Tuesday, October 27, 2009

Government Run Long Term Care Insurance: A Non-Starter

[Welcome Industry Radar readers!]

First, we are big fans of Long Term Care insurance (LTCi); too many folks (wrongly) believe that Medicare will cover an extended stay in a long term care facility. It does not; in some cases, Medicaid will pick up part of the tab, but this can eat up the assets you've spent a lifetime accumulating, and your choice of facilities may be limited.

State-sponsored Partnership Programs are a step in the right direction: these encourage folks to purchase LTCi, and offset Medicaid's "spend down" requirements for those who purchase PP compliant plans.

A proposed Federal LTCi program, on the other hand, is a leap in the wrong direction:

"House health care legislation expected within days is likely to include a new long-term care insurance program to help seniors and disabled people stay out of nursing homes..."


Let's examine that premise:

The Feds can't even handle a simple flu vaccine distribution, but they can administer a new long term care plan? They have the experience and expertise to adjudicate claims? What happens when (not if) they're wrong? Will they raise those "modest rates?" Cut back on that "generous" $50 a day benefit? Or simply deny claims, as they do now with Medicare?

There's no question that folks in the middle class, and especially those approaching (or in) their Golden Years, will feel a major squeeze when it comes to long term care. But trusting the government to manage this effectively is non-optimal. What would work would be to expand the Partnership Programs, and for the industry and government to better publicize their existence.
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