BP BHEAD INT H

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

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 office of insurance commissioner 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 combined to finance long-term care. This program will allow an individual to purchase a precertified long-term care insurance policy in an amount commensurate with his or her assets. Notwithstanding any provision of law, the resources of such an individual, to the extent such resources are equal to the amount of long-term care insurance benefit payments as provided in this section, shall not be considered by the department of social and health services in a determination of: (1) His or her eligibility for medicaid, (2) the amount of any medicaid payment, or (3) in any subsequent recovery by the state of a payment for medical services.

NEW SECTION. Sec. 3. The department of social and health services shall seek appropriate amendments to its medicaid regulations or any other regulations to allow protection of resources and income pursuant to section 1 of this act. The protection assets shall be provided, to the extent approved by the federal health care financing administration, for any purchaser of a precertified long-term care policy delivered, issued for delivery, or renewed from January 1, 1994, to December 31, 1999, inclusive, or the termination of the program, whichever is sooner. The projections shall last for the life of the purchaser. The department of social and health services shall count insurance benefit payments toward resource exclusion to the extent such payments are for: (1) Services medicaid approves or covers for its recipients; (2) the lower of the actual charge and the amount paid by the insurance company; (3) nursing home care or formal services delivered to those insured in the community as part of a care plan approved by a coordination assessment and monitoring agency approved by the department of social and health services; and (4) services provided after the individual meets the coverage requirements for long-term care benefits established by the department of social and health services for this program. The secretary of social and health services shall adopt rules, in accordance with current law, to implement the provisions of this chapter relating to determining eligibility of applicants for medicaid and the coverage requirements for long-term care benefits.

NEW SECTION. Sec. 4. The insurance commissioner may precertify only those long-term care insurance policies that: (1) Alert the purchaser to the availability of consumer information and public education provided by the department on aging and adult services pursuant to section 5 of this act; (2) offer the option of home and community-based services in lieu of nursing home care; (3) in all home care plans, offer case management services delivered by a coordination, assessment, and monitoring agency, approved by the department of social and health services or by a home health care agency separately licensed as a coordination, assessment, and monitoring agency under this chapter; (4) offer automatic inflation protection or optional periodic per diem upgrades until the insured begins to receive long-term care benefits; (5) provide for the keeping of records and an explanation of benefit reports on insurance payments that count toward medicaid resource exclusion; and (6) provide the management information and reports necessary to document the extent of medicaid resource protection offered and to evaluate the Washington long-term care partnership. No policy may be precertified if it requires prior hospitalization or a prior stay in a nursing home as a condition of providing long-term care benefits. The insurance commissioner shall adopt rules to carry out the precertification provisions of this chapter.

NEW SECTION. Sec. 5. The insurance commissioner shall require its senior health insurance department advisors program to educate consumers as to: (1) The need for long-term care; (2) mechanisms for financing such care; (3) the availability of long-term care insurance; and (4) the asset protection provided under this chapter. In addition the department of social and health services shall provide to the extent possible public information to assist individuals in choosing appropriate insurance coverage.

NEW SECTION. Sec. 6. The department of social and health services and the insurance commissioner shall seek the federal approvals necessary to carry out the purposes of this chapter. Each year, on January 1st, the insurance commissioner shall report to the legislature on the progress of the program. The report shall include: (1) The success in implementing the public and private partnership; (2) the number of policies precertified; (3) the number, age, and financial circumstances of individuals purchasing precertified policies; (4) the number of individuals seeking consumer information services; (5) the extent and type of benefits paid under precertified policies that could count toward medicaid resource protection; (6) estimates of impact 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 1 through 6 of this act shall constitute a new chapter in Title 48 RCW.