Previous efforts to establish public long-term care protections have foundered. In 2010, the Affordable Care Act included the CLASS Act, a legacy of Senator Edward M. Kennedy that would have created a voluntary long-term care insurance program. The Obama administration eventually deemed it unworkable, and “it never saw the light of day,” Dr. Frank said.
The private market has also contracted. Most of the largest companies selling long-term care insurance — Genworth, John Hancock, MetLife — have exited the market. The return on their investments plummeted when interest rates fell after the Great Recession, and the number of insured people who abandoned their policies — a profitable development for insurers — was far below projections.
“The psychology of the industry was: Holy smokes, we’re losing money! We’re getting out,” said Claude Thau, who directs the annual Milliman Long-Term Care Insurance Survey. As premiums spiked to cover the losses, consumers such as Ms. Haggett stopped buying policies. Moreover, Mr. Thau estimated, one in six applicants is unable to get coverage for health reasons.
Thus, fewer than 35,000 Americans bought stand-alone policies in 2024, compared with about 235,000 in 2010, according to a report from LIMRA, a trade association. The average 60-year-old purchaser would, at age 80, receive a projected maximum benefit of $369 a day, Milliman reported. But the average annual premium on new stand-alone policies in 2024 — $3,265 — can seem daunting to someone close to retirement.
As the purchase of stand-alone policies has dropped, insurance companies have turned to policies bundling some long-term care benefits with life insurance or annuities. Those sales figures are climbing. Still, the association notes, only 3 percent of Americans over age 50 have any long-term care insurance.