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March 10, 2009 at 08:00 PM
Steve Moses writes: The feature article by Trevor Thomas in the February 2009 LTC e-Wire, Major LTC Initiatives Could Emerge from Congress in 2009 , is another example of a yearly ritual. Congress returns from its holiday recess and long term care insurance cheerleaders make us this promise: New government policies to encourage the market for LTC insurance are on the verge of passing.
In years gone by, the hopes were much higher. Surely this would be the year when legislators grant above-the-line tax deductibility, approve Section 125 cafeteria plan coverage, and fund a huge LTC insurance education program. But, no, each year passed with hopes dashed.
Now, even these wishful hopes have dwindled to this: “Proposals to emerge are likely to include legislation introduced in the past 2 years but never voted on, such as bills to encourage home and community-based care and to extend Section 125 cafeteria plan to include consumers’ spending on long term care.”
Neither of these bills will pass, but imagine if they did. Congress jumps on the brake by making Medicaid more attractive (more home and community-based care) while lightly nudging the accelerator with a half-hearted nod toward LTC insurance (Section 125). Not a good trade if you want less Medicaid dependency and more LTC insurance.
Through this last decade of shattered hopes and unrealistic promises, one voice has remained consistent: mine. To wit: the LTC insurance market won’t expand until government stops giving away what the industry is trying to sell. Say what?
Medicaid crowds out the market for LTC insurance. By covering people after the insurable event occurs who would, could and should have purchased private insurance, Medicaid has anesthetized the public to LTC risk and cost. Read almost anything at www.centerltc.com to see how it happens.
The market for long-term care insurance will explode soon–certainly within a decade, probably within a few years. But the reason will have nothing to do with government incentives. They won’t pass. What will happen is that government disincentives to the purchase of private LTC insurance will disappear.
In that respect, the anonymous (pusillanimous) source made the only accurate prediction in the whole LTC e-Wire piece: “Another analyst, who asked not to be identified, doubts that legislative proposals to add LTC premiums and costs to employer cafeteria and FSA plans are going anywhere this year. With the current dismal economy, he says, Congress is going to have a ‘pay as you go’ mindset.”
