Report Finds States Vary in Ability to Hold Down LTC Insurance Premium Hikes

A new report by the U.S. Government Accountability Office (GAO) finds that whether consumers will be stuck with a long-term care insurance premium increase depends in large part on the state they're in and the company they bought the coverage from. Some lawmakers who requested the study say the findings raise questions about the ongoing expansion of the state long-term care insurance partnership programs.

Long-term care is currently regulated by the states. The GAO found that about half the states have adopted rate stability measures to keep long-term care insurance premiums from rising precipitously, but this means that the rest of the country is unprotected. In addition, regulators in the states with the rate stability standards are unsure how well the standards will control future increases, according to the GAO.

The GAO researchers found that consumers' likelihood of experiencing a rate increase also depends on the company from which they bought the policy. Examining the rate increases of four leading companies, the GAO found one insurer that had increased premiums on one policy a total of 70 percent since 1991. Another had raised rates on a number of policies since 1995, with many of the increases ranging from 30 to 50 percent. But a third insurer only recently implemented its first premium increase in 33 years, with increases ranging from 8 to 12 percent. (The report does not name the companies.)

"The GAO's findings and our own Committee staff's investigation have identified troubling weaknesses in the states' ability to protect consumers from abusive practices," said Rep. John Dingell (D-MI) chairman of the House Committee on Energy and Commerce, which held a hearing on the GAO's report. "If the insurance industry is not up to the task of correcting these problems swiftly and treating vulnerable policyholders and their families fairly then Congress will need to consider steps to ensure strong, uniform national standards."

Sen. Herbert Kohl (D-WI), chairman of the Senate Special Committee on Aging, raised the issue of state and federal governments using their resources to encourage consumers to buy private long-term care insurance through partnership programs. Under the partnership programs, private companies sell long-term care insurance policies that have been approved by the state. Once the long-term care insurance is depleted, individuals may qualify for Medicaid and keep assets equal to the amount of benefits received under the long-term care insurance policy.

"We need to make sure we get some of these already troubling issues resolved, especially since state governments are partnering with long-term care insurance companies," Kohl said.

The federal government expects 30 states to have partnership programs in place by the end of the year.

To read the GAO's report, Long-Term Care Insurance: State Oversight of Rate Setting and Claims Settlement Practices, click here.