I have often heard from my brothers and sisters in brokerage distribution a suggestion that perhaps as they near retirement they might like to do some consulting work. I would humbly submit to be careful what you wish for. As an example, I have gradually over time limited my practice to the Long Term Care Conundrum and as a result I have signed so many NDAs, all of which are focused on the same problem, that I’m not sure anymore what I can say about current activities designed specifically to take advantage of what we have learned. I can say we have learned…and that we are indeed not doomed to repeat our past failures. For the foreseeable future in this column I will continue to bang pots and pans as loud as possible to illuminate the absolute essentials that will finally at least take the edges off of what in my mind remains America’s largest unprotected and underfunded risk. The absolute “Truths” that have revealed themselves over the last 20 years are:
- We failed to understand the nature of the problem in the beginning. By continuing to progressively limit our sales activity to those with wealth, we have defined the solution as replacing known risk with adequate and equal amounts of insurance. In our defense this was always what we did—measure the financial dimensions of the problem and balance with a liberal application of insurance. However, as premiums rushed in to meet the reality of the risk, we have simultaneously day by day diminished the ranks of those who could afford to take action and be prepared. Recent estimates are that our singular focus may have left as many as 50 million Americans behind. Specifically all those middle class consumers that we were offering the incorrect (and knowingly unaffordable) solution to the wrong problem.
- In a recent Harris Poll Health Care Costs in Retirement, it is abundantly clear that Americans are concerned about retirement and, frankly, the real possibility that they will run out of money. Seventy-two percent were concerned about unplanned medical expense; 70 percent knew they would not have monies for long term care; 69 percent knew that government support would be inadequate and two-thirds knew their retirement dollars would not last. And this was most true where the household income was less than $150,000. Perhaps if we focused on our past historic sales failures, specifically the 90 percent we have been unable to convince to buy or the 40 percent or more that got declined when we took an application, our opportunity to be helpful would increase dramatically.
- The point is that the American people do understand. Yes, it’s about money, but only as it relates to the quality of care. It’s first and foremost about freedom of choice and doing everything in your power to remain a Private Pay patient. As reported recently on NPR “Nursing homes that rely on Medicaid tend to provide the worst care for their residents.” Medicaid should not be anyone’s goal. It is discounted care by definition. The 2015 funding shortfall was $7 billion. A recent Heritage Foundation report on Poor Medicaid Care was adamant that, “American’s enrolled in Medicaid have less access to healthcare, and when they do receive care the quality is often inferior to the care provided to similar patients.” (Suggesting someone access support from Medicaid is like recommending someone should spend time at a Spa currently battling the Black Plague with motel soap and stagnant water. Sorry my passion on this subject may have gotten me a little carried away.)
- The theme I intend to return to repeatedly is that we missed the whole side of the barn when we aimed our insurance resources at the problem. It is not how much insurance is needed to pay for care, but how little insurance is needed to help someone remain the primary decision maker in their own claims destiny. Let’s scrape it all together and see what retirement really looks like for those in need of chronic care assistance. Although the average SSI benefit in 2017 was $1,360 per month, the maximum available payment is $3,538—with many Americans receiving more than $2,000 per month. The mean retirement dollars between age 65 and 74 is $77,000. The median home equity at the same age is between $125,00 and $130,000. According to the latest U.S. Census, the typical American net worth at age 65 is $194,226. Now we know, as is frequently reported, that 83 percent of all LTCI claims would fall under $100,000. I don’t care how you construct the math associated with these facts, it does not require hundreds of thousands of insurance dollars to allow the monthly cost of private care to remain a journey of quality, dignity and personal control.
“Contrariwise,” continued Tweedledee, “If it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”
Other than that I have no opinion on the subject.
