States raise concerns with new insurance program in healthcare law

State legislators are concerned that a new program in the healthcare reform law will reopen a series of problems that states tackled years ago.

The National Conference of Insurance Legislators is worried about the law’s new long-term-care insurance program, known as CLASS.

NCOIL President George Keiser, a Republican state lawmaker in North Dakota, said the group is worried that the U.S. Health and Human Services Department eventually will have to raise premiums for the CLASS program significantly, driving people away from buying long-term-care insurance.

CLASS is slated to begin collecting premiums before it pays out benefits, to help ensure it has enough money on hand to cover claims for long-term care, such as nursing-home stays. But Keiser said HHS hasn’t done enough to make sure that CLASS’s premiums will be high enough to cover its costs.

HHS has said the program won’t run a deficit and won’t be subsidized if it starts to come up short. The department has indicated that if CLASS starts to run low on funds, it will raise premiums to cover the difference, Keiser said.

“That sounds great, but it sounds an awful lot like the early years of long-term-care insurance,” he said.

When long-term-care insurance first became available, Keiser said, companies charged low rates to boost sales. Then they ended up without enough cash on hand to cover their claims, raised premiums to compensate and lost the healthy customers whose money they needed most.

He said he’s afraid the same thing will happen to CLASS.

“This will be a perfect case of adverse selection,” Keiser said.

He wants HHS to reach out to the states that have some experience controlling premiums for long-term-care coverage.

“It would be great if they just would involve … the states a lot more,” he said.

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