The authors consider an integrated income and disability annuity as an alternative framework for long-term care financing, show that pooling disability and mortality risks can reduce the need for medical underwriting, and discuss private and public implications. Data from the National Mortality Followback Survey of 1986 were used to simulate current underwriting and minimal underwriting, excluding only those already eligible for benefits. Remaining disability, life expectancy, and premiums are compared under both underwriting assumptions. Under minimal underwriting, 98% of persons age 65 would be eligible to purchase disability protection through an integrated annuity, versus 77% under current underwriting. Premiums for both the income and disability components were lower with minimal underwriting. Combining income and disability protection may be able to expand private markets for long-term care financing beyond what appears possible in the long-term care insurance market. Public policy should avoid the distortion of choices created by focusing exclusively on an insurance model.
American Academy of Actuaries . (1999). Long-term care: Actuarial issues in designing voluntary federal-private long-term care insurance programs (Public Policy Monograph). Washington, DC: Author.
2.
Braden, B. R. , Cowan, C. A., Lazenby,H. C., Martin, A. B., McDonnell, P. A., Sensenig, A. L., et al. (1998, fall). National Health Expenditures, 1997. Health Care Financing Review, 20, 83-126.
3.
Brown, J. R. , & Warshawsky, M. J. (2001). Longevity-insured retirement distributions from pension plans: Market and regulatory issues (Working Paper No. W8064). Cambridge, MA: National Bureau of Economic Research. Retrieved October 23, 2002, from http://papers.nber.org/papers/W8064
4.
Chen, Y. (1994, fall). A “three-legged stool” for financing long-term care: Is it an acceptable approach?Journal of Case Management, 3, 105-109.
5.
Christopherson, D. L. (1992). A new idea for insuring long-term care. Journal of the American Society of CLU and ChFC, 46(2), 42-53.
6.
Collett, D. A. (1999, October 25). Long-term care insurance: A rapidly growing, little understood product. BestWeek Supplement-Special Report, 1-7.
7.
Connecticut Partnership for Long-Term Care. (2000). Information for consumers: Cost of longterm care in Connecticut, private pay long-term care rates. Hartford, CT. Retrieved October 23, 2002, from http://www.opm.state.ct.us/pdpd4/ltc/consumer/nhrate.htm
8.
Coronel, S . (1998, September). Long-term care insurance in 1996 (#RF-22). Washington, DC: Health Insurance Association of America.
9.
Coronel, S. (2000). Long-term care insurance in 1997-1998 (#RF-20). Washington, DC: Health Insurance Association of America.
10.
Cowan, C. A. , Lazenby, H. C., Martin, A. B., McDonnell, P. A., Sensenig, A. L., Smith, C. E., et al. (1999). National health expenditures, 1999. Health Care Financing Review, 22(4), 77-110.
11.
Cuellar, A. E. , & Wiener, J. M. (2000). Can social insurance for long-term carework? The experience of Germany. Health Affairs, 19(3), 8-25.
12.
Cutler, D. (1993). Why doesn’t the market fully insure long-term care? (Working Paper No. 4301). Cambridge, MA: National Bureau of Economic Research.
13.
Friedman, B. , & Warshawsky, M. (1990). The cost of annuities: Implications for saving behavior and bequests. Quarterly Journal of Economics, 105(1), 135-154.
14.
Gabrel, C. S. (2000). An overview of nursing home facilities; data from the 1997 national nursing home survey (Advance Data from Vital and Health Statistics, no. 311). Hyattsville, MD: National Center for Health Statistics. Retrived October 23, 2002, from http://www.cdc.gov/nchs/data/ad/ad311.pdf
15.
Getzen, T. E. (1998). Longlife insurance: A prototype for funding long-term care. Health Care Financing Review, 10(2), 47-56.
16.
Getzen, T. E. , & Elsenhans,V. D. (1986). Insuring against poverty from long-term care. Business and Health, 300, 20-21.
17.
Health Care Financing Administration . (2002). Estimated spending for freestanding nursing home care, calendar years 1960-2000. Baltimore, MD: Office of National Health Statistics, Office of the Actuary.
18.
Hetzel, L. , & Smith, A. (2001). The 65 years and over population: 2000 (Census 2000 Brief 01-10). Washington, DC: United States Census Bureau. Retrieved February 2001, from http://www.census.gov/prod/2001pubs/c2kbr01-10.pdf
19.
Holden, S. , & VanDerhei, J. (2001, February). 401(k) plan asset allocation, account balances, and loan activity in 1999 (Issue Brief, No. 230). Washington, DC: Employee Benefit Research Institute. Retrieved October 23, 2002, from http://www.ebri.org/0201ib.pdf (Abstract now available at http://www.ebri.org/ibex/ib230/.htm and ordering information may be found at http://www.ebri.org/store/ebriib.htm)
20.
Kassner, E. , & Shirley, L. (2000, April). Medicaid financial eligibility for older people: State variations in access to home and community-based waiver and nursing home services (2000-06). Washington, DC: American Association of Retired Persons Public Policy Institute.
21.
Lifecare Long-Term Care Protection Program, S. 2163, 101st Cong., §2 (1990).
22.
Long-Term Care Assistance Act of 1988, S. 2305, 100th Cong., §2 (1988).
23.
Meiners, M. R. (1998). Public-private partnerships in long-term care. In L. Walker, E. H. Bradley, & T. Wetle (Eds.), Public and private responsibilities in long-term care: Finding the balance. Baltimore: Johns Hopkins University Press.
24.
Mitchell, O. , Poterba, J., Warshawsky, M., & Brown, J. (1999). New evidence on the money’s worth of individual annuities. American Economic Review, 89(5), 1299-1318.
25.
Mulvey, J. , & Stucki, B. R. (1998). Who will pay for the baby boomers’ long-term care needs? Expanding the role of private long-term care insurance [Monograph]. Washington, DC: American Council of Life Insurance.
26.
Murtaugh, C. M. , Kemper, P., & Spillman, B. C. (1995, fall). Risky business: Long-term care insurance underwriting. Inquiry, 32, 271-284.
27.
Murtaugh, C. M. , Spillman, B. C., & Warshawsky, M. J. (2001). In sickness and in health: An annuity approach to financing long-term care and retirement income. Journal of Risk and Insurance, 68(2), 225-254.
28.
Nakashima, E. (2000, September 20). Long-term insurance coverage expanded; Federal employees, military, families gain from new law. The Washington Post, p. A31.
29.
New York State Partnership for Long-Term Care . (2002). Consumer resources: New York state nursing home costs. Albany, NY: Author. Retrieved October 23, 2002, from http://www.nyspltc.org/consumer/index.html#3
30.
Pappas, G. , Queen, S., Hadden, W., & Fisher, G. (1993). The increasing disparity in mortality between socioeconomic groups in the United States, 1960 and 1986. New England Journal of Medicine, 329(2), 103-109.
31.
Pepper Commission (Bipartisan Commission on Comprehensive Health Care) . (1990). Access to health care and long-term care for all Americans. Washington, DC: Government Printing Office.
32.
Rogers, R. G. (1992). Living and dying in the USA: Sociodemographic determinants of death among blacks and whites. Demography, 29, 287-304.
33.
Secure Choice Act of 1993, S. 1600, 103rd Cong., §1 (1993).
34.
Spillman, B. C. , & Lubitz, J. (2002). New estimates of lifetime nursing home use: Have patterns of use changed?Medical Care, 40(10), 965-975.
35.
Tilly, J. , Wiener, J. M., & Cuellar, A. E. (2000). Consumer-directed home and community services programs in five countries: Policy issues for older people and government. Washington DC: The Urban Institute. Retrieved October 23, 2002, from http://www.urban.org/aging/intergen8.html
36.
Walker, L. , & Burwell, B. (1998). Access to public resources: Regulating asset transfers for long-term care. In L. Walker, E. H. Bradley, & T. Wetle (Eds.), Public and private responsibilities in long-term care, finding the balance (pp. 165-180). Baltimore: Johns Hopkins University Press.
37.
Wiener, J. M. (1998). Jump starting the market: Public subsidies for private long-term care insurance. In L. Walker, E. H. Bradley, & T. Wetle (Eds.) Public and private responsibilities in long-term care, finding the balance (pp. 134-149). Baltimore: Johns Hopkins University Press.
38.
Wiener, J. M. , Illston, L. H., & Hanley, R. J. (1994). Sharing the burden, strategies for public and private long-term care insurance. Washington, DC: Brookings Institution.
39.
Wiener, J. M. , Tilly, J., & Goldenson, S. M. (2000). Federal and state initiatives to jump start the market for private long-term care insurance. The Elder Law Journal, 8(1), 57-102.
