LTC Bullet: The Dark Before the LTCI Dawn

Thursday, July 23, 2009


LTC Comment: With sales plummeting, we ask "What hope for private LTC insurance?" We answer "Plenty!" after the ***news.***

*** CLASS ACT NEWS. Lots to share with you: links today, analysis later. Check out the New York Times "New Old Age" blog today titled "Congress Tackles Long-Term Care." The nursing home lobbyist who helped draft the legislation answers questions about it. For a contrarian viewpoint, read what nonpartisan experts from the American Academy of Actuaries have to say about CLASS in a press release and letter dated yesterday. To wit: "[T]he currently proposed benefit structure in the Community Living Assistance Services and Supports Act (CLASS Act) will require premiums that may exceed affordable levels for those in the intended population and is unlikely to achieve broad participation." Correction: we accidentally stated in Tuesday's LTC Bullet that CLASS Act benefits would be $50 per month. We should have said $50 per day. We've corrected the archived and LTC Blog versions. ***

*** STEVE MOSES says "I've had it with discouraging news about LTC insurance sales. Anyone who understands why LTC insurance has lagged up to now will also know why the product's sales are going to explode soon. I'm going to prove that prediction to current producers, prospective agents, and potential referral sources. LTC insurance is consumers' only line of defense against the impending collapse of America's social safety net. We need an army of educated, motivated, optimistic, and successful evangelists for responsible long-term care planning. Let's start recruiting now!" ***

*** INVITE Steve Moses to your next sales meeting. Bring him in for a webinar on why LTCI will take off soon . . . why the bottom's about to fall out of the social safety net . . . why agents and other advisors have a moral and fiduciary responsibility to get their clients protected for LTC. Consider this program the moral equivalent of a half-time pep talk backed up by hard evidence and irrefutable logic. It's free if you don't protect more people from LTC risk and earn more money doing it. Nothing to lose so call the Center for Long-Term Care Reform at 206-283-7036 to schedule the program. ***

*** 2009 SAVE MEDICAID LTC CAMPAIGN. Whatever happened with that "Save Medicaid" project the Center pushed early this year? It was derailed by a crazy federal policy that paid a windfall to state Medicaid programs NOT to fix eligibility problems that have exploded costs and left state budgets in ruins nationwide. Watch for an LTC Bullet soon that explains what happened and why the time is right now to reach out to states with solutions to their LTC financing challenges. ***

*** REGIONAL REPRESENTATIVE of the Center for Long-Term Care Reform. How would you like to represent the Center in your area? Be our voice and presence in your home town. Submit op-eds Steve Moses writes to the local newspaper. Reach out to their editorial boards. Present our project proposals to think tanks. Meet with state Medicaid officials and show them how we can save them money while improving LTC access and quality. Regional reps will meet online once a month to strategize and plan. Steve will lead the discussions and provide the content. Your investment is a premier membership in the Center ($500 per year) and a few hours a month of professional time. Your return on investment is recognition as a local go-to expert on long-term care financing and more business. ***

*** LTC GRADUATE SEMINAR WEBINAR. Watch for a brand new, fully updated, live presentation of our 8-hour LTC Graduate Seminar coming soon online in webinar form. We're working on this project now and hope to offer the program as early as August. But don't worry. If you're on vacation or you miss one or more of the weekly sessions, you'll be able to make them up or take the whole course anytime you like. Keep an eye out for announcements in forthcoming LTC Bullets and LTC E-Alerts. ***

*** NEW WEBSITE WEBINAR. Steve says: "Back in 2007, it took me a whole hour- long webinar to show and explain all the multitudinous features available on the Center's free website and in "The Zone," our password-protected companion site for members only. That presentation was a big hit. Even long-standing Center members remarked they had no idea the website was so chock full of valuable information." We're going to update and redo that popular introduction to Watch for an announcement when it's ready. ***



LTC Comment: The news is bleak.

According to the "Eleventh Annual Individual Long Term Care Insurance Survey" compiled by Claude Thau and Bob Darnell and reported in the July 2009 issue of Broker World magazine:

  • LTCI sales decreased in 2008. Twenty-one participating carriers sold $528,305,282 of new paid annualized stand-alone LTCI in 2008, down 6.7 percent from $566,316,941 in 2007. We estimate the overall industry also was down 6.7 percent, from $670,000,000 in 2007 to $625,000,000 in 2008. Carriers participating in this survey represent approximately 85 percent of the 2008 sales.
  • New insured lives dropped 8.5 percent from 261,277 in 2007 to 239,084 in 2008.

And getting bleaker.

"Individual long-term care insurance sales fell by a third in the first quarter [of 2009], as consumers chose to spend their money on more immediate needs.

"The 34% decline for the first quarter when compared to the fourth quarter in 2008 marks the second straight quarter where premium showed double-digit declines, according to LIMRA's Individual Long-Term Care Sales survey."

Source: "LTC insurance sales shrink for second straight quarter." Insurance and Financial Advisor, June 16, 2009,

OK, so where exactly is the silver lining on these dark and stormy clouds?

The good news for LTCI is the bad news for the product's biggest and only major competitor: Medicaid.

Medicaid crowds out 2/3 to 90 percent of the potential market for private long-term care insurance. (Brown and Finkelstein at

That's true because Medicaid income and asset limits are extremely generous, elastic and easily stretched to include upper middle class and affluent people, not just the poor.

What's about to change is that Medicaid cannot continue being the 800-pound gorilla of LTC financing that stamps out most of the market for private LTCI.


Medicaid LTC has a dismal and rapidly worsening reputation for problems of access, quality, reimbursement, discrimination and institutional bias.

State budgets are under water already and Medicaid, especially its LTC component, is a major culprit. So Medicaid LTC, bad already, will get much worse.

"Stimulus money" ($87 billion) that is propping up state Medicaid programs with supplemental federal matching funds will end 12/31/10, pushing Medicaid LTC off a fiscal cliff.

Social Security income of Medicaid LTC recipients that currently supplements state Medicaid expenditures will drop by 24 percent if the program's $17.5 trillion unfunded liability isn't fixed.

Generous Medicare LTC reimbursements, that help make up for dismal Medicaid reimbursements, are unsustainable because Medicare's unfunded liability is now $89.3 trillion and Medicare LTC reimbursements will be cut when Congress cedes control to the Executive as the Administration has proposed.

The whole story, including the proof, is much too complex to explain here. But the bottom line is that private long-term care insurance is about to take off.


I used to say "certainly within 20 years, maybe as soon as ten years."

Now I'm confident to say "certainly within ten years, maybe as soon as three to five years."

"Great," you say, "but I need help right now!"

OK, help is on the way. The Center for Long-Term Care Reform is developing a whole series of tools and training to help you take full advantage of the coming explosion in long-term care insurance sales. See the ***news*** section above for some examples.

But, for now, keep these factors in mind:

  • If you want to maximize this opportunity, don't wait for the market to take off. Get involved now and learn what you need to know to show consumers the REAL REASON they need LTCI.
  • Get TRAINED UP so you'll do better specializing in long-term care insurance now and you'll do marvelously well when the market takes off. Get in on the ground floor.

In other words, don't wait for the race to begin before you work out, get in shape and position yourself at the starting line.

Stay tuned in coming weeks to follow our exciting plans.