A few weeks ago, I suggested that people might be able to get past any temporary or lingering shortage of high-quality long-term care insurance (LTCI) that occurs by setting up long-term care (LTC) cooperatives, or relying facility-based LTC arrangements.
Of course, many continuing care retirement communities (CCRCs) already offer “life care contracts” that let people rise through different levels of care in the same community, and plenty of LTCI agents are making CCRCs part of their own LTC plans. The contracts are, essentially, a kind of LTCI arrangement.
One important caveat is that any facility-based organization, whether it’s a health club, a golf club, a CCRC that offers life care contracts, or a “staff model” health maintenance organization (HMO) that runs its own clinics, is apt to run into the same kinds of feast or famine demand problems that HMOs often face.
Either business is slow, and the HMO has trouble getting patients in the door, and customers paying premiums, or business is too strong, and every member seems to show up on the doorstep with double pneumonia at the same time. When the feast times come, the HMO has an incentive to skimp on care, the golf club may have scruffy greens and long waits for tee times, and the packed health club might do a poor job of cleaning sweat off the equipment between sessions.
No matter how nice the people starting a CCRC are, they need to talk to a smart, creative, brutally honest actuary to make sure they are not going to disappoint the baby boomer members when incoming boomer members need to shift between levels of care.
Many states, such as Arizona, Iowa and Missouri, already give state insurance departments some say over CCRCs, but other states rely on banking departments or securities departments to regulate the facilities or impose no oversight requirements on the facilities, according to the U.S. Government Accountability Office.