LTCI Watch: Breaking Into the FSA

One hitch is that Democrats may not want to do Republicans any favors.

Another hitch is that insurers themselves may not be in a position to provide as much support for an FSA LTCI bill as they have in the past, given the smaller number of insurers in the LTCI market.

A third hitch is that Democrats, and some Republicans, are skeptical about the concept of using tax deductions and tax credits to encourage consumers to buy specific types of products.

The tax breaks reduce federal tax revenue, often go to taxpayers with high incomes, and, in some cases, generate administrative costs that are comparable to, or higher than, the amount of benefits provided, critics say.

Martin Feldstein, a well-known economist, may have given the idea of making room for tax breaks that encourage taxpayers to save for post-retirement expenses a little intellectual oomph in September, when he suggested at a hearing organized by the Senate Finance Committee that Congress should root out many types of “tax expenditures” but keep tax breaks that encourage saving and investment.

In the mid-1990s, analysts tried to come up with studies showing how LTCI tax breaks would do at generating Medicaid nursing home benefits program savings in later years.

My feeling is that supporting anything that encourages long-term thinking about anything is worth considering in this day of 15-second attention spans. It’s hard to know whether any product, company, currency or country will last or prosper at a time when Greece looks shaky. If an entire European country can enter some kind of national state of bankruptcy, who knows if anything can survive. Maybe only the earth abides. But, it just seems as if there’s something good about having a lot of people around who are thinking about the future when they are buying, selling and creating products. Even if the products don’t perform exactly as we expect, maybe the talking and thinking will help us figure out how to cope.