Keep government out of long term care insurance.

The Register advocated for government operated long term care insurance in its lead opinion on 7/15/2013.  (“Long-term care policies need attention”)  We don’t need or want a government financed program for long term care insurance.  President Obama backed out of a government sponsored long term care insurance program when he felt unable to promise that government would not some day step in and require taxpayers to subsidize the plan.  We have Medicaid for the poor.  That is enough.  If anything, our government should encourage people to buy long term care insurance and/or to save for their own long term health care needs.  Instead, our government seems content to keep interest rates artificially low so that people will borrow and spend.  Low interest rates reduce the returns that insurance companies earn on their reserves, which in turn causes them to increase their long term care insurance rates.  Letting interest rates rise to their natural levels would be one of the best ways for government to help improve the incomes of seniors, and help hold down the cost of long term care insurance.

Register editorial: http://www.desmoinesregister.com/comments/article/20130715/OPINION03/307150025/The-Register-s-Editorial-Long-term-care-policies-need-attention

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2 thoughts on “Keep government out of long term care insurance.

  1. Kurt,

    I agree with your opinion on this issue, but am confused by one of your assertions, specifically:

    “President Obama backed out of a government sponsored long term care insurance program when he felt unable to promise that government would not some day step in and require taxpayers to subsidize the plan.”

    I’m just wondering how you distinguish between a “government sponsored” plan and one where taxpayers subsidize the plan (i.e., can you have government sponsorship of anything without taxpayer subsidy?).

  2. John,

    It is theoretically possible for government to administer a program and charge all of the costs to the users of the program. Unfortunately, most often it does not work out. The historical pattern has been that the government undercharges and the taxpayers have to make up the difference. Federal Flood insurance was supposed to be self supporting. The Federal Pension Benefit Guarantee program was supposed to work that way. Crop insurance could work that way but doesn’t. Many defined pensions provided by governments have been dramatically underfunded. The ObamaCare long term care insurance plan required the President to certify (or something like that), that premiums collected would be actuarially solvent for a 75 year horizon. He did not think the plan as written in law could do that, so he declined to certify it and it never started.

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