A Government Accountability Office report found wide variance in the prices and performance of long term care insurance policies across different plans and different states, raising a concern for lawmakers who expect more state-LTC partnerships to be implemented this year.
Several key members of both the Senate and House requested the GAO report.
“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,” said Sen. Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging. “Congress is doing the right thing by taking a close look at long term care insurance to make sure consumers are protected.”
According to the lawmakers, the federal government expects LTC partnerships to be implemented in as many as 30 states by the end of the year. The partnerships are designed to encourage the purchase of LTC coverage and feature state-approved plans that combine private insurance with possible add-on Medicaid coverage in policies that allow consumers to protect some portion of their accumulated financial assets.
“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,” said Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee. “It’s also important to make sure these products are viable and don’t leave consumers with big premiums and little security. This new report provides helpful information for federal and state lawmakers, regulators and consumer watchdogs in meeting that challenge.”
The GAO found wide fluctuations in rate increases for LTCI policies between different states and plans. As an example, it cited one company that repeatedly raised premiums to a cumulative increase of 70% since 1991, and another that had only one premium increase in the last 33 years. Roughly half of the states have adopted some form of rate stability measures, but the report noted that this leaves the rest of the country unprotected, and that regulators in states with the standards are often still unsure of how useful they will be in moderating future increases.
“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,” said Rep. John Dingell, chairman of the House Energy and Commerce Committee. “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.”