LTC Bullet: Private LTC Insurance Vindicated

Tuesday, April 27, 2010


LTC Comment: The national media and ideologically driven analysts love to bash LTCI based on anecdotes but solid longitudinal data belie their criticism. New evidence after the ***news.***

*** CPA OUTREACH. Ever need to reach out to Certified Public Accountants with your message about long-term care planning? Keep this video in mind as an ice breaker: Read more about it in "LTC Bullet: We Touch Thousands of CPAs with Professional Video," Wednesday, September 24, 2008" here. The same producer has invited me to shoot a similar program aimed at educating CPAs about reverse mortgages. All we need is a sponsor to enable me to do the show in New York. Any takers? Contact Steve Moses at ***

*** MED-SUPP MEETING scheduled. Significant changes impacting the Medicare Supplement Insurance (Medigap) market will be the focus of the Fourth Medicare Supplement Insurance Forum. The conference takes place October 11-13, 2010 at the Hyatt Regency, Scottsdale, Arizona. "This will be the first opportunity to evaluate the launch of new Med Supp plans M and N as well as evaluate the impact of health care reform," explains Jesse Slome, director of the American Association for Medicare Supplement Insurance, the conference organizer. "Changes to MedAdvantage are creating major sales opportunities for Medigap plans." The conference program is available online or call the Association for more information at (818) 597-3205. ***

*** SKY RADIO AND CNN AIRPORT NETWORK want to cover the May 13 "Financial Impact of Health Care Reform on Long-Term Care Industry" audio conference on which Steve Moses will be a panelist but they require a paid sponsor. Your Center for Long-Term Care Reform never pays for media access; we only do "earned media." But in case you or your company would like to sponsor this coverage ($2,995), let me know at and I'll pass your inquiry on to the Sky Radio Network's Senior Producer who contacted us. ***



LTC Comment: Three years ago last month a New York Times article--front page, above the fold, no less--sucked the air out of the LTCI industry's big annual conference on its opening day in Dallas.

Remember "Aged, Frail and Denied Care by Their Insurers" by Charles Duhigg? Based on sparse anecdotes from a few claimants of a couple LTCI carriers, the author smeared a whole industry.

Many responded defending private long-term care insurance against this blatant muckraking. For example, the Society of Actuaries re-published my piece titled "125,000 LTCi Policies and No Claims Payment Problem" in its Long-Term Care News letter (pages 11-12).

Nothing combats yellow journalism, however, like hard, longitudinal data interpreted by objective analysts in respected, peer-reviewed, academic journals. I'm happy to say we have a new example to report of just such data and analysis.

In a forthcoming issue, The Gerontologist will publish "Private Long-term Care Insurance: Value to Claimants and Implications for Long-term Care Financing," by

Pamela Doty, PhD, Marc A. Cohen, PhD, Jessica Miller, MA, and Xiaomei Shi, MA.

But you need not wait to read their encouraging findings about the critical role private long-term care insurance plays today in the lives of claimants and their families. Find all the details in a 55-page report on the U.S. Department of Health and Human Services website here.

Following is the "Executive Summary" from "Private Long-Term Care Insurance: Following an Admission Cohort Over 28 Months to Track Claim Experience, Service Use and Transitions." We've bolded some highlights to catch your eye.



This is the third in a series of reports based on longitudinal information collected from a sample of 1,474 individuals with long-term care (LTC) insurance, who notified their insurance company that they were receiving or intended to receive paid services for which they filed, or would be filing, a claim under their LTC policy. These individuals comprise "an admissions cohort" of new LTC service users. This admissions cohort has been tracked over a period of 28 months. Every four months after the initial in-person baseline interview, these individuals were contacted and completed a telephonic assessment that focused on changes in disability status, service settings, preferences, experience with the claims filing process, use of care management services and service setting transitions. The purpose of this report is to present findings from the analysis of longitudinal data collected over this 2 1/2 year period. We also report on individuals' satisfaction with providers and their experiences with their LTC insurance. For a more detailed explanation of the larger study, as well as a discussion of findings from the baseline interviews, please see the report entitled "Service Use and Transitions: Decisions, Choices and Care Management among an Admissions Cohort of Privately Insured Disabled Elders" located at:

Highlights and key findings are presented below.

Sample Distribution

Most of those using paid care throughout the study period were residing at home or in assisted living facilities.

The proportion of sample receiving care in any of the service settings does fluctuate over time suggesting that there are transitions over the period, although not of a very large magnitude.

The mortality rate at the first Wave of telephone interviews, four months after baseline is high (13%), which suggests that at least one in ten "new admissions" to the LTC system is very sick, and not likely to be long users of care.

By the end of the study period, 39% of the original sample was deceased.

Socio-Demographic Characteristics

As expected, the age and gender profile of paid care recipients during the follow-up period mirrors that at baseline.

Those in assisted living facilities remain the oldest and most likely to be widowed while those receiving paid care at home remain the youngest.

The largest increase in the proportion of those age 85 and over is in assisted living.

Functional Characteristics

Disability levels remain fairly constant across the Waves and service settings, with those residing in nursing homes being the most disabled and those in assisted living the least disabled.

Those who started out at baseline needing help with less than two activities of daily living (ADLs) remain the least disabled over time, increasing to an average of 2.47 ADL limitations by the end of Wave 7.

For the most part, people are deteriorating over time as is evidenced by the fact that the average number of ADL and instrumental activities of daily living (IADL) limitations increases over time.

The exception to this general pattern is found for those who are most disabled (had between five and six ADL limitations at baseline). While this group remains the most disabled, the average number of ADL limitations drops by Wave 7 by almost a full ADL (from an average of 5.31 to 4.33), which is most likely due to the fact that the sickest or most disabled in this group are dying and the healthiest (in a relative sense) of this group are remaining in the sample.

Satisfaction with Service Providers

When looking at satisfaction as a dichotomous variable, satisfaction rates in all service settings across all Waves are very high.

When focusing on those who reported very high satisfaction levels, however, nursing home residents are least likely to report that they are very satisfied and this group has the largest decline in satisfaction over time -- with less than half reporting that they are very satisfied by the end of the follow-up period.

Use of Care Management

While the use of care management was low at baseline (19%, 11% and 7% for home care, nursing home and assisted living facility respectively), there is a significant increase in the use of care management at Wave 1, which is when individuals are putting specific services in place.

At Wave 1, 35% of home care recipients, 20% of nursing home residents and 12% of assisted living facility residents reported using a care manager within the last four months.

Almost all of those who used a care manager found them helpful, responsive to their needs and felt that the care manager spent enough time with them.

Experience with Filing a Claim

Ninety-six percent of paid care receivers reported filing a claim by the time of the first follow-up interview.

The majority of claims for which a decision was rendered were approved -- 95.7% at Wave 1, with 4.3% reporting they were denied benefits.

At the end of Wave 4 and through Wave 7, the adjusted denial rate (total denials over the period) drops to 2.4%. The remainder of those who reported initial denials at Wave 1, who were not approved by Wave 4 and remained in the sample, were not receiving any paid care.

Those who were denied state that they were told they were not disabled enough to qualify for benefits yet. In fact, they only have an average of 0.74 limitations in ADLs at baseline and 1.8 at Wave 1.

Of all those who submitted claims at Wave 1 (both approved and denied), 94% report having no disagreements with their insurance company or that their disagreements were resolved satisfactorily.

Effect of Having a LTC Insurance

At Wave 1, roughly three-quarters of claimants agree that having their insurance made it easier to obtain needed services and that number increases to a high of 89% by the fifth follow-up interview and levels out at 80% by Wave 7.

The majority of claimants also agreed that having their LTC insurance policy allowed them greater flexibility with the choice of care setting.

A majority at all Waves stated that they would have to decrease the amount of paid care they receive if they did not have their policies.

Movement and Transitions

"Movement" is defined as changes in service settings (e.g., to and from receiving care at home, in assisted living or in a nursing home. "Transitions" include not only movement across care settings but also change from using no paid care to receiving paid care and vice versa.

Those who moved to an assisted living facility at baseline were the most likely to remain there over time.

Those who began using paid care at home at baseline were the most likely to stop using paid care over time and had the lowest cumulative mortality rate over the 28 months.

Nursing home residents had the highest overall mortality rate -- close to two in five were deceased after 28 months, with 21% of these dying four months after entering the nursing home.

The highest rate of transitions occurred at Wave 1 with 37% of the sample either changing care settings or going from paid care to no paid care or vice versa.

Of those receiving paid care, the majority had only one transition during their involvement in the study (84%), while 13% experienced two transitions and only 4% changed care settings three times.

For those who were followed for the entire 28 month period, 30% reported no change in care setting or service use, and 51% reported experiencing at least one transition.

The average number of transitions for those observed at all points in time was one.

For those who do transition, they are most likely to be younger, less disabled (both functionally and cognitively) recipients of paid home care and report being less than satisfied with their initial choice of service provider.

Multivariate Analysis


Those who have more ADL limitations and are 85+ are more likely to die, holding other variables constant.

Compared with people who were clinically assessed as "expected to improve," those individuals whose condition was assessed as worsening, were about three times more likely to die during the study period.

Transitions among paid care users

Level of functional disability and age are negatively related to the probability of having a transition -- that is the older and/or more functionally disabled one is, the less likely it is that one will move between care settings.

All other variables held constant, the odds of transition for nursing home and assisted living facility residents are 24% and 22% of the odds of transition for home care recipients.

Those who are cognitively impaired are 50% less likely to transition when compared to their non-impaired counterparts.

Individuals who are receiving unpaid care are 1.31 times more likely to transition to an alternative care setting than are those without such care.

People who are very satisfied with their care or who believe that their care needs are being met are less likely to transition to a different care setting than are those who are dissatisfied or report unmet need.

LTC Expenditures

We estimated the average monthly expenditure for each person who was surveyed at least twice in the sample by assigning costs to current service use. The figures were computed for 3,604 person-waves of data and then an average was calculated for each service setting. We then used a fixed-effect model to analyze the data.

Nursing home residents incurred the highest monthly cost ($5,561) whereas assisted living residents had the lowest average costs -- $2,653.

Home care recipients spent $3,601 and those individuals who were not receiving paid care at the baseline interview but subsequently began using care, spent an average of $1,746.

Disability status is also related to expenditures. The more disabled one is, the higher the service costs incurred.

The independent effect of an additional year of age is to increase average monthly expenditures by about 10%.

Opinion surveys ( indicate that most older Americans hope to continue to reside "at home" after developing LTC needs, if possible. Alternatively, if they cannot live at home, they hope to be able to make one move to a specialized elder care setting (preferably "assisted living") and then "age in place." Most elders would prefer to avoid having to move to a nursing home unless the level of care they need requires that they be in this setting. For most private LTC insurance claimants, their comprehensive insurance coverage facilitates their ability to make choices about when and where to receive care in accord with such preferences. The findings presented here support these notions. The vast majority (88%) of the private LTC insurance sample who started out at home were able to remain at home for the entire period of their participation in the study,1 and for those who remained in the sample over the 28 month period, this proportion was almost equally as high -- 81%. Of those who did move to a specialized residential elder care setting (assisted living or nursing facility), the great majority (85%) experienced only one such move throughout their participation in the study and it was most often to an assisted living facility. A much smaller proportion of the sample choose to use nursing home care, with less than one-quarter (21%) of the sample reporting a move to a nursing home at some point during the study period.

Overall, this study of private LTC claimants suggests that most individuals with insurance coverage for LTC are able to negotiate the service system with little or no help from a professional care manager. Most were able to obtain services that they thought met their needs and that they were satisfied (often very satisfied). This suggests perhaps that affordability not "fragmentation of the service system" or lack of availability of good service providers is the main barrier that the average elder in need of LTC faces and that insurance (assuming it is affordable) can be a solution to that problem. The one striking exception to this apparent conclusion is that LTC claimants in nursing homes experienced declining satisfaction with quality of care, which suggests perhaps that, even elders who can afford better quality care have difficulty finding nursing home care that they find satisfactory.

1 Participation in this regard is defined as the period over which a person continued to provide answers to the questions. For some this will be one Wave and for others all seven.