The rising cost of long-term care is the biggest reason for the state's current Medicaid budget woes.
One idea to save the state money is to encourage more people to buy private long term care insurance. Currently only two-point-six-percent of the state's over 50 population own policies.
New Hampshire Public Radio's Amy Quinton examines why so few people in the state have long term care insurance and what they need to think about before buying it.
65 year old Tim Gormley watched two aunts spend all their savings paying for nursing home care.
Average costs of care today can run from 50 to 100-thousand dollars a year.
Gormley didn't want the same thing to happen to him or his wife. So seven years ago, the Bow, New Hampshire resident decided to take out a long term care insurance policy.
"it gives me peace of mind, it gives me the feeling that my wife has added protection should anything happen to me and my children and grandchildren can benefit from some of the material that I've built over the years."
Gormley, a retired educator, was able to get a policy through the National Education Association.
For about 700 dollars a year in premium costs, his policy will pay for three years of either home health care or nursing home care.
Gormley says he's happy with his policy, even though he may never end up using it.
(I'm a five bypass second pacemaker kind of person, I don't really expect that I'm going to need it, but I have conservative approach to things -- I bought it just to protect my wife and assets for my children.)
Gormley's policy includes an inflation rider, so his coverage can go up in value over time. This kind of rider is a relatively recent innovation and points to the uncertainty surrounding this kind of insurance.
For Sutton, New Hampshire resident Bob Denz -- an inflation rider wasn't an option when he took out a policy more than 20 years ago. If a time comes when he needs it, the policy may not carry him very far.
And Denz cautions people to do their research before buying a policy, particularly if buying one early in life.
(Don't look at a long term care policy until you're at least in your 50's, if you get it in your 40's, lower premiums, attractive, but by the time you may go into a nursing home, chances are you're stuck with some things that are in that policy that you wouldn't want today)
Buying long-term care insurance can be a gamble.
While Denz and Gormley pay modest premiums, some long term care policies can be enormously expensive.
(the insurance is not appropriate for everybody)
Jeremy Benoit is a certified long term care insurance consultant for New England Employee Benefits Company.
(Some folks can buy the coverage for as little as 1,000 dollars per year, others as much as ten thousand dollars a year depending on when and what you're applying for.)
Some experts say consumers who don't have at least 100-thousand dollars in assets - not counting the value of their home - shouldn't even consider long term care insurance. For such people, it may be cheaper to spend down their savings until Medicaid kicks in.
Beyond getting financial advice before buying a policy, Benoit advises people to watch out for companies that have a track record of raising premiums, and look for companies that are going to be stable in the long run. Click here for more advice on buying long term care insurance (warning: this is a PDF file and may take a while to download).
Recent changes in the industry point to why consumers should be concerned about the fiscal health of the industry. Carl Austin, a financial analyst with A.M. Best, says fewer companies are writing the policies.
"it's come down quite a bit in the last few years, a number of companies have decided to get out because it was not meeting their profit expectations."
A number of factors are driving those low profits; companies have to pay high commissions up front, and people are holding on to their policies longer than expected.
Austin says because companies in the insurance industry had never offered the product before, they didn't know how much to charge consumers.
And he says it's still not totally clear.
(it's so new and the product has changed so much and the assumptions are different today than they were five years ago, it's still working out the kinks, and overtime I think companies will get it right, but right now it's a learning experience)
The companies may want to approach this kind of insurance with some caution, but the states don't.
They see long term care insurance as a major source of relief on strained state budgets.
New Hampshire wants to follow Connecticut's lead in offering incentives for people to purchase long term care insurance through so-called state partnership programs with private insurance carriers. It's part of New Hampshire's GraniteCare plan for Medicaid.
Jeremy Benoit says under these programs a person might buy, for example, a policy with a four year benefit.
"after that period of time the four years when the insurance company no longer pays for that individual's care, then the state Medicaid system would pick up the cost"
The person would still need to spend some of their own money, but would protect hundreds of thousands of dollars in assets.
On average, the state would come out ahead, because the average nursing home stay is less than four years. But the partnership program will only work if enough people buy into it. And New Hampshire Insurance Commissioner Roger Sevigny says the long term care insurance market isn't likely to grow dramatically.
We don't see that it's ever going to become a huge market, not everyone is going to purchase it, this isn't like car insurance where competition is fierce, long term care is still very different it's a product that's going to be considered as part of their financial planning process.
But even if long term care insurance catches on, the state won't see the savings for decades.
Connecticut's program that began in 1992, has so far saved the state only two million dollars. They don't expect to see significant savings for another 15 years.
For NHPR news, I'm Amy Quinton.
For more on Medicaid, read our Medicaid: Basic Facts page
