LTC Bullet: Educating
the Educators
Friday June 29, 2001
Seattle—
***This Bullet is sponsored by the National LTC Network, "Partners in Long-Term Care Coverage, Design, Education and Distribution." Visit the Network online at www.nltcn.com. Contact Allen Mansfield, Executive Director, at 800-996-6789 or AMansfi919@aol.com for more information. Thanks so much to Network members for their generous support of the Center and commitment to keeping LTC Bullets free to everyone. Find out how you can sponsor LTC Bullets or other Center activities (e.g., articles, speeches, conference exhibits) by contacting Amy Marohn at 425-467-6840 or amy@centerltc.org.***
In
her article, "Women Boomers Often Neglect Their Own Financial
Planning," (National Underwriter, 6-18-01, p. 28) author Marcella DeSimone
highlights the finding of a recent survey of American baby boomer women
conducted by Prudential Life Insurance Company. According to Simone, "seventy-eight percent [of survey
respondents] said securing long-term or institutional care insurance is
important and 61% said they understand that nursing care can be very expensive.
But only 50% said they know first-hand about the actual costs of
long-term care and only 5% of those surveyed own long-term care insurance
policies."
At
first blush, these survey findings appear irrational. If baby boomer women really are worried about long-term care
costs, why are so few doing anything to prepare? Why do most people, in fact, ignore long-term care planning
despite a professed knowledge of the costs and risks of doing nothing?
Is more education the key to motivating people to plan ahead?
Or do efforts to educate about the supposed "long-term care
risk" only confuse people whose experience of long-term care differs
dramatically from what they're being told?
The
Center for LTC Financing has a pretty good idea why consumer education efforts
to-date have not produced results. Below
is an except from Center Executive Director David Rosenfeld's remarks
delivered at the National Endowment for Financial Education's (NEFE)
"Long-Term Care Think Tank" in Phoenix, AZ on May 7, 2001.
The goal of the event was to develop strategies to motivate consumers to
begin planning and preparing financially for their future long-term care needs.
For more information about NEFE, go to www.nefe.org
or call 303-741-6333.
Here
is the excerpt from Mr. Rosenfeld's remarks:
"NEFE's
goal of motivating consumers to begin planning for long-term care (LTC) could
not be more timely as our 77 million-strong baby boom generation struggles with
their parents’ long-term care and soon enough, with their own.
Effective consumer education is critical and the sooner the better.
"Consumer
education must be approached, however, with an appreciation of its public policy
context. Delivering facts and
figures demonstrating ‘the LTC risk’ or the impact of caregiving, for
example, will not motivate most people to act unless educational efforts reflect
the reality of current consumer behavior.
"Today,
this nation’s public policy encourages people to ignore the risk of long-term
care. For the past 35 years, with
every good intention, the state and federal governments have paid for long-term
care through Medicaid and Medicare after a health crisis occurs.
"People
only plan for real risks. As long
as they can ignore the risk of long-term care, avoid insurance premiums and
financial planning fees, wait to see if they ever need expensive care, and if
they do, transfer the cost to taxpayers, most folks will not buy long-term care
insurance or otherwise plan ahead. This
goes a long way to explaining why less than 10 percent of seniors and very few
baby boomers have purchased long-term care insurance (LTCI) or otherwise planned
for long-term care.
"Most
Americans are not consciously planning to rely on Medicare or Medicaid years
down the road. Most people have no
idea who or what pays for long-term care. Instead,
the reality of how long-term care is, in fact, funded has anesthetized nearly
everyone to the issue and, therefore, planning behavior is almost
non-existent."
*
* *
"Proactive
efforts to motivate LTC planning will likely succeed to the extent they respond
to the underlying basis for the public’s current behavior.
The public ignores the risk of catastrophic LTC costs because they can.
Our public programs may not provide the best care in the most desirable
setting, but care is available to nearly everyone without any pre-planning.
"Supposedly
perplexing survey results make a lot of sense when you view them through this
lens: In one of the most recent
long-term care surveys--a March 2001 U.S. Chamber of Commerce survey of its
members--respondents were asked:
"'Given
the current average cost for assisted living and eldercare services ($45,000 to
$54,000 per year) to what extent is the cost of long-term care a concern to you
as an individual?' Sixty-three
percent said it is 'very much of a concern' or 'a significant concern.'
"Respondents
were asked, 'Does your current financial planning take into account the likely
expense of long-term nursing home,
assisted living, or in-home care for yourself and/or your family?'
Seventy-six percent said 'no.'
"Finally,
respondents were asked, 'Do you currently own any long-term care insurance
policies?' Eighty-six percent said
'no.'
"The
1998 Roper Survey in our [conference] materials presents a similar picture.
Sixty percent of respondents indicated they were either 'somewhat' or
'very' concerned about affording long-term care someday.
Forty-nine percent were aware of LTCI.
But only 8% had purchased it.
"These
and other surveys reveal the public does understand that long-term care is
expensive in a myriad of ways on everyone involved. These surveys also reveal, however,
that the public knows or at least senses--although it goes unspoken--that
someone or something else pays if and when the worst happens.
This is why the public can appreciate the risk of expensive long-term
care on the one hand, and do nothing about it on the other.
"Even
the ‘Background’ paper [for this conference] states that 'consumers seem to
be experiencing a disconnect. They
are aware of the problem . . . but . . . haven’t begun to
seek or act on a solution. The
message Americans are not getting is that, unless they choose to impoverish
themselves in old age, they must take the initiative in planning and preparing
financially for their long-term care needs.'
With all due respect, Americans are hearing this message, but aren’t
acting because the message doesn’t comport with their reality.
"Now,
if ‘losing everything’ isn’t a real risk of not planning ahead, then what
is in jeopardy? In today's public
policy environment, the focus of education must be the benefits afforded by
paying privately with insurance, savings or investments--namely access to
top-quality care at the most appropriate level.
These access and quality advantages must be contrasted to the risks of
relying on our already overburdened public programs, namely exposure to problems
of quality, access, reimbursement, discrimination
and institutional bias.
"The
Center for LTC Financing does not criticize our public programs or the care they
provide with the intent to assign guilt or responsibility for our financing
crisis or the dearth of planning behavior on the part of the public.
It is critical, however, to educate Americans about the impact of the
chronic underfunding and overutilization of these programs and how it may affect
care options and quality on an individual level."