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READ STEVE'S BIO

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Updated, Friday, February 27, 2015, 2:30 PM (Pacific)

Seattle—

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LTC Bullet: Dog Bites LTCI

LTC Comment: A critically important positive report on LTC insurance got short media shrift while a poor academic hit job swept the wires. Today’s LTC Bullet sets the matter straight.

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LTC BULLET: DOG BITES LTCI

LTC Comment: “Good news” is an oxymoron. “Bad news” is redundant. If it bleeds, it leads. In today’s guest column, author-adviser Stephen D. Forman explains why the much-ballyhooed Boston College (BC) “man-bites-dog” critique of private long-term care insurance over-shadowed a more thoughtful and accurate “dog-bites-man” monograph by LifePlans. Read today’s Bullet and you’ll get the reference.

Two LTC Bullets already dismembered BC’s “Long-Term Care: How Big a Risk” analytically. See “LTC Bullet: How Careless Economists Boosted LTC Risk” and “LTC Bullet: When Bad Models Happen to Good People,” the latter piece also authored by Mr. Forman. What we have not done until now is give comparable attention to LifePlans’ superior analysis of the benefits and impact of long-term care insurance. The following article corrects that oversight.

Full disclosure: Stephen D. Forman and the LTC insurance marketing company he and his brothers run are long-time supporters of the Center for Long-Term Care Reform. They publish a very thoughtful occasional newsletter called “Your Next LTCA Sales Idea.” Much more than “salesy” fluff, that publication appeals to an LTCI producer’s intellect. It arms him or her with solid information and analysis to persuade reluctant prospects who’ve been misled by careless scholars and lazy journalists. We thank the Formans for permission to share Stephen’s essay with you today.

[N.B.: Much of the highlighted material in the following article was not bolded in the original LifePlans’ publication quoted.]

"Dog Bites Man"
by Stephen D. Forman

It's a shame a recent dour model by the Center for Retirement Research went viral at the same time LifePlans, Inc. published its landmark report, "The Benefits of Long-Term Care Insurance and What They Mean for Long-Term Care Financing." Although the latter publication is one of the most defining pieces of positive news for our industry in the last decade, I can't think of a major news outlet which covered it.¹

Synthesizing novel research with that of the US Dept of Health & Human Services, the SCAN Foundation, the Mature Market Institute and America's Health Insurance Plans, the study is an update of similar work conducted in 2002. Divided into three parts, it looks first at the impact of long-term care insurance on policyholders, then its impact on family and caregiving, and finally its impact on Medicaid.

LTCI: POLICYHOLDERS

The "face value" of all LTCI policies payable stands at $1.98 trillion. Since not everyone will claim-- or claim in full-- the industry is expected to ultimately pay out $679 billion on the current in-force book. For some context, the country as a whole spent $208 billion on long term services and supports in 2010.

Although LTCI has been dogged by a scurrilous "use it or lose it" accusation of late, the LifePlans study concludes, "LTC insurance policies provide high value in benefits relative to premiums paid." In support, the authors model a 60-year old who pays premiums through age 82 (on a statistically representative policy), then show how 22-years of premium payments would quickly be returned after just 5 months on claim.

By comparison, a 60-year old without insurance would have to set aside $1,666 each month (at 2% interest) to achieve what our LTCI policyholder can leverage with just $188 per month.

In a first, the researchers then confront the "rate increase" argument, building-in a 30% increase in year 7 in one scenario, and a 50% increase in year 7 in another to determine whether the policy still provides good value. It turns out, such rate actions barely move the dial: in the former case, 22-years of premiums are returned after just 6.6 months on claim; in the latter, just 7.3.

Finally, for good measure the researchers examine self-funding-- and quickly dismiss it. "While savings do not cover even average costs, insurance covers catastrophic situations, when much more than the average duration of care is needed."

LTCI: FAMILY

Wade into any online forum and you're sure to find them: sign-waving demonstrators telling anyone who will listen, "Insurance companies are crooks!" Even when the carrier makes good on a $700,000 claim we're told they "build up a wall and make it difficult." As LTCI producers, we've subjectively known the opposite to be true, but now LifePlans categorically rebuts such slander once and for all.

According to the report, "Almost all who filed a claim at baseline were either approved or awaiting final decision. When claims were denied, it was usually (as was to be expected) because the claimant did not meet policy benefit eligibility criteria." Furthermore, the process is easy: policyholders "do not feel they have to 'fight for' benefits," and by a landslide (94%) interviewees report no disagreements with their insurance companies-- or that their disagreements were resolved to their satisfaction.

(For context, here's a headline I wrote last year: "LTC Insurer Declines 41% of Claims. Oops! I Meant TN Medicaid.")

The positive impact of these claims on the insured and her family can be profound. Those with insurance receive 35% more care than those without. Likewise, those with insurance report almost 1/3rd fewer incidences of unmet or under-met needs (eg wetting of clothes, going without bathing, or having to stay in bed) than their uninsured counterparts.

Research from the study also shows that individuals caring for elders with LTCI are "nearly twice as likely" to be able to continue working than elders without insurance. Family caregiving hours are also reduced by about 10%, which allows caregivers to focus on companionship and social interaction rather than hands-on care. "This helps restore a greater sense of normality to the relations between adult and children... or between spouses." As we've been promoting within the industry for years, care coordination (to help locate and arrange the most suitable services) is described as "highly valued."

LTCI: MEDICAID

Medicaid pays for two of every three dollars of LTC costs in America. Like two sides of a scale, we understand there's an implicit relationship between public and private financing-- now the study helps quantify it.

By creating a simulation taking into account socio-demographic profiles, state-specific Medicaid rules, a policyholder dataset, historic trends in assets and income, and claims experience, the researchers estimated "spend down" rates both with and without LTC insurance. What they found is that LTC insurance reduces the likelihood of spend down between 47 - 65% among nursing home claimants. (Looking at other settings like assisted living and home health care, "spending down is much less likely than in a nursing home, and for those with LTC insurance it is virtually eliminated.")

From a policy perspective, we must turn to the big picture. Does encouraging the purchase of private LTC insurance make good sense? The LifePlans study concludes that each inforce policyholder will save Medicaid $6,681 over her lifetime. Multiply this over the current cohort of policyholders and we're looking at a savings of $49.4 billion.

Part of the reason LTCI is so effective is that it covers so much of the cost of care. Buyer cohorts from 1995 through 2010 were reviewed through their first 25 policy years. LifePlans found that 93 - 194% of home care costs were covered, as were 107 - 128% of assisted living costs, and 50 - 79% of nursing home costs. (Here they used average policies and average costs.)

In a separate trial, the claims of actual policyholders were studied at four, eight, twelve and sixteen month intervals. At any given point, between 69 - 75% of these policyholders were receiving "most or all" of the cost of care reimbursed by their policies.

The researchers are favorable once again: "In the service settings most highly desired by individuals with impairments-- home care and assisted living-- insurance should cover almost all of the daily costs of care for a typical policyholder." Meanwhile, nursing facility coverage is "not out of line with cost-sharing required by health insurance plans and is also consistent with expectations of individual buyers, who indicate that they expect their policies to pay for most but not necessarily all of the costs of care. They choose to accept this cost-sharing in part to keep premiums down."

A TALE OF TWO STUDIES

According to the CDC, nearly 4.5 million Americans are bitten by dogs each year. When the expected happens, it's not newsworthy. It no more surprises us than the $20.5 million in routine, clockwork claim payments made by our country's long-term care insurance carriers each and every day. There's just no headline there.

On the other hand, when "man bites dog," that's shocking and absurd. As Dr. Christopher Bader of Chapman University explains, "People often don't realize that when they're watching the news they're watching the worst possible scenario. That's why it's news: A serial killer gets airtime because he's rare, not because serial murders are on the rise."

Why should coverage of LTCI break these rules? The sensational rises to the top, while the mundane gets passed over. And the Center for Retirement Research story was very sensational. Not only did the CRR model try to upend conventional wisdom, but it teased us of bigger shoes still to drop. And in true "man bites dog" fashion, some of our nation's leading personal finance columnists began considering Medicaid as a legitimate first-look LTC solution for their readers.

Meanwhile, the LifePlans report is simply quiet good news about a solution that works. It not only demonstrates Medicaid cost savings (leading to program stability), but also better outcomes for those served. It's not sexy, and it doesn't take on the establishment.

Would it be gratifying if the media ran the LifePlans story? Of course it would! It would be a great service to their readers-- a duty, really, and a responsibility to present the other 99.99% of the news. Until then, we must be our own bullhorns. It's incumbent upon each of us to focus on the positive, both in our lives, our professions, and for the industry of long term care to which we devote ourselves so passionately.

Our clients and policyholders deserve nothing less from us.

¹ I acknowledge that some readers will be familiar with the LifePlans (AHIP) report since it has been breathlessly recirculated within our own tightknit LTC community. Still, few reviews have gone beyond the Executive Summary.

Mr. Forman 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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Updated, Monday, February 23, 2015, 11:09 AM (Pacific)

Seattle—

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LTC E-ALERT #15-008: 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. For our special introductory offer, 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:

Is This Cheap Stock a Bargain or a Trap?
Feds propose maintaining payments to Medicare Advantage
Consumers are Buying Less Long-Term Care Insurance Coverage
Citing long-term care exposures, A.M. Best lowers Genworth’s strength ratings
Long-Term Care Insurance: Costs Are Up but Vary Widely
Long-Term Care Services in the United States: 2013 Overview
Director's Comments
Staffing crisis looms if home-care wages don't rise, advocates say
Medicaid expansion leading HCBS programs to rethink strategy: Researchers
Long Term Care Insurance Paid Claims Increase; Home Care Benefits Growing
5 worst states for assisted living care bills
Facing Suits, a Nursing Home in California Seeks Bankruptcy
Five Things to Know About Long-Term-Care Hospitals
Tax Puzzle: Millions Expected to Forego Deductions as High as $4,750 for Long-Term Care Insurance
Genworth Launches New Advisory Council on 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, February 20, 2015, 10:17 AM (Pacific)

Seattle—

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LTC BULLET: THE VA WANTS TO CLOSE NEED-BASED PENSION ELIGIBILITY LOOPHOLES

LTC Comment: The Department of Veterans Affairs (VA) has proposed new pension rules to cap income and assets and penalize asset transfers in ways similar to Medicaid’s LTC eligibility restrictions. We explain and comment after the ***news.***

*** LTC CLIPPING AND COMMENT: Premium- and Premium Elite members of the Center receive our coverage of critical LTC news and analysis in real time daily. Following is a “clipping” we sent this morning followed by a comment from long-time Center supporter and ACSIA Partner George Braddock.

Our clipping: 2/19/2015, “Long-Term Care Insurance: Costs Are Up but Vary Widely,” by Ann Carrns, New York Times

Quote: “Mr. Slome advises comparing rates from several insurers, as premiums vary widely. The latest analysis found the difference between the lowest- and highest-cost policies for the same coverage ranged from 34 percent to as much as 119 percent. . . . An insurance broker can help sort things out, but since some work exclusively with one insurer, you may need to talk to more than one.”

LTC Comment: Generally positive coverage in the widely read “gray lady” is as helpful as it is rare. Kudos to Jesse Slome and Michael Kitces, also quoted in the piece.

George Braddock’s comment:

[To the author] Ms. Carrns,

As a certified long-term care planner, I want to compliment you on yesterday’s NYT article. Surely your readers can not be reminded too often of the need to prepare for the likely consequences of old age.

If you’ll allow, I’d like to make some constructive criticism. It’s inaccurate to say that most states prohibit elimination periods over 90 days. We do business nationwide and I know of only 3 states that do so. And it’s not that most policies come with a 90-day elimination period. It’s what most consumers pick from a choice of 0, 30, 60, 90, 180, or with a few carriers, 365 days. In my 15 year practice I’ve never had anyone pick more than 90 days. 180 days doubles the insured’s liability for only minimal savings. So far none of my prospects were tempted by the 365 either. Not only is it costly to self-insure that long, it’s also risky. A large percentage of people die during their first year of disability. People who do so would not live long enough to collect with a super long deductible. Not to say 1-3 year deductibles don’t have their place, but that their appeal would probably be limited to some wealthy buyers who believe they can afford to pay out-of-pocket for years before the policy kicks in (and don’t mind if they have to cover six-figure losses). . . .

The answer to affordability for most people is not expanding the elimination period. 90% of buyers select 90 days, which is already cheaper than 0, 30 or 60. Long-term care specialists today typically look elsewhere to economize by:

1) adjusting the pool of money 2) adjusting the monthly benefit 3) adjusting the percentage of inflation protection. In the case of couples, when money is really tight, they might consider only insuring the one most apt to die second. That, of course, usually means the wife. If too much of the nest egg is consumed to pay for the first person to need care, the second could be left defenseless. Because married men will normally receive some care from wives, they generally have long-term care bills only half as high as widows. Women must be protected at all costs!

Again, Ms. Carrns, thanks for your effort to enlighten readers on this vital subject.

Sincerely,

George Holmes Braddock, II, CLTC
Certified in Long-Term Care

Whether you agree or disagree with George, this is a good example of how to comment on an article covering long-term care insurance published in a national media outlet. ***

LTC BULLET: THE VA WANTS TO CLOSE NEEDS-BASED PENSION ELIGIBILITY LOOPHOLES

LTC Comment: If you’ve ever had a loved one in an assisted living facility, you’ve probably been approached by a “financial adviser” offering this unbelievable deal: get Mom and Dad’s savings for yourself and qualify one or both of them for veterans’ “aid and attendance” benefits.

“Too good to be true,” might be your initial reaction. But if you attended one of the “seminars” offered by insurance agents, accountants and lawyers promoting this approach, you quickly learned it is quite accurate. To this day, there is nothing stopping an affluent veteran from giving away all his or her assets and qualifying for substantial monthly cash payments from a program solely intended to help needy vets.

Cons and Pros

Helping heirs get early inheritances in this manner while impoverishing aging veterans has been a lucrative and growing practice for its promoters who siphon the divested funds into trusts or annuities which pay them substantial fees. It’s a seedy grey market based on legal, but arguably unethical and unprofessional practices. On the other hand, VA-planning lacks one of the most offensive characteristics of Medicaid planning. The latter practice makes artificially impoverished elders dependent on a welfare program that pays too little to ensure quality care. At least VA-planning enhances the seniors’ income making a wider range of higher quality private-pay long-term care options more feasible, assuming the beneficiaries of the asset transfer continue to support the elders’ care needs, which definitely is not always the case.

Changes Coming?

But, all that may come to an end soon. The VA has proposed regulations to impose an asset limit, look-back period and transfer penalties similar, but by no means identical, to those governing Medicaid long-term care eligibility. Find the January 23, 2015 Federal Register announcement detailing the proposed changes here. ElderLawAnswers Monthly provides a good summary here:

The proposed rules would establish a 36-month look-back period and a penalty period of up to 10 years for those who dispose of assets to qualify for a VA pension. The penalty period would be calculated based on the total assets transferred during the look-back period to the extent they would have exceeded a new net worth limit that the rules also establish. The proposed net worth limit would be equal to Medicaid's maximum community spouse resource allowance (CSRA) prevailing at the time the final rule is published and would be indexed for inflation as the CSRA is.

The amount of a claimant's net worth would be determined by adding the claimant's annual income to his or her assets. The VA would not consider a claimant's primary residence, including a residential lot area not to exceed two acres, as an asset. But if the residence is sold, proceeds from the sale would be assets unless used to purchase another residence within the calendar year of the sale. Any penalty period would begin the first day of the month that follows the last asset transfer, and the divisor would be the applicable maximum annual pension rate in effect as of the date of the pension claim.

Differences With Medicaid Rules

Sound familiar? “Been there, done that” thinks any Medicaid LTC policy wonk. The VA is obviously modeling its approach on Medicaid’s but with some key differences. The proposed look-back period is only three years instead of five years for Medicaid. The VA’s maximum asset transfer penalty would be only 10 years instead of unlimited for Medicaid. The VA puts no cap on the exemption for home equity, whereas Medicaid imposes a limit of between $552,000 and $828,000. Finally, the VA’s asset transfer penalty would begin the month after the asset transfer takes place enabling the applicant to give away half of his or her assets and spend down the rest during the resulting penalty period, a so-called “half-a-loaf” strategy Medicaid no longer allows.

Savvy Medicaid eligibility experts will recognize these key differences in proposed VA rules and existing Medicaid rules. VA is patterning its proposal on the way Medicaid LTC eligibility used to be before the transformational changes that occurred in the Deficit Reduction Act of 2005. The DRA ’05 extended Medicaid’s transfer of assets (TOA) look-back period from three years to five years; put the first cap ever on home equity; and eliminated the egregious half-a-loaf loophole that effectively cut the TOA penalty in half. The Center for Long-Term Care Reform proudly advocated those changes and we believe the VA will also conclude they’re necessary in time.

GAO Wake-Up Call

So, why is the VA finally wising up to these ways that needs-based “aid and attendance” benefits have been diverted from the needy to enrich middle-class heirs? We can thank the Government Accountability Office for that wake-up call. In a May 2012 report titled “Veterans' Pension Benefits: Improvements Needed to Ensure Only Qualified Veterans and Survivors Receive Benefits,” GAO reached these conclusions, which we’ll quote at length because they are stunning:

The Department of Veterans Affairs’ (VA) pension program design and management do not adequately ensure that only veterans with financial need receive pension benefits. While the pension program is means tested, there is no prohibition on transferring assets prior to applying for benefits. Other means-tested programs, such as Medicaid, conduct a look-back review to determine if an individual has transferred assets at less than fair market value, and if so, may deny benefits for a period of time, known as the penalty period. This control helps ensure that only those in financial need receive benefits. In contrast, VA pension claimants can transfer assets for less than fair market value immediately prior to applying and be approved for benefits. For example, GAO identified a case where a claimant transferred over a million dollars less than 3 months prior to applying and was granted benefits. . . .

GAO identified over 200 organizations that market financial and estate planning services to help pension claimants with excess assets meet financial eligibility requirements for these benefits. These organizations consist primarily of financial planners and attorneys who offer products such as annuities and trusts. GAO judgmentally selected a nongeneralizable sample of 25 organizations, and GAO investigative staff successfully contacted 19 while posing as a veteran’s son seeking information on these services. All 19 said a claimant can qualify for pension benefits by transferring assets before applying, which is permitted under the program. Two organization representatives said they helped pension claimants with substantial assets, including millionaires, obtain VA’s approval for benefits. About half of the organizations advised repositioning assets into a trust, with a family member as the trustee to direct the funds to pay for the veteran’s expenses. About half also advised placing assets into some type of annuity. Some products and services provided, such as deferred annuities, may not be suitable for the elderly because they may not have access to all their funds for their care within their expected lifetime without facing high withdrawal fees. Also, these products and services may result in ineligibility for Medicaid for a period of time. Among the 19 organizations contacted, the majority charged fees, ranging from a few hundred dollars for benefits counseling to $10,000 for establishment of a trust. [Emphasis added.]

How to Comment on the Proposed Rules

Surely any civic-minded person can see the value of ending these abuses, right? Well, no. Trust purveyors and some annuity marketers who benefit from the current system are mobilizing to oppose the proposed changes. They’re urging their clients to comment on and oppose the VA proposals. Maybe you’d like to take the opposite position. If so, here’s how:

DATES: VA must receive comments on or before March 24, 2015. ADDRESSES: Written comments may be submitted through http:// www.regulations.gov; by mail or hand delivery to: Director, Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 273–9026. Comments should indicate that they are submitted in response to ‘‘RIN 2900– AO73, Net Worth, Asset Transfers, and Income Exclusions for Needs-Based Benefits.’’ . . . In addition, during the comment period, comments may be viewed online through the Federal Docket Management System (FDMS) at http://www.regulations.gov.

The fight for responsible welfare eligibility policy is long and hard. Victories are few and far between. Yet slowly but surely we’re winning. Keep the faith and carry on.

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Updated, Tuesday, February 17, 2015, 10:42 AM (Pacific)

Seattle—

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LTC E-ALERT #15-007: LTC NEWS AND COMMENT

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:

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Medicaid rules allow high-income people to temporarily receive benefits
Medicare, Medicaid stay on 'high risk' list
Alzheimer's could bankrupt Medicare
Dilnot reforms fail to spark long-term care market
Insurance Brokers and the ACA: Early Barriers and Options for Expanding Their Role
Atul Gawande on why doctors often fail their dying patients
Florida's High Court Bars Non-Lawyers From Engaging in Medicaid Planning
5 things to know about Paul Forte’s LTC rescue plan
Audit: Government overpaid for Medicaid enrollees who also had private coverage
Genworth reports loss on charges
Why Long-term Care Insurance May Be a Better Deal Than You Think
Seeking a ‘Beautiful Death’
Minnix on leaving: Nonprofits will continue to lead the way
The twisted priorities of a graying nation
No Silver Bullet: Lessons From International Programs for Financing Long-Term Services and Supports
Wanted: More Docs and Nurses at VA
The New Old Age

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Updated, Friday, February 13, 2015, 9:49 AM (Pacific)

Seattle—

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LTC Bullet: Being Morbid

LTC Comment: We’ll review Dr. Atul Gawande’s new book Being Mortal about the modern American way of dying after the ***news.***

*** Attention documentary fans: Regarding the topic of today’s LTC Bullet, also of interest is this article “Atul Gawande on why doctors often fail their dying patients” in The Washington Post. From the article:

Atul Gawande brought his best-selling book on end-of-life care, ‘Being Mortal,’ to the small screen Tuesday night in an hour-long documentary providing a deeply intimate look at patients in their final days, their families, and the doctors wrestling with patients' expectations — as well as their own. The consistent thread in the PBS ‘Frontline’ documentary is just how hard it is for doctors to have honest conversations with their patients about end-of-life care. ***

*** 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: BEING MORBID

LTC Comment: Morbidity scares me a lot more than mortality. The unbearable pain and suffering come first. Death is just the final release from all that and

The heart-ache and the thousand natural shocks
That flesh is heir to; ‘tis a consummation
Devoutly to be wished. (Hamlet)

So I think Dr. Atul Gawande’s new book Being Mortal: Medicine and What Matters in the End focuses on the right topic: how we die, the process of dying. Instead of helping the terminally ill live the best life possible as long as possible, our medical system emphasizes heroic, often poisonous and painful, measures to sustain life regardless of quality.

Don’t misunderstand. Dr. Gawande does not advocate euthanasia. In fact, he criticizes its creeping (and creepy) advance in parts of Europe. He writes with passion and authority, often from deeply personal examples, about needless end-of-life misery and ways we might better help individuals reach the end with dignity and fulfillment.

One problem. I listened to the audio version of the book so I don’t have a hard copy from which to craft a review with quotes and illustrations. Luckily several excellent reviews of Being Mortal have been published in the national media. Some quotes from those and links to them follow. For my part, suffice it to say I recommend the book.

First, Gawande’s own website has this to say here:

Medicine has triumphed in modern times, transforming the dangers of childbirth, injury, and disease from harrowing to manageable. But when it comes to the inescapable realities of aging and death, what medicine can do often runs counter to what it should. Through eye-opening research and gripping stories of his own patients and family, Gawande reveals the suffering this dynamic has produced. Nursing homes, devoted above all to safety, battle with residents over the food they are allowed to eat and the choices they are allowed to make. Doctors, uncomfortable discussing patients’ anxieties about death, fall back on false hopes and treatments that are actually shortening lives instead of improving them. And families go along with all of it.

My favorite of the independent reviews is The Guardian’s available here. It begins by recounting the myth of Tithonus whom the goddess Eos made immortal but, alas, neglected to ensure his health. He withered away with age but couldn’t die. The review summarizes:

If the first half of his book concerns nursing homes and how we can age with self-respect, the second half concerns palliative care and how we can die with grace. The stunning victories of medical science over the last century have, according to some critics, left too many doctors arrogant and unwilling to concede defeat (the militaristic clichés are essential to this vision of medicine and the body). We’re waking up to that mistake now: hospice and palliative care are at last receiving the attention and the funding they deserve; helping our patients through a good death is increasingly acknowledged to be as important as helping them flourish while alive. Much of the second half of the book concerns the health system of the US where Gawande practises, and where the hospice movement and the provision of community palliative care are relatively undeveloped compared to those in the UK.

The New York Times’ review by Timothy Egan, available here, focuses on Dr. Gawande’s development as a surgeon and the evolution of his ideas about death and dying. It concludes:

But patients who receive good geriatric care stay happier and healthier, just as old people who can remain at home and aren’t forced into nursing homes are better able to enjoy their lives. This book makes a thorough inquiry into how the idea of the assisted-living facility arose as a supposed improvement on regimented nursing homes but has often become a disheartening place for independent-minded people to have to go. The all-important quality-of-life issue that is used to market such places, Dr. Gawande maintains, is directed more toward the people planning to leave Mom than toward Mom herself. But he sees a lot of hope in the group living concept, if it is overseen with the residents’ happinss in mind.

Reason magazine has a different take here:

If Gawande had been willing to address the systemic causes of medicalized death, he could have had to face a difficult question: How can we reconcile his hope for personalized end-of-life care with the large, centralized institutions (Medicare and private insurers) that are the system's actual customers? Gawande's whole point is that objectively "needed" care has little meaning when it involves a person who is dying. The course of treatment must be based on personal preferences, on finding the correct balance of treatment and life's objectives that he so eloquently prescribes. But how can a centralized payer—in this case Medicare—ever drive the correct set of incentives for a world of personalized care? It can’t.

Whatever the cause of the current end-of-life medical malaise, every human being has a stake in resolving these problems. For anyone interested in and concerned about the critical issues of death and dying, including the integral role of long-term care, Being Mortal is a book not to be missed.

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Updated, Monday, February 9, 2015, 10:35 AM (Pacific)

Seattle—

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LTC E-ALERT #15-006: LTC NEWS AND COMMENT

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:

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New Test Claims It Can Tell If You Will Develop Alzheimer's... But Do You Want To Know?
Bold Prediction: Interest Rates Won't Go Up For 2 Decades
Medicare and Social Security Tabs Coming Due
The Market Is Watching Genworth
Kindred Completes Gentiva Acquisition
5 ways retirement accounts could feed an LTCI boom
Is Obama Budget The Beginning Of The End For Nursing Home-Based Medicaid?
SuperAger Brains Yield New Clues to Their Remarkable Memories
Protecting Your Clients' Portfolios From Unpredictable Expenses
Maine native named to top job at Unum
Who’s buying LTCI?
2016 budget aims for $400 billion in Medicare reductions
On buying long-term care insurance for a parent who doesn’t want it
Another Road To LTC Coverage
Live, From the Nursing Home

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Updated, Friday, February 6, 2015, 10:27 AM (Pacific)

Seattle—

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LTC Bullet: Holding CMS’s Feet to the Fire

LTC Comment: When a federal agency fails to enforce the law hurting the poor it’s supposed to help and costing tax payers billions of dollars, bureaucratic heads should roll. Background and details after the ***news.***

*** Important ILTCI Conference Hotel Update: We hear from ILTCI that they are expecting record breaking conference attendance next month in Colorado Springs, CO. That’s great for the long-term care insurance industry. Conference registration is still open, but The Broadmoor hotel and resort is sold out for the nights of the conference. Fortunately, there are other excellent options provided by ILTCI which include discounted room rates and amenities. ***

LTC BULLET: HOLDING CMS’S FEET TO THE FIRE

LTC Comment: Two members of Congress have demanded that the Centers for Medicare and Medicaid Services enforce laws governing Medicaid LTC eligibility that the agency has allowed states to ignore with impunity since 1993 (Omnibus Budget Reconciliation Act) and 2005 (Deficit Reduction Act).

The laws in question bear on rules restricting asset transfers and other legal loopholes the affluent and their legal advisors use to qualify for Medicaid’s expensive long-term care benefits without first spending down privately as Congress intended. Read the letter here. Following is the back story.

For over three decades, several Congresses and Presidents have tried to ensure that Medicaid benefits reach only their intended beneficiaries, the genuinely needy. We know. Through all that time, we’ve been at the forefront of analyzing the problem of Medicaid planning abuse and urging corrective action.

It’s been a long hard slog, but not without some big successes. Most of our recommendations in a 1988 study titled “Medicaid Estate Recoveries” for the USDHHS Inspector General—including longer and stronger transfer of assets rules and mandatory estate recovery—became law in the Omnibus Budget Reconciliation Act of 1993. Read that study here.

After Center-co-founder Attorney David Rosenfeld drafted them (in his later role as Health Council to the House Energy and Commerce Committee) and I spent half a year in Washington, DC advocating them, critical changes to Medicaid LTC eligibility rules—including ending the egregious “half-a-loaf” strategy, putting the first limit ever on Medicaid home equity exemption, and liberating the LTC Partnership Program—became law in the Deficit Reduction Act of 2005.

In 2011, when it appeared Congress was eager to confront the burgeoning budget deficit, I spent two hot summer months back in DC working with the Cato Institute and talking to anyone who would listen about state Medicaid programs’ failure to implement those critical OBRA ’93 and DRA ’05 provisions. I argued that fixing Medicaid LTC rules could save $30 billion annually in How to Fix Long-Term Care.” My appeals fell mostly on deaf ears as I reported with great frustration in “Near-Term Prospects for Long-Term Care Financing Reform.” Check it out including the cover which shows an elder on a super-charged Medicare-financed scooter heading at break-neck speed toward a brick wall of fiscal reality.

But thankfully, a few bright minds on Capitol Hill were open to learning more and doing something about it. I’ll mention two key staffers, Brian Blase, then of the House Committee on Oversight and Government Reform and Josh Trent, then of Senator Tom Coburn’s staff. Thanks to their efforts, requests went forth from their principals to the USDHHS Inspector General for information about the status of states’ enforcement of OBRA ’93 and DRA ’05.

In “LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures,” we announced the results of the Inspector General’s study conducted to respond to that congressional query:

The U.S. Department of Health and Human Services Inspector General (IG) has reported that 23 states did not implement some or “all of the eligibility and asset transfer provisions” in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) and the Deficit Reduction Act of 2005 (DRA ’05). The same report provides the first data on Medicaid estate recoveries since FY 2004. The states and federal government may be missing $2.5 billion in potential recoveries.

As we had already discovered and reported long ago, the IG’s study confirmed that too many states failed to implement critical provisions of the two laws; that California wasted untold billions of taxpayers’ money by ignoring asset transfer rules and other mandatory legal and regulatory provisions; and that most states dropped the ball on estate recoveries leaving further billions uncollected that could have helped fund Medicaid for those who truly needed its help.

It’s a sorry story of irresponsible management by states and legally actionable failure to enforce the law by the federal Centers for Medicare and Medicaid Services. What happens next? It depends on how CMS responds to this latest letter demand from Congress for an explanation and whether or not Congress compels CMS to take corrective action.

We’ll be watching and we’ll let you know what, if anything, transpires to remedy CMS’s malfeasance. The wheels of government grind slowly. But with a new Congress now and a new President in two years, there is every reason to hope for another major success. Success would mean targeting Medicaid to those most in need and using some of the savings to educate and incentivize consumers about responsible long-term care planning.

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Updated, Monday, February 2, 2015, 11:30 AM (Pacific)

Seattle—

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LTC E-ALERT #15-005: LTC NEWS AND COMMENT

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:

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How to sell an annuity, from A to Z
The little annuity product with big buying potential
Why Carriers Like Lump Sum Payouts
Book the Man Many Say Could Bring Down ObamaCare
Many Seniors Not Reporting Falls to Physician: Fewer than half tell their doctor of fall, researcher notes
11 Tips on Long-Term Care as Rates Rise
2015 Index of Economic Freedom
Long term care insurance advocate Deb Newman named to ‘Hot 100 in Insurance’
Average Costs For Long Term Care Insurance Rise 8.6 Percent
OneAmerica® Reports on Pension Risk Transfer buy-out product: Single-premium group annuity rings up $51 million
Study to examine Medicaid-centric nursing homes that excel
To Collect Debts, Nursing Homes Are Seizing Control Over Patients
Lawmakers demand better adherence to Medicaid's eligibility and asset transfer rules
Budget Forecast Sees End to Steep Declines in Federal Deficit
Medicare to Rework Billions in Payments
How to make long-term care insurance more affordable

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Updated, Friday, January 30, 2015, 10:25 AM (Pacific)

Seattle—

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LTC BULLET: LIFE INSURANCE FOR LTC

LTC Comment: As the importance of private-pay funding for long-term care grows in the eyes of families and law makers, Chris Orestis shares his ideas for applying life insurance to the problem in today’s guest column after the ***news.***

*** ILTCI CONFERENCE. The 15^th annual Intercompany Long-Term Care Insurance Conference will convene March 22-25, 2015 at The Broadmoor resort in Colorado Springs, CO. Get all the details and register here. Captain Mark Kelly will keynote the event. An American astronaut, decorated naval aviator, retired US Navy Captain, bestselling author and cancer survivor, Kelly gained international attention after the January 2011 assassination attempt on his wife, former US Congresswoman Gabrielle Giffords. In between the opening and closing general sessions, you can expect the usual high caliber presentations, peerless networking, and excellent food and drink. This is a convocation not to be missed if you can manage it. Damon and I will be there to cover the program and report on it. Say hello if you attend and, if you don’t (rue the thought), then watch for our “LTC Embed” accounts of the action. ***

LTC BULLET: LIFE INSURANCE FOR LTC

LTC Comment: For decades qualifying for Medicaid LTC benefits has been an open invitation to terrible financial planning. Only to get those benefits would people do otherwise idiotic things like giving away all their wealth years in advance of needing care. Or setting up a trust with the sole purpose of self-impoverishment. Or buying a half million dollar home just to hide money that would otherwise have been disqualifying.

Disposing of life insurance is another one of the stupid things people have been doing just to get Medicaid to pay for their LTC. Why cash out or lapse? Life insurance with a cash value counts against Medicaid’s low countable asset limit. So Medicaid policy encourages people to take the cash value and buy an exempt new car or otherwise shelter the assets. At the age of people likely to want Medicaid to pay for their LTC, few still have term insurance which has no cash value anyway. Still many would lapse term policies, even though they’re exempt for Medicaid regardless of benefit amount.

In the following essay, Chris Orestis proposes an alternative to wasting the value of life insurance and dumping the cost of people’s LTC on tax payers prematurely. State Medicaid programs and tax payers are likely to favor his solution. Insurance carriers, not so much. Life insurance policies that would otherwise have been cashed out or lapsed that end up paying in full are less profitable. The result could be the future need to recalculate premium rates toward the upside to compensate for this added cost.

So there’s room for reasonable people to disagree. But we invite you to read what Mr. Orestis has to say and form your own opinions.

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Life Insurance for Long-Term Care
by
Chris Orestis

Introduction

Seniors have an overwhelming desire to remain independent, and do not want to become a burden on their family or a ward of the state by entering Medicaid. Unfortunately, the current system to fund long term care has evolved into one that encourages seniors to impoverish themselves and move towards Medicaid as quickly as possible. For the wealthy, long term care costs can be absorbed. For the poor and disabled, government subsidized care is available. But what about the majority of middle class Americans that need access to long term care today? New approaches to fund long term care must be encouraged, and converting life insurance policies into a Long Term Care Benefit Plan is an option that has grown into a mainstream and accepted financial solution.

Can a massive pool of in-force life insurance policies be part of the solution?

According to the National Association of Insurance Commissioners (NAIC), there is $27.2 trillion of in-force life insurance in the hands of 152 million Americans. Too few of these policy owners understand their legal rights of ownership and do not possess the knowledge of how insurance works. When their original need for a policy has run its course, the vast majority of owners simply walk away from what may be one of the most valuable assets they own—for nothing in return. Life insurance is legally recognized as personal property and the owners have the right to use their assets in a number of ways including converting their policies into tax-exempt Long Term Care Benefit Plans while still alive.

A policy owner’s legal right to convert an existing life insurance policy into a long term care benefit plan is not to be confused with a long term care insurance policy, accelerated death benefit (ADB) rider, annuity, a hybrid life/LTCi product, or a loan. This conversion option allows for the private, secondary market exchange of a life insurance policy for a Long Term Care Benefit Plan at the time that care is needed. The benefit plan is a private market long term care funding option and is not issued by a carrier, not restricted to life policies that contain a conversion or accelerated death benefit rider, and conversion options for the owner are not restricted to only the issuing carrier.

A Long Term Care Benefit Plan converts a life insurance policy’s death benefit into a “living benefit” that will allow them to remain private pay and choose the form of care that they want. The Long Term Care Benefit Plan pays out the present day value of a policy and protects the funds in an irrevocable, FDIC insured Benefit Account that makes monthly payments directly to the care provider. Because the funds are protected and only used for care, it is a tax-exempt, Medicaid and VA qualified spend-down of an asset that far too many seniors abandon as they move towards long term care.

This option, by design, extends the time a person would remain private pay and delays their entry onto Medicaid. It is a unique, tax-advantaged financial option to pay for care because all health conditions are accepted, and there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. Any type of life insurance policy can be used to cover any form of senior care the policy owner wants: Homecare, Assisted Living, Nursing Home, Memory Care, and Hospice.

Legislative Attention turns to Private Pay and the Long Term Care Benefit Plan

States are under tremendous budget pressure to keep pace with exploding demand to cover long term care needs with tax payer money. They are quickly realizing the savings that can be found for their beleaguered budgets by delaying entry onto Medicaid through the use of life insurance policy conversions into Long Term Care Benefit Plans. State legislative leaders across the country are taking action with consumer protection disclosure laws and legislation to encourage consumers to convert their life insurance to pay for long term care as an alternative to abandoning their policies. Policy owners are being encouraged to use their legal right to convert an in-force life insurance policy into a Long Term Care Benefit Plan and direct payments to cover their senior housing and long term care costs.

In 2009, Conning and Company analyzed the emerging use of life insurance policies to pay for long term care as part of their Strategic Research Series. In the paper they surmised:

Both state governments and the long term care industry are working to find a solution to the budgetary threat to Medicaid created as aging Baby Boomers impoverish themselves in order to have the state pay for long term care. What is new is the concerted effort to integrate life insurance policies and long term care providers. This new source of funds represents a potential alignment of long term care providers and state governments.

The next year, the National Conference of Insurance Legislators (NCOIL) understood the implications of billions of dollars of life insurance policies in the hands of seniors being discarded when they unanimously passed the Life Insurance Consumer Disclosure Model Act in November, 2010. This consumer protection law requires that life insurance companies inform policy holders above the age of 60, or with a terminal or chronic condition, of approved alternatives to the lapse or surrender of a life insurance policy including “conversion to a Long Term Care Benefit Plan.”

From there, consumer protection disclosure legislation specifically endorsing the Long Term Care Benefit Plan has been introduced in the legislatures of twelve states through 2014: CA, FL, KY, LA, MA, MD, ME, NJ, NY, PA, TX, and WA. This consumer protection disclosure bill has now been passed into law in KY and TX.

Conclusion

Long Term Care providers, insurance agents, financial planners and elder law experts are all on the same page with political leaders about this issue. It makes no sense that seniors in need of long term care would abandon life insurance policies when the option to convert those policies into a monthly long term care benefit stream is readily available. The owner of a life insurance policy with an immediate need for senior care services of any form (Homecare, Assisted Living, Memory Care, Nursing Home, Hospice) can now turn a death benefit into a “living benefit” that will keep someone private pay and delay their need for Medicaid.

Chris Orestis, CEO of Life Care Funding, is an 18-year veteran of both the insurance and long-term care industries. A former Washington DC lobbyist, he is a nationally known senior care advocate and author of the Amazon best-seller book “Help on the Way,” a legislative expert, featured speaker, columnist and contributor to a number of insurance and long term care industry publications. His blog on senior living issues can be found at www.lifecarefunding.com. He can be reached at corestis@lifecarefunding.com or 888-670-7773 x 6623.

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Updated, Monday, January 26, 2015, 11:03 AM (Pacific)

Seattle—

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LTC E-ALERT #15-004: LTC NEWS AND COMMENT

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:

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Will nursing care take all your money? Maybe not
5 ideas for preventing a catastrophic caregiver drought
Leading Long-Term Care Insurance Agency Doubles Worksite Sales
Who Benefits As Medicare Burns?
Kitces: How to Fix LTC Insurance
Regional Forums to Provide Input and Ideas for the 2015 White House Conference on Aging
Millennials Set to Outnumber Baby Boomers
2000-2011 Long-Term Care Intercompany Experience Study - Aggregated Databases and Report
No evidence that opioids are effective for long-term pain management, NIH panel says
Senate Report Urges Calif. To Overhaul Long-Term Care System
The Fifteenth Annual Intercompany Long-Term Care Insurance Conference
The Rising Cost of Living Longer: Analysis of Medicare Spending by Age for Beneficiaries in Traditional Medicare
Insurance via Internet Is Squeezing Agents

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Updated, Friday, January 23, 2015, 10:42 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2013 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?, 2013 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 2013 statistics on its website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Tables.zip.

The current issue of Health Affairs (Vol. 34, No. 1, pps. 150-160) contains a summary and analysis of the new data titled “National Health Spending in 2013: Growth Slows, Remains in Step with the Overall Economy." Registered subscribers to Health Affairs can access the full text of that article online at http://content.healthaffairs.org/content/34/1/150.full.

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

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"So What If the Government Pays for Most LTC?, 2013 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 $155.8 billion on nursing facilities and continuing care retirement communities in 2013. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 43 years (from 26.8% in 1970 to 52.3% in 2013, up 25.5 % of the total) while out-of-pocket costs have declined (from 49.5% in 1970 to 29.4% in 2013, down 20.1% 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 1970-2013.

So What? Consumers' liability for nursing home and CCRC costs has declined by 40.6% in the past four decades, while the share paid by Medicaid and Medicare has nearly doubled, up 95.1%.

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 1/1/15). 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 (30.1% of the dollars in 2013), 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 2012 shortfall was $22.34 per Medicaid patient day and $7 billion in total. Source: 2012 Report on Shortfalls in Medicaid Funding for Nursing Home Care.

Don't be fooled by the 8.1% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2013. 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 80% private pay (Source: AHCA/NCAL Issue Brief) and they cost an average of $42,000 per year (Source: Genworth 2014 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 $79.8 billion on home health care in 2013. Medicare (43.1%) and Medicaid (36.5%) paid 79.6% of this total and private insurance paid 7.9%. Only 8.1% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source.

So What? Only one out of every 12.5 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 small steps toward addressing these problems. A cap was placed on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

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

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. He is the author of the policy analysis "Aging America's Achilles' Heel: Medicaid Long-Term Care," published by the Cato Institute (www.cato.org). Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Tuesday, January 20, 2015, 11:30 AM (Pacific)

Seattle—

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LTC E-ALERT #15-003: LTC NEWS AND COMMENT

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:

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California lawmaker brings back Medicaid recovery bill
“Still Alice” novelist shines spotlight on early onset Alzheimer’s
Top Health Official Marilyn Tavenner to Step Down
Ruling Targets Non-Lawyers Providing Medicaid Advice
Strength in unity is pharmacies' motto, and hope
Studies from Nihon University in the Area of Elderly Care Reported (Can formal elderly care stimulate female labor supply? The Japanese experience)
Caregiving and work leave
5 top LTC risk awareness drivers
Antipsychotics increase fall risk 50% for long-term care residents and those living in community, study finds
When Bad Models Happen to Good People
Study: New MRI approach can detect Alzheimer’s disease early
15th Annual ILTCI Conference Program Expands with Future Leaders Program and Alzheimer’s Association Seminar
NIC: Nursing home and assisted living occupancy remained static in 4th quarter
LTCI Watch: Investors
For The Record: Aging Out and Moving On

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Updated, Friday, January 16, 2015, 11:11 AM (Pacific)

Seattle—

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LTC BULLET: WHEN BAD MODELS HAPPEN TO GOOD PEOPLE

LTC Comment: We offer the last word on that Boston College fiasco of poor scholarship and bad economics after the ***news.***

*** 1/13/2015, “15th Annual ILTCI Conference Program Expands with Future Leaders Program and Alzheimer’s Association Seminar,” Herald Online

Quote: “The Intercompany Long Term Care Insurance Conference Association, Inc. (ILTCI) today announced special pre- and post-conference seminars for its 15th annual conference (www.iltciconf.org), to be held March 22-25, 2015 at The Broadmoor in Colorado Springs, Colorado. The Future Leaders Program will kick off with a pre-conference networking lunch on Sunday, March 22, and the Alzheimer’s Association seminar will conclude the program on Wednesday morning, March 25.”

LTC Comment: All the more reason to get there early and stay late. This should be another excellent industry event. ***

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LTC BULLET: WHEN BAD MODELS HAPPEN TO GOOD PEOPLE

LTC Comment: Stephen D. Forman and the LTC insurance marketing company he and his brothers run are long-time supporters of the Center for Long-Term Care Reform. They publish a very thoughtful occasional newsletter called “Your Next LTCA Sales Idea.” Much more than “salesy” fluff, that publication appeals to an LTCI producer’s intellect. It arms him or her with solid information and analysis to persuade reluctant prospects who’ve been misled by careless scholars and lazy journalists. We thank the Formans for permission to share Stephen’s essay with you today.

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"When Bad Models Happen to Good People"
by Stephen D. Forman

No single model received more attention in 2014 than one produced by the Center for Retirement Research at Boston College titled "Long-Term Care: How Big a Risk?" (November 2014, Number 14 - 18, Leora Friedberg, et. al.) At the same time, no other model has been more widely misinterpreted, wrongly extrapolated, or gleefully co-opted by LTCI detractors. Since the New Year is considered a time for looking forward, let's begin by clearing this foggy hangover from 2014, then speak no more of it.

MEDICAID 1, LTCI 0

This is the way the CRR model's conclusions are most often presented: by using monthly instead of yearly data, it was found that average nursing home stays are 30% shorter than previously believed. (On average a man stays less than 12 months, a woman 17.) In fact, 45% of patient stays do not exceed 3 months. Even worse, LTC insurance is duplicative since Medicare will cover these short stays--the study assumes the first three months of "all episodes of care are covered by Medicare." [emphasis in the original]

Finally, CRR corrects a previous model which understated the probability of ever needing care by 32 - 63%. The conclusion? Since long term care is a relatively high-probability event--but less catastrophic than previously understood--it makes less economic sense to insure against.

The media jumped all over it:

"Maybe You Don't Need Long-Term Care Insurance After All" (Bloomberg)
"Here's a New Reason to Think Twice Before Buying Long-Term Care Insurance" (Time/Money)
"'Spending Down' for Medicaid is the Most Practical LTC Financing Plan for Most Americans, Researchers Assert" (McKnight's)
"Is Long-Term Care Insurance for You?" (Wall Street Journal)
"Boston College Finds Rip-Off in Long Term Care Insurance Costs When Compared to Other Options, Opines UltraTrust.com" (Estate Street Partners)

Readers who dove into these articles seeking sound advice were met with takeaways such as this: "Forgoing long-term care insurance and relying on Medicaid is the smartest financial planning decision for the majority of unmarried Americans." Lacking were any qualifications concerning Medicaid's notoriously low reimbursement rates, institutional bias, record of poor quality, or inability to access care.

This was our first sign of trouble: CRR assumes all "rational, far-sighted, well-informed" individuals make decisions entirely on the basis of money. We do not. As economists, they'd have been better served with a model in which rational individuals make decisions which maximize our utility. Had they done so, their buyers would've valued higher quality care and the ability to remain at home with family, tilting the scales in favor of LTCI.

Meanwhile, the Bloomberg piece acknowledges that the biggest threat to a retiree's nest egg "isn't a stock market crash. It's a long illness requiring round-the-clock care." Unfortunately, thanks to the new CRR model, not only should most people "just skip [LTC insurance]," but the majority of Americans (all but the richest 20 - 30% of singles) should "[spend] down their assets and then [let] Medicaid pick up the tab."

Lest we dismiss this study for its preoccupation with singles, we are warned that "forthcoming research will show long-term care insurance makes even less sense for married couples."

And why did the researchers focus on singles anyway, when 82% of all LTCI policies are purchased by members of couples? They argue that since 75%+ of nursing home residents are over age 65 and single, their limitation to singles is "not significant". Once again our economists have set out on the wrong foot: they are not modeling nursing home residents, they are modeling buyers. Oh, dear.

THE AVERAGE FAMILY HAS 2.5 CHILDREN

I've been careful in my choice of words: what the Center for Retirement Research produced was an economic model. Framing it otherwise (a study or research report) suggests a methodology or outcome which we shouldn't reinforce. Models exist in the abstract, not reality. This one invented hypothetical buyers in a controlled environment.

One particularly unfortunate problem with CRR--overlooked in all the hubbub--is that it sought to answer a question of its own making, and not one that anybody had been asking. Namely, why do only a certain percentage of single individuals (an assumption of their own creation which disagrees with other contemporary sources¹) buy LTC insurance, differing from the percentage predicted by the Brown & Finkelstein Model (i.e., the famous "Medicaid Crowd Out Effect")? This model was an attempt to reconcile the two numbers.

Now, models can serve a purpose, but they are inherently limited. In the case of CRR, even its "new" data remain archaic (10-years old) and don't square with reality: after all, insurance is built primarily around the remote but catastrophic risk--not the occasional shopping cart dinging your car door. This is why buyers and sellers have played a tug-of-war between unlimited benefit periods and short-term care. One is hard to offer profitably, while the other is hard to make desirable.

Worst of all, the model presumes that buyers care only about nursing facilities, when the exact opposite is true. Most of our clients are motivated to purchase LTCI for its ability to do the one thing Medicaid is worst-equipped to do--keep them out of the nursing home.

Then, in a final Hail Mary, they assume Medicare pays for most short stays--which one nursing home worker laughs off, "[I] can count on 2 hands out of the thousands of patients I've served, how many have actually received 100 days of Medicare coverage."

Ultimately, the economists got the results they hoped for (had they not, would this study have seen the light of day?), and were able to achieve agreement between the Brown & Finkelstein model and their own:

Singles aged 65+ who "make optimal saving and insurance decisions" (how many real people do you know like that?) are substantially less willing to buy an option to purchase LTC insurance at market premiums, based on a more-accurate transition matrix updated to 2004 based on monthly probabilities instead of annual transition events.

Now go back and read that sentence again.

Not much of a headline-grabber, huh? We should be asking ourselves what all the hoopla was about--particularly since a landmark study was released almost simultaneously as CRR which contained some of the most newsworthy, compelling and positive research about LTC insurance in over a decade. Do you remember the financial media covering this report with the same enthusiasm as the Boston College model? Do you recall seeing any of the above publications covering it at all?

Don't worry, we'll be reviewing it in our next LTCA Sales Idea. Until then, good selling!

Reach Mr. Forman of Long Term Care Associates at steve@ltc-associates.com.

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Updated, Monday, January 12, 2015, 10:45 AM (Pacific)

Seattle—

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LTC E-ALERT #15-002: LTC NEWS AND COMMENT

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:

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New York state to promote LTC planning
Navigating the complexity of a long-term care insurance policy
Collins to lead Aging committee, says Alzheimer's will be special focus
Multi-drug approach could be way to treat Alzheimer’s, study suggests
Hybrid life-LTC policies are a hit among advisers
4 ways for LTCI specialists to reach
LTCi New Premium Growth In 2015 Projected To Reach 10%
Hawaii seeks long-term services and support awareness proposals
Why you shouldn’t count on your family members to take care of you when you’re old
Key Elder Law Numbers for 2015: Our Annual Roundup
Health Affairs Article: At Least Half of New Medicare Advantage Enrollees Had Switched From Traditional Medicare During 2006-11
Doctors Face A Huge Medicare And Medicaid Pay Cut In 2015
As Caregiving Shifts To The Home, Scrutiny Is Lacking
Inter-Generational Planning
Mester Says Fed May Raise Rates Within the Next Six Months

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Updated, Friday, January 9, 2015, 8:14 AM (Pacific)

Seattle—

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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.***

*** 2015 MEDICARE NUMBERS updated in The Zone. We also reported the new Medicare numbers in this LTC Clipping on Tuesday:

1/6/2015, “Key Elder Law Numbers for 2015: Our Annual Roundup,” ElderLawAnswers

Quote: “Medicare Premiums, Deductibles and Copayments for 2015

Part B premium: $104.90/month (unchanged)
Part B deductible: $147 (unchanged)
Part A deductible: $1,260 (was $1,216)
Co-payment for hospital stay days 61-90: $315/day (was $304)
Co-payment for hospital stay days 91 and beyond: $630/day (was $608)
Skilled nursing facility co-payment, days 21-100: $157.50/day (was $152)”

LTC Comment: This is a handy compilation of all the new key Medicaid and Medicare numbers for 2015. We’ve archived this information in The Zone for Center members here. For a reminder of your user name and password, contact damon@centerltc.com. We previously highlighted the new Medicaid numbers so we cite and archive only the new Medicare numbers today. ***

*** BUT DID YOU KNOW THIS? Long-time Center supporter Carroll Harper shared this tip: “If you know any one of the Medicare Part A deductibles and co-pays, you can figure out the rest. For example, the SNF co-pay is always the Part A deductible divided by 8, or $1260/8 = $157.50. The co-pay for days 61 – 90 is always ¼, or $1260 divided by 4 = $315. And the co-pay for days 91 – 150 (a beneficiary’s one-time 60-day lifetime reserve) is ½, or $1260 divided by ½ = $630. ***

*** ILTCI EXHIBITOR INFORMATION published for the 15th Annual Intercompany LTCi Conference - March 22-25, 2015 - The Broadmoor Hotel - Colorado Springs, CO. If you didn’t receive all the details directly from the organizers, then contact Jim Glickman at jim.glickman@lifecareassurance.com or 818-867-2223. He says: “The ILTCI is the national conference for the Long Term Care Insurance industry (with about 1000 attendees). In addition to all of the normal Exhibit Hall perks, we will be offering a ‘Theater’ where each exhibitor can sign up without charge, to make a presentation on their ‘solution.’ If you are a new Exhibitor, we are offering a new Exhibitor discount of $250.” ***

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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, January 16, 2015. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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

National Health Expenditures

Health Affairs on 2013 NHE 1214 URL

“Spending Remains at 17.4 Percent of Gross Domestic Product, Unchanged since 2009

Bethesda, MD--A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) estimates that in 2013 health care spending in the United States grew at a rate of 3.6 percent in 2013 to $2.9 trillion, or $9,255 per person. The increase was slower than the 4.1 percent growth in 2012 and continued a pattern of low growth that has held relatively steady at between 3.6 percent and 4.1 percent annual growth for five consecutive years.”

Health Affairs on Estimated Health Costs through 2023 URL

“National Health Expenditure Projections, 2013-23: Faster Growth Expected With Expanded Coverage And Improving Economy”

“ABSTRACT: In 2013 health spending growth is expected to have remained slow, at 3.6 percent, as a result of the sluggish economic recovery, the effects of sequestration, and continued increases in private health insurance cost-sharing requirements. The combined effects of the Affordable Care Act’s coverage expansions, faster economic growth, and population aging are expected to fuel health spending growth this year and thereafter (5.6 percent in 2014 and 6.0 percent per year for 2015–23). However, the average rate of increase through 2023 is projected to be slower than the 7.2 percent average growth experienced during 1990– 2008. Because health spending is projected to grow 1.1 percentage points faster than the average economic growth during 2013–23, the health share of the gross domestic product is expected to rise from 17.2 percent in 2012 to 19.3 percent in 2023.” (p. 1)

For analysis, see: LTC Bullet: CMS Health Expenditure Data Mask LTC Cost Growth, September 5, 2014

Unfunded Liability Estimates

Medicare Trustees Report 2014 URL

“2014 Annual Report Of The Boards Of Trustees Of The Federal Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds”

For analysis, see LTC Bullet: Entitlement Double Talk, 8/1/14

Chapter 5: Caregiving

General

DHHS on Informal Caregiving URL 0414: http://aspe.hhs.gov/daltcp/reports/2014/NHATS-IC.cfm

“Informal Caregiving for Older Americans: An Analysis of the 2011 National Health and Aging Trends Study,” April 2014; Brenda C. Spillman, Ph.D., Urban Institute; Jennifer Wolff, Ph.D., Johns Hopkins Bloomberg School of Public Health; Vicki A. Freedman, Ph.D., University of Michigan; Judith D. Kasper, Ph.D., Johns Hopkins Bloomberg School of Public Health

“Abstract: This report examines the role and experiences of informal caregivers for the older population, using a new resource, the National Survey of Caregiving (NSOC). The NSOC is unique in interviewing all informal caregivers for a nationally representative sample of persons age 65 or older receiving assistance with daily activities. NSOC respondents report on types of assistance they provide beyond traditional household (IADL) and self-care or mobility (ADL) tasks. These tasks range from assisting with transportation to help with health or medical care, including such things as injections or ostomy care. Thus, estimates capture the full range of supports informal caregivers provide and contributions they make in areas other than explicit long-term care. Information collected about positive and negative aspects of caregiving, health, and indicators of subjective well-being allows examination of how gains and burdens differ by caregiver and care recipient characteristics and by the intensity of care provided.”

Chapter 6: Long-Term Care Financing

General

Center for American Progress on Long-Term-Care 103114 URL

For press release

LTC Clipping 10/31/2014: “RELEASE: CAP Issue Brief Calls for Tax Credits for Long-Term Care Insurance; Expanding Service-Corps Programs to Aid in Providing Long-Term Care,” by Center for American Progress

Quote: “In a new issue brief, the Center for American Progress recommends two reforms to help make long-term care more affordable and allow more individuals to live independently in their homes for longer periods of time.”

LTC Comment: This unusual call for LTCI tax credits from a progressive think tank is welcome, but the report fails to recommend restrictions on easy and elastic Medicaid LTC eligibility rules without which positive incentives for LTC planning will have little effect.

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

ACLI on LTC URL

http://insurancenewsnet.com

LTC Clipping: 12/9/2014, “For Long-Term Care's Future, 2 Dates Loom,” by Cyril Tuohy, InsuranceNewsNet

Quote: “American Council of Life Insurers vice president and chief economist Andrew Melnyk wants people to keep two years — 2030 and 2050 — in mind. The year 2030 is when the youngest baby boomers turn 65 and the oldest baby boomers turn 85, and the year 2050 is when the youngest baby boomers turn 85. Like a submarine in slow descent with water pressure building slowly on its hull, so too are the 76 million baby boomers exerting a ‘slow intensification’ on long-term care needs as they retire, Melnyk said. … Melnyk and associate Harsh Sharma have issued a white paper titled ‘Who Will Pay For Our Long-Term Care?’”

LTC Comment: You can find a .pdf of the full report here.

State Budgets and Reports

NCPA on LTC in Wisconsin URL: http://www.ncpa.org/pub/st361

11/19/2014, “Improving Long-Term Care in Wisconsin,” by Pamela Villarreal, National Center for Policy Analysis

Quote: “At the federal level, allow states to establish their own home equity limits, or none at all, for Medicaid eligibility. … Allow Medicaid to require and support reverse mortgages as an alternative to asset recovery. … Phase out the public/private partnership, and replace it with a state income tax credit for the purchase of long-term care insurance. … Use home care in place of institutional care when possible.”

LTC Comment: We agree with three of this report’s recommendations: letting state Medicaid programs set their own home equity limits, requiring reverse mortgages as a condition of eligibility, and providing more home care assuming the first two recommendations are actually implemented so that home care doesn’t drive up Medicaid’s cost and make Medicaid dependency more attractive than ever. Cancelling the LTC Partnership program, however, would be a mistake. Read the full study here.

Chapter 7: Long-term Care Insurance

General and Data

Benefits of LTCI by Lifeplans 1114 URL: http://www.ahip.org/Epub/The-Benefits-of-LTC/

LTC Clipping: 11/13/2014, “New Report: Long-Term Care Insurance Offers Critical Financial Stability, Security for Consumers,” InsuranceNewsNet.com

Quote: “With more Americans planning for retirement and future medical expenses, a new report (http://www.ahip.org/Epub/The-Benefits-of-LTC/) released by America's Health Insurance Plans (AHIP) finds that long-term care insurance offers critical protection and needed flexibility for millions of families managing the significant costs associated with long-term care. The latest analysis prepared by LifePlans finds that long-term care insurance provides a more cost-effective way to pay for health care expenses later in life, such as nursing homes, assisted living, or in-home care, rather than relying on personal savings or depleting assets in order to qualify for Medicaid.”

LTC Comment: Hard evidence of the real and substantial benefits of private long-term care insurance. Use it to counteract adverse opinions in the media that poison public opinion.

SOA on LTCI Pricing 0714 URL: https://www.soa.org/research/research-projects/ltc/research-2014-understanding-volatility.aspx

“Understanding the Volatility of Experience and Pricing Assumptions in Long-Term Care Insurance”

“The Society of Actuaries is pleased to make available two reports aimed at advancing knowledge in Long-Term Care pricing. The first report, authored by Actuarial Resources Corporation of Kansas, illustrates how the risks of Long-Term Care Insurance can be understood through modeling the liabilities using a Monte Carlo simulation approach. The second report, authored by PricewaterhouseCoopers, is forthcoming. The reports can be accessed by clicking the links to the right [at the link above].”

Chapter 9: Long-Term Care Providers

Medicaid Reimbursement

GAO on Provider Taxes 0714 URL: http://www.gao.gov/products/GAO-14-627

See LTC Clipping: July 30, 2014: U.S. GAO - Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection: http://www.gao.gov/products/GAO-14-627

Quote: “GAO found, based on a questionnaire sent to state Medicaid agencies, that states financed 26 percent, or over $46 billion, of the nonfederal share of Medicaid expenditures with funds from health care providers and local governments in state fiscal year 2012. State funds were most of the remaining nonfederal share. . . . For example, in Illinois, a $220 million payment increase for nursing facilities funded by a tax on nursing facilities resulted in an estimated $110 million increase in federal matching funds and no increase in state general funds, and a net payment increase to the facilities, after paying the taxes, of $105 million.”

LTC Comment: Instead of taxing their citizens to raise funds for Medicaid, states tax providers like nursing homes, leverage up federal Medicaid matching funds, and kick back some of the “profits” to the providers. It’s “Medicaid planning” on a grander scale and results in much higher costs for federal taxpayers. It also tips the balance away from private LTC financing toward more Medicaid dependency.

Chapter 10: Medicaid

Medicaid Financing

KFF on Medicaid LTC 080114 URL: http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/

LTC Clipping August 1, 2014: Medicaid and Long-Term Services and Supports: A Primer, The Henry J. Kaiser Family Foundation

http://kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/

Quote: “With limited coverage under Medicare and few affordable options in the private insurance market, Medicaid will continue to be the primary payer for a range of institutional and community-based LTSS for persons needing assistance with daily self-care tasks.”

LTC Comment: As usual, this report from Kaiser pooh-poohs the potential of private long-term care insurance. But have a look at its Figure 3, a pie chart showing the sources of LTC financing. Medicaid is 40% and other public sources are 38% leaving only 22% for private financing of which 7% is LTC insurance. In other words, only 15% of LTC spending in the USA is “out-of-pocket.” Can anyone really believe the share covered by private LTCI would be only 7% if it weren’t for the vast mostly un-means-tested (Medicare) or ineffectually means-tested (Medicaid) federal expenditures that have crowded out the market for LTCI? If we were to target publicly financed LTC to the genuinely needy, most Americans would either purchase LTCI or they’d fund their LTC with savings or home equity, an outcome which would cause the next generation to plan more responsibly for LTC risk and cost.

Medicaid Actuarial Report 2013 URL: http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport.html

Christopher J. Truffer, et al., “Report to Congress: 2013 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Kathleen Sebelius, Secretary of Health and Human Services, 2013; http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport.html.

“This is the fifth annual Medicaid report from the Office of the Actuary (OACT) at CMS. The purpose of this report is to describe the past and projected trends for Medicaid expenditures and enrollment, including estimates for Federal fiscal years (FYs) 2012 and 2013 and projections over the next 10 years.” (p. 1)

For analysis, see LTC Bullet: Does Medicaid Solvency Matter?, October 31, 2014

Medicaid Crowd-Out

Boston College on spend down URL: http://crr.bc.edu/wp-content/uploads/2014/11/IB_14-18.pdf

“Long-Term Care: How Big A Risk?, By Leora Friedberg, Wenliang Hou, Wei Sun, and Anthony Webb, November 2014, Number 14-18, Center for Retirement Research, Boston College

For analysis, see LTC Bullet: How Careless Economists Boosted LTC Risk, December 12, 2014

LTC Clipping: 11/14/2014, “'Spending down' for Medicaid is the most practical LTC financing plan for most Americans, researchers assert,” by Tim Mullaney, McKnight's LTC News

Quote: “The upshot is that the 100-day Medicare benefit would cover many of these stays. Therefore, most ‘rational, far-sighted, well-informed’ single people would be smart to avoid paying LTC insurance premiums; if faced with a worst-case scenario, they could spend down their assets until they qualify for Medicaid, the study authors stated.”

LTC Comment: We referenced and debunked this same Boston College report in an earlier clipping. Ignoring Medicaid’s quality, access, financing and institutional bias problems is the height of scholarly irresponsibility. With new political winds blowing we’ll have the chance again in coming years to combat this nonsense with hard facts and logic before state and federal legislative bodies as we have done successfully in the past.

Dual Eligibles

GAO on Dual Eligibles Cost-Effectiveness URL: http://www.gao.gov/products/GAO-14-523

“Disabled Dual-Eligible Beneficiaries: Integration of Medicare and Medicaid Benefits May Not Lead to Expected Medicare Savings,” GAO-14-523: Published: Aug 29, 2014. Publicly Released: Sep 29, 2014.

“What GAO Found: Overall spending for high-expenditure disabled dual-eligible beneficiaries—those in the top 20 percent of spending in their respective states—was driven largely by Medicaid spending, and the service use and health status often differed widely between those with high Medicare expenditures and high Medicaid expenditures. For these beneficiaries, Medicaid expenditures accounted for nearly two-thirds of overall spending. Also, states with high Medicaid spending often had lower Medicare spending but nearly always had greater overall spending for these beneficiaries. Furthermore, service use and health status often differed widely between high-Medicare-expenditure and high-Medicaid-expenditure disabled dual-eligible beneficiaries. Those with high Medicare expenditures were considerably more likely than those with high Medicaid expenditures to have multiple health conditions and use inpatient services but far less likely to use long-term services and supports.”

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Updated, Monday, January 05, 2015, 11:58 AM (Pacific)

Seattle—

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LTC E-ALERT #15-001: LTC NEWS AND COMMENT

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:

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LTCG Announces the Appointment of Vince Bodnar as Chief Actuary
Long-term-care insurance helps relieve stress
A Sobering Perspective on a Looming Retirement Crisis
2015 long-term care planning outlook: Washington
Long-distance caregiving: Tech fills gaps for far-flung families
Elder-care challenges prompt tech executives to create startups, apps
When Home And Health Are Just Out Of Reach
2015 Medicare Fee Schedule Offers Payment for Chronic Care: Code pays for clinical staff time for developing, implementing care plan for chronic conditions
Obama administration to investigate insurance discrimination
A Deeper Dive Into Chronic Illness Riders
Is Long-Term-Care Insurance for You?
Single Digit Growth In LTCi Sales Forecast For 2015
Uncertainty in Long-Term Care Continues to Plague Profitability
The Impact of Long-Term Care Costs on Retirement Wealth Needs
Advisors As Guardians

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Updated, Monday, December 22, 2014, 8:27 AM (Pacific)

Seattle—

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LTC E-ALERT #14-038: LTC NEWS AND COMMENT

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:

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The Long-Term Care Insurance Dilemma: Readers weigh in on why they chose to purchase pricey long-term care policies--or not to
New Medicare Advantage rules benefit seniors
5 LTCI claim payment secrets
More than 65% of Medicaid now is managed care, long-term care programs to expand, PricewaterhouseCoopers reports
You call this a plan to reduce nursing homes?
Medicare Cuts Payments To 721 Hospitals With Highest Rates Of Infections, Injuries
UnitedHealth, Humana continue to dominate Medicare Advantage
Your Next Sales Idea from LTCA: ‘LTC Fallacy: Use It or Lose It
A post-mortem for wellness programs: What went wrong?
Genworth Delays Result of Reserves Review After Shortfall
Why Eldercare Will Need More Gen Xers, Millennials--& Money
New Federal Budget Freezes Most Spending for Senior Services -- Again
2015 [LTC Provider] Business Outlook: Payment
Youngest boomers turn 50 this year
How the Obesity Epidemic Drains Medicare and Medicaid

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Updated, Friday, December 19, 2014, 11:56 AM (Pacific)

Seattle—

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LTC BULLET: SOA’S LTC MONOGRAPH

LTC Comment: The Society of Actuaries has published a monograph on long-term care and retirement security. Excerpts and links after the ***news.***

*** SEASON’S GREETINGS: This is our last LTC Bullet of 2014. We’ll take a break for the holidays and we wish all of you every happiness during this joyous time of year. I’m glad we can close 2014 with an overview of new and hopeful ideas for better long-term care financing in the future. We sense fresh enthusiasm for policy reform and possibly a more receptive political environment for desperately needed policy changes. The Center for Long-Term Care Reform will continue our unstinting efforts in 2015 to document the need, provide the evidence, make the arguments, and advocate the solutions with the help of all our allies in this great mission to “ensure quality long-term care of all Americans.” ***

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LTC BULLET: SOA’S LTC MONOGRAPH

LTC Comment: The Society of Actuaries’ (SOA) Committee on Post Retirement Needs and Risks in partnership with the Long Term Care Section has published a series of articles “that explore the impact of long-term care needs and expense on retirement security from a variety of aspects.” You can access the publication’s “Introduction,” an “Overview,” a compilation of its articles’ abstracts, and each of the complete articles here. Recordings of these papers’ formal presentations at the 2014 SOA Annual Meeting are available free of charge to SOA members here.

Congratulations to the Society of Actuaries and to each of the publication’s contributors for this valuable contribution to the literature on long-term care financing. What follows is a list of the articles in the monograph with excerpts from their abstracts and links to the full paper.

“The Impact of Long-Term Care Costs on Retirement Wealth Needs,” by Vickie Bajtelsmit and Anna Rappaport. “Abstract: This paper provides an overview of the risks and costs of long-term care (LTC), including a discussion of who bears the risk, and the advantages and disadvantages of various funding mechanisms for long-term support and services. A summary of recent simulation studies provides evidence regarding the size of the risk and the impact on household financial wellbeing. We conclude that advance planning for LTC risk is critical for low- to middle-income households. For other than the wealthiest households, the cost at the retirement date of any LTC financing strategy will likely be prohibitive and may deplete household emergency funds. For those with greater wealth and income, paying for LTC costs as they are incurred may be a workable option.”

“How American Society will Address Long-Term Care Risk, Financing and Retirement,” by John Cutler. From the abstract: “This paper uses a literature search and reflective analysis of current programs and policies to lay out a path … . The review covers Medicare, Medicaid, health insurance, LTC insurance (including life and annuities), Social Security, pensions, housing and reverse mortgages as well as family, caregiving and the workforce. What is clear is that a variety of approaches, both public and private, are currently available to address LTC risks. In fact, it might well be that we ARE seeing LTC reforms underway but too incremental (and fragmented) to be obvious.”

“Improving Retirement by Integrating Family, Friends, Housing and Support: Lessons Learned from Personal Experience,” by Anna Rappaport, FSA, MAAA. From the abstract: “This paper provides insights about choices made with regard to housing and supportive services based on personal experience with family and friends. The first experience is about my mother and her choices that involved a move into independent living, assisted living, and ultimately a nursing home. The second story is about an individual interested in a continuing care retirement community (CCRC) and that individual’s attempts to investigate CCRC options. The third story relates to people who live in a community where residents help each other out. All of the stories offered insights, most of which were not obvious to me, and which so far as I know, are not easy to find in the literature. Additional insights come from discussions with friends who have been involved.”

“The 65-Plus Age Wave and the Caregiving Conundrum: The Often Forgotten Piece of the Long-Term Care Puzzle,” by Sandra Timmermann, Ed.D. From the abstract: “Both family caregivers and those who work as paid caregivers are the backbone of the long-term care system, but are often the forgotten link in the long-term care financing discussion. … Paid caregivers are a critical element in the care continuum, both in the home and in facilities, but with low wages and few opportunities for advancement, the jobs are difficult to fill, turnover is high, and the potential for elder abuse is always present. … The paper provides an overview of the situation, including current data, in each of these four areas; highlights some innovative programs and initiatives that are underway by communities, employers and policymakers; and offers some ‘blue sky’ strategies and solutions for both the public and private sectors to bring these issues to the top of the national agenda.”

“Home Equity and At-Need Annuities—A Dynamic Long-Term Care Funding Duo,” by Steve Cooperstein, FSA. From the abstract: “This paper describes the LTC funding problem, including weaknesses of reverse mortgages and Medicaid … and how … an at-need annuity/home equity combination can offer ‘late-in-the-game’ additional insurance leverage. An extensive anecdotal example is provided describing how this option can be effectively used to maximize care outcomes by building on other funding. Cash flow analyses of alternatives are discussed, as well as sensitivities involved and the need to focus on risk/reward choices. The potential and broader implications for practical layered funding of LTC costs, which this possibility facilitates, are also discussed.”

“Long-Term Care Benefits May Reduce End-of-Life Medical Care Costs,” by Stephen K. Holland, MD; Sharrilyn R. Evered, PhD; and Bruce A. Center, PhD. From the abstract: “This study explores whether personal care services for functionally dependent or cognitively impaired individuals paid for by a long-term care (LTC) insurance policy can reduce health care utilization and costs at the end of life. … Claimants using LTC benefits experienced significantly lower health care costs at end of life, including 14% lower total medical costs, 13% lower pharmacy costs, 35% lower inpatient admission costs, and 16% lower outpatient visit costs. They also experienced 8% fewer inpatient admissions and 10% fewer inpatient days. The presence of dementia at the end of life moderated these effects. This study suggests that use of insurance-based LTC services measurably reduces health care expenditures at the end of life. (Population Health Management 2014;17:332–339)”

“An Overview of the U.S. LTC Insurance Market (Past and Present): The Economic Need for LTC Insurance, the History of LTC Regulation & Taxation and the Development of LTC Product Design Features,” by Larry Rubin, FSA, CERA, MAAA, et al. “Abstract: We provide reasons for why U.S. individuals should save for and buy private long-term care (LTC) insurance in the context of demographic trends and increasing cost and coverage constraints on Medicare, Medicaid and the federal budget. Then, we review the history of national regulation (including the recently repealed CLASS Act), especially with respect to pricing and rate review processes. We also examine the U.S. tax code, as it has affected LTC insurance, with specific focus on distinguishing between qualified and non-qualified LTC policies and the lack of a cash surrender value, non-forfeiture clauses, and marketability due to long waiting periods. Next, we examine the LTC insurance market from the early years (1980s and 1990s) through today, with emphasis on the inadequacy of the level-premium structure, dissatisfaction with core LTC products from both consumers and insurance companies, and which carriers have either left the market or persisted into 2014. Finally, we contrast the primary features of LTC product design (so far) to what is needed to make LTC insurance viable going forward, with specific discussion on benefit triggers, coverage portability, non-forfeiture provisions, initial price levels and contract language, all as they help better align the interests of policyholders, regulators and insurers.”

“Can Long Term Care Protection in Other Developed Countries Provide Guidance for the United States? Germany as an Example,” by Doug Andrews, FCIA, FSA, FIA. “Abstract: This paper presents comparative research with respect to a number of developed countries regarding the adequacy and sustainability of programs for care and support of the elderly of which long-term care (LTC) is one component. It may provide guidance to those in the United States by helping to place the adequacy and sustainability of their programs for care and support in an international context. It suggests that the approach to LTC used in Germany of mandated social insurance provided by private sector insurers would be worthy of consideration for implementation in the United States.”

“Financing Future LTSS and Long Life through More Flexible 401(k)s and IRAs,” by Karl Polzer. From the abstract: “This paper proposes and evaluates changing 401(k) and individual retirement account (IRA) rules to help address two major risks facing participants in defined-contribution (DC) retirement accounts: 1) the risk of outliving one’s savings; and 2) the risk of having to pay substantial amounts for long-term services and supports (LTSS). The proposal would allow retirees to invest a portion of their DC retirement savings in a special retirement account for longer without penalty than under current tax rules and could provide additional tax incentives for money drawn from the accounts used to pay for LTSS or long-term care insurance (LTCI).”

“The American Long Term Care Insurance Program (ALTCIP),” by Paul E. Forte. “Abstract: The American Long Term Care Insurance Program (ALTCIP) proposes a public-private partnership for financing long-term services and supports (LTSS). At once an exchange that offers consumers greater access to affordable products and a mechanism for ensuring ongoing quality, the ALTCIP could increase the number of persons with private LTSS coverage in the next 10 years, thus relieving government spending, while giving insurers themselves protections not available in the open market. A paper on the ALTCIP detailing its regulatory structure and operations was submitted to the Commission on Long-Term Care in 2013. An abbreviated version was published in Contingencies (January 2014) under the title ‘Fresh Thinking on Long Term Care.’”

“Home Equity: A Strategic Resource for Long-Term Services and Supports” by Barbara R. Stucki, Ph.D. From the abstract: “The house is a unique and complex asset that serves as both a place to live and as a store of wealth. It is also becoming the primary setting for the delivery of health care and long-term services and supports (LTSS) in later life. Until recently, however, there has been little discussion about using home equity to pay for LTSS beyond reverse mortgages. This paper examines the diverse body of economic and social research on the magnitude, timing, and motivations for decumulating housing wealth in retirement to pay for LTSS. The aim is to provide a more nuanced framework for incorporating housing wealth in efforts to support older people and family caregivers. The study also reviews new data that show how the use of home equity could change in response to the economic and social pressures of our aging society.”

“An Affordable Long-Term Care Solution through Risk Sharing,” Kailan Shang, Hua Su, and Yu Lin. From the executive summary: “In this paper, we propose an LTC product that has an investment-risk-sharing mechanism between the insurer and the insured. The investment risk will be partially transferred to the clients with a guarantee that is much cheaper than those provided by traditional LTC products. The insurance risks are still borne by insurers. The benefit is adjustable with a floor, and the premium is flexible. Policyholders can choose their own investment strategies according to their risk tolerance depending on ages, levels of wealth, and other factors. The benefit of the risk-sharing arrangement is three-fold: (a) the risk of the new product is lower for the insurers, (b) the price of the product is flexible and affordable, and (c) more risky investment strategies can be used at the discretion of the policyholders to address the rising LTC expenses.”

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Updated, Monday, December 15, 2014, 10:35 AM (Pacific)

Seattle—

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LTC E-ALERT #14-037: LTC NEWS AND COMMENT

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:

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The way America pays for nursing homes is a disaster. So how do other countries do it?
Out Of Medicaid Managed Care, Government Report Warns
Six ways to safely spend more in retirement
Voluntary benefits in 2015: What employers need to know
How Retiring Abroad Could Affect Your Long-Term-Care Insurance
Federal Spending by the Numbers, 2014: Government Spending
Trends in Graphics, Tables, and Key Points (Including 51 Examples of Government Waste)
For Long-Term Care's Future, 2 Dates Loom
Medicare Advantage 2015 Data Spotlight: Overview of Plan Changes
Half of Doctors Listed as Serving Medicaid Patients Are Unavailable, Investigation Finds
Older Americans a Pillar of Housing Market With High Ownership Rate
Lawyers See Big Profits from Disability Claims

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Updated, Friday, December 12, 2014, 9:44 AM (Pacific)

Seattle—

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LTC BULLET: HOW CARELESS ECONOMISTS BOOSTED LTC RISK

LTC Comment: We explain how Boston College economists generated poor long-term care planning advice that national media unfortunately amplified, after the ***news.***

*** CLIPPING AND E-ALERT HIGHLIGHTS. Center for Long-Term Care Reform regular members ($150 per year) receive our weekly LTC E-Alert compendia of the past week’s news every Monday. Premium members ($250) get the news in real time averaging three LTC Clippings per work day. Contact Damon at 206-283-7036 or damon@centerltc.com to join or subscribe. Here are some highlights from recent news: CI soars double digits; federal spending explodes; LTC risk peaks in 2030, 2050; Docs unavailable to Medicaid patients; the elderly support housing and vice versa; lawyers abusing SSDI. Your prospects and competition are reading these stories. If you aren’t, they have a leg up on you. Our LTC Clippings and LTC E-Alerts also bring you Steve Moses’s terse and trenchant analysis. ***

LTC BULLET: HOW CARELESS ECONOMISTS INCREASED LTC RISK

LTC Comment: Substantive ignorance and sophisticated economic modeling do not mix well. A recent case in point is “Long-Term Care: How Big a Risk?,” by Leora Friedberg, Wenliang Hou, Wei Sun, and Anthony Webb of the Center for Retirement Research at Boston College. Read the “brief” describing their research here.

The authors are accomplished economists. We won’t challenge their methodology or technical findings, which are very interesting. They “show that previous research understates the risk of going into care but overstates the average duration of stay of those ever institutionalized.” (p. 1) They conclude that “This finding strengthens the claim that . . . few individuals would choose to buy insurance even if they were rational, far-sighted, and well-informed.” (p. 5)

That conclusion is not valid. It ignores what truly “rational, far-sighted, and well-informed” consumers need to know, but don’t, about Medicaid LTC benefits. To wit, Medicaid is a means-tested public assistance program, i.e., welfare. It has a dismal reputation for problems of access, quality, inadequate reimbursement, discrimination, institutional bias, and loss of independence and control. People who pay privately for long-term care command red-carpet access to high quality care at the most appropriate level including care in their own homes. Medicaid dependents take what they can get, usually underfunded nursing home care. Armed with this substantive knowledge, informed consumers are wiser to ignore advice based purely on econometric analysis.

Media Malfeasance

Yet due to these authors’ failure to acknowledge Medicaid’s shortcomings and because of the media’s unquestioning distribution and faulty interpretation of their findings, a terribly irresponsible message was sent to consumers, most of whom remain inadequately informed to make smart LTC planning decisions. For example:

11/11/14, “Here’s a New Reason to Think Twice Before Buying Long-term Care Insurance,” by Penelope Wang, Time

11/12/14, “Maybe You Don't Need Long-Term Care Insurance After All,” by Ben Steverman, Bloomberg

11/14/2014, “'Spending down' for Medicaid is the most practical LTC financing plan for most Americans, researchers assert,” by Tim Mullaney, McKnight's LTC News

Econometricians Make Poor Financial Planners

These technically proficient economists’ substantive ignorance contributed in another way to their mistaken conclusions and the bad advice that followed in the media. In the first paragraph of their article, they say “Medicaid only covers the long-term care costs of the indigent.” (p. 1) If that were true, if people really had to become impoverished before getting help from Medicaid, they would worry about LTC risk and cost. They would plan responsibly and purchase LTC insurance, often with the financial help of potential heirs, even at elevated premium levels. But the assertion that Medicaid only covers LTC costs for the “indigent” is so patently and demonstrably false it is frightening to comprehend how it, and so many other assertions like it, routinely pass by peer reviewers and find their way into otherwise reliable professional journals.

What is the truth? Medicaid covers not only the indigent but the majority of all Americans who need expensive long-term care, including the middle class and many of the affluent. That fact is so well established that it boggles the mind how serious scholars so commonly ignore it. Here’s a primer on how Medicaid financial eligibility rules allow, in fact encourage, people with substantial wealth to qualify for its LTC benefits.

Financial Eligibility for Medicaid LTC Benefits

Income

Income rarely interferes with Medicaid LTC eligibility because most states deduct private medical and LTC expenses from income before asking if someone is “poor” enough to qualify. Even states with “income caps” are compelled by federal law to allow “Miller income diversion trusts,” which similarly sidestep ostensible income limits. The rule of thumb across America is that anyone 65 or older with the appropriate level of medical need who has income less than the cost of a nursing home (currently $77,380 per year for a semi-private room) qualifies for Medicaid LTC benefits based on income. Median U.S. income is $32,000; the 90^th percentile reaches $77,500. Clearly, Medicaid LTC does not require “low income” as is routinely asserted in the academic and popular literature. All one needs is too little income to pay for all one’s medical and LTC expenses.

Assets

Because income does not disqualify most applicants for Medicaid LTC benefits, the program’s supposedly strict asset spend down requirements are critically important. If they don’t work as intended, the program will not prevent excessive utilization by the well-to-do. There again, popular and academic sources routinely claim incorrectly that people must spend down privately for LTC until impoverished before Medicaid will help. Three points regarding that fiction:

First, it does not matter how people spend down their assets to meet Medicaid’s limit on countable assets, usually $2,000. As long as they purchase items for fair market value (FMV) it does not matter what they buy. Medicaid planning attorneys have recommended big parties or world cruises as spend down strategies. They routinely offer lists of exempt assets--such as bigger homes, expensive cars, or new furniture--that families can buy to get an infirm elder’s assets down to the needed level.

Second, uncounted assets are virtually unlimited. These include equity in a home and all contiguous property of between $552,000 and $828,000 as of January 1, 2015. Medicaid LTC applicants and recipients may also retain--without any dollar limit--a business including the capital and cash flow, one auto, home furnishings, personal belongings, prepaid burial plans for self and immediate relatives, and their Individual Retirement Accounts. Such uncounted assets often amount to hundreds of thousands of dollars according to Medicaid eligibility workers we’ve interviewed and quoted in numerous reports here.

Third, Medicaid LTC applicants who still have too much income or assets can retain professional counsel to help them self-impoverish artificially. An internet search for “Medicaid planning” will reveal thousands of such advisors, their advertisements, and their dubious methods. Medicaid planners’ major strategies include “Medicaid-friendly annuities,” reverse half-a-loaf strategies, and irrevocable income-only trusts, but their legal quivers are full of simple and complicated techniques to justify their big fees. The average cost in legal fees to qualify someone in need of care quickly for Medicaid LTC benefits is roughly equal to the cost of one month in a nursing home private pay.

Who’s Indigent?

The dictionary defines the noun “indigent” as a needy person (synonyms: vagrant, homeless person, down-and-out, beggar, pauper, derelict, have-not) and the adjective “indigent” as poor or needy (synonyms: impecunious, destitute, penniless, impoverished, insolvent, poverty-stricken.) If people had to become genuinely indigent before receiving help from Medicaid for LTC expenses, the market for private LTC insurance would be vastly larger than it is now. People would tap their home equity to supplement their incomes so they could afford LTCI premiums, instead of sheltering as much wealth as possible in their homes to qualify for Medicaid. Families would pull together to buy LTC insurance for their aging loved ones instead of tearing themselves apart fighting over the spoils of impoverishing their elders via Medicaid planning. Attorneys and financial planners would strongly recommend LTC insurance if they could not rake in big fees converting affluent citizens into beggars dependent on Medicaid’s “low cost care of uncertain quality.”

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. Instead of solving the long-term care insurance puzzle (i.e., why so few people buy LTCI) as they claim, these researchers compounded the conundrum by ignoring its cause and the main obstacle to its solution.

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Updated, Monday, December 8, 2014, 2:30 PM (Pacific)

Seattle—

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LTC E-ALERT #14-036: LTC NEWS AND COMMENT

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. For our special introductory offer, 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:

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· Why Caring for Older Adults Is Getting Costlier

· Growth In U.S. Health Spending In 2013 Is Lowest Since 1960

· VA Health Care: Improvements Needed to Manage Higher-Than-Expected Demand for the Family Caregiver Program

· Addressing the Fear of Losing Financial Independence: Even Wealthy Women Worry About Becoming ‘The Best Dressed Bag Lady in Their Community’

· 40 Percent of Seniors Report Having a Disability

· 2015 Medicaid Spousal Impoverishment Numbers

· Genworth Declines Most in S&P 500 as JPMorgan Cuts Target

· 6 Ways to Fix Social Security

· An Aging Parent’s Frustrations, Heard but Not Absorbed

· 5 things to know about 2 controversial LTC studies

· Too Few Americans Undergo Dementia Screening

· Retirees Turn to Virtual Villages for Mutual Support

· Improved quality of Medicare plans and steady premiums are great news

· LTCi Sales In 2015 Will Equate To $5B In Benefit Payments

· Google’s latest: A spoon that steadies tremors

· 4 Things to Include in Your Long-Term Care Plan

· Thanksgiving Feast -- Family Talk

· How retirement benefits will change in 2015

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Updated, Friday, December 5, 2014, 11:23 AM (Pacific)

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LTC BULLET: IG REPORT REVEALS MEDICAID ESTATE RECOVERY WEAKNESS

LTC Comment—A newly released USDHHS Inspector General report shows few states do Medicaid estate recoveries well resulting in a potential annual loss, we infer, of $2.5 billion. Details, numbers, and why it matters after the ***news.***

*** 2015 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS RELEASED:

Following are the key Medicaid numbers for 2015 including the new home equity exemption levels. Both the Community Spouse Resource Allowance (CSRA) and the Minimum Monthly Maintenance Needs Allowance (MMMNA) have nearly doubled since they began at $60,000 and $1,500 per month after passage of the Medicare Catastrophic Coverage Act in 1988. We archive this information for every year since 1991 in “The Zone” here. If you need your user name and password to access The Zone, just ask Damon at damon@centerltc.com or contact him to join the Center and gain access to this rich information source.

Minimum Community Spouse Resource Allowance: $23,844 (This is the minimum amount community spouses may retain if half their joint assets with a Medicaid-applicant spouse is less than this amount. In other words, if a couple had $40,000 in combined countable assets, the community spouse could retain $23,844 even though half their joint assets is only $20,000.)

Maximum Community Spouse Resource Allowance (CSRA): $119,220 (This is the maximum amount the community spouse may retain of half the couple’s joint assets. In other words, if the joint assets are $300,000, the community spouse may retain only $119,220, not half or $150,000. Some “generous” states make this maximum their minimum as well so that the community spouse may retain the full $119,220 even though their joint assets are, for example, $200,000, half of which would be only $100,000.)

Maximum Monthly Maintenance Needs Allowance (MMMNA): $2,980.50 per month (This is the maximum income the community spouse may retain of the Medicaid spouse’s income. Otherwise countable income of the Medicaid spouse can be transferred to the community spouse to bring her or him up to this maximum.)

The minimum monthly maintenance needs allowance for the lower 48 states remains $1,966.25 ($2,457.50 for Alaska and $2,261.25 for Hawaii) until July 1, 2015. (Every year in July, when the new poverty level numbers are reported, the minimum MMMNA is adjusted based on inflation.)

Home Equity Limits (These amounts have increased annually based on inflation from the original $500,000 and $750,000 set in the Deficit Reduction Act of 2005):
Minimum: $552,000
Maximum: $828,000

For CMS's full chart of the 2015 SSI and Spousal Impoverishment Standards: go here. ***

*** 2015 ILTCI COLORADO SPRINGS BROADMOOR LTCI CONFERENCE NEWS: This year's mobile app, sponsored by Mutual of Omaha, is ready. Download it. Organizers report this is your best tool for checking out the schedule, speakers, location maps, and for setting up your personal conference schedule. New speaker and event announcements are coming soon. Early-Bird Pricing ($100 discount) ends January 22, 2015. Exhibitor and sponsor opportunities are available, with extra discounts for first-time participants. ***

*** LTC QUEEN RECOMMENDS “this film should renew/re-vitalize passion and commitment to LTC insurance for anyone in the industry. It’s also an excellent movie for family holiday viewing, a great way to start a conversation about LTC, a wonderful family story.” Watch the trailer for “Glen Campbell . . . I’ll Be Me.” Thanks to Center Regional Representative Honey Leveen of Houston, Texas for this tip. ***

LTC BULLET: IG REPORT REVEALS MEDICAID ESTATE RECOVERY WEAKNESS

LTC Comment: Federal and state Medicaid programs leave upwards of $2.5 billion in potential estate recoveries on the table. You won’t find that number in a newly released IG report, but our fuller analysis provided below reveals it. By allowing huge income and asset exemptions from LTC spend down requirements without strong estate recovery, Medicaid rewards failure to plan for long-term care, crowds out private LTC financing alternatives, and incurs huge unnecessary expenditures. The consequences of this short-sighted policy plague the financing and delivery of long-term services and supports throughout the USA.

Background. Medicaid is a means-tested public assistance program, i.e., welfare. Applicants for the program’s expensive long-term care benefits must qualify based on limited income and assets. Wealthier people and their legal advisors have found many ways to hide or transfer excess assets in order to take advantage of Medicaid benefits. The federal government has attempted to discourage this so-called Medicaid planning with two major statutes. The Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) made transfer of assets restrictions longer and stronger and required recovery of costs from recipients’ estates. The Deficit Reduction Act of 2005 (DRA ’05) placed the first cap ever on Medicaid’s home equity exemption and prohibited several of Medicaid’s more egregious loopholes. Over time, evidence accumulated that some states did not implement some or all of the requirements in these two laws. See for example the Center for Long-Term Care Reform’s report for the Pacific Research Institute titled Medi-Cal LTC: Safety Net or Hammock? In 2011, two members of the U.S. House of Representatives and two Senators asked the USDHHS Inspector General to investigate “whether States are implementing provisions of Federal law that are meant to limit individuals with above-average wealth from accessing Medicaid.” They also asked the IG to “provide data on States' efforts with regard to estate recovery, including the amount of resources States put into estate recoveries; and [to] update estate recovery figures for each State.”

The IG Report: On July 7, 2014, the Inspector General issued a letter report responding to the Congressmen’s and the Senators’ inquiry. For reasons related to their concern that negative findings in the report could influence the recent midterm election, public release of the IG’s report was postponed until recently, Monday, November 17, 2014. You can now read the IG’s full report on the Center for Long-Term Care Reform’s website here: http://centerltc.com/OIG/IG_LetterReport.pdf.

We reported two weeks ago on the IG report’s findings regarding states’ failures to implement mandatory provisions of OBRA ’93 and DRA ’05: “LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures,” Friday, November 21, 2014. This week we report on the IG’s findings with regard to estate recoveries.

Major Findings and Analysis. Quotes from the IG report and our comments follow.

IG Report: “All 51 States reported that they have implemented the estate recovery requirements of the OBRA [Omnibus Budget Reconciliation Act of 1993]. All States reported that they are recovering assets from the probate estates of deceased Medicaid recipients when the recipients are not survived by spouses.”

LTC Comment: It took more than a decade for all states to implement even the minimum estate recovery effort mandated by OBRA ’93. According to details in the IG report’s “Enclosure B,” nine states—including staunch holdouts Texas, Michigan and Georgia—waited a decade or more to begin estate recoveries after the program became legally mandatory. The Centers for Medicare and Medicaid Services (CMS) failed to enforce the law during that period.

IG Report: “States reported total yearly recoveries nationwide that ranged from $429.5 million in fiscal year (FY) 2005 to $497.9 million in FY 2011.”

LTC Comment: This is the first official public accounting of Medicaid estate recoveries since a 2005 report by the DHHS Assistant Secretary for Planning and Evaluation (ASPE) based on 2004 data: “Medicaid Estate Recovery Collections: Policy Brief #6.”
That earlier report showed 2004 recoveries totaling $362 million ($431 million in 2011 dollars). Thus, adjusting for inflation, total annual estate recoveries have increased only $67 million or 16% between 2004 and 2011.

IG Report: “The yearly amounts of resources used to achieve these recoveries ranged from $20.5 million in FY 2005 to $34.2 million in FY 2011. Enclosure C includes estate recovery figures for each State.”

LTC Comment: Overall in 2011, states spent $34 million to recover $498 million, a recovery success ratio of 14.6 to one. Not bad. Who wouldn’t invest one dollar to receive $14.60 in return? States vary widely on this cost ratio from Nevada that recovers only $3 per dollar invested to Missouri that recovers $52 for the same dollar of program cost. Estate recovery experts understand, however, that very low or very high recovery ratios indicate program inefficiency, i.e., that a state is spending too much or too little to maximize total recoveries. States maximize estate recoveries by investing more in their programs until they reach a point of diminishing marginal returns.

IG Report: “As of November 2013, 26 States had reported that they have adopted an expanded definition of an estate to allow recovering medical assistance costs from the assets that are not included in the definition of an estate in State probate law. These States are: California, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Oregon, South Dakota, Virginia, Washington, Wisconsin, and Wyoming.”

LTC Comment: Before OBRA ’93 Medicaid estate recovery programs were restricted to recovery only from probate estates. Because many assets pass outside of probated estates, as for example through joint tenancy with right of survivorship, substantial wealth was retained by heirs and lost from estate recovery. It is impressive that over half the states have taken advantage of this important voluntary option.

IG Report: “Further, 42 States reported that they have also implemented the optional provision for recovering all medical assistance costs from the individual's estate. The nine exceptions were Louisiana, North Carolina, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, and Washington.”

LTC Comment: OBRA ’93 required states to recover LTC costs from estates of deceased recipients, but the statute also gave states the option to recover other medical costs incurred by Medicaid. This provision attracted media attention when ObamaCare added millions of non-LTC recipients to the Medicaid rolls making them theoretically though not practically liable to estate recovery. The new recipients are younger, less likely to have significant assets and less likely to die leaving an estate than elderly recipients.

IG Report: “All 51 States appear to be recovering the assets in the probate estate of a deceased Medicaid recipient when the recipient is not survived by his or her spouse. However, we noted that certain provisions within the Act and State laws have prevented some States from recovering medical assistance costs after the death of a surviving spouse.”

LTC Comment: Spousal recoveries have enormous potential. In a 1989 report titled “Medicaid: Recoveries From Nursing Home Residents' Estates Could Offset Program Costs,” GAO concluded

Because about one-third of Medicaid nursing home residents who own a home have a spouse living in the community, a significant portion of potential recoveries is lost unless a state authorizes recoveries from the estates of surviving spouses. For example, GAO estimates that California will recover about $15.8 million from the estates of Medicaid recipients admitted to nursing homes in 1985 under its existing recovery program. But it could recover an additional $11 million if the state enacts legislation to authorize recoveries from the estates of the surviving spouse when he or she, in turn, dies. (See pp. 22 and 37.)” (p. 4)

Failure to recover from deceased Medicaid recipients’ spouses’ estates results in assets protected by Medicaid’s generous income and asset eligibility rules going to heirs and being lost forever to the program at taxpayers’ expense. Obstacles to spousal recoveries identified in the IG’s report should be removed by new federal legislation.

IG Report: “We hope that this information is responsive to your request. We look forward to working with you and your staff on these and other oversight issues.”

LTC Comment: Unfortunately, the IG did not report the most important information about estate recoveries that analysts need to evaluate the program’s success or failure. The aforementioned 2005 DHHS-ASPE study provided not only total estate recoveries by state, but also reported state-by-state recoveries as a percentage of each state’s Medicaid nursing home expenditures. Without data comparing recoveries to expenditures, it is impossible to rank states’ estate recovery performance.

It is not clear why the IG neglected to provide that critical information and analysis, but the Center for Long-Term Care Reform has corrected their oversight. Here, here, and here you can find, respectively, (1) an alphabetical list of states showing their total estate recoveries, their recoveries as a percentage of their nursing home expenditures, and their recoveries as a percentage of their total long-term care expenditures (including home and community-based care), (2) a list of states with the same information in ascending order of their recoveries as a percentage of nursing home expenditures, and (3) a list of states with the same information in ascending order of their recoveries as a percentage of total long-term care expenditures. [Source of data: Steve Eiken, et al., “Medicaid Expenditures for Long Term Services and Supports in 2011,” revised October 2013, Truven Health Analytics for the Centers for Medicare and Medicaid Services, State Summary Table: Medicaid Expenditures for Long-Term Services and Supports: 2011.]

Our findings based on this analysis:

The states with the highest percentage of nursing home costs recovered in 2011 were Idaho (5.4%), Oregon (3.7%), Iowa (3.6%) and Maine (3.1%). (We exclude New Mexico [49.2%] because its extremely low nursing home expenditures compared to total LTC costs distorts the ranking.)
The same states show up in the top category based on percent of total LTC costs (including HCBS) recovered, but they are joined by Delaware and Wisconsin: Idaho: 2.2%; Iowa, 1.3%; Wisconsin, .9%; Delaware, .8%; Oregon, .8%; Maine, .8%.
Do the percentages sound small? Well, they are. Federal law and regulations severely limit states’ ability to recover from estates fully and efficiently. Last year, we analyzed ways to maximize recoveries in spite of existing constraints in a study of the leading Medicaid estate recovery states aimed at increasing Maine’s recoveries: “Maximizing NonTax Revenue from MaineCare Estate Recoveries.”
Nevertheless, actual and potential dollar recoveries are nothing to sneeze at: For example, what if every state in the country recovered at the same rate as the most successful state, Idaho? Total recoveries would have been $2,845,253,843 instead of $497,905,382 based on percentage of nursing home expenditures recovered and $2,941,856,963 instead of $497,905,382 based on percentage of total LTC costs recovered. That’s nearly $2.5 billion in money now allowed to pass unencumbered to heirs. Those lost funds have the effect of converting Medicaid from a long-term care safety net program for the needy to free inheritance insurance for prosperous baby boomers.

LTC Comment: To unleash the full potential of Medicaid estate recoveries federal legislation is needed to (1) close eligibility loopholes that allow affluent individuals to take advantage of Medicaid LTC benefits while retaining large, often huge, financial resources; (2) encourage recoveries from surviving spouses’ estates, (3) enable recoveries from abusive Medicaid-compliant annuities and trusts, and (4) maximize many other potential recovery sources currently inhibited by existing law and regulations.

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Updated, Monday, November 24, 2014, 10:58 AM (Pacific)

Seattle—

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LTC E-ALERT #14-035: LTC NEWS AND COMMENT

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Actuaries chart the LTC universe
America’s seniors are getting a lousy deal on healthcare
Adverse Events In Older Adults: The Need For Better Long-Term Care Financing And Delivery Innovation
We Must Beat Alzheimer's Before It Beats Us! And Here's How!
Genworth CEO remains bullish on long-term care business
How to Protect the Assets of Medicaid Recipients
Raise Interest Rates, Make Grandma Smile
New Medicaid Rule Could Challenge State Shift Away From Nursing Homes
Retirement Expectations’ a Casualty of the Great Recession
Improving Long-Term Care in Wisconsin
5 ways to kill the LTCI slump
Poll: Hispanics More Positive on Long-Term Care
Majority of Households Receive More in Government Payments than they Pay in Taxes
Elder Law: Moving to a nursing home? Ask about ratio of Medicare to Medicaid beds
Nursing homes that primarily serve whites have sharply higher RN staffing, CPI claims
Aging population prompts more employers to offer elder-care benefits to workers

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Updated, Friday, November 21, 2014, 12:30 PM (Pacific)

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LTC BULLET: IG REPORT REVEALS COSTLY MEDICAID ENFORCEMENT FAILURES

LTC Comment--The USDHHS Inspector General reports that many states failed to implement mandatory provisions in OBRA ’93 and/or DRA ’05 designed to discourage abuse of Medicaid LTC benefits. Details after the ***news.***

*** HAPPY THANKSGIVING ***

*** LTCI BENEFITS HOME CARE: The nation's providers of home health care aides and services can expect significantly increased revenue as a result of growing sales of long-term care insurance products. “We expect 300,000 Americans will purchase a new traditional long-term care insurance policy or a combo product in 2015,” predicts Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI). "The maximum potential benefit value for just 2015 new sales will equate to about $5 billion in future benefit payments for home care services." Contact: Jesse Slome, 818-597-3227, jslome@aaltci.org. ***

*** BIPARTISAN POLICY CENTER (BPC) presented “Threats to Retirement Security: Longevity, Long-Term Care and Leakage” on Thursday, Nov. 20. Video of the program is archived here; scroll to bottom of the page. BPC’s Commission on Retirement Security and Personal Savings and Long-Term Care Initiative hosted this event “to discuss how LTSS needs, the risk of outliving savings and pre-retirement withdrawals can make a financially secure retirement more difficult to achieve” and to “examine potential solutions to these problems, including expanded use of annuities and long-term care insurance and reforms to the public programs like Social Security and Medicaid that help mitigate these risks.” ***

*** NCPA STUDY CORROBORATES CLTCR ANALYSIS: A new study by the National Center for Policy Analysis confirms analysis and recommendations we made in a 1992 study titled The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin. On the day of its release, we highlighted the new NCPA report in an LTC Clipping for our clippings subscribers. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. Here’s our LTC Clipping about the new NCPA study.

11/19/2014, “Improving Long-Term Care in Wisconsin,” by Pamela Villarreal, National Center for Policy Analysis

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LTC BULLET: IG REPORT REVEALS COSTLY MEDICAID ENFORCEMENT FAILURES

LTC Comment: The U.S. Department of Health and Human Services Inspector General (IG) has reported that 23 states did not implement some or “all of the eligibility and asset transfer provisions” in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) and the Deficit Reduction Act of 2005 (DRA ’05). The same report provides the first data on Medicaid estate recoveries since FY 2004. The states and federal government may be missing $2.5 billion in potential recoveries.

Background. Medicaid is a means-tested public assistance program, i.e., welfare. Applicants for the program’s expensive long-term care benefits must qualify based on limited income and assets. Wealthier people and their legal advisors have found many ways to hide or transfer excess assets in order to take advantage of Medicaid benefits. The federal government has attempted to discourage this so-called Medicaid planning with two major statutes. OBRA ’93 made transfer of assets restrictions longer and stronger and required recovery of costs from recipients’ estates. DRA ’05 placed the first cap ever on Medicaid’s home equity exemption and prohibited several of Medicaid’s more egregious loopholes. Over time, evidence accumulated that some states did not implement some or all of the requirements in these two laws. See for example the Center for Long-Term Care Reform’s report for the Pacific Research Institute titled Medi-Cal LTC: Safety Net or Hammock? In 2011, two members of the U.S. House of Representatives and two Senators asked the USDHHS Inspector General to investigate “whether States are implementing provisions of Federal law that are meant to limit individuals with above-average wealth from accessing Medicaid.” They also asked the IG to “provide data on States' efforts with regard to estate recovery, including the amount of resources States put into estate recoveries; and [to] update estate recovery figures for each State.”

The IG Report. On July 7, 2014, the Inspector General issued a letter report responding to the Congressmen’s and the Senators’ inquiry. For reasons related to their concern that negative findings in the report could influence the recent midterm election, public release of the IG’s report was postponed until this week, Monday, November 17, 2014. You can now read the IG’s full report on the Center for Long-Term Care Reform’s website here: http://centerltc.com/OIG/IG_LetterReport.pdf.

Major Findings and Analysis. Quotes from the IG report and our comments follow.

IG Report: “As of November 2013, 48 States had reported that they have implemented all the eligibility and asset transfer requirements of the Omnibus Budget Reconciliation Act of 1993 COBRA) (P.L. No. 103-66, Aug. 10, 1993). However, the remaining three States—California, the District of Columbia, and North Carolina—reported that they have not implemented some OBRA eligibility and asset transfer requirements.” (p. 1)

LTC Comment: More than two decades after passage of OBRA ’93, two states and DC have still not implemented all of its provisions. Which ones?

IG Report: California failed “to require that the [asset transfer] look-back period be extended to 36 months for asset transfers (60 months for asset transfers to irrevocable trusts).” Washington, DC did not “include in the definition of ‘assets’ any income or resources that the individual or spouse is entitled to but does not receive because of his or her own action. Such actions may include disclaiming an inheritance, waiving pension income, or refusing to accept an injury settlement.” DC and North Carolina failed to provide that the term “trust” may include an annuity under specific circumstances. (pps. 1-2)

LTC Comment: Failure to comply with federal law is supposed to cause the Centers for Medicare and Medicaid Services (CMS) to withhold federal matching funds from the violating state. Yet this has not happened. In California, Medicaid applicants can give away unlimited wealth 30 months before applying without incurring a transfer of assets penalty. (Not only has California failed to implement OBRA ‘93’s 36-month look back period, Medi-Cal has still not implemented DRA ‘05’s 60-month look back.) DC applicants can disclaim an inheritance with impunity in order to maintain Medicaid LTC eligibility. The IG report does not estimate the cost to the federal and state Medicaid programs of these oversights, but federal regional financial reviewers should evaluate the loss and enforce the law.

IG Report: “As of November 2013, 29 States had reported that they have implemented all the eligibility and asset transfer requirements of the DRA (P.L. No. 109-171, Feb. 8, 2006). However, one State—California—reported that it has not implemented the majority of the eligibility and asset transfer requirements of the DRA. In addition, the remaining 21 States reported that they have not implemented 1 or more of the DRA eligibility requirements.” (p. 3)

LTC Comment: California continues to thumb its nose at the federal Medicaid program without consequences. More than a score of other states have failed to implement some provisions of the DRA ’05. Which states and which provisions?

IG Report: Medi-Cal’s infractions according to the report include failure to implement the 5-year transfer of assets look back period; failure to change the penalty period start date which was intended to end the notorious “half-a-loaf” spend down gimmick; failure to stop the practice of rounding down asset penalties; failure to require applicants to report ownership of annuities; failure to treat the purchase of an annuity as a transfer of assets unless the state is listed as a remainder beneficiary; and failure in several other areas including promissory notes, life estates and the “income first” rule for computing the community spouse resource allowance. The report’s “Table 3: Unimplemented Deficit Reduction Act of 2005 Eligibility and Asset Transfer Requirements” lists each state’s deficiencies. (Enclosure A, pps. 3-6)

LTC Comment: In the Center for Long-Term Care Reform’s January 2011 report Medi-Cal LTC: Safety Net or Hammock?, we stated that

Medi-Cal has not implemented key provisions of OBRA ’93 nor most provisions of DRA ’05. Despite the fact that stipulations in both federal laws are mandatory and long past due for implementation, Medi-Cal still uses the older, more lenient—and far more costly—rules. (p. 25)

It was to confirm or disprove this accusation that Congress asked the Inspector General to investigate. The IG report fully collaborates our analysis.

IG Report: “All 51 States reported that they have implemented the OBRA provision requiring recovery of medical assistance costs from the estate of a deceased Medicaid recipient. Table 5 includes a year-by-year summary of State implementation of the OBRA estate recovery requirement.” (Enclosure B, p. 1)

LTC Comment: Hallelujah! It’s about time we had some new data on estate recoveries. The last information was published by DHHS in 2005 reporting on Fiscal Year (FY) 2004 data: “Medicaid Estate Recovery Collections.” But the IG really dropped the ball on this latest report. It lists collections for each year from 2005 to 2011 by state, but unlike the earlier DHHS report, the IG report fails to compare the states’ recovery success based on the percentage of Medicaid long-term care costs recovered. Not to worry, however, we’ve done that analysis for you and we’ll report our findings soon in another LTC Bullet. Stay tuned after the Thanksgiving Day holiday for our explanation of why the state and federal Medicaid programs may be missing nearly $2.5 billion in non-tax revenue by failing to implement and enforce estate recoveries fully.

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Updated, Monday, November 17, 2014, 11:01 AM (Pacific)

Seattle—

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LTC E-ALERT #14-034: LTC NEWS AND COMMENT

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Critical illness inventor dies
The Retirement Wildcard That Can Derail Your Plan
'Spending down' for Medicaid is the most practical LTC financing plan for most Americans, researchers assert
New Report: Long-Term Care Insurance Offers Critical Financial Stability, Security for Consumers
Families using Medicaid annuities get big assist from federal judge
Here’s a New Reason to Think Twice Before Buying Long-term Care Insurance
GOP’s anti-Obamacare push gains new momentum in wake of Gruber video
More Than 4 in 10 Uninsured Don’t Know Basic Health Insurance Terms, Fewer Understand Complex Coverage Concepts
Alzheimer's care is split evenly between homes and facilities, survey finds
Your Next Sales Idea from LTCA: ‘The Noblest Profession’
You’ll probably live much longer than you think you will
Genworth Long-Term Care Valued at Zero Challenges CEO
MedPAC considers eliminating observation stays

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Updated, Friday, November 14, 2014, 12:30 PM (Pacific)

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LTC BULLET: THE ADVISOR’S GUIDE TO LONG-TERM CARE, 2^ND EDITION: A BOOK REVIEW

LTC Comment: Should you pony up almost $100 for this new guide to long-term care financing and insurance? Answers and a review after the ***news.***

*** HARLEY GORDON (CLTC) AND JONAS ROESER (3IN4 NEED MORE) are joining forces in a new venture they call “Agent Review.” Check it out here: www.agentreview.net. They say “Agent Review will offer non-biased guidance for consumers looking for core insurance products on the Internet, resulting in an opportunity for agents to increase their visibility and credibility. For the first time consumers will have a dedicated resource to find agents whose credentials have been independently verified. Consumers will then be given the option of rating their agent experience to help others make informed decisions.” Want to learn more? Watch their video. Want to join them? Go to their Kickstarter page to pledge. Based on their professional reputations, their valuable contributions to the LTC insurance market, and the merits of this initiative, the Center for Long-Term Care Reform supports it. We’ll publish an LTC Bullet about Agent Review soon. ***

*** LTC CLIPPING: We highlight the following “clipping” sent to our LTC Clippings subscribers last week because it comes from the lead author of the book we’re reviewing in today’s LTC Bullet. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

11/11/2014, “Your Next Sales Idea from LTCA: ‘The Noblest Profession’,” by Stephen D. Forman of Long Term Care Associates

Quote: “I’ve grown up around them since I was a child, and have met and known thousands. To me, there’s something unique about the LTCI Specialist which sets him or her apart from the other professions—and I mean no disrespect to our distinguished colleagues. But it’s this: most have chosen this path because of a personal experience with long-term care, and have become agents in order to spare others the emotional, physical, psychological and financial heartache they’ve experienced firsthand.”

LTC Comment: Center corporate member, LTC advocate and author Steve Forman’s paean to LTCI specialists is an inspiring read for you “AMGs” out there during Long-Term Care Awareness Month. ***

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LTC BULLET: THE ADVISOR’S GUIDE TO LONG-TERM CARE, 2^ND EDITION: A BOOK REVIEW

LTC Comment: The Advisor’s Guide to Long-Term Care, 2^nd Edition, by Stephen D. Forman, CLTC (lead author) and Jeff Sadler, CLTC is a 2014 publication of the well-regarded National Underwriter Company, which also publishes LifeHealthPRO and BenefitsPRO.

There are a lot of good books on long-term care services, financing, and insurance. Do you really need another one in your library especially with a hefty price tag?

Short answer: Not necessarily. But you do need access to this volume for reasons that will become clear as you read this review. So, if you’re one of those “AMG’s” referenced in the clipping above and you’re struggling to make ends meet as a long-term care specialist, maybe you just encourage the carriers or distributors you work with to buy this book and make it available to you. Or better yet, ask your local library to purchase the guide and make it available to the general public, which should also read it to become well-informed consumers. But if you’re in a financial position to purchase the volume outright, here’s good news: access the order form through the banner on the Center for LTC Reform’s website (a couple clicks down and on the left) and you’ll automatically receive $10 off the $106 cost of the print or e-book edition. If you want both the print and electronic versions, you’ll get the same $10 discount off the combined price of $132.50 making the total cost $122.50, plus shipping and tax of course.

Full disclosure: Steve Forman, the lead author, is a friend, colleague and, with his brothers and through their company Long Term Care Associates, a corporate supporter of the Center for Long-Term Care Reform. He references the Center’s publications frequently in this book. We’ve also admired co-author Jeff Sadler’s work, including the first edition of this volume, for many years.

The Advisor’s Guide to Long-Term Care, 2^nd Edition consists of four parts:

“Part1: Current Trends in Long-Term Care” covers LTC Partnership programs, Medicaid LTC, combo products, worksite plans, and other trends and issues. I always scrutinize books on long-term care by looking at their chapter on Medicaid first. This one passes muster.

“Part 2: A Short History of Long-Term Care Insurance” takes the reader back to the beginning and right up to the present, a fascinating journey even if you’ve lived through it yourself as I have.

“Part 3: Who Should Consider Long-Term Care Insurance” explains why boomers, Generation X, the Medicare generation and both employers and employees should be planning for long-term care and considering private LTC insurance.

“Part 4: Which Long-Term Care Insurance Products and Plans Work Best?” examines the elements of a long-term care insurance plan in general and then focuses on combination products, the traditional individual product and alternatives to LTCI including reverse mortgages, life settlements, and longevity annuities.

LTC Comment: President Lincoln said “If we could first know where we are and wither we are tending, we could better judge what to do and how to do it.” (House Divided Speech, 1858) He might have added “how we got there.” Failure to examine the history of how long-term care service delivery and financing became so messed up in the USA is the main reason analysts and LTC commissions fail to find workable solutions. One of the best things about this book is its focus on the history of long-term care and LTC insurance. Its first part on “trends” and its second part on historical background give the reader invaluable context to understand why, as I’ve written elsewhere, “we have a welfare-financed, nursing-home-based long-term care system in the wealthiest country in the world where no one wants to go to a nursing home yet few plan for LTC or purchase LTC insurance.”

Check out “Chapter 5: Recent Trends in the Long-Term Care Industry” for the latest developments. It covers gender-based rates; underwriting innovations; research initiatives like the National Commission on Long-Term Care, the Society of Actuaries’ “Land This Plane” effort, and the new Bipartisan Policy Center. My favorite part of this chapter was the section on “Language,” which dissects the neologism “long-term services and supports.” LTSS is elitist code for “we don’t like long-term care because it implies warehousing old people in nursing homes.” The irony is that the academics and advocates using the LTSS euphemism are the same people whose demand that government programs cover most, and steadily more and more long-term care, caused the very institutional bias in the system they’re now trying to reverse without addressing the real problem—excessive dependency on public financing and Medicaid’s crowd out of private financing alternatives.

The rest of the book is a thoughtful roadmap through the thicket of rules, regulations and considerations that go into making sound recommendations for suitable products to meet the needs of consumers. Unfortunately, making smart decisions about long-term care planning options requires a guide through this tangled web of mostly government-imposed obstacles. If you wake prospects up to the risk and cost of long-term care; overcome their denial and belief that somebody must already pay for LTC (Medicaid, Medicare, Make-a-Wish); crack through the affordability and premium-increase problems caused by Fed policy to force interest rates to zero; convince them that even if it won’t happen to them, as of course it won’t, still what would happen to their families and loved ones if it did? (thank you Harley Gordon for this insight as both authors are graduates of the CLTC certification program); even if you make it through all of this, you still have to show the client a wide array of product options from a narrowing range of carrier “manufacturers” designed to meet the perceived needs of people who really don’t want to be bothered by this worrisome topic.

Negotiating that maze is what the Advisor’s Guide to Long-Term Care will very ably help you do. And in the course of reading the book, you’ll come across many anecdotes and quips that leaven the dryer topics with humor and sometimes, side-ways insights. My advice: buy the book or borrow it, but read it. You’ll be doing yourself, but especially your prospects and clients, a favor.

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Updated, Monday, November 10, 2014, 11:07 AM (Pacific)

Seattle—

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LTC E-ALERT #14-032: LTC NEWS AND COMMENT

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Shawn Britt on LTC planning: Status report
Virtual Insurance Conferences Kicks Off Free Conference Offering
Senior Housing Unit Prices Skyrocket in Record Breaking M&A Year
Long-Term-Care Insurance: What Policyholders Should Know
While Americans Grasp Longevity Risk, Few Have LTCi Strategy
Contemplating Retirement: 4 Big Questions
An Emerging Consensus: Medicare Advantage Is Working And Can Deliver Meaningful Reform
Genworth CEO Sees Tough Turnaround From $844 Million Loss
5 ways a Republican Congress could change health policy
11 questions about the hybrid market answered
Hospice is growing fastest in skilled nursing facilities, new report shows
A Tiny Stumble, a Life Upended
Grim Thoughts That Haunt Us
Nursing Home Style
Early onset Alzheimer's: When plans are upended
U.S. Medicare sets new hospital, doctor payments for 2015

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Updated, Friday, November 7, 2014, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: ELECTION REFLECTIONS

LTC Comment: We maintain political change is usually good for long-term care financing policy, after the ***news.***

*** 2015 LTCI TAX DEDUCTIBLE LIMITS POSTED: The Health Insurance Portability and Accountability Act of 1996 (HIPAA ’96) established long-term care insurance tax deductibility with age-band limits that increase annually. We’ve posted the 2015 limits in The Zone, making this the 19^th year we’ve updated them. Curious where the limits started in 1997, the first year? Wonder how much they’ve increased since then? Find the answers for every intervening year in The Zone, the Center’s members-only, password-protected website. Get free access to The Zone for one week to check out its many features here, including the deductible limits here. Use this temporary UN: CLTCR2014 and PW: FreeTrial. Then contact Damon at 206-283-7036 or damon@centerltc.com to join the Center, get full-time access to The Zone and all the many other benefits of Center membership. ***

*** SAMPLE LTC CLIPPING: Center premium ($250) and premium-elite ($500) members receive an average of three clippings like the following one each work day. Stay on top of the latest news, research and data with a clippings subscription. Contact Damon.

11/6/2014, “An Emerging Consensus: Medicare Advantage is Working and Can Deliver Meaningful Reform,” by Thomas Miller and James Capretta, Health Affairs Blog

Quote: “As MA [Medicare Advantage] enrollment has surged, so has recognition of its improved value. A recent, comprehensive review of the evidence conducted by Joseph Newhouse and Thomas McGuire of Harvard University makes a compelling case that MA plans are providing higher value services at less societal cost than the traditional FFS program. Based on their findings, Newhouse and McGuire argue for policies that would provide incentives for even more beneficiaries to enroll in MA plans in the future.”

LTC Comment: More good news for Medicare Advantage and all the better because it comes in the well-regarded journal Health Affairs, which usually leans the other way politically. ***

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LTC BULLET: ELECTION REFLECTIONS

LTC Comment: The political earth moved on Tuesday. A good night, for Republicans. Not so much, for Democrats. We’re nonpartisan here at the Center for Long-Term Care Reform, but to quote President Obama after his 2008 landslide, “elections matter.” What matters about this one?

It was a big change from the status quo. Sure, the President can still veto House Republicans’ initiatives that Democrats will no longer be able to stop in the Senate. But, I’m making a different point. Change itself seems to be good for long-term care financing policy.

For example, we got stronger Medicaid asset transfer rules and mandatory estate recovery in 1993, shortly after Bill Clinton took the federal helm. Both measures were intentionally designed to encourage private long-term care planning by making Medicaid LTC dependency less easy and desirable for the middle class and affluent.

We got LTCI tax deductibility, such as it is, and the anti-Medicaid-planning “Throw Granny’s Lawyer in Jail” law, such as it was, in the aftermath of the last Republican sweep of Congress (1994). Remember Newt Gingrich, the “Contract with America,” and the Democratic President’s promise, on which he delivered, to “change welfare as we know it”?

Finally, under the next Republican president, in the DRA ’05, we got a reinvigorated LTC Partnership program, the first cap ever on Medicaid’s home equity exemption, and several more restrictions on the most egregious Medicaid eligibility loopholes.

All things considered, it may not matter so much which party’s in power as how fractious the electorate is.

For the past eight years, the Democrats have had the wind at their backs. It looked like that was a permanent climatic change. But what happened in long-term care policy during this political calm? The CLASS Act bombed; an LTC Commission failed; Medicaid planning resurged; and to this day the public remains either in denial or totally asleep about long-term care risk and cost.

The most devastating outcome of recent political stasis, however, has been degenerating fiscal and monetary policy. Federal debt exploded in the name of “stimulus” and the Federal Reserve added trillions of dollars to the economy, both to little avail. Hand-wringing about deficit spending and quantitative easing in 2011 turned to passive acceptance of both as the economy slogged inauspiciously on.

Now we find ourselves with an aging population, fiscally-under-water entitlement programs, giant debt, no arrows left in the monetary quiver with interest rates near zero, and, surprise, a public that thinks the country is on the “wrong track.” Is it any wonder we’ve experienced another electoral earthquake?

Tuesday’s Republican sweep was the mirror image of the 2006 election when Democrats took both houses of Congress and set the stage for Mr. Obama to capitalize on “hope and change.” But this year “Yes we can” became “Oh no you didn’t!” Maybe 2016 will bring a new political savior promising hope and change, this time moving away from failed Keynesian stimulus policies toward fiscal and monetary responsibility.

What matters now is what happens next. Will this change open new opportunities to improve long-term care financing policy as previous political upheavals have? We’re betting so. The Center for Long-Term Care Reform will redouble our efforts to promote rational LTC public policy and responsible LTC planning. How about you? Care to join us in the fray?

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Updated, Monday, November 3, 2014, 11:23 AM (Pacific)

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LTC E-ALERT #14-032: LTC NEWS AND COMMENT

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RELEASE: CAP Issue Brief Calls for Tax Credits for Long-Term Care Insurance; Expanding Service-Corps Programs to Aid in Providing Long-Term Care
How Medicare Advantage Plans Can Improve Care and Save Money
'Informal Care' for Older Americans Tops $500B Annually, Study Finds
Medicare finalizes $60M cut to home health
Dementia is 'the biggest killer for women'
Former Senate Majority Leader Tom Daschle, Co-Chair of BPC’s Health Project, Appeared on CBS Sunday Morning and Highlighted BPC’s Long-Term Care Initiative
Informal Caregiving for Older Americans: An Analysis of the 2011 National Health and Aging Trends Study
The Lowdown on Open Enrollment for Medicare Advantage and Part D
Is Your Long-Term Care Exposure a Broader Danger Than Ebola or Terrorism?
Seniors Housing Weekly Update - Issues In Seniors Housing Occupancy
Rising U.S. Life Spans Spell Likely Pain for Pension Funds
Retirement costs that won't be rising in 2015
Falls are top reason for lawsuits against skilled nursing facilities, report states
Moderate alcohol consumption staves off dementia in seniors
3 paths to health product selection wisdom
Women face unique circumstances in planning for retirement
5 battles over the PPACA-free zone

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Updated, Friday, October 31, 2014, 9:26 AM (Pacific)

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LTC BULLET: DOES MEDICAID SOLVENCY MATTER?

LTC Comment: CMS says Medicaid solvency “is not an issue.” We beg to differ after the ***news.***

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

*** HAPPY HALLOWEEN! It’s the perfect holiday to precede National Long-Term Care Awareness Month, when we illuminate one of the scariest risks lurking in the shadows of human denial. ***

*** 2015 LTCI TAX DEDUCTIBILITY: Update thanks to Jesse Slome and the American Association for Long-Term Care Insurance. We’ll update The Zone with this information soon so you can find it quickly whenever you need it.

The 2014 and 2015 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:

Attained Age Before Close of Taxable Year 2014 2015

40 or less $370 $380

More than 40 but not more than 50                         $700                  $710
More than 50 but not more than 60                      $1,400               $1,430
More than 60 but not more than 70                       $3,720              $3,800
More than 70   $4,660              $4,750

Source: IRS Revenue Procedure 2013-35 (2014 limits) and 2014-61 (2015 limits) ***

LTC BULLET: DOES MEDICAID SOLVENCY MATTER?

LTC Comment: For the past five years, the Centers for Medicare and Medicaid Services (CMS) has published an “Actuarial Report on the Financial Outlook for Medicaid.” The report looks only ten years into the future and contains, we believe, some misguided assumptions and, consequently, some mistaken predictions. Examples follow as we quote the latest edition and then comment.

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Quotes from and comments on:

Quote: “The economic assumptions used to generate the Medicaid projections in this report are the same as those used by the 2013 OASDI and Medicare Boards of Trustees in their annual reports to Congress.” (p. i)

LTC Comment: The Social Security and Medicare trustees’ assumptions lead them to estimate those programs’ infinite-horizon unfunded liabilities at $25 trillion and $43 respectively. We’re well-advised to consider the likely consequences of applying the same assumptions to Medicaid. But . . .

Quote: “. . . Medicaid outlays and revenues are automatically in financial balance, there is no need to maintain a contingency reserve, and, unlike Medicare, the ‘financial status’ of the program is not in question from an actuarial perspective.” (pps. 3-4)

LTC Comment: What precisely is the value of an “actuarial perspective” if it doesn’t question Medicaid’s “financial status”?

Quote: “Because Medicaid does not have any dedicated revenue source at the Federal level or a trust fund approach to financing, the solvency of the program is not an issue; the expenditures of each State (or Territory) program are covered by the State’s revenues plus Federal matching general revenues. However, even without solvency as a concern, Medicaid constitutes a significant portion of spending by both Federal and State governments and thus is important to evaluate as part of the budget.” (p. 56)

LTC Comment: According to Wikipedia, “Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity.” Evidently, solvency in government is something different if all that matters is that spending for a program comes from general funds (vulnerable to deficit spending) and not from “trust funds” (that contain only government-bond IOUs). Cold comfort considering the authors’ acknowledgement that federal and state Medicaid spending are “important to evaluate as part of the budget.”

“Actuarial perspective,” “financial status,” and “solvency” are terms of art. What matters is whether or not we can have a reasonable expectation that America’s Medicaid-based long-term care financing system can survive future demographic and economic challenges. The Center for Long-Term Care Reform’s “Index of Long-Term Care Vulnerability,” operationalized with our Excel-based “Table of Long-Term Care Vulnerability,” is a tool designed to help answer that critical question. You can find the Index and the Table explained with examples in our three most recent state level reports here (Virginia), here (Georgia) and here (New Jersey).

Quote: “The purpose of this report is to describe the past and projected trends for Medicaid expenditures and enrollment, including estimates for Federal fiscal years (FYs) 2012 and 2013 and projections over the next 10 years. … Finally, this report places the Medicaid program within the context of Federal and State government spending and the U.S. health care system.” (p. 1)

LTC Comment: By looking only at the next ten years, this report misses most of the impact of the looming demographic age wave on Medicaid acute care and long-term care expenditures for the aged. Although it does a creditable job of reviewing likely federal Medicaid expenditures for this narrow time frame, the report lacks any state-by-state analysis. We are working with the State Budget Solutions think tank to design a study to fill this gaping hole in the CMS study. We propose to estimate, analyze and critique likely Medicaid expenditures over a 30-year period using data and projections for a specific state. Anyone interested in sponsorship opportunities for this important study, please contact me: smoses@centerltc.com.

Quote: “Yet another limitation is the unavailability of demographic, macroeconomic, health care, and program assumptions specific to each State. Because these State-specific assumptions are not available, it is not possible to credibly project Medicaid spending or enrollment separately by State.” (p. 8)

LTC Comment: Of course it is possible to project Medicaid spending and enrollment by state. The data is readily available, or obtainable by means of Freedom of Information (FOI) queries, to make such estimates. If CMS lacks the time, resources or inclination to do so, then we believe someone else should take on this important task. Federal revenue to support Medicaid may seem unlimited, but states lack the ability to deficit-spend or to print money and their economies have to somehow generate the revenue to attract federal matching funds. Can states be expected to do so? That question is every bit as important as whether or not the federal government can meet its statutory obligations to support Medicaid.

Quote: “From 2001 to 2012, Medicaid payments for managed care plans and other premiums grew on average 12.0 percent per year, faster than overall Medicaid benefit expenditures (6.1 percent). The use of managed care plans within Medicaid has increased over the last 10 years, and this increase accounts for much of the difference between the capitation payment and overall Medicaid expenditure growth rates.” (p. 29)

LTC Comment: In fact, Medicaid managed care has grown explosively across the USA. It was overdue and saved a lot of money on the program’s acute care side. But applied to long-term care—and especially to high-cost, highly vulnerable “dual eligibles”—the jury is still out on managed care. LTC providers and senior advocates express grave concerns that care quality will suffer and that anticipated savings may not materialize.

Quote: “Medicaid spending on long-term care is projected to grow by 6.0 percent on average for 2013 through 2022. The aging of the population is one contributing factor to growth in expenditures for long-term care. As the number of people aged 65 or older increases—and especially the number of those over age 85—there is a corresponding projected increase in the amount of long-term care spending, since elderly beneficiaries use more long-term care than younger beneficiaries. As the oldest members of the baby boom generation begin to reach age 65, both the number of aged enrollees in Medicaid and eventually the rate of long-term care expenditure growth are projected to increase. While the baby boom generation is not estimated to have a major effect on long-term care spending during 2013 through 2022, the increase in the number of people over age 85 in the next 10 years is expected to lead to growth in such expenditures. Additionally, while few of the newly eligible [ObamaCare] Medicaid enrollees are anticipated to have significant or immediate long-term care needs, several provisions in the legislation are expected to expand access to, and modestly increase spending for, long-term care services.” (p. 29, emphasis added)

LTC Comment: We could not compose a better argument against this document’s ten-year diagnosis and in favor of a 30-year or longer perspective.

Quote: Footnote 43: “Use of home and community-based services can substantially reduce expenditures for enrollees who would otherwise have had to enter a nursing home or who transition from institutional to community settings.”

LTC Comment: The myth that home and community-based services (HCBS) save money is widely believed but belied by the facts. Medicaid’s combined HCBS and institutional LTC expenditures continue to increase relentlessly despite a decade of aggressive “rebalancing.” Research shows HCBS delay but do not replace nursing home care and that their combined costs increase rather than decrease overall costs. Providing care in the most appropriate, least institutionalized setting is a worthy goal, but it does not save money. (See “Briefing Paper #4: Rebalancing Long-Term Care.”) The best way for individuals and families to ensure access to quality long-term care in their homes and communities is to prepare to pay privately.

Quote: “Many people who pay for nursing home care privately become impoverished due to the expense; as a result, these people eventually become eligible for Medicaid.” (p. 51)

LTC Comment: This is another commonplace myth that reflects the authors’ lack of understanding about Medicaid long-term care eligibility rules. The proportion of people paying privately for nursing home care has plummeted from over 50 percent to under 15 percent. It may be true that many of the remaining private payers become impoverished paying for their care, but it is equally true that such an outcome is unnecessary, occurs only voluntarily or out of ignorance of the rules, and that many more people easily avoid the alleged consequences of “spend down.” We’ve explained why this is true in all of our major reports here and especially here.

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LTC Comment: CMS’s “Actuarial Report on the Financial Outlook for Medicaid” contains a wealth of interesting numbers, estimates and projections. It’s a worthy piece of work within the boundaries of its short-term, federally focused mandate. So read it and worry about Medicaid’s next ten years even as you truly agonize over the greater, longer-term vulnerabilities the report does not address.

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Updated, Monday, October 27, 2014, 11:59 AM (Pacific)

Seattle—

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LTC E-ALERT #14-031: LTC NEWS AND COMMENT

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Bulk of Medicaid to be managed care in two years: Avalere
10 Money Things You Must Know After 50
Raise Pay for Home-Care Aides? Disability-Rights Groups Say No Way
Older Women and Challenges of Wealth
Colorado lives, workplaces increasingly robbed by Alzheimer's disease
Nonprofit providers face alarming market forces, must rally, LeadingAge chairman say
Finance Lab: They have a pension, long-term care insurance and savings. But is it enough?
Home Health Has Potential, But Faces 3 Real Threats
LTCI issuers seek big price hikes on small blocks
Genworth, Once Part of GE, Offers Breakup Gains: Real M&A
Home Health Has Potential, But Faces 3 Real Threats
Assets Can Be Spent Down Safely to Qualify for Medicaid
Critical Illness Coverage: An Alternative To Clients’ Most Pressing Concerns
How Does Household Expenditure Change With Age for Older Americans?
5 ideas for selling LTCI to the Medicare generation

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Updated, Friday, October 24, 2014, 11:15 AM (Pacific)

Seattle—

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LTC BULLET: WHY BUY LTCI?

LTC Comment: Ironically, despite its recent trials and tribulations, more people—including reporters—emphasize reasons to buy long-term care insurance.

*** THIS JUST IN: Registration is now open for the Fifteenth Annual Intercompany Long-Term Care Insurance Conference, scheduled for March 22-25, 2015 at the The Broadmoor resort in Colorado Springs, CO. Your Center for Long-Term Care Reform will be there, as usual. See you in Colorado Springs. Check out the details here: http://www.iltciconf.org/. ***

*** LTC CLIPPINGS: Did you catch these stories this week? Our LTC Clippings subscribers received them in real time including Steve Moses’s always trenchant, often ironic, sometimes humorous, usually Twitter-length “LTC Comments.” To subscribe or for a free trial, contact Damon at 206-283-7036 or damon@centerltc.com.

10/23/2014, “Raise Pay for Home-Care Aides? Disability-Rights Groups Say No Way,” by Josh Eidelson , Bloomberg BusinessWeek

10/22/2014, “Older Women and Challenges of Wealth,” by Fran Hawthorne, New York Times

10/21/2014, “Genworth, Once Part of GE, Offers Breakup Gains: Real M&A,” by Zachary Tracer and Brooke Sutherland, Bloomberg BusinessWeek

10/21/2014, “Assets Can Be Spent Down Safely to Qualify for Medicaid,” by Bernard A. Krooks, New York Elder Law and Planning Blog

10/20/2014, “5 ideas for selling LTCI to the Medicare generation,” by Stephen D. Forman, LifeHealthPRO ***

LTC BULLET: WHY BUY LTCI?

LTC Comment: We’re seeing a gradual change in the tone of media articles about private long-term care insurance. Less doubt and criticism; more focus on need.

Just yesterday, we clipped this piece in the New York Times for our LTC Clippings subscribers:

10/21/2014, “Finance Lab: They have a pension, long-term care insurance and savings. But is it enough?,” by Martha M. Hamilton

Quote: “‘She owns a long-term care policy, which is good,’ Nathani said. Johnson added that many long-term care costs are not covered by Medicare or ordinary health insurance and end up depleting many people’s assets.”

LTC Comment: Long article in highly regarded national newspaper that takes for granted the value of LTCI.

In other words, we’re seeing more articles that assume the need for protection against the risk and cost of long-term care and fewer articles that focus on the product’s presumed shortcomings or cost.

Furthermore, it seems the public—even LTC experts—are coming around as well. This week I received an inquiry from Cynthia Morton, Executive Vice President of the National Association for the Support of Long Term Care. NASL is a trade association that advocates on behalf of professionals who provide medical services to long term care facilities. She asked:

Steve, I wanted to see if you could steer me to some places on your website or others regarding why buy LTC insurance? I get this question ALL the time and I have my own personal opinions but I want to keep up to date. With several of the big companies getting out of the market, I need to be able to explain that simply and quickly. Are there a couple pages on your site I should look to? Actually, I am in the process of qualifying for my own LTC insurance. Yes, I am a little young for it but my broker says that [carrier omitted] is about to seriously raise their premiums and so he advised we get in now. Don’t they always say that?

I replied:

Hi Cynthia,

How nice to hear from you. Congratulations on your career success and on starting your LTC planning early. Smart move.

I know you don’t need a lot of extra stuff to read, so I’ll give you my “elevator speech” answer to your question and then follow up with some links to relevant items on our website.

While people over 65 have a 70% probability of needing some LTC, they have only a 20% probability of needing five years or more. In other words, LTC represents a small risk of catastrophic loss, which makes it ideal for a private-insurance risk-sharing solution.

Most expensive LTC in the USA is paid for by Medicaid, which is a mean-tested “welfare” program with a poor reputation for access, quality, reimbursement and institutional bias. Few people plan to go on Medicaid, but most who need long-term custodial care end up there, because of the program’s relatively easy and elastic financial eligibility rules.

The main reason to own LTC insurance is to ensure access to the best care in the most appropriate setting. Private payers command red-carpet access to high quality care wherever it’s needed, in a nursing home, assisted living facility or in their own homes. Unlike Medicaid recipients, private-payers can change providers easily if they or their families are unhappy.

The usual arguments against LTC insurance—denial and cost—are specious. “It won’t happen to me” is belied by the facts. “It’s too expensive” ignores the cost of the insured risk. It’s usually better to trade the small risk of a big loss for the certainty of an affordable premium.

Finally, some carriers have left the LTC insurance business and most have raised their premiums. That’s largely because of government fiscal policy (making Medicaid too easily available to too many at huge public cost thus depleting demand for private insurance) and monetary policy (forcing interest rates to near zero obviating insurers’ ability to get actuarially anticipated returns on their reserves.)

Bottom line: LTC insurance is still a smart buy although government policy has made it more expensive.

OK, so it was a long elevator ride, but you get the picture. Searching (Control-F) for “insurance” in our archive of LTC Bullets gave these returns among many more.

LTC Bullet: Buy or Wait?, Friday, May 2, 2014: The lead: “ObamaCare has launched; Vermont is moving toward a single-payer health care system; surely long-term care is next. So why buy LTCI?”

LTC Bullet: WSJ Misfires on LTC Insurance, Friday, February 14, 2014: I dissected Susan Kaplan’s “The Case for Skipping Long-Term-Care Insurance” (Wall Street Journal, 2/10/14)

LTC Bullet: The Insurance Dilemma, Friday, November 1, 2013: The lead: “What a mess! The roll out of ‘health care reform,’ AKA the Affordable Care Act, AKA ObamaCare is almost universally panned in the media. But most coverage misses the real story. Real insurance is disappearing.”

LTC Bullet: Why Don’t More People Buy LTC Insurance?, Friday, July 13, 2012: The lead: “Distinguished researchers have taken another stab at this perennial question, but they still miss the blindingly obvious answer, which follows.”

I concluded my reply there, but Damon chimed with this:

A Brief History of Long-Term Care Financing – This Bullet serves as an overview of how our long-term care financing system became so dysfunctional and, by extension, provides a framework for understanding why LTCi is so important and will become more so in the future.

These two Bullets in our Thousand Bullets Retrospective series are pretty good as well:

Reality Check: The Facts on LTCI: Thousand Bullets Retrospective – A compilation of some of Steve’s best Bullets (dating back to 1998) that address misguided media coverage of LTCi and focus on the importance of taking personal responsibility and planning ahead financially for one’s own long-term care needs.
LTC Services: Thousand Bullets Retrospective – Another compilation of some of Steve’s best Bullets (dating back to 1998) that focus on the link between quality services and private financing.

LTC Comment: Bottom line: the tide is turning. We encourage LTCI carriers, distributors and producers to keep the faith and carry on. Your time is coming.

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Updated, Monday, October 20, 2014, 11:48 AM (Pacific)

Seattle—

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LTC E-ALERT #14-030: LTC NEWS AND COMMENT

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Without Social Security Income, A Majority of U.S. Seniors Would Be Poor
An Alzheimer’s Complication: Some Care May Not Be Covered by Medicare
Do LTC Policies Still Make Sense?
Per-day rate for skilled nursing hit $280 at mid-year, report says
40 states plan to increase nursing home Medicaid rates in 2015, but rebalancing toward community-based care gains steam
LTC outreach group looks at critical illness planningMedicare vs. Medicare Advantage: How to Choose
Parents' Medical History May Make Long-Term Care Insurance More Expensive
NIC: Senior housing sets record for absorption, nursing home occupancy flat
Boomers with aging parents seek advisors' elder-care expertise
Bernstein Litowitz Berger & Grossmann LLP Announces Securities Class Action Suit Filed Against Genworth Financial, Inc. and Certain of Its Senior Executives
Scientists Inch Closer to Alzheimer's Origins: Specially designed cell culture supports notion that toxic 'plaques and tangles' in brain may drive disease
U.S. Finds Many Failures in Medicare Health Plans
Caregiving Innovations: Adaptive Fashion
When dementia leaves you asking, ‘Now What?’

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Updated, Friday, October 17, 2014, 10:30 AM (Pacific)

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LTC Bullet: LTC Awareness: Easier Said than Done

Friday, October 17, 2014

Seattle—

LTC Comment: We examine why long-term care awareness still lags after the ***news.***

*** LTC CLIPPINGS AND LTC E-ALERTS. We send our LTC Clippings subscribers three links per day to articles, reports, videos or statistics they need to know. Following are three examples. We hope they helped their recipients to fare better in the competitive marketplace. Did you catch them? For a free trial or to subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com.

10/16/2014, “Without Social Security Income, A Majority of U.S. Seniors Would Be Poor,” by Neil Shah, Wall Street Journal

Quote: “If Census were to exclude Social Security benefits from income, the poverty rate for American seniors would jump from 14.6% to a whopping 52.6%—roughly 23.4 million people.”

LTC Comment: Social Security, with its $25 trillion unfunded liability, is a weak reed to lean on.

10/16/2014, “Per-day rate for skilled nursing hit $280 at mid-year, report says,” by Tim Mullaney, McKnight's LTC News

Quote: “As of the middle of the year, the average per-day rate for a nursing home bed was about $280, the report states. This should hit $284 by the end of 2014, representing a 3.6% increase compared with a year ago. There also should be a ‘small increase’ in occupancy, as inventory growth slows while demand for services remains.”

LTC Comment: Fewer new beds, higher occupancy, and increasing private-pay and Medicaid rates bode well for the nursing home business but will challenge private consumers to plan better for LTC.

10/12/2014, “U.S. Finds Many Failures in Medicare Health Plans,” by Robert Pear, New York Times

Quote: “Federal officials say they have repeatedly criticized, and in many cases penalized, Medicare health plans for serious deficiencies, including the improper rejection of claims for medical services and unjustified limits on coverage of prescription drugs.”

LTC Comment: Hmmm. Medicare criticizing private insurers is like the pot calling the kettle black. ***

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LTC BULLET: “LTC AWARENESS: EASIER SAID THAN DONE”

LTC Comment: We’d like to thank Center Bronze 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 Awareness: Easier Said than Done”
by
Stephen A. Mose

Another November Long-Term Care Awareness Month is just around the corner. Yet surveys and studies continue to show that the public is in denial about LTC risk and cost. What gives?

The “3 in 4 Need More” campaign has promoted a major bus tour and many public service announcements (PSAs) on the subject. Creative publicity by the American Association for Long-Term Care Insurance (AALTCI) comes out like clockwork including an annual spread in Kiplinger’s Personal Finance magazine. We did our part at the Center for Long-Term Care Reform. I spent the whole year of 2008 and a good portion of 2009 on the road for our “National Long-Term Care Consciousness Tour” in the Silver Bullet of Long-Term Care. Unlike earlier years, the national media is full of articles about the need for health and long-term care planning.

Still, you can almost hear Americans snoring when it comes to long-term care. Why and what’s it going to take to wake them up?

I think the answers are pretty simple and grounded both in human nature and public policy. No one wants to think about growing old, becoming feeble or infirm, and needing help with dressing and using the toilet. No wonder people evade thinking about long-term care.

But families would not have the luxury of ignoring LTC risk and cost if it were not for well-intentioned but counter-productive public policy. Medicaid and Medicare pay for the vast majority of all expensive long-term care in the USA. Social Security pays indirectly for half of private “out-of-pocket” LTC expenditures, because Medicaid recipients must contribute all but a pittance of their Social Security checks to offset the cost of their care.

But, you might argue, Medicaid is welfare and it has a terrible reputation for problems of access, quality and institutional bias. Who in their right minds would plan to go on Medicaid?

But, that’s the point. They don’t plan. They don’t think about LTC until it’s too late to plan. Then, the path of least resistance is to rely on Medicaid, which often looks more attractive to heirs protecting their inheritances than to elders who by then may be cognitively impaired and unable to make their own decisions.

Public policy impedes LTC awareness and planning in other ways too. By forcing interest rates down to near zero, the Federal Reserve has prevented insurance carriers from making the actuarially anticipated level of return on reserves. This policy has forced carriers to raise rates on new and existing policies making LTC insurance less affordable and harder to market.

What’s the solution? The long-term care insurance industry should support changes in public policy that target scarce Medicaid LTC resources to people genuinely in need. Longer and stronger transfer of assets restrictions; more aggressive Medicaid liens and estate recovery; closing egregious eligibility loopholes like the Medicaid-compliant annuity dodge; and publicizing these stricter policies would not only save Medicaid money, but it would greatly increase voluntary LTC planning and LTC insurance sales.

You may not have long to wait for that solution to occur. Government fiscal (spending) and monetary (money printing) policies have failed. Sooner or later, skyrocketing debt and unfunded entitlement liabilities will compel changes like those we’ve recommended.

But what should you do in the meantime? Don’t let the public’s blasé attitude toward LTC planning discourage you. Look at it as an opportunity instead of a disadvantage. Do you really think generous commissions would still be in the offing if LTC insurance were already a commodity that everyone buys?

The trick, I think, is to reconceptualize your mission. Become the “Paul (or Paulette) Revere” of long-term care. Wake the public up about LTC risk and cost. Hammer the message home. Show them why avoiding long-term care planning was never a good idea, but it is a terrible idea today. Use facts, logic, and the best possible sources to back you up.

By the way, providing those facts, logic, and sources is our job at the Center for Long-Term Care Reform and we welcome you to our website at www.centerltc.com to find them anytime. Our LTC Clippings, LTC Bullets, and LTC E-Alerts supply your ammunition. Fire when ready!

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Updated, Monday, October 13, 2014, 11:35 AM (Pacific)

Seattle—

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LTC E-ALERT #14-029: LTC NEWS AND COMMENT

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What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2015
Cancer Patients Unprepared For Costs
LTC awareness campaign support grows
Boomers & Medicare: More Self-Sufficient, Fulfilled, Healthy
Men are moving into memory care units at a 14% faster pace than women, referral service finds
Nearly Half of All Seniors Need Help With Daily Activities, Far More Than We Thought
U.S. life expectancy hits record of 78.8 years — for those born in 2012
LTCG’s Cognitive Testing Tool Administered to Over 1,000,000 Individuals
Nursing home infection rates have increased across the board, hepatitis has surged 50%, Columbia researchers find
Gubernatorial hopefuls square off in televised debate
Beware of Medicare Open Enrollment Scams
Use of LTCI lifetime benefits is high, Genworth says
Staying One Step Ahead of the Mortician
Senior facility rent hike attributed to $15 min. wage
Fiscal Policy Report Card on America’s Governors 2014
Supreme Court to rule on whether providers can sue states over inadequate Medicaid rates

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Updated, Friday, October 10, 2014, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: SUE OR BE SUED

LTC Comment: If lawyers can sue nursing homes for poor care, shouldn’t nursing homes be able to sue Medicaid for adequate reimbursement so they can provide good care? How should SCOTUS rule, after the ***news.***

*** LTC INSURANCE PAID a record $7.5 billion in claim benefits or some $20.5 million a day. “‘Nearly 300,000 Americans and their families received benefits last year because they had long term care insurance coverage,’ explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). ‘Seeing how aging parents benefit from having coverage often motivates the next generation to initiate their own long-term care plan.’" Congratulations to the struggling, but critical private long-term care insurance industry. ***

*** THROW OFF YOUR ELECTRONIC CHAINS. How much time do you spend every day, week, month plowing through articles, reports and websites online? How much more productively could you use that time on your principal business? What if you could delegate the job of trudging through electronic chaff searching for the real nuggets of information you really need to know? That’s our job at the Center for LTC Reform. We read everything so you don’t have to. Try our “clipping service” free for a week. Just reply to this email and ask to be added to our subscriber list. We’ll send you an average of three clippings per work day for one week. After that, you decide if narrowing your reading list saves you enough time and money to justify becoming a regular subscriber. Nothing to lose but your chains. ***

LTC BULLET: SUE OR BE SUED

LTC Comment: We highlighted two articles about nursing-home litigation for our LTC Clippings subscribers last week. The first article was about tort liability suits against nursing homes. Here’s the clipping:

10/3/2014, “Lawsuits Rattle Nursing-Home Chains,” by Jennifer Smith, Wall Street Journal

Quote: “Major nursing-home operators and industry groups say many of the lawsuits line attorneys’ pockets while doing little to improve the quality of care. They cite aggressive tactics by some law firms, such as drumming up clients by blanketing areas with ads citing health violations at individual nursing homes, and say a handful of recent landmark verdicts are driving up the cost of settling other suits that may have little merit.”

LTC Comment: I’ve consulted on a number of lawsuits against nursing homes and can vouch for the profession’s complaints against aggressive tort lawyers. Seeing the same horrific accusations in boilerplate language across several different suits sows doubt.

The second article was about the right of nursing homes to sue Medicaid for adequate reimbursement. Here’s the clipping:

10/6/2014, “Supreme Court to rule on whether providers can sue states over inadequate Medicaid rates [link],” by Tim Mullaney, McKnight's LTC News

Quote: “At issue is the Supremacy Clause of the U.S. Constitution. Idaho officials [representing Medicaid] argue that it prohibits private legal actions like the one brought by the providers. The providers say they have no other recourse to ensure they receive adequate reimbursements to keep offering services under Medicaid. By law, Medicaid funding must attract enough providers so that beneficiaries have roughly the same access to services as the ‘general population.’”

LTC Comment: The “Boren Amendment,” part of the Omnibus Budget Reconciliation Act of 1981, ensured at least minimally adequate Medicaid reimbursement rates for nursing homes. Congress repealed Boren in the Balanced Budget Act of 1997 leaving no floor under Medicaid rates. Experts believe this latest challenge by Idaho LTC providers will fail in the Supreme Court.

Sue or Be Sued

What’s going on? Why are nursing homes being sued for providing poor care? Why do nursing homes need to be able to sue Medicaid? The answer is a sad story about unintended consequences of well-intentioned, but poorly conceived public policy.

Medicaid came along in 1965 and made nursing home care virtually free. Without asset transfer penalties or estate recoveries in the beginning, costs quickly exploded. In response, government capped Medicaid nursing home reimbursements which caused cost shifting to private payers. High private-pay charges and easy Medicaid eligibility led to a rapid and catastrophic decline of private payers and a corresponding increase in Medicaid recipients.

A vicious downward spiral ensued. Clever lawyers found more and more inventive ways to qualify affluent clients for “free” Medicaid-financed long-term care. With fewer private patients paying market rates and most of their residents depending on Medicaid at reimbursement rates lower than the cost of providing the care, nursing homes cut financial corners wherever they could. Care quality suffered.

Re-enter the lawyers. Having raked in big fees putting people on Medicaid who should have and could have paid privately, they sued the nursing homes for providing poor care to the same previously affluent Medicaid patients. Back in 2011, we summed up the story in LTC Bullet: Working Both Ends:

If elder law attorneys diligently warned their affluent clients to avoid Medicaid instead of charging large fees to trap them on welfare, far fewer people would depend on publicly financed long-term care. With many fewer recipients, Medicaid could afford quality care for the genuinely indigent and lawsuits against nursing homes for deficient care would be far less common. But this kind of ethical behavior would destroy both ends of the lawyers' profit stream--the old-faithful Medicaid planning and the promising new field of nursing home litigation. So, don't hold your breath.

Turnabout is Fair Play

Prov. It is fair for one to suffer whatever one has caused others to suffer.

If nursing homes can be sued for providing poor care, then nursing homes should be able to sue their principal funder—Medicaid—for reimbursement levels adequate to provide quality care. But Medicaid will never have enough resources to pay market rates for long-term care, whether the care is provided in a nursing home, an assisted living facility or in recipients’ homes. Both the problem and the solution are more basic than money. They go to incentives.

No system that rewards failure to plan responsibly for long-term care risks and costs can survive indefinitely. Easy access to Medicaid nursing home benefits prevented the development of a privately financed home and community-based care market resulting in the much-maligned institutional bias in the current system. Making Medicaid LTC available after the insurable event occurs crowded out a market for private financing alternatives like home equity conversion and long-term care insurance.

The end result is the Rube Goldberg arrangement we have today: a nursing-home based, welfare-financed long-term care system providing low cost care of uncertain quality in the wealthiest country in the world where no one wishes or intends to be institutionalized in old age, yet too many are. Instead of lawyers and nursing homes suing each other and Medicaid, a much better answer is to give Medicaid back to the poor, incentivize early and responsible LTC planning, and let private payers vote with their feet instead of litigating if they don’t like the care they receive.

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Updated, Monday, October 6, 2014, 11:03 AM (Pacific)

Seattle—

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LTC E-ALERT #14-028: LTC NEWS AND COMMENT

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Lawsuits Rattle Nursing-Home Chains
Your advice wrong on long-term care
Assisted living continues to grow rapidly in expanded markets
5 steps to building your critical illness business
OneAmerica Introduces FIA With Long-Term Care Benefits
Handling Long-Term Care Rate Increases
Excessive worry in middle-aged women linked to higher Alzheimer’s risk
Therapeutic program reverses Alzheimer's memory loss, UCLA researcher says
6 Must-have Insurance Policies
Why caregivers face extra retirement hurdles
Ten Reasons to Buy Long-Term Care Insurance Now
The Right To Die
GAO Report Finds Managed Care Plans Struggling to Deliver Quality Care at Low Prices
Medicaid sprawling under Obamacare, but some states ill-equipped: report,”
Long Term Care Insurance Association Consumer Campaign Set
Nursing Homes Behind Bars
Is Medicare Costing You More?

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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 3, 2014, 11:35 AM (Pacific)

Seattle—

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LTC BULLET: ALZHEIMER’S CURED!

LTC Comment: Have you received the same spam barrage we have? “My Grandma cured of Alzheimer’s Disease!!!” The real news about Alzheimer’s 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 usually $250 per year, but is currently discounted to $225, 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 $19 per month. ***

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LTC BULLET: ALZHEIMER’S CURED!

LTC Bullet: They roll in at a rate of 15 or 20 per day with subject lines like these: “Alzheimer's Finally Has an Effective Cure”; “The Cure to Alzheimer's Finally Found;” “Associated Press: Yale Has Alzheimer's Cure.” Open one of these spam messages and you’ll be invited to visit a website for details. Not a good idea if you’d rather avoid the effects of cybernetic dementia on your computer.

All this junk mail got us thinking about the real news regarding Alzheimer’s. Hardly a week goes by without media stories, often hyperventilating, about some important new study shedding light on the disease’s cause, effects and means of prevention or treatment. The one thing all these reports have in common is that they don’t seem ever to pan out.

A lot of money is spent on Alzheimer’s research. Probably a lot more should be expended. But I can’t help but wonder how much of the research on Alzheimer’s Disease comes from scientists, academics and companies chasing available funding. Is it the best and most promising research that gets the funds? Who decides? Based on what criteria? My personal experience evaluating research proposals in a former government job makes me very dubious.

Following are some examples of stories about Alzheimer’s that we highlighted in LTC E-Alerts in the current year. Our clippings service subscribers received each of these reports in real time. Regular Center members got them all in our weekly compendium of the news clippings, the LTC E-Alerts. We provide the clippings and the E-Alerts as a service to keep members and subscribers at the forefront of knowledge about everything related to long-term care service delivery and financing.

Now here are some of the stories about Alzheimer’s research we highlighted since the beginning of 2014.

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NB: This first item appears to be the story that stirred up all the spam about a “cure” for Alzheimers.

8/7/2014, “Drug cures Alzheimer's symptoms in mice, Yale researchers find,” by Stephanie H. Kim, McKnight's LTC News

Quote: “Results showed that a single dose was enough to reverse the effects of Alzheimer's — enabling mice to learn and to recall motor skills, spatial information, signals and object memory. While many drugs have failed to work in humans, Lombroso is ‘optimistic that in the next couple of years, we will have identified a whole slew of STEP inhibitors,’ he told Newsweek.”

LTC Comment: Even after so many false starts, hope springs eternal.

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9/15/2014, “Alzheimer's Prevention for 30-Somethings With No Symptoms,” by Sumathi Reddy, Wall Street Journal

Quote: “While Alzheimer's prevention is being widely studied, prevention programs at large medical centers are rare. Some of the field's leading experts say there isn't sufficient evidence to support making recommendations beyond eating a heart-healthy diet and exercising regularly, advice that everyone should heed. There is no cure or particularly effective treatment for Alzheimer's.”

LTC Comment: Pushing Alzheimer’s prevention for young people seems a little dubious given the lack of hard evidence that it helps beyond good general health practice.

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9/10/2014, “More than 50% of dementia patients in nursing homes are given potentially pointless and dangerous drugs when near death, study finds,” by Tim Mullaney, McKnight's LTC News

Quote: "Nursing homes administer largely pointless and potentially harmful drugs to a majority of residents with advanced dementia, according to findings in JAMA Internal Medicine. Out of more than 5,400 residents under consideration, about 54% received a ‘medication with questionable benefit,’ the investigators determined. Alzheimer's disease drugs such as donepezil (Aricept) and memantine (Namenda) were the most commonly administered. There is little evidence that they improve cognitive functioning for people with advanced stages of dementia, and potentially put residents at risk for falls or urinary tract infections."

LTC Comment: Wonder why this happens? Follow the money.

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7/17/2014, “Music ignites lost memories in 'good-news' film,” by Kim Painter, USA Today

Quote: "Music has an unmatched power to bring back our pasts. But what if our memories have been lost to Alzheimer's or some other condition? Can music still work its magic? A new film, Alive Inside, says yes. The film, opening Friday in New York, features the work of Dan Cohen, a New York social worker who started taking personalized iPods to people with dementia in nursing homes several years ago. Cohen's non-profit Music & Memory got a huge boost in 2012 when an early clip from the film, featuring a gentleman named Henry, became an online sensation. It has been viewed more than 10 million times at various websites, filmmaker Michael Rossato-Bennett says."

LTC Comment: When an Alzheimer’s clip goes viral on YouTube you know something big is happening in the culture.

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7/16/2014, “Chance of a senior developing Alzheimer's has dropped 44% over the last three decades, large U.S. study shows,” by Tim Mullaney, McKnight's LTC News

Quote: "Long-term care providers in the United States have been preparing for a surge in residents as the baby boomer generation ages, and they already have been providing care for a growing number of people with Alzheimer's and other dementias. The latest results suggest that estimates of needed services might be revised downward; however, increasing rates of obesity and diabetes suggest Alzheimer's cases might again creep up, investigators said."

LTC Comment: I wonder how this finding corresponds with earlier reports that Alzheimer's Disease goes vastly under-reported as a cause of death.

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7/13/2014, “Key to Detecting Alzheimer's Early Could Be in the Eye; Sense of Smell Also May Be a Way to Screen,” by Shirley Wang, Wall Street Journal

Quote: "Efforts to detect Alzheimer's earlier and more cheaply are focusing on signs of the disease in the eye and sense of smell."

LTC Comment: Thankfully, beauty remains in the eye of the beholder.

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7/13/2014, “One in three Alzheimer's cases preventable, says research,” BBC News

Quote: "One in three cases of Alzheimer's disease worldwide is preventable, according to research from the University of Cambridge. The main risk factors for the disease are a lack of exercise, smoking, depression and poor education, it says."

LTC Comment: I am dubious, but I'm headed to the gym cheerfully listening to an audio lecture all the same.

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7/8/2014, “Study: Blood test might help identify Alzheimer's earlier,” by Gail Sullivan, Washington Post

Quote: "A group of British scientists have identified 10 blood proteins that can predict with 87 percent accuracy whether someone with early signs of memory loss will develop Alzheimer's disease within a year."

LTC Comment: So, 13% get false positives or false negatives?

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6/23/2014, “Feeding the Brain's Curiosity Helps Delay Alzheimer's,” by Nicole Ostrow, Bloomberg

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

LTC Comment: Significant findings in this study.

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

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

LTC Comment: This test could be a helpful resource.

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

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

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

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

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

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

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

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

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

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3/26/2014, “How A New Alzheimer's Test Could Kill Long-Term Care Insurance -- Or Make It Cheaper,” by Howard Gleckman, Forbes

Quote: "A widely available test to predict Alzheimer's would make any form of voluntary long-term care insurance impossible. 'It would be a huge game changer,' one insurance actuary told me."

LTC Comment: Nonsense. As long as the law is changed to allow--better yet, require--insurance carriers to have access to the same test results, a reliable test to predict Alzheimer's would increase the market for private LTC insurance and lower the premiums. Such a test would impel financially responsible people to purchase insurance before they take the test. Otherwise they would lose some or all insurability if test results showed a proclivity toward the disease. If people therefore purchased LTC insurance earlier in life and if the test excluded more bad risks (anti-selection), the coverage itself could cost less. On the other hand, a test for Alzheimer's could devastate publicly financed LTC programs by preventing people who could have and should have insured privately from obtaining coverage in the market.

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3/9/2014, “Researchers find way to predict Alzheimer's disease: report,” by Joel Landau, New York Daily News

Quote: “A group of scientists claims it has developed a revolutionary test that can predict if someone will develop Alzheimer's disease. The researchers told CNN they were able to find the connection through testing lipids levels in the blood. The testing found the blood test predicted who would get the degenerative brain disease that kills about half a million people a year with more than 90% accuracy — even if the patient has not exhibited any symptoms, the doctors said.”

LTC Comment: Underwriting breakthrough?

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12/31/2013, “High Vitamin-E Dose Slows Decline in Alzheimer's Patients, Study Finds,” by Jennifer Corbett Dooren, Wall Street Journal

Quote: "However, the research to be published in this week's Journal of the American Medical Association, found no impact on memory and doctors said there was no evidence that vitamin E prevents the debilitating disease."

LTC Comment: If it doesn’t help memory this news is less than epochal.

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12/30/2013, “Cholesterol and Alzheimer's disease link strengthens in study,” by Melissa Healy, Los Angeles Times

Quote: "Well before signs of dementia trigger a diagnosis of Alzheimer's disease, a person's cholesterol levels may be a bellwether of amyloid plaque build-up in the brain, a new study finds. Long considered a reliable predictor of heart attacks and strokes, worrisome cholesterol levels may now raise concerns about dementia risk as well, prompting more aggressive use of drugs, including statins, that alter cholesterol levels."

LTC Comment: Eat well to think well.

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Updated, Monday, September 29, 2014, 10:35 AM (Pacific)

Seattle—

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LTC E-ALERT #14-027: LTC NEWS AND COMMENT

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Financing care for older adults is full of challenges
California governor vetoes asset recovery bill
Senators: Widen Medicaid Program for Frail Seniors
Big retirement fear: Outliving your savings
Fighting to Honor a Father’s Last Wish: To Die at Home
Why Elder Care In America Isn't Working
One family's lessons from learning to cope with Alzheimer’s
Penny Wise: Americans Willing to Swap Cup of Morning Joe for Long Term Care Coverage, According to Genworth
Survey Collects Public Opinion On How To Improve Medicare
The insurance policies you don’t need
New Long Term Care Insurance Book by National LTC Network Member
Medicare Advantage: Stars System's Disproportionate Impact On MA Plans Focusing On Low-Income Populations
Congress approves tighter scrutiny of hospices
Growing senior population spurs Valley growth of luxury developments

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Updated, Monday, September 22, 2014, 11:40 AM (Pacific)

Seattle—

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LTC E-ALERT #14-026: LTC NEWS AND COMMENT

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Genworth: Why It Could Surge 80%, Barron’s
Cost of care for adult relatives often falls on younger generations, Pittsburgh Post-Gazette
Growing senior population spurs Valley growth of luxury developments, Fresno Bee
U.S. says Medicare Advantage enrollment at all-time high, Reuters
One-fifth of caregivers take 6 months or longer to choose a senior housing option for a loved one, poll finds, McKnight's Long Term Care News
7 things Harvard housing researchers can tell you about older adults, LifeHealthPro
Individual Retirement Accounts: Preliminary Information on IRA Balances Accumulated as of 2011, Government Accountability Office
MedPAC chairman: Three-day stay requirement is 'archaic', McKnight's LTC News
Working Longer: Not the Best Retirement-Savings Plan, Fox Business
VA Health Care: Actions Needed to Address Higher-Than-Expected Demand for the Family Caregiver Program, Government Accountability Office
Experts: Insurers should post death-care quality stats, LifeHealthPRO
Phyllis Shelton and Clients' CNN Headline News Interview Airs September 16th and 28th, LTC Consultants
Alzheimer's Prevention for 30-Somethings With No Symptoms, Wall Street Journal
How states have gamed Medicaid for hundreds of millions of dollars, Washington Post
‘Voluntary benefits’ filling gaps in insurance coverage, Boston Globe
5 Things Genworth Financial Inc.'s Management Wants You to Know, The Motley Fool
Top retirement financial concern: Health care bills, USA TODAY

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Updated, Friday, September 19, 2014, 2:06 PM (Pacific)

Seattle—

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LTC BULLET: OUT OF THE LTC FRYING PAN INTO THE FIRE

LTC Comment: New LTC financing policy in the UK is potentially dangerous; hard lessons learned in the U.S. could help, after the ***news.***

*** SPOTLIGHT ON: Articles, Speeches and Reports. Do you faithfully read our “LTC Bullets” and find yourself getting interested in our message, but want to learn more? The Articles, Speeches and Reports section of our website is a great next step. Here you’ll find articles authored by Steve Moses that have appeared in renowned publications such as McKnight's Long-Term Care News, Broker World, and The Wall Street Journal; transcripts as well as audio and video recordings from speeches, including Congressional testimony, delivered by Steve Moses; and dozens of reports authored by Steve Moses dating from 2014 back to 1985, all providing the analysis and evidence supporting positions held by your Center for Long-Term Care Reform. Whether you are new to the Center or are a seasoned LTC savant looking to refine your knowledge, you’ll find an abundance of valuable information in our Articles, Speeches and Reports. If you like what you find there, our Members-Only Zone may interest you as well. If you are considering membership, or would like to join and help support our important work, please contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET: OUT OF THE LTC FRYING PAN INTO THE FIRE

LTC Comment: Vincent L. Bodnar, ASA, MAAA is an actuary and Director at Towers Watson, a leading global professional services company. Vince also co-chairs the Society of Actuaries long-term care think tank this year. We interviewed him on September 15 to learn more about the creative work he’s doing internationally, especially in the United Kingdom (UK). What follows is our interpretation of what he told us. It does not reflect his or his company’s views.

Coping with the challenge to provide and pay for long-term care is an international problem. Every country’s LTC policy is different, but the same as the United States’ in certain respects. All seek to find a workable balance between social and private solutions. The UK is an interesting case in point. The British love their fully socialized National Health Service (NHS), which covers acute care. But they’ve puzzled for many years over how to handle long-term care.

Heretofore, the UK had a highly privatized, heavily means-tested LTC services and financing system. Basically, anyone with a net worth (including home equity) exceeding 22,500 British pounds ($37,000) had to pay their own LTC expenses before getting financial help from the government. According to media reports, this policy forced many people to sell their homes.

The Brits have been trying to fix LTC financing for a good while, at least since I met with a delegation from the Prime Minister’s office during our 2008 National Long-Term Care Consciousness Tour. Last year, the Dilnot Commission on Funding Care and Support proposed a 72,000 British pound cap on private LTC expenditures. That’s about $118,000 in our currency.

What an interesting idea. Cap families’ liability for LTC costs instead of forcing them to spend down nearly everything. Some have recommended the same approach for us. Wouldn’t that make it easier than now to wrap a private long-term care insurance product around what government is willing and able to provide?

Well, maybe, but take a closer look at what they’re doing in the UK. First, that 72,000 pound cap applies only to care costs, not room and board. The Brits are on their own to fund “living” costs over and above the care cap. Neither the government nor the British media have made that clear. It’s a big deal. Average living expenses are 230 pounds per week ($377) or 12,000 pounds ($19,680) per year.

Second, not all LTC costs count toward the 72,000 pound cap. As in the U.S., nursing facilities in the UK charge different rates to private payers and to government-financed dependents. As a rule, the more private payers a facility has, the nicer the place, as is also true in the United States. Under the new British system, however, only the government rate, exclusive of room and board “living costs,” which averages 300 pounds per week ($480) is counted toward the cap. To buy up to a nicer facility, as most people want to do, costs on average 200 pounds ($328) per week. That extra is not counted toward the cap.

So, getting credit for only 300 pounds per week, a person would need to pay privately for institutional care (plus living costs plus any extra for better access) 240 weeks (72,000 pounds divided by 300 pounds per week) or 4.6 years before exceeding the new 72,000 pound cap. Not all that much help, but it does seem like an ideal target for a private LTC insurance product to wrap around, right?

Well, maybe, but there’s still more to consider. Historically, the British have relied heavily on company pensions for retirement security. They required every pensioner by law to purchase a single-premium annuity (SPIA) to guarantee retirement income. But as in our country, most retired people do not have enough income to fund institutional long-term care. Where would retired Brits get the money to pay for their first nearly five years of care before they reach the 72,000 pound cap on care costs?

The answer they found was to repeal the requirement to purchase a SPIA so that pensioners would have a large lump sum of money available to pay for care when they need it. Not such a great idea, maybe. Who’s to say that lump sum won’t be spent on other things or given away? With the popularity of Britain’s National Health Service and the Brits love for it, the UK is more vulnerable than ever to a problem like the one we have with Medicaid estate planning, artificial self-impoverishment to qualify for public benefits.

There is still more to this story. Will the British insurance industry step up with creative new products to wrap around the new 72,000 pound cap? That’s very doubtful. Most insurance carriers that tried to offer private LTC coverage in the past fared poorly with distribution and dropped the product. Once burned, twice cautious.

But wouldn’t it make sense now to introduce new products specially designed to cover the initial LTC expenses before the cap kicks in? Undoubtedly, but the British insurance industry has been clobbered twice recently by new government policies. Eliminating the mandate to purchase a SPIA at retirement devastated their annuity market. Adding insult to injury, the government eliminated commissions for insurance agents forcing companies to provide salaries or customers to donate fees. Burned again!

Still the UK government is struggling with the LTC financing challenge and encouraging private industry to come up with new products and solutions. The Brits may be making some changes that could make the problem worse instead of better. They might want to take an even closer look at U.S. policies that discourage artificial impoverishment to qualify for public benefits and encourage creative LTC insurance solutions such as combo or hybrid policies.

Otherwise the UK may be addressing one problem only to create more and worse ones.

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Updated, Monday, September 15, 2014, 11:09 AM (Pacific)

Seattle—

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LTC E-ALERT #14-025: UK LTCI AND LTC NEWS AND COMMENT

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· United Kingdom needs private LTC products, LifeHealthPRO

· Froyo funding for long-term care, McKnight's LTC News

· Visualizing Health Policy: The Role of Medicare Advantage, KFF.org

· Long-Term Care Risk Management: Re-pricing In-force Policies webcast, Society of Actuaries

· Tips for Buying Long-Term Care Insurance, Fox Business

· How Senior Employees Are A Crucial Force In Business, Forbes

· Study: Rare Blood Type May Slightly Raise Dementia Risk But lifestyle factors play a bigger role, experts say, HealthDay

· Do retirees need long-term care insurance?, USA TODAY

· More than 50% of dementia patients in nursing homes are given potentially pointless and dangerous drugs when near death, study finds, McKnight's LTC News

· The Economic Recovery Hasn't Been Kind to Boomers, Business Week

· AT&T Will Keep Your Grandma Out of the Nursing Home, PC Magazine

· Financial Strategies for the New Single Majority, Bloomberg

· Physician Participation in Medi-Cal: Ready for the Enrollment Boom, University of California, San Francisco

· Grandma's Meat Loaf? Hardly. Her Retirement Home Now Has a 3-Star Chef, New York Times

· Retirement: the fine print on CCRCs, Tulsa World

· Continuing Sedation a Fig Leaf for Euthanasia, Study Finds, Provider

· Progress in Medicare Advantage: Key Lessons for Medicare Reform, Heritage Foundation

· Has private long-term care insurance’s time come around?, Actuarial Post

· Expenditures on nursing home, CCRC care projected to rise 69% over next decade, McKnight's LTC News

· Health Care Spending Forecast To Increase Modestly In Next Decade, Kaiser Health News

· Financial Elder Abuse Near You, Huff Post

· Aging population faces housing shortage, MarketWatch

· Book brings the inside view of health care, Times Herald-Record

· Long-Term Care Update: 6 Trends to Watch, Financial Planning

· Are Long-Term Care Insurance Hybrids All They're Cracked Up to Be?,” Morningstar

· Long-term care continues to lead in deal volume and value: PwC report, McKnight's LTC News

· Does Medicare Advantage Spell Doom For Traditional Fee-For-Service?, InsuranceNewsNet

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Updated, Friday, September 12, 2014, 3:53 PM (Pacific)

Seattle—

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LTC BULLET: HOW DOES YOUR STATE RANK ON THE INDEX OF LONG-TERM CARE VULNERABILITY

LTC Comment: The Center for Long-Term Care Reform has developed a new three-hour workshop. Details after the ***news.***

*** TO SCHEDULE THE WORKSHOP described in today’s LTC Bullet, contact Steve Moses at smoses@centerltc.com or 425-891-3640. ***

*** ATLAS SHRUGGED: Many of you know I'm a fan of Ayn Rand, her novel Atlas Shrugged, and her philosophy "Objectivism." Today is a big day for all three. The third movie in a trilogy based on Atlas Shrugged premiers in theatres across the country today, Friday, September 12, 2014. It's subtitled "Who Is John Galt?" Reason magazine has done a fine job of reporting on the producer John Aglialoro's decades-long struggle to bring this story to the silver screen. Find their coverage, along with other related links, below.

* The movie's trailer

* A list of 245 theatres showing the film

* An interview with producer Aglialoro

* Reason's coverage of the story

Whether you've read the novel or not, I predict you'll find its ideas, as conveyed in the film, interesting and provocative, whether you agree with them or not. The two earlier films in the trilogy are available on DVD. Enjoy the movie,

Steve Moses

PS If you're wondering what in the world this has to do with long-term care . . . check your premises! ***

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LTC BULLET: HOW DOES YOUR STATE RANK ON THE INDEX OF LONG-TERM CARE VULNERABILITY

LTC Comment: How likely is America’s crazy, Rube-Goldberg-inspired LTC services and financing system to survive the aging of the baby boom? How does your state compare with others in the risk/reward matrix? Now you can find out.

Center president Steve Moses was proud to present our new three-hour workshop on LTC vulnerability to CEO Paul Forte and his exceptional team at LTC Partners this week. LTC Partners administers the Federal Long-Term Care Insurance Program. The company is headquartered in Portsmouth, New Hampshire. So Steve compared the LTC challenges facing the USA as a whole with the local situation in the “Live Free or Die” state.

Our newly developed workshop is available now for any organization, agency, or company seeking to understand the complex challenges faced by long-term care services and financing systems in the United States today. By comparing the big national picture with the situation in a specific state, this unique approach to understanding long-term care policy avoids being too abstract or too lost in details.

Following are a brief “Abstract” of the new workshop and the “Summary” and “Conclusion” from a detailed research paper providing documentation for all the data used in the program. Find the research paper itself, titled “Apply the LTC Vulnerability Index to Your State: The New Hampshire Example” here.

Read additional examples of our application of the Index of Long-Term Care Vulnerability to the states of Virginia, Georgia and New Jersey, here, here and here, respectively.

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Excerpts from “Apply the LTC Vulnerability Index to Your State: The New Hampshire Example”

Abstract: Caring for America’s burgeoning older population strains our country’s public health care programs. Private long-term care insurance can and should relieve more of the financial pressure on Medicaid, Medicare and private savings. But private LTCI languishes under current market conditions. How close is long-term care to a breaking point? How likely is it that today’s LTC service delivery and financing systems can endure and for how long? What will replace them if they falter? Will LTCI’s prospects wax or wane? Steve Moses and workshop attendees will interactively analyze the key social, demographic, and economic factors necessary to answer those questions. Together, we’ll review, weigh and score each factor toward the end of better understanding the long-term care crisis, its perils, and potential.

Summary

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

Medicaid is the dominant payor for long-term care consuming nearly 16% of state budgets (much more including federal matching funds); 33% in New Hampshire. Long-term care consumes a disproportionate share of Medicaid expenditures: the elderly are only one-fourth of Medicaid recipients, but they use up two-thirds of Medicaid funds, mostly for long-term care. State efforts to rebalance from institutional to home care have increased expenditures and made Medicaid more attractive. 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. 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 $18 trillion. Infinite horizon unfunded liabilities of Social Security and Medicare are $68 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 huge 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 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. Economists worry that the latest bubble, inflated by extremely loose monetary and fiscal (spending) policy, will bring on a much worse downturn than the Great Recession.

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 easy 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 49 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. Welfare (Medicaid) pays for nearly half of all births in the U.S., though only 30% in New Hampshire. Food stamps sustain 15% of Americans; 9% of 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 has been found to crowd out work. SSDI supports 3% of Americans, nearly 4% in New Hampshire. State and local pensions, on which many depend, are unfunded $3 trillion nationally, $3 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 payor for 63% of nursing home residents; 64% in New Hampshire and upwards of 80% 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.”^{^[1]}

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.

The future prospects for private long-term care insurance are excellent. 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 skyrocket; 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. LTC insurance will become a mainstream financial planning product, losing its reputation as the “poor relative” of insurance. Demand will increase. Distribution will improve. Innovative marketing ideas, such as Paul Forte’s American Long-Term Care Insurance Program will succeed. We’ll see a resurgence of traditional LTC insurance products, but new products, especially equity-based hybrid plans will proliferate and grow exponentially. Good times ahead!

[1] Wikipedia definition of “moral hazard,” http://en.wikipedia.org/wiki/Moral_hazard.

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Updated, Friday, September 5, 2014, 10:19 AM (Pacific)

Seattle—

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LTC BULLET: CMS HEALTH EXPENDITURE DATA MASK LTC COST GROWTH

LTC Comment: CMS actuaries’ estimates of health expenditures for 2013-2023 downplay the big story, snowballing LTC costs, after the ***news.***

*** LTC BULLETS archives: Did you know you can quickly access all 1055 LTC Bullets we’ve published since 1998? Find the most recent ones here. Find all of them listed chronologically here. Find them listed by topic here. Find Bullets on specific subjects by doing a word search in the chronological or subject listings. Just hit Control-F, enter the word for which you want to search, and right-click. For example, I just searched for CLASS and got 27 hits. They weren’t all about the aborted federal LTC plan, but most were. Use the Bullet archives with our compliments. Join the Center to get the LTC Bullets delivered to your email in-basket every week. Center members also receive LTC E-Alerts, our weekly compendia of the news. The Alerts are also searchable in The Zone, our password-protected members-only website with many more features including the “Almanac of Long-Term Care.” Join the Center for $150 per year and get all these benefits and much more. Join as a “Premium Member” for $225 (usually $250) and you can receive our daily “LTC Clippings” to stay in front of all the breaking news, reports and latest data in real time. Contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET: CMS HEALTH EXPENDITURE DATA MASK LTC COST GROWTH

LTC Comment: Once a year actuaries at the Centers for Medicare and Medicaid Services (CMS) estimate health expenditures for the coming decade. Each year they publish an article summarizing their findings in the journal Health Affairs. The latest version of this annual tradition was published this week: “National Health Expenditure Projections, 2013-23: Faster Growth Expected With Expanded Coverage And Improving Economy.” It’s available here but the journal is gated so you may only be able to access the “abstract” without a subscription.

As usual, media sources favoring the politicians currently in charge of government health policy interpreted the new data generously. Kaiser Health News (KHN), for example, said “National health spending will increase modestly over the next decade, propelled in part by the gradual rebound of the U.S. economy and the growing ranks of Americans who became insured under the health law, government actuaries projected Wednesday.” Yeah, right. Thank goodness our economy is booming and ObamaCare has been a grand success.

What if the ballooning federal debt, spending and monetary bubble bursts plummeting the economy into deep recession? What if the Affordable Care Act delivers less than ideological wishful thinkers hope? We get nothing from CMS or KHN on those very likely scenarios. But some of what the CMS actuaries do report is worrisome enough. For example:

Quote: “Because health spending is projected to grow 1.1 percentage points faster than the average economic growth during 2013–23, the health share of the gross domestic product is expected to rise from 17.2 percent in 2012 to 19.3 percent in 2023.” (p. 1)

LTC Comment: 19.3%! and we’re still only at the beginning of the Age Wave. The first boomers, born in 1946, will be only 77 years old in 2023. They won’t reach the age of greatest health and long-term care expenses (85+) for another eight years.

Quote: “By 2023 federal, state, and local government financing is projected to account for 48 percent of national health expenditures, up from 44 percent in 2012, and to reach a total of $2.5 trillion . . .. Increases in the federal government’s share are mostly the result of expanded Medicaid eligibility, Marketplace [sic] premium and cost-sharing subsidies, and a growing gap between dedicated Medicare financing and program outlays.” (p. 9) [Emphasis added]

LTC Comment: With government sources picking up more health care costs and private sources responsible for less, the ominous long-term trends continue—growing entitlement mentality, moral hazard, and private sector crowd out. These trends are even more pronounced in long-term care than in health expenditures generally, but this article almost completely ignores long-term care. Its only explicit mention of LTC:

Medicaid enrollment growth is expected to decelerate and stabilize at roughly 1 percent per year after 2016. Medicaid spending growth is expected to slow less rapidly, to an average of about 6.6 percent in 2017–23. This is a result of the use of expensive long-term care services by elderly and disabled Medicaid beneficiaries. (p. 7) [Emphasis added]

The CMS actuaries focus instead on hospital services; physician and clinical services; and prescription drugs, giving each of these categories a dedicated section in the article. Between 2013 and 2023, they are expected to increase by 78%, 75% and 77%, respectively. Cumulatively the increase would be 77%.

But the three categories of expenditures related to long-term care—other health, residential, and personal care; home health care; and nursing care facilities and continuing care retirement communities—are expected to increase by 83%, 99%, and 74%, respectively. Cumulatively their increase would be 83%, 6% more than the acute care services targeted in the article. Yet the LTC categories get no special attention. You have to search the “exhibits” to find their numbers listed in detailed tables.

Bottom line, long-term care expenses are already growing faster than expenditures for acute care services. LTC cost growth will accelerate rapidly after 2023. Spending for acute care services related to advanced aging will also skyrocket soon after the narrow 2013-2023 window. CMS and its allies in the media are still fighting the last war. By focusing only on the next decade and by largely ignoring the impact of long-term care, they disguise the biggest threat to health care costs in the future.

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Updated, Friday, August 29, 2014, 11:58 AM (Pacific)

Seattle—

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LTC BULLET: LTC E-ALERT AND LTC CLIPPINGS SAMPLES

LTC Comment: If you’re not a member of the Center for Long-Term Care Reform, these are samples of some of what you’re missing, after the ***news***

*** PODCAST of Steve Moses and Center member Maryglenn Boals interviewed August 22, 2014 by Bob Roth of Cypress Homecare Solutions for his radio show: http://media.kfnn.com/content/healthfutures/health-futures_1_220814.mp3. Check out many more of our “media” links, including Steve’s Congressional testimony, here. ***

*** FREE VIDEO: Jesse Slome of AALTCI announces availability of presentation videos from the 2014 LTCI Sales Summit:

“You can now watch one of the 40 sessions recorded at the 2014 LTC Sales Summit. Free. It will be available through Sept. 30th. The 30 minute presentation features [Center for LTC Reform Regional Representative] Romeo Raabe sharing how we deals with uninsurable prospects. Some great selling ideas and tips. You'll see the speaker + his presentation. If you like the presentation, you can watch all the Summit presentations (40 of them) for just $64.50 (TOTAL) when you use the special 50% off code. Enter aaltci50 when you check out. You'll have 24/7 access for a full year. You can share this information with others. Just click the link below to access the sign-in page now.
http://www.fleetwoodonsite.com/aaltci/promo/” ***

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LTC BULLET: LTC E-ALERT AND LTC CLIPPINGS SAMPLES

LTC Comment: If you’re a Center for Long-Term Care Reform member, you see LTC E-Alerts like the one below that we send you nearly every Monday. We’re publishing today’s LTC E-Alert as a LTC Bullet with wide distribution to our entire mailing list to make a point.

Please read through the following “clippings.” Note that they include a title, source, link to the original, and Steve Moses’s trenchant “LTC Comments” for each of the articles, reports or commentaries cited.

We gather and distribute this information so you don’t have to spend precious professional hours searching the internet for data and analysis you must know to be at the top of your professional game. It’s a smart division of labor that saves you time and money.

By far the best way to receive this information is to subscribe to our daily “LTC Clippings” service. We send an average of three clippings per day so you can know breaking news affecting your business before your prospects, clients or competition.

Get LTC Clippings for as little as $10 per month (non-members) or join the Center for LTC Reform as a “Premium Member” for $225 per year or $19/month (usually $250 and $21 respectively) and receive a clippings subscription at no extra cost with full member benefits explained here. Find our temporary special offer for clippings subscriptions and join/subscribe here.

Regular Center members ($150 per year) receive a compendium of the previous week’s LTC Clippings most Mondays. We call those LTC E-Alerts and we archive them in The Zone, our password-protected members-only website, for future reference. Members can search the LTC E-Alerts or our weekly LTC Bullets or our Almanac of Long-Term Care for vital information and statistics published any time in the past 15 or more years.

Of course, Center president Steve Moses eagerly encourages queries from Center members and responds (usually) with 24-hour turnaround. Quick access to his vast LTC policy experience and expertise is another major benefit of membership in the Center for Long-Term Care Reform.

To join the Center, subscribe to LTC Clippings, or ask any questions, please contact Damon at 206-283-7036 or damon@centerltc.com. You can reach Steve Moses at smoses@centerltc.com or 425-891-3640.

Following are LTC Clippings covering the previous two weeks:

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8/28/2014, “Thanks To The Courts, Medicare's Long-Term Care Program Has Become A Profound Fiscal Liability [link],” Forbes

Quote: "Courtesy of a recent court ruling, which clarified program eligibility, Medicare has an untold, profound liability, which actuaries have yet to address in their calculations. The ruling focused on the seemingly innocuous notion of ability to improve, which it turns out has played a pivotal in determining home health coverage. The court struck down consideration of improvement potential as criterion for coverage, even informally. Medicare needs to prepare for the dramatic increase in service demand the clarification will bring and the roll-out, in essence, of its first long term care benefit."

LTC Comment: As we pointed out when this court ruling was first announced, it has the effect of moving Medicare into providing home-based long-term care in a major way. Not only will Medicare expenditures rise, but Medicare will join Medicaid as another major government program crowding out private LTC planning and financing.

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8/28/2014, “Boomer Wealth Dented by Mortgages Poses U.S. Risk,” by Victoria Stilwell, Bloomberg

Quote: “A growing number of homeowners are reaching retirement age still owing money on their houses. The share of Americans 65 and older with mortgage debt rose to 30 percent in 2011 from 22 percent in 2001, according to a May analysis by the Consumer Financial Protection Bureau based on the latest available figures. Loan balances also increased, with the median amount owed climbing to $79,000 from $43,400 after adjusting for inflation, the data showed. . . .

“Greg Frost, founder of Frost Mortgage Banking Group in Albuquerque, New Mexico, said baby boomers will probably be the first generation to take advantage of reverse mortgages on a large scale.”

LTC Comment: Reverse mortgages could be the salvation of LTC financing when Medicaid implodes . . . if there is any home equity left to borrow.

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8/27/2014, “The Prospect of 'Empowered Living' Could Motivate Millions to Plan for Long Term Care, ACSIA Partners Says [link],” InsuranceNewsNet

Quote: "Today ACSIA Partners introduces the concept of 'empowered living' an idea they hope will catch on to help solve a big national problem: lack of planning for long term care."

LTC Comment: Certainly has a nicer ring to it than long-term care, much less nursing home care or, ugh, institutionalization.

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8/27/2014, “Your Retirement Will Probably Start Earlier Than You Want,” by Brian O'Connell, The Street

Quote: “According to the Employee Benefit Research Institute, 63% of employees who leave the workforce early do so because of a health problem or disability; 23% depart over a downsizing issue or an employer shuttering its doors or business closure; and 18% leave because they have to care for a family member. . . .

“Look into long-term care insurance. You can save money by paying for long-term care insurance now instead of paying more for it later. The cost of services such as in-home health care rise annually, but if you buy now, you can lock in a lower price for long-term care and save money for down the road.”

LTC Comment: Good reason, if there’s time, to help that family member get coverage so you don’t have to quit your job early to take care of him/her.

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8/27/2014, “Looking Beyond Medicare's Nursing Home Ratings: What To Know Before Picking a Facility [link],” by Howard Gleckman, Forbes

Quote: “Use Nursing Home Compare, by all means. But don’t stop there. Visit facilities and look beyond the wood-paneled lobby. Talk to residents and their families. Talk to nurses and, especially, to aides, who provide nearly all of hands-on-care. Check the local ombudsman office for complaints. To be fair, the Medicare.gov website makes many of these same suggestions, but they are buried in a 56-page guidebook, so few will ever read them.”

LTC Comment: Sound advice.

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8/27/2014, “Hello, May I Help You Plan Your Final Months?,” by Elana Gordon, National Public Radio

Quote: “Schleicher is one of 50 or so counselors working for a company founded in 2008 called Vital Decisions. The firm represents roughly a dozen insurance companies nationally that want to, when appropriate, start discussions with beneficiaries about end-of-life care.”

LTC Comment: Is this a private “death panel” or good for everyone, as in the terminally ill get counseling, the insurance company may save money, and health insurance premiums could possibly decline?

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8/26/2014, “Minnesota Home-Care Workers Say Yes to Union SEIU Adds 27,000 Home-Health Aides to 600,000 Others in About 20 States [link],” by Kris Maher, Wall Street Journal

Quote: "The Service Employees International Union scored a victory Tuesday as home health-care workers in Minnesota voted to be represented by the labor group, even as it faces a legal challenge from opponents who say the 27,000 workers involved shouldn't be forced to join a union. . . .

"In June, the U.S. Supreme Court ruled 5-4 that home-care workers in Illinois aren't full-fledged public employees and can't be forced to pay union dues. The court found that requiring mandatory union fees violated the First Amendment rights of workers who didn't want to join."

LTC Comment: If not reversed judicially, costs will likely increase putting pressure on Medicaid, Medicare, and home care companies.

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8/25/2014, “Is it any wonder this field has an identity crisis?,” by John O'Connor, McKnight's LTC News

Quote: “Even back when I began reporting for McKnight's in 1990, there was not a universally agreed-upon description for this sector. At that time, many providers of skilled care services simply identified themselves as ‘nursing homes.’ And even now, the term continues to have currency among the general public. But locating a facility that uses ‘nursing home’ in its title these days is a bit like trying to find Waldo.”

LTC Comment: Interesting, but unmentioned in this article, is the fact that LTC name changes have been driven by funding sources. “Assisted living” emerged as a private pay alternative to nursing homes because of discontent with the perceived poor quality of Medicaid-financed nursing homes. “Post-acute care” derived from Medicare’s efforts to reduce costs by substituting skilled nursing for hospitalization. And so on.

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8/25/2014, “Dementia: The Growing Retirement Risk,” by Margarida Correia, Financial Planning

Quote: "No one wants to talk about dementia, but it's a conversation many people-and their advisors-need to have if they want to be fully prepared for the risks of retirement. Individuals who haven't thought through what might await them not only face the threat of throwing their families into chaos but also risk putting their assets on the line by making themselves vulnerable to con artists and other financial predators."

LTC Comment: Curiously, there is nothing in this article about planning to pay for long-term care.

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8/24/2014, “Medicare Star Ratings Allow Nursing Homes to Game the System [link],” by Katie Thomas, New York Times

Quote: "The Medicare ratings, which have become the gold standard across the industry, are based in large part on self-reported data by the nursing homes that the government does not verify. Only one of the three criteria used to determine the star ratings - the results of annual health inspections - relies on assessments from independent reviewers. The other measures - staff levels and quality statistics - are reported by the nursing homes and accepted by Medicare, with limited exceptions, at face value."

LTC Comment: This article, based on one nursing facility and speculation, is reminiscent of the grey lady's hit pieces on LTC insurance a few years ago. The real problem derives from heavy dependency on low reimbursement from Medicaid.

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8/22/2014, “Help Wanted (a Lot): Home-Health Aides Fast-Growing Industry: Experiences High Turnover Amid Low Pay and Demanding Duties [link],” by Sarah Portlock, Wall Street Journal

Quote: "No major segment of the workforce is expected to expand faster in coming years than that of the paid caregivers who assist aging Americans at home. The jobs typically don't require a high-school diploma, there is little required training and the average workweek is 34 hours. . . .

"But the main problem isn't attracting new home-health aides, people in the industry say. It is keeping caregivers in a profession that can be emotionally and physically difficult, and often offers only part-time work with limited pay and few benefits. . . .

"The bulk of funding for the home health-services industry-roughly 73%, or $44.3 billion-comes from government programs, primarily Medicaid and Medicare, according to the Paraprofessional Healthcare Institute, a home-care advocacy organization."

LTC Comment: Attracting, properly training, adequately compensating and somehow retaining enough caregivers as boomer aging spikes is a huge problem. It won't be solved without getting more private financing into the LTC services business, but with nearly 3/4 of all home health funds coming from government programs, private financing has been and continues to be mostly crowded out.

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8/22/2014, “Regulators consider fast LTCI rate review process,” by Allison Bell, LifeHealthPRO

Quote: "Drafters say a state insurance commissioner could let an issuer of LTCI policies written in the past, under old rules and old, mistaken assumptions, have an expedited rate review. The issuer could use the fast-track process if it agreed to share the cost of experience deviations from the expected with the policyholder; send the policyholder a clear, detailed notification letter; refrain from filing for additional increases for at least five years; and refrain from filing for any additional increases unless experience is at least 15 percent worse than now expected."

LTC Comment: First, let's apply comparably strict rules to Medicaid and Medicare which promise benefits without any actuarial likelihood they'll be able to pay in the future. Government criticizing private insurers is the pot calling the kettle black.

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8/22/2014, “Half of all New Mexicans now on Medicaid and Medicare,” by Dennis Domrzalski, Albuquerque Business First

Quote: "Since October, 155,000 New Mexico residents have joined the state's Medicaid rolls, pushing total enrollment to more than 630,000, or nearly a third of the state's population. On top of that, 410,000 New Mexicans are enrolled in Medicare, the federal health care program for the elderly. Together, total enrollment in those two federal programs are more than 1 million, or half of the state's 2.1 million population."

LTC Comment: Half the population dependent on the other half for health care. How long can that go on?

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8/22/2014, “Mid-life obesity linked to risk of dementia,” by Elizabeth Leis Newman, McKnight's LTC News

Quote: "University of Oxford researchers looked at hospital admission records for people with dementia and looked at when a diagnosis of obesity was recorded. They found that obese people between the ages of 30 to 39 had a 3.5 times higher chance of developing dementia. Those who received their diagnosis between their 40s and 60s had a higher risk of developing vascular dementia."

LTC Comment: Is it causation or only correlation? Does public financing of most long-term care indirectly subsidize obesity? Are hard-working, hard-exercising, health conscious people punished by having to pay (through taxes) the medical costs of people who do the opposite? So many tough questions.

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8/21/2014, “World getting 'super-aged' at scary speed,” by Alanna Petroff, Money

Quote: "By 2020, 13 countries will be 'super-aged' -- with more than 20% of the population over 65 -- according to a report by Moody's Investor Service. That number will rise to 34 nations by 2030. Only three qualify now: Germany, Italy and Japan. . . . Canada, Spain and the U.K. will be 'super-aged' by 2025, and the U.S. will follow by 2030."

LTC Comment: When it comes to dealing with the challenge of super-aging, we at least have the advantage of learning from most of the developed world before confronting the problem ourselves.

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8/21/2014, “Divorce Due To Medical Bills? Sometimes It Makes Sense,” by Eve Kaplan, Forbes

Quote: "Divorce among older couples is on the rise in our country due to spiraling medical and long-term care costs. Soaring medical/nursing care expenses are aggravated by longevity and uninsured risk (no long-term care insurance in place). Although unappetizing, divorce - when compared with alternatives - may inflict the least amount of damage. When Medicaid finally steps in to cover an ill spouse, he or she will be guaranteed care to the end of life."

LTC Comment: Divorce and many, many other Medicaid planning methods have the effect of negating the financial liability of LTC after the insurable event occurs and thus discourage responsible LTC planning by the next generation. Unintended consequences of well-intentioned public policy create many such perverse incentives.

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8/20/2014, “Long-term care insurance makes a great birthday gift,” by Robert Klein, MarketWatch

Quote: "Looking for something different to give to your mom or dad for their next birthday? How about long-term care insurance? Don't laugh. If they don't have it already, this will undoubtedly be the most meaningful and memorable gift you give to your parents and you - even if your mom or dad never uses it."

LTC Comment: Good idea. How about Mother's Day, Father's Day, Silver or even Golden wedding anniversaries, Christmas or Hanukkah too?

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8/20/2014, “Genesis, Skilled Healthcare merger to create huge long-term care provider with more than 500 facilities [link],” by Tim Mullaney, McKnight's LTC News

Quote: “The all-stock deal is the latest instance of consolidation in the sector. Less than a month ago, Brookdale Senior Living and Emeritus Corp. closed a $2.8 billion merger, and Kindred Healthcare has been aggressively pursuing an acquisition of home healthcare company Gentiva. Providers have forged deals largely in response to the Affordable Care Act.”

LTC Comment: Big changes are afoot in the LTC provider industry: merging home and institutional care in giant companies with economies of scale but maybe not the same personal touch.

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8/19/2014, “America Has a Retirement Spending Problem,” by Benjamin H. Harris, Brookings

Quote: "[M]arkets for insurance-like products can be a critical tool for achieving retirement security. Without these markets, households either under-save and hence risk retirement security or over-save to protect against various retirement risks-not the least of which is living longer than expected-and consequently enjoy less consumption and happiness over the course of a lifetime. The problem for many retirees is that they simply don't have access to or knowledge of insurance products that can help to provide security. . . . Long-term care risk is a very real threat to older Americans, but few households carry private insurance. In recent years, only one-in-ten elderly people carried long-term care insurance, and the annual growth rate of new premiums has been stagnant for at least a decade."

LTC Comment: This recognition of LTCI on the left-leaning Brookings Institution's website is significant.

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8/19/2014, “More evidence adult daycare eases stress on dementia caregivers,” by Shereen Lehman, Reuters

Quote: "The stress of caring for a family member with dementia may take a toll on health over time, but a new study suggests that even one day off can shift caregivers' stress levels back toward normal."

LTC Comment: "What a difference a day makes; just 24 little hours."

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8/19/2014, “Your Next Sales Idea from LTCA: ‘I Know What You Did Last Summer’ [link],” by Stephen D. Forman, Long Term Care Associates

Quote: "This year [Steve Forman of Long Term Care Associates] was given the opportunity to . . . author the 2nd Edition of the Advisor's Guide to Long-Term Care (1st Edition authored by Jeff Sadler, CLTC). 67% of Land This Plane respondents agree that the ‘long term care problem should be a mainstream financial planning requirement’ and that's the approach we take in the book. We argue passionately, in plain-English, why long-term care solutions and alternatives should be part of every retirement planning discussion.”

LTC Comment: Congratulations to Center-supporter Steve Forman and corporate member LTCA on the publication of this updated version of an excellent guide to LTC planning.

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8/19/2014, “OIG: Nursing homes correctly reported 53% of abuse or neglect allegations in 2012 [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Only about half of nursing facilities correctly reported abuse or neglect allegations in 2012, indicating that the government needs to provide more guidance and oversight, according to a new report from the Office of Inspector General."

LTC Comment: When private payers encounter abuse or neglect, they or their families can change facilities or caregivers. People dependent on Medicaid have little choice but to complain and hope for the best. As Medicaid pays less than the cost of the care, it's hard to see why top quality care can be expected no matter how much reporting and enforcement is required. Compounding the problem is that Medicaid also drags down quality and choices for private payers through cost shifting and a limited supply of non-Medicaid providers.

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8/18/2014, “36% of adults lack retirement savings, including many 65 or older,” by Jim Puzzanghera, Los Angeles Times

Quote: “More than a third of American adults have no retirement savings, and 14% of those ages 65 and older also haven’t put money away yet, according to a new study. . . .   Overall, 36% of those 18 years or older have not started saving for retirement, according to the survey of 1,003 adults. . . . Savers have been hurt in recent years by historically low interest rates caused by the Federal Reserve’s attempts to stimulate the economy after the Great Recession.”

LTC Comment: Fiscal and monetary policy of the U.S. government have discouraged savings. We analyzed the significance of those policies in last Friday’s (8/15/14) LTC Bullet: Keynes vs. Hayek on LTC Insurance.

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8/18/2014, “Medicare Advantage Is More Expensive, but It May Be Worth It,” by Austin Frakt, New York Times

Quote: “Medicare Advantage plans — private plans that serve as alternatives to the traditional, public program for those that qualify for it — underperform traditional Medicare in one respect: They cost 6 percent more. But they outperform traditional Medicare in another way: They offer higher quality.”

LTC Comment: And this in the New York Times, no less!

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8/11/2014, “Stroke risk spikes with declining cognition, researchers say,” by Tim Mullaney, McKnight's LTC News

Quote: "Seniors who scored lower on cognitive tests administered every three years had a 61% higher chance of having stroke, the investigators determined. Cognitive decline increased stroke risk five-fold in African Americans compared to European Americans. After stroke, cognition began to decline about twice as fast in both groups, and the risk of death increased."

LTC Comment: Causation or correlation?

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

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Updated, Friday, August 22, 2014, 12:45 PM (Central)

Austin, Texas—

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LTC BULLET: FREE LTC LOAN WITH NO PAY BACK REQUIRED

LTC Comment: What if you could get unlimited long-term care after you need it at no cost and without reimbursement required? Learn how after the ***news.***

*** JIM GLICKMAN FOR SOA PRESIDENT-ELECT . . . Anyone and everyone involved in the long-term care insurance business knows who Jim Glickman is. You know him through his volunteer activities with the Society of Actuaries and his creation of the ILTCI conference (the 15^th Annual ILTCI Conference is next March at The Broadmoor Hotel in Colorado Springs) as well as for his service over the last decade as the Executive Director of the non-profit ILTCI Conference Association. Jim is currently one of three candidates vying for President of the Society of Actuaries. If elected to that post, he commits to dedicate the same level of effort to making the SOA the best possible organization it can be. Having the President of the SOA be an LTCi expert can only help elevate the public’s and the media’s view of the LTCi industry. Although only Fellows of the SOA (FSA) or Associates who have been so for five or more years (ASA) are eligible to vote, we thought it important to let Center members know about Jim’s candidacy. If you are eligible to vote, please do consider Jim Glickman’s candidacy. He suggests:

· For more information on his leadership approach, click on this interview in the March 2014 issue of the SOA Reinsurance News.

· For his bio, click here.

· For his election message, click here.

Best of luck, Jim ***

*** CLIPPINGS SPECIAL OFFER. Let Steve Moses search the internet, professional/trade journals and the popular media so you don’t have to. He’ll send you a brief quote, a link to the source and succinct analysis by email three times per day. It’s all you’ll need to stay on the frontline of professional knowledge and expertise. Two options:

· Join the Center now or renew your regular membership early at this special, temporary Premium Member rate of $225 per year (usually $250) or $19 per month (usually $21) and we’ll add you to our clippings service and upgrade your membership. Send a check or use PayPal. (Best deal for Center members.)

· Experiment with the clippings: Sign up through PayPal at $10 per month (auto-payment) cancellable anytime and begin receiving only the clippings immediately. (Best deal if you’re not a Center member.)

If you have questions or need help, contact Damon at 206-283-7036 or damon@centerltc.com. He’ll add you to our clippings service post haste. You can be receiving our LTC Clippings before the end of the day. ***

LTC BULLET: FREE LTC LOAN WITH NO PAY BACK REQUIRED

LTC Comment: As we’ve explained often in this space and in dozens of national and state-level reports here, it is much easier than commonly understood to qualify for Medicaid-financed long-term care with little or no asset spend down. Here’s a quick review:

Income rarely stands in the way of Medicaid eligibility because most states subtract private medical and LTC expenses from income before asking if you’re poor enough to qualify. So, you don’t need low income, but only insufficient cash flow. That’s how people with large incomes qualify easily. Even in the minority of states with “income caps,” Miller income diversion trusts make qualification easy.

But what about assets? No problem. For starters, you can keep a home with equity up to as much as $543,000 to $814,000 depending on the state where you live. Without any dollar limit, you can also retain a business including the capital and cash flow, one auto, home furnishings, personal belongings, prepaid burial plans for yourself and immediate relatives, your IRAs, etc. Still have too much to get Medicaid to pay for your LTC? No problem. With an elder law attorney’s help you can score a Medicaid-friendly annuity, a special trust, a reverse half-a-loaf, or any number of special self-impoverishment vehicles to become “poor” quickly and qualify.

So, no matter where you are in the USA, if you choose not to spend your own money (your heirs’ inheritance) on long-term care, you have the option to shift the cost to Medicaid. That’s not the most desirable outcome in terms of the access to and quality of care you’ll receive, but by that time you probably won’t be making such decisions about your care. Those decisions will be made by the people who will receive your wealth when you die if it is not consumed to purchase top-quality LTC in the private market.

Now, the government knows that easy access to free LTC after the insurable event occurs might discourage responsible long-term care planning. So, in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93), the federal government required that every state Medicaid program recover from the estates of deceased recipients the cost of the care they received. Because the biggest exempt asset most older people have is their home equity, that law turned Medicaid long-term care into a de facto home equity conversion program.

The idea was simple. If you have to pay it all back out of your estate, you would be less likely to game the Medicaid eligibility rules in the first place and more likely to plan early and save, invest or insure for long-term care privately. That was the explicit intent of the OBRA ’93 law.

But here’s the problem: most states have not energetically enforced the estate recovery mandate and the federal government has failed to require them to do so. The net effect is what we stated in the tickler for today’s Bullet: many people can get unlimited long-term care after they need it at no cost and without reimbursement enforced. As long as that is true, it should come as no surprise that so few people plan ahead for LTC risk and cost.

So the big questions is this: why do the state and federal Medicaid programs subsidize this high-cost perverse incentive by failing to enforce the estate recovery requirement? The answer is politics and crony capitalism. Politicians like to promise their constituents free benefits; they hate to be seen as taking anything away. Likewise, lawyers and financial advisers who profit from taking advantage of Medicaid’s elastic eligibility rules support politicians who help them dodge those rules and oppose estate recovery.

Why do we return to this subject today? Because we anticipate that new information will soon be available to document—for the first time in a decade—the level of estate recoveries in the United States and the success or failure of state Medicaid programs to implement and enforce laws bearing on Medicaid LTC eligibility and estate recovery. Today’s Bullet tees up the topic. We’ll bring you the follow-through as soon as the new data is published.

In the meantime, if you’d like to dig deeper, “LTC Bullet: The Role of Estate Recoveries in LTC Financing” will direct you to many of the key published resources on the topic.

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Updated, Monday, August 18, 2014, 11:11 AM (Pacific)

Seattle—

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LTC E-ALERT #14-024: LTC NEWS AND COMMENT

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· Care aides get little to no training for life-and-death tasks, Star Tribune

· More alternatives to long-term care insurance, The Oregonian

· Japan also has LTC financing problems, LifeHealthPRO

· New plan to revamp the ACA would eliminate federal funding of long-term care, McKnight's LTC News

· Robin Williams was battling Parkinson's, widow says, USA Today

· Malnutrition Threatens Many U.S. Seniors Seen at ERs: Depression, dental problems, difficulty buying groceries among most common reasons, study finds, HealthDay

· Anatomy of an 85% Rate Increase Decision, LTC Consultants

· “Muscle suits” designed to reduce nursing home workers' musculoskeletal injuries, McKnight's LTC News

· Swap traders react to LTC reserve news, LifeHealthPRO

· Medicaid planning for nursing homes, TCPalm

· Many meds taken by seniors can raise risk of falls, Reuters

· When Elderly Parents Lose Their Independence, Planning Can Make the Transition Easier, Wall Street Journal

· Fitch: Long-Term Care Insurance Draws Renewed Concerns, BusinessWire

· AARP alum to run White House aging conference, LifeHealthPRO

· Study: America’s Seniors More Proactive About Health, View Assisted Living as Likely Option, ALFA

· Drug cures Alzheimer's symptoms in mice, Yale researchers find, McKnight's LTC News

· MetLife study reveals why the value of accident and critical illness plans extends beyond employees, Employee Benefit Adviser

· State regulators may vote on LTCI rate proposals,” LifeHealthPRO

· Medicare Advantage: Better option for the sickest seniors,” Modesto Bee

· 'Elder Abuse' Often Involves Finances, Study Finds: Family members are frequently the culprits, researchers say,” HealthDay

· Longevity has its challenges, too, The Tennessean

· CMS: Skilled Nursing Faces Uncertain Future, Negative Margins by 2040, Senior Housing News

· Genworth Financial Updates Disclosure on Long Term Care Insurance, InsuranceNewsNet

· Who's Moving In Now?, New York Times

· Picking a Nursing Home Shouldn't Be Trial and Error, New York Times

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Updated, Friday, August 15, 2014, 11:47 AM (Pacific)

Seattle—

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LTC BULLET: KEYNES VS. HAYEK ON LTC INSURANCE

LTC Comment: Neither of these world-class economists ever said word one about LTC insurance. But I have a pretty good idea what they would say today, after the ***news.***

*** WHO IS JOHN GALT? If you’ve read Ayn Rand’s prophetic thriller Atlas Shrugged, you know the import of that phrase. If not, you can answer the question on Friday, September 12, 2014. That’s when the third and final movie based on the novel premiers titled Atlas Shrugged: Who is John Galt? Check out the trailer here. ***

*** DON’T BE UNPREPARED: What if a major media outlet publishes an expose’ proclaiming private LTCI a terrible investment? Wouldn’t you like to know about that news item before you sit down with Mr. and Mrs. Prospect . . . who just finished reading the story!? Making sure you have that kind of critical information as well as all the most current data, articles and reports about long-term care is why we publish LTC Clippings. We’ll send you an average of three emails per day providing a representative quote, a link to the source, and a sentence or two of analysis for the most important published information you need to know. Stay on the cutting edge of professionalism. Subscribe to LTC Clippings today. Contact Damon at 206-283-7036 or damon@centerltc.com. Or subscribe with PayPal here while our special temporary rates apply. ***

LTC BULLET: KEYNES VS HAYEK ON LTC INSURANCE

LTC Comment: John Maynard Keynes never won the Nobel Prize, but his interventionist economics have dominated public policy for decades. Richard Nixon surrendered “we’re all Keynesians now.”

Friedrich Hayek did win a Nobel (1974, shared with Gunnar Myrdal), but he’s the Rodney Dangerfield of economic theorists: “Can’t get no respect.”

Who cares? What do dead white men, much less economists, have to do with long-term care financing today? A lot. Keynes himself said . . .

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.

So let’s take these two paragons of the economics profession seriously and see what they might have to say about long-term care insurance if they were still around today.

But let’s not take them too seriously. Before you read on, have a look at these two hilarious rap videos pitting Keynes and Hayek in disputatious sing-offs. They’ll give you everything you need to know to follow the rest of today’s Bullet.

“Fear the Boom and Bust”: https://www.youtube.com/watch?v=d0nERTFo-Sk

“Fight of the Century: Keynes vs. Hayek”: https://www.youtube.com/watch?v=GTQnarzmTOc

Keynes and Hayek agree that boom/bust business cycles are endemic to modern economies. But that’s where their agreement ends.

Keynesian Economics

Keynes attributes the business cycle to “animal spirits” and “circular flow.” Consumers need stuff; they buy it; businesses provide it and prosper. But over time everyone over-extends, capital backs up in banks creating a “liquidity trap,” investment flags, the economy drags, people hoard money instead of spending. This “paradox of thrift” starves the economy of capital.

Solution?

Encourage spending by consumers and government, discourage savings. Borrow to spend more. Run personal and public deficits. Let debt grow. Aggregate demand is all that matters because personal consumption is 70 percent of the economy. Use the central bank to force interest rates as low as possible so that growing personal and public debt is serviceable. Print any extra money needed to keep the party going.

Won’t such fiscal and monetary irresponsibility catch up with families and the government sooner or later? Yeah, but: “In the long run, we’re all dead,” replies Keynes.

Sound familiar?

Keynesianism dominates the U.S. economy today. Every time our economy runs into trouble, most recently the dot.com and housing bubbles bursting, the response is the same: borrow and print money to stimulate the economy by putting more cash in the hands of consumers and government. The Federal Reserve forces interest rates to near-zero creating the illusion that huge and growing debt is manageable. But all that new money has to go somewhere. Some of it backs up in banks too scared to loan. Much, however, finds its way into investments that seem promising because of the phony-money-induced optimism. Too often those speculations end up as mal-investment that an un-goosed market would never have financed. In time, economic reality sets in, the Fed removes the “punch bowl,” interest rates rise, the party ends, the recession begins, and the cycle starts all over again.

Austrian Economics

Friedrich Hayek and others of the “Austrian School” view the economy and the business cycle very differently. Human action is purposive, they say. Consumers respond to incentives. Artificially low interest rates, not vague animal spirits, cause the business cycle. Credit expansion creates the boom by making loanable cash more readily available than a free market would allow. This extra easy money funds economically unjustifiable investments. The resulting mal-investment causes an economic downturn. Government fiscal and monetary (Keynesian) policy responds with more easy money, lower interest rates, bailouts, payoffs, and “stimulus” leading to increased spending, decreased saving, and bigger debt. But such measures are like pushing on a thread. They only deliver more of the toxic medicine that caused the economic malaise in the first place.

Solution?

Hayek and the Austrians seek to free markets, not to steer them like Keynes. Individual consumers, left to their own devices, without the misguided distorting incentives of artificially low interest rates and easy money, will behave responsibly. They’ll buy what they can afford and save the rest. Saving is good because it provides investment capital which makes production possible. Without production generating jobs and incomes, no one has money to spend. Therefore, supply trumps demand. Free markets set interest rates by reflecting the preferences of consumers in the millions instead of economic bureaucrats in the thousands. Everyone is better off without the forced interventions of government’s economic micro-managers. The boom/bust business cycle is not inevitable. If we just stop doing what we’ve always done, we’ll get a different result.

LTC Insurance

So what does all this have to do with long-term care insurance? Plenty. Keynesian economics has wrought chaos in the LTCI market.

Keynesian borrow and spend policies have bloated spending on Medicaid long-term care, which, according to economists Brown and Finkelstein, crowds out up to 90% of the LTCI market.

The Federal Reserve’s Keynesian-inspired near-zero interest rates have devastated the ability of private LTC insurance carriers to obtain returns on their reserves adequate to pay expected future claims.

The same artificially low interest rates prevent LTCI prospects and clients from obtaining enough cash flow from their investments to afford the increased premiums Fed policies have compelled LTCI carriers to charge.

Keynesian public policy has discouraged saving, encouraged spending and left an aging baby-boomer generation bereft of sufficient retirement funds at the very time that public debt and massive unfunded liabilities sow doubt about the social safety net’s viability.

Keynesian-inspired bailouts, payoffs, and buyouts created moral hazard that inspired banks and financial services firms to take crazy risks which led to the Great Recession.

Likewise, eight decades of government promises regarding Social Security, Medicare and Medicaid have chipped away at aging Americans’ good judgment regarding financial risk and personal responsibility. Hence their failure to embrace private savings, investment and insurance.

How would Hayek and the Austrians’ approach LTCI differently?

Stop trying to manage the economy. Let free markets determine interest rates and distribute investment capital. That will create jobs and raise incomes. Don’t reward banks and brokers for irresponsible risk-taking by bailing them out. Don’t reward consumers for failing to save, invest or insure by promising them benefits you cannot hope to deliver. Stop printing money and forcing interest rates down. Unleash the LTCI market by targeting Medicaid to the needy and letting everyone else pay for their own care. Allow higher interest rates to relieve upward pressure on LTCI premiums and to enable consumers to afford coverage. Escape the boom/bust, binge/hangover business cycle and the free market will take care of the rest.

In a nutshell . . .

What would Keynes say? Eat, drink and be merry for tomorrow we die.

What would Hayek say? Save, invest and insure because the long run is here.

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Updated, Friday, August 8, 2014, 11:50 AM (Pacific)

Seattle—

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LTC BULLET: LTC SPEAKER

LTC Comment: Need a speaker on long-term care financing or provider issues? Read on after the ***news.***

*** A LITTLE BIRDIE TOLD ME we’ll soon have dramatic new data on state Medicaid programs’ success (or failure) recovering previously paid benefits from the estates of deceased LTC recipients. The Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) made estate recovery mandatory. The Deficit Reduction Act of 2005 (DRA ’05) increased the potential for estate recoveries by reducing wealthy Medicaid applicants’ ability to transfer or hide assets. But we’ve had zero information since 2005 on which states are following the law and recovering from estates, which states are not, and which states are more effective than others. As we’ve reported here, here and here, Medicaid estate recoveries are a major potential non-tax revenue source and robust estate recovery strongly discourages the abuse of Medicaid by affluent seniors and their heirs. Stay tuned for details when the new information becomes public. ***

LTC BULLET: LTC SPEAKER

LTC Comment: Why is long-term care broken?

· Surveys show people worry about LTC risk and cost, but don’t plan

· People prefer care at home, but nursing home bias still prevails for most

· Only 13% of the elderly are poor, but welfare pays for most LTC

· Medicaid LTC is expensive and deficient, but crowds out private insurance

· The CLASS Act bombed

· LTC commission reports from Pepper (1990) to Congressional (2013) gather dust

· Giant federal debt/deficits and Social Security/Medicare unfunded liabilities portend financial catastrophe

· America hurtles toward a demographic and fiscal brick wall as boomers age

What went wrong? How did we get into this mess? What’s most likely to happen in the near-term and long-term future? Which policies could officials implement that would help or solve the problems? What can you do?

Stephen Moses is one of the nation’s most stimulating speakers on long-term care issues. Nursing Homes magazine reported “there is probably no more articulate spokesperson for privately financed long-term care than Stephen Moses.” Senior Market Advisor magazine put him in its top-ten LTC insurance "Power List." McKnight’s Long-Term Care NEWS said Moses is “one of the 100 most influential people in long-term care.” Long-Term Living named him one of five "people making a difference in LTC."

In frequent articles, state and national reports, Congressional and state legislative testimony, media appearances and conference presentations, Moses has accurately diagnosed our country’s long-term care problems and prescribed workable solutions. His recommendations to tighten Medicaid LTC eligibility, improve estate recovery and encourage private LTC financing became federal law in OBRA ’93 and DRA ’05. He will bring his unique insight, analysis and wit to your conference, meeting, forum, seminar or event

Ask Steve Moses to speak on . . .

· The History of Long-Term Care or How We Got into This Mess

· What’s Wrong With Long-Term Care Insurance and How to Fix It

· Private Long-Term Care Financing Alternatives: Real Asset Spend Down, Medicaid Estate Recoveries, Home Equity Conversion and Private LTC Insurance

· How the Well-To-Do Qualify for Medicaid and Co-Opt the Best LTC

· The Elephant, The Blind Men and Long-Term Care: How Silos Hurt LTC

· Dual Eligibles and Long-Term Care: How to Save Medicaid $30 Billion Per Year

· Can Long-Term Care As We’ve Known It Survive?: The Index of Long-Term Care Vulnerability, A Workshop

· More topics here. Steve custom-tailors every speech to your needs.

Steve Moses is available to speak wherever you need him. Read more about his background and expertise here. Please direct inquiries to info@centerltc.com or 206-283-7036.

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Updated, Monday, August 4, 2014, 11:48 AM (Pacific)

Seattle—

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LTC CLIPPINGS AND LTC NEWS AND COMMENT

· A Crash Course in Long-Term Care: What retirees need to know, before they need it, Morningstar

· Can You Afford to Retire Early? The Five-Year Rally in Stocks Has Bolstered Workers' Nest Eggs. But Consider These Six Issues First, Wall Street Journal

· ‘Turning Back Time’: Claims Backfiling,” The Claim Journal

· Medicaid and Long-Term Services and Supports: A Primer, Kaiser Family Foundation

· Trust can help protect assets of ailing parents, RecordOnline

· Floridians “deeply concerned”’ about care of elder patients, by Frank Gluck, News-Press.com

· Genworth Financial announces 2Q 2014 results, LTCI business disappoints, Insurance Forums

· A New Way to Save for Long-Term Care Costs in Old Age, But How Many Will Buy?, Forbes

· The Healthspan Imperative, video by the Alliance for Aging Research

· Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection, Government Accountability Office (GAO)

· Bill Naylon to lead MedAmerica, LifeHealthPRO

· Nursing Home Unthinkable? Be Prepared in Case It's Inevitable, New York Times

· Changing Family Caregiver Dynamics Ramp Up the Importance of Long-Term Care Planning, Forbes

· Good News For Boomers: Medicare's Hospital Trust Fund Appears Flush Until 2030, Kaiser Health News

· Oversight Subcommittee to Examine Federal Government's Failure to Address Wasteful Medicaid Spending, InsuranceNewsNet

· Medicare and Social Security Report - 4 Things to Watch, Wall Street Journal

· The medical bills that hit retirees hardest, WSJ MarketWatch

· 50 Must-Know Statistics About Long-Term Care: A review of the data--plus weighing the intangibles--can help you arrive at the right decision, Morningstar

· Long Term Care Insurance Association Posts Free Video, PR.com

· GAO: Easy to Fake Applications for Health Insurance Premium Tax Credits, Health Insurance Exchange

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Updated, Friday, August 1, 2014, 12:15 PM (Pacific)

Seattle—

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LTC BULLET: ENTITLEMENT DOUBLE TALK

LTC Comment: To read the major media coverage of the 2014 Medicare Trustees report, you’d think things are looking up for the 49-year-old mega-program. Think again, after the ***news.***

*** KOTLIKOFF on the “fiscal gap.” One excellent exception to the usual rosy-scenario reporting on entitlements is Laurence Kotlikoff’s op-ed in today’s New York Times titled “America's Hidden Credit Card Bill: The Government Should Report Its 'Fiscal Gap,' Not Just Official Debts [link].” Here’s a quote:

The fiscal gap - the difference between our government's projected financial obligations and the present value of all projected future tax and other receipts - is, effectively, our nation's credit card bill. Eliminating it, would require an immediate, permanent 59 percent increase in federal tax revenue. An immediate, permanent 38 percent cut in federal spending would also suffice. The longer we wait, the worse the pain. If, for example, we do nothing for 20 years, the requisite federal tax increase would be 70 percent, or the requisite spending cut, 43 percent.

Kotlikoff concludes: “What we confront is not just an economics problem. It's a moral issue. Will we continue to hide most of the bills we are bequeathing our children? Or will we, at long last, systematically measure all the bills and set about reducing them?” ***

LTC BULLET: ENTITLEMENT DOUBLE TALK

LTC Comment: Dozens of major-media outlets focused on the “good news” in Monday’s release of the 2014 Medicare Trustees report. Read the full report here.

For example, the New York Times article by Robert Pear, titled “Gains Seen for Medicare, but Social Security Holds Steady,” began “Medicare’s financial condition improved significantly in the last year, thanks in part to the Affordable Care Act, but the outlook for Social Security is basically unchanged, the Obama administration said Monday.” The Times article quoted Treasury Secretary Jacob Lew saying “Social Security and Medicare are fundamentally secure.”

The Wall Street Journal’s tone was a little less sanguine in “Medicare, Social Security Disability Fund Headed in Different Directions.” It reported “Medicare's hospital-insurance program spent less on benefits in 2013 than it did the previous year, despite covering an additional 1 million people” and “Medicare will be able to continue paying full hospital benefits for its elderly or disabled clients without any changes in the law through 2030-four years later than last year's estimate.” The Social Security disability insurance program is another matter as “it will be able to pay only 81% of benefits starting in late 2016 unless Congress intervenes.”

All in all, it sounds from these articles and many others like them that things are looking up for our country’s biggest entitlement programs. Hints to the contrary were buried deep in the Times and WSJ articles. Sixteen paragraphs into the Times’, we find this: “‘Under current law,’ [public trustee and former CBO director] Mr. Reischauer said, ‘both of these very important programs are fiscally unsustainable over the long run and will require legislative intervention.’” Eight paragraphs in, the WSJ piece provides a graph showing the Social Security and Medicare trust funds plummeting to zero over the next couple decades.

OK, what’s the whole truth? Both Medicare and Social Security are already bankrupt. Their so-called “trust funds,” which account for the programs’ alleged ability to go on paying full benefits for the time being, actually contain no money. All the cash siphoned from taxpayers into those funds has already been spent on other government priorities. The trust funds contain nothing but IOUs from the federal government promising to repay the borrowed money. Yes, those loans are backed up by the full faith and credit of the United States government. But that guarantee should give you little confidence given the bigger picture. By any legitimate accounting standard, the United States government itself is bankrupt.

Our national debt stands at $17.6 trillion according to the US Debt Clock. But that’s not the worst of it by far. Government unfunded promises of future entitlement benefits are stupendous according to the same source: $15.9 trillion for Social Security; $21.2 trillion for prescription drug liabilities; and $82.7 trillion for Medicare, a grand total of $119.7 trillion or over $1 million per taxpayer! Other sources, including the trustees’ report, give lower, more conservative estimates of unfunded liabilities, but they’re still staggeringly high. No one in possession of the facts and a modicum of economic knowledge believes these debts and promises are meetable.

So, why are we able to keep on keeping on? A household with massive debt, rapidly increasing debt service costs and insufficient income would quickly become insolvent. How can the U.S. government go on operating with massive deficits increasing the national debt year after year? Why is it that families can only borrow so much before they go under financially, but the government is apparently unconstrained by the same economic laws? The answer, according two books I’ve been reading, lies in federal reserve policy and the gullibility of lenders who have been willing to feed America’s deficit spending beast at considerable expense to themselves.

In a nutshell, the Federal Reserve (the Fed) has forced interest rates down to near zero in order to restrain the cost of servicing the national debt. Why does the Fed do this? So the federal government can delay confronting the true magnitude of its obligations. But why do people (bond buyers) and sovereign nations go on loaning money to the U.S. at such low interest rates? Habit and misplaced confidence. The dollar has been the world’s reserve currency. Historically, investing in the U.S. has been relatively safe. But all that could change quickly. Confidence in our ability to repay our debts faltered when the dot.com bubble burst, teetered perilously when the housing bubble popped, swoons every time we approach a “debt ceiling,” and may disappear entirely when the current government spending bubble deflates.

What happens when our lenders lose confidence? They’ll abandon the debt instruments that enable the government to pay its bills. To compensate, interest rates will increase making debt service ever more expensive. If the Federal Reserve keeps pumping money into the system to cover these growing costs, we’ll suffer much higher inflation. But if it stops printing phantom dollars, we’ll likely face a much more severe downturn than the “Great Recession.” The Federal Reserve is already balanced on this tightrope, damned if it does and damned if it doesn’t continue its policy of enabling the government’s deficit spending addiction.

As this economic drama plays out, the consequences for our country and our individual economic well-being are extremely serious. You might want to have a look at these two books: The Death of Money: The Coming Collapse of the International Monetary System by James Rickards and The Real Crash: How to Save Yourself and Your Country by Peter D. Schiff. I listened to both as audiobooks obtained free from the public library and was sufficiently impressed to purchase hardbound copies to review in more depth. I also studied Austrian economics (the antidote to the Fed’s Keynesianism) at the Mises Institute last week, so you’ll probably see more on these topics in future LTC Bullets.

Bottom line, if you buy the government’s and the media’s assurances about America’s entitlement safety net, then caveat emptor.

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Updated, Monday, July 28, 2014, 12:01 PM (Pacific)

Seattle—

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LTC CLIPPINGS AND LTC NEWS AND COMMENT

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

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

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

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

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

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

Thanks as always for your patience and support.

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

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

· More regulations piled on LTC providers

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

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

· Medicaid planning attorney defends millionaires getting Medicaid

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

· Low Medicaid reimbursements cause poor access to care for recipients

· Genworth vastly undervalued according to financial analyst

· Genworth offers new LTCI product line

· Even the wealthy should consider LTC insurance

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

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

· Medicare experiments with dropping the 3-day hospitalization requirement

· The future of robot caregivers

· Music helps Alzheimer’s patients—video

· Medicaid spending varies widely by state—GAO

· Report detail Medicaid reimbursement shortfalls by state

· Medicare spending to slow despite aging population—CBO

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

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

· Medicaid crowds out other state spending priorities—Samuelson

· California tries to coordinate Medicare and Medicaid

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

Auburn, Alabama—

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LTC Bullet: LTC Almanac Update, #2

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

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

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

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LTC BULLET: LTC ALMANAC UPDATE

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

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

The LTC Almanac is divided into 11 sections:

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

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Chapter 1: Aging Demographics

General Stats

65+ in the United States, 2010 URL

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

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

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

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

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

LINK

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

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

3/21/14 LTC Clipping: LINK

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

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

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

CBO on Unfunded Liabilities

The 2014 Long-Term Budget Outlook 0714 URL

LTC Clipping, 7/16/14

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

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

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

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

Unfunded Liability Estimates

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

The Government Debt Iceberg by Jagadeesh Gokhale

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

Chapter 4: Long-Term Care

General

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

LTC Clipping, 3/25/14

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

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

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

CDC and NCHS on LTC Services 2013 1213 URL

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

Chapter 6: Long-Term Care Financing

General

BPC LTC White Paper 0414 URL

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

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

Chapter 9: Long-Term Care Providers

Medicaid Reimbursement

Nursing home shortfall report 2012 URL

LTC Clipping, July 17, 2014:

5 states where Medicaid pounds nursing homes | LifeHealthPro

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

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

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

Chapter 10: Medicaid

Medicaid is the 800-pound gorilla of LTC

Economics of Medicaid book 0414 URL

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

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

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

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

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

Medicaid Financing

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

LTC Clipping, July 17, 2014

LINK

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

“The GAO analysis also found that:

· California spent about $3,800 per beneficiary;

· Rhode Island spent $11,700 per beneficiary;

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

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

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

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

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

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

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

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

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

• 18.3 percent for those with disabilities, and

• 13.3 percent for new mothers or infants.”

Chapter 11: Medicaid Planning

General

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

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

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

For our analysis and critique, see LTC Bullet: GAO Punts on Medicaid Planning, Thursday, July 3, 2014.

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

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

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LTC BULLET: FREE THE LTCI 5000

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

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

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

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

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LTC BULLET: FREE THE LTCI 5000

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

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

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

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

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

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

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

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

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

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

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

Clippings Testimonials

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

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

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

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

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

Mark Randall
LTCI Trainer
Park Rapids, Minnesota

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

Romeo Raabe
www.TheLongTermCareGuy.com
Green Bay, Wisconsin

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

Barbara Franklin, CEO
Charleston, South Carolina

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

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

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

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

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

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

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

Eric Rubin, CLTC
Cedar Brook Financial Partners
Cleveland, Ohio

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

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LTC CLIPPINGS AND LTC NEWS AND COMMENT

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

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

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

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

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

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

Thanks as always for your patience and support.

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

· Shrinking nursing home inventory and rapid assisted living growth

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

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

· LTCconsumer.com launches

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

· Is aging at home too dangerous?

· Vince Bodnar interviewed about prospects for LTCI in the UK

· Bob Vandy writes about LTCI market changes

· Med-Supp conference will stream sessions free

· Genworth starts “two-track” strategy soon

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

· Blood test for Alzheimers

· Top ranked nursing homes often poor and vice versa

· Ken Dychtwald video on “The Boomer Effect”

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

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

· Critical illness coverage

· Morningstar advocates adverse self-selection for LTCI

· ObamaCare’s impact on Medicare Advantage plans

· Wrinkles is a cartoon about nursing home life

· Caregiver to his wife

· States move on LTC policy in federal vacuum

· LTC Global and LTC Financial Partners merge

· LTCI CEOs opine on how to grow sales

· Former Calpers CEO to plead guilty

· Most boomers are overweight or obese

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

· Longevity insurance

· 20% decline in nursing home population

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

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

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

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

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

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

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LTC Bullet: LTC Almanac Update

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

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

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

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

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

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

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

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

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LTC BULLET: LTC ALMANAC UPDATE

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

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

The LTC Almanac is divided into 11 sections:

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

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Chapter 1: Aging Demographics

Assets of the Aged

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

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

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

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

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

Unfunded Liability Estimates

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

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

Chapter 6: Long-Term Care Financing

General

Leading Age on LTC Reform 1113 URL:

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

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

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

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

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

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

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

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

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

Chapter 7: Long-Term Care Insurance

General and Data

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

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

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

Federal LTCI Program

Paul Forte Contingencies Article 0114 [here]

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

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

Chapter 9: Long-Term Care Providers

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

KFF on Olmstead 0614 URL

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

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

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

Managed LTC

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

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

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

Chapter 10: Medicaid

Medicaid is the 800-pound gorilla of LTC

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

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

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

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

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

Medicaid Financing

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

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

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

Chapter 11: Medicaid Planning

Criticism of Medicaid Planning

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

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

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

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

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

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

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

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

Seattle—

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LTC BULLET: GAO PUNTS ON MEDICAID PLANNING

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

*** Happy Independence Day ***

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

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LTC BULLET: GAO PUNTS ON MEDICAID PLANNING

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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“Hospice, Inc.” and LTC News and Comment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC Comment: Significant findings in this study.

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

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

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

LTC Comment: More bad news about Medicaid managed care.

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

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

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

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

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

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

LTC Comment: Rocket fuel for factual LTCI marketing.

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

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

LTC Comment: This test could be a helpful resource.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC Comment: Useful findings on these supplemental health products.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC Comment: Ominous findings.

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

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

LTC Comment: Good prospects for LTCI.

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

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

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

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

Seattle—

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LTC Bullet: Demographics and Other Data: Thousand Bullets Retrospective

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

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

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LTC BULLET: Demographics and Other Data: THOUSAND BULLETS RETROSPECTIVE

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

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

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

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

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

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

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

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

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

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

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

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

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

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January 11, 2007: So What If the Government Pays for Most LTC?, 2005 Data Update. “Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care?” Steve Moses explains in this LTC Bullet.

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

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

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

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

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January 13, 2012: So What If the Government Pays for Most LTC?, 2010 Data Update. “Heads up! We're about to explain why long-term care insurance sales have disappointed, why people don't ‘use their homes to stay at home’ and why LTC providers who depend on public financing are at risk. Details in this LTC Bullet.”

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

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LINKS

Here are some links you can check out to find valuable information on long-term care providers, financiers and insurers. This is just for starters. We'll add many more as time goes on plus advice on what to look for on their sites.

www.ahca.org American Health Care Association

www.leadingage.org American Association of Homes and Services for the Aging

www.alfa.org Assisted Living Federation of America

www.nic.org National Investment Center

www.ahip.net America's Health Insurance Plans

ltcconsultants.com Phyllis Shelton's website

www.aaltci.org American Association for Long-Term Care Insurance

ltcconnection.com LTCi producers' information

Unfunded Liability Estimates

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

LTC Bullet: Demographics and Other Data: Thousand Bullets Retrospective

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

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LTC BULLET: Demographics and Other Data: THOUSAND BULLETS RETROSPECTIVE

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

Seattle—

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