Genworth exec: The LTC crisis is still coming

Members of the private LTCI community often cite statistics suggesting that as many as three-quarters of Americans will need some kind of formal or informal long-term care at some point in their lives. The Boston College economists suggested that only 20 percent may run up the kinds of big nursing home bills people typically think of when buying LTCI.

McInerney said that, even after recent rate increases, the cost of good private LTCI is comparable to the cost of homeowners insurance. The risk of losing a home to a fire or other catastrophe is only about 1 in 200, but “a lot of people buy homeowners’ insurance,” McInerney said. He said “it’s kind of crazy” that people insure their homes without getting angry about their homes failing to burn down but are upset by the thought of owning LTCI and getting through life without ever needing long-term care.

A reporter in the audience asked McInerney about the effects of Genworth’s recent reserve announcement on consumers’ views on whether to trust LTCI issuers.

“That’s our promise,” McInerney said. “That we’ll be around. We think we’re in good shape.”

Genworth has needed help with adjusting the premiums on old policies, and still needs the ability to get much smaller increases on an annual basis, and regulators seem to understand those needs, McInerney said.

McInerney said actuaries and top-level officials at the Centers for Medicare & Medicaid Services (CMS) came face to face with the challenges involved with managing LTC costs when they reviewed financial projections for the Patient Protection and Affordable Care Act (PPACA) CLASS Act program. The Obama administration ultimately killed the voluntary LTC benefits program after CMS actuaries declined to predict that the program would be sustainable.

“They wanted to cover long-term care for all Americans,” McInerney said. “They looked at it, and saw all the things we’re seeing on our own [LTC] blocks.”

Also during the briefing, McInerney:

• Said Genworth is revamping its group LTCI products.
• Predicted that the Bipartisan Policy Center — a think tank formed by former Democratic Senate Majority Leader Tom Daschle and former Republican Senate Majority Leader Bill Frist — will come out with a proposal that would let retirement account holders use the money tax-free to pay for long-term care expenses or to buy a single-premium immediate annuity that could be used to pay LTC-related bills.