LTC Bullet:  A Taste of What's to Come 

Thursday, November 22, 2005 

Seattle-- 

LTC Comment:  Abe Lincoln said "You cannot escape the responsibility of tomorrow by evading it today."  Here are a few recent media reports, after the ***news,*** to help open our eyes before it's too late. 

*** MEDICAID REFORM.  For an excellent article on the need to fix Medicaid by the key Congressman leading the charge to do so, check out Chairman Joe Barton (R,TX), "Save Medicaid from Itself," The Washington Times, October 31, 2005 at http://energycommerce.house.gov/108/News/10312005_1703.htm .  Here's his conclusion which is right on target:  "We did the right thing when we reformed welfare in 1996, and we must now do it again for a slice of the welfare that never got reformed.  If we succeed, a dose of common sense, state flexibility and personal responsibility can make poor people healthier.  And nobody will have to choose between caring for the sick and educating the children." 

*** LTC E-ALERTS.  We frequently receive emails from dues-paying Center for Long-Term Care Reform members who appreciate our daily LTC E-Alerts and miss them when we take time off.  If you enjoy these LTC Bullets, you're going to love the daily alerts.  Why?  Because they are more pointed and pungent than our more widely distributed missives and they often disclose inside information you can't get anywhere else.  So, whether you like what we say and want more OR you hate what we say, but believe the adage "Keep your friends close and your enemies closer," join the Center and follow our daily commentary on long-term care public policy.  To join, go to http://www.centerltc.com/support/index.htm or contact Damon at 206-283-7036 or damon@centerltc.com.  Annual dues are $150 or $12.50 per month.  Do you have a budget for subscriptions?  Use it and help the Center for Long-Term Care Reform continue the fight for rational LTC policy. ***  

LTC  BULLET:  A TASTE OF WHAT'S TO COME 

LTC Comment:  Lately, we've been getting a lot of warnings about what is to come for America's social insurance and welfare safety net.  Ancient societies watched for omens and adjusted their behavior to avert anticipated disasters.  We should do the same when we see news items like the ones that follow.  If our government-financed programs designed to protect people from the need to take personal responsibility are failing already, imagine the crises we'll face as demographic pressures squeeze the fiscal vise shut entirely. 

ITEM 1:  America's three big health and retirement security programs are going down for the count. 

" . . . Social Security, Medicare and Medicaid constitute more than 40 percent of federal spending.  Given the baby boom, longer life expectancies and rising health care costs, these programs are projected (by the Congressional Budget Office and others) to grow by about two-thirds or more during the next 25 years.  To cover these costs, we'd have to do one of the following:  Raise all federal taxes by 30 to 50 percent . . .; eliminate defense spending and 30 percent of other federal spending, excluding interest payments; run budget deficits three times present levels." 

Source:  Robert J. Samuelson, "AARP's America Is a Mirage," Washington Post, November 16, 2005, http://www.washingtonpost.com/wp-dyn/content/article/2005/11/15/AR2005111501308_pf.html.  

ITEM 2:  Responsible public officials like David Walker of the Government Accountability Office are screaming the warnings at the top of their lungs, but irresponsible functionaries treat these demographic Paul Reveres like Chicken Little. 

"We face a demographic tsunami' that 'will never recede,' David Walker tells a group of reporters.  He runs through a long list of fiscal challenges, led by the imminent retirement of the baby boomers, whose promised Medicare and Social Security benefits will swamp the federal budget in coming decades. . . .  To hear Walker, the nation's top auditor, tell it, the United States can be likened to Rome before the fall of the empire.  Its financial condition is 'worse than advertised,' he says.  It has a 'broken business model.'  It faces deficits in its budget, its balance of payments, its savings - and its leadership." 

Source:  Richard Wolf, "A 'Fiscal Hurricane' on the Horizon," USA Today, November 15, 2005, http://www.usatoday.com/news/washington/2005-11-14-fiscal-hurricane-cover_x.htm.  

ITEM 3:  Medicare already has an unfunded liability of $60 trillion that future generations will carry as a back-breaking economic load.  Yet the program can't even pay doctors enough now, much less in the future.  Medicaid, if anything, is even worse off.  No one has even reported that program's unfunded liability yet. 

"The nation's doctors are objecting vigorously to upcoming cuts of 4.4 percent for services provided to Medicare patients in 2006.  AMA chairman Dr. Duane M. Cady said, 'Physicians cannot absorb the pending draconian cuts.  A recent A.M.A. survey indicates that if the cuts begin on Jan. 1, more than one-third of physicians would decrease the number of new Medicare patients they accept.'" 

Source:  Robert Pear, "Doctors Objecting to Planned Cut in Medicare Fees," The New York Times, November 20, 2005, http://www.nytimes.com/2005/11/20/national/20docs.html.  

"Florida's pediatric doctors and dentists are suing the state on behalf of low-income kids, saying it has failed in its duty to provide them with adequate healthcare."   

Source:  Mary Ellen Klas, "Doctors Sue State Over Care for Poor Kids," Miami Herald, November 22, 2005, http://www.miami.com/mld/miamiherald/news/state/13229440.htm.  

ITEM 4:  According to most Governors, Medicaid is bankrupting their state budgets.  Trends that can't continue, won't.  Even New York will have to cut back now that its waiver to allow wide open Medicaid outreach is ending. 

"'Community-based enrollment . . . has changed people's perceptions of Medicaid to be health insurance, not welfare,' said Anne Marie Costello, director of programs at the Children's Defense Fund-New York.  'Without it, enrollment will shut down.  The social service offices will not be able to absorb the crush of people they'll get, and a lot of people will just give up if they have to go to those offices again.'" 

Source:  Richard Pérez-Peña, "For Medicaid Clients, New Hurdle Looms," The New York Times, November 21, 2005, http://www.nytimes.com/2005/11/21/nyregion/21medicaid.html?pagewanted=print.  

ITEM 5:  In spite of all these ominous signs and warnings, the bulging baby boomer generation remains mostly oblivious to the risk even as they approach the cusp of old age. 

"Baby boomers are in real trouble financially, and most don't even realize it.  With the lowest savings rate in history, lax investment habits and no guaranteed pensions, 80% of boomers lack sufficient assets to maintain their current standards of living with financial security late in life, said Jack Waymire, founder of Paladin Registry, LLC ( http://www.paladinregistry.com/ )."  

Source:  PR Newswire, "Boomers Need Excellent Advice to Achieve Financially Secure Retirements, Says Paladin Registry," November 17, 2005, http://www.insurancenewsnet.com/article.asp?a=1&lnid=328461310.  

ITEM 6:  Instead of taking personal responsibility through savings, investment and insurance, where do boomers and the elderly turn?  You guessed it.  They're putting their false hopes in government programs that are already breaking down long before the biggest demographic pressures build. 

"A poll released today says seven in ten baby boomers and senior citizens believe the government should do more to help people meet the cost of long-term care.  Along with the poll, a panel of experts from the National Academy of Social Insurance (NASI) issued a call for fundamental reforms in financing long-term care, including a substantial commitment of federal resources." 

Source:  "Most Boomers, Senior Citizens Think Government Should Help with LTC:  Poll Shows Baby Boomers, Seniors Concerned About Paying for Care, November 14, 2005, http://www.seniorjournal.com/NEWS/Politics/5-11-14-MostSayGovMustHelpLTC.htm?BMIDS=15221981-603b661c-91401.  

LTC Comment:  To aging Americans and the financial advisers who counsel them, heads up, please take Lincoln's advice.  Don't try to escape the inevitable consequences of aging demographics by evading them.  Maybe you can't save America's crippled social insurance and welfare infrastructure, but you have it within your power to protect yourselves and your families by saving, investing and insuring wisely.  To the extent we all take care of ourselves and our own, we contribute in the most crucial way toward protecting whatever vestiges of a social safety net remain salvageable.  Use reports like the ones itemized above to spread the word and the warning to friends, family, clients, and if you write for publication, readers.