Friday, February 29, 2008

NCPA on health spending by seniors

The National Center for Policy Analysis offers a sobering analysis of personal spending by seniors on health care.

The NCPA Study 297, Feb. 2007, by Liqun Liu, Andrew J. Rettenmaier, and Zijun Wang makes for sobering reading. The link is here. Today, seniors spend an average of 17% of their incomes on health care. By 2030, that number will rise to 23.5%. By 2039, total spending, including public spending, will be 100% of seniors’ incomes.
Particularly sobering is “Retiree Health Spending: Who Pays?”, here.

Employers have progressively less incentive to keep retiree health insurance (pre Medicare eligibility). They are typically very expensive with high deductibles, especially for inpatient care.

Nevertheless, the current debate among the presidential candidates on health care does not properly reflect the segmentation of the problem. We do have “single payer” of sorts for over 65 – Medicare, with its limitations (particularly with outpatient) and controvesies over prescription drug coverage (the “doughnut hole”). And Medicare does not cover custodial nursing home care; Medicaid does, after meeting spend-down requirements, with the prospect that some states might start enforcing filial responsibility laws on adult children. Even overseas, custodial nursing home care is typically not covered, although some countries (like Japan) are trying to change this.

So it seems that a responsible health care debate would recognize there are three interconnected problems – “ordinary” health care (and prevention), catastrophic care (including children with incidents like childhood cancers and autism – admittedly Obama has said more about this), and eldercare, which is predictable and has both medical and caregiving (filial) aspects. Yet the candidates don’t seem to want to say this.

The Erickson Tribune (March 2008) mentioned the NCPA study in an article by Lisa M. Davila and Lisa Rademakers, “What’s at stake for health care?”

Tuesday, February 26, 2008

Pundits criticize states for pitching long term care policies to consumers to brace for Medicaid expenses

The front page of The Wall Street Journal today (Tuesday Feb. 26, 2008) has an important story “States draw fire for pitching citizens on private long-term care insurance”, by Jennifer Levitz and Kelly Greene. The link is this.

According to the story as it begins, California Governor Arnold Schwarzenegger sent out six million letters to citizens urging them (many of them low and middle income) to consider buying long term care insurance – early in life. Of course, one motive is to curb Medicaid payments for custodial nursing home care as people live longer. California is one of 28 states with filial responsibility laws (or “poor laws”) that conceivably could be enforced against adult children as public eldercare expenses increase.

As noted earlier in this blog, a number of states are developing partnerships with insurance companies to offer long term care insurance. (The topic was most recently discussed on the Wed. Feb. 20 blog entry.)

But many plans still do not deliver well for what they charge, according to the article. When an elderly person is injured or ill, physicians often make determinations as to whether the patient can care for himself or herself, and whether in-home caregiving can work. In some cases, nursing home placements (or at least assisted living placements) can be rather sudden and immediate. In some of the situations, long term care policy claims have not been honored or remitted inadequately.

There is concern that LTC premiums would increase as people live longer, and that consumers will have to “trade down.” Commissions paid to agents for selling long term care policies are apparently very high, but this may be partly due to the extra effort agents must make in visiting, screening and explaining the complicated policies to prospective consumers, who must undergo complete physicals (sometimes including stress tests or Holter monitoring or continuous blood pressure monitoring) and examinations of their medical records.

Sunday, February 24, 2008

Retirees are in demand in the workforce

Haya El Nasser has a front page story in the print edition of the Friday Feb. 22, 2008 USA Today: "States want to tap boomers' skills: No time to relax: Retirees' experience in high demand," link here.

California has almost 9 million people over 60, and is trying to recruit retired seniors to the En Corps Teachers Program. I've written about retirees' becoming teachers on other blogs. It works well for retirees with military experience or similar, and sometimes with those who have raised kids and who have a lot of experience dealing with other people's kids with different social backgrounds. It can be problematic for those who have worked largely as "individual technical contributors" unless such people work mainly with older students (which is not necessarily where the real need is). Yet, one would think that high school students would benefit from exposure to people with thirty years in the "real world" -- but what's "real" seems to be relative.

Some technical recruiters have predicted that employers will need to hire more mainframe computer programmers again, and most of these would be older workers, but that is still unpredictable and spotty and depends on specific niche skills.

Employers may expect retirees to be open to "commission" careers in sales related to what they did. Examples would include becoming an insurance agent or financial planner, or real estate agent (maybe tough right now), or even technical sales representative.

Employers may depending on retirees already having health insurance (or Medicare), but some have been generous with benefits. When I worked for a collection agency in Minnesota in 2003, I could have had a group health plan for $49 a month out of pocket, but then I had to come back to the East Coast.

Other states discussed are Maryland, New York, and Massachusetts. Arizona has launched a "mature workforce" initiative. "Not everyone has three pensions and an IRA plan," Melanie Starns, the Arizona governor's policy adviser on aging is quoted as saying.

Friday, February 22, 2008

Social Security: repay, then restart later for higher benefits

Sandra Block has a story on p B3 of USA Today, Friday, Feb. 22, “Have your retirement cake early and eat it, too: you can repay benefits, then restart them at a higher rate,” link here. The article also appears here in Insurance News.

This would occur if someone started social security at 62 while unemployed and then suddenly got a high paying job, which would push him over the earnings limits until reaching full retirement age. It’s possible to pay the sum back without interest, and restart later (as late as age 70-1/2) with a higher monthly draw. However, if someone had invested the income in the meantime, he or she still owes taxes on that as ordinary income (according to ordinary tax law), and may have paid taxes on up to 85% of social security benefits depending on investment income in addition to social security.

The Baltimore Sun has a similar story by Eileen Ambrose from Feb. 17, 2008, with a lot of other little known social security tips, here. The story is titled “The benefits of social security can be surprising.”

Thursday, February 21, 2008

Supreme Court allows suits over mishandled 401(k) instructions

Linda Greenhouse has a story on page C1 "Business Day" of The New York Times today (Feb. 21), "Top Court Allows Suit Over 401(k)," link here. The case is LaRue v. Wolfe, Boberg & Associates, et. al., Findlaw opinion here. There is also a slip opinion link on the Supreme Court website, here.

A similar front page story today in The Washington Post by Carrie Johnson, "Supreme Court Rules Employees Can Sue Over 401(k) Misconduct," is here. The Post editorial is "A Victory for Workers: The Supreme Court allows employees to sue their retirement plans," link here.

An earlier ruling back in 1985 had confined plan administrator responsibility to the health of a retirement plan itself. There was never much doubt that the ERISA (Employee Retirement Security Act of 1974) requires this. But the concept had been based on how defined benefit plans (conventional pensions) work. This case was different in that it dealt with an individual person's 401K account being mishandled after specific instructions.

Wednesday, February 20, 2008

John Hancock, ING have presentation on long term care insurance

John Hancock Life Insurance offers some more detailed information on Long Term Care. For example, in Virginia, the cost of long term care in a private room varies from $148 a day in the Richmond area ($4440 a month) to $230 in Alexandria ($7160 a month), reflecting the rapid increase in labor and real estate costs near Washington DC. Assisted living is $2387 a month around Richmond, to $4312 in Alexandria, again representing a steep big city premium. The web link is this.

I know from a specific situation that assisted living in rural Ohio is about $2700 a month and includes some specific personal care services.

ING and John Hancock are sponsoring Webinars for ING employees and retirees. I have signed up for the event on March 4, 2008. However, the site offers ING employees a free (but copyrighted) pdf download that covers the contents of the Webinar.

In a general way, the information is similar to what was presented to me in January by AARP and Greentree. Many large companies may be making similar presentations to associates, with John Hancock or other carriers. Long Term Care insurance is a different product from long term disability insurance, which is applicable while people are still working. Actually, over 40% of people needing long term care services are under 65, contrary to popular belief.

Corporate benefit plans often provide eligibility for long term coverage insurance to eligible parents of eligible employees, answering some filial responsibility concerns. The services covered typically include nursing homes, assisted living, hospice, home health, and homemaking, There are daily maximums and lifetime maximums that can be steep. Sometimes there is a nonforfeiture benefit.

As long term care becomes a more pressing issue, various organizations and insurance companies are starting to present more detailed information on it. I will try to keep the reader tuned.

Update: Feb. 21:

ABC World News Tonight presented the story "Overwhelmed by the Costs of Elder Care
Caring for Her Grandparents, Ray Payton Feels Her Financial Security Slipping Away," link here as part of ABC's "Kitchen Table" series. The young woman is putting off having children because of the responsibilities of eldercare, when (even according to social conservatives) it is children that she needs to "balance the chemistry equation."

Thursday, February 14, 2008

Cost of seniors benefits rises sharply even before baby boomers retire

USA Today on Feb. 14 has a story by David Cauchon, "Senior benefit costs up 24%: 'Health care crisis leads to 8-year rise," with the Internet title "Price of seniors' care to soar as boomers age," link here. That 24% number is supposed to represent the increase in medical costs, social security benefits, and (when allowed by law) nursing home benefits over the natural inflation rate since 2000.

This is with a relatively steady senior population. The problem will become more severe as baby boomers reach 65 in three years and start using Medicare.

Actually, long term care costs may be decreasing as more seniors get in-home care from home health agencies and as more family members become involved as caregivers.

Economists criticize the attitude of "granny bashing," because in general seniors (or at least their spouses) paid into social security and Medicare during their own working lives and in some sense earned their benefits, which was less the case when FDR and then LBJ started these programs. The main problem is the extreme and uncontrollable rise in health care costs, some issues managing prescription drugs, and longer life spans.

Wednesday, February 13, 2008

Controversy of lipitor and memory loss, especially in women; perhaps critical for elderly living alone?

Media reports today (Wed. Feb.13) discuss the stories that the cholesterol lowering drug Lipitor causes memory loss and sometimes muscle cramps. The medical establishment does not fully accept this conclusion. The theory is that cholesterol-lowering drugs could affect brain tissues which actually depend on cholesterol to manipulate memory. There is a “Health Brief” on p 27 of today’s DC Examiner. “Could a drug that helps the heart be harmful to the brain?” and it quotes Dr. Orli Etlingen, vice chairman at New York Presbyterian Hospital, as saying “This drug makes women stupid,” at a recent luncheon on women’s health care.

A typical story appeared on ABC News “Doctors Discredit Lipitor’s Link to Memory Loss: Evidence of Side Effect Remains Anecdotal; Doctors Stress that Benefits Outweigh the Risk,” story by Lauren Cahoon, link here.

I checked around and found many anecdotal reports back to 2003, such as this one on “The Health Care Blog.”

There may be other medications that can be tried, such as forms of Niacin, according to the stories.

The issue is critical for the elderly living at home (facing possible long term care issues), especially those alone depending on home health or alarm systems who need to remember when to take their medications, which require the ability to keep track of dates. As is so often the case, it seems to be much easier for pharmaceutical companies to come up with drugs that lengthen life than it is to maintain vigor and self-sufficiency.

This form of memory loss is distinct from Alzheimer's, which was discussed on this blog Jan. 31.

Sunday, February 03, 2008

Erickson Tribune discusses Medicare Advantage

The Erickson Tribune, a small newspaper for seniors, is now promoting, in the February 2008 issue, its “Erickson Advantage” program – that is, a Medicare Advantage program. I summarized this topic on this blog Dec. 20, here. The article, by Lisa M. Davila, is titled, “A better way to spend Medicare’s money.”

According to the article, a Medicare Advantage plan is set up by a private insurance company that makes a contract with Medicare to make benefits available to its own policyholders and acts as a carrier (the other term is “intermediary”), under a theory that a private company can provide better health care service for a given amount of money than can the federal government. Yes, it sounds like a neocon idea.

Erickson claims it is trying to provide a better deal by bundling primary care with traditional Medicare supplementary insurance, which often costs well over $200 a month. The Advantage policy, when a senior buys such a policy, must cover all of the medical expenses since the senior then no longer can use Medicare (since Medicare has paid the insurance company). A policy obviously must be carefully structured and a senior must look at the costs and benefits (deductibles, etc) very carefully in consideration of his or her own circumstances. Major media outlets claim that there have been serious problems with coverage of some procedures in the plans, where seniors have bought them and then certain procedures that Medicare would have covered were not covered in the Advantage plan. Presumably, Medicare would carefully regulate these plans, but according to media reports, this hasn’t always worked. Some people make a living selling these plans and earning commissions on the sales, so there are issues with integrity, conflict of interest, and other problems common in insurance sales.

The Erickson Advantage fact sheet is here.

Its main website is here. There is some detail as to the individual plans. Visitors who know these products (including insurance agents) are welcome to comment here as to how they work and as to their effectiveness. I try to keep this blog as “objective” as possible.