The safest predictions to make for the private long-term care insurance (LTCI) market are that interest rates will stay low, people will keep getting old, and policymakers will continue to be cold.
Insurers are conducting reserve reviews that may lead to more scrutiny from Wall Street.
But, on the other hand, to quote Warren Buffett, “Be greedy when others are fearful.”
Investors, securities analysts and many insurance company executives are certainly scared of long-term care (LTC) risk right now, and that might be a sign that the LTCI market is near a market bottom.
Here are five other thoughts about why 2015 might be better than 2014.
1. The insurers, agents and brokers in the market really want to be in the market.
Any companies and producers that were wishy-washy about LTCI or long-term care (LTC) planning in general must be gone by now. The players still in the game can see that this game’s for keeps.
2. The level of competition is less intense.
The players in the market may have an easier time working with consumers who already understand why LTC planning is important, rushing tire kickers along, and making a realistic price stick.
It’s not as if 20 other hungry giants are competing for every consumer’s business.
The respite may give the remaining players the same kind of freedom to “take a disciplined approach to pricing” that helped get the disability insurers out of their funk in the 1990s, and helped get the trial-lawyer-plagued major medical insurers out of their own funk just 15 years ago.
3. Long-term care (LTC) providers seem to be noticing how much better patients with private LTCI are at paying for their care.
The Homewatch Caregivers home care franchise, for example, has been active at reaching out to LifeHealthPro.com, and franchise owners interviewed have talked about how much more quickly and more smoothly private LTCI carriers pay benefits than Medicaid programs pay.
4. Policymakers in countries where socialism is just another way of thinking, not a cussword, are also having trouble figuring long-term care finance out.
Japan is famous for taking good care of its elderly, and it has a large, government-run, mandatory LTC insurance program. But it is having to raise premiums for the program, due to higher-than-expected costs, and it has more than 500,000 people on nursing home care waiting lists.
The United Kingdom has a single-payer acute health care system and a public LTC benefits system, but officials have responded to their program’s problems by letting people with assets qualify for benefits only after meeting a £72,000 deductible.
The world’s LTC financing problems may give the pioneers in the United States some protective cover. Apparently, one of the chief reasons the pioneers have had trouble is that figuring how to pay for LTC services for large numbers of people is hard.
5. Republicans are on top in the Senate.
Republicans have aging parents, too, and some of them are already aging into the “oldest old” category.
Traditionally, many of the Republicans in Washington have been warm to the idea of supporting private LTCI, LTC delivery and caregiver support programs, and a willingness to back private LTCI incentives has sometimes split moderate Democrats from more liberal Democrats.
Republicans may now be able to get enough Democratic support for private LTC planning and LTCI incentives to get them to the president’s desk. The question then will be whether Obama will side with the moderate Democrats and sign the bills, or see the bills as an attack on the idea of adding basic LTC benefits to Medicare and veto them.