LTC Bullet:  Index of the Long-Term Care Uninsured 

Friday, January 6, 2006 


 LTC Comment:  Who's insured for long-term care and who isn't?  After the ***news.*** 


Kaiser Daily Health Policy Report Highlights News Coverage of Recent Developments in Medicaid, Other State Health Insurance Programs  Access this story and related links online: 

New York:  The New York Times on Dec. 23, 2005, examined how a number of counties in New York state have "been driven to financial desperation by the rapidly rising cost of Medicaid."  New York is the only state that requires local governments to pay a large share of Medicaid costs.  In recent years, "the Medicaid rolls upstate and around New York [City] have swelled sharply, as the state expanded eligibility and the number of jobs offering health insurance shrank," the Times reports.  The problem "is most serious in counties upstate, which lack a broad tax base but have a growing Medicaid population," the Times reports.  Counties have taken a number of steps to counter the financial problems caused by Medicaid, including raising taxes, reducing services and laying off workers (Perez-Pena/Luo, New York Times, 12/23/05). 

Kaiser Daily Health Policy Report Highlights Recent Opinion Pieces on Health Care Issues Access this story and related links online:    

Robert Samuelson, Washington Post:  As baby boomers reach retirement age, "their huge federal retirement benefits may seriously damage the economy and American politics," Samuelson writes in a Post opinion piece.  According to Samuelson, if Social Security, Medicare and Medicaid are "left alone," they "would require massive tax increases, cause immense deficits or crowd out other important government programs" (Samuelson, Washington Post, 12/28/05). *** 



LTC Comment:  Our thanks to Eileen Tell of the Long-Term Care Group, Inc. for another in her series of "Reality Check" LTC Bullets.  It follows after this brief clarification and comment. 

The Index described in the following article measures market penetration of PRIVATE long-term care insurance, which as you'll see is very low.  A far more important factor is that most people are covered already by PUBLIC long-term care insurance, i.e. Medicaid. 

The Index of the Long-Term Care Uninsured excludes people with incomes below $20,000 per year because they would be eligible for Medicaid and inappropriate for private LTCi with its relatively high premiums. 

Critical to understand, however, is that Medicaid LTC benefits are available to nearly everyone, regardless of income or assets, without spending down their savings for care first.  Medicaid has no limit on income if an applicant's medical expenses, including nursing home care, are high enough.  The program has no limit on assets held in exempt form, such as a home, business, car, home furnishings, term life insurance benefits, etc.  Of course, with only a three-year asset transfer look back, anyone who plans ahead can get Medicaid for LTC no matter how much they give away.  The affluent can hire Medicaid planners to hide additional income and assets. 

The critical take-away from all this is:  "No wonder so few people buy LTCi.  The government has been giving it away for 40 years."  Never mind that Medicaid has a terrible reputation for problems of access, quality, reimbursement, discrimination, institutional bias, and loss of independence and control.  Nobody thinks about those drawbacks until it's too late for private insurance and the path of least resistance is to qualify for public benefits.  

Help is on the way, however.  If the House of Representatives re-passes the Senate's slightly modified version of the Deficit Reduction bill, we'll make a huge step forward to give Medicaid back to the poor and incentivize others to buy LTC insurance or use home equity for long-term care.  Unless or until that happens, the Index of the Long-Term Care Uninsured will remain in the dumps. 


"Index of the Long-Term Care Uninsured"
Eileen Tell 

We have all heard the familiar refrain that there is tremendous untapped market potential for private insurance financing of long term care needs.  However, estimates of market penetration vary, given differences in what and how penetration is measured.  

In 2003, the Long Term Care Financing Strategy Group of Washington D.C. developed a method to estimate an Index of the Long Term Care Uninsured.  This index tracks trends in the population without financial protection against the devastation of long term care needs.  Specifically the Index focuses on adults ages 45 and older with incomes such that they could theoretically afford long term care insurance (i.e., those with incomes of $20,000 or more) who would not immediately qualify for Medicaid coverage.   

This year, the Index was compiled using Census data and information on long term care insurance policies in force as of December 2004 from LIMRA, a market research trade group.  The state distribution of policies in force is based on information from the National Association of Insurance Commissioners, the Federal Long Term Care Insurance Program and the California Public Employees Retirement System (CalPERS) Long Term Care Program. 

The Index is based on a concept developed by John A. Cutler, J.D., a long term care policy expert currently at the U.S. Administration on Aging, with research analysis originally conducted by Marc Cohen, Ph.D., President, LifePlans Inc.  John Cutler and Marc Cohen, along with Malcolm Cheung of Prudential and Eileen J. Tell of Long Term Care Group, Inc., created this third annual report. 

On a national basis, the Index of Long Term Care Uninsured shows that: 

Approximately 95 percent of persons between the ages of 45 and 64 (with incomes over $20,000) are uninsured for long term care.  This figure is essentially unchanged from the 2003 levels. 

For those ages 65 and over, 85 percent are uninsured for long term care, compared with the 2003 figure of 82 percent.  This slight increase may reflect the fact that the average age of purchase for long term care insurance is declining. 

Given the recent decline in policy sales, along with the rate of growth among the eligible population, it comes as no surprise that, over the last two years, the percent of the population that is uninsured for long term care nationally has increased slightly.  While policy sales to younger buyers are increasing as a percent of the total, policy sales overall are down.  This, coupled with the fact that boomers are one of the fastest growing population segments is one of several reasons why there has not been any significant change in market penetration since 2003. 

This year, for the first time, the Index of the Long Term Care Uninsured also looked at state-specific trends, identifying the proportion of older adults who are uninsured for long term care within each state.  Like the national Index, the state-specific analysis focuses on the adult population age 45 and older with incomes of $20,000 or more.  We find tremendous variations across states, including some of the following: 

The percent of older adults who are uninsured for long term care ranges from a low of 78% to a high of 97% across the 50 states and the District of Columbia; 

Eighteen states have a market penetration of long term care insurance that is above the national average.  They are, in decreasing order of market penetration for long term care insurance:  North Dakota, Nebraska, South Dakota, Iowa, Texas, District of Columbia, Virginia, Maine, Kansas, Missouri, Minnesota, Florida, California, Wisconsin, Connecticut, Colorado, New York and Illinois. 

State Initiatives and Incentives 

We are only beginning to understand how the many diverse factors in these states influence these trends.  The variables at work across the states with the highest and lowest market penetration are complex.  First, there are differences in terms of the size, education, age distribution and income among older adults across various states.  Also, some states have adopted one or more of several specific initiatives to reduce reliance on Medicaid by encouraging and enabling more adults to obtain long term care insurance.   

While we have only begun to try to isolate and understand all these factors, a very preliminary analysis suggests that raising awareness and providing incentives to promote the purchase of long term care insurance likely have some effect on reducing the rate of “uninsurance” for long term care.  There are many actions a state can undertake to encourage private responsibility for long term care planning.  State tax incentives, a public-private Partnership initiative, public education and awareness, a long term care insurance program for public employees and retirees, speed to market activities and others are among those states ought to consider.   

In analyzing the variations found in the state component of this third annual Index of the Long Term Care Uninsured, we do see greater market penetration in states that have adopted tax incentives for long term care, with a tax credit having a greater impact than a tax deduction, but both being important.  Specifically, market penetration among states with a tax credit or deduction for long term care is 8.1% compared with 6.7% in states without such incentives.  

Similarly, in states with a state-sponsored long term care insurance program for public employees and retirees, market penetration is 8.1% compared with 4.6% in states without such a program.   

Also, of the 18 states that have “above average” market penetration for long term care insurance, three of them (California, Connecticut and New York) have the “Partnership for Long Term Care” Program, a model being considered for national expansion which combines Medicaid and private long term care insurance.   

“Own Your Future” – Long Term Care Consumer Awareness Campaign 

We know that awareness is a critical element in any strategy designed to increase market penetration.  Too many people learn about long term care the hard way – when they and their loved ones need care.  That’s often when they become aware of the harsh realities of paying for care.  Many people don’t think about their future long term care needs and therefore fail to plan appropriately.  If individuals and families were more aware of their potential need and the options for addressing it, they would be more likely to take steps to prepare for the future. 

These are the critical premises behind the Department of Health and Human Services’ (HHS) Long Term Care Consumer Awareness Initiative called “Own Your Future.”  The Campaign represents a unique partnership between the federal government and the states to offer a consistent, and long overdue, message about personal responsibility and planning ahead for long term care needs.  Another key element of the Campaign and, one which has been vital to consumer acceptance, seems to be the objective sponsorship – providing education and awareness from an independent government source.   

Phase I of this awareness demonstration project was launched in January 2005 in Arkansas, Idaho, Nevada, New Jersey and Virginia.  Governors from those states each sent letters to over two million households with consumers ages 50 to 70 encouraging them to plan for their long term care needs and offering a Long Term Care Planning Kit which provided basic information on how to plan for a broad range of long term care issues including private finance.   

The response rate to the direct mail and media campaign was about 8% across these states.  Individuals from all demographic segments within the target market found relevance in the campaign.  Industry representatives have indicated that they have seen a favorable impact on awareness, inquiries and in some cases sales of private long term care insurance in the campaign states.   A survey of consumer attitudes and behavior among those targeted in the Awareness Campaign is nearing completion.  Preliminary analysis suggests that consumers who ordered the Long Term Care Planning Kit were more likely to review their existing coverage to see if it provided for long term care needs, consult an agent or financial planner about long term care insurance, or buy long term care insurance following the January 2005 launch date of phase I of the campaign in these states. (More information about the campaign is available at both and

The Awareness Campaign is an important model and a great start.  But it will be important for states and the federal government to continue and expand on all of these efforts to make consumer more aware and motivate them to plan ahead for their future long term care needs.   

Eileen Tell is Senior Vice President of The Long-Term Care Group, Inc.  She has written a series of "Reality Check" LTC Bullets.


The Index excludes those with incomes under $20,000 which necessarily includes those individuals on Medicaid.  This is a generally accepted absolute minimum threshold for suitability, though it should be noted that $35,000 is used by the National Association of Insurance Commissioners as a suggested income criterion for purchase.   For more information about the Third Annual Index, go to  For the full report, go to  

The Long Term Care Financing Strategy Group is a non-profit, non-partisan think tank comprised of academics, researchers, policy analysts, and individuals representing aging organizations, providers, insurers and others.  It brings together public and private perspectives, and provides a forum to address long term care financing issues and offer solutions.