We all find irony and humor in the strangest places. Like many my age I have suffered or strategically coexisted with arthritis for many years. Surgery and pain management have recycled me through a number of physical and occupational rehabilitation scenarios. For some strange reason television screens seem to inevitably decorate the walls to provide distraction to the exercise task at play. What strikes me as a little disconcerting is who gets to choose the viewing channels in this strange environment. Generic content seems to range between cooking and stupid video clips. In other words, reality programming. This therefore stands in stark contrast to why you are trapped for an hour trying to make sense of the necessity of rehabilitation in the first place. All of this to explain why one of those self inflicted wounds anthologies brought me involuntarily to this column. Remember when you were young with still unformed internal limitations having someone help you spin around and around until you were impossibly dizzy and then turning you loose allowing your internal compass to go haywire before your head stops spinning and you can reorient yourself to a stable and upright position? I found myself recently walking fast on a treadmill and watching a parade of theoretically grown men on a TV screen repeatedly performing this same childhood game with the same predictable results. I immediately thought of the history of long term care sales and this column.
Where is our learning curve? Are we simply doomed to keep getting back in line to be spun around to lose our equilibrium yet again? Each time, before we step forward again for that heavy spin, could we all just stop and remember the basic truths about the long term care insurance conundrum we should have learned the hard way over the last twenty five years?
- 25 Years ago we spent 20 percent out of every Medicaid dollar on home based care. Today it’s more like 60 percent. COVID just put a finite point on a mass shift to basic consumer and therefore what was already a publicly mandated claims focus.
- We understand we got initial pricing assumptions very wrong. Lapse assumptions wrong, duration wrong, utilization wrong, mortality wrong, longevity wrong, investments/inflation wrong. Whatever pricing issue I missed was also wrong. It was not intentional. It was an honest mistake or best guess based on previous experience and an economy based on polar extremes.
- We now clearly understand the risk was simply bigger, broader and deeper than we thought. We now have the necessary history to recognize who and what becomes a claim. Through 2022 we have paid over 13 billion in claims to 345,000 unable to do two or more ADL’s.
- Average claims now over six figures should be considered catastrophic by definition. We have also learned that a moderate amount of insurance can make all the difference and that the promise of $50,000 of initial protection can force state-wide mandatory social insurance that can possibly provide relief to state run Medicaid money hemorrhaging.
- The LTCI industry is no longer about establishing and leveraging future benefit dollars. We long ago stopped managing new sales and shifted to managing claims. And we seem to only admit privately that, as the flow of new water reduces to a trickle, the overly efficient recognition of claim adjudication may be the last black eye we can sustain without complete collapse. It may be more than a rumor that we are systematically tightening our claims belt. This is I suspect more than a matter of carrier default from a regulatory perspective or anticipated reserve restraints. In other words there may be a method to the madness but those who participate are still certifiable.
- Combo sales cannot just represent our new panacea flavor. They can only provide expanded options and a rock solid back up plan. Benefits are still paid with a tilted scale of justice highlighting one or the other—life or health—not completely even intentionally accomplishing both.
Now return in your mind’s eye to that short Video showing multiple slapstick crash and burns. The set up is the same based on a clear and certain knowledge of exactly what will certainly occur by spinning yourself around and around until barely able to stand and then abruptly letting go to implode into the ground or the nearest solid wall. Hold that thought in your head and you will understand with extremely vivid clarity why this column can legitimately appear to repeat itself.
Other than that I have no opinion on the subject.
Responsibility
My sons grew up on a farm. They learned responsibility early. The land and the animals demanded constant responsible intimate care and service. That requirement fell squarely on those who created the obligation from the moment we stepped onto that ground. There is no finger pointing on a farm. If you have ever sold or facilitated the purchase of an insured chronic illness or long term care financial instrument you are directly and permanently responsible for the exercise of that leveraged risk obligation. Renewals and service are merely a friendly reminder of what is a permanent obligation. For the last twenty years we have lived in a rapidly shrinking universe of dwindling sales particularly for stand alone LTCI health policies.
In relation to new sales vs growing claims adjudication, we long ago became a negative growth industry.
Although no one wants to discuss or loudly admit it, we are in the midst of what may ultimately prove to be an extended and truly unpleasant rate spiral. All but a handful of carriers still have an open for new business sign on the front door. We are an industry of claim management. Closed blocks of premium dominate our activities including corporate priorities and expenditures. Cries in a wasteland of needed premium growth appear to be dominated by managed care strategies and a plethora of claim management vendors. We are paying claims. Last numbers I saw were in excess of 12 billion. Our sales may not ever have been what we would have preferred but it is absolutely true that we have placed on the books trillions of potential claims dollars now waiting for us just over the horizon. Our industry has no choice but to be focused on the rear-view mirror hoping the police never catch up and prove that we were speeding ahead to avoid the inevitable.
The strength and freedom of thought provided by this magazine now allow me to knock the hornets’ nest out of the tree and run. I would ask you to take a moment and review the case study complaints concerning LTCI claims readily available at your State Board of Insurance or the Better Business Bureau. In my humble opinion they are not dominated as might be expected by rate increase concerns. They are drowning in complaints about confusing policy terms and poor service. Shame on us. We should all be extremely proud of those agent advisors and brokerage centers providing advice and counseling to those already caught up in the struggle to get claims paid. Many are already actively responding to the cries for help to understand how a claim is adjudicated and ultimately paid. Simply providing a toll free number in response to the very point in time in which every financial and emotional risk we were intent on leveraging against is, in my humble opinion, morally and ethically insufficient. There is too much here to complete in one column therefore lets just begin with a few shots across the bow of an industry doing it’s best to respond to current realities:
The American consumer remains exposed to the wear and tear of an extended need for custodial assistance. We created and continue to market a complicated insurance leveraging of that risk. The obligations we install with those policies will demand our attention with hands on and standby assistance. We cannot ignore the reality of an adversarial relationship between marketing and claim adjudication that may have always been inevitable. Paperwork is after all just paperwork. I’m sure attempts at fraudulent claim acceptance are also quite real. I am also absolutely certain that we are perhaps inadvertently complicit in building a consumer black eye that may be very slow in healing. We can be better prepared to help navigate choppy water. We can acknowledge that these claims are extremely time sensitive. The need for care is most often immediate and intense. Our involvement and assistance in helping to facilitate expedited claim justice is mandatory.
Other than that I have no opinion on the subject.