LTC Bullet:  Claude Thau Has Your Back

Friday, September 30, 2016


LTC Comment:  Erroneous research that leads to damaging media often goes uncorrected.  Not this time.  Details follow.



LTC Comment:  The Boston College Center for Retirement Research (BC CRR) does not have a very high opinion of private long-term care insurance.  They concluded, for example, that people are better off planning for Medicaid than buying LTCI. The national media slavishly repeats BC CRR’s conclusions as if they were unassailable.  That negative publicity has hurt LTCI producers and denied needed LTC protection to untold numbers of innocent consumers.

We identified and rebutted errors in the BC CRR research in previous LTC Bullets, including “LTC Bullet:  How Careless Economists Boosted LTC Risk,” published December 12, 2014 and “LTC Bullet:  Another LTCI Hit Job?,” published October 9, 2015.  Read those two Bullets and you’ll come away with no uncertain idea about our opinion of BC CRR’s sloppy, ideologically biased, inaccurate, misleading and highly damaging work.  I guess you could say, we’re the “bad cop.”

Claude Thau is the good cop.  Claude reached out to the economists at BC CRR and invited them to undertake a rational dialogue about the same two research papers we critiqued in our LTC Bullets.  Calm, cool and collected, Claude respectfully challenged their findings and positions.  He made them aware of newer data and other angles from which to view the data that only an accomplished actuary with expertise in the specialized field of long-term care would know.  He patiently interacted with the BC CRR researchers for months. 

We are all now privileged to learn what Claude Thau discovered and how the BC CRR researchers responded to the information he provided.  The Society of Actuaries published Claude’s article titled “A Response to RecentLapse Research” in the current (August 2016) issue of Long-Term Care News.  I strongly recommend that everyone concerned about accurate LTC research and the future of private long-term care insurance read this important article in full.  What follows are excerpts to give you the flavor of the piece, and I hope, to motivate you to read it.


Excerpts from Claude Thau, “A Response to RecentLapse Research, Long-Term Care News, Society of Actuaries, August 2016:  (Footnotes omitted, but you can find them in the original.)

“The Boston College Center of Retirement Research (BC CRR)has published articles relating to long-term care insurance(LTCI), including a November 2014 study, ‘Long-Term Care:How Big a Risk?’ and an October 2015 study, ‘Why Do People Lapse Their Long-Term Care Insurance?’” . . .

“Unfortunately, these studies published conclusions that I and other LTCI professionals consider unjustifiable. When asked by several people to comment on these studies, I engaged the researchers to try to assure my comments are fair and intelligent. I contacted the researchers in May 2015 regarding the 2014 study and in November 2015 regarding the 2015 study and I can report the following progress:

1. The researchers intend to update their 2014 study to address its reliance on rehabilitation data. It is not clear whether the revised paper will clarify or modify other information which concerned LTCI professionals.

2. On May 13, 2016, after considering my concerns and speaking with Marianne Purushotham and Cindy MacDonald (experts on the SOA lapse studies), the researchers published a brief revising their 2015 study. The researchers' brief has bridged our differences as to lapses, but their comments about cognitive lapses still seem to be unjustified.

3. The researchers have stated that their future papers regarding LTCI will be vetted with LTCI industry experts prior to publication.

4. New related research is being contemplated by the SOA LTCI Section Council.”  . . .


“BC CRR's 2015 report was widely reported. People who read that report think that LTCI policyholders are 50 percent more likely to lapse than data suggests (and as noted above, today's buyers are even less likely to lapse).

“They also are likely to think people lapse because of being cognitively impaired. They may falsely conclude that insurers take advantage of these policyholders and that regulators do nothing about it.

“I urged the researchers to mention the safeguards against cognitive lapses. They responded, ‘We are aware of these provisions but are unable to incorporate their effects in our analysis.’ Although I told them I was not asking that they ‘incorporate their effects’ but rather that they simply acknowledge the efforts, they chose, once again, not to mention those provisions in the revised brief.

“The researchers' November 2014 paper, ‘Long- Term Care: How Big a Risk?’ essentially concludes that many more people need LTC than was previously thought, but that the need lasts a short time, so LTCI is not valuable. My primary concerns are that the researchers' analysis is based primarily on rehab, which of course is common and short, but has nothing to do with LTC. “Moreover, it is not clear that they have included home care and assisted living facility care in their analysis.

“My interaction with BC CRR highlights the value of actuaries fostering dialogue with professionals performing related work. Timely discussion can contribute to clearer conclusions and more accurate consensus.

“Claude Thau is president of Thau, Inc. He isa consultant and wholesaler, and he can be reached at”


LTC Comment:  We all owe a debt of thanks to Claude Thau for donating so much of his valuable professional time to reach out to the Boston College researchers with sincerity, good will, and exceptional expertise.  Thanks also to the Society of Actuaries for its work on behalf of long-term care insurance and for publishing Claude’s article.  If truth does win out in the end, it will likely be because of the hard work, usually unrecognized and under-appreciated, of these dedicated professionals.