Q&A: Assemblywoman Mariko Yamada looks at long-term care insurance

02/25/2013 12:00 AM

02/24/2013 10:09 PM

Long-term care doesn't come cheap – up to $72,000 a year in California nursing homes, a steep price tag that will provide sticker shock for the more than 70 percent of people age 65 and older who will require care at some point as they grow older.

So it's not surprising that long-term care insurance was a hot, if costly, topic even before the California Public Employees' Retirement System last week announced an 85 percent rate hike at the top tier for its current policy holders.

Assemblywoman Mariko Yamada, D-Davis, chairs the Assembly's Committee on Aging and Long-term Care and is the author of newly enacted legislation that gives the state's insurance commissioner the right to regulate long-term care rates, excluding existing CalPERS policies. The new law also protects consumers by converting lapsed long-term insurance premiums into a lifetime benefit.

With the elderly living longer than ever and 78 million baby boomers gradually edging into age, shouldn't everyone invest in some sort of long-term care insurance?

It's still something society has difficulty coming to terms with. With caregiving in general, research shows that people are aware of the need to address the issue – but they don't, because there are too many other things taking priority in their lives now.

But it's important for the family to think about this. It should be a family or individual choice whether you need long-term care insurance. That's a conversation every family should have.

In the past few years, a lot of insurance companies across the country have suspended sales of long-term care insurance, and a lot have raised their rates. What does this mean for the consumer?

The intent of the insurance industry was always good, to offer a product that would be there when people needed it. But it turned out that people were living longer than when the industry created long-term care insurance in the 1980s, so they were able to access benefits for a longer period of time.

As a business, they had to review what they had to offer. They had to raise rates. Frankly, they expected that people would let their policies lapse at higher rates, but they found that people were hanging onto the policies despite the extreme rate hikes. It's not anything I'm happy about, but it's not unexpected.

And now the industry is planning to start raising rates by up to 40 percent for single women – the nation's widows, basically – starting in April. What do you make of this "gender-distinct pricing" practice?

I share your concern. But gender-distinct pricing is not something the insurance industry is unfair with. There has been gender pricing that disadvantages men – auto insurance, for example. Younger men pay higher premiums. It does work both ways.

But women are already at a disadvantage over their lifetimes with unequal pay and interruptions in their work life. Here we are at the end of our lives, having earned less and living longer. You're kidding that we'll have to pay more for long-term care insurance, right?

Colorado and Montana have already banned the practice, and since the issue has arisen, we're researching gender-distinct pricing here, too.

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