The long-term care insurance test.

Among long-term care's more frustrating aspects have been the sputtering sales of private long-term care insurance. Private LTC insurance makes

a lot of sense, on the face of it--buy it for a few hundred bucks a year in your 40s, and you can feel reasonably assured of having a significant portion of your massive costs for assisted living and nursing-home care covered when you need them. People are expecting longer lives these days and, more to the immediate point, are starting to see their parents encounter the travails of our current non-system. So why aren't LTC insurance policies selling like hotcakes? It appears as though someone is going to take a serious look at this question. In January, the Center for Long-Term Care Financing announced that it was planning to collaborate with the respected consulting firm Milliman USA to perform a study of consumer attitudes about private LTC insurance--in particular, whether a specific plan the Center has proposed might arouse their purchasing interest. The Center's "LTC Choice" plan has, as its centerpiece, a line of credit made available for anyone with income or assets to help purchase an LTC insurance po licy; the line of credit would be secured by the person's estate, with the equity used to pay LTC costs not covered by insurance, including paying back Medicaid, if it's used. The question under investigation is what effect this or, alternatively, a simple tightening of Medicaid standards to require total impoverishment for eligibility, would have on people's desire to purchase a private policy.

Center President Stephen Moses--who, although clearly a proponent of private insurance, should be credited with almost single-handedly keeping long-term care financing issues in front of the public for years--has long contended that Medicaid, a program for the poor, has been misused and abused in paying for long-term care. His goal for the study is to give policymakers some clear direction in dealing with this conundrum.

Private insurance has significant educational hurdles to overcome, especially with its primary market, i.e., 40-somethings with a lot of other expenses to handle and a vague perception that Medicare will take care of them or (if they're somewhat less vague) that Medicaid--for which they pay taxes, after all--will be there to meet their needs. Moreover, there are some (and not just estate planners) who will take umbrage at the thought of laying their estates on the line to pay for any portion of long-term care--a political problem for private-insurance advocates.

At last glance, the Center was still looking for companies to participate in this study, with a sign-up deadline of March 1. I hope this study comes off. Any firm answers, or even just consciousness raising, on long-term care financing these days would be more than welcome.

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