Ronald R. Hagelman

In a distant past presentation I would begin by suggesting that you could take a prospect gently by the hand, lead them to the edge of a bottomless pit of risk and they would invariably ignore the obvious. The situation may have gotten a little better in 20 years but not much. A recently published consumer survey on the Affordability of Long Term Services and Supports from KFF Health news and the New York Times, November 14, 2023, again lays bare Americans’ stunning and at this point legendary ability to avoid what remains as our largest unprotected risk. We know the real burden falls on the caregivers yet half of those surveyed had ever talked to an aging loved one as to who will care for them when the time comes. Even fewer had ever discussed how in the hell that care would be paid for and 43 percent were unsure how they would pay when it does hit. I know many of us have grown hoarse screaming about the frustration of dug in consumer resistance. This research pours a large quantity of salt into that open wound.

“The overwhelming majority of adults say that it would be impossible to pay.” Ninety percent regard the estimated $100,000 for a nursing home or $60,000 from assisted living cost as a bill they have little chance of paying!

And to put a fine point on it the survey also concludes:

• As has been repeated over and over again almost half of those surveyed still believe Medicare will pay.
• 62 percent had difficulty even finding a facility to meet their needs.
• A substantial number were unhappy with the care they could locate.
• Half of those surveyed outlined the cost that splashed back on the family or loved ones providing care.
• Much of the care provided in America is delivered with love but without compensation.

The truth blazed across the sky is Americans remain unprepared. Perhaps we need to reiterate the obvious in some form of financial braille. Why do we continue to hear a cane tapping down an empty hallway? The brick wall is real. What must be done to expose the solidity of that barrier? Medicare pays a very limited amount and the balance is shared between private sources and state run Medicaid. Consumers know they are unprepared and that the burden is likely to fall on them directly. Four in ten surveyed lacked confidence that they would be able to pay. Fewer than half surveyed had ever even had a conversation with their loved ones about who would care for them or how it would be paid. Two-thirds surveyed felt anxious about affording care when needed. There was a clear socioeconomic component to the findings suggesting the obvious that as average income fell, anxiety and stress compounded. The “statistic” we know all too well is that fewer than half were doing anything to even try to plan ahead.

What rattles me the most is that we could have, exactly like a brilliant contestant on Jeopardy, anticipated these responses . There are no revelations here we have not seen before. I am not going to give in, without some reservation, to the temptation that we may have always been plagued by the blind leading the blind. From reinsurance to claims adjudication a handy blind eye may have impaired our ability to see the true nature of the risk or unveil the depth of perception required to avoid the obstacles we know remain in our path.

Other than that I have no immediately visible opinions on the matter.

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.

• There has never really been a visible risk for consumers. How in the hell did we expect sales success in that environment?
• The only real fuel burning anyone’s motivational fire is the robust and growing fire of state Medicaid costs. What’s worse is we sent out firefighters without sufficient water to change the course of events on the ground. The whole concept of possible mandatory impoverishment was pure fraud.
• What’s even more crazy is the government kept trying to return the cost and risk to the middle class. As an example, extending the look back period to five years. Those who could and should pay, however, continue to slip the noose. We still have massive fraud in Medicaid usage to pay for inevitable custodial care.
• Low interest rates only temporarily masked the financial pain which is returning to the political forefront. Experiments in yet another payroll financed social insurance cannot succeed as proposed. What the fire sale in Washington State has demonstrated is that, when the risk is clearly standing before you, private insurance will be the overwhelming first choice.
• As long as Medicaid pays for the middle class to shelter assets, the solution to the long term care conundrum shall remain caught in a financing trap of our own making.

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.

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.

Somewhere in the cacophony of political talking heads I keep hearing the proffered wisdom that “age is only a number.” Which is of course perfectly okay as long as it’s not your number that is up… My suspicion however is that this antiquated gem of cultural wisdom is however being offered as a rationalization to maintain the status quo. Clearly there are many voices on both sides of this far too often called upon chronic social euphemism.

The success or failure of directly addressing the needs of the long term care conundrum has always been just a number. Therefore, in no particular order of significance:

• When is the optimum age to acquire protection? At what young age do I simply just postpone an inevitable conversation? At which age mile marker do I stop asking if my client is ready now? At what age do I simply give up the quest per potential client?
• What is the age at which age related disability will become your number one financial and emotional consideration ?
• What is the number of days that I can personally pay for care before I can depend on government dependence? How many days can my savings hold if I need 24 hour care at home?
• What is the number of discretionary dollars I can commit for long term care premium or savings before my finances implode?
• What is the number and cost of claims risk that will actually await me in 20 or 30 years of inflation? “Where is your million?”

Yes, these are only numbers and I need to stop here as by now you should have had the thought that this list is infinite and this is a finite column.

I have never been a fan of simply hurling statistics at our wall of denial. It is after all the composite generational numbers of the age of birth that may best define statistical predispositions. For almost 30 years I have walked to the front of the room to tell our story. I inevitably began with some version of Paul Revere’s ride: “The Boomers are coming! The Boomers are coming!” This frequent observation now reminds me of the Stephen Sondheim ending of the song Send In The Clowns:

Don’t you love farce?
My fault, I fear
I thought that you’d want what I want
Sorry, my dear
But where are the clowns?
Quick send in the clowns
Don’t bother they’re here

Those born in the mid-20th century between 1946 and 1964 have, during the length of tax qualified LTCI, been our primary target market.

Boomer numbers peaked in 1999 and remained the largest adult population until 2019. Most notably for retirement planners who include long term care risk in their practice, the number turning 65 has grown to 12,000 per day and those hitting 65 peaks next year. There is not enough room in this column to adequately document the retirement shortfalls of all Americans. And I don’t think anyone knows the status of the problem better than those long term care insurance promotion veterans who fought and continue to struggle to do all they can to blunt and hopefully soften the blow of potentially catastrophic risk.

If age is just a number, perhaps we simply need to move on to a different set of numbers. Boomers are now on the precipice of those needing care. They and we may have crossed a line in the insurance sand where assets and income are frozen and progressive aging disabilities severely restrict insurance planning options. Simply meaning that, for us, underwriting resistance is now dug in like Russian trenches in eastern Ukraine. I will not admit defeat nor certainly stunning success. We have placed billions of insurance dollars ahead of the claims that will certainly push through our collective defenses.

Perhaps it is time to fall back and regroup our attack on a different statistical cohort. Millennials born between 1982 and 2000 are, as of July 1, 2019, the biggest age group in American history. They are primarily the children of Boomers currently wading into the necessity of additional care. As of July 1, 2019, they are the largest generation in our “currently at work” force, just beginning to turn 40.

As you might expect, much has been researched about their buying predispositions. They still believe in a bright future. Technology is their friend, not a daily adversary. The recession in 2008 left indelible marks on their psyche. Their fear of a financial catastrophe is more than of the Great Depression. They are known as the “Me” generation although they live more with parents than roommates. They have a more communal nature than their parents and thrive in a network of social media platforms. They currently command a trillion dollars of buying power and four out of 10 are willing to buy a product that supports a cause.

Based on our LTCI marketing limitations of the last 25 years, how could we not recognize a fantastic potential sales opportunity? If you carefully reread the last paragraph, how could we even imagine a more fertile ground for future sales success?
Other than that, I have no opinion on the subject.

Having the ability to reflect back on 35 years of considering the long term care conundrum should afford me some level of comfort that progress has been made. That we have systematically learned from our mistakes. That we have with purpose and growing experience influenced the normally progressive course of history. The vision in my mind that will not leave me alone however is my dog chasing its tail. According to Google, dogs chase their tails for several reasons: Something bit them and spiked their curiosity; they are young and simply exploring their own physical limitations; or, they are really bored. Albert Einstein famous quote concerning the definition of insanity rushes to mind but I like this one better: “We cannot solve our problems with the same thinking we used when we created them.”

Just for fun let’s meander through the big concepts which appear to repeatedly coalesce through our public thinking.

• There is a consistent chorus from all quarters that we need to focus on the middle class. That those with and without the ability to fend for themselves will proceed to fall into solutions based on their circumstance. Our focus must again be on those with the most at risk. Once upon a time, before we understood the true nature of long term care claims, this was our purpose and frankly our greatest historical sales success. As underwriting restricted and premiums rose we simply abandoned our original quest and have satisfied ourselves with picking up the low hanging fruit—those with sufficient wealth to leverage the risk. It is the original crusade that haunts our purpose and brings us back again and again to acknowledge and attack the real need.
• There seems to be a growing acceptance that Custer’s 7th Cavalry is riding hard to our rescue, yet we also privately suspect that he will find the same overwhelming circumstances waiting just over that rise. The problem, as we know, is that the intended solution speaks with a forked tongue. Medicaid and Medicare are already bursting at the administration and financial seams. Adding the administration cost and homogenized managed claim bureaucracy of yet another national social insurance plan would not be built on previous government success stories. We will again come to realize that there are more Indigenous Americans than we thought. Yet the mounted cavalry with sabers extended presses forward. Recent consumer research by the NORC-Center for Public Affairs Research claims 88 percent of Americans wish to receive care at home and 60 percent want the government to pay for that care. Washington State is now collecting employee payroll premium. California has now basically removed the means tested restrictions of access to Medicaid. A number of states are keeping their eye on this cavalry charge. Ultimately those who become enamored with the bugles blowing will suffer the same fate. Underwriting liberties will fester, bureaucracies will bloat, public trust funds will be depleted and the quality of care can only suffer.
• The market reality of all current pricing assumptions is that institutional care is more expensive than home care. There is an almost religious belief that building on home care saves money. In my view it is the same gaslighting that proclaims that electric cars save money. It is the same Utopian fantasy future currently being espoused that AI robotics are at the core of future home care scenarios. According to the Nationwide Retirement Institute: “One third of Americans and over half of millennials believe AI robotics will provide their future in home long term care.” The survey further explained that they would talk to their robots if they were lonely, depend on them to help provide physical safety and trust them with their medical history. You do not have to read Issac Azimov or Ray Bradbury to get a funny feeling in your gut about weaponized self-aware AI.

Honestly, I am tired of worn out excuses. Exhausted by more of the same formula thinking. Frustrated by the continuing lack of a united and industry coordinated education crusade. I am therefore specifically weary of the recurrence of perceived easy answers and utterly dismayed by the continued lack of consumer awareness. I cannot shake the vison of the circular motion of that dog intent on some form of personal gratification when all that will be actually accomplished was perpetual redundant motion and the continued illusion of potential success.

Other than that I have no opinion on the subject.

Even the veteran voices of our sales struggles past and present have died down concerning a fantasy return to the “good old days.” There is nothing standing in front of us that will resurrect surging individual sales and meaningful penetration of the middle market that would resemble our successes of 20 years ago. It is past time for new beginnings, new directions, new goals and rejuvenated primary stakeholders willing to support what the readers of this column would call the “Cause.” Meaning substantial sales that strike directly at those most at risk (my estimate—incomes of $50,000 to $150,000). I would strongly recommend that you review a recent publication from the New York State Department of Financial Services Long Term Care Insurance—Looking Back and Thinking Ahead—June 7, 2023. It is an exceptional historical summary of exactly how we got here. It is a well documented admission of past Department of Insurance culpability in not recognizing the necessity of allowing sufficient and timely rate increases. It includes a detailed summary of the past events that fueled market forces. In my mind it provides an accurate backdrop for understanding what must happen to once again move forward.

Here are the Highlights:

• In 2018 alone Americans paid out $55 billion for long term care expenses and Medicaid paid out triple that amount—$59 billion.
• By 2050 long term care expenses are expected to climb to three percent of gross domestic expense.
• The long term care market has struggled since it began 35 years ago. Recent experience in New York (probably true across all 50 states) reveals policy ownership has fallen from a high of 754,000 insured in 2002 to 394,000 in 2020.
• Our struggles can be largely attributed to “pricing errors made from its inception.” Premiums were initially severely underpriced. Insurers lost money, maintaining adequate reserves became systemic. Departments facing consumer backlash took a very conservative approach to needed rate increases throwing gas on carrier retreat from the market. A retreat that became an exodus.
• Long term care expenses are very expensive. Current per person nursing home expense is $108,000, home care is $61,000.
• New York has been a leader in providing managed long term care services for Medicare Advantage, PACE and Medicaid participants. About half of the states have growing MLTSS programs.
• Reliance on Medicaid “may prove infeasible.” Consumer private pay would have to rise. Private insurance has simply not been the answer with only two percent of Americans owning a policy. This sentence screams off the page: “Private long term care insurance is underutilized relative to potential demand.”
• In New York’s view they have tried to help consumers with cost offering one of the first Partnership initiatives and relief with state income taxes. They even added a 10 percent tax credit in 2020. Ownership continued to fall. NY speculates that the still high cost, the possibility that they may not ever use benefits and prevalent Medicaid planning strategies have contributed to poor sales. Yet they acknowledge that ”consumer reliance on Medicaid in its current form is untenable.”
• The NY department has presented an extensive “Mea Culpa.” Like others they approved rates based on projected lapse rates, mortality rates, morbidity rates and interest rates. Insurers and regulators now freely admit they relied on “erroneous assumptions.” We simply got it all wrong. Projections utilized by carriers and regulators relied on “inaccurate projections.” Current financial losses projected down the road accelerated company retreat from the battlefield and a strong and immediate cry for more ammunition in the form of higher rates. It was acknowledged that the reluctance to grant timely and sufficient rate increases lies at the root of our current predicament. History must record that the approval rate across most jurisdictions can only be described as too little too late. The truth is that further rate increases will be needed; “increases are burdensome to consumers but they are necessary to safeguard policy holder benefits over the long term.”
• It was acknowledged that rate actions can be mitigated by the use of “landing zones” and tiered increases that can exclude the oldest policy owners.
• NY is clearly and painfully aware of the subsequent financial stress on our sparse product market both on insurers and consumers. They have liberalized their acceptance of different forms of insurance designed to reduce cost. They have installed a new Health Insurer Guaranty Fund. They are currently working on a new NY State Master Plan for Aging and they are keeping a close eye on developments in Washington State.

I think the initial and most important ingredient of behavior modification is open acceptance of personal guilt and core responsibility in the creation of the dysfunction. NY has faced its own culpability and established a platform for meaningful reform. I believe all stakeholders now recognize there are absolute certainties that are required if a sales renaissance has any chance of success. There must be a problem solving partnership between the insurers’ necessity to offer profitable policies and the States desire to soften the strain of Medicaid dependence. Innovation and reality must be shaken up in the same cocktail. We must stop only paying lip service to our desire to provide risk sharing options to the mass middle market, recognizing that the dimension of that risk may be our industry’s greatest doughnut hole. Posterity has loudly provided Google maps with the shortest distance between two points. We cannot “return to the route” but we don’t have to go exploring directions to find our destination.

Other than that I have no opinion on the subject.

Free Stock photos by Vecteezy

It is important that once again I remind those who indulge in this “opinion” column that my conclusions are my own personal fantasies and admittedly jaded impressions of 30 years of attempting to read our own peculiar tea leaves. All efforts to reduce the impact of the need for custodial care regardless of how brave or timid have been enthusiastically supported and heralded in my ramblings each month for 20 years. Therefore I would ask your indulgence in my attempt to examine the most important question in our corner of the insurance marketing universe: Where do we go from here?

(Warning: Do not quote or weaponize the comparative statistical speculations inherent in this philosophical exercise.)

I am not admitting defeat in any way. The troop formations may have shifted but our lines have held for over 15 years. It is true sales of stand-alone health insurance solutions have fallen dramatically however reserve replacement troops from short term to combo life in all its incarnations have kept our sales steady and strong at about a half million new policy holders added each year. Next I would challenge all other segments of insurance sales to deny that the individual purchase of protection against the clear and present risk of catastrophic long term care is by far the most difficult sale to complete. It has not gotten any easier and, if anything, even more difficult.

The computer navigation in my car is perhaps the primary reason I am by nature technology averse. First it will only calculate relative efficiencies between two fixed points. The concept of asking the navigation voice to provide a “scenic” route is algorithm anathema. More important to me is my relative spatial position to any and all other points of reference or potential interest. Frankly I would rather be struggling with folding up my old paper map—at least I knew where I was in relation to my surroundings. Where we go from here must be viewed with the widest panoramic view possible. While this is a necessity it is also the greatest impediment to progress. Frankly we are an industry that has lost a clear compass heading. My impression is that the most prominent stake-holders of our future are divided and lacking a clear destination.

Frustratingly, past experience has not really given us any clear path to success. The two most hardened deniers, those who believe the government will provide and those who believe that being self-insured is sufficient and prudent, remain impervious to reason. We know that those who have had a personal experience with the hardships of care together with those better educated and more affluent have the greatest predisposition to buy. Unfortunately, that knowledge has not provided us with a universally recognized accelerant to sales success.

Now, in no particular order of significance, lets try and identify potential compass headings:

• Whatever direction our ship sails, the severe negative impediment of inadequate flexibility in successful underwriting strategies must be addressed. Brokerage was built on finding ways to leverage existing risk. Far too many have been turned away.
• Someone will have to explain why three-fourths of current sales are combo life where premium represents the cost of two separate risks juxtaposed to the singularity of the health insurance approach which is clearly less expensive. And nowhere is this more abundantly clear than the tragic wasteland of worksite solutions.
• The perceived or real concept that premiums are simply too high should not become an automatic rationalization to expand employee/employer payroll tax as a last resort to directly solve what is believed to be the greatest obstacle to market penetration.
• What portion of the risk can we be the most successful supporting front or back? Our response to that will define either our capitulation to a government imposed solution or our successful supplemental support to the establishment of a new centralized base of operations for the risk.
• MLTSS claim administration is now available in half the states. These detailed management services for those most in need may very well be providing a blueprint that can best accommodate the avalanche of boomer claims on the near horizon.
• The rise in interest rates should be providing some relief to a host of issues. Existing product performance as well as potential future income strategies should benefit.

Finding a true direction compelling the greatest possible unity of purpose is really all we have left.

Other than that I have no opinion on the subject.

One of my favorite 25 year mysteries remains American consumers’ ability to so effectively ignore the facts. It reminds me of my three year old grandson who has a standard and highly effective response when confronted with his misdeeds, inconsistencies in his reporting of his brother’s transgressions or his own—a final and heartfelt denial of his participation in the reality of an obvious transgression. He places his arms straight down at his sides, balls up his fists, and proclaims loudly, “I not!”

There is no denying the pot is on the boil. The facts could not be more clear:

• In 2020 73 million Americans were over 65.
• Chronic diseases on the rise, for example six million over 65 have dementia.
• The senior care/long term care market, including all major industry vendors, is estimated at $517 billion in 2023 with a growth rate or CAGR of 6.05 percent expected to grow the market size to $780.2 billion by 2030.

This financial time bomb is ticking so loudly, why does it not cause more hearing loss? And even for those whose personal experience has forced them to stare directly into the sun, we now have second generation “election deniers” who simply cannot face facts.

Even for those unwilling to accept a verified election result long gone over the falls, we seem to have way too many unable to acknowledge basic truths. According to recent LIMRA consumer analysis 29 percent still believe they magically have existing coverage hidden in their other insurance possessions. When the truth is only 3.1 percent own any form of long term care protection. Consumers are looking but not taking action. Exceptional research conducted by OneAmerica suggests that approximately one out of three actually researched their insurance options but only 16 percent followed through with a concrete plan of action. Even the facts you think consumers got right are off kilter. There is even a residual consumer notion that Medicaid pays. Which is of course absolutely right if you have given away, hidden or loopholed all your money and you wish to end your journey in a semi-private room with hard linoleum floors and a possible screamer in the bed next to you. The only unknown variable in your care experience at that point will be, “Is it Jello or peaches tonight?” The recent LIMRA survey suggests that 60 percent of respondents acknowledge they need LTCI with a particularly high interest among millennials.

We now seem to live in a world of extreme speculation:

• Will substantial fixed interest rates finally resurrect the combo annuity market?
• What, if anything, could attract new younger buyers?
• Can technology and AI increase the value of managed care at home?
• Which end of the beast does the insurance industry try to hold onto: 1) a partnership with pending mandatory employer/employee tax plans; or, 2) Expand basic managed care under Medicare Part C; or, 3) Finally streamline underwriting and rejuvenate a vibrant and aggressive payroll market; or, 4) simply place a care robot in every home.

My grandson will slowly but surely become wiser, diplomatic and knowledgeable in his conflict resolution skills. I wish with all my heart the same may be said of us.

Other than that I have no opinion on the subject.

My required statistics classes were the nightmare of my academic journey. Means, modes and medians gave me numerous sleepless nights. I was never really comfortable with the fact that “on average” would never again ring automatically true in my mind. Frankly graduate school was an endless parade of research findings analysis. I learned early to briefly scan these exercises of self fulfilling prophecies. First layout what you will try to prove by conducting a hopefully unbiased statistical analysis and magically the conclusions invariably support the initial question. This is now where the real problem begins, I was never interested in a sterile mathematical body count. I wanted to know what the meaning of that end fact is, the one held up proudly to the light of truth and introspection.

I recently came across some excellent consumer research from the Milken Institute Center for the Future of Aging and Innovative Finance. The statistics presented were big, bold and moderately helpful in understanding why long term care is bigger than a bread box and, considering the trajectory of current marketing efforts, perhaps not smaller than an elephant. Which leaves me, however, as confused as ever as to what they may mean, to whom, and under what circumstances.

Fifty-two—the percentage of adults 65 and older who will require a high degree of long term care. We have all quoted the “70 percent will need some level of care” statistic. I’m not sure we have adequately condensed understanding the risk to the flip of a coin. Betting red or black at a casino roulette wheel does concern the house that they will lose money. So serious long term care risk becomes defined as heads you win if you have an abrupt mortality event and tails you lose and your precious retirement savings are decimated.

Two times—twice your annual income will be required for one year of nursing home care. And I might add nursing home costs are inflating at over five percent per year. Not so sure wages will keep pace. What strikes me is even this is too big a number to honestly understand or provide an adequate step in a buying decision tree. Average savings in an American’s 401k is basically half that average six figure income. Americans understand they are unprepared for retirement; the fact that they have no insurance on a non-existent retirement account is a moot point after all.

Twelve—the number of LTCI carriers today after a high of more than 100 about 20 years ago. This has been flogged enough. We innocently underpriced. We tragically underestimated that, once sold, the sale stuck hard. Investments underperformed and the industry’s built in protection mechanisms required insurers to strengthen reserves. At this point the exodus was unstoppable. Claims rose, interest rates fell, the perfect storm descended; perhaps we were just another victim of global warming. Underwriting in my humble opinion remains the most onerous in insurance history. Rate increases became the hot stove where agents and consumers were required to burn fingers and in many instances jeopardize long standing relationships. Remember this was always supposed to be a happy medium sale. The market was created for the middle class—those with the most at risk. The last 20 years have left the companies with few options. Price new sales adequately, remove non insurance benefits and try to stabilize past blocks of premium with additional income. The rise of combo sales is commendable. However a very small number of options are complete with a health 7702B rider relying perhaps too heavily on chronic illness riders which may provide some marketing cover but may also impede an aggressive claims administration. Now let’s try to make sense of who pays:

• Fifty-two percent—Individuals and Family
• Thirty-four percent—Medicaid
• Three percent—Private Insurance

The statement that Medicare does not pay for care is no longer completely true. Some home care service expense is picked up by Medicare and a growing number of Medicare Advantage plans have some limited managed care benefits. Alright no matter how your brain processes those numbers the truth should be shouting at you. Since the advent of modern TQ comprehensive LTCI our sales success has not been sufficient. Even pulling out the social safety net leaves you with the fact that the majority of Americans are clearly exposed to a financial and emotional conflagration. The Goldilocks principle must guide our efforts. Self insurance and government dependence delineate the opposing goalposts with a massive open and virtually empty football field of sales opportunity in between. We have constantly drifted from our original intentions of maintaining the quality of claim control for the middle class. The very cohort outlined so vividly and statistically spot on above. Regardless of how you or your client arrive at your own happy middle ground, on average the problem is real and the solution is painfully obvious.

Other than that I have no opinion on the subject.

I’ve just returned from our industry’s professional annual gathering which I believe represents our faithful and permanent commitment to keep trying. The ILTCI 2023 was in my humble opinion a smashing success. In no particular order of importance an inventory of why may have merit in your forward thinking, planning and prioritizing:

• It was the largest attendance in years with almost 1000 stakeholders who remain concerned about the insurance care conundrum.
• It was a diverse professional assemblage, grounded again by the avatars of good math.
• The progression of claim efficiency and quality of service truly benefiting by the evolution of technology was clearly on display. Gains were evident in virtual underwriting and there were even successful robotics teetering on the edge of Artificial Intelligence advancements.
• There were multiple vendors helping to define the meaning and parameters of what should be the true Holy Grail–efficient humanized quality managed care and claim adjudication.
• But the best clues to predict a better future were all the eager bright shiny faces attending every session. A third of those present were there for the first time and over half had been attending for less than three years. Only one percent had been in attendance for 20+ years.

Helping to represent that one percent, my partner Barry Fisher and myself had been asked by the meeting chair Steve Schoonveld to reminisce about our vast, perhaps simply lengthy, experience to provide what could best be described as comic relief. Steve asked us to help conclude the meeting by being humorous and optimistic. As this was a large public forum we were asked to also remain non-denominational, non-sectarian, apolitical and keep it under 20 minutes.

Interestingly, as insurance company consultants for many years, we are used to being asked the impossible and to come in under budget.

We began by proclaiming we were going to attempt to explain two of the greatest mysteries of our little corner of the insurance marketing universe. First: Why my partner continues to accuse me of writing the same column month after month for almost 20 years. Second: How two clearly diverse Class A personalities have been able to work successfully together for this long. Actually the answer to both rhetorical questions is the same. We are simply unable to give up our quest to understand, “Why in the Hell can’t we get this right?”

We began by suggesting, as I have repeatedly in this column, that we didn’t just miss the side of the barn but that we may have been aiming at the wrong barn. We have continued to make this about financial indemnification. In my humble opinion it is about who and under what circumstances the claim journey will be managed. I have suggested many times in this column that sales begin with those who have been touched by the caregiving angel. It is a predisposition to buy that gives sales success any hope of self analysis. My partner added that our market was never given enough time to establish itself in the pantheon of mandatory risk abatement vehicles. That consumers have yet to understand their personal responsibility. That with the incessant background noise of rising premium the market abandoned the middle class buyer that the product was originally designed to serve.

We reminded the audience that producers have clearly identified this as the most difficult of insurance sales yet, frankly, the product manufacturers of this world have never banded together to publicly support this crusade.

It was pointed out that many agents have retired from the field of battle and that fresh troops may not be coming from the plethora of financial advisors/planners who seem to have moved insurance transactions to the caboose.

It was impossible to not reflect on the past and to some extent we may just have been a couple of curmudgeonly aging rock stars brought out to entertain the troops.

There was laughter and applause perhaps not from our discourse but from our longevity. The hard truth is the answer to a brighter future was in that room. We knew it and they knew it.

Other than that we all had no opinion on the subject.