LTC Bullet:  125,000 LTCi Policies and No Claims Payment Problem 

Wednesday, October 10, 2007 


LTC Comment:  My article in a Society of Actuaries' newsletter debunks a New York Times hit piece and defends LTC insurance, after the ***news.*** 

*** REFERRALS.  Thank you for reading the Center for Long-Term Care Reform's latest "LTC Bullets" newsletter.  If you know someone who would be interested in this publication, please recommend us by clicking here  If you have received this edition as a forward, and would like your own subscription, you may subscribe here  Thank you. ***   

*** LTC AWARENESS WEEK.  Jesse Slome and the American Association for Long-Term Care Insurance have announced:  "New Online Resource Center Offers Free Marketing Material For Upcoming Long-Term Care Awareness Week (November 4-10, 2007).  Special thanks to the 10 LTCi carriers who supported this resource.  Check it out at  Don't miss the "free audios," including mine. *** 

*** LTC GRADUATE SEMINAR.  The first online offering of this highly regarded course (details at has filled to capacity.  The LTC Graduate Seminar is a pre-requisite for "Regional Representative" participation in the Center's 2008 "National Long-Term Care Consciousness Tour."  If you'd like to join us for the second offering of this course, available as soon as 20 people register, contact Damon at 206-283-7036 or  Tuition is $225 but that includes a one-year membership in the Center (or extension of your current membership.)  Watch a webinar about the LTC Graduate Seminar by pushing the "View Webinar" button at the top of or jump straight to *** 



LTC Comment:  A week after New York Times muckraker Charles Duhigg bashed LTCi last March, I explained what's really happening in an LTC E-Alert (one of our daily "mental vitamins" for Center members.)  

The Society of Actuaries re-published my piece in its "Long-Term Care News" (August 2007, Issue No. 19, pps. 11-12,  And here it is again for our wider "LTC Bullets" readership. 


"125,000 LTCi Policies and No Claims Payment Problem"
Stephen A. Moses 

I was in Dallas at the LTCI conference when The New York Times' hit piece struck last week. A few days later, I was in Des Moines, Iowa and found what I initially expected to be a "me too" editorial bashing long-term care insurance in the local daily. 

Here's the lead from "Read policy fine print for long-term care; Contact Insurance Division about problems," in the March 31, 2007 edition of the Des Moines Register. The full article and readers' responses, including mine, are at  [Alas, this link has since gone dead.] 

"Long-term-care insurance can help ensure future nursing-home expenses don't burden children or grandchildren or force seniors to turn to government health care programs such as Medicaid. The insurance is designed to protect assets and give people peace of mind. 

"But that's assuming the insurer actually pays the bills when a policyholder enters a long-term care facility. 

"According to an investigation by The New York Times, some long-term-care insurers are denying a substantial number of claims. Some insurers have 'developed procedures that make it difficult-if not impossible-for policyholders to get paid,' the Times reported." 

Sounds pretty bleak so far, doesn't it? But read down a few lines and here's what you find: "So is this happening in Iowa, where more than 125,000 Iowans have purchased long-term care insurance? 

"We checked with the Iowa attorney general's office, the Iowa Insurance Division and the Iowa Department of Elder Affairs. None identified denial of long-term care claims as a common problem." 

Well, miracle of miracles, no complaints about denied claims in Iowa. 

What do we know about LTC in Iowa? The state has the lowest percentage of nursing home residents dependent on Medicaid in the entire United States. It is also one of only five states in the country with long-term care insurance market penetration in excess of 15 percent for people over the age of 50. 

Compare New York. That state's LTCI market penetration is among the lowest in the country (1 to 5 percent). New York's Medicaid nursing home census is 73 percent, the seventh highest in the United States. 

New York is a long-term care basket case. It has the worst LTC public policy in the country. The state discourages responsible long-term care planning with perverse incentives that trap its frail and elderly citizens on public welfare. It rewards heirs for taking their parents' wealth and placing them on the public dole. 

When The New York Times cherry picks problems with long-term care insurance while totally ignoring the inferior care and impending insolvency of government LTC programs, it does its readers, the public and LTCI producers a major disservice. 

Here's how I responded to the Des Moines Register's editorial: 

"Scrutiny of long-term care insurance is good. I'll let people in that business defend their product. But to be fair, what happens if people don't have private LTC insurance? Most likely, they end up on Medicaid, which is a means-tested public assistance program. 

"Although it is welfare, Medicaid for LTC is easy to get. Income is rarely an obstacle and most assets are protected, a home (up to $500,000) plus a business, car, home furnishings, personal belongings, term life insurance and prepaid burials of unlimited value. 

"Free long-term care? What's not to like? First of all, it isn't free. You'll have to contribute all but a pittance of your income toward your cost of care. 

"Then consider that Medicaid is tax-payer financed. It's always short of funds. In Iowa, Medicaid pays nursing homes $10.07 per bed day less than their cost of providing the care. "So what? 

"Medicaid has a dismal reputation for problems of access, quality, reimbursement, discrimination and institutional bias. Depend on Medicaid and you'll probably end up in an under-financed nursing home if you can find one at all that will accept such low reimbursement. 

"The main reason to have private LTC insurance is so you can keep control of your life and receive red-carpet access to top quality long-term care at the most appropriate level: home care or assisted living and a top-notch nursing home, but only if you need it. 

"If Medicaid financed long-term care is problematical now, just wait a couple decades until baby boomers need LTC. By then Social Security ($15 trillion unfunded liability) and Medicare ($71 trillion unfunded) will be in big trouble. Those programs prop up Medicaid now by offsetting its LTC costs (Social Security) and paying nursing homes more generously (Medicare), but by the time most boomers need LTC, those supports will be long gone.  

"Wise consumers should use caution when selecting a private LTC insurance policy, but they should also apply similar scrutiny toward Medicaid. Because, without private insurance, that's where they'll likely end up." 

(Note: Reprint permission granted from Stephen A. Moses).