HEARING - U.S. Senate Special Committee on Aging

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63 or no individual underwriting). At least one company has filed for approval of a group policy. It appears that new products are being introduced with ijcreasing frequency and that the next generation of long term care insurance products will be more diverse than the current one. Each venture into the marketplace provides the industry with additional information on the feasibility and viability of private long term care insurance coverage. Long term care may well be the major health policy issue in the coming decades. The industry and individual companies are exploring the problems and seeking solutions. Both government and private resources are required to meet current challenges and plan for the future needs of our expanding elderly population. The Health Insurance Association of Pmerica stands ready to join in the public debate and offers its assistance to this coanrdttee as you deliberate this pressing national probem.
64 Chairman MELCHER. Senator Heinz. Senator HEINZ. I will just take a moment because I asked probably more than my fair share of questions earlier. Mr. Shapland, one of the recommendations you made in your testimony has to do with getting employers to fund retiree health benefits. How much is that going to be a solution to the problem? Mr. SHAPLAND. It is hard to tell. I do not know if anybody would know the answer to that. All we do know is that when employers see a need for retirement income, then when they fund for that, IRS and tax laws and so on will recognize that as a legitimate business expense. But if an employer also said, well, we need to recognize that our retirees when they retire are going to have long-term nursing home care costs and expenses like that that are catastrophic and want to fund for that, then IRS says no. Senator HEINZ. The Brookings Institute is studying the viability of various financing options for long-term care; that is the Alice Rivlin Task Force. I am told. that their preliminary analysis shows that private insurance is unlikely to be purchased by very many Americans. I guess right now, there are about 130,000 policies outstanding, offered by about 12 companies. How do we deal with the apparent lack of marketable long-term care insurance policies by the private sector, namely your industry? Mr. SHAPLAND. I thought the answer to that was pretty well demonstrated here today and discussed, and that was education. You know, people when they are 40 years old-- Senator HEINZ. I beg your pardon? Mr. SHAPLAND. It is an educational process, as was discussed here. People age 40 without a lot more education do not think about, gee, I have got to start funding for long-term care. They might think a little bit about pension costs or something like that, but they do not visualize themselves being in a nursing home. So it fits an educational process that I think is tied in with the whole gamut of catastrophic costs. There is a big educational process that needs to take place regarding what Medicare pays, what Medicaid pays, what is not covered, where you need to buy some insurance. As far as the number of people covered currently by the private insurance industry by private long-term care policies, that is a very low number, because it is in its infancy. Long-term nursing home care policies have just begun to be sold so we have not really been given a chance. Part of the reason that we have not sold nursing home care policies up to this time is because we did not have any actuarial statistics, and there is quite a risk involved in engaging in a market where you have no data. Senator HEINZ. Well, I understand the difficulties in pricing, but in view of the study that was done last year by the American Association of Retired Persons, which shows roughly 79 percent of senior citizens think that Medicare is going to cover their health care needs, including nursing home care. I would scarcely describe that as an educational problem. It is like everybody believing that the world is flat when in fact it is round. And to say that in 1492,
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S. HRG. 100-69 CATASTROPHIC HEALTH
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CONTENTS Opening statement by Senat
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2 Second, I think the private insur
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4 So the question before us is how
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6 the elderly, long-term health car
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8 ments for our retirement. I might
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10 Mrs. YELINECK. Well, it would be
Page 15 and 16: 12 As I understand it, you have not
Page 17 and 18: 14 Mrs. YELINECK. One does not expe
Page 19 and 20: 16 Senator BURDICK. Well, thank you
Page 21 and 22: 18 Mrs. YEL.INECK. No. I started ou
Page 23 and 24: 20 Therefore-I am supposed to take
Page 25 and 26: 22 Chairman MELCHER. Well, I am ple
Page 27 and 28: 24 month. Let us assume it costs $1
Page 29 and 30: 26 STATEMENT BY SENATOR PETE WILSON
Page 31 and 32: 28 Mrs. RIEGER. We have; we have wo
Page 33 and 34: 30 Four years ago this August was w
Page 35 and 36: 32 she has only 50 percent vision i
Page 37 and 38: 34 Senator HEINZ. So it is both a p
Page 39 and 40: 36 rich. Indeed, in the academic co
Page 41 and 42: 38 pointedly in the comment from Mr
Page 43 and 44: 40 finding out is that it is very l
Page 45 and 46: 42 industry's role in providing cat
Page 47 and 48: 44 Senator HEINZ. So things are wor
Page 49 and 50: 46 Chairman MELCHER. In exactly the
Page 51 and 52: 48 plement policy, what should that
Page 53 and 54: 50 - 2 - I am Robert Shapland, Vice
Page 55 and 56: 52 - 4 - CATASTRIPC PROTECTION IiDE
Page 57 and 58: 54 -6- MiCIGAP INSJRANCE: A RPL1C/P
Page 59 and 60: 56 To ensure that all of these cont
Page 61 and 62: 58 - 10 - The HJAA also endorses Me
Page 63 and 64: 60 - 12 - Finally, given that Congr
Page 65: 62 - 14 - A recent HLAA survey of o
Page 69 and 70: 66 Mr. SHAPLAND. I think we are in
Page 71 and 72: 68 Those problems are real problems
Page 73 and 74: 70 Mr. SHAPLAND. Oh, no. There are
Page 75 and 76: 72 comprehension, and it is growing
Page 77 and 78: 74 that educational process, and we
Page 79 and 80: 76 So we have supported and activel
Page 81 and 82: 78 Mr. SHIAPLAND. How much would nu
Page 83 and 84: 80 rently being offered by the indu
Page 85 and 86: 82 Recently, Karri Lynn has started
Page 87 and 88: 84 Mr. Chairman and Members of the
Page 89 and 90: 86 standards for voluntary certific
Page 91 and 92: 88 non-group subscribers of reporti
Page 93 and 94: 90 We believe a new federal program
Page 95 and 96: 92 However, public awareness is nee
Page 97 and 98: 94 Item 3 Testi~ony of GAIL SHEARER
Page 99 and 100: 96 to Secretary Bowen's proposals c
Page 101 and 102: 98 -4- most-states do not monitor t
Page 103 and 104: 100 Catastrophic Protection within
Page 105 and 106: 102 - a - participants and in part
Page 107 and 108: 104 - 2-- Consumers Union suV orts
Page 109 and 110: 106 29), but fails to acknowledge t
Page 111 and 112: 108 explore all alternatives to lon
Page 113 and 114: 110 adds to the complexity of Medic
Page 115 and 116: 112 - 10- Consider first the propos
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114 - 12- insurance premiums and me
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Consunmer Unon Pubtishcr of Consume
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FOR RELEASE AT 9:00 P.M. H2ST) TUES
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120 Itema I CENTER FOR MEDICARE ALw
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Page 3 122 aide services, however,
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Page 5 state treasuries." 124 Judge
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126 462 6485 New Developments 10,05
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128 462 6-85 New Developments 10,05
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130 462 6-85 New Developments 10,05
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132 10,930 New Developments tI.PZ ;
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10,932 134 New Davelopments 492 346
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136 10,934 New Developments It! ;6
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10,936 138 New Developmenlt I. Thc
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140 10,938 New Development. 492 S-8
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10,940 142 New Developments i92 586
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ATroR EYS -HARLES C. -ULiIN JUDITH
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146 reformed its decision-making pr
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148 : 14 2i57 New Developments 13,1
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~ 150 a>, rsn Cdw ~w (e d rum 0A7,.
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152 All Of these figures are based
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154 The requirements of this Act sh
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156 Drefting Note: Where the word "
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158 (b) The issuance of the group p
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160 (2) Contain a provision establi
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162 and competitive reasons. It is
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164 -13- E. Affordability of Long T
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NAIC LTC ADVISORY COMMITEE EXPOSURE
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Setinzn IS. Poicyx D~efinitieno aid
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170 3. The term "noncancellable' ma
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172 extension of benefits beyond th
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artinM B Requirmnts for Rplnmacwt 1
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176 The above "Notice to Applicant"
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(pinnal Rasting &mdsninn 178 Benefi
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APPEMI!X B 180 OCWARISCN OF lVLCY i
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COMPAIeSON OF LOtG TEIM CoAt PfLtCI
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COMPABI:SZN OF LC#C TE" CAiE -OLICI
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COWaPAISON Of LOSt TERM CARE POLICI
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cowRiiSOi or touTE reM CasE nOuczcS
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COGPARISON OF LONG TERM CARE POLICI
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SOME BASIC THINGS YOU SHOULD KNOW M
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Private health insurance is availab
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WHAT MEDICARE PART B PAYS 196 MEDIC
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EXPENSES NOT COVERED BY MEDICARE Me
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HEARING - U.S. Senate Special Committee on Aging

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