Many of us will remember our mothers telling us as wayward children: “If you keep picking at it, it will never heal.” Unfortunately, or maybe providentially, this particular open wound continues to fester, itch and burn. I sincerely apologize that I am unable to leave it alone. The spectacle that continues to unfold in Washington State contains every past attempted ingredient of resolution that has infected both public and private attempts to at least hold down the fever of massive unfunded care. You should begin by understanding that this is an old unhealed attempt at subacute care policy. The CLASS Act was removed from the ACA not because it was an unworthy concept, but specifically because it was bad math. Under actuarial scrutiny it simply would not perform as advertised.

I believe there are insurance constructs that we would all acknowledge as basic truths. Layering risk is a good thing. Adequate participation in any risk pool is a prerequisite of future success. Adverse selection is the bad apple we all energetically strive to remove from the barrel. A strategic balance playing to each other’s strength between public and private efforts to meditate risk sharing is in everyone’s best interest. The relative acceptance or accommodation of preexisting conditions, mortality or morbidity, still represents the greatest toxicity to any plan of insurance.

Now let’s return again to the unfolding drama on the Pacific coast. First, my enthusiastic endorsement of the good intentions of WA Cares Fund. The director of the fund, Ben Vegte, couldn’t be more spot on: “By contributing to the WA Cares Fund, we are all better prepared to age with dignity and independence. It gives families peace of mind and allows them to focus on care, not costs, when a loved one needs support.” The readers of this column should read these words and with the patience of Job try not to scream out loud that we have been giving this speech for over 30 years. We also know that as events unfold out west the realities of implementation may temper their perceptions of success:

  • The program has already been amended early this year to correct certain inequities such as inadequate time to vest benefits for older employees. Some limited exemptions were additionally allowed for existing military coverage and those predetermined to be out of state where no benefits could be received as the program has no portability.
  • These changes pushed back beginning the program until July 1, 2023, and no benefits paid until July 1, 2026.
  • The ability to opt out remains open this year but private insurance must have already been in place by last November. This process is a little confusing and the real numbers for what happened last year need to be understood. Almost 500,000 have shown proof of private insurance, somewhere around half of those joined the ranks during last fall’s famous fire sale.
  • There is growing push back to the program. A recent article in the Health Affairs Forefront by Mark Warshawsky suggesting that the program is “deeply unpopular, poorly designed, unstable, insolvent ab initio, perhaps illegal, and, without major change, failed.” This has drawn strong rebuttals from those who support the program, but it has also ignited a healthy debate as to the merits.
  • The half a million who bought a policy went through underwriting. The new employee payroll tax will not have any. Adverse selection is an issue.
  • The commission is currently considering additional revisions specifically monitoring the persistency of coverage from those claiming private policy exemption and subsequently how someone could rejoin the public risk pool by paying back taxes.
  • The status of the self-employed is currently, at best, in serious turmoil. Definitive clarification of employment status rules will need to be enacted.
  • Initial actuarial projections predicted a 12.3 billion dollar reserve over the first 30 years because no benefits are paid for several years, vesting is required, and, as we know, claims will be small in the beginning. There will be some savings of Medicaid expense. This savings extended the program’s projected life span to 75 years. As always, these pristine optimal projections are subject to the usual suspect list of program debilitating scenarios from inflation to unexpected risk spikes. Maintaining a balance between potential long term deficits and the on-going necessary political support maintenance required will remain an open question.
  • In a migratory society, requiring that benefits remain exclusive to the state will ultimately require further amendments to the program.

I would ask you again to keep your eye on this continuing microcosm of the struggle for care equity and justice. We will always admire altruistic intentions but we will never blindly accept politically motivated projection speculations. Continue to bear in mind what we know, yet every politician and bureaucrat has never clearly understood: Every “tweak” to the program, those already made and those contemplated, will as certainly as the rising sun add to the cost. Future cost adjustments will absolutely be required. Bad math is still bad math. Frankly, what continues to hang in the balance is where this fiscal burden will eventually land. Will it again be on an unsuspecting and inadequately informed public tax payer or the individual conscience of all caring Americans? Our prayers for that outcome will never waiver.

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: