Barack Obama Renews His Call for Investigation into Long-Term Care Abuse During Community Meeting on Health Care in Iowa.

MASON CITY, Iowa -- During a community meeting on Health Care in Mason City, Iowa this morning, Barack Obama renewed his call for an investigation into the abuses in the long-term care business.

"Today I am renewing my call for an investigation into the fraud that is running rampant in the long-term care business," said Barack Obama. "We're going to end it because it's about time Washington stood up to insurance companies so that families and seniors across the country can get the care they deserve."

The community meeting on Health Care this morning was Obama's second in what will be a series of similar gatherings across the country where he will listen to providers, consumers, and experts about their experiences with the Health Care system.

On March 29, Obama wrote a letter to the head of the Government Accountability Office calling for an investigation into long-term care following a report in the New York Times of a high number of claims being denied, and practices that make it "difficult - if not impossible - for policyholders to get paid." (complete letter enclosed below)

April 5, 2007

The Honorable David M. Walker
Comptroller General
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548

Dear Mr. Walker:

A March 26, 2007, article in the New York Times investigated the
practices of several long-term care insurers and reported a number of
troubling findings about practices that "make it difficult - if not
impossible - for policyholders to get paid." According to the article,
nearly 1 in every 4 long-term care claims in California was denied in
2005.

Nearly 9 million long-term care policies had been sold as of 2002, the
most recent year for which data were available, with about 80 percent
purchased through the individual market and the remaining 20 percent
purchased through the group market. These products provide elderly
Americans with coverage for care in their homes, assisted living
facilities, and nursing homes. This range of services is critical for
the health and financial well-being of seniors, 70 percent of whom
will require long-term care at some point in their lives.

Long-term care is a problem of national significance. As the baby
boomers age, policymakers are struggling to design a long-term care
system that meets the needs of Americans with disabilities. While
progress has been made, the long-term care system is heavily biased
towards institutional care, and the quality of care is often poor.
Moreover, nursing home and home care are very expensive, and Medicare
coverage for both is limited. As a result, catastrophic out-of-pocket
expenses for nursing home and home care by American's older people are
routine, forcing many to rely on Medicaid to finance the care they
need.

The federal government has taken steps to promote the use of long-term
care insurance. The Long-Term Care Partnership Program, a
public-private partnership between states and private insurance
companies, is one such example. The Federal Long Term Care Insurance
Program, sponsored by the Office of Personnel Management for federal
employees, is a second example. In addition, the Health Insurance
Portability and Accountability Act has profoundly shaped the long-term
care market by establishing standards regarding the characteristics of
policies whose premiums can count towards the tax deduction available
for health care costs that exceed 7.5 percent of income.

I have a number of serious concerns about the long-term care insurance
market and its ability to fulfill its promise to its policyholders.
First, I am concerned about the possible arbitrary denial of insurance
benefits to seniors at their time of need. Second, I am concerned that
some insurers may be enticing individuals to buy policies by offering
low premiums, and then sharply increasing premiums if lapse rates are
not as high as assumed in the premium calculations. Third, a
substantial percentage of policies do not offer inflation adjustments,
resulting in a significant erosion of purchasing power in later years.
Even worse, some companies offer "inflation coverage" which allows
policyholders to purchase additional coverage at a later date, but at
the price charged older purchasers. Premiums increase dramatically by
age, and individuals who elect to buy coverage later may not realize
that such coverage will be extremely expensive, which may be
financially infeasible.

Given the role of the federal government in long-term care financing,
I request that GAO investigate these allegations and the adequacy of
state and federal regulation. Specifically, I request that GAO review
the practices of these insurers in order to assess the following:

-- Rate of denial of claims, and as feasible, the extent to which
   denials were justifiable;

-- Types of policies purchased, including the percentage of policies
   that do adjust and do not adjust for inflation and those that allow
   for purchase of additional coverage at a later date;

-- Estimated loss of purchasing power for those individuals that have
   policies without inflation adjustment provisions;

-- Frequency and amount of premium increases in already purchased
   policies, average lapse rates of policyholders, and the correlation
   between premium increases and lapse rates;

-- Extent to which long-term care policies are marketed to individuals
   that would likely qualify for Medicaid or may not have substantial
   assets to protect; and

-- What, if any, additional federal regulation is needed.

Thank you.
Sincerely,


Barack Obama
United States Senator