Long-Term Care Insurance: Is It a Pitfall or Panacea?
Lipson, Benjamin, Aging Today
BUSINESS AND AGING
The drive to establish long-term care insurance (LTCI) as a permanent fixture of Healthcare financing in the United States is picking up steam. As more and more people opt for LTCI, though, two trends seem evident: Insurers and their agents are rushing to cash in on the potential bonanza, and more and more older Americans and their advisers are trying to decide whether these policies are worth the investment.
Insurers can hardly be blamed for the full-court press on this nascent market. There are 73 million Americans age 50 or older-millions of whom will need long-term care eventually as they traverse their later years. Some of these elders are fortunate enough to have the insurability and affluence to buy LTCI. They are even willing to purchase policies that have premium rates not guaranteed to remain stable or that are fraught with other risks inherent in today's coverage.
Many other older people are in a tough spot, though. They understand the need to insure the health vagaries of old age, such as possible residency in a nursing home, but their financial options are severely limited by everything from an unsteady stock market to increasing costs for health insurance, prescription drugs and real estate taxes. According to an AARP survey, "Impact of Stock Market Decline on 50-70 Year Old Investors," conducted last November and December, stock market losses have caused nearly 60% of those polled to budget more carefully. Also, 30% of respondents said they have postponed making major purchases, and 20% expect to have difficulty paying for healthcare and prescription drugs during retirement.
Older people look to Washington for relief, but lawmakers right now have matters other than the domestic economy on their agendas, especially Iraq and North Korea. There is not much hope of a change in focus, at least until the next presidential campaign. Yet, people facing chronic illness-mostly older but also many younger individuals-need solutions.
I became concerned about this issue during my daughter Marjorie's 20-year struggle with eating disorders. Even though I've worked in the insurance industry for five decades and founded Just for Seniors Insurance, based in Chestnut Hill, Mass., my very best efforts to work with Marjorie's insurers seemed to achieve little. Like other families confronting chronic illness, we were held hostage to her illness for 20 years, during which time the fiber and resilience of all of us were put to the test. Marjorie's losing battle-she died at age 35-was further complicated by the maze of insurance requirements and denials of coverage. Her struggle to support herself during her illness reinforced my recognition that the medical system in this country is breaking down under the weight of bottom-line medicine that puts profits before patients.
For those who may experience long-term illness, LTCI offers a potential solution-though it is not for everyone-and it comes with many limitations and pitfalls. In an effort to set the record straight about ltci, I decided to write Choosing the Right Long-Term Care Insurance (New York City: J.K. Lasser-Wiley, 2002). All royalties from sale of the book will go to the Majorie E. Lipson Memorial Fund, which I established at Massachusetts General Hospital's John D. Stoeckle Center for Primary Care. This center promotes patient advocacy and patients' rights within the healthcare and insurance bureaucracies.
GOOD, BAD AND UGLY
My first job in preparing a treatise on the good, the bad and the ugly of LTCI was to explain as simply as I could what such coverage does and doesn't provide. People need to know that except for making a will, there may be no other financial or insurance decision that comes with the same emotionally loaded pre-conceptions and unpalatable alternatives as planning for old age-particularly very, very old age. …