Recently, I was watching members of the Federal Commission on Long-Term Care talk about private long-term care insurance (LTCI).
Then it hit me — that kneejerk disdain for private LTCI carriers is a symptom of a lack of realism about our country’s financial problems.
Congress created the commission when it killed the Community Living Assistance Services and Supports (CLASS) Act, a well-intentioned but poorly designed effort to create a voluntary LTC benefits programs. The commission is supposed to come up with ideas for improving the LTC system.
One idea is this: To realize that just about all of us have messed up.
The managers of Medicare, Medicaid and private pension and retiree health benefits programs have joined with private LTCI programs to make one giant, bright, shiny promise about post-retirement financial security that they can’t keep.
Some members of the LTC commission were asking what sounded, on the surface, like a reasonable question: “Why should we be worrying about the future of a private product?”
Others took the policymaker equivalent to a “Mean Girls” approach and said (make that, “sniffed”) remarks along the lines of, “Private long-term care insurance — a product that’s been in its infancy for the past 20 years.”
Meanwhile, one of the reasons they’re so mad about private LTCI is that they’re trying to scrape up whatever money they can for Medicaid nursing homes, or efforts to expand Medicare’s effort to sneak into long-term care — even into institutional long-term care.
Organizers of just about every old age program started to make wild and crazy promises back in the 1970s and 1980s, because interest rates were high, economic growth rates were often high, and the years when the baby boomers would start to retire seemed to be a long way off.
Now, rates are low, and Mick Jagger is 70.
Private retiree health benefits are in trouble because hardly anyone set aside a dime to fund them, even when times were good.
Medicaid is having trouble because the economy is soft.
Medicare, private pensions and private LTCI are in trouble partly because they over-promised, but partly because the Fed has tried to hold down rates to nurse the economy back to health.
One reason you could make an argument that the federal government ought to consider trying to do something for private LTCI, at least send a postcard, is that the government is responsible for the low interest rates that are suffocating the private LTCI carriers (and the pension plans, and the Medicare Part A hospitalization plan trust fund.)
It might seem easy to pretend that only those greedy capitalists at the private LTCI carriers are imposing horrible cost increases on seniors, but look at CalPERS, the socialism-flavored, nonprofit California public employees’ retirement fund. CalPERS is raising its LTCI rates 85 percent. So much for socialist-flavored nonprofit benefits providers.
Maybe, if the Medicaid nursing home benefit program had an actuarially sound trust fund, someone would be trying to increase its premiums 85 percent, too.