Before I can even attempt to answer that question, I first need to lay the foundation of how we got to the question itself.
In 1990, Medi-Cal was paying 45% of all nursing facility expenses. California’s 65 population was expected to double over the next 28 years from 3.6 million to 7.2 million. A proposal solution to that looming problem was the development of the Partnership for LTC.
Legislation was enacted 1990, which added Sections 22000-22013 to the Welfare and Institutions Code, and authorized the Sale of Long-Term Care insurance policies bearing the endorsement of the state of California.
The Partnership started operations in 1994 with seven participating insurers, Amex Life, Bankers Life, CNA, John Hancock Life Ins., New York Life, Times/Fortis, and TransAmerica. Between 1994 and 2010, quarterly sales of the Partnership program averaged around 2,500 policies per quarter.
Between 2011 through the 1st quarter 2013, quarterly sales fell to 2,100 policies and between 2nd quarter of 2013 through the 3rd quarter of 2015 the quarterly average of Partnership Sales is down to 245 policies. From an all time high of seven carriers in 1994, to one “Active” carrier in 2016.
In September of 2014, a meeting was held in Sacramento regarding the status of California Partnership, the ability of the California Dept. of Ins. to handle timely product approval and the future of LTC Ins. in California. Fifteen attendees were scheduled to attend, and twenty-five showed up ranging from four government agencies, two carriers, DOI, NAIFA, lobbyists, consumer groups, consultants, sales representatives, and legislatures. The meeting lasted two and a half hours and nothing happened.
In January of 2016, New York Life announces its departure from the Partnership. Then on February 18th, the Partnership holds its Agent Advisory Group (AAG) quarterly meeting and not one word of the New York Life departure was mentioned and the quarterly sales for the 2nd quarter of 201… was 121 policies!
After seeing and hearing the systematic demise of the Partnership program on February 23rd of 2016, I sent the following email to over half of the attendees of that September 2014 meeting in Sacramento.
Subject: FW: New York Life Departure
How is it, that a program designed to help “Middle Class” Californian’s with their Long-Term Care needs, a program that the feds followed as the bases for the federal/DRA program (which did not include our Consumer Protection features) of which 43 states now offer, go down to One Company?
How is it, that a program designed to make Long-Term Care Insurance more affordable to the masses, in lieu of offering Life time coverage, became the most expensive LTC Insurance in the State? How is it, that with the withdrawal of lifetime coverage from the industry, why did the California Partnership not explode in demand?
Why is it that the most consumer oriented/ protected policy form will soon become extinct/unavailable in California? Why is it that no one in the legislature, let alone the Dept. of Health Services “Really” and I mean “REALLY” understands the value and the concept of this program?
Why is it taking over 2 years (TWO, 730 days!) for anyone to make the approval of a “simple” I mean “simple, no brainer, common sense, logical” amendment/addendum to the Partnership regulations on “Simply adding” 3% compound inflation to the already 5% offering! While the California traditional LTCI products offers alternatives that are more affordable but lack “Key” consumer protections like “Asset Protection”!
Who oversees the Partnership, better yet, who can make decisions regarding the Partnership? Why are Californians being left out of a program that all the current National studies (which I will be more than Happy to provide upon request) which are all suggesting that the future viability of Long-term Care Insurance is a Partnership based Approach (which we have had since 1994)!
Can anybody, I mean anybody out there explain this to me? Please!
Within twenty-four hours I received three emails and after five months I have made over 100 phone calls, sent dozens of emails, written three reports and have spoken to seven carriers, NAIFA California, three senators, two assembly women, two actuaries and a few key industry experts, and here is where we all are as of July 8th 2016:
In summary:
SB 1384 was amended June 14, 2016, Senate Vote: 39-0 for the bill!
Subject: California Partnership for LTC program. It establishes a task force to advise the Department of Health Care Services (DHCS) on the operation of the California Partnership for LTC (partnership) and revises the requirements for partnership policies.
There are “two key components” to this bill,
1) it requires that Partnership policies provide the consumer with “at least” two inflation protection options (5% annual compounded inflation protection or a less expensive inflation protection option) we have presented and demonstrated a 3% and 2% compound option and why they are applicable to today and future claims realities.
2) The bill requires DHCS to adopt regulations allowing the Partnership to certify policies covering:
a) Facility only benefits (NH and RCF’s)
b) Home and community-based only benefits
c) Comprehensive LTCI benefits
However, it is the taskforce that is critical/key to SB 1384 and its implementation because without this, nothing and I mean nothing will ever get done as “clearly” demonstrated by the ineptness of the Partnership and DHSC over the last seven years.
Without oversight and or enforcement or hell, even accountability over the program, carriers will not return or apply for the program as bluntly expressed by many individuals, I have spoken to over the course of five months.
So to answer the question, “Is the Partnership dead or alive?”, it’s on life support and within the next six weeks we’ll see if the Partnership Program will act like the Phoenix and arise from the ashes with renewed youth to live through another cycle.
