Long-term care policies need attention

By The Des Moines Register

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Implementation of the new health reform law has hit a few snags. Some states are refusing to expand Medicaid health insurance for low-income people. The Obama administration recently announced that it was delaying a controversial employer requirement to offer insurance coverage to some workers. It's unclear whether enough insurers will participate in the new marketplaces where some people will turn to buy health insurance beginning later this year.

Like all complicated, major reforms, it will take time to work out the kinks in the health reform law. Some issues can still be addressed by government officials involved in the implementation. To address other issues, Congress may need to get past the politics of reform and work together to make changes.

Among the provisions lawmakers should revisit is a government program that would offer long-term care insurance. It would provide assistance to people paying for expensive care that can include stays in nursing homes. Under the program included in the reform law, workers could choose to pay a premium through a payroll deduction and be eligible to receive a modest cash benefit if they later needed long-term care.

Congress required the program to be financially solvent for 75 years before it could be implemented. Because the Obama administration could not make such a guarantee, the new option for coverage never got off the ground.

But such a program is desperately needed.

As Americans live longer, there should be a way to help people both for home-based care and for stays in care facilities. Traditional health insurance does not cover such expenses. Medicare only does so in limited cases for a short period of time. And the long-term-care insurance offered in the private sector is a mess. Older Americans may have bought these policies decades ago. Insurers underestimated the future cost of care and expected more people to drop their coverage so the company never had to pay claims. Now many companies are increasing premiums on current policyholders, including the very elderly, to cover rising costs.

So if you are 80 years old and have been paying premiums for 25 years, a rate increase leaves you with only a few options: struggle to make the higher payments, agree to pay less for a policy in exchange for reduced benefits or cancel the coverage and watch all the money you paid in in premiums disappear.

In 2007, The Des Moines Register editorial board investigated long-term care insurance, including a review of more than 50 complaints filed with the Iowa Insurance Division and interviews with scores of Iowans with stories of rate increases, denied claims and unexpected changes in coverage.

Among the Iowans we interviewed were the children of Marge Bode of Algona, who had been diagnosed with dementia. She and her husband paid more than $71,000 in premiums for a long-term care policy, but when she needed help paying for care, the insurance company denied the claim. By the time someone is old enough and sick enough to use long-term care insurance, they often don't have the ability or energy to fight with an insurance company. Or file complaints with the state.

The Iowa Legislature responded by creating a consumer advocate in the Iowa Insurance Division. The agency, which for years had approved every insurer's request for higher premiums, finally stopped rubber-stamping those rate increases.

The most recent requests for rate increases from long-term care insurance companies show that Continental Casualty Co. asked for an 80 percent increase in rates, but the Iowa Insurance Division approved 18 percent. John Hancock Life Insurance Co. asked for a 68 percent increase; the division approved a 8.9 percent increase. Of the 13 rate increase requests closed in 2013, four companies received the amount they were seeking; the rest were negotiated down or denied.

“We're trying to walk a delicate tightrope of protecting Iowans, but I don't want to see companies go out of business,” said Iowa Insurance Commissioner Nick Gerhart. He said Iowans should carefully consider whether this insurance product fits their needs. He said he found it wasn't a good fit for his mother-in-law.

Going forward, Americans should have an option in long-term-care coverage besides a private-sector plan. Those who can't afford the cost of a nursing home may end up turning to Medicaid, which is financed by taxpayers. Congress recognized this when crafting the health reform law and created an option facilitated by the government to help people pay for care. Now Washington should find a way to make that program work.