Long-term care insurance rate increase being debated

Senior citizens already paying heavy premiums on their long-term care insurance plans strongly urged state regulators on Thursday to oppose any additional rate hikes wanted by insurance carriers.

The seniors, who complained about the financial pressures placed on them by past rate increases, filled a Baltimore County auditorium where a public hearing called by Maryland Insurance Commissioner Al Redmer Jr. was held to consider if insurers should be allowed to impose even higher premiums.


Maryland law prevents long-term care insurers from raising rates more than 15 percent annually. The carriers, who have not formally requested that the 15 percent cap be lifted, say the increase isn't enough to cover rising claims as people are living longer.

Many of the seniors gathered at the Community College of Baltimore County said they have been hit with the maximum increases for several years and they can't afford to pay anymore. They worry about having to cancel their policies or cut back on the benefits covered. This could put an extra burden on the Medicare program, some said, as more seniors turn to it for coverage of some medical services.

Lynn Hollenbach of Silver Spring said he and his wife were subject to 15 percent rate increases for the last three years on their policy from Genworth.

"My wife and I are now retired and living on a fixed income," he said. "We never anticipated multiple rate increases. This has become prohibitive. It would appear these insurance companies are purposely pricing us out of our insurance policies."

Insurance company representatives said they have to make enough money to be able to pay claims.

"It is always important to protect the solvency and book of business," said Kimberly Robinson, executive director of the League of Life and Health Insurers of Maryland. "It's never easy for a company to raise costs on customers."

Redmer said he will coordinate a working group to consider next steps but said he is not "seriously" considering eliminating the 15 percent cap at this point. The hearing was called because so many consumers were complaining about recent rate hikes. At the same time, insurers have said the 15 percent cap hurts them. Redmer wanted to hear from all sides.

Insurers blame bad predictions on factors such as morbidity and mortality that impact how much is paid out on claims. Morbidity, or the number of people who are sick, is higher than they thought it would be, meaning more money is paid out. Mortality, or the number of people who die, is lower, so more people are living into the age where they might have to file more claims.


"Without a crystal ball to know when changes are going to occur you [make an] assumption and then when they turn out wrong then you have to adjust," said Bill Weller of America's Health Insurance Plans, a trade group that represents 1,300 insurance companies.

Policyholders said they should not be punished because of bad decisions made by insurance companies.

"I believe the impact of this should not be held solely by the consumers who purchased the policy," said Stephen Fox, who said he has held a long-term care policy since 2004 and seen rates increase 15 percent the last two years.

He said he thinks the state should do a better job at protecting consumers.

"With 15 percent rate increases each year, I hope I can win the lottery before I run out of money," Fox said.

Many in the crowd called for more transparency, saying the rate hikes caught them by surprise. They also suggested a lifetime cap on increases, so that there could be no increase after they reach a certain time limit or age.


Robert L. Caret, chancellor of The University System of Maryland, said he paid about $5,000 a year for his policy when he bought it five years ago and now pays about $6,000 a year. He still works but said the costs can be hard for people in their 70s and 80s on fixed incomes.

"I don't think profitability of insurance companies should be our problem," he said.

Sarah Li, chief actuary for the Maryland Insurance Administration, told the crowd that the state rate increases are far from the worst in the country.

The cost of long-term care is a national problem. Many carriers have dropped their long-term business over time. Nearly 100 companies sold the policies 15 years ago, but today about 20 do so, including a half dozen or so in Maryland.

Redmer said the state is also considering whether to adopt standards created by the National Association of Insurance Administrators regarding long-term care.

The group has adopted a "long-term care insurance model" that it says provides consumer protections while promoting innovation to deal with the financial problems in the troubled industry.