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Treasury convening inter-agency task force on long-term care insurance

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Treasury convening inter-agency task force on long-term care insurance

A recommendation tucked in a U.S. Treasury Department report last fall garnered little attention at the time, but could have big consequences for the long-term care insurance industry.

Treasury will "convene an inter-agency task force to develop policies to complement reforms at the state level relating to the regulation of long-term care insurance," a section of the October 2017 report to the president on asset management and insurance stated.

The department has yet to confirm whether the task force has already been created and a Treasury spokeswoman did not return emails asking for details.

Yet, in a sign that Treasury is intent on significantly ramping up engagement on the long-term care issue, the Federal Advisory Committee on Insurance discussed LTC issues at its first 2018 public meeting Feb. 22. A pair of industry experts presented concerns and findings to the group, which is hosted by the department's Federal Insurance Office.

The challenge of financing LTC "will only grow in the years ahead," cautioned Marc Cohen, co-director of the LeadingAge LTSS Center @UMass Boston, a joint research venture on caring for the elderly through LTC services and providers. Cohen is also research director at the Center for Consumer Engagement in Health Innovation, a healthcare advocacy and education organization.

While Cohen, a professor of gerontology, advocated for ways to increase private insurance coverage for LTC services, it was discussion of the government's potential role in coordinating a reinsurance vehicle that gained the most traction in discussions during the meeting. The thinking is that such a reinsurance vehicle, perhaps a mutual, could mitigate LTC carriers' risk.

But in public and private discussions the federal advisory group — composed of industry executives, state regulators, consumer advocates and a state legislator — struggled to flesh out how a potential reinsurance mechanism would work to provide funding for an industry that is facing potential shortfalls in assets to pay claims.

State and federal policymakers need to examine "new models for financing care," Cohen noted.

"This is the stickiest insurance product that is out there," Cohen told the advisory committee. LTC insurance is difficult to get people to buy, but once they do, it is "like a pitbull," he said. "It won't let go."

Treasury's involvement in LTC is significant because the business is regulated through the state system, not by the federal government.

Under the aegis of the National Association of Insurance Commissioners, state insurance commissioners meet in a number of working groups and an executive level task force to address all aspects of the industry, from new product development to solvency concerns. A big and growing concern is the struggle to secure sufficient funding for LTC's massive liabilities stemming from decades of inadequate premiums.

"We look forward to working with our federal counterparts on the issues surrounding Long Term Care Insurance and the attendant impacts on health and retirement policy," a spokesperson for the NAIC stated in an email March 1.

Treasury called the challenges in financing LTC "of national interest" in its report, and said they need a coordinated response from the federal government.

The department said it would work to assist with state and NAIC policy efforts. "Given the growing social need for LTC and the resulting strain on public resources, state and federal officials should collaborate on addressing the challenges of financing LTC," the report recommended.

Other members of the task force will include representatives of the Department of Health and Human Services, the Internal Revenue Service and the Office of Management and Budget, the report said. HHS representatives also participated in an LTC roundtable at Treasury under the previous administration. HHS is responsible for the Medicaid and Medicare programs, which pay about two-thirds of LTC costs in the U.S., according to Treasury. Emails to HHS were not returned.