As readers may recall, we’ve been following the very long running shaggy dog story of the CalPERS long-term care policy debacle. The short version is that CalPERS violated the California statute that allowed it to offer long-term care plan by providing only an in-house product, as opposed to also selling third party plans, and then grossly underpricing it and offering an inflation protection option, which many policyholders chose. CalPERS also failed to disclose that this plan was independent of the rest of CalPERS, not backed by the state, nor supervised by any insurance regulator.
This fiasco generated a policyholder class action suit, where CalPERS agreed to a tentative settlement, which it recently aborted, in what looks like bad faith (see CalPERS Drops Long-Term Care Settlement, Which Was Designed to Suck More Money into Ponzi Scheme and Then Fail).
Below we’ve posted an e-mail from long-term care policyholder Lawrence Grossman, who has written some articles about this train wreck. Kaiser Health News and the New York Times are working on a story on long-term care policy problems, with CalPERS to feature prominently. They are interested in hearing from you!
From Lawrence Grossman:
I have been approached by Kaiser Health News/New York Times. I am sending out tomorrow the text below as an email to those I have been in contact with. Please circulate the information widely.
_______________________________
Further to my recent articles about the CalPERS long-term care insurance (LTC) crisis, I have been contacted by a reporter with Kaiser Health News which is partnering with The New York Times on a series of stories regarding long-term care costs.
The reporter wishes to speak with LTC policyholders like you about the CalPERS rate increases and the prospects of you now getting alternative LTC to CalPERS.
As the first step, here is the link to their “callout form” for you to contact them. They are running it in the New York Times.
https://www.nytimes.com/2022/03/30/science/long-term-care-costs.htmlPlease fill out the form and I understand that they will get back to you for an interview about your experience.
This may be an extremely effective way to get the CalPERS story widely circulated and to build public support to address the LTC crisis. Therefore, I strongly urge you to complete the form. I have done so today in just a few minutes.
It would also be quite helpful if you would share the link with anyone else you know with CalPERS long-term care insurance.
For your information as well, May 9 I attended virtually the Superior Court session where CalPERS and the class action lawsuit attorneys and the judge determined that the case will go to trial, likely late this year or early next year. Any legal resolution is most likely yet a few years or more away in time.
For additional background, please see:
CalPERS’ Long-Term Care Policy Train Wreck – Is Bankruptcy the End Game? July 2019
CalPERS’ Long-Term Care Fiasco: Private Burial to Hide Malfeasance, Failure to Implement Legislation September 2021 (Lawrence Grossman)
CalPERS Devises “Heads I Win, Tails You Lose” Gamble for Long-Term Care Policyholders in Settlement September 2021 (Lawrence Grossman)
CalPERS Drops Long-Term Care Settlement, Which Was Designed to Suck More Money into Ponzi Scheme and Then Fail May 2022 (Lawrence Grossman)
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‘Kaiser Health News and the New York Times are working on a story on long-term care policy problems, with CalPERS to feature prominently.’ Ruh, Roh! Liking a good conspiracy theory as much as the next fella, I began to wonder. It was just recently that CalPERS tried to take out Warren Buffet as they probably figured that at 91 years-old, he must be just an old fool. Well it didn’t work and I bet myself that there would be blowback against the CalPERS Board for this gratuitous attack. So maybe it has started. But it is not like there is any connection with the executives and board members of Kaiser Health, the New York Times and Berkshire Hathaway which would give reason to suspect something. Is there? (crickets)
See also
https://www.csuerfsa.org/index.php/csu-erfsa-executive-committee-approves-resolution-calling-for-an-investigation-of-the-calpers-long-term-care-program
I think a couple of the assertions in the “whereas” clauses are wrong. And an investigation would have done a lot more good a decade ago than it could possibly do now. But whatever. Better late than never?
You left out of your list of contacts those California legislative committees directly responsible for CalPERS board, staff and CalPERS LTC oversight:
They are
1. The California State Assembly Committee on Aging and Long Term Care:
https://altc.assembly.ca.gov/content/welcome-committee-aging-and-long-term-care
2. The California State Senate Committee on Aging and Long Term Care (Page is Blank but staff members are listed: https://shea.senate.ca.gov/agingandlongtermcare
3. California State Senate Committee on Labor, Public Employment and Retirement:
https://slper.senate.ca.gov/
4. California State Senate Select Committee on Aging and Long Term Care (Its last report was issued 8 years ago)
https://archive.senate.ca.gov/sites/archive.senate.ca.gov/files/committees/2013-14
/committeepages.senate.ca.gov/agingandlongtermcare/index.html
All of these Assembly and Senate Committees completely abrogated their oversight functions. It will be interesting and sad to view their shame-and-blame antics. They are useless. Who is accountable and who is watching THEM?
i’m learning as i go. this is very helpful. thank you, i’ll follow up.
One other point: Why did the CA legislature allow CalPERS to remain free of the same type of regulation applied to private insurance companies. This also contributed to the program’s financial demise. The state legislature and governors are also part of this disaster. Unfortunately, California’s lack of oversight of its inept bureaucracy continues to destroy lives. Has anyone contacted 60 Minutes?
I have no answer since the legislation was passed in the 1990s. However, remember it required CalPERS to offer insurance by third parties and only allowed them to sell their own.
no one has contacted 60 minutes that i am aware of. please try to do that as well as contact legislators asking them to request an audit from the joint legislative audit committee. this has to be a grass roots effort by citizens as to date no one single legislator has publicly taken a position. and of course all the members of the calpers board have remained silent. there are calpers elections this year as well as for the assembly and senate. candidates need to be on the public record supporting an audit/investigation if this issue is to be resolved fairly.
Another question is: How could the legislature have allowed CalPERS Long Term Care and the Board of Administration to which it reports, to exist without ANY of the restrictions, regulations or serious oversight that the state places on the insurance industry, including Long Term Care providers?
A thorough review, corrections, and oversight, from the roof to foundation must take place. And once that is finished, all of California’s departments and boards should be equally scrutinized. Think about it. Remember what happened over at EDD during the pandemic.
Thank you Yves Smith and Lawrence Grossman for shining a light on the CALSTRS crisis.
I am among the earliest purchasers of a CALSTRS LTC policy that included inflation protection, and promised low premiums for life. LIke other readers who have responded, I have experienced such stomach-churning angst as to what to do, and so far haven’t been able to make myself give up my plan as much as I think I see the handwritng on the wall. I am in a situation that, surprisingly. I have read no mention of in any of the articles I’ve have found on the crisis of CALSTRS. I was disqualified from participating in the class action and placing the “bets” Mr. Grossman described, because of the class being limited to those living in California at the time of the 2013 rate hike. In spite of having spent a career of employment in California public schools, and still paying premiums during retirement, my only “bets” as a non-California resident are to: 1-Hold onto my policy and weather the escalating premium increases in hopes that the plan will be solvent should I need to file a claim. Or 2 – Give up my plan after all I have paid in, be on my own should I become disabled, and have no possibility sharing in any future assistance from any level of government.
Given the fact that we are a mobile nation, I am certain there are a significant number of retired plan holders who have moved out of California and still retain their plans, paying the same outrageous premium increases and benefit reductions as CA residents. Nowhere is there any requirement in the policy documents that CA residency is required for any future disputes. I do not understand any justification or logic to support what one’s state (or country) of residence in 2013 has to do with being a member of the “class” for settlement or trial should their be any possibility of plan holders being made whole (at least partially). This strikes me as discrimination toward the CALPERS post- retirement “diaspora” on top of the injustice toward all plan holders.
CALPERS, if required to, could certainly identify how many out of state plan holders there are, and how to locate them. These plan holders dispersal around the country make organizing this group pretty much impossible. Many may be unaware that this is all happening. Again, I’m surprised to have never seen this particular injustice addressed. Perhaps the coming NY Times article will increase awareness.