LTC Bullet: CLTCF/Milliman USA Study Wins Supporters, Needs More

Tuesday, January 21, 2003


LTC Comment: LTC insurance sales have not achieved most people's expectations, much less their highest hopes. What if the explanation for this frustrating commercial inertia is much simpler and easier to fix than we thought? The Center for Long-Term Care Financing and Milliman USA propose to test a hypothesis that, if proven, could help break the logjam and unleash the potential of long-term care insurance. Two companies have confirmed support for this project. Two more are nearing a commitment. We need 12 altogether before March 1 to proceed. Read about this innovative study in today's LTC Bullet below and follow the link there to the full project prospectus, posted on the Center for Long-Term Care Financing's website. After the ***news.***

*** ATTN: LTC insurance and provider executives. Following are four excellent industry conferences. If you plan to attend, please contact Steve Moses at 206-283-7036 or and/or Darrell Spell at 813-282-9262, to arrange a time to discuss the CLTCF/Milliman USA project described in today's Bullet. Ask about the exciting news regarding possible public sector backing for this project!

(1) The Society of Actuaries' Third Annual Intercompany LTCI Conference will occur January 26-29, 2003 in Las Vegas, Nevada. For details and to register, go to . The SOA conference has gone paperless this year by posting session handouts at . Check it out.

(2) The Pittsburgh Airport Area Chamber Enterprise Foundation will present a Long Term Care Conference, "Economic Impact with Long Term Care: Corporate Elder Care Planning" on Friday, January 31, 2003. For details and to register, go to . (Late word: this conference may be cancelled because of inadequate registrations by employers and HR professionals.)

(3) The 16th Private Long Term Care Insurance Conference will convene February 12 - 14, 2003, at the Marriott Rivercenter in San Antonio, Texas. For details and to register, go to . The conference is organized to provide insurance, research, policy and provider professional tracks.

(4) The 5th Annual National LTC Forum meets May 4-6 2003 at Caesars Palace in Las Vegas, NV. For details and to register, go to or call 800-619-0029. Steve Moses will speak on why LTCI sales are flat and what must be done to unleash the LTCI market.

*** Tapes and CDs of The Great Medicaid Planning Debate between Center President Steve Moses and NAELA [National Academy of Elder Law Attorneys] President-Elect Bill Browning have been selling briskly. To get yours, go to to order online. Or make a tax-deductible contribution to the Center of $250 or more and we'll send you a free recording of the debate. Mail your check to the Center for Long-Term Care Financing at 2212 Queen Anne Avenue North, #110, Seattle, WA 98109 or contribute online at . Then email and let him know whether you'd like a tape or CD. Keep in mind that there were many other great sessions at the LTC Producers' Summit in St. Louis. To buy tapes or CD's of sessions other than The Great Medicaid Planning Debate, go to .

Reluctant to spend the money? Here's a free alternative that will leave you wanting more: Center President Steve Moses debated public financing advocate Joshua Wiener of the Urban Institute at a forum sponsored by the Cato Institute on October 12, 1999. You can see and hear the program at (scroll down to "The Coming Crisis in Long-Term Care.") ***

*** Latest donor-only zone content:

LTC E-Alert #3-006--LTC in the Twilight Zone: "Body Brokers" Supply Nursing Home Staff and California Courts Give Drunken Millionaire a Medicaid Hardship Waiver

LTC E-Alert #3-007--Health and Medicaid Cost Snowball Becomes Avalanche

If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest donor zone content and the archives: . To Zone In, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


The following are excerpts from the prospectus for the Milliman USA and Center for Long-Term Care Financing proposed Long-Term Care Financing Study. To read the full background, rationale and methodology for this study, consult the complete prospectus at . Please contact Stephen Moses at 206-283-7036 or or Darrell Spell at (813) 282-9262, to discuss corporate support for this study.


"Experts in the long-term care insurance industry have long predicted a 'breakthrough' in sales. Many placed their hope in tax deductibility, but passage of the Health Insurance Portability and Accountability Act of 1996 had little effect. Some believe that publicity about the Federal Employees LTC program could break the market wide open, but others expect only marginal gains. Could it be that genuine 'above-the-line' tax deductibility is the answer or will that high hope prove to be just another red herring also?

"Why are LTC sales lagging expectations? Given the obvious importance of protecting oneself from impoverishment caused by a long-term illness, why are only seven percent of seniors covered by long-term care insurance? For retirees, the risk is urgent yet those who are at risk do not seem to feel the urgency. Why not?

"One possible answer to this question has been proposed by the Center for Long Term Care Financing in their report titled 'LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle.' If the Center's theory is correct, a critical obstacle to substantial growth in the sale of private long-term care insurance is the socialization of long-term care risk through the current Medicaid system.

"The Center theorizes that a different approach to the government's funding of long-term care through Medicaid could reestablish the individual's sense of responsibility to prepare for long-term care. That in turn could substantially reduce the financial threat to Medicaid and bring about the long expected breakthrough in the sale of private long term care insurance.

"We propose to test the Center for Long-Term Care Financing's theory so that policymakers, consumers, and insurers can make better-informed decisions regarding the appropriate means of funding long term care treatment. . . .


"If current public policy--which allows middle and upper-middle income people to qualify for long-term care benefits without spending down--results in . . .

* excessive Medicaid dependency,

* non-use of home equity for long-term care expenses, and

* low long-term care insurance sales, then . . .

"A change in public policy to require an actual spend down of assets and income would . . .

* reduce Medicaid long-term care expenditures,

* increase the use of home equity for long-term care expenses, and

* enlarge the demand for private long-term care insurance.

"In the absence of such a change, the already unsatisfactory status quo will continue to deteriorate . . .

* Medicaid nursing home costs will continue to explode,

* Medicaid's ability to provide quality long-term care for the poor will continue to erode, and

* long-term care insurance sales will remain flat or decline.

"Project Proposal

"We propose to test this hypothesis by answering two questions:

"1. If Medicaid required the politically infeasible standard of total impoverishment including spend down of all assets currently exempted and all income with no provision for spousal support or personal needs of the recipient, what would be the effect on Medicaid long-term care expenditures and on the demand for private long-term care insurance?

"2. Instead of the foregoing draconian measure, what would be the effect of giving all persons with income or assets a line of credit secured by their estates to supplement their income so they could purchase long-term care of their choice in the private market? Under this option, participants would retain the use of their assets (home, personal effects, etc.), but gradually surrender their equity, which would be repayable after death of the last surviving dependent relative. They would go on Medicaid only after their entire estate equity has been consumed on paper and is secured for recovery after death. (See "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle," a report by the Center for Long-Term Care Financing for details.)

Presumably, people who truly stand to lose their savings to the cost of long-term care would be more likely to plan early and save, invest or insure to cover the cost of long-term care. To the extent they did so, they would be less likely to end up needing a line of credit on their estate or requiring public welfare benefits. This change in public policy would relieve the fiscal burden on tax payers and the Medicaid program, while simultaneously expanding the market for private long-term care insurance and increasing desperately needed private-pay revenue for providers. The purpose of this project is to model both of these public policy changes, estimate the impact on consumer behavior, and price out the effect on Medicaid expenditures and long-term care insurance sales."

To read the full prospectus, go to .