InsureBlogger Hank Stern takes over as curator and bartender for the latest edition of the Health Wonk Review blog carnival. You’ll find a great collection of health policy posts there.
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I wrote my blog post about long term care insurance in reaction to what I thought was a foolish, ivory tower-induced article in the Wall Street Journal, which blamed the unpopularity of long term care insurance on “narrow framing.” Narrow framing is certainly an issue in consumer financial decisions, but with long term care insurance the problem is the products themselves aren’t very attractive.
In particular I’m looking for a plan to cover catastrophic expenses in case I end up in a nursing home for a decade or more. I can pay the first few years myself and want coverage that kicks in later and takes over. Instead the plans that are out there start paying within a few months and end after just a few years of coverage.
Whenever I encounter an insurance oriented issue, I know to turn to InsureBlog’s Henry Stern for his perspective. I always learn something when I do.
Hank has a different spin on long term care insurance than what I’ve heard. Here’s what he writes in his critique of my post:
More disturbing, though, is [David’s] contention that “the benefit structure [of LTCi} doesn’t protect against catastrophic expenses.” This is a common misconception of how LTCI works and what it’s really designed to do, and for that I blame not David, but my industry. The story we’ve been told to tell is that you buy LTCi to pay for care. This is correct, but misleading: there is no realistic way to buy a plan that will completely cover the costs of a major claim (or series of claims). Anyone that could afford to buy such a plan would be much better off self-insuring.
No, the role of LTCi is to supplement one’s assets (and a Partnership-compliant plan is a terrific ally in that quest), and to buy “choice.”
What does that mean, Henry, “choice?”
It means that having the ability to pay for care oneself opens up a lot more doors (as regards facility and resource availability) than folks dependent on Medicaid will see. Is that fair? Doesn’t matter. Is that real? Yes.
Ok, that’s interesting. In other words long term care insurance doesn’t do what I want it to do, but it still does something useful for some people.
So I revise my view: long term care insurance has a role to play. But it still doesn’t deliver what I’m looking for.
Hank Stern from InsureBlog has been known to keep me honest on insurance topics, so after I went off about long term care insurance earlier this week, I asked him to let me know if I was out of line.
Good friend that he is he responded by writing not just one but two posts on the topic. The first post –about the WSJ article that annoyed me in the first place- is posted today. The next –responding to issues I raised in my post– is forthcoming.
While acknowledging that some of the basic info in the article is accurate, Hank also has a bone to pick with the authors. Here’s something new I learned from the post:
Interestingly, the article fails to mention one of the most valuable, easily understood benefits of LTCi, one which addresses pretty much all of their concerns: the Partnership Program. Pointing out that a properly constructed plan will help keep the Medicaid folks at bay makes for a very compelling argument that even “narrow framers” would find hard to resist.
This program is meant to get people to buy long term care insurance to reduce the burden on Medicaid. The idea is to “take the value of the plan ‘off the table’ when determining Medicaid eligibility for long term care.”
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