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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 July 26, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-025: 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 Steve at 425-891-3640 or smoses@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 Steve at 425-891-3640 or smoses@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:

A new payroll tax is still on the way, but Washingtonians are letting state agencies know they’re not happy about it
Thousands of CalPERS members could get $30,000 or more in long-term care lawsuit settlement
How much of a cut to social security benefits can you expect based on your age?
Toomey Re-Introduces Measure to Make Long-Term Care Insurance More Affordable
Michael Gorzynski Now Controls a Long-Term Care Insurer
Gen Xers, millennials have less saved for retirement than previous generations: survey
LeadingAge: Survey finds majority of Americans support more services for seniors
U.S. life expectancy falls to lowest level in almost 20 years due to COVID-19 -CDC
California Makes It Easier for Low-Income Residents to Get and Keep Free Health Coverage
Nearly 4 million worldwide likely have young-onset dementia
LTC worker vaccine hesitancy goes under the microscope in national studies
Delta COVID variant now dominant strain worldwide, U.S. deaths surge -officials

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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, Friday, July 23, 2021, 10:40 AM (Pacific)

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LTC BULLET: GOVERNMENT VIOLATES THE LONG TERM CARE SOCIAL CONTRACT TO YOUR DETRIMENT

LTC Comment: What is the long term care social contract? How does government violate it? And why should you care? Answers follow the ***news.***

*** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day) with the date, title, author, source, and his brief analysis of every important new publication. Regular members receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now at wwwb.centerltc.com or contact smoses@centerltc.com with your questions or comments. Here’s a sample LTC Clipping sent last Wednesday:

7/20/2021, “California Makes It Easier for Low-Income Residents to Get and Keep Free Health Coverage,” by Rachel Bluth, Kaiser Health News

Quote: “A provision in California’s newly approved state budget will eliminate the asset test for the 2 million Californians enrolled in both Medi-Cal and Medicare, the federal health insurance program for people 65 and older and people under 65 with certain disabilities. Instead, their financial eligibility will be based solely on income, as it is for the millions of other people in Medi-Cal. … The 2021-22 state budget deal includes several provisions that will make it easier to get on and stay on Medi-Cal, including the elimination of the asset test. Everyone 50 and over will be eligible, regardless of immigration status. And new mothers will be allowed to remain on Medi-Cal for one year after giving birth, up from 60 days.”

LTC Comment: The “Medicaid trap” snaps shut in California ensnaring more and more people in public welfare dependency. As federal taxpayers you get to pay half this cost because of the Golden State’s 50 percent Federal Medical Assistance Percentage (FMAP). Do you think the federal government will intervene? Forget it. California has thumbed its nose at the Feds with impunity for decades by failing to implement key long-term care eligibility restrictions imposed on all states in OBRA ’93 and DRA ’05. See, for example, our 2011 study Medi-Cal LTC: Safety Net or Hammock?. Now the People’s Republic of California is eliminating all pretense of personal responsibility and totally embracing this moral hazard. ***

*** JOIN THE LTC RESISTANCE: Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies like those critiqued in today’s LTC Bullet. Act now before it’s too late.

In addition to the recent articles linked below, Steve has three more columns accepted for publication:

“Great Moments in Unintended LTC Consequences” for McKnight’s LTC News, scheduled for July 26, 2021.

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: GOVERNMENT VIOLATES THE LONG TERM CARE SOCIAL CONTRACT TO YOUR DETRIMENT

LTC Comment: The following article was originally published in Broker World magazine’s June 2021 issue. We thank the editor and publisher Stephen Howard for permission to republish the column here. Subscribe to Broker World here: https://brokerworldmag.com/orders/. We strongly recommend this publication for anyone working in the financing or provider sides of the long-term care profession. Watch for Steve’s next column, titled “The InLTCgentsia” in Broker World’s August 2021 issue.

“Government Violates the Long Term Care Social Contract to Your Detriment”
By
Stephen A. Moses

What is the long term care social contract? How does government violate it? And why should you care?

Congress established the long term care social contract when President Clinton signed the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). That law set up Medicaid long term care benefits to work like this. If you need more long term care than you can afford, Medicaid will pay. You can have substantial income and virtually unlimited assets and still get this deal. But if you take it the only care you’ll receive is whatever Medicaid covers (mostly nursing home care) and you have to reimburse every dollar Medicaid pays from your estate.

Wait a minute. Doesn’t getting help from Medicaid mean you have to be low income and have minimal assets? That’s what everyone says. True, that’s the common myth…or lie…depending on whether the person saying it knows how Medicaid financial eligibility actually works.

The truth is people can have virtually unlimited income and assets and still get Medicaid to pay for their long term care. Medicaid deducts private medical and long term care expenditures from applicants’ income before assessing eligibility. So if your private health care costs are high enough, as they invariably are if you’re receiving expensive long term care services, you qualify for Medicaid based on income. An easy rule of thumb to remember is that as long as your income is less than the monthly cost of a semi-private nursing home bed ($7,756, not exactly low income), you’re in.

Assets are even less of an obstacle, because most large resources seniors own are exempt, including up to $603,000 in home equity ($906,000 in nine states) plus, with no limit on their value, one automobile, prepaid burial plans, a business including the capital and cash flow, term life insurance, household goods and personal belongings, even an Individual Retirement Account if it’s in payout status as most must be by age 72 according to the latest Required Minimum Distribution rules. Those are the basic exemptions that Medicaid eligibility specialists explain when they take your application. Of course, Medicaid planning lawyers can expand financial eligibility much further for people with higher income and assets using sophisticated trusts, annuities, and qualified transfers.

If Medicaid long term care eligibility is easy to achieve, it’s no wonder so many people end up on Medicaid, in nursing homes, and vulnerable to deadly viruses. But what about the downsides of relying on Medicaid? Why would people fail to plan for long term care, neglect to save, invest or insure against the cost as soon as possible, and thus assume the risk of ending up in a Medicaid nursing home receiving publicly financed care of dubious quality which they have to pay back in the end anyway?

Excellent question and the answer explains why private long term care insurance and home equity are so little used to pay for long term care. After Congress and President Clinton set up the long term care social contract, the government dropped the ball. State Medicaid programs did not implement estate recovery aggressively; the federal government did not enforce the law; the media didn’t publicize the new estate recovery liability; so the public continued to ignore long term care until they needed it, turning to Medicaid by default when they did. To add insult to injury, the Medicaid and CHIP Payment and Access Commission (MACPAC) recently recommended that Congress make estate recovery voluntary and implement rules that would substantially reduce its potential nontax revenue for Medicaid.

That would be a terrible mistake. Without estate recovery, an enormous potential source of private long term care financing (home equity) is lost forever and Medicaid becomes a tax-payer financed windfall for heirs at the expense of program resources that should go to the poor. Unfortunately, MACPAC relied heavily on advice from Medicaid planning attorneys who make their living helping upper middle class people qualify for Medicaid and avoid estate recovery, an obvious conflict of interest. See “MACPAC Captured” (http://www.centerltc.com/bullets/latest/1302.htm).

So the questions we asked at the top are answered. OBRA ’93 set up Medicaid long term care benefits to work like a government loan. If you don’t prepare to pay privately for long term care, Medicaid will pay, but you only get what Medicaid provides and you’ll pay it all back in the end anyhow. Smart people understanding that deal would have avoided it by preparing to pay privately for long term care if the need should arise. But government reneged, delivering all the easy long term care benefits, but without enforcing the estate recovery pay back. So if you’re trying to sell private long term care insurance, that’s a major reason why so few people show interest and most of the remainder don’t buy.

What can you do about this? For one, contact your members of Congress and urge them to oppose MACPAC’s recommendation to cripple estate recoveries. For another, join us at the Center for Long-Term Care Reform fighting for long term care financing policy that properly enforces the long term care social contract and supports you.

Stephen A. Moses

425-891-3640 smoses@centerltc.com

Stephen A. Moses is president of the Center for Long-Term Care (www.centerltc.com). The Center promotes universal access to top-quality long term care by encouraging private financing as an alternative to Medicaid dependency for most Americans. Previously, Mr. Moses was president of the Center for Long Term Care Financing (1998-2005), director of research for LTC, Inc., (1989-98), a senior analyst for the Inspector General of the U.S. Department of Health and Human Services (1987-89), a Medicaid state representative for the Health Care Financing Administration (1978-87), a HHS Departmental Management Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970). He is widely recognized as an expert and innovator in the field of long term care.

He completed the “2008 National Long Term Care Consciousness Tour” traveling for a year and 28,028 miles while living in an Airstream trailer dubbed the “Silver Bullet of Long Term Care.” The LTC Tour promoted responsible long term care planning and rational long term care public policy.

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday July 19, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-024: LTC NEWS AND COMMENT

Senate Democrats’ Plan Boosts Spending on Medicare, ACA Subsidies, Long-Term Care
Dementia Comes 5 Years Later for Some
Larger Nursing Home Staff Size Linked To Higher Number Of COVID-19 Cases In 2020
Aging population to hit U.S. economy like a 'ton of bricks' -U.S. commerce secretary
How Might the FDA’s Approval of a New Alzheimer’s Drug Impact Medicaid?
CalPERS settles long-term care insurance lawsuit, agreeing to pay up to $2.7 billion
Social Security COLA Estimate for 2022 Raised to 6.1%
Employers Must Collect Employee Premiums under the New “Washington Cares” Program Starting 1/2022; Employee Window to Obtain Alternate Coverage Closes on 11/2021
The Haddits have left the building
Home care workers to march in 20 cities on behalf of $400B care economy proposal
Tooth loss may up risk for cognitive decline, dementia
'It's bad': Washington long-term care facilities face staffing shortage crisis
Lawmaker Proposes Federal Catastrophic Long-Term Care Insurance Program
Some Hope Is Better Than Having No Hope'
Calculator predicts elders’ life expectancy, needs for palliative care

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Updated, Friday, July 9, 2021, 10:40 AM (Pacific)

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LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

LTC Comment: Senior living providers and insurers face a common public policy threat which they should unite to resist. Details after the ***news.***

*** LTC RESISTANCE? Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies like those critiqued in today’s LTC Bullet. Act now before it’s too late.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

LTC Comment: The following article was first published June 7, 2021 by McKnight’s Senior Living. We thank McKnight’s for this opportunity to reach out to our colleagues on the provider side of the long-term care financing issue. LTC providers and insurers share a common danger from potentially toxic public policy changes currently under consideration. They should work together toward their mutual protection and improvement. We envision future articles capitalizing on that opportunity.

“LTC financing: Be careful what you wish for”
by
Stephen A. Moss

There’s an old saying: “Be careful what you wish for, because you may get it.” That admonition applies to long-term care public policy options under serious consideration today.

The COVID crisis devastated senior living and care facilities of all kinds, but it focused operators, policymakers, analysts and the public on the need to fix what ails long-term care. Both the problem and the most popular proposed solutions have come into stark focus and widespread agreement.

The problems, experts say, are that more people are getting older; they need help with activities of daily living; families are overwhelmed trying to provide such care; Medicare is no help, and Medicaid requires impoverishment; and private long-term care insurance failed because it’s too expensive and complicated. These problems are getting worse with every passing day.

So, many experts agree, what we need to do is fix these problems with the same approach we brought to senior poverty (Social Security) and healthcare (Medicare). That is, we should introduce a payroll-funded, mandatory social insurance program for long-term care. Scholars have proposed many variations on that theme, but two are in the news right now.

Two approaches in the news

One “front-end” approach, already underway in Washington state, is to impose a 0.58% tax on employee wages and pay vested beneficiaries a maximum lifetime benefit of $36,500 when they need assistance with three or more ADLs. Another “back-end” or catastrophic approach, the WISH (Well-Being Insurance for Seniors to Be at Home) Act, would impose a federal payroll tax of 0.5% (half from employees, and half from employers) and give qualified, vested beneficiaries $3,600 per month after a waiting period in which they pay their own costs.

Both of these approaches are complicated and extremely difficult to administer, requiring new, large bureaucracies to collect taxes, invest reserves, determine eligibility, manage care and maintain quality. But put aside those practical challenges for now and consider the proposals’ deficiencies in principle.

Both approaches are compulsory. As with Social Security and Medicare, citizens have no choice but to participate. The Washington Cares Fund allows a time-limited opt out for private long-term care insurance owners but no option to skip the program altogether. Both plans move another step toward government dependency and away from personal freedom and responsibility.

Both approaches tax payrolls, leaving less private capital in the economy to fund productive measures and enterprises aimed at improving long-term care. Is there any evidence that government spends money more wisely than the private sector?

Both approaches assume that private long-term care insurers will rush in with products to “wrap around” the new programs’ front-end or back-end benefits. But this will not happen because neither approach addresses Medicaid’s loose and elastic long-term care eligibility rules, which will continue to crowd out private insurance. Both assume Medicaid expenditures will decline as the new programs’ expenditures increase. But this will not happen. The public will continue to ignore private long-term care insurance options and rely on Medicaid by default, leaving private insurers no commercial leverage.

No serious consideration until now

Advocates for neither approach have explained why long-term care has all the problems they agree it has. By ignoring the history of government financing and regulation that created the existing system, they turn automatically to more government financing and regulation for a “solution” that really is just more of what caused the problems in the first place.

Until recently, there was little reason to worry that approaches to long-term care reform such as those would garner any traction. Their progenitors, Social Security and Medicare, are operating in the red already, with insolvent “trust funds.” Baby boomers start turning 85 when they’ll need the most health and long-term care, in 2031, just about the same time the compulsory social insurance programs we already have are required to cut benefits. No one seriously would consider adding more such programs … until now.

What’s changed? Nowadays, neither the public nor their politicians worry about throwing money at harebrained schemes. According to the National Debt Clock, federal spending this year is $7.1 trillion, but tax collections are less than half that, $3.5 trillion. The rest of the federal budget comes from Treasury borrowing and the Federal Reserve printing the difference. Whether you justify such policy with Modern Monetary Theory or just like the idea of getting something for nothing, such policy could lead inexorably to passage of risky front-end or back-bend plans to “fix” long-term care.

What this means for senior living

What does this mean for senior living operators? If social insurance plans such as those actually were to pass and take effect, you may find yourselves with even fewer private payers and more residents dependent either on Medicaid or one of these new, equally poorly funded government programs.

You’ll be tempted to follow nursing homes down the primrose path of accepting inadequate government reimbursements as better than having an empty unit. Because the federal government operates at such a huge deficit and the Fed has driven the money supply into the stratosphere, too much money chasing too few goods will ignite inflation. Neither the public nor its new funding programs will be able to afford quality senior care and services, and you’ll be unable to afford to provide them.

Long-term care in America is on a slippery slope. It is unwise to assume it can’t get worse or that doing more of the same will fix it. We need to explain why long-term care is such a mess now and use that insight to plot a better course. That’s what I’ve done in “Medicaid and Long-Term Care.” Read it and let me know what you think.

Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com) and the author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

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Updated, Tuesday, July 6, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-023: LTC NEWS AND COMMENT

Covid raises awareness, concerns about Social Security
Jumpstarting the Debate Over Public Long-Term Care Insurance
Where Long-Term Care Reform Goes Now
49 percent of assisted living providers operating at a loss: survey
Only 25 percent of operators believe they’ll survive financially through 2021
Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care – Commentary
Medicaid and the Goldilocks Test
58% of Medicare drug spending goes toward highly advertised meds, GAO finds
Tax Changes and Key Amounts for the 2021 Tax Year
Home Care Providers Are Becoming Less Dependent on Private Pay
A quarter of 65-year-old Americans will have ‘severe need’ for long-term care

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Updated, Monday, June 28, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-022: LTC NEWS AND COMMENT

Washington State Forces Nearly Everyone to Buy Long-Term Health Care
President Biden, tear down this wall
If You Notice This When Talking, It Could Be an Early Dementia Sign, Study Says
Most senior couples will need LTC for at least one partner: report
Older Americans are on the front line of the student debt crisis
Home care agencies are losing a third of their business to the ‘gray market,’ new study finds
Unpaid Caregivers Were Already Struggling. It's Only Gotten Worse During The Pandemic
Although Their Share of the Market Varies By State, Enrollment in Medicare Advantage Plans Has More Than Doubled Over the Past Decade, with More than 4 in 10 Medicare Beneficiaries Now Enrolled in the Private Plans
Insurers Try to Avoid Collision With State LTCI Program

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Updated, Friday, June 25, 2021, 10:40 AM (Pacific)

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LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

LTC Comment: As long as Medicaid diverts over $7 trillion from private long-term care responsibility, how can we expect consumers to plan responsibly for that huge risk and cost? Details follow the ***news.***

*** PUBLICATIONS: Long-term care has reached a crucial crossroads. Will it follow the current course into increased dependency on government deficit spending and eventual collapse? Or will consumers take back responsibility and redirect long-term care toward the kind and venues of care they prefer? It all depends on public policy decisions about to be made in 50 state capitols and in Washington, DC. We need to raise our voices in opposition to compulsory, payroll-funded entitlement approaches that will doom long-term care consumers to outcomes even worse than under Medicaid. We should explore, propose, and support solutions that avoid relying on government and engage the public to save, invest, insure and pay privately for the long-term care they prefer in the settings they desire. Steve Moses and the Center for Long-Term Care reform are doing our part with articles aimed at a wide audience, including the column featured today in The Hill and these:

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 24, 2021

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021

“The social contract for long-term care,” by Stephen Moses, McKnight’s Long-Term Care News, May 17, 2021.

“Why LTCI Fails,” by Stephen A. Moses, Broker World, March 2021.

“Nursing Homes, Coronavirus and Medicaid,” by Stephen A. Moses and Brian C. Blase, Wall Street Journal, June 1, 2020

We urge you to read these articles and forward them to your friends, family and colleagues. Add your comments whenever the publisher invites readers to “Join the Discussion.” ***

*** JOIN THE CENTER: Want to be part of our “LTC Resistance?” Review the Center’s “Membership Benefits and Levels,” choose a plan that’s best for you, and join the Center for Long-Term Care Reform. We’ll fight together for rational long-term care public policy that rewards responsible planning and discourages the Medicaid-induced complacency that results in public welfare dependency. Receive our LTC Bullets, LTC E-Alerts, and at the premium membership level, our LTC Clippings. Get and remain on the cutting edge of professional expertise by taking full advantage of the Center’s Members-Only website and our wide-open public website, www.centerltc.com. ***

LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

LTC Comment: The following column was first published by The Hill on June 10, 2021.

“Using Medicaid to Protect Inheritances”
by
Steve Moses and Brian Blase

The number of Americans over 65 increases by about 4,000 each day, causing the finances of many government programs to become more precarious. While Social Security and Medicare receive the most attention, a growing concern is the reliance on Medicaid to pay the nation’s long-term care needs.

Medicaid pays nearly half the nation’s long-term care bills, and improper payments in the program exceed $100 billion a year. Conventional wisdom is wrong that seniors need to spend down to gain Medicaid eligibility for long-term care. Seniors can make a sizable income (medical and long-term care costs are deducted before determining eligibility) and hold large assets and still qualify for Medicaid. These assets include home equity of $603,000 in most states ($906,000 in nine states) and generally unlimited amounts in retirement accounts.

With minimal prior planning, child heirs can preserve their inheritance by arranging their parents’ finances and assets so that Medicaid picks up the tab in the event long-term care services are necessary. A cottage legal industry has emerged to assist heirs in creating such wealth management schemes.

The ease with which people can gain Medicaid eligibility for long-term care creates a major moral hazard problem. Since the government is paying, people don’t need to properly plan. A prominent economic study found that Medicaid largely crowds out the market for private long-term care insurance. While gaining access to Medicaid long-term care is too easy, one aspect of law in this area that makes sense is now under threat.

The Omnibus Budget Reconciliation Act of 1993 required states to recover long-term care costs borne by the Medicaid program from the estates of deceased recipients. The primary asset in most estates is the home, and U.S. seniors hold $7 trillion of home equity. This law sends the message that Medicaid would pay long-term care bills, but the tab, or at least a portion of it, would be paid out of the deceased person’s estate. It was essentially a government-backed loan for people who failed to prepare to pay privately for long-term care. It isn’t welfare if it’s paid back.

For many reasons, it would be better to limit eligibility to Medicaid long-term care on the front end, but the existence of Medicaid estate recovery efforts avoids some amount of moral hazard. Unfortunately, a powerful Medicaid advisory board is recommending that Congress eliminate the requirement for states to pursue estate recoveries.

This board, the Medicaid and CHIP Payment and Access Commission (MACPAC), says the fear of estate recovery discourages people from applying for Medicaid, and recovery efforts tend to keep poor people poor. But MACPAC’s rationale makes no sense. States cannot recover funds expended on behalf of people who lack assets. Estate recoveries only affect people who have resources left over and generally died without a spouse.

MACPAC also claims that estate recoveries do not produce a lot of revenue. That’s true, but fixable. After the 1993 federal requirement for estate recoveries, states did not implement robust recovery programs, the federal government did not enforce the law and the media didn’t publicize the new estate recovery liability. As a result, the public continued to ignore long-term care until they need it, turning to Medicaid by default if they do.

Here’s our advice. First, don’t make the problem worse by eliminating estate recovery requirements. Doing so will further reduce incentives to prepare properly for long-term care expenses. It also would permit more heirs to shift costs that their parents’ estate should bear onto taxpayers. Government should provide Medicaid for the truly indigent but allowing middle and upper-income Americans to preserve a greater inheritance weakens the safety net for those who most need it and is unfair to taxpayers and those who prepare properly.

Second, the government should enforce and publicize Medicaid estate recoveries. This would reduce dependency on Medicaid, preserve Medicaid for the truly needy and encourage responsible private behavior. As federal deficits and debt explode, it has never made more sense to limit welfare programs to those who are poor.

Steve Moses is president of the Center for Long-Term Care Reform and author of “Medicaid and Long-Term Care” (2020). Brian Blase served as a special assistant to President Trump at the National Economic Council, 2017-19. He is president of Blase Policy Strategies LLC.

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Updated, Monday, June 21, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-021: LTC NEWS AND COMMENT

Going, Going, Gone
Mutual of Omaha is among a handful changing long-term care sales
Common cold starts to spread fast as COVID restrictions are lifted
LTC use expected to double: report
Florida home to more than 9 percent of U.S. Alzheimer’s patients, data shows
Report to the Congress: Medicare and the Health Care Delivery System
Comment on Clare Ansberry’s ‘One Family’s Lessons Learned From a Decade of Caregiving
Why Long-Term Care Cost Reports Are Often Misleading
LTCG’s Annual Cost of Care Report Reveals How the Global Pandemic and Other Industry Trends Impacted Long Term Care Costs
Did you receive a ‘long-term care’ email from your employer? Here’s what it means to opt-in or opt-out
Lessons from a family learned from 10 years of long-term care
Meetings, rules and deadlines push long-term care law along
Healthcare infrastructure missing ‘centralized access point’ to long-term care: experts
One Family’s Lessons Learned From a Decade of Caregiving
3 Experts Have Resigned From An FDA Committee Over Alzheimer's Drug Approval
ACOs don’t reduce burden of care for nursing home dementia patients: study

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Updated, Friday, June 18, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

LTC Comment: Is Washington State’s new compulsory payroll-funded social insurance entitlement program a “wrap trap”? Find out after the ***news.***

*** LATE BREAKING: Two major private long-term care insurance carriers, Mutual of Omaha and Thrivent, have suspended sales in Washington State effective June 17, 2021. These measures appear to have been taken to avoid allowing the purchase of the companies’ products to be used to dodge the State of Washington’s WA Cares Fund mandatory payroll deduction. To avoid that payroll tax, employees must prove they have qualifying private LTC insurance in place by November 1, 2021. That will now be harder to do. ***

*** LTC COMMENT: Architects of the WA Cares Fund should go back to the drawing board before they ruin the LTC insurance market in Washington State entirely and join the government LTC insurance Hall of Shame along with CalPERS and the CLASS Act, not to mention Medicaid. Let’s hope the InLTCgentsia promoting the WA Cares Fund as a model program for the rest of the country is paying attention. ***

LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

LTC Comment: Referring to a program that now calls itself the WA Cares Fund I asked last October “What happens when the Keystone Kops design a long-term care insurance plan?”

Thanks to a series of articles by the Washington Policy Center’s Elizabeth Hovde, we have some more-recent answers to that question here, here, here, here, and here. See also “Did you receive a ‘long-term care’ email from your employer? Here’s what it means to opt-in or opt-out,” by Mike Lewis for Geekwire. He adds “If you need more help or want additional details, here are some explainers:

Gig Harbor financial advisor Gary Brooks in the Tacoma News Tribune;
Another Davis Wright Tremaine analysis;
Long-term care plan advice from Investopedia;
The Washington Technology Industry Association analysis.”

I conclude: Oh what a tangled web they weave when politicians practice to conceive careless, compulsory, complicated new programs. So I disagree with Otto von Bismarck, who said: “Laws are like sausages, it is better not to see them being made.” Distasteful as the process is we’d better watch it closely or we’ll have to live with the dismal consequences indefinitely.

So watch it we will in today’s Guest Bullet article by LTC Associates’ Stephen D. Forman, exclusively for LTC Bullets. We thank the author and the company for their support of the Center for Long-Term Care Reform and for this insightful column.

“The WA Cares Fund Gets a Bad Wrap”
by
Stephen D. Forman

From the start, WA Cares Fund advocates promised that the public program would supercharge the development and purchase of so-called “wraparound” products by the private market. It was a selling point: “The private LTC insurance market is currently failing, but a new LTC Trust could spur [a] new LTC wrap market, similar to what happened with Medicare and gap plans.” By design, a new “LTC Supplement” product would have to be more affordable than today’s comprehensive offerings, making it more attractive to Washington consumers. Unfortunately, by barreling ahead without consulting with insurance carriers, distributors, consumers, or the Washington Insurance Department before making this pronouncement, proponents got out over their skis.

The WA Cares Fund is practically unwrappable.

Not all of the issues below are equally serious, but each should have been considered before—not after—the Fund was drafted into law. Wrapping the WA Cares Fund well takes more than just an “off-the-shelf” product sold with a long elimination period.

Portability
1. Although the wage tax is owed by anyone who earns income “localized” in Washington, the $36,500 nominal WA Cares Fund benefit is payable only to state residents. (Private LTC insurance pays anywhere in the US, almost always Canada, and usually globally.) From a wraparound standpoint, a carrier would have to price a product with a $36,500 deductible that exists only for care incurred in one state, but not in the other 49… or a universal deductible of $36,500 in all states that a resident clearly understood would be met by the WA Cares Fund at home, but would be their responsibility for care received outside the Evergreen State.

Inflation
1. We say “nominal” because the Fund’s $36,500 benefit will change unpredictably over time. What will it be in 15 or 30 years, when beneficiaries need care? No one can say, which makes inflating a wrap product in synch a challenge. The Fund’s benefit units may rise or fall each year depending on the vote of an 8-person Trust Council. Wrapping this deductible will be like riding a bucking bronco—and for its inflation rate the State didn’t even select the correct CPI standard required for Washington LTC Partnership Qualification (not that they had to, but c’mon, it was right there).
2. If pressure were to be put on the tax rate in the future, it was suggested during a presentation on public LTC design that the first “cut” would be to lower the inflation rate.

Partnership
1. Speaking of the Partnership Program, the WA Cares Fund may spell its end (about 6 in 10 policies sold in Washington qualify now). By protecting assets from Medicaid spenddown and estate recovery, Partnership Qualified policies are ideally-suited for broad-market Washingtonians. But the WA Cares Fund was billed first and foremost as a Medicaid replacement, with Fund beneficiaries receiving no protection from asset spenddown and estate recovery.
2. To be Partnership Qualified, your policy must first meet the requirements for Tax Qualification: if “LTC Supplements” can’t thread this needle, they’ll be less appealing to their target market.

Benefit Triggers
1. Speaking of tax qualification, the WA Cares Fund doesn’t use Tax-Qualified triggers. Instead of the nearly 25-year old federal standard, Washington is going with its own Medicaid standard (3 or more ADLs), and no 90-day chronic illness certification.
2. A beneficiary risks qualifying for benefits under the Fund, but not under their private policy (or vice-versa). Or, they may find a benefit or service covered under one program, but not the other (as has happened with assisted living under Medicaid). These risks exist so long as programs like the Cares Fund can be amended twice a year through legislative action: neither the premiums nor benefits nor eligibility triggers are predictable or certain. Wrap that.

Co-Insurance
1. The analogy to Medicare Supplements is built on the idea of co-insurance. The general principle is that Medicare foots 80% of the cost, and an optional private policy picks up the 20% “gap” left over. An LTC Supplement built to cover these small “gaps” should be more affordable, right? We’ve hit our first snag: the analogy misfires. MedSupp is for care used soon and regularly; LTC is for care often used later and claimed infrequently.
2. The WA Cares Fund doesn’t work like an 80/20 co-insurance plan; instead, it’s a “first payor” plan, and its $36,500 is a deductible. Your LTC insurance “gap” policy would step in at the $36,501^st dollar and cover everything catastrophically to follow. How stimulated would the market have been for Medicare Supplements if the original cost-sharing had been reversed from 80/20 to 20/80?

Elimination Period
1. Advocates of the Cares Fund emphasized that many residents lack even a modest emergency account for healthcare expenses—the Fund has even been called a “structured savings account” by its primary sponsor—and for this reason, benefits must be payable from the first day. They got their wish. When the LTC Trust Act was passed, it included “no elimination period in either Title 50B RCW or the administrative rules,” as the Employment Security Department put it.
2. There’s just one problem: the 0.58% payroll tax pays for only a 45-day elimination period.
3. The Fund will have to raise its payroll tax by 0.12%, to 0.70%, to support its existing no-elimination period structure (all else being equal).
4. This discrepancy—one of the greatest threats to Fund solvency, greater than the private insurance opt-out—is well-known to the Trust Commission (“the cost of the program will go up significantly if there is a 0-day elimination period, compared to the baseline assumption of 45 days.”)
5. When a Constitutional Amendment is re-introduced this fall in an attempt to remedy the ($14.7 billion) projected actuarial deficit—a number that does not include the elimination period problem—would the public continue to support the Fund if they learned about this omission? It’s not clear voters support it now, having rejected Advisory Vote 20 and SJR 8212.

Demand
1. During public testimony in favor of the WA Cares Fund, our Insurance Department declared the private LTC market “broken.” Adding injury to insult, for decades consumers around the country have been able to purchase short-term care coverage (“STC”) akin to the WA Cares Fund—but ironically, our Insurance Department frowns on it.
2. LTC insurance has been rate-stabilized in Washington since 2009, then in 2016 the Society of Actuaries reported on the significantly reduced risk of rate increases on newly-issued plans. No one listening to WA Cares Fund proponents would know this—the rate increases in the articles they cited were on twenty-year old policies, the conclusion of a gloomy market they described as “imploded” as though we’d brought it on ourselves.
3. What’s “broken” might be Medicaid, itself a driver of higher insurance rates (private payers subsidize Medicaid’s below-cost reimbursements to providers).
4. If “affordability” were the obstacle some say has prevented LTC insurance sales from flourishing, then 100 carriers would be selling short-term coverage today to take advantage of the insatiable demand. Let’s suggest “crowd-out” plays a larger role than you’d like to admit. Award-winning research suggests Medicaid replaces 80% of the market for LTC insurance because consumers don’t wish to pay for something the government gives them already (even if they’re only aware of it unconsciously). The WA Cares Fund risks exacerbating crowd-out, and—rather than invigorating sales—could further desensitize the public to the risk of needing to pay for care.

Insurance or Not
1. The program is “damned if it is, and damned if it isn’t,” and the Washington Insurance Department may have painted itself into a corner. (We always found it strange how the Cares Fund describes itself as being overseen by three state agencies, but never mentions the fourth agency it is regulated by: the Insurance Department.)
2. The Fund borrows from the insurance world (“premium allowance”) when it wishes to avoid the politically perilous term “payroll tax.” It has advertised itself to the public as “long-term care insurance” in nearly all of its consumer-facing materials, though it is not permitted to do so without following the RCWs and WACs that adhere to the term.
3. I’d admit to compiling a list of RCWs and WACs the WA Cares Fund has been violating, but the fact is: the Washington Insurance Department has been compiling this list—it’s their job. Further, the Department has made it a point of emphasis the past two years to crack down on any entity that acts like insurance, no matter the label. Semantics has been no defense.
4. The Department’s advice to consumers who need help determining if their policy qualifies as LTC insurance is to “contact your insurance company.” Since the WA Cares Fund—in the text of the law—calls itself “long-term care insurance”— which company should consumers call? Is it AM Best Rated “A+” (Superior)?
5. Questions like these make me wonder whether the WA Cares Fund will exist a few years from now, and questions like that make me wonder whether insurers will feel motivated to invest time, energy, and expense, developing, filing, and marketing “wrap products” here after the traumatic experience we’ve just all just shared.

When Fund proponents began their makeover of the state’s private LTC insurance market, they included no one from the private LTC insurance market in their discussions, and this lack of outreach is reflected in the morass described above. Their resistance was so entrenched, it took the State Legislature passing a law to literally compel WA Cares Fund commission to “work with insurers.”

The ACLI expressed concerns about the viability of wrap products to the Trust Commission as well—perhaps their diplomatic influence will advance the success of this market. Had the insurance community been included earlier, we’d have been more optimistic. One thing’s for sure: if private LTC insurance is indeed broken in Washington State, we’ve got a good idea who broke it.

Stephen D. Forman, CLTC of Long Term Care Associates, Inc. is co-author of “The Advisor’s Guide to Long-Term Care” (2^nd Ed.), published by National Underwriter. Reach him at steve@ltc-associates.com.

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Updated, Monday, June 14, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-019: LTC NEWS AND COMMENT

Trouble Falling Asleep Predicts Later Cognitive Impairment
How Might Lowering the Medicare Age Affect Medicaid Enrollees?
Taxpayers Protecting Inheritances
Most Americans Remain Unprepared For The Possibility Of Extended Care
Details about the state’s mandated long-term care law and payroll tax are slowly emerging
Baby Boomers’ Biggest Financial Risk: Cognitive Decline
Comparing Medicare Advantage And Traditional Medicare: A Systematic Review
Time for government – not nursing homes – to shoulder collective COVID-19 blame
Controversial Alzheimer's Drug Wins FDA Approval
Planning For The Peak-65 Generation
Senior housing market likely to rebound from pandemic recession: NIC analysis
LTC financing: Be careful what you WISH for

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Updated, Friday, June 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

LTC Comment: America has a social contract for long-term care and it’s under attack. Learn how after the ***news.***

*** THE HILL last night published “Using Medicaid to Protect Inheritances,” Steve Moses’s latest op-ed co-authored with Brian Blase, former special assistant to the president at the National Economic Council, 2017-19 and current president of Blase Policy Strategies LLC. Moses and Blase earlier collaborated on Nursing Homes, Coronavirus and Medicaid, published June 1, 2020 by the Wall Street Journal. ***

*** THE CENTER FOR LONG-TERM CARE REFORM believes LTC public policy is at a precarious inflection point. It behooves everyone who cares about long-term care to face facts and work together toward viable solutions. We’ve embarked on an effort to reach and mobilize LTC insurers and providers. Won’t you join the Center and help us pursue that objective? Here are a few of our latest efforts to reach out with analysis and recommendations:

“Why LTCI Fails,” Broker World, March 2021
“The social contract for long-term care,” McKnight’s LTC News, May 17, 2021
“Government Violates The Long Term Care Social Contract To Your Detriment,” Broker World, June 2021
“LTC financing: Be careful what you WISH for,” McKnight’s Senior Living, June 7, 2021. ***

*** LTC CLIPPINGS are the best way to stay abreast of news and analysis affecting long-term care insurers and providers. Know the latest data and reporting before you’re blindsided by clients or prospects. Get the title, source, a link, a representative quote, and Steve Moses’s interpretation for the most important articles, studies, and reports as they appear in real time. Steve sends one or two LTC Clippings per day to your email inbox and follows up each Monday with a compendium of the previous week’s Clippings. Subscribe to LTC Clippings by becoming a premium member of the Center for Long-Term Care Reform ($250 per year or $21 per month). Help us keep the fight for rational and responsible LTC financing policy alive. ***

LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

LTC Comment: We thank McKnight’s Long-Term Care News for publishing the following article on May 17, 2021. Long-term care providers and insurers share a common interest in improving public policy that governs LTC services and financing. Equally important, however, is that these two components of the long-term care business collaborate to prevent bad public policy from taking effect. Please read this article and, if you have something to say about it or the topic, avail yourself of the opportunity to comment, which McKnight’s provides readers at the end of the piece. Or just drop me a note at smoses@centerltc.com. Thanks for your time and attention to this important subject.

“The social contract for long-term care”
by
Stephen A. Moses

America has a social contract for long-term care. It’s rarely acknowledged, but here it is.

If you are stricken by a need for long-term care that you cannot afford, we help you even if you are not poor. Assuming you’re eligible medically, you’ll qualify for Medicaid as long as your income is (1) less than the cost of a semi-private nursing home bed, about $93,072 per year, and (2) insufficient to cover your private uncompensated medical and long-term care expenses.

You can retain virtually unlimited assets and still qualify for Medicaid LTC, including up to $603,000 in home equity ($906,000 in nine states), plus, with no limit on their value, one automobile, prepaid burial plans, a business including the capital and cash flow, term life insurance, household goods and personal belongings, even an Individual Retirement Account if it’s in payout status as most must be by age 72, according to the latest Required Minimum Distribution rules.

Those are the basic rules that Medicaid eligibility specialists explain when they take your application. Of course, Medicaid planning lawyers can expand financial eligibility much further for people with higher income and assets using sophisticated trusts, annuities and qualified transfers.

Clearly, Medicaid’s financial eligibility rules for long-term care coverage are generous and elastic. But they do require a quid pro quo.

Ever since the Omnibus Budget Reconciliation Act of 1993, state Medicaid programs have been required to recover benefits correctly paid from the estates of deceased Medicaid recipients. The idea behind this requirement was to make sure the public understood there is no free lunch for long-term care.

There are two choices. You can save, invest or insure for the risk and cost of long-term care, and if you ever need it, pay privately and command access to any venue and quality of care you can afford. Or you can “go bare,” hope you never need long-term care, but if you do, qualify for whatever Medicaid provides, mostly nursing home care, contribute nearly all your income as a kind of co-insurance, benefit from Medicaid’s discounted reimbursement rate, but pay it all back after you die.

Policy makers who established this arrangement in 1993 hoped the public would take the risk and cost of long-term care more seriously and plan early to be able to pay privately if and when the need arose. They wanted to send the message to heirs that their inheritances were still at risk for long-term care even if their parents received Medicaid-financed care. The goal was to end the moral hazard inherent in a program that provided easy access to expensive long-term care after the care was needed.

Mandatory estate recovery also reduced the moral stigma of Medicaid dependency, because “it isn’t welfare if you pay it back.” The hope was that everyone would behave more responsibly, Medicaid LTC expenditures could be significantly reduced, more private financing at market rates would buoy long-term care providers financially, and Medicaid could become a better safety net for its originally intended clientele, the genuinely needy.

Unfortunately, it didn’t turn out quite like that. States did not implement estate recovery aggressively; the federal government did not enforce the law; and the media didn’t publicize the new estate recovery liability. So the public continued to ignore long-term care until they need it, turning to Medicaid by default when they do.

To add insult to injury, the Medicaid and CHIP Payment and Access Commission (MACPAC) recently recommended that Congress make estate recovery voluntary and implement rules that would substantially reduce its potential nontax revenue for Medicaid. MACPAC relied heavily on advice from Medicaid planning attorneys who make their livings helping upper middle class people qualify for Medicaid and avoid estate recovery, an obvious conflict of interest. See “MACPAC Captured.”

Without estate recovery, an enormous source of private LTC financing (home equity) is lost forever and Medicaid becomes a tax-payer financed windfall to heirs at the expense of program resources that should go to the poor.

It behooves long-term care providers to stop the MACPAC proposal from passing. We need to strengthen America’s long-term care social contract, not cripple it. To understand the reasoning, evidence and recommendations that led to passage of OBRA ’93 mandating estate recoveries, read Medicaid Estate Recoveries: National Program Inspection, a 1988 report by the Department of Health and Human Services’ Office of Inspector General. (Full disclosure: I conducted that study and wrote that report.)

By enforcing and publicizing Medicaid estate recoveries throughout the country, we can encourage private LTC financing, reduce dependency on Medicaid, improve access and quality of care for people of all income levels, and discourage the imposition of another compulsory payroll-financed government entitlement program.

Stephen Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). He is the author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

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Updated, Monday, June 7, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-019: LTC NEWS AND COMMENT

Will Congress Abandon America’s Seniors?
Nursing homes among ‘safest places’ for seniors following 98% drop in COVID cases: NIC
Semiprivate Nursing Home Room Cost Rises 9.2%: Mutual of Omaha
Overwhelming Bipartisan Majority Oppose Social Security & Medicare Cuts To Reduce Deficit
39 percent of nursing homes had no COVID deaths: report
State Assisted Living Providers Billions Out of Pocket in COVID-19 Pandemic Losses
Senior living association joins real estate industry in fighting White House tax proposals
Yes, You WILL Have To Have Long-Term Care Ins. In Washington
Simple tool can accurately predict Alzheimer’s onset within 4 years
Government Violates The Long Term Care Social Contract To Your Detriment
Answering Covid’s Wake-Up Call

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Updated, Tuesday, June 1, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-018: LTC NEWS AND COMMENT

Caring for an Aging Nation
New payroll tax to hit workers this fall for mandated long-term-care program, but state commission has few answers on how it will work
A Neurologist Faces His Alzheimer's Disease
Profile of Older Americans
Nursing Home COVID Deaths Lead to State Staffing Rules
Medicare Advantage Dual Eligibles Have Better Access to Care
Washington State Cares Fund Update
You Can Keep Some Assets While Qualifying for Medicaid. Here's How
Too much TV may be bad for your long-term brain health
What are the effects of inappropriate prescriptions in older adults?
Anne Tumlinson, CEO, ATI Advisory

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Updated, Friday, May 28, 2021, 10:40 AM (Pacific)

Seattle—

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LTC Comment: If LTC is such a huge risk and cost, why does the public fail to plan and insure for it? What can and should be done about that? Answers after the ***news.***

*** STRIKE while the iron is hot. One silver lining of the pandemic’s black cloud for long-term care is unprecedented interest in fixing LTC services and financing. The Biden administration wants to pump $400 billion into home care. Analysts are in a tizzy thinking their hopes for a new compulsory government LTC program may finally come to pass. The WA Cares Fund is already floundering toward unfunded implementation. MACPAC wants to ruin what’s left of the long-term care social contract. It seems like everyone wants to throw more government money and regulation at long-term care problems—i.e., institutional bias, poor access and quality, inadequate funding, overwhelmed family caregivers—that were caused by too much government money and regulation interfering with the LTC market since at least 1965. We run the risk of making long-term care services and financing even worse by doing more of the same. So, the Center for Long-Term Care Reform is doing our part to steer public policy in a better direction. Here are some examples of our recent efforts to warn about bad ideas and propose better ideas for long-term care reform.

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021
“LTC Bullet: The Key to LTC,” March 19, 2021, by Stephen Moses
“New guidance could make long term care in the U.S. worse (guest: Stephen Moses),” May 6, 2021 podcast hosted by the Heartland Institute’s Anne-Marie Schieber
“LTC Bullet: LTC Center Standing Guard,” May 14, 2021 by Stephen Moses, links to 100 LTC Bullets critiquing 20 years of misguided long-term care research and advocacy; proposes better analysis and recommendations
“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021
“Government Violates the Long-Term Care Social Contract to Your Detriment,” by Stephen Moses, forthcoming in the June 2021 issue of Broker World
“Medicaid Pays for Long-Term Health Care, Heirs Get Bigger Inheritance,” by Stephen Moses, forthcoming in the July 2021 issue of Health Care News.

The Center for Long-Term Care Reform is taking the fight for rational and responsible long-term care financing policy to a new level. We’ll be publishing our analysis and recommendations anywhere and everywhere. To follow our media campaign and catch everything we publish, join the Center and subscribe to our biweekly LTC Bullets, our weekly LTC E-Alerts, and our daily LTC Clippings. Get all the membership details in our Membership Levels and Benefits schedule and join/subscribe here. The Center will gradually stop sending our publications to non-subscribers so going forward, it will be necessary to join the Center to stay abreast of everything we are doing to promote long-term care reform. Contact Steve Moses at smoses@centerltc.com or 425-891-3640 with questions and to discuss corporate memberships in the Center. ***

LTC BULLET: WHY LTCI FAILS

The following article was originally published in Broker World magazine’s March 2021 issue. Subscribe to Broker World here: https://brokerworldmag.com/orders/. Strongly recommended. Watch for Steve’s next column in Broker World’s June 2021 issue.

“Why LTCI Fails”
By
Stephen A. Moses

Congratulations to Carroll Golden, the Limited and Extended Care Planning Center, and NAIFA, for presenting LTC Impact Week, nine hours of online training for LTCI producers Zoomed over three days in November, 2020. Well done; keep it coming.

But two shortcomings struck me about this otherwise excellent program. Low attendance—under 200—and parochialism—it never emerged from the LTCI silo to consider the broader economic and public policy context in which private LTCI is marketed and sold.

Why the low attendance? In fact, why do so few people sell LTCI? That’s easy. It’s a hard way to make a living. The business mostly attracts people who are passionate about long term care because of a personal, usually wrenching family experience. I’ve called LTCI producers “AMGs,” altruistic, masochistic geniuses.

But why is LTCI hard to sell? That question takes us immediately out of the LTCI market silo into the larger economic and policy domains. The conventional answer is that the public is in denial about long term care.

But that tells us nothing. If long term care is such a big risk and cost, as all agents are trained to believe and say, why is it so hard to get people to take the risk seriously before it’s too late to insure?

Well, maybe it has something to do with the fact that government has paid for most high-cost long term care since 1965. After all, upwards of 90 percent of the biggest long term care expenditures come from sources other than personal asset spend down—mostly government.

But to this observation, agents object: “No, that can’t be the problem. My prospects and clients don’t want Medicaid. They’ve heard it’s no good and leads straight to a nursing home. They resent the idea they’d ever rely on public assistance.”

All right, let’s analyze that objection. LTCI prospects and clients are a very narrow sample of all potential buyers. In fact, I think LTCI producers only get to see and talk to about one in ten of the people who could, should and would buy the product if they really believed they needed it.

So why don’t consumers believe they need long term care insurance?

Don’t blame LTCI carriers, distributors or producers. They’ve warned everyone for decades that if they don’t buy the product and need long term care they’ll be wiped out financially.

Don’t blame government. It’s been telling the same scary story, implemented tax incentives at the state and federal levels, and widely promoted the Own Your Future campaign.

Don’t blame the media. Articles touting the importance of long term care planning and the risks of going bare are everywhere nowadays.

You might wonder, in light of such widespread publicity and promotion, how stupid can the American public be? They still ignore long term care risk and cost despite this constant drumbeat of warnings.

Whoa. Back up. Before you impugn consumers’ judgment, consider some economic realities that also influence their decision making.

Consumers tend to ignore warnings about long term care risk and cost because they don’t hear many tragic stories of catastrophic long term care expenditures. That’s because Medicaid pays for most expensive long term care.

So, does this mean the problem with low LTCI take up is that people know Medicaid will pay and so they count on it instead of preparing with private insurance?

Assuredly not! What’s going on is much more nuanced. Think of it in two steps, like this:

Step One: When people are still young enough, healthy enough, and prosperous enough to plan for long term care and purchase private insurance, they hear the pervasive buzz that they need protection against long term care risk and cost. But they have other priorities.

They have house and car payments. They’re saving for retirement. They’re putting kids through college, and so on. At this stage their level of concern about health in the distant future does not reach the threshold to impel them to consider, much less buy, LTCI. Long term care is a back-of-the-brain concern.

At this time of their lives, most people don’t know who pays for long term care and they don’t care. They do have a vague sense that someone must pay because you don’t see Alzheimer’s patients dying in the gutter. It’s much easier not to think about this bothersome subject in spite of the constant reminders. But then …

Step Two: Decades go by, health deteriorates, activities of daily living get harder to manage, cognitive impairment imposes. The need for long term care becomes imminent. All of a sudden, finding and paying for long term care is a front-of-the-brain issue.

The same people who evaded the issue earlier (or more likely their adult children because the elders are now impaired) begin to research long term care seriously. They get no help from Social Security or Medicare, but they find lots of information on how to qualify for Medicaid.

Medicaid financial eligibility rules are very generous. Income usually isn’t an obstacle because personal medical and long term care expenses are deducted before eligibility is determined. Most large assets are exempt and other assets are easily converted to exempt status.

Medicaid eligibility rules are also very elastic, expandable to allow even people with higher incomes and net worth to qualify with the help of Medicaid planning attorneys, whose ads are everywhere online.

People learn lots of negative information about Medicaid, such as the fact it’s welfare, pays too little to ensure quality care, and usually means nursing home care. But by the time they learn this, high long term care costs aren’t just a vague risk off in the distant future. They’re now!

When infirm elders, or, again, more likely their adult children, are staring at thousands of dollars per month for long term care, the prospect of dodging those expenses makes Medicaid look far less undesirable. People adapt. If they’re affluent, they employ “key money” to buy their way into the nicest facilities by paying privately for a while, and then, after a few months, they flip the legal switch to get Medicaid.

Such people don’t talk about how they solved the long term care problem. They’re not proud of it. So the word doesn’t get out. But the damage is done. Another generation is desensitized to long term care risk and cost and the crisis of long term care financing continues.

That’s why the public remains in denial about long term care risk and cost despite the omnipresent warnings. That’s why LTCI is hard to sell. That’s why long term care service and financing problems are self-perpetuating.

And that’s why nothing will change until we break the cycle by changing Medicaid eligibility rules either to exclude middle class and affluent people entirely or to require them to pre-pay or repay Medicaid for their care from their home equity. Only then will they perceive sufficient reason to plan early and insure for long term care.

In the meantime, LTCI carriers, distributors and producers should realize there is more to selling this product than getting sales and marketing right. They have to confront the broader economic and public policy context in which sales and marketing take place.

Stephen A. Moses
425-891-3640 smoses@centerltc.com
Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). The Center promotes universal access to top-quality long term care by encouraging private financing as an alternative to Medicaid dependency for most Americans.

Previously, Mr. Moses was president of the Center for Long Term Care Financing (1998-2005), director of research for LTC, Inc., (1989-98), a senior analyst for the Inspector General of the U.S. Department of Health and Human Services (1987-89), a Medicaid state representative for the Health Care Financing Administration (1978-87), a HHS Departmental Management Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970). He is widely recognized as an expert and innovator in the field of long term care.

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday, May 24, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-017: LTC NEWS AND COMMENT

Home care providers declare 2021 ‘year of healthcare at home’ while they acknowledge acute workforce shortage
Interest In Life Combination Products Shifts
Drinking any amount of alcohol causes damage to the brain, study finds
COVID-19 in Nursing Homes: Most Homes Had Multiple Outbreaks and Weeks of Sustained Transmission from May 2020 through January 2021
Bracing For The Coming Long-term Care Tsunami
How to opt out of coming payroll tax
Pandemic means 41,000 fewer senior housing units could be needed: analysis
COVID Accelerates Shift to Private Skilled Nursing Rooms, Up 31% in 2020
The social contract for long-term care
Mor: Time to rethink U.S. nursing home landscape
HC2 Moves Closer to Selling Long-Term Care Insurance Unit
CMS issues guidance to states on how to use enhanced Medicaid HCBS funding from stimulus package
Top 11 Fastest-Rising Costs for Older Americans
Are You Prepared for the Staggering Cost of Long-Term Care?
New Guidance Could Make Long Term Care in the U.S. Worse (Guest: Stephen Moses)
New State Payroll Tax Will Provide for Long-Term Care Insurance
Skilled Nursing Facility Surveys Skyrocket During Pandemic
Social Security Sees Slowdown in Retiree Rolls Amid COVID Deaths

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Updated, Friday, May 14, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LTC CENTER STANDING GUARD

LTC Comment: Private LTC financing is constantly under attack by scholars representing financially well-endowed think tanks, advocacy organizations, government agencies and by the media that broadcast their message. We’ve fought back on your behalf for 23 years. Here’s how, after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors as National Brokerage Director for USA-BGA in the individual, worksite and affinity LTCi markets. Advisors like his unique, simple and effective LTCi presentation and his revolutionary “Range of Exposure” tool which, among other things, projects a client’s (joint for a couple) mean age of LTC, likely annual cost and length of need based on age, gender, marital status, success goal (% chance of not outliving their assets), etc. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude.thau@gmail.com to discuss how he might help you. ***

*** CORRECTION: Our last LTC Bullet: 2021 ILTCI Virtual Conference Wrap Up, published Friday, April 30, 2021, contained an error. Vince Bodnar will chair the conference in 2022 with Steve Schoonveld as co-chair. We thank and honor both, and the 2021 Chair Barry Fisher, for their commitment to the profession. ***

*** VIDEO REPLAYS of the 2021 Inter-Company Long-Term Care Insurance Conference sessions are available through June. See LTC Bullet: 2021 ILTCI Virtual Conference Wrap Up for a selection of session reviews to help you pick which ones to watch. In the meantime, check out Anders Sorman-Nilsson’s keynote address here and find the individual session recordings here. ***

LTC BULLET: LTC CENTER STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 23rd year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private funding or promoted compulsory government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, government agencies, 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 100 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, Health Affairs

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, Milken Institute

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), Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” Medicaid and CHIP Payment and Access Commission (MACPAC)

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, Melissa M. Favreault, David C. Grabowski, and Stephanie Kelton.

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 Steve at smoses@centerltc.com or 425-891-3640 to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

(The following Bullets are listed in chronological order beginning with the earliest. If you prefer to start with the most recent issues and controversies, just scroll to the bottom and work your way backwards.)

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: LTCI Defeatism, April 1, 2016
LTC Comment: LTC insurance leaders should not surrender to government-financed long-term care based on ideologically biased policy analysis grounded in misleading data and fallacious arguments. We say “Revolt!”

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: Home Equity and LTCI Demand, June 30, 2017
LTC Comment: We explore the Professor Thomas Davidoff’s thesis that home equity “substitutes” for long-term care insurance demand and suggested instead that Medicaid’s large home equity exemption obviates LTCI demand by eliminating home equity’s liability for long-term care costs.

LTC Bullet: Medicaid, Home Ownership and Long-Term Care Financing, July 7, 2017
LTC Comment: Medicaid’s estate recovery requirement induces aging Americans to reduce home ownership, decrease home equity and set up trusts in order to qualify for Medicaid long-term care benefits.

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.

LTC Bullet: The New Fallacy of Impoverishment, June 29, 2018
LTC Comment: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work.

LTC Bullet: How and How Much Medicaid Reduces Lifetime Medical Spending for Affluent Retirees, October 10, 2018
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.”

LTC Bullet: Amplify LTC Sanity, February 13, 2019
LTC Comment: In today’s echo chamber of irresponsible fiscal and monetary advocacy, a voice for responsible LTC planning and policy is more critical than ever. Join us!

LTC Bullet: Remember the Middle, Friday, May 10, 2019
LTC Comment: A recent Health Affairs article accurately assessed the plight of middle-income seniors whose resources will be inadequate to fund their senior living and long-term care. But the article proposed interventions that would exacerbate the problem.

LTC Bullet: Middle Market Mayhem, June 7, 2019
LTC Comment: LTC analysts, advocates, and providers are wringing their hands about the middle market’s future inability to afford senior living. We mitigate the problem and re-offer a 25-year-old solution.

LTC Bullet: Why Too Little Home Care?, June 28, 2019
LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views follow: more government money or better directing what we already spend to encourage more private financing.

LTC Bullet: To Fix Long-Term Care, Redefine the Problem, September 27, 2019
LTC Comment: Recent research suggests long-term care is not the gargantuan crisis previously thought. So, private sector solutions, including LTC insurance, may be far more effective than commonly believed.

LTC Bullet: The Battle Lines Are Drawn, October 25, 2019
LTC Comment: Two sides advocate diametrically opposite solutions for the long-term care crisis. Who are they? What do they want? Which will win? Answers follow.

LTC Bullet: Where Long-Term Care Went Wrong and How to Fix It, January 3, 2020
LTC Comment: Officials and analysts attack the symptoms of long-term care dysfunction (exploding costs, nursing home bias, and poor quality) without addressing the cause (easy access to Medicaid for consumers and strong incentives for states to maximize federal Medicaid matching funds). Everything follows from that observation.

LTC Bullet: How Not to Redesign Long-Term Care, June 12, 2020
LTC Comment: Do we really need more government money and regulation for long-term care, as this Forbes columnist insists? Analysis and better choices follow.

LTC Bullet: The Crisis on Top of the Crises, July 17, 2020
LTC Comment: What could be worse than the current cataclysm of nursing-home coronavirus deaths? More of the same if we keep doing what caused them.

LTC Bullet: The Keystone Kops of LTC Insurance, October 9, 2020
LTC Comment: What happens when the Keystone Kops design a long-term care insurance plan? Answer: Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” enacted in 2019.

LTC Bullet: Modern Monetary Theory and Long-Term Care, October 23, 2020
LTC Comment: Finally, a solution for the long-term care financing crisis. Or not? Explanation follows.

LTC Bullet: Is Medicaid the LTC Solution or the Problem?, December 4, 2020
LTC Comment: Will more Medicaid funding and regulation help (short-term) and harm (long-term) America’s fragile long-term care system? Answers follow.

LTC Bullet: Spousal Impoverishment, Then and Now, January 22, 2021
LTC Comment: The myth that access to Medicaid LTC benefits requires impoverishment is pervasive. A dose of reality concerning spousal impoverishment specifically follows.

LTC Bullet: Social Insurance is an Oxymoron, February 5, 2021
LTC Comment: Insurance is individualistic, so “social insurance” is a contradiction in terms. Meaning and consequences explained.

LTC Bullet: The Key to LTC, March 19, 2021
LTC Comment: Solving the long-term care financing crisis isn’t so hard if you avoid ideology and take human nature into account. A better public/private partnership is an easy and available solution.

LTC Bullet: MACPAC Captured, April 2, 2021
LTC Comment: Signs in the Medicaid and CHIP Payment and Access Commission’s (MACPAC’s) estate recovery report point to its capture by the Medicaid planning bar.

LTC Bullet: Milken Groupthink Fumbles LTC Financing, April 16, 2021
LTC Comment: You might expect innovative ideas from the Milken Institute, but when it comes to long-term care financing, all you get is ideological retreads.

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Updated, Monday, May 10, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-016: LTC NEWS AND COMMENT

Alzheimer’s Pathology Linked to Diet
White House recognizes assisted living’s ‘critical importance’ as aging services provider
Americans Want Government To Help Them Age At Home, Buttressing Biden’s Medicaid Long-Term Care Agenda
Federal Long-Term Care Programs Get $1.4 Billion More
States’ 2020 Personal Income Growth Was Highest in 20 Years
Senior living preferred over nursing homes for long-term care needs, but home still rules: study
Researchers find many nursing home stays far too long, warn providers to become more efficient
Analysis Suggests Health Insurers Remained Profitable Across Markets Amid Pandemic in 2020
Genworth Plans for Return to Long-Term Care Insurance Sales
Bill to Boost RMD Age to 75 Up for First Vote Wednesday

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Updated, Monday, May 3, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-015: LTC NEWS AND COMMENT

As Medicare Advantage drives rate lower, fed-up CEOs embrace strategies that limit carriers’ influence
First they came for skilled care …,
COVID-19 Pushes Up Genworth Life Unit's Capitalization Level
The LTSS Trust has a new name. Meet the WA Cares Fund!
The Benefits of Working Longer
A Majority Of U.S. Consumers Lack Confidence In Stock Investments
Legislature delivers Washingtonians wins, losses and important health-care legislation to unwrap
Investing in private rooms may have prevented nearly a third of COVID-19 long-term care infections, deaths: analysis
How Lowering the Medicare Eligibility Age Might Affect Employer-Sponsored Insurance Costs
Aging services industry takes wait-and-see approach on infrastructure plan
Retirement confidence resilient despite pandemic
In-Home Care Providers Must Break Through Barriers to Handle More Long-Term Care Volume

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Updated, Friday, April 30, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

LTC Comment: This virtual version of the annual Intercompany Long-Term Care Insurance conference was an extraordinary example of electronic legerdemain. Some comments and session reviews follow. This content will be added to our “History of LTC Insurance Conferences.”

LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

LTC Comment: The 2021 Intercompany Long-Term Care Insurance (Virtual) Conference is history. Organizers Barry Fisher and Vince Bodnar eased potential participants into the idea of a virtual conference with weeks of advanced notice and guidelines. They recruited sponsors for the overall meeting, for each track and even for each session. Virtual exhibitors were encouraged to sign and pay up. Somehow, Fisher and Bodnar managed to fund the effort, because beginning Tuesday, April 13, 2021, it kicked off successfully.

After an Opening General Session on the 13^th, two different educational sessions began on the hour each Tuesday and Thursday for three weeks from 12pm – 4pm EDT and ran for 50 minutes each, followed by 10-minute breaks. Find the agenda here. Sessions were recorded and are available to any and all through June 2021 using the password ILTCI*2021.

Here’s how to access those recordings: Open the ILTCIConf.org screen. Click “Schedule” on the navigation bar at the top of the page. Click the track name of the session you want to watch. Then find and click the session you’re looking for in the list of track sessions. Find and click the “Access Recording” button at the bottom of the session description. Fill out the information to identify yourself, click “I am not a robot” and you’re in … hopefully.

As might be anticipated with a complicated virtual conference, the outcome was not electronically flawless. The opening session was to be a talk by futurist Anders Sörman-Nilsson, who was actually in Australia speaking at 2am local time the next day. Interruptions and sound difficulties caused that session to be cancelled in the middle, but organizers expect a recording of it, done without the long-distance complications, will be available.

As your humble reporter was preoccupied with other matters during three days of the program, I asked some LTCI experts to help me provide reviews of the sessions they attended. I thank Claude Thau, Stephen D. Forman, and Honey Leveen for sharing their comments on several of the sessions. We decided not to attach names to specific session reviews in order to encourage frank commentary. Those reviews follow.

Session Reviews

Week One

Tuesday, April 13, 2021

Opening General Session

After a slight delay, Conference Chairman Barry Fisher opened the conference with the National Anthem followed by announcements, thank you’s, and sponsor appreciations. He said the meeting had over 1500 unique attendees (which later increased to 1700, then 2000!). He recognized the advisory committee and program/education committee, the professional team, and spoke of other ILTCI initiatives.

Robert Eaton, immediate past Chairman and CEO, thanked sponsors and exhibitors, introduced the conference’s new logo and the new “aging in place track,” concluding that he is more positive about the LTCI industry now than in a long time. We are “fulfilling our responsibility.”

Dennis Martin of One America introduced the opening session speaker, “virtual futurist” Anders Sorman Nilsson. But, as already mentioned, that didn’t go smoothly. We’re assured, however, that “Anders will be back for 2022.”

Speaking of 2022, Steve Schoonveld, next year’s Conference Co-Chair, announced where we’ll meet, hopefully in person: the Raleigh, North Carolina Convention Center. Vince Bodnar will Chair next year’s event.

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Session Title: Care Optimization and Best Practices to Streamline the Claims Process

Track: Management & Operations

Presenters: Adam Warner (UW Modernization for LTCi and DI at NYLIC, ex-Claims, awarner@newyorklife.com), Lucy Beiter (Manager, NYLIC LTCi Claims, lbeiter@newyorklife.com), Rita Bennett (rita.bennett@lfg.com), Char Hu, CEO (char@thehelperbees.com)

Comment: 90% of the audience for whom the question was relevant used nurse assessments and 2/3 used video in 2020 and are definitely likely or somewhat likely to continue to use it.

Recommendation: Treat the 80% expecting recovery differently from the 20% not expecting recovery

BEA = Benefit Eligibility Assessments are becoming more varied and customized.

Recertifications can be simplified if recovery is unexpected.

With facilities, some of the electronic substitutions during the pandemic did not help much because facility staff were overwhelmed.

Recommendation (view recording or not?): Maybe; there were no slides.

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Session Title: Seniors and Technology: A Paradigm Shift Toward Digitalization

Track: Management & Operations

Presenters: Laura Moore, Shannon Perschy, Becky Freeman, Christina Newbrough (Helper Bees; christina@thehelperbees.com)

Comment: Several sessions indicate that elders are embracing technology. John Hancock: authenticated, personalized website that allows a person to log on securely and upload a form which by ID is put directly into the queue. Electronic Visit Verification; electronic claims payments; consistent claims across lines; repatriated services that were done overseas. Start clients interacting digitally as soon as possible (premium, claim initiation). I can attest to JH’s excellent upgrade. A classmate’s wife told me how great it was that she could get on the system on the West Coast and work with an East Coast company so efficiently on her schedule. When I passed the compliment on to JH, they were elated because the system had just been released. Thrivent’s upgraded system sends alerts to staff and FUs to claimants during claim. Smart forms reduce displayed fields to those which are necessary. Thrivent learned (more quickly or wouldn’t have learned at all) about out-of-facility days, days paid by 3^rd parties, deaths, no licensed health care professional on-site (so need to do another assessment), etc. Thrivent initiated some efforts jury-rigging existing resources in order to test viability before seeking IT resource. Very important to test on a subset of claims.

Recommendation (view recording or not?): Definitely yes!

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Session Title: The Good and the Bad of The #1 Trend In The Life Insurance Industry

Track: Marketing

Presenters: Steve Cain (LTCI Partners), Ramona Neal (Living Benefit Review)

Summary: What You Don’t Know Can Hurt You And Your Clients.

Agenda
– #1 Trend Life Insurance Industry: LTC-Life Insurance Solutions
o LTC-Life Insurance Continuum
o LTC Riders
o Chronic Illness Riders
o The Risks with some Riders
o Critical Illness Riders
– How to Fish: Understanding what You’ve Sold and are Selling
– Regulation and Litigation
– Best Practices
– What’s Good and What’s Bad?

Comment: All riders are good, but are we adequately disclosing how they work? We need to talk about the riders; sales applications; client fit. People are selling policies they don’t understand. Need to make a study of what we are selling. Sometimes the ones that illustrate the best don’t have the best benefit. All the riders are good; it’s about managing expectations. Are we adequately explaining how they work? Read the fine print.

Recommendation (view recording or not?): Yes, good session as no one left early.

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Session Title: Existing Managed LTC Programs: What Makes Them Successful?

Track: Aging in Place

Presenters: Ali Ahmadi (Tcare), Sam Espinosa (Mercer), Mary Kaschack (National MLTSS Health Plan Assoc), Sanjit Puri (Moderator, Optum)

Comment: A panel of experts knowledgeable about LTSS programs shared their insights on what makes such programs successful. General overall view of benefits. Big changes in Medicare. What is health related? Benefits don’t have to be uniformly available. Medicare Advantage plans can choose to target benefits. But Medicare is still not LTC. Very limited. 72 hours per year. Title 19 not designed for this; Medicaid through waivers has had to adapt to provide these services. Expanded into categories of services not traditionally LTC. We are offering marriage counseling to a family about to break up. Far beyond traditional services. Pest control. Many MA plans starting to offer these new benefits. Driven by rebate dollars available to Medicare Advantage plans. Can they target these benefits to the people who need them most is critical question. These benefits are not short term, they’re chronic, permanent. Program pretty successful on the Medicaid side as compared to Medicare side. Very positive trend on the LTCI side, but not on the dual eligible side. Misaligned. Just because benefits available doesn’t mean they’re being used.

Recommendation (view recording or not?): Yes, very interesting. The government is moving more and more into providing LTC benefits and supportive benefits. For better or worse.

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Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

Presenters: Eddie Armentrout (Actuarial Research Corporation) absent, had baby, Chris Giese (Moderator, Milliman), Annie Gunnlaugsson (Milliman), Matt Smith (State of WA)

Comment: This session compared and contrasted actuarial modeling of public LTSS programs to traditional private standalone and hybrid benefits. The panelists used Washington’s LTSS Trust Program as a case study, providing background on the program as a whole, as well as on the methodology and assumptions used in performing feasibility and actuarial studies for the program. Common features of public programs: insurance, premiums, mandatory participation, limited benefit, financing perspective considered a tax on wages, for example; must pay specified number of years to be vested; long time horizons, 75 years typically; not true pay as you go programs; mismatch over time. Methodology and assumptions to model these kinds of programs. Similar to any insurance program. Look at population and analyze income needed to cover costs. Similar to private LTCI. Demography, morbidity and economic assumptions. How differ between private and public. Brand new programs. Demographic: fertility rate, mortality, migration when benefits not portable. Benefit trigger, some states considering more liberal or restrictive triggers. Continuance tables, how long stay on benefit. WA covering first year. Economic assumptions: payroll tax or premiums; payroll tax tied to wages so have to estimate those. Vesting requirement. Interest rate, mismatch between revenue and expenses emerges over time. Prefunding from vesting period, collect revenue but people haven’t vested in program yet. Interest earned on fund balance very important. Social Security Trustees report publishes interest. Treasuries, bonds, equities?

Question: What is public reaction? They rejected advisory and constitutional change to allow investment in equities. But the program goes forward anyway.

Recommendation (view recording or not?): Yes, actuarial science 101. Incredibly complex even at the high level they addressed in this session. Prompts the question: what could possibly go wrong with an actuarially complex government program dreamed up by politicians that the public has rejected twice in referenda.

Same session; different reviewer:

Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

Presenters: Chris Giese, Milliman; Matt Smith (Department of the Actuary, State of Washington); Annie Gunnlaugsson (Milliman)

Comments: Very interesting session about issues related to pricing a public LTCi program, in particular the WA LTC Trust. Accessing Milliman’s report to the WA LTC Trust provides a lot more detail. Cost varies: CA feasibility range was .3% to 20% payroll taxes

WA average cost =.0058*median = $375/year. $64,655.

Recommendation (view recording or not?): Yes, but accessing the report may be more valuable, depending on your interest.

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Thursday, April 15, 2021

Session Title: Industry Best Practices on Common Terminology

Track: Legal

Presenters: Rita Bennett (Lincoln), Allison Brown (Bankers/CNO), Matt Morton (LTCG), Mike Rafalko (Cozen O’Conner), moderator Josh Falco (Lincoln)

Comment: Thought-provoking presentation focusing on common words and phrases found in LTC contracts, viewed from various points of view (including claims, legal, and risk management). Among the most problematic terms have been “care,” “continual supervision,” and “approved.”

Recommendation (view recording or not?): Yes

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Session Title: Changing Selling Techniques for Changing Times

Track: Advisors and Agents

Presenters: Bridget Collins, Denise Gott, Alecia Barnette, Angie Hughes

Comments: I noticed the following tips:

To protect your Zoom meeting from failure, have wireless back-up in case you lose network connection and be close to your router (if multiple people in the house are on-line, the one closest to the router is most likely to maintain connection).
For client convenience, provide webinars on demand and have an appointment-setting tool (I’d add for your convenience too!)

Recommendation (view recording or not?): Good vibrant speakers. If you want to hear more, sure, listen to the recording.

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Session Title: The COVID-19 Effect: Claims and Underwriting Processes – Part 1

Track: Underwriting and Claims

Presenters: Karen Smyth, Break-Out session leaders: Allison Brown, CNO; Arlene Hendricks, Lincoln Financial Group; Charles Jenkins, CNA; Robyn Narveson, LTCG; Cassandra Prebis, OneAmerica; Natalie Schreiber, CNO; Joan Stear, Wilton Re; Jennifer Vey, LTCG

Comments: LTCi companies stepped up to the pandemic crisis, as 87% of the people answering a poll indicated that their company made claims administrative exceptions and most did so beyond regulatory mandates. Note that this is not the same as saying “87% of the insurers.”

They used Alternate Plan of care, extracontractual letters with Reservation of Rights, and other methods. They used virtual and telephonic assessments and a greater reliance on medical records, instead of on-site assessments

Recommendation (view recording or not?): It was a great session! Exciting that the insurers made such concessions! Definitely worth hearing.

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Session Title: Adverse Decisions: Considerations for Determining Risk Tolerance

Track: Claims and Underwriting

Presenters: Steve Brogan (Moderator, Faegre Drinker), Drinker; Julie Belknap, Continental; Cassandra Prebis, OneAmerica; Jon McElhaney, Northwestern

Comments: Standard advice regarding managing the claims process and inherent risk therein.

The Chronic Illness certification is completed by a HO Licensed HealthCare Professional 50% of the time and by the insured’s physician 37% of the time, but PCPs often document the existence of a chronic condition rather than “chronically ill” as per §7702(b). 87% of the polled people responded that someone could need substantial activity if they needed the care a majority of the time or intermittently.

Recommendation (view recording or not?): Generally standard advice. If that is of value, this session is excellent.

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Week 1 Wrapup (April 13 and 15) as reported by conference organizers

ILTCI attendee registrations are now over 1,700! The Opening Session kicked off with a welcome from the 2021 Conference Chair, Barry Fisher. He expressed appreciation to the 2020 Conference Chair, Robert Eaton, for his mentoring and leadership throughout the year. In case you missed the Opening Session, here are a few other highlights:

As a result of the technical issues during the keynote address, ANDERS SÖRMAN-NILSSON is recording his complete keynote address and it will be posted on the ILTCI website, hopefully next week.
The 2022 ILTCI Conference will be March 20-23, 2022 in Raleigh, NC. The Conference Chair is Vince Bodnar and Co-Chair is Steve Schoonveld.
We hosted 15 individual sessions this week which were recorded and are available at www.iltciconf.org for on-demand viewing until July 1. Check the track pages on the website for recording links.

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Week 2

Tuesday, April 20, 2021

Session Title: Long Term Care Marketing, a 360 View

Track: Marketing

Sponsor: National Peace Officer and Firefighters Benefit Association

Presenters: Claire Akin (Indigo Marketing Agency), Monica Breeding (Fig Marketing), Tom Riekse (Moderator, LTCI Partners)

Comment: Very good, practical info on how to build and develop a LTCi practice – amazing how differently marketing is done today than when I started.

Recommendation (view recording or not?): Yes

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Session Title: The Claims, Compliance and Legal Challenges of CCRCs, Continuing Care Retirement Communities

Track: Legal

Presenters: Gina Besz (Triplus Services), Angie Forsell (Moderator, LTCG), Daniel Lambert, Kenneth Pfaehler (Dentons)

Comment: It was actually “intelligible” and more engaging than I expected. They used interactive polling, which is always more fun. Definitely, some good information. I hope they’ll repeat both of the above sessions at our next in-person ILTCI – hopefully 2022.

Recommendation (view recording or not?): Yes

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Session Title: Fraud: Emerging Trends and Innovative Solutions

Track: Legal

Presenters: Kim Martin, LFG; Kim Dionosio, KRM Legal Group, former environmental attorney who lives in FL; Jeff Ferrand, Attorney, LTCG VP Fraud; Christie Conway, Assuricare

Comments: Disasters create new opportunities for fraud; greater financial pressure makes people more desperate hence likely to commit fraud and justifications people can use to make themselves comfortable committing fraud and also make it harder to expose because of travel limitations, lack of access to medical documents, etc. Accommodations (mandatory or voluntary by insurer) opened up fraud and litigation risks. For example, Alaska required paying for family care; NJ made it easy for people to re-license after extended gap. It is good to have multiple vendors in case some vendors can’t perform.

Recommendation (view recording or not?): Yes.

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Session Title: Tax Advantages of LTC Planning

Track: Marketing

Presenters: Rick Stewart (Crump); David Gresham (OneAmerica), Channing Schmidt (Securian Financial)

Comments: Seemed standard but thorough for me.

Recommendation (view recording or not?): If you are expert, “No”. If you are not expert: “Absolutely.”

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Session Title: Critical Tools for Crisis Planning

Track: Advisors & Agents

Presenters: Elizabeth Moss, Producer’s Choice Network; Cathy Sikorski (NAELA)

Comments: How likely to people think they, their spouse, their parents or people in general are to need LTC in the future?

Recommendation (view recording or not?): Could help you organize your thoughts about this topic. Very good speakers.

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Session Title: The COVID-19 Effect: Claims and Underwriting Processes – Part 2

Track: Claims and Underwriting

Presenters: Karen Smyth; Joan Steer; Arlene Hendricks; Charles Jenkins; John McElhaney (NW); Allison Kusel (GNW, Claims)

Comments: Restoration of Benefits is being requested more now because of temporary discontinuation of service. Fewer visits to doctor during pandemic may mean less medical info available for future applications. What if insurer allowed [a neighbor] to provide care during pandemic and the care recipient is happy, doing well and not wanting to disrupt his/her caregiving situation. But the current care was covered only as a temporary accommodation? Now what?

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Thursday, April 22, 2021

Session Title: LDTI and Regulatory Updates on LTC Standalone and Hybrid Products

Track: Actuarial and Finance

Presenters: Linda Chow, EY, FSA, MAAA, Kevin Healy, New York Life, FSA, MAAA, Doug Reilly, CNA, CFA, CPA

Comment: Broad review of half a dozen regulatory updates (e.g., PBR, 7702 changes), leading into discussion of “long duration targeted improvement” (LDTI) accounting standards, followed by discussion of management reporting with emphasis on “rollforwards” and “remeasurement.” (I can’t say more than that: this was so far over my head as to make me feel dumber after the hour. I’m normally able to keep up, but this was specialty stuff…)

Recommendation (view recording or not?): Honorably recuse myself.

Same presentation; different reviewer:

Session Title: LDTI and Regulatory Updates on LTC Standalone and Hybrid Products

Date and Time: Thursday, April 22, 2 pm

Track: Actuarial

Presenters: Linda Chow; Doug Reilly, CNA: Kevin Healy, NYLIC

Comments: Valuation discount rates are decreasing causing higher required reserves and cash values, hence higher prices (surrender charges higher at young ages, lower at old ages).

Principle-Based Reserving also increases reserves because must hold higher of:

Traditional type of reserves based on prescribed values for variables

Alternative future scenarios, using insurer experience if credible.
The interest rate for MEC and corridor calculations has dropped from greater of (4%, rate guaranteed in contract) to (2%, rate guaranteed in contract). If this lowers the interest rate in the calculation, the MEC premium cap increases and the Death Benefit factors go down, which are both good.

CA AB1209 requires notice of impact of taking ADB, loan or withdrawal.

MT lifted its unisex mandate, Kevin thinks.

Recommendation (view recording or not?): Very good content. Worthwhile.

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Session Title: How to Communicate with Policyholders

Track: Management and Operations

Presenters: Beth Acerbo (MetLife), Jodi Anatole (Moderator, Endeavour Consulting), Andy Freedman (Assured Allies), Jessica Loesing (Faegre Drinker), Sharon Reed (LTCG). I don’t remember Jodi having been there.

Comments: As a result of the pandemic, 62% would rather die than go to a nursing home.

Andy advises insurers to give gifts and wellness advice to policyholders to make their lives more comfortable. 95% still using paper based on poll taken.

Recommendation (view recording or not?): Depends on your needs, interest and knowledge of the subject.

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Session Title: Look What You Made Me Do – The Dilemma with Mortality and Morbidity Trends

Track: Actuarial & Finance

Sponsor: Sutton Actuarial

Presenters: Bob Yee; Andrew Dalton; Laurel Kastrup, PWC

Comments: Many actuaries presume that active life mortality improvement is geometric (it is lumpy based on societal factors), will stop in 10-20 years, that there is no disabled life mortality improvement and that morbidity improvement will stop in 5-20 years. Disabled life mortality improvement or morbidity improvement could lengthen or shorten claims, particularly depending on the cause of claim). Using first principles (multiple decrement assumptions) rather than a cost curve is a superior technique with greater flexibility and imparts more understanding; it reflects that reduced current incidence creates more later incidence. Reserves should be conservative relative to improvements; otherwise booking profits too soon.

Recommendation (view recording or not?): Outstanding!

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Session Title: Litigation Update

Track: Legal, Compliance, & Regulatory

Presenters: Sandy Jones (Moderator, Faegre Drinker), Amy Kline (Saul Ewing LLP), Angela Shire (MedAmerica)

Comments: Reviewed rate increase (Newman, DiRito, Gunn, Skochin, New Hampshire) and claims (Dallal) litigation. Explained types of claims issues and why difficult

Recommendation (view recording or not?): Yes! Super!

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Week 2 Wrapup (April 20 and 22) as reported by conference organizers

We are now up to 2,000 individual people viewing our sessions! This week we had 15 more fantastic sessions, here are a few highlights:

This week's sessions covered Actuarial & Finance, Marketing & Distribution, Legal/Compliance/Regulatory, Advisors & Agents, Claims & Underwriting, and Management & Operations.
Individual sessions were recorded and are available on the track pages under the Schedule tab at www.iltciconf.org for on-demand viewing until July 1.

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Week Three

Tuesday, April 27, 2021

Session Title: Aging in Place – Applications of Remote and Virtual Services

Track: Aging in Place

Sponsor: Active Daily Living

Presenters: Deana Bell (Milliman), Char Hu (The Helper Bees), John Palmer (Moderator, CNA) Kelly Prchal (Allied Virtual Care)

Comments: This panel discussion explored innovative ways companies are providing services to their policyholders and claimants virtually. Topics included pre-claim initiatives and on claim programs that can be conducted remotely to improve the insureds quality of life. Panelists come from different organizations utilizing technology to change the way care is delivered to help insureds sustain their independence and improve their quality of life. Hearing loss; virtual care concierge; adoption rate; engagement; tele-medicine (internet, chat, video, remote patient monitoring, provider to provider). Make expansions permanent? Not clear; fraud risk. Stranger danger. People getting more familiar with virtual option. How do you market this? Glacial pace before pandemic. Post Covid adoption.

Recommendation (view recording or not?): Yes.

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Session Title: Who is Selling What? To Whom, How, and Why? Results of the National Survey

Track: Marketing & Distribution

Sponsor: CLTC – Certification for-Long Term Care

Presenters: Barry Fisher (Ice Floe Consulting), Ronald Hagelman (Ice Floe Consulting), Liz Hoch (Oliver Wyman), Mike Smith (CPS Horizon)

Comments: This survey, “Who is Selling What? To Whom, How & Why?” illuminates the factors most relevant in selling LTC Insurance (Traditional & Hybrid Life + LTC) today. Over 600 Insurance and Financial Advisors shared their opinions and attitudes about the ideal client profile, product perceptions, best practices in starting the LTC planning conversation, what messages resonate with clients and more. Best source of respondents: broker, general agents. 85% over age 50; 80% over 15 years of experience. Majority focus on upscale markets. Most surveys focus on who buys and why, i.e. adverse selection. 2 or 3 key issues: advisors are aging out of the business. How to get younger agents involved? Only 12% called themselves LTCI specialists. Wider range of professionals selling LTCI now. What are they selling? Half, traditional; other half, combo products both suited. Over half said difficult to explain differences in products. Zero premium products were not usually a help to sell product. Need more training and education came through. Agents know what they sell but not necessarily what they don’t know. Who is the customer and why buying? 95% motivated by personal experience. Know cost don’t want to depend on family. Protecting income or leave legacy least important. Premium rate guarantees and inflation protection most important to consumers. Least important: return of premium and non-forfeiture benefits. Risk replacement or partial—partial more than ever. Who provides best training: general agents and insurance companies. High desire to go down market surprised surveyors. Products just not designed for that space. Key is enabling people to stay at home. Most important thing from survey: get in the door by including LTC planning in your retirement planning practice. Should be part of every conversation, individual or corporate. Always address risk mitigation. Go to LTCAuthority.com for copies of the survey results.

Recommendation (view recording or not?): Yes

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Session Title: Rate Increase Innovation: What’s Next in Mitigation, Communication & Implementation

Track: Legal, Compliance, & Regulatory

Presenters: Ralph Donato (LTCG), Afik Gal (Assured Allies), Nolan Tully (Moderator, Faegre Drinker), Amanda Weaver (John Hancock), Kristen Weil (Dentons)

Comments: Rate increases continue to be a necessary component of long term care insurance administration. As the need for rate increases has persisted, however, carriers and regulators have faced the continuing balancing act of servicing a primarily elderly client base while maintaining financial stability for blocks of long term care insurance. Increasingly, companies and regulators have looked at unusual and creative options that will permit rate increases, but allow policyholders mitigation options that might be suitable for them. This session examined the current regulatory environment around rate increases and the options offered by carriers as part of the regulatory approval process. Focus on the future, not the past. Many blocks will need premium relief in the future. Buyouts are an innovative option. Enhanced non-forfeiture. Freeze and drop. NAIC task force. 70% of individuals accept rate increases. Creative options, pushing limit of what accepted: cash buy out increasing interest. Lawyers cringe; actuaries like. Hybrid buy out, none so far. Policy reformation, structural change to the policy to mitigate rate increase. Annual re-rate option; push from some in industry; some regulatory interest, but supplanted by NAIC task force. Many complications. Need clear disclosures. Case study described to identify how a company might come up with a menu of mitigation options.

Recommendation (view recording or not?): Yes.

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Session Title: The WISH Act: Addressing the Financing and Regulatory Needs Within LTC Public/Private Solutions

Track: Legal, Compliance, & Regulatory

Presenters: Peggy Hauser (PwC), Steve Schoonveld (Moderator, Lincoln Financial Group), Tom Suozzi (NY State)

Comments: This session discussed the implications of a proposed federal catastrophic long-term care program, the WISH Act. The session focused on the benefit to consumers, the financial soundness of the proposed program and the regulatory steps necessary to achieve the desired public/private insurance program goals. Average income of 65 year old; guessed $65,000. Median annual income for 65 year old: $55,000. Didn’t give actual until later; could not follow. Confusing what the point was of this query. Pick two ADLs and don’t do them. Can your spouse actually help you? Intense level of need requires personal care. Congressman Suozzi on WISH. Trained as lawyer and CPA; mayor; county position; ran for Governor; Congress, third term. His parents had LTCI but most people can’t afford it. Medicaid cannot support it; just not enough money. Fewer caregivers available: more older people, fewer adult children. Only have access to Medicaid if you are broke; cottage industry to qualify people artificially. Others really spend down. Need better solution. You pay .25% of income from employee and .25% from employer to create a LTC insurance fund, $30B a year for catastrophic insurance plan. You take care of your own needs for 1 to five years depending on your wealth. Fed gov’t provides catastrophic coverage, $3600 per month. Private sector will come in and provide insurance for shorter time up front. Either buy private insurance for first years or have family members take care of you or use your own funds. Willing to listen to others. Good news this is part of the conversation. Biden proposes $400B; he’d like to apply some of that to this program. Need to educate people. Dramatically reduce Medicaid costs. (NB: Be very dubious of that statement.) Heavy lift to create a payroll tax. Lots of demand for more payroll taxes. Nobody wants to pay for anything. Peggy Hauser: what could private sector do within WISH. Fill gaps. Cover costs over $3,600 per month. Could reinvigorate the group LTCI market. WISH Act would be mandatory, so very broad, but there will be people not covered, including those already retired. Suozzi: opt out option?

Recommendation (view recording or not?): Yes, but keep your eyes open and your skepticism sharp. Session offered zero critical perspective, only supportive comments on this important program.

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Thursday, April 29, 2021

Session Title: Tools & Tech to Boost Productivity and Your Bottom Line

Track: Advisors & Agents

Presenters: Matt Essick (The Ensight “Tell A Story” Solution), Ken Leibow (InsurTech Express), Bill Nash (Lincoln Financial Group), Mike Pepe (Proformex)

Comments: Technology is advancing faster than we adapt. The latest apps, software and tech developments that can help you be more efficient, educate your clients, close business and run a more successful practice. Proformex presentation more an ad for company than objective information. Power of visuals through virtual compared to phone calls. Interactive marketing tools. Better experience, more efficiency, bring in new clients. Animated visuals. Tools to deliver LTC information critical now as people are ready to listen. How to reach out to existing clients about new products. All about visual story telling. Everything is online nowadays. Firms are delocalizing; following clients when they move; reaching out geographically. Need tools to tell product stories. Need a hybrid digital model; tools to become more effective; drive better client communication. Covid is changing LTCI distribution forever, hybrid in persona and virtual. Good content in the Q&A part of this session.

Recommendation (view recording or not?): Maybe, especially if you’re interested in the products of the presenters’ companies.

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Session Title: Uninsurable Doesn't Mean the End of the Sale/Relationship

Track: Advisors & Agents

Presenters: Carroll Golden (Moderator, NAIFA), Tafa Jefferson (Amada Senior Care), Shelley Giordano (Mutual of Omaha), Dan Mangus (Senior Marketing Specialists)

Comments: Don’t lose a client, and by extension, the family of a client, who is uninsurable. There are services, products, and tools to use with clients at the point of need. Understand the options available for you to help your client see you as the problem solver and not as part of the problem. What role can Medicare play? Is the home the buffer asset to fund care and/or sustain premium and preserve the retirement portfolio? Is finding a service to help navigate necessary care needs the answer they want to hear? Options related to Medicare supplements and Special Needs Programs. Lots of programs available even up to quite a lot of income. Slimby. Alphabet soup means there’s more Medicare does than you may realize. Lots of noncountable resources allowing Medicaid eligibility. Email Dan Mangus for links to all these sources. Many free publications from Medicare. Hard to tell people “we charge for our home care.” Hate to say “I can’t help you.” So we try to find funding solutions to help people age in place. Huge believers in LTCI. Tools if uninsured and uninsurable. Care coordination. Need holistic approach. Focus during pandemic from institutions to home care. Transitions are challenging. Medicare pays for home health, very limited in scope, but not for assisted living or memory care. Home care not covered by Medicare; that’s a “pay for.” VA Aid and Attendance and homebound benefit. PACE program for dual eligibles. Do you own your own home? MoO does reverse mortgages; home as a LTC funding solution. HELOCs require monthly payment and were cancelled during the Great Recession. Use to buy LTCI. But if coverage denied, other options. HECM line of credit. Bad media, but problems fixed. FHA insured.

Recommendation (view recording or not?): Yes, but expect it will raise many more questions than can be answered without a lot of personal research.

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Session Title: Legal and Regulatory Considerations for Aging in Place Programs

Track: Aging in Place

Presenters: Fred Andersen (Minnesota Department of Commerce), Hugh Barrett (Prudential), Charlie Philbrook (Moderator, John Hancock), Nolan Tully (Faegre Drinker)

Comments: Explored some of the key regulations that influence aging in place services and how regulators are reacting to the emergence of activity in this space. Lots of regulator interest in range of issues. State-specific regulation is complicated. Aging in Place industry changing fast, but measured approach within LTCI. Rebating is a regulatory concern more than any other. Rules recently changed. Insurers permitted to offer services not specified in the insurance contract if related to the coverage and fit into 9 specified categories. Exception to the anti-rebating law. Not meant to prohibit wellness programs. State by state adoption process. Discrimination. If have wellness program dependent on tech ability, is it unfair to less tech savvy beneficiaries. Could Aging in Place services compromise tax status? Many benefits to beneficiaries, but are there claims cost savings? That will decide the future of these benefits. These issues are complications but not show stoppers.

Recommendation (view recording or not?): Yes if you have a need to know and are new to this topic.

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Session Title: Remote Work and Business as Usual

Track: Management and Operations

Presenters: Matt Capell (Moderator, LTCG), Paula Johnson (LTCG), Julie Kirby (sp?), John Hancock

Comments: How do you manage key LTC functions in a COVID environment? Many employees and key functions are now working and taking place in home offices and dining room tables across the world. We are working anywhere but the office. What did we learn in the shift? What will those key functions look like in the coming months or years? Series of polling questions allowing participants to vote. Work situation before pandemic? Full time in office, 60%; hybrid, 26%; all at home, 14%. If hybrid, how often in office each week? 3 to 4 days per week most prevalent answer. Q3: Has your company set a return to office date? If so, when? 54% still undetermined. Q4: How does company accommodate work from home equipment and supply? 72% computer monitor, etc. most common. John Hancock has a comprehensive program to train and support remote workers. Big question how people adapt and perform in remote environment. Need to adjust expectations? How to measure performance. Need consistent way to measure work wherever it is done. New metrics? Phone availability? Communication. Technology, JH provided basic equipment to employees; guidance and guidelines. Step by step instructions on how to set up. 20 megabits connectivity needed. Telephony cloud based. Wireless headsets. Digital transformation. 24 hour access; chat bots. Policies, wild, wild west. Working remotely, managing remotely. Work from home contract? What are working hours? Strict or flexible. Child care. Work force expectations. Privacy, security, avoid kitchen table.

Recommendation (view recording or not?): Yes, very interesting.

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Updated, Monday, April 26, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-014: LTC NEWS AND COMMENT

Why Would A 50-Year-Old Want To Join Medicare?
Biden Should Look Beyond Medicaid to Expand Long-Term Care
Non-covered losses and steep rate increases: New report issues bleak outlook for provider insurance
Moving fast and changing every minute’: COVID-19 brings increased policy attention to long-term care
Sleeping less than 6 hours a night in midlife raises risk of dementia 30%, study finds
How to Get Long-Term Care in Place for Aging Family Members
UPDATE: Not Aware of the Washington State Long-Term Care Program? – Employers Take Notice and Act Quickly
How Could $400 Billion New Federal Dollars Change Medicaid Home and Community-Based Services?
Biden rescinds Medicaid waiver benefiting 300,000 receiving home care
Ransomware ‘bull’s eye’ grows, clouding telehealth’s rise in long-term care
Biden's infrastructure plan reinforces elderly care failings
Insurance State Guaranty Updated Levels Posted by Long-Term Care Insurance Association

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Updated, Monday, April 19, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-013: LTC NEWS AND COMMENT

Diminished capacity creates new investment risk
What Biden’s $400B Plan to Shift Long-Term Care Home Could Mean for Nursing Home Operators
COVID-19 Fogs Long-Term Care Claim Forecasts: ILTCI Virtual Conference
Healthy lifestyle may reduce odds for prostate cancer in men at high risk
Fixing Nursing Homes: A Fleeting Opportunity
The Gifts of Dementia with Author Judy Cornish
Biden Seeks $400 Billion to Buttress Long-Term Care. A Look at What’s at Stake
State Regulators Post LTC Insurance Rate Review Draft
John Oliver Looks Into the Long-Term Care Industry

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Updated, Friday, April 16, 2021, 10:40 AM (Pacific)

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LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

LTC Comment: You might expect innovative ideas from the Milken Institute, but when it comes to long-term care financing, all you get is ideological retreads. We explain after the ***news.***

*** TRUST ACT NEWS: We have big news about the state insurance program to fund long-term care that the Milken Institute and a bevy of study groups in recent years have hung their hopeful hats on. Stephen D. Forman of Long Term Care Associates reported yesterday that: “the Washington State House concurred with the amendments passed by the Senate, approving SHB 1323 by a final vote of 58 – 39. Now that it moves to Governor Inslee’s desk for signature, we can safely call it a “done deal”—including the new opt-out deadline of November 1^st, 2021. That’s a big deal because it means Washingtonians have one last chance to escape the Evergreen State’s oncoming long-term care straightjacket by purchasing real LTC insurance protection in the private market. Let the fire sale begin! ***

*** ILTCI CONFERENCE NEWS: The 2021 Intercompany Long-Term Care Insurance Conference kicked off on Tuesday, April 13. Its unique virtual format this year worked well, enabling 1500 participants to track information-rich presentations on a wide range of topics, but not without some electronic glitches. The keynote speaker, who signed in from Australia at 2am the following day, couldn’t complete his talk. I monitored four hours of break-out sessions on which I’ll report in a LTC Bullet after the conference concludes. I’ve also asked some LTCI experts to report on sessions they attend. We’ll bring you their feedback as well. Kudos to organizers Barry Fisher of Ice Floe Consulting and Vince Bodnar of Oliver Wyman and the teams they recruited to design and implement the program. Four more days of the conference remain:

Tuesday, April 20th, 12pm – 4pm ET
Thursday, April 22nd, 12pm – 4pm ET

Tuesday, April 27th, 12pm – 4pm ET
Thursday, April 29th, 12pm – 4pm ET

If you haven’t already, register and attend this extraordinary, free resource here: https://iltciconf.org/sessions-at-a-glance/. Show your appreciation for the program’s sponsors by visiting their online exhibits and considering their products and services. ***

LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

LTC Comment: The Milken Institute, chaired by former junk-bond king, now philanthropist Michael Milken, modestly bills itself as a “catalyst for practical, scalable solutions to global challenges.” Toward that end they “conduct research and analysis and convene top experts, innovators, and influencers from different backgrounds and competing viewpoints.” Lately, the Milken Institute tackled the problem of providing and financing long-term care for the broad American middle class. Last week it published “New Approaches to Long-Term Care Access for Middle-Income Households,” a timely look at a critical topic that begs for fresh analysis and ideas.

Did the Milken Institute deliver? Yes and no. The report does a yeoman’s job of describing the problem. It offers creative ideas to address service delivery problems, proposing for example a “Medicare Advantage Demonstration Project” and that the country should “Scale Up Integrated Care Programs.” But when it comes to how to pay for long-term care, the report founders as its many predecessors have done. It makes no attempt to understand why long-term care financing is so inadequate in the United States. It parrots the prevailing academic shibboleths, ignores critical facts, and proposes nothing new or promising. We get no original analysis or ideas. We’re asked to hang our hopes on a fatally flawed exercise in political futility, the LTC Trust Act in Washington State.

What went wrong? Following are quotes from the Milken Institute’s “New Approaches to Long-Term Care Access for Middle-Income Households” followed by our comments.

Milken: “In November and December 2020, the Milken Institute … brought together a highly engaged group of experts from government and academia, as well as health care, insurance, long-term care delivery, senior housing, technology, and finance. Long-term care is a complicated issue, and many experts, organizations, and government entities have been working for decades to develop better ways to address this need.” (p. 2)

LTC Comment: There is a reason why groups of all sorts have studied long-term care ad nauseam for decades unsuccessfully. Brought together to summon and balance many different perspectives, such groups can never agree on anything beyond marginal variations from conventional wisdom. The conventional wisdom is that government must do something. The right approach is instead to ask and explain why the problems exist before proposing to add more government funding and regulation, which may, arguably, have caused or contributed to the problems in the first place. Read our Medicaid and Long-Term Care for that analysis.

Milken: “The access, delivery, and financial challenges are too vast for either the private or the public sectors to shoulder alone.” (p. 2)

LTC Comment: Agreed. But we already have a public/private approach to LTC financing. It is supposed to work like this: People pay their own way until they can’t and Medicaid picks up the difference. That doesn’t work, you say? Well, the right answer is to fix it, not to impose a compulsory new government program burdened with another insolvent “trust fund,”

Milken: “But middle-income households cannot qualify for Medicaid without spending down their assets to meet the strict income limits.” (p. 4)

LTC Comment: This is the false premise that dooms Milken to invalid conclusions. Most large assets, including nearly all home equity, seniors’ biggest resource, are exempt for determining Medicaid LTC eligibility. Non-exempt assets are easily converted to exempt status. Excess income must be applied to the cost of care, but that’s a relatively small co-insurance to pay in exchange for receiving expensive long-term care at Medicaid’s discounted rates. Estate recovery is easily evaded and MACPAC recently proposed to hobble that program further. Medicaid is a time-delay trap that anesthetizes the public to LTC risk and cost until a care crisis occurs and then ameliorates the otherwise catastrophic financial consequences. That is the real reason long-term care is in the mess it’s in. Again, see Medicaid and Long-Term Care.

Milken: “In 2010 the Affordable Care Act (ACA) established the Community Living Assistance Services and Supports (CLASS) Act, which would have provided a federally administered and voluntary long-term care insurance (LTCI) program. Ultimately, however, lawmakers deemed the program financially untenable and repealed it in 2013.” (p. 5)

LTC Comment: Why did CLASS fail? Advocates say because it was voluntary. So what they want is a program that is mandatory, that removes the freedom of the marketplace and substitutes the compulsion of government. That’s a Faustian bargain, the wages of which will come due when profligate public spending ends in spiking consumer inflation.

Milken: “Beginning in 2022, Washington will fund its mandatory program through a payroll tax of 58 cents for every $100 of income for all W-2 workers in the state; self-employed workers can participate if they choose.” (p. 5)

LTC Comment: So all rally around Washington State’s new program, but look what that leads to …

Milken: “And in November 2020, voters rejected a referendum to expand the types of investments available to the program’s trust fund to include private equities. As a result, the trust fund investments remain limited to corporate bonds and certificates of deposit. These restrictions will cause the current level of payroll tax to be inadequate for funding the program in the long term, according to a study by Milliman.” (p. 6)

LTC Comment: So, we not only have to force people to participate in government-mandated LTC insurance, we have to risk their “trust fund” by investing it in private equities that are vulnerable to collapse in value. Such a government gamble is likely to leave the Washington State program no better off than the Social Security and Medicare “trust funds” which contain nothing but federal IOUs.

Milken: “A recent AP poll shows that 67 percent of respondents had done little to no planning for LTC, and 57 percent mistakenly believe that Medicare will cover their LTC costs. According to Vanguard, in 2019, the average 401(k) account balance for those 65 and older was $216,720, and the median was $64,548.20. These amounts are wholly inadequate when one considers that costs rise proportionally to the complexity and duration of care, quickly exhausting the personal savings of individuals with severe and extended care needs.” (p. 6)

LTC Comment: Wouldn’t you think Milken, et al., would wonder why most people don’t plan for long-term care, when the risk and cost is so high, the media badgers them incessantly that they’ll lose their life savings if they don’t plan, and they’re “quickly exhausting” their personal savings when “severe and extended care needs” occur. The answer is that people would plan if they were suffering those catastrophic consequences, but they’re not. There is no evidence of widespread catastrophic LTC spend down. That’s why the Milken report cites none.

Milken: “Over the past 15 years, the number of LTC insurers in the market dwindled from over 100 in 2004 to about a dozen in 2018. This is attributed in part to inaccurate actuarial assumptions on older policies and the high levels of losses that insurers sustained. (p. 6)

LTC Comment: LTC insurance carriers didn’t get all their actuarial assumptions correct, but that was not all their fault. The Federal Reserve forced interest rates arbitrarily and artificially to near zero making it impossible for carriers to get the return on reserves they reasonably expected. Medicaid made access to expensive long-term care available to middle class and affluent people after the insurable event occurred obviating demand for the product. Bottom line, government interference in the LTC insurance marketplace is the bigger cause of its dysfunction.

Milken: “Most important, Lab participants noted, there are no current complementary public and private LTCI solutions.” (p. 11)

LTC Comment: That is not true. As mentioned above, there is a public/private solution in place. This is it: Medicaid for the indigent, home equity spend-down for the middle class, and private insurance for the upper middle class and affluent. The problem is that by exempting home equity from LTC risk and cost, and by allowing generous eligibility with many elastic loopholes, Medicaid has short-circuited a system that could work very well. I explain that system in “LTC Bullet: The Key to LTC” and I provide a full explanation of why and how most analysts evade the reality of Medicaid’s perverse incentives that discourage responsible long-term care planning in Medicaid and Long-Term Care.

Milken: “As we stand in early 2021, however, COVID-19 has decimated state budgets, making it more difficult to secure funding or the political will to raise the taxes necessary to build state-level public long-term care programs.” (p. 11)

LTC Comment: All the more reason to look for private sector solutions that build on the Medicaid LTC program for the needy that is already there. The government has no money other than what it borrows or prints. Tax revenues cover less than half of federal spending, according to the US Debt Clock. When the cost for that profligacy comes due in the form of inflation, the idea government can fund big new programs for long-term care on the backs of taxed out consumers will be even more far-fetched than it is already.

Milken: “Because the Lab focused on middle-income access to affordable LTC, the discussion does not extend to Medicaid coverage of LTC.” (p. 13)

LTC Comment: It is beyond bizarre that people who call themselves experts are unaware that Medicaid is the primary payer for expensive long-term care not just for the poor but for the middle class as well. That fact is well-established in the academic literature.

Milken: “As noted, participants agreed that a private funding source would be most expedient and politically feasible to conduct the demonstration. Many argued that the regulatory approval needed for a CMS-sponsored project would present too many constraints.” (p. 17)

LTC Comment: That is a tacit acknowledgement that government won’t help; in the end, we’ll have to rely primarily on the private sector. Better to do that sooner than later in order to save what can be saved of the Medicaid safety net for people in true need.

Milken: “Lab participants were in remarkable agreement that the public and private sectors should work together to design complementary insurance programs and products to provide coverage that would offer financial protection and reduce reliance on Medicaid.”

LTC Comment: The “solution” Milken proposes—front end compulsory public program, private wrap-around coverage, and Medicaid for the back end—won’t save Medicaid anything unless financial eligibility for Medicaid is changed to eliminate its easy access. People will use the government program, skip voluntary private LTCI, and go on Medicaid as they do now. Fix that so that Medicaid truly requires either spend down up front or pay back from estates, and you won’t need new government and private insurance programs. With the right incentives, the system will right itself.

Milken: “In addition, stakeholders reiterated that expanding Medicare to include LTC benefits could be a viable and efficient path forward.” (p. 25)

LTC Comment: That would be like adding deck chairs to the Titanic after the incident with the iceberg.

Milken: “The Lab recommends that policymakers first select their funding mechanisms and set funding levels, and then build out a benefit package to fit that budget.” (p. 27)

LTC Comment: Well that makes sense but it is certainly not what Washington State did. Its politicians came up with a rather meager benefit and they’re now struggling to find a way to fund it. Like the CLASS Act in that respect, it will likely fall of its own weight.

Milken: “In terms of financial solvency, policymakers must first determine if the program is prefunded or pay as-you-go. They will have to create a trust fund and ringfence those dollars. … As noted, Washington voters turned down a referendum in late 2020 that would have expanded investment options for the state’s LTC trust fund. Projections now show a major shortfall in the state’s future fund balances that state lawmakers will have to address in the coming years by increasing the payroll tax, reducing benefit levels, or putting the issue to voters again.” (p. 29)

LTC Comment: How do you “ringfence” a “trust fund” that must be filled with risky investments to have any chance for long-term solvency?

Milken: “One innovative approach to lowering premium levels and boosting uptake could be through the utilization of reinsurance. … Notably, many reinsurers left the LTC insurance market because of significant past losses.” (p. 31)

LTC Comment: The only “reinsurer” they’ll ever find for a program like this is the federal government’s power to tax, borrow, print and spend money citizens will repay through inflation in the end. To find the reinsurer of last resort, look in a mirror.

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Updated, Monday, April 12, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-012: LTC NEWS AND COMMENT

Biden Begins An Important, Much-Delayed, National Debate About Long-Term Care Reform
42% of older adults have unmet need for assistive bathing, toileting devices
Untracked COVID: Nursing home workers have died at twice the rate of hospital workers
CNAs virtually march on Washington, calling for higher wages, more recognition
COVID-19 Helped Long-Term Care Insurers in 2020: Fitch
Genworth Ends China Oceanwide Merger Agreement
Comment: Protect state’s new long-term care trust program
Diane Archer on the Medicare Advantage Racket
Study: Alzheimer's disease treatments could reduce the financial burden to U.S. state budgets
Senior housing wealth exceeds record $8.05 trillion
Washington long-term care insurance program, a ‘compliance nightmare,’ may face ERISA preemption

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Updated, Monday, April 5, 2021, 9:22 AM (Pacific)

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LTC E-ALERT #21-011: LTC NEWS AND COMMENT

A Revolution Is Underway in Alzheimer's, and It's Not All Good
Alzheimer’s origin story is about metabolism and lifestyle, scientists contend
Biden Proposes The Biggest Medicaid Home-Based Long-Term Care Expansion In History, But….
Home care providers laud Biden plan to invest $400B in HCBS
Nursing home residents have a little more time to spend stimulus checks before losing Medicaid
Dementia toolkit for clinicians underscores urgency of early diagnosis
Too Much Restaurant Fare Could Shorten Your Life
Shipping containers show promise as affordable senior living solution
‘We pretend to work and they pretend to pay’
MassMutual Sees Crisis Hitting Younger Adults Harder
The Nursing Home Vulnerabilities That Led to Disaster

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Updated, Friday, April 2, 2021, 10:24 AM (Pacific)

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LTC BULLET: MACPAC CAPTURED

LTC Comment: Signs in MACPAC’s estate recovery report point to its capture by the Medicaid planning bar. Evidence after the ***news.***

*** ILTCI’s VIRTUAL CONFERENCE will convene every Tuesday and Thursday from 12-4pm EDT starting April 13th. Conference Chairperson Barry Fisher and Co-Chair Vince Bodnar report participants should register individually for each session they want to attend or view the recording. All sessions are now open for registration! Click Here to register for the Opening Session and Keynote. Click the following links to register for individual sessions in each track.
Actuarial & Finance
Advisors & Agents
Aging in Place Solutions (new this year!)
Claims & Underwriting
Legal, Compliance & Regulatory
Management & Operations
Marketing & Distribution
You can also click here to see all of the sessions at a glance and register from a single page. Registration and participation are free of charge! ***

*** CENTER SEEKS reporters. As we’ve done every year since the first Intercompany Long-Term Care Insurance Conference (2001 in Miami), the Center for Long-Term Care Reform intends to cover this one. But Center president Steve Moses is unavailable to monitor two days of the conference, April 15 and 20. So we’re inviting anyone who attends those two days to forward their notes on the sessions they attend to smoses@centerltc.com. Steve will integrate the material into as comprehensive a report on the 2021 virtual meeting as possible. But don’t limit yourselves to those two days; we welcome your coverage of all sessions on every day. Thanks for your interest and assistance. ***

*** MOVIE NEWS: Ross Schriftman’ “My Million Dollar Mom” film has been accepted into its sixth festival, the first in the Midwest: the Julien Dubuque Festival in Iowa. Ross also reports: “We received an excellence award from the Best Shorts Competition.” Congratulations to longtime Center member and supporter Ross Schriftman for bringing the importance of long-term care planning to the public’s attention in this creative and impactful way. ***

*** YESTERDAY, the Center for Long-Term Care Reform celebrated its 23^rd anniversary. No foolin.’ Check out our Membership Levels and Benefits and sign up today to help us carry on another year with the kind of trenchant analysis and public policy influence that follows. ***

LTC BULLET: MACPAC CAPTURED

LTC Comment: Medicaid is a means tested public assistance program. It is the primary funder of expensive long-term care (LTC) in the United States. Unlike other welfare programs, however, Medicaid does not have stringent income and asset eligibility limits for its long-term care benefit. Instead, so that people are not wiped out financially when stricken by chronic illness that requires formal long-term care, Medicaid lets them apply excess income toward their care, keep a substantial amount of assets including home equity, and receive care at Medicaid’s substantially discounted rate. The only quid pro quo is that recipients must agree to repay the cost of their care to Medicaid after they pass away, from their estates, unless that would create a financial hardship for a surviving dependent. This is a generous benefit, in essence a government-sponsored loan that allows people and their families to avoid the worst financial consequences of an uninsured extended care need.

But the Medicaid and CHIP Payment and Access Commission (MACPAC) wants to curtail Medicaid estate recoveries. MACPAC recently asked Congress to (1) make estate recoveries voluntary, (2) reduce recoveries from Medicaid’s rapidly expanding Managed Long-Term Services and Supports (MLTSS) programs, and (3) mandate “hardship” waivers for heirs when no financial hardship exists. Without estate recoveries, Medicaid’s generous long-term care benefit is a giant giveaway to people with money who could have paid some or all of the cost of their own care, diverting them from taking timely personal responsibility for LTC risk and cost.

Why would MACPAC seek to make estate recoveries less effective, reduce vital nontax revenue to Medicaid from estates, and reward the heirs of people who failed to save, invest or insure for long-term care with taxpayer-financed loan forgiveness? The answer is that the Commission was unduly influenced by the Medicaid estate planning bar, the lawyers who make their livings counseling affluent clients on how to circumvent Medicaid’s financial eligibility rules and evade estate recoveries. This conclusion is unavoidable upon close review, which follows, of MACPAC’s latest report to Congress.

Chapter 3 of MACPAC’s March 2021 Report to Congress on Medicaid and CHIP is titled “Medicaid Estate Recovery: Improving Policy and Promoting Equity.” It contains MACPAC’s recommendations to Congress regarding Medicaid estate recoveries. What follows are quotations from that chapter followed by our analysis in corresponding “LTC Comments.”

MACPAC: “We conducted nine interviews with AARP, the Centers for Medicare & Medicaid Services (CMS), estate recovery contractor HMS, retired elder law attorney Jason Frank, Justice in Aging, the National Academy of Elder Law Attorneys, the National Association of Medicaid Directors, and state officials from Oregon and Tennessee.” (p. 96)

LTC Comment: This list of interviewees is overweight with senior advocates (AARP, Justice in Aging) and Medicaid planning lawyers (National Academy of Elder Law Attorneys and Jason Frank), underweight in representation from nonpolitical experts on Medicaid estate recovery, and totally missing the front line Medicaid eligibility workers who have the most direct knowledge of how lawyers dodge Medicaid financial eligibility rules and evade estate recovery for their affluent clients.

MACPAC: “[C]ritics have noted that many people with sizeable wealth are able to legally shield assets from Medicaid estate recovery so these can be used for their benefit or passed on to heirs. This leaves the burden of estate recovery to fall primarily on those of modest means; this may also disproportionately affect people of color given disparities in household wealth.” (p. 73)

LTC Comment: Is that the fault of estate recoveries or of the “people with sizeable wealth” and their enablers who dodge estate recovery? This is a theme the Commission returns to over and over again as indicated by the following series of quotes. They have their argument backwards. Their legitimate complaint is with Medicaid planning abuse, not estate recovery. Estate recovery, by definition, reduces “disparities in household wealth” by returning protected wealth to Medicaid for the benefit of the disadvantaged of any color.

MACPAC: “The program mainly recovers from estates of modest size, suggesting that individuals with greater means find ways to circumvent estate recovery and raising concerns about equity.” (p. 73)

“As we heard in our interviews with stakeholders, individuals with greater awareness of estate recovery and resources may protect their assets from estate recovery while preserving Medicaid eligibility, allowing resources to be passed on to their heirs.” (p. 84)

“Because wealthier beneficiaries have found ways to protect assets so they can be passed on to their heirs, current Medicaid estate recovery policy places an unfair burden on beneficiaries with limited means, whose heirs would likely receive substantial protection from poverty or housing insecurity if they were able to retain an estate of even modest size.” (p. 92)

“Given that estate recovery likely only occurs for those without the resources and awareness to avoid it through estate planning, making it optional will help address equity concerns we heard in our interviews.” (p. 94)

“The Commission recognizes the growing financial pressures on the LTSS system, and that one way of addressing that pressure could be to explore mechanisms for people with substantial means to fund their own LTSS (e.g., private insurance) instead of seeking Medicaid. As noted above, during the Commission’s various discussions on estate recovery policy, a concern was raised about potential abuses of Medicaid planning activities that allow individuals to shield assets to gain Medicaid eligibility. Given that this is a wholly separate issue from estate recovery, the Commission agreed to defer further discussion of that issue for now and explore later whether there is a need for policy improvements related to eligibility.” (p. 96)

LTC Comment: The Commission has the cart before the horse. Medicaid planning abuse is not a “wholly separate issue from estate recovery.” It is the essence of estate recovery. Medicaid programs cannot recover what is not in an estate because it was divested prior to or during Medicaid eligibility. Most of the complaints the Commission raises about estate recovery—including low recovery amounts, recovery from small estates, and the inequity of the wealthy dodging the system while the less savvy pay up—would be eliminated by ending Medicaid planning abuse. The logical progression is to address the abuses of Medicaid planning before considering estate recovery. Instead the Commission seeks to hamstring estate recovery which is the only thing preventing Medicaid planners and their prosperous clients from getting off scot-free from long-term care responsibility at the expense of taxpayers and to the detriment of the actually needy people Medicaid is supposed to serve.

MACPAC: “Individuals who engage in Medicaid planning may be able to legally protect some of their assets, thus keeping assets that would otherwise deem them ineligible for Medicaid LTSS. One technique allowed in some states to reduce the length of the penalty period is known as the reverse half-a-loaf mechanism (GAO 2014).” (p. 80)

LTC Comment: Medicaid planning includes a wide range of techniques from very simple and common (the purchase of exempt assets to reduce countable wealth) to relatively sophisticated, somewhat less common methods (Medicaid compliant annuities and Medicaid Asset Protection Trusts) to mind-numbingly complicated, relatively rare strategies like the “reverse half-a-loaf” gimmick. Yet when the Commission gives an example of Medicaid planning, they offer the relatively obscure reverse half-a-loaf. That’s a very lawyerly way to divert attention and criticism from the much more common practices used to dodge Medicaid eligibility rules. For example, Medicaid planners give their clients long lists of things they can buy such as a more expensive home or car, household goods and personal belongings that convert wealth from countable to non-countable. This practice is almost universal, so a much more honest example of Medicaid planning than “reverse half-a-loaf.”

MACPAC: “Finally, Medicaid estate recovery policies are unique among federal programs. For example, many people who use LTSS are dually eligible for Medicare and Medicaid, yet as one advocate noted, the federal government does not pursue Medicare costs, which can also be quite high … .” (p. 84)

LTC Comment: MACPAC is confused about the nature of Medicaid and Medicare. Medicaid is public charity for which people become eligible based on their inability to afford health and long-term care. Medicare is social insurance which entitles people to benefits by virtue of their having contributed substantial payroll taxes over many years. Medicaid is welfare, unearned; Medicare is like private insurance which requires “premiums” and is thus “earned.” Medicaid has “recipients;” Medicare has “beneficiaries,” but MACPAC uses the incorrect term “Medicaid beneficiary” a dozen times in this chapter. MACPAC displays its confusion about these programs by referring everywhere in the report to Medicaid recipients as if they were beneficiaries, giving the former a status they have not earned. Obviously, Medicare beneficiaries who paid for the benefits they received are not required to repay the cost of their care from their as Medicaid recipients must, who received benefits and retained wealth without having to contribute toward the cost of their care.

MACPAC: “If an individual’s home equity is above the state’s limit, they will be deemed ineligible to receive Medicaid LTSS; for 2021, the federal minimum home equity limit is $603,000 and the maximum limit is $906,000 (CMS 2021). In 2018, 40 states used the federal minimum limit, nine states used the maximum limit, one state, Wisconsin, set a limit in between, and one state, California, had no limit (KFF 2019).”

LTC Comment: Prior to the Deficit Reduction Act of 2005, Medicaid had no limit whatsoever on home equity. Unfortunately, the limits cited here, reflecting inflation since the DRA ’05 was passed, are meaningless. Recent research concluded “we estimate that nearly the entire elderly population would meet the home equity threshold of 552,000 [as of 2015].” (Robert Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial Eligibility for Medicaid Long-term Services and Supports, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2020.1740638, p. 7) Without estate recoveries, this enormous real property wealth is eliminated as a source of funding for long-term care, funding for which the country is desperately in need. MACPAC realized this fact as the next quote indicates but ignored it anyway.

MACPAC: “During the Commission’s deliberations, a concern was raised that allowing states to discontinue estate recovery would essentially exempt all home equity below the minimum home equity asset standard (currently set at $603,000) used for eligibility determination. Ultimately the Commission decided that issues and concerns related to eligibility determination should be taken up separately from estate recovery.” (p. 93)

LTC Comment: According to Kiplinger, “homeowners age 62 and older have a record $6.5 trillion of ‘tappable’ equity.” Imagine the potential for that wealth to relieve the stress on America’s long-term care financing system. Yet MACPAC neither proposes mandating reverse mortgages to capture that potential on the front end nor defends estate recovery to put it to use on the back end.

MACPAC: “For heirs of these modest estates, estate recovery may remove a source of income or a residence which, if retained, would protect the heirs from poverty or housing insecurity. As multiple interviewees commented, this contributes to generational poverty and wealth inequality. The policy may also place an unequal burden on people of color, compounding existing wealth inequalities among racial and ethnic groups.” (p. 84)

LTC Comment: This makes no sense. How could requiring people to repay the cost of their care—from wealth Medicaid enabled them to protect while receiving assistance—contribute to “existing wealth inequalities among racial and ethnic groups?” It does exactly the opposite. It reduces the discrepancy in wealth between those who have (including clients of Medicaid planners) and those who have not (underprivileged racial and ethnic groups). Furthermore, it is not in the interest of the state to impose such unreasonable burdens on heirs as to drive them onto public assistance. Hardship waivers are liberally granted in such cases although relatively few are requested.

MACPAC: “Estate recovery recoups relatively little—only about 0.55 percent of total fee-for-service LTSS spending.” (p. 72)

LTC Comment: Every dollar Medicaid does recover from estates goes back into the system to help others in their time of need. MACPAC should focus on preventing leakage of sheltered wealth from estates prior to recovery. Instead the Commission seeks to cripple estate recovery itself. Besides, Medicaid estate recovery barely scratches the surface of the potential nontax revenue that could redound to the program, as MACPAC acknowledges in the next quote.

MACPAC: “Research suggests that states do not recover all they could—one study estimated states could have collected 5.5 times more from 2002 to 2011 if all their efforts matched those states that were most effective at estate recovery (Warshawsky and Marchand 2017).”

LTC Comment: It should be noted, however, that even more important than the actual dollar totals that could be collected is the potential cost avoidance from estate recoveries. Properly publicized and enforced so that the public knows that long-term care is a risk they must pay for later if they don’t plan and prepare now, responsible people will be far more likely than they are today to think about ways to plan, save, invest or insure for the risk. The public policy goal should be to divert people from dependency on Medicaid not to seduce them onto the program as elastic eligibility policies manipulated by Medicaid planners do now.

MACPAC: “Due to restrictions on Medicaid eligibility for LTSS, older adults covered by Medicaid have few assets. Three-quarters of Medicaid decedents had net wealth of less than $48,500.” (p. 72)

LTC Comment: MACPAC can’t have it both ways. Either wealthy people dodge Medicaid financial eligibility rules as the Commission frequently acknowledges or “restrictions on Medicaid eligibility” cause estates to be small. Both aren’t true. Estates are small not because stringent eligibility requirements force a lot of people to spend down into impoverishment. Such requirements don’t exist. Rather, most people on Medicaid had little to “spend down” in the first place. They are the people Medicaid is intended to serve. But Medicaid planners reduce their clients’ net worth by means of Medicaid compliant annuities, Medicaid Asset Protection Trusts, exempt asset transfers, and many other techniques of artificial self-impoverishment. It is those artificially poor Medicaid recipients who are being asked to pay their fair share.

MACPAC: “Fear of estate recovery may deter some individuals from seeking Medicaid LTSS, however, awareness and understanding of these policies by potential Medicaid beneficiaries is low.” (p. 72)

LTC Comment: This is another self-contradictory statement. How can “fear of estate recovery” deter seeking Medicaid if “awareness and understanding of these policies” is low? The solution to this quandary is to publicize the Medicaid estate recovery requirement more widely and often so everyone knows that relying on public assistance while retaining wealth requires a payback from the estate. With that knowledge, more people would take long-term care risk and cost seriously; save, invest or insure to offset or spread that risk; and end up in a better position to pay privately for better care than Medicaid can afford to provide. Especially, knowing that home equity is at risk for estate recovery would encourage more people to tap their home equity through reverse mortgages unleashing a massive new LTC funding source that is so desperately needed to relieve the fiscal pressure on Medicaid.

MACPAC: “In general, this study found that, with some exceptions, the assets of older adults enrolled in Medicaid are quite modest, with a substantial proportion of individuals having little to no wealth (Table 3A-1). At age 65 and older, the average net wealth among Medicaid decedents was $44,393. … the highest quartile held an average of $173,436 in net wealth.” (p. 81)

LTC Comment: Some exceptions? Well I guess so! A quarter of the sample had almost $175,000 in net wealth or more. It’s not clear at all why public policy should discourage recovery from such large estates, but that would be the effect of MACPAC’s recommendations The Congressional Budget Office (CBO) confirmed that all three of MACPAC’s proposals would increase federal expenditures and reduce resources available to Medicaid.

MACPAC: “CBO estimates that this recommendation [to make estate recovery voluntary] would reduce estate recovery collections from state Medicaid programs, which would increase federal spending on Medicaid. Federal spending would increase by $50–250 million per year between 2022 and 2030, less than $1 billion between 2021 and 2025, and $1–5 billion between 2021 and 2030.” (pps. 93-94)

“CBO estimates that this recommendation [to restrict MLTSS recoveries] would reduce estate recovery collections from state Medicaid programs, which would increase federal spending on Medicaid. CBO was unable to provide a specific estimate for us … .” (p. 94)

“CBO estimates that this recommendation [to base hardship waivers on estate values instead of financial hardship] would reduce estate recovery collections from state Medicaid programs and increase administrative costs, which would increase federal spending on Medicaid CBO was unable to provide a specific estimate for us … .” (pps. 95-96)

LTC Comment: No one besides MACPAC is looking for ways to reduce revenue to Medicaid for long-term care. The program is desperately short of funding and notoriously scrimpy in its reimbursement levels for long-term care providers. Low Medicaid funding is often associated in the literature with too few caregiving staff and serious access and quality problems. Medicaid needs more revenue, not less. What exactly does MACPAC recommend?

MACPAC: “Recommendations
3.1Congress should amend Section 1917(b)(1) of Title XIX of the Social Security Act to make Medicaid estate recovery optional for the populations and services for which it is required under current law.” (p. 72)

LTC Comment: Mandatory estate recoveries are critical to the Medicaid long-term care program’s success as explained in the “LTC Comments” above. The policy should affect everyone equally throughout the country in order to discourage excessive reliance on Medicaid for long-term care and to encourage personal responsibility and early long-term care planning. It was a great victory in the Omnibus Reconciliation Act of 1993 (OBRA ’93) to make estate recoveries mandatory in every state based on analysis and recommendations in a 1988 report of the Department of Health and Human Services’ Inspector General: Medicaid Estate Recoveries: National Program Inspection -- Office of Inspector General (1988). See also the related Transfer of Assets in the Medicaid Program: A Case Study in Washington State -- Office of Inspector General (1989). It would be a tragedy to reverse that progress in the way MACPAC recommends.

MACPAC: “3.2 Congress should amend Section 1917 of Title XIX of the Social Security Act to allow states providing long-term services and supports under managed care arrangements to pursue estate recovery based on the cost of care when the cost of services used by a beneficiary was less than the capitation payment made to a managed care plan.” (p. 72)

LTC Comment: Addressing capitation payments as in this recommendation is simplistic. Managed care organizations apply complicated formulas to determine what they charge for their fees and what they pay for all the medical bills, and then they must negotiate with the state. These are very large contracts based on actuarially determined risks and benefits. Insurance is inherently inequitable, because some people pay premiums and get no benefits, while other people pay the same premiums, but become sick, injured, careless or unlucky, and receive large benefits. That is how insurance spreads risk. Managed care organizations already rate the monthly capitation fee by the level of service of individuals. That protects beneficiaries who use relatively few services, but it also covers some potential risks in the same way as private insurance would. Requiring managed care companies to tally up their charges for all services they have paid adds another level of service and causes complications such as attending court hearings and responding to complaints of family members after death about what was paid to providers. This added duty would increase fees to the states. Determining the claim amount is a pre-death matter. Whether fee-for-service or capitation payments are used, the recovery should be for what Medicaid paid on the deceased recipients' behalf. If there are inequities in the system, then those should be resolved before death, because collecting only fee for service in a capitation system would add extra administrative burdens for the managed care organizations to prove up the claims to the heirs and to the courts.

MACPAC: “3.3 Congress should amend Section 1917 of Title XIX of the Social Security Act to direct the Secretary of the U.S. Department of Health and Human Services to set minimum standards for hardship waivers under the Medicaid estate recovery program. States should not be allowed to pursue recovery for: (1) any asset that is the sole income-producing asset of survivors; (2) homes of modest value; or (3) any estate valued under a certain threshold. The Secretary should continue to allow states to use additional hardship waiver standards.” (p. 72)

LTC Comment: Hardship waivers should relate to the financial condition of the qualified heir or dependent. They should have nothing to do with the value of the house, the estate, or an income-producing asset. What matters is whether the person requesting the hardship is actually facing financial hardship. Hardship waivers are rarely requested (1%) and should be routinely granted to avoid generational poverty. Nearly two-thirds of potential Medicaid estate recovery is not collectible at all. There is no effect on race or generational poverty if there is no recovery. Hardship waiver policies across the states are inconsistent as are other estate recovery policies. Seeking uniformity is not a reason to create more loopholes in the process. Hardship waivers should be based on dependents’ income, assets, and whether collection of the debt would deprive the person seeking the waiver of necessities like food, shelter, clothing, or medical care.

Closing LTC Comment: Medicaid estate recoveries help to sustain the Medicaid long-term care program and to discourage excessive dependency on it. MACPAC’s recommendations would line the pockets of Medicaid estate planning lawyers and indemnify their affluent client heirs for the long-term care costs their parents’ avoided at public expense. Is it any wonder that advice from “elder law attorneys” is cited repeatedly throughout this report but we hear nothing from Medicaid eligibility workers or estate recovery staff who know firsthand how desperately inequitable the system MACPAC proposes would be? Medicaid planners have the most to gain from curtailing estate recoveries. By not acknowledging, much less disavowing, this obvious conflict of interest, MACPAC destroyed the objectivity and credibility of its recommendations.

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Updated, Monday, March 29, 2021, 9:20 AM (Pacific)

Seattle—

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LTC E-ALERT #21-010: LTC NEWS AND COMMENT

Reverse Mortgages: 10 Things You Must Know
Genworth Names Chairman With Private Equity Deal Experience
Lawmakers might close a window on workers who would rather choose their long-term care plan than be taxed for a publicly financed one
Middle-Age Loneliness Linked to Alzheimer's Disease
Cutting Medicaid and SNAP Red Tape During the Pandemic
How to Walk the Medicare Advantage Communications Tightrope
Is Eating Processed Meat a Risk Factor for Dementia?
The Nation’s Fiscal Health: After Pandemic Recovery, Focus Needed on Achieving Long-Term Fiscal Sustainability
Implementation of a $15 federal minimum wage may help reduce turnover in long-term care: expert

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Updated, Monday, March 22, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-009: LTC NEWS AND COMMENT

Senator calls for mandatory Medicaid coverage of HCBS as nursing homes remain under fire on Capitol Hill
New Video Library
Long-Term Care Insurers Reveal Early COVID-19 Effects
2021 Poverty Projections: Assessing Four American Rescue Plan Policies
Study: Heart problems in young adulthood increase cognitive decline later
The Boom in Out-of-State Telehealth Threatens In-State Providers
Amazon Care reportedly to launch telehealth offering in all 50 states
Report: Adult family care homes deserve ‘closer look’ as viable alternative to nursing homes
MedPAC to Congress: Reduce payments to home health in 2022, expand telehealth beyond public health emergency
Nearly all seniors are now prescribed drugs tied to falls: Study
Advocates Release Nursing Home Industry Reform Proposals
Home Equity Continues To Soar
House expected to vote to delay start of Medicare sequester
Maggots, Rape and Yet Five Stars: How U.S. Ratings of Nursing Homes Mislead the Public
Washington State's New Long-Term Care Statute Is a Mess – Can ERISA Preemption Provide the Cleanup?
Citing Vaccine Rollout, CMS Relaxes Nursing Home Visitation Rules
How Can The US Fix Long-Term Care In A Post Covid-19 World?
Dementia Patients Often Have Dangerous Mix of Drugs at Home
Pandemic-Driven Home Health Shifts Trigger Therapy Layoffs, Nursing Home Strategy Changes
‘Absolutely astonishing’: 90% drop in COVID cases shocks Parkinson, industry leaders
Can we keep Medicare from being insolvent by 2024?

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Updated, Friday, March 19, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE KEY TO LTC

LTC Comment: Solving the long-term care financing crisis isn’t so hard if you avoid ideology and take human nature into account. We explain after the ***news.***

*** DEBT BOMB, tick, tick, tick: Have you checked the US Debt Clock lately? The Treasury is hemorrhaging debt and the Federal Reserve is monetizing it apace. Federal spending this year is $8.0 trillion, but tax revenue is less than $3.5 trillion. How can that be? The Fed is printing the money, creating it out of thin air, to fund the difference between tax inflow and spending outgo. Bottom line, we’re pulling capital out of the productive economy to shower it on everyone and everything not producing anything. The result is more money and less to buy with it. As Elon Musk said: “If you don’t make stuff, there is no stuff.” Is this the elusive free lunch of Modern Monetary Theory? Hardly. The bill will come due in the form of inflation, the most pernicious tax that hurts the poor most of all. So much for the sanctimonious, hypocritical effusions of politicians and analysts who just want to “help people” by spending money the economy has not earned. ***

LTC BULLET: THE KEY TO LTC

LTC Comment: Long-term care services and financing in the USA are in a world of hurt. More and more people need care; families are stretched thin to provide free care; government programs are inadequate (Medicare) or pay too little (Medicaid) to ensure quality care in the most appropriate venue; private financing from personal spending, home equity or private insurance is extremely limited. The situation gets worse every year. Most analysts prescribe more government spending and regulation, but there is no evidence that vast increases in public spending and control have helped rather than worsened long-term care access and quality so far.

In fact, little has changed for the better since I first analyzed long-term care in the early 1980s. Then as now most people ignored long-term care risk and cost until they suddenly needed expensive care at which time the option of qualifying for Medicaid opened up for them. Generous income and asset eligibility rules eased the way onto public assistance creating a moral hazard for the aging infirm and a conflict of interest for their heirs. Pay privately and be wiped out financially or let Medicaid foot the bill and accept the downsides of limited choice, poor quality and mostly nursing home care. This was the Hobson’s choice, take it or leave it, most families faced. Of course, most families took the path of least resistance. They accepted public assistance, placed their elders in Medicaid nursing homes, and thus perpetuated the system that persists to this day.

As I began to study this problem in 1982, two paths to a solution opened up before me. We could change Medicaid LTC eligibility rules so they truly require impoverishment. That would remove the moral hazard and the perverse incentive to rely on public assistance, but it would be harsh and politically infeasible. The other way would be to keep Medicaid LTC eligibility generous, even make it more so, but require that assets preserved during a recipient’s lifetime while his or her care was covered by Medicaid should be recovered later, from the recipient’s estate, after no exempt relative still depended on them. The key to this “kinder gentler” solution was estate recovery. That would remove the incentive to ignore LTC risk and cost until confronted with the need and it would give seniors their dignity back. It isn’t welfare if you repay Medicaid.

I developed these ideas and documented them in a report for the HCFA titled “The Medicaid Estate Recoveries Study.” It is still available online here. Although HCFA did not publish this study, the USDHHS Office of Inspector General and the then General Accounting Office (now Government Accountability Office) both picked up on it and conducted their own national studies developing the theme. The Inspector General hired me out of HCFA so that I could conduct the IG study and write its report: “Medicaid Estate Recoveries: National Program Inspection.” It remains available on the IG’s website here.

Following are the Inspector General’s recommendations. They were designed to keep Medicaid long-term care eligibility readily available for people, even those with substantial wealth, who had insufficient cash flow to afford needed care and would be devastated financially if they had to pay up front. The quid pro quo for this public munificence was that costs expended by Medicaid would be recovered from each recipient’s estate. The goal of these recommendations was to awaken the public to the need to plan for long-term care, reward personal responsibility and early planning, prepare them to pay privately when and if expensive care became necessary, encourage the use of home equity conversion and private insurance, create a new nontax revenue source for Medicaid, and hence over time return Medicaid mostly to people in true need and make it a better, more well-financed program for all.

Now, please read the IG’s recommendations from “Medicaid Estate Recoveries: National Program Inspection.” The recommendations that later became federal law are bolded. I’ll return at the end with an “LTC Comment” to explain what happened: which recommendations became law and when, why the goal of saving Medicaid LTC by encouraging personal responsibility has failed so far, and what would need to be done to fix the long-term care services and financing crisis now.

The following is a verbatim quote from “Medicaid Estate Recoveries: National Program Inspection,” pages 50-53.

RECOMMENDATION #l--ELIGIBILITY AND TREATMENT OF RESOURCES

FINDING: Some HCFA, SSI, and state Medicaid policies promote retention of assets during Medicaid eligibility while others encourage precipitous liquidation of property with concomitant losses in value. Assets retained by recipients, in the absence of estate recovery programs, pass unencumbered to heirs at the expense of the taxpayers. Assets liquidated, sheltered or concealed to obtain eligibility are lost as a long-term care funding resource also. Incapacitated elderly people are sometimes financially abused by people who want to take their property, while at the same time, qualifying them for Medicaid nursing home benefits.

RECOMMENDATION: Change Medicaid rules to permit families to retain and manage property while their elders receive long-term care. Specifically: eliminate SSI "intent to return" rules as they apply to Medicaid long-term care recipients. Reinstate and broaden the "bona fide effort to sell" exemption. Allow Medicaid recipients to retain more income-producing property such as "contracts of deeds" or rental homes. Require agreement to liens and estate recoveries as a condition of Medicaid eligibility for people with property. Encourage State Medicaid programs to protect recipients and their property from financial exploitation through conservatorships, legal representation, and property management when necessary.

IMPACT: This policy would ease the financial impact of catastrophic long-term care costs on the elderly and their families, giving them time to cope with the problem. Total Medicaid costs would decline as estate recoveries increase.

RECOMMENDATION #2--TRANSFER OF ASSETS

FINDING: Despite almost universal State implementation of the TEFRA authority to restrict transfers of assets for the purpose of obtaining Medicaid eligibility, people are still able to give away property to qualify for assistance. This may be done by using the legal "loopholes" recommended in law journal articles or by deceit and concealment.

RECOMMENDATION: Strengthen the transfer of assets rules so that people cannot give away property to qualify for Medicaid. Specifically: improve State verification of property and transfers. Clarify that the "transfer of assets" restrictions apply to all property including that which is, or would be, exempt from eligibility determination. Expressly prohibit the transfer of property to spouses and other dependents which is permitted under current law. Extend the current 2-year "look-back" period to 5 or more years. Have HCFA publish regulations on transfer of assets.

IMPACT: More property will be retained by recipients to reimburse Medicaid for their cost of care after they and their dependents are no longer in need.

RECOMMENDATION #3—LIENS

FINDING: State Medicaid programs need a way to track property owned by recipients and ensure that it is not transferred or otherwise disposed before recovery of Medicaid benefits can be accomplished. Liens achieve these objectives most efficiently. While permitting liens, TEFRA placed so many qualifications on their use that only two states have employed liens to secure property for recovery of benefits correctly paid.

RECOMMENDATION: Require a legal instrument as a condition of Medicaid eligibility to secure property owned by applicants and recipients for later recovery. Specifically: Make liens, or some other form of encumbrance, a condition of eligibility so that the recipient’s interest in any property solely or jointly owned will inure, up to the cost of care paid by Medicaid, to the Medicaid program when neither the recipient nor dependents need the property further. Promote home equity conversion by using liens, "voluntary mortgages,” open-ended mortgages " and accounts receivable to let people extract their equities gradually while they receive assistance.

IMPACT: Mandatory liens would secure the State and Federal Government’s investment and permit Medicaid recipients to retain needed property while receiving highly expensive, but essential care.

RECOMMENDATION #4--ESTATE RECOVERIES

FINDING: Less than half of the States pursue Medicaid estate recoveries for benefits correctly paid. Of those which do, a few are very effective, but most are not. The HCFA and State Medicaid managements place little emphasis on retention of recipient property or estate recoveries. The TEFRA authority for estate recoveries, as for transfer of assets restrictions and liens, is only voluntary. Many State staff believe that TEFRA limitations hobble estate recoveries without safeguarding legitimate recipient interests.

RECOMMENDATION: Increase estate recoveries as a nontax revenue source for the Medicaid program while steadfastly protecting the property rights of recipients and their dependents. Specifically: Make estate recovery programs mandatory like other forms of third party liability. Provide technical assistance on estate recoveries, so that States can implement quickly and easily to generate an immediate cash flow for the Medicaid program. Promote awareness of the importance of real property ownership and estate recoveries for Medicaid funding. Allow estate recovery of benefits received before age 65. Permit estate recovery in cases of joint tenancy with right of survivorship. Require spousal and dependent recoveries upon death or seniority (of a minor child.)

IMPACT: Based on Oregon' s experience--even under current restrictive laws, regulations and policies--estate recoveries can recoup 5.2 percent of Medicaid nursing home costs, 5.0 percent of Medicaid payments to people over age 65, and 1. 7 percent of total Medicaid vendor payments. With enhanced legal authorities and greater programmatic emphasis, the contribution of estate recoveries to Medicaid’s program resources could be truly staggering.

RECOMMENDATION #5--FUTURE STUDIES

FINDING: We have a great deal of circumstantial evidence about public assistance resource avoidance and estate planning to qualify for Medicaid. No hard data are available, however, on the extent of these practices. We also are unaware of how much Federal money is spent by the Legal Services Corporation and other national programs to promote Medicaid eligibility for people with property. We cannot account, without further review, for large discrepancies in amounts of estate recoveries reported to us versus "probate recoveries" reported to HCFA (for purposes of reimbursing the Federal share of recoveries. Finally, a priori, it would seem that the ability to receive Medicaid while preserving assets is a strong disincentive to the purchase of private long-term care insurance. Is this true, and if so, would programmatic changes such as those recommended here remove the disincentive and promote nonpublic assistance options to funding long-term care?

RECOMMENDATION: At a minimum, the following actions should be taken:

Conduct a comprehensive study of the transfer of assets problem to estimate how much equity is being diverted from long-term care costs at the expense of the Medicaid program. To what extent is the Federal Government funding this diversion by training attorneys and counseling prospective Medicaid recipients?
Conduct a thorough audit of Medicaid estate recovery programs to determine if the Federal Government is receiving its full share of the proceeds.
Perform a review to determine whether the availability of Medicaid without encumbering assets has a chilling effect on the marketability of private sector risk-sharing products such as long-term care insurance.

IMPACT: Results of these studies could point the way to a more equitable and efficient utilization of economic resources for the satisfaction of catastrophic long-term care needs.

LTC Comment: The USDHHS Inspector General’s report “Medicaid Estate Recoveries: National Program Inspection” proposed a straight forward solution for long-term care financing. Let Medicaid pay for long-term care when people lack sufficient income to pay privately, but counterbalance that considerable benefit with a guarantee secured by a lien that families do not divest their wealth before or while receiving publicly financed care and a requirement that benefits received be paid back out of estates whenever recovery does not create a financial hardship on heirs. The goals of this proposal were to eliminate the tragedy of catastrophic LTC spenddown, create an incentive for people to plan early for long-term care by saving, investing, or insuring privately, to generate a large new nontax revenue source for Medicaid, and to reduce dependency on Medicaid by the middle class so that it could become a better program for a smaller number of genuinely needy recipients.

So what happened? We got part way there statutorily. As the highlights in the proceeding quotation indicate, Medicaid estate recoveries became mandatory. That occurred in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). Several federal laws strengthened the transfer of assets restrictions, gradually extending the look back period from two years to five years in the Deficit Reduction Act of 2005 (DRA ’05). DRA ’05 also put the first cap ever on Medicaid’s home equity exemption potentially encouraging home equity conversion to fund LTC in lieu of Medicaid although the cap was too high at $500,000 increasing with inflation to achieve that objective. Transfer of assets restrictions were extended to include transfers of an exempt home which transfers were previously permitted without affecting eligibility. The HCFA finally published regulations on asset transfers after a long delay. Other federal statutes allowed estate recovery of benefits received before age 65 and permitted estate recovery in cases of joint tenancy with right of survivorship.

All these measures were steps in the right direction. But other key recommendations by the Inspector General were left unfulfilled. Liens to hold property during Medicaid eligibility were never required so wealth continued to disappear while recipients received Medicaid LTC coverage. None of the recommended studies to elucidate the reality and potential of eligibility controls, liens and estate recoveries were ever conducted. Most importantly the federal government did not enforce the new restrictions aggressively; most states did not implement them fully and some ignored the federal mandates entirely; the media did not publicize the estate recovery liability; so the public blithely continued to ignore LTC risk and cost until they needed expensive care and Medicaid eligibility opened up as a slick way to avoid personal financial loss.

So what’s the lesson to be learned? Clearly we need to revisit the analysis and recommendations in the IG report, implement them fully, enforce them aggressively, publicize them widely, and get long-term care financing back on an even keel, dominantly financed privately by home equity conversion and, ultimately, by a revitalized private long-term care insurance market. What we do not need is more government money flowing into a system that defies human nature by disincentivizing personal responsibility and rewarding the failure to plan for long-term care. Yet that is exactly what MACPAC (the Medicaid and CHIP Payment and Access Commission) proposes to do as we explained recently in “LTC Bullet: MACPAC Misfires.”

Here’s the latest. On March 15, 2021, MACPAC published its annual “Report to Congress on Medicaid and CHIP.” According to that report:

Chapter 3 makes recommendations to ease the burden of Medicaid estate recovery, which often falls on those with modest means, and may disproportionally affect people of color and perpetuate intergenerational poverty. Federal law requires state Medicaid programs to seek recovery from the estates of certain deceased beneficiaries for payments for long-term services and supports (LTSS) and other services. The Commission recommends returning to prior law, making estate recovery optional, rather than mandatory. It also recommends allowing states that cover LTSS under managed care to pursue recovery based on the cost of services where it is less than the capitation payment paid to a managed care plan; and directs the Secretary of the U.S. Department of Health and Human Services (HHS) to establish minimum hardship waiver standards, including a minimum estate value threshold for estate recovery.

If Congress were to follow these recommendations, the country’s long-term care financing system would be further hampered in its ability to supply quality care for all Americans. It is clear from MACPAC’s report that the commission’s “research” on the subject of Medicaid estate recoveries included extensive consultation with elder law attorneys who make their livings putting affluent people on Medicaid and helping them evade estate recovery. Of course Medicaid planners oppose eligibility controls and estate recovery. The few mentions in the report of “state officials” reflect mostly favorable attitudes toward controlling eligibility and requiring estate recoveries, but it is clear MACPAC did not engage closely with front line Medicaid eligibility workers. Those workers in my experience, having interviewed hundreds of them over decades, passionately favor targeting Medicaid to people in need and recovering from estates of people who shelter wealth. Almost to a person they expressed anger and frustration that it’s so hard to qualify the poor for care, but lawyers fill out applications thick with documentation for their wealthy clients who then qualify easily for Medicaid.

The system MACPAC seeks to sustain and empower by curtailing Medicaid estate recovery is corrupt. It rewards irresponsibility. It discourages early LTC planning. It tips LTC toward public financing and away from private sources such as home equity conversion, private LTC insurance and estate recovery. Human nature being what it is people will always adapt to the rules government imposes in order to maximize their interests. That’s not a bad thing unless government rules incentivize bad behavior as they do now and as MACPAC would further encourage. Instead we should strengthen estate recovery rules so people benefit by planning early for long-term care, saving, investing or insuring, using home equity to get the best care in the most appropriate venue, staying off Medicaid and out of nursing homes.

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Updated, Monday, March 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-008: LTC NEWS AND COMMENT

The Cost of Retirement Has Tripled! But a New Way of Planning Can Help
Falling through cracks’: Vaccine bypasses some older adults
LTCG Launches Self-service Portal for LTC Providers
A COVID Storm Hits Senior Living
Germany’s Exploitative Care Model Is Finally Being Put on Trial
Demystifying Cash Buyouts of Long-Term Care Insurance Policies
Alarming’ nurse turnover rates linked to quality, payment woes in major new nursing home study
Lower Spending Drives Senior Satisfaction with Medigap Policies
Alzheimer's May Strike Women and Men in Different Ways
Reforming Medicaid LTSS would increase HCBS access, create better jobs: report

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Updated, Friday, March 5, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: MACPAC MISFIRES

LTC Comment: MACPAC proposals would cripple Medicaid long-term care and aggravate inequality. Details after the ***news.***

*** WHY LTCI FAILS: Don’t miss Steve Moses’s article of that title in the March issue of Broker World magazine. Read it here. Then subscribe to the insurance trade journal to receive future issues. While you’re there, catch Margie Barrie and Leni Webber’s “COVID-19 and Long Term Care Planning,” expanding on a topic we addressed in “LTC Bullet: Long-Term Care and the Pandemic.” ***

*** MACPAC MEETS: Yesterday, the Medicaid and CHIP Payment and Access Commission met online. What to do about Medicaid estate recoveries was not on the agenda. But the Commission’s Executive Director assures me that “We have read your comments [I sent her a draft of today’s LTC Bullet] and will share them with members of the Commission. … The full report, with a detailed explanation of MACPAC's analysis and recommendations, will be out on March 15.” We’ll watch for that report and update you on whether or not it corrects the deficiencies identified below. ***

LTC BULLET: MACPAC MISFIRES

The issue in a nutshell:

Generous and elastic Medicaid income and asset eligibility limits enable middle class Americans to receive expensive long-term care when they need it while preserving most of their wealth. See “Welfare for the Well-to-do” (Wall Street Journal) and “Pretending to Be Poor” (New York Times).
The quid pro quo for this munificent public benefit is that recipients must agree to pay back the cost of their care after their deaths from their estates when their sheltered wealth is no longer needed by an exempt dependent relative and would not create a hardship for heirs.
MACPAC proposes to weaken Medicaid estate recoveries by (1) making them voluntary, (2) diluting recovery potential below what Medicaid actually pays, and (3) redefining hardship waivers so they do not require financial hardship.
If implemented, these measures would harm the poor by reducing Medicaid program resources, give heirs a tax-payer financed windfall for placing their parents on the public welfare program, further desensitize the public to long-term care risk and cost, cause even more people to end up on public assistance and increase Medicaid expenditures significantly.
Medicaid estate recoveries should be encouraged instead: (1) close Medicaid eligibility loopholes that allow affluent people to divest wealth making it unavailable for estate recovery, (2) require automatic liens to secure sheltered property so it remains available for later recovery, and (3) eliminate counterproductive rules that discourage efficient, cost-effective estate recovery, as recommended for example in Maximizing NonTax Revenue from MaineCare Estate Recoveries, 2013.

LTC Comment: The Medicaid and CHIP Payment and Access Commission (MACPAC) proposes to undercut a critical part of the long-term care financing system. To comprehend what MACPAC recommends and why it would be so detrimental if Congress accepted their advice, we must first review how the United States finances long-term care.

The vast majority of long-term care in the U.S. is provided for free by spouses, families and friends at tremendous financial and emotional stress. When free care is unavailable or exhausted and expensive formal care becomes necessary, Medicaid is the primary payer. Although it is a means-tested public assistance program, Medicaid has come to be the primary source of long-term care financing for the middle class as well as the poor. That is true because, although Medicaid’s financial eligibility rules sound very restrictive, the way the program works in practice is much more elastic and generous.

Medicaid LTSS Financial Eligibility

Most writers claim Medicaid benefits only go to “low-income” people, but medical and long-term care expenses are subtracted from income before eligibility is determined. So, very-high- income people do qualify for benefits if their health care expenses are commensurately elevated, as they usually are for people who need long-term care. The rule of thumb is that Medicaid’s eligibility cut-off for monthly income is roughly the same as the cost of a month in a nursing home, about $7,500 on average nationally for a semi-private room. That’s $90,000 per year, hardly low income.

The seemingly draconian limit on countable assets, $2,000 in most states, is also much less onerous than it appears. That’s because non-countable assets are practically unlimited and countable assets are easily converted to non-countable or exempt assets. Home equity, for example, is completely exempt up to $603,000 in most states and up to $906,000 in nine states. Recent research concluded that Medicaid’s home equity “limits” exclude almost no one. Other non-countable assets, allowed in unlimited amounts, include one automobile, Individual Retirement Accounts (IRAs) that are in payout status as they must be at age 72, one business including the capital and cash flow, term life insurance, household goods and personal belongings including family heirlooms, prepaid burial plans, and others. Lawyers who help affluent clients qualify for Medicaid long-term care benefits by means of sophisticated annuities, trusts, and other asset sheltering techniques, also routinely provide long lists of non-countable assets people can buy to “spend down” artificially to Medicaid’s countable asset limit.

Is Such Easy Access to Medicaid’s Extended Care Benefits Intentional?

Does this sound like a crazy system that could never have been intentionally imposed on unsuspecting taxpayers? If you think that, you are wrong. Medicaid long-term care benefits were originally much more generous than now. From the program’s beginning in 1965 until 1980, federal law expressly permitted asset transfers to qualify for benefits. Even millionaires could give away all their wealth to anyone else and qualify immediately. Unsurprisingly, Medicaid long-term care expenditures exploded from the first day. So a long series of Congresses and Presidents passed laws and imposed regulations that discouraged artificial self-impoverishment to qualify. (See “Appendix I: Supplemental Bibliography” (pps. 34-63) in How to Fix Long-Term Care Financing for the whole history of this process.)

Still, Medicaid long-term care costs continued to escalate throughout the 1980s. Something had to be done to control costs. But it was neither desirable nor politically feasible to stanch Medicaid’s financial hemorrhaging by forcing people into impoverishment before they could get help from the government. So the powers-that-be hit upon an ingenious solution. Let people keep their wealth while they get help with long-term care from Medicaid, but make sure they pay it back after they die out of their estates. That way Medicaid would no longer discourage people from planning early for long-term care. The new system was on the principle “pay now or pay later.” Medicaid would no longer reward heirs for waiting until their parents needed long-term care and then relying on taxpayers to indemnify their inheritances.

This scheme became law in the Omnibus Budget Reconciliation Act of 1993. It was reinforced by the Deficit Reduction Act of 2005. OBRA ’93 made transfer of assets restrictions longer and stronger to encourage people to hold onto their wealth while they received Medicaid benefits. But it made estate recovery mandatory so every state in the country would be required to track exempt wealth and recover it later to reimburse Medicaid. The DRA ’05 closed more of the eligibility loopholes that caused wealth to leak out of estates before it could be recovered later, but the DRA also put the first limit ever on home equity to convey that Medicaid’s generosity is not unlimited.

The Critical Role of Estate Recoveries

So, easy access to Medicaid LTC benefits for the middle class and affluent was not unintentional. It was just supposed to be mitigated by means of mandatory estate recovery. To avoid Medicaid dependency followed by repayment of benefits received from one’s estate, sensible people would plan early and save, invest or insure for long-term care. But to this day, very few people worry about long-term care until they need it. They end up on Medicaid as the path of least resistance, qualify under the program’s generous financial eligibility criteria, and often evade estate recovery with the help of Medicaid planning specialists. What happened?

Transfer of assets restrictions, while occasionally tightened were never made tight enough. Liens to hold property until later recovery remained voluntary and were fraught with loopholes. Likewise estate recovery rules were too easy to circumvent. But most importantly, the federal government did not enforce transfer of assets, lien and estate recovery rules effectively; the states did not implement the requirements consistently; the media didn’t publicize the risk of estate recovery liability; so the public continued to ignore long-term care risks and costs, failed to save, invest or insure, and ended up more dependent than ever on public assistance. That’s the mess in which America’s long-term care financing system remains today. So what should and should not be done?

MACPAC Would Weaken, not Strengthen Estate Recoveries

Let’s circle back to MACPAC now. What has the Commission recommended that Congress change about Medicaid’s long-term care program? These are the proposals approved at the Commission’s January 2021 meeting followed by our analysis.

MACPAC Recommendation #1: “Congress should amend Section 1917(b)(1) of Title XIX of the Social Security Act to make Medicaid estate recovery optional for the populations and services for which it is required under current law.”

LTC Comment: Making estate recovery optional for state Medicaid programs would cripple its ability to recover and reuse nontax revenue for the benefit of genuinely needy recipients, thus further aggravating the program’s financial and racial inequality. Estate recovery saves Medicaid money, preserves scarce resources for those who need them most, encourages early and responsible planning, and discourages abuse of Medicaid by people who should, could and would have paid for their own long-term care absent perverse policy incentives to ignore that risk and cost. Estate recovery should be encouraged and strengthened, not hobbled. Eliminate statutory and regulatory obstacles that prevent efficient enforcement. Stop the well-to-do from evading recovery with the help of legal enablers.

MACPAC Recommendation #2: “Congress should amend Section 1917 of Title XIX of the Social Security Act to allow states providing long-term services and supports under managed care arrangements to pursue estate recovery based on the cost of care when the cost of services used by a beneficiary were less than the capitation payment made to a managed care plan.”

LTC Comment: Medicaid estate recovery ensures that assets sheltered during recipients’ lives are used after their deaths to repay funds advanced by Medicaid for their care. Whether Medicaid pays a monthly fee to Medicare, private health insurance premiums, managed care rates, or fees for service, the principle is the same. Medicaid advanced funds to relieve the recipient of an onerous expense and the recipient’s estate should reimburse the full amount advanced to the extent the estate is sufficient to do so. Medicaid exists to help people in need fund long-term care, not to protect estates or indemnify heirs. Families who wish to preserve estates should consider reverse mortgages or private long-term care insurance to fund long-term care instead of relying on Medicaid and then evading or minimizing estate recovery.

MACPAC Recommendation #3: “Congress should amend Section 1917 of Title XIX of the Social Security Act to direct the Secretary of the U.S. Department of Health and Human Services to set minimum standards for hardship waivers under the Medicaid estate recovery program. States should not be allowed to pursue recovery for: (1) any asset that is the sole income-producing asset of survivors; (2) homes of modest value; or (3) any estate valued under a certain threshold. The Secretary should continue to allow states to use additional hardship waiver standards.”

LTC Comment: Clumsy restrictions like these only hamstring Medicaid estate recovery efforts more than they already are without serving any legitimate purpose. Medicaid estate recovery units do not pursue recoveries unless they are cost effective and humane. To do so would be political suicide. Hardship waivers must be based on whether there is an eligible person who faces a hardship. The MACPAC proposals ignore that precept. Regardless of the value of the house or the small amount left in the estate, the Medicaid program should be reimbursed for the costs of care paid on behalf of the deceased Medicaid recipient unless a qualified heir is actually facing hardship. Heirs should not receive taxpayer financed benefits just because their parents lived in modest houses or had nominal bank accounts at death. Research, referenced below, indicates that Medicaid estate recovery can return 15 times or more the cost of recovery to state and federal revenues. They can only do that by prioritizing their efforts and following good business practices that do not bring political disapproval onto the program.

MACPAC Proposals Are Shortsighted and Counterproductive

Clearly, MACPAC looked at estate recoveries through a microscope instead of taking a wider, telescopic view of their importance for responsible public policy. It is very clear from their staff reports going back to 2015 that the Commission was never provided the rationale behind and the history of estate recoveries. There is no reference, for example, to the US Department of Health and Human Services Inspector General Report from 1988 that analyzed the potential for estate recoveries, recommended strong transfer of assets restrictions, mandatory liens and estate recoveries, and explained how these measures could mitigate exploding Medicaid long-term care costs and incentivize Americans to plan early and responsibly for long-term care.

Here’s an excerpt from that report, Medicaid Estate Recoveries: National Program Inspection, Office of Inspector General, 1988:

A large nontax revenue source generated by Medicaid estate recoveries could be recycled to help the truly destitute. It is possible, however, that enhanced estate recoveries would have more far-reaching effects on long-term care funding. Faced with the certainty--which is almost nonexistent today--that accepting care from Medicaid means paying back the cost out of one’s estate, people might seek other alternatives. Such alternatives include Social Health Maintenance Organizations (SHMO' s), continuing care communities, targeted savings accounts and private long-term care insurance. To pay for these nonpublic assistance options, the elderly would have to turn more to private home equity conversion or to assistance from their adult children. It is their children, after all, who stand to inherit whatever property remains after the costs of long-term care are paid and who currently reap the windfall of Medicaid subsidies. We must emphasize that the issue is enrichment of nonneedy adult heirs, not denial of care to the elderly. For those who opt to rely on Medicaid, or have no other choice, eligibility conditional upon a promise (secured by an automatic lien) to repay benefits from their estates would assure all elderly people of (1) access to care, (2) retention of home property as long as it is needed by spouse and dependents, and (3) the dignity of paying their own way in the end. (pps. 47-48, emphasis added)

For the full picture, see the Medicaid Estate Recoveries report’s recommendations at pages 50 to 53. They propose to strengthen rules that discourage asset divestiture, encourage families to keep and use their property while receiving Medicaid long-term care benefits, but also ensure that protected wealth goes to repay Medicaid for benefits received rather than passing as a taxpayer financed indemnity to heirs. Several of these recommendations became law in OBRA ’93, DRA ’05 and other legislation over the years, but they have never been adequately implemented or enforced. They should be expanded, reinforced and carried out, not diluted as MACPAC proposes. In a subsequent LTC Bullet, we will republish the Inspector General’s recommendations and explain why they should be fully implemented now more than ever. (Full disclosure: I led the IG’s 1988 estate recovery study and wrote the agency’s report.)

This is the honorable principle behind Medicaid estate recoveries:

We have very limited dollars available for public assistance. We must take care of the truly poor and disadvantaged first. The middle class and well-to-do should pay privately for long-term care to the extent they are able without suffering financial devastation. Prosperous people who rely on Medicaid for long-term care should reimburse the taxpayers from their estates before giving away their wealth to heirs. Seniors and their heirs who wish to avoid such recovery from the estate should plan ahead, use their own financial resources first (including home equity by means of reverse mortgages) to pay for home and community-based services and/or purchase quality private long-term care insurance to finance their care.

We can return dignity to the Medicaid long-term care program. It isn’t welfare if you pay it back. That’s what Medicaid estate recoveries enable recipients and their families to do, while at the same time, preserving more resources for the needy and underprivileged.

A wag once defined “commission” as a group of people who’ve done nothing individually who come together to conclude that nothing can be done. If MACPAC isn’t to be a case in point, they should review this new, actually old and heretofore ignored, evidence about Medicaid estate recoveries before making such counterproductive recommendations to Congress. Save Medicaid long-term care from the unintended consequences of misplaced good intentions.

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Updated, Monday, March 1, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-007: LTC NEWS AND COMMENT

The Top Eight Mistakes People Make With Medicaid
Universal coverage of long-term care for older Americans may stabilize provider revenues: A report calls for establishing universal coverage for all Americans' long-term care needs through Medicare
COVID Cases, Deaths Plummet in Nursing Homes After Vaccine Rollout
Unconscionable’: Senior living eliminated from COVID relief package
Is The Shift Of Medicaid Long-Term Care From Nursing Facilities To Home About To Accelerate?
Majority Of Working Americans Are Optimistic About Their Financial Future, Even While Lacking Savings
U.S. unpaid caregivers struggling the most with emotional health problems: report
Alzheimer's May Start Sooner for People With Anxiety, Depression History
At-home hospital-level care is growing fast, home care execs say
Why Some 'Super Ager' Folks Keep Their Minds Dementia-Free
Nursing care prices increase 3.3% in January, but spending down 7.8%,
As Nursing Homes Lose Patients to Home Health During COVID, Past Shifts Show Path Forward
How older adults may be doubling their risk of dementia

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Updated, Monday, February 22, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-006: LTC NEWS AND COMMENT

MA Members Could See High Out-of-Pocket Costs For COVID-19
One of Ten in U.S. May Have to Switch Occupations Post Pandemic
Nursing Home Workers Had One of the Deadliest Jobs of 2020
Advantages, Disadvantages and Considerations for LTC Policy Buyouts
US life expectancy dropped a full year in first half of 2020, according to CDC
Accessory dwelling units may help cities deal with housing shortages for ballooning senior population
Black Caregivers Value Long-Term Care Insurance: Nationwide
Improving the Long-Term Care Insurance Customer Experience
‘The situation is dire’: Provider group seeks $5 billion in COVID relief for senior living

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Updated, Friday, February 19, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: RETHINK LTC FINANCING

LTC Comment: We review a study that, correctly interpreted, would bust the LTC financing debate wide open, after the ***news.***

*** THE 2021 INTERCOMPANY LONG-TERM CARE INSURANCE CONFERENCE will convene virtually and for FREE April 13th – 29^th. Expect 40+ sessions from the usual tracks, but apparently minus Public Policy & Alternative Solutions (my favorite), and adding an Aging in Place Solutions track. ILTCI’s 2021 Virtual Conference will be presented 4 hours per day on Tuesdays and Thursdays over three weeks beginning April 13th. Choose from 2 sessions per time slot! CLICK HERE to view the schedule when it becomes available. Barry Fisher, Conference Chairperson and Vince Bodnar, Conference Co-Chairperson say: “Registration is expected to open later this month. Join us and get the inside scoop on current trends in the long-term care insurance industry and what the future holds. We look forward to seeing you on April 13th. ***

LTC BULLET: RETHINK LTC FINANCING

LTC Comment: The long-term care financing conversation has settled into a comfortable narrative that goes something like this. The need for long-term care is growing and overwhelming both private and public funding sources. Medicaid requires impoverishment. Private LTC insurance failed. So we need a new compulsory tax-based government program to pay for long-term care. But what if private insurance failed largely because Medicaid does not require impoverishment? What if public LTC funding caused, and more of it would only worsen, the crisis? Let’s consider some new evidence.

Very little scholarly work tackles the critical, but complicated topic of Medicaid long-term care eligibility in any meaningful way. You’ll see the statement “Medicaid requires impoverishment” or variations of it in most peer-reviewed articles on long-term care. But analysis that approaches the highly nuanced truth of that subject is rare indeed. For example, you will virtually never find anything in the scholarly literature about people with substantial wealth qualifying for Medicaid LTC benefits by taking advantage of simple and/or sophisticated self-qualification methods. Scholars evade that subject despite the fact that such methods are widely available in popular books and articles and from online advertising, law journal articles and thousands of Medicaid planning specialists throughout the country.

So, because its Abstract promised to show that many more people could qualify for Medicaid LTC benefits besides the poor, I couldn’t wait to read this article:

Robert Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial Eligibility for Medicaid Long-term Services and Supports, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2020.1740638. To link to this paywalled article, click here. (I want to thank LaRhae Knatterud of the Minnesota Department of Human Services and lead author Robert Hest for their time explaining this article’s background, methods and findings to me on a Zoom call and for listening and responding to my positive and critical feedback.)

The article’s “Abstract” states that the authors modeled “the impact of changing income, home equity, and asset limitations on Medicaid eligibility across states” and “found that one in five elderly adults (10 million individuals) meet all three tests and would be financially eligible for Medicaid LTSS.”

Wow! They concluded that 22 percent of all elderly Americans, more than double the official poverty rate of 9.2 percent (KFH, 2018), would qualify for Medicaid LTC benefits. That sure doesn’t support the conventional academic wisdom that Medicaid requires impoverishment. So I hastened eagerly to delve into the study’s details.

What I found pleased and disappointed me. The work is ground-breaking, the results surprising, and their true meaning far more important than the authors themselves realize. Instead, they ignored key evidence in order to conform their findings to the current “LTC Narrative”--that more social insurance is the only hope for long-term care and that targeting financial eligibility for Medicaid to the neediest would be ineffective and unadvisable. To support that assessment, here are some quotes from the article followed by my analysis:

JASP Article: “Medicaid plays a significant role in financing long-term services and supports (LTSS) for low-income elderly (65+) in the United States.”

LTC Comment: True, but Medicaid also “plays a significant role in financing” long-term care for higher income people, because medical and LTC expenses are usually deducted from income before income eligibility is determined. The constant reference in the media and scholarly literature to Medicaid helping only low-income people diverts attention from the fact that people with substantial incomes also qualify routinely.

JASP Article: “Given the high cost of LTSS, individuals often exhaust their personal resources in paying for services and must rely on Medicaid to finance ongoing care.” (p. 1)

LTC Comment: Neither this article, nor any peer-reviewed journal article I can recall, provides evidence for that statement. It is certainly true of low income/low asset people who are quickly wiped out financially by Medicaid eligibility rules. It is definitely not true of higher income/higher asset people with financial savvy and access to legal advice. See for example the 29-page “Bibliography of Books, Elder Law Treatises and Law Journal Articles on Medicaid Planning Listed Chronologically” in How to Fix Long-Term Care Financing (Moses, 2017). That source contains hundreds of techniques elder law attorneys use to qualify their affluent clients for Medicaid LTC benefits. With so much legal smoke, is it reasonable to ignore the fire, i.e. widespread use of Medicaid by prosperous people the program was never intended to serve? Yet the JASP article does not mention the possibility that people with incomes and assets much higher than the amounts they modeled could have achieved eligibility by means of self-impoverishment methods widely recommended in the popular and legal media.

JASP Article: “To qualify for Medicaid payment of LTSS, most individuals must spend nearly all of their income on their care.” (p. 4)

LTC Comment: It is true income must be spent down on care-related expenses, but that gives the lie to the common notion that only low-income people qualify for Medicaid. People who need long-term care have very high medical and LTC expenses. So, because those expenses are deducted before their income eligibility is determined, they can have very high incomes indeed and still qualify for benefits. Furthermore, while it is true that income must be spent for care, it assuredly is not true that assets must be spent on care, although that claim is made in the literature. In fact, there is no limit on how many assets an individual or couple may retain while on Medicaid as long as the wealth is held in exempt form, such as a home, IRAs making periodic payments, an automobile, prepaid burial benefits, household goods, family heirlooms, etc. Countable assets are easily converted to exempt assets as the extensive Medicaid planning literature cited above frequently observes.

JASP Article: “Under the Deficit Reduction Act of 2005, the applicant’s homestead is an excluded asset if the individual lives in the residence, is expected to return to the residence, or a community spouse or dependent relative lives in the residence (ElderLaw Answers, 2018a). … In some states, the home is not considered when determining Medicaid eligibility if the nursing home resident plans to return to the home; in other states, the resident must prove that they are likely to return home (U.S. Department of Health and Human Services, 2005).” (p. 5)

LTC Comment: Actually, the terms “expected to return,” “plans to return,” and “likely to return” are unofficial and inaccurate. Rather, the federal Medicaid criterion for permitting the home equity exemption is a totally subjective “intent to return” expressed by the recipient or a representative with no verification whatsoever required.

JASP Article: “Our data come from the 2014 Health and Retirement Study (HRS), a longitudinal household survey of Americans age 50 or older ….” (p. 6)

“We also want to note that our primary data source, the Health and Retirement Study, though now said to be representative of the institutionalized population, was not originally designed to be representative of that population and some concerns remain about the sample’s representativeness of the nursing home population, especially when used longitudinally (RAND Center for the Study of Aging, 2019; Sonnega et al., 2014).” (p. 12)

LTC Comment: The JASP article relies on HRS data to determine the wealth (income and assets) of people to whom the authors then apply Medicaid LTC financial eligibility standards. But what if the HRS data, commonly assumed to be a gold-standard source, are really highly dubious? That would mean HRS respondents might actually have much more income and assets than they report. Or it could mean that the income and assets they report are correct but that they arrived at the reported levels not by spending their wealth on long-term care but by taking advantage of Medicaid’s generous and elastic financial eligibility rules or by retaining the services of an elder law attorney specializing in Medicaid planning.

I found the HRS data highly questionable in “How to Fix Long-Term Care Financing” (pps. 16-17). For example: “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.” (Venti, p. 3) “Furthermore,” as I explained in the report, “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.” (p. 16)

JASP Article: “We find that applying the most restrictive income allowances across the states would result in an estimated 6.8 million individuals potentially losing financial eligibility for Medicaid LTSS.” (p. 7)

LTC Comment: So, don’t tighten income allowances. It is well accepted that loss of income is the “deductible” people must pay to get Medicaid to cover their LTC expenses. The real potential savings are on the asset side of the ledger. But federal law does not permit states to do what would need to be done to divert many more people away from Medicaid dependency. That is, change the home equity exemption so that home equity goes to fund better LTSS in homes instead of passing as a windfall to heirs at government expense. Loss of the home equity exemption would make people think and plan earlier for LTC resulting in fewer ending up on Medicaid. Eliminating some of the most common Medicaid planning strategies would also help to divert the middle class away from Medicaid without negatively affecting, in fact actually helping, the needy for whom more program resources would remain available.

Having interviewed hundreds of Medicaid LTC eligibility workers over the years, I found little relationship between the ostensibly draconian income and asset eligibility rules and the way the system works in practice. Workers told me they’re frustrated that people of few means quickly get wiped out financially whereas people with substantial wealth qualify immediately and easily because lawyers fill out their applications, know all the loopholes, provide all the documentation, and follow up until eligibility is granted.

JASP Article: “The population of elderly adults studied has an average age of 74.6 and is 56.3 percent female. Among the population, the median household income is 40,912, USD the median value of household net assets is 79,400 USD (excluding housing assets), and the median net primary residence value is 100,000. USD.” (p. 7)

LTC Comment: These are very high medians, which indicates that half of the studied population has even higher incomes and assets. Remember, this study found that 22 percent of the studied population not the median households would be “financially eligible for Medicaid LTSS” (p. 7). In How to Fix Long-Term Care Financing (pps. 8-9), I found that while half of all Medicare beneficiaries had annual incomes below $26,200 in 2016, 45 percent had annual incomes between $26,200 and $103,450, all of whom could qualify for Medicaid LTC benefits based on income if their deductible medical and LTC expenses were high enough. Furthermore, I found that while half of all Medicare beneficiaries had savings of $74,450 or less in 2016, 45 percent of them had savings between $74,450 and $1.4 million, all easily converted to Medicaid LTC asset eligibility with the simplest kinds of Medicaid planning measures. In other words, up to the 95^th percentile of Medicare beneficiaries could qualify for Medicaid LTC eligibility and, in the real world, they often do. This analysis applies equally well to the current study’s findings.

JASP Article: “If the most common state thresholds were applied across all states, we estimate that nearly the entire elderly population would meet the home equity threshold of 552,000. USD Just more than half (54 percent) would meet the home equity and income test, and only 22 percent, or 10 million adults age 65 and older, would meet all three tests – home equity, income, and assets – and be financially eligible for Medicaid LTSS.” (p. 7)

LTC Comment: Now, that statement is far more dramatic than it appears to be on the surface. Let’s deconstruct it. Nearly the entire elderly population would meet the home equity threshold of $552,000, but that was the exempt home equity amount as of 2015. The comparable amount for 2021 is $603,000. In nine states, the home equity exemption was $828,000 in 2015, but it is $906,000 today, because the exempt amount increases every year with inflation. What is the point of having a limit on home equity that does not exclude anyone? What is the public policy reasoning for preventing so much private wealth from funding quality long-term care for prosperous people? Over half the study population (54 percent) meet the home equity and income test? More than one-fifth meet all three (home equity, income and asset) tests? These figures apply to the whole population not just to the median? So much for the fallacy that Medicaid requires impoverishment.

JASP Article: “We found that the population that would be made financially ineligible for Medicaid LTSS by restricting income allowances and thresholds likely has a greater need for services, is less likely to have a spouse who could potentially provide informal care, has fewer financial resources to pay for formal care, and is less likely to be currently using formal LTSS compared to the population ineligible for Medicaid LTSS under the most common income allowances and thresholds. This indicates that Medicaid LTSS eligibility is already narrowly targeted under the most common allowances and thresholds.” (p. 11)

LTC Comment: That statement aligns with the fact that current Medicaid financial eligibility rules are devastating for low income, low asset people. They’re wiped out financially as soon as they begin to need expensive long-term care. But the study’s conclusion that “Medicaid LTSS eligibility is already narrowly targeted” is untrue. Higher income people qualify because their health and LTC expenses are deducted before their income eligibility is determined. Higher asset people qualify because they can easily convert assets into exempt form. Much higher asset people qualify by retaining the services of Medicaid planning attorneys, services and techniques this research and most other research of its kind completely ignore..

JASP Article: “On the surface, this [$552,000 home equity exemption] may seem a generous threshold; however, most states have estate recovery laws that allow a state to seek retroactive payments for LTSS from an enrollee’s estate upon their death (ElderLaw Answers, 2017).” (p. 11)

LTC Comment: Estate recovery was made “mandatory” in the Omnibus Budget Reconciliation Act of 1993, but unfortunately the federal government did not enforce the requirement, states did not administer it fully or consistently, the media did not publicize it, and consequently consumer behavior did not adapt to plan for long-term care in order to avoid estate recovery. By citing “ElderLaw Answers,” the study’s authors display a closed-minded bias. ElderLaw Answers is published by Medicaid planning lawyers whose principal source of revenue is affluent clients they convert to Medicaid eligibility by circumventing the same income and asset limits the study’s authors claim are so restrictive. Did the study’s authors not consider this blaring conflict of interest?

JASP Article: “We believe Minnesota’s eligibility model represents the key components of financial eligibility used by all states and provides a reasonable approximation of the impact of changes to these components on eligibility levels.” (p. 12)

LTC Comment: The study’s authors acknowledge that one of the limitations of their work is the assumption that “Minnesota’s eligibility model represents the key components of financial eligibility used by all states.” Given the constraints of such research, it’s reasonable to accept that limitation. But then, why not ask what methods of artificial self-impoverishment (Medicaid planning) are effective in Minnesota as well? A simple internet search for “Medicaid planning in Minnesota” reveals scores of Medicaid planners available throughout the state to use hundreds of simple and more sophisticated methods to get around Minnesota’s ostensibly strict but actually generous and elastic Medicaid financial eligibility rules.

A few examples: the Medicaid Asset Protection Trust; the “Family Pot Trust;” “Advanced Medicaid Planning Techniques: Trusts, Private Annuities, Spousal Transfers, Caregiver Agreements;” “Elder Law & Medicaid Services: We help clients qualify for government medical benefits legally and ensure their estates are preserved for their families, instead of their nest egg being wiped out by high nursing home expenses.”; “Life Estates.” I found these sources in a few minutes perusing the internet. What value can “modeling” Medicaid financial eligibility rules possibly have when it ignores how Medicaid eligibility qualification is actually done?

JASP Article: “Our study highlights the already strict eligibility levels that limit access to Medicaid LTSS.”

LTC Comment: This study does nothing of the sort. It completely ignores the well-documented evidence of widespread Medicaid planning which allows people far above Medicaid’s apparent financial eligibility limits to qualify. Modeling financial eligibility rules that are actually circumvented routinely in real life is more misleading than informative.

JASP Article: “The Medicaid program for LTSS among the 65+ population is already well targeted and restricting eligibility would likely exclude individuals in need of services. Few states have opted to further restrict access to needed services and are instead opting to find more ways to keep people living independently in the community.” (p. 12)

LTC Comment: As we’ve shown, Medicaid is definitely not “already well targeted.” Few states have opted to target services to the needy because federal law prevents them from changing eligibility rules to exclude the affluent and achieve that objective.

JASP Article: “We caution policymakers who feel pressure to constrain eligibility for Medicaid LTSS as a cost-savings measure against taking this action.” (p. 13)

LTC Comment: This is a wrong conclusion unjustified by findings that ignore the ease of converting countable into non-countable assets and disregard the potential for home equity conversion to fund long-term care privately. In fact, changes in federal law recommended in How to Fix Long-Term Care Financing would allow states to target scarce Medicaid resources to the needy thus impelling those with means to plan early for long-term care and avoid government dependency later on.

Closing LTC Comment: The JASP article dramatically shows that over twice the proportion of elderly poor in America would qualify for Medicaid LTC benefits based on income and assets. It proves this without considering the possibility that many more people, with much higher income and assets, qualify using widely known and applied techniques of Medicaid planning. Only by ignoring the vast legal and popular literature on how to qualify for Medicaid LTC benefits without spending down can the authors cling to the conventional “LTC Narrative” that “a broader finance solution that spreads out the cost risk via a social insurance program” (p. 13) is necessary. I implore these authors and their scholarly colleagues to ask Medicaid LTC eligibility workers how Medicaid eligibility really works and to read the legal literature on qualifying for Medicaid that I painstakingly documented in How to Fix Long-Term Care Financing, pps. 34-63. Then, try modeling reality instead of the Medicaid spend-down myth. If I can help in any way, I would be happy to do so.

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Updated, Monday, February 15, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-005: LTC NEWS AND COMMENT

COVID-19 mortality tied to racial disparities in nursing homes, industry expert says
Analysis Sees $94 Billion in Industry Losses Over Two Years
Covid Has Black Americans Thinking More About Financial Planning
Lincoln to Add Variable Universal Life-Long Term Care Hybrid
Dementia doubles COVID risk — even after accounting for LTC residence, study finds
MA Enrollment in Plans With Extra Benefits for Chronically Ill Tripled in 2021
Legal experts warn of incoming lawsuits for long-term care
COVID-19, in some respects, made senior living more appealing: survey
Why the Medicaid block grant is the right strategy for Tennessee | Opinion
Coronavirus cases drop at US homes for elderly and infirm

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Updated, Monday, February 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-004: LTC NEWS AND COMMENT

Long-term care in the age of Covid, and beyond
Using Estate Planning to Prepare for Medicaid
Baby boomers face financial distress and age discrimination
Long-Term Care Insurance: First, You Should Find an Agent
Want to age at home instead of a nursing home? Consider this first
We need comprehensive long-term care reform, and we need it now
More than a fourth of Americans 40 and younger don’t think they need to be saving for retirement: survey
Six-year study links hearing loss to dementia risk
Here's a New COVID-19 Nightmare, for You
Veterans Community Care Program: Immediate Actions Needed to Ensure Health Providers Associated with Poor Quality Care Are Excluded
NAIFA-ND Activates Grassroots to Counter LTC Proposal
Boren-like solution needed nationwide to address Medicaid shortfalls, expert says

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Updated, Friday, February 5, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

LTC Comment: Insurance is individualistic, so “social insurance” is a contradiction in terms. Meaning and consequences follow the ***news.***

*** LTCI SURVEY NEWS: Oliver Wyman and Ice Floe Consulting have presented the Executive Summary of the “Who is Selling What? To Whom, How & Why?” agent and advisor survey they conducted last fall. The study team gathered a great deal of actionable intelligence from agents and advisors actively engaged in the long-term care insurance planning process. Click here for the executive summary of results. You can request their full report starting next week at this Oliver Wyman webpage. Ron Hagelman and Barrie Fisher published an excellent review of the survey results titled “Actionable Intelligence in Long Term Care Planning” in the February issue of Broker World just out, here. ***

*** WA AND ND SLIDE OFF THE RAILS: Evidently the people in Washington State who are trying to design compulsory social insurance for long-term care can’t decide whether or not people who own private insurance already or buy it now should have to pay for the new state-mandated plan too. Wouldn’t that be double jeopardy? In the meantime, North Dakota wasn’t messing around with any such nuance; they had a bill to stop the sale of private LTC insurance for three years altogether. Apparently they’ve relented on that nuclear option and will only “study” the subject going forward. We thank Stephen D. Forman of Long-Term Care Associates for keeping us apprised of the politicians’ latest shenanigans. ***

LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

LTC Comment: The LTC policy world is smitten by a dream that they can solve the LTC financing crisis by means of social insurance. (Are you listening Marc Cohen, Judy Feder, et al.?) Washington State’s plan to compel workers to fund a government designed and managed LTC “insurance” plan is the basic model. But other states are building similar programs and many more have a social insurance long-term care program on their wish list. What’s wrong with that? Today’s LTC Bullet explains.

The following article, originally published in 2002, begins by defining insurance and explaining its fundamental principles. The article proceeds to describe the many ways the honorable concept of private insurance has been corrupted by government interference and regulation in the name of “social insurance.” It closes with a comparison of the moral consequences of real private insurance compared to so-called social insurance.

In a nutshell, real private insurance is individualistic, voluntary, fair, rational, objective, and based on the trader principle. It serves life. Social insurance is collectivistic, subjective, non-rational, inequitable, and violates the trader principle. So it undermines life. Now read on to see how I justify those conclusions by comparing and contrasting true insurance with the oxymoron “social insurance.”

Stephen A. Moses, "The Inherent Individualism of Insurance," Navigator, Vol. 5, Nos. 10-11, November-December 2002, pps. 10-12, 14-16, published in January 2003.

“The Inherent Individualism of Insurance”

By Stephen A. Moses

As human beings, we fear chaos and confusion and fight against them. We appreciate order. We celebrate reason, logic, and science because they help us bring order and manageability to our experience of reality. But no matter how rational and focused we are, we remain vulnerable to unexpected events that can throw our lives into turmoil. A slippery sidewalk, an unanticipated illness, a drunken driver, a freak storm, or (who knows?) an errant meteor. Besides, "the best laid plans of mice and men oft go astray." We need a tool to help us mitigate the consequences of uncertainty in day-to-day life, just as reason and logic help us to bring order and predictability to cognition. Fortunately, we have such a tool: it's called insurance. Insurance cannot repair the damaged or heal the sick, but it can alleviate the economic consequences of unpredictable negative events like accidents, natural calamities, and illness or death.

What is insurance and why do we need it?

"Insurance" is a financial tool with which we can replace the small risk of a catastrophic financial loss with the certainty of an affordable payment. Insurance companies help people achieve this objective by spreading and pricing risk. For example, let's say there is one chance in a million that I will be hit by a truck, resulting in a $1 million loss. That event—unlikely as it might be—would devastate me financially as an individual. I would gladly pay $2 to make the monetary part of this risk disappear. So would millions of other people. Therefore, an insurance company can profitably sell such protection, called an insurance "policy," to me and to 999,999 others for a reasonable fee, called a "premium."

The insurer promises to "indemnify" me and all other policyholders (or "insureds") if and when the insured event occurs by paying us a specified "claim" amount that restores us to our financial position before the loss occurred. If the company sells one million such policies for $2 each and incurs the anticipated single "loss" of $1 million, it makes a hefty 100 percent profit and performs a valuable public service in the process. The insureds can relax and enjoy life in the knowledge that if the worst happens, at least they are protected financially. That is called "spreading risk." But what if five of the insurance company's beneficiaries are hit by trucks instead of just one? Then the company would have collected only $2 million in premiums, but would owe $5 million in claims, a $3 million loss. To know what to charge for insurance protection, companies must "assess the risk." They must measure, record, and analyze extensive "actuarial" data on the incidence and frequency of the insurable event. In other words, they must answer the question: What is the probability that the insurable event will occur to individuals among the insured group and what will be the cost if it does? That is called "pricing the risk."

Of course, they cannot say with certainty whether you or I may be the victim, but they can say with a high degree of confidence what level of risk we face as a group of individuals. Thus, insurance makes it possible for us to "transfer risk" from ourselves as individuals to a third party, the insurance company, in a voluntary commercial relationship that benefits both parties. The insureds gain peace of mind. The insurer gains profitability.

So far so good. But what if I want to buy insurance because I know I am very likely to need it? This is called "adverse selection," and insurance companies must discourage it. Or else, what would happen if I bring more risk into the risk pool than you do? Would it be fair to charge me the same premium as you have to pay? In fact, would you even purchase an insurance product that guaranteed to give a higher return on average to other, higher-risk insureds than to yourself? Probably not.

For example, say that I am a heavy smoker and I am therefore more vulnerable than a non-smoker to emphysema and lung cancer. If I'm already sick, selling me health insurance would be like providing fire insurance to someone whose house is already in flames—blatant adverse selection. But even if I'm not yet ill, if I were to pay the same premium for health insurance as a non-smoker, I would be getting more protection for my money, dollar for dollar. That's because, as a smoker, I would be much more likely than the non-smoker to file an insurance claim for medical treatments related to my unhealthful behavior. Put another way, the non-smoker would be subsidizing my health insurance premium by paying a higher premium himself than the level of risk he brings to the risk pool warrants.

Thus, insurance companies must not only assess but also "classify" risks. They do this through "underwriting." That is, they ask questions, examine evidence, or do tests to determine the level of risk that each individual or class of individuals brings into the "risk pool," so they will know how much premium to charge each insured or group of insureds. Thus, your insurance company may examine your driving history or review your medical records before underwriting you for auto or life insurance, for example. If insurance companies failed to classify risks in this way, the whole system would fall apart very quickly.

In the example of the smoker and the non-smoker, the non-smoker—unless he's an inveterate altruist—would get smart sooner or later, drop any health insurance that punished him financially but rewarded smokers, and look for a policy that treats everyone fairly. This would have a devastating effect on the "reserve fund" that insurers must maintain and invest. Insurers need reserves to pay claims when they occur, to cover administrative costs, and, of course, to return an acceptable profit to their investors or shareholders. When non-smokers, i.e., "good risks," drop their policies and stop paying premiums while smokers, i.e., "bad risks," keep their underpriced policies, something has to give. Either the insurer must raise premiums for the remaining smokers covered by the policy to ensure sufficient reserves to pay the higher anticipated claims or the reserve fund will become "insolvent," i.e., insufficiently capitalized to pay expected claims. Either way, nobody wins.

Another beneficial effect when insurers classify and price risk accurately is to encourage positive behaviors and discourage negative behaviors. The price of insurance should alert us to the long-term cost of our decisions. When insurance is very expensive, it sends the message that our conduct or condition may be excessively risky. For example, people who have poor driving records usually pay higher auto insurance premiums, sooner or later. Their careless or drunken driving may have little or no cost for a long time. Once a traffic ticket is issued, however, it becomes part of the public record. An auto insurance company can review the public record and raise the violator's insurance rates to reflect the added risk he brings to the risk pool. On the margin, this added cost associated with carelessness or illegality tends to discourage irresponsible behavior and reward responsible behavior. Conversely, over time, if one's driving record improves, one's insurance premiums will decline once again to reflect better performance, thus rewarding improved behavior. Insurance achieves this positive social effect justly and without coercion by objectively pricing the risky behavior of individuals.

Even when our behavior is not dangerous to others or otherwise irresponsible, however, accurately priced insurance premiums still give us valuable personal information and promote fairness and equity. For example, why should a sedate philosophy professor pay the same life insurance premium as a skydiver or motorcycle daredevil? There is nothing wrong with the adventurous life, but insurance helps make sure that those who choose it take their fair share of the fiscal, as well as the physical, risk. Properly conceived, therefore, private insurance is in many ways a marvelous early warning system for us both as individuals and as a society.

Notice, finally, that insurance is different from saving, though the two are intimately related as ways of preparing for future needs. When we save, we are putting money aside for future use, normally in an account or investment that earns a return; we retain the money rather than paying it to someone else, and we get back only what we put in (plus interest or dividends). We can use savings to deal with various risks, but saving per se does not spread risks among people and thus does not require the kind of risk classification that insurance does.

Insurance and savings can of course be bundled together as products. An example is whole life as opposed to term life insurance. When you buy a whole life policy, you are not buying pure insurance; you are investing a portion of your premium with an insurance company. Most people can invest their money much more profitably through independent investment vehicles. In the same way, most managed-care health plans cover both unpredictable catastrophic illness or injury and routine, predictable medical expenses like annual checkups. In effect, managed care is a combination of a lay-away plan for routine care and insurance for catastrophic care. Bundling those functions together is generally not a good idea—though in this case government policies have pushed most people in that direction.

Why and how is insurance corrupted?

Well, if insurance is that wonderful, why do so many people have such a bad opinion of it? What's the "rap" against private insurance? Maybe the following comments will sound familiar:

"Private insurance is heartless. It blames the victim. It punishes people for conditions that are no fault of their own." For example:

Health insurance callously excludes anyone with a serious pre-existing medical condition.
Home owners insurance may be prohibitively expensive for otherwise fine citizens who just happen to live in crime-infested neighborhoods.
AIDS patients can't get life insurance, and Alzheimer's patients can't get long-term care insurance, even though these are the people who need the protection most.

Are these legitimate criticisms? No, of course not. Insurance is a business, not a charity or a welfare program. Private charity or government welfare programs may be legitimate ways to help the uninsurable, but that's a different issue. To achieve the benefits I described earlier, insurance must remain a business enterprise, motivated by self-interest, regulated by competition, and priced by objective evaluation of risks and returns. When politicians, bureaucrats, or "advocates" of one kind or another try to achieve welfare goals through private insurance—when they try to "improve" on private insurance with mandates, controls, or regulations—all sorts of unforeseen and unintended consequences follow.

Here is how it starts. In the interest of protecting consumers, someone insists that insurance should be required to cover a benefit that was previously not covered or covered only as an optional benefit for an added premium. Or, in the interest of assisting the uninsurable, someone demands that everyone should be able to buy insurance and that premiums should not exceed "reasonable" levels. Or, in the interest of helping people who are vulnerable to certain illnesses, someone wants to prohibit the collection and review of medical or genetic information by insurance companies.

Demands for politically induced insurance "reforms" like these start small and quietly. They build over time with growing support from the often small minority of individuals who stand to benefit most from the changes. Gradually, interest groups mobilize to represent the benefit seekers and to promote their claims. A relatively small number of people and organizations have a relatively intense interest in promoting laws that benefit them.

Opposition remains quiescent for two main reasons. "There but for the grace of God go I," think some. "Maybe this new law will actually help me someday." Others think, "I should not begrudge the less fortunate their getting something from private insurance companies. After all, those companies have deep pockets and, even if they pass the cost on to me, how much more will helping the needy cost me anyway?" Most people do not understand the trade-offs between a free and a controlled insurance market. Others don't care. Thus, whether motivated by self-sacrifice or the hope of unearned gain, by ignorance or apathy, most people go along to get along, supporting government intervention in the insurance industry.

All of these interventions attempt to reduce the cost of insurance protection for high-risk individuals by increasing the cost to low-risk individuals. Therefore, their purpose and effect is not to reduce risk but to spread wealth. Like other egalitarian measures, they unjustly grant unearned benefits to some while imposing undeserved penalties on others. And, accordingly, the results are destructive. There is an old saying that "you get more of what you subsidize and less of what you tax." By subsidizing high-risk behaviors and conditions while taxing low-risk behaviors and conditions, these measures have exactly the opposite effect of the benign results we attributed earlier to private insurance. They reward irresponsible behavior and punish responsible behavior, creating a downward spiral of perverse incentives.

Regulation, Welfarization, and Social Insurance

Government efforts to improve on private insurance fall into two major categories. First is the regulation of private insurance through "prior approval," restrictions on risk classification, and mandated coverage (that is, the company must offer certain types of insurance in the state if it offers any). In the second category are the "social insurance" programs that government itself provides.

The first tactics used by state regulators were prior approval of insurance rates, policy forms, or both. Historically, insurance regulation has been a state-level function with relatively little federal involvement. Insurance companies that wish to market a policy nationally must file for approval in all 50 states. Each state has different requirements, some stricter than others; the most rigid states require the use of state-mandated rates or forms. Frequently, the regulation of insurance becomes the politicization of insurance and then the welfarization of insurance. According to testimony given before Congress by Robert E. Litan, co-director of the American Enterprise Institute-Brookings Joint Center on Regulatory Studies:

Regulated rates are often distorted by political pressures in order to subsidize certain classes of drivers. The AEI-Brookings study found evidence that not only does regulation often suppress average rates, but distorts rates between different classes of drivers—keeping rates for high-risk drivers artificially low, while raising rates for lower-risk drivers. This cross-subsidization is accomplished directly through limits on rates in certain classifications…. The Massachusetts case study, for example, found that some high-risk drivers receive subsidies as high as 60 percent, requiring some lower-risk drivers to pay 11 percent more in premiums than they would pay in a competitive environment ("State Regulation of Auto Insurance," Testimony before the Subcommittee on Oversight and Investigations of the House Committee on Financial Services, August 2001).

The obvious solution to bring the market back into equilibrium is to eliminate the rate caps. That is hard to do, however, because advocates for the "disadvantaged" who live in high-risk urban areas insist that the caps favor consumers and that dropping the caps would benefit only the insurance industry by allowing it to charge higher premiums. All too often, the media accept and promulgate this argument. Thus, for reasons discussed above—vested interests for some, forced altruism for others, and ignorance or apathy for most—such insurance "reforms" tend to remain in place and other similar measures constantly gain support and adoption. I call this process the "welfarization" of insurance, that is, the transformation of private insurance by government intervention from a market-based product into a tool to improve the condition of some people in relation to and at the expense of others.

Another form of welfarization is to impose restrictions on risk classification. As explained earlier, insurers must classify kinds and levels of risk carefully to avoid "adverse selection" and to price policies accurately in accordance with the levels of risk that various policyholders bring into the risk pool. In the absence of risk classification, smokers and non-smokers, good and bad drivers, daredevils and college professors would pay identical premiums.

An example of insurance "reform" that eliminates or severely restricts risk classification is "community rating," which requires that insurance premiums reflect the average risk in a geographic region. Under community rating, the level of insurance premium for everyone is determined by adding up the cost of paying benefits for everyone—rich and poor, sick and well, responsible and irresponsible—and dividing by the total number of individuals in the covered population. To many people, this sounds like a fair and effective way to address the endemic problems of unaffordability and the uninsured, especially in the case of health insurance.

But look at what happens. Low-risk insureds soon realize that they have to pay more for insurance than was the case before community rating, and they tend to drop such over-priced coverage. High-risk insureds, on the other hand, have every reason to keep their under-priced coverage. In fact, high-risk people who were previously uninsured tend to purchase this highly attractive new insurance. Gradually, the risk pool becomes heavily weighted with people who are highly likely to file claims. Insurance companies begin to lose money and must either raise premiums to remain solvent or stop offering the coverage altogether. If the insurer raises premiums, the coverage becomes less attractive to low-risk insureds, further exacerbating the problem. Sooner or later, the only viable option for insurance carriers is to drop the policy and leave the state. The money they can collect from premiums will not cover the anticipated expenditures for claims, much less return administrative costs and an acceptable profit.

Viewed logically and analytically, this outcome seems obvious. But that has not stopped real-world regulators from imposing community rating and unleashing the inevitable consequences. For example, New York legislators mandated community rating for health insurance in 1993. The National Center for Policy Analysis summarized the effects:

Consider the impact on policies sold by Mutual of Omaha, one of the largest sellers of individual health insurance policies in the state:

Before community rating was instituted in New York, a 25-year-old male on Long Island paid $81.64 a month for health insurance, and a 55-year-old paid $179.60.

After community rating, both paid $135.95, a 67 percent increase for the 25-year-old and a 25 percent decrease for the 55-year-old.

Because young, healthy people began canceling policies, by 1994 both paid $183.79—more than the 55-year-old was paying before community rating was implemented—and by 1997 that community-rated premium had risen to $217.59 a month.

As a result of the departure of thousands, the uninsured population in New York City grew from 20.9 percent in 1990 to 24.8 percent in 1995, according to one report, while the national rate grew from 16.6 percent to 17.4 percent over that same period. ("Explaining the Growing Number of Uninsured," National Center for Policy Analysis)

In Kentucky, the same tactic prompted 45 of 47 insurance companies to withdraw from the state's individual health insurance market. Market failure caused by government intervention then became one more reason in the minds of politicians to impose even more government intervention—a chain reaction that leads deeper and deeper into political manipulation and further dysfunction.

In addition to manipulating private insurance, government has created its own insurance programs—with equally unsatisfactory results. "Social insurance" is the idea that we should all pay the same premium, usually in the form of a payroll deduction, and that we should all be entitled to the same benefits regardless of the level of risk we bring to the global risk pool. America's Social Security and Medicare programs are social insurance systems. Both of these programs are enormously popular. Many people consider them to be unqualifiedly successful. Similar and more extensive social insurance programs in Europe have even greater popular support despite the enormous tax burden they impose on wage-earning participants.

Nevertheless, these programs are highly destructive. For one thing, social insurance is a pay-as-you-go system, and thus a Ponzi scheme. The government does not invest the payroll taxes it collects from workers in order to support their future benefits. Rather, it pays out their taxes to current retirees; when those who are currently working and paying taxes retire, they will have to depend on taxes from the next generation of workers. This system seemed to work early on when a large number of people were paying into the system while only a small number of people were drawing benefits out. But, in the future, as Europe, the United States, and the rest of the world confront a new demographic of aging, analysts say a shrinking pool of workers will be unable to support full social insurance benefits for a retiring baby-boom generation of gigantic size and unreasonably large expectations. If warnings from the General Accounting Office, the Congressional Budget Office, and dozens of independent experts are accurate, Social Security and Medicare will leave both their participants and the government worse off in the long run.

Insurance performs the critical economic functions of spreading risk and of pricing risk. If we do not price risk fairly and objectively, we end up with a system that rewards high-risk (including irresponsible) behavior and punishes low-risk (including responsible) behavior. One of the main differences between social insurance and private insurance is that, although both spread risk, only private insurance prices risk in a meaningful way. Private insurers have a legal and fiduciary responsibility to their insureds. They must price insurance coverage at a level sufficient to accumulate reserves that will be adequate to pay carefully anticipated claims rates. Private policyholders possess legal contracts, enforceable in a court of law, that assure them recourse in case of dispute, malfeasance, or insolvency by the insurance company.

Social insurance, on the other hand, offers none of these protections. Social Security and Medicare, for example, are notorious for growing exponentially beyond their original cost projections. Socially insured people have no legal recourse or protection against increases in premiums (payroll taxes), decreases in benefits (program cutbacks), or the imposition of means tests (welfarization).

In America's mixed economy, social insurance is usually considered a safety net and not a first line of financial defense. When savings, investments, pensions, and private insurance prove inadequate, we look to social insurance to pick up the slack. Unfortunately, however, the very existence of compulsory social insurance debilitates the effectiveness of these private financing vehicles. People save or purchase insurance if they perceive they are vulnerable to a large financial loss. Social insurance distorts that perception. By creating an illusion of low risk, it reduces the demand for private insurance protection.

For example, when President Lyndon Johnson signed the act that created Medicare in 1965, he stated confidently that "no longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations." By building up false hopes like these, Medicare effectively scuttled any hope for a private health insurance market to cover seniors. Today, the elderly spend a larger proportion of their income for health care than they did before Medicare began; Medicare has little hope of continuing to provide full benefits without major premium increases as the baby-boom generation retires; and a private insurance system to take Medicare's place has no realistic chance to develop.

The same problem occurs in other categories of insurance. Most people buy private car, fire, and life insurance. If they did not have these kinds of coverage and the insurable event occurred, they would usually experience a major loss with little direct assistance from the government. On the other hand, very few people purchase hurricane, flood, or earthquake insurance. When a major natural disaster occurs, local and national politicians jump at the opportunity of promising financial assistance of all kinds to the victims. Nothing lets a politician appear compassionate and generous without fear of criticism like a major disaster. Why buy flood insurance if the government indemnifies you with grants and loans every time the Mississippi escapes its banks? In the same way, the marketability of private long-term care insurance is also undercut by the easy availability of nursing-home care financed by Medicaid. One can only wonder at the possible effect on private life insurance sales of the government's liberal indemnification of families victimized by the World Trade Center attacks.

Thus, government impedes the effectiveness of private insurance in two main ways: first, by trying to improve on private insurance with arbitrary controls; secondly, by allegedly mitigating the risks against which private insurance should protect us through mandatory social insurance, public welfare, and emergency grants and loans.

Insurance and Morality

We have seen that insurance performs a vital economic function. To the extent that government regulates or subsidizes insurance, it also becomes a political issue. But insurance has a moral dimension as well. Insuring against risk is one of the most important ways in which individuals take full responsibility for their lives, in accordance with the ethics of Objectivism. And the private marketplace for insurance illustrates how trade allows individuals to cooperate for mutual benefit.

* Insurance is individualistic. Individuals buy insurance by voluntary choice to protect their own self-interest (including the interests of their loved ones and dependents) in accordance with their own assessment of their individual needs and circumstances.

* Insurance is rational and objective. It helps us prepare for the unexpected based on facts and analysis, so we don't have to depend on wishful thinking or blind hope. Premiums and benefits are based on objective risks as determined by hard actuarial data.

* Insurance depends on the trader principle. You won't buy it and the insurance carrier will not sell it unless you each perceive that the transaction will leave you both better off than you were before. When this simple principle is allowed to operate in a free market, the result is a profusion of different policies—covering a wide range of risks, benefit levels, terms and conditions, and durations—that an individual can tailor to his unique situation, with prices controlled by competition.

* Insurance is fair. You know you get what you pay for because your premium is based on underwriting, which measures and prices the level of risk you bring to the risk pool. Nobody forces you to buy insurance, but if you don't have it, you are responsible for the punishing financial consequences if and when the insurable event occurs.

* Insurance serves life. It helps us to manage uncertainty and therefore preserves, sustains, and promotes life.

By contrast, social insurance violates those same ethical principles.

* Social insurance is collectivistic. It treats individuals as means to an end by sacrificing their interests for the sake of others.

* Social insurance is subjective. "Premiums" and benefits are based on political considerations and are established by the authorities.

* Social insurance is non-rational. You pay what it charges and get what it gives you without regard to any reasoned calculation of what you want, what you need, or what you can afford.

* Social insurance is inequitable. By treating everyone the same, it punishes some people (the most responsible and least risky) to reward others (the least responsible and most risky).

* Social insurance violates the trader principle. It is compulsory and monopolistic. It prevents people from choosing to opt out; it offers a single policy with few options, if any; and it is not subject to competition.

* Lastly, social insurance undermines life. It creates a false sense of security that anesthetizes people to risks that they must recognize and confront to live safely.

For all these reasons, it should be clear that "social insurance" is not a type of insurance but its antithesis. It is not a means of dealing with the chaos and confusion of life; it is a source of chaos and confusion. Because social insurance rests on the politics of demagogy, it renders future freedoms and obligations unknowable, and so vitiates our ability to plan. Because social insurance operates through taxes, it robs us of our money—the principal tool we need to give substance to our plans.

The question, then, is not whether social insurance should become private. That is like asking whether drunk drivers should become sober drivers. Of course they should. And social insurance thus needs to be fought through a well-grounded moral crusade, carried to the voting public through lectures, articles, and other means. But until politicians show an inclination to give up their demagogic joy rides, the uncertainties generated by social insurance will remain a personal threat, compounding the uncertainties that are inherent in life. Although we cannot entirely escape the cost of government intervention, we can gain a measure of independence by refusing to rely on government's offer to help. We can and should use genuine insurance—private insurance—to build a wall of private protection between ourselves and life's uncertainty that depends as little as possible on government promises and programs.

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Updated, Monday, February 1, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-003: LTC NEWS AND COMMENT

COVID-19 and Long-Term Care: LTCI Insider
Trust Fall II: Surfin' USA
An afternoon nap could improve your cognitive abilities, study says
New York AG: Nursing Home COVID Deaths Undercounted by 50%
Group Sees Long-Term Care Insurance Claims Rising
American Academy of Actuaries Examines COVID-19's Potential Impacts on Long-Term Care Insurance
Eating Nuts In Your Forties Could Cut Dementia Risk In Later Life, Study Finds
Promoting the sixth insurance program
Dementia, Alzheimer’s not an inevitable part of aging: Study
Some senior living operators add vaccine access to marketing toolkits to help rebuild occupancy
Hourly rates for assisted living CNAs increased by nearly 6% last year

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Updated, Monday, January 25, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-002: LTC NEWS AND COMMENT

Nursing home sector continues to lose jobs, while healthcare overall rebounds: report
Pandemic forcing nursing homes across the country to close
Washington state lawmakers look to the market to cover long-term care costs
Low Interest Rates Push LTCI Prices Up
The Social Security retirement age could change. What that could mean for benefits
Nearly half of Alzheimer’s cases are mild, supporting a focus on early intervention
Six Months Later, Most Wuhan COVID Survivors Still Have Health Issues
Poor Performance of Long-Term Care Product Persists
Joe Biden’s New Health Care Agenda (and CMS’s Big Role In It)
IRS Reversal: Expenses Paid With PPP Loan Funds Are Now Tax-Deductible
CDC study confirms: Coronavirus most often spread by asymptomatic carriers

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Updated, Friday, January 22, 2021, 10:40 AM (Pacific)

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LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

LTC Comment: The myth that access to Medicaid LTC benefits requires impoverishment is pervasive. A dose of reality concerning spousal impoverishment specifically follows the ***news.***

*** NEW 2021 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS. We’ve just updated MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY in The Zone, the Center’s members-only website. If you need your user name and password to access The Zone or if you’d like to join the Center to gain sustained access, contact Steve Moses at smoses@centerltc.com. The 2021 spousal impoverishment numbers are included in the following LTC Bullet. ***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and 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. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Steve at smoses@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. ***

*** QUINTESSENTIAL QUERY: After a program I gave for LTCI producers recently, an attendee asked:

I never have been able to understand why the state and federal government do not enforce existing rules about qualifying for Medicaid or create new ones that will limit their liability. It is a welfare program designed to help those who need it and not a program for the people who can afford to pay for their own care. We have known for years that the Baby Boomers are a ticking time bomb, yet the government ignores it. Can you explain why they are not interested in making Medicaid a program that can be accessed by the ones who really need it?

I replied:

In a nutshell, the problem is decades of drift toward collectivism and dependency on government as everyone’s provider/protector implemented through compulsory social insurance. We’re now paying the price for replacing personal responsibility with government promises. I expect the full bill to come due by 2031 when boomers start turning 85, Social Security and Medicare “trust funds” are depleted and the Fed’s and Treasury’s Faustian bargain with Modern Monetary Theory plays out. Then we’ll learn if there is anything left of the individualistic values and principles that made America great in the first place.

For the full explanation, I recommend my two latest studies, a monograph published in January 2020 titled Medicaid and Long-Term Care and How to Fix Long-Term Care Financing from 2017, published with the Foundation for Government Accountability. ***

LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

LTC Comment: Before the Medicare Catastrophic Coverage Act of 1988, which was signed into law by President Ronald Reagan July 1, 1988, access to Medicaid’s generous long-term care benefits did require spousal impoverishment under certain circumstances. While the “catastrophic” law was still under consideration in Congress, I described the problem and how the proposed legislation would address it in the U.S. Department of Health and Human Services Office of Inspector General’s June 1988 report titled “Medicaid Estate Recoveries: National Program Inspection”:

Under current law, spouses of institutionalized Medicaid recipients are sometimes forced into impoverishment by Medicaid eligibility rules. This usually occurs because the husband is institutionalized first. If, as is often the case, most of the family's income such as Social Security and/or a pension is in the husband's name, Medicaid rules provide that all but a small amount must be applied toward his cost of care. The wife who is left in the home, i.e., the community spouse, retains only a pittance. On the other hand, if the wife is institutionalized first, and the income is still in the husband's name, he keeps the money, because the community spouse has no legal obligation to contribute toward the cost of the institutionalized spouse's care.

The catastrophic bill addresses this problem by increasing the amount of income and resources that the community spouse may retain without affecting the Medicaid eligibility of the institutionalized spouse. Because more people would qualify for assistance and less family income would apply toward the cost of institutional care, the fiscal impact of this solution would be to increase Medicaid expenditures. We found that 3-year cost estimates on similar provisions in different bills varied from $410 million (Congressional Budget Office) to $1,275 million (HCFA actuaries) depending on implementation assumptions. All estimates ascend steeply into future years. (pps. iii-iv, emphasis added.)

Boy did we get that right! Medicaid’s long-term care expenditures have skyrocketed ever since, from $18.5 billion for nursing home and home health care in 1990 to $87.1 billion in 2019, nearly quintupling in the ensuing 29 years.

What MCCA ’88 Did

MCCA ’88 dealt with the spousal impoverishment problem in several ways. It guaranteed the community spouse a “Maximum Monthly Maintenance Needs Allowance” or MMMNA of up to $1,500 per month. The law granted a “Community Spouse Resource Allowance” or CSRA of $60,000.

What these provisions meant is that the wife or husband of an institutionalized Medicaid recipient could retain up to $1,500 per month of the Medicaid spouse’s income instead of that income having to be used to offset Medicaid’s cost of his or her care in the nursing home. Likewise, the community spouse could retain half of the couple’s joint assets not to exceed $60,000, thus exempting those funds from private LTC liability and increasing Medicaid’s expenditures.

MCCA ’88 provided for these spousal impoverishment protections to increase with inflation annually. As of 2021, the original numbers have more than doubled. The MMMNA is now $3,259.50 per month and the CSRA is $130,380. A little over $3,200 per month is not easy living, but it is also most assuredly not “spousal impoverishment.” The official poverty level for single individuals as of 2021 is $12,760 per year or $1,063 per month, a little less than one-third of the MMMNA. Medicaid’s LTC role is to provide a safety net for the poor, not to protect a middle-class life style for people who fail to plan, save, invest or insure for long-term care. So the term “spousal impoverishment” should be stricken from the LTC financing lexicon.

Updated Medicaid Spousal Impoverishment Numbers

In case you’re interested, we’ve updated and published the Medicaid spousal impoverishment numbers every year since 1991, when the MMMNA was $1,662 and the CSRA was $66,480. Those data are available to Center members in The Zone here. You’ll need your user name and password for access to The Zone. Get a reminder from smoses@centerltc.com if you’re already a Member or contact him to join and get access to this valuable resource. Our source is the Centers for Medicare and Medicaid Services (CMS) “2021 SSI and Spousal Impoverishment Standards” here.

A Better Way

Now back to that old OIG report from 1988. Did it oppose the MCCA ‘88’s provisions to eliminate spousal impoverishment? No! But it did offer an alternative approach designed to achieve the same result more cost-effectively:

Certain findings from the OIG’s Medicaid Estate Recoveries report have a direct bearing on the spousal impoverishment issue. In fact, we believe this problem can be resolved at considerably less public expense than is contemplated in the current legislation. We found, for example, that many "impoverished spouses" own their homes free and clear. Their problem is cash flow, not poverty per se. We found that two-thirds of the elderly poor are unable to qualify for any Medicaid services, although many individuals with large assets are eligible for the program's most valuable benefit (institutional care). We documented that recovery of Medicaid payments from the estates of property-holding recipients is very unusual. This is true because assets are (1) transferred, sheltered, expended or concealed by recipients and their families and/or (2) public officials have taken no action to recover. In light of these facts we recommended that propertied recipients be permitted to retain their income and assets while receiving Medicaid long-term care benefits, but only in exchange for a promise, secured by a legal encumbrance, to repay the cost of their care when they no longer need their property. This repayment would be made from their estates or the estates of their last surviving dependent relatives after the property is no longer needed for a livelihood. Such a plan would resolve the spousal impoverishment problem, eliminate the most catastrophic financial impact of long-term illness and add a major nontax revenue source for Medicaid. More importantly, the risk of losing their financial legacy would influence the elderly and their heirs to seek private long-term care insurance protection and thus further relieve fiscal pressure on public programs. (p. iv)

Congress later adopted some of our 1988 report’s recommendations in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). It made estate recoveries mandatory, for example, but it left Medicaid’s many income and asset exemptions unprotected by the “legal encumbrance” to secure that wealth for later recovery as we had recommended. Nor did the federal government strongly enforce the newly required estate recoveries. Worse, OBRA ’93 left the home equity exemption unlimited. That only changed with the Deficit Reduction Act of 2005 (DRA ’05), which capped home equity at $500,000 to $750,000 ($603,000 to $906,000, as of 2021) at state legislatures’ discretion.

The end result is that Medicaid LTC expenditures continue to grow rapidly, the public remains desensitized to LTC risks and costs, private financing of LTC through home equity conversion and private insurance is stymied, and LTC access and quality continue to be serious problems.

If all this seems just a little too “inside baseball” to you, then you have a good idea why the complicated subject of long-term care financing policy remains a mystery to most analysts and policy makers. If you really want to understand what it means, and what has to be done to resolve the problems once and for all, you could do worse than to spend an hour reading the OIG’s report from 33 years ago. Here it is again: “Medicaid Estate Recoveries: National Program Inspection.”

I’d also like to point readers to an earlier study I conducted and wrote that led directly to the Inspector General’s report. The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the Medicaid Program -- Health Care Financing Administration (1985). Read it and see if you don’t think we nailed the problem and the solution 36 years ago!

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Updated, Monday, January 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-001: LTC NEWS AND COMMENT

Trump Officials Approve Tennessee's Controversial Request To Revamp Medicaid Funding
New Analysis Finds Significant Financial Benefits Locked in Long-Term Care Insurance Policies Sold Fifteen to Twenty-Five Years Ago
One-week US Covid-19 case and death totals are higher than ever
Genworth May Cut Remaining LTCI Sales and Marketing Operations
December Proved To Be Deadliest Month For Residents In Long-Term Care
2021 Economic Outlook Fraught With Uncertainty
Older Adults and COVID-19: Implications for Aging Policy and Practice
MA Beneficiaries See Nearly 20% Fewer Home Health Days Than Traditional Medicare Peers
Genworth to Shift to China Oceanwide Deal Backup Plan
‘Because of You Guys, I’m Stuck in My Room’
The COVID-19 Pandemic Has Upended The LTCi Market
What's Most Hurting the Financial Security of Older Americans?
We need long-term solutions for older Americans’ long-term care
Elder Law Guys: The twelve COVID elder law days of Christmas
Trust Fall
Crushing Despair, Glimmers of Hope: The Top Skilled Nursing Stories of 2020
Senate Passes $2.3T Package of Relief, Funding and Tax Breaks

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Updated, Friday, January 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care and the Pandemic

LTC Comment: What has the Covid-19 pandemic wrought for long-term care? Answers after the ***news.***

*** ILTCI CONFERENCE GOES VIRTUAL: “After surveying our attendees and careful consideration, we will change the 2021 ILTCI Conference from an in-person meeting to a virtual format.” So announced Barry Fisher, Conference Chairperson and Vince Bodnar, Conference Co-Chairperson recently. They’ve polled past participants for their preferences regarding how to structure and present the leading LTC insurance industry conference in a virtual format. Whatever they come up with will be far better than nothing (last year) but could never match past in-person versions. Nevertheless, we’ll take whatever we can get! Read the Center for Long-Term Care Reform’s History of LTC Insurance Conferences (2019) for a detailed look back at all the Intercompany Long-Term Care Insurance Conferences from the first one, 2001 in Miami to the latest, 2019 in Chicago. ***

*** “Trust Fall: The Untold Story of Washington's LTC Trust Act” is an excellent essay by LTC Associates’ Senior Vice President, Stephen D. Forman. In it Forman describes, explains and debunks the CLASS-like public policy misfire currently being operationalized in the Evergreen State. This evergreen new deal for long-term care “vigorously remakes Washington’s insurance market—without voice from the insurance industry—to the financial injury of residents.” We hope to bring you a “guest bullet” by Mr. Forman summarizing the key points in his essay. In the meantime, don’t wait. Read this provocative essay now while there’s still time to talk sense to Washington State policy makers. As with CLASS, it may be possible to derail this taxpayer shakedown before its major damage is done. Washington voters have already expressed their opposition to the plan twice by rejecting it at the ballot box in 2019 and refusing to fund it with risky investments in 2020. ***

*** IF YOU FIND VALUE IN TODAY’S LTC BULLET, please consider joining the Center for Long-Term Care Reform so you can enjoy the many benefits of membership and stay tuned daily with our LTC Clippings, weekly with LTC E-Alerts and bi-weekly with LTC Bullets. Get in front of your prospects and clients by knowing what’s happening in long-term care news and analysis—and what to say about it—before they blindside you with stories you haven’t heard. ***

LTC BULLET: LONG-TERM CARE AND THE PANDEMIC

LTC Comment: Invited by two leading national distributors of long-term care insurance to help kick off their 2021 sales year, Center for Long-Term Care Reform president Steve Moses delivered the following presentation on Wednesday and Friday of this week. He thanks GoldenCareUSA and Long-Term Care Resources (LTCR) for this opportunity to reflect on the impact Covid-19 is having on long-term care services and financing, including the future prospects for LTC insurance sales. Read on for Steve’s insights in the following presentation notes.

Long-Term Care and the Pandemic
Presented to GoldenCareUSA and Long-Term Care Resources agents and staff
Wednesday and Friday, respectively, January 6 and 8, 2021
By Stephen A. Moses, President
Center for Long-Term Care Reform

Covid Impact: Earthquake, life as we’ve known it changed radically, huge opportunities, giant risks, long-term care and LTC financing are more interesting, challenging, and fun than ever before in my 38 years following the field. The opportunity to do well by doing good selling LTCI has never been greater. You producers, distributors and the carriers you represent to consumers are critical to our country’s surviving this crisis and prospering in the future.

3 Themes: I’ll discuss three major themes or contexts of the Covid-19 pandemic:

Health and long-term care
The Economy
Politics

LTC Clippings since last month, December 2020, are the source for most of what follows. LTC Clippings is a publication we produce and distribute to subscribers.

We send an average of two clippings per day by email to subscribers. Each clipping gives the title, a link to the source, a representative quote and a couple sentences of my analysis to put the information in context.

The purpose of LTC Clippings is to inform agents of news, data, reports, articles, etc. that they need to know before they’re blind-sided by prospects or clients who’ve read something the agents haven’t seen yet.

I’ll make today’s presentation and all the links to original stories it covers available in our next LTC Bullet to be published on Friday. The same day it will be posted on The Moses LTC Blog at www.centerltc.com. You can find it there.

My point: if you received the LTC Clippings you would know all of what I’ll say today already.

If you’re blown away and you want to subscribe, check out our “Membership Levels and Benefits” link and our “Join and Contribute Online” link. Both links will be live in the LTC Bullet on the blog.

Health and LTC Context

Acknowledge sources: Experts like Claude Thau, Sally Leimbach and Margie Barrie.

Watch for two forthcoming white papers by Margie Barrie: “The Impact of Covid-19 on Long-Term Care” and “The Medicare White Paper”

Long-term care is in the news—that’s a big change for better and worse
On the bad side, people are dying in LTC facilities:

Even though just 1 percent of the U.S. population resides in a long-term-care facility, LTC deaths represent nearly four in 10 COVID-19 deaths. (Source – Christine Benz, Morningstar, December 8, 2020.)

I covered the causes, consequences and solutions in my June 1, 2020 op-ed in the WSJ: Nursing Homes, Coronavirus and Medicaid

On January 1, 2021, the New York Times published heart wrenching stories about people who have been trapped in nursing homes watching friends and fellow residents sicken and die around them

1/1/2021, “‘Because of You Guys, I’m Stuck in My Room’,” by Kristin Lin, New York Times

LTC providers have been devastated:

“The dual factors of sharply declining occupancy [down from 85% in Feb to 74% in Sept.] coupled with the high cost of personal protective equipment, COVID-19 testing, and hazard pay for workers is placing the skilled nursing sector under unsustainable financial strain.”
12/4/2020, “ NIC Points to Unprecedented Challenges for Skilled Nursing as Occupancy Remains Low ,” by Patrick Connole, Provider

“Two-thirds of nursing homes say they won’t make it another year given the current operating pace due to increased COVID costs. … Staffing has been the top cost in response to COVID with nine out of 10 nursing homes hiring additional staff and/or paying staff overtime.”
12/16/2020 , “ State of Nursing Home Industry: Facing Financial Crisis and Staffing Challenges” by Beth Martino, AHCA/NCAL

“The COVID-19 pandemic [will contribute] to substantial eldercare cost hikes, especially for assisted living and in-home care. … Over the course of a single year, assisted living community rates increased by 6.15% to an annual national median cost of $51,600.” (And pre-Covid)
12/3/2020, “ COVID-19 linked to ‘substantial cost increases’ in assisted living: survey ,” by Kimberly Bonvissuto, McKnight’s Senior Living

“The United States spent a collective $172.2 billion on care at nursing homes and continuing care retirement communities (CCRCs) in 2019…; that’s a gain of 3.3% [from] 2018. But that increase pales in comparison to the 7.7% jump in spending on home health services during that time, from $105.4 billion in 2018 to $113.5 billion in 2019.” Again, all pre-Covid so expect much more coming.
12/16/2020, “ Spending Growth on Nursing Home Care Falls Far Behind Home Health, Hospitals ,” by Alex Spanko, Skilled Nursing News

Shortage of health care workers: “Notwithstanding sign-on bonuses, competitive salaries and benefits packages, recruiting [caregivers] is a challenge, [one home health provider] said. ‘Before the pandemic, I used to get 10 applicants a week for our open positions. Now I’m getting one or two.’”
12/14/2020, “Help wanted: More home healthcare workers due to COVID-19 ,” by Joe Jancsurak, McKnight’s Senior Living

People aren’t exactly lining up for minimum-wage jobs in Covid’s bullseye with higher unemployment benefits readily available. Go figure.

Covid had a crazy impact on health care costs beyond long-term care:

Hospital costs down 36% due to elimination of noncritical services such as elective surgeries

Dental care down 65%. When was the last time you saw a dentist?

Flu cases lower than normal so far this year; measures taken to avoid COVID-19 are likely the reason
12/11/2020, “Flu cases lower than normal so far this year, COVID-19 likely the reason ,” by Brian P. Dunleavy, UPI
12/16/2020, “COVID-19 Shocks The US Health Sector: A Review Of Early Economic Impacts,” by George Miller, Corwin Rhyan, Ani Turner, and Katherine Hempstead, Health Affairs

How is the public reacting to all this? People want to stay home and they want to keep their parents at home:

“The number of COVID-19 cases and deaths for home- and community-based services programs pales in comparison with those for nursing homes … After [researchers] compared positive COVID-19 cases and deaths in three Medicaid [home care] programs to results for nursing home and assisted living residents for March through July, they found that only 3% of older [home care] adults were infected, and only 1% died from COVID-19. Meanwhile, nursing home and assisted living residents showed a 37% positivity rate and an 11% death rate.”
12/10/2020, “Study shows far fewer COVID-19 cases at home than in nursing homes, assisted living,” by Joe Jancsurak , McKnight’s Senior Living

“61% of Americans now report that they would rather die than live in a nursing home. … Americans prefer to stay in their home for long-term care (71%), and most would like to have the option of relying on a family member if they needed long-term care (68%) but would not expect them to [provide such care] if they were unable to pay them (69%).’”
12/9/2020, “More than 6 in 10 Americans now say they would rather die than live in nursing home: survey ,” by Amy Novotney, McKnight’s Senior Living

“The vast majority of Americans (87%) believe it’s more important than ever for people to stay at home for long-term care, as well as have a plan for long-term care (85%) and have long-term care insurance (81%) as COVID-19 has raised concerns about the safety of nursing homes.”
12/16/2020, “Americans Worry More Now About Their Long-Term Care Plans and Prioritize Staying At Home ,” by Nationwide Retirement Institute, Advisor Magazine

There will be more cost and more cost increase awareness

Nursing home, assisted living and home care costs will rise further, especially for home care

LTCI prices are rising, especially for hybrids

According to Margie Barrie: “Virtually all carriers have increased their premium rates and most have limited the application age to 70.”

The impact on traditional LTCI products has been more limited, but stricter underwriting requirements keep coming: Applications may be postponed if someone has been outside the country within the past month; or in contact with somebody who tested positive; or if quarantined, even with no diagnosis or symptoms.

Simultaneously Medicare is pushing more costs onto consumers. To ensure that Medicare remains financially viable, a number of major changes have been introduced over the last several years:

So called “Value Based Care” means fewer services being provided to beneficiaries.

People are being sent home sooner from the hospital and nursing home.

Medicare has changed the payment process. Hospitals will now control the distribution of payments for all parts of the long term care continuum.

For details, read Margie’s forthcoming “The Medicare White Paper.”

Sensitivity to risk is very high: the unpredictability of life and health is on everyone’s mind, observes Sally Leimbach

“A majority of today’s workers and retirees range from feeling cautious to pessimistic about the economic outlook for 2021, with nearly 75% concerned about how the global pandemic may impact their retirement savings ….”
1/5/2021, “2021 Economic Outlook Fraught With Uncertainty,” by Principal Financial Group, Advisor Today

People are more aware of their own and their parents’ vulnerability

Will we have more pandemics, different ones, worse ones? Will Covid-19 have long-term negative effects on brain health?

“Although almost every household with an income of $100,000 or more reports saving for retirement, only half of them (49%) say they believe they will ever be able to retire.”

12/8/2020, “ Half of Americans with incomes over $100,000 think they’ll never be able to retire ,” by Amy Novotney, McKnight’s Senior Living

“According to an analysis of applicants for traditional long-term care insurance in 2019, decline rates ranged from 19.4 percent for individuals applying between ages 40 to 49 to 53.6 percent after age 75. ‘Couples comprise the majority of traditional long-term care insurance applicants,’ explains Claude Thau, National Brokerage Director at USA-BGA … ‘The likelihood that at least one spouse will be declined ranges from 35.0 percent for spouses between ages 40 and 49 to 78.5 percent for couples age 75 or older.’” That’s pre-Covid too so likely getting worse.
12/10/2020, “Long-Term Care Insurance Decline Rates Reported,” by Jesse Slome, American Association for Long-Term Care Insurance

Insurability is declining as urgency for consumers is increasing: Insurance companies are wary to take on applicants who have had the virus or been exposed to it. Intelligent people who realize this are more inclined to purchase LTCI while they still can prove that Covid-19 has not yet compromised their health history.

New and different products are available and catching hold

Hybrids provide a wide range of benefits

Traditional products still offer the biggest leverage against LTC risk

But carriers face increasing costs and consumers confront higher premiums and/or reduced benefits due to the government’s artificially low interest rates.
12/18/2020, “ COVID-19 Drove Up Group Term Life Death Claims: SOA Survey,” by Allison Bell, ThinkAdvisor

In the meantime, Suze Orman says people “must have LTCI”

Virtual marketing and sales via face-to-face electronic connections make LTCI easier and less expensive to sell, eliminating drive time for example

People will be back at work after the vaccine, so their future financial outlook will become more stable.

Bottom line: there’s never been a better time to sell (or to buy) LTCI

Now let’s examine the situation from the standpoint of the …

Economic Context
Characterized by irresponsible fiscal and monetary policy

Consider the national debt. According to the “Debt clock” for 2008 (Obama’s first term) $9.6 trillion; 2016 (Trump elected) $19.2 trillion; 2021, (now) $27.8 trillion; 2025 (end of Biden term) $48.9 trillion projected. See a trend?
These current and projected numbers are going up so fast, they may increase by hundreds of billions of dollars between the time I posted them yesterday and when you click the links
So-called “stimulus” to confront the economic downturn caused by the pandemic has resulted in these huge deficits and rampant money printing by the Federal Reserve to monetize the skyrocketing debt.

All this new money had to go somewhere. It didn’t inflate consumer prices so much because of low demand suppressed by high unemployment.

So instead, we’ve seen rapid inflation in equities (stocks and bonds) and real estate.

Ironically, in this economic crisis stock markets are at all-time highs.

Home prices rose 8.4% in the year that ended in October, up from a 7% annual rate the prior month to a 14-year high: U.S. Home-Price Growth Accelerated in October

People working from home with shorter or no commutes are looking for larger homes in suburbia offering more space, better home offices and a place to provide home care if needed for themselves or their parents.

The result is that we have more upper-middle-class people, exactly the demographic cohort most likely to consider and buy LTCI

They have more wealth to protect and more money for premiums.

People going back to work after the vaccines kick in means a bigger worksite market.

On the negative side, inequality is exacerbated: elderly poor get poorer even as the rich get richer.

There will be more elderly debt: “Adults age 70 and older have increased their debt since the Great Recession — largely due to mortgage payments — and this hampers their ability to overcome ‘negative events’ as they age …” Substitute “a long-term care crisis” for “negative events” and you can see what this means.

The elderly poor get poorer even as the rich get richer due to irresponsible monetary policies that inflate stock and real estate values. What this means in terms of long-term care is that more people will depend on Medicaid when Medicaid is least able to support them. The good news is that the well-to-do will have more wealth to protect and more money to pay premiums for LTC insurance. So the current mess in LTC services and financing will worsen. Medicaid will continue to deteriorate and private LTCI will become more desirable and salable than ever before.

12/29/2020, “What's Hurting the Financial Security of Older Americans?,” by Ginger Szala, ThinkAdvisor

Bottom line: there’s never been a better time to sell LTCI

Now let’s look at the political context. As I prepared this presentation before the Georgia Senate run-off elections, it was impossible to predict what the future might hold politically. Would the Democrats win control of the Senate taking the trifecta of President, House and Senate? That would free them to pursue their left wing’s most radical progressive wish list. Or would the Republicans hold control of the Senate and remain a bulwark of opposition to the goals of Bernie Sanders, Elizabeth Warren, and Alexandria Ocasio-Cortez.

It was a cliff-hanger, but now we know …

The Democrats have taken both Georgia Senate races and so will control both houses of Congress as well as the Presidency. Vice President Kamala Harris will cast the deciding vote in case of a 50/50 tie on key issues. We’ll likely see more progressive measures pass, more spending approved, more money printing to cover it, and higher national debt than otherwise. Only time will tell what the long-term results of such policies will be.

Political Context
Biden Administration

As we’ve seen from the economic context, there isn’t much concern for financial responsibility any more in either party. We have to ask …

Will Modern Monetary Theory, the idea that the government can print and spend unlimited amounts of money without consequences, will MMT prevail allowing progressives to pursue their whole bucket list of goals including “free” long-term care provided by Medicare? That would finally wipe out private LTC insurance.

Actually, the Biden Administration’s LTC wish list is much less ambitious.

According to the “Biden-Harris Plan to Make Nursing Homes and Long-term Care Facilities Safe” the Biden Administration’s whole focus is on regulation and enforcement. For example, they want to …

Promote safety and care
Ensure appropriate oversight of facilities to protect patient safety and wellbeing
Provide oversight for how taxpayer and resident funds are spent and provide avenues for bringing complaints
Increase access to home and community-based services for the number of older Americans and people with disabilities able to receive home and community-based services (HCBS).
All nice sounding ideas, but what they mean is more inspections, more fines and financial penalties, not more money and support. In a phrase “The beatings will continue until morale improves.”

The Biden Plan For Older Americans addresses long-term care by promising to …

Protect Medicare as we know it.

“The Congressional Budget Office (CBO) now projects that the trust fund will be exhausted in 2024 , a little more than three years from now, which is the nearest the fund has come to exhaustion in the 55 years of its existence.

12/15/2020, “The Coming Crisis For The Medicare Trust Fund ,” by David Muhlestein, Health Affairs

The Biden Plan will protect Medicaid funding and make sure the program gives those on Medicaid who need long-term care the flexibility to choose home- and community-based care.

Heavier than ever reliance on Medicaid, a bankrupt welfare program, is a mistake. Making Medicaid LTC more attractive by offering more home care does not save money and further reduces consumers’ perception of LTC risk.

Consider Medicaid’s well-known deficiencies …

Access and quality problems, notoriously low reimbursement rates, discrimination, institutional bias, loss of independence and control, but add to these some new defects …

Managed long-term care through Medicaid is increasing, adding another layer of compensation and control between the patient and provider.
“Over half of states contract with managed care organizations to provide [LTC] services. [GAO] examined 6 states, each of which reported finding significant problems with the quality of care provided through these contracts. In some cases, the problems led to patient injury or neglect.” 12/16/2020, “Medicaid Long-Term Services and Supports: Access and Quality Problems in Managed Care Demand Improved Oversight

On top of that: “The true Medicaid improper-payment rate now exceeds 25 percent, meaning that more than one in every four dollars spent in the Medicaid program — or more than $100 billion in federal spending each year — is in violation of program rules. It turns out that millions of Medicaid enrollees are ineligible for the program — in most cases because they earn too much income, but in others because they are not lawful residents.”
12/9/2020, “ Improper Medicaid Payments Have Soared since Obamacare ,” by Brian Blase and Hayden Dublois, National Review

The Biden Plan promises a $5,000 tax credit for informal caregivers, but that’s

Not above the line LTCI tax deductibility

Not cafeteria plan eligibility for LTCI

Biden will increase the generosity of tax benefits for older Americans who choose to buy long-term care insurance and pay for it using their savings for retirement.

Let people use retirement funds for LTCI premiums. (Good)

Biden made an unpromising first political appointment: California’s Attorney General, Xavier Becerra, is going to run DHHS

He was a big supporter of the CLASS Act and all of ObamaCare

12/8/2020, “Biden nominates defender of long-term care causes and a virus expert to health team,” by Alicia Lasek, McKnight’s LTC News

Biden wants to lower the Medicare age to 60

What happened to “Medicare for All?” “Medicare at 60” is “Medicare For…Gotten.”
Hospitals fear adding millions of people to Medicare will cost them billions of dollars in revenue.”
11/11/2020, “Biden Plan to Lower Medicare Eligibility Age to 60 Faces Hostility From Hospitals,” by Phil Galewitz, Kaiser Health News
Medicare at 60 is just one more way for government to say “don’t worry” just before bottom falls out of the trust fund.

I’m going to close by explaining biggest risk to private long-term care insurance:
LTC intelligentsia has formed a consensus around compulsory social insurance

Their analysis goes like this:

Long-term care is in crisis;
Especially now in the pandemic;
The middle class is unprotected;
LTCI failed;
Big government programs aren’t coming;
Medicaid requires impoverishment;
So our best hope is what Washington State is doing:
Compulsory social insurance funded by mandatory taxes on workers and with a back-end focus;
But “Keystone Kops” and “Trust Fall.”

I’ll explain why this analysis and recommendation is wrong and doomed to fail disastrously in “Why LTCI Fails,” my article in the February Broker World. Watch for it.

Bottom line: Given what’s happening in health and long-term care, in the U.S. economy, and politically, there’s never been a better time to sell LTCI.

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Updated, Monday, December 21, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-049: LTC NEWS AND COMMENT

COVID-19 Shocks The US Health Sector: A Review Of Early Economic Impacts
COVID-19 Drove Up Group Term Life Death Claims: SOA Survey
Spending Growth on Nursing Home Care Falls Far Behind Home Health, Hospitals
Medicaid Long-Term Services and Supports: Access and Quality Problems in Managed Care Demand Improved Oversight
Americans Worry More Now About Their Long-Term Care Plans and Prioritize Staying At Home
State of Nursing Home Industry: Facing Financial Crisis and Staffing Challenges
HC2 Gets Offer for Long-Term Care Insurance Business
The Coming Crisis For The Medicare Trust Fund
Making Care Work Pay: How A Living Wage For LTSS Workers Benefits All
Medicare Advantage Beneficiaries Log Almost 30% Fewer SNF Days Than Traditional Medicare
Help wanted: More home healthcare workers due to COVID-19
Flu cases lower than normal so far this year, COVID-19 likely the reason

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Updated, Friday, December 18, 2020, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 DATA UPDATE

LTC Comment: Heads up! We're about to explain why long-term care insurance sales have disappointed, why people don't "use their homes to stay at home" and why LTC providers who depend on public financing are at risk.

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors as National Brokerage Director for USA-BGA and to other entities as a consultant, in the individual, worksite and affinity group markets. For example, his revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on long-term care, based on their personal characteristics and estimates how much of their cost in each range would be covered by various traditional or linked insurance designs. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. You can reach him at 913-707-8863 or claude.thau@gmail.com. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 DATA UPDATE

LTC Comment: Once a year around this time the Centers for Medicare and Medicaid Services (CMS) report health care expenditure data for the latest year of record. Recently, CMS posted 2019 statistics on its website at NHE Tables (ZIP). Click on that link to download the tables, unzip them, then click on the data tables of interest, Tables 14 and 15 for our purposes.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending in 2019: Steady Growth for the Fourth Consecutive Year." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free. A good summary of the new long-term care data is here.

Following is our annual analysis of the latest nursing home and home health care data.*

Heads Up: This may be the most important LTC Bullet we publish all year. It is the eighteenth in a row we’ve done annually to analyze the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing. If you'd like to see the earlier versions, go here and search for “So What if the Government Pays for Most LTC.” You’ll find our yearly analyses of the data going all the way back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC, 2019 Data Update"
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care? Read on.

Nursing Homes

America spent $172.7 billion on nursing facilities and continuing care retirement communities in 2019. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 49 years (from 26.8% in 1970 to 51.5% in 2019, up 24.7 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.4% in 2019, down 22.8% of the total). Source: Table 15: Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2019.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 46.3% in the past almost five decades while the share paid by Medicaid and Medicare has nearly doubled, up 92.2%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts at least $595,000 and in some states up to $893,000 of home equity (as of 1/1/20). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home (and CCRC) care (29.4% of the dollars in 2019), it covers two-thirds (66.5%) of all nursing home patient days.

So What? Medicaid pays in full or subsidizes two-thirds of all nursing home patient days. Even if Medicaid pays nothing with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. “With states setting the Medicaid rates paid to nursing centers, there is a wide variation in the percentage of costs covered by the rates. In 2015, the coverage ranged from a low of 73.5 percent to a high of 100 percent. A similar range exists with the 2017 projected shortfall across the states.” (Latest available data) Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.4% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2019. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the providers. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? According to the Genworth Cost of Care Survey for 2020, ALFs cost an average of $51,600 per year, up 6.15% from 2019. Although assisted living facilities remain mostly private pay, “48% of ALFs are Medicaid certified” and only “a small minority of state Medicaid programs do not cover services in assisted living.” Over time assisted living facilities have followed nursing homes down the primrose path of accepting more and more revenue from Medicaid.

Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $595,000 or $893,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

So What? For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid's income contribution requirement is usually much less expensive than paying the full cost of assisted living.

No wonder ALFs are struggling to attract enough private payers to be profitable. No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care. This problem has been radically exacerbated in recent years because more and more state Medicaid programs are paying for assisted living as well as nursing home care, which makes Medicaid eligibility more desirable than ever.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $113.5 billion on home health care in 2019. Medicare (38.7%) and Medicaid (32.0%) paid 70.7% of this total and private health insurance (not LTC insurance) paid 14.6%. Only 11.0% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2019.

So What? Only one out of every nine dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care.

Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in denial about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.

The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care. For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

Medicaid and Long-Term Care (2020) at http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf

“How to Fix Long-Term Care Financing” (2017), at http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf

“CASSANDRA’S QUANDARY: The Future of Long-Term Care” (2016), at http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm;

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;

"The LTC Graduate Seminar Transcript" here (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel: Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems. A cap was placed for the first time on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

* Note that CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding for example Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities. This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40% in 2008 to under one-third (32.8%) in 2009. CMS also created a new category called "Other Third Party Payers" (7.1%) which includes "worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health." For definitions of all NHEA categories, see http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, December 14, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-048: LTC NEWS AND COMMENT

GE Puts SEC Long-Term Care Insurance Probe Behind It
Long-Term Care Insurance Decline Rates Reported
Improper Medicaid Payments Have Soared since Obamacare
Study shows far fewer COVID-19 cases at home than in nursing homes, assisted living
‘We can no longer ignore this’: Affordable long-term care is urgent priority, panelists say
Measuring The New Costs Of Care: How the pandemic is exacerbating the already rising price-points of long-term-care
More than 6 in 10 Americans now say they would rather die than live in nursing home: survey
Long-Term Care Planning Firm Sees Life-LTC Hybrid Prices Rising
Half of Americans with incomes over $100,000 think they’ll never be able to retire
Biden nominates defender of long-term care causes and a virus expert to health team
BREAKING: HHS awards nursing homes $523M in COVID-19 performance payments
MedPAC: Nursing Homes on Solid Financial Ground Despite COVID, Medicare Boost ‘Poor Approach’
NIC Points to Unprecedented Challenges for Skilled Nursing as Occupancy Remains Low

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Updated, Monday, December 7, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-047: LTC NEWS AND COMMENT

COVID-19 linked to ‘substantial cost increases’ in assisted living: survey
Cost of Care: Trends & Insights
Town’s only nursing facility converting to ALF, as national study finds ‘dangerously low’ occupancy threatening many SNFs
SNF occupancy ticks up but is ‘dangerously’ low and threatens long-term survival
CDC advisers: Long-term care workers, residents should receive first COVID-19 vaccinations
Life’s Third Age: A Public Television Pledge Special
Genworth, China Oceanwide Push Deal Deadline Back
Financial ‘symptoms’ of dementia seen up to 6 years before diagnosis
Medicaid is hemorrhaging $100B on Americans ineligible for the program
Nearly 6 million Americans expect to lose homes in the next 2 months: survey
COVID-19 Has Claimed the Lives of 100,000 Long-Term Care Residents and Staff
Nursing home residents could start receiving COVID vaccines in about 2 weeks
CMS’s 2020 Final Medicaid Managed Care Rule: A Summary of Major Changes
COVID-19 Pandemic Shifts Caregiving Responsibilities

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Updated, Friday, December 4, 2020, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?

LTC Comment: Will more Medicaid funding and regulation help (short-term) and harm (long-term) America’s fragile long-term care system? Answers after the ***news.***

*** “LTC CLIPPINGS” is a special daily service that premium Center members ($250 per year or $21 per month) and above can opt to receive. Steve Moses scans the internet for news, articles, reports and data you need to know before your prospects start asking about them. He provides the date, title, author, a link, a representative quote and a brief, often humorous or satirical, but always thoughtful comment. Know what you need to know before you’re caught off guard. Subscribe to LTC Clippings. ***

*** RECENT LTC CLIPPINGS:

11/28/2020, “Medicaid is hemorrhaging $100B on Americans ineligible for the program,” by Brian Blase, New York Post

Quote: “The federal government’s improper Medicaid payments now exceed $100 billion a year. This means that more than one-in-four dollars flowing out of Medicaid — our nation’s third-largest government program — do not meet program rules. This staggering failure doesn’t just reduce health-care access for the truly eligible, it also harms taxpayers who fund it.”

LTC Comment: This is an excellent piece by my co-author of “Nursing Homes, Coronavirus and Medicaid,” published June 1, 2020, in the Wall Street Journal. The problem of improper payments is even worse since the Families First Coronavirus Response Act (FFCRA), signed March 18, 2020, imposed maintenance of effort rules prohibiting states from terminating eligibility even for the ineligible. See Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch When They End, Kaiser Family Foundation, September 22, 2020, for details. Kind of makes tracking improper payments moot if ineligibility itself isn’t “improper.” Ugh!

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11/25/2020, “COVID-19 Has Claimed the Lives of 100,000 Long-Term Care Residents and Staff,” by Priya Chidambaram, Rachel Garfield and Tricia Neuman, Kaiser Family Foundation

Quote: “This week marks a bleak milestone in the pandemic’s effect on residents and staff in long-term care facilities across the country. According to our latest analysis of state-reported data, COVID-19 has claimed the lives of more than 100,000 long-term care facility residents and staff as of the last week in November. This finding comes at a time when public health experts are predicting a surge in cases after holiday gatherings and increased time indoors due to winter weather, which will have ripple effects on hospitals and nursing homes, given the close relationship between community spread and cases in congregate care settings. As the nation braces for the fallout of the holiday, recent data on deaths in long-term care facilities highlight the ongoing disproportionate impact on this high-risk population.”

LTC Comment: Maybe the time has come for another “Long-Term Care Consciousness Tour.” Here’s what the first one was like: http://www.centerltc.com/LTC%20Tour/LTC_Tour_Index.htm. This is my favorite reminiscence of that 2008-9 Tour. The need for long-term care planning is even greater now than it was then.

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11/20/2020, “Nearly 6 million Americans expect to lose homes in the next 2 months: survey,” by Amy Novotney, McKnight’s Senior Living

Quote: “Approximately 5.8 million Americans — including many seniors — say they are somewhat or very likely to face eviction or foreclosure in the next two months, according to a Bloomberg analysis of survey data from the U.S. Census Bureau. The survey also found that about 28% of renters, or roughly 14.9 million Americans, have little to no confidence that they’ll be able to pay their December rent.”

LTC Comment: So what’s next? Let them suffer? Or another paroxysm of government borrowing and money printing to aid home buyers and renters? And, when that public debt bill comes due, what then? ***

LTC BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?

LTC Comment: As the Covid plague surged through long-term care facilities this spring, one thing was certain. The long-term care intelligentsia would recommend more government, specifically Medicaid, spending. Our favorite federal fetishist, Judith Feder of the McCourt School of Public Policy at Georgetown University, was no exception. In May 2020, she proposed …

Long-term care financing policy should be modified to either adjust federal matching funds by the age of each state’s population, or fully federalize the funding of LTC expenses of Medicaid beneficiaries who are also eligible for Medicare. (p. 350)

That didn’t happen, won’t, and shouldn’t. Federal funding and regulation of long-term care are what caused us to rely excessively on underfinanced institutional care settings for elderly people leaving them susceptible to the pandemic’s ravages. More of what caused the problem in the first place will hurt, not help.

In fact, what the federal government actually did exacerbated the problem of excessive federal dependency. In Feder’s words …

The Families First Coronavirus Response Act included a modest 6.2 percentage point bump in the Medicaid match tied to the public health emergency, conditional on states’ retention of current eligibility levels or “maintenance of effort” (Broaddus, 2020). (p. 352)

So, the Feds gave states a little more money but only if they maintained their current Medicaid efforts. What does this “maintenance of effort” mean? According to the Kaiser Family Foundation …

To receive the enhanced federal matching funds, states must meet certain MOE requirements that include ensuring continuous coverage for current enrollees. Specifically, states must provide continuous eligibility through the end of the month in which the PHE [public health emergency] ends for those enrolled as of March 18, 2020, or at any time thereafter during the PHE period, unless the person ceases to be a state resident or requests a voluntary coverage termination. Medicaid eligibility during this time must continue “regardless of any changes in circumstances or redeterminations at scheduled renewals that would otherwise result in termination.”¹ (Emphasis in the original)

In case that bureaucratese confounds you, what it means is that state Medicaid programs, if they want to receive the extra federal money, can’t tighten their loose LTC financial eligibility rules. They can’t even terminate Medicaid recipients who are proven to be totally ineligible. They must throw the federal financial floodgates wide open.

So how is this generous policy working out so far? Are people in nursing homes finally free from worry and sickness? Hardly. According to the Kaiser Family Foundation …

This week marks a bleak milestone in the pandemic’s effect on residents and staff in long-term care facilities across the country. According to our latest analysis of state-reported data, COVID-19 has claimed the lives of more than 100,000 long-term care facility residents and staff as of the last week in November.

The holidays and long winter months ahead presage much worse. Current public policy for long-term care services and financing is deadly. We should be asking: “How did we get into this mess?” not “How much more federal money and regulations can we pour on?”

For an answer to the first question, see Medicaid and Long-Term. That 2020 monograph explains step by step how Medicaid caused the very problems that people ask it to solve today. The study’s recommendations explain how to fix the problems Medicaid created.

For specific state-by-state analysis and recommendation, see our many state-specific reports at http://www.centerltc.com/reports.htm. As you see the increasingly frequent pleas of Governors and long-term care trade groups for federal relief, visit that site, find our report for whichever state, and forward its link to them. Policy makers can reduce Medicaid costs and simultaneously expand and improve care, but they must first understand why costs are so high now and care quality so diminished.

Answers to long-term care’s persistent problems—poor access and quality, institutional bias, inadequate funding, etc.—are readily available. The knee-jerk reaction to increase Medicaid actually cripples any hope to fix these problems in the future. Yet, it’s easy to understand why politicians and provider associations gravitate toward the easy money in the current crisis. Any port in a storm.

Unfortunately, higher spending for Medicaid in the short term is far more likely than thoughtful restraint given the incoming Biden administration’s ideological predispositions. With Yellen at Treasury, pile-it-on Powell at the Fed, the Modern Monetary Theory predominating, and fulsome support for unlimited federal spending guaranteed from academia and the media, greater damage to long-term care services and financing is probably inescapable.

It’s as though a family had their maxed-out credit card limit miraculously doubled all of a sudden. The good times would roll until they hit the higher limit too. What’s the upper limit for federal spending? I don’t know, but I’m afraid we’re going to find out.

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Updated, Monday, November 23, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-046: LTC NEWS AND COMMENT

How to Save Money on Assisted Living Costs
Higher Medicare Premiums For 2021 Announced, Topping Out At $504.90
CalPERS approves 90% price increase for long term care insurance plans
Vast majority of providers struggling to fill work shifts or hire new employees: industry survey shows
Where Are the Gray Panthers
COVID-19’s Deadly Lesson: Time To Revamp Long-Term Care
Vulnerable Senior Populations in the Pandemic
89 percent of families with loved ones in long-term care facilities consider home care: survey
Economists warn of lag time between vaccine and recovery
Parkinson: ‘Worst Fears Have Come True’ as Nursing Home COVID Cases Hit New Record, Operators ‘Powerless’ to Stop Trend Alone
81% of providers encouraging residents to stay put for Thanksgiving: survey
Big, big changes’ coming to nursing home regulation thanks to pandemic’s destruction, Grabowski says

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Updated, Friday, November 20, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: Today’s “Guest Bullet” by Bruce Stahl of RGA Reinsurance Company develops the idea of “Caregiver Insurance” after the ***news.***

* LTC IMPACT WEEK EXCELLS: Last week, on November 10, 11, 12, NAIFA’s Limited & Extended Care Planning Center Zoomed nine hours of briefings aimed at LTCI producers. Kudos to LECP Executive Director Carroll Golden for sponsoring this creative educational program and to Steve Cain of LTCI Partners for his omnipresent participation. Highlights included Matt Hamann of Transamerica speaking on “Why LTC Now?”; Denise Gott of ACSIA Partners on “LTC Worksite Enrollments in a Virtual World”; Marc Glickman of BuddyIns presentation on the “Technology Panel”; Shelley Giordano of Mutual of Omaha Mortgage on “No, Long Term Care Insurance Does Not Mean No Plan at All for Long Term Care Needs”; and Barry Fisher and Ron Hagelman, Jr., Principals of Ice Floe Consulting, LLC reporting on results of their survey with Oliver Wyman’s Vince Bodnar, “Who is Selling What? To Whom, How & Why?” This innovative program provided a great foundation on which to build. Room for improvement includes increasing the turnout which I never noticed reaching 200 attendees and considering the larger market in which LTC insurance is sold, including the public policy context, LTC providers, and the elephant in the room, Medicaid’s crowd out of LTC risk and planning. *

*** SUBSCRIBE to LTC Bullets, LTC E-Alerts, and LTC Clippings. Join the Center for Long-Term Care Reform here. Due to the pandemic, long-term care is in the news more than ever before. Calls for more funding to alleviate the strain on seniors’ housing and caregivers are everywhere in the media. But no one has any idea where to find the money to improve long-term care. Except the Center for Long-Term Care Reform. We advocate targeting scarce public resources to those most in need and using the savings to incentivize private financing alternatives such as home equity conversion and long-term care insurance. Check out our analysis and recommendations in Medicaid and Long-Term Care (2020) and How to Fix Long-Term Care Financing (2017). Then join the Center and encourage your employers to join as corporate members. Our “Membership Levels and Benefits” schedule explains all the options. Contact Steve Moses at 425-891-3640 or smoses@centerltc.com with questions or comments. ***

LTC BULLET: CAREGIVER INSURANCE

LTC Comment: Bruce Stahl and Winona Berdine, both vice presidents at RGA Reinsurance Company, published “A Middle-Market Senior Care Solution” in the August 2020 issue of the Society of Actuaries’ Long-Term Care News. Their idea is a product to mitigate LTCI’s “affordability gap.”

They propose a “living benefits solution” that “reaches the middle market, provides security to generations of family members, satisfies real customer financial needs and provides them with peace of mind, minimizes risk in the morbidity tail, reduces asset and interest rate risk, and reduces concerns about pandemic risk in facilities.” (LTC News)

A tall order, but intriguing, so we asked Bruce Stahl to tell us more. His reply follows. But first read “A Middle-Market Senior Care Solution” to get details on the proposed product.

“Caregiver Insurance”
by
Bruce Stahl

The attributes of the product define it better than the name. Our focus groups recommended calling it something with a personal flavor, like “Caregiver Insurance.” Originally, we at RGA were calling it a decreasing term product and a career protection product. Yet the attribute of having a pre-chosen terminus date and the fact that the benefits would be determined by another person’s expenses make the product valuable.

Here’s how it works: The parents are underwritten, but the working adult child is the policyholder. The policy covers the costs of a parent’s care while the child is working. This allows the child to save for their own retirement while still addressing the cost of care needs of parents. The term of coverage is designed to end when the policyholder retires and can care for parents themselves without interrupting their own career.

Typically, care is assumed to be in the parent’s home, given the expectation that the retiree will care for their parents at a time suitable to their plans and budget. The applicant would hypothetically purchase a policy to cover care expenses for the span of time they intend to remain in the workforce. The applicant could also choose a term that allows payment of benefits for additional time after retirement, such as for a prolonged vacation, before taking up caregiver duties. But the policy does not have a waiver of premium benefit, so the policyholder would want to plan on continuing premium payments even when not earning income.

Distributors of senior benefits products might find Caregiver Insurance an attractive product to promote to the insurers they represent. It could fit well as a supplemental worksite benefit if underwriting with electronic medical records could be sufficient. It could also work well for Medicare Supplemental or Advantage distributors, who can contact these adult children policyholders ten to twenty years before they themselves are ready for Med Supp.

Also, if distributors are concerned that their insurance partners might not be willing to take on investment risk at this time, the product has only a small pool of assets available to invest because the maximum benefit decreases as the policy ages, the risk is far lower.

Finally, if insurers want to avoid standalone LTCI’s reputation for premium rate increases, this product, even though it is not LTCI, does cover many long-term care needs without the concerns of increased longevity and lack of very old age mortality and morbidity experience.

Bruce Stahl, ASA MAAA is senior vice president, head of U.S. Individual Health for RGA Reinsurance Company. Reach him at bstahl@rgare.com.

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Updated, Monday, November 16, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-045: LTC NEWS AND COMMENT

Federal Medicaid Outlays During the COVID-19 Pandemic
Medicare Part B premiums are rising in 2021 by more than double the Social Security COLA bump
Baby boomer retirements have taken a big jump in the past year
Pandemic is forcing providers to be ‘catalysts of change’ for long-term care sector, association head explains
Biden Plan to Lower Medicare Eligibility Age to 60 Faces Hostility From Hospitals
28% Growth in Medicare Advantage Plans Led By Senior Housing and Care Providers
As Admissions Stall and Aid Dries Up, ‘Losses are Coming’ for Nursing Homes in ‘Bleak’ First Half of 2021
COVID-19 Tied to New Psych Diagnoses; Pessimism & Bipolar Disorder
70 percent of long-term care claims begin with home care
Nursing home COVID-19 cases rise four-fold in surge states
Medicare Part B Premium to Jump $3.90 a Month for 2021
Welcome to 2020 Impact Week: Long Term Care

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Updated, Monday, November 9, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-044: LTC NEWS AND COMMENT

How To Plan For Nursing Home And Long-Term Care Costs
Long-Term Care Insurance: A Comprehensive Guide to Costs, Coverage, and Whether It's Right for You
What COVID-19 Exposed In Long-Term Care
Are You a Good Candidate for Long Term Care Insurance?
Skilled nursing occupancy hits new low of 73.8%: NIC
Verma: COVID-19 Shows LTC ‘Relies Too Heavily on Nursing Homes’
Retirees, Make the Most of Your Home Equity
A Middle-Market Senior Care Solution
Does Hard Work Help Preserve the Brain?
Community spread triggers growing number of COVID-19 cases in nursing homes: AHCA
Integrity Expands in the Southwestern United States with the Addition of Western Asset Protection

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Updated, Friday, November 6, 2020, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE INSURANCE IN CHINA

*** KUDOS to Bruce Stahl and Winona Berdine of Reinsurance Group of America (a corporate member of the Center for Long-Term Care Reform) for this creative idea highlighted in our recent LTC Clipping:

8/2020, “A Middle-Market Senior Care Solution,” by Bruce Stahl and Winona Berdine, Long-Term Care News
Quote: “Would you like to have an insurance product in your company’s lineup that provides all of the following? • Reaches the middle market, • provides security to generations of family members, • satisfies real customer financial needs and provides them with peace of mind, • minimizes risk in the morbidity tail, • reduces asset and interest rate risk, and • reduces concerns about pandemic risk in facilities.”
LTC Comment: Well, yeah! Click through to read this intriguing proposal.

We hope soon to publish a “Guest Bullet” by Bruce Stahl further developing and explaining this “caregiver insurance proposal. Your comments on the idea are welcome. ***

*** PREDICTING IS HARD, they say, especially about the future. Toward the end of the 2017 Intercompany Long-Term Care Conference in Jacksonville, Florida, which took place shortly after Donald Trump was inaugurated, attendees were invited to answer this question via electronic polling:

Q7. Do you think the next four years will bring an improved economic climate? Or will we see a continuation of low interest rates?
Answers:
1. Improved economic climate/higher interest rates = 76%
2. Stay pretty much the same = 13%
3. Get worse = 11%

In “LTC Bullet: LTC Policy Poll Results,” on April 14, 2017, I offered my own answer to that question and suggested to readers: “Tickle your calendar to review this prediction on election day, November 3, 2020. I’ll do the same.” Here’s my answer then followed by my comment now.

Then: “LTC Comment: I think these voters are vastly over-optimistic. I’d agree with the stay-the-same or get-worse minority. The current ‘economic recovery’ is long in the tooth; the ‘Trump trade’ is already petering out as health and tax reform languish; we may already be in a recession; the Federal Reserve’s tightening cycle has nearly run its course; after perhaps one more interest rate increase, the next step is down and most likely we’ll see more quantitative easing (QE4). That means more and more debt. The U.S. dollar is unsupported by real value and very vulnerable; foreign countries that give us real economic goods in exchange for paper (bonds that the U.S. cannot ever afford to redeem) could wise up any time, stop buying our debt, and start selling it; carrying costs on our $20 trillion debt [$27.2 trillion as of today (11/6/20)] will force a reversal of the Fed’s tightening soon, as the economy worsens. The credit bubble inflating for a decade will pop. Sadly for the Trump Administration, the wages for the economic sins of its predecessors will come due in its first term. (Tickle your calendar to review this prediction on election day, November 3, 2020. I’ll do the same.)”

Now: LTC Comment: QE4 actually turned into QE Infinity. Modern Monetary Theory, as explained and critiqued in “LTC Bullet: Modern Monetary Theory and Long-Term Care,” is sweeping the land. The Federal Reserve has forced real interest rates (nominal rates minus inflation) into negative territory. It appears Trump has been swept out of office and the incoming Biden administration will likely double down on the same inflationary policies. Thus “the wages for the economic sins” of Trump and his predecessors will come due in the term of his successors. We are in for a rough economic ride, exacerbated by the pandemic, but inevitable regardless, because of the irresponsible fiscal and monetary policy of both political parties. ***

*** NOWADAYS, we need clear-eyed analysis of the prospects for long-term care services and financing more than ever. Don’t ingest the “soma” of social insurance purveyed by most of the LTC intelligentsia. If you haven’t already, join the Center for Long-Term Care Reform here. Encourage your company to support the Center as a corporate member. Share our “Membership Levels and Benefits Schedule” with any and all. Join the fight for rational long-term care financing policy. Thanks for your consideration. ***

LTC BULLET: LONG-TERM CARE INSURANCE INBB CHINA

LTC Comment: With Genworth long hanging on the cusp of sale to a Chinese company, what could be a more timely topic than LTCI in China?

On October 20, 2020 the Society of Actuaries LTCI Section sponsored a webinar titled “Long-Term Care Insurance in China.” Moderator Vincent L. Bodnar, ASA, MAAA, a Partner and Long-Term Care Practice Leader, at Oliver Wyman introduced the program and the panel of three experts, two of whom called in from Beijing at midnight local time. (Vince visited China some years ago, conducted a briefing on the U.S. experience with LTCI, found avid interest there and has followed China’s LTCI experience ever since.)

A recording of the “LTCI in China” webinar should be available to buy on the SOA website soon. Attendees who purchased the original webcast will be able to access the recording for free. But here’s a synopsis of the program for those of you who missed the original and may want to consider obtaining the recording:

Panelists:

Guangyao Liu, FSA
Executive Actuary
China Life Reinsurance Company

Xiaochen Sun
Product Actuary
China Life Reinsurance Co Ltd

Song-Song S. Liao
President
Song-Song & Associates

Guangyao Liu opened the session with an introduction to China’s “LTC Pilot Program.” He began by summarizing the uniquely challenging demographics his country faces. China has more “baby boomers,” 359 million, born between 1962 and 1975, than the USA has people (328 million). A second wave of Chinese boomers, 374 million, born between 1981 and 1997, is not far behind. With 176 million elderly (over age 65) people, 12.6% of the population as of 2019, China is looking at 28% and 380 million by 2050. In the meantime, China’s birth rate has been decreasing since the 1990s, due in large part to the country’s one-child policy, exacerbating the elderly dependency ratio and resulting in 120 million “empty nest elderly.”

Anticipating the inevitable challenges of providing and paying for the care of this burgeoning elderly population, the Ministry of Human Resources and Social Security/National Healthcare Security Administration implemented a four-year pilot project in 2016 which is expected to be extended this year. The pilot covers 15 cities and 88.5 million people (out of a total of 1.4 billion). It covers 426,000 insureds at an equivalent cost of 1,300 U.S. dollars per person per year. Care provided is 70% home care and 30% facility care.

Problems of the pilot include limited coverage as only seven pilot cities cover rural residents; an imbalance of funding structure, which is highly dependent on China’s government healthcare fund; inadequate professional care services, which cannot meet demand; lack of uniform standards for care service, ADL assessment, etc.; and large variation of program administration across pilot cities ‐ hard to copy to other cities.

But substantial benefits accrue to commercial LTC insurance including a start to educate residents about the concept of long‐term care and raise potential demand; improve care facility development and care service quality; and participating commercial life and health insurers gain experience data and operating expertise.

Xiaochen Sun next discussed commercial LTCI in China, the first example of which, with a “sum assured” benefit, emerged in 2005. In 2010 a product appeared with a benefit structure like “universal life” and 2017 saw a reimbursement or sum-assured benefit directly to care providers. As of 2020, the Chinese commercial LTCI market has 20 players and 40 products.

The big takeaways from this section of the program, as summarized by Vince Bodnar are:

China has both standalone and hybrid products, like the US
There are two big players in the market today: Taikang Life and Pingan Life
Taikang offers a high-end product that gives the policyholder access to its LTC facilities. It looks a little like a CCRC approach.
Pingan sells a “trauma-led” product, which is cheap. They sell 10,000 of these policies a month.

Song-Song S. Liao concluded the survey of LTCI in China with an excellent summary of the challenges and opportunities the country faces. For example, there is no clear distinction in China between nursing homes and other levels of care. There is inconsistency in defining and monitoring activities of daily living and benefit triggers. Cultural differences often complicate the business. Admission to a long-term care facility, for example, could be considered a disgrace because of the traditional Chinese belief in the responsibility of the younger generation for the older generation. The potentially unrealistic goal is to have 90% age at home with only 3% depending on institutional care.

Further difficulties include insufficient infrastructure and a commercial insurance industry that is very small compared to China’s dominant social insurance structure. Chinese actuaries are exploring all the approaches tried in U.S. It is not a lack of product ideas limiting product development; it’s that the Chinese infrastructure does not support U.S. LTC products. It may be China requires a product more like what we call “critical illness” insurance. Or a product that only provides cash; not care services. Shanghai pushed out a product like the US model, but can’t sell it. The current infrastructure is the biggest obstacle to design a product for China, but “we all know the need is there.”

Song Song summarized the “Contextual Differences” thus:

• LTC business could mean handling government pilots, not commercial LTC

• Commercial LTC is supplemental to social insurance

• Differentiation between medical/acute care vs residential care vs nursing

homes/SNF settings is not distinct in China

• Regulation and standards may exist but not in full compliance

• Much narrower coverage, more restrictive benefit triggers, and more carve outs in China

• ADL 2/6 vs 3/6 or even 4/6

• E.g. restrict to 12 types of diseases, not including cancer, diabetes.

• Age limits and long elimination period

LTC Comment: Congratulations to the Society of Actuaries and Vince Bodnar for conducting this review of nascent LTC insurance in China. We’ll be hearing much more about this topic over time.

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Updated, Monday, November 2, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-043: LTC NEWS AND COMMENT

Medicare Advantage 2021 Spotlight: First Look,” by Medicare Advantage 2021 Spotlight: First Look
U.S. cities seen ill-prepared for boom in elderly population
LONG TERM CARE: Caught in the Middle: How Young Parents Can Plan for Long-term Care
BREAKING: First Alzheimer’s commercial blood test to detect amyloid beta hits the market
Older Americans 2020: Key Indicators of Well-Being
2021 Tax Deductibility Limits
Leisure Activity and Dementia Risk: When Does It Matter?
Report shows 51% growth for home-based services
How do you get the new Medicare Advantage benefits? It’s not easy
Social Security will be exhausted several years earlier than expected: report
Retirement: Average Boomer's savings would only last seven years, study finds

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Updated, Monday, October 26, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-042: LTC NEWS AND COMMENT

Community noise may affect dementia risk
New poll shows most older adults worried about potential healthcare and long-term care costs
Binge drinking may cause Alzheimer's disease—and it might strike younger and in a severe form
Nearly half of COVID-positives were asymptomatic, nursing home study finds
The Collapse of Long-Term Care Insurance
Long-Term Care Awareness Month Approaches Like an Avenging Angel
As most states see nursing home cases increase, providers fear third wave of COVID-19
Most Americans want health insurance companies and Medicare to pay for long-term care: poll
Report shows huge jumps in Medicare Advantage enrollment among minorities, dually eligible
30 percent of COVID deaths in long-term care have occurred in assisted living: study

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Updated, Friday, October 23, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: Finally, a solution for the long-term care financing crisis. Or not? Explanation after the ***news.***

LTC BULLET: MODERN MONETARY THEORY AND LONG-TERM CARE

LTC Comment: Policy wonks have anguished over how to finance long-term care for decades. Most have concluded (wrongly I think, see Medicaid and Long-Term Care) that the only answer is some form of compulsory, government-imposed LTC social insurance program. But, given the insolvency of all existing social insurance programs (Social Security, Medicare, Medicaid, etc.), voters have not been willing to approve even more of these unfundable liabilities. Result: stalemate, frustration, anger, despair, and, finally, hanging their meager hopes on another hapless experiment in government-designed and –imposed LTC insurance that is already foundering in Washington State. (See “LTC Bullet: The Keystone Kops of LTC Insurance.”)

What’s needed to save the policy pundits’ preferred social insurance model is an economic miracle. What if it were possible to find the unlimited government financing that social insurance would need to survive indefinitely? That’s what “Modern Monetary Theory” (MMT) promises to deliver.

For easy, entertaining access to the principles and arguments behind MMT read Stephanie Kelton’s best-selling book The Deficit Myth. Better yet, don’t invest so much of your precious professional time on that source. You can get more than enough to understand Modern Monetary Theory from a summary of the book here.

But let’s cut right to the chase today. Here’s the essence of MMT and the bottom line on what it means. (If what follows seems too bizarre to be credible, refer to the book summary just referenced. You’ll see I’ve neither mis-stated nor exaggerated MMT’s ideas and claims.)

According to MMT, currency issuers like the USA, can print as much money as they want. They do not have to work within conventional financial limits, with revenue matching outlays over time, as mere currency users, such as families, businesses, or countries borrowing in a currency not their own, must.

The power to spend with no set limits is especially true for the U.S. because the dollar is the world’s reserve currency.

TABS or STAB: Conventional economic theory assumes governments must Tax and Borrow to be able to Spend (TABS), but MMT says what really happens is that governments create money by Spending and then they Tax and Borrow (STAB) to control any resulting excessive inflation.

Currency issuers, according to MMT, don’t need to collect taxes, in order to be able to spend. Taxes are necessary but not to generate revenue. Rather the purpose of taxes is to compel citizens to work and provide goods and services the economy needs in order to earn the money to be able to pay the required taxes.

Deficits don’t matter per se. The Federal Reserve could print enough money to pay off the national debt and eliminate the interest cost of servicing the debt. No kidding. MMT actually claims this.

Therefore, to achieve any and all social goals, such as controlling climate change, free college, universal health care, or generous long-term care financing, etc., all it takes is for a currency issuer’s government to have the will to spend/create enough money.

The only limit on printing and spending money in one’s own currency is inflation. When too many dollars chase too few goods, prices increase, thus devaluing the currency and leaving people unable to afford goods and services they need.

So, if inflation starts to become a problem, MMT says the government should raise taxes to reduce the amount of money in circulation and thus stanch inflation before it gets out of control.

Crazy? Of course. But seductive? Very. If you trust government to solve problems, Modern Monetary Theory is your key to unlock not just the Treasury, but the entire productive capacity of the national economy.

But here’s the rub. The net effect of Modern Monetary Theory is redistribution by the Marxist principle “from each according to his ability to each according to his need.”

Government spending (money creation) pursues “progressive” goals, i.e. Need, such as financing free health care, free college, the Green New Deal, free LTC, etc. But when all that extra money printing/spending spikes inflation, who gets taxed to tamp it down? People with the money, i.e. Ability, are the only ones who can be taxed.

MMT is “Miracle Gro” for the idea that taxing productive people is the best way to provide for the needs of unproductive people. Unfortunately, this tried and true principle always applies: you get less of what you tax (ability) and more of what you subsidize (need).

In other words, need is unlimited. It always grows to consume whatever ability, always scarce, is able to produce. Subsidize the former by taxing the latter for 85 years and what you get is …

The whole mess we’re in today including the long-term care financing crisis.

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Updated, Monday, October 19, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-041: LTC NEWS AND COMMENT

Was COVID-19 Really the Killer?
Medicare Advantage Plans May Have More Search Buzz
Covid-19 Has Made Caregiving Harder, But Isn’t Making Americans More Likely To Plan For Their Old Age
Long-Term Care Insurance Benefits Cut Panel Drafts Principles
Having Dementia Doesn’t Mean You Can’t Vote
HCBS could be solution to ‘catastrophic costs’ of long-term care: report
Apathy Predicts Dementia in Cognitively Normal Older People
Extreme confusion most common Covid-19 symptom in frail older adults, new research discovers
Long-term care usage increased under ACA-funded Medicaid expansion
US sees 20% more deaths than expected this year, most due to Covid-19, research finds
HHS officially extends COVID-19 public health emergency again ahead of upcoming expiration date
The Times recommends: Vote to support trust fund for long-term care

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Updated, Monday, October 12, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-040: LTC NEWS AND COMMENT

What Does Retirement Look Like in a Pandemic?
SEC Adds to General Electric's Long-Term Care Insurance Headaches
9 Surprising Secrets About Long-Term Care and Medicaid
Measuring The Financial Impact of Cognitive Decline
Skilled nursing, assisted living facilities top OSHA’s COVID-19 violators list
The Nation's Fiscal Health: A Long-Term Plan Is Needed for Fiscal Sustainability
The Alzheimer's Stamp Now Available to Purchase
Walmart Jumps Into the Medicare Plan Distribution Market
The Problem With Buying Bundled Life and Long-Term Care Insurance
Northwestern Mutual Announces New Senior Leadership Appointments
Looming Medicare Cuts Threaten Physician Services in Nursing Homes, Even as COVID Continues

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Updated, Friday, October 9, 2020, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: THE KEYSTONE KOPS OF LTC INSURANCE

LTC Comment: What happens when the Keystone Kops design a long-term care insurance plan? Details after the ***news.***

*** LONG-TERM CARE INSURANCE IN CHINA: Don’t miss this Society of Actuaries webcast on Oct. 20 as speakers discuss the history of long-term care insurance products in China, current government pilot programs and the opportunity for new products. Register here by October 18, 2020. What could be more timely as Genworth contemplates entering the Chinese market? ***

*** LTCI SURVEY: The deadline for responding to the survey has been extended to October 15^th. Take the Who is Selling What? To Whom, How & Why Survey today! Even if you don’t ordinarily discuss long-term care planning with your prospects and clients, your thoughts are vitally important. This is the largest national effort of its kind, spearheaded by Oliver Wyman Actuarial and Ice Floe Consulting, and supported by NAIFA, NAILBA, Broker World Magazine, the Center for Long-Term Care Reform, and life and long-term care insurance companies. Take the survey and you’ll be first in line to receive its findings. ***

LTC BULLET: THE KEYSTONE KOPS OF LTC INSURANCE

The "Keystone Kops" are fictional, humorously incompetent policemen featured in silent film slapstick comedies between 1912 and 1917. Play this video and you’ll have a pretty good idea what the Washington State Long-Term Services and Supports (LTSS) Trust Commission’s September 30, 2020 meeting was like. More on that below. It’s always a comedy when governments try to do long-term care insurance. Remember CalPERS? CLASS? Every public commission ever mandated to fix long-term care? This new adventure in state-based LTCI hubris is headed toward the same fate.

Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” enacted in 2019, created a long-term care insurance benefit for all eligible Washington employees that would cover some of the cost of their long-term services and supports. Specifically, a .58% mandatory payroll tax would fund benefits up to a lifetime total of $36,500 for people who paid premiums either (1) for 3 years within the past 6 years, or (2) for a total of 10 years, with at least 5 of those years paid without interruption. The state won’t collect the tax until January, 2022 and doesn’t pay benefits until 2025. Eligibility triggers at the need for help with three or more ADLs. Benefits are paid directly to service providers which may include sufficiently trained family members. There are more complications in the legislation, but this is enough to indicate what’s wrong.

The same Trust Act that created this program also created the Long-Term Services and Supports Trust Commission to figure out how to implement it. The Commission consists of legislators, administering agencies, and stakeholder representatives. It “makes recommendations regarding criteria for determining who is a qualified individual, minimum provider qualifications, service payment maximums, actions needed to maintain Trust solvency, and monitoring of agency expenses.” Now ask yourself, aren’t these basic questions that should have been analyzed before imposing a compulsory tax-supported program on citizens? Didn’t the Washington State Legislature put the cart in front of the horse?

What would happen to a private LTC insurance plan dreamed up by an insurance executive and offered to the public without first thinking through who qualifies, provider standards, payment maximums, solvency issues and expenses? Free markets are vicious. No caring person would wish the inevitable catastrophic consequences that would ensue on such a hapless entrepreneur. Yet politicians can wave a magic wand, create such a program, force it on their constituents, and then turn it over to be somehow fixed by a commission comprised of more clueless legislators, bureaucrats, and highly paid representatives of rent-seeking special interest groups … though with not a single representative from the one profession that could help … the private long-term care insurance business.

Now back to the LTSS Commission’s September 30, 2020 virtual meeting. I followed the three-hour session in jaw-dropped awe as one critical issue after another was raised, discussed, and tabled for future consideration. Premium rates? Gotta wait to set those because the law caps the maximum rate and who knows if premiums plus investment returns will cover costs. Qualified individuals? When does the clock start on the required period of employment; when does the look back period begin; how about people too near retirement who will be left out? People disabled before age 18? There ensued a long discussion on how to handle the under-18 who are excluded in the law but mandated to be considered for inclusion. No decisions. As one astute commenter exclaimed: “They don’t even know what they don’t know.”

I think the one thing Washington State has gotten right in this project was to hire Milliman to guide them through the actuarial thicket created by the state legislature’s carelessness. Anyone knowledgeable about insurance could not help but smile as Milliman’s Chris Giese patiently explained adverse selection to the committee. In paraphrase: “You need to set a rate that matches health risk. With no underwriting, the question of who can opt in or opt out creates challenges. Individuals will evaluate what’s best for them in their circumstances. Healthy individuals might opt out. When they opt out, you’re left with a pool of individuals using benefits who are at higher risk. If you adjust the premium rate up to compensate, then more healthy people won’t participate. You get more uncertainty and a spiral of higher and higher costs.” Wow! What an insight? Who could have imagined that adverse selection might be a problem before the program was carved in statutory stone?

Giese also explained the financial facts of life to the Commission. You see, the program must generate enough in premiums plus investment returns on reserves to cover costs. But Treasury yields are very low these days. Stocks have the potential to earn much more, but they’re riskier. How does that impact program income and long-term solvency? The pandemic is a monkey wrench further complicating this problem. Washington State revenues have plummeted as have the incomes of the citizens compelled to fund this program’s new tax. It’s probably not a great time to pile on more government at the expense of the productive private sector.

The LTSS Commission has hundreds of little definitional issues to straighten out. Giese talked about several. The issue of opting out by purchasing private LTC insurance, he explained, is “still relatively undefined.” What if top wage earners opt out? What if half of wage earners opt out by getting private coverage? Who gets to opt out? Only those who had private LTCI before? People who buy it later just to escape the government program? What qualifies for the escape hatch: hybrid policies too or just traditional LTCI. How to handle the self-employed? What if you opt out, can you opt back in? What about elimination periods? What about portability and divesting alternatives? There will be additional costs if people want to receive benefits outside Washington State. On and on and on. Repeatedly, the approach to issues like these was to create yet another “work group,” but (no surprise) volunteers were scarce.

People who monitored the meeting through Zoom had the opportunity to comment or ask questions at the end of the program. One very thoughtful auditor, Stephen D. Forman of LTC Associates posed this:

The Commission has referenced the stakeholder community several times, but I'm not seeing any private insurance industry representation, why is that? It's a 300 million dollar per year market that is being broadly remade by the Commission's decisions. The decisions have the potential to discourage responsible planning by those who have the means to do so, thereby protecting Medicaid, which is a point of the Trust Act. In February we proposed a number of blind spots and loopholes in the Act before the Legislature--including the lack of stakeholder representation--and the fact that these remain speaks to the fact that this institutional expertise is needed. Thank you for listening, and for your hard work!

So, that’s what happens when the Keystone Kops design a long-term care insurance program. It would be funny if it weren’t so sad.

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Updated, Monday, October 5, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-039: LTC NEWS AND COMMENT

Genworth and China Oceanwide Push Back Deal Completion Deadline
Elderly and Homeless: America’s Next Housing Crisis
Low Interest Rates Push Prices for New Life-LTC Hybrids Higher: Milliman
Medicaid expansion filled unmet needs for home health, other long-term care: JAMA
More than 50 coronavirus wrongful death suits have been filed against long-term care facilities
Home healthcare outpaces skilled nursing in its post-COVID-19 rebound
Keeping workers will be biggest struggle for nursing homes as pandemic persists, national policy expert predicts
Medicare Advantage plans banking on non-medical home care needs
CMS touts lower premiums and benefits of Medicare Advantage plans
Nursing homes in Washington state struggled with adequate staffing for years. Then coronavirus struck

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Updated, Monday, September 28, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-038: LTC NEWS AND COMMENT

Nation’s first COVID-19 criminal charges against nursing home operators filed in Massachusetts
Americans worry about Alzheimer's disease, survey finds, but most don't know the early signs and symptoms
Virus Cases Surged in Young Adults. The Elderly Were Hit Next
CMS announces $165 million in funding to move people from nursing homes to assisted living and other settings
Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch When They End
The Nation’s Fiscal Health: Effective Use of Fiscal Rules and Targets
Can You Pass the New York State COVID-19 Death Risk Test?
“‘Living wage’ would benefit 75 percent of direct care workforce: LeadingAge report
The work-from-home surge may lead workers to buy retirement homes even before they retire
4 in 5 Americans Lack Retirement Planning Knowledge: Survey
Older adults in Philly turn COVID-19 into musical comedy
Can The Dutch Example Help Us Improve Long-Term Care And Manage Its Costs? Maybe
Davies announces acquisition of TriPlus as it steps-up North American expansion plans
Nursing Homes Oust Unwanted Patients With Claims of Psychosis

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Updated, Friday, September 25, 2020, 9:00 AM (Pacific)

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LTC BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN THE COMING FLU SEASON

LTC Comment: For fresh thinking on the pandemic and long-term care, look no further than “60 Seconds with Steve Monroe.” We explain after the ***news.***

*** TAKE THE SURVEY: It’s not too late to participate in the nation’s largest opinion survey of agents and advisors that we announced and described in “LTC Bullet: The Who is Selling What to Whom, Why & How Survey.” Read more about this important study in Ron Hagelman’s Broker World column this month. You have until October 8 to do your part by contributing to our knowledge of this critical subject. Take the survey here. ***

*** ARE YOU A MEMBER? If you’re not receiving an LTC E-Alert every Monday and an LTC Bullet every second Friday like clockwork, then you’re not a member of the Center for Long-Term Care Reform and you’re only receiving our occasional wider distribution to non-members (or a bootleg copy from someone else.) You can fix that today. Check out our “Membership Levels and Benefits” here and join the Center here. Note that premium members hear from us daily with LTC Clippings that keep them current on all kinds of LTC information you need to know. For questions or comments, contact smoss@centerltc.com or 425-891-3640. ***

*** TRUE FREEDOM, 9/14/2020, “True Freedom and GoldenCare USA Partner to Provide Seniors with Innovative Home Care Solutions”

Quote: “True Freedom announces our Preferred Marketer partnership with GoldenCare USA, an Integrity Marketing Group company. True Freedom is the only company that provides nationwide home care plans for seniors as an alternative to traditional insurance. GoldenCare and their western-states counterpart, American Independent Marketing, have been leading subject matter experts in long-term care for more than 40 years. By partnering together, they can now serve more Americans by providing unique options for long-term care.”

LTC Comment: Congratulations to long-time friend and corporate member Golden Care on this exciting new partnership. ***

LTC BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN THE COMING FLU SEASON

LTC Comment: Do we face double pandemic jeopardy when flu compounds the Covid crisis this fall? What does it mean to die “of” Covid when the Coronavirus only shortens the life by a week or two of people with multiple co-morbidities?

Those are two of the intriguing questions raised and answered by Irving Levin Associates’ Steve Monroe in his weekly video series “Sixty Seconds with Steve Monroe.” Stephen M. Monroe has been a healthcare and senior care financial expert for over 30 years. In addition to being an often-quoted healthcare finance expert in mainstream media, he has published over 50 bylined articles dealing with various aspects of investing in health care and senior’s housing. He is also called upon to keynote and speak at organizations such as the American Seniors Housing Association, Assisted Living Federation of America, National Investment Center for Seniors Housing and Care, American Health Care Association and the New York State Health Facilities Association, among others.

I’ve followed Steve’s analysis for two decades or more, ever since I became intrigued by the role of finance in shaping the type and availability of seniors housing. When he told me many years ago that he bought private long-term care insurance and it cost him less than the cost of a daily cup of coffee, that sealed it for me. I’ve followed his thoughtful commentaries ever since.

Here are two of them that he and his employer have allowed me to share with you. This material is proprietary so not usually available for free. If you find it helpful, there’s more where this came from and you can subscribe for a 60-day free trial here.

“Beware the Flu Season?,” by Steve Monroe, August 26, 2020

Almost every conversation surrounding the coronavirus and outbreaks in nursing homes or assisted living communities eventually gets around to the double whammy of a “second wave” combined with the upcoming flu season.

Yes, providers will have to be vigilant, but they have never been as well prepared for the flu season as they are today. Think about it. Less than a year ago, do you remember ever walking into any senior care facility where the staff were all wearing masks, where hand sanitizers were everywhere, where your temperature was taken at the entrance, where mobile residents were wearing masks? No, it never happened except if someone had the flu.

My bet is that there will be a record number of people, in and out of senior care, who will get the flu shot this year. And transmission will be lower because most Americans are wearing masks in public, hands are cleaner than ever before, and we are all still coming into contact with fewer people on a daily basis than at the start of any other flu season.

The coronavirus will still be with us, but because of the extra care taken in all senior care communities, its prevalence has declined and the double whammy with the flu season will not be as bad as people fear.

“Death By or With COVID,” by Steve Monroe, August 28, 2020

We are sure every provider is sick and tired of hearing about how many residents have died of COVID-19 in a nursing home or assisted living community. The problem is that the classification may be all wrong.

Unfortunately, there may be a financial reason for such classifications, as in more reimbursement, or more governmental aid. And for those who can profit from making this pandemic seem worse than it is (yes, they do exist), piling up the number of COVID deaths helps to make their case. It has certainly helped the mainstream media and their advertising dollars. But here is the problem, at least as it relates to the deaths in assisted living, memory care and nursing homes. What the statistics don’t differentiate is those residents who died “of” COVID from those who died “with” it.

Let us explain. Most people who are long-term residents in nursing homes, or assisted living and memory care communities, have multiple health issues, commonly referred to as co-morbidities. It is a word often used in the senior care industry, but particularly during this pandemic.

In its most simple definition, a comorbidity is the presence of one or more “additional” health conditions, usually co-occurring with a primary condition. And we are not talking about minor health problems, but major ones, usually chronic and often cardiac or respiratory related, as well as diabetes. To be un-politically correct, these residents today have several health problems, any one of which could result in their death at some point.

In addition, the average length of stay for these residents is relatively short, even in the best of times, especially compared with independent living communities or CCRCs, not to mention active adult communities with their much younger average age. They have moved into nursing homes or AL/MC [assisted living/memory care] communities in a frailer condition than 20 and even 10 years ago. In many cases, they are going to die in six or 12 months even without a pandemic.

So, when a 90-year resident in a memory care wing (true story), on hospice, with maybe three weeks to live gets infected with the coronavirus and dies in two weeks, she is listed as having died “of” COVID. But that is not true. She died “with” COVID. She actually could have died from any of her comorbidities, if not just old age, but that is not how it is recorded. She becomes a statistic as one of the 170,000 and growing deaths from COVID. [The reported U.S. death toll passed 200,000 on September 22, 2020, a little less than a month after this column was published.]

The entire senior care industry has to get this message out and the only way to do so is to track what really is happening inside your buildings. The overall number of deaths “by” COVID will go down, and the industry can make a better case to the consumer for what is really happening to seniors under their care. We would love to receive your statistics, on or off the record.

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Updated, Monday, September 21, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-037: LTC NEWS AND COMMENT

True Freedom and GoldenCare USA Partner to Provide Seniors with Innovative Home Care Solutions
Nursing Homes Given Federal Go-Ahead To Allow More Visitors
Dementia mortality skyrockets since lockdowns; CMS loosens visitor restrictions
Opinion: Long-term care insurance: There’s no good alternative
Federal Nursing Home Commission Calls on CMS to Adopt 27 Recommendations, ‘Reduce Suffering’
When Elder Care Requires Legal Advice
Social Security COLA Estimated at 1.3% for 2021
Lapse In Long-Term Care Insurance Doesn’t Necessarily Ruin Coverage
U.S. health care system on life support, say test results from new study
A win for long-term care: Providers applaud withdrawal of MFAR proposal
Missed Vaccines, Skipped Colonoscopies: Preventive Care Plummets
COVID-19 pushed SNF occupancy below 75% in June: NIC
Ken Dychtwald: 75% of Households Could Face a Big Retirement Shock
COVID-19 and Fast Underwriting Are a Bad Mix: Veteran Underwriter
41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey
Recession And Medicaid Budgets: What Are The Options?
How the Aging Immune System Makes Older People Vulnerable to Covid-19
Almost 40% of residential care aides live in low-income households: report
Vitamin D deficiency may nearly double coronavirus risk, study finds

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Updated, Friday, September 11, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: We’ll finally get answers to all those questions if you fill out this brief survey. We explain after the ***news.***

*** HOW AND WHY TO JOIN the Center for Long-Term Care Reform. After you read “LTC Bullet: What Value Do LTCI Producers Get from the Center for Long-Term Care Reform?, I hope and trust you’ll want to get everything the Center has to offer. So check out our “Membership Levels and Benefits” schedule here. That’ll help you decide between the various levels of individual and corporate membership. If you have questions, drop me a note or give me a call at smoses@centerltc.com or 425-891-3640. One of the benefits of all Center memberships is anytime access to me for questions about LTC services and financing policy. As I explained in that Bullet, I like hearing from agents and discussing the challenges you face. It helps keep my policy analysis grounded in your real world of LTCI prospecting, fighting against prospects’ denial, and answering the hard questions people actually ask. So let’s talk. ***

LTC BULLET: THE WHO IS SELLING WHAT TO WHOM, WHY & HOW SURVEY

LTC Comment: There probably aren’t many public policy analysts who have actually sold a long-term care insurance policy, but I’m one. After leaving my government career to become Director of Research for LTC, Inc., I took the sales training, got a license, did some phone prospecting, and hit the road with a pocket full of leads. My mission was to learn what LTCI agents were really up against.

Boy did I find out. After driving to a distant corner of Washington State so as not to burn leads real agents needed, I set to conducting sales interviews. I talked, they listened, and listened. I knew a lot and, by gum, they were going to hear it all. That’s when I learned the wisdom of the adage “You have two ears and one mouth. Use them in that proportion.”

Long story a little shorter, I got skunked. No buyers. I returned to the office with my tail between my legs wondering how in the world successful agents managed. But later that week I got a call from one of my prospects. He decided to buy a policy after all. What was it, I inquired, my expertise, my savvy selling, my personal charm? Nope, he said. He just didn’t like the policy his retired teachers’ association was promoting.

I’m telling this story because that was my earliest introduction to how little we really know about the who, what, when, where, why and how of long-term care insurance sales. Ever since that experience I’ve referred to the heroes who somehow manage to help people protect themselves for long-term care as AMG’s, altruistic, masochistic geniuses. It’s long past time we empowered those AMGs by giving them answers to those crucial questions. Finally someone is setting out to do so.

The Survey

Ron Hagelman and Barry Fisher of Ice Flow Consulting and Vince Bodnar of Oliver Wyman have teamed up to design and offer a survey questionnaire to address these issues:

Best practices in starting the long-term care planning conversation.
Agent/Advisor/Consumer product perceptions and preferences.
Best ways to get prospects and clients to “YES”.
New product insights.
Types of training and education that will improve sales results.
Why many agents/advisors DO NOT discuss long-term care planning with consumers.

The survey’s sponsors say “This agent/advisor-focused sales analysis is designed specifically to help reveal the mysteries of the structure and motivations of buying behavior from those who make the sales happen.” It will define the “new normal in long-term care planning.” The project is advised and supported by NAILBA, NAIFA, numerous traditional and combo carriers and key distribution friends. Learn more in the September issue of Broker World magazine.

The survey only takes about 5-15 minutes to complete. If you provide your email address, they’ll send you the executive summary as soon as the results are compiled. Don’t wait. Take the survey now here.

Don’t sell LTCI? Please take the survey anyway. The sponsors say: “We’d like you to take a few minutes out of your busy day to take the survey. If you do not discuss long-term care planning with consumers the survey will take 5 minutes or less. Knowing why you don’t is vitally important to us. If you do have long-term care planning conversations with prospects and clients, the survey will take about 15 minutes or less. Your insights into the aforementioned survey goals will help us with new product development, expanding the market, improving agent education and increased consumer awareness.”

We look forward to reviewing the results of this survey and we’ll bring them to you in a future LTC Bullet.

Now TAKE THE SURVEY!

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Updated, Monday, September 7, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-036: LTC NEWS AND COMMENT

Ethics Consult: Keep Patient on Feeding Tube After Dementia Diagnosis?— You make the call
COVID-19 shifts mindset of family caregivers about senior living decisions
Grabowski: As Case Counts Rise and PPE Issues Persist, Nursing Homes Face Grim ‘Groundhog Day’
CBO Cuts Forecast for Social Security Fund Life Span, Sees Debt Topping GDP in 2021
COVID-19 Outbreaks in Long-Term Care Facilities Were Most Severe in the Early Months of the Pandemic, but Data Show Cases and Deaths in Such Facilities May Be On the Rise Again
Skilled Nursing Distress Looms as CARES Funding Ebbs: ‘Bills Are Starting to Come Due’
Key Questions About the Impact of Coronavirus on Long-Term Care Facilities Over Time
China Oceanwide Is 'Progressing Well' Toward Getting Deal Funding: Genworth
Why you need to talk to your parents about how they want to die
Does Medicare cover long-term care?
Long, Frequent Naps Predict Alzheimer's Dementia

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Updated, Monday, August 31, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-035: LTC NEWS AND COMMENT

Bonnie Kraham column: 2020 rates for Community Medicaid and Nursing Home Medicaid
Hundreds of Thousands Of Nursing Home Residents Don’t Need To Be There
Longevity Brings Increased Risk of Cognitive Decline
Female chromosomes offer resilience to Alzheimer's
Morningstar gives ‘negative outlook’ rating to skilled care
State Actions to Sustain Medicaid Long-Term Services and Supports During COVID-19
Ending Payroll Tax Would Drain Social Security by Mid-2023
State with First COVID-19 Outbreak Rolls Back Medicaid Boost for Nursing Homes: ‘Needless Deaths Will Rise’
Dementia may be three times more deadly than thought, analysis finds
A Novel Way to Combat Covid-19 in Nursing Homes: Strike Teams
Two or more long-term health conditions linked to positive COVID-19 tests

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Updated, Friday, August 28, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Bullet: What Value Do LTCI Producers Get from the Center for Long-Term Care Reform?

LTC Comment: Why join and support the Center for Long-Term Care Reform? What’s in it for you, after the ***news.***

*** HOW AND WHY TO JOIN the Center for Long-Term Care Reform. After you read today’s LTC Bullet I hope and trust you’ll want to get everything the Center has to offer. So check out our “Membership Levels and Benefits” schedule here. That’ll help you decide between the various levels of individual and corporate membership. If you have questions, drop me a note or give me a call at smoses@centerltc.com or 425-891-3640. One of the benefits of all Center memberships is anytime access to me for questions about LTC services and financing policy. As I explain in the following Bullet, I like hearing from agents and discussing the challenges you face. It helps keep my policy analysis grounded in your real world of LTCI prospecting, fighting against prospects’ denial, and answering the hard questions people actually ask. So let’s talk. ***

LTC BULLET: WHAT VALUE DO LTCI PRODUCERS GET FROM THE CENTER FOR LONG-TERM CARE REFORM?

LTC Comment: I enjoy speaking to agents about the challenges they face finding and convincing clients to protect themselves against long-term care risk and cost. Agents see the battle for better LTC from the foxholes. As a policy analyst, my perspective often feels high altitude by comparison. Hearing the problems and challenges agents face day in and day out helps ground me in practical ideas and proposals.

So that’s why I jumped at the chance when Center-corporate-member Long Term Care Associates (LTCA) invited me to address their next agent conference call. Special thanks to Stephen, Gary, and Robert Forman and their team for the opportunity to answer the following questions. Here’s what they asked and how I responded.

1. From your vantage, what value proposition from the Center do you think agents should be taking advantage of, which they’ve failed to over the years?

The agent’s role is to educate and sell. To do that well agents need to be on the forefront of professional knowledge and expertise. But how can they do that if they’re also doing all their own research? A critical role of the Center for Long-Term Care Reform is to keep agents apprised of important articles, reports, studies and data they need to know. How often have you been blind-sided by a prospect’s question or criticism that they picked up from a news report that you hadn’t seen or heard yet? Follow the Center and that won’t happen again. The best way to follow the Center is to know our website at www.centerltc.com inside out.

The website has two levels: One for the general public and one for Members Only. Check out the links at the top of the website to get started.

Here are the items available to all:

Take our virtual tour of the Center's website. (Be patient, it may take some time to load.) This video webinar explains how to access and navigate the valuable content on the CLTCR website. This is the best way to find everything quickly.

The “Moses LTC Blog” includes LTC Bullets and LTC E-Alerts as they’re posted. (To find it, scroll down from the top of www.centerltc.com)

Links to 1286 LTC Bullets newsletters, archived chronologically and by topic covering every aspect of LTC services and financing since 1998

Links to hundreds of articles, speeches, state-level and national reports on every aspect of LTC services and financing

Video of Steve Moses’s 9/21/11congressional testimony on “Examining Abuses of Medicaid Eligibility Rules” (Steve testifies at 18 minutes, 45 seconds into the hearing)

"Clash of the Titans: Moses vs Gordon on Medicaid and other Dark Matter" at the 12th Annual ILTCI Conference. Listen to this riveting debate. (May load slowly)

See a retrospective of the 2008 National LTC Consciousness Tour: LTC Tour Slide Show, pictures of the Silver Bullet of Long-Term Care; history of the year-long tour to raise consciousness about long-term care

Members only website content (available to all on a trial basis for two weeks; use user name: CLTCR2020 and password: FreeTrial):

NEW: LONG-TERM CARE CLIPPINGS ARCHIVE
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
LTC ALMANAC: Links to hundreds of articles, reports and data sources on these topics:

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

LTC Graduate Seminar Transcription
Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care
Long-Term Care Cost Surveys
Deductibility Limits for Long-Term Care Insurance
LTCI Tax Treatments
Unfunded Entitlement Liabilities -- Various articles and reports including data on unfunded entitlement liabilities.
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 LTCI conferences.
One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.
CLASS Act Update -- Quick reference to publications on CLASS.

2. You’ve been instrumental in many major pieces of Medicaid reform legislation: is there anything you or others you know of are currently working towards?

We’ve been on the defense for the past decade. Irresponsible monetary and fiscal policy since the Great Recession have convinced the powers-that-be the country can print and spend unlimited funds without producing new goods and services for people to buy. That’s a recipe for disaster and the catastrophe is baking in the economic oven right now, soon to be served up to the country.

In the meantime, the LTC intelligentsia—analysts and economists who opine about the long-term care problem and what to do about it—have come together in support of a compulsory, public, catastrophic LTC insurance plan based on payroll deductions similar to Social Security and Medicare. Handling LTC in this way won’t work any better than those programs, which are insolvent already and likely to survive only as means-tested welfare programs in the not-very-distant future.

Here’s the good news. Thanks to the dozens of state-level and national studies we’ve conducted and which are available on the Center’s website here, we know what to do and how to do it when policymakers are finally forced by circumstances to do what needs to be done.

What’s that? Redirect Medicaid to the needy and use some of the savings to incentivize responsible LTC planning including private LTCI. Specifically, eliminate Medicaid’s huge home equity exemption, close other eligibility loopholes, and enforce estate recovery. Operate Medicaid as a loan instead of a welfare trap for people with wealth. In time consumers will realize private insurance is a far better option than relying on Medicaid.

3. What’s the single greatest legislative change that could galvanize the private LTCI market?

We need to get the government to stop giving away what you’re trying to sell. Eliminating Medicaid as your primary competition for the business of middle class and affluent people is the one change that could make the biggest difference. Unfortunately, that’s not a very popular idea politically, so it’s not likely to happen until the economy tanks, which it is about to do. When states have to curb Medicaid’s excesses to make budget ends meet, they’ll listen again to what we have to say. That’s how we won in 1993 with the Omnibus Budget Reconciliation Act (OBRA ’93 closed eligibility loopholes and made estate recovery mandatory) and in 2005 with the Deficit Reduction Act (DRA ’05 unleashed LTC Partnerships and placed the first cap ever on Medicaid’s home equity exemption). We’re in a better place now than we have been in over a decade to get the policy changes we need done.

4. In all the state-level reports, data, and studies you read, what have you come across that would surprise our agents—and is there something they could use to advance the importance of LTC planning?

What it’s so hard for agents and everyone else to understand is how easy it is for people to qualify for Medicaid LTC benefits despite having large incomes and assets. I was amazed doing state Medicaid eligibility studies to find that eligibility workers are appalled at how easy it is. They’re angry that lawyers for well-heeled people prepare their perfect applications, sometimes three inches think with documentation. Welfare workers can’t get poor people on Medicaid without devastating the families, but the well-to-do go right on. Adult children have a financial conflict of interest and they’re usually the ones making the decisions once the elders are demented and need care. The system is corrupt and leads to bad consequences as we’re seeing during the pandemic especially, with tragic nursing home deaths and families kept from visiting their institutionalized loved ones.

5. You’ve been even-handed of your criticism of both major parties’ failing to address LTC financing: do you think choice of President or Congress matters much to LTC financing in this country, and if so, does either platform appeal to you more on this basis?

Honestly, no, politics doesn’t matter. Politics is the problem not the solution. Politics is about buying votes by promising people something for nothing. Economics is what matters. Markets fairly distribute goods and services based on merit and hard work instead of political influence and graft. So, no, it makes no difference who controls the government. They’re all prone to irresponsible excess. What matters is what we do when the wages of their irresponsibility come due. Fortunately, we’ve done the prep work to know how to fix long-term care when politics fails and markets matter again.

6. Despite continued efforts to “rebalance” Medicaid towards more home health care, it continues to bias toward nursing homes: how would you communicate this bias—and Medicaid’s other shortcomings—to a client who thinks they can self-insure or “Medicaid Plan”?

The idea that home care costs less than nursing home care is a fallacy. Across society home care delays but does not replace facility care. The two together always end up costing more. Bottom line, Medicaid can’t afford quality institutional care, much less a full continuum of care. Institutional bias is here to stay as the only way Medicaid can keep costs manageable. The public knows nursing homes are undesirable, more so now during the pandemic than ever before. The best way to stay out of a nursing home as long as possible and to access the best ones when necessary is to be able to pay privately for alternative care. The best way to do that is to share the risk and cost through private insurance.

7. Reaction to your message from the carriers sometimes seems tepid: why do you think it’s not been more universally welcomed?

Carriers fear that by exposing the abuse of Medicaid by middle class and affluent people in order to correct it I’m actually disclosing to consumers the secrets of how to dodge private insurance. My dilemma is that I can’t get the problem fixed without exposing and criticizing it. Carriers can be very short-sighted and exceedingly careful. They hear that Medicaid captures most of their potential market and instead of aggressively addressing that problem they too often fear criticism and do nothing. The truth is the only way to fix Medicaid for the poor is to get the non-poor to take responsibility and insure. That’s what I’m advocating.

8. What’s wrong with “selling the Medicaid myth”? (i.e. the notion that you have to spenddown to poverty in order to qualify) The insurance companies, the government, the media, and many agents all repeat this same myth—shouldn’t we?

The Medicaid myth is that you can’t get LTC benefits without spending down into impoverishment. It’s a myth because it isn’t true. If it were true, most people with the financial wherewithal to buy LTCI would own a policy. They’d be scared to death of losing their life’s savings if their life savings really were at risk. You could say the Medicaid myth is a “noble lie.” So if it helps you protect someone with a good policy, so be it. Just know yourself what’s really happening.

What’s really going on is that the public has been anesthetized to LTC risk and cost because Medicaid has picked up most of the catastrophic costs for LTC since 1965. So people don’t worry about LTC until they need it, and once they need it they slip onto Medicaid easily. You’re much better off to acknowledge virtually anyone can get Medicaid to pay for long-term care but to focus on the reasons for not doing that: the problems of access, quality, low reimbursement, institutional bias, discrimination, and loss of independence and control.

Do you say “my clients know about Medicaid’s deficiencies and they don’t want to end up on that welfare program?” If so, you’re missing the point. Nine out of ten potential prospects don’t even contact you or answer your calls. Most people don’t worry about long-term care until it’s too late to plan, save, invest or insure against the risk. That’s true because Medicaid has been the payor of last resort for so long. Undesirable as Medicaid is, it looks pretty tempting when it’s the only thing standing between a family and huge out of pocket costs. Help us remove Medicaid as an easy solution for middle class and affluent people after the insurable event has occurred, and then see how many people are beating down your door to get the LTCI protection they truly need.

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Updated, Monday, August 24, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-034: LTC NEWS AND COMMENT

Short-Term Bailouts Won’t Fix Nursing Homes or Medicaid Home-Based Long-Term Care
Covid-19 Vaccination Costs to Strain State Medicaid Programs
Task force delivers final report for senior living’s transformation post-COVID-19; 6 strategies identified
Seattle life plan community successfully shifts from communal dining to food court model
Assisted Living Communities Facing Similar Financial Hardship as Nursing Homes
Assisted living occupancy declines at highest rate since April: NIC
Nearly 75% of older Americans with dementia given drugs that don’t help them despite serious risks: Study
Game changer for long-term care? More like a game ender
REPORT: COVID Cases in Nursing Homes Surpass Peak Level Back in May
U.S. Treasury task force: Federal government must educate public about LTC costs

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Updated, Monday, August 17, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-033: LTC NEWS AND COMMENT

Nursing Home Families Yearn to Visit Loved Ones Again
Verma ‘Deeply Concerned’ About Rise in Nursing Home COVID Counts, ‘Significant Deficiencies’ in Infection Control
The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To
SURVEY: Nursing Homes Incurring Significant Costs and Financial Hardship in Response to COVID-19
Coronavirus cases in nursing homes show alarming spike, AHCA warns
LTCG appoints Sharon Reed as SVP of Process Improvement and Enterprise Training
Older Americans Coping Better With Pandemic Than Younger Ones: Age Wave
Job losses continue in the eldercare sector: Labor Department
When Covid-19 Hit, Many Elderly Were Left to Die
Dementia on the Retreat in the U.S. and Europe
Long-term care groups, 490 others, call for enactment of COVID-related legal protections ‘as soon as possible’
1,600 nursing home workers plan strike

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Updated, Friday, August 14, 2020, 7:00 PM (Pacific)

Seattle—

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LTC Comment: Sometimes bad studies happen to good people. We explain after the ***news.***

*** ILTCI CONFERENCE: Why am I getting Denver history lessons from Barry Fisher? Because he’s a former resident, knows the city well and he’s in charge of the 20^th anniversary Intercompany Long-Term Care Insurance Conference to be held March 8-11, 2021 in Denver. This iteration of the event replaces the one canceled due to the pandemic in March of this year. Get all the details here and here. Barry reports “The good news is that almost all our exhibitors and sponsors have committed to attend the 2021 Conference. The Program and Education Committee is hard at work creating sessions designed to instruct, enlighten, and entertain. And, our Keynote Speaker, Futurist Anders Sorman-Nilsson, will share a whole new look into his crystal ball.” I’m reminded there’s a little Denver lore in the Moses family history also. It seems my great grandfather traded 40 acres of prairie waste land for a pair of pearl-handled six-shooters. Those 40 acres are downtown Denver today, but we don’t even have the pistols to show for it. Oh well! At least we have a great reunion with friends and colleagues coming up in the Mile High City next March … Covid-19 permitting, of course. ***

LTC BULLET: UMPTEENTH LONG-TERM CARE STUDY DISAPPOINTS

LTC Comment: Having toiled in the long-term care field for 38 years, I’ve seen a lot of study groups and commissions come and go aimed at finding a better way to provide and pay for long-term services and supports. Besides their universal abject failures, these many endeavors also have this in common. They brought together experts representing various “stakeholders’” interests who talked, talked, talked until they arrived at the lowest common denominator of their wishful thinking. That usually included a long list of wonderful things to do with no mention of how to pay for them. How might we define such a “study?” The Urban Dictionary suggests this: “A group discussion or activity between like-minded individuals that validates mutual biases or goals in a non-confrontational environment.” What got me thinking along those lines?

“Learning from New State Initiatives in Financing Long-Term Services and Supports” is a report published last month jointly by the Center for Consumer Engagement in Health Innovation at Community Catalyst and The LeadingAge LTSS Center @UMass Boston. Its authors include two, Marc Cohen and Eileen Tell, whose previous work deserves praise. The report is the fruit of deliberations by “42 stakeholders and state officials” who shared “their depth of knowledge and insightful observations on the reform efforts occurring in their states.” Their states, which have “adopted or are considering innovative state-based LTSS financing reforms” include California, Hawaii, Maine, Michigan, Minnesota and Washington. As I’ve conducted studies in three of those states (CA, ME and WA) I’ll offer some balancing perspective when relevant.

So let’s dive into this new report and see what we find. I’ll select a quote and then make a comment. I’m omitting the report’s footnotes but you can find them quickly in the original.

LTSS Report: “Most of the LTSS costs that people are projected to pay will be out of their own pockets (53%); this is especially true when it comes to home and community-based care (68%). Yet Americans are woefully unprepared to pay for their own care, should they need it.” (p. 4)

LTC Comment: What those percentages ignore is that the vast majority of all high cost long-term care expenses are paid for by Medicaid and Medicare. If these catastrophic costs were not removed by public financing, people would worry about and save, invest or insure for long-term care. They would be much better prepared for LTC risk and cost than they are now. I’ve explained in Medicaid and Long-Term Care (pp. 64ff) that “some recent research suggests how we might reconceptualize the quandary we are in so that it is not such a huge challenge and may in fact be amenable to a market-based solution.” Check it out.

LTSS Report: “The bottom line is that private LTC insurance is now out of the financial reach of most middle-income Americans and for that reason, it is not likely to play a meaningful role in financing LTSS costs in the coming decades.” (p. 4)

LTC Comment: This statement reflects a misunderstanding about why private LTCI take-up is so low. Many more consumers than now would find a way to afford the product if they believed they needed it. If, for example, their home equity were at risk for potential long-term care expenses, they’d see a real risk far more starkly. But despite decades of the media and insurance agents telling people they’ll lose their life savings if they don’t insure, they still don’t believe it. Ironically, they’re right. They can ignore the risk, avoid the premiums, and, if they ever need expensive long-term care, Medicaid provides while exempting most assets and charging only excess income as a kind of co-insurance. Until those facts change, the market for private LTC insurance will languish. But those facts will change soon when the bottom falls out of the existing welfare-based LTC financing system.

LTSS Report: “Medicaid provides coverage of LTSS only after individuals have depleted their own resources in paying for care.” (p. 4)

LTC Comment: That statement is so blatantly false it is hard to believe serious people still publish it. Medicaid requires excess income to be spent down for care. But that rule does not apply to excess assets. Assets may be spent down for anything of value. As long as the items purchased are exempt, and most large assets are, Medicaid does not care for purposes of determining eligibility. That’s why elder law attorneys keep long lists of exempt resources and encourage their clients to spend any disqualifying countable assets on them. Even Medicaid eligibility workers frequently advise families to do the same. It defies belief that long-term care experts remain so uninformed or naïve as to ignore these facts. You can find scores of examples with citations to the sources in How To Fix Long-Term Care Financing, pp. 34-63.

LTSS Report: “Currently, Medicaid pays roughly 57% of LTSS costs, elders and their families pay an additional 23%, other public sources contribute 16%, while private insurance pays less than 5% of the nation’s bill.” (p. 4)

LTC Comment: Of that 23% of LTSS costs attributed to elders and their families, roughly half is Social Security income received by people already on Medicaid, which they’re required to contribute to offset Medicaid’s cost for their care. In other words, it’s not—or even mostly—life savings being spent down catastrophically into impoverishment as analysts imply. I explain this Social Security “spend-through” and why it’s so critical to understanding LTC risk and cost in Medicaid and Long-Term Care at pp. 7-8. The key point is that nearly 90% of LTSS costs as cited by the LTSS report come from Medicaid (57%), other public sources (16%), LTCI (5%), or Social Security (1/2 of the 23% attributed to out of pocket expenditures). Why should we be surprised that most people fail to plan, save or insure for long-term care when they’re only personally at risk for about 10% of the cost? What’s worse, when the Social Security trust fund runs out, as it is likely to do much sooner than previously anticipated because of current monetary and fiscal policies aimed at providing coronavirus relief, Medicaid and its long-term care providers will have to adapt somehow to the loss of some or all of this substantial “spend-through” revenue. As Medicaid and providers are already vastly underfunded, this loss will be devastating.

LTSS Report: “Median retirement savings for Americans between age 55 and 64 is roughly $107,000, which is far less than the average expected LTSS costs for those who have to purchase care.” (p. 5).

LTC Comment: True, but irrelevant. Medicaid already covers people with median savings and below. The key question is whether Medicaid also covers most people with savings above the median. It can and often does. In Medicaid and Long-Term Care (pp. 44-46), I explain how Medicare beneficiaries up to the 95^th percentile of income and assets qualify financially for Medicaid LTC benefits. As long as this remains true, don’t expect most people to worry about long-term care until it’s too late to save or insure and Medicaid, despite its flaws, becomes preferable to spending privately.

LTSS Report: “All of the data suggests that our current approach – based on Medicaid, savings, and private insurance – is not meeting the needs of families, providers, nor public payers. Currently, there are two primary strategies designed to move the system toward greater insurance coverage: (1) a federal public insurance approach which is designed to add social insurance coverage for LTSS to existing health insurance programs offered at the federal level, and; (2) state-based social insurance programs, which represent the most recent efforts at reform and for which there is growing interest across multiple states. These state-based efforts are the primary subject of this report.” (p. 5)

LTC Comment: This is the switcheroo. Having described the existing LTC system’s many shortcomings, the LTSS Report jumps right into proposing “strategies” based on social insurance, i.e. more government money, regulation and compulsion. Neither this report nor others of its ilk give the slightest attention to why and how America’s long-term care system became so fouled up in the first place. How in the world can we conclude that new federal or state-based social insurance programs are the right strategies to pursue without explaining what went wrong with the existing government dominated system and why? That explanation is what I provided in Medicaid and Long-Term Care (pp. 10-16). I concluded that excessive government funding and regulation is exactly what ruined the long-term care system over the past eight decades. Adding more of what caused long-term care’s problems in the first place is hardly likely to fix them going forward.

LTSS Report: “In light of the fiscal strain brought on by the COVID-19 pandemic, as well as uncertainty regarding the upcoming federal election results, it is highly unlikely that these [federal LTC reform] bills will move forward in the immediate future.” (p. 7)

LTC Comment: This is a neat brush-off of omnipresent but simpleminded proposals to add long-term care to Medicare. But the same facts bear even more heavily against state-level reform plans. States can’t print and borrow unlimited funds like the federal government can. We’ve barely begun to see the devastation unconstrained federal monetary and fiscal profligacy will cause. Will the federal government pay all the states’ bills in the same way as it has taken the place of private payrolls nationwide? How long before the trillions of newly printed dollars, with no new goods and services for them to purchase, lose their value? “Too much money chasing too few goods?” Where have I heard that expression before? Oh yeah, Econ 101.

LTSS Report: “We describe recent LTSS financing reforms in six states, identify motivating factors that are driving policy change, describe how policy design decisions are being made, and document the key players involved in these reform initiatives. ... The fact that a growing number of states are seeing a broad and disparate array of LTSS stakeholders come together to work in concert on this issue represents a real change in the policy landscape; in essence, it highlights an expansion in the potential policy solution-set for this issue.” (p. 7)

LTC Comment: “Growing number of states?” These are the same six referenced in a program titled “State Initiatives for LTC Financing Reform” at the 19^th Annual ILTCI Conference in Chicago on March 25, 2019 minus one planned then for Illinois. We’re not exactly seeing a wave of new enthusiasm for higher payroll taxes to fund more government long-term care.

LTSS Report: “We conducted comparative qualitative case studies across six states in various stages of developing or executing on reform initiatives including Washington State, which recently passed and is currently implementing a new social insurance program for LTSS; Hawaii, which has programs designed to assist family caregivers; and Maine, which put a specific LTSS financing initiative on the ballot in 2018 that failed to pass. The other three study states – Minnesota, California and Michigan – are at various stages of building stakeholder coalitions to work with policymakers to develop new programs, undertaking studies of the issue to inform policy development, or are ready to move to a full-blown legislative agenda.” (p. 8)

LTC Comment: Now we’re getting into the meat of the report. Of the six states reviewed, only one, Washington, actually has “a new social insurance program for LTSS” underway. The rest have either tried and failed, done something very different, or are perennially studying the matter.

LTSS Report: “In total, we completed interviews with 42 stakeholders and state officials across these states, many of whom were referred by state leaders. Key informants included state officials, leaders working in aging services, consumer advocates working on a broad range of health, disability, and LTSS issues, union leaders, and an assortment of individuals from LTSS provider organizations.” (p. 8)

LTC Comment: What every one of these “stakeholders” has at stake is getting more money from the state and federal governments to finance their special interests. There’s a name for this process: “crony socialism.” When you decide before you begin a study that LTC only has two ways to go, federal or state social insurance, and then interview only people who stand to benefit from either of those options, you’ve squandered intellectual and financial resources.

LTSS Report: “In all the study states, the median monthly costs of home care and nursing home care exceed the national average, and in all but two, the median monthly costs for care in an assisted living facility are also in excess of the national average. This indicates a growing payment burden faced largely by families paying out-of-pocket or, on behalf of those who are poor or become poor paying for care, on the state’s Medicaid program.” (p. 11)

LTC Comment: No, what those constantly rising home care and nursing home costs “in excess of the national average” actually show is that these study states have failed miserably to control expenditures by means of the government regulation and interventions they’ve already employed. For example, rebalancing from nursing home care to home care was supposed to save money, but it didn’t. It turned out home care only delayed institutional care and the two combined cost more. Pouring more and more Medicaid money into experimental programs and continuing to allow easy access to Medicaid benefits with generous financial eligibility rules impeded the private markets for home care, home equity conversion, and private long-term care insurance leaving consumers dependent on poor public programs. Social insurance isn’t the solution for the long-term care problem; it is the problem. For full development of this argument, see any or all of the state-level studies here including these three reports covering states addressed in the current study: What We Don't Know About Medicaid and Long-Term Care is Hurting Washington State (2004); Medi-Cal LTC: Safety Net or Hammock? (2011); The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net (2013); and Maximizing NonTax Revenue from MaineCare Estate Recoveries (2013).

LTSS Report: “We compared the amount of taxes paid per capita by the study states to explore two opposing concepts. The first is that a high tax rate per capita could reflect a state’s willingness to invest in social infrastructure, inferring a greater probability that they would be willing to continue to do so for LTSS finance reform. … On the other hand, states with higher than average taxes per capita may be reluctant to put in place new programs requiring additional tax increases, feeling that citizens are already paying enough in taxes. While there is a great deal of variation in the ranking of taxes paid per capita among the case study states, five of the six states are within the top half of the country in terms of overall ‘tax burden,’ and four of them are in the top 11.” (p. 11)

LTC Comment: A more credible interpretation is that lukewarmness toward expensive new social insurance schemes documented in this study simply means overtaxed citizens are increasingly reluctant to take on an even greater tax burden.

LTSS Report: “In Appendix 2, we include state timelines showing key milestones in the move to adopt these financing initiatives. They clearly illustrate that the journey of reform is best described as a ‘long and winding road’ filled with both off-ramps and on-ramps.” (p. 12)

LTC Comment: An objective interpretation of these financing initiatives’ sluggish progress would use different metaphors, such as wild goose chase, cul-de-sac and dead end.

LTSS Report: “The profiles begin with a brief description of the type of initiative, its current status and the nature of the coalition working on it. Also summarized are the primary motivators driving the LTSS reform efforts identified by respondents. These motivators include easing the burden on family caregivers, concern about the growth in Medicaid budgets, financial help for the middle class, improving financial access to LTSS services, improving support for the LTSS workforce, and compensating for the failure of the private market.” (p. 12)

LTC Comment: All those “motivators” are fine goals. But don’t we need to understand first why and how our existing LTC system, dominated by government funding and regulation, came to have these problems? Don’t we risk making the problems worse by adding more of the same? Forging ahead to propose more government interference in the long-term care market without first explaining how (1) the LTC burden became so great on family caregivers, (2) Medicaid budgets exploded, (3) the middle class are financially overburdened, (4) the workforce struggles and (5) private insurance failed, is intellectually negligent.

LTSS Report: “The driving force in California is the need to address what stakeholders cited as ‘a rapidly rising and unsustainable’ Medicaid budget. Additionally, there is concern with providing financial protection for the state’s broad middle class. As one stakeholder stated the problem, ‘I would say it’s primarily related to the fact that people who are above the Medi-Cal eligibility level…I would say, the whole middle-income…of our state, can’t afford the cost of long-term care. They’re having to impoverish themselves…And Medi-Cal is not an ideal system…it has its own challenges.’ Working with an outside actuarial firm, the coalition is presently exploring a wide variety of program design options and the pricing implications of each.” (p. 12)

LTC Comment: This assessment of the long-term care problem in California would be laughable if it weren’t so sadly mistaken. Middle class people in California do not have to impoverish themselves to get long-term care. The state has the most generous Medicaid financial eligibility standards of any in the country and the biggest elder law bar artificially impoverishing more affluent people. California Medicaid has not even implemented some of the mandatory federal standards from OBRA ’93 and DRA ’05 designed to target Medicaid to the needy. Long-term care is a mess in California because the state trapped its population on Medicaid by making public welfare the path of least resistance for citizens who failed to plan, save, invest, or insure for long-term care. For a full development of this analysis, see Medi-Cal LTC: Safety Net or Hammock? (2011).

LTSS Report: “Hawaii does not currently have an LTSS social insurance program. However, of all the case study states, they have the longest history of attempting to pass a social insurance program for LTSS, as we describe below. … Unlike other states reviewed here, current activity in Hawaii is more narrowly focused on improving the caregiver support program rather than on trying to develop a new social insurance program for LTSS. … In 2012, the legislatively appointed State LTC Commission recommended establishing a ‘limited, mandatory public LTSS insurance program.’ It was to be funded by a 0.5% general excise tax on businesses and would provide 365 days of front-end insurance coverage paying up to $70 per day in benefits. The measure failed to pass the legislature …. Social insurance for LTSS has not been taken up since that time. Even so, Hawaii maintained its interest in addressing resident LTSS needs but no longer through a social insurance mechanism.” (p. 14)

LTC Comment: Well, then, it sounds like Hawaii thoroughly explored and decisively rejected the social insurance approach to long-term care. So why is Hawaii featured in a study that limits “primary strategies” on page 5 to two: either federal or state-based social insurance?

LTSS Report: “Maine’s attempt at LTSS financing reform was based on a ballot initiative – rather than the legislative approach in the other five states studied – to establish a social insurance program focusing exclusively on comprehensive in-home care. The ballot measure failed when put to a vote in November 2018.” (p. 15)

LTC Comment: What part of the public’s clear rejection of these tax-based social insurance programs do these researchers not get? If you want to know what’s really wrong with Maine’s long-term care system and what to do about it, read this: The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net (2013).

LTSS Report: “Michigan, like California, is in the earlier stages of building a coalition and exploring approaches for a social insurance LTSS finance reform solution. … The Michigan stakeholders are working in coalition, and have hired an outside actuarial firm to model the pricing impacts of a variety of program options. With the support of a state representative, Michigan created the Bipartisan Care Caucus in 2017 to advocate for LTSS care and finance reforms. … Legislation was introduced in the 99th Legislature (2017-2018) to require a feasibility study on a variety of LTSS finance and workforce reform proposals, including an actuarial study of a social insurance model. … Stakeholder listening sessions, the actuarial analysis, and a workforce analysis are in process. … The study is due to be completed before December 1, 2020 and delivered to the legislature within 60 days of the study completion date.” (p. 17)

LTC Comment: More bureaucratic and legislative wheel spinning with no clue why the problems they are trying to fix exist in the first place.

LTSS Report: Minnesota’s “reform approach is unique in focusing on options to enhance affordable private market solutions for middle income families. … For many years, Minnesota has focused on raising consumer awareness of the need to plan for LTSS needs and building better private LTSS financing vehicles to meet the needs of the middle-income market. … The first product is called LifeStage, a term life insurance policy that converts into long-term care insurance coverage when someone reaches the ‘policy conversion age.’ … The second pr