
READ STEVE'S BIO.JPG)
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Updated,
Friday, April 16, 2021, 10:40 AM (Pacific)
Seattle—
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LTC
BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING
LTC
Comment: You might expect innovative ideas from the Milken Institute, but
when it comes to long-term care financing, all you get is ideological
retreads. We explain after the ***news.***
*** TRUST ACT NEWS: We have big news
about the state insurance program to fund long-term care that the Milken
Institute and a bevy of study groups in recent years have hung their
hopeful hats on. Stephen D. Forman of
Long Term Care Associates reported yesterday that: “the Washington
State House
concurred with the amendments passed by the
Senate, approving SHB 1323 by a final vote of 58 – 39.
Now that it moves to Governor Inslee’s desk for signature, we can safely
call it a “done deal”—including the new opt-out deadline of November 1st,
2021. That’s a big deal because it means Washingtonians have one last
chance to escape the Evergreen State’s oncoming long-term care
straightjacket by purchasing real LTC insurance protection in the private
market. Let the fire sale begin! ***
*** ILTCI CONFERENCE NEWS: The 2021
Intercompany Long-Term Care Insurance Conference kicked off on Tuesday,
April 13. Its unique virtual format this year worked well, enabling 1500
participants to track information-rich presentations on a wide range of
topics, but not without some electronic glitches. The keynote speaker, who
signed in from Australia at 2am the following day, couldn’t complete his
talk. I monitored four hours of break-out sessions on which I’ll report in
a LTC Bullet after the conference concludes. I’ve also asked some
LTCI experts to report on sessions they attend. We’ll bring you their
feedback as well. Kudos to organizers Barry Fisher of
Ice Floe Consulting and Vince Bodnar of
Oliver Wyman and the teams they recruited to design and implement the
program. Four more days of the conference remain:
Tuesday, April 20th, 12pm – 4pm ET
Thursday, April 22nd, 12pm – 4pm ET
Tuesday, April 27th, 12pm – 4pm ET
Thursday, April 29th, 12pm – 4pm ET
If you haven’t already, register and
attend this extraordinary, free resource here:
https://iltciconf.org/sessions-at-a-glance/. Show your appreciation
for the program’s sponsors by visiting their online exhibits and
considering their products and services. ***
LTC BULLET: MILKEN GROUPTHINK FUMBLES
LTC FINANCING
LTC Comment: The
Milken Institute, chaired by former junk-bond king, now philanthropist
Michael Milken, modestly bills itself as a “catalyst for practical,
scalable solutions to global challenges.” Toward that end they “conduct
research and analysis and convene top experts, innovators, and influencers
from different backgrounds and competing viewpoints.” Lately, the Milken
Institute tackled the problem of providing and financing long-term care
for the broad American middle class. Last week it published “New
Approaches to Long-Term Care Access for Middle-Income Households,” a
timely look at a critical topic that begs for fresh analysis and ideas.
Did the Milken Institute deliver? Yes
and no. The report does a yeoman’s job of describing the problem. It
offers creative ideas to address service delivery problems, proposing for
example a “Medicare Advantage Demonstration Project” and that the country
should “Scale Up Integrated Care Programs.” But when it comes to how to
pay for long-term care, the report founders as its many predecessors have
done. It makes no attempt to understand why long-term care financing is so
inadequate in the United States. It parrots the prevailing academic
shibboleths, ignores critical facts, and proposes nothing new or
promising. We get no original analysis or ideas. We’re asked to hang our
hopes on a fatally flawed exercise in political futility, the LTC Trust
Act in Washington State.
What went wrong? Following are quotes
from the Milken Institute’s “New
Approaches to Long-Term Care Access for Middle-Income Households”
followed by our comments.
Milken:
“In November and December 2020, the Milken Institute … brought together a
highly engaged group of experts from government and academia, as well as
health care, insurance, long-term care delivery, senior housing,
technology, and finance. Long-term care is a complicated issue, and many
experts, organizations, and government entities have been working for
decades to develop better ways to address this need.” (p. 2)
LTC Comment:
There is a reason why groups of all sorts have studied long-term care
ad nauseam for decades unsuccessfully. Brought together to summon and
balance many different perspectives, such groups can never agree on
anything beyond marginal variations from conventional wisdom. The
conventional wisdom is that government must do something. The right
approach is instead to ask and explain why the problems exist before
proposing to add more government funding and regulation, which may,
arguably, have caused or contributed to the problems in the first place.
Read our
Medicaid and Long-Term Care for that analysis.
Milken:
“The access, delivery, and financial challenges are too vast for either
the private or the public sectors to shoulder alone.” (p. 2)
LTC Comment:
Agreed. But we already have a public/private approach to LTC financing. It
is supposed to work like this: People pay their own way until they can’t
and Medicaid picks up the difference. That doesn’t work, you say? Well,
the right answer is to fix it, not to impose a compulsory new government
program burdened with another insolvent “trust fund,”
Milken:
“But middle-income households cannot qualify for Medicaid without spending
down their assets to meet the strict income limits.” (p. 4)
LTC Comment:
This is the false premise that dooms Milken to invalid conclusions. Most
large assets, including nearly all home equity, seniors’ biggest resource,
are exempt for determining Medicaid LTC eligibility. Non-exempt assets are
easily converted to exempt status. Excess income must be applied to the
cost of care, but that’s a relatively small co-insurance to pay in
exchange for receiving expensive long-term care at Medicaid’s discounted
rates. Estate recovery is easily evaded and
MACPAC recently
proposed to hobble that program further. Medicaid is a time-delay trap
that anesthetizes the public to LTC risk and cost until a care crisis
occurs and then ameliorates the otherwise catastrophic financial
consequences. That is the real reason long-term care is in the mess it’s
in. Again, see
Medicaid and Long-Term Care.
Milken:
“In 2010 the Affordable Care Act (ACA) established the Community Living
Assistance Services and Supports (CLASS) Act, which would have provided a
federally administered and voluntary long-term care insurance (LTCI)
program. Ultimately, however, lawmakers deemed the program financially
untenable and repealed it in 2013.” (p. 5)
LTC Comment:
Why did CLASS fail? Advocates say because it was voluntary. So what they
want is a program that is mandatory, that removes the freedom of the
marketplace and substitutes the compulsion of government. That’s a
Faustian bargain, the wages of which will come due when profligate public
spending ends in spiking consumer inflation.
Milken:
“Beginning in 2022, Washington will fund its mandatory program through a
payroll tax of 58 cents for every $100 of income for all W-2 workers in
the state; self-employed workers can participate if they choose.” (p. 5)
LTC Comment:
So all rally around Washington State’s new program, but look what that
leads to …
Milken:
“And in November 2020, voters rejected a referendum to expand the types of
investments available to the program’s trust fund to include private
equities. As a result, the trust fund investments remain limited to
corporate bonds and certificates of deposit. These restrictions will cause
the current level of payroll tax to be inadequate for funding the program
in the long term, according to a study by Milliman.” (p. 6)
LTC Comment:
So, we not only have to force people to participate in government-mandated
LTC insurance, we have to risk their “trust fund” by investing it in
private equities that are vulnerable to collapse in value. Such a
government gamble is likely to leave the Washington State program no
better off than the Social Security and Medicare “trust funds” which
contain nothing but federal IOUs.
Milken:
“A recent AP poll shows that 67 percent of respondents had done little to
no planning for LTC, and 57 percent mistakenly believe that Medicare will
cover their LTC costs. According to Vanguard, in 2019, the average 401(k)
account balance for those 65 and older was $216,720, and the median was
$64,548.20. These amounts are wholly inadequate when one considers that
costs rise proportionally to the complexity and duration of care, quickly
exhausting the personal savings of individuals with severe and extended
care needs.” (p. 6)
LTC Comment:
Wouldn’t you think Milken, et al., would wonder why most people
don’t plan for long-term care, when the risk and cost is so high, the
media badgers them incessantly that they’ll lose their life savings if
they don’t plan, and they’re “quickly exhausting” their personal savings
when “severe and extended care needs” occur. The answer is that people
would plan if they were suffering those catastrophic consequences, but
they’re not. There is no evidence of widespread catastrophic LTC spend
down. That’s why the Milken report cites none.
Milken:
“Over the past 15 years, the number of LTC insurers in the market dwindled
from over 100 in 2004 to about a dozen in 2018. This is attributed in part
to inaccurate actuarial assumptions on older policies and the high levels
of losses that insurers sustained. (p. 6)
LTC Comment:
LTC insurance carriers didn’t get all their actuarial assumptions correct,
but that was not all their fault. The Federal Reserve forced interest
rates arbitrarily and artificially to near zero making it impossible for
carriers to get the return on reserves they reasonably expected. Medicaid
made access to expensive long-term care available to middle class and
affluent people after the insurable event occurred obviating demand for
the product. Bottom line, government interference in the LTC insurance
marketplace is the bigger cause of its dysfunction.
Milken:
“Most important, Lab participants noted, there are no current
complementary public and private LTCI solutions.” (p. 11)
LTC Comment:
That is not true. As mentioned above, there is a public/private solution
in place. This is it: Medicaid for the indigent, home equity spend-down
for the middle class, and private insurance for the upper middle class and
affluent. The problem is that by exempting home equity from LTC risk and
cost, and by allowing generous eligibility with many elastic loopholes,
Medicaid has short-circuited a system that could work very well. I explain
that system in “LTC
Bullet: The Key to LTC” and I provide a full explanation of why and
how most analysts evade the reality of Medicaid’s perverse incentives that
discourage responsible long-term care planning in
Medicaid and Long-Term Care.
Milken:
“As we stand in early 2021, however, COVID-19 has decimated state budgets,
making it more difficult to secure funding or the political will to raise
the taxes necessary to build state-level public long-term care programs.”
(p. 11)
LTC Comment:
All the more reason to look for private sector solutions that build on the
Medicaid LTC program for the needy that is already there. The government
has no money other than what it borrows or prints. Tax revenues cover less
than half of federal spending, according to the
US Debt Clock. When the cost for that profligacy comes due in the form
of inflation, the idea government can fund big new programs for long-term
care on the backs of taxed out consumers will be even more far-fetched
than it is already.
Milken:
“Because the Lab focused on middle-income access to affordable LTC, the
discussion does not extend to Medicaid coverage of LTC.” (p. 13)
LTC Comment:
It is beyond bizarre that people who call themselves experts are unaware
that Medicaid is the primary payer for expensive long-term care not just
for the poor but for the middle class as well. That fact is
well-established in the academic literature.
Milken:
“As noted, participants agreed that a private funding source would be most
expedient and politically feasible to conduct the demonstration. Many
argued that the regulatory approval needed for a CMS-sponsored project
would present too many constraints.” (p. 17)
LTC Comment:
That is a tacit acknowledgement that government won’t help; in the end,
we’ll have to rely primarily on the private sector. Better to do that
sooner than later in order to save what can be saved of the Medicaid
safety net for people in true need.
Milken:
“Lab participants were in remarkable agreement that the public and private
sectors should work together to design complementary insurance programs
and products to provide coverage that would offer financial protection and
reduce reliance on Medicaid.”
LTC Comment:
The “solution” Milken proposes—front end compulsory public program,
private wrap-around coverage, and Medicaid for the back end—won’t save
Medicaid anything unless financial eligibility for Medicaid is changed to
eliminate its easy access. People will use the government program, skip
voluntary private LTCI, and go on Medicaid as they do now. Fix that so
that Medicaid truly requires either spend down up front or pay back from
estates, and you won’t need new government and private insurance programs.
With the right incentives, the system will right itself.
Milken:
“In addition, stakeholders reiterated that expanding Medicare to include
LTC benefits could be a viable and efficient path forward.” (p. 25)
LTC Comment:
That would be like adding deck chairs to the Titanic after the
incident with the iceberg.
Milken:
“The Lab recommends that policymakers first select their funding
mechanisms and set funding levels, and then build out a benefit package to
fit that budget.” (p. 27)
LTC Comment:
Well that makes sense but it is certainly not what Washington State did.
Its politicians came up with a rather meager benefit and they’re now
struggling to find a way to fund it. Like the CLASS Act in that respect,
it will likely fall of its own weight.
Milken:
“In terms of financial solvency, policymakers must first determine if the
program is prefunded or pay as-you-go. They will have to create a trust
fund and ringfence those dollars. … As noted, Washington voters turned
down a referendum in late 2020 that would have expanded investment options
for the state’s LTC trust fund. Projections now show a major shortfall in
the state’s future fund balances that state lawmakers will have to address
in the coming years by increasing the payroll tax, reducing benefit
levels, or putting the issue to voters again.” (p. 29)
LTC Comment:
How do you “ringfence” a “trust fund” that must be filled with risky
investments to have any chance for long-term solvency?
Milken:
“One innovative approach to lowering premium levels and boosting uptake
could be through the utilization of reinsurance. … Notably, many
reinsurers left the LTC insurance market because of significant past
losses.” (p. 31)
LTC Comment:
The only “reinsurer” they’ll ever find for a program like this is the
federal government’s power to tax, borrow, print and spend money citizens
will repay through inflation in the end. To find the reinsurer of last
resort, look in a mirror.
#############################
Updated,
Monday, April 12, 2021, 10:40 AM (Pacific)
Seattle—
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LTC E-ALERT #21-012: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to the
original, and our analysis in a sentence or two. To inquire or subscribe,
contact Steve at 425-891-3640 or
smoses@centerltc.com. Read testimonials
by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more, contact
Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- Biden Begins An Important, Much-Delayed, National Debate About
Long-Term Care Reform
- 42% of older adults have unmet need for assistive bathing, toileting
devices
- Untracked COVID: Nursing home workers have died at twice the rate of
hospital workers
- CNAs virtually march on Washington, calling for higher wages, more
recognition
- COVID-19 Helped Long-Term Care Insurers in 2020: Fitch
- Genworth Ends China Oceanwide Merger Agreement
- Comment: Protect state’s new long-term care trust program
- Diane Archer on the Medicare Advantage Racket
- Study: Alzheimer's disease treatments could reduce the financial
burden to U.S. state budgets
- Senior housing wealth exceeds record $8.05 trillion
- Washington long-term care insurance program, a ‘compliance
nightmare,’ may face ERISA preemption
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Monday, April 5, 2021, 9:22
AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #21-011: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members also
receive our weekly LTC Bullet op-ed. To join the Center and receive all
these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
A Revolution Is Underway in Alzheimer's,
and It's Not All Good
-
Alzheimer’s origin story is about
metabolism and lifestyle, scientists contend
-
Biden Proposes The Biggest Medicaid
Home-Based Long-Term Care Expansion In History, But….
-
Home care providers laud Biden plan to
invest $400B in HCBS
-
Nursing home residents have a little more
time to spend stimulus checks before losing Medicaid
-
Dementia toolkit for clinicians underscores
urgency of early diagnosis
-
Too Much Restaurant Fare Could Shorten Your
Life
-
Shipping containers show promise as
affordable senior living solution
-
‘We pretend to work and they pretend to
pay’
-
MassMutual Sees Crisis Hitting Younger
Adults Harder
-
The Nursing Home Vulnerabilities That Led
to Disaster
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Friday, April 2, 2021, 10:24
AM (Pacific)
Seattle—
#############################
LTC BULLET:
MACPAC CAPTURED
LTC Comment: Signs in
MACPAC’s estate recovery report point to its capture by the Medicaid
planning bar. Evidence after the ***news.***
*** ILTCI’s VIRTUAL
CONFERENCE will convene every Tuesday and Thursday from 12-4pm EDT
starting April 13th. Conference Chairperson Barry Fisher and Co-Chair
Vince Bodnar report participants should register individually for each
session they want to attend or view the recording. All sessions are now
open for registration!
Click Here to register for the Opening Session and Keynote. Click the
following links to register for individual sessions in each track.
Actuarial & Finance
Advisors & Agents
Aging in Place Solutions (new this year!)
Claims & Underwriting
Legal, Compliance & Regulatory
Management & Operations
Marketing & Distribution
You can also
click here to see all of the sessions at a glance and register from a
single page. Registration and participation are free of charge! ***
*** CENTER SEEKS
reporters.
As we’ve done every year since the first Intercompany Long-Term Care
Insurance Conference (2001 in Miami), the Center for Long-Term Care
Reform intends to cover this one. But Center president Steve Moses is
unavailable to monitor two days of the conference, April 15 and 20. So
we’re inviting anyone who attends those two days to forward their notes on
the sessions they attend to
smoses@centerltc.com. Steve will integrate the material into as
comprehensive a report on the 2021 virtual meeting as possible. But don’t
limit yourselves to those two days; we welcome your coverage of all
sessions on every day. Thanks for your interest and assistance. ***
*** MOVIE NEWS: Ross
Schriftman’ “My
Million Dollar Mom” film has been accepted into its sixth festival,
the first in the Midwest: the
Julien Dubuque Festival in Iowa. Ross also reports: “We received an
excellence award from the
Best Shorts Competition.” Congratulations to longtime Center member
and supporter Ross Schriftman for bringing the importance of long-term
care planning to the public’s attention in this creative and impactful
way. ***
*** YESTERDAY, the
Center for Long-Term Care Reform celebrated its 23rd
anniversary. No foolin.’ Check out our
Membership Levels and Benefits and
sign up today to help us carry on another year with the kind of
trenchant analysis and public policy influence that follows. ***
LTC BULLET: MACPAC
CAPTURED
LTC Comment: Medicaid is
a means tested public assistance program. It is the primary funder of
expensive long-term care (LTC) in the United States. Unlike other welfare
programs, however, Medicaid does not have stringent income and asset
eligibility limits for its long-term care benefit. Instead, so that people
are not wiped out financially when stricken by chronic illness that
requires formal long-term care, Medicaid lets them apply excess income
toward their care, keep a substantial amount of assets including home
equity, and receive care at Medicaid’s substantially discounted rate. The
only quid pro quo is that recipients must agree to repay the cost
of their care to Medicaid after they pass away, from their estates, unless
that would create a financial hardship for a surviving dependent. This is
a generous benefit, in essence a government-sponsored loan that allows
people and their families to avoid the worst financial consequences of an
uninsured extended care need.
But the Medicaid and
CHIP Payment and Access Commission (MACPAC) wants to curtail Medicaid
estate recoveries. MACPAC recently asked Congress to (1) make estate
recoveries voluntary, (2) reduce recoveries from Medicaid’s rapidly
expanding Managed Long-Term Services and Supports (MLTSS) programs, and
(3) mandate “hardship” waivers for heirs when no financial hardship
exists. Without estate recoveries, Medicaid’s generous long-term care
benefit is a giant giveaway to people with money who could have paid some
or all of the cost of their own care, diverting them from taking timely
personal responsibility for LTC risk and cost.
Why would MACPAC seek to
make estate recoveries less effective, reduce vital nontax revenue to
Medicaid from estates, and reward the heirs of people who failed to save,
invest or insure for long-term care with taxpayer-financed loan
forgiveness? The answer is that the Commission was unduly influenced by
the Medicaid estate planning bar, the lawyers who make their livings
counseling affluent clients on how to circumvent Medicaid’s financial
eligibility rules and evade estate recoveries. This conclusion is
unavoidable upon close review, which follows, of MACPAC’s latest report to
Congress.
Chapter 3 of MACPAC’s
March 2021
Report to Congress on Medicaid and CHIP is titled “Medicaid
Estate Recovery: Improving Policy and Promoting Equity.” It contains
MACPAC’s recommendations to Congress regarding Medicaid estate recoveries.
What follows are quotations from that chapter followed by our analysis in
corresponding “LTC Comments.”
MACPAC: “We
conducted nine interviews with AARP, the Centers for Medicare & Medicaid
Services (CMS), estate recovery contractor HMS, retired elder law attorney
Jason Frank, Justice in Aging, the National Academy of Elder Law
Attorneys, the National Association of Medicaid Directors, and state
officials from Oregon and Tennessee.” (p. 96)
LTC Comment: This
list of interviewees is overweight with senior advocates (AARP, Justice in
Aging) and Medicaid planning lawyers (National Academy of Elder Law
Attorneys and Jason Frank), underweight in representation from
nonpolitical experts on Medicaid estate recovery, and totally missing the
front line Medicaid eligibility workers who have the most direct knowledge
of how lawyers dodge Medicaid financial eligibility rules and evade estate
recovery for their affluent clients.
MACPAC:
“[C]ritics have noted that many people with sizeable wealth are able to
legally shield assets from Medicaid estate recovery so these can be used
for their benefit or passed on to heirs. This leaves the burden of estate
recovery to fall primarily on those of modest means; this may also
disproportionately affect people of color given disparities in household
wealth.” (p. 73)
LTC Comment: Is
that the fault of estate recoveries or of the “people with sizeable
wealth” and their enablers who dodge estate recovery? This is a theme the
Commission returns to over and over again as indicated by the following
series of quotes. They have their argument backwards. Their legitimate
complaint is with Medicaid planning abuse, not estate recovery. Estate
recovery, by definition, reduces “disparities in household wealth” by
returning protected wealth to Medicaid for the benefit of the
disadvantaged of any color.
MACPAC: “The
program mainly recovers from estates of modest size, suggesting that
individuals with greater means find ways to circumvent estate recovery and
raising concerns about equity.” (p. 73)
“As we heard in our
interviews with stakeholders, individuals with greater awareness of estate
recovery and resources may protect their assets from estate recovery while
preserving Medicaid eligibility, allowing resources to be passed on to
their heirs.” (p. 84)
“Because wealthier
beneficiaries have found ways to protect assets so they can be passed on
to their heirs, current Medicaid estate recovery policy places an unfair
burden on beneficiaries with limited means, whose heirs would likely
receive substantial protection from poverty or housing insecurity if they
were able to retain an estate of even modest size.” (p. 92)
“Given that estate
recovery likely only occurs for those without the resources and awareness
to avoid it through estate planning, making it optional will help address
equity concerns we heard in our interviews.” (p. 94)
“The Commission
recognizes the growing financial pressures on the LTSS system, and that
one way of addressing that pressure could be to explore mechanisms for
people with substantial means to fund their own LTSS (e.g., private
insurance) instead of seeking Medicaid. As noted above, during the
Commission’s various discussions on estate recovery policy, a concern was
raised about potential abuses of Medicaid planning activities that allow
individuals to shield assets to gain Medicaid eligibility. Given that this
is a wholly separate issue from estate recovery, the Commission agreed to
defer further discussion of that issue for now and explore later whether
there is a need for policy improvements related to eligibility.” (p. 96)
LTC Comment: The
Commission has the cart before the horse. Medicaid planning abuse is not a
“wholly separate issue from estate recovery.” It is the essence of estate
recovery. Medicaid programs cannot recover what is not in an estate
because it was divested prior to or during Medicaid eligibility. Most of
the complaints the Commission raises about estate recovery—including low
recovery amounts, recovery from small estates, and the inequity of the
wealthy dodging the system while the less savvy pay up—would be eliminated
by ending Medicaid planning abuse. The logical progression is to address
the abuses of Medicaid planning before considering estate recovery.
Instead the Commission seeks to hamstring estate recovery which is the
only thing preventing Medicaid planners and their prosperous clients from
getting off scot-free from long-term care responsibility at the expense of
taxpayers and to the detriment of the actually needy people Medicaid is
supposed to serve.
MACPAC:
“Individuals who engage in Medicaid planning may be able to legally
protect some of their assets, thus keeping assets that would otherwise
deem them ineligible for Medicaid LTSS. One technique allowed in some
states to reduce the length of the penalty period is known as the reverse
half-a-loaf mechanism (GAO 2014).” (p. 80)
LTC Comment:
Medicaid planning includes a wide range of techniques from very simple and
common (the
purchase of exempt assets to reduce countable wealth) to relatively
sophisticated, somewhat less common methods (Medicaid
compliant annuities and
Medicaid Asset Protection Trusts) to mind-numbingly complicated,
relatively rare strategies like the “reverse
half-a-loaf” gimmick. Yet when the Commission gives an example of
Medicaid planning, they offer the relatively obscure reverse half-a-loaf.
That’s a very lawyerly way to divert attention and criticism from the much
more common practices used to dodge Medicaid eligibility rules. For
example, Medicaid planners give their clients long lists of things they
can buy such as a more expensive home or car, household goods and personal
belongings that convert wealth from countable to non-countable. This
practice is almost universal, so a much more honest example of Medicaid
planning than “reverse half-a-loaf.”
MACPAC: “Finally,
Medicaid estate recovery policies are unique among federal programs. For
example, many people who use LTSS are dually eligible for Medicare and
Medicaid, yet as one advocate noted, the federal government does not
pursue Medicare costs, which can also be quite high … .” (p. 84)
LTC Comment:
MACPAC is confused about the nature of Medicaid and Medicare. Medicaid is
public charity for which people become eligible based on their inability
to afford health and long-term care. Medicare is social insurance which
entitles people to benefits by virtue of their having contributed
substantial payroll taxes over many years. Medicaid is welfare, unearned;
Medicare is like private insurance which requires “premiums” and is thus
“earned.” Medicaid has “recipients;” Medicare has “beneficiaries,” but
MACPAC uses the incorrect term “Medicaid beneficiary” a dozen times in
this chapter. MACPAC displays its confusion about these programs by
referring everywhere in the report to Medicaid recipients as if they were
beneficiaries, giving the former a status they have not earned. Obviously,
Medicare beneficiaries who paid for the benefits they received are not
required to repay the cost of their care from their as Medicaid recipients
must, who received benefits and retained wealth without having to
contribute toward the cost of their care.
MACPAC: “If an
individual’s home equity is above the state’s limit, they will be deemed
ineligible to receive Medicaid LTSS; for 2021, the federal minimum home
equity limit is $603,000 and the maximum limit is $906,000 (CMS 2021). In
2018, 40 states used the federal minimum limit, nine states used the
maximum limit, one state, Wisconsin, set a limit in between, and one
state, California, had no limit (KFF 2019).”
LTC Comment:
Prior to the Deficit Reduction Act of 2005, Medicaid had no limit
whatsoever on home equity. Unfortunately, the limits cited here,
reflecting inflation since the DRA ’05 was passed, are meaningless. Recent
research concluded “we estimate that nearly the entire elderly population
would meet the home equity threshold of 552,000 [as of 2015].” (Robert
Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial
Eligibility for Medicaid Long-term Services and Supports, Journal of Aging
& Social Policy, DOI: 10.1080/08959420.2020.1740638, p. 7) Without estate
recoveries, this enormous real property wealth is eliminated as a source
of funding for long-term care, funding for which the country is
desperately in need. MACPAC realized this fact as the next quote indicates
but ignored it anyway.
MACPAC: “During
the Commission’s deliberations, a concern was raised that allowing states
to discontinue estate recovery would essentially exempt all home equity
below the minimum home equity asset standard (currently set at $603,000)
used for eligibility determination. Ultimately the Commission decided that
issues and concerns related to eligibility determination should be taken
up separately from estate recovery.” (p. 93)
LTC Comment:
According to
Kiplinger, “homeowners age 62 and
older have a record $6.5 trillion of ‘tappable’ equity.” Imagine the
potential for that wealth to relieve the stress on America’s long-term
care financing system. Yet MACPAC neither proposes mandating reverse
mortgages to capture that potential on the front end nor defends estate
recovery to put it to use on the back end.
MACPAC: “For
heirs of these modest estates, estate recovery may remove a source of
income or a residence which, if retained, would protect the heirs from
poverty or housing insecurity. As multiple interviewees commented, this
contributes to generational poverty and wealth inequality. The policy may
also place an unequal burden on people of color, compounding existing
wealth inequalities among racial and ethnic groups.” (p. 84)
LTC Comment: This
makes no sense. How could requiring people to repay the cost of their
care—from wealth Medicaid enabled them to protect while receiving
assistance—contribute to “existing wealth inequalities among racial and
ethnic groups?” It does exactly the opposite. It reduces the discrepancy
in wealth between those who have (including clients of Medicaid planners)
and those who have not (underprivileged racial and ethnic groups).
Furthermore, it is not in the interest of the state to impose such
unreasonable burdens on heirs as to drive them onto public assistance.
Hardship waivers are liberally granted in such cases although relatively
few are requested.
MACPAC: “Estate
recovery recoups relatively little—only about 0.55 percent of total
fee-for-service LTSS spending.” (p. 72)
LTC Comment:
Every dollar Medicaid does recover from estates goes back into the system
to help others in their time of need. MACPAC should focus on preventing
leakage of sheltered wealth from estates prior to recovery. Instead the
Commission seeks to cripple estate recovery itself. Besides, Medicaid
estate recovery barely scratches the surface of the potential nontax
revenue that could redound to the program, as MACPAC acknowledges in the
next quote.
MACPAC: “Research
suggests that states do not recover all they could—one study estimated
states could have collected 5.5 times more from 2002 to 2011 if all their
efforts matched those states that were most effective at estate recovery (Warshawsky
and Marchand 2017).”
LTC Comment: It
should be noted, however, that even more important than the actual dollar
totals that could be collected is the potential cost avoidance from estate
recoveries. Properly publicized and enforced so that the public knows that
long-term care is a risk they must pay for later if they don’t plan and
prepare now, responsible people will be far more likely than they are
today to think about ways to plan, save, invest or insure for the risk.
The public policy goal should be to divert people from dependency on
Medicaid not to seduce them onto the program as elastic eligibility
policies manipulated by Medicaid planners do now.
MACPAC: “Due to
restrictions on Medicaid eligibility for LTSS, older adults covered by
Medicaid have few assets. Three-quarters of Medicaid decedents had net
wealth of less than $48,500.” (p. 72)
LTC Comment:
MACPAC can’t have it both ways. Either wealthy people dodge Medicaid
financial eligibility rules as the Commission frequently acknowledges or
“restrictions on Medicaid eligibility” cause estates to be small. Both
aren’t true. Estates are small not because stringent eligibility
requirements force a lot of people to spend down into impoverishment. Such
requirements don’t exist. Rather, most people on Medicaid had little to
“spend down” in the first place. They are the people Medicaid is intended
to serve. But Medicaid planners reduce their clients’ net worth by means
of Medicaid compliant annuities, Medicaid Asset Protection Trusts, exempt
asset transfers, and many other techniques of artificial
self-impoverishment. It is those artificially poor Medicaid recipients who
are being asked to pay their fair share.
MACPAC: “Fear of
estate recovery may deter some individuals from seeking Medicaid LTSS,
however, awareness and understanding of these policies by potential
Medicaid beneficiaries is low.” (p. 72)
LTC Comment: This
is another self-contradictory statement. How can “fear of estate recovery”
deter seeking Medicaid if “awareness and understanding of these policies”
is low? The solution to this quandary is to publicize the Medicaid estate
recovery requirement more widely and often so everyone knows that relying
on public assistance while retaining wealth requires a payback from the
estate. With that knowledge, more people would take long-term care risk
and cost seriously; save, invest or insure to offset or spread that risk;
and end up in a better position to pay privately for better care than
Medicaid can afford to provide. Especially, knowing that home equity is at
risk for estate recovery would encourage more people to tap their home
equity through reverse mortgages unleashing a massive new LTC funding
source that is so desperately needed to relieve the fiscal pressure on
Medicaid.
MACPAC: “In
general, this study found that, with some exceptions, the assets of older
adults enrolled in Medicaid are quite modest, with a substantial
proportion of individuals having little to no wealth (Table 3A-1). At age
65 and older, the average net wealth among Medicaid decedents was $44,393.
… the highest quartile held an average of $173,436 in net wealth.” (p. 81)
LTC Comment: Some
exceptions? Well I guess so! A quarter of the sample had almost $175,000
in net wealth or more. It’s not clear at all why public policy should
discourage recovery from such large estates, but that would be the effect
of MACPAC’s recommendations The Congressional Budget Office (CBO)
confirmed that all three of MACPAC’s proposals would increase federal
expenditures and reduce resources available to Medicaid.
MACPAC: “CBO
estimates that this recommendation [to make estate recovery voluntary]
would reduce estate recovery collections from state Medicaid programs,
which would increase federal spending on Medicaid. Federal spending would
increase by $50–250 million per year between 2022 and 2030, less than $1
billion between 2021 and 2025, and $1–5 billion between 2021 and 2030.” (pps.
93-94)
“CBO estimates that this
recommendation [to restrict MLTSS recoveries] would reduce estate recovery
collections from state Medicaid programs, which would increase federal
spending on Medicaid. CBO was unable to provide a specific estimate for us
… .” (p. 94)
“CBO estimates that this
recommendation [to base hardship waivers on estate values instead of
financial hardship] would reduce estate recovery collections from state
Medicaid programs and increase administrative costs, which would increase
federal spending on Medicaid CBO was unable to provide a specific estimate
for us … .” (pps. 95-96)
LTC Comment: No
one besides MACPAC is looking for ways to reduce revenue to Medicaid for
long-term care. The program is desperately short of funding and
notoriously scrimpy in its reimbursement levels for long-term care
providers. Low Medicaid funding is often associated in the literature with
too few caregiving staff and serious access and quality problems. Medicaid
needs more revenue, not less. What exactly does MACPAC recommend?
MACPAC: “Recommendations
3.1Congress should amend Section 1917(b)(1) of Title XIX of the Social
Security Act to make Medicaid estate recovery optional for the populations
and services for which it is required under current law.” (p. 72)
LTC Comment:
Mandatory estate recoveries are critical to the Medicaid long-term care
program’s success as explained in the “LTC Comments” above. The policy
should affect everyone equally throughout the country in order to
discourage excessive reliance on Medicaid for long-term care and to
encourage personal responsibility and early long-term care planning. It
was a great victory in the Omnibus Reconciliation Act of 1993 (OBRA ’93)
to make estate recoveries mandatory in every state based on analysis and
recommendations in a 1988 report of the Department of Health and Human
Services’ Inspector General:
Medicaid Estate Recoveries: National Program Inspection -- Office
of Inspector General (1988). See also the related
Transfer of Assets in the Medicaid Program: A Case Study in Washington
State -- Office
of Inspector General (1989). It would be a tragedy to reverse that
progress in the way MACPAC recommends.
MACPAC: “3.2
Congress should amend Section 1917 of Title XIX of the Social Security
Act to allow states providing long-term services and supports under
managed care arrangements to pursue estate recovery based on the cost of
care when the cost of services used by a beneficiary was less than the
capitation payment made to a managed care plan.” (p. 72)
LTC Comment:
Addressing capitation payments as in this recommendation is simplistic.
Managed care organizations apply complicated formulas to determine what
they charge for their fees and what they pay for all the medical bills,
and then they must negotiate with the state. These are very large
contracts based on actuarially determined risks and benefits. Insurance is
inherently inequitable, because some people pay premiums and get no
benefits, while other people pay the same premiums, but become sick,
injured, careless or unlucky, and receive large benefits. That is how
insurance spreads risk. Managed care organizations already rate the
monthly capitation fee by the level of service of individuals. That
protects beneficiaries who use relatively few services, but it also covers
some potential risks in the same way as private insurance would. Requiring
managed care companies to tally up their charges for all services they
have paid adds another level of service and causes complications such as
attending court hearings and responding to complaints of family members
after death about what was paid to providers. This added duty would
increase fees to the states. Determining the claim amount is a pre-death
matter. Whether fee-for-service or capitation payments are used, the
recovery should be for what Medicaid paid on the deceased recipients'
behalf. If there are inequities in the system, then those should be
resolved before death, because collecting only fee for service in a
capitation system would add extra administrative burdens for the managed
care organizations to prove up the claims to the heirs and to the courts.
MACPAC: “3.3
Congress should amend Section 1917 of Title XIX of the Social Security
Act to direct the Secretary of the U.S. Department of Health and Human
Services to set minimum standards for hardship waivers under the Medicaid
estate recovery program. States should not be allowed to pursue recovery
for: (1) any asset that is the sole income-producing asset of survivors;
(2) homes of modest value; or (3) any estate valued under a certain
threshold. The Secretary should continue to allow states to use additional
hardship waiver standards.” (p. 72)
LTC Comment:
Hardship waivers should relate to the financial condition of the qualified
heir or dependent. They should have nothing to do with the value of the
house, the estate, or an income-producing asset. What matters is whether
the person requesting the hardship is actually facing financial hardship.
Hardship waivers are rarely requested (1%) and should be routinely granted
to avoid generational poverty. Nearly two-thirds of potential Medicaid
estate recovery is not collectible at all. There is no effect on race or
generational poverty if there is no recovery. Hardship waiver policies
across the states are inconsistent as are other estate recovery policies.
Seeking uniformity is not a reason to create more loopholes in the
process. Hardship waivers should be based on dependents’ income, assets,
and whether collection of the debt would deprive the person seeking the
waiver of necessities like food, shelter, clothing, or medical care.
Closing LTC Comment:
Medicaid estate recoveries help to sustain the Medicaid long-term care
program and to discourage excessive dependency on it. MACPAC’s
recommendations would line the pockets of Medicaid estate planning lawyers
and indemnify their affluent client heirs for the long-term care costs
their parents’ avoided at public expense. Is it any wonder that advice
from “elder law attorneys” is cited repeatedly throughout this report but
we hear nothing from Medicaid eligibility workers or estate recovery staff
who know firsthand how desperately inequitable the system MACPAC proposes
would be? Medicaid planners have the most to gain from curtailing estate
recoveries. By not acknowledging, much less disavowing, this obvious
conflict of interest, MACPAC destroyed the objectivity and credibility of
its recommendations.
#############################
Updated,
Monday, March 29, 2021, 9:20 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-010: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to the
original, and our analysis in a sentence or two. To inquire or subscribe,
contact Steve at 425-891-3640 or
smoses@centerltc.com. Read testimonials
by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more, contact
Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Reverse Mortgages:
10 Things You Must Know
-
Genworth Names
Chairman With Private Equity Deal Experience
-
Lawmakers might
close a window on workers who would rather choose their long-term care
plan than be taxed for a publicly financed one
-
Middle-Age
Loneliness Linked to Alzheimer's Disease
-
Cutting Medicaid
and SNAP Red Tape During the Pandemic
-
How to Walk the
Medicare Advantage Communications Tightrope
-
Is Eating
Processed Meat a Risk Factor for Dementia?
-
The Nation’s
Fiscal Health: After Pandemic Recovery, Focus Needed on Achieving
Long-Term Fiscal Sustainability
-
Implementation of
a $15 federal minimum wage may help reduce turnover in long-term care:
expert
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, March 22, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-009: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to the
original, and our analysis in a sentence or two. To inquire or subscribe,
contact Steve at 425-891-3640 or
smoses@centerltc.com. Read testimonials
by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more, contact
Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Senator calls for
mandatory Medicaid coverage of HCBS as nursing homes remain under fire
on Capitol Hill
-
New Video Library
-
Long-Term Care
Insurers Reveal Early COVID-19 Effects
-
2021 Poverty
Projections: Assessing Four American Rescue Plan Policies
-
Study: Heart
problems in young adulthood increase cognitive decline later
-
The Boom in
Out-of-State Telehealth Threatens In-State Providers
-
Amazon Care
reportedly to launch telehealth offering in all 50 states
-
Report: Adult
family care homes deserve ‘closer look’ as viable alternative to nursing
homes
-
MedPAC to
Congress: Reduce payments to home health in 2022, expand telehealth
beyond public health emergency
-
Nearly all seniors
are now prescribed drugs tied to falls: Study
-
Advocates Release
Nursing Home Industry Reform Proposals
-
Home Equity
Continues To Soar
-
House expected to
vote to delay start of Medicare sequester
-
Maggots, Rape and
Yet Five Stars: How U.S. Ratings of Nursing Homes Mislead the Public
-
Washington State's
New Long-Term Care Statute Is a Mess – Can ERISA Preemption Provide the
Cleanup?
-
Citing Vaccine
Rollout, CMS Relaxes Nursing Home Visitation Rules
-
How Can The US
Fix Long-Term Care In A Post Covid-19 World?
-
Dementia Patients
Often Have Dangerous Mix of Drugs at Home
-
Pandemic-Driven
Home Health Shifts Trigger Therapy Layoffs, Nursing Home Strategy
Changes
-
‘Absolutely
astonishing’: 90% drop in COVID cases shocks Parkinson, industry leaders
-
Can we keep
Medicare from being insolvent by 2024?
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, March 19, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC
BULLET: THE KEY TO LTC
LTC
Comment: Solving the long-term care financing crisis isn’t so hard if you
avoid ideology and take human nature into account. We explain after the
***news.***
*** TODAY'S LTC BULLET is
sponsored by Claude Thau, who provides many unique services to
advisors as National Brokerage Director for USA-BGA in the individual,
worksite and affinity LTCi markets. Advisors like his unique, simple
and effective LTCi presentation and his revolutionary “Range of
Exposure” tool which, among other things, projects a client’s (joint
for a couple) mean age of LTC, likely annual cost and length of need
based on age, gender, marital status, success goal (% chance of not
outliving their assets), etc. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. Contact him at 913-707-8863 or
claude.thau@gmail.com to discuss how he
might help you. *** |
***
DEBT BOMB, tick, tick, tick: Have you checked the
US Debt Clock
lately? The Treasury is hemorrhaging debt and the Federal Reserve is
monetizing it apace. Federal spending this year is $8.0 trillion, but tax
revenue is less than $3.5 trillion. How can that be? The Fed is printing
the money, creating it out of thin air, to fund the difference between tax
inflow and spending outgo. Bottom line, we’re pulling capital out of the
productive economy to shower it on everyone and everything not producing
anything. The result is more money and less to buy with it. As Elon Musk
said: “If you don’t make stuff, there is no stuff.” Is this the elusive
free lunch of
Modern Monetary Theory?
Hardly. The bill will come due in the form of inflation, the most
pernicious tax that hurts the poor most of all. So much for the
sanctimonious, hypocritical effusions of politicians and analysts who just
want to “help people” by spending money the economy has not earned. ***
LTC
BULLET: THE KEY TO LTC
LTC
Comment: Long-term care services and financing in the USA are in a world
of hurt. More and more people need care; families are stretched thin to
provide free care; government programs are inadequate (Medicare) or pay
too little (Medicaid) to ensure quality care in the most appropriate
venue; private financing from personal spending, home equity or private
insurance is extremely limited. The situation gets worse every year. Most
analysts prescribe more government spending and regulation, but there is
no evidence that vast increases in public spending and control have helped
rather than worsened long-term care access and quality so far.
In
fact, little has changed for the better since I first analyzed long-term
care in the early 1980s. Then as now most people ignored long-term care
risk and cost until they suddenly needed expensive care at which time the
option of qualifying for Medicaid opened up for them. Generous income and
asset eligibility rules eased the way onto public assistance creating a
moral hazard for the aging infirm and a conflict of interest for their
heirs. Pay privately and be wiped out financially or let Medicaid foot the
bill and accept the downsides of limited choice, poor quality and mostly
nursing home care. This was the Hobson’s choice, take it or leave it, most
families faced. Of course, most families took the path of least
resistance. They accepted public assistance, placed their elders in
Medicaid nursing homes, and thus perpetuated the system that persists to
this day.
As I
began to study this problem in 1982, two paths to a solution opened up
before me. We could change Medicaid LTC eligibility rules so they truly
require impoverishment. That would remove the moral hazard and the
perverse incentive to rely on public assistance, but it would be harsh and
politically infeasible. The other way would be to keep Medicaid LTC
eligibility generous, even make it more so, but require that assets
preserved during a recipient’s lifetime while his or her care was covered
by Medicaid should be recovered later, from the recipient’s estate, after
no exempt relative still depended on them. The key to this “kinder
gentler” solution was estate recovery. That would remove the incentive to
ignore LTC risk and cost until confronted with the need and it would give
seniors their dignity back. It isn’t welfare if you repay Medicaid.
I
developed these ideas and documented them in a report for the HCFA titled
“The
Medicaid Estate Recoveries Study.”
It is still available online
here.
Although HCFA did not publish this study, the USDHHS Office of Inspector
General and the then General Accounting Office (now Government
Accountability Office) both picked up on it and conducted their own
national studies developing the theme. The Inspector General hired me out
of HCFA so that I could conduct the IG study and write its report: “Medicaid
Estate Recoveries: National Program Inspection.”
It remains available on the IG’s website
here.
Following are the Inspector General’s recommendations. They were designed
to keep Medicaid long-term care eligibility readily available for people,
even those with substantial wealth, who had insufficient cash flow to
afford needed care and would be devastated financially if they had to pay
up front. The quid pro quo for this public munificence was that
costs expended by Medicaid would be recovered from each recipient’s
estate. The goal of these recommendations was to awaken the public to the
need to plan for long-term care, reward personal responsibility and early
planning, prepare them to pay privately when and if expensive care became
necessary, encourage the use of home equity conversion and private
insurance, create a new nontax revenue source for Medicaid, and hence over
time return Medicaid mostly to people in true need and make it a better,
more well-financed program for all.
Now,
please read the IG’s recommendations from “Medicaid
Estate Recoveries: National Program Inspection.”
The recommendations that later became federal law are
bolded.
I’ll return at the end with an “LTC Comment” to explain what happened:
which recommendations became law and when, why the goal of saving Medicaid
LTC by encouraging personal responsibility has failed so far, and what
would need to be done to fix the long-term care services and financing
crisis now.
The
following is a verbatim quote from “Medicaid
Estate Recoveries: National Program Inspection,”
pages 50-53.
RECOMMENDATION #l--ELIGIBILITY AND TREATMENT OF RESOURCES
FINDING: Some HCFA, SSI, and state Medicaid policies promote retention of
assets during Medicaid eligibility while others encourage precipitous
liquidation of property with concomitant losses in value. Assets retained
by recipients, in the absence of estate recovery programs, pass
unencumbered to heirs at the expense of the taxpayers. Assets liquidated,
sheltered or concealed to obtain eligibility are lost as a long-term care
funding resource also. Incapacitated elderly people are sometimes
financially abused by people who want to take their property, while at the
same time, qualifying them for Medicaid nursing home benefits.
RECOMMENDATION: Change Medicaid rules to permit families to retain and
manage property while their elders receive long-term care. Specifically:
eliminate SSI "intent to return" rules as they apply to Medicaid
long-term care recipients. Reinstate and broaden the "bona fide effort to
sell" exemption. Allow Medicaid recipients to retain more income-producing
property such as "contracts of deeds" or rental homes. Require
agreement to liens and estate recoveries as a condition of Medicaid
eligibility for people with property. Encourage State Medicaid
programs to protect recipients and their property from financial
exploitation through conservatorships, legal representation, and property
management when necessary.
IMPACT: This policy would ease the financial impact of catastrophic
long-term care costs on the elderly and their families, giving them time
to cope with the problem. Total Medicaid costs would decline as estate
recoveries increase.
RECOMMENDATION #2--TRANSFER OF ASSETS
FINDING: Despite almost universal State implementation of the TEFRA
authority to restrict transfers of assets for the purpose of obtaining
Medicaid eligibility, people are still able to give away property to
qualify for assistance. This may be done by using the legal "loopholes"
recommended in law journal articles or by deceit and concealment.
RECOMMENDATION: Strengthen the transfer of assets rules so that people
cannot give away property to qualify for Medicaid. Specifically:
improve State verification of property and transfers. Clarify that the
"transfer of assets" restrictions apply to all property including that
which is, or would be, exempt from eligibility determination.
Expressly prohibit the transfer of property to spouses and other
dependents which is permitted under current law. Extend the current
2-year "look-back" period to 5 or more years. Have HCFA publish
regulations on transfer of assets.
IMPACT: More property will be retained by recipients to reimburse Medicaid
for their cost of care after they and their dependents are no longer in
need.
RECOMMENDATION #3—LIENS
FINDING: State Medicaid programs need a way to track property owned by
recipients and ensure that it is not transferred or otherwise disposed
before recovery of Medicaid benefits can be accomplished. Liens achieve
these objectives most efficiently. While permitting liens, TEFRA placed so
many qualifications on their use that only two states have employed liens
to secure property for recovery of benefits correctly paid.
RECOMMENDATION: Require a legal instrument as a condition of Medicaid
eligibility to secure property owned by applicants and recipients for
later recovery. Specifically: Make liens, or some other form of
encumbrance, a condition of eligibility so that the recipient’s interest
in any property solely or jointly owned will inure, up to the cost of care
paid by Medicaid, to the Medicaid program when neither the recipient nor
dependents need the property further. Promote home equity conversion by
using liens, "voluntary mortgages,” open-ended mortgages " and accounts
receivable to let people extract their equities gradually while they
receive assistance.
IMPACT: Mandatory liens would secure the State and Federal Government’s
investment and permit Medicaid recipients to retain needed property while
receiving highly expensive, but essential care.
RECOMMENDATION #4--ESTATE RECOVERIES
FINDING: Less than half of the States pursue Medicaid estate recoveries
for benefits correctly paid. Of those which do, a few are very effective,
but most are not. The HCFA and State Medicaid managements place little
emphasis on retention of recipient property or estate recoveries. The
TEFRA authority for estate recoveries, as for transfer of assets
restrictions and liens, is only voluntary. Many State staff believe that
TEFRA limitations hobble estate recoveries without safeguarding
legitimate recipient interests.
RECOMMENDATION: Increase estate recoveries as a nontax revenue source for
the Medicaid program while steadfastly protecting the property rights of
recipients and their dependents. Specifically: Make estate recovery
programs mandatory like other forms of third party liability. Provide
technical assistance on estate recoveries, so that States can implement
quickly and easily to generate an immediate cash flow for the Medicaid
program. Promote awareness of the importance of real property ownership
and estate recoveries for Medicaid funding. Allow estate recovery of
benefits received before age 65. Permit estate recovery in cases of joint
tenancy with right of survivorship. Require spousal and dependent
recoveries upon death or seniority (of a minor child.)
IMPACT: Based on Oregon' s experience--even under current restrictive
laws, regulations and policies--estate recoveries can recoup 5.2 percent
of Medicaid nursing home costs, 5.0 percent of Medicaid payments to people
over age 65, and 1. 7 percent of total Medicaid vendor payments. With
enhanced legal authorities and greater programmatic emphasis, the
contribution of estate recoveries to Medicaid’s program resources could be
truly staggering.
RECOMMENDATION #5--FUTURE STUDIES
FINDING: We have a great deal of circumstantial evidence about public
assistance resource avoidance and estate planning to qualify for Medicaid.
No hard data are available, however, on the extent of these practices. We
also are unaware of how much Federal money is spent by the Legal Services
Corporation and other national programs to promote Medicaid eligibility
for people with property. We cannot account, without further review, for
large discrepancies in amounts of estate recoveries reported to us versus
"probate recoveries" reported to HCFA (for purposes of reimbursing the
Federal share of recoveries. Finally, a priori, it would seem that the
ability to receive Medicaid while preserving assets is a strong
disincentive to the purchase of private long-term care insurance. Is this
true, and if so, would programmatic changes such as those recommended here
remove the disincentive and promote nonpublic assistance options to
funding long-term care?
RECOMMENDATION: At a minimum, the following actions should be taken:
-
Conduct a comprehensive study of the transfer of assets problem to
estimate how much equity is being diverted from long-term care costs at
the expense of the Medicaid program. To what extent is the Federal
Government funding this diversion by training attorneys and counseling
prospective Medicaid recipients?
-
Conduct a thorough audit of Medicaid estate recovery programs to
determine if the Federal Government is receiving its full share of the
proceeds.
-
Perform a review to determine whether the availability of Medicaid
without encumbering assets has a chilling effect on the marketability of
private sector risk-sharing products such as long-term care insurance.
IMPACT: Results of these studies could point the way to a more equitable
and efficient utilization of economic resources for the satisfaction of
catastrophic long-term care needs.
LTC
Comment:
The USDHHS Inspector General’s report “Medicaid
Estate Recoveries: National Program Inspection”
proposed a straight forward solution for long-term care financing. Let
Medicaid pay for long-term care when people lack sufficient income to pay
privately, but counterbalance that considerable benefit with a guarantee
secured by a lien that families do not divest their wealth before or while
receiving publicly financed care and a requirement that benefits received
be paid back out of estates whenever recovery does not create a financial
hardship on heirs. The goals of this proposal were to eliminate the
tragedy of catastrophic LTC spenddown, create an incentive for people to
plan early for long-term care by saving, investing, or insuring privately,
to generate a large new nontax revenue source for Medicaid, and to reduce
dependency on Medicaid by the middle class so that it could become a
better program for a smaller number of genuinely needy recipients.
So
what happened? We got part way there statutorily. As the highlights in the
proceeding quotation indicate, Medicaid estate recoveries became
mandatory. That occurred in the Omnibus Budget Reconciliation Act of 1993
(OBRA ’93). Several federal laws strengthened the transfer of assets
restrictions, gradually extending the look back period from two years to
five years in the Deficit Reduction Act of 2005 (DRA ’05). DRA ’05 also
put the first cap ever on Medicaid’s home equity exemption potentially
encouraging home equity conversion to fund LTC in lieu of Medicaid
although the cap was too high at $500,000 increasing with inflation to
achieve that objective. Transfer of assets restrictions were extended to
include transfers of an exempt home which transfers were previously
permitted without affecting eligibility. The HCFA finally published
regulations on asset transfers after a long delay. Other federal statutes
allowed estate recovery of benefits received before age 65 and permitted
estate recovery in cases of joint tenancy with right of survivorship.
All
these measures were steps in the right direction. But other key
recommendations by the Inspector General were left unfulfilled. Liens to
hold property during Medicaid eligibility were never required so wealth
continued to disappear while recipients received Medicaid LTC coverage.
None of the recommended studies to elucidate the reality and potential of
eligibility controls, liens and estate recoveries were ever conducted.
Most importantly the federal government did not enforce the new
restrictions aggressively; most states did not implement them fully and
some ignored the federal mandates entirely; the media did not publicize
the estate recovery liability; so the public blithely continued to ignore
LTC risk and cost until they needed expensive care and Medicaid
eligibility opened up as a slick way to avoid personal financial loss.
So
what’s the lesson to be learned? Clearly we need to revisit the analysis
and recommendations in the IG report, implement them fully, enforce them
aggressively, publicize them widely, and get long-term care financing back
on an even keel, dominantly financed privately by home equity conversion
and, ultimately, by a revitalized private long-term care insurance market.
What we do not need is more government money flowing into a system that
defies human nature by disincentivizing personal responsibility and
rewarding the failure to plan for long-term care. Yet that is exactly what
MACPAC (the Medicaid and CHIP Payment and Access Commission) proposes to
do as we explained recently in “LTC
Bullet: MACPAC Misfires.”
Here’s the latest. On March 15, 2021, MACPAC published its annual “Report
to Congress on Medicaid and CHIP.”
According to that report:
Chapter 3 makes recommendations to ease the burden of Medicaid estate
recovery, which often falls on those with modest means, and may
disproportionally affect people of color and perpetuate intergenerational
poverty. Federal law requires state Medicaid programs to seek recovery
from the estates of certain deceased beneficiaries for payments for
long-term services and supports (LTSS) and other services. The Commission
recommends returning to prior law, making estate recovery optional, rather
than mandatory. It also recommends allowing states that cover LTSS under
managed care to pursue recovery based on the cost of services where it is
less than the capitation payment paid to a managed care plan; and directs
the Secretary of the U.S. Department of Health and Human Services (HHS) to
establish minimum hardship waiver standards, including a minimum estate
value threshold for estate recovery.
If
Congress were to follow these recommendations, the country’s long-term
care financing system would be further hampered in its ability to supply
quality care for all Americans. It is clear from MACPAC’s report that the
commission’s “research” on the subject of Medicaid estate recoveries
included extensive consultation with elder law attorneys who make their
livings putting affluent people on Medicaid and helping them evade estate
recovery. Of course Medicaid planners oppose eligibility controls and
estate recovery. The few mentions in the report of “state officials”
reflect mostly favorable attitudes toward controlling eligibility and
requiring estate recoveries, but it is clear MACPAC did not engage closely
with front line Medicaid eligibility workers. Those workers in my
experience, having interviewed hundreds of them over decades, passionately
favor targeting Medicaid to people in need and recovering from estates of
people who shelter wealth. Almost to a person they expressed anger and
frustration that it’s so hard to qualify the poor for care, but lawyers
fill out applications thick with documentation for their wealthy clients
who then qualify easily for Medicaid.
The
system MACPAC seeks to sustain and empower by curtailing Medicaid estate
recovery is corrupt. It rewards irresponsibility. It discourages early LTC
planning. It tips LTC toward public financing and away from private
sources such as home equity conversion, private LTC insurance and estate
recovery. Human nature being what it is people will always adapt to the
rules government imposes in order to maximize their interests. That’s not
a bad thing unless government rules incentivize bad behavior as they do
now and as MACPAC would further encourage. Instead we should strengthen
estate recovery rules so people benefit by planning early for long-term
care, saving, investing or insuring, using home equity to get the best
care in the most appropriate venue, staying off Medicaid and out of
nursing homes.
#############################
Updated,
Monday, March 8, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-008: 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 Steve at 425-891-3640 or
smoses@centerltc.com. Read testimonials
by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more, contact
Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
The Cost of
Retirement Has Tripled! But a New Way of Planning Can Help
-
Falling through
cracks’: Vaccine bypasses some older adults
-
LTCG Launches
Self-service Portal for LTC Providers
-
A COVID Storm Hits
Senior Living
-
Germany’s
Exploitative Care Model Is Finally Being Put on Trial
-
Demystifying Cash
Buyouts of Long-Term Care Insurance Policies
-
Alarming’ nurse
turnover rates linked to quality, payment woes in major new nursing home
study
-
Lower Spending
Drives Senior Satisfaction with Medigap Policies
-
Alzheimer's May
Strike Women and Men in Different Ways
-
Reforming Medicaid
LTSS would increase HCBS access, create better jobs: report
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, March 5, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC
BULLET: MACPAC MISFIRES
LTC Comment: MACPAC
proposals would cripple Medicaid long-term care and aggravate inequality.
Details after the ***news.***
*** WHY LTCI FAILS:
Don’t miss Steve Moses’s article of that title in the March issue of
Broker World magazine. Read it
here. Then
subscribe to the insurance trade journal to receive future issues.
While you’re there, catch Margie Barrie and Leni Webber’s “COVID-19
and Long Term Care Planning,” expanding on a topic we addressed in “LTC
Bullet: Long-Term Care and the Pandemic.” ***
*** MACPAC MEETS:
Yesterday, the Medicaid and CHIP Payment and Access Commission met online.
What to do about Medicaid estate recoveries was not on the agenda. But the
Commission’s Executive Director assures me that “We have read your
comments [I sent her a draft of today’s LTC Bullet] and will share
them with members of the Commission. … The full report, with a detailed
explanation of MACPAC's analysis and recommendations, will be out on March
15.” We’ll watch for that report and update you on whether or not it
corrects the deficiencies identified below. ***
LTC BULLET: MACPAC
MISFIRES
The issue in a nutshell:
-
Generous and elastic
Medicaid income and asset eligibility limits enable middle class
Americans to receive expensive long-term care when they need it while
preserving most of their wealth. See “Welfare
for the Well-to-do” (Wall Street Journal) and “Pretending
to Be Poor” (New York Times).
-
The quid pro quo for
this munificent public benefit is that recipients must agree to pay back
the cost of their care after their deaths from their estates when their
sheltered wealth is no longer needed by an exempt dependent relative and
would not create a hardship for heirs.
-
MACPAC proposes to
weaken Medicaid estate recoveries by (1) making them voluntary, (2)
diluting recovery potential below what Medicaid actually pays, and (3)
redefining hardship waivers so they do not require financial hardship.
-
If implemented, these
measures would harm the poor by reducing Medicaid program resources,
give heirs a tax-payer financed windfall for placing their parents on
the public welfare program, further desensitize the public to long-term
care risk and cost, cause even more people to end up on public
assistance and increase Medicaid expenditures significantly.
-
Medicaid estate
recoveries should be encouraged instead: (1) close Medicaid eligibility
loopholes that allow affluent people to divest wealth making it
unavailable for estate recovery, (2) require automatic liens to secure
sheltered property so it remains available for later recovery, and (3)
eliminate counterproductive rules that discourage efficient,
cost-effective estate recovery, as recommended for example in Maximizing
NonTax Revenue from MaineCare Estate Recoveries, 2013.
LTC Comment: The
Medicaid and CHIP Payment and Access Commission (MACPAC) proposes to
undercut a critical part of the long-term care financing system. To
comprehend what MACPAC recommends and why it would be so detrimental if
Congress accepted their advice, we must first review how the United States
finances long-term care.
The vast majority of
long-term care in the U.S. is provided for free by spouses, families and
friends at tremendous financial and emotional stress. When free care is
unavailable or exhausted and expensive formal care becomes necessary,
Medicaid is the primary payer. Although it is a means-tested public
assistance program, Medicaid has come to be the primary source of
long-term care financing for the middle class as well as the poor. That is
true because, although Medicaid’s financial eligibility rules sound very
restrictive, the way the program works in practice is much more elastic
and generous.
Medicaid LTSS
Financial Eligibility
Most writers claim
Medicaid benefits only go to “low-income” people, but medical and
long-term care expenses are subtracted from income before eligibility is
determined. So, very-high- income people do qualify for benefits if their
health care expenses are commensurately elevated, as they usually are for
people who need long-term care. The rule of thumb is that Medicaid’s
eligibility cut-off for monthly income is roughly the same as the cost of
a month in a nursing home, about $7,500 on average nationally for a
semi-private room. That’s $90,000 per year, hardly low income.
The seemingly draconian
limit on countable assets, $2,000 in most states, is also much less
onerous than it appears. That’s because non-countable assets are
practically unlimited and countable assets are easily converted to
non-countable or exempt assets. Home equity, for example, is completely
exempt up to $603,000 in most states and up to $906,000 in nine states.
Recent research concluded that Medicaid’s home equity “limits” exclude
almost no one. Other non-countable assets, allowed in unlimited amounts,
include one automobile, Individual Retirement Accounts (IRAs) that are in
payout status as they must be at age 72, one business including the
capital and cash flow, term life insurance, household goods and personal
belongings including family heirlooms, prepaid burial plans, and others.
Lawyers who help affluent clients qualify for Medicaid long-term care
benefits by means of sophisticated annuities, trusts, and other asset
sheltering techniques, also routinely provide long lists of non-countable
assets people can buy to “spend down” artificially to Medicaid’s countable
asset limit.
Is Such Easy Access
to Medicaid’s Extended Care Benefits Intentional?
Does this sound like a
crazy system that could never have been intentionally imposed on
unsuspecting taxpayers? If you think that, you are wrong. Medicaid
long-term care benefits were originally much more generous than now. From
the program’s beginning in 1965 until 1980, federal law expressly
permitted asset transfers to qualify for benefits. Even millionaires could
give away all their wealth to anyone else and qualify immediately.
Unsurprisingly, Medicaid long-term care expenditures exploded from the
first day. So a long series of Congresses and Presidents passed laws and
imposed regulations that discouraged artificial self-impoverishment to
qualify. (See “Appendix I: Supplemental Bibliography” (pps. 34-63) in
How to Fix Long-Term Care Financing for the whole history of this
process.)
Still, Medicaid
long-term care costs continued to escalate throughout the 1980s. Something
had to be done to control costs. But it was neither desirable nor
politically feasible to stanch Medicaid’s financial hemorrhaging by
forcing people into impoverishment before they could get help from the
government. So the powers-that-be hit upon an ingenious solution. Let
people keep their wealth while they get help with long-term care from
Medicaid, but make sure they pay it back after they die out of their
estates. That way Medicaid would no longer discourage people from planning
early for long-term care. The new system was on the principle “pay now or
pay later.” Medicaid would no longer reward heirs for waiting until their
parents needed long-term care and then relying on taxpayers to indemnify
their inheritances.
This scheme became law
in the Omnibus Budget Reconciliation Act of 1993. It was reinforced by the
Deficit Reduction Act of 2005. OBRA ’93 made transfer of assets
restrictions longer and stronger to encourage people to hold onto their
wealth while they received Medicaid benefits. But it made estate recovery
mandatory so every state in the country would be required to track exempt
wealth and recover it later to reimburse Medicaid. The DRA ’05 closed more
of the eligibility loopholes that caused wealth to leak out of estates
before it could be recovered later, but the DRA also put the first limit
ever on home equity to convey that Medicaid’s generosity is not unlimited.
The Critical Role of
Estate Recoveries
So, easy access to
Medicaid LTC benefits for the middle class and affluent was not
unintentional. It was just supposed to be mitigated by means of mandatory
estate recovery. To avoid Medicaid dependency followed by repayment of
benefits received from one’s estate, sensible people would plan early and
save, invest or insure for long-term care. But to this day, very few
people worry about long-term care until they need it. They end up on
Medicaid as the path of least resistance, qualify under the program’s
generous financial eligibility criteria, and often evade estate recovery
with the help of Medicaid planning specialists. What happened?
Transfer of assets
restrictions, while occasionally tightened were never made tight enough.
Liens to hold property until later recovery remained voluntary and were
fraught with loopholes. Likewise estate recovery rules were too easy to
circumvent. But most importantly, the federal government did not enforce
transfer of assets, lien and estate recovery rules effectively; the states
did not implement the requirements consistently; the media didn’t
publicize the risk of estate recovery liability; so the public continued
to ignore long-term care risks and costs, failed to save, invest or
insure, and ended up more dependent than ever on public assistance. That’s
the mess in which America’s long-term care financing system remains today.
So what should and should not be done?
MACPAC Would Weaken,
not Strengthen Estate Recoveries
Let’s circle back to
MACPAC now. What has the Commission recommended that Congress change about
Medicaid’s long-term care program? These are the proposals approved at the
Commission’s January 2021 meeting followed by our analysis.
MACPAC Recommendation
#1: “Congress should amend Section 1917(b)(1) of Title XIX of the
Social Security Act to make Medicaid estate recovery optional for the
populations and services for which it is required under current law.”
LTC Comment:
Making estate recovery optional for state Medicaid programs would cripple
its ability to recover and reuse nontax revenue for the benefit of
genuinely needy recipients, thus further aggravating the program’s
financial and racial inequality. Estate recovery saves Medicaid money,
preserves scarce resources for those who need them most, encourages early
and responsible planning, and discourages abuse of Medicaid by people who
should, could and would have paid for their own long-term care absent
perverse policy incentives to ignore that risk and cost. Estate recovery
should be encouraged and strengthened, not hobbled. Eliminate statutory
and regulatory obstacles that prevent efficient enforcement. Stop the
well-to-do from evading recovery with the help of legal enablers.
MACPAC Recommendation
#2: “Congress should amend Section 1917 of Title XIX of the Social
Security Act to allow states providing long-term services and supports
under managed care arrangements to pursue estate recovery based on the
cost of care when the cost of services used by a beneficiary were less
than the capitation payment made to a managed care plan.”
LTC Comment:
Medicaid estate recovery ensures that assets sheltered during recipients’
lives are used after their deaths to repay funds advanced by Medicaid for
their care. Whether Medicaid pays a monthly fee to Medicare, private
health insurance premiums, managed care rates, or fees for service, the
principle is the same. Medicaid advanced funds to relieve the recipient of
an onerous expense and the recipient’s estate should reimburse the full
amount advanced to the extent the estate is sufficient to do so. Medicaid
exists to help people in need fund long-term care, not to protect estates
or indemnify heirs. Families who wish to preserve estates should consider
reverse mortgages or private long-term care insurance to fund long-term
care instead of relying on Medicaid and then evading or minimizing estate
recovery.
MACPAC Recommendation
#3: “Congress should amend Section 1917 of Title XIX of the Social
Security Act to direct the Secretary of the U.S. Department of Health and
Human Services to set minimum standards for hardship waivers under the
Medicaid estate recovery program. States should not be allowed to pursue
recovery for: (1) any asset that is the sole income-producing asset of
survivors; (2) homes of modest value; or (3) any estate valued under a
certain threshold. The Secretary should continue to allow states to use
additional hardship waiver standards.”
LTC Comment:
Clumsy restrictions like these only hamstring Medicaid estate recovery
efforts more than they already are without serving any legitimate purpose.
Medicaid estate recovery units do not pursue recoveries unless they are
cost effective and humane. To do so would be political suicide. Hardship
waivers must be based on whether there is an eligible person who faces a
hardship. The MACPAC proposals ignore that precept. Regardless of the
value of the house or the small amount left in the estate, the Medicaid
program should be reimbursed for the costs of care paid on behalf of the
deceased Medicaid recipient unless a qualified heir is actually facing
hardship. Heirs should not receive taxpayer financed benefits just because
their parents lived in modest houses or had nominal bank accounts at
death. Research, referenced below, indicates that Medicaid estate recovery
can return 15 times or more the cost of recovery to state and federal
revenues. They can only do that by prioritizing their efforts and
following good business practices that do not bring political disapproval
onto the program.
MACPAC Proposals Are
Shortsighted and Counterproductive
Clearly, MACPAC looked
at estate recoveries through a microscope instead of taking a wider,
telescopic view of their importance for responsible public policy. It is
very clear from their staff reports
going back to 2015 that the Commission was never provided the
rationale behind and the history of estate recoveries. There is no
reference, for example, to the US Department of Health and Human Services
Inspector General Report from 1988 that analyzed the potential for estate
recoveries, recommended strong transfer of assets restrictions, mandatory
liens and estate recoveries, and explained how these measures could
mitigate exploding Medicaid long-term care costs and incentivize Americans
to plan early and responsibly for long-term care.
Here’s an excerpt from
that report,
Medicaid Estate Recoveries: National Program Inspection, Office of
Inspector General, 1988:
A large nontax revenue source generated by
Medicaid estate recoveries could be recycled to help the truly destitute.
It is possible, however, that enhanced estate recoveries would have more
far-reaching effects on long-term care funding. Faced with the
certainty--which is almost nonexistent today--that accepting care from
Medicaid means paying back the cost out of one’s estate, people might seek
other alternatives. Such alternatives include Social Health Maintenance
Organizations (SHMO' s), continuing care communities, targeted savings
accounts and private long-term care insurance. To pay for these nonpublic
assistance options, the elderly would have to turn more to private home
equity conversion or to assistance from their adult children. It is their
children, after all, who stand to inherit whatever property remains after
the costs of long-term care are paid and who currently reap the windfall
of Medicaid subsidies. We must emphasize that the issue is enrichment
of nonneedy adult heirs, not denial of care to the elderly. For those
who opt to rely on Medicaid, or have no other choice, eligibility
conditional upon a promise (secured by an automatic lien) to repay
benefits from their estates would assure all elderly people of (1) access
to care, (2) retention of home property as long as it is needed by spouse
and dependents, and (3) the dignity of paying their own way in the end. (pps.
47-48, emphasis added)
For the full picture,
see the
Medicaid Estate Recoveries report’s recommendations at pages 50
to 53. They propose to strengthen rules that discourage asset divestiture,
encourage families to keep and use their property while receiving Medicaid
long-term care benefits, but also ensure that protected wealth goes to
repay Medicaid for benefits received rather than passing as a taxpayer
financed indemnity to heirs. Several of these recommendations became law
in OBRA ’93, DRA ’05 and other legislation over the years, but they have
never been adequately implemented or enforced. They should be expanded,
reinforced and carried out, not diluted as MACPAC proposes. In a
subsequent LTC Bullet, we will republish the Inspector General’s
recommendations and explain why they should be fully implemented now more
than ever. (Full disclosure: I led the IG’s 1988 estate recovery study and
wrote the agency’s report.)
This is the honorable
principle behind Medicaid estate recoveries:
We have
very limited dollars available for public assistance. We must take care of
the truly poor and disadvantaged first. The middle class and well-to-do
should pay privately for long-term care to the extent they are able
without suffering financial devastation. Prosperous people who rely on
Medicaid for long-term care should reimburse the taxpayers from their
estates before giving away their wealth to heirs. Seniors and their heirs
who wish to avoid such recovery from the estate should plan ahead, use
their own financial resources first (including home equity by means of
reverse mortgages) to pay for home and community-based services and/or
purchase quality private long-term care insurance to finance their care.
We can return dignity to
the Medicaid long-term care program. It isn’t welfare if you pay it back.
That’s what Medicaid estate recoveries enable recipients and their
families to do, while at the same time, preserving more resources for the
needy and underprivileged.
A wag once defined
“commission” as a group of people who’ve done nothing individually who
come together to conclude that nothing can be done. If MACPAC isn’t to be
a case in point, they should review this new, actually old and heretofore
ignored, evidence about Medicaid estate recoveries before making such
counterproductive recommendations to Congress. Save Medicaid long-term
care from the unintended consequences of misplaced good intentions.
#############################
Updated,
Monday, March 1, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-007: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to the
original, and our analysis in a sentence or two. To inquire or subscribe,
contact Steve at 425-891-3640 or
smoses@centerltc.com. Read testimonials
by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more, contact
Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
The Top Eight Mistakes People Make With Medicaid
-
Universal coverage of long-term care for older
Americans may stabilize provider revenues: A report calls for
establishing universal coverage for all Americans' long-term care needs
through Medicare
-
COVID Cases, Deaths Plummet in Nursing Homes After
Vaccine Rollout
-
Unconscionable’: Senior living eliminated from
COVID relief package
-
Is The Shift Of Medicaid Long-Term Care From
Nursing Facilities To Home About To Accelerate?
-
Majority Of Working Americans Are Optimistic About
Their Financial Future, Even While Lacking Savings
-
U.S. unpaid caregivers struggling the most with
emotional health problems: report
-
Alzheimer's May Start Sooner for People With
Anxiety, Depression History
-
At-home hospital-level care is growing fast, home
care execs say
-
Why Some 'Super Ager' Folks Keep Their Minds
Dementia-Free
-
Nursing care prices increase 3.3% in January, but
spending down 7.8%,
-
As Nursing Homes Lose Patients to Home Health
During COVID, Past Shifts Show Path Forward
-
How older adults may be doubling their risk of
dementia
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Monday, February 22, 2021,
10:40 AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #21-006: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
MA Members Could See High Out-of-Pocket Costs For
COVID-19
-
One of Ten in U.S. May Have to Switch Occupations
Post Pandemic
-
Nursing Home Workers Had One of the Deadliest Jobs
of 2020
-
Advantages, Disadvantages and Considerations for
LTC Policy Buyouts
-
US life expectancy dropped a full year in first
half of 2020, according to CDC
-
Accessory dwelling units may help cities deal with
housing shortages for ballooning senior population
-
Black Caregivers Value Long-Term Care Insurance:
Nationwide
-
Improving the Long-Term Care Insurance Customer
Experience
-
‘The situation is dire’: Provider group seeks $5
billion in COVID relief for senior living
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, February 19, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC BULLET: RETHINK LTC
FINANCING
LTC
Comment: We review a study that, correctly interpreted, would bust the LTC
financing debate wide open, after the ***news.***
*** THE
2021 INTERCOMPANY LONG-TERM CARE INSURANCE CONFERENCE will convene
virtually and for FREE April 13th – 29th. Expect 40+ sessions
from the usual tracks, but apparently minus Public Policy & Alternative
Solutions (my favorite), and adding an Aging in Place Solutions track.
ILTCI’s 2021 Virtual Conference will be presented 4 hours per day on
Tuesdays and Thursdays over three weeks beginning April 13th. Choose from
2 sessions per time slot!
CLICK HERE
to view the schedule when it becomes available. Barry Fisher, Conference
Chairperson and Vince Bodnar, Conference Co-Chairperson say: “Registration
is expected to open later this month. Join us and get the inside scoop on
current trends in the long-term care insurance industry and what the
future holds. We look forward to seeing you on April 13th. ***
LTC
BULLET: RETHINK LTC FINANCING
LTC
Comment: The long-term care financing conversation has settled into a
comfortable narrative that goes something like this. The need for
long-term care is growing and overwhelming both private and public funding
sources. Medicaid requires impoverishment. Private LTC insurance failed.
So we need a new compulsory tax-based government program to pay for
long-term care. But what if private insurance failed largely because
Medicaid does not require impoverishment? What if public LTC
funding caused, and more of it would only worsen, the crisis? Let’s
consider some new evidence.
Very
little scholarly work tackles the critical, but complicated topic of
Medicaid long-term care eligibility in any meaningful way. You’ll see the
statement “Medicaid requires impoverishment” or variations of it in most
peer-reviewed articles on long-term care. But analysis that approaches the
highly nuanced truth of that subject is rare indeed. For example, you will
virtually never find anything in the scholarly literature about people
with substantial wealth qualifying for Medicaid LTC benefits by taking
advantage of simple and/or sophisticated self-qualification methods.
Scholars evade that subject despite the fact that such methods are widely
available in popular books and articles and from online advertising, law
journal articles and thousands of Medicaid planning specialists throughout
the country.
So,
because its Abstract promised to show that many more people could qualify
for Medicaid LTC benefits besides the poor, I couldn’t wait to read this
article:
Robert
Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial
Eligibility for Medicaid Long-term Services and Supports, Journal of
Aging & Social Policy, DOI: 10.1080/08959420.2020.1740638. To link to
this paywalled article, click
here.
(I want to thank LaRhae Knatterud of the Minnesota Department of Human
Services and lead author Robert Hest for their time explaining this
article’s background, methods and findings to me on a Zoom call and for
listening and responding to my positive and critical feedback.)
The
article’s “Abstract” states that the authors modeled “the impact of
changing income, home equity, and asset limitations on Medicaid
eligibility across states” and “found that one in five elderly adults (10
million individuals) meet all three tests and would be financially
eligible for Medicaid LTSS.”
Wow! They
concluded that 22 percent of all elderly Americans, more than double the
official poverty rate of 9.2 percent (KFH,
2018), would qualify
for Medicaid LTC benefits. That sure doesn’t support the conventional
academic wisdom that Medicaid requires impoverishment. So I hastened
eagerly to delve into the study’s details.
What I
found pleased and disappointed me. The work is ground-breaking, the
results surprising, and their true meaning far more important than the
authors themselves realize. Instead, they ignored key evidence in order to
conform their findings to the current “LTC Narrative”--that more social
insurance is the only hope for long-term care and that targeting financial
eligibility for Medicaid to the neediest would be ineffective and
unadvisable. To support that assessment, here are some quotes from the
article followed by my analysis:
JASP
Article: “Medicaid
plays a significant role in financing long-term services and supports (LTSS)
for low-income elderly (65+) in the United States.”
LTC
Comment: True, but
Medicaid also “plays a significant role in financing” long-term care for
higher income people, because medical and LTC expenses are usually
deducted from income before income eligibility is determined. The constant
reference in the media and scholarly literature to Medicaid helping only
low-income people diverts attention from the fact that people with
substantial incomes also qualify routinely.
JASP
Article: “Given the
high cost of LTSS, individuals often exhaust their personal resources in
paying for services and must rely on Medicaid to finance ongoing care.”
(p. 1)
LTC
Comment: Neither
this article, nor any peer-reviewed journal article I can recall, provides
evidence for that statement. It is certainly true of low income/low asset
people who are quickly wiped out financially by Medicaid eligibility
rules. It is definitely not true of higher income/higher asset
people with financial savvy and access to legal advice. See for example
the 29-page “Bibliography of Books, Elder Law Treatises and Law Journal
Articles on Medicaid Planning Listed Chronologically” in
How to Fix Long-Term Care
Financing (Moses,
2017). That source contains hundreds of techniques elder law attorneys use
to qualify their affluent clients for Medicaid LTC benefits. With so much
legal smoke, is it reasonable to ignore the fire, i.e. widespread
use of Medicaid by prosperous people the program was never intended to
serve? Yet the JASP article does not mention the possibility that
people with incomes and assets much higher than the amounts they modeled
could have achieved eligibility by means of self-impoverishment methods
widely recommended in the popular and legal media.
JASP
Article: “To qualify
for Medicaid payment of LTSS, most individuals must spend nearly all of
their income on their care.” (p. 4)
LTC
Comment: It is true
income must be spent down on care-related expenses, but that gives the lie
to the common notion that only low-income people qualify for Medicaid.
People who need long-term care have very high medical and LTC expenses.
So, because those expenses are deducted before their income eligibility is
determined, they can have very high incomes indeed and still qualify for
benefits. Furthermore, while it is true that income must be spent for
care, it assuredly is not true that assets must be spent on care,
although that claim is made in the literature. In fact, there is no limit
on how many assets an individual or couple may retain while on Medicaid as
long as the wealth is held in exempt form, such as a home, IRAs making
periodic payments, an automobile, prepaid burial benefits, household
goods, family heirlooms, etc. Countable assets are easily converted to
exempt assets as the extensive Medicaid planning literature cited above
frequently observes.
JASP
Article: “Under the
Deficit Reduction Act of 2005, the applicant’s homestead is an excluded
asset if the individual lives in the residence, is expected to return to
the residence, or a community spouse or dependent relative lives in the
residence (ElderLaw Answers, 2018a). … In some states, the home is not
considered when determining Medicaid eligibility if the nursing home
resident plans to return to the home; in other states, the resident must
prove that they are likely to return home (U.S. Department of Health and
Human Services, 2005).” (p. 5)
LTC
Comment: Actually,
the terms “expected to return,” “plans to return,” and “likely to return”
are unofficial and inaccurate. Rather, the federal Medicaid criterion for
permitting the home equity exemption is a totally subjective “intent to
return” expressed by the recipient or a representative with no
verification whatsoever required.
JASP
Article: “Our data
come from the 2014 Health and Retirement Study (HRS), a longitudinal
household survey of Americans age 50 or older ….” (p. 6)
“We also
want to note that our primary data source, the Health and Retirement
Study, though now said to be representative of the institutionalized
population, was not originally designed to be representative of that
population and some concerns remain about the sample’s representativeness
of the nursing home population, especially when used longitudinally (RAND
Center for the Study of Aging, 2019; Sonnega et al., 2014).” (p. 12)
LTC
Comment: The JASP
article relies on HRS data to determine the wealth (income and assets)
of people to whom the authors then apply Medicaid LTC financial
eligibility standards. But what if the HRS data, commonly assumed to be a
gold-standard source, are really highly dubious? That would mean HRS
respondents might actually have much more income and assets than they
report. Or it could mean that the income and assets they report are
correct but that they arrived at the reported levels not by spending their
wealth on long-term care but by taking advantage of Medicaid’s generous
and elastic financial eligibility rules or by retaining the services of an
elder law attorney specializing in Medicaid planning.
I found
the HRS data highly questionable in “How
to Fix Long-Term Care Financing”
(pps. 16-17). For example: “One expert found significant data quality
issues in the surveys due to “measurement errors in the data, particularly
those arising from item nonresponse and from inaccurate respondent reports
of the ownership and level of assets.” (Venti, p. 3) “Furthermore,” as I
explained in the report, “there are many reasons why survey respondents
and their representatives might fail to report income and assets to
surveyors or even purposefully misrepresent the facts. People who have
reconfigured their wealth to qualify for public welfare benefits may be
ashamed of having done so or simply unaware that their heirs did this on
their behalf. Seniors reporting on themselves may be cognitively impaired
or intimidated by self-interested family members. Heirs who benefit from
preserving parents’ estates may prefer to conceal the facts. Lawyers who
do Medicaid planning are protected from disclosure by attorney/client
privilege, while long-term care providers and Medicaid eligibility staff,
who often know which wealthy locals are taking advantage of Medicaid,
cannot disclose the information because of legally enforced
confidentiality. Getting to the truth in such matters is extremely
difficult.” (p. 16)
JASP
Article: “We find
that applying the most restrictive income allowances across the states
would result in an estimated 6.8 million individuals potentially losing
financial eligibility for Medicaid LTSS.” (p. 7)
LTC
Comment: So, don’t
tighten income allowances. It is well accepted that loss of income is the
“deductible” people must pay to get Medicaid to cover their LTC expenses.
The real potential savings are on the asset side of the ledger. But
federal law does not permit states to do what would need to be done to
divert many more people away from Medicaid dependency. That is, change the
home equity exemption so that home equity goes to fund better LTSS in
homes instead of passing as a windfall to heirs at government expense.
Loss of the home equity exemption would make people think and plan earlier
for LTC resulting in fewer ending up on Medicaid. Eliminating some of the
most common Medicaid planning strategies would also help to divert the
middle class away from Medicaid without negatively affecting, in fact
actually helping, the needy for whom more program resources would remain
available.
Having
interviewed hundreds of Medicaid LTC eligibility workers over the years, I
found little relationship between the ostensibly draconian income and
asset eligibility rules and the way the system works in practice. Workers
told me they’re frustrated that people of few means quickly get wiped out
financially whereas people with substantial wealth qualify immediately and
easily because lawyers fill out their applications, know all the
loopholes, provide all the documentation, and follow up until eligibility
is granted.
JASP
Article: “The
population of elderly adults studied has an average age of 74.6 and is
56.3 percent female. Among the population, the median household income is
40,912, USD the median value of household net assets is 79,400 USD
(excluding housing assets), and the median net primary residence value is
100,000. USD.” (p. 7)
LTC
Comment: These are
very high medians, which indicates that half of the studied population has
even higher incomes and assets. Remember, this study found that 22 percent
of the studied population not the median households would be
“financially eligible for Medicaid LTSS” (p. 7). In
How to Fix Long-Term Care
Financing (pps.
8-9), I found that while half of all Medicare beneficiaries had annual
incomes below $26,200 in 2016, 45 percent had annual incomes between
$26,200 and $103,450, all of whom could qualify for Medicaid LTC benefits
based on income if their deductible medical and LTC expenses were high
enough. Furthermore, I found that while half of all Medicare beneficiaries
had savings of $74,450 or less in 2016, 45 percent of them had savings
between $74,450 and $1.4 million, all easily converted to Medicaid LTC
asset eligibility with the simplest kinds of Medicaid planning measures.
In other words, up to the 95th percentile of Medicare
beneficiaries could qualify for Medicaid LTC eligibility and, in the real
world, they often do. This analysis applies equally well to the current
study’s findings.
JASP
Article: “If the
most common state thresholds were applied across all states, we estimate
that nearly the entire elderly population would meet the home equity
threshold of 552,000. USD Just more than half (54 percent) would meet the
home equity and income test, and only 22 percent, or 10 million adults age
65 and older, would meet all three tests – home equity, income, and assets
– and be financially eligible for Medicaid LTSS.” (p. 7)
LTC
Comment: Now, that
statement is far more dramatic than it appears to be on the surface. Let’s
deconstruct it. Nearly the entire elderly population would meet the home
equity threshold of $552,000, but that was the exempt home equity amount
as of 2015. The comparable amount for 2021 is $603,000. In nine states,
the home equity exemption was $828,000 in 2015, but it is $906,000 today,
because the exempt amount increases every year with inflation. What is the
point of having a limit on home equity that does not exclude anyone? What
is the public policy reasoning for preventing so much private wealth from
funding quality long-term care for prosperous people? Over half the study
population (54 percent) meet the home equity and income test? More
than one-fifth meet all three (home equity, income and asset) tests? These
figures apply to the whole population not just to the median? So much for
the fallacy that Medicaid requires impoverishment.
JASP
Article: “We found
that the population that would be made financially ineligible for Medicaid
LTSS by restricting income allowances and thresholds likely has a greater
need for services, is less likely to have a spouse who could potentially
provide informal care, has fewer financial resources to pay for formal
care, and is less likely to be currently using formal LTSS compared to the
population ineligible for Medicaid LTSS under the most common income
allowances and thresholds. This indicates that Medicaid LTSS eligibility
is already narrowly targeted under the most common allowances and
thresholds.” (p. 11)
LTC
Comment: That
statement aligns with the fact that current Medicaid financial eligibility
rules are devastating for low income, low asset people. They’re wiped out
financially as soon as they begin to need expensive long-term care. But
the study’s conclusion that “Medicaid LTSS eligibility is already narrowly
targeted” is untrue. Higher income people qualify because their health and
LTC expenses are deducted before their income eligibility is determined.
Higher asset people qualify because they can easily convert assets into
exempt form. Much higher asset people qualify by retaining the services of
Medicaid planning attorneys, services and techniques this research and
most other research of its kind completely ignore..
JASP
Article: “On the
surface, this [$552,000 home equity exemption] may seem a generous
threshold; however, most states have estate recovery laws that allow a
state to seek retroactive payments for LTSS from an enrollee’s estate upon
their death (ElderLaw Answers, 2017).” (p. 11)
LTC
Comment: Estate
recovery was made “mandatory” in the Omnibus Budget Reconciliation Act of
1993, but unfortunately the federal government did not enforce the
requirement, states did not administer it fully or consistently, the media
did not publicize it, and consequently consumer behavior did not adapt to
plan for long-term care in order to avoid estate recovery. By citing
“ElderLaw Answers,” the study’s authors display a closed-minded bias.
ElderLaw Answers is published by Medicaid planning lawyers whose principal
source of revenue is affluent clients they convert to Medicaid eligibility
by circumventing the same income and asset limits the study’s authors
claim are so restrictive. Did the study’s authors not consider this
blaring conflict of interest?
JASP
Article: “We believe
Minnesota’s eligibility model represents the key components of financial
eligibility used by all states and provides a reasonable approximation of
the impact of changes to these components on eligibility levels.” (p. 12)
LTC
Comment: The study’s
authors acknowledge that one of the limitations of their work is the
assumption that “Minnesota’s eligibility model represents the key
components of financial eligibility used by all states.” Given the
constraints of such research, it’s reasonable to accept that limitation.
But then, why not ask what methods of artificial self-impoverishment
(Medicaid planning) are effective in Minnesota as well? A simple internet
search for “Medicaid planning in Minnesota” reveals scores of Medicaid
planners available throughout the state to use hundreds of simple and more
sophisticated methods to get around Minnesota’s ostensibly strict but
actually generous and elastic Medicaid financial eligibility rules.
A few
examples: the
Medicaid Asset Protection Trust;
the “Family
Pot Trust;” “Advanced
Medicaid Planning Techniques: Trusts, Private Annuities, Spousal
Transfers, Caregiver Agreements;”
“Elder
Law & Medicaid Services:
We help clients qualify for government medical benefits legally and ensure
their estates are preserved for their families, instead of their nest egg
being wiped out by high nursing home expenses.”; “Life
Estates.” I found
these sources in a few minutes perusing the internet. What value can
“modeling” Medicaid financial eligibility rules possibly have when it
ignores how Medicaid eligibility qualification is actually done?
JASP
Article: “Our study
highlights the already strict eligibility levels that limit access to
Medicaid LTSS.”
LTC
Comment: This study
does nothing of the sort. It completely ignores the well-documented
evidence of widespread Medicaid planning which allows people far above
Medicaid’s apparent financial eligibility limits to qualify. Modeling
financial eligibility rules that are actually circumvented routinely in
real life is more misleading than informative.
JASP
Article: “The
Medicaid program for LTSS among the 65+ population is already well
targeted and restricting eligibility would likely exclude individuals in
need of services. Few states have opted to further restrict access to
needed services and are instead opting to find more ways to keep people
living independently in the community.” (p. 12)
LTC
Comment: As we’ve
shown, Medicaid is definitely not “already well targeted.” Few states have
opted to target services to the needy because federal law prevents them
from changing eligibility rules to exclude the affluent and achieve that
objective.
JASP
Article: “We caution
policymakers who feel pressure to constrain eligibility for Medicaid LTSS
as a cost-savings measure against taking this action.” (p. 13)
LTC
Comment: This is a
wrong conclusion unjustified by findings that ignore the ease of
converting countable into non-countable assets and disregard the potential
for home equity conversion to fund long-term care privately. In fact,
changes in federal law recommended in
How to Fix Long-Term Care
Financing would
allow states to target scarce Medicaid resources to the needy thus
impelling those with means to plan early for long-term care and avoid
government dependency later on.
Closing
LTC Comment: The
JASP article dramatically shows that over twice the proportion of
elderly poor in America would qualify for Medicaid LTC benefits based on
income and assets. It proves this without considering the possibility that
many more people, with much higher income and assets, qualify using widely
known and applied techniques of Medicaid planning. Only by ignoring the
vast legal and popular literature on how to qualify for Medicaid LTC
benefits without spending down can the authors cling to the conventional
“LTC Narrative” that “a broader finance solution that spreads out the cost
risk via a social insurance program” (p. 13) is necessary. I implore these
authors and their scholarly colleagues to ask Medicaid LTC eligibility
workers how Medicaid eligibility really works and to read the legal
literature on qualifying for Medicaid that I painstakingly documented in
How to Fix Long-Term Care
Financing, pps.
34-63. Then, try modeling reality instead of the Medicaid spend-down myth.
If I can help in any way, I would be happy to do so.
#############################
Updated,
Monday, February 15, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-005: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
COVID-19 mortality tied to racial disparities in
nursing homes, industry expert says
-
Analysis Sees $94 Billion in Industry Losses Over
Two Years
-
Covid Has Black Americans Thinking More About
Financial Planning
-
Lincoln to Add Variable Universal Life-Long Term
Care Hybrid
-
Dementia doubles COVID risk — even after accounting
for LTC residence, study finds
-
MA Enrollment in Plans With Extra Benefits for
Chronically Ill Tripled in 2021
-
Legal experts warn of incoming lawsuits for
long-term care
-
COVID-19, in some respects, made senior living more
appealing: survey
-
Why the Medicaid block grant is the right strategy
for Tennessee | Opinion
-
Coronavirus cases drop at US homes for elderly and
infirm
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Monday, February 8, 2021,
10:40 AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #21-004: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
Long-term care in the age of Covid, and beyond
-
Using Estate Planning to Prepare for Medicaid
-
Baby boomers face financial distress and age
discrimination
-
Long-Term Care Insurance: First, You Should Find an
Agent
-
Want to age at home instead of a nursing home?
Consider this first
-
We need comprehensive long-term care reform, and we
need it now
-
More than a fourth of Americans 40 and younger
don’t think they need to be saving for retirement: survey
-
Six-year study links hearing loss to dementia risk
-
Here's a New COVID-19 Nightmare, for You
-
Veterans Community Care Program: Immediate Actions
Needed to Ensure Health Providers Associated with Poor Quality Care Are
Excluded
-
NAIFA-ND Activates Grassroots to Counter LTC
Proposal
-
Boren-like solution needed nationwide to address
Medicaid shortfalls, expert says
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
############################
Updated,
Friday, February 5, 2021, 10:40 AM (Pacific)
Seattle—
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LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON
LTC Comment: Insurance
is individualistic, so “social insurance” is a contradiction in terms.
Meaning and consequences follow the ***news.***
*** TODAY'S LTC BULLET is
sponsored by Claude Thau, who provides many unique services to
advisors as National Brokerage Director for USA-BGA in the individual,
worksite and affinity LTCi markets. Advisors like his unique, simple
and effective LTCi presentation and his revolutionary “Range of
Exposure” tool which, among other things, projects a client’s (joint
for a couple) mean age of LTC, likely annual cost and length of need
based on age, gender, marital status, success goal (% chance of not
outliving their assets), etc. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. Contact him at 913-707-8863 or
claude.thau@gmail.com to discuss how he
might help you. *** |
*** LTCI SURVEY NEWS: Oliver Wyman and Ice Floe Consulting have presented
the
Executive Summary of the “Who is Selling What? To Whom, How & Why?”
agent and advisor survey they conducted last fall. The study team gathered
a great deal of actionable intelligence from agents and advisors actively
engaged in the long-term care insurance planning process. Click
here for the executive summary of results. You can request their full
report starting next week at this
Oliver Wyman webpage. Ron Hagelman and Barrie Fisher published an
excellent review of the survey results titled “Actionable Intelligence in
Long Term Care Planning” in the February issue of Broker World just
out,
here. ***
*** WA AND ND SLIDE OFF
THE RAILS: Evidently the people in Washington State who are trying to
design compulsory social insurance for long-term care can’t decide whether
or not people who own private insurance already or buy it now should have
to pay for the new state-mandated plan too. Wouldn’t that be double
jeopardy? In the meantime, North Dakota wasn’t messing around with any
such nuance; they had a bill to stop the sale of private LTC insurance for
three years altogether. Apparently they’ve relented on that nuclear option
and will only “study” the subject going forward. We thank Stephen D.
Forman of
Long-Term Care Associates for keeping us apprised of the politicians’
latest shenanigans. ***
LTC BULLET: SOCIAL
INSURANCE IS AND OXYMORON
LTC Comment: The LTC
policy world is smitten by a dream that they can solve the LTC financing
crisis by means of social insurance. (Are you listening Marc Cohen, Judy
Feder, et al.?) Washington State’s plan to compel workers to fund a
government designed and managed LTC “insurance” plan is the basic model.
But other states are building similar programs and many more have a social
insurance long-term care program on their wish list. What’s wrong with
that? Today’s LTC Bullet explains.
The following article,
originally published in 2002, begins by defining insurance and explaining
its fundamental principles. The article proceeds to describe the many ways
the honorable concept of private insurance has been corrupted by
government interference and regulation in the name of “social insurance.”
It closes with a comparison of the moral consequences of real private
insurance compared to so-called social insurance.
In a nutshell, real
private insurance is individualistic, voluntary, fair, rational,
objective, and based on the trader principle. It serves life.
Social insurance is collectivistic, subjective, non-rational, inequitable,
and violates the trader principle. So it undermines life. Now read on to
see how I justify those conclusions by comparing and contrasting true
insurance with the oxymoron “social insurance.”
Stephen A. Moses, "The
Inherent Individualism of Insurance," Navigator, Vol. 5, Nos.
10-11, November-December 2002, pps. 10-12, 14-16, published in January
2003.
“The Inherent
Individualism of Insurance”
By Stephen A. Moses
As human beings, we fear
chaos and confusion and fight against them. We appreciate order. We
celebrate reason, logic, and science because they help us bring order and
manageability to our experience of reality. But no matter how rational and
focused we are, we remain vulnerable to unexpected events that can throw
our lives into turmoil. A slippery sidewalk, an unanticipated illness, a
drunken driver, a freak storm, or (who knows?) an errant meteor. Besides,
"the best laid plans of mice and men oft go astray." We need a tool to
help us mitigate the consequences of uncertainty in day-to-day life, just
as reason and logic help us to bring order and predictability to
cognition. Fortunately, we have such a tool: it's called insurance.
Insurance cannot repair the damaged or heal the sick, but it can alleviate
the economic consequences of unpredictable negative events like accidents,
natural calamities, and illness or death.
What is insurance and
why do we need it?
"Insurance" is a
financial tool with which we can replace the small risk of a catastrophic
financial loss with the certainty of an affordable payment. Insurance
companies help people achieve this objective by spreading and pricing
risk. For example, let's say there is one chance in a million that I will
be hit by a truck, resulting in a $1 million loss. That event—unlikely as
it might be—would devastate me financially as an individual. I would
gladly pay $2 to make the monetary part of this risk disappear. So would
millions of other people. Therefore, an insurance company can profitably
sell such protection, called an insurance "policy," to me and to 999,999
others for a reasonable fee, called a "premium."
The insurer promises to
"indemnify" me and all other policyholders (or "insureds") if and when the
insured event occurs by paying us a specified "claim" amount that restores
us to our financial position before the loss occurred. If the company
sells one million such policies for $2 each and incurs the anticipated
single "loss" of $1 million, it makes a hefty 100 percent profit and
performs a valuable public service in the process. The insureds can relax
and enjoy life in the knowledge that if the worst happens, at least they
are protected financially. That is called "spreading risk." But what if
five of the insurance company's beneficiaries are hit by trucks instead of
just one? Then the company would have collected only $2 million in
premiums, but would owe $5 million in claims, a $3 million loss. To know
what to charge for insurance protection, companies must "assess the risk."
They must measure, record, and analyze extensive "actuarial" data on the
incidence and frequency of the insurable event. In other words, they must
answer the question: What is the probability that the insurable event will
occur to individuals among the insured group and what will be the cost if
it does? That is called "pricing the risk."
Of course, they cannot
say with certainty whether you or I may be the victim, but they can say
with a high degree of confidence what level of risk we face as a group of
individuals. Thus, insurance makes it possible for us to "transfer risk"
from ourselves as individuals to a third party, the insurance company, in
a voluntary commercial relationship that benefits both parties. The
insureds gain peace of mind. The insurer gains profitability.
So far so good. But what
if I want to buy insurance because I know I am very likely to need it?
This is called "adverse selection," and insurance companies must
discourage it. Or else, what would happen if I bring more risk into the
risk pool than you do? Would it be fair to charge me the same premium as
you have to pay? In fact, would you even purchase an insurance product
that guaranteed to give a higher return on average to other, higher-risk
insureds than to yourself? Probably not.
For example, say that I
am a heavy smoker and I am therefore more vulnerable than a non-smoker to
emphysema and lung cancer. If I'm already sick, selling me health
insurance would be like providing fire insurance to someone whose house is
already in flames—blatant adverse selection. But even if I'm not yet ill,
if I were to pay the same premium for health insurance as a non-smoker, I
would be getting more protection for my money, dollar for dollar. That's
because, as a smoker, I would be much more likely than the non-smoker to
file an insurance claim for medical treatments related to my unhealthful
behavior. Put another way, the non-smoker would be subsidizing my health
insurance premium by paying a higher premium himself than the level of
risk he brings to the risk pool warrants.
Thus, insurance
companies must not only assess but also "classify" risks. They do this
through "underwriting." That is, they ask questions, examine evidence, or
do tests to determine the level of risk that each individual or class of
individuals brings into the "risk pool," so they will know how much
premium to charge each insured or group of insureds. Thus, your insurance
company may examine your driving history or review your medical records
before underwriting you for auto or life insurance, for example. If
insurance companies failed to classify risks in this way, the whole system
would fall apart very quickly.
In the example of the
smoker and the non-smoker, the non-smoker—unless he's an inveterate
altruist—would get smart sooner or later, drop any health insurance that
punished him financially but rewarded smokers, and look for a policy that
treats everyone fairly. This would have a devastating effect on the
"reserve fund" that insurers must maintain and invest. Insurers need
reserves to pay claims when they occur, to cover administrative costs,
and, of course, to return an acceptable profit to their investors or
shareholders. When non-smokers, i.e., "good risks," drop their policies
and stop paying premiums while smokers, i.e., "bad risks," keep their
underpriced policies, something has to give. Either the insurer must raise
premiums for the remaining smokers covered by the policy to ensure
sufficient reserves to pay the higher anticipated claims or the reserve
fund will become "insolvent," i.e., insufficiently capitalized to pay
expected claims. Either way, nobody wins.
Another beneficial
effect when insurers classify and price risk accurately is to encourage
positive behaviors and discourage negative behaviors. The price of
insurance should alert us to the long-term cost of our decisions. When
insurance is very expensive, it sends the message that our conduct or
condition may be excessively risky. For example, people who have poor
driving records usually pay higher auto insurance premiums, sooner or
later. Their careless or drunken driving may have little or no cost for a
long time. Once a traffic ticket is issued, however, it becomes part of
the public record. An auto insurance company can review the public record
and raise the violator's insurance rates to reflect the added risk he
brings to the risk pool. On the margin, this added cost associated with
carelessness or illegality tends to discourage irresponsible behavior and
reward responsible behavior. Conversely, over time, if one's driving
record improves, one's insurance premiums will decline once again to
reflect better performance, thus rewarding improved behavior. Insurance
achieves this positive social effect justly and without coercion by
objectively pricing the risky behavior of individuals.
Even when our behavior
is not dangerous to others or otherwise irresponsible, however, accurately
priced insurance premiums still give us valuable personal information and
promote fairness and equity. For example, why should a sedate philosophy
professor pay the same life insurance premium as a skydiver or motorcycle
daredevil? There is nothing wrong with the adventurous life, but insurance
helps make sure that those who choose it take their fair share of the
fiscal, as well as the physical, risk. Properly conceived, therefore,
private insurance is in many ways a marvelous early warning system for us
both as individuals and as a society.
Notice, finally, that
insurance is different from saving, though the two are intimately related
as ways of preparing for future needs. When we save, we are putting money
aside for future use, normally in an account or investment that earns a
return; we retain the money rather than paying it to someone else, and we
get back only what we put in (plus interest or dividends). We can use
savings to deal with various risks, but saving per se does not spread
risks among people and thus does not require the kind of risk
classification that insurance does.
Insurance and savings
can of course be bundled together as products. An example is whole life as
opposed to term life insurance. When you buy a whole life policy, you are
not buying pure insurance; you are investing a portion of your premium
with an insurance company. Most people can invest their money much more
profitably through independent investment vehicles. In the same way, most
managed-care health plans cover both unpredictable catastrophic illness or
injury and routine, predictable medical expenses like annual checkups. In
effect, managed care is a combination of a lay-away plan for routine care
and insurance for catastrophic care. Bundling those functions together is
generally not a good idea—though in this case government policies have
pushed most people in that direction.
Why and how is
insurance corrupted?
Well, if insurance is
that wonderful, why do so many people have such a bad opinion of it?
What's the "rap" against private insurance? Maybe the following comments
will sound familiar:
"Private insurance is
heartless. It blames the victim. It punishes people for conditions that
are no fault of their own." For example:
-
Health insurance
callously excludes anyone with a serious pre-existing medical condition.
-
Home owners insurance
may be prohibitively expensive for otherwise fine citizens who just
happen to live in crime-infested neighborhoods.
-
AIDS patients can't
get life insurance, and Alzheimer's patients can't get long-term care
insurance, even though these are the people who need the protection
most.
Are these legitimate
criticisms? No, of course not. Insurance is a business, not a charity or a
welfare program. Private charity or government welfare programs may be
legitimate ways to help the uninsurable, but that's a different issue. To
achieve the benefits I described earlier, insurance must remain a business
enterprise, motivated by self-interest, regulated by competition, and
priced by objective evaluation of risks and returns. When politicians,
bureaucrats, or "advocates" of one kind or another try to achieve welfare
goals through private insurance—when they try to "improve" on private
insurance with mandates, controls, or regulations—all sorts of unforeseen
and unintended consequences follow.
Here is how it starts.
In the interest of protecting consumers, someone insists that insurance
should be required to cover a benefit that was previously not covered or
covered only as an optional benefit for an added premium. Or, in the
interest of assisting the uninsurable, someone demands that everyone
should be able to buy insurance and that premiums should not exceed
"reasonable" levels. Or, in the interest of helping people who are
vulnerable to certain illnesses, someone wants to prohibit the collection
and review of medical or genetic information by insurance companies.
Demands for politically
induced insurance "reforms" like these start small and quietly. They build
over time with growing support from the often small minority of
individuals who stand to benefit most from the changes. Gradually,
interest groups mobilize to represent the benefit seekers and to promote
their claims. A relatively small number of people and organizations have a
relatively intense interest in promoting laws that benefit them.
Opposition remains
quiescent for two main reasons. "There but for the grace of God go I,"
think some. "Maybe this new law will actually help me someday." Others
think, "I should not begrudge the less fortunate their getting something
from private insurance companies. After all, those companies have deep
pockets and, even if they pass the cost on to me, how much more will
helping the needy cost me anyway?" Most people do not understand the
trade-offs between a free and a controlled insurance market. Others don't
care. Thus, whether motivated by self-sacrifice or the hope of unearned
gain, by ignorance or apathy, most people go along to get along,
supporting government intervention in the insurance industry.
All of these
interventions attempt to reduce the cost of insurance protection for
high-risk individuals by increasing the cost to low-risk individuals.
Therefore, their purpose and effect is not to reduce risk but to spread
wealth. Like other egalitarian measures, they unjustly grant unearned
benefits to some while imposing undeserved penalties on others. And,
accordingly, the results are destructive. There is an old saying that "you
get more of what you subsidize and less of what you tax." By subsidizing
high-risk behaviors and conditions while taxing low-risk behaviors and
conditions, these measures have exactly the opposite effect of the benign
results we attributed earlier to private insurance. They reward
irresponsible behavior and punish responsible behavior, creating a
downward spiral of perverse incentives.
Regulation,
Welfarization, and Social Insurance
Government efforts to
improve on private insurance fall into two major categories. First is the
regulation of private insurance through "prior approval," restrictions on
risk classification, and mandated coverage (that is, the company must
offer certain types of insurance in the state if it offers any). In the
second category are the "social insurance" programs that government itself
provides.
The first tactics used
by state regulators were prior approval of insurance rates, policy forms,
or both. Historically, insurance regulation has been a state-level
function with relatively little federal involvement. Insurance companies
that wish to market a policy nationally must file for approval in all 50
states. Each state has different requirements, some stricter than others;
the most rigid states require the use of state-mandated rates or forms.
Frequently, the regulation of insurance becomes the politicization of
insurance and then the welfarization of insurance. According to testimony
given before Congress by Robert E. Litan, co-director of the American
Enterprise Institute-Brookings Joint Center on Regulatory Studies:
Regulated rates are often distorted by
political pressures in order to subsidize certain classes of drivers. The
AEI-Brookings study found evidence that not only does regulation often
suppress average rates, but distorts rates between different classes of
drivers—keeping rates for high-risk drivers artificially low, while
raising rates for lower-risk drivers. This cross-subsidization is
accomplished directly through limits on rates in certain classifications….
The Massachusetts case study, for example, found that some high-risk
drivers receive subsidies as high as 60 percent, requiring some lower-risk
drivers to pay 11 percent more in premiums than they would pay in a
competitive environment ("State Regulation of Auto Insurance," Testimony
before the Subcommittee on Oversight and Investigations of the House
Committee on Financial Services, August 2001).
The obvious solution to
bring the market back into equilibrium is to eliminate the rate caps. That
is hard to do, however, because advocates for the "disadvantaged" who live
in high-risk urban areas insist that the caps favor consumers and that
dropping the caps would benefit only the insurance industry by allowing it
to charge higher premiums. All too often, the media accept and promulgate
this argument. Thus, for reasons discussed above—vested interests for
some, forced altruism for others, and ignorance or apathy for most—such
insurance "reforms" tend to remain in place and other similar measures
constantly gain support and adoption. I call this process the "welfarization"
of insurance, that is, the transformation of private insurance by
government intervention from a market-based product into a tool to improve
the condition of some people in relation to and at the expense of others.
Another form of
welfarization is to impose restrictions on risk classification. As
explained earlier, insurers must classify kinds and levels of risk
carefully to avoid "adverse selection" and to price policies accurately in
accordance with the levels of risk that various policyholders bring into
the risk pool. In the absence of risk classification, smokers and
non-smokers, good and bad drivers, daredevils and college professors would
pay identical premiums.
An example of insurance
"reform" that eliminates or severely restricts risk classification is
"community rating," which requires that insurance premiums reflect the
average risk in a geographic region. Under community rating, the level of
insurance premium for everyone is determined by adding up the cost of
paying benefits for everyone—rich and poor, sick and well, responsible and
irresponsible—and dividing by the total number of individuals in the
covered population. To many people, this sounds like a fair and effective
way to address the endemic problems of unaffordability and the uninsured,
especially in the case of health insurance.
But look at what
happens. Low-risk insureds soon realize that they have to pay more for
insurance than was the case before community rating, and they tend to drop
such over-priced coverage. High-risk insureds, on the other hand, have
every reason to keep their under-priced coverage. In fact, high-risk
people who were previously uninsured tend to purchase this highly
attractive new insurance. Gradually, the risk pool becomes heavily
weighted with people who are highly likely to file claims. Insurance
companies begin to lose money and must either raise premiums to remain
solvent or stop offering the coverage altogether. If the insurer raises
premiums, the coverage becomes less attractive to low-risk insureds,
further exacerbating the problem. Sooner or later, the only viable option
for insurance carriers is to drop the policy and leave the state. The
money they can collect from premiums will not cover the anticipated
expenditures for claims, much less return administrative costs and an
acceptable profit.
Viewed logically and
analytically, this outcome seems obvious. But that has not stopped
real-world regulators from imposing community rating and unleashing the
inevitable consequences. For example, New York legislators mandated
community rating for health insurance in 1993. The National Center for
Policy Analysis summarized the effects:
Consider the impact on policies sold by Mutual of
Omaha, one of the largest sellers of individual health insurance
policies in the state:
-
Before community rating was instituted in New
York, a 25-year-old male on Long Island paid $81.64 a month for health
insurance, and a 55-year-old paid $179.60.
-
After community rating, both paid $135.95, a 67
percent increase for the 25-year-old and a 25 percent decrease for the
55-year-old.
-
Because young, healthy people began canceling
policies, by 1994 both paid $183.79—more than the 55-year-old was
paying before community rating was implemented—and by 1997 that
community-rated premium had risen to $217.59 a month.
-
As a result of the departure of thousands, the
uninsured population in New York City grew from 20.9 percent in 1990
to 24.8 percent in 1995, according to one report, while the national
rate grew from 16.6 percent to 17.4 percent over that same period.
("Explaining the Growing Number of Uninsured," National Center for
Policy Analysis)
In Kentucky, the same
tactic prompted 45 of 47 insurance companies to withdraw from the state's
individual health insurance market. Market failure caused by government
intervention then became one more reason in the minds of politicians to
impose even more government intervention—a chain reaction that leads
deeper and deeper into political manipulation and further dysfunction.
In addition to
manipulating private insurance, government has created its own insurance
programs—with equally unsatisfactory results. "Social insurance" is the
idea that we should all pay the same premium, usually in the form of a
payroll deduction, and that we should all be entitled to the same benefits
regardless of the level of risk we bring to the global risk pool.
America's Social Security and Medicare programs are social insurance
systems. Both of these programs are enormously popular. Many people
consider them to be unqualifiedly successful. Similar and more extensive
social insurance programs in Europe have even greater popular support
despite the enormous tax burden they impose on wage-earning participants.
Nevertheless, these
programs are highly destructive. For one thing, social insurance is a
pay-as-you-go system, and thus a Ponzi scheme. The government does not
invest the payroll taxes it collects from workers in order to support
their future benefits. Rather, it pays out their taxes to current
retirees; when those who are currently working and paying taxes retire,
they will have to depend on taxes from the next generation of workers.
This system seemed to work early on when a large number of people were
paying into the system while only a small number of people were drawing
benefits out. But, in the future, as Europe, the United States, and the
rest of the world confront a new demographic of aging, analysts say a
shrinking pool of workers will be unable to support full social insurance
benefits for a retiring baby-boom generation of gigantic size and
unreasonably large expectations. If warnings from the General Accounting
Office, the Congressional Budget Office, and dozens of independent experts
are accurate, Social Security and Medicare will leave both their
participants and the government worse off in the long run.
Insurance performs the
critical economic functions of spreading risk and of pricing risk. If we
do not price risk fairly and objectively, we end up with a system that
rewards high-risk (including irresponsible) behavior and punishes low-risk
(including responsible) behavior. One of the main differences between
social insurance and private insurance is that, although both spread risk,
only private insurance prices risk in a meaningful way. Private insurers
have a legal and fiduciary responsibility to their insureds. They must
price insurance coverage at a level sufficient to accumulate reserves that
will be adequate to pay carefully anticipated claims rates. Private
policyholders possess legal contracts, enforceable in a court of law, that
assure them recourse in case of dispute, malfeasance, or insolvency by the
insurance company.
Social insurance, on the
other hand, offers none of these protections. Social Security and
Medicare, for example, are notorious for growing exponentially beyond
their original cost projections. Socially insured people have no legal
recourse or protection against increases in premiums (payroll taxes),
decreases in benefits (program cutbacks), or the imposition of means tests
(welfarization).
In America's mixed
economy, social insurance is usually considered a safety net and not a
first line of financial defense. When savings, investments, pensions, and
private insurance prove inadequate, we look to social insurance to pick up
the slack. Unfortunately, however, the very existence of compulsory social
insurance debilitates the effectiveness of these private financing
vehicles. People save or purchase insurance if they perceive they are
vulnerable to a large financial loss. Social insurance distorts that
perception. By creating an illusion of low risk, it reduces the demand for
private insurance protection.
For example, when
President Lyndon Johnson signed the act that created Medicare in 1965, he
stated confidently that "no longer will older Americans be denied the
healing miracle of modern medicine. No longer will illness crush and
destroy the savings they have so carefully put away over a lifetime so
that they might enjoy dignity in their later years. No longer will young
families see their own incomes, and their own hopes, eaten away simply
because they are carrying out their deep moral obligations." By building
up false hopes like these, Medicare effectively scuttled any hope for a
private health insurance market to cover seniors. Today, the elderly spend
a larger proportion of their income for health care than they did before
Medicare began; Medicare has little hope of continuing to provide full
benefits without major premium increases as the baby-boom generation
retires; and a private insurance system to take Medicare's place has no
realistic chance to develop.
The same problem occurs
in other categories of insurance. Most people buy private car, fire, and
life insurance. If they did not have these kinds of coverage and the
insurable event occurred, they would usually experience a major loss with
little direct assistance from the government. On the other hand, very few
people purchase hurricane, flood, or earthquake insurance. When a major
natural disaster occurs, local and national politicians jump at the
opportunity of promising financial assistance of all kinds to the victims.
Nothing lets a politician appear compassionate and generous without fear
of criticism like a major disaster. Why buy flood insurance if the
government indemnifies you with grants and loans every time the
Mississippi escapes its banks? In the same way, the marketability of
private long-term care insurance is also undercut by the easy availability
of nursing-home care financed by Medicaid. One can only wonder at the
possible effect on private life insurance sales of the government's
liberal indemnification of families victimized by the World Trade Center
attacks.
Thus, government impedes
the effectiveness of private insurance in two main ways: first, by trying
to improve on private insurance with arbitrary controls; secondly, by
allegedly mitigating the risks against which private insurance should
protect us through mandatory social insurance, public welfare, and
emergency grants and loans.
Insurance and
Morality
We have seen that
insurance performs a vital economic function. To the extent that
government regulates or subsidizes insurance, it also becomes a political
issue. But insurance has a moral dimension as well. Insuring against risk
is one of the most important ways in which individuals take full
responsibility for their lives, in accordance with the ethics of
Objectivism. And the private marketplace for insurance illustrates how
trade allows individuals to cooperate for mutual benefit.
* Insurance is
individualistic. Individuals buy insurance by voluntary choice to
protect their own self-interest (including the interests of their loved
ones and dependents) in accordance with their own assessment of their
individual needs and circumstances.
* Insurance is
rational and objective. It helps us prepare for the unexpected based
on facts and analysis, so we don't have to depend on wishful thinking or
blind hope. Premiums and benefits are based on objective risks as
determined by hard actuarial data.
* Insurance depends
on the trader principle. You won't buy it and the insurance carrier
will not sell it unless you each perceive that the transaction will leave
you both better off than you were before. When this simple principle is
allowed to operate in a free market, the result is a profusion of
different policies—covering a wide range of risks, benefit levels, terms
and conditions, and durations—that an individual can tailor to his unique
situation, with prices controlled by competition.
* Insurance is fair.
You know you get what you pay for because your premium is based on
underwriting, which measures and prices the level of risk you bring to the
risk pool. Nobody forces you to buy insurance, but if you don't have it,
you are responsible for the punishing financial consequences if and when
the insurable event occurs.
* Insurance serves
life. It helps us to manage uncertainty and therefore preserves,
sustains, and promotes life.
By contrast, social
insurance violates those same ethical principles.
* Social insurance is
collectivistic. It treats individuals as means to an end by
sacrificing their interests for the sake of others.
* Social insurance is
subjective. "Premiums" and benefits are based on political
considerations and are established by the authorities.
* Social insurance is
non-rational. You pay what it charges and get what it gives you
without regard to any reasoned calculation of what you want, what you
need, or what you can afford.
* Social insurance is
inequitable. By treating everyone the same, it punishes some people
(the most responsible and least risky) to reward others (the least
responsible and most risky).
* Social insurance
violates the trader principle. It is compulsory and monopolistic. It
prevents people from choosing to opt out; it offers a single policy with
few options, if any; and it is not subject to competition.
* Lastly, social
insurance undermines life. It creates a false sense of security that
anesthetizes people to risks that they must recognize and confront to live
safely.
For all these reasons,
it should be clear that "social insurance" is not a type of insurance but
its antithesis. It is not a means of dealing with the chaos and confusion
of life; it is a source of chaos and confusion. Because social insurance
rests on the politics of demagogy, it renders future freedoms and
obligations unknowable, and so vitiates our ability to plan. Because
social insurance operates through taxes, it robs us of our money—the
principal tool we need to give substance to our plans.
The question, then, is
not whether social insurance should become private. That is like asking
whether drunk drivers should become sober drivers. Of course they should.
And social insurance thus needs to be fought through a well-grounded moral
crusade, carried to the voting public through lectures, articles, and
other means. But until politicians show an inclination to give up their
demagogic joy rides, the uncertainties generated by social insurance will
remain a personal threat, compounding the uncertainties that are inherent
in life. Although we cannot entirely escape the cost of government
intervention, we can gain a measure of independence by refusing to rely on
government's offer to help. We can and should use genuine
insurance—private insurance—to build a wall of private protection between
ourselves and life's uncertainty that depends as little as possible on
government promises and programs.
#############################
Updated,
Monday, February 1, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-003: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- COVID-19 and Long-Term Care: LTCI Insider
- Trust Fall II: Surfin' USA
- An afternoon nap could improve your cognitive abilities, study says
- New York AG: Nursing Home COVID Deaths Undercounted by 50%
- Group Sees Long-Term Care Insurance Claims Rising
- American Academy of Actuaries Examines COVID-19's Potential Impacts
on Long-Term Care Insurance
- Eating Nuts In Your Forties Could Cut Dementia Risk In Later Life,
Study Finds
- Promoting the sixth insurance program
- Dementia, Alzheimer’s not an inevitable part of aging: Study
- Some senior living operators add vaccine access to marketing
toolkits to help rebuild occupancy
- Hourly rates for assisted living CNAs increased by nearly 6% last
year
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, January 25, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-002: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Nursing home sector continues to lose jobs, while
healthcare overall rebounds: report
-
Pandemic forcing nursing homes across the country
to close
-
Washington state lawmakers look to the market to
cover long-term care costs
-
Low Interest Rates Push LTCI Prices Up
-
The Social Security retirement age could change.
What that could mean for benefits
-
Nearly half of Alzheimer’s cases are mild,
supporting a focus on early intervention
-
Six Months Later, Most Wuhan COVID Survivors Still
Have Health Issues
-
Poor Performance of Long-Term Care Product Persists
-
Joe Biden’s New Health Care Agenda (and CMS’s Big
Role In It)
-
IRS Reversal: Expenses Paid With PPP Loan Funds Are
Now Tax-Deductible
-
CDC study confirms: Coronavirus most often spread
by asymptomatic carriers
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, January 22, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC
BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW
LTC
Comment: The myth that access to Medicaid LTC benefits requires
impoverishment is pervasive. A dose of reality concerning spousal
impoverishment specifically follows the ***news.***
***
NEW 2021 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS. We’ve just updated
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
in The Zone, the Center’s members-only website. If you need your user name
and password to access The Zone or if you’d like to join the Center to
gain sustained access, contact Steve Moses at
smoses@centerltc.com.
The 2021 spousal impoverishment numbers are included in the following
LTC Bullet. ***
***
CLTCR Premium Membership -- Center for Long-Term Care Reform premium
members receive our full suite of individual membership benefits
including: our LTC Bullets and E-Alerts; access to our
Members-Only Zone website and Almanac of Long-Term Care; subscription to
our
Clipping Service;
and email/phone access to Steve Moses for 24-hour turnaround queries. Our
Premium Membership is designed to give you a competitive advantage in your
long-term care profession. Your increased knowledge of the critical issues
and challenges we face in the field of long-term care service delivery and
financing equals improved professional success for you and better LTC
services for your clients and for those who have no choice but to rely on
scarce public resources. Premium Membership is $250 per year, paid up
front or monthly by automatically recurring credit card payments. Contact
Steve at
smoses@centerltc.com
to start your Premium Membership immediately or go directly to our secure
online subscription page and
sign
up
for as little as $21 per month. ***
***
QUINTESSENTIAL QUERY: After a program I gave for LTCI producers recently,
an attendee asked:
I
never have been able to understand why the state and federal government do
not enforce existing rules about qualifying for Medicaid or create new
ones that will limit their liability. It is a welfare program designed to
help those who need it and not a program for the people who can afford to
pay for their own care. We have known for years that the Baby Boomers are
a ticking time bomb, yet the government ignores it. Can you explain why
they are not interested in making Medicaid a program that can be accessed
by the ones who really need it?
I
replied:
In a
nutshell, the problem is decades of drift toward collectivism and
dependency on government as everyone’s provider/protector implemented
through compulsory social insurance. We’re now paying the price for
replacing personal responsibility with government promises. I expect the
full bill to come due by 2031 when boomers start turning 85, Social
Security and Medicare “trust funds” are depleted and the Fed’s and
Treasury’s Faustian bargain with
Modern Monetary Theory
plays out. Then we’ll learn if there is anything left of the
individualistic values and principles that made America great in the first
place.
For
the full explanation, I recommend my two latest studies, a monograph
published in January 2020 titled
Medicaid and Long-Term Care
and
How
to Fix Long-Term Care Financing
from 2017, published with the
Foundation for Government Accountability.
***
LTC
BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW
LTC
Comment: Before the Medicare Catastrophic Coverage Act of 1988, which was
signed into law by President Ronald Reagan July 1, 1988, access to
Medicaid’s generous long-term care benefits did require spousal
impoverishment under certain circumstances. While the “catastrophic” law
was still under consideration in Congress, I described the problem and how
the proposed legislation would address it in the U.S. Department of Health
and Human Services Office of Inspector General’s June 1988 report titled “Medicaid
Estate Recoveries: National Program Inspection”:
Under current law, spouses of institutionalized Medicaid recipients are
sometimes forced into impoverishment by Medicaid eligibility rules. This
usually occurs because the husband is institutionalized first. If, as is
often the case, most of the family's income such as Social Security and/or
a pension is in the husband's name, Medicaid rules provide that all but a
small amount must be applied toward his cost of care. The wife who is left
in the home, i.e., the community spouse, retains only a pittance.
On the other hand, if the wife is institutionalized first, and the income
is still in the husband's name, he keeps the money, because the community
spouse has no legal obligation to contribute toward the cost of the
institutionalized spouse's care.
The
catastrophic bill addresses this problem by increasing the amount of
income and resources that the community spouse may retain without
affecting the Medicaid eligibility of the institutionalized spouse.
Because more people would qualify for assistance and less family income
would apply toward the cost of institutional care, the fiscal impact of
this solution would be to increase Medicaid expenditures. We found that
3-year cost estimates on similar provisions in different bills varied from
$410 million (Congressional Budget Office) to $1,275 million (HCFA
actuaries) depending on implementation assumptions. All estimates
ascend steeply into future years. (pps. iii-iv, emphasis added.)
Boy
did we get that right! Medicaid’s long-term care expenditures have
skyrocketed ever since, from $18.5 billion for nursing home and home
health care in 1990 to $87.1 billion in 2019, nearly quintupling in the
ensuing 29 years.
What
MCCA ’88 Did
MCCA
’88 dealt with the spousal impoverishment problem in several ways. It
guaranteed the community spouse a “Maximum Monthly Maintenance Needs
Allowance” or MMMNA of up to $1,500 per month. The law granted a
“Community Spouse Resource Allowance” or CSRA of $60,000.
What
these provisions meant is that the wife or husband of an institutionalized
Medicaid recipient could retain up to $1,500 per month of the Medicaid
spouse’s income instead of that income having to be used to offset
Medicaid’s cost of his or her care in the nursing home. Likewise, the
community spouse could retain half of the couple’s joint assets not to
exceed $60,000, thus exempting those funds from private LTC liability and
increasing Medicaid’s expenditures.
MCCA
’88 provided for these spousal impoverishment protections to increase with
inflation annually. As of 2021, the original numbers have more than
doubled. The MMMNA is now $3,259.50 per month and the CSRA is $130,380. A
little over $3,200 per month is not easy living, but it is also most
assuredly not “spousal impoverishment.” The official poverty level for
single individuals as of 2021 is $12,760 per year or $1,063 per month, a
little less than one-third of the MMMNA. Medicaid’s LTC role is to provide
a safety net for the poor, not to protect a middle-class life style for
people who fail to plan, save, invest or insure for long-term care. So the
term “spousal impoverishment” should be stricken from the LTC financing
lexicon.
Updated Medicaid Spousal Impoverishment Numbers
In
case you’re interested, we’ve updated and published the Medicaid spousal
impoverishment numbers every year since 1991, when the MMMNA was $1,662
and the CSRA was $66,480. Those data are available to Center members in
The Zone
here.
You’ll need your user name and password for access to The Zone. Get a
reminder from
smoses@centerltc.com
if you’re already a Member or contact him to join and get access to this
valuable resource. Our source is the Centers for Medicare and Medicaid
Services (CMS) “2021 SSI and Spousal Impoverishment Standards”
here.
A
Better Way
Now
back to that old OIG report from 1988. Did it oppose the MCCA ‘88’s
provisions to eliminate spousal impoverishment? No! But it did offer an
alternative approach designed to achieve the same result more
cost-effectively:
Certain findings from the OIG’s Medicaid Estate Recoveries report have a
direct bearing on the spousal impoverishment issue. In fact, we believe
this problem can be resolved at considerably less public expense than is
contemplated in the current legislation. We found, for example, that many
"impoverished spouses" own their homes free and clear. Their problem is
cash flow, not poverty per se. We found that two-thirds of the elderly
poor are unable to qualify for any Medicaid services, although many
individuals with large assets are eligible for the program's most valuable
benefit (institutional care). We documented that recovery of Medicaid
payments from the estates of property-holding recipients is very unusual.
This is true because assets are (1) transferred, sheltered, expended or
concealed by recipients and their families and/or (2) public officials
have taken no action to recover. In light of these facts we recommended
that propertied recipients be permitted to retain their income and assets
while receiving Medicaid long-term care benefits, but only in exchange for
a promise, secured by a legal encumbrance, to repay the cost of their care
when they no longer need their property. This repayment would be made from
their estates or the estates of their last surviving dependent relatives
after the property is no longer needed for a livelihood. Such a plan would
resolve the spousal impoverishment problem, eliminate the most
catastrophic financial impact of long-term illness and add a major nontax
revenue source for Medicaid. More importantly, the risk of losing their
financial legacy would influence the elderly and their heirs to seek
private long-term care insurance protection and thus further relieve
fiscal pressure on public programs. (p. iv)
Congress later adopted some of our 1988 report’s recommendations in the
Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). It made estate
recoveries mandatory, for example, but it left Medicaid’s many income and
asset exemptions unprotected by the “legal encumbrance” to secure that
wealth for later recovery as we had recommended. Nor did the federal
government strongly enforce the newly required estate recoveries. Worse,
OBRA ’93 left the home equity exemption unlimited. That only changed with
the Deficit Reduction Act of 2005 (DRA ’05), which capped home equity at
$500,000 to $750,000 ($603,000 to $906,000, as of 2021) at state
legislatures’ discretion.
The
end result is that Medicaid LTC expenditures continue to grow rapidly, the
public remains desensitized to LTC risks and costs, private financing of
LTC through home equity conversion and private insurance is stymied, and
LTC access and quality continue to be serious problems.
If
all this seems just a little too “inside baseball” to you, then you have a
good idea why the complicated subject of long-term care financing policy
remains a mystery to most analysts and policy makers. If you really want
to understand what it means, and what has to be done to resolve the
problems once and for all, you could do worse than to spend an hour
reading the OIG’s report from 33 years ago. Here it is again: “Medicaid
Estate Recoveries: National Program Inspection.”
I’d
also like to point readers to an earlier study I conducted and wrote that
led directly to the Inspector General’s report.
The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the
Medicaid Program --
Health Care Financing Administration (1985). Read it and see if you don’t
think we nailed the problem and the solution 36 years ago!
#############################
Updated,
Monday, January 11, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #21-001: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Trump Officials
Approve Tennessee's Controversial Request To Revamp Medicaid Funding
-
New Analysis Finds
Significant Financial Benefits Locked in Long-Term Care Insurance
Policies Sold Fifteen to Twenty-Five Years Ago
-
One-week US
Covid-19 case and death totals are higher than ever
-
Genworth May Cut
Remaining LTCI Sales and Marketing Operations
-
December Proved To
Be Deadliest Month For Residents In Long-Term Care
-
2021 Economic
Outlook Fraught With Uncertainty
-
Older Adults and
COVID-19: Implications for Aging Policy and Practice
-
MA Beneficiaries
See Nearly 20% Fewer Home Health Days Than Traditional Medicare Peers
-
Genworth to Shift
to China Oceanwide Deal Backup Plan
-
‘Because of You
Guys, I’m Stuck in My Room’
-
The COVID-19
Pandemic Has Upended The LTCi Market
-
What's Most
Hurting the Financial Security of Older Americans?
-
We need long-term
solutions for older Americans’ long-term care
-
Elder Law Guys:
The twelve COVID elder law days of Christmas
-
Trust Fall
-
Crushing Despair,
Glimmers of Hope: The Top Skilled Nursing Stories of 2020
-
Senate Passes
$2.3T Package of Relief, Funding and Tax Breaks
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, January 8, 2021, 10:40 AM (Pacific)
Seattle—
#############################
LTC Bullet:
Long-Term Care and the Pandemic
LTC Comment: What has the Covid-19 pandemic wrought
for long-term care? Answers after the ***news.***
*** ILTCI CONFERENCE GOES VIRTUAL: “After surveying
our attendees and careful consideration, we will change the 2021 ILTCI
Conference from an in-person meeting to a virtual format.” So announced
Barry Fisher, Conference Chairperson and Vince Bodnar, Conference
Co-Chairperson recently. They’ve polled past participants for their
preferences regarding how to structure and present the leading LTC
insurance industry conference in a virtual format. Whatever they come up
with will be far better than nothing (last year) but could never match
past in-person versions. Nevertheless, we’ll take whatever we can get!
Read the Center for Long-Term Care Reform’s
History of LTC Insurance Conferences (2019) for a detailed look
back at all the Intercompany Long-Term Care Insurance Conferences from the
first one, 2001 in Miami to the latest, 2019 in Chicago. ***
*** “Trust
Fall: The Untold Story of Washington's LTC Trust Act” is an excellent
essay by
LTC Associates’ Senior Vice President,
Stephen D. Forman. In it Forman describes, explains and debunks the
CLASS-like public policy misfire currently being operationalized in the
Evergreen State. This evergreen new deal for long-term care “vigorously
remakes Washington’s insurance market—without voice from the insurance
industry—to the financial injury of residents.” We hope to bring you a
“guest bullet” by Mr. Forman summarizing the key points in his essay. In
the meantime, don’t wait. Read this provocative essay now while there’s
still time to talk sense to Washington State policy makers. As with CLASS,
it may be possible to derail this taxpayer shakedown before its major
damage is done. Washington voters have already expressed their opposition
to the plan twice by
rejecting it at the ballot box in 2019 and
refusing to fund it with risky investments in 2020. ***
*** IF YOU FIND VALUE IN TODAY’S LTC BULLET,
please consider
joining the Center for Long-Term Care Reform so you can enjoy the
many benefits of membership and stay tuned daily with our LTC
Clippings, weekly with LTC E-Alerts and bi-weekly with LTC
Bullets. Get in front of your prospects and clients by knowing what’s
happening in long-term care news and analysis—and what to say about
it—before they blindside you with stories you haven’t heard. ***
LTC BULLET: LONG-TERM CARE AND THE PANDEMIC
LTC Comment: Invited by two leading national
distributors of long-term care insurance to help kick off their 2021 sales
year,
Center for Long-Term Care Reform president Steve Moses delivered the
following presentation on Wednesday and Friday of this week. He thanks
GoldenCareUSA and
Long-Term Care Resources (LTCR) for this opportunity to reflect on the
impact Covid-19 is having on long-term care services and financing,
including the future prospects for LTC insurance sales. Read on for
Steve’s insights in the following presentation notes.
Long-Term Care and the Pandemic
Presented to GoldenCareUSA and Long-Term Care Resources agents and
staff
Wednesday and Friday, respectively, January 6 and 8, 2021
By Stephen A. Moses, President
Center for Long-Term Care Reform
Covid Impact: Earthquake, life as we’ve known
it changed radically, huge opportunities, giant risks, long-term care and
LTC financing are more interesting, challenging, and fun than ever before
in my 38 years following the field. The opportunity to do well by doing
good selling LTCI has never been greater. You producers, distributors and
the carriers you represent to consumers are critical to our country’s
surviving this crisis and prospering in the future.
3 Themes: I’ll discuss three major themes or
contexts of the Covid-19 pandemic:
-
Health and long-term care
-
The Economy
-
Politics
LTC Clippings since last month,
December 2020, are the source for most of what follows. LTC Clippings
is a publication we produce and distribute to subscribers.
We send an average of two clippings per day by email
to subscribers. Each clipping gives the title, a link to the source, a
representative quote and a couple sentences of my analysis to put the
information in context.
The purpose of LTC Clippings is to inform
agents of news, data, reports, articles, etc. that they need to know
before they’re blind-sided by prospects or clients who’ve read something
the agents haven’t seen yet.
I’ll make today’s presentation and all the links to
original stories it covers available in our next LTC Bullet to be
published on Friday. The same day it will be posted on The Moses LTC Blog
at www.centerltc.com. You can find it there.
My point: if you received the LTC Clippings
you would know all of what I’ll say today already.
If you’re blown away and you want to subscribe, check
out our “Membership
Levels and Benefits” link and our “Join
and Contribute Online” link. Both links will be live in the LTC
Bullet on the blog.
Health and LTC Context
Acknowledge sources: Experts like Claude Thau,
Sally Leimbach and Margie Barrie.
Watch for two forthcoming white papers by Margie
Barrie: “The Impact of Covid-19 on Long-Term Care” and “The Medicare White
Paper”
-
Long-term care is in the news—that’s a big change
for better and worse
-
On the bad side, people are dying in LTC
facilities:
-
Even though just 1 percent of the U.S. population
resides in a long-term-care facility, LTC deaths represent nearly four
in 10 COVID-19 deaths. (Source – Christine Benz, Morningstar, December
8, 2020.)
-
I covered the causes, consequences and solutions
in my June 1, 2020 op-ed in the WSJ:
Nursing Homes, Coronavirus and Medicaid
-
“The dual factors of sharply declining occupancy
[down from 85% in Feb to 74% in Sept.] coupled with the high cost of
personal protective equipment, COVID-19 testing, and hazard pay for
workers is placing the skilled nursing sector under unsustainable
financial strain.”
12/4/2020, “
NIC Points to Unprecedented Challenges for Skilled Nursing as
Occupancy Remains Low ,” by Patrick Connole, Provider
-
“Two-thirds of nursing homes say they won’t make
it another year given the current operating pace due to increased
COVID costs. … Staffing has been the top cost in response to COVID
with nine out of 10 nursing homes hiring additional staff and/or
paying staff overtime.”
12/16/2020 , “
State of Nursing Home Industry: Facing Financial Crisis and Staffing
Challenges” by Beth Martino, AHCA/NCAL
-
“The COVID-19 pandemic [will contribute] to
substantial eldercare cost hikes, especially for assisted living and
in-home care. … Over the course of a single year, assisted living
community rates increased by 6.15% to an annual national median cost
of $51,600.” (And pre-Covid)
12/3/2020, “
COVID-19 linked to ‘substantial cost increases’ in assisted living:
survey ,” by Kimberly Bonvissuto, McKnight’s Senior Living
-
“The United States spent a collective $172.2
billion on care at nursing homes and continuing care retirement
communities (CCRCs) in 2019…; that’s a gain of 3.3% [from] 2018. But
that increase pales in comparison to the 7.7% jump in spending on home
health services during that time, from $105.4 billion in 2018 to
$113.5 billion in 2019.” Again, all pre-Covid so expect much more
coming.
12/16/2020, “ Spending Growth on Nursing
Home Care Falls Far Behind Home Health, Hospitals ,” by
Alex Spanko, Skilled Nursing News
-
Shortage of health care workers:
“Notwithstanding sign-on bonuses, competitive salaries and benefits
packages, recruiting [caregivers] is a challenge, [one home health
provider] said. ‘Before the pandemic, I used to get 10 applicants a
week for our open positions. Now I’m getting one or two.’”
12/14/2020, “Help
wanted: More home healthcare workers due to COVID-19 ,” by Joe
Jancsurak, McKnight’s Senior Living
People aren’t exactly lining up for minimum-wage
jobs in Covid’s bullseye with higher unemployment benefits readily
available. Go figure.
-
Hospital costs down 36% due to elimination of
noncritical services such as elective surgeries
-
Dental care down 65%. When was the last time you
saw a dentist?
-
Flu cases lower than normal so far this year;
measures taken to avoid COVID-19 are likely the reason
12/11/2020, “Flu
cases lower than normal so far this year, COVID-19 likely the reason
,” by Brian P. Dunleavy, UPI
12/16/2020,
“COVID-19 Shocks The US Health Sector: A
Review Of Early Economic Impacts,” by George Miller, Corwin
Rhyan, Ani Turner, and Katherine Hempstead, Health Affairs
-
“The number of COVID-19 cases and deaths for
home- and community-based services programs pales in comparison with
those for nursing homes … After [researchers] compared positive
COVID-19 cases and deaths in three Medicaid [home care] programs to
results for nursing home and assisted living residents for March
through July, they found that only 3% of older [home care] adults were
infected, and only 1% died from COVID-19. Meanwhile, nursing home and
assisted living residents showed a 37% positivity rate and an 11%
death rate.”
12/10/2020, “Study
shows far fewer COVID-19 cases at home than in nursing homes, assisted
living,” by Joe Jancsurak , McKnight’s Senior Living
-
“61% of Americans now report that they would
rather die than live in a nursing home. … Americans prefer to stay in
their home for long-term care (71%), and most would like to have the
option of relying on a family member if they needed long-term care
(68%) but would not expect them to [provide such care] if they were
unable to pay them (69%).’”
12/9/2020, “More
than 6 in 10 Americans now say they would rather die than live in
nursing home: survey ,” by Amy Novotney, McKnight’s
Senior Living
-
“The vast majority of Americans (87%) believe
it’s more important than ever for people to stay at home for long-term
care, as well as have a plan for long-term care (85%) and have
long-term care insurance (81%) as COVID-19 has raised concerns about
the safety of nursing homes.”
12/16/2020, “Americans
Worry More Now About Their Long-Term Care Plans and Prioritize Staying
At Home ,” by Nationwide Retirement Institute, Advisor Magazine
-
Nursing home, assisted living and home care costs
will rise further, especially for home care
-
LTCI prices are rising, especially for hybrids
-
According to Margie Barrie: “Virtually all
carriers have increased their premium rates and most have limited
the application age to 70.”
-
The impact on traditional LTCI products has
been more limited, but stricter underwriting requirements keep
coming: Applications may be postponed if someone has been outside
the country within the past month; or in contact with somebody who
tested positive; or if quarantined, even with no diagnosis or
symptoms.
-
So called “Value Based Care” means fewer
services being provided to beneficiaries.
-
People are being sent home sooner from the
hospital and nursing home.
-
Medicare has changed the payment process.
Hospitals will now control the distribution of payments for all
parts of the long term care continuum.
-
For details, read Margie’s forthcoming “The
Medicare White Paper.”
-
“A majority of today’s workers and retirees range
from feeling cautious to pessimistic about the economic outlook for
2021, with nearly 75% concerned about how the global pandemic may
impact their retirement savings ….”
1/5/2021, “2021
Economic Outlook Fraught With Uncertainty,” by Principal Financial
Group, Advisor Today
-
People are more aware of their own and
their parents’ vulnerability
“Although almost every household with an income
of $100,000 or more reports saving for retirement, only half of them
(49%) say they believe they will ever be able to retire.”
12/8/2020, “
Half of Americans with incomes over $100,000 think they’ll never be
able to retire ,” by Amy Novotney, McKnight’s Senior Living
-
“According to an analysis of applicants for
traditional long-term care insurance in 2019, decline rates ranged
from 19.4 percent for individuals applying between ages 40 to 49 to
53.6 percent after age 75. ‘Couples comprise the majority of
traditional long-term care insurance applicants,’ explains Claude Thau,
National Brokerage Director at USA-BGA … ‘The likelihood that at least
one spouse will be declined ranges from 35.0 percent for spouses
between ages 40 and 49 to 78.5 percent for couples age 75 or older.’”
That’s pre-Covid too so likely getting worse.
12/10/2020, “Long-Term
Care Insurance Decline Rates Reported,” by Jesse Slome,
American Association for Long-Term Care Insurance
-
Insurability is declining as urgency for
consumers is increasing: Insurance companies are wary to take on
applicants who have had the virus or been exposed to it. Intelligent
people who realize this are more inclined to purchase LTCI while they
still can prove that Covid-19 has not yet compromised their health
history.
-
Hybrids provide a wide range of benefits
-
Traditional products still offer the biggest
leverage against LTC risk
-
But carriers face increasing costs and consumers
confront higher premiums and/or reduced benefits due to the
government’s artificially low interest rates.
12/18/2020, “
COVID-19 Drove Up Group Term Life Death Claims: SOA Survey,” by
Allison Bell, ThinkAdvisor
-
Virtual marketing and sales via face-to-face
electronic connections make LTCI easier and less expensive to sell,
eliminating drive time for example
-
People will be back at work after the vaccine, so
their future financial outlook will become more stable.
Now let’s examine the situation from the standpoint
of the …
Economic Context
Characterized by irresponsible fiscal and monetary policy
-
Consider the national debt. According to the “Debt
clock” for 2008 (Obama’s first term)
$9.6 trillion; 2016 (Trump elected)
$19.2 trillion; 2021, (now)
$27.8 trillion; 2025 (end of Biden term)
$48.9 trillion projected. See a trend?
-
These current and projected numbers are going up so
fast, they may increase by hundreds of billions of dollars between the
time I posted them yesterday and when you click the links
-
So-called “stimulus” to confront the economic
downturn caused by the pandemic has resulted in these huge deficits and
rampant money printing by the Federal Reserve to monetize the
skyrocketing debt.
-
All this new money had to go somewhere. It didn’t
inflate consumer prices so much because of low demand suppressed by
high unemployment.
-
So instead, we’ve seen rapid inflation in
equities (stocks and bonds) and real estate.
-
Ironically, in this economic crisis stock markets
are at all-time highs.
-
Home prices rose 8.4% in the year that ended in
October, up from a 7% annual rate the prior month to a 14-year high:
U.S. Home-Price Growth Accelerated in October
-
People working from home with shorter or no
commutes are looking for larger homes in suburbia offering more space,
better home offices and a place to provide home care if needed for
themselves or their parents.
-
They have more wealth to protect and more money
for premiums.
-
People going back to work after the vaccines kick
in means a bigger worksite market.
-
On the negative side, inequality is exacerbated:
elderly poor get poorer even as the rich get richer.
-
There will be more elderly debt: “Adults age 70
and older have increased their debt since the Great Recession —
largely due to mortgage payments — and this hampers their ability to
overcome ‘negative events’ as they age …” Substitute “a long-term care
crisis” for “negative events” and you can see what this means.
-
The elderly poor get poorer even as the rich get
richer due to irresponsible monetary policies that inflate stock and
real estate values. What this means in terms of long-term care is that
more people will depend on Medicaid when Medicaid is least able to
support them. The good news is that the well-to-do will have more
wealth to protect and more money to pay premiums for LTC insurance. So
the current mess in LTC services and financing will worsen. Medicaid
will continue to deteriorate and private LTCI will become more
desirable and salable than ever before.
-
12/29/2020, “What's
Hurting the Financial Security of Older Americans?,” by Ginger
Szala, ThinkAdvisor
Now let’s look at the political context. As I
prepared this presentation before the Georgia Senate run-off elections, it
was impossible to predict what the future might hold politically. Would
the Democrats win control of the Senate taking the trifecta of President,
House and Senate? That would free them to pursue their left wing’s
most radical progressive wish list. Or would the Republicans hold control
of the Senate and remain a bulwark of opposition to the goals of Bernie
Sanders, Elizabeth Warren, and Alexandria Ocasio-Cortez.
It was a cliff-hanger, but now we know …
The Democrats have taken both Georgia Senate races
and so will control both houses of Congress as well as the Presidency.
Vice President Kamala Harris will cast the deciding vote in case of a
50/50 tie on key issues. We’ll likely see more progressive measures pass,
more spending approved, more money printing to cover it, and higher
national debt than otherwise. Only time will tell what the long-term
results of such policies will be.
Political Context
Biden Administration
As we’ve seen from the economic context, there isn’t
much concern for financial responsibility any more in either party. We
have to ask …
Will
Modern Monetary Theory, the idea that the government can print and
spend unlimited amounts of money without consequences, will MMT prevail
allowing progressives to pursue their whole bucket list of goals including
“free” long-term care provided by Medicare? That would finally wipe out
private LTC insurance.
Actually, the Biden Administration’s LTC wish list is
much less ambitious.
According to the “Biden-Harris Plan to Make Nursing
Homes and Long-term Care Facilities Safe” the Biden Administration’s whole
focus is on
regulation and enforcement. For example, they want to …
-
Promote safety and care
-
Ensure appropriate oversight of facilities to
protect patient safety and wellbeing
-
Provide oversight for how taxpayer and resident
funds are spent and provide avenues for bringing complaints
-
Increase access to home and community-based
services for the number of older Americans and people with disabilities
able to receive home and community-based services (HCBS).
-
All nice sounding ideas, but what they mean is more
inspections, more fines and financial penalties, not more money and
support. In a phrase “The beatings will continue until morale improves.”
The Biden Plan For Older Americans addresses long-term care by
promising to …
-
“The Congressional Budget Office (CBO) now
projects that the trust fund will be
exhausted in 2024 , a little more than three years from now, which
is the nearest the fund has come to exhaustion in the 55 years of its
existence.
-
12/15/2020, “The
Coming Crisis For The Medicare Trust Fund ,” by David Muhlestein,
Health Affairs
-
Heavier than ever reliance on Medicaid, a
bankrupt welfare program, is a mistake. Making Medicaid LTC more
attractive by offering more home care does not save money and further
reduces consumers’ perception of LTC risk.
-
Consider Medicaid’s well-known deficiencies …
-
Access and quality problems, notoriously low
reimbursement rates, discrimination, institutional bias, loss of
independence and control, but add to these some new defects …
-
Managed long-term care through Medicaid is
increasing, adding another layer of compensation and control between
the patient and provider.
“Over half of states contract with managed care organizations to
provide [LTC] services. [GAO] examined 6 states, each of which
reported finding significant problems with the quality of care
provided through these contracts. In some cases, the problems led to
patient injury or neglect.”
12/16/2020, “Medicaid
Long-Term Services and Supports: Access and Quality Problems in
Managed Care Demand Improved Oversight
-
On top of that: “The true Medicaid
improper-payment rate now exceeds 25 percent, meaning that more than
one in every four dollars spent in the Medicaid program — or more
than $100 billion in federal spending each year — is in violation of
program rules. It
turns out that millions of Medicaid enrollees are ineligible
for the program — in most cases because they earn too much income,
but in others because they are not lawful residents.”
12/9/2020, “
Improper Medicaid Payments Have Soared since Obamacare ,” by
Brian Blase and Hayden Dublois, National Review
12/8/2020, “Biden
nominates defender of long-term care causes and a virus expert to health
team,” by Alicia Lasek, McKnight’s LTC News
Biden wants to lower the Medicare age to 60
-
What happened to “Medicare for All?” “Medicare at
60” is “Medicare For…Gotten.”
-
Hospitals fear adding millions of people to
Medicare will cost them billions of dollars in revenue.”
-
11/11/2020, “Biden
Plan to Lower Medicare Eligibility Age to 60 Faces Hostility From
Hospitals,” by Phil Galewitz, Kaiser Health News
-
Medicare at 60 is just one more way for government
to say “don’t worry” just before bottom falls out of the trust fund.
I’m going to close by explaining biggest risk to
private long-term care insurance:
LTC intelligentsia has formed a consensus around compulsory social
insurance
Their analysis goes like this:
Long-term care is in crisis;
Especially now in the pandemic;
The middle class is unprotected;
LTCI failed;
Big government programs aren’t coming;
Medicaid requires impoverishment;
So our best hope is what Washington State is doing:
Compulsory social insurance funded by mandatory taxes on workers and with
a back-end focus;
But “Keystone
Kops” and “Trust
Fall.”
I’ll explain why this analysis and recommendation is
wrong and doomed to fail disastrously in “Why LTCI Fails,” my article in
the February Broker World. Watch for it.
Bottom line: Given what’s happening in health and
long-term care, in the U.S. economy, and politically, there’s never been a
better time to sell LTCI.
#############################
Updated,
Monday, December 21, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-049: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
COVID-19 Shocks
The US Health Sector: A Review Of Early Economic Impacts
-
COVID-19 Drove Up
Group Term Life Death Claims: SOA Survey
-
Spending Growth on
Nursing Home Care Falls Far Behind Home Health, Hospitals
-
Medicaid Long-Term
Services and Supports: Access and Quality Problems in Managed Care
Demand Improved Oversight
-
Americans Worry
More Now About Their Long-Term Care Plans and Prioritize Staying At Home
-
State of Nursing
Home Industry: Facing Financial Crisis and Staffing Challenges
-
HC2 Gets Offer for
Long-Term Care Insurance Business
-
The Coming Crisis
For The Medicare Trust Fund
-
Making Care Work
Pay: How A Living Wage For LTSS Workers Benefits All
-
Medicare Advantage
Beneficiaries Log Almost 30% Fewer SNF Days Than Traditional Medicare
-
Help wanted: More
home healthcare workers due to COVID-19
-
Flu cases lower
than normal so far this year, COVID-19 likely the reason
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, December 18, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 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.
***
TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many
unique services to advisors as National Brokerage Director for USA-BGA
and to other entities as a consultant, in the individual, worksite and
affinity group markets. For example, his revolutionary “Range of
Exposure” tool projects clients’ likelihood (joint for a couple) of
spending $100,000; $250K; $500K or over $1,000,000 on long-term care,
based on their personal characteristics and estimates how much of
their cost in each range would be covered by various traditional or
linked insurance designs. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. You can reach him at 913-707-8863 or
claude.thau@gmail.com.
*** |
LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 DATA UPDATE
LTC BULLET: SO WHAT IF THE GOVERNMENT
PAYS FOR MOST LTC, 2019 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
2019 statistics on its website at
NHE Tables (ZIP). Click on that link to download the tables, unzip
them, then click on the data tables of interest, Tables 14 and 15 for our
purposes.
Health Affairs
has published a summary and analysis of the new data titled
“National Health Care Spending in 2019: Steady Growth for the Fourth
Consecutive Year." Health Affairs subscribers can access the full
text of that article
here. Others can purchase it. The “Abstract” is available free. A good
summary of the new long-term care data is
here.
Following is our annual analysis of
the latest nursing home and home health care data.*
Heads Up:
This may be the most important LTC Bullet we publish all year. It
is the eighteenth in a row we’ve done annually to analyze the federal
government’s enormous, and we argue, often detrimental, impact on
long-term care financing. If you'd like to see the earlier versions, go
here and search for “So What if the Government Pays for Most LTC.”
You’ll find our yearly analyses of the data going all the way back to "So
What If the Government Pays for Most LTC, 2002 Data Update."
------------------
"So What If the Government Pays for
Most LTC, 2019 Data Update"
by
Stephen A. Moses
Ever wonder why LTC insurance sales
and market penetration are so discouraging? Or why reverse mortgages are
rarely used to pay for long-term care? Or why LTC service providers are
always struggling to survive financially and still provide quality care?
Read on.
Nursing Homes
America spent $172.7 billion on
nursing facilities and continuing care retirement communities in 2019. The
percentage of these costs paid by Medicaid and Medicare has gone up over
the past 49 years (from 26.8% in 1970 to 51.5% in 2019, up 24.7 % of the
total) while out-of-pocket costs have declined (from 49.2% in 1970 to
26.4% in 2019, down 22.8% 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 1970-2019.
So What? Consumers' liability for
nursing home and CCRC costs has declined by nearly half, down 46.3% in the
past almost five decades while the share paid by Medicaid and Medicare has
nearly doubled, up 92.2%.
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 $595,000 and in some
states up to $893,000 of home equity (as of 1/1/20). 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 (and CCRC) care (29.4% of
the dollars in 2019), it covers two-thirds (66.5%)
of all nursing home patient days.
So What? Medicaid pays in full or
subsidizes two-thirds of all nursing home patient days. Even if Medicaid
pays nothing with the entire amount due contributed from the recipient's
income, the nursing home receives Medicaid's dismally low reimbursement
rate.
No wonder the public is not as
worried about nursing home costs as they would be if they were more at
risk for the cost of their care. No wonder
nursing homes risk insolvency when so much of their revenue comes from
Medicaid, often at reimbursement rates less than the cost of providing the
care. “With states setting the Medicaid rates paid to nursing centers,
there is a wide variation in the percentage of costs covered by the rates.
In 2015, the coverage ranged from a low of 73.5 percent to a high of 100
percent. A similar range exists with the 2017 projected shortfall across
the states.” (Latest available data) Source:
A Report on Shortfalls in Medicaid Funding for Nursing Center Care.
Private Health Insurance
Don't be fooled by the 10.4% of
nursing home costs that CMS reports as having been paid by "private health
insurance" in 2019. 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
providers. Thus, a large proportion of insurance payments for nursing home
care gets reported as if it were "out-of-pocket" payments. This fact
further inflates the out-of-pocket figure artificially.
Assisted Living
How does all this affect assisted
living facilities? According to the
Genworth Cost of Care Survey for 2020, ALFs cost an average of $51,600
per year, up 6.15% from 2019. Although assisted living facilities
remain mostly private pay, “48%
of ALFs are Medicaid certified” and only “a
small minority of state Medicaid programs do not cover services in
assisted living.” Over time assisted living facilities have followed
nursing homes down the
primrose path of accepting more and more revenue from Medicaid.
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 $595,000 or
$893,000 depending on the state), plus—in unlimited amounts—one
business, one automobile, prepaid burials, term life insurance, personal
belongings and Individual Retirement Accounts not to mention wealth
protected by sophisticated
asset sheltering and divestment techniques marketed by
Medicaid planning attorneys. Income rarely interferes with Medicaid
nursing home eligibility unless such income exceeds the cost of private
nursing home care.
So What? For most people, Medicaid
nursing home benefits are easy to obtain without spending down assets
significantly and Medicaid's income contribution requirement is usually
much less expensive than paying the full cost of assisted living.
No wonder ALFs are struggling to
attract enough private payers to be profitable.
No wonder people are not as eager to buy LTC insurance as they would be if
they were more at risk for the cost of their care. This problem has been
radically exacerbated in recent years because more and more state Medicaid
programs are paying for assisted living as well as nursing home care,
which makes Medicaid eligibility more desirable than ever.
Home Health Care
The situation with home health care
financing is very similar to nursing home financing. According to CMS,
America spent $113.5 billion on home health care in 2019. Medicare (38.7%)
and Medicaid (32.0%) paid 70.7% of this total and private health insurance
(not LTC insurance) paid 14.6%. Only 11.0% of home health care costs were
paid out of pocket. The remainder came from several small public and
private financing sources. Data source:
Table 14: Home Health Care Services Expenditures; Levels, Percent Change,
and Percent Distribution, by Source of Funds: Selected Calendar Years
1970-2019.
So What? Only one out of every nine
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:
Medicaid and Long-Term Care
(2020) at
http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf
“How to Fix Long-Term Care Financing”
(2017), at
http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf
“CASSANDRA’S QUANDARY: The Future of
Long-Term Care” (2016), at
http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.
“How to Fix Long-Term Care,” at
http://www.centerltc.com/BriefingPapers/Overview.htm;
"Medi-Cal Long-Term Care: Safety Net
or Hammock?" at
http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;
"The LTC Graduate Seminar Transcript"
here (requires password, contact
smoses@centerltc.com);
"Aging America's Achilles' Heel:
Medicaid Long-Term Care" at
http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and
"The Realist's Guide to Medicaid and
Long-Term Care" at
http://www.centerltc.org/realistsguide.pdf.
In the Deficit Reduction Act of 2005,
Congress took some significant steps toward addressing these problems. A
cap was placed for the first time on Medicaid's home equity exemption and
several of the more egregious Medicaid planning abuses were ended. But
much more remains to be done. With the Age Wave starting to crest and
threatening to crash over the next two decades, we can only hope it isn't
too late already.
* Note that CMS changed the definition of National
Health Expenditure Accounts (NHEA) categories in 2011, adding for example
Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities.
This change had the effect of reducing Medicaid's reported contribution to
the cost of nursing home care from over 40% in 2008 to under one-third
(32.8%) in 2009. CMS also created a new category called "Other Third Party
Payers" (7.1%) which includes "worksite health care, other private
revenues, Indian Health Service, workers' compensation, general
assistance, maternal and child health, vocational rehabilitation, other
federal programs, Substance Abuse and Mental Health Services
Administration, other state and local programs, and school health." For
definitions of all NHEA categories, see
http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.
Stephen A. Moses is president of the Center for Long-Term Care Reform in
Seattle, Washington. The Center's mission is to ensure quality long-term
care for all Americans. Steve Moses writes, speaks and consults throughout
the United States on long-term care policy. Learn more at
www.centerltc.com or email
smoses@centerltc.com.
#############################
Updated,
Monday, December 14, 2020, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-048: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
GE
Puts SEC Long-Term Care Insurance Probe Behind It
-
Long-Term Care Insurance Decline Rates Reported
-
Improper Medicaid Payments Have Soared since Obamacare
-
Study shows far fewer COVID-19 cases at home than in nursing homes,
assisted living
-
‘We can no longer ignore this’: Affordable long-term care is urgent
priority, panelists say
-
Measuring The New Costs Of Care: How the pandemic is exacerbating the
already rising price-points of long-term-care
-
More than 6 in 10 Americans now say they would rather die than live in
nursing home: survey
-
Long-Term Care Planning Firm Sees Life-LTC Hybrid Prices Rising
-
Half of Americans with incomes over $100,000 think they’ll never be able
to retire
-
Biden nominates defender of long-term care causes and a virus expert to
health team
-
BREAKING: HHS awards nursing homes $523M in COVID-19 performance
payments
-
MedPAC: Nursing Homes on Solid Financial Ground Despite COVID, Medicare
Boost ‘Poor Approach’
-
NIC Points to Unprecedented Challenges for Skilled Nursing as Occupancy
Remains Low
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, December 7, 2020, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-047: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- COVID-19 linked to ‘substantial cost increases’ in assisted living:
survey
- Cost of Care: Trends & Insights
- Town’s only nursing facility converting to ALF, as national study
finds ‘dangerously low’ occupancy threatening many SNFs
- SNF occupancy ticks up but is ‘dangerously’ low and threatens
long-term survival
- CDC advisers: Long-term care workers, residents should receive first
COVID-19 vaccinations
- Life’s Third Age: A Public Television Pledge Special
- Genworth, China Oceanwide Push Deal Deadline Back
- Financial ‘symptoms’ of dementia seen up to 6 years before diagnosis
- Medicaid is hemorrhaging $100B on Americans ineligible for the
program
- Nearly 6 million Americans expect to lose homes in the next 2
months: survey
- COVID-19 Has Claimed the Lives of 100,000 Long-Term Care Residents
and Staff
- Nursing home residents could start receiving COVID vaccines in about
2 weeks
- CMS’s 2020 Final Medicaid Managed Care Rule: A Summary of Major
Changes
- COVID-19 Pandemic Shifts Caregiving Responsibilities
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, December 4, 2020, 10:40 AM (Pacific)
Seattle—
#############################
LTC
BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?
LTC
Comment: Will more Medicaid funding and regulation help (short-term) and
harm (long-term) America’s fragile long-term care system? Answers after
the ***news.***
***
“LTC CLIPPINGS” is a special daily service that premium Center members
($250 per year or $21 per month)
and above can opt to receive. Steve Moses scans the internet for news,
articles, reports and data you need to know before your prospects start
asking about them. He provides the date, title, author, a link, a
representative quote and a brief, often humorous or satirical, but always
thoughtful comment. Know what you need to know before you’re caught off
guard.
Subscribe to LTC Clippings.
***
***
RECENT LTC CLIPPINGS:
11/28/2020,
“Medicaid
is hemorrhaging $100B on Americans ineligible for the program,”
by Brian Blase, New York Post
Quote:
“The federal government’s improper Medicaid payments now exceed $100
billion a year. This means that more than one-in-four dollars flowing out
of Medicaid — our nation’s third-largest government program — do not meet
program rules. This staggering failure doesn’t just reduce health-care
access for the truly eligible, it also harms taxpayers who fund it.”
LTC
Comment:
This is an excellent piece by my co-author of “Nursing
Homes, Coronavirus and Medicaid,”
published June 1, 2020, in the Wall Street Journal. The problem of
improper payments is even worse since the Families First Coronavirus
Response Act (FFCRA), signed March 18, 2020, imposed maintenance of effort
rules prohibiting states from terminating eligibility even for the
ineligible. See
Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch
When They End,
Kaiser Family Foundation, September 22, 2020, for details. Kind of makes
tracking improper payments moot if ineligibility itself isn’t “improper.”
Ugh!
---
11/25/2020,
“COVID-19
Has Claimed the Lives of 100,000 Long-Term Care Residents and Staff,”
by Priya Chidambaram, Rachel Garfield and Tricia Neuman, Kaiser Family
Foundation
Quote:
“This week marks a bleak milestone in the pandemic’s effect on residents
and staff in long-term care facilities across the country. According to
our latest analysis of state-reported data, COVID-19 has claimed the lives
of more than 100,000 long-term care facility residents and staff as of the
last week in November. This finding comes at a time when public health
experts are predicting a surge in cases after holiday gatherings and
increased time indoors due to winter weather, which will have ripple
effects on hospitals and nursing homes, given the
close relationship between community spread and cases in congregate care
settings.
As the nation braces for the fallout of the holiday, recent
data on
deaths in long-term care facilities highlight the ongoing disproportionate
impact on this high-risk population.”
LTC
Comment:
Maybe the time has come for another “Long-Term Care Consciousness Tour.”
Here’s what the first one was like:
http://www.centerltc.com/LTC%20Tour/LTC_Tour_Index.htm.
This is my favorite
reminiscence
of that 2008-9 Tour. The need for long-term care planning is even greater
now than it was then.
---
11/20/2020,
“Nearly
6 million Americans expect to lose homes in the next 2 months: survey,”
by Amy Novotney, McKnight’s Senior Living
Quote:
“Approximately 5.8 million Americans — including many seniors — say they
are somewhat or very likely to face eviction or foreclosure in the next
two months, according to a Bloomberg
analysis of
survey data from the U.S. Census Bureau. The survey also found that about
28% of renters, or roughly 14.9 million Americans, have little to no
confidence that they’ll be able to pay their December rent.”
LTC
Comment:
So what’s next? Let them suffer? Or another paroxysm of government
borrowing and money printing to aid home buyers and renters? And, when
that public debt bill comes due, what then? ***
LTC
BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?
LTC
Comment: As the Covid plague surged through long-term care facilities this
spring, one thing was certain. The long-term care intelligentsia would
recommend more government, specifically Medicaid, spending. Our favorite
federal fetishist, Judith Feder of the McCourt School of Public Policy at
Georgetown University, was no exception. In
May
2020, she proposed
…
Long-term care financing policy should be modified to either adjust
federal matching funds by the age of each state’s population, or fully
federalize the funding of LTC expenses of Medicaid beneficiaries who are
also eligible for Medicare. (p. 350)
That
didn’t happen, won’t, and shouldn’t. Federal funding and regulation of
long-term care are what caused us to rely excessively on underfinanced
institutional care settings for elderly people leaving them susceptible to
the pandemic’s ravages. More of what caused the problem in the first place
will hurt, not help.
In
fact, what the federal government actually did exacerbated the problem of
excessive federal dependency. In Feder’s words …
The
Families First Coronavirus Response Act included a modest 6.2 percentage
point bump in the Medicaid match tied to the public health emergency,
conditional on states’ retention of current eligibility levels or
“maintenance of effort” (Broaddus, 2020). (p. 352)
So,
the Feds gave states a little more money but only if they maintained their
current Medicaid efforts. What does this “maintenance of effort” mean?
According to the
Kaiser Family Foundation
…
To
receive the enhanced federal matching funds, states must meet
certain MOE requirements that include ensuring continuous coverage for
current enrollees.
Specifically, states must provide continuous eligibility through the end
of the month in which the PHE [public health emergency] ends for those
enrolled as of March 18, 2020, or at any time thereafter during the PHE
period, unless the person ceases to be a state resident or requests a
voluntary coverage termination. Medicaid eligibility during this time must
continue “regardless of any changes in circumstances or redeterminations
at scheduled renewals that would otherwise result in termination.”1 (Emphasis
in the original)
In
case that bureaucratese confounds you, what it means is that state
Medicaid programs, if they want to receive the extra federal money, can’t
tighten their loose LTC financial eligibility rules. They can’t even
terminate Medicaid recipients who are proven to be totally ineligible.
They must throw the federal financial floodgates wide open.
So
how is this generous policy working out so far? Are people in nursing
homes finally free from worry and sickness? Hardly. According to the
Kaiser Family Foundation
…
This
week marks a bleak milestone in the pandemic’s effect on residents and
staff in long-term care facilities across the country. According to our
latest analysis of state-reported data, COVID-19 has claimed the lives of
more than 100,000 long-term care facility residents and staff as of the
last week in November.
The
holidays and long winter months ahead presage much worse. Current public
policy for long-term care services and financing is deadly. We should be
asking: “How did we get into this mess?” not “How much more federal money
and regulations can we pour on?”
For
an answer to the first question, see
Medicaid and Long-Term.
That
2020 monograph explains step by step how Medicaid caused the very problems
that people ask it to solve today. The study’s recommendations explain how
to fix the problems Medicaid created.
For
specific state-by-state analysis and recommendation, see our many
state-specific reports at
http://www.centerltc.com/reports.htm.
As you see the increasingly frequent pleas of Governors and long-term care
trade groups for federal relief, visit that site, find our report for
whichever state, and forward its link to them. Policy makers can reduce
Medicaid costs and simultaneously expand and improve
care, but they must first understand why costs are so high now and care
quality so diminished.
Answers to long-term care’s persistent problems—poor access and quality,
institutional bias, inadequate funding, etc.—are readily available. The
knee-jerk reaction to increase Medicaid actually cripples any hope to fix
these problems in the future. Yet, it’s easy to understand why politicians
and provider associations gravitate toward the easy money in the current
crisis. Any port in a storm.
Unfortunately, higher spending for Medicaid in the short term is far more
likely than thoughtful restraint given the incoming Biden administration’s
ideological predispositions. With Yellen at Treasury, pile-it-on Powell at
the Fed, the
Modern Monetary Theory
predominating, and fulsome support for unlimited federal spending
guaranteed from academia and the media, greater damage to long-term care
services and financing is probably inescapable.
It’s
as though a family had their maxed-out credit card limit miraculously
doubled all of a sudden. The good times would roll until they hit the
higher limit too. What’s the upper limit for federal spending? I don’t
know, but I’m afraid we’re going to find out.
#############################
Updated, Monday, November 23, 2020,
9:00 AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #20-046: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
How to Save Money on Assisted Living Costs
-
Higher Medicare Premiums For 2021
Announced, Topping Out At $504.90
-
CalPERS approves 90% price increase for
long term care insurance plans
-
Vast majority of providers struggling to
fill work shifts or hire new employees: industry survey shows
-
Where Are the Gray Panthers
-
COVID-19’s Deadly Lesson: Time To Revamp
Long-Term Care
-
Vulnerable Senior Populations in the
Pandemic
-
89 percent of families with loved ones in
long-term care facilities consider home care: survey
-
Economists warn of lag time between vaccine
and recovery
-
Parkinson: ‘Worst Fears Have Come True’ as
Nursing Home COVID Cases Hit New Record, Operators ‘Powerless’ to Stop
Trend Alone
-
81% of providers encouraging residents to
stay put for Thanksgiving: survey
-
Big, big changes’ coming to nursing home
regulation thanks to pandemic’s destruction, Grabowski says
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, November 20, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Comment:
Today’s “Guest Bullet” by
Bruce Stahl of
RGA Reinsurance Company develops the idea of “Caregiver Insurance”
after the ***news.***
*** LTC IMPACT
WEEK EXCELLS: Last week, on November 10, 11, 12,
NAIFA’s
Limited & Extended Care
Planning Center
Zoomed nine hours of briefings aimed at LTCI producers. Kudos to
LECP Executive Director Carroll
Golden for
sponsoring this creative educational program and to
Steve Cain
of
LTCI Partners
for his omnipresent participation. Highlights included
Matt Hamann
of
Transamerica
speaking on “Why LTC Now?”;
Denise Gott
of
ACSIA Partners
on “LTC
Worksite Enrollments in
a Virtual World”;
Marc Glickman
of
BuddyIns
presentation on the “Technology Panel”;
Shelley Giordano
of
Mutual of Omaha Mortgage
on “No, Long Term Care Insurance Does Not Mean No Plan at All for Long
Term Care Needs”; and
Barry Fisher
and
Ron Hagelman, Jr.,
Principals of
Ice Floe Consulting, LLC
reporting on results of their survey with
Oliver Wyman’s
Vince Bodnar,
“Who is Selling What? To Whom, How & Why?” This innovative program
provided a great foundation on which to build. Room for improvement
includes increasing the turnout which I never noticed reaching 200
attendees and considering the larger market in which LTC insurance is
sold, including the public policy context, LTC providers, and the elephant
in the room, Medicaid’s crowd out of LTC risk and planning. ***
*** SUBSCRIBE
to LTC Bullets, LTC E-Alerts, and LTC Clippings. Join
the Center for Long-Term Care Reform
here. Due to the pandemic, long-term care is in the news more than
ever before. Calls for more funding to alleviate the strain on seniors’
housing and caregivers are everywhere in the media. But no one has any
idea where to find the money to improve long-term care. Except the Center
for Long-Term Care Reform. We advocate targeting scarce public resources
to those most in need and using the savings to incentivize private
financing alternatives such as home equity conversion and long-term care
insurance. Check out our analysis and recommendations in
Medicaid and Long-Term Care (2020) and
How to Fix Long-Term Care Financing (2017). Then join
the Center and encourage your employers to join as corporate members. Our
“Membership
Levels and Benefits” schedule explains all the options. Contact Steve
Moses at 425-891-3640 or
smoses@centerltc.com with questions or comments. ***
LTC BULLET:
CAREGIVER INSURANCE
LTC Comment:
Bruce Stahl and
Winona Berdine, both vice presidents at
RGA Reinsurance Company, published “A
Middle-Market Senior Care Solution” in the August 2020 issue of the
Society of Actuaries’
Long-Term Care News. Their idea is a product to mitigate LTCI’s
“affordability gap.”
They propose a
“living benefits solution” that “reaches the middle market, provides
security to generations of family members, satisfies real customer
financial needs and provides them with peace of mind, minimizes risk in
the morbidity tail, reduces asset and interest rate risk, and reduces
concerns about pandemic risk in facilities.” (LTC
News)
A tall order,
but intriguing, so we asked Bruce Stahl to tell us more. His reply
follows. But first read “A
Middle-Market Senior Care Solution” to get details on the proposed
product.
“Caregiver
Insurance”
by
Bruce Stahl
The attributes
of the product define it better than the name. Our focus groups
recommended calling it something with a personal flavor, like “Caregiver
Insurance.” Originally, we at RGA were calling it a decreasing term
product and a career protection product. Yet the attribute of having a
pre-chosen terminus date and the fact that the benefits would be
determined by another person’s expenses make the product valuable.
Here’s how it
works: The parents are underwritten, but the working adult child is the
policyholder. The policy covers the costs of a parent’s care while the
child is working. This allows the child to save for their own retirement
while still addressing the cost of care needs of parents. The term of
coverage is designed to end when the policyholder retires and can care for
parents themselves without interrupting their own career.
Typically, care
is assumed to be in the parent’s home, given the expectation that the
retiree will care for their parents at a time suitable to their plans and
budget. The applicant would hypothetically purchase a policy to cover care
expenses for the span of time they intend to remain in the workforce. The
applicant could also choose a term that allows payment of benefits for
additional time after retirement, such as for a prolonged vacation, before
taking up caregiver duties. But the policy does not have a waiver of
premium benefit, so the policyholder would want to plan on continuing
premium payments even when not earning income.
Distributors of
senior benefits products might find Caregiver Insurance an attractive
product to promote to the insurers they represent. It could fit well as a
supplemental worksite benefit if underwriting with electronic medical
records could be sufficient. It could also work well for Medicare
Supplemental or Advantage distributors, who can contact these adult
children policyholders ten to twenty years before they themselves are
ready for Med Supp.
Also, if
distributors are concerned that their insurance partners might not be
willing to take on investment risk at this time, the product has only a
small pool of assets available to invest because the maximum benefit
decreases as the policy ages, the risk is far lower.
Finally, if
insurers want to avoid standalone LTCI’s reputation for premium rate
increases, this product, even though it is not LTCI, does cover many
long-term care needs without the concerns of increased longevity and lack
of very old age mortality and morbidity experience.
Bruce Stahl,
ASA MAAA is senior vice president, head of U.S. Individual Health for RGA
Reinsurance Company. Reach him at bstahl@rgare.com.
#############################
Updated,
Monday, November 16, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-045: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- Federal Medicaid Outlays During the COVID-19 Pandemic
- Medicare Part B premiums are rising in 2021 by more than double the
Social Security COLA bump
- Baby boomer retirements have taken a big jump in the past year
- Pandemic is forcing providers to be ‘catalysts of change’ for
long-term care sector, association head explains
- Biden Plan to Lower Medicare Eligibility Age to 60 Faces Hostility
From Hospitals
- 28% Growth in Medicare Advantage Plans Led By Senior Housing and
Care Providers
- As Admissions Stall and Aid Dries Up, ‘Losses are Coming’ for
Nursing Homes in ‘Bleak’ First Half of 2021
- COVID-19 Tied to New Psych Diagnoses; Pessimism & Bipolar Disorder
- 70 percent of long-term care claims begin with home care
- Nursing home COVID-19 cases rise four-fold in surge states
- Medicare Part B Premium to Jump $3.90 a Month for 2021
- Welcome to 2020 Impact Week: Long Term Care
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, November 9, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-044: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
How To Plan For Nursing Home And Long-Term Care
Costs
-
Long-Term Care Insurance: A Comprehensive Guide to
Costs, Coverage, and Whether It's Right for You
-
What COVID-19 Exposed In Long-Term Care
-
Are You a Good Candidate for Long Term Care
Insurance?
-
Skilled nursing occupancy hits new low of 73.8%:
NIC
-
Verma: COVID-19 Shows LTC ‘Relies Too Heavily on
Nursing Homes’
-
Retirees, Make the Most of Your Home Equity
-
A Middle-Market Senior Care Solution
-
Does Hard Work Help Preserve the Brain?
-
Community spread triggers growing number of
COVID-19 cases in nursing homes: AHCA
-
Integrity Expands in the Southwestern United States
with the Addition of Western Asset Protection
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, November 6, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: LONG-TERM CARE INSURANCE IN CHINA
***
TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many
unique services to advisors as National Brokerage Director for USA-BGA
and to other entities as a consultant, in the individual, worksite and
affinity group markets. For example, his revolutionary “Range of
Exposure” tool projects clients’ likelihood (joint for a couple) of
spending $100,000; $250K; $500K or over $1,000,000 on long-term care,
based on their personal characteristics and estimates how much of
their cost in each range would be covered by various traditional or
linked insurance designs. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. You can reach him at 913-707-8863 or
claude.thau@gmail.com.
*** |
*** KUDOS to
Bruce Stahl and
Winona Berdine of
Reinsurance Group of America (a corporate member of the Center for
Long-Term Care Reform) for this creative idea highlighted in our recent
LTC Clipping:
8/2020, “A
Middle-Market Senior Care Solution,” by Bruce Stahl and Winona Berdine,
Long-Term Care News
Quote: “Would you like to have an insurance product in your
company’s lineup that provides all of the following? • Reaches the middle
market, • provides security to generations of family members, • satisfies
real customer financial needs and provides them with peace of mind, •
minimizes risk in the morbidity tail, • reduces asset and interest rate
risk, and • reduces concerns about pandemic risk in facilities.”
LTC Comment: Well, yeah! Click through to read this intriguing
proposal.
We hope soon to publish
a “Guest Bullet” by Bruce Stahl further developing and explaining this
“caregiver insurance proposal. Your comments on the idea are welcome. ***
*** PREDICTING IS HARD,
they say, especially about the future. Toward the end of the
2017 Intercompany Long-Term Care Conference in Jacksonville, Florida,
which took place shortly after Donald Trump was inaugurated, attendees
were invited to answer this question via electronic polling:
Q7. Do you think the
next four years will bring an improved economic climate? Or will we see a
continuation of low interest rates?
Answers:
1. Improved economic climate/higher interest rates = 76%
2. Stay pretty much the same = 13%
3. Get worse = 11%
In “LTC Bullet:
LTC Policy Poll Results,” on April 14, 2017, I offered my own
answer to that question and suggested to readers: “Tickle your calendar to
review this prediction on election day, November 3, 2020. I’ll do the
same.” Here’s my answer then followed by my comment now.
Then: “LTC
Comment: I think these voters are vastly over-optimistic. I’d agree with
the stay-the-same or get-worse minority. The current ‘economic recovery’
is long in the tooth; the ‘Trump trade’ is already petering out as health
and tax reform languish; we may already be in a recession; the Federal
Reserve’s tightening cycle has nearly run its course; after perhaps one
more interest rate increase, the next step is down and most likely we’ll
see more quantitative easing (QE4). That means more and more debt. The
U.S. dollar is unsupported by real value and very vulnerable; foreign
countries that give us real economic goods in exchange for paper (bonds
that the U.S. cannot ever afford to redeem) could wise up any time, stop
buying our debt, and start selling it; carrying costs on our
$20 trillion debt [$27.2 trillion as of today (11/6/20)] will force a
reversal of the Fed’s tightening soon, as the economy worsens. The credit
bubble inflating for a decade will pop. Sadly for the Trump
Administration, the wages for the economic sins of its predecessors will
come due in its first term. (Tickle your calendar to review this
prediction on election day, November 3, 2020. I’ll do the same.)”
Now: LTC Comment:
QE4 actually turned into QE Infinity. Modern Monetary Theory, as explained
and critiqued in “LTC Bullet:
Modern Monetary Theory and Long-Term Care,” is sweeping the land. The
Federal Reserve has forced real interest rates (nominal rates minus
inflation) into negative territory. It appears Trump has been swept out of
office and the incoming Biden administration will likely double down on
the same inflationary policies. Thus “the wages for the economic sins” of
Trump and his predecessors will come due in the term of his successors. We
are in for a rough economic ride, exacerbated by the pandemic, but
inevitable regardless, because of the irresponsible fiscal and monetary
policy of both political parties. ***
*** NOWADAYS, we need
clear-eyed analysis of the prospects for long-term care services and
financing more than ever. Don’t ingest the “soma” of social insurance
purveyed by most of the LTC intelligentsia. If you haven’t already, join
the Center for Long-Term Care Reform
here. Encourage your company to support the Center as a corporate
member. Share our “Membership
Levels and Benefits Schedule” with any and all. Join the fight for
rational long-term care financing policy. Thanks for your consideration.
***
LTC BULLET: LONG-TERM
CARE INSURANCE INBB CHINA
LTC Comment: With
Genworth long hanging on the cusp of sale to a Chinese company, what could
be a more timely topic than LTCI in China?
On October 20, 2020 the
Society of Actuaries LTCI Section sponsored a webinar titled
“Long-Term Care Insurance in China.” Moderator
Vincent L. Bodnar, ASA, MAAA, a Partner and Long-Term Care Practice
Leader, at
Oliver Wyman introduced the program and the panel of three experts,
two of whom called in from Beijing at midnight local time. (Vince visited
China some years ago, conducted a briefing on the U.S. experience with
LTCI, found avid interest there and has followed China’s LTCI experience
ever since.)
A recording of the “LTCI
in China” webinar should be available to buy on the
SOA website soon. Attendees who purchased the original webcast will be
able to access the recording for free. But here’s a synopsis of the
program for those of you who missed the original and may want to consider
obtaining the recording:
Panelists:
Guangyao Liu, FSA
Executive Actuary
China Life Reinsurance Company
Xiaochen Sun
Product Actuary
China Life Reinsurance Co Ltd
Song-Song S. Liao
President
Song-Song & Associates
Guangyao Liu
opened the session with an introduction to China’s “LTC Pilot Program.” He
began by summarizing the uniquely challenging demographics his country
faces. China has more “baby boomers,” 359 million, born between 1962 and
1975, than the USA has people (328 million). A second wave of Chinese
boomers, 374 million, born between 1981 and 1997, is not far behind. With
176 million elderly (over age 65) people, 12.6% of the population as of
2019, China is looking at 28% and 380 million by 2050. In the meantime,
China’s birth rate has been decreasing since the 1990s, due in large part
to the country’s one-child policy, exacerbating the elderly dependency
ratio and resulting in 120 million “empty nest elderly.”
Anticipating the
inevitable challenges of providing and paying for the care of this
burgeoning elderly population, the Ministry of Human Resources and Social
Security/National Healthcare Security Administration implemented a
four-year pilot project in 2016 which is expected to be extended this
year. The pilot covers 15 cities and 88.5 million people (out of a total
of 1.4 billion). It covers 426,000 insureds at an equivalent cost of 1,300
U.S. dollars per person per year. Care provided is 70% home care and 30%
facility care.
Problems of the pilot
include limited coverage as only seven pilot cities cover rural residents;
an imbalance of funding structure, which is highly dependent on China’s
government healthcare fund; inadequate professional care services, which
cannot meet demand; lack of uniform standards for care service, ADL
assessment, etc.; and large variation of program administration across
pilot cities ‐ hard to copy to other cities.
But substantial benefits
accrue to commercial LTC insurance including a start to educate residents
about the concept of long‐term care and raise potential demand; improve
care facility development and care service quality; and participating
commercial life and health insurers gain experience data and operating
expertise.
Xiaochen Sun next
discussed commercial LTCI in China, the first example of which, with a
“sum assured” benefit, emerged in 2005. In 2010 a product appeared with a
benefit structure like “universal life” and 2017 saw a reimbursement or
sum-assured benefit directly to care providers. As of 2020, the Chinese
commercial LTCI market has 20 players and 40 products.
The big takeaways from
this section of the program, as summarized by Vince Bodnar are:
- China has
both standalone and hybrid products, like the US
- There are
two big players in the market today: Taikang Life and Pingan Life
- Taikang
offers a high-end product that gives the policyholder access to its LTC
facilities. It looks a little like a CCRC approach.
- Pingan sells
a “trauma-led” product, which is cheap. They sell 10,000 of these
policies a month.
Song-Song S. Liao
concluded the survey of LTCI in China with an excellent summary of the
challenges and opportunities the country faces. For example, there is no
clear distinction in China between nursing homes and other levels of care.
There is inconsistency in defining and monitoring activities of daily
living and benefit triggers. Cultural differences often complicate the
business. Admission to a long-term care facility, for example, could be
considered a disgrace because of the traditional Chinese belief in the
responsibility of the younger generation for the older generation. The
potentially unrealistic goal is to have 90% age at home with only 3%
depending on institutional care.
Further difficulties
include insufficient infrastructure and a commercial insurance industry
that is very small compared to China’s dominant social insurance
structure. Chinese actuaries are exploring all the approaches tried in
U.S. It is not a lack of product ideas limiting product development; it’s
that the Chinese infrastructure does not support U.S. LTC products. It may
be China requires a product more like what we call “critical illness”
insurance. Or a product that only provides cash; not care services.
Shanghai pushed out a product like the US model, but can’t sell it. The
current infrastructure is the biggest obstacle to design a product for
China, but “we all know the need is there.”
Song Song summarized the
“Contextual Differences” thus:
• LTC business could
mean handling government pilots, not commercial LTC
• Commercial LTC is
supplemental to social insurance
• Differentiation
between medical/acute care vs residential care vs nursing
homes/SNF settings is
not distinct in China
• Regulation and
standards may exist but not in full compliance
• Much narrower
coverage, more restrictive benefit triggers, and more carve outs in China
• ADL 2/6 vs 3/6 or even
4/6
• E.g. restrict to 12
types of diseases, not including cancer, diabetes.
• Age limits and long
elimination period
LTC Comment:
Congratulations to the Society of Actuaries and Vince Bodnar for
conducting this review of nascent LTC insurance in China. We’ll be hearing
much more about this topic over time.
#############################
Updated,
Monday, November 2, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-043: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Medicare Advantage
2021 Spotlight: First Look,” by Medicare Advantage 2021 Spotlight: First
Look
-
U.S. cities seen
ill-prepared for boom in elderly population
-
LONG TERM CARE:
Caught in the Middle: How Young Parents Can Plan for Long-term Care
-
BREAKING: First
Alzheimer’s commercial blood test to detect amyloid beta hits the market
-
Older Americans 2020:
Key Indicators of Well-Being
-
2021 Tax
Deductibility Limits
-
Leisure Activity and
Dementia Risk: When Does It Matter?
-
Report shows 51%
growth for home-based services
-
How do you get the
new Medicare Advantage benefits? It’s not easy
-
Social Security will
be exhausted several years earlier than expected: report
-
Retirement: Average
Boomer's savings would only last seven years, study finds
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, October 26, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-042: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Community noise may affect dementia risk
-
New poll shows most older adults worried about
potential healthcare and long-term care costs
-
Binge drinking may cause Alzheimer's disease—and it
might strike younger and in a severe form
-
Nearly half of COVID-positives were asymptomatic,
nursing home study finds
-
The Collapse of Long-Term Care Insurance
-
Long-Term Care Awareness Month Approaches Like an
Avenging Angel
-
As most states see nursing home cases increase,
providers fear third wave of COVID-19
-
Most Americans want health insurance companies and
Medicare to pay for long-term care: poll
-
Report shows huge jumps in Medicare Advantage
enrollment among minorities, dually eligible
-
30 percent of COVID deaths in long-term care have
occurred in assisted living: study
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, October 23, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Comment: Finally, a solution for the long-term
care financing crisis. Or not? Explanation after the ***news.***
***
TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many
unique services to advisors as National Brokerage Director for USA-BGA
and to other entities as a consultant, in the individual, worksite and
affinity group markets. For example, his revolutionary “Range of
Exposure” tool projects clients’ likelihood (joint for a couple) of
spending $100,000; $250K; $500K or over $1,000,000 on long-term care,
based on their personal characteristics and estimates how much of
their cost in each range would be covered by various traditional or
linked insurance designs. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. You can reach him at 913-707-8863 or
claude.thau@gmail.com.
*** |
LTC BULLET: MODERN MONETARY THEORY AND LONG-TERM CARE
LTC Comment: Policy wonks have anguished over how to
finance long-term care for decades. Most have concluded (wrongly I think,
see
Medicaid and Long-Term Care) that the only answer is some form
of compulsory, government-imposed LTC social insurance program. But, given
the insolvency of all existing social insurance programs (Social Security,
Medicare, Medicaid, etc.), voters have not been willing to approve even
more of these unfundable liabilities. Result: stalemate, frustration,
anger, despair, and, finally, hanging their meager hopes on another
hapless experiment in government-designed and –imposed LTC insurance that
is already foundering in Washington State. (See “LTC
Bullet: The Keystone Kops of LTC Insurance.”)
What’s needed to save the policy pundits’ preferred
social insurance model is an economic miracle. What if it were possible to
find the unlimited government financing that social insurance would need
to survive indefinitely? That’s what “Modern Monetary Theory” (MMT)
promises to deliver.
For easy, entertaining access to the principles and
arguments behind MMT read Stephanie Kelton’s best-selling book The
Deficit Myth. Better yet, don’t invest so much of your precious
professional time on that source. You can get more than enough to
understand Modern Monetary Theory from a summary of the book
here.
But let’s cut right to the chase today. Here’s the
essence of MMT and the bottom line on what it means. (If what follows
seems too bizarre to be credible, refer to the
book summary just referenced. You’ll see I’ve neither mis-stated nor
exaggerated MMT’s ideas and claims.)
According to MMT, currency issuers like the
USA, can print as much money as they want. They do not have to work within
conventional financial limits, with revenue matching outlays over time, as
mere currency users, such as families, businesses, or countries
borrowing in a currency not their own, must.
The power to spend with no set limits is especially
true for the U.S. because the dollar is the world’s reserve currency.
TABS or STAB: Conventional economic theory
assumes governments must Tax and Borrow to be able to Spend
(TABS), but MMT says what really happens is that governments create money
by Spending and then they Tax and Borrow (STAB) to
control any resulting excessive inflation.
Currency issuers, according to MMT, don’t need to
collect taxes, in order to be able to spend. Taxes are necessary
but not to generate revenue. Rather the purpose of taxes is to compel
citizens to work and provide goods and services the economy needs in order
to earn the money to be able to pay the required taxes.
Deficits don’t matter per se. The Federal
Reserve could print enough money to pay off the national debt and
eliminate the interest cost of servicing the debt. No kidding. MMT
actually claims this.
Therefore, to achieve any and all social goals, such
as controlling climate change, free college, universal health care, or
generous long-term care financing, etc., all it takes is for a currency
issuer’s government to have the will to spend/create enough money.
The only limit on printing and spending money in
one’s own currency is inflation. When too many dollars chase too few
goods, prices increase, thus devaluing the currency and leaving people
unable to afford goods and services they need.
So, if inflation starts to become a problem, MMT says
the government should raise taxes to reduce the amount of money in
circulation and thus stanch inflation before it gets out of control.
Crazy? Of course. But seductive? Very. If you trust
government to solve problems, Modern Monetary Theory is your key to unlock
not just the Treasury, but the entire productive capacity of the national
economy.
But here’s the rub. The net effect of Modern Monetary
Theory is redistribution by the Marxist principle “from each according to
his ability to each according to his need.”
Government spending (money creation) pursues
“progressive” goals, i.e. Need, such as financing free health care,
free college, the Green New Deal, free LTC, etc. But when all that extra
money printing/spending spikes inflation, who gets taxed to tamp it down?
People with the money, i.e. Ability, are the only ones who can be
taxed.
MMT is “Miracle Gro” for the idea that taxing
productive people is the best way to provide for the needs of unproductive
people. Unfortunately, this tried and true principle always applies: you
get less of what you tax (ability) and more of what you subsidize (need).
In other words, need is unlimited. It always grows to
consume whatever ability, always scarce, is able to produce. Subsidize the
former by taxing the latter for 85 years and what you get is …
The whole mess we’re in today including the long-term
care financing crisis.
#############################
Updated,
Monday, October 19, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-041: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Was COVID-19 Really
the Killer?
-
Medicare Advantage
Plans May Have More Search Buzz
-
Covid-19 Has Made
Caregiving Harder, But Isn’t Making Americans More Likely To Plan For
Their Old Age
-
Long-Term Care
Insurance Benefits Cut Panel Drafts Principles
-
Having Dementia
Doesn’t Mean You Can’t Vote
-
HCBS could be
solution to ‘catastrophic costs’ of long-term care: report
-
Apathy Predicts
Dementia in Cognitively Normal Older People
-
Extreme confusion
most common Covid-19 symptom in frail older adults, new research
discovers
-
Long-term care usage
increased under ACA-funded Medicaid expansion
-
US sees 20% more
deaths than expected this year, most due to Covid-19, research finds
-
HHS officially
extends COVID-19 public health emergency again ahead of upcoming
expiration date
-
The Times recommends:
Vote to support trust fund for long-term care
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, October 12, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-040: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
What Does Retirement
Look Like in a Pandemic?
-
SEC Adds to General
Electric's Long-Term Care Insurance Headaches
-
9 Surprising Secrets
About Long-Term Care and Medicaid
-
Measuring The
Financial Impact of Cognitive Decline
-
Skilled nursing,
assisted living facilities top OSHA’s COVID-19 violators list
-
The Nation's Fiscal
Health: A Long-Term Plan Is Needed for Fiscal Sustainability
-
The Alzheimer's Stamp
Now Available to Purchase
-
Walmart Jumps Into
the Medicare Plan Distribution Market
-
The Problem With
Buying Bundled Life and Long-Term Care Insurance
-
Northwestern Mutual
Announces New Senior Leadership Appointments
-
Looming Medicare Cuts
Threaten Physician Services in Nursing Homes, Even as COVID Continues
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, October 9, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: THE KEYSTONE KOPS OF LTC INSURANCE
LTC
Comment: What happens when the Keystone Kops design a long-term care
insurance plan? Details after the ***news.***
***
LONG-TERM CARE INSURANCE IN CHINA:
Don’t miss this Society of Actuaries webcast on Oct.
20 as
speakers discuss the history of long-term care insurance products in
China, current government pilot programs and the opportunity for new
products. Register
here
by October 18, 2020. What could be more timely as Genworth contemplates
entering the Chinese market? ***
***
LTCI SURVEY: The deadline for responding to the survey has been extended
to October 15th. Take the
Who is Selling What? To Whom, How & Why Survey
today! Even if you don’t ordinarily discuss long-term care planning with
your prospects and clients, your thoughts are vitally important. This is
the largest national effort of its kind, spearheaded by
Oliver Wyman Actuarial
and
Ice
Floe Consulting,
and supported by
NAIFA,
NAILBA,
Broker World Magazine,
the
Center for Long-Term Care Reform,
and life and long-term care insurance companies. Take the survey and
you’ll be first in line to receive its findings. ***
LTC
BULLET: THE KEYSTONE KOPS OF LTC INSURANCE
The "Keystone
Kops"
are fictional, humorously incompetent policemen featured in silent film
slapstick comedies between 1912 and 1917. Play
this
video
and you’ll have a pretty good idea what the Washington State Long-Term
Services and Supports (LTSS) Trust Commission’s September 30, 2020 meeting
was like. More on that below. It’s always a comedy when governments try to
do long-term care insurance. Remember CalPERS? CLASS? Every public
commission ever mandated to fix long-term care? This new adventure in
state-based LTCI hubris is headed toward the same fate.
Washington State’s “Long-Term
Services and Supports Trust Act (Trust Act),”
enacted in 2019, created a long-term care insurance benefit for all
eligible Washington employees that would cover some of the cost of their
long-term services and supports. Specifically, a .58% mandatory payroll
tax would fund benefits up to a lifetime total of $36,500 for people who
paid premiums either (1) for 3 years within the past 6 years, or (2) for a
total of 10 years, with at least 5 of those years paid without
interruption. The state won’t collect the tax until January, 2022 and
doesn’t pay benefits until 2025. Eligibility triggers at the need for help
with three or more ADLs. Benefits are paid directly to service providers
which may include sufficiently trained family members. There are more
complications in the legislation, but this is enough to indicate what’s
wrong.
The
same Trust Act that created this program also created the Long-Term
Services and Supports Trust Commission to figure out how to implement it.
The Commission consists of legislators, administering agencies, and
stakeholder representatives. It
“makes recommendations regarding criteria for determining who is a
qualified individual, minimum provider qualifications, service payment
maximums, actions needed to maintain Trust solvency, and monitoring of
agency expenses.”
Now ask yourself, aren’t these basic questions that should have been
analyzed before imposing a compulsory tax-supported program on
citizens? Didn’t the Washington State Legislature put the cart in front of
the horse?
What
would happen to a private LTC insurance plan dreamed up by an insurance
executive and offered to the public without first thinking through who
qualifies, provider standards, payment maximums, solvency issues and
expenses? Free markets are vicious. No caring person would wish the
inevitable catastrophic consequences that would ensue on such a hapless
entrepreneur. Yet politicians can wave a magic wand, create such a
program, force it on their constituents, and then turn it over to be
somehow fixed by a commission comprised of more clueless legislators,
bureaucrats, and highly paid representatives of rent-seeking special
interest groups … though with not a single representative from the one
profession that could help … the private long-term care insurance
business.
Now
back to the LTSS Commission’s September 30, 2020 virtual meeting. I
followed the three-hour session in jaw-dropped awe as one critical issue
after another was raised, discussed, and tabled for future consideration.
Premium rates? Gotta wait to set those because the law caps the
maximum rate and who knows if premiums plus investment returns will cover
costs. Qualified individuals? When does the clock start on the
required period of employment; when does the look back period begin; how
about people too near retirement who will be left out? People disabled
before age 18? There ensued a long discussion on how to handle the
under-18 who are excluded in the law but mandated to be considered for
inclusion. No decisions. As one astute commenter exclaimed: “They don’t
even know what they don’t know.”
I
think the one thing Washington State has gotten right in this project was
to hire
Milliman
to guide them through the actuarial thicket created by the state
legislature’s carelessness. Anyone knowledgeable about insurance could not
help but smile as Milliman’s Chris Giese patiently explained adverse
selection to the committee. In paraphrase: “You need to set a rate that
matches health risk. With no underwriting, the question of who can opt in
or opt out creates challenges. Individuals will evaluate what’s best for
them in their circumstances. Healthy individuals might opt out. When they
opt out, you’re left with a pool of individuals using benefits who are at
higher risk. If you adjust the premium rate up to compensate, then more
healthy people won’t participate. You get more uncertainty and a spiral of
higher and higher costs.” Wow! What an insight? Who could have imagined
that adverse selection might be a problem before the program was carved in
statutory stone?
Giese also explained the financial facts of life to the Commission. You
see, the program must generate enough in premiums plus investment returns
on reserves to cover costs. But Treasury yields are very low these days.
Stocks have the potential to earn much more, but they’re riskier. How does
that impact program income and long-term solvency? The pandemic is a
monkey wrench further complicating this problem. Washington State revenues
have plummeted as have the incomes of the citizens compelled to fund this
program’s new tax. It’s probably not a great time to pile on more
government at the expense of the productive private sector.
The
LTSS Commission has hundreds of little definitional issues to straighten
out. Giese talked about several. The issue of opting out by purchasing
private LTC insurance, he explained, is “still relatively undefined.” What
if top wage earners opt out? What if half of wage earners opt out by
getting private coverage? Who gets to opt out? Only those who had private
LTCI before? People who buy it later just to escape the government
program? What qualifies for the escape hatch: hybrid policies too or just
traditional LTCI. How to handle the self-employed? What if you opt out,
can you opt back in? What about elimination periods? What about
portability and divesting alternatives? There will be additional costs if
people want to receive benefits outside Washington State. On and on and
on. Repeatedly, the approach to issues like these was to create yet
another “work group,” but (no surprise) volunteers were scarce.
People who monitored the meeting through Zoom had the opportunity to
comment or ask questions at the end of the program. One very thoughtful
auditor, Stephen D. Forman of
LTC
Associates
posed this:
The
Commission has referenced the stakeholder community several times, but I'm
not seeing any private insurance industry representation, why is that?
It's a 300 million dollar per year market that is being broadly remade by
the Commission's decisions. The decisions have the potential to discourage
responsible planning by those who have the means to do so, thereby
protecting Medicaid, which is a point of the Trust Act. In February we
proposed a number of blind spots and loopholes in the Act before the
Legislature--including the lack of stakeholder representation--and the
fact that these remain speaks to the fact that this institutional
expertise is needed. Thank you for listening, and for your hard work!
So,
that’s what happens when the Keystone Kops design a long-term care
insurance program. It would be funny if it weren’t so sad.
#############################
Updated,
Monday, October 5, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-039: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Genworth and China Oceanwide Push Back Deal
Completion Deadline
-
Elderly and Homeless: America’s Next Housing Crisis
-
Low Interest Rates Push Prices for New Life-LTC
Hybrids Higher: Milliman
-
Medicaid expansion filled unmet needs for home
health, other long-term care: JAMA
-
More than 50 coronavirus wrongful death suits have
been filed against long-term care facilities
-
Home healthcare outpaces skilled nursing in its
post-COVID-19 rebound
-
Keeping workers will be biggest struggle for
nursing homes as pandemic persists, national policy expert predicts
-
Medicare Advantage plans banking on non-medical
home care needs
-
CMS touts lower premiums and benefits of Medicare
Advantage plans
-
Nursing homes in Washington state struggled with
adequate staffing for years. Then coronavirus struck
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, September 28, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-038: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Nation’s first
COVID-19 criminal charges against nursing home operators filed in
Massachusetts
-
Americans worry
about Alzheimer's disease, survey finds, but most don't know the early
signs and symptoms
-
Virus Cases Surged
in Young Adults. The Elderly Were Hit Next
-
CMS announces $165
million in funding to move people from nursing homes to assisted living
and other settings
-
Medicaid
Maintenance of Eligibility (MOE) Requirements: Issues to Watch When They
End
-
The Nation’s
Fiscal Health: Effective Use of Fiscal Rules and Targets
-
Can You Pass the
New York State COVID-19 Death Risk Test?
-
“‘Living wage’
would benefit 75 percent of direct care workforce: LeadingAge report
-
The work-from-home
surge may lead workers to buy retirement homes even before they retire
-
4 in 5 Americans
Lack Retirement Planning Knowledge: Survey
-
Older adults in
Philly turn COVID-19 into musical comedy
-
Can The Dutch
Example Help Us Improve Long-Term Care And Manage Its Costs? Maybe
-
Davies announces
acquisition of TriPlus as it steps-up North American expansion plans
-
Nursing Homes Oust
Unwanted Patients With Claims of Psychosis
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, September 25, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN
THE COMING FLU SEASON
LTC
Comment: For fresh thinking on the pandemic and long-term care, look no
further than “60
Seconds with Steve Monroe.”
We explain after the ***news.***
***
TAKE THE SURVEY: It’s not too late to participate in
the
nation’s largest opinion survey of agents and advisors
that we announced and described in “LTC
Bullet: The Who is Selling What to Whom, Why & How Survey.”
Read more about this important study in
Ron
Hagelman’s Broker World column
this month. You have until October 8 to do your part by contributing to
our knowledge of this critical subject. Take the survey
here.
***
***
ARE YOU A MEMBER? If you’re not receiving an LTC E-Alert every
Monday and an LTC Bullet every second Friday like clockwork, then
you’re not a member of the Center for Long-Term Care Reform and you’re
only receiving our occasional wider distribution to non-members (or a
bootleg copy from someone else.) You can fix that today. Check out our
“Membership Levels and Benefits”
here
and join the Center
here.
Note that premium members hear from us daily with LTC Clippings
that keep them current on all kinds of LTC information you need to know.
For questions or comments, contact
smoss@centerltc.com
or 425-891-3640. ***
***
TRUE FREEDOM, 9/14/2020, “True
Freedom and GoldenCare USA Partner to Provide Seniors with Innovative Home
Care Solutions”
Quote:
“True Freedom announces our Preferred Marketer partnership with GoldenCare
USA, an Integrity Marketing Group company. True Freedom is the only
company that provides nationwide home care plans for seniors as an
alternative to traditional insurance. GoldenCare and their western-states
counterpart, American Independent Marketing, have been leading subject
matter experts in long-term care for more than 40 years. By partnering
together, they can now serve more Americans by providing unique options
for long-term care.”
LTC
Comment:
Congratulations to long-time friend and corporate member
Golden Care
on this exciting new partnership. ***
LTC
BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN
THE COMING FLU SEASON
LTC
Comment: Do we face double pandemic jeopardy when flu compounds the Covid
crisis this fall? What does it mean to die “of” Covid when the Coronavirus
only shortens the life by a week or two of people with multiple
co-morbidities?
Those are two of the intriguing questions raised and answered by
Irving Levin Associates’
Steve Monroe
in his weekly video series “Sixty
Seconds with Steve Monroe.”
Stephen M. Monroe has been a healthcare and senior care financial expert
for over 30 years. In addition to being an often-quoted healthcare finance
expert in mainstream media, he has published over 50 bylined articles
dealing with various aspects of investing in health care and senior’s
housing. He is also called upon to keynote and speak at organizations such
as the American Seniors Housing Association, Assisted Living Federation of
America, National Investment Center for Seniors Housing and Care, American
Health Care Association and the New York State Health Facilities
Association, among others.
I’ve
followed Steve’s analysis for two decades or more, ever since I became
intrigued by the role of finance in shaping the type and availability of
seniors housing. When he told me many years ago that he bought private
long-term care insurance and it cost him less than the cost of a daily cup
of coffee, that sealed it for me. I’ve followed his thoughtful
commentaries ever since.
Here
are two of them that he and his employer have allowed me to share with
you. This material is proprietary so not usually available for free. If
you find it helpful, there’s more where this came from and you can
subscribe for a 60-day free trial
here.
“Beware
the Flu Season?,”
by
Steve Monroe,
August 26, 2020
Almost every conversation surrounding the coronavirus and outbreaks in
nursing homes or assisted living communities eventually gets around to the
double whammy of a “second wave” combined with the upcoming flu season.
Yes,
providers will have to be vigilant, but they have never been as well
prepared for the flu season as they are today. Think about it. Less than a
year ago, do you remember ever walking into any senior care facility where
the staff were all wearing masks, where hand sanitizers were everywhere,
where your temperature was taken at the entrance, where mobile residents
were wearing masks? No, it never happened except if someone had the flu.
My
bet is that there will be a record number of people, in and out of senior
care, who will get the flu shot this year. And transmission will be lower
because most Americans are wearing masks in public, hands are cleaner than
ever before, and we are all still coming into contact with fewer people on
a daily basis than at the start of any other flu season.
The
coronavirus will still be with us, but because of the extra care taken in
all senior care communities, its prevalence has declined and the double
whammy with the flu season will not be as bad as people fear.
“Death
By or With COVID,”
by Steve
Monroe,
August 28, 2020
We
are sure every provider is sick and tired of hearing about how many
residents have died of COVID-19 in a nursing home or assisted living
community. The problem is that the classification may be all wrong.
Unfortunately, there may be a financial reason for such classifications,
as in more reimbursement, or more governmental aid. And for those who can
profit from making this pandemic seem worse than it is (yes, they do
exist), piling up the number of COVID deaths helps to make their case. It
has certainly helped the mainstream media and their advertising dollars.
But here is the problem, at least as it relates to the deaths in assisted
living, memory care and nursing homes. What the statistics don’t
differentiate is those residents who died “of” COVID from those who died
“with” it.
Let
us explain. Most people who are long-term residents in nursing homes, or
assisted living and memory care communities, have multiple health issues,
commonly referred to as co-morbidities. It is a word often used in the
senior care industry, but particularly during this pandemic.
In
its most simple definition, a comorbidity is the presence of one or more
“additional” health conditions, usually co-occurring with a primary
condition. And we are not talking about minor health problems, but major
ones, usually chronic and often cardiac or respiratory related, as well as
diabetes. To be un-politically correct, these residents today have several
health problems, any one of which could result in their death at some
point.
In
addition, the average length of stay for these residents is relatively
short, even in the best of times, especially compared with independent
living communities or CCRCs, not to mention active adult communities with
their much younger average age. They have moved into nursing homes or
AL/MC [assisted living/memory care] communities in a frailer condition
than 20 and even 10 years ago. In many cases, they are going to die in six
or 12 months even without a pandemic.
So,
when a 90-year resident in a memory care wing (true story), on hospice,
with maybe three weeks to live gets infected with the coronavirus and dies
in two weeks, she is listed as having died “of” COVID. But that is not
true. She died “with” COVID. She actually could have died from any of her
comorbidities, if not just old age, but that is not how it is recorded.
She becomes a statistic as one of the 170,000 and growing deaths from
COVID. [The reported U.S. death toll passed 200,000 on September 22, 2020,
a little less than a month after this column was published.]
The
entire senior care industry has to get this message out and the only way
to do so is to track what really is happening inside your buildings. The
overall number of deaths “by” COVID will go down, and the industry can
make a better case to the consumer for what is really happening to seniors
under their care. We would love to receive your statistics, on or off the
record.
#############################
Updated, Monday, September 21, 2020,
9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-037: LTC NEWS AND
COMMENT
LTC Comment: Do you spend hours
searching the internet for useful articles, key data, and relevant reports
to keep you on the forefront of professional knowledge? Do you lose
business because you’re blindsided by clients or competitors who learn
critical information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile
our daily LTC Clippings into a summary, email it to Center for Long-Term
Care Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- True Freedom and GoldenCare USA Partner to Provide Seniors with
Innovative Home Care Solutions
- Nursing Homes Given Federal Go-Ahead To Allow More Visitors
- Dementia mortality skyrockets since lockdowns; CMS loosens visitor
restrictions
- Opinion: Long-term care insurance: There’s no good alternative
- Federal Nursing Home Commission Calls on CMS to Adopt 27
Recommendations, ‘Reduce Suffering’
- When Elder Care Requires Legal Advice
- Social Security COLA Estimated at 1.3% for 2021
- Lapse In Long-Term Care Insurance Doesn’t Necessarily Ruin Coverage
- U.S. health care system on life support, say test results from new
study
- A win for long-term care: Providers applaud withdrawal of MFAR
proposal
- Missed Vaccines, Skipped Colonoscopies: Preventive Care Plummets
- COVID-19 pushed SNF occupancy below 75% in June: NIC
- Ken Dychtwald: 75% of Households Could Face a Big Retirement Shock
- COVID-19 and Fast Underwriting Are a Bad Mix: Veteran Underwriter
- 41% don’t trust assisted living, nursing homes to keep residents
safe during pandemic: survey
- Recession And Medicaid Budgets: What Are The Options?
- How the Aging Immune System Makes Older People Vulnerable to
Covid-19
- Almost 40% of residential care aides live in low-income households:
report
- Vitamin D deficiency may nearly double coronavirus risk, study finds
#############################
"LTC
E-Alerts" are a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, September 11, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Comment: We’ll finally get answers to all those
questions if you fill out
this brief survey. We explain after the ***news.***
***
TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many
unique services to advisors as National Brokerage Director for USA-BGA
and to other entities as a consultant, in the individual, worksite and
affinity group markets. For example, his revolutionary “Range of
Exposure” tool projects clients’ likelihood (joint for a couple) of
spending $100,000; $250K; $500K or over $1,000,000 on long-term care,
based on their personal characteristics and estimates how much of
their cost in each range would be covered by various traditional or
linked insurance designs. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. You can reach him at 913-707-8863 or
claude.thau@gmail.com.
*** |
*** HOW AND WHY TO JOIN the Center for Long-Term Care
Reform. After you read “LTC Bullet:
What Value Do LTCI Producers Get from the Center for Long-Term Care
Reform?, I hope and trust you’ll want to get everything the Center has
to offer. So check out our “Membership Levels and Benefits” schedule
here. That’ll help you decide between the various levels of individual
and corporate membership. If you have questions, drop me a note or give me
a call at
smoses@centerltc.com or 425-891-3640. One of the benefits of all
Center memberships is anytime access to me for questions about LTC
services and financing policy. As I explained in that
Bullet, I like hearing from agents and discussing the
challenges you face. It helps keep my policy analysis grounded in your
real world of LTCI prospecting, fighting against prospects’ denial, and
answering the hard questions people actually ask. So let’s talk. ***
*** “LTC CLIPPINGS” is a special daily service that
premium Center members
($250 per year or $21 per month) and above can opt to receive. Steve
Moses scans the internet for news, articles, reports and data you need to
know before your prospects start asking about them. He provides the date,
title, author, a link, a representative quote and a brief, often humorous
or satirical, but always thoughtful comment. Know what you need to know
before you’re caught off guard. Subscribe to LTC Clippings. ***
LTC BULLET: THE WHO IS SELLING WHAT TO WHOM, WHY &
HOW SURVEY
LTC Comment: There probably aren’t many public policy
analysts who have actually sold a long-term care insurance policy, but I’m
one. After leaving my government career to become Director of Research for
LTC, Inc., I took the sales training, got a license, did some phone
prospecting, and hit the road with a pocket full of leads. My mission was
to learn what LTCI agents were really up against.
Boy did I find out. After driving to a distant corner
of Washington State so as not to burn leads real agents needed, I set to
conducting sales interviews. I talked, they listened, and listened. I knew
a lot and, by gum, they were going to hear it all. That’s when I learned
the wisdom of the adage “You have two ears and one mouth. Use them in that
proportion.”
Long story a little shorter, I got skunked. No
buyers. I returned to the office with my tail between my legs wondering
how in the world successful agents managed. But later that week I got a
call from one of my prospects. He decided to buy a policy after all. What
was it, I inquired, my expertise, my savvy selling, my personal charm?
Nope, he said. He just didn’t like the policy his retired teachers’
association was promoting.
I’m telling this story because that was my earliest
introduction to how little we really know about the who, what, when,
where, why and how of long-term care insurance sales. Ever since that
experience I’ve referred to the heroes who somehow manage to help people
protect themselves for long-term care as AMG’s, altruistic, masochistic
geniuses. It’s long past time we empowered those AMGs by giving them
answers to those crucial questions. Finally someone is setting out to do
so.
The Survey
Ron Hagelman and
Barry Fisher of
Ice Flow Consulting and
Vince Bodnar of
Oliver Wyman have teamed up to design and offer a survey questionnaire
to address these issues:
-
Best practices in starting the long-term care
planning conversation.
-
Agent/Advisor/Consumer product perceptions and
preferences.
-
Best ways to get prospects and clients to “YES”.
-
New product insights.
-
Types of training and education that will improve
sales results.
-
Why many agents/advisors DO NOT discuss long-term
care planning with consumers.
The survey’s sponsors say “This agent/advisor-focused
sales analysis is designed specifically to help reveal the mysteries of
the structure and motivations of buying behavior from those who make the
sales happen.” It will define the “new normal in long-term care planning.”
The project is advised and supported by NAILBA, NAIFA, numerous
traditional and combo carriers and key distribution friends. Learn more in
the September issue of Broker World magazine.
The survey only takes about 5-15 minutes to complete.
If you provide your email address, they’ll send you the executive summary
as soon as the results are compiled. Don’t wait. Take the survey now
here.
Don’t sell LTCI? Please
take the survey anyway. The sponsors say: “We’d like you to take a few
minutes out of your busy day to take the survey. If you do not discuss
long-term care planning with consumers the survey will take 5 minutes or
less. Knowing why you don’t is vitally important to us. If you do have
long-term care planning conversations with prospects and clients, the
survey will take about 15 minutes or less. Your insights into the
aforementioned survey goals will help us with new product development,
expanding the market, improving agent education and increased consumer
awareness.”
We look forward to reviewing the results of this
survey and we’ll bring them to you in a future LTC Bullet.
Now
TAKE THE SURVEY!
#############################
Updated,
Monday, September 7, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-036: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Ethics Consult:
Keep Patient on Feeding Tube After Dementia Diagnosis?— You make the
call
-
COVID-19 shifts
mindset of family caregivers about senior living decisions
-
Grabowski: As Case
Counts Rise and PPE Issues Persist, Nursing Homes Face Grim ‘Groundhog
Day’
-
CBO Cuts Forecast
for Social Security Fund Life Span, Sees Debt Topping GDP in 2021
-
COVID-19 Outbreaks
in Long-Term Care Facilities Were Most Severe in the Early Months of the
Pandemic, but Data Show Cases and Deaths in Such Facilities May Be On
the Rise Again
-
Skilled Nursing
Distress Looms as CARES Funding Ebbs: ‘Bills Are Starting to Come Due’
-
Key Questions
About the Impact of Coronavirus on Long-Term Care Facilities Over Time
-
China Oceanwide Is
'Progressing Well' Toward Getting Deal Funding: Genworth
-
Why you need to
talk to your parents about how they want to die
-
Does Medicare
cover long-term care?
-
Long, Frequent
Naps Predict Alzheimer's Dementia
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, August 31, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-035: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Bonnie Kraham
column: 2020 rates for Community Medicaid and Nursing Home Medicaid
-
Hundreds of
Thousands Of Nursing Home Residents Don’t Need To Be There
-
Longevity Brings
Increased Risk of Cognitive Decline
-
Female chromosomes
offer resilience to Alzheimer's
-
Morningstar gives
‘negative outlook’ rating to skilled care
-
State Actions to
Sustain Medicaid Long-Term Services and Supports During COVID-19
-
Ending Payroll Tax
Would Drain Social Security by Mid-2023
-
State with First
COVID-19 Outbreak Rolls Back Medicaid Boost for Nursing Homes: ‘Needless
Deaths Will Rise’
-
Dementia may be
three times more deadly than thought, analysis finds
-
A Novel Way to
Combat Covid-19 in Nursing Homes: Strike Teams
-
Two or more
long-term health conditions linked to positive COVID-19 tests
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, August 28, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
Bullet: What Value Do LTCI Producers Get from the Center for Long-Term
Care Reform?
LTC
Comment: Why join and support the Center for Long-Term Care Reform? What’s
in it for you, after the ***news.***
***
TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many
unique services to advisors as National Brokerage Director for USA-BGA
and to other entities as a consultant, in the individual, worksite and
affinity group markets. For example, his revolutionary “Range of
Exposure” tool projects clients’ likelihood (joint for a couple) of
spending $100,000; $250K; $500K or over $1,000,000 on long-term care,
based on their personal characteristics and estimates how much of
their cost in each range would be covered by various traditional or
linked insurance designs. Claude is the lead author of Milliman’s
annual Broker World LTCi Survey & a past Chair of the Center for
Long-Term Care Financing. You can reach him at 913-707-8863 or
claude.thau@gmail.com.
*** |
*** HOW
AND WHY TO JOIN the Center for Long-Term Care Reform. After you read
today’s LTC Bullet I hope and trust you’ll want to get everything
the Center has to offer. So check out our “Membership Levels and Benefits”
schedule
here.
That’ll help you decide between the various levels of individual and
corporate membership. If you have questions, drop me a note or give me a
call at
smoses@centerltc.com
or 425-891-3640. One of the benefits of all Center memberships is anytime
access to me for questions about LTC services and financing policy. As I
explain in the following Bullet, I like hearing from agents and
discussing the challenges you face. It helps keep my policy analysis
grounded in your real world of LTCI prospecting, fighting against
prospects’ denial, and answering the hard questions people actually ask.
So let’s talk. ***
*** “LTC
CLIPPINGS” is a special daily service that premium Center members
($250 per year or $21 per month)
and above can opt to receive. Steve Moses scans the internet for news,
articles, reports and data you need to know before your prospects start
asking about them. He provides the date, title, author, a link, a
representative quote and a brief, often humorous or satirical, but always
thoughtful comment. Know what you need to know before you’re caught off
guard. Subscribe to LTC Clippings. ***
LTC
BULLET: WHAT VALUE DO LTCI PRODUCERS GET FROM THE CENTER FOR LONG-TERM
CARE REFORM?
LTC
Comment: I enjoy speaking to agents about the challenges they face finding
and convincing clients to protect themselves against long-term care risk
and cost. Agents see the battle for better LTC from the foxholes. As a
policy analyst, my perspective often feels high altitude by comparison.
Hearing the problems and challenges agents face day in and day out helps
ground me in practical ideas and proposals.
So that’s
why I jumped at the chance when Center-corporate-member
Long Term Care Associates (LTCA)
invited me to address their next agent conference call. Special thanks to
Stephen, Gary, and Robert Forman and their team for the opportunity to
answer the following questions. Here’s what they asked and how I
responded.
1. From
your vantage, what value proposition from the Center do you think agents
should be taking advantage of, which they’ve failed to over the years?
The
agent’s role is to educate and sell. To do that well agents need to be on
the forefront of professional knowledge and expertise. But how can they do
that if they’re also doing all their own research? A critical role of the
Center for Long-Term Care Reform is to keep agents apprised of important
articles, reports, studies and data they need to know. How often have you
been blind-sided by a prospect’s question or criticism that they picked up
from a news report that you hadn’t seen or heard yet? Follow the Center
and that won’t happen again. The best way to follow the Center is to know
our website at
www.centerltc.com
inside out.
The
website has two levels: One for the general public and one for Members
Only. Check out the links at the top of the website to get started.
Here are
the items available to all:
Take our virtual tour of the
Center's website. (Be
patient, it may take some time to load.) This video webinar explains how
to access and navigate the valuable content on the CLTCR website. This is
the best way to find everything quickly.
The “Moses
LTC Blog” includes
LTC Bullets and LTC E-Alerts as they’re posted. (To find it,
scroll down from the top of
www.centerltc.com)
Links
to 1286 LTC Bullets newsletters, archived chronologically and by
topic covering every aspect of LTC services and financing since 1998
Links
to hundreds of articles, speeches, state-level and national reports on
every aspect of LTC services and financing
Video
of Steve Moses’s 9/21/11congressional testimony on “Examining Abuses of
Medicaid Eligibility Rules” (Steve testifies at 18 minutes, 45 seconds
into the hearing)
"Clash of
the Titans: Moses vs Gordon on Medicaid and other Dark Matter" at the 12th
Annual ILTCI Conference.
Listen
to this riveting debate. (May load slowly)
See a
retrospective of the 2008 National LTC Consciousness Tour:
LTC Tour Slide Show,
pictures of the Silver Bullet
of Long-Term Care;
history of the year-long tour
to raise consciousness about long-term care
Members
only website content (available to all on a trial basis for two weeks; use
user name: CLTCR2020 and password: FreeTrial):
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
2.
You’ve been instrumental in many major pieces of Medicaid reform
legislation: is there anything you or others you know of are currently
working towards?
We’ve been
on the defense for the past decade. Irresponsible monetary and fiscal
policy since the Great Recession have convinced the powers-that-be the
country can print and spend unlimited funds without producing new goods
and services for people to buy. That’s a recipe for disaster and the
catastrophe is baking in the economic oven right now, soon to be served up
to the country.
In the
meantime, the LTC intelligentsia—analysts and economists who opine about
the long-term care problem and what to do about it—have come together in
support of a compulsory, public, catastrophic LTC insurance plan based on
payroll deductions similar to Social Security and Medicare. Handling LTC
in this way won’t work any better than those programs, which are insolvent
already and likely to survive only as means-tested welfare programs in the
not-very-distant future.
Here’s the
good news. Thanks to the dozens of state-level and national studies we’ve
conducted and which are available on the Center’s website
here,
we know what to do and how to do it when policymakers are finally forced
by circumstances to do what needs to be done.
What’s
that? Redirect Medicaid to the needy and use some of the savings to
incentivize responsible LTC planning including private LTCI. Specifically,
eliminate Medicaid’s huge home equity exemption, close other eligibility
loopholes, and enforce estate recovery. Operate Medicaid as a loan instead
of a welfare trap for people with wealth. In time consumers will realize
private insurance is a far better option than relying on Medicaid.
3.
What’s the single greatest legislative change that could galvanize the
private LTCI market?
We need to
get the government to stop giving away what you’re trying to sell.
Eliminating Medicaid as your primary competition for the business of
middle class and affluent people is the one change that could make the
biggest difference. Unfortunately, that’s not a very popular idea
politically, so it’s not likely to happen until the economy tanks, which
it is about to do. When states have to curb Medicaid’s excesses to make
budget ends meet, they’ll listen again to what we have to say. That’s how
we won in 1993 with the Omnibus Budget Reconciliation Act (OBRA ’93 closed
eligibility loopholes and made estate recovery mandatory) and in 2005 with
the Deficit Reduction Act (DRA ’05 unleashed LTC Partnerships and placed
the first cap ever on Medicaid’s home equity exemption). We’re in a better
place now than we have been in over a decade to get the policy changes we
need done.
4. In
all the state-level reports, data, and studies you read, what have you
come across that would surprise our agents—and is there something they
could use to advance the importance of LTC planning?
What it’s
so hard for agents and everyone else to understand is how easy it is for
people to qualify for Medicaid LTC benefits despite having large incomes
and assets. I was amazed doing state Medicaid eligibility studies to find
that eligibility workers are appalled at how easy it is. They’re angry
that lawyers for well-heeled people prepare their perfect applications,
sometimes three inches think with documentation. Welfare workers can’t get
poor people on Medicaid without devastating the families, but the
well-to-do go right on. Adult children have a financial conflict of
interest and they’re usually the ones making the decisions once the elders
are demented and need care. The system is corrupt and leads to bad
consequences as we’re seeing during the pandemic especially, with tragic
nursing home deaths and families kept from visiting their
institutionalized loved ones.
5.
You’ve been even-handed of your criticism of both major parties’ failing
to address LTC financing: do you think choice of President or Congress
matters much to LTC financing in this country, and if so, does either
platform appeal to you more on this basis?
Honestly,
no, politics doesn’t matter. Politics is the problem not the solution.
Politics is about buying votes by promising people something for nothing.
Economics is what matters. Markets fairly distribute goods and services
based on merit and hard work instead of political influence and graft. So,
no, it makes no difference who controls the government. They’re all prone
to irresponsible excess. What matters is what we do when the wages of
their irresponsibility come due. Fortunately, we’ve done the prep work to
know how to fix long-term care when politics fails and markets matter
again.
6.
Despite continued efforts to “rebalance” Medicaid towards more home health
care, it continues to bias toward nursing homes: how would you communicate
this bias—and Medicaid’s other shortcomings—to a client who thinks they
can self-insure or “Medicaid Plan”?
The idea
that home care costs less than nursing home care is a fallacy. Across
society home care delays but does not replace facility care. The two
together always end up costing more. Bottom line, Medicaid can’t afford
quality institutional care, much less a full continuum of care.
Institutional bias is here to stay as the only way Medicaid can keep costs
manageable. The public knows nursing homes are undesirable, more so now
during the pandemic than ever before. The best way to stay out of a
nursing home as long as possible and to access the best ones when
necessary is to be able to pay privately for alternative care. The best
way to do that is to share the risk and cost through private insurance.
7.
Reaction to your message from the carriers sometimes seems tepid: why do
you think it’s not been more universally welcomed?
Carriers
fear that by exposing the abuse of Medicaid by middle class and affluent
people in order to correct it I’m actually disclosing to consumers the
secrets of how to dodge private insurance. My dilemma is that I can’t get
the problem fixed without exposing and criticizing it. Carriers can be
very short-sighted and exceedingly careful. They hear that Medicaid
captures most of their potential market and instead of aggressively
addressing that problem they too often fear criticism and do nothing. The
truth is the only way to fix Medicaid for the poor is to get the non-poor
to take responsibility and insure. That’s what I’m advocating.
8.
What’s wrong with “selling the Medicaid myth”? (i.e. the notion that you
have to spenddown to poverty in order to qualify) The insurance companies,
the government, the media, and many agents all repeat this same
myth—shouldn’t we?
The
Medicaid myth is that you can’t get LTC benefits without spending down
into impoverishment. It’s a myth because it isn’t true. If it were true,
most people with the financial wherewithal to buy LTCI would own a policy.
They’d be scared to death of losing their life’s savings if their life
savings really were at risk. You could say the Medicaid myth is a “noble
lie.” So if it helps you protect someone with a good policy, so be it.
Just know yourself what’s really happening.
What’s
really going on is that the public has been anesthetized to LTC risk and
cost because Medicaid has picked up most of the catastrophic costs for LTC
since 1965. So people don’t worry about LTC until they need it, and once
they need it they slip onto Medicaid easily. You’re much better off to
acknowledge virtually anyone can get Medicaid to pay for long-term care
but to focus on the reasons for not doing that: the problems of access,
quality, low reimbursement, institutional bias, discrimination, and loss
of independence and control.
Do you say
“my clients know about Medicaid’s deficiencies and they don’t want to end
up on that welfare program?” If so, you’re missing the point. Nine out of
ten potential prospects don’t even contact you or answer your calls. Most
people don’t worry about long-term care until it’s too late to plan, save,
invest or insure against the risk. That’s true because Medicaid has been
the payor of last resort for so long. Undesirable as Medicaid is, it looks
pretty tempting when it’s the only thing standing between a family and
huge out of pocket costs. Help us remove Medicaid as an easy solution for
middle class and affluent people after the insurable event has occurred,
and then see how many people are beating down your door to get the LTCI
protection they truly need.
#############################
Updated,
Monday, August 24, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-034: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Short-Term
Bailouts Won’t Fix Nursing Homes or Medicaid Home-Based Long-Term Care
-
Covid-19
Vaccination Costs to Strain State Medicaid Programs
-
Task force
delivers final report for senior living’s transformation post-COVID-19;
6 strategies identified
-
Seattle life plan
community successfully shifts from communal dining to food court model
-
Assisted Living
Communities Facing Similar Financial Hardship as Nursing Homes
-
Assisted living
occupancy declines at highest rate since April: NIC
-
Nearly 75% of
older Americans with dementia given drugs that don’t help them despite
serious risks: Study
-
Game changer for
long-term care? More like a game ender
-
REPORT: COVID
Cases in Nursing Homes Surpass Peak Level Back in May
-
U.S. Treasury task
force: Federal government must educate public about LTC costs
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, August 17, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-033: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Nursing Home
Families Yearn to Visit Loved Ones Again
-
Verma ‘Deeply
Concerned’ About Rise in Nursing Home COVID Counts, ‘Significant
Deficiencies’ in Infection Control
-
The Trump
Administration Thought About Reforming Long-Term Care Insurance. But
Decided Not To
SURVEY: Nursing Homes Incurring Significant Costs and Financial Hardship
in Response to COVID-19
-
Coronavirus cases
in nursing homes show alarming spike, AHCA warns
-
LTCG appoints
Sharon Reed as SVP of Process Improvement and Enterprise Training
-
Older Americans
Coping Better With Pandemic Than Younger Ones: Age Wave
-
Job losses
continue in the eldercare sector: Labor Department
-
When Covid-19 Hit,
Many Elderly Were Left to Die
-
Dementia on the
Retreat in the U.S. and Europe
-
Long-term care
groups, 490 others, call for enactment of COVID-related legal
protections ‘as soon as possible’
-
1,600 nursing home
workers plan strike
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Friday, August 14, 2020,
7:00 PM (Pacific)
Seattle—
#############################
LTC Comment: Sometimes bad studies
happen to good people. We explain after the ***news.***
*** ILTCI CONFERENCE: Why am I getting
Denver history lessons from Barry Fisher? Because he’s a former resident,
knows the city well and he’s in charge of the 20th anniversary
Intercompany Long-Term Care Insurance Conference to be held March 8-11,
2021 in Denver. This iteration of the event replaces the one canceled due
to the pandemic in March of this year. Get all the details
here and
here. Barry reports “The good news is that almost all our exhibitors
and sponsors have committed to attend the 2021 Conference. The Program and
Education Committee is hard at work creating sessions designed to
instruct, enlighten, and entertain. And, our Keynote Speaker,
Futurist Anders Sorman-Nilsson, will share a whole new look into his
crystal ball.” I’m reminded there’s a little Denver lore in the Moses
family history also. It seems my great grandfather traded 40 acres of
prairie waste land for a pair of pearl-handled six-shooters. Those 40
acres are downtown Denver today, but we don’t even have the pistols to
show for it. Oh well! At least we have a great reunion with friends and
colleagues coming up in the Mile High City next March … Covid-19
permitting, of course. ***
LTC BULLET: UMPTEENTH LONG-TERM CARE
STUDY DISAPPOINTS
LTC Comment: Having toiled in the
long-term care field for 38 years, I’ve seen a lot of study groups and
commissions come and go aimed at finding a better way to provide and pay
for long-term services and supports. Besides their universal abject
failures, these many endeavors also have this in common. They brought
together experts representing various “stakeholders’” interests who
talked, talked, talked until they arrived at the lowest common denominator
of their wishful thinking. That usually included a long list of wonderful
things to do with no mention of how to pay for them. How might we define
such a “study?” The
Urban Dictionary suggests this: “A group discussion or activity
between like-minded individuals that validates mutual biases or goals in a
non-confrontational environment.” What got me thinking along those lines?
“Learning
from New State Initiatives in Financing Long-Term Services and Supports”
is a report published last month jointly by the
Center for Consumer Engagement in Health Innovation at Community Catalyst
and
The LeadingAge LTSS Center @UMass Boston. Its authors include two,
Marc Cohen and Eileen Tell, whose previous work deserves praise. The
report is the fruit of deliberations by “42 stakeholders and state
officials” who shared “their depth of knowledge and insightful
observations on the reform efforts occurring in their states.” Their
states, which have “adopted or are considering innovative state-based LTSS
financing reforms” include California, Hawaii, Maine, Michigan, Minnesota
and Washington. As I’ve conducted studies in three of those states (CA, ME
and WA) I’ll offer some balancing perspective when relevant.
So let’s dive into this new report and
see what we find. I’ll select a quote and then make a comment. I’m
omitting the report’s footnotes but you can find them quickly in
the original.
LTSS Report:
“Most of the LTSS costs that people are projected to pay will be out of
their own pockets (53%); this is especially true when it comes to home and
community-based care (68%). Yet Americans are woefully unprepared to pay
for their own care, should they need it.” (p. 4)
LTC Comment:
What those percentages ignore is that the vast majority of all high
cost long-term care expenses are paid for by Medicaid and Medicare. If
these catastrophic costs were not removed by public financing, people
would worry about and save, invest or insure for long-term care. They
would be much better prepared for LTC risk and cost than they are now.
I’ve explained in
Medicaid and Long-Term Care (pp. 64ff) that “some recent
research suggests how we might reconceptualize the quandary we are in so
that it is not such a huge challenge and may in fact be amenable to a
market-based solution.”
Check it out.
LTSS Report:
“The bottom line is that private LTC insurance is now out of the financial
reach of most middle-income Americans and for that reason, it is not
likely to play a meaningful role in financing LTSS costs in the coming
decades.” (p. 4)
LTC Comment:
This statement reflects a misunderstanding about why private LTCI take-up
is so low. Many more consumers than now would find a way to afford the
product if they believed they needed it. If, for example, their home
equity were at risk for potential long-term care expenses, they’d see a
real risk far more starkly. But despite decades of the media and insurance
agents telling people they’ll lose their life savings if they don’t
insure, they still don’t believe it. Ironically, they’re right. They can
ignore the risk, avoid the premiums, and, if they ever need expensive
long-term care, Medicaid provides while exempting most assets and charging
only excess income as a kind of co-insurance. Until those facts change,
the market for private LTC insurance will languish. But those facts
will change soon when the bottom falls out of the existing welfare-based
LTC financing system.
LTSS Report:
“Medicaid provides coverage of LTSS only after individuals have depleted
their own resources in paying for care.” (p. 4)
LTC Comment:
That statement is so blatantly false it is hard to believe serious people
still publish it. Medicaid requires excess income to be spent down
for care. But that rule does not apply to excess assets. Assets may
be spent down for anything of value. As long as the items purchased are
exempt, and most large assets are, Medicaid does not care for purposes of
determining eligibility. That’s why elder law attorneys keep long lists of
exempt resources and encourage their clients to spend any disqualifying
countable assets on them. Even Medicaid eligibility workers frequently
advise families to do the same. It defies belief that long-term care
experts remain so uninformed or naïve as to ignore these facts. You can
find scores of examples with citations to the sources in
How To Fix Long-Term Care Financing, pp. 34-63.
LTSS Report:
“Currently, Medicaid pays roughly 57% of LTSS costs, elders and their
families pay an additional 23%, other public sources contribute 16%, while
private insurance pays less than 5% of the nation’s bill.” (p. 4)
LTC Comment:
Of that 23% of LTSS costs attributed to elders and their families, roughly
half is Social Security income received by people already on Medicaid,
which they’re required to contribute to offset Medicaid’s cost for their
care. In other words, it’s not—or even mostly—life savings being spent
down catastrophically into impoverishment as analysts imply. I explain
this Social Security “spend-through” and why it’s so critical to
understanding LTC risk and cost in
Medicaid and Long-Term Care at pp. 7-8. The key point is
that nearly 90% of LTSS costs as cited by the LTSS report come from
Medicaid (57%), other public sources (16%), LTCI (5%), or Social Security
(1/2 of the 23% attributed to out of pocket expenditures). Why should we
be surprised that most people fail to plan, save or insure for long-term
care when they’re only personally at risk for about 10% of the cost?
What’s worse, when the Social Security trust fund runs out, as it is
likely to do much sooner than previously anticipated because of current
monetary and fiscal policies aimed at providing coronavirus relief,
Medicaid and its long-term care providers will have to adapt somehow to
the loss of some or all of this substantial “spend-through” revenue. As
Medicaid and providers are already vastly underfunded, this loss will be
devastating.
LTSS Report:
“Median retirement savings for Americans between age 55 and 64 is roughly
$107,000, which is far less than the average expected LTSS costs for those
who have to purchase care.” (p. 5).
LTC Comment:
True, but irrelevant. Medicaid already covers people with median savings
and below. The key question is whether Medicaid also covers most people
with savings above the median. It can and often does. In
Medicaid and Long-Term Care (pp. 44-46), I explain how
Medicare beneficiaries up to the 95th percentile of income and
assets qualify financially for Medicaid LTC benefits. As long as this
remains true, don’t expect most people to worry about long-term care until
it’s too late to save or insure and Medicaid, despite its flaws, becomes
preferable to spending privately.
LTSS Report:
“All of the data suggests that our current approach – based on Medicaid,
savings, and private insurance – is not meeting the needs of families,
providers, nor public payers. Currently, there are two primary strategies
designed to move the system toward greater insurance coverage: (1) a
federal public insurance approach which is designed to add social
insurance coverage for LTSS to existing health insurance programs offered
at the federal level, and; (2) state-based social insurance programs,
which represent the most recent efforts at reform and for which there is
growing interest across multiple states. These state-based efforts are the
primary subject of this report.” (p. 5)
LTC Comment:
This is the switcheroo. Having described the existing LTC system’s many
shortcomings, the LTSS Report jumps right into proposing “strategies”
based on social insurance, i.e. more government money, regulation
and compulsion. Neither this report nor others of its ilk give the
slightest attention to why and how America’s long-term care system became
so fouled up in the first place. How in the world can we conclude that new
federal or state-based social insurance programs are the right strategies
to pursue without explaining what went wrong with the existing government
dominated system and why? That explanation is what I provided in
Medicaid and Long-Term Care (pp. 10-16). I concluded
that excessive government funding and regulation is exactly what ruined
the long-term care system over the past eight decades. Adding more of what
caused long-term care’s problems in the first place is hardly likely to
fix them going forward.
LTSS Report:
“In light of the fiscal strain brought on by the COVID-19 pandemic, as
well as uncertainty regarding the upcoming federal election results, it is
highly unlikely that these [federal LTC reform] bills will move forward in
the immediate future.” (p. 7)
LTC Comment:
This is a neat brush-off of omnipresent but simpleminded proposals to add
long-term care to Medicare. But the same facts bear even more heavily
against state-level reform plans. States can’t print and borrow unlimited
funds like the federal government can. We’ve barely begun to see the
devastation unconstrained federal monetary and fiscal profligacy will
cause. Will the federal government pay all the states’ bills in the same
way as it has taken the place of private payrolls nationwide? How long
before the trillions of newly printed dollars, with no new goods and
services for them to purchase, lose their value? “Too much money chasing
too few goods?” Where have I heard that expression before? Oh yeah, Econ
101.
LTSS Report:
“We describe recent LTSS financing reforms in six states, identify
motivating factors that are driving policy change, describe how policy
design decisions are being made, and document the key players involved in
these reform initiatives. ... The fact that a growing number of states are
seeing a broad and disparate array of LTSS stakeholders come together to
work in concert on this issue represents a real change in the policy
landscape; in essence, it highlights an expansion in the potential policy
solution-set for this issue.” (p. 7)
LTC Comment:
“Growing number of states?” These are the same six referenced in
a program titled “State Initiatives for LTC Financing Reform”
at the 19th Annual ILTCI Conference in Chicago on March 25,
2019 minus one planned then for Illinois. We’re not exactly seeing a wave
of new enthusiasm for higher payroll taxes to fund more government
long-term care.
LTSS Report:
“We conducted comparative qualitative case studies across six states in
various stages of developing or executing on reform initiatives including
Washington State, which recently passed and is currently implementing a
new social insurance program for LTSS; Hawaii, which has programs designed
to assist family caregivers; and Maine, which put a specific LTSS
financing initiative on the ballot in 2018 that failed to pass. The other
three study states – Minnesota, California and Michigan – are at various
stages of building stakeholder coalitions to work with policymakers to
develop new programs, undertaking studies of the issue to inform policy
development, or are ready to move to a full-blown legislative agenda.” (p.
8)
LTC Comment:
Now we’re getting into the meat of the report. Of the six states reviewed,
only one, Washington, actually has “a new social insurance program for
LTSS” underway. The rest have either tried and failed, done something very
different, or are perennially studying the matter.
LTSS Report:
“In total, we completed interviews with 42 stakeholders and state
officials across these states, many of whom were referred by state
leaders. Key informants included state officials, leaders working in aging
services, consumer advocates working on a broad range of health,
disability, and LTSS issues, union leaders, and an assortment of
individuals from LTSS provider organizations.” (p. 8)
LTC Comment:
What every one of these “stakeholders” has at stake is getting more money
from the state and federal governments to finance their special interests.
There’s a name for this process: “crony socialism.” When you decide before
you begin a study that LTC only has two ways to go, federal or state
social insurance, and then interview only people who stand to benefit from
either of those options, you’ve squandered intellectual and financial
resources.
LTSS Report:
“In all the study states, the median monthly costs of home care and
nursing home care exceed the national average, and in all but two, the
median monthly costs for care in an assisted living facility are also in
excess of the national average. This indicates a growing payment burden
faced largely by families paying out-of-pocket or, on behalf of those who
are poor or become poor paying for care, on the state’s Medicaid program.”
(p. 11)
LTC Comment:
No, what those constantly rising home care and nursing home costs “in
excess of the national average” actually show is that these study states
have failed miserably to control expenditures by means of the government
regulation and interventions they’ve already employed. For example,
rebalancing from nursing home care to home care was supposed to save
money, but it didn’t. It turned out home care only delayed institutional
care and the two combined cost more. Pouring more and more Medicaid money
into experimental programs and continuing to allow easy access to Medicaid
benefits with generous financial eligibility rules impeded the private
markets for home care, home equity conversion, and private long-term care
insurance leaving consumers dependent on poor public programs. Social
insurance isn’t the solution for the long-term care problem; it is
the problem. For full development of this argument, see any or all of the
state-level studies
here including these three reports covering states addressed in the
current study:
What We Don't Know About Medicaid and Long-Term Care is Hurting
Washington State (2004);
Medi-Cal LTC: Safety Net or Hammock? (2011);
The Maine Thing About Long-Term Care Is That Federal Rules Preclude a
High-Quality, Cost-Effective Safety Net (2013); and
Maximizing NonTax Revenue from MaineCare Estate Recoveries (2013).
LTSS Report:
“We compared the amount of taxes paid per capita by the study states to
explore two opposing concepts. The first is that a high tax rate per
capita could reflect a state’s willingness to invest in social
infrastructure, inferring a greater probability that they would be willing
to continue to do so for LTSS finance reform. … On the other hand, states
with higher than average taxes per capita may be reluctant to put in place
new programs requiring additional tax increases, feeling that citizens are
already paying enough in taxes. While there is a great deal of variation
in the ranking of taxes paid per capita among the case study states, five
of the six states are within the top half of the country in terms of
overall ‘tax burden,’ and four of them are in the top 11.” (p. 11)
LTC Comment:
A more credible interpretation is that lukewarmness toward expensive new
social insurance schemes documented in this study simply means overtaxed
citizens are increasingly reluctant to take on an even greater tax burden.
LTSS Report:
“In Appendix 2, we include state timelines showing key milestones in the
move to adopt these financing initiatives. They clearly illustrate that
the journey of reform is best described as a ‘long and winding road’
filled with both off-ramps and on-ramps.” (p. 12)
LTC Comment:
An objective interpretation of these financing initiatives’ sluggish
progress would use different metaphors, such as wild goose chase,
cul-de-sac and dead end.
LTSS Report:
“The profiles begin with a brief description of the type of initiative,
its current status and the nature of the coalition working on it. Also
summarized are the primary motivators driving the LTSS reform efforts
identified by respondents. These motivators include easing the burden on
family caregivers, concern about the growth in Medicaid budgets, financial
help for the middle class, improving financial access to LTSS services,
improving support for the LTSS workforce, and compensating for the failure
of the private market.” (p. 12)
LTC Comment:
All those “motivators” are fine goals. But don’t we need to understand
first why and how our existing LTC system, dominated by government funding
and regulation, came to have these problems? Don’t we risk making the
problems worse by adding more of the same? Forging ahead to propose more
government interference in the long-term care market without first
explaining how (1) the LTC burden became so great on family caregivers,
(2) Medicaid budgets exploded, (3) the middle class are financially
overburdened, (4) the workforce struggles and (5) private insurance
failed, is intellectually negligent.
LTSS Report:
“The driving force in California is the need to address what stakeholders
cited as ‘a rapidly rising and unsustainable’ Medicaid budget.
Additionally, there is concern with providing financial protection for the
state’s broad middle class. As one stakeholder stated the problem, ‘I
would say it’s primarily related to the fact that people who are above the
Medi-Cal eligibility level…I would say, the whole middle-income…of our
state, can’t afford the cost of long-term care. They’re having to
impoverish themselves…And Medi-Cal is not an ideal system…it has its own
challenges.’ Working with an outside actuarial firm, the coalition is
presently exploring a wide variety of program design options and the
pricing implications of each.” (p. 12)
LTC Comment:
This assessment of the long-term care problem in California would be
laughable if it weren’t so sadly mistaken. Middle class people in
California do not have to impoverish themselves to get long-term care. The
state has the most generous Medicaid financial eligibility standards of
any in the country and the biggest elder law bar artificially
impoverishing more affluent people. California Medicaid has not even
implemented some of the mandatory federal standards from OBRA ’93 and DRA
’05 designed to target Medicaid to the needy. Long-term care is a mess in
California because the state trapped its population on Medicaid by making
public welfare the path of least resistance for citizens who failed to
plan, save, invest, or insure for long-term care. For a full development
of this analysis, see
Medi-Cal LTC: Safety Net or Hammock? (2011).
LTSS Report:
“Hawaii does not currently have an LTSS social insurance program. However,
of all the case study states, they have the longest history of attempting
to pass a social insurance program for LTSS, as we describe below. …
Unlike other states reviewed here, current activity in Hawaii is more
narrowly focused on improving the caregiver support program rather than on
trying to develop a new social insurance program for LTSS. … In 2012, the
legislatively appointed State LTC Commission recommended establishing a
‘limited, mandatory public LTSS insurance program.’ It was to be funded by
a 0.5% general excise tax on businesses and would provide 365 days of
front-end insurance coverage paying up to $70 per day in benefits. The
measure failed to pass the legislature …. Social insurance for LTSS has
not been taken up since that time. Even so, Hawaii maintained its interest
in addressing resident LTSS needs but no longer through a social insurance
mechanism.” (p. 14)
LTC Comment:
Well, then, it sounds like Hawaii thoroughly explored and decisively
rejected the social insurance approach to long-term care. So why is Hawaii
featured in a study that limits “primary strategies” on page 5 to two:
either federal or state-based social insurance?
LTSS Report:
“Maine’s attempt at LTSS financing reform was based on a ballot initiative
– rather than the legislative approach in the other five states studied –
to establish a social insurance program focusing exclusively on
comprehensive in-home care. The ballot measure failed when put to a vote
in November 2018.” (p. 15)
LTC Comment:
What part of the public’s clear rejection of these tax-based social
insurance programs do these researchers not get? If you want to know
what’s really wrong with Maine’s long-term care system and what to do
about it, read this:
The Maine Thing About Long-Term Care Is That Federal Rules Preclude a
High-Quality, Cost-Effective Safety Net (2013).
LTSS Report:
“Michigan, like California, is in the earlier stages of building a
coalition and exploring approaches for a social insurance LTSS finance
reform solution. … The Michigan stakeholders are working in coalition, and
have hired an outside actuarial firm to model the pricing impacts of a
variety of program options. With the support of a state representative,
Michigan created the Bipartisan Care Caucus in 2017 to advocate for LTSS
care and finance reforms. … Legislation was introduced in the 99th
Legislature (2017-2018) to require a feasibility study on a variety of
LTSS finance and workforce reform proposals, including an actuarial study
of a social insurance model. … Stakeholder listening sessions, the
actuarial analysis, and a workforce analysis are in process. … The study
is due to be completed before December 1, 2020 and delivered to the
legislature within 60 days of the study completion date.” (p. 17)
LTC Comment:
More bureaucratic and legislative wheel spinning with no clue why the
problems they are trying to fix exist in the first place.
LTSS Report:
Minnesota’s “reform approach is unique in focusing on options to enhance
affordable private market solutions for middle income families. … For many
years, Minnesota has focused on raising consumer awareness of the need to
plan for LTSS needs and building better private LTSS financing vehicles to
meet the needs of the middle-income market. … The first product is called
LifeStage, a term life insurance policy that converts into long-term care
insurance coverage when someone reaches the ‘policy conversion age.’ … The
second product seeks to add expanded coverage for a package of home and
community services to Medicare supplemental health policies sold in
Minnesota.” (p. 18)
LTC Comment:
Finally, a state that is trying to make personal responsibility and
private insurance work. What Minnesota needs to understand is that what
has kept them from fully succeeding with that approach are myriad federal
Medicaid laws and regulations that prevent them from targeting Medicaid to
the needy so that middle class and affluent people have a stronger reason
to plan for long-term care before it’s too late for anything but Medicaid
to save their wealth. Instead of celebrating Minnesota’s more thoughtful
approach, the LTSS Report tells us that …
LTSS Report:
“the Governor appointed a Blue Ribbon Commission to study LTSS finance
reforms for Minnesota that go beyond these private sector product options.
The commission’s work is about to commence and a number of stakeholders
are interested in exploring social insurance options including a program
to provide catastrophic coverage for individuals with long-duration LTSS
needs.” (p. 18)
LTC Comment:
So even in a state that gets it, that understands personal responsibility
and private markets are the key to solving the long-term care problems
government created, the LTSS reporters still think what Minnesota really
needs is a Blue Ribbon Commission with stakeholders pushing social
insurance programs.
LTSS Report:
“With the passage of the Washington State LTC Trust Act in 2019,
Washington became the first state in the country to establish a social
insurance program for LTSS. … Premium collection for the LTSS program is
scheduled to begin in 2022, with full program implementation in January
2025. The LTSS program will be available to all employed state residents
(including those who are self-employed); it is funded through a mandatory
employee payroll tax of 0.58%. The program reimburses expenses up to $100
per day (with annual adjustments for inflation) for care provided at home,
in the community and in care facilities, up to a lifetime dollar maximum
of $36,500. All workers who contribute to the program become eligible for
benefits after an initial vesting period and once they meet eligibility
requirements based on functional or cognitive impairments.” (p. 19)
LTC Comment:
Washington’s program is the LTSS Report’s pièce de résistance. It has
everything. Government control; mandatory participation; no premiums until
2022; a payroll tax; and a vesting period before outlays begin. CLASS
redux? No, CLASS was voluntary. You could escape CLASS; not this program.
Unfortunately for its supporters, this program will never pay a dollar in
benefits. It will hit a brick wall of fiscal reality probably before any
premiums are paid and certainly before anyone vests. Washington’s
experiment with state-based LTC social insurance was doomed from the start
but the Covid-19 pandemic, the worsening recession, and irresponsible
federal monetary and fiscal policies sealed its fate earlier than
otherwise.
LTSS Report:
“The uniform view was that ‘success’—defined by an ability to form and
sustain a coalition, articulate a common goal, and (for states further
along in the policy development process) identify and/or implement a
specific approach or program—depends on effectively developing, mobilizing
and channeling ground-level demand for policy change.” (p. 21)
LTC Comment:
Is it any wonder none of these initiatives will succeed when they’re
grounded in bureaucratic claptrap like that? What’s really going on here
is that these researchers and the stakeholders they interviewed have
closed their minds to any facts or analysis that conflict with their
social insurance ideology. That ideology embraces the Marxist precept
“from each according to his ability to each according to his need.” Its
fatal flaw is that ability is scarce and need always devours any available
ability. Human nature rebels at self-sacrifice. Sacrificing ability to
need, the philosophical foundation of social insurance, destroys ability
without satisfying need. Thus good intentions pave hell. Using government
force to compel participation in idealistic social insurance schemes is
ironically what made long-term care so bad in the first place and why it
keeps getting worse.
#############################
Updated, Monday, August 10, 2020,
9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-032: LTC NEWS AND
COMMENT
LTC Comment: Do you spend hours
searching the internet for useful articles, key data, and relevant reports
to keep you on the forefront of professional knowledge? Do you lose
business because you’re blindsided by clients or competitors who learn
critical information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile
our daily LTC Clippings into a summary, email it to Center for Long-Term
Care Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
COVID-19 May Fix GE's Long-Term Care
Problem
-
Bullish Investors Still Targeting
Investment Returns Above 10%
-
COVID-19 long-term toll signals billions in
healthcare costs ahead
-
What We Know About Provider Consolidation
-
Baby boomers show concerning decline in
cognitive functioning
-
68 Million Americans Are Changing Their
Retirement Plans
-
COVID-19 could lead to billions in
long-term healthcare costs: experts
-
Despite PPE, healthcare workers face
greater risk of positive COVID-19 test
-
After COVID-19: A Health Care Forecast for
Older Americans
-
Approximately 95% of Green House homes have
reported zero cases COVID-19 among residents or staff: study
#############################
"LTC
E-Alerts" are a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, August 3, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-031: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Building The
Long-Term Care System Of The Future: Will The COVID-19 Nursing Home
Tragedies Lead To Real Reform?
-
Genworth Paid $10
Million in Q2 COVID-19 Life Insurance Claims
-
It’s ‘never too
late’ to prevent or delay dementia, international commission claims
-
Mourning The Many
Foibles Of Medicare And Medicaid At 55
-
COVID-19 Increased
LTCI Claimant Mortality 30%: Unum
-
Scientists get
closer to blood test for Alzheimer’s disease
-
Senior Living
Providers Net At Least $252 Million in Small PPP Loans
-
The COVID-19
Downturn Triggers Jump in Medicaid Enrollment
-
Flu and pneumonia
vaccinations linked to lower Alzheimer’s incidence
-
New Report:
Exploring LTSS Social Insurance Strategies in 6 States
-
Whole Life
Insurance … Love It or Leave It?
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Friday, July 31, 2020, 9:00 AM
(Pacific)
Seattle—
#############################
LTC Comment: Guest
author Claude Thau explains how to improve Medicaid LTC after the
***news.***
***
DEBT CLOCK: U.S. national debt is approaching $26.6 trillion. Average
debt per citizen is $80,506, $213,277 per taxpayer and $252,788.84 per
family. Unfunded liabilities, including $20.6 trillion for Social Security
(over 75 years, but
$53 trillion over the infinite horizon) and $31.9 trillion for
Medicare, total $153.6 trillion. The Federal Reserve has printed trillions
of new dollars unsupported by new goods and services. The pandemic removed
all stops on federal spending. Inflation hedge gold and silver prices
soar. Yet, as we’ll report next time, analysts know nothing to propose for
the long-term care problem besides more government spending, borrowing,
printing and regulation. ***
*** WHY JOIN THE
CENTER?: The
Center for Long-Term Care Reform’s mission is to “ensure quality
long-term care for all Americans.” We pursue that goal by conducting
research, publishing analysis and recommendations, supporting good public
policy, opposing bad policy, and helping everyone who works in long-term
care stay on the forefront of professional knowledge and expertise. Find
hundreds of our articles, speeches, and reports
here. Read 1,285 LTC Bullets, archived chronologically and by
topic
here. Take our virtual tour of the Center's website
here. Review our “Membership Levels and Benefits” schedule
here. Regular members ($150 per year or $12.50 per month) receive our
LTC Bullets and weekly LTC E-Alerts plus access to our
Members-Only Website (The Zone), which is full of special resources
including the comprehensive “Almanac of Long-Term Care.” Premium members
($250 per year or $21 per month) receive all of the above plus a
subscription to LTC Clippings, our daily alerts pointing you to key
articles, reports, or data that LTC professionals need to know before
they’re barraged by questions and objections from their prospects and
customers. Any individual or corporate member of the Center also has
access by phone or email to Center president Steve Moses for questions or
comments regarding all aspects of long-term care services and financing.
***
LTC BULLET: HOW TO
IMPROVE MEDICAID LTC
LTC Comment: What’s
right about Medicaid long-term care? What’s wrong? And what should we do
about it? Today, we turn over the editorial reins to one of the LTC
insurance industry’s leading lights, author, analyst, actuary, and broker
general agent Claude Thau. After Claude has his say, I’ll chime back in
with an LTC Comment anticipating and answering criticism his proposal is
likely to elicit.
The Medicaid long-term
care program is complicated. So here’s a brief set up for Claude’s piece:
Medicaid is a
means-tested public assistance program; in a word, welfare. To qualify for
Medicaid’s long-term care benefits, people must meet defined medical and
financial qualifications. The financial qualifications sound very
strict—monthly income of $723 or below and no more than $2,000 in
countable assets. But in practice, there is no limit on income as long as
a Medicaid applicant’s health and LTC expenses are high enough. Most of
seniors’ large assets, such as home equity, are exempt, and the rest are
easily converted to exempt status. As a rule of thumb, any medically needy
senior holding virtually unlimited exempt assets who has income below the
cost of a nursing home can qualify anywhere in the country for Medicaid
LTC benefits.
That is why Medicaid’s
estate recovery requirement is so important. It ensures that affluent
people pay back the cost of their care from their estates after they and
their last surviving exempt dependent relative pass on. Without estate
recovery, Medicaid rewards recipients’ heirs with a taxpayer financed
windfall, not for taking care of their parents, but for placing them on
public assistance. As Claude points out, the right way to look at generous
Medicaid long-term care eligibility tempered by estate recovery—or a
private loan program that could serve the same purpose—is to view it as an
excellent way to fund long-term care for people who need it, give them the
dignity of staying off welfare (it isn’t welfare if you pay it back), and
ensure that the public program does not disincentivize early and
responsible long-term care planning through private savings, investment
and insurance. For a full explanation of Medicaid long-term care benefits
and eligibility, see
Medicaid and Long-Term Care.
Medicaid Long-Term
Care Reform Suggestions
by
Claude Thau
Medicaid is a wonderful
program. In particular, it makes commercial long-term care services and
support (LTSS) available to indigent people.
It is critical that we
take steps to enable Medicaid to continue to provide such service. These
steps include:
- Encouraging
non-indigent people to take personal responsibility for their LTSS
costs, including, but not limited to, planning in advance
- Using
available resources most effectively to reduce the burden on Medicaid
- Encouraging
states to test ideas to help Medicaid
Aspects of the
current Medicaid LTSS system
In addition to serving
the indigent, Medicaid supports people who are not indigent. If
people had to sell their homes to pay for LTC, and then recovered, they
could not go back home. Therefore, we pay their LTSS costs, expecting to
recover our expenditure from their estate, as required by OBRA 1993 (i.e.,
we loan them money).
Not only do we pool our
money to provide such a loan, we provide that loan on an interest-free
basis! And it is a long-term loan, as it does not require
repayment until the care recipient dies. If the recipient’s spouse is
living in the house, the loan does not have to be repaid until the spouse
dies. If disabled or minor children live in the house or if adult children
who were caregivers for a couple of years live in the house, the loan
continues until they die or sell the house. If siblings were living in the
house for at least a year before the care recipient entered a nursing
home, the loan extends until their death.
Medicaid reimbursements
pay LTSS providers less than the cost of LTSS. At best, they pay marginal
costs without contributions to overhead and profit. When budgets are
tight, state legislators and governors may slash such payments even
further. Meanwhile government pushes provider costs upward with a variety
of mandates, such as quality controls, mandatory staff training, etc.
With low reimbursements,
LTSS providers cannot pay a competitive salary. So when they train staff,
the newly-trained person often secures a higher-paying job in a hospital
or elsewhere. The vacancy reduces the quality of care in the facility, and
the facility incurs cost hiring a new employee, who typically is less
experienced than the person who left.
LTSS providers may
suffer 100% annual turn-over, which means some jobs turn over more than
once; others not at all. Their best employees leave as they are most in
demand, but providers get stuck with their hiring mistakes. Surely, good
managers would fire weak performers, right? Unfortunately, it is not easy
to fire anyone when you are understaffed. As time goes on, the labor pool
quality, as regards caregivers, likely deteriorates. Even outstanding
nursing home managers have an extremely difficult time providing excellent
care in such an environment.
Private-pay
LTSS recipients in Medicaid-certified facilities get “taxed” in three ways
to support this system: 1) they pay income taxes to support Medicaid; 2)
they pay higher fees to LTSS providers (subsidizing the costs of Medicaid
recipients); 3) they can suffer from inferior care in facilities which
have many Medicaid clients.
Therefore, some savvy
private payors now avoid Medicaid-certified facilities. Instead of being
seen as a badge of honor, Medicaid “certification” may be viewed by some
people as a public announcement that cost transfer will occur and that
care might be inferior.
When our government
seeks loan repayment from the Medicaid beneficiary’s estate so that we
will be able to loan the money to another individual who needs LTSS, some
people bewail the plight of “poor Sarah” who wanted to leave her house to
her children, but whose estate had to sell the house because it was
partially encumbered by a government lien.
Of course, recouping
payments from indigent welfare recipients sounds harsh. However, Sarah and
other home-owners were not indigent. We all gave
Sarah a 20-year interest-free loan; all we are trying to do is to recover
the principal (no interest) so that we can lend the money to someone else.
Encouraging
non-indigent people to take personal responsibility
Providing such loans is
marvelous, but such loans should be provided through programs outside
Medicaid, some of which already exist but suffer from having to “compete”
against Medicaid.
When we provide such
loans through Medicaid:
a) Recipients
feel uncomfortable being "on welfare." They have scrimped and saved to
maintain their independence since their youth. Why should they be placed
on a welfare program when they are not indigent?
b) On
Medicaid, they are restricted to Medicaid-certified LTSS providers. They
cannot select the facility of their choice; nor can they have a private
room; nor can they select an assisted living facility, commercial home
care or reward relatives or friends for providing care. Eventually,
they’ll be paying for the services with their money. Why should their use
of their money be restricted?
c) Nursing
homes, receive inadequate government reimbursement, so they cannot afford
to pay competitive salaries. Shouldn’t providers receive full cost for
clients who are not indigent?
d) The
government loses revenue and incurs greater expenses.
We can improve this
situation by not putting people on Medicaid if their assets could fund
their LTSS. Instead, such loans could be financed privately. This simple
change would have dramatic impact:
1. Such
care recipients would no longer be upset that they are "on welfare."
2. They
would have flexibility to purchase the kind of care they want, from
whomever they want (instead of being assigned shared rooms in nursing
homes perhaps not located conveniently for family visits).
3. Many
more care recipients would remain “private payors” rather than being on
Medicaid. Providers would benefit from the resultant higher fees.
4. State
and federal governments will benefit from lower expenses and more revenue,
that is both above-the-line and below-the-line benefits!
5. People’s
buying decisions would encourage consumer-driven efficiency in the
marketplace. Consumer choice and increased profitability (due to fewer
low-margin Medicaid clients) would encourage more private investment in
LTSS, creating more jobs and better services.
6. Improved
care for LTSS recipients would ease burdens on family members, enabling
them to maintain employment and productivity more effectively.
7. The
additional provider revenue would lead to reduced cost transfer (less need
for private-pay clients to make up for the low revenue generated by
Medicaid LTSS recipients) and improved care.
8.
As everyone expects to have to repay a
loan, we avoid the problems of "repaying Medicaid" and "government liens."
Making such a change to
Medicaid would reduce state government expenditures in several ways:
a) There
will be many fewer people on Medicaid, so Medicaid payments for LTSS will
decrease substantially (benefitting the federal government as well as the
state government).
b) Additional
savings accrue from not having to determine whether such people are
“Medicaid eligible.”
c) The
cost of processing their Medicaid payments disappears.
d) The
entire administrative effort for recoveries can be dropped.
In addition to the
substantial savings in expenses mentioned above, there is an increase in
revenue!
- The
additional income of LTSS providers will be taxable, directly if they
retain the money or through their staff if their staff’s salaries are
increased.
- More people
will opt to purchase long-term care insurance (“LTCi”). To the degree
that more people buy LTCi, insurers will pay state premium taxes and
federal income taxes.
- Insurance
brokers will pay state and federal income taxes on their commissions.
- Residents
who use insurance money (rather than personal income or assets) to pay
for LTSS will retain greater invested assets which will generate income
taxes.
- More people
will opt for reverse mortgages. Commercial lenders and reverse mortgage
brokers who participate in the resultant increase in reverse mortgages
will also pay income taxes.
All of the above, except
the investment income, involve an additional circulation of money through
our nation’s economy, producing additional government income with no
offset. Such revenue is significant.
The State also benefits
because there will be more investment in LTSS and more consumer control
over selection of their LTSS provider. Because of better quality LTSS,
some family members are likely to be able to continue to be gainfully
employed, thereby generating additional taxable income. In other cases,
there will be more incentive for family care-giving.
The National Council on
Aging reported that 48% of households headed by someone age 62 or older
could get a reverse mortgage, for an average of $72,128/year.[1]
That would go a long way toward reducing our Medicaid LTSS budget. The
Center for Long-Term Care Reform estimates that $30 billion could be saved
annually.[2]
Thus, my #1 suggestion
for Medicaid Reform is to discontinue giving loans through Medicaid. Shift
such loans to programs established for the purpose of providing loans.
Of course, we could also
encourage personal responsibility by making it harder to reposition assets
in order to qualify for Medicaid LTSS and by promoting LTCi, reverse
mortgages and personal savings. One attractive idea is to permit tax-free
and penalty-free withdrawals from retirement savings accounts to purchase
LTCi. Another would be to allow reverse mortgages for ages under 62,
perhaps with restrictions (such as spousal approval).
Using available
resources most effectively to reduce the burden on Medicaid
Currently, life
insurance policies with cash value greater than $1500 must be surrendered
for their cash value, which must then be spent down, prior to obtaining
Medicaid LTSS.
However, those policies
are generally worth significantly more than their cash value because the
life expectancy of the insured person is relatively short. The greater
value can be accessed by creating an irrevocable LTSS account or by
selling the policy on the secondary market.
For example, according
to “The
Treatment of Life Insurance as an Unqualified Asset for Medicaid
Eligibility”: “By converting an existing life insurance policy to a
long term care Assurance Benefit plan, the owner is spending down the
asset towards their cost of care in a Medicaid compliant manner while
still preserving a portion of the death benefit. If the insured passes
away while spending down via their Assurance Benefit enrollment, any
remaining death benefit would pay out to the designated beneficiary
without being subject to Medicaid recovery.”
We should attempt to
leverage the true value of such insurance policies. In that vein, the
National Conference of Insurance Legislators (NCOIL) supports requiring
life insurers to inform policy owners about options to consider instead of
abandoning an in-force policy. Regardless of whether someone supports such
legislation or not, some type of education to help people stay independent
and to save Medicaid money is desirable.
This option also allows
the owner to preserve a portion of the death benefit throughout the
spend-down period, protecting it from Medicaid Recovery legal action
against the estate.
Another way to use
existing resources more efficiently would be to enact measures that would
reduce the cost of liability insurance for LTSS providers. Tort reform
could help boost our economy in several respects, well beyond simply the
cost of LTSS.
A third way to use
available resources more efficiently might be to facilitate use of
under-utilized housing for LTSS. For example, many widows took care of
their husbands, thereby developing LTSS expertise and now live in an
otherwise-empty house with time on their hands and perhaps low income. If
neighbors could access these people’s caregiving expertise, we might
improve care while reducing expenses.
Encourage states to
test ideas to help Medicaid
It may also be a good
idea to allow states more freedom to obtain Medicaid waivers to try
programs to encourage personal responsibility, reduce costs and leverage
resources more effectively. For example, it would be great to find that a
package of reform measures stabilizes the system sufficiently to allow
Medicaid to pay for more home health care.
Summary
We need to continue to
provide LTSS to the indigent and should attempt to improve the quality of
that care. Medicaid reform is a topic that deserves a lot of attention.
This paper supports the following changes:
- Continue to
provide loans to people who need LTSS but lack liquid assets, but do so
through existing (or new) private lending programs rather than through
Medicaid.
- Allow
withdrawals from qualified retirement accounts to purchase LTCi, without
incurring taxes or penalties.
- Encourage
leveraging the value of life insurance policies rather than having them
surrendered for their “cash value.”
- Allow
reverse mortgages for ages under 62, perhaps with restrictions (such as
spousal approval).
- Encourage
more discussion of ideas to accomplish these goals, such as making it
harder to reposition assets in order to qualify for Medicaid LTSS;
support and promoting LTCi, reverse mortgages and personal savings; tort
reform; and accessing the LTSS skill of people who provided LTSS to a
family member until the family member’s death and now have time
available to provide care to others.
- Grant
greater freedom to states to experiment with programs consistent with
these goals.
These simple changes
would have dramatic impact:
a) Care
recipients with assets would no longer perceive themselves as “being on
Medicaid.”
b) Care
recipients would have greater control and flexibility with respect to the
care they receive.
c) More
care recipients would remain “private payers” rather than being on
Medicaid. Providers would benefit from the resultant higher fees.
d) Providers
will flourish, resulting in more investment and innovation in the area of
LTSS.
e) Family
caregivers may be less-burdened, hence may be more productive, stimulating
the economy.
f) Governments
will earn more revenue, while also reducing their expenditures.
Republicans should
support these ideas because they strongly favor personal responsibility
and reducing unnecessary government involvement. Democrats should support
these ideas because they focus our limited resources on helping the truly
needy.
Claude Thau is
National Brokerage Director for USA-BGA (cthau@usa-bga.com)
and President of Thau Inc. (consulting;
claude.thau@gmail.com). You can call him at 913-707-8863.
LTC Comment:
Claude’s ideas are thoughtful and thought-provoking. I share them, but in
my mind I can hear the strident objections coming from analysts and
advocates who prefer more, not less, government money and regulation in
long-term care. So here’s how I’d reply to some of those objections. For a
comprehensive response, see
Medicaid and Long-Term Care.
Objection:
Despite anecdotes about the “wealthy on welfare,” that rarely happens.
Most people on Medicaid are poor.
Response: Of
course most people on Medicaid are poor. They’re also young women,
children or able-bodied adults, not aged, blind or disabled. What matters
is that financial eligibility rules for Medicaid long-term care
applicants, who are aged, blind or disabled, are extremely generous, a
vast literature on how to qualify while preserving assets is readily
available, and an army of Medicaid planning attorneys helps even the most
affluent fit through Medicaid’s elastic loopholes. In fact, there is
plenty of evidence, as summarized in
Medicaid and Long-Term Care that people with significant wealth
actually do take advantage of these benefits in large numbers. Read it and
see.
Objection: As
Claude admits, Medicaid has a reputation as a poor program with serious
access and quality problems. Why would well-to-do people seek access to a
program like that?
Response:
Medicaid isn’t such a bad program for people with enough personal wealth
to pay privately for a while. Medicaid planning lawyers call that “key
money,” because it buys access to the best care. Medicaid planners
reassure adult children that it’s OK to take an early inheritance from
their parents’ savings in order to qualify them for Medicaid, because they
don’t have to worry about the horror stories they hear regarding Medicaid
nursing homes’ poor quality. By paying privately for a few months, these
affluent clients buy their way into the best facilities. Nursing homes
roll out the red carpet for private payers because they charge them half
again as much as Medicaid pays. Once in the nice facilities, residents
can’t be evicted just because their payment source changes. So the lawyer
flips a legal switch, converts the client to Medicaid, and the family gets
the dual benefit of avoiding the cost of care and knowing the loved one is
in a top quality nursing home. Unfortunately, poor people don’t have key
money. They lose everything they’ve saved quickly and they end up in the
100 percent Medicaid hell holes the media write about. For details on
“Medicaid estate planning,” including its techniques, availability, and
why analysts and advocates ignore or downplay it, see
Medicaid and Long-Term Care.
Objection: Home
equity is by far the biggest potential source of private financing in
Claude’s plan, but most older people receiving Medicaid long-term care
benefits don’t own homes. So the potential is very limited.
Response: The key
question is not how many people currently on Medicaid own homes. The right
question is how many older people on Medicaid owned homes 20 years ago and
what happened to that home equity? Was it transferred to heirs five years
before applying for Medicaid, making it uncountable in any amount, as all
the Medicaid planning lawyers and books urge people to do? It’s a wonder
any home equity remains with people after they need long-term care. Yet
GAO found that 31 percent of the Medicaid nursing home recipients in
its sample owned homes. See
Medicaid and Long-Term Care, p. 56 for details and the full
citation. If the GAO sample were projectable to the country as a whole,
which it is not, it would mean “887,598 Medicaid nursing home recipients
nationwide or 275,155 recipients own homes with a median equity value of
$50,000, [so] at least $13.8 billion worth of their home equity is
non-countable, a figure that is 1.7 times the annual $8.1 billion cost of
their care.” If this is true, it shows Claude’s proposal has very
substantial savings potential. Granted we cannot depend on this particular
study, but why aren’t scholars conducting research that is projectable
nationwide? For the answer to that question and for an explanation of why
analysts have ignored the larger phenomenon of Medicaid overuse by people
with significant wealth, see again
Medicaid and Long-Term Care.
Objection: Why in
the world would we want to fix Medicaid when a much better approach to
funding and providing long-term care is available? Just pass and implement
a universal public catastrophic long-term care insurance program as
proposed by several study groups.
Response:
Government funding and regulation of long-term care caused the problems
long-term care faces today.
Medicaid and Long-Term Care explains in historical
detail how that happened. Compelling Americans to buy government-designed
insurance they may or may not need or want will only further desensitize
the public to the risk and cost of long-term care. The greater probability
we face is that government entitlements like Medicaid, Medicare and Social
Security will succumb to financial dissolution rather than a new program
appearing to cover long-term care. We need more thinking outside the box
like Claude Thau’s and less regurgitating worn out policy themes by
ideologically biased researchers.
#############################
Updated,
Monday, July 27, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-030: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Pandemic-Driven
Change: 60 Seconds with Steve Monroe
-
Temporary Enhanced
Federal Medicaid Funding Can Soften the Economic Blow of the COVID-19
Pandemic on States, but is Unlikely to Fully Offset State Revenue
Declines or Forestall Budget Shortfalls
-
New study reveals
older adults coped with pandemic best
-
Biden Makes Big
Commitment To Home-Based Medicaid Long-Term Care, But Gaps Remain
-
Older adults
excluded, underrepresented in clinical trials for COVID-19
-
Take the insurance
coverage and risk COVID-19?
-
Ten Targets for
Reducing Alzheimer's Risk
-
Now Available:
2019 Profile of Older Americans
-
Another Problem On
The Health Horizon: Medicare Is Running Out Of Money
-
More REM Sleep
Needed to Reduce Mortality Rate in Older Adults
-
Elderly who
distinctly smell roses, paint-thinner or lemons 'have half the risk of
dementia'
-
Senior living
needs ‘substantial and immediate financial relief’ from COVID-19,
leaders tell federal government
-
Home Health in the
Time of COVID-19
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, July 20, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-029: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- The case for defunding nursing homes and replacing them with a
radically different model
- Joe Biden Is Slowly Acknowledging the Nation’s Need To Reform
Long-Term Care
- Millions of Seniors Live In Households with School-Age Children
- Survey: 80% of Older Adults Have Faced Ageism
- Nursing facilities in ‘hot spots’ to receive first batch of COVID-19
test equipment
- Federal Government Will Send Point-of-Care COVID-19 Testing Units,
Kits to All Nursing Homes in U.S. [Updated]
- Journal Special Edition Dedicated to COVID-19 and Older Adults:
Lessons From the Pandemic
- Regulators May Hire LTCI Block Extraction Advisor
- Woman gets job at long-term care facility to see her husband amid
pandemic restrictions
- States Allow In-Person Nursing Home Visits As Families Charge
Residents Die ‘Of Broken Hearts’
- Medicare Advantage Plans Increase, Improve Quality Over FFS Plans
- Andrew Cuomo’s Report on Controversial Nursing Home Policy for COVID
Patients Prompts More Controversy
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, July 17, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: THE CRISIS ON TOP OF THE CRISES
LTC
Comment: What could be worse than the current cataclysm of nursing-home
coronavirus deaths? More of the same if we keep doing what caused them.
Explanation after the ***news.***
***
THE DEBT CLOCK
shows the U.S. national debt exceeds $26.5 trillion, up more than another
quarter trillion dollars since our
last LTC Bullet
nine
days ago. Total unfunded liabilities, including $20.6 trillion for Social
Security and $31.9 trillion for Medicare, are $153.3 trillion. Every
citizen owes $80,387. The federal budget deficit was
$2.7 trillion
in the first nine months of fiscal year 2020. Where is the federal
government getting all this lucre to spend? It’s printing the money,
creating it out of thin air, and borrowing it by purchasing its own and
private companies’ bonds, even their junk bonds. At some point, maybe not
far off, printing more money won’t work because more money will no longer
buy the same quantity of goods and services which are not being produced
because of the lockdown-induced recession. Borrowing more won’t work
because our own people, foreigners and other countries will lose
confidence that America will ever be able to repay the loans, which it
can’t. They’ll stop lending to us. Higher taxes won’t help because they
would only stymie the real economy even further. In the end, inflation—the
most grievous tax of all—will wipe out most government and private debt,
effectively confiscating most private wealth held in dollars. Borrowers
benefit; savers suffer. That is the danger of the course we are on. ***
***
THE TRAGIC IRONY of the Covid-19 crisis is that government responded by
locking down the businesses and people least vulnerable to the virus while
exposing the most vulnerable of all, residents in nursing homes, to sick
and recovering patients from overburdened hospitals. For months, nursing
homes begged for more personal protective equipment, testing, and funds to
little avail. But as we pointed out in this LTC Clipping, that’s
finally beginning to change.
7/16/2020,
“Nursing
facilities in ‘hot spots’ to receive first batch of COVID-19 test
equipment,”
by Alicia Lasek, McKnight’s LTC News
Quote:
“Nursing homes with three or more COVID-19 cases will be the first to
receive on-site diagnostic test equipment from federal health agencies —
starting in regions where infections are spiking. The news was announced
Wednesday by the Centers for Medicare & Medicaid Services, a day after
Administrator Seema Verma revealed a new federal plan to deploy rapid
point-of-care COVID-19 testing capabilities to eldercare facilities
nationwide.”
LTC
Comment:
Harvard professor David Grabowski
found that
nursing home coronavirus deaths were highest in geographic areas with the
highest Covid-19 incidence. Other factors, such as Medicaid census or
for-profit status, didn’t seem to matter much. Businesses have to
prioritize. Governments rarely do. So this new focus on protecting nursing
home residents in high virus areas is a promising development. See
tomorrow’s LTC Bullet titled “The Crisis on Top of the Crises” for
more on this aspect. [Read it today below.]
To
receive LTC Clippings in real time,
join the Center
at the “Premium”
level. Steve Moses will become your research assistant. He reads
everything related to long-term care services and financing; he culls out
what’s most important for you to know; then he emails you with the title,
author, a representative quote, a link to the source, and his brief
analysis. In this way, you can stay abreast of all the news, reports,
articles, data and stories about LTC that you need to know without having
to do so much research yourself. Spend your time doing what you do best;
let Steve do the time-consuming, painstaking research. Contact him at
425-891-3640 or
smoses@centerltc.com
or simply join
here.
***
LTC
BULLET: THE CRISIS ON TOP OF THE CRISES
David Grabowski is everywhere these days describing and explaining the
Covid-19 disaster in nursing homes. The Harvard professor aptly documents
how an epidemiological crisis on top of a long-term care financing crisis
has devastated America’s nursing homes and the people who depend on them.
But there is another crisis on top of those two, which poses greater
danger than either. That is the risk and likelihood that public policy
will make these problems worse instead of better.
Dr. Grabowski observed in a recent
presentation
that “deaths in long-term care facilities account for a majority of
COVID-19 deaths in most states.” The US average is 45%, close to the OECD
average of 42%. I note that
Canada is even worse
with 80% of coronavirus deaths in nursing homes. To stem this viral tide,
U.S. nursing homes locked down, allowed no visitors, closed communal
dining, and took staff temperatures at the start of each shift. Yet 66,000
staff with very limited personal protective equipment, testing, hazard
pay, benefits, and sick leave, contracted the virus. Hundreds have died
doing these very dangerous jobs.
What caused this awful situation? Grabowski says it’s a combination of
things: low Medicaid reimbursement; poor staffing and infection control;
clinicians “missing in action”; ineffective regulations; lack of quality
transparency; and fragmented ownership structures. I’d summarize in one
word—government—because government is responsible for all of these
shortcomings including the “fragmented ownership structures” that private
sector firms set up to take advantage of the perverse financial and
operational incentives that public policies require.
Now consider Dr. Grabowski’s counter-intuitive research findings. Covid-19
nursing home deaths do not correlate with a higher or lower rating
on CMS’s nursing home compare five-star quality rating scheme, nor do they
correlate with having a prior infection violation, nor with whether a
facility is for-profit or part of a chain. Even a high Medicaid census,
despite that program’s notoriously low reimbursement and poor facility
staffing levels, doesn’t signal greater nursing home virus risk. Grabowski
summarizes that what matters is where you are—in geographic areas with
higher Covid incidence—not who you are—such as a Medicaid recipient in a
low quality nursing home. Bottom line, residing in a nursing home during
the coronavirus contagion is deadly. It’s just more deadly if you live in
an area with a higher incidence of Covid-19 in the local population.
So, we can extract two key points from Dr. Grabowski’s analysis. First,
government funding and regulation of long-term care are responsible for
the problems, such as poor funding, staffing, infection control, and
quality, which killed so many people in nursing homes. Second, residing in
a nursing home is dangerous during the contagion and much more so if your
nursing home happens to be in a geographic area heavily stricken by
Covid-19. How can we address both of those problems effectively?
The obvious answer is to divert people away from nursing homes as much as
possible in the future. But that just begs the larger question: Why are so
many people living in nursing homes in the first place, sharing
underfunded “semi-private” rooms with potentially contagious roommates?
The answer to that question is that Medicaid started making nursing home
care virtually free for the poor, middle class and affluent in 1965 and
has continued to do so ever since. Efforts to rebalance Medicaid from
institutional to home care have partially succeeded but totally failed to
save money as they were intended and expected to do. The only permanent
answer is to end the perverse incentive of easy access to Medicaid
long-term care after it is too late for people to save, invest or insure
for the risk. To do that, save Medicaid money, improve care, and support
more people in their own homes requires only clear thinking, objective
analysis, and better public policy. I’ve provided those in
Medicaid and Long-Term Care.
Thus the “crisis on top of the crises” is that we’ll keep doing what we’ve
always done, which has caused the human tragedy in nursing homes that
we’re now experiencing, and we’ll get ever more of the same. Instead, stop
trapping people in Medicaid nursing homes by luring them away from early
and responsible long-term care planning. Eliminate or radically reduce
Medicaid’s gargantuan home equity exemption, upwards of $900,000 in some
states but no less than $595,000 in any state, so that middle class and
affluent people will use the wealth in their homes to fund care leaving
more in Medicaid for the actually needy. Enforce estate recoveries, which
have been mandatory since 1993, but largely unenforced. Use some of the
savings to incentivize the purchase of private long-term care insurance.
Legislate, implement and enforce these and the other recommendations in
Medicaid and Long-Term Care.
The only good news in this whole tragic mess is that it has been
self-inflicted by terribly counterproductive public policy and could be
easily reversed with the better, more efficacious policies we’ve
identified and recommended in that monograph.
#############################
Updated,
Monday, July 13, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-028: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
BREAKING NEWS: CMS
directing ‘immediate’ help to nursing homes in COVID-19 ‘hotspot’ areas
-
Insurance getting
much more expensive, when it’s available
-
Medi(long-term)care for All: A Look into the Future of Long-Term Care
Insurance—Part Two
-
Nevada lawmakers
consider slashing millions in Medicaid services
-
This Threat Scares
Investors More Than the IRS: Lincoln Financial
-
Why Nursing Homes
Are Pandemic Hotbeds (Guest: Stephen Moses)
-
Milliman Actuary:
COVID-19 Adding Fuel to Medicare Advantage’s Home Care Fire
-
Covid-19: Don’t
Mess With My Retirement
-
Skilled Nursing
Occupancy Fell to 78.9% in April as Medicaid Rates Jumped 5%
-
State Regulators
May Form LTCI 'Rate Hike v. Reduced Benefits' Panel
-
COVID-19 has not
changed consumer sentiment toward seniors housing: survey
-
Employee spread —
not controversial admission policy — was driver behind COVID-19 deaths,
report finds
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Monday, July 6, 2020, 8:51
PM (Pacific)
Seattle—
#############################
LTC BULLET:
WHAT TOPICS AND SPEAKERS DO YOU WANT FOR THE NEXT ILTCI?
LTC Comment: Wouldn’t a
debate on the merits and potential of private vs. public long-term care
financing spice up the next ILTCI conference? Offer your own suggestions
to the event’s organizers after the ***news.***
***
THE DEBT CLOCK shows the U.S. national debt will soon exceed $26.5
trillion, up nearly another quarter trillion since our
last Bullet ten days ago. Total unfunded liabilities,
including $20.6 trillion for Social Security and $31.8 trillion for
Medicare, are $153 trillion. Every citizen owes $80,285. At the rate we’re
going, this
2024 version of the Debt Clock estimates the debt four years from now
will be $45.3 trillion with unfunded liabilities of $199.4 trillion on a
debt per citizen of $131,857. So eat, drink and be merry until the bill
comes due for this paroxysm of funny money printing and spending by the
Federal Reserve and Treasury. ***
LTC BULLET: WHAT TOPICS
AND SPEAKERS DO YOU WANT FOR THE NEXT ILTCI?
LTC Comment: The
coronavirus curveball ruined all our plans to learn and network at the
2020 Intercompany Long-Term Care Insurance conference. After fighting to
save the program, the ILTCI Executive Committee finally had to surrender
to hard reality and cancel. But the ILTCI conference is back on for
Monday, March 8, 2021 through Thursday, March 11, 2021 at the same
Sheraton Downtown venue in Denver, CO where we would have met this year.
The 2021 convocation
will be ILTCI’s 20th, so it is special. To mark the occasion,
organizers have appealed to all potential attendees for their suggestions
of “topics or content” to present and of speakers to address them. I don’t
recall such a general invitation having been made before. It’s a great
idea. I hope everyone will rack their brains and pour their recommended
ideas in to the organizers. Here’s their appeal:
“Planning for the ILTCI
Conference is underway and we can't wait to see you in Denver, Colorado
from March 8-11, 2021. But first...
“We need your help with
planning!
“What topics or content
do you want to hear about? Have you thought of a session topic or speakers
you'd want to present at the next ILTCI? This is your opportunity to help
shape the 2021 conference! If you want to offer your assistance in
producing or speaking at a session, this is also the time to raise your
hand and get involved. Session ideas are being generated now and we want
to make this a collaborative process with your feedback.
“Please complete this
quick 4 question survey and enter one session idea or speaker suggestion
at a time through this simple tool. There will be a link to enter
additional ideas at the end of the survey for anyone with multiple
ideas/speakers to submit. We know you have some good ideas for session
content and topics - send them in and let’s collaborate for the 2021 ILTCI.”
At my request organizers
agreed to extend the deadline for submitting your content and speaker
recommendations from the original deadline of Friday, July 10 until
Tuesday, July 14. So, don’t wait—click “Submit your Ideas” now and offer
your suggestions.
To spur your creative
thinking about possible conference ideas, review the “History
of Long-Term Care Conferences” that we published last year. You’ll
find summaries of each ILTCI conference including the first, held January
21-23, 2001 in Miami. You’ll also discover some old photos of some LTCI
leading lights who are still active in the field today, some with less
hair and more heft, but still loaded with institutional memory and savvy.
No one concerned about long-term care financing should miss the
opportunity to confer with the long-term care insurance industry’s leaders
at the 2021 ILTCI conference in Denver.
Now, while you cogitate,
decide and submit your ideas for topics and speakers at the forthcoming
conference, please consider my hopeful proposal.
I love debates. There is
no better way to get a lot of ideas on the table in a hurry with
contrasting points of view compellingly revealed. Nothing culls out bad
ideas and elevates good ones like two contrasting experts challenging each
other’s positions. So let’s debate this question at the next ILTCI
conference: “Can and Should Private Financing Become a Bigger Funder of
Long-Term Care than Government?” I’ll take the positive and I invite any
of the leading advocates of expanding publicly financed long-term care
coverage to take the negative. I’d especially like to debate Marc Cohen,
Judy Feder, or Howard Gleckman, but there are many others who could bring
the case for more government money and regulation thoughtfully.
As format for the debate
I recommend the structure used by the distinguished
Soho Forum of New York City. For their programs, the audience votes
yes or no on the question under consideration both before and after the
debate. The discussant who changes the most minds wins. The debate begins
with each discussant delivering a 15-minute opening statement. Then each
has five minutes for rebuttal followed by questions from the moderator,
from each other and from the audience. Five minute closing statements end
the debate. After the votes are counted, the winner is announced. (By the
way, since the pandemic has shut down in-person events, the Soho Forum has
gone virtual. You can follow their debates in Zoom
here.)
The ILTCI Conference
has a long history of hosting debates. There were probably others, but
these are the ones I recall distinctly and fondly:
At the fourth annual
Society of Actuaries Long-Term Care Insurance Conference (the meeting’s
name before ILTCI) in Houston, Texas on February 10, 2004, I squared off
with
Dr. Judith Feder, then Professor and Dean of Public Policy at
Georgetown University.
Winthrop Cashdollar, then the Executive Director for DI & LTCI at
AAHP-HIAA, moderated. My assignment was to make the case for more
private financing of long-term care. Dr. Feder argued for heavier public
funding. My remarks at the time are available
here. Judy Feder is a distinguished scholar and more active than ever
today researching and promoting her preferred solutions.
In 2011, the CLASS Act
was the hot topic at the eleventh annual Intercompany Long Term Care
Insurance Conference in Atlanta.
Peter Goldstein, then of Univita, now
LTCG, moderated a program titled “Panacea or Problem:
Point/Counterpoint on CLASS,” in which
John Greene of
NAHU and I debated Ted Kennedy-protégé Connie Harner and Rhonda
Richards of AARP.
Eileen Tell enforced time limits on the debaters. I’m not saying John
and I won, but CLASS was later repealed. Check out my three-minute
opening statement
here where I proposed a CLASS-like program called “Steve’s Insurance,
LTC for You” or SILY for short. It involved no policies, no underwriting,
no set premium levels, benefits, or triggers; you’d pay premiums for five
years before you’d qualify for benefits; I’d spend all the proceeds as
soon as they come in, but our trust fund would have lots of IOUs, uh
bonds. In other words SILY was just like CLASS.
But the
pièce de résistance was
the “Clash of Titans” at the 2012 ILTCI conference in Las Vegas. Here’s
how I described that program at the time in “LTC
Bullet: LTC Embed Report from the ILTCI Conference in Las Vegas”:
“Now to recount the most
fun that was had at the conference. In the afternoon of DAY ONE, a great
debate ensued titled “Clash of the Titans: Moses vs Gordon on Medicaid and
Other Dark Matter.” Ably produced and moderated by Federal Long-Term Care
Insurance Program [now
FedPoint] CEO
Paul Forte, the program included a dramatic “fight poster” inviting
the audience to attend, slides featuring great debates of the past,
e.g. Lincoln vs. Douglas, etc., and a dual-podium presidential-style
debate format. Moses and lawyer/author/entrepreneur
Harley Gordon each began with 3-minute opening statements. (Find a
transcript of the “fable” I began with at the end of today’s Bullet
or
here.)
After a coin flip to see
who would get the first question, Forte pummeled the combatants in turn
with six queries ranging from why the LTCI market languishes to what
they’d advise presidential candidates to say about LTC financing. Answers
were strictly enforced to no more than two minutes, with a one-minute
rebuttal, and a final 30-second “re-direct” by the original answerer.
The program moved fast
with lots of humor and more than just a little gentlemanly confrontation.
In the second phase of the debate, the participants asked each other
questions, with the same time limits applying. Neither knew what the other
would ask so the questions and responses were totally spontaneous.
Finally, the audience submitted written queries pinning down the debaters
with new and different viewpoints.
Bruised, bloodied, but
upright, Moses and Gordon shook hands at the end and affirmed they remain
friends. They look forward to continue pursuing their different paths
toward the common goal to improve long-term care for all.
Who won? Just between
you, me and the lamppost, here’s how LTCI producer and author Craig
McCormick, a former college debater himself, scored the matchup: 13 to 4,
for Moses. Now, I acknowledge that Mr. McCormick may have a bias in my
favor. So I invite any of you faithful readers out there who may have
attended the debate to weigh in with your own scoring of the event. I’d
particularly like to hear from anyone who gave the win to Harley instead
of me. Well, I want to hear from anyone except you, Harley! I’ll publish
any thoughtful comments or analysis of the debate in a future LTC
Bullet. Let us hear from you.
“The Elephant, the
Blind Men and Long-Term Care: Three-Minute Opening Statement” by
Stephen A. Moses for the Debate with Harley Gordon at The 12th Annual
Intercompany Long-Term Care Insurance Conference in Las Vegas, Nevada on
Monday, March 19, 2012
Once upon a time, some
blind men approached an elephant.
The first blind man
grasped the elephant’s tail and exclaimed: “This is a rope.”
The next blind man
patted the elephant’s flank and said: “This is the side of a barn.”
A third blind man
clutched the elephant’s trunk and stated confidently: “This is a hose.”
The moral of this
fable?
You don’t know any
complex thing until you comprehend its entirety, including all of its
facets and their interrelationships.
Long-term care is like
the elephant in this story and LTC interest groups are like the blind men.
Government is a blind
man of long-term care. It’s paid for most expensive LTC since 1965, but
can no longer afford the cost. The elephant of LTC gobbles budgets.
The public is a blind
man of LTC. Most people don’t worry about LTC despite the apparent risk
and cost. Somehow the elephant of long-term care provides.
Senior advocates blindly
demand more and better long-term care from the government. To them the
elephant of LTC is a cornucopia of free benefits.
Home care and nursing
home providers obsess over low government reimbursements. They see the
elephant as a stingy, but demanding customer.
What do long-term care
insurers see when they look at the elephant of LTC? A puzzle. Why don’t
consumers buy the product when they obviously need it?
If you want to
understand the elephant of long-term care, you’d better be able to explain
why those five blind men see the elephant so differently.
How can the government
be bankrupt; the public, asleep; senior advocates, naïve; LTC providers,
spoiled; and LTC insurers, befuddled? All at the same time.
No new policy designs,
nor tax incentives, nor education programs will sell more LTC insurance
until we resolve that paradox.
Here’s how I see it:
Government pays for most
expensive LTC which desensitizes consumers to LTC risk resulting in a lack
of demand for LTC insurance. But senior advocates and LTC providers are
hooked on government money and dubious of private LTCI.
Nothing will end this
stalemate short of weaning the elephant of long-term care away from the
trough of public financing.
That’s what’s about to
happen, either on purpose or by default, and that’s why the future of LTC
insurance is bright.
#############################
Updated,
Monday, July 6, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-027: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
- The Next Pandemic Will Be Caused by the National Debt. It Will
Crater the Economy
- Coalition forms to oppose potential long-term care budget cuts
- OSHA blasted for inaction on COVID-19 pleas
- Returning Home To Assisted Living
- Genworth Says Would-Be Buyer Is Having Trouble Closing on Financing
- Amid pandemic, fears that older Americans are feeling 'expendable'
- Strong job growth predicted for aides and other care positions in
senior living and other settings
- Housing wealth among older homeowners grew by $120 billion in Q1:
report
- NIC point-in-time survey shows COVID-19 cases, testing higher in
settings where residents have greater care needs
- Long Term Care Insurance — Act Now!
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, June 29, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-026: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
New Data Reveal
Just How Deadly Covid-19 Is for the Elderly
-
LTC Partners
Announces Rebrand to FedPoint
-
Nursing Homes
Struggle As Staff Choose Unemployment Checks Over Paychecks
-
CNA to Offer Some
LTCI Insureds Free Concierge Services
-
‘Sin Taxes’ Could
Help States in Pandemic Budget Slump (at Least a Little Bit)
-
National median
age increases 1.2 years as aging baby boomers grow older
-
Long-term care
facilities as a risk factor in death from COVID-19
-
Younger adults
most interested in solutions to pay for chronic care as they age: survey
-
A third of
Medicare enrollees with coronavirus ended up in the hospital. A quarter
of them died
-
Are Your Long-Term
Care Plans Putting You in Danger?
-
Better COVID
payments driving Medicaid-resident evictions: report
-
Senior healthcare
workers are the forgotten front line
-
The Future of
Nursing Homes in the Post-COVID-19 Era
-
Older adults
concerned about retirements, look to alternatives to pad portfolios:
surveys
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, June 26, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Comment:
The
Heartland
Institute
recorded a podcast with Steve Moses concerning “Covid and Nursing Home
Deaths.” A transcript follows after the ***news.***
***
DEBT CLOCK:
The U.S. national debt is 26 trillion, 258 billion dollars, fully one
quarter of a trillion dollars higher than it was when we published
our last
LTC Bullet
two weeks ago. In that time, total unfunded liabilities jumped nearly $5
trillion. Every citizen owes $79,588 and every taxpayer owes $211, 222.
We’re in a financial sinkhole, but the politicians just keep digging. What
will happen if we stay on this course? Stay tuned. ***
*** THE
MEDICAID TRAP remains where most people end up if they have a big
long-term care expense and they’ve failed to prepare to pay privately.
What’s changed recently is how serious the outcome of ending up on
Medicaid for long-term care really is. That’s the topic of the following
podcast and of “Nursing
Homes, Coronavirus, and Medicaid,”
my June 1st Wall Street Journal op-ed with Brian Blase.
If you’re in the business of helping people prepare for future long-term
care liability, you owe it to your prospects and clients to warn them
about this added risk of failure to prepare. To overcome their denial and
procrastination, you need facts and arguments. You’ll find them in our
LTC Bullets, LTC E-Alerts, and LTC Clippings. Join the
Center for Long-Term Care Reform and we’ll keep you up to date constantly
with the data, reports, and articles you need to wake people up and get
them to take action. Join the Center
here
or contact Steve Moses at 425-891-3640 or
smoses@centerltc.com.
It’s too late for most people to avoid the Medicaid trap, but it’s not too
late for the people you can reach with this information. ***
LTC
BULLET: COVID AND NURSING HOME DEATHS
LTC
Comment: Following is the transcript of a podcast recorded with Steve
Moses on June 23, 2020 regarding the impact of Covid-19 on nursing home
deaths. We expect to have a link to the actual recording soon. Heartland’s
Health
Care News
publication will have a related story. We’ll send you a link to that as
well in a future LTC Bullet. For now, here’s the transcript.
Date for
recording: June 23
Time:
11am ET
Title:
Why Nursing Homes Have Failed to Protect the Elderly from COVID
Hello and
welcome to the Heartland Daily Podcast. I’m your host today, AnneMarie
Schieber, managing editor of
Health
Care News.
We now are learning that the pandemic in the U.S. has been a crisis for
nursing homes. The Centers for Medicare and Medicaid Services reports of
the 122,289 people who died from COVID-19, nearly 30 thousand lived in
nursing homes…about 1 in 4.
My guest
today is not surprised. Stephen Moses is president of the
Center for
Longer-Term Care Reform
and author of the new book, “Medicaid and Long Term Care.”
Welcome.
1
.
For most
people, this is the first glimpse they have had of nursing home care in
the U.S. That it is substandard at best… Is that an accurate and fair
assessment?
Yes, I’d
say that statement is accurate and recognized by most economists and other
analysts. Medicaid reimburses nursing homes only about 80 percent of the
private-pay rate and often less than the cost of providing the care,
according to the American Health Care Association. Consequently, nursing
homes heavily dependent on Medicaid have difficulty hiring and retaining
enough quality caregivers at the very low salaries they can afford to pay.
Having inadequate caregiving staff is closely associated with lower care
quality ratings.
2.
How
many seniors live in nursing homes and how many are covered by Medicaid?
Roughly
1.3 million people reside in America’s 15,600 nursing homes. Medicaid
covers 62 percent of them for some or all of their bills. Medicaid
residents tend to be long-stayers, so their low reimbursement rates touch
a much higher proportion of nursing home patient days than their total
numbers alone would imply.
3.
How
is it that such a large percentage of seniors are covered by Medicaid long
term care?
You have
to look way back in history to answer that question. As in third world
countries, long-term care was provided largely by extended families in the
U.S. for most of our history. In the 20th century, as people
started living longer, the state and federal governments began offering
cash benefits to the indigent. Old and frail citizens used that cash to
pay for residential care as families became less able to provide full time
home care. Mom and pop nursing homes flourished. By mid-century,
government programs began providing residential care for the “medically
needy,” that is people who weren’t poor except because of their high
medical or long-term care costs. The commercial nursing home industry took
off as a result.
In 1965,
as part of the Great Society programs of Lyndon Johnson, Medicaid became
the dominant long-term care payer. That’s when the problems plaguing the
system today started. From the beginning, Medicaid paid only for nursing
home care, but that benefit included room, board, laundry and related
services. Anyone who wanted home care had to pay for it and the other
services totally out of pocket. Medicaid long-term care eligibility was
originally available to almost anyone who applied. Transferring assets to
qualify was explicitly permitted until 1980. Since then elastic income and
asset eligibility rules have allowed the middle class and affluent to
qualify for what was originally intended to be a poverty program. There is
literally no limit on income if your medical and long-term care costs are
high enough. Assets are also practically unlimited with home equity exempt
between $595,000 and $893,000. Many other resources are exempt with no
dollar limit, such as a car, term life insurance, individual retirement
accounts, one business including the capital and cash flow, personal
belongings and home furnishings including heirlooms. Generous matching
funds from the federal government encouraged state Medicaid programs to
maximize their grants almost without limit. Naturally, Medicaid
expenditures exploded.
From 1965
to the present, Medicaid has paid for the vast majority of all expensive
long-term care. Few people plan to rely on Medicaid, but most end up there
if and when they need high cost care for an extended period. The dynamic
works like this. People don’t worry or plan for long-term care because
Medicaid has always been there as the safety net for poor, rich and in
between. Once they need expensive care, the path of least resistance is to
qualify for Medicaid. That’s the only way to preserve wealth and heirs’
inheritances which makes the program’s access and quality downsides more
tolerable. Thousands of elder law attorneys across the country use
sophisticated legal techniques to qualify affluent clients while
preserving enough “key money” to buy their way into the higher quality,
lower-Medicaid-census facilities.
4.
How
much does Medicaid pay for long care and what should it reasonably cost?
According
to Genworth’s 2019 cost of care survey, the average private-pay monthly
nursing home cost for a semi-private room is $7,513, and $8,517 for a
private room. Costs in expensive urban areas can easily be half again as
much or even double. As Medicaid pays about 80 percent of the private pay
rate, it would pay about $6,010 on average for a semi-private room.
Medicaid would rarely if ever pay for a private room.
It is
important to understand that most people on Medicaid have some sources of
personal income, nearly always Social Security at least. Medicaid requires
that all income except for a tiny personal needs allowance must be used to
offset the program’s cost for their care. For example, a person with
several thousands of dollars’ worth of income from Social Security, a
private pension, an exempt business, etc. qualifies for Medicaid nursing
home benefits because their income is less that the cost of the nursing
home. But once on Medicaid, they must pay most of that income back to the
nursing home reducing Medicaid’s liability. There are even cases where the
Medicaid recipient’s income covers the entire cost of the care at the
Medicaid rate. This is very important because it shows (1) that Medicaid
recipients get a substantial discount on the cost of their care, (2)
nursing homes end up with more low-pay Medicaid recipients and fewer
higher-pay private patients which impairs their ability to provide quality
care, and (3) state and federal Medicaid programs subsidize welfare
dependency at the expense of nursing home providers’ financial viability.
5.
Why
do families want to subject their loved ones to long term care under
Medicaid?
Medicaid
is the only way to get long-term care for free or highly subsidized.
People don’t worry about long-term care until it’s too late. At that
point, the elder is usually very old, infirm and often demented. Adult
children are making the decisions and they have a financial conflict of
interest. Their choices: take Medicaid, put Mom or Dad in a nursing home,
and preserve the estate for their inheritance. Or use the parents’ wealth
to buy high quality home care or assisted living in the private market and
end up with less for themselves or nothing. Medicaid planning attorneys
assure their well-heeled clients (usually the “kids,” not the elders) not
to worry about the horror stories regarding Medicaid nursing homes.
They’ll hold back enough money to pay privately for a few months. Nursing
homes are so strapped for revenue that they roll out the red carpet for
private payers. This key money buys access to the best nursing homes with
the fewest Medicaid beds. After a few months, the attorney flips the
switch and, voila, Medicaid picks up the tab going forward. Tragically,
poor people don’t have key money so they end up in the 100 percent
Medicaid hellholes.
6.
Tell us about market place for private long-term care and insurance for
it,
I’ve
often explained it this way: you can’t sell apples on one side of the
street when they’re giving them away on the other. Easy access to Medicaid
after the insurable event has occurred was the biggest obstacle to private
long-term care insurance. But the federal government added insult to
injury by artificially forcing interest rates to nearly zero making it
impossible for insurance carriers to get adequate returns on their
reserves. That forced the carriers to raise premiums which enraged policy
holders and repelled future prospects. These government policies nearly
destroyed the traditional long-term care insurance market, but the
industry has adapted by offering so-called hybrid products that combine
life insurance or annuities with a long-term care financing component.
Still, private long-term care insurance of any kind will never become a
major market until people can no longer ignore the risk, avoid the
premiums, wait until they need long-term care and then shunt the liability
off onto taxpayers.
7. Let’s
talk about solutions we’ve been hearing about. Congress is already talking
about investigations. I’d like to go over a few that have been mentioned
so far
a. Better
oversight
Won’t
work. As the saying goes, you can’t make a silk purse out of a sow’s ear.
More oversight, regulations, and penalties without enhanced revenue will
only tie caregivers in more paperwork knots. If you keep up the beatings,
don’t expect morale to improve.
b.
increasing
Medicaid reimbursement
Won’t
work. Low Medicaid reimbursement is a symptom, not the cause of the
long-term care market’s malaise. Pump more money into it and all you’ll
end up with is a more expensive welfare trap diverting more people and
resources from the private sector into dependency on public assistance.
c.
home
care
Tried and
failed. State and federal Medicaid programs have attempted for at least
two decades to divert recipients from nursing homes to home care on the
theory that home and community-based care saves money. It doesn’t and
hasn’t. Total institutional and home care Medicaid costs have continued to
increase year after year in every state. On average and across the
society, home care delays but does not replace nursing home care. Home
care is desirable. It is a worthy goal. But it does not save money.
So what
would work? Stop discouraging responsible and early long-term care
planning. Stop making Medicaid available to virtually everyone after
expensive care is needed and when it’s too late to save, invest or insure
for future care. Eliminate or vastly reduce Medicaid’s huge home equity
exemption so that people who need long-term care but have insufficient
income to pay for it can use reverse mortgages to purchase high-quality
home care or assisted living of their choice. Enforce Medicaid’s estate
recovery mandate and use some of the savings to educate the public about
long-term care planning and to incentivize purchasing private LTC
insurance.
8.
What does Congress need to do? What should individuals do to best prepare
for long term care?
Congress
should remove the perverse incentives in public policy that discourage
responsible long-term care planning as I just described.
Individuals should wake up to the reality that to avoid Medicaid and its
nursing home trap, they must plan early, and save, invest or insure so if
and when they need extended, expensive long-term care, they can pay
privately for it. Money talks and it opens doors to the best long-term
care in the most desirable venue, usually one’s own home.
As bad as
the long-term care tragedy is in America, the good news is that it would
be easy to fix. If we stop doing what we’ve always done, we’ll get a
different and better result.
[The
interviewer ended the podcast with a couple questions about long-term care
problems that occur in government-financed systems. Moses explained that
such systems are highly prone to rationing and even euthanasia because
they lack the kinds of incentives and moderating controls that are present
in free markets.]
#############################
Updated,
Monday, June 22, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-025: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
As
Covid-19 Hits Developing Countries, Its Victims Are Younger
-
Surprise: Unhealthy lifestyle tied to Alzheimer’s risk
-
So
Far, So Good: No COVID-19 Spread From Protests...Yet
-
Why the coronavirus has taken so many lives in US nursing homes
-
What to Consider Before Moving a Parent Into Assisted Living During
COVID-19
-
Life plan community model remains stable, viable: report
-
The Road Map to Maximizing Long Term Medicaid Coverage During the
COVID-19 Emergency
-
Never Retire: Why People Are Still Working in Their 70s and 80s
-
What Albany did to seniors when we weren't looking
-
Quit treating the pandemic like a ‘bad apples’ problem, expert warns
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, June 15, 2020, 10:40 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-024: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
How did we get
here?
-
Nursing home
industry on verge of financial collapse, group claims
-
Offer Appropriate
Coverage for LTCi
-
Financial Crisis
of Nursing Home Industry
-
HHS to distribute
$25B for Medicaid, safety-net providers
-
COVID-19 pandemic
encourages consumers to plan for long-term care: survey
-
Misconceptions
about Paying for Long-term Care Part 2 of 3
-
Assisted Living
Communities Ask HHS for COVID-19 Help, Support
-
As negative
thoughts accumulate, so might Alzheimer’s risk
-
LTC workforce has
declined nearly 5% since February
-
Long-term care
facilities driving up COVID-19 death totals
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, June 12, 2020, 8:00 PM (Pacific)
Seattle—
#############################
LTC
BULLET: HOW NOT TO REDESIGN LONG-TERM CARE
LTC
Comment: Do we really need more government money and regulation for
long-term care, as this Forbes columnist insists? Analysis and
better choices, after the ***news.***
***
THE
DEBT CLOCK:
We introduced this new feature in last week’s LTC Bullet when the
U.S. national debt stood at almost $26 trillion. Now it’s over that mark
by $8 billion or so. Unfunded liabilities, including $20.5 trillion for
Social Security and $31.8 trillion for Medicare, topped $148 trillion in
the meantime. Here’s a little historical perspective. In “LTC
Bullet: The Impending Collapse of the Roadblocks to LTC Insurance,”
December 1, 2009, we reported “According to the U.S. National Debt Clock,
our country is currently in hock nearly $12 trillion and soon Congress
will be forced to lift the cap on that debt yet again.” By August 1, 2014
in “LTC
Bullet: Entitlement Double Talk,”
we lamented “Our
national debt stands at $17.6 trillion according to the
US Debt Clock.”
Less than a year ago, we found in “LTC
Bullet: The Post-Medicaid History of Long-Term Care,”
August 9, 2019, that “The ‘National Debt Clock’ places U.S. national debt
at $22.5 trillion and unfunded liabilities at $125.0 trillion, a little
over $1 million per taxpayer.” Our national debt, therefore, has more than
doubled since 2009, and it’s accelerating, up 16% in less than a year.
Most scary, unfunded liabilities are up 18% in the past year. We’re
falling into a monetary and fiscal sink hole. Dramatic consequences are
coming. But what will they be and when will they arrive? We’ll keep trying
to understand. We’ll tell you want we learn. ***
***
JOIN THE CENTER. We have not made a recent appeal for you to support the
Center for Long-Term Care Reform. But now is the time. Our major federal
legislative successes came during or after major recessions. OBRA ’93
required Medicaid estate recoveries and closed important eligibility
loopholes. DRA ’05 put the first cap ever on Medicaid’s home equity
exemption and removed the leash Henry Waxman had put on the Long-Term Care
Partnership Program. We’re entering a period when Medicaid, especially its
massive long-term care component, will consume more state revenue and
crowd out other, critical state and local programs. By retargeting
Medicaid to its originally intended recipients, people in need, the states
and federal government can reduce expenditures and attract more private
financing into the LTC service delivery system benefiting everyone. We’ve
explained precisely how to do that in dozens of national and state-level
studies available
here
and most recently in “Medicaid
and Long-Term Care.”
Help us spread the word and fix long-term care. Check out our “Membership
Levels and Benefits”
here
and join the Center
here.
Thanks for your consideration. Address inquiries to
smoses@centerltc.com
or call Steve at 425-891-3640. ***
LTC
BULLET: HOW NOT TO REDESIGN LONG-TERM CARE
LTC
Comment: They say when the only tool you have is a hammer, every problem
looks like a nail. Here’s a corollary: when the only tool you have is
government, every problem looks like you need more public money and
regulation.
That’s the fundamental problem with Howard Gleckman’s argument in “How
To Redesign Long-Term Care For Older Adults After Covid-19,”
Forbes, June 9, 2020. Compare these quotes from Gleckman (HG) with
Steve Moses’s (SM) replies.
HG:
“The way we care for older adults in the US is, self-evidently, not
working. In just the past three months, at
least 44,000 residents and staff of
nursing homes and other long-term care facilities have died from Covid-19.
Hundreds of thousands have been sickened. And millions
have been isolated from
family and friends for months.”
SM:
Sadly true. I said as much in the Wall Street Journal recently: “Nursing
Homes, Coronavirus and Medicaid,”
June 1, 2020.
HG:
“Yet, this crisis did not spring from nowhere. The Covid-19 epidemic has amplified
and exposed an already deeply-flawed system for
long-term supports and services (LTSS) in the US. As tragic as this
episode is, it has created an opportunity to rethink our care model from
the ground up. But what would it look like?”
SM:
True again. We do need to start over with a new long-term care model. But
“what would it look like?” is the wrong place to start. You need to ask
and answer a more basic question first: how did we get into this mess that
we need to fix? If you don’t start there, you run the risk of making the
problems worse by doing more of what caused them in the first place.
That’s why I started by explaining what caused the dysfunctional long-term
care status quo in “Medicaid
and Long-Term Care,”
a January 2020 monograph. But that’s not where this writer takes us. He
jumps right in to ask for more money.
HG:
“In short, long-term care in the US needs more money and a new model for
delivering care. Our system never will provide adequate care for frail
older adults and younger people with disabilities as long as it remains so
severely underfunded.”
SM:
Hammer is to nail as government is to money. That’s the trap! Let’s see
where this leads.
HG:
“Imagine no entrenched business or bureaucratic interests struggling to
protect an existing system. No legacy regulatory and payment systems. What
sort of care system would we create? Not the one we have, for sure.”
SM:
Absolutely! Imagine what a free market in long-term care could render.
Entrepreneurs would compete to provide the best possible long-term care in
the most desirable venues at the least possible cost. No government
interference; no Medicaid-induced institutional bias; no lawyer-abetted
Medicaid planning lure; no access and quality problems caused my
parsimonious Medicaid reimbursements; more private pay at market rates
lifting access and quality for all; fewer people drawing down Medicaid
funds so the truly needy get better care. But is this what Mr. Gleckman
wants? It does sound similar.
HG:
“It might look like this: Frail older adults and younger people with
disabilities, with support from family and a case manager, would choose
the care setting and supports that would help them live the best life
possible. Long-term supports and services would be well integrated with
medical treatment, with no regulatory or payment barriers, and through a
financial model that creates incentives for strong chronic care
management.”
SM:
Yes! Let’s do it. But, how? There’s the rub.
HG:
“This could be delivered through managed care plans, such as Medicare
Advantage,
fully integrated programs such as the Program
for All-Inclusive Care for the Elderly (PACE),
or special needs plans (SNPs). It might
also be possible in traditional Medicare through
Medicare Supplement (Medigap) insurance. … A public program such as
Medicaid still would support this care for those with very low incomes.
But Medicaid would be far more flexible than today, and the default
setting for care would be people’s own homes, not nursing homes.”
SM:
Wait a minute! Haven’t we tried all those things already and they wouldn’t
scale? What would you do differently that could make these longstanding
programs work better and become bigger? Their advocates have claimed for
decades that what these programs need is more money. Is that what you’re
saying too? More of the same but expect a different result? This is where
the article becomes very foggy.
HG:
“A public program such as Medicaid still would support this care for those
with very low incomes. But Medicaid would be far more flexible than today,
and the default setting for care would be people’s own homes, not nursing
homes.”
SM:
Been there; done that; didn’t work.
HG:
“States should better align Medicaid LTSS with other public services, such
as low-income housing, transportation, home delivered meals, adult day,
and primary medical care.”
SM:
But would they? Why now and not before? This is aspirational, not
realistic or practical.
HG:
“The agencies that deliver these programs need to work with one another to
provide flexible, holistic care.”
SM:
OK, but why are these agencies going to hop out of their silos all of a
sudden and start working cooperatively as never before?
HG:
“The vast majority of those receiving long-term care at home are getting
their support from relatives. Today, those family members are providing
personal assistance with great love—and little or no skill. Like paid
caregivers, they need training. Perhaps, they should even be paid.”
SM:
Instead of relying on the free care provided by families and friends,
which is the main prop sustaining the current Rube Goldberg financing
scheme, we’re going to start paying them and provide more paid home
caregivers also? How?
HG:
“Where will the additional funding for all this come from? The reality is
that few Americans have saved sufficiently for the cost of long-term care
in old age, few have private long-term care insurance, and Medicaid does
not have the resources to fund this care for the fast-growing Baby Boom
generation.”
SM:
Precisely the question that popped into my mind. So what’s the answer?
HG:
“A public
long-term care insurance program could
supplement out-of-pocket spending, especially for those with true
catastrophic costs that few private long-term care insurance policies
cover.”
SM:
Well, what do you know? The answer is to use the punitive power of
government to force people to buy mandatory government insurance. If you
liked the CLASS Act, you’ll love this compulsory version with a political
bullwhip for enforcement.
HG:
“Washington
State already has adopted a
modest public long-term care insurance plan. A half-dozen other states are
exploring the idea. And there is some
interest in Congress.”
SM:
Have you heard anything about these “promising” ideas from anyone else
lately? More likely, you’re hearing the lockdown is bankrupting state
governments and the federal government is maxed out printing and borrowing
money to support closed businesses and laid off workers.
HG:
“The long-term care system in the US was failing long before Covid-19. But
now that this terrible disease has exposed the flaws in our system, we
have an opportunity to fix them.”
SM:
See what happens when you start from the observation that LTC is failing
in the U.S. and jump straight into proposing solutions? You end up as HG
does proposing more of the government spending and regulation that caused
the problems in the first place. So here’s what to do instead.
Analyze what caused long-term care’s problems. You’ll find that easy
access to Medicaid nursing home care after care is needed but when it’s
too late to preserve wealth otherwise caused excessive dependency on
Medicaid. Fifty years of that pernicious public policy created the current
system’s major dysfunctions including institutional bias; poor access and
quality; stultified private home care and LTC insurance markets;
overburdened family caregivers; and many thousands of unnecessary deaths
from the virus contagion.
Unfortunately, the challenges facing long-term care are too complicated to
explain in a few sentences or to resolve simply by throwing more
government money at them. The key is to explain why the problems exist in
the first place before trying to solve them with more government
interference. Do that and you will find the same answers I did in “Medicaid
and Long-Term Care.”
Read it and see.
#############################
Updated,
Monday, June 8, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-023: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Four Ways the
Coronavirus Pandemic May Affect Long-Term Care Insurance
-
CMS releases
provider COVID-19 case, death totals to consumers on Nursing Home
Compare
-
Congress’s
Medicaid Funding Increase Creates Massive Legal Uncertainty for States
During the Covid-19 Crisis
-
Nursing Homes
Already Were Weakened—WSJ op-ed by Blase and Moses
-
Skilled Nursing
Occupancy Hit Record Low in March, ‘Mainly’ Due to Post-Acute Admission
Decline
-
How Covid-19 Will
Shape the Future of Senior Living. New Models of Care, More Aging in
Place
-
Nursing Homes,
Coronavirus and Medicaid
-
BULLETIN: CMS
‘ratcheting up’ nursing home penalties in light of 26,000-resident,
450-worker COVID-19 death toll
-
More Universal
Life Comes With Long-Term Care Riders: Milliman
-
Alzheimer's Gene
Linked to Severe COVID-19 Risk
-
Public Opinion of
Nursing Homes Takes COVID-19 Hit, But Most Think Government Didn’t Do
Enough
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, June 5, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: WSJ COLUMN ON NURSING HOMES, CORONAVIRUS AND MEDICAID
LTC
Comment: Steve Moses and Brian Blase published an op-ed in Tuesday’s
Wall Street Journal. Here’s the back story and much more on the
subject, after the ***news.***
***
THE DEBT CLOCK: New feature. We’re going to start posting a link to the
U.S.
Debt Clock
at the top of each LTC Bullet. U.S. national debt stands now at
almost $26 trillion. Worse yet, our country’s unfunded liabilities,
including $20.5 trillion for Social Security and $31.7 trillion for
Medicare, total $147.9 trillion. Evidently no one cares. The Federal
Reserve is printing, the Treasury Department is spending, and together
they’re borrowing unlimited funds ostensibly to stimulate the economy but
effectively to re-inflate a bubble in stocks, bonds and real estate. This
will not end well. The debt is suddenly skyrocketing. In future Bullets,
we’ll track where the debt stood as we reported it occasionally in the
past. ***
***
WHO KNEW? The coronavirus pandemic lockdown crashed the economy. America
is burning, literally, with civil unrest. Government’s monetary and fiscal
floodgates are wide open. Public and private debt is spiking. Unemployment
is at depression levels. Yet the stock and bond markets are at or
approaching new highs. Who knew we could borrow and spend unlimited
amounts with no consequences? How great is this? You say: “Don’t waste a
crisis.” I say “Why wait for a crisis?” Let the good times roll all the
time. Who needs jobs and taxes? Just print enough money for everyone to
have everything. Voila! Welcome to economic WallyWorld. ***
***
SOHO FORUM: I find these debates fascinating and now that they’re online,
easy to access. The topics are always timely and usually pit a libertarian
against a more middle-of-the-roader. Most recent topic paraphrased: did
the lockdowns do more harm than good? I love the format. The audience
votes on the question before and after the debate. The winner is the
discussant who changes the most minds. Here’s how the Forum describes
itself: “The
Soho Forum
is a monthly debate series held in Soho/Noho, Manhattan. A project of the
Reason Foundation,
the series features topics of special interest to libertarians and aims to
enhance social and professional ties within the NYC libertarian community.
Moderated by Gene Epstein, former economics editor of Barron's, The
Soho Forum features some of the most highly regarded speakers across
varied fields. At each event, the audience actively engages with the
speakers, votes on the resolution, and there is a social reception that
follows.” Enjoy! ***
LTC
BULLET: WSJ COLUMN ON NURSING HOMES, CORONAVIRUS AND MEDICAID
LTC
Comment: When people started dying in droves at nursing homes all across
the country, it raised the question: why are so many frail, infirm elderly
people residing in these institutional settings in the first place? My
friend,
Brian Blase
of
Blase Policy Strategies
and most recently
Special Assistant to the President for Health Care Policy,
had the same thought.
We
conferred and the
Wall
Street Journal
published our op-ed “Nursing
Homes, Coronavirus and Medicaid”
online Monday evening, June 1 and in the print edition Tuesday, June 2.
The WSJ has a pay wall so I can’t link you to the full piece, but
here are the first three paragraphs, which I am allowed to share:
“A
national tragedy began in March when Covid-19 killed 35 residents of Life
Care Center in Kirkland, Wash. Since then, more than 22,000 nursing-home
residents have died in Connecticut, Massachusetts, New Jersey, New York
and Pennsylvania. Nearly half of all Americans who have fallen victim to
the novel coronavirus lived in nursing homes.
“Politicians have made plenty of mistakes. Governors in several states,
including New York and Pennsylvania, ordered nursing homes to take
coronavirus patients discharged from hospitals and reversed the orders
only after weeks of casualties. Families are suffering, forced to stare at
their parents and grandparents through windows or talk only by phone.
Overworked caregivers are at high risk of exposure.
“Why
do so many elderly people live in low-quality nursing homes? Almost no one
wants to end up in a nursing home, and most families prefer not to place
their loved ones in one. The main answer is the legacy of Medicaid, a
Great Society program intended to help the poor.”
Want
more? If you don’t have a print or online subscription, maybe you can find
someone who does. I can forward a limited number of copies for a limited
number of days through the Center’s subscription. If you ask, I’ll try.
After 30 days, the article will be in the public domain.
In
the meantime, how about reading the “rest of the story” that didn’t make
it into the WSJ piece? Here’s my two-part early draft: Part 1
answers the question of why so many people end up in nursing homes
vulnerable to the coronavirus contagion. Part II explains what we can do
to fix that problem.
“Covid-19 and Long-Term Care, Part 1: Why Are So Many Elderly People
Trapped in Nursing Homes?”
by
Stephen A. Moses
News
from the nursing home sector is not good.
Thirty-five die
at a Life Care Center in Kirkland, WA. Locked out
families stare plaintively
at quarantined parents and grandparents through nursing home windows
across the country.
New
York demands nursing homes take Coronavirus patients,
then
prohibits them.
Half or
more of COVID-19 deaths are nursing home residents.
What’s happening? Why are so many old, frail, often cognitively impaired
elders residing in nursing homes? Why aren’t they aging in place at home,
safer from contagion with visiting caregivers and telemedicine? Why is
nursing home quality such a serious problem?
The
answers to all those questions stem from a Great Society program intended
to help the elderly poor. In 1965, Medicaid began providing nursing home
care—including room, board, and medical care—funded with virtually
unlimited federal and state matching funds. It was welfare supposedly, but
it allowed unlimited asset transfers to qualify until 1980. Since then,
generous financial eligibility rules placed no set limit on income for
people with high medical expenses and allowed virtually unlimited exempt
assets, including home equity of $595,000 in every state ($893,000 in some
states). A program intended for the poor became the fall back payor for
middle class and affluent people who didn’t plan for long-term care and
slipped through or manipulated Medicaid’s elastic financial eligibility
rules.
By
making long-term care virtually free when expensive care is needed:
Medicaid (1) quickly exploded in cost, (2) created
institutional bias
by paying only for nursing homes, (3) caused access and quality problems
by paying care providers too little, (4) enriched plaintiff’s attorneys
with the resulting tort liability cases, (5) crowded out private markets
for home care and long-term care insurance, and (6) kept poor people poor
with punishing spend down rules, while (7) letting the well-to-do save and
benefit through eligibility loopholes.
Medicaid pays the bills of
62
percent
of nursing home residents. It pays notoriously low rates, often
less
than the cost
of providing the care. Those low rates drag down nursing homes’ ability to
provide quality care for Medicaid recipients and for the
few
remaining private payers.
Very few private payers remain because Medicaid is so easy to obtain, even
for the well-to-do. Thousands of elder law attorneys specialize in
impoverishing affluent clients artificially to qualify them for Medicaid
and to protect their heirs’ inheritances. Search “Medicaid
planning”
to find these specialists in every state.
Five
and a half decades of easy access to Medicaid-subsidized nursing home care
anesthetized consumers to the risk and cost of long-term care. Few people
know who pays for it and fewer still worry or prepare as a result. Once
they need long-term care, the path of least resistance is to qualify for
Medicaid, preserve most of their assets for heirs, and take whatever
Medicaid has to give. That’s usually nursing home care in facilities too
heavily dependent on the impecunious public welfare program to provide
high quality care.
That’s why so many frail, elderly people are trapped in poor nursing homes
vulnerable to the ravages of Covid-19.
For
the solution, read “Covid-19 and Long-Term Care: Part 2, Save Long-Term
Care with Medicaid Reform.”
Stephen Moses is co-founder and president of the
Center for Long-Term Care Reform
and the author of
Medicaid and Long-Term Care
(2020).
“Covid-19 and Long-Term Care, Part 2: Save Long-Term Care with Medicaid
Reform”
by
Stephen A. Moses
Too
many infirm elderly people are trapped in beleaguered nursing homes
inadequately funded by a public welfare program, Medicaid. They are
vulnerable to the ravages of Covid-19, forcibly cut off from friends and
family, and dying in droves. Part 1 explained why this is so. Part 2
proposes a solution. As bad as the nursing home problem is, there’s good
news. It is easy to fix.
Fifty-five years of easy access to Medicaid financing when expensive
extended care becomes necessary desensitized consumers to long-term care
risk leaving them with a Hobson’s choice. Do we spend our life’s savings,
including home equity, to pay for long-term care privately? Or do we
accept welfare-financed nursing home care and preserve most of our wealth
for a surviving spouse and heirs? In the end, most people choose the
latter course.
That’s how Medicaid became the dominant long-term care payer for the
middle class and affluent as well as the poor. Medicaid planners did a
land office business artificially impoverishing people to qualify them for
the program. Heirs received windfall inheritances, diverted from their
parents’ long-term care expenses by a taxpayer-financed public assistance
program originally intended only for the poor.
Analysts and policy makers study the serious problems afflicting America’s
long-term care system—the poor access and quality, nursing home bias, too
little preferred home care, inadequate financing, excessive dependency on
unpaid family caregivers causing enormous financial and emotional
distress. They propose measures to alleviate these symptoms, usually more
government spending and regulation. But they rarely ask what caused the
problems in the first place.
What
if government interference in long-term care is exactly what caused
long-term care’s problems? Wouldn’t that suggest a different approach than
more of the same?
How
about this? Remove the perverse public policy incentives that trap people
on Medicaid. Don’t exempt their biggest asset, home equity, from long-term
care risk. Let people who fail to plan, save, invest or insure for
long-term care use reverse mortgages or other assets to pay for the home
care they prefer. Perhaps losing their inheritances to their parents’
long-term care costs will make adult children more likely to plan
responsibly for their own future. In other words, stop using Medicaid to
subsidize people for ignoring the risk and cost of long-term care.
Do
not delay making these changes. Budget shortfalls from the current
recession will impair the states’ ability to fund Medicaid, further
devastating nursing home finances and damaging care quality. In past
economic downturns, Medicaid imposed asset transfer restrictions, mandated
estate recovery, and closed eligibility loopholes to control costs. More
of the same will be necessary in the current economic downturn. The poor
will suffer most.
Directing Medicaid long-term care benefits only to the genuinely needy
would ensure more resources and better care for them, achieving the
original intent of the program. With Medicaid long-term care harder to
get, consumers will do the right thing. They’ll plan for long-term care,
save, invest and insure for it. New waves of private financing will surge
through the long-term care market improving quality and choice for
everyone. Care will quickly evolve away from nursing homes toward the home
and community-based care people vastly prefer.
Stephen Moses is co-founder and president of the
Center for Long-Term Care Reform
and the author of
Medicaid and Long-Term Care
(2020).
#############################
Updated,
Tuesday, June 2, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
Bullet: WSJ Column on Nursing Homes, Coronavirus and Medicaid
Tuesday, June 2, 2020
Seattle—
LTC
Comment: Steve Moses and Brian Blase (formerly Special Assistant to the
President for Health Care Policy) have an op-ed in today’s Wall Street
Journal. It explains why so many elderly Americans are confined to
nursing homes where they’re disproportionately vulnerable to the virus
contagion. This is just a quick notice so you can pick up a copy if you
would like to. We’ll share some quotes and give you the back story in a
full-sized LTC Bullet on Friday.
#############################
Updated, Monday, June 1, 2020, 9:00
AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #20-022: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
Social Security trust funds could run
out even faster due to the coronavirus pandemic
-
The Most Important Coronavirus
Statistic: 42% Of U.S. Deaths Are From 0.6% Of The Population
-
WHO launches digital app to improve
care for the elderly
-
The Bifurcating Seniors Housing Market
-
Seniors housing municipal bonds under
distress due to COVID-19 costs
-
The COVID Nursing Home Crisis Was 50
Years in the Making
-
Long-Term Care Policy after Covid-19 —
Solving the Nursing Home Crisis
-
$672 million would be cost of one-time
COVID-19 testing for all assisted living and nursing home residents,
staff, AHCA / NCAL says
-
One in five COVID-19 tests fail to
detect virus
-
Simplifying telemedicine use in
long-term care facilities
-
Families still need care, but many are
afraid of nursing homes amid the coronavirus pandemic
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, May 25, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-21: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Ideal Nursing
Homes: Individual Rooms, Better Staffing, More Accountability
-
Few Medicare
Advantage plans cover social needs for chronically ill patients
-
FAQs About
Coronavirus and Long-Term Care Insurance
-
COVID-19 and
Long-Term Care Insurance
-
HHS Releases $4.9B
in COVID-19 Relief for Skilled Nursing Facilities
-
Coronavirus or no,
why do we have so many people in nursing homes?
-
Senior Employment
Outlook and COVID-19
-
States using
Medicaid to provide ‘lifeline’ for providers, association reports
-
Skilled nursing
occupancy slips as COVID-19 pandemic rages: NIC
-
Home Health
Industry ‘Getting Closer’ to Reimbursement for Telehealth Visits
-
Medicaid Providers
At The End Of The Line For Federal COVID Funding
-
COVID-19-caused
kidney injuries heighten demand for dialysis
-
Reopening Guidance
by CMS Wins Praise for Aggressive Stance on Staff, Resident Testing
-
Governors eye
Medicaid cuts to ease COVID-19 budget pain
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, May 22, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC
BULLET: THE REVERSE ROBIN HOOD ECONOMY AND LONG-TERM CARE
LTC
Comment: Does government take from the rich to help the poor? Or is it
just the opposite? We scrutinize after the ***news.***
***
THE ILTCI EXECUTIVE COMMITTEE reports that the Intercompany Long Term Care
Insurance Conference, cancelled for 2020 due to the pandemic, will convene
in 2021on Monday, March 8th through Thursday, March 11th
at the Sheraton Downtown Denver in Denver, CO. They say “In the coming
months we will be offering a selection of our 2020 ILTCI break-out
sessions/workshops in the form of webinars and podcasts. The first one
will take place this month. We are happy to make this content available
and wish to thank all session producers and speakers who prepared
informational and educational content this year. In the meantime don’t
hesitate to visit our updated FAQs on
www.iltciconf.org
or email
info@iltciconf.org
if you have any questions. ***
LTC
BULLET: THE REVERSE ROBIN HOOD ECONOMY AND LONG-TERM CARE
LTC
Comment: The coronavirus pandemic has thrown millions out of work and
ruined thousands of companies. But, not to worry, the federal government
has taken unprecedented action to alleviate the economic pain until the
virus goes away and we get back to normal.
Specifically, the Federal Reserve is printing money with no limit and the
Treasury is borrowing and spending “whatever it takes.” Voila! People get
paid whether they work or not and companies survive whether they’re open
for business or not. Problem solved.
OK,
but won’t someone, somehow, someday have to pay for all that printing,
borrowing and spending? Yes, of course. TANSTAAFL: There’s No Such Thing
As A Free Lunch. So who gets the bill? Presumably, the rich will pay as
they have most of the money and they pay most of the taxes. This economy,
therefore, is Robin Hood on steroids. Government takes from the rich to
give to the poor.
Or
does it? What’s really happening? Qui bono? That’s the apt
question. Who benefits?
At
first blush, it seems like the poor and unemployed receive a bonanza. They
get money while remaining idle, sometimes even more income than when they
were employed. But look under the economic surface. What happened to all
that money the government created out of nothing?
Some
of it will find its way into consumer spending, which means there will be
much more money chasing fewer goods and services due to the economy’s
shutting down. That is the definition of inflation. So the good news is
government gave you money, but the bad news is that it won’t buy as much
as before.
But
the bulk of the new money will find its way into the stock, bond and real
estate markets. That’s why equity values skyrocketed after the 2008
financial crisis when the same policies were employed. It’s why it is
happening again now. In other words, the new money benefits the already
well-to-do substantially, but only allows the unemployed to wait out the
crisis less painfully.
So,
what happens as we emerge from this pandemic-induced financial cataclysm?
The government and the private sector have taken on unprecedented levels
of debt. Debt is not free. It must be serviced. Even at artificially low
interest rates, that’s difficult. There are only three ways to service
debt: borrow more, raise taxes, or let inflation run rampant.
Borrowing more is possible only until lenders, i.e., the rest of
the world, realize you’ve put no limits on debt. Sooner or later, they’ll
figure out you’re unlikely to pay back what you’ve already borrowed, much
less service even bigger liabilities. So, either you can’t borrow more or
lenders demand higher interest rates. Either way, it’s harder than ever to
service the compounding debt. It’s a vicious downward spiral.
Taxing to pay the interest and/or reduce the debt doesn’t work. People
object to higher taxes. Politicians benefit by giving people what they
want, specifically free stuff, not by raising taxes. Besides, taxes reduce
private capital which is what creates jobs and prosperity which are the
source of tax revenue in the first place. Everyone is better off when we
leave money in the private sector where it can grow through wise
investment.
Finally, inflation makes debt disappear instead of paying it off.
Inflation hurts lenders who get their loans paid back in less valuable, or
worthless, dollars. Inflation helps borrowers by letting them pay back
their loans with cheaper dollars.
Who
are the borrowers? Government and overleveraged companies. Who are the
lenders? You’re looking at ‘em: the American people and all the suckers
around the world who bought our bonds and let us use the proceeds to
purchase their goods and services.
In
other words, we’re in the middle of a big Ponzi scheme benefiting the rich
at the expense of everyone else, especially the poor. As long as there is
a bigger sucker willing to buy into the giant government debt bubble, it
keeps getting bigger. But the coronavirus may just be the pin that finally
pops this monetary balloon. We’re going to find out soon.
Long-Term Care
So
where does long-term care come in? It’s similar in a way. Government
purports to pay for long-term care for the poor by taxing the prosperous.
Robin Hood again, right?
Think again. Medicaid, the government’s long-term care funding program, is
readily available to the middle class and affluent as well as the poor.
Find the evidence for that statement in
Medicaid and Long-Term Care.
So,
the poor end up in welfare-financed nursing homes with notoriously low
quality care. But so do the affluent Medicaid recipients, right?
No.
Prosperous people who take advantage of Medicaid hold back some cash so
they can pay privately for a few months. That gets them into the best LTC
facilities that have relatively few Medicaid recipients. Then they, or
their Medicaid planning attorney, flip the switch and convert their payor
to Medicaid.
The
poor get the worst Medicaid has to offer. The well-to-do get the best.
Reverse Robin Hood redux.
#############################
Updated,
Monday, May 18, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-020: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
States face
looming crisis over Medicaid growth, which could trigger changes for
providers and payers
-
Masks change
everything
-
Seniors turn to
reverse mortgages as a cash lifeline during the coronavirus crisis
-
WSJ: Seniors
housing could face big vacancies with telemedicine available to help
with care needs at home
-
The Pandemic and
the Politics of Long-Term Care in Canada
-
Ken Dychtwald:
Pandemic Will Force Big Changes in Retirement Planning
-
Fewer workers
confident they can meet long-term care cost demands: survey
-
White House: Test
all nursing home residents, staff for COVID-19 over next 2 weeks
-
Key Takeaways: The
Impact of COVID-19 on Social Security and Highlights from the Trustees'
2020 Report
-
Algorithm Beats
Experts in Alzheimer’s Diagnosis
-
New task force to
develop guidance for reopening senior living and care communities
-
For Most States,
At Least A Third Of COVID-19 Deaths Are In Long-Term Care Facilities
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, May 11, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #20-019: LTC NEWS AND COMMENT
LTC Comment: Do you spend hours searching
the internet for useful articles, key data, and relevant reports to keep
you on the forefront of professional knowledge? Do you lose business
because you’re blindsided by clients or competitors who learn critical
information before you do? Here’s an antidote:
LTC Clippings: The Center for Long-Term
Care Reform notifies subscribers to our LTC Clippings service daily of
information you need to know. Each message contains only the critical
facts about new publications: a title, representative quote, a link to
the original, and our analysis in a sentence or two. To inquire or
subscribe, contact Steve at 425-891-3640 or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC E-Alerts: Once a week, we compile our
daily LTC Clippings into a summary, email it to Center for Long-Term Care
Reform members, and archive it in The Zone, our password-protected
members-only website. Center members also receive our weekly LTC Bullet
op-ed. To join the Center and receive all these benefits and more,
contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no longer post our LTC E-Alerts on the
Center’s public access website, but here’s what today’s LTC E-Alert
contained: links, quotes and comments on the following articles, reports,
or data:
-
Senior living industry bracing for
effects state reopening will have on residents, staff
-
Genworth Aims to Line Up Backup
Financing Options
-
The Grim Post-COVID-19 Future For
Nursing Homes
-
States cut Medicaid as millions of
jobless workers look to safety net
-
How Are States Supporting Medicaid Home
and Community-Based Services During the COVID-19 Crisis?
-
How Quarantine Is Affecting Different
Generations: Ken Dychtwald
-
Medi(long-term)care for all: A look Into
the future of long-term care insurance—Part one
-
Unum to Add $2.1 Billion to Long-Term
Care Insurance Reserves Over 7 Years
-
Financial incentives might tempt
facilities to admit infected residents: LA Times
-
States ordered nursing homes to take
COVID-19 residents. Thousands died. How it happened
#############################
"LTC E-Alerts" are
a
feature offered by the Center for Long-Term Care Reform, Inc. to members
at the $150 per year level or higher. We'll track and report to you news
and analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Friday, May 8, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Bullet:
The Gold Standard for Long-Term Care Insurance
LTC Comment: We face a brave new
world—epidemiologically and economically. What’s really happening and how
can long-term care insurance adapt? Analysis and conjecture after the
***news.***
*** LTC BULLETS took some time off to reflect
on the sea change impacting long-term care services and financing. We
serialized our latest report, published in January, titled
Medicaid and Long Term Care. That report presents our analysis
and recommendation for long-term care policy as circumstances existed
before the pandemic. Today and for the future we turn to the challenge of
analyzing, understanding and opining out the radically different
circumstances the long-term care profession faces today. We invite you to
join the conversation by replying to each LTC Bullet as it is
published whenever you agree, disagree, or just have something to say.
Next week, we’ll address the question “Why Are So Many People Trapped in
Nursing Homes?” It’s never been more important to understand the causes
and consequences of Medicaid’s institutional bias than now, with SNF
residents confined to quarters and their loved ones locked out. ***
*** ACTIONABLE NEWS about long-term care is more
frequent and vital during the pandemic than ever before. The Center for
Long-Term Care Reform’s LTC Clippings bring you one or two daily
updates about critical information you need to know to stay at the
forefront of professional knowledge. Steve Moses scans the news and LTC
literature. He chooses reports, articles, stories and data that LTCI
agents, financial advisors, and anyone involved in aging issues need to
know. He provides the title, author, source, a hyperlink to the original,
and a sentence or two of commentary. As a bonus to LTC Clippings
subscribers, Steve will answer questions by phone or email usually within
24 hours. Hook yourself into this reliable source and you can safely spend
less time scanning for information and more time doing what you do best
professionally. Contact Steve at 425-891-3640 or
smoses@centerltc.com to subscribe or learn more. Two sample clippings
from this week:
5/4/2020, “The
Grim Post-COVID-19 Future For Nursing Homes,” by Howard Gleckman,
Forbes
Quote: “The deaths of
more than 16,000 of their residents from COVID-19 has profoundly
disrupted senior living facilities—especially nursing homes— and will
drive historic change in the industry. Robert Kramer, president of the
consulting firm Nexus Insights and a long-time observer of nursing home
finances, told me, ‘There never will come a time when we will return to
the old normal.’”
LTC Comment: Rare flawless analysis by this
writer. Obvious conclusion based on the evidence adduced: stop trapping
people in nursing homes on Medicaid and incentivize responsible LTC
planning by means of saving, investment and insurance. But no, this
article leaves us only with despair. There is nothing about why this
system went so wrong and what needs to happen to fix it. For that, read
Medicaid and Long-Term Care.
5/5/2020, “States
cut Medicaid as millions of jobless workers look to safety net,” by
Rachel Roubein and Dan Goldberg, Politico
Quote: “State Medicaid programs in the
previous economic crisis cut everything from dental services to podiatry
care — and reduced payments to hospitals and doctors in order to balance
out spending on other needs like roads, schools and prisons. Medicaid
officials warn the gutting could be far worse this time, because program
enrollment has swelled in recent years largely because of Obamacare’s
expansion.”
LTC Comment: So, tell me again why it makes
sense to exempt up to $893,000 in home equity so that affluent Americans
can avoid paying for private insurance and qualify for welfare-subsidized
nursing home care, where they’re dying in droves cut off from friends and
family. The only silver lining in this pandemic/recession is that maybe we
can finally reform this corrupt LTC financing system. We made progress
after recessions in the early 1990s and the early 2000s, but the system
has stagnated unreformed since the Great Recession. To learn why, read
Medicaid and Long-Term Care. ***
LTC BULLET: THE GOLD STANDARD FOR LONG-TERM CARE
INSURANCE
“This too will pass”
“After the pandemic, markets will surge back”
“We have nothing to fear but fear itself”
If you believe this HHS (Happy Horse Sh**), you’d
better open your eyes.
This crisis is not going to pass any time soon.
Markets won’t surge back after the virus passes. There is no viable “back”
to go to.
The roaring economy a couple months ago wasn’t real;
it was an asset bubble.
The Federal Reserve pumped it up by imposing
artificially low interest rates through quantitative easing, buying bonds
with printed money.
The federal government, taking advantage of the low
interest rates, overspent
creating huge extra debt.
The private sector over-borrowed at low interest
rates to fund malinvestments, starting uneconomical projects that only
seemed to make sense because borrowing was so cheap.
All the extra money printed (created out of thin air)
drifted into equities so stocks and bonds surged, diverting the huge money
inflation so it didn’t show up significantly in consumer prices.
The wealthy, with real estate and equity investments,
prospered while the poor and middle class languished economically.
The good times rolled as affluent Americans partied,
buying tons of cheap goods from China.
But where’d they get the money to do buy those cheap
goods? America doesn’t produce much to sell internationally anymore. Our
trade deficits are huge.
Easy, we sold the treasury bonds created by the
Federal Reserve to China and other foreign countries.
In short, they gave us dollars in exchange for paper
promises to pay back the principal plus artificially low interest,
someday, somehow.
We prospered on the easy money and left foreigners
holding the paper-money bag.
That was the wonderful, booming, “best market in
American history” according to the President, that we enjoyed until the
bottom fell out in March.
In other words, it was all fake, an asset bubble
created by, well,
Modern Monetary Theory.
How did we get there?
Twenty years ago, back when we still had some
semblance of a real economy, it blew apart with the dot-com bust when the
Fed tried to cool the economy by raising interest rates.
Instead of letting the economy suffer the hangover of
a severe recession that could have squeezed the public and private
malinvestment out of the system …
The Fed pushed interest rates down artificially and
left them there.
Public and private malinvestment surged with a
vengeance, especially in the real estate market, resulting in the 2008
housing bust.
After that bubble burst, the Fed returned to the
seemingly tried and true policy of artificially low interest rates.
A Tale of Two Bubbles: How the Fed Crashed the Tech and the Housing
Markets
This time they added three rounds of Quantitative
Easing (QE) vastly expanding the money supply with the hope of making
people spend more because of the “wealth effect” created by all that extra
cash going into the equity markets.
So, where are we now?
The Coronavirus pandemic shot through the latest
asset-bubble economy like a ballistic missile.
The government closed down the economy to curtail the
disease’s spread.
People are suddenly out of work and out of money as
are the companies that used to employ them.
Few Americans have any appreciable savings because government
programs—from Social Security in 1935 to Medicare/Medicaid in 1965, to the
paroxysm of free stuff promised by present-day progressives—have
desensitized the public to the need for personal responsibility.
So naturally the people from the government, who are
always coming to help us, dove right in.
Did they learn their lesson from the earlier
disastrous policies that created the previous asset bubbles?
Well no, they tripled down on those same policies in
the hopes of re-inflating the bubble yet again once the pandemic goes
away.
The Federal Reserve quickly forced interest rates
back to near-zero and implemented not just QE4, but rather QE∞ (Quantitative
Easing to Infinity).
The Treasury responded in kind promising to spend
whatever it takes.
So the Fed is printing unlimited money and the
Treasury is spending it as fast as it appears out of nowhere.
That’s called
monetizing the debt and it’s economically fatal sooner or later.
The Trump Administration and Congress have pledged to
pay everyone’s wages who isn’t working, to end evictions, to forgive all
kinds of late or non-payments, to buy even junk bonds!
Already the
money supply is exploding and the checks are still going out.
Inflation Alert: Money Supply Expanding At 26x Rate Of QE1
Next likely steps: (1) the Fed will start buying
stocks so government owns the means of production (the definition of
socialism) and (2) the Administration and Congress will ask for trillions
more for “infrastructure” building jobs.
Moral hazard has become moral catastrophe.
OK, so here we are: the economy is shut down;
production and distribution have plummeted; supply chains, including those
cheap products from China, are interrupted, and suddenly we have a
virtually unlimited supply of money.
At the same time, we’re producing fewer goods and
services than ever.
Timid efforts to “restart the economy” will likely
prove false starts indefinitely as the virus resurges wherever they’re
tried.
“Too much money chasing too few goods?” Where have I
heard that phrase before? Oh yeah, a couple decades ago before all this
economic craziness got started in earnest.
Inflation? Yes of course. Inflation is nothing more
than an increase in the money supply. This is inflation by definition and
by orders of magnitude greater than ever before.
Well, then, why aren’t consumer prices going up more?
They didn’t go up commensurately with the increases
in money supply during the previous two asset bubbles because most of the
new money went into the debt and equity markets instead of consumer
prices.
OK, so why won’t that just happen again? We’ll blow
up an even bigger bubble and let the good times roll! Isn’t that what the
currently resurging V-shaped stock market results are showing?
Nope: too much money this time. Too few goods to buy.
Equity markets are unattractive for anyone without the rose-colored
glasses of mindless confidence in the Fed.
Too many dollars with no place to go means the dollar
loses value. People lose confidence in the dollar. The dollar loses its
status as the world’s reserve currency.
Blow a balloon too big and it’ll pop even without a
pin like the Coronavirus to puncture it.
So, this is it, the reckoning, the end game.
Hyperinflation. The Weimar Republic, Argentina, Zimbabwe, the new USA.
The good news: Social Security and other government
pensions and programs will pay in full; the bad news: what they pay won’t
buy much.
On the other hand …
We’ll have no more moral hazard as the government
will have no more ability to supply it.
Medicaid and Medicare? Maybe some residual safety net
will remain, but the smart money will seek protection in the private
market: saving, investing and insuring in real money.
Real money? It’ll be gold again as it always was
under the surface and behind the scenes. It’s the only money that keeps
its value as fiat currencies fluctuate.
Does this have anything to do with long-term care?
You bet.
As the economy stabilizes around real money, we’ll
have no more inflation, no more moral hazard from government “help.”
If Medicaid survives, it will be vastly attenuated,
and certainly not a resource middle class and affluent people can rely on
for long-term care as they have in the past.
Private charity will fill the gap left by
disappearing entitlement programs, but it won’t be enough.
People will have to rely again on personal
responsibility and private means: saving, investment, and insurance, as
they did long ago when America was becoming the great economic powerhouse
it has frittered away.
Long-term care will remain expensive and people will
need it as much as ever.
With no government program to fall back on, private
long-term care insurance will resurge, but underwritten by gold.
We’ll pay premiums, receive benefits, and finance
stable long-term care expenditures with gold, the once and future
objective standard of value.
Instead of “who needs it” private LTCI will become
“can’t go without it” protection.
It’s a long, rocky road ahead, but that’s where we’re
headed.
Your thoughts?
#############################
Updated, Monday, May 4, 2020, 9:00 AM
(Pacific)
Seattle—
#############################
LTC
E-ALERT #20-018: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
Want to slash coronavirus deaths? Start
(really) caring about long term care
-
Coronavirus: Why so many US nurses are
out of work
-
More than 80% of assisted living
facilities report occupancy declines: NIC
-
White House creates national nursing
home safety panel, will deliver 2 weeks’ worth of PPE to every facility
in response to COVID-19 crisis
-
COVID-19 Could Increase Seniors’ Rapid
Disenrollment in Medicare Advantage
-
How Can a Trust Help You Avoid Nursing
Home Costs?
-
Aging in the Time of COVID-19:
Reflections on Life, Health, Family, Community and Purpose - A Chat with
Ken Dychtwald
-
MILLENNIALS SURPASS BABY BOOMERS AS
LARGEST U.S. GENERATION, ENDING 20-YEAR RUN
-
Why Are We So Shocked By COVID-19
Nursing Home Deaths? We Have Been Failing Our Frail Older Adults For
Decades
-
Nursing Homes Were a Disaster Waiting
to Happen
-
Medicare Beneficiaries’ Financial
Security Before the Coronavirus Pandemic
-
COVID-19 May Deplete Social Security
Trust Funds This Decade
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated, Monday, April 27, 2020, 9:00
AM (Pacific)
Seattle—
#############################
LTC
E-ALERT #20-017: LTC NEWS AND COMMENT
LTC
Comment: Do you spend hours searching the internet for useful articles,
key data, and relevant reports to keep you on the forefront of
professional knowledge? Do you lose business because you’re blindsided by
clients or competitors who learn critical information before you do?
Here’s an antidote:
LTC
Clippings: The Center for Long-Term Care Reform notifies subscribers to
our LTC Clippings service daily of information you need to know. Each
message contains only the critical facts about new publications: a title,
representative quote, a link to the original, and our analysis in a
sentence or two. To inquire or subscribe, contact Steve at 425-891-3640
or
smoses@centerltc.com.
Read testimonials by satisfied subscribers
here.
To subscribe online, please click
here.
LTC
E-Alerts: Once a week, we compile our daily LTC Clippings into a summary,
email it to Center for Long-Term Care Reform members, and archive it in
The Zone, our password-protected members-only website. Center members
also receive our weekly LTC Bullet op-ed. To join the Center and receive
all these benefits and more, contact Steve at 425-891-3640 or
smoses@centerltc.com.
We no
longer post our LTC E-Alerts on the Center’s public access website, but
here’s what today’s LTC E-Alert contained: links, quotes and
comments on the following articles, reports, or data:
-
The Potential Health Care Costs And
Resource Use Associated With COVID-19 In The United States
-
National Health Expenditure Projections,
2019–28: Expected Rebound In Prices Drives Rising Spending Growth
-
Coronavirus to accelerate Social Security,
Medicare depletion dates, U.S. officials say
-
Seniors with COVID-19 showing unusual
symptoms, plus: blood clotting an issue
-
A Dozen Facts About Medicare Advantage in
2020
-
Pandemic may push seniors housing occupancy
below 80% for first time
-
Righteous COVID-19 indignation
-
Coronavirus Exposes the Dangers of Age
Segregation
-
ACL Announces Nearly $1 Billion in CARES
Act Grants to Support Older Adults and People with Disabilities in the
Community During the COVID-19 Emergency
-
Pandemic’s Costs Stagger the Nursing Home
Industry
-
CMS Requires SNFs to Report Confirmed
COVID-19 Cases to Residents, Families, CDC
-
Dementia diagnosis often means death within
five years, study finds
-
White House: Senior Care Facility Visits to
Remain Banned Until Final Phase of COVID-19 Reopen Plan
-
CMS Orders Nursing Homes to Report All
COVID-19 Cases to CDC, Plans Public Data Release
-
Some rules of Medicaid for long-term care
are changing
#############################
"LTC E-Alerts" are
a feature
offered by the Center for Long-Term Care Reform, Inc. to members at the
$150 per year level or higher. We'll track and report to you news and
analysis regarding long-term care financing, service delivery, and
research. We hope The LTC E-Alerts will help you attain and maintain a
high level of knowledge and competency in this complex field. The
Center for Long-Term Care Reform, Inc. is a private institute dedicated to
ensuring quality LTC for all Americans (www.centerltc.com).
#############################
Updated,
Monday, April 24, 2020, 9:00 AM (Pacific)
Seattle—
#############################
LTC Bullet: Medicaid and Long-Term Care, the Serial,
Part 7, the End
LTC Comment: The full
Medicaid and Long-Term Care monograph is 78 pages, so we’re
bringing it to you in bite-sized pieces. Here’s the seventh and last one,
after the ***news.***
*** SERIAL ENDS, ACTION BEGINS: Today’s LTC Bullet
brings you the exciting conclusion of
Medicaid and Long-Term Care. In it, we capitalize on the
findings in six earlier episodes to explain why and how Medicaid reform is
necessary and sufficient to improve long-term care service delivery and
financing in the United States. That’s our marker. Future LTC Bullets
will move from analysis and recommendations toward advocacy and
implementation. The U.S. government having thrown open the monetary and
fiscal floodgates, anything is possible now. Will we slip into
hyperinflation, depression, and ever greater government dependency or
revive private markets, competition and personal responsibility? We’ll
tackle that question in a new series of LTC Bullets. Stay tuned!
***
*** IN THE MEANTIME, there’s never been a better time
to renew your support for the Center for Long-Term Care Reform. Our work
was instrumental in winning federal level public policy improvements in
OBRA ’93 (closed Medicaid loopholes and mandated estate recovery) and DRA
’05 (capped home equity exemption and unleashed LTC Partnerships). For the
first time in a decade and a half, the potential for reforming Medicaid at
the federal and state levels is great again. That is the key to unbridle
private long-term care insurance as well. So, please renew and upgrade
your Center memberships; subscribe to LTC Clippings; and urge your
companies to join the Center as corporate members (making your personal
membership free.) Check out our “Membership
Levels and Benefits” schedule for all the details. Contact Steve Moses
at 425-891-3640 or
smoses@centerltc.com. You can also join or upgrade here:
http://www.centerltc.com/support/index.htm. ***
LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL,
PART 7, THE END
LTC Comment:
Episode 1 of our serialization of the
Center’s newest report described the current defective method of
providing and paying for long-term care.
Episode 2 explained how Medicaid became the dominant payor for
long-term care, the dire consequences that ensued, and central planners’
futile efforts to fix the broken system.
Episode 3 showed how scholars made the same mistakes as policymakers,
lamenting long-term care’s problems without analyzing their causes, and
recommending more of the same interventions that caused the problems in
the first place.
Episode 4 focused on how affluent people qualify for Medicaid
long-term care benefits, why they ignore the risk and cost of long-term
care until they need it, and how the government has tried, mostly
unsuccessfully, to curtail artificial self-impoverishment to qualify for
benefits.
Episode 5 explained how and why most long-term care analysts ignore or
misrepresent the vast literature on qualifying for Medicaid long-term care
benefits while avoiding spend down of wealth.
Episode 6 discussed and gave examples of the evidence that Medicaid’s
spend down rules do not prevent middle class and affluent people from
taking advantage of the welfare program’s long-term care benefits. In
today’s seventh and final episode, Steve Moses capitalizes on the
preceding evidence and arguments to explain how long-term care financing
policy must change to ensure quality long-term care for all Americans.
Due to email formatting challenges, we’ll leave out
the content of the report’s extensive footnotes in this serialized
version. But the footnotes are important, and you can find them by
clicking through to the unabridged version
here. Likewise, citations to sources are given in the form (author,
year, page number). To find the full citations for those sources, see the
“References” section at the end of the
full report.
Here’s the seventh and final episode of “Medicaid and
Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform,
Seattle, Washington, published January 17, 2020. This paper was presented
to The Libertarian Scholars Conference on September 28, 2019 in New York
City and to The Cato Institute’s State Health Policy Summit on January 3,
2020 in Orlando, Florida.
Ramifications
If Medicaid is not the
catastrophic poverty-maker it is commonly made out to be, what is it?
Simply put, Medicaid has become a long-term care entitlement for
middle-class and affluent families. Individuals can ignore the risk of
future long-term care expenses, avoid premiums for private insurance, and
then protect home equity and other wealth for heirs if such care is ever
needed, shifting the cost of long-term care to taxpayers. The consequences
of this reality affect every aspect of the long-term care market.
By making nursing home
care virtually free in the mid-1960s, Medicaid locked institutional bias
into the long-term care system, crowded out a privately financed market
for the home care seniors prefer, and trapped the World War II generation
in welfare-financed nursing facilities.
By reimbursing nursing homes
less than the cost of providing the care, Medicaid guaranteed that
America’s long-term care service delivery system would suffer from serious
access and quality problems.
By underfunding most
long-term care providers—leading to doubtful quality—Medicaid incentivized
plaintiffs’ lawyers to launch giant tort liability lawsuits, extract
massive financial penalties, and further undercut providers’ ability to
offer quality care.
By making public
financing of expensive long-term care available after the insurable event
occurred, Medicaid discouraged early and responsible long-term care
planning and crowded out the market for private long-term care insurance.
By compelling
impoverished citizens to spend down what little income and savings they
possessed in order to qualify for long-term care benefits, Medicaid
discouraged accumulation and growth of savings among the poor, reducing
their incentives to improve their stations in life
(De Nardi, French and Jones,
2009, pp. 4-580).
By allowing affluent
people to access subsidized long-term care benefits late in life, Medicaid
encouraged accumulation and growth of savings among the rich who could
pass their estates to their heirs whether they were stricken by high
long-term care expenditures or not, contributing to inequality (Ibid.,
p. 281).
These conditions have
prevailed for Medicaid’s 55-year history. They explain why America’s
long-term care service delivery and financing system is so dysfunctional.
The widespread fallacy of impoverishment sustains this status quo because
scholars fail to challenge it. This explains why long-term care dominates
Medicaid expenditures but remains impervious to reform.
Policy Recommendations
Everyone agrees that
America’s long-term care services and financing system is broken and
unsustainable. But most analysis of the problem fails to address its
causes rooted in public financing. The usual result is ever more emphasis
on expanding government’s role even further. On that path lies more
decline and dysfunction.
If the fundamental cause
of long-term care problems is easy and elastic Medicaid financial
eligibility combined with generous federal matching funds to induce
Medicaid spending by states, then corrective action must address those
causes if it is ever to effect improvements in the symptoms of exploding
costs, dubious access and poor quality.
The best way to eliminate
the incentive for states to maximize federal Medicaid matching funds is,
for the first time ever, to cap those funds at some reasonable level based
on past and anticipated future long-term care expenditures. Without
unlimited access to federal funds and with fewer regulatory strings
attached to the funds they do receive, states will have an incentive to
make the best use of the federal revenue. They will experiment, succeed or
fail, and learn from each other, taking full advantage of America’s
inimitable federal system.
On the consumer side, the
obvious solution is to eliminate incentives in public policy that
discourage early and responsible long-term care planning. One way to do
that would be to end all pathways that enable people to qualify for
Medicaid while protecting income and assets. If individuals and families
truly did face impoverishment when catastrophic long-term care
expenditures occur, that risk and cost would move to the top of their
retirement and estate planning priorities much earlier. But such an
approach would be disruptive, disorienting, and cruel, as well as
politically infeasible.
A less drastic measure
would be to eliminate or greatly reduce Medicaid’s home equity exemption.
Home equity is seniors’ largest asset. As of the third quarter of 2019,
78.9 percent of people over the age of 65 own their homes (U.S Census
Bureau, 2019), and of these 63.2 percent own free and clear of mortgage
debt (Census Bureau, 2017). “Housing wealth for homeowners 62 and older
continues to grow at a steady clip, reaching a record $7.05 trillion in
the fourth quarter of 2018” (Guerin, 2019). Ownership and transfers are
easy to track through public records. Transfers of ownership within 20
years of applying for Medicaid could be deemed disqualifying as all
transfers of any assets are now, though with only a five-year look-back.
With home equity at risk, more people would save, invest or insure for
long-term care. If they failed to do that, they would need to use reverse
mortgages or some other method of public or private home equity conversion
to pay for their care until they became legitimately eligible for public
welfare assistance.
A less politically
objectionable approach would be to allow people to receive long-term care
help from Medicaid when they need it while retaining even more of their
income and assets than is allowed now, but to lien that wealth effectively
and recover it after the recipients’ passing, from their estates. Instead
of making families run the gauntlet of degrading artificial
self-impoverishment methods, let them keep and use what they have saved.
As most of elders’ wealth is in their home equity, securing that wealth
with a publicly administered and enforced home equity conversion program
could reduce the cost of Medicaid and empower far more people to obtain
high quality private long-term care in the most appropriate venue. To
avoid dependency on Medicaid and the eventual liability of estate
recovery, elders and their heirs would have a much stronger incentive to
plan early and responsibly for long-term care risk and cost.
Critics may say we tried
that approach with OBRA ’93, which discouraged divestment of wealth and
required estate recovery. Unfortunately, that strategy did not work
because the legislation left too many loopholes and exclusions enabling
divestment and impeding estate recovery. The Medicaid planning bar
creatively worked around the new restrictions finding ever more ingenious
ways to defeat the policy. Furthermore, states failed to implement; the
federal government did not enforce; and the media neglected to publicize
the new rules that were intended to encourage people to plan ahead to
avoid Medicaid dependency (USDHHS Inspector General, 201482).
Consequently, consumer behavior did not change.
Policymakers should try
again and this time eliminate the loopholes, enforce implementation, and
publicize the methods and benefits of preparing to pay privately for
long-term care. But first, we should all …
Redefine the Problem
Albert Einstein said “We
can't solve problems by using the same kind of thinking we used when we
created them.” The kind of thinking that created the long-term care
problem is that markets cannot provide the services people need without
massive government regulation and financing. No other way of thinking
about the problem has been seriously considered heretofore. But some
recent research suggests how we might reconceptualize the quandary we are
in so that it is not such a huge challenge and may in fact be amenable to
a market-based solution.
Long-term care may not be
the titanic crisis it has been assumed to be. For example, in February
2016, the Department of Health and Human Services Assistant Secretary for
Planning and Evaluation (ASPE) reported:
Using microsimulation
modeling, we estimate that about half (52%) of Americans turning 65 today
will develop a disability serious enough to require LTSS, although most
will need assistance for less than two years. About one in seven adults,
however, will have a disability for more than five years. On average, an
American turning 65 today will incur $138,000 in future LTSS costs, which
could be financed by setting aside $70,000 today (Favreault and Dey, 2016,
p. 1).
That does not sound so
daunting, especially if you consider these authors believe half the cost
of long-term care will be covered by other payers, including Medicaid.
Where would the average person come up with $70,000 today so that it would
appreciate from that present discounted value to the $138,000 he or she
might need to cover long-term care costs in the future? The extractable
home equity of 19.4 million senior households (age 65 plus) at a
conservative Combined Loan to Value (CLTV) of 75 percent was $3.1 trillion
in 2015, averaging $160,000 per household (Kaul and Goodman, 2017, pp. 2-3
and Tables 1 and 2). If Medicaid did not exempt a minimum of $595,000,
more than triple the average extractable home equity amount, a way could
be found to earmark enough of it to cover the total cost of most older
homeowners’ long-term care. By diverting people with sufficient home
equity from Medicaid dependency to financing their own care privately, the
fiscal burden on Medicaid could be substantially reduced.
There is more good news.
In June 2019, Johnson and Wang “simulated the financial burden of paid
home care for a nationally representative sample of non-Medicaid
community-dwelling adults ages sixty-five and older.” They “found that 74
percent could fund at least two years of a moderate amount of paid home
care if they liquidated all of their assets, and 58 percent could fund at
least two years of an extensive amount of paid home care” (Johnson and
Wang, 2019, p. 994). Furthermore: “Nearly nine in ten older adults have
enough resources, including income and wealth, to cover assisted living
expenses for two years” (Ibid., p. 1000). So, the problem is much
more manageable than we thought. All we have to do is persuade people to
liquidate all their assets.
Obviously, there is no
incentive for people to liquidate their wealth as long as Medicaid
long-term care financial eligibility works the way it does. But if
Medicaid’s perverse incentives were changed to encourage responsible
long-term care planning and private payment, how would people respond?
Home equity conversion could handle much of the financial burden for the
majority of home-owning elders. Reverse mortgages would free up cash flow
to cover home care expenses or, for people who plan ahead, the extra
revenue could be used to fund long-term care insurance premiums.
Most analysts, however,
have written off private long-term care insurance as unlikely ever to
penetrate enough of the middle market to become a significant payment
source. But they have always assumed that people would need much more
coverage at too great a cost to attract enough buyers to make a big
difference. That assumption may be wrong. The National
Investment Center (NIC) recently reported that reducing the annual
cost of seniors housing by $15,000, from $60,000 to $45,000 per year,
would expand the middle market for seniors housing by 3.6 million
individuals enabling 71 percent of middle-income seniors to afford the
product (NIC, 2019, April83).
Where could consumers
find that extra $15,000 to bring the cost of seniors housing into reach?
The premium for an annual long-term care insurance benefit of $15,000
would only cost a small fraction of the premium required for the full
coverage that consumers find so financially daunting now. Unfortunately,
insurance regulations forbid carriers from offering coverage with a
benefit of less than $18,000 per year. Once again, well-intentioned
regulation stands in the way of sensible long-term care policy and
planning.
Then there is this. A
Cato Institute Policy Analysis reports that “Improved estimates of poverty
show that only about 2 percent of today’s population lives in poverty,
well below the 11 percent to 15 percent that has been reported during the
past five decades” (Early, 2018, p. 1). How can that be? “By design, the
official estimates of income inequality and poverty omit significant
government transfer payments to low-income households; they also ignore
taxes paid by households” (Ibid., p. 2). What is the bottom line?
“The net effect is that pretax data overstate the true income of
upper-income households by as much as 50 percent, and missing transfers
understate the true income of lower-income households by a factor of two
or more” (Ibid., p. 4). The rich are poorer and the poor, richer
than we thought. “More than 50 years after the United States declared the
War on Poverty, poverty is almost entirely gone. … Public policy debate
should begin with the realization that only about 2 percent of the
population—not 13.5 percent—live in poverty” (Ibid., p. 21).
Former Democratic
presidential candidate New York Mayor Bill de Blasio is correct when he
says “There's
plenty of money in this country.” He’s mistaken when he adds “it’s
just in the wrong hands.” It’s in exactly the right hands, those of
the people with personal resources or home equity sufficient to fund their
own long-term care and stay off Medicaid. All they need is positive public
policy incentives to get them to use it. But, unfortunately, the kind of
corrective action needed to achieve that outcome is highly unlikely in the
current economic environment of profligate fiscal and monetary policy.
The Broken Rhythm of
Reform
Historically, progress
toward making Medicaid a better long-term care safety for the poor—by
diverting the middle class and affluent from dependency on it—tends to
occur after major economic downturns when state and federal governments
face serious budgetary constraints. After most recessions since 1965,
congresses and presidents of widely divergent ideological persuasions
backed legislation closing Medicaid long-term care eligibility loopholes
and encouraging early and responsible long-term care planning. But as each
recession was followed by a rapid economic recovery in which budgetary
pressure abated, Medicaid long-term care benefits always reverted to
virtually universal availability for all economic classes.
This pattern has changed
since the start of the new millennium. After the recession from March 2001
to November 2001 following the internet bubble’s implosion, economic
recovery came more slowly than before. Likewise, it took much longer for
legislation discouraging the excessive use of Medicaid long-term care
benefits to be passed. The Deficit Reduction Act of 2005, which imposed
the first cap on home equity and expanded the asset transfer look back
period, was not signed into law until February of 2006, nearly five years
after the start of the previous recession. Economic recovery came and,
true to form, enforcement of DRA 2005 declined.
The new boom ended when
the housing bubble burst, causing the Great Recession of December 2007 to
June 2009. Again, economic recovery came very slowly. To date, over ten
years after the end of the last recession, we have seen no action to spend
Medicaid’s scarce resources more wisely by aiming them toward people most
in need. In fact, public policy analysts and advocates are moving in the
opposite direction, towards proposing yet another compulsory government
program funded by taxpayers to expand public financing of long-term care
for all.
What might explain slower
economic recoveries in recent years and less attention to the cost of
Medicaid long-term care benefits? The Federal Reserve forced interest
rates to artificially low levels during and since the Great Recession. The
consequences of this policy have ramified through the economy in many
ways. One way is that government has been able to finance deficit spending
and the rapidly increasing national debt at considerably lower carrying
costs than before, when interest rates were much higher. By enabling
politicians to spend more without facing the normal budgetary
consequences, this new economic policy has attracted greater financial
resources, including borrowed funds, into public financing of all kinds
and simultaneously diverted private wealth into low-interest-rate-induced
malinvestment. Consequently, political concern about burgeoning budgets
and debt has subsided and no significant effort to preserve Medicaid funds
by targeting them to the poor has occurred.
The danger is that just as
excessive public spending and private malinvestment in the early 2000s led
to the housing bubble and its consequent recession, so the current much
larger credit bubble driven by excessive government borrowing and spending
could lead to an even greater economic collapse. With the current national
debt exceeding $23 trillion and total unfunded entitlement liabilities
around $128 trillion, a return to economically realistic market-based
interest rates would render the federal government immediately insolvent
(The National Debt Clock, 2019).
Further exacerbating the
problem of long-term care financing is the fact that the long-anticipated
age wave is finally cresting and will soon crash on the U.S. economy. Baby
boomers began retiring and taking Social Security benefits at age 62 in
2008. At age 65 in 2011, they turned the Social Security program cash-flow
negative (Burtless, 2011). Boomers began taking Required Minimum
Distributions (RMDs) from their tax-deferred retirement accounts in 2016,
depleting the supply of private investment capital. They will begin to
reach the critical age (85 years plus) of rising long-term care needs in
2031, around the time Medicare (2026) and Social Security (2035) are
expected to deplete their trust funds, forcing them to reduce benefits.
Of course, Medicaid is
the main funder of long-term care, but according to the Centers for
Medicare and Medicaid Services Chief Actuary in a statement of consummate
denial: “. . . Medicaid outlays and revenues are automatically in
financial balance, there is no need to maintain a contingency reserve,
and, unlike Medicare, the ‘financial status’ of the program is not in
question from an actuarial perspective” (Truffer, Wolfe, and Rennie, 2016,
p. 3). In summary, conditions are coalescing for a potential
economic cataclysm in or before the second-third of this century and
public officials are almost entirely ignoring the risk.
Conclusion
America’s long-term care
services and financing system is badly broken. An oncoming demographic age
wave guarantees the symptoms of its dysfunctionality will get much worse
if something is not done. But to address the symptoms of high cost and low
quality without reducing reliance on the public financing which caused
them will only make matters worse. Unfortunately, that is the course most
scholarship on this subject takes, resulting in ever more urgent calls for
even more state and federal financial involvement, with citizens compelled
to participate and |