LTC Choice, Still the Best Solution

LTC Bullet: LTC Choice, Still the Best Solution

Friday, April 15, 2022

Seattle—

LTC Comment: In long-term care, as in life, the fundamental things apply as time goes by. We discuss some long-term care fundamentals after the ***news.***

*** LTC CLIPPINGS are news items we send to Center Premium Members daily with news, data, studies, and information they need to know to stay at the professional forefront. Steve Moses scans the popular and scholarly media, condenses vital information, and forwards to you a message with the title, author, a link, a representative quote and his “LTC Comment” analyzing the significance. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. Here are some examples of LTC clippings sent this week:

4/13/2022, “Inflation: A Special Report,” by Terry Savage, TerrySavage.com
Quote: “It’s the most important financial headline of this century: Inflation! A new generation of Americans is about to face the impact of inflation – on their daily lives, their financial decisions, their investment choices, and their retirement lifestyle. While many pundits proclaim that this period of inflation will come to a quick end, history shows that inflation has always ended not with a whimper, but with a bang. Once started, the fires of inflation are not easily tamped down. Whether in Germany in the 1930s or in Zimbabwe a decade ago (their trillion-dollar note became worthless!) or in the United States in the late 1970s, it has taken a ruthless hand to stamp out the persistent belief that prices would go higher. It’s important to understand what inflation is—and isn’t, what causes it, what “cures” it –- and the potential impact on your life.”
LTC Comment: Terry Savage is my favorite source for financial advice. As a bonus, she’s always been an advocate for private long-term care insurance. Today, she sends this wake-up call about the importance of inflation and what to do to prepare for it. Don’t miss this chance to learn the “Savage Truth.”

4/12/2022, “2023 Social Security COLA Estimate Rises to 8.9% as Inflation Climbs,” by Ginger Szala, ThinkAdvisor
Quote: “Overall, prices rose 8.5% in March from a year earlier, according to CPI data released Tuesday. Annual COLAs are based on inflation in the third quarter; Social Security recipients got a 5.9% raise for 2022. The average Social Security recipient has lost $162.60 in purchasing power so far in 2023, according to Mary Johnson of The Senior Citizens League.”
LTC Comment: You’re at a nice restaurant with a big group of people. A few diners order the most expensive things on the menu, and add more drinks and appetizers. Then when the check comes and gets divvied up, some poor sap is stuck covering the shortfall. That’s how politics works. Politicians buy your votes with lots of “free” benefits, including big cash checks recently. Later the bill arrives and they’re nowhere to be found. You get to pay for their “generosity.” That’s inflation. Oh, and if you think 8.9% will cover 2023 inflation, you’re going to have another think, and a big bill, coming.

4/10/2022, “Having a sense of purpose in life can slash risk of developing dementia, study suggests,” by Xantha Leatham, Daily Mail
Quote: “Feeling a sense of purpose or meaning in life can lower the risk of developing dementia, a study shows. Researchers reviewed evidence from eight previously published papers which included data from 62,250 older adults across three continents. They found higher purpose or meaning in life was ‘significantly associated’ with a reduced risk of dementia and cognitive impairment. Notably, having a sense of purpose was linked with a 19 per cent reduced rate of clinically significant cognitive impairment.”
LTC Comment: This is great news for LTC insurance producers. I’ve never met more purposeful people. Most are driven by a passionate desire to confront LTC risk and cost by helping people prepare. Their passion is nearly always deeply rooted in a personal experience with a loved one. Selling LTCI may have a steep learning curve and demand permanent commitment and perseverance, but now we know at least it comes with a lower personal risk of dementia. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses. We hope you’ll read these articles, join the Center for Long-Term Care Reform, and help us solve the long-term care financing problem. The Center’s “Membership Levels and Benefits” schedule is here. Join individually or urge your company or association to join as a corporate member so you can receive all the benefits of membership at no cost to you. Universal access to top quality care for all Americans (the Center’s mission) is achievable. Join us and make it happen!

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022. (Originally titled more simply “Trapped.”)

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: LTC CHOICE, STILL THE BEST SOLUTION

LTC Comment: The Center for Long-Term Care Reform celebrated our 24^th anniversary in business on April 1, 2022. Since the beginning, we’ve published 1,332 LTC Bullets and scores of articles, speeches, and reports. It’s to the first of those reports I’d like to direct your attention today. Read it and I think you’ll agree it conveys some fundamental things about long-term care that still apply. LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle opened with this …

Executive Summary

How can America solve the long-term care financing problem?

The publisher of this study, the Center for Long-Term Care Financing, is dedicated to ensuring high quality long-term care for all Americans.
The problem of how to finance long-term care for the baby boom generation rivals Medicare and Social Security as the most serious social policy challenge facing the United States.
Today, America’s long-term care service delivery and financing system is fragmented, dysfunctional, and plagued by problems of access, quality, reimbursement, discrimination and institutional bias.
Nevertheless, we know exactly what we would like our country’s long-term care system to provide: universal access to top-quality care for rich and poor alike in the least institutional settings possible.
Pundits, politicians and policy-makers recognize the problem; they know what the solution should look like; why can’t they get the job done? That is the long-term care financing puzzle.
In this report, we explain how America’s long-term care system came to its current sorry state by tracing the history of long-term care financing since the establishment of Medicaid and Medicare.
We disprove and discard the conventional wisdom that catastrophic long-term care spend-down is widespread and therefore requires expanded public financing.
We prove and adopt the position that virtually everyone can obtain public financing of long-term care through Medicaid or Medicare after being stricken by chronic illness. This fact explains why so few people plan ahead for the risk of long-term care.
We demonstrate that the solution to the long-term care financing puzzle is to persuade people to consider and to confront the risk of long-term care while they are still young, healthy, and affluent enough to save or insure privately.
We offer a simple, cost-free solution called LTC Choice.
LTC Choice requires the United States Government to provide information about long-term care risk and financing options to all citizens as soon as possible, but no later than their 65^th birthdays.
Under LTC Choice, every individual may choose to show proof of private insurance or adequate financial reserves to pay for long-term care and thus abstain from public financing entirely and avoid all other reporting requirements.
Alternatively, anyone who is unable or chooses not to show proof of private long-term care financial protection would have to acknowledge formally in writing that any future eligibility for publicly financed long-term care is contingent upon spending down nearly all his or her income and assets for care expenses first.
Requiring all citizens to confront the LTC Choice long before the insurable event occurs will radically increase the proportion of Americans who plan responsibly for long-term care and drastically reduce the incidence of artificial impoverishment to qualify for Medicaid.
With over $10 trillion about to pass by inheritance to the baby boomers from the WWII generation, Americans have no shortage of private money to save or insure for long-term care.
All we need to do is eliminate the perverse incentives in the current system that enable denial of longterm care risk and discourage responsible, early planning.

LTC Comment: That was then. This is now. Little has changed except it’s the baby boom generation that is about to pass $68 trillion to their Millennial heirs by inheritance. People over age 62 now hold $10.1 trillion in home equity alone. In other words, money is not the problem. It never was. The problem is that government pays for most catastrophic long-term care expenses long after it’s too late for people to plan responsibly for that risk and cost. The solution remains to get people’s attention to long-term care risk and cost while there is still time for them to plan, save, invest or insure so they’re able to pay their own way when the time comes and avoid public dependency.

How then can we get people to confront the LTC Choice earlier, say by age 50. That’s when they really start getting serious about estate planning. Merely threatening them as in the past doesn’t work: “Mr. Jones, if you don’t buy long-term care insurance now, you will lose your life’s savings if you every need expensive, extended care.” We tried that for decades and it failed miserably, because it was not true. You could always ignore the risk, avoid the premiums for private insurance, wait to see if you ever need catastrophic long-term care, and easily switch the liability to Medicaid and the taxpayers if necessary. Measures taken to prevent that option, such as ostensibly draconian financial eligibility rules, liens and estate recoveries, failed because states didn’t implement them, the federal government didn’t enforce them and the media didn’t publicize them. So the public continued to ignore long-term care until they need it and then to rely on the government to provide.

We need something new, different, and far more persuasive to get people to deal with long-term care long before they need it. Putting that $10.1 trillion of home equity at risk would go a long way toward waking the public up. Just eliminate or radically reduce Medicaid’s huge home equity exemption. That would compel people who didn’t plan ahead by saving or insuring, to use their home equity to pay for their long-term care. Reverse mortgages would enable them to continue living at home while they receive the care they need. Most older people own homes and most of them own their homes free and clear. Voila. Problem solved for most homeowners.

But what about the rest of the population who may not own homes or who have no home equity? We should have special individual retirement accounts earmarked for long-term care that everyone contributes to by the age of 50. Such accounts should be voluntary, not compulsory like traditional social insurance programs, i.e., Medicare and Social Security. Compulsion is anathema to America’s culture and economy of freedom. But, while voluntary, the accounts should be “opt-out,” that is, automatically enrolled upon employment and only avoidable by consciously choosing not to participate.

Home equity and LTC-IRAs will cover most people, but what about the less responsible or less able? Will they fall through the cracks? No. We should lengthen, strengthen, publicize and enforce rules to ensure that no one with significant income or assets relies on public welfare to fund long-term care. That means eliminating the many “loopholes” in Medicaid financial eligibility policy that now, and always before, enabled the public’s denial about long-term care risk and cost. Once people really do have to become impoverished to get public assistance, very few will end up in that condition. Those that do will join a much smaller Medicaid long-term care program that can afford to provide better care in the most preferred settings than has been the case heretofore.

Solving long-term care is not as complicated as the analysts, policy makers, and politicians make it out to be. Just stop rewarding people with free long-term care later and they’ll take personal responsibility sooner.