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The Administration supports House passage of H.R. 4040, which would offer
long-term care (LTC) insurance to Federal employees and annuitants and
their relatives, active and retired members of the uniformed services and
their relatives, and employees of the United States Postal Service. On
January 4, 1999, the President announced an initiative to improve access to
LTC for all Americans. H.R. 4040 would be a significant step in
implementing the President's Plan. In addition to encouraging the purchase
of LTC insurance for Federal employees, the President's LTC initiative
includes a $3,000 tax credit for those with long-term care needs or their
caregivers, funds services to support family caregivers of older persons,
equalizes Medicaid eligibility for those cared for in home and community
based settings, and encourages partnerships between Medicaid and low-income
housing for the elderly.
The Administration does, however, have some concerns with H.R. 4040 and
will work with the Senate to address them. For example, the Administration
will seek amendments to:
Improve the administration of the new LTC program by: (1) reducing
from seven years to five years the LTC insurance contract with the
qualified carrier(s) in order to allow the LTC program to better adapt to a
rapidly evolving marketplace and industry; (2) addressing the application
of appropriate accounting practices and principles to protect the interests
of beneficiaries under the LTC contracting program; and (3) creating a
separate section in the bill that authorizes appropriations for the
implementation and administration of the LTC program, which would maintain
the distinction between LTC and Federal Employee Group Life Insurance
(FEGLI) programs, and limit the exposure of the FEGLI Trust Fund resources.
This would provide greater accountability by basing administrative expenses
on anticipated workload and staffing needs funded through discretionary
spending subject to Presidential discretion and Congressional oversight.
Allow OPM greater flexibility regarding the scope and nature of the
information to be provided under the informed decision-making
provisions to individuals who are considering enrolling in the LTC
program. These provisions are designed to ensure that individuals
take into account alternative ways of saving for their long-term care
expenses (such as through qualified pensions), the ability of the
insurers to increase premiums on the LTC policies, the likelihood that
their LTC policy will lapse before they need LTC, the economic
consequences to them of allowing their policies to lapse, and the
likely ratio of their benefits to the cost of LTC in the future.
Rectify a Constitutional flaw in the bill that requires OPM to provide
Congress with written recommendations regarding the LTC program. This
provision is invalid under the Recommendations Clause of the
Constitution. Legislation that requires the President's subordinates
to provide Congress with policy recommendations interferes with the
President's efforts to formulate and present his own recommendations
and proposals and to control the policy agenda of his
Administration.
The Administration appreciates the bipartisan cooperation that has
characterized the discussions of LTC insurance for Federal employees and
looks forward to the development of a program that not only will benefit
civilian and military individuals and their families, but will also serve
as a model for other employers as we meet the challenges of a new century.
Pay-As-You-Go Scoring
H.R. 4040 would affect direct spending; therefore it is subject to the
pay-as-you-go (paygo) requirement of the Omnibus Budget Reconciliation Act
of 1990. OMB's paygo estimate for this bill is under development.
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