LTC Bullet: Clueless in Orlando

Tuesday, February 1, 2005


LTC Comment: The best minds in the business met in Orlando last week to analyze and anguish over last year's 28 percent drop in LTC insurance sales. But they ignored the "elephant in the room" according to Steve Moses's "LTC Embed" reports from the 5th annual Society of Actuaries LTC Insurance Conference. More after the ***news.***

*** Our thanks to Bob Pagel of Newman Financial Services, LLC in Bloomington, Minnesota (, who attended our LTC Graduate Seminar in Minneapolis recently, for this tribute: "The Center for Long-Term Care Financing is the source, the fountain of knowledge on long-term care in America. Any person who has anything to do with providing care, selling long-term care insurance or serving in government and working to solve the mess that we have gotten ourselves into, should get their checkbooks out and support Stephen Moses and his army. We need you and the Center needs the support of those who have joined the battle. For $12.50/month you can join Steve's Army and be awarded the Good Conduct Medal." (For details on how to "enlist" and make your contribution, please go to )

*** LTC GRADUATE SEMINAR. Your next two opportunities to attend the Center for Long-Term Care Financing's popular, full-day, seven CEU course on LTC financing are coming up Wednesday, February 23 in Seattle, Washington and Wednesday, March 2, 2005 in Rockville, Maryland, near Washington, DC. We'll have more details on times and locations for the DC program later this week. In the meantime, check out the class syllabus, the free text books, and a long list of testimonials at . When you're ready to enroll, call or email Amy McDougall at 425-377-9500 or . Individual and corporate sponsors of the program can receive free admissions. Contact Amy for details. ***

*** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content followed by instructions on how to subscribe so you can receive these critical epistles daily by email.

LTC E-Alert #5-005--MedPac Says Freeze NH and Home Health Payments (Terrible advice could doom LTC providers who are too dependent on government financing.)

The LTC Data Update #5-003--LTC Online (New hope for reaching consumers in denial about long-term care online.)

LTC E-Alert #5-006--Dental Hygiene Prevents More than Tooth Decay for LTC Patients (Avoiding pneumonia is one more reason to seek the best, private nursing home care.)

LTC E-Alert #5-007--LTC Embed: Report from the SOA-LTCi Front, #1
LTC E-Alert #5-008--LTC Embed: Report from the SOA-LTCi Front, #2
LTC E-Alert #5-009--LTC Embed: Report from the SOA-LTCi Front, #3
(See below)

The LTC Reader #5-004--Don't Assume Infirmities Come from Aging (They may derive from drug complications or other easily fixable problems.)

The LTC Reader #5-005--Kondracke Sings Center's Song (Political pundit, "Beltway Boy," and Roll Call editor Morton Kondracke echoes the Center's message.)

Don't miss our "virtual visits" to major LTC industry conferences in The Zone. You'll find our comparison of the conferences, session summaries, interviews and pictures at .

Individual donors of $150 or more and corporate donors to the Center for Long-Term Care Financing receive our daily email LTC Bullets, LTC E-Alerts, LTC Readers, and LTC Data Updates for a full year. You'll also get access to the donor-only zone where these publications are archived along with other donor-only features. 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 archives: . If you do not already qualify for The Zone, 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 . ***


LTC Comment: Today's "LTC Bullet" transmits Steve Moses's three LTC Embed reports from the SOA-LTCi conference last week. Donors to the Center for Long-Term Care Financing received these real-time, onsite reviews daily by email last week. We present them here so that our wider audience can see an example of the kind and quality of material available to Center supporters in our "donor-only zone."

Donor Zoners receive daily LTC E-Alerts, Readers or Data Updates that convert a burgeoning online, academic and popular literature about long-term care service delivery and financing into a quick and easy five-minute-a-day read. Join the Zone and receive these one-a-day mental vitamins. You'll expand your awareness of critical LTC issues and research while helping the Center pursue rational long-term care policy reform.

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 as little as $12.50 per month online by credit card or direct withdrawal at . Be part of the solution!


LTC E-Alert #5-007--LTC Embed: Report from the SOA-LTCi Front, #1

Tuesday, January 25, 2005

LTC Comment: Today's alert comes to you from the fifth annual Society of Actuaries Long-Term Care Insurance Conference in Orlando, Florida. The SOA-LTCi meeting has evolved into the premier industry event for executives involved in the nuts and bolts of long-term care insurance. We realize many of you can't or won't attend, so as we did last year from Houston, here's a brief report on the proceedings from Steve Moses on site.

Rather than spend time and space here describing the SOA conference and explaining how it differs from other industry meetings, why don't you take a quick look at this overview: .

One great feature of the SOA-LTCi conference, especially for non-attendees, is that you can access all of the handouts for each of the sessions at .

No fault of the organizers of this meeting who've done a phenomenal job, but this year's session got off to a frustrating start. Blame Mother Nature. Of the 800 registrants--a hugely successful turnout--less than half were present for the opening reception Sunday night. [All but 100 arrived later.]

By Monday morning, the keynote speaker, Dr. Joseph Coughlin, Director of MIT's "Age Lab," was still unable to get out of snowbound Boston. But here's a link to information about his organization whose mission is to "do the research that will allow more elderly people to maintain their health and 'do things'." Now you know more about Age Lab than most of the conference attendees here, who missed out on hearing Dr. Coughlin speak.

That's enough for today. Tomorrow, I'll bring you a summary of the sessions I've attended and maybe a little "spin" from the Center's perspective on how the industry is faring. Hint: the 28% drop off in LTCi sales for 2004 has already been mentioned and lamented by several speakers. But nobody's offered a convincing proposal to correct the problem and get the industry back on course.

Now, I'm headed back to the exhibit all and later to the "hospitality suites." That's where you pick up the rumors, gossip, innuendos, and other interesting stuff that doesn't make it to the surface in the formal sessions.

Until tomorrow,



LTC E-Alert #5-008--LTC Embed: Report from the SOA-LTCi Front, #2

Wednesday, January 26, 2005

LTC Comment: Steve Moses's second report from the 5th annual Society of Actuaries LTC insurance conference in Orlando, Florida follows.

If you've not attended one of these SOA-sponsored convocations before, consider it for the future. Every imaginable industry point-of-view is represented, albeit with an emphasis on actuarial and underwriting issues. There's too light a focus on public policy for our preference, but the creative tension between the green-eye-shade types who keep the products honest and the marketers who try to sell them avoids boredom even in some of the otherwise duller sessions. Besides, the drinks are free, the exhibit-hall food is good, and the quantities of both are copious.

Following are some thumb-nail summaries of the sessions I attended. Remember, you can find the handouts for all these sessions at . And, you can peruse a complete list of all the sessions at .

The "Distributors' Roundtable" opened with an overview and introductions of the panel members by Tom Skiff, formerly President of the GE LTCi Division. Discussion focused on the challenges and strategies involved in marketing multi-life and group LTCi plans and making the transition from selling individual plans. Executive carve-out was the path of least resistance for most of the panelists' companies. They shared a consensus that overcoming the obstacles to this more challenging level of marketing is critical for industry growth.

The "First Annual LTCI Operations and Technology Survey" session covered preliminary results from a study to find performance benchmarks for the LTCi industry. Over 60 companies were surveyed on their cost and timeliness of claims processing. Preliminary results show a bell-shaped curve around 21 days of processing time. Budgets focus on new business and underwriting costs. Call center budgets are low, but carry a lot of staff. Outsourcing budgets are very large or very small, with few in the middle. For more, check out the session handouts and watch for the final results when they're published.

"My Trade Association Works for Me" was a session on the role of trade associations with panelists from America's Health Insurance Plans, the American Council of Life Insurers, and the American Health Care Association, which represents nursing homes and assisted living facilities. All trade associations "carry water" for their members, represent their interests in state and federal politics, and help with media influence and control. What was striking about this session was the stylistic differences between the insurance industry associations, which basically just do what their members tell them to do, and the provider association which makes an active effort to educate members and influence policy formulation and advocacy.

My favorite session of the whole conference was "Claims Paying Benefits New LTCi Sales" organized by Jesse Slome and presented by Marc Cohen and Winthrop Cashdollar. Long-term care insurance pays well over $1 billion in claims each year, has paid over $10 billion in claims altogether, and has over $550 billion of protection in place. That may be only a drop in the bucket compared to total LTC expenditures, which are over $150 billion per year, but to the individuals who are helped, it's a godsend. Bottom line: this session provided ample hard data that private LTCi is making a huge difference in many people's lives, that they appreciate their coverage, and that providing proof of these facts could go a long way toward convincing others to purchase the product. Check out to find out what is being done to compile LTCi's success stories and get the word out to the rest of the world. And be sure to look up the handouts for this session to get a lot of excellent data you can use to convince people of the value of the LTCi product. See above for the hyperlink to the sessions' handouts.

"Federal Action on LTC: Moving Past Reaction" was basically a rehash of what the industry has been pushing in public policy unsuccessfully for the last few years. One is reminded of the definition of insanity, i.e., doing the same thing over and over and expecting a different result. Most everyone would like to see above-the-line tax deductibility pass and the obstacles to LTC Partnerships removed, but no one knows how to pay for those measures and nothing that costs money is getting passed in the current fiscal malaise. To listen to this session, you'd think there's nothing new under the sun. Truth be told, the secret is to target Medicaid to the needy and use the savings to fund LTCi incentives. Just replacing the open-ended home exemption with a reverse mortgage requirement would save more than enough in one year to fund a decade of above-the-line tax deductibility. But in the meantime, it's just more of the same old, same old.

Tomorrow, we'll give you a report on the last session of the conference: the CEO Forum. Don't get your hopes up, however. That's usually just more oldthink and "rah-rah," but there are always some noteworthy exceptions and surprises. We'll find the good points and pass them on to you. 'Til then.


LTC E-Alert #5-009--LTC Embed: Report from the SOA-LTCi Front, #3

Thursday, January 27, 2005

LTC Comment: Steve Moses's third and last report from the 5th annual Society of Actuaries LTC insurance conference in Orlando, Florida follows.


The closing general session of the SOA-LTCi conference was a two-hour "CEO Forum" held on the morning of January 26, 2005.

Jim Glickman, President of the Life Care Assurance Company and the founder and motive force behind the SOA-LTCi conferences, was moderator.

The panelists included Richard Merrill, Golden Rule; Joyce Ruddock, MetLife; Buck Stinson, Genworth; Ken Grubb, New York Life; Michelle Van Leer, John Hancock; and Stan Johnson, Kanawha.

By all accounts, these panelists are a distinguished group representing a wide range of industry perspectives. Glickman's questions to them were thought-provoking and their answers were thoughtful and wide-ranging. But the moderator and panelists mostly ignored the "elephant in the room" as I'll explain after this summary.

RUDDOCK of MetLife took the first question: The current generation of new products has higher premiums attributed to rate stabilization. Will this trend continue in the next three years? Answer: I wish I had a crystal ball. We have been through a "perfect storm." Many of the things that could go wrong, did go wrong. The key thing going forward is affordability. That will drive price."

GRUBB of NY Life took the second question: What is the right inflation protection and is it time to make inflation protection mandatory? Answer: My view is that anyone who buys a policy should consider how to hedge against inflation. We need to make sure policyholders have an adequate amount of inflation protection, but there are many ways to achieve that objective. Requiring inflation protection, or even mandating minimum options, as proposed by the moderator, however, is not a good idea. (Further discussion, including audience comments, swirled around this issue for an extended period.)

MERRILL of Golden Rule fielded the third question: Is there any chance we'll see "non-can" policies in the future? Answer: Limited-pay policies, including single-premium plans, have an important role to play. If priced properly, they are more expensive but they attract policy holders who are better risks. Such policies are basically non-can. (Again further discussion ensued, with the preponderance of opinion being that limited pay policies will remain niche products and that true non-can policies are a long way off, when the LTCi industry is much more mature.)

The fourth question went to JOHNSON of Kanawha: Do you think underwriting will become more restrictive across the industry? Answer: The short answer is yes, but I do see it becoming better underwriting. The concept of insurance is that we should all be paying for our own appropriate risk. That's where the industry is headed, but it is a mistake to see that as becoming more restrictive. In truth, underwriting is becoming more appropriate and more accurate. (Audience and panel tackled the ticklish question of how obesity and diabetes, which Stinson called "This generation's cigarette," will impact underwriting, but all concluded we just don't know yet.)

STINSON of Genworth was asked the fifth question: If the industry could go back five years and change one decision, what would it be and how would you change it? Answer: Without a doubt, if the LTCi industry had a more aggressive government relations agenda five years ago, we would be in a better position today. There's been too much fuss over above-the-line tax deductibility and not enough focus on education, public awareness, and a national LTC partnership program. (All bowed before the Holy Grail of education, but audience members, including yours truly and Center Board Chairman Claude Thau, reminded panelists and the audience that Medicaid and government budgets are hurting big time, that LTCi could bring major fiscal relief, and that properly targeted public policy advocacy could achieve a bigger and better result than the dismal failures of the past.)

(Note: more than once and again at this point, rebellion broke out among the audience, who wanted to skip over questions and answers about technical topics and talk turkey: "Why are sales down almost 30 percent this year and what are you big shots going to do about it?" The moderator tamped down these outbursts with a promise, later fulfilled, that the panel would tackle that critical question before the end of the program.)

The sixth and last prepared question went to VAN LEER of John Hancock: How can we change the perception that LTCi is only appropriate for a narrow band of people? Answer: We need to modify the message we are delivering and how we deliver it. We need to evolve the message and stop defining need by amount of income or assets that people have or don't have. LTCi is not just a stand-alone insurance product. It needs to be conceptualized as part of a comprehensive retirement plan. LTC is the biggest threat to retirees' assets. All roads lead to retirement planning. "Asset protection is number one."

Finally, just as I had to leave to catch my plane, the panel began to address the big question on everyone's mind: Why are sales down and what can be done about it? Answer: All express optimism, emphasize the promising demographics, repeat the usual reasons why consumers should be buying, blame distribution problems and rate stability challenges, and state their confusion and frustration that people still don't buy in bigger numbers.

The most comprehensive answer I heard before having to rush away came from Ruddock of MetLife: What happened? The economy took a downturn. Big companies couldn't deliver adequate profit margins at the macro level. So some of them left the LTCi market. Right after that, we had a lot of negative press about the product. In the employer market, even though it has grown, participation levels are below where they should be because health insurance costs in general are going through the roof. Response rates from LTCi direct marketing have tanked. Policy prices are higher than they were. We have to bring the price down. In the public policy arena, there can't be enough said. We need to work together through our trade associations to go along on the ride for Social Security reform, because our issue is closely related. The state government level also has big potential, because states are bleeding. As long as people with significant income and assets have Medicaid as an option, LTCi sales will lag. This is a complicated issue with lots of factors that is not going away. If we can't figure this out, shame on us.

LTC Comment: With the exception of that final comment, the panelists ignored the "elephant in the room:" "You can't sell apples on one side of street when they're giving them away on the other." As long as Medicaid remains "inheritance insurance" for the middle class, most people will not take the risk of LTC seriously and only a few will buy private insurance against it. That's the cause of the problem. Everything else is symptoms. But there is hope. On the very day the SOA-LTCi conference closed, the National Council on the Aging (NCOA) published Dr. Barbara Stucki's superb new report on the use of home equity conversion to fund long-term care: "Use Your Home to Stay at Home." Watch for it and for our comments and analysis. This could blow the lid off LTCi sales and save Medicaid as a long-term care safety net for the poor.