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America is a lousy long-term care planning partner

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A Treasury Department economist talks about the role of private issuers of long-term care insurance in a new report on the economic security of America’s older woman. He suggests that private insurers’ problems with long-term care insurance might be a sign of a need for additional government involvement.

Related: Treasury economist finds women need help with LTC costs

The economist, Jason Brown, doesn’t say what exactly the government should be doing differently. He does say policymakers should probably focus support mainly on older women who live alone and have disabilities, not on women who simply happen to be older.

Brown seems to be too polite to write such a thing, but one reason that the U.S. federal government might have to increase its involvement in long-term care finance is that it’s a terrible deadbeat, and no sensible insurance company executive would be eager to get involved with any new long-term care finance system it sets up.

Whatever one thinks of the Affordable Care Act, for example, the federal government told health insurers, in mammoth batches of regulations and informal guidance, that it would use an ACA program, the risk corridors program, to protect ACA exchange plan issuers that did especially poorly.

The government also told health insurers selling exchange plans that it would give them extra cash, through a cost-sharing reduction subsidy system, to reduce the burden of deductibles, co-payment requirements and coinsurance amounts on low-income exchange plan enrollees.

Congress then blocked the federal government from coming up with the cash to make good on the ACA risk corridors program payment obligations, and the Obama administration got a federal court to rule that U.S. Department of Health and Human Services  descriptions of how the program would work were simply “policy statements,” not contracts, or documents that created any kind of contractual obligation.

Recently, Republicans in the U.S. House of Representatives went to court to yank the cost-sharing reduction subsidy payments away from insurers, arguing that the Obama administration made the payments without the right congressional approvals.

On the one hand: Maybe the Republicans have been right to fight to block the risk corridors and cost-sharing reduction programs.

On the other hand: The fact that Congress and the Obama administration have teamed up to chop the heads off of the insurers depending on those programs to help them support business already written, rather than applying the program funding cut-offs only to future business, shows the Republicans and Democrats in the U.S. government have no more regard for the solvency of private U.S. insurers than they have for the solvency of Medicare.

The Federal Reserve Board has done all that it can to help keep the deadbeat U.S. government’s interest costs low, while starving private insurers, such as issuers of long-term care insurance, of interest income, by holding interest rates as close to zero as it can muster, and writing and enforcing lending policies that keep any borrowers other than government agencies, quasi-government agencies, big Wall Street companies and rich people from borrowing much money at any legal price.

Your clients can borrow money if the money will flow to some industry that has enough lobbyists in Washington or state capitols to maintain its access to borrowed money.

If you want to borrow money just to expand your agency, or buy another agency, good luck.

If your small business owner clients want to borrow money to expand their businesses, so they can get bigger and buy more insurance from you, poor them. Maybe they’ll get lucky with a GoFundMe pitch.

The U.S. government may be a big business partner, but it’s about as reliable as a gorilla with rabies. It will create one set of rules and one program one year, then smash the heads of the participating insurers four years later, just because.

If the U.S. government ever does try to expand the role of insurers in long-term care financing, by, for example, creating a new long-term care insurance premium tax credit, insurers should ask the drafters to include a provision requiring an adequate transition period if the provision is changed. Otherwise, if consumers learn that some federal income tax credits will exist in Republican years, and go away in Democratic years, and vice versa, why would they ever dare to trust in the continuous existence of federal income tax credits?

Allison Bell is a senior editor at 


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