Lawmakers warming to discussing long-term care

Several factors are creating a fertile environment for discussing long-term care policy in Washington, an industry association leader said.

Doug Lathrop, vice president of the American Council of Life Insurers, was one panelist who discussed LTC policy and the legislative landscape during OneAmerica Financial’s recent Long-Term Care Summit.

“One factor is that you have a younger generation of lawmakers who are now experiencing these kinds of challenges,” he said. “I think most people here in the room know that the largest provider of long-term care, at least for the aged, is free. It's family members. So it's uncompensated care. Right after that is your own money. And then after that, it's Medicaid. And way down here is private insurance.”

Lathrop said he has had conversations with three or four lawmakers who are caring for aging parents as well as young children.

“So you have this huge problem that more and more of them are actually living and experiencing,” he said.

Another factor leading to long-term care policy discussions, Lathrop said, is Medicaid.

“Two-thirds of the Medicaid program goes to pay for nursing home care,” he said. “It pays for nursing home care for people who mostly spend all of their assets down in order to qualify for nursing home care for long-term care needs. If you could just increase the amount of private insurance modestly - and there is certainly enough out there for middle-income folks to purchase it at an affordable rate when they're in their 50s or 60s, when they're insurable - you would save Medicaid a tremendous amount of money. That's one way we try to start the conversation.”

On one end of the care spectrum are people who need Medicaid to pay for care, he said. On the other end are people who can afford to self-insure their care.

“You don't want to aim public policy solutions at people who don't need it and can't afford it. But that sweet spot is fertile ground for initiating conversations with policymakers to draw that out.”

Two ideas to help people fund care

Lathrop said no one can deny that care costs money. But he gave two examples of ideas the industry has to help people pay for care.

“The industry has promoted an idea that would allow people to pull a small amount of money out of their qualified retirement accounts to pay for long-term care insurance,” he said.

“The reason why is because you're essentially insuring your nest egg anyway.  In our view, long-term care insurance attached to your retirement savings makes a tremendous amount of sense. For pennies on the dollar, you can protect yourself against spending all of it for a long-term care event.”

Under this plan, the early-withdrawal penalty is removed and the amount withdrawn isn’t included as taxable income.

“That does have a modest cost, but our argument is that if you can get somebody who's 55 to buy a long-term care policy, that is the way you tip them into it. If that person does that when they're insurable, when rates are pretty good, you're actually providing them both the protection they need, and the government isn't going to come in on the back end and give them Medicaid dollars for that.”

The second idea is using the funds in a long-term care policy to pay for things such as installing a ramp or a safe shower in the home. This would enable more older Americans to remain safely in their homes.

“I think the industry is getting around to smart ideas that have modest costs but actually make a compelling case to expand access to private long-term care insurance,” he said.

A long-term window

One issue surrounding the long-term care discussion in Washington is that consumers don’t use their LTC policies immediately after buying them, said Diane Boyle, senior vice president of government relations for the National Association of Insurance and Financial Advisors.

“People don't purchase and then immediately go on claims, so that's usually a twenty-year window before you start seeing that, and in policy terms, everything is a ten-year budget window,” she said.

“So now you're asking policymakers to make a decision that's going to be a tough decision and a costly decision, and they're not going to reap the benefits while they're in office. That makes it a really hard sell. When you change the conversation so that you can talk about it more broadly, you get those shorter windows of success and opportunities and short-term gains, and I think that is a positive change.”

Progress on paid leave legislation

More Paid Leave for More Americans Act, S. 5017, was introduced in the Senate on July 16. Kathleen Bochow, a legislative assistant with the office of Sen. John Boozman, R-Ark., gave a rundown on the bill.

It is a bipartisan proposal that would encourage states to establish paid family and medical leave programs, but it would not create a universal federal paid-leave entitlement. Washington would provide incentives and infrastructure to encourage states to create qualifying programs. States would establish the programs, and private companies could play an important administrative role.

Bochow said she is hopeful similar legislation will be introduced in the House of Representatives when the new Congress convenes in January.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.