LTC Bullet: Paragon on Medicaid and Long-Term Care

Friday, August 7, 2026

Seattle—

LTC Comment: Paragon Health Institute, America’s leading health policy think tank, brought Medicaid and LTC inequities to the Senate Budget Committee’s attention this week. The hearing video is captivating. We elaborate after the ***news.***

*** 8/4/2026, “Lumos Insurance Introduces the Immediate Care Plan to Help Families Fund Long-Term Care,” StreetInsider.com

Quote: “Lumos Insurance™ today announced the general availability* of its Immediate Care Plan, a fully underwritten single premium immediate annuity built for people who already need paid care. A single lump sum is exchanged for guaranteed monthly income for life, with payments beginning within one month, so families can fund an assisted living community, a memory care unit, or in-home care without drawing down every other asset they have. … The Immediate Care Plan addresses what Lumos calls the Care Gap: the recurring difference between the monthly cost of formal care and the income a family already has coming in from Social Security, a pension, or other sources. … ‘The Care Gap is showing up in advisors' offices every week, and without a solution, it can put a lifetime of savings at risk,’ said Vince Bodnar, President of Lumos Insurance and a two-time chairperson of the Society of Actuaries' Long-Term Care Insurance Section. ‘When a product is priced for the average person instead of the individual, families may commit more assets than their situation requires. The families arriving at the care transition today deserve solutions built for their actual circumstances — not actuarial averages. Lumos is excited to offer our Immediate Care Plan to help meet this need.’”

LTC Comment: Congratulations to Center-corporate-member Lumos and its president Vince Bodnar on the introduction of this promising new solution to a longstanding problem for LTC consumers. ***

LTC BULLET: PARAGON ON MEDICAID AND LONG-TERM CARE

LTC Comment: Paragon president Brian Blase described the hearing and his testimony in the Institute’s weekly newsletter:

“Medicaid: The Reality” was the first Senate Budget Committee hearing under Chairman Ron Johnson’s leadership. My oral testimony focused on Medicaid’s fundamentally broken financing incentives. I explained that the ACA created a financing formula that pays states roughly $9 in federal funds for every $1 they spend on able-bodied, working-age Medicaid expansion adults, compared to an average of $1.33 for every $1 spent on traditional enrollees. That sevenfold disparity encourages states to prioritize expansion adults over the populations Medicaid was originally created to serve—and has resulted in worse health care access for traditional enrollees. I also described how provider taxes, state-directed payments, and other financing arrangements have evolved into a legalized Medicaid money-laundering apparatus that shifts costs from states to federal taxpayers while generating tens of billions of dollars in corporate welfare for politically powerful providers, insurers, and consultants.”

Do yourself a favor and watch this video of the full hearing: “Medicaid: The Reality” . It is engaging and informative, but for pure entertainment value, check out the exchange between Senator John Kennedy and Brian Blase. Also of interest, testimony by Jonathan Ingram, Vice President of Policy and Research at the Foundation for Government Accountability, concerning Medicaid’s excessive improper payments. The third witness at the hearing, Mr. Andy Schneider, Research Professor of the Practice Center for Children and Families, McCourt School of Public Policy, Georgetown University, is a study in hapless defense of Medicaid’s dysfunctions in the face of hard, empirical evidence of their damage.

But you might ask: What does this have to do with long-term care? ObamaCare’s (ACA’s) expansion population generates 90% federal matching funds for state Medicaid programs when they cover able-bodied, working age adults. At seven times the match for poor women, children, the aged, blind and disabled (ABD), this distorted incentive moved Medicaid funding away from the program’s traditional, more vulnerable enrollees. For example, ABD recipients were a quarter of total enrollment in 2010 (when the ACA passed) and they consumed nearly 2/3 of all Medicaid expenditures. By 2025, ABD recipients were down to 1/5 of total enrollments and they accounted for only half of total expenditures. This ABD population consumes the majority of LTC benefits—including nursing facility care and home and community-based services (HCBS). LTC alone accounts for approximately one-third (30% to 33%) of all Medicaid spending, despite being used by only 6% of total Medicaid recipients who are mostly ABD. Prioritizing able-bodied, working age adults over Medicaid’s original target population of those most vulnerable and in need has changed the program’s focus from helping those with the greatest need into a non-tax federal money generator for states.

More on Long-Term Care

Congressional hearing testimony generally takes the form of brief verbal statements by witnesses who also submit much more detailed written testimony. Most interesting to us is that Brian Blase’s written testimony included the following content close to our hearts. By highlighting the problem of excessive use of Medicaid LTC by people who could, should and would have paid their own way and stayed off Medicaid, Blase pointed the way toward better policy to benefit both the poor and the more affluent.

The following is a quote from Brian Blase’s written testimony:

“MEDICAID’S DAMAGE TO RESPONSIBLE LONG-TERM CARE PLANNING

“A fundamental flaw in America’s long-term care system is that Medicaid has evolved from a safety net for the poor into an inheritance protection program for many households with substantial assets. Through generous asset exemptions, home equity exclusions, trusts, and estate-planning strategies, many individuals can qualify for taxpayer-financed long-term care while preserving significant wealth for their heirs. Rather than requiring families to use accumulated assets to finance their own care before relying on public assistance, current policy often allows Medicaid to pay first while inheritances remain largely intact. This is inequitable to taxpayers who save responsibly and distorts the program’s original purpose.

“These policies also create powerful disincentives for individuals to prepare for their own long-term care needs. When people expect Medicaid to cover nursing home costs or home-based care after modest planning or asset restructuring, they have less reason to purchase long-term care insurance, accumulate dedicated savings, or otherwise plan for a predictable risk associated with aging. The result is a classic moral hazard: private financing declines because public financing is readily available. As more people rely on Medicaid, the program consumes more taxpayer resources while providers become increasingly dependent on low Medicaid reimbursement rates, contributing to workforce shortages, limited access to high-quality care, and persistent financial pressures throughout the long-term care system.⁶⁸

“The irony is that these policies often harm the very people they are intended to help. By encouraging reliance on Medicaid rather than personal planning, they weaken the market for private long-term care financing and reduce the resources available to improve care quality for the most vulnerable. A system that requires individuals with sufficient means to finance more of their own long-term care before turning to Medicaid would better preserve the program for those with genuine financial need while encouraging greater personal responsibility and a stronger private market for long-term care services.

“III. Recommendations to Improve the Medicaid Program …

“Reform Medicaid long-term care

“Medicaid should not be used to preserve inheritances for wealthy heirs. Congress should ensure that people with sizeable assets are not able to use Medicaid to finance their long-term care expenses.

“These reforms will reduce waste, fraud and abuse and provide Medicaid a responsible fiscal trajectory to ensure we continue to have the ability to care for our most vulnerable.”

⁶⁸ Stephen Moses, "Long-Term Care: The Problem," Paragon Health Institute, October 2022, https://paragoninstitute.org/medicaid/long-term-care-problem/

LTC Comment: My role as a Visiting Fellow with the Paragon Health Institute has widened the reach of the Center for LTC Reform’s research and analysis through numerous reports and articles for Paragon.