Monday, August 24, 2009

"Death Tax" - not if, but to whom

Conservatives rail against confiscatory estate taxes, wondering why the fruit of folks' lifetime labors, already taxed along the way, should be plundered again when they try to pass it on to descendants, charities or institutions of their choice.

This makes me wonder why those on the right don't have more to say about another very real confiscation of estates, a "death tax" not imposed by government but gobbled up by the health care industry.

Statistics used by Genworth Financial, one of the largest and best regarded carriers of long term care insurance, indicate that 60% of people over age 65 will experience the need for expensive long term care.

The average current duration of care is 4 years (2.5 in a nursing facility plus 1.5 of home health services). Today's average cost is $4,500 per month, meaning an average exposure of $200,000 per individual.

It is expected that costs will increase at about 5% per year, leading to a $400,000 average individual exposure 15 years from now - $800,000 for a couple.

Medicare/Medicaid are very limited in their long term care coverage, and some skilled facility benefits don't kick in until pretty much all personal resources are exhausted.

Long term care insurance is one alternative, but the premiums are very expensive, exclude a number of pre-existing conditions, and can be risky if not carried by companies with a large risk-pool and documented history of reliable pay-outs and few consumer complaints. (Some positive approaches to LTC include employers being able to purchase it for employees, as the premiums are tax deductible for business owners, and adult children sharing the premium costs to provide policies for parents as a means to protecting the family resources.)

In all of the drama surrounding health care reform, these are the kinds of very real issues that do not get discussed or addressed. There's plenty of blame to go around - Conservatives can be faulted for protecting a cash cow system that wipes out estates but benefits a favored industry, while Liberals can be faulted for their refusal to state clear, targeted policies instead of the "comprehensive" (too big to read but with ample pork storage for favored interest group) boondoggles they prefer.

As I've blogged before, I have a second job parking cars at a medical center, which provides my family better health coverage than I can get through the available church plan. The other valets are mostly retired gents. They are from a variety of political perspectives (a bunch of guys in a booth are gonna talk politics, so I know).

Yesterday, several were talking about the health care reform "news." Most found the protests to be over the top, but also agreed that the the government has not put forward any clear policy to discuss.

All had anecdotes about friends or relatives losing everything due to long term medical care, usually late in life. One valet summed it up with, "I'm pretty stupid, and I don't know the answer, but something needs to be done. This just ain't right."

I agree. Why should any institution, be it the government, a particular business sector or some other important entity, have entitlement to confiscate the lifetime work of a citizen? Jesus didn't like it and said so to the earthly elites he faced.

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