Obama Health reform must include long-term care Long Term Care Insurance by Tom Dennis America’s health care system is in trouble — but at least most Americans have options. Our long term care system is in trouble, too. The difference is, there are no good options. Neither private long-term care insurance nor the federal or state governments offer useful and affordable alternatives. That must change, especially considering the coming retirement wave of Baby Boomers and the fact that many millions of them surely will need long-term care. Ideally, every American would buy long-term care insurance, probably from the very first day on one’s very first job. Spreading the risk across the generations is the surest way of keeping the costs of long-term care insurance about as low as they could be. Unfortunately, nothing like that happens today. Instead, our voluntary system of private long-term care insurance results in policies that are forget-about-it expensive for the old and the not-so-old alike. If you’re 65 and want to buy even a limited policy — one that offers, say, $150-a-day in covereage for four years — it’ll cost you nearly $5,000 a year, writes Saul Friedman, a columnist for Newsday newspapers of Melville, N.Y. “The median income for households headed by people older than 65 was $34,243 in 2004,” Friedman points out. “The premium would be less if the policy was purchased at age 50. But that means paying for, say, 25 years or more on the one-in-three chance that you may use the benefits, with no guarantee that the premium won’t go way up when you can least afford it or that the insurance company will still be in business. “Unless you have an even more expensive policy, which would provide a return on part of the premiums, you get none of the money back if the benefits are not used. But the insurance company gets to invest your premiums.” Of course, if you skip buying long-term care insurance, then you’re gambling with your life savings — because if you lose your bet and have to enter a nursing home, you’ll have to deplete your savings enormously before government Medicaid payments kick in. A few reforms have promise. A new one co-sponsored by Rep. Earl Pomeroy, D-N.D., would let people pay for long-term care insurance with pre-tax dollars, the way many millions of people now pay for health care and child care costs. That would in effect ratchet down the cost of the premiums a sizable notch. The Long-Term Care Affordability and Security Act also would strengthen consumer protections for people who buy long-term care insurance. The law makes very good sense and ought to be passed. Another useful policy in New York and elsewhere lets people protect some or all of their assets even if their long-term care insurance runs out. The state subsidizes this catastrophic protection in order to bring overall costs down by convincing more people to buy long-term care insurance. Again, these are useful and needed reforms. But the long-term care system probably needs more basic changes before most Americans satisfactorily can buy coverage. Washington is in a reforming mood, as the debate about health care shows. Congress and the president should charter a study or blue-ribbon commission to look at this issue, too. — Tom Dennis for the Herald More Info at Long Term Care Insurance Info Page