Long-term care costs scrutinized
Four state lawmakers from Spokane have intervened on behalf of seniors who say they are being priced out of their long-term care policies.
State Sen. Chris Marr, Senate Majority Leader Lisa Brown and Reps. Timm Ormsby and Don Barlow, all D-Spokane, attended a recent meeting with the state insurance commissioner, deputy insurance commissioner and insurance agents representing seniors to address concerns that the state hasn’t used rigid enough standards for approving 14 rate increases granted to Conseco Senior Health Insurance Inc., during the past six years.
“We’re going to have to drill into this and really see what’s behind the approval process,” said Marr,who plans to propose legislation that would codify how rate increases are granted and form a long-term care insurance reform task force.
Marr sent a follow letter asking Insurance Commissioner Mike Kreidler for his support with the legislation, which includes adopting the National Association of Insurance Commissioners long-term insurance regulations, and calling on him to scrutinize future requests for Conseco rate increases.
At a time when Washington wants to encourage people to purchase long-term care insurance, to save on future Medicaid costs, Marr said news of a small percentage of companies repeatedly raising rates or disapproving legitimate claims may discourage people from purchasing coverage that could ultimately save the state money.
“I think it’s hard on the industry,” Marr said.
Conseco Inc. has 4,074 policyholders throughout Washington. During the past five years, the company’s rate hikes ranged from 10 to 25 percent. The hikes weren’t applied to a single policy, but rather covered a few different products.
A Conseco spokesman didn’t return calls asking for comment. The company’s Web site shows that Conseco Inc. posted a $54.4 million net operating loss for the second quarter of 2007.
The company, which emerged from Chapter 11 bankruptcy in 2003, quit selling long-term care policies several years ago, but still pays claims on existing policies and must maintain adequate reserves. Conseco subsidiary, Bankers Life & Casualty, still sells those long-term care policies.
But Marr is concerned that Washington policyholders are paying more than their share and subsidizing losses in other states.
“Most people do not think that they are buying a product that represents a blank check,” he said.
Deputy Insurance Commissioner Beth Berendt said her office approved the increases because Conseco provided credible information that reserves set aside for future claims could run out if the rate increases weren’t granted.
“They have demonstrated under Washington state law that when they originally priced their product, it was significantly under-priced,” Berendt said.
In September, the OIC denied Conseco’s request for a 25 percent rate increase because the company failed to provide Washington-specific data, she said.
Wanda Flood, a 75-year-old retiree on a fixed income, said her and her husband’s long-term care policies have nearly doubled since 1998, when they purchased the insurance.
Their Conseco policies have been raised six times and now the couple pays $6,925 a year.
“This is unconscionable what is happening here,” said Flood, who lives in south Spokane.
Flood said Marr called her to talk about her experience with Conseco and the OIC, which she said she contacted multiple times about the increases.
She’s now worried that Conseco won’t pay the claim it approved for her 78-year-old husband, Lawrence, who has been getting four hours of daily in-home care since July.
Allyn Edwards, president of the National Association of Insurance and Financial Advisors Spokane Chapter, attended last week’s meeting and was impressed that people on all sides of the table showed a willingness to work together to stabilize rate increases.
“I thought it was a great win,” Edwards said.