The "70%" LTCI Lie

(UPDATED on September 21, 2023, to include a new 2022 report from the Urban Institute and the US Department of Health and Human Services - see details and link below.)

Why do I keep harping on about this?

1. In any context related to LTC insurance "70%" is indeed a lie.
2. Its use creates a further loss in confidence from already-skeptical consumers.
3. Compliance matters in an increasingly fiduciary-focused marketplace.

Truth Matters

The original "70%" flaw: Neither one ADL nor four IADLs will trigger benefits in a TQ LTC insurance contract.

The problem is the study that kicked-off our misguided obsessions with "70%" clearly used impairment criteria that is significantly more liberal than HIPAA Tax-Qualified (TQ) LTC insurance benefit eligibility criteria. Specifically, Kemper, et al, 2005, used one (1) ADL or four (4) IADLs to get to its 69% conclusion - later infamously rounded up by HHS to "70%."

This is the "flaw" I have always harped on in using "70%" for the the risk of needing care in the context of TQ-LTC insurance.

The "NEW 70%"?

Another study, Johnson, 2019, appears to validate the use of "70%" in the context of LTC insurance by making a big deal out of how it looked at the risk of "having difficulty with two or more ADLs expected to last at least 90 days or severe cognitive impairment."

That sounds just like the HIPAA, TQ-LTC insurance benefit eligibility. But the author cheats:

The cheat - or inconsistency - presented deep in the report: "ADLs include getting in and out of bed, dressing,?walking across a room, bathing or showering, eating, and using the toilet."?[EMPHASIS ADDED]

A careful reading reveals that Johnson, 2019, does not ever claim to track "HIPAA TQ" eligibility triggers, and he does NOT use HIPAA TQ LTCI-compliant ADLs. Therefore we should not rely on it to support the use of "70%" for LTC insurance.

Johnson, 2019, drops "continence" from the list of ADLs which is not a big deal statistically I think, especially related to LTCI claims, but he adds the non-HIPAA-compliant "walking across a room" (i.e., "mobility" or "ambulating"). Anecdotally, from nearly 30-years of LTC experience, when "mobility" is considered a measure, as part of the ADL trigger, the need or the claim risk increases significantly.

"But, Bill, people should still know that a 70% chance of 'any kind of care' is a risk and should plan for it..."

I would agree, IF the use of "70%" were properly, fairly, fully explained and contextualized, which it never is when used by LTC insurance companies, marketing departments, wholesalers, distributors, and agents. When used as a stand-alone data point in a graphical meme, on a brochure, etc. published by an insurance company selling LTC insurance, what is the message? What is the conclusion that a consumer is supposed to make?

Right. That "70%" of people will need to use LTC insurance, which is a marketing lie.

You do not get a pass just because you can footnote the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation as the source. "70%" is still a lie in any context related to LTC insurance!

(HHS no longer cites "70%" on its longtermcare.gov website. It does now provide a link to the 2016 report highlighted below that shows 52% may need care at a HIPAA (LTCI) level.)

The [formerly] BEST LTC Insurance Risk Statistic: 52%

Favreault & Dey, 2016 - also published by HHS-ASPE - clearly and explicitly used the HIPAA TQ LTC "chronic illness" impairment/benefit eligibility standard to reach this conclusion:

"We estimate that about half (52%) of Americans turning 65 today will develop a disability serious enough to require LTSS..."

Favreault, 2016, is also consistent with LTC insurance industry claims and pricing data that suggests that about 50% of policyholders with a 0-day EP will receive at least $1 in benefits (33% with a 90-day EP will receive at least $1).

52% is still a very compelling risk stat if needed, and it is [was] the ONLY stat that is appropriate when used in any context related to a discussion or promotion of LTC insurance.

An UPDATE on the BEST LTC Insurance Risk Statistic: 56%

Johnson & Dey, 2022 - again published by HHS-ASPE - updates the data and risk of needing care at a level that could qualify for benefits from a tax-qualified LTC insurance policy as in Favreault, 2016, above.

This updated study and stat, used the same HIPAA TQ LTC "chronic illness" impairment/benefit eligibility standard as the 2016 study, but with a more recent and expanded data set.

"We estimate that over half (56%) of Americans turning 65 today will develop a disability serious enough to require LTSS..."

If you are promoting, marketing or selling LTC insurance and absolutely have to use a scary risk stat, the only credible statistic is now: 56%.

Want a DEEPER dive into these studies and why using "70%" in the context of selling LTC insurance is lazy and ineffective? Click here to read my article, "'70%' - It's Baaack! Kind of..."

?2021-2023 William E. Comfort