Monday, October 31, 2011

As world population reaches 7 billion (today), futurists warn of aging crisis in wealthier societies

Joel Achenbach has a big story as the world’s population reaches 7 billion: “A world growing – and growing grayer”, on the front page of the Oct. 31 Washington Post online it’s titled “World population not only grows, but grows old”, link here

The upshot is, of course, that the wealthier populations are not replenishing themselves, whereas in the third world, population is exploding.  In the United States, Hispanics account for more of the population replacement. In Europe, Muslim immigrants, threatening a political crisis.

But the biggest problem is, of course, is that there are fewer workers per retired or unable-to-work person as life spans in wealthier countries increases.  Hence, the pension crises as well as, obviously, Social Security challenges.

The article mentions two important books. One is by Matthew Connelly from Columbia University, “Fatal Misconception: The Struggle to Control World Population” (2011, Belknap of Harvard University, 500+ pages), and  Ted C. Fishman, “Shock of Gray: The Aging of the World’s Population and How it Pits Young Against Old, Child Against Parent, Worker Against Boss, Company Against Rival, and Nation Against Nation”, (2010, Scribner, 400+ pages).  I just ordered the second of these to review (the long title sounds more relevant to my specific concerns). 

Some countries, varying from France to Russia, have started programs to encourage families to conceive of more children. 

Sunday, October 30, 2011

Social Security shortfall in 2010 getting attention, despite 2011 payroll tax holiday; Social Security was really just "insurance" when it started in the 1930s

Lori Montgomery has an important and detailed front page story in the Sunday Oct. 30 Washington Post, “Social Security adding billions to U.S. budget woes; ‘Cash negative’ milestone comes early; Fearing backlash, parties reluctant to pursue fix”, link here.  A secondary headline on p A8 is “Payroll tax holiday depriving Social Security of revenue”. 

In 2010, the cost of social security retirement benefits outstripped collections from FICA for the first time since the 1980s. Replacing the revenue loss from the 2011 payroll tax abatement would require $105 billion.

There are graphical charts mapping “year you turn 65” to average annual wage (adjusted for inflation), and (1) currently scheduled monthly benefits (2) what you would receive if the trust fund runs out” and (3) “what you would get under the fiscal commission’s proposal”.

When social security was implemented in the 1930s, it was intended to guarantee a short period of comfort and security before death, not a period of “golden years”.  Everyone was expected to keep working as long as they could, she says.

But the idea that you can combine “insurance” with “assets” (and repackage the whole thing as annuities) is a concept that the life insurance industry has been selling for decades. 
 Pictures: homelessness on DC streets, on way to Halloween party. 

Monday, October 24, 2011

Now, I have to make a decision about purchase of LTC insurance (Lincoln Money Guard)

As part of going through getting distribution from my own mother’s trust, I’m seriously looking at a single premium long term care policy, at age 68. 

Now, it comes from Lincoln National Life.  But it is a single premium Universal Life Insurance policy  (wiki), with a payment of $100000, that provides a death benefit incorporating a residual death benefit equivalent to the Benefit Limit of a Comprehensive Long-Term Care Benefits Rider (“CCBR”) and also adds an Extension of Benefits Rider (“EOBR”).

The monthly premiums for the riders are subtracted from the cash value; they are not added to the original premium.

There is a total long term care benefit limit in the mid $300000 range, and a monthly maximum LTC benefit of about $4800.  There is a maximum duration of 6 years.  There is a surrender value equal to the premium.

To qualify, you have to fill out a detailed questionnaire, and undergo a long telephone interview.  There is a memory test in the interview.  From the documentation, it’s not clear, however, that the applicant must be submitted to all kinds of medical monitoring first (like repeated blood pressure measurements, EKG stress test, or maybe even Holter).  An earlier visit in 2008 from someone with Genworth made it sound like one had to undergo such embarrassing monitoring  (see Sept. 3, 2011 posting).  I’ve  also had another caller from still another company from a man who is selling LTC policies but trying to establish himself as a rock musician.  Sounds tough.

Lincoln calls the product "Money Guard" (trademarked) and has an Internet description, with somewhat different numbers, here.

Is this pseudo-LTC policy "worth it"?  Maybe since there is a no-penalty surrender value, it’s moot.  To qualify for benefits, you need to have difficulties or impairments with two major life activities.   Covered services would include adult day care, home health care, personal care services, hospice, nursing home, and assisted living.  In the northern VA area, a private room in assisted living typically costs about $5000 a month minimum, nursing home, at least $7000 (except that some nursing homes have a minimal care option that is less).  So the patient’s regular assets still must be used and spent down, before Medicaid can be used.

The government’s current reference on LTC is this
Should people who had no children be required to purchase LTC coverage if available?  That sounds like a good policy question.  Should they be required to submit to monitoring first?  Sounds like a privacy question, maybe running afoul of HIPAA.

Wednesday, October 19, 2011

Social Security announces 3.6% COLA increase in benefits, but warns rise in Medicare premiums may exceed benefits increase for many

Social Security has announced a 3.6% increase in retirement benefits for 2012, starting in January. But SSA warns, in its press release, that Medicare premium increases may be more than the benefit increase for some recipients. The link is here.  

The wage base maximum increases from $106,800 to $110, 100. That increase, in an actuarial sense, is supposed to support the COLA benefit increase.

It seems to make little sense, to me, to collect less than the full FICA taxes this year while Social Security approaches eventual breaking points.  Yet some social conservatives want to stop FICA taxes altogether for married couples who raise “enough” children.

For the short run, Social Security still displays plenty of political inertia, and this may be protecting current beneficiaries only.

Saturday, October 15, 2011

Obama administration won't be able to help with long-term care for now; CLASS is too expensive

The Obama administration has had to scrap its plans to include opportunities for long-term care insurance through its CLASS Act, according to a story Saturday by N.C. Aizenman, link here

Again, the premiums were high enough to discourage healthier people from enrolling.

Some companies are selling “single premium” long term care policies, especially to younger seniors (under 70) who inherit estates; what’s not clear is the degree of medical pre-monitoring required to qualify for such policies. I don’t want to have to wear a Holter and be “watched” (and worse) to get one (see Sept. 3). 

Friday, October 07, 2011

Government will recommend greatly scaling back prostate cancer screenings; disruptive treatment unnecessary for most men

Rob Stein writes in the Washington Post this morning that medical “authorities” (The U.S. Preventive Services Task Force  -- USPSTF) will recommend dropping most routine prostate cancer screening for men (through the PSA Antigen test [link]).  The results have consistently amounted to unnecessary tests and treatment, sometimes with real practical consequences, for a cancer that often grows so slowly that men will dies of something else (at the end of a natural life span).

Rob Stein has a Washington Post report front page on Friday morning Oct. 7, link here.  

The USPSTF is also called the Agency for Healthcare Research and Quality, website here  and the new press release should appear Tuesday. It’s recommendations affect what Medicare and private insurers pay for.

My own father died of suddenly metastasized prostate cancer just before age 83, in 1986, but was ill and incapacitated for only about four weeks.  My mother died of heart failure at age 97 at the end of 2010, but in 2009, a surgeon had insisted on doing a lumpectomy and wanted to operate further when it didn’t “get everything”.  At that age, we said “No”.  Her decline accelerated after the late 2009 surgery. 

Gardiner Harris reported considerable opposition to this new report in the New York Times on Saturday, link to the story here.  But prostate patients do not want potentially unnecessary "castration", chemical or actual, to prevent future cancer blowback.  Men are finding out what a more publicized problem for women can really feel like.

CNN says that the ratio of indolent prostate cancers to aggressive (like my father had) that would actually need to be removed with radical treatment to save a life, is 47:1.   CNN says that men should be aware of the statistics (which seem to favor "watch and wait" most of the time.)  I would think a biopsy could identify which type. But men may experience a "shame" factor.

Thursday, October 06, 2011

Medicare cuts will be a very hard sell, especially in provider operating margins

Look at this –no, I'm not talking about a pitcher's hitting a homer on -- I'm pointing to  Richard Wolf’s tome on Tuesday in USA Today, “Five Ways to Squeeze Medicare,” link here.  

Targeting the “rich” was tried before, in 1989, when there was an attempt to provide catastrophic health care “at their expense”, and this sparked a rebellion, leading to repeal.

More interesting is reducing provider profit margins. But since the late 1980s, “K Street” has nurtured a cottage industry of consulting firms that help provider associations maximize their Medicare operating margins.  I know this because I worked for one of them, Lewin (now very successful) in 1989.

Rooting out waste and inefficiency should be a no-brainer. But the hard part is going to be to stop over-treating seniors. I know that was the case with my own mother, who passed away at 97 in December 2010. 

Monday, October 03, 2011

Life companies offer interest-bearing variable annuities than can be convenient for beneficiaries of trusts, for charitable giving

A few life insurers are selling variable annuities which pay guaranteed interest rates, sometimes as high as 6% even now, and these products could be useful when people receive distributions of estates from trusts to meet the deceased’s wishes on charitable giving (using the interest income to fund the gifts, which may work in some tax situations).

In many cases, these products are offered by specific insurers only for specified periods (at least at higher rates0, according to the insurer’s market share situation.

I’ve found this to be the case with the Met Lifew MLI USA Varriable Annuity Series.  But in general, the availability of this kind of product varies a lot with time, among different companies.