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Our Mission:

The Center for LTC Reform is a private institute dedicated to ensuring quality long-term care for all Americans by promoting public policy that targets scarce public resources to the neediest, while encouraging people who are young, healthy and affluent enough, to take responsibility for themselves.

We do this through...

The CLTCR National LTC
Consciousness Tour Retrospective

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Not a CLTCR member?  Get a free trial membership for your sneak peak at our LTC Almanac and Members-Only Zone.  Contact us at 206-283-7036 or info@centerltc.com

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Updated: Thursday, March 11, 2010, 10:11 AM (Pacific)

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YOU HEARD IT HERE FIRST

LTC Comment: You heard it here first, but now it's everywhere!

We've highlighted time after time the likely implosion of government entitlement programs. We've emphasized how loss of the social safety net will end the public's entitlement mentality (and hence their LTC denial). We've urged you to redouble your efforts to protect consumers from LTC risk and cost, because the risk of "going bare" is so much greater in the future than it has been in the past.

What's changed?

Well, nowadays, every time you open a newspaper, read a magazine or watch the news, you're getting the message that entitlements are doomed. Today, we bring you just one more example. Use this and other stories like it to show prospects and clients why they need to wake up, stop ignoring LTC risk, and take personal responsibility.

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The following summary of an article in National Review comes from "NCPA: Daily Policy Digest 3-11-2010."

Federal Spending & Budget Issues

March 11, 2010

ENTITLEMENT APOCALYPSE

Our long-term budget challenge can be summarized in one word: entitlements. Without Social Security, Medicare and Medicaid, the budget would be roughly in balance over the coming decades. But with these programs, and without reform, a fiscal crisis is inevitable. TO BALANCE THE BUDGET OVER THE NEXT 25 YEARS WOULD REQUIRE AN IMMEDIATE AND PERMANENT 30 PERCENT INCREASE IN ALL FEDERAL TAXES. [Emphasis added] That is the future we face, and it is a future of our own making, says Andrew G. Biggs, a resident scholar with the American Enterprise Institute.

Entitlements traditionally have paid generous benefits -- financed by affordable taxes -- TO RICH AND POOR ALIKE, because the ratio of workers to beneficiaries has been high. [Emphasis added] Those days are gone and will not return, says Biggs:

* Maintaining entitlements in their current form will require either crippling taxes or crippling debt.

* Alternatively, we can rethink the entitlement philosophy, focusing resources where they're needed most, empowering individuals to make choices and giving them incentives to reduce waste, and buttressing personal retirement savings.

We spend 9.7 percent of gross domestic product (GDP) on entitlements today and by 2030 we will spend around 14.4 percent. Two forces bear primary responsibility for pushing entitlement spending upward: population aging and health care-cost growth.

Population aging is easily understood:

* The baby boom generation is retiring, seniors are living longer and families are having fewer children.

* The ratio of workers to beneficiaries, which is now over three to one, will fall to around two to one by 2030.

* Aging alone will ultimately raise entitlement costs by nearly 50 percent.

As for health care costs, they are rising for three reasons:

* As incomes rise, the value of health increases relative to that of other goods (as you make more money, the marginal value of new goods falls, and you would rather live longer with the stuff you have than buy more stuff and die sooner).

* Technology generates treatments we gladly would have purchased in the past but couldn't, because they didn't exist; today they do, and we buy them.

* The falling share of health care that is paid out-of-pocket -- 47 percent in 1960, 12 percent today -- encourages patients to purchase even marginally useful treatments.

Source: Andrew G. Biggs, "Entitlement Apocalypse: What We Must Do to Avoid It," National Review, March 2010.

For text:

http://ow.ly/1gCWs [Full version of article summarized above]

For more on Federal Spending & Budget Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=25

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Updated: Wednesday, March 10, 2010, 11:15 AM (Pacific)

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LTC Comment: If LTC is such a huge risk and cost, how come people don't plan for it and what must you know to overcome their denial and get them protected? Ten key truths after the ***news.***

*** UNDERSTANDING BOOMERS. For decades, American Baby Boomers have been characterized as a bloc of people who think and act as one monolithic generation. However, recent data from the MetLife Mature Market Institute®, show that Young, Middle and Older Boomers grew up during disparate "eras" and are now at different stages in their lives. They should, perhaps, be treated as separate demographic groups. In both a series of Demographic Profiles and a new study, The MetLife Study of Boomers in the Middle, facts are emerging about how distinct the segments are. ***

*** MEDICARE PRIMER: The Kaiser Family Foundation has updated its Medicare primer that explains key elements of the program providing health coverage to 47 million people, including 39 million seniors and another 8 million younger adults with permanent disabilities. The updated 2010 Medicare primer is available online at http://www.kff.org/medicare/7615.cfm. ***

*** LTCI GUILD NEWS. Courtesy of LTC Financial Partners (a Guild sponsor and Silver Sponsor of the Center for Long-Term Care Reform), the guidebook "3 in 4 Need More" is now available free to all LTC Guild members and site visitors. Just click on the link in the middle of the home page, near the top, and you may download the book in PDF form. Visit Long Term Care Insurance Guild at: http://ltcguild.ning.com/?xg_source=msg_mes_network. Dick Samson,

LTC Guild national site administrator. ***

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LTC BULLET: THE 10 THINGS YOU MUST KNOW ABOUT LONG-TERM CARE

LTC Comment: Most people look at the LTC status quo and scratch their heads:

• Seventy percent of people over 65 will require LTC.
• Twenty percent will require five years or more.
• LTC is extremely expensive whether delivered in a home, NH or ALF.
• But the public is in denial about LTC risk and few plan for it.
• So, most with high LTC costs end up in nursing homes on welfare.

Go figure!

I've spent my professional career explaining this seeming paradox and recommending public policy changes that would resolve it. Practically everything you find in our daily e-pistles and at www.centerltc.com tells the story.

Later today I'm doing a private phone briefing for some leading LTCI producers. Prepping for the presentation, Center supporter and well-known LTCI author/trainer Marilee Driscoll asked me to boil down my analysis to the "ten facts" every producer must know.

I wish I could give you ten simple facts you could learn that would break through consumers' denial of LTC risk and get them protected with LTC coverage. Alas, it's more complicated than that, because you must first understand: (1) why the public is in denial, (2) how everything is about to change, and (3) what's coming next.

Fortunately, I can give you ten points of principle which, if you understand and apply them consistently, will help you break through consumers' veil of confusion and denial about LTC. Here they are:

1. The public isn't in denial about LTC risk and cost out of ignorance or stupidity but because government has always paid for most expensive LTC since 1965.
2. Nine out of 10 dollars for nursing home and home health care come from Medicaid, Medicare, VA, Social Security or other income . . . not assets!
3. Medicaid alone crowds out 2/3 to 90% of the potential market for LTC insurance.
4. Medicaid does not require impoverishment: all you need is income below nursing home cost plus unlimited exempt assets.
5. Social Security and Medicare prop up Medicaid LTC and help crowd out LTCI.
6. Social Security and Medicare have combined infinite-horizon unfunded liabilities of $107 trillion.
7. Medicaid already has problems of access, quality, reimbursement, discrimination, institutional bias, welfare stigma and loss of independence and choice.
8. Medicaid reimburses providers less than the cost of providing the care: $4.6 billion and $14.17 per bed day less for nursing homes.
9. Better look at LTC through the windshield, not the rear-view mirror, because the entitlement safety net is doomed.
10. True now but more in the future: you must pay privately to ensure access to quality LTC at the most appropriate level.

Now, if you know the field of long-term care, you probably think several--if not most--of these ten points are wrong. But, I assure you, they are not. I can't give you the whole picture, much less the proof for each point, in a single LTC Bullet.

But if you'll invest some time exploring the resources at www.centerltc.com, reading our daily LTC E-Alerts and LTC Bullets, and following our new research and reports, I can promise you this: you WILL awaken more people to the need for responsible LTC planning and you WILL help more of them get the protection they need.

For starters, read the transcript of my two-hour "LTC Graduate Seminar" here. I promise you a revelation about why LTC is the way it is, proof of the 10 points above, and greater success persuading consumers to prepare for LTC risk and cost.

But reading that 40-page document once will not suffice. Much of the analysis of long-term care is complicated and counter intuitive. Stick with us. Get our daily publications. Access our members-only website: "The Zone." Avail yourself of the extensive resources on our free public website. Give us a few minutes of your time everyday, and you WILL overcome consumer denial.

In other words, join the Center for Long-Term Care Reform, and help us "Save LTC." The annual membership fee is only $150 or $12.50 per month for individuals. Corporate members cover their employees and key producers at no extra cost. To join the Center, contact Damon at 206-283-7036 or damon@centerltc.com. He'll have you in "The Zone" momentarily.

We can do this!

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Updated: Tuesday, March 9, 2010, 12:15 PM (Pacific)

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FEARLESS CAREGIVERS MEET IN NASHVILLE

EXTRA: 50% discount on AALTCI membership: Since 1998, the American Association for Long-Term Care Insurance (AALTCI) has been a powerful voice on behalf of the LTCI industry. Members get an extensive online resource center where you can listen to or download audios featuring top LTCi professionals. AALTCI also publishes the annual LTC insurance industry Sourcebook filled with data and statistics. Membership in the Association is $98 for one year. Take advantage of a special 50% discount (you pay $49 -- less than $1 a week). Simply enter "CENTER50" (without quote marks) in the "Referral Code" box when joining online. To read AALTCI's online guide to all the benefits available, click here: http://www.aaltci.org/benefits. Be sure to use the code when signing up!

LTC Comment: Steve Moses says: "I was scheduled to speak at the 'Fearless Caregiver' conference in Nashville, Tennessee tomorrow. I've had to cancel due to a family medical emergency. We announced this event several times previously. So, for any of you who registered for it expecting to see me and hear my presentation, I apologize for the change of plans. Bruce Moon, vice president of marketing for The State Life Insurance Company, will be presenting instead. Thanks for your understanding."

State Life is a OneAmerica company. OneAmerica is a "Gold Sponsor" of the Center for Long-Term Care Reform and one of the main reasons we're able to do the work we do. We owe special thanks to the company for sponsoring the Fearless Caregiver program. Following is a press release about tomorrow's event.

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The State Life Insurance Company to sponsor Fearless Caregiver Conference in Nashville, Tenn.

Contact:
Beth King, APR, Media Relations Manager
(317) 285-4168 or beth.king@oneamerica.com

For Immediate Release:

Indianapolis (March 5, 2010) – To further educate and inform health care providers and families with aging loved ones on their roles and responsibilities concerning long-term care, The State Life Insurance Company, a OneAmerica® company, will sponsor The Fearless Caregiver Conference in Nashville, Tenn., Wed., March 10 at the Radisson Hotel at Opryland from 8:30 a.m. to 2:30 p.m.

Designed to arm participants with information, support and insight about long-term care, the conference keynote speaker will be country singer Clay Walker. Nationally known expert Stephen Moses, President of the Center for Long Term Care Reform, will also speak at the conference, discussing the financial crisis surrounding public health care funding as it relates to long-term care and innovative solutions available to individuals attending the conference.

"We’re extremely excited to be sponsoring the Fearless Caregiver Conference in Nashville, Tenn.," said Bruce Moon, vice president of marketing for The State Life Insurance Company. "As the face of long-term health care in America changes, health care providers and family members responsible for their aging loved ones’ care will have heavier financial burdens with increasingly less available public funding. By sponsoring this event, we can reach an audience who knows and understands the importance of preparing for long-term care effectively."

The Care Solutions portfolio of asset-based long-term care solutions has been available in Tennessee and surrounding states for over 20 years. More details can be obtained by calling Vice President of Marketing Bruce Moon at (317) 285-4562. For more information about the Fearless Caregiver Conference, visit www.caregiver.com.

About State Life

The State Life Insurance Company, a OneAmerica® company, is focused on providing asset-based long-term care solutions. State Life is a recognized leader in providing these solutions, which utilize life insurance, fixed-interest deferred and immediate annuities. The company’s extensive Care Solutions portfolio of products helps consumers build a secure future by helping to protect their assets.

About OneAmerica

OneAmerica Financial Partners, Inc., is headquartered in Indianapolis, IN. The companies of OneAmerica® can trace their solid foundations back more than 130 years in the insurance and financial services marketplace.

OneAmerica’s nationwide network of companies offers a variety of products to serve the financial needs of their policyholders and other clients. These products include retirement plan products and services; individual life insurance, annuities, long-term care solutions and employee benefits. The goal of OneAmerica is to blend the strengths of each company to achieve greater collective results.

The products of the OneAmerica companies are distributed through a network of employees, agents, brokers and other distribution sources that are committed to increasing value to our policyholders by helping them plan to meet their financial goals.

We deliver on our promises when customers need us most.

-END-

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Updated: Thursday, March 4, 2010, 10:00 AM (Pacific)

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LTC Bullet: CLASS Class March 11

LTC Comment: The CLASS Act (proposing federal LTC insurance) is in the President's health reform proposal. Learn from top experts the prospects for and likely consequences of this industry-transforming plan.

LTC BULLET: CLASS Class March 11

As the Administration's Rube Goldberg health reform legislation teeters between ignominious defeat and economically ruinous passage, all LTC eyes are focused on the massive bill's CLASS plan.

Here's a great way for you to learn the CLASS Act's prospects for passage and likely consequences if implemented. The following invitation comes from Claude Thau, a leading LTC insurance practitioner and analyst:

WEBEX ON THURSDAY, MARCH 11TH, AT 2:00 CENTRAL TIME:

The CLASS Act has been included in every major health care reform proposal in recent months, including President Obama's proposal to the Health Care Summit. If you would like to learn more about this long-term care insurance (LTCi) industry-changing proposal, please join Claude Thau of Thau, Inc. and Allen Schmitz and Dawn Helwig of Milliman, Inc. for a WebEx presentation on Thursday, March 11th, at 2:00 PM Central time.

This presentation will cover the basics of the proposals, as well as several analyses of the program. In addition, we will discuss the ramifications of this bill for the private long-term care industry.

• Will it create a market for supplemental coverage?

• Will it increase private LTCi sales or result in further sales decline?

• Who will the program appeal to and what kind of anti-selection will result?

To register, email your name and email address to cthau@targetins.com. You'll receive a "CLASS Act" invoice from PayPal that will allow you to use PayPal or a credit card to pay the $25 fee. After your $25 fee payment is received, Claude will send you the link for the web presentation and the long-distance phone number for the audio portion.

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The Center for Long-Term Care Reform is pleased to inform you of this upcoming presentation. For further information about the CLASS Act, check out these resources:

YouTube interview of Claude Thau re the CLASS Act by Center VP Damon Moses (Part One) (Part Two)

Al Schmitz and Steve Schoonveld, "Health Reform's CLASS Act," Broker World, February 2010 (subscription required)

LTC Bullet: "CLASS Dismissed" for Broker World, Thursday, February 11, 2010

LTC Bullet: DéCLASSé, Wednesday, December 9, 2009

LTC Bullet: CLASS Consciousness, Wednesday, October 21, 2009

LTC Bullet: CLASSified, Monday, October 19, 2009

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Updated: Friday, February 19, 2010, 11:15 AM (Pacific)

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IT'S HAPPENING

ALERT: If your electronic inbox is a little lighter next week, it's because the Center for Long-Term Care Reform is going on holiday. Back atcha March 4.

RESOURCE: Consider using some of the time saved from reading LTC Bullets and LTC E-Alerts next week to watch this professionally produced interview about LTC financing sent to thousands of CPAs: http://videoplayer.nlps.com/?cpar_2008-08-08_seg3. Could be the key to reaching accountants with your message . . . well . . . maybe after tax season.

LTC Comment: You've read it here many times. Medicaid crowds out most of the LTCI market and when Medicaid goes down, LTCI will take off. Well folks, here's the latest: It's Happening.

When I started studying the long-term care financing problem 25 years ago and conducted the HCFA and Inspector General studies here and here, my message was this:

"If we don't do something to divert most Americans away from Medicaid-financed LTC and toward private insurance, we'll face a fiscal crisis of epic proportions in 25 years when the Age Wave hits."

My message today is simpler: It's Happening.

My message to LTCI carriers, brokers and producers for the past several years has been this: Hang tough, support the Center, we're on the verge of big new policy changes that will unleash LTC insurance and in the process help save the LTC safety net for people in need.

My message today is: It's Happening. Most state and federal officials haven't figured it out yet, but they are undergoing a sea change in public sentiment and policy that will swamp the old ways of doing things and force government to pull back the benefits that have crowded out the LTCI market.

I've always said targeting Medicaid to people truly in need is a good thing because it enables government to provide better services to fewer people and it brings more private financing into the service delivery system which makes care access and choice better for everyone.

Instead of hope for the future, we'll see over the next few years that in this area too: It's Happening.

That sucking sound you hear is not the air going out of the LTCI market. It's the pull of financial reality drawing the public out of passive denial and into the hard truth that they must plan for LTC personally. It's Happening.

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Here are some items in the news that show Medicaid and Medicare must retrench leaving a huge vacuum for personal responsibility and private LTC insurance to fill. Believe it or not, these stories come from a single day's news summary. Use them, and others like them that you'll see more and more going forward, to help prospects and clients understand why they can no longer afford passive denial leading to reliance on government entitlement programs. They must accept personal responsibility and prepare for LTC risk and cost.

Medicaid rolls swell by 3.3 million nationwide By Catherine Candisky, Columbus Dispatch. Feb 18, 2010, 12:15 pm Between June 2008 and June 2009, Medicaid enrollment rose by 7.5 percent and all 50 states saw increases, according to an analysis released Thursday by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured. LINK

States consider Medicaid cuts as use grows By Kevin Sack and Robert Pear, New York Times. Feb 19, 2010 States are already unable to make budgetary ends meet with the influx of Medicaid recipients resulting from the country's economic woes, yet health care reform could add more than 15 million more people to the rolls. Many states are considering cutting vision and dental care which are considered optional benefits, and some other states are discussing new taxes on tobacco or levies on doctors and hospitals. LINK

Millions of seniors face 14 percent premium increase for popular Medicare Advantage plans By Ricardo Alonso-Zaldivar, Los Angeles Times. Feb 19, 2010 Medicare Advantage plan premiums have risen by an average of 14.2 percent in 2010 according to the findings of a new study by data analysis firm, Avalere Health. Avalere Health vice president, Lindsey Spindle said, "These premium increases fit within a broader trend of increased financial pressure on the insured. We see very large premium increases and a continued upward creep in how much out-of-pocket expenses beneficiaries are expected to pay, such as copayments." LINK

Many patients may never fill new prescriptions Reuters. Feb 18, 2010 A recent study published in the Journal of General Internal Medicine has found that between 28 and 31 percent of first-time prescriptions for conditions such as high cholesterol, high blood pressure and diabetes were never filled by the patients. LINK

States' pension plan funds fell $1 trillion short in 2008 By Brian Tumulty, Gannett. USA Today. Feb 18, 2010 A report released Thursday by the Pew Center found that in 2008, states underfunded their retiree health benefits and pension plans by $1 trillion. LINK

Concerns grow over unsettled issues of therapy caps, Medicare physician pay McKnight's Long-Term Care News & AssistedLiving. Feb 18, 2010 The American Health Care Association reports that many nursing homes have already exceeded the therapy limits. LINK

Source: AHCA / NCAL Gazette - Friday, February 19, 2010

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Updated: Thursday, February 18, 2010, 10:50 AM (Pacific)

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IT'S THE SPENDING, STUPID!

LTC Comment: Remember "Cue-Ball" Carville's slogan "It's the Economy, Stupid!" that helped elect Bill Clinton in 1992?

A similar epiphany is sweeping the country now. Read Daniel Henninger's column, titled "It's the Spending, America," in today's Wall Street Journal, gated here or in the print edition. Find excerpts below after our comments.

Schopenhauer wasn't one of your happier philosophers but he sure got it right when he said: "All great truth goes through three phases. First it is ridiculed, then violently attacked and finally accepted as self-evident."

When I made the following predictions ten days after the 2008 presidential election, that's the reaction they (and I) received.

• No broad-based health reform will come to pass, much less reform that includes long-term care.
• Another economic "stimulus" will fail as they all do, only shifting wealth, not creating it.
• Huge increases in the federal deficit and debt will require additional borrowing to the point where interest on the public debt will crowd out new--and even much current-- social spending.

(Center members can read the rest of my 13 predictions made November 14, 2008 in The Zone here. Not a member? No password to "The Zone." Contact us at 206-283-7036 or info@centerltc.com to join the Center. You'll be in The Zone immediately.)

But now, it looks like I nailed it. There is a limit to the crazy deficit spending that has our economy (and our spirits) in a tail spin. And we've reached it! From now on, the focus of public policy must be to control spending and encourage personal responsibility, entrepreneurialism, saving, investment and private insurance.

What's that mean to you? More people will plan early to take personal responsibility for their own retirement income, health care and long-term care security. We're not out of the fiscal tunnel yet, but maybe that light ahead doesn't have to be an oncoming locomotive.

So step up, advisors. You're called upon now to show your prospects and clients how to protect their savings and independence. It's your civic duty too, because, as the old adage says: "The best way to help the poor is not to become one of them."

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Excerpts from Daniel Henninger, "It's the Spending, America," Wall Street Journal, February 18, 2010.

"With voter anger at federal profligacy and states teetering on the verge of financial collapse, the moment is ripe for an historic reordering of American politics."

"Finally, after a nonstop, nearly 80-year upward climb, government spending has hit a wall. It didn't seem possible but this is a big wall. It's the American voter."

"Dollar signs rocketed into the sky all year . . . Some of this was spending, some taxes, some fees. It's all spending. A tax or fee is just a sluice gate that separates private income from the public-spending lake. And in 2009 it was beginning to look as if the politicians were going to blow the dam."

"The message of Massachusetts, of the tea parties, of Evan Bayh and the other retirements in Congress, and of the palpable disaffection of voters in states like California, New York and New Jersey is that the moment is ripe for an historic reordering of American politics.

"That's been said before, and the politicians burrow in like sand crabs until the tides sweep public anger out to sea. It looks different this time."

"We've been grinding toward this moment since 1932. It has always been a question of political physics just how high government could go in the U.S. before it arched over and down. Now we have Washington, California, New York, New Jersey and others all arriving at the same time of reckoning. And all for the same reason, public spending by the public sector—its politicians, its unions, its massive schools of pilot fish."

"You need one big club to beat the [government spending] into a size appropriate for what we still call the United States. . . . It's the spending, America."

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Updated: Wednesday, February 17, 2010, 10:30 AM (Pacific)

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FEARLESS CAREGIVER EVENT IN NASHVILLE

LTC Comment: Steve Moses will speak at the Fearless Caregiver Conference in Nashville, Tennessee on March 10, 2010. His presentation is sponsored by OneAmerica, a Gold Member of the Center for Long-Term Care Reform. Details follow in Caregiver's (www.caregiver.com) press release. Or read it online here.

Hope to see you there. But if you can't make it to the program in Nashville, do watch for a "Fearless Caregiver" program near you in the future. Find more information on these inspiring events here and a list of upcoming programs here.

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Updated: Monday, February 16, 2010, 11:15 AM (Pacific)

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LTC BULLET: NEW STATE X PROJECT: OWN THIS LTC RESEARCH PROJECT

LTC Comment: Learn how to save a state millions, improve LTC, expand LTCI, and own a piece of the action, after the ***news.***

*** FEARLESS CAREGIVER. Steve Moses will speak at the Nashville, Tennessee "Fearless Caregiver" conference on March 10, 2010. We'll provide full details on the program soon in an LTC E-Alert. In the meantime, check out www.caregiver.com with its exceptional resources for family caregivers. To register for the "Fearless Caregiver" program at the Radisson Opryland Hotel in Nashville, go here. ***

*** NEW JH WEBSITE. John Hancock has launched a new interactive microsite, www.GetMoreWithMultilifeLTC.com, to help brokers and consultants explore and establish LTC insurance plans for businesses with up to 1,000 employees. The site includes information and tools to help brokers and consultants, whether familiar with LTC insurance or not, navigate through the employer-sponsored LTC insurance benefits planning process. Get the details here. ***

*** NEW MMMI WEBSITE. The MetLife Mature Market Institute has launched a new website here (www.MatureMarketInstitute.com). You'll find MMMI's research, information and consumer publications easier to access, navigate and retrieve. The site features a new Topic Index for easy access to information on Baby Boomers, caregiving, advocacy, health, housing, long-term care, finances, family and work. Other improvements include a research home page, a media room, downloadable charts, key study findings and methodologies, a publications listing and an area to sign up for their free e-newsletter, QuickFACTS. ***

*** JOBS IN LTC. The unemployed need jobs and the LTC insurance industry needs producers. A perfect match. So: "An alliance of leading long-term care insurance organizations has launched the national 'Jobs To Protect America's Future' campaign. The effort intends to recruit, train and support up to 2,000 unemployed Americans who will help educate Americans about the need to plan for the potential risk of needing long-term care." Get the details from the American Association for Long-Term Care Insurance here. ***

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LTC BULLET: NEW STATE X PROJECT: OWN THIS LTC RESEARCH PROJECT

LTC Comment: Last year, we proposed a "State X" project to study LTC financing problems in one key state and propose solutions. Center for Long-Term Care Reform members and supporters responded with targeted contributions. Your financial help primed the pump, attracted outside foundation support, and we got the job done. Read our report, titled "Doing LTC RIght," here.

Rhode Island was a unique opportunity because of its "global Medicaid waiver." But every state faces similar problems and challenges. So we propose to take our analytical model and our recommendations for doing LTC right to the rest of the country. Here's what we have in mind and how you can participate, own part of the program, and receive the same published recognition our original "State X" project donors did.

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I can't think of anything more important for the future of long-term care than achieving these three goals:

(1) Wake up the public to the risk and cost of LTC,

(2) Prepare more people to pay privately for long-term care, and thereby,

(3) Save the Medicaid safety net for people in need by unleashing the markets for LTC insurance and home equity conversion.

But it does not look like any of these outcomes will occur without a nudge. So, we've come up with the following proposal to help matters along. The Center for Long-Term Care Reform will perform the proposed project in state after state for as long as it takes to achieve the objectives listed above.

For each project in each state, if our recommendations are implemented, the state will save millions of dollars, more of its citizens will have access to higher quality long-term care, and the reverse mortgage and LTC insurance markets will expand. The Center needs $25,000 per state to make it happen. Here's how you can participate:

Purchase up to 100 shares in a project at $250 per share. Once a full project is sold out (100 shares sold), share-holders will vote on which state to target with one vote per share. Combine your shares with others to choose the state or buy 100 shares in a project (full ownership) to guarantee your choice. Or persuade your company, carrier, or organization to sponsor a project. We'll seek supplemental foundation support too, but we need your help to prime that pump. The state must agree to participate, of course, but in the condition they're in financially now, we don't see many states turning away free help.

If you think you may like to participate, contact Steve Moses at smoses@centerltc.com or 206-283-7036, give us the state you'd prefer to target and we'll fill in the blanks in the following "generic" proposal for you and your state.

Bottom line, we estimate conservatively that states which implement our recommendations will save 10 percent of their annual Medicaid nursing home expenditures within five years by reducing Medicaid LTC dependency, increasing estate recoveries, and maximizing private LTC financing through home equity conversion and LTC insurance.

Here's the basic proposal. Again, we can fill in the blanks for any state quickly. While no contribution is too small, shares are in $250 increments and we strongly encourage full project ownership.

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How to Reduce Medicaid Expenditures and Improve Long-Term Care
a proposal by the
Center for Long-Term Care Reform
submitted to [Name of Organization]
on [Date]

I. The National 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. Although LTC users are only seven percent of the Medicaid population, they account for more than half of the program's costs nationally. The only way Medicaid can survive as a long-term care safety net for the poor is if more prosperous people plan responsibly and pay privately for their own long-term care. But Medicaid crowds out most private LTC financing alternatives such as home equity conversion and insurance. The trend toward greater and greater dependency on welfare-financed nursing home care is reversible. It will be reversed by responsible public policy or by default as costs skyrocket and public resources dwindle with the aging of the baby boom.

II. The State Problem

[State] spent [$$$] on Medicaid in 2007 of which [$$$] or [%%%] were LTC expenditures for older people and adults with physical disabilities, an increase of [%%%] since 2002. [State's] age 85 plus population, the cohort most likely to require LTC, was [thousands] or [%%%] in 2007, but is expected to be [thousands] and [%%%] in 2030, a [%%%] increase. Medicaid is the primary payer for [%%%] of the state's nursing home residents. Another [%%%] rely primarily on Medicare. Medicaid and Medicare also pay for most home health care, 75% nationally. Our best estimate is that only [%%%] of [State's] 50+ citizens own LTC insurance. Very few use home equity to fund LTC. Thus, financing Medicaid LTC is a large and growing strain on [State's] budget. Private LTC financing is minimal and shows few signs of increasing. Demographic and fiscal pressures will exacerbate these problems. Yet federal law and regulations inhibit some effective corrective actions [State] might take--such as tightening loose eligibility rules--and encourage other initiatives--such as "rebalancing" from institutional to home care--which may increase utilization and costs.

III. Substantive Proposal

[State] can reduce its annual Medicaid budget by an amount equal to 10% of current nursing home expenditures for aged and disabled recipients or [$$$ ] per year within five years. We propose to conduct a study of LTC financing in [State] that shows why such savings are possible and how to achieve them while improving access to quality LTC for everyone in the state. Toward that end, we will . . .

• Research and document federal and state Medicaid LTC eligibility laws and regulations that encourage public assistance dependency for LTC.
• Interview state staff who make, interpret, and implement LTC eligibility policy to identify eligibility "loopholes" that circumvent spend-down rules.
• Measure the level of Medicaid estate planning, i.e. artificial impoverishment to qualify for Medicaid LTC, in [State] with a literature search and interviews.
• Analyze how much revenue [State] receives from federally mandated estate or lien recoveries and how much more could be recovered using best practices.
• Examine the reverse mortgage market and interview lenders and loan representatives to identify ways home equity could offset Medicaid LTC costs.
• Examine the LTC insurance (LTCI) market and interview carriers, brokers, agents and regulators to identify ways LTCI could offset Medicaid LTC costs.
• Meet key state legislators and executive branch officials to discuss why Medicaid LTC expenditures are so high and how they could be reduced progressively.
• Meet LTC providers (nursing home, assisted living and home health) to get their perspective and gauge their support for measures to increase private LTC revenue.
• Meet senior advocates to get their perspective and gauge their support for measures to increase overall public and private LTC resources.

We propose to work with a representative of [the sponsoring organization and/or the State Medicaid program] to identify interviewees and schedule appointments. We will visit [State] for one week to conduct the onsite research and interviews. We will conduct other necessary research online.

IV. Business Proposal

Deliverables, within six weeks of project approval, will include (1) a comprehensive report (approx. 25 pages) that explains the problem of LTC financing and recommends solutions to achieve savings of at least [10% of State's Medicaid nursing home budget] per annum; (2) one or more newspaper op-eds, and (3) an article suitable for publication in [the sponsoring organization's] journal.

Stephen Moses (professional bio attached) will conduct all of the research and interviews for this project. He has conducted many similar studies over the years. Examples of his project reports are at http://www.centerltc.com/reports.htm.

Total cost: $25,000 including travel expenses and distribution of electronic reports to all interviewees and respondents. Payable: $10,000 upon signing; $5,000 upon successful progress report; and $10,000 upon submission of acceptable deliverables.

Respectfully submitted [date]

Stephen A. Moses

President

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Updated: Friday, February 12, 2010, 10:01 AM (Pacific)

Seattle--

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OVER-THE-TOP MEDICAID PLANNER IS OHIO HOUSE SPEAKER

LTC Comment: The staff of your Center for Long-Term Care Reform never rests. When we're not reading, interpreting and writing about LTC policy, we're gauging which way the political winds blow in the media.

So, last night I'm monitoring Fox News. (Don't get your shorts in a knot. I watch MSNBC too for the other point of view.) And what should I learn? Probably the single most egregious Medicaid planner in the country is now Speaker of the House of Representatives in Ohio!

So, I figure, why not stir the pot a little. I drafted the following email to Bill O'Reilly, host of "The O'Reilly Factor." Read it; check out the quotes that follow from Speaker Armond Budish's books and articles; then, if you're of a mind to highlight the point, send your own note to oreilly@foxnews.com.

Maybe if he knows what a disservice to the poor Medicaid planning is and how it discourages affluent people from planning responsibly for long-term care, he'll give some much-needed national media attention to this travesty of American justice.

And, hey, if you lean toward the other side of the political spectrum, consider sending a similar message to the commentators on MSNBC and CNN. The Left should despise Medicaid planning even more than the Right. After all, why use our country's scarce public welfare dollars to indemnify affluent heirs of wealthy seniors when they're probably all a bunch of Republicans anyway?

So, here's the note I sent followed by the quotes from Armond Budish.

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February 11, 2010

Dear Mr. O'Reilly:

You mentioned Ohio House Speaker Armond Budish in a story tonight. You may be interested to know that he is also notorious as a "Medicaid estate planning" attorney. That is, he makes his living--or did when I knew him--legally impoverishing affluent seniors to qualify them for Medicaid, i.e. welfare, financed nursing home care.

Below are representative quotes from his books and articles. Budish is not alone. Thousands of attorneys specialize in Medicaid planning to the detriment of the poor and at enormous expense to taxpayers. Google "Medicaid planning" and you'll see what I mean.

I became aware of these abuses as a career U.S. government employee (Health and Human Services and the Office of Inspector General) in the 1980s. I've been fighting ever since to eliminate them. While I've had some successes, including three major federal statutes, the practice remains commonplace. . . .

Budish Quotes:

"So is there any practical way to juggle assets to qualify for Medicaid--before losing everything? The answer is yes! By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmakers' best efforts...Here are the best options: Hide money in exempt assets...Transfer assets directly to children tax-free...Pay children for their help...Juggle assets between spouses...Pass assets to children through a spouse...Transfer a home while retaining a life estate...Change wills and title to property...Write a durable power of attorney...Set up a Medicaid Trust...Get a divorce...Purchase a long-term-care insurance policy." (Armond D. Budish, Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 34)

"We have committed an act of piracy--we have broken into the Fort Knox of Government benefits and uncovered the best legal strategies available to you for claiming your share of the gold from the Government's treasure chest.... We'll explain how you can 'strike gold' in the Social Security [including SSI], Medicare, and Medicaid programs.... With this book we are handing you the treasure map, deciphered from a mine of unintelligible government rules and regulations." (Amy Budish and Armond D. Budish, Golden Opportunities: Hundreds of Money-Making, Money-Saving Gems for Anyone over Fifty, Henry Holt and Company, New York, 1992, p. xiii)

"By paying off a mortgage, they can magically change assets like cash, which would be lost to a nursing home, into assets that can't be touched.... Since there's no limit on the value of a house that they can buy, they may be able to hide most or all of their assets with this one simple technique. This is a giant loophole, which they should feel free to take advantage of." (Armond D. Budish, Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 38)

"Here's another loophole that a nursing-home resident may want to consider. He or she could buy a brand-new--and expensive--ring right before going into a nursing home. After all, the law doesn't limit this exclusion to rings purchased at the time of a wedding or engagement." (Armond D. Budish, Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 39)

"If the person is married, household goods, a car and personal effects are protected without regard to their value!.... For example, oriental rugs or paintings that appreciate in value may be worthwhile investments that add beauty and hide assets at the same time." (Armond D. Budish, Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care, Henry Holt, New York, 1989, p. 39)

"Q: Can my parents give away a part of their life savings and still qualify for Medicaid? A: Yes. The law lets people give a portion of their savings to children or others to protect those funds from being tabulated as assets. Giving away money can help your parents reduce their funds to a level that makes them eligible for Medicaid. Q: How else can my parents protect part of their life savings? A: Here are three of the most popular planning strategies. ...1. Put money into exemptions [i.e. home improvements, a new car, etc.]. ...2. Create specialized trusts. Medicaid permits the creation of a variety of specialized trusts that preserve assets. Your parents might transfer their home to an irrevocable Medicaid trust, which allows them to live at home for life, obtain Medicaid coverage if they must enter a nursing home, pass the residence to heirs at death, and avoid capital-gains taxes. ...3. Purchase an immediate Medicaid annuity or promissory note. Let's return to the example of your parents with $100,000 in assets when dad enters a nursing home. Your mom takes $50,000 of that and buys (in her name) an immediate Medicaid-qualified annuity from an insurance company. ...Dad qualifies for Medicaid immediately, and Mom remains financially secure because she keeps all the income. She may even save and accumulate the annuity payments without jeopardizing her husband's Medicaid coverage." (Armond Budish in Family Circle, 11/1/97, p. 46)

Regards,

Stephen A. Moses, President
Center for Long-Term Care Reform
2212 Queen Anne Avenue North, #110
Seattle, WA 98109
Office: 206-283-7036
Fax: 206-283-6536
Email: smoses@centerltc.com
Web site: www.centerltc.com

Updated: Thursday, February 11, 2010, 10:44 AM (Pacific)

Seattle--

"CLASS Dismissed" for Broker World

LTC Comment: Steve Moses's latest--and hopefully last--article on the CLASS Act is in the current issue of Broker World. Read it after the ***news.***

*** SUBSCRIBE to the Center for a free one-month trial here. Or join and help us fight the good fight to save long-term care here. ***

*** INVITE Steve Moses to your next sales meeting. Bring him in for a webinar on why LTCI will take off soon . . . why the bottom's about to fall out of the social safety net . . . why agents and other advisors have a moral and fiduciary responsibility to get their clients protected for LTC. Consider this program the moral equivalent of a half-time pep talk backed up by hard evidence and irrefutable logic. It's free if you don't protect more people from LTC risk and earn more money doing it. Nothing to lose so call the Center for Long-Term Care Reform at 206-283-7036 to schedule the program. ***

*** BONUS WEBSITE DEAL IS BETTER THAN EVER. All you have to do to have your very own LTC website designed by LTC Connection is join the Center for Long-Term Care Reform. That's right, join the Center for $150 per year, get all our publications and access to The Zone, including our "Almanac of Long-Term Care," and on top of that LTC Connection will design your website, waive their usual $59 set up fee, and give you three months of the $37 monthly maintenance fee for free. That's a total savings of $170 on your website. And you get the Center membership too! So, what do you have to do? Just contact Damon at 206-283-7036 or damon@centerltc.com, join the Center, pay your membership fee, and say "I want my website." He'll give you a "promo code" you can use to get your website from LTC Connection for no additional charge until your fourth month of site maintenance. Already a member of the Center but want your free website? No problem. Renew your annual membership early and get the same deal. ***

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LTC BULLET: "CLASS DISMISSED" FOR BROKER WORLD

LTC Comment: This month's Broker World has my last word on the now-defunct CLASS Act. Read it below or here. Reprinted from BROKER WORLD February 2010, www.brokerworldmag.com. Used with permission from Insurance Publications. Subscriptions, $6/yr., 1-800-762-3387.

Stephen Moses, President
Center for Long-Term Care Reform

Has Congress got a deal for you?! It’s a new government LTC insurance plan included in both the House and Senate health reform bills. Here’s what CLASS (Community Living Assistance Services and Supports Act) proposes.

If you (1) don’t opt out of the one-size-fits-all program (you’re in automatically otherwise—no choices, take it or leave it) and (2) if you pay your $100 (or more) extra monthly payroll tax for five years (to "vest") and (3) you remain employed (at least marginally) and (4) you need help with two, three or four out of six activities of daily living, such as dressing, bathing, eating, toileting (depending on what the U.S. Department of Health and Human Services [USDHHS] decides CLASS can afford), then (5) you may receive a benefit of $50 or more per day (again depending on what the USDHHS thinks the system can bear) for as long as you need it (no limits on the benefit which pays forever once you quality).

Now, you’re a savvy consumer. So you ask some questions just as a client might interrogate you if you were trying to sell a private insurance product.

Question 1: "I’m healthy," you say, "I eat well, I work out. I have no more than an average risk of needing expensive long term care someday. How do I know I’m not paying higher premiums so others can pay less? How do you price my risk? How do you underwrite?"

Answer: CLASS has no underwriting—anyone, no matter how frail or infirm, can participate. Everyone pays the same premium, but only people who need services will receive benefits. Insurance professionals call this "adverse selection."

Question 2: "I usually buy (life, health, auto, fire) insurance to replace the small risk of a sudden catastrophic loss with the certainty of an affordable premium. What will this coverage do for me if I have a stroke or get hit by a truck tomorrow and need full-time skilled nursing care?"

Answer: CLASS pays nothing until you’ve contributed premiums for at least five years and then about a quarter of the average cost of a private nursing home bed ($219 per day) if, and only if, the USDHHS decides it can afford even that.

Question 3: "I’ve heard there is nothing but IOUs in the Social Security and Medicare trust funds and their unfunded liabilities top $106 trillion. How would the CLASS Act’s trust fund protect my investment?"

Answer: Money is fungible—as long as the federal budget runs a deficit, your premiums will go to make fiscal ends meet. In fact, half the deficit reduction alleged for "health reform" comes from counting the CLASS Act’s claims reserves as available surplus revenue! The CLASS Act’s promise to pay you benefits someday is tantamount to: "Trust me, I’m from the government, I’m here to help you."

Question 5: "This CLASS plan sounds awfully top-heavy. Is it actuarially sound?"

Answer: CLASS advocates—LTC providers who need the revenue and people who are uninsurable without it—say CLASS is sound actuarially. The American Academy of Actuaries, the actuary for Medicare and Medicaid, and the Congressional Budget Office say it isn’t. Who ya gonna trust?

Question 6: "What are my options if I opt out of CLASS?"

Answer: Private long term care insurance is available in many forms. It is priced for actuarial solvency; it is underwritten so you pay only for the level of risk you bring into the risk pool; it invests your hard-dollar premiums in solid, protected reserves; it’s regulated to ensure a guaranteed benefit; and it is a contract enforceable in a court of law. CLASS has none of these characteristics.

Question 7: "CLASS sounds like a sucker deal, just another way to transfer wealth from me to others the government thinks need my money more than I do. Right?"

Answer: Bingo! The Medicare and Medicaid actuary estimates that only two percent will use CLASS. The people who participate will be those who know for sure they’ll need LTC someday and sooner rather than later.

The Big Question: If CLASS passes, how will consumers react?

The Big Answer: Since 1965, when Medicaid and Medicare passed, the government has paid (inadequately) for most expensive long term care (in nursing homes). CLASS will lead careless consumers to believe a risk they didn’t think they faced anyway has been further reduced by yet another government program, one that pays for home care (they want), not just for nursing home care (they’d rather avoid).

But smart consumers will see through the CLASS Act’s smoke and mirrors. They’ll realize private long term care insurance is their last best hope to ensure access to quality long term care when they need it and in the best, most appropriate setting.

Stephen A. Moses is president of the Center for Long-Term Care Reform. He can be reached by telephone at 206-283-7036. Email: smoses@centerltc.com. Website: www.centerltc.com.

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Updated: Wednesday, February 10, 2010, 10:12 AM (Pacific)

Seattle--

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RETIREMENT PLANNING IN REVERSE

LTC Comment: What a mess we got into using our houses as checkbooks. Home equity loans enabled Americans to live beyond our means for decades. Poor public policy pushed people into mortgages they couldn't afford, aggravating the problem. To top it all, Medicaid allows people with up to $750,000 of home equity to get free long-term care.

As things stand now, our economy's in the tank; our entitlement programs are bankrupt; our welfare programs are broke and deteriorating; only a third of boomers have saved enough for retirement income security, much less health and LTC security; and it looks like all this will get much worse before it gets better.

On the bright side, our personal savings rate that topped out at 14.5 percent in 1975 and plummeted to a minus .8 percent in 2008 is on the rise again at 6.0 percent as of May 2009. (Source) Moral: when the going gets tough, the tough start saving.

This is why I like Atare Agbamu's idea to build reverse mortgages into sound financial planning. Agbamu is the author of Think Reverse, a 2008 book we reviewed here. In a recent article titled "Build Reverse-Capacity," he says:

"The retirement-planning industry and policy leaders have been urging Americans to save for retirement for decades. To this sound traditional advice, I add a complementary new call: Build Reverse-Capacity! To build reverse-capacity, young families should plan their home purchase early and not use their home as a 'piggy bank' to pay for non-emergency pre-retirement consumption. Using the tax code, Congress should create incentives to support reverse-capacity building."

Turns out, China has the jump on us in this area. Agbamu explains: "Taiwan has seen the future of retirement cash flow: There is a reverse mortgage in it, and [Taiwan] plans to help its first-time homebuyers think reverse early . . .. Chang Chin-oh, a professor of Land Economics at National Chengchi University in Taipei City, Taiwan, recently gave this hint about Taiwan's evolving reverse-mortgage model: 'The program will also encourage young people to start planning a home purchase early for retirement.' Let me repeat: Plan a home purchase early for retirement!"

According to the Taipei Times, Taiwan has a retirement planning problem: "[Chang Chin-oh] said that although the main source of income for the elderly still comes from their children, the percentage of those who rely on the government's subsidies in retirement has increased. The [reverse] mortgage program aims to help older homeowners enjoy retirement with their own property . . .." (Source)

How quaint! "The main source of income for the elderly still comes from their children." America left that system behind decades ago and now depends almost entirely on "government's subsidies in retirement." Moral: if Taiwan needs its people to start building home equity early so they can draw on it in retirement, i.e. "reverse capacity," how much more do we in the United States need to do the same thing?

As I've said so many times here before, when the bottom falls out of the federal entitlement programs, people will have nowhere else to turn but to their home equity. Reverse mortgages will be the next LTC "safety net" for middle class and affluent families when they lose their access to Medicaid. So thanks for the good advice, Atare Agbamu: "Think Reverse" and "Build Reverse Capacity."

And while you're at it, consider some private long-term care insurance just in case.

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Updated: Tuesday, February 9, 2010, 11:03 AM (Pacific)

Seattle--

AGING DEMOGRAPHICS UPDATE

LTC Comment: The Administration on Aging has published "A Profile of Older Americans: 2009." Find it here. Highlights follow below.

For comparison, check out "A Profile of Older Americans: 1999" here.

Note especially this ominous prediction from the 1999 edition: "[Older population] growth slowed somewhat during the 1990's because of the relatively small number of babies born during the Great Depression of the 1930's. But the older population will burgeon between the years 2010 and 2030 when the 'baby boom' generation reaches age 65." [Emphasis added.]

Now, juxtapose that with this from the 2009 edition: "The older population (65+) numbered 38.9 million in 2008, an increase of 4.5 million or 13.0% since 1998. The number of Americans aged 45-64 - who will reach 65 over the next two decades - increased by 31% during this decade."

See why we say there's a "Silver Tsunami" coming? Politicians had their chance in the slower-aging 1990's to modify entitlement programs like Social Security, Medicare and Medicaid in preparation for the Age Wave. It didn't happen. Now, it's too late.

The big entitlement programs won't disappear. But they will all be radically means-tested so that affluent and upper-middle-class people can no longer receive previously promised benefits.

What that means is that private financial tools, including traditional LTC insurance and the new "combo" annuity or life insurance products will explode in market growth. You'll see it start with skyrocketing reverse mortgage financing of long-term care when Medicaid eliminates its huge home equity exemption.

So keep a weather eye. The storm is coming.

Note that we've featured this report in the "Almanac of Long-Term Care" in The Zone, the Center's password-protected website for members only. You can always find the latest aging demographic statistics there. To join the Center and receive your user name and password to The Zone, contact Damon at 206-283-7036 or damon@centerltc.com.

Highlights from "A Profile of Older Americans: 2009":

• The older population (65+) numbered 38.9 million in 2008, an increase of 4.5 million or 13.0% since 1998.

• The number of Americans aged 45-64 - who will reach 65 over the next two decades - increased by 31% during this decade.

• Over one in every eight, or 12.8%, of the population is an older American.

• Persons reaching age 65 have an average life expectancy of an additional 18.6 years (19.8 years for females and 17.1 years for males).

• Older women outnumber older men at 22.4 million older women to 16.5 million older men.

• In 2008, 19.6% of persons 65+ were minorities--8.3% were African-Americans.** Persons of Hispanic origin (who may be of any race) represented 6.8% of the older population. About 3.4% were Asian or Pacific Islander,** and less than 1% were American Indian or Native Alaskan.** In addition, 0.6% of persons 65+ identified themselves as being of two or more races.

• Older men were much more likely to be married than older women--72% of men vs. 42% of women (Figure 2). 42% older women in 2002 were widows.

• About 31% (11.2 million) of noninstitutionalized older persons live alone (8.3 million women, 2.9 million men).

• Half of older women (50%) age 75+ live alone.

• About 471,000 grandparents aged 65 or more had the primary responsibility for their grandchildren who lived with them.

• The population 65 and over will increase from 35 million in 2000 to 40 million in 2010 (a 15% increase) and then to 55 million in 2020 (a 36% increase for that decade).

• The 85+ population is projected to increase from 4.2 million in 2000 to 5.7 million in 2010 (a 36% increase) and then to 6.6 million in 2020 (a 15% increase for that decade).

• Minority populations are projected to increase from 5.7 million in 2000 (16.3% of the elderly population) to 8.0 million in 2010 (20.1% of the elderly) and then to 12.9 million in 2020 (23.6% of the elderly).

• The median income of older persons in 2008 was $25,503 for males and $14,559 for females. Median money income (after adjusting for inflation) of all households headed by older people did not change in a statistically different amount from 2007 to 2008. Households containing families headed by persons 65+ reported a median income in 2008 of $44,188.

• Major sources of income for older people in 2007 were: Social Security (reported by 87% of older persons), income from assets (reported by 52%), private pensions (reported by 28%), government employee pensions (reported by 13%), and earnings (reported by 25%).

• Social Security constituted 90% or more of the income received by 35% of all Social Security beneficiaries (21% of married couples and 44% of non-married beneficiaries).

• About 3.7 million elderly persons (9.7%) were below the poverty level in 2008 which is not statistically different from the poverty rate in 2007 (9.7%).

• About 11% (3.7 million) of older Medicare enrollees received personal care from a paid or unpaid source in 1999.

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Updated: Monday, February 8, 2010, 11:33 AM (Pacific)

Seattle--

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LTC BULLET: THE ENEMY OF LTC TRUTH

LTC Comment: Albert Einstein said "Unthinking respect for authority is the greatest enemy of truth." See how this principle applies to long-term care, after the ***news.***

*** ILTCI CONFERENCE IN NEW ORLEANS. This is the big one folks. Excellent networking. All the leading lights of the long-term care insurance industry attend. Hear dozens of presentations in ten tracks, i.e. actuarial, compliance, policy and providers, etc. Successful producers can even receive a $700 discount on registration for the 2010 Intercompany Long-Term Care Insurance Conference in New Orleans March 14-17. To qualify for the discount, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application. Application here. If you missed our detailed announcement, call Damon at 206-283-7036. For more information on this event, go to www.iltciconf.org. Steve Moses will be there to cover the conference for the Center's publications, so be sure to say hello. ***

*** COMPACTed. The CLASS Act was quashed last week as most analysts acknowledged the health reform proposals in Congress that included it were doomed. This week, it looks like the budget crisis has crushed another bad idea for expanding government financing of LTC while encouraging a good idea. According to this article, "New York State's Department of Insurance is recommending the state undertake a fresh campaign to encourage consumers to buy long term care insurance." That's great news. But what encouraged me even more is that the article made no mention of the state's "LTC Compact" plan that seemed to be rolling toward passage in the "mid-aughts" before New York's budget went south. We described and debunked the "LTC Compact" proposal in "The New York Long-Term Care Compact Proposal: Update, Analysis and Recommendations" (LINK). Thanks to Center for Long-Term Care Reform member and supporter Arthur Rudnick for tipping us to this news. ***

*** DEADLINE APPROACHES. The American Association for Long-Term Care Insurance (www.aaltci.org) has announced its "2010 LTC Insurance Sales Awards" contest. Deadline to enter is February 28, 2010. Something new this year: "Rookie of the Year" competition. Click here for more information. ***

LTC BULLET: THE ENEMY OF LTC TRUTH

LTC Comment: Einstein disdained "unthinking respect for authority," but he wasn't alone. President John F. Kennedy said:

"The great enemy of truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought."

The field of long-term care financing is a perfect case in point. What exactly are the "persistent, persuasive and unrealistic" myths of long-term care? I nominate the following:

1. The high cost of long-term care consumes the life savings of millions of Americans.

2. Medicaid forces people to spend down into impoverishment for LTC before it helps.

3. Most people don't buy private long-term care insurance because it's too expensive.

4. The best solution for long-term care is more government financing.

5. Medicaid can cover more people for less money in home care than in nursing homes.

All five of these myths are patently false. Yet they persist in both the popular and academic literature.

I've disproved each of the myths in published articles and reports over 25 years. See for example:

• "Medicaid Estate Recoveries: National Program Inspection," Office of Inspector General, 1988

• "The Fallacy of Impoverishment," The Gerontologist, 1990

• "The Myth of Medicaid Spend-Down," LTC, Incorporated, 1991

• "The Magic Bullet: How to Pay for Universal Long-Term Care," LTC, Incorporated, 1994

• "The Myth of Unaffordability: How Most Americans Should, Could, and Would Buy Private Long-Term Care Insurance," Center for Long-Term Care Financing, 1999 LINK

• "The Realist's Guide to Medicaid and Long-Term Care," Center for Long-Term Care Financing, 2004

• "Aging America's Achilles' Heel: Medicaid Long-Term Care," Cato Institute, 2005

• "Doing LTC RIght," Ocean State Policy Research Institute, 2010

Interestingly, the five "myth-statements" about long-term care financing are not always stated explicitly in the literature anymore. They've seeped into the academic psyche. They've migrated from articulated premises to hidden assumptions.

For example, I'd point to the January 2010 special issue of the journal Health Affairs, Vol. 29, No. 1, dedicated entirely to "Advancing Long-Term Services & Supports." There you'll find the myths of long-term care implied in nearly every article if rarely affirmed outright.

But let me focus on just one piece from that issue: "The Complementarity of Public and Private Long-Term Care Coverage," by David G. Stevenson, Marc A. Cohen, Eileen J. Tell and Brian Burwell. This is one of the best articles in the special Health Affairs issue and its authors are well known, highly qualified experts in the field. (Respected colleagues as well.) Their article is available here, although it's gated so you'll have to pay if you want to read more than the "abstract."

The theme of the article is that the solution to long-term care financing is neither exclusively public sector nor private sector, but a complementary melding of both. OK, agreed. But what would such a solution look like? How do you get there? Why hasn't it evolved already? And what are your assumptions? It seemed to me that false assumptions--including some of the myths I enumerated above--prevented the article from identifying the desirable solution convincingly.

So I wrote to the authors explaining why I think their unstated "myth-assumption" that people are more financially at risk for long-term care than they actually are leads to their underestimating the "crowd out" effect of government LTC financing on the LTC insurance market. Here's my email letter:

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January 22, 2010

Dear LTC Research Friends:

Thank you for citing me in your Jan. 2010 Health Affairs article. [p. 98, footnote # 7, "Aging America's Achilles' Heel: Medicaid Long-Term Care"] I'd like to offer some comments and suggestions.

You write: "Medicaid's share of total long-term care costs has remained relatively stable over the past few decades at around 50 percent." [p. 98]

Actually, Medicaid's share of nursing home costs has declined steadily from 55.4% in 1980 to 40.6% in 2008. Medicaid's share of total home health costs is only 34.6% for 2008.

I think what you're missing is that Medicaid's absolute dollar expenditure for LTC is not what matters for the crowd out issue. It is rather the total government role in LTC financing.

So, you need to add to Medicaid's share, (1) the one-half of "out-of-pocket costs" that are really just spend-through of Social Security income of people already on Medicaid, (2) Medicare's 18.6% of NH [nursing home] and 41.1% of home health, (3) other state and federal LTC funding sources; (4) other non-Social Security income, as opposed to assets, that Medicaid recipients contribute toward their cost of care. The last point is important for the crowd out issue, because, while Medicaid LTC consumes most of recipients' income, most of their assets are not at risk as explained below and in the attachments.

I've documented and analyzed the true impact of government financing of LTC on the demand for private LTC insurance annually in a series called "So What if the Government Pays for Most Long-Term Care." The latest addition to that series is attached and available here: http://www.centerltc.com/bullets/latest/855.htm. It covers 2008 data. Past editions are in our LTC Bullets archives for each January here: http://www.centerltc.com/bullets/date.htm.

You write: "Although Medicaid is not an insurance product, because it offers little explicit financial protection for long-term care costs, some have argued that Medicaid in fact does provide a degree of protection for those who are well schooled in Medicaid eligibility policy." [p. 98]

Nearly every phrase in that sentence is incorrect. Medicaid offers little financial protection for LTC? How about the unlimited resource exemptions and easy estate recovery avoidance explained in detail in my article you cite! Medicaid only offers asset protection for those "schooled" in policy? No, that's never been true nor is it my argument. Medicaid planning is just the tip of the iceberg. The vast majority of Americans qualify for Medicaid LTC based on income and assets without any such schooling or legal advice. That's the big problem, although even GAO admitted "transfer of assets," itself only a small part of Medicaid planning, is a $1 billion a year expense. Nothing to sneeze at.

I urge you to read our new report titled "Doing LTC RIght," attached and available here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. It focuses on LTC financing in Rhode Island but offers a model for national reform. I hope it nails these points down even more clearly than "Achilles' Heel."

You write: "Even if one accepts that Medicaid crowds out long-term care insurance purchase for the majority of people across the wealth spectrum, it seems neither feasible nor desirable to reduce Medicaid eligibility standards to eliminate this impediment to the private market. For instance, empirical analyses have shown that even if all states moved to the most stringent eligibility standards allowed by federal law, private long-term care insurance purchase would rise by only 2.7 percentage points." [p. 99]

But you entirely miss the point. Federal law and regulations governing Medicaid LTC eligibility are wide open. States have little authority to restrict access based on income and assets. That's why our new Rhode Island report is so important. It shows what a state, freed of Lilliputian federal rules, might do to target Medicaid to people truly in need and encourage others to plan early and responsibly for LTC. Rhode Island's unique "global Medicaid waiver" is a reason to hope for change and a way to experiment with more rational LTC policy.

Again, I hope you'll read the two attachments and as always, I'd value your comments.

Thanks again for citing my work. That's more recognition than I usually receive from researchers, Josh Wiener excepted. But if I could get you to understand what I'm actually saying and cite THAT, it would be so much better.

Regards,

Steve

LTC Comment: No substantive reply yet but I'm looking forward to their answers.

Updated: Friday, February 5, 2010, 10:45 AM (Pacific)

Seattle--

FISCAL STORM MEANS CLEAR SAILING FOR LTCI

LTC Comment: There are plenty of reasons to be depressed about the economy, but lagging long-term care insurance sales isn't one of them. So cheer up carriers, brokers and producers, your time has finally come!

Puzzled by that statement? Discouraged by years of flat or declining sales? Convinced the public remains in denial about LTC risk and cost? Wonder why and how LTCI sales will take off soon?

Here's the argument in a nutshell followed by evidence in the news that the process has begun.

Point One: The main reason people don't buy LTCI is that government has paid for most expensive LTC since 1965 and so crowds out 2/3 to 90% of the LTCI market. (Brown and Finkelstein, www.nber.org)

Point Two: The government programs that pay for most nursing home and home care (Medicare [19%], Medicaid [41%] and Social Security income of people on Medicaid [13%]) are fiscally unsustainable. (So What If the Government Pays for Most Long-Term Care?)

Point Three: When government pulls back the LTC safety net as it must by means-testing Medicare, Social Security and Medicaid (more severely), the middle class and affluent will turn to savings, reverse mortgages, and long-term care insurance to fund LTC. (Doing LTC RIght)

I can't make it any simpler than that. Of course, the full argument and evidence are much more complicated. So if you harbor any doubts, check out the sources cited. My main goal today is to bring hope to a discouraged and faltering industry and sales force.

What follows is evidence in the news that the scenario I've described is playing out on schedule. The economic news is terrible. But what that means is that long-term care insurance and LTCI producers are critical to protecting the prosperous and saving the social safety net.

Remember the old saying: "The best way to help the poor is not to become one of them." By insuring the middle class and affluent, you're doing them a valuable service, but you're also helping to preserve government social programs for people truly in need.

Now, here's the latest evidence the safety net is hurting. It won't survive without your help. If you convince boomers they can't rely on the entitlement programs that sustained their parents, you will crack through their denial about LTC.

Don't use scare tactics. Employ the hard, reliable, third-party evidence we send you every day. Buck up. Carry on. Just do it.

Health Care's Share of U.S. Economy Rose at Record Rate By Katharine Q. Seelye, New York Times. Feb 4, 2010 New projections released by the Centers for Medicare and Medicaid Services indicate that the nation's health care spending went up by 5.7 percent in 2009, consuming 17.3 percent of the country's gross domestic product. This is the largest rise since the federal government began tracking health care spending in 1960. The steep increase is attributed to the suffering economy, job losses and more people receiving Medicaid coverage. LINK [Emphasis added]

Michigan health care groups fear more cuts to Medicaid By Daniel Opsommer, Capital News Service. Sentinel.com. Feb 1, 2010 Michigan Medicaid reimbursement rates were slashed by 8 percent for 2010 and state health organizations worry that more cuts could be ahead. About 70 percent of skilled nursing facility residents are covered under Medicaid and an additional 17 percent are covered under Medicare. Health Care Association of Michigan director of public relations and communications, Elizabeth Thomas said, "We are always concerned when the state may be cutting Medicaid reimbursement to nursing facilities." LINK

Source: AHCA / NCAL Gazette - Thursday, February 4, 2010

Additional States Announce Program Cuts to Medicaid. As governors and state lawmakers around the country convene their 2010 legislative sessions, policymakers are faced with tough choices as the vast majority of state economies remain weak. Deep benefit and/or eligibility cuts, along with reductions in provider reimbursement levels, are being considered by a number of states as unemployment levels remain high, tax revenues slump, and budget deficits grow. What follows is a summary of the latest announcements of Medicaid cuts from Arizona, California, Idaho, Nevada, and New York.

Source: AHIP, 2/3/10, gated for members only

"Social Security could be next to need a bailout," by Allan Sloan, Washington Post, Tuesday, February 2, 2010; A13: LINK

Obama to propose further Medicaid help for states By Andrew Taylor, Associated Press. Washington Post. Jan 29, 2010, 3:15 PM New York and California are two of the states that may benefit the most from the Obama administration's proposal to give states about $25 billion in help with Medicaid budgets. The proposal will extend the help each state received in last year's stimulus package through July of next year. LINK

[LTC Comment: Receipt of supplemental Medicaid funds is conditional upon the state's doing nothing to fix the underlying problem of hemorrhaging eligibility.]

How the aged and frail are exploited in Washington's adult family homes Adult family homes in the state of Washington are seen as a national model, and in King County alone, they've become more plentiful than Starbucks stores. But the explosive growth, fueled by profiteers and a lack of careful state regulation, is leaving thousands of people vulnerable to harm. By Michael J. Berens, Seattle Times. Jan 30, 2010 LINK [LTC Comment: So much for Medicaid saving money and improving care with home and community-based services.]

Source: AHCA / NCAL Gazette - February 1, 2010

"We Have to Do Something to Save Social Security," David M. Walker, from "Comeback America: Turning the County Around and Restoring Fiscal Responsibility," Random House, January 12, 2010.

Source: NCPA: Daily Policy Digest 2-1-2010, LINK

State Fiscal Distress (NEW): New data on states with projected budget shortfalls for fiscal year (FY) 2011 have been added and are available from the Center on Budget and Policy Priorities (CBPP). Also updated are aggregate state rankings in foreclosures, unemployment, and food stamp participation with the latest data from the BLS and the USDA. http://www.statehealthfacts.kff.org/comparereport.jsp?rep=56&cat=1

Source: StateHealthFacts.org, January 29, 2010

"Estimating the Fiscal Gap Using Generational Accounting," from Laurence J. Kotlikoff, "Is Uncle Sam Bankrupt?," National Center for Policy Analysis, Brief Analysis No. 689, January 29, 2010.

Source: NCPA: Daily Policy Digest 1-29-2010

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Updated: Thursday, February 4, 2010, 11:15 AM (Pacific)

Seattle--

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DATA ARROWS FOR YOUR LTCI QUIVER

LTC Comment: Most people need long-term care insurance. But too few buy it even if they can afford the coverage and qualify medically.

We spend a lot of time in these daily publications explaining why the market for LTCI remains stunted and what must happen to unleash it.

But just as important, or more immediately so for our readers who are LTCI producers now, is to provide hard data establishing the need for LTC protection.

That's our goal today and we thank the MetLife Mature Market Institute and its collaborators for the following data and report.

Whether you market individual or worksite coverage, the following information will add ammunition to your armory of persuasion.

Read the press release below and find the full report here.

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CAREGIVING EMPLOYEES' HEALTH PROBLEMS CAN COST U.S. COMPANIES A POTENTIAL $13.4 BILLION YEARLY

CAREGIVERS ARE MORE LIKELY TO REPORT HEALTH PROBLEMS

Westport, CT, February 2, 2010 - If you are responsible for taking care of an elderly relative or friend, it will likely impact your health and your employer's bottom line. Employees in the U.S. who are caring for an older relative are more likely to report health problems like depression, diabetes, hypertension or heart disease, costing employers an estimated average additional health care cost of 8% per year, or $13.4 billion annually, according to the MetLife Study of Working Caregivers and Employer Health Care Costs. The report, produced by the MetLife Mature Market Institute® with the National Alliance for Caregiving in conjunction with the University of Pittsburgh Institute of Aging, also found that younger caregivers (ages 18 to 39) cost their employers 11% more for health care than non-caregivers, while male caregivers cost an additional 18%. It also found that eldercare may be closely associated with high-risk behaviors like smoking and alcohol consumption. Exacerbating the potential impact to employers is the possibility that these medical conditions may also lead to disability-related absences.

[Data table omitted. Find the full press release including the table here.]

The MetLife report was drawn from an analysis of 17,000 employees of a major multinational U.S. corporation who completed health risk assessment questionnaires (HRA). Twelve percent were caregivers for an older person.

"While this news may be distressing, our research points out that coordination of eldercare services and wellness initiatives may open new avenues of innovation to benefit both employees and employers," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. "Employers can provide support to their employees and, at the same time, reduce their health care costs by anticipating and responding to the challenges of eldercare."

According to Gail Hunt, president and CEO of the National Alliance for Caregiving, "Caregivers have more unplanned absences. Their performance on the job is also compromised by a lack of focus on their work due to distractions, like phone calls and care coordination, that occupy their time. They need solutions so they can be healthier and perform better."

Additional study findings:

· Among particular employee segments, some are particularly at risk. Younger caregivers (18 to 39 years old) demonstrated significantly higher rates of cholesterol, hypertension, COPD, depression, kidney disease, and heart disease in comparison to non-caregivers of the same age.

· Employed caregivers find it more difficult than non-caregivers to take care of their own health or participate in preventive health screenings. For example, women caregivers were less likely to report annual mammograms than non-caregivers.

· Employees with eldercare responsibilities were more likely to report missed days of work. Overall, 10% of caregivers missed at least one day of work over the past two weeks because of health issues compared to 9% of non-caregivers. Differences were mostly driven by the much higher absenteeism among younger caregiving employees, age 18 to 39.

To meet the health care needs of caregivers while reducing the associated costs, employers should consider integrating their wellness and eldercare programs. In addition to practices like flexible hours, paid time off (PTO) and telecommuting, the report contains suggestions to connect their employees who are caregivers with wellness programs that will reduce their stress, positively impact their health and provide needed support. These include stress-reduction seminars expanded to include on-site yoga and exercise classes, relaxation techniques and massage therapy, decision-support systems providing information about available services, financial incentives to encourage participation in preventive benefits offered by employers (like premium reductions for those who obtain annual physicals, mammograms, Pap tests, smoking cessation classes, and exercise), expanded on-site medical screenings, and free legal and financial advice, especially pertaining to Medicare, Medicaid, and insurance.

Methodology

Data in the MetLife Study of Working Caregivers and Employer Health Care Costs is from a single corporate employer based in the northeastern U.S. The company is a leading manufacturer with offices and affiliates worldwide, but the report was limited to 17,000 employees in 20 states who completed the company's online health risk appraisal questionnaire (HRA), a voluntary, anonymous document. An independent company developed and processed the appraisal, which is also used to establish benchmarks for health care and occupational safety. The study limited analyses to standard HRA indicators of disease status, health behaviors and socio-demographic information. Participating employees were representative of the company's U.S. workforce with proportionate numbers of blue-collar (manufacturing) and white-collar (sales and management) workers.

National Alliance for Caregiving

The National Alliance for Caregiving is dedicated to providing support to family caregivers and the professionals who help them and to increasing public awareness of issues facing family caregivers. Established in 1996, The National Alliance for Caregiving is a non-profit coalition of national organizations focusing on issues of family caregiving.

University of Pittsburgh Institute on Aging

The Institute on Aging is an umbrella organization for aging research at the University of Pittsburgh. The Institute collaborates with The University Center for Social & Urban Research (UCSUR) which focuses on regional economic analysis and forecasting, the psychosocial impacts of adult development and aging, intergenerational relations, and environmental resource management, and the Department of Behavioral and Community Health Sciences (BCHS) at the Graduate School of Public Health which promotes understanding of social and behavioral factors that influence the health of populations, with a particular focus on evaluation of health programs and policies.

The MetLife Mature Market Institute®

Established in 1997, the Mature Market Institute (MMI) is MetLife's research organization and a recognized thought leader on the multi-dimensional and multi-generational issues of aging and longevity. MMI's groundbreaking research, gerontology expertise, national partnerships, and educational materials work to expand the knowledge and choices for those in, approaching, or caring for those in the mature market.

MMI supports MetLife's long-standing commitment to identifying emerging issues and innovative solutions for the challenges of life. MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates, is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin American, Europe and Asia Pacific regions.

For more information about the MMI, please visit:www.maturemarketinstitute.com.

The MetLife Study of Working Caregivers and Employer Health Care Costs can be downloaded from www.maturemarketinstitute.com; on the home page see "New from the MMI." It can also be ordered by e-mailing, maturemarketinstitute@metlife.com, or by writing to: MetLife Mature Market Institute, 57 Greens Farms Road, Westport, CT 06880.

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Updated: Wednesday, February 3, 2010, 10:45 AM (Pacific)

Seattle--

COURTS ATTACK MEDICAID PLANNING

LTC Comment: Whether you know it or they know it, most people will end up on Medicaid if they ever need long-term care.

That statement's truth ever since Medicaid started paying for nursing home care in 1965 is the main reason so few people worry about or plan for long-term care.

Exacerbating the problem historically has been the American judiciary's tendency to hold against state Medicaid programs in cases involving Medicaid planning, i.e. the artificial impoverishment of affluent seniors to qualify them for the means-tested welfare program.

For decades, it seemed like judges interpreted every law and regulation to favor Medicaid applicants and their families no matter how egregious the planning abuse and no matter how damaging their rulings were to the safety net program.

It was as if judges figured "Hey, it's just government money. Why not help people avoid the high cost of long-term care?"

Of course, the consequences have been disastrous. Easy access to Medicaid financed nursing home care prevented the growth of a home and community-based services infrastructure and impeded the development of a private insurance market to pay for LTC.

But with the impending retrenchment of the social safety net--including Social Security and Medicare as well as Medicaid--the courts seem to be wising up. Eight of the top ten elder law decisions in 2009 undermine instead of support major Medicaid planning techniques.

Below are the headlines. You can read the details in Elder Law Monthly's February 2010 issue here.

Always remember this: middle class people never need Medicaid planning. They qualify easily for Medicaid LTC without significant spend down. Only the affluent take advantage of trusts, annuities, life care contracts, promissory notes, etc. to self-impoverish and evade mandatory estate recovery.

In other words, only the people who should, could and would buy private LTC insurance (absent perverse incentives in public policy) avail themselves of abusive Medicaid planning techniques.

The following victories (except items 8 and 10) are further evidence we are winning the battle, slowly but surely, against Medicaid planning abuses.

Headlines from Elder Law Monthly's February 2010 issue:

1. State That Has Not Expanded Definition of Estate May Still Recover Non-Probate Asset

2. Annuity Purchased to Benefit Community Spouse Is Available Resource

3. Non-Saleable Promissory Note Is Improper Transfer

4. Trust Is an Available Resource Despite Discretionary Language

5. Property Owned in Joint Tenancy Falls Under Estate Recovery Rules

6. Irrevocable Trust Forbidding Distribution of Corpus Is Still Countable by Medicaid

7. Property of Trust That Bars Distributions That Interfere With Medicaid Eligibility Is Available Asset

8. Community Spouse's Post-DRA Annuity Purchase Is Not an Improper Transfer

9. 10th Circuit Reiterates: States Need Not Exempt (d)(4) Trusts From Asset Calculations

10. Annuity Purchase by Community Spouse Upheld in Federal Appeals Court Decision

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Updated: Tuesday, February 2, 2010, 1:33 PM (Pacific)

Seattle--

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LTC Bullet: Columbo Interviews Don Quixote of LTC

LTC Comment: I give a lot of media interviews every year, but this was the most fun. After the ***news.***
 

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a Master General Agent who serves LTCi producers nationwide. Claude is the lead author of the Milliman Broker World LTCi Surveys. He helps you build whichever markets suit you best (individual, executive carve-out, work-site, affinity, financial institution, referrals from other professionals, etc.). Claude was selected by Senior Market Advisor as one of the 10 "Power People" in the LTCi industry in 2007 and was Chairman of the Board of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at cthau@targetins.com to ask questions or get references. ***

*** PRESIDENT OBAMA released his $3.8 trillion Fiscal Year 2011 budget yesterday. It includes a $1.3 trillion deficit (34% based on very optimistic projections). Just to put it in perspective, that would be like you spending $6,000 per month with an income of $4,000 when you're already in debt up to your ears. Most significant for LTC financing the President proposes extending the temporary increase in the Federal Medical Assistance Percentage (FMAP) for six months (from January 2011 to June 2011) at an additional cost of $25.5 billion. To continue receiving that windfall states must agree to "maintenance of effort," i.e. NOT to do anything to tighten loose Medicaid LTC eligibility rules or hemorrhaging costs. ***

*** SCHOLARSHIPS AVAILABLE FOR ILTCI CONFERENCE IN NEW ORLEANS. $700 discount on registration for 2010 Intercompany Long-Term Care Insurance Conference in New Orleans March 14-17. To qualify, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application. Application here. If you missed our detailed announcement, call Damon at 206-283-7036. ***

*** NASHVILLE CONFERENCE: Don't miss Phyllis Shelton's "Worksite and Combo Products Conference" convening in Nashville, Tennessee on May 24-26, 2010. Register by February 15th and save $200! Enjoy a registration reception with entertainment and a fun-filled barbecue dinner at the world famous Wildhorse Saloon in downtown Nashville. Limited to 200. Details here. ***

*** CONTEST. The American Association for Long-Term Care Insurance (www.aaltci.org) has announced its "2010 LTC Insurance Sales Awards" contest. Deadline to enter is February 28, 2010. Something new this year: "Rookie of the Year" competition. Click here for more information. ***

LTC BULLET: COLUMBO INTERVIEWS DON QUIXOTE OF LTC

LTC Comment: Long Term Living magazine is a trade journal for "continuing care professionals." Visit their website at www.ltlmagazine.com to subscribe.

LTL was a gold sponsor of our 2008 National Long-Term Care Consciousness Tour. We thank editor Maureen Hrehocik for permission to "reprint" the following interview. Read it online with pics here.

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Long-Term Living, Issue Date: January 2010, Posted On: 1/1/2010

"Just one more question"

by Gary Tetz

Like the great TV detective Columbo, Long-Term Living columnist Gary Tetz (Funny You Should Ask) always has one more question. In this bimonthly feature, he talks with long-term care leaders about anything that pops into his mind. He's as surprised as you are that they'll speak to him, and apologizes in advance for whatever inanity he might blurt out in the pressure of the moment.

This Month's Victim:

Stephen Moses

President, Center for Long-Term Care Reform, Seattle, Washington, http://www.centerltc.com

I don't know if he's part Mayan, but a lot of the scary things Stephen Moses predicts tend to come true. On the bright side, he hasn't said long-term care will end in 2012. Yet.

As president of the Center for Long-Term Care Reform, Moses roams the country promoting universal access to top-quality long-term care by encouraging private financing as an alternative to Medicaid dependency. He's widely considered one of the most influential people in long-term care, a status I have not managed to achieve. Yet.

Since serving as a senior analyst for the Inspector General of the U.S. Department of Health and Human Services in the late 1980s, Moses has played an active role in major legislation aimed at reducing Medicaid planning abuses. A noted speaker and prolific author, he has testified before Congress and most of America's state legislatures, which perhaps explains why he had no difficulty answering my questions.

Providence, Rhode Island.

Not quite. I can see three states, but not Russia.

Yes, we try to get them on a 12-step process to recovery.

I'm working on a study of the state's long-term care financing system and global Medicaid waiver. Rhode Island is attempting to rebalance its Medicaid long-term care program from dominantly nursing home care to more home- and community-based care. This intrigues me, because I'm not at all convinced that it saves money to deinstitutionalize people. It's desirable. We want to do it. But most of the research shows that it doesn't replace nursing home care, it just delays it. And over the lifetime of a population it will end up costing more.

The way I would like to pay for more long-term care for all Americans is to preserve the scarce resources available under Medicaid, which is after all a means-tested public welfare program, and make sure that public money goes to the people most in need. Now, many of the public resources go to the middle class and even the affluent because of the way the generous Medicaid rules work. And even if you don't qualify, there are always attorneys who specialize in impoverishing people artificially.

So I'd like to see if there's a way to use the increased flexibility under Rhode Island's global Medicaid waiver to target welfare benefits primarily to people most in need, and create stronger incentives for those who are still young, healthy, and affluent enough to save, invest, or insure for long-term care. Because Medicaid, for all intents and purposes, is insolvent.

Yes. And if they'd listened to me 25 years ago, we wouldn't be in the mess we're in now. They didn't, and we are.

Some people call me the Don Quixote of long-term care, but I've tipped over a few windmills in my time and more are soon to fall.

The message has been sent over and over again by the federal government that there is a limit to how much we can pay to cover long-term care for everybody. Unfortunately, they have not successfully restricted it yet. I am now convinced, after 25 years of beating my head against this problem, that it's not going to be fixed through responsible public policy. As a result, the whole entitlement house of cards is going to collapse as we hit a brick wall of fiscal reality.

(Laugh) Ah, you did your homework.

No, I have a boundless supply.

The public has been totally duped into thinking they aren't at risk. The vast majority never think or worry enough about long-term care even to ask who pays. They don't know if it's Medicaid, Medicare, or Santa Claus-and they don't care. Whether you're poor, middle class, or even affluent, the government continues to pay for the vast majority of all expensive long-term care in this country, and that fact has enabled the public's denial.

But the government is soon going to have to means test Social Security and Medicare, and finally Medicaid, and a lot of people are going to get hurt, especially the poor. The middle class and affluent, once they can no longer get the government to pay for their long-term care, are going to have no place to go but to their savings. They'll spend that down very fast, and then go to their home equity in an explosion of reverse mortgages. And once we eliminate or radically decrease the $500,000 home equity exemption still available under Medicaid, the public is going to start to realize they need private long-term care insurance to cover this risk and substantial liability.

But it isn't going to happen because politicians wake up and realize they've caused the problem. It's going to happen because they keep digging the fiscal hole deeper. We're facing a $107 trillion infinite horizon of unfunded liability on Social Security and Medicare alone, not even counting the problem with Medicaid and long-term care. So we've basically painted ourselves into a corner with no exit, and that's why I think it's all going to come to a crashing halt.

People tell me that a lot. I'm just a bearer of joy and hope.

Oh, you've got to believe it. (Laugh) On our Web site, by the way, there's a link to 13 predictions I made in November of last year. Shortly after the presidential election, everybody was walking around with rose-colored glasses. They thought healthcare was going to be reformed and all the problems were going to go away-it was just mindless. So I tried to throw a little objective ice water on that and predicted basically what is playing out. I could still be wrong, but I doubt it.

I'm very optimistic long term. The way the United States operates is not to deal with something until it becomes a crisis. But underneath the entitlement mentality that is crushing us remain the fundamental values that made the country great in the first place. Once the government programs collapse, independence, personal responsibility, and hard work are going to come back. We'll see entrepreneurial ingenuity and the tremendous power of the profit motive and capitalism. That's what's going to save us, and what could have saved us all along.

Of course, we're going 100 miles an hour in the opposite direction right now, but all that does is speed up the crash. Over a couple decades this will all work itself out. But in the meantime, a lot of people are going to be hurt unnecessarily as a result of the well-intentioned but perversely counterproductive public policy incentives in this crazy, mixed-up system we've had all these years.

They'll have to pass a bill, just to make it look like they did something. But I never would have thought comprehensive changes could get this far. I mean, it is just insane the money being spent that we don't have. There are basically three things they can do to pay for it all-tax, borrow, or print more money-and all of those lead directly to an isolated financial corner with nowhere to turn. If you think it can't happen to the United States, I'm sure there are people from Argentina who didn't think it could happen there either.

But there's a fundamental difference. I'm right and he's wrong.

I think you have your 1,600 words. I'm getting a dollar a word, right?

[Ha, ha. SM]

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Updated: Monday, February 1, 2010, 11:00 AM (Pacific)

Seattle--

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FOR SALE, MEDICAID SENIORS

LTC Comment: If you advise, or just care about, aging people, stop whatever you're doing and read this story now:

"Seniors for Sale: How the aged and frail are exploited in Washington's adult family homes" by Michael J. Berens, Seattle Times, January 31, 2010. Three-part series; first part yesterday, second part today.

A few excerpts follow below, but do read the whole article. You'll never find a better reason for individuals and families to insure privately for long-term care.

As we've said here so many times before: "It is true now and will be more true in the future that to get quality long-term care in the most appropriate setting, you must be able to pay privately."

Private pay status does not guarantee quality, but it does guarantee the ability to shop around for the best place. That's what people trapped in Medicaid adult foster homes miss.

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Here are some clips from the piece:

"The location of the home was secret. Only potential buyers with a $500,000 line of credit could learn its Seattle address. The seller insisted on discretion because the price included three frail seniors who lived inside.

"A Bothell real-estate listing last year touted five seniors for $120,000, 'sold separately' from the home. Bids for five vulnerable adults in Arlington opened at $90,000 -- 'cash only.'

"These deals aren't illegal. Washington officials not only know about it, they allow it.

"Twenty years ago, the state Department of Social and Health Services [DSHS, Washington's Medicaid agency] began licensing homeowners to provide spare bedrooms and care for the old or frail who might otherwise have to live in nursing homes. . . .

"Today, Washington is lauded nationally as a leader in community care options for seniors.

"But inside the state's 2,843 adult homes, thousands of vulnerable adults have been exploited by profiteers or harmed by amateur caregivers, an investigation by The Seattle Times has found.

"The Times uncovered accounts of elderly victims who were imprisoned in their rooms, roped into their beds at night, strapped to chairs during the day so they wouldn't wander off, drugged into submission or left without proper medical treatment for weeks. . . .

"'DSHS has pushed so hard and developed these adult family homes so quickly that they have little ability to oversee them. It should scare people,' said Gary Weeks, director of the Washington Health Care Association, which represents nursing homes.

"About 11,200 people reside in adult family homes across the state. About three out of five residents are private pay. There are about 1,100 homes in King County alone, more than three times the number of Starbucks stores.

"The pace of licensing is so furious that, on average, the state issues a new one every day.

"Officials at DSHS, which inspects the homes at least every 18 months, say the majority are run by caring, competent providers with good records. Officials say the agency's standards are among the highest of those states that allow similar homes.

"However, The Times examined 15 years of inspection reports and found that, time and again, DSHS excused reports of abuse and neglect, even when it knew that violators lied to its investigators, provided falsified medical records, or contributed to preventable deaths.

"Overlapping trends exacerbate the problem: Washington's aged population is growing. State budgets are underfunded, resulting in a cost-cutting strategy to move state-subsidized patients from nursing homes into less-expensive neighborhood residences. And in today's battered economy, more people than ever hope to make money from their homes by taking in the elderly. . . .

"Washington's tiny adult-family-home industry got a boost in 1993 when the state, desperate to cut Medicaid expenses, began to relocate or steer patients from nursing homes into private residences, which cost less than half as much.

"State officials maintained that nursing homes were glutted with lower-income patients, covered by Medicaid, who didn't require 24-hour care. Essentially, these residents were not infirm enough to justify the costs.

"In the first year, DSHS reduced the number of its 17,448 nursing-home patients by 750. The next year, lawmakers approved relocations of 1,400 more.

"State officials said the strategy, in 2008, saved $105 million in state Medicaid funds that would otherwise have gone to nursing homes.

"By 2012, DSHS plans to relocate another 1,100 nursing-home patients into adult homes or other community-based facilities.

"The state may not be able to adequately oversee the growing ranks of government-paid and private-paid residents in adult family homes. DSHS is not able to answer such questions as: Which homes and how many didn't provide enough food? What homes had assaults on residents? . . .

"Kathy Leitch, a deputy director who oversees the DSHS Aging and Disability Services Administration, said a hiring freeze -- the result of state budget cuts -- has left fewer investigators to monitor more homes.

"Many licensing and training standards may be outdated, she said.

"'There's this idea that it's a cottage industry, and that the state shouldn't be overly regulatory. Personally, I think that's a bit naive.' . . .

"Navigating the labyrinth of adult family homes can be confusing. There is no government clearinghouse to compare the quality of care and services from one home to another.

"As a result, this gap has spawned a new kind of profiteer: senior-placement agencies.

"These companies offer to match a senior's medical needs to the most appropriate care facility -- free of charge. They will generate a list of suggested homes based on the person's medical needs and wishes, such as a private room or recreational activities.

"These companies earn hefty commissions paid by owners of adult homes -- a potential conflict of interest that is seldom disclosed, The Times has found.

"A typical commission is equivalent to a resident's first month of rent, generally from $2,000 to $7,000."

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Updated: Thursday, January 28, 2010, 3:15 PM (Pacific)

Los Angeles, California—

UPDATE: I'm en route to San Diego to educate and motivate some top-flight LTCI producers. If you'd like to bring me in too, just reply to this E-Alert. We'll make you a tempting offer! Thanks, Steve Moses

GOOD AALTCI DEALS

LTC Comment: The Center for Long-Term Care Reform's mission is to ensure access to quality long-term care for all Americans.

We pursue that mission by encouraging public policy that preserves the social safety net for LTC by getting everyone who doesn't need public assistance privately insured.

So, naturally, we support the long-term care insurance industry's trade association: AALTCI (www.aaltci.org). And we're proud to say AALTCI supports the Center.

That said, we want to point you to two great offers from AALTCI. First, join your trade association for half the usual cost: $49 instead of $98.

Apply here: http://www.aaltci.org/join and use the special Referral Code: SELL2.

Here are some of the benefits AALTCI says you'll get:

1. The 2009 LTCi Sourcebook (only 100 copies remain)

2. The 2010 LTCi Sourcebook (the most current info on sales, insurers, multilife, Partnership, LTC need, costs)

3. Access to AALTCI's online LTC Learning, Marketing & Sales Center (sales and expert audios, marketing tools ++)

4. Samples of some of AALTCI's generic marketing tools (and 10% off all orders)

5. Monthly E-newsletter: LTCi Sales Strategies (starting in February)

6. Free online listing on AALTCI's "Find An LTCi Agent" directory (producers only)

7. The ability to enter the 2010 LTCi Sales Achievement Awards (get their name published

Did you notice item #3 above? I want to point you to just one example of AALTCI's online learning tools. It's a brand new podcast interview. Here's how AALTCI president Jesse Slome describes it:

"We have just posted a great audio online that is well worth listening to (or downloading for listening at your leisure). I interview Scott Boyd, from TNBC a national expert, who explains how the new linked annuities work - how they differ - what you should watch out for - and how one can market these. It's the perfect 'how to' that addresses what you need to know."

I've listened to this interview and many of the other educational podcasts available on the AALTCI website. In fact, I'm featured in one of them. They're an excellent resource.

My advice: if you're not a member of AALTCI, take this opportunity to join at a big discount. If you're a member, take advantage of the many educational resources and sales tips available through the association.

And while you're at it, why not join or renew your membership in the Center for Long-Term Care Reform. We have lots of good stuff too. Contact Damon at damon@centerltc.com or 206-283-7036.

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Updated: Wednesday, January 27, 2010, 11:15 AM (Pacific)

Seattle—

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WHAT TO LOOK FOR IN TONIGHT'S SOTU SPEECH

LTC Comment: Don't expect much about health reform--much less long-term care--in tonight's State of the Union address. For the Administration, that's water over the "damn!".

Tonight most of the talk will be about the economy, jobs, and a half-hearted spending freeze. But within that context, here are two points to watch for that are absolutely critical to LTC.

First, observe what the President says about aid to the states. Here's how the New York Times framed that issue in an editorial this morning.

"To create jobs, Mr. Obama must make it clear that he will not abandon the states at this time of budget crises. Bolstered aid to states is unpopular. But it is among the surest ways to preserve and create jobs because the money is pushed through quickly to employees, contractors and beneficiaries."

The big question for long-term care is whether or not the federal government will extend supplemental federal Medicaid matching funds into 2011. Last year's "stimulus" bill pumped an extra $87 billion into state coffers, ostensibly to sustain Medicaid. But states used much of that money just to plug budget holes.

Here's the kicker. To get the additional money, states had to promise not to restrict Medicaid, including long-term care, eligibility. In effect, the feds subsidized loose Medicaid LTC eligibility rules that helped cause the financial crisis in the first place and states exacerbated the problem by using the windfall for non-Medicaid purposes.

The net effect is that states have not had to bite the bullet and tackle the underlying problems with Medicaid long-term care financing. If the supplemental Medicaid funds are extended beyond the current year-end cut off and into 2011 (the House has already passed legislation to do just that), states will be enabled to delay the day of reckoning that much longer.

As long as states are compelled by "maintenance of effort" rules to sustain hemorrhaging Medicaid LTC eligibility and costs in order to get extra federal money to supplement their budget shortfalls, forget about reining in generous Medicaid eligibility and encouraging more private LTC financing alternatives.

The second key issue to look for in tonight's speech is whether or not the President will call again for empowering MedPAC by giving it stronger executive powers. The advisory commission annually advises Congress to cut Medicare payments to LTC providers. It just did so again. Every year, Congress ignores the recommendation. But the Administration wants MedPAC's cuts to become effective unless Congress actively votes to reverse them.

That would devastate LTC providers as Bruce Yarwood, president and CEO of the American Health Care Association, explained today: "He noted that the long-term care sector already employs more people than Wal-Mart, the world's largest private employer. [LTC] also continues to supply new jobs. But he warned that Medicare funding must remain steady to offset states' Medicaid cutbacks . . .."

Bottom line: the government and long-term care providers are caught between a rock and a hard place. They can't go on borrowing and deficit spending indefinitely to support a predominantly government-financed long-term care system. But they can't cut government financing to long-term care without destroying jobs in state governments and in the LTC delivery system.

My guess is that tonight's speech will include both the extension of supplemental federal matching funds for state Medicaid programs and the empowerment of MedPAC. The speech may not mention these measures explicitly, but they will be inherent in the bigger policy proposals the President articulates.

If I'm right, it means the fiscal end game--LTC Armageddon--will be delayed a little longer, but becomes more inevitable than ever. When it does come, be ready for a total make-over of long-term care financing. You'll see less state and federal spending for LTC, more personal responsibility for LTC expenses, and growing markets for reverse mortgages and private insurance to fund long-term care.

Sound like "inside baseball" to you? Maybe, but believe me folks, the next few years are the World Series for the future of long-term care.

Updated: Tuesday, January 26, 2010, 11:15 AM (Pacific)

Seattle—

LTC BULLET: LTC PREDICTIONS

LTC Comment: One week ago today, most people still thought health reform, including the CLASS Act, was a slam dunk. We disagreed. We were right then and 14 months ago! Now too. See the future, after the ***news.***
 

*** SILVER LINING. McKnight's LTC News editor Liza Berger reviewed our "Doing LTC RIght" report last Friday. She contrasted our positive, hopeful analysis with the "casualty" of the CLASS Act and concluded: "Those who are serious about finding answers to the long-term care and Medicaid problems would be wise to read it." ***

*** NEWS MAP. At this website http://www.newseum.org/todaysfrontpages/flash/, put your mouse on a city anywhere in the world and the newspaper headlines pop up. Double click and the page gets larger. The site changes daily with the publication of new editions. Thanks to Karen Minto for this tip. ***

*** PRESS RELEASES. The Ocean State Policy Research Institute (www.oceanstatepolicy.org) published a press release titled "Study: RI Can Save Millions in Medicaid" about our joint report "Doing LTC RIght" on January 18, 2010. Read it here. The Center published our own press release on the study titled "Help for States Crushed by Medicaid Costs" on January 15, 2010. Read it here: http://www.centerltc.com/pubs/Press_Release-DoingLTCRIght.htm.

LTC BULLET: LTC PREDICTIONS

LTC Comment: At the LTCI producers' summit in Kansas City last November, I overheard a major player scoff at the idea CLASS would NOT become law.

When the Senate passed a health reform bill on Christmas Eve, several people emailed me assuming CLASS was enacted.

All along, I've said "hold your horses." This won't happen and even if it did, it would be quickly repealed.

Now we know the outcome and why. Last week, CLASS and broad-based health reform ran out of gas.

The electorate permitted Congress to approach fiscal suicide much closer than I anticipated. But in the end, sanity prevailed.

At the brink, America did an about face, led by the most unlikely parade marshal, a political oxymoron--a Massachusetts Republican.

Now it remains to see whether the Administration and Congress tackle the economy--including the national debt, deficits and unfunded entitlements liabilities--or revisit the financial precipice by pushing more taxes, spending and government expansion.

For my part, I'm sticking with the predictions I made in an LTC E-Alert just days after the 2008 presidential election.

Ever since then, we've had a hyperlink to those predictions on the Center's website at www.centerltc.com. (Look just above the "LTC Almanac" link.)

Here are our predictions again, with updates in [brackets], as originally introduced and presented in LTC E-Alert #8-110: LTC Predictions on November 14, 2008.

LTC Comment: Lately, I've heard some Panglossian prognostications about the future of health and LTC public policy.

People think the time has finally come for all they've worked for to be realized.

Universal health care? Good as done.

Tax incentives for LTC insurance? Section 125, at least, maybe above-the-line tax deductibility.

Recession? Just the usual cycle that a "New New Deal" will fix.

Sorry, but this looks to me like the victory of wishful thinking over hard economic reality.

So, I've decided to lay down a few markers. What follows are predictions. Not what I hope will happen. Rather, what I expect to happen.

Read this now. Then set it aside. Tickle your calendar to read it again in five years and ten. I will too. Let's review then. [Why wait? We're already well on our way to fulfilling these predictions.]

LTC PREDICTIONS

1. No broad-based health reform will come to pass, much less reform that includes long-term care.
2. Another economic "stimulus" will fail as they all do, only shifting wealth, not creating it.
3. Huge increases in the federal deficit and debt will require additional borrowing to the point where interest on the public debt will crowd out new--and even much current--social spending. [President Obama announced last night a three-year freeze on discretionary spending.]
4. The present economic crisis will worsen precipitating immediately problems with Social Security and Medicare unfunded liabilities ($102 trillion [now $107 trillion, 1/26/10]) that Pollyannas think we won't confront until 2041 and 2017 respectively.
5. Several states will declare bankruptcy, or whatever they choose to call acknowledging their financial insolvency. [Hello, California and New York]
6. Medicare will cut reimbursements to skilled nursing facilities dramatically leaving the nursing home industry unable to meet even current standards of care access and quality for publicly financed patients. [Hello, MedPAC]
7. Medicaid costs will skyrocket. After a one-time federal matching fund supplement, state and federal Medicaid programs will cut reimbursement, then benefits, and finally eligibility. Expect a new Deficit Reduction Act within five years that will make DRA '05 look like child's play.
8. Medicaid will not increase funding for home and community-based services significantly and Medicaid financing of nursing home care will be dramatically reduced. [Medicaid HCBS expansion slows as HCBS payments from LTC insurance expand.]
9. No new federal tax deductibility for LTC insurance will pass, not even Section 125.
10. Middle class and affluent people will be far more personally responsible for their own long-term care in the future.
11. Within five years, reverse mortgages will become a major source of financing for long-term care.
12. Within ten years, the market penetration of private long-term care insurance will have doubled at least.
13. The "New, New Deal" will prove as infeasible to finance as the old "New Deal," and the United States will slowly return to the principles that made our country great in the first place: personal responsibility, self-sufficiency, free minds, free markets, competition and risk without moral hazard.

There you have them. Thirteen predictions. Unlucky? Maybe. But if everything plays out as I forecast, we'll come out all right in the end.

And with even a little luck, we'll preserve a vestige of the now-fraying social safety net for the most needy.

LTC Comment: 2010 update: We still have several years to run before all these predictions play out. But so far, we're right on schedule.

The outcome is promising although getting there will be tumultuous. More clear-headed thinking and objective analysis with less wishful idealism and unrealistic ideology would help.

We'll get a better idea which way the Administration is leaning tomorrow night in the President's State of the Union address.

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Updated: Monday, January 25, 2010, 11:15 AM (Pacific)

Seattle—

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LTC E-Alert #10-011: "Doing LTC RIght" Part Five

LTC Comment: We’ve been running a very special serialized version of our latest report: "Doing LTC RIght." This series began last Tuesday and ends today. We’ve been sending to you, and posting to www.centerltc.com, each installment of the report. "Doing LTC RIght," released in collaboration with the Providence-based Ocean State Policy Research Institute (OSPRI), focuses on Rhode Island’s unique "global Medicaid waiver," and explains how states can save money and improve long-term care services by escaping federal Medicaid red tape. Don’t miss this. See OSPRI’s press release here: http://www.oceanstatepolicy.org/pr01182010.html. If you’ve missed anything, go to: part one / part two / part three / part four or read the full report here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. Part five begins after the *** news. ***

*** SCHOLARSHIPS AVAILABLE FOR ILTCI CONFERENCE IN NEW ORLEANS. $700 discount on registration for 2010 Intercompany Long-Term Care Insurance Conference in New Orleans March 14-17. To qualify, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application. Application here. If you missed our detailed announcement, call Damon at 206-283-7036. ***

LTC E-Alert: "Doing LTC Right" Part Five

LTC Comment: This week we’ve been running a very special serialized version of our latest report: "Doing LTC RIght." This series began on Tuesday and will run until Monday. We’ve been sending to you, and posting to www.centerltc.com, each installment of the report. "Doing LTC RIght," released in collaboration with the Providence-based Ocean State Policy Research Institute (OSPRI), focuses on Rhode Island’s unique "global Medicaid waiver," and explains how states can save money and improve long-term care services by escaping federal Medicaid red tape. Don’t miss this. See OSPRI’s press release here: http://www.oceanstatepolicy.org/pr01182010.html. If you’ve missed anything, go to: part one / part two / part three or read the full report here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. Part four begins after the *** news. ***

*** EXTRA: Liza Berger, editor of McKnight's Daily Update, editorialized this morning about our "Doing LTC RIght" report. She said: "Those who are serious about finding answers to the long-term care and Medicaid problems would be wise to read it." See the whole column here including her report on CLASS advocates' discouraged vow to plough on somehow in the wake of health reform's demise. ***

LTC E-Alert: "Doing LTC Right" Part FOUR

Assisted living facility providers told us only a couple facilities have been willing to participate because, with an average private pay rate of $4,500 per month, none of the three rates variously available through Medicaid waivers in the past ($1,079, $1,700, or $2,011) covers costs. "We see no incentive for assisted living to take a Medicaid client. The program does not even cover 50 percent of our costs."

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Seattle—

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LTC Comment: This week we’re running a very special serialized version of our latest report: "Doing LTC RIght." This series began Tuesday and will run daily until Monday. We’ll send to you, and post to www.centerltc.com, each installment of the report. "Doing LTC RIght," released in collaboration with the Providence-based Ocean State Policy Research Institute (OSPRI), focuses on Rhode Island’s unique "global Medicaid waiver," and explains how states can save money and improve long-term care services by escaping federal Medicaid red tape. Don’t miss this. Stay tuned for daily installments of this report, or read the full report here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. See OSPRI’s press release here: http://www.oceanstatepolicy.org/pr01182010.html. If you’ve missed anything, go to: part one / part two. Enjoy.

LTC E-Alert: "Doing LTC Right" Part THREE

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Seattle—

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LTC E-Alert #10-008: "Doing LTC RIght" Part Two

LTC Comment: This week we’re running a very special serialized version of our latest report: "Doing LTC RIght." This series began yesterday and will run daily until Monday. We’ll send to you, and post to www.centerltc.com, each installment of the report. "Doing LTC RIght," released in collaboration with the Providence-based Ocean State Policy Research Institute (OSPRI), focuses on Rhode Island’s unique "global Medicaid waiver," and explains how states can save money and improve long-term care services by escaping federal Medicaid red tape. Don’t miss this. Stay tuned for daily installments of this report, or read the full report here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. See OSPRI’s press release here: http://www.oceanstatepolicy.org/pr01182010.html. Enjoy.

LTC E-Alert: "Doing LTC Right" Part TWO

The National Academy of Elder Law Attorneys (NAELA), the Medicaid planners' professional association, lists 28 members in Rhode Island on its website at http://www.naela.org/MemberDirectory/default.aspx.

A typical internet ad for Medicaid planning in Rhode Island reads: "We help clients understand their rights and avoid common mistakes as they plan a transition to a nursing home or an assisted living facility, enabling them becoming [sic] eligible for Medicaid while preserving their hard-earned assets."

Congress made it clear 27 years ago that "all of the resources available to an institutionalized individual, including equity in a home, which are not needed for the support of a spouse or dependent children will be used to defray the cost of supporting the individual in the institution."

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Seattle--

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LTC E-Alert #10-007: "Doing LTC RIght" Part One

LTC Comment: This week we’re running a very special serialized version of our latest report: "Doing LTC RIght." From today until next Monday, we’ll send to you, and post to www.centerltc.com, each installment of the report. "Doing LTC RIght," released in collaboration with the Providence-based Ocean State Policy Research Institute (OSPRI), focuses on Rhode Island’s unique "global Medicaid waiver," and explains how states can save money and improve long-term care services by escaping federal Medicaid red tape. Don’t miss this. Stay tuned for daily installments of this report, or read the full report here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf. See OSPRI’s press release here: http://www.oceanstatepolicy.org/pr01182010.html. Part one begins after the *** news. ***

*** SCHOLARSHIPS AVAILABLE FOR ILTCI CONFERENCE IN NEW ORLEANS. $700 discount on registration for 2010 Intercompany Long-Term Care Insurance Conference in New Orleans March 14-17. To qualify, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application. Application here. If you missed our detailed announcement, call Damon at 206-283-7036. ***

LTC E-Alert: "Doing LTC Right" Part One

This report is the product of a collaboration between the Ocean State Policy Research Institute of Providence, Rhode Island (OSPRI, www.oceanstatepolicy.org) and the Center for Long-Term Care Reform of Seattle, Washington (CLTCR, www.centerltc.com).

Therefore, we recommend that you review the report in a special way. First, suspend your disbelief temporarily. Read only the text. It's intended to make the argument as concisely and compellingly as possible. Disregard the footnotes at first reading. [Footnotes removed for serialized version. For full report with footnotes, see http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf.] Ask yourself, if this is true, do the conclusions and recommendations make sense?

• Home Equity
• Prepaid Burials
• Personal Property
• Medicaid Planning
• Medicaid Estate Recovery

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Updated: Friday, January 15, 2010, 11:45 AM (Pacific)

Seattle--

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LTC Bullet: "Doing LTC RIght" or The Medicaid Mouse that Roared

LTC Comment: Our new blockbuster report on LTC financing assaults assumptions, shatters shibboleths and confounds convention. Read it now here or follow the serialized version on our "LTC Blog" next week.

LTC BULLET: "DOING LTC RIGHT" OR THE MEDICAID MOUSE THAT ROARED

LTC Comment: The State of Rhode Island took a daring leap into radical Medicaid reform last year. The state requested and the Centers for Medicare and Medicaid Services (CMS) granted a "global Medicaid waiver." Under this unique plan, Rhode Island agreed to a cap on Medicaid matching funds for five years in exchange for more flexibility to administer the program than federal law and regulations otherwise allow. Among other objectives, the state is using the global waiver to increase Medicaid-financed home and community-based services while reducing nursing home utilization.

Rhode Island's gutsy move and noble goals are praiseworthy. But will they save money or break the bank? Will offering more services people want (home care) and fewer they'd rather avoid (nursing homes) swell Medicaid ranks? How will home care providers fare with higher acuity patients? How will nursing homes survive with fewer low-acuity (profitable) residents? Why are low-acuity patients in expensive skilled nursing facilities in the first place? Can private financing alternatives like insurance and reverse mortgages grow if Medicaid LTC becomes more attractive than ever? Is Rhode Island jumping from the fiscal frying pan into a financial firestorm? What might the state do with its global Medicaid waiver authority to reinvent and save the LTC safety net? Can Rhode Island get it right and become a model for the rest of the country?

Our new report, titled "Doing LTC RIght," released today in collaboration with the Providence-based Ocean State Policy Research Institute, answers all these questions. The executive summary, findings, and recommendations follow. Read the whole report here now or in serialized form all next week on the LTC Blog at www.centerltc.com and in our LTC E-Alerts for members.

With state and federal budgets in crisis, public officials will have to address Medicaid and long-term care costs sooner rather than later. The good news is the problem of financing long-term care is easy to fix. Our report explains the solution. If Rhode Island follows our recommendations, it can become a model for long-term care reform the rest of the country should follow. So, roar Rhode Island, show the rest of America how it's done. Save the Medicaid LTC safety net and unleash the potential of private market alternatives.

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Excerpts from "Doing LTC RIght" with footnotes omitted:

• Caring for the frail and infirm elderly is difficult and expensive. Today, America's long-term care delivery and financing system is a mess.

• Rhode Island has been a case in point.

• Most people receive long-term care in nursing homes funded inadequately by a public welfare program called Medicaid.

• Ideally, most people would receive long-term care in their homes and communities, but arcane federal Medicaid rules have precluded that result.

• Rhode Island Medicaid sought and received a "global Medicaid waiver" enabling it to manage long-term care more effectively in exchange for a cap on federal funding.

• The state is implementing a new system of clinical eligibility that makes more home care and less institutional care available to Medicaid recipients.

• But, demographic pressures (the Age Wave) and financial pressures (the recession and government deficits) presage huge future problems for long-term care.

• This report examines whether Rhode Island's ingenious global waiver strategy can achieve its goal of rebalancing long-term care without breaking the bank.

• The report explains how long-term care in the USA and Rhode Island came to be dominated by publicly financed institutional care.

• It describes how Medicaid became the dominant payer for long-term care not only for the poor, but for most of the middle class, and many of the affluent.

• The report argues that financing quality long-term care for all Rhode Islanders will require more private financing to supplement dwindling public funds.

• It explains why potential private long-term care financing alternatives, such as home equity conversion and private insurance, have languished to date.

• Finally, this report recommends a course of action whereby Rhode Island Medicaid can ensure clinical success and financial viability under the global waiver.

• "Doing LTC RIght" offers a model for long-term care reform that could reduce institutional bias, increase access and quality of long-term care, and save money.

• If Rhode Island does LTC right, the rest of the country may follow its example.

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Rhode Island Medicaid has embarked upon a financially risky, but potentially very beneficial reorganization of its long-term care delivery system.

State policy makers agree on the "Basic Principles" guiding their long-term care reform initiative:

1. "'Take care of the people with no other options first'
2. 'Right service, right setting, right time, right result'
3. 'For everyone a medical home with all the necessary information'
4. 'Leverage all available money'
5. 'Remember the taxpayer'"

So far, Rhode Island's LTC reform measures have addressed two of those objectives (numbers 2 and 3) but largely disregarded three others (numbers 1, 4, and 5).

The state's unique global waiver enables Rhode Island Medicaid to provide more LTC services in settings people prefer (home and community) and fewer in settings most people would rather avoid (nursing homes).

Thus, the principles of providing the right services in the right settings are being met.

In the absence of equally radical changes to Medicaid's generous financial eligibility for long-term care, however, the clinical changes implemented by Rhode Island could cause LTC expenses to skyrocket, waiting lists to explode, or both.

Easy access to Medicaid LTC eligibility after the insurable event has occurred increases public expenditures and crowds out potential private LTC financing sources.

Clearly, the objectives of caring first for the neediest, leveraging all available money, and remembering the taxpayers are not yet achieved nor even being strongly pursued.

To be sure, Rhode Island is constrained by generous and elastic, federally imposed LTC eligibility rules that prevent the state from targeting scarce Medicaid resources to people most in need.

It was precisely the domineering, over-restrictive federal laws and regulations governing waivers, home and community-based services, and institutional bias that Rhode Island sought to escape by means of its global Medicaid waiver.

So, the next logical step for Rhode Island is to seek authority under the global waiver to pursue Medicaid LTC financial eligibility rules that comport more fully with the state's principles of long-term care reform.

The following recommendations if implemented would position Rhode Island Medicaid to achieve all of its remaining LTC reform goals by (1) targeting scarce public resources to people most in need and (2) attracting nontax revenue to LTC financing from private assets, home equity and insurance, thus (3) relieving the financial burden of Medicaid LTC on taxpayers.

If some of these recommendations seem harsh, consider them in the context of what will happen when Medicaid and other state and federal safety net programs are unable to continue supporting current programs. Consider the potential benefits to all concerned--care receivers, caregivers, and care funders--of attracting new sources of private financing to the long-term care system.

I. Establish a baseline. Study a valid random sample of LTC cases to determine how much money Rhode Island Medicaid loses because of . . .

1. Assets transferred before the five-year transfer of assets look-back period.
2. The $500,000 home equity exemption.
3. The business exemption.
4. The automobile exemption.
5. The prepaid burials exemption.
6. The term life insurance exemption.
7. The household goods exemption.
8. Purchase of exempt assets.
9. The "reverse half-a-loaf" technique.
10. Irrevocable income-only trusts.
11. Medicaid friendly annuities.
12. Life estates with special powers.
13. Purchase of an interest in another's home.
14. Fraud or unintentional misrepresentation of personal finances.
15. Other Medicaid planning techniques.
16. Failure to pursue TEFRA liens.
17. Lack of a robust Medicaid estate recovery program.

The results of this study should provide ample evidence of the need for and the benefits of implementing the remaining recommendations.

II. Seek authority from the federal Centers for Medicare and Medicaid Services under the state's global Medicaid waiver to change Rhode Island's financial eligibility rules for long-term care services in the following ways.

1. Extend the look-back period during which assets transferred for less than fair market value to qualify for Medicaid incur an eligibility penalty from five years (currently) to ten years (as currently in Germany, a socialized health care system.)
2. Eliminate or radically reduce the home equity exemption for Medicaid LTC eligibility from $500,000 (currently) to no more than $40,000 (as in the United Kingdom, another socialized health care system.)
3. Preclude the use of trusts, annuities, promissory notes, the "reverse half-a-loaf" strategy and other Medicaid planning techniques to divest or shelter assets from Medicaid LTC financial eligibility limits.

III. Enhance Rhode Island's lien and estate recovery program.

1. Establish a TEFRA lien program and make it stronger than otherwise allowed under federal law by using the global Medicaid waiver authority.
2. Hire more estate recovery personnel until the marginal rate of return is reached, i.e. add staff as long as each new hire increases lien and estate recoveries.
3. Establish a system, currently nonexistent, to ensure that every death of a Medicaid LTC recipient is reported immediately and that the estate recovery procedure begins without delay in every case with potentially recoverable assets.
4. Seek passage of the "uniform probate code" by the state legislature.
5. Expand estate recovery to include home care, not just nursing home services as currently.
6. Seek state legislative approval of the expanded definition of probate to include assets passed in joint tenancy with right of survivorship as authorized by OBRA '93.
7. Track and seek recoveries from the estates of deceased spouses for Medicaid's cost of care paid for their predeceased spouses on Medicaid, AKA "spousal recoveries."
8. Track and seek recoveries from former Medicaid recipients who die after leaving Medicaid.
9. Seek state legislative authority to capture accounts held by nursing homes in the Medicaid recipients' names until estate liability is determined.
10. Establish a system to recover hard assets, including investment-grade property, from recipients' estates before the property is taken by heirs.
11. Set up repayment plans whereby families can repay their estate recovery liability over time and retain ownership of homes or other property if they wish.
12. Conduct a study of successful estate recovery programs, especially Oregon's, and implement best practices. Seek state legislative authority for changes that require it.
13. To eliminate all cost to the state and maximize recoveries, consider hiring an outside contractor on contingency to do estate recoveries in exchange for a percentage of the amount recovered.

III. Educate Rhode Islanders about the importance of planning for long-term care.

1. Explain the risk and cost of long-term care in the media and in public meetings.
2. Publicize what the state will and will not pay for and for whom under new, stricter eligibility rules.
3. Describe measures taken to restrict access to Medicaid LTC and why they are necessary to ensure access to quality care for the needy, as public funds diminish.
4. Emphasize the fact that stronger lien and estate recovery rules will ensure everyone who can pay will pay for long-term care, either up front as a private payer or after the fact, through Medicaid estate recovery.

IV. Implement measures to encourage the use of reverse mortgages and private long-term care insurance to fund long-term care privately.

1. Consider both tax and Medicaid eligibility incentives to promote the use of reverse mortgages to fund long-term care privately.
2. Consult the National Council on the Aging's (NCOA) report titled "Use the Home to Stay at Home" for additional ways to encourage the use of home equity conversion to fund LTC.
3. Publicize and expand Rhode Island's Long-Term Care Partnership program.
4. Consider and implement tax incentives to encourage the purchase of private long-term care insurance.

Why not try these measures in a small state that has already embarked on Medicaid experimentation with its global waiver? If they work, Rhode Island Medicaid could become a model for LTC reform throughout the country.

It happened for welfare reform when an experiment in Wisconsin went national in the Welfare Reform Act of 1996. It must happen for long-term care somewhere soon, because the Age Wave will make fixing long-term care harder and harder as time goes on.

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Updated: Thursday, January 14, 2010, 10:12 AM (Pacific)

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LTC MISCELLANY

LTC Comment: Today, we bring you several messages of interest and where to find more details.

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Tomorrow, we unveil "Doing LTC RIght," our dramatic report on long-term care financing in Rhode Island focusing on that state's unique "global Medicaid waiver." When it comes to long-term care public policy, little old Rhode Island could be the biggest state in the country! Stay tuned.

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The American Association for Long-Term Care Insurance (www.aaltci.org) has announced its "2010 LTC Insurance Sales Awards" contest. Deadline to enter is February 28, 2010. Something new this year: "Rookie of the Year" competition. Click here for more information.

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Don't miss Phyllis Shelton's "Worksite and Combo Products Conference" convening in Nashville, Tennessee on May 24-26, 2010. Register by February 15th and save $200! Enjoy a registration reception with entertainment and a fun-filled barbecue dinner at the world famous Wildhorse Saloon in downtown Nashville. Limited to 200. Details here.

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Check out this 8-minute NPR clip of David Walker, former Comptroller General of the USA, famous for his "Fiscal Wake-Up Tour," talking about America's unfunded entitlement liabilities. Listen here. Thanks to Center supporter and Regional Representative Honey Leveen (www.LTCQueen.com) for this tip.

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Another CLASS Act story here. Excerpt: "Concern is mounting about the worksite market impact of a proposed government-run plan to provide in-home, long-term care (LTC) assistance to the elderly and disabled that survived a flurry of amendments to both the House and Senate health care reform bills."

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$700 discount on registration for 2010 Intercompany Long-Term Care Insurance Conference in New Orleans March 14-17. To qualify, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application. Early registration ends today. Application here. If you missed our detailed announcement, call Damon at 206-283-7036.

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Medi-Gap for LTC? Another CLASS Act article here. Excerpt: "The proposed Community Living Assistance Services and Support Act, part of the House and Senate versions of the health bill, could create opportunities for private insurers to sell products that would wrap around government plan benefits."

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Updated: Wednesday, January 13, 2010, 11:10 AM (Pacific)

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2008 DATA UPDATE

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

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2008 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 2008 statistics on its website at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.

The current issue of Health Affairs (Vol. 29, No. 1, pps. 147-155) contains a summary and analysis of the new data titled "Health Spending Growth at a Historic Low in 2008." Registered subscribers to Health Affairs can access the full text of the article online at http://content.healthaffairs.org/cgi/content/full/29/1/147.

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

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"So What If the Government Pays for Most LTC?, 2008 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 $138.4 billion on nursing home care in 2008. The percentage of nursing home costs paid by Medicaid and Medicare has gone up over the past 38 years (from 26.8% in 1970 to 59.2% in 2008, up 32.4 % of the total) while out-of-pocket costs have declined (from 52.0% in 1970 to 26.7% in 2008, down 25.3% of the total). Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 9.

SO WHAT? The consumer's liability for nursing home costs has declined almost by half in the past 3.8 decades, while the share paid by Medicaid and Medicare has more than doubled.

No wonder people are not as eager to buy LTC insurance as insurers would like them to be! No wonder they don't use home equity for LTC when Medicaid exempts most home equity. No wonder nursing homes are struggling financially--their dependency on stingy 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 government program. Thus, although Medicaid pays less than half the cost of nursing home care (40.6% of the dollars in 2008), 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 LTC insurers think they should be. No wonder nursing homes are facing insolvency all around the United States 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 7.4% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2008. They derive that number by subtracting all the known costs from 100% and reporting the remainder as private insurance. No one knows how much private health insurance really pays toward nursing home care, because most long-term care insurance pays beneficiaries, not nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments because private payers write the checks to the nursing home but are reimbursed by their LTC insurance policies. This fact further inflates the out-of-pocket figure artificially.

How does all this affect assisted living facilities? ALFs are 90% private pay and they cost an average of $37,572 per year (Source: MetLife survey here). 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 $500,000 or $750,000 depending on the state), plus one business, and one automobile of unlimited value, plus many other non-countable assets, not to mention sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income far 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 insurers would like them to be.

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $64.7 billion on home health care in 2008. Medicare (41.1%) and Medicaid (34.6%) paid 75.7% of this total and private insurance paid 9.0%. Only 10.2% 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, Tables 4 and 11.

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

No wonder the public does not feel the sense of urgency about this risk that long-term care insurers think they should.

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

"Doing LTC RIght" at http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf; "The LTC Graduate Seminar Transcript" at http://www.centerltc.com/members/LTCGradSemTranscription.pdf (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.

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.

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Updated: Tuesday, January 12, 2010, 10:21 AM (Pacific)

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LTCI CONFERENCE SCHOLARSHIPS FOR PRODUCERS

LTC Comment: Receive $700 off the price of admission to the 10^th Annual Intercompany Long-Term Care Insurance Conference in New Orleans, March 14 to 17, 2010. That's the deal.

To qualify, you must have had $50,000 of personal LTCI premium production in Calendar Year 2009 or within the 12 months prior to the date of your application.

If you meet that criterion and you'd like to attend this outstanding national long-term care insurance conference for a small fraction of the full fee, download the application form here http://www.centerltc.com/iltciform.pdf, fill it out and mail it, fax it or scan and email it to . . .

Jim Glickman
21600 Oxnard Street
Suite 1500
Woodland Hills, CA 91367
Fax number. 818-867-6793
Email: Jim.Glickman@LifeCareAssurance.com

For every LTCI producer who submits this application form and qualifies for the discounted registration, the conference will donate $25 to the Center for Long-Term Care Reform to help defray our cost to attend and cover the meeting for the trade media.

If you are a sales person, why attend a meeting aimed mainly at industry executives? The program's ten educational tracks (Actuarial, Claims, Compliance, Field Marketing, Group, Home Office Marketing, Management, Operations, Policy and Providers, Underwriting) do not include one for "sales."

Answer: you'll never have a better chance to meet, greet and network with the movers and shakers of the long-term care insurance profession. This is your opportunity to question and learn, but also to convey your concerns to the industry leaders who are in position to fix problems and pursue new ideas.

For more information about the Tenth Annual Intercompany Long-Term Care Insurance Conference, check out the website here. If you have any questions, please contact Jim Glickman at 818-867-2223 or by e-mail at Jim.Glickman@LifeCareAssurance.com.

Act now! The early bird deadline is January 14 at which time the registration fee goes up $100. Reserve a room at the conference hotel while the best rates are available. But most important: get your application in before the rest of the world learns about this offer. Today's announcement goes only to Center members. Tomorrow's announcement goes to everyone. Only 250 scholarships are available so hustle if you want one.

Don't miss this chance to attend an excellent conference at a huge discount while supporting your Center for Long-Term Care Reform.

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Updated: Monday, January 11, 2010, 10:00 AM (Pacific)

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LTCI TAX INCENTIVES, FEDERAL AND STATE

LTC Comment: Want to know how private long-term care insurance is tax-incentivized . . . or not . . . in your state?

AARP has an answer for you in "Federal and State Income Tax Incentives for Private Long-Term Care Insurance," November 2009. Check out the full 42-page report here.

Short on time? You can find the report summarized "In Brief" here.

Still no time, but you need the highlights. Excerpts from the summary follow below.

Know too that you can always get back to this information quickly when you need it IF you are a member of the Center for Long-Term Care Reform.

Whenever new information is published about "LTCI Tax Treatments" we add it to that section in The Zone, our password-protected website for members only.

You'll find many other features in The Zone also, including The Almanac of Long-Term Care, Key Medicaid and Medicare Numbers by Year, Long-Term Care Cost Surveys, Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care, archives of all the LTC Bullets and LTC E-Alerts and other features.

But to access this vital repository of information you must be a member of the Center. Join here or contact Damon at 206-283-7036 or damon@centerltc.com. Please encourage your brokers and carriers to become corporate members of the Center. Then you'll get full access to all the Center's benefits at no personal cost. Such a deal!

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Excerpts from David Baer and Ellen O'Brien, "In Brief," AARP Public Policy Institute, No. 181, November, 2009.

Federal and State Income Tax Incentives for Private Long-Term Care Insurance

Policymakers are looking for ways to increase the affordability of long-term care services and supports for individuals and families. To help make long-term care insurance more affordable and to encourage purchases, both federal and state governments provide tax subsidies for private long-term care insurance. . . .

Federal Tax Incentives

Taxpayers can receive a federal tax subsidy for long-term care insurance primarily by claiming an itemized deduction for medical expenses— including long-term care insurance premiums—that exceed 7.5 percent of their federal adjusted gross income (AGI). . . .

Although the large majority (89 percent) of people ages 65 and above who have private long-term care insurance filed a federal tax return in 2006, only about a third (36 percent) claimed an itemized deduction for medical expenses. When tax filers are able to itemize, the value of their federal income tax deductions depends on their marginal tax rate, which ranged from 10 percent to 35 percent in 2007. Federal subsidies for long-term care insurance are thus worth more to higher-income than lower-income tax filers.

State Tax Incentives

In 35 states and the District of Columbia, people with long-term care insurance may qualify for a state subsidy. In 15 states, people who purchase long-term care insurance receive no state subsidy. . . .

The design of state tax incentives varies. Some states build on the federal itemization only, allowing federal itemizers a deduction from their state taxable income. Others provide a unique state deduction. Nine states offer a nonrefundable tax credit. These states generally allow tax filers with long-term care insurance to claim a credit equal to a fixed percentage of the premium—ranging from 15 to 25 percent. Credits are available to policyholders of all ages, but are capped at fairly low dollar levels (e.g., $100 to $150) in a number of these states. . . .

Combined Value of Federal and State Tax Incentives

Together, federal and state tax incentives provide a significant after-tax discount to some long-term care policyholders, and no discount—or a very modest discount—to others. The largest federal state subsidies are available to older people in the highest marginal income tax brackets who can itemize their medical expenses. High-income policyholders ages 61 and above with a $2,000 policy could qualify for a 35 percent federal discount plus an additional 5 to 10 percent in most states, for a total federal-state tax subsidy in the range of 40 to 45 percent of premiums. . . .

Issues for Policymakers

As policymakers consider tax subsidies for private long-term care insurance, several important questions arise: Do the tax breaks incentivize purchases, or merely reward those who would have purchased without the subsidy? Is the tax code the most effective way to expand the market for long-term care insurance? How fair are the existing tax subsidies? How should tax breaks for affluent purchasers of long-term care insurance be balanced with programs that target middle- and lower-income people— people with care needs and their caregivers—for whom insurance is not appropriate or not available?

State policymakers thinking about expanding subsidies for long-term care insurance should consider tax credits if they are concerned about increasing the affordability of premiums for middle income, and not just higher-income, people.

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Updated: Friday, January 8, 2010, 11:15 AM (Pacific)

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REVERSE MORTGAGES FOR LTC

LTC Comment: In a rational world, people who need long-term care would use their home equity, if necessary, to obtain red-carpet access to top-quality care at the most appropriate level.

In a rational world, to avoid having to use their home equity to obtain quality long-term care, most people would buy insurance against that big, expensive risk.

In a rational world, needy people who lack home equity and can't afford private insurance would qualify for public assistance that provides excellent home care or institutional care based on their needs and preferences.

But we don't live in a rational LTC world.

Instead, we live in a crazy, mixed up world in which a welfare program, Medicaid (1) pays for most expensive long-term care, (2) pays mostly for nursing home care which nearly all people would rather avoid, (3) traps millions on public assistance by being the only way to avoid catastrophic LTC costs after the insurable event has occurred, (5) exempts up to three-quarters of a million dollars in home equity from LTC spend down, (6) fails in most cases to recover its cost from deceased recipients' estates, and (7) therefore operates as free inheritance insurance for heirs, thus anesthetizing the next generation to LTC risk.

It's a mess created by long-standing perverse incentives in public policy. But all that's about to change. Medicaid is on its last legs as a major funder of long-term care. It will either collapse altogether or start paying only for people truly in need. Either way, middle class and affluent families will soon have no access to government financed LTC while preserving huge amounts of home equity and other exempt assets.

Once that happens, people will turn to reverse mortgages both to fund the kind of LTC that enables them to remain in their homes and, if they remain financially and medically eligible, to generate supplemental income that will help them afford private long-term care insurance.

So, if you care about long-term care financing, you need to know about reverse mortgages. Fortunately, a company that offers both reverse mortgages and long-term care insurance has made available a new primer on reverse mortgages. Following is the press release about the MetLife Mature Market Institute's new guide to reverse mortgages. N.B. MetLife doesn't recommend the use of reverse mortgages to help fund LTC insurance premiums. That's our suggestion, but only when appropriate as part of a carefully thought-out financial plan.

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FREE REVERSE MORTGAGES ESSENTIALS GUIDE FROM METLIFE MATURE MARKET INSTITUTE HELPS CONSUMERS MAKE INFORMED DECISIONS ABOUT TAPPING HOME EQUITY IN RETIREMENT

Westport, CT - December 21, 2009 - With increasing interest in reverse mortgages as a potential source for retirement income, the MetLife Mature Market Institute (MMI) has released a free guide, The Essentials: Reverse Mortgages, to help consumers make informed decisions regarding the use of home equity to help fund one's retirement. The guide follows The MetLife Study on the Changing Role of Home Equity and Reverse Mortgages, which was released by the MMI earlier this year. That study found that in today's economic environment, older homeowners are increasingly seeking new sources of retirement income and tapping into their housing wealth in greater numbers, often using home-equity loans or reverse mortgages. The guide will help individuals take a comprehensive approach to ensure that, when needed, the value of their home is used appropriately and effectively to deal with the growing uncertainties of retirement. Reverse mortgages are available only to those age 62 and older.

"Reverse mortgages can allow older individuals to receive funds while they continue to live in and own their homes," said Sandra Timmermann, Ed.D, director of the MetLife Mature Market Institute. "Our guide is a general introduction to reverse mortgages. It explains important terminology, presents basic issues, and answers frequently asked questions. While a reverse mortgage can be a valuable tool for many older homeowners, it may not be right for everyone. We suggest that individuals thinking about a reverse mortgage consult with a certified U.S. Department of Housing and Urban Development (HUD) reverse mortgage counselor and a reverse mortgage lender to determine if the product is right for them and understand the details as to how it would work in their particular situation."

The MetLife study on home equity and reverse mortgages, produced in conjunction with the National Council on Aging (NCOA), found that 35% of older Americans see their homes not just as secure places to live, but also as collateral for a loan. About 14% have taken cash out of their house through a home equity loan or reverse mortgage. The use of home equity can be a viable source of income in retirement to help individuals enhance or maintain their lifestyle. Study findings indicate that older homeowners are using home equity to increase income security, enhance financial resilience to deal with unexpected expenses, and improve debt management, among other things.

The Essentials: Reverse Mortgages provides the following information for those considering a reverse mortgage as an option:

• 95% of reverse mortgages are Home Equity Conversion Mortgages (HECM). They are insured by the Federal Housing Administration (FHA).
• The amount one can borrow depends on age, type of reverse mortgage, current interest rates, location of the home, value of the home, and FHA lending limits in that area. For HECM loans, there is currently a $625,500 borrowing cap for most areas.
• The costs associated with a reverse mortgage typically include an origination fee, other closing costs, and for HECM loans, both an upfront mortgage insurance premium and an ongoing premium. These costs can be included in the loan and paid (with interest) when the reverse mortgage becomes due. A monthly service fee may also apply.
• With a reverse mortgage there are no monthly mortgage payments. However, as long as borrowers still live in and own their home, they continue to pay their property taxes, homeowner's insurance, and any home maintenance. The loan, including accrued interest and any service fees, becomes due when the borrower (or last borrower for a couple) dies, sells the house, moves permanently to a new residence, or fails to live in the home for twelve consecutive months.
• Borrowers may choose to receive funds as a lump sum payment, where the cash will be available immediately, in equal monthly payments for a fixed number of months (or for as long as one borrower lives in the home), as a line of credit to draw funds as needed, or any combination of these options.
• Interest rates for most reverse mortgages are tied to a financial index and vary according to market conditions. Some financial institutions offer both fixed- and variable-rate reverse mortgages.

The MetLife Mature Market Institute(r)

Established in 1997, the Mature Market Institute (MMI) is MetLife's research organization and a recognized thought leader on the multi-dimensional and multi-generational issues of aging and longevity. MMI's groundbreaking research, gerontology expertise, national partnerships, and educational materials work to expand the knowledge and choices for those in, approaching, or caring for those in the mature market.

MMI supports MetLife's long-standing commitment to identifying emerging issues and innovative solutions for the challenges of life. MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates, is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin American, Europe and Asia Pacific regions. For more information about the MetLife Mature Market Institute, please visit: www.maturemarketinstitute.com.

The Essentials: Reverse Mortgages can be found at www.maturemarketinstitute.com under "In Focus." You may also order a printed copy by sending an email to MatureMarketInstitute@MetLife.com, calling 203-221-6580, or writing to MetLife Mature Market Institute, 57 Greens Farms Road, Westport, CT 06880.

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Updated: Thursday, January 7, 2010, 11:17 AM (Pacific)

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LTC Comment: The man who ran Medicaid from 2000 to 2008 says dropping the program could save states $1 trillion. What will it mean to LTC . . . and LTCI . . . if that happens? After the ***news.***

This Bullet is sponsored by LTCI Partners, who would like to thank the Center for Long-Term Care Reform for helping increase awareness of LTC Financing issues. You can learn more about LTCI Partners and its solutions for financial distributors at www.ltcipartners.com.

*** TERRY SAVAGE is perhaps the strongest supporter of responsible long-term care planning in the major media. A standing ovation for her keynote address capped the kudos she's earned from a grateful profession at the recent LTCI Producers Summit in Kansas City. Ms. Savage's mother passed away last Saturday. The Chicago Sun-Times obituary included this quote from Terry: "My mother was always an optimist and taught us we could achieve anything we set as a goal." We thank Paulette Markoff posthumously for giving the world her exceptional daughter and we offer Terry our sincerest condolences. ***

*** SPEAKING OF THE LTC INSURANCE SUMMIT, recordings are now available of 36 sessions (including Terry Savage's) focused on everything from marketing and sales to experts sharing new information on the length of LTC insurance claims and State Partnership programs. If you order a CD-rom containing the complete set of audios with synchronized PowerPoint presentations ($339), $75 of the cost will be paid to the Center for LTC Reform. To order the complete set, call the American Association for Long-Term Care Insurance at (818) 597-3227. Be sure to mention the Center offer. If you would like to download or order individual audios from the LTC Summit (starting at $15 each) simply click on this link: www.fleetwoodonsite.com/aaltci. ***

*** AND SPEAKING OF LTCI CONFERENCES, the Tenth Annual Intercompany Long Term Care Insurance Conference will be held from March 14 to March 17, 2010 at the Sheraton New Orleans. Find details and register here. Conference organizer Jim Glickman asked us to give you the following special information: 1. The early-bird registration ($100 discount) deadline is Thursday, January 14th. 2. Information on a "Producer Scholarship," which provides $700 towards the attendee fee of $995 plus an additional $100 off prior to January 15^th, is available at www.ILTCIConf.org including a downloadable application form. Steve Moses says "I'll be there to cover this meeting for LTC Bullets and I hope to see you there as well." ***

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LTC BULLET: WHAT HAPPENS TO LTC WHEN STATES SECEDE FROM MEDICAID?

LTC Comment: For as long as I've studied long-term care financing . . . say 25 years . . . I've warned that making Medicaid the dominant LTC payer is dangerous.

Sooner or later, the Age Wave will crest, Medicaid will fail, and the bottom will fall out of our welfare-financed, nursing-home-based LTC system.

Well, folks, that's no longer an iffy prognostication off in a scary distant future. It's an immediate likelihood on the cusp of occurring.

The health reform bills in both the House and Senate would load up Medicaid with millions of new welfare recipients at a cost states cannot sustain. So says Dennis Smith, the Bush Administration's director of the Medicaid side of CMS.

In a Heritage Foundation "WebMemo" titled "Medicaid Meltdown: Dropping Medicaid Could Save States $1 Trillion," Smith and co-author Ed Haislmaier opine:

"Faced with becoming merely an agent of the federal government, states will likely take the rational and reasoned approach of simply ending the state-federal partnership known as Medicaid." (p. 1)

"If all states withdraw from Medicaid, their collective savings would be $725 billion over the 2013- 2019 period, but they would exceed $1 trillion over 10 years." (p. 1)

"The cost to the federal government to replace the state share of Medicaid, however, would be greater than $1 trillion as the entire Medicaid population would become eligible for the new, more expensive federal subsidies for premiums and cost-sharing." (p. 1)

"By piling billions of dollars in new costs onto states and imposing greater federal control over the states, Congress is recklessly increasing the likelihood that states will exert their own authority as sovereign units of government and end their participation in Medicaid entirely.

"The savings to state budgets are so enormous that failure to leave Medicaid might be viewed as irresponsible on the part of elected state officials. The federal government, however, would be left holding a trillion-dollar-plus tab." (p. 4)

LTC Comment: If Smith and Haislmaier are correct and health reform passes, Medicaid as we've known it will cease to exist. Will what happens next be better or worse for long-term care?

Well, it'll probably be better AND worse. We'll see many state experiments in health and LTC financing instead of a one-size-fits-all, centrally planned and federally enforced welfare program. Some states will improve on the status quo; others won't. But at least we'll have an opportunity to test what works and what doesn't instead of staying on the current course, which is doing more of the same year after year and expecting a different result, Einstein's definition of insanity.

So, what if cash-strapped states respond to health reform by seceding from Medicaid? How could they improve access to and quality of long-term care while saving money in the process?

Simple. Target scarce state LTC resources to people most in need. Eliminate eligibility loopholes and enforce estate recovery. Use some of the savings to incentivize responsible LTC planning and private financing alternatives like reverse mortgages and insurance. Find numerous national and state-level studies that explain in detail how to do this here.

States that follow that formula after they escape Medicaid's Lilliputian constraints will have fewer people dependent on public assistance for long-term care. They'll have more private financing at market rates uplifting LTC access and quality for everyone. Their public expenditures for LTC will plummet and their people will enjoy better LTC services across a wider continuum of care. What's not to like?

As White House Chief of Staff Rahm Emanuel once said: "Never let a serious crisis go to waste . . . it's an opportunity to do things you couldn't do before." Carpe diem.

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Updated: Wednesday, January 6, 2010, 11:20 AM (Pacific)

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THE ROPE TO HANG THEMSELVES

LTC Comment: Ayn Rand's novel Atlas Shrugged, always a best-seller, has been flying off the shelves lately. In it she praised self-sufficient, creative, competitive companies and people who thrive in a free market. But she reviled big businesses and their leaders who seek profit through government favors and anti-competitive regulations.

I wonder which kind of people and companies are leading the fight for health reform today. There's no question in Greg Scandlen's mind. Here's what he wrote on December 30 in his Consumer Power Report #209 for the Heartland Institute:

"During the Bolshevik revolution Lenin reportedly said that capitalists would sell him the rope by which they would be hanged.

"More recently in 1971, Chicago's Saul Alinsky wrote in Rules for Radicals, 'I feel confident that I could persuade a millionaire on a Friday to subsidize a revolution on Saturday out of which he would make a huge profit on Sunday even though he was certain to be executed on Monday.'

"Alinsky is, of course, the radical community organizer whom Barack Obama studied when he was organizing in the same city 20 years later. The lesson was not lost on him.

"The most remarkable thing about the health reform battle of the past year is how all the powerful interest groups have jumped on the bandwagon to their own execution.

"In some cases there are short-term gains that perhaps have addled their thinking, but in other cases there is no gain whatsoever for their members, but still they have supported, or at least not vigorously opposed, the legislation."

LTC Comment: Pique your interest? If so read here how Scandlen says these organizations betrayed their principles to win special favors from the government to the detriment of their members' and their members' customers' best interests:

* AARP
* American Medical Association (AMA)
* Pharmaceutical Research and Manufacturers of America (PhRMA)
* America's Health Insurance Plans (AHIP)
* National Association of Health Underwriters (NAHU)

LTC Comment: On the same day he published the foregoing, Greg Scandlen made the following announcement, putting his ideas into action.

"I have concluded over the past year that it is time to pivot from policy analysis to helping people who are devoted to liberty get elected to office. I have already said everything I have to say about health policy, anyway. It isn't all that complicated -- what is ruining health care in the United States is excessive reliance on third-party payment. The way to fix it is to move away from third-party payment. This is no longer just a theory. It has been proven in the marketplace.

"But it is clear to me that the current ruling elite doesn't care a whit about sound ideas or good policy. They will ignore any facts, tell any lies, destroy any opponents, in order to gain more power over the lives of others.

"They have convinced themselves that the American people are too stupid and too lazy to control our own lives. We must be controlled for our own good.

"This kind of thinking offends and infuriates me. It also frightens me to the core because this elitist superiority is widespread in the media, in academia, in business, and certainly in politics. These people have far too much power already and they must be stopped.

"They must be stopped because, in spite of (or because of) their smug superiority, they almost always get it wrong. They advance ideas that destroy the lives of thousands and are never held to account. Examples are legion over the years -

* Urban renewal that bulldozed vast areas of viable neighborhoods.
* Public housing that created crime-ridden hell holes like Chicago's Cabrini Green.
* Welfare programs that banished fathers from being with their own children.
* Education policies that abandoned teaching in favor of indoctrination.

"All of these programs were absolute disasters advocated by small elites who were never personally affected. They had no stake in whether the programs would actually work.

"The same elite is about to take over our health care and the results will be similar. They have been advancing a bevy of bad ideas and ignoring those with real promise. They push for things like pay-for-performance, community rating, chronic disease management, centralized health information technology, and dozens of other little panaceas, heedless of all the evidence that not only do these programs not work, but they make conditions worse. Meanwhile, these same elites ignore those ideas that actually do work, like consumer driven health care. They find it inconvenient that regular working Americans who control their own money can achieve the health reforms that have eluded the experts for decades.

"The elite ignore evidence in a blind lust for power. They don't care if an idea works as long as they get more control. Creating dependency is the key. They want to be the masters and have the rest of us implore them for favors. They will 'give us' health care and we will be grateful for it.

"No! This will not stand. Not in this country. Not in America.

"Here we are allowed to control our own lives. Here we are allowed to use our own judgment. Here we are allowed to make our own mistakes and enjoy our own successes. Here we live with the consequences of our own decisions.

"That is the legacy I inherited from my grandparents and it is the legacy I intend to pass on to my grandchildren.

"Thank you for your support and attention over these many years. I hope you will join me, or at least wish me well, in a new crusade -- an Awakening -- that will restore 'the blessings of liberty to ourselves and our posterity.'"

-- Greg Scandlen
Consumers for Health Care Choices at the Heartland Institute
19 South LaSalle St. #903
Chicago, IL 60603

Reach Greg Scandlen at
301-606-7364
GMScan@comcast.net

LTC Comment: For my part, Greg Scandlen, I wish you well and Godspeed.

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Updated: Tuesday, January 5, 2010, 11:00 AM (Pacific)

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LTC Bullet: LTC News Update and Free Almanac Access

LTC Comment: Keep up on all the LTC reports and data after the ***news.***

*** FREE ACCESS. Click here, use "free" and "access" for your user name and password, and get 24 hours of The Zone and the "Almanac of Long-Term Care" at no charge, thanks to LTCA, today's LTC Bullet sponsor. If you're a paid-up member of the Center, of course, you get all our publications and free access full time, all the time to The Zone, the LTC Almanac and many other features. But if you're not a member, join now here or contact info@centerltc.com. ***

*** LTC-TV. Our LTC embed reporter Damon Moses asked LTC experts their opinions of the CLASS Act at the LTCI Producers Summit Conference in Kansas City last November. Now you can watch and hear their answers. Get LTC actuary and expert Claude Thau's opinion here (Part One, 8 minutes) and here (Part Two, 3 minutes). Check out Marsh Senior VP Anthony Stratidis here (1.5 minutes) and LTC Partnership Managing Partner Michael Fitzpatrick here (1.5 minutes). For the rest of the interviews, including conference keynoter and nationally syndicated financial columnist Terry Savage and conference organizer Jim Glickman and others, go to our LTC-TV channel here. ***

*** 2008 HEALTH OUTLAYS published. U.S. health care spending grew by 4.4 percent in 2008, the lowest rate in 50 years but still 4.3 percent above the overall inflation rate. We'll have more analysis soon in our annual "LTC Bullet: So What if the Government Pays for Most Long-Term Care," but in the meantime read about the latest health expenditure data in today's New York Times here and in the Wall Street Journal here or on p. A-4 of the WSJ print edition. ***

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LTC BULLET: LTC ALMANAC UPDATE AND FREE ACCESS

LTC Comment: The "Almanac of Long-Term Care" is a special feature in The Zone, our password-protected website for LTC specialists. We update it periodically to reflect the latest reports and published articles from think tanks, government agencies, and LTC experts of all kinds. The LTC Almanac is where I go when I need to find the latest statistical updates and published analysis related to long-term care.

The Almanac contains 11 "chapters" including Aging Demographics; International; Unfunded Liabilities--Social Security, Medicare, and Budgets; Long-Term Care; Caregiving; Long-Term Care Financing; Long-Term Care Insurance; Reverse Mortgages; Long-Term Care Providers; Medicaid; and Medicaid Planning. Use this resource whenever you need to get the latest and best information quickly.

Most of the time, the Almanac of Long-Term Care is available only to Center members. But thanks to the sponsor of today's LTC Bullet, we're making an exception: 24 hours of free access to the LTC Almanac and everything else in The Zone. Check it out here using "free" and "access" for your user name and password. Please thank today's LTC Bullet sponsor for this "sneak peek" at The Zone. Then join the Center and get all our resources at your fingertips 24/7/365.

Now, to give you the flavor of what you'll find in the LTC Almanac, here are our latest updates, uploaded to The Zone today:

Chapter: Long-Term Care

MetLife Mature Market Institute, "MetLife Long-Term Care IQ: Removing Myths, Reinforcing Realities," September 2009, pps. 5-6, LINK

Key Findings

* More than eight in 10 respondents (85%) understand that long-term care could be the result of a variety of causes such as Alzheimer's disease, an accident, or a chronic or disabling condition.

* Just over one-third know that most longterm care services are received in one's home. While the number of respondents (37%) who do know this has increased since the 2004 survey (18%), there continues to be a very low overall awareness level.

* Over four in 10 (43%) are able to correctly identify the national average monthly cost for assisted living.

* Two-thirds (66%) are unable to identify which programs or insurance policies pay for long-term care services.

* Only 18% know long-term care insurance rates are primarily based on age, but almost nine in 10 (87%) are aware a comprehensive policy covers care at home, in an assisted living facility, and in a nursing home.

* Less than one-half (45%) can correctly identify how many households are caring for an adult family member or loved one.

* Over six in 10 (64%) are aware that transferring financial assets to your family would not allow you to qualify immediately for Medicaid payment of long-term care.

* Fewer than four in 10 (36%) know that 60%-70% of 65-year-olds will require long-term care services at some point in their lives.

See for analysis: LTC E-Alert #9-112: LTC Ignorance or Stupidity?, Thursday, October 1, 2009, LINK

Terence Ng, Charlene Harrington, and Molly O'Malley, "Issue Brief: Medicaid Home and Community-Based Service Programs: Data Update," Kaiser Commission on Medicaid and the Uninsured, Washington, DC, November 2009, http://www.kff.org/medicaid/upload/7720-03.pdf

EXECUTIVE SUMMARY Developing home and community-based service (HCBS) alternatives to institutional care has been a priority for many state Medicaid programs over the last three decades. While the majority of Medicaid long-term care dollars still go toward institutional care, the national percentage of Medicaid spending on HCBS has more than doubled from 19 percent in 1995 to 41 percent in 2007. The recent financial crisis could impact the ability of many states to provide Medicaid services to the growing number of people who rely on the program for health and long-term care services. The ongoing debate about health care reform could also affect Medicaid eligibility and services provided in home and community-based settings. This report presents a summary of the main trends to emerge from the latest (2006) expenditures and participant data for the three main Medicaid HCBS programs: (1) optional 1915(c) HCBS waivers, (2) the mandatory home health benefit, and (3) the optional state plan personal care services benefit. It also presents findings on eligibility criteria, provider, service and waiting lists for all three programs, as well as provider reimbursement rates for the home health benefit and the personal care services benefit in 2008. (p. 1)

Chapter: Caregiving

National Alliance for Caregiving in collaboration with AARP, "Caregiving in the U.S. Executive Summary," November 2009, http://www.caregiving.org/data/CaregivingUSAllAgesExecSum.pdf. Excerpts:

"The purpose of this study is to present a portrait of family caregivers today, and to compare it to a portrait of caregivers in the past. A national profile of caregivers first emerged from the 1997 Caregiving in the U.S. study. A related study was conducted in 2004, and now, in 2009, we are presenting the results of the third wave of this important study. Each of the three studies has inquired about certain core elements of caregiving situations, while also exploring new areas." (p. 1)

"In the past 12 months, an estimated 65.7 million people in the U.S. have served as unpaid family caregivers to an adult or a child. About 28.5% of the respondents surveyed reported being caregivers. The percentage of people who are caregivers does not appear to have changed significantly since 2004." (p. 4)

"More than three in ten U.S. households (31.2%) report that at least one person has served as an unpaid family caregiver within the last twelve months, leading to an estimate of 36.5 million households with a caregiver present." (p. 4)

Chapter: Long-Term Care Insurance

David Baer and Ellen O'Brien, "Federal and State Income Tax Incentives for Private Long-Term Care Insurance," AARP Public Policy Institute, Washington, DC, November 2009, p. 9, http://assets.aarp.org/rgcenter/ppi/econ-sec/2009-19-tax-incentives.pdf.

"[I]n 35 states and the District of Columbia, people with long-term care insurance may qualify for a state subsidy (including the federal itemized deduction that is carried from the federal return). In 15 states, people who purchase long-term care insurance receive no state subsidy. In 9 of those 15 states, there is no broad-based income tax; in the other 6 states there is no state subsidy because the states neither carry through the federal itemized deduction nor offer any unique state tax benefits (see figure 3)."

"Scary Story," Registered Rep, April 1, 2006, http://registeredrep.com/mag/finance_scary_story/index.html.

Scary story re no LTCI 0406 URL:

"A registered rep in Utah did everything right by his elderly clients. He even recommended long-term care insurance as an asset-preservation tool but they had turned him down. Later, when their son sued him after both parents tragically suffered from dementia and began ringing up incredible medical bills, the advisor assumed he was covered by his errors-and-omissions insurance. He was so confident, in fact, that he didn't keep a record of his advice, which would have likely helped him immensely in the suit.

"Unfortunately, his confidence was misplaced. While his actions routinely covered him from a suit by his clients, it did not protect him from their son acting on their behalf. His ignorance of the fine print cost him dearly: He had to pay $600,000, plus any legal fees incurred, to the son."

Chapter: Reverse Mortgages

MetLife Mature Market Institute, "The Essentials: Reverse Mortgages," December 2009, LINK

Fundamentals of reverse mortgages in a quick question and answer read.

Chapter: Medicaid

Dennis G. Smith and Edmund F. Haislmaier, "Medicaid Meltdown: Dropping Medicaid Could Save States $1 Trillion," WebMemo No. 2712, The Heritage Foundation, Washington, DC, December 1, 2009, http://s3.amazonaws.com/thf_media/2009/pdf/wm2712.pdf.

"The health care legislation currently in Congress not only imposes new costs on states through expansion of the Medicaid program; it also preempts state authority in management of the program. Faced with becoming merely an agent of the federal government, states will likely take the rational and reasoned approach of simply ending the state– federal partnership known as Medicaid."

LTC Comment: Medicaid planning not only results in LTC eligibility without significant spend down, it also makes people eligible for a wide range of services Medicaid covers that Medicare doesn't, thereby adding to the benefit of qualifying. The Medicaid benefit package is often as good as or better than health care plans available in the private market through employers or independently.

Updated Online 50-State Database Provides Comprehensive Source on Medicaid Benefits, The Kaiser Family Foundation's Commission on Medicaid and the Uninsured has updated its online database of Medicaid benefits to include data from October 2008, the most recent available. The comprehensive database houses information on Medicaid acute and long-term care benefits in the 50 states, the District of Columbia and the U.S. territories. It includes data about 46 services, including whether the benefit is covered, the populations that are eligible to receive various benefits, and the limitations, co-payments and payment rules that apply to the benefits for each state or jurisdiction. The database is searchable by Medicaid benefit as well as by state, and includes information from 2003, 2004, 2006 and 2008. You can compare specific benefits across states and in regional groupings of states. Additionally, you can print, e-mail or save your search results. The database can be accessed at http://medicaidbenefits.kff.org/.

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Updated: Monday, January 4, 2010, 9:54 PM (Pacific)

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DON'T CLASSASSINATE LTCI

LTC Comment: As I write this morning, the stock market is way up. "As goes January, so goes the rest of the year," they say. So that's good news.

Having begun the new year with good news, then, let's turn now to the prospects for the CLASS Act and private long-term care insurance.

First, thanks to Center supporter and LTCI maven Marilee Driscoll and her LTC Pro e-letter for these easy-to-access copies of CLASS language in the House and Senate health reform bills available here.

Next, thanks to Center supporter and LTC expert Liz Taylor for a heads-up about Steve and Cokie Roberts' endorsement of CLASS available here.

The Roberts' article contains this gem: "As it is now, in order to receive care many disabled and elderly people are forced to divest themselves of all their assets so they can qualify for government assistance through the Medicaid program."

They conclude: "How can forcing people into poverty so the government can pay for them be better than setting up a program where workers pay for themselves?"

Therefore, Steve and Cokie infer "Why not try something where I can exercise my own responsibility for my future?" In other words, pass CLASS.

How utterly corrupt the issue and the argument have become! Let's deconstruct it.

The system forces people to become poor by divestment of assets before they can get help from the government, so we need another big government entitlement program.

Say, what? Hold on one moment. What's really going on here?

If Medicaid actually required people to spend down assets before they qualify for LTC, most people would understand they need private insurance against the LTC risk and would buy it.

But by their own admission, the Roberts agree that Medicaid does not require spend down, only divestment of assets.

But if one can divest assets and get the government to pay after the insurable event occurs, why would we expect anyone to consider LTC a risk against which they need to insure privately?

In other words, the real problem we have is that government created a perverse incentive in Medicaid that discourages responsible LTC planning.

The whole truth is even worse. In reality, most people don't have to divest or transfer assets to qualify for Medicaid LTC. As we've explained so many times here, Medicaid eligibilty rules allow recipients to have large incomes and practically unlimited assets. See the evidence here and practically anywhere here.

Bottom line, the real problem with LTC financing is that we've trapped people in nursing homes on welfare by facilitating that outcome through counterproductive incentives in Medicaid eligibility rules.

Further duping the public into thinking the government will pay for LTC by adding a new entitlement they can opt into when they start realizing they'll need extended care someday will further bankrupt the government and administer the coup d' gras to LTC insurance. If CLASS passes, look for private LTCI to become another wrap-around poor relative of real insurance like Medi-Gap.

The better course is to change Medicaid into the kind of program for people truly in need that most folks think and say incorrectly that it's always been. That's how to save the LTC safety net and unleash the potential of private LTC insurance.

For how to do it, see our "Doing LTC RIght" report on Rhode Island coming soon.

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Updated: Friday, December 18, 2009, 12:47 PM (Pacific)

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A STORY OF HOPE AND RENEWAL

LTC Comment: When Center member and LTC Tour sponsor Gail Lindsey of Chattanooga, Tennessee sent me the following story, I asked for and she granted permission to "reprint" it.

I thought to myself "how many stories like this one are out there?" Stories about people who had the foresight to purchase long-term care coverage and who benefited from it at a critical time in their lives.

So, today we offer you, in our closing LTC E-Alert of the year, a success story of hope and renewal in a season of hope and renewal.

Many of you have similar stories to tell about clients who've benefited from your product. Send them to us. We'll publish one every so often in the coming year.

Thanks as always for supporting the Center for Long-Term Care Reform. Enjoy the holidays and join us again January 4, 2010 to make another run at the Holy Grail of LTC: quality long-term care for all Americans.

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The following is from Lindsey and Associates' Fall 2009 e-newsletter Talking Tomorrow . . . Today.

Longtime policy owner learns true value of LTC. The lifestyle and dignity of your tomorrows begin with how you plan today.

Sheila Sear felt great about purchasing long term care coverage long ago when she and her husband, Gerald, made the decision to plan for their future. "I reasoned that, if I ever need nursing home care, I was covered," said Sear. "No one in my family would have to change their lives to take care of me when I got old and frail."

Little did Sheila realize that she'd purchased even more security than she thought. It took twelve years of back pain, several epidural treatments, repeated rounds of physical therapy and--ultimately--radical back surgery for her to discover that her long term care insurance gave her more than nursing home care.

Sheila and Gerald are the proud owners of a family shoe store with a loyal customer base. Sheila once took care of all the bookkeeping for the business, a job that required long hours at a desk. "I know all that sitting didn't help my back," she said. "I had several things going on that caused me more and more pain over the years. My doctor diagnosed multiple slipped disks and spinal stenosis (narrowing of the back or neck spinal canal, with resulting compression of the nerves). I tried everything to reduce the pain, hoping to avoid the surgery that offered the best chance for relief. I resisted for a long time because I was scared."

In 2006, Sheila's pain had become so pervasive that an operation no longer seemed so bad. "I told my husband going in to the operating room that, if I died in surgery, I just didn't care," she reflected. "That's how bad it was." The operation was indeed extensive, requiring more than seven hours and the insertion of numerous screws and rods as well as delicate bone grafts. Sheila underwent several blood transfusions.

Post-surgery she spent five days in intensive care, sedated with morphine by her physician in an effort to keep her comfortable. After the ICU, she spent a few days in a regular hospital room before being released to return home for convalescence.

After such serious surgery and so much heavy sedation, Sheila needed help with routine day-to-day activities like bathing, dressing and moving from one place to another. Fortunately, she'd been in touch with Gail Lindsey of Lindsey & Associates before her operation.

"Gail suggested that my policy would probably cover care while I healed," said Sear. "At first I objected, thinking I would use my benefits up and be left without them later when I was elderly and might really need them. Gail assured me that getting the care I needed was exactly why I was paying for insurance."

Sheila saw the wisdom of accessing her LTC benefits while she needed personal help after surgery. Gerald worked long hours but was home at night, so she chose in-home assistance between 8 AM and 8 PM while she regained her ability to care for herself.

Gail helped Sheila fill out forms and worked with her surgeon to let the insurance company know of her anticipated limitations for at least 3- 4 months. "Gail is the ultimate professional. She was extremely easy to work with and explained every step of the process," said Sear. "It turned out that, after about two and a half months, I could do a few things and felt less fuzzy as the medication worked its way out of my system. I recovered faster than expected! And I'm so glad I have that policy. I just did not focus on the fact that it was there for any long term care need, not just a nursing home."

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Updated: Thursday, December 17, 2009, 11:30 AM (Pacific)

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LTC Bullet: Reflections on Long-Term Care Planning

LTC Comment: Steve Moses reflects on what he's learned as a caregiver about long-term care planning, after the ***news.***

*** CLASS on NPR: Diane Rehm's hour-long talk show on Tuesday covered the CLASS Act. If you harbor any hope that CLASS would wake consumers up to the need for private LTCI, this program will dash it. Rude and hostile toward the experts on the panel, the "senior advocate" insists CLASS obviates private LTC insurance except for a wrap-around role. No one mentions the real reason most Americans don't buy LTC (and won't opt for CLASS). That is, easy access to Medicaid after the insurable event occurs crowds out a major market for LTCI. With all its faults, this program is worth a listen if you can spare an hour. Listen here. ***

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LTC BULLET: REFLECTIONS ON LONG-TERM CARE PLANNING

LTC Comment: This month's Broker World has my latest thinking on long-term care planning. Read it below or here with a picture. Reprinted from BROKER WORLD December 2009 www.brokerworldmag.com. Used with permission from Insurance Publications. Subscriptions, $6/yr., 1-800-762-3387.

------------

"Reflections on Long Term Care Planning"

by

Stephen A. Moses

I've studied long term care services, financing and planning since the early 1980s. But it was only when long term care touched my own family a few years ago that I gained the critical insights I'd like to share with you in this article.

In 1987, while still a career U.S. government employee studying Medicaid and long term care financing, I purchased long term care insurance for both of my parents (I still pay the premiums for my 96-year-old mother who resides today in an assisted living facility). I tried to do everything right.

Lesson Number One. No one knows what long term care will look like in the future. When I bought my parents' policies, nursing homes and long term care were synonymous. Other venues of care hardly existed. Nursing home insurance came with a three-day hospitalization requirement, but so did Medicare reimbursement. Over the years, private insurance dropped that prerequisite, but Medicare still has it.

Lesson Number Two. When my parents started needing long term care, it began gradually. Help with grocery shopping, house cleaning and cooking came first. Then things like transferring, bathing and toileting became priorities. Naturally, our nursing home only LTC policies didn't cover such services. Nor should they; we weren't underwritten for such services nor did we pay premiums to cover them.

In any case, my folks could afford to pay for home care services. The problem was that they would not put up with strangers, even professionals, coming into their home. They always found something wrong with the providers, so my wife and I always ended up providing the care ourselves-mostly my wife, frankly.

Lesson Number Three. I always knew in principle that long term care is a woman's issue. Most caregiving is done by wives, daughters and daughters-in-law, and the heaviest financial and professional burdens of caregiving fall on women. But seeing this in practice, not just in theory, when my own wife had to take early retirement to care for her parents (just when her career and income were finally taking off) was a wholly different experience. She was glad to be able to help despite the professional setback, and we managed financially just fine. So would many families.

However, your clients must save, invest and insure for long term care in ways that ensure adequate cash flow especially in crisis, thus enabling options that might otherwise be unavailable. Now that's smart.

Lesson Number Four. Long term care services and financing have changed dramatically in the past 25 years. They'll continue to change even more rapidly and radically in the next 25 years. When I first studied LTC in the early 1980s, nursing homes provided and government paid for nearly all expensive extended care. Almost no one planned to save, invest or insure for long term care. People could ignore the risk, avoid the premiums for private insurance, and count on the publicly financed safety net to protect them from the worst financial consequences of needing care. That's all about to change because of the enormous unfunded liabilities of America's safety net programs. Families and individuals will be far more personally responsible for long term care financing in the future than they ever were in the past.

Bottom line: Make sure your clients save, invest and insure for long term care now. Make sure they have the wherewithal to pay for professional services-and don't forget the importance of adequate cash flow for caregivers and care receivers during a long term care crisis either.

In parting, I ask you to consider this old saying: "The best way to help the poor is not to become one of them." So everything you do to protect your clients (and yourself, for that matter) from the risk and cost of long term care is very good citizenship, too.

STEPHEN A. MOSES is president of the Center for Long-Term Care Reform, Inc., which is a private think tank and public policy organization. Its mission is to ensure quality long term care for all Americans. Moses is widely recognized as an expert and innovator in the field of long term care.

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Updated: Tuesday, December 15, 2009, 10:30 AM (Pacific)

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: What a year! Did you get value from the Center for LTC Reform? We'll report today. You decide. Then please let us know. Thanks for your support.

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: What a challenging year!

• LTC insurance sales remain down or flat overall although most producers tell us they're managing, some even prospering.
• Congress seems on the verge of handing over to government the remaining private half of health care financing, though I still doubt it'll happen.
• Long-term care financing is caught in the turbulence because the CLASS Act may slip through as part of the bigger health reform plan.
• Government spending at all levels exploded this year throwing local, state and federal budgets into the red.
• Entitlement mentality is stronger than ever, but entitlement programs are weak and carry massive unfunded liabilities.
• The long-awaited Age Wave has begun to crest and will soon crash on us.
• Expect more of the same in the coming year(s), only worse.
• That's why consumers will need you and your counsel more than ever.

It's a sorry state (in every sense of the word) we're in. But here's the good news. If we can't stop government from jumping off a fiscal cliff, we (you and your Center) are better positioned than anyone else to mitigate the damage.

If you advise aging Americans about financial planning, you are your clients' last line of defense against eroding public benefits on which so many have come to rely. If your job is to protect them against long-term care risk and cost, then you're the last hope they'll receive quality care at the most appropriate level by paying privately.

But how do you crack through the veil of denial that prevents most people from seeing the need to plan early and save, invest or insure? That's where your Center for Long-Term Care Reform comes in. Our goal is to help you help more people prepare responsibly for LTC. And everything we do-- research, publication, speaking, legislative testimony, and advocacy--is aimed at achieving that goal.

So what have we done for you lately? Here's a sampling.

• Early in 2009, we extended the Center's 2008 National Long-Term Care Consciousness Tour into the new year with a "Western Mini-Tour." We covered several more states and brought the message of rational LTC policy and responsible LTC planning to hundreds more advisers and consumers.
• Center president Steve Moses published 15 new bylined articles in LTC provider and insurance trade journals, newspapers, or other publications.
• Seven of our "LTC Bullets" we're republished as Gerson Lehrman Group "Analyses," including "CLASS Consciousness: Problems with the 'Kennedy' CLASS Act"; "We Reply to Washington Post Blast at Federal LTC Insurance"; "Will Health Reform Include Long-Term Care?"; "Welfare for the Well-to-do?"; "So What if the Government Pays for Most Long-Term Care? 2007 Data Update"; "If you think health care and Medicare are problems, consider long-term care and Medicaid"; and "Feds Rank Nursing Homes Like Restaurants."
• Risk Management magazine republished our annual report on government interference in the LTC financing market titled "So What if the Government Pays for Most Long-Term Care?" Watch for our 2010 update in January as soon as the Centers for Medicare and Medicaid Services (CMS) publishes the latest data on LTC financing sources.
• Our op-ed in the Providence Journal titled "Rhode Island Medicaid Has Sprung a Leak" attracted outside financing for our major study of LTC financing in R.I.
• Our research for the Rhode Island project is complete. The report, to be titled "Doing LTC RIght" will be published in time for the opening session of the Ocean State's next regular session and offers a long-term care financing model for the whole country. (Special thanks to the many donors who made this project possible and who will be recognized publicly in our final report.)
• Thanks to VP for Administration Damon Moses's efforts, we've posted numerous additions to our LTC-TV feature. Check them out here. You'll see interviews with many people you know and other experts you need to hear.
• Damon also directed and produced our "website webinar," a virtual tour of www.centerltc.com. Check it out here. You'll find a cornucopia of helpful information in our public and members-only websites.
• We announced that Steve Moses' April 2000 lecture titled "The Long-Term Health Care Crisis: How Can We Solve It?" was included among "the most important Heritage Lectures of the past 27 years." See the LTC Bullet here.
• Steve was also recognized as one of Long-Term Living magazine's five "People Making a Difference in Long-Term Care."
• Steve Moses delivered 21 speeches and conducted four briefings at conferences and meetings throughout the United States on many themes but with one central focus: planning for long-term care is more important than ever because of the impending collapse of government safety net programs.
• LTC Bullets: By the end of this week, we will have published 61 LTC Bullets during 2009.
• LTC E-Alerts: By the end of this week, we will have published 147 of our daily LTC E-Alerts in 2009.
• We've covered the "CLASS Act" often this year with full analysis and criticism in eight LTC E-Alerts, three LTC Bullets, and in many shorter items.
• We published an important preliminary report on LTC financing in Rhode Island titled "The Age Wave, the Ocean State and Long-Term Care" in concert with the Ocean State Policy Research Institute (OSPRI). Read it here.
• We don't keep count, but we've responded to hundreds, maybe thousands, of phone and email inquiries from members, media, policy makers, legislators, and think tanks. We're dedicated to getting LTC right.

In the coming year . . . in 2010 . . . we all need the Center for Long-Term Care Reform carrying out its mission to "ensure access to quality long-term care for all Americans."

Won't you help us keep the pressure on for rational LTC policy and responsible LTC planning?

Where else can you get one-a-day mental vitamins like our LTC E-Alerts and LTC Bullets to educate and motivate you?

Just think of all the resources the Center puts at your fingertips:

Review dozens of our articles, speeches and reports here.

Find over 850 LTC Bullets archived by date and by topic here.

For one week only, preview "The Zone" here. (Temporary user name: free; password: trial)

Check out testimonials the Center's received here.

Find our membership levels and benefits schedule here: It covers everything from individual memberships ($150 per year) to all levels of corporate memberships.

Still harboring doubts? Get your free trial membership here.

Thank you for giving us another year to fight the good fight for our common objective: better LTC for all. Keep the faith. We'll be there for you as long as you're there for us.

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Updated: Monday, December 14, 2009, 11:21 AM (Pacific)

Seattle--

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MUCH MORE MEDI-MADNESS

SPECIAL CLASS ACT ALERT:

Today's New York Times has a story by Robert Pear on the CLASS Act. Read it here or on the front page of the west coast print edition (possibly p. A21 in other editions). In today's Wall Street Journal, you'll also find an op-ed on CLASS by Scott Harrington, a professor of insurance and risk management at the Wharton School. Read it here if you have an online subscription. Otherwise, in the paper.

Both of these articles are negative toward the CLASS Act. Both point out that half of the alleged deficit reductions in the House and Senate health reform bills derive from the CLASS Act's early years of premium collections with zero outlays for benefits.

But aren't those funds just reserves set aside to pay claims some day? How can that money cut the deficit at the same time? That's like asking: How can I have my cake and eat it too? Answer: find 60 votes in the Senate and you can have anything you want. Until the laws of economic gravity finally force a reckoning.

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LTC Comment: By now, most thinking people are scratching their heads and wondering: what in the world are these politicians doing?

Crazy spending, new and growing unfunded liabilities, huge health reform proposals that come and go with the solidity and rapidity of cloud formations.

But the latest idea is probably the craziest of all. Let's expand Medicare to cover an extra decade of Americans, down to age 55. Sure, why not? Medicare's doing so well these days, why re-invent the wheel?

After all, Medicare only went into deficit spending last year and won't run out of its trust fund money until 2017, a whole eight years from now.

Well, except that there is no money in the Medicare trust fund, so we're already drawing on general funds, also in deficit, to make up the difference.

Oh yeah, and the recession will probably close the fiscal vise on Medicare even faster. Want to bet next year's report from the Medicare Trustees will show an insolvency date closer to 2010 than to 2017?

For coverage and analysis of the plan to expand Medicare, see National Public Radio here or the Kaiser Family Foundation here.

But this isn't the only Medi-Craziness going on.

The U.S. Department of Health and Human Services just announced the federal medical assistance percentages (FMAP) for the third and fourth quarters of 2009. FMAP is how much of every dollar of Medicaid spending the feds will pony up. An FMAP of 75 percent means the state only has to come up with 25 cents of its own money to spend a dollar on Medicaid.

Check the FMAP out for your state in the Federal Register here.

Some examples:

Highest: Mississippi, 84.24 percent.

Lowest: Wyoming, 58.78 percent.

FMAP rates are based on states' economic prosperity. The better off the state is economically, the lower its federal matching rate. The minimum is 50 percent and, in the past, lots of affluent states received that rate. But then came the recession. All states received at least a 6.2 percent bump in FMAP and many received bigger supplements if they were in particularly bad economic shape. The extra federal money started October 1, 2008 and it is scheduled to end on December 31, 2010.

But here's the kicker. As a condition of getting the extra money, states had to promise not to restrict eligibility beyond the rules they had in effect as of July 1, 2008. In other words, they could do nothing to control the eligibility hemorrhage that caused the financial mess they're in. In effect, the federal government is deficit spending in huge amounts to subsidize dysfunctional, insolvent state Medicaid programs. To add to the problem, many states aren't using the extra cash for their Medicaid programs, but rather to offset their open-ended budget deficits.

What happened to the old idea that when you're in a hole you should stop digging? Why is the federal government sending in bulldozers to dig deeper faster? What's going to happen when the federal subsidies end next year?

Dennis Smith, who ran the Medicaid side of CMS for eight years under the Bush Administration and currently works at the Heritage Foundation, speculates about that last question here. He and colleague Ed Haislmaier conjecture in "Medicaid Meltdown: Dropping Medicaid Could Save States $1 Trillion" that if Congress shifts more people onto Medicaid through health reform, states will secede from the program.

OK folks, that's enough for one day. If after reading this you're not exactly filled with confidence that government will be there for your clients someday when they need health or long-term care, then consider this . . .

You are your clients' last line of defense. Open their eyes. Don't use scare tactics but make sure they see the big picture and the whole truth. Sell them the coverage they need. Don't give up on the sale until they refuse to see the facts and demonstrate irremediable irrationality.

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Updated: Friday, December 11, 2009, 10:15 AM (Pacific)

Seattle--

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WHO MAKES IT UP WHEN MEDICAID SHORTCHANGES NURSING HOMES?

LTC Comment: A new report says Medicaid shortchanges nursing homes $4.7 billion this year. That's $14.17 per bed day!

Read Liza Berger's editorial on the news in McKnights.com Daily Update here.

She says "[R]ates are likely to sink further in 2010 and 2011 according to the study, which the American Health Care Association commissioned. A major reason for that is that states are slashing budget programs to fill deficit holes. Also, funding from the American Recovery and Reinvestment Act of 2009, also known as the federal stimulus package, enacted this year will end at the end of 2010."

The inadequacy of Medicaid reimbursement rates for nursing homes isn't news. That's been a problem for decades and AHCA, the LTC-provider trade association, has documented the problem with reports like this one annually. What's newsworthy is that the problem is likely to get much worse in the near future for the reasons Berger lists and others.

So what? Why should you care?

Ever heard of "cost shifting?" That's what happens when government programs pay too little for services they "cover" and private payers or their insurance plans are charged more to make up the difference. It's health-care-cost double jeopardy. Actually triple jeopardy, since you pay taxes for the public programs, pay premiums for private insurance, and then pay half again as much for your care than Medicaid pays. What suckers we are!

Nowadays, very few people pay privately for nursing home care, however. Half of the 26 percent of nursing home costs the Centers for Medicare and Medicaid Services calls "out of pocket" are really just spend-through of Social Security income of people already on Medicaid. That leaves only 13 percent of total nursing home expenditures that could possibly come from individual private payers.

Medicare pays 18 percent of nursing home costs and pays very generously. Skilled facilities actually make a pretty good profit on their Medicare patients. So, in essence, nursing homes also shift costs from Medicare to make up for low Medicaid rates.

Therefore, the answer to the question "Who Makes It Up When Medicaid Shortchanges Nursing Homes?" is this: a dwindling number of private payers, a few people with private long-term care insurance, Social Security income of people on Medicaid, and Medicare.

How much longer is that going to continue? State budgets are sinking deeper and deeper into the red. Social Security has a $17 trillion unfunded liability. Medicare is $89 trillion under water. Private payers are few and far between already. Private LTC insurance won't help much in the short term.

The big lesson today is that people looking at long-term care risk and cost through the windshield instead of through the rear-view mirror should be looking ahead to the day, coming sooner rather than later, when a much bigger share of the cost of LTC will fall on their shoulders.

But here's today's key insight.

Private payers and their families will not only be responsible for more of their own LTC in the future. They'll have to make up even bigger shortfalls in Medicaid reimbursements as that program continues to sink into insolvency. And when Medicaid's historical props, like Social Security and Medicare, begin to lag as well, Katie bar the door.

Government will tax, borrow and print more money trying to keep Medicaid afloat. But it'll also cost shift more and more expenses onto private payers and private insurance. Savvy consumers will take heed and plan accordingly to save, invest and insure more than ever for LTC.

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Updated: Thursday, December 10, 2009, 10:56 AM (Pacific)

Seattle--

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TAKE THE LTC QUIZ

LTC Comment: A few weeks ago, to celebrate LTC Awareness Month, John Hancock tested a sample of Americans about their long-term care knowledge.

We thought you might like to take the same quiz. Simply answer the following questions: True or False.

Then check the answers here. Read an analysis of the public's responses to the survey here.

Finally, check our analysis in an "LTC Comment" following the quiz.

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John Hancock 2009 LTC Survey and Quiz

1 Disability insurance and LTC insurance cover the same things.

2 The average lifetime chance of needing long-term care for an individual 65 years or older is more than 40%.

3 People generally need to spend almost all of their assets to get Medicaid benefits.

4 Medicare is not the primary funding source for most seniors' long-term care costs.

5 Most long-term care is provided in a nursing home.

6 Medicaid covers long-term care services received at home.

7 Nursing home expenses for Alzheimer's Disease patients are covered by Medicare.

8 The average length of stay in a nursing home is more than four years.

9 Nearly 40% of the long-term care population is under the age of 65.

10 On average, a one-year stay in a nursing home costs about $30,000.

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LTC Comment: Mark Twain said "What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so."

I think that's the key to understanding the public's seemingly contradictory answers to questions like those posed in this quiz.

If the public understands that LTC carries a high risk and a significant cost, even if they underestimate both, how come they aren't more concerned about preparing for LTC?

I believe the answer to Question #3 unlocks that puzzle. Here's the question:

People generally need to spend almost all of their assets to get Medicaid benefits.

The answer according to the survey is : "True. While the maximum level of assets you're allowed to keep varies from state to state, people are required to spend down assets to a significantly low level before they can qualify for Medicaid benefits."

72 percent of the respondents got the answer to that question correct.

But what if it isn't really true that people must spend down most of their assets to qualify for Medicaid LTC?

Wouldn't that explain why the public is confused . . . why people know about LTC risk and cost intellectually and have been convinced Medicaid requires catastrophic spend down, but they still don't act to protect themselves?

In other words, it's not what people say they think or what they answer on quizzes that matters. It's what happens in the real world.

And in the real world, it works like this:

Income is rarely an obstacle to Medicaid LTC eligibility. Anyone with income less than the cost of a nursing home qualifies anywhere in the USA. Cash must be spent down to a low level, but not necessarily for care. Buy anything you want, just don't give assets away. Besides, you can keep unlimited assets in exempt form such as a home (up to $500,000), and with no limit, a business, a car, home furnishings, prepaid burial plans and term life insurance. Medicaid's mandatory estate recovery actually captures very little.

Don't get me wrong. I'm not saying the public fails to buy LTCI because they're planning to go on Medicaid. Not at all. The survey shows they believe Medicaid requires catastrophic spend down. Planning for that would be irrational.

What I am saying is more nuanced. Because most people have been able to ignore the risk of LTC, avoid the premiums for private insurance, wait to see if they ever need expensive LTC and get the government to pay, few even think about planning for long-term care until they're in crisis. Then they end up quickly on Medicaid, which operates today as free inheritance insurance for baby-boomer heirs.

Mystery solved.

But here's the kicker. Medicaid can't go on much longer anesthetizing the public to LTC risk and cost. Soon it will become in truth the draconian welfare program that the public already incorrectly believes it is. Once Medicaid really does require total impoverishment, people will get the message and start buying LTCI.

When? Don't hold your breath, but it could be within ten years. Or, as soon as three to five years if government remains on the suicidal spending and borrowing path it is following today.

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Updated: Wednesday, December 9, 2009, 10:37 AM (Pacific)

Seattle--

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LTC Bullet: DéCLASSé

LTC Comment: More analysis and criticism of the CLASS Act after the ***news.***

*** SPONSOR A BULLET? Just contact Damon for details at 206-283-7036 or damon@centerltc.com. You'll reach thousands of LTCI producers and hundreds of leading LTC media, policy makers, legislators, and other experts. Get an add on our "LTC Blog" page for no extra charge. ***

*** MORE ON CLASS. "Like other entitlements before it, the CLASS (Community Living Assistance Service and Supports) health insurance scheme will force the next generation of Americans to bear its true cost, says David Gratzer, a Senior Fellow with the Manhattan Institute." Source: David Gratzer, "Yet another new entitlement,"

Washington Times, December 6, 2009, full text here. From: NCPA: Daily Policy Digest 12-08-2009. ***

*** MORE LTC-TV. LTCI industry leader and actuary Jim Glickman analyzes and prognosticates about the CLASS Act. Recorded on scene at the 8^th LTCI Producers Summit in Kansas City last month. Check it out here. ***

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LTC BULLET: DéCLASSé

LTC Comment: My web dictionary defines déclassé as "fallen or lowered in class, rank, or social position . . . of inferior status." Seems to fit the CLASS Act.

Although doubtlessly well-intentioned and ingenious, this proposed new entitlement for long-term care is fundamentally flawed actuarially and philosophically.

We've analyzed the CLASS Act here before. See "LTC Bullet: CLASS Conciousness" and "LTC Bullet: CLASSified." Or check out eight more examples in The Zone including LTC E-Alert #9-076--A CLASS Half Full, LTC E-Alert #9-104--Will CLASS Pass?, and LTC E-Alert #9-123--CLASS Dismissed. (You'll need your user name and password to access The Zone. Contact info@centerltc.com if you need a reminder or to join the Center and connect to The Zone.)

Today, we bring you two new critiques of the CLASS Act. The first is from the Concord Coalition's latest Facing Facts Quarterly newsletter published yesterday. Read Neil Howe and Richard Jackson's excellent essay about CLASS titled "The Other New Health Entitlement" here.

Following is an excerpt:

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"With the budget deep in deficit, new war costs looming, and Congress struggling to find the fiscal resources to pay for the President's core health-care reform agenda, the Concord Coalition does not believe that this is the time to enact a new long-term care entitlement. But if Congress does enact one, at the least it should ensure that it is soundly designed and honestly paid for.

"As it stands, the CLASS Act embodies the worst sort of budgetary and actuarial chicanery. It pretends that premiums can be double-counted both as a near-term budget offset and as long-term savings. And it violates the most basic principles of sound insurance design by failing to provide for either underwriting or a mandate and by underfunding the oversight needed to detect fraud. The losers will be today's younger taxpayers, who will have to bear the ultimate cost. Congress' willingness to engage in this kind of legislative malpractice helps to explain why so many Americans believe that government does not have the interests of future generations in mind."

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LTC Comment: Our second contribution to CLASS analysis today comes again from that bottomless well of ideas, Claude Thau. He sent his mailing list, including yours truly, his "Top 10 Concerns About the CLASS Act." Republished with permission.

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You might want to contact your Reps and Senators about the CLASS Act which is in "health reform" bills in the House and Senate. It nationalizes LTCi with an under-funded "Medicare" type of program, increasing the $152 trillion of debt that we have greedily heaped onto future generations. Our unborn descendants already suffer from egregious "taxation without representation." Here are my top 10 points.

1) It has been repeatedly under-priced, from $35 to $65/month. The American Academy of Actuaries [AAA] (see attached) concluded that it would have to cost $160/month and a Centers for Medicare and Medicaid Services actuary (see link below) concluded that it would have to cost $180/month. LINK

2) However the AAA priced it only for a 75-year horizon, because that was what it was asked to do. The cost of any program is significantly understated if you count up-front premiums and ignore back-end payments. It's like saying you are $100,000 richer when you get a $100,000 loan. The annual OASDI fund solvency reports show that when the arbitrary 75-year horizon is removed, the unfunded liability more than triples. I would expect a LTCi program to be more back-ended than Social Security (see my attached paper) [omitted here, but paid-up Center members may request a copy from info@centerltc.com]. The CMS actuary may have adjusted for this issue.

3) Federal Government-run programs generate deficits, not because they can't be run well theoretically but because of the lack of checks and balances when the government is trying to govern and to run a program at the same time. Consider AMTRAK, the Post Office, Fannie Mae, Freddie Mac, Medicare, Social Security, Medicaid.

4) Proponents of the CLASS Act tout that the money would go into a lock-box. But, in a striking example of lack of control, they claim it reduces the cost of the health care reform bill! Private industry must create an accounting liability for reserves, but the attached [omitted here, but paid-up Center members may request a copy from info@centerltc.com] CBO CLASS Act analysis CLEARLY VIOLATES this principle. The CBO table on page 2 shows NO reserves. Au contraire, it says that the premiums reduce the national deficit! Unbelievably irresponsible raiding of the "lock box" before it is even created! (By the way, if you read the CLASS Act, you'll see that the lock box is not locked.)

5) The cost estimates seem to ignore some provisions of the CLASS Act and some impacts of the CLASS Act. For example, like the "public option", it replaces private industry revenue which gets taxed with government revenue that does not get taxed, then counts the lost tax revenues as "health care savings".

6) It precludes premium increases until it is too late to establish solvency and then still limits the increases to further pander to recipients by increasing the burden on future generations.

7) Whether people have coverage under the CLASS Act or not, they are likely to think they have coverage. Whether the coverage is sufficient or not, they are likely to think it is sufficient. If an insurance broker tries to convince them they have insufficient coverage, they will distrust the broker. Furthermore, their CURRENT amount of coverage is not meaningful to them; they (rightfully) do not expect to need care NOW. They will believe (rightfully given past government practices) that the government will give away increases in benefits over time, digging larger deficits. Why buy LTCi in such an environment?

8) If the broker closes a sale that complements CLASS, the size of the case will be very small, hence little commission will result. Who can afford to sell that?

9) Some people think the industry can survive selling to healthier risks. Do you think the government is going to let the industry "cherry pick" like that? To protect the Federal program, the LTCi industry would probably be banned from asking health questions. Spousal discounts would probably also be banned as discriminatory.

10) Someone with Federal and private coverage could double dip. Duplicate coverage is a difficult and costly problem, particularly when the government puts up barriers to solving it, as it often does.

The author can be reached as follows:

Claude Thau, President, Thau, Inc., cthau@targetins.com

Ph: 913-403-LTCi (-5824); 800-999-3026, x2241; Fax: 913-384-3781

• Thau Inc. was established to help create a sound long-term care insurance industry in the U.S.A. It works in 3 areas:
• Consulting for LTCi companies, providers of services, employers, associations, insurance agencies, etc.
• Wholesaling LTCi by training and servicing insurance brokers across the country.
• Advocacy work.

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LTC Comment: Our last word: some thoughtful people in the long-term care insurance industry think the CLASS Act, if passed, would increase public interest in and, possibly, augment the purchase of private long-term care insurance. I'm not one of them.

The public's asleep about LTC risk and cost because government has paid for most expensive LTC since 1965 and still does. How could adding one more government program purporting to pay for even more LTC wake people up? It won't. It'll be like adding an extra dose of anesthesia to the body politic.

There is one way that passage and implementation of the CLASS Act would increase the market for LTC insurance. By piling up billions more in unfunded liabilities for the federal government, CLASS will hasten the impending collapse of the social safety net including Medicaid, the dominant payer of LTC, as well as Medicare and Social Security.

When that happens . . . when people really do face the catastrophic costs of long-term care, it won't take long for folks with wealth to snap to attention, recognize the new vulnerability, and plan for it. The first wave of reality will hit home equity. Reverse mortgages will soar as a source of LTC financing. The next wave will make long-term care insurance into a must-have financial product.

What a shame that government ruined the safety net by trying to cover too many instead of saving public assistance for people most in need and allowing private long-term care insurance to carry most of the weight. Ironically, that's where it's all going to end up anyway.

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Updated: Tuesday, December 8, 2009, 9:40 AM (Pacific)

Seattle--

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LTC INSURANCE: DON'T FALL WITHOUT IT

LTC Comment: It usually begins with a fall. That's how so many expensive long-term care episodes start.

Falls often lead to immobility, loss of independence, physical decline, institutionalization, depression and death.

No, indeed, falls are not funny. So, don't end up like the people highlighted in this video: http://www.youtube.com/watch?v=4EbBKwZzE3g&feature=related .

And if you're going to be active and adventurous like so many aging Americans these days, make sure you're fully protected against the risk and cost of long-term care.

That's why we say: "LTC Insurance: Don't Fall Without It."

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Updated: Monday, December 7, 2009, 11:06 AM (Pacific)

Seattle--

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LTC ANNUITIES BUT NOT WHAT YOU'D THINK!

LTC Comment: Pearl Harbor Day. What better time to highlight a sneak attack on responsible long-term care planning?

We all know about the Pension Protection Act's provisions encouraging the use of combo products, i.e. products combining life insurance or annuities with LTC protection.

But did you know that Medicaid planners and their affluent clients just got a judicial boost for the use of annuities to qualify for Medicaid-financed nursing home care?

That's not exactly good news for the frail or infirm elders who will be institutionalized in welfare homes as a consequence. But it's a bonanza for the lawyers who get big fees and the families who dodge the high cost of private LTC.

Here's an update from the e-letter of a Medicaid planner in Pennsylvania.

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Annuity Purchase by Community Spouse Upheld in Federal Appeals Court Decision

Written By: Attorney Jeffrey A. Marshall, CELA*

In a much anticipated decision, the Federal 3rd Circuit Court of Appeals has affirmed the lower court ruling in Weatherbee v. Richman. The lower court had allowed a community spouse to purchase a DRA annuity[1] to protect savings from the costs of her husband's nursing home care.

When her husband entered a nursing home, Adeline A. Weatherbee purchased a DRA compliant annuity for approximately $400,000. It paid her $4,423 per month in income. Her husband then applied for Medical Assistance to help pay the costs of his care.

The Department of Public Welfare (DPW) denied the requested benefits. DPW took the position that under the Deficit Reduction Act (DRA) and Pennsylvania's Act 42, the $4,423 in monthly payments Adeline received was an available resource that she could sell. Thus, DPW argued, Mrs. Weatherbee had too much in the way of resources for Mr. Weatherbee to qualify for Medicaid with his nursing home costs.

The lower court in Weatherbee rejected DPW's arguments and precluded it from denying the requested benefits. The Court found that DPW's interpretation of the DRA was unreasonable. It said that the provision of the DRA upon which DPW was relying to deny eligibility "is unambiguous and does not support DPW's reading of it."

In addition, the lower court found that "the Pennsylvania statute upon which the DPW relies [62 PA.STAT.ANN § 441.6(b)] in treating the income from an otherwise compliant annuity as an available resource is inconsistent with the treatment of annuities under the Medicaid Act." Thus, section 441.6(b), which attempts to void anti-assignment provisions in annuities, is preempted by the Medicaid Act.

DPW refused to accept the Federal District Court's decision as the final word and appealed the case to the 3rd Circuit Court of Appeals. On November 12th, the Appeals Court issued its opinion. The Appeals Court opinion fully supports the decision made by the lower court.

In affirming the lower court, the 3rd Circuit Court of Appeals found that:

(1) The Deficit Reduction Act did not change the longstanding rule that a community spouse's income is not available to an institutionalized spouse (42 U.S.C. §1396r-5). The provision of the DRA [42 U.S.C. §1396p(e)(4)] upon which DPW has been relying provides no basis by which DPW may deny eligibility for benefits where the annuity otherwise complies with the law.

(2) As the 3rd Circuit previously decided in James v. Richman, there is no merit to DPW's assertion that the annuity was a resource because it could be sold on a secondary market. (Lead counsel on the James v. Richman case was Matthew Parker, CELA* of Marshall, Parker & Associates).

(3) The state law relied upon by DPW (62 P.S.§441.6(b)) is preempted by federal law.

Conclusion:

Since 1994 federal law has allowed a community spouse to purchase a properly structured immediate annuity in order to accelerate her husband's qualification for Medicaid and protect assets from the cost of long term care.[2] Although states are supposed to follow federal law, officials at the Pennsylvania Department of Public Welfare (DPW) have nevertheless long attempted to prevent or discourage this type of "Medicaid Planning." These attempts have failed. Six separate federal and state courts have now considered the legality of the various procedures used by DPW to limit community spouse annuity purchases. [3] Every one of these courts has found that the DPW limitations violate federal law.

As a result of effective advocacy by elder law attorneys in these cases,[4] a Pennsylvania community spouse can now purchase a DRA compliant annuity to convert excess resources into protected income. When a married person needs to qualify for Medicaid financial help with long term care costs, it is critical that the family consult an elder law attorney who understands how to use these specialized annuities to protect the family's financial security.

Attorney Marshall can be contacted at webmail@paelderlaw.com or at 1-800-401-4552. More information about Attorney Marshall is available on our website at www.paelderlaw.com/staff.html

*Attorneys Marshall, Parker, Grebas, Weber & Colbert are all certified as Elder Law Attorneys by the National Elder Law Foundation under authorization from the Pennsylvania Supreme Court.

[1] DRA annuities are specially structured immediate annuities that comply with the requirements of the Deficit Reduction Act of 2005. PCM is a leading provider of DRA compliant annuities to the clients of Pennsylvania Lawyers.

[2] In State Medicaid Manual, Health Care Financing Administration Pub. No. 45-3, Transmittal 64, §3258 (November 1994) the federal government provided instructions to Medicaid caseworkers at the state level regarding the treatment of annuities. Federal guidelines like Transmittal 64, although not a statute or a regulation, are entitled to deference by the courts as long as it is "consistent with the plain language and purposes of the statute and if [it is] consistent with prior administrative views." Cleary v. Waldman, 167 F.3d 801, 808 (3d Cir. 1999).

[3] Mertz v. Houstoun, 155 F. Supp. 2d 415 (E.D. Pa. 2001); James v. Richman, 465 F.Supp.2d 395 (M.D. Pa. 2006), aff'd 547 F.3d 214 (3d Cir. 2008); Ross v. DPW, 936 A.2d 552 (2007 Pa.Commw); Weatherbee v. Richman, 595 F. Supp. 2d 607 (W.D.Pa.2009); aff'd 2009 U.S. App. LEXIS 24939, 2009 WL 3792406 (3dCir. 2009).

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LTC Comment: As long as people can ignore the risk, avoid the premiums, wait to see if they ever need expensive long-term care, and shift the cost to taxpayers and Medicaid, we'll never see a healthy LTC safety net for the needy nor a growing LTC insurance market for others.

See what you're up against? See why it's so important to save Medicaid by removing it from greedy relatives and grasping lawyers? See why Medicaid is bankrupting states and the feds? See why LTCI sales are flat or down? Help us tackle the problem and promote the solution.

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Updated: Friday, December 4, 2009, 12:40 PM (Eastern)

Providence, RI--

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LTC EMBED REPORT: FISCAL APOCALYPSE 2012, RHODE ISLAND STYLE

LTC Comment: Today is the last day of our field work on the Center's "State X" project in Rhode Island. OSPRI (www.oceanstatepolicy.org) president Bill Felkner and I will meet with State Treasurer Frank Caprio, among others.

The State Treasurer interview should be especially interesting and enlightening. "Follow the money" is good advice in any study. It's critical counsel for our review of long-term care delivery and financing in Rhode Island.

Why? Medicaid is the biggest LTC payer in the USA. It consumes nearly 25% of the average state's budget. And long-term care is one-third to one-half of Medicaid's costs.

Rhode Island is currently engaged in a daring LTC experiment. The state traded a cap on federal matching funds for more program flexibility. Our interviews yesterday with top state staff implementing RI's "global Medicaid waiver" underscored for me the thoughtfulness, creativity, ingenuity and capability they've invested in this venture. But money and staff for the project are already short and an op-ed yesterday in the Providence Journal emphasized RI's financial problems.

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You can read "While pols dither, R.I. faces financial doomsday" here, but check out this excerpt for now:

"We were warned. That's the underlying theme of this fall's apocalypse blockbuster film, '2012.' . . .

"But living in this tiny corner of the earth we call Rhode Island, a different kind of doomsday is coming. Though it may not be a natural disaster, it threatens . . . to have an outcome of unprecedented and devastating proportions.

"It's called the coming bankruptcy of the Rhode Island pension system, and just as in the film, we were warned. . . .

"State Auditor General Ernest A. Almonte, testifying to the Municipal Pension Study Commission in the Senate on Nov. 10, used terms like 'devastating' and 'unsustainable' to describe the combined unfunded liability of 24 municipal-employee-pension plans across the state, which now totals $1.7 billion.

"[T]he New England Economic Partnership, a regional economic forecasting group, gave the gloomy news that not only does our state rank flat at the bottom of all of the region's states in terms of unemployment, but it will be the last to see any real job or economic growth even as other states slowly begin to crawl out of the recession.

"[I]n a state where one out of every six jobs is tied to state and local government, the looming disaster that could occur if there were to be a full-fledged bankruptcy of the state's pension system cannot be overstated. . . .

"When you combine the unfunded liability of the local community pension funds with the teachers fund liability ($3 billion), the state-worker-fund liability ($2 billion), and factor in the recent financial market drop-off which shrank value from pension funds, the overall unfunded liability in public pension funds in Rhode Island is now closer to $7 billion. . . .

"The end of the world as we know it here in Rhode Island could be coming in 2017 - or much sooner.

"Maybe we'll call our film '2017: A story of pensions, peril and paralysis.'"

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Whoa! With fiscal headwinds like that, Rhode Island's "global Medicaid waiver" had better contain--and preferably reduce--long-term care costs to the state.

Will it? Can it? How? Those are some of the questions we'll tackle in our report, to be prepared over the next few weeks and published in time for the Rhode Island legislature's opening session in January 2010.

Stay tuned.

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Updated: Thursday, December 3, 2009, 12:56 PM (Eastern)

Providence, RI--

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LTC EMBED REPORT: DOES ADULT DAY CARE SAVE MONEY?

LTC Comment: I'm in Rhode Island working on our study of the state's LTC financing system and "global Medicaid waiver."

Under that unique waiver, Rhode Island attempts to rebalance its Medicaid LTC program from dominantly nursing home care (90%) to more home and community-based care (currently only 10%).

Intuitively, it seems like home care should be cheaper than nursing home care so rebalancing ought to save money even as it provides more desirable care for Medicaid recipients.

Take adult day care for example. Surely if someone can manage, usually with help from friends and relatives, to live at home in the evening and get meals and socialization in a daytime program, it must save lots of money compared to ending up in a nursing home by default.

But if that's true, why are so many states cutting back on Medicaid-financed adult day care programs? That seems to be true based on an article titled "Recession-Driven Cuts Threaten Efforts To Expand Adult Day Care" published by Kaiser Health News and available here.

See our analysis of the situation after these excerpts:

"Not only do adult day services keep caregivers in the workforce, advocates say, they also provide a cost-effective alternative to a nursing home, which runs an average of $198 a day for a semi-private room, or to a home-health aide, at $21 an hour.

"By contrast, a full day at an adult day center, on average, costs $67, according to the 2009 MetLife Mature Market Institute survey (.pdf). . . .

"[R]eliance on public funding for adult day-care services has made them vulnerable. In Washington state, a lawsuit has warded off a move to deny adult day services to residents of state-funded residential care homes. In California, lawsuits by community service advocates thwarted a cut in the Medicaid reimbursement rate and a move to limit attendance to three days a week. Minnesota decreased its reimbursement rate and made eligibility requirements more restrictive. New York, Illinois and other states are also pursuing reductions. . . .

"New Jersey has cut Medicaid reimbursement by $8 per participant per day, and administrators at Montclair's Senior Care fear more cuts in public funds. . . .

"The grim situation with state budgets has added urgency to efforts to include funding for expanded adult day services and other community long-term care programs in whatever health-care reform package emerges from Congress. . . .

"'Governors are scrambling to reduce deficits, and they're going after the programs that aren't mandated by law,' says Sara Myers, managing director of the National Adult Day Services Association, based in Seattle. 'Adult day is optional.'"

LTC Comment: The fundamental problem here is paying for adult day care through public programs that are overused and underfunded. Politicians and bureaucrats, caught in budget binds by bad economies and lagging revenues, cut wherever they can. It's penny wise and pound foolish, of course, but what else is new? "Programs for the poor are poor programs," goes the old aphorism, so they're easy targets--even if they would save money in the long run.

But imagine if most people paid privately or relied on private insurance to pay for their care. Common sense, self-interest and good financial management would direct private payers to the most desirable care available at the lowest cost. They'd flock to adult day care, home care, assisted living, etc. They would avoid high cost nursing home care as long as possible. In other words, private market incentives are the opposite of perverse incentives in public policy that leave most Medicaid recipients in nursing homes.

The solution is to provide positive incentives for early and responsible long-term care planning that enables people to pay privately for their care in the most appropriate settings. That's how to empower adult day care. Trying to fund it through bankrupt welfare programs never worked before and it's hopeless going forward because of the government safety net's insolvency.

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Updated: Wednesday, December 2, 2009, 12:48 PM (Eastern)

Providence, RI--

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LTC EMBED REPORT FROM THE POLICY FRONT IN RHODE ISLAND

LTC Comment: I'm in the "Ocean State" pursuing our special project with OSPRI, the Ocean State Policy Research Institute.

Our objective is to examine LTC financing in the only state in the country with a "global Medicaid waiver."

Rhode Island traded a cap on its federal Medicaid matching funds for flexibility to try things otherwise not allowed under federal regulations.

The state's main goal is to rebalance its LTC program away from nursing homes (currently 90%) and toward home and community-based options (currently 10%).

Sounds great, but what if . . . it costs more than anticipated . . . it discourages LTC planning by suggesting government will pay for even-more-desirable services than nursing home care . . . there aren't enough home care and assisted living services available at prices Medicaid can afford to satisfy the demand resulting from nursing home diversions?

These are the kinds of things we're studying. In two prior week-long field visits, we looked very closely at income and asset eligibility, estate recoveries, and the markets for home equity conversion (reverse mortgages) and long-term care insurance.

This week we're homing in on the likely impact of the global waiver on the LTC service delivery system's ability to meet newly created care needs.

Yesterday, OSPRI president Bill Felkner and I met with (1) eligibility technicians who re-determine Medicaid LTC eligibility and ensure (hopefully) that recipients remain eligible; (2) an Associate Director responsible for implementation of RI's lagging LTC Partnership program; (3) a nursing home owner who watched in frustration as a "private pay" patient with $930,000 converted overnight to a Medicaid patient by means of an annuity resulting in the nursing home having to pay back the $32,000 in private payments it had received; (4) with members and the executive director of RI's non-proprietary LTC provider trade association.

I'm slammed again today with appointments beginning with a speech to the Rhode Island NAIFA association at 9AM. So, gotta run. But watch for more on RI and LTC. This could be the "mouse that roared" for long-term care public policy.

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LINKS

Here are some links you can check out to find valuable information on long-term care providers, financiers and insurers.  This is just for starters.  We'll add many more as time goes on plus advice on what to look for on their sites.

www.ahca.org American Health Care Association

www.aahsa.org American Association of Homes and Services for the Aging

www.alfa.org Assisted Living Federation of America

www.nic.org National Investment Center

www.ahip.net America's Health Insurance Plans 

ltcconsultants.com           Phyllis Shelton's website 

www.aaltci.org American Association for Long-Term Care Insurance 

www.ltcsales.com LTCi Sales Strategies

www.ahia.net Association of Health Insurance Advisors