A vote on repeal of the estate tax was scheduled to be among the first actions taken by the Senate last week when it returned from its August recess, but was delayed as Congress sought to address the recovery after Hurricane Katrina.

Senate Majority Leader Bill Frist, R-Tenn., announced that the estate tax measure would be put on hold in order for Congress to address the recovery efforts, as well as the nomination of Judge John Roberts to the position of Chief Justice of the Supreme Court. For the moment, the delay seems to be indefinite, as no schedule for returning to the estate tax issue has been set.

Yet, despite the schedule of Congress being thrown into disarray last week, committees in both chambers were able to meet on several legislative issues, including Medicaid reform and data security.

In a hearing before the House Energy and Commerce Committee, Frank Keating, president of the American Council of Life Insurers, offered testimony discussing the role that private long term care insurance plays in helping to provide retirement security.

Keating’s testimony at the hearing specifically touched on current financing arrangements for LTC, specifically mentioning long term care partnerships. The ACLI, along with groups such as America’s Health Insurance Plans and the National Association of Health Underwriters have been pressing Congress to enact legislation, specifically HR 3511, encouraging these partnerships, which currently exist only in California, Connecticut, Indiana and New York. In these partnerships, Medicaid becomes the payer for an individual’s LTC expenses after the benefits of his or her long term care policy have been exhausted. The partnerships also allow the policyholder to keep personal assets equal to the benefits paid by the policy, rather than being forced to “spend down” assets to become Medicaid eligible. Under HR 3511, Keating noted that any state-approved tax-qualified LTC policy would be eligible for a partnership program.

Additionally, Keating said other provisions in the bill, including measures protecting individuals’ assets, guaranteeing state reciprocity and simple reporting requirements, would also provide incentives for Americans to purchase LTC insurance.

These issues, like many in Congress last week, were largely overwhelmed by the aftermath of Katrina. Several members, typically from the Democratic side, questioned the timing of the hearing, drawing a response from Committee Chairman Joe Barton, R-Texas. Barton argued that the hearing had been scheduled before the hurricane, giving members ample opportunity to ask for a delay. Several Democrats also expressed outrage over the main proposal being debated, which they said would include a $10 billion cut of Medicaid benefits and was especially insensitive in the aftermath of the hurricane.

Comparing the proposed cuts to the failure to reinforce the levees in New Orleans, Rep. Janice Schakowsky, D-Ill., said the results would be the same. “People will die if we cut $10 billion from Medicaid,” she said. Schakowsky added that cutting the program would be “shameful” and called on lawmakers to consider other options. “Let’s improve it, let’s not cut it,” she said.

On the other side of Capitol Hill, members of the Senate Judiciary Committee were expected to consider two measures dealing with the issue of data security and privacy protections during a meeting of the hearing that also included votes on legislation on violence against women and pending nominations.

Jack Dolan, a spokesman for the ACLI, said that on the issue of data privacy, the main issue for insurers is ensuring that data privacy regulations are made uniform between the states, so that companies don’t have to sort through a patchwork of rules and regulations from state to state.

“Uniformity is very important on this issue,” he said. “Having differing requirements about notices to consumers from state to state doesn’t make sense.”

There were two pieces of legislation scheduled to go before the Senate Judiciary Committee. In addition to legislation on overall data protection, members of the panel also were expected to vote on a bill that would provide guidance on how companies should notify consumers in the event that there is a security breach and some personal data is compromised. In these cases, Dolan said that the ACLI would work to ensure that consumers are notified but not frightened needlessly that their identities would be stolen.

“We also want to make sure that notices go out when there is a threat to a person’s identity,” he said. However, Dolan noted that “the fact is that not every breach represents a threat to an individual’s privacy. Consumers should not be unnecessarily alarmed if a breach will not result in any affect on the consumer.”

Identity theft will continue to maintain a presence on the Senate calendar in spite of the pending legislation dealing with the aftermath of Hurricane Katrina and the nominations to the Supreme Court. The Senate Banking, Housing, and Urban Affairs Committee announced that it would be holding a hearing titled, “Examining the Financial Services Industry’s Responsibilities and Role in Preventing Identity Theft and Protecting Sensitive Financial Information” on Sept. 22, although the committee did not announce any witnesses set to testify at the hearing.

Industry supporters of estate tax reform, rather than repeal, noted the importance of focusing on the victims of the hurricane.

“Taking care of people at times like this is a national priority,” said David Stertzer, executive vice president of the Association for Advanced Life Underwriting. “While we as individuals, businesses and industries are doing what we can, people look to government to help with such sweeping needs. We think it is appropriate that the U.S. Senate has rearranged its schedule to focus on how to help provide relief from the terrible impact of the hurricane and has postponed a vote on the estate tax issue.”

Dolan also said that Congress’s efforts were better focused on helping Katrina’s victims.

“The nation is focused on responding to Hurricane Katrina and helping people respond to the disaster,” he said. “It is wise for Congress to put first things first, that is, helping our fellow citizens.”

Frist Delays Estate Tax Vote. Senate Majority Leader Bill Frist, R-Tenn., announced that a measure repealing the estate tax would be put on hold in order for Congress to address the recovery efforts in the aftermath of Hurricane Katrina.