KIRKLAND, Wash. (CitizenWire) — Concerned that long-term care insurance rates might go up? "The California Assembly feels your pain," says Cameron Truesdell, CEO of LTC Financial Partners LLC (LTCFP), "but they just passed a bill, AB 999, that will only make matters worse if the State Senate also passes it." LTCFP is one of America's largest and most experienced long-term care insurance agencies, representing multiple carriers.
The California legislation would require carriers to wait 10 years before requesting rate adjustments on new insurance products (5 years for existing policies).
"AB 999 sounds like a good idea, to protect consumers by keeping a lid on rates," says Truesdell, "but in the real world it would have very bad unintended consequences."
* Risk of rate spikes on new policies. "Insurance companies don't have crystal balls," says Truesdell, "so on their new products, many would set higher rates than otherwise, knowing they can't change them for 10 years. They would need to protect themselves from the worst, since anything can happen in a decade, such as longer periods of incapacity requiring care, or continued low interest rates that depress their income."
* Fewer LTC insurance choices. "Some carriers have told us they will exit the California market if AB 999 makes it into law," says Truesdell. "Many years ago we saw this happen in another state with a related health-care product. A well-intentioned but onerous law drove most of the top insurers out. They don't like being handcuffed, thrown overboard, and then expected to swim in uncertain waters."
* Greater financial burden for Medi-Cal (California's name for Medicaid). With an initial rate hike and fewer options for private LTC insurance, "more middle-class Californian's would spend down their assets to qualify for Medi-Cal instead of buying LTC insurance," says Truesdell. "This could break the back of a system designed for the truly needy, and everyone would lose."
Instead of pursuing counterproductive legislation, California should ramp up an effective, already-existing program, the California Partnership for Long-Term Care, Truesdell advises. In this program residents may choose any qualified private LTC plan with the state's assurances of Medi-Cal asset protection.
"We applaud the motives behind AB 999," Truesdell says. "But good intentions can result in over-regulation that backfires. This new law, if enacted, will not only encourage but almost mandate higher initial rates on new policies. How does that help consumers?"
Truesdell encourages California voters to let their State Senators know where they stand on AB 999, "before it's too late." Contact information for California representatives may be found at http://www.legislature.ca.gov/legislators_and_districts/legislators/your_legislator.html .
LTCFP is a co-founder and sponsor of the "3 in 4 Need More" campaign, which seeks to multiply the number of Americans protected by long-term care planning. More information is available at http://web.ltcfp.com .
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