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Join the Center for Long-Term Care Reform. Help us fight for rational LTC policy reform. Receive our daily email publications. Get a user name and password to our Members-Only Zone. Only $150 per year. Mail your check to Center for Long-Term Care Reform, Inc., 2212 Queen Anne Avenue North, #110, Seattle, Washington, 98109. Contact Damon at 206-283-7036 or damon@centerltc.com if you have questions. Join the team!

READ STEVE'S BIO

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Updated, Monday, November 19, 2018, 10:25 AM (Pacific)

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LTC E-ALERT #18-044: LTC NEWS AND COMMENT

LTC Comment: Do you spend hours searching the internet for useful articles, key data, and relevant reports to keep you on the forefront of professional knowledge? Do you lose business because you’re blindsided by clients or competitors who learn critical information before you do? Here’s an antidote:

LTC Clippings: The Center for Long-Term Care Reform notifies subscribers to our LTC Clippings service daily of information you need to know. Each message contains only the critical facts about new publications: a title, representative quote, a link to the original, and our analysis in a sentence or two. To inquire or subscribe, contact Damon at 206-283-7036 or damon@centerltc.com. Read testimonials by satisfied subscribers here. To subscribe online, please click here.

LTC E-Alerts: Once a week, we compile our daily LTC Clippings into a summary, email it to Center for Long-Term Care Reform members, and archive it in The Zone, our password-protected members-only website. Center members also receive our weekly LTC Bullet op-ed. To join the Center and receive all these benefits and more, contact Damon at 206-283-7036 or damon@centerltc.com.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

LTCi Liquidation Decision Could Undermine The Insurance Industry, ACLI Says
Obesity and diabetes rates are up in every state
Veterans ‘demand action’ to improve care at VA nursing homes
A Dozen Facts About Medicare Advantage
Failure to Plan for Long-Term Care Often Leaves Caregiving to Female Family Members
Health, Family Take Precedence In Aging Americans' Minds
Life-LTC Hybrids Confuse Regulators, Too
Boomer Retirement Will Fuel Wave of Business Ownership Transitions
Liability insurance rates to increase 5% to 30%, according to new report
Wildfire destroys three skilled nursing facilities

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"LTC E-Alerts" are a feature offered by the Center for Long-Term Care Reform, Inc. to members at the $150 per year level or higher. We'll track and report to you news and analysis regarding long-term care financing, service delivery, and research. We hope The LTC E-Alerts will help you attain and maintain a high level of knowledge and competency in this complex field. The Center for Long-Term Care Reform, Inc. is a private institute dedicated to ensuring quality LTC for all Americans (www.centerltc.com).

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Updated, Monday, November 12, 2018, 9:53 AM (Pacific)

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LTC E-ALERT #18-043: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

New Medicare Advantage Benefits Are Supposed To Help Seniors Stay Out Of The Hospital
Top Strategies to Pay for a Longer, Healthier Retirement
It’s time to sign up for long care coverage
One of the fastest-aging US states has rejected free care for seniors
Study: Dark roast coffee may reduce risk of Alzheimer’s, Parkinson’s
Active Ingredient In Marijuana Reduced Alzheimer's-Like Effects In Mice
Medicaid Is A Big Winner On Election Day
New prize offers $2 million for finding key to Alzheimer’s in past research
Senior Citizens Are Replacing Teenagers as Fast-Food Workers
CalPERS insurance rates moves forward with trial date
In Less Than 10 Years, America Will Have 17 ‘Superaged’ States

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Updated, Thursday, November 8, 2018, 9:36 AM (Pacific)

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LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In Part 1, we showed how Medicaid misleads by taking credit for helping recipients whether it pays anything for their care or not. Part 2 shows how Medicaid misleads by downplaying its cost and exaggerating out-of-pocket expenditures, after the ***news.***

*** LTC CLIPPINGS bring you one or two daily updates on critical information you need to know to stay at the forefront of professional knowledge. Steve Moses scans the news and LTC literature. He chooses reports, articles, stories and data that LTCI agents, financial advisors, and anyone involved in aging issues need to know. He provides the title, author, source, a hyperlink to the original, and a sentence or two of commentary. As a bonus to LTC Clippings subscribers, Steve will answer questions by phone or email usually within 24 hours. Hook yourself into this reliable source and you can safely spend less time scanning for information and more time doing what you do best professionally. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe or learn more. Sample clipping:

11/7/2018, “Medicaid Is A Big Winner On Election Day,” by Jeffrey Young, HuffPost

Quote: “Voters in Idaho, Nebraska and Utah on Tuesday defied their GOP state leaders and approved ballot initiatives to expand Medicaid, which would provide access to health coverage for about 300,000 working adults. … In other potentially positive news for supporters of Medicaid expansion, Kansas elected Democrat Laura Kelly to be its next governor. … Kelly voted for expansion while serving in the legislature. In Maine, Democrat Janet Mills will succeed Gov. Paul LePage (R) after winning Tuesday, which should bring swift implementation of the Medicaid expansion there, which LePage has obstructed since voters approved it via ballot initiative last year.”

LTC Comment: When is adding more people to public assistance a victory? 73.2 million out of 325.7 million or 22.5% already receive Medicaid. What happens when half of us are supporting the other half? We should be working to reduce dependency not to increase it. ***

LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In “LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?,” we explained how Medicaid claims “primary payer” status for a nursing facility resident whether it pays any part of the bill or not.

We observed that this makes Medicaid, senior advocates, politicians and public officials appear to be supporting more people than is actually the case.

We pointed out losers in this system include nursing facilities who receive Medicaid’s extremely low reimbursement rate and tax payers who fund a system that discourages LTC planning and often results in their ending up in publicly-underfinanced nursing homes.

We explained that the system perversely …

incentivizes consumers to ignore the need for LTC planning by making publicly funded care available after the insurable event, i.e. the need for care, has already occurred.
incentivizes politicians and bureaucrats to drive up public expenditures, deficits and debt offering generous LTC benefits in exchange for votes, professional advancement and ego gratification.
incentivizes state governments to maximize federal funding by “Medicaiding,” i.e. charging Medicaid for any good or service they can get away with, and/or using “provider taxes” to jack up federal financial participation.
incentivizes nursing facilities to do whatever they can to survive debilitatingly low Medicaid reimbursement rates, including economizing on care, creative billing, driving up private pay rates, and over-charging Medicare.
incentivizes tax payers not to plan or insure for long-term care resulting in their dependency on public assistance for care widely recognized as institutionally biased and at risk of lower quality.

Thus, Medicaid misleads to the upside about its benefits and disguises its negative consequences.

But Medicaid also misleads to the downside on its cost and that is our focus in today’s LTC Bullet.

For example, for 2016 CMS reported in Table 15 that Medicaid paid $50 billion (30.7 percent of the total) for “Nursing Care Facilities and Continuing Care Retirement Communities Expenditures” whereas it reports out-of-pocket expenditures for the same service were $43.8 billion (26.9 percent of the total.)

What a bargain! Medicaid is the “principal payer” for 62 percent of all nursing facility residents (see LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?), but it only charges us 31 percent of the total cost of nursing facility care. Who picks up the other half?

Must be out-of-pocket costs. At 27 percent, they’re very high, nearly as high as Medicaid itself (31 percent) and even higher than Medicare’s, $37.5 billion or 23 percent of the total. Reporting out-of-pocket expenditures so high appears to support the conventional wisdom that Americans are spending down their life’s savings before qualifying for Medicaid.

But it’s an illusion.

Nearly half of what CMS reports as out-of-pocket expenditures for nursing home care is actually the “spend through” of Social Security income, by people already on Medicaid who are required to contribute their income to offset Medicaid’s cost for their care. Here’s the proof:

According to HCFA: “An estimated 41 percent...of out-of-pocket spending for nursing home care was received as income by patients or their representatives from monthly social security benefits.” (Helen C. Lazenby and Suzanne W. Letsch, “National Health Expenditures, 1989,” Health Care Financing Review, Vol. 12, No. 2, Winter 1990, p. 8.) Later research confirmed that Social Security spend-through is almost half of nursing home out-of-pocket costs. (Nelda McCall, "Long Term Care: Definition, Demand, Cost, and Financing," in Nelda McCall, editor, Who Will Pay for Long-Term Care, Health Administration Press, Chicago, Illinois, 2001, p. 19.) As all income, not only Social Security, is subject to the Medicaid recipient contribution requirement, private pension and other income also count as income “spend-through” and not asset spend down.

In other words, Medicaid recipients are largely spending income, not catastrophically depleting their life savings as is almost universally assumed and reported. The 27 percent reported by CMS as out-of-pocket costs, half of which are really Social Security income, explains much of the difference between the 62 percent of nursing facility residents for whom Medicaid is allegedly the “primary payer” and the fact that Medicaid only pays 31 percent of the cost for their care.

Wait, people own their Social Security, pension and other income, don’t they? When they contribute those sources of income to offset Medicaid’s cost, they are actually paying out of pocket. True, but you can see the confusion and misrepresentation created. It gives the impression that people are spending down the savings of a lifetime when they’re actually only applying income from another fiscally challenged government program, i.e. Social Security, as likely as Medicaid to suffer catastrophic reductions when the age wave hits in earnest.

We’ve already explained the motive Medicaid advocates have for making the program appear to support more people than it really does. Why do they make out-of-pocket expenditures appear to be higher and more onerous than they really are?

Let me explain with an example…

Some analysts say the out-of-pocket share of long-term care expenditures has skyrocketed to more than 50 percent.^{^[i]} But they arrive at that figure by including room and board expenses in residential care settings — costs that people would incur whether they need long-term care or not — and by excluding Medicare post-acute care expenditures from the total even though Medicare’s relatively generous nursing home and home care reimbursements are the only thing enabling Medicaid to pay long-term care providers less than the cost of providing the care to a majority of long-term care patients.^{^[ii]}

In reality, the proportion of long-term care expenses paid by taxpayers has been rising and the proportion paid by families has been declining for half a century. When Medicaid first started paying for long-term care in the late 1960s, out-of-pocket expenditures were very high – upwards of half of all nursing home expenditures. Since then, Medicaid and Medicare spending have increased rapidly and dramatically. Out-of-pocket expenditures, as reported by CMS, declined to around one-fourth of total long-term care expenditures. But even that low figure is misleadingly high because roughly half of it is not savings being spent down as often implied but Social Security and other income being “spent-through” by people already on Medicaid to offset Medicaid’s cost of care as federal law requires.^{^[iii]} To this day, upwards of 85 to 90 percent of nursing home expenditures are accounted for without dipping into personal savings and only 8.9 percent of formal home health care costs were paid out of pocket.^{^[iv]}

Nevertheless, analysts and advocates continue to argue that out-of-pocket long-term care expenditures are higher than they really are. Why? When you back out Social Security income that beneficiaries contribute to Medicaid, which is income they would otherwise have spent on room and board in the absence of Medicaid nursing home benefits, you’re left with a much smaller out-of-pocket total for long-term care. Medicaid promoters push up out-of-pocket expenditures creatively in order to justify new, government-funded long-term care financing programs. But spending more on the same programs that caused the problems in the first place is as foolish as it is self-serving.

Closing LTC Comment: Medicaid misleads to the upside by claiming to help more people than it does. Medicaid misleads to the downside by claiming out-of-pocket LTC expenditures, strongly implied to be asset spend down, are higher than they really are. Medicaid advocates do both to promote the program and their own interests. The net effect is that too few people plan for long-term care; they end up unable to pay its full cost; and they become dependent on the Medicaid program, which may disappear just when people need it most as the age wave crests and crashes.

A more honest way to measure Medicaid’s benefits and costs would be to report the number and proportion of patient days the program covers. Medicaid recipients tend to be the long-stayers in nursing homes, often remaining a year or more whereas Medicare residents are in an out usually in 20 days. Private payers last only as long as it takes the family to find a Medicaid planning attorney. If 62 percent of nursing facility residents qualify for Medicaid, but they account for 80 or 90 percent of patient days, because of their long stays, then Medicaid with its notoriously low reimbursement rates is doing far more damage than the commonly reported and highly misleading 62 percent “primary payer” number suggests. So what proportion of total nursing facility resident days does Medicaid touch? That’s the key metric researchers should discover and analyze. Does anyone know?

[i] Melissa Favreault and Judith Dey, “Long-Term Services and Supports for Older Americans: Risks and Financing,” USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief, July 1, 2015, revised February 2016, p.5; https://aspe.hhs. gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief. Critiqued in S. Moses, LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015; http://www.centerltc.com/bullets/archives2015/1094.htm.
[ii] “Nursing centers rely heavily on two public programs, Medicare and Medicaid, to pay for the services they provide to most of their patients. The rates paid by states for Medicaid do not adequately reimburse the actual costs incurred by providers, resulting in a major disconnect between payment levels and the needs of the patients. Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year’s projected shortfall of $21.20.” ELJAY, LLC & Hansen Hunter & Company, PC, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care,” American Health Care Association, Washington, D.C., April 2016, p. 1; www.ahcancal.org.
[iii] People in nursing homes on Medicaid are required to contribute all of their income, except for a small personal needs allowance, to offset Medicaid’s cost for their care.
[iv] See S. Moses, “LTC Bullet: So What If the Government Pays for Most LTC?, 2015 Data Update,” December 6, 2016; http://www.centerltc.com/bullets/latest/1159.htm.

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Updated, Monday, November 5, 2018, 9:36 AM (Pacific)

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LTC E-ALERT #18-042: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Legal-Ease: Asset protection from nursing home costs
Maine might fund senior home care. How do most Americans pay?
Pete the Planner: Elderly couple learns lesson about long-term care insurance
Deep in the weeds: A tale of two poverty measures
US Retirement Confidence Reaches 10-Year High
Medicare Advantage insurers could be on the hook for billions from audit changes
US News Rolls Out New Nursing Facility Rankings with Short-Term Focus
Evidence mounts that an eye scan may detect early Alzheimer's disease
How Much Will Boomers, Millennials Get in Retirement?
Reimbursement limitations on home healthcare are being loosened

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Updated, Monday, October 29, 2018, 9:50 AM (Pacific)

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LTC E-ALERT #18-041: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Venture-Funded Medicare Advantage Plans Launch into 2019 Market
Retirees' Health Care Costs May Blow Your Mind
2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending
Make November The Time to Start LTC Conversations
Ameriprise Will Be a Careful LTCI Reinsurance Shopper
Medicaid Overpays Nursing Homes by $1B Per Year, Study Suggests
Limit on immigrant visas would hurt nursing homes, LeadingAge says
The Hidden Costs Of Alzheimer's Disease
There's No Magic Number for Self-Funding Long-Term Care
Common Herpes Virus Could Cause 50 Percent of Alzheimer's Disease Cases, Expert Says
Critical Illness Market Keeps Growing: Gen Re
This retirement expense has hit $100,000 annually — and it's continuing to rise

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Updated, Thursday, October 25, 2018, 9:16 AM (Pacific)

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LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS?

LTC Comment: Public financing impacts long-term care more than most analysts recognize, benefiting affluent recipients and Medicaid planners but hurting providers and taxpayers. Insights and analysis follow the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find and educate clients, reducing the “Ping-Pong” in the LTCi sales process. Help clients project their exposure to LTC risk, compare Combo vs. Stand-Alone LTCi easily, and make informed final decisions about buying LTCi in 15-20 minutes! Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation! Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, & a past Chair of the Center for Long-Term Care Financing. Contact Claude at 800-999-3026, x2241 or claudet@targetins.com to ask questions or get references. ***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:

· All LTC Bullets and E-Alerts

· Access to our Members-Only Zone website and Almanac of Long-Term Care

· Subscription to our Clipping Service

· Email/phone access to Steve Moses for 24-hour turnaround queries

Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources.

Stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform by contacting Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS?

LTC Comment: Everyone knows Medicaid is the major payer for nursing home care. But as soon as you get below that high-level platitude, the subject complicates quickly. The consequences of how Medicaid really works as opposed to how it is represented are serious. Let me give you some examples.

AARP’s 2018 version of its “Across the States” report tells us that nationwide Medicaid is the “primary payer” for 62 percent of nursing facility residents. The report also provides the comparable figure for each state, which varies from 82 percent in Alaska to only 46 percent in Iowa.

Now here’s something curious. When I read that Medicaid is the “primary payer” for a resident, I’m thinking Medicaid must pay most of the bill. So I’m wondering who else pays the remainder? Who’s the secondary payer? But that isn’t what “primary payer” means at all. A nursing facility resident has Medicaid as “primary payer” if Medicaid pays any part of the bill, whether or not any other source contributes to the total, as is usually the case.

That seemed strange to me, so I did some research. I asked Charlene Harrington, co-author et al. of “Nursing Facilities, Staffing, Residents and Facility Deficiencies, 2009 Through 2016,” which is the source of the Medicaid-as-primary-payer data that AARP reported. She confirmed “when it says that a payer is the primary, it means that those residents have that payer source. Even if they have a share of payment, if Medicaid is paying any part, it is credited to Medicaid.” So, if Medicaid pays only $1, as can happen when a recipient has substantial income to contribute, Medicaid gets the credit in full.

That got me wondering where the primary payer data come from originally, so I consulted long-term care data maven extraordinaire Mick Cowles of the Cowles Research Group. He told me the summary data are compiled from field #76 of the CMS-672 “Resident Census and Conditions of Residents” form that is filled out by staff of the nursing facilities that receive the Medicaid payments. So I checked the instructions for that form and found this guidance on when to check that box: “Block F76: Residents whose primary payer is Medicaid.”

We seem to be going around in circles here. We ask: “What does it mean that Medicaid is the primary payer for a nursing home resident?” We get the answer: “Someone at a nursing home checked a box saying Medicaid is the primary payer.” But what makes Medicaid a primary payer even when it pays almost nothing? What is the definition of “primary payer”? No answer. Not very enlightening and quite frustrating.

But why does this matter anyway? Who cares?

You need to know how Medicaid eligibility and reimbursement work. It’s a complicated system with several undesirable, maybe or maybe not unintended, consequences. Unlike most of what you read in the newspaper, and in academic journals for that matter, people do not have to be low-income to qualify for Medicaid’s long-term care benefit. In most states, they qualify if their income is insufficient to pay all their medical and LTC expenses. In other states, those that cap income, Miller trusts achieve the same purpose. Rule of thumb: people with incomes below the cost of a nursing home, which is at least several thousands of dollars per month and often $10,000 or more--hardly “low income”--qualify routinely for Medicaid based on income. (Never mind assets. That’s a topic for another day, but the short answer is that substantial assets often don’t obstruct eligibility either because of Medicaid’s huge resource exemptions and/or legal machinations by Medicaid planners.)

This situation has consequences for everyone involved, beneficial for some, very negative for two. To wit:

Recipients get nursing home care at the Medicaid rate, which on average is about two-thirds of the private pay rate.
Medicaid, as well as the politicians and government officials who run it, get credit for helping a citizen who couldn’t afford long-term care otherwise.
State governments that partially fund Medicaid rake in billions from the federal government which pays the larger share of Medicaid.
Nursing homes are big losers. They get the Medicaid rate instead of the private pay rate which on average is half again as much.
Tax payers are the biggest losers. They seem to get something for nothing, easy access to publicly financed long-term care, but at the expense of ultimately ending up uninsured and dying in a welfare home.

Perverse incentives influence each party in this system. To wit:

The recipients, who can retain substantial assets because of Medicaid’s large resource exemptions, get care they would have had to pay half again as much more for privately, while only contributing their income as a kind of deductible. That’s much better than being wiped out financially as most media reports claim happens frequently, but actually doesn’t. Thus, Medicaid offers the uninsured a good deal after they need care when it’s too late to plan ahead for the risk thus perversely rewarding and incentivizing consumers’ failure to plan.
Politicians and government officials who get the credit for the services Medicaid provides are perversely incentivized to do more of the same, trading government deficits and debt for votes and personal advancement.
State governments are perversely incentivized to maximize the federal financial participation they receive from the U.S. government by charging Medicaid for anything they can get away with and by means of “provider taxes,” i.e., taxing LTC providers to bump up the federal contribution and then kicking back some of the extra funds to the over-taxed, underfunded providers and putting the rest of the windfall into the state’s general budget.
Nursing homes, which can’t survive without Medicaid, their single biggest payer, are perversely incentivized in several ways. They cut corners on care, file questionable claims, over-utilize higher-paying Medicare and over-charge private payers trying to compensate for the dismally low Medicaid reimbursements on which they principally depend.
Tax payers are perversely incentivized not to plan or insure for long-term care resulting in their dependency on public assistance for care widely recognized as inferior and subject to institutional bias.

It’s a crazy, mixed up system, but what does this have to do with calling Medicaid the “primary payer” whether it pays any part of the bill or not?

Because of the way Medicaid eligibility works, as described above, it is entirely possible for someone with substantial Social Security and pension income to qualify for Medicaid because their income is insufficient to cover all their medical and LTC costs but meets or exceeds the low Medicaid rate for their care. I’ve even seen cases where the patient contribution pays the entire cost of care at the low Medicaid rate. So, Medicaid gets the credit even when the recipient pays the whole bill out of pocket.

In a rational system, when the patient pays most or all of the bill out of pocket, out of pocket would be the “primary payer.” But reporting the reality instead of the myth required by the Centers for Medicare and Medicaid Services instructions for its CMS-672 form would diminish the reported proportion of residents Medicaid supports.

LTC Comment: In general, it benefits the government, and its hangers on, politicians and bureaucrats, to give the impression that Medicaid does more good than it does, does less damage than it does, and costs less than it seems. Reporting Medicaid as the “primary payer” even when it pays nothing for a recipient’s care is a handy way to buff the welfare program’s image. The big losers in this system are the nursing facilities expected to provide “Ritz Carlton care at Motel 6 rates,” as a provider explained to me once. Biggest losers of all are the tax payers who fund the system and end up uninsured for long-term care and spending their final days in welfare-financed nursing homes.

Entitlements of all kinds are popular. Most people like to get something for nothing at someone else’s expense. Medicaid fits that bill. But there is one big criticism of Medicaid that still rankles after its reputation as “primary payer” has been artificially enhanced. Medicaid costs too much. Does government reporting also mislead regarding Medicaid’s cost to make it appear less than it really is? If so, how? Qui bono? Who benefits? Who loses?

For the answer to those questions, stay tuned for our next LTC Bullet.

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Updated, Monday, October 22, 2018, 10:10 AM, (Pacific)

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LTC E-ALERT #18-040: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

4 Top Medicare Advantage Mini LTC Benefits
Study: For-profit nursing home residents more likely to be diagnosed with neglect issues; AHCA calls conclusions ‘faulty’
Long-term care institute compiling ‘No Brainers’
Trump proposes 5 percent budget cut for each Cabinet agency
Controversial former aide to Maine’s LePage to run Medicaid
Genworth's 15th Annual Cost of Care Survey Shows Continuing Rise in Long Term Care Costs
Aging Parents With Dementia? Beware Of Thieving Financial Advisors
AP-NORC Poll: Many caregivers neglecting their own health
40% of the American middle class face poverty in retirement, study concludes
Medicare Advantage Plans Found to Improperly Deny Many Claims

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Updated, Monday, October 15, 2018, 11:32 AM (Pacific)

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LTC E-ALERT #18-039: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Starbucks Opens New Front in Staffing Wars: Senior Care Benefits
Retirees, Adult Children Disagree on Retirement Community Essentials
7 reasons seniors housing is attracting investor interest
Top 25 cities for best and worst nursing homes listed
As Open Enrollment Begins, Record Medicare Advantage Growth Expected
Unlocked And Loaded: Families Confront Dementia And Guns
Seniors Prefer Assisted Living To Moving In With Family
Failing health top reason for move to assisted living: survey
Average State Medicare Advantage Plan Costs for 2019
Managed Care Payers Struggle to Staff Long Term Support Services
The Comforting Fictions of Dementia Care

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Updated, Wednesday, October 10, 2018, 10:13 AM (Pacific)

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LTC BULLET: HOW AND HOW MUCH MEDICAID REDUCES LIFETIME MEDICAL SPENDING FOR AFFLUENT RETIREES

LTC Comment: Medicaid is welfare, so of course it reduces lifetime medical spending of the poor. But here’s evidence Medicaid radically reduces medical spending by the affluent, especially for those savvy enough to maximize “Medicaid planning.” Evidence and analysis after the ***news.***

*** IMAGINE THE POSSIBILITIES: The 19th Annual ILTCI Conference convenes March 24-27, 2019 in Chicago. Great deals on exhibit space remain available through Friday, October 12. Organizers say “We're looking to increase participation with new companies and increase our 1,000+ attendee group. To do that we've created cost effective exhibiting options with savings compared to regular attendee pricing.” Get an exhibitor application here and a sponsorship application here. We hope to see you there. ***

*** THE LTC DISCUSSION GROUP will address the “Potential for Medicaid Savings from New Long Term Care Financing Products: LifeStage and Retirement Plus” as presented by Brian Ulery, LTCG and Vincent Bodnar, Genworth on Thursday, October 25 from 11am to noon EDT. For more information, go to http://www.ltcdiscussiongroup.org/aboutus.html. If you have not participated in the LTC Discussion Group’s informative sessions in person or by phone, this would be an ideal time to begin. ***

LTC BULLET: HOW AND HOW MUCH MEDICAID REDUCES LIFETIME MEDICAL SPENDING FOR AFFLUENT RETIREES

LTC Comment: Today, we direct your attention to new research that bears on the critical question of why people don’t worry enough about long-term care risk and cost to prepare in advance. Answering that question is not the stated goal of the paper we’ll discuss, so we’ll tease out this meaning from its findings.

“The Lifetime Medical Spending of Retirees” by John Bailey Jones, Mariacristina De Nardi, Eric French, Rory McGee, Justin Kirschner is NBER (National Bureau of Economic Research) Working Paper No. 24599, issued in May 2018 and revised in July 2018. To give you its general direction, we’ll start with the paper’s “Abstract” and then pull representative quotes followed by our “LTC Comments.” Our “Closing LTC Comment” will answer the key questions we raise, but which this paper leaves frustratingly unaddressed. You may purchase the paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

NBER Paper: “ABSTRACT: Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired U.S. households face over the remainder of their lives. We find that households who turned 70 in 1992 will on average incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000, and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the dispersion of this spending diminish only slowly with age. Although permanent income, initial health, and initial marital status have large effects on this spending, much of the dispersion in lifetime spending is due to events realized later in life. Medicaid covers the majority of the lifetime costs of the poorest households and significantly reduces their risk.” (p. 1)

LTC Comment: OK, important information to know, but we see no direct reference to long-term care spending. It’s easy to infer such a connection, however. We know a large portion of late-life medical spending is for long-term care, one of the biggest “events realized later in life.” So, these findings on the wide dispersion of lifetime medical spending, are highly relevant to the insurability of long-term care. Insurance should replace the small risk of a catastrophic loss with the certainty of an affordable premium. Lifetime medical spending ranging from an average of $122,000 to a 5 percent probability of more than $300,000 to a 1 percent chance of more than $600,000 certainly invites mitigation by insurance. But wait, these aggregate numbers include both out-of-pocket spending and Medicaid expenditures. Won’t we have to separate those to understand the impact of medical spending on consumers as opposed to its impact on taxpayers?

NBER Paper: “Our focus is out-of-pocket spending, the payments made by households themselves. High out-of-pocket expenses, however, can leave households financially indigent and reliant on Medicaid, the means-tested public insurance program. Medicaid eligibility depends on financial as well health-related factors (De Nardi et al., 2012), and Medicaid-provided care is widely viewed as inferior (e.g., Ameriks et al. 2011). Our benchmark spending estimates therefore include payments made by Medicaid, to capture all of the medical spending risk that households potentially face. Mechanically, our benchmark estimates measure the medical spending not covered by Medicare or supplemental private insurance. In economic terms, they measure the medical spending risk that wealthier households would face, and the medical spending risk that less wealthy households would face were Medicaid not available (absent any other changes in their insurance).” (p. 3)

LTC Comment: Hmmm. Their focus is out-of-pocket spending, but high costs may impoverish people and leave them dependent on “inferior” care from Medicaid, so they also look at total medical spending including out-of-pocket and Medicaid expenditures. That strategy allows them to identify the medical spending risk that both wealthy and poor households would face in the absence of Medicaid. Very useful and interesting, but I already discern a potential problem. If affluent people can rely on Medicaid without becoming financially indigent (and they can; see the evidence here), how does that affect the calculation and impact of medical spending risk? Will the paper address the myriad ways in which affluent people qualify for Medicaid, thus reducing their vulnerability to out-of-pocket medical spending? That would be very unusual.

NBER Paper: “We find that Medicaid lowers average lifetime expenditures by 20 percent. It covers the majority of the medical costs of the poorest households and significantly reduces their risk. Medicaid also reduces the level and volatility of medical spending for high-income households, but to a much smaller extent.” (p. 5)

LTC Comment: Now that is disappointing. Medicaid lowers expenditures by 20 percent wiping out the majority of medical costs for poor people, but only helps high-income households much less. How much less? Why does Medicaid, a welfare program, reduce spending for “high-income” people at all? Will we learn more as the paper progresses? Only a little more.

NBER Paper: “Our baseline measure of medical spending is the sum of payments made out-of-pocket and Medicaid. A number of recent papers have argued that Medicaid significantly reduces the out-of-pocket spending risk faced by older households. Brown and Finkelstein (2008) conclude that Medicaid crowds out private long-term care insurance for about two-thirds of the wealth distribution. De Nardi et al. (2016a) find that most single retirees, including those at the top of the income distribution, value Medicaid at more than its actuarial cost.” (p. 21)

LTC Comment: This is promising. If Medicaid crowds out private LTC insurance and high-income retirees value Medicaid more than its actuarial cost, this welfare program must be significantly impacting saving, spending, and insuring behavior by affluent people somehow. How? With what effect on the proclivity of the well-to-do to worry about and plan for long-term care? Blank out.

NBER Paper: “The top row of Figure 7, which compares the two spending measures for households at the bottom of the PI [permanent income] distribution, shows that Medicaid picks up a large share of these households' medical expenditures. At age 70, mean out-of-pocket expenditures are about 45 percent lower than mean combined expenditures, meaning that Medicaid constitutes about 45 percent of the total. The share of costs covered by Medicaid rises rapidly with age, however, to around 85 percent. The bottom row of Figure 7 repeats the comparison for the top of the PI distribution. Not surprisingly, Medicaid covers a much smaller fraction of these households' expenditures.” (p. 24)

LTC Comment: Again, proof Medicaid helps poor people a lot (from 45 to 85 percent depending on age), and people with high lifetime incomes, less, but now how much less? No answer. It’s as though the authors want to obscure the puzzling impact of how a welfare program benefits affluent people so they don’t have to explain it.

NBER Paper: “Figure 8 compares lifetime spending totals. The top row of this figure shows that at the bottom of the income distribution, Medicaid covers 57 percent of lifetime costs as of age 70. At older ages and higher percentiles it covers even more. The bottom row shows results for households at the top of the income distribution. Medicaid covers 21 percent of lifetime costs at age 70, with the fraction rising to nearly 30 percent at age 100. While most high-income households do not receive Medicaid, those that do qualify under the Medically Needy provision, which assists households whose financial resources have been exhausted by medical expenses. Such households tend to have high medical expenses and tend to receive large Medicaid benefits (De Nardi et al., 2016a).” (p. 24)

LTC Comment: All right, finally, numbers describing the impact of Medicaid on medical spending of high-income households. From 21 percent of lifetime costs at age 70 up to 30 percent at age 100. That’s huge. How can it happen? What effect has decades of avoiding roughly a quarter of the medical spending liability they’d otherwise have incurred had on the tendency of affluent people to plan responsibly for the health risks and costs of old age? The paper provides no answers but we do get a clue to why it has no answers. We learn that high-income households who get Medicaid qualify under the “Medically Needy provision” when their “financial resources have been exhausted by medical expenses.” Really? What is “Medically Needy”? What evidence proves people must exhaust their financial resources to qualify for Medicaid? If late-life medical spending frequently wipes out life savings, why aren’t consumers more apt to use insurance to abate that risk. Blank out. Our “closing LTC comment” answers those critical questions which this paper ignores.

Closing LTC Comment: This paper accepts the common myth of most academic research on the subject of long-term care financing. To wit, Medicaid eligibility requires impoverishment. But if Medicaid requires impoverishment, how do so many affluent people benefit so much from the welfare program? Scholars who accept the myth of impoverishment unquestioningly, as these do, have no answer. So they dodge the hard question (how Medicaid benefits the affluent) and focus on the obvious (that Medicaid helps the poor) as in this paper.

Let’s demythify this matter. Medicaid does not require impoverishment. Anyone with income below the cost of a nursing home, which averages $7,148 per month, can qualify for LTC benefits anywhere in the country. It’s easier to do in a “Medically Needy” state where health expenditures are deducted from income before determining eligibility, but in “income cap” states, higher income people can divert their excess income into “Miller income trusts” to qualify. So, the fact that high-income people qualify for Medicaid LTC benefits is no surprise, happens routinely and ought to invite explanation and analysis of its impact on consumer behavior.

But don’t the wealthy have to spend down their life’s savings into penury, no more than $2,000 in assets? How quaint and naïve to think so. Experts should know, and every affluent family quickly learns, that Medicaid exempts most wealth from spend down liability. Examples include a home and all contiguous property worth $572,000 everywhere but up to $858,000 in some states; a business including the capital and cash flow of unlimited value, including a second home if rented for income; and with no limit on their value, household goods and personal belongings, including heirlooms; one automobile; prepaid burial plans for the Medicaid recipient and everyone in his or her immediate family; term life insurance; individual retirement accounts if they’re “paying out” as all must at age 70 ½. I listed and sourced the federal laws and regulations supporting these exemptions in Medi-Cal LTC: Safety Net or Hammock? (2011), pages 19-21.

Still dubious? Explore the vast legal literature on how to expand those broad exemptions much further to protect an estate of virtually any size by means of sophisticated “Medicaid planning” techniques. I summarized that literature in a “Supplemental Bibliography of Books, Elder Law Treatises and Law Journal Articles on Medicaid Planning Listed Chronologically,” pages 34-63, in How to Fix Long-Term Care Financing (2017).

Here are the questions and answers long-term care financing scholars should be addressing.

Does Medicaid require impoverishment? No, of course not, open your eyes.

Are the affluent vulnerable to high late-life medical expenditures? Yes, of course. But really wealthy people absorb those easily. It’s the middle class and moderately well-to-do who qualify for Medicaid to offset their biggest liability, long-term care costs. Hence, the 21 percent to 30 percent of lifetime costs avoided through Medicaid by the top of the income distribution as identified by this paper.

Does the fact that Medicaid eliminates much, possibly most, of the long-term care vulnerability of the middle class and moderately well-to-do, affect their savings, investment and insurance behavior? Well, yeah. That explains why “Brown and Finkelstein (2008) conclude that Medicaid crowds out private long-term care insurance for about two-thirds of the wealth distribution” and why “De Nardi et al. (2016a) find that most single retirees, including those at the top of the income distribution, value Medicaid at more than its actuarial cost.” (p. 21)

In what directions should these facts take the study of long-term care financing? Pretty obvious. We need research that acknowledges Medicaid’s true impact on the LTC planning behavior of aging middle-class and affluent Americans. Such research should also address questions like these:

How does the availability of Medicaid after care is needed affect the planning, saving, and insuring behavior of people still in the prime of life?

Does it matter that most people do not know that Medicaid pays for most expensive long-term care if the reality is that it does?

If Medicaid did not exempt relatively high incomes and virtually unlimited assets, would people be more likely to save, invest or insure for long-term care?

If Medicaid protected the inheritances of fewer adult children of infirm elders, would those “kids” be more likely to prepare for their own future long-term care needs?

If Medicaid with its bias toward institutional care were less available to middle class and affluent people, would they be more likely to opt for private-pay home and community-based care?

If the LTC service delivery system had more private-payers at market rates and fewer Medicaid dependents generating reimbursements less than the cost of care, would access and quality of long-term care improve for everyone, rich and poor alike?

The answers to these questions are as obvious as the research needed to address them is barren. Unless and until scholars acknowledge and correct the myth of Medicaid spend-down and explore its ramifications for consumer behavior, progress to improve long-term care services and financing will remain stunted.

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Updated, Monday, October 8, 2018, 10:13 AM (Pacific)

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LTC E-ALERT #18-038: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

What A Medicare Advantage Personal Care Benefit Looks Like
Without Safety Net Of Kids Or Spouse, ‘Elder Orphans’ Need Fearless Fallback Plan
Study claims nursing homes increasingly pushing residents into ‘unnecessary’ rehab at end of life
Feds Unleash Short-Term Health Insurance From Obama-Era Limit
Nursing homes can treat higher acuity patients without raising their risk of death: Study
Half of women 'will develop dementia or Parkinson's or have a stroke'
Studies in healthy older people aim to prevent Alzheimer’s
Parents Spend Twice as Much on Their Adult Children as They Save for Retirement Merrill Lynch/Age Wave Study Finds
Governor vetoes expansion of assisted living program for Medicaid beneficiaries
Medicare Advantage Premiums to Decrease by 6% in 2019
In the Nursing Home, Empty Beds and Quiet Halls

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Updated, Monday, October 1, 2018, 10:00 AM (Pacific)

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LTC E-ALERT #18-037: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

You may be hovering too much over your aging parents
CMS chief stresses need to improve care for dual-eligible population: Inefficiencies are ‘unacceptable’
Nationwide Finds LTC Discussion Gap
5 Things to Know About New York Life's New LTCI Policy
The U.S. Returns to Top 10 in World Economic Freedom Index
What's the Dollar Cost of Caring for a Loved One With Alzheimer's?
71% of affluent older adults would rather rely on family — and pay them — for LTC, survey finds
28% of affluent 50+ adults expect to live in assisted living, survey finds
Investing in Long-Term Care Now Can Help America Age Well
The Rising Value of Senior’s Homes
Survey: 85% of adults want active adult and assisted living communities nearby
The Authentic Role an Insurer Can Play as ‘Personal-Risk Manager’
It’s Now Harder for Veterans to Qualify for Long-Term Care Benefits

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Updated, Thursday, September 27, 2018, 9:33 AM (Pacific)

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LTC BULLET: LONG-TERM CARE ACROSS THE STATES

LTC Comment: This is the single best source and compendium you’ll find anywhere of state and national-level demographic and long-term care data, after the ***news.***

*** “LTCG, a recognized leader in business process outsourcing for long term care insurance (LTCi), has announced the launch of its new Unified Provider Database (UPD). This new product contains detailed information for more than 100,000 senior care providers including non-skilled home care, skilled home health, assisted living communities, skilled nursing facilities, memory care, hospice agencies, adult day care facilities and continuing care retirement communities.” For the full story, click here. We extend congratulations to LTCG, a longtime friend and corporate member of Center for Long-Term Care Reform. ***

*** ADVISORS INSURANCE BROKERS announcement: “This is just a friendly reminder to our valued business partners. Note: while our Marketing name has changed, our Corporate ID, including our ID for carrier licensing and contracting, commissions, etc., is NOT changing. That will remain under the New York Long Term Care Brokers, Ltd. Corporate name. We continue to ‘fine tune’ our transition from New York-National LTC Brokers to our new Marketing name, Advisors Insurance Brokers. I am also pleased to announce that our new AIB website, www.AdvisorsIB.com is now LIVE. Please feel free to check out the new website at your convenience, and we welcome your feedback.” Congratulations to Kevin Johnson and Bob Vandy of AIB/NYNLTCB, longtime friends and supporters of the Center for Long-Term Care Reform. ***

LTC BULLET: LONG-TERM CARE ACROSS THE STATES

LTC Comment: Three cheers for AARP! Those are words you won’t hear often in these LTC Bullets. But in this case, they’re deserved.

The AARP Public Policy Institute has published a new version of its longest running (24 years) and best publication, titled “Across the States 2018.” This is the first update of the classic since 2012.

We’ll tell you more about the report and pull a selection of highlights below, some with our comments, but first this slide deck by two of its authors, Ari Houser and Wendy Fox-Grage, from their recent presentation to the LTC Discussion Group, makes a good summary.

I’m especially fond of “Across the States” because it was a principal source for the “Index of Long-Term Care Vulnerability” we developed in 2013 and used to analyze the condition of long-term care services and financing in these four states:

· New Hampshire: Apply the LTC Vulnerability Index to Your State: The New Hampshire Example (2014)

· New Jersey: The Index of Long-Term Care Vulnerability--A Case Study in New Jersey (2014)

· Georgia: The Index of Long-Term Care Vulnerability: A Case Study in Georgia (2013)

· Virginia: The Index of Long-Term Care Vulnerability: A Case Study in Virginia (2013)

Our plan eventually to apply the Index of Long-Term Care Vulnerability to every state in the country was stymied when AARP stopped publishing Across the States after its 2012 version. The data was just getting too old. So despite the fact that our other principal sources continued to be published annually, we had to give up on the larger project.

But, hallelujah, publication of Across the States 2018, means we can get back to analyzing long-term care vulnerability state by state. So please review the reports linked above for NH, NJ, GA, and VA. If you would like to underwrite similar studies applying the Index of Long-Term Care Vulnerability to any state, please contact Steve Moses at smoses@centerltc.com or 425-891-3640. I think you’ll be surprised how economically this work can be done.

Now, back to Across the States 2018. Here’s how the authors describe it:

“This reference book is a powerful compilation of state data and analysis on LTSS in each state. This resource combines data from a large number of studies and data sources—including some original analysis not found elsewhere—into a single volume, so these state data can be at your fingertips. … Each state profile is a four-page, user-friendly, print-ready document that provides your state’s data and rankings and can be found at http://www.aarp.org/acrbossthestates.” (p. 1)

Report Highlights:

“The ages 85+ population—the cohort with the highest need for LTSS—is projected to triple (a 208 percent increase) between 2015 and 2050.” (p. 2)

“The caregiver support ratio … will drop [from 7 to 1] to 3 to 1.” (p. 2)

“In particular, the Hispanic population ages 65+ is projected to quadruple between 2015 and 2050.” (p. 2)

“The percentage of LTSS [long-term care] spending for older people and adults with disabilities going to HCBS [home and community-based services] ranged from 13 percent to 73 percent in 2016. While 40 states became more balanced [more HCBS], 11 states became less balanced [less HCBS] for older adults and people with physical disabilities in 2016 compared with 2011.” (p. 2)

“Nearly one-third of this [age 85+] population has dementia. Members of this age group not only have higher rates of disability than younger people, but they are also more likely to live alone, without a spouse or other family member to provide them with assistance.” (p. 3)

“Although disability is often associated with old age, the number of people ages 18–64 with cognitive difficulty or any disability is actually higher than the number of adults ages 65+ with these conditions.” (p. 6)

“The cost of LTSS is not within reach of most families across all the states. The annual median cost for nursing facilities is more than double the median income of older households, $42,113. This high cost of care can all too often cause people to exhaust their savings and rely on Medicaid, the largest public payer for LTSS.” (p. 7)

LTC Comment: Oops. Not every conclusion in this report is justified by the facts. Yes, LTC is expensive and most people cannot afford it. But, no, people do not have to “exhaust their savings” to qualify for Medicaid. There are dozens of ways to convert savings into exempt resources preserving most wealth while shifting LTC costs to taxpayers.

Report: “Despite the need for long-term care insurance to cover these costs, the vast majority (95 percent) of adults ages 40+ do not have this type of insurance. … Because of the low take-up rates, the overwhelming majority of private pay LTSS is paid out of pocket rather than by insurance.” (p. 8)

LTC Comment: Ah, true, but misleading. Fully half of the “out of pocket” funding for long-term care comes from the personal income people on Medicaid are required to contribute toward their cost of care. Even if they pay most of the bill out of pocket, providers get the notoriously low Medicaid reimbursement, often less than the cost of providing the care. Medicaid is a far bigger factor undercutting access to and quality of care in the US than appears evident from these unanalyzed data.

Report: “Family caregivers provided $470 billion worth of unpaid care in 2013, more than six times the Medicaid spending on home-and community-based services.” (p. 11)

“In 2015, there were 7 people ages 45–64 (the peak caregiver age group) for each person age 80 and older (the peak care need age group). While not all people ages 80+ have access to 7 potential caregivers ages 45–64, this is a useful metric for the overall availability of caregivers to provide family care to older people. In 2030, it is estimated that the ‘family caregiver support ratio’ will drop to 4 to 1. It is estimated to then fall to about 3 to 1 in 2050, when all baby boomers will be ages 85 or older.” (p. 11)

LTC Comment: So, we’ll just rely on paid caregivers then, right?

Report: “In 2015, nearly 2 million home health and personal care aides provided care, at just slightly more than $11 per hour on average. These workers made roughly $22,000 each in 2015 if they worked full time, which is just above the poverty line for a family of three (about $20,000), making them eligible for Medicaid.”

LTC Comment: Not exactly an attractive career we should expect future professional caregivers to seek.

Report: “Assisted living and residential care communities are needed options for when living at home is no longer viable. …These options are available mostly to people who can pay privately for them. Medicaid cannot cover room and board charges, only services. However, many state Medicaid programs do not cover these optional services in assisted living and residential care settings.”

LTC Comment: So Medicaid should pay more for ALFs and RCFs, right? Sounds logical until you analyze why we have a nursing home bias and quality of care problem in the first place. That is, because Medicaid made institutional care virtually free. We run the risk of ruining assisted living and residential care in the same way if we follow that course, as I explained in "The Sirens' Call, The Primrose Path, and Assisted Living," Assisted Living, April 2004.

Report: “Roughly 6 out of 10 (62 percent) nursing facility residents rely on Medicaid because many of them have spent their life savings paying for care.”

LTC Comment: There is no empirical evidence that many “have spent their life savings paying for care.” Medicaid does not require spend down for care. People can spend down by purchasing exempt resources, thus preserving wealth, while qualifying for Medicaid. To learn how and why, Google “Medicaid planning.” To learn why it’s terrible public policy, condemning millions to mediocre care or worse, read any report by the Center for Long-Term Care Reform here.

Closing LTC Comment: We’ll have more to say based on the excellent AARP Across the States report soon. We will revisit the potential of applying the “Index of Long-Term Care Vulnerability” to more states and we’ll explore what AARP means by “primary payer,” a critical concept, misused I think, to make Medicaid appear less damaging to LTC access and quality than it truly is. Stay tuned.

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Updated, Monday, September 24, 11:32 AM (Pacific)

Seattle—

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LTC E-ALERT #18-036: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Universal Life Insurance, a 1980s Sensation, Has Backfired
When Family Members Care for Aging Parents
Number of people with Alzheimer’s to double by 2060, CDC predicts
Another Big Insurer Posts Another Big Long-Term Care Insurance Charge
Low Medicaid Rates Cause Skilled Nursing Crisis in Washington State
Medicare-Medicaid dual eligible care models provide highly coordinated healthcare services to help beneficiaries navigate their healthcare options
Managed care organizations picking nursing homes based on cost, not quality, study finds
New Report Finds Nation’s Retirement Crisis Persists Despite Economic Recovery
Social Security COLA Estimate Revised Below 3% for 2019
Buyers Of New Long-Term Care Insurance Policies Face Little Risk Of Future Rate Increase
To Manage Dementia Well, Start With The Caregivers

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Updated, Monday, September 17, 2018, 10:12 AM (Pacific)

Seattle—

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LTC E-ALERT #18-035: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

State tests voucher program to help adults with dementia afford assisted living
Sex Doesn't Stop with Dementia
Not just nursing homes’ problem
States try to beat back rate increases on long-term-care policies
Anne Tumlinson: Transforming Long-Term Care for Older Adults
How a son’s viral videos give hope to families dealing with dementia
Benefits and Challenges of Payment Adjustments Based on Beneficiaries' Ability to Perform Daily Tasks
Traditional gender roles don't keep men from becoming caregivers
What to do if Your Long-Term Care Insurance Premiums Have Skyrocketed
CCRC occupancy strong as construction pipeline continues to expand, analysis finds
Smoking May Increase Dementia Risk
Infectious Theory Of Alzheimer's Disease Draws Fresh Interest

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Updated, Thursday, September 13, 2018, 10:25 AM (Pacific)

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LTC BULLET: STATE OF THE LTCI INDUSTRY—2018

LTC Comment: Don’t believe ~~everything~~ anything you read in the media. Count on this annual report for the truth about long-term care insurance, after the ***news.***

*** ACT FAST, DEADLINE TOMORROW: The premier long-term care insurance industry annual conference, to be convened in Chicago March 24-27, 2019, is making this offer: “We're looking to increase participation with new companies and increase our 1,000+ attendee group. To do that we've created cost effective exhibiting options with savings compared to regular attendee pricing. Regular attendees will pay $1,095 each to attend but now through Friday [September 14] you can get a 6x10 booth with two attendee passes for only $2,000. If you've never exhibited with us before you get an additional $250 discount. 10x10 Booths come with 4 attendee passes and are only $3,500, or $3,250 if you've never participated before. Aside from our exhibit hall we also have 45+ educational sessions, a keynote speaker, and more to offer attendees.” Find the exhibitor application here for the 19th Annual Intercompany Long-Term Care Insurance Conference. We hope to see you there. ***

LTC BULLET: STATE OF THE LTCI INDUSTRY--2018

LTC Comment: “The 2018 Milliman Long Term Care Insurance Survey is the 20th consecutive annual review of long-term care insurance (LTCI) published by Broker World magazine. It analyzes the marketplace, reports sales distributions, and details available products.”

Subscribers can find this article, authored by actuaries Claude Thau, Allen Schmitz, and Chris Giese, in Broker World’s July 2018 issue here. Purchase a .pdf of the full survey here. To whet your appetite for more, here are a few items that stood out to us:

“State Farm discontinued stand-alone LTCI sales in May 2018, hence is no longer included in the Product Exhibit.”

“The 17 carriers reported sales of 70,080 policies … with on-going premiums ($181,956,656 of new annualized premium … ) in 2017, compared to our 2016 reported sales … of 94,353 policies ($225,838,660 of new annualized premium), a 26 percent drop in the number of policies and a 19 percent drop in the amount of new annualized premium.”

“Six insurers (three in the Product Exhibit and three others) sold more premium than in 2016 and five sold more policies.”

“Mutual of Omaha and Northwestern reversed position as the top two carriers, combining for more than half of the new sales in terms of premium.”

“For the third straight year (and 3rd time ever), our participants’ number of inforce policies dropped, this time by 5.1 percent after 0.3 percent (2016) and 0.2 percent (2015) drops previously.”

“Nonetheless, year-end inforce premium increased 6.0 percent in 2017 (2.9 percent in 2016). Inforce premium increases from sales, price increases, and benefit increases (including FPOs), and reduces from lapses, reductions in coverage, deaths, and shifts to paid-up status for various reasons.”

“Participants’ individual claims rose 6.1 percent and group claims rose 10.3 percent. Overall, the stand-alone LTCI industry incurred $11.1 billion in claims in 2016 based on companies’ statutory annual filings, raising total incurred claims from 1991 through 2016 to $118.9 billion. … This compares with $9.5 billion of incurred claims in 2015, a 14 percent increase. Combo LTC claims are in their infancy and amounted to $5.9 million. The claim figures are even more startling considering that only 4 percent of 7 million covered individuals were on claim at the end of 2016.”

“Only 59.0 percent of applications resulted in active policies. This low success ratio contributes to financial advisors’ reluctance to recommend that clients apply for LTCI.”

“Recently priced policies are based on assumptions that rely on far more credible data, hence premiums should generally be more stable.”

“Despite the anticipated more stable pricing, many financial advisors presume that currently-issued policies will face steep price increases. It is important to educate them that assumptions underlying current market pricing should produce a lower chance of needing a rate increase.”

“‘Combo’ policies (LTCI combined with life insurance or annuity coverage) increased to 256,000 sales totaling more than $4 billion of new premium in 2016 (88 percent life; 12 percent annuity) much of which was from single premium sales, compared to $3.6 billion in 2015.”

“During the course of 2017, the brokerage worksite market reduced to a sole insurer. However, three new unisex offerings appear likely by the end of 2018.”

“For the nine insurers which reported individual claims for both 2017 and 2016, claim dollars rose 6.1 percent, despite a 6.3 percent decrease in inforce policies.”

“The LTCI industry has had a much bigger impact than indicated above, because a lot of claims are paid by insurers that no longer sell LTCI.”

“Individual claims shifted significantly away from nursing homes (from 37.4 percent to 32.1 percent) to ALFs (31.2 percent to 35.3 percent).”

“Some people may have expected that ALF claims would be less expensive than nursing home claims because ALFs cost less per month. But that has not been the case.”

“Past average claim data understates the value of buying LTCI because the many small claims drive down the average claim. LTCI can provide significant financial return for people who need care one year or longer. The purpose of insurance is to protect against a non-average result, so the amount of protection, as well as average claim, is important.”

“Worksite business produced 22.0 percent of new insureds (see Table 7), but only 13.9 percent of premium because of its younger issue age distribution and less robust coverage.”

“[T]he average premium per new insured ranged between $2,322 and $2,497 between 2011 and 2016, then surged to $2,596 in 2017.”

“The average issue age rose to 56.7, the highest since 2013.”

“Five percent compounded for life, which represented 56 percent of sales in 2003 and more than 47.5 percent of sales each year from 2006 to 2008, now accounts for only 1.5 percent of sales. Simple five percent increases were 19 percent of 2003 sales, but are now 0.2 percent of sales.”

“Partnership Programs When someone applies to Medicaid for long term care services, states with Partnership programs disregard assets up to the amount of benefits received from a Partnership-qualified policy. Partnership sales were reported in 44 jurisdictions in 2017, all but Alaska, District of Columbia, Hawaii, Massachusetts, Mississippi, Utah, and Vermont, where Partnership programs do not exist. Massachusetts has a somewhat similar program (MassHealth).”

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Updated, Monday, September 10, 10:25 AM (Pacific)

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LTC E-ALERT #18-034: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicaid-exempt assets from nursing home costs
3 Peeks Behind the LTCI Blinds
New York Life Launches Stand-Alone Long-Term Care Insurance Policy
As debt grows among older Americans, so does bankruptcy
Some older adults using Facebook less
‘It’s become a gold rush’: Inside the race to create smart shoes, custom razors and high-tech devices for the over-65 crowd
New report paints bleak picture for nursing assistants
Elderly Women to Bear Brunt of Japan's Spending Cuts
5 Long-Term Care Stats That Will Blow You Away

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Updated, Thursday, September 6, 10:22 AM (Pacific)

Seattle—

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LTC Bullet: Why Keep Fighting … and How

LTC Comment: Responsible long-term care planning is on the ropes. Government dependency prevails. Worse, we’ll get more of the latter and less of the former in the short run. Give up or fight on, after the ***news.***

*** 2019 ILTCI CONFERENCE will convene in Chicago March 24-27, 2019. Organizers report “Now through September 14th exhibitor and sponsor pricing is at the Early Bird Rate and the lowest it will be all year! This year's individual attendee rate is $1,095 per person, making exhibitor and sponsor discounts even more valuable and cost effective. Preliminary conference info and hotel details can be found at www.iltciconf.org.” We’ll follow up with more news and information about the meetings as they become available. ***

LTC BULLET: WHY KEEP FIGHTING … AND HOW

LTC Comment: Here’s the problem:

Most of the public is finally aware of long-term care risk and cost, but the vast majority still fail to plan, save, invest or insure privately.
LTC insurance is out of favor and many carriers, distributors and producers have migrated partially or wholly to other products.
Medicaid continues to fund most high-cost LTC, while paying providers less than cost, exacerbating quality problems.
Plans to expand public LTC financing abound without serious strategies to pay for them.
Media coverage is frequently inaccurate and biased, but mostly uncontested.
Asset bubbles and deep debt due to irresponsible government monetary and fiscal policies threaten the economy.
We’re little more than a decade away from the 2030s when boomers start turning 85, their medical and LTC expenses explode, and their entitlement safety nets (Social Security, Medicare and Medicaid) implode.
Time is running out.

What a mess! What’s the use? Why not give up and move on?

Well, read through that litany of travails again and ask yourself what’s different? Most of it reflects errors of public policy that have prevailed for decades, but remain untenable indefinitely. The late economist Herb Stein said "If something cannot go on forever, it will stop," often paraphrased “Trends that can’t continue, won’t.” The LTC financing status quo cannot go on forever. Therefore, it will end. So the right question is not what’s the use? But rather, how can we make the most of this stupendous opportunity to understand, anticipate and get in front of a major, forthcoming social and economic sea change? Disrupt or be disrupted!

Comparable Considerations

Consider this analogy. Stocks just achieved the longest bull market in history. Do you sell out entirely now? If you’d done that when this bull run was the second or third longest in history, you’d have missed, as many did, a big portion of the profits from holding on. If the bull market finally ends and stocks plummet, will you sell then and risk getting out at the bottom, the opposite of good “buy low, sell high” advice, or will you buy more trying to “catch a falling knife” against most professional investment counsel? No, wise investors dollar-cost average into the market, diversify domestically and internationally, take profits occasionally, look for unique opportunities, remain ever vigilant to changes in the economy, and purchase insurance against financial cataclysms by holding some hard assets such as gold that are resistant to recessions and fiat currency risk. Awareness, analysis, research, persistence and insurance are the watchwords for successful investing.

Same Principles Applied to Long-Term Care Policy Reform

Likewise, what would be comparable principles and responses to address the current bear market in long-term care financing policy?

Awareness: Understand the problem; know what we’re facing; stay abreast of the latest news, studies, journal articles, legislation and public policy affecting long-term care services and financing. Here’s how the Center for Long-Term Care Reform helps:

Our daily LTC Clippings briefly highlight critical new information and developments
Our LTC E-Alerts summarize the previous week’s LTC Clippings in one quick read
Our LTC Bullets analyze larger policy trends, major reports, and academic articles. Search the Bullets here and you’ll find 1,235 of them archived both chronologically and by topic. To wit:

The LTC Problem and Solutions: 293

Reality Check: The Facts on LTCI: 130

Medicaid Planning: 151

LTC Services: 184

Politics and Legislation: 174

Demographics and Other Data: 119

CLTCR News: 215
Total: 1266 (A few Bullets straddle topics and therefore are listed under more than one heading.)

Our members-only website provides many more features to facilitate professional expertise and excellence. Non-members may access these free for one week at user name: IntrotoZone and password: FreeTrial (case sensitive)

New: Long-Term Care Clippings Archive: Access all our LTC Clippings here organized chronologically by topic.

LTC Almanac: Our huge and unique compilation containing links to decades of news, articles, studies, and reports organized by topic.

LTC Graduate Seminar Transcription: Full day advanced training program presented throughout the USA including a history of how we got into this mess and what to do about it.

Long-Term Care Cost Surveys: Find most of the surveys ever published covering LTC costs by year for nursing homes, assisted living and home care.

Medicaid and Medicare Key Numbers Updated Annually: Look back at yearly Medicaid Spousal Impoverishment Standards since 1991 and Medicare Deductibles and Co-Insurance amounts since 1993.

Deductibility Limits for Long-Term Care Insurance: See how these have changed every year since they began in HIPAA ’96.

LTCI Tax Treatments: How individual states treat LTC insurance for taxes.

Unfunded Entitlement Liabilities: Many articles and reports with data on unfunded entitlement liabilities.

Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care: Years of stark warnings not to count on the VA for long-term care.

LTC Embed Reports: Brief on-site reports from the policy front in Washington, D.C. and elsewhere, wherever the LTC policy battle takes us.

Virtual Visits to years of long-term care insurance conferences.

CLASS Act Update: Quick reference to dozens of publications on CLASS.

One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.

Analysis: Having provided all the tools necessary to keep you abreast of everything going on in the long-term care financing field, we focus frequently on broader analysis, making sense of new developments, praising if they’re positive, and criticizing otherwise. Browse these for example:

The Still Broken Rhythm of Long-Term Care Reform, July 20, 2018: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer?
The New Fallacy of Impoverishment, June 29, 2018: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work.
Feder Fantasy Fatally Flawed, May 4, 2018: A new Feder/Cohen proposal would take long-term care out of the frying pan into the fire.
The End of Alzheimer’s, April 20, 2018: Is there hope for delaying, mitigating, even ending Alzheimer’s? We report, you decide.
Have Your Cake Until It Eats You, March 23, 2018: Americans want to have their cake (entitlements) and eat it too, but scary evidence and trends show this cake will eat our economy first.
LTC Calculation, February 16, 2018: We explore why socialism always fails, especially when applied to long-term care.
LTC Cause and Effect, February 9, 2018: New Bipartisan Policy Center LTC report puts the services cart before the financing horse as usual.
Don’t Buy LTCI?!, January 12, 2018: Bad advice by the unknowing spread by the unwitting refuted by understanding.
The Morality of Hazards, November 10, 2017: If conventional morality is a trap, what would work better?
The Hazards of Morality, November 3, 2017: Is conventional morality a trap? Could we have it all backwards?
Is it Spend Down or Medicaid Planning?, July 14, 2017: A lot of what passes for Medicaid “spend down” in the scholarly literature is really Medicaid planning. We explain and give examples.
Home Equity and LTCI Demand, June 30, 2017: We affirm and confirm Professor Thomas Davidoff’s observations on the connection between home equity and LTC insurance demand.

Keep browsing 20 years of LTC Bullets archives and you will find our trenchant analysis of every major LTC financing development and proposal during that period.

Research: It’s not enough to stay current with the LTC literature and to analyze developments carefully. We must push the boundaries of knowledge especially in areas, such as the benefits of freer markets and the downsides of over-reliance on government, where many conventional scholars refuse to go. Steve Moses and the Center for Long-Term Care Reform have conducted and published such original research on long-term care financing for over 30 years. Examples include:

How to Fix Long-Term Care Financing (2017)
New Hampshire: Cassandra's Quandary: The Future of Long-Term Care in New Hampshire (2016)
Georgia: The Index of Long-Term Care Vulnerability: A Case Study in Georgia (2013)
Near-Term Prospects for Long-Term Care Financing Reform (2012)
New York: Long-Term Care Financing in New York: The Consequences of Denial (2011)
California: Medi-Cal LTC: Safety Net or Hammock? (2011)
Save Medicaid LTC $30 Billion Per Year AND Improve the Program (2011)
Rhode Island: The Age Wave, the Ocean State, and Long-Term Care (2009)
North Carolina: Long-Term Care Financing in North Carolina: Good Intentions, Ambitious Efforts, Unintended Consequences (2008)
Aging America's Achilles' Heel: Medicaid Long-Term Care (2005)
The Realist's Guide to Medicaid and Long-Term Care (2004)
Nebraska: The Heartland Model for Long-Term Care Reform (2003)
The Long-Term Care Partnership Program: Why It Failed and How to Fix It (2001)
LTC Triathlon (2000)
Myth of Unaffordability (1999)
LTC Choice (1998)
Maryland: THE Long-Term Care Financing Crisis: Danger or Opportunity? A Case Study in Maryland (1995)
Illinois: The Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois (1994)
Florida: The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term Care (1994)
Wisconsin: The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin (1992)
The Myth of Medicaid Spend-Down -- LTC, Incorporated (1991)
The Fallacy of Impoverishment --The Gerontologist (1990) (Requires membership or "pay-per-view" through GSA, Gerontological Society of America)
Transfer of Assets in the Medicaid Program: A Case Study in Washington State -- Office of Inspector General (1989) -- Archived permanently here
Medicaid Estate Recoveries: National Program Inspection -- Office of Inspector General (1988) -- Archived permanently here
The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the Medicaid Program -- Health Care Financing Administration (1985)

Persistence: Your Center for Long-Term Care Reform has pursued these principles in these ways for over 20 years, since April 1, 1998. We’ve faced the same challenges so many of you struggle to overcome. But like thoughtful investors, we don’t panic and sell. We carefully evaluate the challenge, adjust to meet it in evermore creative ways, keep our powder dry, and await the next big opportunity to effectuate change for the better. We remain proactive, supporting good ideas, opposing bad ideas, and proposing new approaches.

We remember and are buoyed by our major successes changing long-term care financing law and regulations for the better, including

(1) forging the framework for the Omnibus Budget Reconciliation Act of 1993, which closed many Medicaid eligibility loopholes, made estate recoveries mandatory, and implemented most of the recommendation from the 1988 "Medicaid Estate Recovery" report Steve Moses wrote for the Office of Inspector General [http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf] and

(2) influencing (with co-founder, attorney David Rosenfeld) the content and passage of the Deficit Reduction Act of 2005, which capped Medicaid’s home equity exemption for the first time, extended the asset transfer look back period to a full five years, and unleashed the long-hamstrung LTC Partnership program from debilitating statutory restraints.

We did it before. We can do it again.

Insurance: Like buying gold to insure an investment portfolio against inflation, recession, and stagflation, supporting your Center for Long-Term Care Reform ensures that we’ll be there fighting for sound long-term care financing policy, keeping you apprised of all you need to know, taking every opportunity to correct errors by ideologically biased analysts or media, and seeking every opening to effectuate changes that benefit private LTC financing products and producers.

LTC Comment: I started to title today’s LTC Bullet “Why You Need the Center for Long-Term Care Reform.” But then I figured you might not read what I had to say. So I took the tack of assessing the problems we face and pointing out how the Center for Long-Term Care Reform addresses them with careful analysis, realistic recommendations, and forward-looking optimism. I hope you share our vision and will support our on-going efforts. Join, renew, or upgrade by contacting Damon at 206-283-7036 or damon@centerltc.com.

We are planning to make a few changes in the Center’s approach to these problems we all face. Instead of publishing LTC Bullets every Friday, we’ll publish periodically as needed to oppose bad research and support promising developments. We’ll use time saved to focus more on writing for outside publication and correcting mistaken or biased media coverage of long-term care financing. Instead of conducting more state and federal studies to re-substantiate what we’ve proved over and over again, we’ll focus on forcing the opposition to consider facts and analysis they’ve evaded.

Thanks for your support.

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Updated, Tuesday, September 4, 10:30 AM (Pacific)

Seattle—

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LTC E-ALERT #18-033: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Nursing home resident numbers decreasing, while quality varies, new AARP analysis notes
Assisted living supply, charges vary widely among states, new AARP report shows
Wall Street Journal: Aging Boomers Divided on Being Called ‘Perennials’
Sizing up the state of labor in senior living
New York Life Tests New Pitch for an Unpopular Insurance Policy
Short-Term Care Has Role in Skilled Nursing, But Future Remains Cloudy
Genworth and Oceanwide Extend Merger Agreement
Medigap Offers Agents Years Of Strong Commissions
10% of Surveyed Seniors Say They’ll Fund Long-Term Care with Reverse Mortgages
In-force LTC Rate Increases Continue, Some Lower Than Actuarially Justified
How to Tame Health Care Spending? Here’s a One-Percent Solution
Reinsurers Have Traded $60 Billion in Longevity Risk: Rating Agency
Foreign workers to the rescue?

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Updated, Monday, August 27, 9:33 AM (Pacific)

Seattle—

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LTC E-ALERT #18-032: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Long-Term Care Hospitals: A Case Study in Waste
Some Doubt LTC Insurance Industry's Future As Premiums Spiral Upward
The big difference between long-term care and long-term disability insurance
Autobiographical memory tested for early Alzheimer's detection
Don't Blame Older Adults For Big Increases In Medicaid Spending
Plan ahead to protect your family and your fortune from this retirement risk
A Late-Life Surprise: Taking Care Of Frail, Aging Parents
Michael Cohen's guilty pleas include assisted living connection
75 Must-Know Statistics About Long-Term Care: 2018 Edition
Good providers need more Medicaid help
Scott Harrison Is Tired of Long-Term Care Policy Think Tanks
China Beckons to US Skilled Nursing, Long-Term Care Operators
42% of older adults have a disability: CDC

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Updated, Monday, August 20, 10:13 AM (Pacific)

Seattle—

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LTC E-ALERT #18-032: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Elder Care: Frequently asked questions regarding Medicaid Asset Protection Trusts
Could Your Long-Term Care Premiums Be Hiding in Plain Sight?
Mutual of Omaha Adds Medicare Drug Plans and an LTC Rider
Genworth and China Oceanwide Push Back Deal Deadline
Life expectancy decreasing, CDC says
Slideshow: 15 employee benefits on the rise
Slideshow: 15 employee benefits on the decline
Humana completes sale of long-term care insurance policy business KMG, at a loss of $790 million
Planning challenge: Aging clients, no kids, assisted living required
How to protect your retirement when your senior parent needs financial help
LTCG to Provide Administration to Wilton Re in Support of Its Transformative Reinsurance Transaction with CNO Financial
Are You Ready for Longevity? 4 Steps to Take Now
As the Wilmington-area region ages, nursing home populations decline
HC2 Completes One LTCI Deal, Seeks More: Have an unwanted LTCI block, and some cash? Philip Falcone's company might be interested

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Updated, Friday, August 17, 2018, 10:26 AM (Pacific)

Seattle—

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LTC BULLET: IS IT TIME TO PROSPECT MILLENNIALS?

LTC Comment: Maybe at 22 to 37 years old they’re too young to buy LTCI, but boy are they going to disrupt the insurance market. Details after the ***news.***

This week’s LTC Bullet is sponsored by LTC Consumer, an online resource that’s helping individuals understand and plan for long term care. LTC Consumer is managed by Nathan Sanow, Executive Director. Sanow leads an experienced team of Long Term Care Insurance Specialists educating consumers on the need for long term care insurance planning and to identify the best solution that meets their long term care needs. Resources on LTC Consumer can be found at www.LTCConsumer.com

*** SCHRIFTMAN to receive Dementia Society of America’s Diplomat Award for raising awareness about dementia through his book and film “My Million Dollar Mom” at September 14 gala. We congratulate longtime Center friend, member and supporter Ross Schriftman for his work and this well-deserved honor. ***

LTC BULLET: IS IT TIME TO PROSPECT MILLENNIALS?

LTC Comment: Have you noticed all the news stories about millennials recently? We’ve highlighted several for LTC Clippings subscribers:

7/10/2018, “With little saved, employers and aging employees share same fear: Can retirement happen?,” by Yasemin Sim Esmen, Employee Benefit Adviser

6/7/2018, “Millennials and retirement: How bad is it?,” by Alicia H. Munnell, Politico

1/5/2018, “Millennials flock to nursing at twice the rate of baby boomers, staving off shortage,” by Shari Rudavsky, Indianapolis Star

Note especially these stories about millennials and long-term care financing/insurance:

2/14/2018, “How To Sell LTCi To Millennials For Their Parents,” by Susan Rupbe, InsuranceNewsNet

6/20/2018, “Despite not using long-term care, millennials have strong opinions on how it should be paid for,” by Marty Stempniak, McKnight's LTC News

6/27/2018, “Millennials May Care Deeply About Long-Term Care Benefits,” by Allison Bell, ThinkAdvisor

Finally, stories about millennials caring for parents and grandparents abound:

8/15/18, “From Sunday Brunch To Caregiver Crunch: Millennials Confront Caring For Aging Baby Boomers,” by Joseph Coughlin, Forbes

5/21/18, “This is What the Challenging Life of a Millennial Caregiver Looks Like,” Abigail Abrams, Time

8/9/18, “It looks like it's not just crushing student loans holding millennials back anymore — it's also their aging parents,” by Hillary Hofflower, Business Insider

So, what’s going on?

Here’s a LTC Clipping we sent this week that points to the answer:

8/14/2018, “Dimensions, Demographics And The March Of Generations,” Advisor Magazine

Quote: “By 2019, Millennials will number 73 million, and will have taken over Baby Boomers as America’s largest living generation. Meanwhile, in 2016 Millennials became the largest generation in the U.S. Labor Force and will soon surpass Baby Boomers as comprising the majority of the U.S. electorate (Fry, 2018). In short, Millennials are about to take over the world. Yet, even as Millennials surpass Boomers in their sheer numbers (not to mention contributions to the economy), they continue to be treated by many industries and institutions as a niche market, whose values, beliefs and behaviors are at best inscrutable and at worst despicable. And like any other generation, they have been vulnerable to stereotyping and even derision. … Read the entire report: Insurance And Millennials- A Coming Of Age here.”

LTC Comment: Get to know the new boomers who’ll have to fund the entitlements for the old boomers . . . and themselves.

Read that article from Advisor Magazine and consider especially these observations from it about the likely impact of millennials on the insurance industry:

“Like its infrastructure, both technological and human, the composition of insurance products remains rigid and structured along hard lines that are ceasing to exist for Millennials: business vs. personal, digital vs. physical, online vs. offline etc. The way that products are sold and marketed often does not align with how Millennials shop and research and is instead driven by assumptions, like the idea that Millennials want to do everything online or that Millennials are lazy and won't do their research.

“Attitudes in insurance toward Millennials and toward change in general are slowly shifting, but still pervasive within the industry is the perception that it's not the industry that needs to change, but Millennials themselves. A study conducted by the website insurancequotes.com in 2015 revealed that Millennials are severely misinformed about insurance, finding that while the majority of Millennials rent, most do not have renters insurance, and are the group most likely to lack knowledge about renters insurance, with 29 percent believing renters insurance costs more than $1,000 a year (Johnson, 2015). The common industry response to such findings (and indeed the general tone of this particular study) has been to blame Millennials for their ignorance, relying on the old adages-that Millennials are naive, selfish, and irresponsible-rather than the industry's own failures.

As an industry that will increasingly rely on Millennials to buy its products, it is on the industry to understand, empathize and find innovative ways connect with Millennials, not the other way around. If what the research shows is true, Millennials are not lazy, and they definitely aren't stupid. It's the insurance industry that has become opaque, complicated and disconnected from the people it exists to serve. The purpose of our research is neither to confirm nor negate common stereotypes of Millennials, but to provide a layer of complexity, nuance and humanity to how Millennials are perceived within the insurance industry. As a customer experience agency, all of our work is driven by real human insights-by what people tell us about how they feel, what they want and what they are worried about-and by what we can observe in their behavior. Millennials are people, too. And like any people, they can only be understood through a complex and interwoven set of values, priorities, and general characteristics that exist within particular economic, historical, and cultural circumstances.”

LTC Comment: Millennials have had a rough go compared to their Baby Boomer parents/grandparents. They’re handicapped by debt yet must carry the economic weight of funding entitlements for their elders and themselves. The long-term care insurance industry hasn’t exactly had an easy ride either. LTCI carriers, distributors and producers have had to adapt to hard realities such as underwriting errors, artificially low interest rates, and consumers asleep about LTC risk and cost.

Millennials and the LTCI industry have this in common: they’ve gotten a bum rap because of poor public policy. Maybe they can find ways to work together toward mutual benefit.

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Updated, Monday, August 13, 2018, 10:44 AM (Pacific)

Seattle—

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LTC E-ALERT #18-030: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicaid Officials Target Home Health Aides' Union Dues
Higher acuity, assisted living behind nursing home Medicare spending growth, experts say
Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society
LTCI Issuers May Be Counting on Health Improvement That Isn't Coming: Prudential
Study confirms what many suspect: Assisted living's growth taking a toll on skilled care private pay
Rate Hikes Help Push Genworth LTCI Premium Revenue Higher
HHS Inspector General's Report Finds Flaws And Fraud In U.S. Hospice Care
Dr. Bill Thomas' tiny house prototype now available for rent
Unum Could Add Up to $750 Million to LTCI Reserves
Fitch Wants Insurers to Post More LTCI Performance Data
Abusive Unlicensed Care Homes Are 'Hidden In Plain Sight' In America, Researcher Says
The hidden male caregiver

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Updated, Friday, August 3, 2018, 9:39 AM (Pacific)

Seattle—

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LTC BULLET: UPDATE ON THE CALIFORNIA LTC PARTNERSHIP

LTC Comment: Thanks to the indefatigable efforts of Louis H. Brownstone, the California Partnership for Long-Term Care has a new lease on life. Details after the ***news.***

*** MEA CULPA. Last week’s, “LTC Bullet: SOA Delivers on LTCI Again,” mistakenly reported that the two concepts tested came from the “Land this Plane” effort. They actually arose during an October 2015 Think Tank meeting.

Further clarification from analysts representing the report: There is no current facility that enables a conversion from term life to LTC later in life, in the same policy. By combining them in this way, with the original issue age, our analysis shows that consumers will save about 1/3 on premiums versus buying the products separately. Given how affordability is such a big issues for LTC, we think that’s important. Benefit levels and the premiums are designed to stay the same when the conversion occurs, which helps account for the ease of understanding seen in the research. The “Retirement Plus” proposal assumes that the “retirement account” would NOT be excluded from assets considered for Medicaid eligibility. Because the term life ends when the LTC begins (65 or older), the product that consumers would have when they apply to Medicaid would be LTC which we believe will count as an asset in most states. ***

LTC BULLET: UPDATE ON THE CALIFORNIA LTC PARTNERSHIP

LTC Comment: Center-corporate-member Louis H. Brownstone has spearheaded a years-long effort to salvage the nearly defunct California Partnership for Long-Term Care. In today’s guest Bullet, he describes the challenge he and his co-reformers faced and the success they are having. We congratulate Mr. Brownstone for his proactivity, persistence, dedication and impending victory.

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Progress for the California Partnership for Long-Term Care
by
Louis H. Brownstone

There has been significant progress in reviving the California Partnership for Long-Term Care. The Partnership is still in intensive care; its sales are non-existent; and it’s barely on life support. But changes are likely to occur which could bring the plan out of its critical condition and into rehabilitation.

As you may recall, California Senate Bill 1384 was passed in September, 2016. It allowed for inflation options in Partnership policies besides the formerly mandated 5% compound. It also required the formation of a Task Force of interested stakeholders to advise and assist in implementing reforms to the Partnership.

That Task Force is composed of some fifteen members of various state departments and a dozen outside consultants. This group has now met seven times. Its purpose is to mitigate the coming tsunami of Medi-Cal long-term care expenses when the baby boomers reach their eighties and need long-term care. Its main objective is to create new and innovative Partnership policies that would be affordable to the middle class.

That goal required coming up with a policy structure that would achieve it. A subgroup was formed to recommend a structure to be presented to the Task Force, which was done on February 6^th.

There are two major impediments to creating an affordable Partnership policy:

1. The heretofore compulsory 5% compound inflation rider; and

2. The requirement that the minimum facility benefit be 70% of the average nursing home cost in California, now $310/day, 70% of which is $217/day.

A subgroup of the Task Force recommended two measures to address these impediments. First, it proposed a 3% compound inflation rider, in compliance with SB 1384, which all by itself cuts the premium by about half. Second, it recommended that the 70% requirement for the average nursing home cost factor be removed entirely.

The subgroup recognized that future nursing home claims will probably be less than 10% of all long-term care claims. Therefore, it believed that basing future requirements on nursing home costs would be an outdated guideline, and that it was far more pertinent to base future protection on far less expensive residential care facility and home care costs where the vast majority of care would be received. It also noted that new robot and sensor technology would change the caregiving dynamic, especially in the home.

Next, the question became what structure would be both meaningful protection and affordable to the middle class. There was serious debate on the answer to this question, but in the end, the subgroup agreed and recommended the following:

1. That the minimum benefit would be $100/day, or $3,000/month, in all settings;

2. That the minimum lifetime benefit would be $73,000.

3. That required elimination periods would be up to 30 calendar days for one and two-year benefit limits and up to 90 calendar days for benefit limits of three years or more.

The subgroup decided that these would be its only requirements in a policy, giving the insurance carriers maximum flexibility in their policy design. Carriers would be encouraged to file structures currently in their non-Partnership policies in order to ease their filing process and obtain speedy approval. For example, they could file either a lifetime benefit of $73,000 over two plus years with a daily benefit of $100 or a lifetime benefit of $73,000 with a daily benefit of $100. Or they could file a lifetime benefit of $73,000 over one year with a daily benefit of $200, or a two-year plan with a lifetime benefit of $109,500 and a daily benefit of $150.

Industry studies have concluded that the market for long term care insurance would be substantially larger if premiums would be at or under $100/month. This was the premium goal of the Task Force. The subgroup anticipated that a two-year plan at $100/day with a lifetime benefit of $73,000 with 3% compound inflation would create premiums at or under $100/month for males and for each individual of a married couple in their mid-fifties. Premiums would be somewhat higher for unmarried females, but still under $150/month.

Of course, a $100/day benefit with a $73,000 lifetime benefit would only constitute partial coverage in many scenarios. But these benefits could be a big help to claimants, and could be coupled with Social Security income and other income to fully cover costs in many cases. The assumption here was that the market for Partnership policies was not appropriate for the lower 50% to 60% of the population, which would have to rely solely on their own resources and on Medi-Cal. But the top 40% to 50% of the population would have other income and assets they could utilize to cover the balance of the costs of care. Long term care insurance is currently primarily being sold to the top 10% of the population in income and assets, and it would be a major step forward to increase the marketability of the product to the top 40% or 50% of the population.

For citizens with moderate income and assets, such plans could in effect offer lifetime protection. For example, if a person had $73,000 in assets, he or she could purchase a partnership plan with a benefit limit of $73,000. Once that person became sick, he or she could use up the benefits in the policy, apply for Medi-Cal, protect the $73,000 in assets, and be covered for the rest or his or her life. With Medi-Cal waivers, he or she may be able to stay at home for at least most of the period of care. That’s what we all want in a long-term care insurance policy…lifetime protection, preservation of assets, and possible home care. Perfect!

The Task Force then considered whether to wait for revised regulations from the California Department of Health Care Services or attempt to pass an urgency statute through the legislature. The revised regulations approval process of DHCS was deemed too slow, and the legislative approach was endorsed.

This structure was introduced to the legislature as SB 1248. That bill has been endorsed by both political parties. It was passed by the Senate easily, and we expect the Assembly to pass it in August based on the Assembly Appropriations Committee’s recommendation. Governor Brown will most likely sign the bill by the end of September.

In addition, the bill requires the various departments to “adopt emergency regulations … necessary for the immediate preservation of the public peace, health, or safety.” The intent is for all departments, including the Department of Insurance, to approve new Partnership filings within 90 to 120 days, assuming such filings would be submitted very shortly after the bill becomes law.

Whew! Sacramento works in strange ways. I have a political science degree from Stanford, but I was never taught the intricate machinations that occur inside our state government. I don’t pretend to understand completely what goes on. The good news is that I probably don’t need to, and that some folks in the Task Force are passionate and want to push this process on to a conclusion.

The Task Force has made significant progress, but this would only begin the process. As its immediate goals, the Task Force also needs to:

1. Convince the insurance carriers that such Partnership policies could be filed expeditiously and with minimum expense;

2. Convince the insurance carriers that such policies could be saleable in volume and be flexible enough to ensure future profitability;

3. Educate the public with a major campaign on the need for long-term care protection.

4. Convince agents that they can create a new long-term care market and sell what is essentially lifetime coverage, based on premiums a client can afford.

5. Educate agents and get them excited enough to sell Partnership policies again.

Long-term care expenses are going to skyrocket in about ten years when the baby-boomers begin to reach their eighties. Billions of dollars of Medi-Cal expense can be saved if this new Partnership program works. It can also be duplicated in other states. Anyone want to join in this effort?

Louis H. Brownstone is Chairman, California Long-Term Care Insurance Services, Inc., past-Chairman of the National LTC Network and Government Relations Chair of NAIFA SF-Peninsula. Reach him at louis@cltcinsurance.com

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Updated, Monday, July 30, 2018, 10:06 AM (Pacific)

Seattle—

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LTC E-ALERT #18-029: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Why does one of the most needed jobs pay so poorly?
The Heated Battle Over Whether Medicare Advantage Plans Should Offer Personal Services
Long-term nursing care turnover linked to low Medicaid payments
Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks
What the World's Biggest Asset Manager Recommends to Boost Retirement Savings
What Are Senior Citizens’ Biggest Financial Regrets From Their Twenties?
How Medicare Advantage Fuels Innovation in Care of Seriously Ill
Senior living will grow at skilled care's expense through 2021, report predicts
Critical Illness Insurance Sales Rise: LIMRA
What's the Ideal Retirement Age? Here's What Americans Think
Researchers find Alzheimer's threat never diminishes; average survival confirmed 6 years
Got Medicare Advantage? Prepare for New Perks — and New Questions

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Updated, Friday, July 27, 2018, 11:02 AM (Pacific)

Seattle—

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LTC BULLET: SOA DELIVERS ON LTCI AGAIN

LTC Comment: New product ideas originated by the “LTC Think Tank” are formalized in a report sponsored by the Society of Actuaries. Details after the ***news.***

LTC BULLET: SOA DELIVERS ON LTCI AGAIN

LTC Comment: Remember the LTC Think Tank’s extraordinary effort to address the long-term care insurance puzzle? We summarized it and its report, titled “Land This Plane,” in LTC Bullet: Inspect This Plane, April 18, 2014. Now, two of the product ideas proposed in that study have received detailed description and analysis in a new report written by Maddock Douglas’s Cindy Malone and sponsored by the Society of Actuaries. Read “Long-Term Care and the Middle Market: Sizing the Opportunity for New Ways to Finance Long-Term Care” and/or its highlights here. Following is the report’s summary from page 6:

“Section 2: Summary of Findings

“The combination long-term care (LTC) insurance product concepts developed in this project, LifeStage Protection and Retirement Plus, both show promise for success in the consumer marketplace. The forecasts projecting these results are based on above-average self-reported purchase intent scores and other real-world assumptions. In addition, modeled tax revenue and Medicaid spending projections suggest that both concepts create the opportunity for significant government savings.

“In addition, both concepts have been well received, with key diagnostics providing clues to what is driving the strong self-reported purchase interest. Most significantly, many consumers can envision a personal need for each (although more commonly in the future than today, regardless of current age). While some seek additional information, the majority find both concepts to be easy to understand and believable. Many also feel these products are unique compared to other offerings designed to help them plan for their future financial needs.

“Price is a likely barrier for many as “interest in investigating further” drops sharply after exposure to price. Of note, however, is that purchase intent is higher among those who selected a larger benefit level, suggesting that those who recognize the benefits of the products may be willing to pay more to get the coverage they desire.

“Consumers would prefer to purchase both concepts through their employer or online, directly from the insurance company. However, offering either product only through employers may lower overall interest. About one in five would prefer to purchase through an agent.

Here are the findings specific to each concept:

LifeStage Protection. An insurance policy that starts as term life insurance during prime income-earning years and then switches to long-term care insurance during later years gathers positive initial impressions. The concept fills a need for consumers in the future. Being a combination product that transitions as you get older is a top-liked element. However, there is some concern about not choosing the “right” transition age. Survey data indicates that the option to pay more to receive a death benefit after the transition age or to be able to use long-term care benefits prior to the transition age is likely to increase interest and could help alleviate some of the concerns.
Retirement Plus. A flexible retirement plan like a 401(k) or IRA, but with long-term care insurance built in also generates positive initial reactions and the perception that it fills a personal need. The flexibility to use saved funds for whatever the buyer needs is appealing. Highlighting the benefits of this product compared to other separate savings and insurance options will be important to converting hesitant or skeptical consumers. Survey results show adding an option to pay more to have access to the insurance benefit early is likely to increase interest.”

LTC Comment: We congratulate all associated with the project that generated these ideas and the report that published them. They’re too many to mention by name here, but key contributors acknowledged in the report included LTCI veterans Vince Bodnar, John O’Leary and Eileen Tell as well as “the members of the Long-Term Care Think Tank, whose collaborative thinking generated ideas for what evolved into the LifeStage Protection and Retirement Plus concepts.” (p. 5).

Not to rain too heavily on their parade, but I’d be remiss in my role if I didn’t point out a couple problems with these ideas:

“LifeStage Protection” is based on combining term life insurance and LTCI. Point 1: People don’t need a special product to combine those two kinds of coverage. It always made sense to buy term life when young and convert to LTC insurance later. But few did it. Why? Point 2: Because Medicaid always paid for most high LTC costs after the insurable event had already occurred desensitizing people to LTC risk until it was too late for private insurance. Besides, term life insurance, in any amount, does not deter Medicaid eligibility.

“Retirement Plus” relies on tax-deferred retirement accounts, but those aren’t at risk for Medicaid spend down either, at least under federal law and regulations. Some states do count them in spite of federal rules to the contrary.

For more details and links to the federal laws and regulations that apply, see especially Medi-Cal LTC: Safety Net or Hammock? (2011), pages 19-21.

Unfortunately, the report’s estimates of Medicaid savings are vastly over-optimistic. Ignoring Medicaid’s ease of access after care is needed and its true effect of crowding out consumers’ concern for LTC risk and cost is like an engineer disregarding gravity when constructing a bridge. Anything seems possible.

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Updated, Monday, July 23, 11:02 AM (Pacific)

Seattle—

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LTC E-ALERT #18-028: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

America Is Running Out of Family Caregivers, Just When It Needs Them Most
U.S. Medigap plans fall short on protections for pre-existing conditions
Nursing home signs 'groundbreaking contract,' doles out bonuses to staffers for cutting back bed sores
CCRCs Move Away From Skilled Nursing As Demand Drops
Majority of older adults with probable dementia are likely unaware they have it, study suggests
A Growing Number of People Are Navigating Retirement Alone. This Woman Is Spearheading a Movement to Change That
CDC: 14% of those 75+ have early symptom of Alzheimer's
Baby boomers bode well for CCRCs
Are adult foster homes a good long-term care option?
3 ways to help employees understand the value of their HSAs

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Updated, Friday, July 20, 2018, 9:57 AM (Pacific)

Seattle—

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LTC BULLET: THE STILL BROKEN RHYTHM OF LONG-TERM CARE REFORM

LTC Comment: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer? The answer follows after the ***news.***

*** LTC CLIPPINGS are our way of keeping premium Center members abreast of all the news, data, reports and articles they need to read to be at the forefront of professional knowledge. If you’re not receiving our daily (2 on average) LTC Clippings contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. Here are a couple examples from last week to help you keep your finger on the pulse of change in long-term care:

7/15/2018, “Baby boomers bode well for CCRCs,” by Lois A. Bowers, McKnight's Senior Living

Quote: “Continuing care retirement communities are expected to hold much appeal to baby boomers, and the good news is, the first wave of boomers will be entering the target age range for such communities within the next five years, notes a new “Market Insight” report from CBRE. … The oldest baby boomers are turning 72 this year, and CCRC residents typically are in their late 70s to mid-80s at move-in, according to CBRE.”

LTC Comment: And so it begins . . . finally. But what happens 13 years from now when the oldest boomers start turning 85 and moving into the highest acuity CCRC settings?

7/16/2018, “CCRCs Move Away From Skilled Nursing As Demand Drops,” by Maggie Flynn, Skilled Nursing News

Quote: “By the industry’s own definition, continuing care retirement communities (CCRCs) include skilled nursing care — but there is a growing trend of developing similar communities that lack such care, according to a report from the commercial real estate services firm CBRE.”

LTC Comment: We reported yesterday that boomers are moving into their peak years for joining CCRCs, age 72. We observed it’ll be a much bigger problem when they start turning 85 in 2031 and need more skilled nursing care. Now we learn CCRCs are cutting back the SNF option. First a shortage of kindergartens in 1950; now a shortage of nursing homes coming to a CCRC near you soon.

LTC BULLET: THE BROKEN RHYTHM OF LONG-TERM CARE REFORM

LTC Comment: Why have we seen no progress for eight years (now nine) to protect Medicaid as a long-term care safety net for the poor? Why are Medicaid LTC benefits more readily available than ever to middle class and affluent people who failed to plan for long-term care? Why has the previously steady rhythm of long-term care reform been broken? I wrote this article to address those questions.

“The Broken Rhythm of Long-Term Care Reform”
by
Stephen A. Moses

(This article was originally published as an LTC Bullet in May of 2017. But the situation persists, so we’ll revisit the matter once a year until it changes.)

Historically, progress toward making Medicaid a better long-term care safety net for the poor tended to occur shortly after major economic downturns when state and federal governments faced serious budgetary constraints. After most recessions since 1965, Congresses and Presidents of widely divergent ideological persuasions backed legislation that closed Medicaid long-term care eligibility loopholes and encouraged early and responsible long-term care planning. But as each recession was followed by a rapid economic recovery and fiscal pressure abated, Medicaid long-term care benefits always reverted to virtually universal availability for all economic classes. That pattern prevailed for the first 35 years of the program, but it ended at the turn of the millennium. It has been eight years since the end of the “Great Recession” in June 2009; the country is mired in a slow, [now long-in-the-tooth] recovery; but we’ve still seen no movement, much less legislation, to target Medicaid’s scarce resources to the needy. Why?

The Rhythm of Long-Term Care Reform

On July 30, 1965, President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . . aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” The new program’s costs immediately exploded far beyond expectations. The U.S. suffered a recession from December 1969 to November 1970, which sensitized the country to the spiraling guns-and-butter expenditures of the Viet Nam War and Great Society programs. By 1970, a Wisconsin Law Journal article concluded

To evaluate Medicaid at the halfway mark to 1975, i.e., in terms of its ability to provide comprehensive medical care to substantially all needy and medically needy, would show not merely a failure but, perhaps, a disaster.^{^[i]}

The country fell into economic recessions again from November 1973 to March 1975 and from January to July 1980. Finally, Congress acted to curtail spiraling Medicaid LTC expenditures. On December 5, 1980, President Jimmy Carter signed the Omnibus Reconciliation Act, imposing the first ever restriction on asset transfers done in order to qualify for Medicaid. Until then, Medicaid “applicants were expressly permitted to transfer resources that otherwise would have disqualified them from receiving any benefits.”^{^[ii]}

July 1981 to November 1982 brought another recession during which, on September 3, 1982, President Reagan signed the Tax Equity and Financial Responsibility Act authorizing, but not requiring, state Medicaid programs to penalize asset transfers, place liens on real property, and recover benefits from the estates of deceased recipients. Reagan doubled down on April 7, 1986, signing the Consolidated Omnibus Budget Reconciliation Act that restricted the use of Medicaid Qualifying Trusts. He followed through again on July 1, 1988 by signing the Medicare Catastrophic Coverage Act, which made asset transfer penalties mandatory and expanded the transfer of assets look-back period to 30 months.

Unfortunately, these Reagan-era measures were not strongly enforced or publicized. With the economy booming, it was easier for the state and federal governments to pay the still-burgeoning Medicaid bills and avoid the political sensitivity of enforcing restrictions on Medicaid long-term care eligibility. But that changed when the country experienced another recession from July 1990 to March 1991. All of a sudden, state and federal officials were again having trouble making budget ends meet. Congress responded and President Bill Clinton signed the Omnibus Budget Reconciliation Act on August 10, 1993, making estate recovery mandatory, expanding the look back period to three full years, eliminating the cap on asset transfer penalties, and prohibiting “pyramid divestment.” When costs continued to skyrocket, Clinton also doubled down. On August 21, 1996, he signed the Health Insurance Portability and Accountability Act (the “Throw Granny in Jail Law”) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

But the latter Clinton years brought renewed prosperity as the technology boom intensified. With revenues up and welfare rolls down, why worry about enforcing rules to target Medicaid to the needy? On August 5, 1997, President Clinton signed the Balanced Budget Act repealing the criminalization of asset transfers to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee. Shortly thereafter, this “Throw Granny’s Lawyer in Jail Law” was deemed unconstitutional and thus unenforceable. Back to square one.

The Rhythm of Reform Breaks

This historical pattern of rapid statutory action to control Medicaid planning abuse following each economic recession ended with the start of the new millennium. After the March to November 2001 recession resulting from the internet bubble’s implosion, economic recovery came more slowly than before. Likewise, it took much longer for legislation discouraging the excessive use of Medicaid long-term care benefits to be passed. The Deficit Reduction Act of 2005, placing the first cap ever on Medicaid’s home equity exemption, extending the asset transfer look back period to a full five years, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program, was not signed into law by President George W. Bush until February of 2006, nearly five years after the start of the previous recession. Ultimately, economic recovery did come and true to form, enforcement of the DRA ’05 declined.

The next economic boom ended when the housing bubble burst causing the Great Recession of December 2007 to June 2009. Again, economic recovery has come very slowly and meagerly.^{^[iii]} To date, eight years after the end of the last recession, we have seen neither a full economic recovery nor action to spend Medicaid’s scarce resources more wisely by aiming them toward people most in need. In fact, public policy analysts and advocates are moving in the opposite direction, toward proposing yet another government program funded by taxpayers to expand public financing of long-term care for all.

What Broke this Rhythm of Reform?

What might explain both phenomena, i.e., slower economic recoveries in recent years and less attention to the cost of Medicaid long-term care benefits?

The Federal Reserve forced interest rates to artificially low levels after the internet bubble burst and to almost zero during and since the Great Recession. The consequences of this policy have ramified through the economy in many ways. One way is that government has been able to finance deficit spending and the rapidly increasing national debt at considerably lower carrying costs than before, when interest rates were much higher. By enabling politicians to spend more without facing the previously inevitable fiscal consequences, this new economic policy has attracted greater financial resources, including borrowed funds, into public financing of all kinds and simultaneously diverted private wealth into low-interest-rate-induced malinvestment. Consequently, political concern about mushrooming budgets and debt has abated and no significant effort to preserve Medicaid funds by targeting them to the poor has occurred.

The danger is that just as excessive public spending and private malinvestment in the early 2000s led to the housing bubble and its consequent mid-decade recession, so the current much larger credit bubble driven by excessive government borrowing and spending could lead to an even greater economic collapse. With the current national debt nearing $20 trillion [now $21.3 trillion] and total unfunded entitlement liabilities around $106 trillion, a return to economically realistic market-based interest rates would render the federal government immediately insolvent.^{^[iv]}

Rendezvous with the Age Wave Looms

Further exacerbating the problem of long-term care financing is the fact that the long anticipated age wave is finally cresting and will soon crash on the U.S. economy.

Baby boomers began retiring and taking Social Security benefits at age 62 in 2008. At age 65 in 2011, they turned the Social Security and Medicare programs cash-flow negative. Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital. They will reach the critical age (85 years plus) of rising long-term care needs in 2031, around the time Social Security and Medicare are expected to deplete their trust funds forcing them to reduce benefits.

Of course, Medicaid is the main funder of long-term care, but according to the Center for Medicare and Medicaid Services Chief Actuary, in a statement of consummate denial, “. . . Medicaid outlays and revenues are automatically in financial balance, there is no need to maintain a contingency reserve, and, unlike Medicare, the ‘financial status’ of the program is not in question from an actuarial perspective.”^{^[v]} In summary, conditions are coalescing for a potential economic cataclysm in or before the second third of this century and public officials are almost totally ignoring the risk.

Conclusion

Old-fashioned monetary and fiscal discipline kept Medicaid long-term care spending somewhat in check during the program’s early decades. Spending skyrocketed all along, but when the country fell into recessions, state and federal legislators responded with measures to reduce the overuse of Medicaid. Those measures helped to discourage prosperous people from ignoring long-term care risk and hence ending up on Medicaid by default.

But any semblance of monetary and fiscal discipline ended after the year 2000. Artificially low interest rates invited deficit spending and enabled politicians to keep Medicaid eligibility very generous without breaking their budgets. Easy access to Medicaid long-term care benefits after care was needed anesthetized the public to LTC risk and cost, impaired the private home care market, and crowded out sources of private funding such as home equity conversion and long-term care insurance.

Consequently, the country is on the cusp of aging demographic and economic crises of historic proportions without the resources to continue funding the current system nor the incentives in public policy to inspire more responsible long-term care planning by the public. The solution, and the only hope for a benign outcome, is to end Federal Reserve manipulation of interest rates and stop federal deficit spending, so we can once again target Medicaid’s scarce resources to people genuinely in need.

While we are unlikely to see such policy changes soon, we definitely should redouble our efforts toward those objectives.

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[i] Sydney E. Bernard and Eugene Feingold, “The Impact of Medicaid,” Wisconsin Law Review, Wis. L. Rev. 726 1970.

[ii] Timothy N. Carlucci, “The Asset Transfer Dilemma: Disposal of Resources and Qualification for Medicaid Assistance,” Drake Law Review, 36 Drake L. Rev. 369 1986-1987

[iii] According to the Wall Street Journal, we are experiencing “the weakest pace of any expansion since at least 1949.” Eric Morath and Jeffrey Sparshott, “U.S. GDP Grew a Disappointing 1.2% in Second Quarter,” Wall Street Journal, July 29, 2016; http://www.wsj.com/articles/u-s-economy-grew-at-a-disappointing-1-2-in-2nd-quarter-1469795649.

“Even seven years after the recession ended, the current stretch of economic gains has yielded less growth than much shorter business cycles.” Eric Morath, “Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era,” Wall Street Journal, July 29, 2016; http://blogs.wsj.com/economics/2016/07/29/seven-years-later-recovery-remains-the-weakest-of-the-post-world-war-ii-era/

[iv] The “National Debt Clock” (http://www.usdebtclock.org/) places U.S. national debt at $19.9 trillion and unfunded liabilities at $106.0 trillion (cited May 2, 2017).

[v] Christopher J. Truffer, Christian J. Wolfe, and Kathryn E. Rennie, “Report to Congress: 2016 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Sylvia Mathews Burwell, Secretary of Health and Human Services, 2016, p. 3; https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/medicaidReport2013.pdf. This identical quote was in the 2013 version of the “Actuarial Report” and was critiqued in S. Moses, “LTC Bullet: Does Medicaid Solvency Matter?,” Friday, October 31, 2014; http://www.centerltc.com/bullets/archives2014/1062.htm

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Updated, Monday, July 16, 9:57 AM (Pacific)

Seattle—

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LTC E-ALERT #18-027: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

New Study Links MA Plans to Lower Levels of Hospital Visits
The 'Big Bang' of Alzheimer's: Scientists ID genesis of disease
With little saved, employers and aging employees share same fear: Can retirement happen?
The 2018 Medicare Trustees Report: Fiscal and Policy Challenges
Skilled Nursing Facilities Rank Low on Operators’ Investment Wish Lists
Advocacy group calls for 'immediate' Congressional hearings into nursing home staffing
Gen X's Deep Dive Into Financial Stress
Medicaid Backlog to Shutter Central Illinois Nursing Home
It’s Almost Like a Ghost Town.’ Most Nursing Homes Overstated Staffing for Years
The truth behind long-term care insurance
New ways to estimate and fund long-term care costs
Aging Population to Be Major Driver of Healthcare M&A
Life-LTC Hybrid Sales Soar: LIMRA
U.S. Interest Payments to Equal Social Security Spending by 2048: CBO
An aspirin a day may keep dementia away, study finds
Study rebuts idea that Medicare is wasted on the dying
Where Do Older Americans Die?

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Updated, Friday, July 13, 2018, 11:17 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care News and Analysis

LTC Comment: Center for Long-Term Care Reform Premium members have the option to receive our LTC Clipping Service and weekly LTC E-Alerts newsletters. Today, we’d like to share a sample of these members-only services with a wider audience. Our topic is the news this week, so we’ll skip our usual ***news*** section and dive straight in.

LTC Bullet: Long-Term Care News and Analysis

Many Center for Long-Term Care Reform Premium members are familiar with our LTC Clipping Service, and from what we hear, get great value from this benefit of Premium membership.

For those who don’t already know, our LTC Clipping Service is an excellent way to stay on top of current and critical long-term care news without having to spend hours a day researching on the internet. We send our Clipping Service subscribers an average of 2-3 emails per workday with a must-read-article link, a pull quote and some brief analysis. We’re sensitive to the fact that we all receive too many emails, so we’re very careful to send along only the most important LTC news items.

As an added benefit and for convenient reference, we keep a running archive of the clippings we send in our new LTC Clippings Archive, dating back to January 2016. This archive is organized by LTC-related subject and sub-category. While CLTCR Premium members will continue to receive their LTC Clippings in real time, they and Individual members, have access to the Clippings Archive through our Members-Only Zone website. Here’s a breakdown of the Archive’s subject categories:

INSURANCE (Long-Term Care Insurance, Critical Illness Insurance, Hybrid and Miscellaneous (including alternative financing solutions))

LONG-TERM CARE (General, Cost, Assisted Living, Nursing Homes, Home Care, Caregiving, Veterans Affairs and Government Solutions)

MEDICAID (General, Medicaid Planning and Crowd-Out Effect)

MEDICARE (including Medi-Gap and Medicare Advantage)

SOCIAL SECURITY

ALZHEIMER'S DISEASE

POLITICS, LEGISLATION AND PUBLIC POLICY

ECONOMICS, DEMOGRAPHICS AND DATA

RETIREMENT PLANNING

HEALTH AND HEALTHCARE

OTHER

If you’re reading this, chances are you play a valuable role in protecting people from the risk and cost of long-term care and to that end we think the Clipping Service allows our subscribers to be more effective doing so. Based on their feedback, we think our subscribers feel the same. For example:

Your clipping service is the best. I seldom give out insurance company brochures to prospects, much preferring the third party endorsement of published articles that are far more believable than an insurance company brochure. The news does a great job of creating urgency to act as well. You bundle them and send to my inbox for me to use, wonderful! I’m speaking to a group at lunch today and will be handing out an article that was published two days ago that you alerted me to. Keep up the good work, saves me time, and makes me money. -- Romeo Raabe, www.TheLongTermCareGuy.com

In my entire 24- year career in the long term care insurance industry I have never seen such a spate of articles in popular media – including print, digital, radio, TV - highlighting long term care as one of the top worries of aging Americans facing retirement. As a supporter of the Center for Long Term Care Reform and a subscriber to “LTC Clippings” I have been kept completely “in the loop” and fully up to date on the vastly increasing information flow about the need for LTC planning. I can not only see what my prospects and clients are reading and hearing about the industry but also have good quality information to share with the “centers of influence” that depend on me for information. The “clipping service” is just one of many benefits provided by the Center and I am grateful to Stephen and Damon Moses for providing a tool that has been so important over the years to the success of Franklin & Associates and Franklin Funding Reverse Mortgages. -- Barbara Franklin, CEO

Please find below a sample collection of clippings we’ve sent to our Clipping Service subscribers over the past few months. Read through them and if you think that receiving news items like these in real time would be valuable to you, please consider subscribing at the Premium membership level. By doing so, you can stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform.

Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month.

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7/9/2018, “Gen X's Deep Dive Into Financial Stress,” by Christy DeFrain, Advisor Magazine

Quote: “Gen X (born between 1965 and 1979) is now the second largest generation in the workforce today, and this group of ‘latchkey children’ and ‘slacker’ young adults can be viewed as America’s neglected middle child. Bookended by two much written-about generations — the Baby Boomers ahead and the Millennials behind — this driving force behind today’s companies is easily overlooked despite the fact that they are the most committed and engaged at work. Truly, Gen Xers are the source of power that keeps a business together”

LTC Comment: A new generation of LTCI prospects comes online.

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6/28/2018, “The Infamous Medicaid Look Back Rule… Why Does it Matter and What Does it Mean?,” by Casey Sauerwine, Marshall, Parker & Weber LLC

Quote: “Engaging in trust planning or gifting more than five years before applying for Medicaid can be an effective strategy to protect assets from nursing home costs. Gifting ahead of time can reduce the amount of available assets an individual will have at the time a Medicaid application is completed. It is important to talk about trust planning and gifting with your elder law attorney if you are considering going down one of these paths.”

LTC Comment: Academics who favor turning LTC over to the government pretend Medicaid planning is so minor as to justify they’re ignoring it. This is a sample of the kind of information elder law firms all across the country routinely purvey to their affluent clients.

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6/21/2018, “Senior living might want to take a new look at an old friend,” by John O’Connor, McKnight's Senior Living

Quote: “Odd as it now seems, there was a time when private insurance was allowed to sit with the grownups. … Turns out the sellers grossly underestimated how expensive and likely senior living services would turn out to be. Most of the dozens of firms that once sold private long-term care coverage culled it from their portfolio as quickly and quietly as possible. … But a rebound of sorts appears to be underway. A growing number of firms are starting to sell hybrid products that combine LTC insurance with a potential life insurance benefit. More than a quarter million of these combo policies were sold last year, primarily as estate-planning tools. By comparison, the number of traditional LTC policies sold was only 66,000.”

LTC Comment: If LTC provider pooh-bahs and their political allies paid attention to the real problem—dependency on Medicaid and crowd out of private financing—all forms of LTC insurance would resurge.

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6/20/2018, “New screening tool could help diagnose early cognitive decline in dementia from home,” Science Daily

Quote: “An international team of scientists have developed a new way to screen for age-related cognitive decline at home using a test which asks people to detect sounds and flashes on their laptop or phone.”

LTC Comment: Early diagnosis is more critical than ever as behavioral modifications to reduce or reverse cognitive decline become more seriously considered.

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6/13/2018, “Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients,” by Jordan Rao, Kaiser Health News

Quote: “With hospitals pushing patients out the door earlier, nursing homes are deluged with increasingly frail patients. But many homes, with their sometimes-skeletal medical staffing, often fail to handle post-hospital complications — or create new problems by not heeding or receiving accurate hospital and physician instructions. Patients, caught in the middle, may suffer. One in 5 Medicare patients sent from the hospital to a nursing home boomerang back within 30 days, often for potentially preventable conditions such as dehydration, infections and medication errors, federal records show. Such rehospitalizations occur 27 percent more frequently than for the Medicare population at large. Nursing homes have been unintentionally rewarded by decades of colliding government payment policies, which gave both hospitals and nursing homes financial incentives for the transfers. That has left the most vulnerable patients often ping-ponging between institutions, wreaking havoc with patients’ care.”

LTC Comment: Rewarded? Really? Medicaid pays nursing homes less than the cost of providing their care for 60% of their residents which is why medical staffing is skeletal. Nursing homes have to maximize relatively generous Medicare reimbursements for a small minority of their residents to make up part of the difference. Poor public policy is the problem and can’t be solved by punishing LTC providers with more regulation and penalties.

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6/2/2018, “'Invisible workforce' of caregivers is wearing out as boomers age,” by Jackie Crosby, Star Tribune

Quote: “Growing numbers of Americans face the immense and often overwhelming challenge of caring for an aging parent or other loved one, a burden that will skyrocket as 76 million baby boomers move into their 80s and need help coping with dementia, cancer, heart disease or just plain frailty and old age. … Soon, Minnesota and the nation will reach a demographic crossroad. In 2030, the first wave of the baby boom generation will turn 85, an age when people are twice as likely as those even a decade younger to need help getting through the day.”

LTC Comment: Good article on the topic especially because it recognizes the sea change coming in 2030. Add to the wave of boomers turning 85 the exhaustion of Social Security and Medicare “trust funds” and you have a clear view of the coming mayhem.

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5/17/2018, “The Hidden Costs Of Caregiving,” Securian Financial

Quote: “Securian Financial recently conducted a survey of more than 800 people currently providing, or who have provided, unpaid care to a parent, in-law or spouse who is aging, or has a disability or chronic disease. The survey found the majority of caregivers (60 percent) spend more than 10 hours per week caring for a family member, and about one in four (29 percent) spend more than 20 hours per week. Women (32 percent) are more likely than men (26 percent) to spend more than 20 hours each week on caregiver duties.”

LTC Comment: Information to share with prospects and clients to trigger and sustain their concern about planning ahead for long-term care.

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5/9/2018, “Why Families Need a Plan for Caregiving,” by Kimberly Lankford, Kiplinger’s Personal Finance

Quote: “Kamilah Williams-Kemp, 43, is the head of Northwestern Mutual's long-term-care insurance business. She was the primary caregiver for her mother last year.”

LTC Comment: The personal story of one of our own in the LTCI business.

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5/2/2018, “The Myth of Outliving Your Retirement Savings,” by Gail MarksJarvis, Reuters

Quote: “Most retirement research points to an impending retirement crisis for about half of Americans who save too little. But a new study suggests that behavior like Anderson’s makes the outlook far less dire. Because people worry about outlasting their savings, most adjust by living humbly – often overly so. Consequently, they make even modest savings last for years longer than expected by researchers.

“What can devastate financially are divorce, caring for a mentally or physically ill adult child who cannot work, and long-term care expenses, according to the Society's research. Still, debilitating healthcare costs are far more rare than people fear, according to the EBRI research. Half of retirees face no nursing home expenses since Medicare covers short recoveries after hospital stays and Medicaid can help when resources run out.”

LTC Comment: Unfortunately, the author here fails to mention that the supposed rareness of debilitating healthcare costs doesn’t make those costs less impactful to those who experience them.

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5/2/2018, “Medicare Advantage Plans Can Pay for Many LTC Services in 2019: Feds,” by Allison Bell, ThinkAdvisor

Quote: “The Centers for Medicare and Medicaid Services is getting ready to let Medicare Advantage plan issuers add major new long-term care benefits to their supplemental benefits menus.”

LTC Comment: Medicaid made nursing home care free in 1965 without enforcing spend-down rules thus desensitizing the public to LTC risk, locking in institutional bias, and impeding private financing of LTC through savings, home equity conversion and private insurance. This new government venture into “free LTC” will also end badly.

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4/27/2018, “Largest LTCi Claim Exceeds $2 Million,” by Jesse Slome, Advisor Magazine

Quote: “A single long-term care insurance policyholder claim has exceeded two million dollars (actually $2.6M for a female). The largest claim still being paid to a male policyholder reached nearly $1.6 million. Why is this important? First, it’s the first time we’ve seen a single claim in excess of $2 million. Second, because consumers mistakenly perceive this protection in ‘investment’ terms … will I get my money back? Advisors need info like this to tell the story properly! When it comes to LTC insurance (or most insurance for that matter) some will get NO benefit … some will get SOME benefit … and a few will get HUGE benefit.”

LTC Comment: Fascinating findings. I wonder how many million-dollar claims Medicaid has paid.

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4/20/2018, “No Spend Down,” by Stephen D. Forman, LTCA Weekly Reader

Quote: “The Employee Benefit Research Institute (EBRI) always publishes high-quality research. In their latest study they find that retirees do a poor job of asset decumulation. Those with few assets (who enter retirement with median assets of $31,740) still have $24,000 eighteen years later, a parsimony which is ‘not irrational,’ according to the authors. But even when assets are plentiful upon retirement (a median of $857,450), eighteen years later this group still maintains a healthy bank account worth $763,900. In short, EBRI finds that retirees spend their income (what comes in, goes out), but rarely touch assets. That's what the chart above illustrates. (This is not what ‘life cycle theory’ or traditional financial planning has presumed.)”

LTC Comment: So much for the idea that wide swaths of the American public are spending down into impoverishment for long-term care. As we’ve explained frequently and most recently here, Medicaid pays for most expensive LTC in the USA and for most Americans it’s easy to get after care is needed without spending down significantly.

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4/20/2018, “Couples in retirement face average health care costs of $280,000, Fidelity estimates,” by Adam Shell, USA Today

Quote: “Fidelity estimates it will cost a couple $280,000 to cover their health care costs in retirement, up 2% from last year and 75% since its 2002 estimate of $160,000. The math assumes a couple retires at 65 and is eligible for Medicare. The cost for care for males in retirement is an estimated $133,000, while the tab for women, who tend to live longer than men, is $147,000.”

LTC Comment: Annual update excludes long-term care costs.

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4/19/2018, “'60 Minutes' To Air Unprecedented Video Study On The Progression Of Alzheimer's,” by Robin Seaton Jefferson, Forbes

Quote: “The chief medical correspondent to CBS News and professor of medicine at NYU Langone Medical Center has spent the last 10 years recording the effects of Alzheimer’s disease on a patient and her husband, who over the course of his study have become not only his subjects but his friends. … LaPook will share his journey and their stories-said to be the longest video study of its kind-Sunday on "60 Minutes," chronicling the long-term devastation of Alzheimer’s disease on both patient and caregiver.”

LTC Comment: Watch this 60 Minutes episode if you have access. If not, click the article for the story. See also: “LTC Bullet: The End of Alzheimer’s.”

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4/15/2018, “65% of Baby Boomers Are Making a Huge Financial Mistake That Could Leave Them Broke,” by Christy Bieber, Motley Fool

Quote: “Many pre-retirees think they don't need to worry about healthcare because they anticipate care costs will be covered by Medicare. But the reality is that Medicare makes seniors responsible for picking up a significant percentage of their cost of care. Seniors may face high deductibles, coinsurance costs, premiums, and coverage limitations. … There are also many services Medicare doesn't cover, including hearing aids, long-term care, and dental care. … Qualifying for Medicaid could also help you afford care costs by subsidizing Medicare premiums and paying for some services not covered by Medicare, such as routine nursing home care. While there are strict asset limits to obtain Medicaid, an attorney can help you to develop a plan that protects your wealth and still allows you to obtain coverage.”

LTC Comment: There’s the essence of the problem in a nutshell. People are in denial about the long-term care risk, but not irrationally so because “an attorney can help you” protect your wealth and get the government to pay if you ever need LTC. The truly irresponsible parties in this public policy fiasco are the academics, politicians and policy-makers who refuse to take this simple, obvious reality into account. For details see How to Fix Long-Term Care Financing.

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4/4/2018, “Caring for elderly parents can put a dent in your budget,” by Sarah O’Brien, CNBC

Quote: “The biggest monthly expenses for caregivers are medicine and medical supplies ($273), food ($159) and personal-care items ($151).

About half of current and past caregivers did not know in advance that they would be stepping into that role.

In advance of finding yourself in that situation, whether expected or not, it's worth having a conversation with your parents about how they envision their care if they reach a point where they no longer can care for themselves.”

LTC Comment: Sound advice.

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3/26/2018, “As Trump Targets Immigrants, Elderly Brace To Lose Caregivers,” by Melissa Bailey, Kaiser Health News

Quote: “Nationwide, 1 million immigrants work in direct care — as CNAs, personal care attendants or home health aides — according to the Paraprofessional Healthcare Institute, a New York-based organization that studies the workforce. Immigrants make up 1 in 4 workers, said Robert Espinoza, PHI’s vice president of policy. Turnover is high, he said, because the work is difficult and wages are low. The median wage for personal care attendants and home health aides is $10.66 per hour, and $12.78 per hour for CNAs. Workers often receive little training and leave when they find higher-paying jobs at retail counters or fast-food restaurants, he said.

“The country faces a severe shortage in home health aides. With 10,000 baby boomers turning 65 each day, an even more serious shortfall lies ahead, according to Paul Osterman, a professor at Massachusetts Institute of Technology’s Sloan School of Management. He predicts a national shortfall of 151,000 direct care workers by 2030, a gap that will grow to 355,000 by 2040. That shortage will escalate if immigrant workers lose work permits, or if other industries raise wages and lure away direct care workers, he said.

“‘What people don’t seem to understand is that people from other countries really are the backbone of long-term care,’ said Sister Jacquelyn McCarthy, CEO of Bethany Health Care Center in Framingham, Mass., which runs a nursing home with 170 patients. She has eight Haitian and Salvadoran workers with TPS, mostly certified nursing assistants. They show up reliably for 4:30 a.m. shifts and never call out sick, she said. Many of them have worked there for over five years. She said she already has six CNA vacancies and can’t afford to lose more.

“Osterman, the MIT professor, said the sum of all of these immigration policy changes may have a serious impact. If demand for workers exceeds supply, he said, insurers may have to restrict the number of hours of care that people receive, and wages may rise, driving up costs. ‘People aren’t going to be able to have quality care,’ he said. ‘They’re not going to be able to stay at home.’”

LTC Comment: Politics + demographics = LTC - TLC.

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Updated, Monday, July 2, 2018, 10:41 AM (Pacific)

Seattle—

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LTC E-ALERT #18-026: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Millennials May Care Deeply About Long-Term Care Benefits
Voices Pushing through client fears about LTC needs
Some Advisors Call for Early Long-Term Care Planning
Hannover Re Backs OneAmerica Life-Based LTC Product
Medicaid: Actions Needed to Mitigate Billions in Improper Payments and Program Integrity Risks
Help clients face up to long-term care
More time in SNF does not 'yield better health,' new study asserts
Pain, bed sores more common at most VA nursing homes than private facilities, data show
Survey: Older adults prefer assisted living over home health or nursing home care
Medicare Allows More Benefits for Chronically Ill, Aiming to Improve Care for Millions
Spending on Medicare Advantage Plans Nearly Doubled Over Last Decade
AHCA/NCAL President Parkinson Shares Lessons Learned from China Visit
Despite slower Medicare growth, higher taxes may be needed to cover aging population, researchers say

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Updated, Friday, June 22, 2018, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: THE NEW FALLACY OF IMPOVERISHMENT

LTC Comment: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work, after the ***news.***

*** GC AND AIM JOIN INTEGRITY MARKETING: American Independent Marketing and GoldenCare are now part of Integrity Marketing. The announcements came on February 6 in AIM’s case and on May 8 for GC. Lenny Anderson (GC) and John Wane (AIM) and their companies have been pioneers and leaders in long-term care insurance for over four decades. Both men cited succession planning, the ability to stay involved, and the ongoing success of the companies they founded as reasons for the move. Check out this video press release for a more personal insight on the decision. We congratulate these two great men of the private LTC insurance business and wish them, their companies and Integrity Marketing every success going forward. By the way, GC and AIM were the organizing sponsors of the Center for LTC Reform’s 2008 “Long-Term Care Consciousness Tour” and they continue to support our LTC financing policy research and advocacy generously. ***

LTC BULLET: THE NEW FALLACY OF IMPOVERISHMENT

LTC Comment: In 1990, the Gerontologist published my article “The Fallacy of Impoverishment” explaining how middle class and affluent people take advantage of Medicaid long-term care benefits intended for the needy. In 2005, I updated that research in a “Policy Analysis” for the Cato Institute titled “Aging America’s Achilles’ Heel: Medicaid Long-Term Care.” My work shows how people do not have to be poor to get public welfare. Now Cato has published a new “Policy Analysis” that proves most of the poor … well … aren’t.

Whoa, say what? We’ve whipped poverty? How can that be? For answers, check out “Reassessing the Facts about Inequality, Poverty, and Redistribution” by John F. Early, published in April by the Cato Institute. Or read this summary by Phil Gramm and Robert B. Ekelund, Jr. in the June 24 Wall Street Journal: “How Income Equality Helped Trump: Working Americans sense that taxes and transfers now leave them little better off than those who work less.” What follows are snippets from the Cato piece to give you the gist followed by our comments. Footnotes are omitted.

Cato: “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades.” (p. 1)

LTC Comment: How can that be?

Cato: “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households.” (p. 2)

LTC Comment: Interesting, how about some examples?

Cato: “The inequality debate is most frequently framed in terms of the differences in money income as measured by the Current Population Survey (CPS) from the U.S. Census Bureau.” (p. 2) [but] “Census money income estimates explicitly exclude the following:

The Earned Income Tax Credit (EITC)
The monetary value of benefits from the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps
Free or subsidized medical care such as Medicaid and the Children's Health Insurance Program (CHIP)
Free, subsidized, or controlled rent or other ‘affordable housing’ schemes
Heating subsidies
Free or reduced-fee social services such as daycare, tax preparation, or meal services” (p. 4)

LTC Comment: So, when analysts report the percentage of people living in poverty and levels of inequality they’re leaving out cash and in-kind benefits provided by all those government programs? Wouldn’t that make people look a lot poorer than they really are?

Cato: “The net result is that although the lowest income group has only 2.2 percent of earned income, it receives 8.3 percent of spendable income available for consumption and savings. … Beneficiaries in the lowest income quintile during their working years receive 10 times more benefits per dollar contributed than those in the top two quintiles.” (pps. 5-6)

LTC Comment: Wait a minute. Wouldn’t this effect be counterbalanced by the taxes poor people have to pay, especially sales and payroll taxes?

Cato: “Official income statistics make no adjustments for taxes paid.” (p. 4)

LTC Comment: If that’s true, doesn’t it make higher income people look richer than they are? Leaving out government benefit transfers and taxes would make the poor look poorer and the affluent look wealthier. Right?

Cato: “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more.” (p. 4)

LTC Comment: It sounds like all the anguishing we hear about poverty and inequality in the USA is vastly overstated.

Cato: “If the government were to raise taxes on the wealthy tomorrow and transfer all the additional money to the lowest income groups through a larger EITC [earned income tax credit], the official metrics of inequality would not budge by a single cipher because neither the new taxes taken from the top nor the additional income transfers given to the bottom would be used in the calculations.” (p. 4)

LTC Comment: What’s the bottom line?

Cato: “The net result was that the average spendable income for the highest income group was only three times higher than that for the lowest group.

Government redistribution eliminated 88.5 percent of the ratio between the highest and lowest market income quintiles.
The 3.0:1 ratio in spendable income between the highest and lowest quintiles is more than five times smaller than the 16.2:1 ratio highlighted by the annual Census Bureau money income estimate.” (p. 10)

LTC Comment: What does this really mean for the middle class?

Cato: “On average, households with $63,136 in earned market income get to keep it all. They pay taxes averaging approximately $17,000 per year, but on average they also get an equal amount of government transfers.” (p. 10)

LTC Comment: So, you’re saying we’ve practically eliminated poverty, as only 2% remain genuinely impoverished, and the middle class is getting back in benefits as good as it gives in taxes. Who’s picking up the tab?

Cato: “The top 47.5 percent of households were taxed to do the following:

Transfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income
Pay for the many activities of government that require 40 percent of all government spending
Pay the interest on the national debt, which constitutes 12 percent of government expenditures” (p. 10)

LTC Comment: But surely widespread hunger and homelessness belie your rosy statistics.

Cato: “Other independent data confirm that only small numbers of Americans live in conditions that would normally be considered poverty. These data show that families classified as poor have lifestyles that would usually be considered middle class. For example:

Only about 2.5 percent of the U.S. population has even a single day of hunger or malnutrition in a year.
Only about 1 percent of the population lives in housing that is severely inadequate or crowded-one-fourth as many as in 1975. Less than one-half of 1 percent of the population is homeless for even a short time during a year.
Most families that are defined as ‘poor’ have many goods and services that would be classified as luxury items. Air conditioning is seven times more prevalent among poor families today than among the general population when the War on Poverty began. Most poor families have microwave ovens, at least one vehicle, video games, flat-screen TVs, and personal computers.

“These metrics are consistent with the improved measures that show about 2 percent poverty prevalence. (p. 20)

LTC Comment: I spent 1968-70 in the Peace Corps in Venezuela and I correspond with friends suffering there now. I know what poverty is. That isn’t it.

Cato: “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone. … Public policy debate should begin with the realization that only about 2 percent of the population—not 13.5 percent—live in poverty.” (p. 21)

Closing LTC Comment: Well, there you have it. Poverty is gone for all intents and purposes. We spend one trillion dollars a year to erase it. But that’s not the only cost.

We “[t]ransfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income.” (p. 10)

Re-read that last sentence and then ask yourself:

Does taxing half the people enough to pull the other half up to the median income make sense?
What effect does getting so much unearned income have on the motivation and effort expended by the recipients?
What effect does paying their own bills and those of the other half of the population have on the motivation and effort expended by the payers?
Have we eliminated poverty at the cost of inhibiting economic incentives and rewards?

One last quote from the Cato report:

During the 15 years before President Johnson's announcement of the War on Poverty, the measured poverty rate had fallen from 34.8 percent to 19.0 percent. Two years after Johnson's speech and before most of the new programs were fully implemented, the rate had dropped to 14.7 percent, well within the range that would prevail for the next 48 years. (p. 15)

One last question: By eliminating the economic consequences of laziness, irresponsibility and poor behavior, did we punish producers, reward indolence, create dissension, polarize our politics, handicap the economy and make everyone’s life less rewarding?

The Cato “Policy Analysis” does not draw those conclusions, but it definitely provides ample evidence to support them.

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Updated, Monday, June 25, 10:02 AM (Pacific)

Seattle—

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LTC E-ALERT #18-025: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

White House releases sweeping proposal to reorganize government
Senior living might want to take a new look at an old friend
New Stand-Alone LTCI Player Continues to Move Forward
The Nation's Fiscal Health: Action Is Needed to Address the Federal Government's Fiscal Future
How to Talk About Long-Term Care Planning Now
New screening tool could help diagnose early cognitive decline in dementia from home
Dr. Atul Gawande, new healthcare company CEO, no stranger to senior living
Help clients come to grips with long-term care
The Low-Down on the Medicaid Spend-Down
House GOP 2019 Budget Takes a Swing at Social Security, Medicare
Health Care Choices Proposal: A Plan to Lower Costs, Provide Better Choices in Health Care and Return Power to Consumers
LTSS financing proposal 'a promising start,' providers say
Walgreens and Humana are partnering to create senior health hubs
Despite not using long-term care, millennials have strong opinions on how it should be paid for
Second hospice employee pleads guilty in alleged $60 million kickback scheme involving assisted living communities
MedPAC calls for lower SNF pay rates; provider advocates fire back
Secret VA nursing-home ratings hid poor quality care from public
Research shows that the prevalence of dementia has fallen in the United States

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Updated, Friday, June 22, 2018, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: TRIBUTE TO PHYLLIS SHELTON

LTC Comment: LTCI trainer, consultant and author Phyllis Shelton says goodbye and hello after the ***news.***

*** LTC CLIPPINGS, our special service for premium Center members, keeps you abreast of the latest LTC news, data, reports and articles. We drop brief messages into your email inbox a couple times per day with a title, author, source, representative quote, and our comment. Contact Damon at 206-283-7036 or damon@centerltc.com for details and to subscribe. Examples from this week include:

6/20/2018, “New screening tool could help diagnose early cognitive decline in dementia from home,” Science Daily

LTC Comment: Early diagnosis is more critical than ever as behavioral modifications to reduce or reverse cognitive decline become more seriously considered.

6/20/2018, “Despite not using long-term care, millennials have strong opinions on how it should be paid for,” by Marty Stempniak, McKnight's LTC News

Quote: “That's one of the key takeaways from a AP/NORC survey of young individuals about LTC, highlighted by Forbes this week. As noted by AARP, about 1 in every 4 caregivers is between the ages of 18 and 34. They spend about 20 hours per week delivering care, which is only going to balloon as the population ages. … Some 62% are in favor of instituting tax breaks for purchasing long-term care insurance. And 60% said they would like to see a government-administered LTC insurance program in the same vein as Medicare. Another 81% said they would favor employers offering long-term care insurance plans as a benefit, the report notes.”

LTC Comment: I’m not sure how you square 62% favoring LTCI tax breaks and 81% wanting employer LTCI plans with 60% preferring a Medicare LTC takeover. But, hey, at least the generation that will have to pay for our Social Security and Medicare is starting to think about long-term care. ***

LTC BULLET: TRIBUTE TO PHYLLIS SHELTON

LTC Comment: Anyone involved in the long-term care insurance business knows the name Phyllis Shelton. Her training company, LTC Consultants, prepared thousands of eager new producers to ascend the steep learning curve of LTCI sales. Her book, Long-Term Care: Your Financial Planning Guide, introduced consumers to the perils of long-term care and the protection private insurance provides. Phyllis’s omnipresence at key industry events; her penetrating questions; her informative comments are well known to her fellow professional travelers. That’s why it was with some surprise and disappointment this week that we received Phyllis Shelton’s “goodbye letter.” She’s closing LTC Consultants and moving on to other pursuits, including Christian speaking opportunities and helping families personally with retirement planning.

We asked Ms. Shelton if we could re-publish excerpts from her goodbye letter in this week’s LTC Bullet including a link to the whole story. She replied “When Steve and Damon asked if they could publish my goodbye letter for LTC Consultants, my agent training company, I said of course! The Center for LTC Reform has been an integral part of my success by making sure I was always up on the latest news and research in the LTCi industry.” Thanks, Phyllis, the feeling is mutual.

Now, here’s enough of Phyllis Shelton’s goodbye letter for LTC Consultants to give you the flavor and the gist. We’ve focused on the professional stories including the names of people and companies that helped her along the way. Read the full unedited version with photos and all of its personal content here: http://ltcconsultants.com/good-bye/good-bye.html.

June 16, 2018

Dear Long-Term Care Insurance World,

It has been my honor and pleasure to serve you from a training standpoint since August 7, 1991, the birth of this wonderful company known as LTC Consultants … .

The mission of LTC Consultants was to provide a way for me to teach as many who wanted to learn my simple sales presentation and how I was selling 40-year-olds back in 1988-1991. … I hate cold calls and after three failed phone calls with the last one telling me he already had someone to mow his lawn, I resolved to NEVER make another one! I resolved to work as hard as it took doing seminars, networking with other professionals and PR, like writing articles and giving radio/television interviews to never, ever face another cold call. …

When the $500 marketing system [she designed] didn’t fly off the shelves after paying $1200 for a booth at the 1991 NALU (now NAIFA) annual convention … and after calling all the major insurance companies with no result, God gave me a vision to do a national training tour which would be a grassroots marketing effort … [with financial help] from Long-Term Preferred Care, spearheaded by Gerald Witcher and Robert Forman. Robert is now president of LTC-Associates. …

Two big bonuses: I met Suze Orman at my San Francisco meeting in November, 1994, and secured my first big training contract (40 cities) with Banker’s Life at that same meeting. I told them I could train their 3000 agents for the cost of two 6 packs of Diet Coke per agent! Plus, they bought the rights to print my marketing materials, so each agent would have a flip chart and sales script, and each office would have a seminar system. I still have the letter – their LTCI production went up 34.6% in 1995. Home Run.

Nine additional companies followed in the ensuing years, including a large bank and a large LTC provider, and two online training programs. … The second one was for the mandated training with Phil Sullivan of Selling LTC.

Prior to the mandated training, we had to bring on additional trainers so we could do five cities on the same day for big accounts like State Farm, Allstate and Prudential. [Husband] Bill orchestrated that entire effort with John Ferroni, Dave Miller, Catherine Dove and Randy Smith. … The best thing that came out of the grueling training they went through was “The Medicaid Blues,” compliments of John and Dave playing hooky one night and escaping to the Bourbon Street Blues and Boogie Bar in downtown Nashville. We incorporated it into the Medicaid section of every training class we ever did after that! If you’ve never heard it, it’s a crack-up. You can listen to it here.

Then we implemented the first live training in 2001 for Harley Gordon with the CLTC designation and brought in Bill Comfort, Betty Doll and Shelly Kapfhammer, along with Catherine Dove. That was a true Hall of Fame effort as we taught the course in 33 cities using a 2 ¾ day format. Each city had a guest elder law attorney, and we used two videos that Harley did on the estate planning and Medicaid planning segments. I found the elder law attorney for each city to make sure he or she believed in long-term care insurance. I remember telling a well-known elder law attorney in Long Island that he didn’t qualify, and he was flabbergasted that I “fired” him for not being what we were looking for, as he was an avid Medicaid planner. If you want to see how a great elder law attorney behaves, click here.

Then in 2002 came the Federal LTC Insurance Program (FLTCIP). I was referring MetLife to a firm in Nashville that specialized in employee meetings, but they came back and asked if I would consider doing 1,000 meetings for them. I’m sure that request came from my wonderful friend Joyce Ruddock, who was head of MetLife’s LTCi effort at that time. …

2003 saw LTC Consultants helping with the launch of the State of Tennessee group LTCi program with MedAmerica. …

In 2005-2006, we helped MetLife build a field sales force for the AARP program. …

2007-2010 was crazy with the mandatory LTCi training, which Phil [Sullivan] and I put together based on the chapters in my big book with added audio/video effects. I’m a huge believer in the LTC Partnership, so somehow I got involved with helping several states implement it…Washington, Louisiana, Tennessee and Alabama…as well as forming relationships with insurance departments and Medicaid managers throughout the country to gather credible information for the course, LTCi Training.com.

I continued to do live training tours every year and a big meeting in Nashville with a BAND (my favorite part!), and now all of my materials were in digital form and editable…One-on-One, Seminar Selling, Worksite Selling with new books for a turnkey training and presentation system. Unfortunately, the compliance police killed that business, even though everything I put out was the most well-researched material in the industry.

2011 saw the publication of Suze Orman’s The Money Class. I had been serving as a resource for Suze for a number of years prior, but she decided to bring me out of the closet by putting my name in her book as a resource for those who don’t have a knowledgeable LTCi professional. …

So today I’m back where I started in 1988, on the front lines, serving families. Yet now I can do it in all 50 states from the comfort of my beautiful office in Tennessee. …

So what do I tell people today who ask what I do for a living?

I say “I help people retire with dignity.” How, they ask?

Simple – I help people avoid the two biggest mistakes people make in retirement. They fail to plan for a long chronic condition and they fail to keep a paycheck. I can solve both of those with some form of LTC insurance, whether it be traditional or hybrid, and I can provide a lifetime paycheck that they can’t outlive with a fixed index annuity for only 1% a year. I can also provide a way for their money to grow with zero market risk for no fee. …

All this leads me to why I’m closing LTC Consultants. …The percentage of agents who became my students over the years and wanted the annual updates became fewer and fewer as the compliance police made my materials black market.

My last tour was in 2010 on worksite and combo LTCi and I used that to go to Washington, D.C., and try to convince regulators that I had a plan to fix Medicaid. How? By educating financial professionals and state governments on how to sell worksite LTCi with limited underwriting and take the burden off Medicaid. I even provided a budget on how to do it with funding from the additional premium tax that would go to the state as a result of more LTCi being sold. Part of the materials at the live meetings and on my website gave agents a press kit so they could do the same thing in their states. That failed miserably as you can imagine, but I know I gave it my best shot, so no regrets.

So I’m signing off on the training and coaching business, and directing my effort into helping families first-hand. Believe me, there’s NO SHORTAGE of people who want my help in this arena…and your help too. We need knowledgeable professionals in LTC planning more now than ever!! …

[Special thanks] to Martin Bayne and Kevin Johnson of New York LTC Brokers (now Advisors Insurance Brokers), who hired me for my first training gig on September 29, 1994 in Albany NY.

How do you say good-bye after 28 years?

Good-bye.

Phyllis Shelton

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Updated, Monday, June 18, 2018, 9:16 AM (Pacific)

Seattle—

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LTC E-ALERT #18-024: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Gout Linked to Higher Risk of Dementia
Five myths about Alzheimer’s disease
‘Dying at your desk is not a retirement plan’
A New Congressional Proposal For A Medicare Long-Term Care Insurance Benefit
America’s Entitlement Crisis Just Keeps Growing
Announcement: Moody's: Legacy long-term care blocks concerns heightened as focus on actuarial assumptions could lead to margin declines
AMA adopts policy to make long-term care more affordable
Association between systolic blood pressure and dementia in the Whitehall II cohort study: role of age, duration, and threshold used to define hypertension
Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients
APNewsBreak: Nursing homes sue to halt Montana Medicaid cuts
Big state budget changes alter nursing homes' outlook
Visual Association Test, MMSE Highly Predictive of Dementia in Older Adults
Genworth Clears Major Obstacle to Completing China Oceanwide Deal
China Oceanwide’s $2.7 Billion Takeover of Genworth Financial Passes U.S. Security Review

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Updated, Friday, June 15, 2018, 11:04 AM (Pacific)

Seattle—

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LTC BULLET: STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 20^th year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private financing or promoted government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to six dozen LTC Bullets we’ve published taking these groups and individuals to task:

Media: Consumer Reports, National Public Radio (NPR), Public Broadcasting System (PBS), New York Times, Wall Street Journal, Washington Post, Dow Jones MarketWatch

Organizations: National Academy of Elder Law Attorneys (NAELA, Medicaid planners’ trade association), AARP, Alzheimer’s Association, Leading Age (formerly American Association of Homes and Services for the Aging, LTC provider trade association)

Thinktanks or companies: Kaiser Family Foundation (KFF), Georgetown Long-Term Care Financing Project, Urban Institute, Avalere, SCAN, Employee Benefit Research Institute (EBRI), Bipartisan Policy Center (BPC), Center for Retirement Research at Boston College, LTC Collaborative

Government Agencies and Commissions: Government Accountability Office (GAO), the Medicaid Commission, the Long-Term Care Commission, Congressional Research Service (CRS), Congressional Budget Office (CBO), Medicare Trustees, Centers for Medicare and Medicaid Services (CMS)

Scholars: Ellen O'Brien, Peter Kemper, Harriet L. Komisar, Lisa Alecxih, Timothy Waidmann, Korbin Liu, Judith Feder, Richard W. Johnson, Joshua Wiener, Mark Merlis, Lee Shirey Thompson, Anne Tumlinson, Christine Aguiar, Molly O'Malley Watts, Diane Rowland, David G. Stevenson, Marc A. Cohen, Janemarie Mulvey, Sudipto Banerjee, Richard G. Frank, Neale Mahoney, Howard Gleckman, Leora Friedberg, Wenliang Hou, Wei Sun, Anthony Webb, Gretchen Jacobson, Shannon Griffin, Tricia Neuman, Karen Smith, Norma B. Coe, and Melissa M. Favreault

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Damon at 206-283-7036 or damon@centerltc.com to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

LTC Bullet: More Bad Advice from Consumer Reports, November 15, 1999
LTC Comment: Individuals and organizations most critical of private long-term care insurance are usually the ones lining their pockets with Medicaid estate planning profits.

LTC Bullet: They're Baaaack . . . Medicaid Planners Rise Again, April 25, 2001
LTC Comment: Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. No longer.

LTC Bullet: "Nursing Home Care Virtually Free For Life," Tuesday, May 7, 2002
LTC Comment: What follows is a transcription of excerpts from a professionally produced and mass-distributed videotape from a man and his company who promise lifelong free long-term care.

LTC Bullet: Medicaid Planners Confess, October 2, 2003
LTC Comment: A survey intended to exonerate Medicaid planners is actually the strongest indictment of artificial impoverishment yet.

LTC Bullet: Where There's Smoke, There's Fire, May 18, 2005
LTC Comment: Our critique follows of "Medicaid's coverage of nursing home costs: Asset shelter for the wealthy or essential safety net?" by Ellen O'Brien of the Georgetown Long-Term Care Financing Project.

LTC Bullet: LTC Bombshell, June 29, 2005
LTC Comment: Results from a poll of state Medicaid programs by a Congressional office with subpoena power may blow the lid off a carefully orchestrated cover-up of Medicaid planning abuses. Lists, summarizes and analyzes studies that pooh-pooh Medicaid planning.

LTC Bullet: Alzheimer's Association Shortsighted on LTC Financing, July 6, 2005
LTC Comment: The Alzheimer's Association's public position on Medicaid reform and long-term care financing is a classic example of how good intentions invite unintended consequences.

LTC Bullet: GAO on TOA Underwhelms, October 5, 2005
LTC Comment: The Government Accountability Office's new report on Medicaid asset transfers asks the wrong questions, uses the wrong data, and so provides few helpful answers.

LTC Bullet: NPR Defends Medicaid Planning, Attacks Messenger, January 4, 2006
LTC Comment: National Public Radio's "All Things Considered" show took a slanted swipe at responsible Medicaid reform yesterday while defending Medicaid planning abuse. Hear the broadcast version, followed by our side of the story.

LTC Bullet: Georgetown, GAO and Kaiser: The Bermuda Triangle of Good LTC Policy, January 25, 2006
LTC Comment: LTC doubletalk is not the exclusive province of Medicaid planners and AARP lobbyists. Otherwise often reliable analysts get long-term care policy wrong too.

LTC Bullet: LTC Victory, February 2, 2006
LTC Comment: The Deficit Reduction Act of 2005 passed yesterday curbing Medicaid abuse and unleashing LTC Partnerships. Celebrate? Sure. But don't take a victory lap until you consider what can go wrong.

LTC Bullet: Microsimulate This!, March 28, 2006
LTC Comment: The fundamental things apply as time goes by--like "garbage in, garbage out." Take for example a recent Inquiry article that estimates future public and private LTC costs. Our critique follows.

LTC Bullet: Kaiser Cover-Up Continues," April 27, 2006
LTC Comment: Urban Institute "scholars," aided and abetted by the Kaiser Family Foundation, employed an underhanded straw man argument in the foundation's latest unsuccessful attempt to debunk the impact of Medicaid planning abuse.

LTC Bullet: Medicaid Commission Errs by Omission, August 9, 2006
LTC Comment: The national Medicaid Commission, appointed last year to fix Medicaid (including its dysfunctional LTC component) before the welfare program implodes financially, is way off track.

LTC Bullet: The DRA Bullets, January 9, 2007
LTC Comment: Two Medicaid planners lament the DRA we praised and defended in 21 LTC Bullets last year. Their whining, our replies plus links to all the DRA Bullets follow.

LTC Bullet: Take Georgetown's Facts With a Big Grain of Salt, February 15, 2007
LTC Comment: Three new "fact sheets" from the Georgetown LTC Financing Project are spoiled by ideological bias. This Bullet critiques Medicaid's Spousal Impoverishment Protections (February 2007) , Medicare and Long-Term Care (February 2007) and National Spending for Long-Term Care (February 2007)

LTC Bullet: GAO AWOL on LTC TOA, May 2, 2007
LTC Comment: The Government Accountability Office has again displayed stunning miscomprehension of the Medicaid eligibility, Medicaid planning and transfer of assets issues.

LTC Bullet: GAO on LTCI Partnerships, June 20, 2007
LTC Comment: GAO drops the ball again on the issues of Medicaid, long-term care financing and private insurance.

LTC Bullet: Medicaid Estate Recover. . .up, July 5, 2007
LTC Comment: Medicaid estate recovery could be a major source of non-tax revenue for the ailing LTC safety net for the poor, but AARP would tie the program in bureaucratic knots.

LTC Bullet: The NY Compact: Analysis, Conclusions, and Recommendations, July 31, 2007
LTC Comment: Is the New York Compact the future of long-term care financing or the last gasp of an old, failed system?

LTC Bullet: Hillary Clinton on LTC, January 3, 2008
LTC Comment: Presidential candidate Senator Hillary Clinton has promised a cornucopia of LTC benefits if elected. Would our service delivery and financing system be better or worse if she delivered? We comment.

LTC Bullet: WSJ Attacks LTCI, We Respond, February 26, 2008
LTC Comment: Today's front-page Wall Street Journal article criticizing long-term care insurance was as one-sided and misguided as a similar piece published by the New York Times also during a major industry conference. We reply, same day, as follows.

LTC Bullet: NYT Asks Medicaid Planner to Advise on LTCI, July 18, 2008
LTC Comment: The New York Times added insult to injury by inviting a notorious Medicaid planner to advise readers on private long-term care insurance. We respond.

LTC Bullet: We Critique WSJ on Medicaid Planning, January 16, 2009
LTC Comment: Within 24 hours, we replied to a Wall Street Journal column that promoted Medicaid planning for long-term care.

LTC Bullet: New LTC Financing Study Uninterpreted or Misinterpreted, March 24, 2009
LTC Comment: A new report on LTC financing by Avalere Health was reported uncritically by many and mistakenly by one source.

LTC Bullet: LTC Clueless, May 26, 2009
LTC Comment: Consumers' denial of LTC risk and cost is nothing compared to the naiveté of professionals who should know better.

LTC Bullet: KFF Misfires on LTCI, June 9, 2009
LTC Comment: A new study of private long-term care insurance published by the Kaiser Family Foundation fails in the usual, predictable ways. Details follow.

LTC Bullet: How Much More Wrong Can They Get It?!, July 21, 2009
LTC Comment: Another "report" from the usual suspects gets long-term care advice dead wrong.

LTC Bullet: We Reply to Washington Post Blast at Federal LTCI, August 14, 2009
LTC Comment: Read our reply to the Washington Post's "Federal Diary" criticism of Federal LTCI's premium increase.

LTC Bullet: CLASS Consciousness, October 21, 2009
LTC Comment: To hear Kaiser Family Foundation speakers, the CLASS Act is a no-brainer for passage and implementation. We offer a wake-up call.

LTC Bullet: The Enemy of LTC Truth, February 8, 2010
LTC Comment: Albert Einstein said "Unthinking respect for authority is the greatest enemy of truth." See how this principle applies to long-term care.

LTC Bullet: New LTCI Report: Research or Propaganda?, June 8, 2010
LTC Comment: Is a newly updated report on LTC insurance by the Congressional Research Service really research, or CLASS Act propaganda? You decide.

LTC Bullet: CLASSless Journalism, September 21, 2010
LTC Comment: Reporting only the CLASS program's dubious benefits and none of its inevitable detriments is negligent journalism. An example follows.

LTC Bullet: Friendly Fire in the Class War (LTC Embed Report #6), September 22, 2011
LTC Comment: Steve Moses's Congressional testimony on Wednesday was well-received except for an ad hominem attack, "friendly fire" in the class war. An explanation, witness testimonies, and a video of the hearing follow.

LTC Bullet: Moses Replies to Congressman's Questions (LTC Embed Report #11), October 13, 2011
LTC Comment: House Oversight and Government Reform Healthcare Subcommittee ranking member Danny Davis (D, IL) asked me some questions in writing after the 9/21 hearing on "Examining Abuses of Medicaid Eligibility Rules." His questions and my answers follow.

LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News, July 20, 2012
LTC Comment: A recent EBRI study that claims nursing home stays are wiping out Americans’ savings is based on a fallacy and mistaken. What’s really happening?

LTC Bullet: SCAN the LTC Possibilities, April 5, 2013
LTC Comment: SCAN is a fountainhead of ideas about long-term care financing, but are those ideas potable? We analyze.

LTC Bullet: What Should the LTC Commission Do?, June 21, 2013
LTC Comment: How should the LTC Commission prioritize its work and recommendations? Some thoughts follow.

LTC Bullet: Medicaid Spend Down that Isn't and Why it Matters," July 19, 2013
LTC Comment: Claiming “transitions” to Medicaid are evidence of catastrophic LTC asset “spend down” misrepresents the truth and should be publicly recanted. We answer who, what, when, where and why.

LTC Bullet: The LTC Blind, October 25, 2013
LTC Comment: “There are none so blind as those who will not see.” That proverb applies perfectly to a recent column about long-term care by the Urban Institute’s Howard Gleckman.

LTC Bullet: PBS’s 6 LTC Tips Miss the Mark, November 8, 2013
LTC Comment: What’s wrong with the conventional wisdom about how to resolve America’s long-term care crisis?

LTC Bullet: WSJ Misfires on LTC Insurance, February 14, 2014
LTC Comment: We dissect and correct a misbegotten column in the Wall Street Journal.

LTC Bullet: Who Gets Medicaid LTC?, March 28, 2014
LTC Comment: Is Medicaid a long-term care safety net for the poor, the middle class, even the affluent, all of the above? Questions remain, but answers abound.

LTC Bullet: Will Bipartisan LTC Policy Be Better?, April 11, 2014
LTC Comment: Heads up! Consensus is coalescing around a bipartisan long-term care financing solution. Let’s be hopeful, but wary.

LTC Bullet: GAO Punts on Medicaid Planning, July 3, 2014
LTC Comment: Another GAO report underplays dramatic findings about the role, methods and extent of Medicaid planning and loose LTC eligibility rules.

LTC Bullet: Entitlement Double Talk, August 1, 2014
LTC Comment: To read the major media coverage of the 2014 Medicare Trustees report, you’d think things are looking up for the 49-year-old mega-program. Think again.

LTC Bullet: CMS Health Expenditure Data Mask LTC Cost Growth, September 5, 2014
LTC Comment: CMS actuaries’ estimates of health expenditures for 2013-2023 downplay the big story, snowballing LTC costs. We explain.

LTC Bullet: Does Medicaid Solvency Matter?," October 31, 2014
LTC Comment: CMS says Medicaid solvency “is not an issue.” We beg to differ.

LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures, November 21, 2014 LTC Comment--The USDHHS Inspector General reports that many states failed to implement mandatory provisions in OBRA ’93 and/or DRA ’05 designed to discourage abuse of Medicaid LTC benefits. Details follow.

LTC Bullet: IG Report Reveals Medicaid Estate Recovery Weakness, December 5, 2014
LTC Comment—A newly released USDHHS Inspector General report shows few states do Medicaid estate recoveries well resulting in a potential annual loss, we infer, of $2.5 billion. Details, numbers, and why it matters follow.

LTC Bullet: How Careless Economists Boosted LTC Risk, December 12, 2014
LTC Comment: We explain how Boston College economists generated poor long-term care planning advice that national media unfortunately amplified.

LTC Bullet: When Bad Models Happen to Good People, January 16, 2015, guest Bullet by Stephen D. Forman
LTC Comment: We offer the last word on that Boston College fiasco of poor scholarship and bad economics.

LTC Bullet: Holding CMS’s Feet to the Fire, February 6, 2015
LTC Comment: When a federal agency fails to enforce the law hurting the poor it’s supposed to help and costing tax payers billions of dollars, bureaucratic heads should roll. Background and details follow.

LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015 LTC Comment: New numbers, better than the old numbers, but they require further clarification and explanation.

LTC Bullet: Pandora Meets Rosy Scenario in CMS Projections, July 31, 2015
LTC Comment: The aging demographic evils in Pandora’s “box” don’t find their way into CMS actuaries’ health expenditure estimates for the coming decade. Quotes and our comments follow.

LTC Bullet: Another LTCI Hit Job?, October 9, 2015
LTC Comment: What shall we make of this new attack on private long-term care insurance? Answers follow.

LTC Bullet: A New Revolution in Long-Term Care Financing . . . by Government, November 6, 2015
LTC Comment: Radical, disruptive changes in how government pays for long-term care are advancing rapidly. We provide background.

LTC Bullet: The Future of Long-Term Care Seen Through the Prism of History, November 13, 2015
LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We cover the big picture.

LTC Bullet: The Arrogance of LTC Analysts' Elitism," December 4, 2015
LTC Comment: Arrogance, ideological bias and elitism spoil the recent research of abundantly endowed LTC analysts. We explain .

LTC Bullet: Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations, February 5, 2016
LTC Comment: The Bipartisan Policy Center’s new report on long-term care leads with LTCI (hear, hear!), but makes Medicaid even more tempting (boo!) and adds a new, expensive, mandatory government program (boo!) based on faulty premises. Our analysis and critique follow.

LTC Bullet: Losing Principles, April 29, 2016
LTC Comment: What’s happening to the basic principles of personal responsibility and self-reliance that validate private insurance? We reflect.

LTC Bullet: LTC at a Crossroads, June 3, 2016
LTC Comment: Long-term care financing policy is at a critical crossroads and may take a wrong turn. We explain.

LTC Bullet: How the Government Ruined LTC (and We’ll Fix It), June 10, 2016
LTC Comment: Government interference in the LTC marketplace since 1965 caused harmful unintended consequences that only clear analysis and bold action can fix.

LTC Bullet: Half a Century of Bad Medicaid LTC Policy, August 5, 2016
LTC Comment: Medicaid long-term care policy is a classic story of good intentions leading to unfortunate consequences.

LTC Bullet: Behind AHEAD, September 2, 2016
LTC Comment: The people and organizations advocating a new, compulsory, payroll-financed government program to fund catastrophic LTC expenses base their arguments on dubious sources and reasoning. Details follow.

LTC Bullet: How Fiscal and Monetary Malfeasance Will Ruin Long-Term Care, October 7, 2016
LTC Comment: Fiscal malfeasance ($20 trillion federal debt) enabled by monetary malfeasance (artificially low interest rates) bode ill for the economy and for Medicaid LTC financing. Here’s why and how.

LTC Bullet: Medicaid LTC Data Insights, October 14, 2016
LTC Comment: What’s happening with Medicaid LTC financing and why it matters.

LTC Bullet: What’s Wrong with Bundled and Value-Based LTC Payments? January 20, 2017 LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We present the big picture.

LTC Bullet: Hoist with its Own Petard , April 28, 2017
LTC Comment: This Kaiser Family Foundation “Issue Brief” blows up its own argument. We explain.

LTC Bullet: The Broken Rhythm of Long-Term Care Reform, May 19, 2017
LTC Comment: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer? The answer follows.

LTC Bullet: Is it Really Hopeless to Reduce Medicaid LTC Costs?, June 23, 2017
LTC Comment: Kaiser Family Foundation researchers despair of reducing Medicaid LTC expenditures, but their “literature review” is incomplete, misleading and risky.

LTC Bullet: Is it Spend Down or Medicaid Planning?, July 14, 2017
LTC Comment: A lot of what passes for Medicaid “spend down” in the scholarly literature is really Medicaid planning. We explain and give examples.

LTC Bullet: Have Your Cake Until It Eats You, March 23, 2018
LTC Comment: Americans want to have their cake (entitlements) and eat it too, but trends show this cake will eat our economy first. Scary evidence follows.

LTC Bullet: Retirement Confidence and Asset Spend Down, April 27, 2018
LTC Comment: Two new EBRI studies shed light on how workers/retirees’ expectations and behavior differ.

Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding), May 4, 2018
LTC Comment: A new Feder/Cohen proposal would take long-term care out of the frying pan into the fire.

LTC Evasion, May 11, 2018
LTC Comment: We explain what LTC scholars evade and why.

Feder/Cohen Proposal Ignores LTC Problems’ Cause, May 18, 2018
LTC Comment: We explain how government intervention caused the dysfunctions in long-term care that Feder/Cohen seek to correct with more government intervention, including institutional bias, poor access and quality, excessive dependency on family caregiving, inadequate financing, and lack of insurance.

LTC Policy Blinders, May 25, 2018
LTC Comment: We explain why and how LTC policy analysts evade facts that contradict their predisposed positions in favor of compulsory government LTC insurance.

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Updated, Monday, June 11, 2018, 9:17 AM (Pacific)

Seattle—

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LTC E-ALERT #18-023: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

This is how to truly save Social Security and Medicare
Millennials and retirement: How bad is it?
Integrating Medical and Nonmedical Services — The Promise and Pitfalls of the CHRONIC Care Act
Planning for Retirement as a Single Person
Long-Term-Care Insurance Isn’t Dead. It’s Now an Estate-Planning Tool
No, Medicare Won't Go Broke In 2026. Yes, It Will Cost A Lot More Money
Medicaid: CMS Should Take Steps to Mitigate Program Risks in Managed Care
Social Security trust fund reserves on track to be depleted by 2034
Medicare fund to fall short in 2026, sooner than last forecast
Political grandstanding hurting long-term care again
Social Security COLA Could Top 3% in 2019

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Updated, Friday, June 8, 2018, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: WHO’S RESPONSIBLE? WHO ISN’T?

LTC Comment: Social Security and Medicare are underfunded by trillions of dollars, while private LTC insurance is fully funded. Who’s responsible and why, after the ***news.***

*** NBC BLASTS LTCI: In a June 2 video report titled “Consumers reconsidering long-term care insurance as premiums skyrocket,” NBC News said “The nation’s largest long-term care insurer says its lost billions of dollars, forcing them to raise rates. Now families are choosing between paying for insurance they may not need, or risk going without it.” Such criticism stings, especially because it’s unwarranted as today’s LTC Bullet explains below, but it annoyed LTCI producer Romeo Raabe for a different reason. He writes:

NBC recently had a segment on supposedly horrible increases on LTCi premiums and how the companies jack up the price on seniors. Interesting that they never mentioned what benefit was purchased on the sample LTCi policy whose premium increased to $3,500 a year for two people in their 70’s.

When we sell LTCi, do you think the client really grasps the concept of how the benefits will increase over 20 – 25 – or 30 years? That benefit with the inflation factor it should have, might be $500,000 or more. Quite a good deal for $3,500 a year, wouldn’t you agree?

At 5% compound, the benefit will double every 15 years, so $100/day can become $400/day. Even this does not adequately convey the growth in benefits.

You propose a premium of $4,000/year with 5% compound inflation and a daily benefit of $100/day. The client sees a cost of $4,000 and a benefit of $100 and thinks it’s too expensive.

I propose a premium of $4,000/year with 5% compound inflation and a daily benefit of $100/day. I tell the client that if they pay this premium for 30 years and then one person claims for 10 years of care that one person will receive $1,984,140 in total benefits. Now this looks like a good deal and they buy. That is nearly $4,000,000 total benefits for both insureds.

The point is, why let them expect to receive only $100 as a benefit when the total years later will be huge? Prospects who would and could buy will not if they perceive it to be too expensive.

I keep this little chart laminated and in my pocket, with 3% inflation on one side and 5% inflation on the other. Just multiply the initial daily benefit by the factor for the full benefit potential. Yes, not all will claim for the full benefit, but show them the potential!

3%
20 years – 3 yr benefit 2036.7
20 years – 5 yr benefit 3500.35
20 years – 10 yr benefit 7555.5
25 years – 3 yr benefit 2361.55
25 years – 5 yr benefit 4058.8
25 years – 10 yr benefit 8760
30 years – 3 yr benefit 2737.5
30 years – 5 yr benefit 4704.85
30 years – 10 yr benefit 10157.95

5%
20 years – 3 yr benefit 3051.4
20 years – 5 yr benefit 5350.9
20 years – 10 yr benefit 12180.05
25 years – 3 yr benefit 3898.2
25 years – 5 yr benefit 6829.15
25 years – 10 yr benefit 15545.35
30 years – 3 yr benefit 4971.3
30 years – 5 yr benefit 8716.2
30 years – 10 yr benefit 19841.4

Romeo Raabe, LUTCF, LTCP is The Long-Term Care Guy of Wisconsin, a proactive advocate for better LTC financing policy, and a long-time Regional Representative of the Center for LTC Reform. Contact him at (920) 884-3030 or rraabe@thelongtermcareguy.com

LTC BULLET: WHO’S RESPONSIBLE? WHO ISN’T

LTC Comment: Their trustees have just delivered the annual financial prognosis for Medicare and Social Security. As usual, the prospects for both programs are dismal. The outlook for Medicare is especially bad with its expected insolvency coming three years sooner, 2026, than predicted just last year. I’ll list a few places where you can learn about just how bad the situation is, but pointing those details out is not my objective today.

“The 2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds,” June 5, 2018

“2018 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” June 5, 2018

“The 2018 Medicare Trustees Report: Fiscal challenges and future reforms,” American Enterprise Institute video panel discussion featuring Paul Spitalnic, the chief actuary for the Centers for Medicare and Medicaid Services (CMS), June 6, 2018

“Medicare’s Trust Fund Is Set to Run Out in 8 Years. Social Security, 16,” by Robert Pear, New York Times, June 5, 2018

“Social Security Expected to Dip Into Its Reserves This Year,” by David Harrison, Wall Street Journal, June 5, 2018

“Medicare Financial Outlook Worsens,” by Phil Galewitz, Kaiser Health News, June 5, 2018

Rather, my purpose today is to compare and contrast the way government has handled its responsibilities to citizens with the way the private insurance industry has handled its obligations to policy holders.

First, who’s responsible? If you promise somebody something, whether as a political commitment or in a private contract, you are responsible. So in the case of Social Security and Medicare, politicians are responsible. They made the promises. But most of the politicians who made the promises are long gone and the ones in office now would not be for long if they did what needs to be done to keep the promises. In other words, the responsible parties are irresponsible and those of us impacted, American citizens, have no recourse.

Compare that situation with the condition of a private citizen who has a commercial insurance policy, say for example a long-term care insurance contract. Such a policy holder owns a commitment enforceable in a court of law to receive certain specified benefits in exchange for a specific premium. Make the payments and you’re guaranteed the benefits. What if your carrier goes bankrupt? Then a guaranty association pays with funds supplied by the rest of the industry. But what if the whole industry fails? Then you’d be stuck, just like Social Security and Medicare beneficiaries. But that isn’t what happened to long-term care insurance.

Unlike irresponsible politicians who’ve failed to ensure entitlement programs’ solvency, the private long-term care insurance industry bit the bullet. They took the difficult, costly, embarrassing, financially responsible steps to be sure their LTC insurance policies can pay in full when claims come due. They raised premiums, tightened underwriting, and/or exited the market, passing on new business while taking responsibility for their previous commitments. Ironically, yellow journalists criticized private insurance carriers mercilessly for doing the right thing while largely exempting their irresponsible political counterparts from criticism.

When the current generation has to pay for the unfunded social insurance liabilities run up by earlier generations, the questions “Who’s Responsible?” and “Who Isn’t?” will be answered starkly. By then, however, it will be too late for private insurance to save the day, because you can’t buy private coverage after the insurable event has already occurred. But if it’s too late to dodge the social consequences of politicians’ irresponsibility, it’s not too late for individuals and families to mitigate the aftermath for themselves. Save, invest or insure for long-term care before it’s too late.

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Updated, Monday, June 4, 2018, 10:16 AM (Pacific)

Seattle—

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LTC E-ALERT #18-022: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

'Invisible workforce' of caregivers is wearing out as boomers age
The Many Shades of Boomer Health
Genworth Updates Website
Long-Distance Caregiving, Up Close: LTCI Insider
Younger People Find Long-Term-Care Insurance Is Harder To Get
Live Free and Die
‘They Deserve It’: In Foster Homes, Veterans Are Cared For Like Family
'Short-Term Care Insurance' Faces a Name Fight
Clues to Parkinson’s and Alzheimer’s From How You Use Your Computer
What Explains The Widening Gap In Retirement Ages By Education?
Alzheimer's: Rethinking the 'One-Size-Fits-All' Approach
Researchers I.D. barriers to care as Alzheimer's diagnoses in Latinos explode

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Updated, Friday, June 1, 2018, 11:16 AM (Pacific)

Seattle—

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LTC BULLET: LTC ALMANAC UPDATE

LTC Comment: We’ve updated the “Almanac of Long-Term Care” in The Zone. More on the LTC Almanac and today’s update after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, whose revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on LTC, based on their personal characteristics. Claude offers ways to educate clients and reduce “Ping-Pong” in the LTCi sales process. Help clients compare Combo vs. Stand-Alone LTCi easily and make informed final LTCi decisions in 15-20 minutes! Change work-site LTCi from a series of proposal deliveries to a single interactive consultation! Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. For questions or references, reach Claude at 913-403-5824 or claudet@targetins.com. ***

*** HEADS UP! “My Million Dollar Mom” is available to download and watch. From the movie’s website:

Based on a true story, a loving mother is diagnosed with Alzheimer's. Her devoted son steps forward to care for her. Her needs are so great that he must decide whether to pursue his final chance for his lifelong dream of high political office, something she wanted so much for him, or give it all up to fulfill a promise he made to her long ago that he would care for her and be by her side at the end of her life.

“My Million Dollar Mom” is densely emotional and satisfying to watch. Those who know the joy, difficulty and complexity of caregiving should relate to the son. Those who don’t know, yet, will learn. All will gain important insight into the growing epidemic of Alzheimer’s disease and what it means to be a caregiver for a loved one with Alzheimer’s. The writer, Ross Schriftman, states: “You'll laugh. You'll cry. You'll cheer. Bring tissues.” Indeed.

We own “My Million Dollar Mom” and you can, too. It’s only $4.95 through Vimeo. Visit http://www.mymilliondollarmom.com/ to learn more and buy your copy. ***

LTC BULLET: LTC ALMANAC UPDATE

LTC Comment: Center members know and appreciate our "Almanac of Long-Term Care" in The Zone, our password-protected website.

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, June 15, 2018. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

Aging Demographics
International
Unfunded Liabilities--Social Security, Medicare, and Budgets
Long-Term Care
Caregiving
Long-Term Care Financing
Long-Term Care Insurance
Reverse Mortgages
Long-Term Care Providers
Medicaid
Medicaid Planning

Each section is divided into sub-sections and under each sub-section we provide a list by date of the most important reports and articles published on the topic, usually with a few highlights and sometimes with analysis.

The Almanac of Long-Term Care is a great way to find statistics you need quickly or to get current on topics you need to know the latest information about.

The Zone and the LTC Almanac are for Center for Long-Term Care Reform members only, except during the current free trial offer. Join the Center here: http://www.centerltc.com/support/index.htm. Call or email Damon at 206-283-7036 or damon@centerltc.com. He can give you a user name and password to open up The Zone even before your dues payment arrives. Individual annual memberships are $150. Premium memberships with access to our “Clipping Service” start at $250. Premium Elite and “Regional Representative” membership (if you qualify professionally) are $500. Corporate memberships with many extra benefits start at $1,000. See our "Membership Levels and Benefits" schedule here.

Caveat: With time, some hyperlinks go bad. In a huge document like the "LTC Almanac," we can't keep all the links current all the time. If you find a bad link, but want to get to the material, contact us. We often have an electronic copy of the document and we can usually find a current live link. We'll also fix the link in the LTC Almanac so it will be current again for others.

Suggestion: Read through the following update to stay current on new resource materials. Then browse the full LTC Almanac at your leisure. When you need a quick fact or the latest research on a particular topic, you'll know right where to go. Enjoy.

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Chapter 1: Aging Demographics

United States

General Stats

2017OlderAmericansProfile 0418 URL

4/30/2018, “2017 Profile of Older Americans,” The Administration for Community Living, which includes the Administration on Aging

Quote: “Highlights

Over the past 10 years, the population age 65 and over increased from 37.2 million in 2006 to 49.2 million in 2016 (a 33% increase) and is projected to almost double to 98 million in 2060.
Between 2006 and 2016 the population age 60 and over increased 36% from 50.7 million to 68.7 million.
The 85 and over population is projected to more than double from 6.4 million in 2016 to 14.6 million in 2040 (a 129% increase).
Racial and ethnic minority populations have increased from 6.9 million in 2006 (19% of the older adult population) to 11.1 million in 2016 (23% of older adults) and are projected to increase to 21.1 million in 2030 (28% of older adults).
The number of Americans aged 45-64 – who will reach age 65 over the next two decades – increased by 12% between 2006 and 2016.
About one in every seven, or 15.2%, of the population is an older American.
Persons reaching age 65 have an average life expectancy of an additional 19.4 years (20.6 years for females and 18 years for males).
There were 81,896 persons age 100 and over in 2016 (0.2% of the total age 65 and over population).
Older women outnumber older men at 27.5 million older women to 21.8 million older men.
In 2016, 23% of persons age 65 and over were members of racial or ethnic minority populations--9% were African-Americans (not Hispanic), 4% were Asian or Pacific Islander (not Hispanic), 0.5% were Native American (not Hispanic), 0.1% were Native Hawaiian/Pacific Islander, (not Hispanic), and 0.7% of persons 65+ identified themselves as being of two or more races. Persons of Hispanic origin (who may be of any race) represented 8% of the older population.
A larger percentage of older men are married as compared with older women---70% of men, 46% of women. In 2017, 33% older women were widows.
About 28% (13.8 million) of noninstitutionalized older persons lived alone (9.3 million women, 4.5 million men).
Almost half of older women (45%) age 75 and over lived alone.
The median income of older persons in 2016 was $31,618 for males and $18,380 for females. The real median income (after adjusting for inflation) of all households headed by older people increased by 2.1% (which was not statistically significant) between 2015 and 2016. Households containing families headed by persons age 65 and over reported a median income in 2016 of $58,559.
The major sources of income as reported by older persons in 2015 were Social Security (reported by 84% of older persons), income from assets (reported by 63%), earnings (reported by 29%), private pensions (reported by 37%), and government employee pensions (reported by 16%).
Social Security constituted 90% or more of the income received by 34% of beneficiaries in 2015 (23% of married couples and 43% of non-married beneficiaries).
Over 4.6 million older adults (9.3%) were below the poverty level in 2016. This poverty rate is not statistically different from the poverty rate in 2015 (8.8%). In 2011, the U.S. Census Bureau released a new Supplemental Poverty Measure (SPM) which takes into account regional variations in living costs, non-cash benefits received, and non-discretionary expenditures but does not replace the official poverty measure. In 2016, the SPM showed a poverty level for persons age 65 and over of 14.5% (more than 5 percentage points higher than the official rate of 9.3%). This increase is mainly due to including medical out-of-pocket expenses in the poverty calculations.
The need for caregiving increases with age. In January-June 2017, the percentage of older adults age 85 and over needing help with personal care (22%) was more than twice the percentage for adults ages
75–84 (9%) and more than six times the percentage for adults ages 65–74 (3%).”

LTC Comment: Annual update of a premier source of data on older Americans.

Expenditures of the Aged

EBRI on Assets 0418 URL: https://www.ebri.org/pdf/briefspdf/EBRI_IB_447.pdf

4/20/2018, “No Spend Down,” by Stephen D. Forman, LTCA Weekly Reader

Elderly Below Poverty

KFF on Senior Poverty 0318 URL: http://files.kff.org/attachment/Data-Note-How-Many-Seniors-Are-Living-in-Poverty-National-and-State-Estimates-Under-the-Official-and-Supplemental-Poverty-Measures-in-2016

3/2018, “How Many Seniors Are Living in Poverty? National and

State Estimates Under the Official and Supplemental Poverty Measures in 2016,” by Juliette Cubanski, Kendal Orgera, Anthony Damico, and Tricia Neuman, Kaiser Family Foundation

Quote: “Payments from Social Security and Supplemental Security Income have played a critical role in enhancing economic security and reducing poverty rates among people ages 65 and older. Yet many older adults live on limited incomes and have modest savings. In 2016, half of all people on Medicare had incomes less than $26,200. This analysis provides current data on poverty rates among the 49.3 million seniors in the U.S. in 2016, as context for understanding the implications of potential changes to federal and state programs that help to bolster financial security among older adults.”

LTC Comment: We don’t know that SS and SSI have enhanced economic security and reduced poverty rates compared to what would have happened if those programs had not undercut the public’s sense of personal responsibility to save, invest and insure privately against the risk and costs of aging and retirement. Further, what matters is not that half of all Medicare recipients have incomes below $26,500. We have them covered with a wide range of government programs. What matters is how many people are getting those same programs, including Medicaid long-term care benefits, who have incomes far in excess of the median. KFF’s ideological bias is to over-estimate poverty in order to promote ever more government spending on the very programs that have created the problems it is claiming to fix.

Retirement Planning

EBRI on Retirement Confidence 0418 URL

4/24/2018, “Only 16% of retirees 'very confident' they can afford long-term care,” by Lois A. Bowers, McKnight's Senior Living

Quote: “Only 16% of current retirees are ‘very confident’ that they will have enough money to pay for long-term care should they need it during their retirement, according to the results of a survey released Tuesday. That percentage, said the nonpartisan Employee Benefit Research Institute and research firm Greenwald & Associates, is a decrease from last year's 20%, which they defined as ‘down significantly.’ The firms polled 1,040 retirees between Jan. 3 and 16 for the annual Retirement Confidence Survey.”

LTC Comment: Sounds like denial is declining, but how do you reconcile these findings with the reality that few people worry enough about LTC expenses to plan for them? Answer: By paying for most expensive LTC, Medicaid enabled people to claim they worry about LTC, do nothing to prepare, and still preserve most of their wealth for heirs. That’s been the reality for 53 years and it explains America’s dysfunctional LTC services and financing.

RBC on Wealth 0318 URL

3/2/2018, Good data source referenced by Stephen D. Forman in the “LTCA Weekly Reader”

Quote: “RBC Wealth Management did a bang-up job on their new report, "Taking Control of Healthcare in Retirement." It's a readable mix of text, graphs and well-sourced information that points frequently toward long-term care. Pre-retirees reading its 20-pages will not only get a better handle on the magnitude of the challenges they face, but also an encouraging tour of the manageable steps they can take.”

LTC Comment: We thank Center friend and Corporate member Steve Forman of Long-Term Care Associates for this resource tip.

Chapter 3: Unfunded Liabilities--Social Security, Medicare, Pensions and Budgets

National Health Expenditures

Health Affairs on National Health Expenditures for 2016 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2017.1299

See also LTC Bullet: So What If the Government Pays for Most LTC?, 2016 Data Update, Friday, December 8, 2017

Unfunded Liability Estimates

Heritage on Welfare 040518 URL: https://www.heritage.org/sites/default/files/2018-04/BG3294_4.pdf

4/5/2018, “Understanding the Hidden $1.1 Trillion Welfare System and How to Reform It,” by Robert Rector and Vijay Menon, Heritage Foundation Backgrounder

Quote: “The true cost of welfare or aid to the poor is largely unknown because the spending is fragmented into myriad programs. Current welfare is focused largely on increasing benefits and enrollments and redistributing income. Self-defeating behaviors that increase the need for assistance are rarely even mentioned. Policymakers should replace welfare’s current focus with a new set of interlinked goals: reducing self-defeating and self-limiting behaviors, increasing self-support, and improving true human well-being. Welfare reform should (1) require all able-bodied adult recipients to work or prepare for work as a condition of receiving aid, (2) remove the substantial penalties against marriage within the welfare system, and (3) fund programs aimed at improving behavior on a payment-for-outcome basis rather than today’s fee-for-service basis.”

LTC Comment: This fascinating report is a case study in the unintended consequence of well-intentioned, but perversely counterproductive public policy.

Chapter 6: Long-Term Care Financing

General

BPC-Health-Policy-Roadmap-For-Individuals-With-Complex-Care-Needs 0118 URL: https://bipartisanpolicy.org/wp-content/uploads/2018/01/BPC-Health-Policy-Roadmap-For-Individuals-With-Complex-Care-Needs.pdf

https://www.forbes.com/sites/howardgleckman/2018/01/31/a-new-publicprivate-long-term-care-financing-plan/#23370cc23b9b

1/31/2018, “A New Public/Private Long-Term Care Financing Plan,” by Howard Gleckman, Forbes

Quote: “Two years ago, the Long-Term Care Financing Collaborative proposed a public catastrophic long-term care insurance program. In effect, people would use private insurance, savings, or home equity to pay for the first few years of their care needs, then the government would pick up costs for people with true catastrophic needs. Today, two highly-respected long-term care experts offered an important refinement to that basic structure: A plan that ties the time period before insurance benefits are available to a person’s income. As a result, lower-income people could access new benefits sooner than higher-income people.”

LTC Comment: This new plan is more of the same old, same old. It calls for compulsory, payroll-funded, means-tested social insurance for long-term care supplemented by wrap-around private coverage that converts LTCI from real insurance, with all its benefits, to a kind of Medi-Gap policy, with all its drawbacks. What’s worse, it won’t work because it fails to address the real problem, easy access to Medicaid after the insurable event occurs. We’ll have more to say in a future LTC Bullet.

Cost of Care Surveys

PWC on Cost of Care 0318 URL: https://www.pwc.com/us/en/insurance/assets/pwc-insurance-cost-of-long-term-care.pdf

https://www.pwc.com/us/en/insurance/assets/pwc-insurance-cost-of-long-term-care.pdf

3/16/2018, “Formal Cost of Care,” by Stephen D. Forman, LTCA Weekly Reader

Quote: “Formal Cost of Care: Price Waterhouse Cooper analyzed 223,963 claims worth $14.8B of payments from carriers representing 72% of the inforce population to produce the report: "Formal Cost of Long-Term Care Services." It concludes the average lifetime cost of formal care (i.e., excluding informal services) is $172,000. As you can see from Figure 4, a quarter of the time, the cost is less than $26,000, while another quarter of the time it's over $240,000, and there's a 5% chance of exceeding $578,000. In Figure 5, we see that the largest cohort of policyholders incur claims under $50,000 (this is supported by Figure 7, not shown, which reports that 49% of claims are 1-yr or less). Should you download the 29-pg report, you'll find that males average 2.5 yrs on claim, while females average 3.4 yrs-- but 16% of women and 9% of men outlive their benefits. Meanwhile, non-cognitive claims average $140,000, while cognitive claims cost much more: $216,000 (and last 1 yr longer). There's more stuffed into this brief report than I can share here, but you should consider the PwC stats the most current on the subject.”

LTC Comment: Thanks to Steve Forman of Center-corporate-member LTCA for this excellent summary of the PWC findings.

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

NHE Estimates 2017-2026 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2017.1655

2/14/2018, “National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth,” by Gigi A. Cuckler, Andrea M. Sisko, John A. Poisal, Sean P. Keehan, Sheila D. Smith, Andrew J. Madison, Christian J. Wolfe, and James C. Hardesty, Health Affairs

Quote: “National health spending growth is expected to average 5.5 percent per year for 2017–26 and to reach $5.7 trillion by 2026 (exhibit 1). Over the same period, growth in the nation’s gross domestic product(GDP) is expected to be 4.5 percent per year. This 1.0-percentage-point differential is expected to result in an increase in the health share of the economy from 17.9 percent in 20161 to 19.7 percent in 2026.”

LTC Comment: We don’t need Ben Franklin to remind us spending beyond our means is problematical. But what’s really interesting about this iteration of CMS’s annual projection of the coming decade’s national health expenditures is that it doesn’t mention long-term care! Oh, you can find “home health care” and “nursing care facilities” in the detailed tables, but LTC isn’t highlighted for consideration in the analysis as in past years. Nevertheless, nursing facility care is expected to grow from 3% annually in 2013 to 5.3% by 2026, topping around $261 billion in expenditures by 2026. Likewise, home health care, rising 5.1% in 2013 will be going up 6.7% annually by 2026 to $172.6 billion. Dramatic numbers, but evidently not worth highlighting in CMS’s analysis.

Chapter 9: LTC Providers

HCBS: Cost-Effective or Not? (See also similar section under LTC Financing)

GAO on Medicaid ALFs 0218 URL: https://www.gao.gov/assets/690/689302.pdf

https://www.nytimes.com/

2/3/2018, “U.S. Pays Billions for ‘Assisted Living,’ but What Does It Get?,” by Robert Pear, New York Times

Quote: “Federal investigators say they have found huge gaps in the regulation of assisted living facilities, a shortfall that they say has potentially jeopardized the care of hundreds of thousands of people served by the booming industry. The federal government lacks even basic information about the quality of assisted living services provided to low-income people on Medicaid, the Government Accountability Office, a nonpartisan investigative arm of Congress, says in a report to be issued on Sunday. … Assisted living was not part of the original Medicaid program, but many states now cover it under waivers intended to encourage ‘home and community-based services’ as an alternative to nursing homes and other institutions.”

LTC Comment: In "The Sirens' Call, The Primrose Path, and Assisted Living," Assisted Living, April 2004, I warned “In a nutshell, as an industry leader told me once, ‘Medicaid demands Ritz Carlton care for Motel 6 rates while imposing a regulatory Jihad.’ The assisted living industry should keep that in mind before accepting more Medicaid money.” Evidently, those chickens are coming home to roost.

Chapter 10: Medicaid

Medicaid Spousal Impoverishment Tables

2018 SSI and Spousal Impoverishment Numbers URL: https://www.medicaid.gov/medicaid/eligibility/downloads/spousal-impoverishment/ssi-and-spousal-impoverishment-standards.pdf

See also LTC Bullet: Why Couples Worry So Little about Long-Term Care, Friday, December 15, 2017

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Updated, Tuesday, May 29, 11:32 AM (Pacific)

Seattle—

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LTC E-ALERT #18-021: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Private Pay Skilled Nursing Shouldn’t Be Ignored, Especially in Rural Areas
What the Hell Happened at GE?
How HSA savings can be used for long-term care in retirement
With death rate up, US life expectancy is likely down again
Now More Of Us Can Count On More Time Dodging The Dementia Bullet
The cost of long-term-care insurance keeps rising
Congress enacts bill to protect senior citizens from scam artists
Aging Baby Boomers are Continuing to Impact the Composition of the American Labor Force
Analysis: New Mexico Nursing Homes Worst in Nation
How to Age Well and Stay in Your Home
Why the pharmaceutical industry is giving up the search for an Alzheimer’s cure

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Updated, Friday, May 25, 2018, 11:06 AM (Pacific)

Seattle—

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LTC BULLET: LTC POLICY BLINDERS

LTC Comment: We explain why and how LTC policy analysts evade facts that contradict their predisposed positions in favor of compulsory government LTC insurance, after the ***news.***

*** LTC CLIPPINGS: Premium members of the Center for Long-Term Care Reform receive our daily LTC Clippings. These are brief emails, averaging two per work day, alerting them to critical LTC-related news, articles, reports or data they need to see ASAP. The idea behind our LTC Clippings is that people in the LTC financing foxholes need to spend more time doing what they do and less time sorting through the barrage of largely useless information on the internet. We have to review everything; you don’t. Let us screen the chaff and send you what you most need to see. Following is one example of an LTC Clipping this week. (We usually keep our “LTC Comment” briefer, but this one was irresistible.) To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

5/23/2018, “The cost of long-term-care insurance keeps rising,” by Walecia Konrad, CBS News

Quote: “Long-term-care insurance seemed like such a great idea. Buy a policy when you're in your 50s or 60s, while you're still relatively healthy, pay your monthly premiums and in return you'll have help managing the astronomical costs of a nursing home, assisted-living facility or personal aide when the time comes. … But long-term-care insurance hasn't exactly worked out that way.”

LTC Comment: This article, relatively more accurate than most of its ilk, has gotten wide play in the media. Ironically, the same problems it recounts besetting LTC insurance, a relatively small payer, also apply to Medicaid, the major LTC payer. For example: higher premiums for LTCI? Compare decades of exploding costs for Medicaid. Insurance actuaries underestimated LTC costs? Where were the Medicaid actuaries? Assisted living popularity caught LTCI carriers by surprise? Medicaid continues to expand ALF and HCBS coverage which people prefer with no end in sight. Low lapse rates hurt LTCI? Medicaid is the LTC default with no lapses possible to mitigate future costs. Low interest rates hurt LTCI? Imagine what will happen to Medicaid and all the entitlement programs when interest rates return to the norm and the federal government can’t afford the carrying costs for $21 trillion in debt, not to mention another $100 trillion or more of unfunded liabilities. If you think private LTC insurance disappointed, just wait until you see the inevitable outcome for its public sector alternatives. ***

LTC BULLET: LTC POLICY BLINDERS

LTC Comment: How to finance long-term care has bedeviled analysts, public officials, study commissions and families for decades. To little avail. Everyone knows the Rube Goldberg system we have now fails miserably. But no one agrees on how to change it for the better. So it persists.

Lately, however, a consensus is developing around the suggestion that the federal government should compel citizens to participate in a back-end, catastrophic LTC insurance system funded by mandatory payroll taxes. The latest iteration of this idea is “A New Public-Private Partnership: Catastrophic Public and Front-End Private LTC Insurance.”

Over the past three weeks, we have (1) refuted the arguments in that paper (LTC Bullet: Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding), May 4, 2018), (2) explained the consequences of the paper’s discounting Medicaid’s role in long-term care financing (LTC Bullet: LTC Evasion, May 11, 2018) and (3) critiqued the paper’s plan to solve problems created by government intervention by adding more of the same (LTC Bullet: Feder/Cohen Proposal Ignores LTC Problems’ Cause, May 18, 2018). In a nutshell, we’ve made the case that ignoring the evidence of Medicaid’s role in long-term care financing led these authors to propose a solution worse than the problem itself.

This week, we explain why and how these authors and others have dodged evidence they should have considered leading them to (1) discount Medicaid’s role and (2) conclude more government intervention is the answer. The following is from “How to Fix Long-Term Care Financing,” published by the Foundation for Government Accountability and the Center for Long-Term Care Reform in July 2017.

Why Do Analysts Wrongly Claim Medicaid Long-Term Care Eligibility Requires Impoverishment?

If people with substantial assets and income can, and do, receive Medicaid-financed long-term care benefits, why do so many analysts say that Medicaid requires impoverishment? The answers lie in a confusion of key concepts and the use of ambiguous language to explain them.

First, analysts wrongly claim Medicaid requires impoverishment because they equivocate on the meaning of “impoverishment.”

Medicaid long-term care eligibility requires inadequate cash flow, i.e. insufficient income, to cover all an individual’s medical and long-term care costs. But it does not require low income, low assets, or financial destitution. Even so, statements like these abound:

Medicaid (the federal-state health care program for the poor) covers long-term care costs for individuals below certain income levels, but the deductible for Medicaid is nearly all of an individual’s income and assets. As a result, Medicaid is the long-term care coverage of last resort for those with no assets.⁴⁸

Medicaid is a means-tested welfare program, and eligibility is limited to people who are poor or become poor after incurring high medical and long-term services and supports expenses, and who have very low levels of assets.⁴⁹

The right conclusion to reach about Medicaid’s role in long-term care financing is that it substantially ameliorates the risk and cost of long-term care, not that it impoverishes people. In the absence of Medicaid, if people truly had to bear the entire cost of long-term care, impoverishment would prevail, reverse mortgages would consume home equity to fund care, Medicaid long-term care expenditures would decline substantially, and many more people would plan, save, invest, and insure for long-term care risk and cost.

Those are not reasons to eliminate or replace Medicaid but rather reasons to target the program to its originally intended recipients — the truly needy — and to increase both positive and negative incentives for the middle and upper classes to prepare for long-term care and avoid Medicaid dependency.

Second, analysts wrongly claim Medicaid requires impoverishment because they equivocate on the meaning of “spend down.”

Real asset spend down comes from expending income and savings for care before applying for Medicaid benefits. Artificial spend down comes from divesting or sheltering wealth by legal or other means to qualify for Medicaid. An expansive legal literature on methods to qualify for Medicaid while preserving wealth began in 1981, immediately after the first restriction on asset transfers was imposed in the Omnibus Reconciliation Act of 1980. It continues today.⁵⁰ A 2012 article on preserving wealth through Medicaid planning describes the strategy this way:

Medicaid planning may be defined as the process of effectively accessing government resources to pay for long-term health care of a disabled person in the manner that is least financially disruptive to the wellbeing of the person’s spouse and family. These government resources derive primarily from Medicaid.⁵¹

The ability to access “government resources to pay for long term health care” in order to preserve the “wellbeing of the person’s spouse and family” sounds highly desirable. Who wouldn’t take advantage of such resources when faced with catastrophic long-term care expenses? In fact, why would anyone plan for long-term care expenses when such an option is available after expensive care is needed and the cost is no longer insurable privately? The reality is that public policy incentives like these discourage early and responsible planning for long-term care and result in excessive Medicaid dependency and cost.

Despite this reality, economists and health policy analysts who write about Medicaid and long-term care financing rarely mention that Medicaid eligibility can be achieved by means other than paying cash for long-term care services. A common error is to claim falsely that Medicaid asset spend down must be done by purchasing medical or long-term care services.

Medicaid requires applicants to spend down their income on medical and long-term care costs to reach allowable income limits. But Medicaid does not require applicants to spend down their assets on medical or long-term care services to reach allowable asset limits. Assets may be divested or spent down in exchange for any exempt product or service without reducing eligibility so long as fair market value is received in the exchange. Spending down one’s income may hurt financially, but spending down one’s assets can be financially painless.

Nevertheless, analysts often refer to asset spend down as though it refers to spending savings on long-term care. For example, an otherwise excellent article by a well-regarded economist on the influence of Medicaid estate recovery on wealth accumulation and decumulation states that “spend-down of assets occurs as individuals are required to contribute liquid resources toward the cost of their care until the typical state threshold of $2,000 is reached.”⁵²

Third, analysts wrongly claim Medicaid requires impoverishment because they equivocate on the meaning of “Medicaid planning.”

Analysts seldom cite the extensive legal literature on Medicaid planning nor acknowledge the omnipresent information on Medicaid planning in the popular media and on the internet.⁵³ Instead, when writing about decumulating wealth to qualify for Medicaid, they usually assume and imply that the money is used to purchase long-term care rather than being divested, diverted, or sheltered to achieve eligibility. This ignores Medicaid’s lenient income and asset eligibility criteria that allow people with substantial resources to qualify for long-term care benefits; it ignores the fact that Medicaid rules do not require that assets be spent down for long-term care services; and it evades the reality that information on ways to qualify for Medicaid without paying for care is universally available.

In the rare instance where analysts consider the possibility that people might qualify for Medicaid without spending down wealth, they tend to write only about “asset transfers” without considering other Medicaid planning methods and they often misrepresent the arguments of those seeking to preserve resources for the truly needy.^54-56

Asset transfers are very expensive for taxpayers, crowding out resources for the most vulnerable. Transferring assets may have increased Medicaid spending by as much as $1.5 billion in 2014 alone.^57-58 But focusing only on asset transfers ignores the more widely practiced techniques of Medicaid planning. Indeed, asset transfers are only the tip of the Medicaid planning iceberg.

Routine practices of eliminating countable assets by converting them into exempt assets, setting up caregiver agreements, employing Medicaid-friendly annuities, or making use of trusts, spousal refusal, or even divorce are far more common than asset transfers. Elder law specialists not only describe these techniques in the estate planning literature but frequently encourage their use.

Unfortunately, analysts rarely consult and almost never cite this legal scholarship, despite its direct relation to the topic at hand. By focusing only on asset transfers, they overlook the far more extensive and costly forms of Medicaid planning.

(See the supplemental bibliography in Appendix I of “How to Fix Long-Term Care Financing” for numerous examples of Medicaid planning techniques that are not based on transferring assets.)

Fourth, some analysts wrongly claim that Medicaid requires impoverishment because they equivocate on the meaning of “out-of-pocket” expenditures for long-term care by claiming they are higher than they really are.

Some analysts say the out-of-pocket share of long-term care expenditures has skyrocketed to more than 50 percent.⁵⁹ But they arrive at that figure by including room and board expenses in residential care settings — costs that people would incur whether they need long-term care or not — and by excluding Medicare post-acute care expenditures from the total even though Medicare’s relatively generous nursing home and home care reimbursements are the only thing enabling Medicaid to pay long-term care providers less than the cost of providing the care to a majority of long-term care patients.⁶⁰

In reality, the proportion of long-term care expenses paid by taxpayers has been rising and the proportion paid by families has been declining for half a century. When Medicaid first started paying for long-term care in the late 1960s, out-of-pocket expenditures were very high – upwards of half of all nursing home expenditures. Since then, Medicaid and Medicare spending have increased rapidly and dramatically. Out-of-pocket expenditures declined to around one-fourth of total long-term care expenditures. But even that low figure is misleadingly high because roughly half of it is not savings being spent down as often implied but Social Security and other income being “spent-through” by people already on Medicaid to offset Medicaid’s cost of care as federal law requires.⁶¹ To this day, upwards of 85 to 90 percent of nursing home expenditures are accounted for without dipping into personal savings and only 8.9 percent of formal home health care costs were paid out of pocket.⁶²

Nevertheless, analysts continue to argue that out-of-pocket long-term care expenditures are higher than they really are in order to justify new, government-funded long-term care financing programs.

Fifth, analysts wrongly claim Medicaid requires impoverishment because they rely on data, much of it faulty, from HRS and AHEAD surveys.

When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. These surveys have information on home values, automobile ownership, liquid assets, farms and other businesses, retirement accounts, and other assets.⁶³

Noteworthy is the fact that each of these financial holdings is either expressly exempt under federal law or easily converted into an exempt asset for purposes of Medicaid long-term care eligibility. For example, between $572,000 and $858,000 of home equity is exempt from eligibility limits, depending on the state.

Additional real estate such as vacation homes may easily be made exempt. As one Medicaid planning attorney explains in his newsletter, a spouse could take out a loan in the amount of the second home’s equity to “reduce its effective value to $0” and then spend the borrowed money on home improvements or invest it in other exempt resources.⁶⁴ Another estate planner explained that a couple with a second vacation home could simply rent its own home and claim the rental income as necessary for the spouse’s maintenance needs, converting it into a non-countable resource.⁶⁵

One automobile is exempt regardless of value so long as it is used at least occasionally for the benefit of the Medicaid recipient. Liquid wealth such as bank accounts or securities may be converted from countable to non-countable status by purchasing exempt assets. These strategies typically involve converting countable assets into home equity, a new car, household items, travel, funeral expenses, or burial plots.⁶⁶

Farms and other businesses, including their capital and cash flow of unlimited value, are exempt without any dollar limit.⁶⁷

Tax-deferred retirement accounts, including IRAs, Keoghs, and 401(k)s are exempt if the holder is receiving a regular payout.⁶⁸ Such payouts are required by the time an individual reaches 70.5 years old, though may begin as early as 59.5 years old.

HRS/AHEAD Data are highly questionable.

While the HRS and AHEAD surveys provide the most reliable longitudinal data currently available, they are far from foolproof. One expert found significant data quality issues in the surveys due to “measurement errors in the data, particularly those arising from item nonresponse and from inaccurate respondent reports of the ownership and level of assets.”⁶⁹ He concluded that the survey data make it “difficult to reach consensus among research studies” because “each author must arbitrarily decide whether to exclude, censor, or impute particular observations.”⁷⁰ Other researchers have noted similar limitations, explaining that “information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility.”⁷¹ Given these facts, these surveys provide a dubious foundation on which to generalize about long-term care financing policy.

Furthermore, there are many reasons why survey respondents and their representatives might fail to report income and assets to surveyors or even purposefully misrepresent the facts. People who have reconfigured their wealth to qualify for public welfare benefits may be ashamed of having done so or simply unaware that their heirs did this on their behalf. Seniors reporting on themselves may be cognitively impaired or intimidated by self-interested family members. Heirs who benefit from preserving parents’ estates may prefer to conceal the facts. Lawyers who do Medicaid planning are protected from disclosure by attorney/client privilege, while long-term care providers and Medicaid eligibility staff, who often know which wealthy locals are taking advantage of Medicaid, cannot disclose the information because of legally enforced confidentiality. Getting to the truth in such matters is extremely difficult.

Finally, the HRS/AHEAD surveys pose the wrong questions regarding wealth transfer and do not address the larger issue of Medicaid planning at all. They typically ask if the respondents gave financial help worth more than $500 to any children, not counting shared housing or food costs, within the preceding two years.⁷² But there are several problems with this question. Transfers of assets relevant to qualifying for Medicaid long-term care benefits are not necessarily done to provide “financial help” to children. Looking back only two years is insufficient, as Medicaid has a look-back period of five years. Finally, focusing as narrowly as the question does on asset transfers ignores the much larger issue of other sophisticated Medicaid planning tactics.⁷³

Sixth, analysts wrongly claim Medicaid requires impoverishment because they do not ask the people who know the truth.

Besides passing over the formal legal literature on Medicaid planning, long-term care scholars have paid little attention to the voluminous testimony of Medicaid staff, financial advisors, Medicaid planners, consumers and long-term care providers about the ease and impunity with which middle and upper-class individuals take advantage of Medicaid long-term care benefits. In the 1990s, The Gerontologist published several articles quoting these sources on that topic, but very little such information has found its way into the peer-reviewed literature since.⁷⁴ Despite this absence, popular media abound with such examples.

Since 1998, for example, the Center for Long-Term Care Reform has published 144 articles about Medicaid planning.⁷⁵ Unfortunately, most academic scholars either do not read such material or they think they can ignore anything in it, however conclusive, that contradicts the conventional scholarly wisdom about long-term care financing. Unfortunately, such arrogance has significant consequences not only for taxpayers but ultimately for the truly needy. After all, every dollar spent on Medicaid benefits for middle-class and affluent seniors is a dollar that cannot be spent on the truly vulnerable.

Closing LTC Comment: Why don’t analysts consider the overwhelming evidence about Medicaid’s true LTC financing role? Because taking it into account would overturn their arguments in favor of government control of long-term care financing. How do they evade germane facts? By equivocating on key concepts, relying on highly questionable survey data, and ignoring evidence that contradicts their ideologically biased preferences. Most galling is their casual sophistry, such as brushing off solid proof of Medicaid planning abuse because “no one wants to go on Medicaid,” as Judith Feder claims. Hello. When all your options have run out; when it’s too late to plan, save or insure for long-term care; when you’re facing high expenditures for LTC; when your heirs step in to take early inheritances leaving you dependent on public welfare; you better believe Medicaid becomes very attractive and most people do want it at that stage. In fact, that’s why we’re in the mess we’re in. Evading this reality only sinks us deeper in. We’ll make no real progress to improve LTC services and financing until analysts take their policy blinders off and cope honestly with the truth.

(In the following footnotes, you will find examples of the evasion and misrepresentation of facts that I’ve alleged above with links to articles in which I’ve critiqued those sources. See especially footnotes # 48, 49, 54, 55, 56, 57, 59, and 75.)

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⁴⁸ Sudipto Banerjee, "Effects of Nursing Home Stays on Household Portfolios," EBRI Issue Brief, no. 372, June 2012, p. 4; http:// www.ebri.org/pdf/briefspdf/EBRI_IB_06-2012_No372_NrsHmStys.pdf. Critiqued in S. Moses, "LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News," July 20, 2012; http://www.centerltc.com/bullets/ archives2012/966.htm
⁴⁹ Joshua M. Wiener, et al., "Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform: Final Report," prepared for the SCAN Foundation by RTI International, Research Triangle Park, North Carolina, March 2013, p. 1; http://www.thescanfoundation.org. Critiqued in S. Moses, "LTC Bullet: Medicaid Spend Down that Isn't and Why it Matters," July 19, 2013; http://www.centerltc.com/bullets/archives2013/1007.htm
⁵⁰ Generally recognized as the first published law journal article on Medicaid planning is William G. Talis, "Medicaid as an Estate Planning Tool," Massachusetts Law Review, Spring 1981, p. 94. See the online bibliography for quotations from this article.
⁵¹ Sean R. Bleck, Barbara Isenhour, and John A. Miller, "Preserving Wealth and Inheritance Through Medicaid Planning for Long-Term Care," MSU Journal of Medicine and Law, 17 Mich. St. U. J. Med. & L. 153 2012, p. 155
⁵²Nadia Greenhalgh-Stanley, "Medicaid and the housing and asset decisions of the elderly: Evidence from estate recovery programs," Journal of Urban Economics 72 (2012), p. 211; http://econpapers.repec.org/article/eeejuecon/ v_3a72_3ay_3a2012_3ai_3a2_3ap_3a210-224.htm
⁵³ Do an internet search for "Medicaid planning in [your state]" to find dozens of law firms advertising their Medicaid planning services.
⁵⁴ Ellen O'Brien, "Medicaid's coverage of nursing home costs: Asset shelter for the wealthy or essential safety net?," Georgetown University Long-Term Care Financing Project Issue Brief, May 2005, p. 2; http://www.canhr.org/reports/2005/ nursinghomecosts.pdf. Critiqued in S. Moses, "LTC Bullet: Where There's Smoke, There's Fire," May 18, 2005; http://www. centerltc.com/bullets/archives2005/558.htm
⁵⁵ Joshua M. Wiener, et al., "Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform: Final Report," prepared for the SCAN Foundation by RTI International, Research Triangle Park, North Carolina, March 2013, p. 9; http://www.thescanfoundation.org. Critiqued in S. Moses, "LTC Bullet: Medicaid Spend Down that Isn't and Why it Matters," July 19, 2013.
⁵⁶ S. Moses, "LTC Bullet: Where There's Smoke, There's Fire," Wednesday, May 18, 2005; http://www.centerltc.com/bullets/ archives2005/558.htm "Other researchers have offered estimates of the prevalence of Medicaid estate planning that vary greatly, ranging from 5% to 54% of Medicaid beneficiaries. Burwell and Crown (1995) estimated that 5% to 10% of unmarried applicants and 20% to 25% of married applicants transfer wealth to qualify for Medicaid. The estimates of the Minnesota Department of Human Services (1996) and GAO (1993) are 22% and 54%, respectively. Walker and colleagues (1999) also estimated the rate of Medicaid estate planning at 25% to 50%." Jinkook Lee, Hyungsoo Kim, and Sandra Tanenbaum, "Medicaid and Family Wealth Transfer," Gerontologist, Vol. 46, No. 1, 2006, p. 8.
⁵⁷ Timothy Waidmann and Korbin Liu, "Asset Transfer and Nursing Home Use: Empirical Evidence and Policy Significance," The Urban Institute, Washington, DC, April 2006; http://kff.org/medicaid/issue-brief/asset-transfer-and-nursing-home-use-empirical/. Critiqued in S. Moses, "LTC Bullet: Kaiser Cover-Up Continues," April 27, 2006; http://www.centerltc.com/bullets/ archives2006/630.htm
⁵⁸ Total FY 2014 long-term care expenditures come from Steve Eiken, et al., "Medicaid Expenditures for Long-Term Services and Supports (LTSS) in FY 2014," Contract No. HHSM-500-2010-00026I, between Mathematica Policy Research, Inc. and the Centers for Medicare & Medicaid Services (CMS), under which project Truven Health Analytics was a subcontractor, p.3, April 15, 2016; https://www.medicaid.gov/medicaid/ltss/downloads/ltss-expenditures-2014.pdf
⁵⁹ Melissa Favreault and Judith Dey, "Long-Term Services and Supports for Older Americans: Risks and Financing," USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief, July 1, 2015, revised February 2016, p.5; https://aspe.hhs. gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief. Critiqued in S. Moses, LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015; http://www.centerltc.com/ bullets/archives2015/1094.htm
⁶⁰ "Nursing centers rely heavily on two public programs, Medicare and Medicaid, to pay for the services they provide to most of their patients. The rates paid by states for Medicaid do not adequately reimburse the actual costs incurred by providers, resulting in a major disconnect between payment levels and the needs of the patients. Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year's projected shortfall of $21.20." ELJAY, LLC & Hansen Hunter & Company, PC, "A Report on Shortfalls in Medicaid Funding for Nursing Center Care," American Health Care Association, Washington, D.C., April 2016, p. 1; https://www.ahcancal.org/
⁶¹ People in nursing homes on Medicaid are required to contribute all of their income, except for a small personal needs allowance, to offset Medicaid's cost for their care.
⁶² See S. Moses, "LTC Bullet: So What If the Government Pays for Most LTC?, 2015 Data Update," December 6, 2016; http://www. centerltc.com/bullets/latest/1159.htm
⁶³ De Nardi M, French E, Jones JB. Medicaid insurance in old age. Am Econ Rev. 2016;106(11):3480-520
⁶⁴ Michael Gilfix, "Practice Tip: Protect Non-Residential Real Property and Medi-Cal," Gilfix ElderLaw News Alert, Vol. VII, No. 1, February 1997, p. 3
⁶⁵ John J. Regan, Tax, Estate & Financial Planning for the Elderly, Matthew Bender, New York, 1991, 1993 update, p. 10-68
⁶⁶ Lawyers Weekly, September 27, 1993
⁶⁷ Rebecca L. Shandrick, "The Family Business: An Exempt Resource for Medicaid Eligibility," The ElderLaw Report, Vol. 4, No. 3, October 1992, pps. 1-4, emphasis in the original.
⁶⁸ ElderLawAnswers, "Can an IRA Affect Medicaid Eligibility?," article last modified 03/17/2015, cited May 10, 2017; http:// www.elderlawanswers.com/can-an-ira-affect-medicaid-eligibility-14544. The relevant Social Security Administration, Program Operations Manual System (POMS) reference is "SI 01120.210 Retirement Funds," https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120210. Nevertheless, Warshawsky and Marchand found that roughly two-thirds of retirement assets, such as IRAs, are counted in determining Medicaid eligibility. Mark J. Warshawsky and Ross A. Marchand, "Improving the System of Financing Long-Term Services and Supports for Older Americans," Mercatus working paper, Mercatus Center, George Mason University, Washington, DC, January 2017, p. 27; https://www.mercatus.org/system/files/mercatus-warshawsky-marchand-ltss-v2.pdf.
⁶⁹ Steven F. Venti, "Economic Measurement in the Health and Retirement Study," Dartmouth College and NBER, January 21, 2011, p. 3; https://www.degruyter.com/view/j/fhep.2011.14.issue-3/1558-9544.1273/1558-9544.1273.xml
⁷⁰ Ibid., p. 4.
⁷¹ Joshua M. Wiener, et al., "Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform: Final Report," prepared for the SCAN Foundation by RTI International, Research Triangle Park, North Carolina, March 2013, p. 50; http://www.thescanfoundation.org/
⁷² Jinkook Lee, Hyungsoo Kim, and Sandra Tanenbaum, "Medicaid and Family Wealth Transfer," Gerontologist, Vol. 46, No. 1, 2006, p. 9; https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1450010/
⁷³ Ibid., p. 12
⁷⁴ Examples include Stephen A. Moses, "The Fallacy of Impoverishment," Gerontologist, Vol. 30, No. 1, 1990; http:// gerontologist.oxfordjournals.org/content/30/1/21.abstract Leslie Walker, Cynthia Gruman, and Julie Robison, "Medicaid Estate Planning: Practices and Perceptions of Medicaid Workers, Elder Law Attorneys, and Certified Financial Planners," Gerontologist, Vol. 38, No. 4, 1998, pps. 405-411; http:// gerontologist.oxfordjournals.org/content/38/4/405.full.pdf Leslie Walker, Cynthia Gruman, and Julie Robison, "Medicaid Eligibility Workers Discuss Medicaid Estate Planning for Nursing Home Care," Gerontologist, Vol. 39, No. 2, 1999, pps. 201-208; http://gerontologist.oxfordjournals.org/content/39/2/201.full. pdf
⁷⁵ Find 144 articles on Medicaid planning here: http://www.centerltc.com/bullets/subject.htm#medicaid_plan

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Updated, Monday, May 21, 2018, 10:02 AM (Pacific)

Seattle—

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LTC E-ALERT #18-020: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

What the growing wealth gap could mean for senior living
Survival for the Sandwich Generation: Navigating the hidden costs for working caregivers
Improving Long-Term Care Insurance Rate Increase Communications
The Hidden Costs Of Caregiving
Leaders Declare Senior Care Staffing Crisis in Texas Amid 97% Turnover
National summit leads to 700 dementia recommendations
How to Protect Yourself and Your Family From Long-Term Care Insurance Scams
AP-NORC Poll: Young adults feel stress of long-term care
‘Simple test’ improves dementia prediction rates
Fewer Americans Are Delaying Major Life Events Because of Money Worries
Why Yelp Could be Superior to Five-Star Ratings for Nursing Homes
Nancy Pelosi wrong on Medicaid's role for children, elderly

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Updated, Friday, May 18, 2018, 10:58 AM (Pacific)

Seattle—

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LTC BULLET: FEDER/COHEN PROPOSAL IGNORES LTC PROBLEMS’ CAUSE

LTC Comment: We explain how government intervention caused the dysfunctions in long-term care that Feder/Cohen seek to correct with more government intervention, including institutional bias, poor access and quality, excessive dependency on family caregiving, inadequate financing, and lack of insurance, after the ***news.***

*** WATCH “MY MILLION DOLLAR MOM” MOVIE: Ross Schriftman reports “I am so pleased to tell you that the time has finally come. The ‘My Million Dollar Mom’ short film is now available for you to enjoy right from our website at www.mymilliondollarmom.com. To see our film, you can watch the 2-minute trailer and then click the button to buy the film through Vimeo. You will be asked to ‘join’ Vimeo (if you haven't already) which simply means you enter your email and create a password. Then you can purchase the film [for $4.95] and keep it in your personal Vimeo library so you can watch whenever you want. You can also sign up for email updates on our progress.” ***

LTC BULLET: FEDER/COHEN PROPOSAL IGNORES LTC PROBLEMS’ CAUSE

LTC Comment: “If you are unable to understand the cause of a problem, it is impossible to solve it.” – Naoto Kan

“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein

That’s good advice that Judith Feder, Marc Cohen and Melissa Favreault ignored in their recent proposal for LTC financing reform: “A New Public-Private Partnership: Catastrophic Public and Front-End Private LTC Insurance.”

They tell us “Current U.S. policy toward the financing of long-term services and supports (LTSS) underserves people who need care, overburdens families who care for them, and strains state budgets supporting Medicaid services when personal resources fall short. The fundamental LTSS financing problem is the absence of an effective insurance mechanism to protect people against the costs of extensive LTSS they may require over the course of their lives.” (p. i)

All right, but why? Blank out. They say nothing about how these problems came to exist or why they persist so intractably. Instead, these advocates proceed immediately to prescribe a complex, top-down, payroll-financed, heavily bureaucratic and compulsory new government LTC program. This is folly.

We’ve already explained that Feder/Cohen’s fundamental error was discounting Medicaid’s role in LTC financing (“LTC Bullet: Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding))” and we addressed the consequences of their evading that reality (“LTC Bullet: LTC Evasion”).

Let’s consider today the diametrically different conclusions and recommendations one reaches by analyzing and understanding the problems of LTC service delivery and financing first before proposing solutions.

The following is adapted and updated from a series of seven “briefing papers” we published in 2012 titled “How to Fix Long-Term Care.”

Briefing Paper #1: The History of Long-Term Care Financing, or How We Got Into This Mess

The Status Quo

Long-term care (LTC) service delivery and financing in the United States are fraught with problems. Families provide most LTC for free, but suffer enormous financial and emotional strain. We have too many nursing homes and not enough home care. Medicaid and Medicare pay for most expensive LTC, but they are short of funds. LTC is a high probability and very expensive, yet too few people save or insure against the risk. Many end up as dual eligibles, the most costly of Medicaid's and Medicare's beneficiaries. Access to LTC and quality of care are always in doubt. Capital is in short supply to build, operate and maintain LTC facilities or to support home care services. Bankruptcies and closures loom. Yet America's demographic age wave is only beginning to crest.

What Should We Do?

This is the first question most people [including Feder/Cohen] ask, but it is the wrong question. To address the dysfunctional status quo without first examining why it exists can lead to more of the same expensive interventions that have already failed. For example, here’s the typical academic’s approach to address these problems:

Free care stresses families? Subsidize them. Too little home care? Make Medicaid buy more. Medicaid and Medicare lack funds? Tax and spend more. LTC insurance is unpopular? Subsidize it. Too many dual eligibles? Manage them better. Access and quality problems? Hire more surveyors and increase penalties. Too little capital and investment? Offer tax incentives (more tax expenditures). Bankruptcies threatening? Increase reimbursements. Can't afford boomers' entitlements? Borrow more. Bottom line: Find yourself in a hole? Dig faster. Keep doing what you’ve always done and hope for a different result.

The Right Question

Lincoln said: "If we could first know where we are and whither we are tending, we could better judge what to do and how to do it." (House Divided Speech, 1858) Faced with any problem, the right question to ask first is: How did we get into this mess? Otherwise, we run the risk of doing more of what caused the problem in the first place. Before we propose LTC solutions, we should ask "How did long-term care come to be the way it is today?"

History of LTC Financing or How We Got Into This Mess

By 1965, most of the 20th century's life span extension had already occurred. People lived longer and died slower often from the chronic illnesses of old age. Increasing numbers lived long enough to need LTC. Medicaid began to pay for nursing home care. Initially, the new program had no penalty for transferring assets to qualify and no requirement for recovery of benefits paid from recipients' estates. Virtually anyone could qualify easily for Medicaid-financed LTC.

Several things happened as a result. The public placed aging parents in nursing homes paid for by the government instead of paying for home care themselves. The nursing home industry expanded to take advantage of the new government funding source. Thus began the heavy use of nursing homes or "institutional bias," the lack of a privately financed home and community-based services market, and the absence of private LTC financing alternatives, such as home equity conversion or LTC insurance.

The 1970s

Political satirist P.J. O'Rourke says "If you think health care is expensive now, just wait until it's free." With nursing home care virtually free, Medicaid LTC expenditures exploded, rising from $900 million in 1970 to $7.1 billion in 1980. In response, government capped the bed supply by requiring "certificates of need" before new nursing homes could be built. Medicaid could not be charged for beds that didn't exist went the reasoning.

But limiting their ability to expand gave existing nursing homes a government-enforced monopoly. To compensate for limits on growth, they began charging Medicaid higher rates. Government responded by capping the rates nursing homes could charge. This was the origin of "cost shifting," which resulted from the differential between low Medicaid reimbursement rates (about 2/3 of private-pay rates) and much higher private-pay rates (about 1.5 times the Medicaid rate on average).

The 1980s

With nursing home supply and prices capped, and few controls on Medicaid LTC eligibility, demand soared. Costs continued to explode, rising from $7.1 billion in 1980 to $16.4 billion in 1990. Unable to build more beds or charge Medicaid more, nursing homes cut corners on quality to make ends meet.

By the mid-1980s, reports of dismal conditions in America's nursing homes led to Congressional action. The Omnibus Budget Reconciliation Act of 1987 required nursing homes to improve care or face legal and financial penalties. But OBRA '87 provided no extra Medicaid funds to finance the mandated improvements.

Caught now between the rock of inadequate reimbursement and the hard place of mandatory quality, nursing homes started suing state Medicaid programs for higher reimbursements. They won most of these lawsuits based on the 1981 "Boren Amendment" which required Medicaid to pay at least minimally adequate rates. But Congress repealed Boren in 1997 leaving no floor underneath Medicaid nursing home reimbursements.

The 1990s

Several cross currents developed in the 1990s, as Medicaid nursing home expenditures continued to rise from $16.4 billion in 1990 to $31.9 billion in 2000. Private payers declined as people, enticed by free or subsidized Medicaid benefits, found more and more creative ways to qualify for the program. Out-of-pocket expenditures fell from 49.5% of nursing home revenues in 1970 to 32.5% in 2000, while Medicaid's share of costs increased from 23.3% to 37.4% in the same period.

Starting with the Tax Equity and Fiscal Responsibility Act of 1982 and continuing through the Deficit Reduction Act of 2005, the federal government tried to restrain the growth of Medicaid LTC expenditures by closing income and asset eligibility loopholes and by mandating recovery from recipients' estates. Briefing Paper #3 in this series, on "Medicaid Planning for Long-Term Care," covers those developments in detail and explains their failure to restrain costs significantly.

Simultaneously, throughout the 1990s and up to the current day, state and federal policy makers, encouraged by academic researchers, have argued that Medicaid can reduce costs by "rebalancing" from nursing home care to home and community-based services (HCBS). Briefing Paper #4 in this series, on "Rebalancing Long-Term Care," explains that Medicaid's combined nursing home and HCBS expenditures have continued to increase in every state despite efforts to rebalance. This trend will continue absent restraints on Medicaid's generous eligibility criteria, which are described in Briefing Paper #2, titled "Medicaid Long-Term Care Eligibility."

The 2000s

A strong economy during the late 1990s, with lower welfare rolls and higher tax revenues, deflected political attention from Medicaid's growing role as the dominant LTC payer for most Americans. After 9/11, the internet bubble's collapse and the ensuing recession, state and federal officials began to worry about Medicaid LTC again and more than ever.

In the first decade of the new century, Medicaid nursing home expenditures moderated somewhat growing only 41.1% from $31.9 billion in 2000 to $45.0 billion in 2009. Total LTC costs did not decline, however, because Medicaid's home health care expenditures soared 113% from $11.5 billion in 2003 to $24.3 billion in 2009.

Meanwhile in the Deficit Reduction Act of 2005, the federal government tried to restrain Medicaid LTC growth by tightening eligibility criteria and encouraging the purchase of private long-term care insurance. In the same legislation, however, it made qualifying for Medicaid more attractive than ever by encouraging the program to offer more of the home care benefits people prefer and less of nursing home care they'd rather avoid.

Today

The preceding thumbnail history of long-term care services and financing answers the key question we posed at the beginning: How did we get into this mess? It suggests that our search for solutions should look in a different direction than increasing government intervention and financing, which clearly has not worked. For example:

Do families provide most LTC for free, but suffer enormous financial and emotional strain? Medicaid crowded out a market for affordable home and community-based services and discouraged private financial products to pay for them by subsidizing nursing home care.

Do we have too many nursing homes and not enough home care? Medicaid made nursing home care free in 1965, leaving lighter care the responsibility of families and making nursing homes the dominant venue for custodial care.

Are Medicaid and Medicare short of funds for LTC? By paying for most expensive LTC since 1965, these public programs exploded in cost while discouraging other venues for care and hampering potential private sources of payment.

Do few people save or insure against the high risk and cost of LTC? Easy access to Medicaid benefits after the insurable event occurred desensitized the American public to LTC liability resulting in their failure to plan early to save, invest or insure for LTC.

Do too many people end up as dual eligibles, the most costly of Medicaid and Medicare beneficiaries? Medicaid's home equity exemption, which was unlimited until 2006 and is still at least $572,000 [as of 2018], prevented the use of home equity to fund LTC privately which could have delayed or prevented Medicaid dependency altogether for many duals.

Are access to LTC and quality of care always in doubt? By dominating long-term care financing and paying too little to ensure quality care, Medicaid created a serious drag on access and quality.

Do we lack adequate capital to build, operate and maintain LTC facilities or to support home care services? Capital migrates to its highest and best use. Because of Medicaid's low reimbursement rates, profitability in the LTC sector is too low to attract enough investment capital.

Do LTC bankruptcies and closures loom? Medicaid's easy availability and low reimbursement rates caused cost shifting from public to private patients who gradually converted to Medicaid in large numbers leaving LTC providers without adequate revenue.

The Future

Medicaid's heavy spending on LTC services created a perverse incentive that discourages responsible LTC planning and private financing. Government spending and interference in the LTC financing market caused the problems the system faces. More government spending and interference will exacerbate rather than ameliorate these problems.

Most measures currently under consideration to improve LTC services and financing, such as subsidizing family caregivers, rebalancing to more desirable home care services, and offering tax incentives for private insurance or investment, would increase public expenditures just when they need to be reduced. [Let us add the new Feder/Cohen proposals for higher payroll taxes to fund compulsory public LTC insurance to the list of potential counterproductive government interventions.]

America's demographic age wave is only beginning to crest. Soon it will crash as 76 million baby boomers retire, stop paying payroll taxes, and start drawing benefits from entitlement programs that are already facing unfunded liabilities in the trillions of dollars. The question we should be asking now is "How can we preserve Medicaid as a quality safety net for people in need while reducing instead of increasing the program's LTC expenditures? The remainder of these Briefing Papers will explain how that can be done.

LTC Comment: To summarize, ignoring how long-term care services and financing became so dysfunctional led Feder and Cohen to propose more of the same kind of government interference that created those problems in the first place. This outcome is potentially even more tragic than it is ironic. Implementing their recommendations would make long-term care services worse, financing less, and the human tragedy graver. Ironically, doing the opposite, reducing government interference in long-term care, by targeting Medicaid to the truly needy and using some of the savings to incentivize responsible LTC planning, would improve and expand long-term care services, enhance private sources of funding, and finally relieve the caregiving burden on families and loved ones.

See the aforementioned “Briefing Papers” and “How to Fix Long-Term Care Financing” for a fuller exposition of these arguments, conclusions and recommendations.

Next week: why analysts like Feder, Cohen and Favreault wrongly claim Medicaid LTC requires impoverishment, which mistaken claim results in their making such potentially disastrous policy recommendations. Are they blinded by ideology? Do they rely on faulty data from the HRS and AHEAD surveys? Is it confusion, contempt or fear that prevents them from considering evidence that contradicts their assumptions? All of the above? Don’t miss the exciting conclusion of our LTC Bullet series critiquing the Feder/Cohen/Favreault proposals.

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Updated, Monday, May 14, 10:42 AM (Pacific)

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LTC E-ALERT #18-019: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Report Says Medicare Health Plan Tool Needs Major Overhaul
Death rate from falls increases 31% over 9 years
Why Families Need a Plan for Caregiving
A proposal to enhance competition and reform bidding in the Medicare Advantage Program
Official Gives Hints About Medicare Advantage LTC Benefits
Britain 'should learn from Japan' when it comes to care of the elderly
Maybe Traditional Medicare Should Cover Chronic Care: Hearing Witnesses
Financial abuse against the elderly most often committed by those closest to them
Nearly 25% of Americans Over 85 Need Personal Care
Even Mild Concussion Tied to Greater Dementia Risk Later
Obesity soars among long-stay nursing home residents
'Mass chaos': 37,000 nursing home eviction notices prepared in
Retirees: Here's Why You Might Be Investing All Wrong

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Updated, Friday, May 11, 2018, 10:01 AM (Pacific)

Seattle—

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LTC BULLET: LTC EVASION

LTC Comment: We explain what LTC financing scholars evade and why after the ***news.***

*** LTC CLIPPINGS are our daily “heads up” emails to premium members/subscribers to advise them of news, data and reports they should see to stay at the forefront of professional expertise. We send an average of two clippings per day. Perhaps the biggest benefit of receiving LTC Clippings is the ones we don’t send! Those are all the stories, articles, and reports that we reviewed and decided they are not worth your time and focus to read. Our screening saves you research time and ensures you read the best of the best. To subscribe, contact Damon at 206-283-7036 or damon@centerltc.com. Here are three sample LTC Clippings from the past week.

5/9/2018, “Why Families Need a Plan for Caregiving,” by Kimberly Lankford, Kiplinger’s Personal Finance

Quote: “Kamilah Williams-Kemp, 43, is the head of Northwestern Mutual's long-term-care insurance business. She was the primary caregiver for her mother last year.”

LTC Comment: The personal story of one of our own in the LTCI business.

5/10/2018, “Report Says Medicare Health Plan Tool Needs Major Overhaul,” by Patrick Connole, Provider

Quote: “A tool used by older Americans and others to explore which Medicare health plans to purchase needs improvement, notably in the areas of gauging plan costs and providers' in-network status, according to a recent report and corresponding scorecard by the Clear Choices Campaign, a health care cost transparency initiative of the Council for Affordable Health Coverage and National Council on Aging (NCOA). ... ‘The scorecard gives the MPF 'A' grades only for its anonymous browsing capabilities and non-English translation services. MPF earned 'D' or 'F' grades in seven other criteria,’ said the report, titled, ‘Modernizing Medicare Plan Finder: Evaluating and Improving Medicare's Online Comparison Shopping Experience.’”

LTC Comment: One more reason not to turn LTC over to Medicare.

5/7/2018, “Nearly 25% of Americans Over 85 Need Personal Care,” by Tim Regan, Senior Housing News

Quote: “It’s no secret that the need for caregiving services tends to grow with age, but a newly released report from the federal Administration for Community Living sheds light on just how many older adults in the U.S. need personal care. The percentage of older adults age 85 and older needing help with personal care was 22% between January and June of last year. That’s more than twice the amount of people between the ages of 75 and 84 (9%) and more than six times the percentage of adults 65 to 74 (3%) who reported needing help with personal care during the same period, according to the ‘2017 Profile of Older Americans’ report, which was published in April.”

LTC Comment: The perfect storm hits in 2031, just 13 years from now, when boomers start turning 85 in the same decade that Social Security and Medicare trust funds are depleted. ***

LTC BULLET: LTC EVASION

LTC Comment: Last week we disentangled and refuted the convoluted reasoning in Feder and Cohen’s “A New Public-Private Partnership: Catastrophic Public and Front-End Private LTC Insurance.” We attributed the authors’ fundamental error to their discounting Medicaid’s role in long-term care financing. See “LTC Bullet: Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding).” Today we summarize the consequences of evading LTC reality. In future weeks, we’ll explore each of those consequences more deeply. If you just can’t wait to get the full picture, go directly to “How to Fix Long-Term Care Financing.” For now, here’s the overview.

Medicaid Matters Most

“Give me a lever long enough and a fulcrum strong enough and single-handed I can move the world.” --Archimedes

“The simplest answer is most often correct.” --Occam’s Razor

Medicaid is in the news daily, particularly its expansion under the Affordable Care Act, or ObamaCare. But ObamaCare primarily affected acute care for young people. And while the young are three-fourths (75 percent) of Medicaid’s recipients, they account for only slightly more than one-third (36 percent) of the program’s expenditures. The aged, blind, and disabled, on the other hand, are just one-fourth of the recipients (24 percent) but account for nearly two-thirds (63 percent) of expenditures, mostly for the long-term services and supports that they require.^1-2 Given its disproportionately high impact on Medicaid costs, long-term care deserves much more attention than it currently receives from policymakers.

With that said, long-term care financing is complicated. Consider all the research studies, journal articles, and special commissions that have unsuccessfully grappled with it for decades. Recall the myriad variables, perplexing questions, noble goals, and stubborn obstacles standing in the way of progress. To name a few:

Who should pay? Are families responsible for payment or is the government? Should planning be voluntary or compulsory? Why do people ignore long-term care risk and cost until it is too late to prepare? How can nursing home bias prevail when people prefer cheaper home care? Why is long-term care fraught with access and quality problems? How can taxpayers spend so much for long-term care but the sector remains starved for funding? Who will provide care when compensation is so low? What is going to happen when the age wave finally crests and crashes in the 2030s?

Most policy analysts [including Feder and Cohen] respond to these perplexities by wringing their hands. They conclude that the government must compel people to prepare for long-term care by paying higher taxes. But what if public financing caused the long-term care dysfunctions in the first place? What if the questions and problems we face have a simpler answer? Do Occam’s razor and Archimedes’ leverage principle apply to long-term care?

Medicaid is not just a factor in long-term care financing. It is the critical factor.

Medicaid is not just a factor in long-term care financing; it is the critical factor. Since its founding in 1965, Medicaid has evolved from a minor funding source to the primary funder of formal paid care. This near monopsony status has serious ramifications. Because it requires state programs to pay for nursing home care, Medicaid has an institutional bias. Because it pays notoriously low reimbursement rates, Medicaid causes caregiver shortages, access, and quality problems. Because it pays for care after it is needed, Medicaid enables the public’s denial of long-term care risk and cost. Because it pays after the insurable event occurs, Medicaid crowds out private long-term care insurance. And because it increasingly pays for home care, Medicaid inhibits the private home care market. Name a deficiency of long-term care service delivery or financing and you will find Medicaid at the root of the problem.

Many policy analysts will agree with that assessment or at least some parts of it. They too blame Medicaid for numerous long-term care problems but for different reasons. Most analysts claim Medicaid requires impoverishment, that people must spend down their life’s savings to qualify for long-term care benefits, and that wide swaths of the American public are devastated by catastrophic expenditures before they receive help from Medicaid.

What such analysts do not and cannot explain is, if Medicaid requires impoverishment, why do most people ignore such a calamitous risk? Why do they fail to plan, save, invest, or insure for long-term care and end up dependent on a means-tested welfare program to receive nursing home care they would rather avoid? Since they cannot explain this logical contradiction, most analysts [including Feder and Cohen] evade it.

Therein is the fulcrum strong enough and the lever long enough to render a simple answer to the long-term care financing quandaries: Medicaid long-term care benefits do not require impoverishment. Virtually unlimited income does not obstruct eligibility if medical and long-term care expenses are high enough, as they usually are for people in need of formal, paid long-term care. Virtually unlimited assets are exempt in the form of home equity [between $572,000 and $858,000], one business, one auto, IRAs paying periodically, term life insurance, Medicaid-compliant annuities, life care contracts, prepaid burials, personal belongings, and home furnishings. In addition to these routine exemptions, the use of trusts, “spousal refusal,” disinheritance, divorce, and numerous sophisticated “Medicaid planning” techniques make access to Medicaid long-term care benefits available to nearly anyone who chooses to take advantage of the program.

This report explains and substantiates the argument that easy access to Medicaid after care is needed has caused most of long-term care’s problems.

Once it is clear that Medicaid does not require impoverishment, the puzzles associated with long-term care financing disappear. If people can ignore the risk of long-term care, avoid the premiums for private insurance, wait to see if they ever need expensive paid long-term care, and, if they do, transfer most of the cost to Medicaid, then everything else follows logically. Most people do not plan for long-term care; instead, they end up on Medicaid by default when they need care, leaving Medicaid to pick up the cost and overburdening its scarce resources. Consequently, Medicaid has too little revenue to pay care providers adequately, causing caregiver shortages as well as access and quality problems. Consumers lack choice of services and providers that a freer market could ensure. The system struggles financially in the absence of private revenue from genuine asset spend down, home equity conversion, or long-term care insurance.

That analysis requires fuller exposition and proof. This report [“How to Fix Long-Term Care Financing”] explains and substantiates the argument that easy access to Medicaid after care is needed has caused most of long-term care’s problems. This report demonstrates that access to Medicaid long-term care benefits does not require impoverishment and explains why most analysts wrongly claim that it does. It describes Medicaid’s true role as the dominant factor in long-term care financing and traces the history of how it became that way. It recounts how legislative and regulatory efforts to target Medicaid’s limited resources to its originally intended needy recipients have failed repeatedly. It explains why such efforts ended in 2005, show no signs of recurring, and must begin anew to salvage long-term care financing. Finally, this report proposes simple solutions to improve Medicaid as a long-term care safety net for people in need while improving the access to and quality of long-term care for people of all economic levels.

1. Kaiser Family Foundation, StateHealthFacts.org, “Distribution of Medicaid Enrollees by Enrollment Group,” cited May 8, 2017; http://kff.org/medicaid/state-indicator/distribution-of-medicaid-enrollees-by-enrollment-group/.

2. Kaiser Family Foundation, StateHealthFacts.org, “Medicaid Spending by Enrollment Group,” cited May 8, 2017; http://kff.org/medicaid/state-indicator/medicaid-spending-by-enrollment-group/.

LTC Comment: Even more basic than their evasion of Medicaid’s detrimental LTC financing role is the failure of LTC scholars, including Feder and Cohen, to explain why America’s long-term care services and funding system is so dysfunctional. They merely accept the defective status quo and propose solutions without understanding, much less explaining, why the problems exist in the first place. Consequently, their solutions always entail more of the same government control and revenue, which ironically, caused the dysfunctions in the first place. We’ll develop that theme in future LTC Bullets by explaining how long-term care came to be the way it is so that we can propose solutions that fix, instead of exacerbate, the problems.

Next week: How Medicaid caused most of the dysfunctions in long-term care including institutional bias, poor access and quality, inadequate financing, and excessive dependency on family care-giving.

Following week: How and why LTC academics refuse to acknowledge these realities, evade the consequences, and contribute to the problems instead of solving them.

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Updated, Monday, May 7, 2018, 10:01 AM (Pacific)

Seattle—

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LTC E-ALERT #18-018: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Eating a Mediterranean Diet Could Delay Alzheimer’s Disease by Years
The Myth of Outliving Your Retirement Savings
Federal Panel Puts Off Dementia Financial Burden Battle
Proposed Medicare Change Would Create Long-Term Care Benefit
Medicare Advantage Plans Can Pay for Many LTC Services in 2019: Feds
Increases in Medicaid Spending Come at the Expense of Higher Education: Study
New Report Blasts ‘Confusing’ Medicare Search Tool
Crisis in care | Lack of quality caregivers, constant turnover tough on the disabled, families
Wisconsin's Long-Term Care Workforce At 'Crisis Level,' Report Finds
Visit from home care nurses linked to more emergency department use by seniors
How to Talk About Moving to a Retirement Home: ‘It’s a Journey’
2017 Profile of Older Americans
How Nursing Homes Can Destroy Families

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Updated, Friday, May 4, 2018, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: FEDER FANTASY FATALLY FLAWED (COHEN CONTRIBUTION NOTWITHSTANDING)

LTC Comment: A new Feder/Cohen proposal would take long-term care out of the frying pan into the fire. We explain after the ***news.***

*** “MY MILLION-DOLLAR MOM” TRAILER RELEASED: Longtime Center friend and supporter, LTCI producer and expert Ross Schriftman announces the trailer for the movie based on his book of the same title. Watch it here for a moving reminder of why we care so much about getting long-term care right. Ross reports “we plan to release the film for purchase on line off our website on May 15th. So stay tuned. Finally, Kevin Jameson of the Dementia Society of America and [Ross] were interviewed by John Ralston on WNPV's Bucks Mont Live program last week.” Listen to that interview here beginning at 5.5 minutes in. ***

LTC BULLET: FEDER FANTASY FATALLY FLAWED (COHEN CONTRIBUTION NOTWITHSTANDING)

LTC Comment: Professor Judy Feder dreams of expanding government financing (and control) of long-term care. Marc Cohen, Ph.D. is a respected analyst and advocate of private long-term care insurance. Oil and water?

Maybe not. They’ve put their heads together and come up with an ingenious concoction to fix public LTC financing and supercharge private LTC insurance with a single legislative remedy. But like any mixture of insoluble ingredients, it quickly comes apart.

Their paper, co-authored with Melissa Favreault, Ph.D. of the Urban Institute, is titled “A New Public-Private Partnership: Catastrophic Public and Front-End Private LTC Insurance.” Read it first so you have the big picture and then come back here for our challenge and analysis.

Challenge: Frankly, I’ve had it with wishful-thinking plans like this that ignore the facts of long-term care financing reality. Below is a detailed analysis and refutation of this proposal, but first, here’s the crux of the matter and an invitation to its authors.

The fatal flaw in their proposal is that it purports to achieve major savings including a 15% cut in out-of-pocket LTC costs and a 23% reduction in Medicaid expenditures by increasing Medicare premiums for individuals and businesses, jaw-boning the purchase of LTC “gap insurance” (an oxymoron) and leaving Medicaid eligibility rules unchanged. None of this will work, as I explain below and elsewhere. In fact, it would make the long-term care financing problem much worse.

Yet these authors ignore their critics’ arguments. They claim against the facts that Medicaid LTC asset spend down is unavoidable and causes impoverishment, that middle class and affluent people taking advantage of Medicaid LTC benefits is rare, and that Medicaid estate planning amounts to little more than rumors. Instead of acknowledging and addressing our evidence and objections, they dodge them with misdirection, straw-man arguments, and equivocation on key terms like “impoverishment,” “spend down,” and “out-of-pocket.” We need to pierce the shield wall of “peer review” that enables scholars of conventional wisdom to ignore evidence and logic they don’t want to consider.

Therefore, I invite Judith Feder and/or Marc Cohen to a public debate of these issues in the venue of their choice. Let’s see whose arguments and conclusions the facts support!

Here’s what I propose: A formal debate with ten-minute opening statements by each side (total 20 minutes). Then three rounds (six questions total) with the discussants probing each other’s positions including a one-minute question, a three-minute-reply, and a one-minute rebuttal for each of the six questions (30 minutes). Q&A from the audience for any time remaining. Jury of objective reviewers chosen by voir dire to score, judge and report the result. Wouldn’t such an intellectual duel be entertaining, informative and a great draw for any germane conference? RSVP to smoses@centerltc.com.

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Analysis: Following are quotes from the Feder, Cohen, Favreault (FCF) paper with our comments.

FCF: “The intent with this design is twofold: first, to target publicly-financed benefits to expenses that exceed amounts that middle-income (along with higher-income) people can reasonably be expected to manage – either with private insurance or personal resources; and second, to enhance the attractiveness and purchase of the limited-coverage private insurance products that insurers prefer by positioning them as gap fillers that, in combination with public insurance, facilitate relatively comprehensive protection against LTSS costs.” (pps. 5-6)

LTC Comment: OK, sounds interesting. They want to use public funds only to cover what middle class people can’t afford. But wait, wasn’t that supposed to be the idea behind Medicaid “spend down?” They want to turn private insurance into a first-dollar “gap filler.” But wait, isn’t the purpose of insurance to replace the small risk of a catastrophic loss with the certainty of an affordable premium? Wouldn’t their plan be like using car insurance for oil changes? What are we really talking about here?

FCF: “A public catastrophic insurance program for LTSS costs that takes effect after an income-related waiting period has been met. … Eligibility … phased in over ten years, with people eligible for benefits once they work 40 quarters after the law’s enactment …. Benefits would become available once people incur impairments in 2+ ADLs and/or severe cognitive impairment … . Up to $110/day cash benefit (2014 dollars) … Paid out either daily or weekly … Unlimited benefit once an income-related waiting period is met … Waiting period of 1 year for people with lifetime incomes in the lowest two quintiles of the distribution and 2, 3, and 4 years for people with incomes in the third, fourth and highest quintiles, respectively. … Annual benefits increase at the rate that hourly costs increase for home health aide workers” (p. 7)

LTC Comment: My, that does sound complicated. Is the government up to handling such administrative complexity? What if I don’t think so and I want to say “no thanks?” They considered giving people the freedom to opt out, but “Though potentially feasible and a lighter political lift, previous analysis suggests that the scope of coverage would likely be much more limited with this approach.” (pps. 24-25) Ya think? You won’t find the words involuntary, mandatory or compulsory in the plan, but they do apply. Just like Social Security and Medicare; you’re in this program whether you want to be or not. So, hmmm, who’s going to pay for this new entitlement?

FCF: “The program would be financed in large part by increasing the Medicare tax split

between employees and employers that would begin at age 40. … For ease of estimating, we … estimated that an additional tax of about 1.0 percent of earned Medicare-covered income would be sufficient to finance the proposed program over the required period assuming that the surplus revenue from early years were invested in a secure Trust Fund.” (pps. 13, 22)

LTC Comment: Medicare already faces unfunded liabilities of $48 trillion. Its “trust fund” has nothing in it except IOUs for money the federal government has already spent on other things. Any new money we put into a long-term care trust fund will inevitably be misappropriated in the same way. This idea is like adding deck chairs to the Titanic after the incident with the iceberg. But we’re going to save a ton of money by reducing Medicaid expenditures and selling private LTC gap insurance, right?

FCF: “In fact, we project a public catastrophic program for older Americans would enhance LTSS spending by 14 percent, reduce out-of-pocket spending by 15 percent, and reduce Medicaid spending by 23 percent, compared to projected spending under current law. … The implication is that Medicaid will remain a vital part of the nation’s overall LTSS system – whether for people currently impaired or for people for whom our proposal is insufficient to provide meaningful insurance protection against substantial LTSS risk.” (pps. i, 25)

LTC Comment: This plan’s architects leave Medicaid, the dominant long-term care payor currently, in place. They propose no changes to Medicaid LTC eligibility and yet they expect to save almost a quarter of its cost. How? Blank out. There is nothing in this proposal to explain why consumer behavior with regard to Medicaid would change. Instead of paying privately or buying insurance to cover the plan’s one-to-four year waiting period before the new government program kicks in, people will go directly onto Medicaid as they do now. No savings will accrue to Medicaid. Nor will significantly more people buy LTC gap insurance than buy regular LTC insurance now for the same reasons. For the evidence to support this conclusion, see “The Fallacy of Impoverishment” (1990), “How to Fix Long-Term Care Financing” (2017), and our many state and national studies in between those publications here.

FCF: “While some have argued that the Medicaid program, which represents the largest public payer of LTSS, ‘crowds out’ or suppresses demand for private insurance, evidence suggests that the impact is likely modest in light of other issues affecting demand and that such effects are operant at the lower end of the income scale;⁵ even proponents of the theoretical argument for ‘crowd-out’ point to problems with the private products as an empirical explanation of the market’s failure to thrive.^{6,7,8,9,10,11,12}” (p. 2)

LTC Comment: “Some have argued” Medicaid crowds out private LTC insurance? Who? Blank out. We get not a single reference to the dozens of published reports (many, if not most, written by yours truly) that present the evidence that Medicaid exempts most assets, is easy to qualify for after care is already needed, and therefore desensitizes consumers to long-term care risk and cost, discourages early and responsible long-term care planning, undercuts the use of private resources to pay for long-term care by means of asset spend down, home equity conversion or private LTC insurance, and thus contributes to institutional bias by channeling people into nursing homes who could have paid for home care or assisted living. Instead, we get footnotes to eight sources that allegedly prove otherwise, but are easily refuted and were disproved contemporaneously. For example:

We refuted Footnote #9 (Waidmann, T., & Liu, K. (2006). Asset transfer and nursing home use: Empirical evidence and policy significance) with LTC Bullet: Kaiser Cover-Up Continues, Thursday, April 27, 2006: “Urban Institute ‘scholars,’ aided and abetted by the Kaiser Family Foundation, employed an underhanded straw man argument in the foundation's latest unsuccessful attempt to debunk the impact of Medicaid planning abuse.”

We addressed a fundamental flaw in Footnote #10 (Lee, J., Kim, H., & Tanenbaum, S. (2006). Medicaid and family wealth transfers. Gerontologist, 46, 6–13) with “LTC Bullet: Behind AHEAD,” Friday, September 2, 2016: “The people and organizations advocating a new, compulsory, payroll-financed government program to fund catastrophic LTC expenses base their arguments on dubious sources and reasoning.”

We refuted Footnote #12 (Wiener, J, Anderson, W., Khatutsky, G., Kaganova, Y and O’Keefe, J. (2013). Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform: Final Report) with “LTC Bullet: Medicaid Spend Down that Isn’t and Why it Matters,” Friday 19, 2013: “Claiming ‘transitions’ to Medicaid are evidence of catastrophic LTC asset ‘spend down’ misrepresents the truth and should be publicly recanted. [We explain:] Who, what, when, where and why.”

For a complete exposition of the evidence and logic refuting the argument that the proposed compulsory, payroll-financed, public catastrophic LTC insurance plan will reduce Medicaid expenditures and encourage the purchase of private LTC insurance, see “How to Fix Long-Term Care Financing.” That paper includes a “Supplemental Bibliography of Books, Elder Law Treatises and Law Journal Articles on Medicaid Planning Listed Chronologically with Dates of U.S. Economic Recessions and Passage of Major Legislation to Control Medicaid Planning” (pps. 34-63) and dozens of “Examples of Medicaid Planning Techniques; Home Equity Potential; Estate Recovery and Medicaid-Compliant Annuities” (pps. 64-65)

FCF: “At the same time, public ‘insurance’ – through Medicaid – supports services only after people pay what might be called an ‘infinite deductible’ – that is, only after they expend most, if not all, of their personal liquid financial resources.” (p. 2)

LTC Comment: Contributing income and cash resources toward one’s cost of long-term care is a tiny price to pay, while retaining for heirs all the wealth Medicaid routinely allows recipients to keep. In most states, Medicaid lets LTC recipients retain only $2,000 in cash or assets easily convertible to cash. But that doesn’t mean people have to spend down into impoverishment in order to qualify. Rather, they can retain virtually unlimited wealth in the form of home equity (at least $572,000 and up to $858,000 in some states) as well as unlimited amounts of personal belongings, home furnishings, one automobile, one business including the capital and cash flow, term life insurance, IRAs paying periodically (as they must do after age 70 ½), Medicaid-compliant annuities, life care contracts, and prepaid burials for the recipient and immediate family members. In addition to these routine exemptions, the use of trusts, “spousal refusal,” disinheritance, divorce, and numerous sophisticated “Medicaid planning” techniques make access to Medicaid long-term care benefits available to nearly anyone who chooses to take advantage of the program. Nor is income an obstacle to Medicaid LTC eligibility in most cases. Virtually unlimited income does not obstruct eligibility if medical and long-term care expenses are high enough, as they usually are for people in need of formal, paid long-term care.

FCF: “Changes in the political landscape have replaced efforts to reform federal LTSS financing, and instead are increasingly focused on limiting public LTSS spending. But financing challenges will continue to grow with the aging of the population. Research undertaken now on the design and challenges of specific proposals for LTSS financing reform will provide the necessary intellectual infrastructure and foundation for effective action when policymakers are inevitably forced to address the issue in the years ahead. (pps. 4-5)

LTC Comment: True, but what if future policymakers are facing the far more likely outcome that public programs are imploding because of their gargantuan unfunded liabilities? This new LTC plan only adds an extra bale of hay to the “camel’s back.” A far better and much simpler solution is to redirect public financing to those most in need and use some of the savings to incentivize early, responsible long-term care planning and private financing. For details on how to do this, see “How to Fix Long-Term Care Financing.”

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Updated, Monday, April 30, 2018, 10:25 AM (Pacific)

Seattle—

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LTC E-ALERT #18-017: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

A Data Dump That Could Make a Difference in Health Care
Largest LTCi Claim Exceeds $2 Million
Provider-sponsored Medicare Advantage plans seeing big growth in membership
Only 16% of retirees 'very confident' they can afford long-term care
The myth and reality of the Medi-Cal 'spend-down'
Retirees Come Face To Face With Longevity
Following a couple from diagnosis to the final stages of Alzheimer's
U.S. Pension Fund Collapse Isn't a Distant Prospect. It Could Come in 5 Years
Thousands of nursing home patients nationwide affected by NJ company's financial trouble
No Spend Down
Couples in retirement face average health care costs of $280,000, Fidelity estimates

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Updated, Friday, April 27, 2018, 10:08 AM (Pacific)

Seattle—

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LTC BULLET: RETIREMENT CONFIDENCE AND ASSET SPEND DOWN

LTC Comment: Two new EBRI studies shed light on how workers/retirees’ expectations and behavior differ, after the ***news.***

*** LTC CLIPPINGS: Three LTC Clippings sent this week to Center premium members follow. To inquire about premium membership including a subscription to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

4/18/2018, “U.S. Pension Fund Collapse Isn't a Distant Prospect. It Could Come in 5 Years,” by Aaron Brown, Bloomberg

Quote: “Warnings about looming public pension disasters have regularly cropped up since the 1950s, pointing to problems 25 years or more down the line. To politicians and union leaders, the troubles were someone else's predicament. Then crisis fatigue set in as the big problem remained down the road. Today, the hard stop is five to 10 years away, within the career plans of current officials. In the next decade, and probably within five years, some large states are going to face insolvency due to pensions, absent major changes. … The next phase of public pension reform will likely be touched off by a stock market decline that creates the real possibility of at least one state fund running out of cash within a couple of years. … I cannot see any plausible scenario in which full promised benefits are paid.”

LTC Comment: The perfect storm for all pensions and entitlements arrives no later than the 2030s when baby boomers start turning 85 and Social Security and Medicare have to cut benefits.

4/22/2018, “Following a couple from diagnosis to the final stages of Alzheimer's,” by Jonathan LaPook, CBS News

Quote: “For 10 years, Dr. Jon LaPook has been checking in on Carol Daly, a woman diagnosed with Alzheimer's, and her caregiver husband, Mike. After a decade, the disease has had a devastating impact on each of them.”

LTC Comment: We tipped you to this 60 Minutes episode in advance, but did you see it? If not, click through and watch it now. This may be the most powerful 12 minutes you, your prospects and clients will ever see about Alzheimer’s disease. Here’s how longtime Center friend and premium member Bill Rives, Ohio State University Finance Professor Emeritus, described it to me.

“You may have caught it, but if not, you really need to see the final segment of 60 MINUTES yesterday (APR 22). Producers have been following a husband and wife for the last decade. She was diagnosed with Alzheimer’s in 2006 (or thereabouts) and he (a retired police officer) is her sole caregiver. They conducted a 20-30 minute interview once a year each year. The couple agreed to the interviews because they wanted people to see what Alzheimer’s does over time as the patient deteriorates (not to mention the caregiver). I watched the episode last night. Sad, depressing, insightful. They play segments from all the early interviews to show how her condition has gradually melted away. She goes from being able to answer any question to not knowing anything – not even her or her husband’s name. Her husband also goes from being upbeat about prospects to someone who admitted that he’s contemplated suicide more than once in the last few years. People in denial about the ravages of Alzheimer’s should watch these episodes. Much more powerful than all the articles and data on the disease. It’s hard to sit there and not think, ‘This could be me.’”

4/24/2018, "The myth and reality of the Medi-Cal 'spend-down'," by Philip P. Lindsley, San Diego Union-Tribune

Quote: “What’s the reality? The need to ‘spend down’ is almost never true. There are many assets that are considered exempt or unavailable and are not counted in the qualification process. Just two of several examples would be the home and all IRAs and other pension plan funds. There are also other substantial additional allowances and planning opportunities available for those who are aware and use them. Few do.”

LTC Comment: Few do? Hardly. Most do. Not because most consult Medicaid planners. They don’t, though many do. Rather, Medicaid eligibility workers routinely explain all the asset exemptions and even some of the “loopholes.” After all, they’re social workers; they want to help people, and it’s only government money, right? Ironically, whether or not you qualify for Medicaid benefits depends as much on how “caring” your worker is as on the rules and how much wealth you possess. ***

LTC BULLET: RETIREMENT CONFIDENCE AND ASSET SPEND DOWN

LTC Comment: Two recent reports by the Employee Benefit Research Institute enlighten us about retirement planning versus performance. EBRI’s “2018 Retirement Confidence Survey” is their latest in the longest running (28 years) survey series covering worker and retiree confidence about retirement. Also published by EBRI this month is “Asset Decumulation or Asset Preservation? What Guides Retirement Spending?,” by Sudipto Banerjee, which bursts a long-standing myth about asset “spend down.”

Let’s consider retirement confidence first. We’ll quote EBRI’s Retirement Confidence Survey (RCS), then comment.

RCS: “The share of workers who feel very confident in their ability to live comfortably in retirement remains low at just 17%, but another 47% are somewhat confident. … Retirees remain more confident than workers, with a third (32%) very confident and another 44% somewhat confident that they will have enough money to live comfortably throughout retirement.”

LTC Comment: Almost 2/3 (64%) of workers and over ¾ (76%) of retirees feel confident about their economic security in retirement. What are they smoking? Are they inEBRIated? Evidently workers and retirees haven’t read the omnipresent reports that they’re saving too little and depending on public programs and pensions too much.

RCS: “Why are workers confident? Workers [76%] appear to be very positive about their workplace defined contribution (DC) retirement plans and that may be impacting overall retirement confidence. Those with a DC plan are far more likely to be confident in their ability to live comfortably in retirement.”

LTC Comment: Now, that’s interesting. Remember how progressives lament the transition from “guaranteed” public and company pensions to defined contribution plans that employees own personally? Looks like those DC plans are propping up workers’ confidence in the face of widespread reports of impending entitlement shortfalls and pension collapses.

RCS: “Why are retirees less confident? Retirees’ overall confidence shows signs of decline, but their confidence in being able to afford medical and long-term care expenses in retirement is down significantly. Relatedly, their confidence that Social Security and Medicare will continue to provide benefits equal to what retirees receive today has decreased.”

LTC Comment: Ah-ha! Retirees are finally starting to awaken to the real financial risks they face: growing health and LTC costs exacerbated by impending safety net cuts.

RCS: “Only 19% of workers and 39% of retirees have tried to calculate how much money they would need to cover healthcare costs in retirement.”

LTC Comment: In other words, the vast majority of workers and retirees have no clue what they’ll need in retirement and no idea what it’ll cost. Evidently, their “feelings” of confidence recorded by EBRI have no basis in reality. Why might that be? Social entitlements like Medicare, Medicaid and Social Security have provided a false sense of security for many decades which unfounded confidence is eroding now as those programs’ unfunded liabilities approach the terminal stage.

RCS: “Two in three retirees report Social Security is a major source of income, while only about a third of workers believe Social Security will be a major source. … Workers expect to rely on their workplace DC retirement plans as a source of income in retirement far more than retirees report they have. Eight in ten believe this will be a major or minor source of income in retirement, compared to just 50% of retirees.”

LTC Comment: QED. The inevitable sea change from government dependency to personal responsibility is underway as workers lose confidence in entitlement programs and gain confidence from their ownership of real assets.

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Let’s turn now to the other April EBRI report: “Asset Decumulation or Asset Preservation? What Guides Retirement Spending?,” by Sudipto Banerjee. Our comments follow quotes from “ADAP.”

ADAP: “One of the assumptions underlying many models used to measure retirement income adequacy is that retirees will spend down their accumulated assets to fund their retirement needs. While this may make sense in theory, do people actually behave like this?”

LTC Comment: Wow! Someone is finally asking the right question. The universal assumption among academics is that wide swaths of the American public spend themselves into impoverishment on long-term care expenses before qualifying for Medicaid. Of course, as I’ve shown in many studies, Medicaid does not require that and there is no evidence it’s true. So, what is the reality?

ADAP: “Over the 18-year period, there was a very small drop in the median assets of this group [those who started retirement with less than $200,000 in non-housing assets], from $31,740 (after 1- 2 years of retirement) to $24,000 (after 17 - 18 years of retirement). This was only a 24.4 percent drop. Such a rate of asset decumulation was definitely much lower than what has been traditionally assumed by most retirement models.”

LTC Comment: Interesting. How about the other groups studied, i.e. those with $200K to $500K at retirement and those with more than $500K?

ADAP: “In the first two years of retirement, the non-housing asset median for Group B [$200K to $500K] was $333,940. After 13-14 years of retirement the median was still above $300,000 (at $301,620). By the 17th-18th year of retirement, the non-housing asset median was $243,070, a 27.2 percent drop compared to the asset median in the first two years. So, in this group as well, retirees did not spend down their assets as quickly as retirement models would generally predict.”

“The asset decumulation rate was even slower for this group [those with over $500K]. The non-housing asset median for retirees in this group was $857,450 in the first two years of retirement. After 19-20 years of retirement, the median dropped to $756,300 – an 11.8 percent drop. So, the group with the highest level of assets had the lowest rate of asset spend down.”

LTC Comment: OK, the more you have, the more you’re able to retain. No great insight there. What can we glean from these findings?

ADAP: “Discussion Why are retirees not spending down their assets? There are probably a number of reasons. First, there are the uncertainties. People don't know how long they are going to live or how long they have to fund their retirement from these assets. Then there are uncertain medical expenses that could be catastrophic if someone has to stay in a long-term care facility for a prolonged period. Of course, if people have to self-insure against these uncertainties, they need to hold onto their assets. Second, some of these assets are likely to be passed on to their heirs as bequests. But, what percentage of actual bequests are planned vs. accidental is an open question. Third, another possible reason for this slow asset decumulation rate could be lack of financial sophistication, or in other words, people don't know what is a safe rate for spending down their assets. So, they are erring on the side of caution. Finally, some of it could be just a behavioral impediment. After building a saving habit throughout their working lives, people find it challenging to shift into spending mode. They continue to build up their assets or hold on to their assets as long as possible.”

LTC Comment: Gee, that’s very complicated. Let me offer a simpler explanation. Decades of academic studies and media reports have convinced the public they will lose everything if they succumb to the high risk of needing long-term care. So, as best they can, people preserve their assets and spend only income. But catastrophic spend down for long-term care is a myth because Medicaid pays for most expensive LTC, exempts most assets, is easy to get after care is needed without spending down assets significantly and only requires income as the patient’s contribution to the cost of care. Consequently, after decades living in retirement, most people at most levels of wealth, spend down very little.

ADAP: “This EBRI study shows that the majority of retirees do not spend down their assets in the first two decades of their retirement. This behavior is not limited to those with lower levels assets. In fact, those with the highest level of assets show the lowest rates of spending down. … When household income of retirees is compared to household spending, the study finds that majority of households indeed limit their spending to their income.”

LTC Comment: This drives home a point I’ve made repeatedly over the years. As much as possible, people retain their assets (for security and/or bequest) and spend only their income. Then, when long-term care becomes necessary, it’s the assets their heirs want to preserve. Heirs have not had the use of their parents’ income so turning it over to Medicaid is no loss. But the assets, including home equity, personal belongings, IRAs, the car, etc. are tempting and easy to preserve. Most Medicaid eligibility workers will explain how to save most assets. Medicaid planning attorneys will show how to preserve the rest.

Closing LTC Comment: Academics pull their hair out trying to explain consumer behavior. For example: why are people more confident about their retirement security than they should be objectively? Why do they spend down less in retirement than logic and asset decumulation models suggest they should? Researchers will never find the answers as long as they cling to their belief in social insurance and the myth of Medicaid spend down.

As people adjust positively to owning their savings (defined contribution plans) and negatively to the impending curtailment of public safety net programs (welfare, Social Security, Medicare and Medicaid), they’re becoming more realistic. They’ll save and insure more and place less and less confidence in government entitlements. The big question is whether the 70-plus-year assault on personal responsibility by public promises of retirement security has gone too far for a healthy private economy to recover. I fear it has.

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Updated, Monday, April 23, 2018, 9:18 AM (Pacific)

Seattle—

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LTC E-ALERT #18-016: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Most who collect long-term care insurance benefits not in nursing homes
Opinion: What the rise of dementia may mean for your financial future
New Census Bureau data show steady increase in prospective residents
This state won’t extend Medicaid benefits to elderly nuns
Home Sharing: Growing Trend or Desperate Need?
IG: OPM Needs Contingency Plan for Long-Term Care Insurance
Many Retirees Are Not Spending Down Their Accumulated Assets To Fund Their Retirement Needs
High-quality, short-term nursing stays lower risk of seniors entering long-term care
Investors Should Still Be Skeptical About GE's Long-Term Care Obligations
Thought Leaders Want Alzheimer's At The Top Of G20 Agenda
Are Medicare Advantage Plans Steering Enrollees to Lower-Quality Nursing Homes?
Clichés about only being as old as you feel are starting to have scientific backing
65% of Baby Boomers Are Making a Huge Financial Mistake That Could Leave Them Broke

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Updated, Friday, April 20, 2018, 9:18 AM (Pacific)

Seattle—

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LTC BULLET: THE END OF ALZHEIMER’S

LTC Comment: Is there hope for delaying, mitigating, even ending Alzheimer’s? We report, you decide, after the ***news.***

4/19/2018, “New Census Bureau data show steady increase in prospective residents,” by Lois A. Bowers, McKnight's Senior Living

Quote: “Most U.S. older adults who make the move to a senior living community do so between ages 75 and 84, according to the American Seniors Housing Association's Where You Live Matters consumer education campaign. Data released by the Census Bureau on Thursday show a steady increase in the number of 75-year-olds from the years 2010 to 2017.”

LTC Comment: OK, but you ain’t seen nothin’ yet. Baby boomers don’t start turning 75 until 2021. After that, look out!

4/17/2018, “This state won’t extend Medicaid benefits to elderly nuns,” Associated Press

Quote: “A vow of poverty by more than 20 elderly nuns isn’t enough to qualify for Medicaid in Nebraska. The state cut Medicaid benefits earlier this year for the Sisters of Mercy, one of the oldest Roman Catholic religious orders in Nebraska, the Omaha World-Herald reported. … The state fears that expanding Medicaid to cover the Sisters of Mercy could prove costly if other people also qualify. Ignoring the sisters’ patrimony requires accounting for tithing in income qualification reviews of Medicaid recipients of all faiths, state officials said. Doing so could cost Nebraska $3 million annually by adding more than 300 Medicaid recipients by 2020.”

LTC Comment: How ironic. When I did the following study back in 2003, Nebraska routinely granted Medicaid LTC benefits to middle class and even savvy affluent people: The Heartland Model for Long-Term Care Reform. Not much has changed because many of the same mandatory eligibility loopholes still exist in federal law and regulation.

4/15/2018, “65% of Baby Boomers Are Making a Huge Financial Mistake That Could Leave Them Broke,” by Christy Bieber, Motley Fool

Quote: “Many pre-retirees think they don't need to worry about healthcare because they anticipate care costs will be covered by Medicare. But the reality is that Medicare makes seniors responsible for picking up a significant percentage of their cost of care. Seniors may face high deductibles, coinsurance costs, premiums, and coverage limitations. … There are also many services Medicare doesn't cover, including hearing aids, long-term care, and dental care. … Qualifying for Medicaid could also help you afford care costs by subsidizing Medicare premiums and paying for some services not covered by Medicare, such as routine nursing home care. While there are strict asset limits to obtain Medicaid, an attorney can help you to develop a plan that protects your wealth and still allows you to obtain coverage.” (Emphasis added.)

LTC BULLET: THE END OF ALZHEIMER’S

LTC Comment: Everything about Alzheimer’s disease jades me with pessimism, hopelessness and worry. Research goes nowhere. Incidence increases. Costs rise. Funding languishes. Patients and families suffer. Analysts and policymakers dither. You want to throw up your hands and cry “What’s the use?”

So, when a serious, well-credentialed, highly experienced research neurologist says cognitive decline is not inevitable, is actually reversible, and claims he has the evidence to prove it, we should at least listen. Today’s LTC Bullet introduces you to Dr. Dale Bredesen’s book The End of Alzheimer’s: The First Programme to Prevent and Reverse the Cognitive Decline of Dementia.

I’ve compiled a few pages of quotes from the volume to give you a sense of its content and argument. But first, here’s my takeaway in a nutshell. Alzheimer’s disease is not a single malady like cancer. So targeting a single cure, such as removing amyloid plaques, doesn’t work. Rather, cognitive decline leading to Alzheimer’s comes from a variety of sources, especially poor diet, lack of exercise, deficient sleep, and excessive stress. Eliminate those causes and, Bredesen’s research and clinical results show, cognitive decline can be avoided, stopped, reversed and Alzheimer’s evaded even in people who carry genes that predispose them toward the disease.

The following quotes from the book give you only a conceptual framework to consider. I haven’t attempted to summarize the extensive research, findings, case studies, or specific recommendations you’d need to consider to judge conclusively. I recommend that you get the book and see for yourselves.

Hopelessness:

“It is impossible to escape the drumbeat of grim news about Alzheimer’s disease: that it is incurable and largely untreatable, that there is no reliable way to prevent it, and that the disease has for decades beaten the world’s best neuroscientists.” (p. 3)

False start:

“[S]eemingly rock-sold evidence from lab rodents suggested that Alzheimer’s disease is caused by the accumulation in the brain of sticky synapse-destroying plaques made of a piece of a protein called amyloid-beta. (p. 6)

“But here’s the thing: when drug companies tested compounds that are based on any piece of the amyloid hypothesis, the results have ranged from frustrating to bewildering. … the experimental compounds did precisely what their inventors intended, following the amyloid rule book, but patients either got no better or, incredibly, got worse. … Targeting amyloid was supposed to be the golden ticket to curing Alzheimer’s. It wasn’t.” (p. 7)

False assumption:

“Just as tragic as the blinkered adherence to the amyloid hypothesis is mainstream medicine’s assumption that Alzheimers is a single disease.” (p. 7)

“Alzheimer’s is not a single disease. … [T]here are three main subtypes of Alzheimer’s. … Each one requires a different treatment. … Type 1 is inflammatory (hot). … Type 2 is atrophic (cold). … Type 3 is toxic (vile).” (pps. 9, 98, 102, 104)

“Alzheimer’s ‘disease’ is not the result of the brain doing something it isn’t supposed to do, the way cancer is the result of cells proliferating out of control or heart disease is the result of blood vessels getting clogged with atherosclerotic plaque. Alzheimer’s arises from an intrinsic and healthy downsizing program for your brain’s extensive synaptic network. … In Alzheimer’s, an otherwise normal brain-housekeeping process has gone haywire.” (pps. 12-13)

The right track:

“Contrary to the current dogma, therefore, what is referred to as Alzheimer’s disease is actually a protective response to, specifically, three different processes: inflammation, suboptimal levels of nutrients and other synapse-supporting molecules, and toxic exposures.” (p. 16)

Hopefulness:

“Let me say this as clearly as I can: Alzheimer’s disease can be prevented, and in many cases its associated cognitive decline can be reversed.” (p. 10)

“These are bold claims deserving of healthy skepticism. I expect you to exercise that skepticism as you read about the three decades of research in my lab, which culminated in the first reversals of cognitive decline in early Alzheimer’s disease and its precursors, MCI (mild cognitive impairment) and SCI (subjective cognitive impairment).” (p. 10)

“By following the protocol I describe, those with cognitive impairment that is not yet Alzheimer’s disease, as well as those who are already in the grip of Alzheimer’s, can not only halt but often actually reverse the cognitive decline they have already suffered.” (pps. 10-11)

“Called ReCODE, for reversal of cognitive decline, the protocol not only achieved the reversal of cognitive decline in Alzheimer’s disease and pre-Alzheimer’s that no one thought possible; it also allowed patients to sustain that improvement.” (p. 13)

The stakes:

“Because Alzheimer’s disease strikes an estimated one in nine Americans 65 and older, or 5.2 million people as I write this, the aging of the baby boom generation threatens to bring a tsunami of Alzheimer’s immense enough to bankrupt medicare and Medicaid and overwhelm the nation’s long-term care facilities—to say nothing of the toll it will take on tens of millions of families whose love ones are swallowed by this merciless disease.” (p. 15)

“[I]f enough people adopt ReCODE, the consequences would ripple across the nation and the world, cutting medical costs by many billions of dollars a year, preventing Medicare’s bankruptcy, reducing the global burden of dementia, and enhancing longevity. All of these are feasible.” (p. 15)

ReCODE:

“The solution is a very effective combination of DESS (diet, exercise, sleep, and stress reduction)—which is so important for your cognitive health that you might call them your ‘desstiny’—along with some simple supplements and, as a last resort, medication.” (p. 177)

Diet: “This is a largely plant-based diet with an emphasis on vegetables, especially nonstarchy ones. It is best to include both uncooked vegetables, such as those in salads, and cooked ones, and to include as many colors as possible, from deep green to bright yellow and orange. Some fish, poultry, and meat are fine, but remember that meat is a condiment, not a main course.” (p. 180)

Exercise: “Sitting is the new smoking! … We are sitting ourselves to death! Research has shown not only that exercise is beneficial, but that sitting is detrimental to cognitive and physical (especially cardiovascular) health. … What is the optimal exercise for cognition? You want to combine aerobic exercise, such as jogging or walking or spinning or dancing, with weight training, preferably at least four or five days per week, for 45 to 60 minutes in total each day.” (p. 191)

Sleep: “When I asked whether [an expert in Alzheimer’s disease evaluation and clinical research] saw any differences between those who continued to decline [from mild cognitive impairment] and those who improved [avoiding Alzheimer’s] she thought about it for a few moments. ‘Yes,’ she said, ‘the ones who get good sleep are the ones who tend to improve.” (p.192) Then follows “how to optimize your sleep, thus improving brain function.”

Stress: “Stress is a factor in most cases of cognitive decline, but an especially strong one in type 3 (toxic) Alzheimer’s disease, MCI, or SCI. For those individuals, stress worsens cognition especially rapidly. The onset of cognitive decline in such patients often coincides with a period of great stress.” (p. 197)

Go figure:

“If someone had told me a few decades ago that, as a research neurologist, I would be recommending protocols that involve medication, yoga, laughter, music, joy, fasting, exercise, herbs, nutrition, and sleep, I would have laughed. But I cannot argue with results, or with the conclusions of years of research.” (p. 247)

Summary:

“Cognitive decline, including dementia, is a hugely complicated process, affected by dozens of factors. Targeting all of the factors that are relevant to your case in order to change the course of illness has yielded the greatest success to date. The fact that no one of these alone is curative does not mean that a combination may not be helpful.” (p. 265)

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Updated, Monday, April 16, 9:18 AM (Pacific)

Seattle—

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LTC E-ALERT #18-015: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Report identifies seven ways to prevent dementia
Improper payments, bad data threaten access to long-term care, GAO health leader testifies
How Growing Inequality Is Altering The Long-Term Care Policy Battlefield, While Tightening The Financing Knot
Breakthrough: Researchers fix Alzheimer's gene
Is There Such A Thing As Normal Aging?
Kaiser Study: Nursing homes have fewer residents, but those residents need more help
Group Defends Stand-Alone Long-Term Care Insurance With Infographic
Older Pre-Retirees Worry a Lot About Social Security: Gallup
New way of defining Alzheimer’s aims to find disease sooner
Beyond mystery meat
Do You Have What It Takes? A Workbook in Preparation for Caregiving
Why Americans' Life Expectancy Is Getting Longer
Arthritis: Long Term Pain May Require Long Term Care
The deeper cause behind the school strikes: Teachers are competing with the elderly

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Updated, Monday, April 13, 10:26 AM (Pacific)

Seattle—

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LTC Bullet: LTCI’s Responsibilities

LTC Comment: Today’s guest author, LTCI specialist Gene Cutler, asks what responsibilities LTC insurance producers, distributors and carriers have to current and future clients, after the ***news.***

***LTC CLIPPINGS: Following are a couple of our recent “LTC Clippings.” To subscribe and receive the clippings by email once or twice per day, contact Damon at 206-283-7036 or damon@centerltc.com. ***

4/11/2018, “Is There Such A Thing As Normal Aging?,” by Bruce Horowitz, Kaiser Health News

Quote: “Drawing on their decades of practice along with the latest medical data, Gill and three geriatric experts agreed to help identify examples of what are often — but not always – considered to be signposts of normal aging for folks who practice good health habits and get recommended preventive care.”

LTC Comment: If you’re older, read this article to see how you’re doing in comparison to others. If you’re younger, find out what you have to look forward to!

4/10/2018, “How Growing Inequality Is Altering The Long-Term Care Policy Battlefield, While Tightening The Financing Knot,” by Karl Polzer, Health Affairs Blog

Quote: “For many years, long-term care (LTC) policy makers have tended to fall into two warring camps: those favoring expanded social insurance, and those wanting tighter Medicaid eligibility criteria to incentivize people to plan for and buy LTC insurance. Both sides have warned of looming financial catastrophe as the Baby Boomers move into retirement and more than double the population needing care. Disagreement has resulted in a policy stalemate. The vanguard of the Boomer generation is less than 10 years away from beginning to drive up demand for LTC, and the country is unprepared to pay for it. It’s time that the policymakers stepped out of the old trenches. The war they’ve been fighting is largely obsolete.”

LTC Comment: Congratulations to longtime friend and fellow LTC policy plodder Karl Polzer for publication of this piece on the Health Affairs Blog. Read it for sure, but keep in mind that as pessimistic as its message is, the reality is much bleaker. None of the interventions he mentions would mitigate the impending LTC financing crisis significantly. Such proposals address only symptoms, not the cause, i.e. easy access to Medicaid LTC benefits after the insurable event has already occurred. I address that cause and propose a realistic solution in How to Fix Long-Term Care Financing, published last July by the Foundation for Government Accountability and the Center for Long-Term Care Reform. Read it for balance.

LTC BULLET: LTCI’S RESPONSIBILITIES

LTC Comment: I’ve known Gene Cutler and followed his career for over 20 years. He is one of the top LTCI producers in the country. When someone like Gene becomes concerned about how his industry is treating customers, he bears hearing. So here’s what Mr. Cutler wants to say to you and ask. Contact him directly to reply at gene.cutler@acsiapartners.net and copy ltcbullets@centerltc.com to keep us in the loop as we’re interested too.

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“What are LTCI’s Responsibilities to Customers?”
By
Gene Cutler

I have been a long term care specialist exclusively since 1994. I’ve placed well over $7,000,000 of business with the major carriers, some of which are still writing LTCI and some no longer accepting new business.

I frequently hear from clients I’ve written well over 20 years ago to update me. They say they’ve “become that person you were there to introduce me to … the one I didn’t want to meet.” They reassure me that the reasons for taking out this coverage have become clearer and more meaningful, validating not only their worries at the time but also my efforts to awaken them to long-term care risk.

We gave good advice back then. We should be there again as industry evolution and adjustments require our clients once more to make difficult decisions. They need our guidance and recommendations, which have proven so right.

I’m looking for suggestions from those of us who have made it our mission to help clients confront the unavoidable and disconcerting challenges that long-term care planning resolves. Specifically, I seek reassurance that when care needs arise, long-term care providers will be there as promised.

As our industry has evolved and companies have stopped accepting new applicants, our existing clients need to feel confident they will receive the benefits their policies promise. This is true now more than ever, as necessary rate adjustments have been approved and implemented.

The challenges for policyholders arise when they receive notifications pronouncing 50, 65, 80 percent + increases--unexpected and unwelcome--typically stating an increase on page 1 followed by multiple pages rationalizing why and offering options--scripted by attorneys and actuaries--that are too often more confusing than clarifying. In this situation, customer support is critically needed to clarify and advise, but carriers have downsized or outsourced channels, ultimately causing additional frustrations.

As writing/servicing agents, we are all motivated, willing and able to console, explain and advise clients if and when we are notified in advance and provided with the options. Some carriers do notify us ... some don’t. If a policyholder can’t get through to the carrier and/or frustration leads to a potential lapse, the agent should be there to help the client maintain the original objectives of the plan with appropriate modifications. But that can happen only as long as the carrier notifies the agent of an impending lapse.

Long-term care insurance carriers have declined in number from over 100 at one time down to perhaps 15 now. Some were up to the task of guiding their insureds through these difficulties initially upon departing the business, while many have clearly reduced policyholder services. Some never intended to notify the agent of impending lapses, prompting if not encouraging higher lapse rates.

Is that part of their business model? Where are the State Departments of Insurance and the regulators? NAIC? Tax incentives and LTC Partnerships were intended to emphasize financial concerns and transfer this risk into the private sector, yet a blind eye to this unfortunate behavior will bring it right back to states and the federal government.

I’d like to believe that the initial intentions of both producers and carriers when we encouraged these transactions were and remain honorable and supported as policyholders approach potential claims. I’d like to feel that companies still in the game maintain the commitment they advertise in marketing promotions, and that they will enable us, as the points of contact for the industry with their insureds, to support policyholders’ rights with confidence and sincerity. Our clients deserve no less.

Major carriers still want us to promote other products on their behalf, such as Life/Health/Annuities, etc., as we once did their LTCI products. They emphasize their customer support, as they once did for LTCI, should problems arise or claims occur. Are we as comfortable and confident as we once were that we will be able to give that support?

What can we do?

Think about calls you’ve handled recently, or wished you could have handled better. Express your concerns through your wholesalers. Make recommendations to your clients based on your confidence and experience with the carrier.

I’ve heard it said many times that LTCI specialists have a passion about their work that other specialists don’t exhibit. Our passion arises from the satisfaction of listening to and then addressing a client’s worst fears. It is justified and reinforced as years go by. In the end, those clients and their families understand and express appreciation for the value of our advice. That instills the confidence in each one of us to continue.

It would be nice to believe our carriers feel the same.

Gene Cutler, Master Agent, ACSIA Partners, gene.cutler@acsiapartners.net

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LTC Comment: Gene Cutler isn’t the only source of LTCI industry self-analysis and self-criticism. We’ve noticed a lot of healthy introspection among thought leaders in the business lately. Another example is Ron Hagelman’s excellent recent columns in Broker World. We highlighted one of them in LTC Bullet: The Medicaid Prevention Business. Here’s an excerpt from another, titled “Monday Morning Quarterback” in the magazine’s March 2018 issue.

All our futures in long term care insurance must now be guided not by our past success of a mere 8 million policy owners after 20 years, but by the 54 million we failed to encourage to “do the right thing.” The truth is we have been looking at this from the wrong end of the telescope. It was not how big and simple that was needed—it was how small and customized to the actual circumstance and dimensions of the most likely claim experience! The corollary truth is that for too long our goal has been to replace as much risk as possible with insurance. The affluent have always done just that and I see no reason for them to stop. Our goal should have been how many can we save from the intrinsic inadequacies of government dependence. How little is needed to maintain the freedom of choice that comes from remaining a private pay patient?

I wish I could say we’re seeing the same kind of modesty and self-review among the advocates of government financing. After all, they created the mess we’re in with inadequate retirement, health care and long-term care funding. But they only advocate more entitlement spending, which further anesthetizes the public to financial risk and loads the country with unprecedented debt. Doing the same thing and expecting a different result is, in a word, nuts.

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Updated, Monday, April 9, 10:26 AM (Pacific)

Seattle—

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LTC E-ALERT #18-014: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

2 Big Financial Shocks That Most Retirees Face
Understanding the Hidden $1.1 Trillion Welfare System and How to Reform It
The National Debt Grew by $1 Trillion in Just Six Months
Insurers likely to add and trim senior living benefits, thanks to relaxed Medicare rule
All-cause mortality is increased for older adults with sudden loss of wealth in the US
Caring for elderly parents can put a dent in your budget
The Long-Term-Care Insurance Dilemma
Insurer that cheated seniors raising rates again
Why you shouldn’t bother with memory or brain health supplements
What You Need To Know About Social Security and Medicare Changes for 2018
DNA and Long-Term-Care Insurance
U.S. government sets 3.40 percent hike in 2019 payments to Medicare insurers

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Updated, Friday, April 6, 11:45 AM (Pacific)

Seattle—

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LTC Bullet: The State of LTCI: Myths, Facts and the Wall Street Journal Article

LTC Comment: Tired of reading misguided and bad information in media coverage of long-term care insurance? MAGA’s Brian Gordon offers a much-needed reality check by rebutting the infamous “Wall Street Journal article” with facts, after the ***news***.

*** Those who attended the closing session (The Coming Revolution in Long Term Caregiving: The Future is Now!) at last month’s ILTCI conference know that technology and robotics will play an increasingly substantial role in caregiving going forward. However, in the meantime, caregiving continues to affect real people in real ways. Here are two recent articles we sent to our Clipping Service subscribers that deal with the current and forthcoming caregiving challenges we face. To inquire about our Clipping Service, contact Damon at 206-283-7036 or damon@centerltc.com. Please enjoy these sample clippings:

4/4/2018, “Caring for elderly parents can put a dent in your budget,” by Sarah O’Brien, CNBC

· Quote: “The biggest monthly expenses for caregivers are medicine and medical supplies ($273), food ($159) and personal-care items ($151).

· About half of current and past caregivers did not know in advance that they would be stepping into that role.

· In advance of finding yourself in that situation, whether expected or not, it's worth having a conversation with your parents about how they envision their care if they reach a point where they no longer can care for themselves.”

LTC Comment: Sound advice.

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3/26/2018, “As Trump Targets Immigrants, Elderly Brace To Lose Caregivers,” by Melissa Bailey, Kaiser Health News

LTC Comment: Politics + demographics = LTC - TLC. ***

ltc Bullet: The State of LTCI: Myths, Facts and the Wall Street Journal Article

LTC Comment: Recently we, at the Center for Long-Term Care Reform, celebrated 20 years in operation. In those 20 years, we’ve published over 1,200 LTC Bullets and have all of them archived on our website by date and by subject. One of those vital subjects we call “Reality Check: The Facts on LTCI.” This is where we store over 120 LTC Bullets, dating back to 1998, that address inaccuracies and faulty data that abound in media coverage of long-term care insurance. Lately, with the abundance of LTCi-related inaccuracies, faulty data and bad advice in the popular press, we’ve added a lot of “Reality Check” LTC Bullets to our archive. Today, we add one more. This latest addition is a guest LTC Bullet by Brian Gordon, president of MAGA Ltd., a CLTCR corporate member. We wish to thank Brian Gordon and MAGA for their role in protecting people from the risk and cost of long-term care. Reprinted with permission is Brian Gordon’s piece: “The State of LTCI: Myths, Facts and the Wall Street Journal Article.”

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“The State of LTCI: Myths, Facts and the Wall Street Journal Article.”

by Brian Gordon

By now, you've probably read Leslie Scism's Wall Street Journal article, "Millions Bought Insurance to Cover Retirement Health Costs. Now They Face an Awful Choice." The "awful choice" in question is Ms. Scism's assertion that today, LTCI policyholders must either 1) accept large premium increases or 2) drop their coverage.

We found this gloom-and-doom argument-that there is no other reality and no other options-to be misleading and incomplete. Most disturbingly, it invites consumers to throw up their hands in despair, rather than encourage thoughtful long term care planning.

On the plus side, this opinion piece sparked an important conversation, eliciting a range of responses. Here is our rebuttal to some of the key points in the WSJ editorial.

WSJ: Today, LTCI insureds have two bitter choices: pay stiff premium increases or forfeit coverage.
Fact: Those facing increases (not everyone is) have multiple solutions available to them. Most LTCI insureds can keep their policies inforce and premiums down simply by modifying their benefits-solutions known as "landing spots." For example, we've recommended to clients that they reduce their inflation rider benefit-say, from 5% to 3%-or shorten their benefit period, resulting in little or no premium change. Most clients are receptive and it's worked very well.

WSJ: LTCI carriers made a huge pricing mistake and now their insureds will pay for it forever in the form of steep rate increases.
Fact: It's true that when actuaries first priced LTCI 40+ years ago, they made some mistaken assumptions-not uncommon with brand new insurance products. They assumed more insureds would drop their policies than actually did so, and they did not foresee a decade of historically low interest rates. Combined with larger-than-anticipated claims that lasted longer than expected, it resulted in "a perfect storm." As a result, older LTCI policies have seen larger rate increases as more claims are paid on older policies.

However, in recent years, carriers have corrected their pricing. Consider this: rate assumptions made in 2014 were based on 16 times as much actuarial experience as those made in 2000. Companies are more informed. We do prime clients purchasing traditional LTCI today to expect some modest rate increases, just like their car and health insurance.

WSJ: When an insured's LTCI premiums increase, they're getting a raw deal.
Fact: Actually, a reason some insureds' LTCI premiums have increased is because they got way too good a deal in the first place. In some cases, they received incredibly valuable protection at what we now know was unsustainable premiums. Many older LTCI policies offered such generous benefits-for example, lifetime coverage-that they cannot be purchased today.

WSJ: Since hybrid/combo LTCI products are costly, they aren't worth consideration.
Fact: To dismiss the entire spectrum of hybrid/combo LTCI policies wholesale is disingenuous. (In WSJ's 50+ paragraph article, only a single paragraph addressed hybrid policies, which now are nearly as popular as traditional LTCI policies.) Yes, premiums are higher-because hybrid products by their nature include additional benefits, such as life insurance or an annuity. However, they can also offer guaranteed premiums and peace of mind-for some clients they make excellent sense.

WSJ: With such limited choices, why bother with long term care planning at all?
Fact: Americans face a proven likelihood of needing long term care at some point, and Medicaid is a solution intended for only the poorest individuals. To forsake long term care planning altogether may be shortsighted, particularly for families with enough assets to engage a professional financial planner. Between traditional LTCI policies, hybrids and the option of self-funding or partially self-funding one's long term care risk, there are numerous long term care funding solutions available.

If you'd like to explore this topic further, we suggest reading the recent Forbes article, "Why the WSJ Is Wrong about Long- Term Care Planning," by Jamie Hopkins, the Co-Director of the American College's New York Life Center for Retirement Income and an Associate Professor of Taxation at the American College. And if you'd like to discuss this further with us, please don't hesitate to get in touch.

MAGA Ltd is a LTCI pioneer established in 1975. The award winning MAGA team provides education to consumers, financial advisors and insurance professionals. Licensed nationally, they represent highly rated carriers for both Asset-Based and Traditional LTCI products. The Founder Murray Gordon, along with Brian Gordon CLTC and Peter Florek CLTC, have over 90 Years combined experience in the LTC Industry. MAGA clients have received millions of dollars in LTC insurance benefits thanks to their dedication to service.

For more info, call 800-533-6242 or email Maga@ltc.com. Visit our website at www.Magaltc.com.
We are located at 2610 Lake Cook Road, STE 250, Riverwoods, IL 60015.

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Updated, Monday, April 2, 10:31 AM (Pacific)

Seattle—

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LTC E-ALERT #18-013: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

'Aggressive' advance directive would allow patients to decline food, water at end of dementia battle
Automatic Adjustments Within Entitlement Programs: A Look at the Swedish Pension Reform Model
How much do retirees really depend on Social Security? Far less than you’d think
Why Are the New Hybrid LTC Policies So Popular?
Medicare’s condition-specific readmission measures are poor reflectors of hospital quality
How to figure out elder care for your aging parent
As Trump Targets Immigrants, Elderly Brace To Lose Caregivers
The power of biases
Key Points for Long-Term Care Insurance Purchases
Shift in Long-Term Care Planning Shapes ILTCI Meeting

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Updated, Friday, March 30, 2018, 10:11 AM (Pacific)

Seattle—

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LTC Bullet: Virtual Visit to the 18th Annual ILTCI Conference in Las Vegas, Nevada

If you couldn’t attend last week’s 18^th Annual Intercompany Long-Term Care Insurance Conference in Las Vegas, you missed out. But don’t fret. Your Center for Long-Term Care Reform has you covered. We attended and will provide our “Virtual Visit” of this must-attend LTCi industry conference after the ***news***.

*** HAPPY BIRTHDAY: The Center for Long-Term Care Reform will turn 20 years old on Easter Sunday. No April fooling. Steve Moses and attorney David Rosenfeld founded the Center on April 1, 1998. Today, our mission continues: “to ensure quality long-term care for all Americans.” We wish to thank our many generous supporters for their financial and moral support through the years. We could not have reached this milestone without you. ***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:

All LTC Bullets and E-Alerts
Access to our Members-Only Zone website and Almanac of Long-Term Care
Subscription to our Clipping Service
Email/phone access to Steve Moses for 24-hour turnaround queries

LTC Bullet: Virtual Visit to the 18th Annual ILTCI Conference in Las Vegas, Nevada

The 18^th Annual Intercompany Long-Term Care Insurance Conference, held March 18-21, at the Paris Hotel & Casino in Las Vegas, NV was another excellent industry event. Attendance was high at over 1,000 attendees, 60+ exhibitors and nearly 40 sponsors. An ample 45+ breakout sessions covered a diverse array of topics:

Actuarial
Legal, Regulatory & Compliance
Claims & Underwriting
Marketing, Distribution & Sales
Traditional, linked and combination products
Technology

These educational sessions combined with the high caliber of attendees, exhibitors and sponsors offered plentiful occasions for valuable learning and professional development, while receptions and meals provided many indispensable opportunities for networking with a diverse range of industry professionals. With Steve unable to attend the conference and Damon busy volunteering at conference registration, our coverage will be limited; however, we attended some sessions, mingled with attendees and received a sense for the state of the long-term care insurance industry.

Every year the Intercompany Long-Term Care Insurance Conference takes the pulse of the LTCi industry and offers direction forward. To that end, “A Matrix of Opportunities” was the tagline for this year’s conference and that optimism filled the agenda. According to the conference website’s homepage:

A quiet revolution is taking place in the long-term care insurance industry. More interest than ever is being focused on private sector solutions to the growing societal issues pertaining to long-term care. Planning choices for consumers are growing at a rapid pace. Insurance companies are developing new innovative approaches to providing long-term care liquidity at various life stages and insurance agents and financial advisors are showing renewed interest in talking to consumers about their long-term care planning needs.

With entitlements and social programs strained, longevity and healthcare costs increasing, caregiver supply decreasing and the age wave cresting, how we finance long-term care now and in the future is a demographic, political and fiscal Rubik's Cube. This year’s ILTCI conference contributed to solving that multi-dimensional puzzle by hosting the innovators who are offering new directions and products designed to save people from the risk and cost of long-term care.

The conference opened with keynote speaker, Vinh Giang, a business person and magician. From his profile:

Vinh’s mission in business and life is to share the psychology of illusion. He has devoted himself to understanding the ways in which people are fooled by illusions and by the tricks we play on ourselves. During his presentations, he demonstrates how this occurs.

By all accounts Mr. Giang’s presentation was engaging and the strong work ethic he espoused was something with which people in the long-term care insurance industry could identify.

Mr. Giang got the conference off to a good start. Next, we’ll provide a summary of some of the sessions we attended. We stuck primarily to the “Public Policy & Alternative Financing Solutions” and “Producers & Sales” tracks, but there were plenty of other worthwhile tracks to follow and sessions to attend. Access the complete conference schedule here for session information and presentation documents not provided below.

We’ll begin with three sessions focused on long-term care financing innovation:

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Session: The Case for Variable LTC Insurance
Track: Public Policy & Alternative Financing Solutions
Speakers: Joan Melanson, CLTC, LTCP - Long Term Care Partners, LLC - Director of Program Promotions / Marc Cohen, PhD - University of Massachusetts - Clinical Professor of Gerontology / Paul Forte - Long Term Care Partners, LLC - Chief Executive Officer / Roger Loomis, FSA, MAAA - Actuarial Resources Corporation (ARC) – Principal
Documents: Presentation, The Case for Variable Insurance - Final Contingencies

Highlights:

This session was a perfect example of top LTCi industry professionals offering creative innovation in the field of long-term care financing. From the session’s description:

The LTC industry has been dealing with the ongoing challenges of rate increases. But what if, instead of attempting to fine-tune the LTCI premium after the fact, we were to allow the benefit to fluctuate from the outset, such that it would track and reflect emerging experience over time?

Presenter, Roger Loomis, used an apt oil drilling analogy to describe this. When people seek to extract oil from underneath an ocean they don’t simply set up an oil rig, point a drill towards oil and hope for the best. They find out exactly where the oil is, point the drill and make countless corrections to the drill’s course until the exact destination is reached. The session continued by exploring the viability of using a similar approach to LTCi using a variable benefits design.

See the session’s documents for further details.

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Also in the vein of offering creative alternative financing solutions, we attended:

Session: Consumer View of New Long Term Care Combination Products
Track: Public Policy & Alternative Financing Solutions
Speakers: Eileen Tell, MPH - ET Consulting, LLC - Independent Consultant / John O'Leary - O'Leary Marketing Associates – President / Vincent Bodnar, ASA, MAAA - Genworth - SVP, Product Management / Cindy Malone - Maddock Douglas - Senior Vice President Research
Documents: Presentation

Session’s online description:

While consumers today better understand the risks and costs of needing long term care, there is a significant gap between awareness and action. The lack of viable solutions, from the consumer perspective, is a key factor. The social marketing literature defines two key elements needed for behavior change: (1) awareness of the problem and (2) offering solutions which consumers deem as viable and appropriate. Based on very limited product acceptance, current mainstream private LTC insurance products do not satisfy the latter component. Hence an interest in creating new and affordable coverage options for consumers. Two new product concepts – LifeStage and Retirement Plus – have emerged from the Society of Actuaries’ Think Tank as creative ways to combine LTC coverage with existing financial vehicles to create new kinds of combination products. This session reports on findings from consumer research to understand how well these new options might meet consumers’ needs. The research also includes a demand model to estimate market potential.

See the session’s documents for further details.

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Session: Home as a Strategic Asset for Retirement and Long Term Care Needs
Track: Public Policy & Alternative Financing Solutions
Speakers: Eileen Tell, MPH - ET Consulting, LLC - Independent Consultant / Amy Ford - National Council on Aging (NCOA) - Senior Director, Home Equity Initiatives and Social Accountability / Barbara Stucki, Ph D. - NestCare FPC - Cofounder and CEO / Sandra Timmermann - American College of Financial Services - Visiting Professor of Gerontology and Retirement Living
Documents: Presentation

Session’s online description:

Home equity represents a significant portion of the financial net worth of older adults, most of whom want to age in place in their current homes. Despite the importance of home equity as part of the financial portfolio, recent research shows that older homeowners do not understand the home equity release products available to them. They also do not know how to decide when and how to leverage home equity in addressing retirement concerns. Greater education and understanding could enhance affordability to buy long term care insurance or pay for in-home care through the appropriate use of home equity release options. This session summarizes new consumer survey findings on the topic and identifies new and improved home equity product options.

Here we have another session focusing on solutions for financing retirement and long-term care needs. Basically, the home is a “pot of money” that people can use to help finance the many costs associated with aging. However, homeowners are at odds with tapping their homes’ equity because they are stuck between an emotional connection to their home on one side and their financial needs on the other. Furthermore, it doesn’t help that home equity release products are poorly understood. This session helped to reconcile all the facets of the home equity dilemma and presented home equity as a viable retirement and long-term care planning asset.

See this session’s presentation for further details.

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THE HUMAN INTERFACE

Innovative products are nothing without innovative people to connect them with the right consumers. The next session we attended covered successful sales strategies to do just that.

Session: Return of the Jedi: Best Practices of the Masters
Track: Producers & Sales
Speakers: Terry Truesdell - National LTC Network - President/CEO / Matt McCann - McCann Insurance Services – Owner / Jim Dawson, CLTC - PNW Insurance Services - Agency Mentoring Leader / Melissa Barnickel, CPA, CLTC - Baygroup Insurance LLC - Accountant & Insurance Broker / Sally Leimbach, CLU®, ChFC®, CEBS, LTCP, CLTC - TriBridge Partners LLC - Senior Consultant for Long Term Care Insurance
Documents: Presentation

Session’s online description:

This panel discussion of leading producers and Jedi Masters will share the business practices that have allowed them to build large books of business and to maintain a steady flow of new business. When not fielding questions from the audience they will be sharing tried and true closing techniques, as well as the elements of a successful placement rate ranging from effective field underwriting and solidifying the sale to client communications and referral generation.

Highlights:

Sally Leimbach eschews stupidity in her sales strategy by flipping the KISS (Keep It Simple, Stupid) approach. She espouses KISUI: “Keep It Simple, Understandable and Intelligent.” Perfect. Everyone involved in the LTCi sales transaction is intelligent and should be treated that way.

Useful sales tips were provided in abundance from these experienced sales pros, but some session attendees shared their sales techniques as well. One attendee shared a crowd-pleaser something to the effect of: “2 out of 3 people will need long-term care. I already decided I won’t, so it looks like you will.”

See this session’s presentation for each speaker’s “Pearls” of wisdom.

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Branding and marketing are other key human elements in the sales process. The next session we attended employed the expertise of four more sales savants to explore the empirically successful methods they use to effectively brand and market their services.

Session: Building YOUR Brand
Track: Producers & Sales
Speakers: Denise Gott, MBA, CLTC - ACSIA Partners – CEO / Marilee Driscoll – Speaker / Honey Leveen, LUTCF, CLTC - Your LTCI Specialist – Owner / Betty Doll, MBA, CLTC - Doll & Assoc. Long Term Care Insurance Services - Owner/Broker
Documents: Presentation

Session’s online description:

In today’s world, everyone is connected to others electronically and your life is very visible. So, YOU have a brand that your client will see. Is it what you want? Learn from marketing experts how to create a positive brand that will attract clients. Also, covered are the latest methods of: creating/utilizing a website, generating new leads and referrals, utilizing social media, and general effective marketing techniques.

Highlights:

This session covered key elements such as logo format, design and size (keep it simple); how to choose a website domain; how to yield beneficial web search results; and how to keep in contact with your clients and prospects (newsletters). Ultimately, building a brand is a “get rich slow” process.

See this session’s presentation for further details.

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Closing session: The Coming Revolution in Long Term Caregiving: The Future is Now!

The conference closed with a shift from long-term care planning innovation to caregiving innovation. Caregiving is a dangerous job and with long-term care needs increasing and available caregivers declining, technology is the future of caregiving. Specifically, robots. Speakers, Jeremy Pincus, PhD and Marjorie Skubic, PhD, were not fantasizing about science fiction; they were describing the current technological advances in robotics and how they will fill the “caregiver void.” Will caregiving robots prove to be “Disruptive Innovation” for the long-term care industry?

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Final thoughts: What I take home from each ILTCI conference is a renewed sense of appreciation for the LTCi industry and all the talented people in it who devote themselves to protecting others from the risk and cost of long-term care. It’s a diverse group of attendees, but I’ve noticed that what draws many to the industry (and to these conferences) are personal long-term care experiences and the resulting desire to help others plan for their long-term care needs. Many thanks are due to Jim Glickman, everyone on the conference organizing committee, Meeting Masters, A/V crew, Paris hotel staff and, of course, all the sponsors, exhibitors, speakers and attendees for making this event exceptional. See you next time.

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Updated, Monday, March 26, 2018, 10:16 AM (Pacific)

Seattle—

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LTC E-ALERT #18-012: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

The LTC insurance conundrum: Slumping sales, but no shortage of demand
NAIFA Launches Center For Excellence In Long Term Care
Spotting Alzheimer’s Early Could Save America $7.9 Trillion
6.6% of those 65+ need help with ADLs, says CDC
Formal Cost of Care
Everything You Need To Know About The New Medicare Cards (But Beware Of Scams)
MedPAC: Congress Should Cut Medicare Rates for Skilled Nursing Facilities
Long-term care costs could reach $5.6 trillion by 2047: report
Why advisers should be offering critical illness policies
Dementia study links your risk with your fitness level
Skilled Nursing Occupancy to Keep Falling in 2018
How In-House Insurance Plans Can Boost Skilled Nursing’s Fortunes
New Technologies Help Seniors Age In Place — And Not Feel Alone
Americans Are Spending More But Planning Less For Caregiving
One State’s Quest to Introduce Long-Term Care Benefits
What the Rise of Medicare Advantage Means for Skilled Nursing
Looking At Tax Deductibility Of LTC Combo Policies
What influences older adults' preferences for care?

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Updated, Friday, March 23, 2018, 9:15 AM (Pacific)

Seattle—

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LTC BULLET: HAVE YOUR CAKE UNTIL IT EATS YOU

LTC Comment: Americans want to have their cake (entitlements) and eat it too, but trends show this cake will eat our economy first. Scary evidence after the ***news.***

HEADS UP! Ross Schriftman tells us: “We now have our 12 minute documentary of the making of the My Million Dollar Mom short up on our website at www.mymilliondollarmom.com.” Soon to follow will be the premiere of the movie on May 14. Check the film’s website to stay tuned for details and further information.

LTC BULLET: HAVE YOUR CAKE UNTIL IT EATS YOU

LTC Comment: We invite your attention to two excellent columns published recently in the Wall Street Journal.

The first, titled “Americans Want Big Government,” by William A. Galston, explains how Americans want more “free” stuff, but neither they nor their political representatives say how to pay for it.

The second, “Why America Is Going Broke,” by John F. Cogan, explains how our prodigious appetite for the unearned will come back to bite us.

Here are some telling facts from the Galston piece:

“In the NBC/Wall Street Journal poll last month, 58% of Americans—the highest share ever recorded—agreed that ‘government should do more to solve problems and help meet the needs of people,’ compared to only 38% who thought that ‘government is doing too many things better left to businesses and individuals.’”

What more should we be doing and for whom?

“A Pew study last month found majorities endorsing the view that government does too little to help young people, the elderly, the middle class and the poor.”

“According to the Kaiser survey, 40% of Americans favor more defense spending while only 19% want less. Seventy percent want more spent on education, while only 7% want less. The Spring 2017 Pew survey found broad support for increased spending on veterans’ benefits, infrastructure, scientific research, environmental protection and assistance to the needy.”

Sounds great, right? But don’t we have to pay for all this largesse? Why worry?

“Not surprisingly, surveys also register a steep decline in public concern about the federal budget deficit. In 2013, according to the January 2018 Pew study, 72% of Americans regarded deficit reduction as a top priority. By the beginning of this year the figure had fallen to 48%.”

Well, at least our public officials are addressing this issue head on. Not.

“Last December, President Trump signed a Republican tax bill that will raise the deficit by an estimated $1 trillion over the next decade, and the new budget will add to this figure. Based on data from the Congressional Budget Office, the Committee for a Responsible Federal Budget calculates that the budget deficit will rise from $800 billion in 2018 to $1.19 trillion in 2019, and will increase even more in 2020. If the spending increases for these two years are made permanent, the annual deficit will reach an estimated $1.7 trillion by 2027. And political pressure will make it nearly impossible to roll back these increases.”

Oh well, “eat, drink and be merry for tomorrow we die,” right?

“We do not know for sure. But we do know that when the next recession comes, the government will have few fiscal and monetary tools left to fight it. If annual budget deficits already exceed $1 trillion, and if the burden of the national debt is already at an all-time high, little room will be left for the antirecessionary measures that governments of both political parties have employed since the early 1930s.”

“The American people have told Congress how much government they want. Responsible leaders would now inform the people what it will take to pay for this much government. In the absence of such responsibility, our fiscal policy will remain on a collision course with reality. The only question is when the crash will come.”

The second article, by John Cogan, focuses on entitlements as the elephant of anti-austerity. First, the problem:

“President Trump’s budget estimates a deficit of nearly $900 billion for 2018 and nearly $1 trillion (with total spending of $4.4 trillion) for 2019. Its balance sheet reveals that the public debt will reach $15.7 trillion by October. This works out to $48,081.61 for every man, woman and child in the U.S. That doesn’t count unfunded liabilities, reported by the Social Security and Medicare Trustees, that are four times the current public debt.

“How did the federal government’s finances degenerate this far? It didn’t happen overnight. For seven decades, high tax rates and a growing economy have produced record revenue, but not enough to keep pace with Congress’s voracious appetite for spending. Since the end of World War II, federal tax revenue has grown 15% faster than national income—while federal spending has grown 50% faster.”

Next, the cause:

“[A]ll—yes, all—of the increase in federal spending relative to GDP over the past seven decades is attributable to entitlement spending. Since the late 1940s, entitlement claims on the nation’s output of goods and services have risen from less than 4% to 14%. Surprising as it may seem, the share of GDP that is spent on national defense and nondefense discretionary programs combined is no higher today than it was seven decades ago.”

“If you’re seeking the reason for the federal government’s chronic budget deficits and crushing national debt, look no further than entitlement programs. … Since the early 1970s, entitlements have been the federal budget’s largest spending category, the sole source of the federal budget’s growth relative to GDP, and the primary cause of chronic budget deficits.

“Today, entitlement spending accounts for nearly two-thirds of federal spending. Defense spending still only accounts for about a sixth of the federal budget, even with recent increases. Defense spending could be doubled and it would still be only half what the federal government spends on entitlements. Significant reductions in the budget deficit can only be achieved by restraining the growth of entitlement spending.”

But, unfortunately:

“The president has ruled out any significant reform of Social Security and Medicare, the two largest entitlement programs. His budget shows that this year Social Security and Medicare expenditures will exceed the payroll taxes and premium payments dedicated to supporting them by $420 billion. Social Security and Medicare deficits will account for half this year’s total budget deficit.”

Maybe Congress will step into the breach. Well, no:

“The situation is no better at the other end of Pennsylvania Avenue. Democrats are getting domestic spending increases and Republicans are getting increases to the defense budget. Instead of offsetting higher spending with reductions elsewhere, Congress simply increased both defense and domestic spending in the recently enacted continuing resolution to fund the government. At the same time, by eliminating the need to vote on a debt ceiling this year and ruling out the reconciliation process for any budget bill, Congress signaled that it has no stomach for entitlement restraint.”

The future bodes ill:

“Social Security and Medicare expenditures are accelerating now that baby boomers have begun to collect their government-financed retirement and health-care benefits. If left unchecked, these programs will push government spending to levels never seen during peacetime.

“Financing this spending will require either record levels of taxation or debt. Economics teaches us that high tax rates reduce economic growth and living standards. History teaches us that high public debt aggravates economic volatility and makes a country’s financial system more prone to crisis.”

LTC Comment: OK, so where does this leave us? We’re on a collision course with economic disaster. Neither the public nor its political representatives have the stomach to confront excessive entitlement spending. But, in the end, we can’t have that cake and eat it too. The suffering when the inevitable end comes will be tragically greater than the need these entitlement programs sought to meet in the first place.

It fascinates and frightens me that America, founded in the spirit of freedom, independence and individual enterprise, could have deteriorated to its current state of collective self-deceit, authoritarianism, and dependency. I find a clue to how this happened in the Galston article’s opening sentence:

“In a well-functioning democracy, the people articulate their desires and grievances, and their elected officials shape these sentiments into sustainable policies. With this division of labor between citizens and representatives, democracy can be both responsive and responsible.”

That statement is fundamentally mistaken. It is not democratic politics that bring us sensible policies and prosperity. Political majorities will always vote themselves more free stuff until they run out of other people’s money.

That’s the fix we’re in now. And that’s why our founders and the Constitution they wrote tempered democracy with principled protection of individual rights and property. The Supreme Court’s failure to keep those principles inviolable has allowed government encroachment into economic spheres it was never intended to enter.

To wit: majorities of people demand more and more free stuff and their political representatives give it to them in order to remain in power. It’s a vicious downward spiral the awful bottom of which we’re nearing today.

What’s a better way? Get government out of the business of being the people’s nanny. Have confidence that most human beings, left to their own devices (as the founders intended) will not only survive, but prosper. The resulting economic bonanza would enable private charity to provide for the few who need help better than the bloated, ineffectual social programs the needy rely on now.

Why will this happen? In free markets, unencumbered by excessive government interference, taxation and regulation, people vote with their hard-earned dollars for what they want. Entrepreneurs anticipate what people may want. If they get it right, they profit. If they get it wrong, they lose and disappear. Investors choose which entrepreneurs to support with their hard-earned capital. Smart ones win; others lose. The only guaranteed winners in capitalism are consumers. They are the net beneficiaries of the many risks entrepreneurs and investors take.

There is no room for self-deceit, authoritarianism or government dependency in such a system. No unearned free stuff stolen from producers undercuts individual initiative. The resulting prosperity unleashes the natural human generosity to help those less fortunate. Everyone is better off. But, alas, don’t hold your breath.

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Updated, Monday, March 12, 2018, 9:15 AM (Pacific)

Seattle—

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LTC E-ALERT #18-011: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Using a Health Savings Account to Pay for Long-Term-Care Insurance
Per-bed SNF price plummets in 2017; NIC's cross-sector collaboration to support industry
Assisted living sets record for price per unit
Amazon extends discounted Prime memberships to Medicaid recipients
Why Long-Term Care Insurance Is a Bad Investment
Letting an LTC insurance policy lapse
CMS allots $30M for new quality measures
The 37 States That Don't Tax Social Security Benefits
As Trump Pushes Medicaid Testing, the Grading Falls Short
The Long-Term Care Insurance Market Evolves
How Many Seniors Are Living in Poverty? National and State Estimates Under the Official and Supplemental Poverty Measures in 2016
These 5 defensive moves can protect your money and wealth
Why the daunting economics of elder care are about to get much worse

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Updated, Friday, March 9, 2018, 8:43 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care News and Analysis

LTC Comment: Center for Long-Term Care Reform Premium members have the option to receive our LTC Clipping Service and weekly LTC E-Alerts newsletters. Today, we’d like to share a sample of these members-only services with a wider audience. Our topic is the news this week, so we’ll keep our ***news*** section brief then dive straight in.

*** Some CLTCR staff will be attending the upcoming 18th Annual Intercompany Long-Term Care Insurance Conference in Las Vegas. In preparation for this vital and not-to-be-missed annual affair, we’ll skip next week’s LTC Bullet, but don’t fret: There’s over 1,200 LTC Bullets dating back to 1998 and archived by date and subject here. In lieu of anticipating and reading your Friday Bullet, why not have a look at our archive? If you need some direction, start by reading our LTC Bullets rebutting some of the unbalanced and negative treatment of LTCi in the popular press recently. To that end, we offer: Don’t Buy LTCI?!, LTCI Under Fire, LTCI Expert Fights Back and last week’s piece from Phyllis Shelton, It’s Time to Stop Bashing Long-Term Care. If that’s not enough, try our Reality Check: The Facts on LTCI section which compiles LTC Bullets dating back to 1998 that combat inaccurate media coverage of LTCi with facts and sound analysis. Enjoy. ***

LTC Bullet: Long-Term Care News and Analysis

Many Center for Long-Term Care Reform Premium members are familiar with our LTC Clipping Service, and from what we hear, get great value from this benefit of Premium membership.

INSURANCE (Long-Term Care Insurance, Critical Illness Insurance, Hybrid and Miscellaneous (including alternative financing solutions))
LONG-TERM CARE (General, Cost, Assisted Living, Nursing Homes, Home Care, Caregiving, Veterans Affairs and Government Solutions)
MEDICAID (General, Medicaid Planning and Crowd-Out Effect)
MEDICARE (including Medi-Gap and Medicare Advantage)
SOCIAL SECURITY
ALZHEIMER'S DISEASE
POLITICS, LEGISLATION AND PUBLIC POLICY
ECONOMICS, DEMOGRAPHICS AND DATA
RETIREMENT PLANNING
HEALTH AND HEALTHCARE
OTHER

I depend on the clipping service to keep me abreast of all LTC breaking news. It is a huge time-saver and contributes to my overall sense of confidence and knowledge as a LTCi specialist. I really think the service gives me an “edge,” and helps keep me one step ahead of my competitors. Conveying the insights I gain from the clipping service often enables me to more easily and relevantly educate my clients on the importance of LTCi ownership. -- Honey Leveen

I LOVE receiving your clippings, because . . . I'm able to get the info quickly and can pass it on to my colleagues. Honestly, without your service, I probably wouldn't be aware of half of the things that you serve up to me, on a “silver platter" as the saying goes. Thanks for making my life so much easier! -- Susanne E. Howarth, Director of Long-Term Care, TBG West

Please find below a sample collection of clippings we’ve sent to our Clipping Service subscribers over the past two weeks. Read through them and if you think that receiving news items like these in real time would be valuable to you, please consider subscribing at the Premium membership level. By doing so, you can stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform.

Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month.

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3/7/2018, “What influences older adults' preferences for care?,” MedicalPress

Quote: “The researchers found that support from family was the most important influence on care preferences for older adults. But people also usually formed their preferences based on a variety of factors. They also discovered that it was unusual for older adults to know their care preferences or to have a clear understanding of how they formed their preferences.

“The key findings of this study were:

· The level of support from families was the most important influence on care preferences. Often, older adults changed their preferences based on the concerns of family members or a wish to avoid ‘being a burden’ to others. This was especially true for preferences regarding the places where people wished to receive care (for example, at home versus in a healthcare facility).

· Older adults' experiences of previous illness and of caring for others also influenced preferences about their own future care.

· Being more seriously ill strongly influenced care preferences, especially for older adults who were aware that they were unwell.”

LTC Comment: Interesting that not being a burden on others and prior care-giving experience influence type-of-care preferences. Having LTCI would ameliorate both concerns and keep all options open.

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3/7/2018, “Using a Health Savings Account to Pay for Long-Term-Care Insurance,” by Kimberly Lankford, Kiplinger

Quote: “Q: Can I withdraw money tax-free from my health savings account to pay my long-term-care insurance premiums? If I can, is there a limit to the amount I can use? Does it have to be for a stand-alone long-term-care policy, or can it be for a life insurance policy with long-term-care benefits, too?”

LTC Comment: Click through to the article for the answers.

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3/7/2018, “Why Long-Term Care Insurance Is a Bad Investment,” by Jason Notte, TheStreet

Quote: “‘Mathematics work against [long-term care insurance] because most people will need long-term care eventually,’ Kibler says. ‘For insurance to make economic sense, the risk must be spread across a pool of participants.’”

“With other types of insurance, only a portion of the population collects, while the others continue to pay their premiums. That covers expenses paid out and keeps premiums manageable. However, since most buyers of long-term care insurance will eventually collect, Kibler notes that insurers will have to raise premiums. That will cause the healthier portion of the population to opt out, leaving a pool of less-healthy participants who all believe they will need to collect their insurance in the immediate future.”

LTC Comment: The argument here is specious and the nuance the author misses is that through LTCi some people will be spared catastrophic loss, others will be glad they never needed it and many people will fall somewhere in-between and have protection.

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3/7/2018, “Letting an LTC insurance policy lapse,” by Karin Price Mueller, nj.com

Quote: “Q, My husband and I are 84 and 85 and we have had long-term care insurance for 17 years. The premiums are going up too much and we are on a fixed income, earning a little over $30,000 a year. We have a good amount of other assets, and we're trying to decide if we should keep the insurance or cancel it.
-- Tough decision

A. As you know, long-term care insurance can be a very important part of your financial plan.

You shouldn't let the policy lapse without serious consideration.”

LTC Comment: Some welcome good advice.

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3/5/2018, “The Long-Term Care Insurance Market Evolves,” by Mark Miller, Morningstar

Quote: “It's a paradox: More Americans are worried about the risk that long-term care expenses can pose for their retirement plans, but few take action to protect themselves. The commercial long-term care insurance industry has never achieved mass market penetration levels, and sales have been falling steadily over the past five years. Chalk it up, in part, to consumer resistance. People are reluctant to spend thousands of dollars annually on insurance premiums for a long-term care need that might come far down the road, or not at all.”

LTC Comment: Some paradox! Medicaid has paid for the vast majority of all expensive long-term care since 1965. There’s no mystery why most Americans don’t worry about LTC costs until they need care after which it’s too late to do anything responsible like buy private insurance.

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3/2018, “How Many Seniors Are Living in Poverty? National and State Estimates Under the Official and Supplemental Poverty Measures in 2016,” by Juliette Cubanski, Kendal Orgera, Anthony Damico, and Tricia Neuman, Kaiser Family Foundation

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3/5/2018, “These 5 defensive moves can protect your money and wealth,” by Liz Miller, MarketWatch

Quote: “Every well-considered wealth-management plan includes an assessment of personal, property, and financial risk. Investments have risks that can’t readily be insured, so other risks must be managed in order to minimize threats to overall wealth goals. Fortunately, many of the personal risks that can threaten one’s wealth can be managed with proper insurance. Consider these five ways to reduce your exposure to risk:

“2. Consider long-term care insurance:

Studies indicate that at least one member of every couple living today is likely to need some kind of long-term medical assistance. Many people have the means to pay these expenses out of their wealth savings, but for many others, a long-term stay in a luxury care facility — due to dementia or some other debilitating condition — can derail their lifestyle or legacy goals. If you have any medical conditions or family history that make you particularly vulnerable to health risks, or you do not have the means to cover these costs, consider long-term care insurance options. This is relatively inexpensive insurance to add prior to age 50, but it can get pricey later in life.”

LTC Comment: A pretty good concept offering LTCi as a type of lifestyle insurance or even “portfolio insurance.”

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3/2/2018, “Why the daunting economics of elder care are about to get much worse,” by Patricia Smith, The Conversation

Quote: “When no relative steps up to serve as an unpaid caregiver when the need arises, families hire paid caregivers or move their loved one into a nursing home, where a private room may cost $100,000 or more per year. Medicare rarely covers nursing home stays, and eligibility for Medicaid coverage is limited, so institutional care like that is generally out of reach for all but the wealthiest Americans or those with long-term care insurance – which also costs a lot. … In the meantime, Medicaid and Medicare can make caregiving more financially rewarding by increasing the rates they pay for elder care, spurring the kind of salary growth for home health aides required to make the profession more attractive. And to ease the financial burden of caregiving all around, Medicaid and Medicare could ramp up benefits for care delivered in the home and in institutions and extend coverage to more people.”

LTC Comment: Typical balderdash: fix the LTC problem by spending more on what caused it in the first place.

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3/2/2018, Good data source referenced by Stephen D. Forman in the “LTCA Weekly Reader”

LTC Comment: We thank Center friend and Corporate member Steve Forman of Long-Term Care Associates for this resource tip.

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2/27/2018, “Aerobic exercise slows cognitive decline in Alzheimer’s disease,” by Mary Gillis, Reuters

Quote: “Researchers assessed data from 19 studies conducted between 2002 and 2015 that examined the effects of exercise on cognitive ability in 1,145 people at risk of or diagnosed with Alzheimer’s disease. Nearly 90 percent were randomized controlled trials, which are the most reliable type of study.

“Results indicated that exercise - specifically, cardiovascular exercise - had a strong favorable impact, researchers reported in the Journal of the American Geriatrics Society.

“This study is the first to suggest that aerobic exercise may be more effective than other types of exercise when the goal is to preserve the cognitive health of older adults at risk of or with Alzheimer’s disease, Panza said.”

LTC Comment: It’s pretty gloomy here in Seattle, but I think I’ll go for a run later.

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2/27/2018, “Here’s a surprise source you can tap for long-term care services,” by Darla Mercado, CNBC

Quote: “It isn't every day that an older client might consult experts to help him become impoverished as he prepares for long-term care. Enter Medicaid planning, a corner of personal finance that brings together elder law attorneys, accountants and financial advisors to help seniors pay for nursing home care while protecting their family members.

“Those who participate in Medicaid planning work with attorneys, accountants and advisors to shift their wealth to trusts or annuities in order to qualify.”

LTC Comment: We hesitate to forward articles such as this that are basically advertisements for Medicaid planning and contribute to the overall desensitization to the need for responsible long-term care planning. However, people read articles like this when researching options for financing long-term care and it’s better to know when there’s a new one out there. For some balance, see also our recent LTC Bullet: The Medicaid Prevention Business, which features Ron Hagelman’s column from the latest Broker World.

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2/23/2018, “HSA use increasing among those under 65,” by Allison Bell, ThinkAdvisor

Quote: “U.S. residents’ use of public and private health coverage stayed about the same between 2016 and the first three quarters of 2017, but use of health savings accounts (HSAs) may have climbed 15 percent. The number of U.S. residents under the age of 65 who had HSAs increased to 17.9 million in 2017, from 15.5 million in 2016, according to new National Health Interview Survey (NHIS) data.”

LTC Comment: Many will use the HSAs to fund the next generation of LTCI after Medicaid stops subsidizing the middle class and affluent.

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2/26/2018, “Are You Prepared To Live To Be 100?,” by Alexander Koury, Forbes

Quote: “Today, we are living healthier lives, which has increased our life expectancy and changed the way in which we should prepare to live well beyond our expectations. We are living in an age when medicine and technology are being designed to keep us living longer, and future developments will continue to push life expectancies higher. This is the new reality, and unless you choose to solve the problem now, you could outlive your money. Ask yourself, ‘How long will my money last?’ If you do not know, now is the time to figure out how you will get on track.

“Last, consider buying long-term care, and shop for a plan that fits your budget and your goals. If we go back to the example I presented earlier, long-term care may end up costing you as much as a $700,000 home. Imagine having to buy one for you and your spouse. These are things you should consider reviewing now before too much time passes. The older you are, the less time there is to make sure your financial plan is intact.”

LTC Comment: A pretty good article and reminder of the various costs associated with increasing longevity and how to prepare for them.

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2/21/2018, “Immigration Curbs Will Weaken Social Security,” by Howard Gleckman, Forbes

Quote: “President Trump has proposed deporting hundreds of thousands of immigrants and backed curbs on legal immigration into the US. The president’s aggressive views on immigration have generated intense debate over the past year, but much of that discussion has ignored a key issue: What immigration restrictions would mean for the long-term health of Social Security.

“A new study by my Urban Institute colleagues Damir Cosic and Rich Johnson finds that just one proposal—a Senate bill to reduce the number of permanent residency visas (green cards)-- would increase unfunded Social Security obligations by $1.5 trillion, or 13 percent, over the next 75 years. In the nearer term, it would accelerate by one year the date by which the Social Security trust fund is projected to be depleted—from 2034 to 2033.”

LTC Comment: This affects the long-term care industry because those would-be immigrant workers could fill positions as much-needed long-term caregivers and pay into Social Security and Medicare which are both connected to Medicaid via spend-through and reimbursement, respectively.

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2/18/2018, “1.5 Million Retirees Await Congressional Fix for a Pension Time Bomb,” by Jim Tankersley and Alan Rappeport, New York Times

Quote: “The sprawling agreement to boost government spending reached by Republicans and Democrats this month quietly included a step toward defusing what could be a financial time bomb for 1.5 million retirees and hundreds of companies in the industrial Midwest and the South. The deal creates a select congressional committee to craft what could effectively be a federal rescue of as many as 200 so-called “multiemployer” pension plans — in which employers and labor unions band together to provide retirement benefits to employees.
Many of these plans are hurtling toward insolvency in the coming decade, with benefits owed to retirees projected to swamp what the plans can afford to pay. The 16-member, bipartisan committee will have to come up with a solution and legislation by the end of November, which the full Senate would need to vote on by the end of the year.”

LTC Comment: Who’s going to bail out Social Security and Medicare?

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Updated, Monday, March 5, 11:06 AM (Pacific)

Seattle—

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LTC E-ALERT #18-010: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Good data source referenced by Stephen D. Forman in the “LTCA Weekly Reader”
Why the daunting economics of elder care are about to get much worse
When is the Skilled Nursing Wave Coming? Depends Who You Ask
Minnesota LTC pros apologize to public after abuse claims
Widows Got Bad Social Security Claiming Advice From SSA: IG Report
Aerobic exercise slows cognitive decline in Alzheimer’s disease
Here’s a surprise source you can tap for long-term care services
HSA use increasing among those under 65
Are You Prepared To Live To Be 100?
Alzheimer's Death Rate Continues to Rise: CDC

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Updated, Friday, March 2, 2018, 9:14 AM (Pacific)

Seattle—

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LTC Bullet: It’s Time to Stop Bashing Long-Term Care Insurance

LTC Comment: The title of this week's LTC Bullet says it all. Phyllis Shelton speaks her mind after the ***news.***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:

All LTC Bullets and E-Alerts
Access to our Members-Only Zone website and Almanac of Long-Term Care
Subscription to our Clipping Service
Email/phone access to Steve Moses for 24-hour turnaround queries

LTC Bullet: It’s Time to Stop Bashing Long-Term Care Insurance

LTC Comment: Many of you surely know Phyllis Shelton, but for those who don't, she's a highly regarded author, teacher and consumer advocate for LTC planning. She's a friend and member of the Center for Long-Term Care Reform and is passionate and prolific in her work helping to protect people from the risk and cost of long-term care. We enjoy following her work. We have all noticed a recent spate of negative and unbalanced media treatments of LTCi, so when we read her latest blog post, "It’s Time to Stop Bashing Long-Term Care Insurance," it resonated with us. The title says it all. If you're tired of reading articles that bash LTCi without context or an opposing view, read what follows.

Reprinted below with permission is "It’s Time to Stop Bashing Long-Term Care Insurance" by Phyllis Shelton. Get in touch and read more of her blog posts via her website: www.gotltci.com.

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It’s Time to Stop Bashing Long-Term Care Insurance

by Phyllis Shelton

Enough. Stop. The plethora of LTC insurance bashing articles has gotten to me.

These people aren’t bashing LTC insurance!

Mr. C. Vernon Duckett – he was able to take care of Helen, his most precious asset, with the best care possible AND continue to play golf four times a week for his own well-being.
Mary and Don – Don died the day before his 75th birthday after 10 years of Parkinson’s disease and Alzheimer’s. He paid just over $18,000 in premium before receiving about $530,000 in tax-free cash benefits. Mary has received two rate increases and is the first to tell you she will never let her policy go. (names changed to preserve anonymity)
Ella Keith spent her 65th birthday in the hospital, having suffered a major stroke. Her family was able to keep her at home for the next 15 years because her LTC insurance policy paid over $300,000, almost half.
Russell Polston – he is not only happy with how his wife’s claim was paid, but also the three year claim paid for another family member.

Rate Increases and Why the Sky Isn’t Falling

Yes, there have been rate increases. Long-term care insurance is “guaranteed renewable” which means it can never be canceled as long as you pay your premium in a timely manner. It also means there can be a “class” rate increase, which means on an entire class of people, not just on individual policyholders at the whim of the insurance company. Frankly, I struggle with why this is a big deal when I look at my health insurance going from $330 a month for my husband and me in 1993 to $1690 a month in 2016. I’m not a math whiz, but isn’t that FIVE times as much?

I’ve had people come to me with a 90% rate increase on long-term care insurance. After I compare what they can spend by age 80 vs. the benefits at that time, they peel themselves off the ceiling…I don’t have to do it for them. It’s all relative. Older policies were so underpriced that while a rate increase of 130% sounds terrible, it doesn’t even get the premium up to what is being charged today. Why were they so underpriced?

No one knew how to price for long-term care back in the 80s and 90s.
Companies thought many more people would let their policies lapse but most people don’t, even when they receive rate increases. They appreciate them for the gold they are.
People are living much longer today than anyone expected, which means they are more likely to have a claim.
Claims are lasting longer than expected, largely influenced by the really nice assisted living facilities that exist today but didn’t exist 30 years ago when I got in the LTCi business. The latest claims study (also from the Society of Actuaries) shows that women who need care longer than a year average 4.67 years and men 3.8 years, as opposed to 3.7 and 3.1 respectively. The average for all claims regardless of length has gone from 1.9 years to 2.5.
The cost of care is steadily growing. I project the cost of a “country club” assisted living facility at 5% compound as only 10% of the 80 million baby boomers are in their care receiving years. So if the current cost is $5000 a month today, that’s $21,000 a month in 30 years. Yes believe it.
The bottom fell out of interest rates as we all know back in 2008ish. When an insurance company prices for a 7% interest rate on reserves and gets 2-3%, you can imagine the impact!
Yes, there were a few bad apples that intentionally priced policies too low, accepted people in poor health and paid out higher commissions than other companies. They did this to steal market share, but it backfired on them. I warned agents away from them in my 20 training years.

So when you hear the annual premium for a 55 year old female as follows…

$5,700 (single)
$4,848 (part of a couple)
$3,992 (both issued)

…you fall over with shock. But when I tell you these premiums are buying a plan that will be worth $1.5 MILLION in 30 years, payable at $21,000 a month for six years, now what do you think? Even the highest one of $5,700 x 30 years equals only $171,000, vs. $1,500,000 in benefits. Will there be rate increases? Maybe, but there’s a huge difference between $171K and $1.5M. That particular company can pay dividends in the older years, thus offsetting the need for a rate increase.

The Society of Actuaries just came out with research that shows policies issued 2014 and later have been priced correctly for all the bad stuff that has hit long-term care insurance. (FYI, those of you who have had much larger rate increases most likely bought before 2000.)

Some people maintain 5% compound inflation is too aggressive. This article just came out today.

New estimates released today from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) and published online in Health Affairs project an average annual rate of national health spending growth of 5.5 percent for 2017–26, outpacing average projected growth in gross domestic product (GDP) by 1.0 percentage point.

LTC facility costs usually outpace overall health costs. Home care has been growing much slower but I’m seeing it start to pick up as more and more people need extended health care.

But What if I Never Need Care?

Listen to me. Walk around your neighborhood and ask every single household if their house has ever burned to the ground. Not many yes answers, right? Now ask if they know someone who has needed help longer than three months with bathing and dressing or with a cognitive impairment. That’s long-term care. How many people can you think of in that situation?

Do you honestly think people sit around and worry that they haven’t gotten their money’s worth out of their homeowners or auto policies? Just how do you want to “get your money’s worth” out of your long-term care insurance? Do you want to have a brain tumor, get hit by a drunk driver, have a major stroke…or maybe suffer with Parkinson’s or Alzheimer’s for 10 years?

If you never need care, count your blessings! It means you paid the annual premium for peace of mind.

!	You will die before you will know you never needed it, so you will always be glad you had it!

I see so many families who are SAVED by long-term care insurance and it cuts me to the quick to read the bashing articles. Let’s reward the hand full of companies that have weathered the pricing storm and stayed in the market. Some offer both traditional and products combined with life insurance and/or annuities. If yo