Issue #26, Fall 2012

The Long Term Is Now

As the population ages, the costs—financial and social—of long-term care will rise rapidly. And our current model of funding it will not work.

Every five years after the new long-term care program went into effect, an independent long-term care actuarial commission would evaluate the program’s financial soundness and recommend whatever changes it deems necessary to ensure its long-term sustainability. Any proposal involving changes in benefits or the payroll tax rate would be submitted to Congress for an up-or-down vote within 90 days. If Congress failed to act, a package evenly balanced between revenue increases and benefit cuts would be triggered and would remain in effect until such time as Congress accepted the commission’s recommendations or enacted its own package making financially equivalent changes to the program.

A Moral and Responsible Goal

Our current circumstances of fiscal constraint, intense controversy over federal health programs, and pervasive skepticism about government’s effectiveness may seem like an odd time to suggest extending our patchwork system of social insurance. But reforms along the lines I’ve suggested represent the only way of achieving a morally essential goal—providing for the long-term care of the physically dependent elderly—while also meeting the equally essential practical goals of preventing unsustainable claims on general public revenues and ensuring that the states retain the fiscal capacity they need to invest adequately in the future. Americans will have to accept a broadened principle of personal responsibility as part of any viable twenty-first century system of social insurance. If the need for long-term care is an insurable event—and I’ve argued that it is—then we must all do our individual part, as our means permit, to help insure against it.

If we do what we should, my son’s generation will not have to face the burden so many members of my generation do—struggling to help parents avoid an old age of destitution and dependency. Few children want to consign their parents to institutional care if there is a reasonable alternative. Few want their parents to be forced to divest themselves of what they have managed to accumulate through decades of hard work, a process that strips the elderly of dignity and pride. But that is what our current system does. We can do better.


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Issue #26, Fall 2012
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Raymond Lavine:

Informative and beneficial history on long term care insurance.

The free market system as people are aware is doing well for some people, in recession for others, and depression for older workers who will never find the jobs and incomes lost because of the 2008 financial melt down.

Harley Gordon offers the best approach to how we as agents should provide the need and urgency.

So long as you may qualify financially and are in good to reasonable health, owning a plan is good estate planning, and valuable to your family who absorb the consequences taking care of a loved one.

Long Term Care is not about protecting assets -- it is about preserving a family and providing additional income to a families income stream to pay for extended care benefits.

It thereby preserves the estate to provide income stream, tax consequences to allow for cash flow, legacy, and keeping a family together by keeping them apart.

For the next decade or more, the United States will not have the economic resources to have a government sponsored program, even if it is transfer of assets, to pay for extended care coverage.

The political system is toxic to allow for rationale education and conversation.

I do honor William with writing this article.

Sep 11, 2012, 8:35 PM
Kathleen Williamson:

Purchasing Long term care insurance may be the solution for the "under 50" population, but with the high premiums for the "60+" population who can not afford such a high premiums on fixed incomes.
So we are left with a generation of elderly that will need both home and institutional care before the "Insured" generation even come of age.
Something must be done now to enable todays frail elderly population, the providers who serve them and the families who struggle with the cost of such care to to have access to the least restrictive form of care they need.
Today's nursing homes are not the same institutions of the past. They are more home like, striving to provide life enriching environments for their residents as well as quality care, but all that comes with a cost.
I have seen an increase in the number Medicaid applications denied or assessed a "Penalty Period" due to the transfer of assets. The result is the facility incurrs an enormous debt and they must continue to care of the resident with no reimbursement for months and months.
Something must change or nursing home will be disappearing or going bankrupt in this troubled political and ecominc climate.

Sep 12, 2012, 10:05 AM
Wally Roberts:

Excellent analysis--as far as it goes. What it does not discuss that is crucial for making nursing homes affordable for both individuals and Medicaid is the exorbitant profits made by for-profit nursing homes, especially those owned by private equity funds.

And it's more than just money, as these profits are achieved largely by deliberate understaffing, which leads to enormous suffering by the patients. The private equity owners shield themselves from lawsuits over elder abuse by using multiple shell corporations so ultimate responsible cannot be assigned.

Sep 21, 2012, 10:14 AM
Gabriel Heiser:

You've only discussed how to pay for a current system of care with no mention of the other side of this coin, i.e., ways to reduce the cost of care by alternatives to the current nursing home model. I have read of other methods of care that are much less costly. I'd like to see a discussion of those ideas. If the costs were much lower, then a lot of this problem goes away. In my book, "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," I advise the reader how to take full advantage of the opportunities in the current law, but at the same time I recognize that with the aging population and longer lifespans, the numbers are just not going to work without radical changes. I applaud the author for discussing this difficult topic.

Dec 19, 2012, 12:31 PM

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