LTC Bullet: LTC Strawman

Friday, September 30, 2022

Seattle—

LTC Comment: Disproving a claim no one has ever made contributes nothing to a crucial conversation about who should qualify for Medicaid LTC benefits, when and under what circumstances. What this means and why it matters after the ***news.*** [omitted]
 

LTC BULLET: LTC STRAWMAN

LTC Comment: Marc Cohen, a distinguished LTC scholar I consider my friend, insists Medicaid forces people to spend down into impoverishment before they qualify for Medicaid LTC benefits. I maintain that accessing Medicaid LTC benefits without spending down significantly is easy, commonplace and recommended by thousands of lawyers and financial advisors. Who’s right?

Marc has published a new article he says supports his point of view. Does it? Let’s see. Definitely consider what he and co-author Jane Tavares have to say. Then read on for my response. Here’s their article:

Marc A. Cohen & Jane Tavares (2022): Are Wealthy Older Adults who use Medicaid Opportunistically Accessing the Program?, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2022.2127597

To link to this article: https://doi.org/10.1080/08959420.2022.2127597

The article’s “Abstract” says it all:

There has been longstanding concern that wealthy older adults may be accessing the program by opportunistically divesting assets in order to qualify for coverage rather than by having high medical or LTSS expenses on which they spend down their resources to eligibility levels. … Our findings demonstrate that this may occur among a relatively small proportion of wealthy people, and that tightening Medicaid eligibility criteria would likely have only a very modest impact on program expenditures.

What are we to make of that problem statement and those findings? Is it true there has been a “longstanding concern that wealthy older adults may be accessing” Medicaid “by opportunistically divesting assets”? Maybe, but I’m not aware of anyone having claimed such behavior is widespread. Certainly I have not and I am the only author cited in the article as having made the claim. My 1990 piece in The Gerontologist titled “The Fallacy of Impoverishment,” the one Cohen and Tavares reference, says nothing about asset divestiture by the wealthy.

My position is much more modest and nuanced. It is that qualifying for Medicaid long-term care benefits does not require impoverishment, that Medicaid’s income and asset limits allow middle class and moderately affluent people to qualify without spending down their savings significantly, and that in some cases even more wealthy people can qualify without spending down appreciably, with the help of lawyers who specialize in “artificial impoverishment.” In fact, when I searched my dozens of national and state-level reports about Medicaid planning I found not a single use of the term “opportunistic.” When I used the term “wealthy” it was either to quote a state Medicaid eligibility official complaining about the abuse or to point out that rich people can qualify for Medicaid LTC benefits, which Cohen and Tavares acknowledge is true, not that they do so in large numbers.

So why all the hyperventilating about wealthy people accessing Medicaid by opportunistically divesting assets? It is to divert attention from the real problem which is that Medicaid has become the dominant long-term care funding source for most Americans and that it is available without significant asset spend down after care is needed and long after it is too late for people to plan early and responsibly to handle the high risk and cost of long-term care privately. It is that reality that has caused most of the long-term care system’s problems including excessive dependency on welfare-financed nursing home care, insufficient supply of home and community-based services, meager public funding resulting in serious access and quality problems, as well as severe caregiver shortages, and the lack of demand for private insurance to spread the risk.

Why do scholars like Cohen and Tavares, and nearly all of their “peers” choose to focus exclusively on minor problems like the wealthy capturing Medicaid instead of the big problem, that Medicaid crowds out personal LTC responsibility and planning? Why do they fail to mention, much less explain, the many Medicaid planning techniques that are far more common and costly to Medicaid than asset divestiture? Why is there no mention of the National Academy of Elder Law Attorneys, the Medicaid planners’ professional association nor the vast formal legal literature on Medicaid planning? How do they manage such intellectual sleight of hand when the real problem is so much more obvious and compelling?

The answer is that the real problem violates the dominant ideological narrative to which most academics subscribe. That narrative is that Medicaid requires impoverishment and that aging Americans in the millions are being wiped out financially by high and rising long-term care costs. It isn’t true. There is no empirical evidence that it is true and these authors provide none. In fact, Medicaid does pay for most catastrophic LTC expenses and its financial eligibility rules are very generous and elastic. But the impoverishment narrative is necessary to garner support for these experts’ preferred “solution,” a new, compulsory, payroll-tax-funded social insurance program to fund long-term care. Why is it that we only hear this narrative and almost nothing about how Medicaid actually works? Because very little information to the contrary can penetrate the “peer review” wall that protects the dominant narrative from critical scrutiny.

In a 2017 report titled “How to Fix Long-Term Care Financing” for the Foundation for Government Accountability I answered the question “Why Do Analysts Wrongly Claim Medicaid Long-Term Care Eligibility Requires Impoverishment?” Here’s my answer in a nutshell, but do go to the source for the full six-page explanation.

First, analysts wrongly claim Medicaid requires impoverishment because they equivocate on the meaning of “impoverishment.” … Second, … they equivocate on the meaning of “spend down.” … Third, … they equivocate on the meaning of “Medicaid planning.” … Fourth, … they equivocate on the meaning of “out-of-pocket” expenditures for long-term care by claiming they are higher than they really are. … Fifth, … they rely on data, much of it faulty, from HRS and AHEAD surveys. Sixth, … they do not ask the people who know the truth.

Until analysts come to grips with the real reasons long-term care service delivery and financing are so dysfunctional by confronting each of those issues honestly, there will be little hope for improvement. Focusing instead on asset divestiture by the wealthy is a Strawman argument: “an intentionally misrepresented proposition that is set up because it is easier to defeat than an opponent's real argument.”

Marc, I challenge you, as I have done before, to debate the real issue in a public forum. To wit: What is Medicaid’s role in the long-term care system and how can we repair the damage it has caused? You can pitch socializing the LTC risk by partnering with government and I’ll defend a freer market relying more on individual initiative and responsibility.