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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...


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

Here’s what Steve had to say at ACSIA Partners’ “Wiggin’ Out for Alzheimers” event that raised $19,000 for the Alzheimer’s Association.

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READ STEVE'S BIO

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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.

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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

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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 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

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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.

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

“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

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

"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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LTC E-ALERT #16-016:  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.  

  • Medicaid Managed Care Rule Changes To Impact Long Term Care

  • Can You Be Paid to Care for Mom and Dad?

  • How We'll Fix Social Security By Not Fixing It

  • U.S. suicide rate has risen sharply in the 21st century

  • New Overtime Rules May Put Squeeze On Caregivers For Those With Disabilities

  • Study: Half of SNF residents end up in emergency room, regardless of cognitive status

  • Can we prevent Medicare bankruptcy?

  • Obama signs Older Americans Act reauthorization

  • Sales of Short-Term Care Insurance Policies Grow 20 Percent

  • Why Americans Aren't Opposed to Assisted Living Facilities

  • UnitedHealth to drop out of all but a few PPACA states

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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 22, 2016, 12:21 PM (Pacific)
 
Seattle—

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LTC Bullet: Will the Aging of America be a Triumph or a Tragedy?

LTC Comment:  Many have noticed a glaring omission in the topics covered in this latest political cycle and Ken Dychtwald, Ph.D. aims to correct that. Today’s topic is the news so this week we’ll skip our regular ***news*** section and dive straight in.

 

LTC Bullet: Will the Aging of America be a Triumph or a Tragedy?

Today’s LTC Bullet is coverage of Thursday’s press briefing by Ken Dychtwald, Ph.D., called “Will the Aging of America be a Triumph or a Tragedy?” For those of you who don’t already know, Ken Dychtwald has been a leader in the field of gerontology and an age wave savant for four decades. He is well-known as a prolific author and effective aging activist, so when he announces a press briefing to discuss our severe demographic challenges and what our news media and presidential candidates should be doing to communicate and combat those challenges, people tune in.

The primary focus of the call was to discuss the demographic “age wave” which is leading to the United States of America becoming a “gerontocracy” and to look at the profound and myriad effects that will have on our country. This is an unprecedented challenge we face and as such Dychtwald views longevity as “humanity’s new frontier.” Is it all dire? No. There is opportunity for humanity to triumph. In order to do so, we must first talk about the issues. Unfortunately, even in this critical election cycle, our politicians give short shrift to these issues and are not prompted enough to talk about them by the news media. That’s a serious problem. What is the solution? To hold this conference call “…to raise awareness of the five aging-related transpartisan issues every presidential candidate must address” and host the audio recording and transcript online at www.agewave.com. What transpired was an engaging forty-two minutes dedicated to covering those five critical issues:

  • Issue # 1: What is the new age of “old?”
  • Issue #2: The diseases of aging could be the financial and emotional sinkhole into which the 21st century falls.
  • Issue # 3: Averting a new era of mass elder poverty
  • Issue # 4: Ending ageism
  • Issue # 5: The new purpose of maturity

Each issue was thoughtfully described and carefully delineated into five or six concisely presented questions for candidates to answer. The hope is that they will. But if this content does not get circulated to the people who ought to be thinking about, and can act on, these issues, they won’t. Politicians don’t always effectively answer questions they are asked; they certainly won’t answer questions they are not. Please help the aging of America be a triumph by reading the transcript or listening to the call and circulate this vital content.

What follows is the press release for the conference call. Read it, but also access the full transcript and an audio recording of the call at http://www.agewave.com/candidates/. Thank you to Ken Dychtwald and Age Wave for creating and making this content available.

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

Media Contact:
Robyn Reynolds
rreynolds@agewave.com
Tel. 510-899-4004

THE COMING “AGE WAVE” THAT PRESIDENTIAL CANDIDATES
NEED TO ADDRESS…BUT AREN’T
 
EMERYVILLE, CA, April 21, 2016. An age wave is coming that could either make or break America. Yet the issue has received little attention in the current presidential campaign.
 
When our Constitution was crafted, the average life expectancy in the U.S. was barely 36 years, and the median age was a mere 16. In this regard, we are living in truly uncharted territory and longevity is humanity’s new frontier. As the baby boomers turn 70 at the rate of 10,000 a day, America is becoming a “gerontocracy.” Already, 42% of the entire federal budget is spent on Medicare and Social Security. And according to the Congressional Budget Office, this will exceed 50% by 2030. In the 2012 election, older adults out-powered all other age groups with 72% of men and women 65+ voting, while only 45% of those 18-29 did.
 
This demographic transformation will create new social contribution and marketplace opportunities, as well as potentially devastating medical, fiscal, and intergenerational crises. Are we prepared? No. Are the candidates addressing this age wave and offering innovative solutions? No. WHY NOT?
 
These are the questions being asked by Ken Dychtwald, PhD, author of 16 books on aging related issues and CEO of Age Wave. Based on his 40 years of research, dialogue, and analysis, Dr. Dychtwald believes there are five essential transpartisan issues that must be addressed if our newfound longevity is to be a triumph rather than a tragedy.
 
Issue #1: What is the new age of “old?”
 
Our economy is hinged to 19th century notions of longevity and old age. When Otto Von Bismarck picked 65 to be the marker of old age in the 1880s, the average life expectancy in his country was only 45. Similarly, when Social Security began, the average American could expect to live only 62 years, and there were 42 workers paying for each “aged” recipient. Today life expectancy is approaching 79, and due to decades of declining fertility, there are fewer than three workers to pay for each recipient. And we have to ask, is 65—or even 67—the right marker of old age in the 21st century? As our demography continues to tilt older, the economic impact of these numbers on working Americans will be massive. This is not a Democrat or Republican issue. This is not an issue that only impacts “seniors.” The designated age of “old” in the 21st century is a demographic/social/economic issue that will affect us all. Left unchanged, it will have a particularly brutal impact on the millennial generation.
 
Issue #2: The diseases of aging could be the financial and emotional sinkhole into which the 21st century falls.
 
As a result of modern medical advances and public health infrastructure, we’ve managed to prolong the lifespan, but we have done far too little to extend the healthspan—with pandemics of heart disease, cancer, stroke, Alzheimer’s, and diabetes. In addition to being quite costly, our healthcare system is incompetent at preventing and treating the complex conditions of later life. For example, Alzheimer’s (and related dementias) now afflicts one in two people over 85, and it has become the nation’s scariest disease. Unless there is a breakthrough, its sufferers are anticipated to grow from 5+ million today to 15+ million, with its cumulative costs soaring to $20 trillion by 2050. But our scientific priorities are out of synch: for every dollar currently spent on Alzheimer’s care, less than half a cent is being spent on innovative scientific research. Our doctors are also not aging-ready. We have more than 50,000 pediatricians, but fewer than 5,000 geriatricians. Only eight of the country’s 145 academic medical centers have full geriatrics departments, and 97% of U.S. medical students don’t take a single course in geriatrics.
 
Issue #3: Averting a new era of mass elder poverty
 
According to the Government Accounting Office, roughly half (52%) of all households near retirement (headed by someone age 55+) have NO retirement savings and about half (51%) of our population have no pensions beyond Social Security. We could be heading to a future in which tens of millions of impoverished aging boomers will place crushing burdens on the U.S. economy and on the generations forced to support them. On top of this, we are not fostering financial literacy or responsibility among the young. For example, 37 states require providing sex education to high school students by law, while only 17 states require financial education.
 
Issue #4: Ending ageism
 
In Colonial times, elders were respected and honored for their wisdom and experience. During the industrial era, all of that turned upside down. Now, in our youth-focused society, many people of all ages are gerontophobic—uncomfortable both with older adults and their own aging process. And many institutions—from urban planning, to technology, to employment hiring practices, to housing, to popular media (where advertisers will pay networks far more for a 30-year-old viewer than one who is 60) are both youth-centric and ageist. For example, our homes were not built for aging bodies: less than 2% of our housing stock is built to be safe and accessible for elders (and 1/3 of the elderly fall each year).
 
Issue #5: The new purpose of maturity

Today’s retirees feel they are in the best time in their lives to give back. And they do: contributing both more dollars and volunteer time than any other age group—doing everything from teaching schoolchildren to read, to helping their peers recover from loss, to building homes for Habitat for Humanity. Going forward, medical science will increasingly prolong life. But political, religious, and community leaders have yet to create a compelling vision for the purpose of those additional years. For example, our 68 million retirees currently spend an average of 49 hours a week watching television. Ultimately, the problem may not be our growing legions of older adults, it may be our absence of imagination, creativity, and leadership regarding what to do with all of this maturity, experience, and longevity.
 
A letter is being sent to each major candidate asking them to articulate their views on these five critical issues.
 
A written copy of Dr. Dychtwald’s views and a recording of his April 21 press briefing, including the specific questions on these issues that he believes the candidates must address – with fact sheets and related data and sources, can be accessed at
www.agewave.com/candidates.

About Age Wave
 
Founded in 1986, Age Wave is a pioneer in the exploration of the impact of the longevity revolution. Under the leadership of Founder/CEO Ken Dychtwald, PhD, Age Wave advises businesses and non-profits worldwide on the opportunities and challenges of an aging population.
 
#   #   #
 
04/21

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Updated, Monday, April 18, 2016, 10:39 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-015:  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:

  • Senior Housing Occupancy Outlook Mixed Across Property Types

  • Rich States, Poor States, 9th Edition

  • Law can require children to pay support for aging parents

  • Disabled Medicaid beneficiaries are losing services in managed care

  • LTCI: Which insureds have the toughest grip on their policies?

  • Medicare Help At Home

  • Underpaid nursing home aides lead to poor care, group says

  • Priced out of Obamacare, some opt for short-term plans

  • Trouble Ahead! Baby Boomers’ Retirement Outlook on the Decline

  • A new divide in American death

  • 7 Easy Ways To Get Your Financial Life in Order

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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 15, 2016, 10:21 AM (Pacific)
 
Seattle—

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LTC BULLET:  USING LIFE INSURANCE DEATH BENEFITS TO FUND LTC

LTC Comment:  Hybrid policies are not the only way to employ life insurance to fund long-term care according to a national expert and policy advocate after the ***news.***

*** HAPPY TAX DAY:  Oops.  Taxes aren’t due this year until April 18.  How come?  Well usually if April 15 falls on a weekend, the due date for paying the IRS becomes the following Monday.  But this year April 15 falls on a Friday.  So, what gives?  Turns out Friday, April 15, 2016 is “Emancipation Day,” which “marks the day that the Compensated Emancipation Act was signed by President Abraham Lincoln and is observed on April 16,” a Saturday this year.  It’s a legal holiday in DC so public employees get the Friday before off work.  Your belated tax dollars at work. ***

*** LTC CLIPPINGS:  Following is an example of an LTC Clipping we sent to our LTC Clippings subscribers this week.  We try with the clippings to keep our readership abreast in real time of important news, reports and statistics that they need to know in order to stay at the forefront of professional knowledge.  To join the Center or subscribe to our LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

4/13/2016, “Medicare Help At Home,” by Karen Davis, Amber Willink, and Cathy Schoen, Health Affairs

Quote:  “This blog presents a Medicare Help at Home policy proposal to add home and community-based services to Medicare to enhance financial protection for beneficiaries, provisions to ensure the quality and efficient use of services, and honor beneficiary preferences for independent living and care at home.”

LTC Comment:  Brought to you by the same people who proposed adding deck chairs to the Titanic after the incident with the iceberg. ***

LTC BULLET:  USING LIFE INSURANCE DEATH BENEFITS TO FUND LTC

LTC Comment:  There is a lot of money stored up in life insurance that could go to funding long-term care according to Doug Burr, SVP of Finance, Reimbursement & Government Relations at Health Care Navigator, LLC.  We asked Doug to share his ideas on this subject.  He chose to put what he has to say in the context of a new “framework” for long-term care financing.  His article follows explaining his new framework and how using insurance to fund LTC fits into it.

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

“Using Life Insurance Death Benefits To Fund LTC”
by
Doug Burr
 

For decades I have been reading newspaper articles, public policy analyses and detailed academic research reports all discussing the issues related to planning for and paying for long term care (“LTC”) services.  It is true that consumers generally do not want to think about potentially needing LTC services and certainly do not want to think about how much it costs to be completely dependent on other people for daily living activities.  However, the reality is that the majority of us will need some LTC services at some time in our lives. 

It is also true that the government - by allowing many exclusions, exemptions and special provisions in defining eligibility for the Medicaid safety net program - has both confused consumers and crowded out private market solutions and the will of individuals to take on that responsibility for themselves.  It is now a widely accepted practice for consumers to structure their retirement and estate plans in order to optimize access to government benefits instead of attempting to plan for and pay for their own eventual LTC needs.  And who would blame them…it’s easy to do and “free.” 

We need to change the motivation for and drivers of planning for LTC needs and refocus the roles that are and should be played by individuals, families, governments and private enterprises.  To do so we need to take portions of policy ideas historically proposed by competing political spectrums.  Only when we have everyone disliking something will we know that we have a plan that represents a valid compromise.

There is no one size fits all right option when it comes to LTC planning.  Therefore, allow me to propose a framework that has sufficient flexibility to accommodate a variety of planning options and government benefit programs.

 

Proposed Framework
(all dollar figures are purely arbitrary and for illustration purposes only)

The current Medicaid benefit program for the over age 65 Aged Blind and Disabled (“ABD”) populations would be replaced with a federal catastrophic safety net program that has a front end means tested LTC lifetime deductible.  There would be a stringent hardship application process for the truly needy that would allow for a lower lifetime deductible.  This change could be phased in over time with notices and educational materials provided to consumers as part of Social Security benefit packages mailed out on each person’s 35th, 45th and 55th birthdays.  These materials would educate consumers about their role in paying – on the front end - for a portion of any LTC services they may need.  The lifetime deductible could be set somewhat above the current institutional LTC utilization length of stay and cost (e.g., 1 year at $225 per day = $82,125…so let’s call it $100,000).  Any person who plans to and meets their lifetime LTC deductible would become eligible for the catastrophic benefit (by entering through the “front door” of the framework).

To qualify to count against the lifetime deductible any incurred LTC costs would need to be for services that are defined as covered by the new federal catastrophic LTC benefit and be incurred after the person is found to meet the institutional level of care requirement either due to physical or cognitive deficits as defined in the state in which he/she lives.  The dollar amount applied against the lifetime deductible for the individual would be based upon the fee schedule payment under the catastrophic LTC benefit program for the service received that was in effect at the time the service was provided.

The lifetime deductible could be means tested by adding $10,000 to the lifetime deductible for every $1,000 of monthly retirement income in excess of a threshold – say $20,000 - AND for every $100,000 of non-family farm real estate assets in excess of a threshold – say $2,500,000 - as measured at the earlier of (i) the year in which the person first draws a social security or pension benefit or (ii) the year in which the person reaches the age of 70.  Hypothetically, a person who first draws Social Security in the year they turn 67 and reports income equal to $25,000 per month and has $8,000,000 of (fair market value) real estate holdings would have a lifetime LTC deductible of $700,000 ($100,000 + {[($25,000-$20,000)/$1,000]*$10,000} + {[($8,000,000-$2,500,000)/$100,000]*$10,000}) prior to being eligible for the catastrophic benefit. 

You could also adjust the LTC lifetime deductible downward on a similar basis as described above to account for low income people, but not to less than some reasonable level (e.g., 200% of FPL).  The only way to get a lower lifetime deductible would be to apply through the proposed hardship process.  For anyone applying through the hardship process (the “back door” of the framework) there would be no exclusions from countable income or assets.

The “premium” for the new catastrophic LTC benefit could be paid jointly by the state and federal governments.  The federal government could cover the lion’s share of services it considers “mandatory”.  Each state could choose from a menu of “optional” services for which it would be responsible for most or all the calculated premium.  This could likely be done in a budget neutral manner over the first decade of implementation with savings occurring in future periods as larger and larger portions of LTC costs are borne by the private sector.

Using Life Insurance Death Benefits to Pay for LTC

The new framework encourages consumer friendly funding mechanisms that already have broad acceptance as means to meet the lifetime deductible amounts.  I envision insurance companies offering consumers the opportunity to convert a portion of existing term life policies to some form of permanent coverage for the expressed purpose of meeting the LTC lifetime deductible and consumers using this life insurance death benefits for this purpose with the federal LTC catastrophic benefit serving as the safety net it was intended to be all along.  The current practice of Medicaid paying for services and then trying in vain to recover crumbs through a tortured estate recovery process would end.

According to the ACLI 2015 Fact Book there were 142.7 million life insurance policies in force in the United States for individuals with a total death benefit of $11.8 trillion.  Envision a consumer whose lifetime deductible is the hypothetical $100,000 and who owns a life insurance policy with a $150,000 death benefit when he/she first needs qualifying LTC services.  The consumer could either (i) sell the policy in a viatical-like transaction that creates a tax advantaged LTC trust account that is managed by an independent fiduciary to be used only to pay health care providers for covered services or (ii) enter in to a legally binding primary collateral beneficiary agreement naming the new federal benefit program as primary beneficiary of the policy up to the amount of the LTC lifetime deductible. 

To put it in perspective, a Federal Reserve report issued on June 11, 2015 indicated that home equity in the first quarter of 2015 had risen to $11.7 trillion – the highest it had been since 2007.  This means that life insurance for individuals is on par with home equity as a potential funding source for LTC and it is so without possibly stripping heirs of a home.

Several states have already considered legislation that “marries together” current Medicaid eligibility provisions with life insurance death benefits.  Despite this legislative activity in a few states many life insurance policies currently lapse at the point of Medicaid application due to the practice of case managers advising people to withdraw cash value from the policy resulting in these policies delivering no value to anyone. 

I like to think of it this way.  During and after World War II the leaders of our nation asked its citizens to pay for the war by purchasing war bonds.  They did and in one generation the war was paid off.  What if life insurance was thought of as the vehicle capable of paying for the Baby Boomers’ aging war?  What if death benefits became the path to quality of life by providing economic security and mitigating the stress that occurs when facing need for LTC services?   I think we could win this war.

Doug Burr is Senior Vice President of Finance Reimbursement & Government Relations at Health Care Navigator, LLC.  Reach him at dburr@hcnavigator.net.

 

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Updated, Monday, April 11, 2016, 10:21 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-014:  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 Poll Finds Public Not Ready For Long Term Care

  • U.S. Fiscal Imbalance

  • Long-term care premiums for federal employees set to rise

  • LTC regulator panel may consider viaticals, hybrids

  • Will obesity reverse the life-span gains made over decades of health triumphs?

  • CMS proposes pay raise for Medicare Advantage plan

  • Sicker Patients Seem at a Disadvantage With Medicare Advantage

  • As the poor die earlier, Social Security isn't paying off

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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 8, 2016, 10:12 AM (Pacific)
 
Seattle—

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LTC BULLET:  FUEL FOR LTC CHANGE

LTC Comment:  Why doesn’t somebody do something about long-term care services and financing?  Well, somebody did.  Details after the ***news.***

*** LTC CLIPPINGS:  Following is an example of an LTC Clipping we sent to our LTC Clippings subscribers this week.  We try with the clippings to keep our readership abreast in real time of important news, reports and statistics that they need to know in order to stay at the forefront of professional knowledge.  To join the Center or subscribe to our LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

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? ***

*** BETTER BURGERS THAN BEDPANS:  Thanks to longtime Center friend and supporter Ric Schafer for tipping us to this story “Nurses Quit Texas Nursing Homes to Work at McDonald's.”  The article says “Roughly 85 percent of Texans living in nursing homes depend on Medicaid or Medicare, and [Director of Government Relations for the Texas Health Care Association] Kibbe said each Medicaid patient is underfunded by 14 percent.”  According to a LTC patient “You can make more money flipping hamburgers than you can helping another person,” Lopez said, and she understands why the turnover rate is so high.  The pay is especially low for Certified Nurse Assistants and attendants who offer at-home care. According to Lopez, her attendant makes $8 an hour [and] she only requires one to two hours of assistance a day.”  Expect more stories like this one, especially if the economy takes a turn for the worse bringing even greater pressure on state budgets and Medicaid LTC reimbursements. ***

LTC BULLET:  FUEL FOR LTC CHANGE

LTC Comment:  The delivery and financing of long-term care has received some much-needed attention lately.  We had our say over the past few weeks regarding the recent reports and recommendations coming from a provider trade association, a policy center, and an ad hoc “collaborative”—LTC Bullet:  LTCI Defeatism; LTC Bullet:  No Single Solution?; LTC Bullet:  Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations; and LTC Bullet:  The Arrogance of LTC Analysts’ Elitism.  Let’s look this week at some ideas coming from the people who see long-term care from the insurance side.

What follows are excerpts from “Long Term Care Think Tank:  Exploring the Possibilities for Helping the American Public Manage the Financial Burden of Long Term Care,” a report and recommendations by Maddock Douglas, Inc. for the Society of Actuaries, February 22, 2016.  Find the complete report here for free:  https://www.soa.org/Files/Sections/2016-03-long-term-care-think-tank.pdf.  For $149 you can buy a very good webinar titled Fuel for Change: Three Angles on LTC Innovation which describes the process that generated the report and its results.

Special thanks to Think Tank Chair Vince Bodnar of LTCG, Inc. and Maria Ferrante-Schepis of Maddock Douglas for bringing this material to our attention and for taking the time to explain and discuss the process and results with us. 

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Excerpts from the Society of Actuaries’ Long-Term Care Think Tank Report

“On October 19 and 20, 2015, the [Society of Actuaries] Long Term Care Think Tank met in Rosemont, Illinois, for a collaborative workshop. During this two-day facilitated session, participants from across the LTC industry reviewed previous Think Tank work and other industry research and participated in facilitated brainstorming exercises to:

  • Hypothesize and describe how consumers’ needs may be changing
  • Brainstorm how the LTC industry could evolve their offerings to meet these need in innovative new ways

“‘Fair Game’ for the workshop included ideas that would potentially impact the following areas:

  • Helping people pay for their care differently
  • Making care more accessible to everyone
  • Helping reduce the costs of care
  • Mitigating the need for care in the first place”  (p. 4)

The structured exercise, developed and led by staff of the innovation consulting firm Maddock Douglas, broke the long-term care challenge into three “Platforms of Influence” for each of which the participants generated ideas, two of which were highlighted in the report.

Read the report for its methodology and process.  We’ll focus here on the end result, the two creative ideas in each of the primary areas of focus.  Consult the full report for all the details.

Platform of Influence #1

“Data-Driven Decision Support:  This category addresses how data is used to drive more evidence-based decision-making.  Ideas in this category aim to educate caregivers and care recipients, keep them informed of best practices, guide them in making decisions, improve the coordination of care, and obtain longitudinal data required to improve pricing and recommendations.” (p. 11)

Ideas:

Healthy Longevity App:  “App to encourage LTC insurance policyholders to lead healthier, more engaged and fulfilled lives. Focus on emotional, psychological and social engagement factors. App could act as coach/companion.” (p. 19)

The Care Portal:  “This is a curated portal accessible via the Web that aggregates vetted products and services (such as care.com, caring.com) and points people in need of care to relevant products and services.” (p. 24)

Platform of Influence #2

“Service Evolution and Expansion:  This category addresses consumer needs that relate to where, how or when claims dollars can be spent and how this impacts access to care. Ideas in this category aim to increase the number of caregivers in the system, more efficiently distribute available care to match care recipient needs, more efficiently deploy care-related resources, improve access to quality care, and delay the need for care in the first place.” (p. 12)

Ideas:

Uberfication:  “Technology can lower service prices. The Think Tank will encourage and promote these trends.” (p. 30)

Health Care Look-a-Like:  “Design a LTC insurance policy that ‘looks like’ a health insurance policy.”  (p. 34)

Platform of Influence #3

Paying for Care (“Pay-fors”):  “This category addresses how long term care costs are funded. Ideas in this category aim to help the industry and consumers to find additional ways of financing long term care, more effectively pool their resources, and make receiving financial reimbursement more familiar.  Use the ideas in this category to recognize potential partnerships and/or support changes to legislation that give consumers access to new financing options and make paying for LTC easier/more affordable.” (p. 13)

Ideas

Flex 401(k):  “Individuals/families should have more options to use DC [defined contribution] plan/IRA funds to pay for LTSS (Long Term Services and Supports) directly and/or LTC insurance.” (p. 40)

The Family Long-Term Care Account:  “The Family Long Term Care Account is a product designed to help an individual or a family save responsibly for long term care needs of multiple family members with a benefit that lasts beyond their savings, thanks to an insurance element added to it.”  (p. 45)

Starting on page 55, the report covers “recommended next steps” for the Think Tank to pursue.

The report contains an Appendix starting on page 70 that enumerates all 85 of the ideas generated by the Think Tank.

LTC Comment:  We commend the SOA LTC Think Tank for a valuable contribution to the national discussion concerning what to do about long-term care services and financing.  While the report does not tackle the bigger, politically sensitive challenges which also eluded the Congressionally mandated LTC Commission, it does offer some good, systematically thought through ideas.

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Updated, Monday, April 4, 2016, 10:30 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-013:  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: at forefront of public policy, lags in personal planning

  • New push to keep seniors in home, community-based programs

  • Cognitive Decline: The Boomer Issue that Families Aren’t Discussing

  • At New Jersey museum, getting older is a virtual reality

  • As Alzheimer’s Costs Rise, Researches Double-Down on a Cure

  • An Overview of Medicare

  • Relatively low percentage of U.S. residents in long-term care: report

  • Hot Housing Markets Pinch Seniors

  • A British LTC rescue strategy: Good for you?

  • Medicare Advantage Makes It Easier For People To Achieve Their Best Health

  • Big Financial Costs Are Part Of Alzheimer's Toll On Families

  • Are You Your Parents' Retirement Plan?

  • World's Senior Population Forecast to Boom by 2050 

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

"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 1, 2016, 10:12 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTCI DEFEATISM

LTC Comment:  LTC insurance leaders should not surrender to government-financed long-term care based on ideologically biased policy analysis grounded in misleading data and fallacious arguments.  We say “Revolt!” after the ***news.***

*** MEDICAID FOR THE RICH REVOKED:  In a surprise reversal of their decades-long policy of easy access to Medicaid LTC benefits, federal authorities dropped the welfare program’s home equity exemption from over a half million dollars to under $50,000 and slammed the door shut on Medicaid-compliant annuities which enabled applicants to divest hundreds of thousands of dollars immediately before qualifying for benefits.  A top-ranking official sheepishly acknowledged:  “We’ve diverted desperately needed scarce public resources from the truly needy to relatively affluent people for decades.  That ends today.  No longer will Medicaid discourage responsible long-term care planning or crowd out better LTC financing alternatives like private insurance.”  Yeah, right.  Dream on.  April Fools! ***

*** WHO YA GONNA CALL?  What if you’re speaking with a couple about LTC insurance protection and one of them qualifies, but the other doesn’t?  This week, two of the Center’s “Regional Representatives” brought to our attention alternate approaches to that problem.  Barbara Franklin of Charleston, South Carolina sent a flyer from The Krause Agency that proposed:  “Instead of both clients ending up with no long-term care plan, you can offer them both an option. The healthy spouse would purchase the long-term care policy they were approved for, and the ineligible spouse would plan to use Medicaid, the governmental program that pays for the majority of long-term nursing home costs in the United States.”  The flyer offered a “Medicaid Compliant Annuity” as the solution.  Barbara editorialized “Ugh!” and I agreed.  A couple days later, I heard from Romeo Raabe of Green Bay, Wisconsin that whenever he encounters a split decision on LTCI, one spouse accepted and the other declined, he proposes an “Immediate Care” policy, an impaired risk, medically underwritten annuity that pays for quality care privately and keeps the otherwise uninsurable individual off Medicaid.  I could hardly imagine a starker comparison between an improper and an appropriate use of an annuity for funding long-term care.  For more, see LTC Bullet:  LTC Annuities:  To Get or Avoid Medicaid?, Friday, June 19, 2015 and LTC Bullet:  Medically Underwritten Annuities for LTC, Friday, May 15, 2015. ***

*** HAPPY ANNIVERSARY:  The Center for Long-Term Care Reform is 18 years old today.  Steve Moses and attorney David Rosenfeld founded the Center with help from then-LTCI insurer General Electric on April 1, 1998.  The Center’s mission “to ensure quality long-term care for all Americans” remains unchanged to this day.  We thank our many providers of financial and moral support for your long and strong dedication to our common goals.  Heed the message of today’s LTC Bullet and fight on! ***

LTC BULLET:  LTCI DEFEATISM

LTC Comment:  I came away disheartened from the recent LTC insurance conference in San Antonio.  Not that it wasn’t a fine, well-conceived and flawlessly executed industry meeting.  It was.  See our virtual visit to it here.

What deflated my spirits was a strain of discouragement and defeatism that pervaded some of the sessions.  According to Wikipedia, “Defeatism is the acceptance of defeat without struggle.”  Here’s why I got that impression.

Alternative Solutions

Most of the break-out sessions I attended at the conference were in the “Alternative Solutions” track.  One of those sessions focused on new research about private long-term care insurance and was excellent.  But other sessions covered three recent studies that reached many wrong conclusions.  Those studies were funded by the SCAN Foundation and reported by the Bipartisan Policy Center, Leading Age, and the LTC Collaborative.  I call these well-financed organizations with big bull horns the “Four Horsemen of the LTCI Apocalypse” for reasons that will become obvious as you read on.

The thrust of the Alternative Solutions sessions was that although “insurance” has an important role to play in long-term care financing, the potential scope for private insurance is extremely limited by unaffordability, inadequate demand, and commercial unviability, so that social insurance in the form of mandatory, catastrophic coverage of LTC risk is unavoidable by default. 

Should LTC Insurance Admit Defeat?

That’s not depressing in itself, because it is refutable as I show below.  What’s bothersome is that some of the leading lights of the long-term care insurance industry seem to be buying into such a narrative.

They praise the research, reports and recommendations coming from the Four Horsemen.  They acknowledge that private LTCI’s role is severely limited.  They accept that the only solution may be to ally private LTC insurance on the front end with a mandatory government program on the back end.  They sound whipped.

I say bunk!  Don’t give in.  Never give up.  Think.  Fight back.  Here’s some ammunition.

The Best Offense is a Good Defense and Vice Versa

Ceding the moral and financial high ground to government-financed long-term care is a huge mistake.  Whatever shortcomings private LTC insurance may have, they pale in comparison to the proven failures of social insurance programs as demonstrated by their trillions of dollars of unfunded liabilities and their disastrous prognosis for the future.  As we explain in “Cassandra’s Quandary,” LTC expenditures will spike in 2031 as boomers start turning 85 in the same decade that Social Security and Medicare run out of IOUs in their phony “trust funds.”  It would be supremely unwise to double down on government’s mistakes of the past in a futile attempt to fund LTC in the future.

Relinquishing the back end of LTC financing to the government is a fatal concession.  It betrays the true principle of private insurance, which is to replace the small risk of a catastrophic loss with the certainty of an affordable premium.  Taking on the front-end risk of LTC would demote private LTCI to the status of Medi-Gap, which is mostly pre-payment for care and not genuine insurance at all.

We must make the most of private LTCI and not heed the siren’s call of an easy government solution.  Social insurance cannot work in the long run.  While it spreads risk, it does not price risk.  It forces everyone to participate and then gives each the same benefits regardless of character or conduct thus creating moral hazard, rewarding irresponsible behavior, and punishing conscientious people.  “Social insurance” is an oxymoron, a contradiction in terms.  See “The Inherent Individualism of Insurance.”

Besides, the Four Horsemen’s arguments about long-term care are fallacious. 

The Fallacy of Impoverishment

They say Medicaid requires impoverishment, but that’s untrue.  Anyone with income below the cost of a nursing home can qualify for Medicaid LTC based on income.  Countable assets retained must be minimal, but exempt assets are virtually unlimited, including at least $552,000 of home equity and, with no limit at all, one business including the capital and cash flow, term life insurance, prepaid burial expenses, Individual Retirement Accounts, one auto, and personal belongings.  Add hundreds of thousands of dollars more in sheltered or divested assets with the help of a Medicaid planner using special trusts, transfers or annuities.  Don’t believe “The Fallacy of Impoverishment,” which I refuted in this Gerontologist article 26 years ago.

The 53 Percent Hoax

The Four Horsemen say that 53 percent of all long-term care costs are paid for out of pocket, implying people all across America are spending down their life’s savings for long-term care before turning to Medicaid.  Where do they get such a number?  It’s double the true figure of out-of-pocket spending (OOPS)?  They get it by including assisted living which is nearly all private-pay (81 percent) and by excluding Medicare as though it does not pay for long-term care.  Why is including assisted living and excluding Medicare deceptive?

Including payments for assisted living facilities (ALFs) in long-term care expenditures is misleading, because ALFs provide room and board primarily and care secondarily.  As one tax expert explains:  “Nursing homes are primarily used for medical care, and medical care is always deductible. Assisted living is not necessarily there for medical reasons. It’s often a safety or companionship issue, so an assisted living facility is not usually deductible.”  Money spent for assisted living is largely money that would have been spent for food and lodging anyway in the absence of a care component.  That may be why assisted living costs $120 per day on average whereas nursing homes cost $220 per day (for a semi-private room.)

Excluding Medicare from long-term care expenditures seriously distorts LTC financing.  It is true Medicare pays mostly for short-term post-acute and rehabilitative care provided in nursing homes and by home health agencies.  But it pays generously compared to Medicaid.  Without Medicare, most long-term care providers could not survive on the revenue they receive from Medicaid, at less than the cost of the care, or from a dwindling supply of private payers.  Take generous Medicare reimbursements out of the long-term care financing equation, as the Medicare Payment Advisory Commission often recommends to Congress, and the whole government-financed house of cards collapses.

Out-of-pocket spending for long-term care is much lower than the Four Horsemen acknowledge.  CMS reports OOPS for 2014 as 26.5 for nursing homes and only 8.9 percent for home health care costs.  See “LTC Bullet:  So What If the Government Pays for Most LTC?, 2014 Data Update,” Friday, December 11, 2015.  What’s more, half of what CMS reports as OOPS is actually spend-through of income, mostly from Social Security, by people already on Medicaid.  So what?  It’s still people spending their own money for their care, isn’t it?  Yes, but two critical points apply.  First, Social Security may have to cut back substantially on benefit payments someday, which would throw Medicaid programs and LTC providers that depend on Medicaid into financial chaos.  Second, heirs don’t count on getting their parents’ income, which ends when they die.  So expenditure of income for long-term care does not disincentivize taking advantage of Medicaid.  But Medicaid does provide free inheritance insurance for heirs by protecting substantial assets, making qualification for Medicaid very desirable.  That’s why Medicaid crowds out all forms of private LTC financing.

The Red Herring of Affordability

Its critics say LTC insurance is unaffordable.  But affordability is relative.  Early policies were underpriced and their purchasers got a great deal.  LTCI is still a good deal--even after premium increases forced on the industry by irresponsible government monetary policy made interest rates too artificially low to grow reserves adequately.  So, blame the culprit (government) and not the victim (LTCI).

Furthermore, LTCI affordability should be measured against the real risk of catastrophic LTC expenditures.  But government also took real LTC risk off the table by making Medicaid the de facto catastrophic coverage plan for most Americans, including the rich according to analysts at the Chicago Fed.  It’s no wonder people remain in denial about LTC and think long-term care insurance is unaffordable.  Since 1965, most have successfully ignored the risk, waited to see if they ever need expensive extended care and, if and when they do, transfer most of the cost to the government thus indemnifying and desensitizing the next generation to LTC risk.

We Already Have a Back End Government Program for Long-Term Care So Give It a Chance to Work

It’s called Medicaid.  It was conceived as a safety net to care for people who were unable to care for themselves:  the truly needy.  It was supposed to protect only those with too little income and assets to manage on their own.  But Medicaid transformed in time into the dominant payer for most Americans in need of expensive long-term care.  We need to give Medicaid back to the poor, eliminate the eligibility loopholes abused by the affluent, tighten eligibility in general, enforce estate recoveries, educate the public about Medicaid’s deficiencies and the benefits of private financing, support the LTC Partnership program, end the crowd-out of private financing alternatives, and unleash the power of free-market forces to save Medicaid and private long-term care insurance.

March On

So, buck up, LTCI team.  You not only have more to offer toward the solution of LTC financing than government; you’ll be the primary LTC financing source one day, when the bottom finally falls out of those doomed unfunded entitlement programs.  Shake off your doldrums.  Take your critics on, boldly.  When the Four Horsemen point to the mote in LTCI's eye; hit them with the log in their own.

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Updated, Monday, March 28, 2016, 10:40 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-012:  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 You Can Have More Time, Money, And Freedom This Year As 60+ Of The Industries Best Agents And Thought Leaders Show You Their Secrets For Success

  • Investing for Your Future Health Care

  • 2015 Welfare Reform Report Card

  • Aging population offers golden opportunities

  • Survey reveals senior living's current, potential appeal

  • Watch Out, Boomers, Here Comes 70

  • New York Life Introduces NYL Secure Care, a New Long-Term Care Insurance Product with Industry Leading Dividend Opportunity:  Reimbursement Now Available to Family Members Who Live with the Client

  • AirLTC: Can you play that game?

  • Most U.S. adults lead unhealthy lifestyle, study says

  • Navigating Medicaid for elder care can be as painful as the ailments

  • New Math on Reverse Mortgages

  • Europe Bets on Robots to Help Care for Seniors

  • The high cost of seniors' soaring Rx drug use

  • Where Is The Long-Term Care Insurance Industry Headed?

  • The annual Medicare Advantage dance avoids the bigger issues of entitlements

  • Women outlive men but suffer long years of disability

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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, March 25, 2016, 10:15 AM (Pacific)
 
Seattle—

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LTC BULLET:  HOW MUCH DOES LONG-TERM CARE COST?

LTC Comment:  How do we know how much people pay for home care, assisted living and nursing home care?  Where do those dollar figures come from?  Background on a key source follows, after the ***news.***

*** MEMBERSHIP BENEFITS:  Are you or your company a dues-paying member of the Center for LTC Reform?  Or do you only receive our weekly LTC Bullets or LTC E-Alerts when a member forwards them to you or we send to our widest distribution?  Basic members ($150 per year or $12.50 per month) receive the Bullets, the E-Alerts, access to Damon and Steve for answers to queries, and the satisfaction of knowing they’re at the forefront of LTC knowledge and advocacy.  Premium members ($250 per year or $21 per month) also receive our LTC Clippings service, daily real-time notices of key articles and reports you need to know first before your competition and clients act on them.  Ask about our Premium Elite memberships and Regional Representative status.  Read all about our “Membership Levels and Benefits” here.  Corporate members make the benefits of membership available to staff or agents at no extra cost, a genuine perk for them and the company.  Join us and help promote our mission:  “Universal access to top-quality long-term care for all Americans.”  Contact Damon at 206-283-7036 or damon@centerltc.com.  ***

 

LTC BULLET:  HOW MUCH DOES LONG-TERM CARE COST?

LTC Comment:  LTCG, formerly the Long-Term Care Group, Inc., has a mission “to provide industry leading long term care services and solutions while helping people through some of the most challenging times of their lives.”

When we saw a press release announcing availability of LTCG’s latest annual cost of care survey, we asked for a copy.  Wouldn’t it be great to preview the results for you, our readers?  Not surprisingly, however, this is highly valuable proprietary information that requires enormous effort to compile and analyze.  In other words, it’s for sale.

So, instead, we asked for a brief summary of how the data is collected and some highlights about this year’s findings.  We reckon you’ll see these numbers and much more from the study reported in many places over the coming year.  But remember, you saw it here first.

Bottom line, long-term care is expensive and getting more so all the time.  The figures you’ll find below are considerably higher than we’ve seen before.

 


“LTCG’s Cost of Care Study”

by Adam Hoffman, Vice President Business Development for LTCG

Using actionable data about LTC costs helps insurers, consumers and advisors navigate the complexity of the marketplace

LTCG’s newest Cost of Care Study showcases the variation in LTC pricing across a wide array of services and geographies

The long term care (LTC) industry environment continues to rapidly change. The demographics of today’s applicants are shifting—as are their demands—and new products are coming into the marketplace to address these issues. In these evolving times, it’s critical that insurance companies, agents and policyholders make coverage-related decisions based on real, actionable data and not assumptions. One of the biggest factors that can influence the amount of coverage a consumer needs—whether they are looking at purchasing a new LTC policy or considering adapting their traditional LTC coverage to address rate changes—is the wide variation in long term care costs.

To meet these demands, LTCG recently released its 11th annual Cost of Care Study, which provides a thorough, retrospective compilation of the cost of care for LTC services and facilities nationwide. The study examines the range and average costs of receiving care in an assisted living facility, in a nursing home, at home or at adult day cares.

As a leader in business process outsourcing for LTC insurance, LTCG surveys its extensive nationwide network of 47,000+ providers covering 190 Metropolitan Service Areas to distill detailed and valuable cost of care insights into a centralized, comprehensive report. LTCG surveys the same providers year over year to capture true longitudinal trends in cost of care pricing. However, new providers are also added each year, leading to larger and more reliable datasets.

The Cost of Care Study can be used to support agents and applicants in determining the appropriate amount of coverage, to educate existing policyholders about coverage changes and as a tool for home office new business, claims and customer support teams to better inform the individuals they serve.

Examples of high-level key findings include:

  • For care in a nursing home, the nationwide average was $273/day. At $460/day, Connecticut was the most expensive state while Missouri was least expensive at $186/day.
  • For care in assisted living facilities, the average annual rates ranged from $46,500 for a studio to $56,000 for a 2-bedroom unit. Washington, D.C. was most expensive at $100,680/year and North Dakota was least expensive at $37,908/year.
  • For care in the home, the average hourly rate ranged based on different provider skill levels from $25.75/hour for health aides to $65.74/hour for licensed practical nurses to $83.40/hour for registered nurses.

Simply put, there are a lot of factors to evaluate in comparing and contrasting LTC costs, which are not always easy to understand. LTCG’s process is supported by a comprehensive provider database where full-time staff working year-round collect and analyze this information in this annual study, so you can use it to empower your agents, policyholders and home office staff with actionable data based on actual industry costs.

Purchased versions of the Cost of Care Study can be private labeled or co-branded, and each report comes with the data tables so you can leverage the data for your business needs. Also available is an optional interactive online map for easy at-a-glance comparisons.

To learn more or to purchase the report, please email adam.hoffman@LTCG.com. Or for a web-based demonstration, visit http://www.ltcg.com/our-services/cost-of-care/.

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Updated, Monday, March 21, 2016, 10:53 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-011:  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:

  • Seniors Rush To Medicare's Star-Rated Plans Under ACA

  • Life Insurers Pass Pain of Low Rates on to Consumers: Long-term-care policies are among hardest hit

  • Women outlive men but suffer long years of disability

  • Insurance for Critical Illness Adds Security, but at a Cost

  • NAHU To Propose National LTCi Program

  • Long-Term Care Insurance: Less Bang, More Buck

  • The red-hot debate about transmissible Alzheimer's

  • Long Term Care Insurance Tax Benefits 2016

  • Long Term Care Insurance Industry Payout Potential Equals $800 Billion Reports AALTCI

  • How to Fix the Scandal of Medicaid and the Poor

  • NIC report: Occupancy down, managed Medicare use up in skilled nursing facilities

  • LTCi and D-I-V-O-R-C-E: A Conversation Worth Having

  • Genworth Agrees to Pay $219 Million to Settle Securities Suit

  • 3 Ways To Mitigate The Cost Of Long Term Care

  • Ontario's long-term care problem: Seniors staying at home longer isn't a cure for waiting lists

  • Share Of Medicare, Managed Care Plans In SNF Revenue Falls, Report Finds

  • An LTC planner's guide to the presidential candidates

  • John Hancock Hires Long-Term Care Industry Veteran Scott Williams As Vice President, LTC Insurance Sales and Distribution

  • Medicaid and senior living: A troubled marriage

  • Living With the Parents I’m Losing to Alzheimer’s

  • Why Long-term Care Insurance Is Becoming a Tougher Call

  • Screening for Alzheimer’s Gene Tests the Desire to Know

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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, March 18, 2016, 9:30 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE 16TH ANNUAL INTER-COMPANY LONG-TERM CARE INSURANCE CONFERENCE:  A VIRTUAL VISIT

LTC Comment:  In case you couldn’t be there, today’s LTC Bullet provides a little glimpse and some of the flavor of an exceptional industry meeting convened earlier this week, 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. ***

*** WE NEED YOU.  Every time I attend a major industry conference like the one described in today’s LTC Bullet, I’m gratified by the many expressions of appreciation I receive for our work at the Center for Long-Term Care Reform.  Thank you!  But let me make this appeal, if you are receiving our content forwarded by others, please consider joining the Center on your own.  The only thing that makes our contribution to improving long-term care financing policy possible, is the support we receive from our very special individual and corporate members.  So, please, if you get value from our publications and you appreciate our advocacy on behalf of responsible LTC public policy, lend us your support by joining and contributing to the Center and our common mission.  Contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET:  THE 16TH ANNUAL INTER-COMPANY LONG-TERM CARE INSURANCE CONFERENCE:  A VIRTUAL VISIT

LTC Comment:  The biggest and best LTC insurance industry conference wrapped up at the Hyatt Riverwalk in San Antonio, Texas on Wednesday.  Attendance approached 1000, slightly down from last year, but the quantity and quality of sessions as well as the opportunities for networking were as plentiful and rewarding as ever. 

It would have been virtually impossible to top last year’s event at The Broadmoor in Colorado Springs, and there were a few overcrowded sessions this year, but conference founder Jim Glickman told me that’s because a larger proportion of attendees actually went to the educational session than last year.  He also opined that this year’s meeting was more upbeat, thanks to a new entrant to the business (National Guardian), optimism about combo products, and a general sense that LTCI has passed its nadir and is on the way back up.

LifeHealthPRO reporter Alison Bell took away a less sanguine impression of the meeting’s mood as she reported from the conference on March 15 in “ILTCI attendees hope traditional LTCI gets better soon”:  “[T]he conversation is more somber than it was a year ago … with news of MedAmerica's departure from the long-term care insurance (LTCI) market still fresh.”  My impression:  It’s a “glass half full or half empty” quandary which pretty well describes the LTCI industry’s current condition.

What follows are some quick impressions of the sessions I attended.  They are not a representative sample as I visited almost exclusively the program’s “Alternative Solutions” track.  (Special thanks to Eileen Tell, John O’Leary, Brian Vestergaard, and Don Redfoot for the hard work they expended to put together the seven sessions comprising the Alternative Solutions Track.)  The other tracks were Actuarial; Claims & Underwriting; Combination Products; Finance, Management & Operations; Legal, Compliance & Regulatory; Marketing, Sales & Distribution; and Technology. 

To find a list and description of all the sessions in all the tracks including links to the slide decks for many of the presentations, click here https://event.crowdcompass.com/iltci2016 and check out the conference’s web-based version of the smartphone app that guided participants to all the sessions.  You’ll be quickly impressed by the range and richness of the content.

Texas Insurance Commissioner David Mattax offered a welcome to San Antonio and delivered some remarks about regulation of the LTCI product in Texas.

This year’s keynote speaker, sponsored by Agent Review, was Ken Schmidt, brand visionary and former communications strategist for the Harley-Davidson Motor Company.  The eponymous motorcycle company famously reinvented itself, rising from sinking failure to market ascendancy under Schmidt’s guidance.  He urged the audience to ask and answer three questions:  What are people saying about you?  What do you want them to say?  And how do you get them to say it?  Drawing parallels between the motorcycle industry and long-term care insurance, spiced with humorous anecdotes, the speaker pointed to ways a company in the latter business might achieve extraordinary results like those he and Harley Davidson achieved.  I don’t think anyone who heard the talk will be able to see and hear a HOG (Harley Owners Group) member revving his bike’s engine at an intersection without laughing and contemplating “How can we get people to brag about owning a long-term care insurance policy the way Harley owners take pride and satisfaction in their purchase?”

The first break-out session I attended was What's on the Minds of Combo Product Thought Leaders?   Producer Linda Chow of Ernst & Young brought together panelists Barry Fisher – Broadtower; Dennis Martin – OneAmerica; Parag Shah - Pacific Life Insurance Company; Steve Schoonveld - Lincoln Financial Group and Anthony Vossenberg – Genworth.  Consensus quickly emerged that the combo market remains largely untapped, that many more players are needed and wanted in the market, and that while combo products do not replace traditional LTC insurance, they do fill a critical space that fulfills and expands the mission of LTC insurance protection.  All in all, a very positive panel enthusiastic about the future prospects for their niche of the market.  Refreshing.

Next came the two-part “Alternative Finance Proposals” sessions.  Together the two sessions provided a review and summary of work recently reported by the SCAN Foundation, Leading Age, the LTC Collaborative, and the Bipartisan Policy Center. Click here for details on Part 1.  Part 1 focused on the “Economic and Actuarial Modeling Results” that formed the basis for analysis and recommendations reported by these groups and the policy implications explained in Part 2 of the program.  Independent consultant Anne Tumlinson described the “Top Ten Lessons from LTC Financing Research.”  Milliman actuary and mathematician Al Schmitz greeted the audience with “Happy Pi-Day” (3.14.16) and proceeded to explain how Milliman brought actual industry data to bear in the review and analysis of policy options and proposals.

Part 2 covered “the policy implications of the results and potential next steps from the study funders and from the perspectives of other interested parties.” The presenters said, in a nutshell, that private long-term care insurance on its own is too expensive to make much of a difference so it should be targeted toward a two-year front end role while a mandatory, government program paid for by an extra payroll tax should pick up the back-end, catastrophic risk.  I wanted to ask this question, but could not get recognized:  “You’ve put a lot of effort into showing why private, voluntary LTCI won’t work, which leaves you with a mandatory public program by default.  What effort have you put into considering that the mandatory public programs we already have--Social Security, Medicare and Medicaid--face trillions in unfunded liabilities and become insolvent in the 2030s just as the first baby boomers turn 85 and start needing LTC in skyrocketing numbers?”  I always wonder why private market options are scrutinized thoroughly but public funding alternatives get a casual pass—at least until they become law like CLASS and then blow up in the face of hard reality.

The next session I attended was New Research on LTCI.  Susan Coronel and Marc Cohen shared insights coming out of two important new studies, one of which looked at 25 years of buyer and nonbuyer research and general population surveys on LTCI.  The other updated critical work on claimant satisfaction, needs, experiences and the role of insurance.  Here are a few highlights, but watch for the full results in forthcoming reports.  Average age of LTCI purchase is down from 68 in 1995 to 64 in 2015 but up from 63 in 2010.  Only 26% think it’s the federal government’s responsibility to finance LTC for everyone.  Nursing-home-only policies have disappeared, but they were 60% of all LTCI policies in 1990.  Consumers who bought early underpriced polices were getting a very good deal.  LTCI claims are predominantly for home care (36%) and assisted living (30%).  Claims paid to date are a little less than $100,000 on average, a fairly high level of benefit with the vast majority of benefits way above premiums paid.  Very high, 96%, satisfaction with LTCI policies reported.  Summary:  Insurers are performing well for claimants regarding the claim filing process.  Insurance is achieving multiple goals :  affordability of services, ability to access high quality care, reducing burden on families, receiving care timely and not delaying, supporting choice regarding services. 

What Role Should Informal Caregivers Play in Alternative Solutions
Click here for details and access to presentation slides.  Unpaid (don’t call them “informal”) caregivers are the unsung heroes of long-term care.  The statistics are alarming:  60% of caregivers are women averaging 49 years old (1 in ten is 75 years plus).  They provide 24.4 hours per week of care; a quarter give 41 or more hours of care.  Duration averages 4 years, but a quarter provide care for more than 5 years.  Worst of all, we’re  living in the halcyon days now because typical caregivers are boomers.  The supply of caregivers will decline radically just as the number of people needing care explodes in the 2030s.  The value of unpaid care is $470 billion, which exceeds the entire cost of the Medicaid program.

Thought Leaders Forum (Details)  LTCI industry veterans (Jodi Anatole - Independent Consultant; Malcolm Cheung - Cheung Consulting, LLC; Laura Moore - TriPlus Services, Inc.; and Karen Smyth – Prudential) opined about “the successes, failures, hits and misses of our industry.  If we knew then what we know now, what would they have done differently?  What are the key lessons of the past and how do they or should they inform the future?”  The reflections of these experts were too many and varied to summarize, but I’ll share one that especially struck me.  When asked “what role should the public sector play?,” Laura Moore said we’re no closer to “cracking the nut of LTC risk;” there won’t be enough caregivers; there is no way Medicaid can cover the LTC need; and we’re going to see a “financial tsunami to make the current challenges we face look like a mere blip.”  So there has to be a public/private solution, but her biggest fear is that we’ll wait until the crisis happens to deal with it.  Hear, hear!

The conference’s closing general session was It's Not Me, It's You; A Consumer View on LTCI (Details).  Behavioral economist Jeremy Pincus and consumer insight expert Luisa Uriarte delivered new information about how our current approach and sales and marketing techniques are actually standing in the way a broader appeal for long-term care insurance.  These fascinating presentations challenged everything we thought we knew about LTCI marketing, such as--explain the problem, price the risk, scare the pants off ‘em and they’ll buy.  Well, no, turns out that just drives people away.  What’s needed is an approach that generates good feelings and makes people positive about preparing for what’s coming.  Interestingly, this session was a perfect bookend for the conference, by providing evidence from behavioral research for some of the same insights about human behavior shared by the opening general session speaker about the turnaround he led at Harley Davidson.

The last full day of the conference ended with a closing exhibit hall session capped by a prize drawing and leading into a “casino night” featuring Texas hold ‘em and Blackjack tables.

That was not the end, however.  Wednesday morning’s offering was Alzheimer’s Association Session:  Advancements in Research, Current Breakthroughs and a Personal Story Details.  James A. Hendrix, Ph.D., Director, Global Science Initiatives, at the Alzheimer’s Association, opened the program by acknowledging that, yes, he is Jimmy Hendrix, followed by delivering a summary of the current status and recent findings of Alzheimer’s research.  The numbers are staggering:  Alzheimer’s cost is $226 billion growing to $1.1 trillion by 2050; 50.1% of boomers will have the disease by 2050; it will consume a quarter of Medicare funding by then.  In the meantime, NIH spends $586 million on research, less than for other major illnesses.  Research has made progress against other diseases and other diseases are declining as causes of death, but Alzheimer’s continues to increase.

Numbers are scary, but nothing moves an audience like a personal story.  Barb Cole shared the saga of early onset Alzheimer’s Disease experienced by “someone she knows very well.”  She talked about the confusion, the exclusion, the frustration, the expense, on and on as you can imagine from hearing so many similar stories.  What brought the audience to its feet in a standing ovation was when Ms. Cole acknowledged that the “Annie” of her story was actually she, herself.  Barb Cole reinvented herself after her devastating diagnosis by telling her story, opening others’ eyes, and advocating on behalf of the Alzheimer’s Association for the past six years.

See what you missed this year?  Mark your calendars now:  The 17th Annual ILTCI Conference will be held March 26-29, 2017 at the Hyatt Regency Jacksonville Riverfront in Jacksonville, FL. 

P.S.  The last time the ILTCI conference convened in Jacksonville, Florida was 2008 during the Center for Long-Term Care Reform’s “National LTC Consciousness Tour.”  We parked the “Silver Bullet of Long-Term Care” right in front of the Hyatt Regency venue, stocked the fridge with refreshments, and opened the little Airstream trailer as a “hospitality suite” for all visitors.  Check out our review of that year’s conference:  “LTC Bullet:  The Jacksonville LTCI Conference,” Thursday, March 20, 2008.

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Updated, Wednesday, March 9, 2016, 10:50 AM (Pacific)
 
Seattle—

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LTC BULLET:  NO SINGLE SOLUTION?

 

LTC Comment:  Three groups with new LTC policy proposals “share many of the same members, cite many of the same sources, and rely on the same modeling,” but can’t find a single solution after the ***news.***

 

*** THIS WEEK’S LTC BULLET comes to you earlier than usual because we are headed to San Antonio, Texas for the 16th Annual Inter-Company Long-Term Care Insurance Conference.  We’ll bring you a full report on that major LTCI industry meeting next week.  For now, check out the agenda, the keynote speaker, and each of the sessions with their presenters. ***

LTC BULLET:  NO SINGLE SOLUTION?

LTC Comment:  As one who has since 1985 proposed a consistent, thoroughly documented single solution to the long-term care financing problem (see the reports linked here), and who has watched several of my recommendations moving us toward that solution pass into federal law (in 1988, 1993, and 2005), I’m not surprised to see three more study groups come up empty handed yet again by ignoring basic facts about Medicaid and addressing the challenge from a mistaken ideological perspective. 

Today, we bring you the reflections of a thoughtful LTC insurance producer and author regarding the latest spate of LTC policy proposals. 

But first, if you want to see just how aimless and confused the analysts, policy makers and legislators struggling with this critical topic are, then check out the March 1, 2016 hearing of the House Energy and Commerce Health Sub-Committee titled “Examining the Financing and Delivery of Long-Term Care in the U.S.”  Find the details, witnesses, documents, etc., here.  Watch and listen to the proceedings here:  https://www.youtube.com/watch?v=lGy905yCQkU.

I sat through most of the live hearing video suppressing a scream of frustration at the witnesses’ and their interrogators’ failure to understand, articulate and deal with the role of Medicaid in long-term care.  As the dominant, last-resort, and easily accessed payer for LTC, Medicaid has discouraged responsible LTC planning, crowded out private financing alternatives, created institutional bias, and trapped generations of aging Americans in welfare-financed care of often dubious quality.  Unless and until we understand and confront the real cause of our country’s LTC woes (excessive government interference in the market) we’ll be doomed to repeat the many fruitless efforts (including these most recent three) to address them. 

But for now, check out what guest columnist Stephen D. Forman, CLTC has to say about the three newest proposals from long-term care experts:

“The Voice of Long Term Care:  No Single Solution”

by

Stephen D. Forman, CLTC

As if the name itself weren't a giveaway, take a look at the logo for the Bipartisan Policy Center: red and blue arching toward one another.  And so it is that we half-expect the conclusions of its LTC Initiative (begun December, 2013) to appeal to everyone and please no one at the same time.

When we first previewed their work, we gave the BPC promising marks for their desire to build consensus at a time of political discord and fiscal constraints. Better still was their stretch-goal of producing actionable legislation. And in their initial paper, the BPC headily rejected a "true social insurance option financed through a broad-based tax."

But during the intervening years, we have grown cynical. The BPC has come to the sobering conclusion that there simply is no "single, comprehensive solution" to our nation's LTC funding crisis (that is financially or politically viable anyway). There is no magic bullet.

After two years of work, the Bipartisan Policy Center has released its “Initial Recommendations to Improve the Financing of Long-Term Care.” Building on the lessons of CLASS—that unique populations require unique solutions—the working group has pitched several planks, each with a different target:[1]

  • Placing a “heightened focus on the role of the private market”[2]

  • Improving Medicaid

  • Constructing a catastrophic, backstop plan

Speaking as a producer, I should feel heartened by the BPC’s belief that “middle-income Americans should have a functional, sustainable private LTCI marketplace to help them pay for LTSS should they need it.” Unfortunately, I may never play a role in it.

Wait, what? Why not?

Because they’ve concluded one of the reasons premiums are unaffordable is due to our agent commissions.[3] So they aim to reduce the price of insurance by removing us. Consumers of the future will apply for LTCI by one of two means: via automatic enrollment at work (on an opt-out basis), or on the state and federal exchanges. (Ironically, the Bipartisan Policy Center devalued agents during the same month Google Compare announced its withdrawal from agent-less sales of auto insurance—a mandatory commodity and failed precedent rolled into one.)

Part of the BPC’s enormous bet on worksite LTC stems from their belief in the existence of a thriving true group market of eight carriers (even though the actual number is closer to one). But to their credit, they also propose eliminating the early withdrawal penalty imposed on qualified retirement savings tapped to pay LTCI premiums. This is such an agreeable notion that the 100,000-member National Association of Health Underwriters (NAHU) has advocated for it in its own LTC position paper.[4]

The linchpin of the BPC’s proposal is a new class of LTC product coined “Retirement LTC.” Although described as lower-cost and limited-benefit[5], it should not be mistaken for Short-Term Care (STC), because its benefit periods range between 2-, 3- and 4-years. Instead, keeping the price low are its high deductible (ranging from $10,000 to $50,000, indexed for inflation), its elimination period (ranging from 180 to 365-days)[6], and built-in 20% coinsurance.

Premiums would be step-rated through age 75 (in other words, policyholders would pay more each year, based on the CPI-U). On top of this, every three years everyone’s rates would be re-priced based on current assumptions. A nonforfeiture benefit would be built-in, as would inflation protection based on the employment cost index (never before used in LTC). Since an annual open enrollment implies some version of guaranteed issue, the BPC assumes Retirement LTC plans might incorporate a vesting period during which no claims would be payable—for example the first 10 years.[7]

If you recognize some of this product’s features as among the industry’s least popular, you are not alone. The only difference is, the BPC is proposing that every working American buy it.

In future work, the BPC will be exploring:

  • a limited LTC benefit for MedSup and MedAdvantage plans,

  • a federal caregiving tax credit,

  • a respite-care benefit for Medicare, and

  • a right to “buy-in” to Medicaid LTC by the working disabled

Finally, they recommend a fully-financed (budget-neutral) catastrophic risk pool for the nationally uninsurable and largest claims (the 15% of Americans 65+ whose care will cost more than $250,000). The BPC does not believe the private market wants to insure claims this large—an arguable point, to say the least. To cover as many of us as possible (estimated to reach 90%), this would be a mandatory, public insurance program, potentially funded via payroll tax.

Deliberately, the BPC did not spend a great deal of energy building out the concept of universal catastrophic LTC since they acknowledged it would be dead-on-arrival in today’s political climate. Rather, they float the trial balloon and leave it to fall some indefinite day in the future.

This is in stark contrast to the LTC Financing Collaborative (LTCFC), whose final report came out within days of the BPC’s and gained national headlines by advocating for their own version of universal catastrophic LTC, calling it not only “most likely to meet the test of fiscal sustainability,” but ominously—since voluntary insurance hasn’t worked—“the only thing that’s left.”

In a recent article promoting its plan, the LTCFC described a possible catastrophic benefit of $100/day for life which would kick in after a 2- or 3-year elimination period, and cost about $300/year in taxes. But the article gently skirted the elephant in the room: such coverage has been marketed before. I still have the rate books, and can produce a similar benefit for a similar price. But they've always proven deathly unpopular. Why can't anyone be convinced to spend even a pittance on such a plan?

The answer to this question is the heart of our entire LTC financing debacle[8], but we can put a pin here for now: the Collaborative's imaginative understanding of Medicaid is holding them back from making real progress.

In almost conspiratorial fashion, LeadingAge also chose February to release their “Pathways Report: Perspectives on the Challenges of Financing LTSS.” And while they see “an urgent need for an LTSS financing system that is insurance-based and guided by principles of rationality, equity and affordability,” they ultimately couldn’t help themselves, and called for “a mandatory, universal insurance option [as] the best choice to minimize costs and optimize coverage.”

If readers are by now curious why three major reports have all called for universal, mandatory LTC, it is no coincidence. The Bipartisan Policy Center, LeadingAge and the LTC Financing Collaborative share many of the same members, cite many of the same sources, and rely on the same modeling (the Dynasim Model co-produced by Milliman and the Urban Institute). Practically all that’s left is for each to sign the other’s yearbook.

The opportunity to catch-up with old friends came on March 1st when the House Energy & Commerce Committee held a hearing which featured these three reports. Although reviews of the testimony were tepid, at least one Congressman present that day (Frank Pallone, D-NJ) was moved to "act with a sense of urgency," and plans to introduce legislation that would finance LTC through Medicare Part E.

Whether any of this will come to pass takes a crystal ball none of us has. Some proposals call to mind the half-baked naiveté of the CLASS Act, while some common-sense ideas are long overdue and will surely be greeted with enthusiasm. It is disappointing that the valuable field experience of agents was not sought, nor were carriers themselves given a seat at the table during these grand deliberations. Nevertheless, we shall remain vigilant to ensure our clients above all are protected, and our livelihoods as well.

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

_________________________________________________

[1] The BPC recognizes that financing is the first element which must be addressed nationally. Without adequate payment reforms, the US won’t attract good caregivers and will continue to face a worker shortage.

[2] Of the private market, the BPC says categorically, “LTSS is an insurable risk.” The significance of this declaration should not be discounted.

[3] Never mind that, on average, administrative expense (~16%) contributes more to policy pricing than commission expense (~12%), which adds not much more than the 10-15% cushion added explicitly for safety. Everyone wants to pay "factory-direct" wholesale prices ... what the heck do distributors even do? The Affordable Care Act's Medical Loss Ratio (MLR) debate accelerated this assault on the role of distribution (which began with Amazon and eBay), and which we will explore in a future column.

[4] They would allow access at age 45, and are also investigating the possibility of allowing LTCI as an investment option in workplace retirement plans.

[5] And so simple that ordinary folks can buy it without agent guidance.

[6] Policyholders would qualify for benefits after satisfying the deductible OR elimination period, whichever comes first.

[7] They would also seek legal exemptions to ensure Retirement LTC is both tax-qualified and partnership-qualified, and rules changed to protect plan sponsors from fiduciary liability.

[8] Because nothing is at risk, and someone else always pays.

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Updated, Monday, March 7, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-010:  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:

  • Hybrid Long-Term Care Policies Provide Cash and Leave Some Behind

  • GAO Report Sheds Light on Retirement Debate

  • The Voice of Long-Term Care: No Single Solution

  • The Internet Of Caring Things

  • Medicare Advantage ratings proving to be boon to insurers, patients

  • Women 80% More Likely Than Men to be Impoverished in Retirement

  • Experts talk trade-offs in House hearing on LTC financing

  • House To Take Up Long Term Care Financing

  • How to Prioritize Spending in Retirement

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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, March 4, 2016, 9:00 AM (Pacific)
 
Seattle—

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LTC BULLET:  READ CASSANDRA’S QUANDARY

LTC Comment:  After the recent spate of misguided LTC financing proposals recently, read our analysis for recommendations that will truly fix the problem, 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:  READ CASSANDRA’S QUANDARY

LTC Comment:  We’ve teased you mercilessly about our new report starting with “LTC Bullet:  Cassandra’s Quandary,” Friday, July 17, 2015, which previewed the project as we began its research phase.  “LTC Bullet:  Heed Cassandra on LTC,” Friday, January 22, 2016 offered the report’s brief summary and conclusions.  “LTC Bullet:  Cassandra’s LTC Recommendations,” Friday, January 29, 2016 followed with its specific proposals.

But now, finally, you can read the full report and see how we reached its conclusions and recommendations.  Find “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” here on Federalism in Action’s website or here on the Center for Long-Term Care Reform’s website.

Don’t be fooled by the title’s reference to New Hampshire.  This report is about America’s long-term care financing crisis.  The Granite State is our “canary in the mineshaft” to show why the crisis is so great, why it hasn’t fully materialized yet, and why 2031 through 2050 are the years when tremendous damage will occur unless the corrective actions we propose are implemented.

By all means, read the whole report, but to whet your appetite, here’s the press release that announced its publication.  We welcome comments and questions.

------------------ 

FOR IMMEDIATE RELEASE: March 2, 2016
CONTACT: media@federalisminaction.org

New Hampshire’s Financial Time Bomb: The Looming Impact of Long-Term Care on Medicaid

WOODSVILLE, NH – A new study, published by Federalism In Action, finds that America’s and New Hampshire’s long-term care service delivery and financing systems - as currently operating and likely to evolve - will not survive the coming demographic age wave.

According to the study, CASSANDRA’S QUANDARY: The Future of Long-Term Care in New Hampshire, radical changes in federal and state laws and regulations are needed to align consumer incentives with the need to finance future long-term care (LTC) adequately. To begin the public conversation and highlight this financial time bomb, Federalism In Action (FIA) partnered with the Center for Long-Term Care Reform and the New Hampshire Center for Economic Policy to perform a 30-year cost projection of NH’s Medicaid system.

“Long-term care financing is a time bomb about which experts and policy makers are too complacent,” said Stephen Moses, author of the study. “The soporific effect of moderate health and LTC cost inflation will end soon causing disastrous financial and care quality problems. Cassandra’s Quandary explains how and why this will happen in New Hampshire and the USA if nothing is done.”

Two federal programs—Social Security and Medicare—are notorious for their unfunded liabilities: $25 trillion and $43 trillion, respectively. However, another federal program—Medicaid—consumes a growing proportion of state and federal budgets but attracts less scrutiny of its long-term fiscal viability.

“While Obamacare is dominating the Medicaid discussion at the state level, it is long-term care for the aging that will dramatically increase Medicaid spending over the next several decades,” said J. Scott Moody, Federalism In Action CEO. “Yet, there is not a single state that is estimating these future costs, let alone preparing for them. New Hampshire, and New England in general, will be the first place where the fiscal pressure of the retirement of the baby-boomer generation will be felt.”

According to Moses, “the risk and cost of long-term care explodes at age 85. The first baby-boomers turn 85 in 2031. By then, it will be too late to avoid the collapse of America’s long-term care service delivery and financing system that will occur by 2050. The report explains why we’re in this mess and what to do about it—now!”

While common perceptions are that America’s aging population will strain Medicare resources, it will also adversely impact Medicaid and its long-term care coverage. Already a problem, three-fourths of Medicaid recipients are impoverished adults or children, but account for only one-third of the program’s expenditures, whereas only one-fourth of Medicaid recipients are aged or disabled, but consume two-thirds of the program’s costs. Just as alarming, Medicaid’s most expensive “dual eligible” recipients—those also receiving Medicare—comprise only 15% of total recipients but account for 39% of Medicaid spending, of which 70% is for their long-term care.

“Poor federal Medicaid policy caused America’s and New Hampshire’s LTC problems of impaired access, doubtful quality, inadequate reimbursement, and institutional bias,” explains Moses. “Our study explains what’s wrong with long-term care public policy and how shifting responsibility from the federal government to the states and the people can fix it.”

Stephen Moses is a senior policy fellow with Federalism In Action and the president of the Center for Long-Term Care Reform. He may be reached by email at smoses@centerltc.com or by phone at 432-364-2254. (To read his bio, click here.)

Federalism In Action, a 501c(3), is an energetic, results-oriented public policy organization – promoting American federalism, liberty, and fresh ideas aimed at limiting government. We seek to restore the proper balance between the federal government and the states – focusing on ways states can truly act as independent sovereigns and come up with local solutions. To learn more, visit FederalismInAction.org.

The Center for Long-Term Care Reform, located in Seattle, Washington, promotes universal access to top-quality long-term care by encouraging private financing as an alternative to Medicaid dependency for most Americans. To learn more, visit CenterLTC.com.

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Updated, Monday, February 29, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-009:  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:

  • Number of seniors who need personal care help increasing, CDC says

  • HEARING NOTICE

  • Nursing Home Evictions Strand The Disabled In Costly Hospitals

  • SNF bed prices increased 12% last year, hitting all-time high

  • MetLife in Talks to Sell U.S. Advisor Network to MassMutual

  • CDC report details characteristics of assisted living residents

  • Genworth's announcement a potential game changer

  • Mental Stimulation May Delay Alzheimer's Symptoms, But Not Pathology

  • ACSIA Partners Alerts Americans to Plan for Alzheimer's Long-Term Care Before It's Needed

  • Nursing home capacity down across country, CDC report finds

  • Yes, We Can Create A Universal Long-Term Care Insurance Program

  • Genworth debuts new annuity for long-term-care coverage

  • U.S. proposes hike in Medicare Advantage payments; insurer shares 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, February 26, 2016, 10:17 AM (Pacific)
 
Seattle—


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LTC BULLET:  REAL ID VS. ESTATE RECOVERIES:  A DECADE OF DIVERGENCE

LTC Comment:  Why do the Feds force states to comply with one law that costs money (Real ID), but fail to enforce another law that saves money (Medicaid estate recoveries)?  Stephen D. Forman poses the question in today’s guest LTC Bullet after the ***news.***

*** THIS WEEK’S LTC CLIPPINGS:  Did a prospect or client hit you with a surprise question or comment this week?  Were you up to speed on everything you needed to know each day?  Ever get flat-footed by a fact or stat you wish you’d known but didn’t?  Those are problems our LTC Clippings subscribers avoid.  Here are this week’s LTC Clippings titles through this morning.

  • Nursing Home Evictions Strand The Disabled In Costly Hospitals : Shots - Health News : NPR

  • SNF bed prices increased 12% last year, hitting all-time high - McKnight's Long Term Care News

  • MetLife in Talks to Sell U.S. Advisor Network to MassMutual | IAG Breaking News

  • CDC report details characteristics of assisted living residents

  • Genworth's announcement a potential game changer

  • Mental Stimulation May Delay Alzheimer's Symptoms, But Not Pathology - Neurology Advisor

  • ACSIA Partners Alerts Americans to Plan for Alzheimer's Long-Term Care Before It's Needed - ACSIA Partners

  • Nursing home capacity down across country, CDC report finds - McKnight's Long-Term Care News

  • Yes, We Can Create A Universal Long-Term Care Insurance Program – Forbes

  • Genworth debuts new annuity for long-term-care coverage – InvestmentNews

  • U.S. proposes hike in Medicare Advantage payments; insurer shares rise | Reuters

Our LTC Clippings alert you in real time to news or reports you need to know and understand.  We give you a quote from the source, a web link to the full item, and a one- or two-sentence analysis of what it means.  All for 27 cents per day if you’re already a member of the Center or 68 cents per day with a new Center for Long-Term Care Reform membership.  Contact Damon at 206-283-7036 or damon@centerltc.com for details. ***

 

LTC BULLET:  REAL ID VS. ESTATE RECOVERY:  A DECADE OF DIVERGENCE

“Real ID vs. Estate Recovery: A Decade of Divergence”

by

Stephen D. Forman, CLTC

An article ran in the December 28, 2015 edition of the New York Times detailing a fight between the federal government’s Department of Homeland Security and the states over a 2005 law that would bar some residents from commercial air travel due to their non-compliant state driver’s licenses.[1]

It’s an interesting story, and one that impacts nearly all of us, but what does it have to do with long-term care?  Read on.

The 2005 Real ID Act was enacted by Congress on the recommendation of the 9/11 Commission, and it requires states to comply with minimum federal standards when issuing driver’s licenses. These include new burdens on drivers (e.g., proof of immigration status and Social Security number), the cards themselves (e.g., use of new machine-readable chips to store information and deter counterfeiting), and the agencies issuing them (e.g., conducting background checks on employees issuing driver’s licenses). The cost alone—perhaps as high as $11 billion—was just one reason states objected. Several state legislatures took the extreme countermeasure of passing their own laws literally banning compliance with the Act.[2]

So, if you’re the federal government, how do you compel the states to adopt your law? First, you apply pressure by barring visitors to military bases and nuclear sites unless they can show proof of ID from a compliant state. Then, when that doesn’t work, you exert your leverage over air travel via the TSA, preventing travelers without compliant ID’s from passing security checkpoints to board their flights. As one commenter notes, “This is a game of intimidation being played out between ... the federal government and state governments, with ordinary citizens being squeezed in the middle.”[3]

And this is where we get to long-term care.

2005 was a productive year for Congress, the same in which they passed the Deficit Reduction Act (“DRA ‘05”), which contained some of the widest-reaching Medicaid reforms since 1993.[4] Besides widening the Partnership Program nationwide, you’ll remember these:

  • Imposing the first-ever home-equity limit of $500,000 (or $750,000 at the state legislature’s discretion)[5]

  • Extending the look-back period on all transfers to 5 years (not just trusts)

  • Forwarding the penalty-period start date to the date of Medicaid application (versus the date of transfer)

  • Adding more restrictions to so-called “Medicaid-friendly” annuities

Eleven years later, there are still 23 jurisdictions which have yet to fully comply with the DRA[6] and/or OBRA ’93—the law which made estate recovery mandatory. We know this because Congressman Fred Upton (R-MI) and Senator Orrin Hatch (R-UT) wrote to then-CMS Administrator Marilyn Tavenner[7] last January to raise this very issue. In their letter they pointed out how federal Medicaid dollars may be paying for individuals who are not eligible for coverage, thus straining the program’s ability to pay for rightful recipients.

Here’s the irony: whereas Real ID costs states money, implementing these Medicaid reforms would actually save states money, as much as $2.5 billion. Very few non-tax sources of revenue can do better. More than that, they’d spur interest in private long-term care insurance. And we know that LTCI is a net-positive for states: each new policy saves Medicaid approximately $8,000 over its lifetime (at a minimum).

As we begin 2016, there is no shortage of trial balloons being floated by various advocacy groups who envision new ways of financing America’s system of long-term care. Included among these are dozens of Medicaid reforms, but it is hard to justify a menu of new reforms when we have yet to implement those enacted over 20 years ago.

In November, 2014 the Inspector General released a report three years in the making, to determine whether states were implementing federal law designed to restrict high-net worth individuals from accessing Medicaid, and to quantify states’ estate recovery efforts. Here is what the IG found:

  • 51 states now report they are recovering assets from the probated estates of deceased Medicaid recipients (when not survived by a spouse)

  • 42 states report implementing the option to recover all Medicaid costs paid to beneficiaries aged 55 and over—not just LTC—from an individual’s estate

  • 26 states report adopting a voluntary expanded definition of “estate” which allows the recovery of Medicaid costs from assets outside state probate law (e.g., through joint tenancy with right of survivorship)

On average, estate recoveries are a good investment. In 2011 the states spent a combined $34 million (M) to recover $498M (or $14.60 for each dollar invested). More could be recouped if obstacles to spousal recoveries were lifted. In those 51 states identified above, about 1/3rd of Medicaid nursing home (NH) residents who own a home have a spouse still living there. If the Medicaid-recipient outlives the community spouse, the state will make the recovery; but if the community spouse outlives the Medicaid NH recipient, those assets are protected by law in many states (even after she or he dies).

As a percent of total Medicaid expenditures, some states recover a higher share than others. At the top of the list is Idaho (recovering 5.4 percent of what it spends on nursing facility costs, or 2.2 percent of total LTC costs when home and community-based services [HCBS] are included). Extrapolating from these numbers, Steve Moses of the Center for Long-Term Care Reform calculated the combined recoveries from all states if they did as thorough a job as the Gem State. Instead of the $497M actually recovered (according to the Inspector General’s report), total recoveries could have been as great as $2.9 billion (B). In other words, there’s an additional $2.5B currently being forfeited by the states through no fault but a failure to enforce existing law.

The results are well-documented:

  • A Medicaid program which is chronically over-extended and under-funded[8]

  • Whose underpayments lead to systemically low quality, high staff turnover, lack of institutional investment, and cost-shifting to private LTC insurance

  • Which teeters between institutional bias on the one hand and lack of access to overcrowded HCBS programs

  • Which crowds out responsible early planning, including saving, investing, long-term care insurance and the use of reverse mortgages and home equity options to age-in-place

The federal government has the ability to swing a big stick or wave a big carrot. The way it’s exerting its muscle with the Real ID program is an example of the former. An example of the latter is the way the White House has sold the Affordable Care Act’s (ACA’s) Medicaid expansion. To convince states to enroll an additional 10M Medicaid beneficiaries, states were promised a higher federal “matching rate”—a full 100% reimbursement through 2020, dropping to 90% thereafter. Even so, 20 states remain un-sold on this deal.[9]

We live in strange times. States fail to enact their own laws. The federal government gives them a free pass even though it has multiple means at its disposal to effect compliance. Medicaid programs are gobbling up budgets, yet no one likes being the candidate who voted in favor of the last tax hike. A proven solution exists in plain sight, but in 2016 if something’s not “The Uber of…” anything, it’s hard to generate attention anymore. All we can hope is that by repeatedly calling attention to the issue, the conclusions will finally be inescapable—it makes no sense to embark on grandiose new visions until we’ve taken steps to maximize existing Medicaid estate recovery law.

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.


[1] On January 9th, 2016 the Seattle Times ran an updated story “TSA gives reprieve on state driver’s licenses” in which they advise that Homeland Security now says passengers could continue using current ID’s through 1/22/18. Some will have until 10/01/20. Currently 23 states and territories have complied with the Act and 27 states and territories have been granted an extension. Five states—IL, MN, NM, MO and WA (and American Samoa) have not complied and have not been granted an extension.

[2] The other reason states oppose the Act is requiring the storage of “proof of identity” images which they say could be breached and be used to track law-abiding US citizens. They also oppose the US government unilaterally setting standards which have traditionally fallen under the purview of the states.

[3] It’s a lot like the government telling states, “We can’t force you to adopt a 55-mph speed limit, but we don’t have to share these highway construction funds with you, either.”

[4] Omnibus Budget Reconciliation Act of 1993 (“OBRA ‘93”).

[5] These amounts have now increased with inflation to $552,000 and $828,000 respectively for 2016.

[6] Twenty-two states and the District of Columbia.

[7] Now President and CEO of the industry trade group, America’s Health Insurance Plans (“AHIP”).

[8] Although LTC users are only 7 percent of the Medicaid population, they account for more than 50 percent of its costs ($106B spent in 2014 on NH and HCBS).

[9] As we approach 2020, those states who failed to expand Medicaid when first given the opportunity were recently offered an extended deadline for the higher matching rate in an attempt to re-sell the deal.

 

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Updated, Monday, February 22, 2016, 9:50 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-008:  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:

  • Medicare reform a back-burner issue for most 2016 presidential candidates

  • Baby Boomers Set Another Trend: More Golden Years In Poorer Health

  • Current LTSS financing methods 'irrational, unfair' LeadingAge report claims

  • New Study Links Widening Income Gap With Life Expectancy

  • Biden Was Right: Medicaid Provider Taxes A 'Scam' That Should Be Scrapped

  • Long-term care insurance could help defuse the looming baby boom retirement ‘disaster’

  • What Older Voters Care About Now

  • How retirement has changed in the last 30 years

  • Family caregivers may be sacrificing their own health to help loved ones

  • Heartburn medications associated with higher dementia risk

  • Long Term Care Insurance Is Second Leading Source Paying For Private Home Care

  • A promise sometimes impossible to keep

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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, February 19, 2016, 10:08 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.  The Almanac is not up to date.  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:  our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries.  Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources.  Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments.  Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

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LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, February 26, 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 3:  Unfunded Liabilities--Social Security, Medicare, Pensions and Budgets

Unfunded Liability Estimates

TIA on State Finances 0915 URL:  http://www.truthinaccounting.org/library/doclib/FSOS-Overview.pdf

9/2015, “Financial State of the States,” by Robert Rector, Truth in Accounting

Quote:  “For the sixth consecutive year, Truth in Accounting (TIA) has completed a comprehensive review of the financial reports of all 50 states to provide citizens with a clear picture of their governments’ financial conditions. Despite an improvement in the economy and financial markets, the amount of bills accumulated by the states has not significantly decreased. States still have almost $1.3 trillion of unfunded debt, accumulated despite balanced budget requirements in 49 of the 50 states. 39 states have dug financial holes, thus creating a “Taxpayer Burden,” which is the amount each taxpayer would have to send to their state’s treasury in order for the state to be debt-free. If state budgets had been truly balanced, no Taxpayer Burden would exist.”

LTC Comment:  Check out your personal debt or credit as a taxpayer in your state.

 

Chapter 5:  Caregiving

Caregiver Stress, Burnout and Costs

Genworth on Caregiving 1015 URL:  https://pro.genworth.com/riiproweb/productinfo/pdf/157453C.pdf

10/1/2015, “Beyond Dollars: Caregivers Face Career Crisis Resulting from Lack of Long Term Care Planning, According to Genworth Study,” Genworth press release, Market Watch

Quote:  “Providing care for loved ones has taken a toll on the careers of half of caregivers surveyed in Genworth's latest Beyond Dollars study, with 11 percent actually losing their jobs and another 10 percent having to change careers. That's in addition to the other financial, physical and emotional impacts of caregiving examined in the study. ”

LTC Comment:  It’s not just the money—a powerful message for prospects in denial.

 

Caregiver Shortages

NBER on LTCI 0815 URL:  http://www.nber.org/papers/w21483

8/2015, “Family Spillovers of Long-Term Care Insurance,” by Norma B. Coe, Gopi Shah Goda and Courtney Harold Van Houtven, National Bureau of Economic Research

Quote:  “LTCI coverage induces less informal caregiving, suggesting the presence of intra-family moral hazard. We also find that children are less likely to co-reside or live nearby parents with LTCI and more likely to work full-time, suggesting that significant economic gains from private LTCI could accrue to the younger generation.”

LTC Comment:  How much more would this finding apply to free Medicaid-financed HCBS than for expensive private long-term care insurance?  Easy access to Medicaid LTC crowds out free family care whereas private LTCI enables family members to keep their jobs and spend quality, less stressful time with chronically ill elders.

 

Value of Free Care

BLS on Free Caregiving 0915 URL:  http://www.bls.gov/news.release/archives/elcare_09232015.pdf

9/23/2015, “Unpaid Eldercare in the United States —2013-14:  Data from the American Time Use Survey,” Bureau of Labor Statistics

Quote:  “Sixteen percent (40.4 million) of the civilian noninstitutional population age 15 and over provide unpaid eldercare, the U.S. Bureau of Labor Statistics reported today. Of the 40.4 million eldercare providers, a majority are employed (61 percent) and nearly one-half are employed full time (47 percent). These estimates are averages for the 2-year period of 2013-14; combining the 2 years of data facilitates a more in depth analysis of eldercare. ”

LTC Comment:  This BLS report contains extensive data on unpaid caregiving in the USA, but no estimate of its dollar value.  For that ($470 billion per year) see:  Susan C. Reinhard, et al., “Valuing the Invaluable: 2015 Update, Undeniable Progress, but Big Gaps Remain,” AARP Public Policy Institute, July 2015, p. 1; http://www.aarp.org/content/dam/aarp/ppi/2015/valuing-the-invaluable-2015-update-undeniable-progress.pdf.

 

Chapter 6:  Long-Term Care Financing

Who Will Pay for LTC? (includes "Not the VA")

Bipartisan Policy Center’s “Initial Recommendations to Improve the Financing of Long-Term Care

2/2/2016, “Private Long Term Care Insurance Market Must Be Shored Up, Policy Center Argues,” by Bill Myers, Provider

Quote:  “Policymakers should act ‘to stabilize’ the long term care insurance market ‘and make it accessible to more Americans,’ a new report argues.  ...  The report also urges state policymakers to consider expanding Medicaid-even if only as part of a one-off ‘buy-in’ to help pay for long term care services and supports. Finally, the report urges lawmakers and policymakers to pursue concepts and elements for a public insurance program to: 1.) address uninsurable long term care costs; 2.) protect Americans from the catastrophic costs of long term care supports and services; and 3.) provide relief to states, which along with the federal government face significant Medicaid costs in the coming years as baby boomers begin to need their own long term care, the report says.”

LTC Comment:  This Friday’s LTC Bullet will summarize and analyze the new report.  Check it out here in the meantime.

Find our critique of the BPC proposals at LTC Bullet:  Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations, Friday, February 5, 2016
Health Affairs on LTC Article 1115 LINK 

 

“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

ABSTRACT About half of older Americans will need a high level of assistance with routine activities for a prolonged period of time. This help is commonly referred to as long-term services and supports (LTSS). Under current policies, these individuals will fund roughly half of their paid care out of pocket. Partly as a result of high costs and uncertainty, relatively few people purchase private long-term care insurance or save sufficiently to fully finance LTSS; many will eventually turn to Medicaid for help. To show how policy changes could expand insurance’s role in financing these needs, we modeled several new insurance options. Specifically, we looked at a front-end-only benefit that provides coverage relatively early in the period of disability but caps benefits, a back-end benefit with no lifetime limit, and a combined comprehensive benefit. We modeled mandatory and voluntary versions of each option, and subsidized and unsubsidized versions of each voluntary option. We identified important differences among the alternatives, highlighting relevant trade-offs that policy makers can consider in evaluating proposals. If the primary goal is to significantly increase insurance coverage, the mandatory options would be more successful than the voluntary versions. If the major aim is to reduce Medicaid costs, the comprehensive and back-end mandatory options would be most beneficial.

Find our critique of this important article in “LTC Bullet:  The Arrogance of LTC Analysts’ Elitism,” Friday, December 4, 2015

 

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

Health Affairs on 2014 National Health Expenditures URL:  http://content.healthaffairs.org/lookup/doi/10.1377/hlthaff.2015.1194

“National Health Spending In 2014: Faster Growth Driven By Coverage Expansion And Prescription Drug Spending,”  by Anne B. Martin, Micah Hartman, Joseph Benson, Aaron Catlin, and the National Health Expenditure Accounts Team

ABSTRACT US health care spending increased 5.3 percent to $3.0 trillion in 2014. On a per capita basis, health spending was $9,523 in 2014, an increase of 4.5 percent from 2013. The share of gross domestic product devoted to health care spending was 17.5 percent, up from 17.3 percent in 2013. The faster growth in 2014 that followed five consecutive years of historically low growth was primarily due to the major coverage expansions under the Affordable Care Act, particularly for Medicaid and private health insurance, which contributed to an increase in the insured share of the population. Additionally, the introduction of new hepatitis C drugs contributed to rapid growth in retail prescription drug expenditures, which increased by 12.2 percent in 2014. Spending by the federal government grew at a faster rate in 2014 than spending by other sponsors of health care, leading to a 2-percentage-point increase in its share of total health care spending between 2013 and 2014.

 

Chapter 7:  Long-Term Care Insurance

Criticism

CRR on Lapse Rates 1015 LINK

Pdf:  http://crr.bc.edu/wp-content/uploads/2015/09/IB_15-17.pdf

“Why Do People Lapse Their Long-Term Care Insurance?,” by Wenliang Hou,Wei Sunand, Anthony Webb
IB#15-17

The brief’s key findings are:

  • More than a third of those with long-term care insurance at age 65 will let their policies lapse at some point, forfeiting all benefits.
  • Lapses could be due to the burden of insurance premiums, a strategic calculation that care use is less likely, or poor decisions due to declining cognitive ability.
  • The analysis finds support for both the “financial burden” and “cognitive decline” explanations.
  • The consequences of lapsing are significant, as lapsers are actually more likely than non-lapsers to use care in the future, partly due to cognitive decline.
  • Thus, for some lapsers, having insurance could be counterproductive as they buy it to protect against risk but drop it just when the risk becomes more likely.

For our critique of this report, see LTC Bullet:  Another LTCI Hit Job?, Friday, October 9, 2015

 

Chapter 10:  Medicaid

Medicaid Spousal Impoverishment Tables

2016 SSI and Spousal Impoverishment Standards
2016-ssi-and-spousal-impoverishment-standards URL:  http://medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/downloads/2016-ssi-and-spousal-impoverishment-standards.pdf

https://attorney.elderlawanswers.com/cms-confirms-that-spousal-impoverishment-figures-will-remain-the-same-for-2016-15398

12/2/2015, CMS Confirms That Spousal Impoverishment Figures Will Remain the Same for 2016,” by, ElderLawAnswers

Quote“The Centers for Medicare and Medicaid Services (CMS) has announced that the spousal impoverishment and home equity limit figures will not change from 2015 levels next year.  This is because there was no increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). . . .  For CMS’s page on all the SSI and spousal impoverishment standards for 2016, click here.  For an informational bulletin that was attached to the figures, click here.

LTC Comment:  We’ll also update these numbers in The Zone where you can find the comparable annual amounts all the way back to 1991 for comparison.

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Updated, Monday, February 15, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-007:  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:

  • Surge in Medicare Advantage Sign-Ups Confounds Expectations

  • Many Americans Are Rising Out of the 'Middle Class' — But Are They Better Off?

  • [Seniors Housing] Troubles Everywhere

  • Hedge fund manager: Genworth had a good fourth quarter

  • Long Term Care Insurance Industry Paid $8.15 Billion in Claim Benefits

  • Study finds dementia rates falling steadily

  • Millionaires Are Qualifying for Medicaid Under Obamacare

  • LTC planning in world history: You are here...

  • Report: Alzheimer’s market to double by 2021 to $10.4B

  • Deal on New Managed Care Tax Imminent

  • White House budget includes $4 billion pilot to 'streamline' LTC

  • ‘Promise you’ll never put me in a nursing home’

  • Who’ll Pay for Americans to Live to 100?

  • Premiums for New Long-Term Care Insurance Policies Actually Decline in Some Cases

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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, February 12, 2016, 9:38 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Almanac Update

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

*** TODAY'S LTC BULLET is sponsored by Claude Thau, 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. ***

 

*** 2016 ILTCI CONFERENCE:  The 16th Annual Intercompany LTCI Conference will convene at The Grand Hyatt in San Antonio, Texas March 13th to 16th, 2016.  Get the mobile app and be there if you can.  Professional meetings don’t get any better than this one.  Your Center for Long-Term Care Reform will be on hand and we hope to see you there. By the way, we hear that nearly all exhibit booth spots are taken, but there are some left. Click here for further information and reserve your spot while you can. ***

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

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LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, February 19, 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

United States

General Stats

Heritage on Poverty 0915 LINK

9/16/2015, “Poverty and the Social Welfare State in the United States and Other Nations,” by Robert Rector, Heritage Foundation

Quote:  “When private-sector contributions to retirement, health care, and education are added to the count, social welfare spending in the U.S. dwarfs that of other nations. In fact, social welfare spending per capita in the U.S. rises to nearly twice the European average.[4] As Garfinkel, Rainwater, and Smeeding conclude, ‘For those who believe the absolute size of the US welfare state is small, the data presented...[in the book] are shocking and constitute a wake up call. Once health and education benefits are counted, real per capita social welfare in the United States is larger than in almost all other countries!’[5] Only one nation (Norway) spends more per person than the U.S. spends.[6] . . .  Compared against a uniform standard, the U.S. has a poverty rate that is similar to poverty rates in most other advanced nations. However, the U.S. should not seek to outspend other nations in its anti-poverty programs. Instead, the U.S. should seek to reduce poverty by promoting self-sufficiency: the ability to support one’s self and family above the poverty level without reliance on welfare aid.”

LTC Comment:  This is a fascinating article that blows up the stereotype of poverty in America.  The poverty rate is lower and the poor’s standard of living is higher that commonly understood.

 

Chapter 5:  Caregiving

Caregiver Stress,  Burnout and Costs

Health Affairs on Caregiving 1015 URL:  http://content.healthaffairs.org/content/34/10/1642.full.pdf

10/9/2015, “The Disproportionate Impact Of Dementia On Family And Unpaid Caregiving To Older Adults,” by Judith D. Kasper, Vicki Freedman, Brenda C. Spillman, and Jennifer L. Wolff, Health Affairs

Quote:  “Although 10 percent of older adults have dementia, their caregivers account for one third of all family and unpaid caregivers and for 41 percent of all hours these caregivers provide to older adults.

LTC Comment:  You can read the Abstract of this article for free here.  You can subscribe to Health Affairs or buy only this article here.
Northwestern Mutual 2015 Long Term Caregiving Study 1015 LINK

 

11/09/2015, “New C.A.R.E. Study from Northwestern Mutual Reveals the Caregiving Conundrum,” by Northwestern Mutual

Quote: “New research from Northwestern Mutual released today uncovers a number of surprising insights into the emotional and financial implications of delivering care to an elderly relative or friend. Drawn from the perspectives of both current and future caregivers, the C.A.R.E  (Costs, Accountabilities, Realities, Expectations) Study finds that Americans are often unprepared for the complex and unpredictable realities of longevity and caregiving. According to the C.A.R.E. Study, the cycle of care and dependency is a constant that extends beyond child rearing. Nearly 4 in 10 Americans (36%) either currently consider themselves a caregiver to someone aging, ill or with special needs (other than a child) or say they have performed this role in the past. Notably, the majority (59%) of Americans feel that taking care of two adults between the ages of 85 and 90 would be more difficult than managing two children, ages 3 and 5.

“The 35% of experienced caregivers who have incurred financial costs suggest there can be significant financial pressure. They estimate that on average more than a quarter (26%) of their monthly budget goes towards caring for an aging family member or friend. However, even though financial demands are a concern, people are not necessarily taking action. According to the research, among experienced caregivers who listed financial costs as their top concern about caregiving, more than a quarter (27%) say they know they need to do something but have not taken any steps while 22% have just completely avoided the issue.”

LTC Comment: This is a good reminder, especially during LTC Awareness Month, that while some people might be able to rely on family for caregiving, it’s not without cost. Of course, those costs are vast: emotional, physical, psychological, professional, financial and so on.

 

Chapter 6:  Long-Term Care Financing

General

NAHUWhitePaperLTC 0615 LINK

LTC Bullet:  NAHU on LTC Financing, Friday, September 18, 2015:

LTC Comment:  The National Association of Health Underwriters (NAHU) has published its analysis and recommendations regarding long-term care financing.  Some background, the executive summary and a link to the full report follow the ***news.***

 

Medicare LTC Financing

Institute on Medicare Age Increase Impact 0915 URL:  Here

9/17/2015, “The Effect on States of Increasing the Medicare Eligibility Age,” by Timothy A. Waidmann and Emily Lawton, Urban Institute

Quote:  “Proposals to raise the eligibility age for Medicare may have unintended consequences for state government finances. The medical care of persons who currently receive both Medicaid and Medicare benefits, also known as ‘dual eligibles,’ could become the sole responsibility of Medicaid. In this brief we estimate the number of such individuals in each state and the amount of current Medicare spending that could be shifted to state Medicaid programs. The actual cost impact of such a policy change for an individual state depends on both the demographic makeup of its population and its decision about Medicaid expansion under the ACA.”

LTC Comment:  Something has to be done about Medicare’s huge unfunded liabilities.  One of the commonest proposals is to raise Medicare’s age of eligibility.  But doing that could devastate Medicaid by shifting huge costs to the welfare program.

 

KFF on Income and Assets of Medicare Benes 091015 URL:  Here

9/10/2015, “Income and Assets of Medicare Beneficiaries, 2014 – 2030,” by Gretchen Jacobson, Christina Swoope, Tricia Neuman, and Karen Smith, Kaiser Family Foundation

Quote:  “While a small share of the Medicare population lives on relatively high incomes, most are of modest means, with half of people on Medicare living on less than $24,150 in 2014.  The typical beneficiary has some savings and home equity, but the range of asset values among beneficiaries is wide and varies greatly across demographic characteristics. Looking to the future, the income, assets and home equity values of Medicare beneficiaries overall are projected to be somewhat greater in 2030 than in 2014 after adjusting for inflation; yet, much of the growth is projected to be realized among those with relatively high incomes and assets.  As policymakers consider options for decreasing federal Medicare spending and addressing the federal debt and deficit, these findings raise questions about the extent to which the next generation of Medicare beneficiaries will be able to bear a larger share of costs.”  [Emphasis added.]

LTC Comment:  The correct take-away from this data showing how poor most Medicare beneficiaries are:  We should stop destroying the Medicaid backstop by stretching it to cover middle and upper-middle class people.

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

 

Chapter 9:  Long-Term Care Providers

HCBS:  Cost-Effective or Not?

KFF on Medicaid HCBS 0915 LINK

9/18/2015, “Serving Low-Income Seniors Where They Live: Medicaid's Role in Providing Community-Based Long-Term Services and Supports,” by Rachel Garfield, Katherine Young, MaryBeth Musumeci, Erica L. Reaves, and Judy Kasper, Kaiser Family Foundation

Quote:  “Looking ahead, state and federal policymakers and other stakeholders will be challenged to meet the growing need for LTSS to support seniors living in the community in a way that accommodates diverse needs, ensures care quality, and manages costs. Insight into the socio-demographic and health status characteristics of these seniors, especially dual eligible beneficiaries who rely on Medicaid for their LTSS needs and how they may be similar to or different from other seniors with LTSS needs, can lead to increased understanding about how to optimize policies to support these populations.”

LTC Comment:  Like the Health Affairs issue brief on “rebalancing” we sent your way yesterday, this disquisition on the long-term services and supports (LTSS, aka LTC) needs of seniors in the community is worth reading.  But keep in mind that the high need and poor care management it documents was caused by excessive dependency on public financing for long-term care.  In a free market, people would pay privately for care they prefer instead of relying on Medicaid with its institutional bias.  They would buy private insurance to avoid late-life catastrophic LTC costs.  If they did not buy insurance, they would use their home equity to pay for care.  With those incentives to plan responsibly in place, few would end up dependent on welfare which would be better able to serve fewer people in the most appropriate care setting. 

 

Health Affairs on Rebalancing Medicaid LTC 0915 LINK 

9/17/2015, “Health Policy Brief: Rebalancing Medicaid Long-Term Services And Supports," Health Affairs, September 17, 2015.

Quote:  “Twenty-five years after the passage of the Americans with Disabilities Act (ADA), the Medicaid program is also marking an important milestone in system transformation in 2015. The national profile of Medicaid long-term services and supports (LTSS) expenditures has shifted away from primary dependence on institutional care. In 2013 the majority of Medicaid LTSS spending was for the first time focused on home and community-based settings instead of institutional care, and the Centers for Medicare and Medicaid Services (CMS) projects that community-based spending will reach 63 percent of all Medicaid LTSS spending by 2020. However, the fundamental structure of the Medicaid statute continues to promote an ‘institutional bias’ that strongly limits the potential for true balance for beneficiaries.”

LTC Comment:  This history of Medicaid’s rebalancing from principally institutional to mostly home and community-based care is worth reading, but take it with a grain of salt.  There is no reliable evidence that rebalancing saves Medicaid money and one thing is for sure, the more Medicaid pays for home care that people want instead of nursing home care they’d rather avoid, the more people will seek Medicaid and the more its cost for LTC will increase.  Be sure to note that while HCBS now consumes over half of Medicaid LTC expenditures overall, that’s not the case for elderly recipients for whom 71 percent of LTC expenditures still pay for institutional services.

 

Chapter 10:  Medicaid

Medicaid is the 800-pound gorilla of LTC

KFF on LTC and Medicaid 1215 link to PDF of report

Report online:  Here

12/15/2015, “Medicaid and Long-Term Services and Supports: A Primer,” by Erica L. Reaves and MaryBeth Musumeci, Kaiser Family Foundation

Quote:  “Private long-term care insurance is typically inaccessible to all with current or future care needs often due to high premium prices. . . .  Few individuals can afford to pay out-of-pocket for needed long-term services and supports, especially those living on fixed incomes with limited personal savings and assets. . . .  People with long-term services and supports needs may qualify for Medicaid based solely on their low incomes or they may qualify at slightly higher incomes if they also meet disability-related functional criteria.” (Emphasis in the original.)

LTC Comment:  This overview of Medicaid and long-term care is mostly accurate factually.  The problem is interpretation of the facts based on ideological bias.  That bias is revealed in the quotes above.  In a nutshell:  LTC is expensive so people can’t afford insurance for it and, therefore, government has to pay even for people with higher incomes.  Try this instead:  LTC is expensive so people would insure against its potentially catastrophic costs if it were not for government having co-opted the private insurance market by paying for most LTC for most people regardless of their financial wherewithal.  See how the otherwise puzzling pieces fit together if you just look at the facts objectively?

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Updated, Monday, February 8, 2016, 11:00 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-006:  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: 3 things for agents to know

  • Radio Interview with Former U.S. Comptroller General David Walker

  • Where dementia is most prevalent

  • Genworth suspends life insurance sales, plans restructuring

  • The 2 Big Misconceptions About Long-Term Care

  • Where You Live Matters

  • Analysis: Affordable senior housing becoming harder to find

  • Why Critical Illness Insurance Is Gaining Popularity

  • Aetna Overcomes Obamacare Losses As Medicaid, Medicare Lines Grow

  • Private Long Term Care Insurance Market Must Be Shored Up, Policy Center Argues

  • Why the Conventional Wisdom About Retirement Spending Is Wrong

  • Wealth-Protection Insurance People Neglect

  • Millionaires Get Obamacare Tax Credits. And It’s Completely Legal

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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, February 5, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC BULLET:  THREE CHEERS (BUT TWO FROM THE BRONX) FOR NEW BPC-LTC RECOMMENDATIONS

LTC Comment:  The Bipartisan Policy Center’s new report on long-term care leads with LTCI (hear, hear!), but makes Medicaid even more tempting (boo!) and adds a new, expensive, mandatory government program (boo!) based on faulty premises.  Our analysis and critique follow.

 

LTC BULLET:  THREE CHEERS (BUT TWO FROM THE BRONX) FOR NEW BPC-LTC RECOMMENDATIONS

LTC Comment:  The Bipartisan Policy Center released “Initial Recommendations to Improve the Financing of Long-Term Care” this week to considerable live, web-based fanfare.  The new report is the second deliverable in fulfillment of the BPC’s “Long-Term Care Initiative” launched in April 2014 with the publication of  “America's Long-Term Care Crisis: Challenges in Financing and Delivery.”  We summarized and criticized the BPC’s ambitious long-term care plans in “LTC Bullet:  Will Bipartisan LTC Policy Be Better?,” Friday, April 11, 2014.  Let’s apply a critical eye now to what they’ve come up with 22 months later.

What follows are quotes from and our comments on the BPC’s “Initial Recommendations to Improve the Financing of Long-Term Care.”

BPC Quote:  “BPC’s Long-Term Care Initiative plans to produce a set of recommendations that weave together the approaches of publicly funded programs, such as Medicaid, with private insurance products, while also improving the efficiency and quality of LTSS.”  (p. 4)

LTC Comment: A worthy goal, but the devil is in the details.

BPC Quote:  “[S]ales of private LTCI continue to fall, largely because premiums are unaffordable and the traditional product design has proved to be unsustainable for carriers.”  (p. 5)

LTC Comment:  Wrong!  Devilish detail #1:  The real cause of falling LTCI sales is government fiscal and monetary interference in the market.  Easy access to Medicaid after the insurable event occurs crowded out demand for private LTC insurance and the Federal Reserve’s zero-interest-rate policy (ZRP) made the product unprofitable, thus necessitating premium rate increases.  Artificially low interest rates also reduced seniors’ incomes making it harder for them to afford LTCI premiums, a double whammy.  Blaming the victim (LTCI carriers) instead of the culprit (bad government fiscal and monetary policy) for poor LTCI sales is incorrect and irresponsible.

BPC Quote:  “BPC’s work over the last two years led us to conclude that the challenges to achieving consensus on long-term care financing are numerous.  Among them:  …  Lack of awareness about the costs and risks of needing LTSS and the incorrect belief that Medicare or Medicaid will cover LTSS needs … Significant variation in the need for LTSS. For example, while more than half of Americans age 65 and over will need LTSS during their lifetimes, only 15 percent will have LTSS expenses exceeding $250,000 during their lifetimes.”  (p. 5)

LTC Comment: False assumptions!  Devilish detail #2:  Erroneous foundational premises bode poorly for BPC’s conclusions.  The “belief that Medicare or Medicaid will cover LTSS needs” is hardly incorrect.  Those two public programs pay for most high LTC costs, whether the public realizes the fact or not.  Variations in the need for LTC are hardly a “challenge”; they are precisely what makes private insurance a viable solution. 

BPC Quote:  “The Long-Term Care Initiative recommendations place a heightened focus on the role of the private market, outline improvements to public programs such as Medicaid, and consider the potential for catastrophic coverage.”  (p. 5)

LTC Comment:  OK, sounds reasonable, what exactly does BPC recommend?

BPC Quote:  Recommendation:  “Increasing the Availability and Affordability of Private Long-Term Care Insurance to Extend Existing Resources” including “establish a lower-cost, limited-benefit private LTCI product, called ‘retirement LTCI,’” for which “employees may use funds in retirement accounts to pay retirement LTCI premiums (early withdrawals would be penalty-free),” and “providing incentives for employers to offer retirement LTCI on an opt-out basis through workplace retirement plans and permitting the sale of retirement LTCI through state and federal insurance marketplaces.”  (pps. 5-6)

LTC Comment: Well, hallelujah, now you’re talking!  I think we have LTCI analyst/advocate Marc Cohen’s participation in the BPC project to thank for the ascendancy of private long-term care insurance in the report’s hierarchy of priorities.  These are proposals LTCI carriers’ government affairs specialists have been advocating for decades.  Unfortunately, designing a lower-cost LTCI product and getting expensive LTCI incentives passed will be very difficult, more likely impossible, unless and until the Devilish Details identified above are recognized and corrected.  Affordable LTCI won’t happen as long as Medicaid LTC is easy to get, artificially low interest rates prevent profitability, and so-called experts believe Medicaid and Medicare do not pay for LTC.

BPC Quote:  Recommendation:  “Expanding Options at Home and in the Community for Older Americans and Individuals with Disabilities under Medicaid Under Medicaid” including “Create incentives for states to expand the availability of HCBS by: (1) combining existing Medicaid waiver and state plan amendments (SPAs) authorities into a single streamlined SPA; and (2) extending existing enhanced federal matching to encourage states to take advantage of the new streamlined authority.”  (p. 6)

LTC Comment:  Sounds great.  Most seniors prefer home and community-based services (HCBS) to living in a nursing home and shouldn’t Medicaid give its “customers” what they want?  Sure, but the presumed financial viability of expanding Medicaid HCBS depends on another erroneous assumption—Devilish Detail #3—that home care saves money.  It does not.  Home care delays but too often does not replace institutional care.  Everywhere and everywhen Medicaid LTC expenditures for nursing home care and HCBS combined have increased rather than decreased year after year.  That’s why Congress only dipped its toe into providing non-institutional Medicaid LTC services originally.  It required formal waivers approved by the federal government which, ironically, limited HCBS to people who already need nursing home care and, as a cost-effectiveness guarantee, mandated that total costs could not exceed what expenditures would have been for purely institutional care.  BPC’s belief that Medicaid can throw the doors wide open to HCBS without breaking the bank is as dangerous as it is naïve.  The truth is that making Medicaid even more attractive and tempting will drive up costs and further crowd out private LTC financing alternatives.

BPC Quote:  Recommendation:  “Addressing the Needs of Americans with Significant LTSS Needs” including “For individuals with significant LTSS needs, pursue concepts and elements for a public insurance program to: (1) address uninsurable long-term care costs; (2) protect Americans from the catastrophic costs of LTSS; and (3) provide relief to states, which along with the federal government face significant Medicaid costs in the coming years as baby boomers begin to need LTSS.”  (p. 6)

LTC Comment:  Did you wonder why people with such an obvious bias for a government-program solution led with a nod to private LTC insurance?  Now you have the answer.  They think we really need a public LTC financing program to “address uninsurable long-term care costs.”  But what LTC costs are uninsurable?  Well most of them supposedly because BPC assumes private LTC insurance is severely limited by challenges they delineate, but which wouldn’t exist in the absence of government interference in the fiscal and monetary markets, as I explained above.  (See Devilish Details 1, 2 and 3.)  BPC wants to relegate LTC insurance to covering relatively small front-end LTC expenditures which would turn this genuine insurance product into a pseudo-insurance, pre-payment mechanism like Medigap.  The true purpose of insurance is to replace the small risk of a catastrophic loss with the certainly of an affordable premium.  By claiming the back-end, catastrophic costs of LTC for a new government program, these analysts relegate private LTC insurance to a permanent third class position and elevate the public program to a precarious fiscal pedestal from which, like its predecessors Social Security and Medicare, it will inevitably fall.

BPC Quote:  Recommendation:  “Program costs should be fully financed so as not to add to the federal deficit over the long-term.”

LTC Comment:  This is the “have our cake and eat it too” portion of the BPC proposals.  How exactly shall we pay for this big new back-end catastrophic LTC government program?  For that you have to leave the “Executive Summary” and dig through the weeds of the report.  Here’s what you’ll find:   

BPC Quote:  “A variety of financing approaches could be considered, including:  A dedicated payroll-tax financing approach, similar to Social Security or Medicare Part A” or “A general-funding approach, which could be offset through changes to the tax system, such as broadening income or consumption-tax bases or increasing tax rates, changes to spending programs, such as adjustments to Medicare and Social Security, or a combination of both.”  (pps. 22-23)

LTC Comment:  Bottom line, if you start with the false premises (1) that people are spending down to impoverishment for long-term care because Medicaid and Medicare don’t pay for it, (2) that variations in LTC risk are a detriment to LTCI instead of its basis, and (3) that home and community-based services save Medicaid money, you’ll end up concluding that the only solution to the LTC financing crisis is to increase payroll taxes, income taxes, sales taxes, or most likely, all of the above.

Closing LTC Comment:  We saw this upshot coming.  Here’s how we closed our analysis and critique of the Bipartisan Policy Center’s original “Long-Term Care Initiative” mission statement (America's Long-Term Care Crisis: Challenges in Financing and Delivery) in LTC Bullet:  Will Bipartisan LTC Policy Be Better?, Friday, April 11, 2014:

“The consensus coalescing around a long-term care financing solution is that some form of mandatory social insurance should supplement private LTC insurance.  The dangers in that remedy are myriad.  Do we really need another expensive entitlement program?  What happens when Social Security cuts back so that people have less income to spend on LTC?  What happens when Medicare reduces its generous provider reimbursements that currently enable LTC providers to survive despite Medicaid’s low payments?  Wouldn’t more public financing of LTC only increase the public’s growing entitlement mentality?  Don’t we need to start weaning people off dependency on government largesse?  How long will it be before economic gravity takes hold again and government has to pay normal interest rates on its trillions of debt?  What happens when the unfunded entitlement liabilities come due?  It is nothing short of bizarre that serious people claim to study, diagnose, and prescribe about long-term care without taking these factors into account.  It goes to show we’re not much closer to a real solution and that the new consensus coalescing is as much a danger as an opportunity.”

We see no reason to amend this judgment based on the Bipartisan Policy Center’s latest report.  If anything, we’re more concerned than ever.  We document our concerns in much greater detail in a new report soon to be published by Federalism in Action and the Center for Long-Term Care Reform titled “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire.”  This report will show why the current long-term care service delivery and financing system in the USA in general and New Hampshire specifically is highly unlikely to survive the age wave.  It will recommend viable solutions.  Stay tuned.

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Updated, Monday, February 1, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-005:  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:

  • 9 senators request more funds for Alzheimer's

  • Why Candidates Aren't Talking About Long-Term Care

  • The old folks home goes upscale and ultra-competitive: The race is heating up in Massachusetts for a share of the golden-years gold mine

  • What Are The Best Coverage Options For Long-Term Care Insurance?

  • Free Webinar: The Evolving Medicare Payment Landscape: How PAC Providers Can Prepare

  • Short-Term Care Insurance Finding a Market

  • Medicaid and Long-Term Care Quiz

  • Officials urge state to support nursing homes if minimum wage reaches $15

  • Dual eligible pilots proving pricey, time consuming for states

  • What Are The Best Coverage Options For Long-Term Care Insurance?

  • What This Survey Said About Paying For Long-Term Care

  • Is Dementia Risk Falling?

  • As Population Ages, Where Are the Geriatricians?

  • Rocky Rollouts as States Try Managing Medicaid Long-Term Care

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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, January 29, 2016, 10:05 AM (Pacific)
 
Seattle—

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LTC BULLET:  CASSANDRA’S LTC RECOMMENDATIONS

LTC Comment:  Our recommendations for federal and state long-term care policy changes follow the ***news.***

*** TAKE THE KFF’S MEDICAID AND LTC QUIZ:  We sent the following LTC Clipping to our clippings subscribers last week.

 1/27/2016, “Medicaid and Long-Term Care Quiz,” Kaiser Family Foundation

Quote:  “Medicaid and Long-Term Care Quiz:  Medicaid, the nation’s major publicly-financed health insurance program, plays an important role in the delivery and financing of long-term care (LTC) services. These services include a broad range of paid and unpaid medical and personal care assistance. Long-term care is not medical in nature. Instead, it provides help with regular daily activities to support independent living. People may need LTC over a period of weeks, months, or years.  How much do you know about Medicaid and LTC?  Get Started

LTC Comment:  I aced the quiz and I bet most LTC Clippings readers will too. ***

*** WHY SUBSCRIBE TO LTC CLIPPINGS:  To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge.  Good LTC planning requires understanding the six “blind men” of long-term care and how they interact:  government, consumers, advocates, providers, insurers and financiers.  For the details on that observation, read “The Elephant, The Blind Men and LTC” here.

How can you keep abreast of those complicated topics and their interactions?  You can spend dozens of hours every week canvassing the internet for relevant articles, speeches and reports.  Then scan volumes of useless information to find and absorb the few valuable gems of knowledge they contain.   Or you can subscribe to LTC Clippings and let us do that part of the job for you.

If you subscribe to LTC Clippings and invest a few minutes of your time each week to read and consider them, we promise you a plentiful and profitable source of actionable information and insights.  Contact Damon at 206-283-7036 or damon@centerltc.com for details and to subscribe. ***

*** WIGGIN’ OUT FOR ALZHEIMERS VIDEO:  Steve Moses keynoted the ACSIA Partners 2016 Kick-Off Conference in Austin, Texas recently.  We published his remarks in LTC Bullet:  The Long-Term Care Crisis:  Why Now But Not Yet?, January 15, 2016.  Now see what Steve had to say at ACSIA Partners’ “Wiggin’ Out for Alzheimers” event that raised $19,000 for the Alzheimer’s Association.  Here’s the link:  http://centerltc.com/Steve_Moses.mp4 It may take a while to load. ***

 

LTC BULLET:  CASSANDRA’S LTC RECOMMENDATIONS

LTC Comment:  Last week’s LTC Bullet brought you the “Summary” and “Conclusion” from our forthcoming report “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire.”

We warned “From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.”

We concluded “that long-term care scholarship should angle away from narrow, marginal reforms of specific LTC service and financing problems toward comprehensive analysis and potentially radical restructuring with much heavier reliance on private planning and individual responsibility and much less dependency on public programs and funding.”

That said, what should federal and state policy makers do about the impending crisis in long-term care service delivery and financing?

 

 

Recommendations from “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” by Stephen A. Moses; to be published soon by Federalism in Action and the Center for Long-Term Care Reform

Recommendations

Federal

1.  Change federal monetary policy (low interest rates, credit expansion, easy money) which has enriched the affluent by increasing equity and real estate values but hurt the poor and middle class by impeding job creation and nearly eliminating safe income from savings.

2.  Change federal fiscal policy (deficit spending) which has grown the national debt from $10.8 trillion in January 2009 to $18.9 trillion today, undermined social safety net programs with trillions of dollars in unfunded liabilities, and diverted capital away from productive private uses thus damaging the economy and inhibiting job creation.

3.  Change the Federal Medical Assistance Percentage (FMAP) system of funding Medicaid so that it does not incentivize excessive program expenditures and disproportionately benefit wealthier states and people at the expense of poorer states and people.

4.  Block grant Medicaid or cap federal funding with fewer mandates and controls in order to encourage and enable states to experiment with new, potentially more cost-effective approaches to long-term care service delivery and financing. 

5.  Let states target Medicaid to the needy by allowing them more freedom to set their own Medicaid long-term care eligibility standards.  For example, eliminate or radically reduce the mandatory home equity exemption currently set at between $552,000 and $828,000 while retaining reasonable protections for community spouses.

6.  Review federal restrictions on Medicaid estate recovery, encourage and publicize the responsibility of recipients with exempt wealth to repay Medicaid for their care from their estates, and use some of the savings to educate consumers about long-term care planning, home equity conversion, and long-term care insurance as options to fund LTC.

7.  Reassess waiver and incentive programs that encourage rebalancing from institutional to home-based care.  Programs that make Medicaid more attractive should await successful re-targeting of LTC benefits to the truly needy so they do not discourage private financing and overwhelm the publicly funded system.

8.  Reduce future numbers of Medicaid’s most expensive users, the dual eligibles, by tightening financial eligibility rules, including much longer transfer of assets lookback restrictions, so people will know they need to plan for long-term care many years before they become eligible for Medicare and vulnerable to Medicaid dependency.

9.  Reassess incentives for expanding LTC managed care and delay implementation, especially for dually eligible recipients, until demonstrations show more conclusively that Managed Care Organizations can handle the special challenges such patients entail.

10.  Recognize the damage done by the growing entitlement mentality and start weaning Americans, especially the non-poor off the dole in all its forms.

State Recommendations

1.  Advocate for the federal changes described above.

2.  Eschew complacency.  Take aging demographics much more seriously.  Focus on preparing for 2050 and 2025 will take care of itself.

3.  Review New Hampshire’s 209-B status for ways to tighten eligibility for Medicaid long-term care benefits.

4.  Enhance private LTC revenue sources by tightening eligibility, disallowing Medicaid planning wherever possible, encouraging personal responsibility for long-term care, publicizing estate recovery responsibility, and endorsing reverse mortgages and private long-term care insurance as preferable to Medicaid dependency.

5.  Reduce Medicaid LTC participation, utilization and costs so that the program can afford to pay adequately for a continuum of care for a smaller number of genuinely needy recipients.  In the meantime, don’t discourage “free” care by making Medicaid home and community-based care more attractive and easier to get. 

6.  Recognize the roles of Social Security and Medicare in sustaining Medicaid long-term care at sub-cost reimbursement rates.  Account for those programs’ fiscal vulnerability so that the state is not surprised and devastated by potential, and increasingly likely, federal cutbacks.

7.  Reduce dependency on federal funds in general.  End provider taxes specifically.

8.  Drop out of the Affordable Care Act, ObamaCare program before it makes New Hampshire even more dependent on dubious future federal funding.

9.  Take managed care for the aged, blind and disabled slowly, especially for duals. Reduce future duals by stronger eligibility controls and early consumer education.

10.  Enhance state revenue prospects by aspiring to better scores on economic rating systems.  Stop New Hampshire’s economic freedom slide.  Encourage economic activity by lowering taxes.  End Medicaid LTC financing by county property taxes or give counties a much stronger role in eligibility and other policies.  Fund the state pension system.

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Updated, Monday, January 25, 2016, 10:09 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-004:  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 App from Agent Review, the “Yelp of Insurance,” Gives Insurance Agents Simple New Ways to Stand Out From the Crowd

  • Women and the Longevity Risk: Planning challenges can vary dramatically from that of men

  • XPrize Founder Seeking Sponsor For Alzheimer's Contest

  • We’re lucky if we get to be old, physician and professor believes

  • Tavenner slams CMS over Medicare Advantage underpayments

  • The Benefits and Drawbacks of Buying an Annuity Doubler to Pay for Long-Term Care

  • Hybrid Long-Term Care Insurance Policies

  • Computer-Based Test Aims to Predict Dementia Risk

  • Number of Americans living past 100 jumps 44%

  • Terri Judge joins LTCG as Senior Vice President, Operations

  • Can long term care illness be your biggest expense during your retirement?

  • Austin 'Wiggin' Out' Event Raises Awareness and Dollars to Help Fight Alzheimer's Disease

  • Potential Concerns and Risks for Traditional Long-Term Care Insurance

  • Medicare to tighten requirements for many home medical devices

  • Insurers push policies for coverage gaps

  • How reverse mortgages can help stave off Medicare surcharge

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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 22, 2016, 10:37 AM (Pacific)
 
Seattle—

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LTC BULLET:  HEED CASSANDRA ON LTC

LTC Comment:  The Trojans ignored Cassandra and Troy fell.  Disregard today’s LTC Cassandras at your peril.  Details 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. ***

*** WIGGIN’ OUT EVENT—We sent the following LTC Clipping on Wednesday:  

1/20/2016, “Austin 'Wiggin' Out' Event Raises Awareness and Dollars to Help Fight Alzheimer's Disease,” Send2Press Newswire

Quote:  “Wearing smiles and purple wigs, a gathering of normally serious professionals mingled festively in ‘Wiggin' Out,’ a fundraising event held at Maggie Mae's in Austin, Texas, Saturday evening, January 16. ‘We achieved two objectives,’ says Denise Gott, CEO of ACSIA Partners, hosts of the event. ‘First, we raised some money [$19,000] to help fight Alzheimer's. And second, we raised awareness of the growing need for long-term care as the disease progresses.’”

LTC Comment: It was a hoot.  I was there to keynote ACSIA Partners’ 2016 Kick-Off Conference earlier in the day.  We published my remarks in last Friday’s LTC Bullet The Long-Term Care Crisis:  Why Now But Not Yet?, January 15, 2016. ***

 

LTC BULLET:  HEED CASSANDRA ON LTC

LTC Comment:  Last July, in “LTC Bullet:  Cassandra’s Quandary,” we explained how the ancient Greek myth applies to modern day long-term care financing:

In the ancient myth, Apollo granted Cassandra the ability to predict the future accurately, but when she declined his romantic advances, he doomed her to be disbelieved.  The evasion of reality and denial of risk surrounding long-term care public policy reminds me of Cassandra’s quandary.  No matter how much irrefutable evidence we adduce for the unsustainability of the current LTC financing system, the stubborn minions of complacency persist and prevail.

We capped that Bullet with this statement:  “So, when will Cassandra’s dire LTC predictions come true?  No later than 2030, but probably much sooner.  We’re compiling and organizing the evidence in one politically prominent state, New Hampshire.  Expect our report in September.”  Well, September 2015 is long past, but finally our report, titled “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” is nearing publication.

Don’t be underwhelmed by the report’s focus on a small state like New Hampshire.  Our analysis applies to the country as a whole and is easily comparable to any other state by applying our “Index of Long-Term Care Vulnerability.”  Besides, what could be more relevant right now than to home in on the LTC financing crisis as it manifests itself in the first-in-the-nation presidential primary state?

Here’s a sneak peak at our findings.  Soon we’ll share the report’s recommendations. 

 


Excerpt from “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” by Stephen A. Moses; to be published soon by Federalism in Action and the Center for Long-Term Care Reform

Summary

America’s LTC-prone, 85-plus population will more than triple by 2050 (+224 percent); New Hampshire’s will nearly quadruple (+267 percent).  Over one-third of the elderly already have a disability (37 percent); just under one-third in New Hampshire do (32 percent).  Nearly half of nursing home residents suffer from dementia nationally (46 percent); well over half do in New Hampshire (55 percent).  More people are living longer and the longer they live, the more likely they are to succumb to the chronic illnesses of old age and to require extended care.

Medicaid is the dominant payor for long-term care consuming nearly 17.8 percent of  state budgets (much more including federal matching funds); 40.4 percent in New Hampshire.  Long-term care, especially for dual eligibles and the aged, blind and disabled, consumes a disproportionate share of Medicaid expenditures.  State efforts to rebalance from institutional to home care have made Medicaid more attractive and increased expenditures.  Easy access to Medicaid after people need long-term care has crowded out private LTC financing alternatives such as home equity conversion and private long-term care insurance.  Low Medicaid reimbursement has diminished care access and quality for poor and affluent alike.  Medicaid consumes a larger and larger proportion of state budgets and tends to crowd out other spending priorities over time.  Expansion of Medicaid eligibility under the Affordable Care Act (AKA ObamaCare) will exacerbate all these problems.

To survive as the principal funder of long-term care, Medicaid is heavily dependent on federal (57%) and state (43%) funds.  The ratio is 50/50 for New Hampshire.  But the availability of sufficient federal funds in the future is dubious.  Federal debt is huge and growing, nearly $19 trillion as of January 20, 2016.[i]  Infinite horizon unfunded liabilities of Social Security and Medicare are $73.4 trillion.  Federal Medicaid lacks even the artifice of a borrowed “trust fund” to obscure its unlimited general fund liability.  Federal reserve policy has expanded the money supply tremendously and forced interest rates to near-zero creating a risk of higher, possibly hyper-inflation.  Aging boomers have not saved enough.  Low interest rates reduce their retirement incomes, making them more dependent on safety net programs that threaten to explode in cost.  

State funds needed to match the federal Medicaid funds are also vulnerable.  Each new economic bubble bursting—most recently the dot.com (2000) and housing (2008) busts—has brought worsening recessions that devastate state tax revenues and reserves.  Economists worry that the latest bubble, inflated by extremely loose monetary (credit expansion) and fiscal (spending) policy, will bring on a much worse downturn than the Great Recession.[ii]  Worst of all, “Policy makers worry fiscal and monetary tools to battle a recession are in short supply ….  The U.S. generally injects cash into the economy through interest-rate cuts, tax cuts or ramped-up federal spending.  Those tools could be hard to employ when the next dip comes:  Interest rates are near zero, and fiscal stimulus plans could be hampered by high levels of government debt and the prospect of growing budget deficits to cover entitlement spending on retired baby boomers.”[iii]

If the Age Wave and financing pressures are too great for Medicaid to sustain long-term care financing, where can the country and states like New Hampshire turn?  Unfortunately, potential private sources of LTC financing have been largely crowded out by the relatively easy access to Medicaid in the past.  Medicaid income and asset eligibility rules make it feasible for people with substantial wealth to qualify.  Mandatory estate recovery goes largely unenforced.  Medicaid’s outsized home equity exemption eliminates reverse mortgages as a major source of LTC funding.  A main reason so few people purchase private LTC insurance is that for the past 50 years Americans have been able to ignore the risk and cost of LTC, wait to see if they need extended care and, if they do, qualify easily for public financing while protecting most or all of their estates.  This perverse incentive has discouraged responsible LTC planning and impeded the market for private insurance products that could have relieved the financial pressure on Medicaid.

Underscoring all these practical problems is a broader socio-political malaise.  Over the past eight decades more and more Americans have become dependent on government programs.  Arguably, a growing entitlement mentality has substantially impaired the country’s traditional reliance on personal responsibility, self-sufficiency, independence, and freedom, the building blocks of our earlier economic success. 

Public assistance (Medicaid) pays for nearly half of all births in the U.S. (47.8 percent), though less than a third (29.9 percent) in New Hampshire.  Food stamps sustain one in seven (14.4 percent) of Americans; only one in 12 (8.4 percent) New Hampshirites.  Welfare pays more than work in 35 states, over $19 per hour in New Hampshire, the ninth most generous state.  The nearly bankrupt Social Security Disability Income (SSDI) program crowds out work.  SSDI supports 2.7 percent of Americans, 3.5 percent in New Hampshire.  State and local pensions, on which many depend, are unfunded $3 trillion nationally, $4.6 billion in New Hampshire.  Fully funding them would require tax increases of $1,385 per household per year for 30 years nationally; $1,010 in New Hampshire, which has pre-funded only 56.2% of its pension liability.  Medicaid is the primary payer for 63 percent of nursing home residents; 64 percent in New Hampshire and upwards of 80 percent of all Medicaid nursing home residents have prepaid burial insurance funded by assets exempted from the program’s resource spend down requirements.  This cradle-to-grave public safety net creates a moral hazard, “a situation in which a party is more likely to take risks because the costs that could result will not be borne by the party taking the risk.”[iv]

Conclusion

From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.  Absent extraordinary improvements in the national and state economies generating huge new revenues to support large and growing public programs and pensions, it is difficult to see how those programs’ and pensions’ promises will be met.  A sensible conclusion is that long-term care scholarship should angle away from narrow, marginal reforms of specific LTC service and financing problems toward comprehensive analysis and potentially radical restructuring with much heavier reliance on private planning and individual responsibility and much less dependency on public programs and funding.

The future prospects for private long-term care financing alternatives are better than they currently appear.  When economic conditions compel Medicaid and Medicare to back off from LTC financing, real asset spend down will rapidly increase; spend down of home equity to fund LTC will accelerate; and as retirement savings and home equity are consumed to pay for long-term care, more and more people will begin to plan early and insure privately for that risk and cost.  Private LTC insurance can become a mainstream financial planning tool, losing its reputation as the “poor relative” of insurance products, as demand and distribution increase. 

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[i] US Debt Clock.org, http://www.usdebtclock.org/, extracted January 20, 2016.

[ii] “We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit booms, asset price bubbles increase financial crisis risks; upon collapse they tend to be followed by deeper recessions and slower recoveries. Credit-financed housing price bubbles have emerged as a particularly dangerous phenomenon.”  Source:  Òscar Jordà, Moritz Schularick, and Alan M. Taylor, “Leveraged Bubbles,” National Bureau of Economic Research (NBER) Working Paper 21486, http://www.nber.org/papers/w21486.

[iii] Jon Hilsenrath and Nick Timiraos, “U.S. Lacks Ammo for Next Economic Crisis,” Wall Street Journal, August 17, 2015; http://www.wsj.com/articles/u-s-lacks-ammo-for-next-economic-crisis-1439865442.

[iv] Wikipedia definition of “moral hazard,” http://en.wikipedia.org/wiki/Moral_hazard. The definition cited in the text is no longer at this source, but remains an accurate description of moral hazard.

 

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Updated, Tuesday, January 19, 2016, 9:45 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-003:  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 Things That No Middle-Aged Person Has Said – Ever

  • Why Self-Coverage May Not Be An Adequate Substitute for Long-term Care Planning and Insurance

  • The Easy Way to Make Your Retirement Savings Last

  • Elder Orphans: Step One in the Aging-Alone Plan, learn the stages

  • What to Do With Your HSA Money When You Go on Medicare

  • Family Won't Help with Mom? 6 Strategies to Reduce the Drama

  • I Still Believe in Long-Term Care Insurance

  • MetLife to break itself up

  • Life Lessons: Thinking ahead to retirement? Get to know your future you

  • My Motherless Mother

  • Hawaii Long-Term Health-Care Bill Serves as National Model

  • Two Options for Funding Long-Term Care Expenses

  • Hospitals Step Up To Help Seniors Avoid Falls

  • A Tale of Two Retirements

  • RMDs aren't a tax-free way to pay for long-term care insurance

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

"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, January 15, 2016, 11:11 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE LONG-TERM CARE CRISIS:  WHY NOW BUT NOT YET?

LTC Comment:  If the LTC crisis is such a big deal and government is the cause, why hasn’t it happened already and when will it occur?  Our thoughts follow.

 

LTC BULLET:  THE LONG-TERM CARE CRISIS:  WHY NOW BUT NOT YET?

LTC Comment:  Tomorrow morning, I’m speaking to a group of long-term care insurance producers at the ACSIA Partners 2016 Kick-Off conference.  What follows is the message I plan to share with them.  My goal is to explain why the crazy, mixed up long-term care financing marketplace is the way it is, why it has worsened lately, and why it will change for the better sooner rather than later. 

Selling long-term care insurance is a tough business.  Agents need hope and understanding.  They need dedication and perseverance.  But just as important, consumers need what they’re selling in spite of all the obstacles to the sale, including rising premiums, tougher underwriting, and public policies that crowd out private financing options. 

Why are things the way they are and what’s going to happen next?  Read on.

 

 

“The Long-Term Care Crisis:  Why Now But Not Yet?”
by
Stephen A. Moses

What’s the deal with long-term care?

Do you know?

Just look at the facts.  They present an army of puzzles.

Aging population
High incidence of LTC
Very expensive for some
Unpredictable
Insurance is perfect solution
Yet few buy even if they can afford

We’ve known all that for 20 years

Latest facts and puzzles even worse 

Premiums higher
Underwriting tougher
Consumer denial/indifference continues, even greater
Yet need is bigger than ever

What gives?

Anybody here know?

If so, I’ll step aside.

No? 

Well, here’s the good news:  I know and I’m going to tell you.

I figured it out 34 years ago.

It hasn’t played out exactly as I predicted . . . yet!

But it will.

Here’s the story.

I was working for HCFA in 1982.

My job was to make sure the state of Oregon followed federal law and regulations implementing Medicaid.

I was doing a routine state assessment when I came across the estate recoveries program.

Little state of Oregon collected $5 million or 5% of LTC expenditures from estates of deceased recipients.

Wait, I thought.  How can that be?  Don’t you have to be poor to get Medicaid?

That set me to studying Medicaid eligibility.  What I found created a public policy uproar.

Income allowed practically unlimited—up to cost of a nursing home.

Assets truly unlimited—home and contiguous property, one business, one auto, term life, home furnishings, personal property, IRAs—all uncounted

Whoa!  This is huge, I thought. 

The aging baby boom will overwhelm Medicaid when they need LTC.

But people won’t buy the budding new LTC insurance product if they can ignore the risk, avoid the premiums, wait to see if they ever need extended care and then get Medicaid to pay.

The whole public welfare system will collapse if something isn’t done!

So I wrote reports explaining this for the Inspector General of the US Department of Health and Human Services.

I recommended tightening Medicaid LTC eligibility and requiring estate recoveries.

I met Secretary Louis Sullivan of HHS on a plane and told him about my findings.  Next thing I knew Cabinet secretaries were outbidding each other to deal with the issue. 

Almost everything I recommended passed into federal law in 1993.  Longer and stronger transfer of assets restrictions and mandatory estate recoveries.

We gave Americans a publicly-financed line of credit on their estates to pay for long-term care recoverable from their estates in order to encourage responsible LTC planning to avoid that eventuality.

Problem solved, right?

That’s what I figured, but . . . alas, no.

State Medicaid programs didn’t implement the new requirements aggressively; the feds didn’t require them to do so; the media didn’t publicize the new rules; so consumer behavior didn’t change.

I don’t have time to cover all the details.  Several Congresses and Presidents tackled the problem over the years, but our next big success didn’t come until 2005.

The Deficit Reduction Act of that year closed some more loopholes and put the first cap ever on home equity—at $500K to $750K, now $552K and $828K

That law as it applies to Medicaid was written by my co-founder of the Center, attorney David Rosenfeld when he became counsel to the House Medicaid committee.

I spent half a year lobbying for it commuting half time from the good Washington (Seattle) to Washington, DC.

That was a big victory, but didn’t solve the problem either.

Medicaid remains the primary payer for long-term care, not only for the poor, but also for the middle class, and even for many of the affluent.

LTCI remains a niche product as a result.

All this is well documented and we fully report the research in Center publications and on our website:  www.centerltc.com.

OK, so here we are over 30 years later.

The problem we found so long ago still persists and worsens

Boomers are retiring at 10,000 per day.

Social Security is overloaded with $25 trillion unfunded liabilities.

Medicare is underwater--$43 trillion unfunded.

Medicaid is even worse off—it has no phony trust fund like Social Security and Medicare to hide the problem.

So why hasn’t the whole public financing house of cards collapsed already as I predicted it would in 1985?

Why hasn’t private LTC insurance come to the rescue as I predicted it would?

The answer to both questions is the same.

The government!  There are two basic problems:

(1)  Fiscal or spending policy—profligate spending on Social Security, Medicare and Medicaid undercut personal responsibility, planning, and LTCI demand.

(2)  Monetary policy--Then, to disguise the damage done by borrowing and deficit spending . . .

The Federal Reserve printed a lot of money, sold a lot of bonds (Quantitative Easing) and forced interest rates to near zero undercutting seniors’ income, making them more dependent on public programs, and ruining LTCI’s profitability.

Government tries to have its cake (big spending) and eat it too (avoid consequences like recession and inflation).

The result is the puzzle we started by describing:  high risk and cost of LTC but consumer denial and indifference.

The economist Herb Stein said:  “Trends that can’t continue, won’t.”

So a day of reckoning is still coming.

But why hasn’t it come yet?  That’s the big question before us today.

Government interference in the economy postponed the reckoning.

Bottom line:  Federal reserve policy printing money and pushing interest rates to zero has created a series of economic booms and busts, one bubble after another growing until they burst.

The first was the internet bubble when low interest rates and easy monetary policy pushed money into high-tech stocks until that bubble popped in 2000.

Then the real estate bubble when low interest rates and easy money flowed into the housing sector until that bubble popped in 2008 leading to the “Great Recession.”

What’s happening now?

A bigger bubble is growing, the third and biggest bubble so far.

Stupendously bigger.

A decade of easy money and artificially low interest rates has enabled federal deficit spending to continue beyond all reason.

How can that be?

Federal debt now $18.9 Trillion; in 2000, $5.7 Trillion  more than triple

Interest on the federal debt was 6.63% in 2000; 2.33% in Dec. 2015 down by 2/3

The federal government is defying economic gravity.

If interest rates return to 2000 levels of 6.7% with 2016 debt $19 trillion, U.S government interest payments would jump from $400 billion to $1.3 trillion, 35% of the federal budget!

Heritage Foundation says “All Tax Revenue Will Go Toward Health Care, Social Security, and Net Interest by 2033

What else happens around 2033?  Social Security and Medicare trust funds will be depleted, automatically reducing those benefits.

In 2031, the first baby boomers turn 85, the age at which long-term care becomes a probability instead of a possibility.

Think of it like a family.

If you live beyond your means, sooner or later you can’t pay your bills and loans.  You go bankrupt.

But unlike a family, the government is able to print money, expand credit, and reduce interest rates.

That delays a reckoning, but it does not prevent one.

The excess money and credit chases investment opportunities that seem smart and profitable in good economic times, but create mal-investment.

That is, too much money goes into bad investments:  such as internet stocks with no revenue; real estate with values pumped up by sub-prime mortgages and “liar loans;” or, now, excess public spending on entitlement programs.

The first two bubbles popped after less than a decade.

The third and biggest bubble—excess debt and credit pumped into government social programs—could pop anytime.

That means an economic downturn even worse than the “Great Recession.”

Why now?

Markets are predictive.  “Buy the rumor; sell the news.”

What’s different now is that all the risk factors are approaching critical mass:

Aging of the baby boomers
Bankruptcy of the entitlement programs
Weakness of the LTC insurance business
Entitlement mentality of consumers

I’ve laid all this out in a new report:  “Cassandra’s Quandary”

Apollo blessed Cassandra with accurate prognostication but when she declined his romantic advances, he cursed her to be disbelieved.

We’ve been lulled to sleep by easy money, generous credit and deficit spending just as everything is about to hit the fan.

Like Cassandra, those of us—like you and me—who see it coming have great difficulty convincing people they should worry about and plan for long-term care.

So what does all this mean?

We’re in a critical period.

You must persevere.

Opportunities are coming.

You are the only line of defense between your clients and the poor house.

You are committed—you have commitment or you would not be in the business

Embrace the passion—let it show

Do what the top sellers do CWQLPK:

Care
Work
Question
Listen
Personalize
KISS

Thank you for listening but more importantly, thank you for all you do.

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Updated, Monday, January 11, 2016, 11:17 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-002:  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:

  • BY-BOOMERS: Tapping hard-earned resources

  • Agent Review, The ‘Yelp for Insurance,’ Closes Seed Round With Angel Investors to Drive Continued Growth

  • Are Health Plans That Pay A Lump Sum For Critical Illnesses Worth It?

  • Dear Distributor” letter from William L. Naylon, President, MedAmerica

  • Home Health Aides: Unsung Health Care Heroes

  • 'Critical illness' insurance plans surge in popularity

  • Genworth Investors: Beware of Bogus Reassurances

  • White House: ‘Age Wave’ Can Make Country Stronger

  • To keep seniors living independently, sensors track their home habits

  • By 2050, There Could Be as Many as 25 Million Poor Elderly Americans

  • Ep. 558 Medicare and Medicaid, 50 Years Later: The Awful Truth

  • Long-Term Care Insurance Can Be Costly but Effective

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

"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, January 8, 2016, 9:54 AM (Pacific)
 
Seattle—

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

LTC BULLET:  CENTER KICKS OFF NEW YEAR WITH MAJOR STUDY

LTC Comment:  Medicaid’s large home equity exemption vastly increases the program’s LTC expenditures, contributes to its growing unfunded liability, and discourages responsible LTC planning.  Details on our new study to address these problems follow the ***news.***

*** MEDICARE has published “2016 costs at a glance” here:  https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html.   We’ve posted the key numbers in The Zone here.  You’ll also find the comparable deductible and co-insurance numbers, etc. going back to 1993.  If you need your user name and password to access The Zone, or if you want to join the Center and get access to all our members-only resources, please contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** AGENT REVIEW LIFTS OFF—We posted the following LTC Clipping to our clippings subscribers yesterday.

1/5/2016, “Agent Review, The ‘Yelp for Insurance,’ Closes Seed Round With Angel Investors to Drive Continued Growth,” Yahoo Finance

Quote:  “Agent Review (www.agentreview.net), a free online platform to connect consumers with non-biased insurance education and credible agents, today announced it has closed its seed funding round and will begin fundraising for its Series A investment in January 2016. The angel investment was led by insurance leaders Joe Pulitano and Doug May, and by industry investors Towpath and Anabranch. The amount of money raised was not disclosed.”

LTC Comment: Congratulations to Agent Review and everyone associated with the ground-braking, pro-consumer initiative. ***

 

LTC BULLET:  CENTER KICKS OFF NEW YEAR WITH MAJOR STUDY

LTC Comment:  Until the Deficit Reduction Act of 2005 (DRA ’05), Medicaid allowed applicants and recipients to retain unlimited equity in a home and contiguous property.  DRA ’05 imposed the first-ever home equity limit of $500,000 or $750,000 at state legislatures’ discretion.  This cap has increased with inflation to $552,000 or $828,000 in 2016.  Inasmuch as the average senior’s home equity is only $130,000, Medicaid allows people with more than four to six times that level of wealth to qualify for LTC benefits. 

Theoretically, estate recovery—made mandatory in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93)—should recapture the exempted home equity after the Medicaid recipient and his or her last surviving exempt dependent relative pass away.  But state Medicaid programs have not pursued estate recoveries fully and the federal Medicaid program has not compelled them to do so as OBRA ’93 requires.  Consequently, Medicaid permits people to shelter hundreds of thousands of dollars in exempt home equity against the risk of long-term care expenditures. 

The Center for Long-Term Care Reform’s new study will (1) analyze the impact of Medicaid’s home equity exemption on the program’s LTC expenditures and unfunded liabilities, (2) examine the exemption’s impact on the LTC financing system in general and private financing alternatives in particular, and (3) propose solutions to reduce dependency on Medicaid, encourage responsible long-term care planning, and increase the use of home equity conversion and private LTC insurance to fund long-term care.

Following are excerpts from the formal description of this project, which we are conducting on behalf of the Foundation for Government Accountability.  We’ll report periodically on our progress.  Our final report will be due August 15, 2016.

 

“Medicaid Long-Term Care:
Ensuring Scarce Resources Reach the Neediest People”

Background

Medicaid has a massive unfunded liability that will cripple taxpayers if no changes to the program are made. The biggest problem is that Medicaid has become inheritance protection insurance for too many middle-class seniors in nursing homes. That is not what it was created for. That reality is robbing Medicaid and taxpayers of scarce resources needed to serve the truly needy. Reforming that part of Medicaid is the first and biggest step toward fixing the entire Medicaid program and its unfunded liability.

There are simple solutions, but we need to build the intellectual case for these reforms and market and mainstream them to state and federal policymakers.  . . .

The Problem

Medicaid is a means-tested public assistance program, i.e., welfare. Medicaid is also the principal funding source for long-term care (LTC) throughout the United States, not only for the poor, but for most middle-class Americans as well. Why is that? Because Medicaid’s basic LTC eligibility rules are different than traditional Medicaid, which only targets the poor. In many states, Medicaid’s basic LTC program allows elderly people who medically need nursing-home-level care to have income up to the annual cost of a nursing home—$80,300 per year on average as of 2015—to qualify. In addition to this high income limit, many large assets are exempt, such as equity in a home and contiguous property up to as much as $828,000 and, without a dollar limit, one business (including the capital and cash flow), one automobile, prepaid burial expenses, personal belongings, term life insurance, and IRAs.

Medicaid-compliant annuities and trusts, as well as other legal techniques, are used by prosperous applicants and their lawyers to protect even larger sums from Medicaid’s spend-down rules. Peer-reviewed research shows that easy access to Medicaid’s LTC benefits by people with substantial assets discourages early and responsible LTC planning and crowds out private LTC financing alternatives. Other research by the Federal Reserve Bank of Chicago indicates that affluent people benefit as much or more from Medicaid as the poor.

Taking advantage of Medicaid’s home equity limit is the biggest and easiest way for people with substantial wealth to access the program’s expensive long-term care benefit. In response to a Congressional inquiry on which the Center for Long-Term Care Reform consulted, North Dakota Medicaid reported that a couple with $700,000 in liquid assets qualified for Medicaid LTC by purchasing a more expensive house and car and buying an annuity, all the while receiving $8,000 of income per month from pensions, Social Security, annuity payments and oil lease money.

According to Tennessee Medicaid officials: “Taking substantial home equity and other assets currently exempt under the law into account in determining eligibility for Medicaid reimbursement of LTC would result in fewer people with substantial means qualifying for Medicaid-reimbursed LTC until such time that those assets have been exhausted, and target Medicaid reimbursement to those with the greatest financial need.”

Whether provided in someone’s home, in an assisted living facility, or in a nursing home, long-term care is Medicaid’s most expensive benefit. In 2014, taxpayers spent almost $106 billion on Medicaid-financed nursing home and home care services. Although LTC users are only seven percent of the Medicaid population, they account for more than half of the program's costs nationally. For Medicaid to survive as a last-resort LTC safety net, the program must direct its scarce resources to the neediest people and away from those able to plan wisely to pay for their own long-term care.

Yet there is strong political opposition to eliminating or radically reducing the limits. Why? Because Medicaid’s generous LTC eligibility limits have, in effect, become an inheritance protection program for the adult children of middle class elderly. To make matters worse, some states such as Texas and Florida actually provide special protections from creditors, including Medicaid, for home property.

One of the biggest changes Congress could make to reduce the taxpayer burden and dependency impact of Medicaid’s LTC program would be to narrow the front door and exclude the middle class by changing these generous and elastic financial eligibility rules, especially the home equity exemption. 

Goals and Outcomes

The primary objective of this proposed study is to forge a politically feasible strategy to:

(1) put home equity to use paying for long-term care in ways that improve access to and quality of care for everyone,

(2) save taxpayers money while

(3) re-targeting Medicaid LTC benefits to those most in need and

(4) encouraging most Americans to plan privately for long-term care so they do not become dependent on public assistance.

Strategy

We propose to select two target states . . . where officials have shown concern for federal Medicaid’s excessive financial exemptions and mandatory eligibility loopholes . . .. We will interview key Medicaid officials in those states, develop a methodology to measure the cost of the home equity exemption, propose recommendations, and draft state and federal legislation to correct the problem. We will publish a report on the project, write op-eds for local and national newspapers, and encourage the introduction of legislation at the state and federal level.

Toward those ends, we propose to:

  • Contact numerous officials who are knowledgeable about Medicaid long-term care’s financial eligibility at the state and federal level to identify two highly concerned states willing to work with us on this issue.
  • Apply the Center for Long-Term Care Reform’s “Index of Long-Term Care Vulnerability” to the two states selected as a means to demonstrate and document the magnitude of their potential risk and cost in financing LTC for a burgeoning elderly population.
  • In both states, interview the state Medicaid director, the LTC financial eligibility policy specialist, and LTC eligibility supervisors and workers for the purpose of documenting the incidence and cost of the Medicaid LTC home equity exemption.
  • Interview Medicaid estate recovery officials in both states to get their views on specifically how much home equity is lost to attrition before mandatory estate recovery from the recipients’ estates can be actualized.
  • Seek permission to identify and review a random sample of valid Medicaid long-term care eligibility case records in one state with the goal of estimating the total loss to Medicaid expenditures from the home equity exemption.
  • Review and document historical Congressional action on Medicaid, supporting its proper role as a safety net for people in need rather than the dominant long-term care payer it has become.
  • Work with members of Congress and their staff who have demonstrated concern for this problem and seek their guidance in proposing federal legislation.
  • Interview the principal researchers who have published on related topics and seek their advice and counsel.
  • Compile all findings, write a report, promulgate the report electronically, and draft model state and federal legislation.

This project for the Foundation for Government Accountability will be led by renowned Medicaid long-term care policy expert Stephen Moses.

Deliverables

Deliverables, within six months of the project start date, will include (1) a comprehensive report (approx. 25 pages) that explains the problem of Medicaid LTC financing and recommends modifications to the Medicaid home equity exemption which, if implemented, could achieve substantial savings of Medicaid long-term care expenditures in each state and nationally; (2) draft state and federal legislation to implement the proposed solution; (3) submit several newspaper op-eds, and (4) prepare an article suitable for publication in an appropriate journal.

Stephen Moses will conduct all of the research and interviews for this project. He has conducted many similar studies over the years. Examples of his project reports are at http://www.centerltc.com/reports.htm.

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Updated, Monday, January 4, 2016, 11:35 AM (Pacific)
 
Seattle—

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

LTC E-ALERT #16-001:  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:

  • Washington Post Endorses Medicaid Gimmick That It Once Wanted Eliminated

  • Congress Boosts Alzheimer's Research But Offers Little To Help Those Who Already Have The Disease

  • 10 Worst Mistakes People Make After Retirement

  • Long-Term Care Insurance Can Be Costly but Effective

  • Long-Term Care Insurance Can Be Costly but Effective

  • America Cares, and It’s Draining

  • Inspired by Her Mother, WV Woman Revolutionized Long-Term Care For Elderly

  • Why Nearly All Consumers Should Open an HSA Account

  • The Twelve Days of Christmas in LTC

  • Caring for His Elderly Dad Made This Japanese Businessman Homeless

  • Create Custom Reports on Long-Term Care

  • Medicaid and Long-Term Services and Supports: A Primer

  • National Poll Finds Americans Thinking About Retirement But Not Long Term Care

  • Long-Term Care Insurance Can Baffle, With Complex Policies and Costs

  • Critical Illness Plans Become A Popular Voluntary Benefit

  • Rate Rise Signals a Merry Christmas (Finally) for Life Carriers

  • Baby Boomers Set Another Trend: More Golden Years In Poorer Health

  • Rising Obesity Rates Put Strain on Nursing Homes

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

"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, December 18, 2015, 9:50 AM (Pacific)
 
Seattle—

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

LTC BULLET:  WHAT HAVE YOU DONE FOR ME LATELY?

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

*** ILTCI MOBILE APP READY.  The 16th Annual Inter-Company Long-Term Care Insurance Conference convenes at the Grand Hyatt hotel in San Antonio, Texas March 13-16, 2016.   Go here for more information and to register if you’re not on board already.  Denise Liston, 2016 ILTCI Conference Chair, reports that the ILTCI 2016 Mobile App, sponsored by Mutual of Omaha, is now available!  It's easy to connect with everything you need to make this year's ILTCI conference a great experience.  Download the app and use your cell phone/tablet to:  

  • Access the full event schedule, select sessions to attend, and create your own personal agenda
  • Access maps of The Grand Hyatt and session/event locations
  • Find out who's attending and share contact information
  • Preview the speakers, read their bios, and view presentations as they are finalized and posted
  • See who's exhibiting and easily locate their booths
  • Participate in live polling during the sessions
  • Complete session surveys
  • Surf through the Social Wall; read live displays of Tweets, Instagram photos, and LinkedIn posts. Post your own messages using the hashtags #ILTCI16 or @ILTCI.
  • Get important updates and exciting offers through the app
  • Play our Click Game to win prizes, share photos and join in the fun

To download the app visit the Apple Store or Google Play then:
o   Search for ILTCI
o   Download (It's that easy!) ***

*** ARTICLE HIGHLIGHTS CENTER.  Long-time friend and corporate member of the Center, Christine McCullugh, president of LTC Solutions, Inc., featured the Center for Long-Term Care Reform and an interview with Steve Moses in her monthly column for Health Insurance Underwriter’s December 2015 issue.  Titled “Close-up on Group Long-Term Care:  When Did Medicaid Become the Solution to Long-Term Care Financing?,” you can read the article here at page 36.  ***

*** 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:  The Center for Long-Term Care Reform’s major accomplishment for 2015 was to conduct, complete and prepare a report on a study of long-term care financing in the state of 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.  We expect to publish that report with the project’s sponsor, State Budget Solutions (SBS), early in 2016.  SBS will also convene a meeting with several think tank representatives to review and discuss the study’s findings. 

For the start of 2016, we have exciting news.  The Center for LTC Reform has received a contract to study the problem of Medicaid’s excessive home equity exemption which diverts up to $828,000 per recipient homeowner from private long-term care liability to the welfare program’s overburdened budget.  A secondary focus of the study is to review the egregious abuse of “Medicaid-compliant annuities” by affluent couples to qualify for Medicaid LTC benefits.  We’ll work with the highly regarded Foundation for Government Accountability to complete that project by fall of next year.  Our first LTC Bullet in January will provide details.

On that happy note, let’s turn to the Center for Long-Term Care Reform’s other 2015 activities in brief.

LTC Bullets

The Center for Long-Term Care Reform 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 1113 Bullets (so far), by date here and by topic here.  These 1100-plus articles are a valuable historical resource.  Please make use of them. 

Some highlights of our 2015 LTC Bullets include: 

January When Bad Models Happen to Good People
February Holding CMS’s Feet to the Fire
March LTC in the USA:  Who Provides to Whom and Who Pays?
April:  New Tool to Analyze LTC Spending Data
May Medically Underwritten Annuities for LTC
June CLTCR News:  Thousand Bullets Retrospective
July New Data on LTC Incidence, Duration, Cost and Financing Sources
August The Top 10 LTC Bullets of All Time
September:  LTCI Update from Broker World
October Another LTCI Hit Job?
November The Future of Long-Term Care Seen Through the Prism of History
December:  So What If the Government Pays for Most LTC?, 2014 Data Update

The Center for Long-Term Care Reform published a total of 46 LTC Bullets in 2015.

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 2013.

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 672 LTC Clippings so far in 2015 or roughly 1.9 per calendar day and 2.7 per work day.  2015 was our fourth year offering the clipping service in real time. 

Season’s Greetings

All in all, 2015 was a challenging year for long-term care financing and for your Center.  We look forward to a better 2016 as the political ground becomes more fertile for public policy research and advocacy.  The pendulum has begun to swing back, away from expansion of government dependency and toward more fiscal 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, but for everything else, we’ll see you next year.

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Updated, Monday, December 14, 2015, 9:54 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-048:  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:

  • Stress May Boost Risk for Alzheimer's-Linked Thinking Problems

  • Job forecast is sunny for healthcare industry

  • Dementia Care: Protecting a Father’s Legacy

  • For Early-Stage Alzheimer’s, a Little Alcohol May Be a Good Thing

  • Rethinking retirement income replacement rules

  • How to understand who’s eligible for long-term care benefits

  • US life expectancy flat for third straight year at almost 79

  • As Aging Population Grows, So Do Robotic Health Aides

  • Long-term care: why your home, not your pension, is key

  • There aren't enough nursing-home beds to meet demand

  • Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes

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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 11, 2015, 10:30 AM (Pacific)
 
Seattle—

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LTC BULLET:  SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2014 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?, 2014 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 2014 statistics on its website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Tables.zip.

Health Affairs has published a “web first” summary and analysis of the new data titled “National Health Spending In 2014:  Faster Growth Driven By Coverage Expansion And Prescription Drug Spending."  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 thirteenth 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?, 2014 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.

America spent $155.6 billion on nursing facilities and continuing care retirement communities in 2014.  The percentage of these costs paid by Medicaid and Medicare has gone up over the past 44 years (from 26.8% in 1970 to 54.8% in 2014, up 28.0 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.5% in 2014, down 22.7% of the total).  Source:  Table 15:  Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2014.

So What?  Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 46.1% in the past four decades while the share paid by Medicaid and Medicare has more than doubled, up 104.5%.

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 1/1/16).  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 (31.9% of the dollars in 2014), 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.  If it pays even one dollar per month (with the rest 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 2014 national projected shortfall in Medicaid reimbursement is $21.20 per patient day and $6.7 billion in total.  Source:  2014 Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Don't be fooled by the 8.4% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2014.  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.

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.

The situation with home health care financing is very similar to nursing home financing.  According to CMS, America spent $83.2 billion on home health care in 2014.  Medicare (41.7%) and Medicaid (35.6%) paid 77.3% of this total and private insurance paid 9.9%.  Only 8.9% of home health care costs were paid out of pocket.  The remainder came from several small public and private financing sources.  Data source:  Table 14:  Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2014.

So What?  Only one out of every 11.2 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:

“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, click here

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 7, 2015, 11:14 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-047:  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:

  • Letter: Who pays for assisted living?

  • Women Will Face Especially High Long-Term Care Risks As They Age

  • Panel issues definition of 'person-centered care'

  • Taxpayers on hook for Medicare payments for unnecessary scooters

  • Analysis: Observation stays skyrocket, jeopardize SNF admissions

  • 4 Smart Uses for RMDs

  • Caregivers Of Spouses With Alzheimer’s Most Likely To Suffer From Depression

  • Obamacare deductibles leading to more critical illness policies

  • What working in a nursing home taught me about life, death, and America’s cultural values

  • Son Must Pay for Mother's Care Under Filial Responsibility Law Despite Abusive Childhood

  • CMS Confirms That Spousal Impoverishment Figures Will Remain the Same for 2016

  • How Hillary Clinton Is Making Aging Parents a 2016 Issue

  • Top-Rated Caregiving Apps To Consider Using

  • Health Insurance Pressure Increases Critical Illness Demand

  • Medicaid Drives Biggest State Spending Boost in Decades

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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 4, 2015, 10:10 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE ARROGANCE OF LTC ANALYSTS’ ELITISM

LTC Comment:  Arrogance, ideological bias and elitism spoil the recent research of abundantly endowed LTC analysts.  We explain after the ***news.***

*** ONE OF OUR OWN PASSES—Gary Corliss, retired LTCI actuary and long-time friend of so many in the business, died November 30.  You can read his obituary in the Hartford Currant, get information about the memorial service, and post condolences here.  Fellow LTCI actuary Claude Thau said:  “Gary was a true gentleman, in all senses of the word.  Gary led by example, without seeking fanfare.  His behavior and approach to life shall continue to serve as a model for those who had the privilege of knowing him.”  That sums up our impression too of a kind and thoughtful truly professional expert always ready to answer a question or make a helpful suggestion when asked.  Rest in peace. ***

*** ILTCI CONFERENCE KEYNOTER NAMED—Ken Schmidt, “Brand Visionary and Former Communications Strategist for Harley-Davidson Motor Company,” will address the 16th annual Intercompany Long-Term Care Insurance Conference to be held March 13-16, 2016 in San Antonio, Texas.  Schmidt has been associated with Harley-Davidson since 1985 and his success in helping rebuild the company's brand played a vital role in the motorcycle legend's turnaround from the brink of ruin to global dominance.  In his role as Harley's director of communication, Schmidt shaped the company’s positioning and served as its primary spokesperson to the media and financial communities.  Learn more and register for the meeting, themed as “Transforming the Options, Refining the Risk,” here.  See you there! ***

*** 2016 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS UNCHANGED FROM 2015—LTC Clippings subscribers received the following announcement on December 2.  We’ve also 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 access, contact Damon at 206-283-7035 or damon@centerltc.com.

12/2/2015, CMS Confirms That Spousal Impoverishment Figures Will Remain the Same for 2016,” ElderLawAnswers

Quote “The Centers for Medicare and Medicaid Services (CMS) has announced that the spousal impoverishment and home equity limit figures will not change from 2015 levels next year.  This is because there was no increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). . . .  For CMS’s page on all the SSI and spousal impoverishment standards for 2016, click here.  For an informational bulletin that was attached to the figures, click here.

LTC Comment:  We’ll also update these numbers in The Zone where you can find the comparable annual amounts all the way back to 1991 for comparison. ***

 

LTC BULLET:  THE ARROGANCE OF LTC ANALYSTS’ ELITISM

LTC Comment:  Medieval philosophers built castles of elegant logic into the sky.  Starting with arbitrary rationalistic premises they constructed fanciful mental models of “true” reality.  But their simulations bore little resemblance or connection to the real world.  Consequently, human society and economics remained mired in misery and poverty for centuries.  Scientific method grounded in objective reality ended such philosophical and methodological error in the hard sciences unleashing the industrial revolution and the prosperity much of the world enjoys today.  Unfortunately, the same cannot be said for much of what passes as social science today.

Recent research in our very own field of long-term care financing is a case in point.  Based on false premises, arrogantly self-confident analysts backed by a richly financed think tank, advocacy organization and trade association have presumed to tell us how we should pay for long-term caregiving.  I refer of course to the recent article in Health Affairs titled “Financing Long-Term Services and Supports:  Options Reflect Trade-Offs for Older Americans and Federal Spending” which summarized research conducted by the Urban Institute and financed by the SCAN Foundation and Leading Age.  Let’s dissect that article, pinpoint its most fundamental errors, and explain why its advice that government should compel Americans under threat of force to pay for each other’s long-term care is mistaken and misguided.

Quote:  “Medicare does not provide coverage for extended LTSS.  Medicaid does, but only for people who meet state-specific eligibility standards that limit benefits to those who have disabilities and very limited income and wealth.  However, because people with LTSS needs may qualify for Medicaid after they deplete most of their resources, Urban Institute projections indicate that Medicaid will pay for about one-third of lifetime costs associated with severe LTSS needs for people turning sixty-five today.”  [p. 2, emphasis added]

LTC Comment:  Therein lies the fallacy that undermines these analysts’ whole evidentiary and logical structure that follows.  If Medicaid long-term care benefits required “very limited income and wealth” after recipients “deplete most of their resources,” our LTC financing system would not be in the mess that it’s in.  If that were true, responsible people would plan, save, invest and insure to avoid a catastrophic spend down scenario.  But it is not true and so most people don’t plan ahead for LTC costs and risks that are predominantly covered, and have been for 50 years, by Medicaid. 

Surely analysts who represent themselves as experts on Medicaid long-term care benefits must know that the program’s financial eligibility rules allow recipients to have incomes up to the cost of a nursing home plus virtually unlimited assets held in exempt form with any excess easily transferred or sheltered by a Medicaid planning attorney.  I wouldn’t accuse these analysts of ignorance or dishonesty so the only plausible explanation I’m left with is ideological bias that blinds them to the reality of how Medicaid actually works.

Quote:  “Because private insurance is not widespread and public financing is available only for people who have few financial resources or who have already spent nearly all of their resources, older adults with severe LTSS needs will pay about half of their expenses out of pocket.” (p. 2)

LTC Comment:  The article’s authors double down on the same error.  Because they assume incorrectly that people only get Medicaid LTC benefits after spending down into impoverishment, they accept without challenge that “older adults with severe LTSS needs will pay about half of their expenses out of pocket” which is also untrue.  Out-of-pocket nursing home costs have declined from 49.5% in 1970 to 29.4% in 2013, down 20.1% of the total while only 8.1% of home health care costs were paid out of pocket in 2013.  (For sources, see “LTC Bullet:  So What If the Government Pays for Most LTC?, 2013 Data Update.”  Furthermore, half of the “out-of-pocket” expenses reported by the Centers for Medicare and Medicaid Services (CMS) actually come from Social Security benefits that Medicaid recipients are required to contribute to offset Medicaid’s cost for their care.  In other words, these out-of-pocket costs are spend through of income from another fiscally vulnerable government program, not spend down of personal assets.

Quote:  “The average American turning sixty-five today will incur about $138,100 in future lifetime expenses for severe long-term care needs, according to Urban Institute projections.  These future expenses could be financed by investing $69,500 at age sixty-five, under the assumption that the investment earns average returns.” (pps. 1-2)

LTC Comment:  Gee, not so bad.  All we need to set aside to cover future LTC costs is $69,500.  Sounds doable.  The article tells us just a little further on:  “In 2014, people ages sixty-five and older had median financial assets of only $76,000 and median home equity of only $80,000.”  (p. 2)  Consider what this means. 

First, the financially median elderly person has enough wealth to cover the “future lifetime expenses for severe long-term care needs.”  Second, the financially median elderly person does not need to cover those expenses out of pocket, because he or she already qualifies for Medicaid LTC benefits!  Medicaid exempts a minimum of $552,000 of home equity up to a maximum of $828,000 in 14 states, so $80,000 in home equity is no obstacle anywhere in the country.  Cash resources of $76,000 are disqualifying for a single individual though usually not for a married person, but such an amount can be converted easily and virtually instantaneously into any of a long list of exempt assets, e.g. home improvements, a new car, furniture, personal possessions of almost any kind, etc.  No wonder most people with moderate and even substantial income and assets don’t worry about future LTC costs when they have so many bigger and more imminent financial worries to consider.

Finally, what about the analysts’ assertion that “These future expenses [$138,100] could be financed by investing $69,500 at age sixty-five, under the assumption that the investment earns average returns.”  I ran the numbers using the Bankrate Simple Savings Calculator here and found that one would need to get over 4.9% annual interest over the 14-year life expectancy of someone 65 years of age today (see the life expectancy table here).  Where can you get such a return reliably?  Answer:  nowhere, thanks to the Federal Reserve’s nearly-decade-long zero-interest rate policy (ZIRP).

Quote:  “Private insurance could help shield middle-income people from this financial risk. However, the market penetration of private long-term care insurance has been limited because of high premiums, the potential for Medicaid to crowd out demand for private coverage, and adverse selection—which limits the size of the market and drives up premiums.”  (p. 2)

LTC Comment:  Having asserted incorrectly that most people have to spend down into impoverishment before getting LTC help from the government, these analysts seek to show that private insurance is no solution, but the reasons they give are mostly wrong or misleading.  Do high premiums impede LTCI market penetration?  Of course, but why are premiums high?  First, because long-term care is expensive.  There’s nothing we can do about that.  If every tenth house burned down, fire insurance wouldn’t be cheap either.  But the other main reason for high LTCI premiums is government interference in the market.  By making LTC free after the insurable event occurs through Medicaid and by forcing interest rates down to nothing through the Fed, government forced product demand down and premium rates up.  Nor is adverse selection a cause of higher premiums.  Successful insurance carriers control adverse selection through good underwriting, which by the way, social insurance—these analysts’ preferred alternative—eschews.

Quote:  “Surveys show that while consumers demand a balance between price and benefits, their top priority is low cost.  None of the alternatives we modeled were able to resolve this major challenge.”  (p. 9)

LTC Comment:  Well, hello!  Everyone wants something for nothing.  The real problem is not that we can’t give them something for nothing, i.e. low cost LTCI.  The real problem is that we’ve been doing precisely that for half a century by making Medicaid LTC benefits easily available after the insurable event occurs.  Clearly, these authors are using the “Fallacy of Impoverishment” to lead us to a conclusion that the only solution for long-term care financing is to force people against their will to pay even greater job-killing payroll taxes than they already do in order to create another underfunded entitlement program that further weakens their sense of personal responsibility and efficacy. 

Quote:  “Each mandatory program would enroll more than 95 percent of the population. Access to this insurance would be especially beneficial to middle-income consumers, many of whom are unlikely to be able to afford voluntary insurance.” (p. 9)

LTC Comment:  People can't afford long-term care insurance voluntarily but society can afford it if it is forced on them?  Actually, costs will be much greater when everyone is insured because everyone will have an incentive to maximize benefits.  This is the fundamental fallacy of “social insurance.”  It spreads risk but, unlike real private insurance, it does not price risk.  Without underwriting and risk-based premiums, social insurance rewards irresponsibility and punishes responsible behavior.

Quote:  “If the primary purpose is to significantly increase insurance coverage, the mandatory programs we modeled would be far more successful than the voluntary ones. If the major aim is to reduce Medicaid costs, the comprehensive and backend mandatory programs would be most beneficial.” (p. 10)

LTC Comment:  Well, surprise, surprise.   Compulsion is more effective than persuasion if all you care about is forcing people to do something they don’t want to do.  Did we need the DYNASIM modeling software to tell us that?  If you really want to reduce Medicaid costs, you don’t need a new “comprehensive and backend mandatory program” to do so.  All you really need to do is reconfigure Medicaid so that it works the way this Health Affairs article inaccurately assumes it already works.  To wit:  eliminate the income and asset eligibility loopholes, stop the Medicaid-compliant annuity abuse, radically reduce or eliminate the home equity exemption, and strictly enforce mandatory estate recoveries. 

When people find they are actually responsible for their own long-term care expenses, they’ll quickly learn to save, invest and insure for those risks. For those who don’t or can’t prepare in that way, Medicaid will be a better program with more resources to cover many fewer people with less need for institutional bias to discourage participation.  Home equity conversion and reverse mortgages will generate huge amounts of private financing to help LTC providers give better care.   As the next generation watches their inheritances going to fund their parents’ private long-term care, they’ll decide traditional and asset-based private LTC insurance options are not so prohibitively expensive after all.  It’ll take a decade or so to sort out, but if instead we pursue a compulsory, tax-funded social insurance solution as these analysts propose, that program will join the rest of the unfunded government-based social insurance house of cards when it implodes as the aging demographic nemesis prevails.

Final LTC Comment:  Now you can see why I titled this LTC Bullet “The Arrogance of LTC Analysts’ Elitism.”  These analysts are arrogant because they seek to impose their policy preferences on others by means of government force.  They’re elitist because they think the American people are too stupid or self-indulgent to take personal responsibility for themselves.  The sad irony is that the “solution” they arrogantly propose is precisely what causes people to slide toward greater dependency on government.  I could draw on any number of sagacious quotes by America’s founders to nail this point down, but let’s close with this apt comment instead:

“There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” ― Robert A. Heinlein, The Moon is a Harsh Mistress

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Updated, Monday, November 30, 2015, 10:07 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-046:  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:

  • Financial Abuse of the Elderly: Sometimes Unnoticed, Always Predatory

  • The New Case for Reverse Mortgages

  • Losing your life savings to long-term care

  • Age Critical Illness Insurance

  • The Crisis in Our Midst: Ensuring Quality Home Care in an Aging America

  • National Health Spending 1960-2013

  • How to Care for 2 Parents at Once Without Going Broke

  • Detection of Alzheimer's

  • Clinton Unveils Elderly Care Plan

  • How to Work Better with Aging Clients

  • Long Term Care Insurance Association Suggests New Thanksgiving Tradition

  • UnitedHealth Warns Of Marketplace Exit – Start Of A Trend Or Push For White House Action?

  • LTC liability costs to rise by 5% for 3rd straight year

  • To understand climbing death rates among white Americans, look to women

  • LeadingAge, SCAN Foundation report sets framework for future of LTC financing

  • Building Better Long-Term Care Insurance

  • Report Finds Alzheimer’s May Possibly Bankrupt States, Medicaid If Precautions Aren’t Taken

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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 16, 2015, 10:45 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-045:  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:

  • Half of Americans Aged 45 to 65 Currently Care for Their Children or Aging Relatives

  • 3 types of insurance that can protect your family for years to come

  • Where Seniors Go When Their Nursing Homes Close

  • Older Americans Are Confident – Maybe Too Confident – They Can Detect Financial Abuse; Family/Friends Tell a Different Story, Are More Concerned

  • Critical Illness Insurance Market Sees Record High New Premium in 2014

  • Citizens group sues California over nursing home 'patient dumping'

  • Audit finds waste, inefficiencies in Virginia’s Medicaid program

  • The secret to LTC success? A focus on well-being

  • Your Kids Will Live Longer Than You Thought

  • New C.A.R.E. Study from Northwestern Mutual Reveals the Caregiving Conundrum

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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 13, 2015, 11:25 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE FUTURE OF LONG-TERM CARE SEEN THROUGH THE PRISM OF HISTORY

LTC Comment:  Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well.  We present the big picture 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:  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. ***

*** FRIDAY THE 13TH:  Don’t let superstitious fear of the unknown keep you from reading today’s LTC Bullet which presents a truly scary scenario about the future of LTC financing, but with a happy ending for those who persevere. ***

 

LTC BULLET:  THE FUTURE OF LONG-TERM CARE SEEN THROUGH THE PRISM OF HISTORY

LTC Comment:  In last week’s LTC Bullet:  A New Revolution in Long-Term Care Financing . . . by Government we provided a summary of the coming upheaval in public LTC financing and how it fits in with the history of government involvement in the long-term care market.  This week we present the bigger picture.

For starters, check out this presentation by Brian Ellsworth of Health Dimensions Group on “The Emerging World of Value-Based Payment.”  It will tell you everything you need to know about the trends I’ll critique below. 

In a nutshell, the Centers for Medicare and Medicaid Services (CMS) seeks to change both programs LTC payment systems to reward quality instead of quantity.  Sounds good, right?  But why does government pay for most LTC in the first place?  Why does it have to revolutionize its reimbursement methods to ensure quality?  Why can’t people simply choose the LTC services and providers they prefer without the long arm of the law needing to intervene? 

Those are the questions I tried to answer in my presentation Tuesday at a conference in Dallas.  Following is a transcription of my remarks.  You’ll see why I think the whole publicly financed long-term care house of cards may soon come crashing down.

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The Future of Long-Term Care Seen Through the Prism of History
by
Stephen A. Moses

If value-based payment is good enough for Medicare, it should be good enough for McDonald’s too. 

A monopsonistic, government-based nutrient payer could ensure quality food distribution by paying for value instead of quantity.

We could reimburse prospectively for dietary-related groups of alimentary consumption episodes rewarding lower food poisoning levels with five-star ratings.

“What if I want a Big Mac,” you ask?  Tough luck.  Too many calories for too little nutrition.  The re-hospitalization risk is off the chart.

Why do we have prospective payment systems, bundling, managed care, and value-based payment in health care but not in food distribution?

Why is government micro-management of long-term care service delivery and financing the wave of the future?

Well, it’s been a slippery slope for 50 years.  Santayana said:  Remember history or you’ll repeat it.  We’re not just repeating the mistakes of the past, we’re doubling down.

So, how did we get into this mess?

Once upon a time, long-term care was a Mom and Pop arrangement.  Mom and Pop took care of Grandpa and Grandma, usually as a family, sometimes as a business.

Then, in 1965, government stepped in to help.  At first, Medicare and Medicaid paid generously on a fee-for-service basis--initially to win passage of those programs and later to sustain support for them from business and political interests.

Medicare was to be “social insurance” for acute health care with premiums paid and benefits received by all.

Medicaid was to be a safety-net for long-term care, a means-tested public welfare program.

Remember that distinction between social insurance and welfare.  We’ll return to it.

In the beginning, Medicaid offered only nursing home care.  This was the origin of the welfare-program’s infamous “institutional bias.”

And in the beginning, Medicaid had no asset transfer restrictions nor any estate recovery requirement.  Access to publicly funded nursing home care was easy and practically universal.

Now, people aren’t stupid.  They saw that Medicaid would pay for Grandma in a nursing home, but they’d be burdened by personal caregiving or face cash out of pocket for any other kind of care.

Why pay for home care, adult day care, respite care or assisted living, when the government provides nursing home care? 

Unsurprisingly, a private market for home and community-based services did not develop in those early years.  There was no financial incentive for entrepreneurs to build a better long-term care mouse trap.

The same generous nursing home policies also stunted a budding private long-term care insurance market in the mid-1970s.  Why insure privately for a risk and cost the government already pays for?

The nursing home profession was pretty savvy also.  They saw a huge new funding source in Medicaid and Medicare.  Naturally, nursing homes adapted to take full advantage of the opportunity.  They formed powerful interest groups to influence public LTC policy.

So what do you think happened by the early 1970s?  P.J. O'Rourke, the political satirist, likes to say "If you think health care is expensive now, just wait until it's free."  Of course, the cost of Medicaid financed long-term care exploded.

Did the government respond by addressing the cause of this cost inflation—easily available free long-term care paid for by Medicaid?

No.  Government attacked the symptom of bulging budgets instead. 

Figuring nursing homes couldn’t charge for beds that don’t exist, the public pontiffs of health policy imposed “certificate of need” requirements severely limiting new construction.

But you don’t need a Ph.D. in economics to understand what happens in any market when you artificially cap supply.  Prices tend to increase and that’s exactly what happened. 

Nursing homes said:  “We can’t build more beds?  Fine, we’ll charge you more for the ones we already have.  Thanks, by the way, for protecting us from new entrants into our business.”

So, government finally got the message and curtailed the cause of the problem, free Medicaid-financed nursing home care, right?  Wrong.  The Medicaid monarchs capped nursing home reimbursement instead. 

This was the origin of the differential between low Medicaid reimbursements (often less than the cost of providing the care) and market-based rates half again higher but dwindling in total as private-payers followed public policy incentives and migrated to Medicaid.

Now, put your economists’ hats back on.  With supply and price capped, what do you think happened to demand?  Correct, it went through the roof!  Nursing home occupancy in the mid-1980s jumped to 95 percent at a time when hospitals were little more than half full.

If a nursing home was willing to accept Medicaid's low reimbursement rates, it could fill all of its beds . . . no matter what kind of care it provided.  Consequently, quality of care collapsed in principally Medicaid-financed nursing homes.  Or so the public powers-that-be concluded.

True to form, government attacked the symptom (poor quality) instead of the cause (public financing).  As if wishing could make it so, Congress simply mandated higher quality, more nurses’ aides, better training and so on in the Omnibus Budget Reconciliation Act of 1987.

Thankfully, this time federal command and control worked.  Expenditure growth abated and quality improved—NOT. 

Now caught between the rock of inadequate reimbursement and the hard place of mandatory quality, the nursing home profession had no place to turn but to the courts.

Suing under the 1981 “Boren Amendment” which required state Medicaid programs to reimburse nursing homes adequately so they could provide good care--lo and behold--state nursing home associations won most of those lawsuits.

Who says you can’t fight city hall?

But then, what do you think the government did next?  You guessed it.  Congress repealed the Boren Amendment in the Balanced Budget Act of 1997.  Since then, there has been no legal floor under Medicaid reimbursement for nursing home care, yet costs continued to grow insupportably.

Now, while all this was going on another situation developed.  Private payers in nursing homes, paying half again as much as Medicaid for the same semi-private room, began to wise up. 

They rebelled against this “cost shifting” toward them by seeking ways to qualify for Medicaid themselves.  After all, state and federal laws require the same quality of care regardless of payment source.  So why not?

Some Medicaid eligibility workers were only too eager to help families who faced a long-term care crisis by stretching Medicaid’s already elastic financial eligibility rules in their favor. 

Other workers tried to solve the national debt by strictly enforcing the most draconian rules keeping even the poorest families off Medicaid. 

A special practice of elder law evolved to impoverish wealthier clients artificially in order to qualify them for LTC benefits.

In other words, Medicaid long-term care eligibility became a crap shoot with the lucrative benefit passing to people lucky enough to get a lenient eligibility worker or wealthy enough to consult a Medicaid planning attorney.

Not that it was ever very hard to qualify for Medicaid long-term care benefits.  Despite the common misconception that you must be “low income” to get Medicaid, the fact is that anyone with income below the cost of a nursing home, upwards of $80,000 per year on average, is eligible based on income. 

Consequently, two out of five people receiving Medicaid LTC benefits have incomes between $51,000 and $217,000 per year or more.  More than two-thirds getting Medicaid LTC have incomes between $30,000 and infinity.  Only for the low income?  Hardly.

What about assets?  The usual limit of $2,000 in cash or equivalents is unquestionably poor.  But to get to that level, you can spend down on anything, not just care.  Lawyers advise world cruises, big parties, better cars and larger houses to dispose or shelter excess assets.

Furthermore, virtually unlimited exempt resources don’t even count toward the asset limit.  These include . . .

At least $552,000 in home equity and--with no dollar limit at all--one business including the capital and cash flow, Individual Retirement Accounts, one automobile, term life insurance, prepaid burial plans, home furnishings, and personal belongings.

If you still have too much money, your friendly local Medicaid planner will wave a magic legal wand and reduce the surplus to a level below the welfare program’s income and asset limits. 

Cost in attorneys’ fees to become eligible for Medicaid after you already need care?  About the same as one month in a nursing home private pay, maybe $6,000 or $7,000.

In the early ‘80s, Congress began to attack the problem of Medicaid eligibility abuse with a long series of statutes:

TEFRA (the Tax Equity and Fiscal Responsibility Act of 1982) for the first time authorized state Medicaid programs to impose asset transfer penalties, liens on real property and estate recoveries.  But these measures were only voluntary.

MeCCA (the Medicare Catastrophic Coverage Act of 1988) required state Medicaid programs to penalize asset transfers made for the purpose of qualifying for public benefits within 30 months of application.

OBRA ’93 (the Omnibus Budget Reconciliation Act of that year) made estate recoveries mandatory, expanded the asset transfer look-back period to 36 months, and eliminated the previous 30-month cap on the asset transfer penalty.

When none of these measures worked as hoped, Congress and President Clinton stepped in with HIPAA (the Health Insurance Portability and Accountability Act of 1996) which made it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

Senior advocates and the elder law bar called this the “Throw Granny in Jail Law,” so Congress repealed that provision in the Balanced Budget Act of 1997 and replaced it with the “Throw Granny’s Lawyer in Jail Law” making it a crime to advise a client in exchange for a fee to transfer assets to get Medicaid.

When that law was deemed unconstitutional because it held lawyers culpable for recommending a practice made legal again when Congress repealed “Throw Granny in Jail,” public policy intended to save Medicaid for the needy was dead in the water again.

Nothing more happened until the Deficit Reduction Act of 2005 put the first cap ever on Medicaid’s home equity exemption.  It started at $500,000 or $750,000 at state legislatures’ discretion and has increased with inflation to range today from $552,000 to $828,000, from four to seven times the average senior’s home equity.

The DRA ’05 also extended the transfer of assets look-back to five years and closed several loopholes such as the “half-a-loaf” strategy, but it left other gimmicks used to qualify millionaires for Medicaid in effect such as the “Medicaid-compliant annuity.” 

Now, let’s pause for a moment and review.  Government intervened in the long-term care marketplace 50 years ago by providing nursing home care to infirm seniors with most of their assets exempt from spend down and most of their income (largely Social Security benefits) as co-insurance. 

This caused Medicaid LTC expenditures to skyrocket leading to federal and state initiatives to control costs by capping supply and price which drove up demand, undercut quality, reduced private-pay census, and crowded out private markets for long-term care insurance or home equity conversion (to fund LTC) and for home and community-based services (to provide care).

Meanwhile, from the early 1980s forward, another theme developed which was aimed at addressing the problem of escalating Medicaid LTC costs without confronting their real cause.

Academics and government officials became enamored of the idea that Medicaid's long-term care financing crisis could be relieved by paying less for expensive nursing home care and more for lower-priced home and community-based services.

The idea is that taking care of people in their own homes or in the community must be cheaper than maintaining them in a nursing home.  Data often cited at the individual level seem to show that home care is less expensive than nursing home care. 

But this reasoning commits the fallacy of composition, inferring that potential savings for specific individuals are additive to the society as a whole. 

In fact, available research does not show that home and community-based services save money compared to nursing home care overall. 

Community-based care usually only delays institutional services.  Between them, expanded home care plus eventual nursing home care end up costing more in the long run than nursing home care alone. 

That fact is borne out by historical data showing continued growth in total Medicaid long-term care expenditures.  While nursing home costs have leveled out considerably, the home care side of Medicaid continues to grow rapidly.

Here’s the point:  providing long-term care in the most appropriate and desirable setting is a worthy goal to pursue.  But it does not save money.

For every person in a nursing home or assisted living facility in America, there are two or three of equal or greater disability, half of whom are bedbound, incontinent or both, who remain at home.  They are able to stay home because their families, mostly daughters and daughters-in-law, struggle heroically to keep them out of an institution.

When government starts providing long-term care that they want (home care) instead of long-term care that they’d prefer to avoid (nursing home care), people come out of the woodwork to take advantage of it.  That too drives up overall Medicaid LTC expenditures.

Finally, Medicaid financed home and community-based care is deadly to the marketability of private long-term care financing alternatives, such as reverse mortgages or long-term care insurance. 

The big benefit of being able to pay privately for long-term care is the ability to command red-carpet access to top-quality long-term care at the most appropriate level and in the private marketplace. 

To the extent the government conveys to the American public that consumers can obtain the same benefits financed by Medicaid, Medicaid will continue to explode in costs and reverse mortgages to fund long-term care in the short-term and LTC insurance to fund it in the long run will remain stunted.

What a mess!  Here it is in a nutshell.

Easy access to Medicaid-financed nursing home care prevented the development of a private market for home and community-based services. 

Explosive cost growth led to ultimately unsuccessful government efforts to control the supply, price, quality, type and access to Medicaid funded care.

Notoriously low Medicaid reimbursement rates for two-thirds of nursing home residents were partially counterbalanced by relatively generous Medicare reimbursement levels for post-acute and home health care.

As good business people, the nursing home profession pursued the incentives in public policy by reaching out for higher paying Medicare post-acute patients and by seeking fewer lower-paying long-term Medicaid custodial care residents.

That caused the balance of Medicare financing to shift significantly from nearly all acute care toward much more post-acute and long-term care. 

Between 1990 and 2013, long-term care—defined as nursing home and home health care—remained roughly eight percent of total National Health Expenditures.

During the same period, however, the proportion of long-term care expenditures funded by Medicare more than tripled from 9 percent in 1990 to 29 percent in 2013.  Long-term care increased from 4.5 percent of total Medicare expenditures to 11.7 percent in those 23 years.  (CMS-NHE Data)

Consider what this means.  Our current long-term care financing system depends, and has depended for decades, on generous and growing Medicare reimbursements for home care and nursing home care balancing meager Medicaid reimbursements for the majority of people dependent on either or both programs.

As worries about Medicare’s solvency grew throughout the 2000s, federal policy makers looked for new ways to control public LTC expenditures.  CMS hit upon the idea of

driving reimbursement toward “quality” instead of “quantity” as a way to reduce long-term care cost growth in Medicare and Medicaid.

In other words, this latest push by government to manage the LTC service delivery and financing system is designed to fix or at least mitigate problems that were actually caused by earlier government market interventions.

As always before, these new interventions address symptoms—high costs, low quality  and public-policy-induced market dysfunction—instead of the real causes, perverse incentives created by earlier government intercessions.

The risk is that further interference in an already fragile LTC market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.

Remember what I said at the beginning of this talk about how Medicare began as “social insurance” and Medicaid as welfare? 

Ironically, political pressure is building now to means-test, that is to say welfarize, Medicare.  I’ve already shown how Medicaid has become a de facto entitlement, the dominant LTC funding source for all economic levels of Americans.

The net effect of this long historical process is that public financing of long-term care has expanded beyond government’s ability to pay while private LTC financing has dwindled almost to disappearance.

The public does not know who pays for long-term care, but they know someone must pay.  You don’t see Alzheimer’s patients dying in the gutter.

The result is a public asleep about the risk and cost of long-term care and dependent by default on a mostly publicly financed LTC service delivery system that may be on its last legs, unable to squeeze more and better care out of more and more intrusive regulations and mandates.

In a free market consumers rule.  They demand quality and volume.  If they don’t like what they get, they vote with their pocket books and move on to products and providers they prefer.

Competition to provide the best care at the lowest price in the most appropriate settings could and would solve the LTC service delivery and financing problems that have been created by government’s interventions, however well-intentioned those interventions may have been.

Do you have any doubt that long-term care services and financing in the United States would be better if government had left the market alone and allowed competition and the profit motive to make the best possible care available at affordable levels?

Would the poor suffer?  More than they do now?  Hardly.  There would be room for a real safety net paying market rates for the full continuum of care.  Such a safety net might even be possible without public funds, relying entirely on charity and philanthropy. 

But, that is not the course we’re on.  Let’s get back to reality.  I fear we’re headed toward a perfect economic storm when interest rates finally increase making service of our massive public debt unsustainable and leading to a severe retrenchment in Medicaid and Medicare long-term care financing. 

Such an outcome is very nearly inevitable.  The Federal Reserve and the U.S. Government cannot ignore economic gravity forever.  Sooner or later debt and unfunded promises come due.

But to end on a more positive note, if the worst does happen, we’ll be forced to get back to methods and strategies that are more in keeping with the traditional American values of independence, personal responsibility, self-sufficiency and hard work.

I predict that as government is compelled to withdraw from LTC financing dominance:

Medicaid will have to become a real welfare program.  Its home equity exemption will disappear or be radically reduced.  Consumers will use their home equity to pay privately for long-term care.  They’ll employ reverse mortgages for that purpose. 

That new source of private financial oxygen will reinvigorate all providers across the whole continuum of long-term care.

Over time, after watching their own inheritances consumed by their parents’ long-term care costs, the next generation will finally see the merit of private LTC insurance and begin to buy it.

Medicare will stop being “social insurance” paid for by and available to all.  It will be means-tested and become a program for the poor, and hence, as the saying goes, “a poor program,” like Medicaid. 

Acute health care will drift away from mostly public funding toward mostly private financing through health savings accounts and high-deductible insurance.

After 50 years of consuming our economic seed corn by moving ever more fully away from private and toward public financing of long-term care, demographic and economic reality will force us back to the kind of freer market that made the country great in the first place.

Now, before I conclude and turn to your questions, let me anticipate your first query.  You might ask:

“Well Steve, you’ve painted a pretty dismal picture.  Why are you so worried that this whole publicly financed long-term care house of cards may soon come crashing down?”

I’m glad you asked.

My organization, the Center for Long-Term Care Reform, has developed a tool to measure and analyze that risk.

We call it the “Index of Long-Term Care Vulnerability.”  We’ve applied the Index to the LTC service delivery and financing systems in four states so far:  Virginia, New Jersey, Georgia, and most recently, New Hampshire.

You can find our reports on each of those projects by opening the link on my handout which will take you to an online version of the handout where all the links in it are live.

Our Index of LTC Vulnerability analyzes the sustainability of current long-term care systems by examining published data in each of seven key issue areas.  These are:

  • Aging demographics:  how many 85 year olds are in the pipeline?  Answer:  Too many; more than triple what we’re dealing with now by 2050.

  • Morbidity:  how sick will they be?  Answer:  Too sick.  Recent optimistic compression of morbidity predictions are not bearing out due to the obesity epidemic.

  • Medicaid:  how viable is the welfare program as a source of future LTC financing?  Answer:  Not very based on expenditure trends, ObamaCare expansion, easy income and asset eligibility, inadequate reimbursement and cost shifting, dual eligibles, rebalancing and managed care challenges.

  • Federal revenue:  can revenue from taxation and borrowing sustain the federal share of Medicaid?  Answer:  Almost impossible when interest rates increase because of elevated debt and entitlement liabilities and high state matching rates exacerbated by provider taxes and recessions.

  • State revenue:  can state economies generate enough revenue to fund their share of Medicaid?  Answer:  Very doubtful based on rankings of states’ fiscal policies by Cato, Forbes, Mercatus, the Pew Charitable Trust, and the Urban Institute.

  • Private financing alternatives:  could genuine asset spend down, higher estate recoveries, reverse mortgages and private LTC insurance relieve the financial pressure on Medicaid and, if so, how much?  Answer:  Plenty if Medicaid financial eligibility rules were tightened and enforced.

    Finally,
     

  • Entitlement mentality:  to what extent has easy access to all forms of public assistance undercut the willingness and ability of the American people to fend for themselves?  Answer:  A lot based on metrics like dependency on Medicaid, food stamps, welfare, and disability, but we won’t know how much until we see what happens when people do have to fend for themselves.

The Index of Long-Term Care Vulnerability comes with an interactive score sheet which allows the user to apply weights and scores for each factor of analysis in order to estimate, albeit subjectively, the potential vulnerability of the national and each state’s long-term care service delivery and financing system. 

Check it out and let me know what you think.

Well, that’s my take on where we are, how we got here, and what’s likely to happen next.  Thanks for your attention.  I’ll be glad to answer questions.

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Updated, Monday, November 9, 2015, 10:07 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-044:  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:

  • Retirement: How to Live Well: Few people want to leave their home as they grow older. Smart planning about health care can make all the difference

  • New Research Exposes Big Problem With Long-Term Care Insurance

  • The Irresponsibility of States Guaranteeing Pension Returns

  • Critical illness coverage reaches tipping point

  • Alzheimer’s Link Leads to More Financial Planning

  • Actuaries choose new LTC future shapers

  • Genworth Unveils Long-Term Care Adviser Resource

  • Affluent Boomers Consider Long-Term Care Top Risk to Well-Being in Retirement Yet Only 3 in 10 Have Made Financial Plan to Address Issue

  • Access To Long Term Care Insurance Summit Videos Offered By AALTCI

  • Taking the really long view on long-term care insurance

  • CMS finalizes physician fee schedule for 2016

  • Economic Freedom of the World

  • ‘A lot of opportunity’ in critical illness insurance

  • The Death Rate Is Rising for Middle-Aged Whites

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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 6, 2015, 10:15 AM (Pacific)
 
Seattle—

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LTC BULLET:  A NEW REVOLUTION IN LONG-TERM CARE FINANCING . . . BY GOVERNMENT

LTC Comment:  Radical, disruptive changes in how government pays for long-term care are advancing rapidly.  Background after the ***news.***

*** MOSES SPEAKS:  If today’s LTC Bullet strikes a chord of interest, consider bringing Center president Stephen Moses in to speak at your next meeting or conference.  Check out his professional bio here and review our newly revised “handout” with links to dozens of his articles, speeches and reports here.  Get it as a one-pager .pdf for hard-copy distribution here.  Then call or email Steve or Damon to discuss arrangements:  206-283-7036 or info@centerltc.com.  Do not let these big changes in long-term care public policy catch you, your prospects or your clients by surprise. ***

*** AALTCI REPORTS:  “Video recordings of sessions at last week's 2015 National Long Term Care Insurance Sales Summit are being made available by the American Association for Long-Term Care Insurance.  ‘Holding the Summit in Washington D.C. allowed us to have top national legislative, legal and sales professionals speaking,’ explains Jesse Slome, executive director of the American Association for Long Term Care Insurance.  ‘We streamed the sessions live online and some 800 insurance professionals tuned in to watch.  Recordings of the sessions are being made available for On Demand viewing.  ‘We followed what I call the TED Talks format, which means sessions were between 12 and 18 minutes,’ Slome adds.  ‘People watching the recordings will see the speakers as well as their presentations and can view the recording on any device with Internet access.’  To learn more about accessing recordings from the 2015 LTC Sales Summit go to http://goo.gl/sR1vqp.” ***

 

LTC BULLET:  A NEW REVOLUTION IN LONG-TERM CARE FINANCING . . .  BY GOVERNMENT

LTC Comment:  Huge changes in how the government pays for post-acute and long-term care are under way, building steam, and about to revolutionize LTC service delivery.  “Bundling” and “prospective payment” are on every health care bureaucrat’s lips.  The system’s transformation to “managed care,” whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country.  We’ve touched on that development and its likely ramifications in earlier Center publications.  There will be more to come. 

The government’s latest move toward centralized control of the LTC market is even more significant.  The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated “quality” metrics).  The new system will put care managers and providers at far greater financial risk.  Only time will tell if this shake-up improves or damages the care patients actually receive.

I am learning more about the value-based payment revolution.  I’ll be attending and speaking at a conference focused on the subject next week.  I’ll report further thereafter.  But I am already very concerned.  My speech at the conference will place the transition to value-based payment by public programs into historical context.  I will show how the new policy relates to and builds on previous government interventions in the long-term care financing market.  I will speculate on the likely consequences of the new policy.

Today’s LTC Bullet is a summary and preview of what I intend to say at the conference next week. 

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

“The Future of Long-Term Care Seen Through the Prism of History”
by
Stephen A. Moses

How did it come to pass that government is the dominant payor for long-term care?  Why does the government now perceive a need to demand value from LTC providers rather than simply paying for services or not?  What trend does this latest government intervention in LTC service delivery and financing continue?  Where is this trend likely to lead?  These are the questions my presentation will attempt to answer.

I will recount the history of long-term care financing beginning with the passage of Medicare and Medicaid in 1965.  I will show how generous public financing in the early days caused institutional specialization, public dependency on Medicaid-financed nursing home care, and exploding expenditures.  I will explain how government tried to deal with rapid cost increases by (1) capping supply with “certificates of need,” (2) suppressing price with reimbursement caps, and (3) attacking the resultant excess demand by statutorily compelling higher quality (OBRA ’87) without extra funding.

I will show how each of these measures addressed the symptom of out-of-control costs instead of the cause—easy access to public financing of long-term care after care is already needed.  I’ll explain the net effect:  a public desensitized to the real risk and cost of long-term care; the lack of private markets for home care services or long-term care insurance; the gradual disappearance of private LTC payers; and the increasing dependency of long-term care providers on generous and growing Medicare LTC funding to counterbalance inadequate Medicaid reimbursements.

I’ll cover several related themes that evolved as this basic history unfolded.  I’ll trace the government’s efforts to discourage Medicaid LTC eligibility abuse as private payers awakened to the ease of getting Medicaid.  I’ll address the seeming panacea of replacing expensive Medicaid nursing home care with ostensibly cheaper home and community-based services.  I will show how Medicare (social insurance) is giving way to means-testing (welfarization) while Medicaid has become a defacto entitlement program lacking fair or effective spend down requirements.

Finally, I will tie all these strands together to show how the latest government demands on long-term care providers are a consistent continuation of its previous interventions in the LTC service delivery and financing market.  I will speculate on the likely future of that market in the context of the age wave (demographic challenges), profligate fiscal policy (debt and unfunded entitlement liabilities), and irresponsible monetary policy (artificially low interest rates that hide public programs’ insolvency).

I’ll close on a hopeful note with a prediction that better times are ahead after we endure and weather the perfect economic storm I fear is coming.

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Updated, Monday, November 2, 2015, 10:11 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-043:  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:

  • LeadingAge: Start saying 'life plan community' instead of CCRC

  • Abuse Plagues System of Legal Guardians for Adults

  • Genworth Falls Most in S&P 500 as CEO Says Much More Work to Do

  • Seven money milestones to hit while you’re in your 50s

  • This is your brain on retirement — not nearly as sharp, studies are finding

  • Eligibility for federal employee long-term care insurance to expand

  • The Greatest Fear of Old Age: Who Will Take Care of Me?

  • How Race Influences Why People Die in America

  • The one thing CI producers ‘are all clamoring for’

  • Baby Boomers Hugely Underestimate What They Need for Retirement

  • Are voluntary benefits like pet insurance worth it?

  • Dementia costs rocket past heart disease, cancer

  • Learning the Unfamiliar Language of Home Care

  • Health Care Co-op Closings Narrow Consumers’ Choices

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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 30, 2015, 10:23 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC SUMMIT SMASHING SUCCESS

LTC Comment:  Brilliant conception, flawless execution and best-of-all free admission marked the live and online 2015 National Long-Term Care Insurance Sales Summit in and from Washington, D.C.  Detailed notes on each presentation follow the ***news.***

*** MAGA’s Brian Gordon was recently interviewed on Kevin Price's Houston-based radio show, "The Price of Business.”  The topic was LTC, proactive planning and emergency strategies.  The interview is on YouTube.   Here's the link:  https://youtu.be/9lewCmrNON4 .  Check it out. ***

LTC BULLET:  LTC SUMMIT SMASHING SUCCESS

LTC Comment:  If you missed this year’s free “Long-Term Care Insurance Sales Summit,” you missed one for the history books.  The live event took place Tuesday, October 27, 2015 in Washington, DC, but most participants followed it live as we did via online streaming.

Fortunately, if you were otherwise occupied on Tuesday, it’s not too late for you to glean this program for LTCI knowledge, insights, sales tips, and motivation.  According to the program’s sponsors, you can order 24-7 on-demand access to video recordings of the whole days’ sessions for 90 days here.  Alas, the recording, available for $19 on the day of the event, now costs $49.  Still a steal!

To whet your appetite for more, Damon and I took notes on the entire program.  They follow in the single longest LTC Bullet ever published.  If the notes seem to become clearer and more detailed around mid-day of the program, that’s because Damon took over the note taking to give me a two-hour break.  Well done!

Notes on the LTC Summit held Tuesday, October 27, 2015

Scope out the agenda here:  http://www.aaltci.org/2015summit/program123.html

The program began a little after 8:00am EDT with AALTCI president Jesse Slome’s introduction and welcome to the 2015 National Long-Term Care Insurance Sales Summit followed by four “bonus sessions” delivered by Jesse himself on Short Term Care Insurance.

8:15 AM - 8:50 AM
Successful Strategies For Short Term Care Insurance

Primer on industry and the product.  New organization with mission to put SLTCI on the map:  www.shorttermcareinsurance.org.

Recovery care product; LTCI light.  Lots of different products.  Coverage for SNF, ALF, and some home health care for less than one year; some as few as 30 days.

Regulations governing LTCI do not cover SLTCLI.  Market penetration still small.  Product in very formative stages. 

Seeing interest from major insurance companies.  Sales are growing.  First half 2015 sales up 71% over same period 2014.  26,000 policies closed.

Who is buying SLTCI?  A senior product.  Different than short-term health care to cover gap.  Age 61 and older:  60s and 70s.  4% are over 80.  Can write SLTCI policies on older people.

10 or 11 companies selling the product.  Medico, Aetna, etc.  Surveyed 9 insurers.

Benefit periods:  most people buying a year of coverage, getting maximum benefit.  Half of policies are 90 days or less. 

People using as plan B if can’t afford LTCI or to fill the gap.

Sales opportunity:  for LTCI producers, this is currently “Plan B” option.  Ideal affordable option for client declined for LTCI.  Go back to clients who were declined and offer SLTCI.

If you sell Medicare, Jesse presents on dovetailing SLTCI with Medicare.  Observation status problem is a gap SLTCI can bridge.

71% growth is just the beginning.  Jesse proud of relationship with media.  Every week in major media.  Counter negative publicity about LTCI.  So far no negative publicity about SLTCI.

Visit website which will have consumer and producer sides.  Sales tools, etc.

Recordings available for $49.

Types of people for SLTCI:  can’t, won’t, or waiting for LTCI.

Can’t:  SLTCI is ideal for people you cannot get LTCI.  Height/weight criteria may prevent coverage.  Diabetes with high blood pressure, with arthritis, pain medication, osteoarthritis, even stroke can be accepted.  Even a home care policy with memory issues.  No cookie cutter standard.  Some protection better than none.  49% of LTCI claims are over at one-year mark.

Won’t pay the cost:  Jesse advocates good, better, best strategy.  Compare single male or female:  360 day policy.  Comparing LTCI vs. SLTCI.  People expect SLTCI policies to be cheap but they are not.  360-day with zero elimination period.  Don’t have 90-day certification requirement that keeps LTCI cheaper.  SLTCI also has zero day elimination.  Very attractive for single women. 

Waited:  Age ratcheting down for LTCI.  In SLTCI policies not an issue.  Market starts at 60 to 65 mostly; high ages also.  Learn more at the website:  www.shorttermcareinsurance.org

Why SLTCI works for Medicare.  STOP!  For years, everybody has looked and said need to get Medicare producers talking about LTCI.  Perceptions of LTCI are not positive.  Let’s accept reality.  They don’t want to hear about something that sounds like LTCI.  SLTCI sounds like LTCI.  You have to change the terminology.  Call the product what the insurers call it:  “Recovery Care.”

Major gap in what Medicare covers and does not cover.  Observation claims; NBC Nightly News report, 3-minute video; if hospital categorizes as observation, get same care, 1.8 million; once categorized as observation not considered hospitalized.  So go to SNF, but Medicare does not pay.  You were not hospitalized.  Reason for Medicare producers to talk to their prospects and clients about “Recovery Care.”

Medicare is vulnerable entitlement.  That’s why observation care is hard for Congress to change.  If fixed, you drop the coverage.  For now it is real and this is an affordable solution.

Prospects for recovery care are Medicare prospects.  They are also your LTCI prospects who assume Medicare will cover them.

Learn more by watching the NBC report.  It will open your eyes.  Great YouTube video to show prospects.

How to be successful in SLTCI or Recovery Care

1. Review your declines.  Tell them benefits of product they may be able to get.

2. Anticipate your declines.  Offer Plan B ahead of decline.

3.  Too old:  Many products go well into the 80s.

4.  Good, better, best approach.  Position SLTCI as “good.”

5.  SLTCI uses unisex rates.  This is the only way we can get you both covered.

6.  Layering traditional LTCI; going back to clients to cover the first 90 days.

7.  Property casualty (PC) agents.  Ads for compare.com.  Gives ability to buy car insurance from all companies; Google owns; eating PC producers’ lunch.  State Farm is broadening from car insurance.  SLTCI is a way to partner with PC agents.

End of beginning sessions on Short Term Care Insurance

9:10 AM
Broadcast Begins: Welcoming Overview Comments

Welcome by Tom Riekse, Jr. of LTCI Partners:  Introduced Jesse. 

Jesse:  Thanks to LTCI Partners:  lined up sponsors; made it happen.  LTCI carriers underwrote cost of putting on event.

20 plus sessions.  All being recorded.  Streaming live throughout the day.  A few people in Hawaii, very early there.

Underwriters panel at end of day with questions from viewers at home.

Thanks to insurance media services and National Underwriter that ran ads about the Summit.

You can order on demand recordings of full day of sessions:  insuranceexpos.com, click on the “on demand” button.

9:15 AM - 9:33 AM
Who's Driving The Future of Long-Term Care Exploration Of Initiatives by Major Centers of Influence
John Cutler, Architect of the Federal Long-Term Care Insurance Program, Co-Chair, National LTC Discussion Group

5 Ws of journalism.

Who:  CLASS Act, Connie Garner, Ted Kennedy.  People work through organizations.  Modeling:  Bruce Chernoff, SCAN, Nov. 17 briefing with Health Affairs; Leading Age, Larry Minnix; AARP; HHS Center for Innovation; ASPE.  Designers:  Bipartisan Policy Center looking at proposals; LTC out this December; cutting costs and making services more affordable; LTC Collaborative, Howard Gleckman.  Minnesota:  looking at adding LTCI to Medi-Gap.  NAHU issue paper.  Paul Forte of FLTCI Program:  create FLTCI for all.

Where:  Minnesota, California around duals, Hawaii universal LTCI but Governor lost; New York doing education campaign.

When:  Driven by federal elections; only client who has said anything about LTCI is Hillary Clinton; might lead to proposals if she becomes president.  He thinks change will be incremental.

Jimmo case:  don’t have to be able to improve to get Medicare.  Medicare up from 3% to 18% for LTC.  Medicaid changing to HCBS.

With the Affordable Care Act, adding to Medicaid.  States integrating health care systems with Medicaid.  Why not do same for LTC?  Aligning post-acute and LTC for dual eligibles.

Sleeper issue:  adding LTC to IRAs and 401Ks.

Medicare for all:  not so likely.  CLASS defeated so nothing like it being proposed.

Jesse questions:  What’s likely to happen?

Answer:  don’t duplicate failure.  Section 125 plans; not a lot of lift for that.  Changing restrictions on IRAs and 401Ks possible.  Developing connection around annuities.

What is greatest vulnerability for traditional LTCI?  Claims denial is what gets the press concerned.

9:34 AM - 9:51 AM
Legislative Update & Outlook: The Latest Federal, State and NAIC Initiatives
Rod Perkins, Vice President, Insurance Regulation, American Council of Life Insurers

Snapshot of what’s going on from regulatory standpoint.  Rates and rating practices. 

First NAIC.  Passed changes to LTC model regs and model bulletin.  Attempt to do something regarding closed blocks and new business.  NAIC working groups for more clarification and work to implement. 

Health actuarial task force:  LTC pricing subgroup.  Companies now have to do annual recertification of adequacy of rates.  Carriers concerned about amount of information and security.  Looked at combo products.  How do they work with the LTCI rules? 

Senior issues task force:  look at updating consumer disclosure.  Changes being made re disclosure.  Significant changes to Appendix B, the LTC personal worksheet.  Collect info on income and assets.  Building in more disclosures about possibility of rate increases.  Variation across states.  Public hearing in Minnesota. 

Number of states have implemented LTC studies.  Some states capping rate increases, even retroactively.  Unique age-based limits. 

Reg changes.  Model regulation and Model Bulletin.  Too detailed to summarize; see available video recording of the slide presentation.  Other state activity:  lapses and notices; independent claims review; state health benefit exchanges—should LTCI be assessed to fund those exchanges?

Partnership programs still out there.  Just about every state has one; renewed activity in MI, IL and NM.  Companies have to report to HHS about Partnership activity; funding went away; NAIC leadership will send letter to HHS to try to get resources reassigned to Partnership effort.

Interstate compact:  get approved in many states.  Five year review.

Fiduciary rule of Department of Labor:  concerned about expanding definition of fiduciary.  If company provided LTC, need to be a fiduciary?  Need for exclusion? 

What’s next?  Something significant has to change.  Product with 30- or 40-year tail but little flexibility to change rates.  Need that for viable market.

Jesse question:  Enough already!  What makes states positive and excited.

Answer:  Innovative products like combos.  Organizations like Bipartisan Policy Center; big solutions.  Role for public backstop?

9:52 AM - 10:09 AM
Are Current LTCi Policies At Risk Of Future Rate Increases?
Roger Loomis, Principal & Director, ARC, Author of the Society of Actuaries’ 2015 Study of Rate Increase Risk

Roger Loomis, Actuarial Resources Corporation:  Are future LTCI policies vulnerable to rate increases?  For new issues, how likely rate increases?   Old books have a problem.  But what about new issues?

Three ways to approach.  Qualitative or predictive modeling.

Qualitative:  premiums higher now than in the past.  Have learned from experience.  Products less risky.  Still companies scared.  Most have pulled out.  Afraid of this project.  Buffet quote:  “When others are greedy be fearful and vice versa.”

Lapse rates most important.  Six large insurance carriers in business a long time, provided data.  How have assumptions changed over time?  How confident can we be?

Morbidity assumptions now higher:  108% of what companies have seen in the past.

Mortality improving.  Lapse assumptions very conservative now.  Assuming people will hold on to policy for life.  No downside risk.  Risk margins are higher; into 10, 12, 14 percent levels.  Premiums are already much higher and companies’ premiums are much closer to each other.

More detailed model from actuarial perspective.  Apply modern standards to earlier years.  Look at claims, lapses and mortality.  Look at those rates and figure confidence.  Compare to 2000 and 2007.  Have 16 times more data now.  70 times as much data for main policies.  Confidence levels much higher now. 

In 2000 would have predicted high premium increase rate 40%.  In 2007, a little better.  2014, best estimate right plus or minus 20%.  Really substantial probability of no rate increases.  Can pay many more claims now without a rate increase.

Finally, overall probability of a rate increase.  Looked at all the elements.  2000:  40%.  2007:  30%.  2014:  10%.  40% in past turned out to be low, but 10% now could be really, really high.  Little room for downside. 

Duke University study compared morbidity and mortality changes.  Eric Stallard.  People going to get old, live long, and be sick.  That’s scenario of morbidity getting worse.  Found morbidity improving.  60 is the new 50.  Putting those assumptions together means people living healthier longer.  More premiums collected to pay claims.  Either way good.  Bright future.  Comfortable buying a policy now.  Companies should reconsider the market.

Jesse question:  look at specific kinds of policies to lower risk?

Answer:  Some policy designs more risky than others.  Premium level tied to CPI reduces risk for insurance company.

10:10 AM - 10:28 AM
Long-Term Care Litigation: Recent LTC Insurance-Related Cases, Class Actions & Trends
Stephen A. Serfass, Drinker Biddle & Reath LLP

Litigation in an ever-changing landscape.  3 principal points: 

1. Volume of litigation growing.  So is magnitude, dollars at issue, complexity.  Sophistication.

2. What you as sales professionals do influences litigation.

3.  Easy things you can do to reduce the risk

Stats.  22 lawsuits in 2011, no class actions; 2015:  48 cases, 5 class actions and it’s only October.  April 6, 2012 everything changed.  Relatively small number but tripled since four years ago.  Significant increase. 

This story drives home the reason:  elderly insured on claim due to cognitive impairment; physician said moderate cognitive impairment; insurer sees this and claims rep calls facility to see if require continuous supervision; claims rep checked no; 24 hour round the clock; carrier denied claim; period of months not receiving benefits; lawsuit filed; then put back on claim but doesn’t pay gap period; case goes to trial; $34.25 million dollar award against carrier.  Shock heard round the plaintiff’s bar world.  Got bar thinking about LTCI.  Now all of a sudden more sophisticated plaintiff’s lawyers getting interested. 

Claim-based case.  How is continuous supervision defined?  Don’t get into that situation of misapplying definition.  Most profound reason litigation volume growing.  Expect continued growth at 10% through 2040; more claims mean more denials which  means more litigation.  Class actions also on the rise.  Plaintiffs’ bar looking for ways to recover funds.

Why should you care and what can you do about it?  LTCI litigation driven by three things.  Communication and documentation.  You are gifted communicators.  Document your communication.  Most litigation happens because of confusion.  Why did you tell Mom that the rates will never go up?  You know you would never say that.  I just pulled out my file; I sent email that said rates can go up.  Here’s what we talked about.  Now you have contemporaneous documentation that will defeat a lawsuit or prevent it from being filed.  Also increase communication with the family.  Defuses hostility.  Think about those things.

10:29 AM - 10:39 AM
Sponsored Message: Genworth
5 insurance companies made this program possible.  Each gets to present.  First, Genworth.  Video about LTC awareness and aging and LTC financing.

10:40 AM - 10:58 AM
The Right LTC Messaging To Get Their Attention And (More Important) Get Their Buy-In!
Nancy Dykeman, CLTC, CSA, LTC Consultant, Plan Advisor, LTCI Partners

Nancy Dykeman, LTCI Partners:  One of top producers in the country.  Subject:  “Right Messaging to Get Their Attention”

You’ve built your life around a goal for yourself and others.  88 keys on a piano.  Think about melodies.  52 white keys; 36 black keys.  All reflect ups and downs of our 88 years.  Sometimes warm and soft; sometimes harsh and loud. 

When you talk about planning, you must ask them about their little ones.  These are highest notes on the piano.  Must bring meaning to their lives.  Are you asking emotional questions about their family?  Our responsibility to ask all the right questions.  You are their trusted advisor.  Ask about dreams to show importance of planning.

Middle notes:  8 keys to left and right of C.  Middle range.  Solid notes, plans.  Middle aged market is smart.  Have experience.  Have seen what happened with parents and grandparents.  These clients put their thrust in you.  Strong melodies; full of action.  What do they want to be remembered for?  So many in this age group we have not talked to?  Concerned about parents but have not started to think about themselves.

36 black keys sharps and flats:  can throw off plans.  What about extended care?  What is your plan?  Especially if have not had experience of dealing with LTC.  Poor health, accidents can and probably will happen.  Living in denial not smart.

Nancy has been a music performer all her life.  Must ask questions about what people want.  Where receive care?  Who beside you?  What will pay for it?  The three critical questions.  We know great products and we have access to them.  Getting up to that is creating a plan.  Have to know the answers to these questions so you will be the one to provide the solution.

Book she read by Genova who wrote “Still Alice.”  50% chance of Huntington’s Correia.  Legacy for young ones.  Lower tones of the music.  Life gets rough.  Now in lower notes of later years; time to rest and remember.  Quite possible six sets of grandparents.  Sound of music.  Elders in low notes.  Everyone at risk of needing care.  May need extended care.  Carve your name on hearts, not tombstones.  You can change lives, by creating music, asking the right questions.

Maya Angelou:  people will never forget how you make them feel.

10:59 AM - 11:17 AM
Selling Traditional LTC Insurance To Single Women: Do You Know How To Really Sell It Today?
Beth Ludden, Senior Vice President, Genworth Financial

Jesse is awesome; celebrate his creativity; free program; no greater advocate over the years.

Women are important focus, but now always the main focus as they should be.  Lot of statistics.  Benefits in products.

Long time ago a smart producer told her what sales process ought to be.  Seven step sales process.  He advocated the three:  create need, solve need, close the sale.  Do the first two and the third is just the paperwork.

Creating the need:  women need it, women use it, and get the most out of it.  Women need a lot of data.  Need financial purpose validated.  Financial planning takes a back seat for women.  Genworth has done a lot of studies; found women don’t plan financially as much as men.  38% vs 57%.  Women have lower savings.  Women earn a quarter less than men; less in top tier jobs. 

Women just don’t like to plan.  That’s where you come in.  You can give women confidence because you have the data.  Millennial women don’t plan.  Women like to be validated with advice.  References Dallas Morning News story.  Given bad advice by journalist.  Single women advised not to buy.  This is an opportunity to refute that kind of dumb advice.

Women are caregivers.  We’re doing study called “Beyond Dollars” for three years.  Trending numbers.  What’s interesting this year:  shows women are 50% of caregivers but 50% are men for the first time.  But male caregivers are different than women caregivers.  Included Millennials in survey.  Late 20s and 30s.  69% already said expect to be caregivers.  Why?  Because seeing parents giving care. 

Everyone skipping over GenXers.  Only 50 million.  GenY is 80 million: aka Millennials.  Even more cynical about Medicare, Social Security and other public safety net programs.  Very interested about planning for future.  May be a way to get them an insurance product to help them plan today.

36% of claims come from single women.  Married women:  29% of claims.  Women make up 65% of Genworth claims.  Married women go on claim younger than single women.  When women claim on Medicare, Medicaid or out of pocket, exceed men on all marks. 

Driver is men tend to perform less caregiving tasks than women even if the caregiver.  Women feel need to do it themselves; men have no such notion.  Men will pay for care.  If relying on a man for  your care, you are probably making a mistake.

Benefit design used to be more important.  What’s important now:  home care, ALF, inflation.  Many ways to reduce cost.

My family will take care of me.  75% said that.  According to Genworth study, 19% of adult children did not, 12% of siblings did not despite expectation.  Care did not materialize.  People having smaller families and they are more dispersed.  Key issue with baby boomer women; 20% or so don’t have children.  Caregivers aren’t always more likely to buy plans; 37% still think family will provide care.  More of men have plans.

Need to start planning and need to focus on women.

Rate increases?  Need to disclose there will be rate increases and need to help them plan.  In the future this premium could change and likely will.  People handle it better if they know what to expect.

Women need and use and benefit from LTCI more than men.  Your job is to show need and plans.  Go to Millennials not just middle aged.  Don’t believe safety nets will be there.  Less underwriting problems.  Can have quite a large policy at the end of the day.  Important to plan.

Important to focus more on women even though they don’t like to plan.  Women graduating from college in greater numbers than men.  Also in professional degrees, doctors, lawyers, dentists.  More professional women coming and more wearing the financial pants in the family.

Jesse comment:  add one sales line:  When one needs care, woman will ask “What can I do?”, men ask “Who can I call?”

11:18 AM - 11:36 AM
Using Annuities To Fund Your Personal Healthcare Pension (including LTC Insurance)  
Michael Lehrhaupt, President & CEO, Strategies for Retirement


“Creating your Personalized Health Care Pension Plan”  Great reason to get back to your LTCI clients.  Strategy to present at reviews. 

Basics of retirement planning.  Break down into two categories:  essential (housing, food, health care); crucial to cover those expenses.  Non-essential:  travel, entertainment, etc.  Won’t greatly affect life style.  Pay money vs. play money. 

Insurance and health care.  LTC insurance.  Make sure people can afford essential expenses.  USA Today:  top retirement worry over 50 is health care costs.  Dilemma.  Planning has to be done long before retirement.  Better to buy younger than older. 

Personalized health care pension.  Two decisions in LTC.  Decision to insure the risk.  How pay for it is next decision.  Can afford while working, but what about after I retire? Where will the premium come from? 

Decision number two; how to pay for it.  That’s what he’ll help with.  Talking about traditional LTCI.  Three possibilities:  Immediate annuity.  Irreversible decision.  Give insurer an amount of money and they give you lifetime cash flow.  Income for life.  Old school.  Lots of options.  Fixed index and variable annuities.  Market risk in variable annuities.  His choice is fixed index annuity.  Perfect because principal can grow if market goes up, but if market goes down no loss.  Preserves principal better; fees lower; only a life insurance license needed.  Assets used to fund the account:  retirement or non-retirement assets.  He likes to use retirement assets.  Can take out at 59.5 but have to take out at 70.5.  He advises use to fund health care personal pension.  Works for any policy with an annual premium.

Two case studies:  need to take RMDs.  Create annual guaranteed annual income.  $120,000 could have been left in, but what if a market crash?  Have turned it into income to cover the LTCI premium.  Income is still $6,000 per year.

Other case study:  single female buying LTCI.  Can afford premium while working, but concerned about paying later and future premium increases.  Set aside $30K and defer income until age 66, able to create great plan.  Guaranteed lifetime income of $2,000 or more.  Could increase, but can’t go down. 

11:37 AM - 11:47 AM
Sponsored Message: John Hancock
Conference free because of underwriting from five corporate sponsors.  Joe Howard and Gene Arsenault presented live how John Hancock has adapted to the challenges LTC insurance has encountered.  For example, flex account.  LTC Captivate 2.0 just implemented yesterday.  Shaves a week off the submission process.  No money required with the application.

11:48 AM - 12:06 PM
Why Affluent Clients Still Need Long-Term Care Insurance
Steve Cain, Principal, National Sales Leader, LTCI Partners, LLC

Assume everyone knows need, product, expensive, tough on families.  Risk resonates with affluent clients.  We’re in the risk management business.  Reduce risk; avoid it; comes down to retain or transfer the risk. 

What’s on minds of affluent clients.  Risk management strategy.  Overview of options.  Come up with a road map.  Not so much about money; they have money.  Clients say health care is number one, then inflation and longevity.  Not specifically LTC, actually all health care.  Medicare, expenses, extended care.  Need more holistic discussion. 

What’s affluent depends on who is defining.  Under $250K investable assets or over $5 million.  Even for folks with lots of money, concerned about health care.  Be sensitive to that.  Not immune to issue because you have money.  Need to manage LTC and money. 

Awareness of LTC higher than it has ever been.  Talking about strategies to manage risk.
Strategies:  Speak in language of the affluent.  Speak about risk.  How to deal with the risk.  All different kinds of products.  Mitigate risk plans.  Maybe self-insurance.  Could be a yellow pad.

Solutions out there:  stand alone, linked, life with riders, etc., etc.  Encouraged despite lumps product has taken recently.  Tremendous transference of wealth and more planning solutions than ever before.  LTC planning needs are being met by other products and that’s OK.

Affluent clients often say we are going to self-insure.  I said you can, but managing a LTC event takes more than money.  Put a plan in place.  Timing, liquidity and health care.  During bull market or bad market.  Who will be quarterback to deal with the health care event?  Could turn it over to LTCI carrier.  Dig deeper than “self-insure.”  Plan of care.  Who will hire?  Ways to overcome the objection.

Simplify the conversation.  Emphasize risk management.  Financial trigger?  Emotional trigger?  Gain client agreement.  Get them nodding yes.  Provide objective planning solution.  Duty to make a recommendation and then follow up.

12:07 PM - 12:25 PM
Good, Better, Best; The Simple, Timely Sales Strategy That Works!
Jesse Slome, American Association for Long-Term Care Insurance

Jesse Slome:  How to Reboot Strategy for Increased LTCi Sales

Experienced in marketing for decades.  LTCI costs almost tripled.  If you think people with lower incomes prepared to spend more for optional insurance protection, naïve.

He proposes different way to present.  Good, Better, Best presentation strategy. 

We all do that.  Coach, business, or first class air.  Most people choose coach.  Few fly first.  Same is true for LTC or any discretionary insurance products.  Same with gasoline, tires, get a haircut.  We are consumers and so are the people you’re talking to.

Prospect age 60.  When most likely to need LTCI at age 83.  Don’t sell what everybody buys, best protection money can buy.  Much can change between now and later.  Wouldn’t buy now for 2039.  But every day people who sell LTCI say buy this and you won’t have to think about it again.  Curtails your ability to sell.

I’ve changed my good, better, best over time.  Good plan may be one year protection.  But call it two years.  Freaks out some producers.  Why comfortable with this being good.  Like a coach seat.  Affordable.  Some protection always better than no protection.  2 years very likely to be sufficient.  Half of claims satisfied in one year.  Coach is better than deciding not to fly.  If have good protection, can augment it later.

Better protection:  costs and gives a little more.  Option to increase coverage.  Single best way to help consumers with the here and now.  Low interest rate environment dictates what premiums will be.  Choose a policy to lock in health today and buy more coverage in the future.  One and done does not make sense.  Confusing to look at the products and know how they handle inflation.  One percent inflation is quite suitable.

The Best:  three year plan, $150 per day, 3% compound inflation.  That’s what most are selling.  Doing that is like American Airlines only sold first class.  Wait, before you leave, we also have these other seats. 

Almost every study shows consumers are ready to spend $100 per month for LTCI protection.  Good comes in under; better comes in at; best comes up a little more.  Consumer responds he didn’t think would be this cheap.  Consumer will be in disbelief and you reassure them.  They will make a decision that need coach and will then consider what more to enhance.  Most will take the better coverage.

End with couple statistics.  Most producers accept 3% inflation because can’t sell 5%.  Facts:  see Sourcebook for these statistics.  Claims mostly begin and end in the home:  1% annualized.  ALF 2.3%.  Nursing home:  1.9%.  Why do you need 3% compound growth?

He has been, is and continues to be advocate of good, better, best.  Industry needs a reboot. You can overcome objections, shock yourself when consumer agrees.

12:26 PM - 12:36 PM
What Is Your Present or Future LTCi Book of Business Worth?
Richard Pitbladdo, CEO, Commission Acceleration Corporation

What is the worth of your commissions?  What you could sell your commissions for is the definition of value.

Market for LTC renewals.  Sellers want to raise cash.  Buyers are specialty finance firms.

In-force Rate Increases

  • Bad if agent agreement excludes commissions on rate increase premium

  • Actually good if agreement does not exclude rate increase premium

  • Valuation impact depends on detailed carrier-specific and state-specific analysis

Description of buying process:  Review agency agreements, look over commission statements, enter data into actuarial pricing algorithm to generate price code. Two week process (approx.).

Next:  Distill three factors into primary, generic categories:  (1) Commissions schedule, (2) age of commission block and (3) detailed provisions in carrier agreement regarding how rate increases are handled. 

Absolute value of commissions reduces over time.  Policy lapses reduce the annualized cash flow over time.  Declining cash flow stream.

Value as multiple of annualized commissions is not flat. Valuation multiple tends to peak at five years and declines after.  Refer to recording for GRAPH.

Continual rate increases on in force business have an adverse impact on the value of a commission block if the agent agreement excludes commissions on rate increase premium.

Valuation impact depends on a very detailed carrier- and state-specific analysis. Buyers will pay more for blocks where the contract grants them commissions on rate increase premium.

12:48 PM - 1: 18 PM
National Economic Forecast: What's On Consumers' Minds As We Head Towards 2016

Knight Kiplinger, Editor in Chief, Kiplinger Washington Editors, Kiplinger Personal Finance

DC – Dysfunctional Capitol

Kiplinger offers staff LTC coverage through payroll deduction.  Kiplinger is very public about their support for LTC planning and know LTCi products very well.

Personal story of LTC coverage – having coverage greatly eased the financial burden on Mr. Kiplinger’s relatives recently.  Coverage paid for home healthcare.

LTCi is not an easy product to explain.  The Kiplinger publication carefully details how LTC coverage fits in a secure long-term financial plan.

“I want to talk today about America’s future: economic and political over the next two or three years.  Without wishful thinking.  Without partisanship.  No prescriptions and recommendations, just cool, dispassionate forecasts, which is what we have been doing at the Kiplinger Letter for over 90 years.”

First a snapshot of the present.

  • Economy growing

  • Long expansion

  • Job creation growing – almost back to 2007 employment level

  • Long surge of corporate profits

  • Amazing five years in stock market until recent correction

  • Inflation is tame.  No COLA for Social Security recipients.

  • Budget deficit

  • How long can expansion continue? Run out of steam? Collapse?

  • Slowing growth in China

  • Struggling Japan

  • “The EU is groaning under the burden of bailing out their profligate southern members and absorbing a huge wave of refugees from the Middle East.”

  • Sagging US exports

  • Plunge in global prices for raw materials

  • Fed printing money

“With all of this ominous stuff going on, should we assume that the expansion is just about over? Will next year, 2016, be the first year of sustained contraction? A mini recession since the Great Recession? I think not and I want to share with you some of the reasons:”

  • Some business sectors are struggling but others are doing well (auto, tech, airlines, healthcare, financial services, real estate).

  • Expansion of the last five years has been driven alternately by different actors: 1.) government via stimulus, budget deficits, Fed printing money; 2.) foreign buyers = export boom; 3.) business / capital spending and hiring; and 4.) consumers (consumer debt is down and people now have funds to afford purchases previously deferred).  Psychological: Wealth Effect

Looking at all the positives and negatives, it looks like we will see continued growth in the economy next year.

FED: When will they begin to change short term interest rates? Economy is too fragile to begin raising rates this year.  Odds favor the beginning of the Fed raising short term interest rates in December.   “easy-money regime”

End economic talk.  Start talking politics.

Democrats to nominate Hillary.  Who is her opposition? Not any of the moderate, conservative, republicans. 

GOP nominee likely to come from the far right of the party.  Perhaps Ted Cruz or Marco Rubio.  Very conservative candidate is unlikely to pull enough swing votes therefore Hillary is most likely to give Democrats another four years of control in the White House. 

Republican party doesn’t care: “They are going for ideological purity over electability.” They want to keep control of Congress and will likely do that in order to block the executive branch. 

It will be years before we see a viable budget out of Congress.  Budget by continuing resolution.  “Kick the can down the road.”

Too much democracy on Capitol Hill.  Gridlock.

“Gridlock created by extreme polarization in our society.” America secretly likes gridlock because it prevents either party from doing anything too extreme.

“Gridlock keeps each party as a counterweight to the excessive tendencies of the other.”

“The downside of gridlock, of course, is paralysis.” Paralysis prevents us from addressing necessary reforms: entitlement, Medicare and Social Security, and tax simplification.

“Political will is in very short supply.”

Acrimony in Washington.  Don’t hold your breath for meaningful change for the better, but know… “this too shall pass.”

1:19 PM - 1:37 PM
Financial Advisors: Your Planning Approach Is Incomplete! Now Finish The Job!
Laurence Moore, MBA, National Training Director, LTCi, John Hancock Insurance

“Engage in the LTC planning process … don’t be the gatekeeper to your client’s LTC planning.”

The audience Mr. Moore is trying to engage is the general financial professional, not people who specialize in LTC.

Objective: engage the “trusted advisor” with LTC planning

What is the sense of urgency?  Stats:  Risk and cost of LTC.  Clients very exposed to this risk and cost and coverage has not been addressed in the long-term financial planning process.

Through basic analysis of LTC risk and cost, LTC is a client’s greatest risk.

Why are people avoiding speaking to their clients about LTC protection?

  • Not comfortable talking about it.

  • Products are too complicated.

  • Underwriting is too difficult and too intrusive.

  • LTC planning is not part of their practice or perceived market.

  • Don’t have time.

BUT AREN’T YOUR CLIENTS WORTH THE EFFORT?

Impacts of LTC risk and cost:  The physical, psychological and financial reality of a long-term care event has a multi-generational impact on siblings, children and grandchildren.  “Ultimately, the nature of this risk is like a pandemic in terms of its impacts within a family structure.”

Barriers to the LTC conversation:

  • We over complicate the LTC planning issue.

  • Too closely associated with aging and the elderly.

  • LTCi products have perceived complexity and limitations.

  • Premium stability issues with the LTCi industry

BUT…

LTCi enjoys unique tax treatment and delivers superior financial leverage.

Restructure the conversation as a strategic sale.  The need for LTC is more closely associated with a disability that’s chronic in nature: physical or cognitive disability.

Potential buyer does not want to think about decades down the road, but does realize they could get hurt anytime.

Talk about LTC should be kept simple. Talk in terms of a disability that is either cognitive or physical in nature.

Age should not be specified in the definition of LTC.

Need for LTC impacts people of all ages.  Mr. Moore presents a list of famous people with corresponding LTC event age.

Keep the LTCi product discussion simple as well.  Think about LTCi as a strategic planning tool.  Four key areas:

  1. Generate cash flow.  Protection against a cash flow crisis.

  2. Duration of benefit

  3. Inflation protection

  4. Elimination period

Tax treatments of LTCi are advantageous.  Leverage of LTCi is amazing for what you pay. 

In comparing LTCi to self-insuring we find that LTCi is a better value in terms of financial investment.

12:37 PM - 12:47 PM
Sponsored Message:  Transamerica

1:38 PM - 1:56 PM
Five Winning Ways To Sell Linked Benefit Solutions; Different Approaches For Different Scenarios
Shawn Britt, Director, Long-term Care Initiatives, Nationwide Financial

What single women buy, but married women don’t.  82% of LTCI policies sold to married clients.  67% to women; 33% to men.  Men don’t think they need this; they’re married to their long-term care.  

We show women LTC; we show men return.  Women will look at benefits and features as she may have cared for a parent.  40% of spouses pre-decease the spouse needing care.  Show him a good return whether he needs care or not.  Guarantee a 9% rate of return tax adjusted.

Help for uninsurable spouse.  People get interested once they need to file a claim.  Indemnity policy for the healthy spouse.  Life insurance with indemnity rider.  Two potential solutions.

Do you have any CDs?  All should ask clients this question.  Bankers are pushing people into CDs with money that could be a LTC solution.  If they have CDs, maybe they can afford an LTC solution.  Better way to use “rainy day” funds.

Learn linked benefits pricing.  Confusing.  Does not follow traditional pricing of LTC.  Show different year durations. 

High Earners Not Rich Yet:  “Henrys.”  Use monthly premiums at a price they can afford.  Have your tool box ready.  Have the women talk first.  Get her concerns. 

1:57 PM - 2:15 PM
A Financial Advisor's Guide To "LifeSpan” Long-Term Care Planning
Kim Natovitz, CLU, The Natovitz Group

Planners say hard to bring this up.  Vegetable strategy.  Want kids to eat vegetables, start slow.  Work your way up to guacamole and finally to plain vegetables.  Meet them where they are.  Discuss LTC planning, but meet advisors where they care. 

Need to change the conversation.  We begin the conversation too late when they are close to retirement.  If important, why wait until age 50?  Somebody else will have talked to them if you don’t.  Needs to be part of every conversation you have with clients. 

Our health insurance plans exclude custodial care.  Potential significant costs uncovered.  Paying for children’s and grandchildren’s educations important to many.  Some retirement funds don’t transfer easily.  Medical underwriting does not improve with age.  More people with dementia under the age of 65. 

3 types of people:  who take your advice, don’t take your advice, or never heard your advice.  55% of clients say other expenses take priority.  Add a rider to those contracts they already have.  Prepare client for fact that may not be best fit for all time, but a start.  Too expensive?  How about the cost of care!?

Need to think about catastrophic riders when clients are buying disability insurance.  Traditional LTCI is not the best solution for everyone.  Look at all possibilities.  Maybe use an annuity to pay a LTCI premium.  Several case studies provided as examples.

2:16 PM - 2:26 PM
Sponsored Message: Nationwide

Sponsored message:  Nationwide, Shawn Britt, Director of LTC Initiatives at Nationwide.  Number one in availability (pay internationally for example), simplicity (all but one policy are cash indemnities), and ingenuity (only cash indemnity linked benefit now).

2:27 PM - 2:45 PM

The 5 Key Components of the New LTC Consumer Presentation
Pattianne Baran, Master Long Term Care Specialist, LTC Experts

Who I am and why I’m doing it.  Saw mother go through mini-strokes, broke her hip, laid all night on floor, major stroke, but didn’t kill her.  Had promised would not put her in a nursing home.  Cost of care in 1998 was over $250 per day.  Watched everything go out.  Lived on; ran out of money.  Father broke.  Sister’s husband diagnosed with Alzheimers.  Then her husband dies.  That was her LTC introduction.  Two by four to the head.  This info pulls people in.  Have to build trust right from the beginning.  Have to establish need.  Solve clients’ issues. 

Many of us are selling virtually.  Can’t see body language.  Still a sifting process.  Have to see what makes them tick; what’s going to work best.

After I tell them about my experience, I ask questions.  The more I know about you the more I can help you find a solution.  My job is to be your advisor.

What is your biggest worry?  Man:  asset protection.  Woman:  don’t want to be a burden on kids.  Turn it around and ask men about being a burden, etc.

2:46 PM - 3:04 PM
Selling The "50-50" Ultimate LTC Plan: Using Both Traditional & Linked To Get Best of Both
Jeff Merwin, CLTC, CLU, RHU, Capitol Metro Financial Services., Inc.

Story:  Goldilocks and the three bears; samples porridge; too hot, too cold, one just right.  Just right is what clients want to find.  Simplification is critical.  Choice is important.  Men are hunters; women are shoppers. 

Leverage is premium low enough and protection high enough it’s a good deal.  Traditional LTCI is the best leverage.  But objections are use it or lose it; premium increases; financial media criticism. 

Some people pivot to the hybrid product.  With life insurance connection, now the man costs more than the woman.  Don’t have compounded growth with the hybrid product.  Narrow market has $100K for both of a couple.  So, cut traditional LTCI by half.  Cut hybrid in half too to $50K each.  Add up the two pools of money.  Total premium is recouped by the life insurance benefit.  Don’t feel like I wasted money.  Do same thing but solve for premium, not benefits.

He tries with his advisors.  Simplify.  One page.  Traditional and hybrid.  What each does.  We have more tools and resources now than we have ever had in the industry.  Color code.  Summary:  Enhance value; increase leverage; cost recovery; one pager summary.

3:05 PM - 3:23 PM
Repositioning Qualified Monies To Fund Both Retirement & Long-Term Care
Michelle Prather, Marketing Director, OneAmerica Care Solutions

Talk about use of qualified money.  Asset Care III using qualified dollars.  How to use that for LTC expenses.  Why use qualified dollars?  For some it’s the only money they have.  People starting to turn 70.5 and facing RMD.  Many don’t need qualified dollars for income.

First cover the concept.  Aggressive, moderate and conservative assets.  What kind of money would they use first?  Usually use conservative assets.  Government gave tax incentives to get people to save.  Example.  Carve out $125K from your conservative funds.  Take money from right pocket and put it in left pocket.  Turn it into double.  Life insurance as death benefit.  Started these contracts 26 years ago.  Can use the whole $250K for LTC tax free. 

Guaranteed return of premium from day one.  Joint life contract.  If don’t quit and don’t live too long, death benefit goes to heirs.  Using this for LTC, $125K gives $250K.  Options up to age 85.  $5,000 per person per month.  One or both could use up whole month so have options to add more up to lifetime benefits.  Continuation of Benefits Rider, separate policy, no cash value, just going to pay like traditional LTCI with a $250K deductible.  Higher my deductible, the lower my premium.  Noncancellable.  Can never have a rate increase.  Life time coverage for $3,000.  Like a HSA. 

That’s how all their options work.  Has same tax advantages as traditional LTC insurance.  Use health savings account to pay the premiums.  Premiums locked in and lifetime coverage.

Look at qualified money aspect.  IRS will not allow us to take qualified money and put in life insurance without paying taxes on it.  Move money from one IRA to OneAmerica.  Taxable distribution goes toward RMD. 

Cover two people with one’s money; cover RMD; keep you from becoming poor.

3:24 PM - 3:34 PM
Sponsored Message:  OneAmerica:  Michelle Prather, Marketing Director, OneAmerica Care Solutions.  Four trends:  Boomers coming; medical technology, preparing for longevity; family dynamics, outsourcing care; government programs change, may not be available.

3:35 PM - 3:53 PM
Your #1-Ranked Internet Storefront: E-Z Ways To Create The Ultimate Linkedin Profile
Jesse Slome, National Award-Winning Marketing Professional

Even you can create and make a highly effective LinkedIn page.  Whatever kind of agent you are:  truism consumers today use the internet.  People will look you up on Google.  Give people the opportunity to check you out.  Number one result is his LinkedIn profile.  Paramount.  This is like your storefront.  If don’t have one, must get one over next two days.  Join world’s largest professional network.  Goal is to build into a colossus. 

Tips:  most important field is the name field.  Don’t be gimmicky.  With photo field 11times more looks.  Simple clean head shot.  Look business professional against a clean background:  400 by 400 pixels.  Search Google for resizing pictures.  

Branding headline:  120 characters to tell people most important things about you.  Look at other people’s profiles, competitor or someone you respect.  Make it stand out.  Key word rich.  Google looks for key words. 

Contact information:  click the pencil.  Be sure it’s complete.  People overlook Twitter, Facebook, websites.  Add links to your key words. 

Summary section:  one of the most important.  Write in first person and make it a conversation between you and your audience.  End with a call to action. 

Skills and expertise:  long section.  Use many skills and topics.  All ways you want to be found.  Complete your full profile.  Do not give up.  You can do it relatively quickly. 

Tip #8:  section on every linked in page allowing people to recommend you.  Often overlooked.  Jesse has over 100 recommendations.  Ask people to recommend you.  You can write their recommendations of you for them.  Join Groups.  LinkedIn just changed everything regarding Groups. 

Tip 10:  Promote your profile.  Google will promote it.  “See my LinkedIn profile.”  If you do this, you can track your results.  Most important thing you’ll do is create or improve your LinkedIn profile.

3:55 PM - 4:13 PM
Making A Virtual Sale Less Virtual; Success Strategies For Selling Remotely
Matt McCann, Principal/Owner, Long-Term Care Planning Specialist, McCann Insurance Services

Announced for president of USA.  Top producer years ago.  Face to face.  Sales management.  Marketing.  Last summer back into the field.  Went virtual.  Once you go virtual you will never go back.  Commute upstairs to downstairs.  Idea to be successful in virtual sales. 

Obstacles in virtual sales.  Fear danger of internet.  Screen sharing is safe but consumers may not know that.  May want to see actual human.  Conveying need without presence is difficult.  Education is not motivation.  Can't hold their hand.  Key to successful virtual selling, be as human as possible.  Not about technology.  If you embrace these things the extra work will give you more freedom, time, and money.

Start with strong logo.  His cost $45. Embrace social media.  Have personal email.  Good photo of yourself on all.  Makes you human.  Makes you real.  Make the process real.  Confirm appointments.  Include website in emails.  Interview not presentation.  Have fun; be real; human conversation; ask questions; follow up.  Explain why you’re unique, better than their local person.  Ask detailed health questions financial questions.  Not just for underwriting.  Find their motivation; then solve for them.  Every slide is a point of conversation.  Don’t read your slides.  Don’t be an educator. 

Attempt to close on first appointment.  Don’t lose the need, urgency, motivation.  He closes two/thirds in first appointment.  If can’t close, set the next appointment.  Take an application?  Send a welcome letter through the mail.  Avoid email which can be avoided.  Send priority mail.  Keep in touch during underwriting. 

Schedule delivery.  Congratulate them.  Have carrier send you the policy; you repackage with your folder; you send to the client.  Finally, thank them and ask them for referrals.  Stay in touch by email and snail mail.  Once you go virtual, you will never go back.

4:14 PM - 4:32 PM
Build Your Own Lead-Generating Website for $100 (In Under 5 Hours)
Jesse Slome, National Award-Winning Marketing Professional

100% of you want more leads; 99% will watch this and do nothing.  Hoping 1% may grow to 5%.  Nothing is more important than having a website.  He did it for one dollar in four hours.  You can do it too.  Why need a website?  The world has gone online. 

Step one:  name game.  You want your own domain name.  Most important property you’ll own.  Ease of recall for your users.  Google searches.  You have to create something new because you can’t afford to buy a great name.  GoDaddy he recommends.  Good customer service.  Allows you to research names.  “LongTermCareKansas” was available.  Did buy ShortTermCareInsurance.org.

Step two:  Design your website.  Trial and error, but pretty simple.  Select a theme from their templates.  Business instead of personal.  Start building your pages.  Just start playing around with it.  Drag and click.  Home page and secondary pages.  Name the pages with search engines in mind.  Use hyphens between words.  Keep it basic for starters.

Step Three:  Manage your pages.  Title should be unique.  Type in descriptions for each page.  Click publish when you like it.  That will save it if you mess up.  Navigation bar:  the one confusing area.  Has all the website pages linked.  Home page, primary page, pages underneath it.  Right click open settings button opening navigation panel click and drag.  Practice. 

Four hours later, he had simple website.  Top of page two on Google within a day. 

A website in and of itself not going to get you leads.  People need to know about it.  Promote your website on your business card, LinkedIn, etc. 

Add a new page every month on something.

4:35 PM - 5:15 PM
Ask The Underwriters Panel: Responding to online viewers' queries.
Moderator: David Hillelsohn, Brokerage Manager, Haslett Management Group
Actuaries from Transamerica, OneAmerica, Nationwide, Genworth, John Hancock

Underwriting critical part of the process.  Over last five years, more comprehensive.  More medical records requested. Screening for cognitive impairment, used to be 85, down to 65 now.  Much more intensive now.  Placement rates better for higher levels.  Placed more in standard class. 

Soliciting questions from audience.

Four things affect placement.  (Too fast to list; check recording.)

Advice on how to work with underwriters.  Make sure people know there will be cognitive testing for older people. 

Is end of year a better time to get a client through underwriting?  Expediency is more for the field than for underwriting.  We have three days to look at the application at Transamerica.

Pre-underwriting:  what percentage of declined cases are reversed on appeal?  Small percentage.  Prepare clients for interviews.  Get right the first time.

What percent of apps come in with cover letters?  Fewer on care solutions product.

How is information related to family history being used?  Genworth:  Coronary artery disease and dementia.  Viewed differently in LTCI than other insurance.

Underwriting for combo products net same result as for traditional LTCI? 

Too technical and detailed to follow and transcribe:  see video recording of this program for more.

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Updated, Monday, October 26, 2015, 10:23 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-042:  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:

  • Why Medicare Advantage members are so satisfied

  • Success Redefined: The Personal Impact Of The $8 Trillion Longevity Bonus:  Part 2 of a Two-Part Series

  • Unleashing The $8 Trillion Longevity Bonus:  Part 1 of a Two-Part Series

  • IRS Issues Long-Term Care Premium Deductibility Limits for 2016

  • 50-Somethings Advised to Calculate Their ‘Long-Term Care Savings Gap’

  • Long-term care insurance requires long-term planning

  • Insurance premiums: Is $100 the next Obamacare hurdle?

  • When Does A Reverse Mortgage Make the Most Sense?:  Quite seriously… when you don’t need it; Part III in a three-part series

  • Long-term care insurance helps protect family farm

  • Medicare Advantage and Traditional Medicare: Is the Balance Tipping?

  • Long-Term Care Takes Back Seat on Client Priority List

  • Almost half of elderly patients miscalculate life expectancy

  • Why some advocates are trying to push caregiving onto the 2016 presidential agenda

  • Advisers shy away from LTC insurance dialogue: Study

  • Why you shouldn’t worry about saving for long-term care  

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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 23, 2015, 09:51 AM (Pacific)
 
Seattle—

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LTC BULLET:  LONG-TERM CAREGIVING:  LATEST DATA

LTC Comment:  We source a cornucopia of new data and analysis on long-term elder caregiving 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 CLIPPINGS subscribers received notification, including citations, links, key quotes and our commentary, for each of the reports highlighted in today’s LTC Bullet on or near their dates of publication.  Tune into LTC Clippings by contacting Damon at 206-283-7036 or damon@centerltc.comLTC Clippings subscribers know more news and analysis faster than their prospects, clients, colleagues or competitors. ***

*** REVERSE MORTGAGES:  We recently sent the LTC Clipping below about a series of articles on how to use reverse mortgages for retirement and longevity planning.  Center Regional Representative Romeo Raabe from Green Bay, Wisconsin replied with this creative extra idea: 

“And if you use the proceeds of the reverse mortgage to fund a life income annuity from State Life--the one that underwrites your health so that the shorter your life expectancy, the better the payout--you may end up with lifetime benefits far greater than any other possibility to fund your care.  I have a homeowner in Green Bay who is still in her home with five days per week home care funded by this method from a reverse mortgage.”

10/21/2015, “When Does A Reverse Mortgage Make the Most Sense?Quite seriously… when you don’t need it; Part III in a three-part series,” by Stephen R. Greenberg, Life & Health Advisor

Quote:  “Let’s take a quick look at the last two articles in this series and review what we’ve discussed so far. In the first, ‘A Practical Solution for Funding Longevity,’ I discussed that a reverse mortgage line of credit, when used in addition to, or in place of, long-term care insurance (LTCI), can be an effective way to support a client’s long-term care protection plan, particularly if the client is self-insured, or can’t afford or does not qualify for LTCI.

“In article two, ‘Reverse Mortgage Adds Alternative Retirement Funding Strategy,’ we talked about the common strategies of the ‘Three-legged Stool,’ delaying Social Security, working longer and saving more, and how a reverse mortgage fits within those strategies. . . .

“The use of a reverse mortgage as part of a client’s comprehensive overall retirement plan is a strategy that’s increasingly being embraced by leading financial experts. How can you incorporate home equity into a retirement plan for the best possible outcome for your client? The first step is education, and I hope these articles have helped.”

LTC Comment:  This series of articles is well worth reading. ***

*** LTC SALES SUMMIT ONLINE.  Jesse Slome of AALTCI reminds us that Tuesday, Oct. 27th is the date for the free LTC Sales Summit broadcast from Washington D.C.  If you’ve registered already, just click here on that day at that time and watch!  Otherwise, go to www.insuranceexpos.com and sign-up for access.  The broadcast starts at 8:15 AM eastern and continues all day (until about 5:00 PM).  Most sessions are 15-to-18 minutes presented by top LTC industry experts.  SUGGESTION:  Click here and print out the schedule.  That way you can pick the sessions you won't want to miss!  Your Center for Long-Term Care Reform will be tuned in.  Be there too. ***

*** 2016 LTCI TAX DEDUCTIBILITY LIMITS PUBLISHED: 

10/22/2015, “IRS Issues Long-Term Care Premium Deductibility Limits for 2016,” ElderLawAnswers

Quote:  “The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2016 taxes as a result of buying long-term care insurance.”

Attained age before the close of the taxable year

Maximum deduction for year

40 or less

$390

More than 40 but not more than 50

$730

More than 50 but not more than 60

$1,460

More than 60 but not more than 70

$3,900

More than 70

$4,870

LTC Comment:  We’ve updated these numbers in The Zone here:  Deductibility Limits for Long-Term Care Insurance.  There you’ll find the LTCI tax deductibility limits for every year all the way back to the first in 1997, after passage of the Health Insurance Portability and Accountability Act of 1996 that authorized LTCi tax deductibility.  Need a reminder of your user name and password for access to The Zone?  Contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET:  LONG-TERM CAREGIVING:  LATEST DATA

LTC Comment:  In the past month, three major reports on elder caregiving in the United States have appeared.  Today’s LTC Bullet gives you links to and highlights of those reports with our comments.

Report #1:  “Unpaid Eldercare in the United States —2013-14:  Data from the American Time Use Survey,” Bureau of Labor Statistics, 9/23/2015

Highlights:  “Sixteen percent (40.4 million) of the civilian noninstitutional population age 15 and over provide unpaid eldercare, the U.S. Bureau of Labor Statistics reported today. Of the 40.4 million eldercare providers, a majority are employed (61 percent) and nearly one-half are employed full time (47 percent). These estimates are averages for the 2-year period of 2013-14; combining the 2 years of data facilitates a more in depth analysis of eldercare.”

LTC Comment:  This BLS report contains extensive data on unpaid caregiving in the USA, but no estimate of its dollar value.  For that ($470 billion per year) see:  Susan C. Reinhard, et al., “Valuing the Invaluable: 2015 Update, Undeniable Progress, but Big Gaps Remain,” AARP Public Policy Institute, July 2015, p. 1.

Report #2:  “Beyond Dollars: Caregivers Face Career Crisis Resulting from Lack of Long Term Care Planning, According to Genworth Study,” Genworth, Market Watch, 10/1/2015

Highlights:  “Providing care for loved ones has taken a toll on the careers of half of caregivers surveyed in Genworth's latest Beyond Dollars study, with 11 percent actually losing their jobs and another 10 percent having to change careers. That's in addition to the other financial, physical and emotional impacts of caregiving examined in the study. ”

LTC Comment:  It’s not just the money—a powerful message for prospects in denial of LTC risk.  Read this report for details on how caregivers and the care they provide are changing; how caregiving negatively impacts caregivers’ health, careers, and retirement savings; and how planning mitigates stress and negative impacts.

Report #3:  “The Disproportionate Impact Of Dementia On Family And Unpaid Caregiving To Older Adults,” by Judith D. Kasper, Vicki Freedman, Brenda C. Spillman, and Jennifer L. Wolff, Health Affairs, 10/9/2015.

Highlights:  “The number of US adults ages sixty-five and older who are living with dementia is substantial and expected to grow, raising concerns about the demands that will be placed on family members and other unpaid caregivers.  . . .  We found that among family and unpaid caregivers to older noninstitutionalized adults, one-third of caregivers, and 41 percent of the hours of help they provide, help people with dementia, who account for about 10 percent of older noninstitutionalized adults.  Among older adults who receive help, the vast majority in both community and residential care settings other than nursing homes rely on family or unpaid caregivers (more than 90 percent and more than 80 percent, respectively), regardless of their dementia status. Caregiving is most intense, however, to older adults with dementia in community settings and from caregivers who are spouses or daughters or who live with the care recipient.” (From the Abstract, p. 1642) 

LTC Comment:  You can read the Abstract of this article for free here.  You can subscribe to Health Affairs or purchase only this article here.

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Updated, Monday, October 19, 2015, 11:17 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-041:  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:

  • Winning Hearts And Minds By Shocking Them…

  • To Age Well, Change How You Feel About Aging

  • 5 kinds of insurance you might need but not know it

  • Got $730K saved for nursing care? Dementia could cost that much

  • The Disproportionate Impact Of Dementia On Family And Unpaid Caregiving To Older Adults

  • Caregiver Thought Leader Interview: Dr. Samuel Henderson

  • What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2016

  • Knight Kiplinger to Keynote at Long Term Care Insurance Association Summit

  • CDC: 3 in 4 nursing home prescriptions are wrong

  • You need to Understand Medicaid if you need Nursing Home Care

  • Goldman's Fels Says Long-Term Care Insurance Is `Ripe for M&A'

  • Mortality rates, hospital admissions higher in for-profit LTC facilities

  • Top VCs target $7 trillion senior-care market: Marc Andressen and Mitch Kapor are betting on the booming longevity economy

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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 16, 2015, 10:27 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC UN-AWARENESS MONTH

LTC Comment:  After years of “LTC Awareness Months,” why does LTC denial still prevail?  We explain after the ***news.***

*** LTC AWARENESS MONTH began in 2001 as “LTC Awareness Week” promoted by Jesse Slome and the American Association for Long-Term Care Insurance.  In 2004 or 2005, the week dedicated to awakening the public about LTC risk and cost grew to a month.  This campaign of education and marketing aimed at cracking through the seemingly impenetrable wall of LTC ignorance and denial continues unabated.  Kudos to Jesse and AALTCI for their hard work and unflagging commitment to this mission. ***

*** LTC CLIPPING SAMPLE:  Every day we send LTC Clippings subscribers real time news they need to know about LTC services and financing with our comments.  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe by upgrading your membership to “Premier” ($250 per year).  That’s just an extra $100 for most Center members and only a little more than $20 per month for new subscribers.

10/14/2015, “Caregiver Thought Leader Interview: Dr. Samuel Henderson,” by Gary Barg, Today’s Caregiver

Quote:  “It has been 12 years since any new compounds have been advanced for Alzheimer’s disease. I think that reflects our fundamental misunderstanding of the disease. As you know, the primary hypothesis for Alzheimer’s disease is what is called an amyloid cascade hypothesis. Unfortunately, all of the large phase, (what are called Phase Three efficacy trials), have failed. I think the field is really struggling now with what really does cause Alzheimer’s disease and how we can tackle that best.”

LTC Comment:  This interview is one of the most interesting things I’ve read recently on Alzheimer’s Disease. ***
 

LTC BULLET:  LTC UN-AWARENESS MONTH

LTC Comment:  We’d like to thank Center Bronze corporate sponsor United Security Assurance for commissioning the following article.  Despite the heroic efforts of so many for so long, LTC awareness still trails our hopes and expectations.  Redoubling our efforts may help, but recognizing the cause of the problem and solving it is the permanent solution.  Toward that end, we offer . . . 

“LTC Un-Awareness Month”
by
Stephen A. Moses

You know what they say about doing the same thing over and over again but expecting a different result.  Yeah.  It’s nuts.

Yet, come November 1 every year, that’s what we continue to do.  We lament the public’s denial of long-term care risk and cost.  We repeat all the reasons to plan early and responsibly.  We urge government to educate, advocate and incentivize LTCI.  We implore consumers to buy the product.

What has it gotten us? 

Private long-term care insurance sales are down precipitously and neither the federal nor the state governments have lifted a finger lately to help.

What challenges do the “AMGs” (altruistic, masochistic geniuses) who still sell private LTC insurance face?  To name a few . . .

  • A public that thinks Medicare pays for LTC
  • Prominent carriers leaving the market
  • Rising premiums
  • Increasing underwriting declines
  • A shortage of good leads
  • A demographic sweet spot (40 to 50 year olds) that isn’t

But those are only the symptoms of LTCI’s malaise.  As it is for the medical profession, so it is for insurance:  if you treat the symptoms of disease instead of its underlying cause, you run the risk of making the ailment worse instead of better.

What is the cause of LTCI’s disorder?  Easy to explain; much harder to fix.

Government (Medicaid and Medicare) has paid for most expensive long-term care since 1965, not only for the poor, but also for the middle class and even the affluent when they take advantage of “Medicaid planning.”

Easy access to government financing after the insurable event occurred desensitized consumers to the risk and cost of long-term care thus enabling widespread denial that on the face of it seems irrational, but isn’t because of the Medicaid safety net.

Overspending on social engineering including LTC financing landed the state and federal governments in a financial morass of overspending, overpromising, burgeoning debt and unfunded liabilities leaving few resources to promote private LTC planning.

Futile monetary efforts to boost the economy by pushing interest rates down to nothing undercut profitable distribution of any insurance product based on building reserves, including private LTC insurance.

Do you see the connection between the symptoms and the causes? 

  • The public still mistakenly thinks Medicare pays for LTC because the fact that Medicaid actually does pay has anesthetized generations to the risk and cost of LTC.
  • Prominent carriers left the market because government fiscal and monetary policy crowded out demand for LTC insurance and shrank the product’s profitability.
  • Raising premiums was the responsible private-sector reaction to government-induced, artificially low interest rates that obviated lower premiums.
  • Increasing underwriting declines were another way to shore up LTCI’s financial viability in the face of negative public policy.
  • The shortage of good leads and the lack of interest among 40 to 50 year olds are just another way of saying the public has been duped into a false sense of security.

So what should we do about this problem?  Will attacking the symptoms with more studies, education and importuning the government for tax subsidies succeed?  Decades of trying those measures have fallen flat.

So how can we tackle the real cause?  I recommend two approaches.

  1. LTCI producers need to address the causes, not just the symptoms of consumers’ denial.  Learn to understand why the public is in denial about LTC risk and cost.  Show them why ignorance isn’t bliss.  Explain why going bare and hoping for the best is a plan to fail, not just a failure to plan.  To make those arguments, you’ll need to know why, how and to what extent the social safety net for long-term care is vulnerable and untrustworthy.  Find the answers at www.centerltc.com and in our LTC Bullets, LTC E-Alerts and LTC Clippings.
  1. LTCI carriers need to shift some of their resources toward effective public policy advocacy.  Beseeching the federal and state governments for tax incentives, education programs, and all forms of rent-seeking is fruitless.  Show instead how targeting scarce public LTC resources to the truly needy will save taxpayers money and simultaneously redirect the middle class and affluent to save, invest and insure privately for long-term care.

Easier said than done you say?  Well, yeah!  We’ve been pursuing those approaches at the Center for Long-Term Care Reform since 1998.  No one knows better than we do how difficult the mission is.  But we’ve had major successes before, as when the Deficit Reduction Act of 2005 tightened Medicaid financial eligibility and unfettered the LTC Partnership Program.  We can have more and bigger successes in the future as the government’s ability to fund programs that discourage private LTC planning becomes less and less viable.

In the meantime, your Center for Long-Term Care Reform is fighting the good fight for responsible LTC planning and rational LTC public policy.  We bring you critical information, trenchant analysis, and best practices every week in LTC Bullets, LTC E-Alerts and LTC Clippings.  If you’re not a member, join.  If you are a member, keep the faith.

We can and will prevail.  Failure is not an option.  Too much is at stake.  When we confront the causes of the LTC financing crisis, not just the symptoms, we will get the desired result.

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Updated, Monday, October 12, 2015, 11:20 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-040:  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:

  • Kiplinger's Personal Finance - Trade-offs that make long-term care coverage more affordable

  • Untangling the Medicare Premium Mess -- And What It Means For You

  • Medicare Advantage star ratings reveal mix of high, low performers

  • States 'shocked' they're on the hook for rising Medicare premiums

  • Retiree Health-Care Costs Rise to a Cool Quarter Million

  • Seniors Dump Long-Term Care Insurance Just When They Need It Most

  • The looming Medicaid time bomb

  • Retiring Into Uncertainty: One-in-Three Americans afraid of losing their independence in retirement

  • Why critical illness sales may be falling flat

  • I put my father in a nursing home at age 98. Then I brought him home

  • When care turns costly, patients leave private Medicare

  • GAO: Safety net programs account for billions in improper payments

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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, October 9, 2015, 10:38 AM (Pacific)
 
Seattle—

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LTC BULLET:  ANOTHER LTCI HIT JOB?

LTC Comment:  What shall we make of this new attack on private long-term care insurance?  Answers after the ***news.***

*** REGISTRATION IS OPEN for the 2016 Inter-Company Long-Term Care Insurance Conference to be held March 13-16, 2016 at The Grand Hyatt in San Antonio, Texas.  Organizers expect over 1000 attendees at this premier educational and net-working event of the private LTCI industry.  Insurance producers should apply for the “Producer Scholarships” ($600 price discount).  Broker General Agents can receive a $400 discount by entering “BGA” in the Coupon Code Box.  LTC Bullets and your Center for Long-Term Care Reform will be on hand to cover the conference, reconnect with old friends, and meet some new ones.  Register and make your hotel reservations early here. ***

*** HOLD ON:  Long-time friend of the Center George Braddock of Miami, Florida shared this note, which we’ve abbreviated considerably, that he sent to a representative of the state’s insurance commission:  “Dear Mr. Atwater:  While holding on the phone for the insurance department, I heard your many announcements.  It occurs to me that an important one is missing:  a message encouraging Floridians to explore the Florida Partnership for Long-Term Care insurance.  Don’t you agree?  Of course, adding an on-hold message is a small start, but it’s a start.  I’m sure if the right state leaders committed to a proper public campaign of outreach and education, many other ways to get out the word would be added.  What say you, Mr. Atwater?  Respectfully, George”  It’s a good idea all states should consider.  Even better:  don’t leave callers on hold interminably. ***

*** 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:  ANOTHER LTCI HIT JOB?

LTC Comment:  Boston College’s Center for Retirement Research (BC/CRR) really has it in for private long-term care insurance.

Last November, BC/CRR published “Long-Term Care:  How Big a Risk?”  This report concluded that “previous research understates the risk of going into care but overstates the average duration of stay of those ever institutionalized” and that “most single individuals should not buy insurance given the availability of Medicaid.”  (p. 1)  The national media popularized these dubious findings by saying long-term care is not as big a risk as previously thought and that people should plan for Medicaid instead of getting private LTC insurance.

We refuted BC/CRR’s findings and recommendations in “LTC Bullet:  How Careless Economists Boosted LTC Risk” on December 12, 2014.  We also lambasted the national media in the same LTC Bullet for uncritically accepting and promulgating the think tank’s erroneous findings and bad advice.

Now, the Boston College economists are at it again.  In “Why Do People Lapse Their Long-Term Care Insurance?” (October 2015), authors Wenliang Hou, Wei Sun, and Anthony Webb (all three of whom also bylined the earlier report) conclude:

First, low-wealth and low-income individuals are more likely to lapse their insurance policies. Second, the study finds no evidence that individuals are lapsing strategically, i.e., because they believe they have a low probability of needing care. Third, and importantly, the study finds that lapses are common among the cognitively impaired, perhaps reflecting poor financial decision-making.  (p. 4)

Time magazine saw BC/CRR’s latest report and ran with “Seniors Dump Long-Term Care Insurance Just When They Need It Most,” by Dan Kadlec last Tuesday (October 6, 2015): 

Buying long-term care insurance has always been a dicey proposition.  It’s expensive.  You may never need it.  Insurers may later jack up the premiums.  And new research shows that a third of those who buy the coverage let it lapse—forfeiting benefits they had paid for, often just as they are about to be eligible to collect.

If the national media’s response to BC/CRR’s earlier report is any indication, we’ll see much more of such unfair, unwarranted and inaccurate coverage in the weeks and months ahead. 

Critique of “Why Do People Lapse Their Long-Term Care Insurance?”

What exactly is wrong with this latest salvo from BC/CRR? 

(1)  Data and Interpretation:  The data on which these analysts base their conclusion that LTCI “lapse rates”—the term as they use it is a misnomer—are high comes from a now-outdated 2011 Society of Actuaries report.  They conclude that

At current lapse rates, men and women age 65 have, respectively, a 32- and 38-percent chance of lapsing prior to death, assuming that lapse rates remain at the same levels observed for recent cohorts.  (p. 1)

We queried highly regarded LTC insurance actuary Roger Loomis regarding this data.  He explained:

Three thoughts on lapse rates.  First, whether the lapse rates in the industry are “very high” as they claim is subjective.  Perhaps without exception, LTC lapse rates are the very lowest lapse rates in any type of private insurance.  LTC lapse rates are much lower than what we thought they’d be 20 years ago . . .

 

Second, the lifetime lapse rates they mention in the article are based upon an old industry study.  Lapse rates have continued to go down since then.  According to the most current data, if somebody purchases a policy at age 65, less than 27% will eventually lapse—the rest of the policies will end either because of benefit exhaustion or death.  If somebody purchases a policy at age 50 and still has it at age 65, there is less than a 15% chance they will ever lapse.

 

Third, whether lapse rates being “high” is a good thing or a bad thing is somewhat complicated.  If lapse rates are high, that causes lower premiums, no rate increases, and higher profits—all good things (and a predominant focus in the insurance industry).  However, if lapse rates are “high,” that also means fewer people who once purchased insurance will still have that insurance in force when they need it—that’s something you, me, and the folks at Boston College can all agree is a bad thing.

 

“Wait,” I replied, “I thought LTCI lapse rates turned out to be much lower than previously expected, down around 1% instead of the 5% to 8% originally anticipated.”  Loomis explained:  

Yes, ultimate lapse rates are now less than 1% per year.  That is an annual rate.  With new issues, lapse rates might be in the 5% range for the first few policy years, and then quickly drop to less than 1% per year thereafter. 

 

The Boston folks are aggregating the numbers differently.  When they say a policy has a 32% “lapse rate”, what they mean is that if a company sells 100 policies, 32 of the policies will eventually end due to voluntary lapsation, with the other 68 policies eventually ending due to policyholder death (the other option is policies ending due to benefit exhaustion, but I can’t tell whether they included that in their calculations).  I think this is an important number to look at—especially when your concern is private LTC as a solution for financing actual LTC care.  But it is confusing to call this a lapse rate—lapse rates being expressed annually is a well-established standard and is based on actual data.  The number of people who will eventually lapse is based upon projections that use assumed future mortality and lapse rates.

 

It’s important to understand that most lapses happen in the first few policy years before the policyholder is really committed to the policy and before they have invested very much into it.  Somebody changing their mind about a policy in the first few policy years is very different than somebody lapsing after 20 years because they become too poor and sick to pay the premiums.  The authors didn’t discuss this distinction. 

(2)  Post hoc, ergo propter hoc fallacy:  Fine, let’s give the Boston College authors this much:  it’s unfortunate that so many people who originally purchase private long-term care insurance end up dropping their policies before they can collect on them.  Let’s even accept for the purpose of argument that people tend to be more likely to lapse their LTCI policies when they are less prosperous economically (“Financial Lapsers”) or cognitively impaired (“Forgetful Lapsers”) rather than “strategically” because they conclude they are unlikely to need care after all (“Strategic Lapsers”).

What these authors miss is that an entirely different reason may explain why Financial and Forgetful Lapsers drop their LTCI policies.  The authors commit the post hoc, ergo propter hoc fallacy by assuming that poor economic status or cognitive impairment cause lapses because these conditions precede the action to drop the policy.  But what if these conditions are merely symptoms and not the actual cause?

What might such an actual cause be?  The closer people come to needing long-term care, the more they learn about the available LTC funding sources.  The media drums into everyone’s heads that Medicaid pays for long-term care but only after people become totally impoverished first.  Some people buy LTC insurance to avoid just such a financial disaster.  They may pay LTCI premiums for many years under this assumption.

But the closer they come to actually needing care, the more they and their relatives (potential heirs) begin to worry and to research all available funding sources for LTC.  They read magazines, listen to radio ads, consult elder law attorneys, or see reports by the Boston College Center for Retirement Research, all of which sources tell them they’re suckers to pay for their own LTC or LTCI premiums when the government will pick up the tab.  They quickly learn that Medicaid financial eligibility rules allow people with high incomes and practically unlimited exempt assets to qualify and that even wealthier people can easily self-impoverish artificially to become eligible.  We’ve explained how this works and documented how commonplace it is in many articles, speeches and reports here.

Easy access to Medicaid after the insurable event occurs is a double whammy for private LTC insurance.  It deflates original demand for the product and it clearly inflates later lapses.  The BC/CRR authors do not choose to understand how Medicaid actually works, so they miss and consequently underestimate the welfare program’s disproportionate impact on LTC financing, consumer behavior and the long-term care insurance market.

(3)  Ideological Bias:  Why would accomplished professional economists fail so egregiously to see an obvious alternative explanation for their findings?  Why would they ignore Medicaid, the elephant in the room of long-term care financing?  What makes them attack private LTC insurance for high lapses and overlook the real culprit?  I think the answer is ideological bias.  Too many academics wear intellectual blinders that prevent them from seeing the shortcomings of public LTC financing and the benefits of private LTC financing.

Consider Social Security and Medicare for example.  These mandatory public “social insurance” programs do not allow non-participation or lapses.  Like private long-term care insurance, Social Security and Medicare failed to set aside enough reserves to meet future benefit promises.  But unlike private LTCI, which has responsibly adjusted premiums to provide adequately for paying future claims, Social Security and Medicare have done nothing to offset their tens of trillions of dollars of unfunded liabilities.

Generations X, Y, and the Millennials look at Social Security and Medicare and realistically conclude that they can expect to receive from those programs, if anything, only a paltry return.  The smart thing for them to do would be to lapse these worthless social insurance policies and save, invest or insure privately.  But that is not an option because these programs are compulsory, enforced by the threat of government force.

Do you begin to see why analysts who prefer to compel people to participate in self-destructive financial boondoggles are prone to miss the perverse incentives in public programs like Medicaid?  Is their onus toward private long-term care insurance more understandable now?

Conclusion

Thanks to the national media, which share the same ideological bias, and because of this report from BC/CRR, millions of people around the country will learn one more reason not to plan responsibly for long-term care risk and cost.  We conclude as we did after these authors’ earlier foray into LTCI bashing:

Facts have consequences.  By focusing only on technical economic analysis and ignoring the substantive reality of how Medicaid actually works, these authors, this work, and the misbegotten reporting it engendered increased consumers’ LTC risk, swelled Medicaid’s liability for future LTC costs, and further damaged the struggling LTC insurance industry’s prospects.

Unfortunately, only a handful of you faithful readers will see our rebuttal of this report.  But we hope we’ve armed you with some ammunition to counteract its damage with the prospects and clients whose lives you touch.

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Updated, Monday, October 5, 2015, 11:19 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-039:  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:

  • Use reverse mortgage for long-term care or insurance?

  • Why Obamacare's Cost Control Efforts Aren't Working

  • Critical illness insurance sales show improvement

  • New York Life Selected as Exclusive Long-Term Care Options Provider to 37 Million AARP Members

  • How to sell critical illness (and why you should)

  • Independent advisors dominate in life but not in CI insurance

  • Beyond Dollars: Caregivers Face Career Crisis Resulting from Lack of Long Term Care Planning, According to Genworth Study

  • 1996 report warned CalPERS about long-term care insurance pricing

  • Understanding Medicaid reimbursement

  • Social Security puzzles future beneficiaries: survey

  • Supreme Court urged to halt new pay rules for home aides

  • 300 million seniors excluded from long-term care

  • Billionaire Preaching Doom for Social Security and Medicare: Is He Right?

  • Financial State of the States

  • Family Spillovers of 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, October 2, 2015, 10:30 AM (Pacific)
 
Seattle—
 

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LTC BULLET:  THE LTCI SOURCEBOOK

LTC Comment:  Do you have AALTCI’s 2015-16 Sourcebook for LTCI information?  If not, you should.  Why, after the ***news.***

*** LTC SALES SUMMIT:   Jesse Slome of AALTCI reports “This is your final reminder to sign-up for the FREE online broadcast from the 2015 National LTC Solutions Sales Summit.  The conference takes place on Tuesday, October 27 and the video broadcast begins at 9:00 AM (Eastern Time).  You can watch as little or as much as you like during the day.  PRE-REGISTRATION IS REQUIRED to receive the web access information.   To see the program line-up and register click here now or go to http://www.insuranceexpos.com/LTC-Solutions-Sales-Summit-2015-signup/  ***

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LTC BULLET:  THE LTCI SOURCEBOOK

LTC Comment:  Having come up for air after a lengthy stint of research and writing on our latest project, I began a long overdue browse of “The 2015-2016 Sourcebook for Long-Term Care Insurance Information.”  The Sourcebook is Jesse Slome’s invaluable freebie for members of the American Association for Long-Term Care Insurance (www.aaltci.org.)  I’m going to give you a preview of the volume’s informative content below, but first, here’s Jesse’s “two cents” about the organization’s flagship publication.

The Sourcebook is more than just a compendium of the latest facts and data relevant to selling long-term care insurance … it answers the questions your clients and prospects will be asking you.  Plus it contains some beautifully designed, generic marketing tools that you can use to convey impactful information to prospects.  To see the Table of Contents for the 2015-2016 LTC Sourcebook and some examples of pages, click here

 

Copies are sent to all individuals who join the American Association for Long-Term Care Insurance.  The cost to join is $98 for one year and the cost of the Sourcebook alone would sell for $99.  But it’s yours at no charge when you join.  In addition, members are listed on the Association’s Find A LTC Insurance Agent online directory.  This is the #1 national resource for consumers seeking information on long-term care insurance.

OK, what’s in the LTCI Sourcebook?  Lots of data.  You’ll find average premiums for good, better, best LTCI policies for male and female singles and couples; sales data for tax qualified LTC riders; covered lives and market share for 2013 and 2011 plus 2013 earned premium for every LTCI carrier; 2012 and 2014 inforce lives by state; and a section on key findings from recent studies.

What really captivated me, however, were the graphs and charts in the Sourcebook that bring the data to life.  One explains how “We’re Terrible at Predicting How Long We’ll Live.”  For example, people who said they’d have a 30% chance of living to age 75 actually had a 70% chance.  Don’t you think facts like that could be a wake-up call for people in denial about the need for LTCI?

Getting old isn’t easy.  At age 85+, 41.5% of people have three or more disabilities.  Hard reality is less easy to dodge when you’re staring the proof in the face.  Almost 2/3 of Alzheimer’s patients are women.  Good husbands can’t evade that niggling tidbit by failing to insure their wives at least.

We all know Medicare and Medicaid are bankrupt, but most Americans don’t.  The Sourcebook has a whole page of eye-opening documentation of those programs’ shortcomings and long-term vulnerabilities.  You’ll see one chart that tells you how old you’ll be in 2030 followed by another chart that shows Social Security, Medicare and Medicaid will consume one-seventh of our Gross Domestic Product in that year, the same year Medicare’s trust fund is depleted!

Scare tactics?  Bull-pucky.  Tell it like it is!  Just be very sure you have the data and sources to back it up.  The Sourcebook has them.

Inclined to wait?  LTCI applicants ages 70-79 are declined 44% of the time.  For ages 60 to 69, the decline rate is 25%.  Reasons to act followed by reasons to act NOW.

But is it worth the cost?  Another full page answers that question.  Check out your lifetime chance of using your benefits and a comparison chart of insuring vs. saving.

Wonder where claims begin?  In homes far more than nursing homes.

Another whole page documents why premiums are unlikely to rise much in the future, putting to rest one of the biggest objections against LTCI.

OK, you get the idea.  But I’ve barely scratched the surface.  Oh, and by the way, free electronic versions of the Sourcebook’s impactful infographics are available to AALTCI members.

Bottom line.  Whether you sell LTC insurance or only advise clients about financial planning in general, you should own, study, and share the information packed into the Sourcebook.   And it’s free to AALTCI members.  Such a deal.

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Updated, Monday, September 28, 2015, 9:14 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-038:  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:

  • 50 Must-Know Statistics About Long-Term Care: The skinny on usage, cost, insurance, caregivers, and more

  • Unpaid Eldercare in the United States —2013-14: Data from the American Time Use Survey

  • Short-Term-Care Insurance Policies on the Rise

  • Communities Struggle to Care for Elderly, Alone at Home

  • The Effect on States of Increasing the Medicare Eligibility Age

  • A Practical Solution for Funding Longevity: How reverse mortgages can help manage the long-term-care risk

  • Poverty and the Social Welfare State in the United States and Other Nations

  • Some Legal Issues at the Intersection of Elder Law and Estate Planning

  • Court: Federal Nursing Home Act doesn't create private rights

  • An Aging Population, Without the Doctors to Match

  • MedAmerica introduces new long-term care insurance product

  • Millennials and the long-term care challenge

  • When $500,000 In Social Security And Medicare Benefits Isn't Enough

  • Medicare premiums for most won't increase in 2016, but higher-income seniors could see a big hike

  • New cancer cases to reach nearly 2.4 million in 2035 – AACR

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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 25, 2015, 10:56 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTCI UPDATE FROM BROKER WORLD

LTC Comment:  Broker World magazine has published its annual long-term care insurance surveys for 2015.  Highlights after the ***news.***

*** WHY SUBSCRIBE TO LTC CLIPPINGS:  To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge.  Good LTC planning requires understanding the six “blind men” of long-term care and how they interact:  government, consumers, advocates, providers, insurers and financiers.  For the details on that observation, read “The Elephant, The Blind Men and LTC” here.

How can you keep abreast of those complicated topics and their interactions?  You can spend dozens of hours every week canvassing the internet for relevant articles, speeches and reports.  Then scan volumes of useless information to find and absorb the few valuable gems of knowledge they contain.   Or you can subscribe to LTC Clippings and let us do that part of the job for you.

Just this week, our LTC Clippings  documented (1) how higher cancer incidence combines with declining cancer death rates to increase the future ne