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.
