LTC Execs: It's Time to Grow

The U.S. long term care (LTC) insurance market could enjoy 10% to 15% in annual short-term growth, according to the heads of two major LTC insurance businesses.

Malcolm Cheung, a vice president at a unit of Prudential Financial Inc., Newark, N.J. (NYSE:PRU), and Ross Bagshaw, president of Transamerica Long Term Care, Bedford, Texas, talked about that kind of growth earlier this month at the annual LTC Insurance Industry Conference in Las Vegas, which was organized by the American Association for Long-Term Care Insurance (AALTCI), Westlake Village, Calif.

Other conference speakers included some of the U.S. Department of Health and Human Services (HHS) officials involved with launching the voluntary federal worksite LTC program that is supposed to be created by the Community Living Assistance Services and Support Act (CLASS Act), a component of the Patient Protection and Affordable Care Act, by early 2013.

The HHS officials at the conference were Robert Yee, the newly hired actuary for the CLASS Act, and Hunter McKay, who will be responsible for marketing the program for HHS.

Some companies have left the LTC market in recent years, and some have raised rates, but the health of the market should be improved by the growing awareness of the consumers in the prime market that government programs “are not going to be a viable option going forward,” Cheung and Bagshaw said, according to conference recordings provided by the conference organizers.

In theory, if the CLASS Act program survives what many experts say is a structure likely to create a death spiral, that program could fill some gaps.

But the controversy surrounding the CLASS Act program and its limits, and the controversy surrounding PPACA as a whole, have helped draw attention to the need for comprehensive, private LTC benefits.

People in the prime market–ages 55 to 65–also see the intense pressure on Medicare, Social Security, and Medicaid nursing home benefits, said AALTCI Executive Director Jesse Slome, citing comments from industry executives.

“Medicare and Social Security used to be the third rail that no politician would touch; that has now changed,” Slome said. “If every day there is news that Congress and the president have decided that we need to address entitlement programs, then people in the target market are deciding they need private alternatives.”

Slome said the theme for the 2011 AALTCI conference was “Get Over It,” in recognition of the fact that the industry has been in the psychological doldrums for the past 18 months because conversation has focused on “waiting on the next shoe to fall”

But LTC sales have been growing, “albeit at a lower rate,” Slome said.