|
ADS
Place your advertisement
here.
Email
info@centerltc.com
or call Damon at 206-283-7036 for advertising rates.
American Independent Marketing
LTCA enables
GAs to receive top compensation and vesting directly from each carrier
while supplying endorsed leads and support in a revolutionary new "hybrid"
model:
Click
to see if you qualify for this limited opportunity.
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.JPG)
#############################
Updated, Monday, April 21, 2014,
11:08 AM (Pacific)
Seattle—
#############################
LTC COST SURVEY DIFFERENCES AND
LTC NEWS AND COMMENT
LTC Comment: We recently observed and reported a significant discrepancy
between the cost of a private nursing home as reported by
Genworth,
here and
New York Life,
here. Genworth gave the figure
$240 per day which aggregates to
$87,600 per year. New York Life reported $95,706 or $262 per day. We
asked the people behind both numbers “Who’s right?”
According to Eileen Tell of
Univita, which conducted New York Life’s survey, and Bob Bua of
CareScout, which conducted the Genworth survey, the $22 difference in
the costs reported for a day of private nursing home care derives from the
use of means (averages) or medians, respectively, to summarize the data.
The mean or average used by Univita (NY Life) gives full weight to
“outliers,” i.e., nursing homes with unusually high charges. The
median, which is the middle charge in a range, smoothes out the impact of
outliers giving CareScout (Genworth) the somewhat lower number.
However you cut the data, nursing home care is a very expensive
proposition.
#############################
4/18/2014, “When it comes to fixing long-term care, it's time to
start thinking outside the tank [link],”
by John O'Connor, McKnight's LTC News
Quote: “With all
due respect to the various experts who have been and continue to be put on
these esteemed panels, the problem with long-term care is not that hard to
describe. It essentially boils down to two shortcomings: adequate service
and payment options.”
LTC Comment: This
opinion column by the editor of McKnight’s LTC News compares the
Pepper Commission, last year’s LTC Commission and other “think tank”
initiatives to the movie “Groundhog Day.” Right on! The one thing all
those failed initiatives—and the newest one from the Bipartisan Policy
Center that we analyzed in
last week’s LTC Bullet—have in common is that they never ask
the most critical question: what caused the problems with long-term care
in the first place? We answered that question in Friday’s “LTC Bullet:
Inspect This Plane.” Read it
here.
#############################
4/17/2014, “Study:
Cuts to Medicare Advantage Top $1,500 Per Senior,” by Sam Baker
Quote: “The federal Medicare agency recently backed off a proposal
to make additional cuts to Medicare Advantage—the second year in a row it
has proposed and then abandoned such reductions. But the AAF
analysis says the reductions mandated in the Affordable Care Act will
still affect benefits for most seniors who use the program.”
LTC Comment: Waiting for the next shoe to drop about Medicare
Advantage.
#############################
4/16/2014, “Taking cues from 'Golden Girls,' more single baby
boomers are building a future together [link],”
PBS News Hour
Quote: "The '80s sitcom 'The Golden Girls' popularized the idea
that four older women could get along well as housemates. Now, with one in
every three baby boomers single and approaching retirement, many women are
turning to communal living to ease the burdens of aging. Special
correspondent Spencer Michels reports for our Taking Care series."
LTC Comment: This 6-minute PBS video raises some interesting
questions about the future of long-term care and financing.
#############################
4/16/2014, “Long
Term Care Insurance Rate Increase Risks Greatly Diminished,” by Jesse
Slome, Digital Journal (press release)
Quote: "An individual purchasing long term care insurance
protection today faces a significantly lower risk of future premium rate
increases says a leading expert."
LTC Comment: I agree with Jesse. In fact, I'd go a little further
to say LTCI premiums may decline in coming years. If the Fed stops
pushing interest rates to zero and if Medicaid runs out of money to pay
for middle class and affluent people's LTC after they need care, private
LTC insurance may become so profitable--having already raised rates and
tightened underwriting--that market competition will ultimately force
premiums down even as profits increase.
#############################
4/15/2014, “The
cost of long-term care in your state,” by Anne Tergesen, WSJ
MarketPlace
Quote: “Whether you’re in market for long-term-care insurance or
not, you owe it to yourself to take a look at some new data that documents
the cost of long-term-care—both at home and in assisted living facilities
and nursing homes.”
LTC Comment: We’ve seen a flurry of articles by Anne Tergesen in
the Wall Street Journal for the past few days. This one announces
the publication of Genworth’s latest cost of care survey which we
circulated two weeks ago.
#############################
4/1/2014, “Ken
Dychtwald's Four Observations on the Future of Aging,” by Ken
Dychtwald, YouTube
Quote: “Fascinated by the dance of biology, demography, and
economy;
watch Ken Dychtwald, Ph.D. present four observations on the Future of
Aging at the conclusion of the March 12th General
Session, sponsored by Bank
of America Merrill Lynch, of the 2014
American Society on Aging Annual Conference.”
LTC Comment: My budding interest in aging and long-term care was
enhanced by reading Ken Dychtwald’s 1988 best seller “Age Wave.” I’ve
followed his career ever since with interest. I recommend this 8-minute
YouTube clip for your inspiration and motivation this morning.
Here’s what Ken said about the Center for Long-Term Care Reform some years
ago:
“[Y]ou and the team have been insightful, bold, astute, and ‘early!’ You
have established the foundation from which the future of LTC and eldercare
will emerge.”
#############################
4//2014, “How
much income will you need in retirement?,” by Robert Powell, USA
Today
Quote: "Be mindful of long-term care expenses. According to
Rohwedder, long-term care expenses can be sizable, which is of particular
concern for couples if one spouse needs nursing home care while the other
one is still alive and living in the community and not in need of nursing
home care. In some cases, long-term care insurance might be an appropriate
way to mitigate the risk of long-term care needs. But a word to the wise
is in order: 'Long-term care insurance policies often are designed in ways
that leave considerable risk uninsured and therefore may not be
appropriate for many,' says Rohwedder."
LTC Comment: LTCI may not be appropriate for some, but inability
to cover all of the risk is not one of the reasons why.
#############################
4/14/2014, “Video:
Tips on Looking for Long-Term-Care Insurance,” Anne Tergesen, Wall
Street Journal
Quote: “Should you purchase long-term-care insurance? Building off
her recent article on the subject, The Wall Street Journal’s Anne
Tergesen discusses many sides of this complex question with a panel of
experts.”
LTC Comment: This link takes you to a 31-minute video interview of
three long-term care insurance experts including Jesse Slome of
AALTCI, agent Michael Kitces, and Urban Institute analyst Howard
Gleckman. On the plus side, it’s great to see this level of detail about
private LTC insurance reaching the readership of the Wall Street
Journal, which is comprised largely of people who should, could and
would buy the coverage if they were in possession of all the facts. On
the down side, the impact of Medicaid in desensitizing the public to LTC
risk and crowding out private financing is critical, but not covered.
#############################
4/14/2014, “Skilled nursing edges toward 90% occupancy, absorption
rate makes first gain in nearly a decade, NIC data shows [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
“Nursing care occupancy reached 88.4% in the first quarter of this year,
based on numbers gathered by NIC's MAP® Data and Analysis Service. This
was an increase of 0.4 percentage points from the last quarter of 2013.
The increase is in line NIC's forecast models, which predicted occupancy
in seniors housing to exceed 90% this year, NIC President
Robert Kramer told McKnight's
recently. . . .
First quarter private pay rents for the nursing sector were up 2.8% on a
year-over-year basis.”
LTC Comment:
A spike in private-pay nursing home care augurs poorly for people without
LTCI.
#############################
4/13/2014, “Making
room for multiple generations,” by Elizabeth Gehrman, Boston Globe
Quote: “In part because of the recession, job losses, and
foreclosures, the number of US households containing three or more
generations in the United States is surging back after decades of decline
since World War II. In 2000, there were 3.9 million multigenerational
households, according to the Census Bureau. In 2010, that figure shot up
to 5.1 million, roughly a
30 percent increase.”
LTC Comment: Disability is one of the five leading causes of this
trend.
#############################
4/13/2014, “Mistakes to Avoid When Shopping for Long-Term-Care
Insurance: How to Pick the Best the Policy for Your Needs and What to
Avoid [link],”
by Anne Tergesen, Wall Street Journal
Quote: “Here are six mistakes consumers commonly make when
purchasing long-term-care insurance, and advice on how to avoid these
pitfalls.”
LTC Comment: This is a relatively long and fairly good
article. As it’s in the Wall Street Journal, many across the
country will see it.
#############################
Updated, Friday, April 18, 2014,
10:53 AM (Pacific)
Seattle—
#############################
LTC BULLET: INSPECT THIS PLANE
LTC Comment: There are good and bad ideas in the LTC Think Tank’s
remarkable “Land This Plane” report. Which are which? We’ll opine after
the ***news.***
*** GOOD LTCI NEWS. Center for LTC Reform Premium Member and clipping
service subscriber Melissa “Missy” Vanderwaal of LTC Benefits in
Indianapolis shared the following client letter that she received April 15
(slightly edited and names replaced with initials).
Dear Missy,
In the Fall of 1999 you wrote a LTC
policy for a 77 year old woman, my mother. My sister and I decided to pay
the premium for her by splitting the premium and each paying half. Mother
could not afford the premium but we looked into the future and decided LTC
insurance was the best option for her and us. In the Spring of 2011 mom
was diagnosed with dementia (which she denies to this day) and she was
placed in Assisted Living. She remains in Assisted Living but we are
beginning to consider the next step, Memory Care.
But my point is this: the LTC insurance
you helped us choose has been a blessing. We did not have to sell her
home to afford her care. The independence and stimulation she receives in
Assisted Living is better than the fewer choices she would have had
without LTC insurance. Even though she has been using her benefits for 3
years, she still has a large amount of value left in her policy which
eases our concern for her future care. (You helped us choose an Indiana
Partnership plan).
So, I'm sure you get the gripes when
things go wrong, but I wanted to remind you of the times when things go,
oh, so right. Don't know what we would have done without you and LTC
insurance.
P.S. My sister and I are both retired
now and our mother is 92. Sis and I were both able to go to Florida for a
few months this Winter. How in the world would we have been able to go if
we did not have confidence that our mother would be well taken care of
while we were gone?
Thanks for helping us chose the right
policy for mom,
Sincerely,
T. W. ***
LTC BULLET: INSPECT THIS PLANE
LTC Comment: Sponsored by the Society of Actuaries and prepared by John
O’Leary, the LTC Think Tank recently published a report titled “Land This
Plane: A Delphi Research Study of Long-Term Care Financing Solutions.”
Read it
here.
Sticking with the aeronautical metaphor, every aircraft requires periodic
inspection and maintenance. We’ll have a look at this plane in today’s
LTC Bullet. Will it fly or should it be grounded? Your feedback is
welcome.
Let’s start with some background about the study from the report’s
Executive Summary:
In January 2013, the Long-Term Care
Think Tank launched a comprehensive study with the goal of articulating
solutions to the nation’s long-term care (LTC) financing challenges. The
project, called “Land This Plane,” was conducted by the Long-Term Care
Think Tank, and sponsored and supported by two of the Society of
Actuaries’ professional interest sections: the Long-Term Care Insurance (LTCI)
Section and the Forecasting and Futurism Section. The Long-Term Care Think
Tank was established in 2005. Its broad purpose was to provide a forum for
a broad coalition of LTC experts from inside and outside the insurance
industry to discuss the looming LTC financing crisis. The hope was that
the group would research and discuss needed changes, and would publish
solutions with broad public and private support.
I participated in the first phase of this project, but dropped out when it
became too time consuming and seemed to be drifting toward some
recommendations with which I preferred not to be associated.
Nevertheless, I think this was an exceptional effort and that all those
associated with it should be congratulated and thanked for the
professional time and effort they invested in it. Kudos especially to
Roger Loomis and Ron Hagelman.
What follows are brief excerpts from the “Land This Plane” report’s
“Executive Summary” with our “LTC Comments” on each.
-------------------
Quote: “A systemic overhaul of the LTC financing system is
needed. . . . The overhaul needs to clarify, define, and
structure today’s somewhat disjointed system of private and public funding
options for the American consumer.”
LTC Comment: LTC financing in the USA is a mess. That’s for
sure. But we don’t need anyone or anything to “overhaul” it. The very
idea evokes what? A deus ex machina, a Long-Term Care Czar, a
five-year plan? Rather we need to reduce government interference that has
steered LTC financing off course. Get Medicaid out of the business of
funding LTC for the middle class and affluent. Put home equity at risk
for funding long-term care. Stop crowding out private funding sources
like reverse mortgages and private LTC insurance. Return to sane fiscal
policy (balanced budgets) and honest monetary policy (no Fed gaming
interest rates). Let the market work and it will solve most of the
problems with LTC services and financing. Stop doing what you’ve always
done and you will get a different result.
Quote: “Private insurance needs to be part of the financing
solution. . . . Private insurance could provide a
much-needed additional funding source for many people, but both the supply
of and demand for private insurance need to increase. There was less
consensus on exactly how to do this, but several ideas received positive
consideration, including changes to regulations, new product designs,
government incentives, public awareness campaigns, and changes to
professional standards.”
LTC Comment: All are fine ideas but none will have much effect
unless and until the government stops giving away what the LTCI industry
is trying to sell to the very same middle class and affluent people to
whom they’re trying to sell it. Fix that and most of the rest of what’s
needed will fall into place.
Quote: “Social insurance is needed as part of the solution.
The most surprising finding of the survey is the overwhelming degree
to which the panelists agreed on the need for a social insurance component
as part of the ultimate LTC financing solution. . . . Among the range of
social product concepts evaluated by panelists and that emerged with
strong support were a high-deductible, long-term care insurance concept to
cover catastrophic situations, and a health savings account (HSA)-like LTC
savings fund.”
LTC Comment: Here we part company. With Medicare and Social
Security facing $66 trillion dollars of unfunded liabilities, the last
thing we need is another social insurance entitlement. That’s not to say
there’s no role for public financing. Medicaid could provide a very good
LTC safety net for the truly needy if it stopped being the primary LTC
funder for everyone. By giving Medicaid back to the poor, enough money
could be saved to pay market rates for quality care across the whole
continuum of “long-term services and supports,” home care, assisted living
and nursing homes.
An HSA for LTC is a great idea. So also is high-deductible LTC insurance,
although not through a government program which would leave private
insurance with only Medi-Gap-style products for the front end. The
purpose of insurance is to replace the small risk of a catastrophic loss
with the certainty of an affordable premium. Regulatory change should
permit and encourage such products.
Quote: “The government needs to take an active role in the
LTC financial solution. Over 90 percent of panelists agreed on the
need for the government to take an active role developing and implementing
LTC financing solutions. Panelists consistently discussed the need for a
logical, consistent, defined LTC system.”
LTC Comment: Again with the central planning focus! How’d that
work out for the Soviet Union? Has our government done such a fine job of
managing the long-term care marketplace up to now that we should turn over
more control to it?
Quote: “Consumer education and tax incentives are critical
to the solution. The study suggests that government’s active role
should extend beyond designing the overall system to providing education,
incentives and leading regulatory change that encourage planning-oriented
behaviors.”
LTC Comment: This constant plea for the past decade or more from
the LTCI industry to the appropriators of government money has always
fallen on deaf ears. Hello! No one’s listening. Tax incentives and
education programs are within reach, but only if you show legislators
where to save the money to pay for them. You can get the funds for
positive incentives for responsible planning by increasing the
disincentives against failing to plan. In other words, give Medicaid back
to the poor and use some of the savings to incentivize and educate
consumers about private LTC financing alternatives.
Quote: “The Medicaid program is overdue for a major reform.
Panelists consistently and emphatically agreed that major changes are
required to the Medicaid program as related to LTC. Those changes
consisted of tightening eligibility for Medicaid so the program doesn’t
allow people with significant assets to divest them to the benefit of
heirs and still qualify for LTC reimbursement. Also, panelists felt that
benefit restrictions need to be changed across all states/jurisdictions to
enable Medicaid to pay for services in a full range of settings, including
home and community care, if appropriate and cost-effective. . . . Many
panelists suggested that reforming Medicaid is the essential first step in
the overall LTC system overhaul.”
LTC Comment: OK, good, but it could be better. First, divesting
assets isn’t the big problem. The big problem is that basic Medicaid LTC
eligibility rules allow people with very high income and assets to
qualify. Start there, then eliminate the Medicaid annuity loophole, and
finally tackle asset transfers. Regarding the rebalancing from nursing
home care to home and community-based care, states can do that now and
many have, but it doesn’t save money. The only way to enable Medicaid to
pay for quality care in the most appropriate and most desired venues,
including the home, is to have fewer people dependent on the program.
Quote: “LTC regulations and legislation need substantial
revision. Panelists were in strong agreement that regulations and
legislation governing LTCI should be revisited and revised to consider
consumer realities and needs. . . . Panelists indicated a need for
regulatory change that encourages simpler policies that are affordable and
accessible to a broader population.”
LTC Comment: I agree completely except that “simpler policies”
should not limit consumers’ choices. They should be able to buy whatever
a carrier wants to offer, including high-deductible, catastrophic policies
as well as more complicated policies that cover much more.
Quote: “Incenting personal and family responsibility should
be part of the solution. Panelists overwhelmingly indicated that a
reformed LTC system should incent household and family participation in
long-term caregiving situations. Comments from panelists suggested the use
of innovative tax credits to encourage family- and community-based
caregiving as a way to minimize formal services and keep costs under
control.”
LTC Comment: Again, who’s going to pony up for those costly tax
credits? What if paying caregivers reduces the free care on which the
current Rube-Goldberg public financing system depends? Has anyone
considered the unintended consequences that current public policy causes
and these new ideas may exacerbate?
Quote: “Use of retirement savings accounts to fund LTC
protection should be incentivized. Panelists overwhelmingly
favored the idea of modifying federal tax rules to enable funds in
tax-deferred savings accounts (401(k), 403(b) and IRA accounts) to be used
on a tax-free and penalty-free basis to fund LTC protection products,
including LTCI. Panelists agreed that tax incentives are an attractive way
to encourage consumers to leverage existing savings mechanisms to protect
against the costs of LTC.”
LTC Comment: Great idea although unlikely because it would cost
the government money that it doesn’t have and legislators would rather
spend money they must borrow on things that bring more direct benefits,
i.e. campaign contributions. The first thing to do about tax-deferred
savings accounts is to stop exempting them from Medicaid asset spend down
limits. That would save the government money, pump more private funding
into the desperately under-financed service delivery system, and radically
increase the public’s incentive to plan ahead for long-term care . . . in
order to avoid having to spend their IRAs for care.
Quote: “Improvements in LTCI products, marketing and sales
are needed. Panelists agreed that the risks of needing LTC, the
potential costs of LTC services, and the available LTC financing solutions
need to be better communicated both overall and at the point of agent
interaction with consumers. Life and health insurance agents and brokers
as well as financial advisors need to include the risks, costs and LTC
funding options in their consumer presentations.”
LTC Comment: Agreed. People who fully understand the downsides of
“going bare” will buy LTC insurance if they can afford it. The problem is
that easy access to publicly financed care after the insurable event
occurs has desensitized consumers and most of their financial advisors to
the real risk and cost. Hence most people don’t even talk to someone who
can fully advise them. That won’t change until the alleged catastrophic
financial consequences of going bare become real.
Closing LTC Comment: I conclude this plane needs to go into the
hanger for further inspection, but it is repairable. Two suggestions.
Number one: Ask and answer the key question no one ever seems to
pose. That is, how did long-term care in the USA get so fouled up in the
first place? Answer: Medicaid made nursing home care free, which created
the institutional bias problem, crowded out a private home care market,
and stifled the private insurance market leaving families unprotected
financially and with a huge burden of “free care.” There in a nutshell is
the problem and a pointer to the solution.
Number two: Don’t ask the government to “overhaul” the same
dysfunctional “system” it created. No mysterious third party is going to
fix this mess either. Central planning does not work. Just get out of
the way.
Bottom line:
We don’t need an airliner with Uncle Sam at the controls. We need a
glider, unmanned and guided only by the invisible hand of market forces,
consumers’ self-interests and free competitive enterprise. That’ll fly.
And it’ll take us where we need to go.
#############################
Updated, Monday, April 14, 2014,
11:10 AM (Pacific)
Seattle—
#############################
SECOND WIND AND LTC NEWS AND
COMMENT
LTC Comment: Dr. Bill Thomas, the indomitable force behind the
Eden Alternative and
The Green House Project, has a new book out called
Second Wind. In it, according to a blurb by Jane Pauley, "Bill
Thomas goes deep inside our culture. Like the best kind of doctor, he
evaluates the toll our hurried, quantified, and driven lives have taken on
us before he suggests a new way forward. He'll challenge the way you think
about your future. And you'll want to make the journey with him."
Speaking of journey’s, Dr. Thomas has taken his book and mission on the
road in a “Second
Wind Tour.” He says: “The Second Wind Tour will visit 25 cities in
spring of 2014 and offer audiences powerful insights into slower, deeper,
more connected ways of living and working.” To find out when the tour
will be in your city, get tickets, or become a sponsor, click
here. It’s a new age vision of aging from a long-term care
revolutionary.
#############################
4/13/2014, “Mistakes to Avoid When Shopping for Long-Term-Care
Insurance: How to Pick the Best the Policy for Your Needs and What to
Avoid [link],”
by Anne Tergesen,” Wall Street Journal
Quote: “Here are six mistakes consumers commonly make when
purchasing long-term-care insurance, and advice on how to avoid these
pitfalls.”
LTC Comment: This is a relatively long and fairly good
article. As it’s in the Wall Street Journal, many across the
country will see it. Consider picking up a hard copy of the WSJ.
#############################
4/11/2014, “Burwell
has insurance ties: HHS nominee was a MetLife director,” by Allison
Bell, BenefitsPRO
Quote: "But Burwell, who has been director of the Office of
Management and Budget since April 2013, also has ties to the insurance
community: She was a director both of MetLife Inc. and of Metropolitan
Life Insurance Company from early 2004 through early 2013."
LTC Comment: It’ll be interesting to see if Ms. Burwell’s
background in private insurance affects her policy making at HHS if she’s
confirmed.
#############################
4/9/2014, “Finally, Modest Progress Toward Long-Term Care Financing
Reform [link],”
by Howard Gleckman, Forbes
Quote: “For the
first time in years, there is hope that the U.S. can create a new model to
help families finance long-term supports and services. The solution isn’t
yet visible, and lawmakers won’t address the issue any time soon. But a
wide range of private interests including long-term care providers,
consumer groups, the insurance industry, and
policy analysts seems to be moving toward a broad consensus on how to
address this important and difficult issue. And that solution is likely
to include some mix of private insurance and a public safety net beyond
Medicaid—the current government program that is the single biggest payer
of long-term services and supports.”
LTC Comment: It
is true that long-term care policy is getting more attention all of a
sudden. Let’s hope policy makers abide by the medical rule: “first do no
harm.” Of the three initiatives mentioned in this article, we’re covering
two in LTC Bullets this Friday and next: the Bipartisan Policy
Center’s report and initiative tomorrow and the Society of Actuaries’
“Land This Plane” report the following week. We promise you an objective,
well-documented and enlightening perspective you won’t get elsewhere.
#############################
4/9/2014, “Advising The Worry Generation: Millennials, younger
Americans continue to show more anxiety about common financial issues than
older generations [link],”
Life & Health Advisor
Quote: "Younger Americans, including 'millennials' age 25-34, show
the highest level of concern across all generations for common financial
planning issues, including saving for retirement, paying for a child's
education, and burdening others with final expenses."
LTC Comment: Maybe there's hope for the younger generation after
all.
#############################
4/9/2014, “Caregivers
need greater support, Harvard study says,” by Kathryn Roethel,
SFGate
Quote: “A Harvard
report released last month provides statistics to back up what millions of
Baby Boomers supporting aging parents already suspected. The vast majority
of long-term care in the United States takes place at home, and 43.5
million friends and family members are the unpaid caregivers. The report,
published in the
Journal of the American Medical Association, reveals that most
caregivers are women and that the hours they spend assisting their loved
one usually equates to a part-time job. As the U.S. population ages, the
problem is likely to worsen because there will be fewer caregivers to
go around.”
LTC Comment: Evidence mounts of growing age wave impact on
caregiving.
#############################
4/8/2014, “Avoiding the Nursing Home Ups The Risk of Unwanted
Medical Care [link],”
by Linda Poon, National Public Radio
Quote: "Most older people suffer from cognitive impairment or
dementia in the year before death, making it more likely that they will
get aggressive medical treatments that they don't want. And people with
dementia who are cared for at home are more likely to get unwanted
treatment than if they are in a nursing home, a study finds."
LTC Comment: Unintended consequences of a generous and
inadequately monitored Medicare home health system.
#############################
4/8/2014, “Think
Tank to Recommend Long-Term Care Solutions,” by Steve Teske,
Bloomberg BNA
Quote: “The Bipartisan Policy Center April 7 said it will publish
recommendations by the end of the year for transforming the way long-term
care is delivered and financed. The think tank released a white
paper that said the number of Americans estimated to need long-term
care services is expected to more than double, from 12 million in 2010 to
27 million in 2050.”
LTC Comment: I wrote about this initiative and critiqued its white
paper in Friday’s “LTC
Bullet: Will Bipartisan LTC Policy Be
Better?”
#############################
4/8/2014, “
It takes villages: Boomers' new retirement communities,” by Mark
Miller, Reuters
Quote: "Villages and house sharing are growing the most rapidly.
The village movement started in 2001, and 125 have opened around the
country, with another 100 more in the planning stage. It's a 'neighbors
helping neighbors' approach, with the aim of providing support and
friendship to people who want to age in their homes. They rely on a mix of
paid staff and volunteers who help members with everything from
transportation to computer know-how and grocery shopping. They're really
great - they provide support and friendship to people who want to age in
their homes, although most have been started in upper-income or
upper-middle income neighborhoods."
LTC Comment: The LTC service delivery system continues to evolve.
Will LTCI cover “villages” as it came to cover assisted living over time?
#############################
4/8/2014, “Skilled nursing facilities could lose big money if they
don't hire a managed care coordinator, expert says [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Skilled nursing facilities stand to lose substantial sums
of money as they increasingly do business with managed care plans, unless
a coordinator is on top of exclusions and other contract elements, a
prominent healthcare consultant told an audience Monday at the American
College of Health Care Administrators annual meeting."
LTC Comment: Medicaid's move to managed care for frail and infirm
elderly recipients--even the extremely vulnerable dual eligibles in some
states--will further exacerbate challenges skilled nursing facilities face
as they try to provide quality care despite low, and getting lower,
Medicaid reimbursement rates.
#############################
4/7/2014, “U.S.
government rolls back proposed Medicare Advantage cut,” by Caroline
Humer and David Morgan, Reuters
Quote: "The Obama administration on Monday rolled back some of the
more controversial cuts proposed for privately managed Medicare health
plans used by the elderly following pressure from insurance companies and
lawmakers. The Centers for Medicare and Medicaid Services (CMS) said that
on average, reimbursement for such Medicare Advantage plans in 2015 would
rise 0.4 percent, reversing what is said was a 1.9 percent average
reduction proposed in February."
LTC Comment: Go figure! These cuts were hanging over the head of
the Medicare Advantage industry for months, and then "poof," gone. A good
thing, but it looks like health policy is being decided with a
public-opinion wind sock.
#############################
4/7/2014, “America's
Ponzi scheme: Why Social Security needs to retire,” by Laurence
Kotlikoff, PBS News Hour
Quote: "Resolving Social Security's insolvency requires either an
immediate and permanent 32 percent increase in payroll taxes or an
immediate and permanent 22 percent cut in all Social Security benefits.
Detroit, in contrast, needs to cut pension benefits by roughly 16 percent
on a system-wide basis."
LTC Comment: At the risk of belaboring this subject, this is one
of the best articles I've read about it.
#############################
4/7/2014, “Expensive
Markets for Long-Term Care Coverage,” Fort Mill Times
Quote: "Statistics show that the need for and cost of long-term
care are both increasing. In fact, according to the results of an
independent study commissioned by New York Life's Long-Term Care
Operations, the average cost for nursing home care in the U.S. has climbed
significantly in the past five years, up 20% to $95,706 per year from
$79,935 in 2009."
LTC Comment: Genworth's annual cost of care survey recently
estimated the cost of a private nursing home room as $240 per day which
aggregates to $87,600 per year. Now New York Life reports $95,706 or $262
per day. Who's right? We’ve asked folks at Univita who did the study for
New York Life for an answer.
#############################
4/7/2014, “Do preventive home visits work? The largest and most
comprehensive review of trials on home visits is inconclusive on their
benefits [link],”
by Evan Mayo-Wilson, Sean Grant and Paul Montgomery, The Guardian
Quote: "On average, these programmes did not reduce
hospitalisation, long-term care or mortality. That is, there were no
consistent differences between older adults receiving home visits and
those who did not."
LTC Comment: More evidence (from the UK) that home and
community-based services will not be the end all and be all for long-term
care savings.
#############################
4/7/2014, “The
Government Debt Iceberg,” by Jagadeesh Gokhale, Cato Institute
Quote: “In The
Government Debt Iceberg, Jagadeesh Gokhale reveals the extent to which
western governments are keeping taxpayers in the dark about true levels of
debt by hiding the magnitude of future spending commitments that cannot be
met by future tax receipts.”
LTC Comment: A good
read by an excellent scholar.
#############################
4/4/2014, “Medicaid,
CHIP enrollment soars in February,” by Jayne O'Donnell, USA Today
Quote: “Nearly 3 million people enrolled in Medicaid or the
Children's Health Insurance Program in February, an increase probably
spurred by the Affordable Care Act deadline of March 31 and improvements
in state and federal insurance exchanges. . . . Opponents of Medicaid
expansion say states won't be able to afford it once the federal
government isn't paying the whole bill and that expanding a program that
even President Obama has called ‘a broken system’ is not the best
approach. Many doctors refuse to treat Medicaid patients because they
receive very low reimbursement for their services.”
LTC Comment: Watch for much more reporting like this in the
national media.
#############################
Updated, Friday, April 11, 2014,
1:17 PM (Pacific)
Seattle—
#############################
LTC BULLET: WILL BIPARTISAN
LTC POLICY BE BETTER?
LTC Comment: Heads up! Consensus is coalescing around a bipartisan
long-term care financing solution. Let’s be hopeful, but wary after the
***news.***
*** LAND THIS PLANE, the LTC research project undertaken by the Society of
Actuaries, has issued its final report titled “Land this Plane: A Delphi
Research Study of Long-Term Care Financing Solutions.” Read it
here. We’ll take a closer look and provide our analysis and comments
in next week’s LTC Bullet, or soon. Congratulations to Roger
Loomis and Ron Hagelman, the out-going co-chairs of the Long-Term Care
Think Tank who brought this study to fruition, and good luck to Vince
Bodnar and John O’Leary, the incoming Think Tank co-chairs. ***
*** 2014 LTC SALES SUMMIT - FREE LIVE STREAMING VIDEO. Jesse Slome of the
American Long-Term Care Insurance Association reports that “the
deadline to sign up approaches! For the first time, you can watch
sessions streamed live from the 2014 National Long Term Care Solutions
Sales Summit. It's all completely free. No special equipment required.
You can watch on your computer or tablet. Pre-register to receive the
secure website access. Click
here. The conference will feature top industry producers and experts,
including the CEOs of five leading insurers. You can watch as little or
as much of the conference as you like. Sessions will be broadcast live on
Sunday, May 18, Monday May 19 and Tuesday, May 20. (This is not a webinar.
It's a live broadcast from a national sales conference.)”
--------------
LTC BULLET: WILL BIPARTISAN LTC POLICY BE BETTER?
LTC Comment: Long-term care is back on the public policy radar screen.
The CLASS Act fiasco got people thinking. Last year’s LTC Commission
crystalized the issues. Think tanks are doing programs with panels of
long-term care experts. Studies, reports and scholarly monographs emerge
in greater numbers. Articles in the popular media abound warning of
catastrophic long-term care risk. Now, here’s the very latest:
The
Bipartisan Policy Center (BPC) has taken on the challenge of fixing
long-term care services and financing. The BPC launched its “long-term
care initiative” last Monday with an event in Washington, DC and a white
paper titled “America's Long-Term Care Crisis: Challenges in Financing and
Delivery.” Watch the event
here and read the white paper
here. But I’ve already done both so let me save you some time and
effort.
Skip all the introductory remarks by the program’s sponsors, two former
Senators, a former CBO director and a former Governor and HHS Secretary.
You’ve heard it all before and these folks bring little to the
conversation beyond their prestige. Go directly to the panel of experts.
That’s worth watching. Note especially these presentations:
Anne Tumlinson, founder and director of
Avalere, is one of the more thoughtful long-term care analysts. She
observes that 1/3 of all payments for assisted living in this country are
actually made by adult children who are also buying geriatric case
management services, private duty nursing, and home care aides to help
their ailing parents. But none of this spending shows up in the national
health expenditure accounts that most analysts use to estimate the cost of
long-term care. Tumlinson also observes that Medicaid is actually
spending less on LTC as a percent of total expenditures today than in the
past 20 years. Hence, relative to the exploding number of people who will
need long-term care, there will be fewer public dollars to go around. She
concludes that voluntary insurance will not work and that some form of
mandatory social insurance is unavoidable. Her observation that “the
people who would be helped by private LTC insurance are not the people who
spend down to Medicaid” is wrong as we’ll explain.
Marc Cohen of
LifePlans always does a fine job of laying out the statistical
parameters of the long-term care financing issue. He says, for example,
that the expected cost of long-term care would account for about 31% of
the net worth of households aged 65 to 74. Yet most people don’t worry or
plan for long-term care: “If you don’t perceive there is a problem, why
would you do anything about solving it?,” he asks. “What would it take to
move the needle of public awareness and planning? My own sense,” Cohen
says, “is that we can’t fund care for middle class Americans without
expanded public sector support to spur demand and supply. We need to
think through new models that go beyond current Partnerships to combine
public and private funding.” In other words, he agrees with Tumlinson
that it will take more than Medicaid and private insurance to solve the
problem.
Tom McInerney of
Genworth and Diane Rowland of the
Kaiser Family Foundation also presented on this panel. McInerney’s
main points were that the government is broke, can’t fund what’s needed
and private insurance could do much more with a better regulatory
environment. Dr. Rowland made her usual appeal for a bigger government
role in long-term care financing. As always she pooh-poohed the impact of
Medicaid asset transfers but failed to acknowledge the far greater impact
of easy Medicaid eligibility and other forms of Medicaid planning.
Let’s turn now to the Bipartisan Policy Center’s white paper: “America's
Long-Term Care Crisis: Challenges in Financing and Delivery.” It does
a good job of laying out the issues and data, but not without some errors,
omissions and misunderstandings.
First a pet peeve. Throughout, this paper refers to “long-term
services and supports” or LTSS instead of “long-term care.” That awkward
locution is the current politically correct term of art. It evolved to
emphasize the need for home and community-based care to replace nursing
homes, the venue which had become synonymous with long-term care. The
irony is that Medicaid, i.e. public LTC financing, is responsible
for the long-term care system’s nursing home bias. If Medicaid hadn’t
paid for nursing home care after the insurable event occurs for most
Americans, including the middle class, since 1965, we would have had a
healthy private home-care-based service delivery system funded largely by
personal savings, home equity conversion and private long-term care
insurance. So the very people who caused the problem of institutional
bias by demanding more and more government interference in the long-term
care market are the same people corrupting the language with “LTSS” and
denigrating the honorable appellation “LTC.”
Some quotes from the BPC report follow with our “LTC Comments.” We’ve
omitted footnotes in the quotes below, but you can find them in the
published report
here.
Quote: “In this paper, BPC seeks to: (1) identify the most
pressing problems associated with the current system of providing LTSS in
the United States; (2) identify the barriers to finding a sustainable
means of financing and delivering LTSS; and (3) outline some of the more
critical policy questions that will guide BPC's work in the coming
months.” (p. 6)
LTC Comment: Note that the Bipartisan Policy Center’s approach
does not include an attempt to analyze, understand, or explain what caused
long-term care’s problems. That is a fatal omission. If you don’t know
why you have a problem, you run the risk of making it worse by applying
the same remedy that caused the problem in the first place. For example,
if government financing of long-term care through Medicaid caused
institutional bias, crowded out private financing alternatives, and
contributed to poor care by providing inadequate funding, then it is folly
to expect more government financing to fix those problems.
Quote: “While some may believe that a true social insurance option
financed through a broad-based tax, similar to the Medicare program, may
be the most efficient and equitable means of financing LTSS, the current
political and fiscal environment make that solution infeasible for the
foreseeable future.” (p. 9)
LTC Comment: It is easy to discern the ideological bias in this
“bipartisan” report. But it is encouraging to see that even die-hard
advocates of socialized long-term care are finally acknowledging economic
and political reality.
Quote: “No one would argue that the private long-term care
insurance (LTCI) market, as currently structured, is a viable solution to
address the needs of the diverse population in need of LTSS.” (p. 11)
LTC Comment: Whose fault is that? Medicaid crowds out most of the
market for private LTC insurance and the Federal Reserve ruined the
product’s financial viability by artificially forcing interest rates to
nothing. The miracle is that private insurance does as good a job as it
does do protecting consumers and developing new products in spite of the
daunting obstacles imposed by counterproductive public policy.
Quote: “Medicare does not cover long-term services and supports.
Benefits are limited to acute care health services-including, among other
acute services, hospital stays, post-acute care, and physician visits-and
prescription drugs for the elderly and certain individuals with
disabilities.” (p. 18)
LTC Comment: Leaving Medicare out of the computation of long-term
care expenditures is bad reasoning and naïve. Duration of care is not the
key factor. Medicare has a huge impact on long-term care because its
generous reimbursements to nursing homes and home health agencies help to
counterbalance Medicaid’s paying less than the cost of care for the vast
majority of their residents and patients. If and when Medicare cuts back
on its reimbursement to long-term care providers, as the program’s
desperate financial condition suggests it will have to do, the financial
bottom will fall out of the main source of long-term care spending,
i.e., Medicaid. That will devastate state budgets, the nursing home
business, and home care providers who rely on Medicaid.
Quote: “Medicaid is the primary LTSS payer, generating two-thirds
or more of the total payments for LTSS. In 2011, the CMS Office of the
Actuary estimated Medicaid LTSS spending at $114 billion, while an
analysis by Mathematica Policy Research arrived at an estimate of $136
billion. LTSS accounts for at least one-quarter, and possibly almost a
third, of total Medicaid spending ($432 billion in 2011); however, only a
small fraction (6.7 percent or 4.2 million in 2009) of Medicaid
beneficiaries received LTSS and/or post-acute care.” (p. 19)
LTC Comment: Yes, Medicaid is the 800 pound gorilla of long-term
care and, to stick with the animal metaphor, LTC is the elephant in the
room when it comes to Medicaid expenditures. So job number one should be
to understand why Medicaid dominates LTC financing, why the public ignores
LTC risk and cost despite being educated that it will devastate them
financially, and why private LTC financing is so limited and focused on
desirable services that government does not provide, such as most assisted
living. Again, if you don’t know why you have these problems, you run the
risk of applying more of the “remedy” that caused them in the first place.
Quote: “When an individual has too much income to qualify for
Medicaid under the SSI pathway, but faces catastrophic LTSS and health
care costs that he or she cannot meet, it is possible to qualify for
Medicaid through a ‘spend down’ process. Most individuals over the age of
65 who qualify for Medicaid do so by spending down. The details of this
process vary by state, but individuals typically must exhaust almost all
of their savings (an exception allows Medicaid beneficiaries to keep a
home, within certain limits) and spend a substantial portion of their
income on health care and LTSS expenses before they can qualify.” (p.
19)
LTC Comment: The ignorance of most “experts” about Medicaid
financial eligibility rules and policy simply astounds. People do not
have to “exhaust almost all of their savings” to get Medicaid LTC. They
can hide them in exempt assets, including a home, business or car. They
can buy unlimited term life insurance. They can use Medicaid friendly
annuities. Their individual retirement accounts are exempt as long as
they’re generating a regular distribution as is required by tax law after
age 70 and a half. “Mandatory” estate recovery is easy to dodge.
Nor do people have to “spend a substantial portion of their income on
health care and LTSS expenses before they can qualify.” There is no such
requirement. People can spend their income and assets on anything they
want in order to “spend down” to Medicaid eligibility. Elder law journals
have recommended taking a world cruise, throwing a party of “Ziegfield
Follies” proportion or simply purchasing assets that Medicaid does not
count. The only requirement is that you get value for what you spend, not
that you spend on health or long-term care.
Income rarely obstructs Medicaid LTC eligibility because private health
and LTC expenses are deducted before income eligibility is computed in
most states. In the other “income cap” states, Miller income diversion
trusts enable higher income people to qualify. It is true that once
someone is on Medicaid, he or she must contribute most of their income to
offset Medicaid’s cost for their care. But at that point, the damage has
been done. The person is on public assistance, probably in an
underfinanced nursing home, and Medicaid is paying for someone who could,
should and would have paid their own way, at least for a time, if it were
not for the perverse incentives in Medicaid eligibility rules that
discourage responsible LTC planning.
Quote: “Because a small number of people will have substantial
needs that are unlikely to be met solely through personal savings,
insurance would seem to be an ideal mechanism to finance these needs. Yet,
the private LTCI market has struggled in recent years and currently plays
a minor role in the financing of LTSS. After several years of strong
growth in private LTCI coverage in the late 1990s and early 2000s, the
number of insured lives has been virtually unchanged since 2005, and sales
of individual-market policies have dropped by two-thirds from their peak
in 2002. Growth has focused on the group market, while the individual
market (two-thirds of the total) has declined. About 8.2 million lives are
covered by private LTCI, representing fewer than 6 percent of Americans
over the age of 40. Of those over 65 with annual incomes above $20,000,
only 16 percent carry private LTCI. In 2012, LTCI policyholders paid more
than $11 billion in premiums. Cash payments to policyholders (or LTSS
providers) from private LTCI claims totaled about $7 billion in 2012,73
funding less than 5 percent of total spending on LTSS.” (p. 20-21)
LTC Comment: I draw the exact opposite conclusion from these
statistics. It is amazing, approaching miraculous, that private long-term
care insurance has done so much for so many in spite of the terrible
obstacles put in its way by public policy. Try this thought experiment:
if government did not pay for most expensive LTC after care is needed
unless and until people became truly impoverished, having consumed all
their savings, property and home equity, do you really think long-term
care insurance would still play “a minor role in the financing of LTSS?”
And if you dream up yet another government funding source for long-term
care, do you really think consumers will become more responsible about
saving, investing and insuring for long-term care? Think about it and you
will understand why proposals to increase government financing of LTC may,
and likely will, exacerbate rather than ameliorate these problems.
Quote: “Even without adverse selection, it is not clear that
consumer demand for private LTCI would be strong. Most Americans are not
especially interested in or motivated to purchase private LTCI. Many do
not plan for LTSS costs, and, as noted above, 65 percent of Americans over
40 have done little to no planning for any sort of living expenses for
when they are older. Many think that they won't need LTSS (70 percent of
those over 65 will need some LTSS, whether paid or unpaid, but just over
half say that they are at risk of needing LTSS), and most of those who do
realize they are at risk of needing LTSS think that someone else will bear
the cost.” (p. 23)
LTC Comment: Consumers’ denial of LTC risk is rational and
excusable, because most expensive LTC gets paid for by the government in
the end. People don’t know who pays, but they know someone must. You
don’t see Alzheimer’s patients dying in the gutters. On the other hand,
LTC analysts’ evasion of the facts about public financing of long-term
care is neither rational nor excusable. It is grounded in ideological
bias and fact avoidance. “None so blind as those who will not see.”
Quote: “The National Retirement Risk Index, which incorporates
factors other than retirement accounts (such as home equity and Social
Security) into an assessment of national retirement preparedness,
estimates that 53 percent of households are at risk of not being able to
maintain their standard of living when they are no longer working.” (p.
24)
LTC Comment: That means 47 percent of households may be all right
financially if you count home equity. Yet the BPC report barely mentions
home equity as a source of LTC financing. Eliminate or severely reduce
Medicaid’s home equity exemption and a flood of private dollars from
reverse mortgages would revive the home and community based care, assisted
living and nursing home markets making more choices and better care
available to everyone, including those who remain dependent on Medicaid.
Quote: “Private spending on LTSS is even more difficult to
estimate than public spending. The NHPF [National Health Policy Forum]
analysis of NHEA [National Health Expenditure Accounts] data shows a total
of almost $70 billion out-of-pocket and other private (including
insurance) spending on LTSS in 2011 (not including assisted living), but
this figure includes a substantial amount of PAC [post-acute care]
spending. Additionally, some spending that originated from private LTCI is
reported as out-of-pocket because it is common for LTCI to pay
policyholders directly, who then in turn pay LTSS providers. This figure
also leaves out spending on assisted living, and probably does not include
a substantial amount of graymarket home care, but it likely includes all
nursing-home out-of-pocket spending, which is the most expensive form of
LTSS. Because we have no sense of how much of the $70 billion figure is
for out-of-pocket and health insurance payments for PAC, the true
out-of-pocket LTSS spending figure (not including assisted living) is
likely somewhere well above zero and well below $70 billion. Hence, a
precise estimate is not possible; the best we can say is that tens of
billions are likely spent out-of-pocket on LTSS annually, excluding
assisted living.
“The situation is different for private LTCI. While LTCI issuers do not
report the exact amount of cash paid to policyholders and LTSS providers
each year based on claims, the data available can be used to estimate
annual cash payments from claims. At the request of BPC, LifePlans
reviewed data collected by the National Association of Insurance
Commissioners and estimated that private LTCI paid out about $7 billion on
claims in 2012.” (p. 27)
LTC Comment: Two points about these tightly packed paragraphs.
The observation that “some spending that originated from private LTCI is
reported as out-of-pocket because it is common for LTCI to pay
policyholders directly, who then in turn pay LTSS providers” is one we
often make, but I have not seen it in other published work before. It is
critical. Out-of-pocket LTC spending, we call it “oops,” is much lower
than is usually reported. That’s why consumers ignore the “catastrophic
spend down” warnings that permeate media coverage and ostensibly scholarly
publications.
Secondly, a very substantial part of out-of-pocket spending for long-term
care is really the contribution from income to their cost of care that
Medicaid recipients are required to make. That out-of-pocket expenditure
does not come from assets, but rather from income and mostly from Social
Security income. As much as half of all out-of-pocket LTC spending comes
from Social Security income of people already on Medicaid which income is
diverted to reduce Medicaid LTC expenditures. Why does this matter?
Social Security is financially unstable, already collects less in payroll
deductions than it spends, relies on a phony trust fund that the rest of
government has already spent, and will pay 24% less in the future than it
has promised unless fixed, which is unlikely. If and when Social Security
cuts back, Medicaid nursing home recipients won’t care because they have
to contribute nearly all their benefits to offset Medicaid expenses
anyway. But state Medicaid programs, nursing homes and home health
agencies will have to make up the difference and that will devastate them
financially.
Closing LTC Comment: The consensus coalescing around a long-term
care financing solution is that some form of mandatory social insurance
should supplement private LTC insurance. The dangers in that remedy are
myriad. Do we really need another expensive entitlement program? What
happens when Social Security cuts back so that people have less income to
spend on LTC? What happens when Medicare reduces its generous provider
reimbursements that currently enable LTC providers to survive despite
Medicaid’s low payments? Wouldn’t more public financing of LTC only
increase the public’s growing entitlement mentality? Don’t we need to
start weaning people off dependency on government largesse? How long will
it be before economic gravity takes hold again and government has to pay
normal interest rates on its trillions of debt? What happens when the
unfunded entitlement liabilities come due? It is nothing short of bizarre
that serious people claim to study, diagnose, and prescribe about
long-term care without taking these factors into account. It goes to show
we’re not much closer to a real solution and that the new consensus
coalescing is as much a danger as an opportunity.
#############################
Updated, Monday, April 7, 2014,
10:25 AM (Pacific)
Seattle—
#############################
BIPARTISAN POLICY CENTER EVENT
AND LTC NEWS AND COMMENT
LTC Comment: The
Bipartisan Policy Center (BPC) Health Project's Long-Term Care
Initiative (LTCI) will release a white paper today at 1:00PM EDT
identifying the major challenges to the financing and delivery of
long-term care for seniors and individuals with disabilities under 65. A
final report of LTC policy recommendations will be released in late 2014.
The initiative is co-chaired by former Senate Majority Leaders Tom Daschle
and Bill Frist, former Wisconsin Governor and HHS Secretary Tommy Thompson
and former White House and Congressional Budget Office Director Dr. Alice
Rivlin. Co-chairs will make introductory remarks and a panel discussion on
the topic will follow with national experts in the field. You can watch
the live webcast of the event starting at 1:00PM ET
here.
#############################
4/5/2014,
“Long-term
care insurance is a difficult decision,” by Chris Farrell, Star
Tribune
Quote:
"Without insurance you and your family are largely on your own meeting
these costs. Medicare doesn't pay the tab for most long-term care charges.
Medicaid, the joint federal/state safety net, is the main public program
for long-term care. However, Medicaid is a 'means-tested' program geared
toward low-income households. The greater your financial resources, the
more purchasing long-term care insurance is a sensible precaution. Put it
this way: If you can easily afford the premium payments then go ahead and
get it and hope you never have to tap the policy."
LTC Comment:
Good advice although the presumption that Medicaid is only for
“low-income” households is untrue. Income rarely excludes people from
Medicaid LTC eligibility.
#############################
4/3/2014,
“LTCI
is worth it: Opinion,” by Louis H. Brownstone, LifeHealthPRO
Quote:
"Getting LTCI coverage for half of what, from an actuarial perspective,
the coverage ought to cost is like buying a $30,000 car and paying on a
$16,000 loan for half of the loan period. What a deal!"
LTC Comment:
Center corporate member Louis Brownstone opines in this article on how to
respond to clients' complaints about premium increases.
#############################
4/3/2014,
“Guide
to Funding Long-term Care,” by FTAdviser
Quote:
"Most shocking for many is to realise for the first time that they are
expected to pick up the bill for their own care where the state deems they
can afford to do so and the costs can run into many tens of thousands of
pounds each year. . . . This guide explores self-funding requirements for
long-term care, the different products that offer to pay for that support
in 2014 and regulatory requirements for these deals."
LTC Comment:
Ever wonder how the Brits do it? This "guide" includes several articles
on long-term care financing in the UK.
#############################
4/3/2014,
“How
to win the long-term-care insurance game,” by Elizabeth O'Brien's,
WSJ MarketWatch
Quote:
"The long-term care insurance industry has seen its share of challenges in
recent years, generating no shortage of negative headlines. But while such
coverage isn't for everybody, almost anyone planning for retirement ought
to carefully consider whether they might need it-after all, burying our
heads in the sand about our future care needs is hardly a good
alternative."
LTC Comment:
Hackneyed but true, “denial is not a river in Egypt.”
#############################
4/3/2014,
“The
RAND Military Caregivers Study,” by Rajeev Ramchand and Terri
Tanielian, Rand Corporation
Quote:
“The RAND Military Caregivers Study focuses on the caregivers of wounded,
ill, and injured military service members and veterans. Funded by the
Elizabeth Dole Foundation, the study aims to quantify military
caregivers' needs and examine existing policies and programs for meeting
them. . . .
“There are 5.5
million military caregivers across the United States, with nearly 20
percent caring for someone who served since the terrorist attacks of Sept.
11, 2001. Military caregivers experience more health problems, face
greater strains in family relationships, and have more workplace issues
than noncaregivers. Changes are needed to both provide assistance to
caregivers and to help them make plans for the future.”
LTC Comment:
Tragic long-term (care) consequences of war.
#############################
4/3/2014,
“Today's Estate Planning Strategies: How to use ILIT-owned UL with an
indemnity LTCi rider [link],”
by Russell E. Towers, Life & Health Advisor
Quote:
"A popular new product that has aroused the interest of many estate
planners is a Guaranteed No-Lapse UL Policy with an ‘Indemnity’ Type of
Long Term Care (LTC) Rider. This type of policy would typically be owned
by an Irrevocable Life Insurance Trust (ILIT) to provide an income and
estate-tax-free death benefit. And the ‘indemnity’ LTC rider would be
available to provide potential LTC benefit payments to the ILIT to offset
extended care medical costs of the insured estate owner."
LTC Comment:
All these acronyms and complexity make a layman almost feel ILITerate.
#############################
4/3/2014,
“Median cost of a private nursing home room now exceeds $87,000 a year,
Genworth survey finds [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
“The median annual cost
of a private nursing home room in the United States has increased to
$87,600, according to the latest annual survey from insurance company
Genworth. This represents a 4.4% increase from a
year ago. The median price for a semi-private nursing home room
increased by 2.62%, reaching $77,380 a year, according to the report. The
cost of nursing care surged more dramatically than the cost of assisted
living, which ticked up 1.45% since Genworth's last report. The monthly
median rate for assisted living now is at $3,500, according to the latest
figures. . . .
Click here to access the 2014 report.”
LTC Comment:
Homemaker services surged
4.11% to $19 per hour, a 1.20% five year growth rate. Home health aide
services were up 1.59% and 1.32% per year for the past five years. As
always, we’ve posted the Genworth report in The Zone, the Center’s special
compendium of key data and information for members.
#############################
4/1/2014,
“Connecticut
blocks MetLife LTCI rate hikes,” by Allison Bell, LifeHealthPRO
Quote:
"The Connecticut Department of Insurance has rejected 13 individual
long-term care insurance (LTCI) rate increase applications filed by
MetLife Insurance Company of Connecticut."
LTC Comment:
Penny wise, pound foolish.
#############################
4/2/2014,
“Assembly Hearing Examines Latinos' Unpreparedness for Long-Term Care [link],”
by David Gorn, California Healthline
Quote:
"An Assembly [lower house of California state legislature] committee
hearing yesterday highlighted the lack of preparedness in the Latino
community for long-term care of family members and the large number of
families who likely will need help paying for it. . . . According to a
2012 poll by the SCAN Foundation, 60% of all Latino families in California
will need long-term care for a family member in the next five years. Among
Latino respondents, 91% said they could not afford three months of nursing
home care."
LTC Comment:
In the meantime, California’s Latino population continues to grow as the
state’s ability to generate revenue to fund its main LTC
payer—Medicaid—constricts.
#############################
4/1/2014,
“Huge Opportunity for Assisted Living to Retool for Short-Term Patients [link],”
by Alyssa Gerace, Senior Housing News
Quote:
“Assisted living providers looking for ways to grab a
piece of the post-acute care pie and simultaneously improve occupancy
are exploring short-term care models that function as a private-pay bridge
from hospital to home. In the skilled nursing industry, the split between
the short-term, Medicare-reimbursed and long-term, Medicaid-reimbursed
models is growing. As healthcare reform
puts greater emphasis on the healthcare continuum and post-acute care,
a similar split may start to occur in assisted living as well.”
LTC Comment:
As Medicare and Medicaid dodge responsibility to cut costs by pushing
people into private-pay assisted living, LTC insurance will be more
valuable to consumers than ever.
#############################
3/31/2014,
“Government-Sponsored Healthcare Shifts To ‘Survival Of The Fittest [link],’"
by Sundar Subramanian and Joyjit Saha Choudhury, Forbes
Quote:
"As baby boomers retire, the number of people eligible for Medicare is
expected to grow by some 3 percent a year, and we think growth will
slightly exceed that rate. That's only half the story though. Given
current constraints in the market, we expect that many unfocused and
low-quality plans will either be acquired or exit the MA business,
particularly small and mid-size payors. The emerging winners-those that
gobble up the membership of the exiting plans-will fall into two
categories: (1) larger players that can leverage their scale as an
antidote to smaller margins, and (2) regional plans that have deep local
provider relationships, which can give them a significant cost advantage
in both medical care and administration."
LTC Comment:
Maybe, but if true to past form, government will continue to clamp down on
reimbursements and increase regulation until even the fittest will be
challenged to survive.
#############################
3/31/2014,
“Leadership
and execution: Keys to culture change,” by Chris Perna,
McKnight's LTC News
Quote:
“The transformation of an organization's culture to person-directed care
is really hard work. Culture change may sound like a simple concept, but
it isn't necessarily easy to do. It takes strong leadership to guide an
organization through the transformation process. It takes time, energy,
resources, and requires a strong focus on follow-through. Leaders need a
combination of patience and tenacity to pull it off. If these realities
are underestimated, the journey will likely lead to failure.”
LTC Comment:
Remember Chris Perna who used to run MedAmerica? He left a few years ago
to direct the Eden Alternative, Dr. Bill Thomas's movement to bring
person-centered care to long-term care facilities. Chris writes about
that challenge in this “guest column” for McKnight's.
#############################
3/31/2014,
“States
may tighten ancillary product rules,” by Allison Bell, BenefitsPRO
Quote:
"Some insurance regulators want to tighten the state laws and regulations
that apply to health insurance products other than major medical
products. The regulators hope to update the standards that apply to
critical illness insurance, hospital indemnity insurance, short-term
medical insurance, dental insurance, vision plans and other products that
fall outside the scope of most or all of the Patient Protection and
Affordable Care Act major medical coverage rules."
LTC Comment:
Heads up! Here come the regulators.
#############################
3/31/2014,
“How
'eBaby Boomers' are finding extra cash in their closets,” by Michael
De Groote, Deseret News
Quote:
"A growing number of baby boomers are making money by taking a lifetime of
possessions and selling them online."
LTC Comment:
This story reminded me of the old TV ad with seniors shaking the couch
cushions in search for change to pay for long-term care. What company ran
that ad?
#############################
3/31/2014,
“LifeSecure Insurance Company Names New President and CEO [link],”
press release, PR Newswire
Quote:
“LifeSecure
Insurance Company, today announced the appointment of Tiffany Albert
as president and CEO. The move follows the retirement of Lisa Wendt, who
previously held the same position.”
LTC Comment:
Our best wishes to Ms. Wendt in her future pursuits.
#############################
3/24/2014,
“The Private Cost of Public Queues for Medically Necessary Care: 2014
Edition [link],”
by Nadeem Esmail, Fraser Institute
Quote:
"The estimated cost of waiting for care in Canada for patients who were in
the queue in 2013 was $1.1 billion-an average of about $1,202 for each of
the estimated 928,120 Canadians waiting for treatment in 2013."
LTC Comment:
Publicly financed health and long-term care definitely has "ancillary"
costs.
#############################
1/22/2014,
“How
Are Seniors Spending Their Money?,” by Pamela Villarreal, National
Center for Policy Analysis Issue Brief No. 135
Quote:
"Today's seniors have a mixed bag of spending habits. Although
discretionary and recreational purchases have increased, today's seniors
are taking on debt in the form of mortgages and credit cards. Moreover,
with abysmally low interest rates on savings and a tax policy that
subsidizes consumption over saving, seniors do not have much incentive to
save. Those who are early into retirement should rethink conventional
wisdom about saving by considering a variety of investments besides just
bonds. Also, they should avoid incurring debt through a home equity loan
or any type or mortgage."
LTC Comment:
As today’s boomers become tomorrow’s seniors, they’ll pay a steep price
for our country’s misguided fiscal and monetary policy.
#############################
Updated, Friday, April 04, 2014,
11:17 AM (Pacific)
Seattle—
#############################
LTC BULLET: HOW TO FIX LTCI IN
CALIFORNIA
LTC Comment: Private long-term care insurance in California is hurting.
Center corporate member Louis Brownstone provides a diagnosis and
prescription after the ***news.***
***
GENWORTH published its widely cited “Cost of Care Survey” for 2014 this
week. The median annual cost of a private nursing home room in the United
States increased 4.4% since last year to $87,600. Cost of a semi-private
nursing home room went up 2.6% to $77,380 per year. Assisted living
monthly costs increased somewhat less, up 1.45% to $3,500. Homemaker
services surged 4.11% to $19 per hour, up substantially from an average
1.20% five-year growth rate. Home health aide services increased 1.59%;
1.32% per year over the past five years. Click
here
for the full 2014 report;
here
for the “cost of care map”; and
here for “key findings.” As always, we’ve posted the Genworth report
here
in “The Zone,” the Center's special compendium of key data and information
for members. ***
*** THE AMERICAN ENTERPRISE INSTITUTE hosted another forum on long-term
care services and financing this week. Watch the full proceedings
here. This video is well worth a two-hour investment of your time.
Six of the most thoughtful analysts in the field comprise the panel
including the chairman, vice-chairman and one member of last year’s
Long-Term Care Commission. Besides summarizing the Commission’s work and
report, the panelists cited much of the most important recent research on
LTC financing. A couple thoughts to keep in mind as you watch this
program, however. First, not one of the presenters addressed the question
of how long-term care came to be so dysfunctional. (Nor did the LTC
Commission address that question.) It’s very dangerous to propose
solutions to a problem when you don’t know what caused the problem in the
first place. You run the risk of exacerbating the problem by
administering more of what caused the problem in the first place. Second,
note that the panel recognizes that Medicaid is important but can’t quite
pin down why and how. For example, even though it’s well substantiated
that the program helps middle class and affluent people as well as the
poor, how can Medicaid crowd out private LTC insurance if most people
don’t know who pays for long-term care? Simple: Medicaid has paid for
most expensive LTC since 1965, so the public doesn’t know who pays, but
Medicaid does pay, and that fact has anesthetized the public to LTC risk
and cost. Little progress in solving the LTC financing problem will be
made until experts like these diagnose the real cause (government
interference in the LTC market) and propose solutions that address that
problem (targeting Medicaid to the poor and using some of the savings to
incentivize responsible private LTC planning.) ***
*** READ OUR REPORT on long-term care financing in California--Medi-Cal
LTC: Safety Net or Hammock? here [???Damon add URL???] or on the
Pacific Research Institute’s website here [???Damon add
URL???]--together with today’s LTC Bullet for a fuller
understanding of the big picture in “The Golden State.” ***
LTC BULLET: HOW TO FIX LTCI IN CALIFORNIA
LTC Comment: From time to time we turn over the Center’s weekly LTC
Bullet op-ed to an expert in a field of interest to our readers.
Today, we invited Louis Brownstone to share his analysis of the long-term
care insurance market in California.
Mr. Brownstone is Chairman of
California Long-Term Care Services,
NorthStar Network, Inc. and past chairman of the
National LTC Network (also a longtime corporate member of the Center
for Long-Term Care Reform). Get to know Louis
here.
#############################
The following is Louis Brownstone’s “A Proposal for Long Term Care for
California,” as edited and condensed by LTC Bullets.
From what I can see, and from what others tell me, the long term care
insurance industry in the State of California is in gridlock. The
stakeholders are not speaking constructively to each other. The industry
is in danger of losing its viability. I want to stimulate a conversation
that can fix this mess.
What's at stake? Absent a solution, long term care services needs will
grow in the next twenty years to consume more than one half of all Medi-Cal
expenditures, costing hundreds of millions of dollars, that will drain
funds from a myriad of other public needs. Thousands of citizens will be
unable to afford or receive long term care services, will not be able to
care for themselves and will age poorly in place. Alternatively, we can
all come together and resume leadership in long term care planning.
Here are the problems as I see them with proposed solutions.
Problem #1: The Department of Insurance (DOI) fails to protect the
interests of the insurance carriers. It distrusts insurance carriers and
is either unwilling or unable to approve new policy filings. Maybe the
DOI has become ossified and the carriers are correct in saying that the
people in the DOI don't care. I suspect that's not true. Maybe it's a
question of an inadequate budget. Whatever the cause, I hear of many
instances where the DOI’s responses to carrier's requests are sympathetic
to their needs . . . and then nothing happens. That has to change.
It takes three to five months for carriers to get new policy filings
approved in other states, but two to three years in California. Many
carriers have adjusted their pricing in their filings to reflect this time
delay. The result is that citizens in California pay more than citizens
in other states for the same or lesser benefits. Timely approvals will
help everyone.
Long term care insurance policies sold in the 1990's gave policyholders
terrific value and cost about a third of what policies cost today. The
insurance carriers priced the policies incorrectly, and need price relief
so that they can come close to a breakeven on these older policies.
They're asking for huge rate increases.
They need some help . . . maybe not all that they are asking for, but some
help. It's not well known, but it also takes two to three years in
California for the DOI to approve a rate increase. This only creates
further delay and larger rate increase requests later on. Timely
approvals will help everyone in the end.
California has a history of top insurance carriers either suspending sales
or ceasing sales altogether. Allianz, Transamerica, Prudential, MetLife,
John Hancock, Mutual of Omaha, Genworth Financial . . . all large and
well-funded carriers. We need them. My greatest concern is that Genworth
will once again suspend or cease sales in California. Genworth represents
roughly half of all long term care insurance policies sold in California
in the last six months. It would be catastrophic if Genworth left.
Everyone would lose. Six months ago, Tom McInerney, Genworth's Chairman,
met with DOI Commissioner Jones. They had a meeting of minds. To my
knowledge, nothing has happened since.
Problem #2: The Department of Insurance is failing to protect the
interests of California citizens. The DOI has evolved from being a strong
protector of the interests of consumers to watching other states provide
better long term care solutions to their citizens. The main problem here
is failure to adjust to a change in the philosophy of long term care
planning and to accept the structure of new policies.
People are living longer, and when they get old, they get sick. Adverse
morbidity trends and other factors have made long term care insurance
policies far more expensive than before. Compromises have to be made to
make policies affordable to more than the very rich. The DOI has resisted
many of these compromises. The result is that people in other states are
utilizing novel inflation riders and are often paying far less in premium
than Californians. We allow our citizens to buy $25,000 life insurance
death benefits, which afford little family protection, because that's
better than nothing. Why not the same rationale for long term care
insurance? Bad regulations are hindering needed change.
An important price factor has been inflation riders. The old standard of
5% compound inflation is often unaffordable. But is it necessary? Most
folks are going to be cared for either at home or in a residential care
facility. Nursing facilities are becoming a last stop, and average time
spent in them is shrinking. If home health care inflation has been 1% to
2% and residential care facility inflation has been 3%, why should a
person need 5% compound inflation, as required by California Partnership
plans?
The industry standard for inflation riders has become 3% compound . . . or
less. We sell life insurance with small death benefits and even term
insurance which produces very few claims. Short and fat long term care
benefits can be a great help in many situations. Allow the consumer to
decide what he or she can afford.
Problem #3: Long term care insurance in California is badly in
need of new enabling legislation. The laws of the 1990's are outdated and
are not appropriate for the 21st century. They were in many ways
visionary when they were enacted, especially in consumer protections. But
they now inhibit change and prevent Californians from having choice in
long term care planning.
The theory has been that California should not adopt laws prevalent
elsewhere because California is different from any other state.
California is different, but if you look at California's six major
regions, each region has strong similarities with other regions of the
United States. We are Americans, and can learn from other Americans and
even embrace some of their laws. Our citizens are similar, and our long
term care problems are similar.
Many of the consumer protections in our laws have been adopted by other
states. They have not caught up to us, but they're close. Some
thirty-seven states have banded together to create an “interstate
compact.” Is it time to change our laws sufficiently to enable us to join
them? This would be a far simpler solution than beginning from a zero
base, and should be considered.
The National Association of Insurance Commissioners has adopted long term
care insurance standards and is presently working on a set of even newer
standards. We are engaged with this process. Again, the reasons for us
to be different have decreased. The Legislature needs to immediately
review and possibly adopt these new standards when they have been
completed.
The Legislature should enact new legislation which will change the laws to
give insurance carriers the product flexibility they enjoy elsewhere.
This will give consumers more choice and, importantly, more affordable
long term care insurance options. Policies in California are now
primarily being sold to the wealthy. Future Medi-Cal costs are going to
go through the roof if policies are not sold to the middle class.
Rich Californians now utilize elder law attorneys to shield their assets
in order to qualify for long term care services and supports through Medi-Cal.
The list of exempt assets is far too generous and the look-back period
needs to be extended. Medi-Cal should be for the needy, not the rich.
These lax standards need to change.
There is a new Assembly bill (AB 1553) which would prohibit gender-based
pricing for long term care insurance. Women pay lower rates than men for
life insurance and this is as it should be. Women live longer than men
and the insurance carriers price life insurance policies appropriate to
the risk. It should be the same with long term care insurance. This bill
is unwise and should be defeated.
I hope that the Insurance Committees of the Assembly and Senate will
consider these thoughts and will engage in meaningful discussions with all
stakeholders. It's their responsibility to do so, and much needs
attention.
Problem #4: The California Partnership for Long Term Care needs a
total overhaul.
California was one of the original four Partnership states in 1994. Its
purpose was to provide long term care protection for Californians with
moderate income and assets. This concept has now been adopted by most
other states and Partnership policies are being sold in quantity almost
everywhere. But the California Partnership is now in such bad shape that
it is really on life support.
This product is no longer saleable to its intended buyers . . . people
with moderate income and assets. Partnership policies used to constitute
about 75% of all my brokerage's sales, but I doubt if we sell 20%
Partnership policies today. Long term care insurance rates are triple
what they were in 1994. The 5% compound inflation requirements are too
stringent. Federal legislation accepts almost any kind of inflation rider
as a part of a Partnership policy. We need new Partnership legislation so
that the Partnership can be sold to a far greater audience. Otherwise,
it's of little value, and may even be a negative factor on future Medi-Cal
expense.
The Partnership program is currently a part of the Department of Health
Services. It is severely underfunded and understaffed. It seems almost
as if DHS doesn't recognize its existence. The Partnership has the
potential to save the state hundreds of millions of dollars. It needs to
be recognized as a future producer of revenue for the state, not as an
expense. It needs to be given the tools to do its job.
The Partnership was originally put under DHS because the program needs to
be coordinated with Medi-Cal. In fact, Medi-Cal has inhibited change by
insisting on the robust inflation riders discussed above. Maybe the
Partnership is in the wrong department and should be moved over to the
Department of Insurance. I would be in favor of this because it would
create fresh thinking.
The
Interstate Compact could be a starting point for new legislation. A
simple approach, accepting the Compact, could get a major change done
quickly. If its regulations were unacceptable, it could at least be built
upon to conform with some of the unique California standards.
The Partnership needs additional funding in order to educate Californians
and disseminate its message. It needs to ally with other outreach
programs, such as the
3in4 Need More campaign, and increase its public relations efforts.
These PR efforts are currently restricted by budgetary considerations.
Again, the proper promotion of long term care insurance will save the
state of California hundreds of millions of dollars.
As I said at the top, I want to stimulate a conversation that can fix this
mess. I am available to assist in any way that I can.
Sincerely,
Louis H. Brownstone
Louis@cltcinsurance.com
#############################
Updated, Monday, March 31, 2014,
???? AM (Pacific)
Seattle—
#############################
NEW SOURCEBOOK EDITION AND LTC
NEWS AND COMMENT
LTC Comment: Our
lead story today highlights the publication of the latest version of the
Alliance for Health Reform’s “Sourcebook for Journalists.”
*** HAPPY 16TH
BIRTHDAY (TOMORROW) TO THE CENTER FOR LONG-TERM CARE REFORM ***
3/25/2014,
“Covering
Health Issues: A Sourcebook for Journalists, Fall 2013,” Alliance for
Health Reform
Quote:
"The Sourcebook, produced with the support of the Robert Wood Johnson
Foundation, has the latest information and data on pressing health care
topics. It also includes the names and contact details for top experts in
each subject area, along with a comprehensive glossary of health care
policy terms."
LTC Comment:
This recently updated "Sourcebook" slants toward public financing and away
from market-based solutions but it is a useful data resource.
#############################
2/28/2014,
“MasterCare, a National LTC Network Member Firm, Recommends Consumers Work
with Long Term Care Insurance Specialists [link],”
press release edited by Jennifer Hedly, Florida NewsWire
Quote:
"The National LTC Network announces its immediate past Chairman, Mike
Skiens, is featured in an article on long term care planning in
Kiplinger's Retirement Report (March 2014)."
LTC Comment:
Congratulations to Mike Skiens and Center-corporate-member MasterCare.
#############################
3/27/2014,
“Insurers
tire of 'frenemy' White House,” by Elise Viebeck, The Hill
Quote:
"Insurers feel that the administration has taken advantage of them by
making repeated delays and changes to the law, even as they have gone
above and beyond the call of duty to fix problems with the rollout."
LTC Comment:
That’s what insurers get for trusting a government that repeatedly draws
the private sector in with promises of rich rewards and then reneges.
#############################
3/28/2014,
“CMS is failing to ensure that terminated skilled nursing facilities and
other providers are not billing Medicaid, watchdog agency says [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
“The report does not
include any numbers as to how many terminated providers still might be
receiving Medicaid payments, but the implication is that many could be.
Without reliable interstate data, a provider conceivably
could be terminated in one state but continue to bill Medicaid in another.”
LTC Comment:
Lack of profit motive and competition accounts for such oversights, or
lack of oversight.
#############################
3/26/2014,
“Overwhelming Majority of Seniors Satisfied with their Medigap Coverage [link],”
AHIP Press Release, InsuranceNewsNet.com
Quote:
“Ninety-four percent of seniors enrolled in Medigap are satisfied with
their coverage, according to a new Purple Insights survey released by
America's
Health Insurance Plans (AHIP). According to the survey, 80 percent of
beneficiaries say their policy provides excellent or good value for the
money, and the vast majority (91 percent) would recommend Medigap to a
friend or relative.”
LTC Comment:
Pretty good batting average.
#############################
3/26/2014,
“How A New Alzheimer's Test Could Kill Long-Term Care Insurance -- Or Make
It Cheaper [link],”
by Howard Gleckman, Forbes
Quote:
"A widely available test to predict Alzheimer's would make any form of
voluntary long-term care insurance impossible. 'It would be a huge game
changer,' one insurance actuary told me."
LTC Comment:
Nonsense. As long as the law is changed to allow--better yet,
require--insurance carriers to have access to the same test results, a
reliable test to predict Alzheimer's would increase the market for private
LTC insurance and lower the premiums. Such a test would impel financially
responsible people to purchase insurance before they take the test.
Otherwise they would lose some or all insurability if test results showed
a proclivity toward the disease. If people therefore purchased LTC
insurance earlier in life and if the test excluded more bad risks
(anti-selection), the coverage itself could cost less. On the other hand,
a test for Alzheimer's could devastate publicly financed LTC programs by
preventing people who could have and should have insured privately from
obtaining coverage in the market.
#############################
3/26/2014,
“Social
Security Deficit: Fact or Fiction?,” by Paul Nor, Financial
Planning
Quote:
"The Social Security OASI Trust Fund, now valued at roughly $2.7 trillion,
is fully invested in US Treasury securities. The projected 2013 interest
payments on this investment are approximately $98 billion. Add this into
the tax receipts and the program remains snugly in the black."
LTC Comment:
This article is worth reading for its clarification of the annual Social
Security deficit. It misleads, however, by suggesting Social Security is
"in the black" by virtue of its "trust fund," which holds nothing but IOUs
for money the rest of government has already spent. How solvent would you
feel if your entire net worth amounted to promissory notes from a bankrupt
relative?
#############################
3/26/2014,
“CNA Announces the Appointment of Al Miralles as President of Long-Term
Care [link],”
Press Release, Wall Street Journal
Quote:
"Al joined CNA in 2011 as Senior Vice President, Investments and Treasury.
He has more than two decades of insurance and financial services
experience and a proven track record of developing strategy, building high
performance organizations, and executing on sustainable operational
improvements. 'This new position brings a renewed focus to strategic and
operational management of Long-Term Care,' said Craig Mense. 'I am
confident Al's leadership will help us advance our objective in this line
of business."
LTC Comment:
CNA: Gone but not forgotten.
#############################
3/25/2014,
“Long-Term-Care Coverage With an Asset-Protection Twist: A
‘partnership-eligible’ policy may allow you to keep more of your assets if
you eventually need to rely on Medicaid [link],”
by Kimberly Lankford, Kiplinger
Quote:
“If a policy doesn’t qualify for the partnership program because it has a
smaller inflation protection, but it meets your needs and costs a lot less
than a partnership-eligible policy that, say, provides 5% compound
inflation, don’t automatically reject the lower-cost policy. If you never
need Medicaid, you’ll never benefit from the partnership policy anyway.
There are generally two criteria to qualify for Medicaid: the asset test
and the income test, says Steve Sperka, vice-president of long-term care
for Northwestern Mutual. 'If people have some source of retirement income,
say, from a pension, they may run out of assets but may never qualify for
Medicaid based on income.' You can find out more about your state’s
Medicaid eligibility requirements at
www.medicaid.gov."
LTC Comment:
The possibility Steve Sperka mentions—that people might deplete their
assets but still not qualify for Medicaid LTC benefits because of excess
income—is theoretically possible but highly unlikely. Income almost never
disqualifies anyone for Medicaid LTC because most states subtract private
LTC expenditures and medical expenditures not covered by Medicare from
income before deciding eligibility. You don’t need low income, but rather
only insufficient cash flow. Other states (13) apply income caps but
those are easily circumvented by means of Miller income-diversion trusts.
A good rule of thumb is that anyone with income below the cost of a
private nursing home, roughly $6,000 per month, qualifies for Medicaid LTC
based on income. Of course, most of that income has to be used to offset
Medicaid’s cost of care, but the eligible person gets Medicaid’s lower
reimbursement rate (for purposes of later estate recovery) along with
Medicaid’s substantial acute care benefits that go beyond what Medicare
covers.
#############################
3/25/2014,
“Two
New Ways to Buy Long Term Care,” by Terry Savage, Huff Post
Quote:
“Getting older is far better than the alternative. But taking care of our
parents - or having children take care of us - in our old age is an
expensive burden to place on each generation. That's something to think
about as Mother's Day and Father's Day approach. Long term care insurance
- either a traditional policy or one of these asset-based policies - can
make a huge difference in a family's finances. And that's The Savage
Truth.”
LTC Comment:
Sound advice from long-time nationally-syndicated financial columnist
Terry Savage. The article recognizes Center corporate members
One-America as a major carrier offering equity-based LTC combo
products and
MAGA as a key distributor.
#############################
3/25/2014,
“A
Quiet 'Sea Change' in Medicare,” by Susan Jaffe, New York Times
Quote:
“In January, Medicare
officials
updated the agency’s policy manual — the rule book for everything
Medicare does — to erase any notion that improvement is necessary to
receive coverage for skilled care. That means Medicare now
will pay for physical therapy, nursing care and other services for
beneficiaries with chronic diseases like multiple sclerosis, Parkinson’s
or Alzheimer’s disease in order to maintain their condition and prevent
deterioration.”
LTC Comment:
More Medicare coverage of
home care will help a lot of people, but it will also contribute to the
crowd out of private financing alternatives like LTCI, thus doing
long-term damage to LTC financing overall.
#############################
3/25/2014,
“Univita's Long Term Care Expertise Highlighted in LIMRA's MarketFacts
Publication [link],”
Press Release, HeraldOnline.com
Quote:
“Univita Health, the
largest long term care insurance administrator in the United States, as
well as an innovator in providing home-based care management, announced
today important findings in key claim practices for successfully managing
closed blocks of long term care insurance. Their
findings are published in the recent issue of LIMRA’s MarketFacts
Quarterly. In addition to converting more long term care (LTC) insurance
closed blocks than any other company in the industry, Univita’s LTC
division has over 1.4 million LTC policies under management, handling over
1 million claim transactions that pay over $1.4 billion in claims
annually. The findings in this study are based on Univita’s more than 20
years of research, analysis, and practice in claims and care management,
including claims audits of many of the leading insurance companies in the
industry.”
LTC Comment:
Congratulations to Univita, an industry leader and bellwether.
#############################
3/24/2014,
“Feeling
ill-effects of private long-term care insurance,” by David Lazarus,
Los Angeles Times
Quote:
"Critics of safety-net programs such as Social Security and Medicare are
fond of saying that the private sector would do a much better job of
protecting people thanks to the magic of the marketplace. Mike and Judy
Holtzman of Laguna Woods are now experiencing the magic of the marketplace
for long-term care insurance. And it stings. They were recently informed
by their insurer, John Hancock Life & Health Insurance Co., that their
annual premiums will almost double."
LTC Comment:
The premise of this article--that public programs have done fine while
private LTC insurance has failed--is false. The truth is that the public
entitlement programs are vastly underfunded. Yes, so are private books of
old LTC insurance. The difference is that the private sector is doing the
responsible thing, raising premiums to be able to pay claims, whereas the
public programs are sinking deeper and deeper into economy-sapping debt
and deficit spending.
#############################
3/24/2014,
“Medicaid
now attractive to millionaires,” by Jackson Adams, The Daily
Journal
Quote:
"Millionaires now can safely enroll in Medicaid, thanks to an
interpretation of the Affordable Care Act recently confirmed by the U.S.
Department of Health and Human Services."
LTC Comment:
It's not quite that simple, but still a concern, and worth understanding.
#############################
3/24/2014,
“Unless You Have Cash, You Don't Have Long Term Care Insurance [link],”
Press Release, PRNewswire
Quote:
"Why have sales started to increase with plans that offer a cash benefit?
Many feel agents are showcasing the cash benefit in response to prospects'
objections that LTCI policies are too complicated and that the consumer is
reacting to the simplicity that cash offers at claims time."
LTC Comment:
Cash IS king.
#############################
3/21/2014,
“How the Fed is hurting seniors, Opinion: The low-interest-rate policy
does more harm than good [link],”
by Diana Furchtgott-Roth, WSJ MarketWatch
Quote:
"The big winners of the Fed's policies were the U.S. government, which
gained about $900 billion, and non-financial corporations, which gained
$310 billion.
"McKinsey calculated
that households headed by people under the age of 45 are net debtors and
so have benefitted from lower rates. In particular, those households with
heads ages 35 to 44 have gained $1,700 more in spending each year because
of lower rates. Those under 35 gained $1,500 a year.
"The losers are the
seniors, especially household heads aged 75 and over, who lost $2,700 a
year in income. Those aged between 65 and 74 lost $1,900."
LTC Comment:
Turnabout from the usual government policy favoring seniors at the expense
of the young, but still a pernicious policy in many ways.
#############################
3/21/2014,
“Flu
Vaccines Spare Even the Frailest Elderly, Study Finds,” by Bill Myers,
Provider Magazine
Quote:
"Some health experts have worried that flu vaccines may do more harm than
good for those elderly in hospitals, homes or other 'institutions.' But
researchers at the Fung Yiu King and Queen Mary hospitals in Hong Kong
pored over thousands of worldwide studies-some dating as far back as
1946-and re-examined the data for outcomes. They found that vaccinations
correspondent [sic] to a 37 percent reduction of pneumonia
(especially when the year's vaccine matched the strain of that year's
virus-42 percent), and a 34 percent reduction in deaths from pneumonia or
flu."
LTC Comment:
I’ve wondered myself about the efficacy of flu vaccines.
#############################
Updated, Friday, March 28, 2014, 11:46 AM (Pacific)
Seattle—
#############################
LTC BULLET: WHO GETS MEDICAID
LTC?
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: WHO GETS
MEDICAID LTC?
LTC Comment: Last
week’s “LTC Bullet: LTC Embed Report from the Policy Front at ILTCI ’14
Orlando [link]”
highlighted a presentation at the recent 14th Annual
Intercompany Long-Term Care Insurance conference titled “Feder and
Warshawsky: Long-Term Care Financing Perspectives and Solutions: An
in-depth conversation with two of the nation's most knowledgeable
long-term care experts, Mark Warshawsky and Judith Feder.”
During that
presentation, Dr. Feder of
Georgetown University's McCourt School of Public Policy—who has had a
long and distinguished academic career focused on long-term care financing
issues—stated that most people who receive Medicaid nursing home benefits
did not possess much wealth 10 or 15 years before qualifying for public
assistance. That statement didn’t surprise me. Too few Americans have
accumulated sufficient retirement savings so naturally “most” of them who
end up in Medicaid nursing homes will have had small estates a decade or
more earlier. What gave me pause, rather, was her implication that this
fact meant problems raised in a recent Wall Street Journal op-ed
titled
Millionaires on Medicaid by her interlocutor,
Mark Warshawsky of the
American Enterprise Institute , himself an accomplished and
well-regarded scholar in the field, somehow didn’t matter.
So I asked Dr. Feder
what her source was for that conclusion. She responded by referring me to
Rich Johnson’s testimony before the LTC Commission. Check it out: “Income
and Wealth of Older Adults Needing Long-Term Services and Supports,”
Statement of Richard W. Johnson, Senior Fellow, The Urban Institute,
before the Commission on Long-Term Care, August 1, 2013. I encourage
everyone to read his full testimony. What follows are selected quotes and
my comments. My closing comment addresses the more general question of
why so many academics choose to conduct only research that supports a
public financing bias and avoid addressing facts that challenge that bias.
Quote:
"As the focus on Medicaid intensifies, questions grow about exactly who
receives help from the program in later life. Has the program morphed into
a middle-class entitlement for nursing home care? I have been examining
the income and wealth trajectories of older adults who end up in nursing
homes. My principal conclusion is that most older people who receive
Medicaid-financed nursing home care have low incomes and very little
wealth, not only while they are in the program but also for at least a
decade before they enter a nursing home.” (p. 1)
LTC Comment:
OK, as I acknowledged above, that’s obvious given Americans’
well-documented failure to save adequately for retirement.
Quote:
"These results suggest that efforts to promote individual saving for
long-term care, while laudable, may not move many people off Medicaid or
save the program much money, because most Medicaid nursing home residents
never had the means to save much in the first place. These findings thus
underscore the importance of Medicaid for some of the nation's most
vulnerable citizens." (pps. 1-2)
LTC Comment:
Whoa! Wait a minute. First, no one has challenged “the importance of
Medicaid for some of the nation's most vulnerable citizens.” What’s at
issue is whether Medicaid should provide long-term care to people who
could have, would have and should have planned responsibly to pay for
their own care if it were not for perverse public policy incentives that
discourage responsible LTC planning. Let’s first see if Johnson’s data
and analysis support his conclusion that more responsible LTC planning
wouldn’t save Medicaid much money.
Quote:
“It can be difficult to tap into home equity to cover the cost of
long-term services and supports and other living expenses, and states do
not always pursue beneficiaries' housing wealth when trying to recoup some
of the cost of Medicaid-financed nursing homes. Consequently, nonhousing
wealth-defined as total household wealth excluding the value of home
equity-is another useful metric of financial well-being.” (p. 4)
LTC Comment:
Hard to tap home equity? No it’s not. That’s what reverse mortgages do.
The
National Council on the Aging (NCOA)
encourages their use as a funding source for long-term care. Home
equity, the biggest asset aging Americans possess, goes largely unused to
fund long-term care because Medicaid exempts the home and all contiguous
property up to a minimum of $543,000 in most states and a maximum of
$814,000 in the rest. People face a strong disincentive to tap the equity
in their homes to fund home care or to supplement their income so they can
afford private LTC insurance. Furthermore, the fact that state Medicaid
programs fail to pursue estate recovery of housing wealth means that home
equity is not only exempt for recipients going onto assistance, it is
protected as a “windfall of Medicaid subsidies” for their heirs as the
HHS Inspector General explained in a 1988 report (pps. 47-48).
Johnson’s conclusion that “nonhousing wealth” bears considering as a
measure of financial well-being is therefore unfounded. Nonhousing wealth
doesn’t amount to much in the first place and, in the second place, it is
very easy to eliminate from Medicaid spend down liability by purchasing
exempt assets including home equity but also an automobile, an
income-producing business, term life insurance, an IRA, and prepaid burial
insurance.
The first section of
the testimony titled "Current Financial Status of Older Americans with
Disabilities" (pps. 2-5) is not relevant as the disabled could not have
insured and likely would not have been able to save for long-term care.
The second section, titled "Midlife Financial Status among Those Who
Develop Disabilities in Later Life" is more relevant (pps. 5-7)
Quote:
“The limited income and wealth of older adults with disabilities suggests
that few can afford to spend much out of pocket on long-term services and
supports. However, financial shortfalls in later life may reflect
long-term care expenses and are not necessarily reliable indicators of
lifetime economic status or the ability to have saved earlier in life for
future care needs. Moreover, some older adults with disabilities might
have recently transferred assets to family members to qualify for
Medicaid. To improve our understanding of the potential capacity of adults
to save for future spending on long-term services and supports, the
analyses described in this section examine income and wealth for people in
their fifties in the early 1990s, and compares financial well-being for
those who develop disabilities by their seventies and those who do not.
Estimates are restricted to those who reported no ADL limitations in their
fifties and were not yet retired at that time, so that the analyses do not
confound the financial effects of retirement with the effects of future
disabilities. (p. 5)
LTC Comment:
This is too short a span of years to permit valid conclusions. People in
their 50s who develop disabilities only 20 years later by their 70s were
likely poorer and more prone to health problems than people who did not
develop disabilities in that short time span. We would need to compare
the financial condition of people in their 50s with their financial and
health conditions at age 85 or older, which is when the need for long-term
care spikes upward. Unfortunately the data source used for this analysis
does not cover such a long span of time. It would be very interesting to
have an insurance actuary analyze this data.
Quote:
“Disability-related disparities in household wealth are even more stark
than disparities in household income. Median household wealth in 1992 for
adults ages 52 to 60 was nearly twice as high for those who did not
develop any disabilities by ages 70 to 78 than those who developed two or
more ADL limitations (figure 2). Total household wealth did not exceed
$13,300 for one in four of those who became disabled. Half of those who
became disabled held less than $111,300, and three-quarters held less than
$238,900. Household wealth approached $700,000 or more for only 1 in 10
adults in their fifties who became disabled by their seventies. (p. 6)
LTC Comment:
Ditto my previous comment. But really, half of those who became disabled
had $111,300 or more in household wealth and one quarter had $238,900 or
more in their 50s when they were still working and accumulating more
wealth? They sound like candidates for savings or insurance who could
have prepared better for their future disabilities (and possibly delayed
or avoided welfare dependency) had they had stronger incentives (and fewer
disincentives) to do so.
The key section in
Dr. Johnson’s testimony is the next one, titled “Financial Status of Older
Americans Receiving Nursing Home Care” (p. 7).
Quote:
"The analysis in this section follows a sample of HRS respondents for up
to 17 years, from 1993 until 2010. The respondents were ages 70 to 75 in
1993, when all were living in the community, and survivors were ages 87 to
92 in 2010. The analysis compares 1992 income and 1993 wealth for those
who received some Medicaid-financed nursing home care over the period,
those who received some nursing home care but were never covered by
Medicaid, and those who never received nursing home care.
"Adults who
eventually obtained nursing home care paid at least in part by Medicaid
received substantially less income before they entered a nursing home than
those who never entered a nursing home and those who obtained nursing home
care that was never paid by Medicaid. Median annual per capita household
income in 1992 was about $14,200 (in 2012 constant dollars) for those who
eventually received Medicaid-financed nursing home care, compared with
$21,500 for those who never received nursing home care and $25,500 for
those who received nursing home care but were never covered by Medicaid
(figure 4). Only a quarter of those who eventually obtained
Medicaid-financed nursing home care received annual per capita income in
excess of $20,000, and only a tenth received income in excess of $31,800."
(p. 7)
LTC Comment:
How is this relevant? By the time they're in their 70s their incomes have
already declined because they are no longer employed. We need to know
their incomes and wealth in their 50s when they could have saved or
insured. But again, as above, the data source used for this analysis does
not have the longitudinal reach it would need to have to span people’s
financial and health conditions from their 50s, when their income and
wealth are higher and still growing, through their 90s when they’re most
likely to need expensive long-term care.
Quote:
“Household wealth varies sharply by future nursing home care. Among
community-dwelling adults ages 70 to 75 who eventually entered nursing
homes, the median household wealth for those who never received Medicaid
was more than five times as high as for those whose nursing home care was
at least partly paid by Medicaid ($255,000 versus $49,600, figure 5).
Median wealth for those who never entered nursing homes was more than
three times as high as for those who received Medicaid-financed care. A
quarter of those who later received Medicaid-financed nursing home care
held less than $2,700 in total household wealth at ages 70 to 75, while
only a quarter held more than $151,700 in total household wealth and 1 in
10 held more than $260,600.” (p. 9)
LTC Comment:
Ditto my comment above about the inadequate chronological span of this
data. Furthermore, that quarter of folks with more than $151,700 and the
one in 10 with over $260,000 sure sound more like candidates for
private-pay LTC instead of Medicaid, yet that’s where they ended up. The
more important question is how much of their wealth was actually used to
fund long-term care? How much was lost to asset exemptions, Medicaid
planning, and estate recovery evasion?
Quote:
"About half of our 1993 sample of adults ages 70 to 75 who eventually
received Medicaid-financed nursing home care entered a nursing home within
10 years. Some of these people may have spent much of their wealth on paid
home care, and some may have transferred some of their assets out of their
own name to qualify for Medicaid because they expected to need nursing
home care soon.
"To account for these
possibilities, figure 7 examines household wealth in 1993 for
community-dwelling adults ages 70 to 75 who did not enter nursing homes
until 2003 or later (at least 10 years in the future). Even among members
of this group, who seem less likely to have been able to anticipate their
future nursing home admissions and may have spent less on other care and
medical expenses than those who entered nursing homes sooner, very few of
those whose eventual nursing home stays were at least partly paid by
Medicaid had accumulated much wealth. Half had less than $59,600 in total
household wealth in 1993, and a quarter had less than $9,900. Only 10
percent had more than $286,800." (p. 10)
LTC Comment:
Ditto my comment above about the inadequate chronological span of this
data. Furthermore, it is naïve to think people are unaware of Medicaid
planning opportunities to shelter or divest assets. Do an internet search
for “Medicaid planning in Your State” and see what you get. Word gets out
fast among the aging on the “wheel chair telegraph.” Potential heirs have
their ears to the ground as well. Still, half had more than $59,600 and
one in 10 had over $286,800? Isn’t there something these folks and their
families might have done to avoid welfare dependency if public policy had
encouraged them to do so instead of providing a slippery slope into public
assistance? Before Medicaid intervened half of nursing home residents
were private pay; now 63% reply on Medicaid; 14%, on Medicare; and only
22% depend on “other” sources. Those other sources include private
long-term care insurance, other medical insurance, other public coverage
and, finally, last and likely least, the old-fashioned, write-the-check
every month kind of private-pay which is rapidly disappearing.
Quote:
“It is worth noting some of the limitations of this research. For example,
income, wealth, and Medicaid coverage are all reported by older
respondents themselves or their proxies (usually their spouses or adult
children), and the information they provide is not always accurate. The
sample of older adults with disabilities on which the analyses are based
is relatively small, which limits confidence in the estimates.
Additionally, we observe Medicaid coverage only through ages 87 to 92, and
some people do not receive Medicaid-financed nursing home care until even
older ages. Those who do not obtain Medicaid coverage until they reach
their nineties may have had more wealth when younger than those who obtain
coverage sooner.” (pps. 11-12)
LTC Comment:
“Worth noting some of the limitations”? I should say so. Data provided
by elderly respondents, and by their heirs with a stake in potential
inheritances protected by Medicaid, is dubious. Missing ages over 92
years drops the most costly long-term nursing home expenditures from the
analysis as Mark Warshawsky points out and DeNardi, et al. observed
in their
seminal paper for the Chicago Federal Reserve Bank. Finally “big
data” is notorious for misinterpretation, intentional or otherwise.
Quote:
“Despite these caveats, it is clear that Medicaid provides a vital safety
net for older adults with disabilities. 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.”
Closing LTC
Comment: Most is not all. The
fact that “most older adults who end up on the program” would not have
been able to save, invest or insure sufficiently to avoid Medicaid is not
at issue. Nor is Medicaid’s future role in providing long-term care to
the indigent. What is at issue is whether Medicaid should be readily
available for middle class and affluent people without significant spend
down and whether or not the fact that it is so available results in fewer
people saving, investing or insuring for long-term care and more people
unnecessarily dependent on the program.
That is the issue so
many academics evade. They continue to write that “Medicaid requires
impoverishment” and only “low income” people qualify for the program’s
long-term care benefits. Such statements are demonstrably false. Income
level rarely interferes with eligibility. Assets are virtually unlimited
because of Medicaid’s many exemptions. Actual unlimited wealth can be
divested five years ahead of applying without penalty. Numerous other
means of sheltering assets are available from elder law advisers without
planning half a decade ahead. Estate recovery is weak in most states,
easily avoided in the rest, and of course cannot recapture wealth that was
jettisoned in the first place.
All these facts are
well documented
here. They explain why a few brave academics have been able to
discover and publish results that contradict the conventional academic
wisdom that Medicaid LTC requires impoverishment. They explain why the
Chicago Fed found “that even higher-income retirees benefit from
Medicaid.” They explain why
Brown and Finkelstein discovered that Medicaid crowds out 65% to 90%
of the potential market for private long-term care insurance.
What remains
unexplained is why most academics and the reporters they supply with
expert advice still ignore the facts of Medicaid eligibility. They
continue to seek answers in giant data bases and tiny samples, but almost
never ask Medicaid eligibility workers how the program really works or
consult actual Medicaid case files for answers. I’ve done both for 30
years and I’ve reported the surprising results in publications for the
Health Care Financing Administration (1985), the
HHS Inspector General (1988), the
Gerontologist (1990), the
Journal of Accountancy (1993), the
Journal of Financial Planning (2001), the
Cato Institute (2005) and in dozens of trade journal articles and
think-tank sponsored reports available
here. So, you can’t say we didn’t warn you.
The Center for
Long-Term Care Reform’s latest research goes beyond documenting the easy
access to Medicaid LTC benefits and its crowd out effect on responsible
planning. We’ve begun to explore the likely consequences of a wider range
of factors dragging down the prospects for future long-term care
financing. Our “Index of Long-Term Care Vulnerability” gauges the
likelihood that long-term care service delivery and financing as it exists
in the United States today can survive the ravages of aging demographics,
morbidity, economic and fiscal challenges, inadequate private financing
alternatives, and the “entitlement mentality.” Our three latest reports
apply this “Index” to Virginia, New Jersey, Georgia and the USA. Read
them
here at the section titled “The Center’s latest state reports.”
It may be already too
late to save America’s dysfunctional long-term care system, but it’s never
too early to wake up, smell the coffee, debunk the myths, and confront the
reality.
#############################
Updated, Monday, March 24, 2014,
11:20 AM (Pacific)
Seattle—
#############################
PREMIUM INCREASES AND LTC NEWS
AND COMMENT
LTC Comment: During his “Future of the Industry” remarks last week,
Genworth CEO Tom McInerney emphasized the importance of convincing LTC
insurance regulators to allow reasonable premium increases. We
highlighted this event and his speech in Friday’s LTC Bullet: “LTC
Embed Report from the Policy Front at ILTCI ’14 Orlando.” Read it
here. In our first article today, the New York Times addresses
the issue of LTCI premiums.
3/21/2014, “Premiums Rise for Long-Term Care Insurance. Keep It or
Drop It? [link],”
by Ann Carrns, New York Times
Quote: "[M]ajor insurers have been successfully seeking state
approval to raise premiums on existing policies, and the increases are
typically phased in over several years."
LTC Comment: Music to Tom McInerney's ears as he identified--at
the ILTCI conference last week--cooperation of regulators in raising
premium rates as key to the LTCI industry's survival and growth.
#############################
3/21/2014, “The
'wealthy poor' replace the middle class,” by Rick Newman, Yahoo!
Finance
Quote: “A
new paper by economists Greg Kaplan and Justin Weidner of Princeton
University, and Giovanni Violante of New York University, finds that about
70 million Americans may live in families they describe as “wealthy
hand-to-mouth” households. These are families that own assets such as
homes, cars, retirement plans and even boats, yet still spend virtually
every dollar of their regular income because it’s necessary to pay all the
bills they’ve racked up.”
LTC Comment: Two points: (1) this research shows why Medicaid’s
home equity exemption of up to $814, 000 is crazy and (2) imagine the
potential for funding long-term care insurance through a carve out of home
equity which would protect the entire estate including the residual home
equity.
#############################
3/21/2014, “How
Long-Term Care Insurers Deny Benefits,” by Richard Eisenberg,
Forbes
Quote: “Here’s a
heartbreaking scenario: Your parents or another loved one bought a long-term
care insurance policy years ago and have paid its steep premiums ever
since, but now that they need the benefits, the insurer refuses to pay
them. Sadly, this happens all too often, as I learned last week at the
Aging in America 2014 conference of the American
Society on Aging in San Diego.”
LTC Comment: This
slanted article is full of specious arguments even implying that LTC
insurers should pay for facilities that are unqualified to provide the
insured services!
#############################
3/21/2014, “Public reporting of physical restraint use led to 36%
increase in antipsychotic prescribing for dementia, researchers find [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Public reporting of physical restraint use in nursing homes
caused a spike in the use of antipsychotic medications to control
residents' dementia symptoms, according to a recently published analysis.
These results suggest that policymakers should consider unintended
negative consequences of publicly reporting quality measures, the
researchers emphasized."
LTC Comment: You couldn't ask for a better example of how
bureaucrats' good intentions can go terribly awry.
#############################
3/20/2014, “Trade
groups oppose LTCI proposal,” by Allison Bell, LifeHealthPRO
Quote: "Some regulators want insurers to have a long-term care
insurance (LTCI) loss ratio of 100 percent before they raise LTCI rates.
The American Council of Life Insurers (ACLI) and America's Health
Insurance Plans (AHIP) have teamed up to fight the proposal."
LTC Comment: Only government can operate at a 100 percent (or
greater) loss ratio and look what that's brought us!
#############################
3/19/2014, “Observation
stay bills in focus for LTC providers,” by Elizabeth Leis Newman,
McKnight's LTC News
Quote: “While
some have argued that CMS's recently enacted
two-midnight rule should fix much of the problem for seniors,
providers counter that it doesn't help those who are in the hospital for
fewer than two midnights and may face huge costs when they discover they
are ineligible for skilled nursing care.”
LTC Comment: Medicare dropped the 3-day hospitalization rule after
MCCA ’88 but reinstated it a year later. Private LTCI dropped it and it
stayed dropped.
#############################
3/19/2014, “HBO documentary reveals a certified nursing assistant's
struggle [link],”
by Tim Mullaney, McKnight's LTC News
Quote: “President
Lyndon Johnson highlighted
impoverished families in Appalachia when he declared a ‘war on
poverty.’ Fifty years later, as the nation takes stock of how successfully
we've waged this war, the media is spotlighting certified nursing
assistants in long-term care facilities as examples of the working poor.”
LTC Comment: A good example of poor public LTC policy that left
too many people dependent on inadequate Medicaid reimbursement rates.
#############################
3/18/2014, “Robots to Aid Walking Offer New Tool to Aging, Disabled
[link],”
by Kanoko Matsuyama, Bloomberg
Quote: “Eyeing a
new market of aging populations and concern over rising health costs,
companies in U.S.,
Europe and Japan are developing bionic suits that may someday save
labor and help the elderly care for themselves.”
LTC Comment: A new version of “the six million dollar man.”
#############################
3/19/2014, “Alzheimer's
takes heavy toll on women,” by Karen Weintraub, USA Today
Quote: "Women are far more likely to develop the fatal disease
than men: one in six women over 65 will get it during their lifetime,
compared with one in 11 men."
LTC Comment: Nevertheless, some say charging women more for LTC
insurance is "discrimination." The same folks are silent about the
appropriateness of charging men more for life insurance. Just goes to
show that politics is the wrong realm for discussing such issues. Logic,
evidence, markets and economic principles should prevail.
#############################
3/19/2014, “Dual eligibles in nursing homes have fewer
hospitalizations than those in home- and community-based care, researchers
find [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Recent Medicaid reforms have aimed to increase use of HCBS
because it is believed to be less costly than institutional long-term
care, investigators noted. They said their findings suggest that more
frequent hospitalizations are a 'hidden cost' of home- and community-based
care."
LTC Comment: More evidence HCBC is a double-edged sword.
#############################
3/17/2014, “HHS
may kill stand-alone indemnity,” by Allison Bell, LifeHealthPRO
Quote: "The U.S. Department of Health and Human Services is trying
to eliminate any possibility that consumers will use limited-benefit
health insurance as a substitute for traditional coverage. . . . HHS
proposed the rule on page 44 of a draft regulation that could apply to
individual hospital indemnity insurance, individual critical illness
insurance and other individual supplemental health insurance products."
LTC Comment: We'll follow this issue and report further
developments. Thanks to AIM's John Hennessey for tipping us to this
article.
#############################
3/17/2014, “U.S. retirees return to reverse mortgages, big banks
stay away [link],”
by Peter Rudegeair and Michelle Conlin, Reuters
Quote: "U.S. baby boomers desperate for retirement income are
increasingly turning back to a financial product that, after the housing
bust, had been left for dead: the reverse mortgage."
LTC Comment: Home equity could boost private LTC financing when
the bottom falls out of Medicaid, but not if it’s used up supplementing
seniors’ retirement income in the meantime.
#############################
3/10/2014, “America Needs to Rethink 'Retirement': Unleashing the
economic power of older workers is essential for U.S. prosperity [link],”
by Nicholas Eberstadt And Michael W. Hodin, Wall Street Journal
Quote: "Research suggests that keeping older workers engaged in the
economy will directly boost gross domestic product. In Japan, a 2005 study
by the Nihon University Population Research Institute concluded that
increasing the retirement age to 65 from 60 could raise per capita GDP 10%
by 2025."
LTC Comment: A “silver” lining.
#############################
3/16/2014, “How
to handle long-term care premium hikes,” by Robert Powell, USA
Today LTC Comment:
Quote: "Three things are certain in life if you're among the 8
million Americans who own a long-term-care insurance policy. Besides
death and taxes, you'll face an extraordinary increase in your premium at
some point."
LTC Comment: Death and taxes will continue but exceptionally high
LTCI premium increases may not. What if interest rates return to normal
and public programs stop paying for LTC? With profits and demand up, LTCI
premium might decrease in the future.
#############################
3/16/2014, “Alzheimer's and Its Uncounted Victims Deaths from the
disease may be six times higher than reported. This is a cancer-size
illness [link],”
by George Vradenburg and Stanley Prusiner, Wall Street Journal
Quote: "It's well known that President Ronald Reagan died in 2004
after a long battle with Alzheimer's disease. Yet his death certificate
listed pneumonia as the official cause of death. Attributing Alzheimer
deaths to other diseases is all too common-and highlights the complicated
nature of Alzheimer's contribution to deaths in the U.S. each year. It
also suggests that Alzheimer's might be a bigger problem than previously
thought."
LTC Comment: One more way in which this disease is pernicious.
#############################
3/15/2014, “As Living Standards Fall for Seniors, Some See Signs of
'Silver Revolution' [link],”
by David Wallismarch, New York Times
Quote: "Whatever the reasons, several social scientists say
deteriorating conditions for retirees and older Americans in general -
intensifying fear about retirement security, age discrimination,
increasing poverty among the elderly and new threats to cut programs for
seniors - could be the impetus for what some are calling a 'silver
revolution.'"
LTC Comment: Others have called this “generational warfare.”
#############################
3/13/2014, “Life
care lawyers can help navigate veterans' benefits,” by Rachel
Kabb-Effron, Cleveland Jewish News
Quote: "With the cost of long-term care rising every day, seniors
want to know how to pay for care without breaking the bank. Many know
about Medicaid benefits and planning, but few realize there is a benefit
available to veterans and their widows called the VA Pension, commonly
known as Aid and Attendance. Under this program, the VA can contribute up
to $2,094 per month for a married veteran and $1,130 per month for a
veteran's widow."
LTC Comment: Gaming VA benefits is as common as, and easier than,
gaming Medicaid LTC benefits.
#############################
3/13/2014, “Emergency
Rooms Are No Place for the Elderly,” by Pauline W. Chen, M.D., New
York Times
Quote: “The
number of older people seeking health care is expected to increase
significantly over the next 40 years, doubling in the case of those older
than 65,
potentially tripling among those over 85. In a health care system
already
critically short of primary care providers and geriatrics specialists,
many of these older patients will likely end up in emergency rooms.”
LTC Comment: Just as we didn’t have enough elementary schools for
the baby-boomers in the early 1950s despite several years to plan, we
won’t have enough caregivers for them in the 2030s despite decades to
plan.
#############################
3/12/2014, “Medicare Changes Prompt Enrollees to Reconsider Plans [link],”
by Walecia Konrad, New York Times
Quote: "One reason Medicare Advantage plans have attracted a
growing number of Americans - 29 percent of the 52 million Medicare
recipients have chosen them, according to Avalere Health, a research firm
- is that they have been, in effect, subsidized by the federal
government. Now the government is reducing, over time, what it pays the
private plans, bringing payments in line with those for traditional
Medicare."
LTC Comment: Another bait and switch by the government?
#############################
3/12/2014, “Insurers
wary of Obamacare unknowns as they plan for 2015,”
by Caroline Humer, Reuters
Quote: "For 2015, insurers must describe their health plans and
proposed rates to state and federal regulators starting in April and May.
But before they do, some of the most important factors that go into those
decisions may not be known, from the size of the doctor and hospital
networks that the federal government will approve to final 2014 enrollment
figures and the relative health of their new plan holders."
LTC Comment: It looks like the health insurance industry will pay
dearly for following government down the primrose path of ObamaCare.
#############################
3/12/2014, “CalPERS long-term care policyholders downgrade
coverage, avoid rate hike [link],”
by Jon Ortiz, The State Worker
Quote: “About 16,000 people shifted from programs that guaranteed
life-time benefits with inflation-adjusted payouts to policies that cap
payments for convalescent care, in-home assistance and similar services,
CalPERS executive Ann Boynton told reporters during a Tuesday
conference call.”
LTC Comment: But they kept their coverage and that’s the bigger
story.
#############################
3/12/2014, “Long Term Care Insurance Association Launches Drive To
Double Sales [link],”
Press Release, ExpertClick
Quote: “A drive to bring back insurance agents who once sold long
term care insurance and recruit new producers interested in hybrid
solutions is being undertaken by the American Association for Long Term
Care Insurance, a national trade group."
LTC Comment: You can’t win the war without soldiers.
#############################
3/11//2014, “Lincoln
Financial Group Introduces Next Generation of Long Term Care Funding
Solution [link],”
Press Release, Wall Street Journal
Quote: "MoneyGuard(R)
II offers clients the option to spread premiums over multiple years.
Clients can select a variety of payment patterns, from single pay to over
10 years, providing cash flow flexibility for various financial
portfolios. MoneyGuard(R) II offers clients the option to spread premiums
over multiple years. Clients can select a variety of payment patterns,
from single pay to over 10 years, providing cash flow flexibility for
various financial portfolios."
LTC Comment: Another “combined product” to help meet the industry
challenges of these times.
#############################
3/10/2014, “What Paul Ryan Got Right: Medicaid's Effect on
Long-Term Care Insurance [link],”
by Jeffrey Brown, Forbes
Quote: “The study
in question – the one that Congressman Ryan got right despite the Fiscal
Times claim to the contrary – was a paper I co-authored with
Amy Finkelstein of MIT. This
paper, published in the 2008 American Economic Review, estimated that
Medicaid could explain the lack of private insurance for about two-thirds
to ninety percent of individuals, even if no other factors limited the
market for insurance. This despite the fact that long-term care
expenditures constitute one of the largest financial risks facing the
elderly in the United States and play a central role in determining the
retirement security of elderly Americans.”
LTC Comment: Good
to know that Paul Ryan understands how Medicaid crowds out private LTC
insurance.
#############################
3/9/2014, “Researchers find way to predict Alzheimer's disease:
report [link],”
by Joel Landau, New York Daily News
Quote: “A group
of scientists claims it has developed a revolutionary test that can
predict if someone will develop Alzheimer's disease. The researchers
told CNN they were able to find the connection through testing lipids
levels in the blood. The testing found the blood test predicted who would
get the degenerative brain disease that kills about half a million people
a year with more than 90% accuracy — even if the patient has not exhibited
any symptoms, the doctors said.”
LTC Comment:
Underwriting breakthrough?
#############################
Updated, Friday, March 21, 2014,
11:11 AM (Pacific)
Seattle—
#############################
LTC BULLET: LTC
EMBED REPORT FROM THE POLICY FRONT AT ILTCI ’14 ORLANDO
LTC Comment: ILTCI
’14 in Orlando was another fine conference with record attendance despite
downbeat LTCI industry results. Details after the ***news.***
*** SPRING SPRANG
YESTERDAY! ENJOY. Now, let’s go directly to today’s report. ***
#############################
LTC BULLET: LTC
EMBED REPORT FROM THE POLICY FRONT AT ILTCI ’14 ORLANDO
LTC Comment: Damon
and I are just back from the 14th Annual Intercompany Long-Term
Care Insurance Conference in Orlando, Florida. Like its predecessors,
this year’s meeting, with over 900 attendees including 100 presenters, was
another big success. Incomparable networking opportunities, a large
exhibit hall and excellent food and drink (open bars) are typical of this
industry meeting. None of that would be possible without the generous
support of many major supporters. Check out the Diamond, Platinum, Gold
and Silver sponsors
here.
We asked conference
founder Jim Glickman for his highlights of the meeting. He responded:
1.
The 14th Annual Intercompany LTCi Conference in Orlando, FL
(co-sponsored by the LTC Section of the Society of Actuaries) had over 900
attendees, an all-time record surpassing the 855 attendees in
Jacksonville, FL in 2008. [NB: the Silver Bullet of Long-Term Care was
parked outside the conference venue in Jacksonville as we were well
underway with the Center’s 2008 “National
Long-Term Care Consciousness Tour.”]
2.
As usual, the largest representation from the 10 tracks (Actuarial,
Claims, Compliance, Field Marketing, Group, Home Office Marketing,
Management, Operations, Policy and Providers, and Underwriting) was from
Field Marketing, followed closely by Actuarial and then Management).
3.
For the first time in several years, there were attendees from
multiple insurance companies not currently participating in the LTCi
marketplace, together with most of the larger companies, who have at least
temporarily, stepped away from issuing new business.
4.
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.
5.
The two full days and two half days featured over 45 educational
sessions, together with more than 20 hours of organized networking.
6.
The Exhibit Hall featured 54 Exhibitors, displaying all the latest
innovations for insurance company home offices and their agents.
Next year’s 15th
Annual ILTCI Conference will take place March 22-25, 2015 at the beautiful
Broadmoor in Colorado Springs, CO. Conference organizers negotiated a
$128 daily room rate!
Saturday, March
15, 2014
Pre-conference
activities included Harley Gordon’s CLTC Master Class, always an important
contribution to LTCI marketing and professionalism.
Following is a
sampling of the conference sessions I attended.
Sunday, March 16,
2014
“Land This Plane”
Report: Ron Hagelman, Roger
Loomis and John O’Leary reported on the findings of a “Delphi Study”
conducted by the Society of Actuaries’ Long-Term Care Think Tank. Dubbed
the “Land This Plane” project, the research has been underway since
January 2013. A panel of 45 experts answered and defended their responses
to numerous questions about how to solve America’s long-term care
financing problems. An executive summary of the project’s final support
was distributed in hard copy, but you can read it now
here. The final report should be out within the next couple weeks.
We’ll watch for it and pass on the key findings. Here are the highlights
as reported in Orlando:
* An overhaul of the LTC system is needed with
private insurance involved
* Government should have a role, but without “filial responsibility”
required
* Social insurance needs to be part of the solution (84% agreed)
* Catastrophic (81%)
* Mandatory (78%)
* Medicaid needs major reform
* Tightening eligibility, closing loopholes (81%)
* Modernization (86%)
* Remove institutional bias
* NAIC regulations need revision (79%)
* Marketing and sales improvement (67%)
Monday, March 17,
2014: St. Patrick’s Day
Opening General
Session: The conference’s
opening session featured motivational speaker Chris Gardner whose life
story was portrayed in the book and movie “Pursuit of Happyness.”
Gardner’s message was that people always have a choice to make of
themselves what they will. “Spiritual genetics” are more important than
biological genetics. “Never let anyone tell you what you can’t do.” Just
do it. His humorous, inspirational presentation was a good start for a
convocation of shell-shocked, but persevering, LTC insurance experts
dedicated to overcoming difficult industry challenges. More on Chris
Gardner and his story
here.
Feder and
Warshawsky on LTC Financing Policy:
Billed as “an in-depth conversation with two of the nation's most
knowledgeable and thoughtful long-term care experts,” this session paired
two Harvard PhDs with opposing views both of whom served on last year’s
Long-Term Care Commission. (Read the LTC Commission’s final report to
Congress
here.) After John O’Leary’s introduction, the two policy wonks
outlined very different perspectives and solutions. Mark Warshawsky, who
co-chaired the LTC Commission, offered a market-based analysis emphasizing
the risk that government LTC financing would crowd out family care and
private insurance. Judith Feder took the position that government needs
to take an even larger role in financing LTC than it does now. She
proposed a sliding-scale financing approach whereby people with higher
lifetime Social Security incomes would have to wait longer than people
with lower earnings for government financing of their catastrophic LTC
costs to begin. Presumably, private insurance might be available to cover
the front-end cost, sort of like Medicare supplemental coverage. While
the LTC Commission on which both served failed to reach a consensus on the
key issue of LTC financing, Warshawsky’s views prevailed in the majority
report. To wit, we should tighten Medicaid LTC eligibility rules, reduce
the home equity exemption, and incentivize early and responsible private
LTC planning. (Those ideas should sound familiar to Center members and
LTC Bullets readers.)
Short-Term
Planning for Long-Term Care:
This session addressed the question “What can you do if you didn’t plan?”
Only 14 people attended, but that was due to a mis-print in the
mini-schedule used by most of the conferees which showed the program would
be presented a day after it actually look place. Romeo Raabe, “The
Long-Term Care Guy” from Green Bay, Wisconsin, and a Regional
Representative of the Center for Long-Term Care Reform, opened the
session. He observed that most agents have gotten this breathless phone
call: “Remember that long-term care insurance you tried to sell me three
years ago? I’m ready. How fast can you write me? What? Oh yeah. Well
it was only a little stroke.” Romeo described how VA Aid and Attendance
benefits can help when private LTC insurance is no longer an option. He
explained and gave examples of how he uses and combines medically
underwritten annuities and reverse mortgages to help people generate the
extra income they need to purchase LTC services and remain in their
homes. John Zwolanek, an elder law lawyer, discussed how he helps clients
without using egregious Medicaid planning gimmicks. He pooh-poohed the
$300-per-hour Medicaid planners who push complex gimmicks like the
“reverse half a loaf.” Finally Bridgett Duber, of Elderlife Financial
Services, explained her company’s bridge loan designed to help families
span the financial gap between a long-term care crisis and the time when
permanent financing can be secured from a reverse mortgage or other
source. Elderlife Financial Services, formally known as “Granny Mae,” was
founded and guided for over a decade by Elias Papasavvas, a good friend
and long-time supporter of the Center for Long-Term Care. Slides for this
program including Romeo’s case studies and details on Elderlife’s
“financial concierge” service are
here.
Tuesday, March 18,
2014
Aging and
Community Redefined with an Eye Toward the Future:
Beth Ludden of Genworth introduced Dr. Gretchen Alkema, Vice President for
Policy and Communications at the SCAN Foundation. SCAN is 6 years old and
addresses the needs of vulnerable older adults. The foundation focuses on
the “macro population level, service delivery and financing,” distributing
$6 million per year in grants. Dr. Alkema offered three take-home
messages: the LTC financing and delivery challenges are not intractable;
they involve “people not patients,” and require a strategic framework for
a path forward. LTC financing boils down to “four big buckets”: (1)
front end or (2) back end funding which is public (3) or private (4). My
own take away from this presentation is that SCAN focuses on making LTC
service delivery and financing more efficient without first understanding
and fixing why long-term care became such a convoluted, dysfunctional
mess. They run the risk of fine tuning a Rube Goldberg machine that may
run better but still poorly. Better to get to the root of the problem
first and then address causes, not only symptoms. Slides for the program
are
here.
Squaring the Circle: The American LTCI
Program: Paul Forte, CEO of the Federal Long-Term Care Insurance Program,
presented his recently published version of the proposed “American
Long-Term Care Insurance Program.” Forte calls the ALTCIP “A New
Public-Private Model for Financing and Delivering Long Term Services and
Supports.” Check out his detailed description of the program here and his
slides for the conference program here. Like the LTCI program for federal
employees and qualified relatives that he runs, the ALTCIP would market
directly to consumers but without sales being limited to government
workers. Critiquing the Forte proposal were G. Lawrence “Larry” Atkins,
Ph.D., Executive Director, Long-Term Quality Alliance and staff director
of the Long-Term Care Commission and Stuart Butler, Ph.D., Distinguished
Fellow and Director, Center for Policy Innovation, The Heritage
Foundation. Both discussants agreed Paul’s proposal is a valuable
contribution to the search for a better way to market LTC insurance,
although each had his own reservations and recommendations.
Managed Medicaid: Understanding the Basics from an Industry Leader:
Paula J. Tietjen, Executive Director of Long-Term Care for the United
Healthcare Community Plan of Florida, described that state’s ambitious
effort to implement a Medicaid managed care program for the frail and
infirm elderly. See details in her slides
here. Combining personal care, case management, participant
direction, and rebalancing toward home care, this approach sounds
comprehensive and appealing. But senior advocates worry the end result
may be narrow provider networks, quality sacrifices due to cost cutting,
and ultimately provider failures. Still the basic approach is sweeping
the country so it bears watching closely.
The Future of the
Industry: This general
session, delivered to a packed auditorium, closed the conference. Its
goal was to address the “elephant in the room,” the industry’s challenges,
missed assumptions, dismal recent results and uncertain future.
Marc Cohen
of LifePlans painted a picture of the
LTCI industry’s current state. See his slides
here. LIMRA’s recent review showed LTCI sales down 30% last year and
minus 8% compounded for the past five years. Most industry metrics are
negative but there are some bright spots, such as “combination products.”
Marc opined that “we need to rethink the structure and distribution of the
product, think beyond current LTC Partnership product, and do some
unorthodox thinking.”
Maria
Ferrante-Schepis of Maddock
Douglas said LTCI may face a “Napster moment,” as when someone who doesn’t
belong in your business comes in and reinvents your business. Citing
Apple and Amazon as companies that Napstered several industries, she
observed that some companies, such as American Airlines/Travelocity and
Disney, have successfully Napstered themselves. She recommends the latter
course for LTCI. “What if Mark Zuckerberg were to reinvent the insurance
industry?,” she mused. Exciting queries, but no answers except to suggest
we all “lean into” the “sharing economy.” See her slides
here.
Tom McInerney,
CEO of Genworth, observed that “we can’t continue to do what we’re doing.
It doesn’t work.” He came into the LTCI business with an insurance
background and a bias toward following other big carriers out of the
market. But after close review he concluded LTC insurance is viable. The
key is to persuade regulators to allow periodic small premium increases as
occur in other lines of insurance. Everyone needs to recognize that
morbidity and service delivery preferences are unpredictable decades in
advance. Aging demographics, the national debt, and huge unfunded
entitlement liabilities mean a government takeover of LTC financing is
impossible and private insurance is necessary. See his slides
here.
Wednesday, March
19, 2014
Two post-conference
programs occurred this day:
Harley Gordon’s
Advanced Sales & Marketing Program for CLTC Designated Professionals
“Alzheimer's
Disease: the What, the How and the Hope.” This two part session
included:
Understanding the
Latest In Alzheimer’s Research:
Every week there is something in the news
about Alzheimer’s research, treatments or prevention. Join Heather Snyder,
PhD, Director of Medical and Scientific Relations at the Alzheimer's
Association to hear the latest in what is real and promising in the fight
against Alzheimer’s. (75 minute session)
Resources and
Support for All Stages of the Disease:
This session explores the benefits of
early detection, how to address a diagnosis of Alzheimer’s disease, stages
of the disease and most importantly the various programs and services of
the Alzheimer’s Association available to help individuals. Presented by
Ruth Drew, Director of Family and Information Services at the Alzheimer's
Association. (75 minute session)
I didn’t stay for
this program but Center for Long-Term Care Reform Regional Representative
Sally Leimbach reports that it was excellent.
#############################
Updated, Monday, March 10, 2014,
12:01 PM (Central)
Midland, Texas—
#############################
LTC E-ALERT #14-008: MANAGED
LTC AND LTC NEWS AND COMMENT
LTC Comment: Keep an eye on “managed long-term care.” It’s coming on
big, throwing the service delivery system into confusion, and changing LTC
financing in radical ways. Today’s first article gives some perspective
on how long-term care providers see managed LTC. The March 6 New York
Times article which it discusses is highlighted and linked below.
Check it out too. Managed LTC is a major trend comparable to the impact
of HMOs on acute health care delivery a couple decades ago.
#############################
3/10/2014, “Privately managed Medicaid threatens long-term care
quality and options, New York Times article states [link],”
by Tim Mullaney, McKnight's LTC News
Quote: “People with
complex needs could find themselves squeezed out of the most appropriate
long-term care settings as Medicaid beneficiaries become enrolled in
programs from private sector companies,
The New York Times
reported in a lengthy
Page 1 examination of the subject Friday.”
LTC Comment: This
article gives a long-term care provider perspective on the New York
Times report about managed LTC that we highlighted in Friday’s LTC
Bullet and in today’s LTC E-Alert.
#############################
3/7/2014, “LIMRA:
LTCI-covered life count holds steady,” by Allison Bell,
LifeHealthPRO
Quote: "The number of people covered by new LTCI policies fell 26
percent between 2012 and 2013, to 172,178, according to the LIMRA data.
Premium revenue from new sales fell 30 percent, to $406 million. The
average level of premiums generated by each of the new covered LTCI lives
fell 5.4 percent, to about $2,360. But, in spite of all of the news
reports about massive increases in LTCI premiums, the number of people
with LTCI coverage held steady at about 4.8 million."
LTC Comment: Amazing persistency.
#############################
3/7/2014, “Should Middle-Class Seniors and People with Disabilities
be Paying More for Medicare? [link],”
Medicare Rights Center
Quote: "If the President's plan were implemented today, people
with incomes as low as $46,500 would be forced to pay higher premiums.
Middle class seniors and people with disabilities are in no position to
pay more for Medicare."
LTC Comment: Proponents claimed for decades that Social Security
and Medicare were better than private insurance. They were "social
insurance" for which everyone paid the same premiums (payroll taxes) and
everyone received the same benefits, whether rich or poor. Critics
claimed from the beginning that these programs failed to price risk and so
rewarded irresponsibility. They were Ponzi schemes and economic reality
would catch up with them sooner or later. Well, sooner has arrived and
later looks worse than ever. We predicted long ago that government would
deal with burgeoning social insurance costs by means-testing the programs;
in other words, by welfarizing Social Security and Medicare. That process
began years ago when Social Security benefits were taxed and Medicare Part
B and Part D premiums were raised for higher income beneficiaries. Means
testing is accelerating now as this message from the Medicare Rights
Center complains. It just goes to show, you can evade economic reality
for a long while, but not indefinitely.
#############################
3/6/2014, “'Aging-in-place' features for the home gain higher
profile as baby boomers get older [link],”
by Wendy A. Jordan, Washington Post
Quote: "Aging-in-place design choices are gaining a higher profile
as baby boomers become a larger and larger segment of the population. . .
. This demographic change translates into demand for residential designs
that anticipate changes in health, vision or mobility, and ensures that
homes stay safe, comfortable and aesthetically pleasing."
LTC Comment: Boomers are waking up to aging-in-place design
choices. Now, how do we wake them up to planning for how to pay for aging
in place?
#############################
3/6/2014, “Financial
'vicious cycle' traps poor women caregivers,” by Shereen Jegtvig,
Reuters
Quote: "Caring for aging parents can be a burden for anyone, but
poor women are more likely to need to take it on and to enter a financial
downward spiral as a result, a recent study suggests. . . . Overall, the
researchers found, women who cared for their parents in 2006 and 2008 had
lower incomes in 2008 and 2010. As household income increased, women were
23 percent less likely to care for parents in 2008 and 12 percent less
likely to care for parents in 2010."
LTC Comment: Elder care is expensive in lost income and other
ways. More evidence supporting the value of LTCI.
#############################
3/6/2014, “Pitfalls
Seen in a Turn to Privately Run Long-Term Care,” by Nina Bernstein,
New York Times
Quote: “Even as
public attention is focused on the Affordable Care Act, another
health care overhaul is underway in many states: an ambitious effort
to restrain the ballooning
Medicaid cost of long-term care as
people live longer and survive more disabling conditions.”
LTC Comment: This
is a long article, but I strongly recommend that you take the time to read
it. Managed long-term care, even for the most severely disabled Medicaid
recipients, is sweeping the country. State Medicaid programs are trying
to save money by turning over their most severely impaired LTC recipients
to giant managed care companies whose job it is to move them from mostly
nursing home to mostly home care. This article explains why the strategy
is not working as well as hoped. Savings from managed
deinstitutionalization are not materializing and care quality is
suffering. The underlying problem, however, with which this article does
not deal and which most analysts evade, is that Medicaid covers the
long-term care for too many people who should, could and would have paid
for their own care. Managed home care for severely disabled patients
won’t solve the problem of too many people dependent on welfare-financed
long-term care. That problem will only be solved by (1) returning
Medicaid to its original purpose of being a long-term care safety net for
the neediest and by (2) incentivizing all who are financially able to
plan, save, invest and insure to pay privately for their own long-term
care.
#############################
3/6/2014, “2013
a record-setting year for Mutual of Omaha,” by Steve Jordon,
Omaha.com
Quote: "Mutual of Omaha reported Wednesday a record $359.2 million
in net income in 2013, up 26.6 percent from 2012, crediting increases
especially in individual Medicare supplement, employee benefit and
mortgage loan products."
LTC Comment: Good for MoO.
#############################
3/5/2014, “Senior
Services Take a Hit in Obama Budget,” by Howard Gleckman
Quote: "Until Congress and the president break their impasse over
raising taxes and fundamentally restructuring costly entitlement programs
such as Medicare and Social Security, there is no chance that spending for
federal senior services will increase. The money just won't be there."
LTC Comment: The money isn't there and hasn't been there for a
long time, but that hasn't stopped Congress and the President from
borrowing to spend more and more. A little less of that is a good thing.
A lot less would be a better thing.
#############################
3/5/2014, “New study ranks Alzheimer's as third-leading cause of
death, after heart disease and cancer [link],”
by Tara Bahrampour, Washington Post
Quote: “The
Centers for Disease Control and Prevention lists Alzheimer’s as the
sixth-leading cause of death, far below heart disease and cancer. But the
new report, published Wednesday in the medical journal of the American
Academy of Neurology, suggests that the current system of relying on death
certificates for causes misses the complexity of dying for many older
people and underestimates the impact of Alzheimer’s.”
LTC Comment: Families often object to having “Alzheimer’s” listed
as the cause of death.
#############################
3/5/2014, “A
Third Of Nursing Home Patients Harmed By Their Treatment,” by Ina
Jaffe, National Public Radio
Quote: "In a large sampling of Medicare patients discharged from
hospitals to skilled nursing facilities in one year, roughly a third of
the patients were harmed by their treatment in the nursing homes, the
study found. And most of that harm could have been prevented."
LTC Comment: We reported this study earlier, but the fact that NPR
publicized it is news in itself. Two-thirds of nursing home residents are
funded by Medicaid at less than the cost of care. You get what you pay
for . . . or what you don't pay for. Jawboning quality without adequate
reimbursement won't work now any more than it did when Congress tried to
demand quality in OBRA '87.
#############################
3/5/2014, “Required
Minimum Distributions for Roth IRAs?,” by Jeffrey Levine,
Financial Planning
Quote: "In other words, you would have to begin taking RMDs from
your Roth IRA when you turn 70 1/2, the same way you do with your
traditional IRA and other retirement accounts. If this were to come to
pass, it would be a major game-changer when it comes to retirement
planning. The fact that Roth IRAs have no RMDs is one of the key reasons
many people decide to contribute or convert to Roth IRAs in the first
place. If this proposal were to become law, conversions would make sense
for far fewer people. Not only that, this proposal gives all those who
haven't made Roth conversions over the years because they 'don't trust the
government to keep their word" more ammunition.'"
LTC Comment: Heads up!
#############################
3/5/2014, “White House proposes 'accelerated' skilled nursing
facility payment cuts [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "The White House's proposed 2015 budget includes sharp cuts
to skilled nursing facility reimbursements, which has drawn strong
criticism from the nation's largest long-term care provider group."
LTC Comment: The more government reduces already inadequate
Medicaid nursing home reimbursements, the more important it becomes for
people to be able to pay privately for their own care-both to avoid
nursing homes if possible and to ensure quality care if necessary.
#############################
3/4/2014, “GAO:
'Traditional Medicare' is private, too,” by Allison Bell,
LifeHealthPRO
Quote: "The traditional Medicare program affects the commercial
health insurance and employee benefits markets by shaping provider pay
rates; changing reimbursement rates for its enrollees in ways that change
costs for enrollees in commercial insurance programs; and affecting
private insurers' appetite for commercial business, by causing big, sudden
shifts in profitability at some private carriers' Medicare administration
units."
LTC Comment: What an interesting admission from GAO!
#############################
3/4/2014,
“Don't
Get Conned on Long-Term Care,” by Carole Moore, The Fiscal Times
Quote: "Brian Gordon, president of MAGA, a long-term care planning
and insurance company, says consumers should exercise extreme care when
purchasing policies from telemarketers or agents who claim to be 'jacks of
all trades.' Like Teicher, Gordon cautions consumers to ascertain that the
agent knows his or her way around the industry, has a good track record
and is knowledgeable on the art of filing a claim. He also advises
choosing an insurance company that's not new to the game."
LTC Comment: Good advice from Center-supporter Brian Gordon of
Center-corporate member MAGA.
#############################
3/4/2014, “Government report: 1 in 5 Medicare patients suffers an
adverse event while receiving post-acute SNF care [link],”
by Tim Mullaney, McKnight's LTC News
Quote: “About 22%
of Medicare beneficiaries experienced an adverse event during a
post-hospitalization skilled nursing facility stay in fiscal year 2011,
and the majority of these events were preventable, according to a
newly released government report. Post-acute provider groups said many
initiatives to lower this percentage already are underway.”
LTC Comment: Medicare pays adequately for SNF care but Medicaid
doesn’t. Because most nursing home residents are on Medicaid and most SNF
revenue comes from Medicaid, the bar of quality is lowered for everyone,
including private payers, who also have to overpay because of low Medicaid
reimbursements.
#############################
3/3/2014, “Long-term care insurance costs go up, benefits go down;
Experts say it's best to buy policy while still in good health [link],”
by Tom Wilemon, The Tennessean
Quote: “People on
the wrong side of the baby boomer population curve are getting doubly
squeezed. As costs for private long-term care insurance skyrocket, state
Medicaid programs are imposing greater hurdles to
qualify for nursing home coverage.”
LTC Comment:
When a reporter needs an “expert” to tell him people should buy insurance
before the insurable event occurs, you know you have a problem. People
and reporters have been brainwashed by social insurance and ObamaCare
which purport to be available whenever you need them, but never quite live
up to the billing.
#############################
3/3/2014, “Strict blood pressure control won't stem mental decline,
study says [link],”
by Melissa Healy, Los Angeles Times
Quote: "New research has found that using medication to
aggressively drive down blood pressure or improve lipid levels does not do
more than standard therapy to stem the decline in cognition that's common
among such patients. In fact, aggressively lowering systolic blood
pressure may accelerate brain shrinkage, which is a hallmark of dementia,
the new study found."
LTC Comment: Can’t win for losing.
#############################
3/3/2014, “Warning
over 'risky' schemes to cut care bills,” by Nicole Blackmore, The
Telegraph
Quote: "Experts have warned local authorities are increasingly
challenging cases of what they call 'deliberate deprivation of assets' -
where people give away their wealth to avoid paying for care. Local
authorities have the power to challenge such transfers and seize the
assets."
LTC Comment: This article is about the UK but it goes to show
we're not alone in this problem of "Medicaid planning" abuse.
#############################
3/3/2014, “Buyers
beware of long-term care insurance,” by Cynthia Flash, The
Spokesman-Review
Quote: "The [1994 Bankers United] policy the couple bought covers
skilled nursing-home care. But Dan's physician wrote to the insurance
company stating his ailments are best served at a special dementia-care
facility like the one where he is, rather than a more expensive skilled
nursing home. Gunnarson called the insurance company and later had the
director of the facility work on her behalf, but failed to get anywhere."
LTC Comment: Faced with a similar situation Genworth paid for my
mother's assisted living although she had a nursing-home-only plan
originally purchased in 1987.
#############################
Updated, Friday, March 7, 2014,
11:40 AM (Central)
Alpine, Texas—
#############################
LTC BULLET: ILTCI CONFERENCE
PREVIEW
LTC Comment: Whether you can attend or not, you should know what’s being
discussed at this important LTC insurance industry conference. We offer a
preview after the ***news.***
*** NEW YORK TIMES reports today: “Pitfalls Seen in a Turn to Privately
Run Long-Term Care.” We alerted the Center’s “Clippings Service”
subscribers first thing this morning to this important
article.
Quote:
“Even as public attention is focused on the Affordable Care Act, another
health care overhaul is underway in many states: an ambitious effort
to restrain the ballooning
Medicaid cost of long-term care as
people live longer and survive more disabling conditions.”
LTC Comment: This is a long article, but I strongly recommend that
you take the time to read it. Managed long-term care, even for the most
severely disabled Medicaid recipients, is sweeping the country. State
Medicaid programs are trying to save money by turning over their most
severely impaired LTC recipients to giant managed care companies whose job
it is to move them from mostly nursing home to mostly home care. This
article explains why the strategy is not working as well as hoped. It
claims that savings from managed deinstitutionalization are not
materializing and care quality is suffering. ***
*** CLIPPING SERVICE. Would you like to receive three emails a day
alerting you to the most important new articles, reports, and data sources
related to long-term care services and financing? The Center for LTC
Reform’s clipping service is available at no extra cost to Premier Members
($250), Premier Elite Members ($500), and Corporate Members ($1,000+).
Even non-members of the Center can receive our clippings for only $120 per
year. Steve Moses (and Damon if Steve’s away) scans the LTC literature,
culls the most important items, and sends them to you every day with a
representative quote, a link to the source, and often a brief comment or
analysis. It’s like getting your weekly LTC E-Alert in smaller
doses and in real time. Don’t be left wondering what your prospect is
talking about when he or she has read something important that you haven’t
seen yet. To subscribe, contact Damon at 206-283-7036 or
damon@centerltc.com. ***
*** SPEAKING OF LTCI CONFERENCES, don’t forget AALTCI’s 2014 LTC Sales
Solutions Summit at the Westin Kansas City at Crown Center May 18-20,
2014. For the agenda:
http://www.aaltci.org/i/2014summit.pdf. For all the details:
http://www.aaltci.org/2014summit/index.html. To register (only
$99!):
http://www.aaltci.org/2014summit/register.html. And if you can’t
attend, you can even view some of the conference programs online for
free:
http://www.insuranceexpos.com/. Watch a short video about the free
online access:
http://www.insuranceexpos.com/ ***
LTC BULLET: ILTCI CONFERENCE PREVIEW
LTC Comment: The 14th Annual Inter-Company Long-Term Care
Insurance Conference convenes in Orlando, Florida at the Rosen Centre
Hotel from March 16-19, 2014.
This is a premier industry meeting for a business facing many challenges
and changes. Its theme this year is “Sharing News, Exchanging Views, and
Forging Solutions,”
Most of the following “preview” comes from the conference’s website here:
http://www.iltciconf.org/. We’ll only hit a few of the highlights. So
take the opportunity to dig deeper there.
Damon and I will be onsite, so if you can attend, be sure to say hello.
We’ll report from the conference. If you aren’t able to be there, we will
try to give you a virtual visit with our “LTC Embed” dispatches.
Hopefully this preview will inspire some of you to join us at the
conference after all or to send a representative from your company or
organization.
Find a full conference brochure with brief descriptions of each session
and information on all the conference sponsors
here.
For a top line version of the agenda, go to:
http://www.iltciconf.org/agenda.htm
Harley Gordon will offer his CLTC Master Class on Saturday (3/15)
and Sunday (3/16):
http://www.iltciconf.org/cltc%20master%20class.htm plus a special
program, Advanced Sales & Marketing Program for CLTC Designated
Professionals on Wednesday, March 19:
http://www.iltciconf.org/cltc%20master%20class.htm.
Keynote speaker will be Chris Gardner, well known for The Pursuit of
Happyness:
http://www.iltciconf.org/keynotespeaker.htm
A
Future of the Industry - General Session on Tuesday, March 18 will
feature Marc Cohen (LifePlans), Maria Ferrante-Schepis (Maddock Douglas),
and Thomas McInerney (Genworth) discussing: “Carrier exits, in-force
premium increases, missed assumptions, the persistent low interest rate
environment, few new carriers, shrinking distribution” and what to do
about all the industry’s problems.
You can view the “PowerPoint” presentations for many of the breakout
sessions here:
http://www.iltciconf.org/presentations.htm.
Following are descriptions of several sessions that caught my eye. All
the sessions are described
here.
1. Current Alternatives – Short
Term Care/Combination Products
The major alternative products
that exist in the market today include Short Term Care and combination
products. Both products have their own niche markets. The speakers will
give a brief introduction about each product, pros and cons from a
consumer and insurance company's perspective, discuss the regulatory
requirement, the existing market, the opportunity and obstacles in the
future.
Alternative Products – Panel Discussion
Session Producer: Linda Chow, Milliman, Inc.
Panel: Dawn Helwig, Milliman, Inc.
Anthony Laudato, Hannover Re
5. Litipedia: How Recent Trends in LTC Litigation are Changing the Face
of Risk
Show me an insurer and I’ll show you a litigant. Sooner or later, we
all get sued. And litigation is on the rise. Not just the simple one-off
claim disputes, mind you, but the larger and more sophisticated brand of
actions that resonate across our industry. This interactive session gives
a primer on key current legal actions and the take-aways that will help
you reduce risk to the company.
Legal, Compliance, & Regulatory – Case Studies
Session Producer: Mike Rafalko, Drinker, Biddle & Reath LLP
Panel: Mike Rafalko, Drinker, Biddle & Reath LLP
Lisa Simmons, Edwards Wildman Palmer LLP
6. Feder and Warshawsky: Long-Term Care Financing Perspectives and
Solutions
An in-depth conversation with two of the nation's most knowledgeable
and thoughtful long-term care experts. Judy Feder and Mark Warshawsky come
at the long-term care problem with years of experience and two different
points of view. In this session, the panelists will discuss their
different perspectives on private and social insurance, but importantly,
the session will also explore where there are areas with the potential for
agreement.
Marketing – Panel Discussion
Session Producer: John O’Leary, O'Leary Marketing Associates
Panel: Judy Feder, Georgetown University Public Policy Institute
John O’Leary, O'Leary Marketing Associates
Mark Warshawsky, American Enterprise Institute
13. There’s Room in the Tent: Clarifying Traditional LTCi/Hybrid
Product Roles
According to LIMRA, individual LTC sales declined 27% through 3Q13.
Fewer people are buying and they’re spending less when they do. But it’s
not all bad news. Buyers continue to get younger –57 is the current
average age – and in 2012, 57% were Boomers between 55 and 64 years old.
This session will look at today’s buyer in the context of shifting
priorities and changing market conditions. The session is designed to help
carriers rethink your product choice, position for maximum effect, and
find the best fit for your consumers.
Marketing – Panel Discussion
Session Producer: Suzanne Schmidt, Lincoln Financial Group
Panel: Suzanne Schmidt, Lincoln Financial Group
Steve Schoonveld, Lincoln Financial Group
15. Middle Market Success Stories
To the extent that people don’t buy LTCI, how are they solving this
problem when they need assistance? This session will examine the concerns
and motivations of middle-income families, and potential solutions for
this market.
Alternative Products – Panel Discussion
Session Producer: Dr. Barbara Stucki, NestCare FPC
Panel: Rona Bartelstone, Our Aging
Linda Chow, Milliman, Inc.
Dr. John Migliaccio, Strategy and Research Consulting
20. Incremental Visualization - LTC Product Innovation in Minnesota
How is the State of Minnesota approaching the Long-term care dilemma
facing its citizens? Minnesota has long been a leader in healthcare and
aging innovation. They have identified the future impact long-term care
will have on their state and they are doing something about it. Hear
Minnesota Lt. Governor Yvonne Prettner Salon, Loren Colman, Assistant
Commissioner of Continuing Care and LaRahe Knatterud, Director of Aging
Transformation, discuss Minnesota's approach to LTC.
Marketing – Panel Discussion
Session Producer: John O’Leary, O'Leary Marketing Associates
Panel: Loren Coleman, State of Minnesota
LaRhae Knatterud, Minnesota Department of Human Services (DHS)
John O’Leary, O'Leary Marketing Associates
Yvonne Prettner Solon, Lt. Governor State of Minnesota
21. The Growing LTC Spectrum
This session will cover the LTC Product Spectrum. The speakers will
discuss the scope of products, the future role of traditional products,
new product definitions, costs, and benefits, training agents on how to
make appropriate recommendations, and how new product designs can
re-ignite worksite LTC sales.
Sales – Panel Discussion
Session Producer: Carroll Golden, Transamerica Long Term Care
Panel: Doug Burkle, Genworth Financial
William Comfort, Comfort Assurance Group, LLC
Bradley Ridnour, Transamerica Long Term Care
Session Survey
22. Short-term Planning for LTC
If you did not plan ahead, what are the options? Who is innovative?
Who is providing advice? Creative ways to make the money last, America’s
best kept funding secret, and protecting assets for self and family.
Alternative Products – Panel Discussion
Session Producer: Romeo Raabe, Consultant
Panel: Bridgette Duber, Elderlife Financial Services, LLC
Romeo Raabe, Consultant
John Zwolanek, Main Street Law Office
26. Watch Out! Protect Your Company from LTC Insurance Fraud
LTC Insurance remains a prime target for insurance fraud, especially
with the shift to home-based and new care delivery models. Come hear from
the experts about what your company needs to be doing today to avoid being
a victim of fraud. This session will include: • Insights from the Claims
Bureau USA with firsthand accounts of current fraud techniques • Legal
experts will offer the latest information on fraud litigation • Company
Special Investigations Unit (SIU) leaders share their advice and answer
your questions.
Legal, Compliance, & Regulatory – Panel Discussion
Session Producer: Rod Perkins, Genworth Financial
Panel: Chuck Angiollio, Claims Bureau USA
Mike Gugig, Saul Ewing LLP
Harry Markland, Genworth Financial
28. Aging and Community Redefined with an Eye Toward the Future
The SCAN Foundation will present their new strategic framework that
includes viable options for long-term care needs in 2014 and beyond. Hear
about family, vulnerable adults, support models, decision making and
various options to help families finance LTC expenses.
Policy & Providers – Teaching Session
Session Producer: Beth Ludden, Genworth Financial
Panel: Dr. Gretchen Alkema, The SCAN Foundation
Beth Ludden, Genworth Financial
29. International Market
What is working in other places? Demographics, care delivery system,
family and consumer attitudes in 3 countries. Government programs used to
fund LTC. Market for private LTC insurance and products provided.
Alternative Products – Panel Discussion
Session Producer: Vince Bodnar, Towers Watson
Panel: Dr. Yair Babad, University of Illinois at Chicago
Etienne Dupourqué, Consultant
Mark Dearsley, Partnership
34. Home Equity Release Products
With only a few years of coverage, policyholders may need to use other
resources, particularly home equity, to serve as a wrap-around to
comprehensive LTCI. This session will examine new ways of funding this gap
for aging in place.
Alternative Products – Panel Discussion
Session Producer: Dr. Barbara Stucki, NestCare FPC
Panel: Steve Cinelli, PRIMARQ
John Nelson, Wall Street Without Walls
36. Squaring the Circle: The American Long Term Care Insurance Program
Paul Forte will present an overview of his proposal for a national
public-private partnership to finance LTSS. His new framework would
facilitate mass enrollment, create administrative efficiencies, and offer
greater accountability and stability to consumers. In this session his
proposal will be reviewed and discussed by nationally recognized policy
experts Stuart Butler and Larry Atkins in light of the key policy issues
facing LTSS financing today. The session will be moderated by Gretchen
Alkema.
Marketing – Panel Discussion
Session Producer: Joan Melanson, Long Term Care Partners, LLC
Panel: Dr. Gretchen Alkema, The SCAN Foundation
Larry Atkins, Long-Term Quality Alliance
Dr. Stuart Butler, The Heritage Foundation
Paul Forte, Long Term Care Partners, LLC
37. Managed Medicaid - Understanding the Basics from an Industry Leader
Florida Managed Care programs have been leading the country in
innovation and cost-effective solutions. This session will provide
training in the basics of Managed Medicaid programs that focus on the
chronically ill in both home and facility based settings. Learn the
terminology that is buzzing around in this space, the priority of case
management metrics and the role of state/federal government.
Policy & Providers – Teaching Session
Session Producer: Sharon Reed, Penn Treaty Network America
Panel: Sharon Reed, Penn Treaty Network America
Paula Tietjen, UnitedHealthcare Community Plan of Florida
41. Price Sensitivity in LTC Insurance
Consumers typically cite "it costs too much" as a primary reason for
not buying LTCI. But if the premium were reduced, would they really buy?
Or would the trade-off in coverage required to satisfy a lower premium
turn off interest? At what premium price point does product interest
increase? This session explores consumer price sensitivity in LTCI based
on a recent study across age segments and at varying price points.
Coverage trade-offs with enhanced "middle market" appeal are explored.
Marketing –Panel Discussion
Session Producer: Eileen Tell, Univita Health
Panel: Clark Heitkamp, United Health Actuarial Services, Inc.
Dr. Jeremy Pincus, Forbes Consulting Group
Eileen Tell, Univita Health
#############################
Updated, Monday, March 3, 2014,
11:33 AM (Central)
Alpine, Texas—
#############################
ILTCI ROOMS AND LTC NEWS AND COMMENT
LTC Comment: Are you headed to the 14th Annual Inter-Company
Long-Term Care Insurance Conference in Orlando March 16-19? Great, see
you there.
But if you’ve had a change of plans and need to cancel your Rosen Centre
hotel reservation, Jim Glickman asks you to contact him rather than the
hotel. Here’s Jim’s message:
To all: The Rosen Centre is sold out for the nights of Monday March
17th, Tuesday March 18th, and Wednesday March 19th. We have a waiting
list for rooms (which is growing as more people register), but can only
help those people if those of you who need to cancel part (such as
Wednesday night only) or all of your reservation choose to contact me
first to reassign your reservation. If you cancel directly with the
hotel, your cancelled reservation will unfortunately not be available to
anyone on our waiting list. Also, there are still rooms available at the
$125 Conference rate for the Friday, Saturday, and Sunday nights before
the conference. Please let me know if you have any questions. Thank
you. Jim Glickman 818-867-2223
#############################
3/1/2014, “State
rules for nursing care aid are strict,” by Katie Evans Moss, The
Tennessean
Quote: “Choices,
a part of TennCare Medicaid, is the major payer for nursing home care in
Tennessee, but changes in nursing home admission requirements are
affecting many patients. Navigating eligibility requirements for Choices
can be
difficult. An acuity scale determines if you meet the at-risk level of
care based on how serious your medical problems are and how much help you
need with daily activities. Take, for example, a person who must be
physically helped to get from a bed to a chair. That person gets a maximum
of four points if he can never do this on his own. If the same person is
incontinent and can never use a toilet on his own, he gets three more
points. That is still not enough to get the nine points required to
qualify for Choices Groups 1 or 2.”
LTC Comment: The
good news is you’re eligible for Medicaid. The bad news is that you don’t
qualify medically for services.
#############################
2/28/2014, “6
Ways Federal Reserve Policy Hurts Retirees,” by Chris Kissell, Fox
Business
Quote: "Fed policy effect No. 4: Costly long-term care premiums.
Long-term care insurance covers the cost of a wide range of expensive
services you may need in your final years, including nursing home care,
assisted living facilities and adult day care. This insurance potentially
can save you and your family hundreds of thousands of dollars. But thanks
to falling interest rates, long-term care insurance premiums have
skyrocketed, says Jesse Slome, executive director of the American
Association for Long-Term Care Insurance."
LTC Comment: Double whammy. Low interest rates mean seniors have
less cash flow for LTCI premiums which low interest rates have forced to
be increased.
#############################
2/27/2014, “New Report: Seniors to Lose Benefits and Choices as a
Result of CMS' Proposed Cuts to Medicare Advantage [link],”
by Robert Zirkelbach, AHIP
Quote: "Seniors and people with disabilities enrolled in Medicare
Advantage plans would face premium increases and benefit reductions of
$35-$75 per month, or $420-$900 next year, if new Medicare Advantage
payment cuts recently proposed by the Centers for Medicare and Medicaid
Services (CMS) take effect next year, according to a new analysis by
Oliver Wyman prepared for America's Health Insurance Plans."
LTC Comment: Cut what works and subsidize what doesn’t.
#############################
2/27/2014, “Better
Coordinating Long-Term Care and Medical Treatment,” by Howard Gleckman,
Forbes
Quote: “The most
important trend in care for the frail elderly and younger people with
disabilities may be what’s called managed long-term supports and services,
or MLTSS. This effort to combine medical care with long-term care would
replace today’s disorganized, ineffective, and even dangerous system with
one that can bring together complex care that’s being delivered by many
different providers.
“Done well, this model
has the potential to improve the quality of life for those receiving care
and save money. Done poorly, it puts an extremely vulnerable population at
even greater risk than it is today–and may not save money.”
LTC Comment:
Funding most long-term care through dysfunctional public programs that
have mutually contradictory perverse incentives is what caused this
problem. Turning it over to giant private sector managed care
organizations (MCOs) financed inadequately by those same public programs
may mitigate the problem if “done well.” But that is a very big “if.”
Far better would be to introduce more private financing and competition
into the LTC marketplace by implementing recommendations of the Center for
LTC Reform in many reports including this one:
Briefing Paper #5: Dual Eligibles and
Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and
Pay for the "Doc Fix"
www.centerltc.com/BriefingPapers/5.htm
-- (PDF
for print)
#############################
2/27/2014, “5
Financial Risks to Consider in Retirement,” Life & Health Advisor
Quote: "Health/long-term care: Sadly, the escalating costs
associated with long-term care during retirement can make the possibility
of outliving one's retirement income a reality for many. Statistics reveal
that as we age, there's an increased probability of our eventually needing
assistance with basic daily activities. The truth is that most of us will
need long-term care in our later years."
LTC Comment: It is encouraging to see this basic truth sinking in
and articulated more often in the media.
#############################
2/27/2014, “Many families will spend modestly for dementia care, a
minority face financial ruin, expert tells senators [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Low uptake of current long-term care insurance policies
shows that these products are not working, Hurd told the senators. RAND is
preparing a report on long-term care costs for dementia to help guide
policymakers as they work to improve the status quo, Hurd noted."
LTC Comment: Yet another study by "experts" will conclude LTC
protection has to be nationalized because private insurance is "not
working." Nonsense. Stop paying through Medicaid for most expensive LTC
after the insurable event occurs and private insurance will grow.
Medicaid's "spend down" and "estate recovery" mandates are too weak and
easy to avoid. Consequently, the public has no sense of urgency about LTC
until they need it.
#############################
2/26/2014, “A
Shortage of Caregivers,” by Judith Graham, New York Times
Quote: “If you
want fresh evidence of the caregiving crisis that lies in the
not-too-distant future, look no further than
the employment projections released by the Bureau of Labor Statistics
late last year. Topping the list of occupations expected to grow between
2012 and 2022 are personal care aides, in the No. 1 slot (580,800 new
positions); home health aides, No. 4 (424,200 jobs); and nursing
assistants, No. 6 (312,200 jobs). . . . About 75 percent of services
provided by home care agencies are paid by Medicaid and Medicare.
Financial pressures on both programs are enormous, making it unlikely that
significant wage increases are in store. . . . ‘The direction of Medicaid
policy is to provide more services to frail seniors in the home and fewer
in institutions,’ he said. Yet this won’t be possible unless steps are
taken to create a more stable, better trained work force.’”
LTC Comment: All
the more evidence we desperately need more private LTC financing sources
including genuine Medicaid spend down requirements, stronger estate
recoveries, home equity conversion and long-term care insurance.
#############################
2/26/2014, “LTC Global Marketing Names Diana Hayn Director of
Talent Acquisitions [link],”
Press Release
Quote: "In this new position, Diana Hayn will be responsible for
handling the extra flow of candidates from the more efficient recruiting
drive LTCGM has been using in its efforts to bring agents in to selling
Long Term Care insurance. LTCGM has developed new techniques to recruit
potential candidates at a much higher efficiency."
LTC Comment: Congratulations.
#############################
2/25/2014, “Study Questions Benefits of 'Medical Home' Programs for
Chronically Ill [link],”
by Melinda Beck, Wall Street Journal
Quote: "Health-policy experts often talk up the notion of a
'patient-center medical home'-in which a medical practice actively manages
patients' chronic conditions to improve their health and avoid
hospitalizations-as the ideal model for transforming the U.S. health-care
system. But a study of one of the earliest and largest medical-home pilots
found that after three years, patients' health improved in only 1 of 11
measures. There was no change in hospital or emergency-room use, and no
significant cost savings."
LTC Comment: The best-laid plans of mice and academics go awry
unless and until they are tested in a market.
#############################
2/24/2014, “Obama Administration Proposes 1.9% Cut In Medicare
Advantage Payments [link],”
by Mary Agnes Carey, Kaiser Health News
Quote: “Late
Friday, the Centers for Medicare & Medicaid Services announced
proposed rates that officials said could mean payment reductions of
1.9 percent for the private plans in the program. But insurers, who have
led a fierce lobbying campaign against payment reductions, say the
Medicare Advantage plans would sustain a far deeper cut.”
LTC Comment: The squeeze is on . . . already!
#############################
2/24/2014, “Link
Between BP Meds and Falls Affirmed for Some,” by Todd Neale,
MedPageToday
Quote: “Older adults with multiple chronic health conditions --
including
hypertension -- appear to be at greater risk for sustaining serious
fall injuries when treated for high blood pressure, an observational study
showed.”
LTC Comment: Damned if you do and damned if you don’t.
#############################
2/24/2014, “Implementing Health Reform: Medicaid Asset Rules and
the Affordable Care Act [link],”
by Timothy Jost, Health Affairs
Quote:
"In sum, most of the rules that apply to traditional Medicaid recipients
with respect to LTSS (except for lien requirements) are likely to apply to
MAGI-eligible individuals who receive LTSS. CMS intends, however, to take
steps to avoid applying estate-recovery rules to MAGI-eligible individuals
who do not receive LTSS to keep this from becoming a barrier to Medicaid
expansion eligibility."
LTC Comment: There has been much ado in the media lately about the
possibility that Medicaid estate recovery will impact new enrollees who
end up on Medicaid due to ObamaCare. This commentary is more "inside
baseball" than most of you are likely to want, but it does do a good job
of explaining the situation and allaying those concerns.
#############################
2/24/2014, “NYL
Launches Next Generation Asset Preserver,” Press Release
Quote: "This product is designed to help individuals guard against
today's surging costs of long-term care, including nursing home care,
assisted living and extended at-home care, while enjoying the traditional
benefits of permanent life insurance."
LTC Comment: Another hybrid.
#############################
2/24/2014, “Incorporating the LTCi Solution: The once stand-alone
product has become integral to retirement income strategy [link],”
by Maria Sarci, Life & Health Advisor
Quote:
"Today the LTC planning market is vastly different and in a good way.
There are more solutions available to agents and consumers than ever
before. Linked-benefit solutions continue to enjoy double-digit growth
each year, and insurance companies continue to innovate their standalone
long-term care solutions."
LTC Comment: Silver lining on a difficult market created by bad
public policy.
#############################
2/23/2014, “Options for Covering Long-Term-Care Costs; Facing
scaled-back benefits and premium hikes, baby boomers can use several
strategies to help cover future costs [link],”
by Kimberly Lankford, Kiplinger's Retirement Report
Quote: "As boomers help their aging parents, many are experiencing
firsthand the overwhelming costs of long-term care. And they want to
protect their own children from these crushing responsibilities if they
end up needing care themselves."
LTC Comment: And just imagine how much more daunting it will be
when boomers are the care receivers instead of the care givers.
#############################
2/21/2014, “The
Baby Boomer Housing Bust,” by Mary Meehan, Forbes
Quote: "Boomers had an unreal real estate run for decades. But
it's about to come to a hard stop. Social shifts and demographic forces
(more than the ups or downs of any local housing markets) are poised to
change Baby Boomers' futures."
LTC Comment: With the baby-boomers downsizing, who will buy all
those McMansions?
#############################
2/21/2014, “Blockbuster merger will bring Brookdale, Emeritus
together, create largest senior living company [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Brookdale Senior Living and Emeritus Senior Living will
merge through a $2.8 billion deal, in a move that Brookdale CEO T. Andrew
Smith said will be 'transformative for the industry.' . . . 'In an
industry with very attractive long-term growth dynamics, this strategic
merger creates the first national, predominantly private-pay based, senior
living solutions company,' said Smith."
LTC Comment: Bigger isn’t always better, but economic activity in
a dominantly private-pay sector of long-term care is promising.
#############################
2/20/2014, “Many
on Medicare get painkillers from multiple doctors,” by Deborah Kotz,
The Boston Globe
Quote: "In the
study published Wednesday in the
British Medical Journal, researchers reviewed more than 1.2 million
medical records of Medicare patients who received a prescription for an
opioid— such as hydrocodone, fentanyl, morphine, and oxycodone—and found
that nearly 35 percent had received a prescription from more than one
doctor. One-third of this group got their prescriptions from four or more
doctors.”
LTC Comment: With no profit motive or competition, Medicare lacks
a financial incentive to avoid such disastrous mis-handling of dangerous
drugs.
#############################
2/20/2014, “Medicaid-only long-term care residents driving up state
expenditures, report finds [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "The high-expenditure group represented 4.3% of total
Medicaid beneficiaries nationally, but accounted for 31.6% of state
Medicaid spending in 2009, according to the report. Dual eligibles were a
costlier group, accounting for 35.2% of spending. The remaining third of
Medicaid dollars went toward the beneficiaries who were not in the
high-expenditure or dual-eligible groups - and this cohort accounts for
the majority (81%) of those enrolled in Medicaid, the report notes."
LTC Comment: Because a disproportionate share of Medicaid
expenditures go to a small percentage of recipients who need long-term
care, public policy to discourage Medicaid dependency by encouraging early
LTC planning and private LTC financing alternatives would result in
disproportionately high savings to the program and tax payers.
#############################
2/19/2014, “California
bill would ban gender-based LTCI pricing,” by Allison Bell,
LifeHealthPRO
Quote: “Assembly
Member Mariko Yamada, D-Davis, Calif., has introduced
Assembly Bill 1553, a bill that would prohibit gender-based LTCI
pricing.”
LTC Comment: Unlikely to pass but worth knowing about.
#############################
2/18/2014, “Unique
Retirement Planning Challenges Facing Hispanic Americans,” by Jamie
Hopkins, Forbes
Quote: "The bright side for both financial planners and for the
Hispanic American community is that the study found that they are 'equally
likely to work with a financial advisor, if contacted.' This provides an
amazing opportunity for financial advisors and retirement planning
specialists to reach out and assist Hispanic Americans in planning for the
unique retirement challenges they face."
LTC Comment: Another rapidly growing demographic to target . . .
and help.
#############################
2/17/2014, “Should You Self Insure Against Long-Term Care Risk Or
Buy Insurance? [link],”
by Howard Gleckman, Forbes
Quote: “So what
most people face is an impossible choice. Realistically, most won’t save
for their long-term care needs despite Ms. Thakor’s advice (many won’t
even save enough for healthy retirement). Yet, they won’t buy LTC
insurance either, and for the most part can’t buy catastrophic coverage
even if they want to. That means yet another generation unprepared and
likely with nowhere to turn but Medicaid.”
LTC Comment: At
long last, an article by this writer with which I can largely agree,
although we strongly disagree on the cause of the problem and the
solution. People will buy LTC insurance, even at newly increased
premiums, when Medicaid stops mitigating the consequences for the middle
class and affluent of failing to insure. Likewise, even more consumers
would buy LTCI if the government got smart and gave large, above-the-line
tax deductions for catastrophic policies that would save Medicaid
billions and make critical back-end coverage more affordable. Alas, don’t
hold your breath.
#############################
2/17/2014,
“Long-term
care insurance rising,” by John Reid Blackwell, Richmond
Times-Dispatch
Quote:
"While long-term care insurance has been on the market for about four
decades, it is still a relatively new type of insurance compared with
others such as homeowner and health insurance. McInerney said insurers
approached the pricing of long-term care insurance the wrong way from the
start. It should have been structured less like life insurance and more
like health insurance."
LTC Comment:
Article has long section on Genworth's McInerney's views on LTCI.
#############################
Updated, Friday, February 28,
2014, 11:47 AM (Pacific)
Alpine, Texas—
#############################
LTC BULLET: HOW TO END
MEDICAID ANNUITY ABUSE
LTC Comment:
Medicaid-compliant annuities enable wealthy people to divest unlimited
assets making them immediately eligible for Medicaid LTC benefits. What
should be done?
LTC BULLET: HOW TO END
MEDICAID ANNUITY ABUSE
LTC Comment: The problem
of waste, fraud and abuse of scarce Medicaid resources is long-standing,
wide-spread, and repugnant. No worse misuse of the welfare program exists
than so-called Medicaid-friendly or Medicaid-compliant annuities. These
special annuities enable the affluent to qualify easily for Medicaid’s
expensive long-term care benefits without spending down their own
resources as Congress intended. They reduce public awareness of and
demand for private LTC planning and financing alternatives, thus resulting
in more people unprepared to pay for their own long-term care and
dependent on public assistance.
State Medicaid programs
have litigated against the use of Medicaid annuities to dodge the
program’s spend down rules. But those lawsuits failed. Courts have held
that federal law precludes preventing the use of annuities in this way so
long as the annuities comply with all other laws and regulations. Appeals
by some states to the Centers for Medicare and Medicaid Services (CMS)
have not resulted in corrective action by administrative means. It seems
evident now that resolution will have to come in the form of an Act of
Congress. But, without strong public support, Congress is unlikely to
tackle this politically sensitive issue. Such action would eliminate a
lucrative loophole used mainly by the same affluent constituents most
likely to finance congressional campaigns.
Persuading Congress to act
will require a systematic effort to identify, document and publicize the
frequency and cost of Medicaid annuities. The Center for Long-Term Care
Reform has prepared the following proposal for a project to achieve those
objectives. We invite our readers to forward this proposal to any company,
organization, or foundation that might consider supporting this work.
--------------------
How to Eliminate Fraud, Waste and
Abuse
Caused by Medicaid-Compliant Annuities
a proposal by the
Center for Long-Term Care Reform
submitted to the [sponsor to be decided]
I. The Problem
Medicaid is a
means-tested public assistance program, i.e., welfare. Yet
Medicaid is the principal funding source for long-term care (LTC)
throughout the United States, not only for the poor, but for most
Americans. Medicaid’s basic LTC eligibility rules allow people with
income below the cost of a nursing home—$82,855 on average as of 2013—to
qualify. Many large assets are exempt, such as the equity in a home and
contiguous property up to as much as $814,000 and, without a dollar
limit--one business including the capital and cash flow, one automobile,
prepaid burial expenses, term life insurance, and IRAs. Research shows
that easy access to Medicaid’s LTC benefits by people with substantial
assets after they already need care discourages early and responsible LTC
planning and crowds out private LTC financing alternatives.
Further exacerbating this
basic problem are Medicaid-compliant annuities which allow wealthy
individuals to (1) shelter and divest virtually unlimited assets, (2)
avoid Medicaid spend down requirements entirely, and (3) qualify for LTC
benefits immediately. Three recent U.S. Court of Appeals cases bearing on
Medicaid-compliant annuities—Geston v. Anderson in North Dakota ($400,000
annuity), Hughes v. McCarthy in Ohio ($175,000), and Lopes v. Department
of Social Services in Connecticut ($167,000)—have dramatically complicated
this issue by reversing state Medicaid programs’ efforts to prohibit the
abuse of Medicaid annuities. Two national studies have estimated the cost
of Medicaid-compliant annuities to the program at $1 billion (2003) and
$200 million (2005) per year. Whatever their actual cost, the use of
Medicaid annuities to artificially impoverish affluent people in order to
qualify them for public assistance violates the congressionally intended
purpose of Medicaid which is to be a long-term care safety net for people
in need.
II. Substantive
Proposal
Closing the
Medicaid-compliant annuity loophole would save the state and federal
governments substantial amounts of money. It would end a practice that
discourages private long-term care planning and causes unnecessary
Medicaid dependency. Entreaties to the Centers for Medicare and Medicaid
Services (CMS), which oversees Medicaid at the federal level, and court
challenges at the federal district and appeals court levels have not
curtailed the use of Medicaid annuities. To resolve the problem will
likely require action by the Congress of the United States. The best way
to encourage Congress to act is to make the public aware of the widespread
abuse of Medicaid-compliant annuities and to encourage citizens and the
media to call for statutory corrective action. Toward that end, we
propose to . . .
·
Research and document federal
and state Medicaid LTC eligibility laws and regulations that encourage
public assistance dependency for LTC.
·
Review the issue of
Medicaid-compliant annuities and compile examples of annuities having been
used in North Dakota, Ohio, Connecticut and other states to shelter or
divest large amounts of assets.
·
Study all relevant court
cases, including appeals, and identify necessary legislative changes to
prevent the abuse of Medicaid annuities.
·
Interview attorneys who
represented the state Medicaid programs in cases challenging
Medicaid-compliant annuities and seek their advice regarding needed
changes in the law.
·
Interview state staff who
make, interpret, and implement LTC eligibility policy to determine and
document the frequency of Medicaid annuity use and the amounts involved.
·
Seek advice from Medicaid
directors and eligibility policy specialists, supervisors and workers with
experience handling annuity cases regarding needed changes.
·
Interview Medicaid estate
recovery staff on methods used in various states to discourage the use of
annuities: what has worked where?
·
Travel to five or more key
states to accomplish these reviews and interviews.
·
Review published research
conducted by the American Public Health Services Association in 2003 that
resulted in a potential savings estimate of $1 billion per year from
closing the Medicaid-compliant annuity “loophole.”
·
Summarize, analyze and
critique findings by Robert A. Levy, et al., for CMS in 2005 that
estimated potential savings at only $200 million per year.
o
This research arguably
underestimated potential savings by inadequate sampling, failing to
consider moral hazard or the crowd out effect on private LTC financing and
because the Deficit Reduction Act of 2005 (DRA ’05) later closed other
Medicaid planning loopholes making annuities more attractive, frequent and
larger.
o
This research appears to have
a pro-annuity bias as the reviewers did not interview long-term care
providers or insurers who are most impacted negatively by Medicaid
annuities, but rather only consulted one annuity marketer and an elder law
attorney representing the “industry” that benefits from Medicaid
annuities.
o
This research did not review
or cite sources in the voluminous Medicaid estate planning literature
which widely advocates the use of Medicaid annuities to circumvent
Medicaid spend down rules.
·
Document and publicize
egregious examples of Medicaid-compliant annuities
·
Interview key state
legislators and/or their staff to gauge their interest and willingness to
fix the problem and seek advice on best strategy to do so.
·
Interview members of Congress
and/or their staff to gauge interest in fixing the problem and to get
advice on the best strategy.
·
Work with staff in Congress
to develop proposed legislation to close the Medicaid annuity loophole.
·
Estimate the cost of Medicaid
annuities to the Medicaid program.
·
Propose specific changes to
federal and state law to fix the Medicaid annuity problem.
·
Publish articles through
national and state think tanks identifying abuse of Medicaid-compliant
annuities and advocating legislative action at the state and federal
levels to close the loophole.
·
Publish op-eds in national
and state-level media identifying abuse of Medicaid-compliant annuities
and advocating legislative action at the state and federal levels to close
the loophole.
To accomplish these
objectives, we will contact Medicaid officials in the states most
seriously affected by the Medicaid annuity problem. Through them we will
reach and interview the key front line staff who know the most about the
issue. We will also seek their advice and assistance in identifying and
contacting their peers in additional states until we have reached and
interviewed all state and federal officials with knowledge of and a
concern for the impact of Medicaid annuities. We will also contact and
work cooperatively with staff of the State Policy Network affiliates in
each state. We anticipate that the research, report writing, and article
and op-ed preparation and publication will consume approximately six
months full time effort.
III. Business proposal
Deliverables, within 26
weeks of the project start date, will include (1) a comprehensive report
(at least 35 pages) that explains the problem of Medicaid annuities,
documents the degree of the problem, and recommends solutions to achieve
savings per annum of at least 1,000 times the cost of the contract; (2)
distribution of electronic reports to all interviewees and respondents,
(3) several newspaper op-eds in affected states, and (4) an article
suitable for publication in a relevant professional journal.
Stephen Moses (professional
bio attached or viewable here:
http://www.centerltc.com/steves_bio.pdf) will conduct all of the
research and interviews for this project. He has conducted many similar
studies over the years. Examples of his published articles and project
reports are at
http://www.centerltc.com/reports.htm and on the websites of many state
and national think tanks, including the Cato Institute, the Pacific
Research Institute in California, and the Manhattan Institute’s Empire
Center for New York State Policy.
Total cost: $75,000 plus
reasonable travel expenses not to exceed $10,000. Payable: $10,000 upon
signing; $10,000 upon submission of five monthly progress reports; and
$15,000 upon submission of acceptable deliverables.
Respectfully submitted
February 28, 2014
Stephen A. Moses
President
#############################
Updated, Friday, February 21,
2014, 7:00 AM (Pacific)
Alpine, Texas—
#############################
LTC
BULLET: CAN LONG-TERM CARE SURVIVE?
LTC Comment: How vulnerable is our current and likely future long-term
care system to the ravages of aging demographics, unfunded entitlement
liabilities, bad economic policies, and a growing entitlement mentality?
LTC BULLET: CAN LONG-TERM CARE SURVIVE?
LTC Comment: We welcome your comments on the following draft article, on
the findings it summarizes, and on the reports it references. My thanks
to Bob Helms of the American Enterprise Institute for his helpful
suggestions.
#############################
“Can Long-Term Care Survive?”
by
Stephen A. Moses
The question policy makers and analysts usually ask is “How shall we pay
for long-term care?” It stumps them every time. Last year’s Long-Term
Commission punted on the question. The only hint of consensus is that
public and private funding must combine somehow. But how?
Maybe it’s time we ask a more basic question: Can Long-Term Care
Survive? If we don’t find a way to pay for it, what is the likelihood our
current non-system of service delivery and financing can endure the coming
age wave? If we can muddle through, all right. But what if prospects are
dim? Then how to finance LTC takes on far greater urgency.
America’s dominantly Medicaid-financed, nursing-home-based long-term care
system is in turmoil. State Medicaid programs struggle to constrain LTC
expenditures by expanding managed care and rebalancing from institutional
to home care. But total Medicaid LTC costs continue to rise and private
LTC financing continues to decline. Few people save, invest or insure to
pay for their own long-term care.
What if those trends persist? Can long-term care survive in its current
or likely future form? The answer depends on how the USA and each state
copes with the daunting problems of aging demographics, Medicaid funding,
economic growth and social policy. It bodes poorly that we already have
too many sick elderly people dependent on inadequately funded public
programs without the means to pay for their own care.
The Index of Long-Term Care Vulnerability
How can we measure the prospects for future success or failure? The
Center for Long-Term Care Reform developed an “Index of Long-Term Care
Vulnerability” as a tool to help answer that question. The Index
incorporates seven key metrics to which the analyst ascribes weights. The
Index, an Excel worksheet, automatically calculates maximum points for
each metric out of a total possible of 1000. The analyst then scores each
sub-factor under the metrics using links to data sources provided in the
Index instructions.
Here’s how we ranked the key metrics followed by the results we obtained
for the United States and three states.
1. How many older people are coming in the next few decades? (5%, 50
points)
2. How sick will they be? (5%, 50 points)
3. How viable is Medicaid as a long-term care payer? (15%, 150 points)
4. How reliable is federal revenue on which Medicaid mostly depends?
(20%, 200 points)
5. How reliable is state revenue on which Medicaid secondarily depends?
(20%, 200 points)
6. How much private-pay revenue is available to relieve LTC financing
pressure on
Medicaid? (15%, 150 points)
7. How strong is dependency on public programs (i.e., the
entitlement mentality)? (20%, 200 points)
You may assign different weights for each metric and different scores for
each sub-factor. Our objective with the Index was not to provide an
indisputable conclusion but rather to ask “Can LTC Survive?,” to lay out
some key issues that go into answering that question, and to provide links
to sources of data that shed light on the crucial factors and sub-factors
.
Results
So far, we have applied the Index of Long-Term Care Vulnerability to the
United States and to the states of Virginia, Georgia and New Jersey. In
the following reports, you can find our analysis, a completed Index for
each of those states with footnotes to the data sources used, and a blank
Index that you can experiment with by filling it out yourself.
“The Index of Long-Term Care Vulnerability: A Case Study in Virginia”
was published in November 2013 by the
Thomas Jefferson Institute for Public Policy and the Center for
Long-Term Care Reform. It is posted on their websites
here and
here, respectively.
“The Index of Long-Term Care Vulnerability: A Case Study in Georgia”
was published in December 2013 by the
Georgia Public Policy Foundation and the Center for Long-Term Care
Reform. It is posted on their websites
here and
here, respectively.
“The Index of Long-Term Care Vulnerability: A Case Study in New Jersey”
was published in January 2014 by the
Common Sense Institute of New Jersey and the Center for Long-Term Care
Reform. It is posted on their websites
here and
here, respectively.
The results are not encouraging. We concluded that the United
States—scoring only 529 out of a possible 1000 points—has little more than
a 50/50 chance to sustain its long-term care system through the aging of
the baby boom generation. Virginia’s prospects (501 points) and Georgia’s
(455 points) are only slightly worse, but New Jersey’s situation (338
points) is nearly hopeless with a two-thirds probability the state’s LTC
system will fail.
How did we reach these conclusions? You will need to consult the
individual state reports and their vulnerability indices for a full
explanation. But in a nutshell, here’s how we scored each of the key
metrics:
Factor #1—How many older people are coming in the next few decades?
The key metric for aging demographics is how many people over age 85—the
population cohort most likely to need long-term care—there will be in the
future. We applied a weight of 5% for a possible 50 points out of 1000
total. For the USA, 2% of the population was over 85 in 2012 with an
increase of 69% expected by 2032 and 224% by 2050. Providing long-term
care to this rapidly increasing group is a formidable challenge so we
assigned only one-third of the possible points, 17 to the USA. Virginia
begins with a smaller proportion over 85 (1.7%) but its old-old (85 plus)
cohort grows even faster through 2032 (101%) and 2050 (307%). We gave
Virginia 14 points. Georgia is comparable to Virginia. It starts at only
1.4% in 2012, but increases 121% and 375% through 2032 and 2050,
respectively. Georgia got 14 points also. New Jersey begins with a
higher percentage of old-old than the USA (2.2%), but its expected
increase is somewhat less, 58% through 2032 and 206% through 2050. So 14
points for New Jersey too. All three states face similar vulnerability
for aging demographics, just slightly more vulnerable than the USA as a
whole. Hence slightly fewer points.
Factor #2—How sick will they be?
We applied a weight of 5% (50 points) and ranked the USA and all three
states based on their percentage of people age 65-plus with disabilities
including self-care difficulty, cognitive difficulty, any disability, and
nursing facility residents with dementia. Consult the state reports for
scoring details. The totals were USA, 22; VA, 27; GA, 14; and NJ, 26. In
other words, Virginia and New Jersey’s aged populations are somewhat
healthier than the USA average, but Georgia’s elderly are markedly
sicker.
Factor #3: How viable is Medicaid as a long-term care payer?
Medicaid is now and will remain for the foreseeable future the principal
payer for long-term care throughout the United States. The program’s
sustainability is critical to long-term care financing. We applied a
weight of 15% to this factor with 150 potential points. To measure
Medicaid’s sustainability in future decades, we considered (1) the percent
of budget devoted to Medicaid, (2) the percent of LTC spending for aged
and disabled recipients, (3) the increase in nursing home spending over
time, (4) the increase in Home and Community-Based Services (HCBS)
spending over time, (5) HCBS spending as a percentage of LTC spending, (6)
Federal Medical Assistance Percentage (FMAP), (7) Affordable Care Act (ACA)
Medicaid expansion or not, (8) LTC eligibility strictness, (9) Skilled
Nursing Facility (SNF) reimbursement shortfall, (10) Medicaid SNF
reimbursement rate compared to private-pay rate, (11) dual eligibles
vulnerability, (12) rebalancing vulnerability, and (13) managed care
vulnerability. Refer to the respective worksheets for detailed scoring.
Totals are USA, 97; VA, 81; GA, 114; NJ, 68.
Factor #4: How reliable is federal revenue on which Medicaid mostly
depends?
Without federal matching funds averaging 57% of their total Medicaid
expenditures, state Medicaid programs would collapse. We assigned a
weight of 20% to this factor, 200 possible points. Sub-factors considered
were (1) total Medicaid spending, (2) five year increase in spending, (3)
federal and state shares of Medicaid costs, (4) dependency on “provider
taxes,” (5) Social Security unfunded liability, (6) Medicare unfunded
liability, and (7) federal debt. Refer to the respective worksheets for
detailed scoring. Totals are USA, 89; VA, 70; GA, 71; NJ, 64.
Factor #5: How reliable is state revenue on which Medicaid secondarily
depends?
States can only draw down federal Medicaid matching funds by putting up
revenue of their own. Therefore a healthy economy is critical to the
sustainability of long-term care programs. We assigned a weight of 20% to
this factor, 200 total possible points. Sub-factors considered were (1)
ALEC-Laffer State Economic Competitive Index, (2) Forbes
Best States for Business and Careers, (3) Cato’s “Fiscal Policy Report
Card,” (4) Mercatus Center’s “Freedom in the 50 States,” (5) Tax
Foundation’s “State and Local Tax Burdens,” and (6) State Health Facts
State Budget Shortfalls. Refer to the respective worksheets for
detailed scoring. Totals are USA, 160; VA, 156; GA, 139; NJ, 55.
Factor #6: How much private-pay revenue is available to relieve LTC
financing pressure on Medicaid?
If public financing falters, long-term care viability will depend on
private resources such as savings and home equity. We assigned a weight
of 15 to this factor, 150 possible points. Sub-factors are (1) asset
spend down potential, (2) Medicaid estate recoveries, (3) home equity
conversion potential, and (4) private long-term care insurance. Refer to
the respective worksheets for detailed scoring. Totals are USA, 77; VA,
69; GA, 47; NJ, 49.
Factor #7: How strong is dependency on public programs (i.e.,
the entitlement mentality)?
To the extent citizens have come to expect government to provide their
long-term care, service delivery and financing are more vulnerable than
when people expect to take personal responsibility for funding their own
care. We assigned a weight of 20% or 200 points to this factor.
Sub-factors include (1) percentage of births financed by Medicaid, (2)
Food Stamp participation rate, (3) the degree by which welfare proceeds
exceed the minimum wage, (4) the degree to which Social Security
Disability Insurance replaces work, (5) unfunded pension liabilities, (6)
nursing facility residents dependent on Medicaid, and (7) Medicaid
recipients with prepaid burial plans that avoid spend down requirements.
Refer to the respective worksheets for detailed scoring. Totals are USA,
67; VA, 84; GA, 56; NJ, 62.
What is the bottom line?
Be scared. Be very scared about the future of long-term care financing
and services wherever you live in the USA. By our reckoning, the USA and
two of the states we reviewed in detail (Virginia and Georgia) have only
one chance in two of surviving the age wave with their LTC programs
intact. New Jersey’s prospects are even worse, about one in three.
What might a long-term care system failure look like? Exploding public
expenditures for long-term services and supports. Long-term care expenses
crowding out other critical government priorities such as education,
highways, and law enforcement. More municipalities and then states
declaring bankruptcy. Nursing homes and home health agencies closing due
to cuts in federal and state funding. Caregiver shortages caused by
inadequate wages. Plummeting quality of paid care. Excessive strain on
family and friends forced to provide even more free care than they do
now. Loss of personal savings and home equity as Medicaid and Medicare
spend less on home care and skilled nursing home care. Concomitant
reduction in retirement income and acute health care security as more
personal wealth goes into funding long-term care. Development of a
two-tier long-term care system; best for the affluent and worst for the
poor.
If you see many of these outcomes starting to happen already, you might
want to ask this next question and see if the Index of Long-Term Care
Vulnerability can help you answer it.
Can long-term care survive in my state?
How would your state score on the Index of Long-Term Care Vulnerability?
The Center for Long-Term Care Reform can review the key factors, calculate
the metrics, and give you an answer. To discuss that possibility contact
Center president Stephen Moses at 425-891-3640 or
smoses@centerltc.com.
But feel free to use the Index of Long-Term Care Vulnerability to compute
your own estimate of your state’s LTC prospects. A lot depends of course
on how you analyze the current condition of long-term care in your state,
what weights you place on each of the major metrics in the Index, and how
you score each of the sub-factors. Those choices will determine the
result and your conclusion may be very different from the one we would
reach.
So try the Index of Long-Term Care Vulnerability yourself. See what you
conclude. And please let us know your results. We’ll use your findings
to improve the current beta version of the Index.
Steve Moses is president of the Center for Long-Term Care Reform (www.centerltc.com).
Reach him at
smoses@centerltc.com or 425-891-3640.
#############################
Updated, Tuesday, February 18,
2014, ???? AM (Pacific)
Alpine, Texas—
#############################
WSJ ON LTCI AND LTC NEWS AND COMMENT
LTC Comment: The Wall Street Journal has been running a series of
articles about long-term care insurance by “The Experts,” a collection of
writers the newspaper convened and calls “An
exclusive group of industry and thought leaders . . . who engage in
in-depth online discussions of important topics.” Well, take that with a
grain of salt. We critiqued one egregiously wrong and misleading example
in
last Friday’s LTC Bullet and below. Some of the other articles
in this series weren’t so bad and we highlight a couple of those below.
But the basic problem with the series is that it gives voice to financial
planners who, as a group, understand little about long-term care financing
and insurance. So too often they end up criticizing LTCI unfairly and
endorsing Medicaid planning irresponsibly.
Heads up! The last three exhibit booths
(10x10, $3,250) for the
14th Annual Inter-Company Long-Term Care Insurance Conference
(Orlando, March 16-19) are available with a special enticement. According
to Jim Glickman: “In order to finish selling the rest of the Exhibit Hall
slots quickly, the Executive Committee has approved allowing your
attendees to register for the conference for only $100 each (instead of
the regular discounted price of $295) as long as they are registered by
February 21st. In addition, any new Exhibitor (who has never
exhibited at our conference before) is eligible for an additional $250
discount.” If you have questions, please contact Jim Glickman or go to
www.ILTCIconf.org for additional information.
#############################
2/18/2014,
“Response to ‘Surprise! Your
Long-Term Care Insurance Won't Cover It’,” [link]
by Phyllis Shelton, LTC Consultants
Quote:
“This
very unfair and uneducated article was written by a financial planner.
My take on it is his agenda is to sell individual long-term care insurance
by bashing group LTCi plans. You can read it and see what you think. Here
is my response. Just as in any other response I write, please feel free to
use any part of it in any response of your own with your clients and
prospects.”
LTC Comment: Phyllis Shelton takes issue with an article published
in the Wall Street Journal’s “MarketWatch.”
#############################
2/16/2014,
“Medicaid's
death bill leaves homes, assets at risk,” by Shannon Mullen, USA
Today
Quote:
“After their 92-year-old
mother died, Richard Pfieffer and his siblings were
set to sell her New Jersey home when a bill for $25,347 brought them
up short. The amount was the total cost of the home-based medical care
their mother received through Medicaid in the last years of her life. If
the bill wasn't paid in full, the family was informed, the state would
place a lien on the property.”
LTC Comment:
We fought hard to make estate
recovery mandatory in 1993 on the grounds that people who get free
long-term care from Medicaid should pay it back from their estates. We
argued successfully that without estate recovery baby-boomer heirs would
reap a windfall from the welfare program and be less likely themselves to
insure for long-term care. Now, estate recovery is under attack and this
article in a national newspaper openly proposes Medicaid planning as a
means to evade estate recovery. The Center for Long-Term Care reform
remains one of the few voices defending estate recovery and Medicaid as a
safety net. Matt Salo, executive director of the National Association of
Medicaid Directors Association, is another such voice. Bottom line: the
tide is turning against responsible long-term care public policy and your
support for our work is needed more than ever now.
#############################
2/15/2014,
“Custodial care fraud against
Medicare persists as funds to fight it ebb,” [link]
by Jim Landers, Dallas Morning News
Quote:
"Medicare has struggled with home health care fraud for decades, because
the industry has kept trying to use the federal insurance program to get
paid for long-term custodial care."
LTC Comment: The common caveat that "Medicare does not pay for long-term care" is
untrue. Just as Medicaid funds LTC for the middle class and affluent
despite rules that seem to prohibit the practice, Medicare pays for a
great deal of LTC at home and in nursing facilities despite rules to the
contrary.
#############################
2/13/2014,
“Retiring
on the House: Reverse Mortgages for Baby Boomers,” by Lisa Prevost,
The New York Times
Quote:
"As baby boomers age, reverse mortgages are expected to gain popularity as
a means of covering living expenses. Hence, in the future, more homes
passed on to children will come with a bill attached - the balance due on
these equity loans."
LTC Comment:
Medicaid's mandatory estate recovery is a form of government-provided
reverse mortgage which protects Medicaid from affluent abusers and
encourages heirs to protect their inheritances by insuring their parents
and themselves against LTC risk.
#############################
2/13/2014,
“Why
Long-Term-Care Coverage Is Right for Me,” by Olivia Mitchell, Wall
Street Journal
Quote: "We became empty nesters! Our children finished school,
moved out, and (even more awesome), got jobs. To celebrate, I canceled my
term life and bought long-term care insurance (LTCI) instead."
LTC Comment:
Better advice from WSJ.
#############################
2/13/2014,
“LTCI
sales rise at John Hancock,” by Allison Bell, LifeHealthPRO
Quote:
"John Hancock Long-Term Care operations did well in the fourth quarter,
despite the effects of a paper investment loss that reduced revenue."
LTC Comment:
Better news.
#############################
2/13/2014,
“Start
Shopping for Long-Term-Care Insurance at 45,” Michelle Perry Higgins,
Wall Street Journal
Quote:
"If you're around 45 years of age, start doing your homework on the
different plans available (including through your employer) and costs you
may be looking at for a long-term health-care policy. By 50 years of age,
you may want to consider purchasing a policy that would complement your
financial plan."
LTC Comment:
Better advice from WSJ than what we cite below.
#############################
2/13/2014,
“CO man gets decade-long prison
sentence for human trafficking of nursing home workers,” [link]
by Tim Mullaney, McKnight's LTC News
Quote:
“Kizzy Kalu, 49, was
convicted on dozens of criminal counts in July. He and a
co-conspirator, 78-year-old Philip Langerman, were found guilty of
promising nonexistent jobs to foreign nurses, then forcing them to take
jobs in nursing homes once they were in the United States. The nurses paid
Kalu about 40% of their earnings, and he threatened to have them deported
if they did not comply.”
LTC Comment: Low
Medicaid reimbursement rates have many bad side-effects.
#############################
2/12/2014,
“CNO
Rallies After Deal to Cut Long-Term Care Risk,” by Alexandria Baca,
Bloomberg
Quote: “Beechwood
Re Ltd. agreed to take on obligations tied to the policies with
CNO ceding $590 million, mostly in reserves, the reinsurer said in a
statement today. CNO is among insurers burned by higher-than-expected
costs on the coverage, which helps pay for home-health aides or residence
in nursing homes. Low interest rates also pressured returns.”
LTC Comment:
Who “reinsures” Social Security and Medicare? We do.
#############################
2/12/2014,
“States
Meld Medicare and Medicaid,” by Christine Vestal, Stateline
Quote:
"In the nearly 50 years since Medicaid and Medicare were enacted, the two
health care programs - one for the poor and the other for the elderly and
disabled - have remained separate, with different rules, duplicative
benefits and conflicting financial incentives. The result has been wasted
money and disjointed care for more than 10 million 'dual eligibles,' the
Americans who qualify for both programs."
LTC Comment:
The best solution for the “dual eligibles” problem is to have fewer of
them. Our white paper explains how: “Briefing Paper #5: Dual Eligibles
and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and
Pay for the ‘Doc Fix’”
www.centerltc.com/BriefingPapers/5.htm -- (PDF
for print)
#############################
2/12/2014,
“The
Real Reason Health Spending Has Slowed,” by John C. Goodman and Peter
Ferrara, National Center for Policy Analysis
Quote:
"Three developments track the slowdown in health care spending very
closely: the growth of Health Savings Accounts (HSAs), the growth of
Health Reimbursement Arrangements (HRAs) and the general trend toward
higher deductibles. All three changes mean that patients are paying more
medical bills out of their own pockets. And that has produced profound
changes - on both the demand and supply sides of the market."
LTC Comment:
And if HSAs and HRAs had been the norm in acute health care insurance for
the past three decades, enough money would repose in them now to pay LTCI
premiums for aging boomers.
#############################
2/11/2014,
“Carrier
applies for LTCI rate hikes,” by Allison Bell, LifeHealthPRO
Quote:
"For that block, incidence is just 58 percent of what the company had
expected, but, because the claim termination rate is just 89 percent of
the expected rate, and mortality is just 34 percent of the affected rate,
the company expects the lifetime loss ratio to be 93 percent even if it
gets the full rate increase requested, the company said."
LTC Comment:
Hard to make such numbers work.
#############################
2/11/2014,
“Medicaid
and Your Parents: The Basics,” by Virginia Morris, Forbes
Quote:
“Some health care
providers and
nursing homes won’t take patients on Medicaid or will accept only a
limited number because the reimbursement rates are low. In some areas, it
may be difficult (or impossible) to find aides or other
home care workers who will take Medicaid. As a result, Medicaid
patients may have to settle for fewer choices and lower quality care.
Furthermore, Medicaid has largely switched over to
managed-care plans, which means that your parent has to receive care
from a particular list of providers. Her doctor and many specialists
might not be in that group.”
LTC Comment:
This article advocates Medicaid planning and incorrectly states that the
home exemption disappears when a recipient is permanently
institutionalized, but at least the author mentions some of the downsides
of ending up on Medicaid.
#############################
2/11/2014,
“When
Boomers Inherit, Complications May Follow,” by Fran Hawthorne, New
York Times
Quote: "[T]here have never been as many heirs with as much money
as now, thanks to the intersection of two demographics: the 79 million
baby boomers and the general thriftiness of their Depression-raised
parents. The Center for Retirement Research at Boston College estimates
that boomers will ultimately receive a total of $8.4 trillion, most of it
by 2030."
LTC Comment:
That’s a lot of money that needs protection from LTC risk.
#############################
2/11/2014,
“States Accelerate Shift Of Nursing
Home Residents Into Medicaid Managed Care,” [link]
by Phil Galewitz, Kaiser Health News
Quote:
“States had traditionally
been reluctant to place frail and elderly people into managed care. But
that caution is fading as officials become comfortable with managed care
and more anxious to curb Medicaid spending. The elderly and disabled
account for about 6 percent of Medicaid enrollees, but nearly half of
the program’s spending.”
LTC Comment: Can
giant managed care companies learn to care adequately for Medicaid’s
frailest, most infirm recipients? Does home and community-based care so
managed really save money without sacrificing quality? Time will tell as
managed LTC is a trend sweeping through Medicaid programs across the
country.
#############################
2/11/2014, “Remembering
Philip Seymour Hoffman, long-term care firebrand,” [link]
by Tim Mullaney, McKnight's LTC News
Quote:
"Hoffman himself wasn't a critic of the nation's long-term care system,
but in the role of Jon Savage, he delivered a blistering and relevant
diatribe against a certain type of provider."
LTC Comment:
This is an interesting column dealing with the tension between assisted
living and nursing homes with a relevant movie review included.
#############################
2/10/2014,
“Reasons
to be Wary of State-Run Retirement Plans,” by Jeffrey Brown, Forbes
Quote:
“Lawmakers in states from
Connecticut to
Washington are considering letting the state manage the retirement
funds of private sector workers. Given how poorly states like California
and Illinois have funded the pension funds for their own employees, one
would think that this would stop dead in its tracks any plan to have the
government assist in managing private sector funds too. The spate of
recent activity, however, suggests otherwise.”
LTC Comment: There’s no substitute for personal responsibility
when it comes to retirement savings. Some private company pension
programs and most run by governments at any level are unsound financially.
#############################
2/10/2014, “The Case for Skipping Long-Term-Care Insurance; Adviser
Says the Coverage Is Too Expensive and Often Doesn't Get Used,” [link]
by Susan Kaplan, Wall Street Journal
Quote: “Those who are wealthy enough or can save enough should
just pay for long-term care out of pocket. For those who can't, one
solution is to put clients' assets into an annuity, which will provide
them with an income stream of X amount for the rest of their lives.
Because they are no longer holding the majority of their assets, clients
can qualify for Medicaid before entering a nursing home.”
LTC Comment: This patently irresponsible article had no business
appearing in the Wall Street Journal. Nevertheless, the annuity
gambit it recommends works . . . for now. The Center is going after that
gaping loophole with a vengeance this year. We devoted last Friday’s
LTC Bullet:
WSJ Misfires on LTC Insurance to refuting claims in this
article.
#############################
2/8/2014,
“Seniors
overspend on mortgage, credit cards,” by Robert Powell, USA Today
Quote:
“The percentage of 65- to
74-year-olds who report having a mortgage or home equity loan payment
increased from 21% in 1989 to nearly 37% in 2010, according to Pamela
Villarreal, author of How Are Seniors Spending Their Money. And for
those age 75 and older, the percentage of mortgage or home equity loan
holders increased from just 6% to 21% during the same time.”
LTC Comment: An
ominous development if the Center’s prediction proves true that aging
Boomers will need their home equity to fund long-term care when Medicaid
cuts its home equity exemption.
#############################
2/7/2014,
“'Aid
in Dying' Movement Takes Hold in Some States,” by Erik Eckholm, New
York Times
Quote:
"Helping the terminally ill end their lives, condemned for decades as
immoral, is gaining traction. Banned everywhere but Oregon until 2008, it
is now legal in five states. Its advocates, who have learned to shun the
term 'assisted suicide,' believe that as baby boomers watch frail parents
suffer, support for what they call the 'aid in dying' movement will grow
further."
LTC Comment:
Worthy perhaps in its own right as a voluntary choice, let's hope "aid in
dying" doesn't become a mandatory solution to the long-term care financing
crisis.
#############################
Updated, Friday, February 14,
2014, 9:26 AM (Pacific)
Terlingua, Texas—
#############################
LTC BULLET: WSJ
MISFIRES ON LTC INSURANCE
LTC Comment: We dissect
and correct a misbegotten column in the Wall Street Journal after
the ***news.***
*** HAPPY VALENTINE’S DAY
***
*** CENTER “CLIPPINGS”
SUBSCRIBERS knew about this WSJ article the day it was published
and fired off rebuttals. Others learned of the piece when their prospects
cited it as a reason not to buy LTCI. Knowledge is power and information
is key. If you belong to the Center for Long-Term Care Reform, you
already receive a weekly digest of the most important LTC articles and
reports, our Monday LTC E-Alerts. But reading material that is
critical to your profession a week later is like waiting for the gun to go
off before you duck. Clippings subscribers receive the information and
data they need by email daily in real time. Join the Center as a “premium
member” or upgrade to that status and you’ll begin immediately to receive
our clippings service. Contact Damon at 206-283-7036 or
damon@centerltc.com for details. ***
#############################
LTC BULLET: WSJ
MISFIRES ON LTC INSURANCE
LTC Comment: Over the
years, private long-term care insurance has been the target of many
unfounded attacks. But this latest one is especially galling as it comes
from someone pushing a truly irresponsible alternative: Medicaid
planning. Here’s the reply we emailed to the offending author and posted
on the Wall Street Journal’s website.
#############################
Susan Kaplan’s “The
Case for Skipping Long-Term-Care Insurance” (Wall Street Journal,
2/10/14) is full of inaccurate statements and bad advice.
For example:
Quote: “[T]he odds that
clients will continue paying for coverage until they actually need it are
slim.”
LTC Comment: Not true. Most
LTC insurance policy holders retain their coverage. In fact, lapsed
policies are only a small fraction of what actuaries originally expected.
Besides, consumers who worry about making future premiums for traditional
coverage can purchase LTC protection linked with single-premium life
insurance or an annuity.
Quote: “Premiums are going up
10% to 45% a year.”
LTC Comment: Premiums on
in-place business remained flat for the first three decades of the LTC
insurance product’s existence. Recent premium increases have largely
achieved their purpose so future increases should be moderate. If the
Federal Reserve stops forcing interest rates to zero so insurance carriers
can receive better returns on their reserves it is possible competition
could actually push LTC insurance premiums down in the future. Besides,
consumers who still worry about premium increases have guaranteed premium
options through linked products.
Quote: “The average premium
these days can cost anywhere from $4,000 to $6,000 annually per person, a
lot even for high net-worth clients.”
LTC Comment: Actually, a
couple can buy “best” coverage for less than that. According to the
American Association for Long-Term Care Insurance: “Today’s average cost
for ‘Best’ coverage for a 60-year-old couple each purchasing $164,000 of
immediate coverage that grows to a combined benefit pool of $730,000
($365,000 each) at age 85, is $3,840-per-year. ‘That’s a three percent
increase from the 2013 average ($3,725) and 4.8 percent higher than 2012
($3,663),’ [AALTCI executive director] Slome shares.” Furthermore: “A
55-year-old single male purchasing new long-term care insurance protection
can expect to pay $925-per-year for $164,000 of benefits according to an
industry report. He’ll pay $1,765 for coverage that increases the benefit
pool to $365,000 at age 85, a 14.5 percent decline from last year’s
average.”
(Emphasis added. Source:
“2014 Long Term Care Insurance Price Index Published,” http://www.aaltci.org/news/long-term-care-insurance-association-news/2014-long-term-care-insurance-price-index-published)
Quote: “After paying the premium, clients may not have money left over to do
things like take a vacation.”
LTC Comment:
What’s more important? Preparing for a secure future or immediate
gratification?
Quote: “Those who are wealthy enough or can save enough should just pay for
long-term care out of pocket.”
LTC Comment:
So, it’s better to spend dollar-dollars later than nickel-dollars today?
Most people with significant assets to protect didn’t accumulate their
wealth by ignoring the power of private health, life and auto insurance to
protect it. Why should they ignore the leverage from private long-term
care insurance?
Quote: “For those who can't [save enough to pay for their own long-term
care], one solution is to put clients' assets into an annuity, which will
provide them with an income stream of X amount for the rest of their
lives. Because they are no longer holding the majority of their assets,
clients can qualify for Medicaid before entering a nursing home. This
doesn't have to be done in advance of needing long-term care and is
perfectly acceptable to the nursing home.”
LTC Comment:
Here’s what this article is really about, i.e., selling
“Medicaid-friendly annuities.” But, Medicaid is a means-tested public
assistance program. In a word, welfare. The program has a dismal
reputation for problems of access, quality, reimbursement, discrimination
and institutional bias. It is not true that Medicaid is “perfectly
acceptable to the nursing home.” Medicaid pays nursing homes only 2/3 of
the private pay rate so the nicest facilities roll out the red carpet for
private payers. It is true now and will be more true in the future that
to obtain the highest quality long-term care at the most appropriate level
people need to be able to pay privately.
Quote: “The reality is that when a client gets sick, many don't even make it
to the nursing home, and once there, most people die within 18 months.
This paints a bleak picture of the future, but ultimately can save a
client thousands of dollars over the years, especially as long-term-care
policies get less and less appealing.”
LTC Comment:
Long-term care insurance is “stay out of a nursing home insurance” because
it ensures that policy holders can stay at home or in a comfortable
assisted living facility as long as possible and that they can access the
very finest skilled nursing facilities if necessary.
#############################
Updated, Friday, February 10,
2014, 10:55 AM (Pacific)
Seattle—
#############################
3 IN 4 NEED MORE, AN INSPIRING STORY AND LTC
NEWS AND COMMENT
LTC Comment:
The 3in4 Association has announced its new lead generation marketing
fulfillment licensee - TargetLeads. Says 3 in 4: “This new partnership
means more efficiency, more variety, more effectiveness and more success
in sharing the 3in4 message with Americans.” Check out the details
here.
Center Regional Representative Romeo Raabe of Green Bay, Wisconsin
reports:
“I had quite an emotional end to a meeting this morning. I was in a
client’s office, delivering his wife’s LTCi policy and going over options
for him who was declined. We settled on an annuity/LTC product that
should accept him although costing much more and providing less coverage.
After filling out all the paperwork and him signing it, he got up and
paced a bit in his office as I packed up.
“He had tears in his eyes as he looked at me and said ‘You don’t know
this, but I’ll bet you have saved 20-30 lives over your career. People
who did not know what to do, people who might have considered suicide if
you had not come along with some solutions to at least help them
somewhat.’
“I did not know what to say, except that it is so satisfying to be able to
help people with what would otherwise be overwhelming financial distress.
I had tears in my eyes as we shook hands and I left.
“Just thought you might be heartened by this story, I sure as heck am!”
#############################
2/9/2014,
“LTCi & Gender-Distinct Pricing As
products mature, so do opportunities [link],”
by Henrik Larsen, Life & Health Advisor
Quote:
"In conclusion, I strongly believe that the move to gender-distinct
pricing is an overall benefit to not only the carriers from a risk
spreading perspective, but also to distribution from the marketing
perspective. Results from our early initiatives support this opinion. The
change in pricing philosophy has not disrupted demand; it has created
opportunities. The fact that women are the ones planning for long-term
care as they face the largest risk has been validated. We will capture
more sales to men. And lastly, women in the workplace will be even greater
allies than before."
LTC Comment:
Congratulations to author Henrik Larsen of Center Bronze corporate member
Advanced Resources Marketing for this thoughtful article.
#############################
2/6/2014,
“Unum
says LTCI reserve release possible,” by Allison Bell, LifeHealthPRO
Quote:
"Someday, the closed block of long-term care insurance (LTCI) at Unum
Group Corp. could free up a lot of cash for general corporate purposes. .
. . John McGarry, the head of individual disability and LTCI closed-block
operations, said the company would be cautious about releasing reserves
but might be in a position to do so in three to five years. McGarry said
one challenge is that the average age of the insureds in Unum's large
block of group LTCI business is still under 50. 'This is going to be
around for a long time,' McGarry said."
LTC Comment:
That’s a good example of a difference between government and private
insurance. Medicare and Social Security didn’t wait to release their
reserves. Everything in their “trust funds” has been spent and replaced
with IOUs.
#############################
2/6/2014,
“CalPERS
reopens long-term care insurance to new applicants,” by Dale Kasler,
Sacramento Bee
Quote:
"CalPERS' troubled long-term care insurance program has reopened to new
applicants, ending a five-year hiatus marked by heavy financial losses and
the announcement of a significant rate increase. . . . Following years
of hefty losses, the California Public Employees' Retirement System closed
the program to new applicants in 2008. In 2012, the fund imposed an 85
percent rate increase for most of its existing policyholders, taking
effect in 2015."
LTC Comment: More proof that putting government in charge
of insurance is a very bad idea.
#############################
2/6/2014,
“Study:
Small biz health costs have doubled under Obama,” by Tim Devaney,
The Hill
Quote:
"Healthcare costs for small businesses have doubled under President Obama,
according to a new study. The report from the National Small Business
Association (NSBA) surveyed 780 small business owners and found that
healthcare cost increases are preventing many companies from growing."
LTC Comment:
No wonder we’re experiencing a jobless non-recovery.
#############################
2/6/2014,
“MetLife Study Finds Lost Income
from Major Accidents and Critical Illness Averaged $26,900 and $50,600
Respectively [link],”
press release, Wall Street Journal
Quote:
"MetLife, a leading provider of employee benefits, today announced the
release of new research exploring the growing need and popularity of
supplemental health solutions. Findings are highlighted in MetLife's white
paper, Accident and Critical Illness Insurance Are Surprisingly Good for
Business!, which examines the financial risks associated with accidents
and critical illnesses and how employers can effectively leverage
voluntary insurance solutions to not only provide added financial
protection to employees, but to address their own business challenges. The
paper can be downloaded at metlife.com/cwb."
LTC Comment:
Good news for CI.
#############################
2/5/2014,
“Subsidy
Eligibility, Demographics Fuel Hot Debates,” by Bruce Shutan,
Health Insurance Exchange
Quote:
"HHS noted that nearly 80% of the roughly 2.2 million Americans who signed
up for a public exchange plan by the end of 2013 were eligible for federal
subsidies. However, reports published in December by The Atlantic
Monthly and Kaiser Health News projected that just 40% of
people were thought to be eligible for HIX subsidies, which the former
publication later revised upward to 60% in an article postscript. The HHS
report was more in keeping with Congressional Budget Office projections of
around 90%."
LTC Comment:
Just what we need—more people dependent on government subsidies.
#############################
2/5/2014,
“Emerging
Trends: A Working Retirement,” Life & Health Advisor
Quote:
"Working beyond the traditional retirement age is having a positive effect
in the British workplace as older people stay on in work because of high
living costs and uncertainty about the future, a survey commissioned by
Nationwide Building Society shows."
LTC Comment: The same trends are present in the USA and bode well
for private financial planning and insurance products. Working longer in
retirement is a sign of greater personal responsibility and lesser
confidence in financially vulnerable public programs.
#############################
2/5/2014,
“Some
Illinois Medicaid patients' assets at risk,” Chicago Tribune
Quote:
"More than 200,000 low-income Illinoisans have applied for new coverage
under Medicaid, the state-federal health insurance that was expanded in
Illinois and several other states as part of the Affordable Care Act. But
for certain members of that group, the new coverage could come with
strings attached. A little-known wrinkle in the federal health insurance
expansion could put at risk the house and other assets of those ages 55 to
64 should they require substantial and expensive health care treatments.
The issue arises because of a provision in the long-standing laws
governing Medicaid that compel states to recoup certain medical costs
after a person dies, either via liens placed on an individual's home or
claims on their assets."
LTC Comment: Medicaid estate recovery is a mandatory and critical
feature of the LTC safety net ensuring (when enforced) that affluent
people pay back the welfare program for the cost of their care.
#############################
2/5/2014,
“The
true state of the elderly,” by Robert J. Samuelson, Washington Post
Quote: "How well-off are the elderly? The answer is crucial to
public debate about Social Security, Medicare and other programs to help
older Americans. If most live on the edge, then cuts are hard to justify.
On the other hand, if many elderly are financially comfortable, then their
government benefits and taxes should be open to change - just like other
Americans'.
"It's routinely said that the elderly's median household income - the
income of the household exactly in the middle - is lower than that of the
non-elderly population. That's true. In 2012, it was $33,848 compared with
$57,353 for the under-65 population. We're then supposed to imagine that
the median income accurately reflects the lot of most elderly. That's not
true."
LTC Comment:
You’re well-advised to click through to this article and find out why and
how the elderly are better off than commonly reported.
#############################
2/5/2014,
“CBO: Affordable Care Act will
reduce full-time workforce by more than 2 million in the next decade [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
“More than 7.5% of the nursing home workforce is vulnerable to having
hours reduced as a result of the health law's ‘employer mandate,’ Stanford
University's Lanhee J. Chen, Ph.D., told the House Ways & Means Committee
on Jan 28. The mandate calls for employers with at least 50 full-time
workers to provide health insurance that meets certain requirements, or
face a penalty. The ACA defines full-time work as 30 hours or more a week,
and some employers threatened to cut workers' hours below that threshold
to avoid the mandate."
LTC Comment:
Nursing home care deficiencies are directly related to inadequate staffing
and the ACA will make the problem even worse.
#############################
2/4/2014,
“Less than half of doctors in
nation's largest cities are accepting Medicaid now: study [link],”
by Sarah Hurtubise, The Daily Caller
Quote:
“Health-care consulting firm Merritt Hawkins
conducted a survey of Medicaid acceptance rates which found that just
45.7 percent of physicians are now accepting Medicaid patients in the
U.S.’s largest 15 cities. The federal welfare program cuts costs by
reimbursing physicians at extremely low rates, preventing many doctors
from seeing patients with Medicaid coverage.”
LTC Comment:
Will Medicaid LTC facilities be next?
#############################
2/4/2014,
“Genworth's Profit Rises 24%,
Insurer Cuts Expenses, Posts Higher Net Investment Gains [link],”
by John Kell, Wall Street Journal
Quote:
"Genworth Financial Inc.'s fourth-quarter profit rose 24% as the life and
mortgage insurer cut expenses and reported higher net investment gains.
"Genworth's long-term-care insurance's operating profit grew to $42
million from $7 million last year. Long-term-care insurers rely heavily on
investment income to help pay claims decades into the future."
LTC Comment: With premiums up and able to go higher, imagine how
profitable LTCI can be once interest rates rise.
#############################
2/4/2014,
“Tips
on caring for your aging parents,” by Julie Landry Laviolette,
Miami Herald
Quote:
"Financial advisors say the best way to manage a potential blow to your
budget if you take on the financial care of a parent is to anticipate and
plan for it. A little preparation can go a long way, said Frank Armstrong,
a certified financial planner and founder of Investor Solutions in Coconut
Grove. 'There are all kinds of resources available, but they come at a
cost, and if your parents didn't save enough, it's going to come out of
your pocket,’ he said. ‘The average family has only 'x' number of dollars,
and if you don't plan in advance, it may mean your kid can't go to the
college you want them to or you may impact your own ability to retire.'"
"You may be dealing with your own retirement, kids who want to go to
college and your parents' problems, and there are only so many dollars to
go around. It's a crap shoot, Armstrong said. 'Some of these things can be
insured against - like long-term care - it's expensive, but the odds that
one of your parents is going to need long-term care are quite high,'
Armstrong said. 'So you can share the risk through insurance policies or
you can bear the risk, and take the chance that you're going to get wiped
out.'"
LTC Comment: Unfortunately, there’s another option that is
available even after the LTC crisis occurs. Medicaid planners offer
protection of the inheritance and free care (such as it is) for the
parents. All it costs in attorney’s fees is the equivalent of one month
in a nursing home at the private-pay rate.
#############################
2/4/2014,
“Long Term Care Insurance Industry Paid $7.5 Billion in Claim Benefits [link],”
by Jesse Slome, AALTCI
Quote:
"Long term care insurance companies paid nearly $7.5 billion in claim
benefits to 273,000 individuals in 2013 according to a just-released
report.
"'Total benefit payments increased by 13 percent and the number of
long term care insurance policyholders on claim grew 3.4 percent,'
explains Jesse Slome, director of the American Association for Long Term
Care Insurance (AALTCI), the national trade group. Insurers paid $6.6
billion to some 264,000 policyholders in 2012."
LTC Comment:
Progress but, alas, still a drop in the bucket of total LTC expenditures
of $229 billion.
#############################
2/3/2014,
“Nation's
nursing homes undergoing culture change,” by Stacey Burling,
Philadelphia Inquirer
Quote:
"Long places where many older people dreaded to go, nursing homes
originally followed a medical model. They resembled hospital units with
long, sterile-looking corridors. Regimented schedules were designed more
for staff efficiency than patient happiness. A newer approach emphasizes
that skilled nursing centers are often a last home before death. They
should feel more like homes. That means more choices for residents, better
food, individualized care, smaller units called neighborhoods or
households, stronger relationships with staff, flexible schedules, even
pets. WillowBrooke now lets residents help choose new staff and pick paint
colors. This model of reform, known broadly as 'culture change,' has been
building for more than 25 years. It remains rare, in part because of tight
funding, old buildings, a lack of incentives, and resistant staff, but it
is gaining."
LTC Comment: You can thank nursing home reform pioneer Dr. Bill
Thomas for these promising changes.
#############################
2/3/2014,
“Who Will Pay For Mom's Or Dad's
Nursing Home Bill? Filial Support Laws and Long-Term Care [link],”
Northwestern Mutual
Quote: "If your parents live in one of 29 states or Puerto Rico that
has filial responsibility laws on the books, you could potentially be held
legally responsible for their care under certain circumstances, such as
when your parents are ailing and without sufficient financial resources to
take care of themselves. Until recently, these statutes have been largely
ignored. However, several recent court decisions indicate that there might
be renewed interest in enforcing them.
"Now, with long-term care costs on the rise and funding sources under
pressure, nursing homes and other health care providers may have
increasing incentive to seek to use the courts to compel children to
either help a parent financially or be at risk for covering the cost of
his or her care.
"No one knows whether these recent court cases will encourage other states
to enforce their filial support laws with greater vigor, but this is a
development worth watching. However, as more of the Baby Boomer generation
reaches their golden years, and as many nursing homes and local
governments are faced with providing care to a growing number of indigent
elderly patients, there's a possibility that other states will look more
closely at their filial support statutes in an attempt to find another way
to fund mom's or dad's nursing home bill."
LTC Comment:
Idaho tried in 1984 (and I helped as their HCFA Medicaid state rep) to
enforce relative responsibility but the effort succumbed to political
opposition. It’s more likely states will strengthen estate recovery than
they will enforce filial support laws.
#############################
2/3/2014,
“Pew report: US expectations for elder care are at odds with those in
similar nations [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"People in the United States are
much more likely to say that seniors should be responsible for their own
care, compared with people living in similar economies around the world,
according to a recently released study from the Pew Research Center.
"Only 24% of Americans said the government should bear primary
responsibility for the elderly, which tied Indonesia as the second-lowest
percentage. Pakistan ranked lowest, with 16% saying the government should
bear primary responsibility, and 77% saying families should do so."
LTC Comment:
Maybe there’s still hope.
#############################
1/31/2014,
“Retiring
on Your Own Terms,” by Jason Zweig, Wall Street Journal
Quote:
"To be assured of having enough money to fund a comfortable retirement,
you should save a total of 22 times the annual income you want to earn
when you retire. That is higher than many previous estimates, but it
offers near-certainty of hitting your target."
LTC Comment: Best to include in that savings goal enough income to
cover your LTCI premiums so the total principal is protected.
#############################
1/31/2014,
“The
Policy Lapsed, but No One Knew,” by Paula Span, New York Times
Quote:
"In the meantime, cases like this demonstrate anew how vigilant families
need to be. If your older relative has a long-term care policy, photocopy
the page listing the company, policy number and claims contact
information. Keep the insurance company updated on new addresses, yours
(if you are the third-party designee) and your relative's. It wouldn't
hurt, if the policyholder is becoming forgetful, to check bank statements
or call the company to be sure premiums are paid."
LTC Comment: Reasonable precautions.
#############################
1/31/2014, “More
elderly get care from families than paid workers,” by Sharon Jayson,
USA Today
Quote: "More than 8 million people (mostly women over 65) used
services of a long-term care provider in 2012, according to the first-ever
compilation of federal data on the subject, by the National Center for
Health Statistics.
"Services include adult day centers, home health agencies, hospices,
nursing homes and assisted-living-type residential care communities.
"But 'by far, the lion's share of people getting care are getting it from
family caregivers rather than from paid care workers,' says John Schall,
CEO of the Caregiver Action Network in Washington, D.C. 'There's no
question that family caregiving is really the backbone of the long-term
care support services in this country.'"
LTC Comment:
Publicly financed LTC would crowd out more family caregiving than it does
already if it weren’t for its serious problems of access, quality, low
reimbursement, discrimination and institutional bias.
#############################
1/30/2014, “Maryland
considers LTCI tax credit bill,” by Allison Bell, LifeHealthPRO
Quote:
"Today, Maryland lets a taxpayer have a credit for up $500 in LTCI
premiums for the first year the coverage is in effect. If S.B. 478 takes
effect as written, it will cut the value of the state's LTCI tax credit to
$250 in the first year, then increase the value to $500 in later years."
LTC Comment: Penny wise, pound foolish.
#############################
1/30/2014,
“Americans
shrug off worries over aging population,” by Mary Bowerman, USA
Today
Quote:
"Concern was highest in regions such as East Asia and parts of Europe,
where the percentage of older people will be greater than other countries
by 2050. Almost 90% of Japanese surveyed worried about the aging
population, and half of those in Germany and Spain are worried, the survey
found. On the opposite end, only 26% think the aging population is a major
problem for the USA."
LTC Comment: What, me worry? Dangerous complacency about aging
demographics.
#############################
1/8/2014,”
State Budget Solutions' Fourth Annual State Debt Report,” by Cory
Eucalitto, State Budget Solutions
Quote:
"State Budget Solutions' (SBS) fourth annual State Debt Study reveals that
state governments face a combined $5.1 trillion in debt. This total equals
roughly $16,178 per capita, or 33 percent of annual gross state product.
Another telling way to view the problem - state debt is equal to 469% of
all fiscal year state general and other fund expenditures."
LTC Comment: What happened to the idea that states can't run
deficits because their constitutions don't allow it? How do you
accumulate huge debt without running deficits?
#############################
Updated, Friday, February 7,
2014, 11:11 AM (Pacific)
Alpine, Texas—
#############################
LTC BULLET: MEDICAID
PLANNING—THE REST OF THE STORY
LTC Comment: We made
progress combatting Medicaid estate planning over the years, but
artificial self-impoverishment to obtain free long-term care is back with
a vengeance. Details follow.
LTC BULLET: MEDICAID
PLANNING—THE REST OF THE STORY
LTC Comment: You may
recall those catchy radio commentaries by the late
Paul Harvey in which he told an anecdote, paused for a commercial, and
then returned with the “rest of the story,” a surprising, amusing or
tragic twist on the lead. Here’s the rest of the story about Medicaid
planning.
Medicaid planning is the
practice of divesting or sheltering assets to create a condition of
supposed poverty sufficient to fall within the welfare program’s
ostensibly stringent income and asset eligibility limits.
Medicaid estate planning
includes many techniques to achieve that goal. One can give away any
amount of assets, or transfer them to an irrevocable trust, five years
before applying for Medicaid. Or use countable assets to buy exempt
things such as an expensive house, business or car. Or claim compensation
for providing care to a parent, care that most people give for free out of
love and personal responsibility. Or convert wealth Congress meant to be
spent down privately for care into uncountable income by means of an
annuity.
Over the years, we’ve tried
to discourage this abuse of the welfare safety net by affluent shirkers.
I wrote about the problem in a 1988 report for the DHHS Inspector General
you can still read on the IG’s website
here. I proposed a simple solution: let people keep most of their
wealth and receive LTC from Medicaid if they want it, but make certain
they pay it back out of their estates so their heirs do not “reap the
windfall of Medicaid subsidies.” (pps. 47-48)
Most of my recommendations
in that long-ago report became law in the Omnibus Budget Reconciliation
Act of 1993. OBRA ’93 made Medicaid’s asset transfer restrictions longer
and stronger and required states to recover from recipients’ estates. The
idea was to send good news and bad news to people with wealth who wanted
to reply on public assistance. They could access the safety net, but
they’d have to pay it back.
Congressional intent in
OBRA ’93 was to encourage people to plan responsibly for long-term care so
they would not end up dependent on Medicaid with their legacies encumbered
to reimburse the government. It didn’t turn out that way. Most states
did not implement the new rules aggressively; the federal government did
not enforce the stronger eligibility standards and mandatory estate
recovery strongly; the media didn’t report the new liability consumers
were supposed to face; and so the public went on ignoring LTC risk until
they needed care leaving them dependent on Medicaid and with easy access
to it.
Later attempts to
discourage Medicaid planning also failed. HIPAA ’96 made transferring
assets to qualify for LTC assistance illegal. But the “throw Granny in
jail law” was repealed a year later by the BBA ’97 “throw Granny’s lawyer
in jail” which proved unenforceable. Finally the Deficit Reduction Act of
2005 (DRA ‘05) made some more progress by extending the asset transfer
look-back period to five years, capping the home equity exemption for the
first time, and attempting to discourage the use of Medicaid friendly
annuities.
Have the decades-long
efforts by Congress to preserve Medicaid as a safety net for the poor
finally worked? Read the following and judge for yourselves.
In “LTC
Bullet: States Decry Medicaid LTC Loopholes,” we highlighted
responses from states’ replies to a Congressional inquiry about the
problem of Medicaid planning. One state’s reply was especially
informative and we provide it here in full along with the question to
which it responded.
-------------------
4. Do you consider
Medicaid estate planning to be a significant problem that takes resources
from the truly needy in your state? Please explain and provide examples.
ND: Assuming that by
"Medicaid estate planning" you mean the sheltering of assets to allow
people with greater resources to become eligible to receive Medicaid, then
yes. We have seen some extreme examples in North Dakota.
The Medicaid Act is very
difficult to understand, making it easy to misconstrue its intent. The
courts have recognized that the Act's "Byzantine construction makes it
almost unintelligible to the uninitiated," "an aggravated assault on the
English language," and "resistant to attempts to understand it." This has
led to courts approving techniques employed to circumvent the intent of
the Medicaid Act and expand eligibility far beyond those it was intended
to serve.
Under current statutes and
case law, married people are able to shelter nearly unlimited wealth.
Recent court decisions are allowing for a more widespread use of asset
sheltering strategies within the Medicaid system, with agents marketing
products like annuities on the internet and attorneys advising clients on
how to circumvent Medicaid rules and exploit them to their benefit.
(Interestingly, single people are not able to shelter their assets in the
same way.)
A striking example of
aggressive asset sheltering strategies is seen in Geston v. Olson
No. 1:11-cv-044,2012 WL 1409344 (D.N.D.2012) where one spouse had dementia
and, it was apparent, would eventually need nursing home care. Shortly
before going into the nursing home, the couple had liquid assets worth
about $700,000, not including the home or car. They were over the
Medicaid limit by more than half a million dollars. The community
spouse, on advice of an attorney, sold the home the couple had lived in
for years and bought one worth twice as much and sold the car they had and
bought a brand new one worth three times as much. The car is completely
exempt under Medicaid rules. The house also is completely exempt under
Medicaid rules, as long as the community spouse lives in the house.
After successfully
sheltering those assets, the community spouse took $400,000 cash, money
that was available to be spent on the institutionalized spouse's care and
instead, bought an annuity from their attorney, (an "investment" which
essentially returns the premium with a very small return) in an effort to
tie up the money to make the couple appear to have fewer resources. The
annuity is irrevocable, non-assignable, and non-transferable.
Under a very well-crafted
state statute that places limits on the amounts that can be put into these
types of annuities, and a long line of state case decisions that allows
the Department to count the annuity as an asset, eligibility was denied.
The North Dakota Department of Human Services was sued in federal court
under a civil rights action for denying Medicaid to this wealthy
institutionalized spouse. Based on its interpretation of federal law and
following existing federal case law, the Court ruled the annuity could not
be counted as an asset. Thus, none of the actions could be considered a
disqualifying transfer, none of the 'new' resources could be considered
available, and none of the annuity income could be considered available to
meet the long-term care needs.
The community spouse has
successfully retained nearly all of the wealth the couple had before the
institutionalized spouse went into the nursing home and the nursing home
has not received one penny. The bill is nearly $100,000 and the couple
wants Medicaid to cover it. The couple receives nearly $8,000 a month from
pensions, social security, the annuity payments, and oil lease money. This
couple is not needy and they are simply not who the Medicaid program was
or is intended to cover. While North Dakota believes that reading the
statutes as a whole and applying generally accepted rules of statutory
construction would not allow these provisions to be used to shelter
assets, courts are consistently reading certain sections of the Act to the
exclusion of relevant others to allow applicants with extensive assets to
become eligible for Medicaid by transferring assets from the
institutionalized spouse to the community spouse.
In another case, a couple
had nearly $600,000 available that could have been used for nursing home
costs. The 83-year old community spouse had beginning signs of dementia,
and "invested" $340,000 (over 64 percent of the couple's net worth) into
an irrevocable, nontransferable, non-assignable annuity on the advice of
his attorney in an attempt to qualify the institutionalized spouse for
Medicaid.
In another case, the day
the institutionalized spouse entered the nursing home, the couple had more
than $528,000. At that time, the couple represented to the nursing home
that they intended to be "self-paying," and in fact, paid for two months
of care. After learning of ways to exploit Medicaid laws, the community
spouse purchased not one, but two annuities from their attorney after
realizing the first one did not maximize the assets that could be
sheltered. The community spouse bought a new home, a new car, an annuity
for $220,000 and the next day, a subsequent one for $20,000, and then
applied for Medicaid to pay the institutionalized spouse's nursing home
costs.
In yet another case, a
couple had nearly $400,000 the day one spouse entered the nursing home. An
annuity for $125,000 was purchased to try to become eligible for Medicaid.
These scenarios are being
duplicated around the state, with an increase in the sales of these types
of annuities, and around the country in other states. Medicaid is not
intended for people who artificially impoverish themselves by sheltering
their wealth instead of using it to pay for nursing home care, but these
are the people who are fighting for it and winning - at the expense of the
taxpayers and those who legitimately need the assistance of the Medicaid
program.
The North Dakota Department
of Human Services argues that annuities like these should be treated as an
asset available to pay the long-term care costs incurred by either spouse.
It is simply a contractual right to receive income, an asset under state
law. The annuity is not income, but a different form of asset; the cash is
converted to another asset, the contractual right to receive income. The
annuity pays the annuitants' own money back to them over time, similar to
a certificate of deposit. Further, under state law, the contractual rights
to receive money payments are presumed saleable. Despite the "irrevocable,
non-transferable, non assignable" language of the annuity contract, a
factors market exists where these annuities can be sold. If the annuitant
makes a good faith effort to sell and finds no buyer willing to pay at
least 75 percent of the fair market value of the payment stream of the
annuity, an annuitant is able to defeat the presumption that the annuity
is saleable. In that case, the annuity is not saleable and is not counted
as an asset. This is how annuities were treated under North Dakota state
law, until the Geston decision.
As the law currently
stands, federal courts have misinterpreted federal law as prohibiting
states from counting annuities as assets. The problem is the courts are
treating the annuity as community spouse income (which cannot be deemed
available under Medicaid law) instead of treating the annuities as
assets-which are available and countable under Medicaid law.
Something should be done
quickly before these practices become commonplace. Changing the federal
law to clarify that these annuities are assets or to allow states to
determine how to treat these annuities as assets would be a significant
first step in helping states determine the appropriate limits of
eligibility for the Medicaid program. This would help ensure that Medicaid
funds would be used by states for those who are the intended recipients
rather than being diverted to subsidize those who can and should pay for
their own care.
-------------------
LTC Comment: North Dakota
appealed the court decision that allowed the use of annuities to shelter
hundreds of thousands of dollars immediately before accessing Medicaid LTC
benefits. Eight more states supported North Dakota’s appeal with amicus
briefs. But the Eighth Circuit Court of Appeals rejected the eloquently
argued and documented appeal on September 10, 2013. Its
decision leaves North Dakota and other states helpless to prevent such
egregious abuses of the Medicaid safety net.
That’s the rest of the
story . . . but not the end of the story.
It’s clear the Centers for
Medicare and Medicaid Services (CMS) will not act to close the annuity
loophole. The problem has been brought to CMS’s attention many times.
Nor will the courts act, believing they are constrained by the impermeable
federal Medicaid statute. The solution will have to come from Congress,
but despite
efforts in the House of Representatives, the problem remains and grows
as more and more states report the abuse of Medicaid annuities.
What’s needed is to make
the public aware of this profligate misuse of their hard-earned tax
dollars. We propose to (1) gather examples of egregious Medicaid
annuities from state Medicaid programs around the country, (2) write
articles and op-eds exposing these abuses, and (3) engage the support of
interest groups representing the needy and others who would benefit from
discouraging the abuse of Medicaid. By shining the light of public
scrutiny on this problem, Congress can be persuaded to fix it. That’s
what happened with OBRA ’93 and DRA ’05. It can happen again.
#############################
Updated, Friday, January 31,
2014, 11:23 AM (Pacific)
On Amtrak near Los Angeles—
#############################
CONFERENCE NEWS AND LTC NEWS AND COMMENT
LTC Comment: ‘Tis the season for conferences. I just returned from
presenting at the AICPA Personal Financial Planning Conference in Las
Vegas. CPAs are a rich potential source of leads. Center Regional
Representative Romeo Raabe informs us he’s been a guest speaker for an
investment company helping their financial advisors fulfill continuing
education requirements. The Wisconsin CPA Association has asked him to
present a three hour class on LTC financing. You go, Romeo!
The
Intercompany Long-Term Care Insurance Conference coming up soon (March
16-19) in Orlando, Florida reports that all but ten booth locations in
their exhibit hall are sold out. “The cost for a 10x10 Exhibit Booth is
only $1,250 for Non-Profit Associations and allows you to send up to four
attendees at a discounted price of only $295 each ($700 off of the
individual registration price of $995).” If you have questions, contact
Jim Glickman at 818-867-2223 or go to
www.ILTCIconf.org.
Last but not least, Jesse Slome urges everyone to spread the word about
the AALTCI’s forthcoming “Summit” and the fact that portions of it will be
streamed for free. To be held May 18 to 20, 2014 in Kansas City,
this premier event for LTCI producers is a “must see” especially now that
you can watch it online from the comfort of your office or home. Check
out all the details here:
2014 National Long-Term Care Solutions SALES SUMMIT.
#############################
1/29/2014,
“Health Care and Retirement:
Embracing the new essentials of retirement planning [link],”
by Beth Allan and Chris Leone, Life & Health Advisor
Quote:
"While planning for the final two years of life may seem excessive to
some, there is growing concern that a lifetime of saving and hard work may
go to LTC facilities, rather than children or other family members. For
many, this will result in the liquidation of assets to pay for a decent
facility, a minimal inheritance for surviving family members, and living
with the very real possibility that earnings garnered over a lifetime of
labor might be pillaged in the final two years of life."
LTC Comment:
Access to Medicaid-financed LTC without significant loss of assets has
been the rule since 1965, but that reality is likely to change. A fiscal
vise is closing on Medicaid and Medicare making the conclusion above truer
now and in the future than it has ever been.
#############################
1/28/2014,
“Falls Top Car Crashes as Leading
Cause of U.S. Spinal Injuries
Rates rising fastest among seniors, study finds [link],”
HealthDay
Quote: "Spinal cord injury rates in the United States are rising, and
the leading cause now appears to be falls suffered by seniors rather than
traffic crashes, according to a new study. The findings suggest that
programs to prevent falls in elderly people could significantly reduce the
number of spinal injuries in the nation, the researchers said."
LTC Comment: Get used to more news like this as age-related
injuries and illness spike with the aging of the baby boomers.
#############################
1/28/2014,
“New Website for LTC Agents Launched
- LTCUnderwriter.COM; Recently launched website LTCUnderwriter.com offers
free underwriting tools and features to assist LTC insurance professionals
in various underwriting processes [link],”
Debra Tancredi, LTC Global
Quote:
"By combining multiple functionalities that reflect common, yet tedious,
tasks associated with underwriting, LTCUnderwriter can help agents become
more efficient in manual checks, and allow them to focus better on giving
top quality service to their clients."
LTC Comment:
Simplifying tedious tasks sounds like a good thing.
#############################
1/28/2014,
“2014
Long Term Care Insurance Price Index Published,” AALTCI
Quote:
"Long term care insurance prices drop 14 percent for single men, rise
three percent for couples reports the American Association for Long Term
Care Insurance."
LTC Comment: A different spin on the usual reports that LTCI
premiums have skyrocketed.
#############################
1/28/2014,
“Political
Cartoon: 'Think Or Swim?,” by Lisa Benson, Kaiser Health News
Quote:
Click through to see the cartoon: http://www.kaiserhealthnews.org/Cartoons/2014/January/Think-Or-Swim.aspx.
LTC Comment:
Community rating always means low risk people subsidize high risk people
whether the low risk people want to or not and whether the high risk
people are deserving of special treatment or not.
#############################
1/28/2014,
“Surprise: Millennials as
Financially Conservative as Grandma & Grandpa [link],”
Life & Health Advisor
Quote:
"The majority of Millennials said saving was the best financial advice
they had received, while other generations said investing was the best.
This Depression Era mentality combined with advice they get from family is
turning Millennials into a generation of savers who are skeptical about
long-term investing and market chasing. Only 12% of Millennials said they
would invest found money in the market, and only 28% see long-term
investing as a pathway to success and are focused on meeting their goals
instead of a specific market return."
LTC Comment: Conservative savers are likely to protect their
principal with insurance.
#############################
1/27/2014,
“Part-time work is the
fastest-growing source of retirement income [link],”
by Emily Brandon, US News and World Report
Quote:
"While 47 percent of retirees receive interest generated by their personal
savings, half reported $255 or less in annual interest payments."
LTC Comment: You can thank the Federal Reserve’s having pushed
interest rates to near zero for that meager return on savings.
#############################
1/27/2014,
“The
Older Mind May Just Be a Fuller Mind,” by Benedict Carey, New York
Times
Quote:
"It goes without saying that many people remain disarmingly razor-witted
well into their 90s; yet doubts about the average extent of the decline
are rooted not in individual differences but in study methodology. Many
studies comparing older and younger people, for instance, did not take
into account the effects of pre-symptomatic Alzheimer's disease, said
Laura Carstensen, a psychologist at Stanford University."
LTC Comment: Hopeful findings for the aging brain.
#############################
1/27/2014,
“As
America ages, senior care options flourish,” by Matthew Perrone,
FiftyPlusAdvocate
Quote:
"'The people who can really afford long-term care insurance often have
enough fixed income that they don't really need it,' said Bradley Frigon,
vice president of the National Academy of Elder Law Attorneys."
LTC Comment: Unsound advice from the people who bring you
artificial impoverishment via Medicaid planning.
#############################
1/25/2014,
“Sixteen States Still Offer Unisex
Long Term Care Insurance Rates [link],”
by Jesse Slome, Kansas City Infozine
Quote: "California, New York and Florida are three of the nation's
larger states where men and women still can pay equal amounts for long
term care insurance according to an analysis by the American Association
for Long Term Care Insurance."
LTC Comment:
Isn’t failure to price risk a form of sex discrimination?
#############################
1/23/2014,
“Baby Boomers to Push U.S. Politics
in the Years Ahead; Baby boomers' politics vary significantly by age [link],”
by Frank Newport, Jeffrey M. Jones, and Lydia Saad, Gallup Politics
Quote: "Predicting the politics of the highly important baby boom
generation over the next decade as the group moves into its senior years
is highly speculative. But one thing is certain. Baby boomers, holding the
distinction of the largest generation in the U.S. population, will
continue to exert disproportionate influence over the U.S. political
process for at least the next 25 years."
LTC Comment: It’s not so difficult to predict that boomers will
become more conservative as they grow older just as previous age cohorts
have done.
#############################
1/23/2014,
“For Seniors With Dementia, the
Choice to Live Alone Can Be a Risky One; Study identifies safety issues,
lack of social activities and health care [link],”
by Lisa Esposito, HealthDay
Quote:
"For the millions of Americans with dementia, staying at home for as long
as possible is a common goal. But independent living can pose certain
risks for these adults -- and prove challenging for family caregivers. A
new study of more than 250 Baltimore residents with dementia found unmet
needs, especially concerning safety, health and meaningful activities, in
almost all cases."
LTC Comment:
We're seeing more and more reports like this one suggesting that home care
is not the panacea often suggested. Institutional care of various kinds
may rebound especially for the most frail and infirm seniors. Such a
trend runs directly contrary, however, to broad national Medicaid policy
pushing high-risk "dual eligibles" into home care managed by giant MCOs
(managed care organizations).
#############################
1/23/2014,
“5,000 Expected For Long Term Care
Insurance Virtual Conference [link],”
American Association for Long-Term Care Insurance
Quote: "Some 5,000 insurance agents and financial advisors who market
traditional long term care insurance as well as hybrid long term care
products are expected to participate in the national conference organized
by the American Association for Long Term Care Insurance."
LTC Comment:
Congratulations to AALTCI for convening a virtual crowd.
#############################
1/22/2014,
“Intercompany Long Term Care
Insurance Conference Welcomes 800+ LTCI Professionals to Orlando for 14th
Annual Conference, March 16-19; Chris Gardner, Portrayed by Will Smith in
the movie ‘The Pursuit of Happyness,’ To Provide Keynote Address [link],”
by The Intercompany Long Term Care Insurance Conference Association, Inc.,
PR Newswire
Quote:
“The Intercompany Long Term Care
Insurance Conference Association, Inc. (ILTCI) today announced its 14th
annual conference (http://www.iltciconf.org), March 16-19 at the Rosen
Centre in Orlando. 800+ long-term care insurance (LTCi) specialists are
expected to attend, to learn more about how to better support retirement
planning for baby boomers and seniors. Co-sponsored by the LTCi Section of
the Society of Actuaries, the conference will include a keynote by Chris
Gardner, whose amazing life story was published as the #1 bestselling
autobiography, The Pursuit of Happyness. Will Smith starred in the movie
version, earning Academy Award, Golden Globe, and Screen Actors Guild
nominations for his performance.”
LTC Comment:
Be there if you can and do say hello to Damon and Steve.
#############################
1/22/2014,
“Managing long-term care insurance
for a parent? Try these tips to make sure claims are covered [link],”
by Kimberly Lankford, Kiplinger Personal Finance
Quote:
“A long-term-care insurance policy can help cover the costs of care in a
nursing home, an assisted-living facility, or at home. If you're helping
out a parent, follow these steps, and you're more likely to get through
the claims process smoothly . . ..”
LTC Comment:
Helping a parent through the LTC or LTCI process is often the first
encounter of the younger generation with the challenges of long-term care.
#############################
1/22/2014,
“Most Boomers Mistakenly Think
Affordable Care Act Covers Long-Term Care Costs [link],”
Life & Health Advisor
Quote:
“According to the poll conducted by Harris Interactive of 801 Americans
over 50 with at least $150,000 in household income, only 28 percent know
that the Affordable Care Act does not cover LTC costs. Nearly half say
they are worried about becoming a burden to their families, but 54 percent
say they would rather die than live in a nursing home.”
LTC Comment: What you don’t know can hurt you.
#############################
1/22/2014, “Issue Brief:
How Are Seniors Spending Their Money?,” by Pamela Villarreal,
National Center for Policy Analysis
Quote:
“Today's seniors have a mixed bag of spending habits. Although
discretionary and recreational purchases have increased, today's seniors
are taking on debt in the form of mortgages and credit cards. Moreover,
with abysmally low interest rates on savings and a tax policy that
subsidizes consumption over saving, seniors do not have much incentive to
save. Those who are early into retirement should rethink conventional
wisdom about saving by considering a variety of investments besides just
bonds. Also, they should avoid incurring debt through a home equity loan
or any type or mortgage.”
LTC Comment: LTC insurance is a great option to preserve capital
in such an environment.
#############################
1/21/2014,
“New York Life Introduces a New Way
to Address the Financial Demands of Chronic Illness [link],”
Business Wire
Quote:
“The Chronic Care Rider is a flexible, low-cost addition to a whole life
insurance policy with a premium that is guaranteed to stay level. If a
policyholder does not need to use their benefits for chronic care, those
funds remain intact as life insurance benefits for heirs or as cash value
that can help supplement retirement income as their life insurance needs
decrease. The Chronic Care Rider is also very easy to use once the insured
is certified as permanently chronically ill. Policyholders are not
required to submit receipts or a care plan for claim reimbursement, and
policyholders can decide how their monthly claim payments are spent. The
benefits may be used - for at-home care, a nursing home stay, or even to
help supplement the needs of family members who are spending time
providing care - no receipts or plan of care needed.”
LTC Comment: Options for LTC protection proliferate.
#############################
1/20/2014,
“High-tech upgrades may let aging
boomers live independently in their own homes longer [link],”
by Hayley Tsukayama, Washington Post
Quote:
“Their medicine bottles will alert their doctor when they miss a dose.
Pressure-sensing floor mats can sense when they have fallen or let
caregivers know when a patient hasn't showered for a while. Honeywell is
developing a sensor that customers can wear on their body that would
detect whether they are moving in a manner that would indicate they have
fallen. The aim of these upgrades is to allow an aging population to stay
in their homes - and independent - longer.”
LTC Comment:
Ain’t technology great . . . when it works?
#############################
1/18/2014,
“The
Register's Editorial: Court delivers a lesson on Medicaid,”
DesMoines Register
Quote:
“Most Iowans are likely comfortable paying taxes used to provide health
care to poor people - as long as we know they are actually poor.
“So there is something wrong when Medicaid pays hundreds of thousands of
dollars for an Iowa couple's care and then after they die, the children
sell the couple's assets and collect more than $900,000. But that is what
happened with Arnold and Vesta Melby. . . .
“'The decision of the Iowa Supreme Court was unanimous supporting the
state's position that these funds should be repaid to the taxpayers of
Iowa,' said DHS spokeswoman Amy Lorentzen McCoy. . . .
“A strong estate recovery program is essential as more Iowans will be
eligible for Medicaid under the health reform law. These government health
care dollars should not be used to pay for the care of those who can
afford to pay it themselves. And when that does happen, taxpayers should
get their money back, even if the state has to fight the case all the way
to the Iowa Supreme Court.”
LTC Comment: Once in a while, a court and a newspaper get it
right.
#############################
1/13/2014,
“Iowa Supreme Court Reaffirms
Extensive Reach of Medicaid Recovery in Granting Department's Claim
against Irrevocable Trusts [link],”
by Kristine A. Tidgren, Iowa State University Center for Agricultural Law
and Taxation
Quote: "The Iowa Supreme Court has reaffirmed the extensive reach of
the Iowa Medicaid recovery program, stressing the Medicaid program's
'broad purpose' of 'providing for care for those in need' and 'allowing
for recovery by the state' to free 'more funds for the provision of future
services.' The Court again noted that the Iowa legislature has
intentionally defined 'estate' for purposes of the Medicaid recovery
statute more broadly than required by federal law. . . . Clients should
be counseled that a long-term care insurance policy, purchased during
middle age from a reputable insurer, is usually going to be the best
Medicaid planning tool available."
LTC Comment:
Finally a state supreme court sends the message we've been sending for
decades now.
#############################
Updated, Monday, January 27,
2014, 1:30 PM (Pacific)
Seattle—
#############################
LTC BULLET: A BRIEF HISTORY OF LONG-TERM CARE FINANCING
LTC Comment: How did America’s LTC service delivery and financing system
become so dysfunctional? A brief history follows the ***news.***
*** CENTER PREZ Steve Moses is back from the AICPA (American Institute of
Certified Public Accountants) Advanced Personal Financial Planning
Conference at the Aria Resort and Casino in Las Vegas. There he presented
a “Long-Term Care Intensive” which included two key sections of our
“Long-Term Care Graduate Seminar”: “The Elephant, the Blind Men and
Long-Term Care” and “The History of Long-Term Care” to a highly attentive
and appreciative audience. ***
*** BULK MAIL MISHAP. Our bulk mail sending program was down for a few
days. Hence we’re sending this Bullet today instead of last
Friday. Your next LTC E-Alert will arrive on schedule next
Monday. Thanks for your patience. ***
#############################
LTC BULLET: A BRIEF HISTORY OF LONG-TERM CARE FINANCING
LTC Comment: Once a year we update the Center for Long-Term Care Reform’s
“LTC Graduate Seminar.” Center members have access to this 44-page
transcription in The Zone
here. Reading it is a great way to review the big picture about
long-term care financing. For access, you’ll need your user name and
password. For a reminder or to join the Center and get access to
everything we do including The Zone, contact Damon at 206-283-7036 or
damon@centerltc.com.
Today for everyone, including non-members, we offer a special peek at one
section of the LTC Graduate Seminar. What follows is a 15 page history of
long-term care services and financing in the United States since the
establishment of Medicaid and Medicare in 1965. We hope you find it
interesting and helpful in understanding this complicated topic. There is
much more in the LTC Graduate Seminar than this, however. If we pique
your interest with the history section below, check out the rest of the
document including these informative sections:
The Elephant, the Blind Men, and
Long-Term Care
The Welfare Paradigm
The Entitlement Paradigm
Medicaid Eligibility for Long-Term Care
Medicaid Estate Planning
Key Money
What's Going to Happen Next?
How Social Security Props Up Medicaid LTC
How Medicare Props Up Medicaid LTC
The Welfarization of Medicaid, Medicare and Social Security
The Bottom Line
#############################
History of LTC and Why it Matters
for Financial Advisors and LTCI Producers
I want to change gears now and take another approach to the LTC issue. We
have established so far that the elephant of long-term care is a very
complicated animal. It's comprised of many competing interest groups,
each and all of which have something to gain from continuation of the
status quo.
We've established that the United States has a welfare-financed, nursing
home based long-term care system in the wealthiest country in the world
where nobody wants to go to a nursing home. And yet most people are
asleep about the risk and cost of long-term care. Until we understand how
this status quo came to be and why, we can hardly expect to identify the
right corrective actions.
So I want to turn now to the history of long-term care service delivery
and financing. How did we get into the mess we're in?
Something really important happened in 1965. Two new government programs
were established. Do you know what they were?
Right, Medicare and Medicaid.
Medicare, of course, was designed to provide acute health care to the
elderly. But Congress decided that something really needed to be done for
low income people as well. So they added Medicaid as kind of an
afterthought to Medicare. Then, as an afterthought to that afterthought,
Congress decided that something should also be done for aging Americans
who need long-term care. So they added nursing home care to Medicaid for
people over the age of 65.
In the beginning, there were no transfer of assets restrictions
interfering with eligibility for Medicaid long-term care. There was no
estate recovery mandate requiring people with sheltered wealth to pay back
the cost of their care. If you were over the age of 65, it was easy to
get the government to pay for nursing home care.
The public isn't stupid. They figured: "You mean, if we want to take
care of Grandma at home, we'll have to pay for it 100 percent out of our
own pockets? But if we put her in a nursing home, the government will not
only pay for her care but send in surveyors to make sure she receives
quality care? That's a no-brainer."
The nursing home industry isn't stupid, either. They said. "You mean the
government is going to put a giant pot of money out in the middle of the
country, somewhere around Kansas or Nebraska, and all we have to do is
build nursing homes, offer the beds to people who want long-term care, and
the government will pay? Terrific. Bring it on."
Medicaid Nursing Home Costs
Explode
P.J. O'Rourke, the political satirist, likes to say "If you think health
care is expensive now, just wait until it's free."
For all intents and purposes, the government made nursing home care free
in 1965.
That had the effect of crowding out a market for privately financed home
and community-based care. Why pay out of pocket for home care services,
adult day care, respite care or assisted living, when the government
provides nursing home care?
For the same reason, a market for long-term care insurance to pay for home
care and nursing home care was slow to develop and remains stunted to this
day.
By the mid-1970s, I was working for the Health Resources Administration in
Rockville, Maryland. That's part of the U.S. Public Health Service. I
saw what happened next, up close and personal.
Predictably, the cost of Medicaid financed nursing home care exploded.
The public filled new nursing home beds as fast as the nursing home
industry could build them. "Roemer's Law" said: "A built bed is a filled
bed."
[See
http://en.wikipedia.org/wiki/Roemer's_law]
The government looked at the exploding cost of nursing home care and
concluded that something had to be done. But instead of addressing the
cause--that is, the fact that government had made nursing home care free
or radically subsidized resulting in higher construction, utilization and
expenditures--they attacked the symptom, the increasing costs.
The government figured "they can't charge us for a bed that doesn't
exist." So, state governments began to require nursing homes to get
permission before they build new facilities. Nursing home companies had
to obtain a "certificate of need" or CON before building new skilled
nursing facilities.
Now, this arrangement was fine with the nursing home industry. For anyone
already in that business, the Certificate of Need only meant that they now
had a government-enforced monopoly. They might not be able to build more
nursing homes, but neither could their potential competition. Since the
nursing homes' growth was restricted by this limit on supply, however, the
industry simply started charging more for the beds they already had.
That was predictable. In any economic system, when supply goes down or is
artificially restrained from going up, price tends to increase. You don't
need a PhD in economics to figure that out, but the government didn't see
the consequences coming.
The cost of Medicaid financed nursing home care continued to explode.
Once again, the government knew it had to take action. And once again, it
failed to address the cause--i.e., free government financed nursing home
care--and went instead after the symptom--skyrocketing costs caused by
increasing charges to Medicaid by the nursing home industry.
So the government told the nursing home industry they could no longer
charge whatever they wanted to charge for nursing home care. Medicaid
capped its reimbursement rates. This was the origin of the differential
between the very low Medicaid reimbursement rates for long-term care and
the relatively high private pay rates. Today, Medicaid pays only about
two-thirds of the private-pay rate for nursing home care. Private payers
have to pay half again as much as Medicaid reimburses for people in the
same nursing home, sometimes in the same room as the private payers.
Quality Collapses
With supply AND price capped, what do you think happened to demand? Of
course, demand went through the roof. In the mid-1980s, nursing homes
were 95 percent occupied. At the same time, hospitals were only 55
percent to 60 percent full. If a nursing home was willing to accept
Medicaid's low reimbursement rates, it could fill all of its beds . . . no
matter what kind of care it offered. Consequently, quality of care
collapsed in principally Medicaid-financed nursing homes.
Once again, Congress took note. Even though quality plummeted, costs
continued to explode. True to form, however, government attacked the
symptom (poor quality) instead of the cause (public financing). So
Congress went to the nursing home industry and said, in paraphrase:
"This is America. We cannot tolerate poor quality of care in our nursing
homes. You must improve the care. You must hire more nurse's aides; you
must train them better; you must pay them more. Make sure you dot every I
and cross every T according to stricter regulations. And if you don't, we
will hit you with fines and other penalties."
That was OBRA '87, the Omnibus Budget Reconciliation Act of 1987.
Thankfully, it worked, and quality of care in America's nursing homes is
top notch today. [Audience snickers.] Well, not exactly. If anything,
the problems are worse than ever now, 27 years later.
But when OBRA '87 passed, the nursing home industry wasn't displeased.
They said, in essence, "We're not in this business just to make a lot of
money. We want to provide loving and compassionate care. We love the
idea that you want us to hire more people, train them better and provide
higher-quality care. Only one question though, how much more are you
going to reimburse us under Medicaid to make this possible?"
And the government responded "Money? We don't have any of that. We just
demand that you do all these new things."
Nursing Homes Sue Medicaid
Well, now the nursing home industry was caught between the rock of
inadequate reimbursement and the hard place of mandatory quality. If they
tried to attract more private payers at the higher private-pay rate, they
were accused of discriminating against Medicaid recipients. If they tried
to cut costs, they were accused of providing poor care. It was a hopeless
situation. So the nursing home industry turned to the courts.
Under the "Boren amendment," which was part of OBRA '81, the nursing home
trade associations in many states began suing their state Medicaid
programs for higher reimbursement under Medicaid. The Boren amendment
said in essence: "State Medicaid nursing home programs must provide
sufficient reimbursement for an effective facility to provide decent
care." That's a paraphrase, but pretty close.
[For the precise language, see Joshua M. Wiener and David G. Stevenson,
"Repeal of the 'Boren Amendment': Implications for Quality of Care in
Nursing Homes," at
http://www.urban.org/publications/308020.html.]
Who do you think won most of those lawsuits? There's an old saying that
"you can't fight City Hall," so you might think the State Medicaid
programs prevailed. But the truth is, the state nursing home associations
won most of those Boren suits. They forced Medicaid to increase
reimbursements for nursing home care.
So, what do you think the government did next? You guessed it. Congress
repealed the Boren Amendment in the Balanced Budget Act of 1997. Since
then, there has been no floor under Medicaid reimbursement for nursing
home care. Nevertheless, long-term care costs continue to increase and
quality remains questionable.
Medicaid LTC Eligibility Bracket
Creep
While all this was going on, another situation developed. Most people who
needed long-term care were receiving it in nursing homes because an
alternative market for home and community-based care had been crowded out
by free nursing home care. So people were finding themselves in nursing
homes, often in semiprivate rooms, paying privately, but sharing a room
with a person on Medicaid.
The people paying privately, or their representatives, noticed that the
person on Medicaid may have had more money throughout most of their lives
than the person paying privately. Because of Medicaid's reduction in the
reimbursement rate it was willing to pay nursing homes, private payers
came to be paying half again as much on average as Medicaid was paying for
Medicaid recipients. That's called "cost shifting." Naturally, this
created a temptation on the part of the private payers to find a way to
qualify for Medicaid. If they could get onto the program, it would pay
not only for their nursing home care, but for other, ancillary services
that Medicaid often pays for but Medicare doesn't, such as foot care, eye
care, dental care and residual pharmaceuticals after Part D.
By the early 1980s, there developed a sub-practice of law, called
"Medicaid estate planning" designed to help middle-class and affluent
people self-impoverish in order to become eligible for Medicaid. I call
this process of extending Medicaid eligibility to more and more prosperous
people "eligibility bracket creep." As Medicaid LTC eligibility expanded,
it created even more financial pressure on Medicaid and reduced the number
and percentage of people in nursing homes who were paying at the higher
private pay rate. Thus, eligibility bracket creep exacerbated all the
problems we've discussed so far regarding access to and quality of care.
Congress Acts to Discourage
Medicaid Abuse
Beginning in 1982, Congress tried to get control of Medicaid LTC
eligibility. The first major measure in this direction was the Tax Equity
and Fiscal Responsibility Act of 1982, or TEFRA '82. TEFRA authorized
state Medicaid programs for the first time to (1) penalize asset transfers
done for the purpose of qualifying for Medicaid, (2) place liens on real
property in order to hold that property in a recipient's possession during
their period of Medicaid eligibility, and (3) to recover the cost of their
care from the estates of deceased recipients.
The critical thing to understand about TEFRA '82 is that it was entirely
voluntary. States could implement these new programs or not at their own
discretion. In 1983, I was the Medicaid State Representative for the
state of Oregon in the Seattle Regional Office of the Health Care
Financing Administration (the predecessor organization of the current
Centers for Medicare and Medicaid Services or CMS). It was my job to make
sure that the federal laws and regulations governing Medicaid long-term
care were properly implemented by the state government. The federal
government partially funds and oversees Medicaid. State governments
partially fund and administer the program. So the Medicaid State Rep's
job was to be the linchpin between the federal and state Medicaid
programs.
In Oregon, I came across this interesting program called "Medicaid estate
recoveries." It purported to recover five percent of the cost of Oregon's
nursing home program, or about $5 million a year. That was back then.
It's more like $20 million a year now.
Imagine my confusion when I discovered this program. By that time I had
already worked a total of ten years in federal welfare programs. I
thought I knew how they worked. When you're poor . . . when you're
destitute . . . when you have nothing left . . . you can apply for public
assistance, and the government helps you with cash or, in Medicaid's case,
with medical or long-term care services. That's how it was with the old
Aid to Families with Dependent Children Program. I thought it was the
same with Medicaid.
So how could it be that people who are poor and destitute enough to
qualify for Medicaid would spend years in a nursing home at enormous
expense to the state and federal governments, and then, after they die, a
little state like Oregon recovers nowadays $20 million out of their
estates? Where did all that money come from?
That question really fascinated me. So, in 1983 I conducted a study, the
objective of which was to ask and answer the question "What if every state
in the country recovered from estates at the same rate as Oregon?"
I quickly realized that to do this study, I would have to understand how
Medicaid eligibility works. In other words, how could people with
substantial income and assets qualify for Medicaid in the first place?
What I learned is that income is rarely an obstacle to qualifying for
Medicaid. I also found that assets, ostensibly limited to only $2000,
were rarely an obstacle to qualifying for Medicaid. That's because
unlimited assets could be held in exempt form. We'll discuss Medicaid
income and asset eligibility in detail later in this program.
Until 2006, for example, there was no limit on the amount of home equity
that could be exempted. One home and all contiguous property, regardless
of value, was disregarded. It was no wonder, therefore, that people could
qualify for Medicaid, receive free or subsidized nursing home care and
other medical services indefinitely, and still have substantial assets in
their estates.
The report I prepared for the Health Care Financing Administration in
1985, titled "The Medicaid Estate Recoveries Study," is available at
http://www.centerltc.com/mer_study.pdf. What I found was that most
states had not aggressively implemented TEFRA '82. Most states had put in
place some form of the transfer-of-assets restriction, but back then it
was limited to a two-year look-back and no more than a two-year penalty.
Only two states had implemented TEFRA liens. And while 15 or 16 states
had implemented estate recoveries, most had not done so in such a way as
to maximize estate recoveries. My state of Oregon was an exception in
that regard.
After I drafted this report, I forwarded it to a number of people
interested in long-term care financing, including several scholars and
federal agencies like the General Accounting Office (GAO is now known as
the Government Accountability Office) and the Office of Inspector General
(OIG) of the Department of Health and Human Services (DHHS). Although
HCFA discouraged my work and refused to publish it, the DHHS Inspector
General loved it and hired me out of the Health Care Financing
Administration to conduct a more comprehensive national study and write a
report titled "Medicaid Estate Recoveries." That report is still available
to read on the OIG's website at
http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf. (Cut and paste
this link into your browser if it does not come up otherwise.) GAO also
followed up with a national study on which I consulted. Read that report
at
http://archive.gao.gov/d15t6/138099.pdf.
My report for the OIG explained how people with substantial income and
assets could qualify routinely for Medicaid. It estimated that nearly
$600 million could be recovered from estates, if every state in the
country performed at the same level as Oregon. The report warned that as
long as people with substantial income and assets could qualify easily for
Medicaid, there would be very little market for private LTC financing
alternatives; Medicaid long-term care expenditures would continue to
explode; little privately financed home and community-based services
infrastructure would develop; quality of care would continue to decline
due to Medicaid's notoriously low reimbursement rates; and, if something
weren't done about these problems, within 30 years the cresting of the Age
Wave would crush the existing long-term care financing system.
Here we are 26 years later and everything I predicted in that early OIG
study has come true or is about to!
COBRA '85, MCCA '88, OBRA '93,
HIPAA '96, BBA '97 and DRA '05
In 1985, in the Consolidated Omnibus Budget Reconciliation Act of
that year, Congress took the next step to rein in abuse of Medicaid LTC.
COBRA '85 put a stop to "Medicaid qualifying trusts." MQTs had become the
technique of choice for elderlaw attorneys to impoverish their affluent
senior clients and qualify them for Medicaid nursing home care. COBRA '85
changed the rules, but did not grandfather in people who already had
Medicaid qualifying trusts. Many individuals and families were hurt. A
lot of elderlaw attorneys were embarrassed professionally. But that
didn't stop them from finding new ways to focus on qualifying affluent
clients for Medicaid financed long-term care.
The Medicare Catastrophic Coverage Act of 1988 (MCCA '88) was the
next step in this process. MCCA '88 was mostly about Medicare, but it did
have some provisions that affected Medicaid long-term care eligibility.
The most important change was, for the first time, to require state
Medicaid programs to penalize asset transfers for less than fair market
value done for the purpose of qualifying for Medicaid long-term care
benefits. MCCA '88 required state Medicaid programs to look back 30
months for inappropriate asset transfers. It established an ineligibility
penalty equal to the amount of assets transferred for less than fair
market value for the purpose of qualifying for Medicaid divided by the
average cost of a nursing home in the state. For example, give away
$80,000 to qualify for Medicaid in a state where nursing home care
averaged $8,000 per month and you'd be ineligible for 10 months from
the date of the transfer. The italicized point will be very important
later. MCCA '88 also established a limit of 30 months as the maximum
penalty for asset transfers. In other words, if you gave away $1 million
within 30 months of applying for Medicaid, your transfer of assets penalty
would still be only 30 months.
In 1993, the Omnibus Budget Reconciliation Act of that year
implemented most of the recommendations from my 1988 "Medicaid Estate
Recovery" report for the Office of Inspector General [http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf,
you may have to cut and paste this link into your browser]. OBRA '93
extended the look-back period for asset transfers to a full three years
(36 months) for most improper transfers and to five years for transfers
into or out of a trust. The law also eliminated the limit on the
eligibility penalty. Now, if you gave away $1 million within three years
of applying for Medicaid, you would be permanently ineligible for all
intents and purposes. OBRA ’93 made estate recoveries mandatory for the
first time.
OBRA '93 also eliminated the Medicaid planning gimmick of "pyramid
divestment." Before OBRA '93, the elderlaw bar had figured out that
because transfer of assets eligibility penalties were allowed to run
concurrently, they could jettison lots of money very quickly for their
affluent clients while minimizing any transfer of assets penalty. On
their websites, they published schedules that showed exactly how much to
give away each month to take full advantage of this loophole. They could
actually spend you down from $1 million to nothing in a period of about a
year. This was possible because, for example, instead of giving away all
the money in one month and incurring the maximum penalty, you could give
away smaller amounts each month and, because the penalties ran
concurrently from the date of the first transfer, you'd be out of money
and eligible for Medicaid in only a fraction of the time originally
intended by Congress. This so-called pyramid divestment was no longer
allowed after 1993. But the elderlaw bar was very creative and opened
many new "loopholes" to replace this one.
A Political Earthquake
Something big happened in American politics in 1994. Anybody recall what
it was? Remember the "Contract with America," Newt Gingrich? The
Republicans took over both houses of Congress.
Who was president at the time? Right, Bill Clinton.
Clinton was well known for something in particular. [Audience snickers.]
"Not that!"
I'm referring to President Clinton's frequent statement that he would
"change welfare as we know it." And he did. He added a work requirement
to the welfare (Aid to Families with Dependent Children or AFDC) rules and
reduced the welfare rolls by two-thirds, a tremendous success.
The new Republican Congress and President Clinton were alarmed by the
exploding Medicaid long-term care costs. They were frustrated that none
of the government's efforts since 1982, which were intended to control the
abuse of Medicaid long-term care resources, had worked. So they decided
to stop the overuse of Medicaid once and for all. In 1996, in the
Health Insurance Portability and Accountability Act (HIPAA '96 or the
Kennedy/Kassebaum Act), they made it a crime to transfer assets for less
than fair market value for the purpose of qualifying for Medicaid. To do
so, according to HIPAA '96 would be punishable by a fine of up to $10,000
and a jail term of as much as a year.
Now, remember the senior advocates? They were one of the blind men of
long-term care we talked about. The senior advocates and their
organizations looked at this new rule with alarm and decided to fight it.
They called HIPAA '96 the "throw granny in jail law." Okay, this was one
measure to control Medicaid abuse that even I didn't favor. It seemed to
me like a stupid, ham-handed way to deal with the problem, which is
actually fairly simple to fix.
But when Congress repealed the throw granny in jail law in the Balanced
Budget Act of 1997 (BBA '97) and replaced it with the "throw granny's
lawyer in jail law," that made a lot more sense to me. Why penalize the
victim, when you should be going after the culprit? For a while, the
Medicaid planners' big conventions, held at luxury resorts twice a year,
were more like funeral dirges than professional meetings. (I used to
attend those sessions to keep an eye on the Medicaid planners and report
their egregious methods to the media until they blackballed me by closing
their conventions to non-attorneys.)
Unfortunately, the "throw-granny's-lawyer-in-jail law," which threatened a
year in jail and/or a $10,000 fine for recommending (in exchange for a
fee) that a client transfer assets to qualify for Medicaid, was
unconstitutional. Janet Reno, who was Bill Clinton's Attorney General at
the time, looked at the law and concluded it would be unenforceable. How
could you hold an attorney legally culpable for recommending a practice
that was legal again after the "throw-granny-in-jail law" was repealed?
So, there we were in the late 1990s, 15 years after Congress had taken the
first steps in TEFRA '82 to control the abuse of Medicaid, right back
where we'd started. Costs continued to explode. More and more people
were qualifying for Medicaid-financed long-term care. Private payers were
disappearing. Quality of care continued to decline. The public remained
asleep about long-term care risk and cost. Neither private insurance nor
home equity conversion contributed significantly to LTC costs. And the
Age Wave was a decade and a half closer to wiping out the LTC safety net.
From Boom to Bust
Now, what was the economy like in the late 1990s? Good or bad?
Right, those were boom years. The Internet bubble. The new economy.
Everyone's 401(k) was on its way to becoming an 802(k). In my experience,
when the economy is good, when tax receipts are up, and when welfare rolls
are down, it is extremely hard to get the attention of politicians and
public officials to the issues of controlling Medicaid costs and
encouraging personal responsibility and long-term care planning.
But, exactly the opposite is true when the economy goes into the tank.
When welfare rolls are up and tax receipts are down, state legislatures,
governors and other public officials become much more amenable to reason
and evidence about the need to control Medicaid long-term care
expenditures. After September 11, 2001, as the economy went rapidly into
recession, state officials became far more sensitive to the need to spend
Medicaid's scarce resources effectively and efficiently.
When governors could not make their budget ends meet and because, unlike
the federal government, they are constitutionally required to work within
their budgets, we were able to get their attention. In 2005, I was funded
by the American Health Care Association, the big proprietary nursing home
and assisted living trade association, to spend half time for six months
in Washington, DC. My objective was to explain to all of the "blind men
of long-term care," the key stakeholders in the LTC issue, the need to
control Medicaid long-term care expenses and encourage private financing
alternatives for long-term care.
I testified before Congress on April 27, 2005; I gave briefings on Capitol
Hill; I met with all the key interest groups, including long-term care
providers, LTC insurers, the National Governors Association, the National
Reverse Mortgage Lenders Association and dozens of others. In fact, I
sought out and met with anyone and everyone who had any role in or concern
about long-term care financing . . . and would listen.
My co-founder of the Center for Long-Term Care Reform, an attorney by the
name of David Rosenfeld, after leaving the Center in 2001, ultimately
became the Chief Health Counsel to the House Energy and Commerce
Committee, the germane committee for Medicaid in the United States House
of Representatives. David wrote much of the Deficit Reduction Act of
2005 and guided it through the shoals of political opposition.
On February 8, 2006, President Bush signed the DRA '05. It had passed by
a single vote. Vice president Cheney 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. 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
assets that could be exempted in a home and contiguous property. The
limit was placed at $500,000 ($543,000 as of 2014 in 37 states) or up to
$750,000 ($814,000 as of 2014 in 13 states and DC) at the option of a
state legislature. That is a step in the right direction. By the time
the Deficit Reduction Act passed, however, the recession that made it
possible had ended. When state governments were under severe budgetary
constraint, the National Governors Association had actually advocated in
writing for a limit on the Medicaid home equity exemption of $50,000. We
got half a million and that's significant, but it isn't enough to solve
the problem.
An LTC Tour Anecdote
Let me tell you an anecdote from our
2008 National Long-Term Care Consciousness Tour that helps make the
point about Medicaid's home equity exemption.
When I was in Washington, DC with the
Silver Bullet of Long-Term Care, I received an e-mail from the Prime
Minister's office of the United Kingdom. They wanted to know if it would
be all right to send over a delegation to speak with me, and others, about
long-term care financing. It seems Great Britain is unable to pay for its
socialized acute care health system, much less for long-term care. They
would love to have a private long-term care insurance market to help
defray the public cost of funding long-term care.
But when they looked at the United States, where it is commonly understood
that no one qualifies for help with their long-term care costs until they
have spent down into total impoverishment, they wondered: "If Americans
can't sell long-term care insurance in their dog-eat-dog, capitalist
system, how could we ever hope to develop a long-term care insurance
market in a socialized health care system like England's?" (My
paraphrase.)
I invited the U.K. delegation of two experts on aging to join me in the
Silver Bullet at a very nice RV park on the outskirts of DC. I picked
them up in the truck at the end of the D.C. Metro Green line, and drove
them to the Airstream trailer. It was a hot and humid day, so we had the
air conditioning on. The three of us sat in that little 16-foot trailer
for three hours talking about long-term care financing.
I learned something very interesting. In the United Kingdom, all you can
shelter in home equity while getting the government to help with your
long-term care costs is $40,000. We are 10 to 20 times more generous with
our scarce public resources for long-term care in the United States as
they are in their socialized health care system.
More on the DRA
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, another European 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. That
was 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.
Ironically, this was a DRA provision the nursing home lobby opposed. They
worried that people who had transferred assets would end up on their
doorstep destitute, unable to pay their own way for long-term care, but
also ineligible for Medicaid. In other words, nursing homes figured
they'd end up with a lot more "charity" cases. I explained to them at the
time that this would not happen, at least not in significant numbers,
because the new rule eliminated the practicality of giving away half of
one's assets to become eligible for Medicaid more quickly. In the future,
no attorney in his or her right mind would recommend that people transfer
assets in the same old way to qualify for Medicaid, because that strategy
would no longer work and would leave the lawyers vulnerable to malpractice
suits. To date, I have heard no evidence that the worry of the nursing
home industry has materialized. By eliminating the half-a-loaf strategy,
people who would have used that trick are now having to spend their money
for long-term care or they divest or shelter it in some other way.
Long-Term Care Partnership Program
Finally, the DRA ’05 reinvigorated the LTC Partnership Program. LTC
Partnerships had been around since 1992. The idea behind them was to
incentivize people to purchase LTC insurance by forgiving some of the
prospects’ Medicaid spend down liabilities. The offer: buy LTCI, use it,
and the Partnership policy holder could go onto Medicaid while retaining
assets up to the amount of insurance purchased and used instead of having
to spend down to $2,000. Under a Robert Wood Johnson Foundation grant,
four states—California, New York, Connecticut and Indiana—piloted the
program. A variation, in New York alone, allowed holders of special
Partnership policies to retain all their assets and still receive lifetime
Medicaid LTC benefits.
As these pilot projects were gearing up in the early 1990s, they were
derailed by Henry Waxman, a liberal Congressman from California. Waxman
considered Medicaid to be welfare and inappropriate for people with
substantial resources to receive. So, when the Omnibus Budget
Reconciliation Act of 1993 made recovery from the estates of deceased
Medicaid recipients mandatory, Congressman Waxman insisted that assets
sheltered by Partnership policies for purposes of initial Medicaid
eligibility, should nevertheless, not be exempted from estate recovery.
That rule took the steam out of the Partnership movement. A Partnership
policy holder could preserve substantial wealth and qualify for Medicaid,
but at death that wealth became recoverable by the state to recoup
Medicaid funds expended on the policyholder’s behalf.
For over a decade, the Partnership program languished. Then, in the DRA
’05, the OBRA ’93 estate recovery mandate was eliminated as against
Partnership policies. They resurged and became available in half or more
of the states. LTC insurance sales in the original four pilot states
increased on the margin. Similar results are expected in the new
Partnership states, especially in those that endorse and promote the
policies officially. Nevertheless, two factors impede Partnership sales.
First, Medicaid LTC eligibility remains easily available to middle-class
and affluent people without significant spend down so that the
Partnerships’ spend down forgiveness is less of an incentive than it would
otherwise be. Second, Medicaid LTC has such a dismal reputation for
problems of access, quality and impending insolvency that consumers who
know the program are not likely to want to rely on it. Certainly,
Medicaid is unlikely ever to pay for the kind and quality of home care and
assisted living that are routinely available through private LTC insurance
policies.
[See 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.]
Recent LTC History
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, soon after the new legislation
passed, the economy improved, 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
mandatory changes required by the DRA ’05 such as the longer lookback
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.
[Source: Stephen A. Moses,
Medi-Cal Long-Term Care: Safety Net or Hammock?, Center for Long-Term
Care Reform and Pacific Research Institute, January 2011]
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
(Maine’s name for Medicaid) eligibility workers.
[Source Stephen A. Moses, “The Maine Thing About Long-Term Care Is That
Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link],”
Center for Long-Term Care Reform and the Maine Health Care Association,
November 2012]
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?
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, AKA 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 LTC 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, have made that case, but so far
unsuccessfully 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 have only two ways to constrain
costs: cut benefits or cut providers. With eligibility cuts out of
bounds due to MOE, the states’ only options, besides shifting funds from
education or some other budget category, are to eliminate desperately
needed services or to reduce provider reimbursements. Cutting services
hurts the most needy. Provider reimbursements are already minimal and
further cuts could lead to facility closures and other LTC provider
shortages. At present, the maintenance of effort requirement is the
biggest obstacle to Medicaid LTC reform, which is stymied so long as MOE
remains 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 [link].”
They need not concern us here, because, as the following section explains,
publicly financed HCBS on a wide scale are not financially sustainable,
impede a private market for home-based care, and discourage responsible
long-term care planning.
#############################
Updated, Tuesday, January 21,
2014, 1:01 PM (Pacific)
Seattle—
#############################
LTC NEWS AND COMMENT
1/18/2014, “The
Key Health Risk Obamacare Doesn't Cover,” by Dan Caplinger, Motley
Fool
Quote: "But Obamacare doesn't address one key health risk that
everyone faces, forcing you to make alternative arrangements to protect
yourself from potentially catastrophic expenses. In the following video,
Dan Caplinger, The Motley Fool's director of investment planning, talks
about how Obamacare doesn't cover long-term care expenses."
LTC Comment: Important advice from a widely read national column.
#############################
1/17/2014, “Advisors
Put To Test by LTC Insurance Market Upheaval,” by Karen Demasters,
Financial Advisor
Quote: "'Financial advisors need to start the conversation about
long-term care with their clients and then go to experts for the details,'
says Deb Newman, founder of Newman Long Term Care and former chair of the
board of directors of the LIFE Foundation. . . . 'One of the challenges
is to get advisors to discuss the subject. Their clients do not want to
talk about dying, becoming disabled or living too long. But long-term care
coverage is not just a financial issue,' Newman says. 'Having coverage
provides peace of mind.'”
LTC Comment: Excellent quotes from long-time friend, Center
supporter and corporate member Deb Newman of Newman Long Term Care.
#############################
1/17/2014, “Medicare appeals at the administrative law judge level
will be suspended for two years due to backlog, agency announces [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "A tremendous increase in appeals has swamped the 65 ALJs
who hear disputes over Medicare claim determinations, OMHA Chief
Administrative Law Judge Nancy J. Griswold wrote in a memorandum obtained
recently by the Bureau of National Affairs. To give the judges time
to work through this backlog, OMHA stopped assigning new hearing requests
from providers as of July 15, 2013, Griswold disclosed. Beneficiaries'
appeals will continue to be processed, to safeguard patients, she wrote."
(Emphasis added.)
LTC Comment: Interesting policy. Pay nursing homes less than cost
for most of their residents who depend on Medicaid. Threaten often to cut
Medicare reimbursements which currently help to make up for the revenue
shortfall from Medicaid. Then process Medicare beneficiaries' appeals but
gag providers. Observed over time it is easy to see why publicly financed
long-term care is deteriorating.
#############################
1/16/2014, “Medicare
cuts weigh on UnitedHealth,” by Alex Nussbaum, LifeHealthPRO
Quote: "Medicare Advantage, insurers' private version of the U.S.
government program for the elderly, has been a key source of growth for
the industry and provided about a fifth of UnitedHealth's profit last
year. The companies' reimbursements are being scaled back to help pay for
the insurance expansion under the Patient Protection and Affordable Care
Act (PPACA)."
LTC Comment: Another version is playing out of the common
government "bait and switch" gimmick. Offer lucrative incentives to
private industry. Get them committed to some new publicly financed
program. Then, when costs explode as they always do, stop the party by
pulling away the financial punch bowl. It's happened over and over again,
but the private sector never seems to learn.
#############################
1/16/2014, “Study: Rehospitalizations Nearly Twice As High When
Elders Are Transferred To HCBS From Skilled Nursing [link],”
by Bill Myers, Provider
Quote: "Those seniors who went into HCBS from nursing homes were
nearly 40 percent more likely to be sent back into the hospital with
preventable conditions, the Brown University report says in this month’s
edition of the Journal of the American Geriatrics Society. Indeed,
moving to HCBS increased the overall risk of hospitalization by 58 percent
compared with those who stayed behind, lead researcher Andrea Wysocki
writes for her colleagues."
LTC Comment: More evidence that, desirable as home care may be, it
does not save Medicaid money overall.
#############################
1/16/2014, “Insured for Old Age? An Economist Explains the Dangers
of Long-Term Care Insurance [link],”
by Lew Mandell, PBS NewsHour
Quote: "If neither community spouse nor another dependent lives in
the house, homes with equity values from $536,000 to $802,000 (depending
on the state) may be retained when the owner accepts Medicaid for
long-term care, provided that the owner signs a form stating his or her
intent to return to the house. Medicaid is then entitled to be reimbursed
from the equity of the home when it is sold, generally after the
recipient's death, so it is seldom worthwhile to pay real estate taxes,
insurance, utilities and maintenance for a home owned by a long-term care
Medicaid recipient."
LTC Comment: This article is a mixed bag of good and bad, accurate
and inaccurate information and advice about LTC insurance and Medicaid LTC
eligibility.
#############################
1/16/2014, “Managed care plans will account for 75% of Medicaid
beneficiaries by 2015, analysts estimate [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "By providing capitated payments to these plans, states can
have more budget certainty than if they were paying out Medicaid claims on
a fee-for-service basis. The MCOs themselves can coordinate care and
sometimes offer services that would not be available through a program
administered by the state."
LTC Comment: Managed care saves Medicaid money by transferring
management responsibility and cost control to giant private companies
(Managed Care Organizations or MCOs). The worry is that Medicaid will
clamp down on payments forcing the MCOs to reduce provider reimbursements
and minimize the number of providers resulting in care and access even
more deficient than now. A special worry is how this new system will
impact the most frail and vulnerable Medicaid population, the "dual
eligibles."
#############################
1/15/2014, “Long-term
care insurers' 'gender rating' practices challenged,” Business
Record
Quote: "The
complaints were filed today by the National Women's Law Center with
the U.S. Department of Health and Human Services' Office for Civil Rights.
The organization asserts that recently adopted gender rating practices by
Genworth Financial Inc., John Hancock Financial, Transamerica Life
Insurance Co. and Mutual of Omaha violate an anti-discrimination rule
enacted as part of the federal health care overhaul."
LTC Comment: What about the discrimination against men when they
have to pay premiums in excess of the level of risk they bring into the
risk pool?
#############################
1/15/2014, “Only
one-third of employees consider retirement savings a priority,” by
Amanda McGrory-Dixon, Employee Benefit Adviser
Quote: "Regionally, North America and Asia-Pacific respondents
report being the most involved in saving for retirement, with interest at
39%. However, only 32% of respondents in Latin America, 30% of respondents
in the Middle East and Africa, and 26% of respondents in Europe say they
are actively saving for retirement. In fact, 40% of respondents in Europe
say they have no expectations for saving for retirement at all, above the
global average of 22%."
LTC Comment: That statistic for Europe is alarming and clearly a
result of the continent's decades-long growth of entitlements and public
dependency. When Europe's social insurance programs finally hit the
fiscal wall, it will be devastating for citizens who lack private
resources. As Europe is further along in this decay than the USA, perhaps
we can learn the lesson before it's too late.
#############################
1/15/2014, “Gap between long-term care costs and Medicaid payments
was widest ever last year, report finds [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "LTC providers incurred more than $7.7 billion in allowable
costs that were not reimbursed by the Medicaid program in 2013, the
investigators estimated. Analysts from Eljay LLC compiled the report by
looking at data such as Medicaid cost reports and the long-term care
inflation index known as the market basket. This 'historic' shortfall
translates to an estimated average Medicaid shortfall of $24.26 per
Medicaid patient day. This exceeds last year's projected shortfall by
8.6%, the report notes."
LTC Comment: Access and quality problems in Medicaid-financed LTC?
Why expect otherwise when the program pays less than cost for a majority
of long-term care patients?
#############################
1/14/2014, “Virginia
considers LTCI premium options,” by Allison Bell, LifeHealthPRO
Quote: "Virginia has not let insurers use the drop in interest
rates as a reason to increase rates. But, if rates turn out to be 4
percent, and the company assumed it could earn 6 percent on its
investments, it would have had to charge 45-year-old purchasers about 33
percent more at the time of purchase to make up for the difference, and it
would have had to charge 55-year-old purchasers about 24 percent more, the
actuaries say."
LTC Comment: Too many regulators try to defy economic gravity.
#############################
1/14/2014, “Fresh Thinking on Long-Term Care Financing: The
American Long-Term Care Insurance Program [link],”
by Paul Forte, Contingencies
Quote: "Many U.S. policymakers believe that there's no way a
voluntary long-term care (LTC) insurance program can attract a critical
mass of enrollees. Given the 2011 severing of the optional federal
Community Living Assistance Services and Supports Act from the Affordable
Care Act (ACA) and a continuing exodus of private insurers from the LTC
market, this isn't surprising. But arguing that any LTC program must be
mandatory ignores both the federal budget deficit and ongoing political
resistance to mandatory provisions in the ACA."
LTC Comment: This thoughtful, well-documented article by Federal
Long-Term Care Insurance Program CEO Paul Forte is well worth a careful
reading. His proposal seems to leave little room for LTCI producers and
it does not solve the problem of easy Medicaid LTC access after the
insurable event occurs, but it is nonetheless a notable contribution to
the literature on this difficult topic.
#############################
1/13/2014, “America's
Dwindling Economic Freedom,” by Terry Miller, Wall Street Journal
Quote: "World economic freedom has reached record levels,
according to the 2014 Index of Economic Freedom, released Tuesday by the
Heritage Foundation and The Wall Street Journal. But after seven
straight years of decline, the U.S. has dropped out of the top 10 most
economically free countries."
LTC Comment: If you would like to read this article but do not
have easy access to the Wall Street Journal, let me know. I'll
forward a copy to you under the Center's online subscription.
#############################
1/13/2014, “Government
Programs Have Become One Big Scammer Fraud Fest,” by Merrill Matthews,
Forbes
Quote: "We are being inundated by news stories of fraud
perpetrated against numerous government programs. The feds themselves put
Medicare and Medicaid fraud at
approaching 10 percent of the programs’ budgets, or about $100 billion
a year for the two programs."
LTC Comment: This article highlights the problem of Medicaid
planning abuse of LTC benefits.
#############################
1/13/2014, “New Medicaid rule requires patient-centered care for
home- and community-based services, defines HCBS settings [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "A person receiving HCBS should be able to direct the care
planning process, including defining goals and preferences for how to
achieve them, the rule states. The planning process also may involve a
representative chosen by the beneficiary, and other people who the
beneficiary wishes to contribute. . . . The final version of the rule
revised problematic language in the proposed version, which threatened to
uproot residents of assisted living and residential care communities,
according to the American Health Care Association/National Center for
Assisted Living."
LTC Comment: Providing patient-centered home care is a nice goal
for Medicaid-financed LTC, but demanding it without accounting for
cost--as when OBRA '97 demanded higher nursing home quality without
supplying new revenue--will have no more effect than to hamper state
Medicaid programs' ability to manage their financially challenged systems
cost-effectively.
#############################
1/12/2014, “The
High Cost of Health Care in Retirement,” Wall Street Journal
Quote: "A couple retiring in 2013 with median drug expenses would
need $151,000 for a 50% chance of having enough money to cover health
costs in later life (assuming they have Medicare Part B and Part D
coverage as well as Medigap insurance). But the same couple at the 90th
percentile of drug spending would need $220,000-an additional $69,000.
(Some good news: Those figures are down from 2012, given that projections
of spending growth for Medicare beneficiaries are slowing.)"
LTC Comment: Don’t forget long-term care on top of that.
#############################
1/9/2014, “Why
boomers get more from Social Security than anyone,” by Jeffrey Miller,
WSJ MarketWatch
Quote: "The age at which workers born between 1943 and 1954 can
receive full Social Security retirement benefits is 66. If workers delay
claiming benefits until age 70, they are rewarded with a whopping 8%
increase in benefits for each year delayed. Workers who are retiring now
can get the 8% increase each year for four years. In an environment where
interest rates are historically low, the 8% Delayed Retirement Benefit
bonus is one of the very best bargains around."
LTC Comment: For younger generations, who must wait until age 67
to receive full Social Security benefits, the 8% yearly increase for
delaying benefits will only be available for three years.
#############################
Updated, Friday, January 17,
2014, 11:33 AM (Pacific)
Seattle—
#############################
LTC BULLET: THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN
NEW JERSEY
LTC Comment: The
Center for Long-Term Care Reform and the Common Sense Institute of New
Jersey have published “The Index of Long-Term Care Vulnerability: A Case
Study in New Jersey [link].”
Details after the ***news.***
*** "FRESH THINKING
ON LONG-TERM CARE FINANCING: THE AMERICAN LONG-TERM CARE INSURANCE
PROGRAM [link]"
by Federal Long-Term Care Insurance Program CEO Paul Forte is a
thoughtful, well-documented Contingencies article well worth a
careful reading. Unfortunately, his proposal leaves little room for LTCI
producers and it does not solve the problem of easy Medicaid LTC access
after the insurable event occurs. Quote: "Many U.S. policymakers believe
that there's no way a voluntary long-term care (LTC) insurance program can
attract a critical mass of enrollees. Given the 2011 severing of the
optional federal Community Living Assistance Services and Supports Act
from the Affordable Care Act (ACA) and a continuing exodus of private
insurers from the LTC market, this isn't surprising. But arguing that any
LTC program must be mandatory ignores both the federal budget deficit and
ongoing political resistance to mandatory provisions in the ACA." ***
*** THE FOURTEENTH
ANNUAL INTERCOMPANY LONG TERM CARE INSURANCE CONFERENCE [link]
will be held March 16-19, 2013 at the Rosen Centre, in Orlando, FL. Find
details and registration at the conference website here:
http://www.iltciconf.org/. If you have questions, please contact Jim
Glickman at 818-867-2223. Check out the closing conference session on
“The Future of the Industry Session”
here. Genworth's CEO Thomas J. McInerney will complete the panel
previously announced. Conference highlights also include keynoter Chris
Gardner, whose life story The Pursuit of Happyness became a
best-selling book and movie. ***
***
THE INSTITUTE FOR THE AGES has announced that National Public Radio
(NPR) correspondent Ina Jaffe will headline the dinner keynote
presentation at the Seventh Annual International Conference on Positive
Aging on February 11, 2014 at the Hyatt Regency in Sarasota, Florida. For
more information about the Conference program, travel and hotel
arrangements, and other details, visit
www.positiveagingconference.org. Tickets may be purchased online at
www.positiveagingconference7.eventbrite.com. Sponsorship
opportunities are still available. Please email inquiries to
info@institutefortheages.org or contact Michelle Bauer at
727-510-2524. ***
#############################
LTC BULLET: THE
INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN NEW JERSEY
LTC Comment: Last
summer, the Center for Long-Term Care Reform conducted research on
Medicaid and long-term care financing in three states: Virginia, Georgia
and New Jersey. Last month, we published our reports on the first two
states in “The
Index of Long-Term Care Vulnerability: A Case Study in Virginia” and
“The
Index of Long-Term Care Vulnerability: A Case Study in Georgia.” On
Wednesday, January 15, 2014, we released the third and last report in the
current series titled “The
Index of Long-Term Care Vulnerability: A Case Study in New Jersey.”
Today we bring you
the Executive Summary of the New Jersey report and encourage you to read
any or all of the three studies. Each report features a new tool, called
the “Index of Long-Term Care Vulnerability.” The purpose of the Index is
to help legislators, policy makers and analysts assess the future
sustainability of their states’ long-term care financing systems.
Try your hand at
filling out the “Index” for your state. You’ll find two links to the
Index tool at the end of each report. One link goes to a sample version I
filled out as an example. The other link goes to a blank version you can
use to evaluate the state of your choice. See the body of each report for
links to the sources you’ll need to find the data for your state.
Soon, we will publish
a comparative analysis of Medicaid and long-term care financing in the
three states comparing them to each other and to the USA as a whole. This
year, we plan to apply The Index of Long-Term Care Vulnerability to more
states and to bring the findings to the attention of key state and federal
decision makers.
#############################
Executive Summary
from “The Index of Long-Term Care Vulnerability: A Case Study in New
Jersey,” by Stephen A. Moses, published simultaneously by the
Common Sense Institute of New Jersey
here and by the
Center for Long-Term Care Reform
here, on January 15, 2014.
Long-term care (LTC)
for the elderly is already a large risk and expense for private citizens
and public programs. The need for and cost of LTC will increase radically
with the aging of the baby-boom generation. Most expensive long-term
care, including care provided in nursing homes or by professional aides in
family homes for more than nominal durations, is paid for by Medicaid, a
means-tested public assistance program.
Medicaid already
strains federal and state budgets, including New Jersey’s. Yet major
initiatives at the federal level and in New Jersey are underway to expand
Medicaid coverage in general and to make the program’s LTC benefits more
attractive, accessible and efficient. New Jersey’s “Comprehensive
Medicaid Waiver” aspires to achieve those goals by rebalancing care from
mostly institutional services to mostly home and community-based services
and by turning over management of long-term care for more recipients with
higher acuity care needs to managed care organizations.
New Jersey faces
multi-faceted long-term care problems including (1) a rapidly increasing
elderly population with (2) much higher numbers of disabled or demented
people coming soon and (3) Medicaid already strained as the principal LTC
payer dependent on (4) funding from the heavily indebted federal
government as supplemented by (5) state revenues constrained by
recessionary pressures and poor future economic prospects with (6) very
little private financing of LTC to relieve the budgetary pressure on
public programs in the context of (7) heavy public dependency on social
programs already and a growing “entitlement mentality” among the
citizenry.
By focusing on
improving the state’s current long-term care service delivery and
financing program instead of taking into account this full range of
problems and addressing it, New Jersey runs the risk of modifying a broken
LTC system that cannot survive the larger on-coming demographic, economic
and social challenges. This report offers a way to take account of these
broader challenges by applying an Index of Long-Term Care Vulnerability.
It recommends that New Jersey reassess its current LTC initiatives and
move in the direction of reducing dependency on public programs while
attracting much more private revenue into the LTC financing mix.
#############################
Updated, Monday, January 13,
2014, 11:23 AM (Pacific)
Seattle—
#############################
2014 ILTCI CONFERENCE AND LTC NEWS AND COMMENT
LTC Comment: Early-bird registration ends this Thursday, January 16th,
for the
Fourteenth Annual Intercompany Long Term Care Insurance Conference, to
be held from March 16-19, 2013 at the Rosen Centre, in Orlando, FL. On
that date the $895 and all early bird registration prices go up $100.
Agents selling long term care (or other insurance) directly to consumers
may apply for a scholarship
here. Government employees may register at a special $95 rate
here. New attendees may apply by January 10th (tomorrow) for a
special $395 rate
here. If you have any questions, please contact Jim Glickman at
818-867-2223.
Conference highlights include keynoter Chris Gardner, whose life story
The Pursuit of Happyness became a best-selling book and movie. A
closing session on “The Future of the Industry,” featuring Marc Cohen,
Maria Ferrante-Schepis and another panelist to be named, will focus on the
present state of the LTCI industry, provide parallels to other industries
that have weathered turbulent times and offer opinions and perspectives
about what all can do to re-invigorate this industry. Here’s an outline
of the closing general session:
TITLE: The Future of the Industry
1. Current vs. Future State: Can our industry bounce back?
2. What can we learn from other industries?
3. Hear from experts why they are bullish on our future
DESCRIPTION: The long term care insurance industry is in a state of
flux. Numerous companies have exited the market. Sales of long-term care
insurance are on a downward trend. Distribution is shrinking. In-force
premium increases dominate the headlines. This general session will focus
on the present state of the industry, offer parallels to other industries
that have weathered turbulent times and offer opinions and perspectives
about what we all can do to reinvigorate this industry.
#############################
1/11/2014, “What
happens when your spouse's care drains your savings?,” by Garry Marr,
Financial Post
Quote: "It's the end of the line for you, so who cares if there's
nothing left and you actually owe money? How about the lifelong partner
funding the expensive care you require in your last days - their own
retirement plans now in jeopardy? . . . While it depends on the province,
the government will provide you with long-term care in your old age, but
the type of place you'll end up living in could be limited and part of
your income is likely to be clawed back."
LTC Comment: Note the ominous parallels between Canadian and U.S.
long-term care policy.
#############################
1/11/2014, “Top
5 reasons why long-term care insurance hasn't taken off,” by Mark
Halpern, Financial Post
Quote: "LTC insurance coverage has a number of benefits, and you
have to weigh the possibility of requiring long-term care in the future as
part of your comprehensive estate planning or explore other ways to
self-fund the care, perhaps with less expensive joint last-to-die
insurance or an annuity down the road."
LTC Comment: This is an interesting article about LTCI in
Canada.
#############################
1/10/2014, “Long Term Care Insurance Prices Drop for Men, Rise
Slightly for Couples [link],”
by Jesse Slome, Market-Wired
Quote: "The
typical healthy 55-year-old male can expect to pay almost 15 percent less
for
long term care insurance coverage purchased in 2014 compared to last
January. A 60-year-old married couple faces a seven percent increase
according to a new analysis of prices.
"‘Compared to last year, costs for long term care insurance have risen
slightly for couples, increased more significantly for single women but
they have decreased for single men,’ reports Jesse Slome, director of the
American Association for Long-Term Care Insurance (AALTCI). The
national trade group released the findings of their 2014 Long-Term Care
Insurance Price Index."
LTC Comment: How long until the government forbids pricing
insurance based on risk and requires “gender equality” for LTCI?
#############################
1/9/2014, “Study:
Supplemental Plans Raise Medicare Costs 22 Percent,” by Jay Hancock,
Kaiser Health News
Quote: "Supplemental
"Medigap" plans shield millions from Medicare's deductibles and other
out-of-pocket costs. Pay a flat Medigap premium to a private insurer such
as UnitedHealthcare or Humana and you might have little or no
out-of-pocket expense for doctor visits, hospitalization or other Medicare
services.
"Naturally many worry that the all-you-can-eat model inflates Medicare's
costs by encouraging consumers to seek -- or doctors to order --
potentially unnecessary procedures. Now economists at the University of
Texas and the University of Chicago
have taken what some call the closest look yet at the relationship
between Medigap coverage and Medicare spending. Their conclusion, that
Medigap substantially increases what Medicare spends on treatment and
tests, gives new ammunition to those who want to
restrict these plans."
LTC Comment: This is only one of many perverse economic incentives
in government health financing programs that have unintended, but entirely
predictable, negative consequences.
#############################
1/9/2014, “Transition from facility to home- and community-based
care greatly increases dual eligibles' risk of hospitalization, study
shows [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "Controlling for demographic and medical factors, the
researchers determined that people who transitioned had an elevated risk
of being hospitalized and also had their first hospitalization sooner than
those living in nursing homes. Including both preventable and
non-preventable hospitalizations, 419 people in the transition group were
admitted while 297 of the nursing home residents were admitted."
LTC Comment: Nevertheless, rebalancing from nursing home to home
care and switching dual eligibles into giant managed care organizations
with little experience caring for the most frail and vulnerable are two
trends sweeping through Medicaid programs nationwide. Our new “Index
of Long-Term Car Vulnerability” exposes the risk of these cost-cutting
policies.
#############################
1/8/2014, “Why
has LTD done better than LTCI?,” by Allison Bell, LifeHealthPRO
Quote: "Premium flexibility has helped the U.S. long-term
disability (LTD) insurance market weather low interest rates better than
the private long-term care insurance (LTCI) market."
LTC Comment: Ultimately, the only solution is to let markets set
interest rates and get the Federal Reserve out of the business of
manipulating them to crony capitalists’ benefit and everyone else’s
detriment.
#############################
1/8/2014, “Long-Term
Care Platform Eyes CU Market,” by Michelle A. Samaad, Credit Union
Times
Quote: "Advanced Resources Marketing, a distributor of long-term
care insurance, announced the creation a new sales and marketing platform
for credit unions. The Health Care Solutions Distribution platform will
consist of agents working closely with ARM nationwide, delivering
long-term care insurance and related product solutions to credit
unions, according to the Boston-based ARM."
LTC Comment: Congratulations to Center Bronze corporate member ARM
president Joe Pulitano, CEO Henrik Larson and Brent Stubbe who will head
up the new distribution channel.
#############################
1/7/2014, “U.S. Cancer Deaths Decline Again: Report Better
prevention, screening and treatment are keys to continued progress,
experts say [link],”
by Steven Reinberg, HealthDay
Quote: "The rate of cancer deaths among Americans continues to
decline, according to a new report. Over the last 20 years, the overall
risk of dying from cancer has dropped 20 percent, researchers found."
LTC Comment: A bit of good empirical news in a torrent of poor
public policy.
#############################
1/7/2014, “Illegals
still get Medicare benefits, but feds vow crackdown, $70M savings,” by
Tom Howell Jr., The Washington Times
Quote: "Federal health officials vowed this week to crack down on
illegal immigrants who get
Medicare — signaling that one part of the
Obama administration believes it has authority to deny taxpayer-funded
benefits going to those in the country without authorization. The Centers
for
Medicare and Medicaid Services said it could save nearly $70 million
from 2015 to 2019 by preventing illegal immigrants from taking advantage
of
Medicare’s prescription drug program or enrolling in
Medicare Advantage plans."
LTC Comment: Yeah, that’s about as likely to happen as government
stopping Medicare fraud and Medicaid eligibility abuse.
#############################
1/7/2014, “CMS: Nursing home Medicare cuts helped keep healthcare
spending at historic low levels [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "While hospital, physician and clinical services spending
increased in 2012, health spending as a share of gross domestic decreased
slightly, from 17.3% in 2011 to 17.2%. This was due to slow growth in
nursing home, prescription drug, private health insurance and Medicare
expenditures, according to the annual report from the CMS Office of the
Actuary." (Emphasis added.)
LTC Comment: We've predicted major cuts to Medicare nursing
homes. They've arrived. This is a very significant development because
high Medicare reimbursements for a small minority of nursing home
residents have historically made up for extremely low Medicaid
reimbursements for the majority of nursing home residents. Further
strains on nursing home access and quality are inevitable.
#############################
1/6/2014, “More Cuts In Store For Medicare Plans -- Here Are The
Options That Will Shrink Most For Seniors [link],”
by Scott Gottlieb, Forbes
Quote: "The privately run Medicare plans known as 'Medicare
Advantage' have been in the political crosshairs of the Obama White House.
Even after facing steep cuts under Obamacare, the Advantage plans are now
slated to take a brand new round of reductions in 2015. . . . This means
that in 2015, the rates that the feds pay these plans is slated to go from
an earlier 1.7 percent increase to a new, -2.0 percent decrease. This is
on top of other cuts that have already been announced or implemented.
Combined with these other cuts mandated by Obamacare, the Medicare
Advantage plans are looking at significant reductions when they had been
expecting small increases."
LTC Comment: Current health policy: first, find the best Medicare
program and cut it. Then, find the worst health care program, Medicaid,
and expand it. What are they thinking?
#############################
1/6/2014, “Millionaires
on Medicaid,” by Mark Warshawsky, Wall Street Journal
Quote: "Expanding Medicaid coverage to an estimated nine million more
Americans-as mandated by the Affordable Care Act-reinforces the idea that
Medicaid only serves the poor. That perception is not accurate. And it
distracts from a looming budgetary threat to the program: long-term care.
. . .
"We might accept these rising costs if benefits flowed only to the elderly
poor, as originally intended. But that is not the case. Significant
long-term care benefits flow to individuals in the top 20% of retirement
earnings, enabled by Medicaid's generous asset-exclusion limits. . . .
"The rules wouldn't matter if wealthy individuals shunned Medicaid
long-term care benefits. But with Medicaid crowding out private
alternatives, many don't. In fact, 15% of elderly individuals in the
middle-income quintile, 8% in the upper-middle quintile, and 5% in the top
quintile receive Medicaid benefits.
"Even these numbers don't capture the burden wealthy individuals place on
Medicaid because they live much longer than the poor. Beneficiaries in the
top income quintile receive, on average, double the lifetime payouts of
those that are less well-off. And because Medicaid lowers reimbursement
rates to providers and restricts benefits to contain costs, the poor are
tied to lower-quality care and enjoy far less provider flexibility. . . .
"Tightening eligibility rules is the first step toward a solution. Before
receiving Medicaid payouts, for example, wealthier households should first
be asked to draw down the value of their home through a reverse mortgage
to help pay for long-term care. Wealthier households could also be asked
to meet long-term care expenses through life annuity payouts from their
retirement accounts. Such changes would help ensure that Medicaid benefits
flow to the financially needy."
LTC Comment: The author of this Wall Street Journal op-ed
co-chaired last year's LTC Commission. I spent several hours answering
his questions about the problem of easy Medicaid LTC eligibility for the
middle class and affluent and its effect of crowding out home equity
conversion and long-term care insurance as private financing
alternatives. I'm very glad to have Mark Warshawsky as an ally in the
Center for LTC Reform's mission to ensure access to quality long-term care
for all Americans.
#############################
1/6/2014, “Genworth
shows $8.3 billion in captive reserves,” by Zachary Tracer,
LifeHealthPRO
Quote: "The Richmond, Va.-based company said it would probably
face increased costs and the need to curb sales of some products if it
were required to stop using reinsurance subsidiaries, known as captives,
to build reserves. . . . Genworth said most of the $7.3 billion in
reserves at its Bermuda-based units stem from the LTCI business. Today's
filings include queries from the SEC about the reserves and Genworth's
responses."
LTC Comment: Reinsurance is as important to insurers as insurance
is to consumers.
#############################
1/6/2014, “New
Medicare Data Show Hospitals With High Rates Of Readmissions,” by
Jordan Rau, Washington Post
Quote: "Medicare’s
new comprehensive measure of hospital readmissions shows that at least
20 percent of the hospitals in Illinois, Maryland, Massachusetts, New
Jersey, New York and Rhode Island have higher rates of patients returning
than the national average. Colorado, Hawaii, Idaho, North Carolina,
Oregon, South Carolina, Utah and Washington led the states with the
highest proportion of hospitals with low readmission rates. In those
states, between 13 and 16 percent of hospitals came in below the national
average, the
data show."
LTC Comment: Are states with higher readmission rates simply
providing more aggressive, better care? Or are they wasting money? Who
decides? Medicare regulators decide in the absence of real market data
based on consumers selecting hospitals based on price, reputation, and
other objective metrics.
#############################
1/4/2014, “Readers
weigh in about their long-term care insurance,” by Scott Burns,
Dallas Morning News
Quote: "Some people swear by their long-term care insurance
policies. Others swear at them. There is no middle ground. . . . I think
it is fair to say that while long-term care insurance is a wonderful idea,
the actual product has been oversold and underserviced."
LTC Comment: An unfortunate conclusion reached by a reporter who
has covered LTC for a long time.
#############################
Updated, Friday, January 10,
2014, 11:15 AM (Pacific)
Seattle—
#############################
LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2012 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. After the ***news.***
*** “MILLIONAIRES
ON MEDICAID” by Mark Warshawsky, Wall Street Journal, 1/6/14:
We forwarded this article to Center “clippings service” subscribers on the
day of its publication. We’ll feature it in Monday’s LTC E-Alert.
The author, Mark Warshawsky co-chaired last year’s LTC Commission and
queried Center president Steve Moses often about why and how the affluent
qualify for Medicaid LTC benefits. ***
*** INSTITUTE FOR THE AGES’ Seventh Annual International Conference on
Positive Aging (February 9-12, 2014 at Sarasota, Florida's Hyatt
Regency) will feature a keynote address by Marc Freedman, founder and CEO
of Encore.org, a non-profit supporting "encore" careers for older
Americans. Susan Stamberg, special correspondent for National Public
Radio and former co-host of NPR's award-winning news magazine, All
Things Considered, will deliver the closing keynote. The 2014
conference theme is "Positive Aging Transcends: The Voices of Innovation
and Community." Registration for the conference is open. Find tickets
here. More information
here. For sponsorship opportunities, email inquiries to sponsor@institutefortheages.org,
or call Michelle Bauer at 727-510-2524. ***
*** KEN DYCHTWALD, Ph.D., one of the world's foremost visionaries and
original thinkers in the field of aging has been nominated Chair-Elect of
the American Society on Aging (ASA), www.asaging.org. The association's
5,000+ members range from practitioners, educators, administrators,
policymakers, business leaders, entrepreneurs, investors, researchers,
media and students all working towards improving the lives of older
adults. In this important and significant role, Ken will contribute the
leadership skills he has honed for nearly 40 years, as well as innovative
ideas, with an eye towards further building the largest association of
professionals in the field of aging/gerontology. More
here. ***
*** ATTEND AALTCI’s 2014 LTC Solutions Sales Summit for $99 or
watch its top sessions online FOR FREE. Get all the conference details
here and register for the online access
here. Jesse Slome expects 5,000 people will watch the live sessions,
with special interest in the LTC CEO panel featuring the chiefs of five
insurers. He notes that two insurers, Transamerica and Mutual of Omaha
have signed up to be Platinum Sponsors in support of the virtual event.
Kudos to Slome, AALTCI, and the meeting sponsors for this creative,
cost-sensitive effort to encourage LTC insurance success during a
challenging time for the profession. ***
*** EARLY BIRD REGISTRATION ends next Thursday, January 16th, for the
Fourteenth Annual Intercompany Long Term Care Insurance Conference, to
be held from March 16-19, 2013 at the Rosen Centre, in Orlando, FL. On
that date the $895 and all early bird registration prices go up $100.
Agents selling long term care (or other insurance) directly to consumers
may apply for a scholarship
here. Government employees may register at a special $95 rate
here. New attendees may apply by January 10th (tomorrow) for a
special $395 rate
here. If you have any questions, please contact Jim Glickman at
818-867-2223.
Conference highlights
include keynoter Chris Gardner, whose life story The Pursuit of
Happyness became a best-selling book and movie. A closing session on
“The Future of the Industry,” featuring Marc Cohen, Maria Ferrante-Schepis
and other panelists to be named, will focus on the present state of the
LTCI industry, provide parallels to other industries that have weathered
turbulent times and offer opinions and perspectives about what all can do
to re-invigorate this industry. ***
LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2012 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 2012 statistics on its website at
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.
The current issue of Health Affairs (Vol. 33, No. 1, pps. 67-77)
contains a summary and analysis of the new data titled “National Health
Spending in 2012: Rate of Health Spending Growth Remained Low For The
Fourth Consecutive Year." Registered subscribers to Health Affairs
can access the full text of that article online at
http://content.healthaffairs.org/content/33/1/67.full.pdf.
Following is our annual analysis of the new nursing home and home
health care data.*
#############################
"So What If the Government Pays for Most LTC?, 2012 Data Update"
by
Stephen A. Moses
Ever wonder why LTC insurance sales and market penetration are so
discouraging? Or why reverse mortgages are rarely used to pay for
long-term care? Or why LTC service providers are always struggling to
survive financially and still provide quality care? Read on.
America spent $151.5 billion on nursing facilities and Continuing Care
Retirement Communities in 2012. The percentage of these costs paid by
Medicaid and Medicare has gone up over the past 42 years (from 26.8% in
1970 to 53.3% in 2012, up 26.5 % of the total) while out-of-pocket costs
have declined (from 49.5% in 1970 to 28.6% in 2012, down 20.9% of the
total). Source:
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf,
Table 15.
SO WHAT? Consumers' liability for nursing home and CCRC costs has
declined by 42.3% in the past four decades, while the share paid by
Medicaid and Medicare has nearly doubled, up 98.9%.
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 $543,000 and
in some states up to $814,000 of home equity (as of 1/1/14). No wonder
nursing homes are struggling financially--their dependency on parsimonious
government reimbursements is increasing while their more profitable
private payers are disappearing.
Unfortunately, these problems are even worse than the preceding data
suggest. Over half of the so-called "out-of-pocket" costs reported by
CMS are really just contributions toward their cost of care by people
already covered by Medicaid! These are not out-of-pocket costs in
terms of ASSET spend down, but rather only INCOME, most of which comes
from Social Security benefits, another financially struggling government
program. Thus, although Medicaid pays less than one-third of the cost of
nursing home care (30.6% of the dollars in 2012), it covers two-thirds of
all nursing home residents. Because people in nursing homes on Medicaid
tend to be long-stayers, Medicaid pays something toward nearly 80 percent
of all patient days.
SO WHAT? Medicaid pays in full or subsidizes almost four-fifths of all
nursing home patient days. If it pays even one dollar per month (with the
rest contributed from the recipient's income), the nursing home receives
Medicaid's dismally low reimbursement rate.
No wonder the public is not as worried about nursing home costs as they
would be if they were more at risk for the cost of their care. No
wonder nursing homes risk insolvency when so much of their revenue comes
from Medicaid, often at reimbursement rates less than the cost of
providing the care.
Don't be fooled by the 7.9% of nursing home costs that CMS reports as
having been paid by "private health insurance" in 2012. 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 most LTCI policies pay beneficiaries who then pay the
nursing homes. Thus, a large proportion of insurance payments for nursing
home care gets reported as if it were "out-of-pocket" payments. This fact
further inflates the out-of-pocket figure artificially.
How does all this affect assisted living facilities? ALFs are 87%
private pay (Source:
AHCA/NCAL Issue Brief) and they cost an average of $42,600 per year
(Source:
2012 MetLife survey). Many people who could afford assisted living by
spending down their illiquid wealth, especially home equity, choose
instead to take advantage of Medicaid nursing home benefits. Medicaid
exempts one home and all contiguous property (up to $543,000 or $814,000
depending on the state), plus—in unlimited amounts—one business,
one automobile, prepaid burials, term life insurance, personal belongings
and Individual Retirement Accounts not to mention wealth protected by
sophisticated asset sheltering and divestment techniques marketed by
Medicaid planning attorneys. Income rarely interferes with Medicaid
nursing home eligibility unless such income exceeds the cost of private
nursing home care.
SO WHAT? For most people, Medicaid nursing home benefits are easy to
obtain without spending down assets significantly and Medicaid's income
contribution requirement is usually much less expensive than paying the
full cost of assisted living.
No wonder ALFs are struggling to attract enough private payers to be
profitable. No wonder people are not as eager to buy LTC insurance as
they would be if they were more at risk for the cost of their care. This
problem has been radically exacerbated in recent years because more and
more state Medicaid programs are paying for assisted living as well as
nursing home care, which makes Medicaid eligibility more desirable than
ever.
The situation with home health care financing is very similar to nursing
home financing. According to CMS, America spent $77.8 billion on home
health care in 2012. Medicare (43.4%) and Medicaid (37.2%) paid 80.6% of
this total and private insurance paid 7.2%. Only 7.8% of home health care
costs were paid out of pocket. The remainder came from several small
public and private financing sources. Data source:
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf,
Table 14.
SO WHAT? Only one out of every 13 dollars spent on home health care
comes out of the pockets of patients and a large portion of that comes
from the income (not assets) of people already on Medicaid.
No wonder the public does not feel the sense of urgency about this risk
that they would if they were more at risk for the cost of their care.
Bottom line, people only buy insurance against real financial risk. As
long as they can ignore the risk, avoid the premiums, and get government
to pay for their long-term care when and if such care is needed, they will
remain in denial about the need for LTC insurance. As long as Medicaid
and Medicare are paying for a huge proportion of all nursing home and home
health care costs while out-of-pocket expenditures remain only nominal,
nursing homes and home health agencies will remain starved for financial
oxygen.
The solution is simple. Target Medicaid financing of long-term
care to the needy and use the savings to fund education and tax incentives
to encourage the public to plan early to be able to pay privately for
long-term care. For ideas and recommendations on how to implement this
solution, see
www.centerltc.com.
Note especially:
“How to Fix Long-Term Care,” at
http://www.centerltc.com/BriefingPapers/Overview.htm;
"Medi-Cal Long-Term Care: Safety Net or Hammock?"
here;
"The LTC Graduate Seminar Transcript"
here (requires password, contact
smoses@centerltc.com);
"Aging America's Achilles' Heel: Medicaid Long-Term Care" at
http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and
"The Realist's Guide to Medicaid and Long-Term Care" at
http://www.centerltc.org/realistsguide.pdf.
In the Deficit Reduction Act of 2005, Congress took some small steps
toward addressing these problems. A cap was placed on Medicaid's home
equity exemption and several of the more egregious Medicaid planning
abuses were ended. But much more remains to be done. With the Age Wave
starting to crest and threatening to crash over the next two decades, we
can only hope it isn't too late already.
* Note that CMS changed the definition of National Health Expenditure
Accounts (NHEA) categories in 2011, adding for example Continuing Care
Retirement Communities (CCRCs) to Nursing Care Facilities. This change
had the effect of reducing Medicaid's reported contribution to the cost of
nursing home care from over 40% in 2008 to under one-third (32.8%) in
2009. CMS also created a new category called "Other Third Party Payers"
(7.1%) which includes "worksite health care, other private revenues,
Indian Health Service, workers' compensation, general assistance, maternal
and child health, vocational rehabilitation, other federal programs,
Substance Abuse and Mental Health Services Administration, other state and
local programs, and school health." For definitions of all NHEA
categories, see
http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.
Stephen A. Moses is president of the Center for Long-Term Care Reform
in Seattle, Washington. The Center's mission is to ensure quality
long-term care for all Americans. Steve Moses writes, speaks and consults
throughout the United States on long-term care policy. He is the author
of the study "Aging America's Achilles' Heel: Medicaid Long-Term Care,"
published by the Cato Institute (www.cato.org).
Learn more at
www.centerltc.com or email
smoses@centerltc.com.
#############################
Updated, Monday, January 6, 2014,
11:46 AM (Pacific)
Seattle—
#############################
HAPPY NEW YEAR AND LTC NEWS AND COMMENT
LTC Comment: Failure
of the Affordable Care Act brings danger and opportunity. Danger because
demands for a government-controlled single-payer system will increase.
Opportunity because true insurance against catastrophic risk, with
vouchers as a safety net, is a better direction to take. Whether the
danger or the opportunity prevails will depend on whether or not the
pendulum of government dependency swings back toward freedom,
independence, and market-based solutions. 2014 could be the year.
#############################
1/3/2013,
“Analysts
expect slower Medicare Advantage growth,” by The Associated Press,
Business Week
Quote:
"Enrollment in Medicare Advantage plans will grow more slowly in 2014 than
it did the past couple years, predicted a Citi analyst who follows health
insurers. . . . The government has been cutting funding in part to help
pay for the health care overhaul, the federal law that aims to cover
millions of uninsured people. Insurers have responded by trimming the
benefits their Medicare Advantage plans offer, dropping doctors from their
coverage networks or, in some cases, pulling out of markets where they
feel they can no longer make a profit."
LTC Comment:
ObamaCare siphons funds from a relatively good program to support a
relatively bad program.
#############################
1/3/2013,
“Medicaid Expansion Drives Up Visits to ER; Study Finding Increased Use
Contradicts View of Health-Overhaul Backers [link],”
by Melinda Beck, Wall Street Journal
Quote:
"Some supporters of President Barack Obama's health-care overhaul say that
putting uninsured Americans on Medicaid will reduce costly emergency-room
visits by giving them more access to care in other settings. But a new
study found the reverse: A group of 10,000 low-income Oregon residents who
recently obtained Medicaid coverage visited ERs 40% more often than those
without insurance."
LTC Comment:
One possible explanation for this phenomenon is that people on Medicaid
have difficulty finding primary care physicians and specialists to treat
them because of Medicaid's low reimbursements.
#############################
1/2/2013,
“State
finds Medicaid expansion surprise,” by Allison Bell, BenefitsPRO
Quote:
"To reduce the risk that families with assets will think of Medicaid as a
free long-term care insurance plan, federal regulations require states to
put liens on the homes, cars and other assets of Medicaid users ages 55
and older, to help state [sic] recover any money spent on long-term
care from the Medicaid users' estates."
LTC Comment:
Unfortunately, this statement is incorrect. Medicaid law and regulations
do not require liens. Liens are optional and can only be applied to
homes, not cars or other assets, and only under very strictly limited
circumstances, i.e., when it can be shown that a Medicaid recipient will
be unable to return to the home within six months. The author confuses
liens with estate recoveries, which are mandatory for the recovery of
costs for long-term care services, though optional for recovery of costs
for non-LTC services provided after age 55. See the CMS guidelines
here.
#############################
1/2/2014,
“Long-Term Care Insurer Gets Sued for Excluding Assisted Living Claims [link],”
by Alyssa Gerace, Senior Housing News
Quote:
"'Defendants have engaged in an illegal course of conduct designed to
reduce its exposure to costly long-term care claims by denying claims of
elderly insureds through a scheme of fraud, deception, and manipulation of
policy terms, while seeking massive premium increases at the expense of
these same insureds,' Gardner says in a federal class action suit she's
bringing against CNA, Courthouse News reports."
LTC Comment:
The principle of “innocent until proven guilty” should apply as
accusations of failure to pay claims in the past have often proved
specious.
#############################
1/1/2014,
“Why
the rise in fatal falls?,” by Barbara Peters Smith, Herald-Tribune
Quote:
"Especially when it comes on top of other chronic health problems, a hard
fall often signals the beginning of the end for an elder - causing broken
bones or injuries that can immobilize the body, depress the spirit and
force overall well-being to plummet."
LTC Comment:
More people living longer means more falls and more need for education and
preventive measures to prevent them.
#############################
12/31/2013,
“High
Vitamin-E Dose Slows Decline in Alzheimer's Patients, Study Finds,” by
Jennifer Corbett Dooren, Wall Street Journal
Quote:
"However, the research to be published in this week's Journal of the
American Medical Association, found no impact on memory and doctors
said there was no evidence that vitamin E prevents the debilitating
disease."
LTC Comment:
If it doesn’t help memory this news is less than epochal.
#############################
12/31/2013,
“With
new year, Medicaid takes on a broader health-care role,” by Sandhya
Somashekhar and Karen Tumulty, Washington Post
Quote:
"'I think it is very bad social welfare policy,' said Edmund F. Haislmaier,
a senior research fellow at the Heritage Foundation. 'You are taking
people who are by and large young, healthy and perfectly capable
productive members of society and encouraging them to become dependent on
public assistance. This is the very last population you want to do that
for.'"
LTC Comment:
The ACA should be renamed the “Entitlement Expansion Act.”
#############################
12/31/2013,
“Liability claims and costs on the rise for long-term care providers;
Aggressive plaintiffs' lawyers may contribute to increases [link],”
by Stephanie Bouchard, Healthcare Finance News
Quote:
"Aon found that since 2010, claim frequency has been rising after a decade
of remaining essentially flat. The consultant estimates a 2 percent
increase in claims frequency in 2014. Coupled with a 3 percent increase in
claims severity, Aon estimates that long-term care providers are facing an
annual loss rate increase of 5 percent. Why these increases are being
seen is hard to pinpoint and varies from state to state, said Christian
Coleianne, author of the report and associate director and actuary at Aon.
Among the possible reasons are increases in the usage of long-term care
and plaintiffs' attorneys who are more aggressive."
LTC Comment:
Medicaid planning attorneys manipulate the program’s rules to make
affluent people eligible for Medicaid which, because of the resulting
excessive utilization, is unable to pay nursing facilities adequately
which results in poor care which ends in the attorneys bringing liability
suits against the facilities. The lawyers make money on both ends. The
poor and taxpayers lose.
#############################
12/30/2013,
“Medicaid On The Eve Of Expansion: A Survey Of State Medicaid Officials
About The ACA [link],”
by Benjamin Sommers, Sarah Gordon, Stephen Somers, Carolyn Ingram, and
Arnold Epstein, Health Affairs Blog
Quote:
"Twenty-five states and Washington D.C. are currently planning to
expand Medicaid in 2014 under the Affordable Care Act. We recently
surveyed Medicaid directors in these expanding states (for simplicity, we
refer to D.C. as a state throughout this article) to assess expectations
and implementation strategies regarding enrollment, costs, and access.
This blog post describes some of the most relevant findings from our
analysis."
LTC Comment:
Even states that wisely opt not to expand Medicaid under the Affordable
Care Act will suffer huge cost increases due to the “woodwork effect,” the
influx of new Medicaid recipients who were eligible before but had not
applied until the publicity about ObamaCare.
#############################
12/30/2013,
“3
things to know when hiring home health aide,” by Robert Powell, USA
Today
Quote:
"In 2012, some 58,500 paid, regulated long-term care companies served
about 8 million people in the U.S., some 4.7 million of whom received that
care in their home. And more often than not, experts say those receiving
that care - be it one, two or all of the basic activities of daily living
- didn't know the first thing about hiring a home health care provider."
LTC Comment:
All the more reason to have a LTC insurance policies with a case
management to help find a good home health provider AND pay for it.
#############################
12/30/2013,
“Cholesterol
and Alzheimer's disease link strengthens in study,” by Melissa Healy,
Los Angeles Times
Quote:
"Well before signs of
dementia trigger a diagnosis of Alzheimer's disease, a person's
cholesterol levels may be a bellwether of amyloid plaque build-up in the
brain, a new study finds. Long considered a reliable predictor of heart
attacks and
strokes, worrisome cholesterol levels may now raise concerns about
dementia risk as well, prompting more aggressive use of drugs, including
statins, that alter cholesterol levels."
LTC Comment:
Eat well to think well.
#############################
12/30/2013,
“Some
with Alzheimer's find care in far-off nations,” by Denis D. Gray
Quote:
"Faraway countries are offering cheaper, and to some minds better, care
for those suffering from the irreversible loss of memory."
LTC Comment:
This article reminded me of an elder law training session I wrote about in
an
LTC Bullet in April 2001,
"International Long Term Care Options: The Good, The Bad, and the Ugly."
Here’s how I summarized it: “Recognizing that they can no longer find
decent nursing home care for clients they've put on Medicaid, these elder
law attorneys want to ship the infirm seniors off to Thailand, Costa Rica
or Uruguay where their Social Security checks will still buy quality
professional care, their heirs' inheritances will remain untouched, and
plenty will be left over for generous attorney's fees. They call this the
‘globalization of long-term care.’ How can we get demented elders across
the border? Drug them with ‘happy pills.’ How can we make sure they get
decent care? Three hundred dollars a month will buy a geriatric care
manager to look after Mom or Dad for a month in a third world country.
Visiting gramps at the home won't just be a Sunday outing anymore. This
presentation was so bizarre, you would have to hear it to believe it.”
#############################
12/28/2013,
“Barbara
Franklin helps seniors grow old with dignity,” by Wevonneda Minis,
The Charleston South Carolina Post and Courier
Quote:
"It was 1990, and a relatively unfamiliar specialty in the insurance
industry was becoming more well-known. While insurance wasn't a
professional road Barbara Franklin had considered traveling, the new
long-term care insurance being marketed by American Express piqued her
interest and she joined its sales team."
LTC Comment:
This article profiles Center Premium Member and long-time supporter,
colleague and friend Barbara Franklin of Charleston, South Carolina. As
you'll see from the article, Barbara is a prime example of the many
top-notch people dedicated to long-term care planning.
#############################
12/26/2013,
“Elder
Care Options: Help Clients Get Help,” by Jessica Ness, Financial
Planning
Quote:
"Most commonly, clients cover the cost with long-term care policies,
because geriatric care managers can qualify as private care help. If the
bill needs to be paid out-of-pocket, however, our recommendation for doing
so depends on the financial resources and status of the patient. Patients
who have the financial means should pay the bill and perhaps look to
reduce the burden by writing off the medical expense. If the patient is
getting financial help from a relative or other loved one, that person
could pay the provider directly to avoid making a gift. And if the patient
is considered a dependent, the custodian could use their pre-tax HSA
dollars."
LTC Comment:
LTC policies are the best option, of course, but most people are
unprepared and end up with the other options, which may include ending up
in a Medicaid nursing home.
#############################
12/25/2013,
“Guest: Depending on observation status, Medicare may not cover a hospital
stay Medicare patients can be subject to exorbitant hospital bills if they
don't carefully check their patient status [link],”
by Tony Provine, Seattle Times
Quote:
"Medicare currently requires that patients have at least three consecutive
days of 'inpatient status' in the hospital to qualify for recovery time in
a skilled-nursing facility. Yet some patients are unknowingly kept in the
hospital under a different category called 'observation status.' When this
happens their admission is not covered by Medicare. Also, while
hospitalized they can be subject to multiple co-payments for various
medications, procedures and tests."
LTC Comment:
When the Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) repealed
Medicare’s three-day hospitalization requirement (for SNF coverage),
private LTC insurance policies dropped the same requirement. But Congress
repealed MCCA ’88 one year later thus reinstating the Medicare rule.
Private insurance policies never did return to the earlier more
restrictive system.
#############################
12/23/2013,
“Connecticut
rejects LTCI rate hike request,” by Allison Bell, LifeHealthPRO
Quote:
"The Connecticut Insurance Department is refusing to let an insurer
increase premiums for the holders of 28 individual long-term care
insurance (LTCI) policies."
LTC Comment:
What’s the alternative? Follow the government’s plan for Medicare and
Social Security, i.e., let the unfunded liabilities build up until
the programs collapse?
#############################
12/23/2013,
“How
Seniors Manage to Adapt,” by Judith Graham, New York Times
Quote:
“Many older adults want to live independently, without relying on
assistance from others, for as long as they can. But how often does that
actually happen? A study published recently in the American Journal of
Public Health attempts to answer the question by examining
how seniors adapt to disability, an issue that hasn’t received much
scholarly attention. . . .
“And the results: an
estimated 12 million older adults are fully able to manage on their own
without any type of help (31 percent of all seniors on Medicare); 9
million have successfully adapted to disability (25 percent); 2.1 million
have reduced their activities without acknowledging limitations (6
percent); 7 million find it hard to function independently (18 percent);
and 7.7 million received assistance with at least one task over the last
month (about 20 percent, including 1.1 million seniors living in nursing
homes).”
LTC Comment:
What more do you need to know before starting to plan responsibly for
long-term care?
#############################
Updated, Friday, January 3,
2014, 1:35 PM (Pacific)
Seattle—
#############################
LTC BULLET: MINNESOTA MEDICAID
ABORTS MOVE TO FOUR ADLS
LTC Comment: If home
care saves Medicaid money, why would Minnesota change from requiring one
ADL to four ADLs for recipients to qualify for its home care waiver? The
answer after the ***news.***
*** CLTCR Premium Membership -- Center for
Long-Term Care Reform premium members receive our full suite of
individual membership benefits including: our LTC Bullets and
E-Alerts; access to our Members-Only Zone website and Almanac
of Long-Term Care; subscription to our
Clipping Service; and email/phone access to Steve Moses for 24-hour
turnaround queries. Our Premium Membership is designed to give you a
competitive advantage in your long-term care profession. Your increased
knowledge of the critical issues and challenges we face in the field of
long-term care service delivery and financing equals improved professional
success for you and better LTC services for your clients and for those who
have no choice but to rely on scarce public resources. Premium Membership
is $250 per year, paid up front or monthly by automatically recurring
credit card payments. Contact Damon at 206-283-7036 /
damon@centerltc.com to start your Premium Membership
immediately or go directly to our secure online subscription page and
sign up for as little as $21 per month. ***
*** ILTCI CONFERENCE.
The 14th annual Intercompany Long-Term Care Insurance
Conference will convene March 16-19, 2014 at the Rosen Centre in Orlando,
Florida. Get all the details and register
here. Chris Gardner will keynote the event on opening day. His life
was the basis for the book and movie “The Pursuit of Happyness.” The
conference will close with a general session on “The Future of the
Industry,” by Marc Cohen, a nationally known and highly regarded industry
analyst. In between the opening and closing general sessions, you can
expect the usual high caliber presentations, peerless networking, and
excellent food and drink. This is a convocation not to be missed if you
can manage it. Damon and I will be there to cover the program and report
on it. Say hello if you attend and, if you don’t (rue the thought), then
watch for our “LTC Embed” accounts of the action. ***
*** THE INSTITUTE FOR
THE AGES will host its Seventh Annual International Conference on Positive
Aging on Florida's Gulf Coast, February 9-12, 2014, at Sarasota's Hyatt
Regency. Registration for the conference is open, with Early Bird rates
offered through December 30. Tickets may be found online at
www.positiveagingconference7.eventbrite.com. For more information
about the Conference program, travel , hotel arrangements and other
details, visit
www.positiveagingconference.org. ***
#############################
LTC BULLET: MINNESOTA
MEDICAID ABORTS MOVE TO FOUR ADLS
LTC Comment:
Minnesota planned effective January 1, 2014 to jump from requiring one ADL
for Medicaid recipients to qualify for home-based LTC benefits to four
ADLs. Read all about it in the Minneapolis Star Tribune
here. This was the plan in a nutshell:
“Starting in January,
thousands of low-income elderly Minnesotans could lose government benefits
intended to help them stay in their homes and out of nursing care.
“In an effort to
constrain runaway Medicaid spending, Minnesota is implementing stricter
rules that will make it harder for senior citizens to qualify for
home-based services, potentially leaving them with reduced care or no care
at all. . . .
“Until now, it has
been relatively easy for poor Minnesotans to qualify for the program. It
was enough to show that they needed assistance in one basic activity of
daily living, such as help with bathing or dressing.
“Under the new
criteria, seniors must show that they need assistance in at least four
activities of daily living; or, alternatively, they need help in a single
critical activity such as toileting or transferring, for example, moving
from a bed to a wheelchair.”
This new tougher rule
was not implemented. Minnesota Governor Mark Dayton postponed the change
for a year due to “an outcry from advocates for senior citizens and the
poor.” Find details on the delay
here.
What’s going on?
First, why would Minnesota Medicaid cut home care services to save money
if home care itself is supposed to save money? Second, why would the
Governor delay the change if it makes sense? The answers are an object
lesson in why and how Medicaid distorts the long-term care market.
The answer to the
first question is that Minnesota Medicaid would not seek to cut home care
services if they really did save money. They do not. No empirical
evidence shows that home care saves money. It tends to delay, but not
prevent institutionalization, thus causing higher costs overall. State
Medicaid expenditures for all long-term care—home and community-based care
and nursing home care combined—continue to rise rapidly everywhere.
Furthermore, the availability of home care makes Medicaid much more
attractive than when nursing home care was its only option. Thus, when
home care is offered, the public is less likely to plan privately for
long-term care and more likely to rely on Medicaid. Consequently, LTC
expenditures, especially for home-based services, continue to skyrocket.
The answer to the
second question is that the senior lobby and groups claiming to represent
the poor brought political pressure to bear on the Governor leading to his
decision to delay the change from one to four ADLs. The irony is that
seniors and the poor do not benefit from programs to make Medicaid more
attractive. The reason is that loose financial eligibility criteria make
it too easy for middle class and affluent people to qualify for Medicaid
LTC benefits. By admitting too many people to Medicaid, the Medicaid
program has distorted the market for long-term care resulting in the
public’s denial of LTC risk, their failure to save, invest or insure for
long-term care, and Medicaid’s burgeoning and insupportable LTC
expenditures. Those consequences do not help, rather they hurt the poor.
To put the issue in
broader historical perspective, this is how Medicaid distorted the LTC
market. It made nursing home care free in 1965 which resulted in (1)
widespread and unnecessary use of nursing homes for custodial care
(Medicaid’s institutional bias), (2) public indifference to LTC risk and
cost which prevented successful development of private LTC financing
alternatives (LTC insurance and home equity conversion), and (3) impeded
growth of a private home care infrastructure and delivery system. We’re
living with the consequences of these market distortions to this day.
What is changing is
that state governments can no longer evade the budgetary consequences of
providing most long-term care through Medicaid, a defacto entitlement
masquerading as a means-tested public assistance program. The only thing
propping up Medicaid’s LTC financing is the federal government’s ability
to borrow and spend beyond its means. At some point, the federal deficit
and debt will sow doubt among lenders (domestic and foreign bond holders)
who will no longer provide needed funds except at higher interest rates.
Higher interest rates will make servicing the federal debt impossible.
States, which constitutionally cannot run budget deficits indefinitely,
will be left holding the bag.
When economic gravity
again prevails, the current system will come crashing down. The lesson in
all this is that state Medicaid programs should seek to return the program
to what it was intended originally to be—a safety net for the poor. When
middle class people and the affluent really do have to spend down their
own resources, including home equity, for long-term care, they will begin
to understand why planning for LTC is necessary. That process has already
begun as we’ve successfully curtailed Medicaid abuse over the years by
requiring transfer of assets penalties, extending the look back period,
mandating estate recoveries, and capping the home equity exemption. Much
remains to be done, but Minnesota’s aborted effort to save money by
cutting home care services is evidence the pressure for such changes
remains heavy.
The lesson for
individuals and families is that people who want access to quality home
care when they need LTC someday had better plan to pay privately. The
Medicaid safety net will no longer catch them, at least not for home care
and, in the future, probably not even for nursing home care.
#############################
Updated, Monday, December 23,
2013, 2:52 PM (Pacific)
Seattle—
#############################
MERRY CHRISTMAS AND LTC NEWS AND COMMENT
LTC Comment: With Christmas Eve tomorrow, everyone’s probably too busy to
read today’s LTC E-Alert. But just in case your eye scans this
title in your email in-box, we wanted to wish you Happy Holidays. Thanks
for your support of the Center for Long-Term Care Reform and for the
critical work you do all year long to advance our common mission—better
long-term care for all Americans.
#############################
12/21/2013,
“State
to Cut Medicaid Benefits for the Elderly,” by Chris Serres,
Minneapolis Star Tribune
Quote:
“Starting in January, thousands of low-income elderly Minnesotans could
lose government benefits intended to help them stay in their homes and out
of nursing care.
“In an effort to constrain runaway Medicaid spending, Minnesota is
implementing stricter rules that will make it harder for senior citizens
to qualify for home-based services, potentially leaving them with reduced
care or no care at all. . . .
“Until now, it has been relatively easy for poor Minnesotans to qualify
for the program. It was enough to show that they needed assistance in one
basic activity of daily living, such as help with bathing or dressing.
“Under the new criteria, seniors must show that they need assistance in at
least four activities of daily living; or, alternatively, they need help
in a single critical activity such as toileting or transferring, for
example, moving from a bed to a wheelchair.”
LTC Comment:
Rebalancing from skilled nursing to home care is supposed to save Medicaid
money. So why is Minnesota cutting home care to save money? Simple.
Rebalancing doesn’t save money. It makes Medicaid more attractive. Home
care and nursing home expenditures continue to rise in tandem. The only
way Medicaid can fund a true continuum of care is to target benefits to
the needy, reduce caseloads, and divert many more people to private
financing alternatives.
#############################
12/19/2013,
“Senate
panel still thinking about public LTC options,” by Allison Bell,
LifeHealthPRO
Quote:
"Scott, who joined the Senate in
January, pointed out that he is the grandson of a grandmother who died of
Alzheimer's in 2001 -- and an insurance agent who sold private LTCI
policies.
"Scott said he thinks the right kind of support could help private LTCI
benefit as many as 40 percent of Americans.
"He said one major problem with any kind of voluntary LTCI program is that
letting workers know LTCI benefits are available is much different from
actually getting workers to sign up for coverage, especially given how
many people think Medicare or ordinary health insurance will pay for
nursing home care.
"‘The misinformation really takes away the motivation,’ Scott said.
"But the emphasis has to be on making as much use of private programs as
possible, because the country is having a hard time paying for the public
benefits programs it already has, Scott said."
LTC Comment:
A former LTC insurance salesman who is a “tireless advocate for smaller
government, lower taxes, and restoring fiscal responsibility in
Washington” is now in the United States Senate. Don’t expect a sea change
in LTC policy overnight, but that has to be a good thing.
#############################
12/19/2013,
“Oregon State Fines Bankers Life $115,000 for Mishandling Long-Term Care
Claims, Denying Benefits Without Full Investigation [link],”
Albany Tribune
Quote:
"The Oregon Insurance Division has fined Bankers Life and Casualty
Company, one of the state's largest long-term care insurers, $115,000 for
improper claims handling."
LTC Comment:
Another black eye for the embattled carrier.
#############################
12/19/2013,
“Senators weigh need for individual mandate in long-term care financing
reform [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Senators and panelists alike agreed that the current system is broken and
that it is all but impossible for individuals to prepare for LTC needs in
the absence of a stable insurance option, either public or private."
LTC Comment:
Yet another Congressional hearing that ignores the underlying problem and
proposes "solutions" that would make the LTC financing system even worse.
Forcing people to buy LTC insurance might be seductive to the LTCI
industry, but consider how the "individual mandate" worked out for the
acute health care industry. Ironically, LTC financing isn't hard to fix.
All that's needed is to recognize the real problem: easy access to
government financed LTC after the insurable even occurs. Change that,
give Medicaid back to the needy, and hold others accountable for their own
LTC expenses and most will begin to take responsibility to plan and insure
for their own LTC.
#############################
12/18/2013,
“Association Announces Long Term Care Insurance CEO Forum Participants [link],”
by Jesse Slome, PR.com
Quote:
"The five panel participants announced today are:
Michael Doughty, President and General Manager, John Hancock Insurance
Michael Hamilton, Vice President, Lincoln Financial Group
Tim Kneeland, President, Transamerica Long Term Care
Scott McKay, Senior Vice President, Genworth Financial
Steve Sperka, President & CEO, Northwestern Long Term Care Insurance
Company"
LTC Comment:
The 2014 Long-Term Care Insurance Solutions Summit will convene May 18-20,
2014 in Kansas City. Registration is only $99. Check out all the details
here: http://www.aaltci.org/2014summit/.
#############################
12/18/2013,
“Social
Security to run 12% deficit for next decade,” by Stephen Dinan,
Washington Times
Quote:
"Social Security has been running in the red for several years and will
see a 12 percent gap between the taxes it’s collecting and the benefits
it’s projected to pay out over the next 10 years, according to a report
Tuesday from the
Congressional Budget Office."
LTC Comment:
That shortfall is part of the 20 percent of the entire federal budget that
we’re borrowing.
#############################
12/17/2013,
“Carrier
updates LTCI commission structure,” by Allison Bell, LifeHealthPRO
Quote:
"An insurer says it will return to an older, higher sales commission
structure for some long-term care insurance (LTCI) products sold in some
states."
LTC Comment:
A nice little package under the tree from Genworth.
#############################
12/17/2013,
“2014
Long Term Care Insurance Predictions Released By AALTCI,” by Jesse
Slome, ExpertClick
Quote:
"'We expect sales of individual long term care insurance policies will
increase between eight and 10 percent next year, though I wouldn't be
surprised if growth was more than that,' declares Jesse Slome, director of
the American Association for Long Term Care Insurance, the national trade
organization. . . . Slome notes that election year politics at both the
Federal and State level will refocus attention on the potential collapse
of Medicaid. 'There will be a lot of finger pointing and dire predictions
all of which will make Americans aware that government programs are not
the desired solution,' Slome notes. 'Those with the ability to plan for
their own future will recognize the importance of planning and long term
care insurance provides a most viable alternative.'"
LTC Comment:
I agree that the implosion of ObamaCare and the increasing volume of
reportage about budget shortfalls, excessive borrowing, and unfunded
entitlement liabilities will create a growing sense of unease among
consumers. Whether that will translate into significantly higher LTCI
sales . . . we’ll just have to wait and see.
#############################
12/17/2013,
“Retirement
myths you need to ignore,” by Anthony Volastro, NBC News
Quote:
"Myth # 3: You're too young to start paying for long-term care.
Long-term care could be the next major retirement crisis in America. The
Department of Health and Human Services expects that some 70 percent of
Americans over the age of 65 will need it at some point. Currently, only
about 8 million Americans have long-term care coverage."
LTC Comment:
Well, thank you NBC. More of the same kind of advice would be welcome.
#############################
12/17/2013,
“Employed Family Caregivers Providing Complex Chronic Care: A report of
the AARP Public Policy Institute and the United Hospital Fund [link],”
by Susan C. Reinhard, Carol Levine, and Sarah Samis
Quote:
"This report shows that employed family caregivers, despite their
workplace obligations, perform many of the tasks that health care
professionals do-a range of medical/nursing tasks including medication
management, wound care, using meters and monitors, and more. While an
earlier report from the authors documented that nearly half of family
caregivers nationally performed these types of tasks-in addition to
familiar personal care and household supports-the new report is the first
to document that those who have the responsibilities of full- or part-time
employment take on this high level of support in similar proportions."
LTC Comment:
This report may help persuade younger generations to insure against LTC
risk and cost--for their parents and themselves.
#############################
12/16/2013,
“5
predictions for the LTC insurance industry in 2014,” by Stephen D.
Forman, LifeHealthPRO
Quote:
"As we look ahead to the
New Year and ponder what changes lie in store for our beloved long-term
care insurance industry, this author finds it easiest to place into five
categories the major influences which impact whether 2014 will be sweet or
sour.
. . . There's no greater impediment to LTCI sales than government's 'free
inheritance insurance for prosperous heirs,' as
Steve Moses describes Medicaid. 2014 will see 9 years since the
Deficit Reduction Act was passed — the last real attempt to curb Medicaid
abuse — and time for renewed attention."
LTC Comment:
Another thought-provoking
piece by Center supporter and corporate member Stephen Forman of Long Term
Care Associates.
#############################
12/16/2013,
“Long-term
care is free,” by Romeo Raabe, LifeHealthPRO
Quote:
“The partnership concept was designed to give an incentive to Americans
of modest means to purchase at least some long-term care (LTC) insurance.
. . . This should have triggered a considerable number of people
purchasing some LTCI, but nothing happened. Nobody knew the program
existed.”
LTC Comment:
Center for Long-Term Care Reform Regional Representative Romeo Raabe is a
passionate advocate for LTCI and the LTC Partnership program, but
Wisconsin is a hard nut to crack.
#############################
12/16/2013, “In
denial that you've reached middle age? A survey identifies some telltale
signs,” by Margaret Shapiro, Washington Post
Quote: "The 2,000
people
surveyed by Benenden, a health-care and insurance firm, also made
clear that middle age was no longer something for 30- or 40-year-olds to
worry about. The life change, they said, began at 53. In fact, nearly half
of the older-than-50s who were surveyed said they personally had not
experienced ‘middle age’ yet."
LTC Comment:
So, 53 is the new 40.
#############################
12/16/2013,
“Columnist Ellen Goodman wants families to have end-of-life talks before a
crisis hits [link],”
by Richard Harris, Washington Post
Quote:
"In a survey it commissioned, The Conversation Project found that more
than nine in 10 Americans think it's important to talk about their own and
their loved one's wishes for end-of-life care, but fewer than three in 10
actually engage in these conversations."
LTC Comment:
So a little over half, six in ten, think they should have the end-of-life
conversation, but don’t. Kind of a sad commentary.
#############################
12/16/2013,
“Groups
call for tough LTCI rate rules,” by Allison Bell, LifeHealthPRO
Quote:
"The groups want regulators to create new conversion rights for any LTCI
policyholder who has held a policy 10 years or more. If an LTCI policy
rate increase occurs after a consumer has owned a policy for 10 or more
years, the consumer should be able to convert to a paid-up policy with
benefits equal to the amount of premiums paid, the groups say."
LTC Comment:
I wonder what a “paid-up” policy would look like after only 10 years.
#############################
12/16/2013,
“Expanded Medicaid's fine print holds
surprise: 'payback' from estate after death [link],”
by Carol M. Ostrom, Seattle Times
Quote: "As thousands of state residents enroll in Washington's
expanded Medicaid program, many will be surprised at fine print: After
you're dead, your estate can be billed for ordinary health-care expenses.
State officials are scrambling to change the rule."
LTC Comment: With easy financial eligibility rules getting even
easier under ObamaCare, the only remaining disincentive (other than poor
access and quality) to shift health and LTC costs to the government is the
requirement we got into federal law in 1993 that people repay the welfare
benefits they receive from their estates. Otherwise, Medicaid operates as
free inheritance insurance for affluent heirs instead of as a safety net
for the poor. Such perverse incentives are ruining Medicaid and
bankrupting government.
#############################
Updated, Friday, December 20,
2013, 10:37 AM (Pacific)
Seattle—
#############################
LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?
LTC Comment: Our annual
report on the Center for Long-Term Care Reform’s year follows the
***news.***
*** MEMBERSHIP BENEFITS.
Let’s take a moment to review the benefits of individual and corporate
membership in the Center. For more details, see our “Membership
Levels and Benefits Schedule.”
In a nutshell, as a
regular member of the Center ($150 per year or $12.50 per month),
you’ll get our weekly LTC Bullets and LTC E-Alerts and a
user name and password for access to our “Members-Only Zone.”
In “The Zone,” you’ll find
the “Almanac of Long-Term Care,” our compendium of LTC news,
reports and statistics stretching back more than a decade with links to
critical research materials covering eleven topics from “Aging
Demographics” to “Unfunded Liabilities.”
Other features in The
Zone include key Medicaid and Medicare numbers updated yearly and
archived, a transcription of our highly regarded “Long-Term Care Graduate
Seminar,” links to the major current and past “Long-Term Care Cost
Surveys,” a couple dozen reasons why veterans should not rely on VA
benefits for long-term care and much more.
If you’re really serious
about a career in long-term care financing, then join the Center as a “Premium
Member” ($250 per year). At that level, you’ll have all the benefits
of regular membership plus email and phone access to Steve Moses with a
24-hour turnaround and a subscription to our “Clipping Service,” placing
you on the pioneering forefront of up-to-the moment news, data and
analysis in your field.
Premium Elite members ($500
per year) get all of the above plus a complimentary LTC Bullet or
LTC E-Alert sponsorship with a banner ad, complimentary Center
membership for one assistant, and quickest-turnaround email and phone
access to Steve Moses.
Regional Representative
members ($500 per year) get all of the above and, after they meet all the
qualifications—including five years qualified experience and completion of
our LTC Graduate Seminar—the status of Regional Representative of the
Center for Long-Term Care Reform.
Every member of the Center
gets the “Big Benefit”: the knowledge and personal satisfaction
that you're supporting the indefatigable research and public policy
advocacy of the Center for Long-Term Care Reform.
Corporate membership at the
Bronze, Silver, Gold and higher levels is also available. Each level
includes the same benefits individual members receive for increasing
numbers of employees or producers plus additional benefits exclusively for
corporate members. ***
LTC BULLET: WHAT HAVE YOU
DONE FOR ME LATELY?
LTC Comment: 2013 was a
frustrating year for long-term care policy. We waited month after month
for the LTC Commission to be appointed only to wait longer for them to
begin deliberations and finally to produce an anti-climactic report which
fell on deaf ears. It was another fruitless effort and lost opportunity,
despite the valiant efforts and hard work of a few clear-thinking members.
Then implementation of the
Affordable Care Act, alias ObamaCare, stole the national spotlight. So
far, no one has formally identified the third graders who designed
Healthcare.gov, but rumor has it they are being held back for a year. In
fact, the whole Rube Goldberg scheme to hijack health care is failing
fast. Now we worry, was that their goal in the first place—to pave the
way for a single-payer system? Will they snuff out the last embers of a
free market in health care or will a better system rise like a Phoenix
from the ashes, sloughing off both ObamaCare and the crony capitalist
mixed system that preceded it?
In the meantime, the only
viable alternative to welfare-financed long-term care is less than
healthy. More long-term care insurance carriers left the business or
raised premiums and regulators threaten to make life even more difficult
for the brave companies and souls who remain. The Federal Reserve plans
to keep interest rates near zero for at least another year propping up
government’s deficit spending and Medicaid expansion while devastating the
private insurance industry’s financial reserves and destroying its
customers’ ability to afford its products.
Nor is home equity
conversion yet a viable financing source for long-term care. Starting
January 1, 2014, Medicaid’s home equity exemption increases from a minimum
of $543,000 in most states to a maximum of $814,000 in 13 states. That
travesty is only exceeded by the widespread abuse of Medicaid-compliant
annuities, which were granted a longer lease on life by three major court
cases this year. The wealthy can easily divest unlimited amounts of
money, qualify for Medicaid LTC overnight, and crowd out poor people from
the best long-term care by paying privately for awhile.
How bad is this situation?
That’s exactly the question we set out to answer with the “Index of
Long-Term Care Vulnerability” which figures prominently in the Center’s
2013 publications discussed below. It’s probably too late now to avoid a
catastrophic financial meltdown, so what’s important next year is to
understand the risk and do whatever we can do to mitigate the damage.
That will remain the Center for Long-Term Care Reform’s focus in 2014.
Nevertheless, we expect
2014 to begin a turnaround. Disenchantment with Medicaid expansion on the
acute and long-term care sides will grow. Political support for
ever-more-deficit spending with borrowed funds will decline.
Disillusionment with entitlement programs and increasing evidence of their
unfunded liabilities will compel thoughtful citizens to reassess their
retirement risks and take more personal responsibility. The more of them
who do so the less disastrous the inevitable collision with financial
reality will be when it occurs.
On that happy note, let’s
turn to the Center for Long-Term Care Reform’s year in brief.
LTC Bullets
The Center for Long-Term
Care Reform endeavors every year to keep our members educated and updated
about important news and developments bearing on long-term care financing
policy.
Once a week, usually on
Fridays, we publish our LTC Bullet. The Bullets are often
policy pieces, sort of like op-eds. You can always find the five latest
Bullets
here and archives of all 1025 Bullets (so far), by date
here and by topic
here. These 1000 plus articles are a valuable historical resource.
Make use of them.
In 2013, to celebrate the
Center’s 15th anniversary (April 1, 2013) and our thousandth
LTC Bullet (published May 25, 2013), we began a retrospective series
highlighting the most interesting and dramatic LTC Bullets that
we’ve published since the Center’s founding in 1998. We’ve completed four
of our seven main topical areas. Check them out as compiled, edited and
published by Damon:
“LTC
Bullet: The LTC Problem and Solutions: Thousand Bullets Retrospective”
“LTC
Bullet: Reality Check: The Facts on LTCI: Thousand Bullets Retrospective”
“LTC
Bullet #1,000: Medicaid Planning: Thousand Bullets Retrospective”
“LTC
Bullet: LTC Services: Thousand Bullets Retrospective”
In 2014, we’ll bring you
the remainder of our retrospective series covering these topical areas: “Politics
and Legislation”; “Demographics and Other Data”; and “CLTCR News.” Stay
tuned.
Highlights of our 2013
LTC Bullets include:
January:
So What If the Government Pays for Most LTC?, 2011 Data Update
February:
Bipartisan Congressional Blast at New York Medicaid
March:
National LTC Commission Disbanded: Did this April Fool’s report by
spokesman “Tungan Sheek” catch you off guard?)
April:
SCAN the LTC Possibilities
May:
Let’s Play LTC Jeopardy
June:
The Role of Estate Recoveries in LTC Financing
July:
Medicaid Spend Down that Isn’t and Why it Matters
August:
Do the Rich Benefit from Medicaid?
September:
The Tarnished Name of Assisted Living
October:
Why Don’t Children Buy LTCI for Parents?
November:
Annuity Blues
December: A twofer:
Government LTC is Getting Old announced publication of our Georgia
report and
The Index of Long-Term Care Vulnerability: A Case Study in Virginia.
The Center for Long-Term
Care Reform published a total of 43 LTC Bullets in 2013.
LTC E-Alerts
Our LTC E-Alerts
serve a different purpose than the Bullets. We scan the print and
electronic literature on long-term care services and financing every day.
We identify the articles, speeches and reports that we consider most
important for Center members to read, hear or see. Then we cite them by
date, title and author; we provide a representative quote from the source;
and we give our “take” on what it means in our “LTC Comment.”
The main idea behind the
LTC E-Alerts is to lift the burden of time-consuming research off the
shoulders of LTC professionals whose time is better spent providing
financial planning advice to clients, selling long-term care insurance,
counseling borrowers on home equity conversion, or supplying any of the
many other critical services our members provide. It’s called “division
of labor.” We have to stay abreast of everything that’s happening in the
popular and professional media. We pore over tons of material so you
don’t have to spend nearly as much time doing so.
The Center for Long-Term
Care Reform published a total of 38 LTC E-Alerts in 2013.
LTC Clipping Service
2013 was our second year
offering a clipping service in real time. In addition to getting a
summary of the news and key professional developments once a week, we send
our clipping service subscribers an average of three items per work day.
Reading them on the go keeps your professional knowledge at a peak
minute-by-minute. They make a nice break from other duties. And you’re
probably more likely to read a few items per day than to go through the
whole list of publications in the weekly LTC E-Alerts at a sitting.
We explained all the
details and pricing for the LTC Clipping Service in
LTC Bullet: New LTC Clipping Service. Check it out. If you’d like
to subscribe, contact Damon at 206-283-7036 or
damon@centerltc.com.
The Center for Long-Term
Care Reform published a total of 742 LTC Clippings so far in 2013 or
roughly 2.1 per calendar day and 3.0 per work day.
Publications
The Center for Long-Term
Care Reform published three major reports in 2013. One more is pending
and we hope to report its publication before the end of this year. Check
them out at these links:
Maximizing NonTax Revenue from MaineCare Estate Recoveries, Center for Long-Term Care Reform, Seattle, Washington, May 15, 2013.
The Index of Long-Term Care Vulnerability: A Case Study in Virginia,
published simultaneously on November 26, 2013 by the
Thomas Jefferson Institute and the Center for Long-Term Care Reform
(archived
here.)
The Index of Long-Term Care Vulnerability: A Case Study in Georgia,
published simultaneously December 3, 2013 by the
Georgia Public Policy Foundation and the Center for Long-Term Care
Reform (archived
here.)
Pending publication:
The Index of Long-Term Care Vulnerability: A Case Study in New Jersey.
Our three most recent study
reports all carry the title “The Index of Long-Term Care Vulnerability.”
The Index is a seven-part analytical tool with numerous subparts designed
to help legislators and policy-makers measure the sustainability of their
states’ Medicaid and long-term care financing systems. Its objective and
empirical metrics facilitate analysis of Aging Demographics, Morbidity,
Medicaid viability, Federal financing, State financing, Private financing,
and Entitlement mentality as these factors will impact long-term care in
the future. In each of our “Index” reports, you will find a version of
the Index filled out by Steve Moses and another blank version which you
are invited to fill out based on your own opinion of how each of the key
factors should be weighted and scored.
Other publications by the
Center this year included:
“States Decry Medicaid LTC
Loopholes,” Long Term Care News, Issue Number 34, June 2013, pps.
20-23.
“Government Role in
Long-Term Care: It's Getting Old,” op-ed posted on December 6, 2013 by
the Georgia Public Policy Foundation (link0
“Government's role in
long-term care is getting old,” The Columbia County News-Times,
December 11, 2013 (link)
Speeches
Steve Moses addressed 125
LTCFP partners at their annual all-partners meeting in San Diego on
January 12, 2013; 15 dinner guests of the Maine Heritage Policy Center in
Bangor, Maine on May 22, 2013 regarding MaineCare’s long-term care
program, our studies, and the importance of estate recovery; 60 luncheon
guests of the Maine Heritage Policy Center in Portland, Maine on May 23,
2013 on the same topic; 40 attendees and a live C-SPAN 2 audience
at the American Enterprise Institute on May 31, 2013 for a program titled
“Long-term
care: Markets or mandates?” Video here:
http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/;
70 agents on an AIM webinar on July 30, 2013 titled "Long Term Care Update
-- Congressional Committee Status"; 40 MBA and other students at the
Wharton Business School by Skype video on September 18, 2013; 40 state
attorneys at the 46th Annual Conference of the American
Association of Public Welfare Attorneys in Newport, Rhode Island on
November 12, 2013 and 28 attendees at the Virginia Health Care Round Table
on December 12, 2013 sponsored by the
Thomas Jefferson Institute for Public Policy.
Plans for 2014
We’re still formulating our
strategy for the coming year. A likely target of our efforts is the
egregious abuse of Medicaid-compliant annuities which we documented this
year in two of our reports. We have in mind a research project to review
the loophole in federal law that enables the practice and to document more
cases like the $450,000 and $900,000 examples we discovered this year. If
we can get the support for such a study and conduct it, we’ll produce the
evidence and argument to convince Congress to end this Medicaid planning
gimmick.
Further plans involve
refining the Index of Long-Term Care Vulnerability, applying it in more
states, and bringing the results to the attention of the powers-that-be
who can adjust course and improve likely future outcomes.
Season’s Greetings
All in all, 2013 was a
challenging year for long-term care financing and for your Center. We
look forward to a better 2014 as the ground becomes more fertile for
public policy research and advocacy. The pendulum has begun to swing
back, away from expansion of government dependency and toward more fiscal
responsibility.
We wish our many friends
and members a Merry Christmas and Happy New Year.
The Center’s Clipping
Service will continue without interruption, but for everything else, we’ll
see you next year.
#############################
Updated, Monday, December 16,
2013, 3:42 PM (Pacific)
Seattle—
#############################
O’CARE EXPLAINED IN ONE PARAGRAPH AND LTC NEWS AND COMMENT
LTC Comment: I
usually dislike “fram”— email spam from friends. But this item,
purporting to represent Donald Trump’s one-paragraph assessment of
ObamaCare, caught my eye:
“Let me get this
straight.... We're going to be ‘gifted’ with a health care plan we
are forced to purchase and fined if we don't, which
purportedly covers at least ten million more people, without
adding a single new doctor, but provides for 16,000 new IRS
agents, who have recently demonstrated their objective and
professional integrity; written by a committee whose chairman says he doesn't
understand it, passed by a Congress that
didn't read it but exempted themselves from it, and
signed by a President who smokes, with funding administered
by a treasury chief who didn't pay his taxes, for which
we'll be taxed for four years before any benefits take effect, by a
government which has already bankrupted Social Security and Medicare, Fannie
Mae and Freddy Mac, and the Post Office all to be overseen by a surgeon
general who is obese, and financed by a
country that's broke!!!!! 'What . . . could possibly go
wrong'??”
#############################
12/13/2013,
“First-ever CDC report: Nursing homes provide most long-term care
nationwide, alternative settings gain ground in the West [link],”
by Tim Mullaney,
Quote:
"Research has shown home- and community-based care is increasing at a
faster rate than nursing home care, the report states. However, nursing
homes are still by far the most prevalent long-term care settings in most
regions, the NCHS research found.”
LTC Comment:
But combined HCBS and nursing facility costs continue to increase rapidly
giving the lie to the notion that rebalancing from institutional to home
care saves money. So what? We should make the change even if
it doesn’t save money. The key is to rely less on Medicaid and more
on private financing for LTC. Otherwise, publicly funded care in all
venues will continue to grow out of control.
#############################
12/12/2013,
“Cancer
deaths rise to 8.2 million, breast cancer sharply up,” by Kate Kelland,
Reuters
Quote:
“The global death toll from cancer rose to 8.2 million in 2012 with sharp
rises in breast cancer as the disease tightened its grip in developing
nations struggling to treat an illness driven by Western lifestyles.
Cancer deaths were up 8 percent from 7.6 million in a previous survey in
2008 and breast cancer killed 522,000 women last year, up 14 percent in
the same period, according to the World Health Organisation's
International Agency for Research on Cancer (IARC)."
LTC Comment:
Take note, CI.
#############################
12/12/2013,
“5
Steps To A More Affordable Retirement,” by Barbara Davis, Forbes
Quote:
"Long-term
care insurance policies can help hedge your risk. If you’re able to
afford the monthly premiums, buying a policy in your 50s or early 60s
might be a smart investment to tamp down potential retirement costs."
LTC Comment:
Good advice.
#############################
12/11/2013,
“Genworth CEO Would Support Public/Private Long-Term Care Insurance [link],”
by Howard Gleckman, Forbes
Quote:
"After Thomas J. McInerney took the helm of insurance giant
Genworth Financial
GNW +0.67% Inc. last January, he ordered an intensive review of the
firm’s long-term care insurance business. Genworth was one of the biggest
players in the market, but the industry was struggling and investors
unhappy. . . . McInerney . . . says is looking at ways to
create a joint public/private insurance product where government would
assume risk for catastrophic care. McInerney’s interest in such a solution
is a major change for Genworth, which in the past had been skeptical of a
public/private partnership."
LTC Comment:
It's good to know the person at the helm of Genworth is thinking
creatively, but none of the ideas for reforming LTC insurance and LTC
financing discussed in this article address the basic problem:
Medicaid LTC eligibility is easy to get after the insurable event occurs.
Fix that and everything else falls into place. Leave it alone and
most people won't buy LTCI regardless of its form, tax deductions,
education campaigns or any other public efforts to encourage its purchase.
What's so hard to grasp? Doesn't half a century of experience teach
us anything?
#############################
12/12/2013,
“On
Avoiding Long-Term Care Insurance,” Susan Kaplan, Wall Street
Journal
Quote:
"Although it seems like blasphemy, I don't recommend that clients purchase
long-term care coverage. It's a burden on clients who have to move heaven
and earth to pay extremely high premiums. Further, the odds that your
client will continue paying for coverage until they actually need it are
slim."
LTC Comment:
I'm undecided whether ignorance or stupidity prevails in this article, but
both are present in nearly every sentence.
#############################
12/12/2013,
“More
than 8 million use long-term care services in USA,” by Sharon Jayson,
USA Today
Quote:
"More than 8 million people (mostly women and mostly older than 65) used
services of a long-term care provider last year, according to the
first-ever compilation of federal data profiling the types of providers in
the USA and the people who use them. The report, released Thursday, is
based on the National Study of Long-Term Care Providers, a new effort by
the National Center for Health Statistics to get a better handle on the
options for care and determine trends. . . . The five areas of paid,
regulated providers are adult day service centers, home health agencies,
hospices, nursing homes, and assisted living and similar residential care
communities. The report for 2012 includes some 2011 data; officials say
numbers will be updated every two years."
LTC Comment:
America’s LTC service delivery system has changed radically over the past
five decades. Starting in 1965, free nursing home care provided by
Medicaid created the system’s institutional bias compounded by inadequate
reimbursement, poor access and low quality. Disenchanted by Medicaid
financed nursing home care, people able to pay privately started
purchasing assisted living, home care and adult day care. Now
government is trying to rebalance Medicaid and integrate funding streams
from Medicare and Medicaid in order to pay for more home and
community-based care. Unfortunately, state and federal governments
have too few resources to make such a new service delivery and financing
system work well. So high costs and low quality remain for most
people who rely on Medicaid. Private payers suffer too but at least
they can demand higher quality or change providers.
#############################
12/11/2013,
“USA's
health improving; Hawaii ranks first, Miss. Last,” by Michelle Healy,
USA Today
Quote:
"An annual measure of the nation's health status finds evidence that
Americans made 'a notable shift' toward better health in 2013.
Important gains were seen in more than two-thirds of the measures analyzed
for the 2013
America's Health Rankings report, released today . . .."
LTC Comment:
Good news on the acute care side, but ironically, healthy people live
longer and are therefore more likely to succumb to the debilitating
chronic illness that require long-term care.
#############################
12/11/2013,
“Medi-Cal Clinics Recruit Long-Term Care Patients To Boost Billings [link],”
California Healthline
Quote:
"Some rehabilitation clinics that receive funding from the Drug Medi-Cal
Treatment Program have been using money and other incentives to recruit
board-and-care residents in order to bill the program for more services,
the
Center for Investigative Reporting reports. Medi-Cal is
California's Medicaid program . . .."
LTC Comment:
Just another kind of "Medicaid planning."
#############################
12/11/2013,
“Government's role in long-term care is
getting old,” by Stephen Moses, The Columbia County News-Times
Quote:
“The single biggest expense senior citizens face is long-term care. The
risks and cost are huge: a 20 percent chance they'll need five years or
more, with costs of $181 per day for a nursing home in Georgia. Yet few
Georgians plan for long-term care. Only 3.5 percent of Georgians over age
40 own private insurance; the national average is 4.5 percent. Why don't
they?”
LTC Comment:
I wrote this “op-ed” to introduce our new report titled “The
Index of Long-Term Care Vulnerability: A Case Study in Georgia.”
#############################
12/10/2013,
“Feds
to study LTCI attitudes,” by Allison Bell, LifeHealthPRO
Quote:
"The U.S. Department of Health and Human Services (HHS) is getting ready
to conduct a long-term care insurance (LTCI) awareness survey."
LTC Comment:
Another government boondoggle study. They gave the contract to the
Research Triangle Institute, probably under the guidance of Josh Wiener, a
staunch advocate of government-financed long-term care and a stauncher
critic of private LTC insurance. It's like a fox study the henhouse.
Moreover, asking people what they think about LTC insurance or LTC
financing policy doesn't work. They tell researchers the same thing
every time, i.e., they don't know who pays and if they think they
know they're wrong, and besides they aren't very interested anyway.
The important question for researchers to ask is "why is the public asleep
about LTC risk and cost if the danger is so great?" That's the
implicit and mistaken premise they never question. Get Medicaid out
of paying for most LTC after the insurable event occurs and people will
quickly get serious about saving, investing, and/or insuring for LTC risk
when it's real.
#############################
12/10/2013,
“Boomers Terrified of Future Health Care Costs: Nationwide Financial
Survey shows 30 percent jump in fear level [link],”
Life & Health Advisors
Quote:
"More than three in five (61 percent) pre-retirees now say they are
‘terrified’ of what health care costs may do to their retirement plans.
The annual survey by Nationwide Financial released today reveals the
number of affluent pre-retirees jumped 30 percent from the fewer than half
that used the word ‘terrified’ last year to describe their concerns about
paying for health care costs in retirement."
LTC Comment:
In a rational world, people “terrified” by a financial risk buy insurance
to protect against it. What’s different in our world?
Government’s futile attempt to cover everyone by spreading risk without
pricing it.
#############################
12/9/2013,
“Federal
exchange sends unqualified people to Medicaid,” by Jayne O'Donnell,
USA Today
Quote:
"The federal health care exchange is incorrectly determining that some
people are eligible for Medicaid when they clearly are not, leaving them
with little chance to get the subsidized insurance they are entitled to as
the Dec. 23 deadline for enrollment approaches. . . . Jessica
Waltman, top lobbyist for the National Association of Health Underwriters,
says she's heard a number of reports from around the country of people
making as much as $80,000 a year being told they qualify for Medicaid on
HealthCare.gov."
LTC Comment:
Just what Medicaid needs: more ineligible recipients.
#############################
12/8/2013,
“Should
you buy long-term care insurance?,” By Robert Digitale, The Press
Democrat
Quote:
"Insurance actuaries have estimated that 35 percent of clients will get
paid on a claim for a long-term care policy that requires the buyer to pay
for the first 90 days of care before eligibility for coverage."
LTC Comment:
Used in the article as a reason not to buy LTCI, this fact is irrelevant.
Insurance protects against catastrophic risk, which a 90 day LTC stay is
not. Only 69 percent of people over age 65 need any care, which
excludes most insureds from having claims. That’s what makes
long-term care an insurable risk, i.e., a risk private insurers can
spread and price. What matters is that most insureds with long-term
stays (over 90 days) do have their claims paid, but that stat is missing
from the article.
#############################
12/7/2013,
“ObamaCare
created a Medicaid time bomb,” by Michael D. Tanner, New York Post
Quote:
"The good news, if you want to call it that, is that roughly 1.6 million
Americans have enrolled in ObamaCare so far. The not-so-good news is
that 1.46 million of them actually signed up for Medicaid. If that trend
continues, it could bankrupt both federal and state governments."
LTC Comment:
Like a gambler who doubles his bet every time he loses in the hope he’ll
win before his stake runs out, the government’s expansion of Medicaid is a
race against fiscal insolvency.
#############################
Updated, Friday, December 13,
2013, 10:43 AM (Pacific)
Seattle—
#############################
LTC BULLET: GOVERNMENT LTC IS
GETTING OLD
LTC Comment:
Georgia Medicaid is free inheritance insurance, after the ***news.***
*** Happy Friday the
13th. Be careful out there! ***
*** ILTCI CONFERENCE.
The 14th annual Intercompany Long-Term Care Insurance
Conference will convene March 16-19, 2014 at the Rosen Centre in Orlando,
Florida. Get all the details and register
here. Chris Gardner will keynote the event on opening day.
His life was the basis for the book and movie “The Pursuit of Happyness.”
The conference will close with a general session on “The Future of the
Industry.” Stay tuned here to learn who will deliver that
challenging presentation. In between the opening and closing general
sessions, you can expect the usual high caliber presentations, peerless
networking, and excellent food and drink. This is a convocation not
to be missed if you can manage it. Damon and I will be there to
cover the program and report on it. Say hello if you attend and, if
you don’t (rue the thought), then watch for our “LTC Embed” accounts of
the action. ***
*** VIRGINIA HEALTH
CARE ROUND TABLE. The
Thomas Jefferson Institute for Public Policy convened a conference in
Richmond yesterday to discuss health and long-term care policy. Some
of the leading national critics of the Affordable Care Act (aka ObamaCare)
spoke including Grace-Marie Turner of the Galen Institute and Michael
Tanner of Cato. Addressing the challenges to Medicaid and long-term
care financing, respectively, were Bob Helms of the American Enterprise
Institute and the Center for Long-Term Care Reform’s Steve Moses.
The audience of public officials, business and professional people came
away educated but hardly edified. National health and LTC public
policy are on a rapidly accelerating deadly course. ***
LTC BULLET:
GOVERNMENT LTC IS GETTING OLD
LTC Comment: For
the second week in a row, we’re announcing publication of a major study by
the Center for Long-Term Care Reform. The
Georgia Public Policy Foundation (GPPF) underwrote the project.
Steve Moses conducted the onsite research last summer and produced the
draft report on deadline September 30, 2013. You can read “The Index
of Long-Term Care Vulnerability: A Case Study in Georgia,” on the
GPPF’s website
here or on the Center for Long-Term Care Reform’s website
here.
Now, if you’re
thinking to yourself “Gee, that title sure sounds familiar,” give yourself
a gold star. Last week’s published report was “The
Index of Long-Term Care Vulnerability: A Case Study in Virginia.”
And, get ready for this, we have one more coming soon titled “The Index of
Long-Term Care Vulnerability: A Case Study in New Jersey.”
What’s with all this “Index” business you might ask.
The “Index of
Long-Term Care Vulnerability” is an analytical tool we’ve developed to
help legislators and policy makers (and anyone else who’s interested)
assess the future sustainability of their state’s long-term care service
delivery and financing system. Check it out
here as applied to Virginia and
here (pages 27-28) as applied to Georgia in our latest report.
In both reports, you’ll find the Index filled out by me for the USA and
for the state in question. In each of the reports, you’ll also find
a blank version of the Index inviting you to weight the key factors
determining the sustainability of LTC and to score your own state’s
vulnerability. Check it out
here and let me know what you conclude.
Op-Ed Published
I wrote an op-ed to
introduce our Georgia report to the media. I titled it “Georgia
Medicaid is Free Inheritance Insurance.” Editors change titles
sometimes with or without telling authors. That can be annoying, but
this time I had no objection to the new title. “Government's role in
long-term care is getting old” was the title assigned by The Columbia
County News-Times. Read the piece
here or below.
It’s true literally
and figuratively that government LTC is getting old. It started long
before Medicaid and Medicare came along in 1965, but it has ballooned ever
since. Government interference in the LTC market is not only
temporally old, it is deadly tiresome as well. When will the
powers-that-be learn that providing underfinanced LTC after the insurable
event has occurred to consumers who should, could and would have planned
responsibly and paid privately otherwise--is a recipe for insolvency?
---------------
Here’s the op-ed for
your consideration:
“Government’s Role in
Long-Term Care is Getting Old”
by
Stephen A. Moses
The single
biggest expense senior citizens face is long-term care. The risks and cost
are huge: a 20 percent chance they’ll need five years or more, with costs
of $181 per day for a nursing home in Georgia. Yet few Georgians plan for
long-term care. Only 3.5 percent of Georgians over age 40 own private
insurance; the national average is 4.5 percent. Why don’t they?
The answer
is surprising. Most frail or infirm elderly Georgians don’t pay for their
own long-term care. In fact, expensive long-term care in Georgia is
financed mostly by the state and federal government through Medicaid, a
means-tested public assistance program. Georgia Medicaid spent a billion
dollars on long-term care in 2011, most of it for nursing home care (76
percent) but a substantial portion (13 percent) for the more popular,
waivered home care services. Medicaid recipients occupy 72 percent of the
beds in Georgia’s nursing homes.
The way
Medicaid eligibility works results in most people qualifying for
Medicaid-financed long-term care almost regardless of their income or
assets. That’s the conclusion we reached in a study sponsored by the
Georgia Public Policy Foundation and published recently in a report titled
The Index of Long-Term Care Vulnerability: A Case Study in Georgia.
Read it here:
http://www.georgiapolicy.org/ftp_files/IndexofLong-TermCareVulnerability.pdf.
This is
what we found:
Georgians
can circumvent Medicaid’s $2,130 per month income limit by setting up
Qualified Income Trusts (QITs). County eligibility workers provide
“templates” to help families set up QITs, which enable people with
substantially higher incomes to qualify for Medicaid-financed long-term
care.
Nor are
assets a significant obstacle to qualifying for Medicaid. The $2,000 limit
applies only to cash or assets easily convertible to cash. Medicaid
recipients in Georgia may also retain up to $536,000 worth of home equity,
plus one automobile, prepaid burial plans, personal belongings and home
furnishings of unlimited value.
Income and
asset eligibility rules are even more generous for married couples and
Georgia Medicaid is more lenient in this area than federal rules require.
The spouse in the community can draw on the institutionalized spouse’s
income to bring monthly income up to $2,898. The non-institutionalized
spouse may retain $115,920 of the couple’s joint assets. Federal rules
limit the income to $2,184 (without a household to maintain) and set the
minimum asset limit to only half the joint assets, not to exceed $115,920.
Even
wealthier Georgians qualify by retaining Medicaid planning attorneys to
impoverish themselves (or more often, their parents) artificially. Common
Medicaid planning techniques used in Georgia include asset transfers,
promissory notes, annuities and purchase of exempt assets. For example,
according to county eligibility workers, annuities worth hundreds of
thousands of dollars are established in ways that prevent the state from
capturing any of the money to offset Medicaid costs.
Isn’t this
retained wealth recaptured from the estates of deceased Medicaid
recipients? Georgia Medicaid finally implemented an estate recovery
program a decade after the federal Omnibus Budget Reconciliation Act of
1993 made one mandatory. Georgia’s program is set up in such a way,
however – exempting, for example, the first $25,000 of an estate – that it
is unlikely to recover much revenue.
Georgia
Medicaid makes free or subsidized long-term care available to most
residents of the state. The consequences of this generous policy are that
few Georgians plan for long-term care or purchase insurance for it, and
most expensive long-term care is paid for by Medicaid, a large and rapidly
growing program that consumes more and more state and federal resources.
Georgia
should seek ways to return Medicaid to its original intent: a long-term
care safety net for people in need. Without that, Medicaid will remain
free inheritance insurance for relatively prosperous heirs, deflating
their sense of urgency about long-term care risk and cost, and resulting
in too many ending their lives on Medicaid for that program to survive.
(Stephen
Moses is president of the Center for Long-Term Care Reform and author of
The Index of Long-Term Care Vulnerability: A Case Study in Georgia.)
#############################
Updated, Monday, December 9,
2013, 1:20 PM (Pacific)
Seattle—
#############################
ANNUITY ABUSE AND LTC NEWS AND COMMENT
LTC Comment: Today’s lead article is about an appeals court
case argued by Bill Browning, a former President of the National Academy
of Elder Law Attorneys whom I debated eleven years ago at one of Jesse
Slome’s national conferences:
“Listen to
"The Great Debate": Steve Moses v. NAELA (National Academy of Elder
Law Attorneys) President-Elect Bill Browning, held at the National LTCi
Producers Summit, November 18-19, 2002 - St. Louis, Missouri.”
The net result of Mr. Browning’s “win” in this case is that his client
diverted $175,000 from Medicaid spend down rules thus transferring the
cost to taxpayers at the expense of a program intended to help the poor.
In the greater scheme of annuity abuses, this one is small potatoes.
I’ve documented examples of $450,000 and $900,000 annuities in recent
reports available
here and
here. In fact, there is no limit on how much money can be
divested through Medicaid compliant annuities.
This is a quote from a Virginia Medicaid eligibility worker frustrated by
the problem of annuity abuse:
“Medicaid
is a program that pays for pretty much anyone who needs care and knows how
to get it, not just for the poor.”
(Source: Stephen A. Moses, “The Index of Long-Term Care
Vulnerability: A Case Study in Virginia,” The Thomas Jefferson
Institute for Public Policy, November 2013, p. 7; http://www.thomasjeffersoninst.org/files/3/LongTermCare.pdf.)
December 2013, “Community Spouse's Purchase of Annuity Before
Medicaid Determination Is Not Improper Transfer [link],”
ElderLaw Answers
Quote:
“In a case argued by Ohio ElderLawAnswers member attorney William
Browning, the U.S. Court of Appeals for the Sixth Circuit rules that an
annuity purchased by a community spouse before a Medicaid eligibility
determination is not an improper transfer and that the annuity does not
need to name the state as a remainder beneficiary.
Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25,
2013).”
LTC Comment:
Waste, fraud and abuse are rampant in Medicaid’s long-term care financing
program, but the worst of these is abuse that is legal. Waste can be
fixed and fraud can be prosecuted, but legal abuse goes on and on unless
and until Congress acts. Yet, year after year, nothing happens to
close this gaping loophole and the Centers for Medicare and Medicaid
Services (CMS) remains silent about Medicaid annuity abuse.
#############################
12/7/2013,
“Long Term Care Insurance Association Praises Virginia LTC Vulnerability
Report [link],”
by Jesse Slome, American Association for Long-Term Care Insurance
Quote:
"The Association director praised a new report researched and written by
Stephen Moses, president of the Center For Long-Term Care Reform and
presented by the Thomas Jefferson Institute. 'This is a very well prepared
look at the current environment that draws some very dire conclusions if
we continue to hide our heads in the sand,' Slome explains. 'Kudos to
Moses and the Center for another excellent look at the problem in an
extremely fair and balanced way.'"
LTC Comment:
Thanks to our friends at AALTCI for this endorsement.
#############################
12/6/2013,
“Government
Role in Long-Term Care: It's Getting Old,” by Stephen A. Moses,”
Georgia Public Policy Foundation
Quote:
"Georgia should seek ways to return Medicaid to its original intent: a
long-term care safety net for people in need. Without that, Medicaid will
remain free inheritance insurance for relatively prosperous heirs,
deflating their sense of urgency about long-term care risk and cost, and
resulting in too many ending their lives on Medicaid for that program to
survive."
LTC Comment:
This is the op-ed I wrote for the Georgia Public Policy Foundation
announcing publication of our report titled “The Index of Long-Term Care
Vulnerability: A Case Study in Georgia [link].”
#############################
12/6/2013,
“2014
Long Term Care Insurance Tax Guide Published by AALTCI,” by Jesse
Slome, American Association for Long-Term Care Insurance
Quote:
"Long term care insurance premiums remain one of the tax deductible
expenses few individuals are aware of according to the American
Association for Long Term Care Insurance. A new guide produced by the
organization explains the current rules and the new IRS tax deduction
limits for 2014."
LTC Comment:
Heed and lead.
#############################
12/5/2013,
“Nursing
home $10,000 suicide fine upheld,” by Dave Surico, McKnight's LTC
News
Quote: "A federal appeals court has upheld a $10,000 fine
against a skilled nursing facility for leaving a suicidal patient
unattended, who then walked out of the facility and killed himself. The
U.S. Court of Appeals for the Ninth Circuit said the Department of Health
and Human Services' ruled that the decision (Del Rosa Villa v.
Sebelius, 2013 BL 330965, 9th Cir., No. 12-71685, 11/26/13) to
fine petitioner Del Rosa Villa was supported by substantial evidence. The
court denied a petition to overrule decisions that led to the fine."
LTC Comment:
Care to make a guess whether this facility was mostly Medicaid or mostly
private pay?
#############################
12/5/2013,
“Russian
diplomats charged in $1.5M Medicaid scheme,” by Associated Press,
Politico
Quote:
"More than three dozen Russian diplomats and their spouses enjoyed luxury
vacations and spent tens of thousands of dollars at the finest stores as
they lied about their incomes to get the government to pay their health
care bills, federal prosecutors in New York said Thursday."
LTC Comment:
Medicaid planning: it’s not just for elder law attorneys anymore.
#############################
12/4/2013,
“How
is Medicare Advantage really doing?,” by Allison Bell,
LifeHealthPRO
Quote:
"Two witnesses painted completely different pictures of the state of the
Medicare Advantage program today at a House Energy & Commerce health
subcommittee hearing."
LTC Comment:
Who are you going to believe? An employee of a research firm that
depends on government grants or the former chief of the Congressional
Budget Office?
#############################
12/4/2013,
“Nursing
homes lagging in palliative care, researchers say,” by Dave Surico,
McKnight's LTC News
Quote:
"Nursing homes have lagged in the area of palliative care, and need to
take a seat at the table, according to researchers in a Health Affairs
blog. The lack of intertwinement between nursing homes and palliative
care is due to a number of factors: regulations that favor rehabilitation,
inadequate staff education around palliative care, financial
disincentives, lack of reimbursement and misconceptions, write authors
Mary Ersek, Ph.D., RN,
David Stevenson, SM, Ph.D., and Justine Sefcik."
LTC Comment: All sorts of perverse incentives are built into
government financed long-term care which makes providers, instead of
patients, the customers.
#############################
12/4/2013,
“Genworth
Says Higher Premiums Blunt Long-Term Care Errors,” by Dan Reichl,
Bloomberg
Quote:
"Genworth Financial Inc., the largest seller of long-term care coverage,
is counting on periodic rate increases of 2 percent to 4 percent to
maintain profit targets, after larger insurers retreated from the business
to limit risk. 'I don't think it's prudent to be in this business unless
you can, over time, re-rate policies to reflect the difference between how
actual reality played out versus your original assumptions,' Chief
Executive Officer Tom McInerney said today in an interview. 'You have to
ultimately have a return in the mid-teens range. If it's less than that,
on a risk-adjusted basis, investors shouldn't invest in the business.'"
LTC Comment:
“If at first you can’t succeed, try, try again.” The irony is that
government has set aside nothing to ensure it will be able pay its
entitlement promises. Yet the private sector is criticized for doing
the responsible thing, i.e., making sure reserves will suffice to
pay future claims.
#############################
12/3/2013,
“Carriers slam Medicare Advantage moves: AHIP says carriers should
be able to cut MA networks [link],”
by Kathryn Mayer, BenefitsPRO
Quote:
"Because of the Patient Protection and Affordable Care Act, seniors
enrolled in Medicare Advantage plans are paying higher premiums and
experiencing a reduction in benefits and disrupted coverage. And that's
just the beginning. That's the dire message from America's Health
Insurance Plans, which predicts will hit seniors even harder over the next
two years."
LTC Comment:
Unfortunately, the insurance industry cozied up to the Administration to
help pass the Affordable Care Act (aka ObamaCare) and now we’re all living
with the disastrous consequences: higher premiums for worse
coverage. The private sector (Charlie Brown) never seems to learn
that government (Lucy) always offers a sweet deal (the football) and then
reneges after companies adapt to take advantage.
#############################
12/3/2013,
“Post-hospital
care spending jumps,” by Dave Surico, McKnight's LTC News
Quote:
"Bundled payment experiments are growing while Medicare spending on
nursing homes continues to come under scrutiny, according to a
Kaiser Health News/Washington Post report. Widely varied care,
additional services and costs from state-to-state have drawn the attention
of regulators."
LTC Comment:
The risk is that cutting Medicare payments to nursing homes will undermine
access to and quality of care funded (at less than the facilities’ cost of
care) by Medicaid.
#############################
12/3/2013,
“North
Dakota drafts short-term care insurance regs,” by Allison Bell,
LifeHealthPRO
Quote:
"The North Dakota Department of Insurance may add a section on short-term
care insurance (STCI) to the state administrative code."
LTC Comment:
Better some insurance than none.
#############################
12/2/2013,
“NIH deposits first batch of genomic data for Alzheimer's disease [link],”
NIH News and Events
Quote:
"Researchers can now freely access the first batch of genome sequence data
from the Alzheimer's Disease Sequencing Project (ADSP), the National
Institutes of Health (NIH) announced today. The ADSP is one of the first
projects undertaken under an intensified national program of research to
prevent or effectively treat Alzheimer's disease."
LTC Comment:
One more step in a Sisyphean effort to conquer Alzheimer’s.
#############################
12/2/2013,
“Doctors Face A 24% Pay Cut In Both Medicare And Medicaid Reimbursements [link],”
by Merrill Matthews, Forbes
Quote:
"In 1997 Congress passed legislation, known as the 'sustainable growth
rate' (SGR), to try and reduce Medicare spending. If Medicare
spending grew faster than a predetermined amount, doctors' Medicare
reimbursements would be cut the next year by enough to offset the
overspending. Not surprisingly, Medicare spending didn't hit the target
rate, and, again not surprisingly, Congress didn't want doctors to take
the financial hit. So Congress has passed legislation, known as the
'Doc Fix,' multiple times to postpone the cuts and keep the reimbursement
levels roughly the same. But those postponed deficits keep piling up, and
come January doctors will see, on average, a 24 percent cut in Medicare
reimbursement levels. And here comes the double whammy: Medicaid
reimbursements will face the same 24 percent cut."
LTC Comment:
The Center for Long-Term Care Reform proposed a solution to the “Doc Fix”
problem that would save $30 billion per year and solve the LTC financing
problem too. Read it
here.
#############################
12/1/2013,
“Oversight
of nursing home trust funds limited,” by Peter Eisler, USA TODAY
Quote:
"Many states do not require criminal background checks on nursing home
staff who manage residents' trust funds, and few demand audits of those
accounts - a regulatory gap that contributes to scores of cases in which
the money is stolen or mismanaged. Nearly every state requires background
checks for nursing home staff in caregiving roles, but 20 states don't
apply that requirement to office workers who do not routinely have direct
patient contact, a USA TODAY review of state laws finds. Those office
employees typically manage the trust accounts that nursing homes must
maintain for residents who request that the facility safeguard their
money."
LTC Comment: And why must nursing homes maintain “trust
accounts” for residents? Because 2/3 of their residents are on Medicaid
and the nursing homes have to help ensure that Medicaid residents’ assets
never exceed $2,000 and throw them off the program that pays for their
care. Private-pay patients don’t need nursing home trust accounts
and don’t have to worry about crooked nursing home employees ripping them
off.
#############################
11/29/2013,
“Why
your clients need a care coordinator,” by Margie Barrie,
LifeHealthPRO
Quote:
"Q. The policies I’m selling contain a care coordinator
benefit. How can I explain the value of that benefit to clients? A.
Having hired a care coordinator for my mother, I am a big advocate of that
benefit. When I tell my mother’s story to clients, they really understand
how valuable a benefit caregiving is."
LTC Comment: Someone should do a study that compares the care
coordinator benefit in a private long-term care insurance policy with
whatever benefit, if any, is available under Medicaid.
#############################
11/28/2013,
“Large discrepancies found in Medicare spending on post-hospital care [link],”
by Jordan Rau, Washington Post
Quote:
"After years of trying to clamp down on hospital spending, the federal
government wants to get control over what Medicare spends on nursing
homes, home health services and other medical care typically provided to
patients after they leave a hospital.”
LTC Comment:
Great idea except that the only thing enabling nursing homes to provide
custodial long-term care to two-thirds of their residents--who rely on
Medicaid at less than the cost of providing the care--is that Medicare has
paid very generously in the past. Take that away and the whole
government LTC financing scheme collapses.
#############################
11/27/2013,
“Long-term
care: The silent Medicaid killer,” by Kathryn Watson, Watchdog.org
Quote:
"ALEXANDRIA, Va. — A silent threat to the commonwealth looms as the baby
boomer generation gets older — long-term care costs like nursing home
expenses, paid for by taxpayer-funded Medicaid.
“'Income, I found, is almost never an obstacle to qualifying for
Medicaid,' said Stephen Moses, a former Medicaid state
representative who is now president of the Center for Long-Term Care
Reform and recently
wrote a report on the state of long-term care in Virginia. [Emphasis
in the original]
"Moses said Virginians need to take personal responsibility to save and
find ways to finance nursing home care in the future, and lawmakers need
to put more restrictions on eligibility so long-term care doesn’t cripple
the system."
LTC Comment:
This article reviews and recommends the first of our three state-level
studies introducing a new analytical tool: “The Index of Long-Term
Care Vulnerability.” Watch for subsequent reports applying the index
to Georgia and New Jersey.
#############################
11/26/2013, “Group
wants Virginia to tighten Medicaid rules,” by Chelyen Davis, The
Fredericksburg Star
Quote:
"A conservative think tank is advising Virginia to tighten its rules for
Medicaid coverage of long-term care to discourage reliance on the public
program. The Thomas Jefferson Institute for Public Policy, which advocates
for public policy 'based on a philosophy of limited government, free
enterprise and individual responsibility,' said in a report Tuesday that
Virginia is going to see big growth in the over-85 population in the next
40 years."
LTC Comment:
The Thomas Jefferson Institute, which published our report reviewed by
this article, is more accurately described as a libertarian, not as a
conservative, think tank.
#############################
11/26/2013,
“Inspector
General Scrutinizes LTC Industry on Rehospitalizations,” by Jason
Oliva, Senior Housing News
Quote:
"Government inspectors say there's not enough attention being paid to the
readmissions problem in long-term care settings, specifically nursing
homes. A recent study by the Office of the Inspector General (OIG) found
that of the 825,765 Medicare residents who stayed in nursing homes for at
least one day in fiscal year 2011, 24.8% experienced hospitalizations."
LTC Comment:
Frail, infirm and elderly people need a lot of care, both acute and
long-term. It’s very hard to say how much is too much.
#############################
11/26/2013, “How a toddler's brain may indicate if they'll get
Alzheimer's in old age: Children with a genetic risk have brains that
develop differently [link],”
by Anna Hodgekiss, MailOnline
Quote: "Toddlers who have a genetic risk from Alzheimer's
have brains that develop differently, new research suggests. Infants who
carry a gene associated with increased risk of the condition tend to have
differences in brain development compared to children without the gene.
The gene variant is called APOE-E4 - a known risk factor for late-onset
Alzheimer's - and researchers say this study shows some of the earliest
differences in people who have it."
LTC Comment: A whole new age demographic for the LTCI market
to target.
#############################
Updated, Friday, December 6,
2013, 1:10 PM (Pacific)
Seattle—
#############################
LTC BULLET: “THE INDEX OF
LONG-TERM CARE VULNERABILITY: A CASE STUDY IN VIRGINIA” PUBLISHED
LTC Comment: Can the Commonwealth of Virginia’s Medicaid-based
long-term care system survive? Hard questions asked, analyzed and
answered after the ***news***
*** SEND STEVE TO HEALTH CARE ROUNDTABLE in Richmond, VA. The
Thomas Jefferson Institute for Public Policy (TJI) published our major
report titled “The Index of Long-Term Care Vulnerability: A Case
Study in Virginia.” This study introduces the public policy world to
our new “Index of Long-Term Care Vulnerability” which enables analysts to
answer objectively the question: can LTC financing survive in its
current and tending form? TJI is sponsoring an important “Health
Care Roundtable” on December 12. Steve Moses will present our
report’s findings and join the discussion with some of the top health care
policy analysts in the country, including Grace-Marie Turner of the Galen
Institute, Michael Tanner of the Cato Institute and Bob Helms of the
American Enterprise Institute.
The Center for Long-Term Care Reform seeks to raise funds to support
Steve’s trip to give this presentation and contribute to this important
health policy conversation.
Special deal:
Pledge any amount $25 or above to support this important project and
we’ll comp you for a year of the Center’s
clipping service (usually $120 minimum; valid for new clipping service
subscribers only) at no extra charge.
Pledge $50 or more and we’ll upgrade your Center membership to the next
higher individual level, e.g. Regular membership ($150 per year) goes to
Premium Membership (usually $250 per year); Premium goes to Premium Elite
or Regional Representative ($500 per year, for those who qualify).
Check out our “Membership
Levels and Benefits” for details on all membership levels.
If you can help, let Damon know at
damon@centerltc.com or 206-283-7036. He’ll subscribe you to the
Clippings or upgrade your membership immediately, even while your check is
in the mail.
We’ll gladly make similarly attractive special offers to corporate donors
willing to pony up somewhat larger amounts. Just email Steve at
smoses@centerltc.com or call him at 425-891-3640 to discuss and
negotiate a bonus benefit most attractive to you and your company.
How to contribute:
Make your check out to Center for Long-Term Care Reform and send to: 2212
Queen Anne Avenue North, #110 / Seattle, WA 98109 -- Or
contribute online
here.
Our goal is to raise $1,500 to support this trip and opportunity.
Thanks in advance for your consideration and support. ***
*** IF YOU’RE NEAR RICHMOND, VA ON 12/12/13, YOU CAN ATTEND THE SAME EVENT
and join Steve’s cheering section (free registration required, see below):
Leadership Roundtable On Health Care Reform — Register today for the
next Leadership Roundtable hosted by the Thomas Jefferson Institute for
Public Policy! This Roundtable, on Health Care Reform, is sponsored
by Verizon-Virginia and will take place on Thursday morning, December 12
in the Shenandoah Room of the SunTrust Building, (919 East Main Street in
Richmond), from 8:30 am until noon. The first half of the session
will cover an update on Obamacare and possible reforms; the second half
will discuss reforming or expanding Medicaid in Virginia.
Among the expert speakers confirmed –
Grace Marie Turner, President of the Galen Institute
Michael Tanner, Healthcare expert for the Cato Institute
Kevin Kuhlman, Manager of Legislative Affairs for the NFIB National
Office
Robert B. Helms, Resident Scholar, American Enterprise Institute,
and
Stephen Moses, Center for Long Term Care Reform (and author of a
new Jefferson Institute study
here)
Registration for this Leadership Roundtable is Free, but there is limited
space available. To register at no charge,
please click here. ***
*** PUBLICATION ANNOUNCEMENT: “The Index of Long-Term Care
Vulnerability: A Case Study in Virginia — Virginia is faced with a serious
problem as are all states: The aging population requires us to
determine how to handle the additional costs this will bring to government
and personal budgets. Long Term Care is one of the more important
problems facing all parents, as parents, siblings, aunts and uncles live
longer and longer. What are the costs today? What are the
projections for these costs in the future? And how should we
consider restructuring this need for Long Term Care? These are the
questions and concerns examined by this new study on Long-term care funded
by Medicaid.
Read It Here!” ***
*** KEY NUMBERS UPDATED: The Centers for Medicare and Medicaid
Services (CMS) has updated the critical Medicare and Medicaid numbers for
2014. For example, the home equity exemption for Medicaid increases
from a minimum of $543,000 ($500,000 in 2010) to a maximum of $814,000
($750,000 in 2010). For all the new numbers, including the Community
Spouse Resource Allowance (CSRA) and the Minimum Monthly Maintenance Needs
Allowance (MMMNA) see our updated chart
here. It shows the year-by-year increases in all the key numbers
as adjusted annually for inflation going back two decades. You’ll
need your Center Member’s-Only User Name and Password. Need a
reminder? Or want to join the Center, receive our weekly
publications and get access to The Zone? Contact Damon at
206-283-7036 or
damon@centerltc.com. ***
#############################
LTC BULLET: “THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE
STUDY IN VIRGINIA” PUBLISHED
LTC Comment: As ObamaCare doubles down on Medicaid for national
acute-health-care policy, the beleaguered welfare program continues to
undermine long-term care throughout the country.
After three decades of analyzing America’s long-term care financing system
and proposing policy solutions in dozens of national and state-level
studies
here, we realized it may be too late to avoid a catastrophic meltdown
of the system.
So we decided to ask a different question in three studies this year.
Instead of “What’s wrong and how can we fix it?,” we asked “What is the
probability today’s LTC system can survive the challenges it faces?”
Step one was to ask: What are the main challenges our long-term care
financing system(s) face? We broke them into seven key questions:
1. How many older people are coming in the next few decades? (The
“Age Wave”)
2. How sick will they be? (Morbidity)
3. How viable is Medicaid as a long-term care payer?
4. How reliable is federal revenue on which Medicaid mostly depends?
5. How reliable is state revenue on which Medicaid secondarily depends?
6. How much private-pay revenue is available to relieve LTC financing
pressure on
Medicaid?
7. How strong is dependency on public programs (i.e., the
entitlement mentality)?
To measure those challenges, we developed an “Index of Long-Term Care
Vulnerability.” The Index enables a user to assign percentage
weights of importance to each of the challenges and then to score and rank
the national and state levels of achievement on each of several sub-issues
within each challenge using objective metrics.
Not quite sure what we mean by that? Then take this opportunity to
read our first of three forthcoming reports that apply the Index of
Long-Term Care Vulnerability to specific state Medicaid and long-term
care financing systems. You’ll find a full explanation of our
methodology, a sample “Index” filled out by the author for Virginia, and
an Index worksheet you can use to assign your own weights, ranks and
scores to your own state.
The Thomas Jefferson Institute for Public Policy and the
Center for Long-Term Care Reform published “The
Index of Long-Term Care Vulnerability: A Case Study in Virginia”
last week. You can read it at
TJI’s website or the
Center’s.
To whet your appetite for the full report, what follows is the “Foreword,”
written by Michael Thompson, president of the Thomas Jefferson. You
can also read two media articles about our study
here and
here.
#############################
“Foreword”
by
Michael W. Thompson
Virginia is faced with a serious problem as are all states: the aging
population requires us all to figure out how to handle the “costs” that
this is going to bring to government and personal budgets.
Long Term Care is one of the more important problems facing all families
as parents, brothers and sisters and aunts and uncles live longer and
longer. What are the costs today, what the projections for these
costs in the future, and how should we consider restructuring this need
for Long Term Care in order for those who need it receive it, and that the
burden on government – on the taxpayers – is kept within reasonable
bounds?
It is these questions and concerns that prompted the Thomas Jefferson
Institute to ask Stephen Moses of the Center for Long Term Care Reform to
look into our program and, with his expertise from doing similar work in
other states, to suggest what we ought to do here to prepare for this
growing need within our society. Four concerns popped out to me in
this study that need to be opening and frankly discussed. They are:
1) Long-term care is expensive, funded mostly by Medicaid (considered part
of our nation’s welfare program), heavily dependent on already strained
state and federal revenue, and facing an on-coming wave of aging boomers
who will test the adequacy of scarce public resources.
2) Virginia is one of only seven states in which the age 85 plus
population, the cohort most likely to need LTC, is projected to more than
quadruple between 2012 and 2050, up 307%! So financing long-term care in
Virginia will become a huge problem.
3) The Commonwealth has doubled down on its Medicaid-financed LTC system
by implementing major new programs to (a) “rebalance” services from
nursing home care to home care (making Medicaid more desirable) and (b) to
“manage” care by turning it over to large managed care organizations
(making Medicaid recipients more vulnerable to cost cutting and quality
problems).
4) While ramping up Medicaid for long-term care, Virginia has not done
enough to encourage private sources of LTC financing that could relieve
financial pressure on the tax-financed program. Asset spend down, estate
recovery, home equity conversion and private long-term care insurance
could and should contribute far more to financing quality LTC services.
This study, “The Index of Long-Term Care Vulnerability: A Case Study in
Virginia,” focuses on this problem and offers some policy alternatives. At
the end (in the Appendix) there is worksheet/an index process that policy
makers, policy influencers and others can use to determine long term care
needs depending on the variables outlined in this report. This is a
serious problem that needs to be confronted sooner than later.
Michael W. Thompson, President, Thomas Jefferson Institute for Public
Policy November 2013
#############################
Updated, Wednesday, November 27,
2013, 11:13 AM (Pacific)
Seattle—
#############################
ILTCI CONFERENCE NEWS, A NEW CENTER
REPORT AND LTC NEWS AND COMMENT
LTC Comment:
Registration is now open for the Fourteenth Annual Intercompany Long Term
Care Insurance Conference to be held from March 16-19, 2014 at the Rosen
Centre, in Orlando, Florida. Details and conference website
here.
Once again, the ILTCI
conference will be hosting and subsidizing the cost for a special 2-day
pre-conference CLTC Master Class (only $195 extra). Harley Gordon
will personally conduct this class on Saturday March 15 (8AM to 6PM) and
Sunday March 16 (8AM to 4PM).
If you are an agent selling
long term care (or other insurance) directly to consumers, you can apply
for a Scholarship. The Scholarship application is available at
www.ILTCIConf.org/Scholarship.htm. All Scholarship applications that
are approved, will qualify the attendee for the $295 Scholarship rate
(plus an additional $195 if you are attending the CLTC class).
If you are a government
employee, please go to https://LTCIDB.com/Registration-Government/ and
register for the conference using the Government Employee rate of $95.
For those who have never
attended ANY of the previous thirteen annual conferences, there is a
special new attendee rate of only $395 (instead of the $895 early bird
rate). Please go to https://LTCIDB.com/Registration-Introductory/
and register before January 16th.
Next, ILTCIC strongly
recommends that you make your Hotel reservations by clicking on the "HOTEL
AND TRAVEL" button. The Hotel has very attractive rates of only $125 (for
the Rosen Centre Hotel). If the Hotel is already fully booked for a room
for any date that you want to stay at the hotel, please contact Jim
Glickman at 818-867-2223, so that you can be placed on a waiting list
(which usually clears) for those days.
If you have any questions,
please contact Jim Glickman at 818-867-2223.
*** CENTER REPORT RELEASED.
The Center for Long-Term Care Reform and the Thomas Jefferson Institute (TJI)
of Virginia released today a report titled “The
Index of Long-Term Care Vulnerability: A Case Study in Virginia.”
Center president Stephen Moses and TJI president Michael Thompson
participated this morning in a “tele-press conference” attended by 13
reporters to answer questions about the report’s findings and
recommendations. Read the new report
here. Experiment with the generic Index/Worksheet which enables
you to predict the likely survivability of LTC financing in your own
state. We’ll have much more to say about this report and two others
we conducted in Georgia and New Jersey in an LTC Bullet next week.
***
#############################
11/26/2013,
“NAIC
to consider LTCI market conduct forms,” by Allison Bell,
LifeHealthPRO
Quote:
"Top bodies at the National Association of Insurance Commissioners (NAIC)
have put three items related to private long-term care insurance (LTCI) on
their
agenda for the NAIC's upcoming fall meeting. The NAIC's executive
committee and its plenary -- a body that includes all voting NAIC members
-- plan to consider adopting the widely discussed
Long-Term Care Premium Rate Increase Model Bulletin at a joint
session Dec. 18."
LTC Comment:
Oh good, more help from the government.
#############################
11/25/2013,
“Pressure
ulcer treatments should be re-evaluated, expert says,” by Elizabeth
Leis Newman, McKnight's LTC News
Quote:
"Nursing home staff should adopt evidence-based approaches to pressure
ulcer prevention and treatment, and significantly more research is needed,
a geriatric medicine professor said Saturday.
'We don't know as much as we think we know,' said David Thomas, M.D., FACP,
AGSF, GSAF, CMD, a professor at the Saint Louis University School of
Medicine, where the
International Nursing Home Research Conference was held last
weekend. 'What we have been facing in the care of pressure ulcers in
nursing home is dogma. We desperately need people in nursing homes to do
clinical research.'"
LTC Comment:
Research is fine but the real solution to most problems with care in
nursing homes is adequate reimbursement, which means more private
financing and less dependency on Medicaid.
#############################
11/25/2013,
“The
$234 billion job that goes unpaid,” by Elizabeth Shell, PBS News
Hour
Quote:
"Nearly 9 in 10 Americans who need some form of long-term care (LTC) get
that assistance from family members or friends who volunteer their time.
More than a third of these 'informal' caregivers are taking care of an
aging parent, and assist with tasks like getting in and out of bed, going
to the bathroom, eating, housework and transportation."
LTC Comment:
The solution to this problem is not bigger government programs to pay
families for providing the care they give for free now. The solution
is to target scarce government resources to the truly needy and
incentivize middle-class and affluent people to insure privately.
That’s the only way we’ll ever relieve the huge and growing burden of
elder caregiving on families across the land.
#############################
11/25/2013,
“OIG promises more in-depth
anti-fraud efforts, further auditing of providers [link],”
by James M. Berklan, McKnight's LTC News
Quote:
"The Office of Inspector General may have delayed the announcement of its
detailed 2014 annual Work Plan from October until January, but providers
now know where the overall focus of investigative efforts will lie for the
next four years. The OIG has announced it is committing to maximizing
fraud recoveries and the protection of patient data for 2014-2018."
LTC Comment: Maybe the OIG should also pay attention to poor
estate recoveries by most state Medicaid programs. My report in 1988
for the OIG laid out findings and recommendations, most of which were
adopted by Congress and President Clinton in the Omnibus Budget
Reconciliation Act of 1993. Medicaid Estate Recoveries:
National Program Inspection is still a useful manual for states
seeking to increase non-tax revenue from their estate recovery programs.
You can still read the 25-year-old report on the OIG’s website
here.
#############################
11/24/2013,
“Exploding Medicaid bills will
threaten budgets and health: So get ready for more Obamacare trouble [link],”
by Paul Howard and Stephen Parente, New York Daily News
Quote:
“While the persistent problems with Obamacare's health exchanges have
captured media headlines, a more troubling underlying story is the law's
historic and unsustainable expansion of Medicaid. For every one person
that has enrolled in private coverage under Obamacare to date, four have
enrolled in Medicaid. That portends an astronomical rise in Medicaid
spending in state and federal budgets - and worse health outcomes for
millions of Americans."
LTC Comment: Never mind the incident with the iceberg, let’s
add more deck chairs to the Titanic.
#############################
11/22/2013,
“Liability
costs climb for long-term care, analysis finds,” by Elizabeth Leis
Newman, McKnight's LTC News
Quote:
“A nursing home operator with 100 beds can expect $194,000 in liability
expenses in 2014, according to a new analysis from the American Health
Care Association and Aon Global Risk Consulting. Liability costs for
long-term care providers are expected to increase by 5% next year, while
claims frequency also is expected to climb, says the ‘2013 Long Term Care
General Liability and Professional Liability Actuarial Analysis.’
The projected national 2014 loss
ratio is $1,940 per bed.”
LTC Comment:
Low Medicaid reimbursement for most of their residents and lawyers lined
up to sue at any opportunity bode poorly for nursing homes’ liability
risk.
#############################
11/21/2013,
“When Mom And Dad Move In: The
'Granny-Flat Tax Exemption' For The Sandwich Generation [link],”
by Kelly Phillips Erb, Forbes
Quote:
"My brother and I understand that we will eventually become part of
the 'sandwich generation' – adults who are charged with taking care of
their parents while also taking care of their own children. That doesn’t
make us special: in fact, far from it. Accordingly to a recent study
published by the Pew Foundation, nearly half (47%) of adults in their
40s and 50s have a parent age 65 or older and are either raising a young
child or financially supporting a grown child (age 18 or older). And while
those numbers are creeping up just slightly, the financial and other
burdens associated with caring for parents and children are increasing
quickly.
"It’s an economic reality that takes some adjustment – and politicians are
just now beginning to feel the pressure from their constituencies to make
changes in the law to ease that burden. That’s exactly what just happened
this week in Jefferson County, Florida. Jefferson County is located in the
state’s panhandle, bordered by Georgia and the Gulf of Mexico. In terms of
age, it tracks pretty closely
with the nation as a whole with a median age of 39 while 14.50% of all
residents are age 65 years or older. With those demographics in mind, the
Jefferson County Commission recently passed a 'granny flat tax' – the name
for the law that makes it tax-exempt to build onto or remodel a home if
taking care of an elderly family member."
LTC Comment:
Now, how about a tax incentive for LTCI?
#############################
11/21/2013,
“CMS too burdened and focused on
cost to be the epicenter of long-term care reform, experts say [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Most long-term care reforms rely on the Centers for Medicare & Medicaid
Services for implementation, but the overburdened agency cannot manage all
the needed changes in this area, according to a panel of experts."
LTC Comment: Why would we expect CMS to do a better job on
LTC reform than it’s done on ObamaCare implementation?
#############################
11/21/2013,
“Aging Baby Boomers And Higher
Health Care Costs To Impact Long-Term Care [link],”
by Partnership for Long-Term Care
Quote:
"University
of California, Berkeley researchers state in a new study that an
unprecedented increase in seniors over the next decade could nearly double
Medi-Cal
long-term care costs, from $6.6 billion to $12.4 billion annually by
2023."
LTC Comment:
To understand just how disastrous this news is read our California report
titled
Medi-Cal LTC: Safety Net or Hammock?
#############################
11/20/2013,
“Hospital admission rates show need
for new nursing home quality measure , OIG and CMS say [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"One in four nursing home residents on Medicare was hospitalized in 2011,
costing the program $14.3 billion, according to a new report from the
Department of Health and Human Services Office of Inspector General. In
light of its findings, the OIG has recommended a new quality measure to
track hospital admissions."
LTC Comment:
“Dual eligibles” are old, frail, infirm and extremely vulnerable to
hospitalization, especially because Medicaid pays less than the cost of
their care to LTC providers. This problem is endemic to
government-financed LTC.
#############################
11/20/2013,
“LTCI
deduction limits creep higher,” by Allison Bell, LifeHealthPRO
Quote:
“Taxpayers who can use the federal long-term care insurance (LTCI) premium
deduction in 2014 may still get substantial benefits from the deduction.
Analysts at
LTC Tree, an LTCI agency network, looked at how the latest LTCI
premium deduction limits might affect policyholders who own a policy that
provides a total of up to $219,000 in lifetime benefits with a 3 percent
automatic inflation increase."
LTC Comment:
Federal below-the-line LTCI deductions benefit few people unfortunately.
#############################
11/20/2013,
“Planning
for saving in the face of terminal illness,” by Paul Sullivan,
MarketPlace, New York Times
Quote:
"Patrick Skeldon, a commercial airline pilot, started having trouble
walking in the autumn of 2003. His doctor thought he had a vitamin
deficiency and prescribed supplements. When those didn't work, the doctor
referred him to a neurologist. The next year, he was told he had
amyotrophic lateral sclerosis, more commonly known as Lou Gehrig's
disease. He was 59.
"Through some shrewd financial planning, Mrs. Skeldon was able to continue
working for the United States Marshals Service and adding to her own
retirement while still getting care for her husband. Several years before
Mr. Skeldon was found to have A.L.S., the couple had purchased long-term
care insurance. They did so out of a fear that they might run out of
money, as her father had.
"To date, she said, the policy has paid $213,000 to cover a home health
care aide and still has $349,000 or five years left in benefits."
However:
"Depending on the state, there may be help short of running out of money.
New York, for one, has a generous program for home care.
LTC Comment:
There are mixed messages in this article. It begins with an LTCi success
story, but ends with a message encouraging long-term care planning
indolence. "Abandon all logic, ye who enter here." Indeed.
#############################
11/19/2013,
“Gaming
Medicaid has potential consequences for the aging,” by Kerry Peabody,
Portland Daily Sun
Quote:
"People trying to avoid the responsibility of providing for their own
long-term care by transferring assets as they age is a mine field of risk
not to mention a moral dilemma.
"Unfortunately, some people continue to game the system - attempting to
protect assets to benefit their family members while transferring the cost
of care to the taxpayers. Put another way, it is the practice of
engineering one's own poverty.
"With the federal debt now exceeding $17 trillion and the interest on that
debt absorbing evermore of our tax dollars, our government simply will not
have the ability to fund the crushing demand for these services. Based on
public policy discussions, means testing for all social services is likely
to become more aggressive and the threshold for eligibility will be
higher. Ultimately, the burden is ours to provide for our future. One
mechanism is long-term care insurance."
LTC Comment:
Hear, hear!
#############################
11/19/2013,
“'Self-reliance'
a key to long-term care financing reform, experts say,” by Tim
Mullaney, McKnight's LTC News
Quote:
"The United States is likely to favor an approach to long-term care
financing reform that values self-reliance but includes some form of
social safety net, according to a new report from a panel of experts."
LTC Comment:
Great, but the current system falls far short of that. It undermines
self-reliance by making the Medicaid LTC safety net available to people
who could, should and would insure privately otherwise.
#############################
11/19/2013,
“5
Financial Lessons from Retirees,” by Donna Fuscaldo, FoxBusiness
Quote:
"Whether it's not saving enough, or being too conservative with their
investments, people already in retirement make many mistakes that
adversely impact their lifestyle that can tarnish their so-called golden
years. But that doesn't have to happen to you. Before you let history
repeat itself, check out these five lessons financial planners and their
retired clients:"
LTC Comment:
Lesson #5 includes a strong recommendation to purchase LTC insurance.
#############################
11/18/2013,
“Watchful
Eye in Nursing Homes,” by Jan Hoffman
Quote:
"A pretty nightie, a new lipstick, a
fresh toothbrush: Doris Racher noticed that small things she had bought
for her 96-year-old mother, Eryetha Mayberry, a dementia patient at a
nursing home in Oklahoma City, had been disappearing. Ms. Racher assumed
the culprit was another resident who sometimes wandered into her mother's
room and fell asleep in her bed. So in 2012, Ms. Racher placed a
motion-activated camera in her mother's room. It looked like an alarm
clock, and Ms. Racher nearly forgot about it. About two months later, the
family decided to pore through the recordings."
LTC Comment: A new source of horror movies.
#############################
11/18/2013, “Most
People Misunderstand Long-Term Care Insurance Coverage, Costs [link],”
by Mark Chalon Smith, FoxBusiness
Quote:
"Most people are woefully unprepared to cope with long-term care needs and
expenses, according to a study released this week by a major insurer.
Northwestern Mutual's report, based on a Harris Interactive survey of more
than 2,000 people nationwide, found that 41% of those questioned admitted
they're confused about how to approach future long-term care challenges.
They are also failing to actively build a strategy for long-term care
needs, despite the possible personal and financial consequences."
LTC Comment: An open invitation to LTCI producers to fill the
information gap and provide the needed coverage.
#############################
11/18/2013, “It's
time frivolous lawsuit filers were held more accountable,” by John
O'Connor, McKnight's LTC News
Quote: "We live in a world where the luckiest among us get
old and sick before we die. Fortunately, senior living options exist to
make the endgame more comfortable and less painful than it otherwise would
be. And while it's one thing to hold operators responsible for bad care,
it's another to blame them for life's inescapable realities. Yet all too
often, that's the driving factor behind many cases that never should have
been filed."
LTC Comment: Such as the cases that come into vulture lawyers
from their highway billboards urging people to sue nursing homes.
Sometimes the same people who sue are ones who used the same lawyers to
impoverish their parents to qualify them for Medicaid. Low Medicaid
reimbursements for their parents’ care may have caused the problems
they’re now suing to correct. What a system!
#############################
11/17/2013,
“Survey:
Americans do not like to discuss finances,” by Annika McGinnis, USA
Today
Quote: "American families may not be saving enough for
retirement but even worse, they're not talking about it with each other,
show the findings of a new study out Monday. 'Family & Retirement: The
Elephant in the Room,' a representative survey of 5,400 adult Americans
conducted by Merrill Lynch and consulting firm Age Wave in August shows
70% over the age of 25 have not had a discussion with their parents about
retirement.
"Not discussing these emotionally delicate topics is preventing many
Americans from facing the facts together as a family. More than 90% say
they would not be prepared financially if an aging parent or close
relative needed long-term care. And just 37% of people age 50 or older
believe they'll need long-term care before they die. The reality: 70%
eventually will need the costly services, the new study says."
LTC Comment:
Moral of the story? Have “the talk” with aging parents.
#############################
11/7/2013,
“Doctors In Venezuela Say Their
Universal Health Care System In Collapse [link],”
by Dr. Susan Berry, Breitbart.com
Quote:
"Almost everything needed to mend and heal is in critically short supply:
needles, syringes and paraffin used in biopsies to diagnose cancer; drugs
to treat it; operating room equipment; X-ray film and imaging paper; blood
and the reagents needed so it can be used for transfusions."
LTC Comment:
So why am I sending you news about health care in Venezuela? My late
wife and I were Peace Corps Volunteers there from 1968 to 1970. It
always seemed ironic to me that the country's constitution guaranteed
"free" health care to all citizens . . . but free health care was
virtually unavailable to anyone. So much for "social health
insurance."
#############################
Updated, Monday, November 18,
2013, 12:25 PM (Mountain)
Santa Fe, New Mexico—
#############################
MEDICARE RUN AMUCK AND LTC NEWS AND COMMENT
LTC Comment: Medicare has a $43 trillion unfunded liability.
Yet, the program eagerly encourages seniors to take maximum advantage of
its wide ranging benefits. Last week I received the following
personal email message from the Centers for Medicare and Medicaid Services
(CMS):
“Happy Birthday from Medicare! We wish you well in the upcoming year and
want to remind you of the preventive services Medicare offers to help you
stay healthy. Our records show that you have not taken advantage of
some of the preventive services which are available to you now or in the
future and listed in the table below. Please talk with your doctor to
decide which ones are right for you.”
Here are some of the preventive services Medicare’s boilerplate email
urges me to use:
OBESITY COUNSELING
CARDIOVASCULAR
DISEASE (BEHAVIORAL THERAPY)
HIGH INTENSITY
BEHAVIORAL COUNSELING
ALCOHOL MISUSE
SCREENING
DEPRESSION SCREENING
ABDOMINAL AORTIC
ANEURYSM
I’m not obese.
I work out regularly. I don’t misuse alcohol. I’m not
depressed. And last time I saw a doctor, he told me biannual check
ups would suffice. The nurse marveled that, at 67 years of age, I
didn’t use a single drug prescription. But Medicare is looking after
me and insists I should avail myself of all eligible services whether I
need them or not.
The message ended: “Remember, Medicare is your partner in health.
Sincerely, Centers for Medicare & Medicaid Services.”
As ObamaCare implodes, the commonest “solution” proposed is “Medicare for
all.” Out of the frying pan, into the fire.
#############################
11/15/2013,
“CBO
analyzes Medicaid caps to curb federal healthcare spending,” by Tim
Mullaney, McKnight's LTC News
Quote:
"The federal government could reduce its Medicaid contributions to states
as a deficit reduction measure, but the move likely would achieve savings
only by putting seniors at risk, according to the Congressional Budget
Office."
LTC Comment:
A better approach to Medicaid savings is to change the program's LTC
eligibility rules to prevent the non-poor from taking advantage of the
program and encourage them to plan early and responsibly for long-term
care.
#############################
11/14/2013,
“Better Medicaid managed care oversight needed to protect providers
serving high-risk populations: OIG [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"States are not doing a good job of monitoring how Medicaid managed care
enterprises handle providers serving high-risk populations, according to a
new government report."
LTC Comment:
Across the USA states are converting their fee-for-service long-term care
systems into managed care. They transfer the responsibility for
providing complicated care for vulnerable populations such as the aged,
blind and disabled, and in some states even the highest-risk "dual
eligibles," to giant managed care companies that have little or no
experience delivering such care to such groups. Senior advocates
worry it's a disaster ready to happen. The USDHHS Inspector General
(my former employer) finds in this report that states are not adequately
monitoring managed LTC. Risks due to Medicaid managed LTC
conversions are a component of the Center for LTC Reform's "Index of
Long-Term Care Vulnerability," about which, more, in future messages.
#############################
11/14/2013,
“Caring
For Elderly Parents Is A Daily Choice,” by Edgar B. Herwick III,
WGBH News
Quote:
"Ward, who lives in Rhode Island, said before his father died he did
something simple and extraordinary. 'My father began to realize at a
certain point that his health was declining, and he made a decision at
that point that he wanted to prepare for the fact that my mother was going
to outlive him,' he said. 'So he pulled us together and he gave us a task:
to be responsible and to take care of her.'"
LTC Comment: More aging Americans should do what Ward's Dad
did and more adult children should partially fulfill such commitments by
helping their parents obtain LTC insurance.
#############################
11/13/2013,
“LTC
community fights for attention: The silver tsunami,” by Allison Bell,
LifeHealthPRO
Quote:
"Insurance groups, insurance companies and insurance producers are trying
to tap Americans on the shoulder this month and remind them that long-term
care (LTC) planning is much more of a mess than acute health care
planning."
LTC Comment:
Long-Term Care Awareness Month is afoot!
#############################
11/13/2013,
“Price increases, not a larger senior population, are responsible for
exploding healthcare costs: analysts [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Escalating healthcare costs in the United States cannot be pinned on an
aging population demanding more services for chronic conditions. Instead,
higher costs are primarily the result of price increases, according to a
new analysis in the
Journal of the American Medical Association."
LTC Comment:
The Age Wave has only begun to crest. It won't crash until boomers
reach the age when acute and long-term care risk peak. Then
age-related health expenditures will exceed and exacerbate "higher costs."
#############################
11/13/2013,
“Major insurers say they will hike premiums on long-term care policies,”
by Tim Mullaney [link],
McKnight's LTC News
Quote:
"A number of issues have necessitated the rate modifications, including
miscalculations about how many people would maintain their policies and
the true costs of claims, as people are receiving benefits longer than the
insurers anticipated when designing these products."
LTC Comment:
The other major reason, totally outside the control or reasonable
anticipation of the private insurance industry, is the Federal Reserve’s
policy of forcing interest rates down to near zero artificially.
#############################
11/12/2013,
“An
Alzheimer's reality check,” by Tim Mullaney, McKnight's LTC News
Quote:
"Alzheimer's researchers - or the public relations machines trumpeting
their work - should chill out. Frequent breathless reports about major
breakthroughs are giving false hope to anyone who believes the hype about
an imminent cure. . . . It's perhaps too easy to be cynical about
Alzheimer's research, thanks to how the results often are presented. In
addition to creating false hope, the hype around promising findings also
threatens to make people complacent, thinking that the Alzheimer's
research machine is well-oiled and firing on all cylinders. This new
report does a service by pointing out the huge challenges that remain.
Signing your name to the declaration might be a merely symbolic gesture,
but hopefully the report will remind everyone that Alzheimer's research
still needs - and merits - our attention and activism.”
LTC Comment:
Well said.
#############################
11/11/2013,
“None
Dare Call It...,” by John Goodman, National Center for Policy Analysis
Quote:
"But what threatens the foundations of a free society most of all is when
it is the government (and its allies in the private sector) who are doing
the attacking, and when the reason there is no response is that the
victims of the attacks have been threatened and bullied into silence. I
believe that is where we are today--not just with respect to health
insurance, but with respect to health care generally. I'm afraid other
industries are not far behind."
LTC Comment:
This is an excellent column on the current status of health policy
intimidation by the government and its ramifications.
#############################
11/11/2013,
“Nursing homes are the most dangerous workplaces in America, government
data shows [link],”
McKnight's LTC News
Quote:
"Last year's illness and injury incidence rate for private sector nursing
and residential care facilities was 7.3%, the BLS reported Thursday. This
was the highest overall, and it far eclipsed the illness and injury rates
for workplaces that might seem more dangerous. The rate for miners (except
oil and gas) was 2.7%, and the rate for construction was 3.6%.
State-run nursing homes are even riskier places to work, with a 13%
incidence rate. Of all the illness and injury rates
published by the BLS last week, this was the only one to reach double
digits."
LTC Comment:
Medicaid pays nursing homes less than the cost of providing the care and
nursing home caregivers are paid some of the lowest wages of any workers
in the country. Having the highest injury rates adds injury to
insult.
#############################
11/9/2013,
“Blame
game as insurers dump doctors,” by Carl Campanile, New York Post
Quote:
"The nation's largest health insurer, UnitedHealthcare, claims the
Affordable Care Act is responsible for forcing it to boot doctors from its
Medicare Advantage program that serves thousands of elderly patients in
the New York metro region."
LTC Comment:
The ACA is from the government and it’s here to help you.
#############################
11/8/2013,
“Routine assessment predicts when Alzheimer's patients will need nursing
home care, researchers report [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"The variables include the patient's ability to take part in daily
activities, estimated time of symptom onset and level of rigidity. A
healthcare professional can gather this information in a single patient
visit, the researchers noted. They also said the assessment has proven
highly accurate even when not all 16 variables can be collected."
LTC Comment: Possibly a valuable new assessment worth adding
to the underwriting tool chest.
#############################
11/7/2013,
“How Social Security redistributes money from minorities to whites [link],”
by Brad Plumer, Washington Post
Quote:
"Specifically, for every $100 that white beneficiaries pay in taxes, they
receive $113 in benefits, blacks receive $89 and Hispanics receive $58.
The gap is particularly pronounced for retirement benefits, although the
Disability Insurance program narrows the gap somewhat. The disparity will
continue to widen in the next ten years. Whites will receive $120 in
benefits for every $100 they paid in taxes, while blacks will receive $91
and Hispanics $62."
LTC Comment:
Unintended consequences? One wonders, given how skewed Medicaid LTC
benefits are toward the middle class and affluent.
#############################
11/7/2013,
“Speaking
more than one language may delay dementia,” by Kim Painter, USA
Today
Quote:
"The latest evidence that speaking more than one language is a very good
thing for our brains comes from a study finding dementia develops years
later in bilingual people than in people who speak just one language."
LTC Comment:
Bueno, pues!
#############################
11/6/2013,
“New Study Examines Who's Really Living in Assisted Living Communities [link],”
by Alyssa Gerace, Senior Housing News
Quote:
"Small assisted living communities were nearly three times more likely to
house 'non-senior' residents under the age of 65, the study found, with
more than 21% of residents falling into that age group compared to about
7% in larger communities.
"However, the smallest communities were also more likely to house
residents with Alzheimer's disease or other memory care needs, at 53%,
compared to 41% of large communities, even though those conditions are
typically associated with the 'oldest old,' or seniors aged 85-plus.
"Still, larger assisted living communities were more likely to house
older, 'traditional' residents: nearly 85% were over the age of 75, while
more than half (56%) were older than 85."
LTC Comment:
Disturbing evidence that the most frail, infirm and vulnerable patients
are ending up in smaller care homes which may be less equipped to provide
quality care and much harder for quality control inspectors to reach.
#############################
11/6/2013,
“Young people becoming more realistic about future long-term care needs,
survey finds [link],”
by Tim Mullaney
Quote:
"Out of more than 2,000 people surveyed, about 30% said they were saving
for future long-term care needs. The number was highest (36%) for those
between 18 and 34 years old. Only 21% of people between the ages of 45 and
54 said they were saving."
LTC Comment:
Evidently caring for Grandma takes its toll on youthful complacency more
than on middle-aged anxiety.
#############################
11/5/2013,
“Why
it's time to embrace asset-based long-term care products,” by Chris
Coudret, LifeHealthPRO
Quote:
"With all the recent negative news, it would be easy and natural for the
financial services industry and the financial media to be sour on the
prospects of finding a worthy approach to funding long-term care. However,
the sustained growth of asset-based long-term care products indicates
there is a sea change occurring in the industry and a story that needs to
continue to be told."
LTC Comment:
A major benefit of private insurance vs. “social insurance” is that the
private market allows and encourages many different kinds of coverage.
Consumers can pick and choose what’s best for them. Social insurance
imposes a one-size-fits all program that usually fits no one especially
well.
#############################
11/5/2013, “Retirement:
Make long-term care coverage more affordable,” by Kimberly Lankford,
Chicago Tribune
Quote: "Until recently, people bought long-term-care policies to
cover 100 percent of the cost of care. But rates for new policies have
shot up and it has become a lot more difficult to qualify for coverage if
you have health issues. Fortunately, insurers are offering new options
that shift more risk to you but make policies less costly."
LTC Comment:
This Chicago Tribune article quotes Center-corporate-supporter
Claude Thau.
#############################
11/4/2013,
“The
Biggest Risk to Your Retirement,” by Shelly K. Schwartz, CNBC
Quote:
"You can create an additional financial safety net with long-term care
insurance. Such policies are designed to cover long-term services and
support, including assisted living, home care, adult day care and
hospice-things traditional health insurance doesn't cover. . . . Not
everyone requires assisted living in their later years, however, and
long-term care coverage does not come cheap. As such, it's important to
consider how much money you already have set aside for health-care costs
and purchase only the amount of coverage you actually need, according to
the Department of Health and Human Services."
LTC Comment:
Sound advice to insure only for LTC risk that exceeds your ability to pay
otherwise. Properly used, insurance replaces catastrophic risk with
affordable premiums rendering peace of mind to the insured and well-earned
profit for the insurer.
#############################
11/4/2013, “Long Term Care Insurance Applications Cost Insurers
Reports AALTCI [link],”
by Jesse Slome, Expert
Quote: "An individual applying for long term care insurance
costs the insurer between $400 and $600 even if they are not accepted
according to a study from the American Association for
Long Term Care
Insurance. The approximate cost to the industry was $200
million in 2012, AALTCI reports."
LTC Comment: Due diligence in establishing eligibility for
coverage and estimating the level of risk each insured brings to the risk
pool is a major benefit of private insurance over “social insurance.”
The latter lets everyone in, charges everyone the same and thus rewards
poor behavior, punishes good behavior, and becomes insolvent over time.
#############################
11/3/2013,
“We
need to stop coddling the elderly,” by Robert J. Samuelson,
Washington Post
Quote:
"No one wants to be against Grandma, who — as portrayed in the media — is
kindly, often suffering from some condition, usually financially
precarious and somehow needy. But projecting this sympathetic portrait
onto the entire 65-plus population is an exercise in make-believe and,
frequently, political propaganda. The
St. Louis Fed study refutes the stereotype. Examining different age
groups, it found that since the financial crisis, incomes have risen
for the elderly while they’ve dropped for the young and
middle-aged."
LTC Comment:
We're getting closer and closer to a time when views like Samuelson's will
prevail. Social Security, Medicare and the defacto entitlement Medicaid
LTC will be means-tested. The imbalance of government benefits
flowing from the young to the old will equalize. And private
insurance will rise again to fulfill its rightful role in retirement
planning.
#############################
Updated, Friday, November 15,
2013, 12:48 PM (Mountain)
Santa Fe, New Mexico—
#############################
LTC BULLET: ANNUITY BLUES
LTC Comment:
Medicaid planners use annuities to disappear megabucks and they (the
planners and the annuities) drive the good Medicaid lawyers crazy.
After the ***news.***
*** NOVEMBER IS
LONG-TERM CARE MONTH SEVEN TIMES OVER according to a press release today
highlighting these seven programs: Long Term Care Awareness Month,
National Home Care Month, National Family Caregivers Month, National
Hospice and Palliative Care Month, National Alzheimer's Disease Awareness
Month, Warrior Care Month and the 3 in 4 Need More campaign. LTC
Awareness month (November) gets all too little attention in the national
media. Thanks to
LTCFP for pushing these important programs into the limelight. ***
*** SEND STEVE TO
HEALTH CARE ROUNDTABLE in Richmond, VA. The
Thomas Jefferson Institute for Public Policy (TJI) is about to publish
our major report titled “Medicaid and Long-Term Care Financing: A
Case Study in Virginia.” This will introduce the public policy world
to our new “Index of Long-Term Care Vulnerability” which will enable
analysts to answer the question objectively: can LTC financing
survive in its current and tending form? TJI is sponsoring an
important “Health Care Roundtable” on December 12. They’d like Steve
Moses to present our report’s findings and join the discussion with some
of the top health care policy analysts in the country, including
Grace-Marie Turner of the Galen Institute, Michael Tanner of the Cato
Institute and Bob Helms of the American Enterprise Institute.
The Center for
Long-Term Care Reform seeks to raise funds to enable Steve to make this
trip, give this presentation, and contribute to the important health
policy conversation.
Special deal:
Pledge any amount
$25 or above to support this important project and we’ll comp you for a
year of the Center’s clipping service (usually $120 minimum; valid for new
clipping service subscribers only) at no extra charge.
Pledge $50 or more
and we’ll upgrade your Center membership to the next higher individual
level, e.g. Regular membership ($150 per year) goes to Premium Membership
(usually $250 per year); Premium goes to Premium Elite or Regional
Representative ($500 per year, for those who qualify). Check out our
“Membership
Levels and Benefits” for details on all membership levels.
If you can help,
let Damon know at
damon@centerltc.com or 206-283-7036. He’ll subscribe you to the
Clippings or upgrade your membership immediately, even while your check is
in the mail.
We’ll gladly make
similarly attractive special offers to corporate donors willing to pony up
somewhat larger amounts. Just email Steve at
smoses@centerltc.com or call him at 425-891-3640 to discuss and
negotiate a bonus benefit most attractive to you and your company.
Our goal is to raise
$1,500 to support this trip and opportunity. Thanks in advance for
your consideration and support. ***
#############################
LTC BULLET:
ANNUITY BLUES
LTC Comment: I’m
just back from the 46th Annual Training and Continuing
Education Conference of the American Association of Public Welfare
Attorneys. Dan Hart, Assistant Attorney General from Iowa, and I
presented a program titled “Medicaid Eligibility for Long-Term Care:
If You Build It, They Will Come.” We explored the collateral damage
done to the long-term care safety net by aggressive Medicaid planning.
Evidently we succeeded. Two members of the audience came up to me
afterwards to say they'll keep their LTC insurance coverage after all,
despite harboring recent doubts.
In the course of the
conference, I learned about extraordinary efforts some states have made to
curtail the abuse of one especially egregious Medicaid planning technique.
Special
Medicaid-friendly annuities make hundreds of thousands of dollars
disappear from spend down scrutiny. While conducting state-level
studies of Medicaid and long-term care financing, I’ve frequently
encountered examples of this loophole. Search for “annuities” in any
of our many state reports
here and you’ll see what I mean. Here’s one example from our
November 2012 study titled “The Maine Thing About Long-Term Care Is That
Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link].”
The
use of annuities to qualify affluent Mainers, even “millionaires”
according to eligibility workers interviewed for this study, is pervasive.
This technique is used in two ways. For married applicants, the couple’s
otherwise disqualifying wealth is transferred into an annuity for the
community spouse strictly in keeping with allowable federal guidelines,
which require actuarial soundness and making the state the beneficiary of
residual funds. Virtually any amount of money can be transferred into such
an annuity rendering the institutionalized applicant immediately eligible.
The annuity pays out to the community spouse within the life expectancy of
the institutionalized spouse, often in less than one year. Workers cited
one example of a $450,000 annuity which paid out at a rate of $17,000 per
month until all the sheltered funds were back with the community spouse
and hence uncounted, the eligibility determination having already been
made.
The
second way annuities are used to qualify otherwise ineligible applicants
for MaineCare involves single people with excess assets. The “reverse
half-a-loaf” strategy works as follows. The applicant gives away half his
or her disqualifying assets thus creating an eligibility penalty equal to
the amount of assets transferred for less than fair market value divided
by the average cost of a nursing home in Maine. With the other half of the
assets, the applicant creates an annuity in his or her own name and uses
the proceeds of the annuity to pay for care during the duration of the
penalty period. When the penalty period expires, the annuity runs out, and
the applicant is eligible for MaineCare LTC benefits having protected half
the original assets from MaineCare’s spend down requirement. (pps. 10-11,
footnotes omitted)
There is virtually no
limit to the amount of assets that can be divested in this way. But
wait, you demur. Didn’t the Deficit Reduction Act of 2005 (DRA ’05)
fix the Medicaid annuity problem? Well, yes, partially. It put
some new restrictions on the use of annuities to qualify for Medicaid
long-term care benefits. Here’s how I summarized the new provisions
in a contemporaneous “LTC
Bullet: The Brave New World of LTC Financing.”
ANNUITIES
AND OTHER LARGE TRANSACTIONS
* Medicaid recipients and community spouses must disclose annuities at
eligibility and recertification
* State must be named as remainder beneficiary
* State must notify annuity issuer of its status as remainder beneficiary
* States may require annuity issuer to report income or principal
withdrawals
* States may deny Medicaid eligibility based on such withdrawals
* Purchase of an annuity is a penalizable TOA unless state is listed as
remainder beneficiary in first position for at least total of Medicaid
payments or in second position to community spouse or minor or disabled
child
* Effective at enactment
So, how is it that
Medicaid planners can still use annuities to make huge amounts of assets
go poof? The method discussed at the conference depends on the
difference between Medicaid’s treatment of income and resources for
married couples. Spousal impoverishment rules protect a certain
amount of a couple’s joint assets for the healthy community spouse.
But, as long as it is done before the Community Spouse Resource Allowance
(CSRA) is determined at the time of Medicaid application, the rules also
allow the transfer of an unlimited amount of assets from an ill,
institutionalized spouse to the community spouse for the “sole benefit” of
the community spouse.
So, to get around the
spousal impoverishment CSRA limits, Medicaid planners have their clients
do a sole benefit transfer before applying for Medicaid. Then they
have the community spouse purchase an annuity that meets all the federal
requirements delineated above. They argue this is not a penalizable
transfer of assets because fair market value, in the form of an income
stream from the annuity, has been received. Now, however, instead of
having resources which would be limited by the spousal impoverishment
rules, the community spouse has an income stream, which federal Medicaid
rules consider unavailable to the institutionalized spouse. At this
point, the ill spouse can apply for Medicaid with impunity having
transferred literally unlimited amounts of money into the sole ownership
of the healthy, community spouse.
Three states have
challenged such annuities in three different court cases. They
argued variously that such annuity machinations are really inappropriate
asset transfers or that they violate the letter and intent of the Medicaid
law in other ways. It seems to most stewards of the Medicaid LTC
safety net that for the wealthy to be able to shift a million dollars or
more out of the way of spend down requirements is a distortion and
perversion of Medicaid’s avowed purpose, to be a safety net for people
genuinely in need. But the courts did not agree. The law is
the law, they said. Efforts to persuade the Centers for Medicare and
Medicaid Services to fix the problem and appeals to Congress to fix it in
statute have gone nowhere. So the practice continues, rendering big
fees to Medicaid planners and diverting desperately needed public funds
from the poor to the affluent.
We at the Center for
Long-Term Care Reform see the annuity problem and many other abuses of
Medicaid’s loose eligibility rules day in and day out. Fighting for
laws and public policy that preserve scarce public resources for the needy
and encourage everyone else to plan responsibly for long-term care is our
stock in trade. It’s sad to see the highly qualified and superbly
competent attorneys who represent America’s public welfare programs
struggle in frustration to make those programs work to the benefit of
their rightful beneficiaries. I applaud their efforts and we’ll
continue to do what we can at the Center to support them with thoughtful
and persuasive public policy research and analysis.
#############################
Updated, Friday, November 8,
2013, 11:02 AM (Pacific)
Seattle—
#############################
LTC BULLET: PBS’S 6 LTC TIPS
MISS THE MARK
LTC Comment:
What’s wrong with the conventional wisdom about how to resolve America’s
long-term care crisis? After the ***news.***
|
 |
|
Here is the latest
from the president of LTC Consultants, Phyllis Shelton:
*** "I've been
saying since my 2010 Worksite and Combo Tour that Medicaid is the real
threat to our economy. May I say ‘I told
you so’ now with this Oct. 25th 2 1/2 minute
CBS
video?" ***
*** In "Why
Caregivers are an Endangered Species", US News & World Report
9/4/13 says: "The nation's bill for Medicaid is already projected
to rise substantially due to the expansion of health insurance under
Obamacare. Imagine what a caregiving crisis would do." Critical
related reading: "Why
Medicaid Could Be the Real Threat to Our Economy". ***
*** Cover Story:
Life Insurance Selling *** |
***
2014 LTC SUMMIT.
AALTCI has seemingly worked a miracle. Next year’s LTC Summit
costs only $69 to attend in person if you register by November 30.
If you still can’t afford to participate in person, you can watch the
program streamed live online. How can they do it? Check out
the details
here. ***
*** CLTCR Premium
Membership -- Center for Long-Term Care Reform premium
members
receive our full suite of individual membership benefits including:
our
LTC Bullets and E-Alerts; access to our Members-Only
Zone website and Almanac of Long-Term Care; subscription to our
Clipping Service; and email/phone access to Steve Moses for 24-hour
turnaround queries. Our Premium Membership is designed to give you a
competitive advantage in your long-term care profession. Your increased
knowledge of the critical issues and challenges we face in the field of
long-term care service delivery and financing equals improved professional
success for you and better LTC services for your clients and for those who
have no choice but to rely on scarce public resources. Premium
Membership is $250 per year, paid up front or monthly by automatically
recurring credit card payments. Contact Damon at 206-283-7036 /
damon@centerltc.com to start your Premium Membership
immediately or go directly to our secure online subscription page and
sign up for as little as $21 per month. ***
#############################
LTC BULLET:
PBS’S 6 TIPS FOR LTC MISS THE MARK
LTC Comment:
Millions watch the Public Broadcasting System’s NewsHour every
night. So when that show addresses long-term care it’s worth paying
attention.
You can read about and view videos from a forum, titled "Global and
Regional Models for Long-Term Care: Can They Work Nationally?," that
MacNeil/Lehrer Productions (the NewsHour’s parent company) and the
SCAN Foundation sponsored on Monday.
But if you have better
things to do, such as advising consumers on how to protect themselves from
LTC risks and costs without depending on tottering government programs,
let me save you some time.
Following are quick
summaries of PBS’s “6 tips for averting America's looming long-term care
crisis” followed by our critique of each.
PBS Tip #1:
“Keep it Local” The Urban Institute’s Howard Gleckman says don’t
seek a “single answer.” Rather work from the bottom up with friends,
neighbors and families taking the lead. “To the degree that we can,
government can at least try to stay out of the way of those solutions . .
..”
LTC Comment:
Hear, hear! Finally something from this writer with which I can
agree. But true to form, he reverts to form a few sentences later,
advocating more and bigger government programs.
PBS Tip #2:
“Change the Financing” Former CMS Administrator Dr. Mark McClellan,
currently with the Brookings Institution, says “let people control how
[Medicaid] money is spent on their behalf. That's what's behind our ‘Money
Follows the Person’ [MFP] initiatives in states around the country . . ..”
LTC Comment:
Terrific. MFP programs are a vast improvement over the current LTC
financing system which makes providers--not patients--the program’s
customers. But “Money Follows the Person” still depends on payments
coming from an unsustainable welfare program. Making Medicaid more
attractive to more people is not a solution.
PBS Tip #3:
“Focus More on the Poor”
Dr. E. Percil Stanford, president of
Folding Voice and
the KIND Corporation, says “Unfortunately, considerable [LTC policy]
attention from the most well-intentioned institutions and organizations
has focused primarily on the middle and upper classes.” Instead, he
says, they should focus laser-like on the poor elderly.
LTC Comment:
Right on, but how? No answer from this source. Research shows
Medicaid’s LTC program benefits the middle-class and affluent as much or
more than the poor. The solution is to target scarce public benefits
to the needy and use some of the savings to incentivize early and
responsible LTC planning by more prosperous people.
PBS Tip #4:
“Build a Comprehensive National Strategy” AARP’s Debra Whitman wants
us to spend more government money to help family caregivers, grow
Medicaid, expand “affordable” housing and transportation, “integrate”
health care services, and eliminate LTC impoverishment.
LTC Comment:
Typical AARP eyewash. Not a word about where the money will come
from to pay for such wishful public program expansions. The federal
government already borrows a third or more of everything it spends.
It forces interest rates to near zero to make such borrowing feasible
temporarily. Watch out when this bubble bursts.
PBS Tip #5:
“Begin the Conversation”
Jennie Chin Hansen, CEO of
the American Geriatrics Society [AGS], thinks we should "chat and
chew" LTC issues with our friends and colleagues creating a "study group"
opportunity to “discuss the universal journey.” She says “Let's
proactively help each other build greater confidence, clarity and
capacity.”
LTC Comment:
Doesn’t that advice sound vacuous coming from the head of the AGS?
We’ve been jaw-boning long-term care for decades without addressing the
real problem, i.e. government pays for most high-cost LTC which
anesthetizes consumers to the risk and crowds out responsible LTC planning
and private financing.
PBS Tip #6:
“Make It a Human Right”
Dr. Laura Gitlin of the
Center for Innovative Care in Aging says “We need to grow a long-term
care system based on . . . [the] principle . . . that long-term care is a
basic right."
LTC Comment:
Of all the empty rhetoric in this program, the prize for thoughtless
irresponsibility goes to this proposal. If people have a basic human
right to long-term care whether or not they are able or willing to pay for
it, their “right” means someone else must provide LTC whether or not they
are compensated for their effort. That is the definition of
slavery, which is what this ostensibly caring academic actually
advocates.
Closing LTC Comment: When I see the subterranean quality of LTC policy analysis
displayed in program’s like this one, I’m nearly ready to despair.
The one thing that keeps me going is that a few of you AMGs (altruistic,
masochistic geniuses) are still out there having truly valuable
conversations with real consumers about how actually to protect themselves
from escalating LTC risks and costs.
The whole wobbly Rube
Goldberg apparatus of government-financed LTC puts enormous obstacles in
your way. It gives away what you’re trying to sell. It makes
your product unprofitable by manipulating interest rates so that its
programs are artificially viable. It falsely assures citizens
they’ll be taken care of by bankrupt social programs already under-funded
by trillions of dollars. Yet you soldier on. Somehow.
Hail to the AMGs!
#############################
Updated, Monday, November 4, 2013, 11:08 AM (Pacific)
Seattle—
#############################
OBAMACARE STUMBLES AND LTC NEWS AND COMMENT
LTC Comment:
What a week for “ObamaCare.” Everything its critics predicted is
beginning to happen. It will get worse. We begin today’s
LTC E-Alert with this link to the best critique of the government
health care take over I’ve seen so far. It isn’t just the software,
folks.
10/23/2013,
“Top Ten Obamacare Disasters to Come,” by Grace-Marie Turner, National
Review Online
Quote:
“[E]ventually, software can be fixed. Obamacare’s epic policy flaws can’t.
The problems increasingly are going to be up close and personal, as people
see for themselves the impact it has on their lives and pocketbooks. The
top ten debacles to come:
1.
Deductible shock . . . 2. Will people pay? . . . 3. Attracting the sickest
. . . 4. Less expensive plans vanish . . . 5. Families lose out . . . 6.
Repaying subsidies . . . 7. Public health-care costs are going to explode
. . . 8. More jobs lost . . . 9. Identity theft and fraud will explode . .
. 10. Federal-exchange subsidies eliminated? . . . If you thought
Healthcare.gov was bad, just wait. This article is available online
at: National
Review Online.”
LTC Comment:
Read it and weep.
#############################
December 2013,
“How to Make Long-Term Care More Affordable: We help you navigate the maze
of choices to get the best deal [link],”
by Kimberly Lankford, Kiplinger
Quote:
"The average cost of a private room in a nursing home is now about $248
per day (or about $90,000 per year), and 12 hours a day of home care costs
even more, according to the MetLife Mature Market Institute. But for many
baby-boomers, it takes more than the threat of financial catastrophe to be
prodded into buying a long-term-care insurance policy."
LTC Comment:
Gee, wonder why, when the government pays for most expensive long-term
care after the insurable event occurs and without requiring spend down of
most assets. See
How to Fix Long-Term Care for more.
#############################
11/1/2013,
“IRS Announced Increased Tax Deductible Limits for Long Term Care
Insurance [link],”
by Jesse Slome, ExpertClick
Quote:
"November 1, 2013. The American Association for Long Term Care Insurance
announced today release of increased deductibility levels for long-term
care insurance policies purchased in 2014.
"'For taxable years
beginning in 2014, the limitations have been increased again,' explains
Jesse Slome, executive director of the American Association for
Long Term Care Insurance (AALTCI), the industry's trade
association. 'Tax advantaged long-term care insurance remains one of the
few remaining significant tax-savings benefits especially meaningful for
small business owners.'"
LTC Comment:
See our Members-Only Zone archives for LTCi tax deductibility limits for
each year dating back to 1997
here.
#############################
11/1/2013,
“Analyst
expects insurer loss on overhaul exchanges,” by Tom Murphy,
Bloomberg Business Week
Quote:
“Health insurers will lose money for the first couple years on business
they get from the health care overhaul's public exchanges, according to a
Goldman Sachs analyst. He says the hits won't be big enough to change
earnings forecasts, however.
"Borsch said a bigger
concern for health insurers will be rate cuts for Medicare Advantage
plans, the privately run versions of the federal government's Medicare
program. Insurers will receive less reimbursement next year for these
plans due to overhaul-mandated reductions."
LTC Comment:
And thus the Medicare Advantage plans favored by consumers will be forced
to subsidize ObamaCare’s expansion of high-cost coverage to subsidized
public dependents.
#############################
10/31/2013,
“Why
Art Therapy is Good for the Brain,” by Jennifer Wegerer, A Place
for Mom
Quote:
"Art therapy has proven a powerful tool for treating Alzheimer’s. More
than giving patients something pretty to look at it or an exercise to keep
them busy, it stimulates the brain. It stirs memories and can bring
language back into the life of someone who struggles to speak.
"Studies show that
art therapy gives back to Alzheimer’s patients, in some part, what the
disease has taken away. It stimulates the senses, can trigger dormant
memories and encourages conversation. Whether they’re viewing or creating
art themselves, Alzheimer’s patients can use it as a form of expression,
particularly individuals who can’t communicate verbally."
LTC Comment:
How much “art therapy” do you think Medicaid patients in nursing homes or
waivered home care programs receive? The best and most creative care
will always be available first and foremost to people who can afford to
pay privately.
#############################
10/31/2013,
“Advance Planning for Eldercare Saves Money, A New Study Shows [link],”
by Sally Abrahms, AARP Blog
Quote:
"When it comes to planning for
long-term care, the early bird does get the worm, according to a new study : The
report shows that families who anticipate their needs can save close to
$11,000 a year in out of pocket expenses by planning in advance instead of
waiting until a crisis."
LTC Comment:
Just be sure you aren’t trading poor care for savings by planning for
Medicaid eligibility by deliberately impoverishing yourself.
#############################
10/31/2013,
“Nursing home arbitration agreements force consumers to 'sign away legal
rights,' trial lawyers argue [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Arbitration agreements in long-term care contracts are harming consumers
and eroding the U.S. civil justice system, according to a prominent
association of trial lawyers."
LTC Comment:
Maybe trial lawyers would have more credibility if they hadn’t abused
nursing home liability cases for so long. Have you seen the
billboards in Florida urging drivers to sue their parents’ nursing homes?
First the Medicaid planning attorneys take their cut by impoverishing the
parent and enriching themselves and their adult-children clients.
Then the litigators extract a fortune from the LTC financing system by
suing nursing homes that can’t afford to provide good care because they
have too many Medicaid recipients paying rates less than the cost of
providing their care. Yeah, these lawyers really have our best
interests at heart.
#############################
10/30/2013,
“Social
Security benefits up just 1.5% in 2014,” by Chris Isidore, CNNMoney
Quote:
“Social Security benefits will rise only 1.5% next year, one of the
smallest increases ever in the program's annual cost-of-living adjustment.
The increase is down from the 1.7% increase for 2013. There was no
cost-of-living increase at all in 2010 and 2011 because prices fell in the
wake of the recession. A 3.6% adjustment in 2012 has been the only
significant rise in benefits in recent years."
LTC Comment:
And that little increase will likely be wiped out by increases in Medicare
costs.
#############################
10/30/2013,
“Healthcare Continues To Rank as Top
Financial Fear in Retirement in National Investor Survey [link],”
Press Release, Wall Street Journal
Quote:
"A new survey of investors who are currently working shows concerns about
rising health care costs, changes to Social Security and/or Medicare and
running out of money are among the greatest financial worries in
retirement, and the percentage citing them has increased since prior
surveys.
"'Though being able
to afford healthcare isn't a new issue, the fact that more affluent
workers are very worried about it than not, points to the value advisors
can provide to help clients develop strategies to manage it,' said Matt
Rigatti, vice president, Signator Investors, Inc. 'We've already seen
movement in the direction of tools that address healthcare,
specializations -- or including a healthcare finance-oriented specialist
on a client's team and I suspect we'll continue seeing growth in that
area.'"
LTC Comment:
Well, yes, and including a long-term care specialist.
#############################
10/29/2013,
“How
to transfer IRAs to LTC insurance Opinion,” by Brent Welch,
LifeHealthPRO
Quote:
"Nearly 10,000 baby boomers are turning 65 every day, and they will for
the next 16 years. Where will they get the money to purchase long-term
care insurance (LTCI)? Most LTCI owners are deeply concerned about the
shocking price increases in policies this past year. Forbes
reported that the increases in LTCI premiums may be between 45 percent and
85 percent in 2013 alone! The question I am asking you this month is: How
can one use IRA assets to pay for long-term care insurance? Is it really
possible to transfer IRA money into tax-free LTCI?"
LTC Comment:
Does this work and is it a good idea?
#############################
10/29/2013,
“Medicaid
enrollment surges ahead of ACA sign-ups,” by Jennifer Haberkorn,
Politico
Quote:
"HealthCare.gov may be limping along to full viability, but Medicaid is
flying off the shelves. New Medicaid enrollment is far outpacing new
insurance customers under Obamacare so far, a subtle sign that the program
could play a greater role in the law's coverage expansion than first
anticipated. Some people are signing up for the Medicaid expansion created
by the president's health law. Others were already eligible for their
state's current Medicaid program, but until this outreach campaign about
health coverage, they had never signed up."
LTC Comment:
There’s an old saying in the business world: “When you’re losing
money on every customer, you can’t make up for it with greater volume.”
Welcome to Medicaid, a bankrupt public welfare program that is crowding
out health care and LTC providers with dismally low reimbursements.
#############################
10/28/2013,
“Another
perspective on the Virtual Dementia Tour: Guest Column,” by
Lassie Pappas, McKnight's LTC News
Quote:
"Several years ago, I attended a seminar on how to decorate an Alzheimer's
unit in a skilled nursing facility. While fascinated by what patterns,
textures, and nuances should and should not be used in that situation, I
never really knew how the residents FELT about their surroundings. I
simply took the information as factual based on research, and moved
forward with an internal renovation. A recent experience at the American
Healthcare Association Convention really changed my perspective on how our
elderly population may view their environment, and how we as care givers
or visitors may unknowingly make them feel."
LTC Comment:
Read this for a vicarious sense of what being a dementia patient might be
like.
#############################
10/28/2013,
“What
the Voyager space program can teach you about preparing for long-term care,”
PBS News Hour
Quote:
"At first glance, comparing a 36-year-old, one-ton spacecraft hurtling
through interstellar space at about 37,075 miles per hour to the realities
of planning for our long-term care needs seems ... odd. But the more we
thought about it, it made sense. We brought together the wisdom of NASA
scientists and health experts to highlight 10 lessons the Voyager
spacecraft can teach us about planning for long-term care.
"Like the Voyager
engineers, make sure your plans have fallback options in case your
intended future doesn't materialize. Consider a long-term care insurance
policy in case investments and Social Security are not enough to cover
your medical needs after you retire. Understand the availability and kinds
of care options your state and local government provides, and make plans
should you need additional support."
LTC Comment:
Hmmm. Maybe those who preferred to call the Center’s “Silver
Bullet” a “space capsule” were right all along.
#############################
10/28/2013,
“Breakthrough study identifies 11 new genes linked to Alzheimer's disease
[link],”
FoxNews
Quote:
"Researchers have identified 11 new genes linked to an increased risk of
developing Alzheimer’s disease, Medical News Today reported. In a
study published in Nature Genetics, researchers from 145 academic
centers around the world collected genetic data from 74,076 people in 15
countries in an attempt to identify more genes linked to the
neurodegenerative disease."
LTC Comment:
The more we know about the “Big A” the better, but who needed 11 more
genes associated with Alzheimer’s Disease?
#############################
10/28/2013,
“The
real cost of (not having) LTCI: Sales strategy,” by Ed McCarthy, CFP,
LifeHealthPRO
Quote:
"Many clients who reject long-term care insurance (LTCI) or consider
dropping their coverage do so on the argument that it's too expensive. But
that attitude overlooks several important aspects of the costs of not
buying the coverage, including the financial and personal burdens imposed
on long-term care (LTC) recipients' families. We asked several LTCI
experts for their thoughts on the cost issue and how they approach it with
prospects and clients."
LTC Comment:
This article cites Premier Elite Center members Honey Leveen and Phyllis
Shelton. Well done!
#############################
10/25/2013,
“The
future of LTCI: Options, opportunities and urgency,” by Tom Riekse,
Jr., LifeHealthPRO
Quote:
"Luckily, in the United States, we have many private LTC insurance
solutions. Despite media perceptions, Americans have more opportunities
than ever to plan for LTC through insurance. Will baby boomers heed the
message and actually engage in planning? Financial professionals are the
most likely group to influence them.
"There are four key
types of coverage: traditional health-based LTC insurance, linked life/LTC
plans, life insurance with LTC or chronic care riders, and finally annuity
LTC plans. Let's look at the future of these product categories."
LTC Comment:
Congratulations on this fine article to long-time Center supporter Tom
Riekse, Jr., managing
principal of Center-corporate-member
LTCI Partners.
#############################
10/25/2013,
"Strokes
affect more young people, could double by 2030: study,” The Associated
Press, New York Daily News
Quote:
"The incidence of stroke in people aged 20-64 jumped by a quarter,
according to a new analysis of more than 100 studies published between
1990 and 2010. Stroke is the second-leading cause of death worldwide,
though the death rate from stroke is actually falling due to better
treatment options.”
LTC Comment:
As stroke is one of the leading causes of LTCI claims, this finding should
be a wake up call to younger prospects who now face a higher LTC risk.
#############################
10/25/2013,
“Greater family involvement in care improves resident outcomes but
increases guilt, researchers find [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Programs to boost family involvement in caregiving can improve quality of
life for long-term care residents and decrease the burden on staff, but
might also increase family members' feelings of guilt, researchers have
found."
LTC Comment:
Caregiving is fraught with mixed emotions: pride and satisfaction
for doing what you can, but worry and guilt that you could and should have
done more. Very natural feelings.
#############################
10/24/2013,
“Medicaid
could be the next headache for Obamacare,” by Kyle Cheney, Politico
Quote:
"A new phase of the Obamacare launch is coming, this one involving
Medicaid. And it could be déjà vu all over again. On Nov. 1, the health
law's malfunctioning enrollment system is supposed to send reams of data
to states so they can begin placing thousands of people into Medicaid. But
state officials say that transfer system has barely been tested and could
be vulnerable to technical failures like those that have crippled the
broader Obamacare sign-up process.
"Under Obamacare,
millions of low-income uninsured people are expected to enroll in
Medicaid, which will be expanded significantly in about half the states on
Jan. 1. Plus, the health law's enrollment push is expected to bring out of
the woodwork people who are currently eligible but haven't already signed
up for Medicaid. Early data from states running their own enrollment
systems are reporting tens of thousands of new Medicaid enrollees so far
this month, a potential indicator of strong interest."
LTC Comment:
Solving America’s health care problems by placing millions more people on
Medicaid is like adding deck chairs to the Titanic after the
incident with the iceberg.
#############################
10/24/2013,
“Health-care help from an unlikely source: As clients' health costs rise,
financial advisers scramble to become Medicare experts [link],”
by Elizabeth O'Brien, WSJ MarketWatch
Quote:
"Most financial advisers spend years developing expertise in the likes of
asset allocation and investment fund selection. Until recently, they
barely addressed the second-largest budget item of their older clients:
health-related costs. This is beginning to change, though, as demand for
help with health-care planning drives more advisers to add another line to
their resume: Medicare consultant."
LTC Comment:
When will financial advisors get around to becoming “LTC consultants?”
More of them should advise their clients to consult genuine LTC insurance
experts.
#############################
10/23/2013,
“3
ways to pitch worksite LTCI,” by Jeff Sadler, LifeHealthPRO
Quote:
"Say what you will about the
Patient Protection and Affordable Care Act (PPACA), but it is having a
positive effect on the voluntary worksite marketplace. The majority of
Americans seem to feel that health insurance coverage will never be the
same and that future coverage will be less comprehensive and more costly.
This would continue a decade-long pricing trend where employers passed
more of the premium responsibility for health coverage on to the employee
even as deductibles and out-of-pocket costs were increasing. Concerned
that the underlying health care coverage may not be enough or even
affordable in the years to come, employees have embraced the supplemental
products employers are making available to them through both Section 125
cafeteria plans and payroll deduction. Whatever health insurance ends up
looking like post-2014, there will be ample opportunity for additional
supplemental sales to make up for whatever an employee feels the core
benefit package is lacking. Enter
long-term care insurance."
LTC Comment:
A dim silver lining at best, but any port in a storm.
#############################
10/22/2013,
“Survey:
Third of Americans expect to work until they drop,” by Eric Rosenbaum,
CNBC
Quote:
"You've heard the story about America's retirement crisis. Young people
don't save enough. Older people have to work longer. Public
pension
benefits are always on the verge of being
slashed, and Social Security's future is anyone's guess. And now it
has come to this: In its annual
retirement
study of middle-income Americans (income of $25,000 to $100,000), Wells
Fargo asked participants if they expect to work until they die. 'This is
the first time we asked if people thought they would work until they die
or become too sick,' said Laurie Nordquist, head of Wells Fargo
Institutional Retirement and
Trust.
Thirty-seven percent of middle-income Americans surveyed by Wells Fargo
said they have that expectation. ‘If 80
is the new 60, it's looking like six feet under is the new 65 for a
significant percentage of Americans.’”
LTC Comment:
The reality is that most people will not work until they die. They
may work until they need long-term care, but then they’ll “retire.”
The bad news is that traditional retirement is disappearing. The
somewhat better news is that more people will have higher incomes longer
so they can afford the LTC insurance they’ll need to gain access to better
private LTC services when that time comes.
#############################
10/22/2013,
“7
health insurance blogs you should know about,” by Lauren Jaeckel,
LifeHealthPRO
Quote:
"From
health care reform to
sales and marketing, the insurance landscape is constantly evolving.
Throughout every change, industry thought leaders provide essential tips
and insights into new policies and trends to keep us on top of our game.
Without further ado, here are seven of the industry’s most influential
insurance blogs that you should be following."
LTC Comment:
All good, but we scan everything and deliver the best of it to you in the
Center for Long-Term Care Reform’s “Clippings” and LTC E-Alerts.
Congratulations to Center supporters Honey Leveen (Premier Elite) and
Stephen Forman (Bronze Corporate) for publishing free public blogs that
made the list of the health care industry’s best!
#############################
10/21/2013,
“GAO
analysts eye Medigap effects,” by Allison Bell, LifeHealthPRO
Quote:
"Holders of Medicare supplement insurance who said they had health
problems spent an average of about $30,000 on care in 2010. The ailing
Medigap holders spent about 2.5 times as much on care that year as
consumers who said they had health problems but only had traditional
Medicare fee-for-service (FFS) coverage, without help from a Medigap
policy, a Medicare Advantage plan, or employer-sponsored retiree health
benefits."
LTC Comment:
Government ruined Medi-Gap insurance by forcing it into limited,
structured plans and eliminating most of the choices consumers used to
have for supplementing their Medicare coverage.
#############################
10/21/2013,
“The cost of not planning for long-term care: Study pinpoints financial
cost of caregiving [link],”
by Maria Wood, LifeHealthPRO
Quote:
"Numerous studies have underscored the physical and psychological strain
of taking care of an aging, ailing loved one. However, a recent study by
Genworth quantifies the
monetary loss that caregiving could entail without the benefit of
long-term care insurance (LTCI) or some form of pre-planning. The new
report, ‘Beyond Dollars: A Way Forward,’ calculated that, on average,
families would be able to save nearly $11,000 yearly in out-of-pocket
expenses if long-term care arrangements were made prior to a loved one
actually needing long-term care. Moreover, 53 percent of family members
that acted as the primary caregiver have lost income due to their
caregiving duties."
LTC Comment:
There’s more to LTC expenses than the cost of the patient’s care itself,
especially for caregivers.
#############################
10/21/2013,
“Report: Providers should prepare for managed care partnerships for dual-eligibles
services [link],”
by Tim Mullaney, McKnight's LTC News
Quote:
"Managed care organizations are set to play a bigger role in how long-term
care is provided for people currently eligible for both Medicare and
Medicaid, and providers should focus on having the right capabilities in
place for them, according to a new report. Released by merchant bank
TripleTree, it also identifies technology vendors enabling these
capabilities in the long-term and post-acute care settings."
LTC Comment:
Moving the aged, blind and disabled—even including the most frail, infirm
and expensive dual eligibles—into care managed by giant corporations that
are more accustomed to dealing with preventive and acute care of mostly
healthy people is a huge trend nationally. Advocates worry it will
not work even as well as the poor system already operated by Medicaid and
Medicare.
#############################
Updated, Friday, November 1, 2013, 1:06 PM (Pacific)
Seattle—
#############################
LTC BULLET: THE INSURANCE DILEMMA
LTC Comment: Why are we losing the benefits of insurance and
suffering the inevitable consequences of compulsory government benefit
programs? After the ***news.***
*** FREE LTCI CONFERENCE: Jesse Slome and the
American Association for Long-Term Care Insurance have announced that
key portions of their
May 2014 long-term care insurance solutions conference in Kansas City
will be streamed live for free to 5,000 virtual attendees. Read all
about it
here. You can watch two hours of sessions each day, including a
special one-hour workshop by
Corporation for Long-Term Care Certification president Harley Gordon.
Tweet questions to presenters. Says Slome: “Nothing can
replace face-to-face networking but technology will allow us to reach
thousands of professionals who can’t dedicate the time or expense involved
with attending a conference.” Congratulations to Jesse and AALTCI
for another creative effort to promote responsible LTC planning and to
support the producers who make it possible. ***
LTC BULLET: THE INSURANCE DILEMMA
LTC Comment: What a mess! The roll out of “health care
reform,” AKA the Affordable Care Act, AKA ObamaCare is almost universally
panned in the media. But most coverage misses the real story.
Real insurance is disappearing.
Insurance is a financial tool that allows purchasers to replace the small
risk of a catastrophic loss with the certainty of an affordable premium.
Because it spreads risk, insurers can sell the product to many vulnerable
customers, taking a loss on some and a profit on most. But insurance
does more than spread risk. It also prices risk. By
actuarially estimating the amount of risk each insured brings to the risk
pool and pricing each individual’s coverage accordingly, insurance ensures
that reserves collected from premiums will suffice to pay reasonably
anticipated claims.
But pricing risk does something else of enormous importance. When
smokers pay more for life insurance than non-smokers, smoking is
discouraged. When poor drivers pay more for car insurance, bad
driving is discouraged. When older people pay for more long-term
care insurance, failure to plan early is discouraged. In other
words, when insurance prices risk it performs a valuable role for
individuals and for society by encouraging responsible behavior and
discouraging irresponsibility.
Now consider the misnomer “social insurance.” Social insurance
programs such as Medicare and Social Security spread risk very
effectively. Everyone pays in and everyone receives benefits,
equally in its pure form. Thus social insurance does not price risk.
It has no way to determine what premiums are adequate to meet total
claims in the future and it entirely lacks the valuable benefit of
rewarding responsible behavior and discouraging irresponsible behavior.
In fact, how has social insurance played out in the United States and
elsewhere? Everywhere accumulated reserves are vastly
inadequate compared to reasonably anticipated future costs. Social
Security has a $23 trillion unfunded liability and Medicare a staggeringly
irresponsible $43 trillion shortfall. As bad or worse, the false
hope that social insurance will somehow provide future benefits has
replaced the public’s sense of personal responsibility with a widespread
entitlement mentality.
It’s really pretty clear what is happening to the personal values of hard
work, self-reliance and individual responsibility that made this country
great in the first place. We’ve chipped away at them for decades and
we’re now about to pay a tragic price for the inevitable results of social
insurance. So, why not confront that reality, explain it clearly,
and advocate a return to true insurance?
Therein lies the insurance dilemma. Imagine what would happen to the
politician who advocates that insurance should price risk. You mean
people with pre-existing conditions should pay more? How cruel.
Women should pay higher premiums for health insurance and men, for life
insurance? How unfair. People who don’t want or can’t afford
insurance should remain uninsured? How socially irresponsible.
Never mind that everyone was better off when real private insurance
prevailed. Forget that everyone is and will be worse off as social
insurance and the entitlement mentality lead to their inevitably
destructive outcomes.
Bottom line, social insurance requires responsible (insurable) people to
pay more to offset the cost of irresponsible (uninsurable) people.
Responsible people will not voluntarily pay more to support the
irresponsible, so government has to compel citizens to participate.
That’s why the Affordable Care Act forces citizens to buy insurance and
penalizes them if they do not. It substitutes personal
responsibility with a false hope of social security. Easy to see all
around us.
Ah, but make that case and you’ll be reminded that social insurance not
only subsidizes the irresponsible, it helps the poor and unfortunate, who
may be in that condition through no fault of their own. Don’t you
care about them? How long will a politician survive without taking
the needy into account? Ironically, the poor fare much better in a
society that rewards personal responsibility and encourages freedom.
Without the economic drag of social insurance and compulsory wealth
redistribution, the economy would thrive and all, including the poor,
would fare better. Voluntary charity could and would provide for the
needy better than government dependency.
But that argument is complicated and difficult to make. Which is why
few politicians who understand and believe it actually try to convey it
publicly. Thus the opposing argument that government has to force
citizens to act against their own best interests prevails. Only
strong principles, grounded in human nature, could turn the tide.
But it is those principles of independence, self-reliance, personal
responsibility and hard work that have been corrupted over time.
Sadly, we may have to suffer the increasingly inevitable collapse of the
current system before better values can prevail again. Whether the
USA follows the dismal history of previous economic powerhouses or rises
again depends on whether or not and to what extent those fundamental
values have survived. In the meantime, the relentless political
efforts to destroy them, grounded in the threat of government force,
continue apace.
For a more detailed account of the difference between social insurance and
real insurance, see Stephen A. Moses, “The
Inherent Individualism of Insurance,” Navigator, Vol. 5, Nos.
10-11, November-December 2002, pps. 10-12, 14-16, published in January
2003.
#############################
Updated, Friday, October 25, 2013, 11:15 AM (Pacific)
Corning, California—
#############################
LTC BULLET: THE LTC BLIND
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,
after the ***news.***
*** AALTCI: The American Association for
Long-Term Care Insurance has announced their 11th National Long-Term Care
Solutions Sales Summit will be held May 18-20, 2014 at the Westin Hotel in
Kansas City, MO. Over the past decade we’ve attended many of these
conferences and have always found them to be of high value in terms of
professional development through educational content and networking
opportunities. Early registration is only $69. See
http://www.aaltci.org/2014summit/index.html for further details and to
register. ***
*** CLTCR
Premium Membership -- Center for Long-Term Care Reform
premium members receive our full suite of individual membership
benefits including: our LTC Bullets and E-Alerts;
access to our Members-Only Zone website and Almanac of Long-Term
Care; subscription to our
Clipping Service; and email/phone access to Steve Moses for 24-hour
turnaround queries. Our Premium Membership is designed to give you a
competitive advantage in your long-term care profession. Your increased
knowledge of the critical issues and challenges we face in the field of
long-term care service delivery and financing equals improved professional
success for you and better LTC services for your clients and for those who
have no choice but to rely on scarce public resources. Premium
Membership is $250 per year, paid up front or monthly by automatically
recurring credit card payments. Contact Damon at 206-283-7036 /
damon@centerltc.com to start your Premium Membership
immediately or go directly to our secure online subscription page and
sign up for as little as $21 per month. ***
#############################
LTC BULLET: THE LTC BLIND
“There are two ways to be fooled. One is to believe what isn't true; the
other is to refuse to believe what is true.”
―
Søren Kierkegaard
LTC Comment: Case in point? A Forbes column last week
by a perennially insightless writer. Excerpts and our analysis
follow.
#############################
Excerpts from “Americans Worry About Long-term Care Costs, See Insurance
and Government Solutions [link]”
by Howard Gleckman
“Americans have little idea how long-term supports and services are paid
for, according to a new poll by
Harris Interactive HPOL -0.51% and the medical publishers HealthDay.
Yet, they are worried about the cost, believe most people should buy
long-term care insurance, and also favor a new government program to pay
some or all of the costs of LTC.
“It is hard to make much sense of these results, although the public's
confusion in this poll seems consistent with past surveys.
“For instance, although Medicaid pays for as much as 60 percent of
long-term care costs, only about one in five of those surveyed believe the
program is the major payer of these services. One-third think Medicare is
the biggest funder, though the program pays for almost no LTC costs. Half
think individuals pay the most. In reality, families pay only about
one-fifth of the cost of paid services, though of course they do provide
the vast bulk of uncompensated care.
“When asked who should pay these costs, 29 percent said individuals and
their families while 27 percent said the federal government. Interestingly
only 9 percent thought state and local governments should pay even though
states are already a major payer through their share of Medicaid. Fully
one-third said they don't know who should pay. . . .
“The survey also asked if people were worried about the cost of long-term
supports and services. Overall, 68 percent said they were very or somewhat
worried. Women more much more likely to be concerned than men by 74
percent to 61 percent. By age, those least likely to be concerned were
18-24 (not surprising) and those 65 and older (very surprising). Those
most likely to worry were aged 40-49. . . .
“What's the take-away of all this? Americans recognize that long-term
supports and services are a major financial risk, yet they are deeply
uncertain about how long-term care is paid for today and what to do about
it. And they seem open to some sort of new government program to help,
perhaps one that is insurance-based in some way.”
#############################
LTC Comment: If the findings of this poll leave you stumped like the
Forbes columnist, you haven’t been reading your LTC Bullets.
Let’s review.
Survey after survey and poll after poll produce the same results:
Americans don’t know who pays for long-term care. Nevertheless, they
do know LTC is high risk and high cost. But they don’t do much about
it, such as buying LTC insurance.
Academics, pundits, policymakers and even some LTCI marketers scratch
their heads, throw up their hands and whine: “What’s wrong with the
American people? How can they be so dense? It must be denial,
self-delusion, or early onset Alzheimer’s.”
Guess what? The public has a better grasp of reality than the
“experts” who “refuse to believe what is true.” Here’s what’s true
and why it explains the poll findings that befuddle so many analysts.
(1) Americans don’t know who pays for long-term care because they haven’t
needed to know. Since 1965 Medicaid has paid for most expensive
long-term care. It still does. It pays after the insurable
event occurs and without significant income or asset limits as we’ve
explained so many times before. Ending up on Medicaid is a terrible
outcome because of the program’s access and quality problems, but
consumers don’t confront that reality until after it is too late to
prepare responsibly. By then their heirs are so relieved their
inheritances are safe that they blank out about their own need to plan for
LTC risk.
(2) Americans know LTC is high risk and high cost? Of course.
It’s been drummed into them by newspapers, magazines, TV specials, “Own
Your Future” campaigns, and every altruistic, masochistic genius who’s
ever survived for more than a few weeks selling long-term care insurance.
A truly strange poll finding would be that Americans hadn’t gotten the
message of LTC’s high risk/cost and somehow thought long-term care was an
emotional and financial cakewalk.
Now, all you have to do is add paragraph one to paragraph two to get
paragraph three.
(3) When asked who pays for LTC, Americans either don’t know or say
“Medicare.” Well good guess, but the real payer is Medicaid.
The only thing that matters is that somebody pays, and Medicaid does.
So, even though people do know that LTC may hit them with huge costs, it’s
all just theory to them because in fact somebody really does pay if LTC
becomes high-cost. Why don’t they plan to save, invest or insure for
LTC? Simple. Consumers have many demands on their attention
and finances. They only focus on real risks and costs and they
prioritize which risks and costs on which to focus.
End result? You get the survey and poll findings that baffle
deniers. They refuse to acknowledge how Medicaid works in reality
and cling to the myths that (1) it requires impoverishment and (2) LTC
wipes out life savings nationwide. To resolve their conundrum is as
easy as opening their eyes and accepting reality. But they have
clamped their eyes shut.
Want some good eye-openers? Read just about anything at
www.centerltc.com, especially our “Articles,
Speeches, and Reports.” We’ve provided the evidence to back up
the argument in this Bullet often and irrefutably. We’ll
gladly debate anyone publicly who disagrees.
#############################
Updated, Monday, October 21, 2013, 11:27 AM (Pacific)
Seattle—
#############################
LTC E-ALERT #13-033: LTC NEWS AND COMMENT
LTC Comment: It was a slow news week for LTC, with reportorial and
editorial content aimed mostly at the debt ceiling and government shutdown
stories.
Coverage of the challenges facing ObamaCare will ramp back up now.
That won’t be pretty. Everything critics of the Affordable Care Act
have warned would happen is beginning. It will be entertaining
political theater.
We’ll stick to our knitting here with a focus on LTC news and policy, but
we won’t entirely neglect the bigger, acute care policy drama that is
unfolding. It does have a long-term care component, in that
ObamaCare pushes state Medicaid programs toward more home care (which
increases costs) and more managed care (which risks access and quality
problems). More on those issues will follow as we publish our three
new state reports over the next month and a half.
#############################
10/18/2013, “Family
caregivers live longer than their peers,” by C. E. Huggins, Reuters
Quote: "In a nationwide study, adults who provided care for a
chronically ill or disabled family member had a lower death rate than a
similar group of non-caregivers. The finding is something of a
surprise. In the past, researchers have found just the opposite - an
increased risk of death as well as poorer mental and physical health among
caregivers."
LTC Comment: Seems counter-intuitive, but anyone who has
cared for a chronically ill loved one knows how personally rewarding the
experience can be . . . if it isn’t too hard and doesn’t go on too long.
#############################
10/17/2013, “PPACA
premiums, state-by-state Infographic,” by Nichole Morford,
LifeHealthPRO
Quote: "It's mid-October and
the exchanges have launched — clunkily, in most cases, and with many
unknowns still to be answered. One question that has been answered is an
important one: How much will health care cost under the
Patient Protection and Affordable Care Act (PPACA)?"
LTC Comment: And the answer is . . . it depends.
#############################
10/18/2013, “Common blood pressure drugs cut the risk of
Alzheimer's dementia by 50%, researchers find [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "People older than 75 who had normal cognition and
took diuretics, angiotensin-1 receptor blockers (ARBs) and angiotensin-converting
enzyme (ACE) inhibitors demonstrated a 50% reduced risk of Alzheimer's
dementia, the researchers found. Among those with mild cognitive
impairment, diuretic use was associated with a 50% reduced risk."
LTC Comment: Almost makes you want high blood pressure.
#############################
10/17/2013, “Don't
Let Health Care Squeeze Your Retirement,” Military.com
Quote: "In 2012, 82% of all long-term care insurance policy
buyers were under age 65, according to the financial research organization
LIMRA. And, most likely because of longer life expectancy, women make up
57% of long-term care insurance purchasers, according to a 2012 LIMRA
study."
LTC Comment: USAA promotes LTC insurance for the "military
community."
#############################
10/16/2013, “Thefts
from nursing home trust funds target the elderly,” by Peter Eisler,
USA Today
Quote: "Thousands of residents in U.S. nursing homes and
other long-term care institutions for the aged and disabled have had their
personal savings raided or mismanaged after relying on the facilities to
safeguard the money in special trust fund accounts, a USA TODAY
investigation shows."
LTC Comment: Most people in nursing homes are funded by
Medicaid. Medicaid limits their cash assets to $2,000. Nursing
homes manage those assets in trust accounts to ensure they do not exceed
$2,000 and cause the resident to become ineligible for Medicaid. So,
as new revenue comes into the accounts, they spend money to keep the
accounts below the limit. Hopefully, the money is spent on the
resident, but evidently that's not always the case according to this
article. Another big question, unaddressed in this article, is what
happens to the money in these accounts when a resident dies. It
should go to the state's Medicaid estate recovery program to reimburse
Medicaid for the cost of caring for the resident. But that's not
what happens often. Someone shows up, claims to represent the
deceased, and takes the money, leaving Medicaid (and taxpayers) with the
full cost of the departed's care.
#############################
10/15/2013, “Seniors Cautioned To Pay Close Attention To Details As
Enrollment Begins In Medicare Plans [link],”
by Susan Jaffe, Kaiser Health News
Quote: "The seven-week enrollment period for next year's
Medicare prescription drug and managed-care plans begins Tuesday, but
seniors shouldn't simply renew their policies and assume the current
coverage will stay the same. There's a likely payoff for those who
pay close attention to the details."
LTC Comment: Government makes everything so simple.
#############################
10/15/2013, “'Landmark' discovery brings a pill for Alzheimer's
closer to reality, researchers say [link],”
by Tim Mullaney, McKnight's LTC News
Quote: "In Alzheimer's and similar diseases, the brain responds
to the buildup of 'misfolded' proteins by shutting off production of new
proteins altogether, which leads to cell death. An orally administered
compound has been found to intervene in this process and restore protein
production in mice with neurodegenerative disease, according to
researchers at the Medical Research Council Toxicology Unit at the
University of Leicester."
LTC Comment: Another false hope or "this time is different?"
#############################
10/14/2013, “Beneficiaries
of Medicare Left Confused by Exchanges,” by Robert Pear, New York
Times
Quote: "Medicare
beneficiaries can sign up for private health plans starting Tuesday, but
federal officials fear that many of them, out of confusion, might go to
the new federal insurance exchange."
LTC Comment: How tangled the web of confusion becomes with
government in charge.
#############################
10/14/2013, “Most
Americans expect to work for pay in retirement, poll says,”
Associated Press
Quote: "Stung by a recession that sapped investments and home
values, but expressing widespread job satisfaction, older Americans appear
to have accepted the reality of a retirement that comes later in life and
no longer represents a complete exit from the workforce. Some 82 percent
of working Americans over 50 say it is at least somewhat likely they will
work for pay in retirement, according to a poll released today by the
Associated Press-NORC Center for Public Affairs Research."
#############################
10/13/2013, “Baby
boomers fueling wave of entrepreneurship ,” Associated Press
Quote: "Every passing month an unanswered resume dimmed
Jim Glay's optimism more. So with no job in sight, he joined a growing
number of older people and created his own. In a mix of boomer
individualism and economic necessity, older Americans have fueled a wave
of entrepreneurship."
LTC Comment: If there is a silver lining to the dark economic
clouds, it's that boomers working longer and becoming entrepreneurs will
be sensitized to the importance of preserving principal as they generate
income longer, which they can put to good use with LTCI.
#############################
Updated, Friday, October 18, 2013, 11:32 AM (Pacific)
Seattle—
#############################
LTC BULLET: WHY DON’T CHILDREN BUY LTCI FOR
PARENTS?
LTC Comment: The Wall Street Journal
says professional kids should buy LTC insurance for their parents.
It’s a perfect solution. So why doesn’t it happen more often?
The answer after the ***news.***
*** LTC COVER UP: By hiking the debt ceiling
and reopening government yesterday without corrective action, Congress
covered up the underlying cause of America’s financial malaise: too
much spending; too much debt; too little private economic incentive.
They applied a band-aid to a suppurating malignant tumor. Long-term
care is part of the cover up because most expensive LTC in the USA is
financed in large measure by federal borrowing, money printing and
deficits. As the time approaches when this funny money finally runs
out, we face huge demographic challenges that legislators, policy makers,
and bureaucrats have ignored for decades. There is not much
individuals and families can do to protect themselves beyond maximizing
personal savings, investments and insurance. ***
*** TESTIMONIALS AND OFFER:
“I just can’t imagine how difficult, and time
consuming it would be to keep up on LTC news without your LTC Alerts
and Bullets. You guys do a spectacular job.” -- Randy
Gallas, CLTC, LTCP, President, Long-Term Care Insurance Agency, LLC,
Kettering, OH
“I strongly recommend that every LTCi ‘Professional’
subscribe to and support the Center for Long-Term Care Reform, and receive
their own ‘LTC-E-Alerts’... the minimum $150.00 annual membership is one
of the best ‘Business Expenses’ a serious LTCi professional should gladly
incur.” -- Robert A. Callanan, LTCP, CLTC, Senior Vice
President, Borden Hamman Agency, Dallas, TX
Find many more testimonials like these here:
http://www.centerltc.com/Testimonials.htm.
If you agree our LTC E-Alerts and LTC
Bullets are worth a modest investment of $12.50 per month, then
consider this. For an extra $100 per year, you can hear from us most
days with an average of three emails alerting you to key media stories,
academic articles, and major reports. Our “Clippings Service”
delivers that information in real time to your email in-box. To
subscribe to the clippings, contact Damon today and upgrade your
membership to Premier or Premier Elite:
damon@centerltc.com or 206-283-7036. Find all our
Membership Levels and Benefits here:
http://www.centerltc.com/MembershipLevelsandBenefits.htm. As an
extra added bonus for Premier and Premier Elite members, we’ll forward
articles to you that are “gated” and otherwise unavailable to
non-subscribers – like the one discussed below – whenever you ask and we
legally can. ***
#############################
LTC BULLET: WHY DON’T CHILDREN BUY LTCI FOR
PARENTS?
LTC Comment: Yesterday’s Wall Street Journal
had an article titled “Protecting
a Family from Long-Term Care Costs.” It’s available
here to online WSJ subscribers. If you’d like a copy
forwarded to you, see the ***news*** above. Articles like this one,
appearing in national publications, are a godsend for the struggling LTC
insurance industry. Following are excerpts to give you a sense of
the piece followed by our commentary.
#############################
Excerpts from Austin Kilham, “Protecting
a Family from Long-Term Care Costs,” Wall Street Journal,
October 17, 2013 [link].
“The husband and wife were successful physicians in
their late 30s, but they were worried about the husband's parents, who had
saved only about $100,000 for retirement.
“The couple was especially concerned about the cost
of medical expenses falling to them should the parents' health
deteriorate. . . .
“The adviser [Ms. Horvath] realized that even though
her client's parents had relatively little saved for retirement, they
wouldn't be eligible for long-term care coverage through Medicaid, which
requires recipients to have less than $2,000 in assets. That meant that
even if they purchased LTC insurance, they would be responsible for
additional expenses once the policy ran out.
“But Ms. Horvath devised a solution that protected
the parents and their children from the high cost of long-term care, while
improving the parents' chances of qualifying for assistance from Medicaid.
“First, the adviser suggested that the parents
purchase LTC insurance from Georgia's Long-Term Care Partnership
program-one of 31 state partnership programs to encourage individuals to
buy LTC insurance. . . .
“Ms. Horvath found a policy with a $6,300 annual
premium and would pay up to $4,500 a month for long-term care for three
years. . . .
“But Ms. Horvath had a second part to her plan: The
son and daughter-in-law could pay the premiums on behalf of the parents.
Not only could the successful couple afford the payments, she showed them
how it might be less expensive than paying for long-term care down the
road.
“Above all, Ms. Horvath adds, both the children and
the parents are relieved to have a plan in place that addresses potential
long-term care needs without putting either couple's finances in
jeopardy.”
#############################
LTC Comment: Great plan. Slam dunk.
That’s why everyone’s buying LTCI for Mom and Dad, right? Hardly.
Adult children purchasing LTC insurance policies for
their parents is not unheard of, but it is rare. Why?
Most people don’t think about LTC protection until
they need it and then it’s too late.
Well, sure, but why don’t they think about it?
After all, the risk of needing LTC someday is high and the potential cost
is astronomical.
If the risk and cost is so high, why are most people
unconcerned? “They’re in denial,” you say. OK, true, but that
explains exactly nothing.
The key question is “What enables their denial?”
Do you really think most Americans would remain in
denial, oblivious of long-term care’s risk and cost, if one of every ten
families in the country were being wiped out financially by long-term
care?
No, there is a simple reason for this seemingly
peculiar circumstance that most people ignore long-term care until they
need it.
Since 1965, Medicaid and Medicare have paid most of
the cost of expensive long-term care. Sure, families provide huge
amounts of free care at considerable emotional and financial distress.
But once care costing thousands of dollars per month becomes necessary,
public funding kicks in.
Now, if the public funding didn’t start until
personal finances were wiped out, as most media coverage and academic
writing incorrectly assumes, then people would worry about LTC and plan
ahead.
But that’s not how it works in the real world.
Income doesn’t interfere with Medicaid LTC eligibility because people who
have too little income to pay privately for all their LTC and medical
expenses qualify based on income. Assets don’t interfere despite the
$2,000 limit, because people’s biggest assets are exempt, such as a home,
business, IRAs, term life insurance, an automobile, etc. Those who
still have too much wealth to qualify consult Medicaid planners.
They make the excess go away artificially and get their affluent clients
into the nicest facilities by holding back some “key money” to buy their
way into the best care.
Do you see why the LTC Partnership Program, promoted
in the article, has not attracted as many clients as it was expected to
do? People don’t buy insurance to avoid a catastrophic spend down
liability that does not actually exist. They don’t intentionally
plan to go on Medicaid. They just don’t plan or think about LTC at
all. Their denial is the logical outcome of nearly five decades of
Medicaid’s operating as a de facto LTC entitlement.
The Wall Street Journal article cited above
describes a situation in Georgia. The Center for LTC Reform recently
completed a study of Medicaid and LTC financing in “The Peach State.”
Our report, titled “The Index of Long-Term Care Vulnerability: A
Case Study in Georgia” will be published soon by the
Georgia Public Policy Foundation and the Center. It will provide
a much more detailed explanation than we have space for in this LTC
Bullet. Stay tuned.
#############################
Updated,
Monday, October 14, 2013, 12:11 PM (Pacific)
Seattle—
#############################
KING KONG, THE
DEBT AND LTC NEWS AND COMMENT
LTC Comment:
Last Friday’s LTC Bullet, titled “Shutdown
Irony,” pulled some compliments. Thanks.
But I’m not the
only analyst to see the key issues in the current political morass as the
debt (not the ceiling) and excessive government spending (not the
shutdown).
Today, editorial
cartoonist Glenn McCoy portrays a growling King Kong (labeled “debt”) atop
the Empire State Building. Kong grasps Uncle Sam in a choke-hold
with bi-planes circling. A frustrated elephant pilots one and the
President the other saying “Gorilla? What Gorilla?” Check it out
here.
Denial is not a
river in Egypt.
#############################
10/11/2013, “What's
the Deal with the Exchanges?,” by Greg Scandlen, John Goodman’s
Health Policy Blog
Quote: At e.Healthinsurance.com:
“All you have to do is enter your zip code to find out what is available
in your area and the world of choices opens up. You can see what the
benefits and costs will be. Only after you have made your selection do you
have to start filling out the paperwork. That is not how the ObamaCare
exchanges operate. You can't see any actual insurance plans until you
first fill out a whole lot of paperwork. Even Kentucky, the state with the
best performance so far, requires you to complete a form including your
name, address, ph |
