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

READ STEVE'S BIO

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

Seattle—

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LTC E-ALERT #21-040: LTC NEWS AND COMMENT

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

LTC Clippings: The Center for Long-Term Care Reform notifies subscribers to our LTC Clippings service daily of information you need to know. Each message contains only the critical facts about new publications: a title, representative quote, a link to the original, and our analysis in a sentence or two. To inquire or subscribe, contact Steve at 425-891-3640 or smoses@centerltc.com. Read testimonials by satisfied subscribers here. To subscribe online, please click here.

LTC E-Alerts: Once a week, we compile our daily LTC Clippings into a summary, email it to Center for Long-Term Care Reform members, and archive it in The Zone, our password-protected members-only website. Center members also receive our weekly LTC Bullet op-ed. To join the Center and receive all these benefits and more, contact Steve at 425-891-3640 or smoses@centerltc.com.

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

US announces big hike in Medicare premiums
A list of trouble for Washington state’s long-term-care law
Repeated listening to favorite music induces beneficial brain plasticity in Alzheimer’s patients
Opinion | ‘We Don’t Fix This Because We Just Don’t Care About Old People’
Medicare Advantage's cost to taxpayers has soared in recent years, research finds
No cognitive gains from ‘brain gaming’ found in studies of older adults with dementia
Class action lawsuit filed against new WA long-term care tax
Long Term Care Industry Facing Worst Job Loss Among All Health Care Providers
More than 2,000 nursing homes earn top U.S. News ratings
Pandemic Takes Its Toll On Caregivers
How to Restructure Your Assets to Qualify for Medicaid

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

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Updated, Friday, November 12, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: AMADA KEYNOTE

LTC Comment: Amada is a model for home care delivery and financing from which Medicaid should learn. Details follow the ***news.***

*** WA CARES FUND problems dominate the news as these three recent LTC Clippings indicate:

11/1/2021, “Leaders are saying — and writing — the magic word in regard to a misguided long-term-care law: ‘repeal’,” by Elizabeth Hovde, Washington Policy Center
Quote: “Momentum is building to repeal the Legislature’s unpopular long-term-care law and accompanying payroll tax that starts in January. A Nov. 1 press release announces that Reps. Joe Schmick, R-Colfax, and Peter Abbarno, R-Centralia, have drafted legislation to repeal the law, a Washington Policy Center recommendation, calling the long-term-care program it creates ‘unfair,’ ‘inadequate’ and ‘insolvent,’ and rightly pointing out that the payroll tax is ‘regressive.’ The draft legislation has the support of House Republicans.”
LTC Comment: Given that Washington voters have twice rejected the WA Cares Fund, this legislation to repeal it has a good chance to succeed.

11/1/2021, “Initiative could change Washington's controversial long-term care fund,” by Drew Mikkelsen, King 5

Quote: “Backers of an initiative to change the state’s new long-term care fund, called the WA Cares Fund, said they are not having trouble getting signatures. ‘Just say we're trying to make the long-term care tax optional. That's all you have to say is that one sentence and they go, ‘Where do I sign?'‘ said Cary Condotta, co-founder of Reform Washington, the organization behind I-1436. … If enough signatures are turned in by the end of the year for the initiative to reach the Legislature, lawmakers would have three options: make the program optional, send the issue to the voters next November, or offer an alternative to the initiative to voters.”

LTC Comment: Freedom to choose? Naw, can’t have that, say Washington State legislators.

11/9/2021, “Class action lawsuit filed against new WA long-term care tax,” by Rachel La Corte, Associated Press
Quote: “Opponents of a mandatory payroll tax to fund Washington state’s new long-term care program filed a class action lawsuit Tuesday in federal court seeking to stop the January start of the payroll premium for most employees in the state. … Among the arguments made by the suit is that the WA Cares Fund violates a federal law that forbids the state from passing any law that requires employees to participate in a plan that provides sickness or medical benefits. It also says that the disparate treatment of people paying the tax but not receiving benefits if they are not a Washington resident violates the Equal Protection and the Privileges and Immunities clauses of the U.S. Constitution.”
LTC Comment: Latest on the WA boondoggle. ***

*** LTC CLIPPINGS are a benefit received my premium members ($250 per year) of the Center for Long-Term Care Reform. Center president Stephen Moses scans the academic and popular media for critical studies, articles and data LTC professionals need to know. He sends an average of two brief email messages per day (like the ones above) to subscribers. Regular Center members ($150 per year) receive a weekly LTC E-Alert compendium of the previous week’s LTC Clippings. Both options provide members a way to stay on top of critical news and information so they are not blindsided by clients who have important knowledge before they do. Join the Center here. ***

LTC BULLET: AMADA KEYNOTE

LTC Comment: Amada Senior Care provides home care through franchisees. CEO Tafa Jefferson reports that over half the company’s clients own private long-term care insurance. Amada seeks out LTCI owners to become clients and then assists them to obtain all the benefits they’re entitled to under their policies. When more funding is needed, Amada helps customers explore home equity conversion and/or life settlements. If only Medicaid thought more creatively about diverting consumers away from dependency on public assistance.

Center for Long-Term Care Reform president Stephen Moses delivered the keynote address to Amada’s annual franchisees’ conference in Dana Point, California on October 27. After celebrating the company’s creative approach to private home care financing, he delivered the following remarks.

Amada Keynote Address
by
Stephen A. Moses

Most high-cost long-term custodial care is funded by Medicaid and is still delivered primarily in nursing homes. Quality is problematical because Medicaid often pays less than the cost of providing the care. When you’re losing money on every patient, you can’t make up for it in volume. But it seems like that’s exactly what many politicians want to attempt.

Most people prefer to “age in place.” I expect one of your biggest challenges is to find people to provide home care. Paid caregivers are in short supply. The pandemic made the shortage critical. But, what’s the problem?

It’s a steady job; lots of overtime; you’re doing God’s work. On the other hand, caregivers work long hours, move heavy objects and clean up smelly messes--for fast-food wages. Who wants to stay home and watch Netflix when you could be changing bedpans and turning patients?

You’re in this whirlwind business of coordinating and providing long-term care in the home. So I expect you often feel more like contestants in the Squid Game.

My Background

I attend a lot of big long-term care conferences. The keynoters are usually mountain climbers, motorcycle CEOs, or they come from some other exotic background. I congratulate you on picking someone with many years of work experience in long-term care.

I’ve been working in this field for about forty years. Let me tell you a little bit about that journey to establish my bona fides and give you a little background on the history of long-term care insurance and how its prospects have been affected by government policies.

I first got involved in 1982 as a U.S. government employee working in the Seattle regional office of the Health Care Financing Administration, the now defunct predecessor of the Centers for Medicare and Medicaid Services.

I did research about Medicaid and long-term care in the states of Oregon and Idaho. I concluded Medicaid was doing more harm than good and that it was stifling the market for a then new and promising product called long-term care insurance.

My HCFA bosses didn’t like that conclusion. They thought regional office staff shouldn’t be doing policy studies, so they threatened me with negative personnel actions if I kept distributing my report.

But it was too late. The HHS Inspector General and the Government Accountability Office liked what I’d written and both agencies went on to conduct similar studies on a national level.

In fact, the Inspector General hired me out of HCFA to conduct its national study based on my findings in Region 10. Recommendations from the IG’s resulting 1988 report became federal law in the Omnibus Budget Reconciliation Act of 1993.

Those changes included longer and stronger transfer of assets restrictions for Medicaid eligibility and mandatory estate recovery. The idea was to aim Medicaid toward the truly needy so others would have a stronger incentive to plan ahead and insure for long-term care.

In the meantime, a small long-term care insurance brokerage in Seattle called LTC, Inc. had just received a big contract from American Express to take its local marketing strategy national. They hired me as their Director of Research in 1989.

I published a lot of articles, conducted several state and national studies many of which are linked on your electronic handout, and gave numerous speeches, but in 1995 General Electric bought American Express’s long-term care business. A couple years later GE also bought LTC, Inc.

Suddenly I was working for a giant international company which put the same kinds of restraints on me that I left government to escape. To do the kind of disruptive research and advocacy I’d become known for, I could not be under the thumb of corporate overlords worried I might say something to the media that could embarrass them.

So, I told GE: “You need me doing what I do, but I can’t do it working for you. So give me the money to start an independent think tank and I’ll pursue research and advocacy that will help you market your product. After all, you can’t sell long-term care insurance on one side of the street when the government is giving it away on the other.”

So I founded the Center for Long-Term Care Financing as a 501c3 charitable non-profit in 1998, but I quickly learned I couldn’t afford to be a non-profit. It was too expensive to keep all those records and too bothersome to maintain a Board of Directors that always wanted to tell me what to do. So the Center became a for-profit, more accurately a no-profit, in 2005.

In that same year, we had another opportunity to impact federal law. The American Health Care Association, the big nursing home lobby, hired me to work half time in DC promoting policies that would return Medicaid to the needy and incentivize others to save, invest and insure so they could pay privately for long-term care. Seattle to DC was a long commute, but that’s what I did for six months, two weeks on and two weeks off.

We succeeded. The Deficit Reduction Act of 2005, actually passed in 2006 when Vice President Cheney flew in from overseas to break a tie in the Senate. It put the first cap ever on Medicaid’s home equity exemption and unleashed the long-term care partnership program that California Congressman Henry Waxman had hamstrung years before.

These were important steps in the right direction, but they didn’t solve the problem. Most Americans still ignored the risk and cost of long-term care until they needed it and then slipped quickly and easily onto Medicaid. So we turned our efforts to waking the public up.

In December 2007, I teamed up with some industry sponsors, bought a silver FJ cruiser and a 16-foot Airstream trailer, plastered it with corporate decals and headed out on a 16-month “National Long-Term Care Consciousness Tour.” I did a lot of radio, TV and print interviews, trained insurance agents, gave speeches to community groups and, really, addressed anyone who would listen about the importance of long-term care planning.

When the Silver Bullet of Long-Term Care and I visited Met-Life’s Connecticut headquarters, they greeted me with this video. Would you play it please Rick? [Play video.]

I guess you could call me the Nomadlander of long-term care.

Then in March of 2009, my wife of 45 years, was stricken with a glioblastoma. That’s an aggressive form of primary brain cancer, the same disease that took Ted Kennedy and John McCain. Suddenly, I went from speaking about long-term care in the abstract to delivering it in the most concrete ways for the next 20 months.

That experience, along with guiding my own and my late wife’s parents through the shoals of aging and long-term care, sensitized me intimately to what we’re all dealing with in this issue.

In the past 16 years we’ve made little further progress toward getting people to take the risk and cost of long-term care seriously and early enough to prepare for it. The number of carriers offering the product has declined from over 100 to about a dozen.

In fact politicians and policy analysts have drifted toward a very different model. They want to fund long-term care with compulsory social insurance funded with payroll deductions that go into a “trust fund” like Social Security and Medicare. I’m afraid that would be like trying to extinguish a fire by dousing it with gasoline.

So here’s the big picture: long-term care is a huge risk and cost yet most people don’t worry about it until they need it. Then, because they have not prepared financially, they drift toward public programs that mostly provide institutional care and pay too little to ensure quality.

America and Americans are prosperous, especially now that the Federal Reserve has printed so much new money. Yet very little of that money finds its way into funding the kind of home-based long-term care people prefer.

Puzzling Questions

Does all this seem a little incongruous to you? It does to me. It raises several questions in my mind:

(1) All the studies show that the vast majority of Americans prefer to age in place, at home not in nursing homes or assisted living facilities. And yet, our long-term care system remains institutionally biased. Why?

(2) When they’re spending their own money, consumers gravitate toward home and community-based care. So …

Why do so many people rely today on underfunded public programs and so few pay privately?

Why has private-pay declined to 7.1% of nursing home revenue (5.9% in urban areas)?

Why are assisted living facilities accepting more Medicaid residents despite that program’s extremely low reimbursement rates?

Why are out-of-pocket expenditures only 11% of home health costs?

(3) If the risk and cost of catastrophic long-term care spend down is wiping out life savings all across the country, as the academic journals and popular media are constantly telling us, why is the public still asleep about that risk and cost? Why is private long-term care insurance so hard to market?

(4) We know Medicaid is a means-tested public welfare program with apparently stringent income and asset eligibility limits. So, how is it that once people need expensive long-term care, they quickly become eligible for Medicaid?

(5) America is awash in wealth. According to Federal Reserve data, the median net worth for Americans in their late 60s and early 70s is $266,400. Seniors hold over $9 trillion in home equity alone. Why are huge potential sources of private LTC financing, such as home equity and private insurance, only minor contributors to long-term care providers’ revenue? (Present company excepted with regard to the insurance.)

Those are the thorny questions I propose to answer for you this morning.

But, I have my work cut out for me: First I want to persuade you that a lot of what you know about long-term care policy is wrong. Then I need to convince you that what I’m going to explain is actually correct.

Mark Twain said it best: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

My Story

The best way I know to explain these things is to tell you the story of how I learned them.

In the early 1980s, I was the Medicaid state representative for Oregon in the Health Care Financing Administration.

My job was to ensure that Oregon’s Medicaid program complied with federal rules and regulations. I led an annual program assessment to ensure that was the case.

During one of those assessments, I came across a program that puzzled me. Oregon’s estate recovery unit was collecting enough from deceased recipients’ estates to offset 1.7 percent of total Medicaid vendor payments and five percent of the cost of the state’s Medicaid nursing home expenditures. $3.8 million was still a lot of money in 1981.

Remember, back then, Medicaid was all nursing home care. I actually helped Oregon’s Senior Services Division implement the first Medicaid home and community-services waiver program in the country. That’s where the decades-long campaign of rebalancing Medicaid long-term care from nursing homes to home care began.

Now, here’s the quandary that jumped out at me. If Medicaid is welfare and you have to be poor to get it, how did so many people spend so much time in Oregon’s nursing homes on Medicaid, but the state still collected all that money from their estates?

This contradicted everything I thought I knew about Medicaid. Back then, as now, the conventional wisdom about long-term care and Medicaid went something like this.

“The risk and cost of long-term care is huge. People are spending down into impoverishment all across the country if they need extended care. When they run out of money, they turn to the Medicaid safety net. But Medicaid pays mostly for nursing home care, which people don’t want. They want home care, but too few can afford it. Private long-term care insurance could have helped finance home care, but it failed because it’s too expensive and complicated. The public remains largely ignorant or in denial about who pays for long-term care. So government keeps picking up more and more of the tab. Therefore, most conclude, government should pick up the whole tab.”

Does that about sum it up?

This peculiar state of affairs sent me to the library to study Medicaid eligibility rules and the long-term care financing market. What I found blew me away.

Medicaid does appear to have stringent income and asset limits, but that’s an illusion. The apparent income limit of $730 per month is obviated by the fact that Medicaid subtracts applicants’ personal health and long-term care expenses from their income before comparing the result to that low income limit.

The rule of thumb nationally is that anyone (well, anyone 65 or older with a qualifying medical need) with an income of less than the monthly cost of a nursing home qualifies for Medicaid. That can easily be $7,000 per month or $84,000 per year. Definitely not “low income.”

The truth about Medicaid long-term care income eligibility is that people do not need to be low income to qualify. They only need to have a cash-flow problem due to high personal health and long-term care expenditures. That is a condition most older people find themselves in once they need expensive long-term care.

Medicaid’s eligibility rules governing assets are similarly misleading. The academic and popular literature focus on the seemingly draconian resource limit of $2,000 and conclude people must be spending down huge amounts of wealth to qualify. But that $2,000 limit only applies to “countable” assets like cash, bank deposits, stocks and bonds, in fact anything easily convertible to cash.

But older Americans hold most of their wealth in assets that Medicaid considers “non-countable,” including home equity. Medicaid exempts between $603,000 and $906,000 of home equity depending on the state. According to recent research, that exemption prevents virtually all elderly Americans from having to use their home equity to fund their long-term care.

Besides the home equity exemption, which at least has an upper limit, Medicaid also exempts the following with no dollar limit: one automobile, prepaid burial plans, personal belongings including heirlooms, term life insurance, one business including the capital and cash flow, and Individual Retirement Accounts if they’re in payout status as most are for older people because of the Required Minimum Distribution rules.

The quickest and easiest way to become eligible for Medicaid long-term care benefits without spending down for care is to convert countable assets into exempt resources by purchasing the latter with the former. The lawyers who help affluent clients qualify for Medicaid benefits maintain long lists of exempt assets which they encourage the clients to purchase.

Medicaid planning attorneys also have a well-stocked armory of special legal trusts, annuities and so-called “half-a-loaf” strategies they use to qualify even wealthier clients for Medicaid.

I expect you’ve heard about this kind of “Medicaid planning” and scratched your heads. Who in their right mind with the wealth to purchase quality long-term care in the best and most appropriate venue would choose instead to “game” Medicaid and end up in the kind of underfunded welfare-financed facility you read about in the newspapers. That’s an objection I hear often.

But there are reasons why this happens. By the time elderly people need long-term care, they are often too infirm physically or cognitively to make their own decisions. Their adult children, that is to say their heirs, who have a financial conflict of interest, are in control. What is not spent on Mom and Dad’s long-term care will go to the heirs.

Nevertheless, most adult children do have their parents’ best interests top of mind. But the lawyers who advise them say not to worry about Medicaid’s poor reputation. They’ll get Mom and Dad into the best facilities that only have a few Medicaid beds.

How do they do that? They hold back some “key money” to ensure the client can pay privately for a few months. Nursing homes receive about half again as much from private payers as from Medicaid recipients, so they roll out the red carpet for people who can pay cash. After a few months, the family’s lawyer flips the legal switch and, voila, Medicaid takes over paying.

The sad truth about Medicaid planning is that poor people, for whom Medicaid is supposed to be a safety net, get wiped out financially very quickly because they don’t know the tricks of qualifying for Medicaid and don’t have access to special legal advice. So they end up in the least desirable nursing homes that rely mostly on Medicaid’s penurious reimbursement rates.

Answer the Questions

Let’s answer the questions we posed earlier:

1. Why do most people prefer home care but end up in nursing homes? Medicaid started paying for nursing home care, including room, board, medical care and laundry facilities, in 1965. Ostensibly stringent financial eligibility rules are actually very generous and elastic. Stories of catastrophic long-term care spend down are just anecdotal. There is no empirical evidence to prove that problem is widespread. So analysts cite none. No wonder people don’t worry about long-term care until they need it.

2. Why has private pay nearly disappeared from nursing home revenue? Why are assisted living facilities tempted to accept Medicaid? Why is so little home health care funded privately? Because government co-opted long-term care financing with well-intentioned but perversely counterproductive policies.

3. Why is the public still asleep about long-term care risk and cost? Why is long-term care insurance so hard to sell? Because consumers have been able to ignore the risk, avoid the premiums, wait to see if they ever need extended care, and if they do, get the government to pay. As undesirable as the care government pays for may be, at the point of facing catastrophic costs, it’s not hard for the elderly, and their heirs to justify qualifying for Medicaid. Any port in a storm.

4. How do so many financially comfortable people become eligible for Medicaid so quickly and without spending down significantly? Medicaid’s financial eligibility rules devastate the poor who lose everything quickly but welcome the middle class and affluent who have legal and financial advisers to guide them.

5. Why does the richest country in the world not tap the two biggest potential sources of private long-term care financing? Medicaid exempts nearly all home equity. Without their biggest asset at risk for long-term care, few people buy insurance to protect it.

What Can We Do?

What can we do to fix this ailing long-term care market?

What are policy analysts and the politicians who listen to them doing about this? Not much. They never ask “how did we get into this mess?” so they never discover that government funding and regulation are the primary causes. They just recount all of the dysfunctions afflicting long-term care and insist we need a bigger, better, compulsory, payroll-funded social insurance program. If their models, to wit Social Security and Medicare, were not under water by trillions of dollars in unfunded liabilities already, maybe they’d have a case to make. As it is, programs like the Washington Cares Fund and the federal WISH Act proposal only make you want to say “Oh no, here we go again.” I’ve analyzed those programs in articles cited in your handout. Ironically, the WA Cares Fund ignited a long-term care insurance fire sale by offering an exemption from its otherwise mandatory payroll tax for people who can show proof they have private long-term care insurance by November 1. The resulting demand for the product overwhelmed the insurance industry’s ability to meet it. The market shut down before the hundreds of thousands of people who wanted the exemption could qualify for it by purchasing a private policy. I have a column coming out in Broker World next week titled “LTCIrony.” [Publication of this article was delayed until Broker World’s December issue.]

What are LTC insurance carriers doing about these policy issues? Not much. The carriers have been very creative modifying their policies to deal with common objections. The newer “hybrid” policies, for example, counter the “what if I don’t need it” complaint, by returning a payment whether beneficiaries need long-term care or not. But there’s not much they can do about the “too expensive” objection. Fire insurance wouldn’t be cheap either if every fourth house burned down. With regard to the issues we’ve identified today as inhibiting the long-term care insurance market, the carriers and their industry groups have been mostly silent. Either they don’t get it or they’re too scared to offend the powers that be. I’ve made the case to them that they should support me and the Center for Long-Term Care Reform. We can say what needs to be said and advocate for the policies that are needed. And we’re not required to disclose our contributors, nor do we do so.

What are the long-term care providers and their trade associations doing about this? Again, not much. Their principle revenue sources are Medicaid and Medicare. Virtually all of their lobbying effort goes into asking for more money from those sources. It’s hard to think about the big picture and the need for major public policy changes when you’re struggling to keep the doors open for another month. I think the most promising source of support for better long-term care policies is companies like yours that would benefit tremendously from more private payers and less public funding.

What am I doing about this? I figure it’s really very simple actually. We want people to take the risk of long-term care seriously and buy insurance in case they ever require a long, expensive bout of care. So, the government should stop giving away what the insurance industry is trying to sell. Require people to use their home equity, through reverse mortgages or other methods, to fund their long-term care before they turn to public safety net programs.

Give the safety net programs back to the poor whom they were originally intended to serve. Do this and huge new revenue will flow into the service delivery system, most people will get the kind, quality, and type of care they prefer by paying privately; Medicaid will serve fewer, cost much less, and people still dependent on public assistance will also get better care because of the increased private revenue going to providers.

What’s Standing in Our Way?

I mentioned earlier that we made great progress changing federal law in 1993 and 2005, but we’ve made little or no progress in the last 16 years since. Why? What’s changed?

In the 1990s and early 2000s, politicians still cared about fiscal responsibility. Remember the “Contract With America” in 1994 and the worries about excessive spending and skyrocketing debt that ensued when the dot-com bubble burst?

Back then, we were able to get the powers that be to listen about ways to reduce government long-term care expenditures while simultaneously improving care for rich and poor alike. That’s our mission after all.

But nowadays no one seems to care about excessive government spending. The Federal Reserve just prints more money to cover whatever the U.S. government wants to spend.

It’s as though our public officials are guided by Modern Monetary Theory. It says that a country borrowing in its own currency can accumulate unlimited debt without creating a problem unless or until inflation flares.

Well, in case you haven’t noticed, inflation is finally flaring. So the Fed’s monetary policy of meeting every financial crisis—including the dot-com collapse, the 2008 housing bust, and the Covid recession—with more money printing, spending and debt may be slowly ending.

Ironically, while the politicians want us to believe that their big spending plans will be paid for by the wealthy, the truth is that inflation, the most pernicious tax of all, which hits low income people hardest, will be the price we pay for decades of careless monetary and fiscal policy.

The only silver lining in that cloud is that once inflation forces policy makers to refocus on responsible public policies that keep spending under control and incentivize personal responsibility, saving and private insurance, perhaps then our proposals regarding Medicaid and long-term care will have a better chance to succeed.

Want to Learn More?

Now, I think I know what’s on the tips of your tongues right now. Tell me Steve, how can we learn more about all this? If that is the case ….

I would refer you to two of my recent publications. Both are monographs. The first is titled “How to Fix Long-Term Care Financing.” It presents the material I’ve covered today, but it also includes a long annotated bibliography of books, elder law treatises and law journal articles on Medicaid planning. I think you’ll be amazed how vast and sophisticated that literature is.

The other monograph is titled “Medicaid and Long-Term Care.” It presents my argument and evidence in a more formal, scholarly way with abundant citations to the peer-reviewed academic literature on long-term care to make and substantiate my points.

Finally, you can find over 1300 of my articles, we call them “LTC Bullets” archived chronologically and by topic at the Center’s website, www.centerltc.com.

The Center is a membership organization, so please consider joining and working with us to achieve these goals. Amada is a member in good standing.

I think I’ll stop there. Thank you for your attention. I will be around the rest of the day and this evening. If you have any questions, please find me and ask them.

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

Seattle—

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LTC E-ALERT #21-039: LTC NEWS AND COMMENT

Resourceless vaccine rule could have ‘disastrous’ impact on long-term care
Genworth Might Resume Long-Term Care Insurance Sales by July
Democrats reach a breakthrough deal on drug prices, as spending bill nears the finish line
Many Now Use Life-LTC Hybrids to Pay for Care: Genworth
Leaders are saying — and writing — the magic word in regard to a misguided long-term-care law: ‘repeal’
Initiative could change Washington's controversial long-term care fund
Family feels less guilt when loved one moves to assisted living versus nursing home: study
Caregiving becoming more complex, consuming for family members, surveys reveal
State lawmakers look at long-term care program as criticism builds
Middle Class U.S. Households Have Few Financial Assets
Pandemic reshaping Medicaid programs

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

Seattle—

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LTC E-ALERT #21-038: LTC NEWS AND COMMENT

Redesigning The Washington Cares Act
Answers to your questions on the new Washington Cares Fund and the long-term care payroll tax
Long-Term Care Insurers May Have to Keep Their Policies: Regulators
Caregiving Caused Me to Divorce My Siblings
Confronting Ageism in Health Care: A Conversation for Patients, Caregivers and Clinicians
Policymakers see retraining older Americans as key to combating labor shortage
What’s better for senior living and care — the market or government?
3 States Limit Nursing Home Profits in Bid to Improve Care
SNF staffing shortages may get ‘much worse’

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Updated, Friday, October 29, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THREE NEW ARTICLES

LTC Comment: With Halloween approaching, here are some scary stories about long-term care. Synopses after the ***news.***

*** AMADA SENIOR CARE Annual Franchise Conference 2021. Stephen Moses delivered the keynote address for this event at the beautiful Marriott Laguna Cliffs Resort in Dana Point, CA on October 27. He congratulated the home care company’s stunning success. Over half its customers have private long-term care insurance. Amada prides itself in helping its LTCI beneficiaries obtain all the benefits they have coming to them under their insurance policies, cutting through red tape that sometimes inhibits the process. Steve assessed the state of long-term care financing in the USA and suggested how the country could move successfully from its remaining institutional bias toward a mostly privately financed system dominated by home and community-based care. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses.

In addition to the columns listed below, Steve has another article accepted for publication soon.

“LTC Irony” scheduled for the November issue of Broker World.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

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

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

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

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

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

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

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

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

LTC BULLET: THREE NEW ARTICLES

LTC Comment: Magazines want exclusives on everything they publish. So I can’t share my three latest columns with you in full. But I do have permission to convey the essence of the articles and some short quotes. Please read the articles in their entirety at the sources.

McKnight’s Long-Term Care News published “Long-term care’s problems are bad, getting worse, but fixable” on October 1, 2021. In it I explained what ails long-term care service delivery. I asked: “What do all of the analysts’, politicians’, and bureaucrats’ proposed solutions have in common?” I answered: “They propose more government funding and regulation, usually in the form of a new compulsory, social insurance program for long-term care.” I pointed to the WA Cares Fund and the WISH Act as examples of these dangerous approaches seeking to build on the shaky fiscal foundation of Social Security and Medicare. I explained how and why government funding and regulation caused long-term care’s problems by making Medicaid easy to get after care is needed. I concluded with these questions: “Who dares raise the call to close Medicaid LTC eligibility loopholes, make home equity a giant new source of private LTC financing, strengthen estate recovery rules to recapture wealth lost to Medicaid exemptions and persuade more people to plan early to save, invest or insure so they can pay privately for long-term care when they need it? Will you?”

Broker World has scheduled “LTC Irony” for publication in its November issue. In it I point out the irony that decades of warning us “If you don’t buy long-term care insurance you could lose your life’s savings” had little impact on expanding the market. But let Washington State government impose a compulsory payroll tax on personal income unless citizens have private LTC coverage by November 1, and voila. A sudden fire sale ensued that shut down the market with excess demand. I conclude: “The lesson for state and federal central planners is this: if you must force people into mandatory payroll-funded LTC programs of dubious solvency, at least give them a way out by purchasing private insurance so we have some consumers able to pay their own way if and when the bottom falls out of the country’s many fiscally challenged entitlement programs.” Finally we’ve found the secret to selling private long-term care insurance: make it the only way to escape more government taxes, rules, regulations, and interference.

McKnight’s Senior Living published “What’s better for senior living? The market or government?” on October 25, 2021. In it I compare and contrast the basic principles underlying markets on the one hand and government on the other. For example: “In markets, millions of transactions between willing buyers and sellers create spontaneous economic order, set interest rates (the price of money) through supply and demand, and generate price data which tell investors and businesses how much of which products and services to produce. In government, the Federal Reserve sets interest rates based on balancing political powers and influence resulting in asset bubbles, mal-investment, and economic inequality.” In the article, I ask and answer “How has government impacted senior living?” and “How could a more market-oriented approach improve senior living?” I conclude “Applying the general principles of markets and government identified above to the practical challenges of senior living and long-term care points to only one conclusion. We need to rely more on markets and less on government to improve both.”

Happy reading!

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

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LTC E-ALERT #21-037: LTC NEWS AND COMMENT

So far, more than 200,000 apply for exemption from the state’s long-term-care fund
Milliman Report Shows $32.5B Value in Medicare Advantage
New federal funds spur expansion of home care services for the elderly and disabled
Are You Ready to Move Your Aging Parent Into Your Home?
My Perfect World
For most seniors, there’s no place like home
The Troubling Trend of ‘Gray Sheeting’ Life Insurance Policies
Covid-19 breakthrough deaths most common among older Americans, data shows
‘Fairly large contingent’ of National Guard will alleviate ‘healthcare backups’ at long-term care facilities
How a long-term care operator used immigrant program to overcome chronic staff shortages

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Updated, Monday, October 18, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-036: LTC NEWS AND COMMENT

Long-term care planning, retirement savings suffered during pandemic: study
My incredible shrinking lifespan
Most post-acute Medicare recipients with dementia sent to SNFs despite payment changes: study
Nursing home residents may have better CPR outcomes than their community-dwelling peers: study
Alzheimer’s villages could be the answer to the rising cases—and cost—of dementia
Poorly controlled diabetes — not diabetes itself — triples dementia risk, study finds
Washington state receives 95,000 exemption applications to new long-term care benefit in first week
Parkinson: COVID-19 May Be An ‘Endemic Problem’ For Nursing Homes Moving Forward
Nursing Facilities Need to Weather the ‘Reimbursement Storm’ of Medicare Advantage
Medicaid's safety net for pregnant women
State Senator: Only Gov. Inslee ‘has the power’ to pause Washington’s long-term care tax

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Updated, Friday, October 15, 2021, 10:40 AM (Pacific)

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LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: What would a bare-bones outline of the long-term care problem and its solution look like? Read on after the ***news.***

*** LTC DISCUSSION GROUP has launched their new and improved website. Browse it, find presentation materials from prior sessions, get added to their mailing list, submit questions or topic ideas for future sessions, or heaven forfend, even unsubscribe from future “Save the Date” notifications. Check the Group’s new You Tube channel for presentation videos starting with the September 2021 meeting that we highlighted in LTC Bullet: LTC Prevention is Better than Cure. Save the date for the LTC Discussion Group’s October 19^th meeting on “Direct Care Workforce.” ***

*** AMADA SENIOR CARE has retained Stephen Moses to deliver the keynote address at their annual franchise conference in Dana Point, CA on October 27. Amada is a home care provider that specializes in helping people get everything they’re entitled to from their long-term care insurance policies. The company also joins the Center for Long-Term Care Reform as a Bronze Member for the coming year. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses:

In addition to the columns listed below, Steve has another article accepted for publication soon and a second out for query. Watch for them.

“LTC Irony” scheduled for the November issue of Broker World.

“What’s better for senior living? The market or government?”

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

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

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

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

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

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

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

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

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

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

LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: Long-term care financing is complicated. Most analysts bewail long-term care’s problems—excessive dependency on family caregiving, institutional bias, caregiver shortages, inadequate funding, etc.—and then, without analyzing or explaining why these problems exist, they reflexively prescribe more government financing and regulation. Ironically, they recommend more of what arguably caused the problems in the first place.

The explanation of why long-term care is so dysfunctional requires complex research, analysis, evidence, and reasoning. Our monographs, Medicaid and Long-Term Care and How to Fix Long-Term Care Financing, provide that. But they contain too much data and analysis to absorb all at once. So below, for brevity and clarity, I present only the basic argument. It leads in a very different direction than the anti-democratic, compulsory, payroll-funded social insurance plans (like WA Cares Fund and the federal WISH Act) on which so many analysts and advocates have come to agree.

A Framework for Thinking about Medicaid and Long-Term Care
by
Stephen A. Moses

The big picture: About 70% of people will require assistance with activities of daily living due to age. But only 25% are likely to experience expenses that are potentially catastrophic.

The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. A one in four chance of a catastrophic loss is an insurable risk.

So private insurance against long-term care risk should be a promising market. That is why over 100 companies sold the product at one time. But only a dozen still do. Why?

People only buy insurance against real risk from which they can see the dire consequences of being unprotected. That condition does not exist with long-term care. Why?

Most catastrophic long-term care costs are paid for by Medicaid, Medicare, the VA, and other smaller public programs.

Add “spend-through” of Social Security and other income Medicaid recipients must contribute toward their care and we account for 90% of total LTC costs without touching any savings.

But don’t people have to spend down their wealth before they become eligible for Medicaid? That is the conventional wisdom in most academic and popular articles but it is untrue.

To qualify for Medicaid people do need to meet ostensibly low income ($723/month) and asset ($2,000) limits. But those limits are misleading because …

Medicaid subtracts private medical and long-term care costs from income before determining eligibility. Rule of thumb: income below the cost of a nursing home, say $7K/month, qualifies.

Most large assets are exempt including $603K to $906K of home equity plus without a $ limit one vehicle, burial expenses, personal belongings, a business, term life insurance, IRAs, etc.

Non-exempt assets are easily converted to exempt status. Medicaid eligibility workers routinely advise applicants how to use countable assets to purchase exempt resources in order to qualify.

Beyond these already generous financial criteria, Medicaid planning attorneys qualify much wealthier people for Medicaid LTC using special trusts, annuities, and half-a-loaf strategies.

If most people aren’t at risk for catastrophic long-term care expenses, it makes sense that they are not sufficiently concerned about them to plan ahead, much less buy expensive insurance.

Yet, even experts still believe that all we need to do is educate the public about long-term care and they’ll take it seriously. But telling people they’re at risk when they’re not doesn’t work.

Consumers have been barraged for decades with warnings from government and the media about potentially catastrophic long-term care spend down. They still ignore the risk. Why?

Most people don’t know and don’t care who pays for long-term care. Many think incorrectly that Medicare pays. It doesn’t, but as explained above Medicaid does.

Medicaid enables denial about long-term care risk by paying for most expensive long-term care after the care is needed and long after the risk has become privately uninsurable.

It works like this. The public does not see large numbers of people being wiped out financially by long-term care. Why?

There is no empirical evidence that this actually occurs. That’s why the academic literature on this topic never cites hard evidence. There is none.

How can that be? As previously explained, the vast majority of catastrophic long-term care expenses are paid by sources other than personal wealth, mostly government programs.

So here’s the anomaly and the explanation. People don’t know who pays for long-term care, but they ignore the strident warnings about catastrophic spend down anyway, because …

They are not confronted with evidence that it actually happens, so they casually ignore the risk until they need expensive long-term care and when they do they slide easily onto Medicaid.

But don’t middle class and affluent people want to avoid Medicaid, which has such a poor reputation for nursing home bias and deficient quality? Two points:

Once care is needed the senior is usually out of the picture due to physical or mental incapacity. So, adult children, who are heirs with a financial conflict of interest, are making the decisions.

Second, Medicaid planners advise affluent clients not to worry about Medicaid’s poor reputation. They promise access to the best facilities that have only a few Medicaid beds. How?

The trick is to hold back enough “key money” to get those facilities to roll out the red carpet. Nursing facilities receive half again as much from private payers as from Medicaid.

So anyone who can pay privately for a while is welcomed into the nicest places. The tragedy is that poor people dependent on Medicaid end up in the nastier nursing homes.

What should be done?

They key to fixing what ails long-term care in the USA is to wake up consumers to the real risk and cost while they are still young, healthy and affluent enough to plan, save, invest or insure.

To do that, Medicaid must stop exempting seniors’ biggest asset, the home, so that aging Americans and their heirs know long-term care is a real risk for which they need to prepare.

With home equity finally at risk for the first time, more people will worry about long-term care and insure against the risk.

But those who don’t insure will have to tap home equity by means of a reverse mortgage or some other form of commercial or intra-family home equity conversion.

As more people have to use home equity, more will want to avoid that result by insuring, thus creating a positive incentive to insure and replacing the current perverse incentive to go without.

Over a very few years huge new private revenues from home equity conversion and private long-term care insurance will flow into home care, assisted living and nursing home providers.

The new private revenue at much higher market rates than Medicaid or Medicare pay will improve access and quality across the whole continuum of care for rich and poor alike.

What prevents this solution from being implemented? The main obstacle is political sensitivity. People have a visceral attachment to their homes.

Politicians benefit by providing “free” goods and services in exchange for votes. Removing or vastly limiting Medicaid’s home equity exemption is not politically feasible … yet

What is important now is to be ready with the right analysis and proposals when the political calculation changes as the result of a major economic collapse coming in the 2030s. Why then?

Social Security’s “trust fund” runs dry in 2034; Medicare’s, in 2026; Medicaid has no phony savings. Boomers start to turn 85 in 2031, the critical age for rising health and LTC expenditures.

This perfect fiscal and demographic storm will make the solution to long-term care financing possible. But what must be our focus in the meantime? Defense.

We need to defend what remains of Medicaid’s integrity as a means-tested public assistance program. That means opposing MACPAC’s proposal to make estate recoveries voluntary.

It also means opposing the increasingly popular proposals by academics, advocates and politicians to impose new, compulsory, payroll-funded social insurance programs for LTC.

Job one now is “do no harm.” Oppose bad programs like the WA Cares Fund and the federal WISH Act while we defend and strengthen Medicaid eligibility limits and estate recovery.

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

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LTC E-ALERT #21-035: LTC NEWS AND COMMENT

Tallying the Cost of Growing Older
How Making Public Long-Term Care Insurance (Sort Of) Voluntary Created A Mess In Washington State
Better Than No Loaf: Medicaid Planning Using “Half a Loaf” Strategies
10 Fastest-Rising Costs for Older Americans Since 2000
From transportation to housekeeping, MA plans moving further into the home in 2022
Limiting Medicare benefits deepens rift among Hill Democrats
Social Security Debt up $6.8T
The Delta variant caused a spike in deaths among nursing home residents, study finds
Long-term care’s problems are bad and getting worse — but fixable
Website to opt out of Washington state’s long-term care tax crashes on first day

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Updated, Monday, October 4, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-034: LTC NEWS AND COMMENT

The Risk of Coverage Loss for Medicaid Beneficiaries as the COVID-19 Public Health Emergency Ends
Opt-out option for Washington's long-term care tax begins Oct. 1
Medicare Advantage premiums to decline slightly in 2022, Part D to rise by nearly 5%
AP-NORC poll: Virus fears linger for vaccinated older adults
Assured Allies Makes Key Hires and Expands Advisory Board With Increasing Market Acceptance for Its Innovative ‘Successful Aging’ Platform
Biden’s $400 billion push for LTC faces severe cuts
Long-Term Care Planning: What Advisors Should Know
Strengthening Long-Term Services and Supports: The Difference Federal Investment Can Make
The Build Back Better Plan Remains Popular
New podcast offers latest insights about dementia

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Updated, Friday, October 1, 2021, 10:40 AM (Pacific)

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LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The old saying “an ounce of prevention is worth a pound of cure” applies equally well in long-term care according to three experts in this promising field. Much more after the ***news.***

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

*** ILTCI CONFERENCE live and in person returns March 21-23, 2022 in Raleigh, NC. The organizers are planning the program and want your help. They say “Our Programs & Education Committee would like to know what YOU want to learn about next year.” Submit your session ideas and topic requests here. Additional information on the 2022 ILTCI Conference will be available soon. Check the website for details. Registration will launch in November. Exhibitor & Sponsor applications will be accepted beginning Oct 1st. As the program develops, we’ll keep you posted here as well. ***

*** WHAT’S NEXT AFTER THE WA CARES FUND? We thank Center corporate member CLTC and its Executive Director Amber Pate for inviting us to attend Wednesday’s webinar of that title. CLTC® Certification for Long-Term Care educates and certifies professionals in the fields of insurance, financial services, law and accounting in the discipline of extended care planning. Steve Cain emceed this 30-minute webinar for CLTC graduates with Melissa Steiner and Courtney Crenshaw commenting. Highlights follow.

The WA Cares Fund in Washington State unleashed an unprecedented demand for private LTC insurance.
Both traditional and hybrid policies went “bananas” in Washington. “3 years of business in 3 months.” “3 to 10 times normal volume.”
Advisers should build on the rising awareness of LTC planning caused by the Covid crisis and supercharged by new state-level efforts to develop public funding programs.
Carriers had to adapt by leveraging technology and maneuvering underwriting procedures to process more applications faster.
Lesson learned: important to track state program development earlier and closer and work directly with developers to influence design and implementation. Avoid surprises.
49 more states could potentially follow Washington with similar programs. They may not offer an opt out in which case there would be no incentive to buy private coverage.
Encourage states to include renewal monitoring in their opt-outs so new insureds cannot quickly drop the policies they just purchased in order to avoid the public program.
The LTCI industry did a good job of mobilizing in Washington, so was able to affect some beneficial amendments. Kudos especially to LTCA’s Stephen D. Forman.
Washington is unlikely to delay their program despite its many flaws. A proposal to “pause” at a recent Trust Commission meeting was quickly shot down.
What else is going on? WISH Act at the federal level. Caregiver tax credit under consideration. Biden wants $400 billion for HCBS, but probably won’t get it. Senator Pat Toomey proposes allowing withdrawals from IRAs for LTCI.
CLTC training, certification, and webinars like this one ensure a knowledgeable and highly professional work force of long-term care planning advisers. ***

*** RECENT MOSES COLUMNS:

In addition to the published columns listed below, Steve has two more articles accepted for publication soon and a third out for query. Watch for them.

“LTC Irony” in the November issue of Broker World.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” expected October 1, 2021 in McKnight’s LTC News.

“What’s better for senior living? The market or government?”

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

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

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

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

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

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

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

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

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

LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The Long Term Care Discussion Group is a “voluntary independent group that meets solely for the purpose of educating the policy community on all facets of long term care.” The group’s September 28, 2021 meeting discussed “How Wellness Programs Can Enhance Care for Long-Term Care (LTC) Insurance Policyholders.” The speakers were:

Vince Bodnar, Chief Actuary, Bain Capital Insurance
Peter Goldstein, CEO, LTCG
Afik Gal, Co-Founder and CPO, Assured Allies

What follows is a paraphrased summary of the program in case you missed it followed by the presenters’ professional bios.

Vince Bodnar opened the program asking “What is a wellness program?” It is foremost about getting people into optimal care settings and not only about saving claims dollars. To keep people well is good for everybody involved. There are two areas of focus: pre-claim and in-claim. Pre-claim is about interacting with policy holders before they need care, usually before age 75. Interventions increase as the covered population becomes more frail. The goal is to maximize “disability-free lifetime.” The claim is a critical event taking place over a week or so. Once on claim, the focus becomes initiating, prolonging and improving services at home in order to avoid nursing home intake by default.

The LTC insurance industry asks “does this stuff work?” about two common wellness models. CCRCs without walls (Continuing Care Retirement Communities) is one model. People contract with an organization, pay a monthly fee while still healthy, and receive care as needed. There are annual physicals; prior authorization required to enter a facility; annual visits by a care coordinator to monitor progress and ensure quality. The care coordinators often become almost like family members. Over 90% of people in these programs receive services at home as compared to 40% on average for the LTCI industry in general.

The other wellness model is Medicaid Long-Term Services and Supports programs. The MLTSS model involves commercial managed care companies receiving capitation fees from state Medicaid programs to manage care recipients’ long-term care. They require prescreening before institutionalization; mandate referrals; attempt to “repatriate” people from facility to home care. They may help people find a home who no longer have one. One-on-one caseworkers coordinate care as with the CCRC w/o walls model. The more advanced programs use data for sophisticated risk scoring. MLTSS programs keep 80% in home care compared to 40% for LTCI.

If home care claims are half of facility claims, a carrier can reduce claims costs by 12%. That’s a big number. Carriers save money while policy holders get better care and stay in their homes longer.

A long list of the kinds of interventions used to achieve these outcomes is included in the presentation materials. (The LTC Discussion Group usually archives program materials here. I don’t find them there yet, but it’s worth checking again when you read this.) For a tongue-in-cheek example of technology helping seniors, see the Saturday Night Live skit Alexa for Seniors.

How do companies collect and use data to guide caregiving? Big data collection; wearables; monitoring devices; data from assessments; risk scoring for people needing care. Learn what the early warning signs are that transfer to facility is imminent. Intervention scoring: what’s working?

Companies talked about wellness programs in the 1990s, but high cost and low results led the programs to be dropped. Carriers were afraid such programs would stimulate claims. We’re getting beyond that now. Instead of being limited only to rate increases or benefit reduction to confront the industry’s challenges, this is an honest attempt to save money while delivering better services. Interest in wellness programs is expanding geometrically, especially in the past year and a half. Some carriers have entire teams working on this. They’re beginning to see promising results.

But there are challenges. Vendor contracting processes with carriers can be frustrating. Is there rebating? Who should provide services? Can be viewed as discriminatory if not providing same services to all. Liability might attach to referring a policy holder to a certain provider. The regulatory community is quite interested in these programs. Mostly positive. Seen as beneficial if done right. NAIC working group concerns: data privacy, rebating, unfair trade practices model regulations, discrimination.

The LTC insurance business needs good news. The wellness approach is very positive. Deliver better care more efficiently. No more “grim reaper of LTC.”

Peter Goldstein

The wellness focus is not just a funding issue. There is always the idea that a LTC insurance policy can provide a helpful service, not just dollars. We’re thinking about wellness, pre-claim, at-claim and on-claim.

LTCG is the largest claims payer. $4 billion last year. The business is all about claims now. After 25 years of adding policy holders, they’re now going into claim status. Previously, there was not enough interest. Now claims are growing rapidly and so are costs. We ask: what can we do besides raise rates and reduce benefits? Pursuing wellness is win/win because it benefits all stakeholders, carriers, policy holders and care providers.

Getting grounded in the claims process is challenging. We needed to make decisions, prioritize. We know we can’t be all things for all people. Three phases: pre-claim, the claim event, post-claim. The process usually lasts 2 to 3 years. LTCG made the decision to focus on at-claim and post-claim. Once someone makes a claim, what else can we offer to be sure the claim managed effectively?

The presentation material diagrams and explains the claim process. An interview is conducted at the point of claim so the process begins with more than just a claim form. We get them on phone, find out what has been done so far, what care received, face-to-face interview. Every time a claim is opened it creates a $250,000 cost (on average) for the carrier. We ask what are the needs? How can we manage those needs and arrange payments efficiently. Then loop around, reassess as needs change. Active management.

Make the right decision; use training; keep rules the same for all; same outcomes; collaborate with policy holders; the customer experience is important. Aim for recovery. About 33% recover, which is surprising; with right support, they get off claim. A lot of depression in this population, people spiral down. So we need to lean into recovery.

Pay benefits according to the approval. You need systems to vet claims. Don’t pay claims not covered by the policy. Catch any questionable activity; incredible what we see in fraud from seniors and providers. People are smart, savvy, if money is involved, people find a way to get it whether or not they’re entitled. Expanded programs and capabilities to address risk management, customer experience and administrative efficiency. This is a high touch business, but it needs to be efficient.

Best practices are important. You need an electronic way to view what providers are doing, including downloadable information on location, time in, time out. LTCG is launching a clearing house to take paper out of the process. Fraud detection using analytics. Interact electronically through a portal. 40% of the calls we receive are “where’s my check?” That information is available online so should not require taking phone calls. Care concierge service.

Post claim things we’re doing. There is a huge correlation with fraud when an agent is involved. We need to know and monitor the claim start date. High volume of unverified visits. Data tells more than a paper file. Important to stratify fraud risk.

LTCG partnered with Afik Gal and Assured Allies to expand our capabilities.

Afik Gal

Pre-claim issues are important. Tighter integration of the value proposition. Go a step beyond. That is what Assured Allies does.

We have multi-disciplinary teams, with actuaries, medical staff and others. We bring together professionals not often brought together. Assured Allies was developed because of our long-term care experience with our own parents.

We’re looking at LTC insurance as one determinant for successful aging as a whole. Make sure people don’t decline prematurely. But recognize they will decline and need support. Families must fund it themselves or find a solution, such as LTCI. That’s what attracted us to this topic.

To summarize, we are about employing multi-disciplinary teams to achieve successful aging Make health care work from the lens of insurance and finances. For policy holders, live healthier in homes whenever possible. We’re bringing a win/win value proposition to this market. It is a rare opportunity to do the right thing for the policy holder, the provider, and the payer.

Pre-claim the focus is wellness, risk management. All financially positive if done right.

It is easy to help a lot of people by spending a lot of money. The bigger issue is efficiency. It is important to understand trade-offs. The system must be sustainable financially, not only socially good. Reduce costs of claims while improving care.

Real case study from policy holder standpoint. Reach out to engage people. See what their needs are. Do they want help? Do they want to change how they’re aging? That information translates into how much to spend on people. There is much on the Assured Allies website about how it works. Check out the videos there.

We use data to estimate how likely people are to claim and when. We must decide how much to invest to change or delay that. Depends on their desire to get help. Intervention, feedback loop, compare experience with others. Careful measurement mechanism. Is it working or not? 25,000 lives by end of this year. This market is notorious for poor data. We’re spending a lot of energy improving that to get well-validated data.

Interventions are various. Stratify policy holders by proximity to claim. Ask what is the right thing to do? Self-efficacy. How much effort? How much money? Careful monitoring. Predictive modeling. We don’t focus just on caregiving. Multiple of tools based on risk factors. For example: is the caregiver far away? Different discussion for the very sick. Are the caregivers fighting?, etc. We try to coach them into a solution. We only do things proven to be effective.

We’re not going to actually provide home care assistance. That would be a disservice to the carrier because not proven to deliver a positive ROI (return on investment). We find the right approach for the policy holder.

The goal is successful aging. At age 80 plus, the focus may be urinary continence and caregiver issues. Better to get an earlier start because we can do more at age 60. Build good relationship between all parties so that all parties have better outcomes.

Speakers’ Bios

Vince Bodnar is an actuary with Bain Capital Insurance. He has 37 years of experience with a broad array of insurance products. Mr. Bodnar has led projects related to product and distribution strategy, in-force management, capital optimization, reinsurance strategy, operational reviews and diligence, company rehabilitations and liquidations, and mergers and acquisitions. Prior to joining the firm, Mr. Bodnar had senior leadership roles at Genworth and GE Capital and led actuarial consulting practices at Milliman, Willis Towers Watson, Oliver Wyman and KPMG.

Peter Goldstein is CEO of LTCG, a leading provider of administrative and clinical services within the LTC insurance industry. His 25 years of leadership have helped LTCG adapt to a changing industry environment and have transformed the organization into a premier partner for LTC insurers. LTCG serves all of the top LTC carriers and is the largest third-party claims payer in this space. Peter’s strategic vision for the company has transformed LTCG from a TPA focused on processing capabilities into an organization dedicated to proactive, holistic risk management for its customers. Peter is a recognized thought leader on topics ranging from next-generation claims management to the public policy changes needed to ensure a sustainable future for this industry. He has been featured in a variety of wide-reaching business publications including the Wall Street Journal, Bloomberg, Mergermarket, Think Advisor, Business Week and many others.

Afik Gal is a physician and a co-founder of Assured Allies, an insur-tech company dedicated to making longevity sustainable. Afik has spent over 15 years bringing innovative technological care management solutions to life across healthcare and financial insurance industries. Prior to founding Assured Allies, Afik served as VP of Product Innovation at EviCore healthcare where he revolutionized prior authorization as a benefit to payers, providers, and patients. He also led the innovation lab at PwC’s healthcare advisory practice helping clients design and implement advanced analytics solutions with great impact on their business models. Afik has also served as a partner and advisor to numerous hospitals and startup companies developing technologies to improve patient care.

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Updated, Monday, September 27, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-033: LTC NEWS AND COMMENT

The nursing care insurance fund is apparently threatened with insolvency
Bipartisan group of state lawmakers ask Gov. Inslee to pause long-term care insurance tax
Why the Cost of Long-Term Care Is Out of Reach for the Middle Class
Opt-out direction, updates, and good and bad news concerning long-term-care law
Consumers Use Up Washington State's Private LTCI Capacity
Medicare and Medicaid recipients, minorities receive more low-value, aggressive cancer care at end of life, study finds
The Next Medicaid Blowout
Recognize, Assist, Include, Support, & Engage (RAISE) Family Caregivers Act Initial Report to Congress
State of the Long Term Care Industry: Survey of nursing home and assisted living providers show industry facing significant workforce crisis
Annexus to Offer Social Security Uncertainty Protection
COVID-19 Claims More Than 675,000 US Lives, Surpassing the 1918 Flu
Survey finds family caregiver burden is worsening
Bipartisan Solutions to Improve the Availability of Long-term Care
Steep BMI Increase for Kids, Teens During the Pandemic

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Updated, Monday, September 20, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-032: LTC NEWS AND COMMENT

Retirees’ Need for Caregivers Varies Widely
Letter to Gov. Inslee Objecting to the WA Cares Fund
U.S. poverty declined overall last year due to pandemic relief, Census says
Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report
Two Healthcare Insiders at Aegis Living Blow Whistle on Alleged Elder Abuse and Medical Fraud
Changes to WA Cares Fund likely next session
Will Medicaid take life insurance proceeds after I die?
Long-term care tax is the wrong answer to a good question
The $3.5T Spending Mistake
Study: Medicare reduces older adults' risk for catastrophic health expenses
‘We’ve Been Too Reactive’: Argentum Pivots to Invest More in Public Policy Efforts,”
Older adults with dementia half as likely to move to a nursing home if they live with adult children: study
UK lawmakers back tax hike to pay for health, long-term care
Workers at home health agencies receiving Medicare, Medicaid must get vaccinated: CMS
BREAKING: 16,000 COVID deaths missed in nursing homes
Social Security predicts pandemic birth blip, not birth dearth
Washington is taking the worry out of long term care
New poll: Seniors want to age at home with caregiver support
Nursing home leaders unraveling after months of pandemic dangers, workloads, McKnight’s survey shows

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Updated, Friday, September 17, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE LTC ANOINTED

LTC Comment: Thomas Sowell’s books, A Conflict of Visions, The Vision of the Anointed and Intellectuals and Society, offer insights into why the long-term care intelligentsia think and act the way they do. We explain after the ***news.***

*** LTC CLIPPINGS are daily emails the Center for LTC Reform sends to premium members ($250 per year or $21 per month) apprising them of critical information they need to know before they’re blindsided by clients or prospects. They average two per day and include the date, title, author, a representative quote, a link to the source and Steve Moses’s brief interpretation. The Clippings cover popular and scholarly articles, studies and reports, newly published data, etc. Our goal is to free others from time-consuming research that takes them away from their normal sales or administrative work. The LTC Clippings are compiled each Monday in an LTC E-Alert sent to all Center regular members ($150 per year or $12.50 per month). Check out all the membership levels and benefits here and join the Center here. These are two LTC Clippings from earlier this week:

9/16/2021, “Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report,” American Enterprise Institute
Quote: “For the fourth consecutive year, Medicare trustees report that the program will be unable to pay the full cost of health benefits by 2026. The COVID-19 pandemic harmed Medicare’s finances, but the mismatch between program spending and revenue has been a long-standing concern. If it continues unabated, the consequences for millions of beneficiaries will be dire. Please join AEI as Medicare’s chief actuary summarizes the results of the 2021 trustees’ report. A panel of experts will discuss the need for reform and policy options that could improve the program’s fiscal condition.”
LTC Comment: If you missed it live this morning, catch this video of the program now. What’s more disconcerting? That politicians continue to ignore the oncoming insolvency of Medicare and Social Security? Or that the academics and advocates they listen to keep pushing for more of the same financially irresponsible programs?

9/13/2021, “Will Medicaid take life insurance proceeds after I die?,” by Karin Price Mueller, NJ.com
Quote: “Q. If I have an insurance policy that has no cash value and my son is the beneficiary, when I die and he receives the money, will Medicaid file a lien on that money? Would my son have to pay it?
— Uncertain
A. Many families are surprised that Medicaid will go after funds if it pays for your care before you die. …
New Jersey Medicaid considers proceeds from term life insurance policies with no cash benefit to belong to the named beneficiaries and are not subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.”
LTC Comment: Medicaid exempts term life insurance in unlimited amounts. So to get rid of a million dollars and qualify immediately for Medicaid LTC benefits, all the applicant needs to do is buy a term policy in that amount. Wait, you say. Wouldn’t the premium for such a policy be almost as much as the benefit? Why do it? This article explains the key to this Medicaid planning gimmick. As long as the beneficiary is someone other than the Medicaid recipient’s estate, such as an adult child heir, the family dodges the estate recovery requirement and the millionaire achieves immediate Medicaid eligibility. ***

LTC BULLET: THE LTC ANOINTED

LTC Comment: In A Conflict of Visions, Thomas Sowell identifies and distinguishes two principal ways of viewing the world and human potential. He calls them the unconstrained and the constrained visions. The “unconstrained vision” is The Vision of The Anointed. People with that view of the world imagine that anything is possible, human nature is improvable, and the better sort, especially intellectuals, should guide and direct the rest of humanity. Those with Sowell’s “constrained” or “tragic” vision, in contrast, see human potential as delimited by unavoidable obstacles that must be systematically confronted and overcome. For them, human nature is already mostly established and must be worked around with ingenuity and effort. Intellectuals, according to the constrained vision, are self-satisfied prima donnas who arrogate authority to themselves while ignoring or demeaning the public’s cumulative knowledge and preferences, often called “common sense,” gained from centuries of experience and tradition. Which of these two visions of the world would you associate with the academics and advocates who tell us so confidently what’s wrong with and what to do about long-term care?

To my mind, Sowell’s unconstrained vision clearly prevails among “The InLTCgentsia.” These experts, the “LTC anointed,” believe they know best what ails America’s long-term care system and how to fix it. They ignore the long history of government interference in the long-term care market. They persist in promoting government “solutions” for problems created by government funding and regulation. They brush off arguments to the contrary while refusing to engage on specific objections to their collectivist dogmas. They insist on addressing only symptoms, never identifying or analyzing the causes of long-term care’s dysfunctions. They seduce politicians with ideas and proposals based on the fantasy that government, following their advice, can provide better long-term care than a free market in which people vote with their own money for the kind, amount and quality of care they prefer. The LTC anointed persist in offering the same analysis and proposals rejected by voters decade after decade while expecting a different result.

To expand and elucidate, here are some quotes from Thomas Sowell about the unconstrained vision of the anointed followed by our examples based on observation of the “LTC anointed.”

Sowell: “The question for the anointed is not knowledge but compassion, commitment, and other such subjective factors which supposedly differentiate themselves from other people. The refrain of the anointed is we already know the answers, there’s no need for more studies, and the kinds of questions raised by those with other views are just stalling and obstructing progress. ‘Solutions’ are out there waiting to be found, like eggs at an Easter egg hunt. Intractable problems with painful trade-offs are simply not part of the vision of the anointed. Problems exist only because other people are not as wise or as caring, or not as imaginative and bold, as the anointed.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed have dreamed up “solutions” for long-term care in studies, commissions and legislative proposals over many decades. Somehow they can never figure out how to force the public, who are more self-interested, and supposedly less wise and caring, to pay for their illusive dreams.

Sowell: “While those with the vision of the anointed emphasize the knowledge and resources available to promote the various policy programs they favor, those with the tragic vision of the human condition emphasize that these resources are taken from other uses (‘there is no free lunch’) and that the knowledge and wisdom required to run ambitious social programs far exceed what any human being has ever possessed, as the unintended negative consequences of such programs repeatedly demonstrate.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: All we need to do is raise the marginal tax rate, bump up the Social Security tax, or nail the rich. Never mind that every dollar removed from the supply of private capital to fund social welfare schemes is a dollar that will not go to invest in producing products and services people actually want, as proved by the fact they’re willing to pay for them and do not have to be compelled by the threat of government force to spend for them.

Sowell: “To suggest that ‘society’ can simply ‘arrange’ better outcomes somehow, without specifying the processes, the costs or the risks, is to ignore the tragic history of the twentieth century, written in the blood of millions, killed in peacetime by their own governments that were given extraordinary powers in the name of lofty goals.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: The LTC anointed insist, without specifying the “processes, the costs or the risks,” that if we would just turn over to government the power to compel everyone to pay more taxes to support their recommendations, we could somehow get a better long-term care result than the dysfunctional system we have now that is grounded in many decades of government funding and control.

Sowell: “The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from ‘society,’ rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by ‘society.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed assume it is society’s responsibility to fix long-term care as other followers of the anointed vision “fixed” retirement security and elderly health care with Social Security and Medicare. It feels good to proclaim solutions from on high. But greater and greater dependency on government has depleted individuals’ sense of personal responsibility leaving real life people unprotected if and when government lets them down.

Sowell: “Systemic processes tend to reward people for making decisions that turn out to be right—creating great resentment among the anointed, who feel themselves entitled to rewards for being articulate, politically active, and morally fervent.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: That shoe fits the LTC anointed like a glove. They bask in the warm, unchallenged shibboleths of the “unconstrained” vision while evading the market’s school of hard knocks. Entrepreneurs, on the other hand, risk their own capital in search of profits earned by giving consumers what they actually need and want. Which should we appreciate more?

Sowell: “The hallmark of the vision of the anointed is that what the anointed consider lacking for the kind of social progress they envision is will and power, not knowledge. But to those with the tragic vision, what is dangerous are will and power without knowledge—and for many expansive purposes, knowledge is inherently insufficient”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed seek to force people into one-size-fits-all compulsory social programs that eliminate the power of personal agency leaving people dependent on politicians and bureaucrats. What has our increasing dependency on politicians and bureaucrats given us so far?

Sowell: “One of the first things taught in introductory statistics textbooks is that correlation is not causation. It is also one of the first things forgotten.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed often confuse correlation and causation. Two examples: (1) They assume elderly asset decumulation late in life must have been caused by catastrophic long-term care spend down. They never consider the possibility that older people and their families may learn of Medicaid’s generous and elastic income and asset eligibility rules and hide, jettison or reconfigure their wealth to qualify, with or without the assistance of omnipresent lawyers eager to help them artificially self-impoverish in exchange for a generous fee. (2) Trying to make their case for catastrophic Medicaid spend down, the LTC anointed over-estimate its incidence by pretending that every transition to Medicaid LTC eligibility occurs because of spending on long-term care. People can and often do transition to Medicaid eligibility without spending down significantly. The correlation between spending and transition often hides the true causation, i.e., that Medicaid rules allow people with substantial income and assets to qualify for LTC benefits. Even greater wealth than the basic eligibility rules allow is protected by means of techniques explained in the formal legal literature on Medicaid planning which the LTC anointed almost entirely ignore.

Sowell: “What is seldom part of the vision of the anointed is a concept of ordinary people as autonomous decision makers free to reject any vision and to seek their own well-being through whatever social processes they choose. Thus, when those with the prevailing vision speak of the family—if only to defuse their adversaries’ emphasis on family values—they tend to conceive of the family as a recipient institution for government largess or guidance, rather than as a decision-making institution determining for itself how children shall be raised and with what values.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed treat ordinary people like chess pieces to be moved around on political and economic game boards. They seek to replace personal responsibility and planning with government compulsion through mandatory social insurance for long-term care. They know best; the rest of us are too ignorant or irresponsible to do the right thing. But do they ever ask why the public has become so ignorant and irresponsible when it comes to retirement, health care and long-term care planning? Do they question whether government promises from Social Security, Medicare and Medicaid may have undercut private concern for economic risks? Does the concept of moral hazard, so fundamental to private insurance theory, ever enter their minds? The answers are no, no and no.

Sowell: “Among the many other questions raised by the nebulous concept of ‘greed’ is why it is a term applied almost exclusively to those who want to earn more money or to keep what they have already earned—never to those wanting to take other people’s money in taxes or to those wishing to live on the largesse dispensed from such taxation. No amount of taxation is ever described as ‘greed’ on the part of government or the clientele of government.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“[W]hen people choose their occupations according to what the public wants and is willing to pay for, that is ‘greed,’ but when the public is forced to pay for what the anointed want done, that is ‘public service’.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed routinely ask hard-working people to pay just a little more in taxes to fund their elaborate schemes. Two examples are the WA Cares Fund and the WISH Act. These programs and their ilk add long-term care to the mountain of moral hazard already inflicted on the economy by Social Security and Medicare. Yet the LTC anointed will characterize the opponents of their programs as uncaring and stingy.

Sowell: “Another way of verbally masking elite preemption of other people’s decisions is to use the word ‘ask’—as in ‘We are just asking everyone to pay their fair share.’ But of course governments do not ask, they tell. The Internal Revenue Service does not ‘ask’ for contributions. It takes.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: Usually the LTC anointed don’t even bother to ask nicely. They presume they’re right and the rest of us should fall into step with their mandates.

Sowell: “…the very commonness of common sense makes it unlikely to have any appeal to the anointed. How can they be wiser and nobler than everyone else while agreeing with everyone else?”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed bristle at arguments grounded in common sense. They display contempt for people who just want to keep what they’ve earned, take responsibility for themselves and their families, and give charity as and when they can afford it and deem it justified.

Sowell: “In short, numbers are accepted as evidence when they agree with preconceptions, but not when they don’t.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“Today, despite free speech and the mass media, the prevailing social vision is dangerously close to sealing itself off from any discordant feedback from reality.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

“Reality does not go away when it is ignored.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: Confirmation bias is commonplace among the LTC anointed. They do not consider, much less attempt to refute, evidence that conflicts with their predispositions. Examples are rife. The LTC anointed cling to the myth that Medicaid requires impoverishment while they ignore the ubiquitous popular and scholarly published evidence to the contrary. They insist wide swaths of the American public are being wiped out financially by long-term care expenditures, when there is no evidence this is so and they cite none. They rely slavishly on Health and Retirement Study (HRS) longitudinal data on asset decumulation assuming it’s proof of LTC spenddown without acknowledging or addressing the data’s many flaws. Moreover, nothing in that data demonstrates that spend down occurs because of long-term care expenses.

Sowell: “Many intellectuals are so preoccupied with the notion that their own special knowledge exceeds the average special knowledge of millions of other people that they overlook the often far more consequential fact that their mundane knowledge is not even one-tenth of the total mundane knowledge of those millions. However, to many among the intelligentsia, transferring decisions from the masses to people like themselves is transferring decisions from where there is less knowledge to where there is more knowledge. That is the fatal fallacy behind much that is said and done by intellectuals, including the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less total knowledge but more presumptions, based on their greater average knowledge of a special kind.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: That quote pretty much sums it up.

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Updated, Tuesday, September 7, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-031: LTC NEWS AND COMMENT

Number of people with dementia set to jump 40% to 78 million by 2030 -WHO
COVID vaccine protection drops by 80 percent in 6 months among nursing home residents: study
Do some cognitive functions improve with age?
Long-Term Care Needs Reform, Not More Money
Medicare Advantage slowing COVID discharges to SNFs: report
Why some plan to opt out of new WA long-term care insurance
Senator’s Report Provides Alternative Long-Term Care Policy
Covid could trigger a spike in dementia cases, say Alzheimer’s experts
A New Report Says The COVID Recession Has Pushed Social Security Insolvency Up A Year
Want to opt-out of Washington’s new long-term care tax? Good luck getting a private policy in time
Social Security Fund on Track to Go Bust by 2033: Trustees Report
Could active adult housing be a solution to the middle-market affordability challenge?

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Updated, Friday, September 3, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE INLTCGENTSIA

LTC Comment: Should LTC intellectuals, politicians and bureaucrats who pay no price for being wrong direct long-term care financing reform? Considerations after the ***news.***

*** ANNUAL LTCI SURVEYS available now in Broker World. Check them out for the latest on the status of private long-term care insurance.

“2021 Milliman Long Term Care Insurance Survey,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, July 1, 2021

“2021 Analysis Of Worksite LTCI,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, August 1, 2021 ***

*** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members ($250 per year) receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day on average) with the date, title, author, source, and his brief analysis of every important new publication. Regular members ($150 per year) receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now here or contact smoses@centerltc.com with your questions or comments. Two examples follow:

8/2021, “Senator’s Report Provides Alternative Long-Term Care Policy,” by Ashley Herzog, Health Care News

Quote: “First, Congress would eliminate Medicaid loopholes that allow affluent seniors to qualify, ending the ‘perverse incentives’ that discourage consumers from planning early and responsibly for long-term care, Moses writes. ‘Step two is to put the Medicaid estate planning bar out of business,’ Moses writes. ‘Systematically identify, analyze and prohibit the methods and financial products elder law attorneys use to qualify their affluent clients for Medicaid LTC benefits. Stop their discriminatory practice of using ‘key money’ to buy well-heeled clients access to the best long-term care facilities at the exclusion of poor people who lack the funds to pay privately.’ The third step is to warn the public that long-term care is a ‘pay now or pay later’ proposition, Moses writes”

LTC Comment: We thank Ms. Herzog and Health Care News for citing the Center’s LTC policy proposals at length. “Health Care News is available on the internet. Point your browser to HeartlandDailyNews.com.” To be clear, the Moses proposals are not a part of Senator Tim Scott’s alternative LTC policy referenced in the article’s title … yet. We’ll work on that.

9/2/2021, “Long-Term Care Needs Reform, Not More Money,” by Chris Pope, National Review

Quote: “The reconciliation bill being prepared by congressional Democrats is so substantial that specific provisions as large as $400 billion in proposed extra funds for Medicaid’s long-term-care benefit have attracted little attention. … However, the shortcomings of Medicaid’s long-term-care benefit owe much to the program’s resources being improperly targeted. Instead of being a safety net of last resort, the program has loose and inconsistent eligibility requirements, disincentivizing the purchase of private long-term-care insurance — which ought to bear the bulk of long-term-care costs. Policymakers should use the provision of additional funds to facilitate reforms that fix these deeper structural problems.”

LTC Comment: Well said. Much of this article we might have written ourselves. Actually, we have and many times. Other parts of the article are less coherent and there is no explanation of what should be done except a reference to Senator Casey’s bill, a step in the wrong direction. For a full picture of the problem and the solution, read Medicaid and Long-Term Care. Special thanks to long-time Center friend and supporter Brad Winnekins (President of Legacy Services, bradw@legacyltci.com) for tipping us to this article. ***

*** RECENT MOSES COLUMNS:

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

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

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

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

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

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

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

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

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

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

LTC BULLET: THE INltcGENTSIA

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

“The InLTCgentsia”
By
Stephen A. Moses

“What is called ‘social’ planning are in fact government orders over-riding the plans and mutual accommodations of millions of people subject to those orders.”
—Thomas Sowell, Intellectuals and Society

“Why the transfer of…decisions from the individuals and organizations directly involved–often depicted collectively and impersonally as ‘the market’–to third parties who pay no price for being wrong should be expected to produce better results for society at large is a question seldom asked, much less answered.”
—Thomas Sowell, Intellectuals and Society¹

The LTC intelligentsia agrees on long-term care’s problems and solutions. To wit, more and more people need long term care. Current public programs are inadequate. Private LTCI failed. Providing “free” care stresses families financially and emotionally. So, obviously, we need government to take a bigger role in long term care, preferably with a new, compulsory, payroll-funded, social insurance entitlement program. Or, to keep it simple, just shoehorn long term care into Medicare. That’s the InLTCgentsia’s diagnosis and prescription in a nutshell.

Their remedy relies on government central planners, guided by their own sophisticated expert advice, to design, introduce, pass, implement and defend legislation impacting every individual and family in the country. How do these planners and their advisors know what millions of individuals and families who comprise the market for long term care need and want? In the absence of price data reflecting actual preferences, “polls” must suffice. People say they want more home care, fewer nursing homes, higher quality, lower costs, more control and choices. Will a big new government program deliver those benefits? At what cost? With what unintended consequences?

To answer those questions, don’t we first need to ask and answer why America’s long term care system doesn’t deliver those desired benefits already? Is it for lack of government funding? No. Medicaid, Medicare, the VA and other smaller government programs pay for most long-term care in the United States.² Is it for lack of government regulation? No. Long term care is the second most regulated industry in the nation, after nuclear power.³ So what does explain the dysfunctionality of our long term care services and financing?

Could the answer possibly be—the same government funding and regulation that dominate long term care already? Medicaid is by far the biggest source of funding for long term care and a huge drain on state and federal budgets. Its coverage rules cause institutional bias. Its eligibility rules crowd out private financing sources.⁴ Its low reimbursements hamper quality. Its availability after people need care creates a moral hazard that discourages early planning and traps many on public assistance late in life. If the public funding program we already have is the principal cause of what ails long term care, why should we expect a bigger, more expensive and intrusive program to improve the situation?

Try this thought experiment instead. What if there were no Medicaid program to pay for catastrophic long term care costs? How would consumers behave? Odds are people would worry about the 25 percent probability of having a severe need for long term care in the future.⁵ They would save, invest, or search for private insurance to spread the risk. Unprepared people who were stricken would use their home equity to fund care as most elderly own homes.⁶ Spending their own money for long term care, patients and families would seek home- and community-based care instead of nursing homes. With private asset spenddown, including potentially $8 trillion of home equity,⁷ flowing through the long term care services industry, access and quality of care would improve for everyone. Potential profits would supercharge entrepreneurs to discover and offer new and better care options.

What I’ve just described would solve the middle market problem.⁸ We don’t need to worry about the wealthy; they can take care of themselves. But, what about the poor? Having removed the perverse incentives that discourage responsible long term care planning, many fewer people will end up needing long term care but unable to pay. There will be no more incentive to hire attorneys to manipulate government eligibility rules in order to self-impoverish artificially. The relatively small numbers of genuinely needy people who remain could be served by private charity and/or a vastly scaled down public assistance program funded by a fraction of the savings from ending the Medicaid LTC program.

So let’s pose Thomas Sowell’s “seldom asked, much less answered” question from the quotation above. Whom should we entrust? The InLTCgentsia “who pay no price for being wrong” or the millions of consumers, providers, and insurers who comprise the market for long term care? Why should we be subject to “government orders over-riding the plans and mutual accommodations of millions of people?” When those millions vote with their own money for the kind of long term care they prefer, we will all receive better services in preferred settings. That is the answer.

References:

Stephen A. Moses

425-891-3640 smoses@centerltc.com

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

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

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

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Updated, Monday August 30, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-030: LTC NEWS AND COMMENT

The staggering, exhausting, invisible costs of caring for America’s elderly
New Research Signals Mass Employee Exodus From Long Term Care Due to Vaccination Mandate
Related: 10 Life Insurance Tax Facts to Know
How Taxes, Medicare Premiums Erode Social Security Benefits Despite COLAs
A Massive Elder Corps Is Just Waiting to Be Helpful
PLANNING AHEAD: Are inheritances protected and other Medicaid myths [Column]
Medicare nursing home residents more likely to be diagnosed, hospitalized and die from COVID-19 than beneficiaries not in facilities
Study: Pandemic increased the number of homebound, isolated seniors
How COVID-19 Has Changed Americans' Views on Health Insurance
What Can YOU Do to Resolve the LTSS Workforce Crisis?
CalPERS long-term care insurance settlement: how to avoid missing out on $35,000 checks

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Updated, Monday August 23, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-029: LTC NEWS AND COMMENT

AHCA, NCAL Urge Administration to Consider Implications of Vaccination Policy
Medicare Advantage Healthcare Spending Exceeds Original Medicare: Policymakers may soon have to address inequities between Medicare Advantage healthcare spending and Medicare spending
5 Ways to Keep People With LTC Insurance Healthy
BREAKING: It’s official: Nursing homes must vaccinate employees or lose Medicaid, Medicare funding
Yogurt every day keeps Alzheimer’s away? Probiotics, strong gut health may be key to avoiding dementia
The gig economy finally catches up with long-term care
Washington’s New Long-term Care Benefit Program: Important Deadlines Loom!
It’s Getting Late to Opt Out of Washington’s Long-Term Care Program
The Rising Toll of Autoimmune Diseases in Older People
Boosters to be expanded to most vaccinated Americans: reports
State Regulators Eye Long-Term Care Insurers' Wellness Programs
Retirement Income Policy Needs a Facelift
Commentary: New long-term care tax will affect Washington workers

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Updated, Friday, August 20, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: WISHful THINKING

LTC Comment: Hope springs eternal among the LTC anointed that one more government program forced on the public at the expense of the productive economy can reduce the damage done by its many failed predecessors. Analysis of the WISH Act follows.

LTC BULLET: WISHful THINKING

LTC Comment: Thomas Sowell’s A Conflict of Visions contrasts people with “constrained” vs. “unconstrained” visions of the world. Those with the constrained or “tragic” vision see human limitations and focus on systemic analysis and marginal improvements. There are no solutions, only tradeoffs, for those with the tragic vision. Those with the unconstrained vision, The Vision of the Anointed, believe everything is possible. All it takes is for the best and the brightest to apply their superior intelligence and understanding to a problem and, voila, solutions emerge. But so do unintended, often disastrous, consequences.

We’ll have more to say about the LTC anointed in a future LTC Bullet, but suffice it here to say there’s no question which vision of the world the authors of the article we’ll review today share. Instead of focusing on the historical failure of government to solve the long-term care financing problem after decades of trying, they think one more attempt with the same approach applied by smart people with the best of intentions will have a better result. They’re unconstrained by any analysis or understanding of how the long-term care service delivery and financing system in the United States became so dysfunctional. So, anything seems possible to them.

Marc A. Cohen and Stuart M. Butler published “The Middle Ground For Fixing Long-Term Care Costs: The WISH Act," in the Health Affairs Blog on August 9, 2021. Their article reviews and strongly recommends a new, compulsory social insurance program for long-term care recently introduced in Congress. Quotes from their article and our comments in reply follow.

Cohen/Butler: “Roughly one week before Americans celebrated the July 4 holiday, Representative Thomas Suozzi (D-NY) introduced a revolutionary bill (H.R. 4289) designed to repair our broken system for financing long-term services and supports (LTSS). The ‘WISH Act’—Well-Being Insurance for Seniors to be at Home—is based on an idea first put forward by a group of long-term care experts known as the Long-Term Care Financing Collaborative, which was convened in 2012 by the Convergence Center for Policy Resolution and included the authors of this blog post. The [LTC Collaborative] idea was developed further in a 2018 paper presented at the Bipartisan Policy Center. If enacted, the WISH Act could significantly transform our LTSS financing system by harnessing the best of what the public and private sectors can jointly do to solve a problem that neither sector seems able to solve on its own. And it does this in a fiscally responsible way.”

LTC Comment: If public policy proposals are only as good as the research on which they’re based, the WISH Act is handicapped from the start. We have critiqued and rejected both of the studies cited in the article as foundational for the WISH Act. “LTC at a Crossroads” (June 3, 2016) addressed the “LTC Cooperative’s” proposal and “Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding)” (May 4, 2018) analyzed the 2018 Bipartisan Policy Center paper. Both studies share these shortcomings: (1) They begin by describing long-term care’s problems without asking or answering why and how the problems came to exist in the first place. Thus they run the risk, and do in fact, recommend more of the same government policies that caused the problems. (2) Both mistakenly assume wide swaths of the public are spending down their life’s savings for long-term care based on the “Fallacy of Impoverishment.” (3) Both ignore the vast legal and popular literature on qualifying for Medicaid LTC without spending down, so they assume incorrectly that “big data” from the HRS/AHEAD/Rand studies on asset decumulation prove LTC spend down is widespread. (4) Both equivocate on Medicaid planning by suggesting it means only “asset transfers,” which are a relatively small part of the wide range of techniques to qualify without spending down assets. (5) They equivocate on “spend down” and “transitions” by assuming that any transition to Medicaid means someone had to spend down savings before becoming eligible. (6) They equivocate on “out of pocket” expenses, making them seem larger than they really are by including residential care and excluding Medicare post-acute care expenses from LTC costs. These points are fully explained in “LTC at a Crossroads” and developed further in Medicaid and Long-Term Care. For our review and critique of 100 similar studies and proposals, see “LTC Center Standing Guard,” May 14, 2021. How these points and principles undercut the WISH Act’s approach is explained below.

Cohen/Butler: “The legislation seeks to address the growing problem that needing LTSS for a long spell and, particularly, receiving them in a nursing home, can be financially devastating even for middle-class Americans with significant savings. A year in a two-bed nursing-home room can cost upwards of $93,000, causing many to exhaust their funds and become reliant on Medicaid.”

LTC Comment: The assertion that large numbers of people exhaust their wealth paying for nursing home care before qualifying for Medicaid is often made even in peer-reviewed journal articles. But you will never find a citation to evidence supporting the claim. That is because there is none. According to the National Investment Center’s “NIC Skilled Nursing Data Report” covering data through May 2021, private-pay nursing home revenue mix has plummeted to 7.0%, compared to 49.5%, 20.4%, and 10.8% for Medicaid, Medicare and Managed Medicare, respectively. Most of the small remaining private payments to nursing homes are for short-term sub-acute and rehabilitative care not for the kind of long-term custodial care that Cohen/Butler claim is wiping out the savings of so many. This is a prime example of scholars using the “fallacy of impoverishment” to justify big new government programs. Furthermore,

There is more good news. In June 2019, Johnson and Wang “simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older.” They “found that 74 percent could fund at least two years of a moderate amount of paid home care if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care” (Johnson and Wang, 2019, p. 994). Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years” (Ibid., p. 1000). So, the problem is much more manageable than we thought. All we have to do is persuade people to liquidate all their assets. (Medicaid and Long-Term Care, p. 65)

Obviously, most people aren’t liquidating their assets to fund long-term care or those expenditures would show up in the data for out-of-pocket spending. Nor are people going to start liquidating assets to purchase long-term care as long as Medicaid is so easy to get after extended care is needed. How to remove this obstacle to private financing and responsible long-term care planning is explained below.

Cohen/Butler: “In theory, private insurance is the appropriate tool for protection against such a risk. But the private long-term care insurance market has been declining over the past two decades, with fewer than 10 percent of Americans having policies. … There are multiple reasons for the condition of the insurance market. One is the widespread but erroneous belief that Medicare will pay for LTSS, combined with confusion about what private long-term care policies cover, and an aversion among consumers to the policy’s upfront cost.”

LTC Comment: People don’t buy LTC insurance because they think Medicare pays for long-term care? Maybe, but there is some justification for the public’s seeming misapprehension when Medicare and Managed Medicare contribute 31.2% of nursing home revenues as referenced immediately above. Still, let’s stipulate that Medicare doesn’t pay a large share of the long-term care expenses that Cohen/Butler claim are catastrophically impoverishing so many. No matter; Medicaid does. So if you reconfigure the statement to read “People don’t buy LTC insurance because they think Medicaid pays for long-term care” you’d be much closer to the truth. But there is still a nuance of difference. In truth, most people don’t know who pays for long-term care. It doesn’t matter to them. They can ignore LTC risk, wait to see if they ever need care, and if they do, Medicaid usually pays and its financial eligibility rules are so generous and elastic that most people qualify without spending down assets significantly. Fifty-six years of that being true has essentially anesthetized the public to LTC risk, virtually eliminated potential demand for private LTC insurance, and left most of the middle class unprotected and dependent on Medicaid when they need expensive extended care.

Cohen/Butler: “Agreement on a policy solution has long been stymied by a fundamental philosophical conflict between those who would limit public policy to the promotion of private insurance as the only appropriate policy for protecting private resources and those who regard public insurance as essential to the assurance of adequate, affordable protection for all.”

LTC Comment: That statement is personally galling. I know of no one among academic or popular writers who has ever advocated limiting “public policy to the promotion of private insurance as the only appropriate policy for protecting private resources.” Yet that position has been attributed falsely to me. To be very clear, my position is that America has a social contract for long-term care that includes both public and private contributions. It was established in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) which made Medicaid estate recovery mandatory. This was the plan Congress and President Clinton had in mind at that time: when people need long-term care they can’t afford, Medicaid will provide the care as long as the applicant’s income is below the cost of a nursing home and most retained assets, allowed to be virtually unlimited, are held in exempt form. The only quid pro quo was that after the Medicaid recipient dies, the estate must reimburse Medicaid for the cost of the care provided. That contract still exists although it is under attack by the Medicaid and CHIP Payment and Access Commission (MACPAC).

The social contract for long-term care created in 1993 failed to solve long-term care’s problems because states did not implement its estate recovery provisions aggressively; the federal government did not enforce the requirements; the media did not report the new estate recovery liability; and so the public remained unaware of the need to save, invest or insure for long-term care in order to avoid Medicaid dependency and estate recovery risk. The Medicaid estate planning bar flourishes by helping their affluent clients evade estate recovery at the same time and in the same manner as they qualify those clients for Medicaid by means of artificial impoverishment. We should enforce estate recovery, prohibit Medicaid planning, stop exempting home equity from LTC responsibility, and publicize the fact that long-term care planning is a personal responsibility. In other words, we should fully implement the long-term care social contract as should have been done, but wasn’t, in the 1990s. That would change the incentives for long-term care planning so that they encourage personal savings, investment and insurance instead of desensitizing the public to LTC risk resulting in their dependency on public assistance in the end.

Cohen/Butler: “The WISH Act, however, steers a careful middle course. It combines public and private roles in ways that would promote comprehensive insurance protection while strengthening the private insurance industry. It does so by creating a modest ‘catastrophic’ public program to limit exposure for LTSS costs that modest- and middle-income people can reasonably be expected to manage, either through reliance on family caregivers, personal resources, or on private insurance. In this way, the WISH Act gives private insurers the opportunity and greater actuarial certainty to design insurance as a gap-filler (much like private Medigap insurance does for health costs).”

LTC Comment: Here wishful thinking borders on full-fledged fantasy. Even a “modest catastrophic” benefit sends the worst possible message to consumers: “don’t worry about long-term care; the government has you covered.” Private insurers won’t want to fill the public program’s gaps for reasons I’ll explain below. Middle income people won’t buy more private policies for the same reasons they don’t buy them now; Medicaid picks up catastrophic costs already and the WISH Act does nothing to change that.

Cohen/Butler: “The likely result: Many more middle-income people would buy private policies that, combined with the new public insurance, would provide nearly comprehensive insurance protection against LTSS costs. This fundamental idea is key to the WISH Act: using limited public insurance in part to help stabilize private insurance.”

LTC Comment: It is not necessary to create a new economy-debilitating compulsory payroll-funded catastrophic LTC financing program to solve the problems long-term care faces. All that’s needed is to recognize that Medicaid is America’s catastrophic LTC financing system and restore it to its original purpose. Retarget Medicaid’s benefits to people most in need. Eliminate or radically reduce its home equity exemption. Close its many other egregious eligibility loopholes; and enforce estate recovery. When long-term care really is a potential financial catastrophe that threatens even home equity, people will save, invest and insure against that risk. Furthermore, it does not require a new government program to make adequate private LTC insurance affordable to middle-income people.

The National Investment Center (NIC) recently reported that reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for seniors housing by 3.6 million individuals enabling 71 percent of middle-income seniors to afford the product (NIC, 2019, April). Where could consumers find that extra $15,000 to bring the cost of seniors housing into reach? The premium for an annual long-term care insurance benefit of $15,000 would only cost a small fraction of the premium required for the full coverage that consumers find so financially daunting now. Unfortunately, insurance regulations forbid carriers from offering coverage with a benefit of less than $18,000 per year. Once again, well-intentioned regulation stands in the way of sensible long-term care policy and planning. (Medicaid and Long-Term Care, pps. 65-66)

That is how to make adequate private LTC insurance affordable to middle-income people when they’ve come to want the coverage after Medicaid no longer obviates the need for it. The best solution is to reduce dependency on government not expand it with a big new program.

Cohen/Butler: “Under the legislation, the public program would begin paying a benefit only after an individual has a LTSS need that lasts for at least one to five years—depending on income. … Thus, the amount of time a family would wait to receive the public insurance benefit would be directly related to their income history so that those with lower incomes have to wait less time to receive benefits. This scaled, income-based waiting period is designed to target benefits to middle-income households and protect them from financial ruin.”

LTC Comment: Actually “this scaled, income-based waiting period” is a means test. In other words, the WISH Act would create another welfare program. It is not social insurance as its authors intend it to appear. Ironically, the welfare programs we already have—Medicaid and Supplemental Security Income (SSI)—have gradually become entitlements accessible to people of substantial means as a result of eligibility bracket creep and lack of financial eligibility enforcement. On the other hand, the programs billed as social insurance—Social Security and Medicare—have been welfarized with the addition of extra costs for higher income people. America already has too many middle-class people dependent on government social insurance and welfare programs. We should go in the opposite direction, not add more of the same.

Cohen/Butler: “The WISH Act would also strengthen private insurance by using public insurance to address a part of the risk that is hard for the private insurance market to predict: the costs associated with long-duration LTSS need. Historically, the unpredictability of these costs has discouraged insurers from offering policies in this market. But having a well-defined public insurance program in place would stabilize the market and make it more appealing to new entrants.”

LTC Comment: That statement displays a fundamental misunderstanding of the role of private insurance. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. The private insurance industry is uniquely qualified to perform that role responsibly in actuarially sound ways that the government has shown it is incapable of doing. Filling gaps with private coverage as the WISH Act proposes and Medi-Gap policies do is not insurance. It is dollar cost averaging which lacks the leverage against risk that real insurance provides. By taking over the catastrophic health risk, Medicare ruined genuine private health insurance for the elderly and placed an insupportable burden on the U.S. economy which has no hope of covering that program’s unfunded liabilities, currently $33.2 trillion according to the US Debt Clock. To add more to government’s catastrophic promises at this stage is unwise and irresponsible.

Cohen/Butler: “The largest public payer of LTSS is the Medicaid program. While it pays for more than half of all LTSS, however, it covers support services only after people expend most, if not all, of their personal resources. … The WISH Act would have a dramatic impact on state Medicaid programs, helping to stem expenditure growth and in a manner that also advances health equity. Indeed, by covering long-duration LTSS needs, which are the primary driver of LTSS costs, the WISH program would reduce Medicaid expenditures by at least 23 percent, based on an analysis of a similar approach.”

LTC Comment: The WISH Act would not reduce Medicaid LTC expenditures at all, much less by 23 percent. That’s because the proposed legislation does nothing to change Medicaid’s hemorrhaging financial eligibility system. The idea that Medicaid LTC benefits are only available “after people expend most, if not all, of their personal resources” insults the intelligence of anyone who knows how Medicaid actually works. Income only obstructs eligibility if it exceeds the cost of a nursing home, $7,750 per month on average, hardly low income. Virtually all large assets are exempt including $603,000 or $906,000 of home equity depending on the state and, with no limit on the amount, one vehicle, prepaid burial expenses, term life insurance, one business including the capital and cash flow, IRAs in payout status as most are for older people due to required minimum distributions, household goods and personal belongings, including expensive “heirlooms.” Elder law attorneys expand these already generous rules to qualify their affluent clients by means of special trusts, annuities, and spend down gambits.

Absent estate recovery, which most states do not pursue aggressively, Medicaid operates to preserve substantial assets for heirs at the expense of taxpayers. Heirs who receive large bequests because their parents’ long-term care costs were paid by Medicaid are not likely to purchase long-term care insurance for themselves. If Medicaid operated as it should, as a safety net for the poor, there would be no credible need for a program like the WISH Act proposes. People would know LTC is a personal risk and cost. They would use personal savings and home equity conversion to purchase their preferred kind of high quality care in the private market. In time, more would buy private LTCI to protect their savings and home equity. Fewer people would need Medicaid leaving the program with more resources to provide better care to truly needy recipients. Everyone can benefit by reducing government interference and funding instead of expanding both.

Cohen/Butler: “One of the shortfalls of the CLASS Act was that its design made it fiscally unsustainable, leading to its repeal in 2013. In contrast, the WISH Act is financed much like a typical insurance program, with a payroll premium offsetting program costs. In this case, 0.6 percent of wages would be collected from all participants (half from employees and half from employers). Like Social Security, full benefits would be available after 40 quarters of work. Pro-rated benefits would be available after six quarters. This structure would fund projected benefits and administrative expenses without general revenue.

“What does this mean for a typical worker? In early 2020, median weekly earnings for full-time wage and salary employees were $936. Thus, for such full-time employees, a total of $5.62 per week ($292 per year) would be set aside into a trust fund to pay for future catastrophic LTSS needs.”

LTC Comment: This is so much verbal slight-of-hand. CLASS failed because it was voluntary. It didn’t force people to participate under penalty of law as the WISH Act would. Structuring another quasi-welfare program on the model of Social Security, whose current unfunded liabilities are $21.4 trillion, is folly. Putting a median-income worker’s payroll tax into another “trust fund” that government will spend immediately and replace with IOUs it can never satisfy will be no consolation. Furthermore, what the “InLTCgentsia” never seem to grasp is that pulling $5.62 per week out of workers’ income and the same amount from their employers, which might otherwise have increased workers’ income, is a drag on the productive economy. We see the “benefits” they allege, but the opportunity cost—all the things productive people might have done with the wealth expropriated by government—goes unseen.

Closing LTC Comment: The essence of the Cohen/Butler case for the WISH Act is that

(1) Catastrophic spend down for nursing home care is wiping out the savings of large numbers of Americans. That is false. All but 7% of nursing home revenue comes from government programs. Is it long-term home health care, instead of nursing homes, that is wiping out so much wealth? No, only 11% of home health care expenditures are out-of-pocket. Most (85.3%) come from Medicare, Medicaid, and private health insurance with the remainder deriving from several small public and private financing sources.

(2) Private LTC insurance failed because insurers are afraid of catastrophic risks. That is false. Insuring catastrophic risk is the appropriate role for private insurance, one which government has proven fiscally incompetent to manage.

(3) People don’t buy private LTC insurance because it is too expensive. That is false. The main reasons private LTC insurance has languished are that (a) government forced interest rates artificially low making returns on reserves inadequate to avoid premium increases that alienated potential customers, and (b) after the insurable event occurs, Medicaid gives away the protection insurers were trying to sell when the need for expensive long-term care was still an insurable risk. If Medicaid did not crowd out private LTC insurance, people could purchase smaller amounts of it at much lower cost to close the remaining $15,000 gap identified (above) by NIC.

(4) We can’t possibly meet the long-term care needs of middle-income Americans without forcing them into another mandatory payroll-funded government Ponzi scheme like the ones that are already impossibly over extended financially. That is false. Long-term cares problems were created by decades of government financing that incentivized the public to ignore LTC risk, remain financially unprepared, and rely on public welfare if and when the need arose. Remove those perverse incentives and most people will do the right and responsible thing.

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Updated, Monday August 16, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-028: LTC NEWS AND COMMENT

Is The WISH Act A Real Fix For Long-Term Care Costs?
Who Will Take Care of America’s Caregivers?
Guest Opinion: Stop, rethink Washington state’s long term care law
Kaiser study finds severe workforce shortages challenging HCBS providers
Advisors, Take Fear Out of Long-Term Care Planning
Which long-term-care insurance plans qualify for a payroll tax exemption?
Social Security COLA Estimate for 2022 Raised to 6.2%
The Middle Ground For Fixing Long-Term Care Costs: The WISH Act
Life-LTC Combo Product Sales Fell in 2020: LIMRA
Getting Old Is a Crisis More and More Americans Can’t Afford
Democrats Hope To Beef Up Medicare With Dental, Vision And Hearing Benefits
Should Medicaid protect $8 trillion from private senior living costs?

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Updated, Monday August 9, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-027: LTC NEWS AND COMMENT

Schweitzer urges Inslee to end long-term care insurance benefit
A Woman’s Guide to Long-Term Care
Money For Nothing: The Biden Administration Seeks To Overturn Section 1115 Demonstration Safeguards
Genworth Hopes to Return to Long-Term Care Market Next Year
2021 Poverty Projections: Assessing the Impact of Benefits and Stimulus Measures
SNF-at-Home Model Becoming ‘Critical Player’ For Success
How a Medicaid Trust Protects Your Assets
The Evolution Of Long Term Care: What we might learn from Germany and other countries about managing the care for our aged
Advising non Washington State Employers about the Collection & Remittance process for their Washington State Employees for Wash. Cares
Deaths From Alzheimer's Far More Common in Rural America
The InLTCgentsia
Low vaccination rates, rise in variants preventing end to COVID-19 crisis in long-term care
COVID-19 Cases and Deaths in Long-Term Care Facilities through June 2021
3 Reasons Dementia Cases Could Triple by 2050
Ageism remains last accepted prejudice in ‘egalitarian’ workplace, according to research

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Updated, Friday, August 6, 2021, 10:40 AM (Pacific)

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LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: The best-laid plans of mice and men often go awry and especially in long-term care financing policy, after the ***news.***

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

In addition to today’s featured column and the recent articles linked below, Steve has the following piece accepted for publication in August:

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

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

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

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

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

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

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

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

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

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

LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: We thank McKnight’s Long-Term Care News for publishing the following article on July 26, 2021. Long-term care providers and insurers share a common interest in improving public policy that governs LTC services and financing. Equally important, however, is that these two components of the long-term care business collaborate to prevent bad public policy from taking effect. Please read this article and, if you have something to say about it or the topic, avail yourself of the opportunity to comment, which McKnight’s provides readers at the end of the piece. Or just drop me a note at smoses@centerltc.com. Thanks for your time and attention to this important subject.

“Great moments in unintended LTC consequences”
by
Stephen A. Moses

Reason.com publishes a video feature called “Great Moments in Unintended Consequences.” Each episode features three problems, three “solutions,” and comical coverage of the unanticipated results.

For example, “The Luxury Yacht Tax.” The year: 1990. The problem: the national debt is exploding. The solution: a 10% luxury tax on expensive boats.

Narrator: “Sounds like a great idea with the best of intentions. What could possibly go wrong?”

It turns out that while wealthy people buy yachts, it’s usually middle-income people who make them. This tax plan cut sales of luxury boats by 70%, destroyed hundreds of thousands of middle-class jobs, and resulted in a net loss of tax revenue to the government.

Many episodes of this feature are equally amusing and thought-provoking. They got me thinking about “Great Moments in Unintended Long-Term Care Consequences.”

The year: 1965.

The problem: People are living longer, dying slower and in desperate need of more long-term care.

The solution: Provide Medicaid-financed nursing home care covering room and board as well as custodial and skilled care for anyone who can’t afford it otherwise and with no limit, for the first 15 years, on transferring assets to qualify.

“Sounds like a great idea with the best of intentions. What could possibly go wrong?”

With free long-term care available after they need it, people didn’t bother to save, invest or insure for that big risk and cost when they were young and healthy enough to prepare.

Once they needed care, most discovered they could get Medicaid to pay as long as their incomes were below the cost of a nursing home and they held their assets in easily convertible exempt form, such as a home, car, business, IRAs, prepaid burial funds, term life insurance, household goods or personal belongings.

Demand surged. Medicaid nursing homes filled to 95% capacity in the 1980s. Private pay census at market rates plummeted while Medicaid residents, reimbursed at less than the cost of care, surged. Care quality suffered. You can’t expect Ritz Carlton care for Motel 6 rates.

Medicaid costs exploded, so the government tried to clamp down on eligibility by penalizing asset transfers to qualify, requiring estate recoveries and capping the home equity exemption. But Medicaid planning lawyers dodged these restrictions, and expenditures continued to skyrocket.

Easy access to free or subsidized nursing home care stunted a private-pay market for home care and assisted living for decades until welfare-financed institutional care got such a dubious reputation that people were willing to spend their own money to stay out of a nursing home.

Potential private sources of long-term care financing, such as home equity conversion and private LTC insurance, dried up. Why spend your own money when Uncle Sam is so eager to pay for long-term care, room and board if you ever need them?

So, today we approach the second third of the 21^st century, when boomers start turning 85 and blow the lid off medical and LTC costs just as the Social Security and Medicare trust funds run out, forcing those programs to cut their payments.

We find ourselves overly dependent on welfare-financed institutional long-term care with untrained, unpaid family and friends struggling to care for loved ones and little hope the system will do anything but deteriorate further.

It’s all because well-intentioned academics, policymakers and politicians wanted to help by providing more long-term care back in 1965, then kept on “fixing” it until it became the Rube Goldberg mess it is today, and never asked, much less answered the key question: “What could possibly go wrong?”

But at least they’ve learned their lesson and no longer want to turn long-term care over to more government financing and regulation. Right? Alas, no.

Most of the recommendations coming from analysts and think tanks these days call for even more government involvement, including billions of dollars for Medicaid home-and-community based care and new, compulsory, payroll-funded, government-regulated entitlement programs with “trust funds” bound to be diverted to current spending like the ones we have already.

That sounds like doubling down on the same policies that caused long-term care’s problems in the first place. What could possibly go wrong?

There is a better way. For a fuller explanation of what did go wrong with long-term care and how to fix it, read Medicaid and Long-Term Care.

Steve Moses is president of the Center for Long-Term Care Reform and author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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Updated, Monday August 2, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-026: LTC NEWS AND COMMENT

Long-Term Insurance, Short Term Confusion
Researchers are concerned about the possibility that COVID-19 might lead to dementia
Analyzing Long Term Care Insurance Prices
BREAKING: AHCA backs mandatory COVID-19 vaccinations for healthcare workers
Medicare and Dental Coverage: A Closer Look
Financial Groups, Firms Press Biden to Address Retirement Security
Country Singer Writes Song for Mother in Long Term Care
COVID-19 connected to dementia-like disability, multiple studies find
Great moments in unintended LTC consequences
New study finds drinking too much coffee can shrink your brain, increase dementia risk significantly

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

Seattle—

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LTC E-ALERT #21-025: LTC NEWS AND COMMENT

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

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

Seattle—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stephen A. Moses

425-891-3640 smoses@centerltc.com

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

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

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

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

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

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LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

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

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

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

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

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

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

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

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

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

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

LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

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

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

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

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

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

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

Two approaches in the news

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

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

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

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

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

No serious consideration until now

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

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

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

What this means for senior living

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

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

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

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

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

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

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

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

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

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

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

LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

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

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

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

LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

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

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

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

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

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

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

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

The WA Cares Fund is practically unwrappable.

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

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

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

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

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

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

LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

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

LTC BULLET: WHY LTCI FAILS

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

“Why LTCI Fails”
By
Stephen A. Moses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: LTC CENTER STANDING GUARD

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

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

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

LTC BULLET: LTC CENTER STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 23rd year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private funding or promoted compulsory government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, government agencies, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to 100 LTC Bullets we’ve published taking these groups and individuals to task:

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

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

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

Government Agencies and Commissions: Government Accountability Office (GAO), the Medicaid Commission, the Long-Term Care Commission, Congressional Research Service (CRS), Congressional Budget Office (CBO), Medicare Trustees, Centers for Medicare and Medicaid Services (CMS), Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” Medicaid and CHIP Payment and Access Commission (MACPAC)

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

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Steve at smoses@centerltc.com or 425-891-3640 to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC Bullet: How and How Much Medicaid Reduces Lifetime Medical Spending for Affluent Retirees, October 10, 2018
LTC Comment: Medicaid is welfare, so of course it reduces lifetime medical spending of the poor. But here’s evidence Medicaid radically reduces medical spending by the affluent, especially for those savvy enough to maximize “Medicaid planning.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

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

LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

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

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

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

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

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

Session Reviews

Week One

Tuesday, April 13, 2021

Opening General Session

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

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

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

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

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

Track: Management & Operations

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

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

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

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

Recertifications can be simplified if recovery is unexpected.

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

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

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

Track: Management & Operations

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

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

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

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

Track: Marketing

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

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

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

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

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

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

Track: Aging in Place

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

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

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

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Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

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

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

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

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

Same session; different reviewer:

Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

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

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

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

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

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Thursday, April 15, 2021

Session Title: Industry Best Practices on Common Terminology

Track: Legal

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

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

Recommendation (view recording or not?): Yes

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Session Title: Changing Selling Techniques for Changing Times

Track: Advisors and Agents

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

Comments: I noticed the following tips:

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

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

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

Track: Underwriting and Claims

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

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

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

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

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Session Title: Adverse Decisions: Considerations for Determining Risk Tolerance

Track: Claims and Underwriting

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

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

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

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

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

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

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

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Week 2

Tuesday, April 20, 2021

Session Title: Long Term Care Marketing, a 360 View

Track: Marketing

Sponsor: National Peace Officer and Firefighters Benefit Association

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

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

Recommendation (view recording or not?): Yes

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

Track: Legal

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

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

Recommendation (view recording or not?): Yes

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Session Title: Fraud: Emerging Trends and Innovative Solutions

Track: Legal

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

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

Recommendation (view recording or not?): Yes.

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Session Title: Tax Advantages of LTC Planning

Track: Marketing

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

Comments: Seemed standard but thorough for me.

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

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Session Title: Critical Tools for Crisis Planning

Track: Advisors & Agents

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

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

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

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

Track: Claims and Underwriting

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

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

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Thursday, April 22, 2021

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

Track: Actuarial and Finance

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

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

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

Same presentation; different reviewer:

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

Date and Time: Thursday, April 22, 2 pm

Track: Actuarial

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

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

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

Traditional type of reserves based on prescribed values for variables

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

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

MT lifted its unisex mandate, Kevin thinks.

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

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Session Title: How to Communicate with Policyholders

Track: Management and Operations

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

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

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

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

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

Track: Actuarial & Finance

Sponsor: Sutton Actuarial

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

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

Recommendation (view recording or not?): Outstanding!

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Session Title: Litigation Update

Track: Legal, Compliance, & Regulatory

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

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

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

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

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

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

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Week Three

Tuesday, April 27, 2021

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

Track: Aging in Place

Sponsor: Active Daily Living

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

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

Recommendation (view recording or not?): Yes.

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

Track: Marketing & Distribution

Sponsor: CLTC – Certification for-Long Term Care

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

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

Recommendation (view recording or not?): Yes

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

Track: Legal, Compliance, & Regulatory

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

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

Recommendation (view recording or not?): Yes.

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

Track: Legal, Compliance, & Regulatory

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

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

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

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Thursday, April 29, 2021

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

Track: Advisors & Agents

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

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

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

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

Track: Advisors & Agents

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

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

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

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

Track: Aging in Place

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

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

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

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Session Title: Remote Work and Business as Usual

Track: Management and Operations

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

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

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

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

Seattle—

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

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

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

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

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

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

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LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

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

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

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

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

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

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

LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: MACPAC CAPTURED

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

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

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

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

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

LTC BULLET: MACPAC CAPTURED

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: THE KEY TO LTC

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

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

LTC BULLET: THE KEY TO LTC

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

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

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

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

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

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

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

RECOMMENDATION #l--ELIGIBILITY AND TREATMENT OF RESOURCES

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

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

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

RECOMMENDATION #2--TRANSFER OF ASSETS

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

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

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

RECOMMENDATION #3—LIENS

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

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

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

RECOMMENDATION #4--ESTATE RECOVERIES

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

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

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

RECOMMENDATION #5--FUTURE STUDIES

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: MACPAC MISFIRES

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

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

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

LTC BULLET: MACPAC MISFIRES

The issue in a nutshell:

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

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

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

Medicaid LTSS Financial Eligibility

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

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

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

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

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

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

The Critical Role of Estate Recoveries

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

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

MACPAC Would Weaken, not Strengthen Estate Recoveries

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

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

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

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

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

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

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

MACPAC Proposals Are Shortsighted and Counterproductive

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

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

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

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

This is the honorable principle behind Medicaid estate recoveries:

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: RETHINK LTC FINANCING

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

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

LTC BULLET: RETHINK LTC FINANCING

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I found the HRS data highly questionable in “How to Fix Long-Term Care Financing” (pps. 16-17). For example: “One expert found significant data quality issues in the surveys due to “measurement errors in the data, particularly those arising from item nonresponse and from inaccurate respondent reports of the ownership and level of assets.” (Venti, p. 3) “Furthermore,” as I explained in the report, “there are many reasons why survey respondents and their representatives might fail to report income and assets to surveyors or even purposefully misrepresent the facts. People who have reconfigured their wealth to qualify for public welfare benefits may be ashamed of having done so or simply unaware that their heirs did this on their behalf. Seniors reporting on themselves may be cognitively impaired or intimidated by self-interested family members. Heirs who benefit from preserving parents’ estates may prefer to conceal the facts. Lawyers who do Medicaid planning are protected from disclosure by attorney/client privilege, while long-term care providers and Medicaid eligibility staff, who often know which wealthy locals are taking advantage of Medicaid, cannot disclose the information because of legally enforced confidentiality. Getting to the truth in such matters is extremely difficult.” (p. 16)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

Long-term care in the age of Covid, and beyond
Using Estate Planning to Prepare for Medicaid
Baby boomers face financial distress and age discrimination
Long-Term Care Insurance: First, You Should Find an Agent
Want to age at home instead of a nursing home? Consider this first
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Updated, Friday, February 5, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

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

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

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

LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

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

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

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

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

“The Inherent Individualism of Insurance”

By Stephen A. Moses

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

What is insurance and why do we need it?

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

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

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

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

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

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

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

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

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

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

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

Why and how is insurance corrupted?

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

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

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

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

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

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

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

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

Regulation, Welfarization, and Social Insurance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Insurance and Morality

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

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

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

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

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

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

By contrast, social insurance violates those same ethical principles.

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

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

*** NEW 2021 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS. We’ve just updated MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY in The Zone, the Center’s members-only website. If you need your user name and password to access The Zone or if you’d like to join the Center to gain sustained access, contact Steve Moses at smoses@centerltc.com. The 2021 spousal impoverishment numbers are included in the following LTC Bullet. ***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Steve at smoses@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

*** QUINTESSENTIAL QUERY: After a program I gave for LTCI producers recently, an attendee asked:

I never have been able to understand why the state and federal government do not enforce existing rules about qualifying for Medicaid or create new ones that will limit their liability. It is a welfare program designed to help those who need it and not a program for the people who can afford to pay for their own care. We have known for years that the Baby Boomers are a ticking time bomb, yet the government ignores it. Can you explain why they are not interested in making Medicaid a program that can be accessed by the ones who really need it?

I replied:

In a nutshell, the problem is decades of drift toward collectivism and dependency on government as everyone’s provider/protector implemented through compulsory social insurance. We’re now paying the price for replacing personal responsibility with government promises. I expect the full bill to come due by 2031 when boomers start turning 85, Social Security and Medicare “trust funds” are depleted and the Fed’s and Treasury’s Faustian bargain with Modern Monetary Theory plays out. Then we’ll learn if there is anything left of the individualistic values and principles that made America great in the first place.

For the full explanation, I recommend my two latest studies, a monograph published in January 2020 titled Medicaid and Long-Term Care and How to Fix Long-Term Care Financing from 2017, published with the Foundation for Government Accountability. ***

LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

LTC Comment: Before the Medicare Catastrophic Coverage Act of 1988, which was signed into law by President Ronald Reagan July 1, 1988, access to Medicaid’s generous long-term care benefits did require spousal impoverishment under certain circumstances. While the “catastrophic” law was still under consideration in Congress, I described the problem and how the proposed legislation would address it in the U.S. Department of Health and Human Services Office of Inspector General’s June 1988 report titled “Medicaid Estate Recoveries: National Program Inspection”:

Under current law, spouses of institutionalized Medicaid recipients are sometimes forced into impoverishment by Medicaid eligibility rules. This usually occurs because the husband is institutionalized first. If, as is often the case, most of the family's income such as Social Security and/or a pension is in the husband's name, Medicaid rules provide that all but a small amount must be applied toward his cost of care. The wife who is left in the home, i.e., the community spouse, retains only a pittance. On the other hand, if the wife is institutionalized first, and the income is still in the husband's name, he keeps the money, because the community spouse has no legal obligation to contribute toward the cost of the institutionalized spouse's care.

The catastrophic bill addresses this problem by increasing the amount of income and resources that the community spouse may retain without affecting the Medicaid eligibility of the institutionalized spouse. Because more people would qualify for assistance and less family income would apply toward the cost of institutional care, the fiscal impact of this solution would be to increase Medicaid expenditures. We found that 3-year cost estimates on similar provisions in different bills varied from $410 million (Congressional Budget Office) to $1,275 million (HCFA actuaries) depending on implementation assumptions. All estimates ascend steeply into future years. (pps. iii-iv, emphasis added.)

Boy did we get that right! Medicaid’s long-term care expenditures have skyrocketed ever since, from $18.5 billion for nursing home and home health care in 1990 to $87.1 billion in 2019, nearly quintupling in the ensuing 29 years.

What MCCA ’88 Did

MCCA ’88 dealt with the spousal impoverishment problem in several ways. It guaranteed the community spouse a “Maximum Monthly Maintenance Needs Allowance” or MMMNA of up to $1,500 per month. The law granted a “Community Spouse Resource Allowance” or CSRA of $60,000.

What these provisions meant is that the wife or husband of an institutionalized Medicaid recipient could retain up to $1,500 per month of the Medicaid spouse’s income instead of that income having to be used to offset Medicaid’s cost of his or her care in the nursing home. Likewise, the community spouse could retain half of the couple’s joint assets not to exceed $60,000, thus exempting those funds from private LTC liability and increasing Medicaid’s expenditures.

MCCA ’88 provided for these spousal impoverishment protections to increase with inflation annually. As of 2021, the original numbers have more than doubled. The MMMNA is now $3,259.50 per month and the CSRA is $130,380. A little over $3,200 per month is not easy living, but it is also most assuredly not “spousal impoverishment.” The official poverty level for single individuals as of 2021 is $12,760 per year or $1,063 per month, a little less than one-third of the MMMNA. Medicaid’s LTC role is to provide a safety net for the poor, not to protect a middle-class life style for people who fail to plan, save, invest or insure for long-term care. So the term “spousal impoverishment” should be stricken from the LTC financing lexicon.

Updated Medicaid Spousal Impoverishment Numbers

In case you’re interested, we’ve updated and published the Medicaid spousal impoverishment numbers every year since 1991, when the MMMNA was $1,662 and the CSRA was $66,480. Those data are available to Center members in The Zone here. You’ll need your user name and password for access to The Zone. Get a reminder from smoses@centerltc.com if you’re already a Member or contact him to join and get access to this valuable resource. Our source is the Centers for Medicare and Medicaid Services (CMS) “2021 SSI and Spousal Impoverishment Standards” here.

A Better Way

Now back to that old OIG report from 1988. Did it oppose the MCCA ‘88’s provisions to eliminate spousal impoverishment? No! But it did offer an alternative approach designed to achieve the same result more cost-effectively:

Certain findings from the OIG’s Medicaid Estate Recoveries report have a direct bearing on the spousal impoverishment issue. In fact, we believe this problem can be resolved at considerably less public expense than is contemplated in the current legislation. We found, for example, that many "impoverished spouses" own their homes free and clear. Their problem is cash flow, not poverty per se. We found that two-thirds of the elderly poor are unable to qualify for any Medicaid services, although many individuals with large assets are eligible for the program's most valuable benefit (institutional care). We documented that recovery of Medicaid payments from the estates of property-holding recipients is very unusual. This is true because assets are (1) transferred, sheltered, expended or concealed by recipients and their families and/or (2) public officials have taken no action to recover. In light of these facts we recommended that propertied recipients be permitted to retain their income and assets while receiving Medicaid long-term care benefits, but only in exchange for a promise, secured by a legal encumbrance, to repay the cost of their care when they no longer need their property. This repayment would be made from their estates or the estates of their last surviving dependent relatives after the property is no longer needed for a livelihood. Such a plan would resolve the spousal impoverishment problem, eliminate the most catastrophic financial impact of long-term illness and add a major nontax revenue source for Medicaid. More importantly, the risk of losing their financial legacy would influence the elderly and their heirs to seek private long-term care insurance protection and thus further relieve fiscal pressure on public programs. (p. iv)

Congress later adopted some of our 1988 report’s recommendations in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). It made estate recoveries mandatory, for example, but it left Medicaid’s many income and asset exemptions unprotected by the “legal encumbrance” to secure that wealth for later recovery as we had recommended. Nor did the federal government strongly enforce the newly required estate recoveries. Worse, OBRA ’93 left the home equity exemption unlimited. That only changed with the Deficit Reduction Act of 2005 (DRA ’05), which capped home equity at $500,000 to $750,000 ($603,000 to $906,000, as of 2021) at state legislatures’ discretion.

The end result is that Medicaid LTC expenditures continue to grow rapidly, the public remains desensitized to LTC risks and costs, private financing of LTC through home equity conversion and private insurance is stymied, and LTC access and quality continue to be serious problems.

If all this seems just a little too “inside baseball” to you, then you have a good idea why the complicated subject of long-term care financing policy remains a mystery to most analysts and policy makers. If you really want to understand what it means, and what has to be done to resolve the problems once and for all, you could do worse than to spend an hour reading the OIG’s report from 33 years ago. Here it is again: “Medicaid Estate Recoveries: National Program Inspection.”

I’d also like to point readers to an earlier study I conducted and wrote that led directly to the Inspector General’s report. The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the Medicaid Program -- Health Care Financing Administration (1985). Read it and see if you don’t think we nailed the problem and the solution 36 years ago!

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Updated, Monday, January 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-001: LTC NEWS AND COMMENT

Trump Officials Approve Tennessee's Controversial Request To Revamp Medicaid Funding
New Analysis Finds Significant Financial Benefits Locked in Long-Term Care Insurance Policies Sold Fifteen to Twenty-Five Years Ago
One-week US Covid-19 case and death totals are higher than ever
Genworth May Cut Remaining LTCI Sales and Marketing Operations
December Proved To Be Deadliest Month For Residents In Long-Term Care
2021 Economic Outlook Fraught With Uncertainty
Older Adults and COVID-19: Implications for Aging Policy and Practice
MA Beneficiaries See Nearly 20% Fewer Home Health Days Than Traditional Medicare Peers
Genworth to Shift to China Oceanwide Deal Backup Plan
‘Because of You Guys, I’m Stuck in My Room’
The COVID-19 Pandemic Has Upended The LTCi Market
What's Most Hurting the Financial Security of Older Americans?
We need long-term solutions for older Americans’ long-term care
Elder Law Guys: The twelve COVID elder law days of Christmas
Trust Fall
Crushing Despair, Glimmers of Hope: The Top Skilled Nursing Stories of 2020
Senate Passes $2.3T Package of Relief, Funding and Tax Breaks

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Updated, Friday, January 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care and the Pandemic

LTC Comment: What has the Covid-19 pandemic wrought for long-term care? Answers after the ***news.***

*** ILTCI CONFERENCE GOES VIRTUAL: “After surveying our attendees and careful consideration, we will change the 2021 ILTCI Conference from an in-person meeting to a virtual format.” So announced Barry Fisher, Conference Chairperson and Vince Bodnar, Conference Co-Chairperson recently. They’ve polled past participants for their preferences regarding how to structure and present the leading LTC insurance industry conference in a virtual format. Whatever they come up with will be far better than nothing (last year) but could never match past in-person versions. Nevertheless, we’ll take whatever we can get! Read the Center for Long-Term Care Reform’s History of LTC Insurance Conferences (2019) for a detailed look back at all the Intercompany Long-Term Care Insurance Conferences from the first one, 2001 in Miami to the latest, 2019 in Chicago. ***

*** “Trust Fall: The Untold Story of Washington's LTC Trust Act” is an excellent essay by LTC Associates’ Senior Vice President, Stephen D. Forman. In it Forman describes, explains and debunks the CLASS-like public policy misfire currently being operationalized in the Evergreen State. This evergreen new deal for long-term care “vigorously remakes Washington’s insurance market—without voice from the insurance industry—to the financial injury of residents.” We hope to bring you a “guest bullet” by Mr. Forman summarizing the key points in his essay. In the meantime, don’t wait. Read this provocative essay now while there’s still time to talk sense to Washington State policy makers. As with CLASS, it may be possible to derail this taxpayer shakedown before its major damage is done. Washington voters have already expressed their opposition to the plan twice by rejecting it at the ballot box in 2019 and refusing to fund it with risky investments in 2020. ***

*** IF YOU FIND VALUE IN TODAY’S LTC BULLET, please consider joining the Center for Long-Term Care Reform so you can enjoy the many benefits of membership and stay tuned daily with our LTC Clippings, weekly with LTC E-Alerts and bi-weekly with LTC Bullets. Get in front of your prospects and clients by knowing what’s happening in long-term care news and analysis—and what to say about it—before they blindside you with stories you haven’t heard. ***

LTC BULLET: LONG-TERM CARE AND THE PANDEMIC

LTC Comment: Invited by two leading national distributors of long-term care insurance to help kick off their 2021 sales year, Center for Long-Term Care Reform president Steve Moses delivered the following presentation on Wednesday and Friday of this week. He thanks GoldenCareUSA and Long-Term Care Resources (LTCR) for this opportunity to reflect on the impact Covid-19 is having on long-term care services and financing, including the future prospects for LTC insurance sales. Read on for Steve’s insights in the following presentation notes.

Long-Term Care and the Pandemic
Presented to GoldenCareUSA and Long-Term Care Resources agents and staff
Wednesday and Friday, respectively, January 6 and 8, 2021
By Stephen A. Moses, President
Center for Long-Term Care Reform

Covid Impact: Earthquake, life as we’ve known it changed radically, huge opportunities, giant risks, long-term care and LTC financing are more interesting, challenging, and fun than ever before in my 38 years following the field. The opportunity to do well by doing good selling LTCI has never been greater. You producers, distributors and the carriers you represent to consumers are critical to our country’s surviving this crisis and prospering in the future.

3 Themes: I’ll discuss three major themes or contexts of the Covid-19 pandemic:

Health and long-term care
The Economy
Politics

LTC Clippings since last month, December 2020, are the source for most of what follows. LTC Clippings is a publication we produce and distribute to subscribers.

We send an average of two clippings per day by email to subscribers. Each clipping gives the title, a link to the source, a representative quote and a couple sentences of my analysis to put the information in context.

The purpose of LTC Clippings is to inform agents of news, data, reports, articles, etc. that they need to know before they’re blind-sided by prospects or clients who’ve read something the agents haven’t seen yet.

I’ll make today’s presentation and all the links to original stories it covers available in our next LTC Bullet to be published on Friday. The same day it will be posted on The Moses LTC Blog at www.centerltc.com. You can find it there.