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5 things to know about Paul Forte’s LTC rescue plan

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Countries throughout the world seem to be converging on the idea of using public-private exchange systems to pay for health care.

Opponents of the Patient Protection and Affordable Care Act (PPACA) have blasted the PPACA public exchange systems, but, in spite of its operational glitches and questions about long-term sustainability, it helped bring about rapid expansion in the U.S. individual medical insurance market in 2014.

The Netherlands replaced its own government-dominated system with a market system resembling the PPACA exchange system. Even the United Kingdom, a country known for its government-run health care system, has experimented with offering enrollees in the system access to a menu of plans from a variety of providers.

See also: European Health Ins. Market Emerging.

Acute health insurance exchange programs are still struggling to gain acceptance from members of the general public, but many economics see setting up an exchange as a good vehicle for feeding government subsidies into a market without limiting the ability of free-market forces to help control costs, maximize quality and maximize patient satisfaction.

In the United States, Paul Forte, the chief executive officer of Long Term Care Partners L.L.C., sketched out a proposal for setting up a long-term care insurance (LTCI) exchange in the United States in 2013.

The Society of Actuaries recently included an updated version of the proposal in a recent long-term care (LTC) needs monograph

Forte emphasizes in a note that his American Long-Term Care Insurance Program (ALTCIP) proposal reflects only his own views, not the views of his company or any government agency.

But the proposal could shape how LTC finance policymakers think about the LTCI exchange concept. 

For more about the proposal, read on.


1. In the LTCI market, Forte says, the purpose of setting up an exchange would be more to spread risk and relieve strain on issuers than to increase sales.

Policymakers have been talking about the coming LTC storm since at least the 1960s, and the private U.S. LTCI market is about that old, Forte said.

The problem is that the market needs a system that would appeal to insurers by helping them spread risk more widely and make more efficient use of premium dollars, and, at the same time, help consumers pay for high-quality, reliable LTCI consumers, Forte says.

See also: Is this the End for LTC?.

Woman at computer

2. The administrator of Forte’s exchange would use Web-based systems to handle marketing, enrollment support, underwriting and reporting.

Forte says automation and standardization could help cut the cost of basic coverage aimed at moderate-income people.

See also: 2015 Medigap outlook [Infographic].

Iced out window

3. Forte’s exchange might not make much use of agents and brokers.

Relying on direct sales could be one way to save money, Forte says. 

“Those objecting to what they think will be lost by foregoing the services of live agents should recognize that the ALTCIP would not be geared to high-net-worth individuals, but rather to moderate-income persons seeking better value and essential protection at a more reasonable cost,” Forte says. “Agents would still reign in the most affluent segments of the market.”

See also: Internet Technology — Reaching a New Generation of LTCI Prospects.

U.S. Capitol

4. Forte would further reduce costs by putting the LTCI exchange system under the jurisdiction of the federal government, not state governments.

A uniform approach may have weaknesses, but it could be cheaper, simpler and better for a mobile population, Forte says.

Forte cites a study showing that the cost of state-based regulation is seven times greater than the cost of federal regulation.

See also: Industry sees the Fed as part of its future.

Shopping cart

5. Forte would allow some medical underwriting to allow room for use of the exchange system to be voluntary.

Allowing some medical underwriting could hold down costs without leading to a rate spiral, and keeping costs low could help make a big exchange sustainable even without the help of a mandate, Forte says.

A voluntary program could also improve sustainability by using private or public reinsurance and by requiring participants with health problems to wait several years before collecting benefits, Forte says.

One problem with relying on a mandated benefit is that the mandated coverage might have too low of a value to help purchasers much with the cost of paying for nursing home care, Forte says.

See also: The answer: Creativity


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