Last week, I wondered in a column why the disability insurance market seems to be doing better than the long-term care insurance (LTCI) market, even though the two markets seem to have a lot in common.
I was wondering whether the fact that almost every worker who pays payroll taxes has Social Security Disability Insurance somehow helps the private LTCI market. Maybe so, maybe not. Maybe it's just one of these ideas that seems interesting when one is trying to write a column on the fly but ends up producing leads that are way better than the conclusions.
But then, it hit me: One huge, obvious difference between the disability insurance market and the LTCI market is that most folks seem to be reasonably comfortable with the existence of the Social Security Disability Insurance (SSDI) program, whereas many LifeHealthPro readers are horrified by the idea of any efforts to extend federal acute care insurance or federal Medicaid nursing home benefits to workers much above the poverty level.
Certainly, I have some readers who are serious about being free-market libertarians, and those readers would oppose the concept of SSDI.
Many people have pointed out that the SSDI program operates poorly and is in danger of running out of cash in just a few years. But it looks as if making SSDI solvent is a lot easier, payroll-tax-increase-wise, than making Medicare solvent, and I don't think I've ever gotten a single e-mail spontaneously suggesting that the country ought to abolish the SSDI program. If anything, private disability insurers seem to see SSDI as a wonderful tool for holding down claim costs.
And I've certainly never even seen a message board post here or anywhere else suggesting that the country should get rid of the Social Security survivors benefit program, which is, in effect, a kind of mandatory life insurance program that pays out annuitized benefits streams.
So, what's the difference between government mandates that infuriate and those that purr along unassaulted?
1. It helps for a benefit to be old. It's hard to find much criticism of the SSDI concept today, but, of course, plenty of people in the insurance community were skeptical about the concept when U.S. policymakers started to try to import the concept here from Germany, where it first took visible root.
My understanding is that, back in the day, many people also objected to mandated benefits that we don't think of as benefits, such as free, no-toll access to roads built with government money.
2. An appealing government mandate either helps just about everyone at a fairly low cost or, if the cost is high, a very clearly defined group of people.
Almost everyone seems to accept the idea that having access to good roads is worth paying a little extra tax at the gas pump.
Similarly, most folks seem to accept the idea that the survivors of workers who die young are a fairly small group of people, and that most of the claims for benefits are legitimate claims.
But the SSDI program has been getting criticism over concerns that some beneficiaries might not be malingerers.
3. An appealing government mandate addresses a widely understood problem. One thing the Social Security survivors benefit has going for it is that we all know that premature death is a problem. Similarly, we all understand what disability can do to a family's finances. Maybe a lot of people still aren't as convinced that acute care costs and LTC costs are in the same league.