Act One, Scene One: A group of federal workers and retirees learns that their Long Term Care Health Insurance premiums are going up this year. By an average of 83 percent. They are stunned, horrified then very, very ticked off. They react.
Act One, Scene Two: Federal union leaders, management groups and those representing retirees react. Angrily.
Frequently irate members of Congress become irater and more irater with every statement. They are seriously irate! Politicians threaten/promise to hold hearings to get to the bottom of the shocking premium increases.
Act One, Scene Three: A congressional committee (probably on the House side) holds hearings. Officials from the Office of Personnel Management, from John Hancock Life Insurance and Long Term Care Partners are called as witnesses. Hancock underwrites the program, LTC Partners manage it and OPM has overall responsibility. Some heads may roll. Some people may be verbally roughed up by members of Congress.
Politicians and people who follow the hearings are going to learn a lot about the costs of long term care. And how the number of people needing it has risen dramatically. So have costs. Insurance companies—like most places—are in the business of making money in addition to providing a badly needed benefit or service. When it becomes a break-even or money-losing proposition, the wise ones bail. Ten years ago there were just over 100 life insurance companies offering LTC coverage. Today there are about a dozen. Most companies that did offer it stopped long ago. They continue to cover people who joined a group plan, but haven’t taken on any new policy-holders in a decade. For a reason.
An expert on the various federal health insurance programs says “you might want to mention that the other villain is ‘the Federal Reserve’ which has kept the rate of return on the LTC reserve fund close to zero, but probably no one will invite the Fed to testify.”
So what, in the end, is Congress going to do? When this current seven year contract expires what if NOBODY bids on it? Only one company did this year. If nobody will take the federal program will Congress (using your tax dollars) subsidize it? Will it rewrite the rules which now say that premiums must cover the cost of benefits? Will the government setup its own LTC program? If it does what about people who don’t work for the government, but who want but can’t get coverage elsewhere? Should they be allowed in? Can they be kept out?
Again, our expert says that if nobody bids next time “the program really wouldn’t end” for people already enrolled “because there is a large reserve fund to pay for future LTC of those currently enrolled.” That I can identify with. Years ago I bought a group LTC plan through my employer, The Washington Post. But since LTC has become so expensive, the company that handled our plan got out of the LTC business. Those of us who were covered were grandfathered in. We continue to pay premiums (which by the way are going up next month) and they continue to offer us coverage. But they haven’t been taking in any new customers for at least 10 years.