Long Term Care - An International Perspective
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Transcript of Long Term Care - An International Perspective
C6: Long Term CareAn International PerspectiveEdd Moyle, Chris ReynoldsPartnerRe
11 November 2013
2
Disclaimer
11 November 2013
The views expressed today are those of the presenters and do not necessarily reflect those of their employers, and thus, their employers accept no liability as a result of any reliance you may have placed or action taken based upon the information outlined in this document / presentation.
3
Some Statistics
P(X) = 1
11 November 2013
4
Some Statistics
P(Y) < 1
P(Z|Y) < P(Y)
11 November 2013
Progr
ess
Comm
unity
Sessio
nal M
eetin
gs
Educa
tion
Wor
king
parti
es
Volunt
eerin
g
Resea
rch
Shapin
g th
e fu
ture
Networ
king
Profe
ssion
al su
ppor
t
Enter
prise
and
risk
Lear
ned
socie
ty
Oppor
tunit
y
Inte
rnat
ional
prof
ile
Jour
nals
Suppo
rting
Exper
tise
Spons
orsh
ip
Thoug
ht le
ader
ship
DemographicsWe’re getting older
11 November 2013
6
The Demographic Challenge
11 November 2013
Source: Human Mortality Database
7
The Demographic Challenge
11 November 2013
Source: Human Mortality Database
8
The Demographic Challenge
11 November 2013
Source: Human Mortality Database
9
Life Expectancy at 65
Source: HEALTH AT A GLANCE 2011: OECD INDICATORS
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10
What is LTC?
Bathing
Dress
ing Eating
Mob
ilityPersonal
Hygiene
Family
Friends
Home
Care Inst
itutio
ns
11 November 2013
11
UK – The Government’s View
Stephen Dorell Secretary of State
for HealthMay 1996
11 November 2013
13
0
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20000
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35000
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45000
50000
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15000
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25000
30000
35000
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0
5000
10000
15000
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25000
30000
35000
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45000
50000
UK – Role of the State
Costs Shared
No Care Paid
Savings and Capital
£23,250
£14,250
Only Income Considered
11 November 2013
Critical
14
UK – Key Recommendations
11 November 2013
Asset threshol
d increased to
£100,000
Cap on lifetime contribution of
between £25,000 and £50,000
Eligibility criteria should be set on a
national basis.
Contribute
£7,000 -
£10,000 p.a to cover “hotel costs”
Dilnot
Upper capital will r
ise to
£118,000 and the lower
threshold to £17,000 from
2016
Cap to be set
at £72,000 from 2016
Pay an annual contribution
of £12,000 towards general
living expenses
Care Bill makes provision
for a national minimum
eligibility threshold.
15
UK – The Insurance Market
LTCI
Pre-funded Care Plans
Immediate Needs
Annuities
Secure / Deferred Plans
Enhanced Annuities
Equity Release
11 November 2013
Progr
ess
Comm
unity
Sessio
nal M
eetin
gs
Educa
tion
Wor
king
parti
es
Volunt
eerin
g
Resea
rch
Shapin
g th
e fu
ture
Networ
king
Profe
ssion
al su
ppor
t
Enter
prise
and
risk
Lear
ned
socie
ty
Oppor
tunit
y
Inte
rnat
ional
prof
ile
Jour
nals
Suppo
rting
Exper
tise
Spons
orsh
ip
Thoug
ht le
ader
ship
International PerspectiveWhere is LTC insurance a success?
11 November 2013
Global Leaders
11 November 2013 17
Experience
Volume
Over 20yrs
6m inforce 8m inforceGrowth
15% 12-13%
USA - Market Evolution
First product appears in 1974
Market takes off in the 1980s
Introduction of indemnity cover known as “reimbursement” products
Sales decline
6 insurers represent 80% of premium volume
Return to growth
11 November 2013 18
1980s
Mar
ket
Pro
duct
s
1990s 2000s
Refinement of “reimbursement” products
Strong growth in sales
Poor experience emerges
- Rate increases - Smaller companies exit
Fixed-benefit productsderived from health insurance
USA – Product Design
11 November 2013 19
Reimbursement model
Premium $ indemnity
$2‘000-$2‘500 pa
(£1‘250-£1‘550)
Limits
$150 (£90) per day5% pa escalation
60yr old
Max 3yrs
France - Market Evolution
Launch of LTC products derived from annuity products
Market dominated by 3 companies
Group contracts first marketed
Expansion of severity-based payments
11 November 2013 20
1980s
Mar
ket
Pro
duct
s
1990s 2000s
Fixed-benefit only covering severe loss of independence
Introduction of coverage for moderate dependency
New entrants
5 insurers now represent 70% of premiums
Fixed-benefit model
Premium € cash
€400-€500 pa
(£330-£420)
Severity-based
€200 (£170)per month
€600 (£500)per month
France – Product Design
11 November 2013 21
60yr old
Role of the State
11 November 2013 22
Public Private
Role of the State
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Public Private
Role of the State
11 November 2013 24
Public Private
France - Public Provision
11 November 2013
Public Health
Insurance
Complem-entary LTC
benefit
LTC Tax Benefits
25
Public Health Insurance
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Social Assistance
Universal Coverage of Medical Costs
Complementary State Benefit
Hotel costs
Dependence Costs
Medical costs
11 November 2013
Complementary State Benefit
APADependence€
varying by
At Home
InstitutionWealth Severity
27
Tax Incentives
Income Tax Deductions
Group schemes
Insurance payouts
France - Public Provision
11 November 2013 28
USA - Public Provision
11 November 2013
LTC Coverage
Who is covered?
Scheme
Public Provision
Medicare
Retirees
Limited
Medicaid
Poor
Covers LTC
29
Tax Benefits
USA - Public Provision
11 November 2013
Social Protection
Covers Medical
Expenses
Limited Income
LTC Benefits
In-kind
Not Cash
LTC from approved provider
Eligibility for LTC
Dependence
Personal resources exhausted
Medicaid
30
Global Leaders – Summary
11 November 2013 31
Still Niche Product
Products
Clarity
Range of Policies
32
Global View of LTC Insurance MarketIsrael
60% have some form of LTCI policy
11 November 2013
Israel – Public Provision
LTCIP
National Insurance Institute Providers
11 November 2013 33
Israel – Public Provision
Ministry of Health
Assessment Copay
11 November 2013 35
Individual Cover
Reimbursement of Actual Care
1st LTCI policy (1978)
ADLs Criterion
First Generation
LTCI 2.0
Highly Regulated
Min definitionfor ADLs
Min gate keeper trigger
Level premiumsfrom age 65
Competitive Pressure on Gate
Keepers
11 November 2013 36
Group Cover
4 sick funds provide basic health insurance
Supplementary Cover
LTCI
Group Policy with Private Insurance
Company
11 November 2013 37
Summary
11 November 2013 38
Progr
ess
Comm
unity
Sessio
nal M
eetin
gs
Educa
tion
Wor
king
parti
es
Volunt
eerin
g
Resea
rch
Shapin
g th
e fu
ture
Networ
king
Profe
ssion
al su
ppor
t
Enter
prise
and
risk
Lear
ned
socie
ty
Oppor
tunit
y
Inte
rnat
ional
prof
ile
Jour
nals
Suppo
rting
Exper
tise
Spons
orsh
ip
Thoug
ht le
ader
ship
Final ThoughtsWhat can the UK learn?
11 November 2013
LTC InsuranceUSA
Clearly defined Public Provision
France
Dovetailing of Public/Private
Israel
Automatic Enrolment
Drivers of Private Market Development
11 November 2013 40
Tax Incentives
Specific State Schemes
Learnings from Abroad
Conviction
11 November 2013 41
Different Approaches
Public/Private in Partnership
Variety of Policies
42
Expressions of individual views by members of the Institute and Faculty of Actuaries and its staff are encouraged.
The views expressed in this presentation are those of the presenter.
Questions Comments
11 November 2013
Long Term CareAn International PerspectiveEdd Moyle, Chris ReynoldsPartnerRe
11 November 2013