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December 23, 2001 at 07:00 PM
LTC Insurers Face Skepticism
About Delivering On Promises
By
Chicago
A top benefits expert says some aides on Capitol Hill wonder whether long-term care insurers will really perform the way they are supposed to over the long haul.
The skepticism may be hurting industry efforts to expand the deductibility of LTC insurance premiums, according to Dallas Salisbury, president of the Employee Benefit Research Institute, an influential, nonpartisan Washington think tank.
Before members of Congress give up sorely needed tax revenue to encourage the purchase of private LTC insurance, they want to know, “Will the promises being made be promises that are kept?” Salisbury told 350 insurance industry executives who were here for two conferences organized by LIMRA International, Windsor, Conn.
LIMRA was the sole host of a group insurance and health care conference, and the co-host with LOMA, Atlanta, and Milliman USA, Seattle, of a meeting for disability income and long-term care insurers.
Six months ago, Salisbury said, members of Congress were wondering how to spend federal budget surpluses on social issues of great interest to conference participants, such as establishing private Social Security investment accounts, improving pharmacy benefits for the elderly, and finding ways to finance long-term care for the baby boomers.
Today, as a result of the recession and the Sept. 11 attacks, “every one of those issues is firmly back in the closet,” Salisbury said.
Members of Congress who used to focus on social issues are now focusing on national security, and Salisbury said the retirement of Sen. Phil Gramm, R-Texas, and House Majority Leader Dick Armey will eliminate two of the strongest supporters of proposals for privatizing social programs.
Asking Congress for protection against future mammoth terrorism claims is costing insurers some of the political capital they still have, Salisbury added.
Insurers may feel as if they are asking for help because of national security problems that are entirely outside industry control.
But many members of Congress see the insurance company protection legislation as an “insurance industry bailout” package, and that influences their views of insurers ability to handle many different types of claims, including future LTC claims, Salisbury said.
Salisbury said people on Capitol Hill are especially concerned because of the lack of detailed, comprehensive reports on past failures of LTC insurance companies to meet claims obligations.
Skeptics worry about the possibility that some smaller insurers may become insolvent, and the possibility that insurers of all sizes will force policyholders to drop coverage by dramatically increasing rates, Salisbury said.
