Probe of Nursing Home Insurance Abuse Urged

Vulnerable older Americans are being duped into buying expensive nursing home insurance policies that fail to deliver the promised protection against staggering long-term care costs, a private advocacy group said today.

The Families USA Foundation called for a government inquiry into what it said are widespread abuses in the long-term care insurance market, including misrepresentations by insurance agents, company refusals to pay benefits and extensive payment delays.

“There is so much evidence of insurance industry abuse of frail elderly consumers that the Federal Trade Commission should investigate,” said Ron Pollack, executive director of the foundation. The problems include top-rated companies as well as fly-by-night operations, the foundation said.

In one case, it said, an insurance agent visited a 74-year-old widow in Minnesota in the hospital to collect her first premium and later denied her nursing home benefits because she was hospitalized when she bought the policy.

In another, an elderly Iowa man was promised that he need never worry about paying for a nursing home if he bought a policy that turned out to be so restrictive it would not cover 97% of the nursing home beds in Iowa.

The Health Insurance Assn. of America issued a statement in response that said it would welcome an FTC investigation “because we are convinced it will reveal that abuses are the exception, not the rule.”

It said Families USA was calling for a government inquiry in hopes of promoting “an outdated, big-government approach to long-term care.”

Families USA believes the best solution to the long-term care problem is a broad-based social insurance program akin to Social Security or Medicare, with private insurance playing only a supplementary role.

An estimated 40% of all elderly will spend some time in a nursing home, with half of all stays lasting six months or less and the other half averaging 2 1/2 years, according to the health insurance association.

Rep. John D. Dingell, a Michigan Democrat who chairs the House Energy and Commerce subcommittee on oversight and investigations, said the foundation’s report is in line with what his investigators are finding.

“When untamed avarice and constant prevarication become the trademarks of a product, it is time for reform,” Dingell said.

Rep. Ron Wyden (D-Ore.), also on the subcommittee, said the report would provide added impetus for federal regulation of the nursing home insurance market.