Opinion

DANTE RAMOS

Freedom’s just another name for less coverage and more paperwork

Concord, MA., 07/07/17, Madeleine Maldonado in her home. The box on the check had the exact amount due written in: $3,399.91. It paid the annual premium on Madeleine Maldonado?scq long-term care insurance. If her health deteriorated, the insurance would kick in to cover thousands of dollars in monthly expenses for care at home or in a nursing home. At age 81, it was of vital importance for Maldonado to keep her insurance in effect. But when she finally made a claim, Maldonado and her daughter were shocked to learn her insurer had canceled the policy due to a $98.92 error. She had written the correct amount in the box, but the words spelling out the amount were wrong. When there?s a contradiction between numerals and words on a check, words control. Maldonado wrote ?three thousand three hundred and 99/100? dollars. That meant her payment was short by $98.92. Two months later, AIG, the insurer, terminated her policy for nonpayment after sending Maldonado two notices but without ever hearing back from her or her family. Hundreds of thousands of dollars in potential coverage disappeared due to a dumb mistake by someone in her ninth decade. Suzanne Kreiter/Globe Staff

Suzanne Kreiter/Globe Staff

Madeleine Maldonado lost her long-term care insurance over a $98.92 error.

Because Americans have bought the myth of frontier self-reliance, 81-year-olds face draconian consequences for screwing up their paperwork.

This past week, Globe consumer-affairs writer Sean P. Murphy told the sad, infuriating story of Madeleine Maldonado, an elderly Concord resident who lost her long-term care insurance over a $98.92 error.

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The policy was supposed to help Maldonado defray expenses if she ever needed long-term care at home or in a nursing facility. Such coverage also gives beneficiaries more options than if they relied on Medicaid, the federal program that foots two-thirds of the total bill for nursing home care in the United States. Yet in paying her annual premium to insurer AIG, Maldonado wrote the right amount on the check — $3,399.91 — but spelled it out incorrectly on the next line. AIG received what, in effect, was a check for $3,300.99.

According to Murphy, the company sent out two late notices for the remainder, and then yanked her policy when she didn’t respond in time. Maldonado has been diagnosed with dementia. Her daughter in California tried to persuade the company to accept a late payment and reinstate coverage worth hundreds of thousands of dollars, but to no avail.

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The company only relented after Maldonado’s plight appeared on the front page of the Globe.

This wasn’t just one family’s tragedy. Beyond repeating the standard election-year platitudes about protecting the venerable Social Security and Medicare, today’s lawmakers aren’t planning for the evolving needs of an aging population. Quite the opposite. The Senate’s latest Obamacare repeal bill contemplates major Medicaid cuts, which, in addition to denying coverage to millions of people, would further restrict older Americans’ access to long-term care.

GOP leaders portray their legislation as a triumph of individual choice. “Apparently you believe freedom is optional,” Senate Majority Whip John Cornyn recently tweeted to a critic.

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Longer life expectancies, the withering of defined-benefit pensions, and the growing demand for long-term care all have staggering implications for the entire economy. But the frontier spirit insists that individuals are supposed to deal with the consequences on their own.

Maldonado was doing her part by purchasing private long-term care insurance. But the market for such coverage is a mess. Insurers initially underestimated their costs. Premiums are rising, and some companies have stopped writing new policies. Insurers have a strong incentive to pull the plug if a customer, say, underpays her bill by less than 100 bucks. When policies expire before paying out, consumers typically lose the premiums they’ve contributed.

According to Boston College’s Center for Retirement Research, more than a quarter of those who take out long-term care insurance at 65 will let their coverage lapse. That’s generally not because people decide they won’t need the care. Often, it’s because of cognitive impairments that keep them from tending to their own affairs. Think about it — the people who most need long-term care insurance are most vulnerable to losing it.

This market will never straighten itself out without Washington’s help. Ted Kennedy tried to include a federal long-term health insurance program in the Affordable Care Act, but that nascent effort foundered amid daunting costs.

Last year, the Bipartisan Policy Center proposed a raft of ways to make private insurance cheaper and more accessible. But to say these wonky tweaks aren’t yet a priority for GOP congressional leaders is a colossal understatement.

If anything, they’re going out of their way to make sure Americans age at their own risk. Under pressure from the financial-services industry, Congress has tried to foil states that want to set up automatic payroll-deduction retirement programs for workers who lack access to 401(k)s. Republicans are also fighting a rule that obligates financial advisers to prioritize retirement investors’ best interests over their own fees and commissions.

At every turn, GOP leaders have insisted that these moves maximize Americans’ choice of investments. But at best, Republicans overestimate the average person’s desire or ability to manage the complexities of old-age planning.

We live in a world where, as The New York Times recently reported, consumers are basing financial decisions on whether Alex Trebek makes a more credible ad spokesman than Tom Selleck. Sifting through dull policy documents that no one wants to read is literally part of my job, and yet I have no idea whether or how my 401(k) provider has changed its legal mumbo-jumbo lately.

Americans don’t expect cradle-to-grave coddling from our government. But as the challenges of an aging population reveal themselves, Congress needs to respond substantively — and not by granting “freedom” to Medicaid patients and cutting taxes for 1-percenters.

In cowboy movies, nobody talks about the need to provide a modest level of consumer protection, keep private insurance markets functioning properly, and give people tools to make good financial decisions. But a little reassurance can be liberating.

Dante Ramos can be reached at dante.ramos@globe.com. Follow him on Facebook: facebook.com/danteramos or on Twitter: @danteramos.
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