Three panels of witnesses at a House Energy and Commerce Oversight and Investigations Subcommittee hearing on July 24th called on federal lawmakers to require minimum standards for private long-term care (LTC) insurance policies. Bonnie Burns, Training and Policy Specialist at California Health Advocates (CHA), testified in the first panel and stressed that standardizing various elements of LTC insurance products would greatly reduce consumer confusion and make regulation of policies easier for states and the federal government.
The hearing featured 3 panels of: 1) consumer advocates and researchers (CHA, Pennsylvania Department of Aging, Government Accountability Office (GAO), and Life Plans, Inc.); 2) state insurance commissioners; and 3) industry representatives (Metlife, Genworth, Conseco and Penn Treaty).
Among the many recommendations outlined in her testimony, Burns encouraged states and the federal government to adopt the National Association of Insurance Commissioners (NAIC) Model Act for Long-Term Care Insurance and Model Regulation as the foundation for state and federal laws and regulation regarding LTC insurance. Currently, states can pick and choose which provisions of those Models they incorporate into their state law, if they choose any at all.
Also, while NAIC’s models provide important standards, many consumer issues are still not covered in these standards. The models still leave a need for standardized definitions and benefits among companies and their LTC insurance policies. Without such standardization, comparing policies is virtually impossible. As of now, companies are free to have their own interpretations of benefits offered, often which are often not outlined clearly in their policies. For example, some companies are offering an ‘alternate plan of care’ benefit which is supposed to bring flexibility into what kind of care the policy covers. As many consumers purchase LTC insurance decades before needing it, the types of care offered when they purchased the policy may be different or offered in different arrangements by the time they require care. The ‘alternate plan of care’ benefit is supposed to give people the flexibility of using their benefits in whatever living situation best fits their needs. Yet, as Burns shared in her testimony, exercising this option is completely at the discretion of the company, which often makes this benefit illusory.
Earl Pomeroy, Congressman for North Dakota and former North Dakota Insurance Commissioner and President of NAIC , visited the hearing, contributing some excellent questions to the industry panel and praising Ms. Burn’s advocacy efforts over the last 20 years.
This hearing was spurred by the growing number of older Americans buying LTC insurance (more than 7 million Americans have a LTC insurance policy), the rising cost of nursing home care (about $70,000/yr.), and the increasing percentage Medicaid’s budget being used to pay seniors’ nursing home care. The information and discussions generated will help answer the federal lawmakers’ questions on:
- What is the federal government’s role in providing long-term care and regulating long-term care insurance products; and
- How can it ensure the quality of LTC insurance products being sold?
If LTC insurance is to play a significant role in providing for people’s LTC needs, people must have trust in the insurance products available; they must be able to trust that if they need coverage, they will be able to get it. State and federal governments must ensure the quality of products offered through strong laws, standardization of benefit definitions and elements of LTC insurance products, and regulations and monitoring of companies and agents selling these policies.
See below for more information on the hearing: