LTC Bullet: State Farm/Roper LTCI Poll Informs but Begs Bigger Question
Wednesday, June 18, 2003
LTC Comment: Kudos to State Farm for commissioning a Roper poll that found consumers concerned about long-term care, confused about who pays for it, but slow to buy LTC insurance. We highlight the findings and explain an underlying anomaly in the data, after the ***news.***
*** CLAUDE THAU, Chairman of the Board of Directors of the Center for Long-Term Care Financing, will appear on Jacqueline Marcell's internet radio program on Saturday, June 21 (3:00 to 5:00 PM Pacific time). You can listen live or access the archive after June 23. Marcell is the author of "Elder Rage: Take My Father . . . Please! How to Survive Caring for Aging Parents," which we reviewed May 20 in "LTC Bullet: 'Elder Rage' is a Hoot" -- http://www.centerltc.com/bullets/archives2003/439.htm . For details on how to listen to the "Coping With Caregiving" show, go to http://www.wsradio.com/copingwithcaregiving/ . Also on the roster of interviewees for Saturday's show is Dave Dorfman, a New York elder law attorney and unabashed Medicaid planner, but one with an open mind and some interesting insights. ***
*** NEW FEATURE on the Center for Long-Term Care Financing's free public access website at http://www.centerltc.org/ . We've added a link to several of Center President Steve Moses' recent articles on long-term care services and financing. Scroll down the home page to the first item after "Points of Interest" and click on "Read Recent Articles" or go directly to http://www.centerltc.com/pubs/Articles/Index.htm . You'll find "Long-Term Care Lemmings," "LTC Funding in the Crosshairs," "The Elephant, The Blind Men and Long-Term Care," "Denial is Not a River in Egypt," "The Triathlon vs. The Triumvirate: Why Can't We Fix Long-Term Care?," "The LTC Wake-Up Call," and several others. We encourage readers to send this link to reporters, legislators and policy makers with a recommendation that they contact the Center for Long-Term Care Financing regarding the state fiscal crises, Medicaid shortfalls, and long-term care problems. Help us get the Center's analysis and recommendations to the powers-that-be. ***
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LTC BULLET: STATE FARM/ROPER LTCI POLL INFORMS BUT BEGS BIGGER QUESTION
With all the challenges facing the long-term care insurance industry nowadays--mediocre sales, carrier consolidation and rate stability concerns, to name a few-- it's good to see a big, financially stable company like State Farm getting involved. Like so many other companies that have entered the challenging LTCI business, State Farm may well be puzzled by the peculiar attitude of consumers about this product. People seem to understand the need for long-term care insurance; many, probably a majority, can afford it especially if they buy young; but most don't even talk to an LTCI agent, much less purchase the coverage. Why? State Farm retained the pollster Roper to answer that question. Their survey results were published last September. You can find the fascinating details and the study parameters at http://www.statefarm.com/media/ltcisurv.htm . Some highlights and our analysis of some seeming anomalies follow in an "LTC Comment."
Selected highlights of the State Farm/Roper Long-Term Care Insurance Survey:
* [S]even in ten adults think it is "very important" that people have either some type of private insurance or coverage by a government program for the expenses of long-term care. Nine in ten believe this type of coverage is at least "fairly important".
* Half of all Americans 45+ -- and nearly half of those over age 64 -- claim they are "not too" or "not at all" prepared for a financial crisis like having to pay for either themselves or someone close to them to receive long-term care for an extended period.
* While awareness is high that long-term care insurance can be purchased from insurance companies (71% claim to know of it), purchase levels are low. Only two in ten of those who are aware of this type of insurance have purchased it, and fewer than two in ten of all adults (17%) currently own it. In contrast, nearly nine in ten adults have health insurance, and three in four own a life insurance policy.
* Six in ten adults ages 45+ have never talked with a financial professional about planning for the possibility of needing long-term care. Perhaps even more surprisingly, Americans ages 65+ are no more likely than those under 65 to have spoken to a professional about long-term care.
* Lack of preparation for long-term care may stem at least partially from "procrastination" among Americans 45+, or a reluctance to think about long-term care during their healthier years. Half of all adults aged 45 or older at least "somewhat agree" that long-term care won't be needed until they are older and they don't want to think about it now. Long-term care "deniers" are also significantly less inclined to believe they will have to spend time in a nursing home than are those willing to think about long-term care now.
* Americans have financial barriers as well as psychological ones that appear to be preventing them from purchasing long-term care insurance. Two in three Americans view long-term care insurance as unaffordable. In addition, even when told that other sources either don't fund long-term care or have significant limitations on their coverage, nearly half still consider coverage for it too low a priority given their other expenses.
LTC Comment: According to the State Farm/Roper survey, most Americans understand that long-term care is a big, expensive risk, but they fail to insure against that risk for psychological reasons (denial), practical reasons (affordability), and factual reasons (ignorance about who pays what for LTC.) Here's the puzzle: If people need LTCI, if they can afford it (as we know most can if they place the proper priority on it), and if private insurance and government programs do not pay for long-term care, WHY DON'T CONSUMERS BUY IT? In other words, if the risk and cost is so devastating, how and why do people remain in denial? When the National Council on Aging and John Hancock published findings in 1999 similar to State Farm/Ropers' more recent results, we offered the following explanation in "LTC Bullet: Aging Anomalies Analyzed," April 9, 1999, http://www.centerltc.com/bullets/archives1999/boomersflunkquiz.html . We think this analysis still holds true and we offer it below as a valid explanation of the latest survey results as well. For analysis of the latest CMS data on who pays for nursing home and home health care in the United States, see our January 14, 2003 "LTC Bullet: New LTC Expenditure Data Provide Clues to Low LTCI Sales and LTC Facilities' Financial Woes" at http://www.centerltc.com/bullets/archives2003/411.htm .
From "LTC Bullet: Aging Anomalies Analyzed"
"People only insure against real risks. Despite all the media hype about long-term care costs, the simple fact is that the average senior qualifies for Medicaid nursing home care
without fancy financial planning and without spending down assets significantly. Virtually anyone, regardless of income or assets, can qualify for Medicaid long-term care benefits quickly by legally sheltering or divesting assets. Medicare provides generous long-term home health benefits to most medically qualified seniors, although it has been cutting back severely recently. [Update: as of 2001, only 19 percent of professional home care costs in the U.S. are paid "out of pocket;" Medicaid, Medicare, and private health insurance pay the rest.]
"Americans verbalize worry about long-term care financing because of the increasing barrage of media coverage on the issue. The vast majority of them are not worried enough, however, to expend the substantial premiums necessary to purchase long-term care insurance. They are not worried enough about long-term care for the simple reason that, when the worst happens and formal care becomes necessary, the government usually pays. Something over 80 percent of all nursing home costs in the United States are
paid directly or indirectly by government programs or private income (not assets.) To avoid the anguish and expense of long-term home care, families often turn to Medicaid financing of nursing home care which has contributed to the well-known institutional bias in America's long-term care service delivery system.
"These facts explain why Americans report strong concern and worry about long-term care, but they fail to plan and insure adequately for the risk. They do not know who pays
for long-term care, but they assume, correctly, that someone or something must pay. Ironically, the 'soft landing' provided by easily accessible Medicaid and Medicare finan-
cing has de-sensitized the public to the risk of financing long-term care. The only way to change this situation and create a stronger market for private long-term care insurance
is to establish a real financial risk that cannot be avoided by turning to Medicaid nursing home benefits after the insurable event occurs. The Center for Long-Term Care Financing has proposed new public policy that would achieve that goal, assure universal access to top-quality long-term care at the appropriate level for all Americans, and save Medicaid and Medicare money in the meantime.
"Our white paper titled 'LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle' documents the statements made above about public financing of long-term care, explains why most Americans can be genuinely worried about long-term care financing but still fail to plan or insure adequately, and advocates a method to encourage the early purchase of affordable long-term care insurance while empowering those who fail to insure with the ability to purchase quality home care and assisted living in the private marketplace."
To read "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle," go to http://www.centerltc.com/pubs/CLTCFReport.pdf .