Long term care insurers probed at committee hearing

Sen. Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging, questioned regulators and representatives of the long term care insurance industry at a committee hearing yesterday and focused on the financial viability of LTC insurers. “The committee is aware of instances in which Americans living on modest or fixed incomes who have held policies for many years have seen premium rates double when a company encounters financial difficulties,” he said. “For such consumers, the choices are stark and very limited. They can either dig deeper and pay the increased premiums or let their policy lapse, leaving them with no coverage if they ever need care,” Mr. Kohl said. He also introduced S.1177, the Confidence in Long-Term Care Insurance Act, which he said will include curbs on premium spikes, ensure that agents receive training and make it easier for consumers to compare policies. At the hearing, regulators argued that low-cost policies sold in the past often turned out to be inadequate. Changes to the insurance products, including higher prices, provide greater consumer protections and help ensure solvency. “Many of those problems were the result of long term care products that were sold when there were insufficient regulations,” said Sean Dilweg, insurance commissioner in Wisconsin. “The newer policies are sold at a more realistic price.” Although claim volume for the LTC market has been growing, the growth rate doesn’t appear to be statistically significant, Mr. Dilweg said. Bonnie Burns, a training and policy specialist for California Health Advocates in Scotts Valley, Calif., questioned the stability of prices and whether the policies provide adequate coverage. She cited an 80-year-old woman with a policy from Penn Treaty American Corp. of Allentown, Pa., who was notified in March that her premium rates would rise by 21% to $512.55 a month. She was then told that the company, in fact, was asking for a 53% premium increase. Ms. Burns noted that only half the states have adopted the rate stability requirements and premium increase restrictions promulgated by the Kansas City, Mo.-based National Association of Insurance Commissioners. “It remains to be seen whether the NAIC’s rate stability requirements will allow less volatility in the future,” she said Despite all the advancements in LTC insurance, it still isn’t known whether a policy purchased now will provide adequate coverage later, said Diane Rowland, executive vice president of the Henry J. Kaiser Family Foundation in Washington. “There are no guarantees that your policies bought today will meet needs 20 or 30 years later,” she said.