London Market Monitor – 31 May 2022
Our May review of the markets and Solvency II discount rates.
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Robert Eaton: Hello, and welcome to Critical Point, a podcast brought to you by Milliman. I'm Robert Eaton, and I'll be your host today. On March 31st, President Biden proposed increasing federal support for home-based long-term care as part of his American jobs plan. For long-term care insurance carriers, or LTCI carriers, there are benefits and also some challenges to offering aging-in-place services to policyholders. Joining us today to discuss this important issues is Char Hu, CEO of Helper Bees, and Helper Bees is a healthcare insure-tech company that offers care concierge services for LTCI carriers and health plans. Char, how are you doing?
Char Hu: Great, happy to be here, Robert.
Robert Eaton: Good. Char and the Helper Bees have recently begun collaborating with Milliman's LARA, the long-term care advanced risk analytics, on addressing some of these challenges. And leading that effort with me is Milliman's Missy Gordon, from Minneapolis. Missy, hi, how are you doing?
Missy Gordon: Hey, I'm doing good, thanks, Robert.
Robert Eaton: Good, good. Why don't we start at the beginning. You know, what is the state of the long-term care market? You know, Joe Biden has proposed this large infrastructure plan, this obviously has a big impact on some of what we're doing in the long-term care industry, but Missy, I was thinking, could you tee us up and tell us kind of what's happening in the long-term care insurance market to begin with?
Missy Gordon: Yeah, Robert. Yeah, so, the long-term care market has really been faced with a lot of challenges as an industry. We've seen, you know, many companies needing significant reserve strengthening and needing large rate increases, and so it's kind of resulting in a lot of companies that are leaving that standalone market. Maybe a flip side to that, you know, we do see innovation in the hybrid market, and so that hybrid market is something that has been growing. We've seen a number of products that are life and annuity and combined with long-term care, that are kind of hedging some of those risks and adding value to the policyholders in companies. So, while that's growing, we still have, as a whole, though, the long-term care industries having these challenges. So, you know, long-term care coverage is, you know, really important, as again, the population continues to age. And so, what we've seen is that, while the industry has been faced a lot of rate increases, that policyholders are continuing to keep their coverage, because they really value this product and they have this need and so they know that that's something that they-- you know, is a value to them. So, really, companies are looking for ways in which they can, you know, manage what's really a risky product, but an important product, how they can manage these blocks of business going forward so that they can continue to pay these really valuable benefits to these policyholders as they age and are in need of care. I think it really brings us opportunities for innovation. We've seen these innovative initiatives that are allowing companies to target individuals who are in need of long-term care services, so that they can kind of step in and help individuals that need it the most with the services that are going to be most effective for them. You know, if they can intervene and help individuals stay in their homes longer, rather than going to facilities, that's lower cost to the payers. And, it's also, then, a beneficial to the policyholders. In general, people don't want to go into a nursing home. So, if there's services that help them stay at home longer, that's a win/win for them as well.
Robert Eaton: Yeah, Missy, that really resonates with me. I think I've seen some of the same trends that you have. You know, we have Char here, who's the Founder and CEO of a caregiving service, the Helper Bees. Char, is any of this resonating with you? I know you're not sort of a long-term care insurance industry veteran, but tell us how you kind of see the long-term care insurance marketplaces. Is what Missy's saying-- you know, does that resonate with you from a different angle?
Char Hu: Yeah, it does. Definitely not a long-term veteran. I remember-- I won't bore you with the story, but we asked the world's largest carrier what a TPA meant, four years ago, when we started pitching some of our software solutions. Fast-forward, it only took me four years to earn their business after that fantastic start. So-- but, we've had a crash course in long-term care insurance. We know long-term care support services really well from both a data and a tech delivery angle, and everything Missy says, I just-- I want to underline. Even though we've only been in the industry three to four years, I don't think a collaboration like ours would exist, even two and a half years ago. I think a lot of carriers now are thinking about innovation. Specifically, though-- innovation used to be just around digital tools for us, but now, specifically around delivery of care, everything Missy's talking about, of, hey, how do we go engage the policy holder in a way that's not a rate increase, because they're not giving up their policies. And, we have this massive problem that we know exists. Can we go and intervene-- can we provide the policy holder with something, just anything of value, because we know, if we don't, we're just going to get hammered. And, again, I think this is a very recent shift, and it presents interesting opportunities that Missy had talked about, both from a new product perspective-- again, as us, from a tech-enabled services, Robert, you'd mentioned, from caregiving to nursing assistance to geriatric care management, which is our care concierge program, So, it's a very fun time as an innovator, I think, and I think this-- our collaboration, and you all's data model is coming at exactly the right time, when the industry needs it.
Robert Eaton: Yeah, and I'm glad to hear you say that. I'm glad to hear our observations are sort of echoed in-- throughout the industry. Maybe just, if you could riff for a couple of minutes, you may have observed that we're sort of resurfacing, hopefully after the worst part of a global pandemic, how has that affected your business model? How does that relate to, you know, where I see this trend in the long-term care space is encouraging and assisting people to help them age healthily in place, you know? How has the pandemic factored into that at all. Tell me what your lessons learned have been, over the last 13 months.
Char Hu: Quite a bit. So, we happened to launch our care concierge program, which is what we're collaborating with you and Missy on, when it comes to pre-claimants-- we launched our on claims population I think February of last year, after about seven to eight months of deliberation and planning. Then, we get hit with the pandemic. Luckily, the entire time, we were always going to be virtual care management services. And so, what we got to do is test out, in an environment-- test out virtual care management in an environment that everything was virtual. And so, I think that's led to quite a bit of success and adoption from the industry in general around thinking about new tools and new ways to engage individuals. So, if I can think of anything in the long-term care insurance world that gives me quite a bit of confidence in the successful approach of any sort of new innovation is adoption rate by claimants, who-- even me, who we deal with claimants all of the time, from a front-line perspective, would have thought virtual technologies would have been poorly received. And I use this anecdote. When we were talking about our virtual nursing assessments, I thought we might get 50, 60% adoption rate. I would not have been surprised if we got 40% adoption rate, just because everyone thinks, you know, video conferencing is not for our demographic. Again, this is claimants, on the average age of 83, 84 years old. We have, on average, 93% adoption rate when it comes to video assessments and video nursing. So, that tells me, wow, the world is wide open for interventions. People are clamoring for new things. We have typecast individuals from claimants into a particular role, but imagine, now, our whole toolbox of innovation is available to us. And so, I think that's been interesting to see, from a claimant perspective. And then, a fairly quick shift from carriers, to be like, all right, what more do we have out there? How can we lean in to this sort of innovation pipeline? Let's see if it happens after the pandemic. You know, me, on the vendor side, is always worried that we're going to just sort of slam back into the old ways. But I'm very optimistic that that won't happen.
Robert Eaton: Yeah, it's a really interesting point. It's very positive, you know, what you've shared with us, and the experience you've had in the last, you know, nine or twelve months. You know, I think back to kind of the horrible headlines, which is that the fact that so many of the people that have died from COVID-19 have, you know, died in nursing homes and other kind of care facilities. These are typically the elderly, probably the more frail folks with other comorbidities. And unfortunately, that is a population-- you know, that is a population that usually needs long-term care. These are the policyholders that we're trying to ultimately serve. I'm really happy, Char, to hear that some of your services have really picked up in engagement. A number of Milliman actuaries assisted the Society of Actuaries, trying to look at COVID-19 experience. So that study is out there on the Society of Actuaries website. But that kind of leads me to think, you know, actually looking at COVID-19 experience is very difficult. It's emerging, you know? The data isn't quite there yet. And it reminds me how difficult it is to collect data on long-term care, just in general, even before Coronavirus. There's very little data available, you know? One of the things that Missy and I are working on with our long-term care advanced risk analytics, our LARA project, is to try to understand the data a little better for in-force policyholders, to help companies make decisions a little better, and, you know, Char, as you know, help us kind of collaborate with you. So, Missy, I'm kind of curious if you can give us a little bit more depth on, you know, how have data and predictive analytics really had an impact on the market? I know you're kind of deep in the predictive analytics, so I'm hoping you can share a little more with me on that.
Missy Gordon: Yeah, Robert, yeah, on the predictive analytics side, we've been analyzing long-term care experience and applying predictive analytic techniques to analyze that long-term care experience to develop projection assumptions for probably seven years now. We work with companies on their experience studies, we also work with applying predictive analytics and our long-term care industry data sets that we use to develop our long-term care guidelines. So, we've had a lot of experience in terms of how we can apply these kind of cutting-edge predictive analytic techniques, to analyze that experience. And so, that, so far, has been used by companies in terms of being able to refine and improve their financial projections, getting more accuracy, more understanding, relative to trends and patterns and interactions in this very complex product, and being able to remove some-- or understand where there's embedded margin in their long-term care projection assumptions. Now, using all that experience now, we're using those techniques, but now, we're supplementing with additional data, um we're able to better understand the current situation of policyholders. So, typically, for long-term care insurers, you know, you learn something about the policy holder when you issue a policy when they're in their 50s, and then you don't hear anything from them until they go on claim decades later. So, having this additional information, and understanding the current situation, allows us to better identify who is at risk of needing long-term care, so that way, companies can then identify those who may need services the most, and align those services so that they're most effective with those who need them. And again, hoping, with those earlier interventions, can avoid or prevent or delay a long-term care claim, helping individuals through services like what Char offers through the care concierge in the Helper Bees, allowing them to, you know, make changes, preventing a fall, helping them to age in place in their homes.
Robert Eaton: I think that's really important. It's a bit of progress, you know, in the long-term care insurance industry that I think is very welcome. You know, there's a big conference going on right now, and there's a specific aging in place track, and, you know, that's really showcasing that a lot of folks, both payers and providers, you know, partners in the industry, like we are at Milliman, are really kind of focused on this problem, with the benefit of hopefully kind of a rising tide in helping almost all of the stakeholders in this situation. You know, I want to kind of turn back to some of the comments Char had said earlier, you know, you're reaching people with more engagement, you know, and some folks who are already on-claim-- we're talking about actually reaching both those folks very effectively, but also people who might not yet be on-claim, you know? Missy mentioned kind of meeting people where they are, there are people who aren't yet eligible for a long-term care claim, but still might be able to use some of your services, and maybe help them age in place better, Char. So, you know, what is kind of the-- operationally, kind of what's a-- the best way to sort of implement some of those care concierge programs, even before people have a really acute, you know, long-term care need? What can you tell us about that?
Char Hu: Yeah, so, our initial program, which, as I had mentioned, was on-claims population, which I think was a good choice. Those were a little bit easier, from defining an ROI perspective, as you and perhaps a lot of the listeners know. Some of the difficulties we've had in launching what our industry I think mistakenly calls Wellness Program is because having to define a return on that investment has been really challenging, because of some of the issues that Missy and you had mentioned around data capture and an inability to really benchmark anything. So, our thought was, hey, we've got a bunch of on-claims data, let's go after the on-claims population, use that as a control study. And so, what we've started to do now, is to move upstream in the claims lifecycle, to pre-claims, those who might be at risk for opening a claim. And I think one of the keys is to think about, before deploying any sort of program like that, is understanding what the goals are. And ours is really a delaying a claim or, when you open a claim, reducing the severity of that claim. It's a nuanced point, but if you focus in on that, then the interventions and your analysis and your predictive analytics are all geared towards the same thing, which is, we're not solving aging, which is another thing you hear about. What we're trying to do is remove those preventable conditions that lead to acute care changes prematurely. And I think-- so, working with carriers to launch a program is making sure they understand that, you always inevitably have the ROI question. But then, working very carefully, for months, even, sometimes, beforehand, on crafting the population you want to target. If I could target, pinpoint, like a laser, those that are most able to benefit from our interventions, And I think spending time thinking through your population, crafting a control group, crafting success metrics, is how you start to implement this, and it's a lot easier than people think. We hear a lot of hesitation with some carriers, because-- I didn't realize this early on in our career, but even getting a referral in-- how do I get a referral? Meaning, a referral is, how do I tell you about a policy holder or a claimant that I want you to go do something for? A nursing assessment, find them a caregiver. That's sort of a big barrier. But it turns out, once you start to craft that control group and experimental group, that a lot of times the carriers sort of figure out how to get you batch referrals. It's a weird, nuanced point, but also, on the vendor side, it's something that we really have to think through. Because there's-- even all the innovative ideas we might have, once they run up against some of the hard and fast constraints of the admin platform, it can be challenging.
Robert Eaton: You bring up a great point, you know, getting that engagement and being able to follow through with it is a really important piece of this equation. I totally take your points about, you know, the idea of we're trying to kind of solve aging, or, you know, maybe we mishandle the terminology and call it kind of wellness. I do want to talk about sort of what makes, you know, all of us together in the same room pretty important, you know? Missy's talked a lot about the state of these policyholders, you know? Are they maybe in need of some services that would help them, you know, delay, you know, needing care in the home, or help them postpone a stay, a more acute stay, at a nursing facility. But then, what can we do with that? You know, we actuaries are great with the analysis, the numbers, we're really well-suited to advise our clients, but, Char, you're actually kind of the boots on the ground, as it were, sort of making a difference in some of the policyholders' lives. And can you then, Char, like expand on, you know, once you have an idea of a handful of people that really might need your services, how do you impact them? Like how do you actually kind of affect change in their lives? Maybe a couple of anecdotes from work that you've seen, that you all have done, or a couple of anecdotes that stick out to you. Can you walk me through a couple-- one or two examples?
Char Hu: Yeah, for sure. Not to get too pithy about it -- it's just opening a conversation. So, in general, it's just talking to individuals. Having a guide along the aging in place journey is incredibly important. Having done this for 12 years, I've got thousands of repetitions under our belt, but every single time you talk to an individual, typically, this is the first time that they're starting this process. It's either for a loved one, a spouse, or a family member, and they're lost. A 20-minute conversation is incredibly impactful, just to say, avoid these landmines, look at these resources, and have you thought about that? You can actually hear the relaxation on the other end of the line, because they feel like they have—they’re smart, intelligent individuals, but now you've got an expert whittling all the different choices down, say, hey, go and focus on that. So, in general, I think, that's the power of any sort of intervention program, is just talking to individuals. For some anecdotes, you know, depending on where you are in the spectrum of aging in place's issues, if I go all the way towards sort more acute-- you know, dementia. Dementia is something that our industry is fascinated with. The vast majority of claimants have some sort of cognitive impairment. You can't cure dementia, so you're going to ask, what sort of intervention is going to assist with that? Well, we treat dementia as a diagnosis, and I think the industry thinks about things in terms of the diagnoses. I think of things on pre-claims in terms of triggers. It's, what does dementia cause that would cause you to go to an institution? So, I use this example of dementia sometimes will cause somebody to wander or elope. Elopement is-- wandering is like, if they were in a room, somebody with dementia, Alzheimer's or other type, would be wandering around the room, walking in circles, and would not be able to sit down for any length of time. Elopement is, they're going out that door, that window, at all hours of the day. Of course, it happens a lot of times at night. Elopement is a major risk, which is why, sometimes, you'll see these sober alerts in different states. So, dementia is not going to cause this individual to prematurely go on-claim. The elopement risk will, because their primary caregiver is not sleeping at night, has to worry about the individual getting up at any hour, all hours of the day, walking down the street and potentially getting hit by a car. So, what we tend to do is talk to them about certain monitors, so motion sensing devices-- even moving the placement of the lock on the door-- and there's ways that you can do that so you don't incur a fire risk. These small little tweaks, which cost very, very little money, by the way, and are not reimbursed by the insurance carrier, can lead to the prevention of premature institutionalization. On the other end of the spectrum, we have things just like education. So, we had an individual who-- oftentimes, we're talking to their power of attorney, their point of care, their spouse, he had a stroke, and his wife was his primary caregiver. She wasn't strong enough to really transfer him, because he was essentially bed-bound-- he's developing a pressure ulcer. Pressure ulcers can really start to snowball. And so, what we ended up doing is just talking to his wife around sheet transfer techniques, which are known in our industry, where you just kind of use a sheet under an individual to shift their body. Pressure ulcers, you just need a little bit of a tweak to really help out. And so, we were able to just deliver educational videos and articles, and that had a pretty significant effect on his ability to remain at home.
Robert Eaton: I really love those examples, and those sorts of things kind of bring this full-circle, to me, to help us sort of understand, you know, how is what we're doing actually kind of like touching not just the ones and the zeros of the analyses, but also the atoms, the physical, you know, people whose lives, you know, and wellbeing is at stake here. You know, so--
Char Hu: I wanted to interject on that point, Robert, sorry. Like, you know, we do a lot of really important things as boots on the ground, as you put it, from interventions, but you just hit on something that I want to underline, that there's a lot of care management programs out there, and there's a lot of risk models out there, but there are very few-- why this collaboration is so interesting is that we feed each other. So, yes, we're doing really cool, great things from a geriatric care management perspective, we're doing it at scale, some of the most ambitious projects every launched. The key, though, is behind the scenes, it's all based on structured data. We're going to be able to create profiles to be predictive analytics, and we're going to feed the LARA model. And I think that's what's really powerful..
Robert Eaton: That's exactly right, is that, you know, we each have our kind of separate processes and relatively successful in understanding and learning from them, but when, you know, we are able to kind of learn from you and, as you said, we get data fees in a structured manner, and we're able to incorporate, you know, some of these results. And that's exactly, you know, why, Char, we started talking, I mean, it's almost years ago now, on this very idea, and how we can kind of blend the data we get from you, and the intelligence that we bring to the table.
Robert Eaton: There's one other thing about some of the work that we're doing that I'd like to raise, before maybe asking for some kind of closing statements from Missy and Char. The idea here is, you know, a couple of-- a couple fold. We're looking at a new set of industry data, you know? It's really important. We have a duty to kind of be ethical about the use of that data, you know? We need to ensure that, as we're going about creating out models and making, you know, recommendations, that unanticipated bias or proxy discrimination is really mitigated, and we're addressing that early on. I think it's really important for us to think about that through the entire process.
Char Hu: Robert, you were also saying this, like testing and learning. I mean, I think that is incredibly important, when long-term care insurers are thinking through initiatives like this. We don't know what's going to happen. We've got a great idea, and there's been a lot of thought that has gone into it, but it's a very exciting sort of new world. And the last thing I wanted to leave with is, we're talking a lot about long-term care insurance, but the way I view it, aging in place is becoming, just like you mentioned at the outset, is going to become a national issue. Long-term care insurance plays a very interesting role, because I believe the running point, when it comes to innovation interventions-- programs like this are very, very unique. I think the rest of the U.S. is going to look at what we're doing from a data interventions perspective, as to what the right answer is. So, you're talking about Medicare Advantage, Medicaid, long-term support services, and then, maybe, eventually, when Medicare proper starts providing services. So, I think we are at the start of an explosion of innovation, and I think data is going to lead that charge.
Robert Eaton: I couldn't agree more. I am really excited about the future. I was saying earlier today, for the first time in, you know, five, ten years, in the long-term care insurance industry, I feel like there's really-- there's really some buzz. There's really something to look forward to. So, with that, we'll wrap this up. Char and Missy, thank you for joining me. You've been listening to Critical Point, presented by Milliman. To listen to other episodes of this podcast, visit us at milliman.com. You can also find us on iTunes, Google Play, Spotify, and Stitcher. We'll see you next time.
Critical Point Episode 31: Long-term care insurance and the benefits and challenges of aging-in-place
This podcast episode explores aging-in-place, including potential policy changes, implications for payers and policyholders, recent innovations, and trends such as telehealth.