States Urging Residents To Purchase Long-Term Care Insurance
States increasingly are encouraging residents to purchase private long-term care insurance as a way to reduce Medicaid costs, the Wall Street Journal reports.
In 2007, Medicaid spending for older adults' nursing facilities and other long-term care reached $100 billion. As a result, 15 states are promoting LTC policies under marketing partnerships with the insurance industry, and more than a dozen other states are starting such partnerships.
Raul Moreno, a spokesperson for the California partnership, said the state sees nothing wrong with "asking people to take personal responsibility" for planning their long-term care. He said, "We would never suggest you must buy it," adding, "Our focus is merely to educate Californians to plan ahead for long-term care and to consider [LTC] insurance as a way to fund it."
In addition, some "states are promising consumers that if they exhaust benefits from their LTC policies and eventually need to apply for Medicaid, the state will make it easier for them to qualify," according to the Journal.
However, critics are "sounding alarm bells," saying that the "financial benefits of LTC insurance for many target customers are negligible to nonexistent," the Journal reports.
Patricia White, a director of the National Association of Free Clinics, said many low- to middle-income residents already struggle to pay for prescription drugs and other health care needs. She said, "They can't even buy medicine, why should they buy a (long-term care) insurance policy?"
Total premiums for private LTC policies reached $10 billion last year, a 21% increase from $8.2 billion in 2004.
Consumer advocates also say that it has become increasingly difficult for LTC policyholders to collect benefits.
Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said, "These policies are very difficult to use, and the payouts and benefits are difficult to get."
Congress is "taking note" of consumers' complaints about the plans, the Journal reports.
In October 2007, Senate Finance Committee ranking member Chuck Grassley (R-Iowa) wrote to 10 insurers involved in the partnerships and demanded information about how claims are processed, according to the Journal.
According to a National Association of Insurance Commissioners report, there was a 74% increase in complaints to state regulators about long-term care policies between 2003 and 2006 (Levitz, Wall Street Journal, 2/26).