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Our Mission:

The Center for LTC Reform is a private institute dedicated to ensuring quality long-term care for all Americans by promoting public policy that targets scarce public resources to the neediest, while encouraging people who are young, healthy and affluent enough, to take responsibility for themselves.   We do this through...


NEW: How Medicaid made long-term care free: The Bibliography
Read the Press release for the Center's latest report:

CASSANDRA’S QUANDARY: The Future of Long-Term Care in New Hampshire

VIDEO -- Examining Abuses of Medicaid Eligibility Rules -- Includes testimony from Steve Moses (at 18min:45sec)
NEED A SPEAKER? Have Steve Moses speak at your next event.
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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, Friday, January 13, 2017, 10:41 AM (Pacific)
 
Seattle—

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LTC BULLET:  WHO BUYS LTCI AND WHO DOESN’T?

LTC Comment:  LifePlans’ quinquennial answers to these momentous questions and our targeted comments follow the ***news.***

***  SUPERSTITIOUS?  Consider this confluence:  It’s Friday the 13th.  The moon is full.  And the Trump Administration is about to take office.  Kind of reminds me of the old Chinese curses:  “May you get what you wish for” and “May you live in interesting times.”  Such times also evoke the pinyin symbol for “crisis,” composed of the characters for “danger” and “opportunity.”  Whether you’re worried or hopeful, one thing’s for sure.  For the first time in a decade, long-term care policy reform for the better is a real possibility.  Let’s make it happen. ***
 

LTC BULLET:  WHO BUYS LTCI AND WHO DOESN’T?

LTC Comment:  As anyone who reads these LTC Bullets knows, long-term care financing in the USA is a mess.  Medicaid, a welfare program, pays for most expensive extended care.  With its reputation for problems of access, quality, low reimbursement, discrimination and institutional bias, you’d think anything—especially private insurance—would be preferable to Medicaid.  But, think again.  Private LTCI remains the relatively rare exception rather than the rule for most people contemplating the potential need for costly long-term care someday.  Why?

That’s the question LifePlans sets out to answer every five years on behalf of America’s Health Insurance Plans (AHIP).  Their latest report, titled “Who Buys Long-Term Care Insurance?:  Twenty-Five Years of Study of Buyers and Non-Buyers in 20152016,” was just published.  Get a copy here and devour it.  You won’t find a better insight into the vagaries of marketing long-term care insurance anywhere.  The Executive Summary and a long list of “Key Findings” make capturing the essence of the report quick and easy.  Here are some abbreviated highlights followed by our comments focused on the report’s findings regarding government’s LTC financing role.

  • The average LTCI buyer is 60 years old, and wealthier than the average non-buyer
  • Current buyers average income is $87,500, same as 2010, but up from $27,000 in 1990
  • Buyers are “planners”
  • Non-buyers are less likely to think they’ll need LTC someday
  • 96% of LTCI policies were comprehensive in 2015; institution-only plans are nearly gone
  • Covered benefits up only 5% compared to five-year increases of 20% to 30% formerly
  • Shorter benefit durations; a new low of four years
  • Inflation protection down from 3 in 4 to 2 in 3
  • Average annual premiums up 19% to $2,727
  • Value is down due to new lapse and interest rate assumptions for new policies
  • 1/3 of buyers bought mainly to protect assets; 1/5 bought to ensure service affordability
  • ¾ of  buyers said state participation in the LTC Partnership Program was important
  • 2/3 cited potential cost increases as their main reason to buy now
  • 71% of married couples have policies on both
  • Spouses, agents and financial planners, rarely their children, influence buyers
  • For 15 years, agent’s recommendation and insurer’s reputation have been key
  • Only 20% of buyers knew their carrier raised premiums, but 40% expected it to happen
  • 55% of non-buyers expected future premium increases
  • Most buyers prefer gradual premium adjustments to less frequent, larger increases
  • 1 in 5 buyers considered a combo product before buying a stand-alone product
  • Half of non-buyers said they’d be more likely to buy a combo than a stand-alone product
  • Cost has been the key factor for non-buyers for 25 years; only 15% say too confusing
  • Only 1/3 of non-buyers said they’d never buy, so most are future potential buyers
  • Non-buyers’ worries that companies won’t pay are down to 41% from 71% 25 years ago
  • ¾ of non-buyers would reconsider if premiums stable, deductible, with gov’t stop-loss

LTC Comment:  Let’s turn now to what the new report has to say about LTCI buyers’, non-buyers’ and the general public’s opinions regarding LTC financing.  First a quote from the report’s highlights, then our point of view on the subject.

Report:  “Compared to earlier years, non-buyers have greater understanding that if they need LTC the government will not likely pay for it (although more non-buyers than buyers are still mistaken about this).  . . .  Individuals from the general population were most likely to believe that the government will pay for LTC . . ..”

LTC Comment:  Do the authors of this report really not know that the government does pay for most expensive long-term care?  Ironically, the non-buyers and general public who think government does pay for LTC are more correct than the reports’ authors.  For proof, consult government data or read virtually anything the Center for Long-Term Care Reform publishes.  Why deny such an obvious truth?  Keep reading.

Report:  “Across all groups, and over the last 10 years, well under half of respondents believed that it is the federal government’s responsibility to pay for the LTC needs of all people. Over that decade, among the general population age 50 and over, the proportion who believe that the federal government is primarily responsible for paying for care has dropped from about 1 in 3 to about 1 in 4.”

LTC Comment: Now, that is interesting.  While the federal government, specifically Medicaid and Medicare, continues to pay for the vast majority of expensive long-term care (see LTC Bullet:  So What if the Government Pays for Most LTC, 2015 Data Update), the public is less likely than ever to think paying for LTC is the government’s responsibility.  If you sense an informational disconnect, you’re right.  Why that matters?  Keep reading.

Report:  “Large majorities of respondents among the general population age 50 and over believe that it is the federal government’s responsibility to encourage people to buy LTC insurance by making premiums fully tax deductible or by allowing employed individuals to use pretax dollars to pay for the insurance.  Roughly 2 in 5 Americans over age 50 believe that the single most important action government could take is to offer more tax incentives for the purchase of private insurance policies.”

LTC Comment:  People like tax deductions?  Not exactly big news.  But based on past history and future budget prospects, the probability of above-the-line tax deductibility for LTCI without compensating expenditure reductions is as remote as ever.  (By the way, we know how to deliver those compensating expenditure reductions.  See Save Medicaid LTC $30 Billion Per Year AND Improve the Program.)

Report:  “Most respondents (65 percent) felt it was important to avoid relying on Medicaid for any LTC they might need in the future.”

LTC Comment:  That’s nice, but evidently avoiding reliance on Medicaid LTC isn’t important enough for them to plan, save, invest or insure for long-term care.  How can people think they should avoid Medicaid, but fail to act?  Keep reading.

Report:  “Individuals were asked about their views and preferences on two potential program structures: 

“A private insurance policy would pay for roughly the first two years of LTC services, and then the government would take over and pay for any LTC services needed after that (Back-end or Catastrophic Public Coverage).

“The government would pay for roughly the first two years of LTC services, and then a private insurance policy would take over and pay for any LTC services needed after that (Upfront or Front-end Public Coverage).

“Fifty-five percent preferred a ‘back-end’ program and 27 percent preferred a ‘front-end’ program.  . . . 

“Three in 4 non-buyers said they would be more interested in purchasing a private policy if there was a back-end public program; slightly fewer (69 percent) said the same thing about a front-end public program.”

LTC Comment:  Now we’re getting to the crux of the matter.  People like the idea of buying a little private insurance, preferably with a big tax deduction, and having the government pay for the higher, back-end catastrophic costs?  Well, yeah.  No surprise there. 

What’s really going on here?  What’s the principle underlying all these findings?  People want something for nothing and the closer to nothing the better.  Want proof?  Check out the next report finding.

Report:  “Regardless of what type of potential program they preferred, respondents were willing to pay about $85 per month, or a little over $1,000 per year. Slightly less than one-third would be willing to pay at least $100 per month for either of these programs.”

LTC Comment:   Obviously, people are not willing to pay enough in premiums for the coverage they need, but they’re quite happy to have the government make up the difference, even though they don’t think that’s the government’s responsibility. 

Confused?  So are the public, LTCI buyers and non-buyers, and the authors of this report.  Here’s the explanation to reconcile all the foregoing contradictions.

Government does pay for most expensive LTC and does so without impoverishing many relatively prosperous people.  That 50-year-old policy desensitized the public to LTC risk and cost.  Hence, few people know who pays for LTC, nor do they care, until they need care and don’t want to pay for it.  Then Medicaid and Medicare step in.  That’s why, despite decades of teaching consumers they’ll lose their life’s savings if they don’t buy LTCI, people still don’t buy what LTCI is selling.  Sure, make it cheap enough with subsidized premiums and big tax deductions and have the government cover the bigger risk, and well, then maybe.  But don’t believe it.  That won’t work either.  As long as people can ignore the risk, avoid the premiums, wait to see if they ever need LTC and if they do, transfer the cost to tax-payers, they will not buy LTCI in significantly higher numbers.  The only way to change that reality is to give Medicaid LTC back to its intended recipients, the genuinely needy, by tightening the program’s generous eligibility rules and eliminating the big asset exemptions and loopholes.  Do that and you fix the problem.  Don’t and the confusion and contradictions documented by this report will continue indefinitely.

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Updated, Monday, January 9, 2017, 10:46 AM (Pacific)
 
Seattle—

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LTC E-ALERT #17-002:  LTC NEWS AND COMMENT

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

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

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

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

  • Occupational Therapy May Not Reduce Decline In Patients With AD: Study

  • How New York's Bloated Medicaid Program Punishes New Jersey And Other States

  • Boomers and their parents come face to face with need for support, care

  • Regulator calls for a long-term care planning shift

  • What Should I Do If I Purchased Long-Term Care Insurance from a Disreputable Company?

  • A Little Optimism on the Future of Retirement

  • Senior living continues to see job growth, although rate is slowing

  • New Nursing Home Rules Offer Residents More Control Of Their Care

  • Dementia more common in people who live near highways

  • 2017 health, disability and LTCI planner

  • U.S. Housing Worth Record-High $29.6 Trillion in 2016

  • CMS should improve oversight of HCBS, GAO says

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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, January 6, 2017, 11:19 AM (Pacific)
 
Seattle—

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LTC BULLET:  SPOUSAL IMPOVERISHMENT?

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.***

*** 2017 ILTCI CONFERENCE sponsors inform us that “Early Bird registration rates ($895 for Individual Attendees, $395 for First Time Attendees, $195 for Exhibitors/Sponsors) are available now through Thursday, January 12th, 2017!  If you haven't registered yet be sure to register by 1/12 before our prices all rise by $100.  Register here for the LTC insurance event of the year to be held Sunday, March 26, 2017 12:00 PM - Wednesday, March 29, 2017 5:00 PM (Eastern Time) at the Hyatt Regency Jacksonville (Florida) Riverfront.  ***

*** NEW 2016 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 Damon at 206-283-7036 or damon@centerltc.com. ***

*** CLTCR Premium Membership  --  Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:  our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries.  Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources.  Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments.  Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

LTC BULLET:  SPOUSAL IMPOVERISHMENT?

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 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 $81.7 billion in 2015, more than quadrupling in the ensuing 25 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 2017, the original numbers have more than doubled.  The MMMNA is now $3,022.50 per month and the CSRA is $120,900.  A little over $3,000 per month is not easy living, but it is also most assuredly not “spousal impoverishment.”  The official poverty level for single individuals as of 2016 is $11,880 per year or $990 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 Damon@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) “2017 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 ($560,000 to $840,000, as of 2017) 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 29 years ago.  Here it is again:  “Medicaid Estate Recoveries:  National Program Inspection.”

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Updated, Monday, January 2, 2017, 11:19 AM (Pacific)
 
Seattle—

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LTC E-ALERT #17-001:  LTC NEWS AND COMMENT

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

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

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

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

  • Alzheimer's Falls More Heavily on Women than on Men

  • Thousands of Canadians languish in limbo as they wait for long-term care

  • MedPAC: Medicare Advantage Payments Now Equal to Medicare Fee-for-Service

  • Reverse Mortgage Line of Credit Could Fund Long-Term Care

  • Medicare Advantage Plans in 2017: Short-term Outlook is Stable

  • Six in Ten Older Adults Have Seen Friends Lose Financial Independence

  • The next healthcare crisis: Changes in way Medicare pays doctors

  • NAIC seeks long-term care insurer insolvency comments

  • Opinion: Every U.S. taxpayer should watch what Calpers decides about its investment-returns forecast

  • What Happens To Long-Term Care If Trump Remakes Medicare and Medicaid?

  • My Last Patient

  • U.S. financial system risks in 'medium range,' reports say

  • Test Predicting Alzheimer's Would Be Welcome, Survey Finds

  • Harvard study: Elderly demographics will crush existing housing and service options

  • OLD - The Long-Term Care ETF

  • Finally, Giving The Poor Access To Good Health Insurance

  • Caring For A Loved One At Home Can Have A Steep Learning Curve

  • Many Parents With Job-Based Coverage Still Turn To Medicaid, CHIP To Insure Kids

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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, December 16, 2016, 10:18 AM (Pacific)
 
Seattle—

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LTC BULLET:  WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment:  Our annual report follows the ***news.***

*** REGISTRATION IS OPEN for the 17th Annual Intercompany Long-Term Care Insurance Conference to be convened March 26-29, 2017 at the Hyatt Regency Jacksonville Riverfront in Jacksonville, Florida.  Early Bird registration rates ($895 for Individual Attendees, $395 for First Time Attendees) are available now through January 12th, 2017!  Click here for details and here to register.  Conference organizers tell us:  “If two or more people from your organization are planning to attend, it may be most cost effective for you to become a Sponsor or Exhibitor as they receive deeply discounted registration rates.”  Your Center for Long-Term Care Reform will be present at the meeting eager to discuss new possibilities in the LTC financing policy arena.  See you there! ***

*** MEMBERSHIP BENEFITS.  Let’s take a moment to review the benefits of individual and corporate membership in the Center.  For more details, see our “Membership Levels and Benefits Schedule.”

In a nutshell, as a regular member of the Center ($150 per year or $12.50 per month), you’ll get our weekly LTC Bullets and LTC E-Alerts and a user name and password for access to our “Members-Only Zone.”

In “The Zone,” you’ll find the “Almanac of Long-Term Care,” our compendium of LTC news, reports and statistics stretching back more than a decade with links to critical research materials covering eleven topics from “Aging Demographics” to “Unfunded Liabilities.”

Other features in The Zone include key Medicaid and Medicare numbers updated yearly and archived, a transcription of our highly regarded “Long-Term Care Graduate Seminar,” links to the major current and past “Long-Term Care Cost Surveys,” a couple dozen reasons why veterans should not rely on VA benefits for long-term care and much more.

If you’re really serious about a career in long-term care financing, then join the Center as a “Premium Member” ($250 per year).  At that level, you’ll have all the benefits of regular membership plus email and phone access to Steve Moses with a 24-hour turnaround and a subscription to our “Clipping Service,” placing you on the pioneering forefront of up-to-the moment news, data and analysis in your field.

Premium Elite members ($500 per year) get all of the above plus a complimentary LTC Bullet or LTC E-Alert sponsorship with a banner ad, complimentary Center membership for one assistant, and quickest-turnaround email and phone access to Steve Moses.

Regional Representative members ($500 per year) get all of the above and, after they meet all the qualifications—including five years qualified experience and completion of our LTC Graduate Seminar—the status of Regional Representative of the Center for Long-Term Care Reform.

Every member of the Center gets the “Big Benefit”:  the knowledge and personal satisfaction that you're supporting the indefatigable research and public policy advocacy of the Center for Long-Term Care Reform.

Corporate membership at the Bronze, Silver, Gold and higher levels is also available.  Each level includes the same benefits individual members receive for increasing numbers of employees or producers plus additional benefits exclusively for corporate members. ***
 

LTC BULLET:  WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment:  In 2016, the Center for Long-Term Care Reform (jointly with the Federalism in Action think tank) published, CASSANDRA’S QUANDARY: The Future of Long-Term Care in New Hampshire.  While the report focuses on the Granite State, much of its analysis, based on the Center’s “Index of Long-Term Care Vulnerability,” is applicable nationwide. 

Throughout 2016, we conducted research aimed at revealing flaws in the emerging consensus among researchers and policy makers in favor of a new, compulsory, payroll-financed government program to fund catastrophic LTC expenses.  Under a grant from the highly regarded Foundation for Government Accountability think tank we compiled evidence against and proposed a better alternative to that misguided approach.  Our report, provisionally titled “Long-Term Care Financing: The Myth and the Reality,” will be published early in 2017.  But throughout 2016, we gave Center members several insights into the new study’s original plan, change of direction, progress, findings and recommendations:

LTC Bullet:  Center Kicks Off New Year With Major Study,” Friday, January 8, 2016

LTC Bullet:  Losing Principles,” Friday, April 29, 2016

LTC Bullet:  The Early History of LTC Financing (and Why It Matters),” Friday, June 24, 2016

LTC Bullet:  LTC Action Plan,” Friday, July 1, 2016

LTC Bullet:  New Report Preview,” Friday, July 29, 2016

LTC Bullet:  Real vs. Mythical Medicaid,” Friday, August 26, 2016

LTC Bullet:  Behind AHEAD,” Friday, September 2, 2016

LTC Bullet:  Medicaid Malfunctions Multiply,” Friday, September 16, 2016

LTC Bullet:  How Fiscal and Monetary Malfeasance Will Ruin Long-Term Care,” Friday, October 7, 2016

LTC Bullet:  LTC Predictions,” Friday, December 9, 2016

Now let’s turn to the Center for Long-Term Care Reform’s other 2016 activities in brief.

 

LTC Bullets

The Center for Long-Term Care Reform published a total of 48 LTC Bullets in 2016.

The Center endeavors every year to keep our members educated and updated about important news and developments bearing on long-term care financing policy.

Once a week, usually on Fridays, we publish our LTC Bullet.  The Bullets are often policy pieces, sort of like op-eds.  You can always find the five latest Bullets here and archives of all 1161 Bullets (so far), by date here and by topic here.  These articles are a valuable historical resource.  Please make use of them. 

Some highlights of our 2016 LTC Bullets include:

January The Long-Term Care Crisis:  Why Now But Not Yet?
February:  Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations
March The 16th Annual Inter-Company Long-Term Care Insurance Conference:  A Virtual Visit
April:  LTCI Defeatism
May LTCI Lapses Reconsidered
June LTC at a Crossroads
July The Senior Financial Security Program, Again
August New CLTCR Website Feature
September:  Claude Thau Has Your Back
October Who Isn’t Covered by Private Long-Term Care Insurance?
November The LTC Discussion Group and Marc Cohen’s Claimant Study Presentation
December:  So What If the Government Pays for Most LTC?, 2015 Data Update

 

LTC E-Alerts

Our LTC E-Alerts are a weekly compendium for regular Center members of the previous week’s LTC Clippings, described below.

The Center for Long-Term Care Reform published a total of 48 LTC E-Alerts in 2016.

LTC Clipping Service

Our LTC Clippings lift the burden of time-consuming research off the shoulders of LTC professionals whose time is better spent providing financial planning advice to clients, selling long-term care insurance, counseling borrowers on home equity conversion, or supplying any of the many other critical services our members provide. 

Center staff have to stay abreast of everything that’s happening in the popular and professional media.  We pore over tons of material so you don’t have to spend nearly as much time doing so.  We scan the print and electronic literature on long-term care services and financing every day.  We identify the articles, speeches and reports that we consider most important for Center members to read, hear or see.  Then we cite them by date, title and author; we provide a representative quote from the source; we give our “take” on what it means in our “LTC Comment;” and we send out approximately three “LTC Clippings” by email per work day.

Reading the LTC clippings on the go keeps your professional knowledge at a peak minute-by-minute.  They make a nice break from other duties.  And you’re probably more likely to read a few items per day than to go through the whole list of publications in the weekly LTC E-Alerts at a sitting.

We explained all the details and pricing for the LTC Clipping Service in LTC Bullet:  New LTC Clipping Service.  Check it out.  If you’d like to subscribe, contact Damon at 206-283-7036 or damon@centerltc.com.

The Center for Long-Term Care Reform published a total of 584 LTC Clippings so far in 2016 or roughly 1.7 per calendar day and 2.3 per work day.  2016 was our fifth year offering the clipping service in real time. 

Season’s Greetings

All in all, 2016 was a challenging year for long-term care financing and for your Center.  We look forward to a better 2017 as the political ground becomes more fertile for public policy research and advocacy.  The pendulum is swinging back, away from expansion of government dependency and toward more personal responsibility.

We wish our many friends and members Happy Holidays, a Merry Christmas and Prosperous New Year.

The Center’s Clipping Service will continue without interruption and our research and advocacy continue unabated, but for everything else, we’ll see you next year.

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Updated, Monday, December 12, 2016, 9:53 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-048:  LTC NEWS AND COMMENT

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

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

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

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

  • MedPAC calls for nursing home pay cuts, revised PPS, in final meeting of 2016

  • Can simplification save protection?

  • The Tax Benefits of Long-Term Care Insurance

  • Combine Long-Term Care With Life Insurance? Do the Numbers First

  • Many high-need patients missing out on help with ADLs, report shows

  • Pre-retirees are terrified about health care costs

  • More LTC Policy Collapses

  • Older adults have a greater sense of well-being than younger ones

  • Alzheimer's screening that takes 5 minutes?

  • 7 clues from the House long-term care insurance hearing

  • Insurers’ Flawed Directories Leave Patients Scrambling For In-Network Doctors

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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, December 9, 2016, 10:48 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC PREDICTIONS

LTC Comment:  Yogi Berra said “It’s tough to make predictions, especially about the future.”  I should have listened.  Find out why after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** 17TH ANNUAL INTERCOMPANY LONG-TERM CARE INSURANCE CONFERENCE, themed this year “Navigating the Future” has announced:  “Early Bird discounts of up to $1,995 for Sponsors and Exhibitors have been extended through December 16th! We also offer a First Time Exhibitor/Sponsor Discount of $250 and a Non-Profit discount of $500.”  For details:  http://www.iltciconf.org/ The conference will convene March 26-29, 2017 at the Hyatt Regency in Jacksonville, FL. ***
 

LTC BULLET:  LTC PREDICTIONS

On November 14, 2008, ten days after the historic election of Barack Obama to be President of the United States, we published some predictions about the future of health and long-term care public policy.  Recently, a long-time Center friend and member, LTCI producer Jack Smelser, reminded me of those predictions, as he does every so often.  Today, we’d like to share the original predictions with you and explain how we think we did and how we would modify the predictions going forward.  Following is the original publication containing our predictions with our LTC Updates added in italics.   

When this LTC E-Alert was sent, I was about to complete a full year on the road in the Silver Bullet of Long-Term Care on the National Long-Term Care Consciousness Tour.  I was a little over 25,000 miles into that tour and visiting its 37th state.

Those were some pretty heady times.  Expectations were high that the new Administration could achieve many policy goals that had evaded politicians up to then.  (Kind of like now, though from a vastly different political perspective.)  I was dubious and tried to temper the enthusiasm.

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LTC E-Alert #8-110: LTC Predictions

Friday, November 14, 2008

Newport Beach, California (LTC Tour Mile 25,232; State #37)--

LTC Comment: Lately, I've heard some Panglossian prognostications about the future of health and LTC public policy.

People think the time has finally come for all they've worked for to be realized.

Universal health care?  Good as done.

Tax incentives for LTC insurance?  Section 125, at least, maybe above-the-line tax deductibility.

Recession?  [LTC Update:  We were right in the middle of the December 2007 to June 2009 “Great Recession.”]  Just the usual cycle that a "New, New Deal" will fix.

Sorry, but this looks to me like the victory of wishful thinking over hard economic reality.

So, I've decided to lay down a few markers.  What follows are predictions.  Not what I hope will happen.  Rather, what I expect to happen.

Read this now.  Then set it aside.  Tickle your calendar to read it again in five years and ten.  I will too.  Let's review then.

LTC PREDICTIONS

  1. No broad-based health reform will come to pass, much less reform that includes long-term care. 

LTC Update:  For eight years, it looked like I’d gotten half this prediction wrong.  The Patient Protection and Affordable Care Act, AKA “ObamaCare,” passed in 2010.  Its LTC section, the Community Living Assistance Services and Supports Act (or CLASS Act) was repealed on January 1, 2013.  The new Congress and President elected on November 8, 2016 intend to repeal the rest of ObamaCare.  So, it’s taking a while, but it looks like I got this one right.  Whatever replaces ObamaCare is much more likely to rely on market forces than government control and micro-management.

  1. Another economic "stimulus" will fail as they all do, only shifting wealth, not creating it.

LTC Update:  Sure enough, “The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111–5), commonly referred to as The Stimulus or The Recovery Act,” which was supposed to pump $787 billion into “shovel ready” infrastructure projects was a huge flop mostly enriching friends and supporters of the new Administration.  The U.S. economy has yet to return to pre-Recession growth levels despite unprecedented fiscal and monetary stimulus.  Unfortunately, expect those same economic errors to continue until the next crash occurs.

  1. Huge increases in the federal deficit and debt will require additional borrowing to the point where interest on the public debt will crowd out new--and even much current-- social spending.

LTC Update:  I got this one mostly right.  According to FactCheck.org, during the Obama years:  “The federal debt has more than doubled — rising 116 percent — and big annual deficits have continued.” According to the National Debt Clock we’ll tip over $20 trillion soon.  The “crowd out” I predicted has not occurred to the level I expected . . . yet.  The reason is that the Federal Reserve forced interest rates to near zero enabling the Federal Government to deficit spend with carrying costs a fraction of what they were 20 years ago.  Interest on the national debt in 1996 was 6.58%, but only 2.42% in 2014.  Inevitably, reversion to the mean historical interest rates will sooner or later unleash major crowd out of social programs.

  1. The present economic crisis will worsen precipitating immediately problems with Social Security and Medicare unfunded liabilities ($102 trillion) that Pollyannas think we won't confront until 2041 and 2017 respectively.

LTC Update:  Thanks to trillions of dollars of money printing and bond buying by the Federal Reserve, the economic crisis didn’t worsen . . . yet.  But we’re experiencing the slowest post-recession recovery in American history.  The stage is set for a “Greater Recession” when the stock, bond and real estate bubbles created by Fed policy finally pop.  When?  I’ve predicted before that the reckoning could come anytime, but will come no later than when the perfect demographic storm occurs as boomers begin turning 85 in 2031.

  1. Several states will declare bankruptcy, or whatever they choose to call acknowledging their financial insolvency.

LTC Update:  Stay tuned.

  1. Medicare will cut reimbursements to skilled nursing facilities dramatically leaving the nursing home industry unable to meet even current standards of care access and quality for publicly financed patients.

LTC Update:  This prediction was too pessimistic.  Medicare is still on a glide path to insolvency, but doomsday is delayed due to the federal government’s fiscal and monetary shenanigans already described.

  1. Medicaid costs will skyrocket. After a one-time federal matching fund supplement, state and federal Medicaid programs will cut reimbursement, then benefits, and finally eligibility. Expect a new Deficit Reduction Act within five years that will make DRA '05 look like child's play.

LTC Update:  Ditto the update to Prediction #6 above.  The next DRA has been delayed indefinitely for reasons I explain in detail in our forthcoming report titled “Long-Term Care Financing:  The Myth and the Reality.”  So you’ll have to wait for the full explanation, but in a nutshell:  major reforms to target Medicaid to the needy and transfer LTC liability to the middle class and affluent usually occur shortly after economic recessions, but didn’t this time because of massive money printing, quantitative easing, and interest-rate manipulation by the Federal Reserve. 

  1. Medicaid will not increase funding for home and community-based services significantly and Medicaid financing of nursing home care will be dramatically reduced.

LTC Update:  Medicaid HCBS funding continues to increase rapidly while nursing facility spending has tapered off.  Medicaid reimbursements for home and institutional care remain below the cost of providing the care and continue to exacerbate access and quality problems.  When Fed monetary policy hits a wall, asset bubbles pop, and interest rates return to the historical normal (or higher), this prediction will come to pass.

  1. No new federal tax deductibility for LTC insurance will pass, not even Section 125.

LTC Update:  Unfortunately, I was right about this prediction.  But government policies to encourage LTC insurance will likely happen when Medicaid and Medicare finally have to retreat and more middle class and affluent elders need to turn to savings and home equity to fund their long-term care.  For why and when it will happen, see above.

  1. Middle class and affluent people will be far more personally responsible for their own long-term care in the future.

LTC Update:  Not yet, but this too is coming as explained.

  1. Within five years, reverse mortgages will become a major source of financing for long-term care.

LTC Update:  Oops, way too optimistic, but again, it would have happened if not for irresponsible fiscal and monetary policy and it will happen when those policies end—either through more responsible economic policy or due to market-induced imperatives.

  1. Within ten years, the market penetration of private long-term care insurance will have doubled at least.

LTC Update:  Ditto the update to prediction #11.

  1. The "New, New Deal" will prove as infeasible to finance as the old "New Deal," and the United States will slowly return to the principles that made our country great in the first place:  personal responsibility, self-sufficiency, free minds, free markets, competition and risk without moral hazard.

LTC Update:  Be patient; it’ll happen yet.

There you have them. Thirteen predictions. Unlucky? Maybe. But if everything plays out as I forecast, we'll come out all right in the end.

And with even a little luck, we'll preserve a vestige of the now-fraying social safety net for the most needy.

LTC Update:  It’s harder than ever to sustain an optimistic outlook.  Our political world is in chaos.  But whatever you may think of the incoming Administration, consider this:  The disastrous course we were on is no longer inevitable.  If we all redouble our efforts to promote rational long-term care policy and responsible LTC planning, hope springs eternal.

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Updated, Tuesday, December 6, 2016, 11:02 AM (Pacific)
 
Seattle—

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LTC BULLET:  SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2015 DATA UPDATE

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

LTC BULLET:  SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2015 DATA UPDATE

LTC Comment:  Once a year around this time the Centers for Medicare and Medicaid Services (CMS) report health care expenditure data for the latest year of record.  Recently, CMS posted 2015 statistics on its website here.

Health Affairs has published a summary and analysis of the new data titled “National Health Spending:  Faster Growth In 2015 as Coverage Expands and Utilization Increases."  Registered subscribers to Health Affairs can access the full text of that article here; the “Abstract” is available free.   

Following is our annual analysis of the latest nursing home and home health care data.*

Heads Up:  This may be the most important LTC Bullet we publish all year.  It is the fourteenth in a row we’ve done annually analyzing the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing.  If you'd like to see the earlier versions, go here and search for “So What if the Government Pays for Most LTC.”  You’ll find our yearly analyses of the data going back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC?, 2015 Data Update"
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging?  Or why reverse mortgages are rarely used to pay for long-term care?  Or why LTC service providers are always struggling to survive financially and still provide quality care?  Read on.

Nursing Homes

America spent $156.8 billion on nursing facilities and continuing care retirement communities in 2015.  The percentage of these costs paid by Medicaid and Medicare has gone up over the past 45 years (from 26.8% in 1970 to 55.7% in 2015, up 28.9 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 25.6% in 2015, down 23.6% of the total).  Source:  LINK.

So What?  Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 48.0% in the past four decades while the share paid by Medicaid and Medicare has more than doubled, up 107.8%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care!  No wonder they don't use home equity for LTC when Medicaid exempts at least $552,000 and in some states up to $828,000 of home equity (as of 1/1/17).  No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing. 

Unfortunately, these problems are even worse than the preceding data suggest.  Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid!  These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program.  Thus, although Medicaid pays less than one-third of the cost of nursing home care (31.7% of the dollars in 2015), it covers nearly two-thirds (63%) of all nursing home residents.  Because people in nursing homes on Medicaid tend to be long-stayers, Medicaid pays something toward nearly 80 percent of all patient days. 

So What?  Medicaid pays in full or subsidizes almost four-fifths of all nursing home patient days.  Even if Medicaid pays nothing with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate. 

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care.  No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care.  The 2015 national projected shortfall in Medicaid reimbursement is $22.46 per patient day and over $7 billion in total.  Source:  2015 Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 8.6% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2015.  That category does not include private long-term care insurance.  (See category definitions here.)  No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the nursing homes.  Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments.  This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities?  ALFs are 81% private pay (Source:  AHCA/NCAL Issue Brief) and they cost an average of $43,200 per year (Source:  Genworth 2015 Cost of Care Survey).  Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits.  Medicaid exempts one home and all contiguous property (up to $552,000 or $828,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys.  Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care. 

So What?  For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid's income contribution requirement is usually much less expensive than paying the full cost of assisted living. 

No wonder ALFs are struggling to attract enough private payers to be profitable.  No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care.  This problem has been radically exacerbated in recent years because more and more state Medicaid programs are paying for assisted living as well as nursing home care, which makes Medicaid eligibility more desirable than ever.

Home Health Care

The situation with home health care financing is very similar to nursing home financing.  According to CMS, America spent $88.8 billion on home health care in 2015.  Medicare (39.6%) and Medicaid (36.1%) paid 75.7% of this total and private insurance paid 10.6%.  Only 9.9% of home health care costs were paid out of pocket.  The remainder came from several small public and private financing sources.  Data source:  LINK.

So What?  Only one out of every ten dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care

Bottom line, people only buy insurance against real financial risk.  As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in denial about the need for LTC insurance.  As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen. 

The solution is simple.  Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care.  For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

“CASSANDRA’S QUANDARY: The Future of Long-Term Care” (2016), at http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm;

"Medi-Cal Long-Term Care:  Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;  

"The LTC Graduate Seminar Transcript" here (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel:  Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems.  A cap was placed on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended.  But much more remains to be done.  With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

* Note that CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding for example Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities.  This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40% in 2008 to under one-third (32.8%) in 2009.  CMS also created a new category called "Other Third Party Payers" (7.1%) which includes "worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health."  For definitions of all NHEA categories, see http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf. 

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington.  The Center's mission is to ensure quality long-term care for all Americans.  Steve Moses writes, speaks and consults throughout the United States on long-term care policy.  Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, December 5, 2016, 10:14 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-047:  LTC NEWS AND COMMENT

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

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

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

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

  • National Health Spending: Faster Growth In 2015 As Coverage Expands And Utilization Increases

  • Small Insurers’ Big Collapse Reflects Deep Industry Woes

  • Elder financial fraud may be worse than thought, study says

  • Federal workers cling to long-term care insurance

  • Preparing for the $30 trillion great wealth transfer

  • Genworth's CEO On The Future Of Long-Term Care Insurance, Public Coverage, And Going Private

  • The Human Freedom Index – 2016

  • The politics of why long-term care leaders are smiling

  • A long-term care plan for clients who have failed to plan

  • 3 Dumb Medicare Advantage Moves

  • The Perils of Too Much Relaxation in Assisted Living

  • Trump names Rep. Tom Price as next HHS secretary

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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, December 2, 2016, 11:05 AM (Pacific)
 
Seattle—

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LTC BULLET:  WHERE DO WE GO FROM HERE?

LTC Comment:  Like it or not, the U.S. political world has turned upside down.  LTC financing policy included.  What was possible before, isn’t.  What wasn’t, is?  So, what should we do about it?

 

LTC BULLET:  WHERE DO WE GO FROM HERE?

LTC Comment:  Gale winds of change tipped over the political apple cart on November 8.  Risks are greater now, but so are opportunities.  Anything is possible again. 

For the past eight years, your Center for Long-Term Care Reform has engaged in a holding action.  Recognizing the political climate was not advantageous to achieve needed policy reforms, we focused on conducting fee-for-service studies.  Our two-fold goal was (1) to produce the evidence and arguments we’d need to prevail when the political winds were blowing our way again and (2) to keep the Center financially viable during a time of declining support from our traditional funding sources.

We achieved goal #1.  Since 2008, we’ve published 18 studies explaining the LTC financing problem and what needs to be done about it both nationally and in 12 key states, including California, New York, Pennsylvania, North Carolina, Virginia and Georgia.  Check our reports out here.  We definitely know what to do and how to do it.

That’s where goal #2 comes in.  Thanks to on-going financial support from stalwart Center members, including many LTCI carriers, distributors and producers, as well as some visionary LTC providers, we’ve kept the Center alive to re-engage the political fight for better LTC financing policy when the time is right again.  That time has arrived.

Your Center should turn away now from fund raising and fee-for-service work toward doing what needs to be done to achieve major LTC policy change.  That means writing for publication including op-eds and journal articles, contacting and educating key media sources, speaking at professional conferences, and working closely with national and state level legislators, policy makers, analysts and staff.  Those are the activities that result in concrete policy reform (and have done for us in the past).  Unfortunately, they are not activities that produce revenue, the life blood of any organization or movement.

Here’s our ask:  redouble your support for the Center so we can take advantage of these new opportunities in the realm of public policy reform.  If you’re a Center member, become a Premium Member.  If you’re a Premium Member, step up to Premier Elite status.  And if you are one of our critical corporate members, consider moving from Bronze to Silver to Gold or more.  If you’ve supported the Center up to now, the time has come to maximize and capitalize on your investment.  If you’re new, there’s never been a better time to invest in our work.

What is that work? 

Medicare and Medicaid financing of long-term care are in a death spiral.  Policies currently being pushed to expand and multiply government payment systems, including plans to create a new entitlement for long-term care, would hasten that inevitable collapse.  So, what do we need to do instead?  In a nutshell:  return Medicaid LTC financing to the truly needy and create much stronger incentives for everyone else to plan early and save, invest or insure for long-term care so they can pay privately for care when they need it. 

That’s our objective.  It really is as simple as that, although the details of passing legislation and implementing new policies become quite complicated.  Which is why it’s critical to publish, promulgate and promote the compelling evidence and reasoning we’ve spent decades developing and perfecting.  Help us do that.

In a political hurricane, it’s hard to say for sure which way the winds are blowing.  But one thing is certain:  everything in the policy world is up for grabs right now.  The best evidence, reasoning and recommendations can prevail.  But only if they’re articulated widely and compellingly.  That’s a job the Center for Long-Term Care Reform knows how to do.  We seek your support to do it.

At long last, we have a unique opportunity to fix LTC financing policy:  Seize it!

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Updated, Monday, November 28, 2016, 11:05 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-046:  LTC NEWS AND COMMENT

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

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

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

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

  • Alone and Aging: Creating A Safety Net for Isolated Seniors

  • Occupational therapy may not delay Alzheimer's decline, SNF admission

  • Baby Boomers Relax. It Probably Isn’t Dementia

  • Lilly’s Bet on Alzheimer’s

  • Health insurers may pay for long-term care insurer failures

  • Many Medicare cancer patients hit by high out-of-pocket costs

  • Eli Lilly Alzheimer’s Drug Fails Trial

  • Majority of LTC residents turn down dental care, study finds

  • Major changes for Medicaid coming under Trump and the GOP

  • U.S. Dementia Rates Are Dropping Even as Population Ages

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

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Updated, Monday, November 21, 2016, 10:42 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-045:  LTC NEWS AND COMMENT

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

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

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

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

  • 5 Trump group long-term care insurance plan facts

  • Investigation finds widespread abuse of the disabled

  • Veterans Often Miss Out on the Long-Term Care Benefits They Deserve

  • They’re Growing Older. Their Mortgage Debt Is Growing Deeper.

  • Health savings accounts are a crown jewel of ‘Trump care’

  • ACSIA Partners Seeks 150 New Agents to Serve Growing Segments of Its Long-Term Care Planning Business

  • Column: Who’s paying the true cost of Medicare

  • Expect Medicaid to Change, but Not Shrivel, Under Donald Trump

  • Mutual of Omaha stands by long-term care insurance

  • Think you’re prepared for retirement? Answer these 6 questions

  • New children's book explains Alzheimer's disease through art

  • Study: Many Caregivers Spend $7K Annually Out Of Pocket

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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 18, 2016, 11:55 AM (Pacific)
 
Seattle—

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LTC Bullet:  Long-Term Care News and Analysis

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

*** ILTCI CONFERENCE UPDATE:   We’re looking forward to the 17th Annual Inter-Company Long-Term Care Insurance Conference, which will convene March 26 to 29, 2017 at the Hyatt Regency in Jacksonville, Florida.   Click here to read their most recent announcement including their keynote speaker selection, information on their Predictive Modeling Workshop and details regarding sponsor and exhibitor early bird discounts. See you in Jacksonville! ***


LTC Bullet:  Long-Term Care News and Analysis

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

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

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

  • INSURANCE (Long-Term Care Insurance, Critical Illness Insurance, Hybrid and Miscellaneous [including alternative financing solutions])
  • LONG-TERM CARE (General, Cost, Assisted Living, Nursing Homes, Home Care, Caregiving, Veterans Affairs and Government Solutions)
  • MEDICAID (General and Medicaid Planning and Crowd-Out Effect)
  • MEDICARE (and Medi-Gap and Medicare Advantage)
  • SOCIAL SECURITY
  • ALZHEIMER'S DISEASE
  • POLITICS, LEGISLATION AND PUBLIC POLICY
  • ECONOMICS, DEMOGRAPHICS AND DATA
  • RETIREMENT PLANNING
  • HEALTH AND HEALTHCARE
  • OTHER

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

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

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

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

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

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11/17/2016, “ACSIA Partners Seeks 150 New Agents to Serve Growing Segments of Its Long-Term Care Planning Business,” PR Newswire

Quote:  “The long-term care insurance market seems to be in turmoil thanks to rate increases, waning consumer demand, and carriers exiting the business. Pessimism prevails, but not for ACSIA Partners, one of America's largest long-term care insurance agencies.

“The company is not immune to the industry turmoil. ‘Our traditional business, individual LTC insurance, has temporarily levelled off,’ she says, ‘but it's still substantial and continuing; and two new segments are surging: hybrid care solutions and worksite plans.’”   

LTC Comment:  Earlier this week we saw one major player in long-term care insurance maintain its commitment to the LTCI market.  Now, another company is “quite bullish” on the prospects for traditional LTCI, hybrid products and group LTC plans, according to this press release.

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11/16/2016, “Column: Who’s paying the true cost of Medicare,” by Philip Moeller, PBS Newshour

Quote: “During 2014, the most recent full year covered by official government reports, nearly $600 billion flowed into Medicare and an even larger amount flowed out — $613 billion. Of this $600 billion, how much do you think came from payroll taxes? If you said less than half, you get to keep playing the Medicare money game. Medicare collected $227 billion in payroll taxes in 2014, or about 38 percent of its revenues. That leaves $373 billion unaccounted for. Premiums represent our dollars, too, so perhaps adding what we pay in Medicare premiums will justify the notion that we pay for Medicare. What do you think? Sixty percent? Fifty? Forty? Thirty? How about 21.5 percent, which translates into $80 billion in Medicare premiums.

“As health care hurtles toward such game-changing capabilities, however, consumer empowerment lags far behind. To date, there is little evidence that we pay much attention. Studies show that when consumers do know the true costs of health care, they don’t engage in comparison shopping so much as simply cut back their use of health care.”

LTC Comment:  Who pays the true cost of Medicare?  That’s a truly nebulous question that yields myriad answers and implications.  Many people rely on the solvency of Medicare, but one particularly vulnerable group--nursing homes (and their residents)--depend on it to make up for low Medicaid reimbursements.

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11/15/2016, “Expect Medicaid to Change, but Not Shrivel, Under Donald Trump,” by Robert Pear, New York Times

Quote:  “Without even waiting for legislation, the Trump administration is almost certain to give states more leeway to run their Medicaid programs as they wish, federal and state officials say.  A number of states have already proposed co-payments and work requirements for people on Medicaid.  In an effort to protect beneficiaries, the Obama administration has limited the use of co-payments and has not allowed work requirements. But state officials say that such changes are likely to be allowed in some form in a Trump administration.

LTC Comment:  With block grants, co-payments and work requirements on the table, maybe the new administration will also consider reducing Medicaid LTC’s home equity exemption from a maximum of $828,000 and putting some limits on currently unlimited exempt assets such as a business, car, IRAs, home furnishings, personal belongings, etc.

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11/15/2016, “Mutual of Omaha stands by long-term care insurance,” by Allison Bell, LifeHealthPRO

Quote: “A major long-term care insurance issuer is reaffirming its commitment to the long-term care insurance market.

“‘We believe that LTCI provides value through product profitability and company diversification,’ Walling writes. ‘The product aligns with our mission to help our customers protect what they care about and achieve their financial goals.’ The aging of the U.S. population should continue to help the market for long-term care insurance grow, and Mutual of Omaha believes there is no viable government-provided alternative, Walling says. [Emphasis added.]

“Another player in the market, LifeSecure Insurance Co. of Brighton, Michigan, ended sales of new individual long-term care insurance products Oct. 31, but it's staying in the multi-life long-term care insurance market.

“‘LifeSecure has always been an impassioned advocate of LTCI, and we remain optimistic about the future of this very important product line,’ the company says in a memo sent to producers in October. “We believe that there continues to be a growing need for LTCI and LTC planning in general.’”

LTC Comment:  Win some, lose some.  However, the take-home message here is “there is no viable government-provided alternative” to private long-term care insurance.

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11/14/2016, “Think you’re prepared for retirement? Answer these 6 questions.,” by , The Washington Post

Quote:  Many Baby Boomers are not prepared for retirement, so they need to get much more savvy about their financial lives, and quickly ‘if they’re going to have some peace of mind and security during retirement,’ says Carla Dearing, CEO of SUM180, an online financial planning service. To make sure you are ready, she suggest that you answer these six questions.”

LTC Comment:  We’d like to add:

7. Have you considered how to pay for quality long-term care services when the time comes that you may need to?  Some form of long-term care insurance can be used as "portfolio insurance" in order to protect the nest eggs of retirement planners and ensure quality care when an insurable event occurs.

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11/14/2016, “Study: Many Caregivers Spend $7K Annually Out Of Pocket,” by Rachel Bluth, Kaiser Health News

Quote:  “Denise Sleeper has sold her home, spent most of her retirement savings and quit her job to care for her husband since his Alzheimer’s disease struck two years ago.  . . .  She’s drained $168,000 from the couple’s retirement account since her husband, Scott, was diagnosed with the degenerative illness. At first, she cared for him at home, but he’s in a nursing home now. Sleeper gets by on his disability checks and the $32,000 left in their 401k.

LTC Comment:  This anecdote is either a fabrication or the family self-impoverished voluntarily or through ignorance of the law.  Medicaid pays for LTC, exempts the home up to at least $552K, and protects up to $119,220 for the community spouse.  But then, consider the source:  AARP.  The right take-away from this article is that caretakers do spend a lot of money and time to keep loved ones out of Medicaid nursing homes, which is why everyone should plan, save, invest or insure for LTC risk and cost early.

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11/10/2016, “Trump Medicaid plan could force service cuts, higher taxes,” by John W. Schoen, CNBC

Quote:  “Both Trump and House Speaker Paul Ryan have proposed giving states fixed payments called block grants instead of covering a share of the cost of delivering health care to low-income families.”

LTC Comment:  So far, so good.  Here’s one of the recommendations in our new report titled “Long-Term Care Financing:  The Myth and the Reality”:  “[T]he best approach is to permit individual states to experiment with alternative methods of Medicaid long-term care eligibility determination.  Block granting Medicaid would achieve that objective.  Allowing states to receive federal support for their long-term care programs with fewer strings attached would encourage them to try many different approaches.”  Obviously, we disagree with this article’s assertion that Medicaid block grants would increase costs and decrease services.  Just the opposite will occur.

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11/10/2016, “Blueprint for Reform: A Comprehensive Policy Agenda for a New Administration in 2017,” Heritage Foundation

Quote:  “Blueprint for Reform: A Comprehensive Policy Agenda for a New Administration in 2017
With contributions from various Heritage team members
The Heritage Foundation published a three-part Mandate for Leadership Series of documents over the course of 2016.  Each document educates the American public, specifically including Congress, the new American President, and the new President’s team. All three parts deliver a clear, unified policy vision for Congress and the President to preserve and create opportunities to enable all Americans provide for their families, contribute to their communities, and pursue their dreams.”

LTC Comment:  What was only a pipe dream two days ago, the Heritage Foundation’s master plan has traction in this topsy-turvy new political world.

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11/10/2016, John Hancock ceases sales of traditional long-term-care insurance policies,” by Greg Iacurci, InvestmentNews

Quote: “John Hancock Life Insurance Co. announced Thursday that it will discontinue the sale of individual long-term-care insurance policies starting next year, in yet the most recent blow to an industry that's struggled to overcome the barriers of low interest rates and negative consumer sentiment. The company, among the top three in market share for traditional long-term-care insurance, will no longer issue new policies after February 2017, according to a memo sent to distribution partners and producers. ‘After a recent analysis of the macro-economic trends facing the long-term care (LTC) insurance industry, we have made the difficult decision to discontinue sales of our individual LTC insurance policies in all states,’ the memo stated.”

LTC Comment: Thanks due to LTC Clippings subscriber, Bruce Moon, for alerting us to this development.

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11/9/2016, “Trump presidency promises long-term care changes,” by Elizabeth Leis Newman, McKnight's LTC News b

Quote:  “While Trump's healthcare agenda lacked detail, House Speaker Paul Ryan (R-WI) has an extensive plan, [Cynthia] Morton [National Association for the Support of Long Term Care Executive Vice President] noted. Agendas can move quickly with a unified House, Senate and White House, she added. Ryan has long had a policy goal of reining in entitlement spending, she continued.”

LTC Comment:  Too early to prognosticate, but one thing’s for sure.  The whole deck for LTC services and financing may be reshuffled . . . or not.  Who wants to predict in the aftermath of the unpredictable? 

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11/7/2016, “Kindred to Exit the Skilled Nursing Facility Business,” by Tim Mullaney, Home Health Care News

Quote:  “The nation’s largest home health and hospice provider is betting even more on this side of the business, announcing Monday that it will entirely cease to own or operate skilled nursing facilities (SNFs).”

LTC Comment:  The LTC provider business continues its transition from institutional to home care.  Only time will tell whether Medicaid’s notoriously low reimbursement rates can sustain access and quality of home care (which people want) when it was inadequate even for nursing home care (which people prefer to avoid.)

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11/8/2016, “Make long-term-care insurance equal portfolio insurance,” by Ken Moraif, MarketWatch

Quote: “Your level of health can change drastically as you age. You may get ill. You may become disabled. Your mental capacity could change. These are unfortunate realities of life and they're very, very expensive, which is why I encourage my clients to consider long-term care insurance, even though my firm does not sell it. Since November is Long-term-Care Awareness month, I'd like to take this opportunity to encourage readers to think about long-term care insurance — or "portfolio insurance" as I like to think of it—too.”

LTC Comment:  In our LTC Clippings, we occasionally mention using LTCi to offset the catastrophic financial risk and cost of long-term care in order to allow retirement planners to direct their resources elsewhere, giving them the peace of mind of knowing they won’t lose their nest egg if an insurable event occurs.  Here’s a CFP—who does not sell long-term care insurance—that espouses a similar mentality:  LTCi as "portfolio insurance."

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11/7/2016, “** BREAKING: Federal judge blocks nursing-home arbitration ban **,” by James M. Berklan, McKnight's Long-Term Care News

Quote: “The American Health Care Association has succeeded in achieving at least a temporary halt to the government's ban on nursing homes' pre-dispute arbitration clauses. Judge Michael Mills said in a 40-page decision released Monday morning that while there might be sympathy for consumers' belief that such clauses might not be in their best interests, a solution lies with Congress, not a federal agency overstepping its authority. This echoes AHCA's argument against the ban, and for an injunction.”

LTC Comment:  Breaking news on the LTC arbitration ban.

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11/4/2016, “Seniors Suffer Amid Widespread Fraud by Medicaid Caretakers,” Kaiser Health News

Quote:  “An Alaska man developed gangrenous toes. A Philadelphia woman froze to death on the street. An Illinois woman died emaciated, covered in excrement.  These patients suffered as their government-paid caretakers neglected them, collecting paychecks under a Medicaid program that gives elderly and disabled people non-medical assistance at home. In some cases, the caretakers convicted of neglect were the victims' own family members.  The Personal Care Services program, which exceeded $14.5 billion in fiscal year 2014, is rife with financial scams, some of which threaten patient safety, according to a recent report from the Office of lnspector General at the U.S. Department of Health and Human Services.”

LTC Comment:  Remember that Boston College Center for Retirement Research (BCCRR) report that concluded people don’t need private LTCI because Medicaid is the preferred choice?  You couldn’t ask for a better refutation of the idiotic conclusion than this article.

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Updated, Monday, November 14, 2016, 9:22 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-044:  LTC NEWS AND COMMENT

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

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

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

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

  • Trump Medicaid plan could force service cuts, higher taxes

  • Blueprint for Reform: A Comprehensive Policy Agenda for a New Administration in 2017

  • Carson, Gingrich receive buzz to be HHS Secretary under Trump

  • Trump presidency promises long-term care change

  • John Hancock ceases sales of traditional long-term-care insurance policies

  • 5 Trump-era health policy losers, and 5 possible winners

  • Kindred to Exit the Skilled Nursing Facility Business

  • Make long-term-care insurance equal portfolio insurance

  • ** BREAKING: Federal judge blocks nursing-home arbitration ban **

  • Voting with dementia

  • Seniors Suffer Amid Widespread Fraud by Medicaid Caretakers

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

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Updated, Monday, November 7, 2016, 11:28 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-043:  LTC NEWS AND COMMENT

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

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

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

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

  • Genworth says higher LTCI rates beat liquidation

  • Senate Committee Floats Idea of New Medicare Code for Alzheimer’s Planning

  • Aging alone: If you’re a single, childless senior who has your back?

  • The Next President’s Financial Imperative: Fixing Social Security

  • 3 new fears about the long-term care planning gap

  • CNO and CNA open blinds on LTCI performance

  • Four Keys To A Happy Retirement

  • Loneliness may predict Alzheimer’s disease, suggests a new study

  • Majority of Consumers Nearing or in Retirement Have Not Planned for Long-Term Care

  • Americans Are Dying Faster. Millennials, Too

  • The Big Winners and Losers in America’s Social Security System

  • Health Law Tax Penalty? I’ll Take It, Millions Say

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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 4, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC Bullet:  The LTC Discussion Group and Marc Cohen’s Claimant Study Presentation

LTC Comment:  Last week’s Long-Term Care Discussion Group meeting was an excellent example of an industry’s self-awareness and dedication to protecting people from the risks and costs of long-term care.  Details follow after the ***news.***

*** FOR THOSE WHO DON’T ALREADY KNOW: 2017 LTCI tax deductibility limits published:

10/25/2016, “Increased 2017 Tax Deduction Limits for Traditional Long Term Care Insurance Announced,” by AALTCI

Quote: “The tax deductible limits for traditional long-term care insurance premiums paid in 2017 increased according to a just-released IRS announcement. ‘The tax deductibility of premiums when you purchase traditional long-term care insurance provides a real incentive for consumers, especially after retirement,’ explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   ‘The special tax advantages are not available when individuals purchase linked-benefit products such as life insurance or annuity policies that can provide a future long-term care benefit.’” 

LTC Comment: We’ve updated these numbers in our Members-Only Zone here, where you will also find tax deductibility limits for each year back to 1997. If you need your user name and password contact Damon at 206-283-7036 or damon@centerltc.com. ***

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

  • All LTC Bullets and E-Alerts
  • Access to our Members-Only Zone website, Almanac of Long-Term Care and Clipping Service Archive
  • Subscription to our Clipping Service
  • Email/phone access to Steve Moses for 24-hour turnaround queries

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

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


LTC Bullet:  The LTC Discussion Group and Marc Cohen’s Claimant Study Presentation

According to their website, “The Long Term Care Discussion Group is a voluntary, independent group that meets for the purpose of educating the policy community on all facets of long term care.”  The purpose of last week’s meeting was to discuss the findings of a recent study conducted by LifePlans, Inc.:  Experience and Satisfaction Levels of Long-Term Care Insurance Customers: A Study of Long-Term Care Insurance Claimants.  This informative discussion featured speaker, Marc Cohen, Ph.D., who carefully and clearly reviewed the findings of the study.   

Here’s why they conducted the study:
 

More than seven million Americans have long-term care (LTC) insurance, and more than a quarter million are receiving benefits. As claims grow, a key question emerges: What is their actual experience as they seek benefits under their policies? Insureds applying for or receiving benefits—claimants—may actually be viewed as the ultimate customers of LTC insurance. After all, they are the individuals who are experiencing and utilizing the benefits that their policies promise to provide. To gauge customer experience and satisfaction levels of LTC insurance policyholders, it is important to look at claimants. To that end, America’s Health Insurance Plans (AHIP) commissioned LifePlans, Inc., to conduct a study of claimant experience with LTC insurance. 

And an overview:
 

In this recently released study, Experience and Satisfaction Levels of Long-Term Care Insurance Customers: A Study of Long-Term Care Insurance Claimants, LifePlans, Inc. surveyed a cross-sectional sample of claimants in 2015 and 2016 to ascertain their experience with the claim filing process; their views about their coverage; the influence they believe it has on their use of services; the quality of the care they are receiving; and their overall level of satisfaction with their policy. The study also uncovers the relationship between policy characteristics and people’s level of satisfaction. Finally, the study provides an aggregate profile of in-force policyholders’ coverage. Where possible, findings in this study are compared with those from a 2005 Department of Health and Human Services study that looked at individuals who were beginning to receive benefits.

LTC Comment:  The LTCi industry is comprised of talented people who devote themselves to protecting others from the risks and costs of long-term care.  Many people are drawn to the industry by way of personal long-term care experiences and genuinely want to help others prepare responsibly for the challenges associated with aging.  This study of LTC insurance claimants and its resulting Long-Term Care Discussion Group meeting are no exception and reflect professionals in an industry that seek to improve the claims experience via self-analysis.  For doing so, we wish to thank Marc Cohen and the Long-Term Care Discussion Group Co-Chairs:  Susan Coronel, John Cutler, Hunter McKay (ex-officio), Karl Polzer, Jill Randolph, and Eileen J. Tell.

Those interested in further details and actual findings can access the discussion’s PowerPoint PDF here.  We encourage you to do so and to get familiar with the Long-Term Care Discussion Group if you’re not already.  They do meaningful work, provide a valuable service and are very inclusive, providing free membership that is open to all.  Learn more by visiting their website at http://www.ltcdiscussiongroup.org and get on-board with their “monthly presentations exploring long term care policy, research, and advocacy issues.”

 

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Updated, Monday, October 31, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-042:  LTC NEWS AND COMMENT

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

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

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

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

  • 3 Things That Spook Retirees (and How to Stop Them from Scaring You)

  • This Startup Is An Airbnb For Assisted Living Patients

  • Where the Elderly Die Can Vary by Region, Study Shows

  • China Oceanwide may regret throwing Genworth a lifeline

  • Genworth's would-be buyer helped build modern China

  • 3 Steps to Financial Independence after You’ve Saved your Emergency Fund

  • Genworth Deal: No Relief for Agents, Policyholders

  • Nurse practitioners improve transfer process, reduce errors, study finds

  • Increased 2017 Tax Deduction Limits for Traditional Long Term Care Insurance Announced

  • Antipsychotics raise risk of pneumonia in residents with Alzheimer's

  • Researchers Take First Steps Toward A Preventative Alzheimer's Pill

  • Genworth’s Lost Decade Ends in $2.7 Billion China Deal: Timeline

#############################

"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, October 28, 2016, 9:00 AM (Pacific)
 
Seattle—

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LTC Bullet:  FEE for Service

LTC Comment:  Not fee, but FEE, or the Foundation for Economic Education.  Learn about this inimitable source of information on liberty and free market economics after the ***news.***

*** CLTCR Premium Membership  --  Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:  our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries.  Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources.  Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments.  Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

*** 2017 LTCI TAX DEDUCTIBILITY LIMITS PUBLISHED: 

10/25/2016, “Increased 2017 Tax Deduction Limits for Traditional Long Term Care Insurance Announced,” by AALTCI

Quote: “The tax deductible limits for traditional long-term care insurance premiums paid in 2017 increased according to a just-released IRS announcement. ‘The tax deductibility of premiums when you purchase traditional long-term care insurance provides a real incentive for consumers, especially after retirement,’ explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   ‘The special tax advantages are not available when individuals purchase linked-benefit products such as life insurance or annuity policies that can provide a future long-term care benefit.’” 

Attained age before the close of the taxable year

Maximum deduction for year

40 or less

$410

More than 40 but not more than 50

$770

More than 50 but not more than 60

$1,530

More than 60 but not more than 70

$4,090

More than 70

$5,110

LTC Comment: We’ve updated these numbers in our Members-Only Zone here, where you will also find tax deductibility limits for each year back to 1997. If you need your user name and password contact Damon at 206-283-7036 or damon@centerltc.com. ***

 

LTC BULLET:  FEE FOR SERVICE

LTC Comment:  Regular readers of LTC Bullets have probably discerned a tendency.  When we seek a cause for some problem, we tend to find it in one form or another of government interference in the marketplace.  When we recommend solutions, we tend to find them in reducing the role of government and unleashing the free market. 

Is this ideological bias?  Not if it is grounded in solid evidence and provable theory.

What is the evidence that free markets produce better results than centralized government planning and control?  All you need to do is open your eyes.  Authoritarianism fails to produce plenty everywhere it is tried.  Examples are legion.  The link between economic freedom and prosperity is well substantiated and undeniable.

What is the theory behind this link?  Pretty simple really.  Free consumers voting for what they want with their own money make better decisions for themselves and for the economy than government bureaucrats make when they’re spending other people’s money.  People spending their own money produce the information in aggregate that investors need to target their capital to projects and products that benefit everyone.  Bureaucrats spending other people’s money are prone to invest in boondoggles. 

If the evidence and the theory are conclusive, why do people and governments keep making the same mistakes?  Why do politicians keep promising something for nothing?  Why are people and voters repeatedly suckered by the same promises?  The answers inhere in the questions.  People want something for nothing and politicians are eager to benefit personally by promising it to them.

Are we doomed to keep repeating the same mistakes in perpetuity?   Probably, but not necessarily.  There are two ways to break this cycle.  One is to return government to its original limited role as prescribed by the Constitution.  Don’t hold your breath.  The other is to hammer home daily and persuasively the aforementioned evidence and theory about free markets and the freedom philosophy.  That’s where FEE comes in.

The Foundation for Economic Freedom (www.fee.org) is a non-profit organization dedicated to teaching the principles of a free society.  Today, FEE focuses on bringing freedom as a life philosophy to a wide audience, striving to bring about a world in which the economic, ethical, and legal principles of a free society are familiar and credible. 

“FEE Daily” publishes several brief articles that substantiate the fallacy of relying on government and the power of freedom in all aspects of life.  This online resource is free for the asking.  Just go to www.fee.org, scroll to the bottom, enter your email address and click on “Subscribe.” 

Here are some articles featured in recent FEE Dailys:

“There Is No Such Thing As Trickle-Down Economics” by Steven Horwitz:  The point is not to transfer wealth up and down but rather to create universal opportunity. No market advocate ever used this phrase. That's for a reason. It's not what we favor.  Read Now

“Special Interests May Kill Free Online Courses,” by Walter Olson: The Berkeley case proves that there is nothing that is so beneficial that government won't try to ruin it. If the DOJ and special interest bullies get their way, MOOCs could become a thing of the past.  Read Now

“New Zealand's Remarkable Economic Transformation,” by Daniel J. Mitchell:  We so rarely see dramatic change toward freedom in modern democracies. New Zealand is a beautiful exception. New Zealand privatized, cut the budget, reduced taxes, and generally freed up enterprise, and just look at the wonderful results.  Read Now

“Politicians, Please Stop ‘Helping’ the Disabled,” by Jeffrey A. Tucker:  Government is the least likely institution to help the disabled. Indeed, the reverse is true, and a century of evidence proves it. Every new regulation, every new mandate, makes it harder for disabled people to live normal lives.”   Read Now

LTC Comment:  That’s enough of a sampling to give you the flavor.  These articles address critical, often politically sensitive, issues with ingenuity, evidence, theory and humor.  Whether you agree or not, you will find yourself thinking in fresh new ways.  If you pick one of the six articles on offer each day to read and consider, I believe you’ll find it harder and harder to accept promises from government or criticism of free markets.

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Updated, Monday, October 24, 2016, 10:12 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-041:  LTC NEWS AND COMMENT

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

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

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

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

  • China Oceanwide to Buy Genworth Financial for $2.7 Billion

  • Washington state gets green light for Medicaid, LTSS overhaul

  • As long term care prices soar, majority accept higher premiums or cut coverage

  • The great divide appears to be narrowing

  • Physical therapists in LTC see higher wage increases than those in hospitals, home health

  • Assisted living increasingly a lawsuit target, attorney says

  • Renovators want homeowners to think big about aging

  • How retirees on Social Security can stay afloat despite tiny COLA

  • Lawsuit Takes on CMS Over Arbitration Ban in Long-Term Care

  • The Fed Destroyed US Boomers' Retirement Dreams

  • The Future of Retirement Communities: Walkable and Urban

  • Medicaid benefits for long-term care for the middle class

  • If You're Thinking About Assisted Living for Your Parents

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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, October 21, 2016, 10:03 AM (Pacific)
 
Seattle—

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LTC Bullet:  Who Isn’t Covered by Private Long-Term Care Insurance?

LTC Comment:  Who is not covered by private LTCI is a much more interesting question, and harder to answer, than who is covered as we’ll explain after the ***news.***

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

  • All LTC Bullets and E-Alerts
  • Access to our Members-Only Zone website and Almanac of Long-Term Care
  • Subscription to our Clipping Service
  • Email/phone access to Steve Moses for 24-hour turnaround queries

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

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

 

LTC BULLET:  WHO ISN’T COVERED BY PRIVATE LONG-TERM CARE INSURANCE?

LTC Comment:  A recent (August 2016) “brief” titled “Who Is Covered by Private Long-Term Care Insurance?,” by Richard W. Johnson of the Urban Institute, offers some interesting data and observations in answer to his title’s question.  For example:

“In 2014, 11 percent of adults ages 65 and older living in community settings were covered by long-term care insurance (figure 1), corresponding to about 5 million people.” (p. 2)

“Private long-term care insurance coverage rises with wealth, because wealthier people are better able to afford coverage than those with less wealth.”  (p. 3)

Mr. Johnson concludes:  “Private long-term care insurance is not the best way to finance LTSS for every older adult. People with limited financial resources and pre-existing health conditions, for example, may always have to rely on public programs like Medicaid.  However, expanded long-term care insurance coverage could protect many middle- and upper-income older Americans from catastrophic LTSS expenses.”  (p. 5)

LTC Comment:  These are not very profound observations or conclusions.  Wealthier people are more likely to buy LTCI?  Well, yeah. 

LTCI isn’t for everyone including poor people who need public welfare?  OK, sure. 

Expanded LTCI coverage could protect many more middle- and upper-income people?  Great!  That’s a welcome and very unusual admission for someone representing the Urban Institute.

But the far more interesting question is why don’t “many middle- and upper-income older Americans” buy LTC insurance?

The answer to that question is hidden in Johnson’s paper but you have to identify his fallacious assumptions about Medicaid LTC eligibility to find it.

For example, he writes:  “Medicaid covers only those people with severe LTSS needs who have virtually no assets other than their home or have already spent nearly all of their wealth on LTSS.”  (p. 1)

If that were true, many more people would worry about long-term care, plan for it, and buy LTCI.  But it is not true.

First, there is no requirement in federal or state law or regulations that people must spend down for long-term care.  They can spend their money for anything they want as long as they receive fair market value in exchange.  That’s why Medicaid planning attorneys offer advice like this:

Another sheltering strategy is to convert available, countable assets into noncountable exempt assets.  For example, money in checking or savings accounts may be used, without creating a period of ineligibility, to purchase or improve a home, pay off a mortgage, buy a cemetery lot, pre-pay funeral services, pre-pay residence-related taxes and insurance, or even pay outstanding bills, including legal fees....[1]

 

While there are rules against giving away most assets, there are no prohibitions against simply spending money...options might include travel to visit relatives or see the world, or one last tour of Reno's finest establishments.[2]

 

...a common misconception among [Medicaid] applicants is that excess resources must be spent only on doctors, hospitals, nurses, medication, and nursing homes.  Nowhere in the law is this indicated.  Quite literally, an applicant could spend all of his or her assets on something 'frivolous,' such as a 90th birthday celebration of Ziegfield Follies proportion and this should not be cause for denial of Medicaid, because the applicant received 'value' for his or her money.[3]

Second, the home (up to $828,000 of equity in 13 states, $552,000 elsewhere) isn’t the only major asset Medicaid exempts.  It disregards these with no limit on their value:  one farm or business including the capital and cash flow; IRAs that are paying out (as all must after age 70.5); one automobile (including a new Tesla or Mercedes); prepaid burial funds for everyone in the recipient’s immediate family; term life insurance; personal belongings; and home furnishings.  People who have too much in cash or negotiable securities only need to convert that disqualifying wealth into exempt assets by purchasing one or more of these items.

Now consider this observation that Johnson makes about the relationship between wealth and the purchase of LTCI:

In 2014, coverage rates reached 25 percent for adults ages 65 and older with at least $1 million in total household wealth and 20 percent for older adults with at least $500,000 but less than $1 million in household wealth (table 1). By contrast, only 8 percent of older adults with at least $100,000 but less than $500,000 in household wealth—representing 40 percent of the older population—had coverage.  (p. 3 

Why is the market penetration less than half (8 percent) for people under $500,000 in wealth than (20 percent or more) for people with over $500,000?   Shouldn’t it follow that people with less wealth are more at risk to spend down than people more wealth?  Shouldn’t people with fewer assets be even more worried about losing them than more affluent people?  Ought not lower-wealth people to be even more likely to purchase at least some LTCI protection than their better-well-off fellows?

Of course.  That would follow if it were not for the fact that Medicaid is the dominant payer for long-term care for the middle class and some of the affluent while sheltering virtually unlimited assets from spend down and from estate recovery, which is easy to avoid.  Consider too that we have not even mentioned the more sophisticated legal means to qualify for Medicaid without spending down, i.e., artificial self-impoverishment by means of Medicaid estate planning.

It’s good to know who buys LTCI, but it’s much more important to understand why so many people do not buy the product.  By answering that question, as we’ve just done, and correcting it you can save Medicaid for people truly in need, reduce the burden on taxpayers of welfare-financed LTC, divert many more middle class and affluent people to private LTC financing alternatives like home equity conversion and LTC insurance, and improve long-term care options and quality for all Americans.


 

[1] Hal Fliegelman and Debora C. Fliegelman, “Giving Guardians the Power to do Medicaid Planning,” Wake Forest Law Review, Vol. 32, No. 2, Summer 1997, pps. 341-2, 359, 362-4, 373.

[2] Michael Gilfix and Mark Woolpert, "Medi-Cal Asset Preservation and Your Clients or Estate Planning is Not Enough!:  A California Elder Law Institute Continuing Legal Education Seminar," Gilfix Management Group, Palo Alto, California, 1990, p. 42.

[3] Ira S. Schneider and Ezra Huber, Financial Planning for Long-Term Care, Human Sciences Press, Inc., New York, 1989, p. 142.

 

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Updated, Monday, October 17, 2016, 10:02 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-040:  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 Damon at 206-283-7036 or damon@centerltc.com.  Read testimonials by satisfied subscribers here.  To subscribe online, please click here.

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

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

  • Q&A: A tech startup’s experience at InsureTech Connect

  • Enrollment in 4 or 5-star Medicare Advantage plans rising, new star ratings show

  • Humana, Cigna hit by lower 2017 Medicare star ratings: Aetna scores big but, like its merger partner, sees stock price fall

  • New Short-Term Care Insurance Consumer Video Released

  • Life Insurance Industry a Critical Driver of Economic Growth & Stability

  • The Challenge of Financing Health Care in Retirement

  • 5 Ways A Reverse Mortgage Can Help Your Retirement

  • Ventilator use surges for nursing home residents with dementia

  • When it comes to managing retirement savings, confusion reigns

  • Financial advisers need to prepare for the coming age wave

  • The Gray Gender Gap: Older Women Are Likelier to Go It Alone

  • Long-term care insurance rated a worthwhile benefit

  • Running Out of Money Ranks Top Retirement Concern

#############################

"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).

#############################

Updated, Friday, October 14, 2016, 10:25 AM (Pacific)
 
Seattle—


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LTC Bullet:  Medicaid LTC Data Insights

LTC Comment:  What’s happening with Medicaid LTC financing and why it matters after the ***news.***

*** Here is our latest LTC Clipping and interesting news items:

10/13/2016, “Q&A: A tech startup’s experience at InsureTech Connect,” by Brian Anderson, Insurance Forums

Quote:  “Belleview, Wash.-based Agent Review brings the review model made popular by Yelp, Avvo, Zillow, Angie’s List, etc., to the insurance space. The platform empowers consumers to easily understand the consequences for a lack of coverage, the ability to review an agent’s professional makeup and then allows them the ability to review agents that fit their search criteria. The search criteria can include zip code, type of insurance, agent experience, performance ratings, language, testimonials, military service, charities, states licenses, and more.  In addition, consumers can post reviews and performance ratings about their agent experience, offering reliable social feedback to guide their peers’ future decisions. Agent Review is free to the consumer and provides them two high-level search option features. The first is a dedicated cluster of search tabs and the second is a search bar. The search bar feature is optimized with each agent’s profile allowing a consumer to fine-tune their search.”

LTC Comment:  Congratulations to Harley Gordon and Jonas Roeser, principals of Agent Review. ***

*** ILTCI CONFERENCE:  The 17th Annual Inter-Company Long-Term Care Insurance Conference will convene March 26 to 29, 2017 at the Hyatt Regency in Jacksonville, Florida.  Conference organizers have issued their call for sponsors and exhibitors.  “Early Bird Discounts of up to $1,995 are only available through 11/23/16!”  Booth locations are first come, first pick, so best to get a move on.  See you there. ***

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

  • All LTC Bullets and E-Alerts
  • Access to our Members-Only Zone website, Almanac of Long-Term Care and Clipping Service Archive
  • Subscription to our Clipping Service
  • Email/phone access to Steve Moses for 24-hour turnaround queries

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

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

 

LTC BULLET:  MEDICAID LTC DATA INSIGHTS

LTC Comment:  Truven Health Analytics’ annual report on Medicaid long-term care expenditures is the gold standard for data on that subject.  Read the Executive Summary from this year’s report with our analysis interspersed of what it means for private LTC financing alternatives like LTC insurance and home equity conversion.

------------- 

Following is the Executive Summary from Steve Eiken, Kate Sredl, Brian Burwell and Paul Saucier, “Medicaid Expenditures for Long-Term Services and Supports (LTSS) in FY 2014: Managed LTSS Reached 15 Percent of LTSS Spending” (Ann Arbor, MI: Tru­ven Health Analytics, April 15, 2016).  Read the full report here.

Truven:  “Total federal and state Medicaid long-term services and supports (LTSS) spending was about $152 billion in federal fiscal year (FY) 2014, a 4.0 percent increase from $146 billion in FY 2013. Average annual growth in the most recent two years (FY 2013-2014) was 3.7 percent, greater than the 0.8 percent average annual growth the previous two years (FY 2011-2012). Recent spending growth remains below historical averages. From FY 1996 through FY 2010, expenditures increased by more than 5 percent per year.”

LTC Comment:  The observation that Medicaid LTC expenditures have abated since the 15-year period from FY 1996 to FY 2010 is a little misleading.  For example, the average U.S. GDP growth rate in that period was 4.6%, .4% less than the 5% growth rate in LTC expenditures.  By comparison, the growth rate in LTC expenditures for FY 2013-2014 of 3.7%, is still just a little below the GDP growth rate of 4.2% for those years.  So compared to the growth of the economy, the latest LTC expenditure rate of 3.7% is little different than the 1996-2010 rate of 5%.  What matters much more is what’s likely to happen with the Medicaid LTC expenditure growth rate as the age wave crests, boomers start turning 85 (the critical threshold age for LTC) in 2031, and the Social Security/Medicare trust funds run out in the 2030s.  Sometime between now and then, Medicaid will no longer be able to fund most custodial LTC and private financing alternatives like home equity conversion and private LTCI will become much bigger factors in the LTC marketplace.  For more on what’s likely to happen, see our 2016 report Cassandra's Quandary: The Future of Long-Term Care.

Truven:  “Expenditures for LTSS provided through managed care organizations grew more than overall Medicaid LTSS. Managed LTSS spending increased 55 percent in FY 2014, from $14.5 billion to $22.5 billion. Managed care accounted for 15 percent of LTSS spending in FY 2014. Because of ongoing challenges with collecting managed care data, not all managed care spending is included. As a result, the $22.5 billion figure is a conservative estimate. Starting in FY 2016, CMS requires states to identify an estimate of institutional and HCBS expenditures within Medicaid managed care, which will improve the availability of managed LTSS spending data.”

LTC Comment: The Obama Administration, including the Centers for Medicare and Medicaid Services, is pushing headlong into managed long-term care.  They’re replacing traditional fee-for-service reimbursement with new, experimental financing schemes including bundled and value-based payments.  Let’s hope for the best, but prepare for the worst. Unfortunately, every other time Medicaid has interfered with the LTC market, bad things (such as crowding out private home care and knee-capping LTC insurance) have happened.  Most LTC will still be provided by nursing homes and home care companies, but now a new middle-man, the managed care company, will come between the payer (Medicaid) and the provider, which already stands between the patient and access to quality care.  In every state where I’ve studied this development, LTC providers have complained vehemently that their already meager Medicaid reimbursements, often less than the cost of the care, will be further attenuated with dire consequences for care access and quality.

Truven:  “The percentage of Medicaid LTSS attributable to HCBS continued to increase in Federal Fiscal Year (FY) 2014, one year after HCBS accounted for a majority of Medicaid expenditures for the first time. The percentage of total LTSS spent on home and community-based services (HCBS) increased from 51.3 percent in FY2013 to 53.1 percent in FY 2014. The shifting balance was caused by a 7.7 increase in HCBS spending, from $74.9 billion to $80.6 billion. Institutional service spending was flat, with only a 0.2 percent increase from $71.1 billion to $71.2 billion.”

LTC Comment:  The good news is that nursing home expenditures have leveled off.  The bad news is that HCBS expenditures are exploding.  Academics and policy makers hope that over time HCBS will save money, but there is little reason to believe that.  Despite the rapid transition of Medicaid financing from institutional to home-based care, aggregate LTC expenditures continue to rise worrisomely even before baby-boomers have reached the age of needing LTC. 

Think about it.  People want to avoid nursing homes, and they overwhelmingly prefer home care.  So, as Medicaid pays for the more desirable care, more people will seek Medicaid LTC financing, including by means of Medicaid planning, i.e. artificial self-impoverishment.  Without the economy of scale nursing homes provide, keeping costs down and ensuring at least minimal quality control (QC) will become far more difficult.  Medicaid can’t send QC reviewers into every little adult care home as they can with nursing facilities. 

Nevertheless, aging in place is highly preferable, even if it isn’t cost-effective compared to institutional care.  We need to find a way to pay for HCBS even though they’re more expensive.  Private LTC insurance has done that already; it pays many more claims for home care and assisted living than for nursing home care.  That’s one of the reasons LTCI premiums are relatively high.  Medicaid is trying to have its cake (HCBS) and eat it too (control costs).  That won’t work.

Truven:  “The percentage of LTSS expenditures for HCBS continued to vary across population groups. HCBS accounted for 75 percent of spending in programs targeting people with developmental disabilities, compared to 41 percent of expenditures for programs targeting other large population groups: older people or people with physical disabilities, and people with serious mental illness or serious emotional disturbance. HCBS spending for all three populations increased relative to institutional services in FY 2014, but the historical differences in HCBS spending across the groups remained.

LTC Comment:  How interesting!  The growth of Medicaid-financed HCBS is much higher (75%) for people with developmental disabilities than for the traditional aged, blind and disabled population adding in people with serious mental illness or serious emotional disturbance (41%).  There must be something about the latter groups that makes providing for their LTC needs in the community more challenging even than providing home care for the developmentally disabled.  Otherwise, state Medicaid programs would be further along in implementing the mandates of the 1999 Supreme Court Olmstead decision requiring more HCBS whenever feasible.

Truven:  “New Medicaid State Plan authorities authorized in 2006 and 2010—Section 1915(i), Section 1915(j), Community First Choice (CFC), and Health Homes—continued to represent a small portion of HCBS spending (seven percent). Expenditures for these authorities decreased in FY 2014 because the March 2014 final regulations for CFC required some states to modify their CFC programs to comply with changes in the level of care eligibility standards. Spending for these new authorities is expected to increase in subsequent years as more states implement these important programs.”

LTC Comment:  I’m not so sure “spending for these new authorities . . . [will] increase in subsequent years as more states implement these important programs.”  Far more likely is that Medicaid funding of HCBS will hit a fiscal wall; that institutional services will continue and possibly grow again in comparison to HCBS; and that Medicaid will diminish in time from the dominant payer of LTC services to a lesser role.  For my reasoning on why this is likely see LTC Bullet:  How Fiscal and Monetary Malfeasance Will Ruin Long-Term Care

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Updated, Monday, October 10, 2016, 10:32 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-039:  LTC NEWS AND COMMENT

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

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

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

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

  • How to help even the wealthiest clients see the need for LTC planning

  • Fiscal Policy Report Card on America’s Governors 2016

  • Can You Go Home Again? Some Older Retirees Say Yes

  • Gary Johnson: What Clinton and Trump Won’t Tell You About Entitlements

  • CNO cancels LTCI reinsurance arrangement

  • Rising cost of Medicaid expansion is unnerving some states

  • Broken federal system threatens elderly patients’ safety

  • Know the difference: Critical illness vs. LTCI riders

  • How to Hack Your Medicare Costs, With a Retirement Guru's Help

  • The Two Mysteries of Medicare

  • Future care: The caregiver gap epidemic

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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, October 7, 2016, 11:07 AM (Pacific)
 
Seattle—

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LTC BULLET:  HOW FISCAL AND MONETARY MALFEASANCE WILL RUIN LONG-TERM CARE

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 after this ***quick message.***

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

  • All LTC Bullets and E-Alerts

  • Access to our Members-Only Zone website, Almanac of Long-Term Care and Clipping Service Archive

  • Subscription to our Clipping Service

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

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

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

LTC BULLET:  HOW FISCAL AND MONETARY MALFEASANCE WILL RUIN LONG-TERM CARE

Following is an excerpt from our forthcoming (currently in draft) report titled “Long-Term Care Financing:  The Myth and the Reality.”  This passage, read in tandem with the report’s annotated chronological bibliography, explains why efforts have stalled to target Medicaid LTC benefits to the genuinely needy, why a new compulsory government program to finance catastrophic LTC costs is highly unlikely, and why instead we’re most likely to see Medicaid retrench from being the dominant funder of LTC to a lesser role.

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Excerpt from Stephen A. Moses, “Long-Term Care Financing:  The Myth and the Reality”

Historically, as . . . documented in the Bibliography, progress toward making Medicaid a better long-term care safety net for the poor tends to occur after major economic downturns when state and federal governments face serious financial constraints.  After most recessions since 1965, Congresses and Presidents of widely divergent ideological persuasions backed legislation closing Medicaid long-term care eligibility loopholes and encouraging early and responsible long-term care planning.  But as each recession was followed by a rapid economic recovery and fiscal pressure abated, Medicaid long-term care benefits always reverted to virtually universal availability for all economic classes.

This pattern has changed recently.  After the March to November 2001 recession following the internet bubble’s implosion, economic recovery came more slowly than before.  Likewise, it took much longer for legislation discouraging the excessive use of Medicaid long-term care benefits to be passed.  The Deficit Reduction Act of 2005 was not signed into law until February of 2006, nearly five years after the start of the previous recession.  Ultimately, economic recovery did come and true to form enforcement of DRA ’05 lessened.

The resulting boom ended when the housing bubble burst causing the Great Recession of December 2007 to June 2009.  Again, economic recovery has come very slowly and meagerly.[1]  To date, more than seven years after the end of the last recession, we have seen neither a full economic recovery nor action to spend Medicaid’s scarce resources more wisely by aiming them toward people most in need.  In fact, . . . public policy analysts and advocates are moving in the opposite direction, toward proposing yet another government program funded by taxpayers to expand public financing of long-term care for all.

What might explain both phenomena, i.e., slower recoveries in recent years and less attention to the cost of Medicaid long-term care benefits?  The Federal Reserve forced interest rates to almost zero during and since the Great Recession.  The consequences of this policy have ramified through the economy in many ways.  One way is that government has been able to finance deficit spending and the rapidly increasing national debt at considerably lower carrying costs than before, when interest rates were much higher.  Consequently, according to a Wall Street Journal article:

Gone are the fights of yesteryear over striking a “grand bargain” to slash the debt. In their place a new debate has emerged over whether America’s borrowing capacity has gone up—and how the nation might take advantage of it.  The top candidates from both major parties have made scant mention of addressing rising long-term deficits and are calling instead for an increase in federal stimulus.[2]

By enabling politicians to spend more without facing the normal fiscal consequences, this new economic policy has attracted greater financial resources, including borrowed funds, into public financing of all kinds and simultaneously diverted private wealth into low-interest-rate-induced malinvestment.  Consequently, political concern about burgeoning budgets and debt has abated and no significant effort to preserve Medicaid funds by targeting them to the poor has occurred.

The danger is that just as excessive public spending and private malinvestment in the early 2000s led to the housing bubble and its consequent mid-decade recession, so the current much larger credit bubble driven by excessive government borrowing and spending could lead to an even greater economic collapse.  With the current national debt topping $19 trillion[3] and total unfunded entitlement liabilities around $103.1 trillion,[4] a return to economically realistic market-based interest rates would render the federal government immediately insolvent. 

Further exacerbating the problem of long-term care financing is the fact that the long anticipated age wave is finally cresting and will soon crash on the U.S. economy.  Baby boomers began retiring and taking Social Security benefits at age 62 in 2008.  At age 65 in 2011, they turned the Social Security and Medicare programs cash-flow negative.  Boomers begin taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts this year depleting private investment capital.  They will reach the critical age (85 years plus) of rising long-term care needs in 2031, right around the time Social Security and Medicare are expected to go broke.  Of course, Medicaid is the main funder of long-term care, but according to the Center for Medicare and Medicaid Services Chief Actuary, in a statement of mind-numbing denial, “. . . Medicaid outlays and revenues are automatically in financial balance, there is no need to maintain a contingency reserve, and, unlike Medicare, the ‘financial status’ of the program is not in question from an actuarial perspective.”[5]  In a phrase, conditions are coalescing for a potential economic cataclysm in or before the second third of this century and public officials are in near total denial about the risk.

Under current circumstances, therefore, incrementally adding a new government long-term care financing program to the already dysfunctional system described in this paper would be the height of folly.  We should instead change course and try something totally unprecedented.  Save Medicaid long-term care for the poor by diverting everyone else to personal responsibility for their own lives, well-being and long-term care. 


 

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

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

[2] Nick Timiraos, “Debate Over U.S. Debt Changes Tone,” Wall Street Journal, July 24, 2016; http://www.wsj.com/articles/debate-over-u-s-debt-changes-tone-1469385857

[3] The “National Debt Clock” (http://www.usdebtclock.org/) places the national debt at $19.4 trillion (cited August 8, 2016).

[4] The “National Debt Clock” (http://www.usdebtclock.org/) places U.S. unfunded liabilities at $103.1 trillion (cited August 8, 2016).

[5] Christopher J. Truffer, et al., “Report to Congress:  2013 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Kathleen Sebelius, Secretary of Health and Human Services, 2013, pps. 3-4; http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport.html.  Critiqued in S. Moses, “LTC Bullet:  Does Medicaid Solvency Matter?,” Friday, October 31, 2014; http://www.centerltc.com/bullets/archives2014/1062.htm
 

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Updated, Monday, October 3, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-038:  LTC NEWS AND COMMENT

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

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

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

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

  •  How The Senior Wave Will Reshape The Economy

  • Avalere: Prescription Drug Plan Premiums to Rise, Medicare Advantage Premiums Stay Stable

  • Policy with Built-In Living Benefits for Chronic and Terminal Illness:  Premium rates will never increase, benefit payout guaranteed  

  • 2 ways to encourage affordable senior housing: White House report  

  • CMS final nursing home rule bans pre-dispute arbitration agreements  

  • Critical Illness Insurance Might Not Be Worth It,” by Tracy Anderman  

  • Assisted living use is above average in 13 states  

  • Would delay in a long-term care price hike for federal workers do any good?  

  • As Their Numbers Grow, Home Care Aides Are Stuck at $10.11  

  • 50 Must-Know Statistics About Long-Term Care  

  • 2017 Medicare Advantage hole rankings

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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, September 30, 2016, 9:35 AM (Pacific)
 
Seattle—

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LTC BULLET:  CLAUDE THAU HAS YOUR BACK

LTC Comment:  Erroneous research that leads to damaging media often goes uncorrected.  Not this time.  Details follow.

LTC BULLET:  CLAUDE THAU HAS YOUR BACK

LTC Comment:  The Boston College Center for Retirement Research (BC CRR) does not have a very high opinion of private long-term care insurance.  They concluded, for example, that people are better off planning for Medicaid than buying LTCI.  The national media slavishly repeats BC CRR’s conclusions as if they were unassailable.  That negative publicity has hurt LTCI producers and denied needed LTC protection to untold numbers of innocent consumers.

We identified and rebutted errors in the BC CRR research in previous LTC Bullets, including “LTC Bullet:  How Careless Economists Boosted LTC Risk,” published December 12, 2014 and “LTC Bullet:  Another LTCI Hit Job?,” published October 9, 2015.  Read those two Bullets and you’ll come away with no uncertain idea about our opinion of BC CRR’s sloppy, ideologically biased, inaccurate, misleading and highly damaging work.  I guess you could say, we’re the “bad cop.”

Claude Thau is the good cop.  Claude reached out to the economists at BC CRR and invited them to undertake a rational dialogue about the same two research papers we critiqued in our LTC Bullets.  Calm, cool and collected, Claude respectfully challenged their findings and positions.  He made them aware of newer data and other angles from which to view the data that only an accomplished actuary with expertise in the specialized field of long-term care would know.  He patiently interacted with the BC CRR researchers for months. 

We are all now privileged to learn what Claude Thau discovered and how the BC CRR researchers responded to the information he provided.  The Society of Actuaries published Claude’s article titled “A Response to Recent Lapse Research” in the current (August 2016) issue of Long-Term Care News.  I strongly recommend that everyone concerned about accurate LTC research and the future of private long-term care insurance read this important article in full.  What follows are excerpts to give you the flavor of the piece, and I hope, to motivate you to read it.

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Excerpts from Claude Thau, “A Response to Recent Lapse Research, Long-Term Care News, Society of Actuaries, August 2016:  https://www.soa.org/Library/Newsletters/Long-Term-Care/2016/august/ltc-2016-iss-42-thau.aspx.  (Footnotes omitted, but you can find them in the original.)

“The Boston College Center of Retirement Research (BC CRR) has published articles relating to long-term care insurance (LTCI), including a November 2014 study, ‘Long-Term Care:  How Big a Risk?’ and an October 2015 study, ‘Why Do People Lapse Their Long-Term Care Insurance?’” . . .

“Unfortunately, these studies published conclusions that I and other LTCI professionals consider unjustifiable. When asked by several people to comment on these studies, I engaged the researchers to try to assure my comments are fair and intelligent. I contacted the researchers in May 2015 regarding the 2014 study and in November 2015 regarding the 2015 study and I can report the following progress:

1. The researchers intend to update their 2014 study to address its reliance on rehabilitation data. It is not clear whether the revised paper will clarify or modify other information which concerned LTCI professionals.

2. On May 13, 2016, after considering my concerns and speaking with Marianne Purushotham and Cindy MacDonald (experts on the SOA lapse studies), the researchers published a brief revising their 2015 study. The researchers' brief has bridged our differences as to lapses, but their comments about cognitive lapses still seem to be unjustified.

3. The researchers have stated that their future papers regarding LTCI will be vetted with LTCI industry experts prior to publication.

4. New related research is being contemplated by the SOA LTCI Section Council.”  . . .

“CALL TO ACTION

“BC CRR's 2015 report was widely reported. People who read that report think that LTCI policyholders are 50 percent more likely to lapse than data suggests (and as noted above, today's buyers are even less likely to lapse).

“They also are likely to think people lapse because of being cognitively impaired. They may falsely conclude that insurers take advantage of these policyholders and that regulators do nothing about it.

“I urged the researchers to mention the safeguards against cognitive lapses. They responded, ‘We are aware of these provisions but are unable to incorporate their effects in our analysis.’ Although I told them I was not asking that they ‘incorporate their effects’ but rather that they simply acknowledge the efforts, they chose, once again, not to mention those provisions in the revised brief.

“The researchers' November 2014 paper, ‘Long- Term Care: How Big a Risk?’ essentially concludes that many more people need LTC than was previously thought, but that the need lasts a short time, so LTCI is not valuable. My primary concerns are that the researchers' analysis is based primarily on rehab, which of course is common and short, but has nothing to do with LTC. “Moreover, it is not clear that they have included home care and assisted living facility care in their analysis.

“My interaction with BC CRR highlights the value of actuaries fostering dialogue with professionals performing related work. Timely discussion can contribute to clearer conclusions and more accurate consensus.

“Claude Thau is president of Thau, Inc. He is a consultant and wholesaler, and he can be reached at ClaudeT@targetins.com.”

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LTC Comment:  We all owe a debt of thanks to Claude Thau for donating so much of his valuable professional time to reach out to the Boston College researchers with sincerity, good will, and exceptional expertise.  Thanks also to the Society of Actuaries for its work on behalf of long-term care insurance and for publishing Claude’s article.  If truth does win out in the end, it will likely be because of the hard work, usually unrecognized and under-appreciated, of these dedicated professionals.

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Updated, Monday, September 26, 2016, 9:22 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-037:  LTC NEWS AND COMMENT

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

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

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

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

  • Finding common ground on long term care funding
  • Medicare Advantage rates to drop slightly
  • Leading cause of injury, death in older Americans is on the rise
  • Interest rate slump rocks Pa. LTC Partnership Program
  • Families Caring for an Aging America
  • Medicare Advantage Savings Spread Far and Wide
  • Population Aging and Economic Growth
  • To Protect More of Us, ACSIA Partners Adds Tools from OneAmerica for Long-Term Care Solutions
  • Medicare Advantage Plan Switching: Exception or Norm?
  • Prevalence of mental disorders in seniors higher than thought
  • New LTC entrant could appeal to execs
  • Report Uncovers Widespread Medicare Fraud in Hospice Care
  • Where your new residents are moving from

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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, September 23, 2016, 10:53 AM (Pacific)
 
Seattle—

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LTC BULLET:  GOODMAN ON BETTER RISK MANAGEMENT

LTC Comment:  We invite your consideration of an exceptional paper by health policy guru John C. Goodman after the ***news.***

*** FREE TICKETS to the Insurance Agent Summit, the world’s largest online event for insurance agents.  Jonas Roeser of Agent Review and 3in4 Need More recommends the program and offers free tickets.  Learn more and register here:  www.insuranceagentsummit.com.  Feel free to pass this offer on. ***

LTC BULLET:  GOODMAN ON BETTER RISK MANAGEMENT

LTC Comment:  Having come to understand what’s wrong with long-term care public policy in the late 1980s, I decided I needed to have a better grasp of acute health care policy.  I read John C. Goodman and Gerald L. Musgrave’s seminal Patient Power (Cato Institute, 1992) and was totally blown away.  The book is clear, comprehensive, and convincing.  What surprised and pleased me about its analysis was that health policy generally as explained in the book and LTC policy specifically as I’d come to understand it fit together perfectly.   Government is the source of dysfunctions in both and solutions in both depend on bringing consumers back into the market while phasing government interference out.

So I’ve followed Goodman’s work at the National Center for Policy Analysis and more recently at The Goodman Institute for Public Policy Research with great interest.  He’s best known as the “Father of Health Savings Accounts,” but I’m pleased to see he’s branching out into much broader public policy analysis.  I want to focus your attention today on a new paper he presented recently to the Mont Pelerin Society (MPS).  The MPS was founded by Milton Friedman, Friedrich Hayek and other classical liberals and counts among its members more than a half dozen Nobel Prize recipients.  Goodman says

My paper . . . presents a new way of approaching public policy reform - especially reform of entitlement programs.  It draws on work by Kotlikoff, Saving and other scholars we are working with. My book on this subject will be published by the Independent Institute later this year.

Find his paper, titled “Better Than Government:  New Ways of Managing Life’s Risks,” here.  What follows are excerpts I’ve selected to convey the gist.  We’ll let you know when the book becomes available.

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Excerpts from John C. Goodman’s “Better Than Government:  New Ways of Managing Life’s Risks

This paper is based on three ideas.

The first idea is the win/win policy change.

A typical government program is funded by taxpayers and provides goods, services or money to a group of beneficiaries. Imagine that you could make a change in that program that reduces the cost to the taxpayers and enhances the value of the program for the beneficiaries – at the same time. Who could possibly object to that?

I think there are thousands of opportunities to make win/win policy changes in the US political system. Win/win policy changes ought to be irresistible to politicians – whether Republican or Democrat, conservative or progressive, independent or socialist. After all, win/win means that everyone comes out ahead. There are no losers. What could be more popular?

And yet win/win is just about the last thing our representatives seem disposed to talk about. It’s almost as if members of Congress think they were sent there to do battle. If they don’t draw blood, if someone doesn’t suffer as a result of their efforts, they apparently think they aren’t doing their job. Perhaps for that reason, Washington is dominated by a zero-sum mentality: everyone’s gain must be offset by someone else’s loss.   . . .

The second idea is what I call the trial and error principle.  . . .  Whenever two policy extremes exist such that one kind of cost falls and another rises as we move back and forth between them, there is almost always some intermediate point where everyone gains. We can’t find that point by armchair theorizing, however. We must be willing to experiment and adapt. That is, we must be willing to do the kind of experimentation that private markets do every day.

Why do I think there are thousands of opportunities for win/win public policy changes? Because so many government programs are so visibly inefficient. They labor under archaic rules and regulations . . . -- obstacles that any private entrepreneur would jettison in a second. Further, they inevitably leave all of us with perverse incentives. When we act on those incentives we do things that make social costs higher and social benefits lower than otherwise.

Economists define inefficiency as a state of affairs in which everyone could potentially be better off by doing things differently. If government programs are inefficient, we know that in principle everyone could be better off through some sort of policy change.

Here is the third idea: win/win strategies can be used to solve our most difficult public policy problems – problems created by social insurance.

Many people incorrectly assume that the reason for the growth of government in the twentieth century, both here and abroad, was the need to take care of the poor and the unfortunate. Even the term “welfare state” suggests that way of thinking. But modern governments in developed countries are not principally focused on welfare for the poor. They are focused on benefits for the middle class.

More than one commentator has loosely characterized our federal government as an insurance

company connected to an army. That insurance is “social insurance.”

All developed countries in the world today face a common problem: they have promised more than they can deliver. People are expecting benefits for which taxpayers are unlikely to be willing or able to pay, once the needed tax increases become evident. In addition, the benefits that government provides are all too often delivered inefficiently, impersonally, inflexibly, and in a way that encourages perverse behavior on the part of the beneficiaries.  . . . 

There are certain risks that human beings always have faced. These include:

• The risk of growing too old and outliving one’s assets.

• The risk of dying too young and leaving dependent family members without resources.

• The risk of becoming disabled and facing financial ruin.

• The risk of facing a major health event and being unable to afford needed medical care.

• The risk of becoming unemployed and finding no market for one’s skills.  . . .

In the United States, the federal government provides an income, pays medical bills, and covers a large part of the cost of long-term care for people during their retirement years. For people of working age, the federal government is subsidizing health insurance and insuring against disability and unemployment. State governments are also involved — insuring workers for injury, death, and disability on the job. Although many of these programs include the word “insurance” in their names, they are very different from traditional indemnity insurance. In many respects, they are not insurance at all, but merely thinly disguised vehicles for redistributing income. 

These programs have been insulated from private-sector competition. People who find a better way of insuring on-the-job injuries or health or disability expenses or providing for retirement income are normally not able to take advantage of that knowledge. For the most part, we are all forced to participate in monopoly insurance schemes, regardless of potentially better alternatives. Even where competition is allowed (as in health insurance) it is regulated so tightly that no one ever sees a real premium for any health plan. Government insurance and government-regulated insurance are also subject to special interest political pressures that undermine its rational provision.  . . .

[I]n the United States and in most other countries around the world social insurance schemes

almost always leave individuals with perverse incentives. For example:

• Social Security’s early retirement program and its survivorship benefits discourage work by imposing an implicit marginal tax rate of 50 percent — on top of all the other taxes workers face.

• Our unemployment insurance and disability insurance programs literally are paying people not to work.

• Both Social Security and Medicare have substantially altered the lifetime consumption and saving behavior of most people.

• Both Medicare and Medicaid encourage the over-use of healthcare and long-term care services.

• Obamacare’s employer regulations are encouraging part-time rather than full time work, encouraging contract labor, outsourcing jobs rather than making new hires and discouraging small firms from becoming larger. . . .

Because of the temptation to spend payroll tax revenues that are not needed to pay social insurance benefits on other politically popular programs, social insurance is almost always operated on a pay-as-you-go basis. This has resulted in huge unfunded liabilities both in this country and abroad. These unfunded promises have created enormous implicit liabilities for governments around the world. According to a Social Security trustees report, the unfunded liability in Social Security and Medicare is $107 trillion, or more than six-and-a-half times the size of the entire U.S. economy. If the implicit, unfunded promises in Medicaid, Obamacare and other programs are included, the government’s total implicit debt is almost twice that figure.  . . .

Here is the principle behind social insurance, then: government intervenes in those insurance markets where people’s choices to insure or not insure impose potential costs on others. Because of basic human generosity, society is not going to allow people to starve or live in destitution. So when people don’t insure for retirement, disability, and so forth, society is going to step in and help where help is needed. Implicitly, we have a social contract that socializes the downside of certain risks. If we allow the upside to be left to individual choice, we will have privatized the gains and socialized the losses. When people don’t bear the social cost of their risk-taking, they will take more risks than they would otherwise, a behavioral response known as “moral hazard.”  . . .

Here is the upshot: In fashioning better choices for people, we must at the same time prevent them from becoming free riders on the rest of society if their choices do not turn out as well as planned.  . . .

If individuals can find better ways of protecting themselves against life’s risks, they should be allowed to take advantage of those discoveries. If they are willing to take responsibility for their own needs and relieve others of that burden, they should be encouraged to do so. Wherever possible, the goal should be to maximize choices and opportunities for individuals, leaving to government the minimum role of ensuring that the needs of the most vulnerable continue to be met.  . . .

If we do nothing to reform our nation’s entitlement programs, we will eventually be forced to adopt harsh policies. High-income individuals will be cut off, of course. They will not receive any Social Security checks. Or if they do get them, the government will take the money back through higher taxes. Instead of getting subsidized Medicare, they will be forced to pay the full (unsubsidized) premium — and then some. Yet these changes will amount to no more than a drop in the bucket for Uncle Sam. Before it’s over, most people will find that they are getting less than what was originally promised. In fact, it’s likely that everyone will face higher taxes, smaller benefits, or both. Such a zero-sum outcome is one in which everybody loses. And because everyone will lose, these reforms will be difficult and painful to enact. They will be resisted by everyone. Is there an alternative?  . . .

In what follows, I propose a simple idea. People of any age should have the opportunity to opt out of social insurance in favor of alternatives that better meet their individual and family needs. In particular, they should be able to substitute assets and arrangements they have voluntarily chosen, and that they own and control, for the government systems in which they are now forced to be participate.  . . .

There is only one general condition that must govern these choices: They must not increase the expected burden for other taxpayers. This means that there must be (1) a reasonable expectation that the direct tax burden for others will not rise as a result of an individual’s opting out and (2) a reasonable expectation that the individual will not try to return to the government program (thus creating an additional burden for everyone else) if the private option turns out to be disappointing. This condition implies that opting out must be a win/win proposition.  . . .

Despite this almost self-evident fact, most proposals to change our social insurance programs – proposals coming from both political parties – are zero sum. For every gain they promise, someone else must bear a loss. For example, some Democrats are proposing more generous Social Security benefits. But those benefits would be paid for by imposing new burdens on the young, either in the form of higher payroll taxes or a larger public debt. Some Republicans are proposing to solve future deficit problems by reducing future benefits – a burden for the young without any corresponding gain.  . . .

There is a more general principle here: Any time anyone — rich or poor — can find a way to solve the social problems Social Security and Medicare were designed to address and leave the taxpayers with a smaller burden in the process, we should welcome the change.  . . .

We don’t want the elderly to live out their remaining years of life in extreme poverty. Most of us don’t care very much, however, if seniors fail to live out their remaining years in luxury. That is important to remember because Social Security benefit payments are actually highly regressive.  . . .

What about private savings? If private savings are to serve as acceptable substitutes for benefits there would probably have to be some assurance that the funds would not be squandered or gambled away. Part of the requirement might be that the funds be held by reputable financial institutions and that they be managed according to prudent investment rules. There would also have to be rules governing the rate of withdrawal during the retirement years and a general prohibition against putting the asset up as collateral for loans or other indebtedness.

Texas A&M University economists Thomas Saving, Andrew Rettenmaier and Liqun Liu have produced a first-of-its kind calculation of the value of Social Security to young people in light of the political uncertainty about its future. They conclude that a 21-year-old earning an average wage with a moderate degree of risk averseness would be better off if he could completely opt out of the system by paying a 4.5 percent payroll tax for the remainder of his work life. That means he would forgo all future Social Security benefits and avoid all future Social Security taxes, including the current 12.4 percent tax he and his employer are now paying.  . . .

Think back to the mid-twentieth century when many social security systems were devised in countries around the world. What rational person would choose a system that makes promises to pay young people benefits five or six decades into the future without making any provision to save and invest the funds needed to pay those benefits? What rational person would devise a system that encourages young people to believe they will get benefits five or six decades into the future, knowing all along that the payment of benefits depends on future taxpayers -- but without knowing what the fertility rate will look like a half century later and therefore without knowing how many future taxpayers there will be? In short, what rational person would devise an entire retirement system, using the same techniques that Bernie Madoff used to scam his investors?

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LTC Comment:  That’s enough to give you the flavor of this paper.  I hope this inspires you to read it in full here and to await eagerly, as I will, the book-length treatment of these ideas.

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Updated, Tuesday, September 20, 2016, 8:06 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-036:  LTC NEWS AND COMMENT

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

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

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

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

  • 5 insider tips for finding affordable long-term care insurance

  • AARP Urges Candidates to Address Social Security's Financial Challenges: 67% of its Members Cite Social Security’s Future as Their #1 Concern

  • Donald Trump's Plan To Support Family Caregivers

  • Adult children dread discussing senior living with aging parents: poll

  • Regulators post LTCI reserve-testing draft

  • Study: Elderly’s Family Caregivers Need Help Too

  • Medicaid Is a Ticking Time Bomb

  • 7 new peeks at how long-term care insurance is working

  • Failure to Improve Is Still Being Used, Wrongly, to Deny Medicare Coverage

  • Nearly 90% of Consumers Satisfied with Their Long-Term Care Coverage

  • New LTCI sales firm up

  • 5 ways Genworth wants to reboot LTCI

  • Report: Demand, vacancies for SNF nursing assistants on the rise

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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, September 16, 2016, 9:46 AM (Pacific)
 
Seattle—

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LTC BULLET:  MEDICAID MALFUNCTIONS MULTIPLY

LTC Comment:  Medicaid ruined long-term care, but that’s not the only damage it’s done.  Examples after the ***news.***

*** ILTCI CONFERENCE:  The 17th Annual Inter-Company Long-Term Care Insurance Conference will convene March 26 to 29, 2017 at the Hyatt Regency in Jacksonville, Florida.  Conference organizers have issued their call for sponsors and exhibitors.  “Early Bird Discounts of up to $3,495 are only available through 9/28/16!”  Booth locations are first come, first pick, so best to get a move on.  See you there. ***

*** DYCHTWALD AT NIC:  Just received this note from Ken and watched the video.  Don’t miss it.  One of his best.  He says:  “This week I had the great honor of addressing global leaders in the senior care and housing industries in Washington DC as part of the NIC [National Investment Center] conference.  I was asked to tell them how the boomers will transform aging and how aging will transform them – and do so in less than 20 minutes.  As you’ll see, I threw in a few zingers…..  Enjoy!  https://vimeo.com/182924690  All the best, Ken ***

 

LTC BULLET:  MEDICAID MALFUNCTIONS MULTIPLY

LTC Comment:  Medicaid has had a devastating impact on long-term care services and financing.  By making nursing home care virtually free for all in 1965, Medicaid (1) led to decades of institutional bias, (2) crowded out a market for private home care, (3) crippled private financing options like LTC insurance and home equity conversion, and (4) created the caregiver shortages and access, quality, reimbursement, and discrimination problems we face today.  Seems like that would be enough damage for one centrally planned and managed government program to cause. 

But no, there’s much more to learn about Medicaid’s multiplying misadventures.  Cato’s Dan Mitchell says “Medicaid is a Ticking Time Bomb.”  He delivers devastating evidence that Medicaid (1) is “the fastest-growing entitlement program,” (2) grows faster than state revenues, (3) expands “faster than the private sector,” (4) incentivizes over-spending with a perverse federal funding scheme, (5) lures states into ObamaCare with “free money” that turns out to be very expensive,  (6) hurts the poor with fewer doctors available and worse medical outcomes, (7) enables “staggering amounts of fraud and theft,” (8) enriches the “poverty pimps,” i.e.the vast array of government employees, their union allies, contractors, and third parties who earn six-, seven-, eight-, or nine-figure paydays taking their cuts of money we think we’re spending on the poor,” and (9) should be block-granted like welfare was in 1996 to stem the red ink and to improve the program for the needy.

That must be all that can be said about Medicaid’s problems, right?  But no, there’s more.  The Mercatus Center’s Brian Blase reports today that “Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems.”  In a nutshell, Blase says:

The first two years of the ACA’s [Affordable Care Act, i.e., ObamaCare’s] Medicaid expansion demonstrate that government experts failed to account for how states would respond to the incentives resulting from the elevated federal reimbursement rate. Enrollment and spending are much higher than expected, and this is espe­cially noteworthy since states are adopting the expansion more slowly than expected. Overall, the ACA expansion significantly adds to Medicaid’s unsustainable spending trajectory, likely fails to produce outcomes worth the corresponding cost, and creates a large federal government bias toward nondisabled, working-age adults at the expense of traditional Medicaid enrollees.

He adds details on each of these problems:  (1)  Enrollment has been higher than expected,” (2) “Total costs have been higher than expected,” (3) “Individual enrollees have been more expensive than projected,” and (4) “Medicaid expansion enrollees receive inadequate value from the program.”  Blase also expands on Medicaid’s fundamental problems, explaining how (1) “It crowded out other priorities,” (2) “It lacked effective oversight,” (3)“It disincentivized work,” and (4) “It resulted in lack of access” to care.

Obviously it’s high time to reform Medicaid radically.  Remove its perverse incentives and target its scarce resources to the truly poor.  But how?  We’ve tackled that question with regard to long-term care in the Center’s forthcoming report “Long-Term Care Financing:  The Myth and the Reality.”  Other analysts, including the two cited in today’s LTC Bullet, have complementary proposals to offer.  But time is running out.  A fiscal vise is closing as an unprecedented  monetary bubble expands and the age wave is finally about to crest and crash.  This triple threat compels change either through responsible public policy or by default.

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Updated, Friday, September 9, 2016, 9:46 AM (Pacific)
 
Seattle—

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LTC BULLET:  CENTENNIAL CARELESS AND DIY PUBLICITY

LTC Comment:  How can we get the word out more effectively about the need to plan for long-term care and avoid Medicaid dependency?

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

 

LTC BULLET:  CENTENNIAL CARELESS AND DIY PUBLICITY

LTC Comment:  Analysts, legislators and public officials have drifted into a dangerous frame of mind about long-term care financing.  They blame Medicaid for impoverishing millions who need LTC; they’ve given up on private LTC insurance; so they assume the only hope is to give more power, control and financing of LTC to government. 

But they’ve got the problem and the solution all wrong as we explain in our new report (currently in draft) and in LTC Bullet:  Real vs. Mythical Medicaid.  Medicaid for LTC does not require impoverishment.  Rather Medicaid has operated to fund long-term care after people need expensive care while allowing them to preserve most of their wealth.  The right way to think about Medicaid’s role in long-term care financing is that it substantially ameliorates the risk and cost of long-term care, not that it impoverishes people. 

The result is that most people do not worry about long-term care until they need it at which point they qualify easily for Medicaid without spending down significant assets.  What that means for state Medicaid programs I’ve described in the following “op-ed” which was published in slightly modified form in last Sunday’s Albuquerque Journal, New Mexico’s, the “Land of Enchantment’s,” largest-circulation newspaper.  Also published yesterday on NMPolitics.net here.

I’d like you to read this op-ed in a special way.  It is designed to be a template.  For each of the data points underlined in the article there are easily accessible state-specific online sources.  What this means is that virtually anyone in possession of those sources could fill in the blanks and create a similar op-ed for any state in the country.

As I have those sources at my fingertips, I could easily replicate this op-ed for any state or help others tap those sources to do it themselves.  Your Center at work.

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“Centennial Careless”
by
Stephen A. Moses

“Centennial Care” is New Mexico’s name for Medicaid, the national means-tested public welfare program providing health benefits to the needy.  Fully one-third of the state’s citizens rely on the program. 

Expansion of Medicaid under ObamaCare has blown a big hole in the state’s budget.  Governor Martinez recently called for a five percent across-the-board cut.  An even bigger problem is the demographic time bomb facing Centennial Care:  long-term care (LTC) for the aged, blind and disabled.

Three-fourths of Medicaid recipients are poor women and children in need of acute care.  But they account for only one-third of Medicaid’s cost.  The aged, blind and disabled are barely one-fourth of total recipients, but they consume two-thirds of program costs, mostly for their long-term care.

LTC costs skyrocket after age 85.  New Mexico’s 85-plus population is only two percent now (28th nationally), but it’ll be three percent (10th) by 2032, about when their Trustees say Social Security and Medicare will become insolvent.

Already, Centennial Care pays too little to ensure quality care.  The state reimburses nursing homes $25 per day less than the cost of providing the care (a $34 million annual shortfall).  But New Mexico shuns nursing homes, relying more heavily on home and community-based care (73.6 percent of LTC expenditures, third in the nation).  Home care workers are notoriously underpaid, especially by Medicaid, which is why quality caregivers are extremely difficult to hire and retain.

Given the staggering financial risks Centennial Care already faces, and the exponentially greater liabilities it will soon encounter, some of the state’s policies regarding eligibility for Medicaid long-term care boggle the mind.

For example, New Mexico exempts up to $828,000 of home equity from asset eligibility consideration, the maximum allowed by federal law.  Why does a state with fiscal problems invite people with so much wealth to partake of its welfare program’s most expensive benefit?

Nor is income an obstacle to qualifying for long-term care benefits in New Mexico.  Anyone with income over the monthly limit of $2,199 a month can shift the excess into a “Miller income diversion trust” and qualify quickly. 

Even much wealthier people qualify without spending down their assets by consulting elder law attorneys.  Try Googling “Medicaid planning in New Mexico” for advice like this:  “Medicaid planning involves developing a strategy to protect your assets should you require long-term nursing home care. . . . We will help you maintain what you spent your life earning.”  (http://www.pbwslaw.com/services/medicaid-planning/)

Since 1993, the federal government has required state Medicaid programs to recover care costs from the estates of deceased recipients.  Otherwise, the welfare program would become free inheritance insurance for boomer heirs.  But New Mexico recovers only $1.7 million from estates annually, less than half of one percent of its LTC expenditures, and only one-fourth of Idaho’s, the best state’s, recoveries percentagewise.

Medicaid was supposed to be a safety net for the poor, but it has become the dominant source of long-term care financing for nearly everyone.

Is it any wonder that only 3.8 percent of New Mexico’s age-40-plus population (33rd nationally) have planned ahead for long-term care by purchasing private insurance?  They can ignore the risk, avoid the premiums, preserve their estates and get Centennial Care to pay if they ever need expensive extended care.  So why worry?

What should New Mexico Medicaid do?  Governor Martinez and the Human Services Department should work with the state legislature and the federal Centers for Medicare and Medicaid Services to (1) cut the home equity exemption to the federal minimum (currently $552,000), (2) maximize estate recoveries to bring in an extra $5 million per year in non-tax revenues, (3) curtail long-term care financial eligibility loopholes wherever possible, (4) promote your LTC Partnership Program, and (5) educate the public that long-term care is a personal responsibility for which everyone one needs to plan, save, invest or insure.

It is probably too late for New Mexico to avoid a long-term care financing catastrophe, but those measures could reduce the damage and save Centennial Care $100 million per year.

Stephen Moses is president of the Center for Long-Term Care Reform in Seattle, Washington (www.centerltc.com) and a Santa Fe homeowner.  Reach him at smoses@centerltc.com.

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Updated, Tuesday, September 6, 2016, 11:08 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-035:  LTC NEWS AND COMMENT

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

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

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

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

  • Long-term care costs skyrocketing

  • Top markets for baby boomer moves

  • Will my mother have to sell her half of our house to pay for care?

  • The Staggering Cost Of Long-Term Care And Medical Care in Old Age

  • Taxpayers Foot 70 Percent Of California’s Health Care Tab, Study Finds

  • Sensors help predict falls up to 3 weeks in advance

  • 8 ways long-term care insurance applicants are different: Researchers say people who seek coverage tend to be much healthier than other Americans

  • Small blocks of long-term care insurance may get own rules: Insurers say requiring full actuarial analysis for them would be overkill

  • Demand for seniors housing may be overstated, white paper says

  • ‘America’s Other Drug Problem’: Copious Prescriptions For Hospitalized Elderly

  • Engineering students create app for those with dementia

  • Audits of Medicare Advantage plans find rampant overcharging for elderly patients

  • ADL needs increasing for those aged 45 to 64

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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).

#############################

 

Updated, Friday, September 2, 2016, 10:11 AM (Pacific)
 
Seattle—

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LTC BULLET:  BEHIND AHEAD

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 after the ***news.***

*** LTC CLIPPING:  Here’s an example of a recent LTC Clipping we sent to subscribers.  To subscribe, contact Damon at 206-283-7036 or damon@centerltc.com

8/31/2016, “8 ways long-term care insurance applicants are different:  Researchers say people who seek coverage tend to be much healthier than other Americans,” by Allison Bell, LifeHealthPRO 

Quote:  “The researchers end with a prediction that could disappoint many long-term care insurance agents and brokers: The researchers say using expansion of private long-term care insurance coverage to eliminate the need for new public long-term care programs efforts will be difficult, because about 40 percent of Americans ages 50 and older have health problems or other risk factors that would make them expensive for private long-term care insurance issuers to cover.

LTC Comment:  That “prediction” is nonsensical and, frankly, offensive.  The fact that 40% of Americans over 50 years of age have health problems is no reason to shift the cost of their long-term care to healthier people by means of government compulsion.  People who don’t qualify for private LTCI should begin early to save or invest individually against the LTC risk and cost.  Maybe, without government to step in after they already need care (as Medicaid does now), they would take better care of themselves, avoid obesity, dodge diabetes, exercise and never become ineligible for private LTCI in the first place.  If we stop covering the middle class and affluent on Medicaid, that program could survive as a decent safety net for the rest, but only after they’ve genuinely spent down their own resources, which is not required now.  Will these policy wonks never grasp that it’s the nanny state that caused these problems in the first place and will only make them worse? ***

 

LTC BULLET:  BEHIND AHEAD

LTC Comment:  After decades of searching for a better way to do long-term care financing, leading policy wonks have homed in on . . . well . . . let the government do it.  Not exactly radical new thinking. 

Their reasoning goes something like this:  Although the risk and cost of long-term care are huge, the public just won’t take the problem seriously; they don’t buy private insurance; they end up devastated by LTC costs, impoverished and dependent on welfare, i.e. Medicaid, government’s answer to LTC financing since 1965.

So, what can we do?  We must redouble our efforts to employ government’s monopoly on the use of force to compel people to take long-term care seriously.  Let’s have a new, mandatory, payroll-financed federal program to cover the back-end catastrophic cost of LTC. 

How in the world do they end up with such a stale proposal, yet another federal entitlement program doomed to add more unfunded liabilities to a government already hopelessly submerged in debt?

They rely on survey data, simulations and modeling.  And where do they find the big data to manipulate and analyze?  Two sources.  Today’s LTC Bullet examines those sources and concludes they are highly problematical and lead to conclusions that are misleading, mistaken and misguided.  The following analysis comes from the Center’s new draft report titled “Long-Term Care Financing:  The Myth and the Reality.”

First we explain how the assets analysts discover in the survey data are either entirely exempt from Medicaid resource limits under federal law (meaning they don’t need to be spent down) or they are easily converted into exempt assets.  Then we show why the sources of the data themselves are unreliable.  Finally, we invite analysts to “ask the people who know” instead of ignoring, as they have done for decades, the testimony of Medicaid staff, financial advisors, consumers, long-term care providers, Medicaid planners, the vast legal literature on Medicaid planning, and 143 LTC Bullets on the subject.

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HRS and AHEAD

When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally . . . draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. 

The AHEAD has information on the value of housing and real estate, autos, liquid assets (which include money market accounts, savings accounts, T-bills, etc.), IRAs, Keoghs, stocks, the value of a farm or business, mutual funds, bonds, and other’ assets.[1] 

Noteworthy is the fact that every one of these financial holdings is either expressly exempt under federal law or easily converted into an exempt asset for purposes of Medicaid long-term care eligibility.  Homes are exempt up to between $552,000 and $828,000 depending on the state.  Additional real estate such as a vacation home or homes may easily be made exempt.

Many of our clients own a second piece of real property--a summer home, a mountain cabin, an investment.  It is typically viewed as an impediment to Medi-Cal eligibility when one spouse enters a nursing home.  . . .  Rather than sell this property, as Medi-Cal would likely advise, protect it.  . . .  Assume further that the appraised value is $40,000, entirely likely in light of [California] Proposition 13.  The community spouse, the spouse living at home, could take out a loan in the amount of $40,000 and, for purposes of Medi-Cal, reduce its effective value to $0.  The borrowed money could then be used to add on to the residence, buy needed items, invest in other exempt resources, or be protected by an increased Community Spouse Resource Allowance (CSRA) order.[2]


If a couple has a second vacation home, consider having the couple rent that home and then claim the rental income as necessary for maintaining the community spouse's minimum monthly maintenance needs allowance.  If the vacation home is considered necessary for this purpose, it is no longer a countable resource.[3]

One automobile is exempt regardless of value as long as it is used for the benefit of the Medicaid recipient.  Liquid wealth such as bank accounts or securities may be converted from countable to non-countable status by purchasing exempt assets.

Another tactic is to spend the assets on property that won't count for Medicaid purposes...[such as] a home...a new car...household goods...funeral expenses...and...a burial plot...A client can also reduce his net worth by spending money on travel, which many elderly people enjoy.[4]

Farms and other businesses, including the capital and cash flow of unlimited value, are exempt.

The new amendment to the Social Security Act (Pub. L. No. 101-239, 103 Stat. 2465, amending 42 U.S.C. 1382b(a)(3)) allows for the exemption of all income-producing property used in a trade or business....  In other words, there is now an unlimited exemption for such property....  Property used in a trade or business is excluded regardless of its value or rate of return....  Critical provisions for advocates to note are that liquid resources used in the trade or business may be excluded from countable resources, and that no limit is placed on such resources (POMS SI 01130.501C.5).  Thus, advocates may exclude large amounts of cash in business operating accounts, trust accounts, and the like, that are necessary for use in the business....  Ultimately, Medicaid recipients will want to transfer their property to avoid the imposition of a lien and recovery from the estate for Medicaid expenditures.  Since business, farms, and ranches in current use are exempt property, they can theoretically be transferred without penalty.  No restrictions are placed on the transfer of this exempt property, unlike the transfer of a home (42 U.S.C. 1396(c)).[5]

Tax-deferred retirement accounts, including IRAs, Keoghs, and 401Ks, etc. are exempt if the holder is receiving a regular payout.

At age 70 ½, individuals must begin taking required minimum distributions from their IRAs, which means the IRA is in payout status. You may also be able to choose to put your IRA in payout status as young as age 59 ½ if you elect to take regular, periodic distributions based on life expectancy tables. If an IRA is in payout status, depending on your state, it may not count as an available asset for the purposes of Medicaid eligibility, but the payments you receive will count as income.[6]

Risks of Relying on HRS/AHEAD Data

While the HRS/AHEAD surveys provide the most reliable longitudinal data ever available, they are not fool proof.  Stephen F. Venti found “data quality issues” when he focused “on measurement errors in the data, particularly those arising from item nonresponse and from inaccurate respondent reports of the ownership and level of assets.”[7]  He explains “The fault lies not so much in the sample design or the execution of the survey, but is instead a consequence of the extraordinary lack of knowledge displayed by respondents.”[8]  He adds “‘Noise’ created by inaccurate reports and non-response is a problem common to all asset variables in the HRS.”[9]  Venti concludes “It is difficult to reach consensus among research studies if each author must arbitrarily decide whether to exclude, censor, or impute particular observations.”[10]  Wiener  points out that HRS “information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility.”[11]  HRS and AHEAD data provide a very dubious foundation on which to generalize about long-term care financing policy.

There are many reasons why HRS/AHEAD 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 in order 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 their self-interested loved ones.  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.  Long-term care providers and Medicaid eligibility staff, who often know, especially in small rural communities, which wealthy locals are taking advantage of Medicaid, often seethe, but cannot disclose the information because of legally enforced confidentiality.  Getting to the truth in such matters is extremely difficult. 

Finally, the Health Retirement Study asks the wrong question regarding wealth transfer and does not address the larger issue of Medicaid planning at all.  According to Lee, Kim, and Tanenbaum,

Specifically, the HRS asked the following question: ‘Did you (or your husband/wife/partner) give financial help totaling $500 or more in the last two years (since the previous interview) to any of your children (or grandchildren) not counting shared housing or shared food?’[12] 

There are several problems with this question.  Transfers of assets relevant to qualifying for Medicaid long-term care benefits are not necessarily done to provide “financial help” to children or grandchildren.  The question is too narrow.  Looking back only two years is insufficient.  Medicaid’s two-year asset transfer look back period ended with the Medicare Catastrophic Coverage Act of 1988 when it became 30 months.  Effective with the Deficit Reduction Act of 2005, the asset transfer look back period is five years.  Finally, focusing narrowly as the question does on asset transfers ignores the much larger issue of Medicaid planning as Lee, Kim and Tanenbaum to their credit also observe,

Medicaid recipients will tend to underreport wealth transfers that occurred prior to applying for Medicaid. In addition, elder law attorneys have devised a wide variety of sophisticated asset-sheltering instruments, including irrevocable annuities, life estates, and ''spousal refusal'' testaments in the practice of Medicaid estate planning. These instruments, in fact, make up the bulk of Medicaid estate planning activity and are not captured by the AHEAD survey.[13]

Why Not Ask the People Who Know?

Besides passing over the formal legal literature on Medicaid planning, long-term care scholars have paid little attention to the voluminous testimony of Medicaid staff, financial advisors, Medicaid planners, consumers, and long-term care providers about the ease and impunity with which middle class and affluent people take advantage of Medicaid long-term care benefits.  In the 1990s, The Gerontologist published several articles quoting sources like these on that topic,[14] but very little such information has found its way into the peer-reviewed literature since.  Not so with the non-peer-reviewed literature and the popular media, which abounds with examples. 

Since May of 1998, for example, the Center for Long-Term Care Reform has published 143 articles about Medicaid planning covering what it is, who does it, media coverage, general public opinion and what various groups of professionals think about it, as well as state and federal legislative efforts to curtail it.[15]  . . .  Unfortunately, most academic scholars either do not read such material or they think they can ignore anything in it, however conclusive, that contradicts the conventional scholarly wisdom about long-term care financing.  Such arrogance has consequences.  Had no one thought outside the peer-reviewed box about astronomy, most people would still believe the sun revolves around the earth.

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[1] Mariacristina De Nardi, Eric French, and John Bailey Jones, “Medicaid Insurance in Old Age,” National Bureau of Economic Research Working Paper 19151, May 17, 2016, p. 10;  http://www.nber.org/papers/w19151.  To be published in the American Economic Review.
[2] Michael Gilfix, "Practice Tip:  Protect Non-Residential Real Property and Medi-Cal," Gilfix ElderLaw News Alert, Vol. VII, No. 1, February 1997, p. 3
[3] John J. Regan, Tax, Estate & Financial Planning for the Elderly, Matthew Bender, New York, 1991, 1993 update, p. 10-68
[4] Lawyers Weekly, September 27, 1993
[5] Rebecca L. Shandrick, "The Family Business:  An Exempt Resource for Medicaid Eligibility," The ElderLaw Report, Vol. 4, No. 3, October 1992, pps. 1-4, emphasis in the original.
[6] ElderLawAnswers, “Can an IRA Affect Medicaid Eligibility?,” article last modified 03/17/2015, cited August 9, 2016;  http://www.elderlawanswers.com/can-an-ira-affect-medicaid-eligibility-14544
The relevant Social Security Administration, Program Operations Manual System (POMS) reference is “SI 01120.210 Retirement Funds,” https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120210.
[7] Steven F. Venti, “Economic Measurement in the Health and Retirement Study,” Dartmouth College and NBER, January 21, 2011, p. 3; http://www.dartmouth.edu/~bventi/Papers/Venti-DMC-review_final_1-22-11.pdf
[8] Ibid., p. 2.
[9] Ibid., p. 5.
[10] Ibid., p. 4.
[11] Joshua M. Wiener, et al., “Medicaid Spend Down:  New Estimates and Implications for Long-Term Services and Supports Financing Reform: Final Report,” prepared for the SCAN Foundation by RTI International, Research Triangle Park, North Carolina, March 2013, p. 50; http://www.thescanfoundation.org
[12] Jinkook Lee, Hyungsoo Kim, and Sandra Tanenbaum, “Medicaid and Family Wealth Transfer,” Gerontologist, Vol. 46, No. 1, 2006, p. 9
[13] Ibid., p. 12
[14] Examples include Stephen A. Moses, “The Fallacy of Impoverishment,” Gerontologist, Vol. 30, No. 1, 1990; http://gerontologist.oxfordjournals.org/content/30/1/21.abstract.
Leslie Walker, Cynthia Gruman, and Julie Robison, “Medicaid Estate Planning:  Practices and Perceptions of Medicaid Workers, Elder Law Attorneys, and Certified Financial Planners, Gerontologist, Vol. 38, No. 4, 1998, pps. 405-411,; http://gerontologist.oxfordjournals.org/content/38/4/405.full.pdf
Leslie Walker, Cynthia Gruman, and Julie Robison, “Medicaid Eligibility Workers Discuss Medicaid Estate Planning for Nursing Home Care,” Gerontologist, Vol. 39, No. 2, 1999, pps. 201-208; http://gerontologist.oxfordjournals.org/content/39/2/201.full.pdf 
[15] Find 143 articles on Medicaid planning here:  http://www.centerltc.com/bullets/subject.htm#medicaid_plan


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Updated, Monday, August 29, 2016, 10:53 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-034:  LTC NEWS AND COMMENT

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

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

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

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

  • Social media use linked to less chronic illness, loneliness in seniors

  • Seniors who rarely exercise have 50% higher risk of dementia

  • New tax needed to fund NHS and care, says ex-minister

  • An Insurance Agent’s Case for Buying Long-Term Care Insurance:  A rebuttal to the recent article by Next Avenue's Money Editor

  • Where Clinton and Trump Stand on Caregiving and Long-Term Care

  • Retirees, make sure medical expenses are part of your plan

  • CBO: Medicare, Medicaid, Social Security share blame for deficit increase

  • Less is more: The dilemma over long term care insurance

  • 6 ideas for this week's big long-term care hearing

  • What It Means to Be a Senior in the Gig Economy

  • Elderly with no nearby family to help them need safety net, experts say

  • Are your personal finances as good as gold?

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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, August 26, 2016, 10:23 AM (Pacific)
 
Seattle—

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LTC BULLET:  REAL VS. MYTHICAL MEDICAID

LTC Comment:  What’s the difference between the Mythical Medicaid conjured by analysts and the Real Medicaid at work in the LTC financing market and why does it matter?  After the ***news.***

*** GLICKMAN FOR PRESIDENT:  President of the Society of Actuaries, that is.  Jim asks “Although you may not be eligible to vote in the SOA election (only actuaries can vote for the President) it would be very helpful for my campaign if you can contact the actuaries at your company (as well as actuaries at other companies that you may know) and let them know about my candidacy, and how involved and dedicated I am to my volunteer activities in the LTCi industry.”  We say “hear, hear” and gladly support the candidacy of this indefatigable advocate for responsible LTC planning.  Here are a few links he pointed us to in support of his candidacy: 

·       Read about my leadership approach from this interview, published in the March 2014 issue of the SOA Reinsurance News

·       View my Video Message with my goals, as SOA President: Jim Glickman Video Message

·       View my Candidate Page containing my Election Message, Bio, Background Information and Photos (click on the photo to read the caption): Jim Glickman SOA Candidate Page

Go Glickman! ***

*** SAVAGE TRUTH on long-term care:  Don’t miss this column by Center friend and nationally syndicated financial columnist Terry Savage that quotes Brian Gordon of Center- corporate-member MAGA, Ltd.:  “Don't ignore possible long-term care needs,” by Terry Savage, Chicago Tribune. ***

*** LTC CLIPPING:  Too many academics and senior advocates live in an ideological fantasy world.  They think long-term care is inadequate and call for more government financing which is exactly what fouled up LTC financing in the first place.  I loved this article so we sent it to LTC Clippings subscribers last week.  Here’s what happens when an academic with her head in the clouds confronts the hard reality of Real Medicaid. 

8/21/2016, “An academic knowledge of elder care becomes a harsh, real lesson,” by Erin E. Arvedlund, Philly.com

Quote:  “‘You can only get your parent 10 hours of in-home care a week under Medicaid. Then the gap in service becomes real. I had to fill in the gap myself,’ Olson said of her visits to Florida. ‘While everyone is pushing for at-home care, there's not enough coverage under Medicaid. In order to be eligible, you have to be nursing-home eligible,’ which means your elder relative's assets have been depleted. In 2013, she moved her mother, now 93, into Gracedale, a county-run and subsidized senior facility in Nazareth, Pa. Finding a facility for her mother and ensuring that her benefits stayed consistent shattered Olson's convictions and exposed irrationalities in government systems. Despite her expertise, Olson was ill-prepared to deal with the bureaucratic barriers imposed at every turn. ‘I was surprised at how much every service is siloed,’ she said. ‘It's so burdensome as to be impossible. The VA? To deal with them [Dottie Katz's husband was a veteran] is a nightmare.’”

LTC Comment:  Read this article and you’ll hate to let another LTCI prospect say “No thanks.”  I’ll bet dollars to donuts this elder care “academic” spent her classroom decades teaching that private LTCI is unworkable and we need more government financing of long-term care.  Karma.

To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. ***

 

LTC BULLET:  REAL VS. MYTHICAL MEDICAID

LTC Comment:  Economists and health policy analysts insist that Medicaid requires impoverishment; that it drives millions of Americans into destitution paying for long-term care; and that, therefore, we need a new mandatory, payroll-financed, government program to cover the catastrophic LTC risk and cost.

Bunk!

The Center for Long-Term Care Reform’s new paper proves access to Medicaid LTC benefits does not require impoverishment (that’s Mythical Medicaid); that Medicaid has counterproductively ameliorated LTC risk and cost rather than caused widespread penury (Real Medicaid); and that a new unfunded government entitlement program is the diametrically wrong prescription for future LTC financing.

You’ll have to wait for final release of the paper currently under review by its sponsor to see all the evidence and logic backing up that conclusion, but here’s a peek at how Real Medicaid (government financed indemnification for LTC costs after care is needed) has impacted the long-term care financing market.

---------------

Following is an excerpt from “Long-Term Care Financing:  The Myth and the Reality”
by
Stephen A. Moses

Real Medicaid's Consequences

By making nursing home care virtually free in the mid-1960s, Real Medicaid locked in institutional bias, crowded out a privately financed market for home care, and trapped the World War II generation in sterile, welfare-financed nursing facilities.

By reimbursing nursing homes less than the cost of providing the care, Real Medicaid guaranteed that America's long-term care service delivery system would suffer from serious access and quality problems.

By underfunding most long-term care providers resulting in serious quality problems, Real Medicaid incentivized plaintiffs' lawyers to launch giant tort liability lawsuits, extract massive financial penalties, and further undercut providers' ability to offer quality care.

By making public financing of expensive long-term care available after the insurable event occurred, Real Medicaid discouraged early and responsible long-term care planning and crowded out the market for private long-term care insurance.

By compelling poor people to spend down what little income and savings they possessed in order to qualify for long-term care benefits, Real Medicaid discouraged accumulation and growth of savings among the poor, reducing their incentives to improve their stations in life.

By allowing affluent people to access subsidized long-term care benefits late in life, Real Medicaid encouraged accumulation and growth of savings among the rich who could pass their estates to their heirs whether or not they were stricken by high long-term care expenditures.

By enforcing spend down more aggressively on the poor than the rich, Real Medicaid aggravated ageism and racism because the rich tend to live longer than the poor and minorities.

By allowing people and families with extra "key" money to buy their way into the better nursing facilities, Real Medicaid discriminated against the poor and favored the affluent.  Medicaid planners help affluent clients avoid the program's reputedly poor care.

Medicaid is the cause of most of the dysfunctions in America's long-term care service delivery and financing system.  But blame should not fall on the Mythical Medicaid program imagined by advocates of a new compulsory government program.  Rather blame the Real Medicaid program that has operated to fund long-term care after people need expensive care while allowing them to preserve most of their wealth.

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Updated, Monday, August 22, 2016, 10:57 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-033:  LTC NEWS AND COMMENT

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

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

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

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

  • An academic knowledge of elder care becomes a harsh, real lesson

  • The incredible cost of higher interest rates

  • As the For-Profit World Moves Into an Elder Care Program, Some Worry

  • Computer chips to improve cognition not appealing: survey

  • Who Owns Long-Term Care Insurance?

  • 1.4 Million Americans Will Go Abroad for Medical Care This Year. Should You?

  • Affordability, amenities top influencers of future moves for those 55+

  • New Study Finds Medicare Advantage Plans Pay Lower Prices Than Traditional Medicare

  • Health Care Costs for Couples in Retirement Rise to an Estimated $260,000

  • Alzheimer's Care Puts Financial Strain On Family Members

  • Mother is elderly; does she need long-term care insurance?

  • Will The Cost Of Long-Term Care Bankrupt You?

  • 7 new, free LTC marketing graphics

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

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Updated, Monday, August 15, 2016, 9:43AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-032:  LTC NEWS AND COMMENT

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

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

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

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

  • Feds may ban agents from selling Medicare long-term care plans

  • Dementia care added to Medicare Advantage insurance model

  • Active Life Expectancy in the Older US Population, 1982–2011: Black-White Differences Persisted

  • Medicaid long-term care eligibility and IRA distributions

  • Assisted Living Residents With Dementia Prone To Abusing Others, Study Finds

  • Most Sick, Aging Americans Live Far From In-Home Care

  • Hot Franchising Trend: Services for Seniors

  • Don't ignore possible long-term care needs

  • Brain aging accelerated by 10 years with midlife overweight, obesity

  • Elderly Hospital Patients Arrive Sick, Often Leave Disabled

  • Long-term care insurance rates soaring

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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, August 12, 2016, 10:59 AM (Pacific)
 
Seattle—

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LTC Bullet:  New CLTCR Website Feature

LTC Comment:  Today we are pleased to debut an exciting new feature from our Members-Only Zone website:  The Long-Term Care Clippings Archive.  Think of it as a highly-curated compendium of LTC news.  More on that after this week’s ***news.***

*** NEW 2016 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 Damon at 206-283-7036 or damon@centerltc.com.  (HINT:  Read on to find out how to “Zone in” for free.)

*** Ever wonder how Medicaid made long-term care free and bungled rational LTC financing and public policy in the process?  Read The Bibliography and last week’s LTC Bullet Half a Century of Bad Medicaid LTC Policy” to get enlightened. ***


LTC Bullet:  New
CLTCR Website Feature

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

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

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

What we introduce today is a running collection of the LTC Clippings called the Long-Term Care Clippings Archive. This archive is organized by LTC-related subject and sub-category.  While CLTCR Premium members will continue to receive their LTC Clippings in real time, Individual members will now have access to the Clippings Archive (updated monthly) through our Members-Only Zone website.  Furthermore, this feature is still in beta, and for a limited time (two weeks), we’re making access free to all.  Keep reading to learn how you can access the Archive, but in the meantime, here’s a breakdown of the subject categories: 

  • INSURANCE (Long-Term Care Insurance, Critical Illness Insurance, Hybrid and Miscellaneous [including alternative financing solutions])
  • LONG-TERM CARE (General, Cost, Assisted Living, Nursing Homes, Home Care, Caregiving, Veterans Affairs and Government Solutions)
  • MEDICAID (General and Medicaid Planning and Crowd-Out Effect)
  • MEDICARE (and Medi-Gap and Medicare Advantage)
  • SOCIAL SECURITY
  • ALZHEIMER'S DISEASE
  • POLITICS, LEGISLATION AND PUBLIC POLICY
  • ECONOMICS, DEMOGRAPHICS AND DATA
  • RETIREMENT PLANNING
  • HEALTH AND HEALTHCARE
  • OTHER

See why we’re excited about this new utility and take advantage of the free trial period by going to http://www.centerltc.com/members/LTC_Clippings_Archive/Main.htm and log in with UN:  IntrotoZone / PW:  FreeTrial.  If you find the Clippings Archive useful, join the Center for Long-Term Care Reform here or contact Damon at 206-283-7036 or damon@centerltc.com.

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Updated, Monday, August 8, 2016, 11:18 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-031:  LTC NEWS AND COMMENT

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

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

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

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

  • New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage

  • CMS steps up enforcement on Medicaid users getting marketplace tax credits

  • How to Manage Family Finances While Taking Care of an Elderly Parent

  • Decrease Medicaid beneficiaries in nursing homes, CMS says

  • Genworth stock surges on better financial report

  • CMS Will Begin Immediate Imposition of Penalties

  • Medicaid’s Role in Meeting Seniors’ Long-Term Services and Supports Need

  • 5 reasons Medicaid kills long-term care insurance sales: Economists look at how the government program knocks out the competition

  • CMS extends ban on new home healthcare agencies in select markets

  • How a Medicare Fix Backfires: Certificate of need laws have failed to reduce health care spending, and states should work to repeal them

  • CMS boosts skilled nursing payments by 2.4%

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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, August 5, 2016, 11:35 AM (Pacific)
 
Seattle—

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LTC BULLET:  HALF A CENTURY OF BAD MEDICAID LTC POLICY

LTC Comment:  Medicaid long-term care policy is a classic story of good intentions leading to unfortunate consequences, after the ***news***

*** MEDICAID AND LTCI:  One of this week’s LTC Clippings perfectly teed up our new report, due in draft August 15 and for publication this fall.  If you don’t receive our daily LTC Clippings that highlight all the news, articles, reports and data you need to see ahead of your prospects or competition, then contact Damon to subscribe at 206-283-7036.

8/2/2016, “5 reasons Medicaid kills long-term care insurance sales:  Economists look at how the government program knocks out the competition,” by Allison Bell, LifeHealthPRO

Quote:  “You know that competition from the Medicaid nursing home benefit makes selling private long-term care insurance hard.  So, what does that cash-strapped, bureaucracy-plagued program have that private LTCI never really had, even back when interest rates were high enough that insurers felt comfortable with writing private LTCI?  Mariacristina De Nardi and two colleagues have used the tools of economics to wrestle with that question in a new paper on Medicaid insurance in old age. The paper is on track to appear in an upcoming issue of the American Economic Review, a major academic journal.

LTC Comment:  The paper described in this article is at the heart of the evidence we’ll adduce in the Center’s new report referenced in last Friday’s “LTC Bullet:  New Report Preview.” ***


LTC BULLET:  HALF A CENTURY OF BAD MEDICAID LTC POLICY

LTC Comment:  Political satirist P. J. O’Rourke says “If you think health care is expensive now, wait until you see what it costs when it’s free.”  For all intents and purposes, long-term care has been free—or more precisely, very highly subsidized—since 1965.  So, by now, we have a pretty good idea of what free long-term care costs—a lot!

I spent the last couple days compiling information and quotes that explain how Medicaid made long-term care free.  Some highlights follow.  Find the whole sorry story here:  http://centerltc.com/Bibliography.htm.  In a nutshell:  Medicaid made nursing home care “virtually free for life” to anyone who couldn’t afford it.  From 1965 until 1980, anyone could give away everything with impunity to qualify.  Starting in 1980, many Congresses and Presidents have tried repeatedly to target Medicaid’s scarce resources to people in need.  But Medicaid planners have always circumvented legislative intent in order to divert critically needed funds from the poor to their affluent clients. 

A fascinating historical pattern evolved over the past 50 years.  The U.S. suffers a recession, tax receipts plummet, welfare rolls skyrocket, public budgets go bust, and government clamps down on Medicaid planning.  Then recovery sets in, tax receipts go back up, welfare rolls recede, and the politically sensitive rules intended to protect Medicaid for the poor go by the wayside.  Then another recession occurs, and so on.

What’s different this time around is that after the Great Recession of 2007 to 2009, two things have not happened that always happened before.  We’ve seen no new measures to discourage Medicaid planning abuses and we’ve experienced very little economic recovery.  Why?  Federal debt and unfunded entitlement liabilities have increased enormously, but this time around no one seems to care.  Artificially low, Fed-induced interest rates have enabled careless deficit spending and political denial of the historically inevitable consequences.  Hence no new legislation like DRA ’05 to control Medicaid planning. 

Will the piper have to be paid?  Will the next recession, following the biggest credit bubble in history, blow up federal entitlements, including Medicaid, and lead to a whole new world of long-term care financing?  Or can the government and people go on forever defying economic gravity, borrowing to fund life styles they cannot afford, and pushing the unfunded liabilities into the future?  That’s the climax we’ll have to wait to see, but you can follow the history leading up to it right now.

Excerpts from a Bibliography of Books, Elder Law Treatises, and Law Journal Articles on Medicaid Planning Listed Chronologically
with Dates of
U.S. Economic Recessions
and
Passage of Major Legislation to Control Medicaid Planning

July 30, 1965:  President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . .  aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.”

“Because of the attention focused on Medicare, Title XIX was passed by Congress with little public notice.  This relative obscurity was lost when the cost of New York State's Medicaid program (effective May 1, 1966) became known.  Federal cost estimates for the entire Medicaid Program were shown to have been grossly underestimated."  (p. 63)
“Under Title XIX a state may also provide medical assistance to some of the ‘medically indigent.’ This group includes all persons whose income is high enough to meet daily living expenses, but not sufficient to meet medical bills.”  (p. 64)
“Several different methods of limiting the federal contributions to state Medicaid programs were considered over the objections of liberal, mostly urban, Congressmen. After long debate, the method finally selected was to place limits on the annual incomes of the medically indigent for whom federal matching funds would be available.”  (p. 83)
_________, “Medicaid:  The Patchwork Crazy Quilt,” Columbia Journal of Law and Social Problems, 5 Colum. J.L. & Soc. Probs. 62 1969 

January to July 1980:  Recession.

December 5, 1980:  President Jimmy Carter signed the Omnibus Reconciliation Act of 1980, imposing the first restriction on asset transfers done in order to qualify for Medicaid.

Spring 1981:  First law journal article on Medicaid planning published:

"Careful planning even under adverse state law will still be able to achieve the goal of excluding an applicant's resources for purposes of determining Medicaid eligibility." 
William G. Talis, "Medicaid as an Estate Planning Tool," Massachusetts Law Review, Spring 1981, p. 94 
Also:  "The article also describes ways clients might reduce exposure to health costs through (1) creation of various trust devices, (2) conveyance of remainder interests in property, (3) conversion of property into assets exempted from eligibility tests for medicaid, and (4) outright transfers of property. If a client can be rendered eligible for medicaid, medical expenses will be paid in full and estate assets will be conserved. Moreover, while the Department of Public Welfare may seek recovery for payments made on behalf of elderly recipients from their estates, careful planning can lawfully defeat the Department's ability to obtain indemnification."  (Ibid., p. 90)

July 1981 to November 1982:  Recession

September 3, 1982:  President Reagan signed the Tax Equity and Financial Responsibility Act authorizing state Medicaid programs to penalize asset transfers, place liens on real property, and recover benefits from the estates of deceased recipients.

"With long-range planning, the cooperation of relatives, some good health, and maybe a little luck, couples will be in a position to negotiate between the rock and a hard place that Congress has placed in the Medicaid path." 
Gill Deford, "Medicaid Liens, Recoveries, and Transfer of Assets after TEFRA," Clearinghouse Review, June 1984, p. 139 

"By helping clients plan before the occurrence of disability, by advising clients to make permissible transfers of assets, and by making them aware of relevant administrative regulations on deeming, lawyers can aid in preserving funds to the greatest extent possible." 
William E. Oriol, The Complex Cube of Long-Term Care, American Health Planning Association, Washington, D.C., 1985, p. 216

April 7, 1986:  President Reagan signed the Consolidated Omnibus Budget Reconciliation Act of 1985 restricting the use of Medicaid Qualifying Trusts. 

"Many people assume that a family's resources must be virtually exhausted before any help will be available through the Medicaid program.  In fact, people in Washington who need nursing home care can benefit from medicaid without devastating their families." 
Peter Greenfield and Barbara A. Isenhour, "Medicaid for Nursing Home Care:  Some Estate Planning Considerations," Washington State Bar News, Volume 40, Number 6, June 1986, p. 29 

"...many individuals find it desirable to shelter their income and assets in order to remain eligible for public assistance.  A trust is often recommended to achieve such a shelter....  Trust mechanisms have been and will continue to be an important aspect of planning for Medicaid eligibility." 
C. Wesley Martin, "Medicaid Qualifying Trusts," Connecticut Probate Law Journal, Vol. 3, Fall 1987, pps. 185, 208 

July 1, 1988:  President Ronald Reagan signed the Medicare Catastrophic Coverage Act of 1988 making asset transfer penalties mandatory and expanding the look-back period to 30 months.

"So is there any practical way to juggle assets to qualify for Medicaid--before losing everything?  The answer is yes!  By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmakers' best efforts...Here are the best options:  Hide money in exempt assets...Transfer assets directly to children tax-free...Pay children for their help...Juggle assets between spouses...Pass assets to children through a spouse...Transfer a home while retaining a life estate...Change wills and title to property...Write a durable power of attorney...Set up a Medicaid Trust...Get a divorce...." 
Armond D. Budish, Avoiding the Medicaid Trap:  How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 34 
Also:  “By paying off a mortgage, they can magically change assets like cash, which would be lost to a nursing home, into assets that can't be touched....  Since there's no limit on the value of a house that they can buy, they may be able to hide most or all of their assets with this one simple technique.  This is a giant loophole, which they should feel free to take advantage of."  (Ibid., p. 38
Also:  "If the person is married, household goods, a car and personal effects are protected without regard to their value!....  For example, oriental rugs or paintings that appreciate in value may be worthwhile investments that add beauty and hide assets at the same time."  (Ibid., p. 39)  Also:  "Here's another loophole that a nursing-home resident may want to consider.  He or she could buy a brand-new--and expensive--ring right before going into a nursing home.  After all, the law doesn't limit this exclusion to rings purchased at the time of a wedding or engagement."  (Ibid.

"...a common misconception among applicants is that excess resources must be spent only on doctors, hospitals, nurses, medication, and nursing homes.  Nowhere in the law is this indicated.  Quite literally, an applicant could spend all of his or her assets on something 'frivolous,' such as a 90th birthday celebration of Ziegfield Follies proportion and this should not be cause for denial of Medicaid, because the applicant received 'value' for his or her money." 
Ira S. Schneider and Ezra Huber, Financial Planning for Long-Term Care, Human Sciences Press, Inc., New York, 1989, p. 142

July 1990 to March 1991:  Recession

"It's common...for people to have undocumented and untraceable assets, such as cash and bearer bonds.  If these items were to be surreptitiously transferred, their existence would probably not become known to the authorities.  No doubt it is improper to tell clients to make such transfers, but the temptation to hint at them, or to scrupulously avoid finding out if the client has a safe deposit box or undocumented assets, however reprehensible, is strong." 
Peter J. Strauss, Robert Wolf, and Dana Shilling, Aging and the Law, Commerce Clearing House, Inc., Chicago, 1990, p. 16

"While there are rules against giving away most assets, there are no prohibitions against simply spending money...options might include travel to visit relatives or see the world, or one last tour of Reno's finest establishments." 
Michael Gilfix and Mark Woolpert, "Medi-Cal Asset Preservation and Your Clients or Estate Planning is Not Enough!:  A California Elder Law Institute Continuing Legal Education Seminar," Gilfix Management Group, Palo Alto, California, 1990, p. 42

"The most common problem put to the elderlaw practitioner is how to keep an older person's assets within the family and yet allow the person to qualify for Medicaid." 
John J. Regan, "Financial Planning for Health Care in Older Age:  Implications for the Delivery of Health Services," Law, Medicine and Health Care, Vol. 18, No. 3, Fall 1990, pps. 275-6 
Also:  "It is important to emphasize to the older client, who may be reluctant to utilize Medicaid because of pride or possible stigma, that participation in Medicaid is not a gratuity but an entitlement like use of a public library or a public park." 
John J. Regan, Tax, Estate & Financial Planning for the Elderly, Matthew Bender, New York, 1991, 1993 update, p. 2-44 
Also:  "If a couple has a second vacation home, consider having the couple rent that home and then claim the rental income as necessary for maintaining the community spouse's minimum monthly maintenance needs allowance.  If the vacation home is considered necessary for this purpose, it is no longer a countable resource."  (Ibid., p. 10-68)

"It is true, almost to the point of being a cliche, that benefit programs, whether public or private, are bonanzas for lawyers." 
Lawrence A. Frolik and Alison P. Barnes, "An Aging Population:  A Challenge to the Law," The Hastings Law Journal, Vol. 42, No. 3, March 1991, p. 715

"An alternative to resource gifting and conversion is the purchase of an annuity...the Medicaid estate can usually be reduced by the amount of countable assets used to purchase an annuity."  Jonathan M. Forster, "Favorable Investment Vehicles for Public Benefits Planning (Part 1:  Resource Planning and the Annuity," Elder Law Advisory, No. 7, October 1991, p. 2

"The new amendment to the Social Security Act (Pub. L. No. 101-239, 103 Stat. 2465, amending 42 U.S.C. 1382b(a)(3)) allows for the exemption of all income-producing property used in a trade or business....  In other words, there is now an unlimited exemption for such property....  Property used in a trade or business is excluded regardless of its value or rate of return....  Critical provisions for advocates to note are that liquid resources used in the trade or business may be excluded from countable resources, and that no limit is placed on such resources (POMS SI 01130.501C.5).  Thus, advocates may exclude large amounts of cash in business operating accounts, trust accounts, and the like, that are necessary for use in the business....  Ultimately, Medicaid recipients will want to transfer their property to avoid the imposition of a lien and recovery from the estate for Medicaid expenditures.  Since business, farms, and ranches in current use are exempt property, they can theoretically be transferred without penalty.  No restrictions are placed on the transfer of this exempt property, unlike the transfer of a home (42 U.S.C. 1396(c))." 
Rebecca L. Shandrick, "The Family Business:  An Exempt Resource for Medicaid Eligibility," The ElderLaw Report, Vol. 4, No. 3, October 1992, pps. 1-4, emphasis in the original

"We have committed an act of piracy--we have broken into the Fort Knox of Government benefits and uncovered the best legal strategies available to you for claiming your share of the gold from the Government's treasure chest....  We'll explain how you can 'strike gold' in the Social Security [including SSI], Medicare, and Medicaid programs....  With this book we are handing you the treasure map, deciphered from a mine of unintelligible government rules and regulations." 
Amy Budish and Armond D. Budish, Golden Opportunities:  Hundreds of Money-Making, Money-Saving Gems for Anyone over Fifty, Henry Holt and Company, New York, 1993, p. xiii

"Another asset preservation strategy is for a community spouse to 'just say no' to paying for the other spouse's nursing home care.  Say Mrs. Jones holds more money than the state allows for her husband to qualify for Medicaid coverage.  If it can be shown that she simply refuses to spend her money on her husband's care, Medicaid coverage will be allowed for Mr. Jones if other easily met requirements are satisfied.  This approach has been particularly successful in New York." 
Michael Gilfix, "Elders and Nursing Home Expenses:  Preserving Client Assets," Trial, Vol. 29, No. 6, June 1993, p.38

August 10, 1993:  President Bill Clinton signed the Omnibus Budget Reconciliation Act of 1993 making estate recovery mandatory, expanding the look back period to five years, eliminating the cap of asset transfer penalties, and prohibiting “pyramid divestment.”

"Old Tactics That are Still Good:  Give Assets Away.  Giving assets away [three years in advance] is still the simplest and easiest way to deal with the problem, although it leaves the elderly client totally dependent upon the good faith of their children or others.  Spend Assets on Exempt Items.  Another tactic is to spend the assets on property that won't count for Medicaid purposes...[such as] a home...a new car...household goods...funeral expenses...and...a burial plot...A client can also reduce his net worth by spending money on travel, which many elderly people enjoy.  Pay Children for Their Help.  Be sure that any payments to children for their services are pursuant to a written agreement, so it's clear that they are not just gifts.  Give Assets to the Other Spouse, a Minor Child, or a Child Who is Disabled.  [Such gifts] will not be penalized.  The Other Spouse Can Petition for an Increased Asset Allowance.  The other spouse can argue that additional assets are needed to generate income...[thereby sheltering in one example an additional] $200,000.  The Other Spouse Can Refuse to Support the Applicant....  In New York, this tactic can be successful even if the spouse's refusal is completely artificial; it is used in that state frequently.  Divorce....  The idea is for the spouse to be given a larger portion of the couple's assets, with little or no support awarded to the applicant.  Sign a Durable Power of Attorney.  All clients should sign a durable power of attorney so that if they become incapacitated, someone else can shelter their assets." 
Lawyers Weekly, September 27, 1993

"Medicaid is a middle-class entitlement, just like the deduction for mortgage interest and IRAs."  Mark Heffner, former Rhode Island state legislator and RI Coordinator of NAELA in Providence, RI Journal, February 22, 1994

August 21, 1996:  President Bill Clinton signed the Health Insurance Portability and Accountability Act (Throw Granny in Jail Law) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

"The chart at the end of these materials labeled 'The Home in Medicaid Planning'...contains a matrix with 10 rows and 8 columns.  Each row contains a method of protecting the family home from Medicaid estate recovery.  Each column contains a Medicaid or tax issue which must be considered when selecting a method of protecting the family home." 
NAELA Conference 1996 Proceedings, Session 7, p. 1

"As a practical matter, if your wife needs nursing home care in the future you may want to privately pay the nursing home (three months up front) for purposes of expediting your wife's placement in a nursing home, unless she is eligible for Medicare benefits.  Once your wife is in the nursing home and eligible for Medicaid, you should immediately proceed to file for Medicaid Nursing Home Care....  Since your assets are in excess of the CSRA [$652,550] at the time your wife files a medicaid application for nursing home care, then it is critical that you submit a 'Spousal Refusal' to contribute your assets to pay for her care, or else she will be denied Medicaid....  We are available to assist you in the preparation and filing of Medicaid applications and the coordination of Medicaid coverage, including monthly budgeting....  If you receive a denial of benefits...[o]ur firm is available to assist you with regard to any Medicare claims and appeals....  [S]hould your wife require such care, you can obtain Medicaid eligibility for her by transferring assets into your name and your utilization of spousal refusal....  Another alternative would be for you to purchase an annuity with the assets in excess of the CSRA....  This approach will allow your wife to qualify for nursing home care without a transfer penalty and without spousal refusal....  Your wife can transfer her assets into a trust for your sole benefit.  This transfer would not subject her to a Medicaid period of ineligibility....  [T]he CSRA should be enhanced to $200,000 from $76,740....  If the consultation exceeds the one-half hour, then you will be charged based upon my hourly rate of $275 and my legal assistant's rate is $100."  NAELA Conference 1996 Proceedings, Session 9, pps. 34-38, 46

"The PAN [private annuity] and the SCIN [Self-Canceling Installment Note] are clearly effective but highly underutilized tools in the Medicaid planning area.  As practitioners become more familiar with their tax, legal, and Medicaid planning benefits, their popularity will undoubtedly increase to the point where Congress will again change the laws." 
NAELA Conference 1996 Proceedings, Session 14:  "Making Resources Disappear--The Magic of Private Annuities and Self-Canceling Installment Notes," p. 12

"By using a LCC [Life Care Contract], the applicant is outside the purview of the disqualifying transfer section of Title 42 because the contract anticipates a transfer for value and not a gift.  Therefore, to the extent that the elder's assets are transferred pursuant to this contract, the elder will incur no period of ineligibility....  The LCC is a transfer for value and can either be structured as a lump sum transaction where the entire property is transferred at one time, or can be structured to payout on a month to month basis....  Using this one payment method, an elder can transfer a large number of assets and shortly thereafter qualify for Medicaid if the caregiver can prove that the medical condition causing the disability was totally unanticipated (massive stroke)....  IT DOESN'T MATTER IF MOM HAS A MASSIVE STROKE AND IS A CANDIDATE FOR LONG TERM CARE SIX MONTHS LATER...." 
NAELA Conference 1996 Proceedings, Session 6:  "Uses, Terms and Provisions of Lifecare Contracts for Elders," pps. 1-2, 4, 11                   

"Many of our clients own a second piece of real property--a summer home, a mountain cabin, an investment.  It is typically viewed as an impediment to Medi-Cal eligibility when one spouse enters a nursing home.  Assume that a couple's second (non-exempt) residence is worth $225,000 and that other cash assets are relatively modest, perhaps only $80,000.  Rather than sell this property, as Medi-Cal would likely advise, protect it.  In tallying their assets, the appraised value, not the fair market value, determines the value of the real property asset for Medi-Cal purposes.  Assume further that the appraised value is $40,000, entirely likely in light of [California] Proposition 13.  The community spouse, the spouse living at home, could take out a loan in the amount of $40,000 and, for purposes of Medi-Cal, reduce its effective value to $0.  The borrowed money could then be used to add on to the residence, buy needed items, invest in other exempt resources, or be protected by an increased Community Spouse Resource Allowance (CSRA) order." 
Michael Gilfix, "Practice Tip:  Protect Non-Residential Real Property and Medi-Cal," Gilfix ElderLaw News Alert, Vol. VII, No. 1, February 1997, p. 3 
Also:  "Payment for personal services can be part of a 'spend-down' when a Medi-Cal application may be submitted in one's future.  Depending on the amount of services rendered, this could justify $1,000 or perhaps $2,000 per month when care and support are very substantial....  [F]unds used for the payment of services might otherwise have to be invested in payment for nursing home services at the private rate."  (Ibid., p. 12)

"Cemeteries may do a good or bad job of maintaining grave sites.  And they may do a good job today, but drop the ball years from now.  A new service is being offered to provide assurance that sites will be maintained for the next 25 years.  Depending on the plan purchased, the one-time fee ranges from $3,800 to $13,500.  The company offering the plan, Westland Perpetual Trust, Inc., reports that payment of the fee has been permitted as a legitimate Medicaid spend down.  The service is offered nationwide." 
Elder Law Report, May 1997, p. 12

"Medicaid planning is still practiced by competent people of all socio-economic classes in all fifty states....  In this article, we argue that guardians should be permitted to perform Medicaid planning for their wards....  [T]he term 'Medicaid Planning' is used in this article to mean the process of lawfully rearranging an individual's assets so that the individual qualifies for Medicaid under the law while the assets are sheltered for use by a spouse, children or others....  These techniques...include:  divesting assets generally, transferring assets between spouses, transferring assets to trusts, converting assets, and divorcing a spouse....  [T]he couple may avoid a claim by the state to recover the Medicaid payments by transferring all spousal assets to the sole ownership of the community spouse after the institutionalized spouse's application for benefits has been approved....  Another sheltering strategy is to convert available, countable assets into noncountable exempt assets.  For example, money in checking or savings accounts may be used, without creating a period of ineligibility, to purchase or improve a home, pay off a mortgage, buy a cemetery lot, pre-pay funeral services, pre-pay residence-related taxes and insurance, or even pay outstanding bills, including legal fees....  Divorce is one of the more extreme Medicaid planning strategies.  A successful divorce, in which both parties are represented by independent counsel, and containing an agreement in which most or all of the couple's assets are given to the community spouse, can result in almost immediate Medicaid eligibility for an institutionalized spouse....  The mere fact that Congress and the states have enacted statutes and regulations expressly permitting and endorsing Medicaid planning is clearly an expression of the public policy to allow such planning." 
Hal Fliegelman and Debora C. Fliegelman, “Giving Guardians the Power to do Medicaid Planning,” Wake Forest Law Review, Vol. 32, No. 2, Summer 1997, pps. 341-2, 359, 362-4, 373

August 5, 1997:  President Bill Clinton signed the Balanced Budget Act (Throw Granny’s Lawyer in Jail Law) repealing the criminalization of asset transfer to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee.

"Q:  Can my parents give away a part of their life savings and still qualify for Medicaid?  A:  Yes.  The law lets people give a portion of their savings to children or others to protect those funds from being tabulated as assets.  Giving away money can help your parents reduce their funds to a level that makes them eligible for Medicaid.  Q:  How else can my parents protect part of their life savings?  A:  Here are three of the most popular planning strategies. ...1.  Put money into exemptions [i.e. home improvements, a new car, etc.].  ...2.  Create specialized trusts.  Medicaid permits the creation of a variety of specialized trusts that preserve assets.  Your parents might transfer their home to an irrevocable Medicaid trust, which allows them to live at home for life, obtain Medicaid coverage if they must enter a nursing home, pass the residence to heirs at death, and avoid capital-gains taxes.  ...3.  Purchase an immediate Medicaid annuity or promissory note.  Let's return to the example of your parents with $100,000 in assets when dad enters a nursing home.  Your mom takes $50,000 of that and buys (in her name) an immediate Medicaid-qualified annuity from an insurance company.  ...Dad qualifies for Medicaid immediately, and Mom remains financially secure because she keeps all the income.  She may even save and accumulate the annuity payments without jeopardizing her husband's Medicaid coverage." 
Armond Budish writing in Family Circle, November 1, 1997, p. 46

March 2001 to November 2001:  Recession

“True, Medicaid planning remains a core element in any elder law practice and is probably the leading source of clients and revenues for almost all elder law attorneys.” (pps. 3-4)
“Of course, elder law is not a fringe practice. For thousands of attorneys, elder law represents the core of their practice.”  (p. 13)
“The practice of elder law, however, is not yet fully formed, because there are many parts of it that could either expand or contract, such as nursing home and assisted-living litigation. Will elder law attorneys perceive suing nursing homes and assisted-living facilities for negligent care as part of their practice, or will it be captured by personal injury attorneys?”  (p. 14) 
Lawrence A. Frolik, “The Developing Field of Elder Law Redux: Ten Years After,” The Elder Law Journal,  10 Elder L.J. 1 2002

“Unfortunately, members of the Medicaid planning bar have sometimes been their own worst enemies. For example, at the May 1996 Symposium of the National Academy of Elder Law Attorneys, two prominent NAELA members (one a former President of the organization) gave a presentation on Medicaid planning. Using the format of a skit in which other NAELA members played the roles of the family, the presenters took the audience through a session in which an elderly couple, whose net worth exceeded $750,000, was counseled on how to arrange their affairs to attain Medicaid eligibility. Among the assets in the couple's portfolio was a vacation home. The skit became fodder for critics of Medicaid eligibility planning and indeed was widely criticized by other NAELA members.”  (p. 135) 
Timothy L. Takacs and David L. McGuffey, “Medicaid Planning:  Can It Be Justified?  Legal and Ethical Implications of Medicaid Planning,” William Mitchell Law Review, 29 Wm. Mitchell L. Rev. 111 2002-2003

February 8, 2006:  President  George W. Bush signed the Deficit Reduction Act placing the first cap ever on Medicaid’s home equity exemption, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program.

“Can an elderly husband really refuse to support his wife in a nursing home by shifting the financial burden to Medicaid? Yes, says the U.S. Court of Appeals for the Second Circuit, by employing a Medicaid-planning strategy called ‘spousal refusal.’
“Due to the high cost of nursing home care, elderly people and their families have increasingly turned to Medicaid-planning strategies to qualify for Medicaid benefits and ease their financial burden.' Medicaid planning involves taking measures to preserve one's assets in order to gain Medicaid eligibility by meeting the program's financial criteria. One such Medicaid-planning strategy is spousal refusal, under which a healthy spouse refuses to financially support a spouse in need of nursing home care.  Spousal refusal has been in existence since 1988, following Congress' attempt to fix the Medicaid system to prevent spousal impoverishment, which is when a healthy spouse ends up poor after paying for an ailing partner's care.  (p. 487) 
Andrew D. Wone, “Don't Want to Pay for Your Institutionalized Spouse?  The Role of Spousal Refusal and Medicaid in Funding Long-Term Care, The Elder Law Journal, Volume 14, 14 Elder L.J. 485 2006

“Now that the annuity rules have been greatly clarified, the annuity industry will likely accept this gift from Congress and develop annuity products which comply with DRA.”  (p. 17) 
Stan Miller and D. Scott Schrader, Guest columnist:  Rebecca H. Winburn, “Advanced Planning Strategies:  Medicaid Planning After the Deficit Reduction Act of 2005,” Journal of Practical Estate Planning, April - May 2006, 8 J. Pract. Est. Plan. 15 2006-2007

December 2007 to June 2009:  The Great Recession

“President George W. Bush, in a statement made when he signed the DRA, explained:
The bill tightens the loopholes that allowed people to game the system by transferring assets to their children so they can qualify for Medicaid benefits. Along with Governors of both parties, we are sending a clear message: Medicaid will always provide help for those in need, but we will never tolerate waste, fraud, or abuse.
“The policy reasons set out by former President Bush for the passage of the DRA as it relates to Medicaid are clear: Medicaid's mission is to help the needy, the sickest and poorest members of society, without waste, fraud, or abuse.”  (pps. 347-8)
“Before the DRA, there was a huge gap between what Medicaid law allowed and Medicaid policy, as expressed by President Bush. The DRA was passed to bring Medicaid law closer to Medicaid policy.'”  (p. 350) 
Catherine M. Reif,  “A Penny Saved Can Be a Penalty Earned:  Nursing Homes, Medicaid Planning, the Deficit Reduction Act of 2005, and the Problem of Transferring Assets,” NYU Review of Law & Social Change, 34 N.Y.U. Rev. L. & Soc. Change 339 2010

“While Medicaid was arguably created as a ‘safety net’ program with the sole purpose of providing health care for the poorest members of society, it is common for Medicaid to pay for LTC services for elderly individuals from a variety of economic backgrounds.”  (p. 358)
“It is not uncommon for couples and individuals to engage in a practice often referred to as ‘Medicaid Planning,’ which one commentary defines as ‘the legal fiction of 'rearranging assets' to make someone poor on paper so that he or she may qualify for Medicaid.’ It is well established that such ‘Medicaid Planning’ is legal and that it is professionally ethical, or acceptable, for attorneys and financial planners to assist clients in such planning. Nonetheless, the Medicaid planning and spend down processes are quite complex, potentially highly financially disruptive, and may lead to inequitable results. Moreover, although legal, Medicaid planning is often perceived as ‘gaming the system.’”  (p. 359)
Andrew M. Hyer, Elizabeth L. Hannah, Ross E. Burkhart, and Sarah E. Toevs, “Paying for Long-Term Care in the Gem State: A Survey of the Federal and State Laws Influencing How Long Term Care Services for Idaho's Growing Aged and Disabled Populations Are-and Will Be-Funded, Idaho Law Review, 48 Idaho L. Rev. i 2011-2012

“As discussed more fully in Section IX purchasing an annuity for the community spouse with excess resources can immediately establish eligibility of the institutional spouse irrespective of the amount of excess resources.”  (p. 169)
“As discussed in Section IX, the transfer of asset rules do not foreclose all planning opportunities. It is ironic that more planning opportunities remain for persons of substantial means than for those persons of lesser means. This is an irony quite familiar to those who do tax planning.” (p. 170)
“While not required, transferring title of exempt resources solely into the name of the community spouse can avoid ineligibility for the nursing home spouse in the event the resources are sold, as well as protect the assets from Medicaid estate recovery.”  (p. 183)
“Based on the foregoing analysis we can now set out various planning options to reduce excess resources in the most advantageous manner possible.  We begin by looking at the options available to single persons and then consider the additional options available to married persons.” (p. 188)

Gifting and Waiting Out the Look-Back Period or the Ineligibility Period”  (p. 188)
“Purchasing Exempt Resources”  (p. 190)
“Consuming Excess Resources”  (p. 190)
“Transfer the Home to Certain Children or Siblings” (p. 191)
“Establish Trusts for Disabled Persons Less Than 65 or For a Disabled Child of Any Age” (p. 191)
“Disinheritance or Third Party Special Needs Trusts” (p. 192)
“Transfer Exempt Assets from the Institutional spouse to the Community Spouse”  (p. 193
“Revise the Community Spouse's Estate Plan  (p. 193)
“Purchase an Annuity for the Community Spouse”  (p. 194)
“Requesting an Excess Resource Allowance”  (p. 195)
“Divorce, Legal Separation, or Non-Binding Unions” (p. 195)
“Using Washington State as an example, this article has attempted to provide a road map for practitioners seeking to guide their clients through the long term care planning process. Most of the legal requirements and planning techniques described here have application in other states as well. There are nuances of difference and, of course, the applicable authorities differ from state to state. Still the fundamentals are reasonably universal since Medicaid's basic architecture arises under federal law.”  (p. 196) 
Sean R. Bleck, Barbara Isenhour, and John A. Miller, Preserving Wealth and Inheritance Through Medicaid Planning for Long-Term Care,” MSU Journal of Medicine and Law, 17 Mich. St. U. J. Med. & L. 153 2012

“This Article suggests that the United States also maintains a secret welfare state. The secret welfare state exists because of lawyers' ubiquitous use of questionable practices in representing clients before benefit-granting government agencies, which enable thousands of individuals to collect public benefits who may not qualify for them.”  (p. 1847)
“The funding for SSDI and Medicaid is limited. In assisting relatively advantaged individuals to obtain SSDI, Medicaid, and other public benefits programs, lawyers may be jeopardizing these programs' sustainability and the welfare of those who depend upon them.  (p. 1847)
“This Article concludes by calling for additional research on the role of lawyers in the American welfare state. In particular, it may be possible that the legal profession's central role in the distribution of public benefits is an obstacle to a fairer and more transparent social safety net.”  (p. 1849)
“Studies estimate that anywhere from 5 percent to 54 percent of current Medicaid beneficiaries have engaged in Medicaid planning. Even if the lower estimates are accurate, as Medicaid planning is generally used by more affluent individuals, it predominantly benefits the nonpoor.” (p. 1855)
“Footnote 88:  While fee information for Medicaid planning is not as readily available, according to the American Council on Aging, attorneys' fees can range from $2500 for individuals with relatively simple estates to $10,000 for individuals with significant assets. See Am. Council on Aging, Medicaid Planners: Pros & Cons of Public and Private Assistance, MEDICAID PLANNING ASSISTANCE, http://www.medicaidplanningassistance.org/types-of-medicaidplanners#elderlaw-attorney (last visited Mar. 27, 2016) [http://perma.cc/EJ5L-2RWR].  Nonlawyers who provide Medicaid planning services generally charge less.”  (p. 1857)
“The American welfare state is sustaining relatively advantaged individuals and their lawyers as well as the truly needy. In the long-term, the United States would be well served by a more transparent public benefits regime.”  (p. 1864)
Milan Markovic, “Lawyers and the Secret Welfare State, Fordham Law Review, 84 Fordham L. Rev. 1845 2015-2016

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Updated, Monday, August 1, 2016, 11:12 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-030:  LTC NEWS AND COMMENT

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

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

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

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

  • Nursing Home Bills Are Swamping Medicaid

  • Alzheimer’s researchers seethe over years of missteps after latest drug failure

  • Low interest rates a growing threat to Social Security

  • The Mega-List of Caregiver Support Strategies and Resources

  • 7 (relatively) easy insurer ideas for saving long-term care insurance

  • Trying to find adequate elder care is a bureaucratic and personal nightmare

  • When Aging Parents Need Help With Financial Tasks

  • How to solve California's housing shortage? Build 'granny flats' in homeowners' backyards

  • Senior surprise: Getting switched with little warning into Medicare Advantage

  • What you need to know about the Democratic platform

  • Lawmakers want answers to long-term care premium hikes

  • Dementia diagnosis has 'silver lining' for many

  • Nursing Home Residents Still Vulnerable to Abuse

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

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Updated, Friday, July 29, 2016, 10:13 AM (Pacific)
 
Seattle—

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LTC BULLET:  NEW REPORT PREVIEW

LTC Comment:  I’ve spent the past several months re-reading four decades of research on long-term care financing by economists, policy analysts, and lawyers.  Our new report due out this fall will tell all, but here’s a preview after the ***news.***

*** OMINOUS PARALLELS:  LTC Clippings subscribers received this item from us today.  Artificially low interest rates forced on the economy by the Federal Reserve are doing to Social Security what they’ve already done to LTC insurance.  To learn more about or subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. ***

7/28/2016, “Low interest rates a growing threat to Social Security,” by Harvard Zhang, MarketWatch

Quote:  “Record-low yields on U.S. Treasurys endanger the long-run solvency of Social Security and the future retirement benefits for younger generations of Americans, economists say.  Newer Treasury bonds held by the trust fund have been earning less for years, the consequence of sluggish economic growth and persistently low interest rates. The Federal Reserve has kept its benchmark short-term rate at or near zero for more than seven years in an effort to stimulate the economy.  Even with the Fed’s extended easy-money approach, the U.S. economy has not grown fast enough to generate the necessary tax income to help fund all its responsibilities, including Social Security for current and future retirees.”

LTC Comment:  The Fed’s artificially low interest rates hurt LTCI by forcing premium increases so that reserves would suffice to pay future claims.  This article offers a rare observation that the Social Security trust fund faces the same problem, inadequate reserves with too little investment return.  So too Medicare and all the other many government trust funds.  A reckoning looms and when it comes, we’ll all pay higher “premiums,” i.e., taxes, because of government’s reckless monetary and fiscal policy. ***

*** OTHER NEWS:  LTC Clippings this week also addressed “The Mega-List of Caregiver Support Resources,” “7 (relatively) easy insurer ideas for saving long-term care insurance,” “Trying to find adequate elder care is a bureaucratic nightmare,” “When Aging Parents Need Help With Financial Tasks,” “How to solve California's housing shortage?  Build 'granny flats' in homeowners' backyards,” “Senior surprise: Getting switched with little warning into Medicare Advantage,” “Lawmakers want answers to long-term care premium hikes,” “Dementia diagnosis has 'silver lining' for many,” and other important stories.  Let us screen the voluminous media coverage of aging issues and send you the most important stories, reports and data with brief analysis to help it all make sense.  Subscribe to LTC Clippings. ***
 

LTC BULLET:  NEW REPORT PREVIEW

LTC Comment:  I’m almost one week into writing the draft of our new report.  Following are the “Abstract” and the “Introduction” as they stand right now.  Although they may change, this preview should give you a pretty good idea of where the report is headed.  We may offer more draft excerpts in future weeks.  Your feedback, whether complimentary or critical, is always welcome.

-----------------

Abstract:  The age wave and fiscal constraints challenge America’s long-term care financing system.  Decades of study commissions, white papers and legislative initiatives have failed to achieve a better way.  But consensus is finally forming around a public policy approach advocated by three similar papers published in February 2016.  That approach is to establish a new, mandatory, publicly financed, long-term care insurance program to cover the catastrophic, back-end long-term care financing risk.  The primary rationale for this new program is that the current system, based on Medicaid, forces people into impoverishment and has failed.  In fact, Medicaid does not require impoverishment and the draconian program blamed for the long-term care financing system’s dysfunctions has never existed.  This paper will explain how Medicaid long-term care financing actually works and why much of the contrary analysis by economists and health policy experts, based on survey data, simulations and modeling, is mistaken, misleading and misguided.  The paper concludes with recommendations to improve long-term care financing for the poor, middle-class and affluent based on free-market principles and individual responsibility without adding another layer of compulsory government involvement. 

Introduction

After decades of struggling unsuccessfully to find a better way to finance long-term care, researchers, industry experts and public policy makers are starting to agree on a general direction for reform.  A consensus is forming around the idea of a mandatory, government-financed program to cover the back-end, catastrophic long-term care risk.  Three reports published in February of this year by Leading Age, the Bipartisan Policy Center and the ad hoc LTC Collaborative offered variations of this plan.[1]  All three relied on research conducted by the Urban Institute (UI) and the actuarial firm Milliman as described in a November 2015 Health Affairs article titled “Financing Long-Term Services and Supports:  Options Reflect Trade- Offs for Older Americans and Federal Spending.”[2]

The Health Affairs article stated that “half of older Americans” will require “a prolonged period” of paid “long-term services and supports,” half of which assistance they will fund “out of pocket,” but because “few people purchase private long-term care insurance” or save sufficiently, “many will eventually turn to Medicaid for help.”  The article concluded and the three reports agreed that among the front-end or back-end, voluntary or mandatory, capped or uncapped financing alternatives considered, “the mandatory options would be more successful than the voluntary versions” and “the comprehensive and back-end mandatory options would be most beneficial.”  A payroll tax like Medicare’s, not subject to a wage cap, should fund a new mandatory public long-term care program based on these principles.  This is the consensus around which a growing number of policy analysts, policy makers, and interest groups are coalescing.

It behooves everyone concerned about long-term care financing to identify and question the assumptions, data, and reasoning behind this growing programmatic consensus.  When we unpack these components, we find several common propositions underpinning them that warrant critical analysis.  For example, does the fact that many people eventually turn to Medicaid for help with long-term care mean they have been forced to spend down into impoverishment by the welfare program’s allegedly draconian income and asset restrictions?  Is it true that half of what people spend for long-term care comes out of their own pockets?  Do too few people buy private long-term care insurance because the product costs too much and delivers too little?  Does it follow from rising long-term care expenditures incurred by a rapidly aging population that the best way to pay for care is through a new, compulsory government program?  America already has a number of centrally planned entitlement programs with high and growing unfunded liabilities.  We should not contemplate adding another without first scrutinizing these and other similar questions.

-----------------

LTC Comment:  “Scrutinizing these and other similar questions” is what the remainder of our report will do in detail.  Stay tuned for more.

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Updated, Monday, July 25, 2016, 10:02 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-029:  LTC NEWS AND COMMENT

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

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

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

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

  • Behavior Changes May Be First Signs of Alzheimer's

  • Social Security, Medicare shortfalls are elephants in the room - today

  • Long-term care insurance market gets first new issuer in 10 years

  • Money, Personal Preferences Push States on Long-Term Care

  • 5 things state lawmakers want to do about long-term care insurance

  • Federal long-term care premiums rising by triple digits

  • GOP updates medical and long-term care platform provisions

  • Adult children vital to senior living move-ins

  • Debt dims boomers' retirement prospects

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

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Updated, Friday, July 22, 2016, 10:14 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE SENIOR FINANCIAL SECURITY PROGRAM, AGAIN

LTC Comment:  Fundamental things apply as time goes by, even in long-term care policy, after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

 

LTC BULLET:  THE SENIOR FINANCIAL SECURITY PROGRAM, AGAIN

In the spring of 1992, I sat before Wisconsin Governor Tommy Thompson.  He was famous already for pioneering welfare reform and later to become Secretary of Health and Human Services.  Governor Thompson wanted to do for Medicaid long-term care what he’d done already for welfare:  eliminate the program’s counterproductive incentives and incentivize positive solutions.  He asked me to study his state’s Medicaid long-term care program and propose changes to improve it.

On June 26, 1992, I presented this report to Governor Thompson:  “The Senior Financial Security Program:  A Plan for Long-Term Care Reform in Wisconsin.”  Read the full report here.  Its crux follows, but stay tuned for the rest of the story after this excerpt.

-----------

Excerpt from “The Senior Financial Security Program:  A Plan for Long-Term Care Reform in Wisconsin,” by Stephen A. Moses, LTC, Incorporated, June 26, 1992, Kirkland, Washington, pps. 30-31. 

Who are the main parties to the long-term care financing debate and what do they want?

Seniors want access and quality in home or institutional care without impoverishment or welfare.

Taxpayers, and their stewards in government, want limits on Medicaid's explosive growth.

Nursing homes and home care providers want more private patients at full-pay, non-Medicaid rates.

Long-term care insurers want a level playing field without the competition of free public benefits for the upper middle class.

Younger and future generations want to inherit more than a huge public debt.

Today, these constituencies are pulling in opposite directions, drawing and quartering the broader public interest. What could harness their energies in a common purpose?

First, we must establish in principle a moral high ground on which everyone can stand with pride and agreement. This is the common philosophy that I found in Wisconsin:

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 before giving away their wealth to heirs; seniors and their heirs who wish to avoid such recovery from the estate should plan ahead and purchase private long-term care insurance.

Next, we must imagine a program structure that achieves everyone's goals without violating these principles. Such a program would have to do six things:

(1) Maximize income and asset protections for single and married seniors who need long-term care.

(2) Eliminate divestiture and estate recovery avoidance.

(3) Secure property in a beneficiary's possession as a condition of eligibility for publicly financed care. 

(4) Recover publicly financed benefits from estates when dependents no longer need the assets.

(5) Encourage the sale of long-term care insurance as an alternative to public benefits and estate recovery.

(6) Educate the public on the advantages of avoiding Medicaid dependency and paying privately for care.

Finally, we must show how this program delivers the key values that each constituency wants to achieve.

By maximizing income and asset protections, the program eliminates catastrophic spend-down for seniors. By requiring a pay-back from estates, it removes the stigma of welfare.

By making people pay their own way (pay me now or pay me later), the program creates an incentive (now nonexistent) for people to purchase private insurance.

By empowering people to pay privately for care with insurance, it diverts families from dependency on Medicaid.

By sending the home care and nursing facilities more full-pay private patients, the program enhances the providers' commercial viability and reduces their reliance on public financing. By infusing new money into long-term care, it enhances the industry's ability to provide good access to quality care for all patients, private-pay and Medicaid alike.

By making people spend their own money, i.e. their insurance benefits, on care, the program encourages a wide continuum of cost-effective home, community-based, and institutional options.

By stimulating heirs to plan ahead for their own long-term care needs and to protect their parent's estates (i.e. their own inheritances), the program ameliorates the biggest danger we face as a nation from the aging of the baby boom generation.

LTC Comment:  Here’s the rest of the story.  On August 10, 1993, President Clinton signed the Omnibus Budget Reconciliation Act into law.  OBRA ’93 incorporated all of the key principles and policies recommended in the Senior Financial Security Program.  It preserved Medicaid’s generous income and asset protections, but tightened controls on Medicaid planning (artificial self-impoverishment) and encouraged responsible LTC planning by making estate recovery mandatory.  OBRA ‘93’s goal was to save Medicaid as a long-term care safety net for the poor by creating stronger incentives for the middle class and affluent to plan early, save invest or insure for LTC, and avoid dependency on public assistance.

Wait, you say, it didn’t turn out that way.  True.  States did not enforce the new rules aggressively.  The federal government did not require their compliance.  The media didn’t publicize the new program.  And the public, unaware that Medicaid payments on their behalf were supposed to be deducted from their estates, did not respond by planning more responsibly for LTC.

So here we are, 24 years later, after dozens of studies, commissions and failed proposals, in the same fix we were in a quarter century ago.  The difference is that we are that much closer to the demographic nightmare we’ve known all along was coming.  Worse, we seem to be on the verge of doubling down on past mistakes by leaning toward a new payroll-financed government program to fund LTC’s catastrophic back-end risk.

At the Center for LTC Reform, we’re working on a new report, due out this fall, aimed at pointing out the error of pursuing such a new public LTC financing program and explaining, again, why pursuing policy based on enhancing the same principles and proposals in the Senior Financial Security Program is a much wiser and promising approach.  Stay tuned.

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Updated, Monday, July 28, 2016, 9:19 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-028:  LTC NEWS AND COMMENT

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

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

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

  • Care needs greatest determinant of senior living search length

  • 'We don't know if we can pay our bills on time': For some home care workers, hardest job can be getting paid

  • Why 4% of Patients Consume 25% of Medicare Spending

  • Jumper cables and stethoscopes

  • LTCi Premiums Could Rise In Florida

  • 7 ideas for improving long-term care insurance

  • National Health Expenditure Projections, 2015–25: Economy, Prices, And Aging Expected To Shape Spending And Enrollment

  • More Older Americans Cared for at Home

  • Can a Comic Book Change How We See Alzheimer’s?

  • The 2016 Medicare Trustees Report: Is Medicare Doomed?

  • As rates fall, scramble for riskier debt seen at pensions, insurers

  • 5 ways retirees can control long-term health-care costs

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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).

#############################

 

Updated, Friday, July 15, 2016, 11:11 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Almanac Update (2)

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

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

  • All LTC Bullets and E-Alerts
  • Access to our Members-Only Zone website and Almanac of Long-Term Care
  • Subscription to our Clipping Service
  • Email/phone access to Steve Moses for 24-hour turnaround queries

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

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

LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free another week—today through Friday, July 22, 2016.  To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password:  UN:  IntrotoZone / PW:  FreeTrial.  Like what you see?  Then join the Center for Long-Term Care Reform here.  Or contact Damon at 206-283-7036 or damon@centerltc.com.  ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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Chapter 1:  Aging Demographics

International  

An Aging World: 2015 International Population Reports
Issued March 2016, U.S. Census Bureau [link]

3/28/2016, “Relatively low percentage of U.S. residents in long-term care: report,” by Lois A. Bowers, McKnight's Senior Living

Quote:  “The percent of the over-65 population living in skilled nursing facilities or other residential care settings or receiving care at home ranges from 0.8% in Poland to 22.1% in Israel, according to a new report from the U.S. Census Bureau. Of 26 countries ranked in 2013 by the Organization for Economic Cooperation and Development in research cited in the report, the United States ranked seventh lowest, with 6.4% of the 65+ population living in SNFs or other residential care settings or receiving home healthcare.  The bureau released “An Aging World: 2015” (PDF) on March 28.

LTC Comment:  If you think we have problems, explore the wide, wide world of long-term care in this report.

Boomer Generation Characteristics

IRI on boomer-expectations-for-retirement-April 2016 URL 

“Boomer Expectations for Retirement 2016 Sixth Annual Update on the Retirement Preparedness of the Boomer Generation,” Insured Retirement Institute (IRI)

4/12/2016, “Trouble Ahead! Baby Boomers’ Retirement Outlook on the Decline,” Advisor Magazine

Quote:  “The Insured Retirement Institute (IRI) today released a new research report that found less than a quarter of Baby Boomers, 24 percent, are confident they will have enough savings to last throughout their retirement years. This is the lowest level since IRI began this research study in 2011, when 37 percent of Boomers had this same level of confidence.    The entire report, “Boomer Expectations for Retirement 2016,” is available HERE.”

LTC Comment:  We are now beginning to see the unintended consequences of Social Security, Medicare and Medicaid convincing consumers for decades that they do not need to plan privately for retirement income security, health and long-term care.  Today this is just a worry; by the 2030s it will become a national catastrophe of incalculable proportions.

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

Unfunded Liability Estimates

Cato fiscal-imbalance-book 0416 URL:  http://object.cato.org/sites/cato.org/files/pubs/pdf/fiscal-imbalance-book.pdf  

Jeffrey Miron, “U.S. Fiscal Imbalance,” Cato Institute

See also WSJ:  Inattention-to-the-Deficit Disorder:  By one estimate, the government will spend $117.9 trillion more than it takes in this century.” By George Melloan May 26, 2016 6:07 p.m. ET
http://www.wsj.com/articles/inattention-to-the-deficit-disorder-1464300465

4/6/2016, U.S. Fiscal Imbalance, by Jeffrey Miron, Cato Institute

Quote:  “The U.S. fiscal imbalance—the excess of what we expect to spend, including repayment of our debt, over what government expects to receive in revenue—is large and growing. And with politicians proposing large new expenditures, little is being done to rectify the country’s fiscal health.    As of 2014, the fiscal imbalance stands at $117.9 trillion, with few signs of future improvement even if GDP growth accelerates or tax revenues increase relative to historic norms. Thus the only viable way to restore fiscal balance is to scale back mandatory spending policies, particularly on large health care programs such as Medicare, Medicaid, and the Affordable Care Act (ACA).”

LTC Comment:  Our fiscal imbalance of $117.9 trillion is about 6.6 times the U.S. Gross Domestic Product and getting worse all the time.  Fiscal and monetary shenanigans can delay the reckoning, but not prevent it.  The economic vise is closing.  I don’t think the status quo can continue until, much less beyond, the 2030s when boomers start turning 85 (2031) and Social Security (2034) and Medicare (2030) become insolvent. 

Chapter 4:  Long-Term Care

General

CDC on Care Incidence 0216 URL

Early Release of Selected Estimates Based on Data From the January–September 2015 National Health Interview Survey,” Centers for Disease Control

2/28/2016, “Number of seniors who need personal care help increasing, CDC says,” by Emily Mongan, McKnight's LTC News

Quote:  “The data, released last Tuesday by the CDC's National Center for Health Statistics, shows 7.2% of seniors required help with activities of daily living in 2015, compared to 6.6% in 1997. The report included eating, bathing, dressing and getting around as personal care needs.    Seniors over age 85 were twice as likely as adults between age 75 and 84 to require personal care help, and were five times as likely as adults age 65 to 74. The report also found 6.4% of white seniors required personal care help, compared to 9.6% of black and 11.3% of Hispanic seniors.  Click here to read the full report, which also includes data on other health issues like diabetes, influenza vaccinations and alcohol consumption.

LTC Comment:  We not only have more seniors, especially those over the critical age of 85, but their rate of needing care is increasing as well.  A dangerous combination!

Chapter 5:  Caregiving

Caregiver Shortages

DOL Mandates Minimum Wage for Home Care Workers 0316 URL:  http://www.dol.gov/whd/homecare/homecare_guide.pdf

“Paying Minimum Wage and Overtime to Home Care Workers:  A Guide for Consumers and their Families to the Fair Labor Standards Act,” U.S. Department of Labor

3/2016, “Paying Minimum Wage and Overtime to Home Care Workers:  A Guide for Consumers and their Families to the Fair Labor Standards Act,” by U.S. Department of Labor

Quote:  “Most home care workers must be paid at least the federal minimum wage and overtime. The relevant question is often who is responsible for making sure these workers are paid according to these FLSA requirements. Whether you are responsible for the worker being paid federal minimum wage and overtime depends on whether you are an “employer” as defined by the FLSA.”

LTC Comment:  Double whammy for LTC financing:  first the Labor Department mandates home care workers receive at least the minimum wage (January 2015).  Then California and New York, and probably more states, increase the minimum wage to $15 per hour.  As economic gravity prevails, jobs for home care workers (and hence their availability) will decline and/or they’ll be increasingly replaced by technology such as robots and other assistive devices.  This is a classic case of good intentions with unanticipated consequences, though how can intentions be good when bad consequences are inevitable and recognized by most economists?

Chapter 9:  Long-Term Care Providers

General

CDC on Assisted Living Stats 0216 URL:  http://www.cdc.gov/nchs/data/series/sr_03/sr03_038.pdf
“Long-Term Care Providers and Services Users in the United States: Data From the National Study of Long-Term Care Providers, 2013–2014,” Centers for Disease Control

2/24/2016, “CDC report details characteristics of assisted living residents,” by Lois A. Bowers, McKnight's Senior Living

Quote:  “‘Findings on differences and similarities in supply, provision and use, and the characteristics of providers and users of long-term care services, can inform policy and planning to meet the needs of an aging population,’ according to the report, titled ‘Long-Term Care Providers and Services Users in the United States: Data From the National Study of Long-Term Care Providers, 2013–2014’ (PDF).

LTC Comment:  Valuable information well worth your time to review.

Chapter 10:  Medicaid

Medicaid Financing and Burwell Data

Blase-Medicaid-Provider-Taxes-v1 URL 021716 URL:  http://mercatus.org/sites/default/files/Blase-Medicaid-Provider-Taxes-v1.pdf
Medicaid Provider Taxes: The Gimmick That Exposes Flaws with Medicaid’s Financing,” Brian Blase, Mercatus Center, February 2016

2/16/2016, “Biden Was Right: Medicaid Provider Taxes A 'Scam' That Should Be Scrapped,” by Brian Blase, Forbes

Quote:  “In his book, The Price of Politics, renowned journalist Bob Woodward chronicled the 2011 negotiations between the Obama administration and Congress as the sides attempted to reach a deal to trim future budget deficits. One area of common ground between the administration and congressional Republicans centered on Medicaid provider taxes, which happens to be the subject of my most recent study, “Medicaid Provider Taxes: The Gimmick That Exposes Flaws with Medicaid’s Financing,” published today by the Mercatus Center at George Mason University.”

LTC Comment:  I’ve called Medicaid provider taxes “Medicaid planning writ large.”  They amount to states gaming the program in a manner similar to the way elder law attorneys artificially impoverish their affluent clients.  Brian Blase’s excellent critique of the practice is right on target with this proviso.  The extra federal revenue generated by provider taxes helps prevent Medicaid’s dismally low LTC provider reimbursement rates from getting even worse.  In the bigger picture, however, this fact is a further indictment of Medicaid LTC financing, which crowds out responsible private planning for long-term care, and not a justification for provider taxes.

Medicaid Services

Heartland on Welfare Report Card 2015 URL:  https://www.heartland.org/sites/default/files/03-18-15_welfare_report_card_final_0.pdf

3/19/2016, “2015 Welfare Reform Report Card,” by Diane Bast, Matthew Glans, Logan Pike, and Gary MacDougal, Heartland Institute

Quote:  “Most state governments can improve the effectiveness of their efforts to help those in poverty. This 50-state report card offers policymakers and the public a roadmap for how it can be done.

LTC Comment:  Trillions spent on welfare have failed to improve the lot of the poor and arguably made it worse.  See which states have done relatively well in fighting poverty and which have fared worse.  This “report card” doesn’t address Medicaid or long-term care financing, but many of the same principles of good public policy apply.

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Updated, Monday, July 11, 2016, 10:18 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-027:  LTC NEWS AND COMMENT

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

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

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

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

  • House panel votes to continue funding for Medicare assistance program

  • Americans underestimate senior care costs [infographic]

  • How a Clinton, Trump, or Johnson Win Will Impact Near and Current Retirees, Part 2

  • NAIC looks at ways to boost LTC policy sales

  • VA health care still has ‘profound deficiencies,’ report says

  • Meet 4 execs who are shaping the insurance industry of the future

  • The 2016 Trustees Report: Yet Another Warning to Congress and the President

  • Antipsychotic use down 27%

  • How Google Street View and exercise bikes are helping Alzheimer's patients to remember

  • MassMutual acquires MetLife’s retail advisors

  • U.S. Cancer Survivors Living Longer

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

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Updated, Friday, July 8, 2016, 10:00 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Almanac Update

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

*** Here are two news items we sent recently to our Clipping Service subscribers that deal with financing the many costs of long-term care:

1.)  07/03/2016, “How to get your kids to provide long-term care for you when you need it most,” by Sarah Anderson, Deseret News

Quote: “Are millennials as unwilling to help their parents and relatives as they age as popular conception would have you think? Not exactly. An opinion piece in Forbes discussed the recent results of the Fidelity Investments Family & Finance Study that interviewed 1,273 parents over the age of 55 and 221 of their adult children older than 25.”

LTC Comment: In many cases, it’s not about the willingness of an adult child to care for an aging parent or what generation they belong to. Ultimately, it’s about mitigating the costs associated with caregiving. Of course, those costs are many: financial, professional, physical, emotional, psychological, etc.

2.)  07/03/2016, “Warning: Healthcare Costs in Retirement May Be Higher Than We Thought,” by Maurie Backman, The Motley Fool  

Quote:  Many of us by now have been exposed to the dire reality of financing healthcare in retirement. For years, Fidelity has been releasing data on estimated retiree healthcare costs, and according to the most recent assessment, a 65-year-old couple retiring today can expect to spend $245,000 over the course of a 20-year retirement, not including nursing home or long-term care expenditures.”

LTC Comment:  We’ve often advised “save, invest or insure for long-term care” but with total healthcare costs in retirement on the rise, this article advocates for all of the above. In other words: save, invest and insure. On the upside, it does so in a way that eschews scare tactics and offers LTCi as a way to mitigate the risk of catastrophic healthcare costs in retirement.

Receive these LTC-relevant news items (with original analysis) in real time and stay on the forefront of professional knowledge by subscribing to our Clipping Service. Contact Damon at 206-283-7036 / damon@centerltc.com to start your subscription immediately or go directly to our secure online subscription page and sign up for $250 per year or $21 per month. Already a Center member? Contact us to add the Clipping Service to your membership for only $100 per year or $8.25 per month. ***

 

LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, July 22, 2016.  To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password:  UN:  IntrotoZone / PW:  FreeTrial.  Like what you see?  Then join the Center for Long-Term Care Reform here.  Or contact Damon at 206-283-7036 or damon@centerltc.com.  ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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Chapter 1:  Aging Demographics

International

Longevity+paper+-+ADA+-3-21-16 URL  “A Silver LiningThe Investment Implications of an Aging World,” PGIM, Inc., March 2016

3/24/2016, “Aging population offers golden opportunities,” by Marlene Y. Satter, LifeHealthPRO

Quote:  “In its report “A Silver Lining: The Investment Implications of an Aging World,” PGIM presents the case that global aging will reshape consumer spending for decades to come. According to the report, these changes will not only impact developed markets but also have a far-reaching effect on emerging markets — where two-thirds of the world’s elderly live.  …  Within the three sectors to be most affected, specific opportunities exist in multifamily condos, senior housing, urban life sciences clusters, pharmaceuticals and biotech and technology-enabled medical services and devices.

LTC Comment:  Not to mention to mention LTCI and other financial products to save or invest for long-term housing and care costs.

Retirement Planning

NCOA-Older-Adult-Issue-Debt-Brief 0216 URL:  https://www.ncoa.org/wp-content/uploads/NCOA-Older-Adult-Issue-Debt-Brief.pdf

“Older Adults and Debt: Trends, Trade-offs, and Tools to Help,” National Council on the Aging, February 2016

2/17/2016, “Older Adults & Debt: Trends, Trade-offs, and Tools to Help,” National Council on the Aging (NCOA)

Quote:  “Numerous public and private benefits programs can help low-income older adults pay for health care, housing, food, transportation, and other expenses, thereby freeing up income that can be used to pay down debt.  …  These programs remain undersubscribed by older adults, and yet collectively are estimated to offer savings worth more than $12,000 (in 2014), an amount that would double the income of a person living at the federal poverty level.  …  NCOA’s BenefitsCheckUp® is the nation’s most comprehensive free, online service to screen seniors with limited income for benefits. It includes more than 2,000 public and private benefits programs from all 50 states and the District of Columbia.”  (p. 3)

LTC Comment:   The epidemic of senior debt clearly described in this report is a serious problem, but government benefit programs are the problem not the solution.  After 80 years of Social Security followed by 50 years of Medicare and Medicaid, aging Americans depend too much on public benefits and too little on personal responsibility and planning.  When the public programs they depend on become insolvent, the current crisis will become a genuine national tragedy.

Chapter 2:  International

General

LTC Financing in Europe URL:  https://www.soa.org/Files/Pubs/pub-2016-05-ltc-coverage-europe.pdf

“Long-Term Care Coverage in Europe,” by Edith Bocquaire

6/15/2016, “Some European countries seek private long-term care help,” by Allison Bell, LifeHealthPRO

Quote:  “Some European countries are hoping use of private annuities and insurance policies can help their residents hold down long-term care costs.  Edith Bocquaire, a French insurance industry analyst, has described how some European countries build private-sector arrangements into long-term care planning efforts in a paper posted on the website of the Schaumburg, Illinois-based Society of Actuaries.”

LTC Comment:  Check this paper out if you’re interested in how European countries handle long-term care financing.

Chapter 6:  Long-Term Care Financing

General

Leading Age Pathways 0216 URL

“Perspectives on the Challenges of Financing Long-Term Services and Supports,” Leading Age, February 2016

2/17/2016, “Current LTSS financing methods 'irrational, unfair' LeadingAge report claims,” by Emily Mongan, McKnight's LTC News

Quote:  “’Perspectives on the Challenges of Financing Long-Term Services and Supports’ builds on research from LeadingAge, AARP and the SCAN Foundation first released in late 2015.  …  Click here to read the full LeadingAge Pathways report.

LTC Comment:  More of the same old, same old that we’ve refuted repeatedly.  Don’t bother.  The last thing we need is a “mandatory, universal insurance option” which is what Leading Age advocates.

Chapter 10:  Medicaid

Medicaid is the 800-pound gorilla of LTC

June-2016-Report-to-Congress-on-Medicaid-and-CHIP URL:  https://www.macpac.gov/wp-content/uploads/2016/06/June-2016-Report-to-Congress-on-Medicaid-and-CHIP.pdf

“Report to Congress on Medicaid and CHIP,” Medicaid and CHIP Payment and Access Commission (MACPAC), June 2016

6/15/2016, “MACPAC: Medicaid spending for long-term care 'disproportionate',” by Emily Mongan, McKnight's LTC News

Quote:  “Medicaid is the largest payer of high-cost services like long-term care, MACPAC noted in its June 2016 Report to Congress. The program finances one-third of the country's nursing facilities; and spent $169 billion on long-term supports and services in fiscal year 2012.  That amount added up to roughly 43% of Medicaid's total expenditures for FY 2012, despite just 6.2% of Medicaid beneficiaries needing LTSS, the report found.  …  MACPAC's Report to Congress also covers financing reforms and trends in Medicaid spending. Click here to read the full report.

LTC Comment:  Critically important data:  long-term care touches only 6.2% of Medicaid recipients, but accounts for 43% of costs.  Yet far more political and policy attention is directed toward the other 93.8% of recipients who account for the only 57% of costs.  Whatever happened to the admonition “Follow the money?”

Medicaid Eligibility

KFF on Medicaid Financial Eligibility 0316 URL:  http://files.kff.org/attachment/report-medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-in-2015

“Medicaid Financial Eligibility for Seniors and People with Disabilities in 2015,” Kaiser Commission on Medicaid and the Uninsured, March 2016,

Highlights:  http://kff.org/medicaid/report/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-in-2015/

Medicaid Deficiencies

NCOA on Stigma 0616 URL:  https://www.ncoa.org/wp-content/uploads/An-End-to-Stigma-Issue-Brief-NCOA.pdf

“An End to Stigma: Challenging the Stigmatization of Public Assistance Among Older Adults and People with Disabilities,” National Council on the Aging, June 2016

6//2016, “Report: How to get more benefits to seniors,” by Lois A. Bowers, McKnight's Senior Living

Quote:  “So what's keeping older adults from applying?  Stigma, for one. Medicaid and Supplemental Nutrition Assistance Program benefits carry much more stigma that Medicare and Social Security benefits, according to the survey …  ‘Concerns about estate recovery and states placing liens on homes affect applicants' willingness to apply as well,’ the report authors state, noting that such concerns can be legitimate for families applying for Medicaid coverage for long-term services and supports.

LTC Comment:  More stigma for Medicaid than Medicare?  Well, yeah, Medicaid is welfare (for which others pay taxes) and Medicare is social insurance (for which everyone pays “premiums,” actually payroll taxes.  The irony is that Medicaid has become a de facto entitlement for LTC because of easy and elastic eligibility rules, whereas Medicare is moving toward welfare status due to means-testing, i.e. charging higher income people more.  Do some people object to paying back the cost of their care from their estates (estate recovery)?  Well, yes, and other people (taxpayers) object to paying for their own care and the care of people who transfer the cost of their care to Medicaid.  This new report is a good example of the moral decay we described in “Losing Principles.”

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Updated, Tuesday, July 5, 2016, 9:59 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-026:  LTC NEWS AND COMMENT

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

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

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

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

  • Warning: Healthcare Costs in Retirement May Be Higher Than We Thought
  • How to get your kids to provide long-term care for you when you need it most
  • Catastrophic Insurance Could Help With Long-Term Care Expenses: Studies
  • Gawande: Good palliative care blocked by quality measures, lack of communication
  • Home healthcare industry braces for another Medicare cut
  • Diversity in age, ethnicity of post-acute residents increasing, research finds
  • The financial and emotional toll of America’s Alzheimer’s problem
  • How retirement planning for childless couples is different
  • Survey shows how much long-term care costs continue to climb
  • Aging parents: Your adult kids aren't total ingrates like you think they are
  • Michael D. Fraizer and Thomas J. McInerney

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

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Updated, Friday, July 1, 2016, 11:07 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Action Plan

LTC Comment:  The best way to confront and change the growing LTC reform consensus into something better, after the ***news.***

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

  • All LTC Bullets and E-Alerts

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

  • Subscription to our Clipping Service

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

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

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

 

LTC BULLET:  LTC ACTION PLAN

LTC Comment:  Center members and LTC Bullets readers know we’re working on a six-month study of Medicaid and long-term care financing whose goal is “Ensuring Scarce Resources Reach the Neediest People.”  We explained in “LTC Bullet:  Losing Principles” how and why this study took a change in direction.  We expanded in “LTC Bullet:  Long-Term Care at a Crossroads” on why that change was necessary.  We describe today how we plan to proceed.

What follows is a rough, initial outline of the report we will complete in draft by August 15, 2016.  Many blanks remain to be filled in and much work remains to be done, but this first cut helps us organize our thoughts.  We welcome any feedback and suggestions readers may like to offer.

Draft Report Outline:

A policy consensus is forming based on reports from Leading Age, the Bipartisan Policy Center and the LTC Collaborative that America needs a compulsory back-end government long-term care financing program.

This consensus is based on the presumption that Medicaid requires impoverishment and that the welfare program’s LTC financing approach has failed.  Neither of these suppositions is correct.

The truth is that Medicaid does not require impoverishment and the Medicaid LTC financing program presumed to have failed has in fact never been tried.  This report will address each of those points.

I.  Does Medicaid require impoverishment?

The belief that qualification for Medicaid LTC benefits requires impoverishment is based on (1) a superficial reading of seemingly draconian income and resource eligibility rules, (2) evasion of evidence from key sources, and (3) research by economists and health policy experts grounded in HRS/AHEAD data.

The first two points are easy to substantiate.  Relatively high income and resources do not preclude Medicaid LTC eligibility as we’ve explained in detail often and will again in this report, with references to statutory and regulatory sources.

Advocates for an expanded government LTC financing program have ignored a vast, long-standing and current legal literature on Medicaid planning, i.e. artificial self-impoverishment to qualify for Medicaid, which we will cite and summarize.

Also ignored since the late 1980s and early 1990s are the opinions of Medicaid officials including eligibility workers, elder law attorneys, and the public regarding the ease with which people of substantial means qualify for LTC benefits. 

Less easy to rebut are the findings from more than two decades of longitudinal survey research based on the Health and Retirement Study (HRS) & Asset and Health Dynamics among the Oldest Old (AHEAD).  Journal articles citing these “big data” sources  downplay the use of “asset transfers” to qualify for Medicaid, show that most survey respondents decumulate wealth very quickly before they become eligible for Medicaid, and document how poor most Medicaid LTC recipients actually are.

We will analyze the most influential of these articles and refute their conclusions when mistaken.  For example:  their focus on asset transfers ignores the larger problem of easy and elastic eligibility rules and disregards other methods of Medicaid planning that do not involve divestiture.  They focus on survey respondents at the median of wealth, whereas we’ll show how people from the median to 95th percentile of wealth qualify easily for benefits.  We will explain why evidence of widespread, catastrophic asset spend-down for private long-term care is lacking.  Finally, we will point out deficiencies in the survey data itself based on non-reporting, mis-reporting, and misinterpretation. 

II.  Medicaid, as described by advocates of a big, mandatory public LTC financing program, has never been tried.

From its inception in 1965 until 1980, Title XIX of the Social Security Act (Medicaid) expressly permitted all people over age 65 with a need for long-term care to give away everything they owned in order to qualify for LTC benefits.  From 1980 on, through a long series of federal statutes—including ORA ’80, TEFRA ’82, COBRA ’85, MCCA ’88, OBRA ’93, HIPPA ’96, BBA ’97, and DRA ’05—18 Congresses and five presidents struggled to prevent, or at least discourage, access to Medicaid by the middle class and affluent.  Yet this problem still exists and it is getting worse as the stigma of accepting welfare recedes and the fiscal and monetary restraint of government declines.

Our report will trace these historical developments, describe the status quo, and explain the past consequences and future peril of relying excessively on public financing of long-term care.

Conclusion

Bottom line, the severely restrictive Medicaid LTC financing program, which allegedly forces millions of Americans into impoverishment due to catastrophic long-term care expenditures, does not now and never has existed. 

Historically and today, Medicaid crowds out much more than private LTC insurance.  It diminishes awareness of LTC risk and cost; it degrades personal responsibility; and it discourages early LTC planning and preparation resulting in excessive and ultimately insupportable dependency on the overburdened public welfare program.

A mandatory government program as proposed in the three early-2016 papers referenced above would exacerbate, not relieve, all these problems making the moral hazard of government interference even worse.

Far better to restore the original intent of the Medicaid LTC program, which was to provide long-term care for aged individuals “whose income and resources are insufficient to meet the costs of necessary medical services.”  The report will propose modifications to Medicaid LTC eligibility rules that would achieve that objective.

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Updated, Monday, June 27, 2016, 10:08 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-025:  LTC NEWS AND COMMENT

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

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

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

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

  • Selling LTCi: Pricing, Perception and Persistency

  • Person-centered care programs projected to cut skilled nursing stays by 20%

  • Boomers, it’s time to spend—and pay taxes on—your 401(k)

  • Changes loom as most-popular Medigap plans face extinction

  • A tiny Alzheimer's study with huge results

  • 'Spousal refusal' helps save on nursing home costs

  • Trustees: Tiny rise in Social Security benefits next year

  • As Suburbs Shift, Funding Fights Loom

  • Report: How to get more benefits to seniors

  • Consider Combining a CRT With Long-Term Care Insurance

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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, June 24, 2016, 10:02 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE EARLY HISTORY OF LTC FINANCING (AND WHY IT MATTERS)

LTC Comment:  Did you know the original Medicaid law expressly permitted asset transfers to qualify for long-term care benefits?  Learn the early history, what changed, and how it has affected LTC financing after the ***news.***

*** LTC CLIPPINGS this week included the following two, which fit right in with today’s LTC Bullet topic.  The first, from a New York Medicaid planner, indicates one especially egregious artificial impoverishment technique lives on:

6/22/2016, “'Spousal refusal' helps save on nursing home costs,” by Bonnie Kraham, Times Herald-Record

Quote:  “Last week's column described the ‘gift and loan’ strategy, which is crisis planning that saves about half of the assets for single persons who are applying for Medicaid for nursing home costs. This technique is used on the eve of needing a nursing home when the client has not planned ahead to protect their assets.  In New York we also have a law called ‘spousal refusal,’ sometimes referred to as ‘just say no,’ to save assets from nursing home costs when one spouse needs a nursing home (the ‘institutionalized spouse’), the other spouse is at home (the ‘community spouse’), and they never planned ahead to save their assets.”

LTC Comment:  For the other side of the story on “Spousal Refusal,” see our take here:  They're Baaack, Part IV: "Abandon Your Spouse . . . Get Medicaid".

The other featured LTC Clipping laments America’s failure to expand “free” long-term care to even more seniors.

6/21/2016, “Report: How to get more benefits to seniors,” by Lois A. Bowers, McKnight's Senior Living

Quote:  “So what's keeping older adults from applying?  Stigma, for one. Medicaid and Supplemental Nutrition Assistance Program benefits carry much more stigma that Medicare and Social Security benefits, according to the survey …  ‘Concerns about estate recovery and states placing liens on homes affect applicants' willingness to apply as well,’ the report authors state, noting that such concerns can be legitimate for families applying for Medicaid coverage for long-term services and supports.

LTC Comment:  More stigma for Medicaid than Medicare?  Well, yeah, Medicaid is welfare (for which others pay taxes) and Medicare is social insurance (for which everyone pays “premiums,” actually payroll taxes.  The irony is that Medicaid has become a de facto entitlement for LTC because of easy and elastic eligibility rules, whereas Medicare is moving toward welfare status due to means-testing, i.e. charging higher income people more.  Do some people object to paying back the cost of their care from their estates (estate recovery)?  Well, yes, and other people (taxpayers) object to paying for their own care and the care of people who transfer the cost of their care to Medicaid.  This new report is a good example of the moral decay we described in “Losing Principles.”

To subscribe to our daily LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

 

LTC BULLET:  THE EARLY HISTORY OF LTC FINANCING (AND WHY IT MATTERS)

LTC Comment:  The federal and state governments started funding long-term care in a limited way before Medicaid came along in 1965.  But the cost explosion didn’t occur until Medicaid made subsidized nursing home care easy to get.

The new Title XIX of the Social Security Act (Medicaid) provided federal funds to help states finance medical assistance, including nursing home care, for aged individuals “whose income and resources are insufficient to meet the costs of necessary medical services.” 

What’s really fascinating and little known is that the original Medicaid law expressly permitted elderly individuals in need of nursing home care to divest their assets with impunity in order to meet the new program’s relatively low resource eligibility limits.  Here’s the proof:

42 U.S.C. § 1382b(b) (1983) provides:  The Secretary shall prescribe the period or periods of time within which, and the manner in which, various kinds of property must be disposed of in order not to be included in determining an individual's eligibility for benefits.  Any portion of the individual's benefits paid for any such period shall be conditioned upon such disposal; and any benefits so paid shall (at the time of the disposal) be considered overpayments to the extent they would not have been paid had the disposal occurred at the beginning of the period for which such benefits were paid.[1]       

Does that citation not quite say to you:  “Go ahead, give away everything you own, and we’ll pay for your long term care”?  Right, me neither.  But the same source goes on immediately to explain:

A number of [court] decisions confirmed that states were not permitted to deny Medicaid eligibility to an applicant who had divested himself of resources for less than fair market value.  The conflict between the federal rule and state rules, which were promulgated to prevent applicants from divesting themselves of all resources in order to qualify for assistance, gave rise to litigation which prompted Congress to make a legislative attempt to resolve this problem.[2]

If you still have any doubt, check out some of these cases as listed in the source’s footnote 31:

See e.g., Blum v. Caldwell, 446 U.S. 1311 (1980); Fabula v. Buck, 598 F.2d 869 (2d Cir. 1979); Dokos v. Miller, 517 F. Supp. 1039 (N.D. Ill. 1981); Robinson v. Pratt, 497 F. Supp. 830 (D. Mass. 1980); Udina v. Walsh, 440 F. Supp. 1151 (D. Mo. 1977); Buckner v. Maher, 424 F. Supp. 366 (D. Conn. 1976).

I spot checked these citations and, sure enough, they involve courts striking down efforts by states to prohibit or penalize transfers of assets for less than fair market value for the purpose of qualifying for Medicaid.  For example, according to the decision in Buckner v. Maher, 424 F. Supp. 366 (D. Conn. 1976):

Connecticut's "transfer-of-assets" rule violates the Supremacy Clause by presuming that assets are available to welfare recipients, which are in fact not available. The statutory rule and the information requirements relating to establishing whether or not "reasonable consideration" was received for a particular transfer of property are contrary to federal law standards and found by this court to be unlawful and unenforceable.[3]

Here’s how another source describes the situation with asset transfers between 1965 and 1980:

Shortly after the creation of Medicaid and its adoption by the states, potential Medicaid recipients started exploiting "Medicaid planning" techniques. They structured assets to preserve Medicaid eligibility while retaining personal income and property above baseline levels. Congress responded to the creative lawyering surrounding Medicaid planning by passing the Omnibus Budget [sic] Reconciliation Act of 1980 (OBRA 1980). This act made asset transfers more cumbersome and increased the use of trusts to shelter funds.[4]

So, bottom line, between the passage of Medicaid in 1965 and enactment of the Omnibus Reconciliation Act of 1980 (including the Boren-Long Amendment empowered states to constrain asset transfers), there were no enforceable federal or state laws or regulations prohibiting asset transfers to qualify for Medicaid long-term care benefits.

Of course, that was only the beginning of federal efforts to control the transfer of assets problem, later broadened to include many additional techniques of “Medicaid estate planning.”  But that’s a story for another day, or if you can’t wait, read it here now, but you’ll need your user name and password to The Zone.  Lacking that, contact Damon@centerltc.com or 206-283-7036.

For now  . . .  So what if Medicaid allowed free asset transfers for its first decade and a half?  The cost of Medicaid exploded from the get-go beyond all expectations as this 1969 source explains:

The amounts expended to finance Medicaid in the first two years were surprisingly high. Estimates in 1965 of the annual federal cost of Medicaid ranged from $150 million to $238 million. Yet actual federal expenditures were $621 million in the calendar year 1966. In 1967 Congress estimated that the annual federal share would rise to $1.4 billion in fiscal 1968 and to $3.1 billion by 1972, provided no additional restrictions were placed on the 1965 program.[5]

It didn’t stop there of course and neither did the many ways people and their advisors qualify for Medicaid LTC benefits while preserving their wealth.  Medicaid expenditures as of Fiscal Year 2014 were $496 billion.  Of course, the program’s asset transfer and Medicaid planning giveaways only accounted for a portion of this cost explosion.  But direct cost of Medicaid to taxpayers is by no means the only or necessarily even the biggest problem.

Easy access to Medicaid LTC benefits after the insurable event occurred desensitized the public to long-term care risks and costs resulting in a vast decline of private revenue to LTC providers, excessive reliance on inadequate public funding, serious access and quality problems, institutional bias that stultified the private home care market, and a crowding out of major potential new LTC revenue sources such as home equity conversion and long-term care insurance. 

Consequently we find ourselves today with a public excessively dependent on a financially vulnerable and degrading welfare program for a critical human need, extended care at the end of life.  Perhaps as worrisome, our policy wonks and legislators are leaning toward new programs of even greater moral hazard by expanding government financing of long-term care. 

The lesson of the early history of Medicaid LTC financing is that when supply is free demand is infinite and consequences dire.


 

[1] Timothy N. Carlucci, “The Asset Transfer Dilemma:  Disposal of Resources and Qualification for Medicaid Assistance,” 36 Drake L. Rev. 369 1986-1987, p. 372:  [link].

[2] Ibid., footnotes omitted.

[3] Buckner v. Maher, 424 F. Supp. 366 (D. Conn. 1976): https://www.courtlistener.com/opinion/1444817/buckner-v-maher/. b

[4] Michael A. Bottar, “Robbing Peter to Pay Paul:  Medicaid Liens, Supplemental Needs Trusts and Personal Injury Recoveries on Behalf of Infants in New York State Following The Gold Decision [link],” 53 Syracuse L. Rev. 175 2003, pps. 181-2, footnotes omitted.

[5] ________, “Medicaid: The Patchwork Crazy Quilt,” Columbia Journal of Law and Social Problems, 5 Colum. J.L. & Soc. Probs. 62 1969, p. 65, footnotes omitted:  [link].

 

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Updated, Monday, June 20, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-024:  LTC NEWS AND COMMENT

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

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

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

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

  • Industry, policymakers await report on Medicare's solvency

  • Health care costs eating up Social Security benefits, early retirees say

  • Alzheimer's: Why actuaries shouldn't bet on a cure

  • The long-term care Walk of Shame

  • Some European countries seek private long-term care help

  • Father’s Day: Long Term Care Insurance

  • MACPAC: Medicaid spending for long-term care 'disproportionate'

  • How Much Will Your Health Expenses Be in Retirement?

  • Workers, elderly focus of Women Summit initiatives

  • One in five SNF residents experience abuse from other residents, study finds

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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, June 17, 2016, 11:05 AM (Pacific)
 
Seattle—

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LTC BULLET:  CASSANDRA ON MEDICAID LTC ELIGIBILITY

LTC Comment:  Exactly how do so many middle class and affluent people end up on Medicaid for LTC without becoming genuinely impoverished?  And, so what if they do?  Answers after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** LTC LIGHT.  Our LTC Clippings subscribers received only seven e-pistles from us this week, so far.  As we enter the dog days of summer, LTC news is light.  So this is a good week to remind subscribers and potential subscribers that one of the best benefits of receiving LTC Clippings is that we only send them when there is something worth reading to share!  We spend as much time sifting through all the news, reports, and white papers washing up on the electronic shores we monitor whether there’s anything worthwhile to report or not.  We do that so you don’t have to.  So when your email in-box is light on LTC Clippings, relax, take a longer lunch, or start your weekend early.  We have you covered.  You won’t miss anything of real importance.  To subscribe, contact Damon at 206-283-7036 or damon@centerltc.com.  Now for an LTC Clipping sample and a little LTC humor. 

6/16/2016, “The long-term care Walk of Shame,” by Gary Tetz, McKnight's LTC News

Quote:  “Having experienced the walk of shame through dozens of first-class [airplane] cabins, I can hardly bear the thought of adding that indignity to my nursing home admission. With dementia raging and fresh off my seventh hip, knee, elbow and skull replacement, I imagine hobbling through the lobby, trying to avoid eye contact with smug-looking MVP-status residents in silk bathrobes taking their meds from gold-embossed shot glasses.  …  As I once patiently explained to an irate commenter after he took issue with one of my flippant, unsubstantiated pronouncements, this column is called ‘Things I Think,’ not ‘Things I Research and Prove.’

LTC Comment:  Why not close this week of light LTC news with a little LTC humor, which is not an oxymoron to columnist Gary Tetz? ***

 

LTC BULLET:  CASSANDRA ON MEDICAID LTC ELIGIBILITY

LTC Comment:  For the Center’s new research project aimed at “Ensuring Scarce [Medicaid LTC] Resources Reach the Neediest People,” I’ve been reviewing a vast health policy, economics and legal literature on the topic.  I’ll report soon on my findings, but for now, here’s a brief summation.

According to peer-reviewed journals in …

  • Health Policy:  Accessing Medicaid LTC benefits requires impoverishment, so we need a compulsory new government program to pay for long-term care.
  • Economics:  Longitudinal survey data prove asset transfers to qualify for Medicaid LTC benefits are rare and small, so we need a compulsory new government program to pay for long-term care.
  • Law:  Medicaid LTC benefits are readily available to middle-class and affluent elder law clients and accessing them generates average per-case legal fees of $2,500 to $10,000.  But the process is degrading, so we need a compulsory new government program to pay for long-term care.

With opposite premises, policy wonks and economists on one side and lawyers on the other side arrive at identical policy recommendations.  Which is it?  Does Medicaid LTC require impoverishment or doesn’t it?  And whether it does or not, why do so many experts in such different professions agree that more government involvement in LTC is the best course forward?

The answer to the second question is ideological bias.  It’s almost comical to watch these experts tie themselves in theoretical and evidentiary knots trying to force the conclusion that the only solution to the LTC market’s woes is to bring in more government funding, regulation, and control.  I’ll have more to say on this topic, including examples, in future LTC Bullets.

For now, let’s stick to the first question:  does Medicaid LTC eligibility require actual impoverishment or not?  How can one set of professionals (health policy experts and economists) say one thing and elder law attorneys say the exact opposite?  Clearly, the answer is that they don’t read each other’s academic journals.  But, we are reading them and what we’re finding is fascinating.  More on that in future Bullets also.

For the time being, let’s just take one more look at the underlying question:  does access to Medicaid LTC benefits actually require genuine impoverishment?  What follows is the section on Medicaid LTC income and resource eligibility rules from the Center’s latest report:  CASSANDRA’S QUANDARY: The Future of Long-Term Care in New Hampshire (2016).  While the focus is on New Hampshire, this report’s findings and recommendations apply in most respects to the whole country. 

----------------

Medicaid LTC Financial Eligibility and Medicaid Planning

Income Eligibility

Eligibility for Medicaid long-term care benefits is not as difficult to attain in the United States as commonly reported.  New Hampshire is no exception.  The State Department of Health and Human Services’ (DHHS) website explains that applicants “Must have net monthly income less than the rate Medicaid pays to the facility.”[1]  Net monthly income is determined by subtracting eligible health care and other expenditures paid out of pocket by the Medicaid applicant from the applicant’s total income.  Such deductions can be substantial.  Because the average Medicaid nursing home reimbursement rate in New Hampshire is $157 per day or $57,305 per year, any medically qualified elderly person with net income at or below that level is eligible based on income.  Although media and even academic studies on Medicaid long-term care financing invariably say the program is only available to low-income people, the truth is that people with income of $57,305 per year fall in the middle income quintile for all Americans according to the U.S. Census Bureau, as of 2013.[2]  Hardly low income.

Asset Eligibility

Medicaid long-term care applicants must also qualify based on their level of financial resources.  The DHHS website cited earlier says the “Resource limit cannot exceed $2,500.”  That’s what most articles and reports also say, but the statement is misleading because it does not take into account exempt resources. 

To pinpoint those uncounted assets, it is helpful to consult the lawyers who advise clients on how to become eligible for Medicaid LTC benefits.  According to the Elder Law, Estate Planning, and Probate Section of the New Hampshire Bar Association and New Hampshire Legal Assistance in their “Medicaid Income and Asset Rules for Nursing Home Residents and Guide for New Hampshire Residents Seeking Medicaid Coverage For Nursing Home Care,”[3]A person's home as long as the equity value is less than $552,000, motor vehicle, furniture, clothing and other personal effects are not countable” which means “Since homes with less than $552,000 in equity are not countable assets, most homeowners may qualify for Medicaid.” 

Other exempt assets, none of which have a dollar limit, include one business, Individual Retirement Accounts (IRAs), prepaid burial plans, and term life insurance.  For a full list of exempt assets including footnoted links to the authorizing federal regulations, see the Pacific Research Institute’s “Medi-Cal Long-Term Care:  Safety Net or Hammock.”[4]  People can and do convert countable assets into noncountable assets by purchasing more expensive homes, new cars and other exempt resources with or without legal advice.[5] 

Spousal Impoverishment Protections

Recipients with spouses encounter far more generous income and asset eligibility rules, including a maximum spousal maintenance allowance of $2,981 per month and a spousal resource allowance equal to half the couple’s joint assets up to a maximum of $119,220 with a minimum of no less than $23,844 as of 2015 [and 2016]. [6]  These allowances increase annually with inflation.  Balances in excess of those limits are supposed to be “spent down,” but the Bar Association guide explains “It is important to note that the money which must be spent down can be used for any purpose that would benefit either spouse, such as home repairs, vehicles, life insurance, prepaid funerals, furniture, travel, etc.”[7] These “spousal impoverishment protections,” originally intended to protect only spouses of institutionalized Medicaid recipients, were recently expanded to cover husbands or wives of Home and Community-Based Services (HCBS) recipients as well.[8]

The “ElderLawAnswers website”[9] speaks to some additional nuances.  For example, if applicants are not happy with their community spouse resource allowance, “a fair hearing can be obtained.”  The “Average monthly cost of nursing home care according to [the] state [is]:  $8,889.94 ($292.24/day).”  That means Medicaid applicants are penalized only one month of eligibility for each nearly $9,000 they give away for the purpose of qualifying for Medicaid.  Finally:  “Actuarially sound annuities are permitted, with certain restrictions.”  More follows below on the enormous costs to Medicaid such annuities can entail.

Medicaid Planning

It is clear from the foregoing, that Medicaid applicants with substantial income and wealth can qualify for Medicaid long-term care benefits with little or no asset spend down required.  But the long-term care eligibility rules are complicated and elastic.  Applicants, and their families, with even much greater income and assets than allowed under the basic rules summarized above often consult lawyers who specialize in the artificial impoverishment of clients to qualify them for Medicaid.  Such “Medicaid Planning” specialists are easy to find.  When asked, interviewees for this project spoke of how Medicaid planners advertise frequently on the radio and in newspapers throughout New Hampshire.  Elder law experts are also easy to find online by means of an internet search for “Medicaid planning in New Hampshire.”  For example:

We assist clients with asset preservation and asset protection for themselves and their families in anticipation of applying for long-term care through the Medicaid program. . . . Our attorneys have significant experience in asset protection strategies, such as Medicaid-Qualifying Irrevocable Trusts; Special Needs Trusts; conversion of assets into income through the use of Medicaid-Qualifying Annuities; Personal Care and Service Agreements; as well as other spend-down techniques that allow for transfers of assets to family members without violating Medicaid gifting rules. We frequently work with clients when preparing and filing New Hampshire and Massachusetts Medicaid applications, meeting with caseworkers for applicant resource assessments, as well as successfully litigating denials of Medicaid benefits.[10]

Medicaid-Compliant Annuities

One of the more egregious eligibility “loopholes” that Medicaid planning attorneys and their clients take advantage of is the “Medicaid-compliant or Medicaid-qualifying annuity.”  Such annuities can be used to shelter large sums of money immediately before an individual applies for Medicaid long-term care benefits, as much as a million dollars or more in some states.  We sought but were not able to arrange interviews with New Hampshire’s Medicaid long-term care eligibility policy specialist to learn specifically how such annuities are reviewed and treated by DHHS.  For details on the Medicaid-compliant annuity problem nationally, see “LTC Bullet:  Medicaid Annuity Abuse:  A Case Study.”[11]  Annuity cases involving hundreds of thousands of dollars are commonplace and well-documented.  So far state Medicaid programs have been unsuccessful in several attempts to reverse the use of Medicaid-compliant annuities in state and federal courts.

209-B Status

It is true that eligibility in New Hampshire is slightly more restrictive, and could be made even more so, because it is one of ten “209-B” states.  This means New Hampshire was grandfathered in with more restrictive eligibility requirements than were allowed after the Supplemental Security Income Program (SSI) replaced state welfare programs for the aged, blind and disabled in 1974.  For example, 209-B states “do not automatically grant Medicaid to persons with disabilities who qualify for SSI because they use their own criteria for determining whether someone is eligible for Medicaid.  These states may have income limits that are higher or lower than SSI’s, different asset limits, or different requirements for what makes someone disabled.”[12]  New Hampshire’s 209-B status enables the state to require institutionalized recipients to sell their homes within six months if they have no exempt relatives occupying their home and no reasonable medical expectation that they will be able to return home.[13]  Non-209-B states do not have this flexibility.

The bottom line, however, on Medicaid long-term care eligibility in New Hampshire, as elsewhere, is that people who seek state funding for long-term care and are willing to accept the conditions that apply, can, with or without the legal assistance of a Medicaid planner, qualify for assistance much more easily than is commonly understood.

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[1] “Nursing Home Care,” New Hampshire Department of Health and Human Services; http://www.dhhs.state.nh.us/dcbcs/beas/nursinghome.htm.  Extracted August 10, 2015.

[2] U.S. Census Bureau; LINK.  Extracted August 10, 2015.

[3] Elder Law, Estate Planning, and Probate Section of the New Hampshire Bar Association and New Hampshire Legal Assistance, “Medicaid Income and Asset Rules for Nursing Home Residents and Guide for New Hampshire Residents Seeking Medicaid Coverage For Nursing Home Care,” January 1, 2015, available here at a very long URL.  Cited as of August 10, 2015.

[4] Stephen A. Moses, “Medi-Cal Long-Term Care:  Safety Net or Hammock,” Pacific Research Institute, San Francisco, California, pps. 19-21; http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf.

[5] For details and examples, see Stephen A. Moses, “Briefing Paper #2:  Medicaid Long-Term Care Eligibility,” www.centerltc.com/BriefingPapers/2.htm and Briefing Paper #3:  Medicaid Planning for Long-Term Care, www.centerltc.com/BriefingPapers/3.htm, which are parts of “How to Fix Long-Term Care,” Center for Long-Term Care Reform, Seattle, Washington, 2012; http://www.centerltc.com/BriefingPapers/Overview.htm.

[6] Elder Law, Estate Planning, and Probate Section of the New Hampshire Bar Association and New Hampshire Legal Assistance, “Medicaid Income and Asset Rules for Nursing Home Residents and Guide for New Hampshire Residents Seeking Medicaid Coverage For Nursing Home Care,” January 1, 2015, available here at a very long URL, pps.6-7.  Cited as of August 10, 2015.

[7] Ibid., p. 7.

[8] CMS State Medicaid Director Letter, “Affordable Care Act’s Amendments to the Spousal Impoverishment Statute,” SMD# 15-001, ACA# 32, May 7, 2015; LINK.

[9] “Key Medicaid Information for New Hampshire for 2015,” ElderLawAnswers; http://www.elderlawanswers.com/key-medicaid-information-for-new-hampshire-for-2015-12209.  Extracted August 10, 2015.

[10] McLane, Graf, Raulerson & Middleton Professional Association:  http://www.mclane.com/services/practice-groups/trust-band-estates/medicaid-planning.aspx. “McLane services clients from its four offices, with three located in New Hampshire – Concord, Manchester and Portsmouth. Our newest office is in Woburn, MA.” Extracted August 10, 2015. 

[11] Stephen A. Moses, “LTC Bullet:  Medicaid Annuity Abuse:  A Case Study,” Center for Long-Term Care Reform, Seattle, Washington, June 5, 2015; http://www.centerltc.com/bullets/archives2015/1088.htm.

[12]Does Medicare or Medicaid Come With Social Security or SSI Disability Benefits?,” NOLO Law for All; http://www.nolo.com/legal-encyclopedia/does-medicare-medicaid-come-with-social-security-ssi-disability-benefits.html. Extracted August 10, 2015.

[13] Elder Law, Estate Planning, and Probate Section of the New Hampshire Bar Association and New Hampshire Legal Assistance, “Medicaid Income and Asset Rules for Nursing Home Residents and Guide for New Hampshire Residents Seeking Medicaid Coverage For Nursing Home Care,” January 1, 2015, p. 3; available here at a very long URL.  Cited as of August 19, 2015.

 

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Updated, Monday, June 13, 2016, 9:45 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-023:  LTC NEWS AND COMMENT

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

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

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

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

  • Can Family Caregivers Reduce Hospital Costs?

  • Relocating in Retirement? Don’t Forget About Long-Term Care Costs

  • Rowan Led Research Team Develops Highly Accurate Blood Test For Alzheimer’s Disease

  • 1.8 Million More Seniors Housing Units Needed by 2040

  • Americans’ Total Wealth Hits Record, According to Federal Reserve Report

  • What to Consider If You May Depend on Medicaid for Nursing Care:  Planning ahead could help you avoid scrambling to shed assets so you're eligible for Medicaid

  • Seniors most in need of affordable housing: survey

  • Federal regulators may try to kill critical illness insurance

  • Obesity rate among women reaches record high in the US

  • Are rate hikes for long-term care insurance a claim cost time bomb?

  • Traditional Medicare beneficiaries sicker at end of life than MA patients, analysis shows

  • How to keep your cash from leaving the nest when your kids do

  • 15.5 Million Americans Now Surviving Cancer: Report

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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, June 10, 2016, 9:18 AM (Pacific)
 
Seattle—

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LTC BULLET:  HOW THE GOVERNMENT RUINED LTC (AND WE’LL FIX IT)

LTC Comment:  Government interference in the LTC marketplace since 1965 caused harmful unintended consequences that only clear analysis and bold action can fix.  More after the ***news.***

*** FROM TIME TO TIME, we bring you an oldie, but goodie from the LTC Bullets archives—scan or search all 1136 of them chronologically or by topic here.  Today’s Bullet was originally published August 17, 2012.  Read the original below.  I’ll follow it with some current comments on latest developments. ***

*** LTC CLIPPING:  Wall Street Journal reports today that Americans’ Total Wealth Hits Record, According to Federal Reserve Report

“The wealth of Americans reached a record of $88.1 trillion in the first quarter, with rising home values offsetting stock-market wobbles at the start of the year.  The boost to wealth was driven by a $498 billion increase in residential real-estate values around the U.S., while the overall value of equities declined by $160 billion, according to a Federal Reserve report released on Thursday.  …  One key difference between the increase in asset values today versus a decade ago is that Americans aren’t taking on as much debt. Total household liabilities rose by $17 billion in the first quarter and remained lower than their level during the financial crisis.”

LTC Comment:  Soaring home equity again, but this time without using it as a slush fund.  Can it last?  Doubtful.  More likely another bubble based on the Fed’s low-interest policy.  In the meantime, Medicaid’s big home equity exemption shelters seniors’ biggest asset from LTC and crowds out LTCI. ***

 

LTC BULLET:  HOW THE GOVERNMENT RUINED LTC (AND WE’LL FIX IT)

LTC Comment:  Long-term care in the United States has serious problems of access, quality, reimbursement, discrimination, institutional bias, loss of independence, and welfare stigma.  How did we reach this sorry state?

A long series of well-intentioned, but perversely counterproductive government actions led directly to the dysfunctional long-term care system we have today.  Here’s a list of those mistakes and their consequences in rough chronological order.

Mistake #1:  Medicaid started paying for most nursing home care shortly after the program was signed into law in 1965. 

Unintended Consequence:  Nursing homes became the dominant venue for long-term care crowding out a home care market.

Mistake #2:  Medicaid made nursing home care easy to get with no transfer of assets restrictions and no estate recovery in the beginning. 

Unintended Consequence:  People learned Medicaid would pay for a nursing home, but anything else was out of pocket.

Mistake #3:  When unlimited access to the most expensive kind of care exploded in cost, government capped bed supply by demanding “certificates of need” (CONs) before building more nursing homes. 

Unintended Consequence:  This created a government-enforced monopoly.  Nursing homes raised rates they charge to compensate for growth restrictions.

Mistake #4:  When nursing homes raised rates, Medicaid capped reimbursement rates. 

Unintended Consequence:  This was the origin of the differential between low Medicaid rates and high market-based private-pay rates.  [Cost shifting.]

Mistake #5:  By capping supply AND price, Medicaid caused demand to skyrocket filling nursing homes with too many recipients at too low reimbursements. 

Unintended Consequence:  Care quality plummeted.

Mistake #6:  Instead of fixing the problem (easy access to free under-financed nursing home care), the government demanded quality care without paying for it (OBRA ’87).

Unintended Consequence:  Caught between the rock of inadequate reimbursement and the hard place of mandatory quality, nursing homes sued and usually won.

Mistake #7:  Again, instead of fixing the problem, government repealed the 1981 Boren Amendment under which the nursing homes were suing in 1997. 

Unintended Consequence:  With no floor under Medicaid nursing home reimbursements, quality remained a problem and nursing homes’ reputation disintegrated.

Mistake #8:  Despite some efforts, Medicaid never targeted benefits to the genuinely needy. 

Unintended Consequence:  Easy access to Medicaid nursing home care after care was needed discouraged responsible LTC planning, encouraged artificial self-impoverishment through “Medicaid planning,” and crowded out private LTC insurance.

Mistake #9:  Trying to save money, Medicaid encouraged rebalancing from nursing home care to home care. 

Unintended Consequence:  LTC costs continue to explode because home care delays but does not replace nursing home care and home care is more desirable so more people apply for Medicaid.

Mistake #10:  Seeing that nothing they do seems to work, the government tried to dupe the public into buying government LTC insurance with the misbegotten CLASS Act.

Unintended Consequence:  Now everyone is cynical about the seeming hopelessness of the situation.

Mistake #11:  Having crowded out a market for private LTC insurance by paying for most expensive LTC, the government added insult to injury by driving interest rates on carrier reserves to near zero. 

Unintended Consequence:  Private LTC insurance is nearly ruined as the bloat of government’s unfunded entitlement liabilities expands.

Mistake #12:  The only way to save the LTC safety net is to target Medicaid’s scarce resources to the most needy, but government did the exact opposite with the “maintenance of effort” (MOE) rule in the health reform law.  [Since expired.]

Unintended Consequence:  States struggle to finance a hopelessly dysfunctional system with no control over hemorrhaging eligibility even as the federal government borrows 40 cents of every dollar spent on Medicaid.

OK, folks, that’s the problem and how, step by step, we got into the mess were in.  So, what do we have to do to fix it?

That’s the easy part.  Unwind the mistakes government made that created the problems we face.  Target Medicaid LTC to the needy.  Eliminate the easy income and asset rules that allow practically anyone to qualify regardless of income and assets.  Most importantly, reduce Medicaid’s home equity exemption from as high as $786,000 [now $828,000] to a reasonable level closer to what socialized England allows ($36,000).

Do these simple things and the freer market will correct all the problems.  Once it’s clear to all that long-term care is a personal responsibility, people will plan early and save, invest or insure for long-term care.  With fewer people dependent on Medicaid, the program will be able to afford to pay for quality care across the spectrum from home care to nursing home care.  Nursing homes will remain appropriate venues for short-term post-hospitalization and rehabilitation, but home and community-based care will expand radically and rapidly with an influx of private financing.

LTC isn’t so intractable a problem after all.  Once you understand why things are the way they are and stop doing the things that make the situation worse, guess what?  We have more than enough resources to ensure quality long-term care in the most appropriate settings for all Americans.

Just do it!

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LTC Current Update:  Well, that was the lay of the LTC land four years ago, just before the last presidential election and immediately preceding yet another government fiscal crisis in 2013.  What’s happened since?  Nothing to improve the situation and much to make it worse.

Fiscal and Monetary Shenanigans

The biggest change is that government fiscal and monetary policy is worse than ever.  Nobody worries anymore about out-of-control spending and money printing.  The federal debt has grown past $19 trillion and Cato reports that the total federal fiscal imbalance (expected revenue minus promised benefits) is negative $117.9 trillion.  Fed-induced artificially low interest rates continue to misdirect capital into poor investments while inflating an economic bubble of historic proportion.  The only good news is that when this baby pops and the dollar-fiat-currency collapses, we’ll have nowhere else to turn but to freer-market capitalism that made America great in the first place.  OK, call me Pollyanna, but that’s the last, great hope I cling to.

Medicaid Managed LTC

What about long-term care specifically?  The big change there is that Medicaid, the dominant LTC payer, has shirked its responsibility for providing and paying for quality community and institutional care.  How so?  Instead of paying home care and nursing facility providers directly (however inadequately), state Medicaid programs all across the country are shifting to “managed long-term care.”  That means they contract with private companies to (1) find and sign up providers, (2) direct Medicaid recipients to this limited range of locked in providers, and (3) pay the providers after taking a cut for themselves--all for less than it would have cost Medicaid to pay the providers itself.  Traditional direct-care LTC providers wonder how adding an extra payee and a new level of bureaucracy will lower costs and improve quality.  But for now, that’s the Holy Grail of managed long-term care.

LTC Policy Capitulation

From the Pepper Commission in 1990 through the Medicaid Commission of 2007 and from the CLASS Act fiasco of the early 2010s to the most recent fruitless LTC Commission, the gurus of government gimmicks have shot nothing but ideological blanks.  Now they’ve given up on socializing LTC, proposing a hybrid private front-end and mandatory public back-end program, ironically, just as socialism is getting a new lease on American life thanks to the candidacy of Bernie Sanders and its influence on Hillary’s positions.   Will the Medicare Part LTC idea spring back to life?  I don’t think so.  Its advocates are intellectually burned out.  They can barely muster the energy to promote their latest compromise.  Besides, the bottom’s going to fall out of the entitlement programs we already have before a new one for LTC can get traction.

Back to the Future

Here’s a novel idea.  Let’s try something that’s never been tried before.  Everyone says we need a new mandatory government program for long-term care because Medicaid forces people into impoverishment.  But that’s not true and never has been.  So, since nothing else works, why don’t we try the one approach that’s never been tried before.  To wit, make Medicaid available only to the truly needy so that it can provide top-quality home and institutional care at market rates to fewer recipients.  Let everyone else pay for their own top-quality, market-priced care out of savings and home equity.  That huge influx of private funds will improve care quality and access for everyone.  With their inheritances going to pay for their parents’ LTC, everyone else will get the idea they need to save, invest or insure for LTC.  When the next generation needs LTC, they’ll pay privately for it and the free competitive market thus revitalized will generate creative new ways  to provide the kind of home-based care most people prefer.

Problem Solved

LTC providers are no longer starved for adequate revenues.  The poor get better access to higher quality care.  So do the middle class and affluent.  The reverse mortgage and LTC insurance markets boom creating jobs and throwing off big tax revenues.  Tax payers breathe a sigh of relief.  The new system rewards hard work, personal responsibility and early planning instead of punishing them as in today’s system where, as Jane Bryant Quinn once observed,  “only the suckers pay.”

Pipe dream?  Maybe.  But watch what happens when the current economic bubble deflates leaving the government with staggering obligations and interest rates too high even to service the debt.  Entrepreneurs and consumers will respond as they always do by making the most of a bad situation.  Creative destruction and profit motive will prevail.  The economy, including long-term care, will right itself in time.

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Updated, Monday, June 6, 2016, 10:25 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-022:  LTC NEWS AND COMMENT

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

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

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

  • Expect GAO assisted living study results in early 2017

  • 15.5 Million Americans Now Surviving Cancer: Report

  • More Than Two-Thirds of Americans Believe They'll Outlive Their Savings, New Study Shows

  • Brokers International adds OneAmerica LTC products

  • Naïveté solves all LTC-related problems, studies do not show

  • Why Encouraging Older Adults to Stay In their Homes Isn't Always Smart

  • How one company is studying the brain to better market to consumers

  • This lifesaving coincidence definitely makes you swallow deeply
    President Obama Throws In The Towel On Social Security Reform

  • U.S. Alzheimer's death rate rises

  • Selling LTCi: Pricing, Perception and Persistency

  • Almost no one in the U.S. does everything right, healthwise

  • The most livable cities for seniors, according to new system

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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, June 3, 2016, 9:45 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC at a Crossroads

LTC Comment:  Long-term care financing policy is at a critical crossroads and may take a wrong turn.  We explain after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

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

All LTC Bullets and E-Alerts

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

  • Subscription to our Clipping Service

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

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

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

 

LTC BULLET:  LTC AT A CROSSROADS

When you come to a fork in the road, take it.  Yogi Berra

If we could first know where we are and whither we are tending, we could better judge what to do and how to do it.  Lincoln, House Divided Speech

Beware of the naked man who offers you his shirt.  Navjot Singh Sidhu

LTC Comment:  U.S. long-term care financing policy has come to a fork in the road.  If we take the now-most-likely turn, the consequences could be disastrous.  Far better if we back up, consider how we got to where we are, and reconsider alternative pathways before we choose.  Otherwise, we may end up with yet another bankrupt entitlement program, with Uncle Sam nude promising raiment.

The Trending Consensus

After decades of struggling unsuccessfully to find better ways to finance long-term care, researchers, industry experts and public policy makers are starting to agree on a general direction for reform.

A consensus is forming around the idea of a mandatory, government-financed program to cover the back-end, catastrophic long-term care risk with incentives for private insurance to help pick up some of the front-end risk.

Three reports published in February of this year offered variations of this plan:

All three reports relied on research conducted by (1) the Urban Institute (UI) and Milliman as described in a November 2015 Health Affairs article titled “Financing Long-Term Services and Supports:  Options Reflect Trade- Offs for Older Americans and Federal Spending,” by Melissa M. Favreault, Howard Gleckman, and Richard W. Johnson and (2) the Urban Institute and the Department of Health and Human Services Assistant Secretary for Planning and Evaluation (ASPE) as published July 2015 and revised February 2016 in “Long-Term Services and Supports for Older Americans: Risks and Financing.”

We have already critiqued these reports, the research underlying them and the ethical principles on which they depend in:

Let’s look now at what went wrong that led smart, well-intentioned people to the brink of a big mistake.

Foundational Fallacies

(1) Ignoring Lincoln.  In the quote at the top of this article, our 16th President recommended considering where we are (we might add “how we got here”) and where we’re headed, before deciding just what to do and how to do it.  The organizations and authors behind the new LTC consensus have not explained why LTC has the problems it has, how the problems developed over time, or why their “solution” will help.  What if excessive government interference in the long-term care market is the primary cause of its welfare-based access and quality problems, inadequate funding, caregiver shortages, institutional bias and oblivious consumers as we argue in “The History of Long-Term Care Financing or How We Got Into This Mess?”  If that’s the case, how will adding more government financing and interference improve the LTC market?  Why won’t it make problems worse instead of better?  Yet, any reflection on the history of LTC financing and the cause of the problems they propose to resolve is missing from the research and reports underlying the new LTC consensus.

(2)  Fallacy of Impoverishment and The Myth of Medicaid Spend Down.  The new consensus is grounded in the assumption that vast swaths of America’s aging population are spending down their life’s savings into total impoverishment for long-term care.  Its advocates do not base this assumption on evidence, but on the mistaken presumption that Medicaid, the principal payer for long-term care, requires impoverishment.  Actually, people qualify for Medicaid’s expensive LTC benefit with incomes up to the total cost of their actual medical expenses including long-term care, with practically unlimited exempt assets and with much, much more if they retain the help of a Medicaid planner.  For details, see “The Myth of Medicaid Spend-Down,” “The Fallacy of Impoverishment,” and the dozens of articles here.

(3)  LTC Myopia.  The forming LTC consensus is based predominantly on analysis of longitudinal data about the income and assets of aging Americans and their dependency on public programs such as Medicaid and Medicare.  These HRS/AHEAD/Rand data bases are a wonderful source of information.  They show that most people have low income and assets as they enter their declining years and that many aging people decumulate what little wealth they have fairly rapidly as they approach the need for long-term care.  No surprise there.  Old people in the bottom half financially are poor and do need an economic safety net.  What’s missing in the research based on “big data” is an explanation of what happens to the income and assets of people between the median and the top five percent of wealth.  That research has totally ignored the vast legal literature on Medicaid planning and the flood of information on how to qualify for Medicaid without spending down that is readily available on the internet and in the popular media.

(4) Equivocation on “asset transfers.”  How is it possible for researchers to ignore something as big and ethically questionable as widespread artificial impoverishment to qualify for Medicaid?  Several GAO reports and some scholarly studies we’ve critiqued over the years show how:  Where There's Smoke, There's Fire; GAO on TOA Underwhelms; Georgetown, GAO and Kaiser:  The Bermuda Triangle of Good LTC Policy; Kaiser Cover-Up Continues; GAO AWOL on LTC TOA; GAO Punts on Medicaid Planning.  These studies all focus on only one of the many ways to qualify for Medicaid without spending down, specifically asset transfers.  They find that asset transfers are relatively rare and occur in mostly small amounts, although one study did acknowledge that up to one percent of the cost of Medicaid long-term care spending could be recovered by aggressively pursuing transferred assets.  While that is real money, the big money lost to Medicaid is not in asset transfers, but in the ease with which middle class and affluent people can qualify for Medicaid even without formal legal planning and the many forms of Medicaid planning that do not involve transferring assets, such as the purchase of exempt assets.

(4) Equivocation on “spend down” and “transitions.”  A great deal of the research underlying the new LTC consensus is based on a failure to distinguish between genuine spend down of savings and simply transitioning to Medicaid without needing to spend down or after artificially self-impoverishing oneself.  Because Medicaid’s income and asset rules are very generous and elastic, it is quite easy and commonplace to transition to Medicaid LTC benefits without spending down savings.  But this reality is rarely recognized and acknowledged in the literature.  Analysts choose instead to call everything “spend down” on the simple presumption that people are too ignorant, naïve, or stigmatized to take advantage of universally available information on how to get Medicaid, a means-tested public welfare program, to pay for their long-term care without spending down.

(5) Equivocation on “out of pocket” expenses to include residential care and to exclude Medicare post-acute care.  Advocates of the new LTC consensus argue that out-of-pocket expenditures for LTC (call them “OOPs”) have skyrocketed to over 50 percent.  They get to that figure by including in OOPs room and board expenses in residential care settings, costs that people would incur whether they need LTC or not, and by excluding Medicare expenditures from the LTC total, even though Medicare’s relatively generous nursing home and home care reimbursements are the only thing enabling Medicaid to pay LTC providers less than the cost of the care.  Why tie themselves in argumentative knots to make OOPs look as high as possible?

If you want a big new government program to fund long-term care, it helps if you can convince policy makers and voters that the public is spending outrageous amounts of money for long-term care and so desperately needs financial assistance.  But the proportion of long-term care paid by government has been going up and the proportion paid by individuals and families has been going down for half a century.  When Medicaid first started paying for long-term care, out-of-pocket expenditures were very high, upwards of half of all nursing home expenditures.  But then Medicaid and Medicare spending increased rapidly and dramatically.  OOPs declined to around one-fourth of total expenditures.  As we point out every year in our annual update on the latest LTC expenditure data titled “So What If the Government Pays for Most Long-Term Care,” even that low OOPs figure is misleadingly high because roughly half of it is not assets being spent down, but Social Security income being spent-through by people on Medicaid already as required to offset Medicaid’s cost of care.  To this day, upwards of 85 to 90 percent of nursing home expenditures can be accounted for without dipping into personal savings.  The same is true of home care.  Only 8.9% of formal home health care costs were paid out of pocket. 

Our Challenge

If the newly forming consensus on long-term care financing policy is not to become an unstoppable juggernaut like ObamaCare, we need to mobilize, analyze, criticize and refute its underpinnings.  That’s how cooler heads managed to reverse the misbegotten CLASS Act even after it passed into federal law.  How to proceed?  Well, we’re working on that.

The Center for Long-Term Care Reform is systematically reviewing decades of published research that has culminated in the errors we’ve described in this article.  We’ll show how easy access to Medicaid LTC benefits after the insurable event has occurred explains why most people do not plan for long-term care and end up dependent on Medicaid.  We will explain how people over age 65 with median through 95th percentile incomes ($24,150 to $93,000), assets ($63,350 to $1,219,250), and housing wealth ($65,500 to $418,400) routinely become eligible for Medicaid LTC benefits.  We will demonstrate that tightening Medicaid financial eligibility criteria to put home equity at risk and closing the egregious Medicaid-compliant annuity loophole can remove perverse incentives that discourage responsible long-term care planning.

And from these facts and this reasoning, we will plot and recommend a better course toward improving long-term care service delivery and financing.  Stay tuned.

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Updated, Tuesday, May 31, 2016, 9:18 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-021:  LTC NEWS AND COMMENT

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

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

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

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

  • The many benefits of ​Health Savings Accounts

  • The superbug that doctors have been dreading just reached the U.S.

  • Could Alzheimer’s Stem From Infections? It Makes Sense, Experts Say

  • Report: Chronic diseases to drive growth in skilled nursing market

  • Fresh Approaches to Paying for Long-Term Care

  • The Hidden Risks of Those Popular Medicare Advantage Plans

  • Retirees Uncertain About Tapping Home Equity But Want To Age In Place

  • Brace for a catastrophic seniors housing shortage, group warns

  • The High Cost of Ultralow Interest Rates

  • Aging-in-Place Wildly Popular, Home Health Aides Less So

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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, May 27, 2016, 9:00 AM (Pacific)
 
Seattle—

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LTC BULLET:  HILLARY ON LTC:  NOW AND THEN

LTC Comment:  LTC policy plays in this year’s presidential election even less than in 2008.  Now and then, after the ***news.***

*** Here are two ominously connected news items we sent this morning to our Clipping Service subscribers:

1.)  5/25/2016, “Could Alzheimer’s Stem From Infections? It Makes Sense, Experts Say,” by Gina Kolata, New York Times

Quote:  “Could it be that Alzheimer’s disease stems from the toxic remnants of the brain’s attempt to fight off infection?  Provocative new research by a team of investigators at Harvard leads to this startling hypothesis, which could explain the origins of plaque, the mysterious hard little balls that pockmark the brains of people with Alzheimer’s.  …  Recent data suggests that the incidence of dementia is decreasing. It could be because of better control of blood pressure and cholesterol levels, staving off ministrokes that can cause dementia. But could a decline in infections also be part of the picture?

LTC Comment:  Fascinating new research and speculation that seems more promising than most such reports.

2.)  5/27/2016, “The superbug that doctors have been dreading just reached the U.S.,” by Lena H. Sun and Brady Dennis, Washington Post

Quote:  “For the first time, researchers have found a person in the United States carrying bacteria resistant to antibiotics of last resort, an alarming development that the top U.S. public health official says could mean ‘the end of the road’ for antibiotics.

LTC Comment:  Juxtapose this report with the clipping I just sent you tying Alzheimer’s to infection and you’ll see the combined problem is potentially much bigger than either.

Receive these LTC-relevant news items (with original analysis) in real time and stay on the forefront of professional knowledge by subscribing to our Clipping Service. Contact Damon at 206-283-7036 / damon@centerltc.com to start your subscription immediately or go directly to our secure online subscription page and sign up for $250 per year or $21 per month. Already a Center member? Contact us to add the Clipping Service to your membership for only $100 per year or $8.25 per month. ***

*** BACK THEN:  When we published LTC Bullet:  Hillary on LTC in February 2008, the Center’s National Long-Term Care Consciousness Tour was just getting under way.  So was the “Great Recession.”  There’s been a lot of water under the bridge since then.  So we thought we’d take a look at how LTC policy aspirations were before and are now from the perspective of the once and current presidential candidate, Hillary Clinton. ***

 

LTC BULLET:  HILLARY ON LTC:  NOW AND THEN

LTC Comment:  Most of this year’s long list of now-passed-over presidential candidates had little or nothing to say about long-term care.  This January 29, 2016 piece in Forbes gave some perspective:  “Why Candidates Aren't Talking About Long-Term Care.”  Hillary Clinton broke from the pack, however. 

Here’s her “Plan to Invest in the Caring Economy:  Recognizing the Value of Family Caregivers and Home Care Workers” offered November 22, 2015.

As president: 

  • Clinton will provide tax relief to family members who care for ailing parents and grandparents. Family caregivers spend as much as $5,000 or more in expenses related to their elders’ care, but in many cases they receive no tax deduction or credit. This shouldn’t be this way: caregiving can be a win-win for our families and our overall health system. This is why Clinton will offer a 20 percent tax credit to help family members offset up to $6,000 in caregiving costs for their elderly family members, allowing caregivers to claim up to $1,200 in tax relief each year.
  • Launch a Care Workers Initiative to create a coordinated, government-wide initiative to address the challenges faced by care workers—by developing strategies to improve opportunities for care workers to earn the skills they need; creating paths to professionalize the workforce through career ladders and apprenticeships; improving the rate-setting processes in the child care and health care systems to ensure fair wages; providing care workers with an opportunity to come together and make their voices heard in support of a stronger system; and by developing and enhancing matching services to connect care workers to the families who need them.
  • Expand Social Security by counting the hard work of caregivers and giving them the benefits they deserve. Millions of women—and men—take time out of the paid workforce to raise a child, take care of an aging parent or look after an ailing family member. Caregiving is hard work that benefits our entire economy. However, when Americans take time off to take care of a relative, they do not earn credits toward Social Security retirement benefits. This can reduce their Social Security benefits at retirement, since those benefits are calculated based on their top thirty-five years of earnings—an issue that disproportionately impacts women. For years, leaders like Congresswoman Nita Lowey have called out these disparities. No one should face meager Social Security checks because they took on the vital role of caregiver for part of their career. Hillary Clinton believes this is an idea whose time has come: Americans should receive credit toward their Social Security benefits when they are out of the paid workforce because they are acting as caregivers.
  • Build on the Caregiver Respite program.  Caring for a sick family member day in and day out can exact a significant emotional and physical toll. Both caregiving family members, and those they care for, can benefit from occasional temporary relief. As a Senator, Clinton was the lead Senate sponsor of the Lifespan Respite Care Act, which was enacted. It authorizes grants that continue today to improve respite care access for family caregivers of children or adults of any age with support needs. As president, Clinton will go beyond President Obama’s Caregiver Respite budget request—investing $100 million in the initiative over 10 years.

That is now.  This was back then as pulled from our archives:  LTC Bullet:  Hillary on LTC, February 7, 2008:

LTC Comment:  The February 2008 issue of Health Insurance Underwriter, the monthly magazine of the National Association of Health Underwriters (www.nahu.org), contains my article "Hillary Clinton on LTC."

--------------- 

Hillary Clinton on LTC
by Stephen Moses
February 2008

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?

Hillary Clinton announced her plans for long-term care public policy a few weeks ago. Let's give due credit: none of the other presidential candidates have committed themselves to anything like such a detailed plan. At least she's on the record, with lots of ideas, some of which are very appealing.

First a synopsis, then our comments:

Hillary Clinton's Long-Term Care Agenda

Supporting Seniors with Long-Term Care Needs, and The Invisible Army of Caregivers That Support Them:

-- Enacting a new $3,000 Caregiving Tax Credit to provide financial relief to millions of seniors, people with disabilities and their families. Clinton will also invest more than $300 million per year to support unpaid family caregivers.

-- Giving more seniors the ability to access long-term care services where and when they need them, including in their homes.

-- Doubling the elderly standard deduction to provide additional financial relief for 11 million elderly tax filers.

Helping the Elderly Prepare for Long-Term Care Needs by Making Long-Term Care Insurance More Secure and Affordable:

-- Requiring tough new consumer protections for long-term care insurance, including ending discrimination against veterans and helping states create consumer advocates for long-term care insurance.

-- Offering consumers the same secure long-term care insurance options that members of Congress enjoy.

-- Providing a new Long-Term Care Insurance Tax Credit to make secure, high-quality insurance plans affordable.

Protecting Our Seniors by Improving the Quality of Our Nursing Homes:

-- Tripling federal support for nursing home ombudsmen programs to protect consumers of long-term care.

-- Directing the Department of Justice and the Federal Trade Commission to assist state consumer advocates and prosecutors to tackle persistent abuses and new challenges in the long-term care industry.

-- Reversing the inexcusable policy of the Centers for Medicare and Medicaid Services (CMS) of withholding information on poor-performing nursing homes and giving seniors full access to usable data on nursing homes, including data on nursing home ownership structures.

-- Strengthening our nursing and direct care workforce with a national system of background checks for long-term care workers and $125 million investment in Workforce Improvement Programs.

LTC Comment: Senator Clinton's laundry list of LTC promises includes something for nearly everyone -- a tax credit for caregivers, a tax credit for LTC insurance, new LTC insurance options, tough new LTCI consumer protections, expanded home and community-based care and tougher nursing home regulation. Well, nothing in there for the much-maligned nursing homes, but they're supposed to be the problem that schemes like this are intended to fix. So, no surprise in that.

Here's the flaw in this and any similar grab bag of uncoordinated proposals: They do not derive from analysis of what caused the problems they seek to fix. Consequently, they run the risk of making the problems worse instead of better. So, to evaluate the Senator's plan, let's begin by summarizing why America has such a dysfunctional LTC system in the first place. Then we'll be able to see if her proposals are compatible and progressive or contradictory and self-defeating.

LTC is a mess in the U.S.A. because the government made nursing home care free in 1965 by paying for it through Medicaid and Medicare. That's why the public is in denial today about LTC risk and cost. That's why the system has a nursing home bias. That's why a private home and community-based services infrastructure never developed. That's why the long-term care insurance market remains stunted. It's a big reason why Medicaid and Medicare costs have exploded. And that's why state and federal budgets are too tight to fund access to quality long-term care reliably through public programs.

Now, does anything in Senator Clinton's LTC plan address this underlying dysfunction? No. If anything, her plan would exacerbate all of the underlying causes of the problems. For example:

-- Expand Medicaid-financed home and community-based care? That makes Medicaid LTC even more attractive than it already is. It would increase Medicaid estate planning and ruin the LTCI market unless combined with strict eligibility controls, which the Clinton plan lacks.

-- A $3,000 tax credit for caregivers? That also sends the wrong message: don't worry about long-term care. Not only will Medicaid pay for it, but you'll get a check from the government if you provide the care yourself. Furthermore, it's an open invitation to elder abuse. Find an elderly person to put in the basement and cut your taxes $3,000.

-- Give a tax credit for LTC insurance? Great idea, but it won't help much if combined, as it is in Senator Clinton's plan, with so many expensive new initiatives to make publicly financed LTC more attractive and responsible LTC planning less necessary than ever.

-- Improve nursing home care by adding more regulations and enforcement? Dream on. The problem with nursing home care is that it is underfunded by parsimonious public programs, not that it is under-regulated. Nursing homes are already as regulated as the nuclear industry.

It is tempting for politicians to throw a lot of money and popular proposals at problems. But too often, as in this case, their proposals treat the symptoms of social problems instead of the causes. That's why the unintended consequences of their well-intentioned ideas often make worse the very problems they are trying to solve. Then will come another set of politicians who propose more of the same. After 40 years of this we find ourselves in a quagmire of conflicting policies and funding sources so complicated it takes serious analysis to unravel and correct. But serious analysis is something no politician has the time or inclination to attempt.

And what about the cost? Five billion dollars per year! For what? To add more government interference in the LTC marketplace which is exactly what caused the problems in the first place. Just think what $5 billion could do left in the hands of consumers if they had real incentives to prepare responsibly for long-term care risk and cost.

On the other hand, there is no chance Senator Clinton's proposals will come to pass, whether she becomes president or not. Before long, the fiscal tide will turn (it may be turning already); Social Security and Medicare will shirk their unfunded liabilities by becoming means-tested welfare programs like Medicaid; Medicaid will sink further into red ink; public financing of long-term care will retrench if not disappear altogether; the burgeoning boomer generation will tap their home equity (if any remains) to pay for long-term care; their heirs will get the message and start to buy LTC insurance; and the marketplace will work things out in the long run.

What's so very sad, however, is that a lot of poor people for whom we could have preserved a social safety net will be hurt as this scenario unfolds. And here's the irony. The very politicians who claim to care most about the needy and underprivileged are the same ones who propose the policies that do the most harm. But that is no defense for the other political side, which errs by omission almost as seriously as their opposition seeks to do by commission.

The next 20 years will tell the tale.

---------------

LTC Comment:  How has Hillary on LTC changed?  In 2008, she called for a $3,000 tax credit for caregivers.  That proposal doubled to $6,000 for 2016’s campaign.  In 2008, she proposed a “Long-Term Care Insurance Tax Credit.”  No more; she’ll “expand Social Security” instead.  In 2008, Hillary took aim at nursing homes, calling for more ombudsmen, litigation, background checks and information on poor performers.  No longer, this year it’s all about supporting family caregivers.

Is the new Hillary on LTC any better than the old one?  Hardly.  I stick by my critique above.  But I’ll double down in this respect.  Eight years later, we find ourselves deeper than ever in the financial hole that will bring America’s LTC service delivery and financing system crashing down. 

Our national debt has nearly doubled from $10.9 trillion when President Obama took office in January 2009 to $19.3 trillion now.  Medicare’s and Social Security’s unfunded liabilities are staggering.  Medicaid continues to crowd out responsible LTC planning.  Self-indulgent fiscal and monetary policies push up spending and debt and sustain the excess with artificially low interest rates.  When will this bubble burst? 

I repeat:  “The next 20 years will tell the tale.”

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Updated, Monday, May 23, 2016, 10:22 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-020:  LTC NEWS AND COMMENT

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

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

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

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

  • Most hip fracture patients not told they have osteoporosis, survey suggests

  • More than one-third of Americans think Medicare will cover their LTC needs

  • Americans continue to believe government will pay for ADL assistance, long-term care

  • Think What You Could Do With Half a Million Dollars in Retirement

  • Inside the GOP’s Plans to Overhaul Medicaid

  • Rising Health Care Costs Shine Spotlight On Critical Illness Coverage

  • More Consumers Are Hanging on to their Long-term Care Insurance Policies

  • Poll Says Majority of Americans Prefer 'Medicare For All' Health Care

  • Loneliness hurts: Senior health about more than disease

  • The time to explore long-term elder care is before you need it, experts say

  • Where Drinking, Drugs and Alzheimer’s Are Disproportionately Fatal

#############################

"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, May 20, 2016, 11:45 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTCI OPTIMISM

LTC Comment:  Pollyanna or Cassandra?  Who ya gonna believe?  After the ***news.***

*** LTCI STICKS:  Following is one of the LTC Clippings we sent to subscribers this week.

5/18/2016, “More Consumers Are Hanging on to their Long-term Care Insurance Policies,” Advisor Magazine

Quote:  “More consumers are hanging on to their long term care insurance (LTCI) policies, according to the latest persistency study of U.S. long term care insurance by LIMRA and the Society of Actuaries (SOA). The study is based on data from 20 companies with about 19 million covered lives; about 64 percent of the insureds had individual coverage and 36 percent had group coverage. The study found the percentage of policies voluntarily lapsed was 3.6 percent during the years 2008-2011. This is 30 percent lower than when the study examined experience data from 2002-2004.”

LTC Comment:  For interpretation of these findings, see LTC Bullet: LTCI Lapses Reconsidered, May 6, 2016. ***

*** LTC CLIPPINGS:  We scan the LTC-related news and reports constantly, select and send the most important items in order to keep our LTC Clippings subscribers on the forefront of professionalism.  To inquire or subscribe, contact Damon at 206-283-7036 or damon@centerltc.com. ***

 

LTC BULLET:  LTCI OPTIMISM

LTC Comment:  After my downbeat assessment of a few weeks ago in “LTC Bullet:  LTCI Defeatism,” we thought LTC Bullets readers might be ready for a more positive outlook on the prospects for private LTC insurance.

So today we bring you another piece by our thoughtful guest columnist Stephen D. Forman in which he makes the case that a brighter day is dawning for LTCI--so Carpe Diem. 

-------------

“Spring Comes to LTC Insurance:  The Blooming of a Soft Market”
by
Stephen D. Forman, CLTC

Download the report


INTRODUCTION

Although the terms “hard market” and “soft market” are more commonly used to describe the two to ten-year cycles which recur in property and casualty insurance (P&C), they can extend to many lines, including long term care (LTC). When we pull back and examine the LTC market through a cyclical lens, not only does it improve our ability to forecast, but it sheds light on a multitude of changes which otherwise seem unrelated. Taken together, these changes signal the re-emergence of a soft market, news which the LTC community should greet like the welcome return of Spring.

Many column inches have been written about LTCI’s imminent demise, but on closer inspection what we are witnessing is “economic evolution” typical of any maturing industry. Just as water seeks its own level, the number of carriers has responded to the number of buyers, with some target markets heavily saturated. As the remaining competitors seek to broaden their reach into new markets, the seismic shift between cycles begins.

Reviewing the characteristics of each cycle, it is apparent they operate as “gas pedal” and “brake”. Do we want to slow sales or speed them up? The result is that a hard market is a seller’s market, while a soft market is for buyers. As the pool of suitable customers shrinks and LTCI sales reach historic lows, we expect a concerted reaction to reach and win new clients.


UNDERWRITING

Although conventional wisdom states that policies are tougher than ever to qualify for—that underwriting standards flow down a one-way street—we lose much through this oversimplification. At least three top-tier carriers have announced relaxed underwriting standards this year. Whether by accepting previously-uninsurable conditions (like Type-2 diabetes with insulin, or cirrhosis of the liver) or by waiving invasive requirements (like those involving bodily fluids), the pendulum is swinging back.

We are also seeing more aggressive use of “counteroffers” throughout the industry, be it through an alternative benefit, rider or product than originally applied-for. Only through the accumulation of seventy times the claims data since just 2000 are these moves possible, allowing a fair but careful balance between benefit to the policyholder and exposure to the company.

Some carriers have found another way of accepting more applicants: through the use of combination products which link life insurance with LTC. By incorporating mortality underwriting (which benefits from longer-lived policyholders) with morbidity underwriting (which benefits from shorter-lived applicants), these products boast declination rates about 1/3rd that of traditional LTC insurance. Furthermore, through the use of large single premiums, some shift an inordinate amount of risk back to the policyholder in the form of a large “deductible”, i.e. the exhaustion of one’s own money first.


SUPPLY

Although it’s a funny concept to think about, insurance companies do have a finite “supply” of insurance they can sell, similar to inventory at your local retail store. They can “sell out” of insurance if they assume more risk than they can financially support (and state regulators keep a close watch on this). In the most extreme examples, a company will suspend sales in a state entirely. But at the other extreme, an oversupplied company has a lot of capacity, and we have been told by at least two major carriers—who shall remain unnamed, of course—“We’ll take as much new business as you can send in!"

This might seem bizarre in another industry—who wouldn’t want to sell as many widgets as possible?—but LTCI puts a premium on slow, controlled growth. With its high capital requirements, growing too fast can easily strain an LTCI carrier. It’s not always the case that companies want business (especially if they are waiting for a new, more profitable product to come to market and replace the one currently for sale). So when we read that one of the market leaders is making a nationwide push to hire agents, a second is reportedly twenty percent overstaffed, and a third has lifted its unofficial cap on new business, these are all signs which point to increased capacity.


COMPETITION

While the last decade was marked by carriers exiting the long term care insurance market (from a peak of around 110 to today’s dozen or so), the transition to a soft market predicts new entrants will return. And that’s exactly what we’re seeing (aided by a new study from the Society of Actuaries which demonstrates to sideline insurers the remarkably good odds of a profitable future selling LTCI). Within the last twelve months, heavyweight endorser AARP has signaled a new partnership with the private market, a brand new carrier has announced its intention to sell traditional LTCI, and a third major brand has shed every product in its portfolio but LTCI.

Meanwhile, the number of life insurers who recognize the demographic opportunity represented by the Silver Tsunami is unprecedented: seven have entered the combo space within the past five years, while over twenty offer an accelerated benefit for chronic illness and/or critical illness. LIMRA reports that acceleration riders are now a “must have” benefit, and one carrier was quoted in confidence saying, “You will never see another life insurance product sold by us which does not include a long term care benefit.

These forays do not even consider the ancillary products which are now competing for the same dollar. Just as Netflix and Amazon now compete for the same eyeballs as cable and broadcast television, we must entertain non-LTCI competitors such as critical illness, reverse mortgage, short-term recovery, and life settlements (to name a few). Buyers are finding this softening market exceptionally dense with options.

And then there are the disruptors—those Silicon Valley-based, venture capital-backed companies who are re-writing not only how insurance is bought, but re-inventing insurance itself from a clean sheet of paper with an outsider’s perspective. One or both developments will bleed into the world of LTCI, as we are already aware of such initiatives.


RATES

While most observers would argue premiums are on an ever-upward spiral, this misses some of the nuance between the lines. In a softening market, sellers compete for buyers. We’ve seen how insurers might widen their underwriting, but they can also make their premiums more attractive or broaden their features and benefits. There are now three carriers who have agreed to share some of their profits with their policyholders (two in the form of dividends, and one in the form of policy credits). Another two carriers have explicitly re-packaged their products in order to drive the price of entry below the magic $100/month flashpoint at which buyer interest flares. A few carriers are even modifying agent compensation in an attempt to hold down prices.

And for what it’s worth, there are other entities designing products these days: think tanks like the Bipartisan Policy Center (BPC) and LTC Financing Collaborative have proposed hypothetical LTC plans. Neither is as concerned with the quality of coverage as with the quantity: they’ve concluded the best way to ensure universal participation is by making policy ownership mandatory. But rates are definitively “soft market”: premiums are kept low through taxpayer subsidy, co-insurance, long elimination period, high deductible, low-to-no agent commissions, and periodic rate recertification.

The good news is that the LTCI Pricing Study predicts the age of unstable rates is behind us. Through regulatory fiat or actuarial conservatism, premiums will toe the line.


COVERAGE

Last year’s mantra was “de-risking”: removing or tightening those policy benefits which exposed the insurers to outsize risk. Areas of concern included informal caregiving, lifetime benefit periods, and unencumbered cash, to name just a few. Are we now so optimistic that we forecast these benefits returning this soon? In fact, unlimited benefits are coming back. And at least two combination products offer cash. But not all desirable benefits must carry risk.

In the hard market of the last decade, products were unbundled to their “a la carte” pieces. In the soft market that’s coming, we can expect more and more “built-ins” to create a competitive edge. Technology will fill this gap—bridging the need for immediate benefits without costing carriers a fortune. Disruptive benefits based off of Airbnb and Uber, and robots too, are not far off. Remote sensing of seniors has been hailed a “mega-trend”. As the sharing economy extends its reach into senior services, the only thing lacking is a structural, systemic way to pay for them.

The last eighteen months have witnessed unprecedented innovation in coverage design from both inside the industry and out. From the eighty-five (85!) separate concepts brainstormed by the Long Term Care Think Tank, to the “RetirementLTC” design of the BPC, to the ongoing Home & Community Based Care pilot programs of Medicaid (competitively nicknamed “The Medicaid Insurance Company”), to the two-way mirror focus-grouping from the carriers themselves, never before has such variety been under the microscope.

Tim Urban describes it best, “When Apple decided to make a phone, they didn’t try to make a better Blackberry—they asked, ‘What should a mobile phone be?’” This attitude now permeates LTCI design, as head-scratchers wonder if the essential product which has served the last forty years may have reached the end of its lifespan. Having settled the question of whether LTC is an insurable risk once and for all, the question then becomes, “What should a long term care policy be?”


SUMMARY

The only constant in life is change—but it’s not haphazard. Those who study any profession will recognize the hidden cycles deep below which produce the visible waves on the surface. A few years ago, we claimed to have entered the “Golden Age of Long Term Care,” since there has never been a better time to buy—or sell—long term care insurance.

Today we double-down on that prediction. Unless obstructed, the private market is entering a period of softening, which portends good fortune. Viewed as a whole, LTC is becoming a “buyer’s market”, led by increased avenues through which individuals can access coverage. 

This was inevitable. The market most suitable for private LTCI is the uppermost quintile in terms of income and net worth, even as LTCI ownership over age 65 is nearly twenty percent. Those who argue that the industry suffers from an incredibly low penetration rate have it exactly backward: the primary market is almost completely saturated.

The cherry picking of the first market is over, as companies move downstream and turn their attention to the broader eighty percent. Anyone looking over the horizon needs to build such products: unless the infamous retirement woes gripping the Millennials are repaired—forty-one percent of whom have less than $100 in their checking accounts—LTCI will be dead in a single generation anyway.

Motivated then as much by competition as by self-preservation, companies are breaching new LTC markets, then racing to fill them with appealing new ideas. Tens of millions of Americans will find themselves the center of this attention, wooed by an increasing number of competitors wielding a classic toolbox of underwriting, pricing and benefits to win their business.

It would be wise to take advantage of this cycle before our good fortune ebbs.

 

Download the report

Stephen D. Forman of Long Term Care Associates, Inc is co-author of "The Advisor's Guide to Long-Term Care" (2nd Ed.) published by National Underwriter, and a regular contributor to LifeHealthPro and ProducersWEB. Reach him at steve@ltc-associates.com

---------------------------------

 

WORKS CITED

 

AICPA. Press Releases: American Institute of CPA's. March 24, 2016.
http://www.aicpa.org/Press/PressReleases/2016/Pages/saving-is-a-top-priority-for-millennials.aspx (accessed April 25, 2016).

Bipartisan Policy Center. Initial Recommendations to Improve the Financing of Long-Term Care. Long-Term Care Initiative, Washington, DC: The SCAN Foundation, 2016.

Boodman, Eric. STAT. December 31, 2015. https://www.statnews.com/2015/12/31/remote-monitoring-elderly/ (accessed April 25, 2016).

English, Craig. "Hard Market vs Soft Market: The Insurance Industry's Cycle and Why We're Currently in a Hard Market." PSA Perspective Blog. January 29, 2013. http://www.psafinancial.com/2013/01/hard-market-vs- soft-market-the-insurance-industrys-cycle-and-why-were-currently-in-a-hard-market/ (accessed April 16, 2016).

Forman, Stephen D. "The Current State of the LTCI Industry: Three is the Magic Number." ProducersWEB. April 17, 2012. http://www.producersweb.com/ (accessed April 18, 2016).

Glickman, Marc, and Laury Falter. "Reflecting on Rates- Examining the Outlook of Today's LTCI Pricing."
BrokerWorld Magazine. Overland Park: Insurance Publications, March 2016. 1-4.

Hair, Lanny. What is a Hard/Soft Insurance Market? 2001. http://www.hcc.com/
(accessed April 18, 2016).

Hendricks, Arlene, Stephen Holland, and Jennifer Vey. "1+1≠2, the Challenges of Underwriting Combo Life-LTC Policies." 2016 Intercompany Long Term Care Insurance Conference. San Antonio, 2016. 34.

Ho, Catherine. "LIMRA Study Shows Life Combination Products in Double-Digit Growth Pattern." Newsletter of Insurance and Finance, August 2014: 3.

Leiber, Nick. Europe Bets on Robots to Help Care for Seniors. March 17, 2016. http://www.bloomberg.com/news/articles/2016-03-17/europe-bets-on-robots-to-help-care-for-seniors (accessed April 18, 2016).

Loomis, Roger, Jim Glickman, and Stephen Forman. "LTCI New Business Pricing: How Safe Is It?" SOA 2015 Annual Meeting and Exhibit. Austin: Society of Actuaries, 2015. 25.

Mangan, Dan. Insurance Premiums: Is $100 the Next Obamacare Hurdle? October 21, 2015. http://www.cnbc.com/2015/10/21/insurance-premiums-is-100-the-next-obamacare-hurdle.html (accessed April 18, 2016).

Urban, Tim. Wait, But Why: How Tesla Will Change the World. June 2, 2015. http://waitbutwhy.com/2015/06/how-tesla-will-change-your-life.html (accessed April 25, 2016).


MEDIA CONTACT

Stephen D. Forman, CLTC
Senior Vice President,
Long Term Care Associates, Inc.
steve@ltc-associates.com  

800.742.9444 ext. 205
425.462.9500 direct
425.462.9839 fax

11900 NE 1st St., Suite 115
Bellevue, WA 98005-3030
http://www.ltc-associates.com

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Updated, Monday, May 16, 2016, 10:22 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-019:  LTC NEWS AND COMMENT

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

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

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

  • Confined to Nursing Homes, but Longing (and Ready) for Home

  • Genworth Bets Heavy on LTC Brokers to Save The Day

  • 5 insurance changes to make when you retire

  • Judge Sides With House Republicans Against Health Care Law

  • LTCI block buyer briefs analysts

  • Hillary Clinton Says She’s Weighing Medicare for 50-Year-Olds

  • What If Government Pays For All Long-Term Care?

  • Genworth 2016 Annual Cost of Care Study: Costs Continue to Rise, Particularly for Services in Home

  • The role of critical illness insurance in the new cancer economy

  • GAO Audit: Feds Failed To Rein In Medicare Advantage Overbilling

  • The Retirement Cost That 80% of Americans Aren’t Ready For

  • The 5 best and worst states in which to grow old

  • Two minutes playing this video game could help scientists fight Alzheimer’s

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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, May 13, 2016, 09:59 AM (Pacific)
 
Seattle—

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LTC BULLET:  WHERE’S THE DISCONNECT?

LTC Comment:  Confronting long-term chronic illness is easier with the financial help LTC insurance provides, but too few people have the coverage.  Where’s the disconnect?  After the ***news.***

*** TODAY IS FRIDAY, THE 13th:  Y’all be careful out there!  Superstition aside, these are truly dangerous times. ***

*** LTC DÉJÀ VU:  Hillary wants to add 50-year-olds to Medicare.  Bernie would buy everything for everybody and charge it to Uncle’s credit card.  The Donald channels Mad Mag’s Alfred E. Neuman:  “What, Me Worry?” about entitlements?  Janet (Yellen of the Fed) will keep their fantasies looking feasible until November 8 by means of phantasmagorical monetary policy.  Welcome to election year politics.  We’ve seen it all before.  To stay grounded during this depressing, tumultuous time, we invite you to revisit the basics of good LTC financing policy with us.  Go to http://www.centerltc.com/bullets/index.htm.  Browse our 1132 LTC Bullets.  Find them listed chronologically or by topic.  Re-live the earth-shaking upheaval of past LTC policy battles.  We predict you’ll come away with your confidence restored that basic principles apply and, however dysfunctional the current political and economic malaise, clear thinking reveals a successful pathway. ***

 

LTC BULLET:  WHERE’S THE DISCONNECT?

LTC Comment:  Honey Leveen is a long-time friend and a Premium member of the Center for Long-Term Care Reform.  She contributed a chapter to a 2016 book titled “Surviving Alzheimer’s With Friends, Facebook, and a Really Big Glass of Wine,” edited by Dayna Steele with Heather Rossiello.  We thank Honey for permission to reprint the piece she submitted for the book.

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“Where’s the Disconnect?”
by
Honey Leveen, The Queen, by Self-Proclamation, of Long-Term Care Insurance

Insurance disclaimer: The following is based on the author’s personal experiences and opinions.

Much of the legacy we leave may be measured by how honestly we've dealt with life's most painful truths. Often, such truths are the most obvious, yet hardest to see clearly.

I’ve specialized in long-term care insurance (LTCi) since 1990.  That's a long time.  I’ve seen a few hundred of my nearly 3,000 clients collect from policies I’ve sold them. This is just the tip of the iceberg, however; many more will need to collect from their LTCi as time goes on.

I see scenarios just like Dayna’s [as described in Surviving Alzheimer’s] play out again and again. For different reasons, when a parent needs LTC, family members who’ve always gotten along well may find themselves at odds with each other. It is exactly as Dayna describes. The absence of sufficient, readily available money to swiftly access long-term care (LTC) aggravates an already highly stressful situation.

People who own LTCi also commonly suffer familial dysfunction similar to Dayna’s. What makes things so different for them is that their LTCi policies pay out significant, meaningful amounts of money when LTC is needed. This is often a huge game changer. LTCi tends to subdue the emotional discord Dayna describes. Relationships don’t suffer as much, and outcomes are better. The money people collect from LTCi provides them with dignity, choices, access, and options they would not have otherwise had.

Sadly, most of us still do not own LTCi. Sadder still, it is too often well-educated people with good incomes and a whole lot to lose who choose to be unprepared for LTC.

Such people come up with what they think are fabulous excuses to avoid discussing what might happen to them at the end of their lives. There seems to be a disconnect between our intellect and our emotions when it comes to LTC planning.

According to www.longtermcare.gov and other reputable sources, at age 65, there’s a 70% chance of needing LTC. These odds go up with each year we age. Visit Genworth’s Cost of Care Calculator (find it in the Resources area of www.honeyleveen.com) to see just how expensive LTC is in your locale.

Most LTC in the US is provided on an unpaid basis, disproportionately by women, who often have to sacrifice their careers, savings, and relationships to provide care.* LTC already costs American families dearly, yet the worst of this crisis is yet to come.

As former First Lady Rosalynn Carter said, “There are only four kinds of people in this world: those who have been caregivers, those who are caregivers, those who will be caregivers, and those who will need caregivers.”

Here are some simple responses to major misconceptions about LTC and LTCi. More complex answers are found on www.honeyleveen.com or by calling me, at no obligation:

LTCi is too expensive. Not true. What may be expensive is needing LTC for anything but a short time and not owning LTCi. Policyholders usually collect back all premiums they’ve paid over the life of their policy in a few short months. Premiums are customized for each person and can be made to fit into almost anyone’s budget. *

The government pays for LTC. The type of LTC the government pays for is not what you would freely choose. *

Medicare covers LTC. No it doesn’t! Medicare covers acute medical problems and a restrictive, conditional amount of home or in-patient rehabilitative care that most people don’t qualify for.*

The LTCi industry is threatened. It’s true that the number of carriers selling LTCi has shrunk; there are valid reasons.* Policyholders are not in danger.* LTCi carriers remain staunchly committed to the market. They realize the LTC crisis and oncoming Senior Tsunami isn’t going away any time soon, and are in it for the long run.*

LTCi only pays for nursing homes. The opposite is true. The great majority of LTCi policies pay comprehensively, for care at home, in adult day care, assisted living, and nursing homes. They enable you to increase the odds you will not need LTC provided in a nursing home.*

Here are some of many silly excuses smart people give me to avoid conversing about LTCi while they’re healthy and can find reasonable premiums:

My wife will take care of me. Really? Your wife will be eager and physically capable of helping you bathe and dress, for example? You don’t mind the thought of her last memories being about the physical, emotional and financial burdens of caring for you?

That won’t happen to me. Really?

My kids will take care of me. Really?

I’ll kill myself.

I can’t afford LTCi. Many people claim LTCi is too expensive, despite the fact that we tailor LTCi premiums to fit into most people’s budgets. Situations like this one happen frequently: an acquaintance tells me she can’t afford LTCi premiums. This person’s mother needed LTC for an extended length of time, at great sacrifice to the family. A week later this person announces she is making a two week trip to Mt. Everest Base Camp/African photo safari/Tahiti or another exotic locale, or is buying a top-of-the-line car/kayak/audio equipment, etc. She has the money to do that but can’t afford LTC premiums. Where’s the disconnect?

Here’s another common scenario: I get incoming calls with Caller ID stating: “METHODIST HOSP RE-HAB”. The caller is the daughter or son of someone who’s just broken their hip or suffered a stroke. They ask me to come sell their parent LTCi. I have the unpleasant task of trying to tactfully explain that their parent is uninsurable. Sometimes the child is incensed by this news. I suggest the child is of ideal age to find reasonably priced LTCi for themselves; this might be a wise idea if they want to assure a similar scenario doesn’t play out when at the end of their lives. The child is normally not interested. The reason is that the family is in the worst kind of turmoil, duress, and dysfunction. They are scurrying around trying to cobble together LTC for their parent, and there isn’t sufficient, readily accessible money to pay for it. This is the scenario Dayna and I urge you to avoid by doing reasonable, responsible LTC planning, now.

What all of my LTCi clients have in common, regardless of their incomes, is the ability to honestly, openly discuss LTC in advance. Most of my clients have had firsthand experiences similar to Dayna’s. They’ve learned from them, and taken action to avoid the consequences of not being prepared for their own long-term care.

* For comprehensive links, videos, and documented facts supporting my statements, visit www.honeyleveen.com, or just give me a call.

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Updated, Monday, May 9, 2016, 09:59 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-018:  LTC NEWS AND COMMENT

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

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

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

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

  • Medicaid loopholes for long-term care are wrong

  • Two minutes playing this video game could help scientists fight Alzheimer’s

  • Nursing homes turn to eviction to drop difficult patients

  • Low Defined Contribution Savings May Pose Challenges

  • Fading Fast: Fewer Seniors Have Retiree Health Insurance

  • LTCI Watch: Luxury Alzheimer's

  • LTCI earnings X-rays: CNO, Unum, CNO, Genworth

  • Must Suspicions About Personal Health Be Shared With an Insurer?

  • How does the MLTC Medicaid model impact seniors?

  • An Interview with Dr. Bill Thomas

  • Repeated nursing home sales linked to poor quality

  • DOJ report slams South Dakota's reliance on nursing homes to provide disability services

  • Aging in Place

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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, May 6, 2016, 10:15 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTCI LAPSES RECONSIDERED

LTC Comment:  LTCI lapses are conceptually slippery.  Some clarification by Claude Thau after the ***news.***

*** WE PUBLISHED the following LTC Clipping a few weeks ago.  Today’s LTC Bullet conveys long-term care insurance expert Claude Thau’s thoughts on the meaning of LTCI lapses in the form of comments on the same article.

4/13/2016, “LTCI: Which insureds have the toughest grip on their policies?,” by Allison Bell, LifeHealthPRO                                                 

Quote:  “The research team found that, on average, insureds with higher benefits were more likely to keep paying their premiums than insureds with lower benefits, and that insureds who went through a full medical underwriting process were more likely to keep paying.  In the first three years a policy was in force, fully underwritten insureds were only about half as likely to let an LTCI policy lapse as other insureds were. But insureds who bought their LTCI policies through career agents were only about half as likely as other policyholders to let a policy lapse as other insureds.

LTC Comment:  Interesting data and insights regarding lapse rates worth considering in the context of the Boston College Center for Retirement Research claims that over a third of LTCI policies lapse.  See LTC Bullet:  Another LTCI Hit Job? ***

 

LTC BULLET:  LTCI LAPSES RECONSIDERED

You may find it helpful to read the article referenced above before going on to what follows:  “LTCI: Which insureds have the toughest grip on their policies?,” by Allison Bell, LifeHealthPRO, April 13, 2016.

Having seen an email with some comments by Claude Thau, we asked him if we could share some of his insights with our readers.  He agreed that the following could be helpful to readers.

First of all, he wanted to note that he looks forward to each of these studies by the Society of Actuaries because they provide so much useful information and stimulate so much thought.  He respects Allison greatly because she is a tireless and prolific dispenser of valuable information.

If lapse data is different between X and Y, the key question is “Why are the lapse rates different for X vs. Y?”  Sometimes there are other factors involved which correlate with X and Y and skew the results.  That is, it may be true that the data varied by X vs. Y, but X and Y might not be causing that impact.

For example, what if I were to tell you that heart condition victims are taller than the average person?  Would that surprise you?  Would you conclude that taller people are more exposed to heart conditions than shorter people?  Clearly, it is true that people with heart conditions are taller because a higher percentage of such victims are adults than in the general population.  Because looking at heart conditions screens out a much higher percentage of children than adults, those victims are taller than usual.

Quote from article:  "On average, policyholders who went through a full medical underwriting process and those who bought their coverage from career agents seem to be more likely to keep their coverage than other policyholders."

Comment:  Both of those statements are true, but perhaps not because of the medical or because of the career agent rather than broker, or at least certainly not entirely because of those.  A key factor above is that group policies have higher lapses than individual policies for the following reasons:

1.    When a group has core coverage paid for everyone by the employer, most employees do not buy-up.  Those who don't buy-up, usually lapse when they terminate employment.

2.    Voluntary work-site LTCi has a higher lapse rate, in general, because when people terminate they may forget to pay premium or may not be able to afford the premium because they are temporarily unemployed.  A lag might cause them to have to pay more than one-month’s premium to continue the policy.  If there was a core benefit, they have to absorb the cost of the core benefit prospectively as well.

3.    Executive carve-out policies probably have a higher-than-average lapse rate upon termination of employment because some executives may not want to pay the premium that has been paid for them previously.

  • Individual policies dominate the full medical UW [underwriting] data and group policies dominate the simplified UW cases.  The fact that the medical UW category excludes group policies is probably the primary cause for the difference in lapse rate experience.
  • Brokers dominate the group sales, hence have higher lapse rates.  If someone were to analyze the difference between broker and agent client persistency looking only at individual policies, they might find a significantly different result.

Quote:  "Actuaries classify an LTCI lapse as ‘voluntary’ if a living policyholder stops paying the premiums for some reason other than death. Actuaries contrast that kind of ‘voluntary lapsation’ with lapsation due to the policyholder's death."

Comment:  That's true but a very important caveat is that lapses are overstated in the study because some deaths are coded as lapses.  Another important caveat is that the SOA study addressed full lapses but did not consider partial lapses.  Because of large price increases on inforce policies, there have been a lot of partial lapses, which are not reflected in this data.

Quotes:  "The voluntary individual lapse rate fell to 2 percent, from 2.7 percent in 2005-2007." 
"The voluntary group lapse rate fell to 4.5 percent, from 6.4 percent in 2005-2007."

Comment:  Both true, but don’t forget that the percentage of first year policies dropped.  As first-year policies have the highest lapse rates, the overall lapse rate would drop if the percentage of first-year policies drops, even if the lapse rate had remained unchanged for each individual policy year.

Quote:  "The research team found that, on average, insureds with higher benefits were more likely to keep paying their premiums than insureds with lower benefits"

Comment:  I would expect this to be true to some degree, but I suspect that the results are largely distorted because:

  • Group policies (which have higher lapse rates) generally provide less coverage.
  • The size of coverage has probably increased over time (not necessarily monotonically) causing a higher percentage of the large policies being in the first few policy years, when lapse rates are higher.

Quote:  "The research team also found that two opposing forces eventually cause the lapse curves of individual LTCI insureds and group LTCI insureds to cross.....But, because the individual insureds tend to be much older than the group insureds, death becomes a major cause of individual policy terminations starting around the ninth policy year."

Comment:  The first sentence is about lapse rates.  The second sentence is about total termination rates.  Readers might get confused.  The actuaries were trying to report lapses, exclusive of mortality.  But, as noted above, some mortality creeps in because of deaths miscoded as lapses.

Quote:  "Meanwhile, group insureds seem to start getting serious about paying their premiums after holding their coverage for about eight or nine years."

Comment:  There are a number of factors at play here.  Employees have higher turn-over rates at younger ages.  When you get out 8-9 years, you're looking at an older, more established employee who is less likely to terminate employment, hence less likely to lapse.  Also the percentage of core coverage reduces the older the inforce block; as the people who are left are more likely to have paid some or all of the cost, they are likely to be more persistent.

Special thanks to actuary and LTCI industry icon Claude Thau (formerly Chairman of the Center for Long-Term Care Financing’s Board) for permission to publish his comments on lapses.  Reach Claude at 800-999-3026, x2241 or email him at claudet@targetins.com.

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Updated, Monday, May 2, 2016, 10:40 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-017:  LTC NEWS AND COMMENT

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

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

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

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

  • Fraying at the Edges

  • Depression in Old Age May Be Linked to Dementia, Study Finds

  • SNF occupancy rates and revenues fall as discharges rise, CDC says

  • More Customers Keeping Long-Term Care Policies

  • When To Move A Parent Into An Assisted Living Facility

  • Upscale Planning: Leveraging Social Security benefits with life insurance

  • LTCI Watch: $400

  • Dr. El tries on the Genworth aging suit

  • Superheroes Of Caregiving Need Better Support

  • It’s official: Millennials have surpassed baby boomers to become America’s largest living generation

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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, April 29, 2016, 11:19 AM (Pacific)
 
Seattle—

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LTC BULLET:  LOSING PRINCIPLES

LTC Comment:  What’s happening to the basic principles of personal responsibility and self-reliance that validate private insurance?  We reflect after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** HELPING PROVIDERS AND FUNDERS understand each other has been a major goal of the Center for Long-Term Care Reform since its inception.  This week, we sent subscribers an LTC Clipping titled “Dr. El tries on the Genworth aging suit.”  Here’s what Dr. Eleanor Barbera had to say in that piece:  Unless we've been residents ourselves, it's difficult for us to know exactly what they are experiencing in our facilities. Opportunities like this can bring us closer to their daily realities and help us train staff, modify approaches and improve customer service.  It could mean the difference between being an OK caregiver and an outstanding one.”  What’s it like wearing the Genworth aging suit and how can wearing it help caregivers do their job better?  Good questions and thanks to Genworth for helping to answer them. ***

*** BOOMERS RECEDE:  Did you catch the news this week that the Millennial generation (born between 1981 and 1997) has surpassed the Boomer generation (born between 1946 and 1964) in total numbers?   (You did if you subscribe to LTC Clippings.)  I don’t know about you, but I feel a certain sense of relief stepping out of the demographic spotlight.  But don’t write off the baby-boomers yet?  Another LTC Clipping this week pointed out that nearly 7,000 boomers are turning 70 every day this year with many more coming as the Age Wave continues to spike.  So what?  So that’s a lot of people forced to remove “Required Minimum Distributions” (RMDs) from their tax-sheltered accounts this and every year.  Any ideas on how folks caught in the RMD trap might put that extra income to work? ***

*** TO SUBSCRIBE to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.  You’ll have access to the most important LTC news and information in real time quicker than you can cut the (little extra) check to the Center. ***

 

LTC BULLET:  LOSING PRINCIPLES

LTC Comment:   The purpose of insurance is to replace an unpredictable catastrophic risk with the certainty of an affordable premium.  Private insurance depends on individuals taking responsibility for themselves by recognizing risks and taking action to mitigate their personal liability by purchasing coverage.   Social insurance, such as mandatory government programs like Social Security and Medicare, also spread and mitigate risk, but they do not require personal responsibility or individual action.  They’re mandatory, meaning they are imposed on consumers by government compulsion without choice or action by covered individuals.  That’s a major distinction.

The other critical difference between private insurance and social insurance is that the first prices risk, but the latter does not.  For example, you’ll pay more for private life insurance if you smoke, because smokers add more potential expense to the “risk pool.”  Thus, private insurance nudges smokers voluntarily away from the self-destructive behavior of smoking. 

Mandatory social insurance programs work differently.  Everybody pays in and everybody benefits equally, at least in theory and at first.  But because social insurance does not price risk, it rewards irresponsible behavior by shifting costs from independent, self-reliant people to their opposite.  That’s why social insurance programs eventually become insolvent.  They undercut the ethical principles of personal responsibility and self-reliance that make people, economies and societies successful over the long term.  See “The Inherent Individualism of Insurance.” 

From Where We Stand

The Center for Long-Term Care Reform’s latest research project is titled “Medicaid Long-Term Care:  Ensuring Scarce Resources Reach the Neediest People.”  We described it in this year’s first LTC BulletCenter Kicks Off New Year With Major Study.”  The study’s goal is to examine two of the most significant Medicaid LTC eligibility characteristics that allow affluent people to access the welfare program’s scarce resources.  These are Medicaid’s large home equity exemption and the so-called Medicaid-compliant annuity.  

Specifically, we seek to understand how often these eligibility factors occur, how much they cost Medicaid, to what extent they are recouped through mandatory estate recoveries, and whether or not their availability to preserve wealth after someone already needs long-term care crowds out other forms of LTC financing.  We set out to answer those questions by inviting state Medicaid programs to participate in the study, making staff and data available for review.  Unlike for dozens of similar studies we’ve conducted over the years (see their reports here), this time we’ve found surprisingly little interest and willingness to participate by state Medicaid agencies.

What’s Changed?

When I first began conducting studies of Medicaid and long-term care financing in the early 1980s, certain ethical principles were taken for granted.  Among those were the belief that individuals are responsible for their own well-being, that public assistance programs should only help people who are unable to take care of themselves, and that because scarce public resources are taken from taxpayers at a substantial cost to the private economy (the only and very fragile source of public funds) those resources should go first to the people most in need.  My sense is that these principles have receded in the public mind, in analysts’ perspectives, and in the outlook and perceived self-interest of politicians, policy makers and public officials.

I’ve already conducted a couple dozen interviews on our current study and that’s the sense I’m getting.  A top-level expert on state Medicaid directors opined they’ve given up on fighting eligibility loopholes.  Other issues consume their attention:  Medicaid expansion under ObamaCare; the transfer of patient responsibility to MCOs (private managed care organizations); and massive “rebalancing” of care from nursing homes to home care.  Nowadays such cost constraint as still exists is focused on risky innovations like managed long-term care and rebalancing instead of controlling eligibility and targeting benefits to the needy.  Besides, why bother to control spending?  Medicaid’s federal matching rate system rewards over-spending.  Should Idaho cut costs when the federal government pads the state’s budget with $2.51 for every dollar the state puts up?  It’s as though public officials have taken the attitude:  “We’re all going to end up on Medicaid anyhow, so why fight it?”

Nor do the states get help from the federal side of Medicaid in controlling access to benefits by the non-needy.  CMS (the Centers for Medicare and Medicaid Services) can’t be bothered with discouraging Medicaid planning or curtailing the use of annuities to divest unlimited assets.  Making Medicaid more attractive to all users is their whole focus with none left over for targeting the program to those most in need.

In previous studies, I’ve received excellent help from State Policy Network members.  These are state-level think tanks dedicated to promoting the freedom philosophy and to finding free-market solutions to social problems.  In the past, SPN members often had excellent relationships with state Medicaid agencies.  They’ve helped me find and interview key state agency officials and gain access to crucial data.  This year most of the state think tanks I’ve contacted are in adversarial relationships with their state agencies due to the controversy surrounding Medicaid expansion under ObamaCare.  The lure of “free” federal money tips the balance in favor of expanding Medicaid and against the free-market think tanks.  So, as much as they believe in what we’re doing and why, the SPN members are fighting other battles these days and can’t be much help to us this time around.

Our Political Representatives

One respondent opined that he was surprised to see even conservative members of Congress defending methods of self-impoverishment to qualify for Medicaid at a recent hearing.  Their reasoning?  “Medicaid requires impoverishment.  How can I blame my constituents for finding ways around the spend down rules?  Why should hard-working, responsible people who did everything right be denied benefits that go exclusively to people who didn’t work, didn’t save and were never responsible?”  I’ve heard and combatted such objections for three decades.  The simple answer is that government can’t do everything for everybody and if it tries there will be nothing left for anybody.  The moral hazard created by eliminating liability after an insurable event has occurred eventually destroys personal responsibility and self-reliance.

Home Equity

Home equity is the biggest asset seniors hold.  In the absence of Medicaid’s home equity exemption (at least $552,000 and $828,000 in nine states, six of which have Republican Governors, go figure), people would use reverse mortgages to help fund the care they need to remain in their homes and out of a nursing home.  I interviewed several experts on reverse mortgages (RMs).  They tell me RMs are rarely used to fund long-term care, which is no surprise of course given the Medicaid exemption.  But recent federal law and regulatory changes have made it even less likely to happen in the future.  New requirements governing credit worthiness of reverse mortgage candidates make it harder than ever for lower income, lower net worth people to qualify.  They’re the very people most likely to need an income supplement to fund long-term care. 

Chicken is to Egg  as Entitlement is to Denial

Another related principle that has gone by the wayside is the idea that people and their government should live within their means.  We see statistics all the time warning that most boomers have saved little or nothing toward their retirement.  Why not? 

Are they unable to save because government has taken so many resources out of the private sector that companies can’t create enough jobs?  Or are they unwilling to save because, why bother?  “We’ll have Social Security for income, Medicare for health care, and if it comes to that, Medicaid for long-term care.”  Which came first, government entitlements or the public’s denial and evasion of risk?

And what about the government itself?  When was the last time anyone worried about out-of-control spending?  We’re bumping up on negative $20 trillion according to the National Debt Clock.  That’s more than our annual Gross Domestic Product.  It doesn’t even include some $70-odd trillion in unfunded Social Security and Medicare liabilities. 

Have you asked yourself why families go bankrupt when they spend beyond their means, but governments (usually) don’t?  The answer is that governments push interest rates down to nothing and when they still can’t service their debts, they print money to make up the difference.  If you think that sounds like a credit bubble ready to burst, you’re probably old enough to have lived through the internet and housing bubbles bursting, but too old to “feel the Bern.”

Margaret Thatcher said “The problem with socialism is that you eventually run out of other people's money.”  Yet other people’s money is the input and the output of most politics.  Taxes (input) come from and impair the private economy.  Benefits (output) go to constituents to buy their votes.  Special interests lobby to minimize their inputs and maximize their outputs.  The whole system floats on a sea of increasingly unfounded faith in its continued viability.  The full faith and credit of the United States means a lot until it doesn’t.  A system funded by a fiat currency paying artificially low interest rates on unlimited debts and grounded on such a faulty ethical foundation could collapse at any time.

Winning Principles

We’re losing the principles that made America great and prosperous.  The damage we’re experiencing is self-inflicted.  If we stop doing what we’ve been doing for so long, we’ll get a different result. 

But there’s the rub.  How do we turn this behemoth around?  I’m sorry to say I think it’s too late for better public policy, much less political leaders, to do the job.  Just look at the policies advocated by most of the leading candidates for President.

Alas, we’re most likely headed for a major economic meltdown, more like the Great Depression than the latest recession, severe as it was.  Sooner or later, economic reality prevails and the system of living beyond our means funded by borrowing and spending will collapse like a house of cards.

What happens then will depend entirely on how many of the winning principles that fueled our rise to super-power status have survived and how fast they can reinvigorate the nation.  Ironically, the sooner we face that test, the better chance we’ll have to pass it.

But When?

So when will the financial cataclysm and the test of our underlying values happen?  Sometime between now and 2031 when the boomers start turning 85 and the bottom falls out of Social Security and Medicare.

But no one knows for sure.  They say a “watched pot never boils.”  That’s why you read “potboilers” while you wait.  Just know this:  if you apply enough heat long enough the water inside a tea kettle will boil. 

That’s physics.  In economics, the denouement may take longer, but it’s equally inevitable.

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Updated, Monday, April 25, 2016, 11:19 AM (Pacific)
 
Seattle—

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