Insurance Curator WASHINGTON — State insurance regulators, lawmakers and industry executives are facing rising political pressure to change how state guaranty funds are structured and to consider new public‑private financing models for eldercare as long‑term care insurance (LTCI) markets strain under surging claims, steep premium increases and a decades‑long series of insurer exits. The debate, accelerating in 2024–2025, centers on who pays when LTC insurers fail, how guaranty associations can withstand large block failures, and whether alternative financing — from state trust funds to hybrid insurance and targeted levies — can fill gaps left by a retrenching private market. (us.milliman.com)
What’s happening and why matters: actuarial projections show LTC claims rising sharply as the U.S. population ages; regulators and the industry say many legacy standalone LTC blocks were underpriced and now require multi‑year remedial strategies; states that would have to rely on guaranty associations to protect policyholders are considering legislative changes to assessment rules and benefit limits; and some jurisdictions are exploring or expanding public programs to share the burden of financing long‑term services and supports. These forces combined are reshaping insurer strategy and fueling disputes about the limits of state guaranty systems. (us.milliman.com)
Industry shock waves: claims, shrinking market and product shifts
A March 6, 2025 projection by actuarial firm Milliman estimates that U.S. long‑term care paid claims — measured on the policies in force at year‑end 2023 — will grow from roughly $16 billion in 2023 to a peak of about $42 billion around 2041, driven by the aging mix of policyholders and the entrenchment of older issue‑year blocks. Milliman used a starting base of roughly six million LTCI policyholders at Dec. 31, 2023 and concluded that, even absent new sales, expected future paid claims will more than double in coming decades. (us.milliman.com)
The private market for standalone LTCI has contracted markedly since its peak. Milliman and regulators note that most companies that once sold these policies have left the market; only a small group of carriers now dominate writing and servicing of legacy blocks, and new sales have largely moved toward hybrid products that combine life insurance or annuities with LTC benefits. The National Association of Insurance Commissioners (NAIC) lists long‑term care as a priority regulatory topic and has been urging states toward coordinated rate review, reserve adequacy and product innovation. (us.milliman.com)
Insurers have responded with a mix of strategies: multi‑year rate action plans that seek regulatory approval for phased premium increases and benefit reductions on older policies; litigation and settlements over disclosure of past rate actions; reinsurance; and product redesign. Genworth Financial, long associated with the U.S. LTC market, has combined remedial work on its legacy block with new market initiatives: in 2025 the company advanced a CareScout platform and launched a new CareScout Care Assurance LTC product as it seeks to rebuild a sustainable distribution model. “We advanced the buildout of our CareScout growth platform,” Genworth CEO Tom McInerney said in a company statement describing recent product and network developments. (fintel.io)
Policyholders and regulators confront the fallout of past insolvencies
Regulatory and political anxiety traces directly to high‑profile failures that tested the capacity of state guaranty associations. The liquidation of Penn Treaty Network America Insurance Co. — a predominantly LTC underwriter — was ordered by a Pennsylvania court on March 1, 2017; state guaranty associations stepped in to administer and pay eligible claims, subject to statutory limits and conditions. The Penn Treaty case exposed gaps in assessment bases and prompted the NAIC and states to re‑examine the Life and Health Insurance Guaranty Association Model Act (Model #520) and other legal frameworks for allocating insolvency costs. (pa.gov)
State guaranty funds are statutory, state‑based mechanisms that assess solvent insurers to pay covered claims of an insolvent carrier, within per‑claimant caps. But the exposure from a large LTC block can be substantial and multi‑jurisdictional: Penn Treaty’s liquidation required interstate coordination, and industry participants and regulators now warn that future large failures could trigger bigger assessments and political backlash. Life and health guaranty associations typically have coverage limits and assessment formulas that were not originally designed for mass‑market, long‑tail LTC failures; those legal structures have been modified over time but remain controversial. (pa.gov)
Political pressure grows as states weigh costs and protections
State lawmakers and insurance departments are under political pressure from voters and interest groups who fear both policyholder losses and higher industry assessments. In some states, legislative sessions in 2024–2025 produced bills changing assessment mechanics or increasing the emergency assessment capacity of guaranty funds. Florida, for example, has recently amended aspects of its guaranty and assessment statutes and considered higher caps on assessments to shore up FIGA’s resilience after earlier market stress, while other states have considered procedural and accounting changes that affect when and how assessments can be recovered. Advocates for consumers warn that expanding assessment bases simply shifts costs to other policyholders; insurers and market groups argue that unlimited or large assessments can raise solvency and competitiveness concerns. (lisamillerassociates.com)
Regulators and the NAIC are navigating a narrow path. The NAIC has revisited Model #520 and in recent years adopted changes to expand the assessment base for LTC obligations, add some managed‑care entities to the assessment calculation in certain circumstances, and to clarify allocation rules; the association has also issued guidance urging caution about using certain corporate restructuring transactions to shield LTC liabilities from guaranty coverage. The NAIC’s public resources describe sustained attention to rate‑review frameworks, reserve adequacy and coordinated multistate reviews — all intended to reduce the chance that insurers face sudden, catastrophic obligations the guaranty system cannot absorb. (jdsupra.com)
Who bears the risk — and what options are on the table?
The discomfort stems from a simple political arithmetic: guaranty associations are funded by assessments on solvent carriers — and those carriers, in turn, pass a portion of costs through pricing and business decisions. If assessments grow large, some insurers could reduce market participation, further shrinking capacity and shifting more risk to states and taxpayers. That dynamic explains why discussions now range across several policy responses:
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Reshaping guaranty associations: proposals include raising per‑claimant limits, broadening or narrowing the assessment base, allowing longer recovery periods or expanding statutory premium‑tax offsets that insurers may claim when assessed. These changes require state legislative action and create tradeoffs between consumer protection today and market stability tomorrow. (jdsupra.com)
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Stricting corporate restructurings and licensing rules: NAIC guidance in 2024–2025 urged states to scrutinize insurance company restructurings (including internal transfers and protected‑cell devices) that could be used to isolate run‑off LTC blocks from guaranty coverage. The NAIC recommended that states discourage such transactions unless a national solution is in place, arguing that such deals can undermine policyholder protections. (hsfkramer.com)
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Public financing or social‑insurance options: some jurisdictions are actively exploring or implementing public programs to provide baseline LTC supports. Washington state’s WA Cares Fund is the most prominent U.S. experiment; it began collecting payroll contributions in mid‑2023 and is scheduled to start paying benefits in 2026. The program sparked a high‑profile repeal effort (Initiative 2124) in 2024 and heated debate about whether voluntary participation would destabilize the fund — a concern articulated by Howard Gleckman of the Urban‑Brookings Tax Policy Center, who warned that making WA Cares voluntary “would make participation … effectively killing it.” Supporters say a public program can protect lower‑income workers and reduce reliance on fragile private markets. (forbes.com)
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Product and market innovation: insurers and regulators are promoting hybrid linked‑benefit products that blend life insurance or annuities with LTC riders, plus workplace‑based solutions and employer‑sponsored offerings. Industry groups and researchers argue that hybrids reduce lapse risk for carriers, lock in premium streams and avoid some pitfalls of standalone policies. Several carriers in 2024–2025 filed new products and sought regulatory approvals for modernized designs and multistate rate frameworks to bring consistency to reviews. Genworth, for one, has rolled out an ecosystem‑oriented offering and emphasized claims management and provider networks as part of its strategy. (us.milliman.com)
Financial and consumer realities behind the debate
Policyholders have already absorbed substantial premium increases. State insurance department filings show dozens of approved premium‑increase filings in 2024–2025, often implemented in phased schedules; Maryland’s rate filings and approvals in 2024–2025 contained several double‑digit and multi‑year phased increases across legacy policy forms as insurers sought to restore actuarial balance. Regulators have rejected or reduced some requests, setting off disputes and, in several cases, litigation between companies and state departments of insurance. For legacy carriers, rate‑action plans have produced material economic benefits: Genworth reported an estimated $31.2 billion in net present value from in‑force rate actions through year‑end 2024. (insurance.maryland.gov)
Consumer advocates emphasize the human stakes. For many older Americans, the choice isn’t which plan to buy but whether to keep paying sharply higher premiums for policies sold decades ago; some policyholders face multi‑year cumulative premium hikes that force wrenching choices — reduce benefits, accept a paid‑up policy, or lapse and lose coverage. Regulatory balancing acts — protecting contractual promises, avoiding unfair price shocks, and preserving insurer solvency — have real implications for retirees’ finances and families’ caregiving choices. (us.milliman.com)
International and comparative lessons
Outside the United States, governments have been experimenting with different funding mixes. The United Kingdom’s long‑term care reform and its cap on lifetime social‑care costs have been the subject of policy adjustments and delays as London seeks to reconcile affordability and fairness; Australia’s Royal Commission and subsequent parliamentary proposals in 2024‑25 have debated means‑testing, user co‑payments and the prospect (and political difficulty) of a specific aged‑care levy. Those international examples reinforce a central political reality: aging populations put pressure on systems that were not designed to finance widespread, long‑duration home and residential care — and each country’s policy choices involve fraught tradeoffs between universality, cost control and fiscal sustainability. (independentliving.co.uk)
What happens next
Policymakers and industry leaders say the next 12 to 36 months will be decisive. Regulators will continue to weigh multistate rate‑review frameworks and reserve standards; state legislatures will debate guaranty association statutes, assessment caps and recovery mechanisms; and private insurers will continue to manage legacy blocks while testing new product, distribution and capital strategies. Milliman’s projection — and the underlying demographic trend that a growing number of older Americans will require care — makes clear that pressure on financing systems will persist even if product innovations reduce some insurer risk. (us.milliman.com)
Voices from the field
“If adopted, Initiative 2124 would make participation in the Washington Cares program voluntary, effectively killing it,” Howard Gleckman, senior fellow at the Urban‑Brookings Tax Policy Center, wrote in February 2024 as voters weighed a repeal initiative that would have altered Washington’s payroll‑tax‑funded program. Supporters of WA Cares say public pooling can protect workers who would otherwise face ruinous out‑of‑pocket costs. Opponents argue that a mandatory payroll contribution is unfair — a debate that surfaced again in 2024 ballot politics. (forbes.com)
Genworth, which has tied parts of compensation and capital planning to progress in stabilizing its LTC book and developing new offerings, described its dual path succinctly in 2025: stabilize legacy obligations through approved rate actions and benefit redesigns while building CareScout as a platform to deliver products and services. “We advanced the buildout of our CareScout growth platform,” Genworth President Tom McInerney said in a company release outlining product launches and network expansion. (investor.genworth.com)
Conclusion
The convergence of rising LTC claims, legacy policy economics, insurer market exits and the structural limits of state guaranty funds has created a high‑stakes policy moment. States must decide whether to shore up guaranty systems, change the rules for assessments, expand public programs, or accept a smaller private market selling primarily hybrid products. Each path redistributes risk — to policyholders, to other insurers, to state balance sheets or to taxpayers — and the choices will shape how millions of older adults pay for care over the next generation. Regulators, insurers and lawmakers are now racing for durable solutions while trying to avoid destabilizing the delicate residual private market that still provides millions of contracts and guarantees today. (us.milliman.com)
Sources: Milliman white paper, “Milliman’s annual U.S. industry LTCI claims projection” (March 6, 2025); NAIC long‑term care insurance topic page (last updated Feb. 24, 2025); Pennsylvania Insurance Department and associated liquidation notices on Penn Treaty (March 1, 2017); Genworth press releases and SEC filings (2024–2025); state insurance department rate filings and approvals (Maryland, 2024–2025); NAIC working papers and guidance on guaranty associations and corporate restructurings; contemporaneous reporting and analysis on Washington’s WA Cares Fund and related ballot initiative debates. Specific citations are provided throughout this article. (us.milliman.com)