Whether someone will need long-term care (LTC) in their old age is one of the most difficult risks to calculate, given its complexities. It is a very long term risk and it is hard to predict what the world will be like in 50, or even 20, years from now, when people who have taken out policies today will begin to make their claims. Will life expectancy continue to increase at the rates we see today? Will diseases be better managed in the future thanks to further advances in medical technology? Will dependent people live longer thanks to these advances?
On October 26, 2016, AXA Experts and Researchers met for a day-long conference entitled “Long-term care…short-term challenges?” The goal of this conference was to bring together leading academics and insurance experts from around the world to discuss the fundamental questions and difficulties surrounding long-term care and how this care will be financed in the future as the world’s population ages and existing public insurance schemes are no longer adapted.
Discover the welcome remarks by Alban de Mailly Nesle, Chief Risk Officer of AXA Group.
Watch the live testimonials of academics an AXA experts.
Discover the closing remarks of the conference with Mohamed Baccouche, Life, Savings & Health Chief Risk Officer of AXA Group, and Christian Thimann, Group Head of Regulation, Sustainability and Insurance Foresight of AXA Group.
Three main questions
AXA as an insurer has a key role to play in developing LTC funding solutions but it needs to better understand and anticipate the risks specifically related to LTC, and price its policies accordingly. It also needs to make sure that it offers cover to its policy holders that will be effective and affordable in 20, 30 or even 50 years down the road.
There are three main questions to answer in this context, explained Alban de Mailly Nesle in his conference opening talk. The first is: how should we deal with the different definitions of LTC, which vary from country to country and sometimes even between public and private sectors in the same country? The second is: what are the risk factors associated with regards to cognitive impairment (CI) in a population that is living ever longer? Will neurodegenerative diseases occur later on in life or at the ages that we see today? Thirdly: what can we learn from existing public policy models of funding LTC around the world and the impact of advances in science and technology in improving these models?
These three questions were addressed in three separate workshops that brought together AXA experts and academic guests representing various disciplines that included demography, economy, sociology, gerontology, neurobiology and psychology.
Workshop 1: Speaking the same language: LTC definitions and cross-country relevance
What is available in terms of LTC funding solutions in a given country today is complicated given that definitions can change over time - either for economic reasons, or as perceptions of what dependency entails change. As mentioned, LTC itself needs to be defined, and insurers then need to be able to put a price on such a definition. The insured also needs to know what criteria he must meet to be adequately covered.
Disparate assessment grids
Although Activities of Daily Living (ADL) and Instrumental Activities of Daily Living (IADL) are consensually used in the literature, each country also often has its own assessment “grid” – for what constitutes loss of autonomy or partial autonomy – and for insurers these grids can be difficult to follow, leading them to use other standards. Cognitive impairment is even more difficult to assess and how to predict the amount of benefit that will be paid out to a person so impaired in the future even more so.
In the complex, evolving world that is ours, how can we predict the cost of care in decades from when a policy is purchased? We do not know what type of care we might need or, as mentioned, to what extent medicine and technology will have advanced to help us. As a result, it is impossible at the present time for an insurer to guarantee the full costs of any LTC.
Hybrid models, profit-sharing schemes, indexed benefits and graded products?
One solution to this problem might involve a hybrid model that takes into account short, medium and long-term risks, suggests Prof. Tom Kirkwood of Newcastle University and Chairman of the AXA Research Fund Scientific Board . These would be, for example, the probability of getting cancer, cardiovascular and Alzheimer’s diseases respectively. “Events such as hospitalization also need to be taken into account, so should part of the insurance product be given over to hospital stays?” asks Prof. Dorly Deeg of VU University Medical Centre Amsterdam in The Netherlands.
Sometimes, top-ups to a cash payout might be needed, and these might be easier to implement in the future if interest rates were to rise from the very low rates we see today. Benefits might also be indexed (to take into account inflation) and longevity as a whole over the population better modeled too. The amount paid out when needed might also be graded according to the degree of a person’s disability, says Prof Kirkwood.
“One way to overcome this problem would be to provide different products for different stages across a person’s life,” he adds. “Medical diagnoses would be crucial here but would not be sufficient on their own to assess whether someone requires LTC or not. What is more, assessment has become more aggressive in recent years in many countries, and people who would have been previously entitled to a LTC cash payout or reimbursement for medical treatment or care no longer are.” This produces another source of heterogeneity in longitudinal studies.
Workshop 2: Insights into Cognitive Impairments
What are the risk factors associated with cognitive impairment (CI)? And as people live longer, will we see an increase in the prevalence of such impairment?
To answer these questions, we first need to clearly define what CI is (be it moderate, severe or mild). This is no easy task since there are many methods to assess whether a person has CI or not. It is much easier, for example to define what cancer is, now that we have better diagnostic processes and understanding of this disease. One such measurement is the MMSE Examination/Folstein’s test, which includes around 30 questions relating to reasoning and understanding, memory, orientation in time and space, problem solving, attention, language and counting. Another is the Blessed Test B and involves a 36-point questionnaire.
These tests are consensually used and they are the only ones available today for longitudinal studies that last a long enough period of time. However, many medical professionals consider these tests as imperfect: half of the people diagnosed as mentally impaired are actually suffering from severe depression – a disease that can be treated. The assessments also need to be repeated many times to be meaningful, but the problem here is that as people re-sit the tests, they begin to answer “by rote” and their feedback becomes less objective.
CI is a heterogeneous, multifactorial disease area
The goal of this 2nd workshop was also to discuss the global trends in CI that we are currently observing. For example, data from Prof. Carol Jagger’s Cognitive Function and Ageing Studies (CFAS) project at Newcastle University in the UK show that cognitive decline is on the decrease in many countries thanks to improvements in lifestyle, overall health, levels of education and wealth.
However, the problem here is that the positive changes we are seeing today may not continue into the future, or at least not to the same extent, so, again, this uncertainty needs to accounted for. One example is the positive effect that higher education has had on cognitive health over the last hundred years or so. Will this effect continue, or will it level out as the “education gap” decreases across society? Environmental factors, such as whether a person has diabetes or high blood pressure also need to be taken into consideration since disease increases the risk of CI. Other risk factors include lack of physical exercise, depression, smoking and low education
CI is such a heterogeneous disease area and involves so many factors that it is difficult to predict future trends - although the most advanced models using population data and scenario analyses have begun to provide valuable insights into possible tendencies.
Precision medicine and “biological signatures”
Genetic and blood testing could come into their own here. Precision medicine could revolutionize our way of thinking about disease and will focus on prevention as well as cure. “Every patient is unique and not everyone benefits from the same treatment for a particular disease in the same way,” explains Prof. Harald Hampel who anticipates a paradigm shift from an outdated ‘one size fits all’ medical approach to one that will be safe, precise and “molecularly” tailored to each individual.
Workshop 3: Integrating advanced technologies, sociology and economics in LTC funding
What models could we foresee for funding LTC that take into account technological, social and economic factors? The discussions during this workshop focused mainly on preventing dependency and the need to focus on a person’s function rather than on the disease they have - or might develop in the future.
The governments of most countries have some sort of healthy-lifestyle message – for example, eating five portions of fruit and vegetables a day, or doing more exercise to remain fit and healthy for as long as possible. New technologies, and in particular mobile applications that encourage a good lifestyle (for the old and young alike) are already on the market and there are also applications that can monitor the physical and mental health of dependent people. In this context, could AXA improve its role as an insurer by providing health services in general as well as offering LTC insurance products?
Prevention policies – what part can an insurer play?
Although policy makers are aware of the future financial burden of LTC and the great need for prevention, these policies will not be easy to put in place because they are sometimes seen as intrusive and a curb to personal freedom. One way for an insurer to play an important part in prevention might be to partner with external organizations that, for example, are developing programs for older, and by definition, frailer, people – by having them do daily exercises to make them stronger overall and so less dependent or frail.
Frailty, as opposed to complete dependence, is an important area to focus on as the The Multidomain Alzheimer Preventive Trial (MAPT) by Bruno Vellas in France and the Finnish Geriatric Intervention Study to Prevent Cognitive Impairment and Decline (FINGER) by Miia Kivipelto in Sweden attest. These studies confirmed that memory stimulation, physical activity and nutritional advice indeed had a positive effect for when it came to preventing frailty and CI.
Other programs being developed aimed at helping the relatives of patients, as well as the patients themselves, manage specific diseases (cancer and diabetes notably) could also help delay the onset of severe dependency and the total time spent needing LTC.
Electronic coaching and home-aid robots
The questions we need to ask here are; how much will these new technologies cost to put in place and who will pay for them? Will people be connected enough to use these electronic “coaches”? And how can they be encouraged to use these applications in the first place without encroaching too much on their personal freedom. Advances in robotics (as home/hospital aids) and prostheses (such as “exoskeletons”) that assist people in their everyday movements should not be neglected either as these are likely to play an important role in LTC in the future – for both individuals and their carers.
“At the end of the day, would I as a customer not be happier to buy an insurance that helps me stay in good health and independent for as long as possible rather than one that provides a lump sum for when I am in a nursing home and completely dependent?” asks Pierre-Yves Director of the Paris School of Economics. “So what I am asking is: can AXA enhance its products and develop new services that will help prevent and delay dependency for its clients in the future?”
These three workshop topics were also the subject of academic presentations and round tables in the afternoon:
All this said, the good news is that only one in four people will need acute LTC at some point in their lives. So even though everyone might not be concerned, everyone should think about taking out some sort of private insurance (and the earlier the better) for their later years, because the longer we live, the more likely we are to have LTC needs.
And as health, social and economic conditions continue to evolve, a close, open and transparent dialogue between insurance experts and academic specialists from all fields involved has a promising future.