Sen. Herb Kohl (D-Wis.) has co-authored legislation to regulate long-term care insurance, following a hearing where the senator called for stronger consumer protections and greater transparency in the industry.

Herb Kohl

Kohl and Sen. Ron Wyden (D-Ore.) introduced the Confidence in Long-Term Care Insurance Act of 2009 June 3. The legislation strengthens consumer protections with respect to premium rate stability, market disclosures, and training and certification of agents, according to the senators. The proposed bill would also make it easier for consumers to accurately compare policies from different insurance carriers, especially in regard to covered benefits and whether the plan offers inflation protection.

Kohl and Wyden’s bill additionally requires reciprocity across state partnership plans, currently in place in 43 states, by aligning everyone under standards in place by the National Association of Insurance Commissioners.

In a statement, Kohl said partnership programs, where states partner with private insurance companies to encourage customers to purchase LTC policies, have been initiated “in order to help alleviate some of the long-term care costs that are crushing state Medicaid budgets.”

“We have a duty to make sure these policies, which may span many decades, are financially viable,” the chairman of the Senate Special Committee on Aging said. “Many insurance companies have been raising their policyholders’ monthly premiums, which can be devastating for older persons who are living on a fixed income. Until we can guarantee that consumers have adequate protections, and that premiums won’t skyrocket down the road, long-term care insurance is not ready to be a major part of the health care reform solution.”

In light of insurers applying for funds from the U.S. Treasury’s Troubled Asset Relief Program, the Senate committee initiated a review of several companies the participate in partnership programs. They found that some have recently requested premium increases, with one company – not named by the committee – requesting a 40% increase.

The committee also found that the cost of comparable plans varies “greatly,” state-by-state, as do consumer safeguards, hence the need for regulation.

During their hearing on the matter June 3, the committee heard support for the proposed legislation from Richmond, Va.-based Genworth Financial.

Buck Stinson, president of the company’s insurance products division, voiced his positive backing for the bill and the encouragement by state and federal entities in urging consumers to take responsibility for their long-term care.

The insurer was the only representative of a long-term insurance carrier asked to testify, as the nation’s largest provider of long-term care insurance policies, according to the committee. Stinson noted Genworth “wholeheartedly appreciates the intent of this legislation, which suggests to us a profound recognition by the federal government of the important role of private long term care insurance.”

“We support the chairman’s efforts to ensure adequate oversight and monitoring of the private market and its state regulators to continue to promote consumer confidence as the market fulfills its obligation to protect consumers when they purchase a policy and at the moment of truth, when they need to access their policy benefits,” Stinton said according to a transcript of the hearing.

The hearing also included testimony from Diane Rowland, executive director of the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. Rowland said that in 2007, long-term care insurance paid for only 7% of long-term care, whereas Medicaid funded 49%.