Long term care insights from a long term friend or Yes Virginia, there is a role for LTCi

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.

By healthcare business consultant David E. Williams, president of Health Business Group.


Primary care prognosis: Is it really so grim?

Is it really that bad?

Is it really that bad?

A lengthy front-page Boston Globe article (Precarious future for primary care) includes some of the usual laments:

  • The shortage of primary care physicians is bad and getting worse
  • Primary care docs don’t make enough money compared to specialists
  • Student loan burdens discourage a career in primary care
  • Medical schools implicitly discourage the best students from going into primary care

There is some truth in the above, but the article misses other significant problems with primary care and fails to note factors that I think may lead to a resurgence of primary care over the next decade.

First, some more challenges specific to primary care:

  • Increasing oversight and control through quality reporting requirements that fall most heavily on primary care
  • The rise of non-physician primary care providers, i.e., nurse practitioners and physician assistants, which in some cases erodes the prestige of being a doctor

The article mentions how new doctors continue to go into more lucrative specialties instead. But if I were starting a medical career, I would look seriously at primary care.

In the traditional fee-for-service model, health systems viewed primary care physicians primarily as feeders for profitable specialties and diagnostic tests. A primary care physician who referred lots of patients to the hospital for MRIs, stress tests and hip replacements was a great thing.

In new value based models, primary care physicians are often taking control. They are starting to view specialists more as vendors, and are thinking twice before making referrals. In this new world, specialists have to demonstrate efficiency, responsiveness and effectiveness to earn referrals. Primary care physicians are climbing into the driver’s seat and finding opportunities to boost their incomes through performance based bonuses. It’s specialists who should be worried about what will happen to their flow of patients and their incomes.

Also, primary care physicians who don’t like the traditional practice set-up can become concierge physicians, boosting their incomes and autonomy in the process. There’s plenty of demand for such services in places like Boston. When I looked into getting a concierge physician for myself the offices either didn’t return my calls or replied that they were not taking new patients.

Read the article carefully and you’ll see that there are also opportunities for primary care to improve through more enlightened practice administration. Scheduling is a prime example. In one place we are told that there is such a shortage of primary care that “they’re filled to the brim with appointments.” But we also read:

Dr. Danielle Silwa… was at her computer… staring at a roster of her patients, most of them no-shows… ‘Sometimes you have days where half your [schedule] doesn’t show up.’

So why are the appointment slots all taken but only half the patients show up? Well, when someone calls for an appointment and is told to wait a month or two, by the time the appointment rolls around they are either dead, or the problem has been resolved, or they’ve forgotten about the visit. There are solutions to this common problem. Open access scheduling, where slots are intentionally left open for same or next-day appointments, has the unintuitive impact of increasing capacity utilization while increasing patient satisfaction. And digital appointments such as video visits and asynchronous encounters can be used to take up the slack when no-shows do occur.

Meanwhile, primary care practices can optimize their use of NPs and PAs, leaving the doctors to work with the more complex patients, and not be stuck just with the more mundane and lower skilled functions mentioned in the article: “act as gatekeepers, watch for signs of decline, push for healthy habits.”

There’s a real need for primary care physicians. In the long run I expect primary to become a more attractive career path, while some specialties will become less enticing. It will take a while for the changes to work their way through the system, and there may be some hiccups and setbacks along the way. But I really don’t agree with the Globe’s angle on this topic.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.


Long term care insurance –perspectives from InsureBlog

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.”

By healthcare business consultant David E. Williams, president of Health Business Group.

Long term care insurance –narrow framing is not the problem

Who are you calling a narrow framer?

Who are you calling a narrow framer?

Health Business Blog readers know the Wall St. Journal is among my favorite publications, but I have to call BS on a recent piece: Why People Don’t Buy Long-Term-Care Insurance. It’s written by a couple of Wharton professors, who frankly should be ashamed of themselves.

Here’s what they have to say:

When it comes to long-term care, two facts stand out. First, an estimated 70% of people will need such care, which will be costly. And second, most of them refuse to buy insurance to cover it…

[O]ur research suggests that some consumers’ rejection of long-term-care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions. Narrow framing has been found to be common when individuals face complicated decisions—and shopping for long-term-care insurance is certainly one of those instances.

Then they go on to explain how they classified people as “narrow framers” and finally end with advice for insurance companies on how to tweak and reposition their products.

Give me a break.

There may be some narrow framing going on, but that’s not the main issue. The problem is that for many people long term care insurance isn’t an attractive product.

Insurance is useful when it covers rare events that could be financially ruinous. But long-term care is a common need (“70% of people” according to the authors) and the benefit structure doesn’t protect against catastrophic expenses.

Last time I looked into long term care insurance, two years ago, I was offered a level premium policy for my wife and me that cost over $10,000 per year. The benefits were $10,000 per month, with a 25 week elimination period (that’s the waiting time before benefits kick in) and 6 year benefit period, with a 5% COLA. In other words (leaving aside inflation for a moment), the maximum benefit is $720,000.

What I really wanted was a policy with a 5 year elimination period and no cap on the benefit period. But no one I can find offers that –either because it’s not legal or because there’s insufficient demand.

Call me a “narrow framer” if you will, but before that, please provide a better argument for why long term care insurance is a good value.

Image courtesy of marcolm at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.



Actually Obamacare prices aren’t skyrocketing

Don't, don't, don't believe...

Don’t, don’t, don’t believe, don’t believe the…

A CNN article (Obamacare sticker shock: Big rate hikes proposed for 2016) earlier this month certainly made things sound dire:

Hold onto your wallets… many insurers want to substantially hike rates on Obamacare policies for 2016.

Many are proposing double-digit premium increases for individual policies, with some companies looking to boost rates more than 60%…

In Florida, for instance, United Healthcare wants to raise the rates of plans sold on the Obamacare exchange by an average of 18%. Individual policies available outside the exchange through United Healthcare or through a broker would go up by 31%, on average, with hikes as high as 60% for certain plans in certain locations.

In Texas, insurer Scott & White is looking for a 32% increase for exchange-based plans, while Humana is asking for an average 30% boost for its exclusive provider organization policies, which generally cover only in-network services.

That sure sounds pretty bad. And maybe it’s true, since Florida and Texas are such screwed up healthcare markets. Our small business has experienced Obamacare-driven rate hikes as well, so it’s not like I’m unsympathetic.

But I put a lot more faith in a new analysis from Avalere Health, which did a thorough analysis in the eight states where complete 2016 premium information is available. What they found is that Silver plans (bought by 68 percent of exchange enrollees) had proposed average premium increases of 5.8 percent, and that the premium for the lowest cost silver plan was rising only 4.5 percent. Keep in mind these are the proposed rates –actual increases may be lower.

Click the image below for a better view of the Avalere analysis.


The cheapest plan one year might not be the cheapest plan the next year, so enrollees might need to shift plans to keep their premiums low. And this fact points to the most significant omission from the CNN. United may be raising its rates by 18%, but as long as a competitor is offering lower premiums, consumers still have options. In addition, consumers who receive subsidies –and that’s most people– won’t necessarily feel any change.

By healthcare business consultant David E. Williams, president of Health Business Group.

Seth Moulton and the VA again

Last week I praised Congressman Seth Moulton for working to reform the VA based on his experience as a patient. I thought he did a reasonable job at looking for opportunities for improvement rather than bashing the organization and its employees. I also pointed out that while there are problems with the VA there’s no guarantee things are better in the private sector.

At least based on the letters the Globe published in response to the original article, others didn’t see things the same way.

  • Dr. Henry Feldman who works mainly at the BI but also at the VA makes my point by stating that things would be as bad or worse at a “prestigious medical center” if a patient walked in with no  medical records or insurance cards
  • William O’Brien, a retired VA mental health chief, blames Congress for increasing the VA’s workload through two wars without providing additional funds to take care of everyone.

As I reread the article I can understand where the letter writers are coming from, but I still give Moulton the benefit of the doubt. If anything responsibility for the tone of the overall article should be placed on the reporter and editor. While Feldman and O’Brien make good points, there are plenty of opportunities for the VA to improve and I’m glad Moulton is trying to help make it happen.

By healthcare business consultant David E. Williams, president of Health Business Group.