WASHINGTON -- Investigators from the General Accounting Office have told Congress that they had found numerous abuses in the sale of private insurance intended to cover the high costs of nursing home care for elderly people.
The testimony laid a foundation for congressional efforts to set minimum standards for such insurance, perhaps as early as this year, even though insurance executives insisted there was no need for federal regulation.
The inspector general of the Department of Health and Human Services, Richard P. Kusserow, seemed to lend support to the call for minimum federal standards.
He reported that only 17 states had adopted all the standards recommended by the National Association of Insurance Commissioners, an organization of state officials, for the regulation of long-term care insurance policies.
The market for nursing home insurance is booming, as people try to protect themselves from the ruinous costs of long-term care.
Nursing homes charge residents an average of $68.50 a day, or $25,000 a year, and in big cities the annual cost often exceeds $40,000.
The Reagan and Bush administrations have encouraged the development of a market for private insurance to cover such costs, hoping that it would reduce the demand for an expensive new federal program.
Nearly two million people now have private insurance to help pay FTC for long-term care. The number of people with such policies has more than doubled in the past three years and is sure to grow as the elderly population increases.
At a congressional hearing, Janet L. Shikles, director of health financing and policy issues at the General Accounting Office, an investigative arm of Congress, testified yesterday that purchasers of long-term care insurance faced "unpredictable premium increases."
In addition, she said, they had little or no protection against inflation in the cost of such care, had difficulty getting the benefits to which they were entitled and might lose their entire investment if they missed a premium payment after 20 years.
Aggressive sales agents have sold policies to consumers who do not need them, including low-income people who may be eligible for Medicaid, she said at the hearing of the House Ways and Means Subcommittee on Health.
Rep. Ron Wyden of Oregon and Sen. David Pryor of Arkansas, both Democrats, said they would soon introduce legislation to protect consumers by setting minimum federal standards for long-term care insurance.