Study probes reasons for spike in federal workers' long-term-care coverage

A large and unexpected premium increase in federal employees' long-term-care insurance two years ago stemmed from higher-than-expected enrollee coverage retention, longer life expectancies and additional claim submissions, according to the Government Accountability Office.

The report, requested by a bipartisan group of members of Congress, was intended to pin down the reasons behind a 2009 premium increase (PDF), in which 66% of enrollees saw premiums rise 25%.

The privately provided insurance based its rate increase on an expectation that more enrollees will continue their coverage, reach older ages and more of them will submit claims than initially assumed, according to the GAO report.

Some of the Democratic senators who requested the report urged continued careful oversight of the program by the Office of Personnel Management “to guarantee that consumers have adequate protections and that premiums won't skyrocket down the road.”

“Managed properly, long-term-care insurance can provide a valuable opportunity for many people planning for a secure retirement,” Sen. Herb Kohl (D-Wis.), chairman of the Senate Special Committee on Aging, said in a written statement following release of the report.

The 2009 rate increase caused consternation among Democrats, who used the previously stable experience of federal employees with the long-term-care insurance program to justify a similar program for the general public as part of the 2010 healthcare law.

The Community Living Assistance Services and Support Act—a consumer-financed, voluntary insurance program intended to help Americans pay their long-term-care needs while remaining independent—has drawn consistent Republican criticism as unsustainable since it was first proposed for inclusion in the healthcare law.

HHS Secretary Kathleen Sebelius announced an overhaul of the design of the program in the spring but Democrats denied it was due to any design flaws or long-term stability flaws.

The program's elimination was urged in several federal budget-deficit-reduction proposals released this year, including one released in July by the bipartisan Senate group known as the Gang of Six.