Private Long Term Care Insurance example essay topic

... 's retirement system. This predicament, of course, will also mean an increase in the need for long-term care service. At the present time, Medicare covers only sixty percent of long-term care costs. A recent AARP report indicated that today's Medicare recipients spend more than 1/3 of their yearly income for health expenses not covered by Medicare. Many baby boomers who are financially secure now may find themselves in the same situation when they reach retirement age (Committee on Aging 7).

The baby boomer generation is aging and the pharmaceutical industry aiding and abetting every step of the way. "The fastest-growing group is aged 55-64, projected to increase by over two-thirds by 2010". (Wallace). Pfizer pharmaceuticals introduced Viagra, a erectile dysfunction drug, which was an immediate success that just kept going and going.

Due to its popularity and profitability, Pfizer stock price doubled in less than a year. There have been over 30 million Viagra prescriptions written to over 10 million men. (Pfizer. com) "Viagra shows what can happen in business when a fundamental demographic shift coincides with advances in science and technology". (Wallace) Celebrex, an arthritis inhibitor, is another of Pfizer's all stars in which they co-promote with Pharmacia. There are over 450,000 prescriptions written for Celebrex a week and there have been more than 29 million prescriptions written for almost 10 million patients. (Pfizer. com) Arthritis, in its many forms, has afflicted generations and the baby boomers are no exception.

Celebrex has been the most successful U.S. product launch in history. (Pfizer. com) This is only a few of the many drugs pushed toward this aging generation. According to the Special Committee on Aging, the 1998 average cost of nursing home care was about $40,000 per year. Today's costs have risen to $50,000 per year.

With costs this high, retirees will quickly exhaust their savings and eventually must rely on Medicare to cover their nursing home expenses. With the approaching retirement of the baby boomer generation, it is essential that the public be educated about planning financially for potential long-term care and that legislative policy makers provide incentives for this kind of planning. Private sector tax options such as IRA's and 401 (k)'s are an indication of incentives to save, but more options must be developed if we are to be prepared for the future demand on long-term care. This tremendous increase will require a mix of both public and private sector initiatives.

Self-pay, Medicaid, or insurance can cover long-term care. Increasing life span means more people will require long-term care and for a longer period of time. "Medicare, as it is currently structured, cannot absorb 77 million new beneficiaries, much less begin to take care of the costs of the baby boomers' long-term care needs" (Committee on Aging 7). While historically, the majority of Medicare expenditure has been for nursing home care, the recent shift in funding has been toward home and community based care. The number of home health visits doubled between 1989 and 1996 (Committee on Aging 10).

The fact that baby boomers have had fewer children themselves means there will be fewer family members to provide unpaid caregiving. Private long-term care insurance was introduced nearly 25 years ago, but sales of this product have been limited. Some of the reasons for low sales are lack of awareness of Medicare's limitations on long-term care coverage, their affordability, and their value relative to the premiums charged for them (Committee on Aging). Long-term care insurance allows for choice in type and level of care received, prevents people from becoming a burden to their families, and preserves their independence as well as their assets (Lilienthal 1). Although more and more insurance companies are offering long-term care policies, the consumer should be aware of their limitations.

Some policies require a waiting period of a year or longer after a chronic illness before coverage begins, or sometimes the coverage does not begin until the patient has reached a state of dependence on others to bathe, dress, feed, and administer medication to them. The consumer should also be aware that some policies only cover the cost of a nursing home today. With the cost of inflation, long-term costs in 10 years may increase by one-third or more. Also, medical procedures may become available in the future that are not covered by current policies. Before purchasing an insurance policy, consumers should check for exclusions and clauses that may limit their coverage (Lilienthal 2). According to Brian Goebel, retiree plans will become increasingly expensive because of "longer life expectancy, the discovery of new treatments for diseases and illnesses associated with old age, earlier retirements and cost shifting by the Medicare program to private sector plans" (Goebel 2).

At a recent hearing on the future of long-term care for baby boomers, Senator James M. Jeffords reported that ongoing chronic illness and disability will consume the major part of health costs in the future, rather than acute care needs. Marketing gold for the ever spending baby boomer is indeed a focus for the medical doctor, pharmaceutical industry, and retailer. To the business owner of any type of sales and services, being just two steps ahead of this generation can reap huge benefits real fast and not necessarily over a long period of time from what his history shows.

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