Let’s return to the vision that will not leave me alone: There is an elephant in the room, and for many of us he has long ago worn out his welcome. His presence haunts our national consciousness as, perhaps, the largest unprotected, underfunded risk ever that refuses to be subdued, diminished or trained and—for far too many consumers—even acknowledged.
The time has come to find a better way. A number of possibilities for a more successful strategy are present in a report: Long Term Care Think Tank Session: From Hope to Change, March 17, 2010, sponsored by a committee—representing the Society of Actuaries and the Intercompany Long Term Care Insurance Conference Association, Inc.—which originally met in 2005 and met again last March to try to find a better approach. Participants in these meetings came from many disciplines: academic, regulatory, home office, reinsurance and marketing specialists.
The first meeting in 2005 identified five “Big Ideas”:
1. Medicaid reform to take out the “loan on home value.”
2. A short term insurance product supplemented by government catastrophic coverage.
3. Medicare and Medicaid repackaged as “Medicare Part E.”
4. Tax incentives for long term care insurance.
5. LTC finance reform/National LTC insurance incentives.
In 2010 the number of committee participants was increased and again the group worked toward a more focused action plan to recommend approaches to shrink or eradicate the problem that has defied all prior best efforts.
Two markets were identified: “middle mass,” representing 83 percent of those best suited to purchase LTC insurance ($75,000 average income, $100,000 average assets), and the “middle affluent,” representing the remaining 17 percent ($132,000 average income, $390,000 average assets).
A number of clear challenges to the committee’s success were identified with a pre-conference survey:
1. Consumer perception remains inadequate.
2. The market must be broadened to include more insurers and more product offerings.
3. Products must be simpler and more flexible, directly addressing consumer need and affordability.
4. The value proposition of LTC insurance must be made much more obvious to consumers.
5. Regulation must be more flexible to accommodate alternate product design. We will be required to find common cause with the CLASS Act.
6. Carrier participation (not retreat) must be encouraged.
Clearly one of the primary design challenges for the industry is to increase alternatives for the middle market, and the committee identified the types of products needed to best suit the middle mass as well as the middle affluent markets. Middle affluent sales are for the most part individual—both combo and stand-alone. The middle mass solution needs to be based on the concept that some insurance is better than no insurance. Medicaid supplement plans, reverse mortgages, higher elimination periods, co-insurance strategies and catastrophic coverage may better address the middle mass. It is believed that state partnership sales will help both markets.
A number of solutions were outlined as a result of the meeting:
1. Embrace technology; 30 percent of sales are already accomplished on the phone and Internet.
2. Diversify both producer and consumer bases.
3. Understand demographics such as target marketing the potential caregiver.
4. Emphasize financial planning.
5. Simplify products.
6. Mandate agent training and certifi-
cation.
Product enhancements were also identified. First and foremost, LTC insurance must become a mainstream insurance option for consumers. In order for this to happen, regulator restrictions need to be modified in order to allow greater product diversity. LTC insurance options and riders must be made available as an add-on to more existing products. Worksite underwriting concessions should be increased, based on greater participation. Non-insurance benefits such as assisted living and informal home care should be removed from LTC insurance. Last, but not least, new solutions are needed for the uninsurable.
A vision is beginning to emerge for an elephant eradication strategy. It is an approach that takes full advantage of what we have learned and is based on a cooperative approach to government programs. It builds on our strengths: product innovation, consumer education, agent training, creative sales approaches and a focused dedication that insurance is the only solution for indigent elephant inertia.
Other than that, I have no opinion on the subject.
