CNN Today

Congress Examines Long-Term Care Policies

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NATALIE ALLEN, CNN ANCHOR: Well, Congress is taking a close look today at a relatively new type of insurance.

Long-term care policies are designed to help sick elderly people live at home. But too often, insurance companies lure the elderly with super-low premiums, only to raise them sky high later.

CNN's Kathleen Koch looked at the problem and what some in Congress want to do about it.

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KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): Oliver and Margaret Cromwell (ph) of West Palm Beach, Florida, wanted to plan ahead in case either of them became seriously ill.

So, to supplement their Medicare coverage, they bought a long- term care policy suggesting they'd pay a fixed premium of $1,500 a year. They were stunned when, four years later, premiums shot up to $9,000.

UNIDENTIFIED MALE: We wonder why they're raising this again. They always had a letter explaining some reason that they were raising it. And, it just kept going up, up, up, and we just couldn't understand why.

KOCH: The problem has gotten so bad, some seniors have won class-action suits against insurance companies they believe duped them.

UNIDENTIFIED MALE: You pay for a year or two, then they jack up the premium. You have to lapse. The company keeps all the money and you got nothing, except you're a few thousand dollars closer to Welfare.

Some three million Americans have long-term care insurance, and in some cases, the premiums do remain level. But one of the insurance companies, which has boosted rates sometimes by 40 percent a year, blames it on early cost miscalculations.

LIZ GEORGAKOPOULOUS, CONSECO: We have a responsibility to all of the policyholders in force to remain solvent and to be there for them when they need those, and that might, indeed, require us to adjust the prices on those policies. KOCH: Congress is considering making all long-term care premiums tax deductible. But first, it wants to stop the abuses.

SEN. CHARLES GRASSLEY (R), IOWA: We want to make sure that we have protections so that these premiums can't shoot up as rapidly as they have in some instances.

KOCH: State insurance commissioners tell Congress they're considering new regulations to assure long-term care policies are priced properly from the start.

KATHLEEN SEBELIUS, NAT'L ASSN. OF INSURANCE COMMISSIONERS: If there has to be a rate increase, they will not lose every dime they put into the premium, which happens too often now.

KOCH (on camera): But such reforms have to be enacted on a state-by-state basis and they would only apply to future policyholders.

Kathleen Koch, for CNN, Washington.

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