House Panel Hears Doubts On Value Of LTC Tax Incentives
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Views on both sides of the question of the value of tax incentives for long term care insurance were presented at a House panel hearing last week.
Some witnesses at a hearing of the House Ways and Means Committee health subcommittee chaired by Rep. Nancy Johnson, R-Conn., presented arguments about why expanding tax breaks for private LTC insurance could encourage a higher percentage of high-income and moderate-income U.S. residents to take care of their own LTC needs, helping government health programs focus on meeting the needs of low-income LTC patients.
Other witnesses, however, presented testimony that suggests insurers may continue to face significant resistance to expansion of LTC insurance tax breaks.
Douglas Holtz-Eakin, director of the Congressional Budget Office, noted that private LTC insurance now covers only about 3% of LTC spending. CBO projections show private insurance could account for about 17% of LTC spending in 2020, but, at that rate, private insurers would continue to be paying a smaller share of patients LTC bills than Medicaid or Medicare, Holtz-Eakin said in testimony presented to the committee.
Dr. Meghan Gerety, a geriatrics professor at the University of Texas Health Science Center at San Antonio, said she does not believe private LTC insurance is now a viable option for many Americans.
"Tax incentives for private long term care insurance primarily benefit the higher income [consumer]," Gerety said. "Additionally, premiums are often unpredictable over the long term. Long term care insurance premiums often increase dramatically as individuals age, meaning that people drop their policies just when they need them most. In fact, as a baby boomer and a geriatrician, I have neglected to purchase a long term care policy because it is of limited value."
