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The Editors

What’s Bad for GE Will Be Worse for America

The company’s troubles with long-term-care insurance show the challenge of caring for an aging population.
Not just a matter of compassion.

Not just a matter of compassion.

Photographer: Sebastien Bozon/AFP/Getty Images

General Electric’s multi-billion-dollar loss in a unit that sold long-term-care insurance is a blow from which the iconic company is still reeling. But it’s also a harbinger of a much greater challenge for society at large: paying to care for the growing number of Americans who can’t look after themselves.

GE’s travails stem from the early 1990s, when insurance companies began developing a new line of business, offering policies that, in return for regular premium payments, would cover the cost of a nursing home or other long-term care if the need arose. With the baby-boom generation approaching retirement, sales took off. By 2007, some 7 million policies were in force, generating almost $10 billion a year in premiums.