Photo Courtesy Obama for President
Campaign |
Barack Obama renews
his call for investigation into long-term
care abuse during community meeting on health
care in Iowa
MASON CITY, Iowa--(BUSINESS WIRE)--During a
community meeting on Health Care in Mason City,
Iowa this morning, Barack Obama renewed his call
for an investigation into the abuses in the
long-term care business.
“Today
I am renewing my call for an investigation into
the fraud that is running rampant in the
long-term care business,”
said Barack Obama. “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.”
The community meeting on Health Care this
morning was Obama’s
second in what will be a series of similar
gatherings across the country where he will
listen to providers, consumers, and experts
about their experiences with the Health Care
system.
On March 29, Obama wrote a
letter to the head of the Government
Accountability Office calling for an
investigation into long-term care following
a report in the New York Times of a high
number of claims being denied, and practices
that make it "difficult –
if not impossible –
for policyholders to get paid." (complete
letter enclosed below)
April 5, 2007
The Honorable David M. Walker
Comptroller General
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548
Dear Mr. Walker:
A March 26, 2007, article in the New York Times
investigated thepractices of several long-term
care insurers and reported a number of troubling
findings about practices that "make it difficult
- if not impossible - for policyholders to get
paid." According to the article,nearly 1 in
every 4 long-term care claims in California was
denied in 2005.
Nearly 9 million long-term
care policies had been sold as of 2002, the most
recent year for which data were available, with
about 80 percent purchased through the
individual market and the remaining 20 percent
purchased through the group market. These
products provide elderly Americans with coverage
for care in their homes, assisted living
facilities, and nursing homes. This range of
services is critical for the health and
financial well-being of seniors, 70 percent of
whom will require long-term care at some point
in their lives.
Long-term care is a problem of
national significance. As the baby boomers age,
policymakers are struggling to design a
long-term care system that meets the needs of
Americans with disabilities. While progress has
been made, the long-term care system is heavily
biased towards institutional care, and the
quality of care is often poor.
Moreover, nursing home and
home care are very expensive, and Medicare
coverage for both is limited. As a result,
catastrophic out-of-pocket expenses for nursing
home and home care by American's older people
are routine, forcing many to rely on Medicaid to
finance the care they need.
The federal government has
taken steps to promote the use of long-term care
insurance. The Long-Term Care Partnership
Program, a public-private partnership between
states and private insurance companies, is one
such example. The Federal Long Term Care
Insurance Program, sponsored by the Office of
Personnel Management for federal employees, is a
second example. In addition, the Health
Insurance
Portability and Accountability
Act has profoundly shaped the long-term care
market by establishing standards regarding the
characteristics of policies whose premiums can
count towards the tax deduction available for
health care costs that exceed 7.5 percent of
income.
I have a number of serious
concerns about the long-term care insurance
market and its ability to fulfill its promise to
its policyholders.
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.
Given the role of the federal
government in long-term care financing, I
request that GAO investigate these allegations
and the adequacy of state and federal
regulation. Specifically, I request that GAO
review the practices of these insurers in order
to assess the following:
-- 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.
Thank you.
Sincerely,
Barack Obama
United States Senator
