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State regulation of the emerging private insurance market for long-term care gives the elderly "a false sense of security" and may warrant federal intervention, says a report issued today by the office of ailing Rep. Claude Pepper.

"Many states allow insurers to use policy provisions that offer consumers less protection than recommended," said the General Accounting Office report prepared at Pepper's direction.

"While such provisions can result in lower policy premiums," the report said, "they can adversely affect policy holders by decreasing the likelihood that needed services will be covered and increasing the risk of policy terminations for reasons other than non-payment of premiums."

Pepper, chairman of the health and long-term care subcommittee of the House Select Committee on Aging, has been hospitalized more than six weeks for treatment of an undisclosed stomach illness. The 88-year-old Democrat issued through aides his own report in conjunction with the GAO report.

Pepper's report said that private long-term care insurance that is properly regulated should help fill gaps in a thus-far non-existent federal program, but should be "banned for sale as primary coverage for long-term care."

Rep. Pete Stark, D-Calif., has introduced a bill to establish minimum federal standards.

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