Colorado Puts LTCI Rates in Context

Individual long-term care insurance (LTCI) prices increased an average of 9.7% in Colorado in 2010, according to officials at the Colorado Division of Insurance.

That rate of increase was down from 23% in 2009, and it was lower than the rate of increase for individual major medical insurance, individual limited benefit plans and CHAMPUS military dependent coverage, officials say in the state’s 2011 health cost report.

In the individual market, CHAMPUS prices increased 9.9%, major medical prices increased 10%, and limited benefit prices increased 11%.

Over the 6-year period starting in 2005 and ending in 2010, the average annual rate of increase for LTCI products was 12.6%.

That was higher than the major medical cost increase average of 10.4% but lower than the average 14.8% increase for limited benefit plans. It was also lower than the 13.4% rate of increase for CHAMPUS military supplemental dependent coverage.

Tom Abel, supervisor of the rates and forms section at the division, said in an interview that officials there do not think comparing price changes for products as different from one another as LTCI coverage, major medical coverage and CHAMPUS produces meaningful results.

“Long-term care insurance is really much different from the other products,” Abel said. 

The factors that drive major medical insurance price changes, for example, include changes in the cost of hospital care and physician services, Abel said.

In the LTCI market, a carrier usually promises to be a benefit amount that is adjusted for inflation but otherwise fixed, Abel said.

The major factors leading to increases in LTCI prices have been the rapid, prolonged drop in interest rates and the fact that the actual percentage of LTCI policyholders who let policies lapse has been closer to 2% than to the lapse rate of 15% originally expected, Abel said.

In 2011, another factor leading to increases in LTCI prices likely will be that claims costs were higher than expected, Abel said.