The headline of the lead story in yesterday's edition of “The New York Times” was devastating to the insurance industry's already tattered reputation–”Aged, Frail and Denied Care By Their Insurers.” (The word “Evil” before “Insurers” is implied.) Included was a page-one picture of a sweet, little old lady, being comforted by her daughter while battling long-term care insurers who are giving mom the runaround. Even though this does not involve property-casualty coverage, collateral damage will affect all types of carriers, as the general public doesn't distinguish among the various types of insurers. It's all one big, bad industry.
You may access the Times story by clicking here. Read it and weep.
The bulk of the story primarily dealt with claims problems plaguing policyholders of Conseco and its affiliate. But even though the article conceded that “tens of thousands of elderly Americans have received life-prolonging care as a result of their long-term-care policies,” the focus of the piece was that “thousands of policyholders say they have received only excuses about why insurers will not pay.”
The article also exposed some serious shortcomings in state regulatory oversight of LTC claims mishandling, making it sound as if insurance departments are absolutely clueless about the problems plaguing policyholders.
I have to admit the article scared the life out of me. Approaching 49, I'm at the age where the purchase of LTC coverage–if only for asset protection–will soon become a necessity. But I have always been nagged by doubts about the product. Will LTC carriers be there years from now, after I have committed tens of thousands of dollars to them, when I actually need care? Or will all I purchase be the right to sue?
If someone in my position is nervous, imagine the average Joe who only hears horror stories like this from the media–or perhaps from a friend, family member or neighbor battling some insurer over a disputed claim.
The phones were probably ringing off the hook yesterday at the offices of life insurance agents and financial planners nationwide from LTC buyers looking for reassurance that their carrier can be relied upon to cough up the dough when required–without undue fuss, let alone a legal challenge.
Every time someone in the industry screws up, the public's worst fears about insurers are realized. The stereotype of fat cats who make profits by denying valid claims is confirmed, and agents face that much harder of a sales job to convince prospects their carriers are different–that such extreme cases of claimant abuse are in the minority. I don't envy them the task.
With LTC costs soaring and the population aging rapidly, can the LTC insurance market fill the gap and provide a soft landing for all but an unlucky handful? Or should LTC be built into the Medicare system, so otherwise honest people don't have to resort to asset-transfer scams to become eligible for Medicaid, and thus avoid spending their life savings on the last few, painful years of life?
These are not easy questions, but fundamental issues such as these–about the need for universal health care, affordable drug coverage, Social Security and long-term care–should dominate the next presidential election. As the Baby Boomers continue to age, we have that much less time to craft a solution–one that hopefully includes a major role for an insurance industry that has yet to prove itself worthy of the public's trust.
(For the LTC industry's reaction, click here.)
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