Economic and External Factors That Influence Long-Term Care Claims

The Society of Actuaries concluded its 4th Long-Term Care (LTC) Medical Symposium on December 2, 2021. The Symposium historically features professionals and experts from outside of the LTC insurance industry to provide insight into the external forces shaping the delivery of LTC in the US, with an eye towards how LTC insurers may pay future claims. Over the past 3 years the Symposium has featured a broad array of professionals such as gerontologists, neurologists, facility managers, nurses, demographers, biologists, economists, investment managers, and more. See the 2018, 2019, and 2020 Symposia write-ups for more information.

To highlight just one of these economic factors, economists Kristin Butcher, Tara Watson, and Kelsey Moran released an NBER Working Paper in November discussing the impact of immigration to the cost of home care services. Notably, the researchers find that “…a 10 percentage point increase in the less-educated foreign-born labor force share in a local area reduces institutionalization among the elderly by 1.5 and 3.8 percentage points for those aged 65+ and 80…”. The researchers note that “… immigration affects the availability and cost of home services, including those provided by home health aides, gardeners and housekeepers, and other less-educated workers, reducing the cost of aging in the community.”

These findings ring true for those in the LTC insurance community who monitor costs of care and its fluctuation with the supply and demand of labor. LTC actuaries will keep in mind that actuarial assumptions based on historical data reflect some level of labor demand and supply, and that immigration has played – and will play – an important role in this equation.

About the Author: Robert Eaton

Robert Eaton, FSA, MAAA, is a principal and consulting actuary at Milliman in Tampa, FL. He is the past chairperson of the Intercompany LTC Insurance Conference (ILTCI) and currently sits on the Board of Directors of the Society of Actuaries. He can be reached on Twitter or via email.

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