Many of us would probably admit that the inexorable advance of technology is sometimes simply overwhelming. It’s like that recurring dream where you are running but not distancing from what is inevitably gaining on you. Escaping the lack of future long term care planning strikes me as very similar. However, the truth is that the probability of at least a marginally adequate solution to America’s lack of long term care protection is excellent. This is true for no other reason than it is a problem of immense proportions that cannot solve itself. It sometimes seems we live in a time when many of the primary stakeholders traditionally assembled to deal with risk at this level have chosen to turn their backs on the problem. There is no current plan in motion to supplement or enhance current government funding levels. The burden of health care expense is falling more severely on all our citizens. More important, the suspicion that health care inflation knows no bounds is sucking much of the oxygen out of many other insurance conversations. Individual LTCI sales are still weak, and basic structural reform or innovation on any level seems to be experiencing a major drought. The industry appears to have folded itself into its own form of lethargic cocoon.
As your resident eternal optimist I must remind all concerned that even after a particularly brutal and bleak winter a new and exciting spring stands before us. Metamorphosis is defined as “a striking alteration in appearance, character or circumstance.” We have been seeing the signs for some time. Traditional LTCI sales have been down, but they did not disappear—they may have simply partially relocated. Combo sales coming from all directions in the planning process have provided one of the only signs of new life available for viewing in life and annuity sales. These options are expanding rapidly, both in form and substance. Innovative product response is emerging. Pricing concerns are being addressed. New co-insurance strategies are being made available.
None of this activity is random. It is a recalculated and recalibrated response. It is because we now have a serious body of evidence that helps us to better understand the real nature of the claim. Its cost, duration and location. We have accumulated substantial buyer and consumer analysis to better understand why, why not and what if.
We have not only come to understand and better appreciate the limitations of government and private industry. We may even have begun to understand where each can be most helpful. We both clearly recognize that private insurance remains the only meaningful defense against the depletion of federally mandated and state operated Medicaid. We have come to appreciate that there is not one grand solution but many approaches that can help to isolate and take down the problem—not only by a massive frontal attack on the risk but also by incremental and planned attrition. We have reviewed our own structural limitations and looked for creative ways to work around them.
One new product alternative deserves special mention. It’s a product concept that has been discussed for some time and was a key recommendation of the SOA”Land This Plane” survey released last year. Perhaps the two most significant restrictions present in traditional stand-alone LTCI pricing are the inability to share either the unpredictable investment environment or the constantly evolving morbidity landscape with the policyholder. The underlying principal of flexible premium life insurance (universal life) is the ability to manage all the moving parts and adjust to fluctuations in circumstance while providing substantial consumer product transparency in the process. A new and potentially spectacular new specimen has recently emerged from a market seemingly in stasis. “Universal long term care” is a radical departure from business as usual. It is an exceptional opportunity to spotlight the inherent beauty of an old and yet very familiar sales alternative. I’m excited that a new and colorful product “butterfly” is loose upon the wind.
Other than that I have no opinion on the subject.
