Regulator: Market may need to reinvent LTCI

Colorado Springs, Colo. — Three state insurance regulators said that they would like to work more closely with long-term care insurance (LTCI) issuers, but they also said that the current wave of LTCI rate increases is unacceptable.

Organizers of the Intercompany Long Term Care Insurance (ILTCI) Conference brought them here Tuesday for a breakout session on regulation and innovation.

Marguerite Salazar, the Colorado insurance commissioner, said that she wants to work harder at getting long-term care (LTC) services providers to work harder at controlling the underlying cost of LTC services, and that she welcomes getting more visits from LTCI issuer representatives. ”Sitting down with regulators is really important,” she said.

She said she’s now getting calls from legislators about LTCI rates.

“We’re going to have to be really creative,” Salazar said.

Eric Cioppa, the Maine superintendent, said the governor of his state, Paul LePage, wants him to work with stakeholders to find a way to promote sales of private LTCI products, to help hold down Medicaid spending on nursing home bills. But the key will be developing better products, he said.

“The current products just don’t work,” he said. 

Jillian Froment, the deputy director at the Ohio Department of Insurance, and that department’s operations manager, said her department wants to help clear up a backlog of LTCI rate filings. Ohio has been requiring insurers to get LTCI rate increase approvals from 70 percent of the other states. Once an insurer has received those approvals, it will average the increases already granted to come with the size of the increase to be allowed in Ohio. In practice, because other states have now adopted a similar system, the system means that many filings are stuck, she said.

“We cannot have you sitting there any longer,” she said.

The Ohio department hopes to set up a streamlined system for issuers applying for rate increases of up to 15 percent, and it’s also thinking of letting insurers hold premiums steady by adjusting policy features, Froment said.

Froment encouraged LTCI issuers to give her more advice about what the department could be doing better.

But, when Froment was asked about the need for LTCI, she was blunt about her skepticism about the product.

“I don’t know that there is a need,” Froment said. “The product that you advertised 10 years ago, there was a desire for it. But the market takes care of itself, and you’re going to price yourself out with this product. We’ll find other solutions. That’s what happens. The market corrects itself. I don’t know if we need what you have today. You need to come up with something else.”

When LTCI issuers are asking state regulators for permission to try creative new ideas, one factor in their favor is that “everyone recognizes that what we have now isn’t really working,” Cioppa said.

At another point, when talking about reviewing LTCI rate increase filings for active blocks of business, Cioppa said he has difficulty knowing whether the insurer will really be using the extra money it gets from an increase to help the block, or if it will simply pass the cash on to shareholders.

During a question-and-answer session at the end, an attendee noted that the regulators had emphasized their interest in seeing LTCI issuer representatives come in more often. He asked whether the regulators would also be having consumer group representatives come in more often

Froment told the attendee, “We hear regularly from the consumer groups already.”

See also:

LTCI: The new crop

LTCI lawyers: Regulatory delays contribute to market woes