Provider and insurance groups are supporting provisions in a congressional health insurance reform bill that would make long-term-care costs and insurance premiums tax-deductible expenses.
Seniors' groups, however, objected that the bill does not do enough to protect purchasers of long-term-care insurance policies.
The insurance bill, which the House passed late last month, makes long-term-care insurance premiums tax-deductible, as regular health and accident-insurance policies are now. It also makes tax-deductible out-of-pocket long-term-care expenses above 7.5% of adjusted gross income.
Nursing home groups said the bill would encourage the expansion of long-term-care insurance coverage, which could relieve the pressure on state Medicaid programs to pay for long-term care as the number of senior citizens and life expectancy increase.
In 1993, Medicaid paid for a little more than half of all nursing home care, while private health insurance paid for only 2.4%, according to HCFA.
The Congressional Budget Office has estimated that the long-term-care insurance provisions would reduce federal revenues by $4.7 billion between 1996 and 2002.
Although they did not oppose the tax-deductibility provisions, some groups representing senior citizens said making long-term-care insurance a tax-deductible expense is likely to have only a negligible effect in the near term.
"It could make the policies more affordable for some people, but I still think they will be unaffordable for most Americans," said Howard Bedlin, a lobbyist for the American Association of Retired Persons.
"If there are savings, it's going to be way out into the future," said Judy Riggs, director of federal policy for the Alzheimer's Association.
Bedlin and Riggs also criticized the consumer protection provisions of the legislation, saying they are based on outdated standards published in 1993 by the National Association of Insurance Commissioners.
Those standards would allow insurers to forfeit all coverage to seniors who stopped paying on their policies, instead of current standards that would offer seniors some protection from such forfeiture.