WASHINGTON – Two Maryland legislators are backing bills that they hope will jump-start the market for long-term health care insurance by requiring government agencies to offer the benefit to federal workers, retirees and their families.
Federal workers would still have to pay the full premium for coverage under the bills introduced on behalf of the Clinton administration by Sen. Barbara Mikulski, D-Baltimore, and Rep. Elijah Cummings, D-Baltimore.
The government would pick up the $15 million administrative tab to select group plans and to educate workers about the new benefit.
The Office of Personnel Management estimates that 300,000 workers will take advantage of the group rates, out of a potential pool of 8.7 million beneficiaries. Those new group policyholders could ultimately drive rates down 15 to 20 percent, OPM predicts.
Currently, employers buy only a fraction of the long-term care coverage policies written in the country. The bulk are paid for by individuals who often find the premiums prohibitive.
Mikulski and Cummings believe that their bills will set the federal government up as a model for private employers.
Richard Coorsh, a spokesman for the Health Insurance Industry Association, applauded the move.
“I believe that the government would be setting an excellent example for private employers if it did this,” Coorsh said.
He said employers bought only 20 percent of the approximately 5 million long-term health care plans sold nationwide between 1987 and 1996.
“More employers offering this means more business, and that means more competition among insurance companies,” Coorsh said. And, ultimately, that competition will benefit all consumers, he said.
Coorsh said the bill would also raise awareness about the need for long-term care coverage. His association found in a 1996 survey that the average age of individuals buying such insurance through an employer is 43, compared to an average age of 66 for those buying such policies on their own.
A 43-year-old would pay $247 a month for bare-bones coverage that would cost $980 a month for a 66-year-old.
Businesses may have an additional incentive to contribute to workers’ long-term care coverage, said Coorsh: The 1996 Health Insurance Portability and Accountability Act makes employer contributions to such group plans 100 percent tax deductible.
An official with the National Association of Retired Federal Employees called the long-term care initiative “a great idea.”
“We’ve been looking for long-term care coverage with cheaper premiums and better coverage and these bills would provide both of those things,” said Dan Adcock, the group’s legislative director.
He said that historically premiums have been prohibitive for individuals and that those who do buy coverage find that the benefits rarely kick in when needed. He said the issue is on the minds of his members.
“They’re blown away when they look on an individual basis, but encouraged that the government could bring the costs down so much,” he said.
The bills’ backers say they worry not only about high premiums, but also about skyrocketing out-of-pocket costs for those who are not covered. Nursing home care that now costs $40,000 a year will cost $97,000 a year by 2030, Cummings said in a Jan. 6 statement.
The bills follow the long-term care initiatives that President Clinton outlined in his State of the Union address last week. His proposal, which will be in the budget he presents next week, includes an annual $1,000 tax credit for patients receiving long-term care at home or in a nursing home and for their caregivers.