Even I can’t believe I am going to write this column. But there is nothing I can do but wade right into what has become my evolving view—which is a dramatic departure from my most firmly held structural principals.
The basic premise upon which we have been making sales for the last 15 years has been flawed—at best. I have come to understand that again my perceptions may have been prejudiced, jaded and seriously self-serving. Yet the fact is that my most fervent beliefs about what we have been doing and why were simply incorrect.
The notion that consumers can choose to protect themselves and their families or that agents can decide whether or not to promote LTC risk leveraging is just dead wrong! This mistaken concept strikes at the heart of who we are and what we do for a living.
The risk is real and ultimately deserves “universal” recognition. Participation in helping to solve an American problem is not now nor has it ever been an optional decision. Consumers and agents have both suffered from a myopic distortion of cosmic proportions with perhaps financially deadly consequences.
In the beginning, we actually thought we were selling just another Medicare supplement policy. Then we realized that custodial care is a separate and distinct need and, by the way, it must remain a separate discipline—a line of demarcation needs to remain between acute/sub-acute care and custodial care. All health insurance is not born the same (fodder for a future column). The point is that we missed one whole side of the barn.
At least since HIPAA we have been selling expensive coinsurance policies to those with substantial assets and income. Again we made an incorrect leap in judgment regarding our methods to accomplish those goals. We saw our mission in typical absolutes: Replace financial risk with insurance. However, big risks require big premiums and, as a result, too many remain underserved. Thus some of the responsibility for not protecting the majority of Americans falls squarely on our shoulders.
Along with that responsibility comes too many unanswered questions:
• How much is enough?
• Is the sale about asset protection or more subjective concerns such as personal freedom, choice, quality control at the time of claim and death with dignity?
• Is it about avoiding financial dependence or avoiding government dependence?
Yet a question that is not even being asked is perhaps the most important: What is the real purpose of the exercise? Are we a standalone LTC financing alternative or merely a firewall against government expense? Have you asked yourself who you are really serving at the point of sale?
Every time you sell a policy you are protecting your customers on several different levels. Even the smallest policy can help maintain control at the time of claim, because beginning as a private-pay patient can make all the difference in the world!
You are giving family members the means to guarantee quality of care. You are protecting the legacy of your clients’ lives, providing security for inheritance and preserving the meaning of a lifetime of hard work and sacrifice. I would also humbly suggest you are serving a greater good. Every dollar of insurance may represent a dollar or more of potential government expense. Government support for LTC drains limited state coffers—monies that could be better spent on infrastructure, jobs and education. In many ways we are merely a firewall for Medicaid.
Clarifying our mission is the only way to guarantee our place at the table. Let me try again to at least position a response to this most basic of questions. Because there are actually several answers—one for each of the two extremes and one for the giant vacuum in the middle. I have simply changed my mind about the no-man’s-land between current obvious and absolute solutions.
For those who cannot afford care, Medicaid must be supported and strengthened. However, as Stephen Moses has so eloquently argued, “but only for the truly needy.”
The current homeowner equity exemption of $800,000 or more must be completely removed. Everyone’s posterior must be exposed. On the other end of the spectrum, affluent Americans must be allowed to self-fund or buy insurance to replace as much or as little of a possible catastrophic risk as they wish.
It is for the middle market that I have changed my thinking. I no longer believe private insurance will work entirely on its own. Like two children after a school yard fight, we must now shake hands (with a public solution) as well. Some form of public “social insurance” must be dramatically expanded and yes, if necessary, mandated.
It is the height of false pride to continue to believe in a fantasy world of voluntary participation. I no longer believe that the majority of Americans will bravely stand up and take personal responsibility for their care; and the consequence of ignoring the obvious is that our industry will become irrelevant and expendable. Overburdened government support systems will implode and social taxes (both federal and state) will mushroom.
This problem is just too large and too complex for a 100 percent public or a 100 percent private solution. Reasonable minds must prevail. We must lead the charge. We must actively campaign to find ways to work together, each doing what we do best. The cost of failure is too great.
Other than that I have no opinions on the subject.
Ronald R. Hagelman Jr., CLTC, CSA, LTCP
CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products. A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing "friend" of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman is president of Broadtower Insurance Solutions, a national IMO helping BGAs enhance LTCI production. Hagelman can be reached at Broadtower Insurance Solutions, Inc., 156 N. Solms Rd., New Braunfels, TX 78132. Telephone: 830-620-4066. Email: firstname.lastname@example.org. Website: www.BroadtowerInsurance.com.