LTC Bullet: LTCi Update
Thursday, October 13, 2005
LTC Comment: LIMRA
International's second quarter 2005 findings regarding the long-term care
insurance market show continuing declines with notable exceptions.
More after the ***news.***
*** ANNUITIZE FOR LTC?
On September 27, Congresswoman Stephanie Tubbs Jones (D-OH) joined Ways
and Means colleague Nancy L. Johnson (R-CT) in introducing the Flexible
Retirement Savings Act of 2005. This
legislation will address the critical issues of long-term care and retirement
savings. Specifically, it creates a
tax incentive for people to annuitize a portion of their savings as a way to
protect against longevity or outliving their savings. In addition, it breaks down artificial walls that discourage
people from coupling a life insurance policy or an annuity with a long-term care
policy. For more details, go to:
*** LTC EMBED MINI-REPORT:
Yesterday, I met with Mark Warshawsky, Assistant Secretary for Economic
Policy at the Treasury Department. Dr.
Warshawsky has long been an advocate for the broader use of annuities in
retirement and long-term care planning. We
had a long conversation about the crowd-out effect of easy Medicaid LTC
eligibility on all forms of private long-term care financing, including
annuities, traditional LTCi and reverse mortgages. Today, I will meet with a staffer for Congresswoman Nancy
Johnson to drive home the same point: "You
can't sell apples on one side of the street when they're giving them away on the
other." Stanching the
hemorrhage in Medicaid eligibility along lines currently under consideration in
the House Energy and Commerce Committee, where former Center for Long-Term Care
Financing Executive Director David Rosenfeld continues to do yeoman's service,
is a critical prerequisite to unleash the potential of private financing
alternatives, to relieve the fiscal burden on Medicaid and to improve that
program's ability to serve the poor.***
*** DO YOU LIKE THE LTC BULLETS? If so, please help us to keep them coming to you AND get even
more inside information from the Center. Join
for $150 per year or $12.50 per month and you will also receive our daily LTC
E-Alerts and access to the Center's "Members Only" website zone.
Contact Damon at 206-283-7036 or email@example.com
for details. Or simply sign up at http://www.centerltc.com/support/index.htm.
We want you. We need you. We
love you, if you're on the side of rational long-term care policy reform. ***
LTC BULLET: LTCI
LTC Comment: LIMRA
International is an insurance industry association that provides, according to
its website, "cooperative
research and value-added marketing and distribution expertise."
An executive summary of LIMRA's second quarter 2005 report
on the individual LTC insurance market can be found at http://docs.bisysinsurance.com/documents/2q05limraltc.pdf?BMIDS=15221981-603b661c-80505.
Following below are some highlights.
Bottom line though, most of the long-term care insurance market continues
to struggle. Sales are down
compared to the first six months of 2004. Despite
some hopeful signs, the overall picture remains bleak.
Is there really any wonder that LTC insurance sales
languish when the availability of Medicaid nursing home benefits obviates
two-thirds of the potential LTCi market? See
Demand: Why is the Market for
Long-Term Care Insurance So Small?," by Jeffrey R. Brown and Amy
Finkelstein, National Bureau of Economic Research, 2004, http://www.nber.org/~afinkels/papers/Brown_Finkelstein_Supply_or_Demand.pdf.
LTCi carriers and their trade associations should be
focused like a laser on changing public policy to target Medicaid to the needy
thereby creating savings that can fund tax incentives for private LTCi.
But they aren't. The industry continues to importune Congress and the Bush
Administration for expensive tax incentives without proposing a way to pay for
them. That's a losing strategy in
times of fiscal duress like now.
A wonderful opportunity is being missed.
Save Medicaid for the poor by preventing overutilization of the welfare
program by the middle class and affluent. Use
the savings to educate and incentivize the non-poor to buy LTC insurance or use
their home equity for long-term care. Unless
and until the LTC insurance and provider industries embrace such an approach,
LTCi sales will continue to disappoint and long-term care providers will remain
starved for revenue.
are excerpts (footnotes and tables omitted) from LIMRA International,
"Individual LTC Insurance: Executive
Summary, Second Quarter 2005, Industry Highlights, http://docs.bisysinsurance.com/documents/2q05limraltc.pdf?BMIDS=15221981-603b661c-80505
170,000 individuals purchased long-term care insurance (LTCI) during the first
six months of 2005, 10 percent fewer than had purchased the coverage during the
first half of 2004. Based on new
premium, individual LTCI sales declined 8 percent. However, the rate of decline lessened significantly during
April, May, and June. Following
first quarter's 15 percent plunge, new premium for second quarter 2005 alone
declined just 1 percent compared to the same three-month period in 2004.
Nonetheless, these comparisons are being made to a year that marked the
greatest decline in sales since LIMRA began tracking LTCI sales in 1988."
percent of both individual LTCI policies sold and the corresponding new premium
in the first half of 2005 are tax-qualified plans. New premium for this preferred product was down 6 percent,
compared to the first six months of 2004.
participating carriers sold non-qualified products during the six-month period.
All nine of these insurers experienced decreases in the sale of
non-qualified LTCI plans, ranging from a 16 percent decline for one carrier to a
60 percent decline for another. The
total new premium for these plans plunged 36 percent."
varied in what their average buyer is paying for their coverage in year one,
ranging from $828 per insured for one carrier to nearly $3,200 for another.
On average, individual LTCI buyers from the first half of 2005 are paying
$1,966 during their policies' first year, 2 percent more than buyers from the
same period last year."
premium payment methods accounted for 94 percent of individual LTCI policies
sold and 87 percent of new premium in the first half of 2005.
Lifetime premium payment methods include annual, semi-annual, quarterly,
and monthly premium payment modes. Buyers
of these products are paying $1,833 per year on average.
carriers sold 10-pay products during the first six months of the year.
Ten-pay products accounted for 4 percent of new policies and 10 percent
of new premium. Averaging $4,532
per insured, carriers' 10-pay products ranged from $1,473 on average for one
insurer to $6,172 for another insurer's average 10-pay buyer."
top five individual LTCI carriers accounted for a combined market share of 69
percent, an increase of 3 percentage points compared to leaders in the first six
months of 2004. The top 10 writers
accounted for 85 percent of annualized new premiums, also up 3 percentage points
over the same period last year."
LTCi Writers based on new premiums (alphabetically listed)
2nd quarter 2005 YTD
Bankers Life and Casualty Allianz Life
Lincoln Benefit Life
New York Life