LTC Bullet: Long-Term Care: The Solution

Friday, October 6, 2023

Seattle—

LTC Comment: The Paragon Health Institute released “Long-Term Care: The Solution” this week. The announcement and links to the study’s content after the ***news.***

*** APPEAL: The Center for Long-Term Care Reform, in partnership with the Paragon Health Institute, is embarking on a campaign to improve LTC services and financing. In “Long-Term Care: The Problem,” we explained what’s wrong and why. In “Long-Term Care: The Solution,” we discard the failed policies of the past and propose a radical new approach based on engaging vast sources of private wealth currently diverted from LTC funding. We will reach out to the media, brief federal and state policy and law makers, speak at conferences, and write for publication, all toward the end of achieving the policy goals in “Long-Term Care: The Solution.” Will you help us in this effort? Join the Center or contribute online here. Check out the Center’s “Membership Levels and Benefits” schedule here. Most corporate memberships include a briefing by Center president and “LTC Solution” author Stephen Moses. Call or write for more information: 206-283-7036; damon@centerltc.com; smoses@centerltc.com. LTC policy has floundered for too long. Let’s get this done! ***

LTC BULLET: LONG-TERM CARE: THE SOLUTION

LTC Comment: Here’s how Paragon Health Institute president Brian Blase announced the paper.

Today, Paragon is releasing an important new report, Long-Term Care: The Solution, authored by Stephen Moses. Steve is the nation’s top expert on long-term care financing and his new report contains a solution to a very difficult policy problem.
 
Given the structure of our major entitlement programs—Social Security, Medicare, and Medicaid—the aging of the baby boomers presents a variety of public policy challenges. One is long-term care (LTC), which consists of medical and supportive services that people require at home or in institutions when they are unable to care for themselves.
 
As Steve wrote in a 2022 Paragon report, Long-Term Care: The Problem, well-intended government policy caused many of LTC’s problems. Government programs have largely paid our nation’s LTC expenses since 1965. Unfortunately, easy access to Medicaid while retaining wealth creates a moral hazard that discourages responsible LTC planning during early and middle adulthood and crowds out private sector alternatives. Too many people end up on Medicaid, which pays too little to ensure access to quality home care and causes excessive reliance on institutionalization and unpaid help from families and friends.
 
In Long-Term Care: The Solution, Steve constructs a reform that would reduce dependence on Medicaid and free up private financing to fix the LTC challenges. The following are from the paper’s executive summary, and the entire paper is worth a read to understand both why past efforts to reform Medicaid LTC have failed and why this new approach is our best hope to improve government LTC policy.
 
What Steve Found
 
When people encounter high LTC costs later in life, they typically qualify more easily for Medicaid than commonly thought. This moral hazard discourages early LTC planning. The past policy approach of generous Medicaid LTC eligibility with estate recovery after death did not adequately promote proper planning, either through savings or insurance. Most Americans possess enough wealth to fund their average LTC needs, which is about two years of home-based services. If the average 65-year-old had $70,000 set aside for LTC, it would grow to meet that need after age 85, when LTC commonly occurs. Positive incentives to plan early and pay privately avoid the loss of freedom and high economic cost from compulsory, payroll-funded policies.
 
Why It Matters
 
With the aging of the baby boomers and an increasing percentage of the population living past 85, creating a sustainable LTC policy is crucial. If Medicaid did not pay for expensive LTC after care is needed, more consumers would prepare privately and avoid Medicaid dependency. Unless policy is changed and the incentive to avoid proper LTC planning is removed, the LTC system will fail, harming those who most need public support.
 
Policy Suggestions
 
Medicaid LTC should be restored as a safety net for indigent elderly people. Lawmakers should eliminate the ability to access publicly funded LTC while preserving wealth. This paper details seven options to empower younger and middle-age Americans to meet a new, publicized individual LTC planning responsibility. This would unleash wealth currently unused for LTC that remains locked in home equity, individual retirement accounts, life insurance, and estates and reorient the LTC system to cater to seniors’ desires to age in their homes rather than in institutions.