Sunday, April 14, 2013

Long Term Care News [UPDATED & BUMPED]

[Scroll down for Update]

A pair of interesting articles from LifeHealthPro's Allison Bell offer an interesting juxtaposition of the future of Long Term Care insurance (LTCi). Long term readers may recall the government's ill-fated CLASS Act, which was (mercifully) put to rest. But like a low-budget zombie, the idea that government knows best refuses to die:

"[H]ealth policy analysts have concluded in a new report that having any kind of mandatory long-term care insurance (LTCI) would probably be a lot more effective at shoring up the U.S. long-term care (LTC) system than any imaginable voluntary system."

Reading between the lines, it appears that these folks think forcing people to buy long term care coverage is a good idea, and perfectly legal.

Now why would they think that?

Which brings us to the next little challenge: as we know, rising health care costs cause health insurance premiums to go up. Since LTC insurance is based on the same principle (indemnity), it stands to reason that increased costs of actual long term care is having a direct effect on LTC insurance premiums. But don't just take my word for it:

"[T]he underlying cost of long-term care (LTC) keeps climbing ... The daily rate for a semiprivate nursing home room rose 3.5% ... the assisted living facility inflation rate is much higher than it was last year"

You get the picture.

Here's the thing: try as they might, our Betters on the Potomac© have yet to repeal the immutable law of Supply and Demand [ed: don't give 'em any ideas, Henry!]. When one considers the ever-shrinking universe of LTCi carriers, and adds in millions of new folks forced to purchase coverage, well, you can see the problem.

Which brings us back to the first item: if the private market can't handle the influx of new business, then the next logical step is another government-run boondoggle.


UPDATE - La Plus Ca Change: My favorite health care economist, Jason Shafrin, notes that "[c]aring for sick parents, however, is not a new problem. Consider how the English dealt with this issue in the 13th century ... Putting one’s parents out to pasture in a nursing home has very deep historical roots in Western Europe."

Click through for an example from the 13th century.

[Original post published 4/12/3]
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