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.

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