[San Gabriel Valley EXAMINER, May 5, 2005]
INSURANCE COMMISSIONER GARAMENDI: HIS P. R. EXCEEDS HIS PERFORMANCE
or
HAPPY BIRTHDAY! WE'VE INCREASED YOUR LONG-TERM CARE RATES - AGAIN
Insurance Commissioner John Garamendi, who last summer kicked off his
campaign for Lt. Governor, has a slogan at the top of his web page: "I am
proud of the battles we fought - and won - to protect California insurance
consumers." Well, John, you haven't won a battle with - or even fought - my
long-term health care insurer, CNA.
About the time headline-maker Garamendi - a battling knight fighting the
dragons of the insurance industry - declared his candidacy last year I got
a birthday greeting from CNA. They omitted the "happy birthday" part and
jumped straight to the "gift:" a 25% increase in the cost of my long-term
health care insurance. This spring, as Garamendi's campaign announced a
BBQ, CNA skewered me with an early birthday present: another 25% increase
in premiums.
Garamendi apparently has his eye on the governor's mansion in 2010, with
the increasing likelihood that the current governor's many gaffes and
decline in opinion polls will impel him to seek that office next year. But
to get there the commisioner needs to do more than shout platitudes about
protecting insureds. He's responsible for the injustice heaped on senior
citizens who purchased long-term health care insurance under the
misapprehension that the commissioner held office to protect their
interests. It was on his watch that CNA was granted, virtually in secret,
what is now a 50% increase on many policies that have been in effect for
years.
The way Garamendi runs his office, policy holders remain in the dark about
company requests for rate increases. We are never told - by either the
company or Garamendi - when hearings (if there are any) are held. We
aren't invited to counter the company's cry of poverty. We only learn of
the increase when that birthday greeting arrives in the mail.
When policy holders complain to the state, the Garamendi line is that rates
have to be high enough to prevent the company from sustaining losses.
Posing as guardians of the insured, the department argues that it's in our
interest to keep CNA healthy. Since the cost of administering these
policies has exceeded the figure anticipated by CNA - too many people are
holding on to their policies and at the same time filing claims - it's
necessary to invoke the clause, stated in each policy, that rates can go
up.
What Garamendi refuses to recognize is that in the early and mid-90s, when
CNA sold policies to seniors concerned about paying for long-term care, the
company proudly stressed that it had thirty years experience in
administering such insurance. We contracted for the policies under the
apparently false impression that this company, with its experience, had
carefully analyzed future costs and had priced their policies
appropriately.
Now it appears that they deliberately underestimated the potential cost of
providing such coverage in order to sucker in as many buyers as possible,
knowing full well that they could plead poverty down the line and a willing
commissioner would give approval for enormous rate increases.
Garamendi will no doubt claim that in 2003 he successfully fought CNA's
request for a 50% rate increase, paring it to 25%. Now he has quietly
approved another 25% increase on top of last year's. My annual premium in
2003 was $2899. Last year it was $3623. This year CNA demands $4529.
While the commissioner's office stonewalled requests for a reversal of last
year's increase, it was already secretly approving this year's increase.
No one even hinted that another increase was up for approval. Next year's
rate increase may already be working its way through the commissioner's
office. We'll never know.
John Garamendi's race for Lt. Governor opens the door to a new insurance
commissioner. Perhaps Chuck Quackenbush will make a comeback. At least
during his murky reign my rates didn't go up.
- - -
[Ralph E. Shaffer, 74, professor emeritus of history at Cal Poly Pomona,
can be reached at reshaffer@csupomona.edu]