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Assembly Bill 567: California Considers A Statewide Long-Term Care Insurance Program
Third-party summation of the bill follows (LINK TO WEBSITE: https://www.keenan.com/Resources/Briefings/Briefings-Detail/california-considers-a-statewide-long-term-care-insurance-program):
Californians are worried about the costs of growing older. Recent research has found that two-thirds of California residents are worried about being able to afford long-term care—as worried about the cost of long-term care as they are about the cost of future health care.
Lawmakers are concerned as well. The number of elderly Americans is expected to double in the next 40 years, and approximately 70% of people over the age of 65 can be expected to use “long term care services and supports” (LTSS). The Medicaid program is the primary funder for “long-term services and supports” in the United States, paying for more than half of all long-term care in the U.S. California spending on Medicaid has grown over the last decade, outpacing growth in state revenues. Medi-Cal (the California Medicaid program) comprises the second largest budget outlay in the state—just behind K-14 education. So while lawmakers are sensitive to constituent concerns, they are also cognizant that dealing with the need for long-term care coverage is a budget priority as well.
SNIP
The bill established a task force to explore the feasibility of a state-wide insurance program: the following paragraphs from the above link summarizes some of the details -- Auggie
Task Force Recommendations
While a range of design options were considered, Task Force members leaned toward a comprehensive benefit design, with the support increasing as benefit levels did, ranging from $36,000 ($3,000/month) at the low end to $144,000 ($6,000/month) at the high end. That benefit would be available to pay for comprehensive home, community-based and facility-based care, for up to two years for Californians aged 18 and older who are unable to perform two of six activities of daily living for at least 90 days or who suffer from severe cognitive impairment.
Funding
The state LTC benefit would likely be funded by a progressive payroll tax split between employees and employers with a contribution cap and a contribution waiver for lower-income individuals. Although the Task Force recommended a payroll tax with an employer-paid portion of up to 50%, there was recognition that it would be challenging to garner political support for an employer-paid tax. The Task Force has recommended assessing the financial impact of various employer-paid portions of the program contribution rate, including an entirely employee-paid tax.
Opt Out
One of the options that seemed to have wide support from the Task Force members was creating an opt-out deadline that predates the enactment of the program. That means the legislature could pass a law that says that unless an individual had private coverage in place before January 1, 2024 (or an even earlier date) then that individual cannot opt out of the program or the payroll tax that will fund it. Those that wait until legislation is drafted will have missed the opportunity to choose their insurance coverage and to avoid additional taxation.
Lawmakers are concerned as well. The number of elderly Americans is expected to double in the next 40 years, and approximately 70% of people over the age of 65 can be expected to use “long term care services and supports” (LTSS). The Medicaid program is the primary funder for “long-term services and supports” in the United States, paying for more than half of all long-term care in the U.S. California spending on Medicaid has grown over the last decade, outpacing growth in state revenues. Medi-Cal (the California Medicaid program) comprises the second largest budget outlay in the state—just behind K-14 education. So while lawmakers are sensitive to constituent concerns, they are also cognizant that dealing with the need for long-term care coverage is a budget priority as well.
SNIP
The bill established a task force to explore the feasibility of a state-wide insurance program: the following paragraphs from the above link summarizes some of the details -- Auggie
Task Force Recommendations
While a range of design options were considered, Task Force members leaned toward a comprehensive benefit design, with the support increasing as benefit levels did, ranging from $36,000 ($3,000/month) at the low end to $144,000 ($6,000/month) at the high end. That benefit would be available to pay for comprehensive home, community-based and facility-based care, for up to two years for Californians aged 18 and older who are unable to perform two of six activities of daily living for at least 90 days or who suffer from severe cognitive impairment.
Funding
The state LTC benefit would likely be funded by a progressive payroll tax split between employees and employers with a contribution cap and a contribution waiver for lower-income individuals. Although the Task Force recommended a payroll tax with an employer-paid portion of up to 50%, there was recognition that it would be challenging to garner political support for an employer-paid tax. The Task Force has recommended assessing the financial impact of various employer-paid portions of the program contribution rate, including an entirely employee-paid tax.
Opt Out
One of the options that seemed to have wide support from the Task Force members was creating an opt-out deadline that predates the enactment of the program. That means the legislature could pass a law that says that unless an individual had private coverage in place before January 1, 2024 (or an even earlier date) then that individual cannot opt out of the program or the payroll tax that will fund it. Those that wait until legislation is drafted will have missed the opportunity to choose their insurance coverage and to avoid additional taxation.
Worth looking at the the full California Assembly Bill 567 Feasibility Report (PDF). There's a lot to it. LINK: https://www.insurance.ca.gov/0500-about-us/03-appointments/upload/AB567OliverWymanFeasibilityReport2022.pdf
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News to me! And good news! I'd been wary of private for-profit LTSS insurance -- the health of the industry for one (profits before people, always) and the threat of increased premiums. This bill offers a state-wide alternative.
Expect some-to-many to balk at the mandatory tax increase.
Washington State, Hawaii, Germany and France have similar LTSS programs.
There is no mention in the report however, of establishing or funding any new state-run LTSS facilities (there is oversight). I suspect this will be boon for the for-profit industry, attracting more reputable providers to California ... along with, unfortunately, the inevitable shysters.
Thoughts / opinions, anyone?
4 replies
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= new reply since forum marked as read
They all went bust.
Hello class-action lawsuits. 
