LTC Bullet: Insurers Acknowledge Role of Public Financing

Monday December 17, 2001


***Important Reminder: Check out the Center’s new "LTC Week in Review" feature published every Monday afternoon in our website donor-only zone. Titles in today’s edition include: "How to Fight Senility" "Silver Lining for LTC Insurance," "LTC Providers Offer LTCI Booklet," "Top 10 Reasons Why You DON'T Need Long Term Care Insurance," and "The Incredible Shrinking Surplus." Details on how to access the donor-only zone are available at See you there!***

The annual "DI and LTC Insurers' Forum" sponsored by LIMRA (Life Insurance Marketing and Research Association []), LOMA (Life Office Management Association []) and Milliman USA ( convened in Chicago last week with 200 attendees present to discuss an array of disability and long-term care insurance issues. On the LTC side, the principal focus was on sales, marketing and distribution matters with sessions such as "Are Too Many Product Choices Confusing Consumers and Complicating Sales," "Using the Internet to Market Individual LTC Insurance," and "Combo Products - Their Place in the Product Mix." Research, actuarial, and data collection issues were also covered by conference sessions.

Most relevant to the Center for LTC Financing, however, were the remarks sprinkled throughout the conference about the role and impact of public financing on the demand for long-term care insurance and other private-pay planning vehicles. The Center for LTC Financing's research and analysis indicate that heavy public financing tends to anesthetize the public to the risk of long-term care, thus impeding market growth for private-pay alternatives. Visit our website at for information and analysis supporting this conclusion.

Below are several paraphrased remarks by conference speakers and attendees worthy of note:

* More needs to be done to promote Medicaid reform and facilitate communication between the insurance industry, public programs, and government officials.

* Medicaid, in effect, has been an entitlement program for the elderly. Seventy-five percent qualify without any spend-down of assets to meet eligibility levels.

* Government programs are clearly broken. Everyone knows that, but people don’t have the courage to deal with it.

* A partnership between government, providers, and the long-term care insurance industry is needed to solve the challenge.

* Our pay-as-you-go system cannot support an LTC quality net and must instead focus on providing an LTC safety net.

* The jury is out on government re-engineering of social programs [referring to the unknown impact of looming changes in public programs].

We applaud those in the LTC service delivery and financing industry who understand and acknowledge that public financing cannot be ignored when addressing the market for private-pay planning tools. How could it? The Center's research confirms, for example, that upwards of 90% of nursing home spending comes directly or indirectly from one government source or another or from residents' income, with only approximately 10% to 15% left over that could have been paid out-of-pocket from their assets. Public financing, primarily through Medicare, is also a significant funding source for home health care.

Many others in the LTC service delivery and financing industry, however, do not acknowledge or address openly issues surrounding public financing in order to avoid questioning of their motives by public financing advocates and others suspicious of the private sector's role in health care. Yet, criticism of the LTC industry for what is alleged to be self-serving rhetoric ignores the objective reality that our public programs are already in severe distress and will not be able to fund quality care for the majority of Americans in the future. Bottom line: long-term care insurance and other private-pay planning tools must meet the needs of a growing number of seniors if we are to avoid a Medicaid meltdown.

We know it, informed lawmakers and public policy experts know it, and a growing number of LTC professionals know it. The question remains: What are we going to do about it? Former New York Senator Daniel Patrick Moynihan recently told USA Today (12/12/01) that "change traditionally has been made only when the system is poised on the edge of a cliff. 'But that's not the most attractive way for a democratic society to work.'" Moynihan was in fact referring to Social Security reform. Let's hope we do better with long-term care.