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LTCI: Is It the Answer?

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Lawmakers are asking what kind of role private long-term care insurance (LTCI) might play in helping the United States pay for long-term care (LTC) for the baby boomers and others.

Douglas Holtz-Eakin, a former Congressional Budget Office director who is now president of the American Action Forum, Washington, said he believes private LTCI can play a role in helping the country solve LTC finance problems.

Some insurers have dropped out of the LTCI market, Holtz-Eakin testified at an LTC finance hearing organized by the Senate Special Committee on Aging. 

“I don’t think private insurance is going to pay every dollar going forward,” Holtz-Eakin said.

But “there are still people in the business and being successful,” Holtz-Eakin said.

The government could help the insurers still in the private LTCI market by encouraging the formation of big LTCI purchasing pools resembling the voluntary Federal Long Term Care Insurance Program, letting employers include LTCI in cafeteria plans, creating new tax breaks for workers who buy private LTCI, and doing something to reduce “Medicaid crowd out,” or the likelihood that middle-income consumers will depend on Medicaid to pay for future nursing home expenses, Holtz-Eakin said.

LTCI “is not perfect for everything,” but it could help reduce the burden on public programs, Holtz-Eakin said.

Judith Feder, a health policy specialist at Georgetown University, said even Holtz-Eakin was talking about private LTCI as being just one part of the LTC financing solution.

“It’s not that I don’t like private long-term care insurance,” Feder said. “It’s part of the solution. It’s not the solution.”

The LTCI market has not grown much in the past 20 years, and the insurers still in the market have trouble making money off it, even when they use tight underwriting requirements, restrict benefits and increase rates, Feder said.

“The number who can afford it is modest,” Feder said.

The insurers themselves admit that private LTCI is just part of the solution, Feder said.


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