Long-Term Care: There Must Be a Better Way

Larry and Janet Blau of Garden Grove did their homework when they set out to buy a long-term care insurance policy a few years ago. Larry, now 74 and Janet, 68, contacted several agents who made presentations. They finally settled on a policy for both of them from American Travellers that cost nearly $3,500 a year.

The Blaus were surprised when, 20 months later, the company hiked their annual premiums some 17%, to $4,100. The agent, they say, never told them that rates might go up.

Although the Blaus can afford the premium, thanks to a company pension and pocket money Janet earns selling Avon products, other Californians are not so lucky. The Blaus have joined other families as plaintiffs in a class-action civil lawsuit alleging that American Travellers and its parent firm, Conseco Senior Health Insurance Co., failed to disclose to policyholders that it planned to raise premiums and were engaging in “low-ball pricing” to encourage sales.

“The facts don’t support the lawsuit,” said Mark Lubbers, an executive vice president at Conseco.

The Blaus and the other plaintiffs were taking “personal responsibility” for their care in old age, but they did not bargain for the headaches that go along with the private insurance market. The insurance industry, some conservative think tanks and other organizations are promoting the concept of personal responsibility when it comes to long-term care. Knowing that long-term care policies can cost upward of $3,000 a year for people age 65 and over, they advocate a federal tax deduction that would make premiums fully deductible after a person keeps a policy for four years. In 1996, the insurance industry successfully lobbied Congress for a partial deduction of long-term care premiums.

These interests, which have organized under the name Americans for Long Term Care Security, have also proposed a maximum tax credit of $3,000 for caregivers and people who have a need for long-term care. But that amount is a mere droplet considering the cost of services. Someone needing full-time care at home could easily pay $40,000 or $50,000 a year. With a tax credit arrangement, the government would pick up $3,000, leaving the family to manage a bill of $47,000.

Only about one in 10 elderly Americans--mostly higher-income families--can afford a quality long-term care policy, estimates Josh Weiner, an economist at the Urban Institute in Washington, D.C. People with health problems who are likely to need long-term care may never get the chance to exercise personal responsibility even if they want to. Most insurers will deny coverage for long-term care to people with chronic conditions that might signal the need for services.

A 62-year-old diabetic who wants insurance can’t buy a policy from most companies, since they consider his condition too risky to the bottom line.

By 2020, about 17% of the U.S. population will be 65 or older. That’s 20 million more elders than there are today, many of whom will need care. Given the graying of our population and a potentially looming crisis in care for the elderly, it is sad that “personal responsibility” is the only solution getting a public airing.

The Blaus’ lawsuit illustrates America’s fragmented, haphazard system of paying for long-term care. That system requires middle-class people to become paupers before Medicaid, the state- and federally funded program for the poor, will pay their nursing home bills. The system provides few public funds for care in assisted-living facilities or in the home, sends families scrambling to patch together services and leaves many people without any care at all. A recent study by the Harvard School of Public Health and the Robert Wood Johnson Foundation noted that half of the caregivers who unsuccessfully tried to arrange services for someone said that financial barriers were the chief culprits blocking access to care.

I recently returned from Japan, where I participated in an international symposium on family care and learned about the country’s new social insurance plan, which pays for long-term care. How could you pass a new and expensive program in the midst of an economic slump, I asked Hideki Tarumi, a senior official at the Ministry of Health, Labor and Welfare.

Tarumi, noting that 25% of the Japanese population will be 65 or older by 2020, said there is widespread acceptance of the need to publicly fund nursing and home care services. “People are seeing that caring for the elderly is a burden,” he said. “Japanese people believe if we request a high level of services, we have to pay taxes to support them.” Japan, Tarumi said, looked to the countries of northern Europe, with their rich services and high taxes, as a model.

Diabetics in Japan don’t worry about satisfying an insurance company’s medical requirements; nor do citizens worry about premium increases that force them to drop their coverage or forgo other needs to buy a long-term care policy.

The program, which began a year ago, allows anyone over 65 to receive services in their homes or in facilities. It also helps people coordinate and design their care plans. People between the ages of 40 and 65 also qualify if an illness associated with aging, such as a stroke, requires long-term care. And here’s the most striking part: The government pays 90% of total costs, with the patient paying the rest. General tax revenue and premiums finance the government’s portion, which is expected to exceed $50 billion by the end of the decade. Premiums are low. They vary by income, but everyone over age 40 currently pays, on average, $19 a month.

In order to get this much sugar into a cup of yogurt, you have to displace some of the yogurt, and thus the valuable nutrients it contains. If you like flavored yogurts, try adding your own fresh fruits to plain yogurt.

To make things easy for families, each municipality acts as a “single entry point.” That means geriatric specialists evaluate every person requesting services, determine which services are best and assign benefits according to the severity of their disability. Those needing the most care receive the largest benefit, about $2,300 a month. The Japanese hope that public insurance will encourage the development of a variety of services to ease the burden on caregivers, particularly women who have traditionally assumed that role.

In the United States, finding the right services is often a hit-or-miss affair. Families tell of making several phone calls to connect with the right agency to get even a shred of information. And because of the patchwork system of payments, a person needing a particular service may get it in one county but not the next. Sometimes people who don’t belong in nursing homes end up there any way because Medicaid will pay the bills.

If the Japanese are looking toward northern Europe, maybe we should be looking at Japan.

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Trudy Lieberman is the author of “Consumer Reports Complete Guide to Health Services for Seniors” (Three Rivers Press, 2000). She can be reached at [email protected]. Health Matters appears on the third Monday of the month.