[Congressional Record Volume 142, Number 58 (Wednesday, May 1, 1996)]
[Extensions of Remarks]
[Pages E683-E684]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           LEGISLATION TO ENCOURAGE LONG-TERM-CARE INSURANCE

                                 ______


                         HON. RICHARD J. DURBIN

                              of illinois

                    in the house of representatives

                         Wednesday, May 1, 1996

  Mr. DURBIN. Mr. Speaker, today I am introducing legislation to 
encourage Americans to purchase long-term insurance and address the 
growing cost to the Medicaid program of long-term care services.
  The Long-Term Care Insurance Incentives and Consumer Protection Act 
of 1996 provides incentives to buy long-term care insurance and 
assistance in paying for long-term care.
  This measure helps families afford the cost of long-term care 
services by treating payments for long-term care services as medical 
expenditures eligible for the same tax deduction as other health care 
services--deductible

[[Page E684]]

to the extent total medical expenditures exceed 7.5 percent of adjusted 
gross income.
  The measure encourages families to buy long-term care insurance to 
cover future long-term care costs by providing a direct tax deduction 
for long-term care insurance premiums, without respect to the 7.5 
percent of AGI floor that applies to other medical expenditures.
  It revises the tax treatment of employer-provided long-term care 
insurance to encourage employers to make this coverage available to 
their employees.
  It provides this new coverage beginning January 1, 1997.
  The legislation helps protect consumers from unfair or abusive 
policies and marketing practices by providing this favorable tax 
treatment only for long-term care insurance plans that meet consumer 
protection standards.
  The standards require the use of standardized benefits and 
terminology and a standard outline of coverage to make comparison 
shopping possible. They prohibit plans from requiring a hospital stay 
before coverage of long-term care services or imposing other 
unnecessary limits on when or from whom a patient can receive services; 
and prohibit a plan from discriminating against patients by providing a 
lesser standard of coverage for specific illnesses such as Alzheimer's 
disease, mental illness, or HIV.
  The standards also require that consumers be offered the option of 
purchasing inflation protection so that the value of their benefits 
does not erode and become inadequate over time; provide a right to 
cancel a new policy within 30 days and receive a full refund of any 
premiums paid; and provide a partial return of premiums if a policy 
lapses before the death of the insured person.
  In addition, the standards prohibit cancellation of coverage except 
for failure to pay premiums, fraud, or misrepresentations by the 
insured; and provide group policyholders an option to continue or 
convert coverage that would otherwise terminate because the person is 
no longer a member of the group.
  This legislation will reduce Medicaid's future outlays by encouraging 
Americans to buy long-term care insurance rather than looking to 
Medicaid for this coverage. Long-term care takes up one-third of the 
Medicaid budget. More than half of all nursing home care is paid by 
Medicaid, along with a significant amount of home and community-based 
long-term care. As more people purchase insurance to cover their long-
term care needs, fewer people will need to rely on Medicaid for that 
coverage.
  Mr. Speaker, this measure provides stronger consumer protection 
standards than the similar legislation previously considered on the 
House floor, including stronger nonforfeiture benefits so that people 
do not lose everything they paid in if they must stop making payments 
before they obtain any benefits. This will increase consumers' 
willingness to buy a product that they may not need for 20 years or 
more.
  In addition, this measure provides a stronger incentive to purchase 
long-term care insurance by allowing taxpayers to take the tax 
deduction for premiums without having to first exclude medical payments 
equal to the 7.5 percent of AGI. For many taxpayers, the 7.5 percent 
exclusion that must be met before expenses become deductible under the 
GOP bill virtually eliminates the value of the tax deduction. My 
legislation allows premiums to be deducted directly, without a 7.5 
percent exclusion, which increases the incentive to obtain long-term 
care insurance.
  Mr. Speaker, the number of senior citizens in our Nation will grow 
substantially in the first part of the 21st century as the baby boom 
generation retires. Between 1980 and 1990, the 65-and-older population 
grew by one-fifth. During that time, while the entire U.S. population 
of all ages was growing by one-tenth, the over-80 population grew by 
one-third. The Bureau of the Census estimates that there will be 31 
million people over age 80 in 2050, around the same number as the total 
number of people over age 65 today.
  These are the people most likely to need long-term care. An expansion 
in long-term care insurance coverage now can ease the burden on 
government to provide the care that will be needed later.
  I urge my colleagues to join me as a cosponsor of this bill to 
encourage Americans to purchase long-term care insurance and help 
reduce our future Medicaid long-term care costs.

                          ____________________