1971-S

AN ACT Relating to a public and private partnership for long-term care insurance for the elderly; adding a new chapter to Title 48 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature recognizes that the elderly are the fastest-growing age group nation-wide and in Washington state, increasing in absolute terms and as a percentage of the total population. In addition, the older population itself is aging. The over eighty-five years of age group of elderly are growing faster than any other group. This is in large part due to the substantial advances in medical technology that have increased the elderly's life expectancy and have changed their prevalent causes of death. Living longer has meant that chronic conditions have become major causes of death, disability, and functional dependency. These conditions can effect the individual for years, impairing their ability to function and necessitating high use of long-term care and health care resources to manage, not cure, the conditions. On the average, the elderly's health care and long-term care utilization and expenditures are much greater than those of the nonelderly. While the elderly spend nearly three times the amount the population as a whole spends on health care, per capita, their largest source of out-of-pocket expenditures is for nursing home care. Currently, almost half of all the nursing home expenditures in the United States are financed by public tax dollars through the medicaid program. Almost all of the remaining expenditures nation-wide for nursing homes are financed privately and are primarily paid directly by individual out-of-pocket payments. Since private health insurance for long-term care has not been a major component of the financing for long-term care, the majority of the aged in our state face the risk of financial ruin from an extended nursing home stay.

The legislature finds that the aged in nursing homes often "spend down" their income and become dependent on tax-supported medicaid nursing home care. Approximately half of the people that medicaid pays for in nursing homes were not initially poor, but spent down their assets as a result of catastrophic nursing home bills. The current financing dilemma is likely to worsen. Additional demands are expected to be made on the long-term care system. At the same time, the public sector's ability to finance increased long-term care needs through tax-supported programs, will decline. The lack of elderly persons protected by private insurance further encourages them to seek medicaid eligibility, often by transferring their assets to family members. As a result, assets are lost that might be used advantageously to add to their income, for more appropriate housing, or for health and social services, to improve the quality of their lives, to prevent or delay institutional placement, and to prevent their becoming indigent.

The legislature further finds that the private long-term care insurance, as regulated and provided in this state, provides a proven and viable option for protecting many of our state's elderly from the devastating financial impact of a nursing home admission. If a sufficient quantity of long-term care policies were purchased, it could also reduce the state's large and growing burden for financing long-term care.

It is the purpose and intent of this chapter to provide a realistic approach to financing needed long-term care to the elderly by encouraging the private market to be an appealing and effective partner in long-term care financing and structuring linkages between private insurance options and access to an improved medicaid system. The approach will build upon the significant responsibilities and experience that we have developed in the finance and delivery of long-term care to address the challenge of coordinating the role of the private sector with rapidly changing public programs.

NEW SECTION. Sec. 2. The department of social and health services shall from July 1, 1993, to July 1, 2000, coordinate a pilot program entitled the Washington long-term care partnership, whereby private insurance and medicaid funds shall be used to finance long-term care. This program must allow for the exclusion of an individual's assets, as approved by the federal health care financing administration, in a determination of the individual's eligibility for medicaid; the amount of any medicaid payment; or any subsequent recovery by the state for a payment for medicaid services to the extent such assets are protected by a long-term care insurance policy or contract governed by chapter 48.84 RCW and meeting the criteria prescribed in this chapter.

NEW SECTION. Sec. 3. The department of social and health services shall seek approval and a waiver of appropriate federal medicaid regulations to allow the protection of an individual's assets as provided in this chapter. The department shall adopt all rules necessary to implement the Washington long-term care partnership program, which rules shall permit the exclusion of an individual's assets in a determination of medicaid eligibility to the extent that private long-term care insurance provides payment or benefits for services that medicaid would approve or cover for medicaid recipients.

NEW SECTION. Sec. 4. (1) The insurance commissioner shall adopt rules defining the criteria that long-term care insurance policies must meet to satisfy the requirements of this chapter. The rules shall provide that all long-term care insurance policies purchased for the purposes of this chapter:

(a) Be guaranteed renewable;

(b) Provide coverage for home and community-based services and nursing home care;

(c) Provide automatic inflation protection or similar coverage to protect the policyholder from future increases in the cost of long-term care;

(d) Not require prior hospitalization or confinement in a nursing home as a prerequisite to receiving long-term care benefits; and

(e) Contain at least a six-month grace period that permits reinstatement of the policy or contract retroactive to the date of termination if the policy or contract holder's nonpayment of premiums arose as a result of a cognitive impairment suffered by the policy or contract holder as certified by a physician.

(2) Insurers offering long-term care policies for the purposes of this chapter shall demonstrate to the satisfaction of the insurance commissioner that they:

(a) Have procedures to provide notice to each purchaser of the long-term care consumer education program;

(b) Offer case management services;

(c) Have procedures that provide for the keeping of individual policy records and procedures for the explanation of coverage and benefits identifying those payments or services available under the policy that meet the purposes of this chapter;

(d) Agree to provide the insurance commissioner, on or before September 1 of each year, an annual report containing the following information:

(i) The number of policies issued and of the policies issued, that number sorted by issue age;

(ii) To the extent possible, the financial circumstance of the individuals covered by such policies;

(iii) The total number of claims paid; and

(iv) Of the number of claims paid, the number paid for nursing home care, for home care services, and community-based services.

NEW SECTION. Sec. 5. The insurance commissioner, in conjunction with the department of social and health services, shall develop a consumer education program designed to educate consumers as to the need for long-term care, methods for financing long-term care, the availability of long-term care insurance, and the availability and eligibility requirements of the asset protection program provided under this chapter.

NEW SECTION. Sec. 6. By January 1 of each year, the insurance commissioner, in conjunction with the department of social and health services, shall report to the legislature on the progress of the asset protection program. The report shall include:

(1) The success of the agencies in implementing the program;

(2) The number of insurers offering long-term care policies meeting the criteria for asset protection;

(3) The number, age, and financial circumstances of individuals purchasing long-term care policies meeting the criteria for asset protection;

(4) The number of individuals seeking consumer information services;

(5) The extent and type of benefits paid by insurers offering policies meeting the criteria for asset protection;

(6) Estimates of the impact of the program on present and future medicaid expenditures;

(7) The cost-effectiveness of the program; and

(8) A determination regarding the appropriateness of continuing the program.

NEW SECTION. Sec. 7. Sections 2 through 6 of this act shall constitute a new chapter in Title 48 RCW.