LONG TERM CARE: Bill Aims to Prevent ‘Low-Balling’ Premiums
Noting that some seniors are "getting ripped off by the handful," Sen. Joe Dunn (D-Santa Ana) is sponsoring a bill that would require the state Department of Insurance to regulate insurance policies for long term care, the Orange County Register reports. Under Dunn's proposal, the state insurance commissioner would be required to approve long term care policies before they are sold. To prevent companies from luring seniors with low premiums and later raising them so high that they become too expensive, the measure also would require insurance companies to receive permission from the commissioner before increasing premium rates. The commissioner would determine the amount companies are spending on claims and assess whether premium rate increases are justified. Although the Insurance Department currently receives few complaints about premium hikes, department senior attorney Alice Gates said "many seniors just hunker down and pay the high rates." Others simply cannot pay the sharp increases, "forfeiting the thousands of dollars they'd already paid into it," Gates added. While the exact number of seniors affected by these premium increases is unknown, "[e]veryone in the long term care field knows this (low- balling) is a serious problem," Gates said.
Don't Blame the Masses
Critics of Dunn's bill argue that the legislation would punish an entire industry for the practices of just a few insurers. "We think that there were some isolated problems, but by and large, those isolated incidents didn't represent the industry," Brad Wenger, president of the Association of California Life and Health Insurance Companies, said. Having the commissioner approve all policies and premium raises up front would take too long, Wenger argued. Instead, the industry has offered a proposal that would allow companies to sell their policies while the commissioner is reviewing them. Under the industry plan, the state "would have to trust that premiums and the benefits promised are reasonable," the Register reports. However, Dunn countered that the industry's offer "has no teeth" (Quach, 7/25).