In Connecticut, prices for long-term care insurance have ballooned. State officials say they’ve hit a wall trying to find a solution.
WSHU’s Ebong Udoma spoke with CT Mirror’s Jenna Carlesso to discuss her article written with Dave Altimari, Katy Golvala, and Andrew Brown, “CT long-term care insurance costs are skyrocketing, strangling consumers,” as part of the collaborative podcast Long Story Short. Read the story here.
WSHU: Hello, Jenna. What's long-term care insurance, and why are aging Connecticut residents finding it harder to pay their premiums, which they’ve paid for decades?
JC: Hi, so long-term care insurance covers a range of services for older adults or people with disabilities. It could support in-home care, nursing home stays, respite care, rehabilitation therapy, assisted living and other similar services.
WSHU: So what's the problem? Why are the premiums skyrocketing? I understand that the insurance companies have threatened insolvency if they don't increase premiums.
JC: Yeah, there were problems right from the start. According to many people who were there, who participated or have analyzed the industry, the insurers miscalculated how long people would live, what the price of care would be, how many people would need it, how many people would keep their policies and not drop them. Also, the product had other flaws from the beginning. I mean, in terms of accessibility, it was marketed mainly to middle-class or upper-middle-class families, posing barriers from the very beginning.
WSHU: And basically, this was pushed out as an alternative to having to pay down and get rid of your possessions in order to qualify for Medicaid, right?
JC: Yeah, a lot of the folks who purchase these policies wanted to protect their assets, you know, save money that they could use in retirement or pass along to their children, as opposed to spending down for care and having to then enroll in Medicaid. They were doing this to preserve their assets.
WSHU: Now, could you give us an example of how high the premiums have become, comparing them to what they were 20 or 30 years ago and what they are now?
JC: So for some policyholders, one person we interviewed took out a policy in 1994 and paid $750 a year at the time, and these days, he's paying $6400, his most recent annual bill. And even with that substantial increase, a lot of these folks that we spoke to have had to reduce their benefits. That is, you know, the length of stay for a nursing home or how many years of coverage you might have under your plan. Different benefits have been reduced in order to try to curb how much those increases are. So this one policyholder we spoke to, if he had made no changes, would be paying over $13,000 for what his original plan had included, which is nearly 18 times the original cost. And we've heard, you know, case after case like this from folks who have this insurance.
WSHU: Now, the insurance industry is regulated in Connecticut by the state insurance department, and they're responsible for approving the rate increases. What is the state insurance commissioner saying about this?
JC: The Insurance Commissioner has said that approving rate increases is never something the department does lightly. He describes the process as being very thorough. They consider several things that go into that, and consumer protection is part of that—not wanting plans to go insolvent. So, at least one company went into insolvency. They don't want to see other customers get their plans pulled out from under them. But on the other hand, this has led to a system where rates are going up and up and up.
WSHU: So what are lawmakers talking about doing here? Because I'm sure they're getting complaints from their constituents.
JC: Yeah, and this has been a pretty intractable issue at the legislature; we put together a database showing, you know, well over 50 bills over the last six years have been introduced on a range of issues, everything from giving a tax credit to people that have long term care insurance to a public hearing on rate increases so the public can weigh in, and very few have passed. The Connecticut Mirror found three that have been passed out of that batch. And you know, it seems like there's a big push this year from policyholders and advocates to want to get something done.
WSHU: So what are lawmakers looking at doing this year, considering that the insurance committee didn't pass any bill last year?
JC: Yeah, so they're going to if they are going to pass legislation this year, there's going to have to be consensus around that. In previous years, you know, there's been budget constraints blamed for the lack of progress on some of these bills, partisan gridlock and a host of other issues. So if they want to move it forward this year, there's really going to have to be consensus, and they're going to have to come together around these bills.
WSHU: So what are other states doing? Do we have any other states dealing with this, and what are they doing about it?
JC: Yeah, a number of states are getting creative, sort of, in the face of, you know, a lack of a federal solution. So we looked at Washington State, which passed a bill implementing a payroll tax of 58 cents per $100. They're funding a long-term care insurance pool there. And just recently, they voted to make it portable, so people can keep the benefit even if they leave Washington state. It offers, you know, a decent chunk of money, about little over $36,000 that can supplement informal care, like, you know, care from a friend or relative, a loved one.
WSHU: So the state is actually getting involved in providing this care?
JC: Yes, and there was an initiative on the ballot recently in Washington to make the program opt-out, and voters rejected it, which shows that they want that program there.
WSHU: Quite interesting. Well, Jenna, any chance that we'll have a payroll tax in Connecticut on this?
JC: I think it remains to be seen.
