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STARK RELEASES G.A.O. REPORT DETAILING DEFECTS IN LONG TERM CARE/NURSING HOME INSURANCE POLICIES

 STARK RELEASES G.A.O. REPORT DETAILING DEFECTS
 IN LONG TERM CARE/NURSING HOME INSURANCE POLICIES
 WASHINGTON, Dec. 27 /PRNewswire/ -- Rep. Pete Stark (D, Hayward), today released a General Accounting Office (GAO) report which examined a number of long-term care (nursing home) insurance policies and reported on defects and pitfalls in the policies which often make them questionable buys for consumers.
 "Caveat emptor," said Stark. "The GAO report shows that many of these policies are so full of loopholes and defects that the consumer is unlikely to ever benefit -- even after investing thousands and tens of thousands of dollars in the policies."
 Stark, chairman of the Ways and Means Health Subcommittee with jurisdiction over Medicare, has introduced legislation to provide stronger consumer protection in the marketing and terms of these policies designed to protect seniors against the catastrophic cost of long nursing home stays.
 "Congress should make a New Year's resolution to pass legislation to stop the abuses in these products. The legislation won't cost the Treasury any money and is a very do-able bill in 1992."
 The GAO identified a wide range of problems:
 "Policy terms, definitions, and eligibility criteria are often expressed in language that is vague and inconsistent between policies.... Consumers also face great financial risks...price is not a good indicator of value -- premiums can vary as much as 150 percent (from $1200 to $3000) for policies with similar benefits...consumers are vulnerable to price hikes that could make it difficult for them to retain their policies. Policyholders who allow their policies to lapse...almost always lose the investment component of their premiums."
 The GAO also noted the importance of making sure that inflation adjustments are compounded, and not just simple interest; that many policies just duplicate Medicare's home health benefits; that many companies fail to offer a grievance or appeals process in case of claims denial; and that "substantial" sales commissions "provide considerable incentives for agents to sell policies to consumers who do not need them."
 -0- 12/27/91
 /CONTACT: Bill Vaughan for Congressman Pete Stark, 202-225-5065/ CO: Congressman Pete Stark ST: District of Columbia IN: SU:


JL -- SF001 -- 5528 12/27/91 16:09 EST
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Publication:PR Newswire
Date:Dec 27, 1991
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