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ACLI: Our members should be part of the LTC solution

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Many U.S. life insurers have pruned or eliminated their long-term care insurance (LTCI) divisions in recent years, but their leading trade group says its members should play a bigger role in helping Americans pay their long-term care (LTC) bills.

The United States has to find a way to expand private insurers’ share of the LTC planning burden or face the possibility that the Americans who need help a few decades now will have to get by with even fewer resources than frail and elderly have today, according to a new American Council of Life Insurers commentary.

Republicans are about to take control over the Senate as well as the House, and both Republicans and Democrats have expressed an interest in finding ways to help the aging population prepare for LTC expenses. Many new members of Congress, members of Congress who have taken new assignments, and congressional aides are learning about LTC issues for the first time.

Andrew Melnyk and Harsh Sharma, the ACLI analysts who prepared the ACLI commentary, seem to have aimed it mainly at the incoming policymakers in and around Capitol Hill.

The analysts give little attention to the challenges facing LTCI issuers.

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The analysts instead talk about LTC financing need. The analysts note that the percentage of the U.S. population over age 85 will double between now and 2050; that LTC expenditures seem to be on track to increase to about $600 billion in 2014 dollars in 2050, up from $239 billion in 2015; and that Medicaid spending on nursing home bills could increase to about $200 billion, from $80 billion, over that period.

Meanwhile, the number of working-age adults available to generate the tax revenue to fund social welfare programs could fall to 2 per retiree by 2030, from 2.9 employed adults per retiree today, the analysts say.

“Congress may be forced to limit Medicaid long-term care spending either by reducing benefit levels or restricting eligibility requirements,” the analysts say.

Critics of private LTCI have argued that it can serve only a small part of the population, and do little to reduce Medicaid nursing home spending.

The ACLI analysts note that private LTCI covers about 6.5 percent of total LTC costs today.

If 25 percent of Americans ages 25 to 70 had an LTCI policy, or equivalent product, with a 3-year term, 4 percent inflation protection and a $200 daily benefit, that could increase private insurers’ share of nursing home spending to 26 percent in 2050 and cut Medicaid’s share of the expenditures to 25 percent, from 34 percent, the analysts say.


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