LTC Bullet: More KFF Data Misinformation

Friday, September 13, 2024

Seattle—

LTC Comment: Does KFF misunderstand, misinterpret, or misrepresent LTC insurance data? All three? See what you think after the ***news.***

*** ILTCI ’25 in Philly next March wants to hear from you. “Call for Speakers/Producers & Session Ideas or Topic Requests. The ILTCI Board and the Program and Education Committee are already working on bringing our attendees the best conference ever for 2025! Session development is just beginning now. If you have any topic requests, session ideas, or if you'd like to help by producing or speaking at a session this year, then now is your time! Please use this link for submissions. Registration for ILTCI 2025 will open sometime in October. We're now accepting applications for exhibitors and sponsors! See you in Philly in March!” ***

*** JOIN the Center and receive all our LTC Bullets and LTC E-Alerts. Become a premium member and get our daily LTC Clippings as well. Your Center for Long-Term Care Reform exists to promote policies that deliver quality LTC to all Americans. We conduct research and pursue advocacy toward increasing private financing and relieving public LTC spending with the goal to improve funding and quality for all levels and venues of long-term care. Join our campaign here. Check out all the individual and corporate membership options here. Read our 1384 LTC Bullets, organized by topic and chronologically, here. Following are sample LTC Clippings. Help continue the good fight. Support the Center for Long-Term Care Reform.

*** LTC CLIPPING SAMPLES:

9/4/2024, “You Aren’t as Sick as Government Claims,” by Charles Silver and David Hyman, Wall Street Journal
Quote: “Criminals and legitimate providers—hospitals, physician groups, drug manufacturers, pharmacy benefit managers and insurers—raid the Treasury in other ways too. Within the past few weeks, it was reported that crooked brokers and insurers are helping five million ObamaCare enrollees enjoy $20 billion a year in premium subsidies by misrepresenting their incomes, and that half or more of Medicaid’s annual $217 billion budget for long-term care goes to people wealthy enough to cover their bills.”
LTC Comment: My July 1 “Paragon Prognosis” titled Medicaid’s $100+ Billion Leak was the source for this Medicaid reference.

9/2024, “Beyond the Numbers: Assisting Clients with LTC Concerns,” by Danielle Andrus, Journal of Financial Planning
Quote: “There are a lot of statistics that planners can employ to illustrate the risk that their clients will face regarding future care needs. A common one is that 70 percent of people who live to age 65 will need paid long-term care at some point. Bill Comfort, owner of Comfort Long-Term Care and director of training for the Certification in Long-Term Care (CLTC) designation and continuing education program, believes this overstates the true risk of needing care. ... Margie Barrie, a long-term care insurance specialist with ACSIA Partners, believes that whether you buy an insurance policy or not, everyone needs to have a plan for long-term care.”
LTC Comment: This article by the editor of the Journal of Financial Planning cites LTCI industry experts Bill Comfort and Margie Barrie at length. Click through to see what they have to say.

9/3/2024, “The cost of senior care: Why aging farmers fear the nursing home,” by Juliana Kim and Tim Evans, NPR
Quote: “Long-term care insurance exists, but it's deeply unpopular with older Americans. So, many seniors dip into their retirement or savings to get the care they need, while others apply for Medicaid, which has its own challenges. … Long-term care insurance is rife with its own problems, from complex underwriting to rising premiums. … Short-term care policies are a newer alternative to long-term care insurance, said Lance Boyer, a sales director at Farmers Union Insurance in North Dakota. But their benefits usually last no more than a year. … Another option is Medicaid, which is the largest single payer for long-term care in the U.S. In North Dakota, while the program completely covers nursing home costs, enrollees can only have a few thousand dollars to their name. They can keep some additional cash and their home and car if it's in their spouse's name, but generally no other property. That’s especially troubling for farmers, whose livelihood and families are often intertwined with their land.”
LTC Comment: This article is a confusing muddle. Here’s the truth. Medicaid exempts the home and the farm business, including its capital and cash flow. That’s how farmers paid for LTC since 1965. That’s also why so few of them purchased LTC insurance. While estate recovery is a concern for some, it is easily avoided by a Medicaid planning attorney. The big LTC problem for farmers nowadays is getting access to any care as Medicaid-dependent nursing homes go out of business and care of any kind becomes difficult to find anywhere nearby. So more and more care falls on unpaid families and friends. The whole sad, worsening mess derives from government trying to help and ruining the LTC market.
 

LTC BULLET: MORE KFF DATA MISINFORMATION

LTC Comment: Our most recent LTC Bullet, titled “LTC Data Manipulation,” analyzed KFF’s publication “10 Things About Long-Term Services and Supports (LTSS).” We concluded KFF distorted National Health Expenditure data in service to an ideologically biased LTC Narrative. To wit: Medicaid and out-of-pocket LTC expenditures appear bigger when you exclude Medicare and private insurance from the data, which supports the mistaken conclusion that catastrophic LTC spend down is widespread and, therefore, America needs a big new, compulsory, payroll-funded LTC entitlement program.

Our essay triggered another analyst to opine further about faults in the same KFF publication. So we invited Stephen D. Forman, CLTC, Senior Vice President of Long Term Care Associates, Inc., to share his thoughts in today’s “Guest Bullet.” Following are quotes from the “10 Things About Long-Term Services and Supports (LTSS)” article followed by Stephen’s “LTC Comments.”

KFF: “In 2021, just 80,000 people filed claims for private long-term care insurance benefits.”

LTC Comment: KFF seems perplexed by what they perceive as a low number of claimants. It’s not clear what the right number should be, but KFF does not believe the industry is paying much of a share.

KFF: “In 2021, about 7.1 million people nationwide paid premiums for private long-term care insurance (LTCI), including standalone LTCI and also an array of products that pair life insurance or an annuity with some long-term care coverage (Figure 6). The age and other demographics of those people are unknown.”

LTC Comment: I don’t always have the latest data, but I usually know someone who does (or knows someone who does). So if I can locate “the age and demographics of those people,” then KFF, which bills itself as “the independent source for health policy research, polling, and news,” can. Between BrokerWorld Magazine’s 2024 Survey, AHIP’s 2017 “Who Buys Long-Term Care Insurance?,” or AALTCI’s Fast Facts (2022) I think they can work it out.

KFF: “While those premiums may sound low relative to private health insurance premiums or to the costs of LTSS, LTCI is purchased before a person develops a need for LTSS and most people pay premiums for many years without using any benefits.”

LTC Comment: The idea that insurance is to be purchased before someone needs to file a claim is so obvious as to beggar belief what it’s doing here. What about the idea that “most people pay premiums for many years without using any benefits?” First, I’ve personally never liked this framing since I don’t subscribe to the belief that you have to file a claim to receive a benefit. The benefit is transferring risk and not being liable during the period covered, liberating money which would have otherwise been tied up. But I know most people don’t view insurance that way. I can’t tell if KFF conceptualizes LTC insurance as analogous to health insurance, and expects the product to behave the same. I do know that most people also pay taxes for many years without using particular benefits, for example Medicaid. Why KFF makes a big deal about the former, but not the latter is anyone’s guess.

KFF: “…most people pay premiums for many years without using any benefits. That is one of the reasons that only around 80,000 people filed a claim for LTCI benefits in 2021.” (Emphasis added.)

LTC Comment: That is not a reason, it is just making the same point twice.

KFF: “It is not uncommon for people to die without using benefits or to let their coverage lapse in response to rising premiums.”

LTC Comment: Not so fast—it’s not low lapse rates that have challenged assumptions, but high lapse rates. Here’s the NAIC: “A consequence of the limited data was that insurance companies overestimated lapse rates, or the number of policyholders who would voluntarily drop their policies.” (pages 18 – 19) In any event, I’m not sure how many insureds are forfeiting a benefit by lapsing in 2024. In the NAIC’s latest consumer research regarding how consumers would respond to a rate increase, “lapse” wasn’t even an option since people could receive either contingent nonforfeiture or a cash buyout.

KFF: “There are a number of limitations of LTCI. Many policies don’t have inflation protection, limit eligibility for services, do not cover all expenses, and have lifetime limits.”

LTC Comment: Here we go again. Medicaid has limitations, so does WA Cares. If “many” policies don’t have inflation protection, it’s because individuals chose not to add that mandatorily-offered option. If “many” policies have lifetime limits, others do not, and consumers can choose what they want. What does this even mean?

KFF: “Insurers could also go out of business before coverage is needed…”

LTC Comment: And programs like CalPERS and WA Cares can jeopardize the credit rating of their respective states, which is why we plan ahead. In the case of the private LTC insurance market—which has seen precious few insurers “go out of business,” consumers are protected by state insurance guaranty funds. It’s not a perfect system, but it’s one that insurers and producers are legally discouraged from promoting, although KFF is not. They could’ve done a service by explaining how this FDIC-like backstop functions.

Closing LTC Comment by your editor, S. Moses: We thank Mr. Forman for his thoughtful observations. KFF’s dismissive attitude about private LTC insurance displays ignorance and ideological bias unworthy of an objective source. We can’t help but wonder how careless KFF is about other topics in the health care policy sphere. When market-based analysis and solutions are ruled out thoughtlessly, we’re left with more of what we already have—a government-dominated LTC system that fails everyone.