James M. Berklan

In olden days, observers could pretty easily figure out what would happen if the leader of an army went down in battle. The rest of the troops were likely to founder, because they were demoralized, directionless or just had the fight taken out of them.

One has to think there are some private long-term care insurance proponents feeling the same way now.

Federal workers and retirees who are enrolled in the government’s shiny long-term care insurance program were notified this week that they could be facing premium increases of up to 126%, effective Nov. 1.  Rate increases will affect the vast majority of enrollees and average 83% — or $111 per month.

The open period for enrollment starts Monday and lasts through Sept. 30. If enrollees do nothing? They keep their same level of coverage and get slammed with a premium increase automatically.

Welcome to the real world, Uncle Sam’s working sons and daughters.

The reason for the huge cost increases is simple: Recent analyses have shown that current premiums won’t be enough to cover projected future payouts. That’s the word from John Hancock Life and Health Insurance — the only insurer to bid for the government contract.

In other words, federal employees are being treated like regular civilians who have been choking on huge LTC insurance premium increases through the years.

It’s a jarring scenario. When it began 14 years ago, the federal LTC insurance program was heralded as a beacon that would lead the general population into greater acceptance and adoption of the product. Enrollment rates were high.

Now it’s difficult to know where they will go. Some will swallow hard, lower their standard of living and pay the increases, while others will dial back their amount of coverage. Yet others might drop out altogether, losing the equity from years of premiums already paid.

The cacophony over the premium-increases has been swift and steady.

“I am stunned at the extent of the increase and angry that this type of financial pressure is being placed on federal employees and retirees,” raged Richard G. Thissen, president of the National Active and Retired Federal Employees Association.

“This situation should not have occurred and signals the need for change in the structure of the FLTCIP to prevent federal employees and retirees from ever facing such huge, unexpected increases again.”

Fat chance of that.

What the hundreds of thousands of federal employees, spouses and family members are experiencing is what’s been happening to others without federal clout for years. As a result, the general public has held private LTC insurance at arm’s length like a dirty diaper.

The disintegration of companies offering long-term care policies has reflected the disdain.

While some might criticize insurance companies for trying to excessively cash in on customers, others point out that high costs of care are driving a lot of insurance price hikes, and withdrawals.

It could lead to expansion of Medicaid rolls. That’s not good news for the government or providers. There are limited Medicaid dollars to be spent, so that will not help pay for increasing care needs. LTC insurance policies are a form of private pay, which is what every healthcare system craves.

Long-term care insurance is a hurting industry, however. It’s hoping for a comeback, or at least a way to gain firmer footing. Few players are still willing to play in its murky waters.

Something is needed to get more people buying if long-term care operators are to benefit more from it. But, as my friend Steve Moses at the Center for Long-Term Care Reform often points out, Medicaid was not meant to be a parachute for the middle class or those who would artificially spend down assets in order to take advantage of a program designed for the needy.

With this latest long-term care insurance punch to the gut, we’re beginning to circle back to some very old healthcare advice for consumers: Simply have a lot — A LOT — of money if want coverage.

Or don’t ever let your health decline.

Follow James M. Berklan @JimBerklan.