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

READ STEVE'S BIO

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Updated, Monday, April 6, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-014: LTC NEWS AND COMMENT

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

LTC Clippings: The Center for Long-Term Care Reform notifies subscribers to our LTC Clippings service daily of information you need to know. Each message contains only the critical facts about new publications: a title, representative quote, a link to the original, and our analysis in a sentence or two. To inquire or subscribe, contact 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:

Coronavirus Is Making the Public Pension Crisis Even Worse
U.S. assisted living costs range from $50,892 to $62,976 per year, on average: survey
Here's Why Genworth Financial Is Soaring Today
As Nursing Homes with Cases Reach 400, AHCA Advises Operators to Assume All Untested Patients Positive for COVID-19
Second thoughts: Some opting to remove parents from senior living communities
CMS waives nurse-aide training, certification requirements
She’s Alone, 105 and in a Nursing Home Threatened by the Virus
Coronavirus Lands Another Blow to Senior Housing Operators
Should You Consider Taking a Loved One Out of a Long-Term-Care Facility Now?
Providers: Death total would rise if nursing homes forced to admit COVID-19 patients

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

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Updated, Monday, March 30, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-013: LTC NEWS AND COMMENT

This Causes Most Falls for Older Adults
When Dementia Meets the Coronavirus Crisis
Older patients stranded in hospitals as nursing homes turn them away over coronavirus
Who cares for those most vulnerable to COVID-19? 4 questions about home care aides answered
Operator survey: Coronavirus hasn’t scared families away from moving loved ones into senior living
Moderate drinkers have lower amyloid-beta levels, study finds
COVID-19 May Delay China Oceanwide-Genworth Deal Closing
Report documents quick spread of new coronavirus through U.S. nursing facilities
How Would Free Market Health Care Respond To The Coronavirus?
LTC providers getting creative to boost seniors’ morale during pandemic
New COVID-19 tip-off may be loss of smell

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Updated, Friday, March 27, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 5

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 fifth one, after the ***news.***

*** THE TEST: Consensus has been forming among analysts for the past several years about the most politically expedient way to improve long-term care financing policy. The best articulation of the proposal I’ve seen goes like this. We should set up “A public catastrophic insurance program for LTSS costs that takes effect after an income-related waiting period has been met.” (Cohen, Feder, and Favreault, 2018, p. 7) What this means is that the federal and/or state governments should back up catastrophic long-term care expenses by borrowing more money than we have already (nearly $24 trillion), as there is no un-borrowed money to spend. If we’re going to try this, now is the time. The Federal Reserve has just removed all limits on government borrowing. Congress is about to lift all limits on spending. If it is possible to solve problems by printing money and spending it without limits, then now’s the time to throw long-term care into the mix as well. Will it work? What do you think? That’s THE TEST. If you want to know what I think, read the report serialized in today’s LTC Bullet.***

*** PREDICTIONS: We all lament cancellation of the 2020 ILTCI conference that would have begun in a few days. Fill that void vicariously by reading our History of LTC Insurance Conferences (2019). Here’s a little peek back at the Jacksonville, Florida 17^th Annual Inter-Company Long-Term Care Insurance Conference’s closing general session on March 28, 2017, which explored the topic “New President and Congress: Implications for Aging and LTC Finance.” Participants were asked to vote on several questions. One of them follows including my response. See the others in “LTC Bullet: LTC Policy Poll Results,” April 14, 2017.

“Q7. Do you think the next four years will bring an improved economic climate? Or will we see a continuation of low interest rates?

1. Improved economic climate/higher interest rates = 76%
2. Stay pretty much the same = 13%
3. Get worse = 11%

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 with the age wave and entitlement insolvencies looming. 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 in competition with The Fed; carrying costs on our $20 trillion debt 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.)”

LTC Comment: I was a little early with this prediction. It took the current pandemic to prick the asset bubble I described, but here we are. What comes next is the critical TEST for the U.S. economy and for long-term care financing. Stay tuned. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 5

LTC Comment: Episode 1of our serialization of the Center’s newest reportdescribed 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 3showed 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.

In Episode 5, which follows, Steve Moses explains 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.

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 fifth 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.

Why Do Analysts Ignore this Vast Literature on Medicaid Eligibility Planning?

Long-term care researchers rarely mention, and never delve deeply into, the Medicaid planning literature. They pretend these easier pathways to eligibility are not widely used. Analysts might argue that widely available consumer information and the formal legal literature on Medicaid planning are irrelevant because the fact that people can qualify for Medicaid while preserving most of their wealth does not mean they do it. All that matters is the evidence showing whether people do or do not spend down. Yet, when analysts ignore the evidence of easy financial eligibility and widespread Medicaid planning, they are predisposed to expect more rather than less genuine spend down. If they knew and understood the methods, techniques, and incentives to use them described in this literature, they would be more likely to look for, find and understand evidence that disproves the presumption of widespread asset spend down for care.

Analysts know the official laws and regulations governing Medicaid long-term care eligibility are complicated and pliant. Yet they frequently apply only the ostensibly severe standards to data on seniors’ wealth and then conclude people must be spending down millions before they qualify. If Medicaid denies access to applicants with more than $723 per month of income and $2,000 in assets, then surely, they reason, the vast majority of people on Medicaid have spent down, often catastrophically before qualifying. With that mistaken assumption firmly fixed in their minds, analysts conduct studies and search giant data bases looking for evidence to support it. This confirmation bias skews what they find.

Analysts could avoid such bias by reviewing and taking into account the legal literature on how to qualify for Medicaid without spending down for care. But they do not, which is a peculiar oversight as the evidence adduced and referenced above is inescapable. How and why do scholars discuss Medicaid long-term care financial eligibility while avoiding the facts of easy access to Medicaid?

Evasion of and Equivocation on Critical Concepts and Facts

Long-term care scholarship does include several excellent explanations of the complicated federal and state Medicaid long-term care financial eligibility rules such as Musumeci, Chidambaram and O’Malley Watts, 2019. But these treatments rarely draw out the ramifications of allowing relatively high-income people with substantial wealth to qualify for public benefits. Nor do they discuss how the superficially strict but fundamentally generous income and asset rules can be stretched to expand eligibility to include even the very well-to-do. When analysts do acknowledge that Medicaid long-term care benefits reach more than the poor, they nearly always equivocate on key concepts such as impoverishment, spend down, decumulation, median wealth, Medicaid planning and out-of-pocket expenses. Moreover, they use highly dubious data sources to substantiate their conclusions. These examples will clarify this point.

Impoverishment

Medicaid long-term care eligibility requires inadequate cash flow, i.e. insufficient income, to cover all of an individual’s medical and long-term care costs. But it does not require low income, low assets, or financial destitution. Yet a typical analysis claims “Medicaid only covers the long-term care costs of the indigent” (Friedberg, Hou, Sun, and Webb, 2014, p. 1). Synonyms for the term “indigent” include “poor, impecunious, destitute, penniless, impoverished, poverty-stricken, down and out, pauperized, without a penny to one's name,” and many more (Dictionary definition of indigent). Clearly, if people with substantial income and assets can qualify for Medicaid long-term care benefits, then eligibility does not require impoverishment, much less indigence. The right conclusion to reach about Medicaid’s role in long-term care financing is that it substantially ameliorates the risk and cost of long-term care, not that it impoverishes people.

Spend Down

Medicaid financial eligibility rules allow people to spend down their private income and assets to reach eligibility limits. Income spend down must be done to purchase medical or long-term care services (Medicaid.gov, 2019)⁶⁹. But asset spend down does not have the same requirement (ElderLawAnswers, 2018⁷⁰). Excess assets may be spent on or converted to exempt resources. There is no requirement to spend down assets on medical or long-term care expenses (Schneider and Huber, 1989, p. 142⁷¹). An expensive birthday party or “one last tour of Reno’s finest establishments” (Gilfix and Woolpert, p. 42⁷²) are viable asset spend down options. Yet the presumption that wide swaths of the American public are forced to spend down their life’s savings on long-term care has prevailed in the research literature for decades.

When several “spend down” studies in the late 1980s and early 1990s set out to prove widespread asset spend down, they found it was far less common than previously believed. A 1992 analysis concluded: “Based on the studies conducted to date, it appears thatsomewhere between one in four and one in five persons who originally enter nursing homes as private payers convert to Medicaid before final discharge (Spend-Down I)” (Adams, Meiners and Burwell, 1992). Moreover, neither these early studies nor more recent ones distinguished between real spend down, paying privately for care until eligible, and artificial spend down, qualifying by purchasing exempt assets or otherwise sheltering or divesting wealth. Hence:

Very little is known about what has actually taken place for the individuals whom the foregoing studies have identified as asset spend-downers. Indeed, we cannot actually be sure these individuals have depleted assets; most of the studies can only identify that a change in payor source has taken place (Ibid.).

A well-known, more recent reportfurther exemplifies the point.“Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy” confidently states: “The high cost of long-term services and supports (LTSS) results in catastrophic out-of-pocket costs for many people needing services, some of whom spend down to Medicaid eligibility” (Wiener, et al., 2013, p. 1). Yet what this report calls “spend down” is nothing more than the “transition” from non-Medicaid status to Medicaid eligibility, which as explained above, is achievable without catastrophic financial consequences.

Asset Decumulation

Recent research on asset decumulation in retirement belies the conventional wisdom that widespread long-term-care spend down occurs. In a study sponsored by the Employee Benefits Research Institute, Sudipto Banerjee observed: “One of the assumptions underlying many models used to measure retirement income adequacy is that retirees will spend down their accumulated assets to fund their retirement needs.” Then he asked“While this may make sense in theory, do people actually behave like this?” (Banerjee, 2018, p. 4) What he found was stunning. People with relatively low savings, under $200,000 in non-housing assets, dropped in wealth only 24.4 percent in the first 18 years of retirement, a rate of asset decumulation “definitely much lower than what has been traditionally assumed by most retirement models” (Ibid., p. 5). Those with $200,000 to $500,000 dropped only 27.2 percent (Ibid., p. 7). “So, in this group as well, retirees did not spend down their assets as quickly as retirement models would generally predict” (Ibid.). Finally, the group with over $500,000 dropped only 11.2 percent. “So, the group with the highest level of assets had the lowest rate of asset spend down” (Ibid.).

Banerjee then asks “Why are retirees not spending down their assets?” (Ibid.) He speculates that people are reluctant to expend their savings because they do not know how long they will live or how large their medical or long-term care expenses may be. They may wish to leave a bequest or they are just being cautious or saving is a habit for them. But there could be a much simpler explanation. Once in retirement, consumers who safely ignored the risk and cost of long-term care during their work lives finally become concerned after their employment income has ended. Decades of academic studies and media reports convince them they will lose everything if they succumb to the high risk of needing long-term care. So, as best they can, people preserve their assets and spend only income. But catastrophic spend down for long-term care is a myth because Medicaid pays for most expensive long-term care, exempts most assets, is easy to get after care is needed without spending down wealth significantly and only requires income as the patient’s contribution to the cost of care. Consequently, after decades living in retirement, most people at most levels of wealth spend down very little.

Other research does show that people do spend down very rapidly at the very end of life, especially in the last year. But, again, no one knows for sure how much of this depletion of measurable wealth represents real or artificial spend down. French, et al., found that medical spending before death, combined with burial expenses explained only “about 24 percent of the decline in assets of the soon-to-be deceased and about 37 percent of the decline in assets in the last year of life” (French, De Nardi, Jones, Baker, and Doctor, 2006, p. 2). The bottom line question, however, is how much Medicaid actually helps affluent people defray the cost of late-life chronic illness and the answer is striking. For households at the top of the income distribution, Jones, et al., found

Medicaid covers 21 percent of lifetime costs at age 70, with the fraction rising to nearly 30 percent at age 100. While most high-income households do not receive Medicaid, those that do qualify under the Medically Needy provision, which assists households whose financial resources have been exhausted by medical expenses [N.B.: Or by Medicaid planning, a key point unmentioned in this article]. Such households tend to have high medical expenses and tend to receive large Medicaid benefits (Jones, Bailey, De Nardi, French, McGee, and Kirschner, 2018, p. 24).

The fact that Medicaid offsets upwards of one quarter of the lifetime medical and long-term care expenses of high income households is staggering and belies the common presumption that people must and do spend down into impoverishment to obtain benefits.

Median Wealth

Analysts focus on people with median or less income and assets, but they routinely evade the more interesting questions of whether and how people with much higher wealth qualify for Medicaid. For example, in testimony before the Commission on Long-Term Care, Richard W. Johnson of the Urban Institute summarized his research findings that people who end up in nursing homes on Medicaid tend to have relatively low incomes and assets. Then he concluded

Most older adults who end up on the program would never have been able to earn enough income or accumulate enough wealth to cover their nursing home costs. It seems likely that Medicaid will continue to play an important role in long-term care financing as long as those with long-term care needs are disproportionately those with limited financial resources (Johnson, 2013, p. 12).

It should not evoke surprise that poor people qualify for Medicaid or that most people who qualify for Medicaid are, and many always were, poor. Helping the poor is the program’s statutory purpose. But, what about people who do have income and assets well above the median? Take Medicare beneficiaries for example. The Kaiser Family Foundation states

While a small share of the Medicare population lives on relatively high incomes, most are of modest means, with half of people on Medicare living on less than $26,200 and one quarter living on less than $15,250 in 2016. The typical beneficiary has some savings and home equity, but the range of asset values among beneficiaries is wide and varies greatly across demographic characteristics. . . . As policymakers consider options for decreasing federal Medicare spending andaddressing the federal debt and deficit, these findings raise questions about the extent to which the next generation of Medicare beneficiaries will be able to bear a larger share of costs (Jacobson, Griffin, Neuman, and Smith, 2017, pp. 6-7).

In essence, Kaiser says Medicare beneficiaries are so poor that it behooves policymakers not to consider “decreasing federal Medicare spending” when they are “addressing the federal debt and deficit.” But, what about Medicare beneficiaries who are not so poor? Would they still qualify for Medicaid long-term care benefits?

According to the Kaiser issue brief, half of all Medicare beneficiaries have incomes of $26,200 or less (Ibid.). That is more than double the $12,490 poverty guideline for a single person as of 2017, but poor enough to be sure. These are the people we might hope the Medicaid long-term care safety net protects. In fact, it does. Anyone needing formal long-term care with that level of income would qualify easily anywhere in the United States.

But what about the other half of Medicare beneficiaries? Forty-five percent of them had incomes between $26,200 and $103,450. That is hardly impoverished. Could someone with an annual income of up to $103,450, at the 95^th percentile of all Medicare beneficiaries, qualify for Medicaid LTC benefits? Yes. All it would take is paying the cost of a nursing home out of pocket at a little more than the median national annual rate for a semi-private bed ($89,292), hardly uncommon in high-cost states like California, New York or Massachusetts. Anyone in the $26,200 to $103,450 range would qualify in most states as long as their total uncompensated medical and long-term care expenses exceeded their income, as they likely would for people who need expensive long-term services and supports.

Turning to the savings of Medicare beneficiaries, we find the same upside down policy incentives as for income. The one-half of beneficiaries with the least savings qualify easily for Medicaid LTC benefits, but so do most of the upper half.

Half of Medicare beneficiaries have savings of $74,450 or less, including “retirement account holdings (such as IRAs or 401Ks) and other financial assets, including savings accounts, bonds and stocks” (Ibid., p. 3). Although their savings exceed the usual Medicaid limit of $2,000 in countable assets, these people can easily purchase extra home equity and other exempt assets, in any amount, such as personal belongings, home furnishings, prepaid burial plans, term life insurance, an automobile, etc., in order to reduce their countable resources and reach the asset eligibility limit.

But,what about the 45 percent of Medicare beneficiaries who have savings between $74,450 and $1.4 million? These higher-savings seniors generally have greater access to professional financial advice on how to protect their wealth from long-term care expenditures. They can avail themselves of Medicaid’s $595,000 to $893,000 home equity exemption and purchase other exempt assets as well; they can take advantage of loopholes favoring the affluent such as Medicaid-friendly annuities, irrevocable income-only trusts, spousal refusal and reverse half-a-loaf strategies; or they can simply divest their savings five years or more before applying for Medicaid as most Medicaid planning attorneys recommend.

Because it is easy and financially beneficial to qualify for Medicaid long-term care benefits while sheltering or divesting up to $1.4 million (the 95^th percentile of Medicare beneficiaries’ savings) or more, Medicaid planners do a land-office business often in practices with multiple geographic locations.⁷³

Medicaid Planning

Medicaid planning is the practice of reconfiguring income and assets, with or without professional legal advice, to achieve financial eligibility for Medicaid long-term care benefits while minimizing financial consequences. Analysts seldom cite the extensive legal literature on Medicaid planning nor do they acknowledge the omnipresent information on its many methods and techniques available online and in the popular media. Instead, when they write about decumulating wealth to qualify for Medicaid, they assume and imply that savings are used to purchase long-term care rather than being divested, diverted, or sheltered to achieve eligibility.

In the rare instances when analysts consider the possibility that people might qualify for Medicaid without spending down wealth, they write only about “asset transfers” without considering other far more common and effective Medicaid planning techniques. For example: "[C]ritics contend that . . . Medicaid pays for the care of most nursing home residents because people with the resources to afford their own care—middle-income and wealthier people, even 'millionaires'—transfer their assets to qualify for public subsidies intended for the poor” (O’Brien, 2005, p. 2). First, no one contends that “most nursing home residents” transferred assets. Asset transfers are very expensive for taxpayers, having increased Medicaid spending by as much as “1 percent of total Medicaid spending for long-term care” (Waidmann and Liu, 2006, p. 1) or $1.7 billion as of 2016. But asset transfers are only the tip of the Medicaid planning iceberg, a minor factor compared to the more common methods of artificial self-impoverishment. Yet the O’Brien article makes only this passing reference to “establishing trusts,giving cash gifts to children and grandchildren, or otherwise concealingtheir ability to pay for their own care by converting countable assets toexempt forms (by spending assets on a car or on a home or home renovation,since those assets are not counted in making a Medicaid eligibilitydetermination)”(O’Brien, 2005, p. 2). By focusing exclusively on asset transfers while ignoring the abundant evidence for the more important Medicaid planning techniques, this article and most of its type violate the Strawman logical fallacy.⁷⁴

Furthermore, formal Medicaid planning itself pales in significance compared to the simple reality explained above that most income and assets do not impede access to Medicaid long-term care benefits. Average middle class people qualify fairly easily without using asset transfers or other Medicaid planning techniques that, when employed, enable even the wealthy to qualify by following sophisticated legal advice.

Long-term care researchers sometimes debunk the idea that Medicaid planning is common among the well-to-do by suggesting that Medicaid’s reputation for poor access and quality would discourage people with financial means from seeking eligibility. Two points rebut that argument. First, the principal drivers behind Medicaid planning are not the ailing parents, but rather the adult children who want to protect their inheritances and therefore have a financial conflict of interest. Second, Medicaid planners routinely advise clients and their families not to worry about Medicaid’s poor reputation. By holding back enough “key money” for the parent to pay privately for a few months, they can buy their way into the best facilities which have relatively few Medicaid beds. Nursing homes routinely give admission preference to higher-paying private payers (Gandhi, 2019, p.1⁷⁵). Then when the last of the cash runs out, the attorney files the Medicaid application and the client remains in the preferred facility because state and federal laws prevent expelling residents simply because their source of payment changes from private to Medicaid. Ironically, poor people for whom Medicaid is supposed to be a safety net, lack the key money to ensure access to the best care. They go to the Medicaid facilities with the bad reputations.

Out-of-Pocket Expenditures

Some analysts wrongly insist Medicaid requires impoverishment by claiming out-of-pocket expenditures are higher than they really are. For example, Melissa Favreault and Judith Dey conclude “Families will pay about half of the costs themselves out-of-pocket ….” (Favreault and Dey, 2016, p. 1). They arrive at that figure by including room and board expenses in residential care settings—costs that people would incur whether they need long-term care or not—and by excluding Medicare post-acute care expenditures, which as explained above, are critical to sustain Medicaid’s viability as the dominant long-term care financing source. The truth is that out-of-pocket long-term care costs have been declining for half a century. In 1970, five years after Medicaid began picking up the long-term care tab, nearly half of nursing home expenditures still came from private resources. That share has dropped to almost one quarter as of 2017, including the spend-through of Social Security income, as explained earlier. Bottom line, over 90 percent of the cost of nursing home care in the United States is explained without counting out-of-pocket asset, as opposed to income, spend down (Colello, 2018, p. 1⁷⁶).

The situation with home health care financing is very similar. According to CMS, of the $102.2 billion America spent on home health care in 2018, Medicare covered 39.4 percent and Medicaid 35.1 percent, totaling 74.5 percent.Private insurance paid 11.9 percent. Only 9.9 percent of home health care costs were paid out of pocket, roughly one dollar out of every $10, and some portion of that amount was income spend down that Medicaid requires from recipients. The remainder came from several small public and private financing sources(CMS, 2020, Table 14).

Faulty Data

When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. These longitudinal surveys contain information on home values, automobile ownership, liquid assets, farms and other businesses, retirement accounts, and other assets (De Nardi, French and Jones, 2016). Noteworthy is the fact that each of these financial holdings, as explained above,is either expressly exempt under federal law or easily converted into an exempt asset for purposes of achieving Medicaid long-term care eligibility. In other words, it would not matter for purposes of determining Medicaid long-term care eligibility whether such assets were retained or spent down.

Furthermore, the HRS and AHEADdata are highly dubious regarding amounts held in each of these asset classes.One expert describes “measurement errors in the data, particularly those arising from item nonresponse and frominaccurate respondent reports of the ownership and level of assets” (Venti, 2011, p. 3). Another identifies several other problems with the data including

The Health and Retirement Study contains no information on health and long-term services and supports expenditures, including out-of-pocket expenditures. Thus, it is not possible to directly link transition to Medicaid with out-of-pocket expenditures for health and long-term services and supports. … Finally, information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility (Wiener, et al., 2013, p. 50).

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 hidden or 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 by putting them on Medicaid 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 affluent 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. Yet analysts routinely accept the HRS/AHEAD data as though it were unchallengeable. They often treat such data as incontrovertible proof of widespread catastrophic long-term care spend down.

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Updated, Monday, March 23, 2020, 10:40 AM (Pacific)

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LTC E-ALERT #20-012: LTC NEWS AND COMMENT

Nursing Home and Assisted Living Breaking News: Revised DHS Guidance for Visitation
FAQs on Medicare Coverage and Costs Related to COVID-19 Testing and Treatment
Senior housing and care facilities could help employ today’s out-of-work restaurant, hotel and retail workers
Post-Acute Bed Capacity Concerns Loom as COVID-19 Cases Grow
U.S. coronavirus death toll surpasses 100
Coronavirus Is Changing The Way We Care For Frail Older Adults
Coronavirus bill provisions would ‘decimate’ senior living workforce, organizations say
CMS waives three-day stay requirement, MDS deadlines as dining struggles emerge amid COVID-19 response
Opportunities To Expand Telehealth Use Amid The Coronavirus Pandemic
McKnight’s 40 for 40: Bill Thomas

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Updated, Monday, March 16, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-011: LTC NEWS AND COMMENT

BREAKING: Feds to ban most nursing home visitors in escalation of coronavirus fight
Denver 2020 ILTCI Conference Cancelled
The Federal Government Is on an Unsustainable Fiscal Path
2020 Alzheimer’s Webinar Series
AHCA’s Parkinson: COVID-19 ‘Almost a Perfect Killing Machine’ for Elderly
Avalanche of Alzheimer's Cases: Are We Ready?
Study links 3 key risk factors to coronavirus deaths among older adults
BREAKING: Feds, providers take ‘unprecedented’ action regarding visitor access at long-term care facilities over COVID-19 fears
COVID-19: What's Cancelled, What Isn't
Nursing Homes Face Unique Challenge With Coronavirus
Senior living communities in Washington, Maryland take precautions after positive COVID-19 test results

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Updated, Friday, March 13, 2020, 10:40 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 4

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 fourth one, after the ***news.***

*** DENVER 2020 ILTCI CONFERENCE CANCELLED: “The Executive Committee of the ILTCI has monitored the COVID-19 virus closely. The situation in the host city of Denver, Colorado has worsened, including the governor of Colorado declaring a state of emergency. Unfortunately, we feel that it is impossible to proceed with the 2020 conference given the facts surrounding this pandemic. As likely goes without saying, we put the safety of our members first. Like most conferences, professional sports teams and other organizations whose members planned to meet in any material number this March, we have decided that proceeding with the conference does not justify the risk that our members could become ill. Steps taken by our members to mitigate the risk of infection have already resulted in speaker and attendee cancellations in significant numbers.

As a result, the ILTCI's Board of Directors voted unanimously to cancel the 2020 conference. We are continuing to evaluate whether the meeting can be rescheduled at a later time. As you can surely appreciate, that evaluation will be contingent on the future trajectory of COVID-19, which is presently unknown.

We will soon reach out to attendees, exhibitors, and sponsors under separate cover with communications regarding the implications of this cancellation.

We will have FAQs available soon on our website, www.iltciconf.org.

Sincerely,
The ILTCI Executive Committee”

LTC Comment: This is a sad but sensible decision. The virus pandemic puts older and immune-deficient people at greatest risk, the very people private LTCI aims to protect financially. What a PR fiasco if someone had sickened at the meeting spreading the infection and carrying it home. The ILTCI Conference has a long, proud tradition. We’re confident it will return next year bigger and stronger than ever. In the meantime, check out our history of the long-term care insurance conferences including all 19 ILTCI’s up to now: History of LTC Insurance Conferences (2019). We should all express our appreciation to the ILTCI conference’s organizers, staff, and contributors for their dedication, hard work and consummate professionalism under extremely difficult circumstances.

***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 4

In Episode 4 of this series, which follows, Steve Moses explains how affluent people qualify for Medicaid long-term care benefits and why they ignore the risk and cost of long-term care until they need it. He then describes the vast popular and legal literature on “Medicaid planning”--artificial self-impoverishment to qualify for assistance--providing many quotes as examples. Finally, he recounts each of the statutory measures taken by numerous presidents and congresses to counteract Medicaid eligibility abuse while also explaining how the Medicaid planning bar circumvented each of those corrective action measures.

Here’s the fourth 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.

Are Consumers Planning to Use Medicaid for Long-Term Care?

Do consumers deliberately plan to take advantage of Medicaid if they ever need long-term care? Do they know the rules on how to qualify for Medicaid long-term care benefits while minimizing the financial spend down consequences? Research suggests they do not. Most people believe mistakenly that Medicare or their health insurance will cover long-term care (AP-NORC, 2017, p. 2⁶⁶). They remain blissfully ignorant of long-term care risk despite being inundated with claims like those cited above insisting the government will not help with long-term care costs except after one’s personal resources are exhausted. What seems to happen is that consumers ignore the alarmist information about catastrophic spend down risk until they need expensive long-term care. At that point, they become quickly aware of information on how to avoid serious spend down liability and they use it, with or without the help of professional advisors.

Such consumer behavior is rational and complies precisely with the real, though unintentional incentives in Medicaid eligibility policy. Eventual easy access to Medicaid long-term care benefits enables consumers to ignore warnings of long-term care risk with impunity. Then, if and when they need high-cost long-term care, they focus on how to pay and quickly discover the many ways to qualify for Medicaid. By then, however, the damage is done. It is too late, after someone already needs care, for him or her to save, invest, insure or otherwise prepare to pay privately for care. At that stage, Medicaid is the path of least resistance.

How Do People Qualify for Medicaid Long-Term Care Benefits While Preserving Most Wealth?

Once people are stricken by chronic illness that requires expensive long-term care, they and their families quickly become sensitive to the question of who pays and who does not. At first it sounds like they are on their own and the consequences could be devastating. But then they begin to learn how the system really works. After receiving no help from their Social Security, Medicare, or health insurance, they hear about Medicaid. When they—or more likely their adult children, as the parents themselves are disabled and often demented—go to the local welfare office, they receive a long, complicated Medicaid application form with many items of financial verification to complete, such as bank balances, home ownership and equity, asset transfers and why they made them, and so on. But they will also learn from the local Medicaid eligibility worker that income is not usually an obstacle, that many assets are totally exempt, and that they can and should use countable assets such as cash and liquid investments to purchase non-countable resources, such as prepaid burial plans or home improvements, in order to hasten the process of spend down and quicken eligibility. Some eligibility workers are more forthcoming than others with information on how to facilitate eligibility for benefits, but most are caring people eager to help families negotiate an emotionally and financially difficult transition.

By this point, people discover information everywhere on how to navigate the crisis. Consumer information on painlessly qualifying for Medicaid is universally available. How-to and self-help books abound. An internet search for “Medicaid planning” reveals thousands of articles on how to qualify without spending down significantly. Anyone can search “Medicaid planning in [your state]” to find websites of law firms that specialize in the practice. Many such firms offer online articles explaining in general how Medicaid planning works, but also warning, to attract clients, why it is too complicated for laypersons to attempt without their professional guidance. Such firms routinely obtain, fully document, fill out, and submit the Medicaid application, often inches thick with verifying documents, to the state agency on behalf of their affluent clients’ families. MedicaidPlanning.org encourages advisors “of any kind (e.g., attorney, financial planner, CPA, care planner, etc.)” to provide the service and offers a book and training on how to impoverish people artificially to qualify them for Medicaid. The American Council on Aging, not to be confused with AARP’s National Council on the Aging (NCOA), offers these Asset Planning Strategies covering “Irrevocable Funeral Trusts, Spousal Asset Transfers, Annuities, Spend Down Excess Assets, Lady Bird Deeds, Medicaid Divorces, Medicaid Asset Protection Trusts, ‘Half a Loaf’ Strategies, Income Planning Strategies, Spousal Income Transfers, Qualified Income Trusts/Miller Trusts, and Income Spend Down.”

Access to a Medicaid planner anywhere in the country is facilitated by the National Academy of Elder Law Attorneys (NAELA), the professional association of lawyers who specialize in the practice of Medicaid planning. NAELA has a national membership of 4,500 and an annual budget of $2 million (NAELA, 2019). Although elder law attorneys perform a wide range of beneficial services for their mostly affluent clients, their primary source of billable hours is Medicaid planning. The fee to qualify someone for Medicaid ranges “from $2500 for individuals with relatively simple estates to $10,000 for individuals with significant assets” (Markovic, 2016, footnote 88).

Medicaid planners’ services are most often sought by the adult children of declining elders for the purpose of preserving their inheritances by avoiding private long-term care expenses for the parents. As Medicaid dependency often involves impaired access to and quality of long-term care (Ameriks, 2007, p. 22), Medicaid planners are vulnerable to and sensitive about accusations of financial abuse of the elderly. This self-description and justification is typical:

It is not uncommon for couples and individuals to engage in a practice often referred to as “Medicaid Planning,” which one commentary defines as “the legal fiction of ‘rearranging assets’ to make someone poor on paper so that he or she may qualify for Medicaid.” It is well established that such “Medicaid Planning” is legal and that it is professionally ethical, or acceptable, for attorneys and financial planners to assist clients in such planning. Nonetheless, the Medicaid planning and spend down processes are quite complex, potentially highly financially disruptive, and may lead to inequitable results. Moreover, although legal, Medicaid planning is often perceived as “gaming the system” (Hyer, Hannah, Burkhart, and Toevs, 2012, p. 359).

Clearly, information on how to qualify for Medicaid long-term care benefits while avoiding the seemingly restrictive financial eligibility rules is widely available. The financial incentive to use such information is great. There is every reason to believe families use this information (and no evidence they do not) to minimize personal asset spend down and to hasten access to care financed by Medicaid.

The Legal Literature on Medicaid Planning

Beyond the ubiquitous consumer information on Medicaid planning, there is a large and always expanding professional legal literature on the topic. The first such article appeared within months of President Jimmy Carter’s signing the Omnibus Budget Reconciliation Act of 1980 (OBRA ’80), which imposed the first ever restriction on asset transfers done to qualify for Medicaid. OBRA ’80 became law in December 1980; “Medicaid as an Estate Planning Tool,” by William G. Talis, appeared in the Massachusetts Law Review’s Spring 1981 issue. It stated “Careful planning even under adverse state law will still be able to achieve the goal of excluding an applicant's resources for purposes of determining Medicaid eligibility” (Talis, 1980, p. 94).

The article also describes ways clients might reduce exposure to health costs through (1) creation of various trust devices, (2) conveyance of remainder interests in property, (3) conversion of property into assets exempted from eligibility tests for Medicaid, and (4) outright transfers of property. If a client can be rendered eligible for Medicaid, medical expenses will be paid in full and estate assets will be conserved. Moreover, while the Department of Public Welfare may seek recovery for payments made on behalf of elderly recipients from their estates, careful planning can lawfully defeat the Department’s ability to obtain indemnification (Ibid., p. 90).

Although some of the methods described in this early article have since been proscribed or delimited by federal law, most of them remain viable and widely used. Quotes on how to do Medicaid planning from this first article and a selection of 86 others spanning the next 35 years are compiled in “Appendix I: Supplemental Bibliography” of How to Fix Long-Term Care Financing (Moses, 2017). These include:

After President Ronald Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA ’82) authorizing states voluntarily to (1) restrict asset transfers done within two years of applying for Medicaid, (2) place liens on real property, and (3) recover benefits correctly paid from recipients’ estates, Medicaid planners concluded they could circumvent the new rules and explained how: “With long-range planning, the cooperation of relatives, some good health, and maybe a little luck, couples will be in a position to negotiate between the rock and a hard place that Congress has placed in the Medicaid path” (Deford, 1984, p. 139).

After President Reagan signed the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA ’85) restricting the use of Medicaid Qualifying Trusts, lawyers reassured their colleagues and clients: “Many people assume that a family’s resources must be virtually exhausted before any help will be available through the Medicaid program. In fact, people in Washington [state] who need nursing home care can benefit from Medicaid without devastating their families” (Greenfield and Isenhour, 1986, p. 29).

After President Reagan signed the Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) making asset transfer penalties mandatory nationwide and expanding the look-back period to 30 months, one especially aggressive Medicaid planner wrote this in his best-selling book Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care:

So is there any practical way to juggle assets to qualify for Medicaid before losing everything? The answer is yes! By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmakers’ best efforts...Here are the best options: Hide money in exempt assets...Transfer assets directly to children tax-free...Pay children for their help...Juggle assets between spouses...Pass assets to children through a spouse...Transfer a home while retaining a life estate...Change wills and title to property...Write a durable power of attorney...Set up a Medicaid Trust... Get a divorce.... (Budish, 1989, p. 34)

After President Bill Clinton signed the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) making estate recovery mandatory, expanding the asset transfer look back period to three years, eliminating the cap on asset transfer penalties, and prohibiting “pyramid divestment,” two experts reassured their colleagues: “Most of the basic planning options that seem to exist today will survive; but many of the more unique, aggressive tactics may or may not survive [p. 1] .... WE STILL BELIEVE THAT ALMOST ANYONE CAN BECOME MEDICAID ELIGIBLE FOR LONG-TERM CARE BENEFITS EVEN IN CRISIS.... [p. 11]” (Brown and Fleming, 1993, emphasis in original).

After President Clinton signed the Health Insurance Portability and Accountability Act of 1996 (HIPAA ’96) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid, planners sought ways around the new rules:

By using a LCC [Life Care Contract], the applicant is outside the purview of the disqualifying transfer section of Title 42 because the contract anticipates a transfer for value and not a gift. Therefore, to the extent that the elder’s assets are transferred pursuant to this contract, the elder will incur no period of ineligibility ... Using this one payment method, an elder can transfer a large number of assets and shortly thereafter qualify for Medicaid if the caregiver can prove that the medical condition causing the disability was totally unanticipated ... a one lump sum payment of $540,000 is a transfer for value and outside of the Medicaid rule ... IT DOESN’T MATTER IF MOM HAS A MASSIVE STROKE AND IS A CANDIDATE FOR LONG TERM CARE SIX MONTHS LATER....” (NAELA Conference Proceedings, 1996, pps. 1-2, 4, 11, double emphasis in the original).

After President Clinton signed the Balanced Budget Act of 1997 (BBA ’97) repealing the criminalization of asset transfers to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee, mortified planners encouraged community spouses of institutionalized Medicaid recipients simply to dodge their spousal support responsibility.

The law, therefore, allows an institutionalized spouse to qualify for Medicaid benefits even though he or she may have a spouse that chooses to keep assets over the CSRA [Community Spouse Resource Allowance]. The spouse retains the assets, in any amount, and then refuses to make them available for the institutionalized spouse’s costs of long-term care. In turn, the state seeks an assignment of the institutionalized spouse’s support rights (Solkoff, 2001, p. 26).

After President George W. Bush signed the Deficit Reduction Act of 2005 (DRA ’05) placing the first cap ever on Medicaid’s home equity exemption, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program, Medicaid planners reassured their colleagues and clients that artificial self-impoverishment to qualify for Medicaid remained feasible and no less ethical than tax planning:

Due to the high cost of nursing home care, elderly people and their families have increasingly turned to Medicaid-planning strategies to qualify for Medicaid benefits and ease their financial burden. Medicaid planning involves taking measures to preserve one’s assets in order to gain Medicaid eligibility by meeting the program’s financial criteria (Wone, 2006, p. 487).

Many commentators, as well as taxpayers generally, have criticized the practice of ‘Medicaid estate planning, [when] individuals shelter or divest their assets to qualify for Medicaid without first depleting their life savings. … However, Medicaid estate planning is not only rational, but it is also consistent with notions of morality and fairness. Akin to tax planning, Medicaid estate planning is as justifiable as any other legal advice an attorney may give to a client to obtain favorable governmental treatment, despite recent measures taken by Congress that might suggest otherwise. The public perception seems to be that tax planning is perfectly acceptable, whereas Medicaid estate planning is morally questionable (Bothe, 2009-10, pp. 815-6).⁶⁷

No further government action has occurred since 2006 to target Medicaid long-term care benefits to the needy or to discourage their overuse by the affluent. These recent law journal articles show that most methods to qualify for Medicaid without spending down for care have survived and thrived:

Thus, for example, if a person gives away one million dollars six years before applying for Medicaid, that gift will not be considered in determining eligibility. (Miller, 2015-2016, p. 8)

In our earlier work on this topic, my co-authors and I described many Medicaid planning strategies. These include gifts beyond the five-year look-back period, disinheritance of the institutionalized person; the use of special needs trusts for the institutional spouse; annuitization of retirement accounts and savings (often for the benefit of the community spouse); spend down on the home or other exempt assets (called asset repositioning); caregiver agreements with family members; certain transfers of the home to a spouse, child or sibling; use of exempt assets (i.e., the home) to pay for the nursing home during a penalty period arising from gratuitous transfers; and, finally, divorce or marriage avoidance. Some of these are only designed to obtain Medicaid eligibility while preserving wealth during the recipient’s lifetime. Others, most prominently gifts and annuities, are designed to avoid estate recovery as well. The liberal income rules and the restrictive resource rules make the purchase of an annuity for the community spouse with excess resources an important planning tool for middle class couples. Indeed, the annuity purchase option is the chief planning alternative to divorce in many cases (Ibid., p. 14).

Countable assets which are attributable to the institutionalized spouse can be reduced by spending or consuming them for the benefit of either spouse. The applicant or their spouse could pay off a mortgage or other debt, pay attorney's fees or other professional fees, pay for travel for themselves, or pay for home care services. … Countable assets can be transformed into exempt assets, for example, by purchasing an irrevocable burial plan for each spouse and by paying for exempt assets which enhance the quality of life of either spouse, such as clothing, electronics, and repairs or improvements to the residence. … Countable assets may also be transformed into a stream of income by the purchase of an approved annuity, with the community spouse as annuitant (immediate payee) (Gilsinan, 2018, p. 19).

If a married couple who owns no primary residence but has substantial liquid assets engages in Medicaid planning, they could create an irrevocable trust and transfer all of their assets to that trust. … As long as there are no circumstances in which the trustee could pay them any amount of trust principal, and as long as the married couple complies with the five-year look-back rule, the applicant would be eligible for Medicaid benefits because the assets would not be countable as his or her assets. … The inclusion of the primary residence among the assets transferred to the irrevocable trust allows the grantor to avoid the estate recovery claim against his or her primary residence that would occur had the grantor obtained Medicaid long-term care benefits and continued to own the home until it was transferred to his or her heirs as part of the probate estate (Tunney, 2018, p. 23).

There are two main alternatives to the CSRA for protecting assets for the community spouse: spousal refusal and divorce. a. Spousal Refusal. A community spouse can simply refuse to allow his or her assets to be made available for use by the institutionalized spouse and refuse to cooperate in the application for Medicaid. … b. Divorce ... Following the divorce, the institutionalized spouse could quickly qualify for Medicaid, and the couple's assets would be preserved for the community spouse (Beckett, 2016, p. 31).⁶⁸

Clearly the practice of Medicaid planning remains vibrant and very well documented in the popular and professional literature on aging and estate planning.

< End >

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Updated, Monday, March 9, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-010: LTC NEWS AND COMMENT

Innovation in the LTC Insurance Market
The number of millennials with early-onset Alzheimer's disease is surging, report finds
An update from the ILTCI Conference regarding COVID-19
CMS to ‘Immediately’ Refocus Nursing Home Inspections on Infection Control Amid Coronavirus
Living The Golden Rule
COVID-19 Webinar & Educational Resources
Genworth reaches deal 'in principle' with New York regulator to clear acquisition by China-based company
Why Are So Many Nursing Homes Shutting Down?
COVID-19 Webinar Tomorrow
House task force introduces Older Americans Bill of Rights
Nursing home the site of first US coronavirus outbreak: 1 dead, 4 hospitalized

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Updated, Monday, March 2, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-009: LTC NEWS AND COMMENT

Debt among oldest Americans skyrockets 543% in two decades
Blue Cross Plans Say Alzheimer’s Has Tripled Among Adults Ages 30 To 64
Long-Term Care Insurance v. a Hybrid: AALTCI Gets the Numbers
One Conversation Can Make All the Difference
Prepare now for coronavirus, association warns
One LTCI Producer’s Take on Nursing Home Closures
550 Nursing Homes Closed from 2015-2019 — With Trend Accelerating Toward End of Decade
Cannabis use rising among older adults, study shows
Empire Center says billions could be saved through Medicaid cost-cutting proposals
Medicare Managers Hope to Lift Agent Referral Fee Cap
McKnight’s 40 for 40: Robert G. Kramer
State considers end to 'spousal refusal' to pay for nursing home care

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Updated, Friday, February 28, 2020, 9:00 AM (Pacific)

Seattle—

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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 third one, after the ***news.***

*** HAPPY 20TH: This year’s Intercompany Long-Term Care Insurance Conference, which meets in Denver, March 29 to April 1, is the program’s 20^th iteration. To celebrate this memorable achievement, we published a 65-page History of LTC Insurance Conferences. It covers all of the ILTCI events, but also some of the other, earlier, now defunct industry meetings, such as Jesse Slome’s “LTCI Producer Summits” and Greg Luque’s “Forums.” For a quicker read, check out “LTC Bullet: History of LTC Insurance Conferences,” which provides thumbnail summaries of each of the conferences covered in the full report. We offer sincere thanks and congratulations to Jim Glickman and everyone associated with the leading LTC insurance industry conference. May it continue to unite, educate and motivate everyone dedicated to improving long-term care in America for many years to come. ***

*** ILTCI RECOGNITION AWARD nominations are open. The deadline for nominations is March 6 so act now! I just submitted my nomination. Can you guess whom I proposed? The Intercompany Long-Term Care Insurance Conference is sponsoring a third annual award for a person or organization “that has made a significant, long-term contribution towards the attainment of the ILTCI vision. The ILTCI vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society. For details and to submit your nomination, go to https://iltciconf.org/recognition-award/. Past recipients of the award were Marc Cohen and Stephen Moses. ***

*** CLTC MASTER CLASS AT ILTCI 2020: Veteran LTCI expert and trainer Bill Comfort will teach the two-day course March 28-29 at the Intercompany Long-Term Care Insurance Conference in Denver. Watch Video on CLTC Master Classes. The class and conference registrations are discounted now. For inquiries, contact: Audrey Sunner, CLTC, CSA at 919-230-8523 or asunner@ltc-cltc.com. The Center for Long-Term Care Reform is proud to acknowledge the Certification for Long-Term Care (CLTC) program as a corporate sponsor. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 3

LTC Comment: Episode 1 of our serialization of the Center’s newest report described the current method of providing and paying for long-term care, explained the long-term care financing problem in detail, and showed how heavily dependent the existing dysfunctional system is on public, especially Medicaid, financing.

Episode 2 explained how Medicaid became the dominant payor for long-term care, described the severe unintended access and quality problems that ensued, and recounted the long series of fruitless interventions policymakers have attempted aimed at correcting symptoms (high cost, nursing home bias, and poor quality) while ignoring their causes (strong financial incentives for states to maximize Medicaid spending and perverse incentives for consumers to rely on the safety net program rather than prepare to pay privately for long-term care.)

In Episode 3, which follows, Steve Moses explains how scholars have made the same mistakes as policymakers. They lament long-term care’s problems without analyzing their causes. Then they propose expanded government funding and regulation without accounting for the damage such interventions have produced in the past. Steve then addresses the key to unraveling the long-term care conundrum, which is to understand and interpret correctly Medicaid’s long-term care eligibility rules and their impact on consumers’ incentives to plan responsibly (or not) for long-term care risks and costs.

Episode 4 in this series, two weeks from now, will explain how Medicaid’s dominance as the principal funder of long-term care inhibited the private market for home care, which consumers prefer over nursing homes, and crippled the potential private sources of financing, such as home equity conversion and long-term care insurance, that could and should solve the system’s access and quality problems—all this transpiring without most consumers even knowing who pays for long-term care!

Here’s the third 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.

Conventional Long-Term Care Scholarship

If government policy on long-term care has consistently addressed the symptoms of high cost and poor quality instead of the cause, excessive public financing, so has and does most scholarship. Building on decades of research and special commission reports, a scholarly consensus has formed regarding the long-term care problem and what to do about it. For example, a December 2015 article in Health Affairs (Favreault, Gleckman, and Johnson, 2015, p. 219048) assessed the problem as high and growing care needs, high and growing cost, inadequate private resources to pay for care exacerbated by the lack of private insurance, resulting in high, growing and unsustainable dependency on Medicaid. Without analyzing how or why these conditions obtain, the article recommends ever more government engagement in the market, specifically mandatory, comprehensive public insurance coverage for the catastrophic back end of the long-term care risk. In other words, we are advised to address the symptoms of the long-term care problem by adding more of the generous funding source that arguably caused them in the first place.

That article spawned three major reports in 2016 promoting its analysis and recommendations. Leading Age, a long-term care provider trade association, reviewed the usual symptoms and concluded “a mandatory, universal insurance approach that covers catastrophic events is the most effective pathway to pursue” (Leading Age, 2016, p. 12). The Bipartisan Policy Center, a Washington, DC think tank, concurred with a now rare nod to cost control, recommending: “Pursue the concepts and elements of a public insurance program to protect Americans from catastrophic LTSS expenses, while assuring that it does not add to the federal deficit” (BPC, 2016, p. 21). The “Long-Term Care Financing Collaborative,” a self-described “diverse group of policy experts and senior-level decision makers representing a wide range of interests and ideological views” proposed “A universal catastrophic insurance program aimed at providing financial support to those with high levels of care needs over a long period of time” (LTC Financing Collaborative, 2016, p. 2).

Nor has this emerging agreement on the problem (symptoms) and its preferred solution (more government) receded. Last year, a respected private long-term care insurance analyst teamed up with a researcher who favors public financing options to produce yet another proposal on the same theme. They recommend

A public catastrophic insurance program for LTSS costs that takes effect after an income-related waiting period has been met. … Eligibility … phased in over ten years, with people eligible for benefits once they work 40 quarters after the law’s enactment …. Benefits would become available once people incur impairments in 2+ ADLs [activities of daily living] and/or severe cognitive impairment … . Up to $110/day cash benefit (2014 dollars) … Paid out either daily or weekly … Unlimited benefit once an income-related waiting period is met … Waiting period of 1 year for people with lifetime incomes in the lowest two quintiles of the distribution and 2, 3, and 4 years for people with incomes in the third, fourth and highest quintiles, respectively. … Annual benefits increase at the rate that hourly costs increase for home health aide workers (Cohen, Feder, and Favreault, 2018, p. 7).

Would consumers choose to participate in this complicated scheme? There is no need to ask. The paper does not contain the terms obligatory, involuntary, or compulsory, but they all apply to this proposal. Like Social Security, Medicare and other plans to fix long-term care mentioned above and below, this one also forces people to pay up, take part and accept whatever the government delivers.

Two influential recent articles home in on special challenges facing the middle market and home care. In May 2019, “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources for Housing and Health Care” correctly assessed the plight of middle-income seniors whose resources will be inadequate to fund their senior living and long-term care and suggested “lawmakers could consider a new benefit that explicitly funds long-term care (for example, a Medicare ‘Part E’ that shifts funds from Medicare Part A acute care)” (Pearson, et al., 2019, p. 8). In June 2019, “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income” argued that home care is desirable; too few people can afford enough of it; so “Government programs could be launched that cover LTSS expenses for the entire duration of an enrollee’s LTSS” (Johnson and Wang, 2019, p. 1000).

Many similar examples from the past three decades could be adduced. Conventional long-term care scholarship is tediously consistent in these respects. It begins by recounting the dire service delivery and financing challenges consumers face, but without analyzing or commenting on how or why those problems came to be. Then it recommends an expansion of government’s role, usually proposing a new or expanding an existing compulsory public financing program.

The Key: Medicaid Long-Term Care Financial Eligibility

The current paper takes a different approach to analyze the long-term care issue. It described and acknowledged the problems and dysfunctions in long-term care services and financing. But then it traced the history and evolution of those problems linking them causally to the early, substantial and constantly expanding role of government financing and regulation in the long-term care market.

Having shown how and why long-term care problems exist, we can now ask: Why are analysts and policymakers caught in the trap of looking only for government solutions to problems government created? Why do most researchers obsess about the status quo without explaining how it came to be? Why do they despair of financing quality long-term care without vastly expanding government spending? Ideological bias is one explanation, but there may be something more basic and easier to resolve at work. The key to answer these questions lies in understanding how Medicaid long-term care eligibility really works as compared to how it is represented to work by the popular media, by most scholarship, and ostensibly by the federal law and regulations themselves.

The federal rules governing financial eligibility for Medicaid long-term care benefits sound draconian. “Medicaid eligibility depends primarily on income and assets. … In general, aged, blind, and disabled beneficiaries may not have more than $2,000 in countable assets for individuals and $3,000 for couples, a level that has not changed since 1989” (Thach and Wiener, 2018, p. 4). No argument; that is poor. Income eligibility is more complicated than asset eligibility, because states may follow various “alternative or optional eligibility pathways to determine which groups qualify …” (Ibid.). But income eligibility under all those pathways still sounds stringent when represented as allowing only $723 per month of income (LTC Financing Collaborative, 2016, p. 19). These “official” financial eligibility rules seem to say that when it comes to paying for long-term care, you are on your own unless or until you spend down your income and life’s savings into impoverishment.

So quotes like these abound in the mass media:

People who exhaust their savings could wind up on Medicaid, the government health program for the indigent that pays for about half of all nursing home and custodial care (Weston, 2019) .

Essentially, you need to have spent practically all your assets before Medicaid will kick in (Eisenberg, 2017).

People may qualify for Medicaid after they have “spent-down” their assets (Lawrence, 2015).

Well-respected scholars often say the same.

The current program requires people to impoverish themselves (“spend down”) to qualify for coverage (Pearson, et al., 2019, p. 858).

At the same time, public ‘insurance’ – through Medicaid – supports services only after people pay what might be called an ‘infinite deductible’ – that is, only after they expend most, if not all, of their personal liquid financial resources (Cohen, Feder, and Favreault, 2018, p. 2).

Medicaid (the federal-state health care program for the poor) covers long-term care costs for individuals below certain income levels, but the deductible for Medicaid is nearly all of an individual's income and assets. As a result, Medicaid is the long-term care coverage of last resort for those with no assets (Banerjee, 2012, p. 4).

Beneficiaries are subject to strict eligibility rules. While these vary from state to state and differ by care setting, they typically limit beneficiaries to $2,000 in financial assets and $723 per month in income (the monthly benefit level for the Supplemental Security Income program). As a result, millions of middle-income families who face catastrophic LTSS costs must impoverish themselves before receiving public support (LTC Financing Collaborative, 2019, p. 19).

The reality of Medicaid long-term care financial eligibility is far more nuanced, generous, and elastic than these quotes convey. While scholars usually and the media sometimes explain (1) how Medicaid allows people with excess income to qualify by spending down privately for care until they reach the required level and (2) how some assets are non-countable and so do not affect eligibility and are not required to be spent down, generally both the media and scholars leave the strong impression that qualifying for Medicaid long-term care benefits is financially devastating and highly undesirable. Media articles usually point their readers to legal experts who can help families reconfigure their income and assets to qualify without spending down. Scholarly articles rarely take that alternative into account. This latter fact is the key to understanding why expanding government spending is usually the only option considered by analysts for reforming long-term care services and financing.

The Fallacy of Impoverishment

Income Eligibility

How does Medicaid long-term care eligibility really work? Most states use “medically needy” eligibility rules, which means people who have too much income can pay privately for their care until their net income level is reduced to the accepted limit (Thach and Wiener, 2018, p. 5⁴⁹). Other states apply “income caps,” usually 300 percent of the Supplemental Security Income (SSI) limit, currently $2,313 per month (Thach and Wiener, 2018, p. 5⁵⁰). But income cap states may allow people with excess income to qualify by setting up special “Miller income diversion trusts,” into which the recipient transfers excess income until the income eligibility level is reached. Then, the trust pays out the money to offset Medicaid’s cost for the recipient’s care (Musumeci, Chidambaram and O’Malley Watts, 2019, p.14⁵¹). The result is the same as under the medically needy system. The rule of thumb in all states, whether “medically needy” or “income cap” standards apply, is that anyone with income below the cost of a nursing home can qualify for Medicaid long-term care benefits based on income. As nursing home care is very expensive (roughly $7,500 or $8,500 per month on average and much higher in many urban venues) (Genworth, 2019), people with substantial incomes qualify routinely for Medicaid long-term care benefits throughout the United States. For example, someone with income of $7,500 per month or $90,000 per year would fall in the 84^th percentile of income nationally (PK, 2018), but would nevertheless qualify for publicly financed long-term care based on income if that income is expended for medical and/or long-term care expenses including home care, assisted living, or nursing home residency. Medicaid long-term care income eligibility requires a cash flow problem, but not low income.

Asset Eligibility

Similarly, Medicaid’s seemingly harsh asset spend down rules are much less so as applied. Most of the wealth seniors hold is not counted in determining eligibility. Home equity is entirely exempt if a spouse remains in the home. Between $595,000 and $893,000 of home equity, depending on the state (Musumeci, Chidambaram and O’Malley Watts, 2019, p. 15⁵²), continues exempt as of 2020 even if the home is unoccupied as long as the Medicaid recipient expresses a subjective, medically unverified intent to return to the home (Thomson/MEDSTAT, 2005, p. 3⁵³). Additional exempt assets, all without any dollar limits, include

one income-producing business,⁵⁴ including the capital and cash flow (Hales and Shandrick, 1992, p. 15⁵⁵)
individual retirement accounts (IRAs) (CANHR, 2019)⁵⁶ if generating periodic income⁵⁷ as most are required to do by age 70 ½ in compliance with the required minimum distribution rules (IRS, 20195⁸)
term life insurance,⁵⁹
prepaid burial funds for the immediate family,⁶⁰
one automobile,⁶¹
household goods and personal effects including heirlooms.⁶²

Thus federal law and regulations, which state Medicaid agencies are supposed to follow, allow applicants and recipients to possess virtually unlimited assets while receiving benefits. It is true that state Medicaid programs are technically required to recover such sheltered assets from the estates of deceased recipients, but enforcement of that requirement is inconsistent, complicated by regulations severely limiting lien placement, and relatively easy to avoid, especially with legal advice.⁶³

Married applicants receive additional financial eligibility considerations. Community spouses of institutionalized Medicaid recipients may retain a “Minimum Monthly Maintenance Needs Allowance” (MMMNA) of between $2,113.75 and $3,216.00 per month (ACA, 2020, MMMNA⁶⁴) plus a “Community Spouse Resource Allowance” (CSRA) of half the couple’s joint assets not to exceed $128,640 but no less than $25,728 (ACA, 2020, CSRA⁶⁵). These allowances began at $1,500 per month and $60,000, respectively, when the Medicare Catastrophic Coverage Act of 1988 established them. By law, they increase annually with inflation. The MMMNA and CSRA were created to end the “spousal impoverishment” that could occur previously when the institutionalized recipient’s (usually the man’s) income was captured as required by federal law to offset Medicaid’s cost of his or her care.

Although there is considerable variation in state Medicaid eligibility rules, DeNardi, et al. concluded there was “little practical difference in Medicaid eligibility across the different states” due to medical and long-term care expense deductions. They explain that “most individuals in nursing homes incur medical expenses far greater than 300 percent of the SSI level,” thus achieving eligibility (De Nardi, French, Jones and Gooptu, 2011, p. 26).

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Updated, Monday, February 24, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-008: LTC NEWS AND COMMENT

Continental, a Long-Term Care Insurance Block Buyer, Is Up for Sale
Long-Term Care Costs
Mediterranean diet improves gut health in elders; tied to lower frailty
Stalked by the Fear That Dementia Is Stalking You
GE’s Long-Term-Care Insurance Liability Is a Non-Issue in 2020
Medicare Advantage enrollment swells
VA Health Care: Veterans' Use of Long-Term Care Is Increasing, and VA Faces Challenges in Meeting the Demand
The Ballooning Costs Of Long Term Care
A VA Program Can Help War Veterans Pay For Long-Term Care, But Applying For It Can Be An Ordeal
What Every Dementia Caregiver Must Know
By 2060, a quarter of U.S. residents will be over age 65
What’s the best way to manage agitation related to dementia?

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Updated, Monday, February 17, 2020, 10:40 AM (Pacific)

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LTC E-ALERT #20-007: LTC NEWS AND COMMENT

Combining Life and Long-Term Care Insurance
Long-Term Care Annuities: Pros and Cons
Feds Probing How Personal Medicare Info Gets to Marketers
Seniors on Medicare Advantage less likely to have issues paying medical bills: CDC study
More Than Half Of Americans Disagree With How Their Tax Dollars Are Spent
Task Force: To Save Top Nursing Homes, Government Should Encourage Lower-Performing SNFs to Exit
A whole new world: 15% growth in post-acute care among 30-year nursing home industry changes
Operators treating Medicare Advantage enrollees for depression, dementia and frailty are unfairly penalized: viewpoint
No, the Trump administration is not cutting Medicaid

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Updated, Friday, February 14, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 2

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 second one, after the ***news.***

*** ILTCI RECOGNITION AWARD nominations are open. The Intercompany Long-Term Care Insurance Conference is sponsoring a third annual award for a person or organization “that has made a significant, long-term contribution towards the attainment of the ILTCI vision. The ILTCI vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society. For details and to submit your nomination, go to https://iltciconf.org/recognition-award/. Past recipients of the award were Marc Cohen and Stephen Moses. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 2

LTC Comment: The one thing everyone agrees about long-term care is that our current system of providing and paying for it is a mess. Unfortunately, most researchers observe the existing system, agonize over its problems, and proceed to recommend solutions without first explaining what caused the problems in the first place and why they persist. These analysts put the proposal cart before the analytical horse.

Our new monograph, Medicaid and Long-Term Care, takes a different approach. Steve Moses first explains historically how long-term care’s major problems--such as institutional bias, inadequate funding, caregiver shortages, access and quality problems, etc.--came to be. Only after explaining the cause of the problems does he turn to ways to correct them, arriving at a much more promising solution than the usual proposals.

But at 78 pages Medicaid and Long-Term Care is a lot to take in as a whole. So we’re serializing the report. Today’s offering is Part 2. We’ll bring you the next installment in a couple weeks.

Here’s the second 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.

How Did Medicaid Become the Dominant Long-Term Care Payer?

Social services and benefit programs in the United States evolved gradually in the country’s first two centuries from a system based on British poor laws—“indoor relief” with many poor houses—toward a system based on cash relief payments (Senior Living: 1776-1799). Cash payments from programs like Old Age Assistance and Social Security gave people funds to spend on residential long-term care enabling the nursing home industry to grow rapidly (Senior Living: 1930-1939). In 1960, the Medical Assistance for the Aged (MAA) program made health care available to people sixty-five and older with low or moderate income and required state matching funds (Senior Living: 1960-1969). The same Kerr Mills statute radically changed eligibility for nursing home care by adding people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses” (Ibid.). In 1965, the new Medicaid program dropped strict eligibility criteria, transfer of assets restrictions, and mandatory liens which were commonplace previously. For its first 15 years, Medicaid explicitly permitted asset transfers for the purpose of qualifying for long-term care benefits (Carlucci, 1986-87, p. 372-3³²). Finally, Medicaid paid exclusively for nursing home care, incentivizing its use by covering “housing, food, housekeeping, and laundry, services” which were not covered for in-home services (Senior Living: 1960-1969).

These features of the new Medicaid program—medically needy eligibility exclusively for nursing home care, including normal costs of living as well as health care, funded with virtually unlimited federal and state matching funds and with no limits on asset transfers to qualify—guaranteed Medicaid would explode in cost from the outset, perpetrate a nursing home bias in long-term care services, discourage development of a private home and community-based care market, and crowd out private long-term care financing sources. That is exactly what happened (Bernard and Feingold, 1970, p. 745³³) and policymakers have been trying to reverse the damage ever since. But their efforts to tame Medicaid long-term care funding growth by capping supply and price, controlling financial eligibility, rebalancing services from institutional to home care, promoting private insurance, and enforcing federal rules on state programs have failed.

A Litany of Failed Interventions

From the beginning, efforts to fix the problems Medicaid created have addressed the symptoms—exploding costs, nursing home bias, and poor quality—not the causes—strong financial incentives for states to maximize Medicaid spending and perverse incentives for consumers to rely on the safety net program rather than prepare to pay privately for long-term care. Inevitable, if unintended, consequences followed a long series of policy errors.

In the 1970s, central health planners tried to control skyrocketing Medicaid nursing home costs by capping bed supply, requiring “Certificates of Need” (CONs) (NCSL, 201934) before allowing new construction on the premise “they can’t charge us for a bed that doesn’t exist.” Nursing homes gratefully took advantage of this new government-imposed monopoly which excluded new entrants from their market. But to compensate for their impeded growth, the nursing home industry raised the rates they charged Medicaid. In response, Medicaid capped nursing home reimbursement rates, which remain to this day only about four-fifths of private-pay rates (Liberman, 2018). But low Medicaid rates created a strong incentive for higher paying private-payers to convert to Medicaid. Consumers sought more and more creative ways to qualify for assistance, sometimes relying on the advice of specialized Medicaid planning attorneys to divest or shelter otherwise disqualifying resources.

Consequently, private-pay nursing home revenue declined from 49.2 percent in 1970 to 26.7 percent in 2017 while Medicaid funding increased from 23.3 percent to 30.2 percent in the same period (CMS, 2018, Table 15). The problem of declining private-pay and increasing Medicaid nursing home revenue is much worse than these numbers suggest due to a change in the definition of National Health Expenditure Accounts (NHEA) categories CMS made in 2011. CMS added Continuing Care Retirement Communities (CCRCs) to the category Nursing Care Facilities. Because CCRCs are much more likely than nursing homes to involve private payments, this misleading change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40 percent in 2008 to under one-third (32.8 percent) in 2009.35

The federal government responded to the growing Medicaid dependency with a long series of laws attempting to restrict asset transfers and close other eligibility “loopholes” while requiring recovery of benefits paid from recipients’ estates. In 1996, President Clinton and the Gingrich Republicans even criminalized asset transfers for the purpose of qualifying for Medicaid.36 But this “throw Granny in jail law” was repealed a year later and replaced with a “throw Granny’s lawyer in jail” alternative, which quickly proved unenforceable.37 These efforts to target Medicaid long-term care resources to people most in need largely failed, though for correctable reasons discussed below. But the main failure was that these measures did not address the larger problem, financial eligibility rules that permit people with median and higher assets and income to qualify even without legal assistance.

By capping the supply and price of nursing home care without effectively controlling financial eligibility, Medicaid caused demand to skyrocket, filling nursing homes in the 1980s with too many recipients at too low reimbursements resulting in serious quality problems (Hawes and Phillips, 1986, p. 50838). By accepting Medicaid recipients, nursing homes could fill their beds no matter what quality of care they offered. Instead of addressing this problem’s cause, easy access to under-financed nursing home care, the government simply demanded higher quality care, requiring tougher care standards, extra staff and training in the Nursing Home Reform Act of 1987, but without appropriating extra funds to pay for the new mandates (Klauber and Wright, 200139). So this measure failed to improve care quality (Ibid.40). Caught between the rock of inadequate reimbursement and the hard place of mandatory quality, state nursing home trade associations sued for higher reimbursements under the 1980 Boren Amendment and usually won (MacPAC41). Government responded by repealing the Boren Amendment in 1997 leaving no legal floor under Medicaid nursing home reimbursements, thus exacerbating the quality problem and causing nursing homes’ reputation to disintegrate (Wiener and Stevenson, 1998, p. 142).

Trying to save money and give consumers more of the care they prefer, Medicaid encouraged states to rebalance from providing only nursing home care to supplying mostly home care. The premise of that policy was that home care costs less than institutional care. Unfortunately, combined institutional and home and community-based care expenditures usually exceed institutional costs alone. Medicaid long-term care costs for older adults and people with physical disabilities continued to grow from $36 billion in 1995 to $104 billion in 2016 despite, or because of, aggressive rebalancing (Eiken, et al., 2016, p. 1443). The evidence is overwhelming that changing from institutional care to home and community-based care does not save money in the long run. Home care delays but does not reliably replace nursing home care (Holahan and Cohen, 1986, p. 10644) and home care is more desirable than institutional care so more people come out of the woodwork (Ng, Harrington, and Kitchener, 2010, p. 2745) to seek Medicaid eligibility (Grabowski, 2006, p. 346).

Attempting to divert consumers from Medicaid to private insurance, government encouraged the use of “long-term care partnerships” which enabled consumers who purchased qualified policies to protect extra assets from Medicaid’s spend down and estate recovery rules (McCall, 2001). But the real problem was that Medicaid’s spend down and estate recovery rules are ineffectual and often unenforced. Forgiving a liability that does not exist in the first place did not incentivize many people to purchase private long-term care insurance policies. A federal income tax deduction for private insurance introduced in the Health Insurance Portability and Accountability Act of 1996 also helped little as it applied only to people with medical and long-term care expenditures exceeding 7.5 percent of adjusted gross income. Few people healthy enough to qualify medically for private long-term care insurance had medical expenses high enough to qualify for the tax deduction.

Having largely crowded out a market for private insurance by paying for most expensive long-term care, the government added insult to injury by driving interest rates on carrier reserves to near zero, forcing premium rates up to compensate, upsetting policyholders and potential buyers, and effectively suppressing the market. Seeing that nothing they did seemed to work, Congress and President Obama tried to nudge the public into voluntarily buying government long-term care insurance with the unfunded and misbegotten CLASS Act that was quickly repealed (Kane, 201147).

The latest attempt by Medicaid to mitigate the rising cost of long-term care is to modify the reimbursement system. Huge changes in how the government pays for post-acute and long-term care are underway and about to revolutionize long-term care service delivery. The transformation to "managed care," whereby state Medicaid programs turn over responsibility for providing and paying for long-term care to the highest bidders, has long been sweeping the country. Most long-term care will still be provided by nursing homes and home care companies, but now a new middle-man, the managed care company, is coming between the payer (Medicaid) and the provider, which already stand between the patient and access to quality care.

The newest move toward centralized control of the long-term care market is even more significant. The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated "quality" metrics). "Prospective payment," "bundling," and “value-based” reimbursement are the watchwords of the day. Instead of consumers pursuing value by purchasing care from providers they prefer, bureaucrats and politicians will define value, reward providers who deliver it and punish those who do not. The new system will put care managers and providers at far greater financial risk. Experts worry the end result will be a two-tiered system with poor providers getting worse and becoming more dependent than ever on low Medicaid reimbursements.

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Updated, Monday, February 10, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-006: LTC NEWS AND COMMENT

Adverse Childhood Events Tied to Dementia
Pennsylvania Puts LTCI Issuer in Rehabilitation
Social Security: Where Do the 2020 Candidates Stand?
How to Deal With an Aging Advisor Force and Aging Clients
How the Longevity Project Is Reimagining Our Longer Lives
Flu more deadly for U.S. seniors than coronavirus, say doctors
Are Tax Credits The Best Way To Subsidize Long-Term Care Costs?
WHY HOME HEALTH CARE IS SUDDENLY HARDER TO COME BY FOR MEDICARE PATIENTS
New Limited CMS Block Grant Program Draws Attention of LT/PAC [Long-Term and Post-Acute Care] Profession
Strategies for Long-Distance Caregivers

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Updated, Monday, February 3, 2020, 7:06 AM (Pacific)

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LTC E-ALERT #20-005: LTC NEWS AND COMMENT

Many Adults Are Helping Their Parents Financially Despite Strain
2019 Novel Coronavirus (2019-nCoV) Situation Summary
Staffing woes threaten shift standards, OnShift survey says
Rising rates of obesity, diabetes may reverse heart disease gains
FIVE TROUBLING TAKEAWAYS FROM THE LATEST CBO REPORT
A Closer Look At The Democratic Presidential Candidates’ Long-Term Care Plans
Supreme Court OKs rule that could limit immigrants’ access to long-term care services, jobs
Living near major roads linked to risk of dementia, Parkinson's, Alzheimer's and MS
New tool predicts life expectancy of dementia patients

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Updated, Friday, January 31, 2020, 9:00 AM (Pacific)

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LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re going to bring it to you in bite-sized pieces. Here’s the first one.

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 1

LTC Comment: It is a mystery for many why markets work for autos, groceries, and plastic surgery, but not for health or long-term care. We set out to solve that conundrum in Medicaid and Long-Term Care. But at 78 pages, this monograph is a big chunk for busy professionals to consume at a sitting. So here are the first seven pages. We’ll bring you the next installment in a couple weeks.

In this opening section, Steve explains the long-term care financing problem, describes the current method of providing and paying for long-term care, and shows how heavily dependent the existing dysfunctional system is on public, especially Medicaid financing. In the next installment, he’ll explain how and why its problems of access, quality, low reimbursement, institutional bias, caregiver shortages and welfare dependency developed. Later sections address and correct most analysts’ misconceptions of the long-term care problem concluding with a better market-based solution than the compulsory social insurance options those analysts invariably propose.

Steve Moses challenges any scholar whose work is cited and critiqued in Medicaid and Long-Term Care to discuss and publicly debate this analysis. Contact him at smoses@centerltc.com or 425-891-3640.

Here’s the first episode of Medicaid and Long-Term Care, by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, 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.

Abstract

How to provide and finance long-term care for a burgeoning elderly population bedevils scholars and policy makers. The existing service delivery and financing system, dominated by public funding, is highly dysfunctional, fraught with problems of access, quality, reimbursement, discrimination and institutional bias. Most long-term care scholarship analyzes these symptoms, without explaining their cause, and recommends expanding government’s role, usually by means of a new or expanded mandatory, tax-funded social insurance program. This paper takes a different tack, first explaining why the long-term care market has the problems it does and then suggesting how to remove their causes. At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying 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 affluent save and benefit through eligibility loopholes. The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

Introduction

Like the drunk seeking car keys only under a streetlight, most scholars narrow their search for long-term care solutions to the funding source they know best, government. Countless special commissions (Pepper Commission, 1990) (Medicaid Commission, 2006) (Commission on Long-Term Care, 2013),¹ studies, reports and articles have explored the same ground. Most made the same recommendation, more obligatory social insurance. Voluntary private sector solutions receive scant consideration. This paper identifies a missing link in conventional scholarly research, draws the logical inferences, and reaches a different conclusion.

Long-term care, also called long-term services and supports (LTSS²), includes health care and social services to help people with physical or cognitive disabilities to perform activities of daily living over an extended period (Thach and Wiener, 2018, p. 1). The probability of needing long-term care is high. Seventy percent of people who reach age 65 “develop severe LTSS needs before they die and 48 percent receive some paid care over their lifetime (Johnson, 2019, p. 3)” incurring average lifetime expenses of $138,100 (Favreault, Gleckman, and Johnson, 2015, p. 2181).Monthly paid care is expensive whether provided in a nursing home ($7,513 for a semi-private room; $8,517 for a private room), assisted living facility ($4,051), or at home ($4,385) (Genworth, 2019). The need for long-term care increases with age. The U.S. 85+ population with the highest need will triple between 2015 and 2050 (Houser, Fox-Grage and Ujvari, 2018, p. 3). The United States spent $366.0 billion on long-term care in 2016 (Colello, 2018, p. 1), not counting half-a-trillion dollars in unpaid caregiving value provided at enormous financial and emotional distress by family and friends (Chari, Engberg, Ray, and Mehrotra, 2015, p. 871). The strain of providing and financing seniors housing and long-term care is huge already, bodes ill for the future, and attracts increasing scholarly and political attention, nearly all leaning toward a larger government role (Pearson, et al., 2019, p. 851³).

Yet, the current structure of long-term care service delivery and financing, dominated by 70.3 percent government funding (Colello, 2018, p. 1), is dysfunctional. Problems include high and rapidly increasing costs (Eiken, et al., 2018, p. 1⁴); persistent nursing home bias (Gleckman, 2013⁵); limited access to the home care consumers prefer (Johnson and Wang, 2019, p. 1000⁶); provider reimbursements too low to ensure quality care (Hansen Hunter, 2018, p. 2⁷); doubtful quality in nursing homes (Wood, 2019⁸)(Ameriks, 2007, p. 22⁹) and home care (Gorges, Sanghavi, and Konetzka, 2019, p. 1110¹⁰) and the tort liability that comes with deficient quality (Aon, 2018¹¹); worsening shortages among both paid (Bryant, 2019¹²) and unpaid caregivers (Schulz and Eden, 2016¹³); and dwindling private financing sources exemplified by declining private payers in nursing homes (NIC, 2019, September¹⁴), the near absence of home equity conversion to fund care (Bell, 2018¹⁵), and poor long-term care insurance take up (Favreault and Dey, 2016, p. 8¹⁶). To understand why this market performs so badly, we can follow the money.

Who Pays for Long-Term Care?

Government financing dominates the long-term care market covering $257.4 billion of total $366.0 billion 2016 expenditures. Medicaid, a means-tested public assistance program jointly funded by the federal and state governments, is the largest contributor at $154.4 billion (Colello, 2018, p. 1). But Medicaid’s contribution of only 42.2 percent of long-term care dollars understates its influence. The program covers 62 percent of all nursing home residents (Harrington, Carrillo, Garfield, and Squires, 2018¹⁷), 19 percent of assisted living residents (AHCA/NCAL¹⁸) and makes a rapidly growing contribution to home and community based care (Landers, et al., p. 265¹⁹).

How can Medicaid pay only two-fifths of long-term care costs, but cover three-fifths of the most expensive, i.e., nursing home, patients? Three factors principally account for this incongruity. First, cost shifting from private patients makes up part of the difference. Medicaid provider reimbursements are notoriously low, roughly 80 percent of private-pay rates (Liberman, 2018²⁰) and often less than the cost of the care (Ibid.²¹ and Hansen Hunter, 2018²²). Second, Medicaid long-term care recipients are required to contribute most of their income to offset the program’s cost for their care (Musumeci, Chidambaram and O’Malley Watts, 2019, p. 15²³). Third, Medicare, which pays far more generously than Medicaid for nursing home and home care (MedPAC, 2018, p. 206²⁴), enables long-term care providers to survive financially while most of their patients’ care is reimbursed at meager Medicaid rates. (Liberman, 2018²⁵).

These facts matter because the impact of public financing on long-term care is substantially greater than the raw numbers suggest in ways almost never acknowledged in the literature. Most of the income Medicaid recipients contribute to offset Medicaid’s cost for their care comes from Social Security. Although Social Security is not usually considered to be a financing source for nursing home care, the fact is that it contributes very significantly, albeit indirectly as “spend-through.” Social Security spend-through refers to income most seniors collect in the form of Social Security benefits which they must contribute toward their cost of care when they receive long-term care services paid for by Medicaid. There is very little in the literature about this source of long-term care financing even though research from 20 to 30 years ago indicated it accounts for nearly half of reported out-of-pocket nursing home costs. The amount is substantial, nearly half of the $57.0 billion (15.6 percent) total otherwise reported as “out-of-pocket” costs in 2016 as inferred based on (Lazenby and Letsch, 1989, p. 8²⁶; McCall, 2001, p. 19²⁷).

Thus, in addition to the 70.3 percent of long-term care financing contributed directly by Medicaid, Medicare and other public sources, the public funding role is enhanced by spend-through of Social Security and other private income and by Medicare’s more generous reimbursement rates offsetting providers’ losses from Medicaid. This added dependency on two financially vulnerable social insurance entitlement programs contributes to the fragility of the long-term care financing system. If Social Security and Medicare trust funds expire as expected in 2035 (Board of Trustees [Social Security], 2019, p. 5²⁸) and 2026, (Board of Trustees [Medicare], 2019, p. 6²⁹) respectively, resulting in substantial cuts to those programs, Medicaid and the long-term care providers dependent upon it will be hard-pressed to make up the loss.

Medicaid Long-Term Care Financing in Perspective

U.S. national health expenditures (NHE) increased 4.6 percent to $3.6 trillion in 2018 or 17.7 percent of Gross Domestic Product (GDP) (Hartman, et al., 2020, p. 8). Medicaid spending grew 3.0 percent to $597.4 billion, 16 percent of total NHE or 2.9 percent of GDP (CMS, 2019). Combined institutional and non-institutional Medicaid long-term care spending was $167 billion in 2016, 30 percent of total Medicaid expenditures (Eiken, et al., 2018, pp. 2, 5). This 4.5 percent increase over the $159 billion spent in 2015 (Ibid., p. 2) was over half again as much as the 2.9 percent increase in GDP for that year (Duffin, 2019).

Medicaid spending is not evenly proportioned among enrollment groups. The program is constantly in the news because of controversy over expanding the program under the Affordable Care Act. But the ACA, or “ObamaCare,” principally addresses acute health care for young mothers, children and working age adults. While these groups comprise 77 percent of Medicaid enrollees (Kaiser Family Foundation [KFF], enrollees), they consume only 38 percent of Medicaid spending (KFF, spending). The aged and disabled who are most likely to use long-term services and supports are 23 percent of enrollees (KFF, enrollees), but they account for 61 percent of Medicaid expenditures (KFF, spending). Likewise, long-term care users, who are 5.9 percent of enrollees, consumed 41.8 percent of total Medicaid benefit spending for both institutional and non-institutional long-term services and supports (Thach and Wiener, 2018, p. 8). Its long-term care tail wags the Medicaid dog.

Medicaid spending on institutional (largely nursing home) care, which most people prefer to avoid (Riley, 2017³⁰), has abated in recent years remaining close to the amount spent in 2010 and actually declining two percent in 2016 (Eiken, 2018, p. i). Spending for home and community based care, which people greatly prefer (Lampkin and Barrett, 2015³¹), has accounted for almost all Medicaid long-term care spending growth in recent years, increasing 10 percent in 2016 alone (Ibid.). In fact, Medicaid home care spending for older adults and people with physical disabilities reached 45.2 percent, up from 40.2 percent in 2013 (Eiken, 2018, p. 13 and Table AS).

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Updated, Monday, January 27, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-004: LTC NEWS AND COMMENT

CMS to Merge Nursing Home Compare into Single, Cross-Continuum Database
Trump says he'd take 'take a look' at changing entitlements such as Medicare
Senior Living Faces Aggressive Litigation, Rising Insurance Costs in 2020
Some LTCI Issuers May Be Too Optimistic About Interest Rates: Fitch
How The Democratic Presidential Candidates Would Address Long-Term Care
Join Us for the Nuts & Bolts of Medicaid Planning Training
Burnout generation gap: Gen X healthcare workers fare worse than millennials, boomers
39% of adults in their 70s view Social Security as ‘a lifeline’
How to Survive as a Caregiver: Six Essential Tips
Long-Term Care Insurance Benefits Payments Rise: AALTCI
Understanding the Nursing Shortage

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Updated, Monday, January 20, 2020, 3:40 PM (Pacific)

Seattle—

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LTC E-ALERT #20-003: LTC NEWS AND COMMENT

What The 2020s Have In Store For Aging Boomers
NAIC Prepares to Collect State-by-State LTCI Rate Data
There are at least 4 different ways of aging, scientists say
Two moments on health care from the Democratic debate
40% of Older Americans Rely Solely on Social Security for Retirement Income
Families sending relatives with dementia to Thailand for care
Growing gap between what insurers and Medicare spend on hospital stays
New 'smart diaper' unveiled at CES 2020 alerts parents when their baby goes to the bathroom, monitors body temperature and urine content - and can even be used for seniors
Plan to Revamp Medicaid-Eligibility Checks Draws Criticism
The Many Ways of Coping With Alzheimer’s

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Updated, Monday, January 17, 2020, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: MEDICAID AND LONG-TERM CARE

LTC Comment: We publish today the Center for Long-Term Care’s new flagship report titled “Medicaid and Long-Term Care.” Read it here after the ***news.***

*** We are aware of formatting problems in the new report, especially missing spaces. These occurred converting from Word to a .pdf. We’ll fix them, but in the meantime, the report is readable and we want to abide by the previously announced publication schedule. ***

*** ILTCI CONFERENCE NEWS: The 2020 Intercompany Long-Term Care Insurance Conference, scheduled for March 29 to April 1 in Denver, Colorado, has named its keynote speaker: Anders Sörman-Nilsson. He is a “global futurist and innovation strategist who helps leaders decode trends, decipher what’s next and turn provocative questions into proactive strategies.” That definitely sounds like something the private LTCI industry can use. Register for the conference here. Book your hotel before February 22. Early registration discounts ended January 16, but “sponsor applications” are still being accepted. ***

*** ILTCI CONFERENCE BACKGROUND: Organizers expect the highest attendance ever for this year’s conference. They have a new, semi-permanent byline for the annual meeting: “Inspire | Lead | Trust | Collaborate | Innovate.” The ILTCI conference has a long and distinguished history. Read all about it in our History of LTC Insurance Conferences with year-by-year summaries of each meeting, some with pictures and links to the more detailed contemporaneous reports. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE

LTC Comment: So many questions plague the issue of long-term care. Our new report answers them all:

If long-term care is such a big risk and cost, why don’t people worry about it enough to prepare?
How did nursing homes become the main care venue when most people prefer home care?
Why does America fund long-term care through a welfare program?
Does Medicaid long-term care eligibility really require impoverishment?
How much income and how many assets can someone keep and still have Medicaid pay for long-term care?
Why do most analysts completely ignore the vast popular and legal literature on qualifying for Medicaid without spending down?
Is another compulsory government entitlement program our only option as most analysts and their studies insist?
Or could private LTC financing predominate if Medicaid became a better safety net for the poor?
Does anyone care anymore about America’s exploding deficit and debt? If not, why not, and so what?

Steve Moses answers all these questions in “Medicaid and Long-Term Care.” We provide the paper’s “Abstract” below and urge you to read the full paper here: http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf.

Abstract

Most long-term care scholarship analyzes these symptoms, without explaining their cause, and recommends expanding government’s role, usually by means of a new or expanded mandatory, tax-funded social insurance program. This paper takes a different tack, first explaining why the long-term care market has the problems it does and then suggesting how to remove their causes.

At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying 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 affluent save and benefit through eligibility loopholes.

The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

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Updated, Monday, January 13, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-002: LTC NEWS AND COMMENT

Losing one night's sleep may increase risk factor for Alzheimer's, study says
Anticholinergic Drug Exposure and the Risk of Dementia
Health Savings Account Balances Show Continued Growth
US cancer death rate sees largest-ever single-year drop, report says
The Longevity Economy® Outlook: How people age 50 and older are fueling economic growth, stimulating jobs, and creating opportunities for all
FLTCIP 3.0: The Federal Long Term Care Insurance Program Benefit Booklet
Long-Term Care Protection Without Additional Cost
Senior living trends: Prepare for historic changes in 2020
Bundles cut spending on joint replacements, but not for other conditions
How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care?
The Health Care Promises We Cannot Keep
Older People Need Geriatricians. Where Will They Come From?
VA pilot program aims to cut nursing home care costs

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Updated, Monday, January 6, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-001: LTC NEWS AND COMMENT

“Traveling the loneliest road,” by Eli Saslow, Washington Post
“7 Rules For Wealth: #3 Long-Term Care End Run,” by William Baldwin, Forbes
“HCBS, caregivers focus of presidential candidate Cory Booker’s long-term care plan,” by Lois A. Bowers, McKnight’s Senior Living
“New York slashing Medicaid payments by 1% as state faces massive $6 billion budget deficit,” by Dennis Slattery, New York Post
“The 2020s Will Be A Tipping Point For Elder Care In The US,” by Howard Gleckman, Forbes
“More Doubt That Plaques in the Brain Cause Alzheimer's,” by E.J. Mundell, HealthDay
“Opinion: Numbers that older workers and retirees need to know in 2020,” by Paul Brandus, MarketWatch
“Americans smoking less, but diabetes and obesity are increasing,” by Scott Wooldridge, BenefitsPRO
“2020 SSI and Spousal Impoverishment Standards,” Centers for Medicare and Medicaid Services
“Medicaid financing scheme endangers federal-state partnership,” by Red Jahncke, The Hill
“Big senior living stories of 2019,” by Lois A. Bowers, McKnight’s Senior Living
“Genworth and Oceanwide Extend Merger Agreement,” Cision PRNewswire
“LTCi: Bringing It All Back Home,” by Gordon Saunders, Advisor Magazine
“Alzheimer’s Tests Soon May Be Common. Should You Get One?,” by Gina Kolata, New York Times

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Updated, Friday, January 3, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: Officials and analysts attack the symptoms of long-term care dysfunction (exploding costs, nursing home bias, and poor quality) without addressing the cause (easy access to Medicaid for consumers and strong incentives for states to maximize federal Medicaid matching funds). Everything follows from that observation after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, whose revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on LTC, 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. He also offers other ways to educate and help clients make informed final decisions in 15-20 minutes! Change work-site LTCi from a series of proposal deliveries to an interactive consultation! 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 913-403-5824 or claude.thau@gmail.com. ***

*** MEDICAID AND LONG-TERM CARE: Our monograph of that title will be published later this month. It fully develops and documents the argument I make in the following speech. Stay tuned. Pre-publication copies of the monograph are available now to Center members upon request. Just email smoses@centerltc.com. ***

LTC BULLET: WHERE LONG-TERM CARE WENT WRONG AND HOW TO FIX IT

LTC Comment: I’m in Orlando today speaking at the Cato Institute’s State Health Policy Summit. My topic is “How to Provide Long-Term Care to a Burgeoning Elderly Population.” The first point I make about that subject is that providing long-term care isn’t the problem. Paying for it is. If it were not for our thoroughly dysfunctional long-term care financing system, we’d have plenty of money and willing providers to render top quality care.

So, what’s wrong with long-term care financing? How did it get that way? And what has to change to fix it? That’s the gist of my talk. Here’s the text:

“How to Provide Long-Term Care to a Burgeoning Elderly Population”
by
Stephen A. Moses, Center for Long-Term Care Reform
for
The Cato Institute’s State Health Policy Summit,
in Orlando, Florida, January 3, 2020

First of all, providing long-term care isn’t the problem. Paying for it is.

So, I’m going to define the long-term care financing problem. Then I will explain how and why it exists with some historical background. Finally I will identify and explain the fundamental obstacle to solving the problem, which is: both government and scholars have focused corrective action on symptoms of the problem instead of its causes.

If we change our focus to causes instead of symptoms, the long-term care problem is easily solved. You’ll see what I mean.

When we’re finished today, especially if you go on to read the monograph “Medicaid and Long-Term Care,” you will understand the long-term care financing crisis and what has to change to resolve it.

Long-term care includes a broad range of social, medical and custodial services that caregivers provide for three months or longer to help disabled people of any age perform activities of daily living such as eating, bathing, and toileting. Our focus is long-term care for the aged.

Let’s stipulate to the magnitude of the problem to save time. You know we have an aging baby boom generation. They’re already stressing Medicare and Social Security. They’ll overwhelm Medicaid, the dominant long-term care payer, when they start turning 85 in 2031. The U.S. age 85+ population, the cohort with the highest long-term care need, will triple between 2015 and 2050.

After age 65, people have a 70% probability of needing extended care, a 48% chance of needing paid care at an average lifetime cost of $138,100, but a 2% probability for everyone and a 5% probability for long-term care users of needing ten years or more costing hundreds of thousands, even millions of dollars. This disproportion makes the risk highly insurable, though insurance has been minimal so far, for reasons I’ll explain.

Care is very expensive wherever received: Nursing homes average $7,500 to $8,500 per month; Assisted Living costs $4,000 or more per month; home care runs about $4,195.

The U.S. spent $366.0 billion on long-term care in 2016. Families and friends provided an additional half-a-trillion dollars’ worth of unpaid care, at huge financial and emotional distress.

Clearly the juxtaposition of these risks with the demographic Age Wave makes the future of long-term care financing highly problematical.

So far, the U.S. has limped along with a severely dysfunctional long-term care service delivery and financing system.

Government pays for over 70% of long-term care, mostly through Medicaid, a means-tested public welfare program. Costs are high and rapidly increasing. The system has a strong nursing home bias even though everyone dislikes nursing homes. Access to preferred home care is very limited. Low reimbursements from Medicaid prevail, often below the cost of providing the care. Quality is dubious in all care venues. The resultant tort liability is astronomical. Private payers at market rates have dwindled as Medicaid has expanded to pay for 2/3 of nursing home residents. Neither home equity conversion nor private long-term care insurance pays for much long-term care. It really is a mess!

What went wrong? Here’s some history.

Long ago, we had indoor relief, that is, poor houses, in the U.S. But that system gave way by the 20^th century to cash benefits for the elderly from Old Age Assistance and Social Security. With government cash in hand, seniors had money to purchase residential care. So nursing homes profited and proliferated.

In 1960, the Medical Assistance for the Aged (MAA) program made health care available to people sixty-five and older who had low or moderate incomes. It also required states to match available federal funds. That was a huge new source of funding for long-term care, further subsidizing the nursing home business.

The same Kerr Mills statute radically changed eligibility for nursing home care by adding people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses.” Those are the so-called medically needy recipients.

In 1965, the Medicaid program institutionalized these features but also eliminated strict eligibility criteria, transfer of assets restrictions, and mandatory liens which had been commonplace before. Medicaid had no restrictions on asset transfers to qualify until 1980. Anyone could give away everything and qualify immediately.

These features—to wit, medically needy eligibility exclusively for nursing home care, which included normal costs of living as well as health care, funded with virtually unlimited federal and state matching funds and with no limits on asset transfers to qualify—guaranteed Medicaid would explode in cost from the outset, perpetrate a nursing home bias in long-term care services, discourage development of a private home and community-based care market, and crowd out private long-term care financing sources. That’s exactly what it did.

The government responded by attacking the symptoms (exploding costs, nursing home bias, and poor quality), instead of the causes (i.e., strong financial incentives for states to maximize Medicaid spending and the perverse incentives encouraging consumers to rely on Medicaid rather than pay privately for long-term care.) For example:

State governments capped nursing home supply by requiring Certificates of Need on the principle “they can’t charge us for a bed that doesn’t exist.”

But capping supply, just made nursing homes charge more. So Medicaid capped reimbursement driving the Medicaid rate down to only 70% of the private pay rate on average.

But higher private-pay rates drove private payers to find ways to qualify for Medicaid. Consequently, private-pay nursing home revenue plummeted from 49% in 1970 to 27% in 2017.

Nursing home occupancy skyrocketed to 95% in the 1980s because beds were easy to fill if owners were willing to accept Medicaid’s low reimbursement rates.

But low rates and heavy demand led to poor quality. So Congress passed the Omnibus Budget Reconciliation Act of 1987 demanding better care, more caregivers and added training, but without providing more funding.

Caught between the rock of inadequate reimbursement and the hard place of mandatory quality, nursing homes sued under the 1980 Boren Amendment, which ensured at least minimal reimbursement levels. They usually won. So Congress repealed the Boren Amendment leaving no floor under Medicaid reimbursements.

Several congresses and presidents tried to control exploding Medicaid eligibility by closing eligibility loopholes and requiring estate recoveries. When nothing worked, Speaker Gingrich and President Clinton backed legislation in 1996 making it a crime to transfer assets to qualify for Medicaid. But opposition to this “Throw Granny in Jail” law got it replaced one year later by the “Throw Granny’s Lawyer in Jail” law. Neither approach succeeded; easy access to Medicaid long-term care continued.

Next Medicaid tried to save money by “rebalancing” from expensive nursing home care to presumably cheaper home care but they eventually learned home care tends only to delay institutionalization and ends up costing more in the long run. Government funding for combined institutional and home care continued to increase year after year.

Government policy tried to encourage private long-term care insurance but failed at that too. Long-Term Care Partnerships, designed to forgive spend down liability equal to the amount of insurance purchased and used, didn’t work because there was no real spend down requirement in the first place. A tax deduction for premiums when total medical expenses exceeded 7.5% of adjusted gross income didn’t work because people who qualified financially were too sick to qualify medically for long-term care insurance.

The 2010 ObamaCare law introduced the CLASS Act designed to entice people into voluntary public long-term care insurance, but that turned out to be another unfundable debacle, quickly repealed.

The latest government interference in the long-term care financing market is centrally planned reimbursement reform. They’re trying to convert from traditional fee-for-service to so-called value-based reimbursement. Managed care, prospective payment and bundling are the watch words of the day. They add an extra middleman and more regulations between providers and patients who are already severed by the Medicaid bureaucracy.

Why does this heavy dependency on Medicaid matter? Medicaid is the sine qua non of the long-term care financing problem.

Medicaid spending is not equally proportioned among recipients. Women, children and working age adults comprise 77% of Medicaid enrollees, but consume only 38% of spending while the aged and disabled are 23% of enrollees and consume 61% of expenditures.

Long-term care users, who are only 6% of enrollees, consumed 42% of total Medicaid benefit spending for both institutional and non-institutional long-term care.

Clearly, Medicaid is the tail that wags the long-term care dog.

What do scholars and analysts have to say about Medicaid and the long-term care financing crisis? They’ve approached these topics in the same way government did. They bewail the symptoms of the problem (high cost, nursing home bias and poor care) without analyzing or addressing the causes, which are easy access for consumers to Medicaid and strong incentives for states to maximize federal Medicaid matching payments.

I cite many examples of this analytical irresponsibility in the “Medicaid and Long-Term Care” monograph. These include studies, commission reports, and articles from the Pepper Commission in the 1990s to a barrage of publications by think tanks, advocacy organizations and Health Affairs articles over the past few years.

Besides focusing on symptoms and ignoring causes, this scholarship also has in common a misunderstanding and underestimation of the impact of Medicaid long-term care eligibility. That is the missing link we must understand to crack this issue wide open.

Nearly all scholars, not to mention politicians and bureaucrats, assume Medicaid long-term care eligibility requires impoverishment. They cite rules that seem to say eligibility requires retention of no more than $2,000 in assets and $723 per month of income. That’s literally true, but it almost never applies because of other more generous rules that supersede.

The rule of thumb is that anyone with income below the cost of a nursing home can qualify for Medicaid long-term care benefits based on income. That’s because most states apply “medically needy” rules allowing people to deduct their actual medical and long-term care expenses from their income in order to qualify. As nursing homes are very expensive, most middle class people qualify easily based on income.

On the asset side, retainable wealth is virtually unlimited. Besides the $2,000 everyone can keep, federal Medicaid rules allow recipients to retain home equity of at least $595,000 and up to $893,000 in some states. Also, regardless of value, recipients may retain one income-producing business, their Individual Retirement Accounts, one automobile, personal effects including heirlooms, term life insurance, and prepaid burial plans. Mandatory estate recovery, introduced in 1993, is easy to dodge.

Married couples get special consideration. At-home spouses may retain a Community Spouse Resource Allowance of half the couple's joint assets up to $128,640. The Minimum Monthly Maintenance Needs Allowance allows the community spouse to receive up to $3,216 of the Medicaid spouse’s income. These allowances increase annually with inflation.

Self-help books and articles on how to take advantage of Medicaid’s generous long-term care eligibility rules abound. State Medicaid eligibility workers are often eager to help applicants find ways to qualify while minimizing spend down for their care.

Beyond the ubiquitous consumer information on Medicaid planning, there is a large and always expanding professional legal literature on the topic. I give many examples of the popular and legal literature on qualifying for Medicaid in the “Medicaid and Long-Term Care” monograph and in dozens of national and state-level studies available at www.centerltc.com.

Strangely, however, most long-term care analysts ignore these easy pathways to Medicaid long-term care eligibility. Why?

An easy explanation is ideological bias. As they ignore causes and focus on symptoms, analysts invariably recommend more government funding and regulations to solve problems that, as we’ve shown, were actually caused by excessive government funding and regulations.

How and why they do this is highly nuanced. They evade and equivocate on key concepts and facts. For example:

Impoverishment: They say things like “Medicaid only covers the long-term care costs of the indigent.” Synonyms for “indigent” include “poor, impecunious, destitute, penniless, poverty-stricken, down and out, pauperized, and without a penny to one's name.” Given Medicaid’s generous income and asset eligibility allowances described above, saying Medicaid requires indigence is obviously false.

Spend down: Analysts routinely claim applicants must spend down their assets to qualify for Medicaid. But there is no requirement to spend down assets for care. Applicants can spend down unlimited amounts for any good or service for which they receive market value, including a lavish birthday party or world travel. Applicants can also purchase unlimited exempt assets, like a new car or more expensive home. I give many examples in the monograph. Spend down studies from 30 years ago and more recently purport to document spend down, but they only prove people have transitioned to Medicaid eligibility, not that they spent down for care.

Asset decumulation: Research shows asset decumulation in old age is much less than economic models predict. People hold on to their assets tenaciously until just before death. Medicaid’s generous income and asset rules enable them to do this even if they need long-term care. The fact that Medicaid offsets upwards of one quarter of the lifetime medical and long-term care expenses of high income households is staggering and belies the common presumption that people must spend down into impoverishment to obtain benefits.

Median wealth: Analysts focus on people with median or less income and assets, but they routinely evade the more interesting questions of whether and how people with much higher wealth qualify for Medicaid. I show in the paper how most Medicare beneficiaries with income and assets above the median qualify for Medicaid if they need long-term care without spending down assets significantly.

Medicaid planning: While most analysts ignore the role of sophisticated legal self-impoverishment to qualify for Medicaid, if they do mention this common practice, they focus only on “asset transfers.” Asset transfers are not insignificant as they cost Medicaid as much as $1.7 billion per year. But they are not nearly as common as other Medicaid planning techniques such as purchasing exempt assets like a car or house, setting up a Medicaid Asset Protection Trust, or creating a Medicaid-friendly annuity. Medicaid planning is far more important than most analysts acknowledge but formal Medicaid planning itself pales in significance compared to the basic eligibility rules that allow most middle class people to qualify without employing sophisticated legal machinations.

Out-of-Pocket Expenditures: Many analysts overestimate out-of-pocket expenditures in order to promote the need for more government spending. They claim half the cost of long-term care is paid out of pocket. They make that claim by including room and board expenses in residential care settings—costs that people would incur whether they need long-term care or not—and by excluding Medicare post-acute care expenditures, which are critical to sustain Medicaid’s viability as the dominant long-term care financing source. Actual out-of-pocket expenditures are closer to 25% and half of those are spend-through of Social Security income by people already on Medicaid.

Faulty data: When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. But these data sources do not include actual assets spent for care. They are based on self-reported information that people have very strong incentives to misrepresent. I explain in the monograph why the HRS and AHEAD data cannot be trusted.

So what evidence can I adduce that Medicaid long-term care eligibility is routinely achieved without significant spend down of assets either because of Medicaid’s basic eligibility rules or with the help of sophisticated Medicaid planning?

Anecdotal evidence abounds, but hard empirical evidence is very limited, because analysts and think tanks avoid the research that needs to be done to establish the facts.

I recount such anecdotal and empirical evidence as does exist in the monograph. I’ve also personally conducted many national and state-level studies available at www.centerltc.com that estimate the incidence of Medicaid planning. I also quote state Medicaid eligibility workers in these studies about their anger and frustration because it’s hard for them to qualify poor people for care, while the middle class and affluent qualify easily, often with flawless applications and documentation prepared by their law firms.

Only one promising empirical study has been done so far. But GAO downplayed its findings and completely missed their significance.

In 2014, the Government Accountability Office analyzed a random, but non-generalizable, sample of 294 Medicaid nursing home applications in two counties in each of three states: Florida, New York, and South Carolina. The summary results are telling:

“GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage: 1. spending countable resources on goods and services that are not countable towards financial eligibility …; 2. converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note; 3. giving away countable assets as a gift to another individual …; and 4. for married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity.” (GAO, 2014, unnumbered “GAO Highlights” page).

This is exactly what we would expect, but when GAO recounts the magnitude of these practices, they largely miss their significance.

For example, nearly 75% of applicants owned non-countable resources; the median amount of which was $12,530. If generalizable nationally, which it’s not, 665,700 Medicaid nursing home residents sheltered over $8.3 billion in non-countable resources or 42.4 percent of the $19.7 billion Medicaid paid for their nursing home care.

39% of GAO’s sample owned burial contracts and prepaid funeral arrangements with a median value of $9,311. If generalizable nationally, $3.2 billion or 6.3% of total Medicaid nursing home expenditures are diverted from funding long-term care to relieving families of the final expenses for their loved ones. This is a bonanza for the funeral industry and for heirs.

GAO found 44% of approved applicants had between $2,501 and $100,000 in total resources, and 14% had over $100,000 in total resources. 887,598 nursing home residents receive Medicaid. If generalizable nationwide and 14% of them, or 124,264 recipients, possessed $100,000 or more in non-countable resources, that is at least $12.4 billion or 3.4 times the $3.7 billion Medicaid spent for their nursing facility care.

GAO found median home equity to be $50,000, ranging from $0 to $700,000, among the 51 applicants (out of 91 total homeowners or 31 percent of the sample) for whom they were able to determine it. Most home equity is non-countable, up to as much as $893,000 in some states as of 2020. Thus 100 percent of their sample’s home equity was non-countable.

If 31% of 887,598 Medicaid nursing home recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, then 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.

Did it not behoove GAO to dig a little deeper? How much money could Medicaid save by making nursing facility care available only after home equity is spent down by means of private or commercial home equity conversion methods?

GAO also failed to develop the implications of similar findings for other Medicaid planning techniques such as personal care contracts, spousal refusal, annuities, and reverse half-a-loaf strategies.

Finally, GAO acknowledged their analysis was based entirely on case records. No further verification was done. This totally discredits their limited findings because state and federal re-reviews of welfare cases historically have shown substantial error rates in case records when they are verified externally and thoroughly.

Bottom line, this kind of study should be done on a nationally generalizable basis with complete external verification of case records by checking bank records, property ownership, property transfer and IRS records. Until we conduct such a study, the true financial impact of easy access to Medicaid long-term care will remain unknown.

Ramifications: What does all this mean? If it’s not a catastrophic poverty-maker, what is Medicaid?

1.     By making nursing homes virtually free in the mid-1960s, Medicaid locked institutional bias into the long-term care system, crowded out a private market for the home care seniors prefer, and trapped the WW II generation in sterile, welfare-financed nursing facilities.

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

3.     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.

4.     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.

5.     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.

6.     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.

Policy recommendations: The cause of long-term care problems is easy and elastic Medicaid financial eligibility combined with generous federal matching funds that induce greater Medicaid spending by states. Corrective action must address those causes if it is to effect improvements in the symptoms of exploding costs, institutional bias and poor quality. The solution is not complicated:

1.     Cap federal Medicaid long-term care matching funds for states.

2.     Allow states more control of Medicaid long-term care financial eligibility so they can target resources to the truly needy and encourage others to save, invest or insure for long-term care

3.     Eliminate or greatly reduce Medicaid’s home equity exemption. Let people keep and live in their homes, but when the last exempt surviving relative dies, recover all costs from estates so Medicaid does not continue giving windfalls to heirs for ignoring long-term care planning. Finally …

4.     We should redefine the problem: 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.

a.     For example, 52% of Americans turning 65 today will develop a disability serious enough to require long-term care, although most will need assistance for less than two years. On average, an American turning 65 today will incur $138,100 in future long-term care costs, which could be financed by setting aside $70,000 today, given the time-value of money. That’s not so daunting. Home equity conversion could cover that cost for many if Medicaid didn’t exempt so much home equity.

b.     In June 2019, Johnson and Wang found that 74% of seniors could fund at least two years of a moderate amount of paid home care if they liquidated all of their assets, and 58% could fund at least two years of an extensive amount of paid home care. Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.” So, the problem is much more manageable than we thought. All we have to do is persuade people to liquidate all their assets. That obviously won’t happen until we eliminate Medicaid’s perverse incentives that discourage paying privately and encourage denial of long-term care risk and cost.

c.     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% of middle-income seniors to afford the product. Consumers could find that extra $15,000 in very inexpensive private LTCI if public policy didn’t choke the long-term care insurance market.

d.     Finally, a Cato Institute Policy Analysis reports that only about 2% of today’s population lives in poverty, well below the 11% to 15% that has been reported during the past five decades.

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.”

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.”

Broken rhythm of reform: If this is all so obvious, why aren’t the necessary reforms being implemented?

Progress toward improving Medicaid long-term care for the poor while diverting others to private pay options usually occurs when state and federal budgets are tight as in recessions. That’s when we got mandatory estate recovery and closed some eligibility loopholes in the Omnibus Budget Reconciliation Act of 1993. The same happened after the recession of the early 2000s when the Deficit Reduction Act of 2005 passed putting the first cap ever on the home equity exemption.

But we’ve had no further progress since the DRA ’05, despite the Great Recession of 2008. Why?

We’ve experienced much slower, steadier economic recovery this time than before. The Federal Reserve forced interest rates artificially to near zero, which encouraged more deficit spending. Irresponsible fiscal policy sustained excessive Medicaid long-term care spending and promoted private mal-investment. Nowadays, no one cares about burgeoning debt. We’ve blown up a huge economic bubble that could burst at any time.

Simultaneously the Age Wave is cresting and about to crash, making the situation truly ominous as the second third of this century approaches.
a.     Boomers started taking Social Security at age 62 in 2008
b.     At age 65 in 2011 they sent Social Security cash flow negative
c.     Boomers started taking Required Minimum Distributions from their retirement accounts in 2016, depleting private investment capital
d.     Boomers 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.

This whole house of cards is going to come crashing down by 2031.

My Conclusion: The best course is to reduce states’ dependency on federal funds, target scarce public resources to people who need them most, and let free market incentives and products take care of the rest.

The prospects of that happening at present are nil. So the single most important thing we can do for now is conduct generalizable studies of Medicaid long-term care cases at the state and national levels to demonstrate exactly how much damage Medicaid does to the long-term care system and to show how much could be saved by fixing it.

Then, when the current asset bubble bursts and state and federal budgets need relief, we’ll have the data to demonstrate where Medicaid went wrong and how to fix its most expensive component, long-term care.

Thank you.

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Updated, Monday, December 23, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-047: LTC NEWS AND COMMENT

A Free Market Solution Within Medicare
Parenting Your Aging Parents When They Don’t Want Help
More payers jump into value-based Medicare Advantage plans in 2020
Continued Uncertainty As Fifth Circuit Strikes Mandate, Remands On Rest Of ACA
Projected U.S. State-Level Prevalence of Adult Obesity and Severe Obesity
Election 2020: How Pete Buttigieg’s Plan Could Help Family Caregivers
MedPAC Commissioner: Underfunding Turns Medicaid-Heavy SNFs into ‘7th Circle of Hell’
Out-of-Pocket Costs for Medicare Recipients Will Rise in New Year
More Americans dying at home, and ‘home’ may include assisted living
The Hidden Drug Epidemic Among Older People
Frail Older Patients Struggle After Even Minor Operations

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Updated, Friday, December 20, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2018 DATA UPDATE

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

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2018 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 2018 statistics on its website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical. Click on “NHE Tables.” Then click on the data tables of interest, Tables 14 and 15 for our purposes to “unzip” them.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending in 2018: Growth Driven by Accelerations in Medicare and Private Insurance Spending." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free.

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

Heads Up: This may be the most important LTC Bullet we publish all year. It is the seventeenth 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."

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"So What If the Government Pays for Most LTC, 2018 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 $168.5 billion on nursing facilities and continuing care retirement communities in 2018. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 48 years (from 26.8% in 1970 to 52.2% in 2018, up 25.4 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.6% in 2018, down 22.6% 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 1970-2018.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 45.9% in the past almost five decades while the share paid by Medicaid and Medicare has nearly doubled, up 94.8%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts at least $585,000 and in some states up to $878,000 of home equity (as of 1/1/19). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home care (29.6% of the dollars in 2018), it covers over two-thirds (67.6%) 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.” Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.1% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2018. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? ALFs are 81% private pay, 19% Medicaid (Source: AHCA/NCAL Data) and they cost an average of $48,612 per year (Source: Genworth Cost of Care Survey 2019). 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 $585,000 or $878,000 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 $102.2 billion on home health care in 2018. Medicare (39.4%) and Medicaid (35.1%) paid 74.5% of this total and private insurance paid 11.9%. Only 9.9% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2018.

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

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

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

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

Note especially:

“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.

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Updated, Monday, December 16, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-046: LTC NEWS AND COMMENT

Federal Watchdog Questions Billions of Dollars Paid to Private Medicare Plans
LTCG to Deliver Fall Prevention Services to CalPERS Long Term Care Policyholders
Medicaid’s Share of Nursing Home Revenue, Resident Days Hits Record High as Medicare Drops to Historic Low
CIPR Fall Program: The State of Long-Term Care Insurance
An 'Epidemic of Loneliness' in America? Maybe Not
Canada Throws China Oceanwide-Genworth Deal a Lifeline
Move from fee-for-service to managed care ‘a disaster’ for long-term care, Parkinson says
The Medicare Change That Could Cost Your Clients Thousands of Dollars
Alzheimer's incidence varies significantly by location
Stop coming up with ideas to raid retirement savings
Spending Growth on Nursing Home Care Drops to Slowest Rate Since 2013 — Even as Overall Health Outlays Accelerate
Silver wave’ will affect some real estate markets more than others as older adults move to senior living, analysis suggests
The Unending Indignities of Alzheimer’s
Bill would let people tap retirement accounts for long-term care insurance
Assisted living threatened by looming federal expirations
Medicaid initiatives that push long-term home, community care over nursing homes could end this year

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Updated, Friday, December 6, 2019, 9:00 AM (Pacific)

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LTC BULLET: PETE FOR LTC?

LTC Comment: Give Mayor Pete credit for publishing the most comprehensive long-term care plan of all the presidential candidates, but it could do more harm than good as we explain after the ***news.***

*** ILTCI 2020 registration is now open! Register here. Organizers report: “On your registration confirmation page/email you will see a link to book your hotel room. If you use that link some info will be prefilled for you. Please book your hotel as soon as possible. Our room block rate of $129/night is only available through Feb 22, 2020 or when our block fills up.” Jump on this so you won’t find “no room at the inn.” Not sure this conference is for you? Read our next item. ***

*** HISTORY OF LTC INSURANCE CONFERENCES published. The report we promised in “LTC Bullet: History of LTC Insurance Conferences,” November 22, 2019, is up. Read the 65-page History of LTC Insurance Conferences (2019) or just browse. Find pictures of LTCI’s leading lights from a couple decades ago. Compare what people thought then with objective circumstances now. It was a real re-education for me compiling this material and I hope others enjoy, and maybe even learn, from it as I did. Some of the links in the report go the Center for Long-Term Care Reform’s members-only site, The Zone. To access one of these, you’ll need your user name and password. To get a UN and PW if you’re not yet a member, join. We’ll have you in The Zone immediately. Call or email 425-891-3640 or smoses@centerltc.com to begin. ***

*** MEDICAD AND LONG-TERM CARE. Around the end of the year, the Center for Long-Term Care Reform will publish a new report titled “Medicaid and Long-Term Care.” This study will explain what is wrong with the favored government takeover plan for long-term care including the one proposed by Mayor Pete described in today’s LTC Bullet. Our study will describe a far less onerous voluntary solution. For a pre-publication copy of “Medicaid and Long-Term Care,” join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email within minutes of joining our campaign to fix long-term care. For a preview of what to expect see “LTC Bullet: The Battle Lines Are Drawn,” October 25, 2019.

LTC BULLET: PETE FOR LTC?

LTC Comment: Pete’s LTC plan is Section I of his overall prescription for “Dignity and Security in Retirement.” We’ll keep our focus on long-term care. But consider briefly “Section II: Economic Security for America’s Retirees” in which “Pete believes every American has the right to a secure retirement with a dignified standard of living.” That is a very dangerous principle, because for every positive good to which everyone has a “right,” others are obligated involuntarily to provide it. That’s the definition of slavery. True rights are only negative. You have the right to be secure in your person and property from force or fraud. Protecting that right is the proper role for government, not guaranteeing benefits for some while extorting others to pay for them.

Back to long-term care.

Pete: “Pete is proposing a new, historic long-term services and supports program to help cover the costs of long-term care for older Americans with a high level of need. To provide financial protection for those who have shorter-term needs or are in the early stages of long-term needs, Pete will strengthen the private long-term care insurance market and make Medicaid benefits more accessible.”

LTC Comment: Not a good start. He wants to pawn off short-term care to the insurance industry and make Medicaid even easier to get. The proper role of private insurance is to replace the small risk of catastrophic loss with the certainty of an affordable premium, not to help people save for an almost inevitable, but smaller care need. Easy access to Medicaid LTC benefits is the main reason consumers have been desensitized to LTC risk and remain unprepared for care costs. Making Medicaid even more “accessible” to middle class and affluent people would make this problem worse.

Pete: “Pete’s Long-Term Care America proposal would create a long-term care program to protect people over age 65 who require assistance with two or more activities of daily living, such as bathing or eating. Benefits would be worth $90 per day for as long as they need care, and kick in after an income-related waiting period. The cash benefit would come with requirements attached to ensure it is being used for high quality long-term services and supports and that the money isn’t perpetuating or undermining worker standards. This benefit will become ‘first payer,’ and can be used to cover the cost of hiring a home health aide for several hours a day, or offset the cost of assisted living or nursing home facilities. It will be inflation-adjusted and regionally-adjusted. Similar programs have been supported by the Long-Term Care Financing Collaborative (a diverse group of policy experts), and the Bipartisan Policy Center.”

LTC Comment: Ah-ha, Pete’s adopting the latest progressive scheme to replace CLASS. We critiqued this plan from the LTC Collaborative, Leading Age and the Bipartisan Policy Center in LTC Bullet: LTC at a Crossroads, June 3, 2016. Unlike CLASS, which was voluntary, and financially unsustainable, this new plan is compulsory and financially unsustainable. Pete has nothing to say about how to pay for it.

Pete: “Only a handful of insurers offer meaningful coverage policies, and the market has shrunk considerably in the last decade. The private long-term care insurance market is failing people. But because our government can set the rules by which private players operate, the government can change the rules.”

LTC Comment: Ominous. First government destroys the demand for LTC insurance by giving away what the industry is trying to sell for half a century. Then government forces interest rates to zero for a decade ruining the product’s profitability. Now government is here to help us by changing the rules and commandeering “private players” options. No thanks.

Pete: “Home care workers are often paid poverty wages. Last year, home care workers made an average of under $12 an hour.” So: “Set a $15 per hour minimum wage for everyone, including direct care workers.”

LTC Comment: The vast majority of home care workers making $12 an hour are dependent on Medicaid’s impecunious reimbursement levels. Artificially forcing the minimum wage up will only make the burden on nursing homes, assisted living facilities and home care agencies greater. They’ll be able to hire fewer caregivers so access and quality of care will suffer. Why is it that the last thing anyone considers about the caregiver problem is its cause, Medicaid?

Pete: “Reduce the financial burden of unpaid caregiving, including by ensuring working Americans have access to 12 weeks of comprehensive paid leave to take care of loved ones.”

LTC Comment: In other words, government can’t figure out how to fix this problem, so they pawn it off on the private sector.

Pete: “Medicaid accounts for a majority of national long-term services and supports spending—over $150 billion a year. Yet Medicaid services are generally only available to people with low incomes and assets, requiring middle-income people to impoverish themselves in order to access the benefit.”

LTC Comment: That is a preposterous statement. Medicaid’s generous LTC eligibility rules allow very high incomes (up to the cost of a nursing home) and virtually unlimited exempt assets. We’ve developed these facts in numerous national and state-level studies over the years. Find them here. If it were true that Medicaid required impoverishment for LTC, consumers would not be desensitized to the risk and cost of long-term care and they would be far more likely to plan responsibly for that risk much earlier. So, what would Pete do?

Pete: “Raise the asset and income limits for long-term services and supports through Medicaid. To qualify for Medicaid’s long-term care benefits, individuals can’t own more than about $2,000 in assets and need an income below $771 per month. This means that to access public long-term care services, older people often must push themselves into poverty. Pete will alleviate this burden on families by raising Medicaid’s asset limit for people who need long-term care to $10,000, and increasing the income limit by 300 percent, or $2,313 per month for an individual in 2019.”

LTC Comment: Smoke and mirrors. The $2,000 asset limit excludes exempt assets that are virtually unlimited. The $771 income limit ignores how virtually everyone can qualify for Medicaid LTC benefits based on income if most of their income is going to pay for their long-term care. So $8,000 per month of income is not disqualifying where nursing home costs are that high or higher. Raising these limits would only exacerbate the problem. The real problem that Medicaid co-opted long-term care demand by providing an easy pathway to care after the insurable event has already occurred. Using public funds to subsidize even further the LTC costs of people who should, could and would have planned responsibly for their own care if left to their own devices only further rewards the irresponsibility Medicaid has subsidized for decades.

Pete: “Make protections against spousal impoverishment permanent for individuals seeking longterm care through Medicaid. Spousal impoverishment rules protect a spouse from losing their home or income when their partner needs long-term care. Pete will permanently extend these protections so families can live with independence and dignity.”

LTC Comment: Spousal impoverishment protections for community spouses of institutionalized Medicaid recipients are already permanent. What Pete refers to here is the new benefit slipped into ObamaCare that is about to expire. It’s meant to encourage home care by allowing spouses to keep more of their Medicaid spouses’ income even if they’re living together at home. It is this benefit that has enabled Medicaid census in assisted living facilities to increase to 20 percent. It is one more way government makes it easier for people to ignore the risk of long-term care, avoid the premiums for private insurance, and still get radically subsidized care even at home or in assisted living.

Pete: “Bar Medicaid from taking families’ homes to pay for their long-term care. Under current law, states are required to seek repayment of Medicaid costs from the estates of individuals who received long-term care benefits prior to their deaths. This policy overwhelmingly punishes working- and middle-income Americans. Pete’s administration will eliminate estate recovery rules.”

LTC Comment: Medicaid does not take “families’ homes to pay for their long-term care.” Medicaid guarantees the right to retain a home even if the recipient is medically unable ever to return but expresses a subjective intent to return. Estate recovery occurs after the recipient dies and only after a non-Medicaid spouse dies later. The purpose of this policy was to prevent families who fail to help their parents prepare for long-term care risk and cost from reaping a windfall of tax-payer subsidized long-term care. How can we ever hope to engage young people in their own and their parents’ long-term care planning if we allow them to ignore the risk, take advantage of Medicaid, and receive large inheritances at public expense?

Pete: “Ensure everyone has the choice of receiving long-term care at home or in their community, including by eliminating Medicaid’s institutional bias.”

LTC Comment: I don’t think Pete understands just how hypocritical that statement is. Medicaid’s institutional bias is what caused the private home care market to remain stunted. The only way to get most people access to home care is to remove their dependency on Medicaid. In fact most of the problems our long-term care system faces are caused by excessive dependency on Medicaid for so long. Our new monograph “Medicaid and Long-Term Care” (prepublication copies available to Center members now) explains it this way

By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying 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 affluent save and benefit through eligibility loopholes. The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

Ironically, government caused most of the problems Mayor Pete seeks to solve … with even more, very much more government intervention, regulation and funding. It’s the same primrose path that led us into the current mess and it spirals dangerously downward from here.

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Updated, Monday, December 2, 2019, 7:10 PM (Pacific)

Seattle—

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LTC E-ALERT #19-045: LTC NEWS AND COMMENT

Some nursing homes are illegally evicting elderly and disabled residents who can't afford to pay
Jeffrey Brown: Saving for Retirement 'Only Half the Puzzle'
About the Certification for Long-Term Care (CLTC)
Presidential candidate’s long-term care proposal calls for increased wages, minimum staffing requirements
60 Seconds with Steve Monroe
Wash. State Continues Public LTCI Effort, in Spite of Ballot Measure Results
Must-Know Statistics About Long-Term Care: 2019 Edition
Buttigieg Proposes An Ambitious—And Much Needed— Long-Term Care Reform Plan
Ransomware attack prevents 110 nursing homes from paying employees, ordering meds
Free Long-Term Care for All?
Why the Median Skilled Nursing Margin Fell Below 0% — and How Operators Can Come Up from Underwater
Higher Debt in U.S. Health Insurance Segment Recognizes Lower Interest Rates
10 Misconceptions About Middle Age
State Faces $6.1 Billion Deficit Amid Medicaid Woes

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Updated, Monday, November 25, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-044: LTC NEWS AND COMMENT

OK Boomer
Opinion: How far off are the actuarial adjustments of Social Security benefits?
5 Facts About the Senate Finance Long-Term Care Hearing
The typical American heir is now a middle-class 50-something who puts the money toward retirement
Improper Medicaid payments exceed $57 billion for fiscal year, CMS says
Memory care approach cuts antipsychotic med use in more than 50% of residents: study
Why Obama Stopped Auditing Medicaid
Can We Tolerate Millions of Elderly People Living in Cars?
Medicaid payment rates blamed as rural nursing home closures pick up pace in Nebraska
Dementia care planning benefit largely untapped: testimony

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Updated, Monday, November 22, 2019, 11:00 AM (Pacific)

Seattle—

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LTC Comment: To anticipate and celebrate the 20^th annual Intercompany Long-Term Care Insurance Conference, coming up late March, 2020 in Denver, we offer this history of that annual event, after the ***news.***

*** ILTCI NEWS: Organizers of the 2020 Intercompany Long-Term Care Insurance Conference, scheduled for Denver March 29 to April 1, invite you to check out their newly redesigned website at iltciconf.org. All details related to venue, dates, exhibitor/sponsor opportunities, and more can be found on the site. Registration launch is just around the. Here are some recent newsletter highlights:

Stay tuned! (ILTCInews.com) ***

*** THE ZONE: Most of what the Center for Long-Term Care Reform does and publishes is available to the public at our website: www.centerltc.com. But we also have a “members-only” website, nicknamed “The Zone,” where we archive our content of most interest to LTC insurance producers, distributors and carriers. Dues paying members of the Center have access to The Zone using their user name and password. Some of the content linked in the following history is only available in The Zone. That content includes many of the contemporaneous pictures of and interviews with attendees of the earliest meetings. They’re a hoot to see. If you’re not yet a member of the Center for Long-Term Care Reform nor have access to The Zone through our corporate members, please consider joining. We’ll have you in The Zone with access to all its content even before we receive your dues payment. To join or recover your UN and PW, contact Steve Moses at 425-891-3640 or smoses@centerltc.com. Thanks for your support. ***

LTC BULLET: HISTORY OF LTC INSURANCE CONFERENCES

LTC Comment: Consider today’s Bullet a tickler. We are preparing the full report described below for publication on the Center’s website, www.centerltc.com. For now, what you’ll find below is the report’s introduction and the highlights of each of the conferences it covers. As soon as the full report is posted, we’ll let you know.

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History of LTC Insurance Conferences

Background

We congratulate Jim Glickman and everyone associated with the Intercompany Long-Term Care Insurance Conference on the meeting’s 20^th iteration, which will convene March 29 to April 1 in Denver, Colorado. To celebrate that exceptional achievement, we offer the following “History of LTC Insurance Conferences.”

The Society of Actuaries sponsored its first long-term care insurance conference in 2001. Representatives of the Center for Long-Term Care Reform (“Financing” at that time) attended. Starting with the third SOA-sponsored conference in 2003, we published detailed summaries of the annual events. What follows are the highlights (from our point of view) of all 19 SOA (later renamed the Intercompany Long-Term Care Insurance Conference) so far.

After these highlights, you’ll find more detailed summaries of each year’s convocation. At the end of each of those summaries will be a link to the even-more-detailed report(s) we published contemporaneously with the conferences. By homing in on the account of each event, we think you can patch together a pretty comprehensive history of private long-term care insurance and the political/economic context in which it evolved over the past two decades.

While this history mostly covers the Intercompany Long-Term Care Insurance Conferences, we intersperse, especially in the very early years, a few summaries we published of other LTCI conferences. These include the ironically named “Private Long-Term Care Insurance Conference” which ran for 17 years until ILTCI replaced it, after running concurrently for a couple years. “Ironically named” because it was co-sponsored by AARP and focused as much on public financing options as on private insurance. LTCI old-timers will also remember “The Forum,” an annual conference for producers sponsored by Greg Luque and the longer-running “LTCI Producers Summit,” sponsored by American Association for Long-Term Care Insurance president Jesse Slome.

[You will find that some of the links in this history lead to material in the Center for Long-Term Care Reform’s members-only website—The Zone. You will need your user name and password to access those materials. For a reminder of your UN and PW or to join the Center and receive a UN and PW, contact Steve Moses at 425-891-3640 or smoses@centerltc.com.]

Highlights

2001, Miami, FL: ILTCI #1, which convened Jan. 21-23, 2001 at the Hyatt Regency in Miami, Florida, was a big success as documented in a Broker World article which reported: “John Hancock featured a guest celebrity, knuckleball pitcher Phil Niekro, signing baseballs for a line of fans stretching all the way out into the hallway. CHCS had perhaps the most unique hospitality suite. They created the illusion for each participant of an old age infirmity, such as smeared glasses to imitate cataracts, and then in true Florida style, let them try their luck at completing a punch card voter ballot with the correct answers to a delayed word recall test.” Steve Moses gave this talk: Long-Term Care's Race for Survival. Check out the picture below of George Sherman, long-time editor of the LTC News & Comment newsletter, who passed away later the same year, Sally Leimbach and Claude Thau.
Source: LTC Bullet: LTCI Conference Focuses on Industry, Wednesday, November 22, 2000

2002, Beverly Hills, CA: The conference convened January 27-30, 2002 at The Beverly Hilton. According to conference organizers: “A LONG, HARD LOOK at long-term care insurance reveals a product on the cusp of widespread acceptance. However, as LTCI has come of age, so too have the challenges facing insurers: the internet's effect on underwriting, claims practices, pricing assumptions, population eligibility, profitability management, and legislative initiatives, to name a few.” Oh boy, if we’d known then what we know now! Check out these pictures below: Ron and Curt Hagelman with Jim Glickman and the exhibit hall at the 2^nd annual SOA ILTCI conference.
Source: LTC Bullet: 2002 SOA LTC Insurance Conference Coming Up

2003, Las Vegas, NV: “After only three years in existence (previous meetings were in Miami in 2001 and Beverly Hills in 2002), the SOA-LTCI meeting now promotes itself as ‘The Premier Conference for the LTCI Industry.’ That's a verbal thumb in the eye of the other major industry meeting, which convenes February 12, 2003 in San Antonio, Texas: ‘The 16th Private Long Term Care Insurance Conference.’ This long-standing industry meeting was sponsored by a consortium of organizations, including AARP, ACLI, HIAA, and the Partnership for Long-Term Care.” Check out pictures below of Peter Goldstein, Jim Glickman, Marc Cohen, Barry Fisher and Phyllis Shelton at ILTCI #3.
Source: A Virtual Visit to the SOA-LTCI Conference in Las Vegas with many contemporaneous pictures of participants.

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We interrupt this summary of ILTCI conferences to bring you reviews of three other industry conferences that took place in 2003.

The 16th Private Long-Term Care Insurance Conference: "Shaping the Future." This meeting convened at the Marriott Rivercenter Hotel in San Antonio, Texas from February 12 to 14, 2003. The Private Long-Term Care Insurance Conference was the grand-daddy of industry meetings in the LTCI field. Some say its name is a misnomer, because this conference catered as much to advocates of government long-term care financing as to manufacturers and purveyors of private LTC insurance. People still complain about its 1993 conference in Baltimore (during an ice storm) when Congressman Pete Stark bashed long-term care insurance agents and insulted the industry in an over-the-top "keynote" address. Check out all the details including many contemporaneous pictures of LTCI’s leading lights in The Zone here.

Our second non-ILTCI conference to feature is the 5^th Annual National Long-Term Care Forum, held in Las Vegas, May 2003. This Virtual Visit takes you there. According to organizer Greg Luque, President of G.J. Luque and Company, the producers of the Long-Term Care Forum: "We're in our eighth year. This is our fifth annual national LTC Forum. We consistently draw agents from over 40 states with 25 insurance carriers sponsoring the program. This year's attendance of 730, including 200 exhibitors, is a record for the Forum." Having attended several of the National Long-Term Care Forums and spoken at two, Center for Long-Term Care Financing [now Reform] President Steve Moses says "This is one of the premier professional training events for long-term care insurance producers. Its relatively low cost and high-quality content should make it goal for agents and brokers to seek to attain and maintain the highest proficiency in sales and substantive knowledge."

The third non-ILTCI conference we’ll mention is The National LTCi Producers Summit convened November 16-18, 2003 in the Astor Crowne Plaza Hotel located at the corner of Bourbon Street and Canal in the French Quarter of New Orleans, LA. This Virtual Visit takes you there. Presented by LTCi Sales Strategies magazine, this 2½-day conference boasted a sold-out attendance of over 700 people, and featured 25 sessions, 50 LTC expert speakers, ample networking opportunities, over 100 exhibitors, cocktail receptions, breakfasts and lunches, the LTCI Sales Idol contest, the top 10 producers contest, and even optional sight-seeing tours. To read interviews with attendees and see their pictures, check out our Virtual Visit to this conference.

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Back to the ILTCI conferences:

2004, Houston, TX: According to our Virtual Visits here and here, over 700 of the movers and shakers of the long-term care insurance industry attended ILTCI #4. Here's a little sampling of scuttlebutt heard in the hallways: “A nationally well-known actuary said ‘Business is excellent, but it's not nearly as much fun as it used to be. We're helping companies to raise rates on in-place business and protect their blocks. I'd much rather be designing and pricing new products like in the good old days.” A long-term care producer with insight into the back-office aspects of the LTCi business opined that “This industry has seen some hard times, but the worst is behind us. Pricing is improving; public awareness is increasing; and the same promising demographics are still out there. Industry consolidation and belt tightening will prove to have been healthy and beneficial in the long run.” “Pollyannaish wishful thinking?,” I asked at the time. Now we know. Steve Moses made the case for private LTC financing while Dr. Judith Feder, then Professor and Dean of Public Policy at Georgetown University appealed for public financing in a session at the Fourth Annual Society of Actuaries Long-Term Care Insurance Conference in Houston, Texas on February 10, 2004.
Source: LTC E-Alert #4-008--SOA LTCI Embed--Report from the Front--Part I
Source: LTC E-Alert #4-009--SOA LTCI Embed--Report from the Front--Part II
Source: LTC Bullet--Changing LTC Public Policy: Why-What-When?

2005, Orlando, FL: No fault of the organizers, but the fifth annual Society of Actuaries Long-Term Care Insurance Conference in Orlando, Florida got off to a frustrating start on January 23, 2005. Blame Mother Nature. Of the 800 registrants--a hugely successful turnout--less than half were present for the opening reception Sunday night. [All but 100 arrived later.] By Monday morning, the keynote speaker, Dr. Joseph Coughlin, Director of MIT's ‘Age Lab,’ was still unable to get out of snowbound Boston. Read all about it in LTC Bullet: Clueless in Orlando.

2006, Anaheim, CA: Attendees heard a report on the "Medicaid Commission’s” findings. Like most commissions, it achieved nothing of consequence. Steve Moses delivered a speech titled "What I Believe About Long-Term Care." The Center's Vice President for Administration, Damon Moses, circulated at the conference interviewing attendees. Interview Question: What effect do you think the new Deficit Reduction Act will have on the marketability of private long-term care insurance? Can you put a percentage on that? Check out our Virtual Visit for answers. The CEO Forum was the biggest draw of the conference. Everyone wants to hear what the big shots have to say about the LTCi industry. But every year, it turns out to be the same thing. The audience asks difficult, penetrating questions like: Why are sales going down when objective need for LTC insurance is going up? The CEOs then give long complicated answers which, when translated into simple straight-forward language mean: "The only thing we know for sure is that it isn't our fault."

2007, Dallas, TX: ILTCI #7 opened to a body blow from the New York Times: “Aged, Frail and Denied Care by Their Insurers,” by Charles Duhigg, March 26, 2007. We responded immediately. Read our response and more about this conference in our virtual visit titled LTC Bullet: Sucker Punched in Dallas, Tuesday, April 10, 2007.

2008, Jacksonville, FL: More than 800 long-term care insurance leaders met March 16-19 at the riverfront Hyatt Hotel in Jacksonville, Florida. The 8^th Annual Intercompany Long-Term Care Insurance Conference achieved its customary high standard. Best of all, this year's meeting wasn't greeted by a fusillade of negative coverage in the national media. Maybe our return fire, correcting the more egregious shortcomings in past published attacks, is making a difference. A distinctive feature of this year’s conference was the presence, at the venue’s front door, of a small Airstream trailer emblazoned with the decals of companies sponsoring the Center for Long-Term Care Reform’s 2008 “National Long-Term Care Consciousness Tour.” Read all about it in LTC Bullet: The Jacksonville LTCI Conference. Enjoy this musical reminder of tour highlights.

2009, Reno, NV: The Silver Bullet of Long-Term Care again graced the entrance to the 9^th Annual Inter-Company Long-Term Care Insurance Conference. We published one LTC Bullet and three LTC E-Alerts (here, here, and here) about the meeting. The first "break out" session I attended was called "Luck of the Draw: Where Will LTC/LTCI Be in 5, 10, 15 Years?" Industry leading lights Paul Forte of the Federal LTCi program, Malcolm Cheung of Prudential and Gary Jacobs of Universal American prognosticated about what lies ahead for LTC insurance. Live polling results:
Question: If you were the CEO of an LTCI insurer, which of the following would best represent your views on the LTCI line of business?Possible Answers: Audience Response
A. LTCI has excellent prospects for profitable growth; I will raise the stakes 52
B. LTCI has moderate prospects for profitable growth; I’ll call the bet (i.e., do just enough to stay in the game) 32
C. I don’t know what to do about LTCI; I’ll check the pot & see what happens 7
D. This hand has no real chance; I’m folding when it’s my turn to bet 9

Such a positive response from an industry that's struggled to grow is encouraging. I was surprised by the level of optimism. [I wonder how the same people would answer the same question today.]

I delivered my conference remarks on the Actuarial Track, answering the question "Can LTCi Really Work?" Read what I said here.

2010, New Orleans: The Tenth Annual Intercompany Long-Term Care Insurance Conference opened in New Orleans on March 15, 2010. The Ides of March! An ominous day to begin the conference formerly known as the Society of Actuaries LTCI conference. Gail Sheehy keynoted the conference, but later dissed LTCI on NPR. Despite some very strong panelists speaking on behalf of logic, evidence and actuarial sanity (Steve Schoonveld of LifePlans; Malcolm Cheung of Prudential; and Al Schmitz of Milliman), everyone seemed to be bending over backwards to give CLASS the benefit of the (clearly overwhelming) doubt. Howard Gleckman of the Urban Institute represented the Obama Administration's latest talking points: "99.5% sure health insurance reform will pass and 100% sure it will include CLASS." We'll see. “I still hold out a 50/50 chance cooler heads and sound reasoning will prevail.” Well, in the end PPACA passed and it included CLASS, but I was right CLASS came to an ignominious end. Read our detailed session summaries here: LTC Bullet: LTCI Conference Wrap.

2011, Atlanta, GA: "Energize Our Industry" was the theme of The Eleventh Annual Intercompany Long Term Care Insurance Conference, which convened March 6 to 9, 2011 at the Marriott Marquis in Atlanta, Georgia. Four breakout sessions focused on the CLASS Act including Steve Moses and John Greene debating CLASS with Connie Harner and Rhonda Richards (AARP). Find summaries of all four CLASS sessions and several other sessions in our Virtual Visit to the conference here. During the lunch break on the second day, the 3in4 Need More campaign had a press conference to introduce the LTCI industry's answer to dairy's "Got Milk" message. Spotted at the 3in4 Need More event and throughout the ILTCI conference was Glenn Ruffenach of the Wall Street Journal. Maybe there's hope for some good publicity for LTCI now.

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Here’s another non-ILTCI conference to remember. The 9^th LTC Insurance Producers Summit, held April 3-5, 2011 in Las Vegas, had the theme "Get Over It!" Get over lagging sales, disappearing carriers, premium increases, and bad publicity. Get over it and, one might add based on the content of the conference: Get On With It! Proceedings got underway with a standing-room-only crowd for the "3 in 4 Need More" campaign's second press conference. Cameron Truesdell, CEO of Long-Term Care Financial Partners, delivered the "Keynote Address." He pointed out the desperate need for responsible long-term care planning and insisted: It's up to us to make it happen. Echoing a patriotic appeal, he asked "If not us, who? If not now, when?" Award ceremonies recognized people and companies who have contributed most to the LTC insurance market including the first annual "Long-Term Care Insurance Industry Lifetime Achievement Award" to Jesse R. Slome in recognition of his outstanding contributions (well deserved and overdue in LTC Bullets' opinion) and the first annual "Bright Idea" award by John Hancock to Jonas Roeser for the "3 in 4 Need More" campaign. For my detailed summaries of several sessions including a long interview of Bob Yee by Jesse Slome about then-prospects for the CLASS Act, check out our Virtual Visit to this conference.

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Back to the ILTCI conferences again:

2012, Las Vegas, NV: Day one opened with a keynote address by “futurologist” David Smith, who pooh-poohed the use of focus groups to learn what consumers want, citing Steve Jobs: “People don’t know what they want until you show them.” So much for the research value of asking people why they don’t buy LTC insurance. Jonas Roeser provided an update on the “3in4 Need More” campaign. Day two of the conference began with an excellent overview of the likely impact of health reform (“ObamaCare” to many) on long-term care. The last session I attended was a post-mortem on CLASS titled “Meeting the Needs that CLASS Intended,” moderated by Prudential’s Malcolm Cheung with presentations by Bob Yee, lately CLASS’s actuary; Yair Babab from the University of Illinois, Chicago; and Mark Meiners, the father of the LTC Partnership Program. For a full account of the conference’s highlight event, the “Clash of Titans” debate between Harley Gordon and Steve Moses, check out LTC Bullet: LTC Embed Report from the ILTCI Conference in Las Vegas.

2013, Dallas, TX: With Steve Moses unable to attend, we engaged LTCI producers to share their impressions of the conference: Sally Leimbach, Honey Leveen, Steve Forman and Claude Thau. Overall, the mood of the conference was one of optimism and motivation. Many conference attendees in Dallas expressed high satisfaction with the value of networking opportunities with industry professionals as well as the quality of educational content. Honey Leveen, the self-styled “Queen of LTCI,” said: “For marketing people like me, the SOA [ILTCI conference] is valuable. I gain insight into the LTCi product, its actuarial, underwriting, and other elements I would otherwise not learn about.” First-time ILTCI conference attendee, Stephen Forman, acknowledged challenges inherent to providing educational sessions that would appeal to such a diverse group of attendees: “How can you appeal to the interests of hundreds of individual attendees when scheduling so many diverse topics? You can’t. Overall, the workshops I attended were terrific, both in educational value and quality of presenters.” One aspect of the conference that caused a buzz was the keynote speaker, Frank Abagnale. Recognized as “one of the world’s most respected authorities on forgery, embezzlement and secure documents,” Mr. Abagnale engendered polarized reactions to his selection as keynote speaker; nevertheless, attendees raved about his presentation. Here’s Claude Thau’s take: “Frank Abagnale’s key-note presentation was excellent. It was an unexpected, yet strong, call for ethical behavior and training. BRAVO! We should show the DVD to our families, friends, associates and politicians.”
Source: LTC Bullet: Virtual Visit to the 13th Annual Intercompany LTCI Conference in Dallas, Texas

2014, Orlando, FL: The 14^th Annual Inter-Company Long-Term Care Insurance Conference convened in Orlando, Florida at the Rosen Centre Hotel from March 16-19, 2014. Conference founder Jim Glickman said highlights included (1) over 900 attendees, an all-time record; (2) for the first time in several years there were attendees from multiple insurance companies not currently participating in the LTCi marketplace; and (3) also in attendance were several reinsurers not currently in the LTCi marketplace together with several representatives of the private equity world, apparently looking for new opportunities to consider. Two highlights we observed were a report on the “Land this Plane” project and a debate between Judith Feder and Mark Warshawsky. Pre-conference activities included Harley Gordon’s CLTC Master Class, always an important contribution to LTCI marketing and professionalism. For session details, read LTC Bullet: LTC Embed Report from the Policy Front at ILTCI ’14 Orlando.

2015, Colorado Springs, CO: The 15^th annual Intercompany Long-Term Care Insurance Conference convened March 22-25, 2015 at The Broadmoor resort in Colorado Springs, Colorado. The annual Inter-Company Long-Term Care Insurance Conferences are always something special. But this year’s meeting exceeded all that came before. It exceeded by breaking past records: over 1100 attendees, up from the 900s; 72 vendors, up from 56; 44 sponsors and 170 speakers. It exceeded by offering new programs including: demonstration rooms where exhibitors could make scheduled presentations; a “social media” room with Twitter feeds; a “future leaders” program; a new Sales and Distribution combination track; and a new “Alternative Solutions” track, honchoed by Eileen Tell and John O’Leary, which replaced Policy and Providers, and captured me for all seven break-out sessions on the agenda. (See the write-ups that follow.) It exceeded with an expanded and improved mobile app, which replaced the thick and awkward hard copy agenda of the past; and numerous drawings with excellent prizes. It exceeded by the venue (the five-star Broadmoor resort in Colorado Springs) and the quality and variety of the free food and drink. It exceeded by raising over $5,000 for the USO. For details on conference sessions, read LTC Bullet: The 15^th Annual ILTCI Conference: A Virtual Visit, Friday, March 27, 2015.

2016, San Antonio, TX: The 16th Annual Intercompany LTCI Conference convened at The Grand Hyatt in San Antonio, Texas, March 13th to 16^th, 2016. This year’s keynote speaker, sponsored by Agent Review, was Ken Schmidt, brand visionary and former communications strategist for the Harley-Davidson Motor Company. Two breakout sessions provided a review and summary of work recently reported by the SCAN Foundation, Leading Age, the LTC Collaborative, and the Bipartisan Policy Center, which work reached a consensus in favor of a new publicly financed LTC program covering the catastrophic back-end risk. In another session, Susan Coronel and Marc Cohen shared insights coming out of two important new studies, one of which looked at 25 years of buyer and nonbuyer research and general population surveys on LTCI. The other updated critical work on claimant satisfaction, needs, experiences and the role of insurance. The conference’s closing general session was It's Not Me, It's You; A Consumer View on LTCI. Behavioral economist Jeremy Pincus and consumer insight expert Luisa Uriarte delivered new information about how our current approach and sales and marketing techniques are actually standing in the way a broader appeal for long-term care insurance. For more on these highlights and other sessions at the conference, read LTC Bullet: The 16^th Annual Inter-Company Long-Term Care Insurance Conference: A Virtual Visit.

2017, Jacksonville, FL: The 17^th ILTCI conference convened March 26-29, 2017 at the Hyatt Regency in Jacksonville, Florida, with the theme “Navigating the Future.” This year’s keynote speaker, sponsored by Genworth, was Anat Baron, former head of Mike's Hard Lemonade, a change strategist and “disruptor.” Ms. Baron’s session was entertaining and interesting, but would have benefited from more effort to apply her observations and analysis to the LTC insurance business and its challenges. A perennial favorite ILTCI conference session was “Who Buys LTC Insurance?... Why? (or Why Not)?” with the latest findings and reflections from 25 years of quinquennial [occurring every five years] analyses of the subject. Presenters Marc Cohen, Susan Coronel, and Eileen Tell recounted and opined about “changes in the LTC insurance market from the consumer perspective, and an empirical basis for projecting future trends.” Other sessions included “Washington State Initiative,” “Finding LTSS: New Options or New Confusions for Consumers Alternative Solutions,” “A Public Private Partnership: Catastrophic Public and Front-End Private LTC Insurance,” “LTC Think Tank Innovations-Exploring Possibilities for Improving LTC Financing,” and a closing general session called “New President and Congress: Implications for Aging and LTC Finance.” See our session summaries and critiques in LTC Bullet: The 17^th Annual Inter-Company Long-Term Care Insurance Conference: A Virtual Visit.

2018, Las Vegas, NV: The 18^th Annual Intercompany Long-Term Care Insurance Conference was held March 18-21, 2018 at the Paris Hotel & Casino in Las Vegas, NV. Attendance was high at over 1,000 attendees, 60+ exhibitors and nearly 40 sponsors. An ample 45+ breakout sessions covered a diverse array of topics. “A Matrix of Opportunities” was the tagline for this year’s conference and optimism filled the agenda. The conference opened with keynote speaker, Vinh Giang, a business person and magician. Examples of breakout sessions: The Case for Variable LTC Insurance; Consumer View of New Long Term Care Combination Products; Home as a Strategic Asset for Retirement and Long Term Care Needs; Return of the Jedi: Best Practices of the Masters; and Building YOUR Brand. The closing session was The Coming Revolution in Long Term Caregiving: The Future is Now! Speakers, Jeremy Pincus, PhD and Marjorie Skubic, PhD described the current technological advances in robotics and how they will fill the “caregiver void.” Read all about the conference in LTC Bullet: Virtual Visit to the 18th Annual ILTCI Conference in Las Vegas, Nevada.

2019, Chicago, IL: The 19^th Annual Intercompany Long-Term Care Insurance Conference, the biggest of its nearly two-decade history with the theme “Imagine the Possibilities,” convened at the Sheraton Grand Hotel in Chicago, Illinois from March 24 to 27, 2019. Conference Director Peggy Hauser kicked off the proceedings by presenting the “ILTCI Recognition Award” to Steve Moses, president of the Center for Long-Term Care Reform. Carroll Golden announced the creation of a new organization she’ll lead, the NAIFA Limited & Extended Care Planning Center, intended to keep LTC issues at the forefront and to bring together LTCI producers and general financial advisors more effectively. Some of the breakout sessions we attended and reviewed in LTC Bullet: Virtual Visit to the 19^th Annual ILTCI Conference included Medicare Advantage Expansion into Personal & LTSS; Demo - My Million Dollar Mom, about Ross Schriftman’s movie he wrote and produced about caring for his mother through her Alzheimer’s Disease; Become an LTCI Super Hero: Integrating Asset-Based into Traditional LTCI Presentation; State Initiatives for LTC Financing Reform; What’s up Doc? Geriatric Neurology and the Implications for LTC Insurance; Evidence-Based Nutrition for Healthier Futures; and Political Pundits Pontificate: The Political/Policy Environment in 2019. The Alzheimer's Association offered a closing session, the highlight of which was Tom Doyle, a member of the National Early-Stage Advisory Group (ESAG), speaking about his life coping with dementia. The conference closed with “Whirled News Tonight,” an improv show.

We turn now to more detailed summaries of each of the conferences highlighted above.

[You will find this content in the full report when posted.]

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Updated, Monday, November 18, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-043: LTC NEWS AND COMMENT

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

Original Medicare Tops Advantage
Welcome to 'Unretirement': Most Older Americans Say They'll Keep Working
‘Replace denial with proposal’ on long-term care, House committee told
The health care system isn't ready to replace aging caregivers
Citing eagerness from states, CMS announces plans to issue guidance on Medicaid block grants
Comfort feeding OK for those with advanced dementia, regardless of advance directives: AMDA
Medicaid supplemental payments could be harmed by newly-proposed federal rule
Improved cardiorespiratory fitness helps lower dementia risk: study
Three Ways to Protect Yourself from the Cost of Nursing Home Care
Boomers Want to Stay Home. Senior Housing Now Faces a Budding Glut

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Updated, Monday, November 11, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-042: LTC NEWS AND COMMENT

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

Medicare Part B Premiums Rise 7% In 2020, With Premiums For Highest-Income Couples Nearing $12,000 A Year
A Retirement Community That Comes to You
Does waist size predict dementia risk?
IRS Seeks to Adjust RMDs for Longer Lives
Even If You Have Medicare, You’ll Still Pay Thousands Out-Of-Pocket For Health Care
Millennials earn 20% less than baby boomers did—despite being better educated
Long-term care resident Medicare beneficiaries spend $22,384 out of pocket for healthcare annually: study
12% of Medicare Advantage Plans Will Offer Expanded Supplemental Benefits in 2020
How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care?
Wearable activity trackers a reliable tool for predicting death risk in older adults
What Retirement? People Over 65 Are Launching Encore Careers and Finding Fulfillment Like Never Before
The Truth About Income Inequality

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Updated, Friday, November 8, 2019, 8:36 PM (Pacific)

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LTC BULLET: SOA TECH SUMMIT DAZZLES

LTC Comment: LTC techies convened in Silicon Valley yesterday with dazzling results. We give you a taste of the event after the ***news.***

*** ILTCI NEWS: Check out the latest news about the 2020 Inter-Company Long-Term Care Insurance Conference here, including

EXTRA, EXTRA: To celebrate the upcoming 20^th iteration of the ILTCI conference in March, Steve Moses is preparing a history of the annual industry convocation. You’ll get details on each year’s event and even some pictures of early attendees. This walk down memory lane will double as a pretty good history of the LTCI business itself. Stay tuned. For access to a pre-publication copy of this report as soon as it’s available, be sure you’re a paid-up individual member or you work with a corporate member of the Center for Long-Term Care Reform. Join here or contact Steve at smoses@centerltc.com or 425-891-3640 to get all the benefits of Center membership. ***

LTC BULLET: SOA TECH SUMMIT DAZZLES

LTC Comment: Who’d have thought 50 years ago that we’d live in the electronic world of omnipresent information we inhabit now? Will the relatively technologically stodgy realm of long-term care services and financing transform alike in the next five decades … or five years? Man, it sure looks like it if you consider the transformative ideas conveyed in yesterday’s Society of Actuaries Technology Summit.

The SOA Tech Summit convened at the Plug and Play Tech Center in Silicon Valley on November 7, 2019. We watched the whole program by livestream and we’ll give you a little flavor here of what it was like. But keep an eye open in the weeks ahead for the opportunity to purchase the program on the SOA website for your personal viewing.

The idea to explore how technology can transform long-term care was the brainchild of actuary Vince Bodnar of Oliver Wyman, ably assisted by LTC thought leaders Eileen Tell and John O’Leary as co-chairs. Maria Ferrante-Schepis from Maddock Douglas was a key partner in the effort and she ably emceed yesterday’s program.

For starters, scan the Tech Summit’s agenda here. (Go to the first “Agenda” link at the top, not the briefer “Event Agenda” under “Event Overview.”) There, you can click through to thumbnail descriptions of each of the sessions. What’s more, you can actually download each presenter’s detailed presentation to review at your leisure. We only have room to touch briefly on these sessions, but they’re all worth your careful review and consideration.

Mike Maddock gave the opening keynote address titled “The Disruptors Mindset,” advising disruptors to change focus from just generating more ideas to operationalizing empathy. See Maddock’s best-selling book, Plan D: Why the Future Belongs to the Disruptors and How to Dream, Drive and Deliver Like the Crazy Ones, for all the details.

Laurie M. Orlov of the Aging in Place Technology Watch delivered the 2^nd opening keynote address presenting a roadmap for the technology and long-term services and support marketplace covering where it has been, what it does best, where it is going, and the challenges it faces. Her presentation is here.

The first panel session was “Information Overlord,” covering how to gather and leverage information to bend the cost curve. Meet the presenters and review their presentations here.

Session #2 was “Alzheimer’s and Dementia Tech” about employing technology to enable better care, mood management and even slowing and reversing memory loss for Alzheimer's and dementia care. Meet the presenters and review their presentations here.

The third 50-minute panel session was “Family Caregiver Empowerment” covering support systems and new solutions to enable caregivers to deliver better care and reduce personal stress. Meet the presenters and review their presentations here.

After a 10-minute (strictly adhered to) “refreshment break,” the Tech Summit changed pace. Matt Capell of LTCG introduced a session titled “Social Challenges: Addressing Cost Transparency.” He explained how LTC costs are rising for families, providers, government and private payors creating a desperate need for disruptive solutions. Then emcee Maria led the attendees in a “mind-mapping” exercise to brainstorm ideas for later review and evaluation.

With a 45-minute lunch break behind them--allowing less time for lunch than for the panel discussions indicates the organizers’ priorities--participants returned to another series of panel discussions.

Session #4: “Using Predictive Analytics to Prevent and Manage Care Needs” explored the new tools and technologies that can change the way we evaluate, manage and expand access to care expertise and empathy.

Session #5: “Whole Person” covered the complex interactions between care providers, medicines and behavior. Meet the presenters and review their presentations here.

Session #6: “Smart Home - Smarter Care” covered the interplay between technology and design to create safe, comfortable and thriving environments for aging in place and managing care costs. Meet the presenters and review their presentations here.

The SOA Tech Summit’s “Closing Discussion: Innovating in a High Stakes/High Barrier Industry and Where to Go From here?” featured Mary Furlong of Mary Furlong & Associates talking about investment in the “longevity market.”

Finally, after a long, fully packed, and fast-paced day, participants retreated to a “Cocktail Hour and Networking Reception,” again showing the organizers got their priorities right, allowing more time for this critical closing activity than for either lunch or each panel.

Watch for future Tech Summits and don’t miss the next one.

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Updated, Monday, November 4, 2019, 9:00 AM (Pacific)

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LTC E-ALERT #19-041: LTC NEWS AND COMMENT

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

CDC: U.S. life expectancy rises slightly, mortality rates fall compared to ’07
Long-Term Care Planning Is Still a Great Way to Connect With Clients: Kristi Rodriguez
Report Finds Americans' Health Is Flagging
Lifestyle changes improved cognition in people at risk for Alzheimer’s, study shows
Early retirement can accelerate cognitive decline among the elderly
Many views on aging based on misconceptions, survey finds
New ‘Co-Care’ Concept Offers Design for Middle-Market Senior Living
Frail nursing home patients told to relocate as their Medi-Cal plans cut off payment
Burned in 2008, Americans are refusing to tap their home equity
The Next Generation of Long Term Care Insurance
Bracelet may help predict dementia-related agitation

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Updated, Monday, October 28, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-040: LTC NEWS AND COMMENT

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

Medicare Advantage 2020 Spotlight: First Look
The path to beating Alzheimer's before it beats us
Dementia patients' adult kids diagnosed earlier than their parents
Value-Based Payment Models Should Account for Higher-Acuity LTC Residents, Leaders Argue
FLTCIP Adds Premium Stabilization Feature for New Enrollees
House Ways & Means OKs Medicare Dental, Vision and Hearing Bills
Study: Educated financial institution employees save seniors from exploitation
Institutional Investors Identify Aging Population as Top Trend Affecting Global Investment Allocations Over the Next 30 Years
Middle Muddle
STDs Rise Sharply Among Older Americans
10 Trends Driving Markets for the Next 3 Decades
5 takeaways from Harvard’s ‘Housing America’s Older Adults 2019’ study
Providers look to foreign-born caregivers to ease LTC staffing shortages
Families Face 'Boomerang' Kid Planning Challenge: Nationwide
Genworth Cost of Care Survey 2019: Skyrocketing care costs may make the dream of aging at home more challenging
Measuring Quality in the Long-Term Care Setting
What Your Long Term Care Insurance Won't Cover And How To Prepare For It
Amenities, social opportunities drawing residents to active adult communities: survey
4 surgeons general call for annual cognitive assessments
Alzheimer's Can Hit People in Their 30sThe Costs of Aging

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Updated, Friday, October 25, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: THE BATTLE LINES ARE DRAWN

LTC Comment: Two sides advocate diametrically opposite solutions for the long-term care crisis. Who are they? What do they want? Which will win? Answers follow the ***news*** with details in our forthcoming report. Learn how to get a pre-publication copy now!

*** SOA TECH SUMMIT: On November 7, the Society of Actuaries, in partnership with Maddock Douglas, will host its first LTC Tech Summit at the Plug and Play Tech Center in the heart of innovation, Silicon Valley. Join leading innovators, payors, providers and investors to learn about emerging LTC technologies and participate in an intimate discussion to assemble the pieces that will address this crisis. Due to limited space, individuals wishing to attend the in-person event should register as soon as possible. Unable to attend in person? Select the live stream option during registration to take part in all the meeting sessions from the convenience of your computer. That’s what Steve Moses will do so he can report on this creative new program in an LTC Bullet soon after. ***

*** GENWORTH 2019 cost of care survey shows dramatic flip in rising costs from skilled nursing to home care. Read the press release here. Find the map and summary here. Dramatic new findings in the redesigned 2019 Genworth Cost of Care Survey will surely help sell new LTCI policies. This year, a single link takes you to one internet page with further links to both the national summary of costs by venue and a map of the U.S. where you can home in on individual states. The new design also has a slider that allows you to see estimated increases in costs for future decades. You can select hourly, daily, monthly and annual costs by venue and by state. I like this new design and believe you will too. Check it out now, but know you’ll be able to find it quickly in the future by accessing The Zone, our members-only website chock-a-bloc with all kinds of critical data and information. ***

*** FLIGHT OR FIGHT, that’s your choice. Either give up, go home, and let the opposition win. Or you can stand up to the perennial pessimists who say private long-term care insurance is a dead letter. You can read today’s LTC Bullet, get a pre-publication copy of our new report on “Medicaid and Long-Term Care,” and join the Resistance, AKA the Center for Long-Term Care Reform. Learn why the opposition’s concerted campaign to turn long-term care completely over to the government—the same government that ruined long-term care in the first place—is doomed either to fail or to make the system’s problems even worse. All current individual and corporate members of the Center should already have received your pre-publication copy of “Medicaid and Long-Term Care.” (If not, let us know at smoses@centerltc.com.) Everyone else: join the Center here, email smoses@centerltc.com to let us know you’re in, and the new report will be in your hands post haste. We can’t do this alone. We need your help. Carpe diem! ***

LTC BULLET: THE BATTLE LINES ARE DRAWN

LTC Comment: On one side are the analysts and advocates who insist fixing long-term care is hopeless without greater government involvement. They want a new, compulsory social insurance program, like Medicare and Social Security, to sweep away problems of access, quality, low funding, and caregiver shortages. Their side is the Favorite.

On the other side are the lonely voices who favor a freer market approach. We want to redirect scarce public resources to the truly needy and create stronger incentives for everyone else to save, invest or insure for long-term care. Let people and the market choose the best way to provide and finance long-term care. Our side is the Underdog.

Around the end of the year, the Center for Long-Term Care Reform will publish a new report titled “Medicaid and Long-Term Care.” This study will explain what is wrong with the favored government takeover plan for long-term care. It will describe a far less onerous voluntary solution. For a pre-publication copy of “Medicaid and Long-Term Care,” join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email within minutes of joining our campaign to fix long-term care.

Here’s a preview of both sides of the long-term care debate, the Favorite vs. the Underdog, as developed in “Medicaid and Long-Term Care.”

Favorite: Long-term care is a mess. Access and quality are doubtful. Caregivers are in short supply. Free, family caregivers are over-stressed financially and emotionally. Medicaid pays too little. Private insurance failed. The coming age wave will explode costs. Institutional bias prevails; home care is inadequate. Woe is us. Please, Uncle Sam, take over and save the day.

Underdog: Whoa! All those symptoms are true. The existing system is terribly dysfunctional. But turning to government financing and control is not the place to start. Rather, the place to start is to ask why such problems exist. How did we get into this mess? What caused those symptoms of dysfunction in the first place?

Favorite: Blank out. Nothing in the favorite’s literature, which we list and summarize in our new report, even attempts to explain why long-term care is failing so badly. Search their Health Affairs’ articles we cite and the SCAN, Leading Age, and LTC Collaborative reports those spawned and you will find nothing to account for the causes, as opposed to the symptoms, of long-term care problems.

Underdog: That’s why our new report briefly traces the history of long-term care services and financing from the 18^th century until today. We show how increasing government regulation and financing of long-term care actually caused the problems that plague the long-term care system now. Given that history, you will see very clearly that adding more government regulation and financing, which caused the problems in the first place, can only make those problems worse.

Favorite: What do you mean government caused long-term care’s problems? How about some examples?

Underdog: OK, sure. Here’s a direct quote from our paper: “At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying 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 affluent save and benefit through eligibility loopholes.”

Favorite: Wait a minute? That can’t be true. Everyone knows Medicaid requires impoverishment and people all across America are spending down their life’s savings catastrophically to pay for long-term care. Medicaid only helps after they’ve been devastated financially. Our side’s articles and reports make that claim over and over again.

Underdog: True, and our report cites your claims and rebuts each one. There is no evidence of widespread catastrophic spend down for long-term care. In fact all the evidence proves the contrary as we explain and document in our report.

Favorite: But, but, but … sputter, sputter. How can that be?

Underdog: Our report explains, with citations to federal law and regulations, precisely why and how access to Medicaid long-term care benefits requires neither low income nor significantly depleted assets. Are you dubious? Then get and read our report. If you disagree, speak up. We challenge anyone willing to engage publicly to debate these issues in a forum of your choice.

Favorite: So, you’re saying people don’t plan for long-term care nor do they buy much private LTC insurance because they intend to rely on this mediocre welfare program? Hrumpf!

Underdog: No, not at all. People don’t know who pays for long-term care. They don’t think about it until they need expensive care at which point Medicaid is the path of least resistance. The simple fact that Medicaid has paid for most expensive LTC since 1965 enabled consumers’ denial of this risk and cost leaving generations dependent on questionable care mostly in welfare-financed nursing homes. Our report covers all that in detail.

Favorite: Well, if that’s true, where’s the proof?

Underdog: Our report cites an extensive popular and legal literature on how to qualify for Medicaid without spending down. We also explain how and why the other side—the advocates of expanded government interference—totally ignores that literature. Furthermore, we cite in detail a Government Accountability Office study that documents easy and commonplace Medicaid planning, but fails to draw the obvious conclusions, which we do draw and explain in our report. We propose a nationally generalizable study to establish once and for all the level and impact of unnecessary and counterproductive Medicaid long-term care dependency.

Favorite: We just don’t think Medicaid is that easy to get so we focus on other things.

Underdog: Right, that’s why our report has a whole section about your “Evasion of and Equivocation on Critical Concepts and Facts.” We explain how you misunderstand and misrepresent key ideas like “impoverishment,” “spend down,” “asset decumulation,” “median wealth,” “Medicaid planning,” and “out-of-pocket expenditures.” You also use and depend on highly dubious data sources which we identify and critique.

Favorite: “If Medicaid is not the catastrophic poverty-maker it is commonly made out to be, what is it?”

Underdog: That is exactly the question we ask and answer in the report’s “Ramifications” section. There we summarize how Medicaid caused institutional bias, impeded a private market for home care, exacerbated access and quality problems, created huge tort liability, impoverished poor people, enriched affluent people, and stultified private long-term care financing sources like home equity conversion and insurance.

Favorite: So, what would you do differently?

Underdog: That’s where our report shines in a section called “Policy Recommendations.” You just have to read it to believe how manageable our problems really are once you realize what caused them and how easy they will be to fix once we address their causes and not just their symptoms. In fact, we include a section called “Redefine the Problem,” which relies on the other sides’ studies and findings to prove the long-term care challenge is much more manageable than anyone previously believed, if and only if, correctly analyzed and addressed.

Favorite: So fixing what ails long-term care is a slam dunk if we just follow what you say?

Underdog: No, not at all, there is one huge obstacle that is beyond our ability to address by changing long-term care financing policy. It has to do again with government interference, but this time, interference in fiscal and monetary policy. Our report explains why our side made huge steps in the right direction, i.e. targeting Medicaid to the needy and encouraging private financing alternatives, in 1993 and again in 2005, but we’ve been stymied ever since. That will change by 2030 with catastrophic economic consequences, which we predict and summarize.

Favorite: So give up and go home?

Underdog: Not at all. Our message is “get ready.” Understand why we have the problems we have. Think clearly about what we have to change to fix them. When the crisis really hits, follow where the evidence and logic lead. Rebuild.

Favorite: We’re intrigued. Where can we get this report?

Underdog: Join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email (and all the other benefits of membership summarized here) within minutes of committing to join the Center for Long-Term Care Reform. Otherwise, you’ll need to wait for the report’s public release early in 2020.

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Updated, Monday, October 14, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-039: LTC NEWS AND COMMENT

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

‘An Alarming Metric’: Median Skilled Nursing Operating Margin Falls Below Zero
Social Security COLA Is 1.6% for 2020
Shopping For Medicare? What To Know About The New Plan Finder
How Do Older Workers Use Nontraditional Jobs?
The government can giveth, or taketh away
With baby boomers aging, the cost of long-term care is set to triple in the next 30 years. What’s our plan for dealing with this?
CMS to label cited nursing homes with ‘Do not proceed’ icon on Nursing Home Compare website
Managing care of residents with dementia? There’s an app for that
EDITORIAL: Financing long-term care sustainably
Why Hospitals Are Getting Into The Housing Business
Proposed ‘excessive lobbying tax’ would hit some provider groups hard

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Updated, Friday, October 11, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE FOR LIBERTARIANS (AND AUSTRIAN ECONOMISTS)

LTC Comment: For unique insights into Medicaid and long-term care, read and/or listen to this speech and watch for the paper it presents, after the ***news.***

*** ILTCI NEWS: The Intercompany Long-Term Care Insurance Conference, celebrating its 20^th anniversary, will be held March 29 to April 1, 2020 at the Sheraton Downtown Denver. The premier LTCI conference now has a newsletter to keep us all up to date on every detail of the program. Check it out here: ILTCInews.com. Follow along as they lock in important details like the keynote speaker, Diamond Sponsors, and session offerings. Bookmark the page, and check back often for “lots of great content coming up, especially in November which is 'Long-Term Care Month.'” Preliminary conference info and hotel details can be found at www.iltciconf.org. Attendee registration will open online in November. Exhibitor and Sponsor applications are being accepted now. Early Bird Discounted rates are available until November 20th, and then will increase in price. Check out the 2020 Exhibitor & Sponsor Prospectus for full details and options. Organizers say “This year's individual attendee rate is $1,095 per person, making exhibitor and sponsor discounts even more valuable and cost effective.” ***

*** THE LTC TECH SUMMIT sponsored by the Society of Actuaries in collaboration with Maddock Douglas convenes November 7, 2019 in Sunnyvale, California at the Plug and Play Tech Center. Get all the details here. Great news: you don’t even have to be present to participate as livestream registration is available. Organizers say “Join leading innovators, payors, providers and investors to learn about emerging LTC technologies and participate in an intimate discussion to assemble the pieces that will address this crisis. Due to limited space, individuals wishing to attend the in-person event should register as soon as possible.” Don’t miss this exciting, cutting-edge program. ***

LTC BULLET: LONG-TERM CARE FOR LIBERTARIANS (AND AUSTRIAN ECONOMISTS)

LTC Comment: Steve Moses delivered the following speech at the Libertarian Scholars Conference, sponsored by the Mises Institute, on September 28, 2019 in New York City. In it he recounts the development of long-term care financing policy since the early 1980s, including his personal involvement in that process. He references the Center for Long-Term Care Reform’s new policy paper, also titled Medicaid and Long-Term Care, which the Center will summarize in our next LTC Bullet and publish soon. We hope this speech will encourage you to read the full paper when it is officially released.

Listen to Steve’s speech on SoundCloud here.

“Medicaid and Long-Term Care”
by
Stephen A. Moses
presented to the
Libertarian Scholars Conference
September 28, 2019
New York City

Good morning. I’m going to speak with you today about long-term care and Medicaid.

Long-term care includes a broad range of social, medical and custodial services that caregivers provide for three months or longer to help disabled people perform activities of daily living such as eating, bathing, and toileting.

Now, how many of you think long-term care sounds like a scintillating topic for a speech? You just can’t wait to hear what I have to say?

Right, I have my work cut out for me.

So, let me frame this topic with a personal story that I hope will engage your interest and cover the main themes of my paper.

In the early 1980s, I was working for the federal Department of HEW, predecessor of the current HHS. I’d landed in the Seattle regional office of the HCFA, predecessor of CMS.

Federal agencies just kept going defunct after I worked there.

Anyway, I was the Medicaid state representative for Oregon. That’s the liaison job between the federal government, which partially funds and oversees Medicaid and the state, which partially funds and administers the program.

My job was to make sure Oregon administered Medicaid in accordance with federal laws and regulations.

In the course of a routine annual review, I discovered a program in Oregon that surprised me.

The state Medicaid agency was filing claims on the estates of deceased Medicaid recipients to recover the cost of benefits correctly paid for eligible recipients in order to reimburse the program (and taxpayers) for the cost of their care.

That was a shock. It contradicted everything I thought I knew about Medicaid. Isn’t it welfare? Doesn’t it require impoverishment to qualify?

If so, how was it possible that people spent years in nursing homes on Medicaid at enormous state and federal expense, but when they died, they still had significant wealth to be recovered from their estates?

So I did some research. What I found blew me away.

Despite the conventional wisdom that Medicaid eligibility required low income and virtually no assets, I learned that for people over the age of 65 who needed nursing-home level of care, income rarely blocked eligibility and the vast majority of all assets were not counted for purposes of determining their eligibility.

That’s still true today and if you want to know the details of how it works, please read my paper. I could easily use up all my time today just explaining the complexities of Medicaid financial eligibility.

Anyway, it made sense that people on Medicaid retain substantial wealth and that Oregon could recover large amounts from their estates. But that got me wondering about the viability of such a system.

Demographically, the baby boomer generation was moving through social history like a pig through a python shaking up everything along the way. School shortages in the 1950’s; drugs, sex, Rock‘n’Roll in the 60’s; stagflation in the 70s; and so on. What would the boomers do to America’s entitlement programs when they retired in 3 or 4 decades?

Already, long-term care services and financing, dominated by Medicaid regulation and funding, were a mess, fraught with problems of access, quality, low reimbursement, discrimination and institutional bias. On top of that, Medicaid long-term care was exploding in cost.

I concluded that as long as Medicaid was easily available to everyone while allowing them to retain their biggest asset, home equity, no one would plan ahead privately for the risk and cost of long-term care. Sooner or later, everyone would end up on Medicaid.

Clearly, something had to be done and my little state of Oregon was doing it. They’d made a deal with the public:

OK, you need long-term care now and you can’t afford it, fine, Medicaid will pay but we’ll make sure your heirs pay it all back from your estate. If you and they don’t like that, then pay your own way by spending down your savings, using your home equity or buying private insurance.

Interesting, I thought. Are other states doing this? A quick review showed most were not. In fact, from its founding in 1965 until 1980, Medicaid law explicitly permitted asset transfers to qualify for long-term care benefits. Anyone could give away everything and qualify overnight.

I learned that in 1982, the Tax Equity and Fiscal Responsibility Act allowed, but did not require state Medicaid programs to penalize asset transfers done for the purpose of qualifying for Medicaid, to place liens on real property to prevent its divestiture, and to recover from estates.

So I did a study. I asked: What if every state in the country made the same deal with its citizens as Oregon? The findings were dramatic, showing widespread overuse of Medicaid by the middle class and affluent as well as substantial potential savings by discouraging that practice and recovering from estates.

But my federal supervisors did not think a regional staffer should be doing a national study, so they suppressed my work threatening me with negative personnel actions if I distributed my report. But I’d already sent my draft to GAO and the IG of DHHS.

Both of those agencies began national studies of the subject. The Inspector General hired me away from HCFA to direct its study and write the report, which was published in June 1988.

That study found that if every state recovered from estates at the same rate as Oregon, estate recoveries could increase by over half a billion dollars, saving about five percent of Medicaid long-term care expenditures. That was three decades ago when a billion dollars was still “real money.”

But we also found that the extra estate recoveries could be much higher and overall savings far greater if people couldn’t divest assets before becoming eligible for Medicaid.

So the report also recommended stronger transfer of assets restrictions and mandatory liens on real property to ensure that wealth would remain available to recover later.

The next question to ask was Qui Bono? If these recommendations became law, who would benefit? Of course, Medicaid would spend less, relieving taxpayers. The public would have a better safety net and the poor, who really need Medicaid’s help, could be better served if the affluent weren’t diverting scarce welfare resources to their own benefit.

But if Medicaid weren’t paying for long-term care for the middle class and affluent, who would?

There were two sources of private financing that might mitigate dependency on Medicaid for long-term care: home equity conversion and private long-term care insurance.

Why home equity? Same reason Willie Sutton robbed banks. That’s where the money is. Literally trillions of dollars were being exempted from long-term care cost by Medicaid’s unlimited home equity exemption.

And private long-term care insurance? Maybe people would actually buy the struggling new, very expensive product, if they couldn’t ignore long-term care risk, wait to see if they ever need expensive care, and then shift the cost to taxpayers if necessary.

By this time I was convinced I couldn’t get the policies I was recommending into law while working within government. So I left the Inspector General in 1989 to become Research Director for a small long-term care insurance marketing firm called LTC, Inc.

Free of the constraints of government employment, I aggressively promoted my analysis and recommendations. I published articles, contacted journalists, buttonholed Congressmen and staff, spoke at industry conferences for insurance, nursing homes, CPAs, financial planners, and many others. I conducted and published state-level studies in Massachusetts, Minnesota, Wisconsin, Kentucky and Montana.

And then, Success! We got most of what we wanted in the Omnibus Budget Reconciliation Act of 1993. It made estate recovery mandatory, extended the look back period on asset transfers to three years, removed the 30-month cap on the eligibility penalty, ended pyramid divestment and closed other financial eligibility loopholes.

The plan was to keep Medicaid long-term care eligibility relatively easy to get, but to ensure that anyone sheltering wealth who relied on Medicaid, would pay it back out of their estates.

We figured that would wake up boomer heirs to the risk and cost of long-term care and get them to prepare with private insurance. If they didn’t, they and their aging parents would have to use their home equity either directly with reverse mortgages or indirectly by going on Medicaid and paying it back.

We sought to eliminate Medicaid’s perverse incentives that discouraged responsible long-term care planning and left people dependent on a financially struggling program for the poor.

Unfortunately, states didn’t implement the new rules consistently; the feds didn’t enforce them; the media didn’t publicize; and consumer behavior didn’t change.

But we continued to make progress awakening the powers that be to the waste and inefficiency of Medicaid long-term care policy. Every time a recession drove welfare rolls up and tax receipts down, bureaucrats and politicians took an interest in ways to cut costs while improving care.

I attended national conferences of the lawyers who specialize in artificially impoverishing affluent clients to qualify them for Medicaid. I publicized their most egregious methods and attracted national media attention to the problem.

I reached out to journalists like Jane Bryant Quinn who took up the issue in numerous nationally syndicated columns excoriating Medicaid planning attorneys and asking “Do Only the Suckers Pay?” for long-term care.

I did more state-level studies throughout the 1990s and 2000s in Florida, Maryland, South Dakota, and New Jersey. I interviewed Medicaid eligibility workers and quoted their complaints about wealthy people getting Medicaid more easily than the poor.

By the mid-1990s scholars favoring a government takeover of long-term care through social insurance—and that’s nearly all of them—began criticizing the effort to target Medicaid to the needy, debunking our argument that Medicaid had become an entitlement program for the middle class and affluent.

They made Strawman arguments against us saying our only complaint was millionaires transferring assets to qualify for Medicaid. That was happening, and the Wall Street Journal highlighted the practice, but it wasn’t the big problem, nor one we emphasized.

The real problem was that the basic eligibility rules allowed most people to qualify easily and the many loopholes, besides asset transfers, let even the affluent qualify.

When the Republicans took Congress in 1994 and President Clinton was under the gun to control government growth, the issue got traction because of renewed concern about controlling budgets.

Frustrated by the inability to control Medicaid costs, Democrats and Republicans passed the Health Insurance Portability and Accountability Act of 1996 making it a crime to transfer assets to qualify for Medicaid.

That was not a policy I promoted and it blew up in their faces. The “Throw Granny in Jail” law was replaced a year later by the “Throw Granny’s Lawyer in Jail” law, which was quickly deemed unenforceable. They couldn’t hold lawyers culpable for offering services that were legal again after “throw granny in jail” was repealed.

Toward the end of the century, the economy improved; the internet boomed; tax revenues poured in. There was no real interest in controlling costs. It was easier to buy off the public and long-term care providers with generous eligibility and higher reimbursements.

But then the 2001 recession hit and interest in controlling costs returned. I’d left LTC, Inc., when General Electric bought the company, and formed the Center for Long-Term Care Reform in 1998, the organization I still manage, dedicated to ensuring quality long-term care for all Americans.

We produced several national studies explaining and promoting our plan to save Medicaid by diverting non-poor people to personally responsible private means of paying for long term care.

We did more state-level studies in Nebraska, Washington State, Kansas, Texas, North Carolina, Rhode Island, California, New York, Georgia, and Virginia.

By this time, opposition became quite virulent from scholars advocating more government financing of long-term care. They could see momentum building for another federal law supporting our position.

They pulled out all the stops, writing articles and conducting studies, mostly searching big data bases for nonexistent evidence that people were spending down their life savings on long-term care all across America.

My co-founder of the Center for Long-Term Care Reform had moved on to become Chief Health Counsel for the U.S. House Committee on Oversight and Reform. He drafted legislation to strengthen transfer of assets rules further, to cap Medicaid’s home equity exemption for the first time, and to close other loopholes.

I testified before Congress and secured a contract with the American Health Care Association to work half time in DC for six months promoting our analysis and recommendations.

Success again! The Deficit Reduction Act of 2005 capped the home equity exemption at half a million dollars, moved the asset transfer look back from three to five years, closed the half-a-loaf loophole, and unleashed the Long-Term Care Partnership program to encourage the purchase of private long-term care insurance.

Nothing has happened since that legislation to give Medicaid back to the poor and encourage everyone else to plan, save, invest or insure for long-term care. Even the Great Recession of 2007-09 didn’t prompt policy makers to revisit these issues.

While some loopholes have been closed and some reforms enacted, it remains easy for middle class and affluent people to qualify for Medicaid long-term care benefits, home equity is rarely used to purchase quality long-term care for home owners, and the market for private long-term care insurance remains stunted.

Why is it so hard to get good long-term care policy accepted and implemented?

Most scholars and policy makers address the symptoms of long-term care—high cost, poor access and quality—and they ignore the cause, excessive government funding and interference in the market.

So they slavishly advocate more government financing and regulation in the form of obligatory social insurance to cover long-term care by expanding Medicare or imposing a new program.

I’ve tried to show in my paper for this conference why long-term care problems exist, and how to fix them by removing policy incentives that discourage responsible long-term care planning and leave people dependent on the welfare program.

Today the boomer Age Wave is shaking things up one last time. Instead of paying into the entitlement programs, they’re withdrawing. They began retiring and taking Social Security at age 62 in 2008. At age 65 in 2011, they turned the Social Security program cash-flow negative.

Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital.

They will reach the critical age (85 years plus) of rising long-term care needs in 2031, right around the time Medicare (2026) and Social Security (2035) are expected to deplete their trust funds, forcing them to reduce benefits.

It is beginning to look like everything I worried might happen, back in 1982, will happen and soon.

Let me conclude by listing some questions I’ve raised today that I’ve tried to answer in the paper.

Why does Medicaid allow people with substantial wealth to take advantage of a financially struggling welfare program?

Why do economists and long-term care analysts ignore the ample evidence that overreliance on government funding caused most of the problems with long-term care services and financing?

Why are long-term care scholars fixated on recommending only new compulsory government funding programs for long-term care?

Why did the progress toward fixing Medicaid slow down after 2001 and stop altogether after 2005?

Can Austrian economic theory answer or at least elucidate these questions?

I hope you will read the paper, consider my analysis, and give me your feedback and advice.

In the meantime, do give serious thought to how you and your family will prepare for the risk and cost of long-term care and become part of the solution instead of the problem.

Thank you.

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Updated, Monday, October 7, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-038: LTC NEWS AND COMMENT

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

Administration intensifies push to Medicare Advantage, other private plans
How the Man Who Nailed Madoff Got GE Wrong
Poll: Most Older Adults Wary of Telemedicine
Trends in Stroke Incidence Rates in Older US Adults
8 in 10 Older Americans Believe They Are Prepared to Age
Well, But Need Help Understanding Their Benefits and Navigating the Health Care System
States Focus on Rise of Elderly Populations
State of Long-Term Care Insurance
‘We Need Each Other’: Seniors Are Drawn to New Housing Arrangements
Difference between Medicare, and Medicaid for nursing home costs
27% Support Medicare for All, Though Most Need More Info
Newspaper series critical of assisted living ‘paints inaccurate picture,’ industry group says
People in need of care in Germany have to pay more and more themselves
The 2020 Medicare Advantage Plan Atlas, for Agents
Private Medicare Plans’ Premium Rates Hit 13 Year Low

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Updated, Friday, September 27, 2019, 10:23 AM (Pacific)

Seattle—

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LTC BULLET: TO FIX LONG-TERM CARE, REDEFINE THE PROBLEM

LTC Comment: Recent research suggests long-term care is not the gargantuan crisis previously thought. So, private sector solutions, including LTC insurance, may be far more effective than commonly believed. Details after the ***news.***

LTC BULLET: TO FIX LONG-TERM CARE, 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 compulsory 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 re-conceptualize 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.

What’s the evidence long-term care may not be the titanic crisis it has been assumed to be? In February 2016, the Department of Health and Human Services Assistant Secretary for Planning and Evaluation (ASPE) reported this:

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 $585,000, 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 long-term care for most older homeowners. 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 and the program’s dismal access and quality improved.

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 them to do that 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 as many more would, 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).

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.

References

Early, John F. 2018. Reassessing the Facts about Inequality, Poverty, and Redistribution. Cato Institute Policy Analysis No. 839. April 24.

Favreault, Melissa and Judith Dey. 2016. “Long-Term Services and Supports for Older Americans: Risks and Financing.” USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief. Revised February.

Johnson, Richard W. and Claire Xiaozhi Wang. 2019. “The Financial Burden Of Paid Home Care On Older Adults: Oldest And Sickest Are Least Likely To Have Enough Income.” Health Affairs. 38 (6)

Kaul, Karan and Laurie Goodman. 2017. Seniors’ Access to Home Equity Identifying Existing Mechanisms and Impediments to Broader Adoption. Urban Institute Housing Finance Policy Center.

National Investment Center (NIC). 2019. “Middle Market Seniors Housing Study: Executive Summary.” April.

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Updated, Tuesday, September 24, 2019, 10:40 AM (Pacific)

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LTC E-ALERT #19-037: LTC NEWS AND COMMENT

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

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 quality measures need improvement, says government watchdog
What Could Help ‘The Forgotten Middle’ Afford Retirement Housing?
Tickle me, Earmo
Seniors will soon have their own IRS tax form
Investors Spending More on Adult Relatives Than They Can Afford: Survey
Take Control of Your Brain’s Destiny
3 Top Democratic Presidential Contenders' Retirement Income Proposals
The High Cost of Long-Term Care Insurance (and What to Use Instead)
Protect Your Family From Taxes And Long-Term Care Costs
What’s the Best Age to Move Into a CCRC?
Nursing homes could lose $67B if Alzheimer’s cure is found soon, researcher says

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Updated, Monday, September 16, 2019, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-036: LTC NEWS AND COMMENT

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

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:

LTCI Policyholders Should Try to Put Up With Rate Hikes: Jesse Slome
Medicaid’s Dark Secret
Opportunities await beyond near-term challenges
Industry will need to get creative to address middle market needs, groups suggest at NIC meeting
Brief bursts of intense exercise normalizes blood pressure in older adults
U.S. News and Caring.com Launch Assisted Living Directory
Scientists rethink Alzheimer’s, diversifying the drug search
Where the top Democratic U.S. presidential candidates stand on 'Medicare for All'
Artificial Intelligence Models Identify Alzheimer’s Cognitive Decline
How to mitigate risk when a resident needs a higher level of care
Recorded Webcast: Long-term Care Insurance with Expert Bonnie Burns
Phishers Are Using the NAIC Logo to Hook Producers
Elderly should consider residential care before health crisis hits: study
SCAN Survey Reveals Majority of Seniors Are Not Adequately Prepared to Age in Place

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Updated, Monday, September 9, 2019, 10:02 AM (Pacific)

Seattle—

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LTC E-ALERT #19-035: LTC NEWS AND COMMENT

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

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 Fix the Global Retirement Crisis
10 Things to Know about Medicaid Managed Care
Medicare Advantage home healthcare may not be best quality
Medicare reform can no longer be ignored: Warnings from the 2019 Medicare trustees report
Long-term care cuts harming seniors
GE’s Long-Term Care Exposure Magnifies Counterparty Risk for Several Insurers
Medicare overpaying for post-acute care, researchers imply
Specialty care is out of reach for most dementia patients: study
What You Need to Know About Long-Term Care Insurance
Interest Grows In Social Insurance For Long-Term Care. What Should It Look Like?
AHIP Backs Four Options for Long Term Care Reform
Older Foreigners May Be a Quarter of U.S. Seniors in 50 Years
Retirement Trends Of Baby Boomers
New Bombshell Report Reveals Obamacare's Epic Medicaid Waste
On the Job, 24 Hours a Day, 27 Days a Month

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Updated, Friday, September 6, 10:23 AM (Pacific)

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LTC Bullet: LTC Almanac Update

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

*** SUBSCRIBE to LTC Clippings and Steve Moses—2019 ILTCI Recognition Award Honoree—will become your research assistant. Steve will tip you twice a day (on average) with news and views on things you need to know to stay at the forefront of professional expertise. You’ll see the latest articles, reports, data, and op-eds before your clients confront you with them. You’ll get trenchant analysis and valuable ideas on how to address objections and complaints. Contact Damon at 206-283-7036 or damon@centerltc.com for details or subscribe directly here: http://www.centerltc.com/newonlinepaymentspage.htm. Choose “Premium Membership” to receive our LTC Clippings. For example, here are some recent LTC Clippings.

8/27/2019, “The elderly aren’t so poor after all,” by Robert J. Samuelson, Washington Post
Quote: “It was probably inevitable that we would have a ‘retirement crisis’ as hordes of baby boomers (people born between 1946 and 1964) sprint and stumble into their ‘golden years.’ But it’s a fake crisis, even though it’s already becoming a staple of journalism and politics. It presumes that most Americans can’t afford to retire comfortably. Not so.”
LTC Comment: Read this and wonder why we still provide Medicaid long-term care to people with big incomes and unlimited assets.

8/29/2019, “Alzheimer’s care isn’t working; here’s what is,” by Pamela Reese, McKnight’s Senior Living
Quote: “If you don’t work in memory care, then take it from me, a former nurse, chief officer of clinical operations and partner within the skilled nursing industry: The current state of Alzheimer’s care is a rosy portrayal of a diminishing standard. It is the unfortunate truth. … Despite having the power to make constructive change in the field, when it came time to care for my own mother, who received an Alzheimer’s diagnosis, I did not want her living in one of my own facilities. Why, you may ask? There are several reasons that I don’t believe Alzheimer’s care is where it should be. Here are six:”
LTC Comment: Click through to read this sad commentary on the state of Alzheimer’s care.

8/27/2019, “'Medicare Advantage for All’,” by Ken Janda and Vivian Ho, The Hill
Quote: “We are already on our way to Medicare Advantage for All, but we are not doing it systematically or thoughtfully. A move to Medicare Advantage for All is achievable in a relatively short time frame, without the disruption and risk of Medicare for All, or without the confusion of even more options and funding mechanisms. The majority of Americans who have employer-sponsored insurance would still have it. And Medicaid becomes mainstream.”
LTC Comment: Medicaid becomes mainstream? No thanks. ***

LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, September 20, 2019. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

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

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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Chapter 1: Aging Demographics

United States

General Stats

2018OlderAmericansProfile 0519 URL: https://acl.gov/aging-and-disability-in-america/data-and-research/profile-older-americans

5/31/2019, “2018 Profile of Older Americans,” Administration for Community Living

Quote: “In the United States, the population age 65 and over numbered 50.9 million in 2017 (the most recent year for which data are available). They represented 15.6% of the population, more than one in every seven Americans. The number of older Americans increased by 13 million or 34% since 2007, compared to an increase of 4% for the under-65 population.”

LTC Comment: This annual report is the best statistical snapshot you’ll find of aging in America.

Chapter 6: Long-Term Care Financing

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

NHE Projections 2018-27 Health Affairs 0219 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05499

2/20/2019, “National Health Expenditure Projections, 2018–27: Economic And Demographic Trends Drive Spending And Enrollment Growth,” by Andrea M. Sisko, et al., Health Affairs
Quote: “ABSTRACT: National health expenditures are projected to grow at an average annual rate of 5.5 percent for 2018–27 and represent 19.4 percent of gross domestic product in 2027. Following a ten-year period largely influenced by the Great Recession and major health reform, national health spending growth during 2018–27 is expected to be driven primarily by long-observed demographic and economic factors fundamental to the health sector. Prices for health care goods and services are projected to grow 2.5 percent per year, on average, for 2018–27—faster than the average price growth experienced over the last decade—and to account for nearly half of projected personal health care spending growth. Among the major payers, average annual spending growth in Medicare (7.4 percent) is expected to exceed that in Medicaid (5.5 percent) and private health insurance (4.8 percent) over the projection period, mostly as a result of comparatively higher projected enrollment growth. The insured share of the population is expected to remain stable at around 90 percent throughout the period, as net gains in health coverage from all sources are projected to keep pace with population growth.”
LTC Comment: The Age Wave cometh.

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

Forgotten Middle 0419 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05233

Pearson, Caroline F., Charlene C. Quinn, Sai Loganathan, A. Rupa Datta, Beth Burnham Mace, and David C. Grabowski. 2019. The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care. Health Affairs. 38 (5)

“ABSTRACT As people age and require more assistance with daily living and health needs, a range of housing and care options is available. Over the past four decades the market for seniors housing and care—including assisted living and independent living communities—has greatly expanded to accommodate people with more complex needs. These settings provide housing in a community environment that often includes personal care assistance services. Unfortunately, these settings are often out of the financial reach of many of this country’s eight million middle-income seniors (those ages seventy-five and older). The private seniors housing industry has generally focused on higher-income people instead. We project that by 2029 there will be 14.4 million middle-income seniors, 60 percent of whom will have mobility limitations and 20 percent of whom will have high health care and functional needs. While many of these seniors will likely need the level of care provided in seniors housing, we project that 54 percent of seniors will not have sufficient financial resources to pay for it. This gap suggests a role for public policy and the private sector in meeting future long-term care and housing needs for middle-income seniors.” (p. 1)

Critiqued in LTC Bullet: Remember the Middle: https://www.centerltc.com/bullets/latest/1252.htm

LTC Costs and Risk

Johnson on Paid Home Care in Health Affairs 0619 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2019.00025

Johnson, Richard W. and Claire Xiaozhi Wang. 2019. “The Financial Burden Of Paid Home Care On Older Adults: Oldest And Sickest Are Least Likely To Have Enough Income.” Health Affairs. 38 (6)

6/2019, “Community Care For High-Need Patients,” by Alan R. Weil, Health Affairs
Quote: “Almost everyone wants to live in their own home and community as they age. Yet for many, later age brings frailty and the accumulation of chronic conditions. This month’s issue of Health Affairs examines how we can best provide care in the community for people with advanced illness.”
LTC Comment: The June issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. Check them out, but be skeptical. As usual, Health Affairs predilection is to lament the LTC service delivery and financing systems’ shortcomings without analyzing their cause and to recommend more government spending to address them, ironically doubling down on the unexamined cause of the shortcomings itself.

Johnson on Lifetime Risk 0419 URL: https://aspe.hhs.gov/system/files/pdf/261036/LifetimeRisk.pdf

Johnson, Richard W. 2019. “What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?” Research Brief. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Washington, D.C. (April)

“Medicaid covers LTSS costs for people with limited income and assets, but many people incur substantial out-of-pocket costs until they deplete their financial resources and qualify for benefits (Wiener et al. 2013). Medicaid covers many nursing homes residents (Spillman and Waidmann 2015), but very few recipients of residential care or home care (National Center for Health Statistics 2016). Relatively few home care recipients receive Medicaid benefits because there are long waiting lists for Medicaid home and community-based services (HCBS), especially in such states as Texas, Florida, Ohio, and Louisiana (Ng et al. 2015; Peterson et al. 2014). Moreover, the Medicaid income allowances for HCBS enrollees are often too low to cover reasonable living expenses (Johnson and Lindner 2016). Inadequate reimbursement rates may also make residential care communities reluctant to admit Medicaid beneficiaries (O’Keeffe, O’Keeffe, and Bernard 2003).”

LTC Comment: Good source for the latest on LTC risk.

Chapter 9: Long-Term Care Providers

General

NCHS Provider Data 2015-16 URL: https://www.cdc.gov/nchs/data/series/sr_03/sr03_43-508.pdf

Lauren Harris-Kojetin, Ph.D., Manisha Sengupta, Ph.D., Jessica Penn Lendon, Ph.D., Vincent Rome, M.P.H., Roberto Valverde, M.P.H., and Christine Caffrey, Ph.D., Long-term Care Providers and Services Users in the United States, 2015–2016 Analytical and Epidemiological Studies.

For more about this excellent resource, see 032019 LTC Bullet #1249--Treasure Trove of LTC Provider and User Data and excerpt from which follows:

LTC Comment: Ever wonder exactly how many people are receiving what kind of long-term care in which venues? We refer you today to Long-term Care Providers and Services Users in the United States, 2015–2016 by Lauren Harris-Kojetin, Ph.D., Manisha Sengupta, Ph.D., Jessica Penn Lendon, Ph.D., Vincent Rome, M.P.H., Roberto Valverde, M.P.H., and Christine Caffrey, Ph.D.
According to its Abstract: “This report presents the most current national results from the National Study of Long-Term Care Providers (NSLTCP) conducted by the National Center for Health Statistics (NCHS) to describe providers and services users in five major sectors of paid, regulated long-term care services in the United States.”
We’ll share some highlights followed by our comments below, but if you would like to see how two of its authors summarized the report’s findings, with charts and tables, check out this slide deck from a presentation by Harris-Kojetin and Lendon to the LTC Discussion Group on February 21, 2019.

Chapter 10: Medicaid

Medicaid Financing and Burwell Data

Burwell on 2016 Medicaid Expenditures 0518 URL: https://www.medicaid.gov/medicaid/ltss/downloads/reports-and-evaluations/ltssexpenditures2016.pdf

Eiken, Steve, Kate Sredl, Brian Burwell, and Angie Amos. 2018. “Medicaid Expenditures for Long-Term Services and Supports in FY 2016.” May. Official report from the Centers for Medicare & Medicaid Services, prepared by IBM Watson Health.

“The percentage of LTSS expenditures for HCBS continued to vary across population groups. HCBS accounted for 78 percent of spending in programs primarily supporting people with developmental disabilities, compared to 46 percent for behavioral health services provided to people with mental health and substance use disorders and 45 percent for programs primarily supporting older adults and people with physical disabilities.” (pps. i-ii)

This is your go-to source for data on Medicaid expenditures for institutional and HCBS. We regret to report the passing of Steve Eiken, the lead researcher on this annual resource. He was an always eager and helpful source.

Medicaid Eligibility

KFF on Medicaid LTC Elig 0619 URL: http://files.kff.org/attachment/Issue-Brief-Medicaid-Financial-Eligibility-for-Seniors-and-People-with-Disabilities-Findings-from-a-50-State-Survey

Musumeci, MaryBeth, Priya Chidambaram and Molly O’Malley Watts. 2019. Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings from a 50-State Survey. Kaiser Family Foundation. June 14

LTC Comment: Latest and best source for Medicaid LTC eligibility variations by state. Dip in for a good sense of the mind-bending complexity of the subject.

Johnson on HCBS Income Limits 0517 URL

Richard W. Johnson and Stephan Lindner. 2017. The Adequacy of Income Allowances for Medicaid Home and Community-Based Services. Urban Institute. May.

“Medicaid has always covered nursing home care for people with disabilities and few financial resources who are unable to live independently. Over the past decade, Medicaid spending on home and community-based services (HCBS) for people with disabilities living outside nursing homes has increased sharply, spurred partly by the US Supreme Court’s 1999 Olmstead decision that requires states to provide alternatives to institutional care when they are appropriate and can be reasonably accommodated.1 However, the rebalancing of Medicaid expenditures on long-term services and supports (LTSS) away from institutions toward HCBS has been much slower for older adults—those ages 65 and older—than for younger people with disabilities. Medicaid’s financial eligibility rules for HCBS help explain why Medicaid’s institutional bias in the provision of LTSS has persisted for older Americans after having been largely overcome for younger people with disabilities.” (p. 1)

LTC Comment: This article explains why rebalancing from nursing homes to home care had occurred more and faster for younger people with disabilities than for the elderly.

ASPE (Thach and Wiener) on LTSS and Medicaid 0518: https://aspe.hhs.gov/system/files/pdf/259521/LTSSMedicaid.pdf

Thach, Nga T., and Joshua M. Wiener. 2018. “An Overview of Long-Term Services and Supports and Medicaid Final Report.” Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Washington, D.C. (May)

You will not find a better description and explanation of Medicaid’s role in long-term care than this one. Alas it is one of the last works to come from Josh Wiener, an icon in the field of long-term care research, who sadly passed away January 9, 2018.

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Updated, Tuesday, September 3, 2019, 10:23 AM (Pacific)

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LTC E-ALERT #19-034: LTC NEWS AND COMMENT

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

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:

Bipartisan effort probes federal oversight of Medicaid LTSS programs
Murder for Hire; Nursing Home Deaths Bring Charges; 'Fright Study'
The elderly aren’t so poor after all
Eldercare: How Does the United States Stack Up?
Verma: CMS Should Reduce Survey Frequency for Top Nursing Homes, Look Beyond Monetary Penalties
Alzheimer’s care isn’t working; here’s what is
'Medicare Advantage for All’
Missed opportunity: Patients fare poorly in long-term acute care hospitals
Economic Impact: The Senior Living Effect White Paper
Many LTCI Companies Leave Antiselection Out of Rate Hike Analyses: Milliman
Fitch: Some LTCI Issuers Look a Lot Better Than Others

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Updated, Monday, August 26, 2019, 9:56 AM (Pacific)

Seattle—

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LTC E-ALERT #19-033: LTC NEWS AND COMMENT

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

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 nursing home crisis is brewing
Your Long-Term Care Insurance Rate Spiked. Now What?
‘Immigrant sponsors' assets will factor into Medicaid eligibility
5 Things for Agents to Know About the Big New Accounting Thing
64% would prefer assisted living to a family caregiver: poll
Dementia Care in Assisted Living Homes
Money, Data and Backup Plans: Why In-Home Medicare Advantage Benefits Are Rolling Out Slowly
Long-Term Care Insurance Policyholders Ask for Relief
GE Responds to Markopolos LTCI Reinsurance Reserving Criticisms
The looming crisis in long-term care
Medicare decides a cost-saving strategy costs too much
Training Webcast: Long-term Care Insurance with Expert Bonnie Burns
5 Markopolos GE Long-Term Care Insurance Report Highlights, for Agents

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Updated, Friday, August 23, 2019, 10:20 AM (Pacific)

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LTC BULLET: STILL STANDING GUARD

LTC Comment: Private LTC financing is constantly under attack by scholars representing financially well-endowed think tanks, advocacy organizations, government agencies and by the media that broadcast their message. We’ve fought back for 21 years. Here’s how, after the ***news.***

*** NEW MIDDLE CLASS ENTITLEMENT? Medicaid for long-term care has operated as a middle-class entitlement for half a century. Now add acute care to the mix. We can fix both if policymakers heed this groundbreaking research reported in the Wall Street Journal on August 14: “ObamaCare’s Medicaid Deception,” by Brian Blase and Aaron Yelowitz

Excerpt: “ObamaCare wasn’t supposed to give free health insurance to everybody. The Affordable Care Act’s authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises. It isn’t working. A study published this week by the National Bureau of Economic Research finds that in several Medicaid-expansion states most people who gained coverage have enrolled in Medicaid regardless of their income. In practice, ObamaCare has turned Medicaid into an entitlement program for the middle class. … These findings should alarm Americans across the political spectrum. They show that complicated government programs often bear little resemblance to planners’ designs. ObamaCare has turned out to be a giant welfare program, with millions of working- and middle-class Americans improperly receiving Medicaid—a reflection of the unpopularity of the exchange policies and incompetence of government oversight.”

Sound familiar?

LTC BULLET: STILL STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 21^th year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private funding or promoted compulsory government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, government agencies, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to 87 LTC Bullets we’ve published taking these groups and individuals to task:

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

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

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

Government Agencies and Commissions: Government Accountability Office (GAO), the Medicaid Commission, the Long-Term Care Commission, Congressional Research Service (CRS), Congressional Budget Office (CBO), Medicare Trustees, Centers for Medicare and Medicaid Services (CMS)

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

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Damon at 206-283-7036 or damon@centerltc.com to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC Bullet: Why Too Little Home Care?, June 28, 2019
LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views follow.

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Updated, Monday, August 19, 2019, 10:20 AM (Pacific)

Seattle—

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LTC E-ALERT #19-032: LTC NEWS AND COMMENT

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

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:

HHS Office of Inspector General plans assisted living report
GE shares tank more than 13% after Madoff whistleblower calls it a ‘bigger fraud than Enron’
ObamaCare’s Medicaid Deception
CalPERS faces ‘very serious risk’ in $1.2 billion long-term care case, judge warns
Seniors have more household debt now than they did during the financial crisis
How Frail Elders Will Pay For Trump’s New Anti-Immigrant Rules
Genworth Finds Buyer for Canadian Mortgage Insurance Unit
More Seniors with Dementia Living at Home: What You Need to Know
Class-Action Lawsuit Seeks To Let Medicare Patients Appeal Gap in Nursing Home Coverage
Alzheimer’s and dementia leading cause of death in England and Wales
To Save Money, American Patients And Surgeons Meet In Cancun

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Updated, Monday, August 12, 2019, 10:17 AM (Pacific)

Seattle—

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LTC E-ALERT #19-031: LTC NEWS AND COMMENT

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

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:

When to Move From Independent Living to Assisted Living
Designing for dementia: Long-term memory care, from the Ground up
4 Hard Truths We're Seeing After The Fed's Rate Cuts
How Assisted Living Improves Quality of Life
Long-Term Caregiving Realities Hit Home for Boomers
Nine Charts about the Future of Retirement
5 Cheapest Countries for Retirement (Some of Which May Surprise You)
Eating more meat and eggs lowers dementia risk in men
Financial Performance of Medicare Advantage, Individual, and Group Health Insurance Markets
‘Awakenings’ in Advanced Dementia Patients Hint at Untapped Brain Reserves
Report Sounds Alarm on Medication Overload Among Older Americans
US seniors fulfill dreams, fight depression with virtual reality
Frailty a growing threat, but not inevitable, in older adults, caregivers advised
The Benefits of Hiring a Companion for an Older Adult
American seniors employed at record-high levels

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Updated, Friday, August 9, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: THE POST-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: We published the pre-Medicaid history of long-term care on March 1. The fascinating saga continues post-Medicaid today.

LTC BULLET: THE POST-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: In “LTC Bullet: The Pre-Medicaid History of Long-Term Care,” we identified several developments that paved the way for Medicaid’s peculiar approach to long-term care financing. In summary, and …

Setting the Stage for Medicaid

In the late 18^th century, “outdoor relief,” cash payments to paupers, gave way to “indoor relief,” or poor houses for the indigent elderly. The 19^th century saw basic principles evolve away from the notion grounded in British “poor laws” that help for the needy should be disagreeable in order to discourage indolence. Gradually, public attitudes distinguished between the “deserving poor,” needy through no fault of their own, and the undeserving poor, alcoholics or the shiftless. Throughout the 20^th century, starting with the Progressive Era, the mostly voluntary, non-profit, non-governmental approach to old age support and care gave way to heavy federal and state government involvement. The Great Depression expanded and consolidated that change. In 1935, Old Age Assistance (OAA) and Social Security put money in the hands of elderly people which they often spent on non-profit or for-profit residential care facilities. Poor houses disappeared and nursing homes thrived.

By 1960, with passage of the Medical Assistance for the Aged (MAA) program, the basic structures were in place that Medicaid institutionalized in 1965: (1) virtually unlimited financing for nursing home care shared by the state and federal governments and (2) nursing home eligibility for people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses.”[1] Those two characteristics guaranteed that the new Medicaid program would rapidly increase in cost, favor nursing homes over less expensive home care, and incentivize states to expand Medicaid services and reimbursement levels at drastically reduced cost by taking advantage of federal matching funds. One cost-controlling feature of earlier programs--strict eligibility criteria, transfer of assets restrictions, and mandatory liens--disappeared with the start of Medicaid.

What happened in 1965?

In 1965, America was just starting to have a serious problem with long-term care. People were living longer, but dying slower often with chronic illnesses that caused frailty and cognitive impairment. Older Americans needed more and more long-term care at the very time when women, the traditional caregivers, were entering the formal workforce in much greater numbers. This was a time when a prosperous private market for low-cost home- and community-based services, geriatric care management, and long-term care insurance might have developed in the United States. It did not.

Instead, the new federal Medicaid program offered publicly-financed long-term nursing-home care. This benefit--initially unencumbered by transfer of assets, liens or estate recovery requirements--confronted families with a difficult choice. They could pay out-of-pocket for the home care and community-based services seniors prefer or they could accept nursing-home care paid for by the government. Most people chose the safety and financial benefits of the government's Medicaid option. Therefore, Medicaid-financed nursing-home care flourished, the market for home care withered, and private long-term care insurance failed to develop. Here’s how that process unfolded.

Key Themes

Several key themes characterize the post-Medicaid history of long-term care. We list these themes here; emphasize them in the narrative; and revisit them when we sum up.

Theme #1: Government involvement in the long-term care services and financing markets is pervasive. The market for long-term care services was never allowed to function freely, based on consumers’ preferences and providers’ ability to satisfy them.

Theme #2: Government involvement in long-term care services and financing invariably addressed symptoms, never the causes of problems. Legislation, regulations and policies tackled explosive costs, poor quality, continuum-of-care imbalances, etc., but not the common cause or source of those problems, government funding itself.

Theme #3: Government involvement in long-term care services and financing was always crisis-driven, responding to budget shortfalls resulting from national economic recessions. Cost controls followed recessions, but heavy spending returned with recovery. That trend changed after the Great Recession of December 2007 – June 2009, presaging potentially catastrophic consequences as baby boomers age into senescence.

Let us see how these themes manifested in the post-Medicaid history of long-term care and what they portend for the future.

The Post-Medicaid History of Long-Term Care

On July 30, 1965, President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . . aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” The new program’s costs exploded immediately for several reasons.[2]

States had no real choice but to participate or lose lucrative federal matching funds.[3]
Medical prices increased rapidly because Medicaid and Medicare contributed “large sums of money to the demand for medical care without substantially increasing or efficiently organizing the supply of medical services available.”[4]
Expensive hospital and nursing home expenditures absorbed the bulk of Medicaid money.[5]
From Medicaid’s inception in 1965 until 1980, federal law explicitly permitted asset transfers for the purpose of qualifying for long-term care benefits. Anyone could give away everything and qualify for benefits immediately.[6]

Bottom line, Medicaid gave everyone--states, families, and long-term care providers--strong incentives to participate with few effective limits on expenditures.

The nursing-home industry took full advantage of this new public financing source by building many new facilities. As fast as the industry could build them, the new nursing-home beds filled with Medicaid residents. Roemer's law--in paraphrase, "a built bed is a filled bed"--became a nursing home industry standby.^{^[7]} Stunned by the cost crisis, Medicaid attempted to control the construction of new beds with Certificate of Need (CON) programs based on the principle that "we cannot pay for a bed that does not exist." By the mid-1970s, health planning for nursing homes was in full swing. It worked. Fewer new beds were built.

Addressing Symptoms, Avoiding Causes

The CON laws restricting nursing home bed supply to control Medicaid costs were an early example of government attacking a symptom not the cause of high long-term care expenditures. Costs were not increasing because there were too many nursing homes. There were too many nursing homes because Medicaid long-term care funding was virtually unlimited. That was the neglected cause that government would have had to address to solve the solution.

Instead, capping bed supply predictably drove up price and demand even further. The nursing-home industry raised charges to compensate for the limitation on new beds. What the government saved by restricting bed supply, it lost to nursing-home rate increases. Consequently, Medicaid nursing-home costs grew faster than ever. In response, Medicaid capped reimbursement rates. This move impelled the nursing-home industry to increase private-pay rates to compensate. The more the government pushed Medicaid rates down, the more the industry pushed private-pay rates up. So began the highly problematic differential between low Medicaid rates and much-higher private-pay rates. Today, on average nationally, Medicaid pays only 70 percent of private-pay market rates.

So again, addressing the symptom (high nursing home charges) instead of the cause (easy access to unlimited Medicaid funds) led to an unintended consequence. It created a strong incentive for former private payers to convert to Medicaid in order to escape higher private-pay rates which were caused by nursing homes counterbalancing the rate caps imposed by Medicaid. When prices, and hence incentives, are set by markets, instead of politicians and bureaucrats, this kind of thing cannot happen. But once begun under political control, it can and did build on itself through generation after generation of public policy interventions as future developments will show.

How did long-term care evolve in the 1980s?

Higher private-pay rates made Medicaid eligibility more attractive than ever to private payers. With no limits on asset transfers to qualify, easy access to Medicaid drove up expenditures and drove out higher paying private patients. In 1970, when Medicaid was only five years old, out-of-pocket spending still contributed 49.2 percent of national nursing home costs. Medicaid paid 23.3 percent and Medicare, only 3.5 percent. By 2017, out-of-pocket spending had declined by nearly half to 26.7 percent, while Medicaid and Medicare climbed to 30.2 percent and 22.7 percent respectively.[8]

The problem of nursing homes’ declining private-pay revenue and greater dependency on Medicaid is worse than these numbers suggest. In 2011, the Centers for Medicare and Medicaid Services began reporting nursing home and Continuing Care Retirement Community (CCRC) expenditures together. CCRCs are much more likely to have private-payers than are nursing homes. So the 26.7 percent private-pay figure above is higher than it would be if nursing homes only were measured. Evidence of this is that nursing homes’ private revenue mix declined from 12 percent in 2012 to 7.9 percent in the first quarter of 2019, whereas Medicaid’s share of nursing home revenue has continued to increase from 47 percent to 49.2 percent.[9]

Because Medicaid pays nursing homes notoriously low reimbursement rates, arguably the cause of nursing home quality problems, it is even more important to understand the proportion of patient days that Medicaid pays for at its low rates as compared to the proportion of days paid by private payers at their higher rates. Based on data through March 2019, Medicaid paid for 65.8 percent of patient days, whereas private payers contributed only 8.2 percent of patient days. Clearly, private payers in nursing homes have declined radically whereas Medicaid’s role has increased substantially. So, while nursing homes get only 49.2 percent of their revenue from Medicaid, the welfare program’s low rates touch 65.8 percent of patient days. This, forces nursing homes to attract as much revenue as possible from higher paying sources such as Medicare and private pay, both of which sources are highly vulnerable.[10]

The Crisis Theme: The Role of Recessions

An economic downturn in the late 1970s led to a recession in early and mid-1980 which aggravated Medicaid’s financial distress.[11] Finally, Congress acted to discourage the overuse and abuse of Medicaid long-term care eligibility by passing the Boren-Long Amendment of 1980. For the first time, it prohibited the transfer of assets solely to qualify for Medicaid benefits.[12] But this new rule expressly excluded otherwise exempt assets, such as seniors’ largest resource, their homes. The strong incentive to take advantage of Medicaid nursing home benefits rather than paying out of pocket for non-institutional home or community-based care continued nearly as strong as ever. Medicaid costs kept rising as even upper-middle class people took advantage of the program.

Origins of Medicaid Planning

As soon as Congress began to restrict asset transfers for the purpose of qualifying for Medicaid, lawyers started finding ways to circumvent the new eligibility constraints. A whole sub-practice of law—Medicaid estate planning—developed to take advantage of this new opportunity. Qualifying affluent clients for Medicaid was and remains its main source of billable hours.

Artificial self-impoverishment, touted frequently in the national media and in local financial planning ads, became a clever solution to the long-term care financing problem for more and more people. The first known article on Medicaid planning was published in 1981 immediately after Boren-Long imposed the first limit on asset transfers.[13] It stated: “Careful planning even under adverse state law will still be able to achieve the goal of excluding an applicant’s resources for purposes of determining Medicaid eligibility.”[14]

Scores of similar law journal articles soon followed.[16]

In 1987, 23 lawyers founded the National Academy of Elder Law Attorneys (NAELA) to represent their professional interests. Today, the NAELA has grown to a membership of 4,500 with an annual budget of $2 million.[17] It functions as the Medicaid planners’ trade association, frequently advocating for looser Medicaid eligibility rules and more public spending on long-term care.

A 2003 survey of NAELA lawyers in 30 states found that 40 percent of Medicaid planning clients transferred more than $75,000 of wealth and 63 percent involved estates of more than $100,000.[18] Most clients transferred more than $50,000 in order to qualify for Medicaid benefits.[19] The rule of thumb for Medicaid planners’ compensation is that fees to qualify someone for Medicaid long-term care benefits roughly average one month’s cost of nursing home care as a private payer. According to one source, such fees “can range from $2,500 for individuals with relatively simple estates to $10,000 for individuals with significant assets.”[20]

The Federal Government Tried to Restrain Medicaid Eligibility Bracket Creep

The federal government did not sit idly by and allow Medicaid long-term care benefits to spread to the upper middle class without a fight. As usual, however, public policy makers had one foot on the accelerator, generously expanding Medicaid benefits to more and more groups, even as they pressed down on the brake with the other. Four presidents and twelve Congresses struggled to discourage the growing practice of Medicaid estate planning from the early 1980s on even as program expansions continued.

Stress on Medicaid budgets worsened as the nation suffered another and longer economic recession in 1981 and 1982. With budget ends harder and harder to meet, Congress responded with the Tax Equity and Fiscal Responsibility Act of 1982. TEFRA ’82 authorized states voluntarily to place restrictions on asset transfers for the purpose of qualifying for Medicaid, to place liens on real property and to recover benefits correctly paid from recipients' estates. Because its provisions were not mandatory and the economy soon recovered relieving the pressure on state and federal budgets, TEFRA ’82 did little to lessen the underlying problem, excessive utilization of Medicaid long-term care benefits.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA ’85) tried to control Medicaid qualifying trusts with only marginal success.

The Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) made transfer of assets restrictions mandatory and lengthened the look-back period for asset transfers from two years to 30 months. None of these measures had much effect on controlling the explosion of Medicaid long-term care eligibility. Endlessly creative Medicaid planners found new legal gambits to circumvent every loophole closed.

Nursing Home Occupancy Balloons While Quality Plummets

With the supply and price of nursing-home beds capped by government fiat and with Medicaid eligibility extremely generous, nursing-home occupancy skyrocketed to an average of 95 percent nationally in the mid-1980s. Given high demand and severely limited supply, nursing-home operators could fill their beds easily with low-paying Medicaid patients regardless of the care quality they offered. To achieve adequate operating margins, however, nursing homes had to attract a sufficient supply of higher-paying private patients or cut costs drastically. Yet, if they tried to attract more lucrative private payers with preferred treatment or accommodations, the nursing homes were deemed guilty of discrimination against Medicaid patients. If they tried to cut costs instead, they came under fire for technical violations or quality problems.

In response, Congress and state governments pressured the industry to provide higher quality care without discriminating against low-paying Medicaid recipients. The Omnibus Budget Reconciliation Act of 1987 (OBRA ’87) mandated extra staff, training, and quality improvements but without appropriating extra funds to pay for them. Given the program's fiscal duress, Medicaid could not offer higher reimbursement rates to achieve the legislation’s goals. That put nursing homes in a severe bind.

What happened to long-term care in the 1990s?

Caught between the rock of inadequate reimbursement and the hard place of quality mandates, the nursing-home industry put up a strong fight. Armed with another provision from the Boren Amendment,[21] a federal law that required Medicaid to provide reimbursement “reasonable and adequate” for “efficiently and economically operated facilities,” many state nursing-home associations took the battle to court and they usually won.

By this time, however, state and federal Medicaid expenditures were increasing so quickly and taxpayers had become so reluctant to pay for growing public spending that large increases in Medicaid nursing-home reimbursements were out of the question, regardless of which side won the lawsuits. The issue became moot when Congress repealed the Boren Amendment in the Balanced Budget Act of 1997. Since then there has been no legal floor on how low Medicaid nursing home reimbursement rates can fall. Consequently, quality of Medicaid-financed nursing home care remains a large and growing concern.

But note again that instead of addressing the cause of nursing home quality problems, i.e. inadequate reimbursements, politicians attacked the symptoms by simply demanding better quality without paying for the extra hiring, training and improvements it would require.

Back to the Battle Against Medicaid Planning

Responding to state and federal budget problems incidental to the July 1990 to March 1991 recession and its slow recovery, Congress picked up the gauntlet of Medicaid planning again in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). This legislation made the mandatory transfer of assets restrictions longer and stronger, extending the look-back period from thirty months to three full years for most transfers and five years for transfers to trusts. It also replaced the 30-month limit on the eligibility penalty for asset transfers with no time limit whatsoever and made recoveries from the estates of deceased recipients mandatory.

This OBRA ’93 package implemented many of the recommendations in a 1988 report by the Department of Health and Human Resources Office of Inspector General titled Medicaid Estate Recoveries: National Program Inspection. That report and OBRA ’93 encouraged families to retain exempt assets while relying on Medicaid for long-term care, strongly discouraged asset transfers with serious penalties, and allowed liens to hold real property in recipients’ possession until the cost of their care could be recovered from their estates. It was a government-sponsored home equity conversion program to fund long-term care, relieve the financial pressure on Medicaid, and incentivize families to plan and insure for long-term care in order to avoid Medicaid dependency and resulting estate recovery.

Unfortunately, states didn’t implement the law’s provisions aggressively; the federal government did not require them to do so; the media didn’t report the new liability of relying on Medicaid, the liens and estate recoveries; and so the public remained unaware and continued to drift onto Medicaid dependency by default. Once again, as the recession which led to OBRA ’93 abated, tax receipts increased and welfare rolls declined. Pressure was off to control Medicaid spending.

The Throw Granny and Her Layer in Jail Laws

When the OBRA ‘93 measures failed to constrain the growth of Medicaid planning and its explosive incidental costs, President Clinton joined the newly Republican-dominated Congress to try a radical solution in the Health Insurance Portability and Accountability Act of 1996 (HIPAA ’96). They criminalized asset transfers to qualify for Medicaid, assessing a $10,000 fine and a jail sentence on offenders. When senior advocacy groups exploded in opposition to this "throw granny in jail law," Congress repealed it one year later.

Undaunted, President Clinton joined Congress again in the Balanced Budget Act of 1997 (BBA ’97) to pass the "throw granny's lawyer in jail" law, which made it a crime to advise a client, in exchange for a fee, to transfer assets in order to qualify for Medicaid. This rule came to naught also. It was deemed unconstitutional, and therefore unenforceable, to hold an attorney legally culpable for recommending a practice to a client that was legal again after the criminalization of asset transfers was repealed.

After 17 years of trying to control Medicaid planning, the federal government gave up until 2006. The Medicaid planning bar prevailed. And Medicaid continued to sink into red ink making adequate reimbursement for nursing homes and home health benefits harder than ever to provide.

Promoting LTC Insurance

Worth noting is that at the same time these efforts to discourage Medicaid planning were underway, state and federal governments were encouraging citizens to buy private long-term care insurance. If people had private insurance to cover their long-term care costs, so the reasoning went, they would relieve the burden on Medicaid and help the long-term care providers, who desperately needed more private payers at rates half again as high as Medicaid's.

An experiment with "Long-Term Care Partnerships" allowed people to reduce their Medicaid spend-down liability dollar for dollar by purchasing and using private insurance. Several states adopted the early partnership program, but it languished when Congress refused to exempt any new partnership programs from the estate recovery mandate imposed by OBRA '93.[22]

HIPAA '96, besides briefly criminalizing abusive asset transfers, also granted a half-hearted tax deduction for private long-term care insurance. Because the deduction only applied to limited premium costs after total health care costs exceeded 7.5 percent of adjusted gross income, this measure helped few people afford the coverage and fizzled as an incentive to buy.

The main problem with marketing long-term care insurance, however, was the simple reality that Medicaid benefits were easy to obtain even after the insurable had occurred, without preplanning and without paying any premiums. That obstacle remains firmly in place.

Home- and Community-Based Services: A Panacea for Public Financing?

In the meantime, a wave of academic speculation beginning in the late 1970s suggested that paying for home- and community-based services (HCBS) instead of nursing-home care could save Medicaid a lot of money. Congress authorized HCBS waivers in the Omnibus Budget Reconciliation Act of 1981 (OBRA ’81), enabling states to spend Medicaid money on services other than nursing home care for the first time.

For the next four decades, Medicaid experimented with HCBS waivers as a cost-saving measure. Before long, however, hard empirical research compelled the conclusion that (desirable as they are) home- and community-based services do not save money overall.[23] Community-based care usually only delays institutional care. Between them, expanded home care plus eventual nursing home care end up costing more in the long run than nursing home care alone. There are many reasons for this. One is the economy of scale that comes from taking care of a larger number of people in an institutional setting. Another reason is that people who are enabled to remain at home and maintain their independence and control, tend to be happier. They live longer and die slower, ending up in a nursing home sooner or later anyway.

Not a single state has reduced the overall cost of nursing home and home health care by diverting more people to home care. The combined costs continue to rise everywhere, year after year. This is not to say we shouldn't find a way to fund home and community-based care. It only means that to think funding home care instead of nursing home care will save money is unreasonable. Medicaid expenditures for long-term personal and home care increased disproportionately even as nursing-home expenditures abated somewhat.

Reported HCBS spending increased 10 percent in FY 2016, greater than the five percent average annual growth from FY 2011 through 2015. Reported institutional service spending decreased two percent in FY 2016 following an average annual increase of 0.3 percent over the previous five years.[24]

Olmstead

The Supreme Court added to the pressure on Medicaid to offer home and community-based care in 1999. In Olmstead v. L.C., 119 S. Ct. 2176, the Court interpreted Title II of the Americans with Disabilities Act (ADA) to require states to serve people with disabilities in community settings rather than in institutions (such as nursing homes) when appropriate and reasonable. The Department of Health and Human Services took up the mantle of HCBS in 2001, spending millions to encourage state Medicaid waivers of the Social Security Act to promote more home and community-based care.

Despite these intensive measures to shift Medicaid away from its "institutional bias," roughly two-thirds of the program's long-term care expenditures continued to go for nursing home care by the year 2000. By 2016, overall Medicaid nursing home expenditures were down to 43 percent, while 57 percent went to HCBS. But HCBS programs primarily supporting older adults and people with physical disabilities have not kept pace. They are only 45 percent with over half, 55 percent, still going toward nursing home care.[25]

States remain afraid to shift too much of their long-term care spending toward popular home and community-based services because of the danger they will attract too many additional applicants, recipients and costs. As one analysis concluded: "Financially strapped states need massive sources of new revenues to comply with the Supreme Court's Olmstead ruling to house the elderly and disabled, if possible, in the community."[26]

It remains true, ironically, that because of the public's aversion to Medicaid nursing homes, institutional bias is Medicaid's strongest cost containment tool, one of its gravest deficiencies, and the biggest single obstacle to the expansion of privately-financed home- and community-based long-term care services.

The Interface Between HCBS and Medicaid Planning

For every person in a nursing home in America today, there are two or three of equal or greater disability, half of whom are bedbound, incontinent or both, who remain at home.[27] They are able to stay home because their families, mostly wives, daughters and daughters-in-law, struggle heroically to keep them out of a nursing home. When government starts providing long-term care that they want (home care) instead of long-term care that they don't want (nursing home care), people come out of the woodwork to take advantage of it. That drives up Medicaid long-term care expenditures.

Furthermore, if all it gets you is into a nursing home, one might be reluctant to seek the advice of an attorney to self-impoverish in order to qualify for Medicaid. But when Medicaid planning will get you access to home care services, adult day care, respite care, and even assisted living, you will be much more likely to seek out an elderlaw attorney. Medicaid financed home and community-based care encourages the practice of Medicaid estate planning.

Furthermore, Medicaid financed home and community-based care is deadly to the marketability of private long-term care financing alternatives, such as reverse mortgages or long-term care insurance. The big benefit of being able to pay privately for long-term care is the ability to command red-carpet access to top-quality long-term care at the most appropriate level and in the private marketplace. To the extent the government conveys to the American public that consumers can achieve the same benefits financed by Medicaid, Medicaid will continue to explode in cost. Reverse mortgages to fund long-term care in the short-term and LTC insurance to fund long-term care in the long run will remain stunted.

Long-Term Care in the New Millennium: Late 1990s to the Present

Reimbursement Revolution

When Medicare changed to a prospective payment system (PPS) for hospital care in 1983, patients moved out of acute care "quicker and sicker." Combined with liberalization of Medicare coverage criteria in the Medicare Catastrophic Coverage Act of 1988, this was a financial bonanza for nursing facilities and home care agencies because it augmented their census of higher-paying Medicare patients.[28]

By 1997, one-quarter of Medicare acute care discharges used postacute services within one day of leaving the hospital. . . . Skilled nursing facilities were used for more than half this time (53%), home health agencies for about one-third of the time (32%), and rehabilitation facilities about one-tenth of the time (11%), with psychiatric facilities and long-term hospitals accounting for the remainder.[29]

The long-term care industry mobilized to make the most of this opportunity. Providers grew, consolidated, and expanded into many auxiliary services to take advantage of the new, generous funding source. Wall Street caught the fever and sent long-term care stock prices way up. Private capital flowed into long-term care projects. Big money chased high hopes based on promising aging demographics in a way similar to the contemporaneous levitation of internet equities based on expectations of a "new economy." Nursing home chains prospered. The home health care industry exploded. Luxurious assisted living facilities popped up everywhere. High hopes veiled ominous possibilities.

This rosy scenario prevailed until the late 1990s. Then, having started the party by pouring vast amounts of new money into long-term care, the government removed the financial punch bowl. It replaced the generous cost plus reimbursement method, which had prevailed since the beginning of Medicaid and Medicare in 1965, with more parsimonious prospective payment systems (PPS).

The Balanced Budget Act of 1997 brought skilled nursing facilities into the prospective payment system and home health agencies were added soon thereafter. As a direct consequence, by 2000 "more than 10 percent of [skilled nursing] facilities nationwide filed Chapter 11 bankruptcy, including many of the largest chains (e.g., Vencor, Genesis Health Ventures, Mariner Post-Acute Network, Integrated Health Services, Sun Healthcare Group)."[30]

Utilization and cost of Medicare's home health benefit dropped by half the year after prospective payment was implemented.[31] Hundreds of home health agencies went bankrupt as a consequence. Providers received some reimbursement relief in the Balanced Budget Refinement Act of 1999 (BBRA '99) and the Benefits Improvement and Patient Protection Act of 2000 (BIPA '00), but the profession never has recovered its former prosperity.

How Medicaid Depends on Medicare

To this day, nursing homes rely heavily on relatively higher reimbursements from Medicare to offset Medicaid's meager rates. Yet fiscal pressure on both programs constantly threatens long-term care providers' solvency. The Medicare Payment Advisory Commission (MedPAC)[32] "continues to focus solely on data detailing the [long-term care] sector’s Medicare-only profits – without also looking at Medicaid losses," complained Mary Ousley, past chairman of the American Health Care Association (AHCA) to the House Ways and Means Committee.[33]

On December 8, 2005, MedPAC staff recommended that Congress deny an inflation increase in Medicare reimbursement rates for skilled nursing facilities for Fiscal Year 2007 and on January 10, 2006, the Medicare Payment Advisory Commission (MedPAC) so voted.[34] As of 2019, MedPAC continues to do so even as Congress continues to ignore the recommendation.

The nation’s more than 15,000 skilled nursing facilities should not receive a scheduled 2.6% Medicare market basket update in fiscal 2020, MedPAC wrote in its twice-annual report to Congress, citing a variety of positive benchmarks for the industry.[35]

Medicaid reimbursement for nursing homes is demonstrably deficient, falling in the early 2000s $12.58 per patient day below allowable costs, as studies by the accounting firm BDO Seidman for AHCA repeatedly established.[36] If that were all, it would be bad enough. But low reimbursements drag down quality and quality problems invite lawsuits.

Tort Liability

A wit remarked once that “Medicaid demands Ritz Carlton care at Motel 6 rates while imposing a regulatory jihad.” But laws and regulations cannot command quality care without paying for it. OBRA’ 87’s failure proved that. Tort liability has become a huge problem for long-term care facilities. A study by the actuarial firm Aon for the American Health Care Association found that claim frequency doubled and severity tripled between 1996 and 2005 and "the annual patient care liability cost for each occupied bed in a long term care facility has grown from $430 in 1993 to $2,310 in 2004."[37] Malpractice insurance costs have surged.[38] In Florida, the state worst hit, "the high liability costs were so dramatic that they entirely offset the average $28 per day increase in Medicaid reimbursement for nursing homes implemented over a five-year period, from $86 in 1995 to $114 in 2000."[39] All of these pressures continue to weigh heavily on the ability of long-term care providers to remain financially solvent while providing care of acceptable quality.

The sixteenth published edition of the Aon General and Professional Liability Benchmark for Long Term Care Providers estimates ultimate loss rates, or the cost of liability for skilled nursing providers on a per-bed basis. The projected national 2019 loss rate is estimated to be $2,410. This means that a skilled nursing facility with 100 occupied beds can expect approximately $241,000 in liability expenses in 2019.[40]

What Have the 2000s Wrought For Long-Term Care?

Following the recession from March to November, 2001, the escalating cost of Medicaid returned as an important budget issue for states and the federal government. Policy makers turned again to the question of how to restrain the overuse of Medicaid’s most expensive benefit, long-term care.

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (DRA '05.) It passed by a single vote, supplied by Vice President Cheney who had to be transported back from the Middle East to cast the deciding vote in the Senate. As soon as the law was signed, senior advocacy organizations and Medicaid planning attorneys filed lawsuits against it, but all of this litigation was thrown out of court.

The DRA '05 took some giant steps in the direction of controlling Medicaid eligibility. For the first time ever, it put a limit on the amount of equity that can be exempted in a home and contiguous property. The limit was placed between $500,000 and $750,000 at the option of each state legislature. Pegged to inflation, the limits have increased to $585,000 and $878,000, respectively, as of 2019. Capping the home equity exemption was a step in the right direction, but the half-million dollar limit actually imposed was not enough to solve the problem. At the current levels inflated over time, people can shelter assets many times the average $79,200 home equity of elderly persons and still qualify for Medicaid.[41]

When state governments were under severe budgetary constraint, the National Governors Association advocated in writing for a limit on the Medicaid home equity exemption of only $50,000. That might have been an effective deterrent to Medicaid long-term care overuse. Unfortunately, the estate recovery requirement from OBRA '93, which was supposed to ensure that exempt assets are eventually used to reimburse Medicaid for the home owners care, is itself easy to avoid. So without lower limits on the home equity exemption or stronger estate recovery enforcement, Medicaid will continue to be the dominant source of long-term care financing for aging Americans.

The Deficit Reduction Act of 2005 also extended the look-back period for asset transfers from three years to five years for all transfers. That sounds impressive until you realize that the look-back period on asset transfers in Germany’s socialized health care system, is ten years. Transfer assets for less than fair market value within ten years of applying for public assistance to help with your long-term care costs in Germany, and you run the risk of their pursuing recovery from the people, probably your relatives, to whom you gave the money.

One of the most important changes the DRA '05 made was to eliminate the single most prevalent Medicaid estate planning gimmick at the time, the so-called "half-a-loaf" strategy. Instead of giving away $100,000 and incurring a 20 month transfer of assets penalty, people would give away $50,000, incur half the penalty, i.e., 10 months, hide the rest of the money and become eligible after the penalty ran its course, without ever spending any of their own money for long-term care. The Deficit Reduction Act ended this practice by starting the eligibility penalty at the date someone would have otherwise become eligible for Medicaid if the rule hadn't changed. Previously, the penalty began at the date of the transfer, a practice which enabled the half-a-loaf strategy. Now, the penalty begins (usually) at the date of Medicaid application.

Another Bust and Boom Story

America’s post-Internet-boom, early-2000s recession led to passage of the DRA ’05 with its new constraints on Medicaid LTC financial eligibility. As so often happened in the past, however, by the time the new legislation passed, the economy had improved considerably, welfare rolls went down, tax receipts improved and public officials at the state and federal levels lost their enthusiasm for enforcing the new restrictions. In California, for example, Medi-Cal (California’s name for Medicaid) didn’t implement, much less enforce, the mandatory changes required by the DRA ’05, such as the longer look-back period for asset transfers and the cap on home equity. Nor did the federal government enforce the law, allowing California to flout it with impunity and other states to get by with only half-hearted enforcement.[42]

Medicaid planners found new ways to circumvent the DRA’s stronger spend-down rules, replacing for example the newly proscribed “half-a-loaf” strategy with a clever “reverse half-a-loaf” gimmick whereby their affluent clients could use promissory notes or annuities to “cure” an asset transfer penalty and achieve the same objective to preserve half the assets. Medicaid-compliant annuities re-emerged in popularity allowing “millionaires” to qualify easily for LTC benefits according to MaineCare[43] eligibility workers.[44]

Thus, by 2007, easy access to Medicaid LTC benefits was returning to its historical norm. Then the economic cycle clobbered America again. In 2008, the “Great Recession” began. Once more, state and federal tax revenues plummeted, welfare rolls skyrocketed, and huge state and federal budget shortfalls developed. In other words, the stage was set for another round of legislative and administrative initiatives to reduce Medicaid expenditures, tighten eligibility rules, curb Medicaid planning abuses, and protect the LTC safety net for people most in need. But this time, it didn’t happen. Why?

The Broken Rhythm of Reform

Historically, progress toward making Medicaid a better long-term care safety for the poor tended 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 and fiscal 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 was not signed into law until February of 2006, nearly five years after the start of the previous recession. Ultimately, economic recovery did come and, true to form, enforcement of DRA ‘05 declined.

The resulting boom ended when the housing bubble burst, causing the Great Recession of December 2007 to June 2009. Again, economic recovery came very slowly and meagerly.[45] By 2016, seven years after the end of the last recession, we had seen neither a full economic recovery nor action to spend Medicaid’s scarce resources more wisely by aiming them toward people most in need. In fact, public policy analysts and advocates are moving in the opposite direction, towards proposing yet another government program funded by taxpayers to expand public financing of long-term care for all.

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

How Washington Learned to Love Debt and Deficits

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

The danger is that just as excessive public spending and private malinvestment in the early 2000s led to the housing bubble and its consequent mid-decade recession, so the current much larger credit bubble driven by excessive government borrowing and spending could lead to an even greater economic collapse. With the current national debt nearing $23 trillion and total unfunded entitlement liabilities around $125 trillion, a return to economically realistic market-based interest rates would render the federal government immediately insolvent.[46]

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. By age 66 in 2012, they had turned the Social Security and Medicare programs cash-flow negative. Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital. They will reach the critical age (85 years plus) of rising long-term care needs in 2031, around the time Social Security and Medicare 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 a former Center 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.”[47] In a sentence, 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.

As fiscal and monetary pressure on government spending abated, other factors also combined to discourage controls on Medicaid long-term care benefit expansion.

Maintenance of Effort

The American Recovery and Reinvestment Act of 2009 (ARRA ’09) was signed into law by President Obama on February 17, 2009. This “stimulus” law ultimately pumped $831 billion into the economy according to the Congressional Budget Office. State Medicaid programs were among the biggest beneficiaries of the ARRA ‘09’s largesse receiving approximately $100 billion in extra funds from an increase in federal Medicaid matching funds. But this windfall had a string attached. To qualify for the additional revenue, states had to agree not to tighten their Medicaid eligibility rules. This “maintenance of effort” (MOE) requirement prevented states from reducing Medicaid expenditures during the economic downturn by means of targeting scarce resources to the neediest applicants.

The ARRA ‘09’s MOE restriction expired at the end of June 2011, at which time state revenues plunged as federal matching fund rates reverted to pre-stimulus levels. A state that had been getting three dollars in federal matching funds for every dollar it put up now was getting only two federal dollars for every state dollar. Simultaneously, due to the reduced economic activity incidental to the ongoing economic downturn, other state revenues from sales and income taxes declined as well. But Medicaid costs continued to increase rapidly as they always do when the economy falters. This would have been the perfect time to control the Medicaid eligibility hemorrhage by targeting the program’s scarce benefits to citizens who needed them most.

By this time, however, a new MOE rule applied which prohibited any reduction in Medicaid financial eligibility. The Patient Protection and Affordable Care Act of 2010 (PPACA ‘10, also known as health reform or “ObamaCare”) required maintenance of effort upon penalty of the loss of all federal Medicaid funds. Under PPACA ‘10, however, the states received no bonus in federal matching funds for complying with MOE. Thus, with flat or falling state government revenues, state Medicaid programs all across the country were locked into retaining the generous Medicaid long-term care financial eligibility they had implemented during better economic times. If they acted to reduce Medicaid LTC eligibility even within limits allowed by federal law before imposition of the MOE requirement, they could lose all federal Medicaid funds.

Then in June 2012 the United States Supreme Court ruled that, although ObamaCare is constitutional, states can nevertheless opt out of its Medicaid expansion provision without losing federal matching funds for the rest of their Medicaid programs. Arguably, states that choose not to expand Medicaid under PPACA should therefore not be constrained by the law’s MOE provision for the same reason. Some legal and policy experts, as well as the state of Maine, made that case, but were unsuccessful based on interpretations from the Centers for Medicare and Medicaid Services (CMS, the federal agency that oversees Medicaid) and the Congressional Research Service.

Thus, faced with widespread budget shortfalls and doubtful new revenues sufficient to close the gaps, states had only two ways to constrain costs: cut benefits or cut reimbursements. With eligibility cuts out of bounds due to MOE, the states’ only options, besides shifting funds from education or some other budget category, were to eliminate desperately needed services or to reduce provider reimbursements. Cutting services hurts the needy most. Provider reimbursements were already minimal and further cuts could lead to facility closures and other long-term care provider shortages. By the beginning of the second decade of the new millennium, the maintenance of effort requirement was a major obstacle to Medicaid long-term care reform, which remained stymied so long as MOE remained in effect.

ObamaCare

The Patient Protection and Affordable Care Act of 2010 (PPACA ’10) or “health reform” was signed into law by President Obama on March 23, 2010. By far its most important impact on long-term care financing was its provision regarding maintenance of effort as already explained. But ObamaCare attempted to address LTC financing in two other potentially important ways. One was the “CLASS Act,” an acronym standing for Community Living Assistance Services and Supports. While not formally repealed, CLASS died for all practical purposes when it became clear the pseudo-LTC-insurance program was financially infeasible to implement. I explained the problems and deficiencies of CLASS in a 2011 speech to the Society of Actuaries "Living to 100" Symposium. The aborted program does not warrant further consideration.

The other way ObamaCare addressed long-term care was with several special programs and pilots designed to encourage more public financing of home and community-based services (HCBS). These are described in an October 2011 report by the Kaiser Family Foundation titled “State Options That Expand Access to Medicaid Home and Community-Based Services.” They need not concern us here, because, as explained earlier, publicly financed home- and community-based services on a wide scale are not financially sustainable, impede a private market for home-based care, and discourage responsible long-term care planning. Striving to make Medicaid long-term care services more attractive without limiting eligibility to those truly in need drives up the program’s cost while reducing the potential private resources that might improve the long-term care service delivery system.

Value-Based Care and Reimbursement

Huge changes in how the government pays for post-acute and long-term care are under way today, building steam, and about to revolutionize long-term care service delivery. The system's transformation to "managed care," whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country. The Obama Administration, including the Centers for Medicare and Medicaid Services, pushed headlong into managed long-term care. The Trump Administration has followed suit.

Most long-term care will still be provided by nursing homes and home care companies, but now a new middle-man, the managed care company, will come between the payer (Medicaid) and the provider, which already stands between the patient and access to quality care. Long-term care providers complain vehemently that their already meager Medicaid reimbursements, often less than the cost of the care, will be further attenuated with potentially dire consequences for care access and quality.

The government's latest move toward centralized control of the long-term care market is even more significant. The federal bureaucracy is replacing traditional fee-for-service reimbursement with new, experimental financing schemes based on value-based payments. The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated "quality" metrics). "Prospective payment," "bundling," “value-based” reimbursement and, most recently PDPM, or the Patient Directed Payment Model, are on every health care bureaucrat's lips.

The idea behind the value-based revolution is to reward long-term care providers for quality instead of quantity, for performance and results, instead of for the number of services they provide. It sounds like a great idea. Who doesn’t want higher quality, better outcomes, at the same or lower cost? The problem comes from having politicians and bureaucrats define quality and outcomes, instead of doctors and patients deciding and choosing. Such an approach is highly susceptible to improper influence, abuse and rationing.[48] The new system will put care managers and providers at far greater financial risk. Experts worry the end result will be a two-tiered system with poor providers getting worse and becoming more dependent than ever on low Medicaid reimbursements.

Attacking Symptoms Again While Ignoring Causes

In a free market, devoid of government interference, people would purchase health care services the same way they buy other products and services. Using their own funds, or an insurance company’s in catastrophic circumstances, patients would choose their doctors, caregivers, and long-term care providers based on price and reputation. If they were not happy with the care they received, they would change providers. Over time the market would sort out the providers, with the best ones surviving and prospering while the poor ones would decline or disappear. No need for central planners to decide what is good care and reward or punish providers. That just adds an expensive and unnecessary layer of bureaucracy.

The right questions to ask about value-based payments are these: why does government pay for most long-term care in the first place? Why does it have to revolutionize its reimbursement methods to ensure quality? Why can't people simply choose the long-term care services and providers they prefer without the long arm of the law needing to intervene? The answer to all these questions is the same. This latest push by government to manage the long-term care service delivery and financing system is designed to fix problems that were caused by earlier government interventions, as we’ve explained in the foregoing history of Medicaid and long-term care financing.

As always before, these new value-based interventions address symptoms—high costs, low quality and public-policy-induced market dysfunction—instead of the real causes, perverse incentives created by earlier government intercessions that turn patients and long-term care recipients into financial pawns instead of customers. The risk is that further interference in an already fragile long-term care market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.

So What Is the Bottom Line on the Post-Medicaid History of Long-Term Care?

In a nutshell, just as heavy demand was building for a privately financed senior services market in the 1960s, Medicaid co-opted the trend by providing easy access to subsidized nursing-home care.

Confronted with a choice between paying out-of-pocket for a lower level of care or receiving a higher level of care at much less expense, seniors and their families made the predictable economic choice. They closed Medicaid-funded nursing home care. Naturally, the potential market for long-term care insurance and privately-financed home- and community-based services languished.

Medicaid nursing-home caseloads and expenditures increased rapidly and drastically. In response, Medicaid capped bed supply and reimbursement rates, which led inevitably to excessively high occupancy, private-pay rate inflation, discrimination against low-paying Medicaid patients, and serious quality of care issues.

Over time, Medicaid nursing-home care acquired a national reputation for impeded access, dubious quality, inadequate reimbursement, widespread discrimination, pervasive institutional bias, and excessive cost.

Medicaid remains, nonetheless, the only way middle-class people can pay for long-term care without selling their homes nor, if they are clever, liquidating their savings. That is why so many otherwise independent and responsible Americans fail to buy private insurance while they are young and healthy enough to qualify for it and afford it. It is why they end up looking to Medicaid planning as the only way to save their estates or their inheritances. It is the reason why a huge proportion of America's proud World War II generation has died on welfare in nursing homes.

Today, these historical trends have almost run their course. We are on the verge of a promising, but perilous, new world of long-term care. We are floundering forward, compelled by necessity to change the system somehow.

Both the private marketplace and public policy are pushing long-term care in a more consumer-friendly direction. Nursing-home occupancy has declined. The trend toward privately-financed assisted living is growing. New buzz words dominate our professional jargon. Policy makers look to concepts like capitation, managed care, dual eligibles, and integration of acute and long-term care for new hope.

Is our dream of a seamless long-term care delivery and financing system just around the next bend in public policy? Or are we at risk of making the same mistakes as in the past, but on a wider scale and with more disastrous consequences? To answer these questions, we need to find a fresh perspective on the past, present, and future of long-term care financing.

Applying Themes

We identified three predominant themes in the post-Medicaid history of long-term care: (1) generous government financing aimed at (2) ameliorating symptoms instead of removing causes while (3) acting in response to budget crises incidental to national economic recessions. We showed how Medicaid provided a huge funding source directed to nursing home care, tried to control symptoms like excessive supply, utilization, and eligibility when costs exploded, but ignored the cause, perverse incentives created by the virtually unlimited funding. Medicaid became the principal payer of long-term care in the United States for poor and rich alike and that led directly to the dysfunctional system we struggle with today.

If Medicaid is not the catastrophic poverty-maker its long-term care critics make it out to be, what is it? Simply put, it has become an entitlement for middle-class and affluent families. By making nursing home care virtually free in the mid-1960s, Medicaid locked an institutional bias into the long-term care system, crowded out a privately financed market for home care, and trapped the World War II generation in sterile, welfare-financed nursing facilities.[49]

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.[50]

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.[51]

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.[52]

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.[53]

Medicaid is the cause of most of the dysfunction in America’s long-term care service delivery and financing system. But blame should not fall on a mythical Medicaid program imagined by advocates of a new compulsory government program. Rather, blame must fall on the real Medicaid program that has operated by funding long-term care after people require expensive care while allowing them both time and the means to preserve most of their wealth.

Notes

[1] “History of Senior Living: 1960 - 1969,” https://www.seniorliving.org/history/1960-1969/.

[2] Columbia Journal of Law and Social Problems, “Medicaid: The Patchwork Crazy Quilt,” Columbia Journal of Law and Social Problems, 5 Colum. J.L. & Soc. Probs. 62 1969, https://heinonline.org

[3] Sydney E. Bernard and Eugene Feingold, “The Impact of Medicaid,” Wisconsin Law Review, Wis. L. Rev. 726 1970, p. 743.

[4] Ibid., p. 745.

[5] Ibid., p. 747.

[6] “Prior to an amendment to the SSI program in 1980, applicants were expressly permitted to transfer resources that otherwise would have disqualified them from receiving any benefits. A number of decisions confirmed that states were not permitted to deny Medicaid eligibility to an applicant who had divested himself of resources for less than fair market value.” Timothy N. Carlucci, “The Asset Transfer Dilemma: Disposal of Resources and Qualification for Medicaid Assistance,” Drake Law Review, 36 Drake L. Rev. 369 1986-1987, p. 372, https://lawreviewdrake.files.wordpress.com/2016/09/carlucci.pdf.

[7] Milton I. Roemer first posited Roemer's law around 1960. In 1993, he reiterated this observation in National Health Systems of the World, Volume Two (Oxford University Press): "The optimal supply of hospital beds needed by each country, for planning purposes, has been a subject of study and debate everywhere. If there is an assured payment system, it seems that almost any additional hospital beds provided will tend to be used, up to a ceiling not yet determined." The Dartmouth Atlas of Health Care 1999, "The Quality of Medical Care in the United States: A Report on the Medicare Program," The Center for the Evaluative Clinical Sciences, Dartmouth Medical School, Hanover, New Hampshire, 1999, p. 309.

[8] Source: [LINK]. For analysis, see “LTC Bullet: So What If the Government Pays for Most LTC?, 2017 Data Update,” December 13, 2018.

[9] Skilled Nursing Data Report Key Occupancy & Revenue Trends Based on Data from January 2012 through March 2019, National Investment Center (NIC), https://info.nic.org.

[10] Ibid.

[11] For a list of all U.S. economic recessions, see https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

[12] Shawn Patrick Regan, “Medicaid Estate Planning: Congress’ Ersatz Solution for Long-Term Health Care,” Catholic University Law Review, 44 Cath. U. L. Rev. 1217, 1227 (1995), p. 1228, https://scholarship.law.edu.

[13] William G. Talis, “Medicaid as an Estate Planning Tool,” Massachusetts Law Review, Spring 1981, pps. 89-90

[14] Ibid., p. 90

[15] Ibid.

[16] Find many examples of Medicaid planning articles in Stephen A. Moses, How to Fix Long-Term Care Financing, “Appendix A: Supplemental Bibliography,” Center for Long-Term Care Reform and Foundation for Government Accountability, 2017, pps. 34-63.

[17] Cited July 25, 2019 from the “History” of NAELA on the organization’s website: https://www.naela.org

[18] ElderLaw News, “Survey Finds Rich Are Not Engaging in Medicaid Planning,” ElderLaw News, September 2, 2003; http://www. elderlawanswers.com/survey-finds-rich-are-not-engaging-in-medicaid-planning-2697, cited June 19, 2019. Critiqued in S. Moses, “LTC Bullet: Medicaid Planners Confess,” October 2, 2003; http://www.centerltc.com/bullets/archives2003/464.htm.

[19] Ibid.

[20] Milan Markovic, “Lawyers and the Secret Welfare State,” Fordham Law Review, 84 Fordham L. Rev. 1845 2015-2016, p. 1857, footnote 88; http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=5184&context=flr

[21] "As part of the Omnibus Reconciliation Act of 1980, the 'Boren amendment' required that Medicaid nursing home rates be 'reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards' (Section 1902(a)(13) of the Social Security Act)." Joshua M. Wiener and David G. Stevenson, "Repeal of the 'Boren Amendment': Implications for Quality of Care in Nursing Homes," The Urban Institute, Series A, No. A-30, December 1998, http://www.urban.org/url.cfm?ID=308020&renderforprint=1, p. 1.

[22] The Long-Term Care Partnership program is described and critiqued in Stephen A. Moses, “The Long-Term Care Partnership Program: Why it Failed and How to Fix it,” in Nelda McCall, editor, Who Will Pay for Long Term Care?: Insights from the Partnership Programs, Health Administration Press, Chicago, Illinois, 2001, pps. 207-222, http://www.centerltc.com/pubs/LTCPartnership.pdf.

[23] "Evaluations of community care programs...tend to show not only that expansion of community care has little effect on nursing home use, but that it raises, rather than lowers, total expenditures." Alice M. Rivlin and Joshua M. Wiener, Caring for the Disabled Elderly: Who Will Pay?, The Brookings Institution, Washington, D.C., 1988, p. 190.

[24] Steve Eiken, Kate Sredl, Brian Burwell and Angie Amos, “Medicaid Expenditures for Long-Term Services and Supports in FY 2016,” IBM Watson Health, May 2018, https://www.medicaid.gov/medicaid/ltss/downloads/reports-and-evaluations/ltssexpenditures2016.pdf.

[25] Ibid., p.2

[26] _______, "Massive New Spending Needed to Comply with Olmstead Ruling," Aging News Alert, January 14, 2002.

[27] William E. Oriol, The Complex Cube of Long-Term Care, American Health Planning Association, Washington, D.C., 1985. An old source, but undoubtedly still a correct statistic.

[28] Although many provisions of MCCA '88 were repealed the following year, home health care and nursing home services remained much easier to obtain than before and utilization and costs of those services increased rapidly.

[29] Gerben Dejong, et al., "The Organization and Financing of Health Services for People with Disabilities," The Milbank Quarterly, Vol. 80, No. 2, 2002, p. 282.

[30] R. Konetzka, et al., "Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies," American College of Healthcare Executives, Vol. 39, No. 3, June 1, 2004, p. 463.

[31] Harriet L. Komisar, "Rolling Back Medicare Home Health," Health Care Financing Review, U.S. Department of Health and Human Services, Vol. 24, No. 2, Pg. 33.

[32] "The Medicare Payment Advisory Commission is a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program.” Source: www.medpac.gov, cited June 20, 2019.

[33] "AHCA to Ways and Means Health Subcommittee: MedPAC Recommendations on Nursing Home Funding Illogical, Hurts Seniors," March 6, 2003.

[34] AHCA President's Memo Number 57, December 9, 2005.

[35] Alex Spanko, “MedPAC Again Calls for $2B in SNF Cuts, But Also Urges Caution Amid PDPM Shift,” Skilled Nursing News, March 15, 2019.

[36] "The daily reimbursement shortfall increased by about 9% from 2001 to 2002 (about 39% in the 4 years from 1999 to 2002). Unreimbursed Medicaid allowable costs were estimated at $4.5 billion nationally in 2002. Since 1999, cost increases have exceeded rate increases by 2%." BDO Seidman, LLP, "A Report on Shortfalls in Medicaid Funding for Nursing Home Care," prepared for the American Health Care Association, April 2005, p. ii.

[37] "Aon Study Finds Liability Cost Increases of 182 Percent in the Long Term Care Sector Since 1996," AHCA News, May 5, 2005.

[38] "The cost of malpractice insurance for nursing homes has jumped an average 51%, according to a study funded by a long-term-care trade group to be released today. The situation is particularly severe in several states with large populations of seniors, including Texas, Arkansas and Florida." Andrea Petersen, "Nursing Homes Face Insurance Crunch: Wave of Consumer Lawsuits Pushes Cost of Malpractice Policies Higher; Some Doctors Stop Seeing Seniors, The Wall Street Journal, June 3, 2004, Page D1. For the full report, see Theresa W. Bourdon and Sharon C. Dubin, "Long Term Care General Liability and Professional Liability, 2004 Actuarial Analysis," Aon Risk Consultants, Inc., American Health Care Association, June 2004.

[39] Elizabeth Devore, "Nursing Homes: The Escalating Liability Crisis," National Conference of State Legislatures, Health Policy Tracking Service, February 2002, p. 1.

[40] “2018 Aon General and Professional Liability Benchmark for Long Term Care Providers,” AON, October 16, 2018, https://www.aon.com/risk-services/thought-leadership/report-2018-long-term-care.jsp.

[41] For the average home equity of elderly people, see the table citing U.S. Census Bureau, Survey of Income and Program Participation, 2014 Panel, Wave 2, in Teresa Ghilarducci, “Reverse Mortgages Are A Bust Partly Because Average Home Equity Is $80,000,” Forbes, January 17, 2019, https://www.forbes.com.

[42] Stephen A. Moses, “Medi-Cal Long-Term Care: Safety Net or Hammock?,” Center for Long-Term Care Reform and Pacific Research Institute, January 2011, p. 25.

[43] MaineCare is Maine’s name for Medicaid.

[44] Stephen A. Moses, “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” Center for Long-Term Care Reform and the Maine Health Care Association, November 2012, p. 10.

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

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

[46] The “National Debt Clock” (http://www.usdebtclock.org/) places U.S. national debt at $22.5 trillion and unfunded liabilities at $125.0 trillion, a little over $1 million per taxpayer (cited July 25, 2019).

[47] Christopher J. Truffer, Christian J. Wolfe, and Kathryn E. Rennie, “Report to Congress: 2016 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Sylvia Mathews Burwell, Secretary of Health and Human Services, 2016, p. 3, https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2016.pdf. This identical quote was in the 2013 version of the “Actuarial Report” and was critiqued in S. Moses, “LTC Bullet: Does Medicaid Solvency Matter?,” Friday, October 31, 2014; http://www.centerltc.com/bullets/archives2014/1062.htm.

[48] “[W]atchdogs say the efforts to give providers more control over quality through value-based payment initiatives may actually create new avenues for fraud or corruption,” Kimberly Marselas, “Value-based care focus could erode regulatory safeguards, critics argue,” McKnight’s LTC News, June 20, 2019.

[49] One Medicaid planner promised and advertised nursing home care “virtually free for life.” Read about his program in Stephen Moses, “LTC Bullet: ‘Nursing Home Care Virtually Free For Life,’ May 7, 2002; http://www.centerltc.com/bullets/archives2002/361.htm.

[50] “Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year’s projected shortfall of $21.20.” ELJAY, LLC & Hansen Hunter & Company, PC, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care,” American Health Care Association, Washington, D.C., April 2016, p. 1; https://www.ahcancal.org.

[51] “Private insurance could be made more attractive to consumers by . . . taking steps to remove or lessen what is sometimes termed Medicaid crowd-out--the dampening effect that the availability of Medicaid’s LTC benefits has on sales of private LTC insurance policies.” The United States Congress, Congressional Budget Office, “Financing Long-Term Care for the Elderly,” April 2004, p. xiii; https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/reports/04-26-longtermcare.pdf.

“Given the current structure of Medicaid, we estimate that even if (contrary to fact) comprehensive private insurance policies were available at actuarially fair prices, about two-thirds of the wealth distribution still would not want to buy this insurance. This suggests that fundamental Medicaid reform is necessary for the private insurance market to expand considerably.” (p. 1084) and “At actuarially fair prices, simple expected utility theory says that in our model all individuals would purchase insurance in the absence of Medicaid.” (p. 1095) Jeffrey R. Brown and Amy Finkelstein, “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market,” American Economic Review, 98:3, 20081083–1102; http://www.aeaweb.org/articles.php?doi=10.1257/aer.98.3.1083

[52] “We demonstrate theoretically that social insurance programs with means tests based on assets discourage saving by households with low expected lifetime income.” R. Glenn Hubbard, Jonathan Skinner, and Stephen P. Zeldes, “Precautionary Saving and Social Insurance,” The Journal of Political Economy, Vol. 103, No. 2, April 1995; https://www0.gsb.columbia.edu

[53] “For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest. These government programs, however, also benefit the rich because they insure them against their worst nightmares about their very old age: either not being able to afford the medical care that they need, or being left destitute by huge medical bills.” Mariacristina De Nardi, Eric French, and John Bailey Jones, “Why Do the Elderly Save? The Role of Medical Expenses,” NBER Working Paper No. 15149, July 2009, p. 2; http://www.nber.org/papers/w15149.pdf.

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Updated, Monday, August 5, 2019, 10:21 AM (Pacific)

Seattle—

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LTC E-ALERT #19-030: LTC NEWS AND COMMENT

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

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 NAIC Long-Term Care Insurance Squad May Keep Some Work Private
New Active Adult Communities Adopt Modern, Flexible Designs
Things I Think: Good, Bad news
Secret shoppers in LTC
Medicare Advantage Hasn’t Always Prioritized Skilled Nursing — But That’s Changing
Advisor Alert: Learning Medicaid Planning Can Keep You From Getting Sued
Genworth Says It's Seeking Buyers for Canadian Unit
As Democrats Debate Single Payer, Humana's Medicare Advantage Enrollment Soars
Current estimates fail to account for ‘hidden’ costs of Alzheimer’s, researchers say
Does Long-Term Care Insurance Cover Assisted Living?
Average LTC policy claim amounts for assisted living top other settings
LTC leads hot healthcare market in first half of 2019

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Updated, Monday, July 29, 2019, 9:56 AM (Pacific)

Seattle—

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LTC E-ALERT #19-029: LTC NEWS AND COMMENT

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

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 wave after the silver one
The downside of low interest rates
‘Brain Safe’ App Helping Elderly Patients Avoid Dementia-Linked Drugs
Spicy diet linked to dementia, study says
The Problematic Law And Policy Of Medicaid Block Grants
With Trump’s Blessing, Some States Aim to Cap Medicaid Rolls
Regulators Brainstorm About Medigap LTC Benefits
Survey: Where assisted living is most expensive, least expensive
HHS Administrator Verma Issues Remarks at Better Medicare Alliance Medicare Advantage Summit
Life-LTC Hybrid Sales Level Off: LIMRA
New standards aim to improve surgery for the oldest patients
Frequent Sleeping Pill Use Linked to Increased Dementia Risk
Apathy: The forgotten symptom of dementia

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Updated, Friday, July 26, 2019, 9:58 AM (Pacific)

Seattle—

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LTC BULLET: STATE OF THE LTCI INDUSTRY—2019

LTC Comment: Read highlights from the Broker World’s annual long-term care statistical tour d’ force below.

LTC BULLET: STATE OF THE LTCI INDUSTRY--2019

LTC Comment: “The 2019 Milliman Long Term Care Insurance Survey is the 21st consecutive annual review of stand-alone long-term care insurance (LTCI) published by Broker World magazine. It analyzes the marketplace, reports sales distributions, and describes available products including group insurance.”

Subscribers can find this article, authored by actuaries Claude Thau, Allen Schmitz, and Chris Giese, in Broker World’s July 2019 issue here. To whet your appetite for more, here are a few items that stood out to us:

“Eleven carriers participated broadly in this survey. Four others provided sales information so we could report more accurate aggregate industry individual and multi-life sales. From these submissions, we estimated total industry production.”
“The 15 carriers reported sales of 56,288 policies and certificates (“policies” henceforth) with new annualized premium of $171,537,644 (including exercised FPOs [Future Purchase Options) in 2018, compared to 2017 restated sales of 64,800 policies ($181,506,770 of new annualized premium), a 13.1 percent drop in the number of policies and a 5.5 percent drop in the amount of new annualized premium. As noted in the Market Perspective section, sales of policies combining LTCI with other risks continue to increase.”
“With FPO elections included in new premium, Northwestern garnered the number one spot in new sales. Mutual of Omaha was a strong second and had a large lead in annualized premium from new policies sold. Together, they combined for 57 percent of new premium including FPOs and 52 percent of new premium excluding FPOs.”
“Participants’ individual claims rose 5.9 percent. Overall, the stand-alone LTCI industry incurred $11.0 billion in claims in 2017 based on companies’ statutory annual filings, raising total incurred claims from 1991 through 2017 to $129.9 billion.”
“The average processing time in the industry was eight percent faster in 2018 than in 2017. Nonetheless, active policies resulted from only 58.8 percent of applications, even lower than 2017’s record low of 59.0 percent.”
“The stability of current prices bears no resemblance to the past instability because today’s prices reflect much more conservative assumptions based on far more credible data and low investment yields. Unfortunately, many financial advisors presume that new policies will face steep price increases. It is likely to take a long time before the market becomes comfortable that prices are stable.”
“Looking at the total LTCI market, stand-alone policies accounted for 20.0 percent of the 2017 policies sold, policies with extensions of benefits (EOB) accounted for 11.2 percent and policies with accelerated death benefits but no EOB accounted for 68.8 percent.”
“Claimants rarely challenge insurer claim adjudications. Since 2009 (varies by jurisdiction), if an insurer concludes that a claimant is not chronically ill, the insurer must inform the claimant of his/her right to appeal the decision to independent third-party review (IR). The IR determination is binding on insurers. As shown in our Product Exhibit, most participants have extended IR beyond statutory requirements, most commonly to policies issued prior to the effective date of IR. At least four participating insurers report never having a request for IR. Four other insurers have reported a total of 72 IR requests resulting in the insurers’ denials being upheld more than 90 percent of the time.”
“The average premium per new life ($2,544) is 18 percent less than we would have quoted including FPOs in the numerator. Three insurers reported average premiums for new insureds below $1,700, while five insurers were over $2,800. The average premium per new buying unit (counts a couple only once) was $3,598. The lowest average new premium (including FPOs) was in Puerto Rico ($1,960), followed by Kansas ($2,448), while the highest was in New York ($4,243), followed by Connecticut ($3,886). Due to rate increases, FPO elections and termination of older policies, the average inforce premium jumped to $2,168, 3.0 percent more than our restated 2017 figure.”
“The average issue age was 56.6.”
“The average notional benefit period slightly increased from 3.73 to 3.74. Because of Shared Care benefits, total coverage was higher than the 3.74 average suggests. For the first time, a single benefit period (3-year) accounted for half the sales.”
“Five percent compounded for life, which represented 56 percent of sales in 2003 and more than 47.5 percent of sales each year from 2006 to 2008, now accounts for only two percent of sales. Simple five percent increases for life were 19 percent of 2003 sales but are now only 0.4 percent of sales.”
“The 77.8 percent of accepted applicants who purchased coverage when their partners were declined was the highest over that time period.”
“Fifty-five percent (55.1 percent) of all buyers were female, the lowest percentage since 2012.”
“Partnership sales were reported in 44 jurisdictions in 2018, all but Alaska, District of Columbia, Hawaii, Massachusetts, Mississippi, Utah, and Vermont, where Partnership programs do not exist. Massachusetts has a somewhat similar program (MassHealth).”
“Ten insurers contributed application case disposition data to Table 21. In 2018, 58.8 percent of applications were placed, including those that were modified, a new low slightly below 2017’s previous record low of 59.0 percent.”

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Updated, Monday, July 22, 2019, 10:35 AM (Pacific)

Seattle—

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LTC E-ALERT #19-028: LTC NEWS AND COMMENT

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

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:

With I-SNPs, Nursing Homes Can Thrive Under ‘the Godfather’ of Value-Based Care
In the Lingering Light
Researchers call providers’ discharge habits into doubt
What You Don’t Know About Your Parents’ Finances Could Ruin Yours
Integrity Marketing Acquires Another Senior Products Distributor
Scientists offer new clues on why Alzheimer’s risk differs for women and men
Scientists close in on blood test for Alzheimer’s
Long-term care gets candidate Klobuchar’s attention
Liz Weston: 3 steps to keep ‘solo agers’ happier and safer
How Cory Booker would address long-term care
Providers fight back against accusations of denied access due to payment ability
Can Alzheimer's be stopped? Five lifestyle behaviors are key, new research suggests

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Updated, Monday, July 15, 2019, 9:48 AM (Pacific)

Seattle—

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LTC E-ALERT #19-027: LTC NEWS AND COMMENT

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

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:

Do you have enough home equity to pay for long-term care in retirement?
The unpaid caregiver crisis is landing on employers’ doorsteps
How Amy Klobuchar would improve care for seniors
How Trump Is Reforming Medicare, Part II
How to Pay for Nursing Home Costs
CCRC line workers receive good news in new salary and benefits survey
2020 Election: Analyzing the Sanders Plan for Long-Term Care
Dementia Patients and the Emergency Department
The Strange Political Silence On Elder Care
How Trump Is Reforming Medicare, Part I

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Updated, Friday, July 12, 2019, 10:14 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE AND MEDICAID

LTC Comment: How has Medicaid financing affected long-term care? Some thoughts after the ***news.***

*** TWO LTC CLIPPINGS this week touch on long-term care as a political issue … or non-issue. Subscribe to LTC Clippings by contacting Damon at 206-283-7036 or damon@centerltc.com. We’ll scan all the published articles, speeches, reports and data to find what you most need to know. We’ll send them to you in neat little email nuggets like these, so you can spend more of your time doing what you do best and less time searching online.

July/August, 2019, “The Strange Political Silence on Elder Care,” by Grace Gedye, Washington Monthly

Quote: “You might expect that a problem that affects so many people so profoundly would become a major political issue. Recent years have seen other issues, including ones that disproportionately affect women in their personal lives, become highly politically salient—from sexual harassment and pay equity to the push for universal pre-K education and improved access to child care. Yet even though American women today are politically organized and running for office in record numbers, elder care remains widely viewed as a purely personal matter. You could be a news junkie, following the 2020 race closely, and have heard nothing about it. Why is that? And could long-term care go from being a sleeper issue to one that boosts a candidate out of the 2020 pack?”

LTC Comment: Ain’t gonna happen. The false premise here is that politicians seek out sensitive controversial issues. Just the opposite is true. Nothing is more important politically than the impending collapse of the entitlement programs before or during the 2030s, just when the boomer generation arrives at their age of greatest need. Yet not a single question was asked on the subject during the Democrats’ circular-firing-squad debates last week. National somnolence on the LTC issue will prevail until the crisis occurs and that reckoning is nearer every day.

7/11/2019, “2020 Election: Analyzing the Sanders Plan for Long-Term Care,” by Chris Farrell, Next Avenue

Quote: “His new federal universal health insurance program would cover long-term care services and supports in homes and in communities for people of any age. Under the Sanders version of Medicare for All, Medicaid would continue covering institutional services, such as care in skilled nursing homes. … Of course, the big controversial question for Sanders is how he’d pay for his overhaul of the health care system, including long-term care. Sanders consistently says that most people would pay more in taxes to fund Medicare for All but would come out ahead overall after eliminating health insurance co-pays, out-of-pocket expenses and premiums. That claim has been met with skepticism by policy analysts crunching the numbers.”

LTC Comment: What a plan! Solve the mess created by government interference in the private LTC market by eliminating the private LTC market altogether.

LTC BULLET: LONG-TERM CARE AND MEDICAID

LTC Comment: Long-term care is the “poor relative” of social issues. Politicians don’t want to talk about it, as the first article above indicates. When one does, like Bernie Sanders in the second article, his wishful thinking is completely disconnected from financial reality.

When it comes to long-term care financing, the elephant in the room is Medicaid. Unless and until people come to grips with the effect previous government funding of long-term care, mostly through Medicaid, has had, there will be no hope of reforming long-term care services or financing for the better.

I’m working on a paper about the impact of Medicaid financing on long-term care in the United States. Following is the abstract. I’d welcome any comments, suggestions, or examples.
Steve Moses

Abstract: Medicaid is constantly in the news because of controversy over expanding the program under the Affordable Care Act. But the ACA, or “ObamaCare,” primarily addresses acute health care for young mothers, children and working age adults. While these groups comprise 77 percent of Medicaid recipients, they account for only 38 percent of the program’s expenditures. The remaining 23 percent of recipients are aged, blind or disabled and they account for 61 percent of Medicaid expenditures, mostly to pay for their long-term care. Medicaid funds more than half of all long-term care costs nationally and long-term care is the sleeping giant of America’s social problems. Yet, long-term care receives much less media and scholarly attention than health policy in general. Why?

Medicaid and long-term care have been inextricably linked since the program’s inception in 1965. The story of how Medicaid eligibility and funding influenced the markets for long-term care services and financing is fascinating. Step by step, government efforts to make critically needed extended health care available to people otherwise unable to afford it led to a long list of seemingly intractable problems. These include high costs, nursing home bias, access and quality problems, caregiver shortages, consumer indifference to long-term care risk, and the resultant failure of the public to plan, save, invest or insure privately for likely future long-term care costs.

The key to understanding how and why this happened is to comprehend and refute the fallacy of impoverishment. Conventional and scholarly wisdom hold that eligibility for Medicaid’s long-term care benefits requires impoverishment. This is objectively false. Financial eligibility for Medicaid is determined based on income and assets. Anyone with income below the cost of a nursing home, averaging $7,441 per month, hardly low-income, qualifies based on income. Countable assets are limited to $2,000, but most large assets are exempt, including home equity up to $585,000, and with no limit on value, IRA’s paying out periodically, one business including the capital and cash flow, one automobile, prepaid burial plans, home furnishings, personal belongings including heirlooms, and more. Medicaid planning attorneys help affluent clients with even more wealth qualify quickly and easily by means of special trusts, qualified annuities, planned gifting, etc.

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.

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 sterile, welfare-financed nursing facilities.

These conditions have prevailed for Medicaid’s 54 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 and explains why long-term care dominates Medicaid expenditures but remains impervious to reform.

This is the story I will tell with recommendations for reforms that would remove the perverse incentives causing the problems.

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Updated, Monday, July 8, 2019, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-026: LTC NEWS AND COMMENT

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

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:

Seeking Savings, NY Tries to Remove Long-Term SNF Residents from Managed Medicaid
Nursing homes happy to be left out of CON repeal
Bonnie Kraham: What you can and can’t do with a Medicaid Asset Protection Trust
Sales Of Traditional Long-Term Care Insurance Policies Continue To Fall
Medicare Advantage And The Future Of Value-Based Care
Minority groups and sicker patients in long-term care most affected, study finds
Boomers, not millennials, may be the most active generation in the gig economy
Americans Lose Trillions Claiming Social Security at the Wrong Time
Caring for Individuals with Alzheimer’s Disease or Related Dementias (ADRD)
State doubles support for Medicaid-dependent nursing homes
‘Staggering’ 75% of nursing homes almost never meet expected RN staffing levels, study finds

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Updated, Monday, July 1, 2019, 10:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-025: LTC NEWS AND COMMENT

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

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: Avoiding the Medicaid asset spend down for nursing home costs
Private Equity Firms Are Acquiring Long-Term Care Insurance Policies. What Will It Mean For Policyholders?
Medigap changes coming next year for future 65-year-olds
The Boomers Ruined Everything
Older Americans Seek Meaning and New Experiences in Retirement Years
The First 2020 Democratic Primary Debate Will Almost Certainly Skip A Key Healthcare Issue
Americans aren’t financially prepared for retirement, surveys show
The Future Looks Terrible for U.S. Nursing Home Costs
An Ambitious State-Based Plan For Universal Family Care That Falls Just Short On Long-Term Care
Broad class of drug linked to 50% higher risk of dementia in older adults
The Big, Feminist Policy Idea America’s Families Have Been Waiting For
Cancer Survivors May Have Lower Odds for Dementia
Where the Democratic presidential candidates stand on health insurance and long-term care

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Updated, Friday, June 28, 2019, 10:38 AM (Pacific)

Seattle—

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LTC BULLET: WHY TOO LITTLE HOME CARE?

LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views after the ***news.***

*** PULITANO NEWS: LTC Global, Inc. has formed LTC Agency Operations LLC (LTCAO), a new intermediate holding company, with Joseph G. Pulitano. LTC Global and Pulitano have contributed their Long Term Care insurance (LTCi) distribution businesses to LTCAO, including ACSIA Partners, LTC Global Agency and Joseph G. Pulitano Insurance Agency, Inc. d/b/a Advanced Resources Marketing (ARM). The combined businesses make up the largest independent LTCi marketing operation in the industry with over 500 career LTCi specialists. Mr. Pulitano will serve as LTCAO’s Chief Executive Officer, and Henrik Larsen will serve as LTCAO’s Chief Operating Officer.” Read all about it here: “LTC Global and ARM Combine LTCi Distribution Businesses Under Pulitano.” Hearty congratulations on this big news to Center-corporate-member Advanced Resources Marketing and our long-time friends and supporters, Joe Pulitano and Henrik Larsen.

*** LTC CLIPPINGS: Here’s why to subscribe to the Center for Long-Term Care Reform’s LTC Clippings service. Steve Moses reads or scans hundreds of articles, reports, speeches and other sources to pick the dozen or so you really need to see each week. That saves you the wasted time and hassle of sifting through mountains of digital chaff. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. Here are two examples of recent clippings:

6/23/2019, “The Big, Feminist Policy Idea America’s Families Have Been Waiting For,” by Ai-jen Poo and Benjamin W. Veghte, New York Times

Quote: “Our organization will unveil a new social insurance program on Monday called Universal Family Care that could fix this social crisis. It would provide affordable early child care, paid leave, assistance for people with disabilities and elder care for people of all incomes. We need an integrated approach because no one experiences needs in isolation: We might need help right after an injury, or over the course of our lives to help a disabled family member thrive. To pay for this, people would contribute small amounts out of every paycheck, from their first job onward, instead of scrambling during an expensive moment of crisis. And they could sign up for benefits when they first need them. Everyone would contribute and be eligible.”

LTC Comment: What’s that they say about doing the same thing over and over again (like Social Security and Medicare), but expecting a different result (avoiding insolvency)? Oh yeah, this is nuts.

6/24/2019, “Broad class of drug linked to 50% higher risk of dementia in older adults,” by Alicia Lasek, McKnight’s LTC News

Quote: “A class of drug commonly prescribed to treat everything from depression to Parkinson’s disease may raise long-term risk of dementia by as much as 50%, according to researchers at the University of Nottingham. The drugs, anticholinergics, help to relax and contract muscles by blocking messages to the nervous system. They are known in some cases to have short-term side effects including confusion and memory loss, but the effects of long-term use have been unclear, wrote the researchers, led by Carol Coupland, Ph.D.”

LTC Comment: Can’t win for losing. This class of drugs includes common sleep aids like Benadryl and Ambien. ***

LTC BULLET: WHY TOO LITTLE HOME CARE?

LTC Comment: The June 2019 issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and inadequate financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. One of those accessible articles is “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income,” by Richard W. Johnson and Claire Xiaozhi Wang. This article argues that home care is desirable; too few people can afford enough of it; so a government program should pay for more of it. Below, we pull quotes from the article (footnotes omitted, find them in the original) and offer our comments in counterpoise.

Johnson/Wang: “The vast majority of elders who receive home care rely on unpaid family caregivers for help with activities of daily living (such as bathing, dressing, and eating) and instrumental activities of daily living (such as preparing hot meals and shopping for groceries). … Paid home care can relieve stressed family caregivers and allow frail older adults to remain at home longer. … Rising labor costs could soon make home care more expensive. There is a mounting shortage of high-quality workers to provide paid hands-on care to the nation’s rapidly growing older population. … Policy makers, advocates, and researchers have tried unsuccessfully for decades to expand financing mechanisms to make home care more accessible and affordable, often by promoting social or private insurance to cover expenses.” (pps. 994-5)

LTC Comment: Sadly, all true already, and the age wave is only beginning to crest. We have to do something. So what’s the problem? Is it simply that people can’t afford the home care they prefer?

Johnson/Wang: “We simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older. We found that 74 percent could fund at least two years of a moderate amount of paid home care [‘the median duration among recipients’ (p. 999)] if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care. Among older adults with significant disabilities, however, only 57 percent could fund at least two years of moderate paid home care by liquidating all of their assets, and 40 percent could fund at least two years of extensive paid home care.” (Abstract, p. 994)

LTC Comment: Well, that doesn’t sound so bad. Most people can afford a substantial amount of home care. All they have to do is liquidate all of their assets. Hmmm, that doesn’t seem like a very attractive option. I wonder how many people actually do that. This article offers no answer to that question. But stay tuned to our comments. You’ll find more on the subject in our concluding LTC comment.

Johnson/Wang: “People with significant LTSS needs are especially likely to need paid care, and they tend to have fewer financial resources than people in better health do.” (p. 996)

LTC Comment: Who’d have guessed? People who already need long-term care are less likely to be able to afford it than people who don’t need it yet? Of course, that is exactly why getting people’s attention about the risk and cost of long-term care many years ahead of when they need it is so critical.

Johnson/Wang: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.” (p. 1000)

LTC Comment: Great news. Maybe long-term care financing isn’t the crisis we thought it was. But keep reading.

Johnson/Wang: “Our findings have important implications for policy debates about alternative LTSS financing mechanisms.” (p. 1000)

LTC Comment: Do you get the feeling these authors are about to cash in on their findings with policy recommendations?

Johnson/Wang: “Better financing options might enable more people to obtain paid home care and remain at home longer, where most prefer to live, instead of moving into assisted living or entering nursing homes and qualifying for Medicaid after their financial resources run out.” (p. 1000)

LTC Comment: What are these better financing options, pray tell?

Johnson/Wang: “Government programs could be launched that cover LTSS expenses for the entire duration of an enrollee’s LTSS needs.” (p. 1000)

LTC Comment: The Green New Deal, Medicare for All, and now unlimited long-term care financing. If you’re going to dream, why not dream big?

Johnson/Wang: “Because such comprehensive coverage would be expensive, many recent proposals would instead provide an up-front benefit for a limited time or a back-end catastrophic benefit that would not begin until after enrollees had experienced significant LTSS needs or received care for an extended period.”

LTC Comment: Right, we’re very familiar with those proposals to turn more long-term care financing over to the government. We’ve critiqued proposals by the Bipartisan Policy Center, the Long-Term Care Financing Collaborative, Feder/Cohen and many others over the years. Find a list of our articles about those proposals with links here: LTC Bullet: Standing Guard.

Johnson/Wang: “Our findings suggest that a moderate share of the at-risk population would not benefit much from catastrophic insurance that did not provide benefits for the first year or two of a severe LTSS episode, because they would not be able to fund expenses during the waiting period.” (p. 1000)

LTC Comment: Wait, didn’t you just tell us that most people can afford a substantial amount of home care for a couple years? Wouldn’t that take care of the waiting period?

Johnson/Wang: “Those who depleted their financial resources before qualifying for insurance benefits would have to turn to Medicaid, which offers limited home and community-based services to older adults with severe disabilities. However, beneficiaries often face long waiting lists for such services financed by Medicaid, and the income allowances that state Medicaid programs grant to home care beneficiaries are often too low to support community living. Consequently, some people who could no longer afford paid home care on their own might have to enter a nursing home to receive subsidized care.” (p. 1000)

LTC Comment: Well, we certainly wouldn’t want that, but how would giving people even more upfront government home care funding solve the underlying problem of explosive government long-term care expenditures? We’ll unravel this confusion in a “closing LTC comment” below, but first a few words on the source of the Johnson/Wang data.

Johnson/Wang: “Our data came from the Health and Retirement Study (HRS), a nationally representative survey of older adults conducted by the University of Michigan’s Institute for Social Research.” (p. 995)

LTC Comment: Here’s the problem with HRS data as we explained in How to Fix Long-Term Care Financing (find footnotes in the original). “While the HRS and AHEAD surveys provide the most reliable longitudinal data currently available, they are far from foolproof. 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.’ He concluded that the survey data make it ‘difficult to reach consensus among research studies’ because ‘each author must arbitrarily decide whether to exclude, censor, or impute particular observations.’ Other researchers have noted similar limitations, explaining that ‘information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility.’ Given these facts, these surveys provide a dubious foundation on which to generalize about long-term care financing policy.

“Furthermore, 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.” (pps. 16-17)

Closing LTC Comment: Here’s what I think Johnson/Wang are saying in this article. The long-term care financing problem is not as serious as we thought it was. Most people can afford the home care they prefer using their income and, if necessary, liquidating all their assets. So we don’t need a big back end, catastrophic public or private insurance program or product. All we need is a little more help from the government on the front end for the minority of people who can’t manage the cost of home care on their own. Then everyone can ride out old age, getting the help they need at home, and staying off Medicaid and out of a nursing home for as long as possible.

Here’s what’s wrong with that wishful thinking. In reality, most people do not and will not liquidate all their assets in order to close the home care gap by purchasing services privately. They have every perverse incentive in public policy not to do so. What these and most other analysts miss is the ease with which people can shelter or divest income and assets to qualify for Medicaid. You will rarely find anything in their research or reporting about the widespread practice of Medicaid planning, artificial self-impoverishment with the help of a lawyer or CPA to qualify for public assistance. But “millionaires on Medicaid” aren’t the big problem. Rather, the nuances of Medicaid LTC eligibility are the culprit.

These authors do understand the letter of the law on Medicaid long-term care eligibility. Richard Johnson has done yeoman’s work on that topic. See “The Adequacy of Income Allowances for Medicaid Home and Community-Based Services,” May 2017. But the letter of the law on Medicaid eligibility makes it sound like it is hard to obtain. It is not. The problem is that Johnson, Wang and others of their ilk do not understand how Medicaid long-term care eligibility works in practice. In the real world, Medicaid eligibility workers (not all but most) bend over backwards to help people manipulate their income and assets to qualify. Books, articles, and online advice abound about ways to convert countable assets into exempt resources, the single most common planning technique. Bottom line, income below the cost of a nursing home, several thousands of dollars per month, does not disqualify. Virtually unlimited assets are exempt. Anything still disqualifying is easily divested or sheltered with or without the help of a Medicaid planner. In the real world, people drift easily onto Medicaid, especially more affluent people who have the benefit of professional financial advice.

The Johnson/Wang proposal to supply more government home care assistance so that more people can afford home care addresses a symptom, not the cause of the long-term care financing crisis. The cause is that too much government financing of nursing home care, and increasingly of home care and assisted living, have desensitized the public to long-term care risk and costs. It has caused institutional bias, impeded the private market for home care, and crowded out huge potential sources of private financing, such as home equity conversion and private insurance. If you want to put out a fire (skyrocketing government LTC costs), don’t douse it with gasoline (more of the same.)

Final thought: the good news in this paper--that most people can afford a lot of home care and others only need some help closing the gap--is further evidence for the point we made in LTC Bullet: Middle Market Mayhem, June 7, 2019. To wit, as little as $15,000 of annual private long-term care insurance coverage could close the middle-market senior housing gap for many choosing to remain in their chosen housing when the need for long-term care occurs.

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Updated, Monday, June 24, 2019, 10:38 AM (Pacific)

Seattle—

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LTC E-ALERT #19-024: LTC NEWS AND COMMENT

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

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

· Medicaid estate recovery program (MERP)

· When the Long-Term Care Insurer Refuses to Pay

· On Average, Retirees Are More Financially Secure Than Ever. Unfortunately, Most Of Us Are Not Average

· Value-based care focus could erode regulatory safeguards, critics argue

· Nursing home costs significantly outpace inflation

· Private Medicare Advantage Could Hit 70% Market Share

· Many U.S. retirees outlive their savings by more than a decade, report says

· Deal Combines Long-Term Care Insurance Distributor

· Excessive Napping Linked to Cognitive Decline in Older Men

· Wall Street takes on long-term care payouts as insurers balk at costs

· Providers Need to Get into the Real Estate Game

· Will My Mother's Jewelry Count as an Asset for Medicaid Eligibility Purposes?

· What if We Don't Shore Up Social Security?

· Investors see demand for SNF properties steady or growing this year

· Assisted living gaining in investor interest: survey

· Fast Food Linked To Dementia, ‘Irreversible’ Brain Damage

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Updated, Monday, June 17, 2019, 10:52 AM (Pacific)

Seattle—

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LTC E-ALERT #19-023: LTC NEWS AND COMMENT

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

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:

LTC Global and ARM Combine LTCi Distribution Businesses Under Pulitano
Walk this way: Wearable artificial ‘muscles’ for functional disabilities are in the works
Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings from a 50-State Survey
Trump's new rule will give businesses and workers better health care options
Certain Factors Tied to Suicide for Older Adults in Long-Term Care
A 21st Century Job Description For Family Caregiving
Social Security Is Staring at Its First Real Shortfall in Decades
Uber Has Changed the World. Now it's Changing Aging, Too
New Resource on Parkinson's Provides a Comprehensive Look at the Human and Economic Burden of the Disease
Caring for a Family Member Can Take a Toll on One’s Career
Early-Onset AD Linked With LDL Cholesterol
Brookdale Senior Living poll: 36% open to a move to senior living
Did CalPERS mislead policyholders on long-term care insurance? Trial begins on a $1.2 billion lawsuit
Hawaii, Mississippi bookend new list of healthiest states for older adults
Community Care For High-Need Patients

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Updated, Friday, June 14, 2019, 10:29 AM (Pacific)

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LTC BULLET: LTCI POOL OF MONEY CALCULATOR

LTC Comment: The LTCi Pool of Money Calculator, designed by Ralph Leisle, is an important tool for advisers to help prospects and clients understand the risk and cost of long-term care. The latest after our ***news.***

*** LTC CLIPPINGS bring you one or two daily updates on 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 Damon at 206-283-7036 or damon@centerltc.com to subscribe or learn more. Two sample clippings from this week:

6/13/2019, “New Resource on Parkinson's Provides a Comprehensive Look at the Human and Economic Burden of the Disease,” Alliance for Aging Research

Quote: “The latest in the Silver Book® series, this factsheet features new data from a study commissioned by The Michael J. Fox Foundation and conducted by the Lewin Group. The study provides the most comprehensive assessment of the economic burden of Parkinson’s to date, nearly doubling previous estimates and for the first time, includes the various ways Parkinson’s affects a person’s finances and their ability to participate in the labor market. … You can find these, as well as additional statistics and sources, online at www.silverbook.org. This data will join the more than 3,000 facts and figures from more than 800 reliable references on a number of chronic diseases that disproportionately impact older Americans.”

LTC Comment: Excellent new source of data and analysis on Parkinson’s Disease.

6/2019, “Community Care For High-Need Patients,” by Alan R. Weil, Health Affairs

Quote: “Almost everyone wants to live in their own home and community as they age. Yet for many, later age brings frailty and the accumulation of chronic conditions. This month’s issue of Health Affairs examines how we can best provide care in the community for people with advanced illness.”

LTC Comment: The June issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. Check them out, but be skeptical. As usual, Health Affairs’ predilection is to lament the LTC service delivery and financing systems’ shortcomings without analyzing their cause and to recommend more government spending to address them, ironically doubling down on the unexamined cause of the shortcomings itself. We’ll make this case in detail in a forthcoming LTC Bullet.

LTC BULLET: LTCI POOL OF MONEY CALCULATOR

LTC Comment: We received the following message from an old friend and colleague, Ralph Leisle, regarding an important product he developed and marketed. The good news is the LTCi Pool of Money Calculator is still/again available, newly under the auspices of LTC insurance expert Susan Blais.

We had this to say about software Ralph designed in an LTC Bullet 19 years ago: “By the way, when it comes to calculating the true risk and cost of long-term care, don't depend on the kind of ‘back-of-the-envelope’ analysis offered in the WSJ article. Rather, consult the extraordinary software developed by Ralph Leisle that we covered in ‘LTC Bullet: Handy New Tool,’ November 17, 2000, http://www.centerltc.com/bullets/archives2000/handy_tool.htm.”

We’re happy to honor Mr. Leisle’s retirement announcement by encouraging readers to review and consider this product of his career. Here’s the latest:

To: Former LTCi Pool of Money (POM) Subscribers
From: Ralph Leisle, Retired President, LTCi Decision Systems, Inc.

Thank you for your past use or support of the LTCia Pool of Money (POM) software program!

As a former subscriber you know through experience that the LTC Pool of Money Calculator can be a great help in enhancing sales of long-term care insurance (“LTCi”). It does this by simply demonstrating the true value of LTCI: the money the client will have available when they’re most likely to need care. It also places the premium in relationship to the benefits available, both now and in the future, and shows the client the wisdom of purchasing insurance for this risk as opposed to investing their way out of the problem using their own savings.

As the proud creator of this program, I happily supported it for 15 years, and recently decided I’d like to retire. Susan Blais, a long-time expert in the long-term care field, took over ownership of the calculator as she didn’t want to see it retired as well. She has set the same calculator program into a simple website with enhancements like tutorial videos, and has reduced the monthly subscription from $14.95 to $9.95 per month.

One of the tutorials, on the Demos page, shows how useful the calculator is when helping existing clients determine the best renewal option when they get a premium increase at renewal. This use of the calculator alone is worth the price of admission, as it makes evaluating renewal options simple, and allows you to request additional options from the carrier to create just the right combo of benefits and premiums for your existing clients’ protection.

To check out the new website and the demos, go to this page: https://www.ltcpomcalculator.com/.

Thank you again for your support throughout the years, and I trust you will continue to help your clients obtain the essential protection offered by long-term care insurance. The risk isn’t going away, and the costs of care are not going down!

All my best,

Ralph Leisle

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Updated, Monday, June 10, 2019, 10:25 AM (Pacific)

Seattle—

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LTC E-ALERT #19-022: LTC NEWS AND COMMENT

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

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 make an insurance company pay what it owes your mom [Opinion]
Japan scraps ambitious plan to decrease dementia
Views: A retirement readiness benefit that addresses the financial challenges of aging
The use and misuse of income data and extreme poverty in the United States
A Dozen Facts About Medicare Advantage in 2019
It’s time to address California’s long term care crisis
Questions to Ask When You're Diagnosed With Dementia
10 Things to Know About Medicare Part D Coverage and Costs in 2019
Deaths from falls almost tripled from 2000 to 2016
Rising demand for long-term home care signals looming crisis
Can Medicaid handle another recession?
Brushing and flossing teeth may be key to reducing Alzheimer’s risk
House committee eyes expanding Medigap long-term care benefit
Study: Immigrants account for 25.7% of workforce in long-term care sector that includes senior living
How to Pick Your Retirement Home When There Are More Choices Than Ever

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Updated, Friday, June 7, 2019, 11:20 AM (Pacific)

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LTC BULLET: MIDDLE MARKET MAYHEM

LTC Comment: LTC analysts, advocates, and providers are wringing their hands about the middle market’s future inability to afford seniors living. We mitigate the problem and re-offer a 25-year-old solution after the ***news.***

*** MOVIE NEWS: On March 13, 2019, My Million Dollar Mom writer producer Ross Schriftman and Kevin Jameson from the Dementia Society of America were invited to the State Capital where Rep. Thomas Murt declared May as Dementia Awareness Month in Pennsylvania. Here’s a clip of the15-minute press conference: https://www.mymilliondollarmom.com/news-051319.cfm. ***

LTC BULLET: MIDDLE MARKET MAYHEM

LTC Comment: All of a sudden, everyone is worried about the middle market for seniors housing.

An article in the May print issue of Health Affairs reported that in just 10 years we’ll have 14.4 million middle-income seniors, three in five with mobility limitations and one in five with high health care and functional needs, over half of whom will have insufficient financial resources to pay for seniors housing.

This finding set off an onslaught of national media coverage, lamenting the problem and urging action, usually more government spending. We critiqued the Health Affairs piece in LTC Bullet: Remember the Middle, pointing out that its proposed solution, i.e. more government spending, would only make the problem worse.

The National Investment Center (NIC) took a deeper dive into the issue with “The Forgotten Middle: Middle Market Seniors Housing Study.” They found 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.

My, that sounds much more manageable than the scary numbers purveyed by alarmists seeking more government largesse. Still, lowering the cost of seniors housing by 25 percent is probably unrealistic. But how about putting an extra $15,000 per year in the pockets of seniors housing customers? That would achieve the same objective.

How can we do that? Well, an annual long-term care insurance benefit of $15,000 would only cost a fraction of the premium required for the full coverage that consumers find so daunting. Although such limited coverage wouldn’t help much with the cost of a nursing home, it would be a huge benefit for the middle-income seniors who need care, helping them remain at home or in assisted living and off Medicaid nursing home rolls for longer.

Unfortunately, current laws and regulations place a minimum on long-term care insurance coverage of $18,000. Companies are not allowed to sell less. That problem is easily solvable. The goal should be to make inexpensive LTC insurance coverage available that is sufficient, when added to consumers’ other resources, to enable them to afford more seniors housing and delay their dependency on Medicaid for nursing home care.

But given the public’s reluctance to purchase long-term care insurance, would people buy even this more affordable protection? Now we’re right back to the same old questions that have perplexed analysts for decades: why don’t people who can afford long-term care insurance buy it and what could be done to persuade them to do so?

Nearly a quarter century ago, I wrote a paper published by the American Seniors Housing Association titled “Long-Term Care Public Policy & the Future of Seniors Housing.” Although currently out of print, it proposed “a strategy for the seniors housing industry to serve beneficially and profitably the enormous lower-middle and middle-class market segment currently lost to Medicaid nursing homes.” Here’s the conclusion of that paper, which I believe remains as apt an analysis and solution today as it was then for the same perennial problem.

Excerpt from “Long-Term Care Public Policy & the Future of Seniors Housing,” by Stephen A. Moses

VI. Conclusions and Public Policy Recommendations

The 1970's should have been the golden age of seniors housing in America. The gerontological wedge pushed into American demographics during that decade could have opened an era of unprecedented entrepreneurial problem solving. By now [1995], we would have a market-driven continuum of care seamlessly covering everything from chore services to assisted living to sub-acute care. We would also have an infrastructure of long-term care insurance and home equity conversion to finance it. Public welfare might still have a role to play in long-term care, but that role would not be the tragedy of today's perverse incentives and unsatisfactory outcomes.

Instead, with every benevolent intent, Medicaid co-opted long-term care by the late 1960's. It impeded the private market for low-cost seniors services and housing by providing free and subsidized nursing home care. It stifled competition, thereby impairing access and quality by artificially constricting bed supply and reimbursement rates. It drove the middle-income consumer out of the private long-term care marketplace by creating a ponderous, publicly-financed monopsony.

In time, Medicaid overwhelmed the nursing home industry with regulations intended to correct the very problems that the program itself engendered. Nevertheless, in the absence of affordable alternatives and the means to pay for them, middle class Americans in the hundreds of thousands are still being herded into Medicaid-financed nursing homes by well-intentioned public administrators and Medicaid estate planning attorneys.

What is the solution? The general profile of a solution is easy to discern. We need a private and public long-term care financing system that (1) educates the public about the enormous financial risk of long-term care, (2) provides incentives for people to plan early and insure fully, (3) offers a broad range of highly affordable seniors housing alternatives, and (4) supports a fiscally viable social safety net for people who cannot pay for their own care. The far tougher issue is how we get from here (the current, failed, publicly financed system) to there (a new, rational, market-based system).

One way is to eliminate all public financing for long-term care. This would immediately compel all Americans to take the risk of long-term care seriously. Consumers would rush to seniors housing, home equity conversion, and long-term care insurance like passengers on a sinking ship to the lifeboats. This approach, however, is anathema to most Americans and politically infeasible.

There is a more benevolent way. We could eliminate the perverse incentives in the current system that discourage long-term care planning and leave seniors dependent on Medicaid by default. This strategy would insure that the truly needy still have access to care while giving the middle class (and their heirs) a big incentive to avoid public assistance.

One such approach would be to embrace and vigorously enforce the authorities in OBRA '93 that empower state Medicaid programs to close eligibility loopholes and increase estate recoveries. The problem with building on OBRA '93, however, is that Medicaid estate planners have already found ways around most of its provisions. A better plan is to start fresh with a comprehensive program and save enhancements on OBRA '93 as a fall-back position if a stronger approach fails.

Political circumstances and events are gelling this year [1995] in such a way as to make major changes in the long-term care financing system highly likely. Compelled by fiscal necessity, Congress is moving almost inescapably toward radical reform of Medicaid. Whether long-term care remains a federal responsibility or is sent to the states in the form of a block grant, it will probably lose its entitlement status soon and much of its federal financing will disappear over time. [Ironically, we’re on this brink again in 2019.]

The best strategy for advocates of a market-based, long-term care solution today is to show public policy makers how to maximize Medicaid savings while minimizing political sensitivity. The following six-part proposal, based on numerous studies conducted over the past 12 years,¹ would save at least 20 percent of Medicaid nursing home costs (more than $5 billion per year nationally) while improving access to and quality of long-term care. Model legislation to implement this plan is already being developed for the American Legislative Exchange Council.²

First, retain a public long-term care program with eligibility criteria at least as generous as Medicaid's. This strategy is necessary to deflect political attacks and guarantee protection for seniors who are already too old, too sick, or too impoverished to obtain care in any other way.

Second, eliminate asset divestiture altogether as a means to qualify for public long-term care assistance. Seniors who struggled through the Depression, fought WWII, and scrimped and saved to put aside a nest egg should not be pressured by public policy (and greedy heirs) to give away their life savings to qualify for welfare.

Third, require security as a condition of eligibility for anyone who receives public long-term care benefits while retaining exempt assets. No other financial institution in America will loan someone $200,000 or $300,000 (the cost of a long nursing home stay) without security. The government can no longer afford to do so either.

Fourth, implement and enforce a strong estate recovery program to assure that people who receive publicly financed long-term care will have to pay it back either out of their own estates or from the estates of their last surviving, exempt, dependent relatives. This will restore the dignity of middle-class seniors who are currently being trapped on public assistance. It is not welfare if you pay it back.

Fifth, encourage the public to avoid the risk of estate recoveries by planning ahead to stay off the public long-term care program. Seniors are the richest cohort in American society. With the proper incentives, far more of them can afford private long-term care insurance and seniors housing than are purchasing these products now.

Sixth, channel ten percent of the proceeds from estate recoveries into a program to educate the public on (1) the risks and costs of long-term care, (2) the availability of insurance and seniors housing options, (3) the disadvantages of public financing such as strict eligibility constraints and mandatory estate recovery, and (4) the importance of planning many years before long-term care is needed.

Implementing this program will change consumer behavior radically. To avoid estate recovery and other problems of public financing, consumers will be far more likely to explore private long-term care options first. They will discover, for example, that the average cost of congregate seniors housing and assisted living is only $1,300 and $1,900 respectively [in 1995]. This will no longer seem expensive when they compare it to paying for less desirable, publicly-financed nursing home care out of their estates.

Instead of encouraging their parents to visit Medicaid estate planners, heirs will have an incentive to help their parents purchase private long-term care insurance and pay for seniors housing. Their choice is to pay a little bit now or a lot more later out of their inheritances. Today's seniors are about to bequeath $10.4 trillion to the baby boom generation.³ [Today the big bequest is about to pass from baby boomers to their Gen X and Millennial heirs.] The old folks have the assets and their adult children have the cash flow. With the right public policy incentives in place, these two generations will work together to protect their legacies.

Finally, with appropriate incentives, seniors will tap their biggest financial resource to pay for long-term care. Seventy-seven percent of seniors own their homes. Of these, 83 percent own them free and clear. Today, fully $1.5 trillion dollars lies fallow in the elderly's home equity.⁴ With the value of the house at risk of estate recovery, seniors and their heirs will finally seek out home equity conversion to generate the cash flow to pay for seniors housing, purchase long-term care insurance, and avoid welfare dependency.

Adoption and aggressive enforcement of these public policy initiatives will

save the taxpayers billions of dollars every year,
protect public long-term care financing from its impending collapse,
unleash the seniors housing, home equity conversion, and long-term care insurance industries to achieve their true potential,
empower more members of the proud WWII generation to avoid the indignity of welfare, and
improve access to quality long-term care for rich and poor Americans alike.

All that is required is the vision to see the way, the courage to embrace the change, and the will to stay the course.

¹ [Most of these references can still be found at www.centerltc.com/reports] Chronological list of research studies and publications by Stephen A. Moses on which this paper is based: The Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois, LTC, Incorporated, Seattle, Washington, 1995; The Perils of Medicaid: A New Perspective on Public and Private Long-Term Care Financing, LTC, Incorporated, Kirkland, Washington, 1995; The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term Care, LTC, Incorporated, Seattle, Washington, 1994; Long-Term Care in Montana: A Blueprint for Cost-Effective Reform, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Recoveries in Maine: Planning to Increase Non-Tax Revenue and Program Fairness, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Planning: Analysis of GAO's Massachusetts Report and Senate/House Conference Language, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Planning in Kentucky: How to Identify, Measure and Eliminate Legal Excesses, LTC, Incorporated, Kirkland, Washington, 1993; "Planning for Long-Term Care Without Public Assistance," Journal of Accountancy, Vol. 175, No. 2, February 1993, pps. 40-44; "Health and Long-Term Care Insurance," chapter in Louis A. Mezzullo and Mark Woolpert, editors, Advising the Elderly Client, Clark Boardman Callaghan, New York, 1992; A Minnesota Prospectus for the Senior Financial Security Program LTC, Incorporated, Kirkland, Washington, 1992; The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin, LTC, Incorporated, Kirkland, Washington, 1992; Medicaid Loopholes: A Statutory Analysis with Recommendations, LTC, Incorporated, Kirkland, Washington, 1991; The Myth of Medicaid Spend-Down, LTC, Incorporated, Kirkland, Washington, 1991; "The Fallacy of Impoverishment," The Gerontologist, Vol. 30, No. 1, February 1990, pps. 21-25; Medicaid Estate Recoveries in Massachusetts: How to Increase Non-Tax Revenue and Program Fairness, LTC, Incorporated, Kirkland, Washington, 1990; Transfer of Assets in the Medicaid Program: A Case Study in Washington State, Office of Inspector General, OAI-09-88-01340, Washington, DC, 1989; Medicaid Estate Recoveries: A Management Advisory Report, Office of Inspector General, Office of Analysis and Inspections, OAI-09-89-89190, Washington, DC, December 1988; Medicaid Estate Recoveries, Office of Inspector General, Office of Analysis and Inspections, OAI-09-86-00078, San Francisco, California, June 1988.

² Stephen A. Moses, Long-Term Care Financing Under a Medicaid Block Grant: Notes Toward a Model State Statute, presented to The American Legislative Exchange Council on August 1, 1995 by LTC, Incorporated, Seattle, Washington.

³ "Boomers will inherit some $10.4 trillion from 1990 to 2040--for a mean inheritance of some $90,000, according to Robert B. Avery and Michael S. Rendall, professors of consumer economics and housing at Cornell University." (Business Week, 9/12/94, p. 64)

⁴ American Housing Survey for the United States in 1991, Bureau of the Census.

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Updated, Monday, June 3, 2019, 10:07 AM (Pacific)

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LTC E-ALERT #19-021: LTC NEWS AND COMMENT

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

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:

Skilled nursing chain’s collapse leaves HUD holding the bag on $146M
2018 Profile of Older Americans
Some Parental and Spousal Caregivers Face Financial Risks
12 Reasons LTC Planning Matters to Women Year-Round
TCI Issuer Gets New President
Alzheimer’s drugs cost seven times more than cancer drugs to develop
Most older adults feel at least 20 years younger than they are
Skilled Nursing Facility Discharges Spike When Medicare Copayments Kick In
Retirement saving delay is biggest financial regret
ADL, cognitive needs higher for home health recipients in assisted living than in other settings
TONI KING: Is Medicaid a good long-term care option?
Palliative Care Beyond Hospice Is Spreading to More States
60+ population will outnumber population under 20 in 18 states next year
The Trump Administration Is Looking At Tax Breaks And Other Ways To Boost Private Long-Term Care Insurance
Billing Peter to Pay Paul

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Updated, Tuesday, May 28, 2019, 10:32 AM (Pacific)

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LTC E-ALERT #19-020: LTC NEWS AND COMMENT

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

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:

May a Medicaid Applicant Freely Transfer Assets to a Disabled Child of Any Age?
Washington is 1st state to allow composting of human bodies
Hip Fractures Are Deadly For Seniors
Adult foster care homes need more oversight, HHS OIG says
5 insights from NIC’s Middle Market Investor Summit
What's new in the quest for Alzheimer's drugs
5.9 million more could afford senior living if annual costs were cut by $15,000
Advisors create a game plan to prepare clients for this retirement expense
Older Americans risking their retirement to help young homebuyers
Elder care homes rake in profits as workers earn a pittance
LTC insurer offering co-pays to blunt soaring premium increases
Social Security just ran a $9 trillion deficit, and nobody noticed

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Updated, Friday, May 23, 2019, 9:44 AM (Pacific)

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LTC BULLET: THE DEMENTIA OF POLITICAL ECONOMY

LTC Comment: If you think the political economy of dementia is a problem, consider the dementia of political economy, after the ***news.***

5/22/2019, “5 insights from NIC’s Middle Market Investor Summit,” by Lois A. Bowers, McKnight’s Senior Living

Quote: “Several panelists shared insights about current and potential efforts to meet middle-income older adults’ senior housing and care needs on Tuesday at the National Investment Center for Seniors Housing & Care’s Middle Market Investor Summit in New York City. The event came as NIC released an analysis showing that reducing the annual cost of senior living by $10,000 could enable 2.3 million more older Americans to afford it, and reducing it by an additional $5,000 on top of that would enable 3.6 million more people to afford it. Here are a few insights that caught our attention.”

LTC Comment: Click through to see their insights. But here’s a key insight from Center member and LTCI producer Romeo Raabe: “This shows that many people only need a small (affordable) LTCi policy to be able to pay for their care!”

5/6/2019, “5 unexpected trends in today’s long-term care,” by Karen Christopher

Quote: “The words ‘nursing home’ often bring to mind thoughts of colorless, sterile and depressing environments. This stereotype couldn’t be further from the truth — especially when you consider the emergence of a new model of long-term care designed to maximize independence, dignity and personal choice among residents. How, specifically, are senior living communities raising the bar when it comes to positive aging?”

LTC Comment: Wouldn’t prospects and clients be more likely to buy or retain LTCI knowing this information? ***

LTC BULLET: THE DEMENTIA OF POLITICAL ECONOMY

LTC Comment: Political economy “is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth.”

Much could be and has been written about the political economy of dementia. A rising wave of aging Americans will succumb to cognitive decline raising difficult questions about their long-term care and how to pay for it. But that’s not my topic today.

Rather, I’m thinking about the dementia of political economy. It seems to me we can discern symptoms of dementia in political economy itself. Especially as applies to long-term care financing. Common symptoms of various forms of dementia include memory loss, delusions, agitation, indifference, impulsivity, disinhibition, and severe depression. So, consider these observations:

Memory loss: How else to explain widespread failure to remember what caused the Great Depression, the Great Recession, currency collapses in Weimar Germany, Argentina and Venezuela, and just about all remaining economic misery in the world after centuries of industrial progress? Want something you can’t afford? Charge it. Or if you’re a country, tax, borrow, or print more money. Damn the consequences until they overwhelm you.
LTC Corollary: Grandpa and Grandma ended up in welfare-financed nursing homes because Medicaid is the dominant payer for most expensive long-term care? Forget that. Why worry?

Delusions: How else to describe the attitude of people, especially politicians, that you can have something for nothing, the proverbial free lunch? Health care and housing are rights that others must give you? That works until the professionals you’ve enslaved rebel. Or paraphrasing Margaret Thatcher: “Socialism works until you run out of other people’s money.”
LTC Corollary: More and more old people, including our own parents and grandparents need expensive long-term care? So what? It won’t happen to me. I’d never go to a nursing home. Shoot myself first. Anyhow, somebody must pay. You don’t