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GAO Finds LTC Product Variations

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Some members of Congress say a new U.S. Government Accountability Office report raises questions about the imminent expansion of the state long term care insurance partnership program.

GAO researchers reviewed private LTC insurance plans at the request of several lawmakers.

The researchers found that one insurer had repeatedly raised premiums to a cumulative increase of 70% since 1991, while another had implemented only one premium increase in the last 33 years.

Roughly half of the states have adopted rate stability measures, but that leaves the rest of the country unprotected, and regulators in the states with the standards are not sure how well the standards will hold down future increases, the GAO researchers write.

The lawmakers who asked for the report included Sen. Herbert Kohl D-Wis., chairman of the Senate Special Committee on Aging; Sen. Charles Grassley R-Iowa, the highest ranking Republican member of the Senate Committee on Finance; Rep. John Dingell, D-Mich., chairman of the House Committee on Energy and Commerce; and Rep. Joe Barton R-Texas, the highest ranking Republican member of the House Energy and Commerce Committee.

An Energy and Commerce subcommittee plans to review the report Thursday at a hearing.

“We need to make sure we get some of these already troubling issues resolved, especially since state governments are partnering with long-term care insurance companies,” Kohl says in a statement.

Partnership programs use state and federal resources to encourage consumers to buy private LTC insurance, rather than depending solely on personal savings and Medicaid nursing home benefits.

The federal government expects 30 states to have partnership programs in place by the end of the year.

Originally, only 4 states were allowed to have partnership pilot programs.

“The very high costs of long-term care make it smart public policy to help people manage their financial risk with long-term care insurance policies,” Grassley says. “It’s also important to make sure these products are viable and don’t leave consumers with big premiums and little security.”

“The GAO’s findings and our own Committee staff’s investigation have identified troubling weaknesses in the states’ ability to protect consumers from abusive practices,” Dingell says. “If the insurance industry is not up to the task of correcting these problems swiftly and treating vulnerable policyholders and their families fairly then Congress will need to consider steps to ensure strong, uniform national standards.”


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