I think insurance company executives need to consult with antitrust lawyers, get together in a room that somehow meets antitrust restrictions, and figure out if they really want to be married to the long-term care insurance (LTCI) market.
The question about how committed private insurers are to the LTCI market came up recently at a Senate Special Committee on Aging hearing on long-term care (LTC) costs and LTCI.
Even Douglas Holtz-Eakin, a former Congressional Budget Office director regarded as a conservative budget hawk, said he thinks the government will continue to have a large role to play in paying for LTC.
But the government could do things, such as letting LTCI into cafeteria plans, allowing for opt-out employer-sponsored LTCI programs, and reducing middle-income and high-income families' reliance on Medicaid nursing home benefits to help expand the private LTCI market, Holtz-Eakin said.
Another witness, Judith Feder, a Georgetown University public policy professor, noted that the private LTCI market has not grown much since she started thinking seriously about LTC finance issues 20 years ago.
Private LTCI is nice for the people who can afford it, but it's not big enough to do much good for the country as a whole, Feder said.
I think another big question is supply.
Some of my readers are pure libertarians. They would say that it's absurd to have the government be involved in operating any day-to-day health care program outside a war zone or an area affected by a natural disaster.
Most of my other readers, including many very conservative readers, seem to accept the idea that the government should have some involvement in paying for care, especially for very poor people, and for children, people with serious disabilities, and others who are not able to fend for themselves in the marketplace.
Personally, I like the idea that private companies always are competing both with one another and with various government, nonprofit and cooperative programs. In my experience, private companies usually do better than other types of organizations, but, despite all the carping, the U.S. Postal Service does a pretty good job. My daughter's public school is great. NASA puts up nice space stations.
One big practical question in a case like this is, how interested are private companies in the market?
If we do what we can to preserve the private LTCI market, will there actually be private insurers in that market, or, in the long run, is the government the only provider that really wants to be (or, perhaps, is statutorily stuck) operating in the market?
Are private companies in the LTCI market just because it would be embarrassing or regulatorily challenging to get out; because there's a split inside the companies that leads to strategy paralysis; or because they really want to be in the market, even at times when low interest rates cause general account yield problems?
To me, it seems as if the answer is, "We want to be in the market in years when rates allow for us to make a profit," or even, "When our actuarial projections work out," that's not a very helpful answer.
I think that insurers have good reason to say staying in the market in the face of unrealistic government meddling is impossible.
But, if private insurers simply view LTCI as an "opportunistic market" that's attractive when rates are high and unattractive when rates are low, then that wouldn't work very well, because the LTCI market is the kind of market in which the insureds are depending on insurers to be paying and smoothly administering benefits 10, 20 or even 30 years in the future.
So, anyhow: I think the LTCI executives who communicate with me are passionately committed to the LTCI market. They love this market.
But what do the people in the boardrooms really think? If they're sincerely making the longest-term commitment that the regulators and credit analysts will let them take, maybe emphasizing that kind of firm commitment to the product would lead the folks in Washington to give private LTCI more respect.