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LTC Bullet: LAN on LTC

Tuesday February 16, 1999


The February 1999 issue of the insurance trade journal Life Association News (LAN) contains an article entitled "Industry Says Clinton's LTC Proposal Not Enough." The article quotes ACLI President Carroll Campbell, AHIA President Matthew Tassey, and HIAA President Chip Kahn to the effect that what America really needs is a tax credit for LTC insurance or, at least, full tax deductibility.

The article also summarized the Center for Long-Term Care Financing's position on the Clinton plan and its "LTC Choice" proposal at length:

"'The Clinton plan is great short-term politics, but terrible long-term public policy,' says Stephen A. Moses, president of the Center for Long-Term Care Financing, Seattle.

"Moses calculates that the plan would add $1.2 billion per year to the federal budget. 'Americans' bills for home health care and nursing home care rose from $31 billion in 1990 to $69 billion in 1997,' he says, 'an increase of 123 percent.'

"'In the same period, private out-of-pocket costs for the same services rose from $26 billion to $33 billion,' Moses says, 'an increase of only 27 percent. Put another way,' he says, 'the proportion of LTC costs paid by the government jumped from 48 percent to 60 percent, while the proportion paid by patients shrank from 40 percent to 28 percent. As public financing of long-term care increases and private spending decreases, the sense of urgency people feel about the need to plan early and insure fully for the risk of long-term care goes down.

"'Consequently, very few people purchase private LTC insurance,' he says, 'and most Americans sense correctly that the government pays much of the cost of long-term care.'

"Moses says there is a better way to cover Americans. 'Instead of spending more of our scarce public resources on current consumption, we should invest the money toward a long-term solution,' he says. 'It would be much smarter to expend money on tax credits or true deductibility for private long-term care insurance. This tack would gain the government some real long-term leverage on the problem.'

"The solution, Moses says, is radical for today's LTC market. 'The best strategy is to provide a fully collateralized, government-backed line of credit on the estates of all Americans who need long-term care,' he says. 'That would empower them to purchase red-carpet access to top-quality home care, assisted living and nursing home care in the private marketplace. The fact that they would have to pay this loan back out of their estates and inheritances would strongly encourage new generations of the aging and their heirs to plan ahead for long-term care."

That's what it will take to break the log-jam in the long-term care insurance market. Thanks to LAN and author Chuck Jones for getting the word out on "LTC Choice."

You can purchase a copy of the Center's white paper "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" ($24.95; free to media) by calling 206-447-1340 or by clicking here to order.