LTC Bullet:  Why Too Little Home Care?

Friday, June 28, 2019


LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, whose revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on LTC, based on their personal characteristics, and estimates how much of their cost in each range would be covered by various traditional or linked insurance designs. He also offers other ways to educate and help clients make informed final decisions in 15-20 minutes! Change work-site LTCi from a series of proposal deliveries to an interactive consultation! Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. You can reach him at 913-403-5824 or ***

*** PULITANO NEWS: LTC Global, Inc. has formed LTC Agency Operations LLC (LTCAO), a new intermediate holding company, with Joseph G. Pulitano. LTC Global and Pulitano have contributed their Long Term Care insurance (LTCi) distribution businesses to LTCAO, including ACSIA Partners, LTC Global Agency and Joseph G. Pulitano Insurance Agency, Inc. d/b/a Advanced Resources Marketing (ARM). The combined businesses make up the largest independent LTCi marketing operation in the industry with over 500 career LTCi specialists. Mr. Pulitano will serve as LTCAO’s Chief Executive Officer, and Henrik Larsen will serve as LTCAO’s Chief Operating Officer.” Read all about it here: “LTC Global and ARM Combine LTCi Distribution Businesses Under Pulitano.” Hearty congratulations on this big news to Center-corporate-member Advanced Resources Marketing and our long-time friends and supporters, Joe Pulitano and Henrik Larsen.

*** LTC CLIPPINGS: Here’s why to subscribe to the Center for Long-Term Care Reform’s LTC Clippings service. Steve Moses reads or scans hundreds of articles, reports, speeches and other sources to pick the dozen or so you really need to see each week. That saves you the wasted time and hassle of sifting through mountains of digital chaff. Contact Damon at 206-283-7036 or to subscribe. Here are two examples of recent clippings:

6/23/2019, “The Big, Feminist Policy Idea America’s Families Have Been Waiting For,” by Ai-jen Poo and Benjamin W. Veghte, New York Times

Quote: “Our organization will unveil a new social insurance program on Monday called Universal Family Care that could fix this social crisis. It would provide affordable early child care, paid leave, assistance for people with disabilities and elder care for people of all incomes. We need an integrated approach because no one experiences needs in isolation: We might need help right after an injury, or over the course of our lives to help a disabled family member thrive. To pay for this, people would contribute small amounts out of every paycheck, from their first job onward, instead of scrambling during an expensive moment of crisis. And they could sign up for benefits when they first need them. Everyone would contribute and be eligible.”

LTC Comment: What’s that they say about doing the same thing over and over again (like Social Security and Medicare), but expecting a different result (avoiding insolvency)? Oh yeah, this is nuts.

6/24/2019, “Broad class of drug linked to 50% higher risk of dementia in older adults,” by Alicia Lasek, McKnight’s LTC News

Quote: “A class of drug commonly prescribed to treat everything from depression to Parkinson’s disease may raise long-term risk of dementia by as much as 50%, according to researchers at the University of Nottingham. The drugs, anticholinergics, help to relax and contract muscles by blocking messages to the nervous system. They are known in some cases to have short-term side effects including confusion and memory loss, but the effects of long-term use have been unclear, wrote the researchers, led by Carol Coupland, Ph.D.”

LTC Comment: Can’t win for losing. This class of drugs includes common sleep aids like Benadryl and Ambien. ***



LTC Comment: The June 2019 issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and inadequate financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. One of those accessible articles is “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income,” by Richard W. Johnson and Claire Xiaozhi Wang. This article argues that home care is desirable; too few people can afford enough of it; so a government program should pay for more of it. Below, we pull quotes from the article (footnotes omitted, find them in the original) and offer our comments in counterpoise.

Johnson/Wang: “The vast majority of elders who receive home care rely on unpaid family caregivers for help with activities of daily living (such as bathing, dressing, and eating) and instrumental activities of daily living (such as preparing hot meals and shopping for groceries). … Paid home care can relieve stressed family caregivers and allow frail older adults to remain at home longer. … Rising labor costs could soon make home care more expensive. There is a mounting shortage of high-quality workers to provide paid hands-on care to the nation’s rapidly growing older population. … Policy makers, advocates, and researchers have tried unsuccessfully for decades to expand financing mechanisms to make home care more accessible and affordable, often by promoting social or private insurance to cover expenses.” (pps. 994-5)

LTC Comment: Sadly, all true already, and the age wave is only beginning to crest. We have to do something. So what’s the problem? Is it simply that people can’t afford the home care they prefer?

Johnson/Wang: “We simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older. We found that 74 percent could fund at least two years of a moderate amount of paid home care [‘the median duration among recipients’ (p. 999)] if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care. Among older adults with significant disabilities, however, only 57 percent could fund at least two years of moderate paid home care by liquidating all of their assets, and 40 percent could fund at least two years of extensive paid home care.” (Abstract, p. 994)

LTC Comment: Well, that doesn’t sound so bad. Most people can afford a substantial amount of home care. All they have to do is liquidate all of their assets. Hmmm, that doesn’t seem like a very attractive option. I wonder how many people actually do that. This article offers no answer to that question. But stay tuned to our comments. You’ll find more on the subject in our concluding LTC comment.

Johnson/Wang: “People with significant LTSS needs are especially likely to need paid care, and they tend to have fewer financial resources than people in better health do.” (p. 996)

LTC Comment: Who’d have guessed? People who already need long-term care are less likely to be able to afford it than people who don’t need it yet? Of course, that is exactly why getting people’s attention about the risk and cost of long-term care many years ahead of when they need it is so critical.

Johnson/Wang: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.” (p. 1000)

LTC Comment: Great news. Maybe long-term care financing isn’t the crisis we thought it was. But keep reading.

Johnson/Wang: “Our findings have important implications for policy debates about alternative LTSS financing mechanisms.” (p. 1000)

LTC Comment: Do you get the feeling these authors are about to cash in on their findings with policy recommendations?

Johnson/Wang: “Better financing options might enable more people to obtain paid home care and remain at home longer, where most prefer to live, instead of moving into assisted living or entering nursing homes and qualifying for Medicaid after their financial resources run out.” (p. 1000)

LTC Comment: What are these better financing options, pray tell?

Johnson/Wang: “Government programs could be launched that cover LTSS expenses for the entire duration of an enrollees LTSS needs.” (p. 1000)  

LTC Comment: The Green New Deal, Medicare for All, and now unlimited long-term care financing. If you’re going to dream, why not dream big?

Johnson/Wang: “Because such comprehensive coverage would be expensive, many recent proposals would instead provide an up-front benefit for a limited time or a back-end catastrophic benefit that would not begin until after enrollees had experienced significant LTSS needs or received care for an extended period.”

LTC Comment: Right, we’re very familiar with those proposals to turn more long-term care financing over to the government. We’ve critiqued proposals by the Bipartisan Policy Center, the Long-Term Care Financing Collaborative, Feder/Cohen and many others over the years. Find a list of our articles about those proposals with links here: LTC Bullet: Standing Guard.

Johnson/Wang: “Our findings suggest that a moderate share of the at-risk population would not benefit much from catastrophic insurance that did not provide benefits for the first year or two of a severe LTSS episode, because they would not be able to fund expenses during the waiting period.” (p. 1000)

LTC Comment: Wait, didn’t you just tell us that most people can afford a substantial amount of home care for a couple years? Wouldn’t that take care of the waiting period?

Johnson/Wang: “Those who depleted their financial resources before qualifying for insurance benefits would have to turn to Medicaid, which offers limited home and community-based services to older adults with severe disabilities. However, beneficiaries often face long waiting lists for such services financed by Medicaid, and the income allowances that state Medicaid programs grant to home care beneficiaries are often too low to support community living. Consequently, some people who could no longer afford paid home care on their own might have to enter a nursing home to receive subsidized care.” (p. 1000)

LTC Comment: Well, we certainly wouldn’t want that, but how would giving people even more upfront government home care funding solve the underlying problem of explosive government long-term care expenditures? We’ll unravel this confusion in a “closing LTC comment” below, but first a few words on the source of the Johnson/Wang data.

Johnson/Wang: “Our data came from the Health and Retirement Study (HRS), a nationally representative survey of older adults conducted by the University of Michigan’s Institute for Social Research.” (p. 995)

LTC Comment: Here’s the problem with HRS data as we explained in How to Fix Long-Term Care Financing (find footnotes in the original). “While the HRS and AHEAD surveys provide the most reliable longitudinal data currently available, they are far from foolproof. One expert found significant data quality issues in the surveys due to ‘measurement errors in the data, particularly those arising from item nonresponse and from inaccurate respondent reports of the ownership and level of assets.’ He concluded that the survey data make it ‘difficult to reach consensus among research studies’ because ‘each author must arbitrarily decide whether to exclude, censor, or impute particular observations.’ Other researchers have noted similar limitations, explaining that ‘information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility.’ Given these facts, these surveys provide a dubious foundation on which to generalize about long-term care financing policy.

“Furthermore, there are many reasons why survey respondents and their representatives might fail to report income and assets to surveyors or even purposefully misrepresent the facts. People who have reconfigured their wealth to qualify for public welfare benefits may be ashamed of having done so or simply unaware that their heirs did this on their behalf. Seniors reporting on themselves may be cognitively impaired or intimidated by self-interested family members. Heirs who benefit from preserving parents’ estates may prefer to conceal the facts. Lawyers who do Medicaid planning are protected from disclosure by attorney/client privilege, while long-term care providers and Medicaid eligibility staff, who often know which wealthy locals are taking advantage of Medicaid, cannot disclose the information because of legally enforced confidentiality. Getting to the truth in such matters is extremely difficult.” (pps. 16-17)

Closing LTC Comment: Here’s what I think Johnson/Wang are saying in this article. The long-term care financing problem is not as serious as we thought it was. Most people can afford the home care they prefer using their income and, if necessary, liquidating all their assets. So we don’t need a big back end, catastrophic public or private insurance program or product. All we need is a little more help from the government on the front end for the minority of people who can’t manage the cost of home care on their own. Then everyone can ride out old age, getting the help they need at home, and staying off Medicaid and out of a nursing home for as long as possible.

Here’s what’s wrong with that wishful thinking. In reality, most people do not and will not liquidate all their assets in order to close the home care gap by purchasing services privately. They have every perverse incentive in public policy not to do so. What these and most other analysts miss is the ease with which people can shelter or divest income and assets to qualify for Medicaid. You will rarely find anything in their research or reporting about the widespread practice of Medicaid planning, artificial self-impoverishment with the help of a lawyer or CPA to qualify for public assistance. But “millionaires on Medicaid” aren’t the big problem. Rather, the nuances of Medicaid LTC eligibility are the culprit.

These authors do understand the letter of the law on Medicaid long-term care eligibility. Richard Johnson has done yeoman’s work on that topic. See “The Adequacy of Income Allowances for Medicaid Home and Community-Based Services,” May 2017. But the letter of the law on Medicaid eligibility makes it sound like it is hard to obtain. It is not. The problem is that Johnson, Wang and others of their ilk do not understand how Medicaid long-term care eligibility works in practice. In the real world, Medicaid eligibility workers (not all but most) bend over backwards to help people manipulate their income and assets to qualify. Books, articles, and online advice abound about ways to convert countable assets into exempt resources, the single most common planning technique. Bottom line, income below the cost of a nursing home, several thousands of dollars per month, does not disqualify. Virtually unlimited assets are exempt. Anything still disqualifying is easily divested or sheltered with or without the help of a Medicaid planner. In the real world, people drift easily onto Medicaid, especially more affluent people who have the benefit of professional financial advice.

The Johnson/Wang proposal to supply more government home care assistance so that more people can afford home care addresses a symptom, not the cause of the long-term care financing crisis. The cause is that too much government financing of nursing home care, and increasingly of home care and assisted living, have desensitized the public to long-term care risk and costs. It has caused institutional bias, impeded the private market for home care, and crowded out huge potential sources of private financing, such as home equity conversion and private insurance. If you want to put out a fire (skyrocketing government LTC costs), don’t douse it with gasoline (more of the same.)

Final thought: the good news in this paper--that most people can afford a lot of home care and others only need some help closing the gap--is further evidence for the point we made in LTC Bullet: Middle Market Mayhem, June 7, 2019. To wit, as little as $15,000 of annual private long-term care insurance coverage could close the middle-market senior housing gap for many choosing to remain in their chosen housing when the need for long-term care occurs.