H.R. 4040 - Long-Term Care Security Act
(Rep. Scarborough (R) FL and 14 cosponsors)

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.