Recently I was asked to speak to a 30-person benefit committee of a very large hospital. “If they liked the idea of LTC insurance, the hospital planned on implementing a voluntary offering.” I requested at least 30 minutes to tell the story but was subsequently informed I would have substantially less time.

    The show must go on was my rationalization as I carefully planned the 15-minute explanation of what LTC insurance is, how important it is, and what it means personally to each and every member of that committee. If you know me, you understand that I have no trouble conveying my passion for the subject matter, but the question was how to boil it down to a direct-impact sermonette that would be immediately internalized and, hopefully, force an immediate change in thinking.

    Unfortunately I would be a long distance from the final buying decision, and to compound my problem, the audience was in their late thirties to early forties and predominantly female.

    It’s All About Choice—
    Or the Lack Thereof

    Consumer worries such as freedom of choice, maintenance of dignity and peace of mind were somehow not only second tier, in my opinion, but “softer” concerns. But upon reviewing the longitudinal LIMRA Buyer/Non-Buyer surveys that continue to demonstrate the top two issues governing an LTCI sale were the money to be protected and the burden of caregiving, I realized I was absolutely wrong. My need to clearly illuminate the purpose of LTCI created my own epiphany!

    There is no stopping the passage of time. Longevity is not a choice. For those born today, life expectancy in the United States now exceeds age 78. There are falling morbidity rates for 9 of the top 15 causes of death. Therefore, anticipating a long life and planning for a very likely outcome would appear to be prudent.

    Medical inflation is not a choice—it operates in reverse of supply and demand. As supply (availability of medical technology, prescription drugs and access to medical services) increases, utilization increases, driving medical inflation above and beyond any other economic measure of future inflation. Regardless of our political persuasion, there is universal acceptance of this known eventuality. There is no choice.

    It could be argued there is a degenerative process established at the beginning of life, because an inevitable change in health remains an absolute certainty. In an article published by the American Journal of Clinical Nutrition, the author’s research shows that “chronic diseases have replaced acute illnesses as major health threats and are responsible for a higher fraction of deaths.” They go on to say that morbidity is unpredictable. For example, cancer is often thought to be more prominent in the elderly. In fact, cancer is no more aggressive in older patients when compared with younger populations. The potential, however, for catastrophic events such as a stroke or a hip replacement do increase with age. (“Aging and Diseases, Patterns of Morbidity with Age, Relationships between Aging and Age Associated Diseases,” B.J. Vellas, J.L. Albarede and P.J. Garry, American Journal of Clinical Nutrition, 2002.)

    The point is that stuff happens at all ages. My question to each of the hospital managers was what happens after you leave the building. Where are your choices? How are you paid? Your health will change. Although the timing can be affected by lifestyle, I am at a loss to find choice anywhere else in the equation.

    The average cost of care per year is more than $70,000, with typical claims in the three to five year range. After age 65 the majority of Americans will need care. Yes, it may be one day or 17.5 years (the longest claim from the recent Genworth claims analysis as of June 30, 2010).

    The Genworth claims analysis also reported that 44 percent of claims last less than one year because claimants recover, die suddenly or require only non-caregiving assistance (equipment, training, etc.). The average length of claims that last more than one year is 3.9 years—and 14 percent of claims will last more than 5 years. Once again I am at a loss to find choice in this obvious risk exposure.

    Although there may be no choice about receiving care in a nursing home, private funds or insurance is the governing factor in the quality of the facility you choose. Genworth’s claims analysis is crystal clear about where claims are paid when insurance is in place. Under one year, 90 percent were at home or in assisted living—again my suspicions are that insurance provided choices.

    As further proof that insurance provides choices, most people do not transition from where they receive their initial care. They are able to choose where they want to be and they stay there. (Genworth Financial “LTC Claims Experience Data,” June 2010 update.)

    The LTC insurance conversation is all about choice. Choice about where and under what circumstances you will receive care. It is the absence of choice that best defines the problem. My 15 minutes was a casual, moderately passionate process of elimination. I explained choices and the meaning of the lack of choices. Each and every employee at that hospital also has a choice and all I was asking for was the same 15 minutes to explain what those choices meant to each of them. Insurance provides choices. I’ll let you know how it turns out.

    Other than that, I have no opinion on the subject!

    Ronald R. Hagelman, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products.

    A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing “friend” of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman and his partner Barry J. Fisher are principles of Ice Floe Consulting, providing consulting services for Chronic Illness/LTC product development and brokerage distribution strategies.

    Hagelman can be reached at Ice Floe Consulting, 156 N. Solms Rd., New Braunfels, TX 78132 Telephone: 830-620-4066. Email: