Long-Term Care Insurance for Solving “2030 Problem”

Today, one of the most important issues in the long-term care field is the so-called “2030 problem”. The essence of the issue lies in assuring that in ten years, there will be sufficient resources for providing competent medical services. The estimated growth of the elderly is, at least, twice what it currently is. Moreover, this growth is potentiated by the generation of “baby boomers.” It is expected to reach the average age of 66-84 by 2030 and enumerate over 60 million people. Additionally, the part of the population born before the late 1940s is expected to be around ten million people at the same time. The main aim of this paper is to assess the economic impact of the “2030 problem” and propose alternative solutions.

The Core of the Problem

The “2030 problem” makes the country and its government realize that it comes to the overwhelming economic burden. Recent researches state that “an estimated 70% of Americans ages 65 and older are projected to experience some level of need for long-term care services and support” (LaQuita, 2017). The economic burden is recognized as overwhelming in three main terms. The first one is whether the government is forced to raise taxes dramatically. The second scenario assumes that the service costs are so high that other kinds of social investments need to be precluded. Finally, the third case takes place if the future generation of the able-bodied population is likely to have worse general well-being than the current one does due to the changes in income transfers and service costs.

Therefore, the efficient solution of the issue needs both the public policy and private institutions to focus on the steady health care system development by the middle of the 21 century. Public policy should aim to increase the level of adequate health services and transfers, simultaneously paying attention to the social and economic well-being of the youth. The researchers revealed that the “proximity-to-death is a major, but not the only driver of health cost expenses growth with rising age” as it was considered before (Von Wyl, 2019). The morbidity-adjusted analysis reflects the essential role of hospital-treated and chronic diseases as two more drivers. Hence, the faster private and public progress begins, the easier will the future burden be to handle.

LTC Insurance Problems and Benefits

There are many issues of economic burden which are firmly associated with the elderly. Primarily, the logic of this paper addresses the growth of long-term care services costs. This issue has the fastest growth of value among all the aging-related aspects as well as prescription drugs. It is worth noting that “female same-sex households are particularly at risk due to greater longevity and higher incidence of long-term care usage” (Crook & Sutedja, 2017). At the moment, long-term care is not covered by Medicare. Moreover, the offered list of benefits is very limited, either. In addition, many people confuse long-term care insurance with short-term medical care. LTC insurance applies to chronic and personal care only.

Most authors in different sources propose to pay special attention to LTC insurance. They appeal to both qualitative and quantitative factors related to LTC. Medicaid and LTC are closely interconnected, as “LTC expenditures are a substantial part of overall Medicaid expenditures, a large elderly population is also expected to increase overall Medicaid expenditures” (Kanika, 2015). The most reasonable factors include the ability to avoid the situation when one becomes a burden for the family. Moreover, the protection of family finances and avoidance of potential increases in tax rates are also mentioned. Providing liquidity due to the cash-flow benefits offered by LTC is the next factor. Finally, obtaining peace of mind by the people purchasing LTC insurance is mentioned.

Potential Problems and Barriers in General LTC Insurance Implementation

There are several reasons why LTC insurance is not implemented as general state practice. The first one is an inflation rate that cannot be paced with and has a cost. The insurance-takers of short-term care have higher chances to keep up with inflation. As the experts predict, the increase of the LTC cost will achieve at least 5% each year due to inflation. It is important to note that the main barrier to general LTC implementation is its current costliness. Such kind of care becomes exceptionally costly if paid through savings and salaries. Finally, the tax system may affect benefits and, therefore, reduce the care. As a result, in the time of need, it becomes impossible to gather the benefits for the services ultimately. Financially constrained people also should be aware of their ability to qualify for both state and federal programs such as Medicaid and Medicare at the same time, if they cannot afford themselves pay for LTC insurance. About 20% of Medicare beneficiaries are dual-eligible, which means that they are eligible for Medicaid as well.

Alternatives and Preventive Measures

Widening the private sector of LTC insurance can decrease Medicaid’s funding strain. The largest LTC insurance industry sector is in-home care. Therefore, there are common incentives for LTC insurers and regulators to be worked out together to develop innovative products. The alternative long-term care solutions should include hybrid policies. As an example, the combination of LTC insurance with life insurance shall be considered. “The leading example of this approach is a term life insurance product that converts into LTCI at retirement. An early review of this approach showed strong consumer interest, and it looks actuarially affordable” (Nordman, 2016). The government should consider the ability to pay for LTC insurance programs through retirement systems instead of salaries and savings.

People should think over the purchase of LTC insurance beforehand without waiting for the moment when they are already vulnerable both to different diseases and fraud from the insurer’s side. The development of health-promoting and illness-preventing structures for the elderly is another public responsibility. For health promotion, it is necessary to analyze and examine personal experiences along with expert suggestions. It is impossible to identify the health promotion concept without a thorough survey of the present services related to health promotion and disease prevention. Hence, it is logical to suggest that market incentive-based programs have to be encouraged as they can minimize health uninsurance (Howdon & Rice, 2018). Moreover, public hearing testimony is obligatory to be taken into account. Therefore, the review of national and state documents related to disease prevention for the elderly is required.

The correct use of palliative care applied earliest and widest possible can dampen the expected health care expenses either. Moreover, chronic illnesses should be managed as efficiently and thoughtfully as possible. The key aspect lies in focusing these measures not only on the elderly but on the younger age categories as well, as they are the potential contributors to the situation in the health care field in the nearest decades.

References

Crook, M., & Sutedja, R. (2017). Will long-term care ruin retirement plans? The Journal of Retirement Winter, 4(3), 42-50. Web.

Howdon, D., & Rice, N. (2018). Health care expenditures, age, proximity to death and morbidity: Implications for an ageing population. Journal of Health Economics, 57, 60-74.

Kanika, A. (2015). Three essays on the supply of long-term care services to the elderly in the U.S. [Unpublished doctoral dissertation]. Syracuse University.

LaQuita S. M. (2017). Understanding long-term care (LTC) in America: Planning ahead for LTC and educating older adults (Publication No. 10270157) [Master’s thesis, Utica College]. ProQuest Dissertations Publishing

Nordman, E. C. (2016). The state of long-term care insurance: the market, challenges and future innovations. National Association of Insurance Commissioners. Web.

Von Wyl, V. (2019). Proximity to death and health care expenditure increase revisited: A 15-year panel analysis of elderly persons. Health Economics Review, 9(1), 1-16.