Sen. Barack Obama, a candidate for the 2008 Democratic presidential nomination, is calling for a wide-ranging investigation of the long term care insurance industry.
Obama, D-Ill., a member of the Senate Health, Education, Labor and Pensions Committee, has written to the U.S. Government Accountability Office to ask it to look into a New York Times reporter’s allegations of widespread LTC insurance claims problems.
Obama also has asked the GAO to look into other concerns about the private LTC insurance market.
The GAO should discuss “what, if any, additional federal regulation is needed,” Obama writes in the letter to the GAO, which he released to the public through the Business Wire news release distribution service.
Although carriers may be mishandling claims, other concerns could include efforts to lure consumers with unrealistically low, lapse-supported premiums and policies that do not include effective inflation adjustment mechanisms, Obama writes.
The senator asked the GAO to report on claims denial rates, the extent to which denials were justifiable, and the percentage of policies sold that do adjust and do not adjust for inflation.
Obama also has asked the GAO to review the frequency and amount of premium increases in already-purchased policies, average lapse rates of policyholders, and the correlation between premium increases and lapse rates.
America’s Health Insurance Plans, Washington, and the American Council of Life Insurers, Washington, have responded to Obama’s letter by suggesting that the picture of the LTC insurance industry presented in the Times article is flawed.
“We believe very strongly in the value that long term care insurance providers to millions of beneficiaries,” says AHIP spokeswoman Susan Pisano.
Preliminary results from a survey of long term care insurance claimants organized by the Robert Wood Johnson Foundation, Princeton, N.J., suggest that 97% of the claimants reported having had no problems with claims or having resolved all problems in a satisfactory fashion, Pisano says.
ACLI President Frank Keating says regulators and ACLI member insurers will be quick to take action if the allegations about LTC claims problems are true.
“Even one legitimate complaint is one too many, and when any are received, companies must and do treat them seriously,” Keating says.
But past surveys have found that most LTC insurance policyholders say they are happy with the quality of the service they are getting, Keating says.
The Long Term Care Insurance Model Act and Regulation developed by the National Association of Insurance Commissioners, Kansas City, Mo., already requires an annual reporting of denied claims, Keating says.
“We encourage the states to monitor these reports,” Keating says. “If the reports show unfair trade practices, regulators should take appropriate action.”