May 2007

Partnership Programs Include Benefits That Protect Policyholders & Are Unlikely to Result in Medicaid Saving

In response to a congressional request, the Government Accountability office (GAO) examined the benefits and premium requirements of partnership policies as compared with those of traditional long-term care insurance policies, the demographics of partnership policyholders, traditional long-term care insurance policyholders, and people without long-term care insurance; and whether the partnership programs are likely to result in savings for Medicaid. GAO used 2002 through 2005 data from the four states with partnership programs- California, Connecticut, Indiana, and New York. To assess the impact on Medicaid savings GAO used:

• Data from a survey of partnership policyholders
   

• Three illustrative scenarios constructed by the GAO to compare how long it takes for an individual to spend his or her assets on long-term care and become eligible for Medicaid
   

• Estimation of the likelihood that partnership policyholders would be eligible for Medicaid based on their wealth and insurance benefits

The study revealed that those with partnership or traditional long-term care insurance tend to have higher incomes and more assets at the time they purchase their policies, compared with those without insurance. In two of the four states, more than half of the partnership policyholders over age 55 had a monthly income of at least $5,000, and more than half of all households had assets of at least $350,000.