Dychtwald on Long Term Care
Editor's note: Senior Market Advisor recently spoke with Dr. Ken Dychtwald, an expert on aging, and Colleen Goldhammer, Genworth senior VP, to get their thoughts on the health care debate and how advisors can help their senior clients navigate through this complex issue.
Senior Market Advisor: The health care overhaul is in the news daily. What are your thoughts on the bill and its ramifications?
Ken Dychtwald: It's still not terribly easy to understand what's in this federal health care bill. From my point of view, I do not believe it will provide effective health care for older patients. And that's just part of the national problem: 85 percent of American doctors have never taken any gerontology classes, and there's no recognition of the huge impact Alzheimer's care is going to have on the entire system. Anyone who's had to deal with elderly parents knows that what's really needed is a continuum of care.
Senator Kennedy's CLASS Act was a good addition to the bill, but even that proposal has two major flaws. It's another encumberment to government entitlement, especially as the weight of aging baby boomers will become a huge strain on the whole system. And, even if it works, it would only provide Americans with $50-$80 a day in coverage; like other government programs, it seems to orient you towards care in a nursing home, not in an independent setting. That becomes the question for everyone: Do I want to count on the government to look after me with some low-financed program, or should I pay more to guarantee coverage for myself?
SMA: It's becoming clear that as the population continues to age, long term care will play a major role in health care. What seem to be people's biggest objections to long term care?
KD: I've found three major obstacles to LTC over the years:
- Confusion. People still don't know what LTC is. Doesn't Medicare cover long term care needs? A recent study of boomers showed that 54 percent of them believed that Medicare would cover LTC. It won't.
- Denial. People still say, "it's not going to happen to me." Especially if they're 36 or even 52. But show them the actual statistics and they'll see that the odds are that 70 percent of people over age 65 end up needing long term care. And 40 percent of LTC costs still go to cover patients aged 18-64.
- Fear. Nobody likes to talk about getting older, but it's a conversation you need to have. What might happen if you or a loved one required long term care? Discussions about ill health are so unsettling and that's caused many people to avoid taking the steps to make sure they are covered.
SMA: You have a personal LTC story that has affected how you look at the subject.
KD: Yes. My own mom and dad were hard-working, middle-class New Jersey people in their 70s who started getting knocked down by a series of health conditions. My father had diabetes and a result he went blind, so he can't drive, he can't read, he can't be independent. My mother started having memory loss problems. All of a sudden, my mom and dad were heading down the path that I'd spent 35 years writing about as an aging expert, and that was quite concerning to me and my family. I also understood that long term care would not be covered by Medicare.
We had great news when my dad, one day, told us he was going to activate his LTCI policy, which we didn't know he'd purchased nine years ago. Now, a care coordinator shows up at their house six days a week, helping with the cleaning and taking them on shopping trips. They just celebrated their 67th wedding anniversary and they're living a pretty normal, independent lifestyle. If they hadn't had the LTCI policy, they might have ended up in a care home or my brother might have had to relocate to help them ... or they might have had to move themselves.
Like any life insurance, there are pros and cons to LTC, but things are very different: When you think about the costs of LTC, you also have to think, "who's going to be changing my father's clothes and giving my parents a bath when they're incapable of doing so themselves?" Eighty percent of care in the United States is provided by other family members; I would prefer to love my parents but have someone else oversee their daily care.
SMA: You've spoken about that "caregiver crunch" at many of your lectures. Can you explain what that means?
KD: It's a major medical issue that will soon be facing us all. Back in the pre-boomer generations, families typically had at least four kids each, which meant a lot of help to call on when the parents became elderly. The boomers have had half as many kids. And 80 percent of middle-aged women today work full-time, unlike the old days. When a care event arises, they have to ask themselves, "Can I afford to leave my job to take care of my parents?" Families no longer live in the same neighborhoods or even states as their parents, which makes care a challenge. And there are an enormous number of Americans who will live much, much longer than previous generations.
Ultimately, the goal for most of us is living comfortable, quality lives in the setting we choose.
It's also a perception issue. Someone who's 59 nowadays probably doesn't think of themselves as a "senior." That's a label we'd put on our grandmother, not ourselves. We have life expectations now that stretch to 80, 90 or even 100 years, and we want to live those years with the highest level of care, and have access to health care in a home setting.
LTCI is no longer "nursing home insurance," as it used to be seen. We don't want to be institutionalized, with uncaring, high-tech medical care. People want low-tech, personal care. They want to be able to live their lives free of pain and discomfort, to still be able to take that vacation, to live independently. This also stretches to the new, high-tech manipulation of the dying process; hence you see the growth in palliative and hospice care.
SMA: What can financial advisors do to help seniors address their health care needs?
Colleen Goldhammer: FAs need to have the following conversation with their clients, and do the following things:
- Gather all of their important medical and financial records.
- Create a contact list who needs to be involved, who will take care of your pets, etc.
- Understand the differences between health care and long term care. There are still lots of misperceptions.
- Figure out a way to fund LTC as part of a broader financial plan
- Think about potential locations for retirement, and have those cost discussions. Some areas of the country are definitely more inexpensive than others.
- And make sure to keep your financial advisor up-to-date and current on any changes. Your LTC plan should be a written plan, like a will or an estate plan, something that's constantly reviewed.
KD: I also think advisors should talk to their own families about their own financial plans, which is often something they forget to do. Do some homework on LTC for your own life. 8.25 million Americans currently hold LTC policies, and the average age of a policyholder is 57. It's a perfect time to build your book of business with a discussion about LTC. Give people the knowledge, and they'll be able to make better choices.
Where the health bill stands
As we go to press for this issue on Jan. 13, health care reform legislation is fluid as the two sides of the House are working to bring their different visions together. In short, they want to make health insurance "more affordable than current versions of the legislation," according to a news report from National Underwriter.
As the final bill gets hammered into shape, in addition to the affordability issue, other key points of focus for legislators are to ensure a role in the final bill for agents to sell insurance in all markets, and to complete work on legislation by late January.
While all of that may (or may not) be worked out by the time you're reading this, industry lobbyists will have their hands full in attempts to direct the bill's final outcome. Following are highlights from some of the insurance industry's top powerbrokers and leading insiders with their thoughts on the Bill.
Work to be done
"We have improved the Senate bill, but much work remains to be done to address affordability in any final legislation."
-- Diane Boyle, vice president of government relations at the National Association of Insurance and Financial Advisors.
Disruption to seniors
"Specific provisions in the current bills will increase, rather than decrease, health care costs, reduce coverage options and disrupt existing coverage for families, seniors and small businesses particularly between now and when the legislation is fully implemented in 2014."
-- Karen Ignagni, president and CEO of America's Health Insurance Plans.
The tax issue
"The road to acceptability is long. Employers, especially small businesses, are already scaling back hiring plans and finding ways to avoid higher taxes."
-- John Greene, NAHU vice president of congressional affairs.
The Class Act
Inclusion of the CLASS Act, a long-term care entitlement program in both bills, remains a big concern.
"The benefit level (on the Class Act) is substandard to the private insurance market, but it creates a false sense of security for Americans that their long term care needs will be met through this program. We have a population that now believes Social Security provides for LTC needs, and that is simply not true."
-- Diane Boyle, vice president of government relations at the National Association of Insurance and Financial Advisors.
To receive ongoing information on health care issues, go to www.lifeandhealthinsurancenews.com/HCRW and subscribe to the free Health Care Reform Watch newsletter, which combines the reporting efforts of Senior Market Advisor, National Underwriter, Agent's Sales Journal and Benefits Selling publications.
Editor's note: Portions of this story appeared on the National Underwriter Web site, available by visiting www.lifeandhealthinsurancenews.com.
What are senior advocacy groups saying?
According to AMA immediate-past President Nancy Nielsen, M.D., "Physicians want to care for seniors and military family patients, but steep payment cuts of 21 percent next year, with more in years to come, will force them to limit the Medicare and TRICARE patients they can treat." In support of the passing of the bill, Dr. Nielsen added, "Swift passage of H.R. 3961 will be a vote of confidence for America's physicians as they decide if they can participate in Medicare next year and care for seniors and military families."
"A recent poll by the AARP found that 76 percent of Americans 50 and older believe that ensuring that people could see the doctor of their choice is a convincing reason to support health care reform," said AARP President Jennie Chin Hansen.
Col. Steve Strobridge, USAF-Ret., director of government relations of the Military Officers Association of America added, "The last thing troops in combat should have to worry about is whether their sick spouse or child can find a doctor to treat them."
Jim Martin, president of the 60 Plus Association, says the bill is an "insult on top on an insult" to current senior citizens and questions the practicality of the proposal. "How in the world are you going to cut $500 billion out of Medicare, add 31 million uninsured ... and then all of a sudden they say, 'Here's another novel idea why don't we expand Medicare and Medicaid to the soon-to-be seniors, those so-called baby boomers?'" he asks.
Quotes from HealthReform.gov:
"The Medicare Hospital Insurance Trust Fund, which pays for Medicare Part A, is now projected to be exhausted in eight years, sometime during 2017."
"It has been estimated that the typical older couple may need to save $300,000 to pay for health care costs not covered by Medicare alone."
"The average Part B plus Part D premium is estimated to equal about 12 percent of the average Social Security benefit in 2010, and 16 percent of the average benefit in 2025. Taken together, this means that if no action is taken, Medicare premiums and cost-sharing could eat up more than one-third of Social Security benefits in the next 15 years."
"A typical older couple in traditional Medicare will pay almost $90 next year on average to subsidize private insurance companies who are not providing their health benefits."
You may be able to find more from this Web site: www.healthreform.gov/reports/seniors/index.html