Wednesday February 21, 2001
Seattle—
LTC Bullets readers know the Center for Long-Term Care Financing's LTC
Triathlon project aims to build bridges of understanding and cooperation between
long-term care financiers, providers and insurers. Therefore, we've been waiting eagerly to see the early findings
of a NIC-sponsored study of the relationship between LTC insurance and the
assisted living industry.
(NIC is the National Investment Center, a trade association for long-term care
financiers and providers that—to quote its mission statement at www.nic.org—"facilitates efficient capital
formation for the seniors housing and care industries through research,
networking, and providing business and financial information.")
The NIC study is being conducted by Joel Leon and Jonas Marainen of the
Polisher Research Institute at the Philadelphia Geriatric Center. The working title for the study's
forthcoming report is "Private Long Term Care Health Insurance and the
Self Financing of Long Term Care; Overview of Issues and Current
Knowledge." It's due to be
published sometime in 2001.
In the meantime, here are some tantalizing tidbits suggesting what to expect from
the final report, as culled from an article by Leon and Marainen titled
"Private Long Term Care Insurance and the Assisted Living Industry: Current Knowledge and the Continuing
Research Agenda." This article was published in the premier edition of a
new academic journal called "Seniors Housing and Care Journal"
(previously the "NIC Review") produced by NIC and the Johns Hopkins
University. (2000, Vol. 8, No. 1, pps.
33-39)
"[G]iven the large estimated costs of long term care, there is little
likelihood that any new national long-term health insurance program will be
established, and the only national action that could be expected is the passage
of legislation that will create some form of further tax incentive to encourage
individuals to purchase private LTC insurance." (p. 34)
"What is known is that for assisted living residents who have a long term
care insurance policy—about 3.2 percent of all residents, according to NIC/ALFA
[ALFA is the Assisted Living Federation of America], 1998—the private insurance
benefit pays for the bulk of the cost of care. A recent study of assisted
living and nursing home residents with private insurance showed that for
assisted living residents with private insurance, the daily benefit paid 88
percent of the incurred cost (Cohen and Miller, 2000)." (p. 36)
[The study referenced is Cohen, M.A. and Miller, J., 2000. The Use of Nursing Home and Assisted Living
Facilities among Privately Insured and Non-Privately Insured Disabled Elders.
LifePlans, Inc. U.S. Department of Health and Human Services. Washington, DC.]
"It seems plausible to conclude that a subset of the insured assisted
living residents would have sought Medicaid-financed nursing home care had they
not had private insurance coverage. So
while there is no clear and direct evidence for this, the data suggest that the
increasing sales of private LTC insurance will help increase the net
consumption of assisted living services in the future by providing increased
financing for long term care in general.
In addition, there may also be an increase in the choice of assisted
living services relative to nursing home care, particularly for persons with
lower incomes." (p. 36)
"In summary, little empirical work has been done on the relationship
between long term care insurance and the use of assisted living services. The
available evidence indicates that private LTC insurance is a significant source
of financing of care for assisted living residents who have such insurance, and
it seems likely that private insurance increases access to and consumption of
assisted living services. The
increasing sale of LTC insurance therefore may have a significant impact on the
assisted living industry." (pps.
36-37)
CLTCF Comment: Thus, it appears that
this study will show very clearly how private long-term care insurance
generously benefits insureds (who can dodge Medicaid nursing home dependency)
and the assisted living industry (which stands to gain lucrative, reliable
private payers) and the poor, Medicaid, and taxpayers (whose long-term care
burden will be lightened). But what's in it for the long-term care insurance
industry? Are they just the deep
pockets to pay the bills? Or can there be a win/win incentive to attract
insurers?
That's where we need to see more creativity.
Assisted living companies should become more actively involved in
educating the public about the need for private LTC insurance. After all, who
is more attuned to the risk and cost of long-term care than the healthy spouse,
children, loved ones and friends of someone who has just entered a
facility? These are exactly the people
who interact with the assisted living facility every day and need to be advised
about how to protect themselves with insurance.
On the other hand, insurers need to realize that providers only benefit—as
matters stand now—from LTC insurance when it pays, someday in the future, not
immediately when it is purchased years ahead of time. Therefore, insurers must
find some way to compensate providers for getting actively involved in
providing medically and financially qualified LTC insurance leads.
If you put those two pieces together—immediate compensation for providers who
supply good LTC leads to insurers—just watch the market for private LTC
insurance explode! Then and only then
will insurance beneficiaries, Medicaid recipients, the Medicaid program, and
taxpayers reap the full potential benefits of private LTC financing predicted
by the Polisher research study.
_____________
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