LTC Bullet: The Gathering LTC Storm

Monday, November 15, 2010


LTC Comment: We step away from LTC Bullets and LTC E-Alerts for a week and all hell breaks loose. Our review and analysis after the ***news.***

*** IN A TOWERING FEAT of statistical prestidigitation AALTCI president Jesse Slome claims "LTCI hits 50 percent market penetration mark." So, fold your tents and go home? Not at all: "[I]nsurance professionals should stop wasting time marketing to those who can't or won't buy. Focus on the remaining 50 percent of the market and you'll have success. Happy Long Term Care Awareness Month!" ***

*** SCHOLARSHIP! Get $800 off the "Early Bird" (before 1/13/11) $895 individual registration fee to attend the 11th annual "InterCompany Long-Term Care Insurance Conference." Discounted room rates of $129 are available at the Atlanta Marriott Marquis venue and you can take in a special Sunday sales training event starring Jesse Slome (AALTCI), Harley Gordon and Skip Liddell (CLTC) and Margie Barrie (LTCP). The requirement to qualify for this scholarship is $50,000 of direct LTCI premium production either in 2009, or in the twelve months prior to application. This is a great deal; jump on it. Details and application here. ***

*** VIRTUAL TOUR. Take our "virtual tour" of the Center for Long-Term Care Reform's website here or click on the "Take our virtual tour" link toward the top of You'll find a treasure chest of helpful information in both our public site and our members-only section, AKA "The Zone." Long-time members and supporters of the Center tell me after they view this program that they had no idea how much valuable content the website contains. Don't miss out if you're already a member. And if you've not yet joined the Center, you will if you take this tour of the website. Need your user name and password? Or want to join? Just contact Damon at 206-283-7036 or ***


LTC Comment: I spent last week in New York state interviewing experts on long-term care services and financing. The "Empire State's" Medicaid program is exploding in cost. LTC providers are pinched by reimbursement cuts and choked by excessive regulation. LTC insurance market penetration disappoints despite a big tax credit and LTC Partnership incentives. The public remains asleep about LTC risk, especially downstate. Policy makers fear the fiscal abyss coming when lucrative supplemental federal matching funds end July 1, 2011. I'll be writing our New York report over the next three weeks.

But while I was away, big forces were at play. Consider these for example:

(1) The "Deficit Commission's" two co-chairs issued a teaser report to test the political waters. Check out the full 50-page document here. One of their proposals is to . . . "Convert The Federal Share Of Medicaid Payments For Long-Term Care Into a Capped Allotment." [page 35] That would save $9 billion in 2015 and $89 billion over the period 2012 to 2020. I was surprised and pleased that LTC made the cut, but this is the only mention of "long-term care" in the "Co-Chairs' Proposal."

"Capped Allotment" evidently means a block grant. Turning off the unlimited flow of federal matching funds with a block grant would limit states' spending on Medicaid, encourage them to budget more sensibly and likely increase the need for middle class people to plan more responsibly for long-term care. That is in keeping with "Guiding Principle" #5 on page 5 of the co-chairs' proposal:

"Protect the Truly Disadvantaged:

  • Focus benefits on those who need them.
  • Ensure an affordable and sustainable safety net."

Now, faithful readers, where have we heard that before?

(2) Something has to be done soon about exploding Medicaid LTC expenditures because states are beginning to talk seriously about bailing out of the fiscally unsustainable program. Read about it in "Battle Lines Drawn Over Medicaid in Texas." Last year, Dennis Smith, who ran Medicaid under the Bush Administration, and Edmund Haislmaier of the Heritage Foundation estimated states' savings would "exceed $1 trillion over 10 years" if all dropped out of Medicaid. Read their analysis here. Read more on the Heritage blog here. When Medicaid worries reach critical mass, withdrawal from the program, called the "nuclear option," becomes a serious choice.

(3) With Medicaid imploding, as we've predicted would happen when the Age Wave crests, surely private long-term care insurers will double down. The American public needs LTCI protection more than ever if Medicaid, the dominant LTC payer, is going down for the count. But alas, there is news on that front too and it is not encouraging: "MetLife exits long-term care insurance market." Another LTCI carrier throwing in the towel does not bode well. Though a MetLife executive assures me they are not abandoning the battle, only modifying their attack. We'll see.

(4) But maybe CLASS (the Community Living Assistance Services and Supports program) will fly in to "save the day" like "Mighty Mouse?" Well, maybe not. Peter Gelbwaks of the National LTC Network asks "Could Election Results Spell End of CLASS, a Fed-run Long Term Care Insurance-like, 'Employee Benefit'?" Even Minnesota Public Radio has raised doubts about the CLASS program's survival in "GOP, with some Dems, targets long-term care provision."

What you are seeing in the headlines these days is what we've predicted for decades would happen when time runs out for America's entitlement programs. Designed to support a small generation by taxing a big generation, they're unsustainable when the tables are turned. A small generation cannot support a big generation (boomers) in the same way.

So, we're finally seeing the perfect storm brewing that will sweep away unrealistic expectations (i.e., "denial") that somehow government will provide for the long-term care needs of the boomer generation.

Lesson learned? Start now to plan for less public support and more personal responsibility, not only for LTC planning, but for retirement income and acute medical care as well.

And if you're in business to advise prospects and clients, take heart. You're their last line of defense if government allows entitlement programs to self-destruct. Every person you protect is one less to fall into the fraying safety net. You truly can do well by doing good.