Ronald R. Hagelman

Begin by imagining the soulful cords of The Streets of Laredo performed by Marty Robbins or Pete Seegar. It’s not exactly a dirge, merely an acknowledgement of a tragic passing too soon. Cliches and glittering generalities describing the status of the continuing battle to give meaning to the necessity and preference of personal control of our own claims destiny is dominated by a chorus of time worn platitudes.

• All that glitters is not gold.
• The calm before the storm.
• The writing on the wall.
• What goes around comes around.
• It’s just a matter of time.

Instead let’s begin by meticulously avoiding America’s most overused buzzword “transparency.” Even though I might humbly suggest the past ills and future promise of significantly supporting and improving acute, sub-acute and custodial care is now in the hands of those with the most experience in managing the quality of care, I am only a salesperson. I do not need to know the frequency, duration or efficaciousness of care administration whether public or private. What I do need to know is that there is absolutely nothing more important than the quality of that claim management.

What I must begin with is the sure and certain knowledge that someone will pay this claim. I know that the balance between private and public sources of paying these claims is becoming more equitable. I know that over 250 million Chinese are already over the age 65. I know that the struggle to leverage a known and measurable risk globally will eventually dominate internal and international political and cultural environments. I know that more folks are passing than being born. I know that we now have substantial and definitive claims experience yet the battle to liberate discretionary funds to blunt that risk remains as elusive as ever.

I know that 20 years ago twice as many consumers actually bought a policy as we are reporting today. I know that combo sales are 20 percent of all life sales but the majority of those did not require a current additional premium. We are doing a better job shifting the risk and yet fewer professional advisors than ever are intentionally focusing their attention on some approach to chronic illness risk mitigation.

I know we continue to chase the wrong industry old wives tales. The romantic and strongly held belief that moving as many claims as possible back into the home will save money is the most popular reflection of erroneous conclusions yet it continues to act as a backdrop for public and private care decisions. There is little evidence that the actual hard dollar cost will be impacted. What I also know is that it doesn’t really matter to me at all.

What I must hold onto is the sole purpose of the exercise. What can I do to help assure the best quality of the care that my customers, friends and loved ones do receive? What I cannot forget is that this problem will not take care of itself. What I must remember is that for rationalizations or denials beyond my control, I may only be able to shift a portion of this risk burden. However, anything I can do to improve the quality and decision making control concerning the efficiency of delivery and the opportunity for personal choice is a job well done.

Interestingly there is a growing hope for our cowboy “All dressed in white linen.” In truth a new Sheriff has slipped into town. Ove 500 Medicare Advantage plans now include some initial long term care managed components from home modification to respite care. This consumer driven predisposition to acknowledge the potential claim provides fertile ground to expand the sale for added protection.

Other than that I have no opinion on the subject.

Consider this column an exercise in fevered dream generalities. Sort of a hybrid train of consciousness somewhere between James Joyce and Salvador Dali. I would simply like to attempt to express a feeling of unease. It is more the growing weight of a persistent impression of an impending calamity. Since I can’t seem to shake it, I’ll graciously share with the hard-core readers of this column in the hope that I may again unload some of the burden on my friends. Specifically, those who refuse to give up this quest.

It seems we initially embarked on our journey with a clear vision of our destination; replace a visible retirement planning deficit (even if a little far over the event horizon) directly attacking a known, measurable risk clearly subject to amelioration with insurance. We took familiar well-known legacy vehicles of both the individual and group variety, adapted them to our perceived needs, and then somewhat innocently turned them out unprotected without adequate contingency plans into a basically virgin market. No one would deny that we may have missed the mark completely or that perhaps our audience was simply unprepared for our performance. The risk was bigger than anticipated which set the stage for brutal and onerous underwriting thresholds. Consumer resistance to understand the pending inevitable financial and emotional conflagration was much stronger than ever imagined and the cosmic irony that, when they did buy, it became the most loved and treasured insurance possession of all time. It was in its truest sense a case of the blind leading the blind.

The problem was baked in at the beginning and we have traveled down the same road for so long it seems impossible to turn around or back up. Every research project over the last twenty years aimed at understanding our consumers and product response in my humble opinion has simply chosen to begin its analysis at the point of sale or a public admission of perceived buying predispositions. Our universe is composed of matter that we can see and dark matter that we cannot. Nonetheless it is the background forces that impose the greatest motivational gravity behind all movement.

This is about control. Money may only provide a tape measure to best define identifiable parameters. It has little to do with who or what brought out a need to measure anything. It’s about control of the claim. It’s about basic personal human control. Control of location, quality, preference, maintenance, duration, transition. Will I or someone I love be making those most crucial decisions or not? It is specifically those who have witnessed personally or close at hand the loss of those decisions that have from the beginning provided any of us with successful sales histories.

What I am trying to suggest is that maybe we built this sale on the wrong foundation. Humor me for a moment that we have not adequately prioritized the value of “control of claim” issues or that my 25 years trying to get this right continue to point me in the same direction. If by some strange twist of fate I am right, the question should become who is best prepared to manage the administration of benefits. On the open market freedom side of the equation we have less than a handful of large companies or stand-alone TPAs. On the government controlled side we now have MLTSS, a state run Federal authorized program of Managed Long Term Services and Supports. These are “capitated” and regulated administrators of Medicaid both disabled and special needs. In addition, as home services expand under Medicare and its derivatives there has been substantial recent growth in dual eligible. Bottom line is these folks do anything and everything associated with long term care administration. In 2008 there were four states with an in-house claim manager; now there are 24. If you were to take a closer look at the relationship between existing/proposed Washington State Cares funding strategies and the existing expertise of these already in place in state and Federal long term care management bureaucracy you might pick up on some of the concerns building in the back of what is left of my mind. Capitated means finite and permanent control. Not yours. Theirs.

“Paranoia strikes deep…into your life it will creep.” The immortal lyrics of Buffalo Springfield inexplicably do come to mind.

Other than that I have no opinion on the subject.

Hegemony is a political and social concept that may best reside in our consciousness as the proverbial 500 pound canary. It is the force that holds sway with a dominant influence over a given current reality. Always follow the money—in the United States long term care costs have reached over $275 billion not including the insidious billions of families’ and friend’s unpaid care expenses. Uncompensated care is now estimated at an additional 450 billion. The majority of the hard dollar long term care costs continue to be paid through Medicare and Medicaid with an additional quarter paid with private out of pocket funding. Private insurance payments remain in the single digits. However our long standing and frankly valiant efforts to shift that claims control to individuals is clearly demonstrated by the fact that over $12 billion was paid by private health based sources and that does not include monies from annuity or life combination policies.

We are not alone. According to a recent market analysis, the global long term care markets where North America has the largest presence is expected over the next five years to have a composite annual growth rate of 5.6 percent. There are a number of new truths associated with our chosen market that significantly contribute to a positive outlook for growth. Care has shifted dramatically to a home based platform. Bear in mind only eight percent start benefits in a nursing home. COVID experience has turned up the heat on augmenting home care with managed care technologies. These efficiencies with medical data and direct access to patient care management are fueling growth. We need to bear in mind that this shift has not yet revealed a substantial reduction in cost.

A recent analysis of global trends summarized our position as, “The long term care market is expected to witness significant growth. However, the high cost associated with nursing home services and a lack of awareness of long term care services restrains the market’s growth.” When I got to this insightful revelation frankly I almost screamed out loud. The same brilliant analysis should have been archived from the last six decades.

We know the facts. Every day through 2029 another 10,000 will turn 65 and 70 percent of those will require some care with almost 20 percent lasting more than a year. The average median cost for a private room in a nursing home is over $92,000 and assisted living over $43,000. Yet consumers refuse to take action. Like many of those reading this column, I have spent the majority of my professional career beating my head bloody against the truth of the insurance profession’s most persistent conundrum.

In a world which now demands transparency, I wish to acknowledge that I am a happy retiree of State Life/One America as well as the proud owner of a long term care paid up policy from the company. I would like to commend their most recent consumer research attempting to understand the aftermath of the COVID catastrophe. The consensus of thought for many of us was that the concentrated effects of institutional confinement should have induced a greater understanding of the risk. Surprisingly only 15 percent of the consumers they surveyed confirmed that their perceptions of the problem had been enhanced. Of those surveyed a mere 16 percent had any plan in place with only 29 percent even researching their options for protection. The majority believed that cost was the most significant obstacle. What was not a departure from current wisdom is that, in regards to prioritizing financial goals, the survey clearly indicated that the number one concern was sufficient money for retirement. Of course, none of us could imagine a more lethal projectile on this primary destination than a need for extended custodial care. For those who are able, an asset-based insurance approach does significantly provide control of both care and money. Even though this consumer research indicated that an overwhelming majority of those surveyed indicated that their top motivation was to remove the financial burden from family members, I am not sure it struck at the motivation to buy at its beginning. Research over the last 20 years has consistently suggested that buyers take action to protect money. This has historically proven however to be a post sale rationalization. It is personal experience with the financial and emotional consequences of a claim that created the momentum to complete a sale. The wisdom of ownership confirmed by its legendary persistency has always been a banner of financial family pride.

Drum roll for the summary. The problem is bigger and more tangible than ever. The marketing opportunity is larger and more appealing from a potential profitability standpoint than ever before. As outlined in numerous previous columns, new and looming attempts to mandate government imposed funding strategies will only add fuel to the fire. Forgive me…my eternal optimism is bubbling to the surface again. However, I will lay claim to the notion that market algorithms are shifting a fresh wind to our sails.

Other than that I have no opinion on the subject.

Take a deep breath and try to relax a little, we have survived another political season. Political winds of change whether progressive or conservative favoring reform, inertia or nostalgia for the past have always defined, inspired or restricted our carefully planned insurance responses. It has always been a perpetual progression of action—reaction involving a careful evaluation of potential risk mitigation opportunities. Within the nature of our discipline we have repeatedly tried to ameliorate the risk of insurable events. The balance of political alternatives reminds us once again that our choices come to a pivotal head at our perceptions of control. Personal control of an individual’s claim destiny or the acceptance of additional centralized perhaps even coercive management. Our universal hope of course is that these most essential components are able to find a balance that benefits the greater good. In LTCSS circumstances that hopefully translates into an acceptable level of mutual decision making and maximum level of quality managed care.

In my humble opinion no one has been a more consistent hard headed advocate of exposing the corrosive relationship between the public response to custodial care for the aged and the lack of success in private responses to reduce and return control of individual claims destiny than Stephen Moses. His most recent manifesto “Long-Term Care: The Problem” recently released from the Paragon Health Institute once again provides conclusive irrefutable evidence that the still mushrooming consequence of current market conditions is the fault of existing misguided public response to the problem. The truth is we have always been fighting ourselves. It is the incestuous relationship between the holy trinity of Social Security, Medicaid and Medicare that has made it virtually impossible for us to adequately blunt this risk from the private sector. Private funding solutions including insurance, reverse mortgages and life settlements have had no room to breathe free when all the oxygen has already been sucked out of the room by State and Federal mandated, frequently capped and therefore underfunded, politically loose footballs. This exceptional white paper provides more than a sufficient arsenal of hard statistic ammunition to defeat any spurious attempt to defend the expansion of public taxpayer funded strategies. More of the same will not help. It will however most certainly exacerbate the problem.

This statistically exhaustive presentation of the facts, clearly researched, reveals more than just a smoking gun. It provides irrefutable evidence of a massive self-inflicted wound:

• The current response to the problem is not working. New taxpayer subsidized solutions will only throw gasoline on an existing hot fire. Half of Americans will need paid care and the number of those 85 and older will triple in the next 35 years.
• Medicaid remains severely underfunded and Medicare currently has unfunded liabilities of almost 35 trillion.
• Medicaid and Medicare currently pay for 70 percent of care in America. Medicaid has a direct negative impact on LTCI. Because it pays for three fifths of the expensive costs (nursing homes) but only reimburses two fifths of the cost. The shortfall lands on private pay patients.
• It is often forgotten in the conversation but the largest source of Medicaid long term care expense comes from Social Security spend down. Some long term care funding does come from Medicare Part A. The projected demise of the trust funds for both these programs reflect a very short future shelf life. Can we guess where that shortfall may ultimately reside?
• It is true that shifting the focus to HCBC has succeeded, now representing approximately 50 percent of current overall spending. What is not true is that it is saving any money. Even though claims for HCBS grow, combined costs also continue to grow.
• Required Medicaid impoverishment remains a ghost story told around financial planning camp fires. It is pure fantasy.
• Compounding problems remain the definition of a Dual Eligible. One-third of overall expenses now come from those qualifying for both Medicaid and Medicare.
• LTCI has experienced reserve and persistency concerns that have caused onerous rate increases and carrier defection from the market. The striking difference is that insurance claims will be paid. Confidence in government programs may or may not be justifiable.
• Claim location matters. Private insurance claims show that three-fourths begin at home. Medicaid would suggest just the opposite.

Stephen’s voice has been steady and spot on from the beginning. The system has always been our own worst enemy. His personal message could not be more timely, “Government subjugates, markets liberate.“

Other than that I have no opinion on the subject.

Whatever will be will be
The future’s not ours to see
Que sera’ sera’

My gift of a legendary earwig delivered sweetly by a freckle faced Doris Day. Recently, I had the privilege to reminisce and retroactively reflect on the historical trajectory arch of the LTCI struggle. I shared the dais with other grizzled veterans of the insurance conundrum of our lifetime. Although the primary conversation was about how we might return to past successes, it was our re-telling of historical context that caused the most animation in the assembled crowd. I began to take better mental note of those assembled before us. There was a smattering of older faces mostly near the front of the room. They had lived or should I say survived the war stories we were telling. Their faces were eager to share the truth of how we got to here. Their heads were nodding in agreement as we tried to make light of our mutual long-standing frustrations. And then it hit me. This was a big room, all the other seats were full of young home office stakeholders and actuaries with their careers stretching out before their front windows not their nostalgic rear view mirrors . Based on a multitude of raised hands and intense questioning, the inescapable fact was they knew the “problem” persists but they did not know how we got here—wherever here is. The immensity of that personal revelation represents the very sharp double-edged sword that continues to hang precariously over all our heads. On one side of that blade we simply must have learned something from our past mistakes, yet it is the magic of that alternate blade of fresh optimism that holds out our only hope to help more Americans preserve control of their claim destiny. It is the intrinsic courage to try again to contain and blunt a known risk that gave us all our careers. What I am certain of is we have left behind a rich legacy of teachers. Perhaps the most frequent statement I hear from producers is: “I used to sell long term care insurance.” Yes, you did, and I might add once upon a time very successfully.

Even those onerous lessons that may have curbed or diffused your enthusiasm have value as we move forward. As usual I would prefer to over generalize those proverbial sinkholes in our experience and potential speed bumps present in our future as we struggle to control a risk that continues to grow every time I send in a draft of this column:

• Underwriting remains a curse. Truthfully the pain of most insurance applications would deter even the most valiant. Yet it is not merely the sometimes-indeterminate depth of the administration process itself. It is the radioactive hot potato of how best to handle pre-existing conditions that continues to plague product futures. This seems to be the first cliff that proposed government solutions seems to favor diving off of and where companies initially throw up the most impenetrable fortress walls. This must not be a world of absolutes; it can however rest comfortably in a pool of moderation.
• Forgive my frankness but it is not bravery that attracts a production drift to easy answers. If you know to include a conversation about the extended cost of custodial care please be willing to collect a premium to guarantee adequate and timely claim payments.
• Price matters! As the predicted reality of this risk continues to manifest itself we can hopefully choose to slice and dice the solutions to adhere to answers that contribute to providing control of each individual’s claim journey. The goal of all sales should be universal to provide primary or supplemental assistance guaranteeing personal management of your potential need for care. In this regard all premium levels work.
• Politics matters. Although the now slow but steady progression of state mandated trust programs designed to offset Medicaid liabilities may be viewed as a blessing or tragedy. Regardless of your faith or lack thereof concerning government imposed attempts to ameliorate risk, I must fervently hope that those wonderful younger insurance warriors with bright shiny faces of hope and faith in our own actions can replant those progressive insurance production flags on higher and higher hills.

Other than that I have no opinion on the subject. Que Sera’ Sera’.

Whether you are envisioning the current collapse of Black Sea ports, the former crash of SE Asian colonial empires or the stampede of carriers to escape out the door of individual LTCI the mental image of falling dominoes takes no prisoners. I would again apologize in advance for my fixation on the “Cares Fund” social experiment underway in Washington State. After 18 years of writing this column my optimism for good intentions should have long ago floated to the surface, as well as my virulent disdain for bad math or attempts at didactic political program execution. Just so there is no room for any misunderstanding or ambiguity in my humble world view: the WA Cares Fund has managed to reassemble every past false structural concept, dusting off every originally innocent actuarial faux pas and will knowingly (maybe intentionally) create a perpetual inflationary taxpayer supported (some would say cursed) political bureaucracy.

Comparing this contagious political manifestation to a virus lab leak is just too easy. The plague as predicted has now successfully escaped to Pennsylvania and New York State. The quest for easy answers fueled by budgetary priorities and the siren song of new fresh taxpayer coerced social experiment trust fund accounting is apparently as urgent as any other drug addiction. Please bear in mind that all future booster shots for these programs will require rate increases with no possibility of ever leaving these questionable and experimental political institutions for alternate risk options.

Random thoughts for your kind consideration:

• Combo life sales still leads our sales efforts. Recent production history has been very self explanatory. Prior to the pandemic three of four years showed dramatic growth. The pandemic particularly in 2020 drove the combo sales down 23 percent according to LIMRA. This was primarily fueled by declines in single premium and extension of benefit sales on universal life. CI acceleration riders still constitute two thirds of all sales. I remain skeptical that if you did not charge a current premium that you actually sold anything.
• As reported last year on a post COVID LIMRA survey, interest in LTCI grew dramatically with an over 50 percent increase in those willing to shop for coverage. Consumer caregiving stress also grew as a result of COVID experience.
• Beginning in the third quarter 2021 combo sales caught fire with the greatest spiked increase since 2007. Accross all distribution channels and product lines 2021 was a banner year. Apparently this was specifically true as it regards single premium LTCI.
• Before you get too excited however, this fantastic increase in buying (mostly from the more affluent) is a direct result of the fire sale in Washington State as over 225,000 scrambled to find individual insurance alternatives to the new pending state tax. Another 250,000 looked under the bed to dust off and prove any LTCI coverage citizenship already in place.
• In the meantime, back at the Virus Farm, Washington Cares Fund is already anticipating rate increases before the program begins as the newly categorically excluded state residents decrease participation expectations in a program already projected to lose money.
• The WA Cares Fund Workgroup has become fixated on any supplemental private long term care insurance that will inevitably emerge as a result of the mandatory coverage. This, dear readers, is the whole enchilada—if you do not participate in the inclusion of these future ingredients there will never again be an abundance of choice at your favorite Mexican restaurant. Extra refried beans will never again be substituted for the unpopular Chicken Chalupa.

Truthfully, I am never pleased when my paranoia proves to be accurate. However, both New York and Pennsylvania have now joined the WA Cares Fund mandatory program parade. HB 2779 is now the law of the land in the great state of Pennsylvania with NY on the launch pad. Before you get too excited it appears there will not be any allowed anticipatory fire sale. It appears no one will be allowed to escape the new tax. Please begin to organize an image in your mind of a growing list of state Insurance Commissioners gleefully joining a regularly scheduled Zoom meeting to facilitate cloning this—at best flawed—attempt to offset Medicaid budget deficits. And then knowing that any taxpayer imposed structure would, could and should be helped with additional supplemental coverage (in this case an inadequate pool of benefits with a 10 year vesting schedule) moving to police any and all attempts to enhance individual protection around the edges.

I would be the first to recognize I may be wasting my breath, but it must be said loudly and frequently: “Freedom of choice for consumers and insurance professionals is in real jeopardy.” Now fueled by a burning sensation in my subterranean regions that the infamous predator of “taxation without representation” haunts our streets at night. I would ask that you take no pleasure in the fact that this foolishness will only see the light of day in Blue States—an untreated virus remains a self-fulfilling prophecy.

Other than that I have no opinion on the subject.

Understanding wireless door-bell video technology may by its purpose and effect provide recognizable structural components for utilizing management technology to reduce cost, monitor current status, coordinate other overall management components, minimize bad outcomes and prevent catastrophic results. This is also the definition of chronic care management actually with a profound cross over of technology applications. Even trying to use managed care and long term care in a meaningful context can be very confusing. It remains difficult to isolate the meaning of “managed care.” All levels of care are available and frankly in desperate need of efficiency management—acute, sub-acute and custodial. Therefore you must start with the degree of care you are attempting to make more time efficient and humanly personal all at the same time. Let’s begin by throwing all aspects of medical/social technology into the massive boiling cauldron of managed care. Nothing better defines our humanity than unpredictable mortality and the persistent need for morbidity care management from infants to the infirm. This column would not be on point without the conversation being framed by who or whom shall control that precious care management. When, where, how and under what circumstances that care will be provided, funded and managed is long term care.

• Perhaps it is best to begin at the source of the need for amelioration efficiencies—chronic disease! Chronic health is defined as a serious physical or mental condition that lasts one year or more. This includes conditions of heart disease, cancer, diabetes, substance abuse, lung disease, and a plethora of additional debilitating conditions. Six in 10 American adults have a chronic disease and four in 10 have two or more. It should therefore not come as any surprise that the pipeline for extended custodial care is always full.
• Efforts to improve the performance of integrated health care services have been slowly but surely developing since the introduction of H.R. 337 Managed Care Consumer Protection Act of 1997. Although this legislation did not pass, it began a process of gradual state implementation that now includes a majority of states. Before we get too far off in the weeds let me take a shot at explaining what is a very complicated and regulated state/federal government attempt to better coordinate the care needs of, for the most part, dual eligible individuals—those qualifying for Medicare and Medicaid. I would only ask that you understand this program does include custodial care issues but is not its primary focus. These are not our customers for insurance. There are however some important care focus similarities that have application in our long term care insurance wheelhouse:
  • The participants must be engaged and personally involved in their care plans.
  • These managed care options must be strongly encouraged to take place at home.
  • The clinician must facilitate a holistic approach to the patients care to include mind, body and spirit.
  • The participant is allowed to choose the level of intrusion and control they are willing to accept.

Principles of managed care in some states such as New York may be specific to long term care. These again are not our customers, however the use of technology to increase the frequency of interactions and the integrated coordination of various support mechanisms may clearly provide us with insights into better serving the quality of care being delivered at the time of claim management. The important lesson here is that research into the efficacy of these support programs does indicate that they improve the quality of care options and save money.

Understanding the background and undercurrents of today’s efforts to manage care both to improve the quality and efficiency of that care and in the process reduce cost is the most important door bell guarding the entrance to all our insurance futures.

Other than that I have no opinion on the subject.

Many of us will remember our mothers telling us as wayward children: “If you keep picking at it, it will never heal.” Unfortunately, or maybe providentially, this particular open wound continues to fester, itch and burn. I sincerely apologize that I am unable to leave it alone. The spectacle that continues to unfold in Washington State contains every past attempted ingredient of resolution that has infected both public and private attempts to at least hold down the fever of massive unfunded care. You should begin by understanding that this is an old unhealed attempt at subacute care policy. The CLASS Act was removed from the ACA not because it was an unworthy concept, but specifically because it was bad math. Under actuarial scrutiny it simply would not perform as advertised.

I believe there are insurance constructs that we would all acknowledge as basic truths. Layering risk is a good thing. Adequate participation in any risk pool is a prerequisite of future success. Adverse selection is the bad apple we all energetically strive to remove from the barrel. A strategic balance playing to each other’s strength between public and private efforts to meditate risk sharing is in everyone’s best interest. The relative acceptance or accommodation of preexisting conditions, mortality or morbidity, still represents the greatest toxicity to any plan of insurance.

Now let’s return again to the unfolding drama on the Pacific coast. First, my enthusiastic endorsement of the good intentions of WA Cares Fund. The director of the fund, Ben Vegte, couldn’t be more spot on: “By contributing to the WA Cares Fund, we are all better prepared to age with dignity and independence. It gives families peace of mind and allows them to focus on care, not costs, when a loved one needs support.” The readers of this column should read these words and with the patience of Job try not to scream out loud that we have been giving this speech for over 30 years. We also know that as events unfold out west the realities of implementation may temper their perceptions of success:

• The program has already been amended early this year to correct certain inequities such as inadequate time to vest benefits for older employees. Some limited exemptions were additionally allowed for existing military coverage and those predetermined to be out of state where no benefits could be received as the program has no portability.
• These changes pushed back beginning the program until July 1, 2023, and no benefits paid until July 1, 2026.
• The ability to opt out remains open this year but private insurance must have already been in place by last November. This process is a little confusing and the real numbers for what happened last year need to be understood. Almost 500,000 have shown proof of private insurance, somewhere around half of those joined the ranks during last fall’s famous fire sale.
• There is growing push back to the program. A recent article in the Health Affairs Forefront by Mark Warshawsky suggesting that the program is “deeply unpopular, poorly designed, unstable, insolvent ab initio, perhaps illegal, and, without major change, failed.” This has drawn strong rebuttals from those who support the program, but it has also ignited a healthy debate as to the merits.
• The half a million who bought a policy went through underwriting. The new employee payroll tax will not have any. Adverse selection is an issue.
• The commission is currently considering additional revisions specifically monitoring the persistency of coverage from those claiming private policy exemption and subsequently how someone could rejoin the public risk pool by paying back taxes.
• The status of the self-employed is currently, at best, in serious turmoil. Definitive clarification of employment status rules will need to be enacted.
• Initial actuarial projections predicted a 12.3 billion dollar reserve over the first 30 years because no benefits are paid for several years, vesting is required, and, as we know, claims will be small in the beginning. There will be some savings of Medicaid expense. This savings extended the program’s projected life span to 75 years. As always, these pristine optimal projections are subject to the usual suspect list of program debilitating scenarios from inflation to unexpected risk spikes. Maintaining a balance between potential long term deficits and the on-going necessary political support maintenance required will remain an open question.
• In a migratory society, requiring that benefits remain exclusive to the state will ultimately require further amendments to the program.

I would ask you again to keep your eye on this continuing microcosm of the struggle for care equity and justice. We will always admire altruistic intentions but we will never blindly accept politically motivated projection speculations. Continue to bear in mind what we know, yet every politician and bureaucrat has never clearly understood: Every “tweak” to the program, those already made and those contemplated, will as certainly as the rising sun add to the cost. Future cost adjustments will absolutely be required. Bad math is still bad math. Frankly, what continues to hang in the balance is where this fiscal burden will eventually land. Will it again be on an unsuspecting and inadequately informed public tax payer or the individual conscience of all caring Americans? Our prayers for that outcome will never waiver.

Other than that I have no opinion on the subject.

I have again been offered the privilege of appearing on an industry conference panel. They needed an old guy who had been around a long time and some level of recall was still available. The question for examination from a panel of veterans is the one that too often remains suppressed and therefore unspoken. The one we perhaps fear to hold up to the light. It is the conundrum which haunts all those who recognize the necessity to reform our actions and sales trajectory concerning the still looming financial miasma. What we know continues to stand before us is a staggering volume of unfunded care.

“What could we do to repeat our past successes?”

They may have been transitory and limited but we did get some things right. Let’s begin first with an acceptance of where we are now. Less than a handful of companies offer stand-alone LTCI with premium mostly beyond the reach of those who will require the greatest future support. Less than 10 percent of what we enrolled 15 years ago are able to now acquire membership in what has become an exclusive self-preservation club. Three fourths of the protection that does take place is achieved by including no current premium ADBRs. The True Group market is virtually non-existent below 500 lives where 90 percent of American worksite insurance should thrive. The great and vast majority of LTCI premium exists in a closed book of business teetering on a rate spiral black hole event horizon. Entrenched negative underwriting continues to effectively blockade premium growth. We continue to create a self-fulfilling philosophy of a third to a half of individual applications declined. In truth, in my humble opinion, distribution has also not significantly evolved. Even with the growth of financial service professionals who tend to restrict themselves to life insurance with affluent asset-based strategies, or some flavor of long term care/chronic illness ADBR, there appears to be little change in the source of most sales. The majority of our premium is still received from occasional producers where the client’s desires may have had more responsibility for the success of the sale than the agent who signed the application. The primary sources of current sales remain basically unchanged. God Bless the hard-headed evangelistic long term care “specialist” still out there successfully working qualified leads and referrals. The middle class is still predisposed to buy their insurance at the worksite even in a market wasteland of product options severely tainted by onerous underwriting restrictions. Premium tolerance at the worksite continues to fall into familiar territory of approximately $100 per month. Combo life with an available potpourri of various quality riders dominates current sales success.

Now let’s stare intently into our rear view mirrors and see what lessons or sales strategies may bear examination or repetition. We have proven historic success with:

• Leads generated among those consumers most at risk. Those who are not apparent recipients of government safety nets or those who could easily finance their own problems.
• Large group worksite purchase success as a result of abbreviated underwriting strategies. Guarantee issue may have incurred some black marks but modified guarantee issue fueled by virtual underwriting technologies can and does work.
• Combo life and annuity sales have a proven track record and most early benefit limitations among the crowded IRC 101g riders has been liberalized. Who can’t sell “no current premium.” We just need to keep a bar of soap handy for those who suggest it’s free.
• In the late 90s to the early 2000s we successfully launched a massive educational campaign advocating the clear advantages of corporate premium deductions. We proselytized 10 pay and single pay. We taught to the sale and it worked.
• In 2004 we launched another massive educational campaign to extoll the virtues of list bill multi-life small group with minimal abbreviated underwriting strategies and within 24 month a dozen companies had successfully increased sales activities.
• It can easily be argued that asset-based combo sales promising the abolition of “use it or lose it” and safety of premium principal has also created a summer pond algae bloom of sales among the affluent.
• And to put an exclamation point on it, our ability to create a premium stampede (read fire sale) could not be any clearer than the recent example of one third of an entire state’s workforce running over each other to block a pending employee tax. We have not nationally sold a half million individual long term care policies for more than 15 years, yet over 450,000 were issued in a six month period in Washington State last year.

What part did we not understand?

• Consumer designed benefits work.
• Workplace purchase convenience works.
• Streamlined benefit and therefore premium reductions work.
• Surely we have not exhausted our creative and innovative skills at benefit configurations.
• Abbreviated underwriting works.
• Tax incentives both positive and negative work.
• Intensive consumer education and public LTCI proselytization works.
• Caregiving issues resonate in almost all American homes. Focusing the sale on personal caregiving experience works.

Perhaps we still do not understand all we know about this subject but we do not need Google Maps to find our way home.

Other than that I have no opinion on the subject.

As a former history major there is no quotation more famous or has filled up more college exam blue books than the quote from the Harvard historian George Santayana: “Those who cannot remember the past are condemned to repeat it.” At the very least it is fair to say that insurance strategy attempts to reduce the financial and emotional price associated with long term custodial risk are now at a point of reflection. I would never suggest we completely failed, only that we never achieved the centrifugal force necessary to adequately establish insurance alternatives to current defaults of personal or governmental funding as we all would have anticipated.

Please understand I am not opposed to collective fairness helping to maintain equity of access, affordability, and quality of outcomes. I do have some difficulty visualizing prior success stories where we have defaulted to mandatory bureaucratic solutions.

• The Social Security Trust Fund by 2035 will only be able to pay 75 percent of scheduled benefits.
• Medicare Part A reserves are predicted to be depleted by 2026. Covid accounting may move this up as early as next year.
• ACA/ObamaCare–The interdependence, some might suggest incestuous relationship, of these Trust dollars with Medicare make solvency predictions difficult. History would suggest you should have suspicions as to the solidity of the financial and political ground upon which this newest social insurance rests.

Now the traditional reservations of intentionally avoiding personally held convictions concerning politics or religion must come into play. Unfortunately, the politics of this market cannot be avoided. Long term care financial risk may be the one issue that transcends yet focuses the usual liberal/conservative polarities. What cannot be avoided entirely is the political, social and cultural context of a nation truly divided. Prospective state by state solutions to the long term care conundrum do follow a suspiciously red vs blue state pattern. Currently California, New York, Alaska, Colorado, Hawaii, Oregon, Illinois, Michigan, Minnesota, North Carolina and Utah are actively considering establishing a new long term care social insurance program paid for by a combination of employee or employer payroll taxes similar to the Washington State Cares Act pending implementation July 1, 2023. As an example, the California Department of Insurance has been charged by the legislature to present a plan for consideration by January 1, 2024. This pot is on the boil primarily in blue states. Mandatory government control required by these plans would of course not find succor among more fiscally conservative approaches evidenced in clearly red states.

I do not wish to drift too far off here into the politically charged health insurance world. I would however remind us that we have all been operating under marching orders created by HIPAA’s proclamation that long term care insurance is health insurance. You must allow yourself to continue to internalize the reality that this “truth” lies at the radioactive nucleus of any and all attempts to ameliorate the long term care risk.

Under the previous administration there was a serious attempt to create an alternative to the ACA. The former president commissioned the Department of Labor to create new expanded and dramatically flexible revisions to the creation and constitution of AHPs (association health plans) under existing ERISA provisions. This would have allowed employers to more easily band together and provide viable alternatives to the coercive nature of Obama Care. These liberalizations of current law would have allowed states to organize alternatives to federal mandates. In the fading days of the previous administration this attempt at greater freedom was stopped in a Washington DC federal court. That decision has been appealed by a laundry list of red states. We are all still waiting for the Court to rule or political winds to change direction .

This war of political thought and competing perceptions of human behavior lies at the heart of any solution to our united and universal desire to soften the blow of long term care.

History will not repeat itself, we will never go back to what was. We will stagger forward. We can and will do better. However I would humbly submit it will not be based on a compromise of these two divergent proposed futures. It will be one or the other.

Other than that I have no opinion on the subject.