LTC Bullet: LTCI Thrives on HCBS While Medicaid Flounders

Thursday, August 14, 2008


LTC Comment: All hopes for a bigger and better home and community-based services (HCBS) infrastructure for long-term care rest on private LTCI as Medicaid reneges on promises. Details after the ***news.***

*** MORE MEDIA FOR LTC TOUR. Check out "Long-term Care Reform Tour stops in Plymouth" here. Want this kind of publicity for your business? Then invite the National Long-Term Care Consciousness Tour to visit your town. Plan an event. Invite the media. Steve Moses and the Silver Bullet of Long-Term Care will do the rest. Contact Damon at 206-283-7036 or for information on all the possibilities. ***

*** NEW YOU-TUBE FEATURE. We've just posted a slide show of the National Long-Term Care Consciousness Tour's progress to the tune of "I've Been Everywhere." Check it out. Special thanks to MetLife's Sara Kneisel for compiling the original which Damon adapted for this posting. Here's a partial list of places I've delivered LTC Tour presentations:

Tampa, FL; Naples, FL; Fort Myers, FL; Deerfield Beach, FL; Miami, FL; Orlando, FL ; Raleigh, NC; Chicago, IL; Greensboro, NC; Knoxville, TN; Nashville, TN; Columbia, SC; Birmingham, AL; Atlanta, GA; Duluth, GA; Pensacola, FL; Baton Rouge, LA; Houston, TX ; Dallas, TX; San Antonio, TX; Austin, TX; Hagerstown, MD; Washington, DC; West Chester, PA; Baltimore, MD; Princeton, NJ; Roseland, NJ; Bethesda, MD; Milwaukee, WI; Philadelphia, PA; Westport, CT; Hawthorne, NY; New York, NY; Windsor, CT; Portsmouth, NH; Latham, NY; Pittsfield, MA; and San Diego, CA.

Trouble is, the LTC Tour hasn't been everywhere yet. So check out the Tour's latest map and calendar. If I haven't been where you are yet, get me there! If I've already covered your part of the country, then fly me back in! The National Long-Term Care Consciousness Tour is too great an opportunity to miss out. Your support keeps the Silver Bullet of LTC in front of the media, consumers, policy makers and financial advisers all across the United States. ***



LTC Comment: Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance (, recently announced that three-fourths of all private LTCI claims are for home care or assisted living. Less than a quarter were for nursing home care. Read all about it in the AALTCI press release below.

What I want to bring to your attention here is the contrast with Medicaid financing of long-term care. According to a December 2007 Kaiser Fact Sheet (, Medicaid's distribution of long-term care spending is almost the opposite of LTCI's. Medicaid spends a little more than one-fourth of its LTC money on community-based services (HCBS) and the rest on institutional care.

Furthermore, although Medicaid financing of home and community-based services has been skyrocketing for many years, there's plenty of evidence that trend can't and won't continue much longer. Take what's happening in Louisiana right now. The state is spending a quarter of a billion dollars this year on HCBS, up from $9 million in 2000, nearly a 28-fold increase. The state (and many others) will have to cut back on HCBS. Read about it at (Thanks to Center for Long-Term Care Reform member and Regional Representative Claude Thau for bringing this article to our attention.)

State Medicaid programs are beginning to learn the lesson private LTC insurers have discovered over the past decade and a half. When you cover services people want--such as home care, adult day care, respite care and assisted living--instead of services they don't want--nursing home care--utilization and costs spike. It is a very good thing to provide HCBS, but it is NOT a way to save money as all the empirical evidence shows.

The only way Medicaid can afford to offer HCBS is to first stanch the program's eligibility hemorrhage. Doing so would save enough money to fund positive incentives for responsible LTC planning and private financing alternatives like home equity conversion and long-term care insurance. For example, incentives for the use of reverse mortgages to fund LTC, above-the-line tax deductibility for LTCI, and nationwide education campaigns on the importance of LTC planning would further relieve the fiscal pressure on Medicaid, thus allowing the program to fund more HCBS.

Remember these facts. America lacks a strong HCBS infrastructure because Medicaid made nursing home care the dominant venue for LTC by making it virtually free starting in 1965. That crowded out a market for privately financed HCBS and private LTCI to pay for it. We are living today with the tragic results: a welfare-financed, institution-based LTC system in the wealthiest country in the world where no one wants to go to a nursing home.

Retrofitting a HCBS system through a bankrupt welfare program like Medicaid won't work. Ironically, such efforts actually impede real progress by further deluding a public already in denial about LTC risk and cost into thinking the government will pay for more and better services when it can't and won't. The real progress in building and financing a HCBS infrastructure for LTC is coming from the private sector.

Celebrate that! And make sure everyone you know or influence understands that it is true now and will be more true in the future that reliable access to quality long-term care at the most appropriate level of care depends on the ability to pay privately. Only if enough people plan responsibly to pay privately for their own care can Medicaid survive as a viable funder of LTC services for people in need.


Contact: American Association for Long-Term Care Insurance, Jesse Slome, Executive Director, Phone: (818) 597-3227, E-mail:

180,000 Americans Receive Long-Term Care Insurance Benefits

Industry Pays Out $3.5B In Claim Payments; New Claims Data Can Help You Plan

Los Angeles, CA - August 6, 2008 - Some 180,000 Americans with long-term care insurance policies were paid benefits in 2007, according to a just-conducted study released by the American Association for Long-Term Care Insurance ( This is the first time the total number of individuals on claim was gathered.

"The long-term care insurance industry paid out $3.5 billion in benefits to individuals last year," said Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance. The AALTCI compiled data from over 60 long-term care insurers who represent 98 percent of all policies currently in force.

"The risk of needing long-term care is higher than the risk of a serious car accident or house fire, but few people are aware of how many individuals and families already benefit from having purchased long-term care insurance," Slome notes. "Some 400,000 new policies were issued last year alone. As more individuals become aware of, and understand the importance of, planning for long-term care needs, the number of individuals and families deriving benefit from this coverage will only increase."

The Association's study of claims paid to individuals revealed meaningful information for those considering a long-term care plan. According to the study, 43.0 percent of claims paid in 2007 were attributed to home care. Nearly one-third (32.9%) of claims were for assisted living and 24.1 percent covered nursing home care.

"Most people associate long-term care insurance with nursing home care, but quite the opposite is true," explains Slome. "The vast majority of benefits paid today cover care at home or in an assisted living community." Over 97 percent of long-term care insurance policies sold provide some form of home care benefit (86% did in 2000 and 67% in 1995).

The Association study found that most individuals receiving benefits from their long-term care insurance policies are older. Nearly a third (32.3%) of new claims in 2007 began for individuals between 70 and 79, according to the Association findings. Over half (55.2%) began for those age 80 or over but 11.5 percent were for those between 50 and 69. The youngest individual on claim (a group insured) was 23.

Long-Term Care Planning Should Be Part of Retirement Planning

"Long-term care planning needs to be part of retirement planning. Because most individuals, unless guaranteed through a group, will need to health-qualify for coverage it's important to start planning when individuals are in their 50s," Slome adds. In 2007, the average purchase age for individual coverage was 58, a decline from the average purchase age of 67 as recently as the year 2000. An individual is far more likely to qualify for significant good health discounts offered by leading insurers when they are in their 50s than if they wait to purchase coverage until they're in their 60s.

The five most common reasons for a long-term care insurance claim, according to the Association, are Alzheimer's Disease, stroke, arthritis, circulatory issues or injury. "One in eight persons age 65 and over has Alzheimer's," Slome says. "The number of new cases is expected to increase to 450,000 a year by 2010 and to 615,000 new cases a year by 2030. It's time for individuals to start planning for care should they need it in the future."

Women comprise two-thirds of individuals on long-term care insurance claim and receive just over two-thirds of all claim dollars. "Women, especially those who are divorced, widowed or living alone, need to plan for the risk," Slome advises. "More than 70 percent of nursing home residents are women and almost two-thirds of formal (paid) home care users and informal (unpaid) care recipients are women."

Claim payments from insurers ranged in size, according to the Association. "Some of the largest open claims (those still being paid) ranged from more than $500,000 to just over $1 million with the claimants having received benefits for between 7 and 13 years," Slome reports. "Most people will be on claim for between one and three years but there are some really catastrophic situations that last far longer."

According to the Association, in 2007 a fourth (25%) of all individuals purchased a three-year plan of coverage (40% buy 4-5 years; 11% buy 6-10 years; and 18% buy unlimited protection).

# # #

The American Association for Long-Term Care Insurance is the professional organization serving both insurance and financial professionals as well as educating consumers nationwide. The Association's Website ( maintains a simple online "look-up" listing long-term care insurance professionals in each Zip Code. The Association established Long-Term Care Awareness Month (in 2001).


Long-Term Care Insurance: 2008 Claims Data Summary
Source of Information: American Association for Long-Term Care Insurance

Number of Individuals Receiving Claim Benefits (in 2007): 180,000
Total Value of All Claims Paid (in 2007) $3.5 Billion

Percentage of Claims Paid For (Individual Policies; 2007)

Home Care 43.0%
Assisted Living 32.9%
Nursing Home 24.1%

Claimant Age For New Claims Opened in 2007

Under age 50 0.5%
Age 50 - 59 2.5%
Age 60 - 69 9.5%
Age 70 - 79 32.3%
Age 80+ 55.2%

Youngest Claimant: Age 23 (a group LTCI policy). Another leading carrier has 87 claimants who are younger than 50

Top Causes of LTC Insurance Claim

Alzheimer's Disease
Nervous System

  Nursing Home Home Health
By Claim Count Alzheimer's (26.6%) Alzheimer's (17.6%)
By Average Payment Alzheimer's ($56,000) Stroke ($29,000)
By Length of Claim Alzheimer's (659 days) Nervous System (284 visits)

Source: 2008 LTCi Sourcebook, LTC Insurance Experience Report prepared by the Society of Actuaries