Incorporating Long-Term Services and Supports in Health Care Proposals: Cost and Distributional Considerations

Recent health care reform proposals have included coverage for long-term services and supports
(LTSS), reflecting a fundamental change in the way many policymakers discuss health care. To inform
broader discussions of these health care reform proposals, we project costs and distributional effects
for three stylized proposals for public LTSS benefits. Each proposal would significantly expand the
public role in financing LTSS relative to current law. All proposals would have broad eligibility criteria
and generous benefit packages, consistent with recent proposals for single-payer health care plans, and
would address family burdens and care inadequacies under current law. Our stylized scenarios are
intended to represent some proposals’ intentions without exactly matching any specific proposal. The
three public LTSS benefit options are as follows:
 Option 1 (Base): Expanded access to home- and community-based services based on Health
Insurance Portability and Accountability Act standards. This option would use Health
Insurance Portability and Accountability Act definitions of disability for eligibility and provide a
broad package of home- and community-based services. It would increase total LTSS spending
by nearly $240 billion and federal spending by $355 billion. It would also greatly expand formal
service use, reduce state Medicaid responsibilities, and alleviate family cost-sharing burdens.
 Option 2: Expanded access to home- and community-based services with an institutional
benefit. This second option would build on the first reform option, using the same definition of
disability and providing the same home- and community-based services, but would also include
institutional care benefits. This option would increase total LTSS spending by about $255
billion and federal spending by $450 billion; this difference in cost from option 1 largely owes to
further reduced state burdens.
 Option 3: Expanded access to home- and community-based services based on less strict
standards. This option would use a broader disability definition and thus cover significantly
more people. We project that it could increase total spending by $321 billion and federal costs
by almost $526 billion.
Families across the income distribution would benefit from expanded LTSS under all three options;
people with the lowest incomes would receive the greatest benefits, and those in the middle of the
income distribution would experience relief from cost sharing given their greater exposure to high out-of-pocket LTSS costs. All families would thus receive protection from a risk for which few are now
covered.Given the lack of precedent for these proposals, we present ranges for our projections to
underscore their uncertainty and dependence on assumptions.