Editorial: Insurers fail to deliver

Tuesday, March 27, 2007 | 7:30 a.m.

As Congress and state legislatures struggle with health care costs and encourage people to better plan their medical futures, the industry that offers insurance to cover nursing home care isn't always holding up its end of the bargain.

A story by The New York Times on Monday says that 8 million Americans pay for long-term care policies, but thousands of them say that insurers are refusing to pay when claims are made. Through interviews and information from depositions in lawsuits against major insurers of long-term care, the Times revealed cases in which aging Americans faced long delays, perhaps intentionally tangled bureaucracies and repeated denials of claims.

In one 2003 case, the Times reports, an insurance company sent an 85-year-old woman who suffered from dementia the wrong form to fill out and then denied her benefits because she had submitted the wrong paperwork. In another instance, a company tried to revoke the policy of a 72-year-old man when he was diagnosed with Alzheimer's disease - four years after he purchased the policy. In California alone, the Times says, one in four claims for long-term care was denied in 2005.

In one lawsuit, a former claims adjustor testified that she denied people's claims because records were missing, and her employer forbade her from calling nursing homes or doctors to obtain the documents. Other companies forbid employees from talking with one another, creating a roadblock when paperwork is lost or inaccurate.

Mary Beth Senkewicz, a former senior executive at the National Association of Insurance Commissioners, told the Times that insurance companies "make money when they don't pay claims," and as a result, "they'll do anything to avoid paying, because if they wait long enough, they know the policyholders will die."

Employers increasingly are offering policies for long-term care as part of employee benefits packages, and lawmakers promote their purchase to help offset health care costs later. But thousands of claims apparently are being wrongly denied, which makes these policies virtually worthless.

In trying to postpone a Medicare funding collapse, Congress has enacted incentives to encourage people to buy these policies. But, as the Times notes, state regulators have failed to ensure that these policies deliver. Congress should step in and investigate the long-term-care insurance industry to see what can be done to prevent what amounts to the abuse of aging Americans.