Private long-term care insurance companies have encountered substantial barriers to selling their product to potential purchasers. 113 “Although long- term care (LTC) is one of the biggest financial risks facing the elderly today, very few—13% of current 65 year-olds—are insured against this risk.” 114 Most prominent among these impediments is a widespread misperception among middle-aged, middle-class people (precisely the group that could benefit the most by having insurance that protects their assets from being dissipated in the event that LTSS are later needed) that they could never become so disabled that they would require LTSS. 115 In consequence, too many people wait until they are old and frail, and therefore, are likely to file claims for coverage within a short period of time, before trying to purchase long-term care insurance. 116 When the only people buying the insurance product are those who are most likely to use it quickly, insurers can only remain financially viable117 and meet state minimum solvency (reserve) requirements118 by vigorously screening potential purchasers and excluding
113. See, e.g., Richard W. Johnson & Cori E. Uccello, Is Private Long-Term Care Insurance the Answer?, CTR. FOR RETIREMENT RES. 1, 5-6 (Mar. 2005), http://crr.bc.edu/wp- content/uploads/2005/03/ib_ 5-29_508.pdf. 114. NORMA B. COE ET AL., NAT’L BUREAU OF ECON. RESEARCH, FAMILY SPILLOVERS OF LONG-TERM CARE INSURANCE 3 (2015). 115. See, e.g., We Must Address Long-Term Services and Supports (LTSS), LEADINGAGE PATHWAYS 1 (Oct. 2013), http://www.leadingage.org/uploadedFiles/Content/Members/ Member_Services/Pathways/WE_MUST_ADDRESS_LTSS.pdf (explaining that the United States’ “lack of a long-term care financing strategy leaves millions unprotected against the catastrophic costs of . . . physical disability and other chronic conditions that often come with longevity or can strike earlier in life . . . [which] inordinately impoverishes middle-class Americans”) [hereinafter Long-Term Services and Supports]; see also Harriet Komisar, The Effects of Rising Health Care Costs on Middle-Class Economic Security, AARP PUB. POL’Y INST. 2 (2013), http://www.aarp.org/content/dam/aarp/research/public_policy_institute/ security/2013/impact-of-rising-healthcare-costs-AARP-ppi-sec.pdf (“Expenses for long-term services and supports (LTSS) are a major risk to economic security in retirement for middle- class families, since such expenses are not covered by Medicare and few people have private insurance to cover such costs.”). 116. Kyle, supra note 107, at 112–13. 117. Nimmi Cleve, Long-Term Care Insurance: An Endangered Species, 22 ANNALS HEALTH L. ADVANCE DIRECTIVE 182, 192 (2013) (“The current problem that the LTCI universe faces is precisely this: expenditures are far exceeding funding. Therefore, the LTCI model is not financially viable in its current avatar. In an effort to remedy the situation, the funding needs to increase, expenditures need to decrease, or a combination of both needs to occur.”). 118. See, e.g., N.M. STAT. ANN. § 59A-23A-6 (1993) (authorizing promulgation of regulations which “include standards for full and fair disclosure setting forth the manner, content and required disclosures for the sale of long-term care insurance policies, certificates and riders, terms of renewability, initial and subsequent conditions of eligibility, non- duplication of coverage provisions, coverage of dependents, preexisting conditions, levels of care, termination of insurance, continuation or conversion, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions and definitions of terms”).
