Managing Long Term Care Insurance

A new national battle about managed care is starting to emerge. This time the combat will be about how insurers market and manage long term care insurance.

Charles Duhigg of the New York Times fired the first journalistic salvo six months ago in his powerful article “Aged, Frail and Denied Care by Their Insurers.” Since then the House Committee on Energy and Commerce and the Senate Finance Committee have launched investigations of the long term care industry.

The aging population makes long term care a central social issue. Not surprisingly, insurance to offset the cost of long term care is a growing sector of the insurance market.

Even in a country as wealthy as the U.S. demand for services virtually always exceeds what the available resources will supply. To meet the needs of an insured population limits must be set, and limits are inherently painful.

Most people, however, understand that limits are part of life and are prepared to accept limits set by a legitimate authority in a fair manner. In a 1998 Health Affairs article on “The Ethics of Accountability in Managed Care Reform ” Norman Daniels and I called for greater transparency in health care limit-setting, open deliberation that explicitly considers the needs of individuals (the “numerator”) and the needs of the population that makes up the insurance pool (the “denominator”), and a robust appeals process. We called this “accountability for reasonableness,” and argued that without it limit-setting will not be seen as legitimate or fair.

Congress can make a real contribution if it (a) acknowledges the need for limits and (b) proposes new and better ways of managing the limit-setting process. Bad apple companies and practices must be rooted out. But punishing the Enrons and Tycos of the insurance world will not take away the need for limits. I hope Congress helps our body politic grow up rather then allowing us to pretend that if we only get rid of the bad actors we will be able to ascend a limitless rock candy mountain.