The House Energy & Commerce Committee has added Senator Ted Kennedy's national long-term care insurance proposal (the CLASS Act) to its version of health reform legislation. This is another remarkable step forward for the measure although, as I've noted before, the fate of this and other long-term care provisions won't be decided until Congress writes a final health care bill sometime this fall.
The House panel included CLASS in its bill despite a new letter opposing the measure from the American Council of Life Insurers, a major industry lobbying group. ACLI says it opposes the bill because its benefit level, a minimum of $50 per day for life, is insufficient for someone who needs a nursing home level of care.
I suspect ACLI's opposition reflects a major industry split. I'm told that many of the biggest writers of private LTC insurance oppose the CLASS Act while many smaller carriers support it. Although Kennedy has explictly said private insurers could write policies to supplement CLASS Act coverage for many consumers, many of the major writers of private LTC insurance prefer the current environment, where they dominate a small market.
It seems that if I were an insurance company, I'd welcome an opportunity to revive what has been a moribund market. As currently designed, private LTC insurance is too complicated, too expensive, and too far off the radar screen for many consumers. Just as Medigap and Medicare Part D insurance have provided a nice kick for the health insurance business, CLASS has the potential to do the same for private LTC carriers. I think ACLI may be missing the boat here.
