Senator Clinton Calls for GAO Investigation of Impact of Insurance Claims Denials

Following a news report showing thousands of seniors struggling with denied claims by long term care insurance providers, Senator Hillary Rodham Clinton today called on the Government Accountability Office (GAO) to investigate the impact on the Medicaid program of insurance companies denying payment for care promised under their policies. In a letter to David Walker, Comptroller General of the United States and head of the GAO, Senator Clinton underscored that by denying claims to seniors who paid for policies, insurance companies are forcing Medicaid to pick up the tab for needed care, further straining already stretched state budgets and putting more stress on the healthcare safety net.

"When it comes to navigating the health care maze, confusion and administrative hurdles are insurance companies’ best friends. Seniors buy long term care insurance policies to plan for their future needs. It is unconscionable that insurance companies are not only undermining long term care for seniors, they’re also sticking taxpayers with the bill. We owe it to our seniors to make insurance companies live up to their promises and it’s critical for the future of our healthcare system that we get this right," said Senator Clinton.

The letter also asks the GAO to investigate enforcement of federal standards included in the Health Insurance Portability and Accountability Act (HIPAA) which are designed to protect consumers from such abuses and recommend needed changes.

The following is the text of Senator Clinton’s letter to Comptroller General David Walker:

The Honorable David M. Walker
Comptroller General of the United States
United States Government Accountability Office
441 G Street, N.W.
Washington, D.C. 20548

Dear Mr. Walker:

An article in today’s New York Times underscores a growing concern I have regarding the treatment of seniors who have purchased private long-term care insurance policies. Based on a review of more than 400 complaints and lawsuits, the article highlights the practices of a number of insurance companies designed to reduce or eliminate the payment of legitimate claims.

I am very concerned about the impact of these practices, which will undoubtedly result in considerable cost-shifting to the Medicaid program. A 2006 report from the Kaiser Family Foundation found that 52 percent of all Medicaid spending is devoted to beneficiaries using long term care services. As the baby boomers age, the demand for long-term care will only increase, placing greater burden on the health care system and on federal and state budgets. Forcing seniors who have paid for private long-term care insurance to turn to Medicaid should not be tolerated. I would ask that you investigate the impact of these practices on the Medicaid program and provide information about the financial impact on federal and state budgets.

In addition, the Health Insurance Portability and Accountability Act of 1996 put in place consumer protection standards for private long term care insurance in exchange for favorable tax treatment. These protections include a description of the policy’s benefits and limitations, which allows seniors to compare policies offered by different companies. Companies must report annually on the number of claims they deny as well as information on policy terminations. The law also prohibits a company from canceling a policy except for nonpayment of premiums. And with a few exceptions, policies that limit or exclude coverage by type of treatment, medical condition, or accident are prohibited. In addition, insurance companies must follow certain administrative and marketing practices or face fines. And some states have adopted stronger state regulations to ensure seniors are protected.

I would ask that you investigate how well these minimum federal long-term care insurance protections are being enforced, and make recommendations for where federal law should be adjusted, if consumer protections are inadequate. In addition, information regarding state policies that provide stronger consumer protections which have prevented these types of problems would also be appreciated.

As Congress explores ways to encourage the purchase of private long-term care insurance, we must ensure that these policies provide the coverage and care that seniors need and think they have paid for. Thank you for your attention to this matter.

Sincerely yours,

Hillary Rodham Clinton