Another ominous sign on the LTC insurance front

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James M. Berklan, Editor, McKnight’s Long-Term Care News
James M. Berklan, Editor, McKnight’s Long-Term Care News

In olden days, 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 simply had the fight taken out of them.

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

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

The open enrollment period lasts through Sept. 30. If enrollees do nothing? They keep their same level of coverage and potentially get slammed with premium increases 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.

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. 

One “stunned” federal employee association exec has called for structural change to the federal employees' LTC insurance plan so that similar shocks won't occur in the future. Fat chance.

While some feel insurance companies are trying to cash in on customers, others say that high costs of care are driving price hikes.

It could lead to expansion of Medicaid rolls. There are limited Medicaid dollars to be spent, so serving more beneficiaries will not cover increasing care needs. LTC insurance is a coveted form of private pay, which is what every healthcare system craves.

With this latest LTC insurance's punch to the gut, however, we're beginning to circle back to some very old health advice:

If you want to survive this health system, have a lot of money. Or simply never get sick.