*** R&R for SAM: As explained below, Steve’s been on the road for four months and he has four major reports to write in September. So he’s hunkering down on the Labor Day weekend for a much needed rest. Then all this coming month will be devoted full time (and then some, he says) to preparing our Virginia, New Jersey, Georgia and “Index of LTC Vulnerability” reports for publication. While Steve’s locked inside his “cave of composition,” Damon will fill in to do most of our clippings service notices, LTC E-Alerts, and LTC Bullets during the month of September. Thanks, Damon, for taking on the extra workload. *** *** ANNOUNCING: CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. *** LTC BULLET: MEDICAID AND LONG-TERM CARE FINANCING IN GEORGIA LTC Comment: Steve Moses has been on the road in the Silver Bullet of Long-Term Care since May 1 conducting studies of Medicaid and long-term care financing in Virginia, New Jersey and Georgia. He’s headed home now with the huge task to write reports on all three studies before the end of September. As if that’s not enough, he’s decided to add a fourth report on what we plan to call “The Index of Long-Term Care Affordability.” See “LTC Bullet: The Index of Long-Term Care Vulnerability” for more on that new method to measure states’ potential to sustain their existing LTC service and financing systems. For now, however, here’s a quick overview of our findings regarding Georgia’s Medicaid and long-term care financing system. We’ll have much more to come about all three states as the final reports are written and published. ############################# Preliminary findings of “How to Reduce Medicaid Expenditures and Improve Long-Term Care,” a project conducted for the Georgia Public Policy Foundation by The Center for Long-Term Care Reform, August 29, 2013 Georgia has one of the tighter Medicaid long-term care financial eligibility systems in the country, when enforced. For example, it operates an “income cap” system meaning people with incomes over $2,130 do not qualify for Medicaid-financed nursing home care. They cannot deduct their medical and LTC expenses to “spend down” to the Medicaid income eligibility limit as in more liberal “medically needy” income eligibility systems. Georgians, however, can achieve the same purpose by setting up Miller income diversion trusts or “Qualified Income Trusts” (QIT). QITs allow people with excess income to qualify for Medicaid LTC benefits by diverting the excess income into a special trust designed for that purpose. We will explain how, why and how often this is done in the final report. Georgia has already implemented a managed care system for most of its recipients (poor women and children) and intends to implement managed care for the aged, blind and disabled. People eligible for both Medicaid and Medicare (dual eligibles) may in time be included in the managed care program, although there has been some political push back from that objective. Georgia has already “rebalanced” its Medicaid long-term care program from mostly nursing home care to nearly half home and community-based care. It has made Medicaid long-term care more attractive as a long-term care funding source and delivery system and is continuing to do more of the same. Less planning has been done to prepare for the reality that a huge new older generation will soon flood the state’s social programs, of which Medicaid long-term care is one of the most expensive. Our final report will develop this theme and suggest corrective actions. Georgia, like most states, runs the risk of Medicaid long-term care crowding out other key state services, especially education. Certain measures can be taken, however, to reduce this risk. One such measure we’ll recommend is to enhance DCH’s [the Department of Community Health contains Georgia’s Medicaid program] estate recovery efforts both to generate non-tax revenue but also and especially to awaken citizens that Medicaid LTC expenditures must be repaid after death. Currently Georgia exempts the first $25,000 of deceased recipients’ estates from recovery. As average recoveries in successful estate recovery programs are much lower than that, Georgia is leaving a large amount of potential non-tax revenue unrecovered. Unless and until Medicaid eligibility spend down requirements become much stronger, failure to enforce estate recoveries aggressively turns the program into free inheritance insurance for baby-boomer heirs who should instead be getting the message that LTC is a personal responsibility for which they should prepare. Unsurprisingly, Georgia’s inconsistent enforcement of Medicaid financial eligibility “spend down” rules, numerous Medicaid planning firms helping affluent Georgians qualify, and lax estate recovery enforcement seriously discourage early and responsible long-term care planning. The state’s Long-Term Care Partnership program, which allows purchasers of the product forgiveness of their Medicaid spend down liability to the extent of the private coverage they actually use, goes unpromoted. The state is moving toward a much more expensive Medicaid LTC program in the future because of the approaching baby-boomer Age Wave at the same time as it is making the program more attractive and private-financing alternatives less likely to succeed. Georgia’s current intention to avoid Medicaid expansion under the Affordable Care Act may mitigate this risk somewhat, but some of our respondents indicated that the state may choose to expand Medicaid after all following the Gubernatorial election. I believe our findings will be on point and very timely. As Senator Renee Unterman told us in an interview “it is imperative to do self analysis like your study” and this is a “sensitive issue but a good time to deal with it.” ############################# Updated, Monday, August 26, 2013, 1:33 PM (Eastern)Rome, Georgia— ############################# GENWORTH CLAIMS DATA AND LTC NEWS AND COMMENT
LTC Comment: We
received the following message from a Center member. Very interesting. Most expensive claims: Dementia & Parkinson's LTC Comment: Some of the most interesting of these findings to me are that 15% of claims lasted more than five years, half lasted less than a year, and the average length of claim was 3.9 years. Does that mean people are well-served by “short and fat” policies? Not if the purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. “Long and lean,” e.g., lifetime institution-only (ALF and SNF) coverage, would better meet that definition, though unavailable or very scarce now. On the other hand, the ability to pay privately for even a short time at least provides “key money” for insureds to buy their way into nicer care settings that Medicaid is likely to provide. ############################# 8/25/2013, “Tighter Rules for Reverse Mortgages: Fewer borrowers will qualify and borrowing limits will drop [link],” by Anne Tergesen, Wall Street Journal Quote: "The rules governing reverse mortgages are about to change, which could mean less money for borrowers. But it also may help reduce the program's high default rate. Congress recently gave the Federal Housing Administration, which insures virtually all reverse mortgages, the authority to make sweeping changes to the federal program for older homeowners. . . . Those who submit an application, complete a reverse-mortgage counseling program, and receive a case number by Oct. 1 will be able to qualify for the higher maximum amounts under the current rules." LTC Comment: When Medicaid finally has to drop its half million dollar home equity exemption, reverse mortgages will likely become a big payer for home and community-based care. ############################# 8/23/2013, “Gray science: 4 lessons from LTCI research,” by Allison Bell, LifeHealthPRO Quote: "Many Americans who could buy long-term care insurance (LTCI) don't. Why? Are the decisions a matter of taste, the result of confusion -- or, perhaps, the result of a lack of understanding that LTCI exists? The SCAN Foundation, a think tank that aims to study and improve senior care, recently tried to get answers by working with Gary Langer, the former ABC director of polling, to do a survey with a little more depth than many other long-term care (LTC) planning surveys." LTC Comment: The worst possible way to find out why people don't buy LTCI is to ask them. They don't know. The real reason they don't buy requires some understanding and thought. You need to understand that government pays for most expensive long-term care. You need to think: if government pays, why would people worry about long-term care until they need it? Voila. There's the answer for why polls don't work, people don't know, and educating the public about "facts" that aren't true has little effect on consumer behavior. ############################# 8/23/2013, “Long Term Care Insurance Association Offers Bonus Sourcebook,” by Jesse Slome, PR.com Quote: "Insurance and financial professionals seeking the latest data on long term care insurance can take advantage of a special offer from the American Association for Long-Term Care Insurance." LTC Comment: The AALTCI “Sourcebook” is always a welcome annual contribution to our understanding of the facts about long-term care. ############################# 8/22/2013, “Medicare Does Not Pay for Long-Term Care,” by Harriet Komisar, AARP Blog Quote: "Many consumers and policymakers mistakenly believe that Medicare—the federal health insurance program for people age 65 and older and some younger people with disabilities—pays for long-term care. It does not, as stated in the official Medicare handbook. Millions of Medicare enrollees must pay for long-term care services (such as personal assistance at home, assisted living, and nursing home care) entirely from their own income and savings." LTC Comment: Medicare does not pay for LTC, but Medicaid does. In fact Medicaid is the dominant payer of expensive long-term care not only for the poor but for the middle class and affluent as well. Denial of this reality by advocates like this author contributes to the denial of LTC risk and cost by consumers. ############################# 8/22/2013, “Direct-care workers may be best leaders of interdisciplinary senior care teams, expert tells LTC Commission [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Working on a tight schedule, the commission has already begun drafting its report to Congress, according to staff director G. Lawrence Atkins, Ph.D. . . . Members will meet privately on Aug. 19 and 29 to discuss policy recommendations, and must conclude all commission business by the end of September, Atkins said on a recent conference call." LTC Comment: One more commission, one more report, likely one more misfire. This LTC Commission, like previous ones, spent no time analyzing how the LTC service and financing system became so messed up in the first place. Therefore, it’s no more likely to propose helpful solutions than previous ones. Expect instead the only recommendation such commissions ever muster: more government spending. Which, ironically, is exactly what created the current mess. ############################# 8/21/2013, “LTCI Watch: Publications, Opinion,” by Allison Bell, LifeHealthPRO Quote: "Two publications of interest to members of the long-term care insurance (LTCI) community also surfaced. One is a DVD, The Completely Understandable LTCI Buyer's Guide, by Craig McCormick. It was published in 2012 and now needs an update, but it has great information about the likelihood that an individual will need long-term care (LTC) services, government LTC programs and even Veterans Affairs Department LTC programs." LTC Comment: I wrote the preface to this book by Craig McCormick. It's very good to see the book receive some well-deserved recognition. ############################# 8/21/2013, “Caregiver asks for Medicare chronic care benefit,” by Allison Bell, LifeHealthPRO Quote: "Suzanne Mintz, the co-founder and former president of the National Family Caregivers Association, talked about health insurance and Medicare Tuesday during a meeting of the federal Commission on Long-Term Care. The commission spent most of the meeting talking about LTC delivery and workforce issues." LTC Comment: Adding a chronic care benefit now to Medicare’s $43 trillion unfunded liability would be like adding deck chairs to the Titanic after the incident with the iceberg. ############################# 8/21/2013, “County nursing home woes reach critical stage in New York, report shows,” by Tim Mullaney, McKnight’s LTC News Quote: "County nursing homes customarily take on a higher proportion of Medicaid residents than privately operated facilities, and reimbursement rates have not kept pace with costs, the report states. The shortfall can be as much as $100 per resident day." LTC Comment: Nursing home interviewees always tell me that source of payment makes no difference for access to and quality of care. That's probably true in a given facility because of cost shifting from private payers, but between 100% Medicaid nursing homes and 0% Medicaid nursing homes, there is nearly always a difference due to Medicaid's low reimbursement rates. ############################# 8/20/2013, “Long-Term Care Insurance Industry Leader Prepares to Serve Groundswell of New Clients as Claim Benefit Payments Quadruple [link],” Voluntary.com Quote: "When today's 50 to 60-somethings turn 70 to 80-something, tens of billions of dollars per year will be paid to holders of long-term care insurance policies and related financial instruments. Will you be among them? Today LTC Financial Partners, LLC (LTCFP), offers a five-fold path for participation." LTC Comment: Conversely, just imagine the financial hit to Medicare and Medicaid “when today's 50 to 60-somethings turn 70 to 80-something.” Sustainable? Doubtful, which is one more reason for people to plan for long-term care. ############################# 8/20/2013, “Obamacare's Impact on Seniors: An Update,” by Alyene Senger, Heritage Foundation Issue Brief #4019 Quote: "The Patient Protection and Affordable Care Act (Obamacare) makes dramatic changes in the country's health care system, especially in Medicare, that will seriously affect American seniors. Indeed, much of the health law's new spending is financed by spending reductions in the Medicare program." LTC Comment: Maybe, but there sure has been a lot of news lately about Medicare coverage of SNF and home care expanding. ############################# 8/20/2013, “Can hybrid annuities solve the LTC insurance scarcity?: Opinion,” by Robert Bloink and William H. Byrnes, LifeHealthPRO Quote: "Fortunately, the product market is evolving so that a relatively new method of securing tax-preferred long-term care benefits has emerged. Hybrid annuity products that combine the estate and income planning features of an annuity with the protection of long-term care insurance are becoming increasingly popular among clients looking for replacement insurance. Because the available long-term care benefits under these contracts are based on a percentage of the annuity premium value and often offer optional inflation coverage, clients may need to triple their initial investment to ensure long-term care needs are met, but with the added bonus that those funds are not lost if care is never required." LTC Comment: Every financial product has its pros and cons, but the more products available, the better chance that consumers’ differing needs are met. ############################# 8/20/2013, “The Wild Card That Could Destroy Your Retirement,” by Frank Armstrong III, Forbes Quote: "I'd advise finding an agent that is an expert in long-term care insurance and working with him/her. Your average life agent may not have the necessary expertise. Look for an insurance company with extensive experience in long-term care, a commitment to that market and the financial resources to pay up when and if you need it. There are still a half dozen great carriers in the market that deserve your confidence. If you are in your forties to sixties, and still in reasonably good health there's a good chance they can tailor something to your needs." LTC Comment: Sound advice. ############################# 8/20/2013, “Boomers beware when caring for dying parents,” by Gwen Fitzgerald, USA Today Quote: "A recent legal ruling emerging from a courtroom in rural Pottsville, Pa., could impact tens of millions of Baby Boomers nationwide caring for their aging and dying parents. This relatively obscure court's decision could chill good end-of-life medical care and diminish legal options nationwide." LTC Comment: One more burden for boomer caregivers to carry. ############################# 8/20/2013, “CMS rule tightens hospital guidelines on granting inpatient status,” by Tim Mullaney, McKnight’s LTC News Quote: "The Centers for Medicare & Medicaid Services has issued a final rule on hospital inpatient status, which is likely to boost the number of seniors receiving Medicare coverage for skilled nursing services." LTC Comment: More Medicare money for nursing home care. With a $43 trillion unfunded liability, when does Medicare run out of money? ############################# 8/19/2013, “Obesity indeed increases seniors' risk of death, will be long-standing issue for LTC providers: study [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Prior studies also indicated that obesity is associated with a decreased mortality risk in seniors. However, the so-called ‘obesity paradox’ is based on studies that did not account for seniors living in nursing homes, assisted living communities or other facilities, Masters told the Los Angeles Times. He said his own research shows that mortality increases sharply as obese people age." LTC Comment: This finding comports better with common sense. ############################# 8/19/2013, “Protein change explains why pressure ulcers are 'not entirely preventable' among seniors, researchers say [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Elderly people's lack of protective skin proteins makes pressure ulcer prevention difficult, according to newly published research." LTC Comment: Yet if pressure ulcers develop even in spite of exemplary care, nursing home litigators are quick to sue. ############################# Updated, Friday, August 23, 2013, 1:28 PM (Eastern)Stone Mountain, Georgia— ############################# LTC BULLET: MEET THE GOOD MEDICAID LAWYERS LTC Comment: Sponsor a conference, get publicity, and send Steve Moses to address the “good Medicaid lawyers,” after this message: LTC BULLET: MEET THE GOOD MEDICAID LAWYERS LTC Comment: The American Association of Public Welfare Attorneys (AAPWA) has honored Steve Moses with an invitation to speak at its 46th Annual National Training and Continuing Education Conference. We seek a sponsor to support the conference and send Steve to the meeting in Newport, Rhode Island this November. Details follow at the end of this message. According to their invitation letter: “The American Association of Public Welfare Attorneys (AAPWA) is an organization of attorneys who represent state and local human services agencies, including most state Medicaid agencies.” In other words, these are the lawyers who protect state Medicaid programs from all kinds of legal challenges. Their letter continues: “As attorneys for state Medicaid agencies, we share the Center for LTC Reform’s goal of targeting scarce public resources to those most in need, and its concern with abuses of Medicaid eligibility rules.” Clearly, these are allies in our struggle to preserve Medicaid as a quality LTC safety net for people in need by diverting those who are financially able to early LTC planning and private payment alternatives. That’s the good news. Here’s the bad news: “I must warn you that we have no budget for speakers’ expenses. We have to rely on speakers’ own funding sources.” Not too big a surprise. Anyone fighting on behalf of Medicaid and the poor has trouble raising funds. Your Center for Long-Term Care Reform is no exception. But here’s the best news. The AAPWA will earmark a conference sponsorship contribution for Steve’s expenses. We estimate the cost for Steve to attend and present at the AAPWA’s 2013 conference would be approximately $2,000. That’s also the cost of a “Silver Sponsorship” of the meeting which comes with the following benefits:
You can find all the details and a “Sponsorship Registration Form” here: http://www.aphsa.org/conference/doc/2013/SponsorsAAPWA.PDF Calling all friends of the Center for LTC Reform. Can you help us with this special project? If so, fill out the sponsorship registration form here, submit it as instructed on the form, and let us know at the Center that you’re on board so that we can get your sponsorship earmarked for Steve’s expenses. We’ll recognize you for your support with an LTC Bullet sponsorship at no extra cost. Don’t feel left out if you can’t sponsor the conference officially. We’ll gladly accept special contributions to the Center in any amount to support this speaking engagement. Just send us an email with the subject line “Send Steve to the Medicaid Lawyers’ Podium.” Tell us the amount of your pledge and Damon will get in touch. Your contribution will be acknowledged (unless you ask to remain anonymous) in the LTC Bullets Steve authors to report on the meetings where he presents. Thanks as always for your support and encouragement. ############################# Updated, Monday, August 19, 2013, 12:38 PM (Eastern)Atlanta, Georgia— ############################# UPDATE ON STATE STUDIES AND LTC NEWS AND COMMENT LTC Comment: We’re experiencing interminable rain in Atlanta where I’m conducting the field work for our study of Medicaid and long-term care financing in Georgia. Interviews today with a state legislator at the Capitol, an expert on home and community-based care, and a nursing home association executive. In another week and a half, we’ll wrap up the site work in Georgia, head home and start writing the reports on Virginia, New Jersey and Georgia that are due by the end of September. ############################# 8/16/2013, “Reverse Mortgages Can Benefit Retirees, Both Wealthy and Not,” by Kelly Greene, Wall Street Journal Quote: "Reverse mortgages aren't just for people struggling to keep their homes anymore. The loans also can work for well-heeled retirees looking for a buffer to keep them from selling investments at the wrong time, according to academic researchers. And Congress last month gave a boost to the type of reverse mortgage that works best for that purpose." LTC Comment: Reverse mortgages could supplement income for people age 62+ so they can afford LTCI to protect all of their assets including home equity. Strong regulations against “cross selling” make it difficult, however, to use these products in tandem that way. ############################# 8/16/2013, “New Texas Medicaid Law May be Future of Life Settlements: A new horizon for seniors grappling with mounting healthcare costs [link],” by Stephen Terrell, Life & Health Advisor Quote: "Many people in this country are currently fighting a two-pronged battle between their serious medical conditions and mounting hospital bills. Texas state legislators recently made history by passing the country's first Medicaid life settlement law. Texas House Bill 2383, which enables residents to use the proceeds of a life settlement to help fund their long-term healthcare needs without it barring them from enrolling in Medicaid, was voted into law last month. The law also grants the authority to the state's Medicaid department to inform and educate residents about their option to cash in their life insurance policies through a life settlement plan. This is the beginning of a new future for the life settlement industry, originally founded to help individuals in deep financial straits, which is now once again assisting Americans overwhelmed by seemingly insurmountable healthcare costs." LTC Comment: Is it a proper role of government to compel private insurance carriers to pay life insurance benefits before the insured dies? ############################# 8/16/2013, “Lack of information prevents long-term care planning even for those with high incomes, SCAN report finds [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Among people earning more than $100,000 a year, only about half say they have planned financially for their long-term care needs, according to the report. And any planning usually does not involve long-term care insurance, which has been purchased by only 17% of this high earners group." LTC Comment: But why do most affluent people fail to seek information for LTC planning? Maybe because historically many have been able to ignore the risk, avoid the premiums, and end up on Medicaid while their heirs keep most of their money. ############################# 8/15/2013, “Who will plan for long-term care?,” by Allison Bell, LifeHealthPRO Quote: "Analysts at Langer Research Associates have published . . . findings in a report on LTC planning based on results from a recent telephone survey of 1,019 adults ages 40 and older. The SCAN Foundation, an organization created by SCAN Health Plan, commissioned the survey." LTC Comment: High income, well-educated people are more likely to buy LTCI. Not exactly earth-shaking news. ############################# 8/15/2013, “5 Tips on a Long-Term Care Plan for Your Cat,” by Jane A. Kelley, Catster Quote: "Almost every day I see cats surrendered to shelters because their owner died or had to go into long-term care, and nobody knew what to do with the cat. But illness and death don't just happen to old people: No matter how young and healthy you are, you need to have a plan to make sure your cat will be taken care of in case you become unable to do so." LTC Comment: See, the LTC market IS expanding. ############################# 8/15/2013, “Paying for elder care, without insurance,” by Matthew Heimer, WSJ MarketWatch Quote: "Going uncovered amounts to a calculated risk that may not be as reckless as it may sound. Some research suggests that the number of people who will face really big nursing-care costs is relatively small." LTC Comment: This is sloppy thinking that derives from corruption of the concept and principle of insurance. When the probability of an event occurring is high, it is by definition uninsurable. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. Otherwise, our car insurance could cover oil changes. ############################# 8/15/2013, “Long-term care insurer Genworth hints at higher prices,” by Mark Miller, Reuters Quote: "Policyholders, as it turned out, were smarter than the insurance companies thought. Once you buy one of these policies, it makes sense to hang on to it for dear life. Insurance companies have been forced to pay out more in claims than they expected. But newer policies are being written with more realistic lapse rate assumptions built into pricing from the start." LTC Comment: Live and learn in the private sector to survive. In the public sector, Social Security and Medicare go on making the original promises and many new ones with no hope of keeping them. Where are the regulators when you need them? ############################# 8/15/2013, “Do the Rich Benefit from Medicaid?,” by Don Redfoot, AARP Blog Quote: "Do the rich benefit from the welfare-based Medicaid program? Not according to much of the testimony presented at a recent hearing of the federal Commission on Long-Term Care." LTC Comment: Much more on this subject in Friday’s LTC Bullet here: “LTC Bullet: Do the Rich Benefit from Medicaid?” ############################# 8/15/2013, “How to Pay for Senior Care with Limited Resources: Troubleshooting Health-Care Woes [link],” by Chris Orestis, Life & Health Advisor Quote: "'Many people who need long-term care can't afford it, so they drop the [life insurance] policies they've been paying on for years in order to qualify for Medicaid. The life insurance companies profit from the fact that they get all those years of premiums and never have to pay out a death benefit.' Orestis, who's been lobbying state Legislatures - including Texas - to make the public aware of their legal right to use this option, says seniors can instead sell their policy for between 30 and 60 percent of its death benefit value. The money can be put into an irrevocable fund designated specifically for their care. He offers more tips for paying for a senior's health care: Don't go straight to Medicaid. If your first thought is skipping right to Medicaid, the government's health-care safety net for the very poor, then you may be heading for a trap. Once you have Medicaid paying the bills, you and your loved ones have little say in how you're cared for and by whom. This policy conversion option allows you to live in a place where you're happy and comfortable and it saves taxpayers millions of dollars every year. Also, with 30 percent of the Medicaid population consuming 87 percent of Medicaid dollars spent on long-term care services, more individuals will be forced to find their own resources to pay for those needs.” LTC Comment: Good for beneficiaries, Medicaid and providers. Not so good for life insurers. ############################# 8/15/2013, “National dementia care guidelines fall far short on ethics issues, researchers find [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Scotland's national guidelines ranked lowest, implicitly or explicitly addressing only 35% of ethical issues examined, while the United Kingdom as a whole ranked highest, addressing 91%. However, the United States scored highest with regard to recommendations on how to handle ethical issues, at 71%. Switzerland scored lowest in that group, at 10%." LTC Comment: The ethics of dementia care is an important and difficult subject. ############################# 8/14/2013, “Watch Out for Long-Term Care Policies That Will Cost You Double,” by Brian O'Connell, The Street Quote: "Data from the American Association for Long-Term Care Insurance says that huge price differentials by big insurance companies can nearly double what Americans are charged for long-term care insurance, which can cost hundreds of dollars a year." LTC Comment: Was that what you were intending to convey, Jesse? ############################# 8/13/2013, “Do your homework before buying long-term care,” by Clark Howard, Atlanta Journal Constitution Quote: "Long term care insurance is a smart decision for many people. It helps pay for long-term nursing home care or for health care assistance in your home when you get older. But far too few people choose to buy it." LTC Comment: I'm in Atlanta working on a study of Medicaid and LTC financing in Georgia. Kelly McCutcheon, president of the Georgia Public Policy Foundation (the study's sponsor) brought this article to my attention. He says "Clark Howard is a very well respected consumer advocate in Atlanta. He appears daily on the number one radio and TV station in Atlanta." ############################# 8/13/2013, “Baby boomers now the largest source of charity gifts,” by Heather Joslyn, The Christian Science Monitor Quote: "'Baby boomers are now the dominant source of income for most nonprofits,' says Mark Rovner, a principal at Sea Change Strategies and the study's primary researcher. Together with the generation born before 1946, he says, they are responsible for the vast majority of giving to charities. The study, which is based on self-reported data, found that the two groups together are responsible for nearly 70 percent of the estimated total annual giving to charities by individuals." LTC Comment: OK, so boomers and the "silent generation" have the dough, but they're giving it away instead of buying LTC insurance. Adding insult to injury, as long as they don't give away their money "for the purpose of qualifying for Medicaid" it doesn't even trigger a Medicaid transfer of assets penalty . . . not even if they give it away within five years of applying for Medicaid. ############################# 8/13/2013, “Better staffing means better care, new nursing home state rankings suggest [link],” by Tim Mullaney, McKnight’s LTC News Quote: "‘States whose nursing homes staffed at higher levels ranked far better than those with fewer staffing hours,’ said Brian Lee, executive director of FBC and former Florida long-term care ombudsman. This finding supports what many stakeholders have been saying for years, Lee noted." LTC Comment: Better staffing means better care? Well, yeah. But what allows better staffing? Obviously, adequate revenue, which is not forthcoming from most residents (who are on Medicaid) and is amply forthcoming from private payers (who pay half again as much as Medicaid, but make up only part of the difference.) ############################# 8/12/2013, “Poll: Blacks, Latinos Worry Over Long-Term Care Crisis,” by Bruce Chernof, MD, New American Media Quote: "African Americans and Latinos were especially worried. Well over half of blacks (57 percent) expressed concern about being able to pay for needed care, compared to 45 percent of Hispanics and 41 percent of whites. Also, half or more of African Americans and Latinos said they worry about becoming a burden on their families, in contrast to just over one in three whites. And almost half of blacks surveyed were concerned that they may leave debts to family related to long-term care, compared to just over one in four Hispanics and whites. The prospect of ending up in a nursing home proved somewhat more troubling for African Americans (57 percent) than for Hispanics (44 percent) and whites (40 percent)." LTC Comment: Apparently "denial" is stronger among whites than minorities. Interesting observation. ############################# 8/12/2013, “What's Keeping You Up at Night: Affording Medical Bills,” by Gail Buckner, FoxBusiness Quote: "Thirty-seven medical conditions meet
the definition of ‘critical illness,’ according to the
Life Insurance Association LTC Comment: Good national exposure for CI. ############################# 8/12/2013, “Connecticut rejects group LTCI rate change request,” by Allison Bell, LifeHealthPRO Quote: "The Connecticut Insurance Department has rejected efforts by John Hancock Life Insurance Company to increase rates on 1,800 long-term care insurance (LTCI) policies by an average of about 58.1 percent." LTC Comment: What if the real choice is whether or not Hancock can pay claims when they come due? Not letting them raise rates creates the same problem the government has caused with Social Security and Medicare—unfunded liabilities which cannot be met and will hurt millions. ############################# 8/12/2013, “Are We Ready For A Massive Aging Population?,” by Celeste Headlee, National Public Radio Quote: "America's population is aging at a rapid rate: 20 percent of the country will be 65 or older by the year 2050. Guest host Celeste Headlee talks with experts about how the aging population will affect the American landscape." LTC Comment: It's interesting that the age wave is finally getting heavy national media attention . . . now that the wave is about to crash and it may be too late to prepare. The same thing happened when America's educational system was totally unprepared for the tsunami of boomer babies reaching school age in the early 1950s. The aging challenge is even worse as we had 65 years to get ready, but didn't. Our country is famous for doing nothing until crises are upon us and this one is no exception. ############################# Updated, Friday, August 16, 2013, 10:03 PM (Eastern)Stone Mountain, Georgia— ############################# LTC BULLET: DO THE RICH BENEFIT FROM MEDICAID? LTC Comment: Biased reporting by AARP suggests the answer to the title question is “no,” but solider peer-reviewed scholarship says “yes.” Who’s right? After the ***news.***
*** PAUL FORTE, CEO of Long Term Care Partners, LLC, which runs the federal long-term care insurance program, has submitted a white paper to the LTC Commission titled “The American Long Term Care Insurance Program (ALTCIP): A New Public-Private Model for Financing and Delivering Long Term Care Services and Supports.” We’ll post it temporarily so you can find it here. Mr. Forte says: “This paper argues that a properly designed voluntary insurance program could work. The ALTCIP combines simplified benefits, streamlined administration, self-service portals, and sustainable price. Hundreds of thousands—even millions—of Americans could secure meaningful protection against potential future LTSS needs, thus reducing the number of people who will rely on Medicaid to cover LTSS, a major problem for federal and state government budgets alike.” Forte’s thoughtful paper is well worth the attention of the LTC Commissioners. *** *** MURRAY GORDON of Center-corporate-member MAGA Ltd. reports: “Out of tens of thousands of professionals nationwide who help consumers identify and purchase the best long term care insurance (LTCI) plans for their specific needs, two LTCI professionals in Riverwoods, IL. rank in the Top 10 nationally by the American Association for Long-Term Care Insurance (AALTCI). Peter R. Florek, vice president of MAGA Ltd., a family owned and operated insurance agency that focuses exclusively on LTCI, ranked 3rd for traditional and 3rd for asset based nationally on the AALTCI recently released 2013 sales achievement listing. MAGA president, Brian I. Gordon, ranked 6th for traditional nationally. The 12th annual awards program recognizes leading LTCI professionals working to meet the needs of consumers.” Congratulations, MAGA, Florek and Gordon! *** ############################# LTC BULLET: DO THE RICH BENEFIT FROM MEDICAID? LTC Comment: The obvious answer to that question is: “Of course not. Medicaid is welfare. You have to be poor to qualify. People must spend down their life’s savings for long-term care before Medicaid will help.” That’s what everyone has been taught. It’s what most of the popular media articles say. Even academics, who ought to know better, repeat the litany in their publications. It’s even what I believed many years ago. Just one problem. It isn’t true. Here’s the puzzle that got me started studying Medicaid and long-term care financing way back in 1982. I was a federal Medicaid State Representative in the Health Care Financing Administration’s Seattle Regional Office. My state was Oregon. During a routine state assessment I came across a program called Medicaid Estate Recoveries which purported to recover millions of dollars from the estates of deceased Medicaid recipients. That really got me thinking. See the problem? If Medicaid requires impoverishment, how could people qualify for the program, spend years in a nursing home at enormous expense to the state and federal governments, and when they died, a little state like Oregon recovered, back then $5 million, more like $20 million today, from their estates!? It didn’t compute, so I set out to study Medicaid long-term care financial eligibility. What I found three decades ago is still true today despite statutory measures (that I successfully advocated) to tighten eligibility rules. Income almost never interferes with Medicaid LTC eligibility unless an applicant’s income is higher than the cost of a private nursing home, $75,000 per year on average. Assets held in exempt form are practically unlimited: up to $802,000 of home equity goes uncounted, and with no limit at all, a business, a car, term life insurance, personal belongings, home furnishings, IRAs if they pay out a regular cash stream, and prepaid burial plans. Finally, if you still have too much money to qualify, cadres of Medicaid planners are eager to take thousands of dollars in fees to provide quick and easy artificial impoverishment. In other words, if middle class and affluent people were NOT benefiting from Medicaid, that would be the surprise. The burden of proof falls on those who claim Medicaid does not benefit the “rich.” A couple weeks ago, the federal LTC Commission heard testimony from several academics on this subject. Read it here. Unfortunately, the Commission’s Vice Chairman, Mark Warshawsky, who understands how Medicaid really works, was not present due to a death in the family. So a key questioner was missing who could have brought reason and understanding to the discussion. According to an article by Don Redfoot of AARP published yesterday, the argument about whether the rich benefit from Medicaid was resolved in favor of the deniers. Think maybe AARP is a little biased on the topic having advocated expanded government financing of LTC for decades? Read Redfoot’s article here and judge for yourself with the preceding and following content for context. He says “Do the rich benefit from the welfare-based Medicaid program? Not according to much of the testimony presented at a recent hearing of the federal Commission on Long-Term Care.” On what is that conclusion based? Ellen O’Brien testified that “There is little basis for the assertion that people with substantial incomes or assets are becoming eligible for Medicaid by improperly transferring their assets.” I’ve debunked such careless conclusions for many years. See for example here, and here. The strategy of researchers with an ideological bias who seek to obfuscate the issue is to focus only on asset transfers. Asset transfers are significant, but they aren’t the major problem. The major problem, as explained above, is that Medicaid’s basic LTC financial eligibility rules are so generous that most people don’t have to transfer assets to qualify. Simply buying exempt assets with otherwise countable resources will suffice. People with much more money can consult Medicaid planners who have many, more effective artificial impoverishment tools than asset transfers. Such tools include Medicaid-friendly annuities, reverse half-a-loaf strategies, life care contracts, systematically purchasing large exempt assets, special trusts, etc. But the obfuscators fixate on asset transfers as if showing the limited impact of a relatively minor Medicaid planning technique proved their case. The other argument against Medicaid benefits for the affluent came from Richard Johnson of the Urban Institute who presented data showing that most people who experience disabilities and need Medicaid assistance not only had lower incomes and assets at the time they needed assistance, but overwhelmingly also had relatively low incomes and assets during their peak earning years. Well, hello, some people on Medicaid are poor? What a surprise. The program is supposed to be a safety net for people in need. That fact says exactly nothing about the real tragedy that affluent people are consuming scarce public resources that should go exclusively to help the poor. Does this academic sleight of hand by ideological prestidigitators get on your nerves? Then have a look at the more serious presenters who testified the same day. Eric French, from the Federal Reserve Bank of Chicago, showed that rich people really do benefit from Medicaid . . . as much or more so than poor people. Jeffrey Brown of the University of Illinois summarized his research findings that between two-thirds and 90 percent of the market for private long-term care insurance is crowded out by the availability of Medicaid LTC benefits. Since poor people don’t buy LTCI, that means that well-heeled people are also failing to buy because of easy access to Medicaid after the insurable event occurs. According to the Redfoot piece: “Chairman Bruce Chernof said it best at the Commission hearing when he noted that he does not know anyone who wants to be on Medicaid, as Medicaid is a poverty program.” One hopes the Chairman is only naïve and not simply ignorant. Medicaid planners lure their clients with the promise that they’ll get great care on Medicaid because they can buy their way into the nicest facilities. How? By retaining “key money” so they can pay privately for awhile at rates half again as high as Medicaid’s. Financially starved LTC providers roll out the red carpet for private payers. Once in, the lawyer flips the switch, converts the client to Medicaid, and the facility is stuck with another welfare patient paying less than the cost of the care because state and federal laws prohibit expelling residents if their source of payment changes. Unfortunately, poor people don’t have “key money.” They’re stuck with whatever Medicaid can afford which has been described as “low cost care of uncertain quality.” That’s the net effect of Medicaid’s covering too many people who could, should and would have planned early and paid privately for long-term care if it were not for the perverse incentives in public policy that academic obfuscators hide and deny. Now they want the LTC Commission to double down on public financing of long-term care which caused the problem in the first place. Recent media stories indicate the LTC Commission has already prepared the first two chapters of its report. It’s hard at work on the final chapter which will include recommendations to Congress. We can only hope against hope that objectivity, clarity and reason will prevail. In the end, however, it likely won’t matter much anyway, because bigger fiscal issues are about to capture lawmakers’ attention as the fiscal cliff looms once again. ############################# Updated, Monday, August 12, 2013, 1:09 PM (Eastern)Atlanta, Georgia— ############################# FOURTEENTH ANNUAL INTERCOMPANY LTCI CONFERENCE AND LTC NEWS AND COMMENT LTC Comment: The Fourteenth Annual Intercompany LTCI Conference will take place March 16 to March 19, 2014 at the Rosen Centre Hotel in Orlando, Florida. Follow development of the agenda and watch for registration details in November here: WWW.ILTCIconf.org. If you want a booth in the exhibit hall, now’s the time to check with Jim Glickman at 818-867-2223 or Jim.Glickman@LifeCareAssurance.com. Here’s what the organizers have to say: “Highlights of the 14th Annual Intercompany Long Term Care Insurance Conference include • Keynote Speaker Chris Gardner, whose life was the basis for the book and movie The Pursuit of Happyness • 48+ Educational Sessions, featuring a high level of education and access to all the different components of the LTCI industry • Excellent mix of content with 100+ exceptionally qualified speakers • Plenty of time to network - meet and collaborate with more than 800 attendees and long-term care industry experts • Pre and Post Conference Opportunities: CLTC Master Class and SOA Professionalism Course • Connect with other professionals and learn about the industry's challenges. The 14th Annual Intercompany Long Term Care Insurance Conference also offers sponsorship opportunities and a large exhibitor space where companies have the opportunity to showcase and demonstrate their products and service offerings to the diverse group of attendees.” ############################# 8/10/2013, “Long-term Care Insurance Claim Payments to Quadruple,” by Jesse Slome, Kansas City InfoZine Quote: “The nation's long term care insurance companies are expected to pay $15 Billion annually to policyholders a decade from now and more than twice that amount in 2032 when today's 60 year olds reach their 80s.” LTC Comment: Dramatic numbers for the future as LTCI policies mature and claims increase. What happens after that depends on public policy regarding Medicaid and interest rates. ############################# 8/8/2013, “More Bad News for Long-Term Care Insurance: A Major Carrier Reassess the Business Amidst More Rate Hikes [link],” by Howard Gleckman, Forbes Quote: "Industry sources say [Genworth] could withdraw from the market if it does not win regulatory approval for new rate hikes on about 650,000 older, existing policies. A company spokesman said the firm also needed states to approve changes that would allow the company to sell policies that are more tightly underwritten and that offer shorter benefit periods, lower daily benefits, and other changes." LTC Comment: This author never misses a chance to pounce with glee on any sign of difficulty in the LTCI market. Yet he and his ilk are blind and silent regarding the government safety net's massively bigger problems. ############################# 8/8/2013, “Is critical-illness insurance worth the money?,” by Elizabeth O'Brien, WSJ MarketWatch Quote: "Now, more employers are offering a product called critical-illness insurance that’s designed to fill some coverage gaps for people with certain costly ailments. But is such insurance the right financial solution for boomers?" LTC Comment: Suitability is a good question to ask about financial products for individuals and families, but as it applies to broad groups like “boomers” the answer will always be “it depends.” ############################# 8/8/2013, “LTCI Watch: Bitterness, Opinion,” by Allison Bell, LifeHealthPRO Quote: "One reason you could make an argument that the federal government ought to consider trying to do something for private LTCI, at least send a postcard, is that the government is responsible for the low interest rates that are suffocating the private LTCI carriers (and the pension plans, and the Medicare Part A hospitalization plan trust fund.)" LTC Comment: Hear, hear! ############################# 8/8/2013, “As Resident Demographic Shifts, Assisted Living Adapts to Change,” by Alyssa Gerace, ALFA Update Quote: "As the assisted living resident demographic changes toward higher age and acuity, senior living providers are shifting care models with a clinical focus to accommodate emerging needs. A majority of assisted living residents are female, 85 or older, and need help with at least one activity of daily living (ADL), according to the CDC’s 2010 National Survey of Residential Care Facilities. Nearly 40% need help with three or more ADLs." LTC Comment: ALFs are accommodating higher acuity residents at the same time they are serving more and more Medicaid recipients. Higher care needs do not mix well with Medicaid’s lower reimbursements, a bitter lesson nursing homes learned the hard way. ############################# 8/7/2013, “Lawsuit Says CalPERS Misled Long-Term Care Policyholders,” California Healthline Quote: "On Tuesday, three law firms filed a lawsuit against CalPERS on behalf of more than 125,000 long-term care policyholders alleging that the pension fund misled beneficiaries by saying premium rates for such plans would be stable, the Sacramento Bee reports (Kasler/Ortiz, Sacramento Bee, 8/7)." LTC Comment: The sad saga of CalPERS’s foray into private LTCI continues. ############################# 8/7/2013, “Study Shows Reasons People Buy Long Term Care Insurance,” by Jesse Slome, ExpertClick Quote: "‘Planning for retirement or entering retirement was the primary motivator for 52.1 percent of buyers,’ explains Jesse Slome, executive director of the American Association for Long Term Care Insurance. ‘More than a third (34.7%) were influenced by an experience with a loved one who needed long-term care services.’" LTC Comment: Both “primary motivators” for buyers, i.e., retirement planning and LTC experience with a love one, are on the increase for many years ahead. ############################# 8/6/2013, “Critical illness cover turns 30 years old,” by Fiona Murphy, Mortgage Solutions Quote: "The insurance product initially called 'Dread Disease' was developed as Dr. Barnard witnessed first-hand the financial impact of illness on his patients. The original policy, brought to market by Crusader Life Insurance, covered four conditions: heart attack, cancer, stroke, and coronary artery surgery and was soon adopted across the world." LTC Comment: Dr. Marius Barnard, who invented critical illness insurance, is a brother of Dr. Christiaan Barnard who performed the first human-to-human heart transplant. ############################# 8/6/2013, “Live to 120? No thanks, many say in new survey,” by Sharon Jayson, USA Today Quote: "More than two-thirds (69%) of a nationally representative sample of 2,012 adults 18 and older say they'd like to live to somewhere between 79 and 100; the median ideal age is 90. That's about 11 years longer than the current U.S. average of 78.7 years (81 for women, 76.2 for men)." LTC Comment: Findings like these must reflect the experience boomers are going through now with their frail, chronically ill parents. ############################# 8/6/2013, “Leveen speaks to Parkersburg Rotary Club about insurance,” by Brett Dunlap, Parkersburg News and Sentinel Quote: "The possibility of long-term care is a topic many aging people are not prepared to discuss yet even though many from the baby-boom generation are beginning to reach the age of 65, a long-term care insurance expert told the Parkersburg Rotary Club Monday." LTC Comment: This article is about Center Regional Representative and clippings subscriber Honey Leveen of Houston, Texas. ############################# 8/5/2013, “Testimony for the Long Term Care Commission based on research by Mariacristina De Nardi: Federal Reserve Bank of Chicago and University College London; Eric French: Federal Reserve Bank of Chicago and University College London; and John Bailey Jones: SUNY-Albany [link].” Quote: “Rich people live longer. They do receive Medicaid, especially when really old. When rich people receive Medicaid transfers, they tend to be big.” LTC Comment: After these researchers published their peer-reviewed findings, I contacted them to explain how it can happen that well-to-do people qualify easily for Medicaid. We carried on an extended exchange of correspondence. Hopefully, Eric French's testimony before the LTC Commission opened some eyes. ############################# 8/5/2013, “The Digital LTCi Sale: Have You Gone Digital? Three Ways it Can Grow Your LTCi Sales Image [link],” by Douglas Hamm, Life & Health Advisor Quote: "If you think buying an ad in the yellow pages, sending postcards and direct mailers, or other traditional marketing methods sound a bit outdated, you're not alone. They may still be popular in the industry and have some value, but buyers of all ages are turning to the Internet to learn about financial products and make their purchases, according to LIMRA's 2013 Insurance Barometer Study, which found that the most important factors in actually purchasing insurance are related to knowledge, and consumers are filling this education gap online." LTC Comment: Online LTCI sales are coming on and some producers are having great success with tech savvy. ############################# 8/5/2013, “Emeritus will respond vigorously to 'sensationalized' Frontline documentary, company leaders say [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Emeritus did provide extensive information to the reporters, but 'they used almost none it,' Vice President of Product Development and Communications Karen Lucas told McKnight's. After being contacted in June 2012, Emeritus worked with the Frontline reporters in a 'cooperative and supportive way,' Lucas added. She said the report was 'sensationalized and lopsided' in tone and singled out Emeritus due to its status as the largest assisted living provider in the country." LTC Comment: LTCI people can understand Emeritus’s frustration having been the target themselves of many “sensationalized and lopsided” media stories. ############################# 8/5/2013, “LTC commission meets for marathon hearing, receives public comments,” by Tim Mullaney, McKnight’s LTC News Quote: "The Congressional Commission on Long-Term Care convened for its third hearing last week, focusing on how Medicare, Medicaid and long-term care insurance interact, and potential ways to strengthen these payment mechanisms." LTC Comment: We had some allies on these panels including Gary Alexander, formerly Rhode Island Office of Health and Human Services; Joseph Antos, American Enterprise Institute; Lane Kent, formerly Univita; Eric French, Federal Reserve Bank of Chicago and University; and Jeffrey Brown, University of Illinois. But the dominant thrust of testimony came from advocates of more public financing of LTC. ############################# 8/4/2013, “Long Term Care Insurance Association Director Appears on PBS,” PR.com Quote: "The executive director of the American Association for Long-Term Care Insurance appeared on PBS television’s Nightly Business Report yesterday as part of a three-part series exploring long term care." LTC Comment: Nice work, Jesse. ########################## Updated, Friday, August 9, 2013, 3:30 PM (Eastern)Stone Mountain, Georgia— ########################## LTC BULLET: LTCI UPDATE LTC Comment: Broker World magazine has published its annual long-term care insurance survey for 2013. Highlights after the ***news.*** *** DAMON’S BACK. Turns out he was a jury “alternate” meaning he had to sit for all the proceedings and testimony, but he’s excused during deliberation unless needed to replace one of the regular jurors. Welcome back, Damon. *** *** BACK ON SCHEDULE. And now that Damon has returned, we’ll try to get back on our regular publication schedule for LTC E-Alerts and LTC Bullets starting with today’s Bullet. *** *** IN THE MEANTIME, Steve’s in Atlanta, near the famous Stone Mountain, living in the Silver Bullet and starting the field work for our study of Medicaid and long-term care financing in Georgia. We’re working on this project under the auspices of the Georgia Public Policy Foundation (www.gppf.org.) More to come as the project progresses. *** ########################## LTC BULLET: LTCI UPDATE LTC Comment: Every year Broker World magazine publishes surveys of traditional and worksite long-term care insurance. The surveys’ authors are well known LTCI experts, Claude Thau, Dawn Helwig, and Allen Schmitz. We’ve culled a few highlights from this year’s surveys below. Check out all the details in the July and August issues of the magazine. Be sure to subscribe to Broker World if you haven’t already. It’s clear from the following data that the private long-term care insurance industry continues to face daunting challenges. On the other hand, it is equally true that private LTCI is playing a bigger and bigger role in financing extended care as its policies mature and claims increase. What the future holds is anyone’s guess, but a likely scenario is that publicly financed long-term care will face harder times, but pressure holding back LTCI will retrench. ########################## Excerpts from “2013 Long Term Care Insurance Survey,” Broker World, July, 2013
########################## Excerpts from 2013 Analysis of Worksite LTC Insurance, Broker World, August, 2013
########################## Updated Monday, August 5, 2013--
Seattle--
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LTCI Sales Achievement Awards Announced and LTC News and Comment
LTC Comment: With Damon on jury duty for the past two weeks, we fell behind on our weely LTC E-Alerts. Today we catch up with a longer-than-usual compendium of LTC news and analysis since mid-July. Enjoy. Jesse Slome at the American Association for Long-Term Care Insurance reports that "The complete listing of individual award recipients for the 2013 Long Term Care Insurance Sales Achievement Awards can be accessed via the Association’s website at www.aaltci.org/2013awards." The top-10 producers based on individual long term care insurance placed premium during 2012 are: 1. Todd Stein, San Francisco, CA 2. Mary Ann DeKing, Darien, IL 3. Peter Florek, Riverwoods, IL 4. Wayne Reynolds, Concord, OH 5. Susie Caspar, Dover, MA 6. Brian Gordon, Northbrook, IL 7. Steve Elliott, San Diego, CA 8 Richard Brief, Warren, NJ 9. Paul LeWinter, Miami, FL 10. Susan Sabella, Issaquah, WA Congratulations all! ########################## 8/2/2013, “How do we fix private LTCI?,” by Allison Bell, ProducersWeb.com Quote: "Should the Federal Commission on Long-Term Care say anything to Congress about private long-term care insurance (LTCI)? Some members of the commission were asking that question recently at a hearing on efforts to strengthen public and private support programs for people who need long-term care (LTC) services." LTC Comment: Predictably, the LTC Commission is drifting toward recommending an expansion of public LTC financing, exactly the strategy that caused the mess we’re in. ########################## 7/31/2013, “Genworth conducting 'deep review' of LTCI business,” by Allison Bell, LifeHealthPRO Quote: "Genworth Financial Inc. needs to improve the way it manages its long-term care insurance (LTCI) business, according to Thomas McInerney, the company's president. ‘We're conducting an intense, very broad and deep review of all aspects of our [long-term care] insurance business,’ McInerney said during the company's second-quarter earnings call." LTC Comment: All LTCI carriers are doing the same. One wishes public LTC financing programs would scrutinize their vulnerabilities and sustainability in the same way. ########################## 8/1/2013, “Planning for long-term care can have a big payout,” by Bertha Coombs, CNBC Quote: "Though the price was steep-$140 a month-she didn't hesitate, and paid $20,000 in premiums over 12 years. Now 85, Douglis has been collecting the benefit since 2010, when she moved into an assisted living facility. ‘I think more people should have it because they don't appreciate what's going to happen to them.’" LTC Comment: Welcome positive coverage. ########################## 7/30/2013, “How to Prepare to Financially Support Aging Parents,” by Philip Moeller, U.S.News & World Report Quote: "In taking the time to provide family care, MetLife said, working Americans lose an estimated $3 trillion in lifetime wages, with average losses of $324,044 for women and $283,716 for men. With these costs and other money issues in mind, MMI researchers put together 10 things to consider about the financial consequences of caregiving." LTC Comment: Buying LTCI for parents should be at the top of the list, but it isn’t on the list at all, whereas “Learn about Medicare and Medicaid” is. Go figure. ########################## 7/31/2013, “Book Review: Medicaid Planning: From A to Z,” ElderLawAnswers Quote: "Among other topics, the manual covers Medicaid’s medical, income and asset qualification rules; the uses of trusts; planning ideas for the home; post-DRA half-a-loaf strategies like gift and return gift and annuity; converting IRAs to an annuity; and the taxation of trusts, estates and gifts. The 2013 edition also includes a 40-page section exploring Medicaid planning and attorney professional ethics, with case studies and ethics resources." LTC Comment: "Medicaid planning and attorney professional ethics" is an oxymoron. ########################## 7/30/2013, “John Hancock National Study Finds Long-Term Care Costs Continue to Climb Across All Provider Options [link],” WSJ Market Watch Quote: "To understand how long-term care costs are trending over time, John Hancock calculated a five-year average based on a subset of common providers from our 2008 and 2011 Cost of Care Surveys and our 2011 and 2013 Cost of Care Surveys. These five-year average annual increases are summarized below: -- The 2013 average cost of a private nursing home room ($258 a day/ $94,170 annually) has risen an average 3.6 percent per year -- The 2013 average cost of a semi-private nursing home room ($227 a day/ $82,855 annually) has risen an average 3.6 percent per year -- The 2013 average cost for a month in an assisted living facility ($3,427 a month/ $41,124 annually) has risen an average 2.0 percent per year -- The 2013 average cost of adult day care ($71 a day/$18,460 annually) has risen an average of 1.6 percent per year -- The 2013 average cost for a home health aide ($19 hourly/$29,640 annually) has risen an average 1.3 percent per year" LTC Comment: Center for Long-Term Care Reform members can always find the latest “cost of care” surveys from all the companies that publish them as well as archives of past years’ versions in The Zone here. ########################## 7/30/2013, “Frontline, ProPublica slam assisted living sector in documentary airing tonight [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Loose regulations are endangering the growing number of assisted living residents in the United States, according to a new Frontline documentary that focuses on Emeritus Senior Living facilities. The program airs Tuesday at 10 P.M. EST, and is accompanied by a series of reports published this week on ProPublica." LTC Comment: We didn't start hearing about quality problems in assisted living until that industry started taking Medicaid residents. That's what ruined nursing homes which became dependent on Medicaid funding. Then the government ratcheted down reimbursement rates over time to hopelessly inadequate levels. Assisted living is following the same primrose path. Cost shifting from private payers will drive up private rates but won't make up the difference. ########################## 7/29/2013, “Optimistic Outlook For Long Term Care Insurance Companies Shared,” by Jesse Slome, ExpertClick Quote: "A rise of one percent in investment return on fixed interest instruments could generate an additional $100 million or more in annual revenue for insurance companies with blocks of long term care insurance." LTC Comment: Likewise increasing interest rates will wipe out government programs that give Americans a false sense of security about retirement income and health. Look for the coming fiscal crisis to unleash the market for private LTCI. ########################## 7/29/2013, “More Doctors Steer Clear of Medicare, Some Doctors Opt Out of Program, Frustrated With Payment Rates and Mounting Rules [link],” by Melinda Beck, Wall Street Journal Quote: "The number of doctors who opted out of Medicare last year, while a small proportion of the nation's health professionals, nearly tripled from three years earlier, according to the Centers for Medicare and Medicaid Services, the government agency that administers the program. Other doctors are limiting the number of Medicare patients they treat even if they don't formally opt out of the system." LTC Comment: The same trend plagues Medicaid and looks to increase as funding problems for the two government behemoths mount. ########################## 7/26/2013, “Regulators eye effects of LTCI rate increase,” by Allison Bell, LifeHealthPRO Quote: "State regulators are talking about just what kind of pain long-term care insurance (LTCI) companies should feel when they increase premiums on in-force policies. The Senior Issues Task Force at the National Association of Insurance Commissioners (NAIC) has been looking at the allocation of rate increase pain in a draft LTCI rate increase model bulletin." LTC Comment: Right, just what we need, more pain for private LTCI insurers while the public LTC programs skate unchallenged toward insolvency. ########################## 7/25/2013, “Government striving to get the word out on long-term care,” by Bonnie Kraham, Times Herald-Record Quote: "The best protection from long-term care costs is Plan A, long-term care insurance, which is private insurance which pays for home care, assisted living or nursing home costs without reliance on Medicaid rules or the need to 'spend down' assets to qualify for Medicaid. The U.S. Department of Health and Human Services is similarly hoping to remind families of the value of long-term care insurance. "If you don't have adequate long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT). After assets are in the MAPT for five years, they will not go to the nursing home and Medicaid will pay for nursing home costs. Even if you can only afford partial protection through long-term care insurance, you may also, in a hybrid approach, create the MAPT. This way you have the less expensive cost of home care provided for and, if you need the more expensive nursing home care, you would qualify for Medicaid benefits. This approach can reduce long-term care insurance premiums by up to one-half." LTC Comment: This is typical of modern-day Medicaid planning. Pay lip service to LTC insurance. You can't really afford it can you? Wink, wink. Then pivot to shifting the risk and cost to public welfare. ########################## 7/24/2013, “Long-Term Care Delivery Hobbled By 'Outrageous' Deficiencies,” by Cyril Tuohy, InsuranceNewsNet.com Quote: "Initial reports about the state of long-term care delivery in the U.S. paint a picture of a fractured, overlapping hodgepodge of services unevenly administered by states through federal insurance programs. In addition, much of the long-term care that gets to the elderly is unplanned, delivered with little structure and left to health aides laboring in the trenches for minimum wage, according to long-term care experts." LTC Comment: Government programs pay for most expensive long-term care and that quote describes exactly what they’re buying. Even private payers, who pay half again as much as Medicaid expends for care, can’t always avoid the deficiencies because the government counts on cost shifting from them to make up for shortfalls in public financing. It’s a house of cards about to fall. ########################## 7/24/2013, “Move Over Nursing Homes - There's Something Different,” by Ina Jaffe, National Public Radio Quote: "One thing just about everyone dreads as they age is the possibility of ending up in a nursing home. We all think we know what that's like: sharing a room with strangers, sitting slumped in a wheelchair all day, rigid schedules, bad smells. And for more than 1 million Americans, this is home. But there's an effort to change all that, and it's known as The Green House Project." LTC Comment: OK, great, but why did nursing homes become the dominant venue for LTC if they’re so bad? Because Medicaid made them virtually free in 1965 crowding out a private market for home and community-based care. America would have had “Green Houses” and many other better LTC solutions decades ago if government hadn’t made such alternatives economically infeasible. ########################## 7/22/2013, “Boomer Sex With Dementia Foreshadowed in Nursing Home,” by Bryan Gruley, Bloomberg Quote: "At 8:30 p.m. on Christmas Day 2009, nurse Tiffany Gourley was called to a room at the Windmill Manor nursing home in Coralville, Iowa. She found a 78-year-old male resident who had just had intercourse with an 87-year-old woman. The man, a former college professor, was divorced. The woman, a retired secretary, was married. Both had dementia. What followed illustrates one of the most complex and unexamined issues facing elderly care facilities as the Baby Boom generation enters old age: How to determine if residents with dementia have the mental capacity to consent to sex." LTC Comment: Whoever doubted that boomers, who ushered in “drugs, sex and rock ‘n’ roll,” would shake up LTC also? ########################## 7/19/2013, “Are You Overpaying for Your Parents' Care?,” by Kelly Greene, Wall Street Journal Quote: "A child's work is never done—especially when it comes to caring for an elderly parent. Time isn't the only cost. Families often spend a small fortune even before their loved ones check into a long-term-care facility." LTC Comment: A needful wake-up call. ########################## 7/19/2013, “Alzheimer's panel gets LTCI update: Low lapse rates, low interest rates [link],” by Allison Bell, LifeHealthPRO Quote: "Marc Cohen met with a combination of warm interest, confusion and skepticism today when he gave a federal Alzheimer's panel a talk on the state of private long-term care insurance (LTCI). "The panel, the Advisory Council on Alzheimer's Research, Care and Services is supposed to help the U.S. Department of Health and Human Services (HHS) coordinate a war against Alzheimer's disease and other forms of dementia." "'Sales today are below levels from the 1990s,' Cohen said. "Dozens of insurers have gotten out of the market, partly because they had a hard time making a profit, but partly because they decided that they could earn much higher returns from using the large amounts of capital needed to support an LTCI operation to write other products, Cohen said. "But LTCI carriers have paid about $35 billion in claims over the years, they've paid about 95 percent of the claims they've received, and the policies they've sold are covering about 70 percent of the cost of nursing home care and about 90 percent of the cost of home care for the insureds who've filed claims, Cohen said." LTC Comment: Capital migrates to its highest and best use. Public policy has substituted Medicaid and low interest rates for the free market in which a private LTCI market would flourish. ##########################
7/19/2013, “How Medicaid life settlements can help senior clients,” by Robin S. Weinberger and Peter N. Katz, LifeHealthPRO Quote: "There has been a great deal of news coverage about Medicaid life settlements since our article on that topic two months ago. During that time, Texas became the first state to enact such a law, and three more states — California, New Jersey and New York — have taken up consideration of Medicaid life settlements. Based on the inquiries and comments we have received regarding this news, there appears to be a need to review the practical implications of these laws." LTC Comment: This trend bears watching as life settlements are not a substitute for real LTCI protection. ########################## 7/18/2013, “Researcher: Set up ACOs that include long-term care,” by Allison Bell, LifeHealthPRO Quote: "Policymakers could set up a volunteer ‘Caregiver Corps’ that would show people how to provide care for their loved ones at home. Policymakers also could try encouraging communities to set up accountable care organizations (ACOs) that would coordinate long-term care (LTC) services and social support services as well as medical care. Joanne Lynn, director of the Altarum Center for Elder Care and Advanced Illness, gave those ideas for improving LTC service delivery Wednesday at the second meeting of the Federal Commission on Long-Term Care." LTC Comment: A "Peace Corps" for LTC? Add LTC to ObamaCare? Two meetings into their two remaining months and this is what the LTC Commission is hearing? Not hopeful. ########################## 7/18/2013, “Long-Term Care Commission seeking provider input,” by Ashley Carman, McKnight’s LTC News Quote: "The 15-member committee met to hear recommendations regarding the topic 'Populations in Need of LTSS and Service Delivery Issues' and worker issues. Experts from various medical facilities, universities and research centers spoke." LTC Comment: With its report due in less than two months, the LTC Commission had its second public meeting and posted a website: http://www.ltccommission.senate.gov/. ########################## 7/17/2013, “Costs of Long-Term Care Rise While Payment Options Narrow,” by Howard Gleckman, Forbes Quote: "It is a cruel paradox: As the cost of long-term care rises and the number of people needing it grows, traditional options for paying for these supports and services are narrowing." LTC Comment: It boggles the mind how one writer can get so much wrong so often. Is LTC insurance struggling? Yes. But that's because of easy Medicaid eligibility after the insurable event occurs and interest rates forced to zero--both are government policies and government's responsibility. Is home equity rarely used to pay for LTC? Yes. But that's because Medicaid exempts up to $802,000 worth of it. Is Medicaid bankrupt? Yes, because it DOES NOT require impoverishment and IS the dominant payer of expensive LTC not just for the poor but for the middle class and above also. As long as analysts misdiagnose the problem, the hope for a solution will elude them. ########################## 7/17/2013, “Selling LTCI online, part 1, Sales ideas,” by Margie Barrie, LifeHealthPRO Quote: "Selling online really works. I'm now doing it and loving it. Agreeing with me is Katie O'Rourke, the managing partner of California Long Term Care Insurance Services, and she agreed to provide some really helpful tips to agents just starting to sell online." LTC Comment: Online sales are the future as the social safety nets fray and people realize they need LTCI. ########################## 7/17/2013, “Rate of dementia has declined dramatically, but not in nursing homes, study finds [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Fewer people overall are going into care settings, but the prevalence of dementia within these facilities increased from 56% to 70% during the study period, the researchers found. Some Alzheimer's researchers in the United States have embraced these results, saying they are likely applicable to the U.S. population and show recent predictions about dementia rates may be too dire, The New York Times reported. However, other researchers expressed reservations, citing methodological concerns with the British study." LTC Comment: Interesting follow up to the following story from the New York Times' front page. ########################## 7/16/2013, “Dementia Rate Is Found to Drop Sharply, as Forecast,” by Gina Kolata, New York times Quote: "A new study has found that dementia rates among people 65 and older in England and Wales have plummeted by 25 percent over the past two decades, to 6.2 percent from 8.3 percent, a trend that researchers say is probably occurring across developed countries and that could have major social and economic implications for families and societies." LTC Comment: Great news if true, but dubious. ########################## 7/16/2013, “A crisis for the very old: They're outliving their assets. Nearly half of all Americans will die with practically no money at all. It's a problem that policymakers and financial services firms must address [link],” by Michael Hiltzik, Los Angeles Times Quote: "As if you haven't been scared enough by the projections that most Americans haven't saved enough to maintain their lifestyles as they enter retirement, here's something even more terrifying: Nearly half of all Americans will outlive their assets, dying with practically no money at all. Even more worrisome, that's true even among households that met the traditional standards for secure retirement income. Economic factors and changes in employer pensions and in economic reality have made it much harder to stretch income and assets so they last, especially as people live longer." LTC Comment: If you wanted another reason to doubt the social safety nets and take personal responsibility, this is it. ########################## 7/16/2013, “Where Are Baby Boomers Going to Live?,” by Tom Sightings, US News and World Report Quote: "There are many recommendations for the best places for baby boomers to retire, including the healthiest places, sunniest places, best places overseas, the most affordable places and the best places that you probably can't afford. But people are funny. Sometimes they just don't do what the pundits tell them to do. So where are baby boomers actually starting to retire? Here’s what the facts say about where boomers are headed over the next 10 or 15 years." LTC Comment: Turns out boomers are staying put or moving to be near grandchildren or relocating to less congested, more affordable areas or moving into senior living facilities. ########################## 7/16/2013, “Nursing home residents are allowed to designate organizations as authorized representatives for Medicaid enrollment, final rule affirms [link],” by Tim Mullaney, McKnight’s LTC News Quote: "After posting a proposed version of the regulation, CMS received 'a number of comments' addressing who may serve as an authorized representative. Some commenters called for organizations to be disallowed altogether or for states to decide whether organizations can serve as representatives, in the interest of better accountability and transparency." LTC Comment: Lawyers and their para-legals frequently fill out Medicaid LTC applications for their affluent clients. Now the door is open for "organizations" to file on behalf of individuals. Which organizations and what accountability? ########################## 7/15/2013, “Prudential Group Insurance Offers Critical Illness Coverage Nationwide [link],” Daily Finance Quote: "Prudential Group Insurance, a business of Prudential Financial, Inc. (NYS: PRU) , today announced the addition of Critical Illness insurance to its suite of products available through the workplace." LTC Comment: CI grows. ########################## 7/1/2013, “Many workers fear critical illness more than death,” by Warren S. Hersch, LifeHealthPRO Quote: "When asked to identify their greatest concern in case of a critical illness, 47 percent of survey participants named 'finances.' That's a significantly higher percentage than the third (29 percent) who flagged 'dying' or the fifth (22 percent) who cited 'the emotional burden.' The report adds that middle-aged workers ages 40 to 50 are twice as likely to be more concerned with finances than with dying." LTC Comment: That could be why CI grows. ##########################
7/12/2013, “Rules for Reverse Mortgages May Become More Restrictive,” by Tara Siegel Bernard, New York Times Quote: "Because of the turmoil in the housing market and because many borrowers in the program didn't have enough money to pay their property taxes and homeowners insurance over the long term, the F.H.A. wants to require borrowers to undergo a financial assessment. It may also factor in borrowers' credit scores, something it has not done in the past." LTC Comment: Home equity will fund LTC someday after Medicaid can no longer exempt up to $802,000 while paying for most expensive extended care. That is, it will if there is any home equity left when the time comes. ############################# Updated, Friday, August 2, 2013, 10:55 AM (Pacific)Seattle— ############################# LTC BULLET: THE INDEX OF LONG-TERM CARE VULNERABILIT LTC Comment: Is America’s LTC services and financing system sustainable? We propose a way to measure LTC vulnerability state by state, after the ***news.***
*** MISS US? For the past couple weeks, you’ve heard a little less from the Center for LTC Reform. We’ve skipped an LTC E-Alert or two and this is our first LTC Bullet in two weeks. That’s because Center VP Damon, who edits, formats, posts and sends all our publications, is doing his civic duty, serving on a jury for a trial expected to last three weeks. Center premium members ($250 per year and above) continue to receive our “clippings” service uninterrupted because those links to key articles and reports come directly from Steve’s laptop wherever he is. We’ll endeavor to give you the best possible service while Damon’s jury duty proceeds. In the meantime, we very much appreciate your patience and support. *** *** ON THE ROAD AGAIN., Have you watched our datelines from recent publications? What do Alpine, Texas, New York City, Cream Ridge, New Jersey, and Richmond, Virginia have in common? They’re locations from which Steve Moses has reported since May. Steve’s traveling in the Silver Bullet of Long-Term Care again. “Living on site enables me to spend more time at each of our three study states,” he says. “That means I can interview more people and get more documentary evidence to support our analysis and recommendations.” Stay tuned for Steve’s LTC Embed reports from the long-term care policy front in Georgia, our next study state. *** *** SPEAKING OF OUR CLIPPING SERVICE . . . The Center for Long-Term Care Reform’s “clipping service” is the best way to stay abreast of critical professional news. Don’t waste your valuable time and effort searching the internet and reading a lot of chaff just to locate what you really need to know. Steve Moses has to do that anyway and he’ll save you the trouble, send you an average of three key items to review per day, and provide a representative quote and a link to the source so you can dig deeper if you wish. Premium members of the Center and higher ($250+ per year) receive our clippings at no extra charge. Corporate members receive one complimentary clipping service subscription upon request and are eligible for additional subscriptions at a discounted rate. For details, contact Damon at 206-283-7036 or damon@centerltc.com. *** ############################# LTC BULLET: THE INDEX OF LONG-TERM CARE VULNERABILITY LTC Comment: Your Center for Long-Term Care Reform set out in May cross country toward the East (in the Silver Bullet) to conduct three state-level studies of Medicaid and long-term care financing. Target states are Virginia, New Jersey and Georgia. We’ve completed our field work in the first two and I’m headed to Atlanta next. But there’s a problem. The Affordable Care Act, aka ObamaCare, has a provision in it called “maintenance of effort” (MOE), which prevents state Medicaid programs from tightening their LTC financial eligibility rules. Targeting Medicaid to those most in need while diverting the middle class and affluent toward private financing alternatives should be states’ most important LTC priority. Unfortunately, the MOE rule prevents states from implementing the critically needed corrective actions we’d likely recommend. Furthermore, most state Medicaid programs aren’t cutting back on growing Medicaid expenditures. They’re doubling down. Initiatives to make Medicaid more attractive by “rebalancing” from nursing homes to home care are widespread. Efforts to shift recipients—even the high-risk, high-cost Medicaid/Medicare “dual eligibles”—into care managed by giant corporations are nearly universal. At the same time, most state budgets remain over-stressed, pinched most of all by growing Medicaid expenditures. In the meantime, a huge age wave is rushing toward state Medicaid programs which are unprepared and failing to plan adequately for it. When the flood of frail and infirm boomers starts to hit, what will happen? Which states are more prepared? Which less? What are the key factors to consider? Can the current public programs such as Medicaid and Medicare survive as the dominant LTC payers? What is the potential for private financing alternatives like LTC insurance and home equity conversion? These are some of the questions we’ve set out to ask and answer in a new “Index of LTC Vulnerability.” We’re still in the roughest draft phase of developing the index. Your thoughts and suggestions are welcome. Here’s an outline of the top line factors we’re beginning to consider for evaluating a state’s ability to sustain its LTC services and financing system. Think of it this way. How would your state score if it were ranked on each of the following factors? The Index of Long-Term Care Vulnerability
a. Measures of state economic potential: i. Rich States, Poor States ranks states on economic competitiveness. ii. Cato’s Fiscal Policy Report Card ranks state governors on fiscal policy b. State budget shortfalls measure current fiscal duress
a. Growth in 85+ population b. People age 65+ with disabilities, 2010 c. Alzheimer’s onslaught
a. Residents with dementia, 2010 b. Nursing facility residents with low care needs, 2008 c. Quality & Oversight of Nursing Facilities
a. Expenditure trends i. Overall ii. Percent of state budget for Medicaid: Distribution of State General Fund Expenditures (in millions) iii. Medicaid LTC spending for older people and adults with physical disabilities (millions) iv. Medicaid nursing facility spending (millions) v. Medicaid HCBS (home and community-based services) spending for older people and adults with physical disabilities (millions) vi. Medicaid HCBS as a % of LTC spending, for older people and adults with physical disabilities b. FMAP (Federal Medical Assistance Percentage): the percent of Medicaid expenditures paid by the federal government c. Medicaid Expansion under ACA? States that expand Medicaid under ObamaCare are vulnerable to higher future costs. d. Medicaid LTC Eligibility and Medicaid Planning: how generous are the states Medicaid LTC financial eligibility rules? See our state-level LTC studies. e. Low reimbursement vulnerability: How much below the cost of care are the state’s Medicaid reimbursement rates? See Eljay Medicaid Shortfalls Report. f. Dual eligibles vulnerability: See Briefing Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the “Doc Fix" -- (PDF for print) g. Rebalancing vulnerability: the more states rebalance from nursing home care (which most people will avoid) to home care (which most people want), the more vulnerable they are to increased utilization and costs. See Briefing Paper #4: Rebalancing Long-Term Care -- (PDF for print) i. Family caregivers; economic value of family caregivers likely to decline as Medicaid HCBS expands h. Managed care vulnerability: advocates warn of impact on . . . i. Access ii. Quality iii. Independence
a. Spend down lack: little spend down in lenient LTC financial eligibility programs b. Estate recovery lack: few states enforce estate recovery strongly: See Maximizing Non-Tax Revenue from Estate Recoveries c. Loss of home equity for LTC financing: Medicaid exempts up to $802,000 d. Long-term care insurance level i. LTCI market penetration? ii. LTC partnership? iii. LTCI tax incentives?
a. Dependency on “provider taxes” used to leverage up FMAP b. Social Security role in sustaining Medicaid c. Medicare role in sustaining Medicaid For now, “The Index of Long-Term Care Vulnerability” is just an outline. We plan to flesh it out with measureable ranking factors and apply the index to each of the states in our three current studies. After that a new goal will be to apply the index to all states as a means to warn those with the lowest scores of their risk and to recommend ways for them to sustain their long-term care social safety nets in the future. ############################# Updated, Friday, July 19, 2013, 12:45 PM (Eastern)New York, New York— ############################# LTC BULLET: MEDICAID SPEND DOWN THAT ISN’T AND WHY IT MATTERS LTC Comment: Claiming “transitions” to Medicaid are evidence of catastrophic LTC asset “spend down” misrepresents the truth and should be publicly recanted. Who, what, when, where and why, after the ***news.*** *** WORK ‘TIL YOU DROP to avoid dementia? "'For each additional year of work, the risk of getting dementia is reduced by 3.2 percent,' said Carole Dufouil, a scientist at INSERM, the French government's health research agency. . . . To rule out the possibility that mental decline may have led people to retire earlier, researchers did analyses that eliminated people who developed dementia within 5 years of retirement, and within 10 years of it." Read the AP story here. *** *** Due to Damon getting selected for jury duty, your Center for Long-Term Care Reform will take a brief hiatus from publishing next week. But don’t worry: there are thousands of publications for you to read online at www.centerltc.com. We’ll be back soon. *** *** FORBES COLUMNIST WRONG AGAIN. In “Costs of Long-Term Care Rise While Payment Options Narrow,” Howard Gleckman states “Traditional private long-term care insurance is largely disappearing from the marketplace. Reverse mortgages, already something of a niche product, are likely to become harder to get–especially for those facing severe economic hardship. Medicaid, the insurer of last resort for those who impoverish themselves, faces growing financial pressures. And personal savings are falling behind the costs of retirement.” LTC Comment: It boggles the mind how one writer can get so much so wrong so often. Is LTC insurance struggling? Yes. But that's because of easy Medicaid eligibility after the insurable event occurs and near-zero interest rates--both are government policies and government's responsibility. Is home equity rarely used to pay for LTC? Yes. But that's because Medicaid exempts up to $802,000 worth of it. Is Medicaid bankrupt? Yes, because it DOES NOT require impoverishment and is the dominant payer of expensive LTC not just for the poor but for the middle class and above also. As long as analysts misdiagnose the problem, any hope for a solution will elude them. *** *** DOUBT THE ARGUMENT in today’s LTC Bullet? Here’s where you’ll find the evidence adduced and the argument articulated in more detail: “How to Fix Long-Term Care.” *** ############################# LTC BULLET: MEDICAID SPEND DOWN THAT ISN’T AND WHY IT MATTERS LTC Comment: Does Medicaid long-term care spend down catastrophically impoverish wide swaths of the American public? Do we need government to swoop in and “solve” the problem as it tried to do for retirement income (Social Security—unfunded by $21 trillion) and acute elder health care (Medicare—unfunded by $43 trillion)? That’s what many analysts, public officials, legislators and reporters believe. Their arguments and advocacy hang on the assumption that Medicaid really does require impoverishment. But anyone who understands Medicaid LTC eligibility knows that Medicaid spend down is a myth. Income rarely obstructs eligibility because Medicaid deducts private LTC and other medical costs from income before applying its income test. Assets are not a problem for most middle class people because exempt resources are virtually unlimited and countable assets are easily converted to exempt status. Affluent people with income and assets above these generous levels hire Medicaid planners to make their wealth disappear prematurely into the hands of premature heirs. There is no empirical evidence of widespread Medicaid LTC spend down. Every time the usual suspects, i.e., researchers pushing for more government financing of LTC, try to prove Medicaid spend down devastates huge numbers of people, they come up short. They tried in the late 1980s and early 1990s and proved the opposite. They found that only 15% to 20% of people in Medicaid long-term care started as private payers and converted to Medicaid. The rest were eligible for Medicaid from the start. Furthermore, these researchers didn’t bother to ask whether the few people who converted to Medicaid did so by actually spending money on their health or long-term care. Maybe they used countable assets to purchase exempt resources or hired a Medicaid planner. Who knows? They didn’t ask. As low as the percentage of people who transitioned to Medicaid was, the researchers assumed without evidence that they spent down to qualify. Today, we see another example of this intellectual sleight of hand regarding Medicaid spend down. Josh Wiener of RTI International and his co-authors published articles recently that purport to prove Medicaid spend down is devastating large numbers of people. Read those articles here and here. They’re titled “Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform” and “Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy,” respectively. Do you get the idea from those titles, not to mention the articles’ content, that they have something to do with spending down money on long-term care before qualifying for Medicaid? That would be a reasonable assumption, but it would be wrong. What these papers call “spend down” is nothing more than “transition” from non-Medicaid status to Medicaid eligibility. Neither the articles nor the research they report contain any measurement whatever of money actually spent for health care, long-term care or anything else. I pointed this fact out when I served on an American Enterprise Institute panel recently with Dr. Wiener. (Watch C-Span coverage here.) Evidently, he took notice. He titled a recent presentation on the same research “What the Long-Term Care Commission Needs to Know about Transitions to Medicaid.” Note the change: “transitions,” not “spend down.” Check out slides from that recent presentation to the DC-based LTC Discussion Group here. You’ll find both terms (spend down and transitions) used interchangeably, so we haven’t carried the day completely yet, but the change from misrepresenting the facts to presenting them accurately is at least underway. Why does this matter? Consider some of the claims made in that presentation to the LTC Discussion Group last week. (NB: I attended that meeting, but I cannot report on what was said because the Group’s policy embargoes reportage in order to encourage presenters to speak candidly. I do have permission, however, to reference the slides which are in the public domain here.) For example: Slide #3: “High cost of long-term services and supports results in routine catastrophic out-of-pocket costs” and “People who have been independent all of their lives are impoverished and must depend on welfare” LTC Comment: Oh? Where’s the evidence? There is none. Wiener cites the high cost of nursing home and home care, but only assumes people are spending their own money for such services. The facts are that private-pay nursing home care is almost extinct; Medicare pays for most home care; and other assisted living and home care expenses are paid mostly from income, not assets. See “LTC Bullet: So What if the Government Pays for Most Long-Term Care, 2011 Data Update [link].” Slide #4: “Study goals . . . Track transitions to Medicaid -- Not Medicaid spend down in technical sense, which relates to depletion of assets.” LTC Comment: Aha! There’s the confession finally. Despite insisting that catastrophic out-of-pocket costs routinely impoverish people who were independent all their lives making them dependent on welfare, this research has nothing to say about “depletion of assets.” So why imply and insist that it does? The only reason is to advance the ideologically biased objective to expand public financing of LTC and curtail private financing alternatives. Slide #15: “Policy Implications . . . Medicaid spend down deserves to be higher on LTSS reform agenda” LTC Comment: Well, yeah! I couldn’t agree more. But how about actually studying spend down instead of transitions? How about analyzing actual expenditures for long-term care instead of pretending that everyone who transitions to Medicaid had to do so by spending down assets? How about looking at the Medicaid financial eligibility rules that allow people with substantial income and assets to qualify? How about considering the vast literature on Medicaid planning? Blank out! Slide #16: “Policy Implications . . . Few people who transition to Medicaid are likely to be able to afford private LTC insurance without large subsidy” LTC Comment: This research proves nothing of the kind. It excludes “IRAs.” It does not identify actual spend down. It completely ignores the myriad ways people can shelter or divest assets. It does not consider the fact that people could and would buy LTC insurance when they’re younger and it’s less expensive if it were not for the perverse incentive to ignore LTC risk and cost created by easy access to Medicaid LTC after the insurable event occurs. Unless and until the research community stops obfuscating and misrepresenting the reality of Medicaid LTC eligibility, it’s unlikely the LTC Commission or anyone else will make much progress toward solving the LTC financing problem. We know Medicaid LTC eligibility does not require significant asset spend down. Why pretend that it does? We know from Brown and Finkelstein that Medicaid crowds out two-thirds to 90% of the potential market for private LTC insurance. Why pretend it doesn’t? We know from the Chicago Fed that affluent people gain as many or more benefits from Medicaid LTC as the poor. Why ignore such facts? The only explanation I discern is that researchers who hide from the facts are viscerally opposed to private market-based solutions. They cling to the same government-based interventions that created the problems of poor access, low quality, stingy reimbursement, institutional bias and excessive cost in the first place. They bend over backwards to force facts into their models instead of building accurate explanations from evidence. Consequently, they’re exacerbating our long-term care problems, not contributing to their solution. ############################# Updated, Monday, July 15, 2013, 12:40 PM (Eastern)New York, New York— ############################# O’CARE HEADED FOR THE GARAGE AND LTC NEWS AND COMMENT
LTC Comment: News about health reform implementation seems to be dominating and crowding out other news. Hence sparse clippings on LTC lately. We don't usually cover the day-to-day battles over "ObamaCare," but this cartoon pretty much sums it up. Readers may be ready for a little humor at this stage: http://www.kaiserhealthnews.org/Cartoons/2013/July/Fixer-Upper.aspx. *** AMERICAN INDEPENDENT MARKETING has announced a series of webinars for LTC specialists. Check out a list and calendar here: http://whyaim.com/news-events/. Topics include “LTC Multi-Life,” “American General CI Product,” “Medicare Supplements,” “Innovative LTCI Plan Designs,” and many others in July and coming months. Note that Steve Moses will be a guest speaker for the July 30 webinar with an update on the federal Long-Term Care Commission. *** ############################# 7/14/2013, “Have 'The Talk' With Mom and Dad About Their Finances; Get over the awkward feelings and start the conversations [link],” by Tom Lauricella, Wall Street Journal Quote: "We are always our parents' children. That's especially the case when it comes time to talk to them about their finances and planning. When an older generation starts needing help, the role reversal can be difficult for all to stomach. But it's crucial to get over the awkward feelings, and have the important conversations ahead of time." LTC Comment: More talk about the “The Talk” below. ############################# 7/12/2013, “Can critical illness sellers be navigators?,” by Allison Bell, LifeHealthPRO Quote: "The Obama administration has come up with a new batch of rules for the people who are supposed to help consumers and employers use the Patient Protection and Affordable Care Act (PPACA) health insurance exchange program. In the new final rule, ‘Patient Protection and Affordable Care Act; Exchange Functions: Standards for Navigators and Non-Navigator Assistance Personnel; Consumer Assistance Tools and Programs of an Exchange and Certified Application Counselors’ (CMS-9955-F), HHS sets rules for navigators -- independent PPACA exchange ombudsmen." LTC Comment: What a tangled web they weave. ############################# 7/11/2013, “In Grandmother's Alzheimer's, Another Lesson in Family,” by Jeanine Grimaldi, New York Times Quote: "My grandmother is one of more than five million Americans who have Alzheimer's disease. Sometimes these patients experience sun-downing, a period of increased confusion and restlessness toward the end of the day, and my grandmother was having one of these episodes. It is hard to know how to handle these situations, but it is best to have family around because patients can say upsetting things or even become physical." LTC Comment: As the Age Wave crests, these lessons are touching more people faster and a perfect storm of LTC is coming. ############################# 7/11/2013, “Making Peace with the End of Life,” by Susan Ann Darley, Huffington Post Quote: "As a society, we are now confronted with complex end-of-life challenges. Personal financial concerns, soaring medical costs, extension and quality of life issues, loss of independence and over-medicating, to name a few. And the recession's lingering aftermath is affecting both the elderly and the young dramatically." LTC Comment: Get used to it. Ironically, it won’t get better until government stops trying to solve the problem by taxing everyone to subsidize irresponsibility. ############################# 7/11/2013, “British health official: Cure for dementia could come by 2020,” by Ashley Carman, McKnight’s LTC News Quote: "Advances in genetics and pharmaceuticals could lead to a cure for dementia by 2020, according to United Kingdom Secretary of Health Jeremy Hunt." LTC Comment: Optimistic predictions like this one may further de-sensitize the public to real LTC risk. ############################# 7/10/2013, “The new solution for coping with critical illness,” by Kenneth J. Smith, LifeHealthPRO Quote: "The question of protecting our clients in the event of cancer, heart attack and stroke is the same as a generation ago, but now the answer is different. Today, the answer is both life insurance and critical illness protection. With the advent of critical illness insurance, there is now financial relief to aid patients and their families who are coping with recovery. Yet many people today aren't even aware that critical illness protection exists." LTC Comment: CI advances. ############################# 7/10/2013, “Unable to Cope, Unwilling to Accept Aid,” by Judith Graham, New York Times Quote: "It is a surprisingly common problem in older adults; self-neglect is believed to account for nearly 40 percent of all cases of abuse and neglect in the elderly. . . . Once, elderly adults of this sort were considered eccentric or alarmingly idiosyncratic. Today, researchers believe they have underlying medical or mental health issues — depression, dementia and delirium top the list — that compromise their ability to function and care for themselves, according to a recent panel sponsored by the Institute of Medicine." LTC Comment: It's hard to imagine anyone who has planned ahead for long-term care ever ending up like the examples in this column. But it isn't hard to understand at all how normal, middle-class, otherwise responsible people who don't plan for LTC might end up alone, without caregivers, demented, and behaving "eccentrically.” ----------------- 7/9/2013, “When to Buy Long-Term Care Insurance,” by Dave Ramsey, FOXBusiness Quote: "My advice, Toni, is to buy long-term care insurance. I believe in having this type of coverage, even if you can afford to pay for care out of pocket. It takes a lot of stress and worry out of growing older.” LTC Comment: Good advice but later in the article he suggests waiting until age 60 to buy, not such good advice. ############################# 7/9/2013, “Column: Long-term care clock ticking for U.S. Congress,” by Mark Miller, Forbes Quote: "Eighty-four days and counting. That's the time remaining that a new Congressional commission has to come up with solutions for one of the country's most vexing problems: how to properly fund long-term care." LTC Comment: I've corresponded with the LTC Commission Vice-Clair to recommend potential witnesses and have been assured that my name will be put forward also. ############################# 7/9/2013, “Financial Disconnect Among Seniors A Harsh Reality Seven in 10 Have Difficulty Discussing Finances, Aging [link],” Life & Health Advisor Quote: "Nearly every family in America has dealt with mental aging issues, from someone forgetting to pay a bill to experiencing the devastating fallout from Alzheimer's disease. Yet, despite the vivid reminders of what happens as we age, many avoid talking to their children and families about planning for what they hope will never happen. A survey by the National Endowment for Financial Education(r) (NEFE(r)) and conducted online by Harris Interactive in November 2012 among 2,059 U.S. adults, finds that seven in 10 say major barriers are preventing their families from openly communicating about who will make financial decisions on behalf of an aging family member if they become unable to." LTC Comment: Expect many more stories like this one about “The Talk” adult children should have with their parents about finances and aging. ############################# 7/9/2013, “Reading and writing later in life wards off dementia, research says,” by Ashley Carman, McKnight’s LTC News Quote: "Nearly 300 older adults were given annual memory and thinking tests for about six years, or up until their deaths, which averaged out at around age 89. The adults also answered questions about whether they read, wrote and participated in other mentally stimulating activities during childhood, adolescence, middle age and at their current age. Once they died, researchers examined their brains for physical signs of dementia, such as lesions, plaques and tangles. Participants who stimulated their minds throughout showed less tangible signs of memory decline than those who did not, the researchers found." LTC Comment: Is this cause or correlation? Isn't it just as likely that people who read and write less in old age do so because they're experiencing early signs of dementia? ############################# 7/8/2013, “A downside of living longer: Oldest often disabled in last months,” by Eryn Brown, Los Angeles Times Quote: "Don't expect old age to be all golf and cruises: As Americans live longer and longer, more of us should expect to suffer some sort of independence-threatening disability in the final phase of life, two new studies published online Monday suggest." LTC Comment: Very disturbing wake up call that all Americans should heed: "The older the subject was when he or she died, the more likely he or she was to wind up disabled in activities of daily living in the last two years of life -- needing help with at least one of six activities: dressing, bathing, eating, getting in and out of bed, walking across a room or using the toilet. The team wrote that half the people who die at 90 or older are disabled two years before their death; the prevalence of disability in people 70 or younger at the time of death was at least 35% lower than that of the oldest in the study, at all points in the final two years of life.". ############################# 7/8/2013, “Are We Underestimating How Much Help Aging Parents Need At Home?,” by Carolyn Rosenblatt, Forbes Quote: "Long term care insurance is the only private benefit that covers home help with activities of daily living, the kind of help most elders need. But most people in the U.S. don’t have it. The Congressional Budget Office report cites statistics from America’s Health Insurance Plans, Who Buys Long-Term Care Insurance in 2010–2011 (report prepared by LifePlans, March 012), www.ahip.org/ WhoBuysLTCInsurance2010-2011/. Among the adult U.S. population only about 3 percent had LTC insurance in 2011." LTC Comment: Efforts to rebalance Medicaid from institutional to home care will not survive the coming Age Wave, but are the main impediment to private financing alternatives like LTC insurance and home equity conversion. ############################# 7/8/2013, “As U.S. Population Ages, ER Visits Will Lengthen And hospitalizations stemming from these visits will rise, study predicts [link],” HealthDay Quote: "The researchers were surprised to find their analysis showed that the number of ER visits would increase at the same rate -- not higher -- as the population increased. However, the length of time that patients spend in ERs will rise 10 percent faster than population growth, and hospital admissions from the ER will rise 23 percent faster." LTC Comment: Ominous. ############################# 7/8/2013, “'Scary' front-page story gave scant attention to benefits of long-term care insurance, industry group says,” McKnight’s LTC News Quote: "Long-term care insurance has benefited policyholders more than a recent Wall Street Journal front-page story indicates, according to the nation's largest LTC insurance trade group." LTC Comment: Jesse Slome and AALTCI fighting the good fight. ############################# Updated, Friday, July 12, 2013, 12:56 PM (Eastern)Cream Ridge, New Jersey— ############################# LTC BULLET: WISCONSIN TACKLES MEDICAID PLANNING LTC Comment: Easy access to Medicaid LTC benefits after care is needed and without spend down or estate recovery overloads the safety net and minimizes responsible LTC planning. Wisconsin is trying to fix that problem, but Medicaid planners object, after the ***news.*** *** AMERICAN INDEPENDENT MARKETING has announced a series of webinars for LTC specialists. Check out a list and calendar here: http://whyaim.com/news-events/. Topics include “LTC Multi-Life,” “American General CI Product,” “Medicare Supplements,” “Innovative LTCI Plan Designs,” and many others in July and coming months. Note that Steve Moses will be a guest speaker for the July 30 webinar with an update on the federal Long-Term Care Commission. *** *** CLIPPING SERVICE. The Center for Long-Term Care Reform’s “clipping service” is the best way to stay abreast of critical professional news. Don’t waste your valuable time and effort searching the internet and reading a lot of chaff just to locate what you really need to know. Steve Moses has to do that anyway and he’ll save you the trouble, send you an average of three key items to review per day, and provide a representative quote and a link to the source so you can dig deeper if you wish. Premium members of the Center and higher ($250+ per year) receive our clippings at no extra charge. Corporate members receive one complimentary clipping service subscription upon request and are eligible for additional subscriptions at a discounted rate. For details, contact Damon at 206-283-7036 or damon@centerltc.com. *** *** CLTCR PREMIUM MEMBERSHIP. Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year ($500 for Elite Premium Members or Regional Representatives), paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. *** ############################# LTC BULLET: WISCONSIN TACKLES MEDICAID PLANNING LTC Comment: Twenty-one years ago I wrote the following in “The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin [link].” Medicaid nursing home eligibility is so generous in Wisconsin that most seniors who need long-term care qualify financially even without sophisticated legal planning. Anyone else can qualify quickly, often overnight, by using techniques such as joint accounts, trusts, purchase of exempt assets, or multiple divestment. Estate recovery is easy to avoid using joint tenancy with right of survivorship and other techniques. Formal, lawyer-assisted Medicaid estate planning is still fairly limited in Wisconsin, but it is growing rapidly. Predictably, private long-term care insurance is stunted. (p. 1) Despite Wisconsin’s having adopted some of the corrective actions we recommended in that report, the fundamental problem still exists. Easy access to Medicaid LTC benefits without significant spend down or estate recovery continues to plague the Badger State. Now, however, Wisconsin is trying to do something about it. Following are quotes from a Wisconsin Medicaid planner’s essay. She laments actions taken by the state to (1) ensure that scarce public resources go to the needy and (2) encourage affluent people to pay their own LTC expenses. We provide our “LTC Comment” after each of her remarks. ############################# Quotes from “What the New Budget Bill Does to Elderly and Disabled Families,” by Attorney Carol Wessels. Medicaid planner: "On Sunday, June 30th, 2013, Governor Walker signed Wisconsin's 2013-2014 Budget into law. The New Budget Bill has changes to the Medicaid program that create severe consequences for the elderly and disabled, and for family businesses and farms." LTC Comment: The need for expensive long-term care IS a severe consequence for which people should plan, save, invest and insure. They should not ignore the potential risk and cost until they seek indemnification from Medicaid. What does the new Wisconsin budget do? Medicaid planner: "Prevents families from transferring family business or the family farm, if original owner needs Medicaid. . . . If he transfers it for nothing, or for less than fair market value, he will be penalized and disqualified from receiving Medicaid for a period of time for up to five years following the transfer. If the business stays in Joe's name, when he dies the state will be able to recover up to the amount paid out in Medicaid, as a lien on the business or from the proceeds of the sale. Elder Law Attorneys believe this provision is contrary to federal law." LTC Comment: Is the purpose of Medicaid to be a long-term care safety net for the needy or free, publicly financed insurance for business owners and their families? Medicaid planner: "Prevents the spouse ('community spouse') of a person in a nursing home or on Family Care ('institutionalized spouse'), from transferring the community spouse's assets to anyone else until the institutionalized spouse has been on Medicaid for five years. If the community spouse transfers assets in the first five years after an institutionalized spouse is receiving Medicaid, then the institutionalized spouse will be penalized." LTC Comment: Did you know that under current federal law, the community spouse can give away everything, including the home, with impunity preventing Medicaid estate recovery? That’s what Wisconsin is apparently trying to avoid. Medicaid planner: "Provides that any property that was marital property within five years before the time that a spouse applied for nursing home Medicaid or Family Care, can be subjected to estate recovery. Where the state pursues estate recovery from the surviving spouse, there is no 'hardship waiver'. Hardship waiver is the process where a person can request that estate recovery provisions not be enforced due to circumstances that would cause a hardship. This provision is required by federal law but yet, Wisconsin's new budget eliminates it in certain cases." LTC Comment: How could anyone consider deliberate self-impoverishment to be a “hardship” tax payers should compensate? Medicaid planner: “Prevents a community spouse from transferring assets free and clear upon death of the community spouse. These assets will be subject to estate recovery first.” LTC Comment: That is the purpose of the estate recovery mandate added to Medicaid in 1993. The principle is that Medicaid LTC benefits received while preserving substantial assets for a surviving spouse should be repaid to Medicaid when the surviving spouse dies and no longer needs the wealth. Otherwise, the money passes to heirs and becomes a reward for failing to plan for long-term care. Medicaid planner: “Puts very restrictive requirements on trustees of living trusts, where a grantor received Medicaid benefits. The trustee must provide specific notice prior to distributing any trust property, and must distribute assets to estate recovery within specific deadlines if a claim is made.” LTC Comment: Medicaid planning abuse of trusts is a loophole properly closed. Medicaid planner: “Makes trustees of ‘Special Needs Trusts’ personally liable if they fail to follow the proper procedures for estate recovery.” LTC Comment: So improper trust management is OK? Come on. Medicaid planner: “Allows estate recovery from living trusts, life insurance, POD [pay on death] accounts of either the Medicaid recipient or the surviving spouse.” LTC Comment: Did you know people could evade estate recovery using those financial products? Other states have already closed that loophole. Medicaid planner: “Penalizes families who have loaned (not gifted) funds to other family members.” LTC Comment: The purpose of such loans is to dodge spend down requirements using a complicated technique called the “reverse half-a-loaf” designed to evade measures in the Deficit Reduction Act of 2005 (DRA ‘05) intended to prevent the “half-a-loaf” divestment gimmick. Medicaid planner: “Prevents a return of funds that have been gifted by maintaining all divestment penalties unless the full gifted amount is returned, which in many cases is not possible.” LTC Comment: Ditto the LTC Comment immediately above. Medicaid planner: “Creates very complicated procedures regarding transfers of real estate where a Medicaid recipient is involved. Allows the state to go so far as to void a transfer under certain circumstances. These changes will make it very complex for people on Medicaid to transfer real estate, give clear title, etc.” LTC Comment: Taking measures to prevent asset transfers for the purpose of self-impoverishment to qualify for Medicaid is not a problem. It is a solution. Medicaid planner: “What this means . . . : It will be extremely important for couples to plan well ahead of the need for care, if the ability to leave anything to their families – or to maintain adequate financial resources for the spouse in the community - is important to them.” LTC Comment: We agree this means people need to plan early for long-term care. We disagree that the way to plan is to use a Medicaid planner to dodge rules intended to preserve the Medicaid safety net for people in need. I’ve been fighting the Medicaid planners’ self-serving arguments like those above for 30 years. We’ve had major successes in federal law including OBRA ’93 and DRA ’05, but clearly there is more to do. Thanks and kudos are due Wisconsin for taking action to discourage Medicaid dependency and encourage responsible LTC planning. ############################# Updated, Monday, July 8, 2013, 12:22 PM (Eastern)Cream Ridge, New Jersey— ############################# CENTER STUDIES IN VA, NJ AND GA AND LTC NEWS AND COMMENT
LTC Comment: We have completed our initial field work on the Center for Long-Term Care Reform’s study of Medicaid and long-term care financing in Virginia. Our interim progress report has been submitted. At the end of July, we’ll pass back through Richmond, conduct the remaining interviews, and begin to write the final report.
For now, Steve Moses and the Silver Bullet are near Trenton, New Jersey, about to begin our latest study of Medicaid and LTC financing. New Jersey is an interesting challenge as we conducted a similar study of the state in 1996, seventeen years ago. What’s changed? Did the state heed our recommendations back then? If so? If not? What is the current state of long-term care? That will be the theme of the new study and report.
Following our New Jersey study, we head south to Georgia. But that will not be until August. Late August and throughout September we’ll be writing and publishing all three final reports, just in time for the November elections. It’s good to be on the road again. Click here for a short video synopsis of the Silver Bullet’s earlier adventures.
############################# 7/5/2013, “LTCI rate wiggle room: How much is enough?,” by Allison Bell, LifeHealthPRO Quote: "Regulators, outside actuaries and others talked about possible LTCI rate margin requirements and other rate stability proposals recently during a Senior Issues Task Force LTCI issues meeting that took place recently in Reston, Va." LTC Comment: They should be talking about getting the monkey of government interference off the back of LTCI. Target Medicaid only to the poor and let a free market determine interest rates. That’s all it would take to save LTC insurance. ############################# 7/3/2013, “Nursing Home Use by Medicaid Seniors is Plunging,” by Howard Gleckman, Forbes Quote: "It is a remarkable story: Long-stay nursing home care by seniors enrolled in Medicaid has been plummeting for 15 years. It is not clear exactly why, but there are probably several reasons. First, state Medicaid programs have been shifting care from nursing facilities to home and community-based settings-a step that seniors themselves favor and one that may save money in the long-run. . . . The second reason . . . is that seniors' enrollment in Medicaid is growing very slowly even though the overall older population is growing rapidly. . . . A third reason may be that nursing homes themselves would rather provide post-acute and rehabilitation services instead of long-stay care." LTC Comment: The reason fewer seniors use Medicaid nursing homes for long, custodial stays is no mystery. Medicaid made nursing home care free in 1965 which killed any market for private home care and crowded out private LTC insurance. In time Medicaid nursing home care became so expensive and reimbursement rates were cut so far as to impede quality and ruin nursing homes' reputation. It got so bad that people became willing to spend their own money for assisted living and that's why that care level has grown to replace “intermediate care” nursing homes. Medicaid tried to save money by "rebalancing" from nursing homes to home care on the mistaken assumption that doing so would save money. It didn't; it won't; and Medicaid's reputation for poor access and quality is now expanding to its home and community-based programs. This is what well-intentioned but poorly designed programs containing perverse incentives to ignore LTC risk and cost have wrought. ############################# 7/3/2013, “Wall St. Journal Didn't Go Deep Enough,” by Phyllis Shelton Quote: "The July 1, 2013 WSJ article about long-term care insurance rate increases entitled "Long-Term Care Insurance Gap Hits Seniors" throws the baby out with the bath water. It overlooks three important areas:
LTC Comment: This is Phyllis Shelton's response to the July 1 Wall Street Journal article that criticized LTC insurance. ############################# 7/2/2013, “Low Interest Rates Are Crippling Long-Term-Care Insurance,” by Kelly Greene, Wall Street Journal Quote: "In addition to the problems chronicled in today’s Page One story “Long-Term-Care Insurance Leaves Customers Groping,” there’s another big culprit: long-term low interest rates. As the Federal Reserve has sought to rev up the economy, the slide in rates has hammered insurers’ investment returns, which are needed to help cover payouts to policyholders." LTC Comment: My comment follows the above Wall Street Journal article online: “Interest rates didn't just ‘decline’ of their own accord as in a free market. Interest rates were forced down to near zero by the Federal Reserve. The big story, totally missed in this and yesterday's article, is that the private sector insurance carriers are preparing to be able to pay future claims despite the government-induced low interest rates, but the government is leaving everyone unprotected by its ‘social insurance’ programs. Medicare has a $43 trillion unfunded liability and Social Security is underfunded by $21.5 trillion. Of course, Medicaid, the dominant payer of long-term care in the USA due to eligibility criteria that allow affluent people to take more benefits from it than the poor, Medicaid doesn't even have a phony trust fund (filled with IOUs from future taxpayers) to pretend it's solvent. Criticizing the mote in the eye of LTC insurance without acknowledging the log of irresponsibility in government is a terrible disservice to the WSJ's readers.” ############################# 7/2/2013, “Exchanging Medicaid for a Better Option,” National Center for Policy Analysis Quote: "Consider this: nationally, less than one-third of physicians accept new patients enrolled in Medicaid. This is nearly double the rate of doctors who have closed their practices to new Medicare patients (17 percent) and to new privately insured patients (18 percent). Physicians are four times more likely to turn away new Medicaid patients than those with no insurance (31 percent versus 8 percent)." LTC Comment: Relying more and more on Medicaid is not going to end well. ############################# 7/2/2013, “Study links poor financial performance and 'de facto' nursing home segregation; raises questions about admissions [link],” by Tim Mullaney, McKnight’s LTC News Quote: “Nursing homes with a high proportion of black residents tend to underperform financially, according to recently published research that raises difficult questions about admissions practices and healthcare disparities. . . . Previous studies have found that minorities rely on Medicaid in greater numbers than other demographic groups, so nursing homes that primarily serve minorities see bottom-line impacts . . . Financial strain on a facility is associated with lower-quality care, as measured by indicators such as bedsore prevention and total catheter use, the researchers found. Other studies have concluded black residents are less likely to get a flu shot and are more likely to be hospitalized, develop bedsores, and need help with activities of daily living. . . . Some facilities simply must maintain a certain proportion of private pay residents to remain solvent, Smith said. Race may not be a consideration in the admissions process for these facilities, but the net result is having financially stronger facilities that are not diverse.” LTC Comment: Medicaid pays nursing facilities substantially less than the cost of providing the care as we often report. High Medicaid census leads to deficient care. Minorities are more likely to rely on Medicaid. Not too hard to connect those dots, but it has amazed me for decades how few analysts do. ############################# 7/1/2013, “Long-Term-Care Insurance Gap Hits Seniors,” Kelly Greene and Leslie Scism, Wall Street Journal Quote: "The long-term-insurance industry now is shrinking, premiums are soaring and there is no fix in sight. At the same time, government safety-net programs, already under cost-cutting pressure, are bracing for demand from more of the 77 million aging baby boomers. . . . But insurers underestimated how fast medical costs would rise, and how many seniors would actually use the benefits. And they underpriced the insurance premiums. . . . Most of the actuarial assumptions made by insurers years ago turned out to be overly optimistic. , . . And many state regulators erred by routinely signing off on the premium on the new products and subsequent rate increases without questioning the companies' pricing assumptions, some officials say. . . . 'We have no way of knowing if these policies will self-destruct in the future,' cautions Mary Ahearn, a financial planner in Arizona." LTC Comment: A formerly accurate and balanced reporter on long-term care issues wrote this biased and mistaken front-page article in today's Wall Street Journal. She and it fail to mention the real reasons LTC insurance is struggling. That is, that government took away the market by providing LTC through Medicaid after the insurable event occurs and took away the profits by forcing interest rates down to nothing. In truth, although they missed on lapse rates, actuaries got much more right than wrong about LTC utilization. Carriers are doing the responsible thing now, correcting for government-caused shortfalls in reserves by raising premiums. Government, which faces a hopelessly huge wave of aging Americans, is not doing the responsible thing to prepare. Entitlement "trust funds" are empty already and will never pay the "claims" it currently promises. Many people, especially the poor, will suffer when the public programs implode. But the people today biting the bullet, sticking with private insurance, and compensating for government's irresponsibility by paying higher premiums for their LTCI policies will come out all right. ############################# 7/1/2013, “Government report: Family size, obesity rate among question marks as long-term care spending surges [link],” by Tim Mullaney, McKnight’s LTC News Quote: "Medical advances and declining obesity rates could help control costs by limiting seniors' functional impairments. However, smaller average family size could drive costs up, as there will be fewer people to provide informal care to elders, who will go into facilities. Informal care accounted for 55% of the LTSS market ($234 billion) in 2011, and institutional care accounted for 31% ($134 billion), according to the CBO report." LTC Comment: Declining obesity? Since when? A perfect LTC storm is brewing. ############################# 6/29/2013, “The Cost of Cashing Out Life Insurance Selling a policy to a third party has tax and other implications [link],” by Tom Lauricella, Wall Street Journal Quote: "It seems like a simple solution to a big problem: Families struggling to meet the high costs of long-term care or other medical bills can sell unwanted life-insurance policies and instantly raise large chunks of cash. But going the route of a so-called life-settlement arrangement is a complex decision that shouldn't be made lightly or alone." LTC Comment: The idea to tap life insurance benefits to help pay for LTC and to relieve fiscal pressure on Medicaid has taken hold recently. Texas passed a law to encourage the practice and other states have similar laws in their legislative hoppers. Thus, the media is taking an interest. Expect more such coverage. ############################# 6/27/2013, “The Real Cost of Long-Term Care (INFOGRAPHIC),” Huffington Post Quote: "While the costs and the means to pay for long-term care can be daunting to think about, the one thing that can put one's mind at ease is preparedness. In the infographic below, you'll get some of the facts about actual costs, your options for long-term care, and tips on how you can prepare now." LTC Comment: Unfortunately, this "infographic" is very difficult to read, even when expanded. ############################# 6/27/2013, “Two Web Sites to Visit,” by Paula Span, New York Times Quote: "LongTermCare.gov, well designed and clearly written, serves as a useful primer, an introduction to the basics. "It’s been around since 2005, so ‘it was time for a refresh,’ said Hunter McKay, program manager for the administration. ‘We wanted to make the content digestible and manageable.’ "Now, the site has a pathfinder tool that allows you to enter your age or your parent’s; it then tailors content according to whether a person needs long-term care right now or probably will in the future. You’ll find a glossary of common terms, sections on advance care planning and information on how to pay for help, including long-term care insurance and reverse mortgages. "Past traffic showed that consumers want to know about Medicaid, so you’ll find a section that explains eligibility and benefits." LTC Comment: Anything about private long-term care insurance and responsible LTC planning on that government website that points people to Medicaid? ############################# 6/27/2013, “A Surprising Health Insurance Option For Those Who Refuse ObamaCare [link],” by Merrill Matthews, Forbes Quote: "The customer buys a life insurance policy that pays up to $250,000 upon death, which I believe is the current maximum available for this kind of policy. "Along with life insurance coverage the policy includes what's called a 'critical illness' component. If the policyholder needs, say, surgery, the insurer writes the policyholder a check based on a schedule. Let's say, for example, it's $10,000. "The policyholder has $10,000 in hand to pay for the medical care - or, frankly, anything else since the money belongs to the insured - but the value of his life insurance benefit is reduced by the same amount, to $240,000. Thus the critical illness component simply accelerates the benefit payout. "One existing policy pays 100 percent for heart attack, stroke, life-threatening cancer, major organ transplant, kidney failure, Alzheimer's and paralysis, among other medical conditions." LTC Comment: This article is written from the polemical perspective of "how to avoid ObamaCare," but it's interesting as it relates to the CI market. ############################# 6/27/2013, “Supreme Court's DOMA ruling expands long-term care insurance options in California [link],” by Tim Mullaney, McKnight’s LTC News Quote: "California same-sex couples who wed in 2008 did not receive all the same benefits as heterosexual couples, due to the federal Defense of Marriage Act. For example, gay couples were not allowed to receive long-term care insurance through the California Public Employees Retirement System (CalPERS), which is governed by federal tax laws. This led to a lawsuit filed last year by a nurse seeking coverage for his husband. Under Wednesday's 5-4 decision, the federal government must grant full marriage benefits to same-sex couples in states that allow gay marriage. This means CalPERS will begin to offer its long-term care coverage to same-sex couples, the fund confirmed to the Sacramento Bee." LTC Comment: Guaranteed issue and spousal discounts are the main issues? ############################# 6/26/2013, “AHIP touts strong enrollment in plans with health savings accounts,” by Elise Viebeck, The Hill Quote: "Enrollment in health savings account (HSA)-eligible insurance plans has reached nearly 15.5 million, growing by almost 15 percent since last year. . . . Authorized by Congress about 10 years ago, HSAs allow consumers to put away money for medical expenses without paying income tax on those savings." LTC Comment: HSAs could solve the acute health insurance problem and ameliorate the LTC insurance problem by putting consumers back into the health care market and letting them accumulate savings for LTC premiums. ############################# 6/26/2013, “Retirement savings $14 trillion below threshold,” by Steve Vernon, CBS MoneyWatch Quote: "The study found that Americans of all ages are falling well short of the savings amount they need to secure their retirement. Still worse, 45 percent of working-age Americans have no retirement savings at all! The estimated gap in needed savings totals $14 trillion if you count only savings set aside specifically for retirement; the gap declines to $6.8 trillion if you consider total net worth, the largest item being home equity." LTC Comment: Warning; brick wall of fiscal reality directly ahead! ############################# 6/25/2013, “Medicaid for prisoners: States missing out on millions,” by Christine Vestal, USA Today Quote: "Only a dozen states have taken advantage of a long-standing option to stick the federal government with at least half the cost of hospitalizations and nursing home stays of state prison inmates. The other states have left tens of millions of federal dollars on the table, either because they didn't know about a federal rule dating to 1997 or they were unable to write the laws and administrative processes to take advantage of it." LTC Comment: Heaven forbid that anyone misses a chance to stick it to Uncle Sucker. ############################# 6/24/2013, “Elder Fraud Epidemic: How Banks Are Failing Seniors,” by Robert McGarvey, TheStreet Quote: "'It's bank employees, caregivers, in many cases it is family members who are stealing from the elderly,' said Tod Burke, a professor of criminal justice at Radford University in Virginia." LTC Comment: Add Medicaid planners to that list. They impoverish frail and infirm elders, enrich their clients the heirs, and take big fees in the process, leaving the elders dependent on public welfare. ############################# 6/23/2013, “Living Long but Not Prospering,” by Joshua Gotbaum and Dallas Salisbury, Wall Street Journal Quote: "The long-term-care private-insurance market is essentially collapsing. All of the major carriers that built long-term-care practices over the past 20 years are exiting the marketplace." LTC Comment: A Center member bcc'd me on his letter bringing up short the president of EBRI for such a ridiculous quote: "Mr. Salisbury: In today's WSJ (R5 - Living Long But Not Prospering) you said 'The long-term-care private-insurance market is essentially collapsing. All of the major carriers that built long-term-care practices over the past 20 years are exiting the marketplace.' The truth is John Hancock, MassMutual, Northwestern, Transamerica, Mutual of Omaha and Genworth all still actively sell LTCi. How can the President and CEO of the Employee Benefit Research Institute be so misinformed?" ############################# Updated, Friday, June 28, 2013, 12:52 PM (Eastern)Washington, DC— ############################# LTC BULLET: LTC EMBED REPORT FROM THE FIRST LTC COMMISSION PUBLIC MEETING LTC Comment: The first public meeting of the LTC Commission involved less wishful thinking and more hopeful signs than I expected. Details and highlights after the ***news.*** *** STUDIES. The Center for LTC Reform has completed our field work in Virginia. We’re headed next to begin a study in New Jersey and finally to Georgia in August. Our interim report on Medicaid and long-term care financing in Virginia will be ready soon. Final reports on all three projects will be released sometime this Fall before the November elections. All three studies will provide evidence and reasoning to support our recommendations to the new LTC Commission, whose first meeting is the topic of today’s LTC Bullet. Commission members are welcome to ride shotgun with me as we interview front line experts in each state about how Medicaid eligibility really works. For examples of our reports on similar studies in many other states, including California, New York, Pennsylvania and Maine, go to http://www.centerltc.com/reports.htm. *** *** MEDICAID PLANNING. Center member Ross Schriftman forwarded an elder law article to us titled “Not Knowing How Medicaid Annuities Work Will Get Advisors into Hot Water!,” by Mike Anthony, JD. I couldn’t find the piece online but its message is that Medicaid-compliant annuities succeed: “There are plenty of good ways to use annuities and other insurance products to proactively help a potential Medicaid patient.” Schriftman had this to say about the Medicaid planning example in the article: Dear Steve, These guys really gall me. The "ethical" thing to do is having the son keep $250,000 AND stick you and me with the cost of the mom's long term care? [Hardly.] Here is the more ethical thing to do. Son buys his Indiana mom a long term care insurance policy when she is 70 and still generally in good health. He pays $584 per month out of his own money to protect his inheritance. Mom's care is paid for by her policy. Son picks where, who and how she gets care; not the government. Son inherits $250,000 minus his cost for the premiums. Assuming he pays $584 per month for 10 years he nets $180,000. (70 year old select rate for Mutual Care Plus $170 per day, 4 year benefit, 90 day EP,3% compound inflation) Sincerely, Thanks, Ross. That example struck home. Knowing every Medicaid planning trick in the book, I chose instead to buy and pay for private LTC insurance for my parents in 1987. Today, my mother is 100 years old and receives benefit payments from her first-AMEX, then-GE, now-Genworth policy. ***
LTC BULLET: LTC EMBED REPORT FROM THE FIRST LTC COMMISSION PUBLIC MEETING LTC Comment: This is how the meeting announcement read: Federal Commission on Long-Term Care Announces First Public Hearing for June 27th Fifteen member commission created by fiscal cliff law tasked with advising Congress on long-term care reform Washington, DC – The newly created federal Commission on Long-Term Care will have its first public hearing on Thursday, June 27th at 2:00 pm EDT in the Rayburn House Office Building, Room 2322. The title of the hearing is "The Current System for Providing Long-Term Services and Supports.” The Commission will hear testimony from the following expert witnesses: • Anne Tumlinson, Senior Vice President, Avalere Health • Kirsten Colello, Specialist in Health and Aging Policy, Congressional Research Service • G. William Hoagland, Senior Vice President, Bipartisan Policy Center • Marc Cohen, Chief Research and Development Officer, LifePlans, Inc. The Commission was created by the American Taxpayer Relief Act – the so-called “fiscal-cliff” law – to advise Congress on how long-term care can be better provided and financed for the nation’s older adults and people with disabilities, now and in the future. The bi-partisan commission consists of 15 appointees – nine members appointed by Democratic Congressional leadership and the White House and six members appointed by Republican leadership. The Commission is charged by statute to report with a “plan for the establishment, implementation, and financing of a comprehensive, coordinated, and high-quality system that ensures the availability of long-term services and supports for individuals in need.” LTC Comment: When I saw that announcement, I said to myself “I have to be there. Center members will want to know what happens.” So I did a couple interviews for our Virginia long-term care financing study by phone instead of in person and hustled myself to the nation’s capital arriving at the hearing room in the nick of time. The first public meeting of the LTC Commission lasted a full three hours. Four panelists gave yeomanlike presentations on aging demographics, the ABCs of LTC, the government’s budget crisis and the current state of the long-term care insurance industry. Two presenters and their presentations stood out. One was Marc Cohen’s explanation of LTC insurance. He presented the usual information familiar to people who know the LTCI industry: who buys, who doesn’t, why, why not, and how has that changed over the years. Committee members addressed most of their questions to Marc and at least one praised him for his clarity and synthesis. The presentation that blew me away, however, was by G. William Hoagland, Senior Vice President, of the Bipartisan Policy Center, which is “a non-profit organization that drives principled solutions through rigorous analysis, reasoned negotiation and respectful dialogue” that was founded by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell. Hoagland’s message was couched in polite, almost apologetic terms, but I would translate it thus: “If you think you’re going to find more government money to improve long-term care, you are out of your minds. Social Security, Medicare and Medicaid are already in deep financial trouble; they’re sinking fast; and you will have to find some way to divert most people to private LTC financing in the future.” Hoagland emphasized that LTC spending went from mostly out-of-pocket personal expenditures in 1970 to mostly Medicaid and Medicare spending now. He left the Commission with two major “take aways.” 1. Medicare and Medicaid have become the major LTC
funding sources but cannot continue so payment reforms are necessary and
alternatives must be found for financing LTC. Hoagland concluded that well-intentioned, commendable intent has left America with a current system that discourages long-term care planning, overwhelms state/federal budgets, and limits care available to people who need it. His arguments were in perfect synch with ones we’ve made year after year in our annual “LTC Bullet: So What if the Government Pays for Most Long-Term Care? [link]” What I didn’t hear a lot of at yesterday’s LTC Commission meeting were the usual bleating calls for more public spending on long-term care. Even the strongest advocates for a government takeover of long-term care restrained their fire. They were brought up short by the hard budget realities. What I did hear a lot more about than I expected were puzzled queries about Medicaid “spend down.” If Medicaid requires impoverishment, how come Medicaid pays for most expensive LTC? Why do studies show Medicaid crowds out most of the LTC insurance market? What accounts for recent studies that prove the affluent get as much or more from Medicaid than the poor? Simplistic dodges of these questions gained no traction. The obvious observation that people don’t know who pays for LTC and so they can’t be deciding not to buy private insurance because they’re planning to go on Medicaid answers nothing. That’s not how it works. Rather, Medicaid has paid for most expensive LTC for nearly 50 years which has desensitized the public to LTC risk and cost. It’s not that they are planning to go on Medicaid. It’s that their denial of LTC risk has been enabled by the reality that Medicaid has paid and continues to pay for most expensive care. If the LTC Commission stays on its current course of acknowledging the fiscal crisis, demanding an explanation about how and whether Medicaid spend down really works, and refusing to gaze thoughtlessly at the chimera of Medicare Part X or mandatory government LTC insurance, there is maybe some hope their deliberations will bear meaningful fruit. In the meantime, if they’d just read the six succinct briefing papers in “How to Fix Long-Term Care,” they’d be off to an even better start. ############################# Updated, Monday, June 24, 2013, 12:41 PM (Eastern)Richmond, Virginia— ############################# MR. LONG-TERM CARE AND LTC NEWS AND COMMENT
LTC Comment: Do your friends or clients ever doubt the ravages of long-term care? Martin Bayne was a successful LTCI broker when he was ravaged by early-onset Parkinson’s. He styled himself Mr. Long-Term Care. Today’s lead article from The Philadelphia Inquirer’s philly.com tells his story. 6/23/2013, “From the front lines, a fight for aging boomers,” by Michael Vitez, Philadelphia Inquirer Quote: "He had foresight to buy a long-term-care policy at age 40, for a $1,000 annual premium, which would pay up to $231 a day for life. His policy, he said, has paid about 80 percent of his $750,000 in long-term-care costs." LTC Comment: Martin Bayne had care options because he had long-term care insurance. Read this article with that in mind. ############################# 6/21/2013, “Ask Farnoosh: What Do You Do After Maxing Out Your 401(k) and IRA? [link],” by Farnoosh Torabi, Yahoo Finance Quote: "Finally, long-term care is proving helpful for seniors who need to fill the gaps not covered by Medicare or health insurance.” LTC Comment: LTC insurance shouldn't be a last resort, but better then than never. ############################# 6/21/2013, “Hybrid Long Term Care Insurance Solutions Explored by Trade Group,” by Jesse Slome, AALTCI Quote: "Two audios exploring hybrid long term care insurance options were made available to insurance professionals by the American Association for Long-Term Care Insurance." LTC Comment: AALTCI’s extensive educational resources continue to grow. ############################# 6/21/2013, “2013 Critical Illness Insurance Forum,” LIMRA/LOMA Quote: “Join us this September 16-18, 2013, in Fort Lauderdale, Florida, where we will discuss how critical illness products are evolving into one of the most important products in the supplemental health insurance portfolio. Plan to attend and learn strategies to help shape your company's success in the years ahead.” LTC Comment: Click the link to reach the conference announcement and details. ############################# 6/20/2013, “How much should you save for long-term care?,” by Chris Farrell, Marketplace Morning Report Quote: "Long-term care. It's an economic consequence of an aging America that doesn't get nearly as much attention as Social Security. Nursing homes can run around $100,000 a year, and many aging boomers will not have the money. Marketplace Economics Correspondent joins Morning Report's Mark Garrison to discuss." LTC Comment: The bottom line of this podcast is "learn about LTC insurance. ############################# 6/20/2013, “Gen X most at risk to burn through retirement savings early,” by Gillian Roberts, Employee Benefit Adviser Quote: "Generation X is currently most at risk for financial hardship in retirement. PricewaterhouseCoopers released results of an employee financial wellness study this week and found of employees in the generation born in the early '60s through early '80s say they're likely to tap into their retirement savings. This number was higher than both surrounding generations, the Baby Boomers and Millennials. In fact, 30% of them admit to already having withdrawn from a retirement account." LTC Comment: Oh what public policy has wrought by tipping all the benefits toward older generations for so long. When will the entitlement bubble burst? ############################# 6/20/2013, “Living Longer + Lack of Lifetime Income = Risky Business: Actuaries express the mission of financial services today: Income [link],” Life & Health Advisor Quote: "A new discussion paper, 'Risky Business: Living Longer Without Income for Life,' developed by the American Academy of Actuaries' Lifetime Income Risk Joint Task Force, explores the difficulties awaiting people in retirement who lack a plan for lifetime income, offers steps individuals can take to prevent shortfalls in retirement income, and discusses public policy options and education initiatives aimed at addressing the problem of inadequate lifetime income." LTC Comment: And whom do we have to thank for this problem? Yes, government again. The Federal Reserve has forced interest rates down to almost nothing ruining sources of lifetime income not to mention handicapping the LTCI market. ############################# 6/19/2013, “More in U.S. caring for someone with health issues, study finds,” by Emily Alpert, Los Angeles Times Quote: "A rising share of Americans is caring for someone with health issues, often juggling the task with a job and family, the Pew Research Center found in a newly released survey. Researchers found that 39% of U.S. adults surveyed said they were caring for an adult or child with significant health challenges in 2012, compared with 30% who said the same in 2010." LTC Comment: The Age Wave crests and its ripples grow bigger. ############################# 6/19/2013, “Perceived Risk of Critical Illness Diagnosis High Among Middle-Income Americans [link],” Life & Health Advisor Quote: "A recent study finds middle-income Americans on average give themselves about a 1-in-5 chance of being diagnosed with a critical illness in the next three years and a 1-in-2 chance of being diagnosed with a critical illness within the next 20 years." LTC Comment: Such perceptions are bound to enhance the market for Critical Care Insurance. ############################# 6/19/2013, “New approach to Alzheimer's treatment might be key to a cure,” by Ashley Carman, McKnight’s LTC News Quote: "Alzheimer's treatment often begins after symptoms are already apparent, such as memory loss. However, medications targeting the dementia-inducing disease's signature plaques and tangles have had little success in reversing symptoms. So doctors and investigators are developing an alternative approach: treatment before the disease takes over." LTC Comment: Well, OK, but how do you know whom to treat? Everyone? Who will pay? ############################# 6/18/2013, “Boomers Greatly Underestimate Cost of Long-Term Care, Retirement Style [link],” Life & Health Advisor Quote: "A new Nationwide Financial consumer survey found that boomers’ beliefs on the cost of long-term care (LTC) and the time they will spend in retirement do not match reality. In fact, Americans aged 50 and older underestimate the annual costs of LTC by more than three times the actual cost." LTC Comment: Well, now, why do you suppose that is? Could it be the same reason most people have no idea what their medical care costs? That is to say: government pays for most medical care and even more so for LTC, thus desensitizing the public to the actual costs and risks. ############################# 6/18/2013, “Tight timeline forces LTC commission to narrow its ambitions, member says [link],” by Tim Mullaney, McKnight’s LTC News Quote: "With its report due by the end of September, the Congressional Long-Term Care Commission is setting its sights on what can be accomplished in an 'extraordinarily short time-frame,' according to member Judith Stein, executive director of the Center for Medicare Advocacy." LTC Comment: Friday’s LTC Bullet provided our recommendations to the LTC Commission on how to prioritize their work. See “LTC Bullet: What Should the LTC Commission Do?,” Friday, June 21, 2013. ############################# 6/17/2013, “How We Became International Senior Gypsies In Retirement,” by Lynne Martin, Huffington Post Quote: "At 72 and 67, we have been home free for two-and-a-half years, lived in nine countries, and we have never been healthier or happier! Buenos Aires, Argentina, San Miguel de Allende, Mexico, Paris, Florence, Istanbul, London, Dublin, Marrakech, Morocco, and California's Central Coast have been our temporary homes for anywhere from two weeks to three months at a time.” LTC Comment: We've known for a long time that boomers would not retire the old-fashioned way. Well, now it's happening. Put on your thinking caps, marketers. There must be some brand-new, creative ways to reach people like these with the LTC insurance solution. ############################# 6/16/2013, “States Ease Use of Life Policies for Elder Care,” by Kelly Greene, Wall Street Journal Quote: "State lawmakers are encouraging elderly residents to use life insurance as a way to pay for long-term care-and lower the Medicaid tab in the process. The strategy marks a tacit endorsement of so-called life settlements, a practice in which policyholders sell their policies at a discount in the secondary market and the buyer takes over premiums and consequently collects the death benefit." LTC Comment: Does the possibility of a life settlement to fund LTC impair the market for traditional LTCI products by giving consumers a false sense of security? We’ve heard from Center members on both sides of that question. ############################# 6/14/2013, “Only 5 percent of new doctors head to rural areas, researchers find [link],” HealthDay Quote: "Fewer than 25 percent of new doctors in the United States go into primary care, and only about 5 percent open offices in rural areas, according to a new study." LTC Comment: Another unintended and very dangerous consequence of government interference in the medical marketplace. ############################# 6/13/2013, “Why the Government Needs to Budget Over the Infinite Horizon [link],” by Laurence Kotlikoff, Yahoo! Finance Quote: "For the U.S. government as a whole, the infinite horizon fiscal gap is a whopping $222 trillion. Its elimination requires not a 32 percent immediate and permanent tax hike in Social Security FICA taxes or a 22 percent immediate and permanent cut in Social Security benefits, but either a 64 percent immediate and permanent tax hike in all federal taxes or a 40 percent immediate and permanent cut in all expenditures apart from servicing official debt." LTC Comment: The 2013 Social Security and Medicare Trustees Reports show infinite-horizon unfunded liabilities of the two programs rising to $23.1 trillion and $43 trillion respectively. When will America’s debt bubble burst? ############################# Updated, Friday, June 21, 2013, 9:53 AM (Pacific)Seattle— ############################# LTC BULLET: WHAT SHOULD THE LTC COMMISSION DO? LTC Comment: How should the LTC Commission prioritize its work and recommendations? Some thoughts after the ***news.*** *** SUMMER SOLSTICE. Happy first day of Summer! The days are long, today the longest, and that’s good because the new LTC Commission needs all the waking hours it can get. *** *** SINKING FEELING. The 2013 Social Security and Medicare Trustees Reports show infinite-horizon unfunded liabilities of the two programs rising to $23.1 trillion (up from $20.5 trillion last year) and $43 trillion (up from $38.6 trillion), respectively. Why is it important to examine the entitlement programs’ unfunded liabilities through all of the future instead of only the 75-year window usually analyzed? See economist Laurence Kotlikoff’s “Why the Government Needs to Budget over the Infinite Horizon.” *** ############################# LTC BULLET: WHAT SHOULD THE LTC COMMISSION DO? When the American Taxpayer Relief Act of 2012 (ATRA ’12) repealed CLASS it offered a consolation prize, a special commission to study long-term care services and financing. The new commission was directed to form quickly, deliberate rapidly, and present its recommendations for long-term care reform within six months. Months have gone by with no action, but the LTC Commission has finally appointed a Chair (SCAN’s Bruce Chernof) and Vice-Chair (Towers Watson’s Mark Warshawsky) and scheduled its first meeting for this coming Thursday, June 27. With only three months of its original six remaining, where should the commission start? What should its priorities be? Where can it get the biggest reform bang for its deliberative buck? The problem with long-term care is that people don’t worry about it or plan until they need it. That condition exists because Medicaid made nursing home care virtually free in 1965, created an institutionally biased LTC system, impeded a private market for home and community-based care, and crowded out home equity conversion and private LTC insurance from helping to finance long-term care. The result is that a safety net program intended to help only the poor has become the dominant payer of long-term care for everyone. Throwing more government money at long-term care or forcing Americans into another unfunded entitlement program like Medicare would only make the situation worse. You don’t put out a fire by dowsing it with gasoline. The right way to approach reform is to return Medicaid LTC to the needy and redirect the affluent and middle class toward early LTC planning and private LTC financing. That’s how a safety net for the poor can be preserved while attracting private-sector funding to relieve the hopelessly heavy and about-to-explode fiscal burden on government. To achieve that goal, these should be the LTC commission’s priorities: 1. Eliminate or vastly reduce Medicaid’s home equity exemption from a minimum of $536K and a maximum of $802K now to something more reasonable, like $50K or less. This would redirect people to reverse mortgages to fund home care, discourage a common planning gimmick of investing otherwise countable assets in exempt homes, and encourage families to help elders prepare for private LTC financing as a way to protect their own inheritances. Simultaneously the look-back period for transfers of real property should be extended from 5 years to 10 years or even 20 years to discourage divestment of the home. Longer lookbacks for real property are no administrative burden because all real estate transfers are recorded and easy to track, often online these days. 2. The next biggest potential savings to Medicaid is reducing or eliminating the currently unlimited exemption for prepaid funeral expenses. Eligibility workers in a couple dozen states where I've conducted my studies have told me 80% to 90% of all Medicaid LTC recipients have prepaid burial plans averaging $8,000 to $12,000. I'm told very few non-Medicaid-LTC recipients purchase such plans. Medicaid planners say “Prepaying a burial may not be a timely investment in many cases since it returns no interest or dividends, but purchasing an irrevocable burial plan is an important part of the Medicaid spend down.” (ElderLaw Answers). Annually, this exemption amounts to scores of billions of dollars diverted from private financing of LTC to Medicaid asset shelters nationally. Wonderful windfall for the funeral industry and heirs but a huge cost to Medicaid and taxpayers. 3. Medicaid-friendly annuities are a gigantic problem that would be simple to fix if CMS would just take the travesty seriously. They're used in two ways. First, a Medicaid LTC recipient transfers all his assets to a community spouse which interspousal transfer is allowed anytime without limit. Now the spouse has the whole estate in her name, buys an immediate annuity which meets requirements of the Deficit Reduction Act of 2005 (DRA ’05), such as paying out within the actuarial life expectancy of the Medicaid spouse, and collects all the money back in her own name but outside Medicaid consideration in as little as a year. Maine gave me the example of a $450,000 annuity that paid out $17,000 per month to the community spouse until she had the whole amount, less the agent's commission, in her exclusive ownership. Maine provided a letter New Jersey sent to CMS requesting closure of this loophole to which they said CMS never formally responded. The second way annuities are used is as a means to return half of a penalized asset transfer in a "reverse-half-a-loaf" method that could also be done using a promissory note for the purpose of qualifying an unmarried applicant for Medicaid LTC in half the time. (That technique is too complicated to explain briefly here, but for a full explanation and documentation of the annuity problem, see “The Maine Thing About Long-Term Care is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link].”) 4. Any assets that are only exempted and not divested should be available for estate recovery. Otherwise, Medicaid operates as free inheritance insurance for heirs. The Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) tightened eligibility, encouraged liens, and made estate recovery mandatory with the intent to encourage people to save, invest or insure privately for long-term care, but to make sure, if they don’t plan responsibly, that they must pay back the cost of their care out of their estates. Unfortunately, states didn't implement estate recovery well; the feds don't enforce it aggressively; the media doesn't publicize it; and the public is unaware of it. The last time the federal government even bothered to measure and publish estate recoveries was in 2005 based on 2004 data. Estate recovery is very easy to avoid with legal advice, and that's a routine part of the advice all Medicaid planners give their clients. For details and a current status report on Medicaid estate recoveries, see our recent report “Maximizing NonTax Revenue from MaineCare Estate Recoveries.” The Center for Long-Term Care Reform’s two recent reports cited above explain in full what must be done to wean the middle class and affluent off Medicaid, return the program to the poor as a quality long-term care safety net, and prepare the LTC financing system to meet the growing Age Wave challenge that will overwhelm long-term care otherwise. For a quick read that explains how America evolved into a welfare-financed, nursing-home-based LTC system and what to do to fix it so that people can get the care they need in the settings they prefer, see our six briefing papers titled “How to Fix Long-Term Care.” Unfortunately, no changes to Medicaid LTC eligibility rules are easy politically. Every imaginable interest group has a stake in the status quo. Needed eligibility changes are even more difficult for the time being because of the “Maintenance of Effort” rule in the Affordable Care Act of 2010 (ACA ’10) which prevents states even from reducing their easy eligibility rules (e.g., $802,000 home equity exemption) to the tighter rule otherwise allowed (e.g., $536,000). So fixing this system isn’t easy. But it is not impossible either, as our victories (documented here) at the federal and state level over the years demonstrate. I think the best argument for the right kind of reform is this: we have a moral and fiduciary responsibility to ensure that Medicaid's scarce resources go first to the truly needy and that taxpayers' money is not used to subsidize the boomers' failure to plan responsibly for long-term care. If the LTC Commission applies that principle, it may make a positive contribution. ############################# Updated, Monday, June 17, 2013, 1:21 PM (Pacific)Seattle— ############################# PATHOLOGICAL ALTRUISM AND LTC NEWS AND COMMENT
LTC Comment: Why is it that so much government does to "help people" ends up hurting them?
Case in point: Medicaid made nursing home care virtually free in 1965 (good intentions), but the result was little demand for private home care or LTC insurance and today (unintended consequence), a bankrupt, welfare-financed, nursing-home-based LTC system that serves no one well.
Here’s a quote from a paper that develops the concept of "pathological altruism" to explain such outcomes:
"Presented here are the mechanistic bases and potential ramifications of pathological altruism, that is, altruism in which attempts to promote the welfare of others instead result in unanticipated harm." “Concepts and implications of altruism bias and pathological altruism,” Barbara A. Oakley, Proceedings of the National Academy of Sciences I found this research fascinating. I hope you do too. ############################# 6/15/2013, “Ruinous promises: States cannot pretend to be in good financial health unless they tackle pensions [link],” The Economist Quote: "Few fiscal problems are as grave, or as little understood, as underfunded state and municipal pensions. The funding gap for all state schemes is estimated at $4 trillion-25% of GDP." LTC Comment: The feds can just print more money (up to a point), but the states have no easy out from the closing fiscal vise of unfunded pensions. ############################# 6/13/2013, “SCAN: 66 percent of Californians want a public LTC program,” by Allison Bell, LifeHealthPRO Quote: "When survey workers asked whether participants in California would favor 'a government administered long-term care insurance program, similar to Medicare' to 'help Americans prepare for the costs of ongoing living assistance,' 66 percent said they favor the idea of setting up a Medicare-like government-administered LTC program . . .." LTC Comment: Well, if Californians want it, it must be a good idea. Never mind Medicare's $38.6 trillion unfunded liability. Let’s spend more funny money and bill it to the future. ############################# 6/13/2013, “Elderly Americans Living With Children Are More Unhappy,” by Khadeeja Safdar, Wall Street Journal Quote: "Young children are supposed to bring joy into their grandparent's lives. But according to two researchers, elderly Americans who live with children under the age of 18 experience inferior living situations and worse emotional health than those who don't." LTC Comment: All the more reason to plan early to remain independent late in life. ############################# 6/12/2013, “Latest Research Reinforces The Need For LTC Planning,” InsuranceNews.net Quote: "According to recent data from Genworth men are taking an increasingly active role in caregiving. The data also shows the impact of long term care on caregivers and care recipients; money, time spent and emotional issues could be minimized if those involved take a more proactive role towards planning." LTC Comment: Damon and I are living that reality with his 100-year-old Grandmother, my mother, in claim on her Genworth policy I purchased in 1987 and moving from assisted living (seven years) to a skilled nursing facility. Difficult transitions. ############################# 6/12/2013, “What Do You Mean I'm Getting Old? Denial About Aging and Our Impending Long-Term Care Crisis [link],” by Bruce Chernof, Health Affairs Quote: "However, there is promise for innovative approaches to solving these issues: Americans across the political spectrum show majority support for public policy solutions to transform the nation's system of long-term care. Seventy-seven percent support tax breaks to encourage saving for long-term care expenses; about half (51 percent) of Americans support a government-administered long-term care insurance program." LTC Comment: Bruce Chernof, the newly appointed Chairman of the LTC Commission, which will meet for the first time June 27, advocates something like mandatory CLASS. Luckily, the Commission's Vice Chair is Mark Warshawsky who has a much better understanding of why LTC financing is the way it is and what's necessary to fix it. ############################# 6/10/2013, “Low blood sugar in some diabetics boosts dementia risk,” by Melissa Healy, Los Angeles Times Quote: "For older patients with Type 2 diabetes, an aggressive focus on keeping high blood sugar down increases the risk of driving blood sugar too low--and with that, boosting the likelihood of developing dementia, says a new study. As if that weren't bad enough, the new research finds that dementia, in turn, increases the risk of hypoglycemic episodes." LTC Comment: Double jeopardy. ############################# 6/10/2013, “Medicare Advantage 2013 Spotlight: Enrollment Market Update,” Kaiser Family Foundation Quote: "While about 28 percent of Medicare beneficiaries nationally are now enrolled in Medicare Advantage plans, the share varies greatly by state -- ranging from 49 percent in Minnesota to less than 4 percent in Iowa and Alaska. National Medicare Advantage enrollment tends to be concentrated among a small number of organizations, with five firms (and affiliates) accounting for two-thirds of enrollment." LTC Comment: Medicare Advantage continues to grow despite disadvantages imposed on it with the intent to shore up demand for traditional Medicare. ############################# 6/8/2013, “For Retirees, a Million-Dollar Illusion,” by Jeff Sommer, New York Times Quote: "In 1953, when ‘How to Marry a Millionaire’ was in movie theaters, $1 million bought the equivalent of $8.7 million today. Now $1 million won’t even buy an average Manhattan apartment or come remotely close to paying the average salary of an N.B.A. basketball player. Still, $1 million is more money than 9 in 10 American families possess." LTC Comment: Anyone smart enough to have that million bucks should also have the brains to protect it with LTCI. ############################# 6/7/2013, “Doctors Should Steer Conversation to Older Drivers: Study,” HealthDay News Quote: "With 10,000 baby boomers turning 65 every day, the number of elderly drivers on U.S. roads is accelerating rapidly, researchers say. But doctors and other health care providers often wait too long before they talk to seniors about giving up driving, even though many elderly patients are ready to discuss the issue much sooner, according to a new study." LTC Comment: A perennial problem that will accelerate dangerously as boomers age. ############################# 6/7/2013, “IG says flaws in Medicare databases invite fraud and abuse,” Washington Examiner Quote: "On the eve of an historic expansion in the federal role in healthcare, a government review finds Medicare overwhelmed by new-medical provider information and unable to police its existing databases against the fraudulent use of taxpayer money. Government investigators found that the data systems used to catalog the records of Medicare providers were riddled with inaccurate or incomplete information. When compared, 97 percent of files studied were inconsistent." LTC Comment: Building on a foundation of straw. ############################# Updated, Friday, June 14, 2013, 1:19 PM (Eastern)Richmond, VA— ############################# LTC BULLET: IMPLEMENTING A MEDICAID AND LTC FINANCING STUDY LTC Comment: What goes into planning, implementing and completing one of the Center for Long-Term Care Reform’s state-level Medicaid/LTC financing studies, after the ***news.***
*** LTC COMMISSION will meet June 27, with Bruce Chernof of the SCAN Foundation as Chair and Mark Warshawsky of Towers Watson as Vice Chair. Created January 1, 2013 by the fiscal cliff avoidance legislation (American Taxpayer Relief Act), the new commission is a consolation prize for the elimination, in the same statute, of the CLASS Act. According to the law, members of the commission were to be appointed “not later than 30 days” after enactment. Oops, missed that deadline by a couple months, with the White House making its three appointments, completing the membership, in mid-March. “Not later than 6 months” after their appointment, the members of the commission are supposed to vote on a comprehensive “long-term care plan.” With only three months remaining of the original six allotted to complete its work, the Commission begins handicapped by time pressures. Expectations are low, but whatever the LTC Commission achieves or doesn’t will at least point public attention now and again toward the looming catastrophe of long-term care financing. *** LTC BULLET: IMPLEMENTING A MEDICAID AND LTC FINANCING STUDY LTC Comment: Over the past three years, the Center for Long-Term Care Reform has completed Medicaid and LTC financing studies in California, New York, Pennsylvania, Rhode Island and Maine. We’ve reported to you faithfully on the results of those studies and our reports are readily available on the Center’s website here and on the sponsors’ websites as well. So far, however, we have not described what goes into conducting one of our state-level studies. Let’s correct that oversight today. Following below the “fold” is a document, titled “Implementing a Medicaid and Long-Term Care Financing Study,” which we provide to each project sponsor at the beginning of the process. Over the years, study sponsors have included state governments, state Medicaid programs, LTC provider trade associations, and State Policy Network-affiliated think tanks. Whoever the sponsor and whichever the state, we always proceed in the same, methodical way. We gather information systematically from face-to-face interviews with key officials and experts. We analyze germane current and archival documents, gleaning from them the history, status, and likely future course of Medicaid and LTC financing in the state. We seek to understand the way Medicaid LTC eligibility actually works, irrespective of the conventional wisdom that it requires catastrophic spend down and total impoverishment. We try to discern the challenges key stakeholder groups face and we gather their ideas and suggestions. We analyze the politically realistic options for change. And we recommend policies that improve the LTC financing system for all while reducing dependency on publicly financed care. We are not always able to schedule all of the desired appointments. Nor can we locate all desirable documentation in every state. We’re usually limited to one intensive week onsite to do all of the face-to-face interviews. This Summer, however, for the three studies we’re conducting in Virginia, New Jersey, and Georgia, I’m onsite for at least three weeks in each place. That’s because we’ve taken the Silver Bullet of Long-Term Care on the road again and I’m living all Summer on the East coast. As these three studies develop, we’ll keep you posted on our progress and results. In the meantime, here’s how we begin each project and what we do in the process. ############################# Implementing a Medicaid and LTC Financing Study for [State Name] Responsibilities I'm counting on the [project sponsor name] to help me find key information and documents not easily accessible online and to help locate interviewees and schedule appointments for the site visit. I anticipate scheduling the site visit for [dates]. I will provide guidance including a full briefing on the issue, suggestions on where and how to find documents and information, names of organizations and/or individuals to contact, draft letters describing our inquiry, documents and web links establishing my and the Center for Long-Term Care Reform's bona fides, etc. After you look this document over, let’s talk by phone about how to begin the process. There are several things we can do in the ensuing weeks which will save us time once we can begin in earnest. Following is a list of organizations and individuals to interview during my site visit and a list of documents and information we need to begin collecting soon. Interviews/Briefings to schedule for site visit Governor: if possible, a short briefing and interview on the issue, the proposed study and likely recommendations, 15 or 20 minutes Governor's health policy specialist: longer briefing and interview, up to one hour Key state legislators and staff, especially chairs of germane committees and sub-committees: short briefings for the principals, longer sessions with staff. OK to set up one briefing for all legislators and staff, but also schedule personal briefings for key legislators who want them. State Insurance Commissioner: if possible, a short briefing on the issue, the study and likely recommendations, 15 or 20 minutes Insurance commission LTC insurance specialist: longer briefing and interview, at least one hour Medicaid single-state agency head and State Medicaid Director: together or separately, a short briefing on the issue, the study and likely recommendations, 15 or 20 minutes State Medicaid LTC financial eligibility policy specialist: intensive briefing and interview, two hours State Medicaid lien and estate recovery program manager: intensive briefing and interview, two hours State Medicaid local offices (one urban, one suburban, and one rural): in each of the three offices, two-hour briefings and interviews with a Medicaid financial eligibility supervisor and at least one, but preferably more, eligibility workers who actually take and process applications Medicaid LTC benefits. Proprietary (AHCA affiliate) and non-proprietary (Leading Age [formerly AAHSA] affiliate) nursing home/assisted living trade association representatives, including executive directors of the state affiliates, their government affairs directors, and a sampling of members (nursing home and assisted living owners or managers). Home health agencies representatives from trade associations and members. Long-term care insurance representatives including individual producers and people representing carriers and major brokers. NAIFA, NAHU affiliates. Reverse mortgage specialists including representatives of lenders and individual producers Elder law attorneys including Medicaid planners. Senior advocates (AARP, NCOA, Area Agencies on Aging, LTC Ombudsman) Business (Chamber of Commerce, etc) and/or taxpayer representatives who have an interest in long-term care financing issues. (Employee absenteeism and presenteeism re family LTC responsibilities have become as big a problem as child care.) Documents or Information: Any data or reports on the current budgetary crisis especially as relates to funding Medicaid and long-term care. Details on measures (1) taken already and (2) anticipated, to cut Medicaid costs, especially cuts that affect LTC. Break out of state spending on Medicaid vs other state programs, i.e. education, corrections, etc. [State] Medicaid expenditures for long-term care for the elderly broken out by nursing home and HCBS (home and community-based care) for the past five years, more years if possible. Any available reports on Medicaid financing of long-term care in [State], including studies bearing on advisability and potential savings from nursing home diversion to HCBS. [State] Medicaid (TEFRA) lien and/or estate recoveries for the past five years, excluding recoveries for fraud. Medicaid financial eligibility rules for nursing home and HCBS, e.g. asset limits, countable vs. non countable assets, income limits, spousal impoverishment protections, etc. Any demographic studies related to aging of the [State] population and the likely impact of the Age Wave. Medicaid reimbursement rates for nursing homes and home care providers and private pay rates in the state for comparison. Any reports or data bearing on quality of care in [State] nursing homes and by home care providers. Information on nursing home liability insurance issues, premiums, claims experience, etc. Percent of nursing home residents in [State] covered by Medicaid, Medicare, private pay and other systems. Summary of [State]'s Medicaid waivers that provide care for the elderly. Any studies that document "Medicaid estate planning," the practice of artificially impoverishing people to qualify them for Medicaid LTC benefits. Any studies documenting the use of private long-term care insurance or home equity conversion to fund long-term care in [State]. Insurance commission regulations bearing on long-term care insurance. Data on home ownership and home equity of [State’s] residents especially for the age 62+ cohort that could qualify for reverse mortgages. Status of "LTC Partnership" take-up and implementation in [State]. ############################# Updated, Monday, June 10, 2013, 12:56 PM (Eastern)Richmond, VA— ############################# FLTCI IN THE LIMELIGHT AND LTC NEWS AND COMMENT
LTC Comment: Private long-term care insurance gets more than its share of negative media coverage. So when a good, positive story comes out, it’s worth highlighting. Such is our lead for today’s LTC E-Alert . . . 6/5/2013, “LTC: Perfect gift for him, her & you,” by Mike Causey, FederalNewsRadio.com Quote: "Personal example: My mother was a long-time federal worker (HUD, HHS, Social Security and the U.S. Information Agency). She retired before the government offered LTC coverage. But as soon as they did, I urged her to sign up. She very reluctantly agreed, although like a lot of us, she didn't like to think about things like that. Anyhow, I thought I was doing her a favor. Turns out it was one of the biggest late-in-life gifts she could give to me. After being healthy as a horse and a big walker (she didn't learn to drive until her early 30s), as well as following a careful diet, she got dementia. We didn't know it at first, but it got worse. For the last couple of years, she had to be in a nursing home. She required watching and 'round-the-clock care. As her only child, I (with a very big assist from my kids and their spouses) was it! Thanks to her federal annuity, Social Security (she worked a long time in the private sector, too) and LTC, she had relatively few bills. Same for me. It was sad, it was trouble, it was awful (especially for her). But it could have been so much worse. She was able to stay in a great place (considering the situation) that was 20 minutes from me and her grandchildren. Thanks to LTC, the icing on the cake, she had a very good quality of life (considering the circumstances), and we weren't always sweating the money and quality of care." LTC Comment: Congratulations to CEO Paul Forte and everyone associated with the federal LTC insurance program for this terrific publicity and for making one more LTC story have the happiest possible ending. ############################# 6/7/2013, “Fine Print and Red Tape in Long-Term Care Policies,” by Tara Siegel Bernard, New York Times Quote: "One of the big reasons people buy long-term care insurance is to avoid burdening a spouse or grown children when they can no longer care for themselves. But some family members are shouldering another type of burden: one that involves piles of paperwork and repeated phone calls, as they are forced to navigate a labyrinth of requirements to collect benefits that the insured spent many years paying." LTC Comment: Thank goodness the alternative—applying for Medicaid benefits—is so efficient and unburdensome. Not! ############################# 6/6/2013, “Genworth To Eliminate 400 Jobs,” InsuranceNewsNet.com Quote: "Genworth Financial, Inc. (NYSE: GNW) today announced an expense reduction plan as it continues to work on improving the operating performance of its businesses. This plan will eliminate approximately 400 positions, including 150 open positions that will not be filled, and will reduce related information technology and program spend. When fully implemented, the company expects to realize approximately $80 to $90 million in annual pre-tax expense savings primarily related to these actions." LTC Comment: The private LTCI industry struggles to adapt with premium increases and expense reductions while the public LTC programs continue to ignore financial reality and the Fed supports bad fiscal policy with near-zero interest rates. When will this bubble pop? ############################# 6/7/2013, “CMS crackdown doubles Medicare removals,” by Tim Mullaney, McKnight’s LTC News Quote: "The Centers for Medicare & Medicaid Services has removed 14,663 healthcare providers and suppliers from the Medicare program in the last two years, the agency announced Thursday. The figure more than doubles the number of removals from the prior two-year period." LTC Comment: Government is much more proficient at giving money away than it is at preventing fraud or recovering mis-appropriated funds. Profit motive and competition compel private companies to monitor spending more carefully in the first place and to correct abuses by employees or customers quickly and efficiently. ############################# 6/6/2013, “Feds settle first genetic discrimination lawsuit,” by Keith R. McMurdy, Employee Benefit Adviser Quote: "Plans may not request or require individuals or their family members to undergo genetic testing or to provide genetic information. As defined in the law, genetic information includes family medical history and information regarding individuals' and family members' genetic tests." LTC Comment: Forbidding private insurance to use genetic information in underwriting invites abuse of the same information by insureds, increases adverse selection, and undercuts actuarial analysis. ############################# 6/4/2013, “Timely Long Term Care Insurance Option Reduces Coverage Costs,” by Jesse Slome, WSJ press release: “The Wall Street Journal news department was not involved in the creation of this content.” Quote: "'The Guaranteed Purchase Option (GPO) allows more people to buy coverage they can afford,' explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). 'You lock in meeting the required good health qualifications along with the advantage of lower rates, plus you still have the ability to increase coverage in future years -- an extremely attractive combination.'" LTC Comment: Premium Elite Center member Sally Leimbach observed “Jesse is correct but consumers have to be careful that their state will allow that [Guaranteed Purchase Option] as Partnership Qualified. Most of those options go away if not exercised and when a person goes on claim. Still better then nothing, but consumers MUST receive the full pros and cons from their broker to make a fully informed decision.” ############################# 6/3/2013, “Baby boomers are killing themselves at an alarming rate, raising question: Why? [link],” by Tara Bahrampour, The Washington Post Quote: "It has long held true that elderly people have higher suicide rates than the overall population. But numbers released in May by the Centers for Disease Control and Prevention show a dramatic spike in suicides among middle-aged people, with the highest increases among men in their 50s, whose rate went up by nearly 50 percent to 30 per 100,000; and women in their early 60s, whose rate rose by nearly 60 percent (though it is still relatively low compared with men, at 7 in 100,000)." LTC Comment: “(I hope I die before I get old (Talkin' 'bout my generation)).” ############################# 5/31/2013, “Congressional Long-Term Care Panel Will Finally Meet, But Odds For Success Are Worsening [link],” by Howard Gleckman, Forbes Quote: "The other controversy focused on whether wealthy people artificially dispose of or hide assets in order to become eligible for Medicaid. Stephen Moses frequently makes this claim and he did again on Friday based on what he says are interviews with state Medicaid officials. Unfortunately, Mark echoed this claim. However, many studies, including a new one by Josh Wiener, tell a different story. The vast majority of those who enroll in Medicaid long-term care never had much in the way of assets, and thus had very little to give away. While it is true that some people abuse the system, the evidence is pretty clear: The problem is much smaller than Stephen and Mark assert." LTC Comment: Apparently Mr. Gleckman drifted off when I explained how basic Medicaid eligibility and Medicaid planning in general, not simply asset transfers, explain why the affluent get as many benefits from the welfare program as the poor, as established by a Chicago Fed study. Thankfully, C-SPAN covered the event live and the video is archived on AEI's website so please do watch and reach your own conclusions: http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/. ############################# 5/31/2013, “Dementia Risk Raised 35% by General Anesthesia in Study,” by Kristen Hallam, Bloomberg Quote: "Older people who undergo general anesthesia for major surgery have a 35 percent higher risk of developing dementia later in life, according to a French study." LTC Comment: One more factor to underwrite? ############################# 5/31/2013, “Medicare Trust Fund's Life Extended, But What Does It Really Mean?,” by Mary Agnes Carey and Kaiser Health News, PBS News Hour Quote: "Slower growth in spending is helping extend the life of Medicare's hospital trust fund to 2026, two years beyond last year's estimate, officials said Friday. They also reported, however, that Social Security's disability trust fund, which pays monthly benefits to disabled workers and their families, is expected to be exhausted by 2016. Social Security will begin to run out of money in 2033, nearly the same time frame as predicted last year." LTC Comment: You could call the Medicare news "good" except that all the money in the "trust fund" has already been borrowed and spent by the government. Hardly encouraging, yet the media coverage of this development was mostly cheerful! ############################# 5/31/2013, “Using your Health Savings Account for Long-Term Care,” by Ann G. Schnorrenberg, US News & World Report Quote: "Health savings accounts are one of the most tax favored savings vehicles available to Americans. Since they are completely tax free — funded with pre-tax dollars and not subject to taxes at withdrawal —they are a great way to save money for future medical costs. In particular, the HSA could be a good way to help cover long-term care costs." LTC Comment: “[A]n HSA (health savings account) is an account established to pay for qualified medical expenses, including qualified long term care costs and long term care insurance premiums. Contributions and withdrawals are tax-free for qualified expenses.” Source: The Federal LTC Insurance Program. ############################# 5/31/2013, “SNF margins cut in half, Alliance report says,” by Tim Mullaney, McKnight’s LTC News Quote: "With income margins decimated by Medicare and Medicaid cuts and access to capital strangled, skilled nursing facilities will be unable to care for the nation's booming senior population unless changes are made, according to a new report from the Alliance for Quality Nursing Home Care." LTC Comment: The fiscal walls are finally closing in on government-financed long-term care. ############################# 5/30/2013, “Coping With Alzheimer's: A Mother and Daughter Portrait Of Long-Term Care [link],” PBS Quote: “After being diagnosed with Alzheimer's, professional artist Mary Wyant slowly lost her ability to paint and the ability to take care of herself. Ray Suarez examines the story of Mary and her daughter Rebecca, who is now her mother's legal guardian and primary caretaker, about the daily struggles of long-term care.” LTC Comment: The following note from Center member B.J. Randolph inspired us to find and share this item: "Did you see the evening PBS news? A great video of a 48 year old daughter caring for her mother with Alzheimer's Disease, for years, to illustrate a message, '70% of 65 year olds will need care ..... but the majority has not made plans for it .....' It was a lengthy part of the news ... well done. I was both touched and hopeful that LTC was reaching a national audience on this respected program and that the subject is emerging more and more into the light of day." ############################# 5/30/2013, “Variation In Medicare Costs Is Mainly Due To Post-Acute Care,” by Peter Ubel, Forbes Quote: "If we want to control Medicare spending, this analysis suggests we need to focus our efforts on post-acute care. Our obsession with hospital costs and physician bills may be misplaced. It could be time to look much more closely at things like the nursing home industry, the home healthcare industry, and places that specialize in long-term care. Not quite as sexy as those other topics. But worrying about sexy doesn't help us control healthcare spending!" LTC Comment: More proof rational LTC financing policy is critical and could produce major savings. ############################# 5/30/2013, “Debt of the Elderly: Housing: Debt payments as a percentage of income steadily rising [link],” by Craig Copeland, Ph.D., Life & Health Advisor Quote: "As described in more detail below, debt levels of the current elderly and near-elderly are at much higher levels than they have been for past generations. Among families with heads age 75 or older, both housing and consumer debt levels increased in 2010. Moreover, for this cohort, a larger percentage had debt levels above the threshold considered problematic. While a high debt level is not necessarily a sign of financial danger for all elderly or near elderly families (especially if they are also high-income), housing debt (typically the most financially significant asset elderly families have) is of particular concern, because leveraging it at this point in their lives may leave them without a major resource to finance an adequate retirement." LTC Comment: This finding is worrisome especially because tapping home equity to fund LTC privately and to encourage the purchase of LTC insurance is just about the only hope government has to save Medicaid as a long-term care safety net. ############################# 5/29/2013, “SSA Representative Payee Program: Addressing Long-Term Challenges Requires a More Strategic Approach [link],” Government Accountability Office Quote: "Although changing demographics and resource constraints will challenge the future administration of the Representative Payee Program, SSA has done little to position itself for the long term. The projected growth in the aged population, as well as the incidence of individuals with dementia, will have implications for the program, as SSA will have to spend more resources finding and monitoring payees. These challenges are exacerbated by staff and resource constraints, which could make SSA less able to identify and address payee benefit misuse." LTC Comment: Abuse of Social Security by representative payees is a major problem for LTC providers. Frail or infirm elderly on Medicaid must contribute most of their income toward their cost of care, including their Social Security benefits. But payee reps, often the same people who take early inheritances to put their parents on Medicaid, sometimes keep the Social Security checks for themselves. Federal and state Medicaid programs usually do nothing to help recoup such funds. They leave the responsibility to collect in the hands of LTC providers who are already receiving less than the cost of care from Medicaid. Losing the Social Security income too adds insult to injury and is one more reason why LTC providers are struggling and publicly financed LTC has a quality problem. ############################# 5/29/2013, “Genworth Down to Underperform,” Nasdaq Quote: "Life insurance sales slipped 68% year over year, while long-term care insurance sales decreased 17% year over year. In addition, loss ratios of long-term care insurance business have been increasing over the past several years and ranged from 65% to 71% over the last five years." LTC Comment: Lower lapse rates and higher loss ratios make a double whammy. ############################# 5/29/2013, “Health Differences May Explain Medicare Spending Variation,” by Jordan Rau, National Public Radio Quote: "The idea that uneven Medicare health care spending around the country is caused by wasteful practices and overtreatment — a concept that has influenced portions of the federal health law — took another hit in a study published Tuesday. The analysis concludes that differing levels of health of people around the country explain between 75 percent and 85 percent of cost variations in Medicare. ‘People really are sicker in some parts of the country,’ said Dr. Patrick Romano, one of the authors.’” LTC Comment: Just as the alleged $70 billion savings from CLASS disappeared in the light of good analysis, so too is another dubious health-reform money saver proving baseless. There simply are not billions of dollars to be saved by standardizing Medicare’s service delivery. ############################# 5/28/2013, “Boomers: Older, Wiser and... Worried,” by Gail Buckner, FoxBusiness Quote: "Now, a recent study by Merrill Lynch and the demographic experts at Age Wave indicates that as boomers are moving into the next stage of their lives, their priorities are coming into sharper focus. And their attention is not about having a fat 401(k). There is fear of the unknown, such as how healthy they or their spouse will be. A shockingly-high number of boomers- 90%- say they are not confident they will be able to afford they health care they might need. They've mixed feelings about living longer. They're worried about running out of assets and concerned that Social Security and pension benefits they are expecting might not be there." LTC Comment: Consumers are worried, yes, but most fail to act. Could it be that eight decades of social insurance programs--which spread but don’t price risk--created a sense of entitlement that undercuts personal responsibility? ############################# 5/28/2013, “Senior health care crisis looms; report ranks states,” by Michelle Healy, USA Today Quote: "An aging nation that's living longer but with growing rates of obesity, diabetes and other chronic diseases points to an emerging health care crisis, says a report out Tuesday that analyzes seniors' health status state-by-state. . . . LONG-TERM CARE: Investigate your options early." LTC Comment: The evidence mounts as dependably as consumers and policy makers ignore it. ############################# 5/24/2013, “Sequestration 2.0 likely to take another bite out of provider payments,” by John O’Connor, McKnight’s LTC News Quote: "For many long-term care providers, dealing with funding cuts that began in March has amounted to making the best of a bad situation. Automatic sequestration cuts are trimming Medicare payments by 2%, while many complementary programs are being held back or halted. That's the bad news. The really bad news is that things are likely to get worse. Thanks to pending sequestration cuts that are beginning to look all but inevitable, more cuts may be coming." LTC Comment: Historically, when government cuts LTC provider rates, providers compensate by raising private-pay rates, which increases the incentive for people to qualify for public financing. It's a vicious downward cycle ruining quality care while discouraging responsible LTC planning. ############################# Updated, Friday, June 7, 2013, 12:30 PM (Eastern)Richmond, Virginia— ############################# LTC BULLET: THE ROLE OF ESTATE RECOVERIES IN LTC FINANCING LTC Comment: When Medicaid pays for expensive LTC without recovering from estates, it subsidizes irresponsibility and hurts the poor. Details after the ***news.*** *** SILVER BULLET IN VIRGINIA. I write this in the Silver Bullet of Long-Term Care with rain pattering on the aluminum roof. I’m in Richmond, Virginia to begin a study of Medicaid and long-term care financing for the Thomas Jefferson Institute for Public Policy, the Commonwealth’s leading non-partisan think tank. From here, I’ll head to New Jersey and later to Georgia to conduct the same studies. In the meantime, we’re keeping a close eye on LTC public policy developments in Washington, DC including the new LTC Commission’s slow start. *** *** LTC COMMISSION. The new study group has a huge task, a short time frame, a late start and little or no budget. Nevertheless, there is a propitious beginning to report. Mark Warshawsky, Ph.D. wrote an excellent paper titled “Questions for the New Federal Commission on Long-Term Care.” Tap the link and read it in the LTC Discussion Group’s archives. You won’t be disappointed. And don’t miss the American Enterprise Institute’s panel discussion of Warshawsky’s paper (“Long-term care: Markets or mandates?”) which was covered live by C-SPAN and is available on AEI’s website for viewing here. Hear my 15-minutes of commentary at the 1:32:44 (one hour, 32 minute, and 44 second) point in the program. Controversy erupted after the program when two panelists privately challenged my assertion that IRAs are exempt for purposes of determining asset eligibility for Medicaid LTC. My position proved correct when the question was put to an expert on the subject of SSI eligibility. *** *** “TRUST FUND MADNESS” is the Washington Post’s hook to Bob Samuelson’s column titled “Trust funds are least of Social Security, Medicare problems.” If you read any of the many good-news columns about alleged improvements in the Social Security and Medicare “trust funds,” you should read Samuelson’s rebuttal which puts the lie to such Panglossian nonsense. *** ############################# LTC BULLET: THE ROLE OF ESTATE RECOVERIES IN LTC FINANCING LTC Comment: The Center for Long-Term Care Reform has published a new report titled “Maximizing NonTax Revenues from MaineCare Estate Recoveries.” It explains the need for estate recoveries, recounts best practices from leading estate recovery states, recommends 20 actions MaineCare (Maine’s name for Medicaid) should take to increase recoveries, and includes an annotated bibliography of publications both for and against estate recovery. We thank the Maine Heritage Policy Center and the Maine Health Care Association for their support of this work. Check out the report here: http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf. “Read the Executive Summary” below. But first some background: The DHHS Inspector General’s 1988 report titled “Medicaid Estate Recoveries,” which I wrote by the way, made three major recommendations:
Federal law (OBRA ’93) implemented all three of those recommendations creating what has been called a “government-sponsored home equity conversion program.” The plan was that Medicaid would retain its huge asset exemptions so that people stricken by the chronic illness of old age would not be forced into poverty, but neither would they be rewarded for failing to save, invest or insure for long-term care. On the way from federal legislation to nationwide implementation, however, the plan went awry. State Medicaid programs didn’t implement strongly, the federal government didn’t enforce aggressively, the media didn’t report, and the public remained unaware and hence uninfluenced by the positive incentives in the law to plan for LTC. Two decades later, Medicaid coverage for LTC expenses remains easy to obtain without spending down, most states do not utilize liens to secure exempt property, and estate recoveries—though mandatory—remain spotty. Consequently, Medicaid continues to discourage responsible LTC planning, rewards failure to plan for LTC, and therefore crowds out both privately financed home and community-based care and private LTC insurance to pay for care. Bottom line, Medicaid LTC financing remains a quagmire of perverse incentives and unintended consequences that will get much worse as the baby-boom generation retires and finally needs LTC in big numbers. So, what does our new report have to say about the situation as it is manifested in Maine and the eight other leading states we reviewed? ############################# Executive Summary from “Maximizing NonTax Revenue from MaineCare Estate Recoveries”: MaineCare is Medicaid in Maine, a means-tested public assistance program, partially funded by the state and federal governments. It is the dominant payer for institutional and home and community-based long-term care in the state. MaineCare, especially its long-term care component, is a huge expense to the state budget, at risk of crowding out expenditures for other critical state programs, facts explained and documented in our earlier report titled “The Maine Thing About Long-Term Care Is that Federal Rules Preclude a High-Quality, Cost-Effective Safety Net.”[1] Federal law exempts substantial assets from Medicaid’s resource limits, such as for example, home equity up to a minimum of $536,000. But federal law also mandates that state Medicaid programs recover the cost of care provided from the estates of deceased recipients or from the estates of their surviving exempt relatives. Thus, although Medicaid is intended as a health and long-term care safety net for the poor, it has also become the predominant funder of most expensive long-term care for the middle class and often for the affluent as well. Without strong estate recovery, state Medicaid programs become free inheritance insurance for baby-boomer heirs. MaineCare operates an inexpensive and quite effective estate recovery program that returns an average of $6.7 million per year in state and federal funds to the state which can be re-invested in the program to benefit citizens who need help with the catastrophic cost of long-term care in the future. By interviewing experts in eight of the leading Medicaid estate recovery states, we identified numerous ways in which MaineCare might increase its estate recoveries by as much as double or triple the amount of current recoveries to a total of $13.4 million or $20.1 million, respectively. To achieve such dramatic results, MaineCare would need to seek new state statutory authorities such as an expanded definition of “estate,” the ability to place liens on real property during a recipient’s lifetime, and elimination of the current “family allowance” which prevents recovery from estates with less than $10,000 in most cases. Operationally, MaineCare would need to invest more in its estate recovery unit to reduce its cost-effectiveness ratio from $25 in recoveries for each dollar of cost to something more closely approaching a ratio that maximizes total recoveries, perhaps $10 to $15 in recoveries per dollar of cost. With additional staff resources, the MaineCare estate recovery unit could pursue all of the best practices listed in the “Recommendations” section below. MaineCare’s long-term care program performs a valuable service for Mainers, enabling them to obtain expensive long-term care when they need it without financial devastation. The program’s federally mandated quid pro quo is that beneficiaries of the state’s and federal government’s largesse repay the program from their estates. That is the moral high ground MaineCare’s estate recovery program occupies. Citizens, policy makers and law makers who support and encourage the program help to ensure that MaineCare will continue to provide a long-term care safety net for Mainers without busting the state’s budget. ############################# [1] Stephen A. Moses, “The Maine Thing About Long-Term Care Is that Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” Center for Long-Term Care Reform, Seattle, Washington, November 2012; http://www.centerltc.com/pubs/Maine.pdf. ############################# Updated, Thursday, May 30, 2013, 12:57 PM (Eastern)Washington, DC— ############################# LTC BULLET: LET’S PLAY LTC JEOPARDY LTC Comment: Good public policy comes down to asking the right questions. Finally, someone has and we’ll provide the right answers after the ***news.*** *** A VERY THOUGHTFUL PAPER written by an appointee to the new LTC Commission inspired today’s LTC Bullet. Tomorrow (Friday) morning, you can watch online as its author presents the paper and five experts discuss it. We highlight this opportunity because it promises to be a very enlightening program and well worth anyone’s time who cares about LTC financing policy. The details follow. *** *** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents “Long-Term Care: Markets or Mandates?” on Friday, May 31, 2013 from 9:15 a.m. - 11:15 AM Eastern Time at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will “explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones.” Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a widely-published LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). AEI’s highly regarded analyst Joe Antos will moderate the program. If you can’t be there in person, check out the live stream here or catch it later in AEI’s archives where the full video will be posted within 24 hours. For more information, please contact Catherine Griffin at catherine.griffin@aei.org, 202-862-5920. *** ############################# LTC BULLET: LET’S PLAY LTC JEOPARDY LTC Comment: When it was announced, no one—I among them—held out much hope for the new “LTC Commission,” created by the oxymoronically named American Taxpayer Relief Act of 2012. But the first output to come from one of the new commission’s members has me thinking more positively. Mark J. Warshawsky, Ph.D., who served as Assistant Treasury Secretary for Economic Policy in the G.W. Bush administration, has written a paper titled “Questions for the New Federal Commission on Long-term Care to Address Prior to Legislative Recommendations.” He’s definitely asking the right questions, as few scholars have, so do click the link and read his paper. Your time will be amply rewarded. But right now let’s play a little “LTC Jeopardy.” As on the TV quiz show, we’ll supply the answers and then see which of Dr. Warshawsky’s questions they resolve. Because our answers contradict much of the conventional academic wisdom about LTC financing, I think you’ll see why we’re so excited someone’s finally asking the critical questions that only our analysis can explain. We’ll close with a final “LTC Comment” that resolves once and for all the puzzling conundrums raised by Warshawsky’s paper. Ready contestants? Here goes. Answer #1: Well-intentioned but counterproductive public policy, which pays for most expensive long-term care without requiring strict financial eligibility limits, has anesthetized the public to LTC risk and cost resulting in their failure to plan, save, invest or insure and guaranteeing a ever-worsening financial crisis as the Age Wave crests. MJW’s Questions: “What has caused this rapid growth in LTC spending? . . . What role is played by the creation of government funded social insurance and welfare programs? Other factors? Will the rapid growth continue into the near future? The next twenty to thirty years? Over the horizon used by the Trustees of the Social Security and Medicare programs?” (p. 3) Answer #2: Despite decades of wishful thinking by academics and policy makers, providing home care financed by public programs without limiting eligibility to people in financial need does not save money compared to institutional care because home care loses the economy of scale, is very expensive to control for quality, crowds out free family care, invites fraud, encourages Medicaid gaming/dependency, and discourages private LTC planning and personal responsibility. MJW’s Questions: “In light of a reported trend in up-coding as well as recent discoveries of outright fraud on Medicare arising from the home health care industry, is growth in this component of spending a source of concern? Can home health care be an efficient replacement of nursing home services, saving the government money, or does it replace free care provided by families and friends and volunteers?” (p. 3) Answer #3: Decades of easy access to publicly funded long-term care through Medicaid, Medicare and the VA has left those programs shackled with trillions of dollars of unfunded liabilities and hopelessly unable to meet the claims of future beneficiaries. MJW’s Questions: “In light of the well-established tendency (commonly called moral hazard) for insurance provision to encourage over-spending, is this shift in the sources of funding for LTC [from mostly private to mostly public] efficient, both in terms of government spending and outcomes? . . . How significant is growing LTC spending in Medicare’s long-standing and deepening deficits and its poor future prospects? . . . How significant are the absence of look-back periods and other constraints on program eligibility for the growth in spending by the VA on LTC? . . . Combining all sources of federal government spending on LTC, and taking a Trustees long horizon approach to evaluating the sustainability of spending and financing, what is the long-term projected status of current law federal government support of LTC?” (p. 4) Answer #4: Asset shifting, or more generally Medicaid planning, is a problem, but the far bigger problem, rarely recognized by analysts including Warshawsky, is that Medicaid LTC eligibility is easy for most middle class people to obtain because income is rarely an obstacle and virtually unlimited assets are exempt. MJW’s Questions: “What is the empirical evidence on asset shifting to gain Medicaid eligibility for LTC services? How strong is state-level enforcement of these rules, including collection efforts? What are the administrative systems in place to police compliance with these rules?” (p. 5) Answer #5: Because of Medicaid’s generous income and asset eligibility rules, people can ignore the risk of LTC, wait to see if they ever need expensive long-term care, and if they do, qualify easily for the program’s most expensive benefit. That’s been true since Medicaid began in 1965, so it’s no surprise that most aging Americans don’t make LTC planning or insurance a priority. MJW’s Questions: What is the evidence, empirical or logical, that the Medicaid crowd-out explanation for the (growing but still) relatively moderate size of the private LTC insurance market is the (largely) correct one? (p. 5) Answer #6: The fact that affluent people get as much or more Medicaid LTC benefits as poor people is only hard to understand if you assume incorrectly—as most scholars do, including those whose Chicago Fed paper Warshawsky cites—that Medicaid forces people to spend down into impoverishment unless they “shift assets.” It doesn’t. MJW’s Questions: “In particular, does the empirical finding that the well-to-do and long-lived qualify for Medicaid to a surprisingly high degree imply that significant asset transference activity is taking place, or, alternatively, that these households are inadequately protected financially for longevity?” (p. 5) Answer #7: Public information programs about the need to plan for LTC have little effect because they invariably claim that catastrophic asset spend down awaits victims of long-term illness which is not true because public financing is factually easy to obtain and the public simply doesn’t take such scary “education” seriously. MJW’s Questions: “How economically significant are the survey results of public confusion about government program coverage for LTC. That is, does lack of knowledge account for why there is not more saving and insurance provision among those for whom advance planning may be possible and sensible (middle class population and above)? If this explanation is important, what are its implications? In particular, can public information campaigns or private marketing help alleviate the knowledge gap?” (pps. 5-6) Answer #8: The LTC Partnership Program only increases LTC insurance sales marginally because forgiveness of the alleged Medicaid spend down requirement, which hardly exists in the first place and likely wouldn’t occur until decades after purchase of a partnership policy, is little incentive to plan or buy. By targeting Medicaid LTC benefits to people most in need, public policy could unleash an enormous source of new private financing for LTC from home equity conversion and private LTC insurance, which would finally be in demand. MJW’s Questions: “Do partnership policies save or cost the government (state and federal) money? Do they expand the LTCI market beyond what it would be otherwise in a leveraged way, for example, through marketing of partnership policies, thereby increasing public knowledge of the limits and deficiencies of public insurance? In the current low inflation environment, is the 5% automatic increase feature for partnership policies still a reasonable requirement? Are there other non-insurance private sources of individual funds of LTC spending whose accumulation can be encouraged? Can Medicaid and Medicare be better structured to incent the wider use of private insurance and/or personal savings accumulated over a working lifetime for LTC?” (p. 6) LTC Comment: Okay, enough with Jeopardy. Let’s put the Qs & As back into the normal order. In a nutshell, Mark Warshawsky’s paper asks the following questions either explicitly or by implication: If people can’t get government-financed long-term care without spending down their life’s savings into total impoverishment, then . . .
The answers to all these questions and many more turn on correcting the fallacious premise that most analysts assume, i.e. that “people can’t get government-financed long-term care without spending down their life’s savings into total impoverishment.” Here are the facts:
But here’s the good news: if we just stop doing what we’ve always done (giving away free LTC after people need it), we’ll stop getting the same result (exploding public costs, complacent consumers, and minimal private LTC financing). That’s the formula for sane public policy. And even better news: it won’t be hard to do. Drop the federal home equity exemption from its current stratospheric level to something closer to England’s $36,000 exemption (for all assets including home equity); eliminate the “Maintenance of Effort” requirement in ObamaCare so that state Medicaid programs can tighten LTC eligibility rules within existing federal limits; and encourage state experimentation with tighter financial limits and stronger estate recovery programs designed to encourage early and responsible LTC planning. Do those things and the puzzling conundrums raised by Mark Warshawsky’s excellent paper will disappear like morning mist in the hot summer sunshine. ############################# Updated, Tuesday, May 28, 2013, 12:24 PM (Eastern)Columbus, OH— ############################# LTC E-Alert #13-017: Hybrids vs. Traditional LTCI and LTC News and Comment
LTC Comment: Thanks to Bronze Corporate Member Rick Leonard, President of Long Term Care Resources, for this thought-provoking query: “Most of the LIMRA and other studies we see on individual LTC sales never account for hybrids like TLC and Moneyguard. There are now numerous other Life policies that have LTC riders and these sales are not tracked. “As I look at this, I consider every one of these hybrid or Life w/ LTC rider sales to be an LTC sale. It may not provide the coverage of traditional LTC but the in the customer’s mind – the LTC issue has been solved. The Life agent is selling it that way in a lot of cases and even if the limitations are explained to the consumer, they have checked off the box for having LTC coverage. They are not replying to any direct mail letter we send them or any other solicitation from an LTC Advisor. “So, under this view point, the year over year sales on LTC may look drastically different and the market penetration as well. Have you seen any data that includes any hybrid or Life w/rider sales data? “Thanks for your help. Rick Leonard “PS With a $50,000 average premium, this would convert to $70 million or more in LTC premium. The actual people planning for LTC could look very different than traditional LTC sales. Life distribution far outpaces traditional LTC sellers.” We replied: “Rick: “According to Broker World's "2012 Long-Term Care Insurance Survey" authored by Claude Thau & Dawn Helwig & Allen Schmitz and published in the July 2012 issue: “‘Life/LTCI and annuity/LTCI products (referred to as hybrid, combination, linked or asset-based products) continue to become a larger factor in long term care planning, accounting for more than $1.5 billion in single premium sales in 2011. These products are attractive because benefits are certain to be received; pricing has been more stable than for past stand-alone LTCI policies; and certificates of deposit have low yields. These products may supplement stand-alone LTCI. If interest rates rise sharply in the future, there may be an avalanche of 1035 tax-free exchanges to hybrid annuities.’” Query: Do hybrid policy sales crowd out traditional LTCI? ------------------ 5/24/2013, “AALTCI: Average age of life-LTC insureds drops,” by Allison Bell, LifeHealthPRO Quote: "The percentage of male buyers who are under age 65 increased to 56 percent in 2012, from 53.5 percent in 2011. The percentage of female buyers who are under age 65 increased to 53.5 percent, from 50 percent. . . . [T]he approval rate for consumers who applied through agents affiliated with the firm fell to about 65 percent in 2012 and 2013, from about 81 percent from 1999 through 2011." LTC Comment: Makes sense: younger people are buying LTCI as coverage rejections increase. ------------------ 5/24/2013, “Senior panel to consider LTCI model update,” by Allison Bell, LifeHealthPRO Quote: "The Senior Issues Task Force, an arm of the National Association of Insurance Commissioners (NAIC), has put proposed changes to the NAIC's LTCI model regulation and a proposed model LTCI rate increase bulletin on the agenda for a two-day LTCI meeting." LTC Comment: Beware! The regulators are at it again. ------------------ 5/24/2013, “How Growth of Elderly Population in U.S. Compares With Other Countries [link],” by Francesca Colombo, PBS News Hour Quote: "By 2050, more than 32 million Americans will be over the age of 80, and the share of the 80-plus generation will have doubled to 7.4 percent. Across the 34 OECD countries, the share of people over the age of 80 is projected to grow even faster, from 4 percent today to almost 10 percent in the same time period. While more and more elderly people will still enjoy active, healthy lives and contribute to society, many are likely to have at least one chronic condition. Today, three out of four Americans aged 65 years and older have to cope with health concerns such as cardiovascular disease, diabetes, cancer or chronic respiratory diseases." LTC Comment: The OECD countries face even greater challenges from the age wave than we do. But our problem is bad enough. Complacency is very dangerous both for individuals and for public policy makers. ------------------ 5/23/2013, “New York Long Term Care Insurance Partnership Costs Too Much for Many [link],” by Jesse Slome, Kansas City InfoZine Quote: "The high cost for New York Long Term Care Insurance Partnership policies make far more affordable options well worth considering today according to the head of the American Association for Long-Term Care Insurance." LTC Comment: What LTC Partnerships give in Medicaid spend down forgiveness, they too often take away with mandated benefits that make the coverage unaffordable. ------------------ 5/23/2013, “Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers [link],” MetLife Mature Market Institute Quote: "Now turning 67 years old, the first set of Baby Boomers, those born in 1946, continue to be myth-busters, according to a new study, Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers. The data, from the company’s MetLife Mature Market Institute, says the earliest Boomers aren’t necessarily “working ’till they drop,” as was predicted." Source: http://www.lifehealth.com/oldest-boomers-are-retiring-at-a-quick-rate/ LTC Comment: Find the MMMI study here. Highlights: “Long-term care rose to the top of the list of retirement concerns; 31% reporting concern about providing for themselves or their spouses.” “Despite the fact that they are worried about long-term care, just under a quarter owns private long-term care insurance.” ------------------ 5/22/2013, “Stroke Costs to Double by 2030, Groups Say,” by Crystal Phend, MedPage Today Quote: "The rising prevalence of stroke in an aging population is likely to more than double the cost of stroke care over the next two decades, the American Heart Association and American Stroke Association warned." LTC Comment: A datum that should open aging eyes to the need for LTCI. ------------------ 5/22/2013, “How can we fix long-term care insurance?,” by Alicia H. Munnell, WSJ MarketWatch Quote: "My colleagues and I really like the idea of a catastrophic policy with the premiums paid up front. That is, the product would pay benefits only after the individual had paid for, say, 18 months of nursing home care - about $120,000. This arrangement would change an unbounded black hole of an expense into a known quantity. Moreover, the premium for this benefit would be relatively modest and could be paid in a single lump sum at retirement so that people would not worry about premium costs climbing as they age. The hope would be that once people felt like they understood the dimensions of their exposure to long-term care costs, they would feel more comfortable about spending their 401(k) balances and tapping their home equity." LTC Comment: A smart government would grant above-the-line tax deductibility to such a policy in a heartbeat, because it would translate into massive, easily documented Medicaid savings many times the cost of the deduction. That’s because the biggest expense to Medicaid is long-term institutional care. The average period of time from onset to death in Alzheimer’s Disease is eight years. ------------------ 5/22/2013, “Why Baby Boomers Need To Get Real About Health and Long-Term Care Costs In Retirement [link],” by Howard Gleckman, Forbes Quote: "That collapse in assets, driven by both medical and long-term care costs, may partially explain why so many nursing home residents end up on Medicaid. As Josh Wiener found in his recent study, the vast majority of those who became eligible for Medicaid long-term care benefits never had much to start with." LTC Comment: If that alleged "collapse in assets" were really happening, LTCI would be flying off the shelves. But Medicaid co-opts most LTC spend down by paying for the vast majority of all high LTC costs, especially for middle-class and affluent people. Both the author of this article and the researcher he cites will be on a panel with me at the American Enterprise Institute on May 31. Check "events" at www.aei.org for details, http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/ They'll stream the event and archive it too. It should be a fascinating discussion. ------------------ 5/22/2013, “Medicare Nixes Coverage For New Cancer Tests,” by Scott Gottlieb, M.D., Forbes Quote: "Medicare has sharply changed the way it pays for diagnostic tests, cutting payment rates and curtailing coverage for some new tests altogether. The makeover in the way that Medicare reimburses molecular diagnostics has been foreshadowed for years, but was abruptly put into effect this summer." LTC Comment: Significance for CI insurance? ------------------ 5/22/2013, “Recession not entirely at fault for retirement crisis,” by Teck Lim, Employee Benefit Adviser Quote: "The economic recession may have sparked a retirement crisis in America, but other significant factors played a role in the derail. On average, retired and pre-retired Americans reported to have lost $117,000 in retirement savings due to unanticipated events, according to a survey conducted by Ameriprise Financial in February." LTC Comment: Long-term care is a major retirement "derailer," but it goes unmentioned in this article. ------------------ 5/21/2013, “Pensions Are Top Income Source for Wealthier U.S. Retirees; Social Security top source for less wealthy retirees [link],” by Jeffrey M. Jones, Gallup Economy Quote: "Specifically, 62% of retirees younger than age 70 say Social Security is a major source of retirement funds for them, compared with 61% of retirees aged 70 or older. Thirty-six percent of both age groups say pension plans are a major source of retirement income. In fact, the only noticeable difference between younger and older retirees comes in the extent to which they rely on 401(k) plans or IRAs, with older retirees more likely to cite these as a major source of retirement funds." LTC Comment: Any port in a storm, but Social Security is a weak vessel in the coming demographic tsunami. ------------------ 5/21/2013, “Wealthy Unprepared for Long-Term-Care Costs,” by Teck Lim, Financial Planning Quote: "Of the 711 high-net-worth adults with over $3 million in investable assets surveyed, 47% have created a financial plan to address long-term care needs that they and their spouse or partner might need, but only 18% have a financial plan that accounts for their parents' long-term care costs." LTC Comment: Maybe that’s because public policy incentivizes adult children to ignore LTC risk and cost for their parents, take an early inheritance if LTC needs arise, and put the parents in a nursing home on Medicaid. ------------------ 5/21/2013, “SNFs could see 50% payment reduction for Pre-Existing Condition Insurance Plan claims [link],” by Tim Mullaney, McKnight’s LTC News Quote: "The PCIP program was created as part of the Affordable Care Act in 2010. It was designed as a stop-gap program for people with pre-existing conditions, so that they could get healthcare coverage before the ACA takes full effect in 2014. At that time, most insurers will no longer be able to deny coverage or charge high premiums due to pre-existing conditions." LTC Comment: Another federal bait and switch. Promise consumers free services, then refuse to pay providers to supply it. ------------------ 5/20/2013, “Too young for long-term care insurance?,” by Bill Losey, WSJ MarketWatch Quote: "The fact of the matter is that long-term care insurance is something that nearly all of us are going to need. Whether we spend our later years in a nursing home, an assisted-living facility or live them out in our own home, we are probably going to need some sort of care." LTC Comment: No truer words were ever spoken. ------------------ 5/19/2013, “HSAs cover critical illness insurance,” by Joanne Wojcik, Business Insurance Quote: “Critical illness insurance is one of a handful of supplemental health insurance policies that workers covered by high-deductible health plans linked with health savings accounts can purchase under Internal Revenue Service rules. . . . Besides critical illness, other types of insurance permitted with high-deductible health plans linked to HSAs are accident, disability, dental, vision and long-term care, as well as insurance that pays a fixed amount per day of hospitalization.” LTC Comment: This is one of those rare areas in which CI and LTCI get positive encouragement from public policy. ------------------ ############################# Updated, Friday, May 24, 2013, 11:30 AM (Pacific)Seattle, WA— ############################# LTC Bullet #1,000: Medicaid Planning: Thousand Bullets RetrospectiveLTC Comment: Today the Center for Long-Term Care Reform celebrates its 1,000th LTC Bullet with this overview of 15 years of “Medicaid Planning” Bullets after the ***news.****** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents “Long-Term Care: Markets or Mandates?” on Friday, May 31, 2013 from 9:15 a.m. - 11:15 a.m. at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will “explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones.” Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a highly regarded LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). If you can’t be there in person, check out the program’s live stream here. For more information, please contact Catherine Griffin at catherine.griffin@aei.org, 202-862-5920. ***
*** PREMATURE LANDING. Last week's LTC Bullet, titled "How Will the LTC Plane Land?," included some of the top level results of a Delphi survey. The detailed report, including individual comments by survey participants, was explicitly embargoed, but LTC Bullets requested and believed we received permission to publish the top-level, summary findings. Evidently we misunderstood, as the directors of that study have indicated it was not their intent to permit any distribution of the results beyond the survey participants. We regret the error. Please disregard the report until it is released publicly. *** LTC BULLET #1,000: Medicaid Planning: THOUSAND BULLETS RETROSPECTIVELTC Comment: Once a week, usually on Fridays, we publish our LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the five latest Bullets here and archives of all 995 Bullets (so far), by date here and by topic here. These 1,000 articles are a valuable historical resource. Please make use of them. Search for key terms using Control-F on your keyboard. This year, in celebration of this thousandth LTC Bullet and the Center’s 15th anniversary (April 1), we are releasing a retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998. We’ll highlight one Bullet per year in each of seven major topics: “The LTC Problem and Solutions”; “Reality Check: The Facts on LTCI”; “Medicaid Planning”; “LTC Services”; “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.” Today’s Bullet is our “Thousand Bullets Retrospective” Number 3 covering “Medicaid Planning.” These “Medicaid Planning” Bullets address the impact Medicaid planning has on public programs and benefit recipients, the latest court and administration rulings and the effect on the marketability of private long-term care solutions. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane. ------------------ October 23, 1998: LTC Bullet: Attorneys Promote Medicaid as Alternative to LTC Insurance [link]. “Elder law attorneys who specialize in Medicaid planning (i.e., transferring or sheltering assets in order to qualify clients for Medicaid's long-term care benefits) routinely defend their practice by arguing that LTC insurance is not an alternative for their clients. They publicly claim to be helping only those who cannot afford or otherwise qualify for insurance. But what are they telling each other? In the Fall, 1998 issue of the NAELA Quarterly (the journal of the National Academy of Elder Law Attorneys), Baird Brown, a fellow and member of NAELA, clearly portrays Medicaid as the preferred alternative to LTC insurance.” ------------------ February 3, 1999: LTC Bullet: Perils of Medicaid. “A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows.” ------------------ August 15, 2000: Bill Gates on Medicaid? “Should Microsoft Chairman Bill Gates have Medicaid pay the bill if he ever needs long-term care? It makes sense ‘if you follow the arguments of elder law attorneys to their logical conclusions,’ says an Arkansas state official and critic of Medicaid planning. Here's the story: The August 2000 issue of the trade journal Contemporary Long-Term Care contains an article entitled ‘The Booming Business of Elder Law’ by New Hampshire nursing home administrator David Irwin. Perhaps you've heard us say: ‘You can't sell apples (LTC insurance) on one side of the street when they're giving them away (Medicaid benefits) on the other.’ Irwin's article shows that Medicaid planners are still dispensing plenty of the free fruit that gums up the long-term care insurance market. Easy money for Medicaid planners means tough sales for responsible financial planners and insurance agents. Want to see what you are up against? Here are some excerpts [in this LTC Bullet].” ------------------ April 25, 2001: They're Baaaack . . . Medicaid Planners Rise Again. “Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. Their conference agendas and publications carefully avoided the phrase "Medicaid estate planning." Even their highly publicized firebrands toned down the rhetoric considerably. Their trade association, the National Academy of Elder Law Attorneys (NAELA), plateaued at just under 4,000 members after skyrocketing for years. Of course, we know from following their actions—not just their words—that the actual practice of artificially impoverishing clients to qualify them for Medicaid hardly skipped a beat. Whether from shame or fear of prosecution, however, the Medicaid planning bar hunkered down in defensive mode for several years and didn't promote their services as loudly as before. That's all over now.” [See also: They're Baaack, Part II: Frank Comments, They're Baaack, Part III: "Buy Cattle, Get Medicaid, They're Baaack, Part IV: "Abandon Your Spouse . . . Get Medicaid", They're Baaack, Part V: "A Person With $1 Million Is Not Wealthy" and They're Baaack, Part VI: "Medicaid for the Upper Crust".] ------------------ September 5, 2002: Medicaid Planning Full Disclosure. “LTC Bullets readers frequently send us examples of flyers and web sites promoting easy access to Medicaid nursing home benefits. Complaints about Medicaid planning are just as likely to come from state and federal welfare administrators as they are to come from insurance agents and financial planners. Over the years, eight Congresses and three Presidents have struggled to discourage the widespread practice of artificial impoverishment to qualify for Medicaid. The government even went so far as to make it a crime: "Throw Granny in Jail" (repealed) and "Throw Granny's Lawyer in Jail" (unenforceable). Nothing seems to work. Now come Ross Schriftman, Associate Chair for Long-Term Care, and the National Association of Health Underwriters (NAHU) Long-Term Care Committee with a fascinating idea they have under consideration. Why not require Medicaid Planners to disclose the nature, consequences, and suitability of the self-impoverishment products they offer just as insurance agents and carriers must do for the legitimate financial products they market? You'll find the proposal that the NAHU folks are considering [in this LTC Bullet].” ------------------ March 4, 2003: In the Lion's Den of Medicaid Planning. “Medicaid planners wave a magic legal wand and shift the cost of long-term care from affluent elders to taxpayers and LTC providers while delivering a financial windfall to client heirs. See how one senior advocate and health care columnist spoke truth to power in a lion's den of Medicaid planners [in this LTC Bullet].” ------------------ March 4, 2004: No Wonder They Don't Buy LTCi. “Do Medicaid estate planners really advise adult children to grab their parents' money, yank them from private-pay assisted living facilities, stick them in a nursing home on welfare, and transfer the cost to taxpayers and providers? Read an actual Medicaid planning ‘engagement letter’ that does exactly that.” ------------------ August 8, 2005: The Great Debate on Medicaid and LTC. “On September 7, 2005 at the Cato Institute in Washington, DC, Steve Moses, president of the Center for Long-Term Care Reform, will debate Vincent Russo, a leading elder law attorney in New York and a former president of the National Academy of Elder Law Attorneys.” Watch or listen to a recording of the debate here: http://www.cato.org/events/medicaid-long-term-care-crisis-who-should-pay [link]. ------------------ August 3, 2006: Dueling Letters. “When I saw two articles justifying and promoting Medicaid planning in Life Insurance Selling magazine, I sent the following letter to the editor, Gordon Bess. He published it with the Medicaid planner's reply in the magazine's July 2006 issue. Both letters follow, republished with permission from Life Insurance Selling (www.lifeinsuranceselling.com).” ------------------ May 30, 2007: Medicaid Pushers. “Another NAELA member offers easy Medicaid LTC and seduces insurance producers with a promise of huge incomes.” Read about it in this LTC Bullet. ------------------ June 3, 2008: Medicaid Planning Update. “We have not published an LTC Bullet to expose the damaging practice of Medicaid estate planning for a long while. Following is kind of a grab bag, but it'll give you a feel . . . more like nausea . . . for the lucrative business of poverty-making.” ------------------ February 4, 2009: Why Stimulate Medicaid Planning? “The stimulus bill could help the poor elderly, the states, LTC providers, and encourage responsible LTC planning by closing Medicaid loopholes, but it doesn't.” Click the link above to find out why. ------------------ August 31, 2010: Medicaid Planning Up, LTCI Down. “It's no secret that long-term care insurance sales have languished over the past few years, despite a recent blip up. But government-financed LTC is on a rampage of expansion. It isn't just the new CLASS program, which is actuarially unsound and bound to wither and die. It's Medicaid, the historically dominant funder of long-term care for most Americans--rich, poor and in between.” ------------------ July 19, 2011: Russian Mafiosos, Medicaid and LTC. “Remember the film maker who posed as a pimp and brought down ACORN? Well, James O'Keefe is at it again. Only this time, his hidden camera is aimed at Ohio's Medicaid eligibility workers. Following are excerpts from ‘New O'Keefe investigation uncovers Medicaid fraud’ by Matthew Boyle in yesterday's ‘The Daily Caller.’ Read the whole article and view the 23-minute video here. Then read our ‘LTC Comment’ on this scandal's relevance to LTC financing.”------------------ February 24, 2012: Medicaid Planning for Long-Term Care. “This week, in LTC Bullet: Medicaid Planning for Long-Term Care, we tackle the controversial topic of how affluent people artificially self-impoverish to qualify for Medicaid LTC benefits and what the government has attempted unsuccessfully to discourage the practice.” ############################# Updated, Monday, May 20, 2013, 10:30 AM (Pacific)Seattle, WA— ############################# LTC E-Alert #13-016: LTC News and Comment
LTC Comment: Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don’t have to. By dividing the labor, we can all work more efficiently. If you like what you read in our “LTC News and Comment” E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. ############################# 05/17/2013, Kiplinger 2013 Retirement Guide Showcases Steps To Starting a Long-Term Care Home Plan, Spotlighting True Freedom II Plans By American Senior Services Incorporated (link), WSJ.com Quote: "Kiplinger's Personal Finance recently published its annual 2013 retirement guide, which will stay on shelves for months and provides numerous articles on programs and services that should be considered in long-term care planning. The issue also features three steps to living safely and independently as you age in your home by American Senior Services Incorporated (ASSI) via its True Freedom plans (http://www.truefreedomhomecare.com)." LTC Comment: Check out http://www.truefreedomhomecare.com for more information on ASSI’s innovative approach to home care. ############################# 05/17/2013, The Journey: Make your finances solid before helping adult kids, by Janet Kidd Stewart, chicagotribune.com Quote: "More than half of people 45 or older who are parents said they expect they will have to provide financial support to adult children, according to the 2013 Merrill Lynch Retirement Study. The survey polled 6,300 people. More than a third expect to provide support to grandchildren, 16 percent expect they will help parents and 10 percent said they expect to help siblings, the survey found. "Particularly for less wealthy retirees, it's also important to cover the practical bases if you're going to be on the hook for family members, whether it's nursing care for parents or graduate school for Junior. That means investigating long-term care insurance well in advance of the need and being realistic about how much you can help children with education expenses, said former IRS attorney Sandy Botkin, author of 'Achieve Financial Freedom — Big Time!'" LTC Comment: Financial planning for retirement, including having a viable long-term care plan in place, is just about the best way parents can help their adult children. ############################# 05/16/2013, Maine Democrats, Republicans duel over Medicaid, hospital payback, by Steve Mistler, The Morning Sentinel Quote: "The two sides held dueling press conferences at the State House a day after Democratic leaders moved to meld one of their highest priorities, Medicaid expansion to cover about 60,000 Mainers, with the Republican-backed plan to pay the state’s $181 million share of back payments to the Maine’s 39 hospitals. The conflict in Augusta mirrors debates that have unfolded in other state legislatures over expanding Medicaid through the Affordable Care Act. It’s an issue that has brought forth entrenched ideologies and political positions on the federal health care law and one of its pillars, Medicaid, the publicly funded health insurance program for low income residents." LTC Comment: The debate on Medicaid expansion continues. ############################# 05/16/2013, Senate confirms Tavenner as CMS administrator, by Tim Mullaney, McKnight's Long Term Care News Quote: "Marilyn Tavenner has become the first confirmed head of
the Centers for Medicare & Medicaid Services in seven years. The Senate
confirmed her as CMS administrator on Wednesday, in a 91-7 vote." Quote: “To protect Americans from the costs of long-term health care for the elderly and disabled, President Obama’s health law established the Community Living Assistance Services and Supports Act (CLASS). Less than two years later, the Obama administration announced that CLASS could not operate without large and growing deficits, and the program was terminated. In its wake, the Commission on Long-Term Care -- created by the fiscal cliff legislation -- is charged with developing a new way to finance long-term care services and supports. The commission’s report is due in September 2013.” LTC Comment: At this event presented by the American Enterprise Institute in Washington, D.C. on May 31, I will debate two of the leading advocates of government-financed long-term care. If you are not able to attend in person, note that the event will be streamed live, no registration necessary. Steve ############################# 05/15/2013, Retirement savers lose $117,000 to unexpected events, b Quote: "Unexpected setbacks, ranging from stock market declines to suddenly supporting an adult child, have taken a major hit to Baby Boomers' retirement savings, according to a recent survey. Such 'retirement derailers' set savers back an average of $117,000, according to an Ameriprise Financial survey of 50-to-70-year-olds with at least $100,000 in cash savings and investments."LTC Comment: Speaking of “retirement derailers.” That’s an understatement when considering the risk and cost of long-term care. ############################# 05/14/2013, “Covering the Rising Cost of Long-Term Care” by Caitlin Kelly, NYTimes.com Quote: "FEW sticker shocks are as bracing as the price of hiring someone to help with the simplest activities — bathing, toilet use, dressing, eating and moving. Whether recovering from surgery or a stroke or suffering a chronic illness like arthritis, those needing skilled help need deep pockets indeed. And those requiring full-time nursing or assisted-living care face even steeper costs. A 2013 report by Genworth Financial, an insurance provider based in Richmond, Va., estimates the national median daily cost of a private room in a nursing home at $230 a day, an increase of 3.6 percent over 2012 — some $6,900 per month. Sharing that room is only $27 less a day, according to the report." ############################# 05/15/2013, “BREAKING NEWS: L&HA e-newsLink,” LIFE&Health Advisor Quote: "Advanced Resources Marketing (ARM), one of the country’s largest distributors of Long Term Care Insurance (LTCi), announced today that Henrik Larsen, MBA, CLTC, has been promoted from Vice President of Marketing to Chief Executive Officer." LTC Comment: Congratulations to Henrik Larsen. ############################# 05/10/2013, “Buy Long-Term-Care Insurance With Tax-Free Money-Kiplinger,” by Kimberly Lankford, Kiplinger Quote: "Can I use money from my health savings account to pay for long-term-care insurance? "Yes. If you have a tax-qualified long-term-care policy (which includes
most policies that pay
benefits ############################# 05/15/2013, 3 concerns for women planning retirement, by Stephen Williams, MarketWatch Quote: "According to recent U.S. census data, almost 50% of women age 65 or older are single, either because they have been widowed, divorced or never married. Women face unique challenges in retirement, as on average women live longer, are more likely to need long-term care and have a lower risk tolerance than men. All of these factors combine to increase their risk of running out of money in their later years. However, there are specific steps women can take to be more prepared for retirement, whether they are single or married." ############################# 05/11/2013, 10 Reasons Critical Illnesses Pose Retirement Risk, by Philip Moeller, The Best Life (usnews.com) Quote: "Health care clearly has emerged as the greatest financial risk faced by retirees. The incidence of expensive chronic diseases is higher for today's retiring baby boomers than it was for their parents. Longevity gains have added years to average life spans, but these extra years may seem more curse than blessing if they are spent dealing with serious illness and unaffordable medical bills. Doesn't insurance cover these things? Not exactly. Basic Medicare leaves retirees on the hook for a 20 percent co-pay with no cap. Supplemental Medicare policies can close much of this gap. But they don't cover most long-term care expenses, and neither does Medicare. The Employee Benefit Research Institute says a 65-year-old couple with median drug expenses would need $283,000 to have a 90 percent chance of covering their out-of-pocket drug expenses during the remainder of their lives. And this total does not include long-term care." LTC Comment: See also news from one of our recent LTC Bullets: “LIMRA, LOMA, SOA, and NACII are teaming up again to sponsor the Critical Illness Insurance Forum, “the premier critical illness insurance gathering in North America and a great opportunity for industry professionals to network and communicate with their peers.” Details: 2013 Critical Illness Insurance Forum September 16–18, 2013 Harbor Beach Marriott Resort & Spa, Fort Lauderdale, FL Event Details | Save the Date | Register Now” ############################# 05/11/2013, The truth about nursing home Medicaid eligibility, by Matthew Wallace, The Times Herald Quote: "There are many misconceptions about nursing home Medicaid eligibility. We have discussed some of these issues before. However, I continue to get these questions, so I thought I would cover them again. Medicaid laws are complex and confusing. I do not recommend that you try to plan for Medicaid by yourself." LTC Comment: Ever wonder how affluent people qualify for Medicaid without spending down? Here's a Medicaid planning attorney telling readers how it's done. Like most Medicaid planners, this author gives lip service to LTC insurance, but only after he's told you why you don't need it. This is precisely what the Center for LTC Reform is fighting to change. ############################# 05/10/2013, Alzheimer's keeps frustrating Big Pharma, by Bruce Kennedy, MSN Money Quote: "When some of the world's leading researchers on Alzheimer's meet in Boston in July to discuss therapies and treatments for the so-far incurable neurological disease, will they have any breakthroughs to mention? Chances are, probably not. Years of research and tests by the pharmaceutical industry, which looks to benefit from patents for an effective Alzheimer's treatment, have so far yielded little to no positive results. And that's leading to questions about whether Big Pharma might still consider Alzheimer's research cost-effective." LTC Comment: Curing, treating, or at least mitigating as much as possible the effects of Alzheimer's is key to restraining the ever increasing cost of long-term care. ############################# 04/19/2013, LTC service contracts, by Allison Bell, LifeHealthPro Quote: "Jonas Roeser -- one of the people who helped promote the 3in4 Need More long-term care insurance (LTCI) outreach campaign with a tireless ability to generate publicity -- is now trying to get attention for a different kind of long-term care (LTC) planning. He has been working with people like Mark Golberg, Tom Skiff and Peter Gelbwaks, long-time LTCI marketers, on an effort to develop and sell non-medical long-term support services (LTSS) service contracts. "Roeser and colleagues at American Senior Services Inc. (ASSI) are taking a different route: Having an association sell a package that provides access to LTC planning services and a set amount of discounted non-medical long-term support services, such as companion care services and homemaker services." LTC Comment: Click www.truefreedomhomecare.com for more information on American Senior Services Inc. ############################# 05/09/2013, Six Global Destinations for an Affordable Retirement, by Michael Foster, Fox Business Quote: "Over the 20th century, many retirees moved from New England, California and the Midwest to the sunny and sparsely populated Sun Belt, where low taxes and warm weather beckoned. Today, many Americans are moving much farther afield to enjoy a new life at a low cost. Thousands are migrating to Asia, South America, Europe and beyond to stretch their retirement dollars. And foreign countries, eager for the boost to their economies, have taken notice. With so many nations interested in attracting retirees from abroad, Americans are spoiled for choice. Bankrate uncovers six up-and-coming destinations where retirees can easily live on an income of $2,000 a month. In some cases, retirees are already living there for far less. Read on to discover the affordability of housing, food and medical care at these retirement destinations." ############################# 05/09/2013, More Tips on Long-Term Care Insurance, by Mark Miller, Morningstar Quote: "Morningstar columnist Mark Miller presents a closer look at hybrid life insurance/LTCI policies, timing an LTCI purchase, self-insuring, and finding the right broker." LTC Comment: In terms of not waiting too long (or until it’s too late), timing is key in the purchase of LTCi. ############################# 05/08/2013, “New Retirement Realities: Part 3 Of 3 'The Family Factor,'” by Ken Dychtwald Ph.D., The Huffington Post Quote: "This is the third part in a three-part series exploring findings from 'Americans' Perspectives on New Retirement Realities and the Longevity Bonus [link],' a landmark national study just completed by my [Ken Dychtwald] firm, Age Wave, in partnership with Merrill Lynch. The study was conducted by research firm Harris Interactive among representative samples of more than 6,000 respondents age 45 and older. "The term 'sandwich generation' was coined in the 1980s to describe baby boomers who needed to simultaneously care for both children and aging parents. Today, the sandwich generation is morphing into a kind of Rubik's Cube puzzle of connections and arrangements. It's not uncommon for people to find themselves extending one type of support or another to parents, in-laws, siblings, children, step-children, and grandchildren--sometimes at the same time!" LTC Comment: We forwarded the series announcement with link to Part 1 recently. See also Part 2 for another good read. ############################# 05/08/2013, How To Hire (And When To Fire) A Caregiver, Forbes Quote: "From time to time, when I worked as a social worker in a skilled nursing facility, visiting family members complained to me about certain staff members. Residents too often were worried that if they themselves griped to senior managers, there might be some form of retaliation. That’s understandable — and it’s why we must advocate for our loved ones in long-term care residences. If there’s a staff member who isn’t doing his or her job properly, an administrator needs to know. And if the issue is a bad attitude, and not just a need for more specific training, perhaps it’s time for that aide to find another job. Addressing problems with an in-home caregiver can be more complicated. The person your family hired may turn out to be unqualified or have a negative attitude. But the patient may still like him or her, in spite of apparent flaws."
05/08/2013, “New Retirement Realities: A 3-part series on a pivotal new study,” Age Wave Quote: “Today, with longer lives, pre-retirees and retirees are pioneering new territory that is far more complex and unpredictable. To better understand how people are now thinking about retirement, we are excited to share with you a fascinating national investigation, ‘Americans' Perspectives on New Retirement Realities and the Longevity Bonus [link],’ an Age Wave/Merrill Lynch collaboration conducted by Harris Interactive.” LTC Comment: An interesting series from a former board member of the Center for Long-Term Care Financing, Ken Dychtwald. ############################# 05/07/2013, “How Would A Critical Illness Affect You?,” Life & Health Advisor Quote: "An overwhelming majority (90%) of our nation’s middle-income Americans say they are not financially prepared for a critical illness diagnosis, according to a new study released by Washington National Institute for Wellness Solutions (IWS)." LTC Comment: Click www.criticalillnesseducation.org/ for more information on this important protection. ############################# 05/07/2013, “Woman With Alzheimer's Receives First Ever Brain Pacemaker,” by Tim Watt, Sunrise Senior Living Quote: "Pacemakers have helped individuals with heart problems for years, and now, a similar technology is being used to treat Alzheimer's disease. Kathy Sanford recently became the first person with the cognitive illness to receive what is being referred to as a 'brain pacemaker.' "While it's too early to tell whether the brain pacemaker will be a successful treatment for Alzheimer's disease, doctors say early research looks positive." ############################# 05/06/2013, “10 Unexpectedly Great States for Retirement,” by Chris Kahn, Fox Business Quote: "What are the best states for retirees? The popular
answer seems to be anywhere along the Sun Belt, where retiring Americans
have flocked for generations in search of sunshine, swimming pools and
year-round golf. Yet, if you consider other factors that are important for
seniors, you'd find that some of the best spots are actually located
farther north. Bankrate pored through a slew of key factors, including
access to medical care, cost of living, local crime rates, state and local
taxes -- as well as climate. Here, in ascending order, is Bankrate's list
of the 10 unexpectedly best states for
retirement ############################# Quote: "The U.S. health care system is rife with rising costs and stagnating quality. All too often, the cure for these ailments calls for ever greater government intervention. Such cures misdiagnose the problem. The health care system’s problems are caused by too little patient control, not too little government intervention. "Reduced patient control takes critical health care decisions away from the patient and gives it to government bureaucrats. Along with other adverse consequences, such as skyrocketing health care inflation, reduced patient control leads to a less responsive, more rigid medical system. The current issue surrounding early detection tests for Alzheimer’s exemplifies this problem." ############################# Updated, Friday, May 24, 2013, 11:30 AM (Pacific)Seattle, WA— ############################# LTC Bullet #1,000: Medicaid Planning: Thousand Bullets RetrospectiveLTC Comment: Today the Center for Long-Term Care Reform celebrates its 1,000th LTC Bullet with this overview of 15 years of “Medicaid Planning” Bullets after the ***news.****** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents “Long-Term Care: Markets or Mandates?” on Friday, May 31, 2013 from 9:15 a.m. - 11:15 a.m. at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will “explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones.” Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a highly regarded LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). If you can’t be there in person, check out the program’s live stream here. For more information, please contact Catherine Griffin at catherine.griffin@aei.org, 202-862-5920. *** *** PREMATURE LANDING. Last week's LTC Bullet, titled "How Will the LTC Plane Land?," included some of the top level results of a Delphi survey. The detailed report, including individual comments by survey participants, was explicitly embargoed, but LTC Bullets requested and believed we received permission to publish the top-level, summary findings. Evidently we misunderstood, as the directors of that study have indicated it was not their intent to permit any distribution of the results beyond the survey participants. We regret the error. Please disregard the report until it is released publicly. *** LTC BULLET #1,000: Medicaid Planning: THOUSAND BULLETS RETROSPECTIVELTC Comment: Once a week, usually on Fridays, we publish our LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the five latest Bullets here and archives of all 995 Bullets (so far), by date here and by topic here. These 1,000 articles are a valuable historical resource. Please make use of them. Search for key terms using Control-F on your keyboard. This year, in celebration of this thousandth LTC Bullet and the Center’s 15th anniversary (April 1), we are releasing a retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998. We’ll highlight one Bullet per year in each of seven major topics: “The LTC Problem and Solutions”; “Reality Check: The Facts on LTCI”; “Medicaid Planning”; “LTC Services”; “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.” Today’s Bullet is our “Thousand Bullets Retrospective” Number 3 covering “Medicaid Planning.” These “Medicaid Planning” Bullets address the impact Medicaid planning has on public programs and benefit recipients, the latest court and administration rulings and the effect on the marketability of private long-term care solutions. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane. ------------------ October 23, 1998: LTC Bullet: Attorneys Promote Medicaid as Alternative to LTC Insurance (link). “Elder law attorneys who specialize in Medicaid planning (i.e., transferring or sheltering assets in order to qualify clients for Medicaid's long-term care benefits) routinely defend their practice by arguing that LTC insurance is not an alternative for their clients. They publicly claim to be helping only those who cannot afford or otherwise qualify for insurance. But what are they telling each other? In the Fall, 1998 issue of the NAELA Quarterly (the journal of the National Academy of Elder Law Attorneys), Baird Brown, a fellow and member of NAELA, clearly portrays Medicaid as the preferred alternative to LTC insurance.” ------------------ February 3, 1999: LTC Bullet: Perils of Medicaid. “A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows.” ------------------ August 15, 2000: Bill Gates on Medicaid? “Should Microsoft Chairman Bill Gates have Medicaid pay the bill if he ever needs long-term care? It makes sense ‘if you follow the arguments of elder law attorneys to their logical conclusions,’ says an Arkansas state official and critic of Medicaid planning. Here's the story: The August 2000 issue of the trade journal Contemporary Long-Term Care contains an article entitled ‘The Booming Business of Elder Law’ by New Hampshire nursing home administrator David Irwin. Perhaps you've heard us say: ‘You can't sell apples (LTC insurance) on one side of the street when they're giving them away (Medicaid benefits) on the other.’ Irwin's article shows that Medicaid planners are still dispensing plenty of the free fruit that gums up the long-term care insurance market. Easy money for Medicaid planners means tough sales for responsible financial planners and insurance agents. Want to see what you are up against? Here are some excerpts [in this LTC Bullet].” ------------------ April 25, 2001: They're Baaaack . . . Medicaid Planners Rise Again. “Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. Their conference agendas and publications carefully avoided the phrase "Medicaid estate planning." Even their highly publicized firebrands toned down the rhetoric considerably. Their trade association, the National Academy of Elder Law Attorneys (NAELA), plateaued at just under 4,000 members after skyrocketing for years. Of course, we know from following their actions—not just their words—that the actual practice of artificially impoverishing clients to qualify them for Medicaid hardly skipped a beat. Whether from shame or fear of prosecution, however, the Medicaid planning bar hunkered down in defensive mode for several years and didn't promote their services as loudly as before. That's all over now.” [See also: They're Baaack, Part II: Frank Comments, They're Baaack, Part III: "Buy Cattle, Get Medicaid, They're Baaack, Part IV: "Abandon Your Spouse . . . Get Medicaid", They're Baaack, Part V: "A Person With $1 Million Is Not Wealthy" and They're Baaack, Part VI: "Medicaid for the Upper Crust".] ------------------ September 5, 2002: Medicaid Planning Full Disclosure. “LTC Bullets readers frequently send us examples of flyers and web sites promoting easy access to Medicaid nursing home benefits. Complaints about Medicaid planning are just as likely to come from state and federal welfare administrators as they are to come from insurance agents and financial planners. Over the years, eight Congresses and three Presidents have struggled to discourage the widespread practice of artificial impoverishment to qualify for Medicaid. The government even went so far as to make it a crime: "Throw Granny in Jail" (repealed) and "Throw Granny's Lawyer in Jail" (unenforceable). Nothing seems to work. Now come Ross Schriftman, Associate Chair for Long-Term Care, and the National Association of Health Underwriters (NAHU) Long-Term Care Committee with a fascinating idea they have under consideration. Why not require Medicaid Planners to disclose the nature, consequences, and suitability of the self-impoverishment products they offer just as insurance agents and carriers must do for the legitimate financial products they market? You'll find the proposal that the NAHU folks are considering [in this LTC Bullet].” ------------------ March 4, 2003: In the Lion's Den of Medicaid Planning. “Medicaid planners wave a magic legal wand and shift the cost of long-term care from affluent elders to taxpayers and LTC providers while delivering a financial windfall to client heirs. See how one senior advocate and health care columnist spoke truth to power in a lion's den of Medicaid planners [in this LTC Bullet].” ------------------ March 4, 2004: No Wonder They Don't Buy LTCi. “Do Medicaid estate planners really advise adult children to grab their parents' money, yank them from private-pay assisted living facilities, stick them in a nursing home on welfare, and transfer the cost to taxpayers and providers? Read an actual Medicaid planning ‘engagement letter’ that does exactly that.” ------------------ August 8, 2005: The Great Debate on Medicaid and LTC. “On September 7, 2005 at the Cato Institute in Washington, DC, Steve Moses, president of the Center for Long-Term Care Reform, will debate Vincent Russo, a leading elder law attorney in New York and a former president of the National Academy of Elder Law Attorneys.” Watch or listen to a recording of the debate here. ------------------ August 3, 2006: Dueling Letters. “When I saw two articles justifying and promoting Medicaid planning in Life Insurance Selling magazine, I sent the following letter to the editor, Gordon Bess. He published it with the Medicaid planner's reply in the magazine's July 2006 issue. Both letters follow, republished with permission from Life Insurance Selling (www.lifeinsuranceselling.com).” ------------------ May 30, 2007: Medicaid Pushers. “Another NAELA member offers easy Medicaid LTC and seduces insurance producers with a promise of huge incomes.” Read about it in this LTC Bullet. ------------------ June 3, 2008: Medicaid Planning Update. “We have not published an LTC Bullet to expose the damaging practice of Medicaid estate planning for a long while. Following is kind of a grab bag, but it'll give you a feel . . . more like nausea . . . for the lucrative business of poverty-making.” ------------------ February 4, 2009: Why Stimulate Medicaid Planning? “The stimulus bill could help the poor elderly, the states, LTC providers, and encourage responsible LTC planning by closing Medicaid loopholes, but it doesn't.” Click the link above to find out why. ------------------ August 31, 2010: Medicaid Planning Up, LTCI Down. “It's no secret that long-term care insurance sales have languished over the past few years, despite a recent blip up. But government-financed LTC is on a rampage of expansion. It isn't just the new CLASS program, which is actuarially unsound and bound to wither and die. It's Medicaid, the historically dominant funder of long-term care for most Americans--rich, poor and in between.” ------------------ July 19, 2011: Russian Mafiosos, Medicaid and LTC. “Remember the film maker who posed as a pimp and brought down ACORN? Well, James O'Keefe is at it again. Only this time, his hidden camera is aimed at Ohio's Medicaid eligibility workers. Following are excerpts from ‘New O'Keefe investigation uncovers Medicaid fraud’ by Matthew Boyle in yesterday's ‘The Daily Caller.’ Read the whole article and view the 23-minute video here. Then read our ‘LTC Comment’ on this scandal's relevance to LTC financing.”------------------ February 24, 2012: Medicaid Planning for Long-Term Care. “This week, in LTC Bullet: Medicaid Planning for Long-Term Care, we tackle the controversial topic of how affluent people artificially self-impoverish to qualify for Medicaid LTC benefits and what the government has attempted unsuccessfully to discourage the practice.” ############################# Updated, Friday, May 17, 2013, 11:46 AM (Central)Branson, MO— ############################# LTC BULLET: HOW WILL THE LTC PLANE LAND? LTC Comment: Net results from 50 LTC experts opining about LTC financing after the ***news.***
*** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents “Long-Term Care: Markets or Mandates?” on Friday, May 31, 2013 from 9:15 a.m. - 11:15 a.m. at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will “explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones.” Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a highly regarded LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). If you can’t be there in person, check out the program’s live stream here. For more information, please contact Catherine Griffin at catherine.griffin@aei.org, 202-862-5920. *** *** CENTER NEWS. We have submitted our final report on the Center’s study of Medicaid estate recovery in Maine titled “Maximizing NonTax Revenue from MaineCare Estate Recoveries.” More about that report and our findings soon. We have begun our review of Medicaid and long-term care financing in Virginia. The Center is conducting that study with the support and participation of the Thomas Jefferson Institute for Public Policy. Finally, reprising our 2008 “National LTC Consciousness Tour,” Steve Moses is headed east in the Silver Bullet of Long-Term Care. He’ll be nearby and girded for the fight as the LTC policy battle in Washington, DC heats up. Expect many “LTC embed” dispatches from that front in the coming months! ***
LTC BULLET: HOW WILL THE LTC PLANE LAND? LTC Comment: There’s an old quip about flying in bad weather: “It’s better to on the ground wishing you were in the air than in the air wishing you were on the ground.” I thought of that maxim when I received the latest communiqué from the “Land This Plane Delphi Study” panel led by John O’Leary, Roger Loomis, and Ron Hagelman, all leaders and veterans in the LTC insurance industry’s ongoing struggles. The Society of Actuaries’ Long-Term Care Section and the Forecasting and Futurism Section sponsored the project. This study aims to identify the best solution for long-term care financing. I and 49 other “experts” filled out a survey questionnaire some time ago and the results are in. There will be a detailed public report published in the future, but for now LTC Bullets has permission to share with you the questions asked and the top-line results and analysis, which follow. A round of applause and hearty thanks are due the subject matter specialists who generously gave of their valuable professional time to complete the questionnaire. But a very special expression of appreciation goes to those who designed the questionnaire, identified the experts, compiled and published the results. Three cheers! For my part, I find a lot to agree with here. After all, I’m 1/50 of the input. But I find a lot to disagree with too, especially in the detailed comments that remain embargoed. But that’s what makes a good discussion and a vigorous debate. Which, heaven knows, long-term care financing policy certainly needs. ---------------- QUESTION 1: MEDICAID DISCOURAGES THE USE OF REVERSE MORTGAGES TO FUND LTC, FAMILY CAREGIVING, AND HOME CARE. FIXING THESE INCENTIVES WOULD PROVIDE SIGNIFICANT COST SAVINGS. Strongly Agree 8 Somewhat Agree 15 Neither agree nor Disagree 9 Somewhat Disagree 5 Strongly Disagree 2 ANALYSIS There is general agreement that Medicaid discourages use of personal means that might decrease the cost of LTC services to the government, but many think better protections for community, spouse, and care recipient are needed, as current reverse mortgage products are not great.
QUESTION 2: IF YOU BELIEVE MEDICAID IS HINDERING PRIVATE OR THE OTHER SOLUTIONS, HOW CAN MEDICAID BE MODIFIED TO DISCOURAGE ABUSE, FRAUD, AND USE BY PEOPLE WITH OTHER OPTIONS? ANALYSIS There is some agreement that the Medicaid "crowd-out" effect has been overstated. But there is also agreement that what is killing Medicaid isn't fraud or abuse as is often alleged, but legal loopholes. These loopholes need to be closed and other restrictions should apply to prevent less needy people from accessing benefits.
QUESTION 3: HOW CAN MEDICAID BE MODIFIED TO REDUCE COST AND MORE EFFICIENTLY PROVIDE CARE? PLEASE DESCRIBE. ANALYSIS There is general agreement that more emphasis should be placed on home and community based care delivery. HCBS viewed as cheaper and more popular except with a minority who view nursing homes as a step up from their own residence. If HCBS are expanded, more restrictions should apply.
QUESTION 4: SOCIAL INSURANCE IS INHERENTLY A FAIRER AND CHEAPER MECHANISM TO PROVIDE LTC INSURANCE COVERAGE. Strongly Agree 3 Somewhat Agree 10 Neither agree nor Disagree 11 Somewhat Disagree 4 Strongly Disagree 11 Blank 5 ANALYSIS Most respondents are not convinced that public sector may not be able to deliver a more "fair" product, but they want to make sure that private market continues to receive a reasonable opportunity to market. Some see social insurance as always favoring current over future generations, but many would like to see a public-private partnership with private LTCI industry supplementing the standardized and universalized public offering.
QUESTION 5: THERE SHOULD BE A PUBLIC OPTION TO PURCHASE LTCI FROM THE GOVERNMENT. Strongly Agree 3 Somewhat Agree 7 Neither agree nor Disagree 9 Somewhat Disagree 8 Strongly Disagree 11 Blank 6 ANALYSIS Respondents are largely indifferent to whether you could buy LTCI from the federal government, although few think it would be a bad thing if it were set up right away, perhaps as a supplement to Medicare.
QUESTION 6: THE GOVERNMENT SHOULD PROVIDE SUBSIDIES FOR THE PURCHASE OF LTCI FROM THE PRIVATE MARKET. Strongly Agree 12 Somewhat Agree 13 Neither agree nor Disagree 3 Somewhat Disagree 6 Strongly Disagree 4 Blank 6 ANALYSIS While some regard government deficits as a serious impediment to any subsidies, others say that government funding is not impossible if certain changes to the private market could be made, such as maximizing the universality, either by uniform regulations, mandates, or both. Incentives should take the form of tax breaks from both state and federal government and would stipulate a minimum amount of coverage.
QUESTION 7: IF YOU BELIEVE THERE SHOULD BE A PUBLIC OPTION OR GOVERNMENT SUBSIDIES, HOW SHOULD IT WORK? ANALYSIS There is broad agreement that a public option or government subsidy for LTCI should not be ruled out, but that it should run like a private insurance plan, with underwriting, deductibles, and full, risk-based premiums. However, there is no agreement as to exactly how such a program would work, except that there is potential in a "Medigap" model, where a public program might carve out a gap to be covered by private LTCI, or private LTCI would begin after a minimum public benefit is exhausted.
QUESTION 8: THERE SHOULD BE A MEDICARE CHRONIC CARE BENEFIT TO REACH THE COSTLIEST OF THOSE NEEDING LONG-TERM CARE. Strongly Agree 6 Somewhat Agree 9 Neither agree nor Disagree 8 Somewhat Disagree 6 Strongly Disagree 9 ANALYSIS There is not much support for having Medicare pick up more of the cast of chronic care for those now receiving this care under LTC, because 1) Medicare already is running huge deficits and 2) Medicare would then be perceived as covering LTC.
QUESTION 9: THE RECENT COURT DECISION CONCERNING THE MEDICARE AT-HOME BENEFIT, JIMMO, ET. AL VS. SEBELIUS, WILL ALTER MEDICARE LONG-TERM CARE COVERAGE IN A SIGNIFICANT WAY. Strongly Agree 6 Somewhat Agree 10 Neither agree nor Disagree 12 Somewhat Disagree 4 Strongly Disagree 3 ANALYSIS Most agree that the recent court decision will increase the cost of care under Medicare, and the increase could be significant. Most also agree that Medicare will be put under even more pressure that could jeopardize the solvency of Medicare itself.
QUESTION 10: MORBIDITY ASSOCIATED WITH UNHEALTHY LIFESTYLE CHOICES IS AN IMPORTANT NATIONAL ISSUE. Strongly Agree 23 Somewhat Agree 12 Neither agree nor Disagree 1 Somewhat Disagree 4 Strongly Disagree 0 ANALYSIS (FOR #10-12) All commend healthy lifestyles. But it’s hard to prove the link between lifestyle and LTC service needs. While data will be available in the future, absence of tracking means it is hard to link lifestyle/behavior to actual long term care risk outcomes.
QUESTION 11: WHAT SPECIFIC CHANGES IN BEHAVIOR WOULD HAVE THE MOST SIGNIFICANT IMPACT IN REDUCING PEOPLE'S RISK OF NEEDING LTC SERVICES?
ANALYSIS (FOR #10-12) All commend healthy lifestyles. But it’s hard to prove the link between lifestyle and LTC service needs. While data will be available in the future, absence of tracking means it is hard to link lifestyle/behavior to actual long term care risk outcomes.
QUESTION 12: WHAT, IF ANYTHING, SHOULD THE GOVERNMENT DO TO PROMOTE MORE HEALTHY LIFESTYLES? ANALYSIS (FOR #10-12) All commend healthy lifestyles. But it’s hard to prove the link between lifestyle and LTC service needs. While data will be available in the future, absence of tracking means it is hard to link lifestyle/behavior to actual long term care risk outcomes.
QUESTION 13: WHAT POSITIVE INCENTIVES, IF ANY, SHOULD THE GOVERNMENT OFFER TO ENCOURAGE PEOPLE TO ADEQUATELY PREPARE FOR THEIR FUTURE LTC NEEDS? Tax Credits for Purchasing LTCi policy 24 support LTC tax-qualified savings plans 27 support Expanded partnership Plans 20 support Other 17
QUESTION 14: WHAT NEGATIVE INCENTIVES, IF ANY, SHOULD THE GOVERNMENT OFFER TO ENCOURAGE PEOPLE TO ADEQUATELY...-LEVY A TAX IF ADEQUATE PREPARATION IS NOT BEING DONE (SIMILAR TO THE TAX LEVIED IF A PERSON DOES NOT BUY MEDICAL INSURANCE AS REQUIRED UNDER THE AFFORDABLE CARE ACT) Levy a tax if adequate preparation is not being done (similar to the tax levied if a person does not buy medical insurance as required under the Affordable Care Act) 11 support Reduce projected Social Security benefits if adequate preparation is not being done 7 support Other 15 Support
QUESTION 15: IF ABLE, ADULT CHILDREN HAVE A RESPONSIBILITY TO HELP THEIR PARENTS DEAL WITH LTC AS NEEDED. Strongly Agree 13 Somewhat Agree 12 Neither agree nor Disagree 7 Somewhat Disagree 3 Strongly Disagree 4 ANALYSIS Most agree that whatever an adult child's moral obligation to his parents, government should not legislate or enforce it.
QUESTION 16: PEOPLE HAVE THE RIGHT TO DIE. Strongly Agree 19 Somewhat Agree 5 Neither agree nor Disagree 6 Somewhat Disagree 3 Strongly Disagree 5 ANALYSIS The majority of the 38 respondents agree with a person’s right to die. However, there might be some confusion on whether right to die refers to “assisted suicide” versus refusing medical care. Also, only a few mentioned any potential impact on LTC.
QUESTION 17: WHAT CAN BE DONE ETHICALLY TO ALLOW PEOPLE TO DIE IF THEY WISH TO DO SO? Agree with the Right to Die Strongly Agree 19 Somewhat Agree 5 Neither agree nor Disagree 6 Somewhat Disagree 3 Strongly Disagree 5 ANALYSIS The majority of the 38 respondents agree with a person’s right to die. The most popular answer to this question is to promote education on the issue as well as promote advanced planning. A few stated that laws need to be changed to allow it.
QUESTION 18: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: TAX-QUALIFIED PRODUCTS WITH SHORT BENEFIT PERIODS (E.G., 6 MONTHS) Strongly Agree 15 Somewhat Agree 12 Neither agree nor Disagree 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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They include ‘major’ cancers, heart attack, some (but not all) types of
stroke, severe burns, blindness, kidney failure and a host of other
illnesses you hope that you- or someone you love- never encounter. While
having health insurance certainly reduces the financial burden, a number
of expenses are either only partly covered, or not at all. According to
Sun Life, on a weighted average basis, a critical illness will set you
back $7,500. If you have a heart attack, or stroke your out-of-pocket cost
will double--even if you have health insurance."