4 long-term care trends emerge as pandemic recedes, regulators say

The devastating impacts of the COVID-19 pandemic gave rise to several trends in long-term care as facilities and caregivers did their best to cope.

Those trends trickled down to long-term care insurance providers. As the pandemic slowly recedes, LTC insurers are waiting and watching to see which of those trends reverts to the norm and which ones become permanent change.

Trend No. 1: Home-based care. For starters, care switched from facility based to home based during the pandemic, said Fred Anderson of the Minnesota Department of Commerce. Up to $265 billion worth of care services for Medicare fee-for-service and Medicare Advantage beneficiaries could shift to the home by 2025, the consulting firm McKinsey reported in 2022.

Care at home could be better for patients and cost less, McKinsey concluded. But will it continue?

"We've been receiving varying reports on the reversal that trend back to facilities," Anderson told the Long Term Care Insurance Task Force Monday.

The task force met in lieu of an in-person meet at the National Association of Insurance Commissioners' annual spring meeting in Louisville March 21-25.

The LTC insurance industry has been through more downs than ups, but years of rate increases are helping insurers like Genworth regain a financial foothold. Otherwise, a few states are at various stages of a possible long-term care public benefit, which could spur further LTCi business.

Anderson listed several more trends in the LTC. They include:

Trend No. 2: Cost-of-care inflation. LTC costs are increasing by 3-5% annually, a trend line that makes LTC care a dicey proposition for many Americans.

"This is leading to more of the maximum daily benefit being utilized than originally expected in many cases," Anderson said. "There's a consensus among companies selling long-term care that home care costs have especially increased over the past five to six years. It's a continued area of major focus and there are likely long-term impacts from this issue."

Trend No. 3: Increase in incidence and length of claims. "For long-term care we had originally seen Covid cause lower incidence and shorter claims, that was a temporary phenomenon," Anderson explained. "We have seen some rebounding of those incidence and claim rates. And so far, that Covid blip has been seen as being a short-term impact."

Trend No. 4: Pre-claim wellness impact. The NAIC produced a guidance document in 2021 as insurers sought to mitigate claims through wellness programs. Regulators looked at discrimination, data privacy, consumer confusion, how to evaluate the effectiveness, and other related issues.

So far, early returns are inconclusive to some degree, Anderson said.

"These programs may involve being proactive in preventing falls, providing early cognitive tests, or providing care for the family caregiver," he noted. "What's being reported is a positive impact on the policyholder's health from these types of programs. However, it's still to be determined whether the investments in these wellness initiatives will be more than offset by claim cost reductions."

Likewise, regulators continue to monitor developments in technology and medical and drug developments, Anderson said.

"Each of those areas have a potential to kind of impact claim costs going forward," he added.

Two comment periods

In addition, the Long-Term Care Actuarial Working Group exposed two concepts: the LTCi rate increase reviews checklist and the Minnesota and Texas actuarial approaches.

With the former, regulators are "hoping to get closer to a point where most of the 50 states rely on the NAIC checklists, instead of states requiring companies to fill out 50 different checklists for each of their states," Anderson explained.

The latter concept is just a review of the actuarial approaches in place in several states.

"There was a vetting process that took place four or five, six, seven years ago, and we're just taking a new look at how these methods are working with these older blocks of business," Anderson said.

Comments of either exposure should be sent to Eric King at [email protected] by April 24.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.