ADS

Place your advertisement here.

Email info@centerltc.com or call Damon at 206-283-7036 for advertising rates.

American Independent Marketing

LTCA enables GAs to receive top compensation and vesting directly from each carrier while supplying endorsed leads and support in a revolutionary new "hybrid" model: Click to see if you qualify for this limited opportunity.

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 28, 2014, 12:01 PM (Pacific)

Seattle—

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LTC CLIPPINGS AND LTC NEWS AND COMMENT

LTC Comment: The Center for Long-Term Care Reform is undertaking a major marketing push. It’s necessary as some of our previous revenue sources have declined.

Of all we do, we believe our “Clippings Service” benefits subscribers the most and most directly. You’ll be seeing much more about the clippings going forward.

One change we’re implementing immediately is to stop posting these “LTC E-Alerts” on our public-access website. From now on, we’ll only post tickler summaries here.

Center members receive the full LTC E-Alert most Mondays. They also have access to archives of past LTC E-Alerts in The Zone, our password-protected members-only website. But non-members will no longer have free access to this material at www.centerltc.com. See below for example.

We invite non-members to join and receive the LTC E-Alerts, plus LTC Bullets, plus access to The Zone and/or subscribe to the clippings service and receive the news in real time.

Help us, won’t you? Join the Center yourself and encourage your colleagues and competitors to join, support our work, and receive the many benefits of membership.

Thanks as always for your patience and support.

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Today’s LTC E-Alert contained links, quotes and comments on articles, reports, or data on the following topics:

· Jury sends $14 million negligent care message to nursing home industry

· More regulations piled on LTC providers

· Not 10,000 but 11,000 boomers retire every day

· Third in excellent 3-part series of articles on today’s LTC insurance

· Medicaid planning attorney defends millionaires getting Medicaid

· Society of Actuaries’ report modeling LTCI liabilities using Monte Carlo simulation

· Low Medicaid reimbursements cause poor access to care for recipients

· Genworth vastly undervalued according to financial analyst

· Genworth offers new LTCI product line

· Even the wealthy should consider LTC insurance

· High income Medicare enrollees spend more on health insurance premiums but less on out-of-pocket health expenditures

· Linked vs. built-in living benefits: Which is a better fit?

· Medicare experiments with dropping the 3-day hospitalization requirement

· The future of robot caregivers

· Music helps Alzheimer’s patients—video

· Medicaid spending varies widely by state—GAO

· Report detail Medicaid reimbursement shortfalls by state

· Medicare spending to slow despite aging population—CBO

· Huge drop in Alzheimer’s risk in past 30 years

· Fewer strokes for seniors, but same risk for those under 65

· Medicaid crowds out other state spending priorities—Samuelson

· California tries to coordinate Medicare and Medicaid

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Updated, Friday, July 25, 2014, 11:16 AM (Central)

Auburn, Alabama—

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LTC Bullet: LTC Almanac Update, #2

LTC Comment: For the second time in two weeks, we’ve updated the “Almanac of Long-Term Care” in The Zone. More on the LTC Almanac and today’s update after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose insight into sex-based pricing can help you secure referrals. His proprietary sales tools enable clients to make informed final decisions about buying LTCi in 15-20 minutes, let you test a client's interest in a combo product immediately, and change work-site LTCi from a proposal-delivery process to interactive consultation. The lead author of the Milliman Broker World LTCi Survey, Claude was named one of Senior Market Advisor’s 10 "Power People" in LTCi in 2007 and Chaired the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** EARLY BIRD Exhibitor Information for the 15th Annual Intercompany LTCi Conference - March 22-25, 2015 - The Broadmoor Hotel - Colorado Springs, CO (Discounts end August 4th). Special discounts available for non-profit partner organizations. Contact Jim Glickman for details, jim.glickman@lifecareassurance.com or 818-867-2223. ***

*** SEVENTH NATIONAL Medicare Supplement Insurance Conference announced by Jesse Slome and the American Association for Medicare Supplement Insurance. It will take place April 13-15, 2015 at the Hilton Hotel, Lake Buena Vista in Orlando. Details here. ***

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LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, August 1, 2014. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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Chapter 1: Aging Demographics

General Stats

65+ in the United States, 2010 URL

65+ in the United States: 2010
Special Studies
Current Population Reports
By Loraine A. West, Samantha Cole, Daniel Goodkind, and Wan He
Issued June 2014
P23-212

“The ‘65+ in the United States: 2010’ report expands on information related to long-term care and nursing homes compared to older reports. The report investigates a wide variety of topics including longevity, health, socio-economic characteristics, size and growth, and geographic distribution of the 65-and-older population. … To access the full report, click here.”

LTC Comment: The big decline in nursing home population reflects the move by public (Medicaid) and private (LTCI and spend down) payers to fund custodial long-term care in homes and assisted living facilities rather than skilled nursing facilities.

Census Bureau on Aging 0514 URL: http://www.census.gov/prod/2014pubs/p25-1140.pdf

“An Aging Nation: The Older Population in the United States: Population Estimates and Projections Current Population Reports Issued May 2014 P25-1140

LINK

"That the U.S. population is aging rapidly is no mystery, but that masks an important fact: America will remain a lot younger than many countries in the developed world. Roughly 1 in 5 Americans (about 21%) will be 65 years old and up by 2050, compared with just 13% in 2010 and less than 10% in 1970, according to a new U.S. Census Bureau report released Tuesday."
Brookings on the Wealthy Poor 0314 URL

“The Wealthy Hand-to-Mouth,” Greg Kaplan, Princeton University, NBER, and IFS Giovanni L. Violante, New York University, CEPR, NBER, and IFS Justin Weidner, Princeton University

3/21/14 LTC Clipping: LINK

“A new paper by economists Greg Kaplan and Justin Weidner of Princeton University, and Giovanni Violante of New York University, finds that about 70 million Americans may live in families they describe as ‘wealthy hand-to-mouth’ households. These are families that own assets such as homes, cars, retirement plans and even boats, yet still spend virtually every dollar of their regular income because it’s necessary to pay all the bills they’ve racked up.”

LTC Comment: Two points: (1) this research shows why Medicaid’s home equity exemption of up to $814, 000 is crazy and (2) imagine the potential for funding long-term care insurance through a carve out of home equity which would protect the entire estate including the residual home equity.

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

CBO on Unfunded Liabilities

The 2014 Long-Term Budget Outlook 0714 URL

LTC Clipping, 7/16/14

CBO: Medicare spending growth will slow down over the next 25 years, despite pressures from aging population - McKnight's Long Term Care News

“Federal spending on Social Security and the major healthcare programs is set to ‘rise sharply’ and account for 14% of gross domestic product by 2039, according to the CBO's annual budget outlook. Yet, the CBO projects Medicare and Medicaid spending over this time period will be $250 billion less than the agency projected in 2010.”

LTC Comment: This news of a slight drop in expected government health care spending was all over the media yesterday. Take it with a grain of . . . actually a shaker full . . . of salt. Here’s the bigger picture from the same CBO report, “The 2014 Long-Term Budget Outlook”:

“Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing its debt to soar. The total amount of federal debt held by the public is now equivalent to about 74 percent of the economy's annual output, or gross domestic product (GDP)-a higher percentage than at any point in U.S. history except a brief period around World War II and almost twice the percentage at the end of 2008.”

Unfunded Liability Estimates

Gokhale on Debt 0414 URL: http://www.cato.org/sites/cato.org/files/books/government-debt-iceberg.pdf

The Government Debt Iceberg by Jagadeesh Gokhale

“Nobody who has even a passing acquaintance with economics could fail to realize that Western governments are highly indebted. Current generations have been consuming at the expense of future generations. However, just how indebted are we? The government measures how much it has borrowed to meet past spending commitments, but it does not measure how much money it needs to meet all the future pensions and healthcare promises it has made to tomorrow's older generations. Furthermore, no funds have been set aside to provide for these costs. In The Government Debt Iceberg, Jagadeesh Gokhale reveals the extent to which western governments are keeping taxpayers in the dark about true levels of debt by hiding the magnitude of future spending commitments that cannot be met by future tax receipts.”

Chapter 4: Long-Term Care

General

The Alliance For Health Reform: Covering Health Issues: A Sourcebook for Journalists Fall 2013 URL: http://www.allhealth.org/sourcebookTOC.asp?SBID=7

LTC Clipping, 3/25/14

“The Sourcebook, produced with the support of the Robert Wood Johnson Foundation, has the latest information and data on pressing health care topics. It also includes the names and contact details for top experts in each subject area, along with a comprehensive glossary of health care policy terms.”

LTC Comment: This recently updated “Sourcebook” slants toward public financing and away from market-based solutions but it is a useful resource.

“Long-Term Care Services in the United States: 2013 Overview” by Lauren Harris-Kojetin, Ph.D. Manisha Sengupta, Ph.D. Eunice Park-Lee, Ph.D. Roberto Valverde, M.P.H., December 13, 2013

CDC and NCHS on LTC Services 2013 1213 URL

“First-ever CDC report: Nursing homes provide most long-term care nationwide, alternative settings gain ground in the West. Nursing homes still account for the vast majority of long-term care services available in the United States despite policies meant to encourage home- and community-based care, according to a new government report. The first-ever ‘National Study of Long-Term Care Providers’ includes data on the capacity and operational characteristics of providers, and information about the people cared for in these settings.”

Chapter 6: Long-Term Care Financing

General

BPC LTC White Paper 0414 URL

“America's Long-Term Care Crisis: Challenges in Financing and Delivery”

“In December 2013, the Bipartisan Policy Center (BPC) launched a Long-Term Care Initiative under the leadership of the BPC Health Project leaders, former U.S. Senate Majority Leaders Tom Daschle (D-SD) and Bill Frist (R-TN), as well as former Congressional Budget Office Director Alice Rivlin and former Wisconsin Governor and Secretary of the U.S. Department of Health and Human Services Tommy Thompson. The Long-Term Care Initiative will propose a series of bipartisan policy options in late 2014 to assist in the effort to build consensus on how to finance and deliver long-term care-referred to in this paper as longterm services and supports (LTSS)-at a time of political discord and fiscal constraints. The initiative seeks to raise awareness about the importance of the issue, bringing it to the attention of the public, as well as to policymakers, and making a strong case for action. This paper sets the stage for BPC's recommendations by identifying the major challenges and key questions in the financing and delivery of LTSS for both seniors and individuals under age 65.”

Chapter 9: Long-Term Care Providers

Medicaid Reimbursement

Nursing home shortfall report 2012 URL

LTC Clipping, July 17, 2014:

5 states where Medicaid pounds nursing homes | LifeHealthPro

"LTCI issuers and producers have always emphasized the advantages that come with using carefully regulated private insurance, rather than a government program meant for the poor, and the advantages may be growing. . . . Of the 39 states Eljay tracked in 2012, Michigan and North Dakota were the only ones in which the average Medicaid nursing home reimbursement rate exceeded the average allowable charges. The biggest recorded shortfall between the average reimbursement rate and the average cost of care was in New Hampshire. In 2012, nursing homes there lost $57 per day – 24 percent of the average cost -- per Medicaid patient. In 2006, Arkansas was the only state in the annual funding table in which the average Medicaid nursing home patient generated an operating profit. A nursing home there could earn $1.24 per day for caring for a Medicaid patient. The biggest average shortfall -- $28.16, or 22 percent of the average cost – was in Illinois."

The United States Average rate paid: $178.68.
Average allowed costs: $201.02.
Average difference: -$22.34.
Difference as a percentage of average allowed costs: -11%.
Percentage of patients with Medicaid: 63%.
Percentage of patients using private sources of funds: 22%.

LTC Comment: You’ve seen us write often that Medicaid pays nursing homes less than the cost of providing the care and that the few remaining private payers in nursing homes (including those with LTCI) are compelled to pay half again as much as Medicaid to make up the difference. This article is about the latest version of the annual report sponsored by the American Health Care Association that provides the evidence for these facts. Check out the full report here. Of the five states with the biggest Medicaid reimbursement shortfalls, we’ve done major reports on four: New York, New Jersey, South Dakota and Wisconsin. Those reports are here.

Chapter 10: Medicaid

Medicaid is the 800-pound gorilla of LTC

Economics of Medicaid book 0414 URL

The Economics of Medicaid: Assessing the Costs and Consequences,
Joseph Antos, Charles Blahous, Darcy Nikol Bryan , James C. Capretta, Robert Graboyes, Jason J. Fichtner, June O'Neill , Nina Owcharenko , Thomas P. Miller | edited by Jason J. Fichtner | Apr 08, 2014

Copy of book here: http://mercatus.org/sites/default/files/EconomicsofMedicaid.pdf

“Medicaid, originally considered an afterthought to Medicare, is today the largest health insurance provider in the United States. Under the Affordable Care Act, the Congressional Budget Office projects Medicaid enrollment to increase nearly 30 percent by 2024, and federal spending on the program to double over the next decade. For the states, Medicaid is already the largest single budget item, and its rapid growth threatens to further crowd out other spending priorities.

“In this collection of essays, nine experts discuss the escalating costs and consequences of a program that provides second-class health care at first-class costs. The authors begin with an explanation of Medicaid's complex federal-state funding structure. Next, they examine how the system's conflicting incentives discourage both cost savings and efficient care.

“The final chapters address the pros and cons of the most mainstream Medicaid reform proposals and offer alternative solutions. This book offers a timely assessment of how Medicaid works, its most problematic components, and how-or if-its current structure can be adequately reformed to provide quality care, at sustainable costs, for those in need.”

Medicaid Financing

GAO on Medicaid payment variations 0614 URL: http://www.gao.gov/assets/670/664115.pdf

LTC Clipping, July 17, 2014

LINK

“In fiscal year 2008, states recorded significantly varied amounts in Medicaid spending, according to a new Government Accountability Office analysis, Modern Healthcare reports. . . .

“The GAO analysis also found that:

· California spent about $3,800 per beneficiary;

· Rhode Island spent $11,700 per beneficiary;

· Alabama spent an average of $9,000 for each beneficiary with a disability; and

· New York spent an average of $32,000 for each beneficiary with a disability.”

LTC Comment: Beneficiary is the wrong term to describe a Medicaid recipient. Medicare is social insurance into which everyone pays and is therefore entitled to benefits, hence deserving the term “beneficiary.” Medicaid is welfare. People who receive Medicaid are public assistance “recipients.”

GAO on Medicaid Demographics and Usage 0214 URL: http://www.gao.gov/assets/670/661011.pdf

Summary: http://www.gao.gov/products/GAO-14-176

“In fiscal year 2009, states spent nearly a third (31.6 percent) of all Medicaid expenditures on the most expensive Medicaid-only beneficiaries, who were 4.3 percent of total Medicaid beneficiaries. States spent another third (33.1 percent) on all other Medicaid-only beneficiaries, who represented 81.2 percent of total Medicaid beneficiaries. Among dual eligible beneficiaries, a similar pattern existed, with a small proportion of the population accounting for a disproportionate share of expenditures. . . .

“Certain characteristics significantly increased the probability of being a high-expenditure Medicaid-only beneficiary. Specifically, the results of GAO’s analyses indicate that the probability of being a high-expenditure Medicaid-only beneficiary was:

• 24.4 percent for those residing in a long-term care facility,

• 20.8 percent for those with human immunodeficiency virus/acquired immunodeficiency syndrome,

• 18.3 percent for those with disabilities, and

• 13.3 percent for new mothers or infants.”

Chapter 11: Medicaid Planning

General

GAO on Medicaid LTC Eligibility 0514 URL: http://www.gao.gov/products/GAO-14-473

Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage GAO-14-473: Published: May 22, 2014. Publicly Released: Jun 23, 2014.

Read a summary and find a link to the full report here.

For our analysis and critique, see LTC Bullet: GAO Punts on Medicaid Planning, Thursday, 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.

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Updated, Wednesday, July 16, 2014, 1:59 PM (Pacific)

Seattle—

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LTC BULLET: FREE THE LTCI 5000

LTC Comment: LTCI specialists should break their chains and soar. We can help, after the ***news.***

*** SPECIAL OFFER. After you read today’s LTC Bullet including the testimonials about our clippings service, we’ll make it very easy for you to try a clippings subscription. Two options:

Join the Center now or renew your regular membership early at this special, temporary Premium Member rate of $225 per year (usually $250) or $19 per month (usually $21) and we’ll add you to our clippings service and upgrade your membership immediately. Send a check or use PayPal. (Best deal for Center members.)
Try the clippings: Sign up through PayPal at $10 per month (auto-payment) cancellable anytime and begin immediately to receive the clippings only. (Best deal if you’re not a Center member.)

If you have questions or need help, contact Damon at 206-283-7036 or damon@centerltc.com. He’ll add you to our clippings service post haste. ***

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LTC BULLET: FREE THE LTCI 5000

LTC Comment: I asked Center Premium Members for their best guess of how many agents specialize in long-term care insurance. Their answers ranged from 500 to 30,000, but most were under 5000. My instincts tell me the number of agents who actually make a living selling exclusively or nearly all LTCI is 5000 or less. But the actual number is not as important as the fact, and the reason why, it is tiny compared to the magnitude of the need.

The need is obvious, right? Baby boomers will need long-term care. They’re unprepared to pay for it. The public safety net is fraying. A new government LTC entitlement is out of the question. Private LTC insurance—traditional or hybrid—is the logical answer. But America can barely muster a few thousand people to sell the product. What gives?

It doesn’t take a mastermind to sell LTCI full time, but it does require a special kind of person. Generally, the agents who succeed have higher-than-average intelligence, a robust work ethic, exceptional perseverance and a strong sense of individual mission. For whatever reason—a personal long-term care crisis in their own family or the satisfaction of having helped a policy holder through one—they believe passionately in what they do.

Bottom line, most people with the characteristics and drive to be successful LTCI specialists can (and usually do) make more money with less effort doing something else professionally. That’s why the sense of individual mission is so important. It separates the many who will dabble in LTCI sales from the few who will excel, prosper or at least hang on.

The challenge facing LTCI distribution is a given. Sales are limited by the number of agents selling, which is limited by the number of job seekers with the skills, drive and fervor to do the job. Today, however, high unemployment and underemployment make all forms of independent sales work attractive to many. There is a large pool of potential salespeople. The growing crisis of boomers caring for aging parents means more people will find their way to a motivating personal sense of LTC mission. I conclude there are many more AMGs (altruistic, masochistic geniuses) out there who could do the job and would if it were a little less daunting.

LTCI carriers and distributors can do a lot to make the challenging LTCI sales job easier. They can train, re-train, reduce paperwork, design helpful online tools, expedite application processing, improve products and do a thousand other things. But one thing they cannot do is add hours to the 24-hour day allotted each LTCI producer. Of course, no one can do that. But what if we could convert some of those hours into more productive time?

Beyond passion, drive and good work habits, successful LTCI specialists need knowledge. Long-term care is a complicated field. Agents must know their own and competitors’ products of course, but also risk factors, field underwriting, aging demographics, LTC provider types and their challenges, Medicaid, Medicare, tax policy, caregiving, and myriad other subjects. Nor does the knowledge base agents need stand still. It changes constantly. What producer has not been blind-sided by prospects, clients, or competitors who read something of which the producer is unaware that ruins the sale?

Here’s a dilemma that faces every LTCI producer. How much time shall I spend staying on top of news and background knowledge relevant to my work? How much of my limited time shall I allot to call on prospective clients? There is a built in bias toward consuming time on research instead of sales. Searching the internet and reading lots of articles and reports is easy and enjoyable compared to picking up the phone, prospecting and selling, which is hard work. Don’t too many agents spend too much time surfing the web and too little time lining up and closing sales? Do you?

Reducing that temptation is why the Center for Long-Term Care Reform created our “clippings service.” The Center’s main job is to read and understand everything relevant to long-term care services and financing so we can apply that knowledge toward influencing public policy, correcting poor media coverage, and keeping our members and readers in the know. Our e-publications reduce the fire-hose volume of internet, academic and popular information to an essential trickle busy producers can consume in a small fraction of their time.

Our clippings service works like this. Steve and Damon Moses scan all the important information sources: academic journals, government and think tank reports, popular media, internet content, etc. We cull out an average of three key items per day and forward them in bite-sized emails with only a title, representative quote, a hyperlink to the original, and often a sentence or two of interpretation. Our clippings subscribers tell us this service is invaluable. (See the testimonials below.) We’re convinced expanding the clippings service to more producers can help them succeed and prosper in this challenging market. So, we’re reaching out to all LTCI carriers (traditional and asset-based), distributors, and producers with an appeal to get on board with the clippings.

Don’t duplicate our effort. Use your precious time to help more families meet the challenge of LTC risk. When we invite you to subscribe, give the clippings a try. You have nothing to lose but your electronic chains.

Clippings Testimonials

I depend on the clipping service to keep me abreast of all LTC breaking news. It is a huge time-saver and contributes to my overall sense of confidence and knowledge as a LTCi specialist. I really think the service gives me an “edge,” and helps keep me one step ahead of my competitors. Conveying the insights I gain from the clipping service often enables me to more easily and relevantly educate my clients on the importance of LTCi ownership.

Honey Leveen, LUTCF, CLTC, LTCP
“The Queen of Long-Term Care Insurance”
Houston, Texas

I find your clipping service invaluable. It helps me stay current not only with industry news (carrier’s, legislation and such) but consumer news as well. Every agent should be reading these stories daily . . . their clients and prospective clients are. To offer the best service one must be informed.

Phillip W. Sullivan
President – SellingLTC.com
Rabun Gap, Georgia

Your clipping service has saved me hundreds of hours of research each year since we started receiving your clippings. Using it makes me feel confident knowing that I’m on top of anything happening in the industry – from legislation to state movements to industry and insurer announcements. And being on top of things is critical in our industry. Any serious LTCi agent who doesn’t take advantage of this . . . doesn’t realize the value the service can bring to their production! For anyone above the level of agent, this service has to be considered a must. Thank you for your diligence in uncovering all the daily news a person in our industry needs!

Mark Randall
LTCI Trainer
Park Rapids, Minnesota

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

Romeo Raabe
www.TheLongTermCareGuy.com
Green Bay, Wisconsin

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

Barbara Franklin, CEO
Charleston, South Carolina

You do a tremendous job of keeping us all up to date in the ever changing world of LTCi and related topics. I value your resource immensely.

Carroll Harper
President
Carroll Harper & Associates, Inc.
Southwest Harbor, Maine

I love the clippings . . . very informative and I'm impressed with the amount of info you are consistently filtering through. I really enjoy the LTC comments, as they boil it down perfectly for me!

Jared Turner
Executive Chairman
Amada Franchise, Inc.
Laguna Woods, California (LTC provider)

I LOVE receiving your clippings, because . . . I'm able to get the info quickly and can pass it on to my colleagues. Honestly, without your service, I probably wouldn't be aware of half of the things that you serve up to me, on a “silver platter" as the saying goes. Thanks for making my life so much easier!

Susanne E. Howarth, CPA, CLTC
Director of Long-Term Care
TBG West
Culver City, California

Steve, you and Damon have been a valuable resource for me regarding all aspects of Long Term Care planning for my clients. I believe there is not an article on the subject that you have missed. Keep up the good work.

Eric Rubin, CLTC
Cedar Brook Financial Partners
Cleveland, Ohio

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Updated, Monday, July 14, 2014, 11:43 AM (Pacific)

Seattle—

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LTC CLIPPINGS AND LTC NEWS AND COMMENT

LTC Comment: The Center for Long-Term Care Reform is undertaking a major marketing push. It’s necessary as some of our previous revenue sources have declined.

Of all we do, we believe our “Clippings Service” benefits subscribers the most and most directly. You’ll be seeing much more about the clippings going forward.

One change we’re implementing immediately is to stop posting these “LTC E-Alerts” on our public-access website. From now on, we’ll only post tickler summaries here.

Center members receive the full LTC E-Alert most Mondays. But non-members will not have free access to the same material at www.centerltc.com. See below for example.

We invite non-members to join and receive the LTC E-Alerts, plus LTC Bullets, plus access to The Zone and/or subscribe to the clippings service and receive the news in real time.

Help us, won’t you? Join the Center yourself and encourage your colleagues and competitors to join, support our work, and receive the many benefits of membership.

Thanks as always for your patience and support.

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Today’s LTC E-Alert contained links, quotes and comments on articles, reports, or data on the following topics:

· Shrinking nursing home inventory and rapid assisted living growth

· Alzheimer’s disease is preventable in 1/3 of cases

· Eye disease and change in sense of smell can predict Alzheimer’s

· LTCconsumer.com launches

· The elderly are happiest, gloomiest about their health in these states

· Is aging at home too dangerous?

· Vince Bodnar interviewed about prospects for LTCI in the UK

· Bob Vandy writes about LTCI market changes

· Med-Supp conference will stream sessions free

· Genworth starts “two-track” strategy soon

· How to use health savings accounts to buy LTCI tax free

· Blood test for Alzheimers

· Top ranked nursing homes often poor and vice versa

· Ken Dychtwald video on “The Boomer Effect”

· New York Times says Newt Gingrich was right about Medicare going private

· 20^th anniversary of the National Long-Term Care Network

· Critical illness coverage

· Morningstar advocates adverse self-selection for LTCI

· ObamaCare’s impact on Medicare Advantage plans

· Wrinkles is a cartoon about nursing home life

· Caregiver to his wife

· States move on LTC policy in federal vacuum

· LTC Global and LTC Financial Partners merge

· LTCI CEOs opine on how to grow sales

· Former Calpers CEO to plead guilty

· Most boomers are overweight or obese

· Administration for Community Living launches webinar series on Alzheimer’s

· Longevity insurance

· 20% decline in nursing home population

· SCOTUS says home care workers can’t be forced into unions

Anything here you missed last week? Anything you need to know? Your prospects and competitors are reading this material.

Get in front of the information curve without spending more time doing research. Join the Center for Long-Term Care Reform to receive our LTC E-Alerts and LTC Bullets.

Subscribe to our clippings service to receive the most critical material online in real time, an average of three clippings per day.

Contact Damon at 206-283-7036 or damon@centerltc.com to join and/or subscribe.

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Updated, Friday, July 11, 2014, 9:00 AM (Pacific)

Seattle—

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LTC Bullet: LTC Almanac Update

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

*** TODAY is lucky Seven-Eleven. Make the most of it. ***

*** BROKER WORLD’S sixteenth annual 2014 Long Term Care Insurance Survey is in the trade journal’s current issue. This excellent update on the LTCI industry’s traditional products market is prepared each year by Claude Thau, Dawn Helwig, Allen Schmitz. We’ll touch on a few key findings here, but don’t miss the full piece in Broker World.

· “Industry sales were down 26.5 percent from 2012 in terms of premium and 22.9 percent in terms of the number of lives insured with individual policies.”

· “[T]he average premium per new sale dropped from $2,424 to $2,311, a surprising change of direction, recognizing that prices are increasing.”

· “Worksite sales also dropped (28.6 percent less new premium; 6.4 percent fewer policies), partly because some insurers discontinued worksite sales or restricted underwriting concessions and price discounts.”

· “Affinity sales increased, with 27.4 percent more premium and 26.3 percent more policies than in 2012.”

It’s not a happy picture, but as “Hybrid and Linked Long Term Care Planning Solutions” in the same issue by Center Premium Member Barry Fisher and Michael Ashwill observes, prospects for linked/hybrid products are brighter. (Gated so subscribe to Broker World to get access.) ***

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LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, July 18, 2014. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

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

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Chapter 1: Aging Demographics

Assets of the Aged

Johnson (UI) on Income and Wealth of Older Adults URL: http://www.urban.org/UploadedPDF/904599-income-and-wealth.pdf

March 26, 2014: Judy Feder said at ILTCI ’14 in Orlando that most people on Medicaid didn’t have much 10 or 15 years ago. I asked what she based that statement on. This is what she referred me to: testimony before the LTC Commission.

“Income and Wealth of Older Adults Needing Long-Term Services and Supports,” Statement of Richard W. Johnson Senior Fellow The Urban Institute Before the Commission on Long-Term Care August 1, 2013

We refuted Feder’s interpretation of this testimony in “LTC Bullet: Who Gets Medicaid LTC?,” Friday, March 28, 2014.

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

Unfunded Liability Estimates

THE REVENUE DEMANDS OF PUBLIC EMPLOYEE PENSION PROMISES Robert Novy-Marx Joshua D. Rauh Working Paper 18489 http://www.nber.org/papers/w18489

“Abstract: We calculate increases in contributions required to achieve full funding of state and local pension systems in the U.S. over 30 years. Without policy changes, contributions would have to increase by 2.5 times, reaching 14.1% of the total own-revenue generated by state and local governments. This represents a tax increase of $1,385 per household per year, around half of which goes to pay down legacy liabilities while half funds the cost of new promises. We examine sensitivity to asset return assumptions, wage correlations, the treatment of workers not currently in Social Security, and endogenous geographical shifts in the tax base.”

Chapter 6: Long-Term Care Financing

General

Leading Age on LTC Reform 1113 URL:

LeadingAge Pathways: A Framework for Addressing Americans’ Financial Risk for Long-Term Services and Supports, October, 2013

LTC Comment: In this report, the major nonproprietary LTC trade association opines about LTC policy favoring “an approach to long-term care financing reform that values self-reliance but includes some form of social safety net” according to McKnight's LTC News here

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

Health Affairs on 2012 Health Expenditures 0114 URL: http://content.healthaffairs.org/content/33/1/67.full.pdf

National Health Spending In 2012: Rate Of Health Spending Growth Remained Low For The Fourth Consecutive Year

Abstract: For the fourth consecutive year, growth in health care spending remained low, increasing by 3.7 percent in 2012 to $2.8 trillion. At the same time, the share of the economy devoted to health fell slightly (from 17.3 percent to 17.2 percent) as the nominal gross domestic product (GDP) grew by 4.6 percent. Faster growth in hospital services and in physician and clinical services was mitigated by slower growth in prices for prescription drugs and nursing home services. Despite an uptick in enrollment growth, Medicare spending growth slowed slightly in 2012, mainly due to lower payment updates. For Medicaid, slowing enrollment growth kept spending growth near historic lows. Growth in private health insurance spending also remained near historically low rates in 2012, largely influenced by the nation's modest economic recovery and its impact on enrollment.

Will HCBS Save Money? (See also similar section under LTC Providers)

Seniors moving to HCBS face more hospital risk 0114 URL: http://news.brown.edu/articles/2014/01/hospitals

Community and home-based care are popular and cost Medicaid less money than nursing home care, but a new study in the Journal of the American Geriatrics Society finds that seniors who left the nursing home for such services were 40 percent more likely to become hospitalized for a potentially preventable reason than those who stayed in the nursing home.

Chapter 7: Long-Term Care Insurance

General and Data

Land This Plane SOA report 0314 URL: http://www.soa.org/Research/Research-Projects/Ltc/research-2014-ltp-ltc.aspx

“Land This Plane: A Delphi Research Study of Long-Term Care Financing Solutions,” Sponsored by Society of Actuaries, March 2014

For summary and analysis, see “LTC Bullet: Inspect This Plane,” Friday, April 18, 2014, but the original is well worth perusing. Find a link to the .pdf here.

Federal LTCI Program

Paul Forte Contingencies Article 0114 URL: http://www.contingenciesonline.com/contingenciesonline/20140102?pg=50#pg50

Title: “Fresh Thinking on Long-Term Care Financing: The American Long-Term Care Insurance Program” Could a public-private model be the way to provide affordable long-term care insurance to large numbers of americans?”

Lead: MANY U.S. POLICYMAKERS BELIEVE that there's no way a voluntary long-term care (LTC) insurance program can attract a critical mass of enrollees. Given the 2011 severing of the optional federal Community Living Assistance Services and Supports Act from the Affordable Care Act (ACA) and a continuing exodus of private insurers from the LTC market, this isn't surprising. But arguing that any LTC program must be mandatory ignores both the federal budget deficit and ongoing political resistance to mandatory provisions in the ACA.

Chapter 9: Long-Term Care Providers

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

KFF on Olmstead 0614 URL

“Olmstead’s Role in Community Integration for People with Disabilities Under Medicaid: 15 Years After the Supreme Court’s Olmstead Decision,” Jun 18, 2014 | MaryBeth Musumeci and Henry Claypool

Executive Summary: June 2014 marks the 15^th anniversary of the United States Supreme Court’s landmark civil rights decision in Olmstead v. L.C., finding that the unjustified institutionalization of people with disabilities is illegal discrimination. While many cases are resolved without involving the courts, during the last 15 years, the lower courts have had the opportunity to apply Olmstead in a number of contexts, resulting in decisions furthering community integration for people with disabilities. This issue brief examines the legacy of Olmstead, with an emphasis on legal case developments and policy trends emerging in the last five years and the related contributions of the Medicaid program. Medicaid is important because of its unique role in financing the home and community-based services (HCBS) that enable individuals in institutions to return to the community and those at risk of institutionalization to remain in the community with support.

LTC Comment: For a different point of view on Olmstead, see “LTC Bullet: Olmstead Languishes,” Monday, April 8, 2002

Managed LTC

3/6/2014, “Pitfalls Seen in a Turn to Privately Run Long-Term Care,” by Nina Bernstein, New York Times

Quote: “Even as public attention is focused on the Affordable Care Act, another health care overhaul is underway in many states: an ambitious effort to restrain the ballooning Medicaid cost of long-term care as people live longer and survive more disabling conditions.”

LTC Comment: This is a long article, but I strongly recommend that you take the time to read it. Managed long-term care, even for the most severely disabled Medicaid recipients, is sweeping the country. State Medicaid programs are trying to save money by turning over their most severely impaired LTC recipients to giant managed care companies whose job it is to move them from mostly nursing home to mostly home care. This article explains why the strategy is not working as well as hoped. Savings from managed deinstitutionalization are not materializing and care quality is suffering. The underlying problem, however, with which this article does not deal and which most analysts evade, is that Medicaid covers the long-term care for too many people who should, could and would have paid for their own care. Managed home care for severely disabled patients won’t solve the problem of too many people dependent on welfare-financed long-term care. That problem will only be solved by (1) returning Medicaid to its original purpose of being a long-term care safety net for the neediest and by (2) incentivizing all who are financially able to plan, save, invest and insure to pay privately for their own long-term care.

Chapter 10: Medicaid

Medicaid is the 800-pound gorilla of LTC

NBER on Medicaid Literature 0514 URL: http://www.nber.org/papers/w20169

Medicaid: A Review of the Literature
Marianne P. Bitler, Madeline Zavodny

NBER Working Paper No. 20169
Issued in May 2014
NBER Program(s): CH HC HE

Abstract: We review the existing literature about the effects of the Medicaid program. We first describe the program’s structure and how it has changed over time. We then discuss findings on coverage, crowd out, take-up and health. Finally, we look at effects of the program on non-health outcomes such as welfare use and labor supply, marriage and fertility, and savings.

Jason J. Fichtner, ed., The Economics of Medicaid, 0614 URL
Contains chapters on everything except long-term care. Go figure.

Medicaid Financing

NBER on Medicaid Insurance in Old Age 0613 URL: http://www.nber.org/papers/w19151

MEDICAID INSURANCE IN OLD AGE Mariacristina De Nardi, Eric French, John Bailey Jones: Working Paper 19151

ABSTRACT The old age provisions of the Medicaid program were designed to insure poor retirees against medical expenses. However, it is the rich who are most likely to live long and face expensive medical conditions when very old. We estimate a rich structural model of savings and endogenous medical spending with heterogeneous agents, and use it to compute the distribution of lifetime Medicaid transfers and Medicaid valuations across single retirees. We find that retirees with high lifetime incomes can end up on Medicaid, and often value Medicaid’s insurance features the most, as they face a larger risk of catastrophic medical needs at old ages, and face the greatest consumption risk. Finally, our compensating differential calculations indicate that retirees value Medicaid insurance at more than its actuarial cost, but that most would value expansions of the current Medicaid program at less than cost.

Chapter 11: Medicaid Planning

Criticism of Medicaid Planning

“Mark Warshawsky: Millionaires on Medicaid,” Wall Street Journal, January 6, 2014 URL

"Expanding Medicaid coverage to an estimated nine million more Americans-as mandated by the Affordable Care Act-reinforces the idea that Medicaid only serves the poor. That perception is not accurate. And it distracts from a looming budgetary threat to the program: long-term care. . . .

"We might accept these rising costs if benefits flowed only to the elderly poor, as originally intended. But that is not the case. Significant long-term care benefits flow to individuals in the top 20% of retirement earnings, enabled by Medicaid's generous asset-exclusion limits. . . .

"The rules wouldn't matter if wealthy individuals shunned Medicaid long-term care benefits. But with Medicaid crowding out private alternatives, many don't. In fact, 15% of elderly individuals in the middle-income quintile, 8% in the upper-middle quintile, and 5% in the top quintile receive Medicaid benefits.

"Even these numbers don't capture the burden wealthy individuals place on Medicaid because they live much longer than the poor. Beneficiaries in the top income quintile receive, on average, double the lifetime payouts of those that are less well-off. And because Medicaid lowers reimbursement rates to providers and restricts benefits to contain costs, the poor are tied to lower-quality care and enjoy far less provider flexibility. . . .

"Tightening eligibility rules is the first step toward a solution. Before receiving Medicaid payouts, for example, wealthier households should first be asked to draw down the value of their home through a reverse mortgage to help pay for long-term care. Wealthier households could also be asked to meet long-term care expenses through life annuity payouts from their retirement accounts. Such changes would help ensure that Medicaid benefits flow to the financially needy."

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We will update the “Almanac of Long-Term Care” again soon to bring its content up to current.

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Updated, Thursday, July 3, 2014, 11:15 AM (Pacific)

Seattle—

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LTC BULLET: GAO PUNTS ON MEDICAID PLANNING

LTC Comment: Another GAO report underplays dramatic findings about the role, methods and extent of Medicaid planning and loose LTC eligibility rules.

*** Happy Independence Day ***

*** HOSPICE: Stephen Moses was interviewed on Garland Robinette's Think Tank show (WWL radio in New Orleans) on July 1, 2014 regarding exploding costs and declining quality of Medicare-financed hospice care. Find the podcast here; Steve Starts at 17 min. and 6 sec. in. (Steve’s segment is archived permanently here.) ***

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LTC BULLET: GAO PUNTS ON MEDICAID PLANNING

LTC Comment: Time after time the Government Accountability Office (GAO) has published studies that downplay the impact of Medicaid’s loose and easily manipulated long-term care eligibility rules. Why and how?

We’ll get to that below in a discussion of the government watchdog agency’s latest report, but first some examples from our past reporting:

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

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

LTC Bullet: Georgetown, GAO and Kaiser: The Bermuda Triangle of Good LTC Policy, January 25, 2006: 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: GAO on TOA Underwhelms, October 5, 2005: 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.

It’s not an impressive record and GAO’s latest report, titled “Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage,” is another case in point. Read a summary and find a link to the full report here.

What’s wrong this time? GAO produces some dramatic findings about the extent and potential cost of easy LTC eligibility and Medicaid planning but downplays the problems and fails to propose solutions. Here are some examples followed by our speculation as to why GAO does not connect the dots.

Quote from the GAO Report: “Nearly 75 percent of applicants owned some noncountable resources, such as burial contracts; the median amount of noncountable resources was $12,530.” (unnumbered “GAO Highlights” page)

LTC Comment: Wow! Three-fourths of GAO’s sample retained assets they weren’t required to spend on long-term care with a median value of more than $12,500? Seems like that would be worth analyzing, but GAO does not draw out the implications. A quick back-of-the envelope analysis indicates that if those results could be projected to the total of all Medicaid nursing home residents—which they can’t because of the small, unrepresentative sample GAO used (another serious problem with the study)—they would show that 665,700 Medicaid nursing home residents sheltered over $8.3 billion in noncountable resources or 42.4% of what Medicaid paid for their nursing home care in 2009. That’s a lot of money to divert from private LTC financing liability.

Quote: “Our analysis was limited to information included in the application files, which states used to make their eligibility determinations. We did not independently verify the accuracy of this information.” (pps. 4-5)

LTC Comment: That single admission obviates any value or credibility this report might otherwise have. Federal quality control audits have found that state welfare eligibility determinations are wrong in up to a third to a half of all cases even after state quality control reviews have confirmed the original determinations by state or county workers. I know this from personal experience as a federal AFDC quality control re-reviewer in the mid-1970s. We’ll never know the true extent of Medicaid asset shelters, transfers and other artificial self-impoverishment techniques until someone reviews a valid random sample of long-term care cases that is projectable statewide and nationwide and goes beyond the extremely limited information available in case records for purposes of verification.

Quote: “. . . 44 percent of approved applicants—129 applicants—had between $2,501 and $100,000 in total resources, and 14 percent of approved applicants—42 applicants—had over $100,000 in total resources.” (pps. 14-15, footnote omitted)

LTC Comment: Now just for the sake of discussion, let’s pretend GAO’s findings are representative of all Medicaid nursing facility recipients. How much wealth would that mean Medicaid is sheltering from private long-term care financial liability? Roughly 888,000 nursing home residents receive Medicaid. If 14% of them, or 124,264 recipients, possessed $100,000 or more in noncountable resources, that’s at least $12,426,400,000 or 3.4 times the total Medicaid spent for their nursing facility care. Yet GAO does not draw out the implications.

Quote: “For the 51 applicants for whom we were able to determine the equity interest in the home, the median home equity was $50,000, and ranged from $0 to $700,000.” (p. 20)

LTC Comment: Of the 294 approved Medicaid nursing home applications in GAO’s sample, 91 or 31% owned their own homes with a median value of $68,350. Most home equity (equity, not value) is noncountable, up to as much as $814,000 in some states. GAO found median home equity to be $50,000 among the 51 applicants for which they were able to determine it. Thus 100% of their sample’s home equity was noncountable as indicated in the table on page 21. Keep in mind that $50,000 is a median home equity value, meaning as many exempt homes were higher in home equity value as were lower, and meaning that the average or mean home equity value could be significantly higher. Now consider this: if 31% of 887,598 Medicaid SNF recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, then at least $13,757,769,000 worth of their home equity is noncountable, a figure that is 1.7 times the annual $8,126,152,615 cost of their care. Did it not behoove GAO to dig a little deeper? How much money could Medicaid save by making nursing facility care available only after home equity is spent down by means of private or commercial home equity conversion methods?

Quote: “We identified four main methods used by applicants—or described by eligibility workers, state officials, attorneys, or other representatives from law practices—to reduce countable assets and qualify for Medicaid coverage for nursing home care. These four methods are: (1) spending countable resources on goods and services that are not countable, (2) converting countable resources into noncountable resources that generate an income stream, (3) giving away countable assets, and (4) increasing the amount of assets the community spouse retains.” (p. 24)

LTC Comment: All right! This line of reasoning sounds promising, but where does it lead on each of the four main artificial impoverishment methods?

Quote: “Eligibility workers in 10 of the 12 counties interviewed stated that purchasing burial contracts and prepaid funeral arrangements, which are generally noncountable resources, was a common way applicants reduced their countable assets; and eligibility workers from one state said they recommend making such purchases to applicants.” (p. 25)

LTC Comment: OK, fine, but how much money is diverted from long-term care by this specific technique and what are the ramifications? For example, in our own study of Medicaid and LTC financing in New York, one of the states also included in GAO’s review, the Center for Long-Term Care Reform found, based on estimates by Medicaid eligibility workers and supervisors, that “Around 75 percent of all LTC cases prepay burial expenses for the recipient and spouse in amounts averaging $8,000 to $10,000, but nothing stops them from spending ‘$10,000 each for caskets for ten family members, including daughters, sons,’ according to one worker.” (See “Long-Term Care Financing in New York: The Consequences of Denial,” p. 18.) A question GAO should have asked and answered but didn’t is “how much private wealth is diverted by Medicaid from purchasing quality long-term care services and into offsetting funeral expenses for which recipients’ families would otherwise be responsible?” The number nationwide is conservatively many billions of dollars, a boon to the funeral industry but a huge cost to tax payers and Medicaid budgets.

Quote: “Among the Medicaid application files that we reviewed in selected states, 16 of the 294 approved applicants (5 percent) had a personal service contract—all of which were determined to be for FMV [fair market value]. The median value of the personal service contracts was $37,000; the value of the contracts ranged from $4,460 to $250,004.” (p. 26)

LTC Comment: What if GAO’s findings were valid nationwide? If 5% of Medicaid nursing home recipients (44,380 recipients) sheltered a median value of $37,000 each in personal service contracts, the total diverted away from private LTC financial liability would be $1,642,056,300 or 3.2% of total Medicaid nursing home expenditures. That’s a pretty large subsidy to family members for taking care of their loved ones. And personal service contracts are a technique that is available mostly to savvier, more affluent families who seek legal advice on how to shelter assets. As usual, the poor lose what little wealth they have to LTC expenses without learning the often technical and complicated legal methods of artificial self-impoverishment.

Quote: “Of the 70 married approved applicants whose files we reviewed, 13 had applications that contained a claim of spousal refusal. . . . These 13 applicants resided in two states and the community spouse retained a median value of $291,888 in nonhousing resources; two of the community spouses were able to retain over $1 million in nonhousing resources.”

LTC Comment: Spousal refusal is based on a bizarre interpretation of federal law commonplace in only two states (New York and Florida, both of which were included in GAO’s three-state sample for this study) by which spouses of institutionalized Medicaid recipients are allowed to refuse to contribute financially toward the cost of their spouse’s Medicaid-financed care--with impunity and in direct contradiction of the federal statute. (See “LTC Bullet: Spousal Refusal Robs Taxpayers and the Poor,” December 14, 2010 and “LTC Bullet: Spousal Refusal: Who Wins? Who Loses?,” April 18, 2006.) The GAO report does not challenge this practice, nor has CMS taken action to curtail or end it. The spousal refusal cases GAO identified had a median value of nearly $292,000 in nonhousing resources, but as they also found and we reported in our New York study as well, some spousal refusal cases involve a million dollars or more. Why exactly is this allowed? Why doesn’t GAO call for its prohibition?   Where is CMS? Blank out.

Quote: “Thus, married applicants may use countable resources to purchase an irrevocable annuity that pays potentially large amounts of income for the community spouse over a short period of time without affecting the institutionalized spouse’s eligibility. A representative from one law office we spoke to in an undercover capacity suggested that the creation of an annuity can be done quickly and therefore, is a tool for last minute planning. . . . State Medicaid officials, county eligibility workers, and attorneys who provided information on the value of annuities for the community spouse reported average values ranging from $50,000 to $300,000. Officials from one state reported seeing annuities for the community spouse worth more than $1 million. Medicaid officials from one state indicated that they have seen annuities that disbursed all of the payments to the community spouse shortly after the annuity was purchased, while officials from another state said that annuities can have large monthly payments for the community spouse, such as $10,000 per month.” (p. 32)

LTC Comment: Spousal annuities are a huge loophole that allows many millions of dollars to be diverted from private long-term care financing into the pockets of wealthy Medicaid nursing home recipients’ spouses. In our study of Medicaid and LTC financing in Maine, for example, we found that in 2011 “46 annuities totaling $5,847,488 were approved averaging $127,119 over a payback period of 20.07 months on average with a total return of $5,911,035 to the annuitants, whose average age was 82.” (“The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” p. 11). Yet GAO does not call for closing the annuity loophole nor has CMS done anything about it.

Quote: “Among the 294 approved applicants whose files we reviewed, we identified 5 applicants (2 percent) who appeared to have used one of the ‘reverse half-a-loaf’ mechanisms; 4 of the applicants appeared to use the mechanism that involved creating an income stream through a promissory note to pay for nursing home care during the penalty period. These 4 applicants gifted between $20,150 and $227,250 worth of resources, and had penalty periods of between 2 months and 22 months.” (p. 29)

LTC Comment: Again, GAO gives only glancing attention to the reverse half-a-loaf technique widely employed by Medicaid planners to reduce their affluent clients’ Medicaid spend down liability by half. The incidence of this technique’s use as identified by GAO—only 2%—seems small, but keep in mind that it’s only used for people with substantial assets. Otherwise, it would hardly be worth the cost in attorneys’ fees to set up the complicated technique. Public officials should ask about this and all the other techniques downplayed in the GAO report “how much public spending is being wasted?” and “why are such abuses allowed to continue?”

Closing LTC Comment: Bottom line, in this and earlier GAO reports on Medicaid LTC eligibility, the agency has minimized the significance of its own findings and failed to recommend needed corrective actions. Why? I think the answer is as simple as this: When it comes to government benefits, nobody wants to rock the boat. It’s easier to borrow and spend more and more public funds on wasteful, counterproductive policies than to confront fundamental problems, especially when those problems benefit affluent people who are most likely to vote.

So, kudos to Senators Tom Coburn, M.D. (R, OK) and Richard Burr (R, NC) and to Congressmen Darrell Issa (R, CA) and Trey Gowdy (R, SC) for requesting this study and special thanks to their hard-working staff who persuaded them to do so. The next step should be to connect the dots, identify the real magnitude of the problems GAO has only partially elucidated, and fix them. Don’t hold your breath.

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Updated, Monday, June 30, 2014, 1:16 PM (Pacific)

Seattle—

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“Hospice, Inc.” and LTC News and Comment

LTC Comment: We lead this week’s LTC E-Alert with a moving story and a worrisome concern. Here’s the story:

6/27/2014, “Life Lessons From Dad: Caring for an Elderly Parent Life Lessons From Dad: Caring for an Elderly Parent,” by Dave Shiflett, Wall Street Journal

Quote: "A hospice nurse told me, early on, that lots of children won't move a stricken parent into their homes, opting instead for a facility such as a nursing home. How would I advise others who are facing this situation? For our family, bringing Dad home was the right thing to do. When he came out of the hospital, he was so weak and disoriented that putting him into an unfamiliar setting might have finished him off. I also think that caring for Dad made us better people."

LTC Comment: This moving video and story will leave any viewer/reader asking "how can I afford help in this situation" even though it does not discuss financing. Interestingly, the story's positive mention of the Medicare hospice program comes one day before I'm scheduled to do a radio interview about the exploding cost and alleged declining quality of that program.

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Here’s the concern. When my wife of nearly 45 years was dying of primary brain cancer (Glioblastoma Multiforme), Damon and I received valuable assistance from Medicare’s hospice program. A nurse came twice a week to help with everything from counseling to injections. An aide helped with showers and even did Judith’s hair and nails. We greatly appreciated the services and the caring way in which they were provided.

So I had mixed feelings when invited to comment on a radio show tomorrow morning on this story: “Hospice, Inc.: How Dying Became A Multibillion-Dollar Industry,” by Ben Hallman in the Huff Post on June 19, 2014. But I know from long professional experience what can happen to good programs when government financing becomes too readily available, perverse incentives develop, and unintended consequences occur.

So I accepted the interview. If it happens as scheduled, you may be able to listen online at www.wwl.com. Just click on “Listen Live” in the upper right corner of that web page at 11:30am , Eastern time tomorrow morning, Tuesday, July 1, 2014. You’ll get to “The Think Tank” with Garland Robinette after a simple registration. The interview begins at 11:35am EDT. The show’s producer tells me a podcast will be available one hour after the show by clicking on “More from the Think Tank.”

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6/28/2014, “Downsizing? Senior move managers wants to help: As boomers look to move themselves - or their parents - some look to a special kind of mover,” by Alison Lobron, Boston Globe

Quote: "These entrepreneurs are tapping into a valuable market. Close to half of the US adult population will be older than 50 by 2017, according to a report by the Nielsen company, and those adults will control some 70 percent of the country's disposable income. A lot of services will be aimed at them, and for many they won't come cheap."

LTC Comment: Hmm, senior move managers, a new collateral lead source?

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6/28/2014, “Genworth CEO Talks About The Long Term Care 'Crisis' In America,” YahooFinanceUK

Quote: "There is a price to most things including aging. America is getting older and a new study from Genworth Financial finds most Americans are not financially prepared, especially with rising health care costs for the elderly. The new study finds more than 90 percent of American Adults do not have long term care insurance. Other findings includes 70 percent surveyed believe than the Affordable Care Act will cover their Long Term Care. Department of Health and Human Services projects the population older than 85 will more than double by 2040. Thomas McInerney is the president and CEO of Genworth Financial and spoke to TheStreet's Susannah Lee on what he calls a 'Long Term Care Crisis.'"

LTC Comment: Video in Genworth’s “Let’s Talk” campaign.

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6/17/2014, “With Parkinson's and blind in one eye, Eau Claire man hits round to remember,” WEAU.com

Quote: "Warren Berg didn't get a hole in one. He made no birdies, no pars, and no bogeys. But just being out on the links made for a round to remember. 'I played a 13 handicap when I played for 18 (holes). But it went up drastically when I got Parkinson's,' Berg said. . . .   It's part of Azura's new dreams program to support its residents by giving them great memories through help and donations."

LTC Comment: Thanks to Center premium member Romeo Raabe of Green Bay, Wisconsin for this story. He says "Warren Berg was a financial planner here in Green Bay years ago who referred clients to me for LTCi. He bought a State life policy at my insistence years ago and is now using it." I wonder where Mr. Berg might have ended up if he hadn't bought that policy, probably not in a facility with a "dreams program."

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6/26/2014, “LTCI Watch: Dear Sylvia, Opinion,” by Allison Bell, LifeHealthPRO

Quote: "If con artists were selling consumers fraudulent LTCI policies, HHS and the Fed might say something. When Fed interest rate policies hollow out perfectly good LTCI policies, maybe HHS should say something to the Fed."

LTC Comment: Low interest rates artificially forced by the Fed to near zero have hurt senior savers and asset- or reserve-based insurance of all kinds, especially LTCI. Shame on the Fed for propping up government's irresponsible fiscal policy and excessive deficit spending at the expense of responsible people and private insurers.

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6/26/2014, “Americans Are Totally Unprepared for This Shock,” by Martha C. White, Time

Quote: “In a new survey by MoneyRates.com, 40% of respondents say they’ve set aside nothing — zilch — towards paying for the care they’ll most likely need in their final years. . . . For people without enough savings or who didn’t plan ahead and take out a long-term care insurance policy, the high cost of nursing homes can force even well-off seniors into poverty, at which point they’re eligible for Medicaid, which does cover nursing home care.”

LTC Comment: This article does not take into account the fact that people can protect substantial assets and still get the government to pay for LTC, but at least it is another warning in a broad national media outlet about the need for long-term care financial planning and the pitfalls of ending up on Medicaid.

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6/26/2014, “Americans unprepared for financial impact of accidents, critical illness,” by Meredith Ryan-Reid, BenefitsPRO

Quote: "Out-of-pocket costs relating to an accident can be as high as $4,112; uncovered costs for a critical illness can total $14,444, according to the MetLife Accident and Critical Illness Impact Study. Moreover, the same study found that lost income due to accidents and critical illnesses could be as high as $26,900 and $50,600, respectively."

LTC Comment: These are “gotcha” expenses that people often don’t consider in their insurance planning.

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6/26/2014, “50 Or Older? 10 Things You Should Do With Your Money,” by Rebecca Reisner, Forbes

Quote: "So we asked several CFPs to reveal 10 crucial things that could affect your money once you enter your 50s, both the bright spots and the potential pitfalls. Read on to see where you might need to be better prepared."

LTC Comment: Number one on the list is long-term care insurance.

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6/26/2014, “75% of nursing home residents are incontinent, care costs reach $5 billion annually, government report shows,” by Stephanie H. Kim, McKnight's LTC News

Quote: "The research also showed an association between incontinence and the increased risk of declining mental health, depressive symptoms, higher risk for the onset of psychological distress and increased risk of falls. Chronic conditions such as diabetes and stroke, mobility impairment and cognitive impairment are associated with incontinence, among other interacting factors."

LTC Comment: Direct caregivers are underpaid, highly susceptible to injury, and in short supply. Having to deal daily with such a high percentage of incontinent residents certainly doesn’t improve the situation.

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6/25/2014, “Where Can You Get the Best Nursing Home Value in America?,” by Howard Gleckman, Forbes

Quote: "A new study by AARP, the Commonwealth Fund, and the SCAN Foundation ranks the quality and affordability of nursing homes by state. It finds wide variation in both cost and quality among states but, at least according to some indicators, you get what you pay for: The states with the most affordable facilities are plagued by many poor performers. . . . To put these numbers in context, and to give you a sense of just how expensive private pay nursing facility care is, the study figured that the median annual cost of a nursing home room in the U.S. is more than twice median income."

LTC Comment: You get what you pay for and Medicaid pays less than cost. Private pay rates are half again as high as what Medicaid pays just to make up part of the difference.

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6/25/2014, “Prevailing in the Long-Term Care Crisis,” by Bob Carlson, InvestingDaily

Quote: "It’s no wonder that survey after survey shows long-term care expenses are among the top worries of Americans in or near retirement. You could have a dynamite estate plan yet have most of your estate pay long-term care expenses instead of going to your loved ones. It doesn’t have to be that way. You can develop a plan to pay for potential long-term care expenses and keep most of your estate intact. There isn’t one silver bullet or strategy. Instead, use all the tools at your disposal to construct a protective moat around your estate. Here are the main tools available:"

LTC Comment: You can tell this article was not written by an elder law attorney because Medicaid is nowhere on his list.

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6/25/2014, “Frailty Risk -- More than Just Long-Term Care and Health Care Expenses,” by Jamie Hopkins, Forbes

Quote: "Retirement income planning is more than just developing a steady stream of income; it also requires planning for those uncertain events that threaten a secure retirement. Aging brings with it a variety of retirement risks, including escalating health care expenses and possible long-term care expenses. While these represent significant financial risks for aging retirees, there is another risk, one often misunderstood and overlooked, lurking in the shadows — frailty risk. Frailty risk can pack a powerful punch to the security of your retirement plan.

"In addition to living independently, you might decide you want to purchase a new life insurance policy or obtain long-term care insurance coverage. However, the onset of frailty could be a factor in the underwriting process, possibly prohibiting you from being insurable. In some cases you might be insurable but at a much higher cost. This is a good reason to purchase long-term care insurance and life insurance at an early age, preferably in your 50s when the likelihood of being uninsurable is much lower."

LTC Comment: Too often people don’t realize they need insurance until it’s too late to qualify for it.

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6/24/2014, “EBRI's First Look at HSA Account Balances and Distributions,” by Greg Scandlen, NCPA Health Policy Blog

Quote: "The Employee Benefits Research Institute has just published its first analysis of HSA accounts, balances, and distributions, based on its own HSA database. This is an excellent report, in part because it also looks at other similar reports and discusses the strengths and weaknesses of each. It is well worth downloading and saving the entire report and using it as a baseline to watch the growth of HSAs over the coming years."

LTC Comment: The rapid growth of health savings account balances, documented by the EBRI report discussed in this article, is very important as these funds can be used to purchase private LTCI.

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6/24/2014, “Rob Lowe: 'It Makes Me Proud and Breaks My Heart' to Watch My Kids Grow Up,” by Lesley Messer via Good Morning America

Quote: "Planning for the future, he said, has become a priority. 'I’m a big believer in planning for any and all contingencies because you never know what may happen tomorrow,' he said. 'At least addressing the issues puts you more in the driver’s seat.' To that end, Lowe, 50, has teamed up with Genworth Financial, Inc. to promote the #LetsTalk tour, an initiative dedicated raising awareness of long-term care planning for aging family members. The campaign will launch June 27 in New York City."

LTC Comment: They say “talk is cheap” but it’s a good start.

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6/24/2014, “MedAmerica reports lower 2013 net income,” by Allison Bell, LifeHealthPRO

Quote: "The Long Term Care Business of MedAmerica -- a privately held company that specializes in selling long-term care insurance (LTCI) -- posted a smaller profit for 2013 but higher revenue.

"Premiums earned increased 6.3 percent, to $161 million, and the amount of LTCI benefits paid increased 4.7 percent, to $205 million."

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Updated, Wednesday, June 25, 2014, 3:16 PM (Pacific)

Seattle—

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LTC E-Alert #14-019: LTC News and Comment

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LTC Comment: Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don’t have to. By dividing the labor, we can all work more efficiently. If you like what you read in our “LTC News and Comment” E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe.

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06/23/2014, “At These Hospitals, Recovery Is Rare, but Comfort Is Not,” by Gina Kolata, NYTimes.com

Quote: “The population is aging, increasing the chances of a catastrophic illness like blood sepsis or acute respiratory distress syndrome that eventually may land patients in a hospital like this one. And doctors are getting better at keeping people alive when they are in intensive care. The result is an increase in the number of highly dependent patients who survive the intensive care unit but must remain on a respirator. They cannot go home or to a rehabilitation facility. Many are too sick even for a nursing home. Long-term acute care is ‘where you go when you survive but you don't recover,’ Dr. Nelson said.”

LTC Comment: The challenge of “longer term care” is large and getting larger.

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06/23/2014, “Medicaid: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage [link],” U.S. GAO

Quote: “Nearly 75 percent of applicants owned some noncountable resources, such as burial contracts; the median amount of noncountable resources was $12,530.

“GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage:

1. spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements;

2. converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note;

3. giving away countable assets as a gift to another individual—such gifts could lead to a penalty period that delays Medicaid nursing home coverage; and

4. for married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity.

“Eligibility workers GAO spoke with identified bank statements as the most useful source of information for assessing financial eligibility. They explained that bank statements could lead to the identification of unreported assets, such as life insurance policies, or show patterns of withdrawals that prompt further inquiry.”

LTC Comment: If those results could be projected to the total of all Medicaid nursing home residents—which they can’t because of the small, unrepresentative sample the government watchdog agency used—they would show that Medicaid nursing home residents sheltered over $13 billion in noncountable resources or nearly 26% of 2009 Medicaid nursing home expenditures. We will describe, interpret, analyze and critique the GAO report and data in next week’s LTC Bullet.

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06/23/2014, “Feeding the Brain's Curiosity Helps Delay Alzheimer's,” by Nicole Ostrow, Bloomberg

Quote: "People genetically prone to Alzheimer’s who went to college, worked in complex fields and stayed engaged intellectually held off the disease almost a decade longer than others, a study found. Lifelong intellectual activities such as playing music or reading kept the mind fit as people aged and also delayed Alzheimer’s by years for those at risk of the disease who weren’t college educated or worked at challenging jobs, the researchers said in the study published today in JAMA Neurology."

LTC Comment: Significant findings in this study.

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06/23/2014, “The Medicaid Black Hole That Costs Taxpayers Billions,” by John Tozzi, Businessweek

Quote: "Here’s some cheerful news: States and the federal government are doing little to stop a costly form of Medicaid fraud, according to a government report released last week.

"Despite the growth of managed care in recent decades, officials responsible for policing Medicaid 'did not closely examine Medicaid managed-care payments, but instead primarily focused their program integrity efforts on [fee-for-service] claims,' according to the Government Accountability Office, the investigative arm of Congress. The managed-care programs made up about 27 percent of federal spending on Medicaid, according to the GAO. The nonpartisan investigators interviewed authorities in California, Florida, Maryland, New Jersey, New York, Ohio, and Texas over the past 12 months."

LTC Comment: More bad news about Medicaid managed care.

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06/21/2014, “Why you need long-term care insurance and tips on buying it,” by Lisa Zamosky, Los Angeles Times

Quote: "Maria Mascone's mom had dementia, and she spent her final six years in an assisted living facility. The cost of the facility ran about $3,000 a month. Mascone says her dad left behind a sizable nest egg, and eventually the sale of her parents' home helped cover the cost of her mother's care.

"The bottom line, Slome says, is that if you live into your 80s, 90s or beyond, 'the chance that you're going to need extended care increases enormously.' And then at that late date, he says, 'the question is: What are you going to do about it?'"

LTC Comment: There is a useful explanation (with examples) of Jesse Slome’s “good-better-best” approach to LTCi in this article.

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06/20/2014, “The Retirement Crisis Nobody Talks About: Long-term Care,” by Penelope Wang, Money.com

Quote: “In its latest annual retirement readiness study, the Employee Benefit Research Institute found that some 57% to 59% of Baby Boomer and Gen X households are on track to retire comfortably. But if you factor long-term care costs, your risk of running out of money in retirement soars by 100% to 800%, depending on your income level, according to new study by EBRI.”

LTC Comment: Rocket fuel for factual LTCI marketing.

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06/20/2014, “A Test for the Early Detection of Alzheimer's Disease,” by Ann Carrns, NYTimes.com

Quote: “Known as the Self-Administered Gerocognitive Examination, or SAGE, the four-page test can be completed in about 10 to 15 minutes by patients at home, or while in the waiting room at the doctor’s office. The test, downloadable free on the medical center’s website, is now used at doctors’ offices nationally.”

LTC Comment: This test could be a helpful resource.

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06/19/2014, “Federal program boosts some states' LTCI use,” by Allison Bell, LifeHealthPro

Quote: “The Federal Long Term Care Insurance Program is having a measurable effect on the likelihood that older adults in and around the District of Columbia will have private long-term care insurance (LTCI). Analysts at AARP, the Commonwealth Fund and the SCAN Foundation have hinted at the power of the government's voluntary long-term care (LTC) benefits program in one of the many tables included in a new state-by-state LTC performance scorecard report.”

LTC Comment: Congratulations to CEO Paul Forte and his team at the Federal Long-Term Care Insurance Program.

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06/19/2014, “How Your State Rates In Terms Of Long-Term Care,” by Ina Jaffe, Shots - Health News : NPR

Quote: “In just 12 years, the oldest members of the huge baby-boom generation will turn 80. Many will need some kind of long-term care. A new study from AARP says that care could vary dramatically in cost and quality depending on where they live. The study was motivated by a simple fact: The number of available family caregivers is declining. In 2010, there were potentially seven for each person 80 years old or older. By the time baby boomers reach that age, there will be only four potential caregivers for each of them. And those numbers are expected to continue declining.”

LTC Comment: This AARP report, highlighted by NPR, has received wide state-level coverage as it ranks and compares states on access, quality, and affordability of long-term care.

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06/18/2014, “GAO calls for more oversight of managed care,” by Ferdous Al-Faruque, TheHill

Quote: “The Government Accountability Office (GAO) said Wednesday that state and federal Medicaid auditors need to increase their oversight of managed care organizations. In a new report, the GAO says Medicaid auditors are focusing their efforts on fraud and waste from fee-for-service payments while neglecting managed care organizations.”

LTC Comment: State Medicaid programs are rapidly ceding their responsibility to administer the program (including its long-term care component) to giant managed care companies, which we now learn, are avoiding the scrutiny and oversight applied to fee-for-service providers.

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06/18/2014, “9 ways to guarantee your retirement,” by Jocelyn Black Hodes, MarketWatch

Quote: "Once upon a time, retirement meant stopping work at 65 and spending the rest of your days doing whatever you wanted while your Social Security and company pension checks rolled in. Not anymore.

"Get Long Term Care Insurance — both for you and your parents. A policy can help cover or pay for a range of services including in-home health care, a nursing home stay, or adult day care. It all depends on the amount of coverage you want and, of course, how much you can afford."

LTC Comment: The peace of mind that accompanies knowing you’re covered for the potentially devastating costs of long-term care is imperative to securing a comfortable retirement.

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06/18/2014, “Web broker charts supplemental health prices,” by Allison Bell, LifeHealthPro

Quote: “A Web broker, eHealth (Nasdaq:EHTH), used its own sales database to analyze the cost of four types of supplemental health products -- short-term medical insurance, fixed indemnity insurance, accident insurance and critical illness insurance -- in 23 U.S. cities.

“The company found that the average monthly premium for a healthy 29-year-old would be about $111 for the 1,262 short-term medical plans available; $113 for the 48 fixed indemnity plans; $26 for the 202 accident insurance plans; and $23 for the 203 critical illness plans.” [Emphasis added.]

LTC Comment: Useful findings on these supplemental health products.

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06/17/2014, “United Security Brings to Maryland Unique LTCi Plans for Individuals Living with Challenging Health Conditions [link],” InsuranceNewsNet.com

Quote: “These flagship products were created and designed by USA's sister company, Coventry CareLink (Coventry). In 1987, Coventry began working on an experimental initiative to combine the availability of both senior services and the financial protection of long term care insurance into a product that could provide an option to older adults who were living beyond the walls of continuing care retirement communities. At the heart of the LSS and LSS Select plans is a special focus on pro-active wellness. This approach stemmed from a collaboration with Johns Hopkins Geriatrics and is a unique feature of these plans.”

LTC Comment: United Security is a long-time corporate supporter of the Center for LTC Reform.

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06/17/2014, “Social Security Agency Cuts Services as Demand Grows, Senate Report Says [link],” by Robert Pear, NYTimes.com

Quote: “The Social Security Administration is closing field offices and reducing services to the public even as demand for those services surges with the aging of the baby boom generation, according to a bipartisan Senate committee report.”

LTC Comment: One more piece of evidence that when it comes to retirement income security (and likely LTC as well), more Americans will be left to their own devices in the future.

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June/2014, “An Interview with Dr. Bill Thomas,” by Gary Barg, Caregiver.com

Quote: "An Interview with Dr. Bill Thomas. Dr. Bill Thomas is an author, entrepreneur, musician, teacher, farmer and physician whose wide-ranging work explores the terrain of human aging. Best known for his health care system innovations, he is the founder of a global non-profit (The Eden Alternative) which works to improve the care provided to older people. He is also the creator of THE GREEN HOUSE® Project which offers a model for long-term care designed to look and feel like a real home. Dr. Thomas also developed the Senior ER model of care and is now working to transform the acute care services provided to elders."

LTC Comment: A quality interview with this highly respected eldercare innovator.

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06/16/2014, “Genworth Kicks Off National #LetsTalk Tour,” MarketWatch

Quote: "Genworth Financial, Inc. GNW -0.86% has kicked-off a national real-life research and education program aimed at creating conversations around a pressing issue confronting many Americans: determining a way to plan and pay for long term care needs for an aging population.

"The Genworth #LetsTalk Tour will visit five cities across the United States – New York, Chicago, Los Angeles, San Francisco and Dallas – in addition to engaging people via social media. Through a series of 1:1 interactions on the #LetsTalk Tour, the company plans to connect with at least 15,000 people and their families who will help Genworth better understand attitudes regarding long term care and how best to start a family conversation about long term care planning. Genworth will share the findings of the research and intends to use these findings to help educate others on how to have 'the talk.' In addition, throughout the tour, Genworth will provide resources to help answer families' long term care planning questions.

"METHODOLOGY: Genworth will conduct real-time, 1:1 interviews with consumers throughout the summer during the #LetsTalk Tour. Trained staff will administer a series of questions designed to get consumers thinking about issues related to long term care. Consumers who participate in the survey will be given a takeaway that will include a conversation checklist with guidelines on how to start the conversation about long term care with their families."

LTC Comment: With its new LTC information website, lower-cost LTCi product and this tour, Genworth’s been quite busy.

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06/16/2014, “5 Ways to Reduce Retiree Health Costs,” by Kiplinger, NASDAQ.com

Quote: "Fidelity's annual retiree health care cost estimate found that couples retiring this year at age 65 will need $220,000 for health care costs during retirement (the same figure as last year's study). The cost assumes the couple has traditional Medicare and pays deductibles and coinsurance for Part A and Part B (plus the premiums for Part B, which are currently $104.90 per month for most people). It also includes Part D prescription-drug coverage premiums and out-of-pocket costs. It does not include long-term-care costs.

"One big number the study doesn't include is the potential cost of long-term care. The national median rate for a private room in a nursing home is $87,600 per year, according to Genworth's annual survey, and the median rate for a home-health aide is $20 per hour -- $45,000 per year if you need 44 hours of care per week. Assisted-living costs are $42,000 per year. You can pay for these costs with your savings or long-term-care insurance or a combination of both. See Options for Covering Long-Term-Care Costs for more information."

LTC Comment: Fidelity might not include potential long-term care costs in its study, but neglect to create a plan to finance those potentially catastrophic expenses at your and your family’s peril.

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06/13/2014, “After hours of strife, lawmakers pass budget without Medicaid expansion [link],” by Laura Vozzella, The Washington Post

Quote: "The Virginia General Assembly adopted a long-delayed state budget late Thursday, acting after an hours-long debate among newly ascendant Senate Republicans who fought among themselves over whether the plan threw up sufficient barriers to Medicaid expansion."

LTC Comment: Related reading: The Index of Long-Term Care Vulnerability: A Case Study in Virginia. See this Center for Long-Term Care report for recent analysis of the specific long-term care financial challenges Virginia faces.

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06/11/2014, “Genworth Financial Inc (GNW) Launching Lower-Cost Long-Term Care Insurance Product [link],” twst.com

Quote: “Thomas McInerney, CEO of Genworth Financial Inc (GNW), says the company is rolling out a new long-term care insurance product called Privileged Choice Flex 3. The product is intended to address the reality that people are living longer and long-term care costs are increasing. He says the new product will offer lower-cost options than traditional long-term care insurance policies.”

LTC Comment: The some-coverage-is-better-than-none approach could really expand the LTCi market.

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06/10/2014, “Seniors' use of potent meds via Medicare staggering,” by Peter Eisler, USA Today

Quote: “From 2007-2012, the number of patients 65 and older getting Medicare prescriptions for powerful opioid pain medications rose more than 30% to upward of 8.5 million beneficiaries, the data show. Use of some of the most commonly abused painkillers, such as hydrocodone and oxycodone, climbed more than 50%. And the supply of each narcotic provided to the average recipient grew about 15% to about three months.”

LTC Comment: Ominous findings.

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06/10/2014, “California Hispanics worry about long-term care,” by Kevin Freking and Matt Hamilton, Washington Times

Quote: “Fifty-five percent of Hispanics are concerned about their ability to pay for the care they may need, versus 37 percent of whites, said the poll . . .. Also, 43 percent of California Hispanics are worried about being left alone without family and friends, versus 27 percent of whites.”

LTC Comment: Good prospects for LTCI.

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05/28/2014, “The future of Google's driverless car is old people,” by Brian Fung, The Washington Post

Quote: “It used to be that cutting off these older folks' access to a steering wheel was the only realistic option if their driving had become unsafe because of their age. Now, we might not have to. Google's self-driving car could get seniors out and about more. As a result, they might also earn more, spend more and give the rest of the economy a lift, too.”

LTC Comment: Yeah, and maybe they’ll buy LTCI.

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Updated, Friday, June 20, 2014, 11:12 AM (Pacific)

Seattle—

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LTC Bullet: Demographics and Other Data: Thousand Bullets Retrospective

LTC Comment: Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 15 years of “Demographics and Other Data” Bullets. Please enjoy this retrospective after these brief messages:

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

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LTC BULLET: Demographics and Other Data: THOUSAND BULLETS RETROSPECTIVE

LTC Comment: Once a week, usually on Fridays, we publish our latest LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the latest Bullets here and archives of the rest of the 1,000+ Bullets (so far), by date here and by topic here. These 1,000+ articles are a valuable historical resource. Please make use of them. Search for key terms using Control-F on your keyboard.

This series is a retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998. We’ll highlight one Bullet per year in each of seven major topics: “The LTC Problem and Solutions”; “Reality Check: The Facts on LTCI”; “Medicaid Planning”; “LTC Services”; “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.”

Today’s Bullet is our “Thousand Bullets Retrospective” Number 6 covering “Demographics and Other Data.” These “Demographics and Other Data” Bullets cover the impact of the Baby Boom and the “age wave,” and also include commentary on resources and data on LTC cost, spending and utilization. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.

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July 27, 1998: The Healthier You Are, the Longer You May Spend in a Nursing Home. “It's not news that Americans are living longer and healthier lives. However, the impact of this fact on our ability to finance long-term care for the baby boom generation definitely is news.”

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January 25, 1999: Scary Numbers. “Center President Stephen Moses wrote the following article at the end of 1998. A few days later, the Clinton Administration put aging and long-term care on the public policy agenda in a big way. The Administration deserves credit for raising and confronting these critical issues sooner rather than later. ‘Scary Numbers’ explains why long-term care financing is so important. An abbreviated version of this article, adapted to the style of an op-ed piece, was published in the January 11, 1999 issue of National Underwriter's Life & Health Edition.”

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March 22, 2000: Pigs, Pythons, and Politics: How to Survive the Aging of the Baby Boomers. “Keynote address [by Stephen Moses] presented to: The IBC Long-Term Care Insurance Conference, Chicago, Illinois.”

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March 14, 2001: Surplus Won't Save Us. “In testimony before the U.S. Senate Budget Committee last month, David Walker, Comptroller General of the United States, delivered a sobering message about our national budget surplus and the future of federal retirement security and health programs, including Medicaid. His message: Don't be fooled by the surplus, however large and however much we save of it. We're still on course for a fiscal train wreck absent serious entitlement reform.”

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June 21, 2002: Wake Up, Little Susie. “Center for Long-Term Care Financing President Stephen Moses wrote the following article. It was published in the May 2002 issue of ‘Advisor Today,’ the monthly journal of the National Association of Insurance and Financial Advisors. Read it here in the original or jump to the edited version, titled ‘The LTC Wake-Up Call,’ published on the magazine's website: http://www.advisortoday.com/archives/article.cfm?articleID=120.”

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April 3, 2003: Long-Term Care Crisis Builds. “We face a looming age wave, rampant nursing home and assisted living bankruptcies, and bursting government budgets, yet the public's asleep about long-term care risk and private LTC insurance struggles. Read a cogent explanation of this seeming paradox [in this LTC Bullet].”

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January 21, 2004: So What If the Government Pays for Most LTC, 2002 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 2002 statistics on their website at http://cms.hhs.gov/statistics/nhe/. The current issue of Health Affairs (Vol. 23, No. 1, January-February 2004, pps. 147-159) contains a summary and analysis of the new data titled ‘Health Spending Rebound Continues in 2002’ written by CMS staffer Katherine Levit and several other authors. Subscribers to Health Affairs can access the full text of the article online after registering at http://content.healthaffairs.org/cgi/content/full/23/1/147. We'll provide some highlights of this article after our analysis of the newest long-term care expenditure data, which follows. You can find the CMS source data at: http://cms.hhs.gov/statistics/nhe/.”

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October 13, 2005: LTCi Update. “LIMRA International's second quarter 2005 findings regarding the long-term care insurance market show continuing declines with notable exceptions.

“Is there really any wonder that LTC insurance sales languish when the availability of Medicaid nursing home benefits obviates two-thirds of the potential LTCi market? See ‘Supply or Demand: Why is the Market for Long-Term Care Insurance So Small?,’ by Jeffrey R. Brown and Amy Finkelstein, National Bureau of Economic Research, 2004, http://www.nber.org/~afinkels/papers/Brown_Finkelstein_Supply_or_Demand.pdf.”

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October 31, 2006: Halloween Scare and New Members-Only Feature. “Happy Halloween! Want to hear something really scary? Social Security and Medicare unfunded liabilities have topped $86 trillion. More in this LTC Bullet.”

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January 11, 2007: So What If the Government Pays for Most LTC?, 2005 Data Update. “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?” Steve Moses explains in this LTC Bullet.

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November 5, 2008: New LTC Numbers You Need to Know. “New Medicaid ‘spousal impoverishment’ numbers and key Medicare premiums updated for 2009. Where to find them all and how they've increased since 1991 [in this LTC Bullet].”

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November 4, 2009: LTC Costs Up, Up, and Away. “Housing costs in general are down but LTC housing costs are way up. What gives?” Find out in this LTC Bullet.

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April 27, 2010: Private LTC Insurance Vindicated. “The national media and ideologically driven analysts love to bash LTCI based on anecdotes but solid longitudinal data belie their criticism. New evidence [in this LTC Bullet].”

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December 16, 2011: New Medicaid and Medicare Numbers Announced for 2012. “You need to know these new numbers for 2012. We've also updated tables in The Zone that provide the numbers for every year since the early 1990s. Details follow [in this LTC Bullet].”

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January 13, 2012: So What If the Government Pays for Most LTC?, 2010 Data Update. “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. Details in this LTC Bullet.”

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August 9, 2013: LTCI Update. “Broker World magazine has published its annual long-term care insurance survey for 2013. Highlights [in this LTC Bullet].”

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Updated, Thursday, June 12, 2014, 11:16 AM (Pacific)

Seattle—

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LTC E-Alert #14-018: LTC News and Comment

LTC Comment: Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don’t have to. By dividing the labor, we can all work more efficiently. If you like what you read in our “LTC News and Comment” E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe.

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06/10/2014, “Home is where the money is for Medicare Advantage plans,” by Fred Schulte, Center for Public Integrity

Quote: “The health plans tout the voluntary, free annual physicals as a major new benefit that can help selected members stay fit and in their homes as long as possible. While the doctors and nurses don’t offer any treatment during their visit, they report their exam findings to the patient’s primary care physician.

“Yet there’s more to this spurt in home visits than the appearance of enhanced elder care. The house calls can be money makers for health plans when they help document medical problems — from complications of diabetes to a history of heart trouble that’s flared up.”

LTC Comment: This is an interesting example of how government sets up rules, clever private market players take full advantage of them, and then government often changes the rules and market disruption occurs. Still, in the meantime, home visits are an attractive potential benefit of Medicare Advantage plans.

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June/2014, “A Free Video: 5 Reasons to Add Long-Term Care To Your Practice,” EmPower Services

Quote: "Whether you’re concerned about healthcare reform biting into your commissions, or you’re just looking to create a new stream of revenue, long-term care can be used strategically to grow your business."

LTC Comment: This free video is offered by long-time Center for LTC Reform corporate member Doug Ross of EM-Power Services, Inc.

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06/10/2014, “Genworth Launches National Advisory Center for Long Term Care Information [link],” MarketWatch

Quote: "Today, Genworth Financial, Inc GNW -0.28% announced the launch of its new website www.longtermcareinsurance.org, designed to help fill the information gap for consumers about the reality of long term care and the importance of planning for the future. The website, named the National Advisory Center for Long Term Care Information (NACLTCI), sponsored by Genworth, is focused on providing clear, concise and unbiased information to consumers faced with making decisions related to long term care."

LTC Comment: Let’s hope this new website helps people get the coverage they need for long-term care.

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06/09/2014, “Retirement Savings Fears Grip Americans: ‘I Don't Have Enough,’” by Eric Pianin, The Fiscal Times

Quote: "Americans are freaking out about their personal savings – and for good reason. A recent Gallup poll found that 59 percent of those surveyed were very or moderately worried they won’t have enough money for retirement – by far their biggest concern. Many people once counted on a triad of support for retirement – Social Security, personal savings, and employer-sponsored pensions. Yet in the wake of the Great Recession and a long stretch of high unemployment and stagnant wages, the once-dependable foundation has been crumbling.”

LTC Comment: The “triad of support for retirement” mentioned above has become extremely compromised and is not a viable plan for financing retirement, much less a catastrophic long-term care event.

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06/07/2014, “Critical illness insurance expensive, but worth it,” by Brett Millard, Daily Courier: Business News

Quote: "An example of how this coverage would work for your financial situation: If you’re diagnosed with cancer in B.C., the average wait time to begin treatment is four to five weeks and that wait could be the difference between a successful recovery or not.

"If you were to have $100,000 of CI coverage, you could jump on a plane to the U.S. and pay for private treatment immediately. If this greatly increased your odds of survival, many would choose to do this anyways, but with CI insurance in place, you would have the financial means to do so instead of having the added stress of financial hardship for your family."

LTC Comment: The more the USA's health care financing system becomes like Canada's, the more being able to pay cash on the barrel head will become important here . . . if we can retain that right!

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June/2014, “Americans' Perspectives on New Retirement Realities and the Longevity Bonus [link],” Merrill Lynch Wealth Management

Quote: “Seventy-two percent of pre-retirees over the age of 50 say their ideal retirement will include working – often in new, more flexible and fulfilling ways. This comprehensive study explores and challenges commonly held beliefs about work during retirement – a phenomenon driven by longer life expectancy, the elimination of most employee pensions, financial need and the reimagining of later life.”

LTC Comment: This report by Ken Dychtwald and his company Age Wave documents the new version of “retirement” confronting baby boomers as they age. There are ramifications too for younger generations whose opportunities, especially at entry-level jobs, are curtailed by minimum-wage increases and retirees eager to take low-wage positions

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06/05/2014, “Overcoming retirement fears,” by Tom Nawrocki, LifeHealthPro

Quote: "One thing that prevents many clients from fully executing a comprehensive estate plan is the fear that they haven’t fully taken care of their own retirement. That must always be their first priority, and rightfully so. That might be surprising given the demographics of the estate-planning market. It is generally high-net-worth individuals who create estate plans, and these people might also be assumed to be well prepared financially for retirement. But surveys show that they are as nervous as any other American heading into retirement. The concern might not be that they have set aside sufficient assets to cover their retirement, but there are serious fears there nevertheless. In a study that just came out last week, Legg Mason surveyed 500 affluent investors (defined as those with at least $200,000 in investable assets), and found that 88 percent of them were confident that their money would fund their retirement comfortably, in the manner in which they were hoping. But they still had many lingering fears about retirement. According to Legg Mason, those concerns are, in order: 1. Having a catastrophic event that uses up my retirement funds 2. Living longer than my retirement funds last 3. Government not following up on obligations 4. Not saving enough for my retirement 5. Low interest rate environment

"There’s an important lesson here for estate planners and other advisors who deal with end-of-life issues. The affluent are not likely to broach the topic of health care costs with you; they’re not likely to see it as a topic you can help them with, and they may be a bit embarrassed to admit that the assets they have accumulated might not make them bullet-proof. A proactive advisor will take the initiative to discuss how these costs fit into an overall retirement plan."

LTC Comment: Creating a plan for financing healthcare and long-term care expenses is a critical facet in retirement and estate planning.

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06/04/2014, “Medicaid enrollment surges, but not everywhere,” by Kyle Cheney, POLITICO.com

Quote: "Medicaid enrollment is surging, but states shunning Obamacare’s huge Medicaid expansion are getting left behind, according to data released Wednesday by HHS. About 65 million people were enrolled in Medicaid and the closely related Children’s Health Insurance Program at the end of April, 6 million more than had been enrolled in the months leading up to Obamacare’s Oct. 1 launch. The numbers reflect a big spike in April, when 1.1 million additional people were enrolled in Medicaid compared to March."

LTC Comment: More numbers in the never-ending saga of Medicaid expansion.

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06/04/2014, “Families Shoulder More Long-Term Care Responsibilities,” by Cyril Tuohy, InsuranceNewsNet.com

Quote: "With long-term care insurance (LTCi) executives reaffirming growth projections for the need for care, it’s worth asking: Who is paying for all this care? No one is suggesting financial advisors get into the long-term care health advisory business, but as so many retirees cite health care costs as their major factor in budgeting for retirement, advisors may find themselves turning into long-term care advisors by default."

LTC Comment: People who have real long-term care experience know the value of protecting family and loved-ones from the many costs of long-term care—financial and otherwise.

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06/04/2014, “Nursing homes the No. 1 setting for norovirus outbreaks,” by Tim Mullaney, McKnight's Long Term Care News

Quote: “More than 2,000 outbreaks of norovirus originated in a long-term care facility between 2009 and 2012, the Centers for Disease Control and Prevention reported. Only about 120 outbreaks occurred in hospitals during those years.”

LTC Comment: Here’s another reason to keep your long-term care options open.

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06/03/2014, “Centenarians Don't Die for the Same Reasons We Do,” by Alice Park, TIME

Quote: “Researchers in the UK say that people who live to be 100 or more are less likely to die of the chronic conditions that are the leading causes of death, such as heart disease and cancer, but more likely to die of sudden declines in their health caused by infections or frailty.”

LTC Comment: The good news is that you dodged Alzheimer’s. The bad news is a norovirus has your name on it.

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06/03/2014, “5 Strategies For Retirement Savings Success,” by Northwestern MutualVoice Team, Forbes

Quote: "You may be saving for retirement, but do you have a strategy for how you save? A strategy for how you save today can make a big difference in how much money you will have available in retirement. A solid retirement saving plan takes the guesswork out of creating retirement income and creates a roadmap to help ensure your money will last as long as you do. It’s also likely to make you happier in retirement. A recent study found that 91 percent of highly disciplined planners report being happy during retirement."

LTC Comment: Saving for retirement is obviously a good idea, but without a mechanism in place designed to finance long-term care expenses, those savings are left awfully vulnerable.

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06/03/2014, “Survey Says: Men Slightly More Confident about Retirement than Women [link],” Business Wire

Quote: "Men, individuals age 51 or older and those with an income over $75,000 are more confident about retirement according to a recent survey conducted by the companies of OneAmerica^®. Contributing to their confidence is a realistic knowledge of how much retirement income they will need.

"Among the people who lack confidence in their retirement preparations, top reasons included not having enough money accumulated (73 percent), economic uncertainty (59 percent), rising healthcare costs (47 percent) and Social Security insecurity (45 percent)."

LTC Comment: Confidence can also be inspired by insuring against potential long-term care costs and knowing that you, your family and loved-ones are protected.

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06/02/2014, “Health Savings Accounts Can Double as Shadow IRAs,” by Peter S. Green, WSJ

Quote: “The basic purpose of an HSA is to salt away pretax income to cover medical expenses not covered by health insurance. But those who generously fund their HSA may find some or all of those dollars can grow in a tax-deferred investment account for many years. Along the way, the money can be used tax-free to pay medical expenses or premiums on long-term-care insurance. After age 65, there's no penalty for withdrawing money for nonmedical use; the money will be taxable, but will still have benefited from years or decades of tax deferral.”

LTC Comment: This is an idea that is a good arrow in the LTCI producer’s quiver. To read the whole article if you miss it in print and lack a WSJ online subscription, ask Damon to forward it to you from the Center’s subscription.

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06/02/2014, “Alzheimer's Caregivers: 5 Tips for Dealing With Family Conflict,” by Marie Marley, The Huffington Post

Quote: "Having a family member with Alzheimer's disease is a stressful situation for everyone involved. According to the Alzheimer's Association, 'Dealing with Alzheimer's can bring out many strong emotions. As the disease progresses caregiving issues can often ignite or magnify [existing] family conflicts.' Carole Larkin (personal interview), a certified dementia consultant, estimates that 30 percent of her clients have conflict between family members. She says you can double that for blended families.

"According to Larkin the most common types of conflict are: 1. Disagreement between the spouse and the children on what needs to be done (especially likely when the primary caregiver is male). 2. Disagreement among the children on what needs to be done. 3. Disagreement among children of blended families about what needs to be done and who should pay for it."

LTC Comment: Long-term care insurance can ease family tension by allowing family caregivers to take on supervisory rolls as opposed to being full-time primary caregivers.

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05/31/2014, “For the Chronically Ill, a Lump-Sum Option,” by Anne Tergesen, Wall Street Journal

Quote: “A new twist on an old life-insurance provision is enabling some policyholders to produce a pile of cash for long-term care. But the makeover comes with some big caveats.”

LTC Comment: Chronic illness riders, along with other alternatives to traditional long-term care insurance products, are really gaining traction lately.

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05/30/2014, “Most Americans neglect financial planning, hesitate using advisors,” by IFAwebnews Staff, IFAwebnews.com

Quote: "Two-thirds of Americans do not have long-term financial plans, and nearly three-quarters do not have a financial advisor, according to recent study findings from Northwestern Mutual.

"According to the study, the majority (70%) of American adults feel that the economy will experience future crises, and that they need a financial plan to help them weather the ups-and-downs (52%). But only two in five agree their financial plan can withstand market cycles."

LTC Comment: It is absolutely critical that a long-term financial plan include a viable strategy for covering major long-term care expenses.

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05/29/2014, “Elimination period part of long-term care to consider,” by Janet Kidd Stewart, chicagotribune.com

Quote: "Looking to economize as long-term care insurance costs rise, retirees on fixed incomes or consumers juggling multiple financial priorities often reach first for cutting their benefits or combining the product with life insurance.

"But for people trying to partially self-insure for long-term care costs, a longer elimination policy can cut premium costs by up to 40 percent today, while still providing a backstop against devastating costs down the road. 'This is actually the strategy I use myself,' said Steve Sperka, vice president of long-term care for Northwestern Mutual. 'I'm in my mid-40s and wanted to cover a catastrophic risk, but I also have young children,' and thus, competing priorities for savings, he said."

LTC Comment: A growing number of consumers have to compromise on the terms and benefits of their LTCi policies. A longer elimination period could be just the compromise that makes long-term care protection economically feasible for many consumers. As Jesse Slome said at the recent Producers Summit in Kansas City, “some coverage is better than none.”

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05/28/2014, “Retirement: U.S. Versus The World,” by Richard Eisenberg, Forbes

Quote: "We hear constantly how Americans are unprepared for retirement and hugely pessimistic about our prospects. But compared to many other countries, we’re doing and feeling great!

"But before you get too chest-pumpy about Americans’ retirement confidence, I have three words for you — it’s all relative.

"Only 19% of the survey’s respondents overall are 'very' or 'extremely' confident they’ll be able to someday fully retire with a comfortable lifestyle, compared with 28% of Americans. Of course, that also means 72% of Americans don’t share that level of confidence. Said Collinson: 'It’s true that a higher percentage of Americans are confident, but 28% is not a high percentage.' What’s more: Only 41% of Americans said they thought they’d enjoy retirement."

LTC Comment: No matter where we are in terms of retirement confidence relative to the rest of the world, it remains true that retirement well-being is vulnerable to myriad catastrophic risks. Planning for long-term care expenses long in advance can help mitigate the damage caused by an otherwise devastating long-term care event.

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05/28/2014, “Want To Know Where Senior Care Is Headed? Keep An Eye On Kindred Healthcare [link],” by Howard Gleckman, Forbes

Quote: “In a major strategic shift, Kindred is betting the company on in-home care, hospice, care management, and fully integrated care services. . . .

"Kindred’s strategy is being driven in large part by government payment policy. In many states, Medicaid reimbursement for long-stay nursing home patients remains below the cost of providing care. For years, those low payments were more than offset by generous compensation from Medicare for post-acute and rehab services (typically, a state pays about $125-a-day for a Medicaid long-stay bed while Medicare pays $500-$600 for rehab).

"But Medicare payments are being squeezed as well, and pressure to hold down costs will only grow in future years. In that environment, providers will seek the lowest cost settings to provide care."

LTC Comment: This trend began many years ago but is finally taking off big time. Over the longer term it means much more LTC financing will have to come from private sources including stricter Medicaid asset spend down requirements, home equity conversion and LTC insurance. Government programs, especially Medicaid and Medicare, simply will not be able to sustain the extra costs that will come with the move from funding mostly nursing home care (which people try to avoid) to funding mostly home care (which most people will seek eagerly). Access to and quality of publicly financed home care is already doubtful and will decline as fiscal pressures prevent adequate reimbursements from public payers.

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05/28/2014, “LIMRA Study: Individual Life Combination Products Record Fifth Consecutive Year of Double-Digit Growth in 2013 [link],” InsuranceNewsNet.com

Quote: "Individual life combination premium grew 12 percent in 2013 -- the fifth consecutive year of double-digit growth -- according to LIMRA's 2014 Individual Life Combination Products Annual Review. Total new premium for life combination products reached $2.6 billion in 2013, representing 13 percent of total individual life insurance new premium. Approximately 98,000 life combination policies were sold in 2013, an increase of 18 percent compared with 2012 results.

"Linked benefit products, which are mostly single premium and all-in-one packaged products, dropped 13 percent in policy count and held 25 percent of the market in 2013. Acceleration policies, which provide long term care benefits up to the amount of the life death benefit and are more commonly riders that can be attached to many of the products in a carrier's life product portfolio, grew 18 percent, capturing 75 percent of market share (by policy count)."

LTC Comment: LIMRA also reported a significant drop in individual LTCi sales. See also this clipping.

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05/28/2014, “How To Shop For Long-Term Care Insurance,” by Steve Tripoli, Shots - Health News : NPR

Quote: "One of the toughest money decisions Americans face as they age is whether to buy long-term care insurance. Many people don't realize that Medicare usually doesn't cover long-term care, yet lengthy assisted-living or nursing home stays can decimate even the best-laid retirement plan.

"Suzanne and Bob O'Donnell of Marshfield, Mass., were in their mid-50s when a financial adviser convinced them long-term care insurance made sense — as did buying it before they got old. 'And, [that] has turned out to be true,' Bob says, 'because later on, a lot of our friends have tried to buy it and either been rejected or their premiums are prohibitive.'"

LTC Comment: It’s good that this article shows how critical it is to lock in a policy while you’re still insurable and premiums are lower.

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05/27/2014, “Midterm Elections Could Bring Changes To LTC,” by Cyril Tuohy, InsuranceNewsNet.com

Quote: "November’s midterm elections have voters selecting governors in 36 states, 35 U.S. Senators and 435 members of the U.S. House of Representatives. This will guarantee that there are new faces and changes surrounding long-term care, a legislative long-term care expert said."

LTC Comment: At the recent AALTCI Producers Summit in Kansas City, Sam Morgante provided a helpful synopsis of key allies in the Senate.

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05/27/2014, “Dual eligibles more likely to go from hospitals to lower quality nursing homes, referral process might need reform, researchers say [link],” by Tim Mullaney, McKnight's Long Term Care News

Quote: “An average dual-eligible patient is about 9 percentage points less likely than a Medicare-only patient to be discharged to a skilled nursing facility with a high nurse-to-patient ratio, the researchers determined. Duals are about 4 percentage points more likely to be admitted to a nursing home in the lowest quintile for nurse staffing. The investigators used nurse-to-patient ratio as a proxy for nursing home quality, as staffing level has been strongly linked to quality in previous research.”

LTC Comment: Just another reason to avoid Medicaid dependency if possible.

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05/20/2014, “LTCI sales fall sharply,” by Allison Bell, LifeHealthPro

Quote: “U.S. long-term care insurance (LTCI) carriers reported big drops in the number of new individual LTCI policies sold in the first quarter and revenue from those policies.”

LTC Comment: Yet hybrid products are really taking off. See also this clipping.

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Updated, Wednesday, June 4, 2014, 11:00 AM (Pacific)

Seattle—

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LTC Bullet: Virtual Visit to the 2014 AALTCI Long-Term Care Solutions Sales Summit in Kansas City, MO

LTC Comment: Our last LTC Bullet covered the online streaming version of the recent American Association for Long-Term Care Insurance LTC Solutions Sales Summit. In today’s LTC Bullet we offer our coverage of the actual conference physically attended by Center for Long-Term Care Reform staff member, Damon Moses. Read all about it after the ***news.***

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

*** SPOTLIGHT ON: Articles, Speeches and Reports

Have you been reading our LTC Bullets and getting interested in our message, but want to learn more? The Articles, Speeches and Reports section of our website is a great next step. Here you’ll find articles authored by Steve Moses that have appeared in renowned publications such as McKnight's Long-Term Care News, Broker World, and The Wall Street Journal; transcripts as well as audio and video recordings from speeches, including Congressional testimony, delivered by Steve Moses; and dozens of reports authored by Steve Moses dating from 2014 back to 1985, all providing the analysis and evidence supporting positions held by your Center for Long-Term Care Reform. Whether you are new to the Center or are a seasoned LTC savant looking to refine your knowledge, you’ll find an abundance of valuable information in our Articles, Speeches and Reports. ***

LTC Bullet: Virtual Visit to the 2014 AALTCI Long-Term Care Solutions Sales Summit in Kansas City, MO

The 2014 Long-Term Care Solutions Sales Summit, presented by the American Association for Long-Term Care Insurance and held May 18-20 at the Westin Crown Center in Kansas City, was another outstanding industry event. The conference website homepage states: “Connecting with the nation’s top LTC producers, marketers and industry experts is the single best way to gain the knowledge and competitive advantages to build your LTC sales.” The conference validated that claim by bringing together 500+ attendees (2,500+ online) and over 40 sponsors, exhibitors and supporters. Furthermore, a broad range of nearly 50 educational sessions offered ample occasions for learning and professional development, while receptions and breaks provided many valuable opportunities for networking with a diverse range of top industry professionals.

Changes

New this year was the ability to watch live, streaming video of selected conference sessions online for free. What an outstanding service and resource for LTCi professionals. Steve wasn’t able to attend the conference due to prior travel arrangements, but was still able to tune into some of the best sessions from the comfort of his accommodations in Toulouse, France. Steve covered some of the live sessions in this LTC Bullet, so if you were not able to attend the conference or catch the online streaming, check it out. Better yet, order the video recordings of all (35+) sessions recorded for only $29.00. There is a lot of great content in these recordings, including Harley Gordon’s keynote address. Steve covered this presentation in his LTC Bullet and gave it profoundly deserved praise, so I won’t repeat anything. But allow me to say this: Getting “yelled” at and thoroughly schooled on innovative ways to increase sales has never been so compelling, informative and entertaining. Those who were there or saw the presentation online know what I mean. Those who missed it should buy the recorded sessions and see for yourself.

Also new this year was a dramatically reduced registration fee of only $69 (early bird). They were able to provide that reduced rate by removing the meals, so attendees were on their own for that. Fortunately, there was an adjoining shopping mall with food court at the hotel. Left to my own devices, I was quite happy to eat Kansas City BBQ for three days straight, but noticed my clothes didn’t fit as well leaving MCI Airport as they did when I arrived.

Sessions

LONG TERM CARE INSURANCE SALES AMMO: WHAT TO SAY & DO TO SECURE SALES (PT. 2)

Here was an excellent session and prime example of the caliber of LTCi professionals that attend and present at this conference. Bill Comfort, Nancy Dykeman, and Betty Doll, all seasoned sales pros, shared their tips and advice vetted through their years of experience.

Bill Comfort began this session by making some interesting points about confirmation bias and how to use human psychology to help clients understand the true risk and cost of long-term care, and therefore the value of protection from those risks and costs. He advised not to dwell on statistics. Instead, use existing beliefs--such as the risk of living too long and running out of money--to connect with clients and make the sale.

After Mr. Comfort’s psychological approach to communicating the need for long-term care financial planning, Nancy Dykeman appropriately continued this dialogue by focusing on communicating to clients the familial consequences of not having an LTC financial plan. She recommended shifting the sales paradigm from insurance being for the insured, to insurance being for the family. This may seem obvious to those who have experience in caregiving for a family member or loved-one, but for people who do not, it can completely change the focus of the dialogue in a meaningful and productive way. She continued by recommending that producers validate this by asking questions that deal with some of the typical objections that break a sale, thereby compelling clients to rationally consider their objections and the resulting implications to their family and loved-ones. What a clean, sensible and useful technique.

Betty Doll rounded out this session by focusing on listening to the client’s needs to design a policy that is affordable and appropriate for them. This technique should allow them to be involved in the crafting of the policy, as opposed to being sold to. She states: “LTCi is not right for everyone, but LTC planning is.” Absolutely.

Establish risk, allow clients to see the consequences of their objections, offer appropriate policy options based on their individual needs and mitigate potential consequences to the family. These three experts make it seem easy.

THE 'GOOD-BETTER-BEST' STRATEGY TO BOOST YOUR LTC SALES

In this session Jesse Slome spoke about the LTCi industry’s depressed sales figures, what’s happening within the industry and described the best way forward. The world is changing, so must the LTCi industry. The terminology for this change is “reboot.”

Americans are still impacted by the last recession and wary of investing in products they view as discretionary. So what’s the answer? Reboot the long-term term care insurance sales paradigm to the “good-better-best” approach. The basic philosophy of this approach is that some coverage is better than none. Good-better-best works by focusing on the creation of long-term care financing solutions that are accessible to, reasonable for, and desired by more clients.

2014 PUBLIC POLICY AND LEGISLATIVE UPDATE

As the LTCi industry’s only full-time representative in Washington, D.C., Sam Morgante has a unique vantage point to view what’s happing in our nation’s capital and individual states. Mr. Morgante spoke for one hour on many topics including: the current political climate in Washington, D.C. regarding gridlock, the effects of redistricting, what happened with the Long-Term Care Commission, allies in the Senate and healthcare policy implications for LTCi. Near the end of his presentation he made an important point by explaining that the problem of long-term care has changed from our parents’ problem to ours and must be solved so the next generation is not burdened with it. Mr. Morgante also rightly acknowledged that without fixing the problem, it will remain a burden on Medicaid.

THE LTC CHIEF EXECUTIVE OFFICER (CEO) FORUM

The panel:

Michael Doughty, President and General Manager, John Hancock Insurance
Michael Hamilton, Vice President, Lincoln Financial Group
Tim Kneeland, President, Transamerica Long Term Care
Scott McKay, Senior Vice President, Genworth Financial
Steve Sperka, President & CEO, Northwestern Long Term Care Insurance Company

This year’s CEO Forum focused on “challenges, changes and strategies for continued industry growth” and did so in a manner that primarily expressed optimism and enthusiasm for many reasons:

Our challenging sales environment generates collective enthusiasm to produce a broad spectrum of new and innovative solutions to long-term care financial planning. Enter the age of riders, hybrids, linked benefit and combination products.
Today’s increasingly diverse array of long-term care financial products caters to the individual needs and financial circumstances of a broad range of people. Think good-better-best approach.
The need for protection against the risk and cost of long-term care is still present and increasing. Public dialogue on this matter is intensifying and awareness is growing.
Regulators are expected to become more open to new products.
Paradigm shift: A generation of people with personal long-term care/caregiving experience shifts the focus of LTCi as a self-protection product to a tool critical to the protection of family and loved-ones.

Final Thoughts

What I take home from each AALTCI conference, and this is true for ILTCI conferences as well, is a renewed sense of appreciation for the LTCi industry and all the talented people in it who devote themselves to protecting others from the risk and cost of long-term care. It’s a diverse group of attendees, but I’ve noticed what draws many to the industry (and to these conferences) are personal long-term care experiences and the resulting desire to help others plan for their long-term care needs. Many thanks are due to Jesse Slome and Mindy Hartman and, of course, all the sponsors, exhibitors, speakers and attendees for making this event exceptional. See you next time.

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Updated, Tuesday, May 27, 2014, 5:12 PM (Pacific)

Seattle—

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LTC E-Alert #14-017: LTC News and Comment

LTC Comment: Due to our attendance, virtually and physically, at the excellent AALTCI Solutions Sales Summit, we skipped publication of last week’s E-Alert. That, however, doesn’t mean we think you should have to miss those important news items, so we’ve included them here. This E-Alert features news items from the past two weeks, so it’s longer than most. Enjoy.

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05/22/2014, “Why Affluent Clients Need LTC,” by Tom Riekse, Jr., Financial Advisor

Quote: “For your more affluent clients, it’s important to not confuse a checkbook with a plan for care. There are two major considerations: the financial part of the equation and the emotional and complicated family part.”

LTC Comment: Tom Riekse, Jr. of LTCI Partners, a long-time corporate member of the Center for LTC Reform, authored this article.

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05/22/2014, “Genworth eyes new approach to long-term-care insurance rate hikes [link]” by Darla Mercado, InvestmentNews

Quote: "Plenty of industry observers have questioned the staying power of the long-term-care insurance industry, but one insurance company executive believes that his firm may have cracked the code to get carriers selling again. Tom McInerney, chief executive of Genworth Financial Inc., believes that the key to the sustainability of the long-term-care insurance industry is adopting a methodology that will allow carriers to reassess their LTC insurance assumptions on an annual basis and adjust their premiums accordingly. The end result? Small single-digit increases to clients' premium costs on a continuing basis as opposed to massive double-digit rate hikes that strike years after customers have purchased their policies."

LTC Comment: Perhaps this is a more palatable method of introducing rate increases to LTCi policy holders.

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05/21/2014, “What's New With Long-Term Care Insurance?,” by Jay MacDonald, Fox Business

Quote: "So how is LTC insurance evolving in the face of economic pressures and consumer ambivalence? The bad news is, today's long-term care insurance is not your parents' policy, which typically featured lifetime benefits and 5% annual increases in benefits as protection against inflation. The good news is, LTC Insurance 2.0 is much more versatile and focused on home health care rather than the nursing home variety -- and should you fail the physical, there are a handful of alternatives for those who are denied coverage."

LTC Comment: The LTCi industry is experiencing a “reboot” and this article covers some of the many alternatives to traditional long-term care insurance products.

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05/21/2014, “Quality Measurement More Advanced Than Payment Reform, CMS Official Says [link],” by Sara Hansard, Bloomberg BNA

Quote: "More progress has been made on making health-care quality measurements more uniform than has been made in aligning payment incentives to get better value, the federal government's Medicare director said May 9. Speaking to a U.S. Chamber of Commerce conference titled Realizing Greater Value: Building on Private Sector Successes, Sean Cavanaugh, director of the Center for Medicare at the Centers for Medicare & Medicaid Services, said that 'relative to payment, I think much more progress has been made on aligning quality.'"

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05/21/2014, “Annuities With LTC Can Be The Right Fit,” by Linda Koko, InsuranceNewsNet.com

Quote: "Annuities that offer long-term care riders don’t get a lot of attention in industry news. But brokerage general agent Michael Smith said clients definitely are interested, and the product does sell when the fit is right."

LTC Comment: Alternatives to traditional LTCi are gaining traction.

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05/21/2014, “Summing Up The Retirement Crisis,” by Ashlea Ebeling, Forbes

Quote: "Is there a retirement crisis for baby boomers and Gen Xers? 'It depends!' says Jack VanDerhei, research director with the Employee Benefit Research Institute in Washington, D.C. The probability of NOT running short of money in retirement ranges from a low of 17% to a high of 99% depending on three main factors: your pre-retirement income level, what percent of expenses you aim to cover, and whether or not you factor long-term care and home health costs into the picture. For Gen Xers, the number of years of future eligibility in a 401(k) plan also plays a huge role.

"The big looming 'if' is long-term care expenses. If you exclude these costs (you think you’re going to get hit by a bus instead of needing years of Alzheimer’s care), the red arrows on the chart show how retirement readiness jumps–from 17% to 30% for the low-income quartile, and from 86% to 99% for the top-income quartile."

LTC Comment: Long-Term Care expenses impose a giant question mark, with catastrophic consequences, for those without a long-term care financial plan.

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05/20/2014, “Should You Buy a Critical Care Rider?,” by Alan Lavine, WealthManagement.com

Quote: "Roche, of Prudential Individual Life Insurance, says 40% of individuals buying universal life insurance policies this year selected the chronic illness rider. One major reason is that the rider pays based on a condition, not for the specific care of a condition. Policyholders needn’t provide receipts to access money from the policy. 'The response to our BenefitAccess Rider has been overwhelmingly positive,' Roche says. 'Financial professionals see the feature as a way to provide more value to their clients by offering not only the death benefit protection, but also the ability to access the death benefit should the insured become chronically ill or terminally ill.'"

LTC Comment: A closer look at more innovation in the field of long-term care financing.

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05/20/2014, “How To Vet A Continuing Care Retirement Community,” by Ashlea Ebeling, Forbes

Quote: "A septuagenarian Nevada couple researching continuing care retirement communities asked where they could find a comprehensive list of campuses and what factors they should consider in their search. It’s a big decision, selling your home and moving to a community where you can cycle through three life stages as needed: independent living, assisted living and skilled nursing. There’s a big upfront fee, and there’s monthly rent, and there’s a lot of fine print. Here’s help."

LTC Comment: It’s nice to have options. Options are most abundant to those who plan for their long-term care expenses long in advance.

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05/20/2014, “Support for Medicare-style, government long-term care insurance program surges, large AP-University of Chicago poll finds [link],” by Tim Mullaney, McKnight's Long Term Care

Quote: "The idea of a government-run long-term care insurance program similar to Medicare has become much more popular in the last year, according to the findings of a large nationwide survey. Independent research organization NORC at the University of Chicago and The Associated Press conducted the 1,400-person poll."

LTC Comment: “The AP article also noted that many people still mistakenly believe that Medicare itself funds ongoing skilled nursing facility care.” That’s no surprise. Many Americans are still unaware of the personal risk and cost of long-term care.

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05/20/2014, “LTCI sales fall sharply,” by Allison Bell, LifeHealthPro

Quote: “U.S. long-term care insurance (LTCI) carriers reported big drops in the number of new individual LTCI policies sold in the first quarter and revenue from those policies.”

LTC Comment: Bad news for the LTCi industry and for those who are missing the opportunity to mitigate the risk and cost of long-term care.

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05/19/2014, “Insurers Ride The Critical And Chronic Illness Wave,” by Cyril Tuohy - Top News - InsuranceNewsNet.com

Quote: “Certainly, insurance carriers see the critical illness and chronic care riders as a major opportunity to sell more life and long-term care coverage at a time when life insurance sales are flat and low interest rates exert a damper on insurance products.”

LTC Comment: There was certainly a lot of talk about products such as these at the recent AALTCI conference.

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05/19/2014, “Facing closures, nursing homes seek boost to Medicaid funding,” by Erin Ailworth, Business - The Boston Globe

Quote: “In the last five months, each of these four nursing homes has gone out of business, unable to make ends meet with the money they get from Medicaid because reimbursement rates have not increased in nearly a decade, according to the Massachusetts Senior Care Association, the industry trade group. Scores more are on the edge of shutting down. The recent closures, which required hundreds of elderly residents to be relocated, are the latest wave in a decades-long squeeze that has closed more than 50 nursing homes in Massachusetts in the past 10 years.”

LTC Comment: Low Medicaid reimbursements have always challenged nursing facility access and quality. Now the very survival of the nursing homes most dependent on Medicaid, i.e. those that serve mostly the poor and Medicaid planners’ clients, is at stake.

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05/19/2014, “California's Medicaid Conundrum,” by Chris Jacobs, Washington Wire - WSJ

Quote: "Two recent articles on California’s fiscal situation illustrate the mixed messages coming from some states, which face rising costs from expanding Medicaid under the Affordable Care Act even as they grapple with a reduced, and frequently fickle, tax base."

"Ultimately, states that expand Medicaid could face pressure to cut other important services, whether health-related or in areas such as corrections or education. Recent trends have moved toward reductions because when an irresistible force such as a shrinking tax base meets an immovable object—the rising costs from expanding Medicaid—something has to give."

LTC Comment: More on the never-ending sagas of Medicaid expansion and California’s fiscal challenges.

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05/19/2014, “Nursing homes trail hospitals in quality improvement, AHRQ report shows [link],” by Tim Mullaney, McKnight's Long Term Care News

Quote: "About 60% of nursing home quality measures have been showing significant year-to-year improvement, but hospitals have been improving more quickly, according to the Agency for Healthcare Research and Quality."

LTC Comment: More reason to stay out of a nursing home if possible.

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05/19/2014, “AGING AMERICA: Poll says more stressful caring for spouse than parent, policies needed to help [link],” by Lauran Neergaard and Jennifer Agiesta, Associated Press

Quote: "You promise 'in sickness and in health,' but a new poll shows becoming a caregiver to a frail spouse causes more stress than having to care for mom, dad or even the in-laws.

"The tug on the sandwich generation — middle-aged people caring for both children and older parents, often while holding down a job — has been well-documented, and the new poll found half of all caregivers report the experience caused stress in the family. But spouses were most likely to report that stress and to say caregiving weakened their relationship with their partner and burdened their finances."

LTC Comment: Either way, long-term care insurance is about protecting the people you love.

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05/16/2014, “Understanding real cost of long term care,” by William G. Lako, Jr, The Marietta Daily Journal

Quote: "Before you balk at the cost, you need to quantify your risk. Most financial and retirement plans are built to support a lifestyle, not the potential for long-term care. In our story, Paul’s mother was a widow. If her husband was still living, he would need to draw upon their retirement assets for his own living expenses in addition to paying for her care. According to Genworth’s 2014 Cost of Care Survey, the median cost for an assisted-living facility in metro Atlanta is $2,775 a month, while the median daily rate for nursing home care is $205."

LTC Comment: The real cost of long-term care transcends the financial.

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05/14/2014, “For Medicaid Patients, Access To Primary-Care May Not Be As Advertised [link],” by Carol M. Ostrom, Kaiser Health News

Quote: “Using ‘mystery shoppers’ looking for access to health care, Public Health - Seattle & King County has found troubling indications that access to primary-care providers may not be as advertised. About half the time, primary-care providers listed as accepting new patients on Medicaid managed-care organization websites in fact told the ‘shoppers’ they were not accepting new Medicaid patients.”

LTC Comment: Ominous news given the fact that state Medicaid programs all across the country are pushing their frailest most infirm recipients into “managed” long-term care.

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05/14/2014, “How to Evaluate Long-Term Care Facilities,” by Casey Dowd, Fox Business

Quote: "Making the decision to move a loved one to a long-term care facility is never easy. However, once the decision has been made, another challenge awaits: finding the right facility, and figuring out how to finance the care."

LTC Comment: There is certainly some useful information in this article for those interested in finding an LTC facility for a loved one, but goodness, they sure botched the order of operations! "Figuring out how to finance the care" should come long, long before care is needed.

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05/14/2014, “Do Seniors Have Too Many Medicare Plans To Choose From?,” by Phil Galewitz, The Washington Post

Quote: “While choice may sound like a good thing, many seniors say they find it difficult to compare plans. As a result, they often stick with the same plan even if it is not best suited to them, according to a new report from the Kaiser Family Foundation based on conversations with beneficiaries in Memphis, Tennessee; Tampa, Florida; Baltimore; and Seattle. (Kaiser Health News is an editorially independent program of the foundation.)”

LTC Comment: Sounds like the old Soviet complaint upon entering an American super-market: too many choices! But here’s an opening for advisors who can help Medicare beneficiaries select the best, most affordable plan.

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05/13/2014, “Beware the long-term labyrinth of costs: report,” by Jonny Paul, FTAdviser.com

Quote: "A 55-page report from IFoA [Institute and Faculty of Actuaries] questioned the government’s proposed £72,000 cap on costs, which will only kick in once pensioners have paid out an estimated £140,000 long-term care."

LTC Comment: It's fascinating to watch the Brits struggle with the same LTC financing problems we have. This article critiques the back-end, catastrophic approach they're implementing (ostensibly capping private LTC costs at 72,000 British pounds or approximately $121,000) which is similar to proposals from several US sources.

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05/13/2014, “Alzheimer's Kills More People Than Breast And Prostate Cancer Combined, So Why Is It So Underfunded? [link],” by Sabrina Bachai, Medical Daily

Quote: "In an effort to shed more light on the sixth deadliest disease in the country, the Alzheimer’s Association put together an informative video regarding Alzheimer’s and other forms of dementia. This was in response to a new report released last week by the Journal of the American Academy of Neurology."

LTC Comment: The video mentioned in this article is pretty good. While being simple and short, it effectively conveys the magnitude of those affected by Alzheimer’s disease and focuses on its disproportionate affect on women.

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05/13/2014, “LTCI carrier to pause California sales,” by Allison Bell, LifeHealthPro

Quote: "John Hancock Long-Term Care Insurance says it will temporarily suspend selling new long-term care insurance (LTCI) products in California while it updates product prices in that state."

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05/13/2014, “The Financial Consequences of a Long Life, Life & Health Advisor,” by Thomas Smoot, Life & Health Advisor

Quote: “As the population ages into retirement in greater numbers than ever before, individuals will need financial planning options that account not only for their longer lives, but also for the contingency events that are likely to arise. By helping clients understand the need for long term care planning, financial professionals can take a big step towards creating a robust longevity risk plan that can stand the test of time.”

LTC Comment: As mentioned earlier, the consequences of not planning for long-term care expenses transcend the financial. It’s every bit as important to plan for long-term care expenses for the purpose of protecting your family and loved ones as it is to preserving financial solvency.

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05/12/2014, “Insurance Agents Played Major Role in Exchange Enrollment,” California Healthline

Quote: “California officials had estimated that about 80% of consumers would seek assistance when enrolling in health coverage through the exchange.

“To meet that need, the state planned to employee 16,000 enrollment counselors to assist consumers with enrollment. However, only 600 counselors were certified by the exchange when open enrollment began because of delayed training sessions and background checks, as well as some computer glitches. At the end of open enrollment, the exchange had about 5,600 certified enrollment counselors.

“In comparison, about 12,000 insurance agents were certified by the state to help consumers enroll.”

LTC Comment: Looks like consumers trust insurance agents more than government bureaucrats. Once again, the private sector bails out the public sector.

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05/11/2014, “Health Sense: Nursing home costs and insurance appeals,” by David Wahlberg, Wisconsin State Journal

Quote: “One reason care is more expensive here than elsewhere is that the state’s Medicaid program doesn’t pay well for nursing home care, according to the Wisconsin Health Care Association, a nursing home group. Wisconsin’s nursing homes lose more than $41 per patient per day from Medicaid, a bigger loss than in all but two states, according to a study in January commissioned by the American Health Care Association. Medicaid covers two-thirds of the state’s nursing home residents.”

LTC Comment: Some things never change! I met with then-Governor Tommy Thompson in 1992 and wrote this in my report which you can still read here: “Medicaid pays nursing homes less than the cost of providing the care according to the United Seniors Health Cooperative. This low reimbursement is a drag on access and quality and entices nursing homes to attract private payers while repelling Medicaid recipients.” (pps. 6-7)

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Updated, Friday, May 23, 2014, 11:42 AM (Pacific)

Seattle—

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LTC Bullet: Covering the First Virtual LTCI Conference from Overseas

LTC Comment: Minor glitches aside, it was great fun to monitor the 2014 LTC Solutions Summit from afar.

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

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LTC BULLET: COVERING THE FIRST VIRTUAL LTCI CONFERENCE FROM OVERSEAS

LTC Comment: When Jesse Slome and the American Association for Long-Term Care Insurance set the date and place for their 2014 LTC Solutions Summit in Kansas City, I had already booked a conflicting vacation in Europe. Bummer!

Then came the news that I could watch the keynote address, the CEO Forum, and several of the best presentations on three successive days by logging in online. Terrific, I thought, I don’t have to miss my first LTCI Summit conference after all.

And it worked . . . mostly. In Europe to visit my soon-to-be niece-in-law, who is studying economics in Toulouse, France, Molly and I were on a side trip to the high Pyrenees on May 18 when the opening session took place.

Ensconced in a cozy AirBnB apartment ($35/night) with all the conveniences including excellent Wi-Fi, I followed the link repeatedly provided by AALTCI to the event. At first, the image and sound flickered in and out. The program was “on air,” then “off air.” But after a while, it persisted nearly full time.

Jesse Slome opened the session with a welcome and some encouraging words about a less-than-exuberant LTCI market. Damon tells me Jesse actually announced that I was tuning in from France. But I must have been “off air” when that particular tidbit was shared.

Harley Gordon’s Keynote

I captured nearly all of Harley Gordon’s excellent presentation. I’ve come to think that Harley has nailed the secret to selling LTC insurance . . . at least as long as the public-policy-induced obstacles to the market remain in place. Eliminate those obstacles and the traditional sales approach might work better.

In the meantime, Harley and his Certified in Long-Term Care (CLTC) training and certification assess the key to selling LTCI as ignoring risk and statistics while focusing on consequences for loved ones.

People who’ve already been through an extended care experience sell themselves on LTCI. They fall in your lap, but there just aren’t enough of them. (CLTC prefers the term “extended care” over long-term care, which connotes getting old and going to a nursing home.)

It’s the people who haven’t experienced extended care who don’t understand it, don’t think it will ever happen to them, and absolutely don’t want to speak with you about it. They are the folks you have to reach.

Harley spoke for an hour with humor, wit and a little good-natured effrontery on just how to talk to such people.

Women naturally get the idea of nurturing and caregiving, so it’s mostly guys who shut down at the mention of aging and care needs. You reach those guys by appealing to their sense of responsibility for the people they love and are committed to protecting.

“Tom,” Harley said (in paraphrase) to a potential prospect, “it will never happen to you.” He said that over and over again. In other words, never mind the risk and statistics. “But if it did happen, what would that mean to the people you’re committed to protect? You raise your children to leave home, not to come back and take care of you.”

Counter-intuitive? For sure. But “it works!” And evidently it does work, because thousands of CLTCs all across the United States testify to the fact by keeping the wounded LTCI market alive until better economic and public policy conditions heal it.

Congratulations, Harley, on a fine keynote, but more especially for what you and your Corporation for Long-Term Care colleagues and graduates have achieved.

More on the Online Conference

By the time Harley finished, it was getting kind of late, seven time zones later than Kansas City to be precise. The Armagnac I’d imbibed was taking its toll. So, while I’m sure Scott Olson’s presentation was terrific, I called it an evening at that point. Apologies also to my old friend and former colleague Kent Wise who spoke after Scott. He’s a dynamo and it would be great to see what he’s become since I knew him years ago as the boy wonder of long-term care.

I had every good intention to monitor Sam Morgante’s presentation on public policy and the CEO Forum on May 19^th, but as circumstances would have it, I was not able to be where I could capture a good Wi-Fi signal at the right time. We’ll just have to leave coverage of those parts of the program to Damon who was on site in person.

The May 20 Online Program

As I write this I’m in a McDonald’s restaurant (free Wi-Fi) in Toulouse sipping a café au lait and waiting for the next live stream to begin. Here’s the billing:

Top Tips From The Trenches - The Best Sales and Prospecting Ideas Shared By Conference Attendees
The New Opening Conversation: Five Questions To Ask Every Prospect - Larry Moore
Selling Combo LTC - A Whole New Approach To Benefit Clients and Close Sales - Shawn Britt

If the reception is adequate, I’ll be watching and listening with interest. Whether I get the program online or not, however, I will definitely buy full conference coverage offered by Virtual Insurance Conferences & Expos for $29. Such a deal!

…………………

All right! I’m on. Music is playing. Slides with facts and statistics are running. Sponsors’ banners are scrolling. Congratulations to those sponsors for making this experience possible.

Jesse Slome opens the May 20 program: “Live from Kansas City, welcome to the 2014 National Long-Term Care Sales Summit.” This is the first national insurance conference ever streamed live for free. People have signed in from Russia, the Ukraine and 10 other countries. “If Steve Moses is watching in France, Bon Jour, Steve.” Right back at you Jesse. I’d drop you a note, but the chat screen isn’t working for me tonight.

Session 1: Today’s program began with Jesse presenting on how to use LinkedIn as your personal LTCI sales storefront. If you missed it, this presentation alone warrants getting the $29 version of the full conference.

Session 2: “The New Opening Conversation” by Larry Moore. Five key questions.
Have you ever had an experience with long-term care?
Based on your experience, how does this impact your thinking about LTC?
If you personally experience a long-term care event tomorrow, which assets would you liquefy first?
What planning solutions can you think of that can help you manage this risk?
What would you prefer? A traditional plan or one that combines death benefit and a long-term care solution in one package?

Brief break for a message from Transamerica and Mutual of Omaha, the conference’s platinum sponsors.

Session 3: Keynote presentation by Shawn Britt from Nationwide. She provides advice for financial advisors on how to help people plan for long-term care by using popular hybrid products. If you missed this program in person or online, read Shawn’s guest LTC Bullet from last September: “LTC Bullet: Guest Column on Linked Products.”

Alas, at this point my laptop’s battery is giving out. McDonald’s gave me free Wi-Fi, but no electrical connection.

One last time, thank you Jesse, Mindy, AALTCI and all you wonderful sponsors and attendees who made this such a fine program—in person and online—and who make this such a proud profession with which to be associated.

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Updated, Friday, May 16, 2014, 11:22 AM (Pacific)

Seattle—

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LTC Bullet: Politics and Legislation: Thousand Bullets Retrospective

LTC Comment: Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 15 years of “Politics and Legislation” Bullets. Please enjoy this retrospective after the news.

*** AALTCI Conference: It’s almost time for another excellent American Association for Long-Term Care Insurance conference. Their Long-Term Care Solutions Sales Summit will be held May 18-20 at the Westin Hotel in Kansas City, MO. Over the past decade+ we’ve attended many of these conferences and have always found them to be of especially high value in terms of professional development through educational content and networking opportunities. I hope to see you there, but if you can’t be there in person, they have you covered: Be there virtually by tuning into a live webcast stream of selected sessions for free! As usual, the American Association for Long-Term Care Insurance is an outstanding resource for LTCi professionals. Click here for further information and to register for free access. ***

*** BY THE WAY: If you are physically attending the forthcoming AALTCI conference and smell delicious, fresh popcorn, follow your nose until you find the LTC Financial Partners booth. According to their press release, LTCFP is “using popcorn and a 'top-10' list to recruit long-term care insurance pros.” What a clever idea. Enjoy some popcorn and learn about what LTC Financial Partners has to offer at their booth in Kansas City and in their press release here. ***

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LTC BULLET: Politics and Legislation: THOUSAND BULLETS RETROSPECTIVE

Today’s Bullet is our “Thousand Bullets Retrospective” Number 5 covering “Politics and Legislation.” These “Politics and Legislation” Bullets cover commentary on news from Congress, the Administration, HCFA, and the states. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.

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May 21, 1998: CNN Update on "Send Granny's Lawyer to Jail Law". “The Balanced Budget Act of 1997 criminalized professional assistance with certain Medicaid asset transfers made to qualify clients for Medicaid's long-term care benefits. This law, dubbed the ‘Send Granny's Lawyer to Jail Law,’ is the latest in a series of attempts by eight U.S. Congresses and three Presidents to curb aggressive Medicaid planning. As usual, the Medicaid planning bar has mobilized to defeat the effort. The New York State Bar Association is suing Attorney General Janet Reno in Federal court to have the law declared unconstitutional. So far, the court has issued a preliminary injunction pending a final judgment. In addition, Attorney General Reno sent a letter to Speaker Gingrich and Congress announcing the DOJ's decision neither to defend the constitutionality of the law nor bring any criminal prosecutions under it. In a recent national broadcast, CNN interpreted these events as putting Medicaid planning ‘back on solid legal ground.’ Did it? What message do these developments send to American taxpayers? Stephen Moses, President of the Center for Long-Term Care Financing, is featured in the CNN story with a brief comment.”

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March 3, 1999: U.S. President Debates Center President. “The February 1999 issue of McKnight's Long-Term Care News contains a point/ counterpoint column entitled ‘Endorse the White House LTC Plan?’ In this article, U.S. President Bill Clinton makes the case for his new four-point long-term care plan. Center for Long-Term Care Financing President Stephen Moses presents the counter argument. Excerpts from both positions follow.”

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July 24, 2000: Open Letter to HCFA Administrator. “The Health Care Financing Administration is the U.S. government agency that administers Medicaid and Medicare. An important role of the Center for Long- Term Care Financing is to bring practices that undermine responsible long-term care financing policy to the attention of the media and the government agencies involved. What could be more irresponsible than HCFA's participation in a continuing education seminar for attorneys and accountants on how to artificially impoverish infirm seniors to get them on Medicaid without spending down? The following open letter to the HCFA Administrator in Washington, DC is self-explanatory.”

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October 2, 2001: The Case for LTCI Tax Incentives. “Congressional action on additional tax incentives for long-term care insurance (LTCI) appears unlikely in the near term. Nevertheless, the American Academy of Actuaries' recently released Issue Brief titled ‘Federal Tax Incentives for Long-Term Care Insurance: Actuarial Issues and Public Policy Implications’ argues why tax incentives for LTCI should remain a public policy priority for America even in these turbulent times. The publication is available online in .pdf format at www.actuary.org/pdf/health/ltc_tax_080101.pdf.”

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December 10, 2002: What About the Rate Stability of the U.S. Government? “The strongest criticism levied today against private LTC insurance is that premiums on in-place business may have to increase someday if claims experience turns out to be worse than anticipated. This, critics say, could devastate long-time policy holders who cannot afford steep premium increases in their old age and who no longer qualify medically for new coverage. Well, that is a valid concern that insurers and regulators are taking very seriously. But what about the far more ambitious, and less achievable promises that the U.S. Government has made to seniors through Social Security and Medicare? David Wessel, in his November 21, 2002 Wall Street Journal column ‘Capital,’ titled ‘U.S. Promises Are in the Hole’ raised that question. [Excerpts follow in this LTC Bullet.]”

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September 25, 2003: Dire Warnings from the Feds “Have you read ‘Your Social Security Statement’ lately. If not, you'd best take a close look soon and beware the latest tidings from GAO as well.”

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February 4, 2004: Presidential Hopefuls Give Lip Service to LTC. “When terrorism has been defeated, America's new twin towers of vulnerability will be retirement and health security for aging boomers. Yet, the leading candidates for President, including the current incumbent, barely recognize the impending mega-trauma of long-term care.”

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December 19, 2005: House Passes Historic LTC Reform; Center Helps Tip Balance; AARP Spurned “At 6:00 AM Eastern, after pulling an historic all-nighter, the House passed long-term care reforms that exceeded our highest hopes. Bottom line, we got everything the Senate proposed, plus everything the House proposed, and then some. We're still on tenterhooks, however, waiting to see if the full Senate will go along. Stay tuned to C-Span coverage of the budget bill for the suspenseful conclusion of this public policy cliffhanger.

“Your Center for Long-Term Care Reform had a thing or two to do with this progress too. We spent half time in Washington, DC this Summer briefing (primarily) Senate Finance Committee staff on the importance of these reforms. Our ‘Rule of Law’ column titled ‘Welfare for the Well-To-Do’ ran over the weekend in the Wall Street Journal and was widely circulated on Capitol Hill Saturday and Sunday before the vote. Read on for a copy of that op-ed. As you know, we've repeatedly exposed AARP's irresponsible attacks on members of Congress who seek to save Medicaid for the poor by diverting the affluent to responsible long-term care planning.”

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February 2, 2006: LTC Victory: “The Deficit Reduction Act of 2006 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.”

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January 9, 2007: The DRA Bullets: “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 [here].”

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May 15, 2008: The LTC Score: “How the Congressional Budget Office (CBO) ‘scores’ proposed legislation helps or hinders passage often inversely to the proposals' merit. LTC tax deductibility is a case in point, [in this LTC Bullet].”

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July 21, 2009: How Much More Wrong Can They Get It?!: “Today, we bring to your attention two examples of propaganda masquerading as research. Both come from an outfit called ‘The SCAN Foundation.’”

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April 7, 2010: CLASS Caveats: “When McKnight's editor Jim Berklan asked me last Friday afternoon for a column on CLASS, I demurred. ‘Too busy,’ I said, ‘too tired.’ He would have none of it, so thanks to Jim we have the following article to share with you today.

“We thank McKnight's for publishing this piece and for permission to ‘reprint’ it here for our readers. Check it out online at McKnight's site here (with picture) and do forward the link to many others.”

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October 28, 2011: Remedial CLASS: “Wednesday's Congressional hearing on the brain dead CLASS program illustrates the inefficacy of seeking political solutions to the easily solvable LTC financing problem.”

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August 10, 2012: Challenge Medicaid’s MOE Mandate: “ObamaCare threatens states’ federal Medicaid matching funds, arguably illegally since the SCOTUS decision. Why it matters [in this LTC Bullet].”

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June 21, 2013: What Should the LTC Commission Do?: “How should the LTC Commission prioritize its work and recommendations? Some thoughts [in this LTC Bullet].”

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Updated, Tuesday, May 13, 2014, 3:45 PM (Pacific)

Seattle—

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LTC E-Alert #14-016: AALTCI Conference and LTC News and Comment

LTC Comment: It’s almost time for another excellent American Association for Long-Term Care Insurance conference. Their Long-Term Care Solutions Sales Summit will be held May 18-20 at the Westin Hotel in Kansas City, MO. Over the past decade+ we’ve attended many of these conferences and have always found them to be of especially high value in terms of professional development through educational content and networking opportunities. I hope to see you there, but if you can’t be there in person, they have you covered: Be there remotely by tuning into a live webcast stream of selected sessions for free! As usual, American Association for Long-Term Care Insurance is an outstanding resource for LTCi professionals. Click here for further information and to register for free access.

*** Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don’t have to. By dividing the labor, we can all work more efficiently. If you like what you read in our “LTC News and Comment” E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. ***

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05/11/2014, “The Unexpected Costs of Long-Term Care,” by Jessica Alling, The Motley Fool

Quote: “With few Americans taking the necessary steps to prepare for the often-inevitable expense of a long-term care requirement, the costs (financial or not) are being passed on to those left providing the care and support. Though the thought of needing long-term care may not be a pleasant topic for you or your loved ones, no retirement plan should be considered complete until the topic of ongoing costs of care are addressed.”

LTC Comment: This article puts emphasis where it belongs—on the consequences of failing to plan for all concerned, especially those left with the task of caregiving.

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05/11/2014, “Your Money: Spend more in retirement? Here's how,” by Karin Price Mueller, NJ.com

Quote: "Aznar says this couple should also consider purchasing long-term care insurance policies that would pay out in the event that one or both of them needed care or were unable to perform certain 'activities of daily living.' 'Considering that the average annual cost of a nursing home in the state of New Jersey is approximately $121,180, the necessary daily benefit to cover the full cost would be approximately $332 (per day),' she says. 'They should consider purchasing a 5 percent compound inflation rider to ensure that the benefit keeps pace with inflation. Also be sure to purchase from a reputable company.'"

LTC Comment: This is primarily a good example of smart retirement planning, but without long-term care insurance, this couple’s financial legacy (even with their substantial net worth) is at risk. Furthermore, financial solvency in retirement is only one facet in planning for long-term care. Take into account the many other costs of long-term care—physical, emotional, professional, social, familial etc.—and purchasing LTCi should be a no-brainer for this couple.

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05/08/2014, “Documents on Long-Term Care,” by Nina Bernstein and Eba Hamid, NYTimes.com

Quote: “The goal was cost savings, but the state’s sweeping changes in Medicaid spending on long-term services set off a stampede in recent years by managed care companies for low-risk, high-profit enrollees. At the same time, some of the most impaired people were cut from services. In these documents, advocates for adult home residents caught in the scramble, and lawyers for the elderly, detailed harmful consequences.”

LTC Comment: Medicaid programs all across the country are turning over their aged and disabled recipients, often including the frailest and most infirm “dual eligibles,” to managed care companies at a discounted rate to save money. These documents show the new system doesn’t always work out very well for the patients.

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05/08/2014, "LTCI Watch: Community service," by Allison Bell, LifeHealthPro

Quote: "Italian authorities have come up with an interesting way to try to change the ways of Silvio Berlusconi, Italy's former prime minister: It's sentenced him to working at least four hours per week at a center for people with Alzheimer's disease.
"This gave me an idea: Why not sentence all members of Congress -- maybe all members of Congress, and their aides -- to working with people with Alzheimer's or other forms of dementia?"

LTC Comment: Quite a shift from Silvio Berlusconi’s activities as Prime Minister of Italy to working with Alzheimer’s patients, but no doubt more useful and edifying. I volunteered in a nursing home as a teenager and have spent quite a bit of time in various facilities with my grandmother. I can say it was a profoundly beneficial experience for me and can be so for anyone.

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05/08/2014, “A Long-Term Care Policy More Than Insurance,” by Austin Kilham, WSJ.com

Quote: "The 60-year-old client had watched his parents burn through their savings and his expected inheritance to pay for their long-term care. He wanted to protect his assets so the same wouldn't happen to him and his family, but he was wary of insurance products that offered no return of their value if he didn't use them."

LTC Comment: For those of you who would like to read this article but do not have a subscription to the Wall Street Journal, please let us know. We can forward a copy to you under the Center's online subscription.

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05/07/2014, "More seniors going into retirement shouldering mortgages, feds say [link]," by Pamela Yip, Dallas Morning News

Quote: “For homeowners age 65 and older, the percentage carrying mortgage debt jumped from 22 percent in 2001 to 30 percent in 2011, the agency said. Among those 75 and older, the rate more than doubled during that same period, from 8.4 percent to 21.2 percent. . . . Median mortgage debt for seniors jumped 82 percent from 2001 to 2011, with the median amount older homeowners owed on mortgages rising from $43,300 to $79,000.”

LTC Comment: This is a very disturbing development given the likelihood that aging Americans will need to rely more heavily on home equity in retirement due to the weakening social safety net.

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05/07/2014, “The 5 Biggest Retirement Planning Mistakes You Can Avoid,” by Barry Glassman, Forbes

Quote: "Retirement Planning Mistake #3: No Long-Term Care Plan. Anyone who has cared for an aging parent knows first-hand the toll it can take on their loved ones and their savings. Both the time and money needed to provide quality care can be staggering."

LTC Comment: There is a reasonable and responsible long-term care financial plan available for most people; the key is to start planning early.

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05/07/2014, “Cost of long-term care outpaces inflation: Genworth report,” IFAwebnews.com

Quote: "The cost of long term care continues rising at a rate outpacing inflation creating significant financial planning challenges for the nearly 12 million Americans currently in need of long term care services. According to Genworth’s 2014 Cost of Care Survey, the cost of receiving in-home care continues to rise, though at a more moderate rate of growth."

LTC Comment: More useful findings from this latest Genworth report. Center members can find this report and others archived here: http://www.centerltc.com/members/ltccostsurveys.htm.

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05/06/2014, “Make gender neutrality standard for long-term-care insurance,” by Mariko Yamada, SFGate

Quote: “In the absence of a national gender-pricing ban, two other states, Montana (in 1985) and Colorado (in 2010), took action to prohibit this practice for long-term-care insurance premiums. California needs to act. California long-term-insurance providers have rate-increase applications pending before the Department of Insurance right now.”

LTC Comment: This op-ed comes from the state legislator who introduced the bill that would prohibit LTCI from charging women more than men in California. Put another way, her bill forces LTCI to charge men more than their actuarial risk justifies.

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05/06/2014, “D.C. Council approves broad new tax on insurance to cover city's health-care exchange [link],” by Aaron C. Davis, The Washington Post

Quote: "The D.C. Council on Tuesday unanimously approved a broad tax on all health-related insurance products sold in the nation’s capital to solve a big money problem faced by its online health insurance exchange.

"The taxable plans will include long-term care, disability, vision, dental, hospital indemnity and dozens of other health-related policies — almost all of which are not allowed to be sold on the exchange."

LTC Comment: No doubt a tax on LTCi in Washington D.C. will inevitably filter down to the consumer. Talk about punishing good behavior.

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05/06/2014, “SCC tinkering with changes to long-term care insurance,” by Laurence Hammack, Richmond Times-Dispatch: Insurance News

Quote: "In response to precipitous rate increases, the State Corporation Commission is calling for changes that tinker with — but do not overhaul — the rules that govern long-term care insurance in Virginia. The SCC has received hundreds of complaints from policyholders in recent years. In a report released Friday, the agency acknowledged that its recommendations are 'not a silver bullet.'"

"Although the average rate increase was 36 percent, some policyholders have seen repeated jumps that collectively have more than doubled the cost of their coverage. While acknowledging the pain of such increases, the SCC also maintained they were justified, noting the importance of 'the financial strength and viability of the insurance industry and the [long-term care insurance] market generally,' the report from the agency’s Bureau of Insurance states."

LTC Comment: See also this recent clipping “Long Term Care Insurance Rate Increase Risks Greatly Diminished.” Steve Moses comments: “I agree with Jesse. In fact, I'd go a little further to say LTCI premiums may decline in coming years. If the Fed stops pushing interest rates to zero and if Medicaid runs out of money to pay for middle class and affluent people's LTC after they need care, private LTC insurance may become so profitable--having already raised rates and tightened underwriting--that market competition will ultimately force premiums down even as profits increase.”

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05/06/2014, “Forever Young? America Stays Relatively Youthful Even as World Population Ages - Real Time Economics [link],” by Neil Shah, WSJ

Quote: "That the U.S. population is aging rapidly is no mystery, but that masks an important fact: America will remain a lot younger than many countries in the developed world. Roughly 1 in 5 Americans (about 21%) will be 65 years old and up by 2050, compared with just 13% in 2010 and less than 10% in 1970, according to a new U.S. Census Bureau report released Tuesday."

LTC Comment: Interesting figures and findings in this globally-focused article and its corresponding Census Bureau report. Occasionally, your Center for Long-Term Care Reform likes to examine the long-term care financial challenges and the systems created to manage those challenges in other countries. Here is some interesting related reading: LTCI in Germany, How Japan Escapes "LTC Hell” and LTC Parallels in Britain.

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05/06/2014, “Federal government notes slowdown in nursing home spending [link],” by Tim Mullaney, McKnight's Long Term Care News

Quote: "Decreased payouts for nursing home care was one reason that healthcare spending grew more slowly for seniors than for any other age group between 2002 and 2010, the Centers for Medicare & Medicaid Services announced Monday."

LTC Comment: Nevertheless, individuals need a plan in place to cover long-term care expenses should they become catastrophic, especially if they want services that people actually prefer, like remaining at home.

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05/05/2014, "The More You Know: Why Virginians Are Souring On Medicaid Expansion & Lessons For Other States [link]," by Josh Archambault , Forbes

Quote: "New polling out of Virginia is sure to disrupt the media’s narrative on ObamaCare’s Medicaid expansion that the public overwhelmingly supports it. The results could even have a ripple effect far beyond the Commonwealth’s borders as 24 other states still debate expansion."

LTC Comment: Related reading: The Index of Long-Term Care Vulnerability: A Case Study in Virginia. See this Center for Long-Term Care report for recent analysis of the specific long-term care financial challenges Virginia faces.

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05/02/2014, “Study: Employees favor companies that offer voluntary benefits,” by IFAwebnews Staff, IFAwebnews.com

Quote: "Sixty-five percent of employees say it is important that their employer offer voluntary products as an employee benefit. However, 47% of employees surveyed have not been offered an additional voluntary product since the Affordable Care Act was implemented in 2010, according to a survey from Transamerica Employee Benefits (TEB), a marketing unit of Transamerica Life Insurance Co."

LTC Comment: With rising awareness that long-term care financial planning is crucial, smart employers are learning that offering a robust benefits package, including LTCi, is necessary to attract the most talented employees.

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Updated, Monday, May 5, 2014, 11:23 AM (Pacific)

Seattle—

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THAU & SLOME IN WSJ AND LTC NEWS AND COMMENT

LTC Comment: Our lead article today is one more sign of how much national publicity long-term care and LTC insurance are receiving these days:

5/4/2014, “'Hybrid' Long-Term-Care Policies How to Tell If They're Right for You [link],” by Anne Tergesen, Wall Street Journal

Quote: "'There is no right or wrong answer,' says Claude Thau, an insurance broker in Overland Park, Kan., who helps financial advisers with long-term-care planning for their clients. 'While hybrids provide a death benefit for heirs, traditional policies provide more long-term-care insurance' for each dollar in premiums."

LTC Comment: Wall Street Journal coverage reaches a lot of potential LTCI buyers. Well done!

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5/2/2014, “Tips for Choosing Care for an Aging or Ailing Family Member,” by Ann Carrns, New York Times

Quote: “As baby boomers age, demand for caregivers is likely to increase, since most people want to remain at home as long as possible, said Mr. McInerney. It’s also possible the cost of hiring a caregiver may be affected by new rules, which kick in next January, extending federal minimum-wage and overtime protection to many home care workers.”

LTC Comment: As growing demand for caregivers and mandatory compensation increases take hold, slow cost inflation for homemakers and home health services will likely end.

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5/2/2014, “Understanding LTCi rate increases LTCI Insider,” by Margie Barrie, LifeHealthPRO

Quote: "During the client appointment, I need to explain about rate increases - why they occurred and the future probability. How do you handle that conversation so that the prospect understands the reasons and still feels comfortable buying this product?"

LTC Comment: Jim Glickman provides the answers.

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5/1/2014, “Hancock LTCI sales jump,” by Allison Bell, LifeHealthPRO

Quote: "John Hancock Long-Term Care increased sales of LTCI to $23 million in the first quarter, up from $12 million in the first quarter of 2013."

LTC Comment: Genworth too—see below. Is this a trend?

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5/1/2014, “Scans Rule Out Alzheimer's,” by John Gever, MedPageToday

Quote: "Autopsy findings in 74 elderly individuals confirmed the accuracy of brain scans for beta-amyloid plaques conducted before they died -- and also showed that the patients' clinical diagnoses were frequently wrong, a researcher said here."

LTC Comment: Recent coverage of efforts to get Alzheimer’s diagnosis right were needed and are welcome.

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4/30/2014, “Current quality measures are unfair to providers serving economically disadvantaged populations, National Quality Forum tells CMS [link],” by Tim Mullaney, McKnight's LTC News

Quote: "The need to adjust quality measures for sociodemographic factors is especially pressing because the government increasingly is tying reimbursement to performance, the report states. This means that providers are incentivized to turn away vulnerable patients to maintain their quality ratings and their bottom lines. Furthermore, cash-strapped providers that continue to take on disadvantaged patients could see their quality ratings suffer and lose reimbursements, making it even more difficult for them to care for people who often have complex healthcare needs."

LTC Comment: Yet another perverse incentive caused by Medicaid's low reimbursement rates and too few private-payers at market rates.

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5/1/2014, “New Data Spotlight Tracks Rising Enrollment in Medicare Advantage Plans [link],” Kaiser Family Foundation

Quote: “A new brief from the Kaiser Family Foundation documents the continuing climb in Medicare Advantage plan enrollment, even at a time when payments to such plans are being reduced under the Affordable Care Act. Despite spending reductions enacted in the ACA to reduce historical overpayments to Medicare Advantage plans, from March 2013 to March 2014 enrollment in Medicare Advantage plans grew by 9 percent, or 1.4 million people, to reach a total of 15.7 million Medicare beneficiaries. The Medicare Advantage 2014 Spotlight: Enrollment Market Update highlights that 30 percent of the Medicare population is now enrolled in such plans, up from 24 percent in 2010, and analyzes trends in Medicare Advantage enrollment, premiums, out of pocket limits, prescription drug coverage and related topics.”

LTC Comment: It’s hard for government to kill a market-based program people choose.

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4/30/2014, “People with dementia are 20% more likely to be rehospitalized, antipsychotic use increases risk, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "The odds of readmission were higher for patients discharged to home healthcare than for people who transitioned to a skilled nursing facility, the researchers determined. This could be because home health services are not designed to compensate for factors such as impaired or absent family caregivers or mitigate unsafe houses, the authors stated."

LTC Comment: No doubt this is less of a problem if a LTCI case manager is involved.

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4/30/2014, “Group Long Term Care Insurance Gains Favor As Options Increase,” from AALTCI, Voluntary.com

Quote: "An increasing number of small businesses are investigating long term care insurance as an employee benefit or as a tax-favored benefit for owners according to a just-published report."

LTC Comment: It’s about time!

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4/29/2014, “UPDATE 1-Strong growth in long-term care insurance boosts Genworth profit [link],” Reuters

Quote: “Mortgage and life insurer Genworth Financial Inc reported a better-than-expected rise in quarterly profit, helped by a near-doubling in income from its long-term care insurance business. . . . Net operating income in the company's U.S. life insurance businesses rose 10.6 percent to $94 million in the quarter ended March 31, with about $46 million coming from the long-term care business.”

LTC Comment: Upbeat news is welcome.

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4/29/2014, “'Large Infusion of Cash' Needed to Address Adverse Events, Top Journal Editor Says [link],” by Bill Myers, Provider Magazine

Quote: “Providers (and hospitals) can do a better job of preventing ‘adverse events’ in nursing homes, but the best answer is ‘a large infusion of cash’ into the sector to hire—and pay—the most talented caregivers, the leader of the Journal of the American Medical Directors Association says in a new editorial.”

LTC Comment: And where is a “large infusion of cash” for nursing homes going to come from? Certainly not from the government. It will have to come from private LTCI and home equity conversion.

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4/29/2014, “Hartford upbeat about disability,” by Allison Bell, LifeHealthPRO

Quote: “Executives at Hartford Financial Services Group Inc. (NYSE:HIG) say the group disability insurance market is looking better. . . . Elliot said later during the call that Hartford has developed a critical illness insurance product and may sell it through private insurance exchanges, and possibly through programs linked to the new public health insurance exchanges.”

LTC Comment: The market evolves.

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4/29/2014, “New Medicare coverage of long-term care off to a rocky start,” by Mark Miller, Reuters

Quote: "Under the 2012 settlement of Jimmo v. Sebelius, the U.S. Department of Health and Human Services agreed to relax Medicare's requirements for coverage of skilled nursing and therapy services in institutional or home care settings."

LTC Comment: It remains to be seen how significantly this change will increase the Medicare/Medicaid crowd-out effect on LTCI demand.

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4/28/2014, “Dementia Facebook app to raise awareness of the illness,” BBC

Quote: “The FaceDementia app, by Alzheimer's Research UK, ‘takes over’ personal Facebook pages, and temporarily erases important memories, mimicking how dementia affects the brain.”

LTC Comment: I guess there is an app for everything.

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4/28/2014, “Man ordered to pay $74,000 in Medicaid fraud case,” by Dave Kolpack, Washington Times

Quote: "Authorities say Donald Hochhalter, 65, of New Leipzig, understated the value of his mother's assets so she would qualify for government payments when she moved into a nursing home. He pleaded guilty to a misdemeanor charge of making false statements. Hochhalter's plea agreement calls for him to repay about $37,000 the government spent on his mother's care. He was assessed a civil penalty of about $37,000."

LTC Comment: The people in charge of Medicaid in North Dakota are very serious about discouraging Medicaid planning of both the legal and illegal kinds. I had a conference call recently--set up by Center-corporate-member SIA Marketing of Bismarck--with the ND Medicaid director who would very much like to see us conduct a study and expose the problem of Medicaid-friendly annuities. If we can raise the funding to support it, we'll definitely pursue that idea.

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4/28/2014, “Constantino to represent Americare Home Care,” Times Herald Record

Quote: "Americare is not insurance, but it was founded by insurance agents as an alternative to long-term care insurance."

LTC Comment: Anyone familiar with this company?

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4/28/2014, “The talk parents need to have with their kids,” The Buffalo News

Quote: "But long before a health crisis forces the issue, you need to talk with your adult children about your later years. The problem is, many people can't bring themselves to have that talk."

LTC Comment: Another talk that is too easy to evade.

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4/27/2014, “Are we under-saving for retirement?,” by Robert J. Samuelson, Washington Post

Quote: "Can America afford to retire? As millions of baby boomers pass their mid-60s, the specter of widespread under-saving has taken hold. Huge numbers of present and future retirees will exhaust their savings before they die. Mass hardship looms, even as the costs of an aging society already weigh on the young and middle-aged. It's a scary vision. But is it likely? Probably not."

LTC Comment: A contrarian view from a usually reliable columnist, but I'm dubious.

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4/25/2014, “Hospital Admits, LOS Cut With Home Care,” by Sarah Wickline, MedPageToday

Quote: “In a group of home-bound, advanced illness patients, the implementation of a managed care program led to a 37% reduction in hospital admissions, and an average of 1.5 fewer days in the hospital when admitted over the course of a year (8.9 versus 7.4) despite an increase in hierarchical condition categories (8% versus 18%), according to K. Sandy Balwan, MD, of North Shore-LIJ Health System in Great Neck, N.Y., and colleagues.”

LTC Comment: Better than usual news on managed long-term care.

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4/25/2014, “Employers face monthly fees of $260 per worker if they don't offer Affordable Care Act-compliant insurance plans, analysts say [link],” by Tim Mullaney, McKnight's LTC News

Quote: “Under the ACA, employers with 50 or more full-time workers must offer employee health insurance that meets certain requirements or else pay a penalty to Uncle Sam. This employer mandate was scheduled to take effect in 2014, but the White House delayed it by one year.”

LTC Comment: One more government-inflicted burden for LTC providers to carry.

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Updated, Friday, May 2, 2014, 11:13 AM (Pacific)

Seattle—

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LTC BULLET: BUY OR WAIT?

LTC Comment: ObamaCare has launched; Vermont is moving toward a single-payer health care system; surely long-term care is next. So why buy LTCI? After the ***news.***

*** THREE WAYS to stay professionally abreast of LTC news, trends and data: (1) Our “clipping service,” (2) LTC E-Alerts, (3) LTC Bullets. The Alerts and Bullets come to you once a week on Mondays and Fridays respectively. Our clippings arrive in your email inbox at an average rate of three per day. Individual Center members ($150 per year) automatically receive Alerts and Bullets. Premium ($250) and Premium Elite ($500) members also receive the clippings. Corporate members can provide our Center benefits to their staff and producers at various levels. Check out the Center for Long-Term Care Reform’s “Membership Levels and Benefits” here. If you belong to the Center already, please encourage others to join. If you’re not yet a member, join and encourage your company to sign up as a corporate member. Contact Damon at 206-283-7036 or damon@centerltc.com for details. ***

LTC BULLET: BUY OR WAIT?

LTC Comment: Bob Vandy, Marketing VP for Center-corporate-member New York & National Long-Term Care Brokers, contacted me the other day. He said one of their agents has a prospect for LTC insurance who is reluctant to buy. After all, Vermont is moving forward with a single-payer health care system over the next three years and maybe long-term care will be included. Perhaps you’ve encountered similar procrastinators.

I had a look at Vermont’s 2012-2014 “Strategic Plan for Health Reform.” The sum of the state’s proposal for long-term care is this: “Implement specific efforts to better manage care for Vermonters with one or more chronic conditions.” The only specific action proposed under that heading is to coordinate Medicare and Medicaid revenue sources. Such a plan doesn’t exactly instill confidence in anyone who understands the current state of LTC services and financing.

But people will cling to any excuse to avoid responsible long-term care planning. The federal and state governments provide such excuses in abundance. Politicians promise new and larger benefits; they rarely campaign on taking anything away. Nowadays, LTC Commissions, study groups, and think tanks are adding to the public’s false sense of security by suggesting a new policy consensus is forming. With so many smart people agreeing that “something has to be done,” surely something will be done. Right?

Don’t hold your breath. We’re much more likely to see the current Rube Goldberg, publicly financed LTC non-system collapse than to find a workable new government-based plan implemented. The Center for Long-Term Care Reform’s latest three state-level studies provided the evidence. Check them out here (Virginia), here (Georgia) and here (New Jersey). In each of those reports, we showed why the national LTC system and each state’s system is unlikely to survive.

We summarized our results in “LTC Bullet: Can Long-Term Care Survive?” In a nutshell:

Factor #1: America faces a crushing challenge of aging demographics.

Factor #2: Longer life spans mean more, if not necessarily longer, morbidity.

Factor #3: The principal LTC payer today, Medicaid, is already over-burdened and inadequate, yet ObamaCare is loading it with millions more recipients.

Factor #4: Federal revenue streams that support state Medicaid programs are dubious due to national debt ($17.5 trillion) and unfunded entitlement liabilities ($66.1 trillion).

Factor #5: State revenue streams that support Medicaid programs are vulnerable due to poor economies caused by over spending, excessive taxation and anti-business policies.

Factor #6: Public financing of long-term care has crowded out most of the private financing alternatives that could have helped including LTC insurance and home equity conversion, but also asset spend down and estate recovery which Medicaid does not strongly enforce.

Factor #7: Government has given so much to so many for so long that a new “entitlement mentality” has replaced Americans’ traditional commitment to personal responsibility.

We concretized, measured and evaluated these factors in the three studies mentioned above. In any one of the three, you’ll find our “Index of Long-Term Care Vulnerability.” Try applying it to your state and see what conclusion you reach. Show it to any prospect reluctant to plan for long-term care because they think government will have to “do something.”

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Updated, Monday, April 28, 2014, 11:53 AM (Pacific)

Seattle—

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THE NURSING HOME MURDERS AND LTC NEWS AND COMMENT

LTC Comment: Did you see the news coverage last week about two nursing home residents bludgeoned to death by their roommate in Houston? We opted not to cover it then, but the story does illustrate an important point. Nursing homes, especially those in poorer areas, are heavily dependent on Medicaid which pays them less than the cost of providing the care. Generous Medicare reimbursements help to make up part of the shortfall (at least for now), but the nursing homes most heavily dependent on Medicaid resort to cutting caregiver staff to a minimum and paying extremely low wages in order to operate.

So what? Well, Honey Leveen, the self-proclaimed “Queen of Long-Term Care” and the Center’s Regional Representative in Houston, draws out the ramifications in her recent blog post here. We encourage you to read it and to follow her links to more of the background. Honey points out that the nursing home in which the murders occurred has “nearly all” Medicaid residents. She opines that inadequate revenue led to dysfunctional management which resulted in poor care and finally in this awful crime. She links to an earlier article she wrote for LifeHealthPRO questioning the value of “Partnership” policies that leave people dependent on Medicaid’s mostly nursing-home based care.

This is sad stuff, but information all LTCI producers should consider as they advise clients on long-term care planning.

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4/25/2014, “States Confront ‘New Mindset’ on Home Care Workers' Wages,” by Pamela M. Prah, Stateline

Quote: “State Medicaid programs worry about the costs, and also about unintended consequences of the new requirements, such as prompting more seniors and disabled to move into expensive institutional settings because in-home care is no longer a more affordable option.”

LTC Comment: This was also a major concern to the home health agency managers I interviewed last summer for our Virginia, Georgia and New Jersey studies. They worry they’ll be unable to continue providing services due to Medicaid’s low reimbursement rates, now exacerbated by mandatory caregiver compensation increases.

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4/23/2014, “LTCI insurer seeks rate increase,” by Allison Bell, LifeHealthPRO

Quote: "MedAmerica Insurance Company is seeking permission to increase long-term care insurance (LTCI) rates for some Connecticut insureds by an average of 39 percent."

LTC Comment: Are we approaching the end of these premium increases?

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4/23/2014, “Advantage plans offer more benefits than Medicare,” by Kathryn Mayer, BenefitsPRO

Quote: "New HealthPocket analysis found that 97 percent of Advantage plans provided coverage for a minimum of one extra insurance benefit - vision, dental, or hearing - not covered by Medicare. And 42 percent of Advantage plans included extra coverage for vision, dental and hearing together."

LTC Comment: Maybe “Advantage” is the right name for these plans.

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4/23/2014, “How Medicare Data Could Revolutionize Health Care,” By John F. Wasik, The Fiscal Times

Quote: "If I was an insurance executive, I would be thrilled to get my analytics department to get to work on the Medicare data. Not only could my actuaries and analysts develop computer models to determine which doctors are likely to overcharge, but they may then exclude them from preferred provider networks and health maintenance organizations, which are offered privately and through the Medicare Advantage program. . . . If the insurance industry does this right, it can find ways to lower costs and create a system of dis-incentives to rein in doctors who are overbilling or overtreating. Although the Medicare data is being pulled from a public system, many doctors have 'private-pay' patients as well, so there's quite a bit of spillover into the private sector."

LTC Comment: What if the same scrutiny were given to Medicare data for spending on home health agencies and nursing homes?

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4/23/2014, “Bipartisan Fix To Retirement Crisis In 2015?,” by Ashlea Ebeling, Forbes

Quote: “The personal savings rate has been declining; defined benefit plans are becoming obsolete. Only 38% of workers made contributions to workplace retirement accounts in 2013 (in large part because only 46% are offered one). Householders near retirement didn’t have enough saved (account balances for all households with heads age 55 to 64 averaged $12,000; $100,000 for households with retirement accounts). And a quarter of American households said they couldn’t come up with $2,000 in 30 days’ time; another 19% could only come up with $2,000 by selling possessions or resorting to a payday loan.”

LTC Comment: The Bipartisan Policy Center that is tackling the retirement crisis here is the same organization that has taken on long-term care financing. See LTC Bullet: Will Bipartisan LTC Policy Be Better?

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4/23/2014, “A jolt to long-term care best practices, amid the Ivy,” by James M. Berklan, McKnight's LTC News

Quote: “The American Health Care Association put its money where its mouth was late last week, when it announced a new partnership with Brown University. The new Long Term Care Quality and Innovation Center will be a part of the Brown University School of Public Health.”

LTC Comment: Bears watching.

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4/21/2014, “Reverse Mortgages: What Advisors Should Know,” by Paul Norr, Financial Planning

Quote: "The features of reverse mortgage loans have been evolving over the years and a growing body of research suggests that these loans can help older adults manage a dependable stream on income during their retirement years."

LTC Comment: Home equity may be the last remaining “safety net” for many retiring baby-boomer homeowners.

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4/21/2014, “New and Unexpected Ways to Fund Long-Term Care Expenses,” by Jamie Hopkins, Forbes

Quote: “While long-term care insurance is one way to fund long-term care expenses, it is not the only option. Policies can be expensive, unavailable (to those who are not healthy enough to purchase them), and many object to the use-it-or-lose-it nature of long-term care insurance. Long-term care expenses can also be financed through a variety of newly developed ‘hybrid’ or so called linked-benefit products.”

LTC Comment: Neither new nor unexpected, but coming on all the same.

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4/21/2014, “How Congress Can Fight the Alzheimer's Epidemic: Delaying the disease's onset by five years would mean billions in health-care savings [link],” by Kenneth Davis, Wall Street Journal

Quote: "Most individuals who develop Alzheimer's begin to show signs of the disease in their 70s. If we were able to slow the progress of the disease by 50%, most of these individuals wouldn't show symptoms until their 90s. Such a delay would enhance quality of life for patients and their families, while leading to substantial savings for Medicare and Medicaid. . . . All signs indicate that Alzheimer's science will continue to accelerate rapidly, and drug development policies and incentives must be realigned to keep up with this knowledge base. If we could introduce a treatment next year to delay the onset of Alzheimer's by five years, annual total costs to all payers would fall by $447 billion in 2050."

LTC Comment: Still, it seems that the frequent hopeful news about Alzheimer’s research always comes to naught.

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4/21/2014, “Retirement Terrors Affordable Care Act debate provides advisors the perfect opportunity to discuss clients' future health care costs [link],” by John Carter, Life & Health Advisor

Quote: "The most common mistake a financial advisor makes is his or her approach to the discussion. When an advisor says the words 'long-term care,' the client often hears 'nursing home.' This often causes the client to shut down. Instead, advisors should say: 'Let's talk about ways we can keep you in your home longer.' The next step is to get a fact-based estimate of what those long-term care costs may be and work to build a plan from there. Four in five advisors say they know if they can have these discussions, their clients will be more likely to stay with them."

LTC Comment: This is one of the main reasons it helps to work with a long-term care specialist.

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4/21/2014, “Aggression strongly signals pain only when dementia reaches advanced stages, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Residents with severe cognitive impairment had 'significantly more frequent aggressive behaviors' when in pain, they discovered. This was not true of residents with less severe dementia."

LTC Comment: Detecting and relieving pain is a challenge for LTC facilities especially when they also must reduce the use of psychotropic drugs.

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4/20/2014, “The 'silver tsunami': Nursing homes prepare for wave of baby boomers [link],” by Jay Greene, Crain’s Detroit Business

Quote: "The oldest boomers will turn 68 this year, the youngest will be 50; most are some time away from nursing home care. But as they drift into their 80s and 90s, or require such specialized care as dialysis, stroke recovery care or services for dementia, the nursing home they vowed to never enter is getting ready for them, either as a short-stay rehabilitation patient or as a long-term, chronically ill resident. Where two seniors to a room used to be the norm, nursing homes are now moving toward private rooms, patient-centered social environments with exercise rooms and therapy pools, fast Wi-Fi, more food options and attractive surroundings."

LTC Comment: Not your father’s Oldsmobile nor his nursing home.

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Updated, Friday, April 25, 2014, 11:53 AM (Pacific)

Seattle—

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LTC BULLET: THE MEDICAID DISSERTATION

LTC Comment: A recent doctoral dissertation sheds light on Medicaid’s public policy role and impact.

LTC BULLET: THE MEDICAID DISSERTATION

LTC Comment: Several years ago I noticed the published work of a young Heritage Foundation analyst. His was among the best writing I’d seen on Medicaid acute health care policy. I contacted him and we began a conversation about Medicaid’s role in long-term care financing. I invited him to accompany me on a field visit to New York in the fall of 2010. Together, we interviewed Medicaid long-term care eligibility policy specialists, supervisors and workers in the state’s county-based welfare offices. The resulting report “Long-Term Care Financing in New York: How to Save Money While Serving the Needy” was published by the Empire Center for New York State Policy in March 2011. Read it here.

Shortly thereafter, Brian Blase left Heritage to join the professional staff of the Committee on Oversight and Government Reform of the U.S. House of Representatives. He was instrumental in organizing a committee hearing titled “Examining Abuses of Medicaid Eligibility Rules” on September 21, 2011 at which a New York Medicaid eligibility supervisor, an Illinois Medicaid director, an elder law attorney and I testified. You can watch that hearing or read the testimony here. We analyzed the hearing in LTC Bullet: Friendly Fire in the Class War (9/22/11) and LTC Bullet: Moses Replies to Congressman's Questions (10/13/11). The proceedings make dramatic reading or viewing.

But the House Oversight and Government Reform Committee didn’t stop there. The Committee released its first bipartisan report in four years on February 13, 2013 titled “Billions of Federal Tax Dollars Misspent on New York’s Medicaid Program.” [This link takes you to a page with further links to a video and to the full published report. If you watch the video, note that the committee’s deliberation begins at 7 minutes, 21 seconds in.] The report details some of the historic problems with New York State's Medicaid program as revealed by independent investigators, news organizations, and the Committee's own research. It shows that fraud, waste, abuse, and mismanagement has been a large problem in New York’s Medicaid program for decades. The report discusses the long-standing and aggressive State approach to maximize federal dollars flowing into New York through the federal Medicaid reimbursement. We covered this important report in “LTC Bullet: Bipartisan Congressional Blast at New York Medicaid” (2/22/13).

Bottom line, we are all very fortunate to have Brian Blase in a position of responsibility in Washington, DC. He received his Ph.D. from George Mason University last year. Following are excerpts from his doctoral dissertation (footnotes omitted), which examines the public policy role and impact of the Medicaid program. I believe you’ll find his observations of interest. We thank Dr. Blase for permission to re-publish this material.

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Excerpts from “Three Papers Toward a Better Understanding of State Medicaid Programs and Program Efficiency” by (current title):

Brian C. Blase, Ph.D., Senior Professional Staff Member, Committee on Oversight and Government Reform, U.S. House of Representatives

From the dissertation’s “Abstract”:

“The federal government provides an uncapped reimbursement of state Medicaid spending. In theory, states can use the federal Medicaid funds as a replacement for state funds or the federal funds, which take the form of a matching grant that reduces the relative price of Medicaid, can increase (or stimulate) spending on Medicaid with state-raised tax revenue.”

“I . . . find that states with wealthier and more liberal populations tend to have larger Medicaid programs and that states with Democratic legislatures tend to have more Medicaid beneficiaries than states with Republican legislatures all else equal.”

“Between 2009 and 2011, many states enacted health care provider taxes as a way to bring in additional revenue through the federal Medicaid reimbursement.”

“I find significantly larger Medicaid spending growth for hospitals in states that added hospital taxes and significantly larger Medicaid spending growth for nursing homes in states that added nursing home taxes within the first two years of the enactment of the tax. I also find some evidence that states with hospital taxes were able to increase their total Medicaid spending more than states without hospital taxes during the economic downturn and initial recovery period. This paper also contains evidence that nursing home taxes diverted Medicaid spending from home and community based services to nursing homes.”

“Ultimately, the evidence in this paper suggests that health reform built around a significant public insurance expansion is likely to result in minimal, if any, overall health gains measured in the entire population, at least in the short run.”

From the dissertation’s “Paper 4: Conclusions”:

“The growth in Medicaid over the past two decades has been substantial. In 1990, the United States expended about 1.27 percent of Gross Domestic Product through Medicaid. By 2011, this percentage increased to 2.70 percent and the percentage is expected to increase to 3.80 percent by 2020.” (p. 154)

“A key finding from my first paper, Subsidizing Medicaid Growth - The Impact of the Federal Reimbursement on State Medicaid Programs, was the high correlation between the number of Medicaid recipients in a state's program as well as state Medicaid spending with the percentage of state Medicaid spending reimbursed by the federal government (the state FMAP) after controlling for many confounding factors. I found that a one percentage point higher FMAP was associated with between $5 and $16 in greater per capita state Medicaid spending and between 0.04 percent and 0.29 percent more program recipients depending on the functional specification.” (p. 155)

"The uncapped federal Medicaid reimbursement, which is essentially a matching grant, produces both a substitution effect and an income effect. The substitution effect significantly decreases the price of Medicaid relative to other categories of state expenditures. Basic economic theory shows that consumers who only bear a fraction of the price of items will tend to consume these items beyond the optimal point. As such, economists and policymakers should be concerned about the distortionary effect of the federal Medicaid reimbursement which directs resources into the health care and long-term care sectors that would likely be better directed elsewhere.

"In my second dissertation paper, Impact of Hospital and Nursing Home Taxes on State Medicaid Spending, I discuss many of the methods, such as provider donations, provider taxes, and intergovernmental transfers, used by states over the past two decades to depress the state share of Medicaid expenditures." (pps. 155-6)

“I found that states that added provider taxes used the increased federal funds primarily to increase spending on the provider class subject to the tax. Specifically, I found that states increased average annual Medicaid spending received by hospitals by 14 percent in the first two years that states enacted hospital taxes and that states increased average annual Medicaid spending received by nursing homes by 10 percent in the first two years that states enacted nursing home taxes all else equal. I also found evidence that states with hospital taxes increased total Medicaid spending more than states without hospital taxes during the economic downturn and initial recovery period and that states that enacted nursing home taxes during this period diverted Medicaid spending from home and community based services to nursing homes.” (p. 156)

“It is important for policymakers to understand that the financing techniques employed by states, such as provider taxes and large supplemental payments to public providers, do not simply transfer costs from state taxpayers to federal taxpayers. The resources employed by states to maximize the federal Medicaid reimbursement, including the work of contingency fee consultants, is almost pure deadweight loss as those resources are involved with redistribution and not production. Moreover since the uncapped federal Medicaid reimbursement incentivizes states to game the federal Medicaid reimbursement, a federal bureaucracy has formed with the task of reducing inappropriate state Medicaid spending. A large part of the federal bureaucracy would be unnecessary if the incentives at the core of the Medicaid program were better aligned.” (p. 158)

“Probably more important than the deadweight loss of individuals engaging in socially unproductive activities for economic efficiency considerations, creative financing techniques, like provider taxes and supplemental payments, reduce the transparency of the cost of the Medicaid program to state policymakers. As a result, these techniques reduce the incentive of states to ensure that Medicaid expenditures obtain adequate value to justify the spending and lead to a reduction in the efficiency of state Medicaid programs. The root cause of the problem is the uncapped federal Medicaid reimbursement. The financing techniques discussed in the second dissertation paper would be counterproductive if the federal financing of state Medicaid programs did not take the form of an uncapped matching grant.” (p. 158)

“My final dissertation paper, Statewide Health Impact of Tennessee's Medicaid Expansion, assessed the health impact of the largest increase in the size of a state Medicaid program over the past two decades. I found evidence that TennCare, Tennessee's Medicaid expansion in 1994, was largely unsuccessful in the first four years of its enactment.” (p. 159)

"I found evidence that - relative to the surrounding states - some measures of utilization (blood pressure checks and cholesterol checks) increased in Tennessee after TennCare but self-reported health and mortality rates were less favorable in Tennessee after TennCare. I also found that TennCare did not have a beneficial impact on individuals who failed to graduate high school, a subgroup that Tennessee's Medicaid expansion was more likely to directly impact.

"Finally, the results from my dissertation enable me to make several predictions about the impact of the Medicaid expansion contained in the Patient Protection and Affordable Care Act. The federal government has enticed states to expand Medicaid by offering a 100 percent FMAP for the expansion population for the years 2014 through 2016. While the FMAP for the expansion population gradually declines to 90 percent by 2020, current law maintains the 90 percent FMAP indefinitely. States with provider taxes in place in 2014, particularly hospital taxes and nursing home taxes, will result in states receiving a windfall from the expansion population as adding individuals to the Medicaid program at a 100 percent federal match will increase federal funding to state Medicaid programs by an amount in excess of 100 percent of the cost of the expansion population because of the provider tax mechanism.

"I predict that in many states the Medicaid expansion will cause states to spend additional state resources on Medicaid since the high FMAP makes the Medicaid expansion very lucrative for states. If left unchanged, I predict that the ideological opposition to the Medicaid expansion will weaken over time and nearly every state will expand their program as interest group pressure intensifies. However, given the projected strain on the federal budget as the retirement of baby boomers intensifies and Medicaid's sizeable and growing share of federal spending, I predict intensified fights over Medicaid policy in future years and that federal policymakers will realize that the easiest types of program reforms will be making perverse financing mechanisms, such as provider taxes, more difficult to utilize." (pps. 159-60)

"I believe economic theory indicates that PPACA's Medicaid expansion will increase the inefficiency of state Medicaid programs as states will have less incentive to be wise stewards of taxpayer dollars." (p. 160)

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Updated, Monday, April 21, 2014, 11:08 AM (Pacific)

Seattle—

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LTC COST SURVEY DIFFERENCES AND LTC NEWS AND COMMENT

LTC Comment: We recently observed and reported a significant discrepancy between the cost of a private nursing home as reported by Genworth, here and New York Life, here. Genworth gave the figure $240 per day which aggregates to $87,600 per year. New York Life reported $95,706 or $262 per day. We asked the people behind both numbers “Who’s right?”

According to Eileen Tell of Univita, which conducted New York Life’s survey, and Bob Bua of CareScout, which conducted the Genworth survey, the $22 difference in the costs reported for a day of private nursing home care derives from the use of means (averages) or medians, respectively, to summarize the data.

The mean or average used by Univita (NY Life) gives full weight to “outliers,” i.e., nursing homes with unusually high charges. The median, which is the middle charge in a range, smoothes out the impact of outliers giving CareScout (Genworth) the somewhat lower number.

However you cut the data, nursing home care is a very expensive proposition.

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4/18/2014, “When it comes to fixing long-term care, it's time to start thinking outside the tank [link],” by John O'Connor, McKnight's LTC News

Quote: “With all due respect to the various experts who have been and continue to be put on these esteemed panels, the problem with long-term care is not that hard to describe. It essentially boils down to two shortcomings: adequate service and payment options.”

LTC Comment: This opinion column by the editor of McKnight’s LTC News compares the Pepper Commission, last year’s LTC Commission and other “think tank” initiatives to the movie “Groundhog Day.” Right on! The one thing all those failed initiatives—and the newest one from the Bipartisan Policy Center that we analyzed in last week’s LTC Bullet—have in common is that they never ask the most critical question: what caused the problems with long-term care in the first place? We answered that question in Friday’s “LTC Bullet: Inspect This Plane.” Read it here.

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4/17/2014, “Study: Cuts to Medicare Advantage Top $1,500 Per Senior,” by Sam Baker

Quote: “The federal Medicare agency recently backed off a proposal to make additional cuts to Medicare Advantage—the second year in a row it has proposed and then abandoned such reductions. But the AAF analysis says the reductions mandated in the Affordable Care Act will still affect benefits for most seniors who use the program.”

LTC Comment: Waiting for the next shoe to drop about Medicare Advantage.

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4/16/2014, “Taking cues from 'Golden Girls,' more single baby boomers are building a future together [link],” PBS News Hour

Quote: "The '80s sitcom 'The Golden Girls' popularized the idea that four older women could get along well as housemates. Now, with one in every three baby boomers single and approaching retirement, many women are turning to communal living to ease the burdens of aging. Special correspondent Spencer Michels reports for our Taking Care series."

LTC Comment: This 6-minute PBS video raises some interesting questions about the future of long-term care and financing.

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4/16/2014, “Long Term Care Insurance Rate Increase Risks Greatly Diminished,” by Jesse Slome, Digital Journal (press release)

Quote: "An individual purchasing long term care insurance protection today faces a significantly lower risk of future premium rate increases says a leading expert."

LTC Comment: I agree with Jesse. In fact, I'd go a little further to say LTCI premiums may decline in coming years. If the Fed stops pushing interest rates to zero and if Medicaid runs out of money to pay for middle class and affluent people's LTC after they need care, private LTC insurance may become so profitable--having already raised rates and tightened underwriting--that market competition will ultimately force premiums down even as profits increase.

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4/15/2014, “The cost of long-term care in your state,” by Anne Tergesen, WSJ MarketPlace

Quote: “Whether you’re in market for long-term-care insurance or not, you owe it to yourself to take a look at some new data that documents the cost of long-term-care—both at home and in assisted living facilities and nursing homes.”

LTC Comment: We’ve seen a flurry of articles by Anne Tergesen in the Wall Street Journal for the past few days. This one announces the publication of Genworth’s latest cost of care survey which we circulated two weeks ago.

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4/1/2014, “Ken Dychtwald's Four Observations on the Future of Aging,” by Ken Dychtwald, YouTube

Quote: “Fascinated by the dance of biology, demography, and economy; watch Ken Dychtwald, Ph.D. present four observations on the Future of Aging at the conclusion of the March 12^th General Session, sponsored by Bank of America Merrill Lynch, of the 2014 American Society on Aging Annual Conference.”

LTC Comment: My budding interest in aging and long-term care was enhanced by reading Ken Dychtwald’s 1988 best seller “Age Wave.” I’ve followed his career ever since with interest. I recommend this 8-minute YouTube clip for your inspiration and motivation this morning.

Here’s what Ken said about the Center for Long-Term Care Reform some years ago:

“[Y]ou and the team have been insightful, bold, astute, and ‘early!’ You have established the foundation from which the future of LTC and eldercare will emerge.”

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4//2014, “How much income will you need in retirement?,” by Robert Powell, USA Today

Quote: "Be mindful of long-term care expenses. According to Rohwedder, long-term care expenses can be sizable, which is of particular concern for couples if one spouse needs nursing home care while the other one is still alive and living in the community and not in need of nursing home care. In some cases, long-term care insurance might be an appropriate way to mitigate the risk of long-term care needs. But a word to the wise is in order: 'Long-term care insurance policies often are designed in ways that leave considerable risk uninsured and therefore may not be appropriate for many,' says Rohwedder."

LTC Comment: LTCI may not be appropriate for some, but inability to cover all of the risk is not one of the reasons why.

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4/14/2014, “Video: Tips on Looking for Long-Term-Care Insurance,” Anne Tergesen, Wall Street Journal

Quote: “Should you purchase long-term-care insurance? Building off her recent article on the subject, The Wall Street Journal’s Anne Tergesen discusses many sides of this complex question with a panel of experts.”

LTC Comment: This link takes you to a 31-minute video interview of three long-term care insurance experts including Jesse Slome of AALTCI, agent Michael Kitces, and Urban Institute analyst Howard Gleckman. On the plus side, it’s great to see this level of detail about private LTC insurance reaching the readership of the Wall Street Journal, which is comprised largely of people who should, could and would buy the coverage if they were in possession of all the facts. On the down side, the impact of Medicaid in desensitizing the public to LTC risk and crowding out private financing is critical, but not covered.

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4/14/2014, “Skilled nursing edges toward 90% occupancy, absorption rate makes first gain in nearly a decade, NIC data shows [link],” by Tim Mullaney, McKnight's LTC News

Quote: “Nursing care occupancy reached 88.4% in the first quarter of this year, based on numbers gathered by NIC's MAP® Data and Analysis Service. This was an increase of 0.4 percentage points from the last quarter of 2013. The increase is in line NIC's forecast models, which predicted occupancy in seniors housing to exceed 90% this year, NIC President Robert Kramer told McKnight's recently. . . . First quarter private pay rents for the nursing sector were up 2.8% on a year-over-year basis.”

LTC Comment: A spike in private-pay nursing home care augurs poorly for people without LTCI.

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4/13/2014, “Making room for multiple generations,” by Elizabeth Gehrman, Boston Globe

Quote: “In part because of the recession, job losses, and foreclosures, the number of US households containing three or more generations in the United States is surging back after decades of decline since World War II. In 2000, there were 3.9 million multigenerational households, according to the Census Bureau. In 2010, that figure shot up to 5.1 million, roughly a 30 percent increase.”

LTC Comment: Disability is one of the five leading causes of this trend.

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4/13/2014, “Mistakes to Avoid When Shopping for Long-Term-Care Insurance: How to Pick the Best the Policy for Your Needs and What to Avoid [link],” by Anne Tergesen, Wall Street Journal

Quote: “Here are six mistakes consumers commonly make when purchasing long-term-care insurance, and advice on how to avoid these pitfalls.”

LTC Comment: This is a relatively long and fairly good article. As it’s in the Wall Street Journal, many across the country will see it.

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Updated, Friday, April 18, 2014, 10:53 AM (Pacific)

Seattle—

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LTC BULLET: INSPECT THIS PLANE

LTC Comment: There are good and bad ideas in the LTC Think Tank’s remarkable “Land This Plane” report. Which are which? We’ll opine after the ***news.***

*** GOOD LTCI NEWS. Center for LTC Reform Premium Member and clipping service subscriber Melissa “Missy” Vanderwaal of LTC Benefits in Indianapolis shared the following client letter that she received April 15 (slightly edited and names replaced with initials).

Dear Missy,

In the Fall of 1999 you wrote a LTC policy for a 77 year old woman, my mother. My sister and I decided to pay the premium for her by splitting the premium and each paying half. Mother could not afford the premium but we looked into the future and decided LTC insurance was the best option for her and us. In the Spring of 2011 mom was diagnosed with dementia (which she denies to this day) and she was placed in Assisted Living. She remains in Assisted Living but we are beginning to consider the next step, Memory Care.

But my point is this: the LTC insurance you helped us choose has been a blessing. We did not have to sell her home to afford her care. The independence and stimulation she receives in Assisted Living is better than the fewer choices she would have had without LTC insurance. Even though she has been using her benefits for 3 years, she still has a large amount of value left in her policy which eases our concern for her future care. (You helped us choose an Indiana Partnership plan).

So, I'm sure you get the gripes when things go wrong, but I wanted to remind you of the times when things go, oh, so right. Don't know what we would have done without you and LTC insurance.

P.S. My sister and I are both retired now and our mother is 92. Sis and I were both able to go to Florida for a few months this Winter. How in the world would we have been able to go if we did not have confidence that our mother would be well taken care of while we were gone?

Thanks for helping us chose the right policy for mom,

Sincerely,

T. W. ***

LTC BULLET: INSPECT THIS PLANE

LTC Comment: Sponsored by the Society of Actuaries and prepared by John O’Leary, the LTC Think Tank recently published a report titled “Land This Plane: A Delphi Research Study of Long-Term Care Financing Solutions.” Read it here.

Sticking with the aeronautical metaphor, every aircraft requires periodic inspection and maintenance. We’ll have a look at this plane in today’s LTC Bullet. Will it fly or should it be grounded? Your feedback is welcome.

Let’s start with some background about the study from the report’s Executive Summary:

In January 2013, the Long-Term Care Think Tank launched a comprehensive study with the goal of articulating solutions to the nation’s long-term care (LTC) financing challenges. The project, called “Land This Plane,” was conducted by the Long-Term Care Think Tank, and sponsored and supported by two of the Society of Actuaries’ professional interest sections: the Long-Term Care Insurance (LTCI) Section and the Forecasting and Futurism Section. The Long-Term Care Think Tank was established in 2005. Its broad purpose was to provide a forum for a broad coalition of LTC experts from inside and outside the insurance industry to discuss the looming LTC financing crisis. The hope was that the group would research and discuss needed changes, and would publish solutions with broad public and private support.

I participated in the first phase of this project, but dropped out when it became too time consuming and seemed to be drifting toward some recommendations with which I preferred not to be associated. Nevertheless, I think this was an exceptional effort and that all those associated with it should be congratulated and thanked for the professional time and effort they invested in it. Kudos especially to Roger Loomis and Ron Hagelman.

What follows are brief excerpts from the “Land This Plane” report’s “Executive Summary” with our “LTC Comments” on each.

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Quote: “A systemic overhaul of the LTC financing system is needed. . . . The overhaul needs to clarify, define, and structure today’s somewhat disjointed system of private and public funding options for the American consumer.”

LTC Comment: LTC financing in the USA is a mess. That’s for sure. But we don’t need anyone or anything to “overhaul” it. The very idea evokes what? A deus ex machina, a Long-Term Care Czar, a five-year plan? Rather we need to reduce government interference that has steered LTC financing off course. Get Medicaid out of the business of funding LTC for the middle class and affluent. Put home equity at risk for funding long-term care. Stop crowding out private funding sources like reverse mortgages and private LTC insurance. Return to sane fiscal policy (balanced budgets) and honest monetary policy (no Fed gaming interest rates). Let the market work and it will solve most of the problems with LTC services and financing. Stop doing what you’ve always done and you will get a different result.

Quote: “Private insurance needs to be part of the financing solution. . . . Private insurance could provide a much-needed additional funding source for many people, but both the supply of and demand for private insurance need to increase. There was less consensus on exactly how to do this, but several ideas received positive consideration, including changes to regulations, new product designs, government incentives, public awareness campaigns, and changes to professional standards.”

LTC Comment: All are fine ideas but none will have much effect unless and until the government stops giving away what the LTCI industry is trying to sell to the very same middle class and affluent people to whom they’re trying to sell it. Fix that and most of the rest of what’s needed will fall into place.

Quote: “Social insurance is needed as part of the solution. The most surprising finding of the survey is the overwhelming degree to which the panelists agreed on the need for a social insurance component as part of the ultimate LTC financing solution. . . . Among the range of social product concepts evaluated by panelists and that emerged with strong support were a high-deductible, long-term care insurance concept to cover catastrophic situations, and a health savings account (HSA)-like LTC savings fund.”

LTC Comment: Here we part company. With Medicare and Social Security facing $66 trillion dollars of unfunded liabilities, the last thing we need is another social insurance entitlement. That’s not to say there’s no role for public financing. Medicaid could provide a very good LTC safety net for the truly needy if it stopped being the primary LTC funder for everyone. By giving Medicaid back to the poor, enough money could be saved to pay market rates for quality care across the whole continuum of “long-term services and supports,” home care, assisted living and nursing homes.

An HSA for LTC is a great idea. So also is high-deductible LTC insurance, although not through a government program which would leave private insurance with only Medi-Gap-style products for the front end. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. Regulatory change should permit and encourage such products.

Quote: “The government needs to take an active role in the LTC financial solution. Over 90 percent of panelists agreed on the need for the government to take an active role developing and implementing LTC financing solutions. Panelists consistently discussed the need for a logical, consistent, defined LTC system.”

LTC Comment: Again with the central planning focus! How’d that work out for the Soviet Union? Has our government done such a fine job of managing the long-term care marketplace up to now that we should turn over more control to it?

Quote: “Consumer education and tax incentives are critical to the solution. The study suggests that government’s active role should extend beyond designing the overall system to providing education, incentives and leading regulatory change that encourage planning-oriented behaviors.”

LTC Comment: This constant plea for the past decade or more from the LTCI industry to the appropriators of government money has always fallen on deaf ears. Hello! No one’s listening. Tax incentives and education programs are within reach, but only if you show legislators where to save the money to pay for them. You can get the funds for positive incentives for responsible planning by increasing the disincentives against failing to plan. In other words, give Medicaid back to the poor and use some of the savings to incentivize and educate consumers about private LTC financing alternatives.

Quote: “The Medicaid program is overdue for a major reform. Panelists consistently and emphatically agreed that major changes are required to the Medicaid program as related to LTC. Those changes consisted of tightening eligibility for Medicaid so the program doesn’t allow people with significant assets to divest them to the benefit of heirs and still qualify for LTC reimbursement. Also, panelists felt that benefit restrictions need to be changed across all states/jurisdictions to enable Medicaid to pay for services in a full range of settings, including home and community care, if appropriate and cost-effective. . . . Many panelists suggested that reforming Medicaid is the essential first step in the overall LTC system overhaul.”

LTC Comment: OK, good, but it could be better. First, divesting assets isn’t the big problem. The big problem is that basic Medicaid LTC eligibility rules allow people with very high income and assets to qualify. Start there, then eliminate the Medicaid annuity loophole, and finally tackle asset transfers. Regarding the rebalancing from nursing home care to home and community-based care, states can do that now and many have, but it doesn’t save money. The only way to enable Medicaid to pay for quality care in the most appropriate and most desired venues, including the home, is to have fewer people dependent on the program.

Quote: “LTC regulations and legislation need substantial revision. Panelists were in strong agreement that regulations and legislation governing LTCI should be revisited and revised to consider consumer realities and needs. . . . Panelists indicated a need for regulatory change that encourages simpler policies that are affordable and accessible to a broader population.”

LTC Comment: I agree completely except that “simpler policies” should not limit consumers’ choices. They should be able to buy whatever a carrier wants to offer, including high-deductible, catastrophic policies as well as more complicated policies that cover much more.

Quote: “Incenting personal and family responsibility should be part of the solution. Panelists overwhelmingly indicated that a reformed LTC system should incent household and family participation in long-term caregiving situations. Comments from panelists suggested the use of innovative tax credits to encourage family- and community-based caregiving as a way to minimize formal services and keep costs under control.”

LTC Comment: Again, who’s going to pony up for those costly tax credits? What if paying caregivers reduces the free care on which the current Rube-Goldberg public financing system depends? Has anyone considered the unintended consequences that current public policy causes and these new ideas may exacerbate?

Quote: “Use of retirement savings accounts to fund LTC protection should be incentivized. Panelists overwhelmingly favored the idea of modifying federal tax rules to enable funds in tax-deferred savings accounts (401(k), 403(b) and IRA accounts) to be used on a tax-free and penalty-free basis to fund LTC protection products, including LTCI. Panelists agreed that tax incentives are an attractive way to encourage consumers to leverage existing savings mechanisms to protect against the costs of LTC.”

LTC Comment: Great idea although unlikely because it would cost the government money that it doesn’t have and legislators would rather spend money they must borrow on things that bring more direct benefits, i.e. campaign contributions. The first thing to do about tax-deferred savings accounts is to stop exempting them from Medicaid asset spend down limits. That would save the government money, pump more private funding into the desperately under-financed service delivery system, and radically increase the public’s incentive to plan ahead for long-term care . . . in order to avoid having to spend their IRAs for care.

Quote: “Improvements in LTCI products, marketing and sales are needed. Panelists agreed that the risks of needing LTC, the potential costs of LTC services, and the available LTC financing solutions need to be better communicated both overall and at the point of agent interaction with consumers. Life and health insurance agents and brokers as well as financial advisors need to include the risks, costs and LTC funding options in their consumer presentations.”

LTC Comment: Agreed. People who fully understand the downsides of “going bare” will buy LTC insurance if they can afford it. The problem is that easy access to publicly financed care after the insurable event occurs has desensitized consumers and most of their financial advisors to the real risk and cost. Hence most people don’t even talk to someone who can fully advise them. That won’t change until the alleged catastrophic financial consequences of going bare become real.

Closing LTC Comment: I conclude this plane needs to go into the hanger for further inspection, but it is repairable. Two suggestions.

Number one: Ask and answer the key question no one ever seems to pose. That is, how did long-term care in the USA get so fouled up in the first place? Answer: Medicaid made nursing home care free, which created the institutional bias problem, crowded out a private home care market, and stifled the private insurance market leaving families unprotected financially and with a huge burden of “free care.” There in a nutshell is the problem and a pointer to the solution.

Number two: Don’t ask the government to “overhaul” the same dysfunctional “system” it created. No mysterious third party is going to fix this mess either. Central planning does not work. Just get out of the way.

Bottom line: We don’t need an airliner with Uncle Sam at the controls. We need a glider, unmanned and guided only by the invisible hand of market forces, consumers’ self-interests and free competitive enterprise. That’ll fly. And it’ll take us where we need to go.

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Updated, Monday, April 14, 2014, 11:10 AM (Pacific)

Seattle—

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SECOND WIND AND LTC NEWS AND COMMENT

LTC Comment: Dr. Bill Thomas, the indomitable force behind the Eden Alternative and The Green House Project, has a new book out called Second Wind. In it, according to a blurb by Jane Pauley, "Bill Thomas goes deep inside our culture. Like the best kind of doctor, he evaluates the toll our hurried, quantified, and driven lives have taken on us before he suggests a new way forward. He'll challenge the way you think about your future. And you'll want to make the journey with him."

Speaking of journey’s, Dr. Thomas has taken his book and mission on the road in a “Second Wind Tour.” He says: “The Second Wind Tour will visit 25 cities in spring of 2014 and offer audiences powerful insights into slower, deeper, more connected ways of living and working.” To find out when the tour will be in your city, get tickets, or become a sponsor, click here. It’s a new age vision of aging from a long-term care revolutionary.

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4/13/2014, “Mistakes to Avoid When Shopping for Long-Term-Care Insurance: How to Pick the Best the Policy for Your Needs and What to Avoid [link],” by Anne Tergesen,” Wall Street Journal

Quote: “Here are six mistakes consumers commonly make when purchasing long-term-care insurance, and advice on how to avoid these pitfalls.”

LTC Comment: This is a relatively long and fairly good article. As it’s in the Wall Street Journal, many across the country will see it. Consider picking up a hard copy of the WSJ.

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4/11/2014, “Burwell has insurance ties: HHS nominee was a MetLife director,” by Allison Bell, BenefitsPRO

Quote: "But Burwell, who has been director of the Office of Management and Budget since April 2013, also has ties to the insurance community: She was a director both of MetLife Inc. and of Metropolitan Life Insurance Company from early 2004 through early 2013."

LTC Comment: It’ll be interesting to see if Ms. Burwell’s background in private insurance affects her policy making at HHS if she’s confirmed.

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4/9/2014, “Finally, Modest Progress Toward Long-Term Care Financing Reform [link],” by Howard Gleckman, Forbes

Quote: “For the first time in years, there is hope that the U.S. can create a new model to help families finance long-term supports and services. The solution isn’t yet visible, and lawmakers won’t address the issue any time soon. But a wide range of private interests including long-term care providers, consumer groups, the insurance industry, and policy analysts seems to be moving toward a broad consensus on how to address this important and difficult issue. And that solution is likely to include some mix of private insurance and a public safety net beyond Medicaid—the current government program that is the single biggest payer of long-term services and supports.”

LTC Comment: It is true that long-term care policy is getting more attention all of a sudden. Let’s hope policy makers abide by the medical rule: “first do no harm.” Of the three initiatives mentioned in this article, we’re covering two in LTC Bullets this Friday and next: the Bipartisan Policy Center’s report and initiative tomorrow and the Society of Actuaries’ “Land This Plane” report the following week. We promise you an objective, well-documented and enlightening perspective you won’t get elsewhere.

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4/9/2014, “Advising The Worry Generation: Millennials, younger Americans continue to show more anxiety about common financial issues than older generations [link],” Life & Health Advisor

Quote: "Younger Americans, including 'millennials' age 25-34, show the highest level of concern across all generations for common financial planning issues, including saving for retirement, paying for a child's education, and burdening others with final expenses."

LTC Comment: Maybe there's hope for the younger generation after all.

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4/9/2014, “Caregivers need greater support, Harvard study says,” by Kathryn Roethel, SFGate

Quote: “A Harvard report released last month provides statistics to back up what millions of Baby Boomers supporting aging parents already suspected. The vast majority of long-term care in the United States takes place at home, and 43.5 million friends and family members are the unpaid caregivers. The report, published in the Journal of the American Medical Association, reveals that most caregivers are women and that the hours they spend assisting their loved one usually equates to a part-time job. As the U.S. population ages, the problem is likely to worsen because there will be fewer caregivers to go around.”

LTC Comment: Evidence mounts of growing age wave impact on caregiving.

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4/8/2014, “Avoiding the Nursing Home Ups The Risk of Unwanted Medical Care [link],” by Linda Poon, National Public Radio

Quote: "Most older people suffer from cognitive impairment or dementia in the year before death, making it more likely that they will get aggressive medical treatments that they don't want. And people with dementia who are cared for at home are more likely to get unwanted treatment than if they are in a nursing home, a study finds."

LTC Comment: Unintended consequences of a generous and inadequately monitored Medicare home health system.

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4/8/2014, “Think Tank to Recommend Long-Term Care Solutions,” by Steve Teske, Bloomberg BNA

Quote: “The Bipartisan Policy Center April 7 said it will publish recommendations by the end of the year for transforming the way long-term care is delivered and financed. The think tank released a white paper that said the number of Americans estimated to need long-term care services is expected to more than double, from 12 million in 2010 to 27 million in 2050.”

LTC Comment: I wrote about this initiative and critiqued its white paper in Friday’s “LTC Bullet: Will Bipartisan LTC Policy Be Better?”

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4/8/2014, “ It takes villages: Boomers' new retirement communities,” by Mark Miller, Reuters

Quote: "Villages and house sharing are growing the most rapidly. The village movement started in 2001, and 125 have opened around the country, with another 100 more in the planning stage. It's a 'neighbors helping neighbors' approach, with the aim of providing support and friendship to people who want to age in their homes. They rely on a mix of paid staff and volunteers who help members with everything from transportation to computer know-how and grocery shopping. They're really great - they provide support and friendship to people who want to age in their homes, although most have been started in upper-income or upper-middle income neighborhoods."

LTC Comment: The LTC service delivery system continues to evolve. Will LTCI cover “villages” as it came to cover assisted living over time?

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4/8/2014, “Skilled nursing facilities could lose big money if they don't hire a managed care coordinator, expert says [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Skilled nursing facilities stand to lose substantial sums of money as they increasingly do business with managed care plans, unless a coordinator is on top of exclusions and other contract elements, a prominent healthcare consultant told an audience Monday at the American College of Health Care Administrators annual meeting."

LTC Comment: Medicaid's move to managed care for frail and infirm elderly recipients--even the extremely vulnerable dual eligibles in some states--will further exacerbate challenges skilled nursing facilities face as they try to provide quality care despite low, and getting lower, Medicaid reimbursement rates.

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4/7/2014, “U.S. government rolls back proposed Medicare Advantage cut,” by Caroline Humer and David Morgan, Reuters

Quote: "The Obama administration on Monday rolled back some of the more controversial cuts proposed for privately managed Medicare health plans used by the elderly following pressure from insurance companies and lawmakers. The Centers for Medicare and Medicaid Services (CMS) said that on average, reimbursement for such Medicare Advantage plans in 2015 would rise 0.4 percent, reversing what is said was a 1.9 percent average reduction proposed in February."

LTC Comment: Go figure! These cuts were hanging over the head of the Medicare Advantage industry for months, and then "poof," gone. A good thing, but it looks like health policy is being decided with a public-opinion wind sock.

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4/7/2014, “America's Ponzi scheme: Why Social Security needs to retire,” by Laurence Kotlikoff, PBS News Hour

Quote: "Resolving Social Security's insolvency requires either an immediate and permanent 32 percent increase in payroll taxes or an immediate and permanent 22 percent cut in all Social Security benefits. Detroit, in contrast, needs to cut pension benefits by roughly 16 percent on a system-wide basis."

LTC Comment: At the risk of belaboring this subject, this is one of the best articles I've read about it.

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4/7/2014, “Expensive Markets for Long-Term Care Coverage,” Fort Mill Times

Quote: "Statistics show that the need for and cost of long-term care are both increasing. In fact, according to the results of an independent study commissioned by New York Life's Long-Term Care Operations, the average cost for nursing home care in the U.S. has climbed significantly in the past five years, up 20% to $95,706 per year from $79,935 in 2009."

LTC Comment: Genworth's annual cost of care survey recently estimated the cost of a private nursing home room as $240 per day which aggregates to $87,600 per year. Now New York Life reports $95,706 or $262 per day. Who's right? We’ve asked folks at Univita who did the study for New York Life for an answer.

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4/7/2014, “Do preventive home visits work? The largest and most comprehensive review of trials on home visits is inconclusive on their benefits [link],” by Evan Mayo-Wilson, Sean Grant and Paul Montgomery, The Guardian

Quote: "On average, these programmes did not reduce hospitalisation, long-term care or mortality. That is, there were no consistent differences between older adults receiving home visits and those who did not."

LTC Comment: More evidence (from the UK) that home and community-based services will not be the end all and be all for long-term care savings.

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4/7/2014, “The Government Debt Iceberg,” by Jagadeesh Gokhale, Cato Institute

Quote: “In The Government Debt Iceberg, Jagadeesh Gokhale reveals the extent to which western governments are keeping taxpayers in the dark about true levels of debt by hiding the magnitude of future spending commitments that cannot be met by future tax receipts.”

LTC Comment: A good read by an excellent scholar.

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4/4/2014, “Medicaid, CHIP enrollment soars in February,” by Jayne O'Donnell, USA Today

Quote: “Nearly 3 million people enrolled in Medicaid or the Children's Health Insurance Program in February, an increase probably spurred by the Affordable Care Act deadline of March 31 and improvements in state and federal insurance exchanges. . . . Opponents of Medicaid expansion say states won't be able to afford it once the federal government isn't paying the whole bill and that expanding a program that even President Obama has called ‘a broken system’ is not the best approach. Many doctors refuse to treat Medicaid patients because they receive very low reimbursement for their services.”

LTC Comment: Watch for much more reporting like this in the national media.

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Updated, Friday, April 11, 2014, 1:17 PM (Pacific)

Seattle—

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LTC BULLET: WILL BIPARTISAN LTC POLICY BE BETTER?

LTC Comment: Heads up! Consensus is coalescing around a bipartisan long-term care financing solution. Let’s be hopeful, but wary after the ***news.***

*** LAND THIS PLANE, the LTC research project undertaken by the Society of Actuaries, has issued its final report titled “Land this Plane: A Delphi Research Study of Long-Term Care Financing Solutions.” Read it here. We’ll take a closer look and provide our analysis and comments in next week’s LTC Bullet, or soon. Congratulations to Roger Loomis and Ron Hagelman, the out-going co-chairs of the Long-Term Care Think Tank who brought this study to fruition, and good luck to Vince Bodnar and John O’Leary, the incoming Think Tank co-chairs. ***

*** 2014 LTC SALES SUMMIT - FREE LIVE STREAMING VIDEO. Jesse Slome of the American Long-Term Care Insurance Association reports that “the deadline to sign up approaches! For the first time, you can watch sessions streamed live from the 2014 National Long Term Care Solutions Sales Summit. It's all completely free. No special equipment required. You can watch on your computer or tablet. Pre-register to receive the secure website access. Click here. The conference will feature top industry producers and experts, including the CEOs of five leading insurers. You can watch as little or as much of the conference as you like. Sessions will be broadcast live on Sunday, May 18, Monday May 19 and Tuesday, May 20. (This is not a webinar. It's a live broadcast from a national sales conference.)”

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LTC BULLET: WILL BIPARTISAN LTC POLICY BE BETTER?

LTC Comment: Long-term care is back on the public policy radar screen. The CLASS Act fiasco got people thinking. Last year’s LTC Commission crystalized the issues. Think tanks are doing programs with panels of long-term care experts. Studies, reports and scholarly monographs emerge in greater numbers. Articles in the popular media abound warning of catastrophic long-term care risk. Now, here’s the very latest:

The Bipartisan Policy Center (BPC) has taken on the challenge of fixing long-term care services and financing. The BPC launched its “long-term care initiative” last Monday with an event in Washington, DC and a white paper titled “America's Long-Term Care Crisis: Challenges in Financing and Delivery.” Watch the event here and read the white paper here. But I’ve already done both so let me save you some time and effort.

Skip all the introductory remarks by the program’s sponsors, two former Senators, a former CBO director and a former Governor and HHS Secretary. You’ve heard it all before and these folks bring little to the conversation beyond their prestige. Go directly to the panel of experts. That’s worth watching. Note especially these presentations:

Anne Tumlinson, founder and director of Avalere, is one of the more thoughtful long-term care analysts. She observes that 1/3 of all payments for assisted living in this country are actually made by adult children who are also buying geriatric case management services, private duty nursing, and home care aides to help their ailing parents. But none of this spending shows up in the national health expenditure accounts that most analysts use to estimate the cost of long-term care. Tumlinson also observes that Medicaid is actually spending less on LTC as a percent of total expenditures today than in the past 20 years. Hence, relative to the exploding number of people who will need long-term care, there will be fewer public dollars to go around. She concludes that voluntary insurance will not work and that some form of mandatory social insurance is unavoidable. Her observation that “the people who would be helped by private LTC insurance are not the people who spend down to Medicaid” is wrong as we’ll explain.

Marc Cohen of LifePlans always does a fine job of laying out the statistical parameters of the long-term care financing issue. He says, for example, that the expected cost of long-term care would account for about 31% of the net worth of households aged 65 to 74. Yet most people don’t worry or plan for long-term care: “If you don’t perceive there is a problem, why would you do anything about solving it?,” he asks. “What would it take to move the needle of public awareness and planning? My own sense,” Cohen says, “is that we can’t fund care for middle class Americans without expanded public sector support to spur demand and supply. We need to think through new models that go beyond current Partnerships to combine public and private funding.” In other words, he agrees with Tumlinson that it will take more than Medicaid and private insurance to solve the problem.

Tom McInerney of Genworth and Diane Rowland of the Kaiser Family Foundation also presented on this panel. McInerney’s main points were that the government is broke, can’t fund what’s needed and private insurance could do much more with a better regulatory environment. Dr. Rowland made her usual appeal for a bigger government role in long-term care financing. As always she pooh-poohed the impact of Medicaid asset transfers but failed to acknowledge the far greater impact of easy Medicaid eligibility and other forms of Medicaid planning.

Let’s turn now to the Bipartisan Policy Center’s white paper: “America's Long-Term Care Crisis: Challenges in Financing and Delivery.” It does a good job of laying out the issues and data, but not without some errors, omissions and misunderstandings.

First a pet peeve. Throughout, this paper refers to “long-term services and supports” or LTSS instead of “long-term care.” That awkward locution is the current politically correct term of art. It evolved to emphasize the need for home and community-based care to replace nursing homes, the venue which had become synonymous with long-term care. The irony is that Medicaid, i.e. public LTC financing, is responsible for the long-term care system’s nursing home bias. If Medicaid hadn’t paid for nursing home care after the insurable event occurs for most Americans, including the middle class, since 1965, we would have had a healthy private home-care-based service delivery system funded largely by personal savings, home equity conversion and private long-term care insurance. So the very people who caused the problem of institutional bias by demanding more and more government interference in the long-term care market are the same people corrupting the language with “LTSS” and denigrating the honorable appellation “LTC.”

Some quotes from the BPC report follow with our “LTC Comments.” We’ve omitted footnotes in the quotes below, but you can find them in the published report here.

Quote: “In this paper, BPC seeks to: (1) identify the most pressing problems associated with the current system of providing LTSS in the United States; (2) identify the barriers to finding a sustainable means of financing and delivering LTSS; and (3) outline some of the more critical policy questions that will guide BPC's work in the coming months.” (p. 6)

LTC Comment: Note that the Bipartisan Policy Center’s approach does not include an attempt to analyze, understand, or explain what caused long-term care’s problems. That is a fatal omission. If you don’t know why you have a problem, you run the risk of making it worse by applying the same remedy that caused the problem in the first place. For example, if government financing of long-term care through Medicaid caused institutional bias, crowded out private financing alternatives, and contributed to poor care by providing inadequate funding, then it is folly to expect more government financing to fix those problems.

Quote: “While some may believe that a true social insurance option financed through a broad-based tax, similar to the Medicare program, may be the most efficient and equitable means of financing LTSS, the current political and fiscal environment make that solution infeasible for the foreseeable future.” (p. 9)

LTC Comment: It is easy to discern the ideological bias in this “bipartisan” report. But it is encouraging to see that even die-hard advocates of socialized long-term care are finally acknowledging economic and political reality.

Quote: “No one would argue that the private long-term care insurance (LTCI) market, as currently structured, is a viable solution to address the needs of the diverse population in need of LTSS.” (p. 11)

LTC Comment: Whose fault is that? Medicaid crowds out most of the market for private LTC insurance and the Federal Reserve ruined the product’s financial viability by artificially forcing interest rates to nothing. The miracle is that private insurance does as good a job as it does do protecting consumers and developing new products in spite of the daunting obstacles imposed by counterproductive public policy.

Quote: “Medicare does not cover long-term services and supports. Benefits are limited to acute care health services-including, among other acute services, hospital stays, post-acute care, and physician visits-and prescription drugs for the elderly and certain individuals with disabilities.” (p. 18)

LTC Comment: Leaving Medicare out of the computation of long-term care expenditures is bad reasoning and naïve. Duration of care is not the key factor. Medicare has a huge impact on long-term care because its generous reimbursements to nursing homes and home health agencies help to counterbalance Medicaid’s paying less than the cost of care for the vast majority of their residents and patients. If and when Medicare cuts back on its reimbursement to long-term care providers, as the program’s desperate financial condition suggests it will have to do, the financial bottom will fall out of the main source of long-term care spending, i.e., Medicaid. That will devastate state budgets, the nursing home business, and home care providers who rely on Medicaid.

Quote: “Medicaid is the primary LTSS payer, generating two-thirds or more of the total payments for LTSS. In 2011, the CMS Office of the Actuary estimated Medicaid LTSS spending at $114 billion, while an analysis by Mathematica Policy Research arrived at an estimate of $136 billion. LTSS accounts for at least one-quarter, and possibly almost a third, of total Medicaid spending ($432 billion in 2011); however, only a small fraction (6.7 percent or 4.2 million in 2009) of Medicaid beneficiaries received LTSS and/or post-acute care.” (p. 19)

LTC Comment: Yes, Medicaid is the 800 pound gorilla of long-term care and, to stick with the animal metaphor, LTC is the elephant in the room when it comes to Medicaid expenditures. So job number one should be to understand why Medicaid dominates LTC financing, why the public ignores LTC risk and cost despite being educated that it will devastate them financially, and why private LTC financing is so limited and focused on desirable services that government does not provide, such as most assisted living. Again, if you don’t know why you have these problems, you run the risk of applying more of the “remedy” that caused them in the first place.

Quote: “When an individual has too much income to qualify for Medicaid under the SSI pathway, but faces catastrophic LTSS and health care costs that he or she cannot meet, it is possible to qualify for Medicaid through a ‘spend down’ process. Most individuals over the age of 65 who qualify for Medicaid do so by spending down. The details of this process vary by state, but individuals typically must exhaust almost all of their savings (an exception allows Medicaid beneficiaries to keep a home, within certain limits) and spend a substantial portion of their income on health care and LTSS expenses before they can qualify.” (p. 19)

LTC Comment: The ignorance of most “experts” about Medicaid financial eligibility rules and policy simply astounds. People do not have to “exhaust almost all of their savings” to get Medicaid LTC. They can hide them in exempt assets, including a home, business or car. They can buy unlimited term life insurance. They can use Medicaid friendly annuities. Their individual retirement accounts are exempt as long as they’re generating a regular distribution as is required by tax law after age 70 and a half. “Mandatory” estate recovery is easy to dodge.

Nor do people have to “spend a substantial portion of their income on health care and LTSS expenses before they can qualify.” There is no such requirement. People can spend their income and assets on anything they want in order to “spend down” to Medicaid eligibility. Elder law journals have recommended taking a world cruise, throwing a party of “Ziegfield Follies” proportion or simply purchasing assets that Medicaid does not count. The only requirement is that you get value for what you spend, not that you spend on health or long-term care.

Income rarely obstructs Medicaid LTC eligibility because private health and LTC expenses are deducted before income eligibility is computed in most states. In the other “income cap” states, Miller income diversion trusts enable higher income people to qualify. It is true that once someone is on Medicaid, he or she must contribute most of their income to offset Medicaid’s cost for their care. But at that point, the damage has been done. The person is on public assistance, probably in an underfinanced nursing home, and Medicaid is paying for someone who could, should and would have paid their own way, at least for a time, if it were not for the perverse incentives in Medicaid eligibility rules that discourage responsible LTC planning.

Quote: “Because a small number of people will have substantial needs that are unlikely to be met solely through personal savings, insurance would seem to be an ideal mechanism to finance these needs. Yet, the private LTCI market has struggled in recent years and currently plays a minor role in the financing of LTSS. After several years of strong growth in private LTCI coverage in the late 1990s and early 2000s, the number of insured lives has been virtually unchanged since 2005, and sales of individual-market policies have dropped by two-thirds from their peak in 2002. Growth has focused on the group market, while the individual market (two-thirds of the total) has declined. About 8.2 million lives are covered by private LTCI, representing fewer than 6 percent of Americans over the age of 40. Of those over 65 with annual incomes above $20,000, only 16 percent carry private LTCI. In 2012, LTCI policyholders paid more than $11 billion in premiums. Cash payments to policyholders (or LTSS providers) from private LTCI claims totaled about $7 billion in 2012,73 funding less than 5 percent of total spending on LTSS.” (p. 20-21)

LTC Comment: I draw the exact opposite conclusion from these statistics. It is amazing, approaching miraculous, that private long-term care insurance has done so much for so many in spite of the terrible obstacles put in its way by public policy. Try this thought experiment: if government did not pay for most expensive LTC after care is needed unless and until people became truly impoverished, having consumed all their savings, property and home equity, do you really think long-term care insurance would still play “a minor role in the financing of LTSS?” And if you dream up yet another government funding source for long-term care, do you really think consumers will become more responsible about saving, investing and insuring for long-term care? Think about it and you will understand why proposals to increase government financing of LTC may, and likely will, exacerbate rather than ameliorate these problems.

Quote: “Even without adverse selection, it is not clear that consumer demand for private LTCI would be strong. Most Americans are not especially interested in or motivated to purchase private LTCI. Many do not plan for LTSS costs, and, as noted above, 65 percent of Americans over 40 have done little to no planning for any sort of living expenses for when they are older. Many think that they won't need LTSS (70 percent of those over 65 will need some LTSS, whether paid or unpaid, but just over half say that they are at risk of needing LTSS), and most of those who do realize they are at risk of needing LTSS think that someone else will bear the cost.” (p. 23)

LTC Comment: Consumers’ denial of LTC risk is rational and excusable, because most expensive LTC gets paid for by the government in the end. People don’t know who pays, but they know someone must. You don’t see Alzheimer’s patients dying in the gutters. On the other hand, LTC analysts’ evasion of the facts about public financing of long-term care is neither rational nor excusable. It is grounded in ideological bias and fact avoidance. “None so blind as those who will not see.”

Quote: “The National Retirement Risk Index, which incorporates factors other than retirement accounts (such as home equity and Social Security) into an assessment of national retirement preparedness, estimates that 53 percent of households are at risk of not being able to maintain their standard of living when they are no longer working.” (p. 24)

LTC Comment: That means 47 percent of households may be all right financially if you count home equity. Yet the BPC report barely mentions home equity as a source of LTC financing. Eliminate or severely reduce Medicaid’s home equity exemption and a flood of private dollars from reverse mortgages would revive the home and community based care, assisted living and nursing home markets making more choices and better care available to everyone, including those who remain dependent on Medicaid.

Quote: “Private spending on LTSS is even more difficult to estimate than public spending. The NHPF [National Health Policy Forum] analysis of NHEA [National Health Expenditure Accounts] data shows a total of almost $70 billion out-of-pocket and other private (including insurance) spending on LTSS in 2011 (not including assisted living), but this figure includes a substantial amount of PAC [post-acute care] spending. Additionally, some spending that originated from private LTCI is reported as out-of-pocket because it is common for LTCI to pay policyholders directly, who then in turn pay LTSS providers. This figure also leaves out spending on assisted living, and probably does not include a substantial amount of graymarket home care, but it likely includes all nursing-home out-of-pocket spending, which is the most expensive form of LTSS. Because we have no sense of how much of the $70 billion figure is for out-of-pocket and health insurance payments for PAC, the true out-of-pocket LTSS spending figure (not including assisted living) is likely somewhere well above zero and well below $70 billion. Hence, a precise estimate is not possible; the best we can say is that tens of billions are likely spent out-of-pocket on LTSS annually, excluding assisted living.

“The situation is different for private LTCI. While LTCI issuers do not report the exact amount of cash paid to policyholders and LTSS providers each year based on claims, the data available can be used to estimate annual cash payments from claims. At the request of BPC, LifePlans reviewed data collected by the National Association of Insurance Commissioners and estimated that private LTCI paid out about $7 billion on claims in 2012.” (p. 27)

LTC Comment: Two points about these tightly packed paragraphs. The observation that “some spending that originated from private LTCI is reported as out-of-pocket because it is common for LTCI to pay policyholders directly, who then in turn pay LTSS providers” is one we often make, but I have not seen it in other published work before. It is critical. Out-of-pocket LTC spending, we call it “oops,” is much lower than is usually reported. That’s why consumers ignore the “catastrophic spend down” warnings that permeate media coverage and ostensibly scholarly publications.

Secondly, a very substantial part of out-of-pocket spending for long-term care is really the contribution from income to their cost of care that Medicaid recipients are required to make. That out-of-pocket expenditure does not come from assets, but rather from income and mostly from Social Security income. As much as half of all out-of-pocket LTC spending comes from Social Security income of people already on Medicaid which income is diverted to reduce Medicaid LTC expenditures. Why does this matter? Social Security is financially unstable, already collects less in payroll deductions than it spends, relies on a phony trust fund that the rest of government has already spent, and will pay 24% less in the future than it has promised unless fixed, which is unlikely. If and when Social Security cuts back, Medicaid nursing home recipients won’t care because they have to contribute nearly all their benefits to offset Medicaid expenses anyway. But state Medicaid programs, nursing homes and home health agencies will have to make up the difference and that will devastate them financially.

Closing LTC Comment: The consensus coalescing around a long-term care financing solution is that some form of mandatory social insurance should supplement private LTC insurance. The dangers in that remedy are myriad. Do we really need another expensive entitlement program? What happens when Social Security cuts back so that people have less income to spend on LTC? What happens when Medicare reduces its generous provider reimbursements that currently enable LTC providers to survive despite Medicaid’s low payments? Wouldn’t more public financing of LTC only increase the public’s growing entitlement mentality? Don’t we need to start weaning people off dependency on government largesse? How long will it be before economic gravity takes hold again and government has to pay normal interest rates on its trillions of debt? What happens when the unfunded entitlement liabilities come due? It is nothing short of bizarre that serious people claim to study, diagnose, and prescribe about long-term care without taking these factors into account. It goes to show we’re not much closer to a real solution and that the new consensus coalescing is as much a danger as an opportunity.

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Updated, Monday, April 7, 2014, 10:25 AM (Pacific)

Seattle—

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BIPARTISAN POLICY CENTER EVENT AND LTC NEWS AND COMMENT

LTC Comment: The Bipartisan Policy Center (BPC) Health Project's Long-Term Care Initiative (LTCI) will release a white paper today at 1:00PM EDT identifying the major challenges to the financing and delivery of long-term care for seniors and individuals with disabilities under 65. A final report of LTC policy recommendations will be released in late 2014. The initiative is co-chaired by former Senate Majority Leaders Tom Daschle and Bill Frist, former Wisconsin Governor and HHS Secretary Tommy Thompson and former White House and Congressional Budget Office Director Dr. Alice Rivlin. Co-chairs will make introductory remarks and a panel discussion on the topic will follow with national experts in the field. You can watch the live webcast of the event starting at 1:00PM ET here.

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4/5/2014, “Long-term care insurance is a difficult decision,” by Chris Farrell, Star Tribune

Quote: "Without insurance you and your family are largely on your own meeting these costs. Medicare doesn't pay the tab for most long-term care charges. Medicaid, the joint federal/state safety net, is the main public program for long-term care. However, Medicaid is a 'means-tested' program geared toward low-income households. The greater your financial resources, the more purchasing long-term care insurance is a sensible precaution. Put it this way: If you can easily afford the premium payments then go ahead and get it and hope you never have to tap the policy."

LTC Comment: Good advice although the presumption that Medicaid is only for “low-income” households is untrue. Income rarely excludes people from Medicaid LTC eligibility.

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4/3/2014, “LTCI is worth it: Opinion,” by Louis H. Brownstone, LifeHealthPRO

Quote: "Getting LTCI coverage for half of what, from an actuarial perspective, the coverage ought to cost is like buying a $30,000 car and paying on a $16,000 loan for half of the loan period. What a deal!"

LTC Comment: Center corporate member Louis Brownstone opines in this article on how to respond to clients' complaints about premium increases.

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4/3/2014, “Guide to Funding Long-term Care,” by FTAdviser

Quote: "Most shocking for many is to realise for the first time that they are expected to pick up the bill for their own care where the state deems they can afford to do so and the costs can run into many tens of thousands of pounds each year. . . . This guide explores self-funding requirements for long-term care, the different products that offer to pay for that support in 2014 and regulatory requirements for these deals."

LTC Comment: Ever wonder how the Brits do it? This "guide" includes several articles on long-term care financing in the UK.

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4/3/2014, “How to win the long-term-care insurance game,” by Elizabeth O'Brien's, WSJ MarketWatch

Quote: "The long-term care insurance industry has seen its share of challenges in recent years, generating no shortage of negative headlines. But while such coverage isn't for everybody, almost anyone planning for retirement ought to carefully consider whether they might need it-after all, burying our heads in the sand about our future care needs is hardly a good alternative."

LTC Comment: Hackneyed but true, “denial is not a river in Egypt.”

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4/3/2014, “The RAND Military Caregivers Study,” by Rajeev Ramchand and Terri Tanielian, Rand Corporation

Quote: “The RAND Military Caregivers Study focuses on the caregivers of wounded, ill, and injured military service members and veterans. Funded by the Elizabeth Dole Foundation, the study aims to quantify military caregivers' needs and examine existing policies and programs for meeting them. . . .

“There are 5.5 million military caregivers across the United States, with nearly 20 percent caring for someone who served since the terrorist attacks of Sept. 11, 2001. Military caregivers experience more health problems, face greater strains in family relationships, and have more workplace issues than noncaregivers. Changes are needed to both provide assistance to caregivers and to help them make plans for the future.”

LTC Comment: Tragic long-term (care) consequences of war.

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4/3/2014, “Today's Estate Planning Strategies: How to use ILIT-owned UL with an indemnity LTCi rider [link],” by Russell E. Towers, Life & Health Advisor

Quote: "A popular new product that has aroused the interest of many estate planners is a Guaranteed No-Lapse UL Policy with an ‘Indemnity’ Type of Long Term Care (LTC) Rider. This type of policy would typically be owned by an Irrevocable Life Insurance Trust (ILIT) to provide an income and estate-tax-free death benefit. And the ‘indemnity’ LTC rider would be available to provide potential LTC benefit payments to the ILIT to offset extended care medical costs of the insured estate owner."

LTC Comment: All these acronyms and complexity make a layman almost feel ILITerate.

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4/3/2014, “Median cost of a private nursing home room now exceeds $87,000 a year, Genworth survey finds [link],” by Tim Mullaney, McKnight's LTC News

Quote: “The median annual cost of a private nursing home room in the United States has increased to $87,600, according to the latest annual survey from insurance company Genworth. This represents a 4.4% increase from a year ago. The median price for a semi-private nursing home room increased by 2.62%, reaching $77,380 a year, according to the report. The cost of nursing care surged more dramatically than the cost of assisted living, which ticked up 1.45% since Genworth's last report. The monthly median rate for assisted living now is at $3,500, according to the latest figures. . . . Click here to access the 2014 report.”

LTC Comment: Homemaker services surged 4.11% to $19 per hour, a 1.20% five year growth rate. Home health aide services were up 1.59% and 1.32% per year for the past five years. As always, we’ve posted the Genworth report in The Zone, the Center’s special compendium of key data and information for members.

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4/1/2014, “Connecticut blocks MetLife LTCI rate hikes,” by Allison Bell, LifeHealthPRO

Quote: "The Connecticut Department of Insurance has rejected 13 individual long-term care insurance (LTCI) rate increase applications filed by MetLife Insurance Company of Connecticut."

LTC Comment: Penny wise, pound foolish.

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4/2/2014, “Assembly Hearing Examines Latinos' Unpreparedness for Long-Term Care [link],” by David Gorn, California Healthline

Quote: "An Assembly [lower house of California state legislature] committee hearing yesterday highlighted the lack of preparedness in the Latino community for long-term care of family members and the large number of families who likely will need help paying for it. . . . According to a 2012 poll by the SCAN Foundation, 60% of all Latino families in California will need long-term care for a family member in the next five years. Among Latino respondents, 91% said they could not afford three months of nursing home care."

LTC Comment: In the meantime, California’s Latino population continues to grow as the state’s ability to generate revenue to fund its main LTC payer—Medicaid—constricts.

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4/1/2014, “Huge Opportunity for Assisted Living to Retool for Short-Term Patients [link],” by Alyssa Gerace, Senior Housing News

Quote: “Assisted living providers looking for ways to grab a piece of the post-acute care pie and simultaneously improve occupancy are exploring short-term care models that function as a private-pay bridge from hospital to home. In the skilled nursing industry, the split between the short-term, Medicare-reimbursed and long-term, Medicaid-reimbursed models is growing. As healthcare reform puts greater emphasis on the healthcare continuum and post-acute care, a similar split may start to occur in assisted living as well.”

LTC Comment: As Medicare and Medicaid dodge responsibility to cut costs by pushing people into private-pay assisted living, LTC insurance will be more valuable to consumers than ever.

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3/31/2014, “Government-Sponsored Healthcare Shifts To ‘Survival Of The Fittest [link],’" by Sundar Subramanian and Joyjit Saha Choudhury, Forbes

Quote: "As baby boomers retire, the number of people eligible for Medicare is expected to grow by some 3 percent a year, and we think growth will slightly exceed that rate. That's only half the story though. Given current constraints in the market, we expect that many unfocused and low-quality plans will either be acquired or exit the MA business, particularly small and mid-size payors. The emerging winners-those that gobble up the membership of the exiting plans-will fall into two categories: (1) larger players that can leverage their scale as an antidote to smaller margins, and (2) regional plans that have deep local provider relationships, which can give them a significant cost advantage in both medical care and administration."

LTC Comment: Maybe, but if true to past form, government will continue to clamp down on reimbursements and increase regulation until even the fittest will be challenged to survive.

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3/31/2014, “Leadership and execution: Keys to culture change,” by Chris Perna, McKnight's LTC News

Quote: “The transformation of an organization's culture to person-directed care is really hard work. Culture change may sound like a simple concept, but it isn't necessarily easy to do. It takes strong leadership to guide an organization through the transformation process. It takes time, energy, resources, and requires a strong focus on follow-through. Leaders need a combination of patience and tenacity to pull it off. If these realities are underestimated, the journey will likely lead to failure.”

LTC Comment: Remember Chris Perna who used to run MedAmerica? He left a few years ago to direct the Eden Alternative, Dr. Bill Thomas's movement to bring person-centered care to long-term care facilities. Chris writes about that challenge in this “guest column” for McKnight's.

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3/31/2014, “States may tighten ancillary product rules,” by Allison Bell, BenefitsPRO

Quote: "Some insurance regulators want to tighten the state laws and regulations that apply to health insurance products other than major medical products. The regulators hope to update the standards that apply to critical illness insurance, hospital indemnity insurance, short-term medical insurance, dental insurance, vision plans and other products that fall outside the scope of most or all of the Patient Protection and Affordable Care Act major medical coverage rules."

LTC Comment: Heads up! Here come the regulators.

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3/31/2014, “How 'eBaby Boomers' are finding extra cash in their closets,” by Michael De Groote, Deseret News

Quote: "A growing number of baby boomers are making money by taking a lifetime of possessions and selling them online."

LTC Comment: This story reminded me of the old TV ad with seniors shaking the couch cushions in search for change to pay for long-term care. What company ran that ad?

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3/31/2014, “LifeSecure Insurance Company Names New President and CEO [link],” press release, PR Newswire

Quote: “LifeSecure Insurance Company, today announced the appointment of Tiffany Albert as president and CEO. The move follows the retirement of Lisa Wendt, who previously held the same position.”

LTC Comment: Our best wishes to Ms. Wendt in her future pursuits.

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3/24/2014, “The Private Cost of Public Queues for Medically Necessary Care: 2014 Edition [link],” by Nadeem Esmail, Fraser Institute

Quote: "The estimated cost of waiting for care in Canada for patients who were in the queue in 2013 was $1.1 billion-an average of about $1,202 for each of the estimated 928,120 Canadians waiting for treatment in 2013."

LTC Comment: Publicly financed health and long-term care definitely has "ancillary" costs.

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1/22/2014, “How Are Seniors Spending Their Money?,” by Pamela Villarreal, National Center for Policy Analysis Issue Brief No. 135

Quote: "Today's seniors have a mixed bag of spending habits. Although discretionary and recreational purchases have increased, today's seniors are taking on debt in the form of mortgages and credit cards. Moreover, with abysmally low interest rates on savings and a tax policy that subsidizes consumption over saving, seniors do not have much incentive to save. Those who are early into retirement should rethink conventional wisdom about saving by considering a variety of investments besides just bonds. Also, they should avoid incurring debt through a home equity loan or any type or mortgage."

LTC Comment: As today’s boomers become tomorrow’s seniors, they’ll pay a steep price for our country’s misguided fiscal and monetary policy.

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Updated, Friday, April 04, 2014, 11:17 AM (Pacific)

Seattle—

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LTC BULLET: HOW TO FIX LTCI IN CALIFORNIA

LTC Comment: Private long-term care insurance in California is hurting. Center corporate member Louis Brownstone provides a diagnosis and prescription after the ***news.***

*** GENWORTH published its widely cited “Cost of Care Survey” for 2014 this week. The median annual cost of a private nursing home room in the United States increased 4.4% since last year to $87,600. Cost of a semi-private nursing home room went up 2.6% to $77,380 per year. Assisted living monthly costs increased somewhat less, up 1.45% to $3,500. Homemaker services surged 4.11% to $19 per hour, up substantially from an average 1.20% five-year growth rate. Home health aide services increased 1.59%; 1.32% per year over the past five years. Click here for the full 2014 report; here for the “cost of care map”; and here for “key findings.” As always, we’ve posted the Genworth report here in “The Zone,” the Center's special compendium of key data and information for members. ***

*** THE AMERICAN ENTERPRISE INSTITUTE hosted another forum on long-term care services and financing this week. Watch the full proceedings here. This video is well worth a two-hour investment of your time. Six of the most thoughtful analysts in the field comprise the panel including the chairman, vice-chairman and one member of last year’s Long-Term Care Commission. Besides summarizing the Commission’s work and report, the panelists cited much of the most important recent research on LTC financing. A couple thoughts to keep in mind as you watch this program, however. First, not one of the presenters addressed the question of how long-term care came to be so dysfunctional. (Nor did the LTC Commission address that question.) It’s very dangerous to propose solutions to a problem when you don’t know what caused the problem in the first place. You run the risk of exacerbating the problem by administering more of what caused the problem in the first place. Second, note that the panel recognizes that Medicaid is important but can’t quite pin down why and how. For example, even though it’s well substantiated that the program helps middle class and affluent people as well as the poor, how can Medicaid crowd out private LTC insurance if most people don’t know who pays for long-term care? Simple: Medicaid has paid for most expensive LTC since 1965, so the public doesn’t know who pays, but Medicaid does pay, and that fact has anesthetized the public to LTC risk and cost. Little progress in solving the LTC financing problem will be made until experts like these diagnose the real cause (government interference in the LTC market) and propose solutions that address that problem (targeting Medicaid to the poor and using some of the savings to incentivize responsible private LTC planning.) ***

*** READ OUR REPORT on long-term care financing in California--Medi-Cal LTC: Safety Net or Hammock? here [???Damon add URL???] or on the Pacific Research Institute’s website here [???Damon add URL???]--together with today’s LTC Bullet for a fuller understanding of the big picture in “The Golden State.” ***

LTC BULLET: HOW TO FIX LTCI IN CALIFORNIA

LTC Comment: From time to time we turn over the Center’s weekly LTC Bullet op-ed to an expert in a field of interest to our readers. Today, we invited Louis Brownstone to share his analysis of the long-term care insurance market in California.

Mr. Brownstone is Chairman of California Long-Term Care Services, NorthStar Network, Inc. and past chairman of the National LTC Network (also a longtime corporate member of the Center for Long-Term Care Reform). Get to know Louis here.

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The following is Louis Brownstone’s “A Proposal for Long Term Care for California,” as edited and condensed by LTC Bullets.

From what I can see, and from what others tell me, the long term care insurance industry in the State of California is in gridlock. The stakeholders are not speaking constructively to each other. The industry is in danger of losing its viability. I want to stimulate a conversation that can fix this mess.

What's at stake? Absent a solution, long term care services needs will grow in the next twenty years to consume more than one half of all Medi-Cal expenditures, costing hundreds of millions of dollars, that will drain funds from a myriad of other public needs. Thousands of citizens will be unable to afford or receive long term care services, will not be able to care for themselves and will age poorly in place. Alternatively, we can all come together and resume leadership in long term care planning.

Here are the problems as I see them with proposed solutions.

Problem #1: The Department of Insurance (DOI) fails to protect the interests of the insurance carriers. It distrusts insurance carriers and is either unwilling or unable to approve new policy filings. Maybe the DOI has become ossified and the carriers are correct in saying that the people in the DOI don't care. I suspect that's not true. Maybe it's a question of an inadequate budget. Whatever the cause, I hear of many instances where the DOI’s responses to carrier's requests are sympathetic to their needs . . . and then nothing happens. That has to change.

It takes three to five months for carriers to get new policy filings approved in other states, but two to three years in California. Many carriers have adjusted their pricing in their filings to reflect this time delay. The result is that citizens in California pay more than citizens in other states for the same or lesser benefits. Timely approvals will help everyone.

Long term care insurance policies sold in the 1990's gave policyholders terrific value and cost about a third of what policies cost today. The insurance carriers priced the policies incorrectly, and need price relief so that they can come close to a breakeven on these older policies. They're asking for huge rate increases.

They need some help . . . maybe not all that they are asking for, but some help. It's not well known, but it also takes two to three years in California for the DOI to approve a rate increase. This only creates further delay and larger rate increase requests later on. Timely approvals will help everyone in the end.

California has a history of top insurance carriers either suspending sales or ceasing sales altogether. Allianz, Transamerica, Prudential, MetLife, John Hancock, Mutual of Omaha, Genworth Financial . . . all large and well-funded carriers. We need them. My greatest concern is that Genworth will once again suspend or cease sales in California. Genworth represents roughly half of all long term care insurance policies sold in California in the last six months. It would be catastrophic if Genworth left. Everyone would lose. Six months ago, Tom McInerney, Genworth's Chairman, met with DOI Commissioner Jones. They had a meeting of minds. To my knowledge, nothing has happened since.

Problem #2: The Department of Insurance is failing to protect the interests of California citizens. The DOI has evolved from being a strong protector of the interests of consumers to watching other states provide better long term care solutions to their citizens. The main problem here is failure to adjust to a change in the philosophy of long term care planning and to accept the structure of new policies.

People are living longer, and when they get old, they get sick. Adverse morbidity trends and other factors have made long term care insurance policies far more expensive than before. Compromises have to be made to make policies affordable to more than the very rich. The DOI has resisted many of these compromises. The result is that people in other states are utilizing novel inflation riders and are often paying far less in premium than Californians. We allow our citizens to buy $25,000 life insurance death benefits, which afford little family protection, because that's better than nothing. Why not the same rationale for long term care insurance? Bad regulations are hindering needed change.

An important price factor has been inflation riders. The old standard of 5% compound inflation is often unaffordable. But is it necessary? Most folks are going to be cared for either at home or in a residential care facility. Nursing facilities are becoming a last stop, and average time spent in them is shrinking. If home health care inflation has been 1% to 2% and residential care facility inflation has been 3%, why should a person need 5% compound inflation, as required by California Partnership plans?

The industry standard for inflation riders has become 3% compound . . . or less. We sell life insurance with small death benefits and even term insurance which produces very few claims. Short and fat long term care benefits can be a great help in many situations. Allow the consumer to decide what he or she can afford.

Problem #3: Long term care insurance in California is badly in need of new enabling legislation. The laws of the 1990's are outdated and are not appropriate for the 21st century. They were in many ways visionary when they were enacted, especially in consumer protections. But they now inhibit change and prevent Californians from having choice in long term care planning.

The theory has been that California should not adopt laws prevalent elsewhere because California is different from any other state. California is different, but if you look at California's six major regions, each region has strong similarities with other regions of the United States. We are Americans, and can learn from other Americans and even embrace some of their laws. Our citizens are similar, and our long term care problems are similar.

Many of the consumer protections in our laws have been adopted by other states. They have not caught up to us, but they're close. Some thirty-seven states have banded together to create an “interstate compact.” Is it time to change our laws sufficiently to enable us to join them? This would be a far simpler solution than beginning from a zero base, and should be considered.

The National Association of Insurance Commissioners has adopted long term care insurance standards and is presently working on a set of even newer standards. We are engaged with this process. Again, the reasons for us to be different have decreased. The Legislature needs to immediately review and possibly adopt these new standards when they have been completed.

The Legislature should enact new legislation which will change the laws to give insurance carriers the product flexibility they enjoy elsewhere. This will give consumers more choice and, importantly, more affordable long term care insurance options. Policies in California are now primarily being sold to the wealthy. Future Medi-Cal costs are going to go through the roof if policies are not sold to the middle class.

Rich Californians now utilize elder law attorneys to shield their assets in order to qualify for long term care services and supports through Medi-Cal. The list of exempt assets is far too generous and the look-back period needs to be extended. Medi-Cal should be for the needy, not the rich. These lax standards need to change.

There is a new Assembly bill (AB 1553) which would prohibit gender-based pricing for long term care insurance. Women pay lower rates than men for life insurance and this is as it should be. Women live longer than men and the insurance carriers price life insurance policies appropriate to the risk. It should be the same with long term care insurance. This bill is unwise and should be defeated.

I hope that the Insurance Committees of the Assembly and Senate will consider these thoughts and will engage in meaningful discussions with all stakeholders. It's their responsibility to do so, and much needs attention.

Problem #4: The California Partnership for Long Term Care needs a total overhaul.
California was one of the original four Partnership states in 1994. Its purpose was to provide long term care protection for Californians with moderate income and assets. This concept has now been adopted by most other states and Partnership policies are being sold in quantity almost everywhere. But the California Partnership is now in such bad shape that it is really on life support.

This product is no longer saleable to its intended buyers . . . people with moderate income and assets. Partnership policies used to constitute about 75% of all my brokerage's sales, but I doubt if we sell 20% Partnership policies today. Long term care insurance rates are triple what they were in 1994. The 5% compound inflation requirements are too stringent. Federal legislation accepts almost any kind of inflation rider as a part of a Partnership policy. We need new Partnership legislation so that the Partnership can be sold to a far greater audience. Otherwise, it's of little value, and may even be a negative factor on future Medi-Cal expense.

The Partnership program is currently a part of the Department of Health Services. It is severely underfunded and understaffed. It seems almost as if DHS doesn't recognize its existence. The Partnership has the potential to save the state hundreds of millions of dollars. It needs to be recognized as a future producer of revenue for the state, not as an expense. It needs to be given the tools to do its job.

The Partnership was originally put under DHS because the program needs to be coordinated with Medi-Cal. In fact, Medi-Cal has inhibited change by insisting on the robust inflation riders discussed above. Maybe the Partnership is in the wrong department and should be moved over to the Department of Insurance. I would be in favor of this because it would create fresh thinking.

The Interstate Compact could be a starting point for new legislation. A simple approach, accepting the Compact, could get a major change done quickly. If its regulations were unacceptable, it could at least be built upon to conform with some of the unique California standards.

The Partnership needs additional funding in order to educate Californians and disseminate its message. It needs to ally with other outreach programs, such as the 3in4 Need More campaign, and increase its public relations efforts. These PR efforts are currently restricted by budgetary considerations. Again, the proper promotion of long term care insurance will save the state of California hundreds of millions of dollars.

As I said at the top, I want to stimulate a conversation that can fix this mess. I am available to assist in any way that I can.

Sincerely,

Louis H. Brownstone
Louis@cltcinsurance.com

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Updated, Monday, March 31, 2014, ???? AM (Pacific)

Seattle—

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NEW SOURCEBOOK EDITION AND LTC NEWS AND COMMENT

LTC Comment: Our lead story today highlights the publication of the latest version of the Alliance for Health Reform’s “Sourcebook for Journalists.”

*** HAPPY 16^TH BIRTHDAY (TOMORROW) TO THE CENTER FOR LONG-TERM CARE REFORM ***

3/25/2014, “Covering Health Issues: A Sourcebook for Journalists, Fall 2013,” Alliance for Health Reform

Quote: "The Sourcebook, produced with the support of the Robert Wood Johnson Foundation, has the latest information and data on pressing health care topics. It also includes the names and contact details for top experts in each subject area, along with a comprehensive glossary of health care policy terms."

LTC Comment: This recently updated "Sourcebook" slants toward public financing and away from market-based solutions but it is a useful data resource.

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2/28/2014, “MasterCare, a National LTC Network Member Firm, Recommends Consumers Work with Long Term Care Insurance Specialists [link],” press release edited by Jennifer Hedly, Florida NewsWire

Quote: "The National LTC Network announces its immediate past Chairman, Mike Skiens, is featured in an article on long term care planning in Kiplinger's Retirement Report (March 2014)."

LTC Comment: Congratulations to Mike Skiens and Center-corporate-member MasterCare.

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3/27/2014, “Insurers tire of 'frenemy' White House,” by Elise Viebeck, The Hill

Quote: "Insurers feel that the administration has taken advantage of them by making repeated delays and changes to the law, even as they have gone above and beyond the call of duty to fix problems with the rollout."

LTC Comment: That’s what insurers get for trusting a government that repeatedly draws the private sector in with promises of rich rewards and then reneges.

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3/28/2014, “CMS is failing to ensure that terminated skilled nursing facilities and other providers are not billing Medicaid, watchdog agency says [link],” by Tim Mullaney, McKnight's LTC News

Quote: “The report does not include any numbers as to how many terminated providers still might be receiving Medicaid payments, but the implication is that many could be. Without reliable interstate data, a provider conceivably could be terminated in one state but continue to bill Medicaid in another.”

LTC Comment: Lack of profit motive and competition accounts for such oversights, or lack of oversight.

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3/26/2014, “Overwhelming Majority of Seniors Satisfied with their Medigap Coverage [link],” AHIP Press Release, InsuranceNewsNet.com

Quote: “Ninety-four percent of seniors enrolled in Medigap are satisfied with their coverage, according to a new Purple Insights survey released by America's Health Insurance Plans (AHIP). According to the survey, 80 percent of beneficiaries say their policy provides excellent or good value for the money, and the vast majority (91 percent) would recommend Medigap to a friend or relative.”

LTC Comment: Pretty good batting average.

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3/26/2014, “How A New Alzheimer's Test Could Kill Long-Term Care Insurance -- Or Make It Cheaper [link],” by Howard Gleckman, Forbes

Quote: "A widely available test to predict Alzheimer's would make any form of voluntary long-term care insurance impossible. 'It would be a huge game changer,' one insurance actuary told me."

LTC Comment: Nonsense. As long as the law is changed to allow--better yet, require--insurance carriers to have access to the same test results, a reliable test to predict Alzheimer's would increase the market for private LTC insurance and lower the premiums. Such a test would impel financially responsible people to purchase insurance before they take the test. Otherwise they would lose some or all insurability if test results showed a proclivity toward the disease. If people therefore purchased LTC insurance earlier in life and if the test excluded more bad risks (anti-selection), the coverage itself could cost less. On the other hand, a test for Alzheimer's could devastate publicly financed LTC programs by preventing people who could have and should have insured privately from obtaining coverage in the market.

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3/26/2014, “Social Security Deficit: Fact or Fiction?,” by Paul Nor, Financial Planning

Quote: "The Social Security OASI Trust Fund, now valued at roughly $2.7 trillion, is fully invested in US Treasury securities. The projected 2013 interest payments on this investment are approximately $98 billion. Add this into the tax receipts and the program remains snugly in the black."

LTC Comment: This article is worth reading for its clarification of the annual Social Security deficit. It misleads, however, by suggesting Social Security is "in the black" by virtue of its "trust fund," which holds nothing but IOUs for money the rest of government has already spent. How solvent would you feel if your entire net worth amounted to promissory notes from a bankrupt relative?

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3/26/2014, “CNA Announces the Appointment of Al Miralles as President of Long-Term Care [link],” Press Release, Wall Street Journal

Quote: "Al joined CNA in 2011 as Senior Vice President, Investments and Treasury. He has more than two decades of insurance and financial services experience and a proven track record of developing strategy, building high performance organizations, and executing on sustainable operational improvements. 'This new position brings a renewed focus to strategic and operational management of Long-Term Care,' said Craig Mense. 'I am confident Al's leadership will help us advance our objective in this line of business."

LTC Comment: CNA: Gone but not forgotten.

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3/25/2014, “Long-Term-Care Coverage With an Asset-Protection Twist: A ‘partnership-eligible’ policy may allow you to keep more of your assets if you eventually need to rely on Medicaid [link],” by Kimberly Lankford, Kiplinger

Quote: “If a policy doesn’t qualify for the partnership program because it has a smaller inflation protection, but it meets your needs and costs a lot less than a partnership-eligible policy that, say, provides 5% compound inflation, don’t automatically reject the lower-cost policy. If you never need Medicaid, you’ll never benefit from the partnership policy anyway. There are generally two criteria to qualify for Medicaid: the asset test and the income test, says Steve Sperka, vice-president of long-term care for Northwestern Mutual. 'If people have some source of retirement income, say, from a pension, they may run out of assets but may never qualify for Medicaid based on income.' You can find out more about your state’s Medicaid eligibility requirements at www.medicaid.gov."

LTC Comment: The possibility Steve Sperka mentions—that people might deplete their assets but still not qualify for Medicaid LTC benefits because of excess income—is theoretically possible but highly unlikely. Income almost never disqualifies anyone for Medicaid LTC because most states subtract private LTC expenditures and medical expenditures not covered by Medicare from income before deciding eligibility. You don’t need low income, but rather only insufficient cash flow. Other states (13) apply income caps but those are easily circumvented by means of Miller income-diversion trusts. A good rule of thumb is that anyone with income below the cost of a private nursing home, roughly $6,000 per month, qualifies for Medicaid LTC based on income. Of course, most of that income has to be used to offset Medicaid’s cost of care, but the eligible person gets Medicaid’s lower reimbursement rate (for purposes of later estate recovery) along with Medicaid’s substantial acute care benefits that go beyond what Medicare covers.

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3/25/2014, “Two New Ways to Buy Long Term Care,” by Terry Savage, Huff Post

Quote: “Getting older is far better than the alternative. But taking care of our parents - or having children take care of us - in our old age is an expensive burden to place on each generation. That's something to think about as Mother's Day and Father's Day approach. Long term care insurance - either a traditional policy or one of these asset-based policies - can make a huge difference in a family's finances. And that's The Savage Truth.”

LTC Comment: Sound advice from long-time nationally-syndicated financial columnist Terry Savage. The article recognizes Center corporate members One-America as a major carrier offering equity-based LTC combo products and MAGA as a key distributor.

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3/25/2014, “A Quiet 'Sea Change' in Medicare,” by Susan Jaffe, New York Times

Quote: “In January, Medicare officials updated the agency’s policy manual — the rule book for everything Medicare does — to erase any notion that improvement is necessary to receive coverage for skilled care. That means Medicare now will pay for physical therapy, nursing care and other services for beneficiaries with chronic diseases like multiple sclerosis, Parkinson’s or Alzheimer’s disease in order to maintain their condition and prevent deterioration.”

LTC Comment: More Medicare coverage of home care will help a lot of people, but it will also contribute to the crowd out of private financing alternatives like LTCI, thus doing long-term damage to LTC financing overall.

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3/25/2014, “Univita's Long Term Care Expertise Highlighted in LIMRA's MarketFacts Publication [link],” Press Release, HeraldOnline.com

Quote: “Univita Health, the largest long term care insurance administrator in the United States, as well as an innovator in providing home-based care management, announced today important findings in key claim practices for successfully managing closed blocks of long term care insurance. Their findings are published in the recent issue of LIMRA’s MarketFacts Quarterly. In addition to converting more long term care (LTC) insurance closed blocks than any other company in the industry, Univita’s LTC division has over 1.4 million LTC policies under management, handling over 1 million claim transactions that pay over $1.4 billion in claims annually. The findings in this study are based on Univita’s more than 20 years of research, analysis, and practice in claims and care management, including claims audits of many of the leading insurance companies in the industry.”

LTC Comment: Congratulations to Univita, an industry leader and bellwether.

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3/24/2014, “Feeling ill-effects of private long-term care insurance,” by David Lazarus, Los Angeles Times

Quote: "Critics of safety-net programs such as Social Security and Medicare are fond of saying that the private sector would do a much better job of protecting people thanks to the magic of the marketplace. Mike and Judy Holtzman of Laguna Woods are now experiencing the magic of the marketplace for long-term care insurance. And it stings. They were recently informed by their insurer, John Hancock Life & Health Insurance Co., that their annual premiums will almost double."

LTC Comment: The premise of this article--that public programs have done fine while private LTC insurance has failed--is false. The truth is that the public entitlement programs are vastly underfunded. Yes, so are private books of old LTC insurance. The difference is that the private sector is doing the responsible thing, raising premiums to be able to pay claims, whereas the public programs are sinking deeper and deeper into economy-sapping debt and deficit spending.

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3/24/2014, “Medicaid now attractive to millionaires,” by Jackson Adams, The Daily Journal

Quote: "Millionaires now can safely enroll in Medicaid, thanks to an interpretation of the Affordable Care Act recently confirmed by the U.S. Department of Health and Human Services."

LTC Comment: It's not quite that simple, but still a concern, and worth understanding.

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3/24/2014, “Unless You Have Cash, You Don't Have Long Term Care Insurance [link],” Press Release, PRNewswire

Quote: "Why have sales started to increase with plans that offer a cash benefit? Many feel agents are showcasing the cash benefit in response to prospects' objections that LTCI policies are too complicated and that the consumer is reacting to the simplicity that cash offers at claims time."

LTC Comment: Cash IS king.

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3/21/2014, “How the Fed is hurting seniors, Opinion: The low-interest-rate policy does more harm than good [link],” by Diana Furchtgott-Roth, WSJ MarketWatch

Quote: "The big winners of the Fed's policies were the U.S. government, which gained about $900 billion, and non-financial corporations, which gained $310 billion.

"McKinsey calculated that households headed by people under the age of 45 are net debtors and so have benefitted from lower rates. In particular, those households with heads ages 35 to 44 have gained $1,700 more in spending each year because of lower rates. Those under 35 gained $1,500 a year.

"The losers are the seniors, especially household heads aged 75 and over, who lost $2,700 a year in income. Those aged between 65 and 74 lost $1,900."

LTC Comment: Turnabout from the usual government policy favoring seniors at the expense of the young, but still a pernicious policy in many ways.

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3/21/2014, “Flu Vaccines Spare Even the Frailest Elderly, Study Finds,” by Bill Myers, Provider Magazine

Quote: "Some health experts have worried that flu vaccines may do more harm than good for those elderly in hospitals, homes or other 'institutions.' But researchers at the Fung Yiu King and Queen Mary hospitals in Hong Kong pored over thousands of worldwide studies-some dating as far back as 1946-and re-examined the data for outcomes. They found that vaccinations correspondent [sic] to a 37 percent reduction of pneumonia (especially when the year's vaccine matched the strain of that year's virus-42 percent), and a 34 percent reduction in deaths from pneumonia or flu."

LTC Comment: I’ve wondered myself about the efficacy of flu vaccines.

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Updated, Friday, March 28, 2014, 11:46 AM (Pacific)

Seattle—

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LTC BULLET: WHO GETS MEDICAID LTC?

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: WHO GETS MEDICAID LTC?

LTC Comment: Last week’s “LTC Bullet: LTC Embed Report from the Policy Front at ILTCI ’14 Orlando [link]” highlighted a presentation at the recent 14^th Annual Intercompany Long-Term Care Insurance conference titled “Feder and Warshawsky: Long-Term Care Financing Perspectives and Solutions: An in-depth conversation with two of the nation's most knowledgeable long-term care experts, Mark Warshawsky and Judith Feder.”

During that presentation, Dr. Feder of Georgetown University's McCourt School of Public Policy—who has had a long and distinguished academic career focused on long-term care financing issues—stated that most people who receive Medicaid nursing home benefits did not possess much wealth 10 or 15 years before qualifying for public assistance. That statement didn’t surprise me. Too few Americans have accumulated sufficient retirement savings so naturally “most” of them who end up in Medicaid nursing homes will have had small estates a decade or more earlier. What gave me pause, rather, was her implication that this fact meant problems raised in a recent Wall Street Journal op-ed titled Millionaires on Medicaid by her interlocutor, Mark Warshawsky of the American Enterprise Institute , himself an accomplished and well-regarded scholar in the field, somehow didn’t matter.

So I asked Dr. Feder what her source was for that conclusion. She responded by referring me to Rich Johnson’s testimony before the LTC Commission. Check it out: “Income and Wealth of Older Adults Needing Long-Term Services and Supports,” Statement of Richard W. Johnson, Senior Fellow, The Urban Institute, before the Commission on Long-Term Care, August 1, 2013. I encourage everyone to read his full testimony. What follows are selected quotes and my comments. My closing comment addresses the more general question of why so many academics choose to conduct only research that supports a public financing bias and avoid addressing facts that challenge that bias.

Quote: "As the focus on Medicaid intensifies, questions grow about exactly who receives help from the program in later life. Has the program morphed into a middle-class entitlement for nursing home care? I have been examining the income and wealth trajectories of older adults who end up in nursing homes. My principal conclusion is that most older people who receive Medicaid-financed nursing home care have low incomes and very little wealth, not only while they are in the program but also for at least a decade before they enter a nursing home.” (p. 1)

LTC Comment: OK, as I acknowledged above, that’s obvious given Americans’ well-documented failure to save adequately for retirement.

Quote: "These results suggest that efforts to promote individual saving for long-term care, while laudable, may not move many people off Medicaid or save the program much money, because most Medicaid nursing home residents never had the means to save much in the first place. These findings thus underscore the importance of Medicaid for some of the nation's most vulnerable citizens." (pps. 1-2)

LTC Comment: Whoa! Wait a minute. First, no one has challenged “the importance of Medicaid for some of the nation's most vulnerable citizens.” What’s at issue is whether Medicaid should provide long-term care to people who could have, would have and should have planned responsibly to pay for their own care if it were not for perverse public policy incentives that discourage responsible LTC planning. Let’s first see if Johnson’s data and analysis support his conclusion that more responsible LTC planning wouldn’t save Medicaid much money.

Quote: “It can be difficult to tap into home equity to cover the cost of long-term services and supports and other living expenses, and states do not always pursue beneficiaries' housing wealth when trying to recoup some of the cost of Medicaid-financed nursing homes. Consequently, nonhousing wealth-defined as total household wealth excluding the value of home equity-is another useful metric of financial well-being.” (p. 4)

LTC Comment: Hard to tap home equity? No it’s not. That’s what reverse mortgages do. The National Council on the Aging (NCOA) encourages their use as a funding source for long-term care. Home equity, the biggest asset aging Americans possess, goes largely unused to fund long-term care because Medicaid exempts the home and all contiguous property up to a minimum of $543,000 in most states and a maximum of $814,000 in the rest. People face a strong disincentive to tap the equity in their homes to fund home care or to supplement their income so they can afford private LTC insurance. Furthermore, the fact that state Medicaid programs fail to pursue estate recovery of housing wealth means that home equity is not only exempt for recipients going onto assistance, it is protected as a “windfall of Medicaid subsidies” for their heirs as the HHS Inspector General explained in a 1988 report (pps. 47-48). Johnson’s conclusion that “nonhousing wealth” bears considering as a measure of financial well-being is therefore unfounded. Nonhousing wealth doesn’t amount to much in the first place and, in the second place, it is very easy to eliminate from Medicaid spend down liability by purchasing exempt assets including home equity but also an automobile, an income-producing business, term life insurance, an IRA, and prepaid burial insurance.

The first section of the testimony titled "Current Financial Status of Older Americans with Disabilities" (pps. 2-5) is not relevant as the disabled could not have insured and likely would not have been able to save for long-term care. The second section, titled "Midlife Financial Status among Those Who Develop Disabilities in Later Life" is more relevant (pps. 5-7)

Quote: “The limited income and wealth of older adults with disabilities suggests that few can afford to spend much out of pocket on long-term services and supports. However, financial shortfalls in later life may reflect long-term care expenses and are not necessarily reliable indicators of lifetime economic status or the ability to have saved earlier in life for future care needs. Moreover, some older adults with disabilities might have recently transferred assets to family members to qualify for Medicaid. To improve our understanding of the potential capacity of adults to save for future spending on long-term services and supports, the analyses described in this section examine income and wealth for people in their fifties in the early 1990s, and compares financial well-being for those who develop disabilities by their seventies and those who do not. Estimates are restricted to those who reported no ADL limitations in their fifties and were not yet retired at that time, so that the analyses do not confound the financial effects of retirement with the effects of future disabilities. (p. 5)

LTC Comment: This is too short a span of years to permit valid conclusions. People in their 50s who develop disabilities only 20 years later by their 70s were likely poorer and more prone to health problems than people who did not develop disabilities in that short time span. We would need to compare the financial condition of people in their 50s with their financial and health conditions at age 85 or older, which is when the need for long-term care spikes upward. Unfortunately the data source used for this analysis does not cover such a long span of time. It would be very interesting to have an insurance actuary analyze this data.

Quote: “Disability-related disparities in household wealth are even more stark than disparities in household income. Median household wealth in 1992 for adults ages 52 to 60 was nearly twice as high for those who did not develop any disabilities by ages 70 to 78 than those who developed two or more ADL limitations (figure 2). Total household wealth did not exceed $13,300 for one in four of those who became disabled. Half of those who became disabled held less than $111,300, and three-quarters held less than $238,900. Household wealth approached $700,000 or more for only 1 in 10 adults in their fifties who became disabled by their seventies. (p. 6)

LTC Comment: Ditto my previous comment. But really, half of those who became disabled had $111,300 or more in household wealth and one quarter had $238,900 or more in their 50s when they were still working and accumulating more wealth? They sound like candidates for savings or insurance who could have prepared better for their future disabilities (and possibly delayed or avoided welfare dependency) had they had stronger incentives (and fewer disincentives) to do so.

The key section in Dr. Johnson’s testimony is the next one, titled “Financial Status of Older Americans Receiving Nursing Home Care” (p. 7).

Quote: "The analysis in this section follows a sample of HRS respondents for up to 17 years, from 1993 until 2010. The respondents were ages 70 to 75 in 1993, when all were living in the community, and survivors were ages 87 to 92 in 2010. The analysis compares 1992 income and 1993 wealth for those who received some Medicaid-financed nursing home care over the period, those who received some nursing home care but were never covered by Medicaid, and those who never received nursing home care.

"Adults who eventually obtained nursing home care paid at least in part by Medicaid received substantially less income before they entered a nursing home than those who never entered a nursing home and those who obtained nursing home care that was never paid by Medicaid. Median annual per capita household income in 1992 was about $14,200 (in 2012 constant dollars) for those who eventually received Medicaid-financed nursing home care, compared with $21,500 for those who never received nursing home care and $25,500 for those who received nursing home care but were never covered by Medicaid (figure 4). Only a quarter of those who eventually obtained Medicaid-financed nursing home care received annual per capita income in excess of $20,000, and only a tenth received income in excess of $31,800." (p. 7)

LTC Comment: How is this relevant? By the time they're in their 70s their incomes have already declined because they are no longer employed. We need to know their incomes and wealth in their 50s when they could have saved or insured. But again, as above, the data source used for this analysis does not have the longitudinal reach it would need to have to span people’s financial and health conditions from their 50s, when their income and wealth are higher and still growing, through their 90s when they’re most likely to need expensive long-term care.

Quote: “Household wealth varies sharply by future nursing home care. Among community-dwelling adults ages 70 to 75 who eventually entered nursing homes, the median household wealth for those who never received Medicaid was more than five times as high as for those whose nursing home care was at least partly paid by Medicaid ($255,000 versus $49,600, figure 5). Median wealth for those who never entered nursing homes was more than three times as high as for those who received Medicaid-financed care. A quarter of those who later received Medicaid-financed nursing home care held less than $2,700 in total household wealth at ages 70 to 75, while only a quarter held more than $151,700 in total household wealth and 1 in 10 held more than $260,600.” (p. 9)

LTC Comment: Ditto my comment above about the inadequate chronological span of this data. Furthermore, that quarter of folks with more than $151,700 and the one in 10 with over $260,000 sure sound more like candidates for private-pay LTC instead of Medicaid, yet that’s where they ended up. The more important question is how much of their wealth was actually used to fund long-term care? How much was lost to asset exemptions, Medicaid planning, and estate recovery evasion?

Quote: "About half of our 1993 sample of adults ages 70 to 75 who eventually received Medicaid-financed nursing home care entered a nursing home within 10 years. Some of these people may have spent much of their wealth on paid home care, and some may have transferred some of their assets out of their own name to qualify for Medicaid because they expected to need nursing home care soon.

"To account for these possibilities, figure 7 examines household wealth in 1993 for community-dwelling adults ages 70 to 75 who did not enter nursing homes until 2003 or later (at least 10 years in the future). Even among members of this group, who seem less likely to have been able to anticipate their future nursing home admissions and may have spent less on other care and medical expenses than those who entered nursing homes sooner, very few of those whose eventual nursing home stays were at least partly paid by Medicaid had accumulated much wealth. Half had less than $59,600 in total household wealth in 1993, and a quarter had less than $9,900. Only 10 percent had more than $286,800." (p. 10)

LTC Comment: Ditto my comment above about the inadequate chronological span of this data. Furthermore, it is naïve to think people are unaware of Medicaid planning opportunities to shelter or divest assets. Do an internet search for “Medicaid planning in Your State” and see what you get. Word gets out fast among the aging on the “wheel chair telegraph.” Potential heirs have their ears to the ground as well. Still, half had more than $59,600 and one in 10 had over $286,800? Isn’t there something these folks and their families might have done to avoid welfare dependency if public policy had encouraged them to do so instead of providing a slippery slope into public assistance? Before Medicaid intervened half of nursing home residents were private pay; now 63% reply on Medicaid; 14%, on Medicare; and only 22% depend on “other” sources. Those other sources include private long-term care insurance, other medical insurance, other public coverage and, finally, last and likely least, the old-fashioned, write-the-check every month kind of private-pay which is rapidly disappearing.

Quote: “It is worth noting some of the limitations of this research. For example, income, wealth, and Medicaid coverage are all reported by older respondents themselves or their proxies (usually their spouses or adult children), and the information they provide is not always accurate. The sample of older adults with disabilities on which the analyses are based is relatively small, which limits confidence in the estimates. Additionally, we observe Medicaid coverage only through ages 87 to 92, and some people do not receive Medicaid-financed nursing home care until even older ages. Those who do not obtain Medicaid coverage until they reach their nineties may have had more wealth when younger than those who obtain coverage sooner.” (pps. 11-12)

LTC Comment: “Worth noting some of the limitations”? I should say so. Data provided by elderly respondents, and by their heirs with a stake in potential inheritances protected by Medicaid, is dubious. Missing ages over 92 years drops the most costly long-term nursing home expenditures from the analysis as Mark Warshawsky points out and DeNardi, et al. observed in their seminal paper for the Chicago Federal Reserve Bank. Finally “big data” is notorious for misinterpretation, intentional or otherwise.

Quote: “Despite these caveats, it is clear that Medicaid provides a vital safety net for older adults with disabilities. Most older adults who end up on the program would never have been able to earn enough income or accumulate enough wealth to cover their nursing home costs. It seems likely that Medicaid will continue to play an important role in long-term care financing as long as those with long-term care needs are disproportionately those with limited financial resources.”

Closing LTC Comment: Most is not all. The fact that “most older adults who end up on the program” would not have been able to save, invest or insure sufficiently to avoid Medicaid is not at issue. Nor is Medicaid’s future role in providing long-term care to the indigent. What is at issue is whether Medicaid should be readily available for middle class and affluent people without significant spend down and whether or not the fact that it is so available results in fewer people saving, investing or insuring for long-term care and more people unnecessarily dependent on the program.

That is the issue so many academics evade. They continue to write that “Medicaid requires impoverishment” and only “low income” people qualify for the program’s long-term care benefits. Such statements are demonstrably false. Income level rarely interferes with eligibility. Assets are virtually unlimited because of Medicaid’s many exemptions. Actual unlimited wealth can be divested five years ahead of applying without penalty. Numerous other means of sheltering assets are available from elder law advisers without planning half a decade ahead. Estate recovery is weak in most states, easily avoided in the rest, and of course cannot recapture wealth that was jettisoned in the first place.

All these facts are well documented here. They explain why a few brave academics have been able to discover and publish results that contradict the conventional academic wisdom that Medicaid LTC requires impoverishment. They explain why the Chicago Fed found “that even higher-income retirees benefit from Medicaid.” They explain why Brown and Finkelstein discovered that Medicaid crowds out 65% to 90% of the potential market for private long-term care insurance.

What remains unexplained is why most academics and the reporters they supply with expert advice still ignore the facts of Medicaid eligibility. They continue to seek answers in giant data bases and tiny samples, but almost never ask Medicaid eligibility workers how the program really works or consult actual Medicaid case files for answers. I’ve done both for 30 years and I’ve reported the surprising results in publications for the Health Care Financing Administration (1985), the HHS Inspector General (1988), the Gerontologist (1990), the Journal of Accountancy (1993), the Journal of Financial Planning (2001), the Cato Institute (2005) and in dozens of trade journal articles and think-tank sponsored reports available here. So, you can’t say we didn’t warn you.

The Center for Long-Term Care Reform’s latest research goes beyond documenting the easy access to Medicaid LTC benefits and its crowd out effect on responsible planning. We’ve begun to explore the likely consequences of a wider range of factors dragging down the prospects for future long-term care financing. Our “Index of Long-Term Care Vulnerability” gauges the likelihood that long-term care service delivery and financing as it exists in the United States today can survive the ravages of aging demographics, morbidity, economic and fiscal challenges, inadequate private financing alternatives, and the “entitlement mentality.” Our three latest reports apply this “Index” to Virginia, New Jersey, Georgia and the USA. Read them here at the section titled “The Center’s latest state reports.”

It may be already too late to save America’s dysfunctional long-term care system, but it’s never too early to wake up, smell the coffee, debunk the myths, and confront the reality.

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Updated, Monday, March 24, 2014, 11:20 AM (Pacific)

Seattle—

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PREMIUM INCREASES AND LTC NEWS AND COMMENT

LTC Comment: During his “Future of the Industry” remarks last week, Genworth CEO Tom McInerney emphasized the importance of convincing LTC insurance regulators to allow reasonable premium increases. We highlighted this event and his speech in Friday’s LTC Bullet: “LTC Embed Report from the Policy Front at ILTCI ’14 Orlando.” Read it here. In our first article today, the New York Times addresses the issue of LTCI premiums.

3/21/2014, “Premiums Rise for Long-Term Care Insurance. Keep It or Drop It? [link],” by Ann Carrns, New York Times

Quote: "[M]ajor insurers have been successfully seeking state approval to raise premiums on existing policies, and the increases are typically phased in over several years."

LTC Comment: Music to Tom McInerney's ears as he identified--at the ILTCI conference last week--cooperation of regulators in raising premium rates as key to the LTCI industry's survival and growth.

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3/21/2014, “The 'wealthy poor' replace the middle class,” by Rick Newman, Yahoo! Finance

Quote: “A new paper by economists Greg Kaplan and Justin Weidner of Princeton University, and Giovanni Violante of New York University, finds that about 70 million Americans may live in families they describe as “wealthy hand-to-mouth” households. These are families that own assets such as homes, cars, retirement plans and even boats, yet still spend virtually every dollar of their regular income because it’s necessary to pay all the bills they’ve racked up.”

LTC Comment: Two points: (1) this research shows why Medicaid’s home equity exemption of up to $814, 000 is crazy and (2) imagine the potential for funding long-term care insurance through a carve out of home equity which would protect the entire estate including the residual home equity.

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3/21/2014, “How Long-Term Care Insurers Deny Benefits,” by Richard Eisenberg, Forbes

Quote: “Here’s a heartbreaking scenario: Your parents or another loved one bought a long-term care insurance policy years ago and have paid its steep premiums ever since, but now that they need the benefits, the insurer refuses to pay them. Sadly, this happens all too often, as I learned last week at the Aging in America 2014 conference of the American Society on Aging in San Diego.”

LTC Comment: This slanted article is full of specious arguments even implying that LTC insurers should pay for facilities that are unqualified to provide the insured services!

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3/21/2014, “Public reporting of physical restraint use led to 36% increase in antipsychotic prescribing for dementia, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Public reporting of physical restraint use in nursing homes caused a spike in the use of antipsychotic medications to control residents' dementia symptoms, according to a recently published analysis. These results suggest that policymakers should consider unintended negative consequences of publicly reporting quality measures, the researchers emphasized."

LTC Comment: You couldn't ask for a better example of how bureaucrats' good intentions can go terribly awry.

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3/20/2014, “Trade groups oppose LTCI proposal,” by Allison Bell, LifeHealthPRO

Quote: "Some regulators want insurers to have a long-term care insurance (LTCI) loss ratio of 100 percent before they raise LTCI rates. The American Council of Life Insurers (ACLI) and America's Health Insurance Plans (AHIP) have teamed up to fight the proposal."

LTC Comment: Only government can operate at a 100 percent (or greater) loss ratio and look what that's brought us!

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3/19/2014, “Observation stay bills in focus for LTC providers,” by Elizabeth Leis Newman, McKnight's LTC News

Quote: “While some have argued that CMS's recently enacted two-midnight rule should fix much of the problem for seniors, providers counter that it doesn't help those who are in the hospital for fewer than two midnights and may face huge costs when they discover they are ineligible for skilled nursing care.”

LTC Comment: Medicare dropped the 3-day hospitalization rule after MCCA ’88 but reinstated it a year later. Private LTCI dropped it and it stayed dropped.

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3/19/2014, “HBO documentary reveals a certified nursing assistant's struggle [link],” by Tim Mullaney, McKnight's LTC News

Quote: “President Lyndon Johnson highlighted impoverished families in Appalachia when he declared a ‘war on poverty.’ Fifty years later, as the nation takes stock of how successfully we've waged this war, the media is spotlighting certified nursing assistants in long-term care facilities as examples of the working poor.”

LTC Comment: A good example of poor public LTC policy that left too many people dependent on inadequate Medicaid reimbursement rates.

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3/18/2014, “Robots to Aid Walking Offer New Tool to Aging, Disabled [link],” by Kanoko Matsuyama, Bloomberg

Quote: “Eyeing a new market of aging populations and concern over rising health costs, companies in U.S., Europe and Japan are developing bionic suits that may someday save labor and help the elderly care for themselves.”

LTC Comment: A new version of “the six million dollar man.”

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3/19/2014, “Alzheimer's takes heavy toll on women,” by Karen Weintraub, USA Today

Quote: "Women are far more likely to develop the fatal disease than men: one in six women over 65 will get it during their lifetime, compared with one in 11 men."

LTC Comment: Nevertheless, some say charging women more for LTC insurance is "discrimination." The same folks are silent about the appropriateness of charging men more for life insurance. Just goes to show that politics is the wrong realm for discussing such issues. Logic, evidence, markets and economic principles should prevail.

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3/19/2014, “Dual eligibles in nursing homes have fewer hospitalizations than those in home- and community-based care, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Recent Medicaid reforms have aimed to increase use of HCBS because it is believed to be less costly than institutional long-term care, investigators noted. They said their findings suggest that more frequent hospitalizations are a 'hidden cost' of home- and community-based care."

LTC Comment: More evidence HCBC is a double-edged sword.

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3/17/2014, “HHS may kill stand-alone indemnity,” by Allison Bell, LifeHealthPRO

Quote: "The U.S. Department of Health and Human Services is trying to eliminate any possibility that consumers will use limited-benefit health insurance as a substitute for traditional coverage. . . . HHS proposed the rule on page 44 of a draft regulation that could apply to individual hospital indemnity insurance, individual critical illness insurance and other individual supplemental health insurance products."

LTC Comment: We'll follow this issue and report further developments. Thanks to AIM's John Hennessey for tipping us to this article.

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3/17/2014, “U.S. retirees return to reverse mortgages, big banks stay away [link],” by Peter Rudegeair and Michelle Conlin, Reuters

Quote: "U.S. baby boomers desperate for retirement income are increasingly turning back to a financial product that, after the housing bust, had been left for dead: the reverse mortgage."

LTC Comment: Home equity could boost private LTC financing when the bottom falls out of Medicaid, but not if it’s used up supplementing seniors’ retirement income in the meantime.

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3/10/2014, “America Needs to Rethink 'Retirement': Unleashing the economic power of older workers is essential for U.S. prosperity [link],” by Nicholas Eberstadt And Michael W. Hodin, Wall Street Journal

Quote: "Research suggests that keeping older workers engaged in the economy will directly boost gross domestic product. In Japan, a 2005 study by the Nihon University Population Research Institute concluded that increasing the retirement age to 65 from 60 could raise per capita GDP 10% by 2025."

LTC Comment: A “silver” lining.

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3/16/2014, “How to handle long-term care premium hikes,” by Robert Powell, USA Today    LTC Comment:

Quote: "Three things are certain in life if you're among the 8 million Americans who own a long-term-care insurance policy. Besides death and taxes, you'll face an extraordinary increase in your premium at some point."

LTC Comment: Death and taxes will continue but exceptionally high LTCI premium increases may not. What if interest rates return to normal and public programs stop paying for LTC? With profits and demand up, LTCI premium might decrease in the future.

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3/16/2014, “Alzheimer's and Its Uncounted Victims Deaths from the disease may be six times higher than reported. This is a cancer-size illness [link],” by George Vradenburg and Stanley Prusiner, Wall Street Journal

Quote: "It's well known that President Ronald Reagan died in 2004 after a long battle with Alzheimer's disease. Yet his death certificate listed pneumonia as the official cause of death. Attributing Alzheimer deaths to other diseases is all too common-and highlights the complicated nature of Alzheimer's contribution to deaths in the U.S. each year. It also suggests that Alzheimer's might be a bigger problem than previously thought."

LTC Comment: One more way in which this disease is pernicious.

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3/15/2014, “As Living Standards Fall for Seniors, Some See Signs of 'Silver Revolution' [link],” by David Wallismarch, New York Times

Quote: "Whatever the reasons, several social scientists say deteriorating conditions for retirees and older Americans in general - intensifying fear about retirement security, age discrimination, increasing poverty among the elderly and new threats to cut programs for seniors - could be the impetus for what some are calling a 'silver revolution.'"

LTC Comment: Others have called this “generational warfare.”

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3/13/2014, “Life care lawyers can help navigate veterans' benefits,” by Rachel Kabb-Effron, Cleveland Jewish News

Quote: "With the cost of long-term care rising every day, seniors want to know how to pay for care without breaking the bank. Many know about Medicaid benefits and planning, but few realize there is a benefit available to veterans and their widows called the VA Pension, commonly known as Aid and Attendance. Under this program, the VA can contribute up to $2,094 per month for a married veteran and $1,130 per month for a veteran's widow."

LTC Comment: Gaming VA benefits is as common as, and easier than, gaming Medicaid LTC benefits.

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3/13/2014, “Emergency Rooms Are No Place for the Elderly,” by Pauline W. Chen, M.D., New York Times

Quote: “The number of older people seeking health care is expected to increase significantly over the next 40 years, doubling in the case of those older than 65, potentially tripling among those over 85. In a health care system already critically short of primary care providers and geriatrics specialists, many of these older patients will likely end up in emergency rooms.”

LTC Comment: Just as we didn’t have enough elementary schools for the baby-boomers in the early 1950s despite several years to plan, we won’t have enough caregivers for them in the 2030s despite decades to plan.

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3/12/2014, “Medicare Changes Prompt Enrollees to Reconsider Plans [link],” by Walecia Konrad, New York Times

Quote: "One reason Medicare Advantage plans have attracted a growing number of Americans - 29 percent of the 52 million Medicare recipients have chosen them, according to Avalere Health, a research firm - is that they have been, in effect, subsidized by the federal government. Now the government is reducing, over time, what it pays the private plans, bringing payments in line with those for traditional Medicare."

LTC Comment: Another bait and switch by the government?

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3/12/2014, “Insurers wary of Obamacare unknowns as they plan for 2015,” by Caroline Humer, Reuters

Quote: "For 2015, insurers must describe their health plans and proposed rates to state and federal regulators starting in April and May. But before they do, some of the most important factors that go into those decisions may not be known, from the size of the doctor and hospital networks that the federal government will approve to final 2014 enrollment figures and the relative health of their new plan holders."

LTC Comment: It looks like the health insurance industry will pay dearly for following government down the primrose path of ObamaCare.

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3/12/2014, “CalPERS long-term care policyholders downgrade coverage, avoid rate hike [link],” by Jon Ortiz, The State Worker

Quote: “About 16,000 people shifted from programs that guaranteed life-time benefits with inflation-adjusted payouts to policies that cap payments for convalescent care, in-home assistance and similar services, CalPERS executive Ann Boynton told reporters during a Tuesday conference call.”

LTC Comment: But they kept their coverage and that’s the bigger story.

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3/12/2014, “Long Term Care Insurance Association Launches Drive To Double Sales [link],” Press Release, ExpertClick

Quote: “A drive to bring back insurance agents who once sold long term care insurance and recruit new producers interested in hybrid solutions is being undertaken by the American Association for Long Term Care Insurance, a national trade group."

LTC Comment: You can’t win the war without soldiers.

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3/11//2014, “Lincoln Financial Group Introduces Next Generation of Long Term Care Funding Solution [link],” Press Release, Wall Street Journal

Quote: "MoneyGuard(R) II offers clients the option to spread premiums over multiple years. Clients can select a variety of payment patterns, from single pay to over 10 years, providing cash flow flexibility for various financial portfolios. MoneyGuard(R) II offers clients the option to spread premiums over multiple years. Clients can select a variety of payment patterns, from single pay to over 10 years, providing cash flow flexibility for various financial portfolios."

LTC Comment: Another “combined product” to help meet the industry challenges of these times.

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3/10/2014, “What Paul Ryan Got Right: Medicaid's Effect on Long-Term Care Insurance [link],” by Jeffrey Brown, Forbes

Quote: “The study in question – the one that Congressman Ryan got right despite the Fiscal Times claim to the contrary – was a paper I co-authored with Amy Finkelstein of MIT. This paper, published in the 2008 American Economic Review, estimated that Medicaid could explain the lack of private insurance for about two-thirds to ninety percent of individuals, even if no other factors limited the market for insurance. This despite the fact that long-term care expenditures constitute one of the largest financial risks facing the elderly in the United States and play a central role in determining the retirement security of elderly Americans.”

LTC Comment: Good to know that Paul Ryan understands how Medicaid crowds out private LTC insurance.

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3/9/2014, “Researchers find way to predict Alzheimer's disease: report [link],” by Joel Landau, New York Daily News

Quote: “A group of scientists claims it has developed a revolutionary test that can predict if someone will develop Alzheimer's disease. The researchers told CNN they were able to find the connection through testing lipids levels in the blood. The testing found the blood test predicted who would get the degenerative brain disease that kills about half a million people a year with more than 90% accuracy — even if the patient has not exhibited any symptoms, the doctors said.”

LTC Comment: Underwriting breakthrough?

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Updated, Friday, March 21, 2014, 11:11 AM (Pacific)

Seattle—

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LTC BULLET: LTC EMBED REPORT FROM THE POLICY FRONT AT ILTCI ’14 ORLANDO

LTC Comment: ILTCI ’14 in Orlando was another fine conference with record attendance despite downbeat LTCI industry results. Details after the ***news.***

*** SPRING SPRANG YESTERDAY! ENJOY. Now, let’s go directly to today’s report. ***

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LTC BULLET: LTC EMBED REPORT FROM THE POLICY FRONT AT ILTCI ’14 ORLANDO

LTC Comment: Damon and I are just back from the 14^th Annual Intercompany Long-Term Care Insurance Conference in Orlando, Florida. Like its predecessors, this year’s meeting, with over 900 attendees including 100 presenters, was another big success. Incomparable networking opportunities, a large exhibit hall and excellent food and drink (open bars) are typical of this industry meeting. None of that would be possible without the generous support of many major supporters. Check out the Diamond, Platinum, Gold and Silver sponsors here.

We asked conference founder Jim Glickman for his highlights of the meeting. He responded:

1. The 14th Annual Intercompany LTCi Conference in Orlando, FL (co-sponsored by the LTC Section of the Society of Actuaries) had over 900 attendees, an all-time record surpassing the 855 attendees in Jacksonville, FL in 2008. [NB: the Silver Bullet of Long-Term Care was parked outside the conference venue in Jacksonville as we were well underway with the Center’s 2008 “National Long-Term Care Consciousness Tour.”]

2. As usual, the largest representation from the 10 tracks (Actuarial, Claims, Compliance, Field Marketing, Group, Home Office Marketing, Management, Operations, Policy and Providers, and Underwriting) was from Field Marketing, followed closely by Actuarial and then Management).

3. For the first time in several years, there were attendees from multiple insurance companies not currently participating in the LTCi marketplace, together with most of the larger companies, who have at least temporarily, stepped away from issuing new business.

4. Also in attendance were several reinsurers not currently in the LTCi marketplace together with several representatives of the private equity world, apparently looking for new opportunities to consider.

5. The two full days and two half days featured over 45 educational sessions, together with more than 20 hours of organized networking.

6. The Exhibit Hall featured 54 Exhibitors, displaying all the latest innovations for insurance company home offices and their agents.

Next year’s 15^th Annual ILTCI Conference will take place March 22-25, 2015 at the beautiful Broadmoor in Colorado Springs, CO. Conference organizers negotiated a $128 daily room rate!

Saturday, March 15, 2014

Pre-conference activities included Harley Gordon’s CLTC Master Class, always an important contribution to LTCI marketing and professionalism.

Following is a sampling of the conference sessions I attended.

Sunday, March 16, 2014

“Land This Plane” Report: Ron Hagelman, Roger Loomis and John O’Leary reported on the findings of a “Delphi Study” conducted by the Society of Actuaries’ Long-Term Care Think Tank. Dubbed the “Land This Plane” project, the research has been underway since January 2013. A panel of 45 experts answered and defended their responses to numerous questions about how to solve America’s long-term care financing problems. An executive summary of the project’s final support was distributed in hard copy, but you can read it now here. The final report should be out within the next couple weeks. We’ll watch for it and pass on the key findings. Here are the highlights as reported in Orlando:

* An overhaul of the LTC system is needed with private insurance involved
* Government should have a role, but without “filial responsibility” required
* Social insurance needs to be part of the solution (84% agreed)
        * Catastrophic (81%)
        * Mandatory (78%)
* Medicaid needs major reform
        * Tightening eligibility, closing loopholes (81%)
        * Modernization (86%)
                * Remove institutional bias
* NAIC regulations need revision (79%)
* Marketing and sales improvement (67%)

Monday, March 17, 2014: St. Patrick’s Day

Opening General Session: The conference’s opening session featured motivational speaker Chris Gardner whose life story was portrayed in the book and movie “Pursuit of Happyness.” Gardner’s message was that people always have a choice to make of themselves what they will. “Spiritual genetics” are more important than biological genetics. “Never let anyone tell you what you can’t do.” Just do it. His humorous, inspirational presentation was a good start for a convocation of shell-shocked, but persevering, LTC insurance experts dedicated to overcoming difficult industry challenges. More on Chris Gardner and his story here.

Feder and Warshawsky on LTC Financing Policy: Billed as “an in-depth conversation with two of the nation's most knowledgeable and thoughtful long-term care experts,” this session paired two Harvard PhDs with opposing views both of whom served on last year’s Long-Term Care Commission. (Read the LTC Commission’s final report to Congress here.) After John O’Leary’s introduction, the two policy wonks outlined very different perspectives and solutions. Mark Warshawsky, who co-chaired the LTC Commission, offered a market-based analysis emphasizing the risk that government LTC financing would crowd out family care and private insurance. Judith Feder took the position that government needs to take an even larger role in financing LTC than it does now. She proposed a sliding-scale financing approach whereby people with higher lifetime Social Security incomes would have to wait longer than people with lower earnings for government financing of their catastrophic LTC costs to begin. Presumably, private insurance might be available to cover the front-end cost, sort of like Medicare supplemental coverage. While the LTC Commission on which both served failed to reach a consensus on the key issue of LTC financing, Warshawsky’s views prevailed in the majority report. To wit, we should tighten Medicaid LTC eligibility rules, reduce the home equity exemption, and incentivize early and responsible private LTC planning. (Those ideas should sound familiar to Center members and LTC Bullets readers.)

Short-Term Planning for Long-Term Care: This session addressed the question “What can you do if you didn’t plan?” Only 14 people attended, but that was due to a mis-print in the mini-schedule used by most of the conferees which showed the program would be presented a day after it actually look place. Romeo Raabe, “The Long-Term Care Guy” from Green Bay, Wisconsin, and a Regional Representative of the Center for Long-Term Care Reform, opened the session. He observed that most agents have gotten this breathless phone call: “Remember that long-term care insurance you tried to sell me three years ago? I’m ready. How fast can you write me? What? Oh yeah. Well it was only a little stroke.” Romeo described how VA Aid and Attendance benefits can help when private LTC insurance is no longer an option. He explained and gave examples of how he uses and combines medically underwritten annuities and reverse mortgages to help people generate the extra income they need to purchase LTC services and remain in their homes. John Zwolanek, an elder law lawyer, discussed how he helps clients without using egregious Medicaid planning gimmicks. He pooh-poohed the $300-per-hour Medicaid planners who push complex gimmicks like the “reverse half a loaf.” Finally Bridgett Duber, of Elderlife Financial Services, explained her company’s bridge loan designed to help families span the financial gap between a long-term care crisis and the time when permanent financing can be secured from a reverse mortgage or other source. Elderlife Financial Services, formally known as “Granny Mae,” was founded and guided for over a decade by Elias Papasavvas, a good friend and long-time supporter of the Center for Long-Term Care. Slides for this program including Romeo’s case studies and details on Elderlife’s “financial concierge” service are here.

Tuesday, March 18, 2014

Aging and Community Redefined with an Eye Toward the Future: Beth Ludden of Genworth introduced Dr. Gretchen Alkema, Vice President for Policy and Communications at the SCAN Foundation. SCAN is 6 years old and addresses the needs of vulnerable older adults. The foundation focuses on the “macro population level, service delivery and financing,” distributing $6 million per year in grants. Dr. Alkema offered three take-home messages: the LTC financing and delivery challenges are not intractable; they involve “people not patients,” and require a strategic framework for a path forward. LTC financing boils down to “four big buckets”: (1) front end or (2) back end funding which is public (3) or private (4). My own take away from this presentation is that SCAN focuses on making LTC service delivery and financing more efficient without first understanding and fixing why long-term care became such a convoluted, dysfunctional mess. They run the risk of fine tuning a Rube Goldberg machine that may run better but still poorly. Better to get to the root of the problem first and then address causes, not only symptoms. Slides for the program are here.

Squaring the Circle: The American LTCI Program: Paul Forte, CEO of the Federal Long-Term Care Insurance Program, presented his recently published version of the proposed “American Long-Term Care Insurance Program.” Forte calls the ALTCIP “A New Public-Private Model for Financing and Delivering Long Term Services and Supports.” Check out his detailed description of the program here and his slides for the conference program here. Like the LTCI program for federal employees and qualified relatives that he runs, the ALTCIP would market directly to consumers but without sales being limited to government workers. Critiquing the Forte proposal were G. Lawrence “Larry” Atkins, Ph.D., Executive Director, Long-Term Quality Alliance and staff director of the Long-Term Care Commission and Stuart Butler, Ph.D., Distinguished Fellow and Director, Center for Policy Innovation, The Heritage Foundation. Both discussants agreed Paul’s proposal is a valuable contribution to the search for a better way to market LTC insurance, although each had his own reservations and recommendations.

Managed Medicaid: Understanding the Basics from an Industry Leader: Paula J. Tietjen, Executive Director of Long-Term Care for the United Healthcare Community Plan of Florida, described that state’s ambitious effort to implement a Medicaid managed care program for the frail and infirm elderly. See details in her slides here. Combining personal care, case management, participant direction, and rebalancing toward home care, this approach sounds comprehensive and appealing. But senior advocates worry the end result may be narrow provider networks, quality sacrifices due to cost cutting, and ultimately provider failures. Still the basic approach is sweeping the country so it bears watching closely.

The Future of the Industry: This general session, delivered to a packed auditorium, closed the conference. Its goal was to address the “elephant in the room,” the industry’s challenges, missed assumptions, dismal recent results and uncertain future.

Marc Cohen of LifePlans painted a picture of the LTCI industry’s current state. See his slides here. LIMRA’s recent review showed LTCI sales down 30% last year and minus 8% compounded for the past five years. Most industry metrics are negative but there are some bright spots, such as “combination products.” Marc opined that “we need to rethink the structure and distribution of the product, think beyond current LTC Partnership product, and do some unorthodox thinking.”

Maria Ferrante-Schepis of Maddock Douglas said LTCI may face a “Napster moment,” as when someone who doesn’t belong in your business comes in and reinvents your business. Citing Apple and Amazon as companies that Napstered several industries, she observed that some companies, such as American Airlines/Travelocity and Disney, have successfully Napstered themselves. She recommends the latter course for LTCI. “What if Mark Zuckerberg were to reinvent the insurance industry?,” she mused. Exciting queries, but no answers except to suggest we all “lean into” the “sharing economy.” See her slides here.

Tom McInerney, CEO of Genworth, observed that “we can’t continue to do what we’re doing. It doesn’t work.” He came into the LTCI business with an insurance background and a bias toward following other big carriers out of the market. But after close review he concluded LTC insurance is viable. The key is to persuade regulators to allow periodic small premium increases as occur in other lines of insurance. Everyone needs to recognize that morbidity and service delivery preferences are unpredictable decades in advance. Aging demographics, the national debt, and huge unfunded entitlement liabilities mean a government takeover of LTC financing is impossible and private insurance is necessary. See his slides here.

Wednesday, March 19, 2014

Two post-conference programs occurred this day:

Harley Gordon’s Advanced Sales & Marketing Program for CLTC Designated Professionals

“Alzheimer's Disease: the What, the How and the Hope.” This two part session included:

Understanding the Latest In Alzheimer’s Research: Every week there is something in the news about Alzheimer’s research, treatments or prevention. Join Heather Snyder, PhD, Director of Medical and Scientific Relations at the Alzheimer's Association to hear the latest in what is real and promising in the fight against Alzheimer’s. (75 minute session)

Resources and Support for All Stages of the Disease: This session explores the benefits of early detection, how to address a diagnosis of Alzheimer’s disease, stages of the disease and most importantly the various programs and services of the Alzheimer’s Association available to help individuals. Presented by Ruth Drew, Director of Family and Information Services at the Alzheimer's Association. (75 minute session)

I didn’t stay for this program but Center for Long-Term Care Reform Regional Representative Sally Leimbach reports that it was excellent.

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LINKS

Here are some links you can check out to find valuable information on long-term care providers, financiers and insurers. This is just for starters. We'll add many more as time goes on plus advice on what to look for on their sites.

www.ahca.org American Health Care Association

www.leadingage.org American Association of Homes and Services for the Aging

www.alfa.org Assisted Living Federation of America

www.nic.org National Investment Center

www.ahip.net America's Health Insurance Plans

ltcconsultants.com Phyllis Shelton's website

www.aaltci.org American Association for Long-Term Care Insurance

ltcconnection.com LTCi producers' information

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Updated, Friday, June 20, 2014, 11:12 AM (Pacific) Seattle— #############################

LTC Bullet: Demographics and Other Data: Thousand Bullets Retrospective

LTC Comment: Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 15 years of “Demographics and Other Data” Bullets. Please enjoy this retrospective after these brief messages:

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LTC BULLET: Demographics and Other Data: THOUSAND BULLETS RETROSPECTIVE

05/19/2014, “Facing closures, nursing homes seek boost to Medicaid funding,” by Erin Ailworth, Business - The Boston Globe

05/14/2014, “Do Seniors Have Too Many Medicare Plans To Choose From?,” by Phil Galewitz, The Washington Post

LTC Comment: Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 15 years of “Politics and Legislation” Bullets. Please enjoy this retrospective after the ***news.***

October 28, 2011: Remedial CLASS: “Wednesday's Congressional hearing on the brain dead CLASS program illustrates the inefficacy of seeking political solutions to the easily solvable LTC financing problem.”

Updated, Friday, June 20, 2014, 11:12 AM (Pacific)

Seattle—

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LTC Comment: Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 15 years of “Politics and Legislation” Bullets. Please enjoy this retrospective after the news.