ACLI on LTCI
Tuesday May 2, 2000
The American Council of Life Insurers' (ACLI) new research report "Can Aging Baby Boomers Avoid the Nursing Home?: Long-Term Care Insurance for 'Aging in Place'" is a good read. Barbara R. Stucki and Janemarie Mulvey authored the study published March 2000. The report can be downloaded from ACLI's web site at http://www.acli.com/public/media/pubs/boomer2.pdf or call to request a hard copy at (202) 624-2372 and refer to inventory number 7358001.
Excerpts from ACLI's April 26, 2000 press release on the report follow below, but we want to comment on the study first. Several important aspects distinguish this work from others of its ilk. For example:
*** The report emphasizes access to quality care in the private marketplace at the most appropriate level of care instead of focusing narrowly on asset protection.
*** It gives center stage to the concept of "aging in place," often associated with marketing for assisted living, which is a wonderful broad banner for all advocates of private LTC financing to rally around.
*** The report does a marvelous job of mobilizing data from numerous reliable sources to support its arguments and theme, giving the lie to critics who discount any industry-sponsored research.
*** It makes a critical point that the "woodwork factor" (the latent demand for free or subsidized home and community-based services) constrains government's ability to offer publicly-funded HCBS and therefore reduces the market for and availability of the very services seniors prefer while increasing reliance on publicly financed nursing home institutionalization.
***The ACLI report observes that Medicaid applicants can have very substantial income and still qualify for government-financed nursing home benefits which causes a lot of people to go to nursing homes who would not otherwise need to be there. This is an important observation rarely seen anywhere besides Center for Long-Term Care Financing publications. Of course, the same point applies to assets with the same effect. Unfortunately, the ACLI report still assumes that assets must be spent down to qualify for Medicaid in spite of the program's unlimited exemptions for homes, businesses, automobiles, funeral trusts, annuities, etc., not to mention the plethora of more sophisticated Medicaid planning techniques to divest or shelter assets. See the Center's "Myth of Unaffordability" report on this. [Order a copy of the "Myth" report ($34.95; free to media and lawmakers) by contacting Sarah Allen at firstname.lastname@example.org or by calling toll free 877-557-3627.]
Excerpts from ACLI's press release:
"Study Finds Rising Long-Term Care Costs, Demographics Will Make 'Aging in Place' Harder Than Boomers Think"
Herb Perone, HerbPerone@acli.com, 202-624-2416
Jack Dolan, email@example.com, 202-624-2418
April 26, 2000
"A new study by the American Council of Life Insurers (ACLI) finds that the chances they'll end their lives in a nursing home are far higher than most Baby Boomers imagine - and that middle income families are at the greatest risk.
"'Middle income Baby Boomers will find that to successfully age "in place" - that is, in their homes or in the home-like setting of an assisted living facility - they will have to use their retirement savings to pay for increasingly expensive long-term care services,' ays Barbara Stucki, Ph.D., primary author of the ACLI study Can Aging Baby Boomers Avoid the Nursing Home? 'Without private long-term care insurance, many will face potentially catastrophic costs that could lead to impoverishment and the need to use Medicaid-funded nursing home care.'
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"'Because government programs are biased toward nursing home care, if you rely on government help, the nursing home is where you're likely to end up,' Stucki said. 'That's ironic, given that one government study says half of the people in nursing homes don't need that kind of intensive care, and could have maintained their independence if they received long-term care services at home.'
"While the financial benefits to individual policyholders are obvious, the benefits to government - and future taxpayers - of wider purchase of private long-term care insurance are substantial, the new ACLI study shows. Medicaid's annual nursing home expenditures are projected to skyrocket from today's $29 billion to $134 billion by 2030 - an increase of 360 percent. ACLI's research indicates that by paying policyholders' nursing home costs - and by keeping policyholders out of nursing homes by paying for home- and community-based services, private long-term care insurance could reduce Medicaid's institutional care expenditures by $40 billion a year, or about 30 percent.
"In addition, the ACLI study found that wider purchase of long-term care insurance could increase general tax revenues by $8 billion per year, because of the number of family caregivers who would remain at work. Today, 31 percent of caregivers quit work to care for an older person; nearly two-thirds have to cut back their work schedules; more than a quarter take leaves of absence, and 10 percent turn down promotions because of their caregiving responsibilities. It costs the typical working caregiver about $109 per day in lost wages and health benefits to provide full-time care at home - which is almost as much as the cost of nursing home care.
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"'At greatest risk for nursing home placement will be middle income elders unable to afford long-term care services that promote aging in place - that is, in the home or the community,' Stucki said. 'Aging Baby Boomers who plan ahead for their long-term care needs can potentially postpone or avoid institutionalization. Private long-term care insurance can ensure choice, dignity and security for middle income Americans who want to age in place.'"