Wednesday February 21, 2001
LTC Bullets readers know the Center for Long-Term Care Financing's LTC Triathlon project aims to build bridges of understanding and cooperation between long-term care financiers, providers and insurers. Therefore, we've been waiting eagerly to see the early findings of a NIC-sponsored study of the relationship between LTC insurance and the assisted living industry.
(NIC is the National Investment Center, a trade association for long-term care financiers and providers that—to quote its mission statement at www.nic.org—"facilitates efficient capital formation for the seniors housing and care industries through research, networking, and providing business and financial information.")
The NIC study is being conducted by Joel Leon and Jonas Marainen of the Polisher Research Institute at the Philadelphia Geriatric Center. The working title for the study's forthcoming report is "Private Long Term Care Health Insurance and the Self Financing of Long Term Care; Overview of Issues and Current Knowledge." It's due to be published sometime in 2001.
In the meantime, here are some tantalizing tidbits suggesting what to expect from the final report, as culled from an article by Leon and Marainen titled "Private Long Term Care Insurance and the Assisted Living Industry: Current Knowledge and the Continuing Research Agenda." This article was published in the premier edition of a new academic journal called "Seniors Housing and Care Journal" (previously the "NIC Review") produced by NIC and the Johns Hopkins University. (2000, Vol. 8, No. 1, pps. 33-39)
"[G]iven the large estimated costs of long term care, there is little likelihood that any new national long-term health insurance program will be established, and the only national action that could be expected is the passage of legislation that will create some form of further tax incentive to encourage individuals to purchase private LTC insurance." (p. 34)
"What is known is that for assisted living residents who have a long term care insurance policy—about 3.2 percent of all residents, according to NIC/ALFA [ALFA is the Assisted Living Federation of America], 1998—the private insurance benefit pays for the bulk of the cost of care. A recent study of assisted living and nursing home residents with private insurance showed that for assisted living residents with private insurance, the daily benefit paid 88 percent of the incurred cost (Cohen and Miller, 2000)." (p. 36) [The study referenced is Cohen, M.A. and Miller, J., 2000. The Use of Nursing Home and Assisted Living Facilities among Privately Insured and Non-Privately Insured Disabled Elders. LifePlans, Inc. U.S. Department of Health and Human Services. Washington, DC.]
"It seems plausible to conclude that a subset of the insured assisted living residents would have sought Medicaid-financed nursing home care had they not had private insurance coverage. So while there is no clear and direct evidence for this, the data suggest that the increasing sales of private LTC insurance will help increase the net consumption of assisted living services in the future by providing increased financing for long term care in general. In addition, there may also be an increase in the choice of assisted living services relative to nursing home care, particularly for persons with lower incomes." (p. 36)
"In summary, little empirical work has been done on the relationship between long term care insurance and the use of assisted living services. The available evidence indicates that private LTC insurance is a significant source of financing of care for assisted living residents who have such insurance, and it seems likely that private insurance increases access to and consumption of assisted living services. The increasing sale of LTC insurance therefore may have a significant impact on the assisted living industry." (pps. 36-37)
CLTCF Comment: Thus, it appears that this study will show very clearly how private long-term care insurance generously benefits insureds (who can dodge Medicaid nursing home dependency) and the assisted living industry (which stands to gain lucrative, reliable private payers) and the poor, Medicaid, and taxpayers (whose long-term care burden will be lightened). But what's in it for the long-term care insurance industry? Are they just the deep pockets to pay the bills? Or can there be a win/win incentive to attract insurers?
That's where we need to see more creativity. Assisted living companies should become more actively involved in educating the public about the need for private LTC insurance. After all, who is more attuned to the risk and cost of long-term care than the healthy spouse, children, loved ones and friends of someone who has just entered a facility? These are exactly the people who interact with the assisted living facility every day and need to be advised about how to protect themselves with insurance.
On the other hand, insurers need to realize that providers only benefit—as matters stand now—from LTC insurance when it pays, someday in the future, not immediately when it is purchased years ahead of time. Therefore, insurers must find some way to compensate providers for getting actively involved in providing medically and financially qualified LTC insurance leads.
If you put those two pieces together—immediate compensation for providers who supply good LTC leads to insurers—just watch the market for private LTC insurance explode! Then and only then will insurance beneficiaries, Medicaid recipients, the Medicaid program, and taxpayers reap the full potential benefits of private LTC financing predicted by the Polisher research study.
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