Long Term Health Care System Under Investigation

Ayinde O. Chase - All Headline News Staff
April 9, 2007

Ontario, CA (AHN) - Analysts of the nation's healthcare system say long-term care is the crisis of the 21st century and 3 out of 5 people will need it, while 2 out of 5 will require nursing home facilities.

According to Frank N. Darras, widely regarded as one the nation's leading disability and long term care insurance lawyers, the number of Long Term Care policyholders has increased 21 percent annually and now there are approximately six million LTC policies in the United States.

"Barack Obama has it right, and it is encouraging to see a presidential candidate focusing on truly helping hard working senior Americans. His call for an investigation into the fraud that is running rampant in the long-term care business is a step in the right direction," says Darras.

Obama recently released a statement saying, "we're going to end it because it's about time Washington stood up to insurance companies so that families and seniors across the country can get the care they deserve."

Following a report in the New York Times outlining the number of Long-Term care policies being undersold and under-priced. Obama wrote an open letter on March 29 to the head of the Government Accountability Office calling for an investigation into the high number of claims being denied, and practices that make it "difficult - if not impossible - for policyholders to get paid."

A portion of the Obama letter reads:

"First, I am concerned about the possible arbitrary denial of insurance benefits to seniors at their time of need. Second, I am concerned that some insurers may be enticing individuals to buy policies by offering low premiums, and then sharply increasing premiums if lapse rates are not as high as assumed in the premium calculations. Third, a substantial percentage of policies do not offer inflation adjustments, resulting in a significant erosion of purchasing power in later years.

Even worse, some companies offer "inflation coverage" which allows policyholders to purchase additional coverage at a later date, but at the price charged older purchasers. Premiums increase dramatically by age, and individuals who elect to buy coverage later may not realize that such coverage will be extremely expensive, which may be financially infeasible.

Some of the industry's practices Obama directly asked the GAO to investigate are listed below:

-- Rate of denial of claims, and as feasible, the extent to which denials were justifiable;

-- Types of policies purchased, including the percentage of policies that do adjust and do not adjust for inflation and those that allow for purchase of additional coverage at a later date;

-- Estimated loss of purchasing power for those individuals that have policies without inflation adjustment provisions;

-- Frequency and amount of premium increases in already purchased policies, average lapse rates of policyholders, and the correlation between premium increases and lapse rates;

-- Extent to which long-term care policies are marketed to individuals that would likely qualify for Medicaid or may not have substantial assets to protect; and

-- What, if any, additional federal regulation is needed.