Why is insurance for nursing home care going up…and going away?

MINNEAPOLIS (FOX 9) - A prominent insurance company has repeatedly raised rates on Minnesotans with long-term care policies, offered policy buy-outs at a fraction of their worth, and pressured people to walk away from insurance policies they paid into for decades, according to a FOX 9 Investigators review of financial documents.

CNA sold long-term care insurance to thousands of Minnesotans 

The backstory:

In the 1990s, long-term care insurance was a booming business. Insurance companies sold policies to tens of thousands of Minnesotans as a way to plan for the future, including the costs of nursing homes and long-term care for adults with disabling diseases.  

One of those companies is Continental Casualty Company, which is also known as CNA. The insurance provider sold policies to Minnesotans who, at one point, paid more than $32 million in premiums. At the time, that was more than any other state in the country. 

The policies were often sold as part of a benefits package to state, county and city workers. They were also sold to employees of some of the state’s largest employers, including Mayo Clinic, 3M, and Wells Fargo. 
 

What they're saying:

"I think we all know what right and wrong is," said John, whose parents hold long-term care insurance policies with CNA. The FOX 9 Investigators agreed to not disclose his last name out of fear of retribution from the company. 

While John had to fight the insurance company on his father’s recent claim, his mom’s premiums also started going up. 

"It seems like pressuring old people to stop paying the premiums for things that they've been hoping they'd be able to use at this point in time," John said. "It seems as though their default is to try to get out of it." 

By the numbers:

CNA’s marketing materials promised "affordable" and "stable" premiums. 

However, over the last nine years, CNA has requested Minnesota to allow the company to increase rates on consumers by up to 345%. 

Minnesota’s Department of Commerce rejected that request but approved CNA to increase rates up to 97% over that same timeframe. 

"There is, I think, a necessary balance between consumer protection and preventing too much financial distress for the insurers," said Fred Andersen, chief life actuary at the commerce department.   

Andersen said CNA’s rate increases are indicative of the larger challenges facing the long-term care industry. 

"On a sense of a consumer, it is a good policy," John said. "On a business line, they were silly to write these things."

His mother is debating whether she can afford to keep paying the premiums, which would mean walking away from a policy she has already paid into for decades.

"She's scared not to go with her premium because she's afraid that if she ends up in a long-term care situation she won't be able to afford it and that's why 20 years ago they bought into this policy," John told the FOX 9 Investigators. 

Long-term care policyholder: ‘They were silly to write these things.’ 

The other side:

CNA did not respond to the FOX 9 Investigators' request for an interview. 

However, the company has repeatedly highlighted its "ongoing" rate increase program during presentations to investors.

Dino Robusto, CNA's former Chief Executive Officer, celebrated the company’s ability to offload long-term care insurance policies.

"Policy counts down by 40% since 2015," Robusto said during an investor’s presentation in 2023 – the same year his total compensation jumped seven figures, topping more than $16 million. 

Minnesota Dept. of Commerce actuary Fred Andersen said he’s "not too happy" about how CNA talked about reducing policies. He believes the state is preventing insurance companies from making gains by forcing people to leave their policies. 

Policy-holders like Betsy are critical of CNA’s intentions.

"Maybe I should’ve just bought CNA stock and not my long-term care insurance plan," Betsy told the FOX 9 Investigators. "It is taking from the many to line the pockets of a few." 

 

Dig deeper:

CNA is facing a class-action lawsuit which claims the company has "schemed to maximize profits and recoup losses" at the expense of policy-holders. 

"These are not just numbers on their balance sheets, these are actual human beings, and they’re vulnerable elderly human beings in a lot of cases," said class-action attorney Sean Collins."I think it just reflects poorly on the entire insurance industry."

Policy-holder Betsy is a mother of three with an arthritis disease. She purchased her long-term care insurance from CNA years ago for "peace of mind" and to avoid becoming a financial burden later in life. 

But her payments have gone up repeatedly, and she’s received multiple offers from CNA to reduce her benefits or buyout her policy at a fraction of its total worth.

"No one should have to deal with these struggles," she said. 

Health CareInvestigators