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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.

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Updated, Thursday, May 12, 2011, 10:34 AM (Pacific)

Seattle--

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LITTLE HOOVER A BUST ON LONG-TERM CARE

LTC Comment:  Journalist K. Lloyd Billingsley of the Pacific Research Institute published the following piece in CalWatchdog yesterday.  It summarizes the legislative testimony we brought you unabridged in yesterday's LTC Bullet.  We thought you'd enjoy Lloyd's briefer, highly readable coverage.

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NEW: Little Hoover A Bust On Long-Term Care

MAY 11, 2011

By K. Lloyd Billingsley

California needs new bureaucracies and a "champion" to oversee long-term care under Medi-Cal, according to A Long-Term Strategy for Long-Term Care, a recent report from the Little Hoover Commission, a state watchdog agency. Those and other strategies won't work, according to Steve Moses, author of a different study.

"Reorganizing, creating new bureaucracies, or appointing a 'long-term care Czar' won't help," said Moses on Tuesday, in testimony to the Senate Human Services Committee.

Moses heads the Center for Long-Term Care Reform in Seattle and is the author of Medi-Cal Long-Term Care: Safety Net or Hammock? released this year by the Center and the Pacific Research Institute, CalWatchdog's parent think tank.

Moses testified that the Little Hoover Commission report left him "a little puzzled by what that report includes, and even more so by what it leaves out." The report, he said, "attributes California's catastrophic long-term care service delivery and financing problem to inadequate central planning."

The three major recommendations of A Long-Term Strategy for Long-Term Care are to create a new state department, pursue "visioning and strategy-building" to "create a seamless continuum" of care, and find a long-term care "champion."

Baby boomers will soon be retiring in huge numbers, and like current retirees many will be looking to Medi-Cal for long-term care. But according to Moses, "Medi-Cal is finished as the dominant payer of long-term care in California."

Medi-Cal, he testified, is a public-assistance program, and not suitable as the dominant payer for long-term care. The cost of Medi-Cal is "bankrupting the state" by allowing the wealthy and middle class to exploit a program intended for the poor.

"California has a plague of so-called Medi-Cal planners, attorneys and other financial advisors who artificially impoverish clients to qualify them for Medi-Cal benefits using techniques such as trusts, transfers, 'Medi-Cal friendly' annuities and 'life care' contracts.

Moses added that "by making long-term care basically a free publicly provided good, the state of California has anesthetized consumers to the risk and cost of long-term care.  People don't worry about LTC until they need it.  Then it's too late to save, invest or insure."

Some Californians still prefer to pay their own way, Moses testified, because "Medi-Cal has such a poor reputation for problems of access, quality, reimbursement, discrimination, institutional bias and loss of independence, that some people are willing to pay privately for quality home care."

Public officials can recognize those realities and preserve a "much smaller safety net program," Moses said. "Or you can ignore the problem, watch the system fall apart, and end up with the same attenuated public system by default."

His recommended reforms included establishing "the principle that long-term care is a personal responsibility, not a social right." He wants to "identify and eliminate policies that encourage public dependency." California should "get out of the way of private markets. Encourage private-sector sources of financing such as greater asset spend-down, estate recovery, home equity conversion, and private long-term care insurance."

Moses warned the California senators about continuing the current course under Medi-Cal.

"If you keep doing what you've always done, even if you do it marginally better, you'll keep getting the same result," he testified. "Expecting otherwise is Einstein's definition of insanity."

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Updated, Wednesday, May 11, 2011, 11:55 AM (Pacific)

Seattle--

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LTC BULLET:  DOES CALIFORNIA NEED A LONG-TERM CARE "CZAR"?

LTC Comment:  What California's "Little Hoover Commission's" LTC report left out is far more important than what it included as you'll see from my state legislative testimony after the ***news.***

*** 2011 CARE COSTS:  "Although long-term care costs in nursing homes and assisted living facilities continued to rise last year, in-home care costs did not increase at all, and have risen very little in the past six years, according to the 2011 Cost of Care Survey sponsored by Genworth Financial, a provider of long-term care insurance."  (US News, 5/10/11)  Cost of care map here; key findings here; full report here; "Beyond Dollars" report here. ***

*** TOP TEN LTCI PRODUCERS named by AALTCI:  "The nation's top long-term care insurance agents and brokers in each state were recognized today for their commitment and results during the prior year."  (PRLog, 5/9/11)  Check 'em out here. ***

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LTC BULLET:  DOES CALIFORNIA NEED A LONG-TERM CARE "CZAR"?

LTC Comment:  From March to November 2010, California's "Little Hoover Commission" studied the Golden State's long-term care system.  In April 2011, the Commission published a report titled "A Long-Term Strategy for Long-Term Care."

That report calls on the state to streamline and consolidate its LTC organizational structure, to create a "seamless continuum of long-term care services," and to find a "champion" ("LTC Czar?")  to promote those goals.

In my testimony yesterday before the California Senate's Human Services Committee, I criticized the Little Hoover Commission's report for what it includes (mostly bureaucratic reorganization) and what it leaves out (anything having to do with the causes of or solutions for California's LTC service and financing problems).

I pointed out that no amount of streamlining, consolidating and championing state LTC programs and activities will save them from financial collapse without finding ways to attract more private financing for long-term care to relieve the fiscal burden on the state.

Unfortunately, the Little Hoover Commission's report contains no analysis or recommendations about how and why (1) Medi-Cal LTC is bankrupting the state, (2) few Californians pay for their own LTC and most rely on Medi-Cal, (3) LTC insurance market penetration is only 5.4 percent; (4) hardly anyone in California uses home equity conversion to pay for LTC; (5) the California LTC Partnership Program is dying for lack of attention; and a whole range of additional issues that bear directly on California's disastrous long-term care service and financing problems.

As one of our Center supporters put it:  "I read the first 50 pages of the Hoover Report - no mention of people spending money out of their own pockets for LTC.  No mention of LTC insurance.  It's a recommendation to set up a new Government Agency to coordinate the efforts of other State agencies currently administering state-tax-funded programs for LTC.  It's basically someone in the State trying to set up their own little kingdom, ignoring how LTC is actually funded and assuming the bankrupt State of California is going to come up with more dollars to fund the Baby Boomers' LTC.  Just arranging the deck chairs on the Titanic.  Steve could provide a wake up call."

And so I did.  I testified that I had good news for the Committee and the Commission.  All the needful questions have been asked and answered in another report, titled "Medi-Cal Long-Term Care:  Safety Net or Hammock?" published by the Pacific Research Institute and by the Center for Long-Term Care Reform in January of this year.  Our report provides a step-by-step approach to save Medi-Cal billions of dollars while improving access to and quality of long-term care for all Californians.

In a nutshell, California doesn't need a long-term care "champion" or "Czar."  It needs some good, common-sense analysis of its LTC problem and a few simple measures to target scarce public resources to the neediest while encouraging everyone else to plan responsibly for long-term care.

Special thanks are due to the Center for LTC Reform supporters who made supplemental contributions that enabled me to travel to Sacramento and provide this legislative testimony:  Prudential Financial, Joe Sturla, Jack Schmitz, Carol Gardner, Steve Forman, Gary Charlon, Sally Leimbach, Bob Callanan, Terry Wood, Michael Bellmont, Susan Geffen, Bill Dorffi, Annemiek Storm, Gene Tapper, Alan Jonas, Julie Garron, Charles C. Arnold.

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Following is Steve Moses's testimony before an Informational Hearing of the California Senate Human Services Committee as presented on Tuesday, May 9, 2011 at the Capitol in Sacramento, California.

Madame Chair and Members of the Committee,

Thank you for inviting me to comment on the Little Hoover Commission's report titled "A Long-Term Strategy for Long-Term Care."

I confess I'm a little puzzled by what that report includes AND even more so by what it leaves out.

The report attributes California's catastrophic long-term care service delivery and financing problem to inadequate central planning.

Its three major recommendations are to (1) create a new state department, (2) pursue "visioning and strategy-building" to "create a seamless continuum" of care and (3) find a long-term care "champion."

The report seems to be saying--just keep doing what you're doing but do it more efficiently!

I'm not sure that will help very much.

Today, I'd like you to consider some of the absolutely critical questions that the Little Hoover Commission report ignores altogether.  For example:

• Why does most of the cost of long-term care fall on state and federal programs in the first place?
• Why is a public assistance program, Medi-Cal, the dominant payer for LTC?
• Why do so few Californians pay for their own LTC?
• Why do you have to "rebalance" away from nursing home care toward home care when no one wants to go to a nursing home?
• Why is the cost of Medi-Cal long-term care bankrupting the state?
• Why is access to and quality of care so problematical?
• How can California possibly support such a system as you have now when the Age Wave crests and crashes?

The Little Hoover Commission study purports to tell you how to fix long-term care in California without even mentioning, much less answering, these key issues.

But, I have some good news for you today.  All these questions have been addressed and answered in another report, titled "Medi-Cal Long-Term Care:  Safety Net or Hammock?"

It was published by the Pacific Research Institute and by my own Center for Long-Term Care Reform.  It provides step-by-step measures you can take to improve LTC services and financing in California while radically reducing Medi-Cal expenditures.

Here's how our report addresses the key questions that the Little Hoover Commission ignored:

• Why does most of the cost of long-term care fall on state and federal programs in the first place?

In 1965, the federal government made long-term care provided in a nursing home virtually free of charge by creating the Medicaid program.

In the beginning, Medicaid had no transfer of assets restrictions or estate recovery requirements.  Virtually anyone could qualify easily and, in time, practically everyone did.

Over the years, private-pay residents nearly disappeared and Medi-Cal became by far the biggest funder of long-term care.

• Why is a public assistance program, Medi-Cal, the dominant payer for LTC?

Most people think Medi-Cal requires catastrophic spend down into total impoverishment before people become eligible for it. 

But if that were true, Medi-Cal would be a relatively minor funder of LTC.  The truth is very different and much more complicated.

Income almost never disqualifies someone from Medi-Cal LTC eligibility.  In California, if your total medical expenses, including the cost of private nursing home care, reduce your residual income to poverty level, you're eligible.

You don't have to be low income.  You only need to have a "cash flow" problem after you pay all your medical and LTC bills.

But what about assets?  Isn't true you can only retain $2,000?

Yes, but no one cares how you spend your wealth to get down to that level?  Take a world cruise; throw a party of Ziegfield follies proportion.  As long as you get value and you don't just give away your wealth, it doesn't count.

You do not have to spend down for long-term care!  You can retain virtually unlimited exempt assets, such as

• Home equity up to ¾ of a million dollars (only $37,000 in England)
• A business including the capital and cash flow of unlimited value, including even a multi-unit apartment house if you claim one of the units as the home you intend to return to.
• One auto of unlimited value, which because it's exempt, you can give away, buy another and so on until you reach the $2,000 cash limit:  The "Two Mercedes Rule"
• Prepaid burial funds of unlimited value for the Medi-Cal recipient and all his or her immediate family members.  Upwards of 85% of all recipients have done so.
• Unlimited term life insurance
• Unlimited household goods and personal belongings, including "heirlooms"
• IRA assets as long as you're receiving periodic interest and principal payments

The rules for married couples are even more generous, allowing community spouses to retain $2,739 per month of income and $109,500 in assets in addition to all the other exemptions.  California is far more generous in this regard than most states.

On top of all this, California has a plague of so-called Medi-Cal planners, attorneys and other financial advisors who artificially impoverish clients to qualify them for Medi-Cal benefits using techniques such as trusts, transfers, "Medi-Cal friendly" annuities, and "life care contracts."

Medi-Cal planners target adult children of frail and infirm elderly offering early inheritances to the heirs and free long-term care to their parents, assuring access to the best Medi-Cal has to offer by holding back "key money" to pay privately long enough to buy their way into the nicest facilities that still have some Medi-Cal beds.

• Why do so few Californians pay for their own LTC?

Simple.  Ever since Medi-Cal began in the late 1960s, Californians have been able to ignore the risk and cost of long-term care, avoid paying premiums for private insurance, wait to see if they ever need expensive care and, if they do, divert the cost to Medi-Cal while preserving inheritances for their heirs.

The more apt question is:  Why do any Californians pay for their own long-term care? 

The answer is that Medi-Cal has such a poor reputation for problems of access, quality, reimbursement, discrimination, institutional bias and loss of independence, that some people are willing to pay privately for quality home care or assisted living even though they could get care for free from the state.

• Why do you have to "rebalance" away from nursing home care toward home care when no one wants to go to a nursing home?

California has made a huge investment in the altogether noble effort to provide more of the LTC services people prefer (home and community-based) and less of the care they'd rather avoid--nursing homes.

You should ask: why do you have a nursing home bias in the first place?  The answer is that Medi-Cal made nursing home care virtually free and thus crowded out a private market for home and community based services.

Will home care services save money?  All the research says they won't.  HCBS delay but do not replace institutional care.  People live longer and end up in nursing homes anyway, costing more across their lifetimes and across the whole caseload.

Furthermore, when Medi-Cal provides services people want like home care, more people want them.  Both caseload and costs increase.

• Why is the cost of Medi-Cal long-term care bankrupting the state?

By making long-term care basically a free publicly provided good, the state of California, has anesthetized consumers to the risk and cost of long-term care.  People don't worry about LTC until they need it.  Then it's too late to save, invest or insure. 

Medi-Cal LTC's income and asset limits are so generous that most middle class people qualify easily after they already need LTC and even affluent people can qualify quickly and inexpensively with the help of Medi-Cal planners.

While the federal government requires states to recover benefits paid from the estates of deceased Medi-Cal recipients, California does not maximize this potential source of non-tax revenue; most Californians are not aware of the liability; and Medi-Cal planners routinely advise their clients how to evade estate recovery rules.

Medi-Cal's home equity exemption of $750,000 is nearly double the median home value in the state of $343,000.  No wonder Californians don't use home equity conversion, through formal or informal reverse mortgages, to fund their own LTC.

With the high cost of LTC easy to avoid after the insurable event occurs, most Californians don't even consider the option of purchasing private long-term care insurance.  The state has no tax incentives for the purchase of that kind of insurance and has dropped the ball on the LTC Partnership Program which could help much more.

• Why is access to and quality of care so problematical?

By turning over most long-term care financing to a virtually bankrupt welfare program, California has denied LTC providers--including nursing homes, assisted living facilities, and home care agencies--adequate funding to ensure access to quality long-term care.

• How can California possibly support such a system as you have now when the Age Wave crests and crashes?

In a nutshell, it can't.  Medi-Cal is finished as the dominant payer of long-term care in California.  Public officials can recognize that fact, adapt, and preserve a much smaller safety net program.  Or you can ignore the problem, watch the system fall apart, and end up with the same attenuated public system by default.

So, what should you do?  Our report lays out a plan with both general and specific recommendations.

In general:

• Clearly establish the principle that long-term care is a personal responsibility, not a social right.
• Conduct a comprehensive review of the current LTC service delivery and financing system to identify and eliminate policies that encourage public dependency.
• Incentivize the middle class and affluent to plan early and save, invest, or insure for LTC.
• Reduce the number of expensive Medi-Cal/Medicare "dual eligibles" in the future by diverting more Californians to private LTC financing alternatives while they are still young enough, healthy enough, and affluent enough to save, invest or insure for LTC.
• Stop expecting "rebalancing" to save money and start providing more home- and community-based services, but to fewer, needier recipients.
• Get out of the way of private markets. Encourage private-sector sources of financing such as greater asset spend-down, estate recovery, home equity conversion, and private long-term care insurance.
• Pay LTC providers adequately to ensure access to quality care at the most appropriate level for a much smaller caseload.
• Forget the chimera of the CLASS Act and insist on actuarially solvent private LTC insurance solidly grounded in well-established insurance principles.

For specific proposals on how to achieve those general recommendations efficiently and cost-effectively, please refer to our report.

In conclusion . . .

California's long-term care financing problem is not a lack of central planning.  Reorganizing, creating new bureaucracies, or appointing a "long-term care Czar" won't help.

Medi-Cal does too much for too many too poorly.  You need to do more for fewer people who really need it, but better.

If you keep doing what you've always done, even if you do it marginally better, you'll keep getting the same result. 

Expecting otherwise is Einstein's definition of insanity.

Thank you.

Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com) in Seattle, Washington.  Reach him at smoses@centerltc.com or 206-283-7036.

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Updated, Friday, May 6, 2011, 11:59 AM (Pacific)

Seattle--

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CALIFORNIA BOUND AND LATEST NEWS

LTC Comment:  Thanks to generous supplemental contributions from Center for Long-Term Care Reform supporters, Steve Moses will testify Tuesday, May 10, before the California Senate Human Services Committee in Sacramento.  We'll fill you in fully next week.

Special thanks to the following donors for making this trip and testimony possible:

Prudential Financial, Joe Sturla, Jack Schmitz, Carol Gardner, Steve Forman, Gary Charlon, Sally Leimbach, Bob Callanan, Terry Wood, Michael Bellmont, Susan Geffen, Bill Dorffi, Annemiek Storm, Gene Tapper, Alan Jonas, Julie Garron, Charles C. Arnold

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Listen here to radio interviews with "LTC Queen" Honey Leveen and Bill Dyess of Gelbwaks Executive Marketing Group on "Coping with Caregiving" with host Jacqueline Marcell, author of Elder Rage: Or, Take My Father . . . Please!

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Do you belong to AALTCI, but you've never before joined the Center for Long-Term Care Reform?  Have we got a deal for you?!  Try out a CLTCR membership for half price:  $75 for the first year.  Check out our "Membership Levels and Benefits" schedule here.  You'll get the equivalent of the Basic Individual Membership that usually costs $150 per year.  Receive all Center publications by email; get access to The Zone; contact Steve Moses by phone or email for questions or advice.  Interested?  Contact Damon at 206-283-7036 or damon@centerltc.com.  This special offer was also published in LTCI Sales Strategies newsletter's May 2011 issue.

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5/4/11, "Long-term care insurance can reduce Medicaid costs: Provide incentives to buy long-term care insurance," Democrat and Chronicle editorial (link)

Quote:  "Recent findings that New York spends more federal aid on social programs than any other state weren't exactly a shocker.  New York, after all, has long been more generous than most to the needy. But a close look at the spending shows that the needy aren't the sole beneficiaries."

LTC Comment:  Now, where have we heard that before?  The Rochester Democrat and Chronicle read our New York report, "Long-Term Care Financing in New York:  The Consequences of Denial," and took heed.  Bravo!

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5/4/11, "New York Life Now Holds the 4th Largest Marketshare for Long-Term Care Insurance Sales," InsuranceNet.com (link)

Quote:  "New York Life Insurance Company announced today that it is the fourth largest seller of new individual long-term care insurance premium, advancing from the #6 position in 2009, according to an industry source. Sales of the product increased 12% in 2010 . . .."

LTC Comment:  Congratulations to New York Life, a company we're proud to have as a corporate member of the Center for Long-Term Care Reform.

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5/3/11, "Americans 45 and older are new voting-age majority," Associated Press

Quote:  "For the first time, Americans 45 and older make up a majority of the voting-age population, giving older Americans wider influence in elections as the U.S. stands divided over curtailing Medicare and other benefits for seniors. . . . As a whole, the numbers point to a rapidly graying nation driven largely by the nation's 78 million baby boomers, who are now between the ages of 46 and 65 and looking ahead to retirement."

LTC Comment:  Danger or opportunity?

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5/2/11, "Rule Would Discourage States' Cutting Medicaid Payments to Providers," Robert Pear, New York Times

Quote:  "In a new effort to increase access to health care for poor people, the Obama administration is proposing a rule that would make it much more difficult for states to cut Medicaid payments to doctors and hospitals."

LTC Comment:  First the feds tie states in regulatory knots so they cannot run Medicaid cost-effectively, then they prohibit states from cutting costs by controlling eligibility, coverage or payments.  As this race to the bottom continues, LTC insurance will become more and more obviously the only LTC solution for middle and upper income people.

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5/2/11, "Medicare's math problem: Taxes - Benefits = Trouble," NPR

Quote:  "According to Eugene Steuerle, a former Treasury Department official and senior fellow at Washington's Urban Institute, Medicare in its current form is unsustainable because '[a]n average couple retiring today has paid just a little over $100,000 in Medicare taxes' yet receives '[a]bout $300,000 in benefits.' With Americans having fewer children, and fewer working adults paying into the system, Medicare is only taking in about one third of the money it pays out."  Source:  AHCA / NCAL Gazette - Monday, May 2, 2011

LTC Comment:  Current Medicare program just doesn't add up, which adds up to trouble for seniors and government coffers.

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5/2/11, "LTC plan suggested as retirement-savings hedge," Bruce Shutan

Quote:  "Retirement plan participants who don't own a long-term care insurance policy and instead choose to self-insure for any LTCI needs in the future run the risk of seeing their life savings decimated by major medical expenses, cautions Jonas Roeser, senior vice president of marketing and operations for LTC Financial Partners LLC."

LTC Comment:  LTCI expenses can turn 401-Ks into 201-Ks fast.

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4/30/11, "The Changes to Save a Big Idea," Ron Lieber, New York Times

Quote:  "And if you are an adult child of aging parents, it's probably time to have that furtive meeting with siblings to level with one another about what you are really capable of taking on.  You may well decide to buy some old-fashioned long-term care coverage from an insurance company now, while keeping one eye out for Class Act developments. Just remember what a wild card the act is, though."

LTC Comment:  Even the New York Times admits CLASS is seriously flawed.

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4/29/11, "Rising Obesity Rates Add to Arthritis Woes in U.S.," Robert Preidt, HealthDay

Quote:  "Rising rates of obesity among the 50 million Americans with arthritis are cause for concern because excess weight is associated with increased problems for arthritis patients, a new study says."

LTC Comment:  Ominous news for future LTCI claims.

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4/19/11, "Senators Call on Sebelius to Provide Key CLASS Act Documents," 

Quote:  "Senator John Thune today sent a letter to Secretary Kathleen Sebelius calling on the U.S. Department of Health and Human Services (HHS) to provide key documents regarding the Community Living Assistance Services and Supports (CLASS) Act that were drafted prior to the passage of the new health care law. Secretary Sebelius agreed to provide any premium, participation, or actuarial models to Congressional leaders at a Senate Finance Committee hearing on March 16, 2011, but has yet to provide such documents."

LTC Comment:  No CLASS answers suggests there's no workable CLASS fix.

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Updated, Wednesday, May 4, 2011, 11:18 AM (Pacific)

Seattle--

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California Senate Testimony Appeal

LTC Comment:  Yesterday, we invited all the Center's California friends to help send Steve Moses to Sacramento to testify before the Golden State's Senate Human Services Committee.  Details follow.  Today, we're throwing the net wider to invite anyone and everyone to support this effort.

California is a bellwether for the country in so many areas.  The state is drowning in red ink, much of which comes from an over-extended Medi-Cal long-term care system that crowds out responsible LTC planning.  The "Little Hoover Commission" report's recommendations would sink California and the federal government even deeper in debt.

To support our special initiative and send Steve with the Center's message to testify in California, simply hit reply and let us know the amount of your pledge.  If we make the goal of $1,000, we'll be back in touch.  We'll also publish Steve's testimony and the feedback from California legislators in a future LTC Bullet.

The people who invited Steve to testify have also offered to set up additional one-on-one meetings with key legislators and staff to maximize the benefit of this trip.  Opportunities like this are how we got the ball rolling that led to the Deficit Reduction Act of 2005's critical LTC reforms.  You supported that work.  Please help us with this now.

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Updated, Tuesday, May 3, 2011, 11:30 AM (Pacific)

Seattle--

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LTC BULLET:  SURVIVAL GUIDE FOR ALZHEIMER'S CAREGIVERS

LTC Comment:  There's no such thing as "Caregiving Made Easy," but Nataly Rubinstein's book is about as close as you're going to get.  Details after the ***news.***

*** AALTCI's TOP LTCI PRODUCERS:  "The nation's top long-term care insurance producers for 2010 were announced today [5/2/11] by the American Association for Long-Term Care Insurance. The Ninth Annual Long-Term Care Sales Achievement Awards recognize producers based on sales across multiple categories."  Find winners names here. ***

*** MOSES ON FEARLESS CAREGIVING.  Nation's Leading Long-Term Care Insurance Expert To Speak At Fearless Caregiver Conference May 19:  "Today's Caregiver magazine and FearlessCaregiver.com, the nation's foremost print magazine and Web community for family and professional caregivers since 1995, announced today that Stephen Moses, President of the Center for Long-Term Care Reform, recognized as "one of the 100 most influential people in long-term care" by McKnight's Long Term News, will join the list of speakers and presenters who will speak with family and professional caregivers at the May 19th Fearless Caregiver Conference" in Minneapolis. *** 

*** MOSES ON LTC FINANCING.  "Long term care planning is about having the right mindset rather than hitting a specific age, according to panelists participating in a recent webcast sponsored by Lincoln Financial Group. . . .  Social programs like Medicare and Medicaid have traditionally provided resources for paying for LTC, but according to Steve Moses, president of The Center for Long-Term Care Reform, it's not going to be reliable in the future.  . . . Moses says there's a 20 percent chance people over age 65 will need long-term care for five years or more. 'You can't buy fire insurance when your house is in flames,' he remarked. 'Likewise, you can't buy long-term care insurance when you already have Alzheimer's Disease. Savvy consumers need to look at long-term care through the windshield, not through the rear view mirror to understand the future risks and plan accordingly.'" 

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LTC BULLET:  SURVIVAL GUIDE FOR ALZHEIMER'S CAREGIVERS

LTC Comment:  I met author Nataly Rubinstein after delivering a speech in Miami at an event organized by Center supporter and LTCI producer George Braddock.  Nataly told me about a book she'd written on Alzheimer's caregiving.  I asked for a copy to review.  When it arrived in the mail, I began browsing through it and was impressed.

To provide long-term care for a loved one without adequate financial resources makes a difficult challenge even harder to bear.  Hence, people need long-term care insurance.  But even with LTCI and adequate financial resources, most families want to do what they can to provide additional, loving, personal care as well.  Hence, all caregivers need a book like Ms. Rubinstein's.

I encourage you to read the following review and consider purchasing the book.  What follows is mostly promotional copy, but it's accurate based on my reading of the book, with this proviso.  The section on Medicaid states:  "With the help of a good financial planner and elder care attorney, you will be able to keep the assets that the person with dementia who has worked hard and long for and still qualify for Medicaid."  I explained my position to the author that diverting Medicaid's scarce and dwindling resources from the needy to those who can afford to pay their own way only ruins the safety net for those who can't help themselves, hastens the program's full collapse which is already well underway, and undercuts the incentive people might otherwise have to plan responsibly for LTC risk and cost.

Be sure to read Nataly Rubinstein's comments in the section below titled "About Long-Term Care." There, she strongly encourages the purchase of private long-term care insurance and discourages LTC planning through Medicaid. 

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Nataly Rubinstein, Alzheimer's Disease and Other Dementias--The Caregiver's Complete Survival Guide, Two Harbors, Minneapolis, Minnesota, 2011.

A Diagnosis of HOPE...

A diagnosis of Alzheimer's disease or dementia often brings with it a tremendous sense of despair. Being a caregiver for a person with dementia is challenging work that can be physically, emotionally and financially draining. In fact, research has shown that providers of long-term care are at a greater risk of premature death than other members of the general public. They also experience higher incidences of depression, anxiety, stress and hopelessness, especially in rural communities.

Help is available, however, if you know where to look. Nataly Rubinstein's book, Alzheimer's Disease and Other Dementias-The Caregiver's Complete Survival Guide was written as a lifeline to caregivers nationwide whose hearts and hands are engaged in selfless caregiving service. With the personal insight and professional expertise gained through decades of involvement in dementia care, Rubinstein helps readers meet the challenges they will face as caregivers, offering useful tools and strategies to successfully guide them through the dementia maze. 

"Alzheimer's disease, or any form dementia, affects the whole family," explains Rubinstein. "And caregivers are not born; they are made. With proper understanding of this disorder and supportive guidance, caring for a person with dementia does not have to become a 36-hour day."

Since there is no cure for Alzheimer's disease in sight and no definitive timeline of care--people are living with dementia for over 20 years--learning how to navigate the disorder is important for both a person afflicted with dementia and for his/her caregivers. As Rubinstein notes, nearly half of all caregivers report they have lost a job, had to change work shifts or missed out on opportunities for professional advancement as a result of their caretaking responsibilities. Tremendous personal sacrifices are required of them as well.

Rubinstein wrote this book to provide caregivers with the resources they need to navigate the challenges they will encounter. "My goal is to give caregivers all of the tools they will need to empower them," she says. "I want to help them provide optimal care for their loved ones, as well as for themselves, developing increased resilience and lasting peace of mind." 

What Makes This Book Unique?

FACT:  Every 70 seconds, someone in the U.S. is diagnosed with Alzheimer's disease (more than 1,200 new diagnoses each day).

FACT:  Approximately 80% of people afflicted with Alzheimer's disease and other dementias are cared for in their homes.

FACT:  There are nearly 11 million unpaid family members, friends, neighbors, and associates who have assumed the responsibility of caring for these individuals.

Author Nataly Rubinstein, a certified geriatric care specialist and licensed clinical social worker, has both personal and professional experience in caring for people with dementia.

When her mother was diagnosed with dementia in 1994, Rubinstein chose to shoulder the responsibility for her care, a service she continued to perform for 16 years until her mother passed away.

As a professional Alzheimer's Coach and Dementia Strategist, she provides her clients, their families and others with the in-home solutions, educational programs and specialized support services they need to successfully cope with the rigors and challenges of caregiving.

Alzheimer's Disease and Other Dementias-The Caregiver's Complete Survival Guide delves into understanding dementia, how to get an accurate diagnosis, the truth about medications, communicating with someone who has dementia, behavior management, options for respite care and much more-including invaluable information on maintaining your own sanity and sense of humor while providing care for another.

The extensive resource listings included in the book address everything from finding and negotiating with government agencies and insurance companies to recommending tools for assistance-like devices to locate missing objects, referrals to third party services and more.

For 16 years, Rubinstein served as her mother's primary caretaker, while at the same time juggling the needs of her own young family. Feeling hopeless and helpless at times, she nonetheless worked diligently to provide compassionate, comprehensive care. Having been there herself, Rubinstein is now reaching out to others with a comprehensive how-to guide, Alzheimer's Disease and Other Dementias: The Caregiver's Complete Survival Guide. Filled with professional expertise, personal insight and invaluable advice, the book is being hailed as a one-stop resource for caregivers, both in urban and rural communities.  "Many caregivers are thrust into this role, and they have no idea of what they've gotten themselves into," says the author. "They soon find themselves stretched to the breaking point emotionally, physically and financially, and they don't always have access to the information and services they need. I wanted to provide them with solutions they could implement at home so they wouldn't feel so isolated and alone. Help is out there, and you don't have to spend endless hours on the Internet. You just need to know where to look."

Every 70 seconds, someone in the U.S. is diagnosed with Alzheimer's disease, and nearly 11 million unpaid family members and friends are doing their best to care for them. Written with a perfect balance of personal experience and professional expertise, Rubinstein's book provides these dedicated caregivers with suggestions on how to successfully manage difficult behaviors, communicate effectively with a person with dementia, hire home health aides, keep loved ones active, manage medications, deal with insurance companies, address legal matters and maintain a balanced perspective through it all. "Being a caregiver often presents pitfalls to one's personal and professional life," says Rubinstein, "but I believe with the information in this book, caregivers can find a path to achieve the balance their lives deserve."

About Long-Term Care--

Author Rubinstein says:  For the past several years I have been a huge promoter of LTC insurance. Through my years as a clinician as a caregiver I am very aware of the financial toll that dementia can have. I lived through it first hand while caring for my mother- who had one of the original policies that was not sufficient to cover the her care. The out of pocket cost for her care was over $750,000.00--sad to say that is money that we would have now had if there was a better policy at that time available. In the book I advise that BEFORE the family races to a diagnosis that they should speak with a LTC representative. In my groups and book I clearly explain the costs of dementia vs the cost of a LTC policy. It's not about jumping the gun to get a policy in place--it's about good long term care planning. I have had my policy in place for several years--not because of dementia but for any event that could happen in my life.  I recently purchased LTC plans for both of my children (ages 19 and 25) in the event that something occurs to them I now have peace of mind that they will be well cared for. The importance of a LTC plan for financial planning is something that I stress daily with caregivers. It's too late for their loved ones but it's not too late for them.

Like you, I too do not believe that Medicare and Medicaid should be used as a LTC plan. Too many of the people I speak with are misinformed about this government plan and in the book I speak directly to those individuals. The services are limited and stressed to the max--the care that they will receive especially in the less severe stages when it is needed the most is meager at best. In South Florida it is over used by many who have learned to beat the system--but that also has a price. Medicaid may pay for a trip to the day center but not in home care and certainly not for round the clock care. It was my hope that when they speak with a financial planner he will fully explain the pitfalls of using this program as a LTC plan.

Alzheimer's Disease and Other Dementias: The Caregivers Complete Survival Guide will give caregivers and financial planners the realistic tools that they will need to successfully deal with dementia--the emotional, physical and financial costs that arise from this disorder. It is a practical and timely guide in light of the new changes in diagnosing MCI and mild dementia. There is a large and growing population of individuals who are being diagnosed at much younger ages. The old rule of waiting to age 60 or beyond to purchase LTC no longer applies. Those reading this book will be armed with the information that they need to get through this disorder no matter where they live. This book is a tool that all LTC planners need to read in order to increase not only their knowledge, but to help inform families and over come objections to the cost of LTC and financial planning. The book is clear, concise and to the point about what to do and where to go in the light of this national crisis. Lawmakers need to understand what families will encounter and what services need to be addressed.

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Updated, Friday, April 29, 2011, 10:54 AM (Pacific)

Seattle--

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LTC NEWS AND COMMENT

LTC Comment:  Topping our news this week is an update from the Pacific Research Institute in California about the media impact of our recent report titled Medi-Cal Long Term Care: Safety Net or Hammock?: 

"The total audience for the study to date has been over 11.5 million based on publication circulation -- the largest exposure coming from Topix.com, a news aggregator site. With a total study cost of $35,000, this translates to a cost of approximately .3 cents based on the circulation of these publications—an impressive return on investment."

Not bad, huh?  The Center for Long-Term Care Reform seeks sponsors for our next round of LTC financing studies.  If you'd like to support our work and get results like these, contact Steve Moses at 206-283-7036 or smoses@centerltc.com.

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4/20/11, "John Hancock Announces Results of 2011 National Long-Term Care (LTC) Cost Study" (Link)

Quote:  "The study, conducted by LifePlans Inc., based in Waltham, MA, surveyed more than 11,000 providers, including nursing homes, assisted living facilities, and home health care agencies, in key cities across the country.  Its findings revealed that the national average annual cost of care in the U.S. is $85,775 for a private room in a nursing home; $75,555 for a semi-private room in a nursing home; and $39,240 for an assisted living facility. The average cost of care received at home was approximately $20 per hour."

LTC Comment:  Get the "key findings brochure" here.  Find the "map" to state-specific findings here.  As always, Center members can locate links to all long-term care cost survey reports, including this latest one from John Hancock in The Zone here.  If you need a reminder of your user name and password or if you want to join the Center and receive your UN & PW, contact Damon at 206-283-7036 or damon@centerltc.com.

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4/29/11, "Administration proposes possible steep cuts for nursing home Medicare reimbursement, providers warn of 'dramatic impact,'" McKnight's LTC News (Link)

Quote:  "The Centers for Medicare & Medicaid Services late Thursday announced a rule that could cut certain Medicare reimbursements to skilled nursing facility operators by as much as 11.3% in fiscal 2012. Provider lobbyists immediately issued a statement warning such a move would create 'dramatic impact on the lives of nursing home residents and patients.'"

LTC Comment:  Generous Medicare reimbursements help nursing homes compensate for lower-than-cost Medicaid reimbursements.  Major cuts in Medicare mean even more strain on quality of care for Medicaid recipients and greater need for private financing alternatives such as LTCI.  For more on this story, see The Hill and the CMS announcement.  For a glimpse of what's likely to happen more often in the future, see "Judge orders four nursing homes closed," by Arielle Levin Becker, Connecticut Mirror, April 28, 2011.  Quote:  "Matthew V. Barrett, executive vice president of the Connecticut Association of Health Care Facilities, said the four homes had higher labor costs than nonunion homes and, like all nursing homes, struggled with Medicaid rates that he said pay $21 a day below the cost of care. The four homes predominantly cared for patients covered by Medicaid." [Emphasis added.]

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4/27/11, "How to Use Public Benefits to Help Pay for Home Healthcare," by Joseph L. Matthews, Caring.com

Quote:  "If your loved one is enrolled in Medicare (including a Medicare Advantage plan) or Medicaid, or in the VA healthcare system, one or all of them will pay the full cost -- meaning there are no co-payments -- of home healthcare as long as certain conditions are met."

LTC Comment:  Just what we needed:  another article on how to get the government to pay for your long-term care whether you need it or not.  See how a sense of denial and entitlement seeps into the public's consciousness over time?

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4/27/11, "Hiss, boom, bah: Why advisers resist teams," by Helen Kearney, Reuters

Quote:  "Whether they're lone wolves or not, advisers are being forced to admit that teams make it easier to handle the growing needs of baby-boomer clients for advice on long-term care insurance, estate planning and other areas, said Bob Mulholland, head of the Americas adviser force at UBS." [Emphasis added]

LTC Comment:  Every aging American should have a phalanx of financial advisers, including a long-term care specialist, to protect their retirement security.  But financial planners, CPAs, and attorneys often resist the need for such teams.  That may be changing according to this article.

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4/25/11, "Lawsuits don't lead to better nursing home care," by Paula Span, New York Times.

Quote:  "David Stevenson, a health policy analyst at Harvard Medical School authored an analysis, after a review of information on almost 1,500 legal claims. 'For the worst facilities, their litigation risk was about 47 percent in a particular year,' said Stevenson. 'In the best, it was about 40 percent. It seems a fairly modest difference between the very best and the very worst facilities,' Dr. Stevenson concluded. Though Stevenson says he does not have solid answers as to what measures can be taken to prompt quality improvements in skilled nursing facilities, he theorizes that paying a facility based on how well it performs might encourage quality improvements."  Summary by AHCA /NCAL Gazette - Tuesday, April 26, 2011.

LTC Comment:  In Florida, lawyers advertise on billboards for clients with nursing home complaints to sue on contingency.  A few years ago, I did a lot of expert witness work in nursing facility liability cases.  Nearly every case I read contained virtually identical boilerplate complaints.  I concluded the practice of suing nursing homes was largely a scam to divert inadequate, desperately needed Medicaid reimbursements away from care giving and into the pockets of abusing attorneys and their greedy adult-child clients.  In fact, the plaintiffs were often the same people who had earlier retained the same attorneys to qualify their ailing parents for Medicaid LTC in the first place.  They worked Medicaid from the front end as well as from the back.

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4/26/11, "Americans depend more on federal aid than ever," by Dennis Cauchon, USA TODAY

Quote:  "A record 18.3% of the nation's total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income - 51.0% - since the government began keeping track in 1929."

LTC Comment:  Still wonder why the public's asleep about long-term care risk and cost?  The safety net really has become a hammock for many.

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4/26/11,  "Medicare Won't Cover All Drug Costs," by Glenn Ruffenach, SmartMoney

Quote:  "A couple retiring today with median drug expenses, according to the institute, would need $158,000 for a 50 percent chance of having enough money to cover health expenses in later life. But the same couple at the highest level of drug spending (90th percentile) would need $231,000."

LTC Comment:  The author of this piece, an editor for the Wall Street Journal, attended the 11^th Annual Intercompany Long-Term Care Insurance Conference in Atlanta in March.  Maybe the dire news about entitlement programs is starting to wake the media up.

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4/22/11, "Majority of Seniors Fear Public Policy Will Derail their Retirement Plans, LIMRA Finds," Employee Benefit News (Link)

Quote:  "More than half of retirees, ages 55-79, fear that changes to the Medicare and Social Security programs, as well as increases in taxes will affect their ability to afford their plan for retirement, according to new LIMRA research presented at the 2011 Retirement Industry Conference."

LTC Comment:  HELLO!  It's about time retirees began realizing America's entitlement programs are under water and they'll need to take more personal responsibility in the future.  The more this kind of news sets in the more people will buy LTC insurance.

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4/22/11, "5 Ways to Safeguard Your Nest Egg From Your Children," by Neal Frankle, US News & World Report

Quote:  "Many parents would spend any amount of money to help their children get out of debt or get ahead. But loaning or giving money to your adult children could do serious damage to your ability to retire comfortably."

LTC Comment:  I'd add a sixth nest egg safeguard:  Don't let your adult children talk you into giving them an early inheritance while you self-impoverish yourself to qualify for Medicaid LTC!

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4/22/11, "New Long-Term Care Insurance Brochure Explores Claims Data," dBusiness News

Quote:  "Eight million Americans currently own long-term care insurance and on any given day, roughly 150,000 are receiving claim payments for qualifying care.  A new brochure published by the American Association for Long-Term Care Insurance http://www.aaltci.org provides a meaningful and current look at long-term health care insurance claims."

LTC Comment:  Chalk another one up for AALTCI.  Find the brochure here.

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4/22/11, "Seniors at risk of hiring caregivers with criminal pasts," by Amy Julia Harris, California Watch

Quote:  "California seniors can unknowingly be put in the hands of caregivers with criminal histories due to shoddy screening and a hole in the state's regulations, according to a report released yesterday by the state Senate Office of Oversight and Outcomes."

LTC Comment:  This is one concrete way in which Medicaid's dismally low provider reimbursements threaten the well-being of people unable to pay privately for better care.

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Updated, Tuesday, April 26, 2011, Time AM (Pacific)

Seattle--

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LTC BULLET:  INTERVIEW WITH PRUDENTIAL'S MALCOLM CHEUNG

LTC Comment:  Marilee Driscoll interviews Malcolm Cheung of Prudential after the ***news.***

*** FEARLESS CAREGIVER CONFERENCE in Minneapolis, May 19.  Steve Moses will speak.  Che

*** FEARLESS CAREGIVER CONFERENCE in Minneapolis, May 19.  Steve Moses will speak.  Check out the flyer here and register here.  Caregiver.com Fearless Caregiver Conferences provide "answers and support for family caregivers."  Read Editor-in-Chief Gary Barg's extraordinary interviews with celebrity caregivers here.  Subscribe to Caregiver magazine here. ***

*** MOSES ON THE FUTURE OF LTC FINANCING.  Lincoln Financial Group sponsored a webcast on April 19 in which a panel of experts urged consumers to understand LTC funding options well before need.  Listen to the program including Steve's five-minute presentation here. ***

*** LTC INSURANCE BUYER STUDY, 2011 LTC SOURCEBOOK.  "Individuals who purchased long-term care insurance protection in 2010 continued to favor limited duration policies according to research by the American Association for Long-Term Care Insurance, the national trade organization.  According to data gathered on 153,000 new policies, over half (57.1%) of purchasers selected policies with a Benefit Period of 4-years or less. . . .  The complete findings will be published in the Association's 2011 Long-Term Care Insurance Sourcebook. ***

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LTC BULLET:  PRUDENTIAL'S MALCOLM CHEUNG INTERVIEWED

LTC Comment:  Most Americans do not worry or plan about long-term care until it's too late to insure against the risk.  But some do act early and responsibly.  Who are they and why are they different?  That's what a recent study published by The Prudential Insurance Company of America revealed.  The answer became the basis for the "3in4 Need More" awareness campaign's message.  Today's LTC Bullet features an interview with Prudential's Malcolm Cheung by author/consultant Marilee Driscoll about the study's findings.

"Interview with Prudential's Malcolm Cheung"
by
Marilee Driscoll

Author's note:

In late March, I read Prudential's newly-released study Long-Term Care Insurance: A Piece of the Retirement & Estate Planning Puzzle.  The study analyzed poll results of 983 Americans.   In my opinion, this is a watershed study.  It puts figures to the feelings that many of us have shared anecdotally for years.  The implications for those looking to encourage Americans to do long term care planning and to purchase long term care insurance are great.  Whether you are a large organization or an individual producer, you should read this report. 

So, when I was offered the chance to interview Malcolm Cheung (Pru's vice president of Long-Term Care Product and Risk) about the report, I jumped at the chance.  The interview took place April 20, 2011.

Marilee:  What was Pru's primary motivation in underwriting this report?

Malcolm:  So many in our industry have struggled with how to get greater penetration in both the individual and group markets.  We did this study to gain a better understanding and to do some consumer research about how people feel about long term care and LTCI, what's keeping them from buying, and how they feel after they buy it.  Our goal was to help the industry in its efforts to encourage planning for potential LTC costs.

Marilee:  What was the finding that most surprised or interested you?

Malcolm:  I was most interested in the finding that adults who knew someone who needed LTC services are much more concerned about personally needing LTC than those who have not (78% vs. 58%).  Here's why I think this is important: as the baby boomers age, many have or will have experience with the LTC needs of parents.  I'm going through this in my own family now.  Those experiences, more than anything else, will move people.  As their awareness rises, as they personally experience the financial and emotional burden of providing this care, the value of LTCI will become more apparent. 

[Author note:  the report says those who knew someone who needed LTC are almost twice as likely to have purchased LTCI - 21% vs. 11%; page 5 of report]

There was another finding I also found significant.  77% of those surveyed agreed with the statement "I should know more about LTC insurance than I currently do."  They recognize the knowledge gap exists. 

Marilee:  When considering the report, what are the implications for the LTCI agent?

Malcolm:  For the producer, the primary point I would highlight is that there is a knowledge gap.  Instead of selling product, producers should help prospects identify and understand the risk.  What are your chances, what does it cost, what are the ways to fund these costs?  I think educating is smart, since prospects know they have a knowledge gap, and they want to take care of the problem.

Marilee:  Is Pru planning any other LTCI research for publication, whether related or not to this report?

Malcolm:  Our next Cost of Care Survey will be coming out the Summer of 2012.

Marilee Driscoll has 20+ years of experience in the LTCi business as consultant to national distributors, founder of the Driscoll Drip LTCI referral marketing program, professional speaker, and licensed agent.  She writes Agent Sales Journal's monthly "12 Questions for One Successful LTCi Agent" column, is author of "The Complete Idiot's Guide to Long Term Care Planning," and is a weekly syndicated columnist for Gatehouse Media.  Reach her at md@MarileeDriscoll.com, tele. 508-830-9975.

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Updated, Friday, April 22, 2011, 10:20 AM (Pacific)

Seattle--

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LTC NEWS AND COMMENT

LTC Comment:  Our goal with these weekly news updates is to give you most of what you need to stay at the forefront of professional knowledge . . . with relatively little effort on your part.  We spend dozens of hours every week keeping up with the news and analysis so you can spend all but an hour or so of your time on the critical work of protecting Americans from the risk and cost of long-term care. 

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4/20/11, "Audios From 2011 LTC Summit - 30% Offer," Jesse Slome and the American Association for Long-Term Care Insurance

Quote:  "Recordings of 26 sessions from the 2011 LTC Insurance Producers SUMMIT are now available.  Some focus on selling.  Some on marketing and generating leads.  Others feature top experts -- including the CEOs of five leading LTC insurers.  You can watch the first five minutes of each presentation for free online.  If you want the full presentation, you can select from three formats -- from audios with synchronized power points to CDs you can listen to while driving.  Costs begin at $15 per session."

LTC Comment:  Here's a special deal if you act now, says Jesse.  Watch the first 5 minutes of presentations from the 2011 Summit and order copies for as little as $10.  Get all the details here.

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4/20/11, "Letter of Support: Repeal the CLASS Act, S. 720 and H.R. 1173," from James Valvo, Director of Government Affairs, Americans for Prosperity

Quote:  "Dear Senator Thune and Representative Boustany, On behalf of more than 1.7 million Americans for Prosperity activists in all 50 states, I want to commend you for introducing the Repeal the CLASS Entitlement Act, S. 720 and H.R. 1173 respectively. Your bills would fully repeal the Community Living Assistance Services and Supports (CLASS) Act, an expensive long-term care entitlement program created in ObamaCare."

LTC Comment:  Momentum builds to end the latest government Ponzi scheme.  Mike Thompson, Legislative Assistant to Congressman Charles W. Boustany, Jr., MD, asks you to convey your pro or con position on the CLASS repeal bill to your federal lawmakers. 

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4/20/11, "New Poll Show Americans Oppose Cuts To Medicare, Medicaid," Kaiser Health News

Quote:  "Though concerns continue to mount regarding the nation's fiscal problems, a new poll finds most Americans would prefer to keep Medicare just as it is."

LTC Comment:  When government taxes Peter to pay Paul, we shouldn't be too surprised that Paul is just fine with the system when polled.

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4/19/11, "Big future ahead for sub-acute healthcare providers offering continuum of care researchers predict," McKnight's LTC News (link)

Quote:  "The market for long-term care services is likely to grow at a rate of 5% to 6% per year, a new study finds."

LTC Comment:  If Malcolm Chung of Prudential is right and LTCI will grow at 15% to 20%, then we may finally see private long-term care insurance catching up with the need for and cost of care.

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4/19/11, "Guidelines For Spotting Alzheimer's," by Shirley S. Wang, Wall Street Journal 

Quote:  "The first update in nearly 30 years to U.S. guidelines for the diagnosis of Alzheimer's disease expands the definition to include patients with earlier stage symptoms and recognizes the condition as being on a continuum rather than just end-stage dementia."

LTC Comment:  These new guidelines could double the total count of Alzheimer's patients:  "Alzheimer's is thought to affect some 5.4 million Americans. An equal number of people may have mild cognitive impairment or earlier stages of the disease, though data about these individuals are lacking."

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4/18/11, "401(k) assets top $3 trillion," Employee Benefit News

Quote:  "Assets in 401(k) plans reached a record $3.075 trillion in 2010, according to the latest Marketplace Update report from the Society of Professional Asset-Managers and Record Keepers (SPARK)."

LTC Comment:  That's a lot of money, much of which could, should and would be insured against LTC risk and cost if it weren't for perverse incentives in public policy that discourage responsible LTC planning.  For details, see our many published reports here.

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4/18/11, April QuickFacts, MetLife Mature Market Institute.  Here's a sample of the items in this month's QuickFacts: 

Americans Worry About Alzheimer's Disease

In asking respondents the top five diseases they feared the most, cancer was first (41%), Alzheimer's second (31%), ranking Alzheimer's far ahead of major killers such as heart disease (8%), stroke (8%), and diabetes (6%), according to a recent MetLife Foundation survey. The telephone survey of 1,007 adults in September 2010, revealed that even though the disease is feared, just 18% have made financial arrangements for the possibility, even though 37% think it's important to do so. Currently, more than 5 million Americans have Alzheimer's, with the number expected to soar as Baby Boomers get older. 

What America Thinks: 2010 Alzheimer's Survey
MetLife Foundation
December 17, 2010
Click for link to survey

LTC Comment:  Denial lives.

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4/17/11, "Being caregiver takes special planning," Times Herald-Record

Quote:  "One of the first things a family should do to prepare for the care of an elderly loved one is to look into long-term care insurance. And don't wait until parents are in their 80s. Do it while they're in their 60s, because the premiums will be lower." 

LTC Comment:  Is it just me or is there a real upsurge in newspaper articles all across the country recommending LTCI?

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4/16/11, "Care-giving boomers find they need care themselves," by Diane Stafford, The Kansas City Star

Quote:  "'You go in the blink of an eye from a call that says your child has fallen off the jungle gym to the call that says your mother has fallen and needs to go to the hospital,' said Gina Pulliam, with the United Way."

LTC Comment:  More and more wake-up calls for boomers in denial.

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4/15/11, "Northwestern Mutual Releases Interactive Version of its 2010 Annual Report Online" (link)

Quote:  "Northwestern Mutual produced outstanding sales results in 2010, reflecting the value that people are currently placing on achieving financial security. New sales of life insurance ($827 million; +23 percent over 2009), individual disability income insurance ($56 million; +5 percent over 2009) and long-term care insurance ($39 million; +32 percent over 2009) all set company records in 2010." [Emphasis added] 

LTC Comment:  Congratulations!

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4/14/11, "25 States Report Long-Term Care Insurance Double Digit Growth"   

Quote:  "Twenty-five states reported a double-digit percentage increase in the number of residents with long-term care insurance according to annual data compiled by the American Association for Long-Term Care Insurance (AALTCI).  The data will be published in the organization's 2011 LTC Sourcebook."

LTC Comment:  The LTCI turnaround we've predicted for the past year is already well underway.  The day after AALTCI reported this news, McKnight's LTC News published the same information. What is noteworthy is that McKnight's, a trade magazine of the LTC provider industry, reported it. Historically, LTC providers have been blasé about LTCI and focused mainly on expanding government revenue sources.

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4/14/11, "Gen X and Y Investors Savings More, But Boomers Strapped," by Temma Ehrenfeld, Financial Planning

Quote:  "We can see that Gen X/Y have accumulated significant assets, are willing to invest those assets, and have an increasing need for advice. However, their behavior and sentiment suggests that their needs are not being fully met by financial advisors,' said William Finnegan, senior managing director of retail marketing for MFS."

LTC Comment:  New target group for LTCI? 

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Updated, Tuesday, April 19, 2011, 10:28 AM (Pacific)

Seattle--

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LTC BULLET:  THE EVIL GENIUS OF LTC FINANCING

LTC Comment:  If an evil genius designed long-term care to fail, he couldn't do a better job than California has done.  Details after the ***news.***

*** WHAT IS "3IN4 NEED MORE?"  Find out by watching this 9-minute video of the LTCI campaign's packed press conference at the LTCI Producers Summit in Las Vegas:  http://youtu.be/4QKme2863-k.  Read more about the "3in4 Need More" movement in Jonas Roeser's article "Get More Referrals and Build Better Partnerships Using the '3in4 Need More' Campaign." ***

*** MEDICAID BLOCK GRANTS?  If you're not quite sure what they are, how they'd work, or who likes and who hates them, check out "Medicaid explained:  How would block grants work?," by Christine Vestal.  It's one of the more balanced and objective explanations of the Medicaid block grant proposal that I've come across. ***

 *** ATLAS SHRUGGED, PART 1.  Did you take our advice and check out this new movie based on Ayn Rand's classic novel?  It was excellent, although panned by anti-capitalist reviewers.  Watch a fine series of video vignettes about Atlas Shrugged produced by Reason Magazine here.  You'll get behind-the-scenes insights on the movie and interviews with Rand's protégés and biographers. ***

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LTC BULLET:  THE EVIL GENIUS OF LTC FINANCING

LTC Comment:  When California Healthline asked me "How Should California Handle Eligibility for Long-Term Medi-Cal?," I replied with the following article.  They published it April 11 along with the views of four other experts, including the top California public official on the topic, the state's LTC "Ombudsman," the executive director of California Advocates for Nursing Home Reform, and our own friend and supporter, LTCI producer Barbara Hanson.

Check out my essay and Barbara's below.  Read California Healthline's set up and the other's articles here.

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"Too Easy To Qualify for Medi-Cal"
by Stephen Moses
President, Center for Long-Term Care Reform

If an evil genius designed a dysfunctional and ruinously expensive long-term care financing system, he could not do a better job than California has done, with help from the U.S. government.

Aging Californians can ignore the risk and cost of LTC, avoid saving for it or insuring against it, wait to see if they ever need expensive LTC, and if they do, qualify easily and shift the cost to Medi-Cal.

But wait, you say. Medi-Cal is a means-tested public assistance program, welfare. You have to be poor to qualify. You must spend down your life savings for your own care before the government helps.

Think again. If that were true, Californians would be impoverishing themselves for LTC. They'd use reverse mortgages to fund home care services. They'd be standing in line to purchase private LTC insurance.

But that's not what happens. Medi-Cal doesn't require people to spend their savings for LTC. Buy anything you want. Take a world cruise. Purchase a new car. Remodel your house. Just don't give away your wealth for less than fair market value.

Assets rarely interfere with Medi-Cal LTC eligibility. Keep home equity up to $750,000. Retain, with no limit on value: the capital and cash flow from a business, even a rental property; one automobile; unlimited prepaid burial plans for you, your spouse and immediate family members; term life insurance; household goods and personal belongings; even IRAs if you're receiving periodic interest and principal payments.

Income is only rarely an obstacle to Medi-Cal LTC eligibility. As long as your income is below your medical expenses, including the cost of nursing home care, you're eligible.

Are you still too rich to qualify for Medi-Cal? No problem. A cottage industry of Medicaid planners will wave a magic legal wand and hide or divest your wealth so you can get Medi-Cal LTC. Their bag of tricks is full of special trusts, Medi-Cal friendly annuities, life care contracts, planned divestiture, and special reverse half-a-loaf gimmicks, to name a few. Just Google "Medi-Cal planning"!

No wonder Medi-Cal is bankrupt. No wonder people ignore LTC until it's too late for anything but Medi-Cal. No wonder private payers have nearly disappeared.

Doubt my analysis? Want to fix the problem? Read my report for the Pacific Research Institute titled, "Medi-Cal Long-Term Care:  Safety Net or Hammock."

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"Long-Term Care Insurance is About Having Choices"
by Barbara Hanson,
Long-term care insurance agent

Long-term care insurance benefits permit a more dignified approach to care than the Medi-Cal route to a two-to-four-beds-per-room skilled care nursing facility. Most people do not need full-time nursing, just custodial care. Policyholders can have options such as home care, respite time off for their caregiving family, equipment, home modifications and/or be able to afford quality assisted living facilities.

Long-term care insurance can include a care coordinator to help family members figure out what to do, as well as provide the extra money needed to make any choices about where and how claimants will live receiving care.

Many of my long-term care insurance clients have had health issues, sometimes more than once, and their long-term care insurance policies have allowed them to stay at home paying friends and other caregivers to help them recover.

A 1999 JAMA/AMA study found that older caregiving spouses face a 63% higher risk of mortality than non-caregiving spouses. We can save more than money with long term care insurance. As one client wrote me, "Your program made my wife's last days infinitely more comfortable, and for that I am eternally grateful."

We will not be able to afford 75 million baby boomers (half of whom at 85 are predicted to have Alzheimer's) "going on Medicaid" when the ones who can afford it could have made rational plans to protect their dignity and independence with LTC insurance. Three years of care could cost nearly $2 million in 30 years if costs only rise by 5% annually. A three-year, $250 a day LTC plan with 5% inflation bought today will meet that number.

We need to save the under-reimbursed, understaffed and overworked nursing facilities for the truly needy.  No one ever intended Medicaid/Medi-Cal to save wealth for heirs via funding by taxpayers.

In my 16-year career, I have often heard, "My mother got the same care as the person in the next bed on Medi-Cal. My lawyer will get me on Medi-Cal, too." It saddens me to think they could have bought insurance enabling them to stay home or in an assisted living facility with a monthly long-term care insurance premium less than the cost of one day in a nursing home.

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Updated, Thursday, April 14, 2011, 10:05 AM (Pacific)

Seattle--

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LTC NEWS AND COMMENT

LTC Comment:  Our periodic review follows of news and views you need to know.

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4/13/11, "Are you a producer or a moocher?," by Marsha Enright and Gen LaGreca, The Daily Caller

Quote:  "'Atlas Shrugged: Part I,' opening April 15, is a movie unlike any other. Based on Ayn Rand's 1957 novel, it depicts with eerie accuracy the fundamental conflict gripping our world today: the battle between those who create values and wealth through their own effort---the producers---and those who seek them through force---the looters and moochers. Since this conflict profoundly affects us all, it's crucial for everyone to choose sides."

LTC Comment:  I'm there!  "Who is John Galt?" 

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4/13/11, "The Welfare Reform Model for Medicaid," by Peter Ferrara and Phil Kerpen, Wall Street Journal  

Quote:  "One of the greatest bipartisan policy successes of recent decades was welfare reform, enacted into law by a Republican Congress and signed by President Bill Clinton in 1996. As House Budget Committee Chairman Paul Ryan (R., Wis.) has proposed in his budget, those reforms should now be extended to Medicaid and beyond."

LTC Comment:  Winston Churchill said "You can always count on Americans to do the right thing—after they’ve tried everything else."  When it comes to LTC financing, we've tried everything else, including CLASS, so it's time to do the right thing.  Cap Medicaid, target it to the needy, and use the savings to educate consumers and incentivize LTC planning.

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LTC Comment:  Want to know what the Medicaid planning bar is telling your prospects about planning for LTC?  This $10 guide would inform you if you didn't mind subsidizing the competition.  Note item #1:  Medicaid planning!

"You will learn:  * The basic rules of Medicaid planning.  * Guidelines for purchasing a good long-term care insurance policy  * The coming public long-term care insurance program known as CLASS.  * The necessary steps to take upon the death of a parent or other relative  * Why a durable power of attorney can be the most important part of your estate plan  * How to reduce your estate through gifts  * Alternatives to nursing homes and how to evaluate them  * The rights of nursing home residents"

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4/12/11, "Kiplinger's Magazine Insert Online," by Jesse Slome, LTCI Sales Strategies   

Quote:  "Copies of the May issue of Kiplinger's Personal Finance magazine were presented to all Summit attendees.  This issue -- which is now arriving in homes across the country -- contains an eight-page insert focused on long-term care insurance planning.  LTCi's 2nd centerfold!  The piece has been receiving rave reviews -- and now you can see it yourself.  Association members can download PDFs of the two Kiplinger's magazine inserts (November 2010 and May 2011).  You can share these with clients and prospects.  Both are available via the Online Learning, Marketing & Sales Center."

LTC Comment:  One more excellent reason to join AALTCI if you have not done so already.

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4/12/11, "CEOs Predict Double Digit Sales Increases," by Jesse Slome, LTCI Sales Strategies 

Quote:  "Nearly 550 Association members gathered last week in Las Vegas and I've never seen a more positive or energized gathering.  Thank you so very much to all who attended -- to the 50+ speakers -- to the insurers and exhibitors.  You energized the industry (me included!)."

LTC Comment:  Read our coverage of the 9^th LTC Insurance Producers Summit in Las Vegas here. 

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4/10/11,  "Obama Adviser Plouffe, Rep. Ryan Dispute Medicare, Medicaid Reform," Kaiser Health News

Quote:  "The Sunday talk shows brought out fundamental differences on what to do about entitlement programs."

LTC Comment:  If I'm right that the biggest obstacle to LTCI market expansion is easy middle-class access to public LTC financing after the insurable event occurs, then the Obama Administration debating entitlement cuts with House Budget Chairman Paul Ryan bodes well for LTCI's immediate future. 

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4/7/11, "New York Life Reports 2010 Financial Results," BusinessWire

Quote:  "While other insurers were exiting the long-term care business or raising prices, the company paid a dividend on its policies for the sixth consecutive year. New York Life is the fourth-largest seller of new individual long-term care insurance premium in the United States."   

LTC Comment:  Congratulations New York Life and thanks for supporting the Center for Long-Term Care Reform.

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4/7/11, "Elder Law Attorney Co-Writes Major Hollywood Film," podcast interview with the screen writer, Elder Law Answers

Quote:  "Attorney Joe Tiboni, an ElderLawAnswers member in New Providence, N.J., tells host Harry Margolis how he came to co-write the story for the newly released film 'Win Win,' which stars Paul Giamatti as a struggling elder law attorney who makes a questionable decision in order to bring in some extra cash. The film opened in New York and Los Angeles on March 18, 2011, and was scheduled for nationwide release in mid-April." 

LTC Comment:  Curious, I saw the film last weekend.  Entertaining though not much of an advertisement for elder law ethics.  For balance, be sure to see "Atlas Shrugged, Part I" opening in theatres across the country tomorrow, April 15, Tax Day!

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4/6/11, "State and Local Governments' Fiscal Outlook," United States Government Accountability Office 

Quote:  "The state and local government sector continues to face near- and long-term fiscal challenges that grow over time. The fiscal challenges confronting the state and local sector add to the nation's overall fiscal difficulties. Although the sector's near-term fiscal picture has improved slightly since our March 2010 update, the economic downturn has created an unprecedented fiscal situation for states as revenues declined in tandem with the economy. As we have reported in previous model updates . . . the sector faces long-term fiscal challenges that grow over time. The model's simulations show that the fiscal position of the sector will steadily decline through 2060 absent any policy changes."

LTC Comment:  The late economist Herbert Stein said "If something cannot go on forever, it will stop."  In other words:  "Trends that can't continue, won't."  GAO's tracking of exploding federal, state and local spending is a case in point.

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3/31/11, "Study Aims to Show Reverse Mortgages Offset Medicaid Spending," by Elizabeth Ecker, Reverse Mortgage Daily

Quote:  "By encouraging seniors to cash in on home equity before relying on entitlement programs for their health and long term care needs, the study asserts, the use of reverse mortgages can cut down substantially on government spending." 

LTC Comment:  Check out the full study here.  It recommends eliminating Medicaid's $500,000 to $750,000 home equity exemption in order to incentivize people to pay for their own long-term care with reverse mortgages before they become dependent on public welfare.  This proposal would obviously encourage the public to plan early and responsibly for long-term care through private insurance. 

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Updated, Wednesday, April 13, 2011, 1:32 AM (Pacific)

Seattle--

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LETTERING IN CLASS

LTC Comment:  In our ongoing effort to keep Center members apprised of CLASS Act developments, we provide three important letters today.

Congressman Charles W. Boustany, Jr. (R, La.) has actively opposed CLASS and introduced legislation to repeal the program. 

In the following email letter, Congressmen Boustany, Daniel Lipinski (D, Il.) and Phil Gingrey, MD (R, Ga.) invite their colleagues to sign a letter to DHHS Secretary Kathleen Sebelius which asks pointed questions about her plans to implement the CLASS Act.

Also included below is the letter to Secretary Sebelius that members of Congress are being invited to cosign.

Finally, we provide a letter dated today from NAHU CEO Janet Trautwein to Congressmen Boustany, Lipinski and Gingrey praising them for their bill to repeal CLASS and describing the CLASS Act's flaws.

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Email from Congressman Charles W. Boustany, Jr. to his colleagues sent: Monday, April 11, 2011

Subject:  Require HHS to Explain Its Legal Authority to Rewrite the CLASS Act

Dear Colleague:

We invite you to sign a bipartisan letter to Secretary Kathleen Sebelius of the U.S. Department of Health and Human Services (HHS) inquiring about the Department's implementation of the new and controversial entitlement known as the Community Living Assistance Services and Supports (CLASS) program.  As you may know, Secretary Sebelius recently called the program, "unsustainable absent massive taxpayer infusion" in its current form.  She has, however, suggested she has the power to change the program's provisions in a manner that would lessen the threat of an adverse-selection death spiral.

The President's own deficit commission recommended repeal of CLASS because of the damage the program poses to taxpayers.  Therefore, it is important we understand the program and what legal authority the Secretary has to make changes.  Unfortunately, HHS recently suggested plans to rewrite the CLASS statute through regulations rather than seeking Congressional approval.

The Secretary also told reporters she would be "violating the law" if she implements an insolvent program, so there is some bipartisan support for getting this right.  A memo from the nonpartisan Congressional Research Service (CRS) warns the Secretary cannot legally alter the key provisions of CLASS that form its structurally unsound foundation.  Indeed, if the Secretary overreaches and increases earnings requirements, as she has proposed in public remarks, the CRS predicts lawsuits from lower-income Americans.

Actuaries warn successful lawsuits in this area would be catastrophic for the program, triggering premium spikes.  Instead of rushing forward, HHS officials have a duty to explain where they find the authority to ignore parts of the health law.  Our children and grandchildren cannot afford another unfunded entitlement program.  If you would like to cosign the letter, please contact Mike Thompson with Congressman Boustany's office, Eric Lausten with Congressman Lipinski's office or Robert Horne with Congressman Gingrey's office before Friday, April 15.

Sincerely,

Charles W. Boustany, Jr.           Daniel Lipinski                         Phil Gingrey

Member of Congress                 Member of Congress   Member of Congress

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April 15, 2011

Dear Secretary Sebelius:

We are writing to request your written response to several questions regarding your Department's implementation of the Community Living Assistance Services and Supports (CLASS) program as established in the Patient Protection and Affordable Care Act, signed into law on March 23, 2010.

You recently called the CLASS program, "unsustainable absent massive taxpayer infusion" of funds, but you have also asserted considerable power to restructure the program.  You have mentioned three specific areas for changes: the automatic-enrollment feature, premium amounts, and minimum-earnings requirements.  On the earnings requirements as established in law, you recently told lawmakers you plan to exclude lower-income Americans from the program, despite language Congress inserted in the law that grants them eligibility for the CLASS program.

According to the enclosed Congressional Research Service (CRS) memo, the minimum earnings requirement in the CLASS program "provides that enrollees must have earned, with respect to at least three calendar years during the first 60 months for which the individual has paid premiums under the program, at least the amount necessary to be credited with a quarter of coverage under the Social Security Act."  In the same memo, CRS warns that the Courts may find the statutory language included in PPACA, "would not provide the Secretary with sufficient authority to raise the minimum earnings requirement for eligible beneficiaries under the CLASS Act."  In reviewing the lack of Secretarial authority to make changes to the program's earning requirements, actuaries have warned successful lawsuits by plaintiffs challenging the Secretary's authority could be catastrophic for the CLASS program's solvency.

We respectfully request that you respond to the following questions in writing by May 1, 2011:

 *   What exact changes are being considered by your Department to achieve CLASS program solvency?

 *   Does HHS believe it can increase the nominal five-dollar premium for individuals below the federal poverty line?

 *   Does HHS believe it can change the automatic-enrollment feature and/or the minimum-earnings requirements as defined in statute?

 *   In light of the aforementioned CRS report, does HHS believe it has authority under Section 3208 to change the statutory definition of eligible beneficiary enacted in Section 3202?

 *   If you believe you have such authority, then what do you believe the purpose and reason was for including the definition of eligible beneficiary in statute?

 *   If you believe HHS has the ability to move forward in making changes to the program's structure through what you consider statutory flexibility, then please explain where in the statute there is flexibility and what you believe "a quarter of coverage under section 213(d) of the Social Security Act" means when determining eligibility for the CLASS program?

 *   If your judgment is counter to that of the CRS and you believe you can increase the minimum-earnings requirements, will the CLASS actuary consider the potential for lawsuits when setting initial premiums in the three CLASS plans you will review?  As you may know, the American Academy of Actuaries requires actuaries to review and consider the risks of "claims adjudication" when pricing initial premium rates.

We appreciate your attention to this matter and look forward to your response.

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NAHU Letter:

April 13, 2011

Representative Charles Boustany                                 
1431 Longworth House Office Building                                    
Washington, DC 20515                                                           

Representative Phil Gingrey
442 Cannon House Office Building
Washington, DC 20515

Representative Daniel Lipinski
1717 Longworth House Office Building
Washington, DC 20515

Dear Representatives Boustany, Lipinski and Gingrey:

NAHU applauds you for your bill, H.R. 1173, the Fiscal Responsibility and Retirement Security Act, which would remove the CLASS Act from PPACA.

Although the CLASS Act is not insurance, it attempts in many ways to act in the manner of insurance. Although it is not an entitlement, it would create an expectation of continuity. These expectations of a product that can make a real promise for the future would find no such certainty from the Class Act and, for this reason, NAHU feels this is an unsafe venture for consumer participation. There is no lock-box, so the money is exposed to being used for other purposes. There is no contract, so there is no guarantee of future benefits, nor is there any of a long list of consumer protections that private long-term care insurance carriers must provide under state and federal regulation. 

The five-year vesting period that permitted the overall score of PPACA to appear to meet a self-imposed budget target uses accounting methods that would not be allowed in the private sector. These discrepancies have been noted by both CBO and CMS. Additionally, the current and past CBO directors have protested that the accounting falsely projected that the program would reduce the deficit. The administration claims that the 75-year solvency requirement protects the program. Such pricing, in fact, ensures that price increases will be necessary if the program's expectations are met. With a level premium, assuming that all anticipated investment earnings were achieved and that claims matched expectations, the fund would have $0 in 75 years, while tens of thousands of people would be advancing toward claims status.

Unlike private LTCI, CLASS is not subject to any premium taxes, income taxes or DAC tax, a potential significant loss of revenue to state governments and the federal government. At the same time, it will require expenditures by the federal government, states and employers. There are numerous provisions that states would not approve if suggested by a private insurance carrier. 

CLASS has four protected classes of people. Low-income individuals and students pay just $5 per month while everyone else must make this up in their premium contribution. A significant part of the cost for unhealthy people is transferred to healthy people. In addition, everyone who is over age 65 and has been in the program at least 20 years is protected from premium increases. Particularly because CLASS is designed to require premium increases, this constitutes an unfair transfer of liability. This inequity will lead to massive adverse selection. 

As designed, CLASS cannot fulfill the promises that it will make. Because few people need LTC before their retirement years, the problem will only be unmasked when it is too late for those who participate to have made other arrangements. By the time it becomes apparent, we will have painted ourselves into a corner. We expect that people with disabilities who are able to work will instead sign up for coverage, driving up claim costs. So when faced with yet another unsolvable "third rail," we will be compelled to:

* Tax benefits and make other modifications to change another social insurance program into a wealth-transfer program
* Require mandatory participation by citizens
* Require employers to contribute to the premium.

The secretary of HHS has said that the program as written will not work, but claims that she has authority to make significant changes to the program without congressional approval. While there is a lot of latitude in the statute, it is unlikely that it will allow the secretary to make the magnitude of changes that are needed to make this a sound and safe program for consumers.

The CLASS Act is broken and should not be implemented; it should be repealed as recommended by the Debt Commission. The CLASS Act is a step down a slippery slope of government takeover of services that is unwise for the future of our nation. Unless it is repealed now, it could lead someday to mandatory participation by all Americans and, with it, a greater burden on employers, which they do not want and cannot afford. Instead of creating additional fiscal headaches for our country, we should focus on solving the ones we already face.

The private sector has the means to provide substantial, excellent long-term care coverage to a large sector of the population, if the public is interested in such insurance. Instead of CLASS, assistance from Congress can come in the form of allowing long-term care insurance to be offered through a Section 125 cafeteria plan. With your help, consumers will have many more legitimate options with regard to this need without risking unknown future liabilities that taxpayers will ultimately be called on to support. 

Sincerely,

Janet Trautwein
Executive Vice President and CEO

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*** THE CLASS CONTENT covered in today's LTC E-Alert has been added to our Members-Only Zone website here:  http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members.  Not a member yet (you should be if you’re receiving this)?  Need to renew?  Need a refresher on your username and password?  No problem.  Just contact Damon at 206-283-7036 or damon@centerltc.com.  Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. *** 

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Updated, Tuesday, April 12, 2011, 12:44 PM (Pacific)

Seattle--

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LTC BULLET:  VIRTUAL VISIT TO THE 9^TH LTCI PRODUCERS SUMMIT

LTC Comment:  Last week's LTCI Producers Summit in Las Vegas caught the wave of surging industry optimism.  Details after the ***news.***

*** CALIFORNIA HEALTHLINE published a "Think Tank" yesterday titled "How Should California Handle Eligibility for Long-Term Medi-Cal?"  Read the contributions by Steve Moses and Center member/supporter and veteran LTCI producer Barbara Hanson here. ***

*** GREAT REPORT CARD:  The CLASS debate at the 11^th Annual Intercompany Long-Term Care Insurance Conference in Atlanta last month got rave reviews.  Steve Moses and John Greene (NAHU) debated CLASS proponents Connie Garner (AdvanceCLASS) and Rhonda Richards (AARP) with Peter Goldstein (Univita) as moderator.  Attendees loved the point/counterpoint format.  The only complaint?  Get a bigger room!  More here. ***

*** LTC DISCUSSION GROUP:  "The Long Term Care Discussion Group, a nonpartisan networking group focused on educating the policy community about long term care, announces the launch of its new website:  www.ltcdiscussiongroup.org."  Details here.  You can follow their monthly meetings by "call in."  Often very worthwhile.  Check it out. ***

LTC BULLET:  VIRTUAL VISIT TO THE 9^TH LTCI PRODUCERS SUMMIT

LTC Comment:  The 9^th LTC Insurance Producers Summit, held April 3-5 in Las Vegas, was the best so far.  I said the same thing about the 8^th in the series 18 months ago, so it looks like a trend.

The meeting's theme was "Get Over It!"  Get over lagging sales, disappearing carriers, premium increases, and bad publicity.  Get over it and, one might add based on the content of the conference:  Get On With It!

I'll share some of the meeting's highlights below, but don't miss this chance to check out the presentations yourself.  Jesse Slome and the American Association for Long-Term Care Insurance posted free PDFs of many presentations here.  They'll add more as they become available.  Watch too for audio versions you can purchase soon.

550 attendees and 27 exhibitors converged on the Tropicana Hotel on The Strip.  Proceedings got underway with a standing-room-only crowd for the "3 in 4 Need More" campaign's second press conference.  That creative LTC awareness campaign continues to build steam.  Check out a video of their first press conference here.

Cameron Truesdell, CEO of Long-Term Care Financial Partners, delivered the "Keynote Address."  He pointed out the desperate need for responsible long-term care planning and insisted:  It's up to us to make it happen.  Echoing a patriotic appeal, he asked "If not us, who?  If not now, when?"

Evidently, Summit attendees took the motivational message and the "Get Over It" theme to heart.  They packed the auditorium for each of the early morning, 8:00 AM general sessions.  The program warned that breakfast starts at 7:30 AM and "Food Services Ends at 8:00 AM Sharp."  Early birds even in Las Vegas!  That's dedication.

Award ceremonies recognized people and companies who have contributed most to the LTC insurance market.

• Five of the nation's leading long-term care insurance agencies were recognized for their significant achievements marketing and selling long-term care insurance protection.  Check out the winners here.
• Individual sales achievement awards went to:  Anthony Stratidis (1^st place); Steve Elliot (2^nd); and Chris Rew (3^rd).
• First annual "Long-Term Care Insurance Industry Lifetime Achievement Award" to Jesse R. Slome in recognition of his outstanding contributions. (well deserved and overdue in LTC Bullets' opinion).  Presented by Mark Goldberg, President of ACSIA.
• First annual "Bright Idea" award by John Hancock to Jonas Roeser for the "3 in 4 Need More" campaign.  Presented by Scott Williams.

Highlights from some sessions I attended follow.  Find session descriptions, times and presenters here:

"Key Pricing Issues that Should Concern Those Selling LTC Insurance":  Regulation has reversed direction.  Instead of rate stabilization which forces companies to keep rates low to justify loss ratios, regulators are now forcing companies to charge more so they can pay claims without rate increases in the future.  Typical lapse rate assumptions in the past were 6% to 8%; they're .5% to 1% now.  Expected investment income on reserves is down to 5% and harder than ever to achieve.  Moving toward more conservative mortality tables.  Morbidity is the most volatile factor.  Older LTCI products were developed before latest advances in longevity, availability of assisted living and home health, clearly defined triggers, and risk selection understood.  In a nutshell:  the good news is reasons for past premium increases are being dealt with; the bad news is new reasons for future increases are developing.  Baby boomer attitude:  less risk averse than parents; wealth transfer not a primary goal; less patient, need simpler sales; want a product with a cash out; old products and distribution don't work so well with them.

"Class Act Round Two:  The Window To Everyone's Future Success":  This luncheon session was presented as a "fireside chat" with Jesse Slome interviewing Bob Yee, actuary for the CLASS program and Hunter McKay of the Department of Health and Human Services.  Here's some of the unusually and refreshingly frank back and forth, paraphrased:

Slome:  Why CLASS and not above-the-line LTCI tax deductibility to encourage LTC planning?

Yee:  The credit or blame rests with Connie Harner.  Whether we like it or not, CLASS is the law of land.  Somebody has to make it happen.  15 people are working full time toward that end.  Regardless of how it happened, it needs to be enacted in the best way we can.

Slome:  Is CLASS going to change?  What will stay?  What go?  Where are we today?

Yee:  In the language of the law, there are numerous inconsistencies and contradictions.  It makes no sense.  CLASS has to be self-sustaining.  We're going to do the best we can to make it self-sustainable.

Slome:  When will you have pricing and benefit features established? 

Yee:  We're in a process of roll out.  Certain aspects of the CLASS Act are unambiguous:  Oct. 2012 is the drop-dead date.  The "independent advisory council" will propose three actuarially sound plans to the Secretary, who will select one.

Slome:  Do you have an idea what the three plans might be? 

Yee:  Yes, but I can't tell you.  The government has rule-making processes that force us to publish proposed regulations and get comments.  So I think you'll know those three plans by the fall of this year. 

Slome:  The "elephant in the room" is that if price is too high, people won't buy.  You have to make CLASS cheaper for it to be saleable.  Its benefits must be unlimited, yet the program has to be sustainable.  How can you do that?

Yee:  Now you know the job.  It's like impossible.  Fuzzy math.  Biggest pricing job I'll ever have.  I have ideas but whether it will work or not I don't know.  We're going to ask experts:  if we try this, what do you think?

Slome:  Where do you see CLASS dovetailing with private LTCI? 

McKay:  This a very fluid, very difficult task.  There has to be room in this market for both of us. We'll be taking advantage of what you all have learned.  We will have some advantages and disadvantages.  CLASS has to have a premium point that works for our market.  We're going for a less affluent market.  We're looking at a variety of designs and don't know how they will come out.

Slome:  We blew it when we had the opportunity to kill a bill that had potential to become our biggest competitor.  DC-based organizations didn't do much to oppose it.  At this point, its too little too late.  Get over it.  Deal with reality.  You take one part of the market; CLASS will take the other.

Yee:  Everyone has their own political view.  If I were an agent, I'd see CLASS as free publicity.  If you kill CLASS, that money [$93 million authorized for publicity] goes away.  If I were an agent, I would keep quiet.

Slome:  How will CLASS premiums be invested? 

Yee:  As usual, junk bonds.  Premiums will be invested just like the Social Security trust fund.  [Audience laughter]  The interest rate is immune from market rates.  Treasury bonds are more predictable for pricing product compared to guessing future interest rates.

Slome:  What input have you had from the insurance industry?  What input would you like? 

McKay:  The opportunity was given but input was minimal.  Kathy Greenlee (head of the Administration on Aging and CLASS implementation) has met with heads of the insurance industry, such as AHIP and others.  Tell us the obstacles you see. 

Slome:  CLASS could lead to Medicare Part E.  If you were on the insurance side, what would you say are changes that would benefit the LTCI industry?  CLASS wrap around? Where do you see the future for this industry?

Yee:  I hope CLASS will help the LTCI industry to grow.  CLASS will make LTCI improvement easier to happen.

"CLASS Act - Where It's At - Where It's Going + Experts Answer Your Questions":  This was a very informative afternoon follow up session on CLASS with industry actuary Steve Schoonveld and CLASS actuary Bob Yee trading questions and answers.  Check out the audio recording when available.  Notable paraphrases: 

Yee:  A lot of the time I don't know what I'm doing, but I do know what I want.  My job is to convert CLASS into something that looks and smells like a regular growth policy.  I have to get there.  Even if I can match the street price, will people buy it?  I might even have to beat it.  We have some wiggle room.  We have to pay 97% for benefits, but private insurers pay only 60 cents on the dollar.  Can I build in things with that extra 37 cents that make CLASS unique?  Not sure it's doable, but maybe it will work.  Vision:  CLASS is the catalyst for individual responsibility to promote successful aging.  Medicaid phases into a true safety net in 15-20 years.  Government incentive to be fully self-reliant (e.g. tax-free withdrawal from 401K to pay for LTCI premiums).

Schoonveld:  When the three proposed CLASS designs are published, the Society of Actuaries/Academy of Actuaries review group will respond very apolitically.  We'll react rather than prophesy.  We'll bring in Medicaid experts.  CLASS points to the fact that we need to reform Medicaid; it needs to stop being the payer of only resort for most of the population.

LTC Insurer CEO Forum

Prudential sponsored the closing breakfast and the CEO Forum.  National Sales Director Roy Gosselin introduced and showed a 9-minute film about John Horton, a former Prudential agent who has Multiple Sclerosis.  He also has a Prudential long-term care insurance policy.  Mr. Horton contacted Prudential and asked the company to tell his story.  The film explains, mostly in the insured's own words, how his LTCI policy made his life and care manageable, allowed him to stay at home, and helped his family immensely.  We've requested a link to an online version of this film and we'll bring it to you as soon as it is available.

CEO Participants:

Ross Bagshaw (RB), President & CEO, Transamerica LTC, Bedford, TX
Malcolm Cheung (MC), Vice President, Prudential, Roseland, NJ
Marianne Harrison (MH), President LTC, John Hancock Financial Services, Boston, MA
Bill Jones (BJ), President & Chief Operating Officer, MedAmerica Insurance Co., Rochester, NY
Beth Ludden (BL), Senior Vice President, LTC Product Development, Genworth Financial, Richmond, VA

Audience members I asked thought this session was considerably more lively and informative than the CEO Forum at the other recent industry conference in Atlanta.  Here's some of the give and take, in paraphrase.  Jesse Slome was master of ceremonies.  Refer to the initials above to identify the speakers.

Slome:  What will your company look like five and ten years from now.

MH:  We've been through some challenges.  We need to reshape the industry.  Really need new and different products.  Simple, affordable.  Multiple products for different consumers.  Awareness is naturally coming.  Boomers retiring.  CLASS Act may help us.  In terms of sales, slowing down right now.  2011 is a year of transition.  Really get going again in 2012.  Hancock is not signaling we're leaving market.  Taking responsible action.  Ten years from now?  That's a long way out and I'm not a gambler.  Opportunities huge if we can get to a broader consumer base.  Double sales in five years.

BJ:  Yogi Berra said it's tough to make predictions especially about the future.  We will be in business in five and ten years.  We are strategic to our parent company.  Major trends:  Buyer behavior changing from belly-to-belly sale to internet or some remote basis.  We see that trend continuing.  Working on processes to help consumers buy more easily.  Help you reach more consumers.  Challenges from technical perspective and other ways.  Premium projections?  "More than today."  What we measure against is our share of the market.  Is our market share getting bigger?  Believe it will.

MC:  Very happy to be "Malcolm in the Middle."  [Malcolm Cheung had the middle seat on the stage.]  We've been waiting for the boomers to buy en masse.  Different now.  Oldest boomers turning 65, youngest 47; most will have had some experience with parents needing LTC.  Our research shows people who have had someone with LTC are twice as likely to have bought LTC already.  Potential changes to Medicaid; budgetary restraints; Medicaid eligibility and Medicaid benefits will change and make LTCI a more appealing alternative.  CLASS Act effort to educate will net-net be a positive for LTCI whether as stand alone or wrap around.  One thing needed to re-enforce growth is product innovation.  Encourage producers to embrace innovation.  We've been selling same product since 1996.  LIMRA found 13% growth last year.  Predict industry sales grow at 15% to 20%.  Prudential 20% to 25% range over that period.  This first quarter volume twice last first quarter.  We are in true group market.  Whether CLASS or not: 10% to 15% annual industry growth.

RB:  Recovering actuary.  Transamerica excited about future of the industry.  Still in top five of in-place business.  Grew 600% last year.  I believe growth over next couple years small, then inordinate growth.  I believe CLASS if it succeeds and comes to fruition will be huge lift for the industry.  About time for government to do something.  Social Security notice says Medicare does not pay for LTCI.  Stand alone individual market need is clear; market disruption from carriers leaving the business; rate increases.  Scare away consumers and distribution.  Will calm down, then need will drive the sales.  In for the long-term.  Our growth rate is going to be spectacular.  $6 million last year; not surprised at $20 million this year.  Believe sustainable for the long term.  Some of distribution running scared right now.  This will be an explosive growth industry.

BL:  Genworth's goal is to maintain number 1 position in the industry.  LTCI is very important to the Genworth franchise.  Consistency and innovation.  Conservative, consistent with management of in-force block.  Vigilant, looking at the LTCI block every month.  Painful to our actuaries.  From that grows our innovation.  Genworth understands the business because we have so much on the books.  Some of things we'll do in the future is try to make the product more compelling to consumers and distribution.  You specialists don't feel the confusion that other distribution feels when they try to pick up LTCI because client asked for it.  Genworth will help you help them understand the product better.  I'm contrarian:  can't make this product simpler.  Insurance isn't simple, the lawyers control it.  "Get over it" message.  Regulator environment very little understanding at the state level.  Genworth is going to come out with ways to make a better consumer proposition.

Slome:  Fun question:  Please describe the LTCI policy you have purchased with all the details on amount, duration, elimination period, etc.  Second part:  if purchasing now, would you buy something different?

BJ:  I love cash.  Simplicity.  I own three years at $12,000 a month; short and fat. 

MC of Prudential:  Group coverage with John Hancock (laughter).  Waiting for my rate increase notice (more laughter).  $240 per day, 90 day elimination, four-year, inflation guarantee purchase option.  Guaranteed issue.

RB:  $150 per day, five year pool, inflation 5%, 1/3 cash benefit.  Wish it had shared care benefit. 

BL:  I have three LTCI policies, one from each company I've worked for.  CNA, started at $120, has everything.  Premium less than $2K a year.  One from NYL with 180-day elimination period.  Genworth pays for a group policy.

There was much more to the CEO Forum conversation, but the above recounting will give you the flavor of the discussion.

"Sell in the Presence of the CLASS Act"

Claude Thau presented his views on why the LTC insurance industry should push hard for repeal of the CLASS Act even as agents make the most of it in the meantime to open doors and sell coverage.  Claude has done yeoman work on this issue.  Follow his comprehensive and persuasive arguments in detail here. 

Catch Claude's presentation of the CLASS issue from a different angle, i.e. what policy makers, legislators and the media need to know about the program and why it should be repealed, in the following WebEx presentation:

Thursday April 14 at 4 pm Eastern (3:00 Central; 2:00 Mountain; 1:00 pm Pacific)  Click here to see the presentation:  Repeal CLASS April 14.  Call (712) 432-0180 to hear the audio portion.  Input this Participant Access Code: 957803#.  It is a long-distance call, but is free if you call from a phone with free long distance.

After Claude's presentation at the Summit, Jesse Slome offered his opinions, which included:

"I believe CLASS will put true group out of business.  Large employers will offer one program and it will be CLASS." 

"I would target major employers and work my way down." 

"We should advise people to kick the tires.  Don't be an early [CLASS] adopter."

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Updated, Friday, April 8, 2011, 10:30 AM (Pacific)

Seattle--

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THAU ON CLASS REPEAL

LTC Comment:  LTCIcon Claude Thau agrees CLASS benefits LTC insurance in the short-run, but CLASS is "bad for both the USA and the LTCI industry in the long-run."

At the ninth LTCI Producers Summit in Las Vegas this week, Claude presented his argument that CLASS is anathema to private LTC insurance.  For a summary of his arguments, see the "Virtual Visit" to that conference we'll publish next Tuesday.

In the meantime, check out Claude's anti-CLASS advice to policy makers, media and all of us who speak to such opinion leaders.  Says he: 

"The presentations mentioned below are very different from my presentation in Las Vegas.  There, I was explaining why the LTCi industry should push for repeal of CLASS.  These presentations are arguments appropriate for legislators, media, etc."

Here's how you can tune into Claude Thau's presentation advocating repeal of CLASS:

For each of the WebEx presentations listed below, call (712) 432-0180 to hear the audio portion.  Input this Participant Access Code: 957803#.  It is a long-distance call, but is free if you call from a phone with free long distance.

Tuesday April 12 at 11 am Eastern (10 Central; 9 Mountain; 8 Pacific)
Click here to see the presentation:  Repeal CLASS April 12

Thursday April 14 at 4 pm Eastern (3 Central; 2 Mountain; 1pm Pacific)

Click here to see the presentation:  Repeal CLASS April 14

Both presentations are the same and will run about 20 minutes.

Following is Claude's contact information:

Claude Thau
Target Insurance Services
We're in it for the Long-Term... We Care SM
11020 Oakmont
Overland Park, KS 66210
Phone direct: 913-403-5824
claudet@targetins.com

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Updated, Wednesday, April 6, 2011, Time AM (Pacific)

Seattle--

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LTC BULLET:  LTC ALMANAC UPDATE (2)

LTC Comment:  Our second LTC Almanac Update in as many weeks follows the ***news.***

*** MEDI-CAN'T:  "'My Medicaid card is useless for me right now,' Ms. Dardeau said over lunch. 'It's a useless piece of plastic. I can't find an orthopedic surgeon or a pain management doctor who will accept Medicaid.'" 
Source:  Robert Pear, "Cuts Leave Patients With Medicaid Cards, but No Specialist to See," New York Times, April 1, 2011. ***

Which leads to this:

*** LTCI AWARENESS:  "Public awareness of long-term care insurance (LTC) is growing due, in part, to the realization that the government cannot or will not pay for long-term care costs." 
Source:  David Rando, "Take Advantage of Employer-Sponsored LTC Insurance," San Francisco Chronicle, April 3, 2011. ***

Which leads to this:

***  "BREATHTAKING FRAUD" of government trust funds, including CLASS:  Read John Goodman's excellent expose' of these phony bookkeeping gimmicks here. ***

Which leads right back to ***news*** item number 1:  "MEDI-CAN'T."

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LTC BULLET:  LTC ALMANAC UPDATE (2)

LTC Comment:  Damon and I are just back from the 9^th LTC Insurance Producers Summit in Las Vegas.  Expect a "virtual visit" to that excellent program after we collect our thoughts, likely early next week.

Today, find below our latest update of the "LTC Almanac."  The Almanac of Long-Term Care is a compendium of information you need at your fingertips if you work in any aspect of LTC financing or service delivery.  Here's the layout:

The LTC Almanac has 11 chapters:

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 
Medicaid Planning   

Each chapter is divided into sections.  Under each section, you'll find titles, quotes, summaries of and hyperlinks to virtually every important article or report published on the topic listed in descending chronological order.  The idea behind the Almanac of Long-Term Care is to capture for you in easily accessible form every piece of information and knowledge you need to be a fully informed professional in the field of long-term care.

Access the LTC Almanac in The Zone here:  http://www.centerltc.com/members/LTC_ALMANAC/Main.htm.  You'll need your user name and password, because you must be a member of the Center to access the Almanac.  Need a reminder?  Want to join and get access?  Contact Damon at 206-283-7036 or damon@centerltc.com.

The Almanac of Long-Term Care is only one of the many valuable information resources in The Zone.  Here are a few more:

CLASS Act Update -- Quick reference to publications on CLASS.
One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.
LTC GRADUATE SEMINAR TRANSCRIPTION
LTC ALMANAC
Deductibility Limits for Long-Term Care Insurance
LTCI TAX TREATMENTS
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
Unfunded Entitlement Liabilities -- Various articles and reports including data on unfunded entitlement liabilities.
LTC Embed Reports -- Brief on-site reports from the policy front in Washington, D.C. and elsewhere, wherever the LTC policy battle takes us.
Long-Term Care Cost Surveys
Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care
VIRTUAL VISITS to LTCI conferences.
ARCHIVES:
LTC Bullets -- "LTC Bullets" is the Center for Long-Term Care Reform's online newsletter covering current topics in the LTC arena. Older editions are available in the archives and are listed both by date and by subject.
LTC E-Alerts -- "LTC E-Alerts" are a feature offered by the Center for Long-Term Care Reform to contributors of $150 per year or more. We'll track and report to you news and analysis regarding long-term care financing, service delivery, and research. LTC E-Alerts will help you attain and maintain a high level of knowledge and competency in this complex field.

Want your staff, colleagues, friends or clients to have access to this wellspring of information?  Encourage them to contact Damon at 206-283-7036 or damon@centerltc.com to request a free peek at The Zone, including the LTC Almanac.

Now, here are our latest updates to the Almanac of Long-Term Care:

Chapter 1:  Aging Demographics

Windfall for the Boomers

MetLife on Wealth Transfer 1210 LINK 
"The MetLife Study of Inheritance and Wealth Transfer to Baby Boomers: A Study by the Center for Retirement Research at Boston College for the MetLifeMatureMarket Institute," December 2010

"Our best estimate is that Boomers will inherit $8.4 trillion. Of this amount, $2.4 trillion has already been received, while the remaining $6.0 trillion is anticipated and, therefore, subject to significant uncertainty. The estimates are based on data obtained before the economic crisis, so our analysis explores how the collapse in the stock and housing markets might affect the picture. Evidence from the previous economic crisis in the early 2000s suggests only a temporary reduction in prospective inheritances, which will be reversed as the economy recovers. However, given the severity of the recent crisis, we also looked at how inheritances would be affected if they were to drop proportionately with the decline in housing and stock values between 2007 and 2010. In this case, anticipated inheritances would fall 13% - from $6.0 trillion to $5.2 trillion."

Chapter 3:  Unfunded Liabilities--Social Security, Medicare, and Budgets

Unfunded Liability Estimates 

CATO on Unfunded Entitlements 0311 URL:  http://www.cato.org/pubs/pas/pa673.pdf
"Bankrupt: Entitlements and the Federal Budget," by Michael Tanner, Policy Analysis No. 673, March 28, 2011, Cato Institute.

"The U.S. government is about to exceed its statutory debt limit of $14.3 trillion. But that actually underestimates the size of the fiscal time bomb that this country is facing. If one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion." p. 1

"Social Security's future unfunded obligations now run to more than $16.1 trillion. Medicare's unfunded liabilities are more difficult to nail down, in part because of the uncertainty brought about by the new health care reform law. In 2009 Medicare's trustees estimated that the program's unfunded liabilities were $89.3 trillion. In the wake of the health care bill, though, those projections declined dramatically to just $28.7 trillion. But, there is reason to be skeptical of that revised figure. The Centers for Medicare and Medicaid Services (CMS), for example, believes that the spending reductions projected under health care reform are unrealistic.

"Thus, the combined federal debt actually totals at least $59.1 trillion, equal to more than 412 percent of GDP. And if the projected savings in Medicare do indeed prove unrealistic, our debt could run as high as $119.5 trillion (including $200 billion accumulated in February and March 2011), an inconceivable 900 percent of GDP."  pps. 8-9

Chapter 4:  Long-Term Care

Home and Community-Based Services

Medicaid Home and Community-Based Service Programs: Data Update KFF 0211 URL:  http://www.kff.org/medicaid/upload/7720-04.pdf

"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 42 percent in 2008."

Chapter 6:  LTC Financing

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

2009 Data

CMS Tables:  LINK
Health Affairs:  Anne Martin, David Lassman, Lekha Whittle, Aaron Catlin and the National Health Expenditure Accounts Team, "Recession Contributes To Slowest Annual Rate Of Increase In Health Spending In Five Decades," Health Affairs, 30, no. 1 (2011):11-22; http://content.healthaffairs.org/content/30/1/11.full.html. 
LTC Bullet:  So What If the Government Pays for Most LTC?, 2009 Data Update, Wednesday, January 26, 2011:  http://www.centerltc.com/bullets/archives2011/903.htm

Medicare LTC Financing
Medicare Spending and Financing Primer KFF 2011 URL:  http://www.kff.org/medicare/upload/7731-03.pdf

"This paper provides a detailed overview of Medicare spending and financing, beginning with a review of the factors contributing to the growth in Medicare spending, including the effects of the 2010 health reform law. Next, it explains the structure of the Medicare program's financing, reviews various measures of fiscal status, and discusses the expected effects of rising Medicare costs on beneficiaries. The paper concludes with a discussion of the program's long-run financial challenges."

Chapter 7:  Long-Term Care Insurance

Denial

Prudential 2011 LTCI study 0311 URL:  http://www.prudential.com/media/managed/Consumer_Research_2011.pdf
March 2011, Prudential released report titled "Long-Term Care Insurance: A Piece of the Retirement & Estate Planning Puzzle"
See also LTC E-Alert for Friday, March 25, 2011:  http://www.centerltc.com/members/e-alerts/ltc_ea11-011.htm

Highlights:  "A majority of Americans are concerned about needing long-term care services someday . . . Knowing someone who has required long-term care services greatly increases the level of concern . . . Lack of knowledge leads to misperceptions about the costs and funding sources for long-term care services . . . Americans say long-term care insurance is important but they don't believe they should buy it until they are retired . . . Life stage (e.g., age, marital status) plays an important role in how people view the value of long-term care insurance . . . Misperceptions about long-term care insurance are an obstacle for many Americans to further researching and considering coverage for themselves and their families . . . Greater awareness and education are needed about the role of long-term care insurance in retirement and estate planning . . . Long-term care insurance can help protect retirement savings and provide peace of mind."

The CLASS Act

NAHSP on LTC Benes in PPACA 0410 URL:  http://www.nashp.org/sites/default/files/LongTermServ%20Final.pdf
"Long Term Services and Supports and Chronic Care Coordination: Policy Advances Enacted by the Patient Protection and Affordable Care Act," by Diane Justice, SCAN Foundation, April 2010
See also "LTC Bullet:  PPACA'd with Unfunded LTC Benefits," Wednesday, April 14, 2010:  http://www.centerltc.com/bullets/archives2010/868.htm

Chapter 8:  Reverse Mortgages

Home Equity Estimates

NET WORTH AND HOUSING EQUITY IN RETIREMENT 2007 LINK
"Net Worth and Housing Equity in Retirement," Todd Sinai, The Wharton School University of Pennsylvania and NBER, Nicholas Souleles, The Wharton School University of Pennsylvania and NBER, August 7, 2007

Abstract: This paper documents the trends in the life-cycle profiles of net worth and housing equity between 1983 and 2004. The net worth of older households significantly increased during the housing boom of recent years. However, net worth grew by more than housing equity, in part because other assets also appreciated at the same time. Moreover, the younger elderly offset rising house prices by increasing their housing debt, and used some of the proceeds to invest in other assets. We also consider how much of their housing equity older households can actually tap, using reverse mortgages. This fraction is lower at younger ages, such that young retirees can consume less than half of their housing equity. These results imply that 'consumable' net worth is smaller than standard calculations of net worth.

Chapter 9:  Long-Term Care Providers

Nursing Home Challenges

The Alliance for Quality Nursing Home Care (http://www.aqnhc.org/) has published a series of five issue briefs explaining the role and importance of nursing homes as long-term care providers and describing the daunting challenge they face because of dominantly public financing.
Trends in Post-Acute and Long-Term Care, September 2009; LINK, May 2010; Economic Contribution of Nursing Facilities, February 2011; Economic Contribution of Nursing Facilities, February 2011; LINK,  January 2010; Therapy Services in Nursing Facilities, September 2010
For analysis and summaries, see LTC E-Alert:  LTC News and Comment (Nursing Homes), Wednesday, March 30, 2011:  http://www.centerltc.com/members/e-alerts/ltc_ea11-012.htm

Chapter 10:  Medicaid

Medicaid Financing

Moving Beyond Medicaid 1210 LINK
"Moving Beyond Medicaid:  Long-Term Care for the Elderly as a  Life Quality and Fiscal Imperative"  December 2010,  Citizens League

"Medicaid is not sustainable as a default source of financing. If other forms of financing are not put in place, Medicaid funding for long-term care for the elderly could grow nearly fivefold in Minnesota, from $1.1 billion in 2010 to $5 billion in 2035. Unless we all agree to massive tax increases to pay for one another's long-term care, Medicaid as the fallback is unsustainable."

Kaiser on 50 State Medicaid Budget Survey:  "Hoping for Economic Recovery, Preparing for Health Reform: A Look at Medicaid Spending, Coverage and Policy Trends, Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2010 and 2011," Prepared by Vernon K. Smith, Ph.D., et al., Kaiser Commission on Medicaid and the Uninsured Kaiser Family Foundation, September 2010:  http://www.kff.org/medicaid/upload/8105.pdf

Quote:  "At the end of state fiscal year (FY) 2010 and heading into FY 2011, states were still in the midst of the worst economic downturn since the Great Depression with high unemployment, severely depressed revenues and increased demand for services, including Medicaid. While most states expect to see the impact of the recession last for the next few years, they are hoping that 2011 will be a turning point moving toward economic recovery. State economies were bolstered by federal fiscal relief from the American Recovery and Reinvestment Act of 2009 (ARRA) which provided a temporary increase in the federal Medicaid matching rate (known as the “Federal Medical Assistance Percentage,” or “FMAP”) from October 2008 through December 2010. Legislation to provide states with a scaled back extension of this fiscal relief through June 2011 was enacted in August 2010; however, this was after most states had adopted budgets for FY 2011. Even as states continue to grapple with historically difficult budget conditions, they are planning for the implementation of the Patient Protection and Affordable Care Act (ACA), major health reform legislation which envisions an expanded role for Medicaid and the states."

Medicaid Eligibility

Kaiser on Medicaid Elig 0210 URL:  http://www.kff.org/medicaid/upload/8048.pdf
"Medicaid Financial Eligibility: Primary Pathways for the Elderly and People with Disabilities," February 2010

"Medicaid plays several unique roles in bolstering our nation's health care system, including acting as a safety net for many of our poorest, sickest, and most disabled individuals. It provides health coverage today to almost 60 million Americans overall, including 8.5 million non-elderly persons with disabilities and 8.8 million low-income frail elderly and disabled Medicare beneficiaries who rely on Medicaid to fill Medicare's gaps. This document details the various eligibility pathways individuals with disabilities and the elderly can qualify for Medicaid coverage."

Medicaid Crowd-Out

Medicaid Crowd Out Dissertation 2010 LINK

Recommended Citation:  Kim, Geena, "Medicaid Crowd-Out of Long-Term Care Insurance with Endogenous Medicaid Enrollment" (2010). Publicly accessible Penn Dissertations. Paper 104. http://repository.upenn.edu/edissertations/104

Health Affairs Public/Private LTCI Complementarity:  http://content.healthaffairs.org/content/29/1/96.short
Health Affairs, 29, no. 1 (2010): 96-101  doi: 10.1377/hlthaff.2009.0920 "The Complementarity Of Public And Private Long-Term Care Coverage" David G. Stevenson,*, Marc A. Cohen, Eileen J. Tell and Brian Burwell

Article debunks Medicaid crowd out and argues against constricting Medicaid LTC eligibility. 

See my letter to the authors answering their arguments in LTC Bullet:  The Enemy of LTC Truth  Monday, February 8, 2010:  http://www.centerltc.com/bullets/archives2010/859.htm

Dual Eligibles

KFF on Dual Eligibles 0710 URL:  http://www.kff.org/medicaid/upload/8081.pdf
"Chronic Disease and Co-Morbidity Among Dual Eligibles: Implications for Patterns of Medicaid and Medicare Service Use and Spending," By Judy Kasper, Molly O’Malley Watts and Barbara Lyons

Quote:  "With the passage of health reform, new provisions are directed at improving the delivery and coordination of services for persons enrolled in both Medicaid and Medicare, otherwise known as dual eligibles. Dual eligibles constitute a costly segment of beneficiaries for both programs and include individuals with some of the most severely disabling chronic conditions. While the higher costs associated with services to dual eligibles is well-known, information on how spending distributes across these programs is less understood. This analysis uses linked Medicare and Medicaid data to provide a clearer picture of the chronic physical and mental conditions and multiple co-morbidities that create substantial needs for medical and long-term services among dual eligibles, and provides information about the financial contribution of both Medicare and Medicaid in meeting these needs."

Mathmatica on shifting LTC to Medicare 0310 LINK
"Coordinating and Improving Care for Dual Eligibles in Nursing Facilities: Current Obstacles and Pathways to Improvement," March 2010, James M. Verdier

"Residents of nursing facilities who are dually eligible for Medicare and Medicaid make up over half of all nursing facility residents. These dual eligibles are enmeshed in a care delivery and coverage system that is highly complex, fragmented, and uncoordinated. Their prescription drug coverage is the responsibility of payers who usually have no responsibility for the rest of residents' nursing facility care. Those responsible for their nursing facility care have few, if any, incentives to provide care that will enable residents to avoid unnecessary hospitalizations."

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Updated, Friday, April 1, 2011, 10:46 AM (Pacific)

Seattle--

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LTC NEWS AND COMMENT

CLASS REPEAL!  Early this morning officials of the Obama Administration reaffirmed that the CLASS Act is unsustainable.  They added that all measures to implement CLASS have ended and the Administration will support repeal of the program.  Former supporters of CLASS acknowledged it was a Ponzi scheme intended to make health reform look less expensive.  Opponents cheered.  (April Fools!)

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HAPPY BIRTHDAY:  No foolin' now.  Happy Birthday to your Center for Long-Term Care Reform!  Thirteen years ago today, on April 1, 1998, attorney David Rosenfeld and I founded the organization.  Thank you for supporting the Center and giving us such a good, long run.  Stick with us.  The best is yet to come.  Fun fact:  the Dow Blue Chips just had their best quarter since 1998 also.

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3IN4 NEED MORE:  Watch the big LTCI campaign's new video here:  www.youtube.com/3in4needmore.  On March 8 in Atlanta, the "3 in 4 Need More" campaign got a boost from Dr. Marion Somers, the long term care planning advocate who is a frequent guest on programs such as Good Morning America, Today Show, and NBC Nightly News. In a formal press conference at the Eleventh Annual Intercompany Long Term Care Insurance Conference at the Marriott Marquis, Atlanta, GA, Dr. Marion's endorsement was recorded for TV and Internet exposure. 

This was the first stop of the campaign 2011 launch.  The 2nd stop is in Las Vegas at the AALTCI Summit April 3-5.   The news briefing will take place Sunday, April 3 at 1:15pm in the Montecristo 1-2 room of the Tropicana Hotel.

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CLASS PRESENTATION:  Another program not to miss at the 9^th LTC Insurance Producers Summit is a session titled "Sell in the Presence of the CLASS Act."  Claude Thau will explain why everyone should be working toward repeal of CLASS while selling strongly at the same time.  Then Jesse Slome will talk about marketing with Claude contributing ideas as well.  The session is in Cohiba 1 of the Tropicana from 9:30 to 10:45 a.m. on Tuesday, April 5.

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MORE KIPLINGER PUBLICITY:   Long-Term Care Insurance Companies Support National Consumer Ad Effort:  "Four of the nation's leading long-term care insurance companies [Genworth Financial, John Hancock, Mutual of Omaha and Prudential] have partnered with the American Association for Long-Term Care Insurance  to undertake a springtime consumer awareness campaign.  The campaign involves placement of a special eight-page consumer guide bound into all May editions of Kiplinger's Personal Finance magazine."

AALTCI Executive Director Jesse Slome said:  "When insurers step up to support consumer education efforts undertaken by AALTCI or the Center for LTC Reform, it benefits the entire industry and so these leaders are deserving of enormous recognition,"

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3/31/11, "Fiscal Health Hinges on Containing Costs of Care," by David Wessel, Wall Street Journal

Quote:   "The U.S. government can't put itself on a sustainable fiscal course without doing something to slow health spending. It can't slow health spending costs without treating Medicaid. And it can't treat Medicaid without confronting the fact that it has become the long-term-care insurer of last resort for an aging society."

LTC Comment:  My email to the author:  "Mr. Wessel:  Excellent article.  If you want answers to the questions you raised in the piece, e.g. why Medicaid LTC is the way it is, costs so much, and how to fix it, see www.centerltc.com.  Specifically five reports I've published in three states this year including 'Medi-Cal Long-Term Care:  Safety Net or Hammock' for the Pacific Research Institute.  I've been working on this issue for 30 years, first with HCFA, then the DHHS Inspector General and in the for profit and non-profit sectors since 1989."  Steve Moses

His reply:  "Thx. Will read with interest."

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3/30/11, "Does Your 401(k) Need Long-Term Care Insurance?," by Jonas Roeser, InsuranceNewsNet.com

Quote:  "People need insurance, but do retirement funds? 'Absolutely,' says Jonas Roeser, Senior Vice President of Marketing & Operations for LTC Financial Partners LLC (LTCFP). 'If you're not thinking about your own health as you age, think about the health of your 401(k) or IRA. If your retirement vehicle becomes disabled or loses life blood, how can it support you when you need it?'"

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3/30/11,  "Obamacare has CLASS, but actuaries see problems," by Brian Blase, The Washington Times 

Quote:  "Tucked in the 2,800 pages of Obamacare was the Community Living Assistance Services and Support (CLASS) program - a new entitlement to taxpayer-supported long-term care. It's set to begin next year."

LTC Comment:  Good article criticizes CLASS.

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3/29/11, "CLASS Act hearing stirs passionate debate," by Bruce Shutan, Employee Benefit Adviser

Quote:  "A March 17th hearing on the Community Living Assistance Services and Supports (CLASS) Act had more of a July 4th sensibility, with fireworks igniting before the U.S. House Committee on Energy and Commerce Subcommittee on Health."

LTC Comment:  We also covered this hearing in "LTC Bullet:  CLASS:  What's Next?"

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3/28/11, "Shrinking Medicaid funds pummel states," by Tami Luhby, CNNMoney.com

Quote:  "Strapped states are scrambling to address Medicaid's ballooning costs before the federal government cuts back a critical source of funding this week."

LTC Comment:  Bye, bye stimulus bonus.  The extra windfall of federal Medicaid matching funds ends completely on June 30, 2011.

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3/28/11, "Medicare rise could mean no Social Security COLA," Yahoo Finance

Quote:  "The government is projecting a slight cost-of-living adjustment for Social Security benefits next year, the first increase since 2009. But for most beneficiaries, rising Medicare premiums threaten to wipe out any increase in payments, leaving them without a raise for a third straight year."

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3/28/11, "Bankrupt: Entitlements and the Federal Budget," by Michael Tanner, Policy Analysis No. 673, March 28, 2011, Cato Institute.

Quote:  "The U.S. government is about to exceed its statutory debt limit of $14.3 trillion. But that actually underestimates the size of the fiscal time bomb that this country is facing. If one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion."  (Emphasis added)

LTC Comment:  What is it they say about being in a hole?  "Stop digging!"

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3/28/11, "GOP questions HHS authority to grant healthcare waivers," by Jason Millman, The Hill

Quote:  "Republicans are also challenging how much authority Sebelius has to alter a new long-term care insurance program, which she acknowledges is 'totally unsustainable' in its current form. Sebelius said HHS will consider increasing premiums and tightening eligibility standards to make the Community Living Assistance Services and Supports (CLASS) Act solvent.  

"But Republicans are pointing to a new Congressional Research Service (CRS) report that questions just how much power Sebelius has to make changes to the voluntary program. The CRS report said a court may find the sweeping healthcare reform law does not provide the HHS secretary with the authority to raise minimum earnings requirements in order to be eligible for the program."

LTC Comment:  What a tangled web the CLASS deceit has woven! 

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3/25/11, "Living Longer: The Good News and Bad," by Jilian Mincer, SmartMoney.com

Quote:  "Men retiring at 65 in 2010 will need an estimated $124,000 to $211,000 saved up to cover health insurance premiums and out-of-pocket medical costs - and there's still a 10% chance they'll run out of savings, the report said; Women, who typically live longer, need $143,000 to $242,000. And those figures don't include the costs of a nursing home or assisted-living facility. About 70% of those over 65 will end up living in a long-term-care facility, according to the U.S. Department of Health And Human Services. In 2009, the average cost for a room in an assisted living facility was $3,131 a month; a semi-private room in a nursing home was roughly double that rate." (Emphasis added)

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3/25/11, "CBO: Block-Granting Medicaid Long-Term Care Would Save $287 Billion," by Avik Roy

Quote:  ". . . [C]onverting Medicaid's long-term care program into block grants to the states would save $287 billion over the ten-year period from 2012 to 2021, and far more in outlying years."

LTC Comment:  But even more important, block grants could free states to target Medicaid LTC benefits to the needy and encourage others to prepare responsibly with LTCI.

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3/25/22, "Handling the Boomer Inheritance," by Ashlea Ebeling, Forbes 

Quote:  "The Center for Retirement Research at Boston College estimates that 70% of baby boomer households will receive inheritances. These will total $8.4 trillion - an average of nearly $300,000 per inheriting household, with the wealthiest 10% receiving an average of $1.5 million."

LTC Comment:  And all should have LTCI!

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Updated, Friday, April 1, 2011, 10:44 AM (Pacific)

Seattle--

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LTC NEWS AND COMMENT (NURSING HOMES)

Topic:  Understanding the Challenges Nursing Homes Face

LTC Comment:  Long-term care is a complicated subject.  I used the parable of the "Elephant and the Blind Men" to explain LTC complexity in "The Elephant, the Blind Men and Long-Term Care" here. 

The basic point is this.  Until you understand all the components of long-term care and how they fit together, you cannot understand LTC service delivery and financing as a whole.  The key components or "blind men" of LTC are government, the public, providers, insurers and financiers. 

In my model of the LTC system, these components interact in the following way:  Government pays for too much LTC which anesthetizes the public to its risk and cost thus crowding out a private insurance market to pay for it and leaving LTC providers and financiers mostly dependent on deficient public financing.

This is why we have a dysfunctional LTC service and financing system fraught with problems of access, quality, reimbursement, discrimination, and institutional bias even though we live in the wealthiest country in the world where no one wants to go to a nursing home.

Today, I want to focus on one component in the LTC system that we all need to understand better:  nursing homes.  They became the dominant venue for custodial LTC because Medicaid made their services virtually free of charge in 1965.  But over time, Medicaid cut back leaving nursing homes with too little revenue, more expensive and higher acuity residents, access and quality problems, and too few private payers.

The Alliance for Quality Nursing Home Care has published a series of topic briefs that explain the challenges nursing homes face.  Following are the titles, the abstracts (with footnotes omitted) and hyperlinks to the full reports.  Read them and you will come away with a much better understanding of the LTC service delivery and financing system. 

I hope you'll also find more evidence than ever to support the reforms the Center for Long-Term Care Reform has recommended.

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Trends in Post-Acute and Long-Term Care, September 2009

On any given day, there are 1.5 million Americans being cared for in 16,000 nursing facilities nationwide. These facilities provide complex medical, therapeutic, and rehabilitative care to a diverse, clinically complicated population. Nursing facilities serve a crucial role in the post-acute and long-term care continuum, serving as the primary provider of Medicare post acute care while simultaneously caring for a functionally impaired and clinically complex longer-stay population.

Nursing Facilities Serve Two Distinct Populations

Nursing facilities provide intense medical, rehabilitative, and therapeutic care to patients following a hospitalization. Many patients treated in nursing facilities after an acute hospital admission ("post-acute" care) are covered by Medicare and have relatively short lengths of stay. Nursing facilities are, in fact, the dominant provider of Medicare post-acute care services, treating more than 50 percent of all Medicare beneficiary hospital discharges that require post-acute care.

Nursing facilities simultaneously care for a longer-stay population, most of whom are medically complex, functionally limited, and, in some cases, also cognitively impaired. These residents are more likely to be paid for by the individual, their family, or Medicaid. The average length of stay for Medicaid residents in FY 2007, for example, was 386 days.

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Medicaid's Important Role in Supporting High-Quality Care for Nursing Facility Residents; Medicaid Support for Nursing Facility Care: At a Crossroads, May 2010 (link)

Over 59 percent of Americans currently receiving care in nursing facilities are covered by Medicaid. These half a million people rely on Medicaid to pay for their care, as the only government program that supports long-term care for the low-income elderly and disabled. Although the Medicaid program has faced serious challenges in the past, the current recession has exacerbated chronic underfunding of nursing facilities, raising serious questions about providers' capacity to deliver quality care.

Medicaid programs in 49 states and the District of Columbia reimburse nursing facilities at rates below the allowable costs, that is, costs recognized by state programs as related to patient care. Many states are proposing further rate reductions to help close significant state budget gaps due to the recession. The State of Kansas, for example, reduced rates to nursing facilities by 10 percent in January 2010 in an effort to close a $258 million budget shortfall.

Medicaid rates have important implications for residents' care. Research points to the relationship between Medicaid rate levels and quality. Where rates are relatively higher, nursing facilities perform better on key outcome measures, such as rates of hospitalization.

In some cases, nursing facilities may cross-subsidize care for Medicaid patients with funding from Medicare or private payments. Where there is limited ability to cross-subsidize due to a high concentration of Medicaid residents, facilities often perform poorly on quality metrics. Since African-American and Hispanic residents are more likely than white residents to be cared for in high-Medicaid facilities, they are disproportionately affected by inadequate Medicaid funding.

States are facing unprecedented challenges funding care for nursing facility residents due to the impact of the recession. The current budget environment, deteriorating rate levels, and quality of care implications raise serious policy questions about how institutional long-term care should be funded for our most vulnerable populations. As one thought leader concluded, "If you did have accurate [information] about what we could do given the resources available, you basically have two choices: to reset standards - the care standards - to be more realistic, or to increase the resources to pay for them."

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Economic Contribution of Nursing Facilities, February 2011

As we begin February, 2011, there exists a growing sentiment among federal officials that the recession is over, the U.S. economy has turned the corner, and that a revitalized state economic picture will quickly follow nascent national trends. However, state and local governments are still dealing with the aftermath of this historic recession, and grappling with record-size budget shortfalls. Nursing facilities in rural, suburban and urban communities alike provide an essential service for an extremely vulnerable population, and employ a substantial segment of the nation's health care workforce. It is essential for nursing facilities to thrive economically so they are able to provide high-quality care to residents, and good jobs to local workers. In addition to the fact nursing facilities will likely experience further Medicaid cuts (driven in part by expiration of the enhanced federal Medicaid match rate), the nursing sector faces the possibility of further reductions in federal Medicare payments. Economic pressures on nursing facilities affect more than the quality of life of residents; they negatively impact a workforce that in many states accounts for a sizable portion of the local employment base. When considering budgetary policy for FY 2012, policymakers should be cognizant of the considerable impact of nursing facilities on the United States economy, and that Medicare cuts have a significant local impact on seniors' care and jobs throughout America.

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Rehospitalizations From Skilled Nursing Facilities:  A Multifaceted Issue That Calls for Innovative Policy Solutions, January 2010 (link)

There is broad interest in improving the quality and efficiency of the health care system in the United States. Policymakers are increasingly focused on the rate of rehospitalizations as an area for potential improvement. An estimated one-fifth of Medicare beneficiaries who are discharged from the hospital are readmitted within 30 days. Ninety percent of those admissions are unplanned, and they cost Medicare an estimated $17.4 billion in 2004. In addition to their cost, rehospitalizations appear to increase the risk of health complications, resulting in greater functional and cognitive impairment for patients.

Nursing facilities are the dominant provider of Medicare post-acute care services, and they represent an important element of any strategy to reduce rehospitalizations. A more detailed exploration of rehospitalizations from nursing facilities suggests the issue is complex and driven by the interplay of several factors. Rehospitalization rates vary substantially by region, implying that local practice norms may play an important role. Specific state and nursing facility characteristics - such as higher Medicaid payments and more generous nurse staffing - also have significant impacts on rehospitalization. Although some causes of rehospitalization are not well understood, the research done to date suggests that efforts to reduce rehospitalizations will have the greatest impact if they reach beyond the Medicare program and consider nursing facilities' broader operating and reimbursement environment.

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Therapy Services in Nursing Facilities, September 2010

Therapy services in nursing facilities serve a critical role in helping individuals achieve and maintain maximum physical and functional well-being. Nursing facilities have evolved over the past twenty years to serve an increasingly acute, clinically complex, and rehabilitation-intensive population. Today, over half of all Medicare beneficiaries requiring care following a hospital admission are treated in nursing facilities. Therapy is an important part of this care, enabling patients to re-gain speech and motor function as well as master key daily activities, such as bathing and dressing. Therapy helps accelerate patient discharge and decrease nursing facility lengths of stay, so that patients may return home sooner.

Therapists treat patients with diverse needs, ranging from helping patients' restore muscle and joint strength following hip or knee replacement surgery to enabling a beneficiary to re-learn speech, language, and swallowing skills following a stroke. Despite this diversity, therapy services share a goal of helping residents achieve and maintain the highest practicable level of functioning. In this way, therapy plays an important role in meeting the Omnibus Budget Reform Act (OBRA) of 1987 requirements, which establish a minimum standard of care, including an expectation that nursing facility residents' ability to perform activities of daily living would be improved or maintained absent medical challenges.

The Centers for Medicare and Medicaid Services (CMS) is currently considering several changes to Medicare payment for therapy services. A better understanding of therapy's role in nursing facilities may help inform this discussion. As policymakers seek to move toward a more integrated, coordinated model of care that focuses on accountability for longer-term outcomes, therapy services will be an important partner in promoting greater physical and functional health for some of the most vulnerable Medicare beneficiaries.

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Updated, Tuesday, March 29, 2011, 11:10 AM (Pacific)

Seattle--

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LTC BULLET:  LTC ALMANAC UPDATE

LTC Comment:  Our latest update to the "LTC Almanac" in The Zone follows the ***news.***

*** SPECIAL.  In appreciation for Claude Thau's sponsorship of today's LTC Bullet we are making access to The Zone, including the "Almanac of Long-Term Care" free for one week.  To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password:  UN: IntrotoZone / PW: FreeTrial.  Like what you see?  Then join the Center for Long-Term Care Reform here. ***

*** 2011 MEDICAID/MEDICARE NUMBERS.  Want to know what the Medicaid Spousal Impoverishment Standards and the Medicare Deductibles and Co-Insurance figures are for 2011?  We've just updated the information in The Zone here.  You'll need your User Name and Password to enter The Zone.  Check with Damon at 206-283-7036 or damon@centerltc.com if you need a reminder or to join the Center and get access to this cornucopia of information in The Zone. ***

*** MEDICAID FLAT/MEDICARE UP.  Because there was no Social Security cost of living increase in 2010 or 2011, the Medicaid spousal impoverishment protection numbers stayed flat.  But Medicare's co-insurance and deductible numbers continue their steady annual increase.  This is just one more example of the eligibility noose tightening on all federal welfare and social insurance programs.  Keep an eye out for others. ***

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LTC BULLET:  LTC ALMANAC UPDATE

LTC Comment:  Center members know and appreciate our "Almanac of Long-Term Care" in The Zone, our password-protected website. 

The LTC Almanac is divided into 11 sections:

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 
Medicaid Planning   

Each section is divided into sub-sections and under each sub-section we provide a list by date of the most important reports and articles published on the topic, usually with a few highlights.

The Almanac of Long-Term Care is a great way to find statistics you need quickly or to get current on topics you need to know the latest information about.

The Zone and the LTC Almanac are for Center for Long-Term Care Reform members only, except during this week's free trial offer.  Join the Center here:  http://www.centerltc.com/support/index.htm.  Call or email Damon at 206-283-7036 or damon@centerltc.com.  He can give you a user name and password to open up The Zone even before your annual dues payment arrives.  Individual annual memberships are $150 and corporate memberships with many extra benefits start at $1,000.  See our "Membership Levels and Benefits" schedule here.

Caveat:  With time, some hyperlinks go bad.  In a huge document like the "LTC Almanac," we can't keep all the links current all the time.  If you find a bad link, but want to get to the material, contact us.  We often have an electronic copy of the document and we can usually find a current live link.  We'll also fix the link in the LTC Almanac so it will be current again for others.

LTC Almanac Update

Chapter 1:  Aging Demographics 

United States 

General Stats 

Older Americans 2010--Key Indicators of Well-Being 
See LTC E-Alert #10-084:  New Compilation of Aging Statistics, Wednesday, July 21, 2010

Boomer Generation Characteristics

Allianz Reclaiming Future Study 0610
"The Allianz Reclaiming the Future Study was conceived to be one of the most comprehensive examination of baby boomers' preparation for and expectations of retirement." Download the White Paper (pdf):  https://www.allianzlife.com/Variable/content/public/Literature/Documents/ENT-991.pdf  Download the Executive Summary (pdf):  https://www.allianzlife.com/Variable/content/public/Literature/Documents/ENT-993.pdf

Chapter 2:  International

Global Aging

Global Aging and the Crisis of the 2020s 1210 URL:  http://csis.org/files/publication/110104_gai_jackson.pdf
“The risk of social and political upheaval could grow throughout the developing world—even as the developed world’s capacity to deal with such threats declines.”

Countries

England:

British LTCI 1010 URL:  http://www.abi.org.uk/Publications/52323.pdf

"If your personal assets are more than £23,250, you will normally be expected to pay for the full cost of long term care yourself, although you may still be entitled to some state benefits that are not means-tested."

Chapter 3:  Unfunded Liabilities--Social Security, Medicare, and Budgets

GAO on Unfunded Liabilities

"The Federal Government's Long-Term Fiscal Outlook  January 2011 Update (link)," United States Government Accountability Office:  Quote:  "GAO’s long-term simulations show that even as the economy recovers and policies to stimulate the economy wind down, the outlook is for large and growing deficits."

Unfunded Liability Estimates

KFF on Medicare Trustees 0810 URL:  http://www.kff.org/medicare/upload/7305-05.pdf

*** UPDATED MEDICARE FACT SHEET Reflects New Medicare Solvency Data.  Tuesday, August 10, 2010.  The Kaiser Family Foundation's Medicare Spending and Financing fact sheet has been updated to reflect changes in the latest financial projections for Medicare from the 2010 Medicare Trustees Report. The report incorporates reductions in the rate of growth of Medicare spending, attributable to the 2010 health reform law. The fact sheet includes an updated estimate showing the law will extend the solvency of the Medicare Part A Hospital Insurance Trust Fund until 2029, 12 years later than was projected in last year’s report.  The fact sheet is available online at http://www.kff.org/medicare/7305.cfm." 

LTC Comment:  Take this with a grain of salt.  For reasons we've covered here and will again, claims the Medicare "trust fund" has a longer lease on life are specious.  See "The $50 Trillion Sleight of Hand." *** 

Critical analysis of 2010 trustees report: 
Medicare Unfunded Liabilities, NCPA 1110 URL:  http://www.ncpa.org/pdfs/st330.pdf
"Medicare Trustees Reports 2010 and 2009: What a Difference a Year Makes, Policy Report No. 330 by Andrew J. Rettenmaier and Thomas R. Saving, National Center for Policy Analysis, October 2010
"News that's too good to be true," by John Goodman, NCPA
"The $50 Trillion Sleight of Hand," Thursday, August 12, 2010, by Steve Moses
"Medicare Trustees Issue Report Disavowed by Chief Actuary," by J. D. Foster, Ph.D.

Live hyperlink to:  2010 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS, 8/5/10  http://www.cms.gov/ReportsTrustFunds/downloads/tr2010.pdf

Chapter 4:  Long-Term Care

Home and Community-Based Services

Adult Day Services by MMMI 1010
A summary of the study's findings in the Sacramento Bee said: "Nearly half of family members serving as primary caregivers to loved ones have either lost a job or missed career opportunities as a result of their care giving responsibilities, finds a new study by Genworth Financial (Genworth) . . . [and] more than four in ten primary caregivers experience an increase in stress with their spouse and nearly three in ten report stress with siblings."
See also LTC E-Alert #10-121:  Two Reports You Should Review, Wednesday, October 13, 2010:  http://www.centerltc.com/members/e-alerts/ltc_ea10-121.htm

Chapter 5:  Caregiving

General

MetLife Caregiving Study 0210
"The MetLife Study of Working Caregivers and Employer Health Care Costs"
See also:  LTC E-Alert #10-016:  Data Arrows for Your LTCI Quiver, Thursday, February 4, 2010

Caregiver Stress and Burnout

Beyond Dollars--True Cost of Caregiving 0910
"Beyond Dollars: The True Impact of Long Term Caring"  Research findings on the circle of care and the impact on the many people within it.  Genworth report.

Chapter 6:  Long-Term Care Financing 

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

2008 Data and 2009-2019 projections:

CMS Tables
Health Affairs URL:  http://content.healthaffairs.org/cgi/content/full/29/1/147
LTC Bullet:  So What If the Government Pays for Most LTC?, 2008 Data Update, Wednesday, January 13, 2010:  http://www.centerltc.com/bullets/archives2010/855.htm
Health Affairs on Spending Projections:  2009-2019

Past Budget Crises as Prologue

AARP on Weathering the Storm 0111

"This report is the most comprehensive analysis to date on the budget cuts to both Medicaid and non-Medicaid–funded long-term services and supports (LTSS) in each state. It also illustrates state-by-state how LTSS are financed. In addition, this study provides a very early snapshot of the likelihood of states pursuing some of the LTSS provisions within the Affordable Care Act (ACA). An individual state profile summarizing additional information obtained from each state that participated in the survey is located at www.aarp.org/ppi, www.healthmanagement.com, and www.nasuad.org."

Chapter 7:  Long-Term Care Insurance

General and Data

ILTCI Think Tank Report 031710 URL:  http://www.soa.org/files/pdf/ltc-2010-think-tank.pdf  "The intent of the Think Tank was to a) identify issues facing the LTC industry; b) prioritize these issues; c) brainstorm solutions to these issues; and d) identify specific next steps. To accomplish these goals, a list of invitees was developed. Invitees were chosen based on their industry position and with an eye toward representing a wide spectrum of disciplines and perspectives—actuaries, underwriters, sales; insurance companies, consultants, vendors, distribution companies."

How Much is Enough?

Healthy aging more costly 070910 URL:  http://crr.bc.edu/images/stories/Briefs/ib_10-8.pdf    May 2010, Number 10-8 "Does Staying Healthy Reduce Your Lifetime Health Care Costs?"  By Wei Sun, Anthony Webb, and Natalia Zhivan:

"Our main finding is that although the current health care costs of healthy retirees are lower than those of the unhealthy, the healthy actually face higher total health care costs over their remaining lifetime."

See also:  LTC E-Alert #10-078:  So Much for the Good Health Objection, Friday, July 9, 2010 

The CLASS Act

For comprehensive, frequently updated background on the CLASS Act, see "CLASS Act Update" in The Zone here: http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm.

Dick Kaplan on CLASS Act 11/10 URL:  http://ssrn.com/abstract=1692288
"Financing Long-Term Care After Health Care Reform"

Heritage on CLASS 0710 URL:  http://thf_media.s3.amazonaws.com/2010/pdf/bg2441.pdf
"The CLASS Act: Repeal Now, or Face Permanent Taxpayer Bailout Later," James C. Capretta and Brian M. Riedl
See also LTC E-Alert #10-086: CLASS Doyenne Cops Out, Cashes In, Friday, July 23, 2010:  http://www.centerltc.com/members/e-alerts/ltc_ea10-086.htm

Chapter 10:  Medicaid

Medicaid is the 800-pound gorilla of LTC

POLICY REVIEW " NO. 153 " FEATURES:  The Forgotten Entitlements by Henry Olsen and Jon Flugstad:  http://www.hoover.org/publications/policy-review/article/5519

"Two little known entitlement programs, Social Security Disability Insurance (ssdi) and Medicaid Long Term Care (ltc), are also increasing at unsustainable rates. Call these the forgotten entitlements."  

Medicaid Financing

Medicaid LTC-The Ticking Time bomb 0610

"A recent report by Deloitte titled "Medicaid Long-term Care: The ticking time bomb" gets the problem right, but the solution wrong."

See:  LTC E-Alert #10-069:  Right Time-Bomb, Wrong Solution, Tuesday, June 22, 2010

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Updated, Friday, March 25, 2011, 1:30 PM (Pacific)

Seattle--

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LTC NEWS AND COMMENT

LTC Comment:  Following is our latest "LTC News and Comment" update.  Does that phrase sound familiar?  That was the title of a much-loved LTCI industry newsletter edited by my late friend and colleague George Sherman.  The company he and I worked for in the '90s (LTC, Incorporated) published LTC News & Comment until GE bought LTC, Inc. in 1997.  Then, Harley Gordon and CLTC published the newsletter until George's untimely death in 2001.  By using the phrase "LTC News and Comment" more in the future, I mean to remember George Sherman's important contribution to the LTC conversation and to appreciate the people and organizations who have supported his work and mine.  (Read our tribute to George Sherman including encomia from many of his friends and colleagues here:  http://centerltc.com/george.htm.)

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The 9^th LTC Insurance Producers Summit convenes at the Tropicana Hotel in Las Vegas from April 3-5, 2011.  AALTCI Executive Director Jesse Slome reports a blow out attendance of 525 and counting.  Damon and I will be there.  How about you?  And remember:  "what happens in Vegas stays in Vegas" unless it's what you learn at this next program in a series of great conferences!

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3/24/11, "A Q&A on the CLASS Act," by Bill Grossman, Employee Benefit News

Quote:  "If nothing else, the CLASS Act will play a significant role in raising employee awareness about the need to plan for their long-term care, and more and more companies will likely begin offering long-term care insurance as an employee benefit as a result."

LTC Comment:  On the other hand, CLASS may further desensitize employers, employees and the public to the need to plan responsibly for LTC risk and cost.  LTC?  Been there, done that, I'll get it at the office if I need it.  Later:  "Oops."

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3/24/11, "Medicare Rule Sparks Concerns About Patients' Access To Home Health Care," by Phil Galewitz , Kaiser Health News (LINK)

Quote:  "Home health agencies, hospitals and consumer groups are complaining that a new rule intended to curb unnecessary Medicare spending will make it harder for senior citizens to get home care services." 

LTC Comment:  Yet one more reason to have private LTC insurance that covers home care.  Expect news like this from Medicare and Medicaid to increase exponentially as the Age Wave crests and crashes.

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3/23/11, "The 50s:  Repairing a Long-Neglected Nest Egg," by Carmen Wong Ulrich, New York Times

Quote:  "Ms. Overman said all older people should consider such [LTCI] coverage, even married couples with children. 'I have had women tell me, 'My kids will take care of me.' Only to have them call me a year and a half later saying that their kids are losing their jobs because they're taking care of me!'"

LTC Comment:  Good to see this kind of advice in the New York Times!

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3/22/11, US Department of Labor Announces Release of Long-Term Care, Supports, Services Competency Model (LINK)

Quote:  "The Employment and Training Administration (ETA) has worked with technical and subject matter experts from education, business, and industry to develop a comprehensive competency model for the Long-term Care, Supports, and Services Industry. The model is designed as a resource supporting workforce development efforts to prepare the workers who make it possible for the aging population and those with disabilities to live their lives with independence and dignity."

LTC Comment:  This "competency model" makes it sound like a home care aide needs the skills of a Philadelphia lawyer.  Check it out here.  The irony is that in the real world, most home care is funded by government programs that pay too little to ensure quality care from competent, English-speaking providers. 

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3/22/11,  At Long-Term Care Conference in Las Vegas, '3 in 4 Need More' Campaign Will Make Its Second Road Show Appearance (LINK)

Quote:  "On Sunday April 3 in Las Vegas, Nevada, the '3 in 4 Need More' campaign will make its second public appearance, following the first in Atlanta, Georgia, on March 8. The campaign seeks to inform Americans that health insurance isn't enough. Millions of us need more: some form of long-term care insurance or planning to cover longer-lasting illnesses and disabilities not covered by regular insurance or Medicare."

LTC Comment:  Got LTCI!? 

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3/22/11, "Guiding Baby Boomer Clients through the Challenges of Long-Term Care," by Jay Pabian and Jessica Weisner Enners, Accounting Today

Quote:  "Long-term health care options must be an integral part of an overall financial plan for Baby Boomers who want to maintain their desired standard of living and provide for a surviving spouse or significant other."

LTC Comment:  Financial planners and accountants often ignore the importance of LTC planning so it bears our notice when CPAs focus publicly on the topic.

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3/22/11, Kaiser Health News, "WSJ: U.S. Disability Fund May Run Out Of Cash"

Quote:  "The Wall Street Journal:  Insolvency Looms As States Drain U.S. Disability Fund.  The SSDI is set to soon become the first big federal benefit program to run out of cash - and one of the main reasons is U.S. states and territories have a large say in who qualifies for the federally funded program.  Without changes, the Social Security retirement fund can survive intact through about 2040 and Medicare through 2029.  The disability fund, however, will run dry in four to seven years without federal intervention, government auditors say (Paletta, 3/22)."

LTC Comment:  Of course both Social Security and Medicare are already collecting less in revenue than they spend.  Their survival until 2040 and 2029 respectively only means taxpayers in the meantime must repay the principal and interest in the programs' "trust funds" which have already been borrowed and spent on other government priorities.  

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3/21/11, "Rep. Rehberg launches CLASS Act probe," by Jason Millman, The Hill

Quote:  "A House appropriator wants to know if any Democrats knew a new long-term-care insurance program created by healthcare reform was unsustainable before they voted for the law."

LTC Comment:  CLASS intrigue!

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3/21/11, "Global Aging and the Future of Emerging Markets," by Richard Jackson, Neil Howe, and Keisuke Nakashima, Center for Strategic and International Studies

Quote from press release:  "The rich world may be leading the way into humanity's graying future, but much of the developing world is not far behind.  [This report] identifies a series of risks to growth and stability that may become acute by the 2020s [including] the 'premature aging' of China, demographic implosion in Russia, and a new resurgence of youth populations in much of the Muslim world."

LTC Comment:  This report is an excellent window into how America's aging demographic challenges fit into the larger international context.

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3/21/11, American Association for Critical Illness Insurance, press release Part 1, Part 2

Quote:  "One third (34%) of new critical illness insurance claims by male policyholders in 2010 began prior to age 55 according to the 2011 Buyer & Claimant Study conducted by the American Association for Critical Illness Insurance (AACII) and Gen Re.  The remainder of claims started at ages 55 or older."

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3/18/11 (reissued), "The Federal Government's Long-Term Fiscal Outlook  January 2011 Update," United States Government Accountability Office (LINK)

Quote:  "GAO’s long-term simulations show that even as the economy recovers and policies to stimulate the economy wind down, the outlook is for large and growing deficits."  

LTC Comment:  Still think Social Security, Medicare and Medicaid can survive in more or less their current form?  Read this GAO report and think again.

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March 2011, Prudential released study report titled "Long-Term Care Insurance: A Piece of the Retirement & Estate Planning Puzzle"

Highlights:  "A majority of Americans are concerned about needing long-term care services someday . . . Knowing someone who has required long-term care services greatly increases the level of concern . . . Lack of knowledge leads to misperceptions about the costs and funding sources for long-term care services . . . Americans say long-term care insurance is important but they don't believe they should buy it until they are retired . . . Life stage (e.g., age, marital status) plays an important role in how people view the value of long-term care insurance . . . Misperceptions about long-term care insurance are an obstacle for many Americans to further researching and considering coverage for themselves and their families . . . Greater awareness and education are needed about the role of long-term care insurance in retirement and estate planning . . . Long-term care insurance can help protect retirement savings and provide peace of mind."

LTC Comment:  "Entitlement mentality" is the answer to the puzzle revealed in so many studies that Americans know they're at risk for LTC but still don't plan.  As the bottom falls out of the middle-class social safety net that created the entitlement mentality, many more people will act responsibly on their knowledge that LTC is high risk and high cost.  The future is bright for all forms of private insurance and retirement planning tools. 

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3/17/11, "It's still an empty lockbox," by Charles Krauthammer, Washington Post

Quote:  "Invoking the 'full faith and credit' mantra for those IOUs in the trust fund is empty bluster. It does not change the fact that, as the OMB itself acknowledged, those IOUs 'do not consist of real economic assets that can be drawn down in the future to fund benefits.'"

LTC Comment:  Ever wonder why the Administration and senior advocates still argue that Social Security is solvent until 2037 when in fact there's noting in the program's "trust fund" but IOUs.  Finally, a clear explanation in this op-ed.

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Updated, Tuesday, March 22, 2011, 12:58 PM (Pacific)

Seattle--

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LTC BULLET:  CLASS:  WHAT'S NEXT?

LTC Comment:  News and views on CLASS including a column by actuary Steve Schoonveld after the ***news.***

*** CLTC DESIGNATION MASTER CLASS available online April 1.  No foolin'!  Information, preview and registration here. ***

*** CLASS Scuttlebutt:   

• According to the Congressional Research Service, HHS lacks the statutory authority to fix CLASS.
• Top 10 Reasons Why Conservatives Should Love CLASS:  This article is pure lunacy because of its fallacies, inaccuracies and misrepresentations, but you should probably be aware of it.

*** CLASS HEARING:  The House Energy and Commerce Subcommittee on Health held a 3-hour hearing on Thursday, March 17, 2011 titled "The Implementation and Sustainability of the New, Government-Administered Community Living Assistance Services and Supports (CLASS) Program."  Watch the hearing and read members' and witnesses statements here. ***

*** LEGISLATION TO REPEAL CLASS ACT introduced by Boustany, Gingrey on  March 17, 2011 ***

*** THE HILL, "House GOP questions CLASS Act startup funds," by Jason Millman, 03/17/11.  "[W]hy [is] the White House . . . requesting millions of dollars to implement a long-term health insurance program that the administration admits is unsustainable. ***

*** HERITAGE:  "Secretary Sebelius Cannot Fix CLASS," by Brian Blase and John S. Hoff, WebMemo #3193, March 16, 2011.  Excellent, must-read analysis. ***

*** CLAUDE THAU on 10 ways the government is prejudicially favored in pricing CLASS:

1. They save underwriting costs as well as the costs of having to issue policies.
2. They save commission cost and processing thereof and don't have to appoint and do background checks on brokers, nor engage in broker training or confirm licenses or certifications.
3. They are allowed to price their product such that if their assumptions materialize, price increases would be required.  In contrast, private LTCi not only cannot price with the intention of having price increases, the private industry must certify that premiums would remain the same even if moderately adverse experience were to occur.  They can account for the program without reporting reserves or holding required surplus.  If insurers had the non-lockbox flexibility that CLASS has, private LTCi could be less expensive.  The government does not incur surplus strain, nor do they have to provide any guarantees as to benefits and they don't have to contribute to state guaranty associations.  Because they have control to change the law, they potentially have access to employer money and other funding to cover shortages and could mandate that everyone must participate.
4. They do not have to pay premium taxes, income taxes or DAC [deferred acquisition cost] tax, etc.
5. They don't invest time educating and counseling clients, and filling out applications, including suitability, replacement, etc. They have minimal costs for marketing material and advertising because they can force employers to deliver education to employees.  Furthermore, not only do they have a tremendous critical mass advantage, but to the degree that they incur costs, they do not have to reflect such costs in the premium.  For example, they already have a bevy of HHS staff working full-time on the program at tax-payer expense and they have budgeted $93 million of tax-payer money for marketing.  They also  are able to increase participation artificially through automatic enrollment.
6. They don't invest any time on non-buyers.
7. They don't have to file contracts, marketing materials or rate increases with the state, do annual filings on all kinds of issues to the various states, etc.  To the degree they have to do any such things, they get to spread that cost over a huge base and don't even have to charge that cost to the program.
8. They don't have to monitor and deal with prospective and actual law changes at the federal level, in all 51 jurisdictions and sometimes at lower levels.  Indeed, they have the unique ability to make business hard for their private industry competitors by creating legal and regulatory obstacles and increasing taxes.
9. They cannot be sued, which saves money and avoids E&O costs.  They are also not subject to state audits, fines or "independent review" of claims.
10. They can created unfunded liabilities on the states, burdening them with establishing care coordination and claims review processes.

LTC Comment:  Why is the government exempt from these routine consumer protections that are mandatory for private LTC insurance? ***

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LTC BULLET:  CLASS:  WHAT'S NEXT?

LTC Comment:  If you missed the House hearing referenced in the ***news*** above, you might want to invest some time to watch it here.  But just in case you can't spare the three hours, here's our thumbnail summary:

Proponents said CLASS does good things, so we should ignore its financial and actuarial irresponsibility.  Opponents said CLASS is financially and actuarially irresponsible, so we should ignore all the good things it claims it would do.  Everyone agreed Medicaid is a disaster that forces people into impoverishment so something has to be done.  But no one understood or explained that (1) Medicaid does not require impoverishment, (2) is easily available even to the upper-middle-class after care is needed, (3) anesthetizes the public to LTC risk, and (4) crowds out the markets for (a) privately financed home care, and (b) home equity conversion or (c) private insurance to pay for it.  The whole hearing floundered for lack of this clarity on Medicaid's role as the cause of the problems, the symptoms of which CLASS ineffectually attempts to address.

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We're pleased now to bring you the following article by well-known consulting actuary Steve Schoonveld.  He opines about what's wrong with CLASS and how to fix it. 

"The CLASS Act:  What Now?"
by
Steve Schoonveld

There is broad agreement that the CLASS program, as passed by Congress, will be a challenge to implement successfully.  Where disagreement lies is in the ability to change the program and the level of changes that are necessary to launch a sustainable and effective program. In this article I provide an analysis of CLASS as it stands today and offer an alternative approach that will more effectively and broadly meet the goals of the program and the needs of consumers.

CLASS Adjustments

The goals of the CLASS program as stated by Kathleen Greenlee, Assistant Secretary for Aging in the U.S. Department of Health and Human Services’ Administration on Aging, are "to create an opportunity for individuals to prepare financially for their own long-term needs, support consumer choices related to their own care and living arrangements, and facilitate independence and community living." The authors of the CLASS program point to the institutional bias and the impoverishment provisions of Medicaid as the only source of support offered to most households. While this is indeed a gross mischaracterization of some innovative state Medicaid programs, it is indeed a painful general truth. State Medicaid programs are in the midst of a significant crisis, however CLASS will not help the people it is intended to help if it is designed to fail. The Administration has a difficult task ahead of them to construct a program under the law that is sustainable and enables broad and meaningful participation.

The adjustments which have been presented in public forums, such as the recent testimony by the Assistant Secretary, include the use of indexing premiums; increasing penalties for delayed enrollment or opting back in; increasing the actively-at-work definition to a $12,000 annual income level; and reducing the one-size-fits all aspect of the program. The presumption within this latter adjustment is that alternative benefit levels and durations are being pursued.  Whether the secretary can make these adjustments without legislative means is immaterial.  The real question is whether the adjustments will yield a sustainable and effective program.

The Participation Play

Greenlee stated that participation is key for the success of the program.  This is true to a limited extent.  Once the appropriate level of scale is achieved the sustainability of the program should not vary based on whether one or a million additional policies are sold.  Participation is a variable that impacts the financial sustainability of the program and should not be a core foundation for pricing an insurance program.  The hope that healthy employees will purchase CLASS and retain coverage through lean financial times is especially concerning in a very long duration program where ongoing adverse selection and induced demand issues are ever present.  Any one of a number of long-term pricing assumptions, a simple example is the number of subsidized premium participants, could bankrupt the program.

A voluntary guaranteed issue-program is considered by many to be a contradiction.  To be successful CLASS will need to do one of two things; either significantly reduce the guaranteed issue aspect or make use of an individual mandate.  The former produces a program that mimics private group long-term care insurance.  The latter is a social program directly funded through general revenue such as payroll deductions.

Complementary but Different?

In general, the Group Long-Term Care insurance market offers guaranteed-issue coverage for employees who are actively at work and enables spouses of employees to purchase coverage if they are able to pass underwriting.  The use of simplified or medical underwriting on employees is rare and limited to certain cases such as the purchase of high amounts of coverage, unlimited benefit periods, or coverage purchased after the initial offering.  In addition, the employer, the insurance carrier and the broker or agent spend a significant amount of time marketing the product to employees through the use of employee meetings, marketing materials to encourage enrollment and web based product demonstrations.

Mark Warshawsky of Towers Watson testified in front of the Health Subcommittee of the House Committee on Energy and Commerce, “about 50% of large employers offer but do not subsidize long-term care insurance to their workers”.  Yet participation rates for these voluntary worksite benefits remain in the mid-single digits.  Reasons for the low participation levels have been attributed to the general reliance on Medicaid as the “payer of only resort”, the lack of strong tax incentives to purchase, and the very limited focus on retirement and financial planning.  Furthermore, one cannot ignore affordability.  According to a 2009 Society of Actuaries study on Retirement Risks and Solutions, the 25^th to 75^th percentile (or middle mass) of households within the pre-retirement ages between 55 and 64, have an average annual gross household income of $57,000.  Given the current cost of housing, college tuition and some need to save for retirement, where is there room for a premium of anywhere from $65 to $240 per month?

It is clear that the private insurance product sold through the group channel is quite similar to where CLASS will likely proceed.  The markets may be complementary in the level of benefits that are offered but are the markets and the approach to sales significantly different?  One area of difference will be the budget available to market CLASS.  Within the Administration’s current budget proposal is over $90 million for CLASS marketing.  While this will go quite a long way to educate the public on the financial risks they face, will it enable CLASS to enroll beyond the mid-single digit level?  Will this be money well spent for a small level of CLASS participation?

"Never let a serious crisis go to waste"

This quote, spoken in support of the economic stimulus bill by fellow Chicago native Rahm Emanuel, can also be said of today’s Medicaid.  State Medicaid programs are facing crises and the opportunity to reform should not go to waste.  These programs should be reserved for the truly impoverished and for circumstances in which care is needed for catastrophic occurrences.  Currently, the ability to qualify for Medicaid through artificial impoverishment is far too easy.  This has encouraged a reliance on Medicaid as the product of choice for catastrophic long-term care needs and discouraged the responsible purchase of an insured solution.

A common reason given for the creation of CLASS was the perceived institutional bias and impoverishment requirements of Medicaid programs.  The inability to qualify for benefits and remain in the community is also cited.  To attain the same goals, CLASS supporters should re-focus their energies on enabling states to administer Medicaid so that it is both an efficient means of funding care for the truly impoverished and unfortunate rather than a dependency for the many.  Such a move will have strong and wide support as without such changes Medicaid will not be able to continue even the basic mission of assisting the impoverished.

With support from the research gained from CLASS, these improvements can increase the reach of Medicaid to reverse many of the recent cutbacks in benefits.  Furthermore, the absence of an assumed dependence on Medicaid, beyond the truly catastrophic safety net, will increase the enrollment in insurance products that meet the needs of consumers thereby reducing the burden on Medicaid. 

The Assistant Secretary stated that Medicaid nursing home care costs “are a key source of financial stress on public budgets”.  Unfortunately, the likely outcome of CLASS will not significantly change this anytime soon.  It is time for an effective approach that is based on sound and efficient public policy solutions instead of a program that may have limited participation and an uncertain future.

Steve Schoonveld is a consulting actuary specializing in the Long-Term Care and Accident & Health industry.  Currently Steve serves as chairperson of the LTC Industry Think Tank which is jointly sponsored by the LTCi Section of the SOA and the ILTCI Conference Board.  He is a Fellow of the Society of Actuaries and is a member of the American Academy of Actuaries.  Steve can be reached at sschoonveld@yahoo.com or www.linkedin.com/in/sschoonveld.

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*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here:  http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members.  Not a member yet (you should be if you’re receiving this)?  Need to renew?  Need a refresher on your username and password?  No problem.  Just contact Damon at 206-283-7036 or damon@centerltc.com.  Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Friday, March 18, 2011, Time AM (Pacific)

Seattle--

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LTC UPDATE WITH CLASS

LTC Comment:  Another of our weekly LTC News and Comment updates follows:

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3/18/11, House Energy and Commerce Health Sub-Committee Hearing on CLASS

LTC Comment:  As I write this, I am one hour and seventeen minutes into watching yesterday's (roughly three-hour) Congressional hearing on CLASS with testimony by Administration on Aging Assistant Secretary Kathy Greenlee in Panel #1 that will be followed by Panel #2, including testimony by Milliman Actuary Al Schmitz among others.  We will bring you coverage and analysis of the hearing, as well as a general CLASS update, early next week.  For now, I'm going back to the recorded hearing. 

By the way, having full-length access to this hearing on video the day after it occurred is pretty amazing.  When I testified before the same committee on the DRA '05 on April 27, 2005, it took weeks to get an audio record and transcript on which we could draw.  Isn't the technology great . . . when it works?

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3/18/11,  The Mainichi Daily News, "Stranded elderly people rescued 2 days after tsunami batters nursing home" 

Quote:  "Dozens of elderly people were rescued on March 13 nearly 50 hours after a powerful tsunami engulfed and partly destroyed their nursing home here."

LTC Comment:  In a torrent of sad news, one happier story.

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3/16/11, McKnight's LTC News, "MedPAC recommendation of 0% pay increase for 2012 leaves long-term care providers fuming" LINK

Quote:  "Long-term care groups on Tuesday strongly criticized the latest round of recommendations to Congress from the Medicare Payment Advisory Commission.  Among its recommendations issued Tuesday for 2012, MedPAC suggested that skilled nursing facilities and long-term care hospitals receive no payment increases-not even cost-of-living adjustments."

LTC Comment:  Why is this important for you to know?  Generous Medicare nursing home and home-health reimbursements now counterbalance below-cost Medicaid reimbursements thus propping up Medicaid LTC's ability to cover middle class and affluent people who should, could, and would otherwise purchase private LTCI.

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3/15/2011, National Underwriter, "Researchers: Expected Retirement Age Rises" by Warren S. Hersch

Quote:  "The percentage of workers who said they are very confident about having enough to live comfortably throughout retirement fell to 13%, from 16% in 2010, and the percentage who said they are not confident increased to 27%, from 22%."

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3/15/11, USA Today, "Alzheimer's carries heavy toll on 15M unpaid caregivers"

Quote:  "The number of people suffering from Alzheimer's disease is swelling - and the number of unpaid caregivers for those with the brain-wasting condition continues to climb as well.  Nearly 15 million unpaid caregivers help someone with Alzheimer's and other forms of dementia in the USA - 37% more than last year, according to a report out today from the Alzheimer's Association."  

LTC Comment:  A 37% increase in a single year sounds more like a data collection issue to me, but the main point is still well taken.     

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3/14/11, CNNMoney.com, "States kick Grandma to the curb"

Quote:  "For the elderly, state budget cuts could mean no more daily hot meals and exercise classes to help prevent falls. At worst, some could even lose their beds at the nursing home."

LTC Comment:  Still want to take your chances without LTCI?

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3/15/11, Administration on Aging, "Profile of Older Americans"

Quote:  "Electronic version of the popular brochure with the latest key statistics on older Americans in key subject areas. It includes both narrative and statistical charts. The 2010 edition is only available online."

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3/14/11, Kaiser Family Foundation, "Medicare: A Primer"

Quote:  "At this briefing, panelists provided an overview of the Medicare program and its role in the health care system. Panelists also discussed Medicare financing and the program's role in health reform.  A podcast is also available."

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3/14/11, McKnight's LTC News, "Analysis: Long-term care could lose billions with block grants; funding answers available" LINK

Quote:  "The long-term care industry would be the third-most impacted healthcare field if state Medicaid funding is converted into block grants, according to a new analysis from Bloomberg News."

LTC Comment:  On the other hand, Medicaid block grants would free states to target funds to those most in need and encourage others to save, invest and insure for LTC.

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3/11/11, McKnight's LTC News, "Moderate drinking associated with lower risk of dementia"

Quote:  "Elderly adults who consume about two alcoholic beverages per day are at a significantly lower risk of developing Alzheimer's disease and dementia than non-drinkers, according to new research from Germany."

LTC Comment:  Maybe Medicaid should pay for nursing home happy hours.

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3/9/11, Investors.com, "Editorial: Is America Becoming A Welfare Nation?"

Quote:  " . . . 35% of wages and salaries this year will be in the form of a government payment. That's up sharply from 2000, when it was 21%, which is more than double the rate - 10% - of 1960. The payouts are primarily Social Security and Medicare benefits, and unemployment checks. But they are not limited to those programs."

LTC Comment:  Hmmm.  Already every couple is carrying one dependent, not counting their own children.  That wasn't supposed to happen until the height of the baby boom.

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3/7/11, Kaiser Family Foundation, "Medicaid: A Primer on the Federal-State Partnership"

Quote:  "At this briefing, panelists provided an overview of the Medicaid program and discussed the effects of the health reform law on Medicaid. In addition, the speakers gave insight into the fiscal challenges currently facing many states and its potential impact on Medicaid programs across the country.  A podcast is also available."

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3/2/11, CBS Evening News, "Over 90 percent of nursing homes hire criminals"

Quote:  "Government investigators ran background checks on all workers who were employed on June 1, 2009 at 260 nursing homes across the country. The results showed 92 percent of the facilities hired at least one employee with a criminal conviction."

LTC Comment:  Meanwhile Medicaid funds two-thirds of all nursing home residents at an average of $17.33 per bed day less than allowable costs.

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3/2/11, Business Lexington, "Understanding the need for long-term care planning" by David Bassoni

Quote:  "Why wouldn't I just want to spend what I have now on things I want and things I want to do, and let Medicaid pick up the bill when I need that kind of help? Well, one reason - even if you aren't swayed by the argument that we should each, as much as possible, be responsible for ourselves - is that Medicaid and the state and federal tax dollars and governments that pay for Medicaid can't afford you and your care. As baby boomers age into needing the kinds of supportive services being discussed here, there is a greater demand and fewer individuals are paying into the system to support these needs."

LTC Comment:  File this under "couldn't have said it better myself."  Thanks to the CLTC Newsletter for tipping me to this well written and argued piece.

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2/24/11, SmartMoney, "Best Careers for Family Caregivers"

Quote:  "A decade ago, few people had ever heard of corporate benefits like elder care leave and caregiving referral services. Now some 10% of companies currently provide them, a percentage experts expect to keep growing."

LTC Comment:  Expect more companies to encourage private LTC insurance too. 

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Updated, Tuesday, March 15, 2011, 11:33 AM (Pacific)

Seattle--

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LTC COMMENT:  IS ATLAS SHRUGGING?

LTC Comments:  The Ides of March.  What better time for ominous tidings and a scary movie?  Details after the ***news.***

*** SO, WHAT DO YOU REALLY THINK ABOUT CLASS?  Steve Monroe is the Managing Editor of several highly regarded LTC provider-side industry newsletters.  He pulls no punches in this one-minute video.  Steve once told me that his top-of-the line LTC insurance policy, purchased at an early age, costs him less that a cup of Starbucks coffee per day. *** 

*** CLASS TESTIMONY.  Milliman actuary Al Schmitz will testify on the CLASS Act before the germane House committee on March 17 at 9:30AM EDT.  Details here.  For more information on the CLASS Act, see the American Academy of Actuaries' FAQ on the program:  http://www.actuary.org/pdf/health/class_nov09.pdf.  "Break a leg," Al. ***

*** NOT TO PUT TOO FINE A POINT ON IT, but "The U.S. Medicare program improperly spent more than $3 million in 2007 and 2008 to buy Pfizer Inc. (PFE)'s Viagra and other erectile dysfunction drugs for senior citizens, government investigators said."  Your tax dollars at work.  Story here. *** 

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LTC COMMENT:  IS ATLAS SHRUGGING? 

LTC Comment:  Ayn Rand's philosophical mystery novel Atlas Shrugged was first published in 1957.  It's been a best seller ever since.  But never a movie.  Until now.

On tax day, April 15, 2011, Part I of a three-part Atlas Shrugged series finally finds its way to the silver screen.  Watch the trailer here and a clip here.  (Be patient as it may take awhile for these clips to load.)

Why should you care?  The novel and now the movie reveal uncanny parallels with today's political and economic situation.  To see what I mean, read Steve Moore's January 9, 2009 op-ed in the Wall Street Journal titled "'Atlas Shrugged':  From Fiction to Fact in 52 Years."  It's one of the most-read opinion pieces in the Journal’s history. 

Moore says:  "Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that 'Atlas Shrugged' parodied in 1957, when this 1,000-page novel was first published and became an instant hit."

He then compares the novel's "Anti-Greed Act," "Equalization of Opportunity Act" and "Anti Dog-Eat-Dog Act" with our real life "Emergency Economic Stabilization Act," the "Auto Industry Financing and Restructuring Act," and the "American Recovery and Reinvestment Plan."  Nowadays, you could add the CLASS Act, to the list.

Will our economy crash and burn as in the book?  Will our producers give up and disappear?  Can any society survive following the principle "from each according to his ability to each according to his need?"  Won't need always overwhelm ability?  Does need have a lien on ability?  Whose life is it anyway?  These are a few of the questions Atlas Shrugged (the book or the movie) invites you to ponder.

Don't assume the Atlas Shrugged:  Part I movie will be in a theatre near you.  Why not?  To find out, watch this interview with John Stossel titled "Why Hollywood Was Against the 'Atlas Shrugged' Film."  If you want to see the movie, you may have to "Demand It" which you can do at this website where you can also subscribe to the "Atlas newsletter" and keep up on late-breaking developments.  So far, only a handful of states and cities have booked the Atlas Shrugged film.  Check them out here.

For more information about the movie and the philosophy behind it, go here.  Read the Atlas Society Founder and Executive Director David Kelley's review of the film here.  Kelley says:  "For over half a century, Rand's novel has been a lightning rod for controversy. It has attracted millions of devoted fans-and legions of hostile critics. A poor adaptation could be ignored by both sides. This adaptation can't be ignored. It is way too good. It is going to turbocharge the debate over Rand's vision of capitalism as a moral ideal. Whether you love the novel or hate it, Atlas Shrugged Part I is a must-see film."

Want an "Atlas Shrugged" lapel pin?  Need a "Who is John Galt?" T-shirt?  How about a movie poster?  Find them and more at the official merchandise site here.

Finally, a personal anecdote.  In 1994, I shared a cab in Manhattan with entrepreneur John Aglialoro.  Two years before, he had purchased the movie rights to Atlas Shrugged for a million dollars.  Fascinated, I've followed his progress ever since.  Several draft scripts and false starts ensued, including near misses with Brad Pitt and Angelina Jolie potentially starring with major studio backing.  Last spring, with only weeks remaining before his option ran out, Aglialoro took on the project personally, finding, hiring, and directing the artistic people to bring the film to completion.  It's an heroic story seemingly right out of an Ayn Rand novel.

So, whatever it takes, wherever I need to go, I'll be there on opening day to view this movie.  Hope to see you there.

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Updated, Thursday, March 10, 2011, Time AM (Pacific)

Seattle-- 

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LTC BULLET:  VIRTUAL VISIT TO THE 11^TH ANNUAL ILTCI CONFERENCE IN ATLANTA, GA 

LTC Comment:  Another fine industry meeting is behind us and optimism is on the rise.  Check it out vicariously after the ***news.*** 

*** CLASS DEBATE.  Read my 3-minute opening salvo in the debate between Connie Garner (AdvanceCLASS) and Rhonda Richards (AARP) on the pro-CLASS side versus John Greene (NAHU) and Steve Moses (CLTCR) on the anti-CLASS side.  Find it here http://www.centerltc.com/speakers/The_Great_CLASS_Debate.htm along with the dozen provocative questions I posed to the CLASS advocates.  Don't miss a chance to hear this spirited ILTCI conference debate when a recording becomes available. *** 

*** HAVE CAKE, EAT TOO, CHARGE THE WEALTHY.  A new Wall Street Journal/NBC News poll found that fewer than 25 percent of Americans were in favor of reducing Medicare or Social Security to help deal with the federal budget deficit. The majority of respondents did approve of trimming Social Security and Medicare payments to wealthier Americans and increasing the retirement age to 69 by 2075.  AHCA / NCAL Gazette - Thursday, March 3, 2011 *** 

*** HELP FOR NEW YORK.  Empire Center for New York State Policy press release:  "The report, written by Stephen A. Moses, suggests that New York's Medicaid program could ultimately save up to $2.9 billion in combined federal, state and local funds by tightening eligibility criteria, enforcing federally mandated recovery of paid benefits, promoting home equity conversion prior to Medicaid eligibility, and encouraging the purchase of private long-term care insurance." *** 

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LTC BULLET:  VIRTUAL VISIT TO THE 11^TH ANNUAL ILTCI CONFERENCE IN ATLANTA, GA 

LTC Comment:  As I write this, I'm boarded and awaiting departure for the return to Seattle.  Sitting beside me is Tom Riekse, Sr. of LTCI Partners.  So let's ask his impression of the 11^th annual ILTCI Conference just ended in Atlanta. 

Tom, what did you think of the meeting and the future prospects for LTCI? 

Tom Riekse, Sr.:  "I'm coming away from the conference upbeat and optimistic.  The 'carrier bumps' of last year are behind us; the CLASS program will raise public awareness of the LTC risk; and we're poised for growth." 

"Energize Our Industry" was the theme of The Eleventh Annual Intercompany Long Term Care Insurance Conference.  Its goal:  "To provide a dynamic setting for engaging discussion, fun-filled networking and a truly rewarding educational experience."  From the opening keynote address on aging demographics through the extensive selection of educational breakout sessions and wide-ranging exhibit hall booths to the closing "Casino Night," the program delivered.  In case you missed it, here's a thumbnail summary of the conference as I experienced it. 

Opening session:  Steven Mosher, a world renowned population expert and president of the Population Research Institute, opened the meeting Monday morning with the message that more elderly in the future with fewer young people to take care of them make long-term care insurance more important than ever. 

Four CLASS sessions:  This truly was a CLASS conference for me.  My first four breakout sessions were pure CLASS, starting with CLASS 101.  Eileen Tell of Univita introduced CLASS maven Connie Garner, Policy Director, Government Strategies, Foley Hoag, LLP and Executive Director of Advance CLASS and Laura Lawrence, Director of Benefits Administration and Enrollee Services, Office of Community Living Assistance Services and Supports (CLASS Office), U.S. Department of Health and Human Services.  Garner explained the history and goals of CLASS.  She defended the new program against common points of criticism deflecting claims CLASS is just another government Ponzi scheme.  Co-Presenter Lawrence described her unit's efforts and progress toward design and implementation of the CLASS program.  Bottom line:  it's a work in progress and we won't know many more details for a long time.  The take away?  Unless and until CLASS designers identify a benefit people want at a price point they're willing to pay, the program will not be implemented. 

My second breakout was "CLASS Act and the Employer Group Market" featuring a role play between Peter Lucas (Employer) and Peter Goldstein (LTCI provider) exploring the challenge of what to do when your LTCI carrier bails out and you have to decide between bringing in a new private LTCI carrier, going with CLASS, or some combination of the two.  Steve Cain wrapped the session explaining how LTCI Partners approaches this dilemma pointing out that "CLASS legitimates all our arguments.  It is the government saying 'we want employers to offer this protection.'  CLASS will be a catalyst for a ton of meetings in which we can build rapport, establish credibility, and advance the conversation."  With the government allocating $93 million to market the need for LTC protection, these presenters concluded "CLASS will be a boon to our business." 

My third CLASS breakout ("Panacea or Problem:  Point/Counterpoint on CLASS") was a debate between Connie Harner and AARP's Rhonda Richards arguing in favor of the program and John Greene of NAHU and myself opposing.  Great fun.  Peter Goldstein of Univita moderated with Eileen Tell in the wings ensuring that two strict timekeepers kept any of us from running on.  Three-minute openings by each panelist were followed by tough questions from the moderator to alternating sides allowing two-minute responses and one-minute rebuttals.  It was a lively session.  To give you the flavor, check out my three-minute opening salvo and our questions to the pro-CLASS side here.  You'll learn about the new private insurance company I'm forming based on the same principles as CLASS:  "Steve's Insurance, LTC for You" or SILY for the NASDAQ ticker.  Sorry I can't be more fair and balanced as I don't have the other side's openings or questions and I was too busy responding to their tough questions to take notes.  

CLASS breakout number four for me came the next day.  Louis Brownstone moderated as Steve Schoonveld, Barry Fisher and Bill Comfort presented "CLASS:  Friend or Foe?"  Schoonveld explained the problems that gave rise to CLASS and urged patience and understanding, while Fisher focused on problems CLASS is likely to cause and urged colleagues to oppose CLASS implementation at every opportunity.  Comfort split the difference observing "CLASS is a direct competitor and we'll win." 

During the lunch break on the second day, the 3in4 Need More campaign had a press conference to introduce the LTCI industry's answer to dairy's "Got Milk" message.  Special guest Dr. Marion keynoted the PR session.  We'll publish a video link to the press conference soon so enough said for now, except to say . . . 

Spotted at the 3in4 Need More event and throughout the ILTCI conference was Glenn Ruffenach of the Wall Street Journal.  Maybe there's hope for some good publicity for LTCI now that the industry's prime competitors--government safety net programs--are collapsing.  Remember the year the New York Times chose opening day of the conference for an expose' of the industry's alleged failure to pay claims?  The accusations proved baseless on examination, but evidently exoneration isn't "news." 

Finally, toward the tail end of the conference, I attended a breakout session not purely about CLASS:  "Washington Watch:  What's Up in Washington, DC."  John Cutler introduced lobbyists Sam Morgante and Bob Blancato who delivered insightful observations about the post-midterm-election political situation.  With 95 new House members and a change in leadership, lobbyists have their work cut out for them to form new relationships and plot strategies.  Three cross currents complicating matters include simultaneous consideration of frequent continuing resolutions, efforts to agree on a FY 2011 budget, and the President's 2012 budget proposal.  In the background affecting everything is the deficit/debt issue including Social Security, Medicare and Medicaid unfunded liabilities.  There's a lot of interest in CLASS at this conference, but it's barely on their radar screens in Congress, though the Administration is busy designing and implementing the program.  Expect no movement on tax incentives at the federal level.  Who matters in the world of LTC is clearing up.  HHS Secretary Sebelius is a former governor and former insurance commissioner.  She knows the Medicaid and LTC insurance issues.  Likewise, Kathy Greenlee, heading the Administration on Aging has the responsibility for CLASS.  She served as council to the Kansas Insurance Commission and attended NAIC meetings.  She brings a neutral, professional standing to the position.  She listens.  Two names in the White House that know a lot about LTC:  Gene Lambrew and Liz Fowler.   

Tip:  The "LTC Discussion Group" meets frequently in Washington, DC but people call in from all across the country to hear presentations and discuss a very broad range of issues.  Attendees include representatives of all sorts of for-profit and non-profit groups interested in long-term care policy.  "One of best collaborative groups," according to Morgante.  Eileen Tell says check out the website:  www.ltcdiscussiongroup.org.  Membership is free.  Thanks to AHIP for sponsoring and to Univita for hosting the website.   

My last breakout session was "Critical Findings in LTC Insurance Buyer and Non-Buyer Behavior," a report by Marc Cohen of LifePlans and John O'Leary of LTC Marketing on 20 years of research into the topic.  "This session summarizes key findings from the 4th generation of AHIP's buyer and non-buyer studies, including results from a general population survey as well."  A few highlights:  eight major carriers do 80% of the LTCI individual business.  Average age of purchase has plummeted from 68 to 59 years, but seems to have stabilized at 59.  Two-thirds of buyers are married and that's stable too.  Three-fourths of buyers have incomes over $50,000 and the average income of buyers has doubled since 1990.  Their asset profile remains nearly constant at $100,000.  Both buyers and non-buyers are older than the general population.  Non-buyers make an active decision not to buy and tend to believe others will pay.  Buyers are more likely than non-buyers to know how much LTC costs.  The preponderance of policies sold are comprehensive; 90% cover all service modalities.  Average premium is a little less than $2,300.  For more, watch for Marc's slides to be posted here:  http://iltciconf.org/Powerpoints.php.  While you're at it, check out John O'Leary's presentation and slides on the group side of the business. 

The substantive portion of the conference closed with a "CEO Forum."  On the stage were Brad Buechler, Mutual of Omaha Insurance Company; Mike DeKoning, Munich American Reassurance Company; Jim Glickman, LifeCare Assurance Company; Frank O'Neill replacing Marianne Harrison, John Hancock Life Insurance Company; Matt Sharpe, Genworth Financial; and Steve Sperka, Northwestern Mutual.  David Kerr moderated.  Topics discussed included: 

- Successes and lessons learned over the past year
- The future viability of LTCI
- Update on CLASS
- Challenges facing our industry - Outcomes from the 2010 LTC Think Tank
- Perspectives from industry representatives (providers, TPAs and agents)
- New product initiatives

As in past years, the audience voted on a series of questions with the results electronically tabulated and displayed.  The discussion moved fast.  No big news or controversy broke.  In fact, attendees I asked said the session was "same old, same old."  Rather flat.  Seems the CEOs are very careful what they say at these public sessions.  That's another reason why the private, one-to-one conversations that this conference makes possible are so valuable.  Of the options attendees were given for future CEO Forums such as "keep it the same," "more audience participation," "less audience participation," etc. the one that won was "do it in a debate format."  I like that idea as debates are fun and very revealing, but the consensus I heard was "ain't gonna happen."

The conference ended for me at "Casino Night" where prizes went to the players who rallied their initial stash of play money into the biggest take.  A good time was had by all. 

Learn much more about the conference at its website, www.iltciconf.org, where you'll find all the sessions and special programs described as well as copies of the presentation PowerPoints. 

Special thanks to the organizers, corporate sponsors and to Vince Bodnar of DaVinci Consulting who had lead responsibility this year.

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Updated, Monday, March 7, 2011, 12:23 PM (Eastern) 

Atlanta-- 

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LTC BULLET:  WE HELP NEW YORK WITH MEDICAID LTC REDESIGN 

LTC Comment:  The Empire Center for New York State Policy published our report on Medicaid and LTC financing in New York.  Check it out after the ***news.*** 

***  I'M IN ATLANTA, GEORGIA for the 11^th Annual Intercompany Long-Term Care Insurance Conference.  Check it out here.  You can even read the PowerPoint "session presentations" here.  I'll debate Connie Harner (who promoted CLASS for Ted Kennedy's Senate HELP committee and heads Advance CLASS now).  AARP's Rhonda Richards joins Ms. Garner on the pro-CLASS side of the debate and John Greene of NAHU teams with me on the anti-CLASS side.  We'll give you a full report after the event. *** 

*** BIG MOE.  Probably nothing is more important to state Medicaid programs (and to the marketability of private LTCI) right now than "Maintenance of Effort" (MOE) rules in the stimulus (which expire June 30, 2011), but are extended in PPACA (health reform or "ObamaCare.")  MOE rules deny states federal Medicaid matching funds if they tighten eligibility.  Desperate to save money without cutting coverage or bankrupting providers, states have asked for more "flexibility" and clarification regarding MOE.  Finally, CMS has obliged with this letter to state Medicaid directors which offers no help and is about as clear as mud.  In the meantime, the feds keep forcing states to cover LTC for middle class and affluent recipients due to mandatory lenient and elastic income and asset eligibility rules.  For details, check out our recent New York, California, and Pennsylvania reports here. *** 

*** 3 IN 4 NEED MORE:  "On March 8 in Atlanta, the '3 in 4 Need More' campaign will get a boost from Dr. Marion Somers, the long-term care planning advocate who is a frequent guest on programs such as Good Morning America, Today Show, and NBC Nightly News. In an informal press conference at the Eleventh Annual Intercompany Long Term Care Insurance Conference -- March 6 - 9 at the Marriott Marquis, Atlanta, Georgia -- Dr. Marion's endorsement will be recorded for TV and Internet exposure. 'We are delighted that she will be lending her support,' says Jonas Roeser, President of the 3 in 4 Association, promoters of the '3 in 4 Need More' campaign." *** 

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LTC BULLET:  WE HELP NEW YORK WITH MEDICAID LTC REDESIGN 

LTC Comment:  The Empire Center for New York State Policy, a project of the Manhattan Institute for Policy Research, is dedicated to promoting freedom, opportunity and enterprise in the Empire State. 

On March 3, the Empire Center published our report titled "Long-Term Care Financing in New York:  How to Save Money While Serving the Needy."  Read the press release here or below.  Save a .pdf copy of the report here. 

For future reference, find our report on the Empire Center's website here or on the Center's website here. 

In cooperation with the Empire Center, the Center for Long-Term Care Reform has published a longer version of the same report titled "Long-Term Care Financing in New York:  The Consequences of Denial."  Don't miss this full-length version with its clever "cartoon" cover designed by Lynn Voss of GoldenCare USA.  Check it out here http://www.centerltc.com/pubs/NY-Consequences_of_Denial-CLTCRfull.pdf. 

Media coverage of our report has already begun.  Read "Cost of Long-Term Care Too Costly:  Report," in the North Country Gazette.  Check out "Medicaid reform is vital to building new New York" in the Rochester, NY Democrat and Chronicle.  Read my op-ed titled "The poor aren't the big problem" here or below. 

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Steve's op-ed in the Rochester, New York Democrat and Chronicle, Sunday, March 6, 2011: 

"The poor aren't the big problem" 

Written by Stephen Moses, Guest essayist  

Long-term care is high-risk and high-cost, especially in New York. 

People 65 and older face a 70 percent probability that they'll need some LTC and a 20 percent likelihood they'll need five years or more. Nursing homes average $336 per day in New York, over half again the national average. Home care alternatives are prohibitively expensive for full-time care. 

So, why isn't the public in New York scared to death about the risk and cost of LTC?  Simple. The government pays for most of it. Medicaid is the dominant payer, picking up the bill for 72 percent of all nursing home residents and paying nearly three times the national average per capita for home health care. 

But hold on! Medicaid is welfare. It's a means-tested public assistance program.  Don't people have to spend down into impoverishment before they qualify for Medicaid?  

If that were true, everyone would worry about long-term care for their parents and themselves. They'd spend down rapidly, tap home equity, or buy private insurance.  But they don't, so what gives? The truth is almost everyone qualifies easily for Medicaid-financed LTC in New York.  Income rarely interferes because Medicaid subtracts the cost of medical expenses, including nursing home charges, before asking if you're “poor” enough. You don't need to be low income. All you need is a cash flow problem. 

Likewise, excess assets aren't an obstacle for most people. Medicaid allows only $13,800 in liquid assets but exempts $750,000 worth of home equity and ignores unlimited resources in one business, a car, term life insurance, home furnishings and pre-paid burials. If you still don't qualify, consult a Medicaid planning attorney for advice on artificial self- impoverishment. 

Here's the problem. N.Y.'s Medicaid program is buckling under the cost of LTC already, but the public has been anesthetized to its risk and cost so doesn't save or insure. Both policy makers and the public are in denial. Something has to give because the age wave of baby boomers will sink the system for sure. 

Here's the solution: Target scarce Medicaid LTC resources to New Yorkers most in need by tightening eligibility, reducing the home equity exemption and maximizing federally mandatory estate recoveries. Use some of the savings to encourage the purchase of private LTC insurance and the use of reverse mortgages to fund LTC privately. 

Moses is a long-term care expert. 

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Empire Center press release: 

Report Finds Long-Term Care Is Too Costly
Lenient and Elastic Eligibility Criteria Burden Medicaid
March 3, 2011
Contact: Tim Hoefer
              518-434-3100 

The cost of financing long-term care (LTC) through Medicaid is on track to become "a crippling burden" for New York State unless steps are taken to reform the program, a report issued today by the Empire Center for New York State Policy warns. 

The report, written by Stephen A. Moses, suggests that New York's Medicaid program could ultimately save up to $2.9 billion in combined federal, state and local funds by tightening eligibility criteria, enforcing federally mandated recovery of paid benefits, promoting home equity conversion prior to Medicaid eligibility, and encouraging the purchase of private long-term care insurance.  

"Access to Medicaid funding for LTC in New York State has been too easy for too long" the report says. "The combination of an aging population with greater care needs, a flagging economy, and dwindling federal support will soon bring Medicaid LTC spending up short. Instead of trying to provide a full range of LTC services to nearly everyone in the state, New York Medicaid will have to prioritize." 

"The preferable course is to funnel scarce Medicaid resources to the neediest people and encourage wealthier individuals to plan early and save, invest, or insure against the risks and costs of LTC," it concludes.  

Entitled "Long-Term Care Financing in New York: How to Save Money While Serving the Needy," the exhaustive 28-page report is a joint product of the Empire Center and the Seattle-based Center for Long-Term Care Reform, of which Moses is president. In the course of his research, Moses interviewed 58 people directly involved in the long-term care field in New York, including senior state and local Medicaid administrators, social workers and policy analysts; insurance industry executives and consultants; and representatives of organizations representing practitioners and providers. 

Several of the report's key recommendations have been adopted by Governor Andrew Cuomo's Medicaid Redesign Team.  These include: 

• Close the "spousal refusal" loophole, through which the assets of a chronically ill elderly person can be shifted to his or her spouse, who can then refuse to take responsibility for paying for that person's long-term care;   
• more aggressive efforts to pursue estate recoveries on a statewide basis; and
• stronger incentives to promote the purchase of private long-term care insurance.

Adoption of the governor's amended Medicaid proposals would equate to "important steps in the right direction, but much remains to be done to put long-term care policy in New York on an economically and financially sustainable footing," the report says. 

The report is available here.

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Updated, Wednesday, March 2, 2011, 10:53 AM (Pacific) 

Seattle-- 

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"GOT LTCI?"

LTC Comment:  When will the long-term care insurance industry promote a public education and marketing campaign like "Got Milk?"

Seems like people have been asking that question ever since the eponymous crusade against lactose intolerance began in 1993.

Interested?  Then check out this press conference announcement:  www.3in4needmore.com/pressconference.

On Tuesday, March 8, 2011 at 12:45 pm (EST) during the 11^th Annual Intercompany LTCI Conference in Atlanta, "3in4 Need More" board members and carrier sponsors will provide details about the new PR campaign to media representatives and other attendees.

Be there if you can, but at least check out this video of special guest spokesperson Dr. Marion:  http://www.youtube.com/user/3in4needmore.

"Considered the Martha Stewart of eldercare, Dr. Marion is passionate about LTC and believes in educating Americans on the benefits of long term care insurance," says "3in4 Need More's" press release. 

For more on Dr. Marion, check out her website:  http://www.drmarion.org/.

If you'll be in Atlanta for the ILTCI shindig, make it a point to attend the "3in4 Need More" press conference:

Date: Tuesday, March 8th

Time: 12:45 pm

Location: Marriott Marquis, Atlanta Georgia

Room: A602 - Atrium Level 

I'll be there, with my press pass donned.  Hope to see you too.

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Updated, Tuesday, March 1, 2011, 10:13 AM (Pacific) 

Seattle-- 

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LTC BULLET:  FOR CLASS ADDICTS 

LTC Comment:  If you just can't get enough information about CLASS, today's LTC Bullet is for you, after the ***news.*** 

***  STATES DEMAND more control over Medicaid eligibility.  2/28/11, Kaiser Family Foundation, "Health Law Ups The Ante In State-Federal Medicaid Budget Battle."  This article is a compendium of numerous recent reports about the need to give states more flexibility to rein in Medicaid eligibility and expenditures.  This development bodes well for our recommendations--articulated in recent reports on Medicaid LTC in Pennsylvania  and California available here and in our forthcoming New York reports due out Thursday, March 3--to target Medicaid to those most in need and encourage private LTC financing alternatives like LTCI and home equity conversion. *** 

*** THE COMING ENTITLEMENT TSUNAMI.  Log on and watch the Cato Institute's on-line e-Seminar, Wednesday, March 2, 2011, Noon - 1 p.m. (E.T.)  To participate, go to www.cato.org/sponsor-e-seminars at Noon (E.T.) on March 2.  There is no need to download any software; no reservations necessary.  Says Cato:  "In the next few years, our major entitlement programs will begin to run major deficits, adding hundreds of billions each year to the debt. Eliminating 'fraud, waste and abuse' is only a tiny starting point. The sad fact is there is simply no way to control our debt without getting serious about extensively reforming entitlements.  Michael Tanner is one of the country's most articulate speakers and policy analysts on entitlements and will be discussing:  needed reforms...how they can be implemented...what's stopping them from occurring...and the consequences of our not making significant changes now." *** 

*** MULTITUDINOUS DATA AND ANALYSIS (24 pages) culled from numerous sources and published by Leading Age, formerly the American Association of Homes and Services for the Aging (the non-proprietary LTC provider association that helped push CLASS through.) *** 

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LTC BULLET:  FOR CLASS ADDICTS 

LTC Comment:  When the top government official responsible for its implementation calls a new government program "totally unsustainable," you know you have a problem.  Unless, of course, you're a Stepford wife when it comes to the CLASS Act.  Here are samples of the latest news and analysis about CLASS with links to more details. 

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2/23/11, McKnight's LTC News, "Of admissions, knitting and bandwagons: CLASS danger," by James Berklan: 

Quote:  "By Sebelius acknowledging its current form is 'totally unsustainable'-totally unsustainable?!  It hasn't even started yet-she essentially handed the program's numerous opponents all the bows and arrows they might need to finish the job." 

LTC Comment:  Watch Secretary Sebelius's "unsustainable" remarks about CLASS here. 

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2/28/11, National Review Online, "Obamacare and the CLASS Fraud," by James C. Capretta: 

Quote:  "But of all the deceptive arguments and tactics Obamacare's apologists employed to jam their government takeover of health care through Congress, none was more egregious than the CLASS Act fraud." 

LTC Comment:  So, what do you really think? 

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2/25/11, Human Events, "Has ObamaCare's Chief Cabinet Member Even Read This Law?," by Congressman Charles W. Boustany, Jr. (R, La.): 

Quote:  "'There is no mandate for auto-enrollment,' Sebelius insisted at a hearing before the House Ways and Means Committee.   

"Yet the part of ObamaCare creating the CLASS program clearly tells the HHS secretary to establish procedures for Americans to be 'automatically enrolled in the CLASS program by an employer.'  Has Sebelius read the law she helped write? 

"The massive new law requires participating employers to automatically enroll all workers in CLASS-unless a worker pays careful attention and takes the time to opt out.  If CLASS were truly voluntary, President Obama would have allowed all American workers to explicitly opt in to CLASS rather than automatically enrolling them.  HHS officials have defended 'nudging' workers into CLASS by 'default,' arguing, 'behavioral economics has frequently smiled on the creative use of defaults.'"   

"Rep. Boustany, a heart surgeon, represents Southwest Louisiana in Congress and is chairman of the House Ways & Means Oversight Subcommittee."  

LTC Comment:  What part of "automatic enrollment" isn't clear to the Secretary?  Read it for yourself.  Go to the following link and search for the germane section:   ''SEC. 3204. ENROLLMENT AND DISENROLLMENT REQUIREMENTS (link)."
''(a) AUTOMATIC ENROLLMENT" in the Patient Protection and Affordable Care Act (Enrolled as Agreed to or Passed by Both House and Senate) [PDF], AKA "Health Reform," AKA "ObamaCare," signed by President Obama on March 23, 2010.  Nothing could be clearer than that CLASS requires automatic enrollment. 

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2/27/11, Ross Schriftman's critique follows of Mark R. Meiners, PhD, "Connecting the Long-Term Care Partnership and CLASS Act Insurance Programs," Center for Health Care Strategies, Inc., George Mason University, February 2011, (link).  (LTC Bullets covered Dr. Meiners' article in "LTC Bullet:  CLASS vs. LTC Partnerships:  Allies, Adversaries or Co-Dependents?," Tuesday, February 15, 2011." (link))

"I just read your briefing about the Class Act. This government program is not insurance.  The participants will not receive a policy or even a certificate of coverage.  All rights, premiums and benefits can be changed by the government. I don't see American workers taking their hard earned dollars and voluntarily sending them to a government that is $14 trillion in debt.  This same government will determine eligibility for benefits, determine future premiums and decide how much someone will receive, not only based on a 'need' determination but on how much money is in the pool. 

"The workers would be much better off taking the money they would have paid into CLASS and purchasing higher amounts of real insurance.  Those who are already too sick to qualify for Private LTCi can get Medical Assistance like they have in the past AFTER really spending down to qualify (with some tighter rules).  MA is for the poor anyway so I don't see any low income worker putting $5 per month in to CLASS.  They need that money for transportation, groceries and trying to get a higher paying job. 

"I don't see any coordination of benefits between private LTCi and CLASS.  Neither private policy contracts nor the CLASS legislation mentions how this will work.  This, in my view, is a ploy to get LTCi insurance producers and companies to use our resources to promote CLASS since the legislation limits ALL admin costs in the program to 3%.  I for one will not be promoting this program as it is bad for my clients and I have no malpractice protection for recommending someone sign up for Class. (What happens if they pay in for five years and then some government bureaucrat decides they aren't sick enough?  Where does that leave me if I told them it would 'coordinate' with a private plan that I sold them which now isn't enough coverage for their needs?) 

"Finally, the PPACA lists contributions to CLASS as revenue offsetting the cost of the legislation.  If this were true insurance they would NOT be listed as revenue.  They would be listed as premium reserves. 

"This is bad public policy.  AND it will NOT get more people to start doing their Long Term Care Planning.  That was supposed to happen with HIPAA's tax breaks and it was supposed to happen with the Own Your Future campaign and it was supposed to happen after the Deficit Reduction Act passed with the Partnership expansion. Sales are not taking off. Until people really understand that they are at risk (and they are not as long as some government program will step in) they don't start planning.  Only when the Feds and the states run out of money and the public sees people kicked off the government dole will they start do buy the private insurance they need." 

Ross Schriftman is a health insurance agent who has been in business since 1975.  He served as Legislative Chair of the Pennsylvania Association of Health Underwriters from 1994 to 2003 and the Associate Chair for Long Term Care for the National Association of Health Underwriters from 2001 to 2003.  He was the Democratic candidate for State Representative in the 152nd District of Pennsylvania in 2004. 

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2/3/11, Congressional Research Service, "Community Living Assistance Services and Supports (CLASS) Provisions in the Patient Protection and Affordable Care Act (PPACA)," by Janemarie Mulvey and Kirsten J. Colello (link):   

Quote:  "To address gaps in LTC coverage and assist individuals and families in paying for such services, the recently enacted Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, as amended) establishes a federally administered voluntary LTC insurance program entitled the Community Living Assistance Services and Supports (CLASS) program." 

LTC Comment:  This paper incorrectly refers to the CLASS program as "insurance."  Insurance spreads and prices risk.  Based on actuarial science and careful underwriting, insurance assigns premium levels commensurate to the level of risk that each insured brings into the risk pool.  CLASS spreads risk, but does not price it.  Without a means to underwrite participants based on the level of risk they bring to the risk pool, CLASS operates as a mechanism to charge low-risk people more in order to support higher-risk people at less than cost.  In other words, CLASS is not insurance.  It is welfare.  For a fuller explanation of the difference between true insurance and "social insurance," aka welfare, see my article "The Inherent Individualism of Insurance," Navigator, November/December 2002. 

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2/10/11, Congressional Research Service, "Factors Affecting the Demand for Long-Term Care Insurance: Issues for Congress," by Janemarie Mulvey (link):   

Quote:  "A number of factors have adversely affected the demand for LTCI. The cost and complexity of LTCI policies have been cited as major deterrents to purchasing LTCI. In addition, increased concerns have arisen about the adequacy of consumer protections for LTCI as a result of inconsistencies in LTCI laws and regulations across the states. More recently, adverse publicity about premium increases and heightened concerns about the future solvency of LTCI insurers in the current economic environment have further dampened demand." 

LTC Comment:  This analysis totally ignores the dominant reason demand for LTCI remains low, i.e., the government pays for most expensive nursing home and home care through Medicaid and Medicare.  And the government pays not only for the poor, but for many who could, should and would have paid privately.  In the absence of these "safety net" programs which have become "hammocks" for the middle class and affluent, many more Americans would have purchased LTC insurance or used home equity conversion to pay for their long-term care. 

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*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here:  http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members.  Not a member yet (you should be if you’re receiving this)?  Need to renew?  Need a refresher on your username and password?  No problem.  Just contact Damon at 206-283-7036 or damon@centerltc.com.  Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Friday, February 25, 2011, 11:30 AM (Pacific) 

Seattle-- 

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LTC UPDATE

LTC Comment:  Next week, on March 3, the Empire Center for New York State Policy will publish our report on Medicaid and long-term care financing.  We'll bring you full coverage soon thereafter.

On the same day, I'll be in Sacramento, California participating on a panel at the closing plenary session of the Aging Services of California 2011 public policy conference.  The panel's title is "Where Can California Go On Aging Policy?"  I've been asked to share perspectives from our report titled "Medi-Cal Long-Term Care:  Safety Net or Hammock."

Jesse Slome of AALTCI reminds us:  "LTCi SUMMIT $349 REGISTRATION ENDS MARCH 17^th.  Some 500 of the leading long-term care insurance marketing organizations, insurers and of course several hundred producers will be attending the National LTCi Summit April 3-5, 2011 in Las Vegas.  It's also a great opportunity to question Connie Garner who now heads the "Advance CLASS" program.  The Early Registration rate of $349 ends March 17th and $70 rooms at the Tropicana Hotel are almost sold out.  For more information, visit the American Association for Long-Term Care Insurance website at www.aaltci.org/2011summit or call (818) 597-3227."

Following are recent news items and information resources I think you will find helpful and interesting. 

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2/23/11, New York Times, "State Proposal Would Limit Annual Medicaid Rise" reports the Empire State proposes "a cap on yearly increases in Medicaid financing that will require across-the-board spending cuts by health care providers." 

LTC Comment:  In every recession, the first place Medicaid programs cut is provider reimbursements.  But there's a limit to how much you can cut providers without care quality and access suffering.  Our forthcoming report, referenced above, recommends instead controlling eligibility, eliminating egregious loopholes, maximizing estate recoveries, and encouraging private financing alternatives like reverse mortgages and private LTC insurance. 

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2/24/11, McKnight's LTC News, "Arizona Senate committee votes to drop Medicaid program" indicates "The Grand Canyon State" wants to do the Empire State one better and bail out of Medicaid altogether. 

LTC Comment:  News items like these prove that we've entered a brave new world of LTC public policy.  It is what we've predicted would happen when the age wave begins to crest and crashes into a serious recession underscored by massive and growing unfunded entitlement liabilities.  Get ready for a rough ride on the public funding side but a clear road ahead for private funding alternatives.  

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2/24/11, AHIPHiWire reports from HealthDay:   

Quote:  "New research suggests that diagnosing Alzheimer's disease and other forms of dementia is not always clear-cut, raising the possibility of misdiagnoses among many seniors.  The finding is based on an analysis of brain autopsies, which found that roughly half of those who had been diagnosed with Alzheimer's before death did not, in fact, show evidence of the right degree of brain lesions to support the diagnosis." 

LTC Comment:  Much of what gets diagnosed as dementia or Alzheimer's is really caused by bad medication management.  A gerontologist friend of ours is working on software to help physicians, pharmacists, and patients manage prescriptions better. 

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2/24/11, McKnight's LTC News, "Nearly 60% of paid home caregivers make medication errors, study finds" 

Quote:  "One-third of paid caregivers who work for clients who live in their own homes had difficulty reading and understanding health-related information and instructions.  Furthermore, 60% of them made medication errors involving their clients, according to Northwestern University researchers, who say the study is the first of its kind." 

LTC Comment:  Illiterate and incompetent caregivers:  One more reason to pay caregivers adequately and demand quality, which Medicaid doesn't and the privately LTC insured can. 

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2/23/11, McKnight's LTC News, "Affordable Care Act provides $4.3 billion to strengthen non-facility long-term care" LINK

Quote:  "Health and Human Services Secretary Kathleen Sebelius announced Tuesday that the Affordable Care Act will provide additional funding to programs that help Medicaid beneficiaries move out of institutions-such as nursing homes-and into community settings." 

LTC Comment:  Ironically, the more money Medicaid spends to make its LTC benefits seem attractive, the less able the program is to meet exploding costs and the more likely people are to plan on it instead of preparing responsibly for LTC.  The solution:  better Medicaid benefits for fewer, truly needy people.  But federal "maintenance of effort" provisions in "health reform" preclude that option.  Catch 22. 

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2/23/11:  Kaiser Family Foundation:  "Resources Examine Recession-Driven Record Medicaid Enrollment and Assess Medicaid Spending Growth."  These three new papers from KFF document an all time high Medicaid census of 50 million people, equaling the number of uninsured Americans.  LINK   

LTC Comment:  KFF touts Medicaid's "counter-cyclical role of helping people who become uninsured when the economy falters," but what if, this time, we aren't bailed out by a new economic up-cycle.  What if we're in the perfect economic storm we've long predicted comprised of age-wave demographics, massive debt and deficits, staggering unfunded entitlement liabilities, and politicians in denial?  That's what has people and their more responsible representatives scared.  This time we may not see the usual regression to the mean of lower welfare rolls and higher tax revenues. 

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2/21/11, MySanAntonio, "Nursing homes look younger" 

Quote:  "People ages 31 to 64 have entered nursing homes at a higher rate than those 65 and older in the past eight years, according to data from the Center for Medicare and Medicaid Services. The age group has climbed to 14 percent of the nursing home population." 

LTC Comment:  One more reason to plan early and well for LTC risk and cost. 

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2/16/11, McKnight's LTC News, "Study: Nursing home nurses top job-dissatisfaction list" 

Quote:  "Even as demand is growing for nurses in all segments of healthcare, 27% of nursing home nurses and 24% of hospital nurses reported being dissatisfied with their jobs, a newly released study found. Just 13% of nurses in other healthcare environments reported such feelings of dissatisfaction." 

LTC Comment:  Much of the problem is low government reimbursements which translate into inadequate salaries and benefits for nursing home nurses. 

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2/15/11, Kaiser Family Foundation:  "A new primer from the Kaiser Family Foundation provides an overview of Medicare spending trends, how the program is financed, and factors contributing to the growth in Medicare spending.  Medicare now covers 47 million seniors and younger people with disabilities, with total expenditures of $524 billion in fiscal year 2010, representing 15 percent of federal outlays." 

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2/7/11, Kaiser Family Foundation:  "The Kaiser Family Foundation's Commission on Medicaid and the Uninsured (KCMU) has released a package of resources, http://www.kff.org/medicaid/medicaid-long-term-services-briefing-resources.cfm, that examine the latest data findings regarding Medicaid's long-term services and supports for seniors and people with disabilities." 

LTC Comment:  Take everything from KFF with a grain of salt.  Their data is reliable but their interpretation and analysis are usually slanted in favor of public financing of health and long-term care. 

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Updated, Tuesday, February 22, 2011, 10:31 AM (Pacific) 

Seattle--

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LTC BULLET:  OUR OP-ED ON MEDI-CAL LTC 

LTC Comment:  The San Bernardino Sun (Circulation: 137,250) published our opinion piece "No Medi-Cal help on long-term care."  Text and links after the ***news.*** 

*** CLASS CRASH.  DHHS Secretary Kathleen Sebelius admits the CLASS program is "totally unsustainable."  The New York Times covered the story yesterday here.  Watch the Secretary's 8.5-minute Finance Committee testimony in response to Senator John Thune's (R, SD) probing questions here.  She thinks CLASS tweaks could save the program.  Unbelievably, 7.5 minutes into her testimony, Secretary Sebelius claims there are no private LTC insurance policies that cover home care services.  Senator Thune wraps with the conclusion he'd still prefer to see CLASS repealed.  Check it out and see what you think.*** 

*** THE 11TH ANNUAL INTERCOMPANY LONG TERM CARE INSURANCE CONFERENCE will be held March 6 to 9, 2011 at the Marriott Marquis in Atlanta, Georgia.  Conference registration is only $995, airfares often under $300 and hotel rooms only $129.  To get additional information about the conference and to register, click on the link: www.ILTCIconf.org.  Then place your cursor over "REGISTRATION" and select the link that is correct for your situation from the drop-down menu.  If you have any questions, please contact Jim Glickman at 818-867-2223. *** 

*** BE A PREEMPTIVE PLANNER, not an immobilized worrier, says a new MetLife Mature Market Institute report.  Read "Best-Case Strategies for a Flexible Retirement:  The MetLife Study of Thinking About Retirement in Uncertain Times" here.  The study found that when it comes to finances, there are ten types of people:  Snoozers, Active Resisters, Immobilized Worriers, Oversleepers, Wood Knockers, Plan B-ers, Realists,  Stewers and Brewers, Compromisers, and Preemptive Planners.  "We found that actively preparing for the surprises that inevitably come our way is the most successful approach to retirement," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. "Knowing you will have guaranteed income sources available and access to emergency funds is key." *** 

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LTC BULLET:  OUR OP-ED ON MEDI-CAL LTC 

LTC Comment:  The San Bernardino Sun and the Inland Valley Daily Bulletin published the following op-ed last week.  Read it below and in the Sun or Daily Bulletin. 

The article cites our report titled "Medi-Cal Long-Term Care:  Safety Net or Hammock."  Read the full report on the Center's website or on the Pacific Research Institute's website. 

California Healthline added this Wednesday, February 16, 2011:  Opinion: Medi-Cal To Be a 'Bust' on Long-Term Care.  In an Inland Valley Daily Bulletin opinion piece, Stephen Moses -- president of the Center for Long-Term Care Reform -- argues that Medi-Cal, California's Medicaid program, will be unable to provide the long-term care many residents will need and that the cost of long-term care will fall to individuals. He writes, "Budget challenges have forced Medi-Cal to cut back on home care and adult day health programs. Californians should expect such cuts to continue and increase." He adds, "On the other hand, when more Californians pay their own way, access to long-term care will improve, along with its quality."  "No Medi-Cal Help on Long-Term Care" (Moses, Inland Valley Daily Bulletin, 2/15).  Read more. 

Special thanks to the Pacific Research Institute and its staff for supporting the underlying research and publicizing the resulting report and recommendations. 

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"No Medi-Cal help on long-term care"
by Stephen A. Moses 

On July 1, the federal funds that have propped up California's troubled Medi-Cal system will disappear. That is only one of the reasons why baby boomers, now retiring in droves, will find Medi-Cal a bust for the long-term care many will need.  

Long-term care (LTC) is the medical or custodial assistance people need when they can no longer care fully for themselves. Nearly 70 percent of all people require some LTC and 20 percent need five years or more. LTC is extremely expensive whether provided in a nursing home ($256/day), assisted living facility ($2,576/month) or in one's own home ($25/hour for an aide).  

Historically, government has paid for most LTC through programs like Medi-Cal, Medicare and the Veterans Administration. In 2008, California spent $3.8 billion on nursing homes and $6.5 billion for home health and personal care through Medi-Cal alone.  

Medi-Cal is public assistance designed to be a safety net for the poor. It has become a comfy hammock for the middle-class and affluent. Anyone with income below the cost of a nursing home qualifies easily for Medi-Cal-funded LTC. Nor are assets an obstacle because Medi-Cal exempts virtually unlimited resources including up to $750,000 of home equity plus a business, automobile, prepaid burial plans, term life insurance and home furnishings of unlimited value.  

For people with even more wealth than Medi-Cal's generous eligibility rules allow, a cottage industry of specialized "Medi-Cal planners" manipulate and stretch the elastic rules with special trusts, annuities, life-care contracts and many other sophisticated legal gambits.  

In the past, Californians relied on Medi-Cal reluctantly despite its easy eligibility because the program paid primarily for nursing homes, which most people would rather avoid. Over the past three decades, however, Medi-Cal has "rebalanced" to pay mainly for home-based and personal care, which most people prefer.  

The effect of easy eligibility and increasingly attractive services - including even Medi-Cal payments for friends or relatives to provide home care - has been to anesthetize the public to LTC risk and cost. Consequently, private-pay for LTC has declined precipitously and only 5.4 percent of Californians age 50-plus have purchased private LTC insurance.  

Medi-Cal costs have been soaring, and California's foundering economy is ill-equipped to pay the bills. With an aging population drifting toward senescence, who will pay for long-term care in the future? Only one thing is certain: it won't be the state and federal governments which now share the cost of Medi-Cal, at least not at anything like the current level.  

Budget challenges have forced Medi-Cal to cut back on home care and adult day health programs. Californians should expect such cuts to continue and increase after July 1, when supplemental federal matching funds that have propped up the program since October 2008 disappear.  

California will then have no choice but to cut popular benefits, tighten Medi-Cal eligibility rules, close gaping "loopholes," strengthen recovery from deceased recipients' estates, and encourage personal responsibility for LTC through greater asset spend-down, home equity conversion, and private insurance.  

As Medi-Cal LTC backs off, more families will have to pay for their own long-term care. When their savings run out, homeowners will turn to reverse mortgages to fund home care. More people will buy private LTC insurance as the consequences of "going bare" become increasingly severe and obvious. On the other hand, when more Californians pay their own way, access to long-term care will improve, along with its quality.  

Currently Medi-Cal LTC attempts to provide too much for too many, failing the very ones for whom it was supposed to provide a safety net. California legislators should redesign Medi-Cal with those realities in mind, and do it sooner rather than later. In 2011, a baby boomer turns 65 every eight seconds.  

Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com) and author of . . . "Medi-Cal Long-Term Care: Safety Net or Hammock?" from the Pacific Research Institute (www.pacificresearch.org). 

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*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here:  http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members.  Not a member yet (you should be if you’re receiving this)?  Need to renew?  Need a refresher on your username and password?  No problem.  Just contact Damon at 206-283-7036 or damon@centerltc.com.  Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Tuesday, February 15, 2011, 1:09 PM (Eastern) 

Seattle--
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LTC BULLET:  CLASS VS. LTC PARTNERSHIPS:  ALLIES, ADVERSARIES OR CO-DEPENDENTS? 

LTC Comment:  The father of the LTC Partnerships compares and contrasts them with CLASS after the ***news.*** 

*** WHILE WE'VE BEEN AWAY:  here's some of the news we would have covered if we'd been on the job.  Back at you full bore next week. *** 

*** 2/13/11, New York Times: Quote:  "Governors and mayors facing large deficits have set their sights on a relatively new target - the soaring expense of health benefits for millions of retired state and local workers."
LTC Comment:  Every piece of news like this sends the message explicitly and subliminally to the public that each and every one of us will be more personally responsible for our own health and LTC costs in the future.  It will be gradual, but demand for LTCI will increase dramatically. 

*** ANOTHER ONE BITES THE DUST:  2/7/11, National Underwriter:  Quote:  "Guardian had a small presence in the LTC insurance market to ensure that its financial representatives had a comprehensive portfolio of products to address the changing needs of their clients, says Gordon Dinsmore, president of Berkshire Life, Pittsfield, Mass. Its decision to leave the market was made after an extensive review of the business and decided to focus on its core life and disability income insurance business, he said."
LTC Comment:  So, we trust, all Guardian agents will be encouraged to refer future LTCI business to representatives of the remaining carriers to ensure ongoing "comprehensive" protection for their clients. *** 

*** SECRETARY SEBELIUS says she can fix CLASS.  NCOA agrees.  The Heritage Foundation strongly disagrees.  Read these three articles and see what you think.  As for me, I believe CLASS is about as fixable as alterations can be made to the "Emperor's New Clothes." *** 

*** LTCI PRICE INDEX:  2/7/11, InsuranceNewsNet.com:  Quote:  "A 55-year-old couple purchasing long-term care insurance protection can expect to pay $2,350-per-year (combined) for about $338,000 of current benefits ($169,000 each) which will grow to about $800,000 of combined coverage for the couple when they turn age 80.  The data comes from the 2011 Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance (www.AALTCI.org) that analyzed rates for 11 long-term care insurance policies. According to the Association report, a 55-year old single individual pays $1,480 annually for comparable coverage. If the 55-year-old couple did not qualify for preferred health discounts, their cost would increase by $325 annually." *** 

*** 2/4/11, McKnight's LTC News:  Quote:  "The Centers for Medicare & Medicaid Services has proposed a new rule that would require an expanded class of providers and suppliers of Medicare services to alert beneficiaries to the existence of quality improvement organizations (QIOs). Previously, only hospitals and select others had been obligated to do so."
LTC Comment:  Ironic.  People with LTC insurance don't have to ask permission to complain about poor care.  They simply move to a better facility. 

*** 2/3/11, Wall Street Journal, "House GOP Weighs Medicare Limits"  Quote:  "Asked about various options for dealing with the federal deficit, 74% of respondents said it would be acceptable to make Medicare more needs-based, so that low-income seniors received larger subsidies than higher-income seniors. Some 64% approved of capping payment increases to doctors and hospitals."
LTC Comment:  Further evidence most Medicare cuts will take the form of means-testing the program or cutting provider reimbursements rather than raising premiums (payroll deductions) or cutting benefits.  This means middle-class and affluent Medicare beneficiaries will be more on the hook than ever for acute, as well as, LTC health costs. *** 

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LTC BULLET:  CLASS VS. LTC PARTNERSHIPS:  ALLIES, ADVERSARIES OR CO-DEPENDENTS? 

LTC Comment:  I first heard about the LTC Partnership idea when it was little more than a gleam in Dr. Mark Meiners' eye.  In the mid-1980s he agreed with me that easy access to Medicaid LTC benefits could crowd out a market for LTC insurance.  But Mark argued that my solution--tightening eligibility, mandating estate recoveries, putting a stop to Medicaid planning, and targeting Medicaid to people in need--wouldn't work.  Rather, he said we needed a kinder and gentler approach, a carrot instead of a stick, something more politically palatable.  So Mark Meiners came up with the LTC Partnership idea and the rest is history--a very bumpy ride for many years but steadier success lately. 

Today we are fortunate to have an excellent and brief monograph by Dr. Meiners that explains the similarities, differences, and potential coordination of the CLASS and LTC Partnership programs.  Read some excerpts below and the article in full here.   

My only criticism is that the piece goes pretty easy on CLASS.  That Ponzi scheme's vulnerability to adverse selection and likely rapid actuarial insolvency gets little more than a mention.  Its phony $70 billion "savings" by double counting unspent reserves as "near-term budget offset and as long-term savings" (per Howe and Jackson) is not mentioned at all.  For an excellent critique of CLASS, see Neil Howe and Richard Jackson, The Other New Health Entitlement, Facing Facts Quarterly:  A Report about Entitlements & the Budget from The Concord Coalition, Volume V, Number 3, New Series, December 2009. 

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Excerpts from Mark R. Meiners, PhD, "Connecting the Long-Term Care Partnership and CLASS Act Insurance Programs," Center for Health Care Strategies, Inc., George Mason University, February 2011, http://www.chcs.org/usr_doc/Partnership_Lessons_for_CLASS_-_FINAL.pdf. 

"Deep within the Patient Protection and Affordable Care Act, the Community Living Assistance Services and Supports provision, known as the CLASS Act, establishes a first-ever publicly sponsored, voluntary long-term care insurance option for all working adults. State Long-Term Care Partnership programs, as the original public-private long-term care insurance strategy, and the CLASS insurance option share the common goal of helping consumers prepare for the risk of catastrophic long-term care costs. 

"This policy brief is designed to help the 40 states with existing Long-Term Care Partnership programs to inform consumers and other stakeholders in considering these two different approaches to insure against long-term care risk. The brief compares the two programs in a variety of areas, including program benefits, eligibility, affordability, intersections with Medicaid, and the need for supplementary products."  (p. 1) 

"State Long-Term Care Partnership programs, the original public-private long-term care insurance strategy, and the new CLASS insurance program share the public policy goal of helping consumers prepare for the risk of catastrophic long term care costs."  (p. 1) 

"Both the CLASS and Partnership programs are designed to address risk pooling and affordability issues in long-term care insurance that would otherwise limit the reach of the private market." (p. 1) 

"Both Partnership and CLASS seek to keep premiums affordable within their respective designs." (p. 2) 

"While CLASS offers a simple 'one-size-fits-all' benefits approach, Partnership insurance offers a wide array of options that can be tailored to provide substantial daily benefits at an affordable premium." (p. 2) 

"Most Americans will be eligible for either CLASS or the Partnership, but eligibility absent affordability is meaningless to the average consumer." (p. 3) 

"CLASS is designed to keep premiums low by offering a limited benefit ($50-100 per day), minimizing administrative expenses (3% compared to 30 to 40% in the private market), and substantially expanding the risk pool, especially with large numbers of healthy younger workers. As noted earlier, this last goal is shared by Partnership insurance, so success is predicated on the appeal and credibility of the CLASS option compared to private insurance offerings." (p. 3) 

"In contrast to the CLASS 'long and lean' benefit structure, Partnership favors a 'short and fat' benefit structure." (p. 4) 

"The limited cash benefit and one-size-fits-all approach of CLASS along with the flexibility of Partnership insurance suggest the potential for private wrap-around products to fill gaps in the CLASS benefit." (p. 4) 

"The feasibility of a private supplemental market emerging to fill gaps in CLASS coverage largely depends on the affordability of CLASS." (p. 4) 

"Several other program features may make Partnership coverage more appealing to eligible individuals. For example, spousal discounts are typical with Partnership insurance, but are not available with CLASS. Indeed, a spouse is not eligible for CLASS, if she/he does not meet the program's employment rules." (p. 5) 

"Individuals who are currently insurable may not want to wait for the CLASS option per the reasons outlined above. Partnership states have been working to help their citizens understand the considerations in choosing a good private insurance policy." (p. 5) 

"Both CLASS and Partnership insurance are designed to relieve stress on Medicaid budgets by helping people prepare for potential long-term care needs. The two programs offer very different models of coverage that will be tested in the marketplace." (p. 5) 

"Both CLASS and Partnership programs will have to convince the public, without any historical proof, that the products are accurately priced." (p. 5) 

"As the DHHS develops CLASS, it will need to address numerous consumer protection issues including premium waivers while in benefit, protection against the risk of policy lapse, and provisions regarding renewability. Even CLASS' strongest supporters acknowledge that the law may need some modifications to be successful. The work of the Partnership states and the lessons learned from the private long-term care market provide a wealth of experience that can help improve both programs for consumers." (p. 5, footnote omitted) 

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*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here:  http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members.  Not a member yet (you should be if you’re receiving this)?  Need to renew?  Need a refresher on your username and password?  No problem.  Just contact Damon at 206-283-7036 or damon@centerltc.com.  Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Thursday, February 3, 2011, 10:50 AM (Pacific)

Seattle--

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LTC UPDATE AND CENTER NEWS

LTC Comment: The Center's biggest project over the past seven months has been to research, write and publish three major state-level reports on LTC financing and Medicaid. Two of those studies have been published. You can read them here and here. We expect the third to be released before the end of this month. We'll link you to it then.

In other words, folks, we're bushed! It's time . . . it's past time . . . to pull back for a bit, have a rest, think, reflect and plan. So your Center for Long-Term Care Reform is shutting down for a couple weeks. Oh, not to worry, we'll still track the news and share our analysis as soon as we return.

But right now, some time is best spent pondering how to make the most of the biggest opportunity for LTC financing reform we've seen since passage of the Deficit Reduction Act of 2005 . . . actually the biggest opportunity ever. We'll be sharing more with you about that when the Center returns--tanned, rested and ready--on February 21, 2011.

For now, here's the latest news to use or lose:

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Conference Reminders:

The 11^th Annual Intercompany Long-Term Care Insurance Conference convenes March 6-9, 2011 at the Marriott Marquis in Atlanta, GA. Get details and register at www.iltciconf.org.

The 9^th Long-Term Care Producers Summit meets April 3-5, 2011 at the Tropicana Hotel in Las Vegas, NV. Get details and register at http://www.aaltci.org/2011summit/.

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2/3/11, Kaiser Health News, "The 'Catastrophic' Experience: Is The Past Prologue?"

Quote: "When Health Repeal Was 'Catastrophic': A president uses his pulpit to call for health reform, but initial agreement over the need for change eventually descends into partisan bickering. Angry constituents shout down lawmakers during congressional town halls. Congress ultimately faces pressure to repeal the health law. If this all sounds familiar, it's because it already happened - in the fight over the Medicare Catastrophic Care Act, more than two decades ago (Diamond, 2/2)."

LTC Comment: Some of you are old enough--like me--to remember how seniors chased Dan Rostenkowski (then Ways and Means Chairman) and rocked his car, demanding repeal of "Medicare Catastrophic." Congress repealed the Medicare portion of that 1988 law in 1989, but left the Medicaid sections in place. To wit: spousal impoverishment protections and mandatory asset-transfer look-back periods and penalties, which previously were only voluntary for states to impose. What goes around comes around.

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2/2/11, Alfa Update, "New Alzheimer's Association Report Tags Boomers"

Quote: "The Alzheimer's Association has nicknamed the baby boomer generation 'Generation Alzheimer's' in a new report, since one in eight boomers is expected to develop the disease, for which there is no cure. Deaths related to Alzheimer's are soaring, increasing 66 percent between 2000 and 2008, and scientists predict an approaching tipping point."

LTC Comment: So, now, finally, the "Me Generation" becomes the "Alzheimer's Generation." "What a revoltin' development," as William Bendix used to say in "The Life of Riley." If you remember that 1950s TV sitcom, congratulations. At least your long-term memory is still intact.

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2/1/11, Financial Planning, "Yet Another Reality Check for Baby Boomers"

Quote: "About 40 years ago, they were told to cut their hair and find a real job. Today, this same massive segment of the American population, better known as Baby Boomers, is getting another ultimatum: stop spending so much money and work even longer at that real job. Oh, and while you're at it, get a reverse mortgage -- if you're lucky enough to still own a home -- because someone's going to have to pay for your exorbitant long-term health care."

LTC Comment: As we've been warning in this space for a long time, expect much more news and advice along these lines: if you don't have private LTC insurance, expect to use your home equity if you need expensive extended care someday after the bottom fall out of middle-class Medicaid.

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1/31/11, PRLog, "Leading Long-Term Care Insurance Companies Pay $10.8 Million In Claims Daily" (link)

Quote: "The nation's 10 leading long-term care insurance companies paid over $10.8 million in daily claim benefits in 2010 according to a new study conducted by the American Association for Long-Term Care Insurance http://www.aaltci.org."

LTC Comment: Says AALTCI president Jesse Slome: "Frankly, I think this is the single most important piece of news this industry could report .... that they pay claims ... lots of them ... and 53% more than just 3 years ago." Say we: "Hear, hear!"

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1/29/11, New York Times, "Social Security and Welfare Benefits Going Paperless"

Quote: "In May, the government will no longer pay someone eligible for benefits with a mailed check. Instead, the money will be electronically deposited directly into a bank account or made accessible by a debit card. And by March 2013, the 10 million people who receive checks, out of 70 million people in all, must switch over to direct deposit or use a card."

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1/28/11, New York Times, "For Governors, Medicaid Looks Ripe for Slashing"

Quote: "Hamstrung by federal prohibitions against lowering Medicaid eligibility, governors from both parties are exercising their remaining options in proposing bone-deep cuts to the program during the fourth consecutive year of brutal economic conditions."

LTC Comment: So called "maintenance-of-effort" requirements in the American Recovery and Reinvestment Act (AKA, the stimulus) and in the Patient Protection and Affordable Care Act (AKA, health reform) prevent states from cutting Medicaid eligibility without losing federal Medicaid matching funds. That leaves financially strapped states with no way to lower Medicaid expenditures except to reduce coverage (e.g. cut dental benefits) or slash reimbursement rates (already disgracefully low). So, in its wisdom, the federal government denies states the opportunity to make cuts where they are truly needed--in overly generous LTC eligibility criteria--and forces states to make cuts where they hurt recipients and LTC providers the most. Go figure.

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Updated, Friday, January 28, 2011, 10:47 AM (Pacific)

Seattle--

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LTC UPDATE

LTC Comment: In case you've been busy on things other than following the LTC news--such as helping people protect themselves against the risk and cost of long-term care--here are some recent stories and reports you should know about.

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1/28/11, "Budget Woes Lead States To Seek Ways To Ease Medicaid's Requirements," Kaiser Health News. Link

Quote: "While The Hill reports that CMS administrator Donald Berwick says his agency is trying to help states find solutions, National Journal notes that mounting budgetary pressure has put the program in 'dire fiscal straits.'"

LTC Comment: As we've predicted, states are bringing pressure on the feds to ease up on "maintenance of effort" provisions that prevent them from managing Medicaid long-term care benefits more sensibly.

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1/27/11, Terry Savage, "Survival and Recovery: A personal financial strategy guide to 2011," Chicago Sun-Times. Link

Quote: "6. Weigh long-term care insurance. I know I've become a nag on this subject - but only because I see it as a coming disaster for an entire generation. Here in Illinois, the state is already way behind on its bills to state-funded nursing homes. And that's where you'll find yourself if you can't afford $6,500 a month or more for private care at home or in assisted living. I always remind women that we are especially vulnerable because we live longer and outlast the men around us. Long-term care insurance policies provide assistance with finding and scheduling care, as well as paying for it. That's going to be particularly important to older women who are alone."

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1/26/11, Brian Faler, "Social Security to Run Deficits for Foreseeable Future, CBO Says," Bloomberg Businessweek. Link

Quote: "The U.S. Social Security program will run a deficit this year and will continue spending more on benefits than it receives in revenue for the foreseeable future, according to the Congressional Budget Office."

LTC Comment: This wasn't supposed to start happening for several more years, surprised everyone when it started last year, and now appears to be locked in.

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1/25/11, Angela Stringfellow, "AHCA/NCAL Profiles Assisted Living in the U.S."

Interesting stats on assisted living residents and funding sources.

Quote: "The average assisted living resident is 87 years old, and the majority (74 percent) are women. The average annual income for an assisted living resident is just $19,000 per year — a harsh reality given the ever-rising assisted living costs, which lends credence to increasing concerns surrounding seniors’ ability to pay for long-term care as they age. Three-fourths of assisted living residents are paying for assisted living care out of their own funds or through funds provided by family members, although 131,000 low-income residents (of the 1 million + assisted living residents residing in more than 38,000 assisted living facilities in the U.S.) are receiving Medicaid coverage for some or all of their assisted living costs."

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1/24/11, Terry Savage, "Long-term care combined with life insurance solves problems," Chicago Sun-Times. Terry Savage endorses hybrid products. Link

Quote: "I have often written about the importance of having long-term care insurance - policies that pay for home care or assisted living or nursing home care - in case you are unable to independently manage the basic activities of daily living."

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1/22/11, Anne Tergesen, "The Latest Long-Term-Care Snafu," Wall Street Journal.

Quote: "Some families with long-term-care insurance policies--under fire recently for steep premium increases--are encountering claims denials that can prevent or delay the collection of benefits. But there are ways policyholders can avoid such problems."

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1/19/11, Pretty good "Nightly Business Report" episode on LTCI and LTC planning:

Quote: "PBS Airdate: January 19, 2011. Long Term Care can be both a highly emotional and costly journey, especially if you choose to grow old in your own home. Plan your options."

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1/19/11, "Obamacare and the CLASS Act: Creating a Long-Term Care Entitlement Burden," by Brian Blase of the Heritage Foundation. Link

Quote: "[A]ctuaries who have analyzed CLASS believe it is poorly designed and will lead to an overabundance of unhealthy and disabled individuals in the risk pool. This adverse selection problem will likely cause either spiraling premium increases for enrollees or a taxpayer-financed bailout. The deficit commission appointed by President Barack Obama has recommended that CLASS be either revamped or repealed."

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January, 2011, AARP, "Weathering the Storm: The Impact of the Great Recession on Long-Term Services and Supports" Link

Quote: "Thirty-one states cut non-Medicaid aging and disability services programs in fiscal year (FY) 2010, with more than half of the states reporting increased demands for information and referrals, home-delivered meals, respite, case management, personal care assistance, family caregiver support, transportation, and homemaker services. Twenty-eight states anticipated making cuts to these programs in FY 2011, when an end to American Recovery and Reinvestment Act stimulus funding will put fiscal pressure on state Medicaid budgets."

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Updated, Wednesday, January 26, 2011, 10:26 AM (Pacific)

Seattle--

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2009 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.

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 2009 statistics on its website at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.

The current issue of Health Affairs (Vol. 30, No. 1, pps. 11-22) contains a summary and analysis of the new data titled "Recession Contributes to Slowest Annual Rate of Increase in Health Spending in Five Decades." Registered subscribers to Health Affairs can access the full text of the article online at http://content.healthaffairs.org/content/30/1/11.full.pdf+html.

Note that CMS changed the definition of National Health Expenditure Accounts (NHEA) categories this year, adding for example Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities. This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40% in 2008 to under one-third (32.8%) in 2009. CMS also created a new category called "Other Third Party Payers" (7.1%) which includes "worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health." For definitions of all NHEA categories, see http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.

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?, 2009 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 $137.0 billion on nursing facilities and Continuing Care Retirement Communities in 2009. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 39 years (from 26.8% in 1970 to 53.2% in 2009, up 26.4 % of the total) while out-of-pocket costs have declined (from 49.5% in 1970 to 29.1% in 2009, down 20.4% of the total). Source here, Table 9.

SO WHAT? Consumers' liability for nursing home and CCRC costs has declined by almost 40% in the past 3.9 decades, while the share paid by Medicaid and Medicare has very nearly 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 parsimonious 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 one-third the cost of nursing home care (32.8% of the dollars in 2009), 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 7.7% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2009. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because most LTCI policies pay 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 $39,516 per year (Source: 2010 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 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 $68.3 billion on home health care in 2009. Medicare (43.6%) and Medicaid (35.6%) paid 79.2% of this total and private insurance paid 7.3%. Only 8.8% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source here, Table 4.

SO WHAT? Less than 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:

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.pacificresearch.org/docLib/20110104_LongTermCare_final(2).pdf;

"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, Friday, January 21, 2011, 12:48 PM (Pacific)

Seattle--

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LTC UPDATE

LTC Comment: Well friends, if you can read and absorb today's LTC E-Alert and you still don't protect more prospects and clients from LTC risk and cost next week, you might want to consider a new line of work. On the other hand, if this information helps you cut through their denial and prepare responsibly, let us know.

Hint: Read the quote and our LTC Comment. Then follow the hyperlink to the underlying story for details.

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1/20/11, New York Times: "If Medicare benefits have to be reduced, the most popular option is raising premiums on affluent beneficiaries. Similarly, if Social Security benefits must be changed to make the program more financially sound, a broad majority prefers the burden fall on the wealthy. Even most wealthy Americans agree."

LTC Comment: Means testing entitlements rather than raising taxes or cutting benefits is the approach we've predicted government would take to deal with unfunded liabilities. That means affluent people will need private insurance protection of all kinds, especially LTCI, much more in the future than ever before.

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1/21/11, New York Times: "Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers."

LTC Comment: Still want to go bare for LTC and take whatever state Medicaid programs can provide if you need care someday? See why we're saying 2011 is the pivotal year when LTCI begins to make the turn from a niche to a mainstream financial product? Now is the time to protect individuals, families, employers and employees before the bottom falls out of the social safety net altogether.

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1/21/11, San Francisco Examiner: "'Currently Medi-Cal LTC attempts to provide too much for too many,' says Steve Moses. 'Medi-Cal is going to fail and the people hurt will be the very ones for whom it was supposed to provide a safety net. In 2011 and beyond, California legislators should make it a priority to redesign Medi-Cal with those realities in mind.'" (Source; K. Lloyd Billingsley of the Pacific Research Institute writing in an op-ed titled "Why retirees will find Medi-Cal to be a bust on long-term care.")

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1/21/11, The Telegraph: LTC Comment: This article points out that in England, public LTC assistance exempts only 23,250 British pounds (about $37,000) including in most cases the family home. People have the option to keep the home and run a tab that the government collects later. If we ran Medicaid like this--a low asset exemption with house lien with later recovery--Medicaid would spend much less and LTC insurance would take off. We do have mandatory estate recovery but it isn't enforced aggressively and home equity is very easy to jettison. That must and will change.

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1/20/11, New York Times: "If Medicare benefits have to be reduced, the most popular option is raising premiums on affluent beneficiaries. Similarly, if Social Security benefits must be changed to make the program more financially sound, a broad majority prefers the burden fall on the wealthy. Even most wealthy Americans agree."

LTC Comment: Means testing entitlements rather than raising taxes or cutting benefits is the approach we've predicted government would take to deal with unfunded liabilities. That means affluent people will need private insurance protection of all kinds, especially LTCI, much more in the future than ever before.

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1/19/11, Wall Street Journal: "Next up is the CLASS Act (for the Community Living Assistance Services and Supports Act) providing a new long-term care insurance entitlement. CLASS hitched a ride on the ACA [AKA Affordable Care Act, PPACA, 'health reform' or ObamaCare] for one reason only: premiums are collected in the first ten years, but no benefits are provided. Voila, it creates the perception of $70 billion in deficit reduction. In fact, CLASS is a bailout waiting to happen, as it will attract mainly sick enrollees. Only in Washington could the creation of a reckless entitlement program be used as 'offset' to grease the way for another entitlement."

LTC Comment: One more reason CLASS is doomed.

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1/18/11, Los Angeles Times: "[U.S. Supreme Court] Justices will hear three appeals from California, where the state has cut back Medicaid payments to doctors, hospitals and pharmacies. Those providers have successfully sued to block the cutbacks, but lawyers for the state say they have no right to sue or to demand a particular payment."

LTC Comment: California cannot afford Medi-Cal any longer as we documented in "Medi-Cal Long-Term Care: Safety Net or Hammock."

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1/18/11, Los Angeles Times: "The class action lawsuit is the first to mount a broad challenge to a controversial Medicare policy requiring that patients achieve demonstrable improvements in functioning in order to qualify for physical, speech and occupational therapy and skilled nursing care."

LTC Comment: Medicare benefits have always been limited to medical care that can improve a patient's functioning. Expanding beyond those limits would vastly expand Medicare's LTC financing role and cost further expediting the program's insolvency.

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1/18/11, PRNewswire: "The American Health Care Association and the National Center for Assisted Living (AHCA/NCAL) today launched an informational series on the State of Long Term and Post-Acute Care, to complement President Obama's State of the Union address next week. According to national projections, of the expected 50 million individuals who will watch the State of the Union, 4.4 million of those Americans will one day need long term care services." (Emphasis added)

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1/12/11, PRLog: "A new report provides insights that can help individuals pay less for long term care insurance coverage. 'People mistakenly believe that long-term care insurance costs thousands of dollars,' states Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national trade organization that issued the report."

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1/12/11, New York Times: "The federal government has accused New York City of over billing Medicaid by 'at least tens of millions of dollars' by improperly approving 24-hour home care for thousands of patients."

LTC Comment: Could the timing be any better for release later this month (hopefully) of our study lambasting NY Medicaid for wasteful LTC spending?

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1/12/11, Heritage Foundation Morning Bell: "This morning, The Heritage Foundation and The Wall Street Journal released the 2011 Index of Economic Freedom, and while the news is good for many countries, it is depressing for the United States. All told, 117 countries, mainly developing and emerging market economies, improved their Economic Freedom Index score. Meanwhile the U.S. dropped to 9th place, remaining 'mostly free,' . . .." (Emphasis added)

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1/11/11, Stateline: "State leaders were well aware that the federal stimulus money would eventually run out. But architects of the [supplemental Medicaid funding] package figured states wouldn't fall off that funding cliff until they were already well on their way to recovery. That's not going to happen."

LTC Comment: When states reach this "cliff," and the supplemental federal Medicaid matching funds disappear, you'll have the best LTCI marketing opportunity in decades.

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Updated, Tuesday, January 18, 2011, 1:30 PM (Pacific)

Seattle--

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Tuesday, January 18, 2011

Seattle--

LTC Comment: Watch, listen and read why CLASS is doomed but LTC financing will improve, after the ***news.***

*** YOU READ IT HERE FIRST. We've argued for decades that a cresting Age Wave will swamp entitlements like Medicare and Medicaid and leave aging boomers much more reliant on private financial products. It's happening . . .

NO MORE FREE HOME HEALTH. "Medicare recipients could see a sizable new out-of-pocket charge for home health visits if Congress follows through on a recommendation issued Thursday by its own advisory panel." More.

MEDICAID PAYS LESS THAN MINIMUM WAGE. "State Medicaid programs underfunded nursing homes by $5.6 billion last year. They paid an average of $7.17 per hour, per patient, which is less than the minimum wage of $7.25 per hour, according to a new study." More.

MEDICARE CUTBACKS IMPERIL MEDICAID SNFs. "The Medicare Payment Advisory Commission (MedPAC) has recommended that Congress not provide a cost-of-living increase, also known as a market-basket update, for skilled nursing facilities in fiscal year 2012." More.

POOR HURT MOST. "Over the last 10 years, nursing home closures have hit poor, urban and minority communities especially hard, according to a new study from Brown University." More.

"We are heading to a two-class society, those who can pay and those dependent on whatever government programs exist," says AALTCI's Jesse Slome. More. ***

*** AGING DELIBERATELY. From time to time we've pointed you toward Liz Taylor's excellent newsletter. Now, Aging Deliberately, has won third place--behind only the AARP Bulletin and Los Angeles Jewish Home eNews--in a nationwide Best of the Web 2011 competition. More. Congratulations, Liz! Join Liz Taylor's mailing list here. ***

LTC BULLET: THE CLASS ACT AND THE FUTURE OF LTC FINANCING

LTC Comment: The Society of Actuaries convened its triennial "Living to 100 Symposium" in Orlando, FL January 5-7. Center president Stephen Moses addressed the event in absentia due to a family medical emergency.

In his speech, Moses explained how the CLASS program addresses symptoms of America's LTC service and financing problems, but not their causes. CLASS is doomed to fail because it does not correct market distortions created by Medicaid.

But don't despair. He goes on to explain how market forces will save the Medicaid LTC safety net, pump the life blood of private capital into long-term care services, and unleash at long last the huge potential of private financing alternatives like LTC insurance.

"Whoa," you say, "how can I hear and see this exciting story for myself?" No problem. Steve's remarks as delivered on video are available here. Or you can read the speech below or here. The speech is bolded; the PowerPoint content is unbolded.

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Presentation on

"The CLASS Act and the Future of Long-Term Care Financing"

by Stephen A. Moses

for the Society of Actuaries "Living to 100" Symposium

January 5, 2011 in Orlando, Florida

Slide 1: "The CLASS Act and the Future of Long-Term Care Financing"

by Stephen A. Moses, president, Center for Long-Term Care Reform, Seattle, Washington

• What is the CLASS Act?

• CLASS is the Non-Medicaid program

• Will CLASS solve or aggravate problems?

• How did we end up with a welfare-financed, nursing-home-based LTC system?

• Brief history of LTC services and financing

• Unintended consequences of well-intentioned but counter-productive policies

• Are HCBS cheaper than institutional care?

Slide 5: Why does Medicaid pay for most long-term care?

• The fallacy of impoverishment

• How Medicaid LTC eligibility actually works
  • Income
  • Assets

• Medicaid planning

Slide 6: Summary and Relevance of the CLASS Act

• Will CLASS fix what's wrong?

• Take up low because of Medicaid crowd out

• Private LTCI already pays for HCBS but people don't buy

• Public sees LTC as a right, an entitlement because of Medicaid and Medicare

• Adverse selection

• One size fits all

• CLASS tries to fix LTC without accounting for why it's broken

• Addresses symptoms, not causes

• Access? Medicaid co-opted private HCBS.

• Quality? Medicaid paid too little.

• Institutional bias? Medicaid paid for nursing homes.

• No change until we address the causes, not just the symptoms

• But policy makers keep making Medicaid more attractive and easier to get

• CLASS will flounder

• Medicaid will have to cut back radically, when support from Social Security and Medicare end

• Boomers will spend through savings and home equity

• Reverse mortgages and private LTCI will flourish

• Medicaid will do a better job for fewer people

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*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here: http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members. Not a member yet (you should be if you’re receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or damon@centerltc.com. Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Friday, January 14, 2011, 10:11 AM (Pacific) 

Seattle-- 

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OUR LTC REFORM PLAN IS A "CAPITAL IDEA" 

LTC Comment:  K. Lloyd Billingsley, editorial director of California's Pacific Research Institute dedicated his Capital Ideas column this week to California's Medi-Cal LTC financing problem.  He addresses our analysis of the problem and recommendations in last week's report titled "Medi-Cal Long-Term Care: Safety Net or Hammock?." 

Read "Why Retiring Baby Boomers Will find Medi-Cal a Bust on Long-Term Care" here or below.  (Republished with permission.) 

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K. Lloyd Billingsley, "Why Retiring Baby Boomers Will find Medi-Cal a Bust on Long-Term Care," Capital Ideas, Vol. 17, No. 2, Pacific Research Institute, Sacramento and San Francisco, California, January 12, 2011. 

The new administration of Jerry Brown faces many challenges, including a tough one that will get worse on July 1, 2011. That's when the federal funds that have propped up California's troubled Medi-Cal system will disappear.  

That is bad news for retirees, including baby boomers, who in 2011 will be turning 65 every eight seconds. Many boomer retirees will need long-term care (LTC), but they shouldn't look to Medi-Cal for such medical and custodial attention.  

Medi-Cal is public assistance designed to be a safety net for the poor. This welfare program is being exploited by the middle-class and affluent, according to Medi-Cal Long-Term Care: Safety Net or Hammock? a new PRI study by Steve Moses, president of the Center for Long-Term Care Reform. The author lays out some stark realities.  

For example, nearly 70 percent of all people require some LTC and 20 percent need five years or more. LTC is expensive whether provided in a nursing home ($256/day), assisted living facility ($2,576/month) or in one's own home ($25/hour for an aide). Historically, government has paid for most LTC through programs like Medi-Cal, Medicare and the Veterans Administration. In 2008, California spent $3.8 billion on nursing homes and $6.5 billion for home health and personal care through Medi-Cal alone.  

As a government agency, Medi-Cal has a bureaucratic incentive to expand, not reduce, the number of its beneficiaries. Medi-Cal officials have followed this pattern by extending to the middle-class and affluent a program designed for the poor. Anyone with income below the cost of a nursing home qualifies easily for LTC funded by Medi-Cal.  

Assets are not an obstacle because Medi-Cal exempts virtually unlimited resources including up to $750,000 of home equity plus a business, automobile, prepaid burial plans, term life insurance and home furnishings of unlimited value. Medi-Cal Long-Term Care helpfully outlines the "Two-Mercedes Rule" and the "Renoir Loophole."  

People with even more wealth than Medi-Cal's generous eligibility rules allow can turn to a cottage industry of specialized "Medi-Cal planners." They manipulate and stretch the rules with special trusts, annuities, life-care contracts and many other sophisticated legal gambits.  

In the past, Californians relied on Medi-Cal reluctantly despite its easy eligibility because the program paid primarily for nursing homes, which most people would rather avoid. Over the past three decades, according to the study, Medi-Cal has "rebalanced" to pay mainly for home-based and personal care, which most people prefer.  

In fact, Medi-Cal even provides payments for friends or relatives to provide home care. According to Steve Moses, "such attractive services, coupled with easy eligibility, have anesthetized the public to LTC risk and cost." According to his study, private-pay for LTC has declined precipitously and only 5.4 percent of Californians age 50 plus have purchased private LTC insurance.  

While the population has been aging, Medi-Cal costs have been soaring and the state economy slumping badly. The state and federal governments, which now share the cost of Medi-Cal, are ill-equipped to provide LTC at anything like the current level. California's budget deficit could top $26 billion over the next 18 months.  

Meanwhile, Medi-Cal has cut back on home care and adult day health programs. Californians should expect such cuts to continue and increase after July 1, 2011, when supplemental federal matching funds that have propped up the program since October 2008 disappear.  

The Brown administration will then have no choice but to cut popular benefits, tighten Medi-Cal eligibility rules, close gaping loopholes, and strengthen recovery from deceased recipients' estates. Instead of cultivating dependency, the state will have to encourage personal responsibility for LTC through greater asset spend-down, home equity conversion, and private insurance.  

"Currently Medi-Cal LTC attempts to provide too much for too many," says Steve Moses. "Medi-Cal is going to fail and the people hurt will be the very ones for whom it was supposed to provide a safety net. In 2011 and beyond, California legislators should make it a priority to redesign Medi-Cal with those realities in mind."  

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Updated, Wednesday, January 12, 2011, 12:09 PM (Pacific)

Seattle-- 

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LTC BULLET:  HOW TO SAVE PENNSYLVANIA BILLIONS:  TWO NEW CENTER STUDIES RELEASED 

LTC Comment:  Read "Long-Term Care Reform:  More Access to Better Care at Lower Costs" and "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians" after the ***news.***

***  Lincoln Financial Life Stages Survey: Long-term Care:  "Promises to save money or manage debt perennially appear on New Year's Resolution lists across the nation. With the lessons of the Great Recession still fresh, as many Americans review their financial plans for 2011 and beyond they are more concerned than ever with rebuilding their portfolios, protecting their savings and better analyzing their long-term financial risks. One such risk is the impact of the cost of long-term care."  Press release. *** 

*** U.S. Nursing Home Closings Hit Poor Neighborhoods Hardest: Study:  "Widespread nursing home closures over the past decade have resulted in a 5 percent drop in available nursing home beds across the United States, with poor, urban neighborhoods hardest hit, new research reveals." 

LTC Comment:  This is one example of what we mean when we write that the impending collapse of Medicaid long-term care will hurt the poor most.  But it will also send the middle class and affluent rushing to LTCI producers for protection which is becoming obvious to them that they need. *** 

*** LTC PARTNERSHIP TRAINING:  "LTC Connection, a continuing education company that specializes in offering mandatory LTC Partnership Training in a classroom setting, has launched their 2011 class schedule.  The classes . . . include many new and exciting initiatives in order to make Partnership training the best value for LTC agents, distributors and insurance carriers."  Press release. *** 

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LTC BULLET:  HOW TO SAVE PENNSYLVANIA BILLIONS:  TWO NEW CENTER STUDIES RELEASED 

LTC Comment:  Your Center for Long-Term Care Reform is capitalizing in these first weeks of 2011 on many months of research conducted during the second half of 2010. 

Last week, we announced publication of our study titled "Medi-Cal Long-Term Care:  Safety Net or Hammock" by California's Pacific Research Institute.  Read a California Healthline "most-commented" review of that "incendiary" report here. 

This week, we're proud to announce the publication of two more reports generated from the Center's research.  

Yesterday, Pennsylvania's Commonwealth Foundation, a free-market think tank, released "Long-Term Care Reform:  More Access to Better Care at Lower Costs," which is based on our research, in tandem with their own study "Five Ways to Cut $5 Billion."  Our LTC recommendations added to their proposals brought the total savings for "Keystone State" taxpayers to $8.1 billion:   

Reform Long-Term Care Spending:  Estimated Yearly Savings-$1 Billion+.  Long-term care currently costs Pennsylvanians $6.6 billion per year, making up 40 percent of all Medicaid spending (much higher than the national average).  Pennsylvania needs to reduce the number of individuals dependent on the program by adjusting enrollment guidelines to target the truly needy while encouraging more Pennsylvanians who can afford it to purchase private long-term care insurance.  Additional Savings for FY 2011-12-$2.8 Billion;  Total Savings for FY 2011-12-$8.1 Billion. 

Today, the Center for Long-Term Care Reform is releasing "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians."  This is our full-length study, conducted for the Commonwealth Foundation, on which their abridged version, published yesterday and described above, is based.  (Link to report.) 

We want to thank the Commonwealth Foundation for retaining the Center to conduct this research and for their invaluable assistance in conducting the research and publicizing the results. 

Following is the "Executive Summary" from our full-length report. 

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Executive Summary 

Long-term care is very expensive whether provided in a nursing home, an assisted living facility or in someone's home. 

Medicaid pays for most professional long-term care in Pennsylvania.  The cost is already huge and likely to increase rapidly because of the Commonwealth's aging demographics. 

Most people prefer to receive long-term care in their homes instead of going to a nursing home, but Pennsylvania Medicaid pays mostly for nursing home care. 

That's all changing as Pennsylvania Medicaid pursues "rebalancing" from nursing-home to home care in a massive effort one official compared to the "Manhattan project." 

The goal of rebalancing is to provide more of the home care people prefer at less cost, based on the opinion that, overall, home care is less expensive than nursing home care. 

But research does not bear out the view that home care saves money overall.  In fact, providing more home care delays but does not replace institutional care and costs more in total. 

Furthermore, rebalancing without controlling eligibility discourages free care and private LTC financing alternatives while encouraging Medicaid enrollment and "Medicaid planning." 

The only way to rebalance Medicaid to provide more home care at less cost is to reduce the number of Pennsylvanians who become dependent on the program in the future. 

Only four alternative sources of LTC financing exist:  (1) Asset Spend Down, (2) Estate Recoveries, (3) Home Equity Conversion, and (4) Private Long-Term Care Insurance. 

This report explains why these alternative funding sources remain small and how to maximize them to relieve Medicaid and enable the program to rebalance cost-effectively. 

Pennsylvania Medicaid would save nearly $120 million per year by preventing only 20% of its "dual eligibles" from ending up dependent on the program in the future. 

If Pennsylvania Medicaid recovered from estates at the same rate as Oregon, the Commonwealth could recover an additional $213 million per year. 

Pennsylvania may have 135,000 households "at risk for spending down" that could receive an estimated $62,800 each or $8.5 billion in total from reverse mortgages to help pay for their own long-term care, stay off Medicaid or at least delay Medicaid dependency.

In the absence of Medicaid's $500,000 home equity exemption and with other tougher income and asset limits, far more Pennsylvanians would purchase private long-term care insurance, avoid Medicaid dependency altogether, and save the Commonwealth large sums.

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Updated, Monday, January 10, 2011, 11:04 AM (Pacific)

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LTC UPDATE

LTC Comment: Now that we're in a temporary period without daily LTC E-Alerts, we'll try to keep you posted on all important developments with occasional "updates" like this one.

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Read this review of our report on Medi-Cal LTC in California Healthline, 1/6/11: "Incendiary Report Lambastes Medi-Cal: 'Expanding California's version of the Medicaid program 'is going to sink the state,' according to a recently released study."

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Wall Street Journal, 1/7/11 (gated), GOP Governors Seek Leeway to Cut Medicaid Enrollment: "Republican governors are pressing the Obama administration to make it easier for states to cut Medicaid enrollment, setting up a fight over one of states' costliest programs."

LTC Comment: This is big. "Maintenance of effort" (MOE) rules in the stimulus and "health reform" prevent states from targeting Medicaid to people in need and reducing LTC eligibility loopholes and abuse by the middle class and affluent. Dropping MOE would help states implement the Center for Long-Term Care Reform's recommendations and encourage more LTCI.

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CLASS finds a home: "The CLASS Office, which will be housed in the Administration on Aging, will head implementation of the program. Overseeing it will be Assistant Secretary on Aging Kathy Greenlee." Source: McKnight's LTC News, 1/7/11

LTC Comment: So much for speculation that CLASS would go to the Centers for Medicare and Medicaid Services (CMS) to protect it from "an unfriendly appropriations process."

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"Is 2011 the beginning of the end for Medicare?": "Today's 65-year olds likely have little to worry about; entitlement reform is typically phased in over years. But everyone else should be facing up to the fact that you will be on the hook for covering more of your health care costs in retirement. And even without reform, that should already be a big-ticket line item in your retirement budget." (Emphasis added) Yahoo Finance, 1/7/11

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To understand how aging demographics affect the whole world and America's place in it, you could do no better than to read Neil Howe and Richard Jackson's article "Global Aging and the Crisis of the 2020s."

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If you wanna follow the game, you gotta have a program. Check out this slide show about Washington DC's new health care power brokers.

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Sacramento Bee, 1/5/11: "Nearly half (48 percent) of Americans ages 45-70 have no financial plans in place to protect themselves against outliving their assets and the rising cost of healthcare should they live longer than they expected, according to a new survey released today by the Society of Actuaries (SOA). Additional findings show more than one-third are worried about running out of money during retirement, but only 20 percent plan to purchase an annuity or other form of guaranteed lifetime income to protect their assets."

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Dallas Morning News, 1/4/11: "Like most Americans, we wouldn't mind having access to good home health care in our later years, which this part of the bill seeks to provide. But the CLASS Act, which stands for Community Living Assistance Services and Supports program, could explode the deficit in a few years."

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"Health spending rose in '09, but at low rate. By Robert Pear, New York Times. Jan 5, 2011; At its lowest rate in 50 years, health spending increased by only 4 percent in 2009. Even so, health spending accounted for a record 17.6 percent of total economic spending that same year as a result of the recession and more Americans requiring Medicaid coverage due to job loss. Hospitals reported that many people put off medical procedures, and there was also a decline in spending for dental services. Overall, the nation spent $2.5 trillion - an average of $8,086 per American - on health care in 2009. Source: AHCA / NCAL Gazette - Thursday, January 6, 2011

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Nothing new or interesting in this podcast about "What you need to know about long-term care" except the source: Vanguard, the big mutual fund company. If you listen to it, note the statement that Medicaid only covers people with low incomes and practically no assets. Of course that is false. If it were true, LTCI would sell like hotcakes. We're working at the Center for Long-Term Care Reform to return Medicaid to its roots as a safety net for the poor and to encourage the middle and upper classes to insure for LTC.

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Updated, Tuesday, January 5, 2011, 10:55 AM (Pacific)

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LTC BULLET: "MEDI-CAL LTC: SAFETY NET OR HAMMOCK?" REPORT RELEASED

LTC Comment: We show how to save Medi-Cal's LTC safety net, reduce expenditures, and improve LTC access and quality in the Golden State, after the ***news.***

*** IT'S CONFERENCE SEASON, so please take note:

The Eleventh Annual Intercompany Long Term Care Insurance Conference will be held from March 6 to March 9, 2011 at the Marriott Marquis in Atlanta, Georgia. The deadline for early bird registration is Thursday, January 13, 2011. Register soon at www.ILTCIconf.org to save the extra $100. Organizers strongly recommend that you make your hotel reservations quickly to receive the special $129 per night rate. If you have any questions, please contact Jim Glickman at 818-867-2223.

The Ninth National LTCi Producers Summit organized by the American Association for Long-Term Care Insurance takes place April 3-5, 2011 in Las Vegas. Early bird registration is $279 ($328 for non-members) only through January 7. It's a 3-day event that brings together hundreds of producers, agencies, and insurers. This year, Connie Garner who spearheaded the passage of the CLASS Act will attend to speak and address questions. So will CEOs of leading LTC insurers who'll answer questions about the future of the industry. All Summit details are online at http://www.aaltci.org/2011summit/index.html or by calling (818) 597-3227. ***

*** "TWO NEW GUIDES detailing the higher 2011 tax deductible limits and regulations pertaining to long-term care insurance protection have been published by the American Association for Long-Term Care Insurance. Over 1.1 million copies of the annually-produced guides have been used by insurance and financial professionals."
Read more.***

LTC BULLET: "MEDI-CAL LTC: SAFETY NET OR HAMMOCK?" REPORT RELEASED

LTC Comment: Today, the Pacific Research Institute released our report on Medicaid and long-term care financing in California titled "Medi-Cal Long-Term Care: Safety Net or Hammock?" PRI's press release follows below.

Find links to the full study and a longer version of the press release here: http://www.pacificresearch.org/publications/medi-cal-long-term-care. The report is also posted on the Center's website here.

Now, check out the "movie" PRI prepared spoofing Medi-Cal's egregious LTC eligibility loopholes as documented in the report: http://www.youtube.com/user/pacificresearch1 - p/a/u/0/eyOpCWIJYC4.

We at the Center for Long-Term Care Reform wish to thank the Pacific Research Institute and its staff for their thoughtful and creative work to bring this report to publication and to promote it with ingenuity and humor.

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A Poor Safety Net for Needy Seniors, But a Hammock for the Middle Class

San Francisco-The continuous expansion of Medi-Cal long-term care benefits could cause a financial catastrophe in California according to a new report by the Pacific Research Institute (PRI), a California-based think tank, in cooperation with the Center for Long-Term Care Reform. Medi-Cal Long-Term Care: Safety Net or Hammock?, by Stephen A. Moses, president of the Center for Long-Term Care Reform, finds that easy access to Medi-Cal-financed long-term care (LTC) has caused many Californians to put off long-term care planning and rely on public assistance. The taxpayer price tag for Medi-Cal Long-Term Care was $12.5 billion in 2008 and will likely increase with the growing population of age-80-plus citizens in the state.

"Conventional wisdom says that Medi-Cal long-term care eligibility requires poverty-level income and very low assets," said Mr. Moses, "But the truth is that most middle-class and even affluent people qualify for the program as a result of easy and elastic eligibility rules. Consequently, Medi-Cal LTC provides a safety net for too few of California's neediest citizens and a hammock for too many who could have afforded to plan for LTC."

According to Medi-Cal Long-Term Care: Safety Net or Hammock?, Californians' excessive dependency on Medi-Cal, with its inadequate and uncertain reimbursements, has created a burden at all levels, debilitating access to care for the truly needy and privately uninsurable. Financing Medi-Cal LTC is a large and growing strain on California's budget. Yet federal law and regulations inhibit some effective corrective actions California could take. The report recommends that state officials:

• Clearly establish the principle that long-term care is a personal responsibility, not a social "right".
• Conduct a comprehensive review of the current LTC service delivery and financing system to identify and eliminate policies that encourage public dependency.
• Incentivize the middle class and affluent to plan early and save, invest, or insure for LTC.
• Reduce the number of expensive Medi-Cal/Medicare "dual eligibles" in the future by diverting more Californians to private LTC financing alternatives while they are still young enough, healthy enough and affluent enough to save, invest or insure LTC.

"The basic problem is that Medi-Cal LTC does too much for too many too poorly," concluded Mr. Moses. "By applying these principles, long-term care services can do a better job of providing care for genuinely needy people who depend on a radically smaller and much less expensive social LTC safety net."

You can watch a short video explaining the eligibility loopholes in the Medi-Cal LTC program on PRI's Youtube page.

###

Medi-Cal Long-Term Care: Safety Net or Hammock?
To schedule an interview with author Stephen Moses, please contact Kelly Gorton at (415) 955-6136 or email kgorton@pacificresearch.org.

About PRI
For 31 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information, please visit www.pacificresearch.org.

Center for Long-Term Care Reform
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. For more information, please visit http://www.centerltc.com/.

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Updated, Tuesday, January 4, 2011, 10:24 AM (Pacific)

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DUALS ARE DOUBLE TROUBLE

LTC Comment: Dual eligibles--8.9 million people who receive Medicaid AND Medicare--are 15% of all Medicaid recipients, but they account for 39% of the program's expenditures. Nearly 2/3 of Medicaid spending on dual eligibles went for recipients aged 65 and older. Only 15% of these older duals resided in nursing homes, but they accounted for over half of all spending on duals.

Clearly, dual eligibles are double trouble for Medicaid, for state and federal budgets, and for any Americans who still cling to the quaint notion that government will somehow pay for their long-term care.

Below is the press release announcing a new Kaiser Family Foundation report about dual eligibles. Read it but while you're at it, have a look at a report we did in 2005 titled "How to Save Medicaid $20 Billion Per Year AND Improve the Program in the Process." We concluded then and still believe today that: "To save $20 billion per year, Medicaid would only need to reduce the number of dual eligibles by approximately . . . 22 percent."

How could we do that when, after all, dual eligibles are the sickest and poorest of all Medicaid recipients? The key is to get to them early while they are still young enough, healthy enough, and affluent enough to plan responsibly for LTC so they will never have to rely on Medicaid in the future. And the secret to making that happen is to reform Medicaid so that it is a true safety net for the poor by implementing stricter asset spend down rules, enforcing estate recovery, requiring home equity conversion, and incentivizing LTC insurance.

America's LTC financing problems are self-inflicted by well-intentioned but perversely counterproductive public policy. The good news is that these problems are easy to fix. For details on the problem and the solution, see our forthcoming studies on Medicaid and LTC financing in California (January 5), Pennsylvania (January 12), and New York (soon).

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Now, here's that KFF press release with a link to their report on dual eligibles:

DATE - Thursday December 16, 2010

Dual Eligibles: Medicaid Enrollment and Spending for Medicare Beneficiaries in 2007

A new issue brief, http://www.kff.org/medicaid/7846.cfm, from the Kaiser Family Foundation's Commission on Medicaid and the Uninsured provides the latest national and state data on Medicaid enrollment and spending for individuals enrolled in both Medicaid and Medicare, also known as dual eligibles. Nationally, there were about 8.9 million dual eligibles in 2007. Dual eligibles are among the sickest and poorest individuals covered by either the Medicaid or Medicare programs. Although they comprised 15 percent of Medicaid enrollment, dual eligibles accounted for 39 percent ($121 billion) of Medicaid spending for medical services. Dual eligibles also accounted for more than a quarter of Medicare spending. Nearly two-thirds of Medicaid spending on dual eligibles was for enrollees age 65 an older.

Nearly one quarter (24%) of the assistance provided by Medicaid to dual eligibles went to pay for Medicare premiums, cost-sharing and other services covered by Medicare. Seventy percent of Medicaid's spending on duals was for long term services and supports, which are mostly not covered by Medicare or private insurance. Although only 15 percent of dual eligibles were in an institutional long-term care setting in 2007, these enrollees accounted for more than half of all Medicaid spending on duals.

The brief also examines variation in these spending and enrollment patterns across the states and includes information on the national distribution of Medicaid spending for dual eligibles. A related updated fact sheet, http://www.kff.org/medicaid/4091.cfm, describes the dual eligibles population and why they need Medicaid, as well as what the new health reform law may mean for them. Because dual eligibles have significant medical and long-term service needs and a much higher per capita cost than other beneficiaries, they are of great interest to Medicare and Medicaid policymakers, and to the state and federal governments that finance and manage the programs.

The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues.

For additional information, please contact:

Chris Lee at (202) 347-5270 or clee@kff.org

Craig Palosky at (202) 347-5270 or cpalosky@kff.org

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Updated, Monday, January 3, 2011, 10:40 AM (Pacific)

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CATCHING UP

HAPPY NEW YEAR

LTC Comment: Welcome to the year when everything begins to turn around. Medicaid backs off its role as dominant funder of long-term care; responsible LTC planning starts to become pro forma; and more people buy home care with reverse mortgages, while others purchase LTC insurance to avoid that necessity. Again, this is the year we commence the pivot from a dominantly government-financed LTC system to a privately financed system with a smaller, but better public safety net. It'll take awhile, but we're on our way. This year!

For now, let's catch up on some of the news since we left off sending you LTC Bullets and LTC E-Alerts late last year:

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First, the Center for Long-Term Care Reform's big news. On Wednesday, January 5, 2011, California's Pacific Research Institute will release "Medi-Cal Long-Term Care: Safety Net or Hammock," the report of a study we conducted last year for that highly regarded, free market think tank. We won't steal their thunder today, but watch for the PRESS RELEASE, the REPORT, and even a MOVIE we'll point you to in Wednesday's LTC Bullet.

Furthermore, starting this big-2011-turnaround year with a bang, the following week, we'll have two more major reports released. Our Pennsylvania study, titled "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians," will be available immediately on our website and we'll tell you all about it in the LTC Bullet scheduled for Wednesday, January 12. If all goes according to plan Pennsylvania's Commonwealth Foundation will release their briefer version of our study, titled "Long-Term Care Reform: More Access to Better Care at Lower Costs" during the same week. We'll key you to that report with a link as soon as it is available.

Now here's some of the other recent news and analysis of note:

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LTC Comment: Let's start with a cartoon that pretty much says it all. Check it out here:

http://www.gocomics.com/glennmccoy. In case the comic doesn't come up for you or it has changed in the meantime, here's the picture and caption: It shows "baby 2011" meeting "Father 2010" with the old year telling the new year in the caption "The bad news is that in one year you'll be an old man like me. The good news is you're the only baby who'll live to see a Medicare check before the system goes broke."

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The article linked below in yesterday's New York Post by Michael Cannon of the Cato Institute is an excellent overview of New York state's Medicaid and LTC financing problem. Note this quote near the end of the piece:

"Steve Moses of the non-partisan Center for Long-Term Care Reform recommends that Cuomo take steps to ensure that New Yorkers with means pay for their own long-term care. These include reducing New York's home-equity exemption from $750,000 to $500,000 (and seeking a federal waiver to reduce it to $0), expanding the use of liens and estate recovery and ending the abusive practice of 'spousal refusal.'" LINK

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1/2/11, Times Herald-Record: "In past columns, I talked about the Medicaid Asset Protection Trust (MAPT), an irrevocable trust used to protect assets from nursing home costs. The protection of the trust, although very effective, only takes place five years after you transfer assets into the name of the trust." LINK

LTC Comment: This New York Medicaid planner is in the center of the target at which our forthcoming report for the Empire Center for New York State Policy is aimed.

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12/31/10, Associated Press: "What you paid in Medicare taxes shows up on your W-2 income tax form every year. So when you retire, you want your money's worth. That's how most Americans see it. In an Associated Press-GfK poll nearly 6 out of 10 said they paid into the system so they deserve their full benefits - no cuts. But a newly updated financial analysis shows that what people paid into the system doesn't come close to covering the full value of the medical care they can expect to receive as retirees." LINK

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12/31/10, US News and World Report: "When Texas Governor Rick Perry recently threatened to pull his state out of Medicaid, he was hardly alone. Across the country, state budgets continue to be strapped. Federal stimulus dollars are running out. And the latest federal tax and stimulus package will not provide much relief at the state and local levels. Meanwhile, looming provisions of health reform will add a projected 16 million to the Medicaid rolls. Where are the facilities to take care of these folks? Where is the money?" LINK

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12/30/10, Reverse Mortgage Daily: "People are living longer, which is a good thing. Regarding retirement needs, however, this means it is as crucial as ever that people stay on top of saving and planning for their personal and financial needs when they hit retirement age. Long-term care, while not the most exciting thing to anticipate, must be carefully planned for as well. Those who cannot fund their own long-term care most likely fall back on Medicaid, which is unsustainable in the long term. . . . Citing the fact that two-thirds of Minnesotans aged 42-60 are concerned about their ability to pay for long-term care and a growing state Medicaid crisis looming, the report strongly advocates a 'cost-effective hybrid reverse mortgage product' for seniors." LINK

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12/29/10, Associated Press: "The first baby boomers will be old enough to qualify for Medicare Jan. 1, and many fear the program's obituary will be written before their own. A new Associated Press-GfK poll finds that baby boomers believe by a ratio of 2-to-1 they won't be able to rely on the giant health insurance plan throughout their retirement." LINK

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12/29/10, The Economist: "FROM the moment they entered the workforce in the 1960s, baby-boomers began to shape America's economy and politics. They will do the same as they leave. The first of the estimated 78m Americans born between 1946 and 1964 turn 65 in 2011, the normal age for retirement. As their ranks swell in coming years, the burden of financing their retirement will mount. So will their electoral importance." LINK

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12/27/10, New York Times: "Americans are living longer, but those added years are more likely to be a time of disease and disability." LINK

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12/27/10, Sacramento Bee: "California was a pioneer in creating [Medicaid-funded] home- and community-based alternatives to nursing homes more than 30 years ago with programs such as IHSS and Adult Day Health Care. In the past several years, however, state and local budget cuts and policy decisions have battered these and a range of other long-term care programs, from Alzheimer's Day Care Resource Centers to Caregiver Resource Centers, resulting in reduced services, slashed staff levels and in some cases, closed doors. " LINK

LTC Comment: You could not ask for a better introduction to our California report, mentioned above, than this article in the Sacto Bee. In fact, the Pacific Research Institute is helping us place an op-ed with the paper responding to the piece and summarizing our study.

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12/24/10, Kaiser Family Foundation: "In response to mounting concern about the nation's rising debt and deficit, and increasing apprehension about the federal budget, prominent leaders and various commissions have come forward with recommendations to strengthen the economy and bolster the nation's fiscal health. These proposals include both tax increases and spending reductions in discretionary programs, including defense, and in mandatory programs, such as Social Security, Medicare, and Medicaid."

http://kff.org/medicaid/8129.cfm

LTC Comment: Note that many of these proposed Medicaid savings involve repeal or radical modification of CLASS.

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Bloomberg, 12/21/10: "Governors nationwide are taking a scalpel to Medicaid, the jointly run state and federal health-care program for 48 million poor Americans, half of whom are children. The single biggest expense for states, Medicaid consumes about 22 percent of their total $1.6 trillion in expenditures, more than what is allocated to elementary and secondary education, according to a National Governors Association report." LINK

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12/21/10, GAO: Press release: "U.S. GOVERNMENT'S 2010 FINANCIAL REPORT SHOWS SIGNIFICANT FINANCIAL MANAGEMENT AND FISCAL CHALLENGES - The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations."

http://www.gao.gov/financial.html

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12/19/10, 60 Minutes: The Next Financial Meltdown
The day of reckoning is at hand. Steve Kroft tells us what we need to know about the looming financial crisis that almost no one is talking about.

"By now, just about everyone in the country is aware of the federal deficit problem, but you should know that there is another financial crisis looming involving state and local governments. It has gotten much less attention because each state has a slightly different story. But in the two years, since the "great recession" wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole in their public pension funds." LINK

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12/17/10, Minneapolis-St. Paul Star Tribune:

"The Citizens League's report, "Moving Beyond Medicaid," argues that middle-income Minnesotans need to be ready to shoulder more of their own long-term-care costs, should they be among the three out of five people who, after age 65, will need to buy some kind of elder-care service in the future. . . .  Medicaid, the health care program for the poor, is government's long-term-care workhorse. But it's poorly designed for the task, the report says. Medicaid's tacit message to seniors: Don't save money for long-term care, and don't bother with long-term-care insurance. . . .  This is a good time to reexamine Medicaid in Minnesota. A new administration and Legislature in St. Paul are bound to look afresh at how Medicaid is and isn't meeting long-term-care needs, with an eye toward shrinking the massive budget deficit." LINK

LTC Comment: Gee, that sounds familiar.  Where have I heard that before?

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12/16/10, Heritage Foundation: "Recent coverage of the proposals offered by President Obama's debt commission managed to gloss over a huge issue that is adding to the nation's deficit — Medicaid." LINK

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12/16/10, Politico: "Medicaid exists to give low-income families, especially low-income mothers and their children, access to health care. But for millions of Americans, Medicaid is an illusion. It is the appearance of coverage - without the power of access."

http://www.politico.com/news/stories/1210/46427.html

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12/7/10: "While half of women at age 65 will likely live beyond age 85, 92 percent of female retirees and 89 percent of female pre-retirees do not plan far enough in the future to cover this 20-year period. A new report from the Society of Actuaries (SOA) highlights these gaps in planning and offers an actuarial perspective on techniques for addressing these retirement concerns."

http://insurancenewsnet.com/article.aspx?id=238945&isrc=fen

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Updated, Friday, December 17, 2010, 10:27 AM (Pacific)

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LAST CLASS

LTC Comment: Unless something really striking comes up, today's will be our last LTC E-Alert and last CLASS update of 2010.

Season's Greetings, Merry Christmas, and Happy New Year to all our much-appreciated Center members and readers.

Diane Boyle is Vice President for Federal Government Relations with the National Association of Insurance and Financial Advisors (NAIFA). If you are a CLTC (www.ltc-cltc.com), you may have read her "LTC Legislative Update" in the organization's December "CLTC Newsletter." If not, maybe you should be, but here are a few highlights from her article.

• Incoming House Speaker John Boehner's (R-OH) top priority is to repeal ObamaCare.
• Full repeal is unlikely because Democrats still control the Senate and President Obama can veto.
• "However, prospects for incremental change including repeal of the CLASS Act have improved."
• "Attempts to modify the CLASS Act in the 112th Congress will not be new. On September 23, Sen. Lindsey Graham (R-SC) introduced S. 3829, the Long-Term Care Bailout Prevention Act to repeal the CLASS Act. Sen. Graham’s unease echoes Rep. Charles Boustany’s (R-LA) concern with the new program."
• "In July, Boustany introduced H.R. 5853, the Fiscal Responsibility and Retirement Security Act. His bill would prevent the government from collecting CLASS premiums until the program’s governing regulations are finalized."
• Deficit Reduction Commission called for major reform or repeal of CLASS.
• Problem is repeal requires $70 billion offset because CLASS was "scored as a revenue raiser."

In a private, invitation only "LTC Discussion Group" on December 9, 2010:

Richard Frank, Deputy Assistant Secretary for the Office of Disability, Aging, and Long-Term Care Policy in the office of the Assistant Secretary for Planning and Evaluation (ASPE) of the Department of Health and Human Services provided an update on CLASS implementation progress:

Some notes from that presentation:

CLASS is a voluntary program with underwriting not permitted. Result and concern is adverse selection. Has to be fixed. But "not here for a funeral."

"Administration and HHS are in the reform camp, not the repeal camp."

Secretary of HHS has wide discretion over many aspects of CLASS including assessing functional disability, designing an alternative automatic enrollment system, whether or not to have a waiver of premium, etc. All these are things that can be decided without further legislation.

Employers are key. Trying to make it easy for them to participate. But very complicated; more so than other payroll deductions. Low employer interest so far.

Other problems:

• Design and implement uniform national eligibility determination process
• How to assess mental illness eligibility
• Establish program's financial integrity

Things Deputy Assistant Secretary Frank and his office are doing:

• Engaged in an extensive actuarial and economic modeling exercise.
• Market research: who are people in position to buy LTCI or CLASS policy? Studying 18,000 households for financial literacy, understanding of LTC, personal history.
• Doing research on employer benefits systems. How to make CLASS participation most easy.
• Examining practices of public and private organizations in measuring functional disability.

OK, that's a rough outline of the latest news on CLASS. Have a wonderful holiday and let's come back rested and ready to take on a new, challenging, but highly promising New Year.

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LTC Comment: The CLASS content covered in this LTC E-Alert has been added to our Members-Only Zone website here: http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members. Not a member yet (you should be if you’re receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or damon@centerltc.com. Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning.

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Updated, Thursday, December 16, 2010, 11:06 AM (Pacific)

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LTC POT CALLS KETTLE BLACK

EXTRA: Be sure to read the MetLife Mature Market Institute's latest report titled "The MetLife Study of Inheritance and Wealth Transfer to Baby Boomers (link)." We'll reference it below in the context of avoiding the Medicaid planning trap.

LTC Comment: Harry Margolis is the publisher of ElderLawAnswers and a well known Medicaid planner and promoter. He's quoted in a recent article titled "Long-term care insurance outlook is shaky" as saying he's "seen numerous cases where long-term care insurance has protected clients from financial devastation. But he's worried by the turmoil the industry is experiencing." All right, but let's focus in a little on that statement.

Medicaid planners make the financial pain of failing to insure for LTC go away after the insurable event has occurred. The average cost in attorneys fees to qualify for Medicaid-financed LTC after care is needed is equal to one month in a nursing home as a private payer. No LTC insurance policy can compete with that. So, point one, take it with a grain of salt anytime Medicaid planners claim to encourage the purchase of LTCI.

Point two. Where do Medicaid planners get off criticizing private LTC insurance for raising premium rates or struggling with claims payments? Good grief. Insurers are doing the right thing. They're making sure they have the reserves to pay claims in the future. How does the option supplied by Medicaid planners compare? Medicaid is bankrupt already and notorious for problems of access, quality, reimbursement, discrimination, institutional bias, and loss of independence.

Now consider the new MetLife study referenced above. It says "that Boomers will inherit $8.4 trillion at 2009 levels. The median per person figure is $64,000. $2.4 trillion has already been received. . . . Additionally, the study reports that the Boomer cohort has or will receive a substantial sum from their parents while the older generation is still alive, increasing the total transfer of assets from $8.4 trillion to $11.6 trillion." That's a significant proportion of the total household wealth of Americans of all ages: $67 trillion. It could go a long way, especially leveraged up with LTCI, to fund LTC for the baby boomer generation. But will it?

Here's some homework for you. Google "Medicaid planning in [my state]." You'll get thousands of hits. Study the websites of Medicaid planners in your area. You will find invitations and methods to plan early to qualify for Medicaid LTC benefits. Otherwise, the ads warn, you could lose everything, including your inheritance from Mom and Dad. Look for their advice to have the parents transfer all their money to you at least five years before they'll need LTC. Study the gimmicks the Medicaid planners use such as the "reverse half-a-loaf," the life care contract, irrevocable income-only trusts, life estates, etc., etc. See where boomers' inheritance windfall is likely to go? Right into their own and their lawyers' pockets at taxpayers' expense. Where will the parents go? Into welfare nursing homes.

Now ask yourself whether Medicaid planners have any credibility at all criticizing private LTC insurers, when the alternative they proffer has no reserves (trust fund), no ability to fund home care or nursing care adequately even now, and no prospect to survive through the Age Wave. I hope you AMGs (altruistic, masochistic geniuses trying to sell something the government gives away) feel a little better about yourselves and a little less credulous toward Medicaid planners when you consider the intrinsic value of what you do and sell compared to their shell game.

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Updated, Wednesday, December 15, 2010, 5:31 AM (Pacific)

Seattle--

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LTC NOTES

LTC Comment: Let's catch up on some news items with brief comments.

A CORPORATE MEMBER of the Center sent me a link to this article with the message "You left your mark in Minnesota." "Minnesota faces 'unsustainable burden' for long-term care." Check it out. The article describes a new report that parallels our analysis and recommendations, i.e., less Medicaid for the prosperous and more home equity conversion and LTCI to fund LTC and keep people off Medicaid. Here's a quote: "'Medicaid is the government's guarantee that if you run out of money, the taxpayers will pick up the bill for your care,' said Stacy Becker, project director at the Citizens League. 'Right now, the government doesn't care if you spend your money for your health care or a cruise.'" Check out the full Citizens League report, titled "Moving Beyond Medicaid" here. Our reports on Medicaid and LTC financing in Pennsylvania, California and New York will be published soon by the Commonwealth Foundation, the Pacific Research Institute and the Empire Center for New York State Policy.

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THIS IS BIG. According to an article in ModernHealthCare.com: "Federal law has largely protected Medicaid from budget cuts as states have struggled to erase painful deficits created by the recession and weak recovery ... the Patient Protection and Affordable Care Act said states cannot make it harder to enroll for Medicaid until states launch the law's insurance exchanges, but Congress included one loophole. States able to demonstrate a deficit or projected deficit may ask CMS for permission to reduce Medicaid eligibility, beginning at the end of the year." This "loophole" could help states implement recommendations in the Center's forthcoming PA, CA and NY studies. By targeting Medicaid LTC benefits to needier recipients, states can reduce Medicaid expenditures, increase the use of home equity conversion and LTCI for funding LTC, and hence relieve taxpayers while creating jobs and increasing revenues. A win, win all the way around.

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These items from the AHCA / NCAL Gazette - Thursday, December 9, 2010 pretty much speak for themselves, but we'll comment anyhow.

Gazette: "Senate approves delaying Medicare pay cut. The move would postpone a 25% reduction in doctors' fees for another year. President Obama urges lawmakers to work on a permanent solution. By Noam N. Levey, Los Angeles Times. Dec 9, 2010 (LINK)"

LTC Comment: Down goes another of health reform's phony savings. No one really believed politicians would implement this supposedly mandatory slash of doc's fees.

Gazette: "Janice Zalen, of the American Health Care Association, says many people who can afford assisted living are moving out of nursing homes, while the people who stay in nursing homes are poorer and sicker. 'If you go into assisted living, you'll often see people that used to be in nursing facilities. . . and nursing-level people used to be in hospitals,' she said. For people who are poorer and sicker, there's a big advantage to being in a nursing home: All the care and services are under one roof. 'It's automatic, it's just there,' Zalen said. 'You have your physician ... there. The nurses are there; the nurse aides are there; the dietitians are there. Everybody that needs to be there is there.'(LINK)."

LTC Comment: Looks like the two-tiered LTC system we've predicted would come from too little private LTC financing and too much public funding is here. See our "Shedding Tiers" article here.

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Updated, Wednesday, December 15, 2010, 11:13 AM (Pacific)

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LTC NOTES

LTC Comment: Let's catch up on some news items with brief comments.

A CORPORATE MEMBER of the Center sent me a link to this article with the message "You left your mark in Minnesota." "Minnesota faces 'unsustainable burden' for long-term care." Check it out. The article describes a new report that parallels our analysis and recommendations, i.e., less Medicaid for the prosperous and more home equity conversion and LTCI to fund LTC and keep people off Medicaid. Here's a quote: "'Medicaid is the government's guarantee that if you run out of money, the taxpayers will pick up the bill for your care,' said Stacy Becker, project director at the Citizens League. 'Right now, the government doesn't care if you spend your money for your health care or a cruise.'" Check out the full Citizens League report, titled "Moving Beyond Medicaid" here. Our reports on Medicaid and LTC financing in Pennsylvania, California and New York will be published soon by the Commonwealth Foundation, the Pacific Research Institute and the Empire Center for New York State Policy.

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THIS IS BIG. According to an article in ModernHealthCare.com: "Federal law has largely protected Medicaid from budget cuts as states have struggled to erase painful deficits created by the recession and weak recovery ... the Patient Protection and Affordable Care Act said states cannot make it harder to enroll for Medicaid until states launch the law's insurance exchanges, but Congress included one loophole. States able to demonstrate a deficit or projected deficit may ask CMS for permission to reduce Medicaid eligibility, beginning at the end of the year." This "loophole" could help states implement recommendations in the Center's forthcoming PA, CA and NY studies. By targeting Medicaid LTC benefits to needier recipients, states can reduce Medicaid expenditures, increase the use of home equity conversion and LTCI for funding LTC, and hence relieve taxpayers while creating jobs and increasing revenues. A win, win all the way around.

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These items from the AHCA / NCAL Gazette - Thursday, December 9, 2010 pretty much speak for themselves, but we'll comment anyhow.

Gazette: "Senate approves delaying Medicare pay cut. The move would postpone a 25% reduction in doctors' fees for another year. President Obama urges lawmakers to work on a permanent solution. By Noam N. Levey, Los Angeles Times. Dec 9, 2010 LINK"

LTC Comment: Down goes another of health reform's phony savings. No one really believed politicians would implement this supposedly mandatory slash of doc's fees.

Gazette: "Janice Zalen, of the American Health Care Association, says many people who can afford assisted living are moving out of nursing homes, while the people who stay in nursing homes are poorer and sicker. 'If you go into assisted living, you'll often see people that used to be in nursing facilities. . . and nursing-level people used to be in hospitals,' she said. For people who are poorer and sicker, there's a big advantage to being in a nursing home: All the care and services are under one roof. 'It's automatic, it's just there,' Zalen said. 'You have your physician ... there. The nurses are there; the nurse aides are there; the dietitians are there. Everybody that needs to be there is there.' LINK."

LTC Comment: Looks like the two-tiered LTC system we've predicted would come from too little private LTC financing and too much public funding is here. See our "Shedding Tiers" article here.

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Updated, Tuesday, December 14, 2010, 10:49 AM (Pacific)

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LTC BULLET: SPOUSAL REFUSAL ROBS TAXPAYERS AND THE POOR

LTC Comment: Spousal refusal in New York robs taxpayers, hurts the poor, and profits the unworthy. Details after the ***news.***

*** LAST BULLET OF THE YEAR. We'll round out the week sending more of our daily LTC E-Alerts but this is it for 2010 LTC Bullets. Thank you for giving us another year to fight for responsible LTC planning and rational LTC policy. 2011 promises to bring challenges and opportunities such as we've never seen before. With your help, we are ready and eager to meet them. Thanks for your support. ***

*** PUT THE TEETH BACK IN MEDICAID. Two Center supporters sent us this article: "Medicaid cuts: teeth pulled, transplant called off." Here's an excerpt: "In Illinois, a pharmacist closes his business because of late Medicaid payments. In Arizona, a young father's liver transplant is canceled because Medicaid suddenly won't pay for it. In California, dentists pull teeth that could be saved because Medicaid doesn't pay for root canals." Depressing? Scary? To be sure. But nothing we haven't warned is coming. This is what we mean when we say you'd better look at LTC risk through the windshield and not through the rear-view mirror. Do not let your prospects go bare for LTC without telling them the whole truth about the risk. You don't need scare tactics. All you need is the daily news. Keep enough aging Americans off Medicaid for LTC and maybe the welfare program will be able again to give poor children dental care. Special thanks to James Collins and Arthur Rudnick for bringing this article to our attention. ***

*** SOA LIVING TO 100 SYMPOSIUM in Orlando, Jan. 5-7, 2011. There's still time to get reduced pricing: Sign up by Dec. 22! Take this opportunity to get special pricing and join distinguished speakers from around the world as they gather to share new ideas and knowledge on aging, changes in survival rates and their impact on society. Supported by a host of international organizations, the Living to 100 Symposium offers two and a half days of groundbreaking presentations, as well as professional development and networking opportunities. Attend the Living to 100 Symposium to participate in the many thought provoking discussions on: how and why we age; measuring current mortality and projecting future rates of improvement in survival; identifying potential advantages and risks associated with the increasing number of retirees; and suggesting solutions to difficult issues resulting from individuals living longer. Register today. Steve Moses says "I'll be there to present a paper titled 'The CLASS Act and the Future of Long-Term Care Financing'." ***

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LTC BULLET: SPOUSAL REFUSAL ROBS TAXPAYERS AND THE POOR

LTC Comment: Spousal refusal is a squalid practice urged on otherwise responsible people by Medicaid planners in New York. It works like this. When your husband or wife needs expensive long-term care, transfer all his or her assets into your name and sign him or her up for Medicaid. And when Medicaid asks for your fair share of the cost, thumb your nose at the bureaucrats and say "Come and get me, chumps." In most cases, they won't, and you're home free. You keep all the money and Medicaid gets all the bills. The result is that taxpayers are hit with higher costs and the poor get lesser access and quality. Of course, the affluent and their attorneys make out like bandits.

Fortunately, most states don't permit spousal refusal. The biggest abusers are New York and Florida. But don't think you aren't paying through the nose for spousal refusal just because you don't reside in those states. As federal taxpayers, you're putting up 62% of the cost of Medicaid in New York. That's because supplemental federal matching funds in the "stimulus" and "health reform" laws bumped up the Empire State's FMAP (Federal Medical Assistance Percentage) from its usual 50% since October 2008.

On Friday, December 10, the New York Times ran a story about spousal refusal titled "Full Wallets, but Using Health Program for Poor." Here's a quote:

Last year, more than 1,200 people in New York City officially turned their backs on their husbands and wives to qualify for Medicaid, triple the number of people five years ago. The practice, known as "spousal refusal," is becoming more common as the population ages and the cost of nursing care rises - and it is coming under increasing attack by government officials looking to curb ballooning Medicaid expenses.

Check out the NYT story but here's all you really need to know about spousal refusal:

Spousal Refusal in a Nutshell*

o A couple, or more likely the well spouse and heirs, consult a Medicaid planning attorney about a chronically infirm husband or wife. Grandpa or grandma needs long-term care but the responsible family members prefer not to pay their fair share under the law.

o The lawyer says "no problem, here's what you can do." Just transfer everything they own from the ill spouse's name to the well spouse's name and apply for Medicaid for the now-impoverished ill spouse. (Medicaid allows interspousal asset transfers without triggering any eligibility penalty.)

o When Medicaid asks for the well spouse's share of the cost of care, "just say no." Under federal law, to wit Title XIX of the Social Security Act, Medicaid cannot refuse to cover the sick spouse's LTC bills just because the well spouse refuses to pay. "It's a great deal which you're a sucker not to take" is the Medicaid planners' sales pitch.

o Rest assured, however, that Congress never intended this rule to be used to dodge Medicaid's cost-sharing and spend down requirements in this way. It was designed instead to protect infirm elders from losing their Medicaid eligibility because of expropriation by a criminally irresponsible spouse.

o That's why Medicaid requires the ill spouse to assign to the state his or her rights to support from the well spouse when spousal refusal occurs. The state then has the right to sue the well spouse to recover the stolen wealth.

o But, unfortunately, a few states don't take that action as often as they should because of the political sensitivity of "chasing" well spouses. New York and Florida are the worst abusers.

o Former Nassau County (NY) Executive Tom Suozzi bucked the spousal refusal tide for awhile back in 2006 and the results showed just how expensive this irresponsible practice is for New York Medicaid and for federal taxpayers who share at least half its cost, 62% since the stimulus bumped up New York's FMAP.

o According to a New York Post article, Suozzi sued nine wealthy spousal refusers worth $13 million between them for a total of $570,709 which they should, could, and would have paid to offset Medicaid expenses for their spouses except for the spousal refusal dodge.**

o Lt. Governor Ravitch's "Report on Controlling Increases in the Cost of New York Medicaid" said spousal refusal involves "abuses that divert resources from Medicaid's legitimate purpose-serving as a safety net for the needy-and turn the program into an entitlement for the less needy. The State should re-examine these rules to re-balance the competing equities."***

o Pursuing every spousal refuser for recovery until the practice halts could recover millions of dollars for New York and federal taxpayers in the short run and avoid their wasteful expenditure in the first place going forward.

* For much more information about "spousal refusal," see "LTC Bullet: They're Baaack, Part IV: 'Abandon Your Spouse . . . Get Medicaid,'" Monday, October 29, 2001, and "LTC Bullet: Spousal Refusal: Who Wins? Who Loses?," Tuesday, April 18, 2006.

** Carl Campanile, "Suozzi $ocking it to Medicaid Millionaires," New York Post, April 10, 2006, copies available from The Post for $3.95.

*** Richard Ravitch, "Lieutenant Governor's Report on Controlling Increases in the Cost of New York Medicaid," letter to Governor David Patterson, September 20, 2010, p. 15. LINK

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Updated, Monday, December 13, 2010, 11:28 AM (Pacific)

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NORTHWESTERN MUTUAL COST OF CARE SURVEY

LTC Comment: Northwestern Mutual recently released its long-term care cost survey. Following are highlights. Get state averages here and the full report here.

As always, find this report and others like it in The Zone, our password-protected members only website here. The Zone contains many resources intended to help LTCI producers and other financial advisers keep critical information at their fingertips. In addition to tracking all the major LTC cost surveys so you can find them when you need them, we maintain a "CLASS Update," the "LTC Almanac," archives of LTC Bullets and LTC E-Alerts, nearly 20 years of key Medicaid and Medicare numbers, reasons why Vets should not rely on government benefits for LTC, and many other features. You must be a member of the Center to access The Zone. Contact Damon at 206-283-7036 or damon@centerltc.com to join and get your user name and password. Members: please pass this message on to others who may find The Zone and the Center's daily publications of value.

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Highlights of the Northwestern Mutual Cost of Care Survey:

In June 2010, the Long Term Care Group, Inc. conducted customized Cost of Care research on behalf of Northwestern Long Term Care Insurance Company of nearly 2,000 home healthcare providers, assisted living facilities and nursing homes in specific regions of the United States.

This research is important in the understanding of accessibility and affordability of different types of care services by geographic location. The findings help consumers make informed decisions about their long-term care options and costs, which may allow them to stay in their homes or within their local communities in the event of functional limitation or cognitive impairment.

Home health care is a $57.6 billion a year industry in the United States, with approximately 7.6 million individuals receiving care because of acute illness, long-term health conditions, permanent disability or terminal illness, according to the National Association for Home Care and Hospice. Home healthcare organizations include home healthcare agencies, home care aide organizations and hospices.

For the Cost of Long Term Care Study, over 2,000 home care organizations were surveyed between April and May 2010. Key findings include:

* The national average hourly rate for Home Health Aides (HHAs) for all regions in this study is $22.14 per hour.

* The region with the highest hourly rate for Home Health Aides (HHAs) was Stamford, Connecticut and costs $34.85 per hour.

* The Region with the lowest average hourly rate for Home Health Aides (HHAs) is Shreveport-Bossier City, LA and costs $14.50 per hour.

Approximately one million Americans make their home in one of approximately 30,000 assisted living facilities in the U.S. today, and this number is projected to grow. The U.S. Census Bureau reports that twenty-six states are projected to double their 65-and-older population between 2000 and 2030. By 2050 there will be an estimated eighty-six million people in the U.S. who are 65 years or older, fueling the demand for assisted living facilities.

Assisted living provides coordinated, personalized 24-hour assistance and support (both scheduled and unscheduled) in a congregate residential setting. The choices, privacy, independence and rights of the persons served are proactively protected and promoted as an essential part of assisted living's core values and mission.

For the Cost of Long Term Care Study, more than 2,000 assisted living facilities were surveyed between April and May 2010. Key findings include:

* The U.S. state annual average cost for residing in a private room in an Assisted Living Facility is $39,540. Overall costs may be higher in urban settings or if a resident has a high level of chronicity which requires additional services.

* The NLTC region national average monthly rate for a single occupancy, private unit in an Assisted Living facility is $3,295 in the regions surveyed.

* The NLTC region with the most expensive average monthly rate for a private, single occupancy unit in an Assisted Living facility is Anchorage, Alaska and costs $4,843 per month.

* The NLTC region with the lowest average monthly rate for a private, single occupancy unit in an Assisted Living Facility is El Paso, Texas and costs $2,103 per month.

The nursing home industry is comprised of establishments primarily engaged in providing inpatient nursing and rehabilitative services. The care is generally provided for an extended period of time to individuals requiring skilled nursing care.

For the Cost of Long Term Care Study, over 2,000 nursing homes were surveyed between April and May 2010. Key findings include:

* The national average annual cost of a private room in a nursing home based on the NLTC regions in the study is $90,155 per year.

* The national average daily rate for a private room in a nursing home is $247 in the markets surveyed.

* The NLTC region with the most expensive daily rate for a private room in a nursing home is Anchorage, Alaska and costs $576 per day.

* The NLTC region with the least expensive daily average rate for a private room in a nursing home is Lafayette, LA and costs $143 per day.

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Updated, Thursday, December 9, 2010, 10:25 AM (Pacific)

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DEBT FEARS MOUNT

LTC Comment: Today some news and analysis about mounting economic worries and some other subjects. Nothing new to these pages, as we write about the debt, deficit, unfunded entitlement liabilities, and Medicaid's precarious condition often. What's new is that everyone seems to be worried and writing about the topic now too.

That's a good thing. Denial is NOT a river in Egypt.

Monday's New York Times story "Mounting Debts by States Stoke Fears of Crisis" is a case in point.

While next year could be even worse, there are bigger, longer-term risks, financial analysts say. Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt - several trillion dollars' worth, with much of it off the books and largely hidden from view - that it could overwhelm them in the next few years.

First, who says the economy is going to recover? This time really could be different. We've never before faced anything like the Age Wave or the staggering debt load already compiled. So the NYT's worst fears may actually be the best case scenario going forward!

Still want to go bare for LTC and hope Medicaid will take care of you? Just because the state/federal welfare program has been the dominant LTC payer since 1965 doesn't mean it will or can continue to be so indefinitely. Welcome to the brave new world of long-term care.

For some thoughtful analysis on this subject, check out Liz Taylor's "Aging Deliberately" newsletter. Sign up to receive it here. The latest issue has two excellent articles titled "America's deficits: Entitlements with 'no visible means of support'" and "Grim message for baby boomers and their heirs." The latter piece was originally published in the Seattle Times on January 16, 2006. Liz has also been attentive to these issues for a long time.

Recently a Center member asked me to recommend some "trusted people" for news and analysis regarding health reform and the future prospects for Medicare. You may be interested too. So here's my recommendation:

My favorite sources on health reform, including the impact on Medicare, are John Goodman (www.ncpa.org), Grace Marie Turner (www.galen.org), the Council for Affordable Health Insurance (www.cahi.org), and Greg Scandlen--check out his Consumer Power Reports here.

Remember how home and community-based services (HCBS) were supposed be so much cheaper than nursing facility care? Diverting Medicaid residents to home care and away from nursing homes was going to save a lot of money. It hasn't worked out that way and states are cutting HCBS more and faster than SNF care expenses. Check out NPR's piece "Home Care May Be Cheaper, But States Still Fear It." State Medicaid programs haven't learned the bitter lesson yet that private insurers have: when you pay for services people want instead of nursing home care they'd rather avoid, utilization goes through the roof. One more reason to depend on private markets more and public financing less.

In the meantime, did you know nursing homes are popular businesses for private equity firms to buy? Stories like this one in The Economist make me nervous. Read "Wall Street Goes Long on Grannies" here. A sampling:

They are best known for eyeing glittery targets such as swanky retailers and landmark buildings. But private-equity firms have also recently shown interest in a much less glamorous business: nursing homes. . . . Private-equity firms now own three of the five largest chains of homes in the United States, including the biggest, HCR ManorCare . . .

The higher revenues from caring for such patients may indeed compensate nursing-home operators for the cuts in government subsidy and the push towards home care. But the risk in this is that poorer old people, who may not be as profitable for nursing homes but are in need of care, will be displaced.

I'm often asked by investment firms what the prospects are for SNF financing in the future. I tell them what I know about Medicaid, Medicare and LTC insurance. The hard reality and future prospects of publicly financed long-term care usually takes the wind out of their sails.

It should frighten consumers that without private insurance so they can pick and choose their own LTC providers, they may someday end up in a nursing facility financed by a bankrupt welfare program and owned by an investor more interested in the bottom line than the quality of care provided.

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Updated, Wednesday, December 8, 2010, 8:38 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.

*** SPECIAL: We are making access to "The Zone," our members-only website, available free of charge for one week. Yikes! One week only. Check it out now. See what you think. Then contact us at info@centerltc.com, join the Center as an individual or corporate member, and we'll immediately give you a permanent user name and password, start your LTC E-Alerts and LTC Bullets coming, and welcome you into the Center's warm educational and motivational embrace.

Check out The Zone here or by clicking on the "Members-Only Zone" link at the top of www.centerltc.com. Enter the user name "free" and the password "trial," all lower case and without the quote marks. Bingo. You're in. Browse all the special features including "The Almanac of Long-Term Care," our encyclopedia of LTC data, quotes and policy analysis. Enjoy! ***

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: What a challenging year!

• LTC insurance sales remain flat or slightly up. More carriers have left the market. Ironically, 2011 is the year everything starts looking up.
• Congress handed over to government the remaining private half of health care financing. I can barely believe it actually happened. I still don't think it'll last.
• Long-term care financing is caught in the turbulence of the CLASS Act because it slipped in under the health reform radar. That'll change.
• Government spending at all levels exploded again this year throwing local, state and federal budgets deeper and deeper 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 an aging populace in denial.
• Expect more of the same in the coming year(s), only worse.
• What's different now is that the public and even many policy makers have begun to worry about bloated budgets, skyrocketing debt, and economic malaise.
• That's why consumers will need you and your counsel more than ever. The good news is they may finally be ready to listen and heed your advice.
• Go get 'em.

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.

• 2010 was the year of studies for the Center for Long-Term Care Reform. What wonderful timing! Just as America is ready to confront Medicaid and LTC financing problems head on finally, we're prepared with hard data, trenchant analysis and creative ideas.

• In January, with the Ocean State Policy Research Institute, we published "Doing LTC RIght," a report about LTC financing in Rhode Island, the mouse that roared with a "global Medicaid waiver." Read our analysis and recommendations, which are applicable nationwide, here.
• We contracted this year with three major State Policy Network think tanks to produce studies of Medicaid and LTC financing in . . .
  • Pennsylvania for the Commonwealth Foundation. Our report, titled "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians" is due out soon.
  • California for the Pacific Research Institute. Our report, titled "Medi-Cal Long-Term Care: Safety Net or Hammock?," is in "layout."
  • New York for the Empire Center for New York State Policy. Our report, provisionally titled "Long-Term Care Financing in New York State: The Consequences of Denial," is due in draft to the Empire Center this coming Friday.
• Center president Steve Moses published only three bylined articles this year, compared to 15 in 2009, due to the all-consuming challenge of researching and writing four major reports. But, boy will he have a lot to write about in 2011!
• Steve delivered 16 speeches or briefings at conferences and meetings and by tele-conference 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.
• The Center kept members up to date all year long on the CLASS Act. We published 14 LTC Bullets and 25 LTC E-Alerts about CLASS. Check them out and many other CLASS sources compiled in our "CLASS Act Update" in The Zone. Use your "free, trial" user name and password to access this content.
• Center VP for Administration Damon Moses edited and transmitted all our publications, maintained our user-friendly website, learned and then automated the Center's bookkeeping system, and supported all our corporate and individual members with skill and alacrity.
• Check out our "website webinar," a virtual tour of www.centerltc.com, which Damon directed and produced. You'll find a cornucopia of helpful information in our public and members-only websites.
• LTC Bullets: By the end of this week, we will have published 46 LTC Bullets during 2010. Find them archived by date and topic here.
• LTC E-Alerts: By the end of this week, we will have published 145 of our daily LTC E-Alerts in 2010. Find them archived by date in The Zone here.
• We don't keep count, but we've responded to hundreds 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 2011 . . . 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 almost 900 LTC Bullets here.

Find 945 LTC E-Alerts--eight years worth--in The Zone here.

Remember: 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, Tuesday, December 7, 2010, 11:49 AM (Pacific)

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CLASS REVIEW

REMEMBER PEARL HARBOR DAY!

LTC Comment: Kudos to John Hancock for a new study and report titled "CLASS Act: A Survey of Employer and Consumer Perceptions."

Following are the highlights, but in a nutshell: Most people and businesses don't know about CLASS. Those who've heard of it don't understand it. The more people and businesses understand CLASS, the less they like it and the more they prefer private LTC insurance.

This is dynamite information that can help advisors blow a hole in consumer and company denial about the risks and costs of LTC. 

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Quoted highlights from "CLASS Act: A Survey of Employer and Consumer Perceptions"

Lack of awareness is widespread, reactions to provisions are mixed. There is a general lack of knowledge about the public program, with only 35% of employers and 8% of consumers aware of the CLASS Act program. And while both groups showed an initial liking for the program, after learning more about the specifics, there were many who viewed it less positively.

EMPLOYERS & CONSUMERS SHOW A PREFERENCE FOR PRIVATE LTC INSURANCE

Despite an initial positive reaction to the CLASS Act program, most respondents expressed a preference for private LTC insurance.

o Employers believe that the majority of consumers are likely to prefer private LTC insurance (55%) over a government run program (19%), just as they would prefer a private policy (61%) to a government (10%) program.

o 77% of consumers indicated a preference for private LTC insurance over the CLASS Act.

Employers and consumers alike see the following as the advantages of a private LTC insurance policy:

o Benefits are generally available 90 days after enrolling, provided benefit triggers are met
o A policy can be designed to suit employee needs
o There is a choice of benefit levels that can be higher than $50 a day
o Coverage is available for spouses and parents

EMPLOYERS EXPECT TO TAKE A "WAIT AND SEE" APPROACH BEFORE OFFERING THE CLASS ACT

Many employers say they will take a "wait and see" approach before making any decisions about how to change their benefit offerings in light of the CLASS Act program.

o More than half of employers without an LTC insurance benefit (53%) and four in ten with this benefit (39%) say they will likely wait for more details on the plan to emerge before making a decision about changing their benefit offerings.

o More than half of employers who do not currently offer LTC insurance believe their company is likely to evaluate the government's plan and consider participating (10% very likely and 46% somewhat likely).

The CLASS Act program will also lead many employers to consider the benefits of offering private LTC insurance.

o Almost half (45%) without an LTC insurance benefit indicate that publicity about the government program is likely to lead their company to evaluate private LTC insurance and consider offering it to employees, instead of the government program.

o 73% of employers indicate they would be likely to compare the costs and benefits of private LTC insurance with the costs and benefits of the CLASS Act plan before making a decision about what to offer their employees.

CONSUMERS LACK KNOWLEDGE OF COST & HOW TO PAY, BUT RECOGNIZE NEED

Survey results indicate there is still a need for further education when it comes to the costs involved in receiving care, yet many realize the likelihood of needing care themselves or for a family member, and have considered private LTC insurance.

Consumers see a potential need for care and have preferences for where they'd like to receive it:

o 53% believe that they themselves may need care someday.
o Should long-term care be needed, the preference for care setting is as follows:
- 64% prefer to be at home
- 34% prefer to be at an assisted living facility
- 2% prefer to be at a nursing home

Cost remains misunderstood and a concern nonetheless

o Nearly 90% of consumers believe they or a spouse will need care and are concerned
about paying for it.

o 76% incorrectly believe that the cost of a nursing home is less than $65,000/year.

o 50% of consumers said they would only be able to afford nursing home care (at $75,000/year) for 6 months or less. 

GENERAL ATTITUDES TOWARD LONG-TERM CARE INSURANCE

The detailed survey responses of the consumers surveyed may assist you in starting a conversation about the value of planning ahead. Consider the following in your prospecting efforts:

Women

o 43% have provided long-term care to a close relative
o 63% see themselves as likely to need care in the future
o 73% believe that their spouses are likely to need care in the future
o 90% are concerned about their ability to pay for future care
o 93% are likely to compare the costs and benefits offered by the CLASS Act and private insurance

College Educated

o 38% have provided long-term care to a close relative
o 58% see themselves as likely to need care in the future
o 61% believe that their spouses are likely to need care in the future
o 88% are concerned about their ability to pay for future care
o 89% are likely to compare the costs and benefits offered by the CLASS Act and private LTC insurance

High-Income Earners (>$100k annually)

o 34% have provided long-term care to a close relative
o 56% see themselves as likely to need care in the future
o 60% believe that their spouses are likely to need care in the future
o 89% are concerned about their ability to pay for future care
o 93% are likely to compare the costs and benefits offered by the CLASS Act and private LTC insurance

Employers With More Than Five Employees

o Only 14% of those small employers surveyed currently offer LTC insurance
o 75% are unfamiliar with the CLASS Act
o 54% have a negative response to the program being run by the federal government
o 70% believe that publicity about the CLASS Act was not likely to cause their employees to want the company to offer the program
o 66% are likely to compare the costs and benefits offered by the CLASS Act and private LTC insurance

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LTC Comment: The CLASS content covered in this LTC E-Alert has been added to our Members-Only Zone website here: http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members. Not a member yet (you should be if you're receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or damon@centerltc.com. Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning.

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Updated, Friday, December 3, 2010, 11:07 AM (Pacific)

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NEW REPORTS YOU SHOULD SEE

LTC Comment: Want some home work to help fill those long weekend hours? Try these readings:

A recent report from New York Life finds: "American Baby Boomers, age 46 to 64, already confronting a difficult economic environment, are ill-prepared for the negative impacts of a long-term care event and have ignored the lessons learned through the experiences of their parents." Read a summary of the findings from a press release here.

A MetLife study of female executives provides insights on finances, financial confidence and retirement planning. The "survey of career women age 45 to 70 earning $75,000-plus per year shows that those in this group are highly confident about how to manage money, yet 62% fear they may never have enough money to retire. A great majority of the women surveyed report that their families count on their income. . . . As a result, they may not be protecting themselves financially with products like disability insurance, annuities and long-term care insurance, especially since more than half will not be able to count on a pension for retirement." Read more in the press release here or check out the full report here.

MetLife also has a free "Aging in Place Guide" available. It's designed to help consumers assess their homes as a care setting. "To assist individuals and their families who wish to remain in their homes as they age, the MetLife Mature Market Institute has introduced 'The MetLife Aging in Place Workbook: Your Home As a Care Setting,' a step-by-step guide to help assess care needs, determine whether home modification and/or assistive devices are needed, identify potential care resources and understand the associated costs. It also provides a listing of organizations and government agencies that may serve as additional resources."

A new report from the American Association for Long-Term Care Insurance (www.aaltci.org) examines what consumers really pay for long-term care insurance. "One fourth (27.8%) of individuals purchasing long-term care insurance during the first half of 2010 who were under age 61 paid less than $1,000 a year. . . . The Association reveals that nearly one-in-five (19.4%) purchasers in the study who were under age 61 pay between $20 and $30 a week for new policies. Over one-fourth of buyers (28.9%) in this age band pay between $1,500 and $2,500 a year with the remainder paying more. Less than one-tenth of these buyers (6.8%) pay $4,000 or over." Find more in the press release here.

Now, make it a great weekend . . . anyway!

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Updated, Thursday, December 2, 2010, 11:01 AM (Pacific)

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KEY QUOTES FROM THE DEBT COMMISSION REPORT

LTC Comment: The Wall Street Journal reported yesterday that "A 59-page proposal from the co-chairmen of the White House's deficit-reduction commission, which they labeled 'The Moment of Truth,' calls for sweeping changes in how the country spends money and collects taxes, the starting point for a long debate about how to tackle the U.S. debt."

Read the full proposal here. If 14 of the 18 members on the Debt Commission vote to send this proposal to Congress with a recommendation for its adoption, which remains unlikey at this stage, we'll follow and analyze its progress. But for a "quick and dirty" perspective on what it means for you, here are some of the key quotes, with our comments, regarding long-term care, CLASS, and Medicaid.

Quote: "3) Health Care Cost Containment: Replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize and from a new long-term care program that is unsustainable with real, common-sense reforms to physician payments, cost-sharing, malpractice law, prescription drug costs, government-subsidized medical education, and other sources. Institute additional long-term measures to bring down spending growth." (p. 13)

LTC Comment: That "long-term care program that is unsustainable" is CLASS. The Debt Commission proposal dismisses CLASS offhand.

Quote: "Federal health care spending represents our single largest fiscal challenge over the long-run. As the baby boomers retire and overall health care costs continue to grow faster than the economy, federal health spending threatens to balloon. Under its extended-baseline scenario, CBO projects that federal health care spending for Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the health insurance exchange subsidies will grow from nearly 6 percent of GDP in 2010 to about 10 percent in 2035, and continue to grow thereafter.

These projections likely understate true amount, because they count on large phantom savings - from a scheduled 23 percent cut in Medicare physician payments that will never occur and from long-term care premiums in an unsustainable program (the Community Living Assistance Services and Supports Act, or "CLASS Act"). (p. 31, emphasis added)

LTC Comment: They really don't like CLASS!

Quote: "RECOMMENDATION 3.2: REFORM OR REPEAL THE CLASS ACT.

(Costs $11 billion in 2015, $76 billion through 2020)

The Community Living Assistance Services and Supports (CLASS) Act established a voluntary long-term care insurance program enacted as part of the Affordable Care Act (ACA). The program attempts to address an important public policy concern - the need for non-institutional long-term care - but it is viewed by many experts as financially unsound. The program's earliest beneficiaries will pay modest premiums for only a few years and receive benefits many times larger, so that sustaining the system over time will require increasing premiums and reducing benefits to the point that the program is neither appealing to potential customers nor able to accomplish its stated function. Absent reform, the program is therefore likely to require large general revenue transfers or else collapse under its own weight. Commission advises the CLASS Act be reformed in a way that makes it credibly sustainable over the long term. To the extent this is not possible, we advise it be repealed. Technically, repealing the CLASS Act will increase the deficit over the next decade, because the program's premiums are collected up front and its benefits are not paid out for five years. To address this, we would replace the deficit reduction on paper from the CLASS Act with real options that truly save the federal government money and put it on a more sustainable path." (p. 32, emphasis added)

LTC Comment: Any ideas where the Commission might find "real options that truly save the federal government money"? How about practically any report, LTC Bullet or E-Alert the Center for Long-Term Care Reform has published since our founding in 1998?

Quote: "Medicaid Savings

3.3.8 Eliminate state gaming of Medicaid tax gimmick.

(Saves $5 billion in 2015, $44 billion through 2020)

Many states finance a portion of their Medicaid spending by imposing taxes on the very same health care providers who are paid by the Medicaid program, increasing payments to those providers by the same amount and then using that additional 'spending' to increase their federal match. We recommend restricting and eventually eliminating this practice." (p. 34)

LTC Comment: This practice is tantamount to "wholesale Medicaid planning." Instead of lawyers gaming eligibility for clients, it involves states tricking CMS to maximize federal matching funds. States and LTC providers will fight vigorously to prevent this reform.

Quote: "3.3.9 Place dual eligibles in Medicaid managed care.

(Saves $1 billion in 2015, $12 billion through 2020)

Approximately nine million low-income seniors and disabled individuals are covered by both Medicaid and Medicare. The divided coverage for dual eligibles results in poor coordination of care for this vulnerable population and higher costs to both federal and state governments. We recommend giving Medicaid full responsibility for providing health coverage to dual eligibles and requiring that they be enrolled in Medicaid managed care programs. Medicare would continue to pay its share of the costs, reimbursing Medicaid. Medicaid has a larger system of managed care than does Medicare, and this would result in better care coordination and administrative simplicity." (p. 34)

LTC Comment: Dual eligibles are by far Medicaid's most expensive recipients. This reform makes sense, but if Medicaid closed eligibility loopholes, enforced estate recovery rules and incentivized LTCI and home equity conversion, more people would plan early for LTC and fewer would become dual eligibles in the first place, because they would not need Medicaid.

Quote: "3.3.10 Reduce funding for Medicaid administrative costs.

(Saves $260 million in 2015, $2 billion through 2020)

We recommend asking states to take responsibility for more of Medicaid's administrative costs by eliminating Medicaid payments for administrative costs that are duplicative of funds originally included in the Temporary Assistance for Needy Families (TANF) block grants." (p. 34)

LTC Comment: This is another proposal states will fight tooth and nail.

Quote: "To the extent health costs are projected to grow significantly faster than that pace [GDP plus 1%], we recommend the consideration of structural reforms to the health care system. Commissioners have suggested various policy options, including: . . . expanding and strengthening the Independent Payment Advisory Board (IPAB) to allow it to make recommendations for cost-sharing and benefit design and to look beyond Medicare; adjusting the federal-state responsibility for Medicaid, such as block grants for acute or long-term care; . . .." (p. 37)

LTC Comment: Good idea. Block granting Medicaid and allowing states more discretion in LTC coverage and eligibility would allow them to target the most needy, encourage others to save, invest or insure for LTC, and save the tax payers huge sums.

Quote: "By 2025 revenue will be able to finance only interest payments, Medicare, Medicaid, and Social Security. Every other federal government activity - from national defense and homeland security to transportation and energy - will have to be paid for with borrowed money." (p. 9)

LTC Comment: When you're in a hole this deep, you need to do more than stop digging. You should start refilling. Home equity conversion and private long-term care insurance can fill the deficits created by wasteful Medicaid LTC spending and fanciful chimeras like CLASS. Just get out of the way and let the free market work!

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Updated, Wednesday, December 1, 2010, 11:36 AM (Pacific)

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MEDICAID PLANNING NEWS AND CONSEQUENCES

EXTRA: Listen to a radio interview with the Center's New Jersey Regional Representative, LTC Financial Partner Michael B. FitzPatrick here.

LTC Comment: ElderLawAnswers Monthly reports that an administrative law judge in New Jersey decided a $100,000 transfer of assets from a man to his daughter did not constitute a penalizable gift for purposes of Medicaid eligibility. It seems he gave her the money "to help with her financial problems." Federal law says asset transfers for less than fair market value do not trigger an eligibility penalty if they are done for a purpose (any purpose) other than to qualify for Medicaid. A year later this generous Dad suffered a stroke and needed nursing home care. No problem; Medicaid to the rescue. Evidently, no one has any responsibility to anticipate potential health problems in old age. Give away anything to anybody and if something bad happens to your health, count on the welfare program and taxpayers to support you.

So, congratulations charitable citizen, you've been granted the privilege selflessly to support a needful daughter and an infirm father, neither of whom you've ever met. Does this story make you want to (a) buy a long-term care insurance policy, (b) give away everything you own for some reason other than to qualify for Medicaid so you can get a free ride too when you need it, or (c) throw the bums out of government who create perverse policy incentives like this one that overload Medicaid and crowd out LTCI? If your answer is (c), please contact your elected representatives and not the Center. We're already doing everything we can to stop Medicaid planning abuses.

Or how about this for a creative way to reach more people with Medicaid LTC benefits?

Elder law attorney and Michigan Medicaid expert David Shaltz will host Elder Law of Michigan's Medicaid Long Term Care Boot Camp in Southfield December 2, 2010 and in Grand Rapids on December 10, 2010. . . . Times are tough for legal aid programs like Elder Law of Michigan. One way it is earning revenue to support the Legal Hotline for Michigan Seniors is by offering training events for a fee in areas in which it has expertise. Participants have a great opportunity to support legal aid while getting important high quality training. . . . Everyone understands it's a charitable endeavor. Source

The following rates apply:

$200 for attorneys, CPA's, and other professionals.

$130 for legal assistants, non-licensed professional, and people working for non-profits.

$150 for social workers seeking continuing education credits.

$100 for students.

Take $10 off if you register before November 15! Source

Thank goodness every attorney, CPA, legal assistant, social worker and student in Michigan will know everything there is to know about qualifying for Medicaid LTC benefits. I wonder if it ever occurred to these people to offer a "Boot Camp" on how to plan for long-term care so you don't end up on Medicaid. Not such a great demand for that training, because, as every LTC insurance producer knows, it isn't as easy to sell someone private insurance as it is to collect big fees for putting people on Medicaid after they're too frail or infirm to qualify for insurance. (Special thanks to the Center's Regional Representative in Wisconsin Romeo Raabe for tipping us to this story.)

Finally, can you believe this next item? A Florida Medicaid planner is trying to co-opt the LTCI industry's new "3 in 4 Need More" slogan. She writes:

"Nearly 3 in 4 Need More" is the new slogan being rolled out for Long Term Care Awareness Month by the Long Term Care Insurance industry. It is designed to make consumers aware that 3 out of 4 consumers over 65 will need more than Medicare and that families must plan for the unfortunate consequences of unexpected long term care needs. . . . Our office specializes in Long Term Care Needs Planning. . . . We did not need a slogan - we see the statistics up front and personal every day. We see families spend down thousands of dollars a month because of lack of planning. If you or someone you care about is afraid of spending down all their hard earned money on long term care needs, than [sic] we welcome the opportunity to guide them on this Long Term Care Needs Journey. Source

And just what is the "long term care needs journey"? It helps you . . .

DEVELOPING AND IMPLEMENTING THE PLAN

1. We arrange assessments, money management, geriatric care management as needed.

2. We pre-plan and apply for benefits such as Medicaid, Medicare, Veteran's Benefits and Hospice.

3. We strive to get the most benefits to which your loved one is entitled.

4. We coordinate your services and benefits and provide crisis intervention.

5. We provide trustee services, fiduciary representation, guardian services and education.

6. We provide a compassionate, friendly and respectful environment in which families and staff can work in harmony.

7. We provide service in a way that you would want all your family and friends treated. Source

What a shame for a legitimate, high quality, and desperately needed LTCI marketing campaign to be diverted to line the pockets of a Medicaid planning attorney. They don't have it easy enough already, giving away free long-term care in exchange for big fees? They have to go after the broader market AMGs (altruistic, masochistic geniuses) who sell LTCI struggle to serve?

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Updated, Tuesday, November 30, 2010, 11:44 AM (Pacific)

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LTC BULLET: CLASS LIVES

LTC Comment: Despite a resounding "no thanks" from voters, health reform and CLASS march on. More after the ***news.***

*** CENTER CITED IN FORBES. Former CAHI Director Merrill Matthews writes in Forbes: "As for long-term care, upper and middle-income families often use eldercare attorneys to hide grandma's assets so Medicaid will pay for her nursing home. States could crack down on eligibility in several ways. They could dramatically reduce or eliminate a home equity exemption that can go up to $750,000 (England only exempts about $37,000), according to Steve Moses of the Center for Long-Term Care Reform. More than 80% of seniors own a home, and more than 70% of that number have a clear title. States could also require a reverse mortgage so that families actually use up all assets before receiving state help. But these are good ideas even if a state doesn't opt out of Medicaid." Read "Should States Opt Out of Medicaid?" here. ***

*** SPECIAL: The National LTCi Producers Summit organized by the American Association for Long-Term Care Insurance takes place April 3-5, 2011 in Las Vegas. It's a 3-day event that brings together hundreds of producers, agencies, insurers. This year, Connie Garner who spearheaded the passage of the CLASS Act will attend to speak and address questions. So will CEOs of leading LTC insurers who'll address attendee questions about the future of the industry. Jesse Slome, AALTCI's director has generously offered to donate $50 to the Center from each new registration received between now and Monday, December 20th. Registration is $279 ($328 for non-members). You must write "CenterLTC" on your registration form for us to receive the $50. All Summit details are online at www.aaltci.org/2011summit or by calling the Association at (818) 597-3227. This offer is for new Summit registrations. I'll be attending this outstanding event. So will Damon. We look forward to seeing you there. ***

*** LET'S BE GRAPHIC. The theme of our New York LTC financing report that I'm writing this week is "denial." Both consumers' denial of LTC risk and, especially, Medicaid policy makers' denial of economic reality. So, I'm seeking a graphic for the draft report's cover. If you have the skill and the interest, or know someone who does, I'd love to receive a picture of a cartoon character who's run over a cliff but hasn't fallen because he has not looked down yet. I'll use the graphic for our draft report though, full disclosure, the think tank underwriting the work will probably utilize their own graphic artist for the final published version. Can you help us out? ***

*** LATE BREAKING: Steve Moses will take the "con" side in a light-hearted "debate" of the CLASS Act at the following event. Come check it out, and take advantage of this scholarship if you qualify. SCHOLARSHIP! Get $800 off the "Early Bird" (before 1/13/11) $895 individual registration fee to attend the 11^th annual "InterCompany Long-Term Care Insurance Conference." Discounted room rates of $129 are available at the Atlanta Marriott Marquis venue and you can take in a special Sunday sales training event starring Jesse Slome (AALTCI), Harley Gordon and Skip Liddell (CLTC) and Margie Barrie (LTCP). The requirement to qualify for this scholarship is $50,000 of direct LTCI premium production either in 2009, or in the twelve months prior to application. This is a great deal; jump on it. Details and application here. ***

*** MORE FROM AALTCI. A new industry award will recognize sales achievement by brokerage agencies marketing long-term care products including traditional insurance as well as linked-products. The awards program conducted by the American Association for Long-Term Care Insurance is open to all agencies who distribute LTC products through independently-contracted insurance professionals. The award recognizes agencies in six categories ranging from annual paid business of under $500,000 to those with $10 million or more in (2010) paid premium. All products offering long-term care benefits are included. Entries for the 2011 award must be received by the Association prior to February 18, 2011 to be eligible. To receive an entry form, call the Association at (818) 597-3227 or send an Email to jslome@aaltci.org. ***

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LTC BULLET: CLASS LIVES

LTC Comment: CLASS is the law of the land. How it happened and why it couldn't be improved or stopped in time are old news we covered long ago. But now the die is cast. Unless and until Congress and the President put a stake in its heart (unlikely any time soon), the CLASS roll out will continue for now. Regs will be written; advisory commissions, appointed; new agencies and boards created, and so on. If the program is repealed or proves infeasible to execute, all this effort will be wasted. We'll all move on to something that makes more sense (hopefully). But in the meantime, it behooves us to keep a close eye on CLASS developments. So here's some of the latest.

If you have any doubt CLASS is on the move, read the New York Times "New Old Age Blog" for November 19.

When the bill passed in March, the Class Act provisions had gone unmentioned for so long that I found myself calling people in Washington, anxiously asking whether the program had survived efforts to strip it from the bill. . . . But the Class Act lives. Last week, the federal Department of Health and Human Services submitted a notice to The Federal Register: It's ready to assemble a 15-member advisory council that will guide Secretary Kathleen Sebelius in figuring out the details and developing the plan, which probably will not start signing up participants until 2012.

Originally, you had a whole two weeks to submit nominations for the CLASS "Independence Advisory Council." But if you have someone in mind, you'd better jump to it. The deadline is tomorrow.

You've been hearing a lot lately about busted budgets, unfunded entitlements, and even the possibility states will bail out of Medicaid. Howard Gleckman of the Urban Institute drew on that theme in a piece yesterday titled "Replace the Tattered Medicaid Long-Term Care Safety Net." I don't agree with him on much, but I find plenty to say "Amen" to in this article. For example:

Medicaid, the state-federal health program that also pays for nearly half of all long-term care services for the frail elderly and younger people with disabilities, is in big trouble. A deep ongoing budget crisis in most states as well as the likely end of special economic stimulus payments could lead to both long-term care service cuts and reduced payments to the nursing homes and home health agencies that provide this assistance.

And this . . .

The long-run future is even dicier. To start, the new health law will add an estimated 16 million more acute care patients to the Medicaid rolls starting in 2014. Congress promised to pick up most of the cost of those added beneficiaries, though the federal payment will slowly decline. If states pay more for those acute care patients, the extra dollars must come from somewhere. And one possibility is Medicaid funding for long-term care.

So true. But then this!

[I]t makes sense to get the program out of the long-term care business. And a way to do that would be to replace it with a broad-based insurance system. The Community Living Assistance Services and Support Act, which was created by the health overhaul, will create a voluntary national long-term care insurance program. Program participants would begin contributing in 2012, but wouldn't be eligible for benefits for at least five years.

But to his credit, Gleckman acknowledges . . .

But there are real doubts about whether CLASS insurance will attract enough middle-class buyers to reduce the burden on Medicaid. If it can't, Congress should begin to think about what insurance design can, and do so before the Medicaid safety net for long-term care is in tatters.

Hear, hear. Finally an avid advocate of CLASS confesses it is most likely unworkable.

Seems to me, however, that the logical next step isn't CLASS but rather to save the Medicaid safety net before it is too late. How? Target Medicaid to people who need it most. Divert everyone else to responsible LTC planning while they're still young, healthy and affluent enough. Private financing alternatives like home equity conversion and long-term care insurance are just waiting to save the day as soon as Medicaid and CLASS get out of the way.

A friend of mine who is a professor of elder law (go figure) has written one of the best analyses of the CLASS Act I've seen so far. The author is Richard L. Kaplan, J.D., the Peer and Sarah Pedersen Professor of Law at the University of Illinois (Urbana-Champaign) where he teaches federal income taxation and elder law. The article is titled "Financing Long-Term Care After Health Care Reform." You can find it in the July-August 2010 issue of the Journal of Retirement Planning or go here for a one-click download. He concludes:

The 2010 health care reform legislation includes a LTC entitlement that is available to all, regardless of health status and financial resources. This program, dubbed CLASS, is a major addition to the array that clients may want to consider in financing their long-term care. It does not, however, replace LTC insurance because CLASS benefits are unlikely to cover the cost of institutional LTC settings, such as assisted living facilities and nursing homes. If insurance is most appropriate to cover catastrophic expenditures, then the CLASS program may not be the most cost-effective approach to funding LTC.

I encourage readers to have a closer look at Dick Kaplan's article. He puts CLASS into historical and programmatic context in a way few authors do successfully. Your time invested perusing the piece will be well rewarded.

For Dragnet-style coverage of CLASS ("just the facts, ma'am"), see pages 11-12 of "How Health Care Reform Affects Seniors," by the Society of Certified Senior Advisors.

You should probably take a quick look at "Setting premiums could present obstacle for CLASS Act implementation, expert says" (link) published November 17 in McKnight's Online. It describes a National Press Club forum held the day before on "Implementing the CLASS Act: Financing Long-Term Care in the United States." What tickled me in the article was this understatement:

The Community Living Assistance Services and Supports Act, or the CLASS Act, which was created under the Patient Protection and Affordable Care Act, has a few hurdles to clear after the midterm elections before it can become a success.

Ya think?

*** THE CLASS CONTENT covered in today's LTC Bullet has been added to our Members-Only Zone website here: http://www.centerltc.com/members/ClassActUpdate-QuickReference.htm, exclusive for Center members. Not a member yet (you should be if you’re receiving this)? Need to renew? Need a refresher on your username and password? No problem. Just contact Damon at 206-283-7036 or damon@centerltc.com. Center membership is only $150 per year for individuals or $12.50 per month and gets you access to The Zone and allows you to receive our daily LTC E-Alerts and LTC Bullets by email. Corporate memberships are also available. Support the Center's research and advocacy on behalf of rational long-term care public policy and responsible LTC planning. ***

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Updated, Monday, November 29, 2010, 11:39 AM (Pacific)

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HOBSON'S LTC CHOICE

LTC Comment: I'm working now on the final report of our New York long-term care financing study. Bottom line, it is very hard to imagine how the "Empire State's" gargantuan Medicaid program can survive much longer in anything like its current form. Medicaid LTC in New York is especially generous, expensive and over-extended. I'm wondering if the question of whether or not to insure privately for LTC in New York is a "Hobson's choice."

According to Wikipedia:

So it occurs to me that the "Hobson's LTC Choice" in New York is to purchase private long-term care insurance or "go bare." That's different . . . really different . . . than the choice described in this column by a small-town, upstate New York Medicaid planner. Bonnie Kraham writes in "Protecting Your Future: Medicaid strategies to protect assets":

The best protection from long-term care costs is long-term care insurance, because you're also insured for home-health aides to come into your home to take care of you. If you don't have long-term care insurance, the next best protection is a Medicaid Asset Protection Trust (MAPT), but it must be in effect for five years before the assets in the trust are fully protected.

The rest of her article describes techniques her readers can use to qualify for Medicaid LTC without planning ahead. This is the typical advice Medicaid planners offer. They give lip service to long-term care insurance and then, in the same breath, they explain how and why you don't need the expense and hassle of insuring privately.

But what if Medicaid disappears, or cuts way back? What if those loopholes Medicaid planners and their clients profit from now are closed? What if Medicaid LTC services deteriorate in quality even more than they already have? Think it's unlikely? Consider this from a recent article in the Wall Street Journal titled "Some States Weigh Unthinkable Option: Ending Medicaid" (gated):

Huge budget shortfalls are prompting a handful of states to begin discussing a once-unthinkable scenario: dropping out of the Medicaid insurance program for the poor. Elected and appointed officials in nearly a half-dozen states, including Washington, Texas and South Carolina, have publicly thrown out the idea. Wyoming and Nevada this year produced detailed studies of what would happen should they withdraw from the program.

It's time to get real and to help your prospects and clients see the true risks of going without LTC insurance: being left with no real safety net at all. Do not dilly-dally like Hamlet. The option "to be or not to be" privately insured, is definitely a Hobson's choice. And a very, very dangerous one.

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Updated, Monday, November 22, 2010, 11:02 AM (Pacific)

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THE BIG 65

LTC Comment: I was 38 years old in 1983 when I began to study aging issues, long-term care financing, Medicaid eligibility, LTC insurance and related subjects.

By the time I wrote my first report on such matters, which the HCFA Regional office in Seattle declined to publish, but the USDHHS Inspector General hired me to re-do on a national scale, I thought I had the problem and the solution nailed.

To wit, Medicaid anesthetizes the public to LTC risk and cost. It crowds out the market for private LTC insurance. But Medicaid can't survive the aging of the baby boomers. So we have to redirect its benefits to the people who need them most and use some of the savings to encourage boomers to save, invest or insure for LTC. Sound familiar?

Well, I figured the problem and the solution were so obvious that with hard work, persistence and cooperation we could resolve the predicament of long-term care financing in a few years and move on to something else.

Instead, here I am 27 years later, Medicaid is burgeoning out of control, LTC insurance carriers are dropping like flies, and it appears my prediction in 1985 is about to come true--that if we do nothing to fix LTC financing through responsible public policy, the bottom will fall out of the social safety net around the time the Age Wave crests and crashes.

But, hey, it's the journey that matters as much as the destination, right? It's been a great run with as many victories as set backs. What's more, I can see the solution and its inevitability more clearly now than ever. So, the trick is just to keep on keepin' on and that's what I plan to do.

Back when I started studying them, the elderly fit neatly into identifiable categories. They were parents, the WWII generation, the beneficiaries of Social Security and Medicare, folks on "fixed incomes," and so on, but fundamentally, the elderly were others.

No more. To paraphrase Pogo: "I have met the elderly and he is me." So, faithful readers, to celebrate this personal milestone, I've decided to make today's our only "daily" publication for this week.

In the meantime, I'm writing our New York report which will state clearly both the problem and the solution for LTC financing in the "Empire State."

As Winston Churchill said: "Success is the ability to go from one failure to another with no loss of enthusiasm." And "Never, never, never quit." 65 is only a number.

Happy Thanksgiving!

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Updated, Friday, November 19, 2010, 11:10 AM (Pacific)

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DEBT S&M

LTC Comment: In his Devil's Dictionary, satirist Ambrose Bierce defined "debt" as "An ingenious substitute for the chain and whip of the slavedriver."

With all the focus these days on "Debt Commissions," budget shortfalls, and unfunded liabilities, we do seem to be entering a period of fiscal sadomasochism.

To help us think through what it all means, I recommend this commentary by John Goodman of the National Center for Policy Analysis (www.ncpa.org): "Debt Commission: The Good, Bad and Ugly."

No sooner had the "Co-Chairs" report Goodman discusses been published than another was released by a different group which you can read about in "Rival deficit plan raises taxes, angers all."

What struck me about this rival plan is its call for a "6.5% national sales tax . . . for reducing the national debt."

That "national sales tax" is the dreaded European-style VAT (value-added tax) that we expected the Debt Commission to recommend but which did not show up in the Co-Chairs' report. We'll see if it's in the full Debt Commission's report due out December 1.

Speaking of budgetary S&M, check out this story: "Organ Transplants Denied in Arizona after Medicaid Agency's Budget Cut." It says "Budget cuts in Arizona's legislature resulted in a man leaving a hospital Tuesday after the state Medicaid agency refused to pay for a life-saving liver transplant."

What's next on Medicaid's chopping block? Long-Term Care?

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Updated, Thursday, November 18, 2010, 10:59 AM (Pacific)

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LTCI STORIES NOT TO MISS

Thursday, November 18, 2010

Seattle--

EXTRA: The National LTCi Producers Summit organized by the American Association for Long-Term Care Insurance takes place April 3-5, 2011 in Las Vegas. It's a 3-day event that brings together hundreds of producers, agencies, insurers. This year, Connie Garner who spearheaded the passage of the CLASS Act will attend to speak and address questions. So will CEOs of leading LTC insurers who'll address attendee questions about the future of the industry. Jesse Slome, AALTCI's director has generously offered to donate $50 to the Center from each new registration received between now and Monday, December 20th. Registration is $279 ($328 for non-members). You must write "CenterLTC" on your registration form for us to receive the $50. All Summit details are online at www.aaltci.org/2011summit or by calling the Association at (818) 597-3227. This offer is for new Summit registrations. I'll be attending this outstanding event. So will Damon. We look forward to seeing you there. Steve Moses, Center for Long-Term Care Reform

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LTC Comment: With premium hikes and carrier market departures in the news, here are two newspaper columns you and your prospects/clients should see.

Jane Bryant Quinn writes in "Long Term Care Insurance: 6 Ways to Buy It Right":

"You have to pay attention, when MetLife - the Metropolitan Life insurance Company - quits selling long-term care insurance (LTCI). Aetna and Equitable Life have exited, too. Insurers are struggling for profits and pushing prices up. Last month, John Hancock asked the states to let it raise premiums on existing policies by an average of 40 percent. Premiums for some older Genworth policies are rising by 18 percent. . . .

"I'm a big believer in LTCI, especially for couples, who - too affluent for Medicaid - want to shield their mates from the potentially huge costs of care. My late husband couldn't qualify for coverage, due to a pre-existing condition. In the last year of his life, his bills for care at home exceeded $100,000. When I remarried, I barely glanced at my new husband's bank balance. What mattered was whether he could get LTCI. He could and did, which sealed the deal. Priorities change, as life rolls on. . . .

"Nevertheless, this industry isn't going away. People with assets should get their heads out of the sand and protect themselves against these old-age costs. Here are seven rules for buying LTCI today:

1. Buy group insurance, if your employer offers it. . . .

2. Be prepared for your policy's premiums to rise. . . .

3. For individual coverage, choose a large, well-diversified insurance company, rated no lower than A. . . .

4. If a big insurer won't take you, go for the small insurer anyway. . . .

5. Consider hybrid products. . . .

6. Cut the cost of a policy while still providing yourself with a reasonable safety net. . . .

"For now, LTCI is a luxury product that not even the well-to-do are taking much interest in. That's too bad. A lot of your future assets are on the line."

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Terry Savage of the Chicago Sun-Times writes in "Long-Term Care Insurance: Cost of coverage rising but it's still a good deal":

"I've been recommending [LTCI] for years. I thought it was a great deal. And now I have proof.

"Long-term care insurance policies have been such a great deal that one of the top underwriters -- MetLife -- has just announced it will no longer sell these policies. (Of course, it is contractually required to keep its existing policies on the books and stand behind them when payout is needed.) And another top LTC insurance underwriter, John Hancock (a division of Manulife), has just announced an intention to raise policy prices an average of 40 percent!

"These policies were such a good deal that the companies were losing money on them. . . .

"And don't rely on the government. Medicaid provides care primarily in state-funded nursing homes, taking away your choice of care providers. And those stressed state budgets mean that those nursing homes are already woefully underfunded. The same baby boom generation that crowded into mobile classrooms in the 1950s and 1960s will now be crowded into whatever facilities can be found to provide care cheaply. . . .

"A woefully small long-term care benefit was included in the health-care reform bill -- with provisions that mean private long-term care insurance is a better deal, if you can get it.

"And a final piece of advice: Don't wait until you're older to buy. Remember, even Superman, Christopher Reeve, needed long-term care in the prime of his life. The need for care could happen to you at any time. And that's The Savage Truth."

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Updated, Wednesday, November 17, 2010, 10:57 AM (Pacific)

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BOOMERS BUSTED

LTC Comment: Evidence mounts that the baby boomer generation is doomed and dooming others.

On the first count (doomed), see "Senior boom begins amid economic bust" in USA Today. Here are some representative quotes:

"Raised in affluent times and imbued with high expectations, the first Boomers now face the ironic prospect of longer yet crimped lives. Their homes and savings are worth less than a few years ago, and health care and energy cost more."

"Given the unfortunate confluence of recession and retirement, have the Boomers' fortunes and expectations, once so high, ever been so low?"

"About two-thirds of Baby Boomers say they're less optimistic about the future of the USA than when they turned 21, and less optimistic about retirement than they were 10 years ago, according to a USA TODAY/Gallup Poll taken this month."

"But the biggest question raised by the Boomers' senior moment is how it will affect the politics of Social Security and Medicare, and the nature of retirement.

"Boomers' sheer numbers (one will be turning 65 every 8 seconds) threaten to overwhelm the federal budget with rising costs for the entitlement programs."

On the second count (dooming others), see "The Federal Government's Long-Term Fiscal Outlook: Fall 2010 Update, GAO-11-201SP, November 15, 2010, http://www.gao.gov/products/GAO-11-201SP; Highlights - http://www.gao.gov/highlights/d11201sphigh.pdf; Podcast - http://www.gao.gov/podcast/watchdog_episode_37.html

Here are some representative quotes:

"GAO's annual fall update of its long-term simulations underscores the need to address the long-term sustainability of the federal government's fiscal policies. While the economy is still fragile and in need of careful attention, there is wide agreement on the need to look not only at the near-term but also at steps that begin to change the long-term fiscal path as soon as possible without slowing the recovery. With the passage of time the window to address the long-term challenge narrows and the magnitude of the required changes grows. The federal government faces long-term fiscal pressures that predate the economic downturn and are driven on the spending side largely by rising health care costs and an aging population. GAO's simulations show continually increasing levels of debt that are unsustainable over the long-term. Under the Alternative simulation, debt held by the public as a share of GDP would exceed the historical high reached in the aftermath of World War II by 2020." (Emphasis added.)

"The timing of the debt build up varies depending on the assumptions used, but the overall picture is the same: the federal government is on an unsustainable fiscal path. As in previous updates, GAO shows the long-term outlook using two different sources--the Trustees and CBO--for the long-term projections of Social Security and major health entitlement programs (Medicare, Medicaid and others). Both CBO and the CMS Actuary offer two alternative projections for major health entitlement programs based on different assumptions about the sustainability of health care cost containment provisions. The simulation results using the Trustees and CBO assumptions are not materially different. These long-term simulations show that absent additional policy actions the federal government faces unsustainable growth in debt." (Emphasis added.)

LTC Comment: OK, boomers, we got us into this mess. How are we going to get us--and our progeny--out of it?

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Updated, Tuesday, November 16, 2010, 11:29 AM (Pacific)

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NEW YORK TIMES HIGHLIGHTS TWO CENTER MEMBERS

LTC Comment: On November 4, 2010, the "Grey Lady" ran a special section called "Stuck in the Sandwich." You probably saw or heard about it. I was too busy preparing for our New York field work to cover it at the time. But two distinguished Center members/supporters were highlighted in the coverage. So, better late than never, I want to recognize them and encourage you to read the NYT stories.

Have a look first at "Ignore Long-Term Care Planning at Your Peril." It's a fairly balanced, if imperfect, general story about the importance of planning for LTC. What I want to bring specially to your attention is the paragraph about "Self-Funding Cost." It includes a reference to the Journal of Financial Service Professionals article Center member Ralph Leisle authored in January 2008, titled "Financial Rationale for Long-Term Care Planning."

Ralph's article projected the lifetime financial impact on family wealth of a 4-year care event starting in 20 years, with the surviving spouse living another 10 years. When including tax on liquidating assets and the investment opportunity cost on the money spent for care . . . and its impact on the surviving spouse, the financial impact on family wealth could be as much as $1.5 million dollars. The article referenced in the NYT is a comprehensive analysis of long term care financial planning. Mr. Leisle says "It was written to inform and assist wealth managers and other professionals who provide financial planning advice to their clients." If you haven't read it yet, find it here and read it now: http://www.ltcia.com/leisle_j0108.pdf.

Elias Papasavvas is another long-time friend and supporter of the Center for Long-Term Care Reform. He and his company, ElderLife Financial Services, were also referenced in the NYT's "Stuck in the Sandwich" section. Check out "Raising Cash From the Less Usual Places" to learn about Elias's company's "elder care loans." He defines the Elderlife Line of Credit for Senior Living in the article as "an unsecured line to cover the gap between the monthly cost of living in one of 3,000 independent communities or assisted-living homes nationwide that Elderlife works with and the amount people can pay until some liquidity-producing event occurs, like the sale of a home."

Congratulations Ralph Leisle and Elias Papasavvas. The Center for Long-Term Care Reform is proud to have such thoughtful, creative and dedicated members as yourselves. Keep up the good fight for responsible LTC planning.

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Updated, Monday, November 15, 2010, 11:58 AM (Pacific)

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LTC BULLET: THE GATHERING LTC STORM

LTC Comment: We step away from LTC Bullets and LTC E-Alerts for a week and all hell breaks loose. Our review and analysis after the ***news.***

*** IN A TOWERING FEAT of statistical prestidigitation AALTCI president Jesse Slome claims "LTCI hits 50 percent market penetration mark." So, fold your tents and go home? Not at all: "[I]nsurance professionals should stop wasting time marketing to those who can't or won't buy. Focus on the remaining 50 percent of the market and you'll have success. Happy Long Term Care Awareness Month!" ***

*** SCHOLARSHIP! Get $800 off the "Early Bird" (before 1/13/11) $895 individual registration fee to attend the 11^th annual "InterCompany Long-Term Care Insurance Conference." Discounted room rates of $129 are available at the Atlanta Marriott Marquis venue and you can take in a special Sunday sales training event starring Jesse Slome (AALTCI), Harley Gordon and Skip Liddell (CLTC) and Margie Barrie (LTCP). The requirement to qualify for this scholarship is $50,000 of direct LTCI premium production either in 2009, or in the twelve months prior to application. This is a great deal; jump on it. Details and application here. ***

*** VIRTUAL TOUR. Take our "virtual tour" of the Center for Long-Term Care Reform's website here http://www.centerltc.com/Webinars/WebsiteWebinar.wmv or click on the "Take our virtual tour" link toward the top of www.centerltc.com. You'll find a treasure chest of helpful information in both our public site and our members-only section, AKA "The Zone." Long-time members and supporters of the Center tell me after they view this program that they had no idea how much valuable content the website contains. Don't miss out if you're already a member. And if you've not yet joined the Center, you will if you take this tour of the website. Need your user name and password? Or want to join? Just contact Damon at 206-283-7036 or damon@centerltc.com. ***

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LTC BULLET: THE GATHERING LTC STORM

LTC Comment: I spent last week in New York state interviewing experts on long-term care services and financing. The "Empire State's" Medicaid program is exploding in cost. LTC providers are pinched by reimbursement cuts and choked by excessive regulation. LTC insurance market penetration disappoints despite a big tax credit and LTC Partnership incentives. The public remains asleep about LTC risk, especially downstate. Policy makers fear the fiscal abyss coming when lucrative supplemental federal matching funds end July 1, 2011. I'll be writing our New York report over the next three weeks.

But while I was away, big forces were at play. Consider these for example:

(1) The "Deficit Commission's" two co-chairs issued a teaser report to test the political waters. Check out the full 50-page document here. One of their proposals is to . . . "Convert The Federal Share Of Medicaid Payments For Long-Term Care Into a Capped Allotment." [page 35] That would save $9 billion in 2015 and $89 billion over the period 2012 to 2020. I was surprised and pleased that LTC made the cut, but this is the only mention of "long-term care" in the "Co-Chairs' Proposal."

"Capped Allotment" evidently means a block grant. Turning off the unlimited flow of federal matching funds with a block grant would limit states' spending on Medicaid, encourage them to budget more sensibly and likely increase the need for middle class people to plan more responsibly for long-term care. That is in keeping with "Guiding Principle" #5 on page 5 of the co-chairs' proposal:

"Protect the Truly Disadvantaged:

• Focus benefits on those who need them.
• Ensure an affordable and sustainable safety net."

Now, faithful readers, where have we heard that before?

(2) Something has to be done soon about exploding Medicaid LTC expenditures because states are beginning to talk seriously about bailing out of the fiscally unsustainable program. Read about it in "Battle Lines Drawn Over Medicaid in Texas." Last year, Dennis Smith, who ran Medicaid under the Bush Administration, and Edmund Haislmaier of the Heritage Foundation estimated states' savings would "exceed $1 trillion over 10 years" if all dropped out of Medicaid. Read their analysis here. Read more on the Heritage blog here. When Medicaid worries reach critical mass, withdrawal from the program, called the "nuclear option," becomes a serious choice.

(3) With Medicaid imploding, as we've predicted would happen when the Age Wave crests, surely private long-term care insurers will double down. The American public needs LTCI protection more than ever if Medicaid, the dominant LTC payer, is going down for the count. But alas, there is news on that front too and it is not encouraging: "MetLife exits long-term care insurance market." Another LTCI carrier throwing in the towel does not bode well. Though a MetLife executive assures me they are not abandoning the battle, only modifying their attack. We'll see.

(4) But maybe CLASS (the Community Living Assistance Services and Supports program) will fly in to "save the day" like "Mighty Mouse?" Well, maybe not. Peter Gelbwaks of the National LTC Network asks "Could Election Results Spell End of CLASS, a Fed-run Long Term Care Insurance-like, 'Employee Benefit'?" (Link) Even Minnesota Public Radio has raised doubts about the CLASS program's survival in "GOP, with some Dems, targets long-term care provision."

What you are seeing in the headlines these days is what we've predicted for decades would happen when time runs out for America's entitlement programs. Designed to support a small generation by taxing a big generation, they're unsustainable when the tables are turned. A small generation cannot support a big generation (boomers) in the same way.

So, we're finally seeing the perfect storm brewing that will sweep away unrealistic expectations (i.e., "denial") that somehow government will provide for the long-term care needs of the boomer generation.

Lesson learned? Start now to plan for less public support and more personal responsibility, not only for LTC planning, but for retirement income and acute medical care as well.

And if you're in business to advise prospects and clients, take heart. You're their last line of defense if government allows entitlement programs to self-destruct. Every person you protect is one less to fall into the fraying safety net. You truly can do well by doing good.

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Updated, Friday, November 5, 2010 10:38 AM (Pacific)

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NY STUDY FIELD WORK AND MORE

LTC Comment: We'll be offline with LTC Bullets and LTC E-Alerts next week. I'll be in Albany, New York conducting briefings/interviews for our long-term care financing study. We described this study in "LTC Bullet: Center Begins Study in New York," Tuesday, October 12, 2010. We're working with the Empire Center for New York State Policy on this project. Brian Blase of the Heritage Foundation will join me for this field work.

We'll be in the state capital of Albany most of the week, but we'll venture out to Long-Island one day to interview Medicaid LTC eligibility workers and supervisors in Suffolk County. We'll do the same in nearby Rensselaer County another day. In all, we have 19 appointments scheduled, including meetings with the health commissioner, Medicaid director, key Medicaid staff including the LTC eligibility policy specialist and estate recovery chief. We'll also meet with representatives of the major LTC provider associations including those representing nursing homes, assisted living facilities, and home care agencies.

Also on the agenda is a session on Thursday, November 11 from 2pm to 4pm with representatives of the long-term care insurance and reverse market industries. If you will be in the vicinity of Albany, NY on that day and would like to participate, please contact Damon at 206-283-7036 or damon@centerltc.com immediately.

Finally, after our session with LTCI and RM reps, Jeff Jacobs of SmartPros, Ltd. will shoot an interview video with me and reverse mortgage expert Stephen Lamoreaux that will be distributed nationwide to CPAs. The subject is the role of reverse mortgages in financing long-term care. Check out a similar, professionally produced video focused on long-term care insurance here.

I expect a busy and productive week followed by an intense period writing and editing our New York LTC financing report in time to have analysis and recommendations ready for the new state legislature to consider in January.

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Article of interest:

Ron Lieber, "Ignore Long-Term Care Planning at Your Peril," New York Times, November 4, 2010.

Quote: "Long-term care insurance ought to be an easy sell to families facing the sandwich challenge. Aging parents can buy it for themselves to cover the costs for a lengthy nursing home stay, for assisted living or for a health aide at home a few hours each day. Or, adult children of parents whose income is limited could buy policies for their parents. That way, the children shield themselves from the cost of their parents' care later. But something seems dreadfully wrong in the insurance market for long-term care."

LTC Comment: This is a relatively good article for one of this kind and in the New York Times, no less. The author does not understand how Medicaid crowds out the LTC insurance market, but at least he recognizes the phenomenon. Jesse Slome of AALTCI is quoted.

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Resource of interest:

Kaiser Family Foundation, "Medicare Chartbook, 2010," November 4, 2010.

Quote: "This chartbook provides the most recent and reliable data available about the Medicare program and the 47 million seniors and younger people with disabilities who get health insurance coverage through the program. Topics covered include: Medicare beneficiaries; the program's benefits, utilization, and access to care; prescription drugs; the Medicare Advantage program; the role of Medicaid for Medicare beneficiaries; supplemental insurance coverage; out-of-pocket spending; and Medicare spending and financing."

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2011 LTCI Tax Deductibility Limits Published: You'll find them anytime you need them in The Zone here. To make it interesting, we've also posted all the LTCI Tax Deductibility Limit updates since the first one in 1997. Check it out. Very interesting. For example, the allowable tax deduction for someone over age 70 in 1997 was $2,500. For 2011, it's $4,240. You'll need your CLTCR member user name and password to access The Zone. Check with Damon if you need a reminder: 206-283-7036 or damon@centerltc.com. Do the same if you need to join the Center to get Zone access. Or do-it-yourself here.

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Updated, Thursday, November 4, 2010 11:21 AM (Pacific)

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MEDI-CRASH SYMPTOMS

LTC Comment: This concatenation of stories reminds us again how fragile LTC services and financing are in America:

Story: Robert Pear, "Medicare Standards Are Too Strict, 2 Courts Find," New York Times, November 1, 2010.

Quote: "Two federal courts have ruled that the Obama administration is using overly strict standards to determine whether older Americans are entitled to Medicare coverage of skilled nursing home care and home health care."

LTC Comment: Thank goodness Medicare is so richly endowed that it can now cover even more SNF and home care for chronic illness!

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Story: Paula Span, "End-of-Life Care for Patients With Advanced Dementia," New York Times, November 2, 2010.

Quote: "Dr. Mitchell's suggestion is to scrap the whole certification system for dementia patients, to allow them access to palliative care, or 'comfort care,' without regard to their expected lifespans, since there's no accurate way to estimate them."

LTC Comment: Yet another proposal to expand public financing of long-term care! Is it cruel to question or crazy to ignore the fiscal consequences?

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Story: Joyce Frieden, "It's Official: Medicare Slashes Doc Pay By a Fourth," MedPage Today, November 2, 2010.

Quote: "Physicians are once again staring down the barrel of a two-digit cut in Medicare reimbursement -- pay will go down by 21% on Dec. 1, and another 4% cut will be loped off on Jan. 1, according to a final payment rule issued by the Centers for Medicare and Medicaid Services."

LTC Comment: Won't the rhetoric of expansion crash into the reality of financing sooner or later? Or is that what happened last Tuesday? Time will tell, but it won't be long. We're in the end game now.

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Updated, Wednesday, November 3, 2010 11:14 AM (Pacific)

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GOOD ARTICLE FOR LTC AWARENESS MONTH

LTC Comment: I've followed Ken Dychtwald's work since his late '80s best seller Age Wave. His insights on the demographics and psychology of aging in books, articles and reports have enlightened all of us ever since. I encourage readers to check out Ken's latest piece published by the Huffington Post. Following are some excerpts, but you can find the whole article here. For much more detail, see the report of a study Dychtwald's company did for Genworth on which the article is based: "Our Family, Our Future: The Heart of Long Term Care Planning."

Excerpts from Ken Dychtwald, "Long-Term Care: The Solutions You Should Be Talking About Now," Huffington Post, November 2, 2010, (link).

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