KOHL HEARING EXAMINES VALUE AND VIABILITY OF LONG-TERM CARE INSURANCE

WASHINGTON - Today U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) held a hearing on long-term care insurance (LTCI), a product that some consider to be the "silver bullet" for addressing the high and rising costs of long-term care as America's population ages at an unprecedented rate.  Chairman Kohl called for stronger consumer protections and greater transparency within the long-term care insurance industry as states partner with private insurance companies to encourage consumers to purchase LTCI. Such "Partnership" programs, now being rolled out in 43 states, have been initiated in order to help alleviate some of the long-term care costs that are crushing state Medicaid budgets.

 

"We have a duty to make sure these policies, which may span many decades, are financially viable. Many insurance companies have been raising their policyholders' monthly premiums, which can be devastating for older persons who are living on a fixed income," said Chairman Kohl. "Until we can guarantee that consumers have adequate protections, and that premiums won't skyrocket down the road, long-term care insurance is not ready to be a major part of the health care reform solution."

 

In response to reports of insurers applying for funds from the Troubled Asset Relief Program (TARP), the Committee recently initiated a review of several companies that participate in the Partnership program, confirming that some have recently requested premium increases, with one company requesting a rate increase of 40 percent. The Committee also found that the cost of comparable plans varies greatly state by state, as do consumer safeguards.

 

Chairman Kohl and Senator Ron Wyden (D-OR) announced today's introduction of the "Confidence in Long-Term Care Insurance Act of 2009," which strengthens consumer protections with respect to premium rate stability, market disclosures, and training and certification of agents. The legislation would make it easier for consumers to accurately compare policies from different insurance carriers, particularly with regard to what benefits are covered and whether the plan offers inflation protection. The bill would also require reciprocity across state partnership plans.

 

The Committee heard testimony from Diane Rowland, Sc.D., Executive Director of the Kaiser Family Foundation's Commission on Medicaid and the Uninsured, who discussed long-term care insurance in the context of overall long-term care financing.  In 2007, private long-term care insurance paid for only seven percent of long-term care service, whereas Medicaid funded 49 percent. Rowland also outlined a report Kaiser released in conjunction with the hearing on the challenges posed by private long-term care insurance. Sean Dilweg, Wisconsin's Insurance Commissioner, testified on behalf of the National Association of Insurance Commissioners (NAIC), where he is chair of their Consumer Affairs Committee and Senior Issues Task Force.  Dilweg gave an overview of state oversight of the long-term care industry, detailing the challenges states face and recent moves toward tighter regulation.  He also described the model regulatory standards developed by NAIC, which have yet to be adopted by all states.

 

Carol Cutter, Chief Deputy Commissioner of Indiana's Department of Insurance, offered testimony on Indiana's Partnership program, which was one of the first of its kind in the nation. Thomas Stinson, President of Insurance Products, Retirement & Protection for Genworth, spoke about the benefits of long-term care insurance, Genworth's experience as the largest Partnership carrier, and their attempts to grow the market. Genworth is the nation's largest provider of long-term care insurance policies. Finally, Bonnie Burns of California Health Advocates testified about the potential pitfalls long-term care insurance can pose for the average consumer.

 

This hearing is the Aging Committee's second on the key topic of long-term care this year. At a hearing in March, Chairman Kohl urged the Senate to include improvements in the coverage, financing, and governing standards of long-term care services and supports as part of comprehensive health reform.

 

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