Yes, I have asked an inordinately large number of rhetorical questions in this column. Yet, like many of my peers who have focused their professional careers on abrogating long term care risk, I may have subconsciously chosen to avoid the most crucial question of all.
Many of those who read this column base their understanding of the long term care risk problem on several irrefutable conclusions:
• America is simply unprepared to absorb the cost of caring for the boomer generation.
• Premiums for LTC insurance have been trying to catch up with the cost of long term care from day one.
• Long term care risk cannot be spread with such meager participation.
• Consumers and agents have persisted in believing that their participation in a solution is somehow voluntary or optional.
Frankly, we do know who buys LTC insurance because policies are still flying off the shelves for those with accumulated assets (money), intelligence (measured by education), concern for family (evident by the desire to map out a strategy to leverage risk with insurance) and/or direct personal caregiving experience (have already stepped into the emotional quagmire and experienced financial disaster on their boots).
Otherwise, the greatest unfulfilled market of our time in this business remains basically unsolved. It is continuing down the same road, in the same car, with the same fuel; and no destination on this trip will improve the LTC conundrum.
So how can this unspoken question be anything but: What if the problem is just too big?
At this point, some of you have begun to suspect that I may have finally wandered off the reservation, because for more than 30 years I have believed and espoused that the truth was self-evident. Insurance, specifically competitive brokerage insurance, is the universal answer to all risk problems. I have remained blissfully secure in the knowledge that there was no financial risk too large and no potential future fiscal adversity that could remain unchallenged by the professional and systematic application of private insurance. Our corollary core belief has been equally important. The motto of Guardsman Life (a brokerage life company that my father founded in 1962) was: “A man must protect his own.”
The strength of brokerage’s moral imperative has always been based on taking responsibility for our obligations. Therefore, we have frequently chosen to perceive government-sponsored social insurance as a direct and perhaps inept competitor, placing ourselves on higher ground as the alternative to relying on institutional structure and guarantees. In other words, we have all knowingly spent a substantial amount of time selling against the inadequacies of Social Security, Medicare and Medicaid.
In reality, social insurance does nothing more than create the participation necessary to sustain adequate spreading of risk. Although some would say current programs are imperfect in execution, most would agree these programs are correct in terms of intent.
The long term care conundrum is simply too large for government or private industry to address alone. We must now work hard to build a bridge that will allow us to truly come together to solve this issue.
First, we must understand that social insurance is a prerequisite to adequate participation. I have come to believe that a viable mandatory permanent solution targeted at the middle class may be the only answer. However, a public program must be built in conjunction with a robust and creative private insurance market.
The choice to replace the long term care risk with insurance must remain, and supplemental options would also need to be created. Tax incentives must be increased and tax-deferred savings options must be flexible enough to accommodate long term care expense.
Bottom line: If you are not part of the solution, you are the problem—and the problem is simply too large for either the public or the private sector to solve alone. If it is not solved, the consequences of our failure to suppress a potentially massive financial risk are catastrophic.
We must now embrace our friends on the regulatory and political front lines and publicly profess our willingness to be helpful.
Our critical ADLs (activities of democratic living) are covered by the first amendment. It is the less formal IADLs (incidental activities of democratic living) that will continue to define our national character. Just as no child in America should go to bed hungry or be denied the opportunity for an education, no adult American should be forced to live without dignity and care at the end of their life’s journey! Basic, affordable health care available on a non-rationed basis must remain a goal of all.
Other than that I have no opinion 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.