Overview

The diagnosis of dementia is a very expensive and long-term concern. It could be called a “misfit” within conventional health insurance structures that are more attuned to sudden physical problems, because its duration and consequences differ from the classic statistical modeling of heart or cancer losses, and there is no surgical or pharmaceutical “cure” to be paid for by an insurer. This level of multiple uncertainties complicates consideration of the merits of a long-term insurance funding system. And long-term care cost uncertainties are a multinational problem for many developed nations.

Paying for health insurance coverage is essential for many families, but today's need for acute health and tomorrow's need for covering the chronic costs of dementia are not treated the same by insurance purchasers. The cost of paying for long-term care insurance is important; but often the need is less well recognized, until it is too late for an applicant to be accepted by insurers. The prudence of purchasing long-term care insurance will probably appear to be a bargain, in retrospect, for those families which have experienced dementia care costs.

In recent years, some but not all of the costs of dementia care have been borne by Medicaid, the governmental health insurance program which is covered in Chapter 5 of this text. Neither program offers a perfect response for families who suddenly learn of the dementia diagnosis of their loved one, and they often erroneously expect that health insurance would pay the large bill for services.

Group health insurance has been a great benefit for American workers and for retirees in many employment and post-employment situations. The 1976 ERISA law provides a comprehensive federal oversight of the fairness of retirement health plan administration. And the converse is true— that when conflicts about coverage and policy interpretation arise, the preemption power of ERISA shields the large insurance plans from being challenged in state courts for unfairness in design of benefits and bad administrative decisions. If the employer offered a plan for long-term care coverage, then the federal standards would shield that plan from most state-court challenges.