HEARING - U.S. Senate Special Committee on Aging

102
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participants and in part by cost-sharing, and second, an
expanded Medicare to cover long-term care expenses for all
participants.
A voluntary Medicare Part C covering costs of long-term
care has several advantages over private market coverage. They
include: (1) lower administrative and marketing costs; (2)
greater value for money for consumers because loss ratios would
be much higher than equivalent private policies; (3) reduced
consumer search costs and confusion resulting from inadequate
information about the worth of products in the private market;
(4) increased access for all of the Medicare-eligible population
to long-term care coverage because no applicants would be turned
down due to poor health. (In contrast, the private market would
not be able to accommodate applicants that they believe are poor
risks).
The second option that should be considered is expanding
Medicare to cover long-term expenses for all participants. The
key drawback to this option is the significant amount of new
federal dollars that would be needed to finance it. (A good
portion of the expense would be a shift from Medicaid spending
to Medicare spending.) Through gradual phase-in of benefits and
significant cost-sharing (possibly a portion of social security
checks of those using long-term care services), the impact on
the federal budget could be reduced. A proposal along these
lines has been developed by the Harvard Medicare Project in
Medicare: Coming of Age -- A Proposal for Reform [Harvard
University, 19861.