|San Francisco’s Poor House|
As prior blog posts have noted, although UC is not under CalPERS, UC employees – because they were state employees – were invited to enroll in CalPERS’ long-term care insurance plan. Such plans ostensibly protect enrollees against potential catastrophic expenses that can be entailed in major health crises. Those who did enroll now find themselves facing large rate hikes or accepting an alternative less generous plan. Many who enrolled did so assuming that CalPERS would protect them from such hikes. Yours truly has encountered a number of folks who now find themselves in this predicament. CalPERS blames the matter on stock market reverses, low current interest rates, and early underestimates of what the program would actually cost.
Yours truly offers this observation. An insurance carrier can cut the cost of offering such plans by removing from coverage the truly catastrophic expenses. But that is what insurance is all about. If you go to the audio link below, you will hear from CalPERS that most people don’t have catastrophes and therefore taking an alternative plan that effectively removes them from full coverage won’t affect most enrollees. The problem is that it is catastrophes that insurance is all about. Most people who have fire insurance on their houses won’t have their house burn down. But it is precisely that unlikely event that causes people to buy fire insurance. If CalPERS ever does reopen with some version of long-term care insurance – see below – caveat emptor.
The California State Assembly Committee on Aging and Long-Term Care held a hearing today largely devoted to the CalPERS issue. A link to an audio of the first part of that hearing – which runs about two and a quarter hours – can be found below. There is a general presentation on long-term care followed by witnesses including one from CalPERS. After the official witnesses, there are lengthy public comments by CalPERS enrollees and others, generally expressing anger at the hikes, the fact that CalPERS is an autonomous public entity not subject to the kind of regulation that applies to private companies, etc. At present, it appears that CalPERS is not offering long-term care policies to new enrollees. However, it was said that there might be such new enrollment allowed – albeit to a limited policy – later this year.
The audio link is at:
Below is the agenda:
“Paying the Price for a Long Life: What’s Next for Long-Term Care Insurance?”
Hearing of California Assembly Committee on Aging and Long-Term Care held largely in response to large premium increases announced by CalPERS for its long-term care program, May 7, 2013
Hearing chaired by Assembly Member Mariko Yamada
Presentation on trends of older Americans and Older Californians preparing for retirement and Long-Term Care, Victoria R. Ballesteros, Director of Communications, The SCAN Foundation
PANEL 1 Government/Industry Officials
1. Ann Boynton, Deputy Executive Officer of CalPERS
2. Nettie Hoge, Chief Deputy Commissioner, Department of Insurance
3. Ted Angelo, Association of California Life & Health Insurance Companies
4. Rebecca Blanton, Executive Director, Commission on the Status of Women and Girls
Note: Recorded from a live stream. In some cases, there were breaks in the transmission. Gaps have been edited out of the recording.