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Life's last chapter dynamics: How well will we care?
Nicholas C Georgantzas Fordham University @ Lincoln Center
Andre Batista 113 West 60th Street, Suite LL 617-D
Francisco Berguido New York, NY 10023-7471, USA
Julie Cotter Tel.: (+212) 636-6216
Margaret Hyland Fax: (+212) 765-5573
Tiffany Mattera Email: georgantzas@ fordham.edu
Abstract: As we transform our thoughts into digital incarnations and try to make the
world a better place, one pixel at a time, the time is approaching quickly for North
America's baby boomers to retire. An estimated 77 million of them will soon do and
some of them will be entering nursing homes. That is, if the capacity exists to
accommodate their huge influx. Despite the overwhelming number of baby boomers,
entrepreneurs are not stammering to build more nursing homes for the foreseen stampede
of retired people, partly because a few states attempt to eliminate excess demand by
increasing supply. If the state Medicaid programs refuse to warrant the creation of more
nursing homes, however, then a serious problem might arise, whereby millions of baby
boomers will be forced to join the extant waiting lists for nursing homes. Over the past
decade, nursing home liability insurance has become the fastest growing type of
insurance coverage in the US. New sales increase between 20 and 25 percent per year,
while competition has pushed long-term care premiums down by 20 to 25 percent. With
eleven major players in nursing home insurance controlling more that 91 percent of sales,
insurance settlements reach outstanding figures. In a recent case settled in Texas, for
example, an elderly man died, reportedly of neglect and malnutrition. The settlement
awarded to his family was US$250 million. The purpose of this system dynamics
modeling project was to determine what insurance firms might expect from the combined
effects of more people living to old age and state regulatory policy. Three computed
scenarios capture the dynamic evolution of alternative behavior patterns that might play
for the population in nursing homes, those waiting for nursing homes, and the
profitability of insurance firms that provide liability insurance to nursing homes.
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