The Center for Insurance Policy and Research, an arm of the National Association of Insurance Commissioners (NAIC), included contributions from a wide range of long-term care (LTC) finance watchers including commercial LTCI industry veterans such as Tom McInerney of Genworth Financial (NYSE:GNW) and Jesse Slome of the American Association for Long-Term Care Insurance (AALTCI); state insurance regulators such as Tera Miller of Pennsylvania and Tanji Northrup of Utah; and LTCI skeptics such as Bonnie Burns, a woman who has an official role representing consumer interests in NAIC proceedings.
The contributors summarize the LTC reform proposals considered by Hawaii, Minnesota and Washington state, and by organizations such as LeadingAge, the Bipartisan Policy, the Society of Actuaries and the National Association of Health Underwriters.
Melissa Favreault and other colleagues at the Urban Institute came out with a separate report of their own, financed by The SCAN Foundation, that shows the way they used an Urban Institute modeling system to predict how one popular proposal, for mandatory use of private high-deductible LTCI coverage, might affect Medicaid spending. The authors contend that mandatory private catastrophic LTCI coverage might save Medicaid almost as much money as a universal public LTCI program.
Agents, brokers and others who are serious about participating in LTC finance policy discussions will have to read the report for themselves. For a peek at some of what we found in there, read on.
1. Current LTCI market data
Private insurance industry groups used to promote LTCI market reports heavily when the market was doing well. When the LTCI market cooled, finding current LTCI market data in front of a paywall got harder.
Marc Cohen, one of the NAIC report contributors, provides a comprehensive statistical picture of the current state of the LTCI market.
He found, based on NAIC data, that insurers generated $11.5 billion in earned premiums in 2014 from providing stand-alone LTCI coverage for 7.2 million people.
The issuers had 73,130 new LTCI claimants in 2014 and were paying benefits for a total of 254,910 LTCI claimants.
The number of new LTCI policies sold fell 49 percent between 2012 and 2014, to 129,000. That was down from a peak of 754,000 policies sold in 2002.
But the number of insureds has fallen only 1.5 percent since 2012, when the number peaked at 7.4 million.
2. Ideas about what to try next
Robert Kane, a researcher in Minnesota who focuses on aging, reviews the options his state has considered starting on page 83 of the report.
On page 88, he provides a chart that shows how a state panel assessed the affordability, political appeal, actuarial realism, marketability and consumer protection strength of various proposals.
About current LTCI products, for example, Kane notes that supporting traditional LTCI is politically feasible, because lawmakers know about it. But he classifies the product as less affordable than some other financing vehicles, and he notes in the consumer protection column that “consumers hear stories of cost increases and repeated claim denials.”
3. Reality checks
Report authors describe many proposals for new LTC financing vehicles, or ways to improve existing vehicles.
Bonnie Burns, a consultant at California Health Advocates, an organization that advises consumers who are having problems with health insurance policies, LTCI policies and other health-related policies, says policymakers have to think hard about the problems regulators have had with policing existing financing vehicles, such as stand-alone LTCI.
“State insurance regulators of LTCI companies have responded slowly to complaints about marketing, sales, benefit design and pricing, often reacting after the fact rather than proactively identifying and proposing solutions to correct market problems before they negatively affect a large number of policyholders,” Burns writes. “Recent efforts to control large premium increases illustrate the problem of reacting to past problems.”
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