According to Jesse Slome, executive director of the American Association for Long Term Care Insurance, a just published book, Universal Coverage of Long-Term Care in the United States, provides a look at the overall issue facing the country.

“Of particular interest were chapters dealing with how the issue has been and is being dealt with around the world,” Slome commented to a group of industry professionals yesterday.  “There is a certain peace that comes from ignoring the world around you.  It’s natural and today’s parsimonious political environment, it’s just too easy to say “enough” — what we are doing is just fine.”

Slome notes, despite the failure of the CLASS Act, which he ascribes to uninspired leadership, the long term care insurance expert says that “CLASS was an important building block that helped to make long-term care more prominent on the national agenda.”

“While it is unlikely that the United States with a history of private sector health financing will adopt a program similar to those already in place in other countries, reading how long term care is dealt with elsewhere provides historical perspective, factual data and valuable insight for anyone who has an interest in what will, I believe, be used to frame the discussion in the years to come,” the long term care insurance expert adds.

The authors lay out an interesting look at how various models have been shaped as much by politics and demographics as by societal factors such as family culture.  “Of particular interest is the consideration of the changing demographic of working women in these countries,” Slome comments.

Demographics clearly drove the need to address the issue with Germany and Spain.  Their population of persons age 65+ will increase from around 16 percent today to around 30 percent in 2040.  In Japan more than 14 percent of the population will be 80+ in 2040 (double that of the US).

Germany’s universal LTC legislation passed in 1994 when 15.8 percent of its population was age 65 or older.  Japan passed legislation in 1997, when its 65+ population was 15.7 percent.  The proportion of US citizens 65+ was 13.0 percent in 2010 and is expected to be 19.8 percent in 2030.

“Germany and Japan adopted many LTC reform goals and policies consonant with their existing structures, funding arrangements, and cultures, and the US is likely to ultimately do the same at some point,” Slome predicts.  “Americans are aging every day and few have a plan for dealing with the enormous risk of needing long term care that results from living a long life,” Slome explains.  “Long term care insurance is a viable option for those who can health qualify and can afford a private option leaving everyone else to depend on family or whatever government programs exist.”

The American Association for Long Term Care Insurance was established in 1998 to advocate for the importance of planning for long term care and to support insurance and financial professionals who market LTC insurance.  To learn more about long term care insurance costs call the organization’s offices at (818) 597-3227 or visit the Association’s website.

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The open season period, which ran from April 4 to June 24, allowed these individuals to sign up for the long term care insurance coverage with abbreviated underwriting, which means they had to answer fewer health questions during the enrollment process.

The Office of Personnel Management, which runs the program, said today that the 20 percent increase in enrollment brought the program to 270,000 total enrollees.  “The Federal program is the nation’s largest group plan,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance http://www.aaltci.org.  “In addition to those enrolling in the plan, we estimate some 10,000 or more individuals purchased private coverage as a result of all the promotion.”

“We’ve seen strong support for the program in federal agencies, and ultimately in the number of people who applied and were accepted into the program,” OPM Director John Berry said in a statement. “OPM is proud of the success of the FLTCIP — one of the most flexible, inclusive and affordable long term care insurance programs, designed to help employees plan for their needs as they age.” 

The open enrollment was the first major open season since OPM initiated the program and the first time eligibility was extended to same-sex domestic partners. OPM said it received more than 300 applications from same-sex domestic partners. 

“We were receiving as many as 30 calls a day from consumers during the open enrollment period,” Slome adds.  “As a result, we expect overall industry sales for 2011 will be higher than 2010 a most welcome occurrence.”

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Included in the new health care law is a new long-term care insurance program called the Community Living Assistance Services and Supports (CLASS) Act.

Documents obtained and included in the report reveal that the Obama Administration’s Department of Health and Human Services (HHS) was acutely aware that the program was unsustainable and suppressed this information from Congressional leaders and the American people prior to the passage of the law, all in the effort to achieve phony savings to offset the bill’s massive spending and taxpayer-funded price tag.

The report was issued by the Repeal CLASS Working Group that is comprised of Republican leadership in both the House and Senate charged with overseeing implementation of the new health care law.

“The President and the Democrats are in an impossible situation,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national trade group.  “If Democrats throw CLASS under the bus, it opens the door for attacks on other aspects of healthcare law.  If they defend what they know is an unsustainable program, they are open to political attack as the party who never met an unsustainable entitlement program they didn’t like.”

According to the Working Group’s key findings, senior Health and Human Services officials publicly pronounced the CLASS program solvent in the fall of 2009, even as their own employees were calling CLASS “a recipe for disaster” in internal emails.

“This report is further confirmation that the Obama Administration willfully chose to ignore the fiscal insolvency of the CLASS program in order to achieve a political victory by pushing the president’s health care bill through Congress,” said Sen. John Thune (R-S.D.), co-chair of the Working Group. “The CLASS Act is a ticking time bomb that will place taxpayers’ money at risk due to fatal flaws in the entitlement program’s design and structure. The American people had a right to know the information revealed in our report before they were put on the hook to pay for this massive new entitlement program.”

“The CLASS Act is billed as an insurance program for long-term care, but really it’s just a huge and very costly government accounting trick,” said Sen. Lindsey Graham (R-S.C.). “Remember Enron accounting? Well, I believe even Enron executives would be embarrassed by the accounting gimmicks created by the CLASS Act.” 

Slome adds that the eventual repeal or transformation of the CLASS Act will not eliminate the emerging national problem.  “Our aging population will require more long term care than ever,” Slome explains.  “Most people have no plan in place and will become increasingly dependent on already strapped and limited taxpayer supported programs like Medicare and Medicaid.  Our hope is that a solution that works for all is found and sooner rather than later.”

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In a paper presented at the 2010 Congress of the Humanities and Social Sciences, held this week at Concordia University in Montreal, Mr. Légaré shows how the family circle available to the elderly will evolve from now until 2030.

It is usually the elderly person’s family circle that provides care. Mr. Légaré notes that about 70 per cent of the care provided for frail seniors comes from the informal network – essentially the spouse or the children. This is only possible because today’s elderly – baby-boomers’ parents – have more children to care for them and generally live in stable couples.

This situation will soon change. Divorce, common-law unions, blended families and relatively few children per couple are factors to consider. In addition to this, death rates have declined considerably, to the point where average life expectancy has grown considerably. Couples who have not split up will be living together longer.

Tomorrow’s elderly – today’s boomers – had far fewer children. Who will take care of them?  “Millions of boomers have their head buried in the sand when it comes to long-term care planning,” states Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  “That’s what forced the government to try a voluntary plan (the CLASS Act) with the hope that at least a small percentage will do some planning.”  Without funds to pay for care, millions will find themselves in difficult circumstances and have to turn to the public system to pay their way.

According to professor Légaré, new programs must be developed to model these extended families and new support systems.

If informal services change, the public system must also adapt. “Boomers have done nothing like the others,” Mr. Légaré points out. “They stand out from the other cohorts, and we believe they will do so again.”

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The report’s conclusion:  “As currently designed, CLASS will not be able to sustain itself without subsidies from taxpayers or from all workers in the form of mandatory enrollment. ”

The conclusion continues, “In addition to being unsound, the program is unnecessary.  Americans already have an array of private long-term care insurance options to choose from; many are more economical than CLASS, most offer richer benefits.”

The report concludes that “The best remedy for the unsustainable, unaffordable CLASS program is to repeal it.”

“This is the first time I have heard a politician utter the word ‘repeal’ when referring to the CLASS Act,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  “I actually wish they would finalize the pricing and benefits for the CLASS plan as soon as possible becuase I believe consumers are confused.   They need to know what this will cost as soon as possible so they can make intelligent comparisons.”

If you would like a PDF of the Senate report, please contact AALTCI.

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The American Association for Long-Term Care Insurance does not lobby legislative bodies.  We are not paid by insurance companies.  Our financial support primarily comes from insurance and financial professionals who are members.  The mission of AALTCI is to inform and advocate for sound long-term care planning for all Americans and support our membership.

The passage of CLASS does not negate the need for private long-term care coverage in any way.  While we have concerns about the long-term fiscal soundness of the plan, we are optimistic that the program will play a significant role in raising consumer awareness about the many issues surrounding long-term health care and the need to plan for the risk of needing this type of costly care.

Many of the details regarding the CLASS program are not yet defined and will be developed through Government regulation.  The following is designed to address what is known currently and to answer the most common questions being asked.  We will make changes as new information becomes available.

The Association has posted current information.  Click on this link to read more about the CLASS Act.

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