Reminiscing Therapy and Dementia

In 1959, Erik Erikson published the first theory of personality that included older people. Before this, theories stopped at adulthood. His mentor, and father of psychodynamic therapy, Sigmund Freud, discounted older people since he believed they are not able to learn after the age of 50. Older age was defined as simply a decline from the apex of adulthood. This changed with Erikson’s final stage of personality development: Wisdom, Ego integrity vs. Despair. This stage related to those over the age of 65. The theory proposed that this is a time of acceptance of past life. By looking back and reconciling one’s accomplishments and losses, wisdom can be attained. If this process remains unfinished however then despair will ensue. Within this first theory of aging, “looking back” is integral to attaining wisdom and deflecting despair in older age.

At the same time, a new theory of older age emerged and can be traced to an earlier article published by Elaine Cumming, Lois Dean, David Newell, and Isabel McCaffrey in 1960. A year later Elaine Cumming and William Henry consolidated their thinking in a book, Growing Old: The Process of Disengagement which created such a backlash within the gerontology community. The idea behind this theory was to validate why older adults disengage from society. Criticisms of this theory were quick and harsh. But disengagement argument is much more subtle, and includes a discussion how society disengages older adults as worthless.

When older people face discrimination that insults their self-esteem, this creates conflict between one's past and the present self-concept.  One way to deal with this conflict—like any reaction to a trauma—is to move away. Older people move away from society in order not to get hurt. Around this time in 1964, in a book chapter, Robert (Bob) Butler argued that the vividness of the past is motivated by emotional needs in old age. These emotional needs he later labeled “ageism.”   Continuing with the Cumming and Henry argument that society mistreats older adults and that reminiscing allows older adults to maintain their sense of self.

Then in 1971 Charles Lewis in Reminiscing and Self-Concept in Old Age reported an experiment to test whether remembering the past allows older people to re-affirm their importance in the world. There were already studies showing that older men who reminisce tended to be less depressed and tended to have better survival (short-term studies.) But Lewis wanted to find out if reminiscing improved older men’s self-esteem especially after experiencing a threat. Lewis’s study showed that those that reminisce deflect some of today’s stressors by inflating one’s sense of self on the basis of past accomplishments or states. All of these set the stage for the pivotal experiment that was done in 1979.

Just under 40 years ago, a classic experiment became known as the counterclockwise study.  Then Harvard University social psychologist Ellen Langer and her colleagues conducted a strange experiment with a group of men between the ages of 75 and 80. For five days, the men were randomly assigned to one of two groups. Both groups were asked to imagine themselves at 55 years of age. One group was placed in an environment which mirrored the 1950s, with a redifusion (hard-wired radio), black and white tv with 1950s old radio and tv programs to match. Newspapers, magazine, decorations, furniture, food all matched the time period. While the second group was instructed to behave like they were 55 years old, but without the added environmental changes.
After only five days, the results were unexpected and dramatic. Men in both groups objectively looked younger by about three years, had improved hearing and memory, gained weight, increased muscle mass and had improved hand strength. These surprisingly quick results were more distinct for the group that lived “in time of their 50s” rather than the group that just reflected as their life was 20 years ago, although both groups improved.

Counterclockwise study catapulted the popularity of Reminiscing Therapy (RT). RT involves many variations. Traditionally—because it was the least expensive—RT involved the older adult discussing past activities, events and experiences. This was helped by the use of photographs, household and other familiar items from the past, music and archive sound and video recordings. Over the last decade, RT has become one of the most popular psychosocial interventions in dementia care. A quick review comes-up with more than 1,000 research papers published in 2016 on this topic. With a century of failures in finding any medication to help people with dementia, at least there was some hope that some therapy exists.

In 2005 Welsh scientist Bob Woods and his colleagues performed a review of four clinical trials—with controlled groups—and RT was found to improve thinking (cognition), mood and general behavior.  In addition, and as an added bonus, those caring for the patient also showed reduced level of stress and strain. Best of all, there were no known harmful effects. Outcomes that were again supported by more recent review in 2012 by Maria Cotelli and her colleagues. Although there are some reviews that show weak outcomes, the mounting evidence suggest that RT is—to varying degrees—effective in improving mood, thinking and well-being in patients with dementia. In a clinical area littered with failures, RT looked like a prime candidate for a miracle intervention. But how does it work?

Living with Alzheimer’s disease means to live in the moment, because the anchoring to the present and being able to predict a future has been disrupted.  Which explains why the placebo effect doesn’t appear to work with Alzheimer’s patients since they are unable to anticipate the future.  But could they relate to the past better, especially a time in the past when they were at their peak?  Anecdotally we know this to be the case.

Time constitutes an important factor in how we think of ourselves. The mind contains specialized areas for storing and retrieving knowledge about our personality traits across time. For example how we behaved as children.   People with dementia may be operating from knowledge of a former self, which may not match their current status. Neurological studies show how damage to certain brain structures result in very specific problems with time. So we know that time is an important function for the brain to process. Stanley Klein with the University of California Santa Barbara has studied this effect, summarizing these studies by identifying at least five functionally—and they argue—neurologically distinct components of how the brain stores time.

The brain is “concerned” with time. There is agreement among philosophers and neurologist that perception of time is an important human component. By thinking ourselves younger we allow our body and mind to behave as though we are younger and therefore we exercise these capacities more. Eventually such exercise improves our capacity. Becca Levy with Yale University and her colleagues has shown that positive age stereotypes, presented subliminally across multiple sessions in the community, lead to improved physical function that lasted for 3 weeks.  The same is true when competitive sportspersons are told that they are testing a new drug (placebo.) Not only do they perform better but their biomarkers all improve as well. This is not just a delusion, but an improvement. It seems that we have some control, or plasticity over our physical and mental functioning. And by pushing this plasticity—either up or down—we can modify our trajectory. This works with healthy sportspeople, people with dementia (because they can relate to the past) and also influence people’s longevity.

The idea that how we think of ourselves, regardless of our actual health, determines longevity seems outlandish. But numerous studies show just that. In a 23-year longitudinal study, Becca Levy reported that those individuals who had a more positive self-perception of aging lived an average of 7.5 years longer than did individuals with less positive self-perception of aging, even after adjusting for gender, socioeconomic status, loneliness, and functional health. In fact, perceived health was a better predictor of mortality than objective measured health (i.e., smoking and being overweight). Older adults who reported their health as poor, regardless of their actual health status, were six times more likely to die earlier than those who reported their health as excellent. We have some plasticity, some control over our physical health as well as mental health. We can “will” this plasticity.

The surprising outcome therefore, is that through Reminiscing Therapy, older adults with dementia are given a way to aspire to a time when they were better and this pushes them to try harder and as a result improve. Such plasticity is a degree change in a trajectory, not a cure.  Right now, there are some interesting developments in Reminiscing Therapy with dementia patients. The surprising take-home lesson for us is that it might also work for people without the disease, to push that plasticity as far as it will go to slow down that trajectory of aging.


References
Butler, R. (1964). The life review: An interpretation of reminiscence in the aged. In R. Kastenbaum (Ed.), New thoughts on old age. New York: Springer Co.

Erikson, E. H., Paul, I. H., Heider, F., & Gardner, R. W. (1959). Psychological issues (Vol. 1). International Universities Press.

Cumming, E., & Henry, W. (1961). Growing old. New York: Basic Books.

Langer, E. J. (2009). Counterclockwise. Random House Digital, Inc..

Some examples of Reminiscing Villages

Cedar Lake Village retirement community Olathe, Kansashttp://www.cbsnews.com/news/reminiscence-therapy-to-trigger-dementia-patients-memories/

The Meadows, assisted living facility in Elk Grove, CAhttp://www.providermagazine.com/archives/archives-2011/Pages/0611/Reminiscence%20Therapy%20Benefits%20LTC%20Residents.aspx

Town Square of George G. Glenner Alzheimer’s Family Centers, San Diego, CAhttp://www.sandiegouniontribune.com/news/health/sdut-glenner-center-town-square-san-diego-opera-2016sep08-story.html

Alexa Seniors’ Residence, Dresden, Germany
http://www.telegraph.co.uk/news/2017/03/02/dresden-retirement-home-recreates-communist-east-germany-helpresidents/

The Easton Home, an elder-care facility in Easton, Penn.http://abc7.com/health/reminiscence-therapy-helping-those-with-alzheimers-and-dementia/1125661/Complete dementia village, Hogewey, Weesp, Netherlands
http://www.alzheimers.net/2013-08-07/dementia-village/

© USA Copyrighted 2017 Mario D. Garrett  

Alzheimer's disease Repeating Failures

Chameleon Dementias

In 1976, a two-page editorial in the journal Archives of Neurology (now JAMA Neurology), penned by the neurologist Richard Katzman, transformed Alzheimer’s disease into an overnight sensation. The title of the paper emphasized the aim “The Prevalence and Malignancy of Alzheimer Disease: A Major Killer.” With the stroke of a pen, Alzheimer’s disease become the 4/5th killer in the world.

Katzman’s secret was simple. By eliminating the distinction between Alzheimer’s disease and senile (of old age) dementia Alzheimer’s disease become a major disease. Since “age” was the only reason that Alzheimer’s disease was defined as separate from senile (of old age) dementia—by Alois Alzheimer’s supervisor, Emil Kraepelin in 1912—this must have been difficult. But eliminating Alois Alzheimer’s definition proved surprisingly easy because there was no distinction in the first place. Katzman’s article by acknowledging this false distinction generated a lot of political capital in supporting the mission of the newly ordained National Institute on Aging. But if the reason for defining Alzheimer’s disease was wrong, what else is wrong with our interpretation of the disease?

And a hundred years later we still have no idea what causes dementia. Katzman threw us back into the past, and now, building upon this political tactic, researchers have again revisited the same issues that occupied them more than a hundred years ago.

History

From ancient Egyptians to the time of Alois Alzheimer in 1900s, dementia was known and rightfully, feared. Early Egyptians first document cases of what could be dementia more than two thousand BC. In a literary text from the beginning of the 2nd millennium BCE, a poem that damning description of aging is placed in the mouth of the embalmed city administrator and first historian Ptahhotep:

Senescence has come, elderliness descended.

Weakness has arrived, helplessness returns.

As one spends every night becoming more childish.

Eyesight has diminished, the ears become deaf.

Strength is perishing from my heart’s fatigue.

The mouth has fallen silent and cannot speak.

The heart is exhausted and fails to remember yesterday.

Bones ache because of length (of years).

Good has become evil.

All taste is gone.

What old age does to people,

Is evil in every respect

The nose is blocked and cannot breathe

from weakness in standing and sitting.

Throughout history, the diagnosis of dementia was confused with many other disorders. The cause was explained through the interpretative prism at the time. From the ancient Egyptians who conceived of dementia as a disease of the heart, to the middle ages where evil spirits invaded the body. Social norms and scientific fads at the time dictated how disease is explained, and dementia was no different. What was important in changing this was how we categorized diseases, especially dementia. And this formed in earnest in the late 1700s when French physicians took a more formal and objective approach to describing dementia.

Early French Scientists

We pick up the story in 1797 with the French psychiatrist, Philippe Pinel (1745-1826), who coined the term démence—deriving from the Latin de meaning "out of" and mens meaning "the mind." One of Pinel’s patients was a woman who over a period of just a few years, lost her memory, speech, and her ability to walk or use common household objects. After Pinel autopsied her brain. he described the woman’s brain as full of fluid and having dramatically shrunk to a third of normal size. In retrospect, Pinel’s patient is likely to have had normal pressure hydrocephalus (NPH). To this day NPH results in more than 9-14% of those admitted to nursing homes to be erroneously diagnosed with dementia. But despite this error, what was significant for the time was the identification of dementia as a biological disease.

After Pinel made this biological connection then it was up to another Frenchman, Jean Etienne Dominique Esquirol (1772-1840), to state more precisely the different types of dementias. Esquirol clearly distinguished dementia from mania—psychoses—and from mental deficiency. He also distinguished between acute, chronic and senile (of old age) dementia. His explanation is important as well since the different causes related to their distinguishing feature rather than their expression (i.e. they might be expressed in the same way). Acute dementia was short-lived, reversible, and followed a fever, haemorrhage or metastasis; chronic dementia was irreversible and caused by masturbation, melancholia, mania, hypochondria, epilepsy, paralysis and apoplexy; lastly, senile dementia resulted from old age, and consisted in a loss of the faculties of the understanding. Separating the observations of dementia into distinct categories based on what was assumed to be the cause, allowed for a more specific understanding of dementia. Although for senile dementia “age” was a good enough reason.

Pinel and Esquirol’s view that dementia was caused by many factors, was in contrast with the explanation used by a contemporary French physician Antoine Laurent Jessé Bayle (1799–1858).  Bayle view was that dementia was caused by an organic disease that caused swelling in the brain. Unknown at the time, Bayle was referring to the effect of long term syphilis infection. Bayle also observed that dementia progresses and becomes increasingly more severe. This interpretation was so influential at the time that dementia was also called Bayle’s disease and dementia paralytica.

By the late 1800s, French physicians already started engaging in a discussion about different types of dementia and identifying senile dementia, the initial observation of a biological cause of dementia, and the progressive nature of the disease.

German Scientists

While this discourse was going on, there was a parallel push to study dementia in Germany. The German scientists had a slightly different approach, including attracting a different name. Senile dementia was named as Presybyophrenia—from the Greek Presby meaning “old” and phrenia meaning of the “mind”—dementia of older age. This term was coined by the German physician Karl Ludwig Kahlbaum (1828–1899). With his associate Ewald Hecker (1843–1909), Kahlbaum introduced a classification system that applies terms that described the disease as expressed depending on biological developments in the body. These German physicians concentrated on nosology—how diseases are categorized. Their observations and methods have contributed to how we categorize disease today.

They argued that by grouping mental disorders based on how they are expressed ignores how the diseases progresses and how it affects the person. Supporting Pinel-Esquirol-Bayle contention that the cause of the disease should be the defining feature of the disease.  For example, a fever that comes on in a day and dissipates in a few days is very different from a fever that comes on slowly and lasts longer. Differences in how a disease progresses and the eventual outcome as a method of classifying different diseases proved providential. Kahlbaum and Hecker’s evaluation of earlier classification of diseases was that physicians were often prejudiced. By making judgements on how diseases are similar to each other, prevented physicians from gaining useful insights into its causes and how to address treatment.

There was a convergence between the French and German physicians at the turn of the 20th century. At the time the final stages of the bacterial infection of syphilis that results in dementia—neurosyphilis—was contributing to between 10-24% of all hospitalized mental health patients at the time. This is what led Bayle to identify physical causes of dementia but did not know that it was syphilis. In fact, Alois Alzheimer’s specialization—and how he met his wife, the widow of one of his patients—was as an expert in treating syphilis. In 1910, Alzheimer already knew of the connection between syphilis and the plaques and tangles that came to characterize his disease. This biological cause encouraged further parallels between an infection and senile dementia.

But both Kahlbaum and Hecker were moving away from simplistic explanations of diseases. Together with Emil Kraepelin (1856-1926), who later coined Alzheimer’s disease, these three men also shared a deep skepticism for the localization of behavior in the brain. Such brain explorations were becoming very popular during the latter half of the 19th century. Paul Broca (1824-1880) together with Carl Wernicke (1848-1905) were leading pioneering work on the localization of brain functions, specifically in speech. But Kahlbaum-Hecker-Kraepelin had bigger worries than such collegial competition.

Competition

The 1900s saw an explosion of academic proliferation. Some of the most famous scientists at the time included: Max Planck (quantum physics), Albert Einstein (physics), Marie Curie (X-rays), Sigmund Freud (psychoanalysis), Niels Bohr (physics), Ivan Panlov (medicine/psychology), Santiago Ramón y Cajal (neuroscience), Franz Boas (anthropology), Wilhelm Wundt (experimental psychology), Richard J. Ussher and Robert Warren (zoology), Ferdinand von Zeppelin (aeronautics) among many other. Together with the new science fiction of H. G. Wells, the early 1900s saw a proliferation of academic disciplines and new hope for the scientific method.

For the emerging study on dementia and the newly identified Alzheimer’s disease by Emil Kraepelin there were other considerations. Primarily there was the perceived (and real) threat that psychiatry was facing from psychoanalysis and from psychology. The case in point was the story of Anna O, now known as Bertha Pappenheim (1859–1936), whose psychoanalytic “cure” created fervor and excitement. An Austrian-Jewish feminist, Bertha Pappenheim suffered from hysteria—paralysis, convulsions, hallucinations and loss of speech—without apparent physical cause. Josef Breuer ostensibly succeeded in treating Anna by helping her to recall forgotten memories of traumatic events. Psychoanalysts proposed that physical symptoms are often the surface manifestations of deeply repressed conflicts. At the turn of the 1900s, after centuries of treating madness as a mystical curse, here was a clear answer and a clear solution. After distinguishing idiocy, epilepsy and cretinism, the remaining maladies had the possibility of being psychosomatic. In hindsight, we now know that these particular case studies—including Bertha Pappenheim—were not cured, and the likely cause of these expressions of hysteria were biological in nature.

In addition to the new vogue of psychoanalytic models, there was a complementary interpretation of disease championed by Kraepelin’s own mentor, Wilhelm Wundt. Kraepelin submitted his thesis on "The Influence of Acute Illness in the Causation of Mental Disorders" under Wundt, for which he received his medical degree in 1878.  A year later Wundt founded the first formal laboratory for psychological research at the University of Leipzig. Wundt and experimental psychologists promoted the idea that we learn how to behave, including when we are behaving abnormally, a theory very much in keeping with the psychoanalyst’s view of disease. At the turn of the century in Germany, psychological theories were becoming the new norm. Kraepelin and his staff did not approve of this interpretation of mental illness. Max Isserlin, an assistant to Kraepelin, made disparaging remarks about psychoanalyses being “complex mythology” which Freud identified as arguments coming “from the blackest clique in Munich,” referring to Kraepelin’s clinical staff. Such animosity ultimately lead to Isserlin being personally expelled by Jung in 1910, from the Congress of the Psychoanalytical Association in Nuremberg. Despite such obvious animosity, there was an intellectual challenge as well. While psychologists and psychoanalysts repeatedly believed that they were gaining ground in understanding mental diseases, what did psychiatry have to offer?

Kraepelin, a seasoned administrator, was aware of this constant yearning for answers. Yearnings for a panacea were real. Kraepelin needed to distinguish psychiatry from the “learning” of the psychologists and the “unconscious” of the psychoanalysts. In doing so he had to resort back to the biology of mental illness. Psychiatry could contribute the biological aspect of mental health.

The contribution of Biology

Kraepelin (with Eugen Bleuler) gained a different kind of success by differentiating schizophrenia from a variety of mental disorders.  The 1880 U.S. Census only distinguished seven categories of mental illness: mania, melancholia, monomania, paresis, dementia, dipsomania, and epilepsy. Psychosis was categorized as hysteria, melancholy, mania, and paranoia. Within this morass of disorders, Kraeplein differentiated between premature (praecox) dementia (schizophrenia) and ‘manic depression’ as two separate forms of psychosis. Although schizophrenia was already described as dementia praecox, first in 1852 by the French physician Bénédict Morel and later in 1886 by Heinrich Schule, it was Arnold Pick in 1891 who defined schizophrenia as a psychotic disorder (hebephrenia from the Greek hebe “young,” and phrenia “mind”). In 1911, Eugen Bleuler revised this idea, renaming ‘dementia praecox’ (premature dementia) as schizophrenia. 

Kraepelin reverted back to the earlier French scientists Pinel-Esquirol-Bayle in arguing for a biological cause to schizophrenia by anatomical or toxic processes (as yet unknown.) When, on his second attempt, Alzheimer managed to publish his observations on Auguste Deter, Kraepelin jumped at the chance to reinforce the biological emphasis of disease by elevating Alzheimer’s disease as different from senile dementia. As with schizophrenia Kraepelin was intimating that Alzheimer’s disease is caused by anatomical or toxic processes which are yet unknown.

Fast forward to 2017, with increasingly powerful biological tools that are now available we are about to enter this portal that was created more than a century ago.

Biomarkers

Alzheimer’s disease guidelines published in 2011 by the U.S. National Institute on Aging and Alzheimer Association, has attempted to define how biological measures can be usefully classifying mental diseases. As with the early pioneers Kahlbaum, Hecker, and Kraepelin, a new method is being devised to better answer the question of what dementia is.  Current psychiatric classification of diseases—Diagnostic and Statistical Manual (DSM-5) and International Classification of Disease (ICD-10)—are focused on being reliable but are short on validity. Repeating the conflict between the early German and French scientists more than a hundred years ago, there is now a shift from surface expression of the disease to search for the underlying causes, except now we can measure biological indicators better than in the past.

To enable this biological emphasis, and in contrast to the DSM-5 and ICD-10, a new classification criterion is being promoted. Research Domain Criteria (RDoC) is a new classification of diseases initiated by the U.S. National Institute of Mental Health director Thomas Insel. Insel now works for Google Life Sciences with a new name: Verily, a for-profit health company. RDoC argues that mental disorders are biological disorders involving brain circuits. And the first test of RDoC’s approach is with dementia. Mirroring Bayle’s 1882 contention that inflammation of membranes that surround the brain and the spinal cord resulted in mental disease, RDoC is following a long line of psychiatrists looking for biological markers to mental health.

Biological determinism of dementia.

There are many faults with RDoC’s focus on neural circuits which excludes research on psychological processes and mechanisms. This is nothing new and we only have to see the arguments in the late 1800s to understand these criticisms. For example, Bayle’s colleagues, especially Esquirol, argued that although there might be correlation there is no indication of causation. Even if causation can be identified it does not explain all dementias. And there are other concerns that were voiced earlier on in the history. Especially by Erich Hoche (1865-1943) on our inability to accurately identifying mental disease; Karl Birnbaum (1878-1950) on how disorders are expressed differently by individuals or cultures; Robert Gaupp (1870-1953) on psychosomatic factors that involve mental, emotional, or behavioral factors. And of course, we now know that that these criticisms remain valid to this day. RDoC simple brushes them away, not by ignoring these factors, but by discounting their influence and importance. It succeeds in doing this because it is concentrating on dementia.

We still do not know what dementia is. The basic issue is a catch 22—in order to be able to differentiate diseases we need to understand their causes and to understand the causes we need to be able to differentiate it. We must be aware of the history in order to stop this cycle of oscillating between the false dichotomy of biological vs everything else. Normality is not simply the absence of pathology. Many symptoms exist on a spectrum or continuum from mild expressions that might be viewed as variants of normality through to severe symptoms associated with impairment. One way to escape this conundrum is to ignore the expression of the disease and to accept the underlying “cause” as proof. But what RDoC ignores is that there are many biological markers and that the brain is the most complex entity in the universe. In such circumstance then you have to approach dementia as a public health issue, where many causes are present. An approach which RDoC continues to ignore. Could it be because  you cannot commercialize public health?

References

Engstrom, E. J. (2016). Tempering madness: Emil Kraepelin’s research on affective disorders. Osiris, 31(1), 163-180.

Garrett, M. D., & Valle, R. (2015). A New Public Health Paradigm for Alzheimer’s Disease Research. SOJ Neurol, 2(1), 1-9.

Kendler, K. S., & Engstrom, E. J. (2016). Kahlbaum, Hecker, and Kraepelin and the transition from psychiatric symptom complexes to empirical disease forms. American Journal of Psychiatry, appi-ajp.

Kurt, C.S. et al., The Realities of Ageing, Boston, 1990.

Wundt, W. (1881). Wilhelm Wundt to Emil Kraepelin, 23 January 1881. Max Wundt Papers: University of Tübingen Archives, 228, 17.

© USA Copyrighted 2017 Mario D. Garrett  

The Rise and Fall of Long Term Care Insurance

This year two small insurance units of Penn Treaty American Corporation—with combined assets of about $600 million but with liabilities topping $4 billion—will go bankrupt. This is unlikely to affect many of the largest insurance companies in the country that sell long-term care insurance including (in order of market share) Genworth Financial, John Hancock, Metropolitan, CONSECO, UNUM, AEGON, Prudential of America, Northwestern Mutual, Ameriprise and New York Life.

Long-term care (LTC) insurance policies cover services and may cover custodial care, home health care, hospice care, assisted living care, adult day care and skilled nursing care. These are services not eligible to individuals through Medicare or Medicaid. Although Medicaid, a federal and state program does pay for nursing homes, it is available only to the poor or if you can “spend down” your assets to show that you are destitute and therefore eligible.

The two Penn Treaty insurers had about 79,000 long-term-care policyholders. Each state has a guaranty fund. For now, and this will likely change, policyholders will retain coverage through such a guarantee association funded by other insurers and tax payers. However, in most states, their claims will be capped at $300,000, which for nursing home residency optimistically covers about 5 years of service.

Regulators knew that Penn Treaty’s plan were trying to undercut the market by unrealistic premiums and wrong market assumptions. It was impossible for Penn Treaty to cover their liabilities from the start. They were designed to default.  While the insurers walk away with their profits and bonuses, the public, state and other insurance companies are left to cover the cost. Eugene Woznicki, chairman of the board at parent company Penn Treaty American Corp remains busy selling insurance across many states under the Affordable Care Act.

The private insurance is only a small player—less than 8%—in the National Long Term Insurance market. Medicaid covers half of the market and is the largest player, followed by out of pocket (19%) and other public insurance (21%). The interest in long term care insurance is that it is likely to grow under the incoming administration. With Medicaid and Medicare in line to being pared down, private insurance might see a resurgence.  Long Term Services and Support have changed over the last twenty years. Older adults have been using more home and community-based services (HCBS). This is partly the preference for older adults to remain in their home, partly due to costs, and partly due to states’ obligations under the Supreme Court’s Olmstead decision which requires states to support people in the community in order to limit unnecessary institutionalization.

On the other side of the coin, potential long-term care expenditures represent a significant source of financial uncertainty for most older adults. Although only about one-third of current 65 year olds will ever enter a nursing home, and that most nursing home stays will last less than a year, there is a great fear that personal accumulated reserves to cover such costs will be insufficient. We see this psychological fear with those older adults that spend down their assets in order to become eligible for Medicaid.

In order to be eligible for Medicaid applicants must have no more than $2,000 in "countable" assets, an amount that varies by state. Applicants may protect their joint savings by spending them on non-countable assets such as a new home, prepaying funeral expenses, paying off a mortgage and other costs allowed by the state. The SCAN Foundation did a study in 2013 of who these older adults are, why did they spend down?  SCAN Foundation found that they made up almost 10 percent of the 50 years and older Medicaid eligibility population. About half of the people who spend down to Medicaid eligibility did not use any Long Term Services and Supports (LTSS) but stayed in the community using personal care services. Most have disproportionately lower income and have substantially fewer assets than people who do not spend down.  What this tells us is that these were worried older adults. They did not want to be a burden on their children and did not have enough capital—or incentive—to buy long term care insurance. Being eligible for Medicaid was their long-term insurance. This is a psychological strategy to address their fear, rather than an economic strategy to gain from the system.  These people are what the market calls the “middle mass,” the 55‐64 age group with an average annual income of $75,000, and total average assets (excluding home value) of just over $100,000.  Representing 83 percent of the target market for LTC insurance.

Without any changes in policy, we can see that Medicaid will continue to bear the cost of long term care for an increasing number of “middle mass” Americans. But we know that the new Republican Congress is forecasted to chop down Medicaid’s budget and allow States to have more control. Promoting more home and community-based services is one option, but that will not be nearly enough as already more than half of Medicaid’s budget is devoted to these services. The reality is that nursing homes are already perceived as a last resort for older adults. But the rise in dementia will see this unattractive and unwanted option becoming the only perceived option. A 1998 study estimated that nearly half of all LTC claims were related to dementia, and it is not cheap. According to a 2015 Cost of Care Survey, the nationwide average daily rate for a private room is $250 and in a semiprivate room is $220, which equals $91,250 and $80,300 per year respectively.

Promoting voluntary enrollment into private or public insurance is unlikely to attract enough people to reduce the nation’s dependence on Medicaid. We have tried that before. LTC insurance which started in 1974 got a bad rap from the start. Low‐income individuals were sold policies with premiums they ultimately could not afford; agents could convince people to cancel their current policy and replace it with a new one in order for them to gain additional commission; insurers that previously did not review health status when they issued the policy could later cancel policies on the grounds of pre‐existing conditions. Some of these irregularities were later addressed under two acts, the Long‐Term Care Insurance Model Act (1987) and Long‐Term Care Insurance Model Regulation (1988) when the market began to be better regulated.

At this time, when there is going to be a greater reliance on LTC insurance, the bankruptcy of Penn Treaty and the seeming culpability of the regulators in allowing this to happen, despite early warnings, does not bode well.

Making LTC insurance more attractive will mean mandatory insurance options with lower premiums in order to cover more older adults. Private insurance will need to pay for a higher proportion of LTSS spending, and reduce the number of people who spend down to become eligible for Medicaid. This is “ultimately the nation’s central long‐term challenge in setting federal fiscal policy.” In 2008, the Congressional Budget Office (CBO) wrote that “future growth in spending per beneficiary for Medicare and Medicaid ... will be the most important determinant of long‐term trends in federal spending.”

We have been here before. In March 2010, the controversial “CLASS Act” was signed into law by President Obama, which was designed to attract higher enrollment from lower middle class, but it was quickly repealed in 2013 as it was found to be untenable—referred to a “Ponzi scheme”. Unfortunately, LTC insurance still has a bad rap. LTC policies from the early 1980s and 1990s were underpriced, promised too much, designed contracts that were too loose, and assumptions about potential costs that were knowingly optimistic. Unfortunately, in order to compete, all other companies were as optimistic about the capacity to cover their liabilities as the most adventurous of companies. It as a race to the bottom. In the end the mathematics did not add up and for some, like Penn Treaty, they had to fold, while for the rest of the insurance companies they had to raise their rates. For example, in 2010, John Hancock requested a 40 percent rate increase for the majority of its LTC policyholders, while AIG, MetLife and Lincoln National (LNC) all requested increases between 10 and 40 percent.

The solutions are not straightforward. A 2014 Society of Actuaries report by the industry, delves into some of the complexity of fixing the LTC insurance market, but it is nuanced. Whether the new Republican Congress will address non-binary solutions remains to be seen. Especially when there is great fear out there about long term care and the industry remains sullied. The bankruptcy of a small LTC insurance company does not bode well for financing of long term care for older Americans.

References

2014 An Overview of the U.S. LTC Insurance Market - Society of Actuaries

https://www.soa.org/Library/Monographs/Retirement-Systems/managing-impact-ltc/2014/mono-2014-ltc-manage-narva.pdf

2008 CBO Chapter 2 The Long-Term Outlook for Medicare, Medicaid, and Total Health Care Spending

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/102xx/doc10297/chapter2.5.1.shtml

2013 SCAN Foundation spend down study

http://www.thescanfoundation.org/sites/default/files/tsf_ltc-financing_medicaid-spend-down-implications_wiener-tumlinson_3-20-13.pdf

Macdonald, A., & Pritchard, D. (2001). Genetics, Alzheimer’s Disease, and Long‐Term Care Insurance. North American Actuarial Journal, 5 (2); 54‐78.

© USA Copyrighted 2016 Mario D. Garrett