There is a possibility that the structural and financial costs of caring for elderly Americans will become the issue that overwhelms all others in importance in the coming decades. Among the myriad issues and problems facing the United States at present, many politicians and policymakers have focused on issues that appear more immediate. As they do, however, the United States grows older and more infirm, all while birth rates fell to 1.73 births per female in 2018 and net immigration has fallen to the lowest levels this decade. Given the aging baby boomer generation, the current scenario has all of the makings of a serious demographic crisis. Among an aging population, dementia has become a very prevalent, very difficult, and very expensive illness that many confront, and so far little progress has been made on a cure. Indeed, The Economist, in its August 27, 2020 edition, published a special report on dementia that included the following statistics:
- By 2050, there will be 152 million people living with dementia worldwide;
- WHO estimates that the worldwide cost of care for dementia will be $2 trillion by 2030;
- In the United States, the average cost of caring for a person with dementia is $350,000, and 70% of those costs are borne by the family;
- Dementia incidence and expense are both rising – in 2015, the OECD estimated that by 2050, rich countries will see a 50% increase in dementia cases.
While the incidence and expense of caring for our elderly has gone up, and is projected to continue rising, the insurance market has faced great challenges in responding to the demand. According to the recent Federal Interagency Task Force on Long-Term Care Insurance, the number of standalone long-term care insurance policies sold in the United States has declined from about 250,000 policies sold in 2010 to about 50,000 sold in 2018. That decline has been more than offset by the sale of hybrid life and annuity products that provide coverage for long-term care expenses, but even that offset has not risen to meet the rapidly growing incidence and expense. Finally, recent medical advancements have made significant strides in diagnostic testing for conditions like Alzheimer’s disease – including a new blood test that preliminarily appears to identify Alzheimer’s with very good accuracy. The advancements in diagnostic testing have lagged behind advancements in curing conditions that cause dementia. Therefore, the metrics all portend a real crisis on the horizon that will have significant negative impacts on individuals, entities, and governments.
These facts then clearly pose the question: What can the various industries working in long-term care do to be part of the solution? A number of viable options have been discussed, and it may take an “all-of-the-above approach” to meet the severity of the problem we are facing as a society. Above all, participants in these conversations have always sought to find solutions that facilitate the extension of coverage, and improve health and financial outcomes for insureds. Broadening the scope of those covered has been a particular focus and challenge. Some concepts and ideas that have seen significant discussion recently include:
- Implementation of managed care concepts and wellness programs as part of an insurance coverage program;
- Encouraging, within regulatory requirements, the use of telemedicine and virtual interaction to improve patient touch points;
- Emphasizing home modification and other “aging in place” initiatives to allow people to remain at home longer;
- Engaging care providers to understand how care will be provided in the next generation, either through technological advancement or through looking at elder care differently – for instance, usage of Adult Day Care or comprehensive senior living communities; and
- Identifying places where segmentation of the insurance marketplace might make sense, either through coordination of different coverage or through public-private partnerships.
As noted above, it will probably take some combination of all of these concepts to react to the depth and breadth of the problem we are facing. Steps are being taken to move forward on many of these concepts, whether it is regulatory movement on anti-rebating laws and regulations, potential revision of tax requirements to facilitate coverage for pre-claim wellness programs, or investment of private money and entrepreneurial effort into disrupting the marketplace for long-term care, there has been a lot of positive activity on these issues recently.