PRIVATE LONG-TERM CARE INSURANCE (LTCI) IS NOW IN ITS FOURTH DECADE—
the last, in the view of some, in which it will be sold widely across America. Before we
observe the obsequies, it may be well to take stock of where we actually are, because sales
of stand-alone LTCI products—not to mention linked or combination products, chronic
illness coverage, and short-term care insurance—do take place each day, suggesting that
private LTCI is filling a need.
At the same time, private LTCI’s chief rival and alternative—social LTC insurance—
has failed to win much support beyond the public policy advocates and nonprofit groups
that push it forward. There are many reasons for this, including the recognition that using
general revenues to finance long-term care benefits for the broad public in the vein of
Social Security and Medicare would be costly. Yet the need for long-term care is growing.
This article attempts to frame the broad arc of historical private LTCI market development, in an effort to assess its strengths and weaknesses. It argues that private
LTCI is hardly finished, that it remains the best choice for uninsured millions looking
to protect their retirement against the risk of needing long-term care services sometime
before the end of their lives.
However, changes need to take place in order to make private LTCI more satisfactory and cost-efficient. Such changes include a better understanding among consumers
about the real need for and cost of long-term care services in relation to premiums, more
flexibility on the part of state regulators, and determination of insurers to manage volatility. Insurers particularly must adjust their stance, becoming more Janus-like—capable at
once of looking both backward and forward, mindful of designs that have undermined
and continue to erode earnings, yet also remaining committed to their core disciplines,
of which the assumption of risk over long periods of time is fundamental.
Private Long-Term Care Insurance
by Paul E. Forte
the Roman god
well as endings.
over finance and
on coins is not