Let's talk about Long Term Care insurance

Yes, this is about Long Term Care insurance. Now take the gun away from your temple (although that would obviate the need for LTC) and read along. And this is not insurance industry bashing; well, mostly not insurance industry bashing.

As we all know, any discussion of insurance brings you into a magically arcane netherworld of mind-numbing actuarial data and terms that have no meaning outside the insurance lexicon. This is not one of those discussions.

This is about how the state of Colorado deals with requests from carriers for LTC insurance and rate increases, and the flaws in that system as those flaws pertain to consumers. Having recently received a notice from our LTC carrier that over three years, our premiums will increase 87.5%, our attention has been grabbed.

That increase was granted by the Colorado Division of Insurance, an agency within Colorado Department of Regulatory agencies. When companies decide to raise their rates on home, property, auto, health, long-term care, they go to DOI to make their case. Their case is often made.

The person who oversees the Division of Insurance is called "The Commissioner." You might think that someone called Commissioner oversees a Commission that decides on the requests for rate increases.

You would be wrong.

There is no appointed commission to assess DOI rate cases, at least as I understand the term "commission." There is only The Commissioner, assisted by his Actuarial Services and Financial Examination Team, who make those decisions.

And according to staff, staff members make up the commission. This is a major departure from other agencies, such as the Public Utilities Commission or the Air Quality Control Commission, which have distinct commissions and commissioners.

In that model, there is a clear separation between staff and commission; and commissioners can review, question, even challenge staff's conclusions and recommended decisions.

Are there opportunities for the people affected by the actions of the DOI to participate in this rate increase process?

Those opportunities are scant.

Participation by the affected is questionable. And conjunctively, so is consumer advocacy. What does advocacy look like? With DOI, it looks like individual policyholders are on their own to advocate for themselves, since, as of this writing, there are no state or local agencies, or nonprofit organizations that might have some clout to advocate for consumers in the LTC field.

When rate increase decisions are made, there is no hearing at which consumers can ask questions like, "What cost-cutting measures is your company taking in-house so that the consumer does not bear the entire burden of making sure the company's annual report looks good?" That is a valid question when the justifications for granting the rate increase are given.

Those justifications by the applicant, for LTC, are:

1) We did not anticipate costs for services would increase so dramatically.

2) We did not anticipate people would be living longer.

3) We did not anticipate interest rates would be so low.

The careful reader will notice a theme running through these three points: "We didn't anticipate."

So the company's inability to make accurate projections results in the policy holder having to make up the short comings of the company's failed forecasting.

It is predictable that this sounds perfectly reasonable. But what is interesting about these three points is that it is DOI that tells the company to use them in its letter to its policyholders, telling them that they will be getting an 87.5% rate increase over the next three years.

And insurance companies can always say the one thing that sends shivers through their insured and the DOI: "Give us what we want or we will leave."

"If it ain't broke, don't fix it." Common sense. Words to live by. But they do not apply to DOI's process for granting rate increases. IMHO: It's broke; fix it.

Josh Joswick served on the La Plata County Board of Commissioners from 1993-2005. He is a resident of Bayfield.

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