HEARING - U.S. Senate Special Committee on Aging

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little bit past the age where we are seeking to interest them in
taking advantage of what may be offered.
But the basic point, I think, is less one of education than of the
affordability. So let us come back to that.
Mr. SHAPLAND. Affordability. OK.
Senator WILSON. You say that the industry is in its infancy in
addressing this problem. I guess the question is you have got something
of a chicken-and-egg situation in that it would appear that
were it more affordable, there would be a much larger market. Possibly,
if there were a much larger market, it would be more affordable.
Now, one of the basic questions facing this committee and this
Congress, it seems to me, is to whatever extent we move in the
area of expanding health care coverage, we have got what you describe
as many options-at least two that I see. One is for the taxpayers
to pay it in terms of a direct subsidy. The other is to pay for
it in what is termed a tax expenditure. By that, I mean what it will
cost the Federal Government by way of lost revenues if we give, let
us say, an individual policyholder a tax deduction for premiums
paid for that kind of extended health care coverage.
I assume that the industry has a position as to which of these
two options is preferable.
Mr. SHAPLAND. I am sorry, I cannot remember what the first
option was that you mentioned.
Senator WILSON. Well, it is direct subsidy by taxpayers, or indirect
by a tax deduction.
Mr. SHAPLAND. Well, there are lots of ways to subsidize. You can
have direct vouchers to help pay premiums. You can have it taxdeductible
as an itemized expense, and so on. I think that no
matter how you do it, the Government has to ask itself whether it
has any money to do anything. And then the second question is if
it does spend some money, is it really seed money that is going to
return many-fold, because if you get, with a little bit of help,
people to buy long-term care insurance, that could save-who
knows-10, 20, 30 times as much money down the road in Medicaid,
because people would be funding this thing out of their own
pockets with a little bit of encouragement from the Government,
dollar-wise, and then they would not be on Medicaid when they do
go on long-term care, and that saves Medicaid dollars.
I do not know how you make the calculations of how much you
would get back for that seed money, but that is one of the questions
I think you need to wrestle with.
Senator WILSON. What is the industry doing, or at least the
members of the industry who are members of your association, to
address this question? Are any of your members now providing
long-term care to any significant audience?
Mr. SHAPLAND. We are offering long-term care insurance to anybody
who will buy it. The Health Insurance Association itself has
had many educational meetings for its members, trying to point
out that, gee, you guys ought to get into this market because it is a
terrific market, because everybody needs insurance, so obviously,
any time there is a need, there is a market. And the insurance
companies have gone through an educational process. As I said, it
is a fairly new market for us to be in, and we have gone through