Bonnie Burns, Training and Policy Specialist for California Health Advocates, who also serves as a long-time consumer representative with the National Association of Insurance Commissioners (NAIC), recently submitted a letter with several other consumer representatives. It urges NAIC’s Senior Issues Task Force (SITF) to: (1) explore proposals to create state programs to finance long-term care, and (2) monitor and regulate the current marketing and sales of insurance products to circumvent participation in state programs that do not yet exist.
Read the letter for details.
Background:
The number of aged Americans is increasing at a rapid rate. By 2032 every baby boomer in the U.S. will have reached the age of 65. Seniors will be a significant percentage of each state’s population. In California, for instance, almost one in four Californian’s are predicted to be 60 years of age or older by 2030. In just two short years from now, baby boomers will begin to reach their 80s, a decade of life when the need for long-term care often begins. The future demand for long-term care services in our state and others is likely to a have profound impact on state budgets and state Medicaid programs.
States have become the laboratories for experimenting with financing options to pay for this increase in the need for care and services in the absence of any response from the federal government. States have begun to plan for this impending demand in various ways. Some states have enacted a “Master Plan for Aging” to better utilize and coordinate state long-term care services and systems, and coordinate payment sources with state resources. Washington State is the first state in the nation to enact a state long-term care program financed by an employment tax. Other states are considering similar legislation.
The insurance industry has taken note of these actions and used the possibility of a state enacted program to convince consumers to buy a product that will supposedly qualify as an opt out for a potential state program, or one that is enacted in the future. The fact that no state program exists outside of Washington has not stood in the way of their marketing attempts. So serious was this in California that Commissioner Lara issued an alert to inform agents and brokers of the consequences of such false and misleading marketing and sales.
As states experiment with ways to finance long-term care, insurance products will be or will become part of those efforts. Insurance products can be designed to compete with a state’s program, become a supplement to those state benefits, be marketed and sold to encourage opting out of a state program, or be designed to deliver benefits upon the exhaustion of a state program’s benefits. One way or
another, insurance products will evolve in response to state efforts to finance the cost of long-term care.
As states move forward with these programs, regulators will need to monitor the states’ efforts to ensure that consumers are not duped into buying unsuitable products, and that state regulatory standards keep pace with the development of potentially questionable methods and products to finance long-term care.
Read the full letter.
