The Private Insurance Market

By James Kwak

I’m currently in the process of buying long-term care insurance—you know, so my daughter won’t have to take care of me when I’m old. I have a good agent who knows all about the market and has answered every question I’ve had. I understand personal finance, opportunity costs, discount rates, and inflation. I know my way around a spreadsheet (one benefit of my years at McKinsey). But I find it’s still hard to figure out what to do.

A bit of background: Long-term care insurance pays for your stay in a nursing home if you become unable to take care of yourself. Depending on the policy, it may also pay for care you receive at home instead of going into a facility. According to the insurer I’m considering, the median annual cost of a semi-private room in a nursing home in my state is $145,000, and the average stay is something like three years. To put that in perspective, in 2009, the median net worth of families where the head of household was of age 65–74 was $205,000 (including real estate assets).

Long term care is not covered by Medicare, except for a short period after each acute event. It is covered by Medicaid, but to be eligible for coverage you have to exhaust all of your assets. Despite that onerous requirement, Medicaid currently covers 40 percent of all spending on long-term care. (2011 Long-Term Budget Outlook, p. 39.) The Affordable Care Act of 2010 included what is known as the CLASS Act, which would have allowed anyone to buy long-term care insurance, with an average benefit of $75 per day, for a monthly premium of $123. The CLASS Act, however, has been suspended because the administration could not certify that it would be deficit-neutral over the long term. So the bottom line is: until you use up all your money, you’re on your own.

Still, shouldn’t you be able to buy protection in the private insurance market? The short answer is: not really.

The first problem is that private long-term care insurance is designed to help you pay for long-term care, but not to insure you against open-ended costs. Most policies have limits on both your maximum daily benefit and your lifetime total benefit, so a typical policy will only cover you for, say, three or five years. Unlimited duration policies do exist, but they are priced to deter people from buying them—because insurance companies don’t want that risk on their books. So an insurance policy will help you pay for long-term care, but won’t take away the tail risk—unless you’re rich enough that you can cover the tail risk yourself.

The second problem is that there’s no way to protect yourself against inflation. The “inflation protection” in the policies I looked at is a simple annual increase in your daily benefit by 3 percent or 5 percent. It isn’t indexed to actual inflation, let alone to actual inflation in the cost of long-term care, which is what you care about. This is important because, if you’re in your forties, you’re buying a policy you will probably need in about thirty years. Again, the insurance companies don’t want that risk, so you get to keep it. So if you buy the maximum, 5-percent protection clause, there is a decent chance that your benefit will keep up with actual costs, but there’s no assurance that it will.

The third problem is that you can’t protect yourself against your premiums going up in the future. The standard way to pay for long-term care insurance is to pay an annual premium that stays flat in nominal terms for the rest of your life. This means that you’re overpaying (relative to the actuarial cost of the insurance) in the early years and underpaying in the later years. But if the insurance company figures out that it has underpriced long-term care insurance in general, it can file for a rate increase and boost your premium payments down the line. And by that point, you’re stuck. You can’t switch insurers because the new insurer won’t take into account the overpayments you made to the old insurer, so it’s certain to charge you higher premiums.*

In a competitive market, doesn’t that just mean that someone will enter the market with a product that includes real inflation protection and a lifetime premium guarantee? Well, it hasn’t so far. But more importantly, that wouldn’t be real insurance either, because of the fourth problem. With long-term care insurance, you’re buying a product you probably won’t need for decades, at which point the world will have changed considerably. There is a decent chance that your insurer has mispriced the risk (more people will need long-term care than they expect, or long-term care will be more expensive, or medical advances will mean that people are living longer in long-term care)—in which case it will go out of business. And then your insurer won’t be around when you need it.** Insurance companies try to protect themselves by (a) not offering real inflation protection and (b) reserving the right to raise your premiums in the future; if they didn’t, they’d be even more likely to fail. But that still isn’t perfect protection, which means you’re taking on counterparty risk.

Then there’s the fifth problem, which applies to all private insurance without a governmental mandate: adverse selection.

In short, the private market doesn’t provide good long-term care insurance—because it can’t. The insurance you can buy is really just a way of reducing the amount you’ll have to pay for long-term care; it’s a financial planning tool that tightens the distribution of your expected long-term net worth. My spreadsheet says it’s worth it on that basis, so I’m planning to buy it (although I’m not accounting for counterparty risk or the risk of future premium increases). But it isn’t insurance against extreme outcomes.

If we want real long-term care insurance, there’s only one place where we could get it: the federal government. The government can offer unlimited coverage and real inflation protection (benefits based on actual costs at the time you incur them) because it has the ability to absorb long-term financial risks. It can mandate universal coverage, eliminating adverse selection. Because it can raise premiums (or other taxes), it will not go out of business. (Those potential premium increases, however, do mean that it can’t offer a lifetime premium guarantee.)

If this sounds radical, it shouldn’t. We already do virtually the same thing: it’s called Medicare Hospital Insurance, and it’s one of the most popular programs in existence. The Hospital Insurance trust fund is facing a long-term deficit, but that’s not because of its basic structure: it’s because the premiums it charges (payroll taxes) haven’t gone up along with health care inflation, so it’s systematically undercharging for the risk it’s taking on.

A federal long-term care insurance program would pool a major financial risk that most middle-class families today are facing alone. (Arguably, if you don’t have any assets, you don’t face any risk because of Medicaid.) This is exactly what governments are supposed to do: protect ordinary people from risks that they cannot absorb and that private markets do not provide good solutions for. It would probably also help budget deficits in the long term. The government already picks up 40 percent of all long-term care spending through Medicaid, for which it gets nothing; a real long-term care program could pay for itself through payroll taxes, reducing Medicaid spending.

Now I know the last thing that will happen today is a new social insurance program. Instead, middle class people will continue hoping they don’t need long-term care, elderly people will spend all their money on long-term care and then go on Medicaid, and government spending on Medicaid will continue to climb. But that’s a comment on our political environment, not on the proper role of government in society.

* You can accelerate your premium payments by paying the whole thing over ten years, which reduces this risk; but the people who can afford to do that are usually people who can self-insure for long-term care anyway.

** There are state guaranty funds that pick up policies from bankrupt insurers, but their benefits are likely to be less than what you originally paid for.

 

99 responses to “The Private Insurance Market

  1. I’ve been involved with geriatrics for some 25 years, and what I have noticed is that people want to remain in their current situation as long as they possibly can. The potential scenarios are limitless, but the one place elderly do not want to go is it a gvt run institution. The elderly already suffer greatly and society insists on this. To be out of your realm and into an atmosphere of complete strangers is more than hell on Earth, never knowing that the next fall and euphoric morphine injection, may be your last.

  2. Can’t you buy a semi-private room in a “median” nursing home in a state with a nice climate & rent it out until you need it yourself?

  3. A couple of comments , as I am very close to the topic:
    Re: …
    #2: “no way to protect yourself against inflation” a couple of carriers (including my own company) offer actual CPI-based inflation protection. Ask your agent to look harder.

    #3: “can’t protect yourself against your premiums going up in the future” This is true, and IMHO it is crucial for insurers to be able to raise premiums in order to cover future payments. But most insurers offer a non-forfeiture benefit which states that when you lapse your policy, you are left with a ‘paid-up’ policy which has a value = sum(all premium payments), or perhaps some other defined sum.

    #4: “you’re buying a product you probably won’t need for decades, at which point the world will have changed considerably”

    I COULD NOT AGREE MORE

    #5: “adverse selection”
    yup (this is correlated with your problem #3)

    For a novel product idea that doesn’t include a new Federal insurance program, check out Don Taylor’s suggestion: http://theincidentaleconomist.com/wordpress/an-interesting-long-term-care-idea/

  4. My CFA/mutual fund salesman offered me a program rather like a pre-paid life insurance. Haven’t run the numbers yet, but at least the cost is up front.

  5. The government can solve many problems by allowing euthanasia (assisted-suicide). Social security, Medicare, Medicaid, and long-term care would not longer be as significant of an issue. We may be decades away and it won’t be a choice we will want to face until we have to, but it’s a decision we will have to take and maybe it won’t even be an option at some point.

  6. Well summarized… I’m in a similar situation (I believe)… I’m in my mid-50s, in good physical and financial health, understand spreadsheets, etc. I’m equally bewildered by how/why the economics make sense for LTC insurance. (Having said that, I, too, will probably buy it.)

    A few comments (similar to the previous post from “loveactuary”)…

    – I, too, have received quotes for true inflation-adjusted benefits. In fact, my agent (who also seems to understand the real economics) strongly pointed me in that direction (correctly) pointing out that the 20 or 30 years from now when I need the benefit is a long time away. So, i think they are available.

    – I also agree that ultimately, it is NOT a true insurance product (in the sense of providing catastrophic risk protection) but instead is really a savings plan with some limited risk shifting.

    – Given that, I believe the true way to consider LTC insurance is that it is a product for a particular economic slice of Americans — not too rich and not too poor. If you’re rich, you’d be buying some limited savings and risk shifting you don’t need; if you’re poor, you’ll rely on Medicaid. If you’re in the middle zone with some decent wealth accumulation after a lifetime of earnings — and a spouse, that’s important — then LTC may be important to consider.

    – I don’t believe the “adverse selection” problem is a serious one for the the carriers. Like life insurance, you need to pass a health test to qualify and the premium is based on your current health. Given how far in the future most payouts occur, it seems that they can assume a reasonably random distribution of claimants.

    – It seems that the only solution to the “counterparty risk” you mention is to buy coverage from a name brand insurer. For the insured, it is a disaster to have paid in premia for 20+ years, for example, and then discover that your carrier either (a) goes out of business or (b) stays in business but decides to exit the LTC market. This is a big risk and I don’t know how to fully cover it but paying a bit extra upfront and going with a name brand who would think twice about tarnishing that brand is all I can think of.

    Having said all of this, I’m tending toward concluding what I do with most insurance — maximize the deductible and minimize the coverage in return for smaller premiums. In this case, I’m likely going to chose a plan with a longer “elimination period” (the time for which they do not pay before benefits kick in) and a smaller daily benefit. These changes can have a pretty big effect on the annual premium amount.

  7. America: no place to die slowly.

  8. Long term care insuranced is a benefit for your heirs — it protects their inheritance.

  9. So, the trick is to give all of your money away (eg, to your kids) when you start falling off the cliff so all of the nursing home expenses are on Uncle Sam, right?

  10. @panly:

    Pretty much no. We attempted to do something similar a few years ago knowing that all of our parents would be needing assisted living over the ensuing decade and found that essentially all providers used a rental model. The one non-profit that still was using a purchase model offered minimal services and was struggling because the only way it could pay for the cost of providing those services was to increase owner’s monthly assessments to the point where the cost differential between it and the rental institutions was not that great, if it even existed.
    Further, a large portion of the “active elder” facilities in the US (those individuals able to live largely independently but needing or desiring assistance with meals and other maintenance activities) are now being provided by hospitality companies (i.e., divisions of large lodging corporations) that have little or no understanding of geriatric care and are ill-prepared for or avoid the continuing-care needs of the aging or infirm. The best model for aging or infirm care may be the “continuing-care” community, where the resident can move smoothly from semi-independent to varying levels of assisted care to nursing or hospice care without major disruption to their routine, but it is extremely expensive. It, too, started out as a purchase model, but was quickly inundated by the costs of residents further down the line, and now is mostly rental model.
    It should also be known that one of the reasons that long-term care insurance policies are time limited is that for the aged at least, nursing home stays are relatively short – perhaps 6 months to at most a year ending in death, and for younger residents a few months at most. Most long-term care clients’ needs can be met by in-home visitation care or foster home / assisted-living care at far less expense, expenses that many long-term care policies DON’T cover.

  11. Speed, actually it also protects your spouse. Under Medicaid in Massachusetts the community (well) spouse can only keep $113,000 and qualify the other spouse for Medicaid, that seems like a lot and for a couple in their ’90’s it probably is, the problem is once again, that “tail” risk where one spouse gets Parkinson’s, or some other disease at 55 years old and is in a nursing home at 70, the well spouse needs to support themselves for 15-20 years. That’s why so many people do Medicaid annuities so the well spouse can keep a larger portion of the money -although as an income stream vs. assets.

    But I digress; I have sold Long-term care insurance (LTC) and also work closely with law firms that specialize in Medicaid qualification. Let me first talk about the societal issues and then the financial ones. Societally the biggest problems are the lack of any right to die legislation and the collapse of the extended family. Almost to a one, I have clients that tell me when we are discussing the financial impact of LTC that they’d rather have somebody knock them off than go into a nursing home. Now that’s an exaggeration on their part, some nursing homes are actually very nice and some people go there because of basic frailty – not a neuro-degenerative disease or something that causes chronic pain, but some do become prisoners in their own bodies for years and years as the state pays for their care. Secondly is the lack of extended family obligation. Because of the society we live in, very few people are willing to take grandma or grandpa back into the house and care for them. It’s not lack of love or caring – it’s simply the necessity of both spouses to work, extended work hours, long commutes between home and work, meetings, doctors etc. It’s the same issue that puts kids in daycare – but they will eventually reach school age and frankly after about age 3 they need less care than many older people.

    Now for the economics, you are exactly right that it’s not insurance like homeowners, or life. Long-term care is really more like disability insurance. DI is not supposed to replace the entire amount of your working salary, and Long-term DI usually has a waiting period of 90 days or more – but it makes it easier. What I would recommend James, is looking at shared risk. At your age that’s difficult to do, and most people don’t buy LTC until they are 15 – 20 years older than you so they have a better idea of their retirement finances. But what I always recommend to clients is figure out how much you could spend out of pocket on care, leaving the other spouse with sufficient resources for let’s say 5 years – then insure the difference. So if that figure is $50,000 a year in today’s dollars and you have to assume your resources will keep up with inflation – then get a $250 / day policy. Also since you are so young – get a six month or even one year elimination period and set up a savings vehicle to cover that $145,000 plus inflation figure for that time period. That will also greatly reduce your premiums. Last option – don’t buy it at all and just make sure you’re rich when you retire. You have about fifty degrees; you should be able to earn $1 Million a year right?

    Also, remember that the demographics are your friend when it comes to LTC costs. I don’t know exactly how old you are, but the youngest of the baby boomers are 47. Over the next twenty years this country is going to build an even bigger infrastructure for geriatric care, more assisted living and nursing facilities, more medical professionals (probably from India and South Africa, but go with it,) Then when you reach your 70’s or 80’s when the need for LTC finally comes to your life (or maybe the 100’s if biotech keeps up) all those people will be dead and those of us Gen Xer’s will have 1.5-2 beds per person at all these facilities that served our parents. We’ll also have this huge millennial generation behind us entering their maximum earnings years – getting that worker to retiree number back up from 2-1 to somewhere between 4 and 7 to one depending upon the statistics you believe.

  12. For an older person (say 60 or more) moving to a continuing care community could be a better option than long-term care insurance. Continuing care communities guarantee care for your lifetime, usually a nursing facility on the premises, so that you not forced to move to an alien environment. Entry to a continuing care community does require a substantial up-front payment, perhaps $100,000 or more. If you are a younger person, rather than paying long-term care insurance premiums, you could invest that money in a special fund that would cover the initial payment of the continuing care community when you are ready to move.

  13. So the bottom line is: until you use up all your money, you’re on your own.

    Out of curiosity, do you think I should pay for your nursing home care BEFORE you use up all of your money? You know, so you can leave all that wealth you earned (doing that oh-so-useful work at McKinsey) to your daughter?

    Sounds fair.

  14. http://today.msnbc.msn.com/id/45484875/ns/today-today_health/#.TuJGQWMs23s

    Or maybe invest in yoga classes? :-))

    The thinking here is all wrong – the REALITY is that your daughter, wife, secret lover, man-friend – who’ever – will be responsible, mano et mano, for your well being. There is no way to predict what you will need, James, or what you will choose as necessary for whatever you consider “quality of life”. So instead of giving your money away to some BUSINESS (Corzine does not know where the $$$ is – go figure), you should be empowering your loved ones with $$$ socked away in a PRIVATE account so that your caregivers can buy you what you need when you need it.

  15. having had experience with LTC (my mother in-law has it). it has a lot of pluses to it. it will pay a lot costs for staying alive in a reduced state (i.e. dementia, or physical issues) that you really have no chance of covering (unless you are in that top %1 in assets). but its not a panacea. some one will have to be able to deal with the insurance company (hopefully a relative, most likely your children. since this is the case, best keep on their good side huh?). so unless you have a lot of wealth, or don’t expect live long, its the best option you have. and you may have to have more than one of the. and hope the insurer doesn’t fail.

  16. One scenario you haven’t touched yet – if anyone has a spare bedroom and sufficient food in their home, there will almost always be someone to occupy it in exchange for some domestic services for the elderly. With the financial markets in turmoil, and our uncertain future, those dependent on the government will need a place to rest their head – when the government spends everything it has control over. Never underestimate the resolve of the American people that still remember working for everything they ever received. My recommendation is to put your money in a home you can afford to operate. I have experience with an elderly that thought LTC was legitimate – the Providers get more benefits from her policy than she does. Her family and friends do much more for nothing. Thank God, she’s still at home where she wants to be, eating the same nutritional food, owns her own car to be driven to the doctor and grocery shopping. Therefore, there is more than one solution, without as much risk for those that see choices.

  17. After finding the policy you like best, take the premiums and save/invest them on your own (assuming you need such discipline.) I wouldn’t recommend buying the insurance until you are much closer to the potential event. For you, the risk seems negligible for at least the next 20 or so years. At that point, most of the risks you’ve identified will be smaller and newer care options might be available.

  18. Mr. Kwak!!!!!!!!!! I say, Mr. Kwak!!!!!!!!!! eeeh, Mr. Kwak!!!!!!!!!!

    How many damned times do I have to tell you, that when you have a question related to health care you either read or consult (call on the phone, e-mail, etc) Uwe Reinhardt!!!!!!!

    It’s this hard buddy:
    Phone: 609.258.5974

    Fax: 609.258.5974

    Email: reinhard@princeton.edu

    And don’t give me this “I am Korean/intellectual/independent/solvemyownproblems dude” Uwe is a classy, kind guy and he would help a fellow traveler of the professorial profession answer a difficult question. Call him you doofus!!!!

  19. “the median annual cost of a semi-private room in a nursing home in my state is $145,000”

    If that’s the case you have a problem that goes way beyond an insurance problem.

  20. I agree with your assessment that there is only a select group that needs to consider buying LTC insurance. I think the easiest solution to the problem is ensure you have enough retirement assets that you can self-insure for LTC. I think $1 Million will do. It’s those between $200K and a million that have to weigh the hard decisions.

    And $145K is a ridiculous average for a semi-private in a nursing home.. You ought to be able to get a nurse in your home full-time for that. I would expect about half that amount. And remember, when you’re in there you no longer need money to go on cruises, pay for groceries, or pay rent/maintain a house. Even if there is a healthy spouse left behind, the non-LTC expenses will go down quite a bit.

    One reason I think self-insurance is a pretty good idea is that there are other options out there in the event you can no longer care for yourself.

    First, Medicare picks up the first 90 days in rehab. Most can then go back home but may need a little more help from family, friends, or neighbors. Maybe assisted living, but that’s not all that expensive when you realize you no longer need to pay rent (or you can sell your home) or groceries. Sure, it’ll cost you a few thousand more a year, but it isn’t going to bankrupt a decent nest egg.

    Second, most people who need expensive long-term care don’t live that long. The likelihood of you having to pay for this for 10 or 15 years is awfully low. Even an Alzheimer’s patient in their slow dwindle can usually be taken care of at home until the last year or two. And if you have to come up with $50K, or $100K to pay for that, well, that’s what the darn nest egg is for isn’t it?

    Third, most people don’t want to be in a nursing home anyway, and most families don’t want to put them there. So many are cared for by family (as they have been for centuries) until the family absolutely can’t do it anymore, and at that point, the patient isn’t long for this world anyway.

    Fourth, there are worse things than spending down your assets and going on Medicaid. It’s not like you’ll end up living in a cardboard box. Sure, the nursing home isn’t as nice as a private one, but just think of all the fun you had with that money you didn’t spend on LTC premiums. If nothing else, that LTC premium money probably kept you out of the medicaid home for an extra year or two if it was invested well.

    Fifth, many people never need significant LTC. They stay fairly healthy until they’re very near death. People still die suddenly from medical and traumatic reasons. Think about it. How many people do you know who spent more than 5 years in a nursing home before dying? It just doesn’t happen that much.

    LTC is a bit like reverse mortgages or variable annuities. The idea is great but the execution just makes them products to avoid.

  21. Nearly all higher-income nations provide frail older people with comprehensive long-term care, all relying mainly on home and community based care; Korea recently started such a system and Taiwan is in the middle of doing so. There are various systems, but the most attractive is social insurance with mandatory participation, with premiums according to income and benefits paid on the basis of an objective test regardless of income level or family situation. In Germany, the cost of the program is considerably lower than what the American government pays for LTC (even though only about half the costs come from government in the US). Japan spends a bit more than the US for a substantially more generous system. See Lessons From Public Long-Term Care Insurance In Germany And Japan
    John Creighton Campbell, Naoki Ikegami, and Mary Jo Gibson
    Health Aff January 2010 29:87-95
    The abstract is here: http://content.healthaffairs.org/content/29/1/87.abstract but the article is not open.

  22. If you own your own home, $145,000 a year can buy a full time nurse and several aids, based on today’s wages for those people.

    For the actual numbers here, and the “cost” of an in home nurse, you would be much better off SAVING your money, and planning on hiring someone yourself to come into your home. Co-ops that train and employ nurses for this purpose could also be a “thing of the future”/

    A bet on any inflation expectation right now is an extreme loser, 2-3 more years of flat/deflation (or at any point in the next 20 years) and the whole spread sheet goes right out the window, along with your premiums.

    Hospice is also under rated. Most people bad enough to be in a nursing home, requiring round the clock care, are on the way out. Hospice handles this well.

    Stop feeding the machine more money, they are not taking any “risk” out of your life, and are charging a very heavy premium for it.

  23. And of course you could always outsource your own retirement care by going to China, or other places, where you could get perhaps a 3 years for 1 deal.

  24. Mr. Kwak’s posting, and some of the comments that justify the present state of affairs, are depressing reminders that we live in a pay-or-die environment regarding our bodies’ inevitable decline. For those who actually believe that markets should dictate what happens to the health of the population, I can only ask: What is wrong with caring deeply about others who do not have your advantages (intelligence, money, good health), and through what lens are you gazing when you accept private-insurance-based solutions? Has corporate propaganda been THAT successful?

  25. The problem as well is that many pension funds are not dependable. They may not be worth the “book value” given changes in accounting practices allowed by the gubmint. Rather the funds have been backstopped by government (taxpayer funded) bailouts. Some might argue that the asset bubble in the housing sector was created in part by massive pension funds looking for slightly higher returns in the hedge funds. (Abacus, Magnatar, Goldman Sachs, et al). By seeking a few more basis points in mis-rated AAA-rated financial instruments these pension funds may have lost up to 50% of their value or who knows even more.

    At one time it was Freedom 55 invest in the markets and you can live like a multi-millionaire when you retire. Now many people are planning to work past retirement age. Which just shows how much nonsense can be promoted. Personally, I find that “free market fundamentalism” and its claim to representing “truth” in how the world should be organized a false claim. I am tempted to extemporize here but I will spare Baseline and myself this noise :)

  26. @Per … of course you are being ironic. If they outsourced retirement to the poor countries it is comparable to out-sourcing manufacturing. Job losses in North America. Here where I live (British Columbia) at one time LTC was a public sector responsibility. This means more middle class jobs. And of course in a decent society the elderly should be taken care of properly.

  27. @Paulski … “pay-til-you-die” aka free market fundamentalism

  28. Yes tippygolden press… but I invite you also to read the following I wrote some years ago on “The ethics of solving the shortage of caretakers” http://bit.ly/vvUgDu

  29. @Per … I took a quick look. Here is Canada there are many Filipino home care workers. I’m not sure how the immigration laws work … but I feel they should be given citizenship after a few years. I’m sorry to put it this way but there are so many migrant Filipono workers around the world it is akin to slavery in some countries. As for sending the elderly abroad … this does not seem humane to me. The elderly need the support of their family and friends. They would find themselves among strangers sent away to die for economic reasons.

    But if a retired person — wanted — to move to Samoa, for example, that would be different. (I’ve always wanted to visit Samoa :)

  30. @tippygolden “to move to Samoa, that would be different”

    Then you might enjoy…. “Samoa… as far as you can go!” http://bit.ly/s94gW7

  31. I have an idea – let’s send all the old guys off to fight the wars they always have the *power* to start – that should whittle away at the demographics :-)

  32. High Plains Lawyer

    I have been caring for my father, who is now 90, for most of the past decade. He has alzheimers. At first, I was able to maintain some degree of employment, but for the past several years, caring for him has become a 24/7 job.

    Earlier this year, he contracted pneumonia and following his release from the hospital, went to a nursing home for two months where he allegedly received rehabilitation. After two months they declared they could do nothing more for him (as if they had done ANYTHING for him) and said he would be confined to a wheelchair for the rest of his life. I brought him home and he was walking around the house, with the assistance of a walker, almost to the day I brought him home.

    The bottom line here is you cannot believe anything you hear. Most of the so called experts do not know what they are talking about and are of little assistance. In fact, they are worse than worthless because they give you bad information.

    The insurance people are hucksters who are trying to sell you something. They will lie to you to sell you something. For example, when they told you that nursing home care would cost $145,000 a year, that was a LIE. They will also tell you that bringing in a CNA to care for your loved one will cost $25 per hours, that, at best is a half truth. It is mostly a LIE.

    Doctors really don’t know the economics of elder care and cannot be relied upon. Discharge planners only have one goal, to get your loved ones out of the hospital. Social workers really don’t know how to help and really don’t know the resources which are available.

    In this environment, it is almost impossible to make well informed decisions. The best strategy would be to give all of your assets to your kids, or whomever you want to receive your assets. Hope that ten years pass before you need this level of care. If you go into a nursing home, it will be paid for by Medicaid. Medicaid residents do not receive any worse treatment than private pay residents. Of course, if you are at that stage, you are pretty oblivious to what is going on around you.

    From what I have seen, and just about anyone who has spent any time in a nursing home will confirm this — a nursing home, at best, is a living death. At worst, it can be a living Hell.

  33. @Per … so lucky … I’m sure it was beautiful. I would have to fly Air Alaska the cost would be $3000 (?) but once there the resorts are incredibly affordable and hopefully “wired”. One day :) but not to die. Now as for Paul Gauguin he was a — French banker — who decided his real calling was to be a painter and sailed to a paradise in the South Seas.

  34. In British Columbia where I live at one time we had LTC for the elderly and the nursing homes were managed and run by government workers. Then our gubmint decided to save healthcare costs by privatizing LTC. The problem with under-paying LTC workers is that they may not view their work as a profession but as a way to pay their rent, there is high turnover, lack of continuity, they may not even be fully qualified for the work. They are working there because they are being financially responsible citizens but duress themselves. The very worse case I heard of was after our government privatized LTC. An elderly woman with Alzheimer’s wandered away from her privately-managed care home in mid-winter in a northern city. She was found frozen to death in a snow bank on (if I recall correctly) Christmas Day.

    So much for privatizing the care of our elderly and paying LTC workers as close to minimum wage as possible.

  35. Even Mark Twain, on the return of his last winters journey to the southern seas said. Even the best people, can not out sail death.

  36. Apologies for digressing and being a teen rowdy (lol). Absolutely love the Haka chant. (The Maori are ritual cannibals but so are Christians although they might not take kindly to the comparison.) So who are the real cannibals in the free market system? May the Haka Force be with 14th and his friends on the road to financial reform.

    [http://www.youtube.com/watch?v=zyfT9mB2CCA&feature=related]

  37. @owen owen … thanks for reading my post :)

  38. The government doesn’t employ mind readers, they are no better at reserving and pricing then anyone else. What distinguishes them from private insurers are two abilities:

    – The ability to levy outside parties through additional taxes.
    – The ability to unilaterally change the benefits. Look at Medicare or Social Security, those benefits are exactly what Congress tomorrow decides they are. With private insurance there is an explicit contractual guaranty and all kinds of third parties available to ensure performance.

    I have no objection to the government providing these benefits, but we should understand clearly what they are and what they are not. If they are uninsurable risks then don’t treat them as insurance. Treating them that way just muddies plan design, it would be like funding the army with “war insurance” or the national parks with “recreation insurance”.

  39. Why isn’t the need for long-term care insurable? Lot’s of people never need it, many only use it a little, others use it so much the cost is crippling. The unusual part is that the need is likely to be many years after one should buy the policy. That, incidentally, is why private LTCI will never solve the national problem of caring for frail older people (the Free Democrats in Germany thought it might, back in the early 1990s, but realized it was hopeless when they looked into it).

    Which is not to say that it needn’t make sense for individuals. But regarding going with big name carriers–I just heard from my university that it will no longer offer private LTCI because its carrier, John Hancock, just decided to get out of the business.

    Finally: everybody knows that all rich countries except the US provide universal health coverage, but nobody thought it was interesting that nearly all rich countries also provide something approximating universal long-term care coverage–except the US. Where, as with health care, we pay much more for much less. (This is per my earlier comment re Germany and Japan).

  40. Hopefully my last comment for most of the day.

    Can you imagine. Here is British Columbia our government decided, if I understand this correctly, to contract out LTC to private companies; the idea here was that these private companies could make a profit while providing care at least equal to government agencies. So now you put the elderly into for-profit facilities with workers paid “as much as the market will bear”. (A euphemism for as close to minimum wage as possible.)

    A senior with Alzheimer’s living in a northern city wandered away from a private home and was found frozen to death in a snow bank on Christmas Day.

    To call this shameless would be an understatement.

  41. This one is even better. The Maori women also do the Haka and have the most amazing ritual grimaces to strike fear into the hearts of their enemies :) OK the Maori could not withstand the musket. But still the Haka conveys a meaning. HTH already late :)

  42. Let me add the perspective of a guy who retired from an insurance company that actively priced, marketed, and sold a ton of LongTermCare insurance. While the sales guys loved it and found plenty of interest, we couldn’t find a decent way to fairly price the product. These policies are almost all driven by the lapse rate, which is the major determinant of profitability. We lost our ass because the customers loved it and the salespeople did a great job matching the features with the right client needs. Mr. Kwak is absolutely right about the risk of misplacing LTC. I would say that any company that issues LTC has a tremendous chance of mid-pricing it. If a company needs to sell it, they should do everything possible to minimize risk which means be modest and limit sales and don’t get caught by salespeople who aggressively pursue competitive pricing features like promises to contain inflation. Maybe there is a way that the government could offer a basic level of benefits like Medicare and private insurers could offer supplemental coverage. So far nobody has found a solution. Most actuaries I know don’t think LTC is a viable product over the long term for either the client or the insurer.

  43. Your problem is actually stated well in the first sentence. You want to buy insurance so that your children won’t have to take care of you.
    How much is your pride and dignity worth to you? How much is it worth to deprive your children of the blessing of caring for others, in this case yourself?
    What is the price of not facing humility?
    Your motive is ‘honorable’ on the face of it, but you would commodify your need for assistance rather than rely on human compassion.
    It is indeed a luxury item.

  44. Np tippy, and bj, I hate when benchmarks fail, just ruins my day.

  45. Well said Mr. Malagodi

    In fact raising well some loving children must be the safest and most sustainable retirement plan.

  46. @Per:

    I’d like to agree, but even the most loving children, in this country at least, are hard pressed to provide for the care needs of their elders, given the demand of modern work of moving to where the jobs are, not where our elders choose to be. I moved my aging parents to where I was so that I could oversee their care but experienced the other side of familial caregiving: employers offer career employees no option for it.
    The result is that the luckier of our elders wind up in extremely expensive commercial care communities anyway, if we or they can afford it; it is the only way that we can keep ourselves healthy and self-reliant in our old age.
    Many of us without ample resources are forced to choose between our own retirement and the care of our elders, and wind up leaving the career workforce for unemployment or part-time lower-paying jobs as a consequence.
    Simply having a loving child is no guarantee of a safe retirement – only that you will likely have an ally in negotiating your own retirement, but that ally may be very restricted in the physical aid and care they can provide. Our culture is simply too peripatetic to permit the arrangements common in less mobile societies. Perhaps with $200/barrel oil that will change.

  47. Long term care insurance is needed by all Americans and it also has great tax benefits.
    Long Term Care Insurance

  48. @Annie: “I have an idea – let’s send all the old guys off to fight the wars they always have the *power* to start – that should whittle away at the demographics :-)”

    That’s what Gagoo always used to say. Gagoo was my grandmother. Actually, she put a slightly different spin on it: it was her peace program. During the war we waged in Vietnam, she used to pound on the kitchen table and say “If they drafted only men over 50, there would be no more wars.”

  49. “In a competitive market, doesn’t that just mean that someone will enter the market with a product that includes real inflation protection and a lifetime premium guarantee? ”

    No. Insurers learned their lesson back in the 1980’s. I don’t recall the details, but they were offering products that included a guaranteed investment return. It worked well until the yields available in the market dropped, which forced insurers to dip into their own capital to pay the guaranteed returns.

  50. @High Plains Lawyer and, eventually, Carla and Gagoo’s Peace Plan :-)

    “Give to Caesar what is Caesar’s….” Where does Caesar have a claim on the activity needed to take care of the elderly? I think even the Roman Caesar from 2000 years ago would recognize vultures circling the elderly to STEAL $$$ to conduct another war raid…

    For a very brief amount of time, a full care nursing home existed in NJ that was working very well as a *non-profit* enterprise. People made their just profit in setting it up, but the maintenance of both the elderly, the facility and the staff’s pay was a management of currency, commerce and resources that had nothing left over for the vultures.

    Big *changes* at that facility since 2007 thanks to drug lords and slave lords infiltrating the facility. It’s one big *black market* of low paid, unqualified, and ethically-challenged immigrant staff conducting commerce from inside of the facility for the basics of life they need which their salary did not cover (which means there was a lot of stealing of personal effects)

    and foreign doctors prescribing popular pharmaceutical *happy* drugs that could flow out the doors through the occasional *grandchild* street pusher fro re-sell who got the stuff from the nurses…

    not to mention that 2 young convicted violent felons – one in a wheelchair from a gunshot and the other ambulatory – were placed as permanent residents to *manage* the whole black market enterprise.

    My Grandma’s necklace was stolen and because her Son made a stink about it to the FOREIGN owner, Grandma became violently and rapidly sick on May 21st in the chaos of all the visiting preacher men coming to lead the residents in prayer because the world was predicted to end on May 21st, 2011 (remember that schtick?) Grandma could not recover her voice and energy after fighting off the 103.4 fever she spiked during the night, so we could not get the details from her about what happened – we just now somebody *laid hands* on her and abused her on May 21st. The official cause of death is, “…failure to thrive….” according to the only doctor allowed to treat her – and that MD is another story – but knowing this site is trolled by many who worship at the altar of PCism, I’ll take that up mano et mano on the FACTS….let her tell the judge that she *believed* it was Grandma’s time to die as a valid defense….

    Bottom line was that you, High Plains Lawyer, would have been paid a wage for participating in a rotating 4 hour shift of work in the facility instead of being *unemployed* in order to do the right thing by your loved one.

    Carla – any excuse you can think of why all these Patriot Act goons supposedly were not monitoring a facility stocked with nothing but foreign care givers from countries where it’s dubious that they are *friends*?

    Love is a two-way street. Mr. Kwak is well aware of how lucrative it was/is to stalk the *archetype* baby boomers who established a local care facility staffed by the locals, themselves, and who had the whole situation of care of the elderly in hand as a NON-profit and shangheid the enterprise and feed it to Global Criminal Inc. and he might be losing sleep due to guilt and fear for what can and will be done to him by vultures run wild in a world run by Global Criminal Inc. *elites*.

    Not sure what advice to give him, considering the options for his daughter’s financial future and his own elder care? Marry the daughter off to a rich enough war/drug/slave lord who has a good character and will apologize to her for the blood that got on her Manolas at one of his public discipline sessions of staff in a restaurant and be generous enough to buy her another pair…? As for himself, well, the Native American Red Man had tough elderly. They did not follow the tribe south for the winter….fell asleep peacefully on a winter’s cold night – a different approach to not being a burden…so much for a shareholder laying hands on unearned wealth.

    It’s a LIE that there is not a *business model* to take care of the elderly without importing slave labor and all savings and possessions of the elderly being sucked up and fed to to the vultures circling around…

    Thanks, once again, for presenting a real-world example of how crazy Caesar has become in claiming what *belongs* to him….

    It’s a Just War. Slamming the *middle class* – financially – below the hooligans, mercenaries and *managers* of Global Criminal Inc. through tax policy in USA is not going to be contained by politicians from erupting (Just War). The situation is clear, there is no way left open for people to make their lives less miserable through HONEST WORK.

    @Tippy – this one’s for you – a peek into a different culture’s expression on the role women play as the MORAL gate-keepers in WESTERN CIVILIZATION. Russian women, obviously, don’t want the game to continue to be on for who can kill off more fellow Russians than Stalin did…as *businessmen* this time….

    http://www.huffingtonpost.com/2011/12/09/femen-topless-russia-election_n_1139091.html

  51. All down the street, they are standing in line,
    with white lipstick, and one thing on their mind.
    Hey little freak, with the lunch pail hurst,
    underneath the clouds, your just a little girl.
    Dancing at the zombie zoo,… dancing at the zombie zoo,
    painted in a corner, and all you want to do,
    is dance down at the zombie zoo.

  52. Bruce E. Woych

    @kWAK: WHAT A WASTE OF RESOURCES…i GUES YOU HAVE MADE IT, HAH?

    MEANWHILE, BACK ON THE FARM,

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7688&updaterx=2011-12-09+13%3A56%3A19
    December 9, 2011
    Wilkerson: New Military Powers the Road to Tyranny
    Larry Wilkerson: National Defense Authorization Act that passed the Senate giving the military power for indefinite detention without trial is a draconian violation of our rights

  53. I agree, this is a prelude to something. Facts are hard to find, but it seems that soon as we crossover to the new year, or spend another $90 billion, (which ever comes first) we will once again bump up against the new 15.194 $trillion debt ceiling. Since we, [or better put, the super committee] did not reach an agreement on spending cuts by Dec23rd, the second round of increases is eliminated and automatic spending cuts are applied. If this becomes an election issue, and Timmy starts cooking the books again, it won’t take long for the kitch to burn down in the name of Italian Bonds, and a lack of perceived capital holdings. Should, and its likely, the tsunami reach the shores of America, a plan to protect the wealthy would need to be enacted, possibly in the form of Bruces link above. There are more straws on this camels back, than one can shake a stick at.

  54. If you are looking at 20+ years out, buy some treasury zero coupon bonds.

  55. Just a thought…prevention. I recommend sporting activities to keep you in shape physically and sociallly…tennis is ideal. I see the older guys in my tennis club at 80+ yeras still cranking and not in need of LTC. Q…do underwriters consider the health history of applicants?

    Doug in Boca Raton FL

  56. Insurers may have learned some lessons in the 80’s, but that was about asset liability matching and had zip to do with long term care pricing or risk management. Very few companies sold LTC in the 80’s. If you want to see what a disaster can happen to policyholders of LTC when it is underpriced, just Google the name Conseco.

    There are plenty of salespeople who are great guys and want to meet real client needs with LTC. Damn few understand the risk management side of this product nor the pricing assumptions. The market is littered with former insurers of good standing who got burned pricing LTC because the profits are lapse driven and not enough clients lapse.

  57. Some of us, balancing at the top of the pyramid, are noticing a broad cheapening of America. At first it was tangible items bought at the store, but now it has spread among it citizens. The quality of education is being cheapen as if people did not even know what year it is, more less what year it could or should be. This will only distance the haves from the have nots, and lead to trouble in the city streets. For now, America has turned into a one way street. And its nothing to sneeze at.

  58. @Saint Thomas – boy, trying to get away with THAT identity? LOL

    Here’s something to make you jealous for POWER over others that is *executed* in a land where money=speech (and everything else….)

    http://www.huffingtonpost.com/2011/12/12/saudi-arabia-woman-sorcery-executed_n_1142942.html

    “…..Render unto Caesar’s what is Caesar’s….”

    What is Caesar’s when it comes to health care….?

  59. Benjamin Franklin

    St. Thomas grey, St. Thomas grey, the longest night, and the shortest day.

  60. Hey there fans, i’m on a equatorial pleasure cruise right now. Now I talked to the boss, and she says you don’t be, Earl Lee, to enjoy the V.I.P. treatment. You just have to,….book early.

  61. Ooops – correction – “….render unto Caesar what is Caesar’s….” – and they were using a coin stamped with Caesar’s image on it to make the distinction between what is Caesar’s and what is not Caesar’s :-)

    But one cannot expect a vulture to participate in that kind of discussion…

  62. Bruce E. Woych

    ETHICS in economics is being discussed at open conference at the Real World Economics forum:
    try here to start:
    http://rwer.wordpress.com/2011/12/12/rwer-issue-58-peter-radford/

  63. Bruce E. Woych

    “… more than 2.7 billion people remain excluded from the world’s financial systems and the opportunity such access can create. With your support we can continue to bridge this gap, bringing life-changing microfinance services to the poor.”

    strategic focus areas: (from ACCION)

    “First, we are building the next generation of top-tier microfinance institutions – enabling these institutions to deliver a range of high-quality, affordable financial services. Highlights include:

    Inaugurating ACCION Microfinanças in Brazil, in June – a new MFI in the heart of the Amazon, where half of the region’s 14 million inhabitants live in poverty.

    Creating microfinance services for rural clients in Latin America through a grant from the Inter-American Development Bank. Over 130,000 clients in Peru, the Dominican Republic, Nicaragua, Colombia and Ecuador have already been reached with rural credit products. Micro-savings programs that help clients recover from natural disasters and other unexpected events have been rolled out in Peru, Colombia and the Dominican Republic.

    Building and strengthening EB-ACCION Microfinance, a new microfinance institution in Cameroon, where more than 65 percent of the actively employed population lacks access to any form of secure, financial services.

    Providing secure savings accounts for more than 250,000 low-income people served by our partners in Tanzania, Nigeria and Cameroon, and proudly recognizing the achievement of both ACCION Microfinance Bank (AMfB) in Nigeria as ‘Microfinance Bank of the Year,’ and EB-ACCION Savings and Loans in Ghana as African Banker’s ‘Microfinance Institution/Project of the Year 2011.’

    Strengthening our pioneering microfinance work in Chifeng, Inner Mongolia, China through partnership with the International Finance Corporation.

    Redoubling our commitment to the future of Indian microfinance, through equity investments and guarantees for our Mumbai- and Bihar-based partners, Swadhaar and Saija.

    Increasing opportunity here at home by working ever more closely with the ACCION U.S. Network – the largest microlending network in the country. Since inception, the Network has extended more than $300 million in small, working-capital loans.

    Continuing to explore un-served and underserved countries and regions of the world, such as Kenya, the Philippines, Pakistan and beyond, where our management, investment and governance skills can help foster financial inclusion.”

    Good luck selling your private Insurance Market ; Tranches of a future less shared.

  64. Bruce E. Woych

    The Kaiser Report:
    http://www.kff.org/insurance/6072-index.cfm
    Private Long-Term Care Insurance: Who Should Buy It and What Should They Buy?

    “Despite the growing interest in private long-term care insurance (LTCI), there has been little independent examination of how much protection LTCI policies provide consumers or whether LTCI policies are a worthwhile purchase for people of average means. This report draws on data from the 1998 Survey of Consumer Finances (SCF) and the 1996 Medical Expenditures Panel Survey (MEPS) to explore the feasibility of LTCI for working families and older adults. Specifically, the report looks at how many working-age families can afford LTCI, whether it is a sensible investment for people who are decades away from requiring long-term care, and how LTCI policies can be made more flexible, to keep pace with changes in long-term care delivery and financing. The report also examines the affordability of LTCI for older people, what kind of policies make sense for seniors, and whether there are less costly products that might reach more buyers and still provide some meaningful protection.”
    report:
    http://www.kff.org/insurance/upload/Private-Long-Term-Care-Insurance-Who-Should-Buy-It-and-What-Should-They-Buy-Report.pdf

  65. For some reason, the details of the post made me more depressed. Analyzing the cost/benefit of something like long term care just never seems like it will be enjoyable. As many have said, I guess the real beneficiaries are your family, not yourself…

  66. Just out of curiosity, does anyone know if regular commenter on BaselineScenario, “Annie”, is actually SeekingAlpha’s “Venerability”?? Or if she is related to “Venerability”?? http://seekingalpha.com/user/209979/stocktalk

    My efforts at comprehending either of the two’s statements often (by “often” I mean every time) is fruitless. Maybe they just hail from the same lunar module.

  67. Okay so my takeaways here are (a) if James Kwak can imagine a product (e.g. the make-James-Kwak’s-Life-Perfectly-Risk-Free-In-Every-Way contract he describes here), then it’s supposed to naturally exist in the market, and (b) if it doesn’t, that’s a market failure (not simply James Kwak engaging in puerile fantasy), but (c) the government can offer it, whatever it is, because governments can magically create open-ended promises and never fail, and this causes no problems for anyone. That’s just economics.

    Good to know.

  68. Mr. Malagodi & Mr. Kurkowski – I’m wondering if you’ve ever had to give your parent an enema, or clean your parent when they couldn’t get to the toilet on time. (I was going to be more graphic. I spared you.) Think about seeing your mother naked when you have to help her dress and toilet and shower. I and my siblings have, and continue to do so. It’s humbling all right and everyone gets used to it after a while – but I’m guessing my parents would have preferred to never put their children in this situation. My parents had some LTC Insurance which covered their costs for 8 hours a day. Then my father couldn’t be left alone at night – we took turns staying at night. Try and hold down a job when you are getting up 4 times per night to help your father onto the commode. Never mind the emotional consequences of watching a parent become unable to eat, speak or walk. We simply couldn’t do it anymore. In our case the next step was to find in home help to care for him at night. My heart broke the night I walked out my parents’ home and left them with a stranger. My father is gone, and my parents’ savings are paying for my mother’s round the clock care. If she is alive this time next year, we’ll have to figure out what to do next – sell her home, do a reverse mortgage, have her move in with my sister (oh the family drama if that happens!).

    At the same time, you are navigating discussions about things like feeding tubes with the family doctor. The doctor says “many of my patients do very well with feeding tubes”. Why does he think keeping an 84 year old man alive, who can no longer enjoy the simple pleasures of walking, talking or drinking a cup of green tea, is even an option?

    By the way, Doug M in Boca Raton, FL, my father tried to keep exercising long after another man would have given up. And it’s hard to socialize when the connection between your brain & mouth isn’t working. (It wasn’t Alzheimers’ – a brain atrophy that was diagnosed about 10 months before he died. The diagnosis helped explain a lot, but nothing could be done to prevent the ultimate outcome.)

    White Coat Invester – a full time nurse for $145,000 per year? A HOME HEALTH AIDE (do you know the difference?) at $20 per hour, 24 hours/day, 365 days per year is about $175,000!

    It makes me angry that so many people can so glibly state a lot of the nonsense I’ve read in these comments. You have no idea what you are talking about.

    I have been considering purchasing LTC insurance for my husband and me. The idea of putting the premiums into savings is appealing. But we are left with the issue of one of us living in poverty if the other needs expensive long term care.

  69. Stephen Malagodi said “you would commodify your need for assistance rather than rely on human compassion. It is indeed a luxury item.”

    Mo… I think your point reinforces perfectly the argument, that family and human compassion is equally a part of life, with all its good and all its bad, and I must express my compassion, and at the same time my admiration, for what you are doing. Of course we would all like to avoid the bad… but should not even having to see it, and paying others to do it, be the goal for humanity?

  70. I have the same problem with LTC insurance that I have with annuities. Read the fine print. Trust that these companies will still be there to serve your needs when the time comes? Right. I have the same problem with trusting insurance companies to be there ‘in futuro’ that I have with letting someone else hold my precious metals. Trust the insurance companies; Trust the banks; Trust the government–Believe; OR build your own wealth and rely on your own resources. Read your insurance policy with a magnifying glass as you would any ‘material’ drafted by a team of vermin legal ‘minds.’ Have a barf bag ready, because even Harvard law ‘professors’ have trouble comprehending the loftiest legalese crafted courtesy of the the finest scum. That same level of creativity spawned the present financial hell also known as the global ‘economy.’ MONSTER SQUID ALERT!

  71. My New York Life long-term care policy is open-ended and has no life-time limit. This company seems to satisfy jimmy b’s requirement of a name-brand company.

    I purchased the maximum elimination period (1 year), so I self-insure during this period, resulting in markedly lower costs.

    My policy increases benefits 5% per year to account for inflation, if you elect, with a premium increase of 5%. (You can refuse the increase 4 times at which point you are not offered further increases.)

  72. @Mo – Obviously, there are a lot of *middle aged* people who are in the same situation – elder care and teenage/college age care – it’s a tough spot. As I tried to communicate, we got together and established an elder care facility that was working for everyone – but it was not FOR PROFIT. It’s a LIE to say that proper elder care cannot be established in middle class neighborhoods where the middle-aged people all have the same circus of responsibilities to balance and manage (for instance, Governor Christie is going to need more than one little Filipino person – full grown elderly are a lot heavier than what one dutiful family member can manage :-))

    The vultures swooped in and destroyed everything….today’s war/drug/slave lords are savage and ruthless in the name of protecting *shareholder’s* UNEARNED WEALTH.

    More misery for others = more $$$$ for ME ME ME

    It’s not IMPOSSIBLE to do – to get the neighborhood elderly taken care of in one home instead of everyone trying to do it in their own individual house….

  73. Replying to Pentagron’s post. You say you have a policy with NY Life and seem to be happy with it. From what I understand NY Life is about the last big name company to distribute LTC.

    Anyone buying this stuff should make sure that the carrier is committed to LTC business over the longer life of the product line and will always treat clients fairly.

    Aside from NY Life, readers should be aware that another biggie, Met Life, has abandoned LTC sales as they apparently had enough trouble in managing the risk and pricing the product.

    John Hancock, another biggie, is reported to have unexpectedly jacked up premiums by 40%. Genworth reportedly is jacking up older policy premiums as much as 18%.A number of companies, such as Aetna, Aegon, and Equitable have all gotten out of the business.

    As a retiree formerly involved with LTC product management in biggie company, I urge anyone who wants to buy LTC to make sure that the company selling it is solid and committed to the longer term viability of the product line.

    If you want to get a lesson to learn here, I suggest doing some followup research on the hapless policyholders of Conseco who were basically abandoned and their policies thrown into an administrative trust, which would pay out benefits until all of the reserves were used up. Conseco sold a ton of LTC at one time. There is a long tail risk to these policies.

    Salespeople may not have any idea of all of the risks here—even though they may be very familiar with features and competitors features—they may not know about hidden risks, such as the lapse rate assumed into determining the policy price..

    The consumer needs to do some homework about the provider and do some research to see what existing policyholders think of other companies who suddenly jacked up premiums and exited the business.

    It’s a sad outcome in many cases for a product that could offer much needed protection, but as Fitch ratings agency says, Long Term Care is a “very risky” product for the insurers. Since LTC typically doesn’t offer guaranteed premiums or benefits like a whole life policy might, this is also be a “VERY RISkY” product for consumers.

  74. I appreciate the comments of RHarold. The New York Life salesman did impress upon me the commitment of the company to the LTC market and he claimed that they had never raised rates. It is a mutual company — I don’t know if that will make a difference in whether they will be resistant to rate increases in the future. At the moment, my New York Life LTC policy annual premium is $930. for $221.62 of daily coverage ($80,690.55) with a 180 day waiting period and unlimited lifetime maximum. To me this seems like a pretty good deal but someone who is better with a spreadsheet than I may want to weigh in. (My objective is to share the cost and avert a catastrophic event.)

  75. outrunning the vultures :-) – you’ve got to be good in *sails* to get this dude’s $$$

  76. You ought to look at Lincoln Financial’s MoneyGuard product. Pay a single premium, and get 1) a tax free death benefit 2)a pool of money (significantly larger than your initial premium) for LTC services 3) a guranteed return of your initial premium at any time.

  77. @Mo and Mr. Kwak:

    Mo, your points are well taken. Indeed as soon as I posted my comment, I felt it was perhaps glib and high-handed. For that I apologize. No one here, particularly me, is in any position to judge anyone else on these kinds of matters.

    I am currently taking care of my 87 year-old mother. I consider it a blessing. Thankfully at present she has recovered enough from hip surgery and the related illnesses contracted in the hospital and rehab to take care of her personal needs; my assistance coming mostly in the form of chauffeur, house cleaning and negotiating with the medical/insurance professions.

    She would not tolerate nor accept any more personal care for her bodily needs from me, though I am not squeamish about those things at all.

    Most of my friends are, or have recently been in the same situation of elder care. It is very difficult for all of them, dealing with Alzheimer’s or Lupus or cancer or whatever. Most, like my mother before me, have no choice but to home care their elderly. She was an only child of working class parents who home cared for her difficult mother almost until the very end. As her only child and childless myself without the means to afford long-term insurance, I will be at the mercy of strangers when my time comes.

    My point, which I tried to make in a rather ham-fisted way, was only that Mr. Kwak was attempting to buy a financial product for himself for his stated purpose of relieving his children of the task. It is a commodification of a process, the process of dying, which involves not only the dying subject him or herself, but everyone around them. Understanding that process is an integral part, and a very valuable part, of being alive. The futile attempts to alleviate the suffering of the sufferer is also part of that process; it engenders maturity and humility. It is called compassion ~ the act of suffering together.

    The vast majority of the human population, and of course none of the rest of the animal kingdom, can afford this commodity. It is a luxury; an expensive one, which may cost more than money.

    If I were in his position, I would probably do exactly the same thing.

  78. Poor Kwak befuddled as usual. Forgets why insurance companies don’t really compete — or never knew. It’s called the McCarran-Ferguson Act and you should look it up, James.

  79. @Moses Herzog,

    Not a fan of Kwak but to refer to him as a “I am Korean/intellectual/independent/solvemyownproblems dude” is not only inaccurate but smacks of racism.

    May you have a Palestinian son-in-law and may your grandkids lead the next Intifadah.

  80. I think he’s on that ever so famous, barf bag break, or stomach turner leave. And I’m gonna turner that whole campus into a tomato farm one day, perhaps the whole stinkin state.

  81. Thank you for clarifying your points. At his wake and funeral I talked with family and friends about embracing his death as a part of life. I wanted the formal mourning period to be a time of stories, laughter and tears.

    I don’t know what the goal of society should be in dealing with the process of aging and dying. Words like dignity and compassion sound good, but I believe they have very different meanings based on who you talk to. Perhaps I’m overly cynical about our society – but I wonder how many of us are selfless* enough or emotionally and physically prepared to take on these responsibilities. (*My brother-in-law grudgingly and infrequently helped my husband in caring for their mother. She died 5 months after my father.)

    In my ideal world, caregivers would be respected and financially rewarded for the work they do, rather than demonized as part of the 53% who don’t pay Federal Income taxes.

  82. Bruce E. Woych

    One People Flash Mob

  83. Bruce E. Woych

    http://blogs.worldwatch.org/nourishingtheplanet/gender-equality-and-economic-development-a-two-way-street-new-world-bank-report-says/

    “…The authors point to four areas policymakers need to prioritize: equalizing human capital developments, ensuring equal access to education, promoting female agency in the house and in society, and educating and empowering future generations of women.

    Ultimately, international cooperation is necessary to make gender equality a reality, the report says.

    Global political action, the report says, is the key factor in determining whether “global integration brings about greater gender equality and better lives for all women, or just for some.”

    Tell us, what do you think policymakers – in the U.S. or abroad – should do to promote gender equality?

    Cameron Scherer is a research intern for Nourishing the Planet.

    To read more about gender issues, see: Closing the Gender Gap in Agriculture, FAO’s State of Food and Agriculture 2010-11: Closing the Gender Gap for Development, La Via Campesina: Fighting for Food Sovereignty, Social Justice, Land Rights, and Gender Equity, and Holding Families and the Country Together: Providing Scholarships to Improve Gender Equity and Alleviate Hunger and Poverty.”

    To purchase your own copy of State of the World 2011: Innovations that Nourish the Planet, please click HERE
    http://blogs.worldwatch.org/nourishingtheplanet/gender-equality-and-economic-development-a-two-way-street-new-world-bank-report-says/

  84. Bruce E. Woych

    The Sun will come out, tomorrow…
    Tomorrow, tomorrow, …we’ll feed you tomorrow; …it’s only a day away…
    http://blogs.worldwatch.org/nourishingtheplanet/archives/

  85. Bruce E. Woych

  86. Bruce E. Woych

  87. Bruce E. Woych

    real-world economics review

    a journal of the World Economics Association ISSN 1755-9472

    Issue no. 58, 1 December 2011

    http://www.paecon.net/PAEReview/issue58/whole58.pdf

    In this issue:

    Ethics in economics – Where is it? 2
    Peter Radford download pdf
    WEA online conference: Economics in Society: The Ethical Dimension

    A problem-centered and student-centered approach 9
    to teaching pluralist economics
    Julie A. Nelson download pdf

    The world in balance sheet recession: causes, cure, and politics 19
    Richard C. Koo download pdf

    Financial crisis, the international monetary system and 38
    the challenge of the emerging economies
    Jorge Rojas download pdf

    Waiting for the next crash: the Minskyan lessons we failed to learn 59
    Randall Wray download pdf

    Europe ’s non-solution: the ‘bazooka’ turned on itself 69
    Marshall Auerback download pdf

    The Eurozone crisis: Looking through the financial fog with Keynesianglasses 77
    Jorge Buzaglo download pdf

    A new international Bretton Woods System? 83
    Bill Lucarelli download pdf

    Ethos and reform of finance systems, a tentative argument 89
    Jamie Morgan download pdf

    Reform of finance education in US business schools 95
    Robert R. Locke download pdf

    Neuroeconomics: A sceptical view 113
    Robert McMaster download pdf

    Other institutionalism for Development Studies 126
    Fernando García-Quero and Fernando López Castellano download pdf

  88. Bruce E. Woych

    What FUTURE?

  89. After reviewing the amendment concerning the inclusion of American citizens, it is even more obvious that need to remove lawyers from gvt is essential to a healthy democracy. The pursuit of happiness has evolved into a pursuit of greed. We proved the constitution is fatally flawed, yet the discussion to repair it is lost in the fray and jobs come to the forefront to drown out the real cause of the problem.

  90. The Declaration of Independence is not *flawed*. It’s the eternal compass of JUSTICE – every person has the RIGHT to make their lives less miserable through HONEST WORK.

    Amendments are made based on the adjustments necessary to react to changes in environmental conditions. World’s population was 800 million in 1776 – it is 7 BILLION now. Global Criminal Inc. is testimony to the need for a GENETIC cleanse, imo. And it’s not “….let’s start with the lawyers” – it’s “let’s start with the misogynists…”

    “IN CONGRESS, July 4, 1776.

    The unanimous Declaration of the thirteen united States of America,

    When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

    We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world…..”

    All the weapons belong to “Caesar” – what kind of MEN sit in their *think tanks* as masturbating perverts stalking Grandma to steal everything from her and her daughter that the women RIGHTEOUSLY earned through VERY HARD AND HONEST LABOR as educators and health care providers?

    The JUST WAR is ON.

    As soon as you can’t pay the premiums, you are cut out – all that you paid in is GONE – what kind of *insurance* is that? Unemployment to increase *shareholder* profit IS the business model – BAIN and Mormons established that schtick…

    Yeah, *jobs* are not the issue…

  91. Herbert Wetherby

    @The Declaration of Independence is not *flawed*.

    Man, I’m glad to hear that, gettin ready to bust down greeces door any day now.

  92. @wetherby – Israel takes down Greece…? Good luck, psycho!

  93. Herbert Wetherby

    I guess runnin kerosene through your veins is a better option then, [secret] its UNSYSTAINABLE!

  94. @wetherby – investing in biotech, eh…? Tons of chemical reagents laying around from turning crude into gasoline – yup, the study of *kerosene* – the ultimate *rent seeking*….

    Go swallow a Winchester today….

  95. Herbert Wetherby

    Hey, the next cancer stick is on me, enjoy.

  96. @wetherby – I don’t smoke. So it’s all yours and make sure to wash it down with some booze – and maybe the Wall Street fav – crack – when the market is down, coke when it’s up, and unlimited meth infusions for the *technicians*…every nanosecond counts…

    I got a 4.0 in P-Chem – you? So I know enough ahead of time that I have TONNAGE of proof about how all the people that did not find oil on their land had to find ways to use the left-over chemicals – you got ziltch to argue whatever your point was – oh, right, I’m somehow being accused of conducting science in WWII concentration camps – infusing people with gasoline to learn how cancer cell chemistry worked (biotech origins)…

    News flash – I WASN’T ALIVE BACK THEN, Nimrod!

    http://en.wikipedia.org/wiki/Monoclonal_antibodies

    Hey, they got a *Nobel Prize* for stealing the work of others – same as it ever was…

    Fast forward to today – “(MoneyWatch) And the top-paid CEO among the largest public companies in the U.S. for 2010 was — envelope, please — McKesson (MCK) CEO John Hammergren! The health care executive made $145.3 million last year. It is, as always, good to be the king.”

    Quite the *history* for McKesson:

    http://en.wikipedia.org/wiki/McKesson_%26_Robbins_scandal_(1938)

    Number 8 was CEO at – tada! – United Health Care…

    The *stuff* that causes cancer is the cure for cancer….modern day *gold* alchemy…

    You and the other OBVIOUS MISOGYNISTS who shoot the semen on this blog to show who’s da man with the *power* need help for your advancing dementia – every time someone mentions Warren, your buddy Moses posts something about Coakley…he no longer knows that they are 2 separate individuals…sad…

    Attach a pic of yourself – we can put it in the dictionary next to the definition of *Psychotic*…

    Gee, why do all the *rich* dudes need to import illiterate slave labor to keep them comfortable in their old age…where’s the *love* from people who have known you your whole lives…?

    over and out…

  97. Herbert Wetherby

    Like your mama, the gift that keeps on giving.

  98. Just giving back to Caesar what is Caesar’s, Herbie.

    What, you don’t want the fruits of all your genius? You can store it in all your global McMansions…

    Billions in investment for electronic billings – wow, impressive medical miracle breakthrough…