Many U.S. insurers have had terrible problems with their long-term care insurance product lines in the past decade, but they still wish they could find some way to help consumers pay for care.
America’s Health Insurance Plans, the insurers’ Washington-based trade group, commissioned a major consumer study by Waltham, Massachusetts-based LifePlans Inc., to look for ways to get back in the LTCI game.
The survey team interviewed 1,326 U.S. consumers who bought LTCI policies in 2015; 225 consumers who had recently reviewed LTCI policies but had decided against buying coverage; and 800 randomly picked U.S. residents ages 50 and older.
The team also analyzed a sample of 8,791 LTCI policies purchased from seven insurers.
Researchers compared the results from the 2015 interviews and 2015 policy analyses with the results from similar surveys and LTCI policy analyses conducted every five years since 1990.
One thing LifePlans found is broad consumer support for a number of policy proposals that insurers could support in Congress.
Only about one-quarter of the LTCI buyers, non-LTCI-buyers, and 50-and-up Americans interviewed said they think the government should pay for all long-term care services for all people, according to the LifePlans survey report.
But 86 percent of the LTCI buyers, 83 percent of the non-buyers, and 73 percent of the 50-and-up Americans agreed that LTCI premiums should be “fully tax deductible.”
In Washington, one hot topic has been the idea of the government offering a universal catastrophic long-term care benefits program, aimed at people who need two or more years of care. The United Kingdom recently set up a similar “back-end” care program for its residents.
LifePlans found that 55 percent preferred the idea of a back-end public coverage system and that 27 percent preferred the idea of the government offering a front-end system, which would cover the first few years of care.
LifePlans also came up with information about trends in what LTCI policies are really like, what the buyers are like, and what the buyers and active non-buyers are thinking about.
Long-term care insurance policies cost more. (Photo: Thinkstock)
Issuers of long-term care insurance policies guessed wrong about the how many policyholders would keep their policies long enough to file claims, and how long the claims would last. They also guessed wrong about what low interest rates would do to their investment earnings.
The issuers have dealt with the forecasting errors by asking state insurance regulators to approve rate increases.
The LifePlans policy analyses show how the same forces have pushed up the cost of new policies.
In 1990, 59 percent of the LTCI policies sold cost less than $1,000 per year, and just 9 percent cost $2,000 or more per year.
In 2015, only 5 percent of the policies sold cost less than $1,000 per year, and 64 percent cost $2,000 or more per year.
The average annual premium increased from $1,071 to $2,727.
The typical LTCI policies sold in 1990 offered no home health care benefits. (Photo: Thinkstock)
2. Home health care
LTCI prices have gone up partly because, in some ways, the policy benefits have gotten better.
The average duration of policy benefits fell to 4 years in 2015, from 5.6 years in 1990.
But the average daily benefit increased to $161, from $72, over that period.
Insurers also added home health care benefits.
Home health care benefits were so rare in 1990 that LifePlans did not track them that year.
In 1995, only 49 percent of the policies analyzed that offered home health benefits could pay for more than two years of care in the home.
Home health care benefits richness peaked in 2000: That year, the home health care benefits sold had an average duration of 5.4 years.
But home health care benefits were still better in 2015 than in 1995. In 2015, 79 percent of the policies that offered home health benefits could pay for more than two years of care, and the average home health care benefits duration was four years.