RTI International RTI International is a trade name of Research Triangle Institute. What the Long-Term Care Commission Needs to Know about Transitions to Medicaid Joshua M. Wiener, PhD RTI International Washington, DC

RTI International Co-authors and Funders  RTI International: Wayne L. Anderson, Galina Khatutsky, Yevgeniya Kaganova, and Janet O’Keeffe  Gratefully acknowledge funding from The SCAN Foundation  Gratefully acknowledge useful comments by Lisa Shugarman and Gretchen Alkema of The SCAN Foundation  Weblinks: medicaid-spend-down_ _1.pdfhttp:// medicaid-spend-down_ _1.pdf. tc-financing_medicaid-spend-down-implications_wiener-tumlinson_ _0.pdf tc-financing_medicaid-spend-down-implications_wiener-tumlinson_ _0.pdf. 2

RTI International Issues  Lack of insurance coverage for long-term services and supports (LTSS) through Medicare or private insurance  High cost of long-term services and supports results in routine catastrophic out-of-pocket costs – Year of private room in nursing home: $84,000 – Year of 20 hours/week of home health aide: $19,740  People who have been independent all of their lives are impoverished and must depend on welfare  From a fiscal perspective, people who spend down are a substantial part of Medicaid spending for LTSS  During 1990s, number of studies by Burwell, Meiners, and myself 3

RTI International Study Goals, Data and Methods  Develop current estimates of transition to Medicaid and characteristics of people who do so  Look at whole population, not just LTSS users  1996 to 2008 Health and Retirement Study merged with Medicare data to determine buy-in  Track 1996 cohort  Population age 50 and older  Track transitions to Medicaid – Not Medicaid spend down in technical sense, which relates to depletion of assets – Includes “partial” dual eligibles and younger people 4

RTI International Medicaid Transitions by Age and Transition Status Medicaid Transition Measure <65 in 1996 (%) 65+ in 1996 (%) Total (%) Non-Medicaid at Baseline Medicaid at Some Time During Study Period Total Population at Baseline Source: RTI International analysis of Health and Retirement Study merged with Medicare data. 5

RTI International Medicaid Transitions by Use of LTSS Spend Down Measure No LTSS Use (%) Only Personal Care (%) Only Nursing Home Care (%) Nursing Home & Personal Care (%) Total (%) Non-Medicaid at Baseline Medicaid During Study Period Total Population at Baseline Source: RTI International analysis of Health and Retirement Study merged with Medicare data. 6

RTI International Medicaid Transitions by Use of LTSS Spend Down Measure No LTSS Use (%) Only Personal Care (%) Only Nursing Home Care (%) Nursing Home & Personal Care (%) Total (%) Non- Medicaid at Baseline Medicaid During Study Period Total Population Source: RTI analysis of Health and Retirement Study merged with Medicare data.

RTI International Socio-Demographic Characteristics of Non-Medicaid Population in 1996 CharacteristicsNo Medicaid Transition (%) Medicaid Transition (%) Age (years) *** Female *** Black *** Hispanic *** White *** Less than GED or high school graduate *** Married *** 8 Source: RTI analysis of Health and Retirement Study merged with Medicare data. *p <.05, **p <.01, ***p <.001

RTI International Income and Wealth Characteristics at Baseline, 1996 No Spend Down Median ($) Spend Down Median ($) Financial Status 1996 Income (respondent + spouse)37,50013,200 Non-housing assets less IRA21, Net value of primary residence*68,00017,000 Total wealth less IRA135,00033,000 Source: RTI International analysis of Health and Retirement Study merged with Medicare data. *Includes people with no housing assets. Non-Medicaid at Baseline 9

RTI International Financial Status of Long-Term Care Medicaid Transition Population at Baseline, by Quartiles, 1996 Total Assets Less IRAs (%) Income Quartiles $0– 38,899 $38,900– 111,999 $112,000– 251,999 $252,000 +Total $0–15, $15,940–31, $31,909–60, $61, Total Source: RTI International analysis of Health and Retirement Study merged with Medicare data. Quartile classes are determined by the income and assets of the total population at baseline. 10

RTI International Median Income (Respondent and Spouse),

RTI International Median Wealth, Less IRA, 1996 to

RTI International Median Net Value Primary Residence,

RTI International Transfer of Assets by Medicaid Status, 65+ Transfer of Assets No spend down (%) Spend Down (%) Since previous wave, transferred more than $500 to children *** Gave financial help to other relatives Since previous wave, child given deed to home ** Source: RTI International analysis of Health and Retirement Study merged with Medicare data. *p <.05, **p <.01, ***p <

RTI International Policy Implications  Medicaid spend down deserves to be higher on LTSS reform agenda  England and Australia are proposing to cap out-of- pocket costs for LTSS  Transitions to Medicaid not just a LTSS issue  Part of broader issue of retirement income security – Substantial number of people experience significant reduction in income and assets as they age, especially people who start out economically vulnerable – Any Social Security reforms need to take that into account 15

RTI International Policy Implications (cont.)  Few people who transition to Medicaid likely to be able to afford private LTC insurance without large subsidy – Private long-term care insurance is unlikely to result in substantial Medicaid savings – Tax subsidies for private LTC insurance unlikely to pay for themselves  Intergenerational transfer of assets common among older Americans, but Medicaid transition population does it less  Wiener’s Iron Law: Cannot transfer large amounts of assets if you don’t have large amounts of assets 16

RTI International Contact Information Joshua M. Wiener, PhD Distinguished Fellow and Program Director Aging, Disability and Long-Term Care Program RTI International th Street, NW Suite 750 Washington, DC