Panel debates long-term care insurance bills

Panel debates long-term care insurance bills

Federal employees will be able to get long-term care insurance at discounted rates starting next year-if Congress can agree this year on how best to offer the new benefit.

The House Government Reform Subcommittee on the Civil Service held a hearing Thursday to review three competing proposals on how to set up a long-term care insurance program for federal employees.

Under all three proposals, the government would entice insurance carriers to lower the long-term care insurance premiums with the potential market of millions of federal employees, retirees and their families. Long-term care insurance covers the costs of nursing care, home health care, and other services for people who require constant medical attention.

At the hearing, Judy Kramer, the wife of a federal retiree, described the financial and emotional burdens of providing long-term care to her parents without the benefit of long-term care insurance. Kramer has written about her experience in a column for the Montgomery County, Md. Gazette newspapers.

Less than two years in a nursing home ate up the $150,000 nest egg her parents had saved up over the course of their working lives, because the cost of nursing care for them was $7,000 a month. After her parents' money was gone, Kramer struggled to find a way to cover the costs of their care.

"This journey with my parents into their old age was a trip none of us wanted to make," Kramer said. "It was expensive. It was lonely. It was frustrating. It was infinitely sad."

Had long-term care insurance been available to them, her parents would likely have purchased it to save their daughter from struggling to cover the cost of their care, Kramer said.

Long-term care insurance is widely seen as too expensive for most consumers, though 6 million Americans have long-term care insurance, insurance groups say. The average base premium for 40-year-olds is $209 a year, the Health Insurance Association of America estimates. The average premium climbs as high as $3,803 a year for 79-year-olds, the association says. The basic long-term care package typically covers four years of nursing home care at $100 a day.

The Office of Personnel Management estimates that the government could negotiate 15 to 20 percent discounts for federal employees and retirees.

Under all three proposals the subcommitee reviewed, employees would have to pay the full premium, unlike the regular federal employees health insurance program, in which the government covers 72 percent of employees' insurance costs.

One bill, H.R. 1111, introduced this week by Rep. Connie Morella, R-Md., would extend the insurance program to military personnel and retirees, postal workers, and their families. Civil Service Subcommittee Chairman Rep. Joe Scarborough, R-Fla., and Ranking Member Rep. Elijah Cummings, D-Md., signaled support for the idea of opening the long-term care insurance program to more people. Both Scarborough and Cummings have introduced different long-term care insurance proposals (H.R. 602 and H.R. 110).

The main dispute among the three proposals is over what role the Office of Personnel Management should play in the program.

Cummings' bill (H.R. 110) would give OPM $15 million to start up the program and would also give the agency broad discretion in negotiating premiums and benefits with insurance carriers. Morella's bill (H.R. 1111) would give OPM a similar level of control over premiums and benefits, but would cover OPM's administrative costs by adding a surcharge to premiums. Scarborough's bill would restrict OPM's influence over premiums and benefits, instead relying on competition among insurance carriers to drive down costs and improve benefits.

Former subcommittee chairman Rep. John Mica, R-Fla., made an appearance at the hearing to ridicule OPM's ability to administer another insurance program.

Mica said OPM was "taking a simple idea and making it into a potential bureaucratic nightmare."

OPM Director Janice Lachance said her agency must have a strong role in the program to get the best rates for employees.

"We would seek competitive bids for long-term care insurance that meet specified quality and price criteria and select the contractor or contractors on that basis," Lachance said.