LTC Bullet: The Savage Truth on LTCI

Monday, September 15, 2008

Springfield, Illinois (LTC Tour Mile 18,932; State #27)

LTC Comment: Nationally syndicated financial columnist and author Terry Savage reflects today on the meaning of LTC insurance price hikes. Details and a link to her Chicago Sun-Times column, after the ***news.***

*** LTC TOUR TELLS LTC STORY. Read today's LTC Bullet and you'll understand why the Center for Long-Term Care Reform's 2008 National Long-Term Care Consciousness Tour is so important to get the truth to consumers, policy makers and the media about the crisis in long-term care financing. Best news of all: LTC Tour sponsorships are now available for one-third the original cost. Get your company's signage on the Silver Bullet of Long-Term Care. Get your two-sided color ad in our elegant presentation packet. Sponsor speaking engagements for Steve Moses at no additional cost. Read all about it in "LTC Bullet: LTC Tour End-of-Year Special" at Then contact Damon at 206-283-7036 or for details. Your company's logo can be on the Silver Bullet at the next "Fast Signs" franchise we pass in plenty of time for LTC Planning Month in October ( and LTC Awareness Month in November ( ***

*** REGIONAL REPRESENTATIVES of the Center for Long-Term Care Reform are the mainstays supporting and benefiting from the National Long-Term Care Consciousness Tour. They organize speaking engagements for Steve Moses; they attract media attention to the LTC Tour; they gain exposure as LTC planning leaders in their communities and markets. Put up $500 of "earnest money" to show you're serious and I'll commit to bring the Silver Bullet of LTC to your town and spend a day with you promoting responsible long-term care planning. Check with Damon first at 206-283-7036 or to see where you'll fit in the LTC Tour's schedule and itinerary. He'll put you in touch with me to firm up our plans. If you're not located on the LTC Tour's remaining geographical path, you can still sponsor LTC Tour events in your town. Ask how. ***

*** LTC GADFLIES. The LTC Tour idea started last year with our invitation to serious LTC planning specialists to become LTC Gadflies. In other words, donít take it lying down. Stand up and fight for responsible long-term care planning and rational LTC public policy. Here's what I said in "LTC Bullet: LTC Gadflies" on January 23, 2007:

"Don't you think it's about time somebody upset the long-term care status quo by asking some tough questions and speaking truth to power? Join the Center for Long-Term Care Reform's 'LTC Gadfly' brigade. Here's what we have in mind.

"I'm going to 'take the show on the road' in 2008. Call it the 'National Long-Term Care Consciousness Tour.' Details will follow in the months ahead. But here's the basic idea:

"I'll visit each of six zones of the continental United States for a month or two during the presidential election year. While there, I'll work with Regional Representatives of the Center for Long-Term Care Reform to raise the long-term care issue with politicians, policy makers, the public and the media.

"We'll ask the tough POLICY questions. Who should pay for long-term care? How can Medicaid be a safety net for the poor AND the main LTC payor for nearly everyone? Where will the money come from for public financing when boomers retire and draw down Social Security, Medicare and Medicaid?

"We'll ask the tough PERSONAL questions. Who will pay for YOUR long-term care? Are you insured for that risk? Have your parents or grandparents used Medicaid for LTC? Did you or they consult a Medicaid planner? Did you pay Medicaid back out of the estate or take the windfall for yourself? . . .

"We'll rock the boat but we'll do it with HUMOR and GOOD WILL."

I've done exactly what I said I'd do. But the LTC Tour still needs your help. If you believe in the LTC Tour and what we're trying to achieve, please vote for its success by sending a check to the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, Washington, 98109. Be a LTC Gadfly! ***



LTC Comment: Terry Savage is a highly regarded financial columnist and the author of several best-selling books on retirement planning. She may be the strongest advocate in the national media for responsible long-term care planning.

So if she "savaged" private long-term care insurance in her column, it would be a disaster for that sputtering business, the only reliable alternative to public welfare dependency for most aging Americans.

By the end of last week, however, Terry Savage was about to do just that. She was livid about the latest premium increases on in-place business declared by leading LTCI companies.

You can see what she actually wrote in her weekly Chicago Sun-Times "Savage truth" column today here.

Here's a taste:

"Just when America was warming up to the idea of purchasing long-term care insurance to protect family assets from the devastating costs of custodial care, the three largest insurance companies have shaken up the market by raising prices on existing policies, not just on policies to be sold in the future. . . .

"Those who bought early to 'lock in' lower prices are now being surprised by significant premium increases. . . .

"In effect, the insurers are admitting they made a pricing mistake. The only other explanation is that they priced policies artificially low to compete for business. . . .

"It's quite likely that state insurance commissioners will approve the requested increases. Unfortunately, a side effect is likely to be that fewer people will buy long-term care insurance. Then, when the real burden of caring for aging baby boomers hits in the next 10 or 15 years, the states will have to shoulder the cost through their Medicaid programs as boomers run out of their own money."

This column could have been a devastating indictment of private long-term care insurance. But Terry Savage is a consummate professional. She did not publish her first emotion-laden response. Rather, she sought an explanation for why LTCI premiums are increasing.

She asked David Acselrod, MetLife vice president, long-term care and critical illness insurance, who said: "Quite simply, we expect to pay out substantially more in claims than we originally anticipated. Some of the assumptions that drive LTCi pricing include policy lapses, interest rates, the number of people requiring care and the duration of care, to name a few. Following a review of our experience, we concluded that we had to make changes to ensure that we are pricing the products appropriately on behalf of all of our policyholders."

She asked Jesse Slome, executive director of the American Association for Long-Term Care Insurance (, who emphasized the important role LTCI plays in funding long-term care: "The total value of claims paid in 2007 [for 180,000 beneficiaries] was $3.5 billion -- money that families didn't have to pay, and money that taxpayers didn't have to pay for impoverished seniors."

Finally, the Silver Bullet of Long-Term Care and Steve Moses were passing through Chicago on the Center for Long-Term Care Reform's 2008 National Long-Term Care Consciousness Tour when Ms. Savage was preparing this column. She asked me for comment on rising LTCI premiums and included this in her column:

"Steve Moses, president of the Center for Long Term Care reform, a national policy think tank, defends private insurers, saying: "The government has not set aside any money for the future to back up its promises that Medicaid will care for frail seniors. At least, the private insurance industry has bitten the bullet and is increasing prices so they will have adequate reserves to pay the claims when they start coming in."

"Moses suggests the market for private LTC insurance will never expand, as long as the government is 'giving away' the same service insurers are trying to sell. He points out that the middle class and even the affluent have learned the tricks of qualifying for Medicaid nursing home coverage.

"They'll be surprised when they learn that Medicaid provides care primarily in nursing homes that will only become more underfunded and understaffed. Moses says the burden of long-term care needs will crush the system, wiping out the possibility of such government-provided benefits in the future."

Bottom line, as usual, Terry Savage delivered a very thoughtful column, warning of real risks, but providing excellent advice:

"Buying long-term care insurance still makes sense. . . . Don't bury your head in the sand about the very real possibility that in your old age you'll need help dressing or bathing or getting out of bed. Can you count on your children to be there for you? Would you even want them to do that? Or will you run out of money trying to pay for care on your own? Those are questions to ask yourself as you consider the value of long-term care insurance. And that's the Savage Truth."