Letter to the editor: Out of whose pocket? 

Stephen A. Moses writes: Little annoys me more than when erroneous findings are reported as unanalyzed fact. The answer to the April 2009 Quiz Question in LTC e-Wire is a good example. (See the answer here.)

The 30% of long term care expenses paid “out of pocket” by individuals and families, as reported by Avalere (in the Quiz question answer), is totally misleading. It includes Social Security income (another government program) that Medicaid recipients have to contribute toward their cost of care. That’s roughly 13% of the entire cost of home care and nursing home care in the United States.

If out-of-pocket costs were really 30%, LTC insurance market penetration would be double what it is today. And to anticipate the critics who say Social Security income is owned by Medicaid recipients and is truly therefore out of pocket, I agree. That’s not the point.

The point is that asset spend-down is only a fraction of what it was thought to be, and public financing of LTC, including Social Security spend-through, is much higher than thought. That’s why Medicaid crowds out two-thirds to 90% of the potential LTC insurance market, as reported in 2006 by Jeffrey R. Brown of the University of Illinois and Amy Finkelstein of MIT.

By ignoring realities like these, the LTC insurance industry has condemned itself to remain a niche market.

Stephen A. Moses
President
Center for Long-Term Care Reform Inc.
Seattle, Wash.
smoses@centerltc.com

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