One of my father’s favorites was “Talk’s cheap, takes money to ride the train.” Financial priorities must now be drastically changed. Institutional care business as usual must be served a cease and desist order. COVID took no prisoners, over half of all deaths in countries around the world took place in a nursing home. The pandemic vividly exposed the lack of care in institutional settings. COVID has reshaped many social interactions worldwide from a global glut of office space to further exposing the truth about the lack of care in nursing homes in countries all around the world. It has been suggested that very little nursing takes place and frequently it would be hard to describe these facilities as anything resembling a home.
Obviously, for those who have a home or the living family support necessary, to establish universally desirable alternate home care would be the unequivocal truth at the heart of all conversations about assistance with ADLs and IADLs. Nursing homes have unfortunately long held a less than stellar reputation for quality of care. Care quality is policed by the government in the United States, Medicare and Medicaid, hopefully guided by consumer choice with an established ironclad commitment to quality. Home and community based care is already driving the bus. Currently 65 percent of caregivers are a spouse or children. Shortages in the quality of institutional care in America are being exacerbated by increasing mortality, many living into their 90s and children who in the past might have succumbed to premature births or medical complications are increasing the number of those who will need disability care.
Currently Medicaid spends 57 cents of every dollar of HCBC, however only 15 percent of those receiving those dollars are over 80. More importantly, as a percentage of those receiving care at home in relation to overall, health expense is among the lowest in the world with America spending only five percent. The average in the world is three times that amount. We cannot keep throwing discounted dollars, meaning knowingly insufficient funding, at a problem that is about to explode. I am among the oldest Boomer generation. Thank God I am facing that aging certainty with a paid-up comprehensive TQ long term care indemnity policy. I will, of course, struggle with the notion that not all who read this column have already put their own protection plan in place. And I will not over excite my blood pressure by even remotely thinking this conversation is not a sacred component of every agent’s fiduciary responsibilities.
Maybe we could all agree to make just one change. Think small! Even those states beginning to mandate a payroll tax are only creating $50,000 plus of financial support. The truth is $50,000 can provide substantial support, particularly if that support takes place at home. Average claims are between two and three years and 50 dollars per day would certainly strengthen a well-managed HCBC plan. I don’t think the industry could make it any easier to add a rider which only gently affects a life sale pricing, again focusing on a small step but always in the right direction.
Please do not misunderstand. The government must now make this a national priority like a war on drugs or poverty. The private insurance industry can continue to aid and supplement a newly enhanced focus to augment quality care in an HCBC environment. There are those who have always claimed we may have originally bit off more than we could chew. If we can increase sales by thinking small, we reduce underwriting friction, decreasing cost and accelerating access, again by thinking small and accomplishing achievable goals. It has also been strongly suggested that HCBC needs to think small, creating a much smaller setting for care to take place. The “Small House” care experiments are showing great promise.
Thinking small may finally create a basis for sustainable sales success. We may again reclaim the middle class as our own. We may escape some of the restrictions of pre-existing underwriting taboos. We may give carriers the optimism of some reserve restraint, growing policies under management with reduced manageable risk.
I can’t believe I’m saying this but please let us Think Small!
Other than that I have no opinion on the subject.
Naked
When I think of my friend Stephen Moses I imagine him as the proverbial town crier, speaking loudly with the courage of his convictions, who begins with what should be obvious that the earth is indeed not flat but concludes with the airtight conclusion that the Emperor has no clothes. Stephen was my first guest speaker in 1999 and the ingredients of his recipe to end the current long term care funding madness were already in the pot to boil. He was already clearly explaining that perhaps some of our basic assumptions concerning the source of our industry’s lack of sales success was our lack of understanding the true nature of the problem itself. That the threat of impoverishment was an illusion. That Medicaid was welfare which should be its only purpose. That perhaps a re-examination of our myopic vision of the risk itself must be at the beginning of potential reform. With assistance from the good folks at Paragon Health Institute he has recently released what can only be described as a very compelling manifesto based on a life of service to the same “Cause” I have attempted to chronicle in these columns for the last 20 years. Long Term Care: The Solution, October, 2023, should be mandatory reading for all stakeholders in the continuing struggle to blunt the still largely unprotected risk facing far too many Americans. In his previous work Long Term Care: The Problem 2022 and his preface to suggested reforms in the current work he carefully chronicles how we got here.
Stephen has laid out a blueprint that attacks the problem at its core. He has once again boldly confronted what might be best described as the Naked Truth. Lawmakers must take practical actions to stop the State funding mechanisms. Severe and definitive actions need to be taken to finally alter the current failed trajectory.
Step One: Eliminate the Moral Hazard. Shut down all planning tools used to avoid personal responsibility—to include purchase of exempt assets, eliminate home equity exemptions, prohibit asset protection trusts and Medicaid compliant annuities. And perhaps most importantly extend the look back period to 20 years and then “monitor and enforce compliance.”
Step Two: Publicize the now exposed true risk.
Step Three: Reconceptualize the actual size of the risk.
Step Four: Proselytize affordable planning at younger ages.
Although the obvious solution is to tighten and reinforce the fences around our unique risk encampment, these proposals must appear somewhat draconian. As an old cattleman I know you must maintain effective fencing perimeters and nothing works better than new barbed wire. If those within the wire are to prosper they must accept that the only exit is single file with only one gate in the corner.
If by some miracle there were to arise the political will to actually fix a broken funding system, Stephen has provided a clear and precise blueprint to make a real difference.
Other than that I have no opinion on the subject.