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Join the Center for Long-Term Care Reform. Help us fight for rational LTC policy reform. Receive our daily email publications. Get a user name and password to our Members-Only Zone. Only $150 per year. Mail your check to Center for Long-Term Care Reform, Inc., 2212 Queen Anne Avenue North, #110, Seattle, Washington, 98109. Contact Damon at 206-283-7036 or damon@centerltc.com if you have questions. Join the team!

READ STEVE'S BIO

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Updated, Friday, May 17, 2013, 11:46 AM (Central)

Branson, MO—

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LTC BULLET: HOW WILL THE LTC PLANE LAND?

LTC Comment: Net results from 50 LTC experts opining about LTC financing after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a General Agent whose proprietary sales tools enable clients to make informed final decisions about buying LTCi in 15-20 minutes, let you evaluate a client's real interest in a combo product in a few minutes, and change work-site LTCi from a proposal-delivery process to interactive consultation. Claude is the lead author of the Milliman Broker World LTCi Survey, was named one of the 10 "Power People" in the LTCi industry by Senior Market Advisor in 2007 and was Chairman of the Board of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** 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.

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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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

Blank

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

Blank

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

Blank

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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?

Rank	Walking and other physical exercise	Brain fitness exercises	Improve diet	Reduce stress	Improve social networks
1	32	1	6	1	4
2	10	15	11	3	5
3	2	8	20	7	7
4	0	8	5	25	6
5	0	12	2	8	22

ANALYSIS (FOR #10-12)

QUESTION 12: WHAT, IF ANYTHING, SHOULD THE GOVERNMENT DO TO PROMOTE MORE HEALTHY LIFESTYLES?

ANALYSIS (FOR #10-12)

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

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

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

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

The group is divided between those who like shorter, more affordable offerings and those who think a six-month benefit period is too short to be meaningful, with most of the premium going to expenses and not benefits. However, most agree that the industry should offer products geared to supplementing the risk of LTCI, not covering 100% of it, making sure that there is protection against catastrophic loss.

QUESTION 19: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: PRODUCTS WITH LONG ELIMINATION PERIODS (E.G., OVER 1 YEAR).

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Most agree that policies with long elimination periods should be sold, because they make good economic sense if properly understood, but many note that they will not likely be properly understood after time of sale or at time of claim. In any event, such a plan should be sold as part of an LTC plan or solution, so as to ensure adequate cash flow during the elimination period.

QUESTION 20: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: PRODUCTS THAT REQUIRE STRICTER BENEFIT TRIGGERS.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Most don't like the idea of stricter benefit periods. This is not necessary, nor would it be good for consumers.

QUESTION 21: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: PRODUCTS THAT OFFER HEALTHY-LIFESTYLE PREMIUM DISCOUNTS THAT ARE REMOVABLE IF THE HEALTHY LIFESTYLE IS DISCONTINUED.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Healthy lifestyle discounts hard to monitor, impractical. Most think they cannot be administered.

QUESTION 22: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: A SPECIAL TAX-QUALIFIED SAVINGS PLAN FOR LTC WHICH COULD BE USED FOR LTCI PREMIUM OR LTC COSTS DIRECTLY.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Tax qualified savings plan--while some see benefits, most think it will not really change the landscape: many will not save enough, low income will not participate, and high living costs make it impractical for older persons, and add complexity.

QUESTION 23: ALLOWING (OR FAVORING) THIS PRODUCT DESIGN WOULD BE IN THE PUBLIC'S BEST INTEREST: "UNIVERSAL LTC" WHERE PREMIUMS NET OF POLICY CHARGERS BUILD AN ACCOUNT VALUE

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Universal LTC--While it may actually be a better, more balanced product, it will not really expand the market and is therefore not really in the general public's interest. Universal LTC is viewed as niche product too few can afford, not best use of funds, complicated, expensive to administer.

QUESTION 24: WHAT OTHER INNOVATIVE PRODUCT DESIGNS WOULD BE IN THE PUBLIC'S BEST INTEREST?

ANALYSIS

Other innovative products: lots of ideas, but little agreement. Some prefer revised insurance risk / transfer products, some insurance plus savings vehicles. More talk of catastrophic coverage, alignment with health plans / longevity cost-sharing a la major medical.

QUESTION 25: THE CURRENT APPROACH TO RATE STABILITY REGULATION DISCOURAGES COMPANIES FROM OFFERING LTC PRODUCTS THAT THE MARKET NEEDS.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

There was no overall consensus about the effect of rate stability regulation. However, with one exception, there is universal support for retaining the rate stability provisions.

QUESTION 26: INSURANCE COMPANIES COULD OFFER MORE AFFORDABLE PRODUCTS IF THEY COULD AUTOMATICALLY CHANGE CURRENT PREMIUMS BASED ON CURRENT INTEREST RATES.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Respondents agree by a margin of more than three to one that carriers could offer more affordable products with premiums based on current interest rates but overwhelmingly disagreed that this was appropriate for the market.

QUESTION 27: HOW COULD RATE STABILITY REGULATION BE IMPROVED?

ANALYSIS

The common opinion was that rate stability regulation should be more closely followed with a defined approach that leaves little room for ambiguity. Regulators and carriers should fully use the regulations that exist.

QUESTION 28: THE GOVERNMENT SHOULD FUND A PUBLIC AWARENESS CAMPAIGN ABOUT THE NEED FOR LONG-TERM CARE PLANNING.

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Most believe government should fund public awareness. Public Education is necessary but not a sufficient condition for success. Products need to be viable, affordable. No real agreement on whether this has helped or not. Some think it has, some think it is a waste of time and money.

QUESTION 29: FINANCIAL ADVISORS HAVE A FIDUCIARY RESPONSIBILITY TO MAKE SURE THEIR CLIENTS ARE AWARE OF THE RISKS AND COSTS OF LONG-TERM CARE…

Strongly Agree

Somewhat Agree

Neither agree nor Disagree

Somewhat Disagree

Strongly Disagree

ANALYSIS

Financial advisors have fiduciary responsibility. Most think it should be built into training or otherwise reinforced.

QUESTION 30: WHAT ELSE CAN BE DONE TO IMPROVE AMERICA'S PROSPECTS FOR DEALING WITH LONG-TERM CARE ISSUES THAT WEREN'T PROMOTED BY THE PRECEDING QUESTIONS?

ANALYSIS

Government needs to take constructive action, education & also risk management. While not advocating a social insurance approach, a number see and understand that the failures of the private market and the failures of government officials are leading us in this direction. There is some agreement that the insurance industry has failed to live up to its responsibility. They see the exit of carriers post CLASS rate increases as the only real response the industry has made for mitigating risk. They think that private LTCI needs a backstop in place until more consistently credible experience develops.

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Updated, Friday, May 10, 2013, 11:29 AM (Central)

Alpine, TX—

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LTC BULLET: AFTER CLASS AND THE LTC COMMISSION

LTC Comment: Are you a pessimist or an optimist about long-term care? Take an astute, if mistaken, analyst’s Rorschach test after the ***news.***

*** LIFEHEALTHPRO says "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 . . . : 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." Learn more here. Register for a webinar Wednesday, May 15th beginning at 11am Eastern here. ***

*** 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: AFTER CLASS AND THE LTC COMMISSION

LTC Comment: Josh Wiener, AKA Joshua M. Wiener, Ph.D., Distinguished Fellow and Director for Aging, Disability, and Long-Term Care at RTI International, is the author or editor of eight books and more than 200 articles, most of them on long-term care financing. He does fine work and he writes very well. I nearly always agree with his facts and statistical analysis. I almost never agree with his conclusions or opinions. To watch and hear our ideas clash, check out this debate between us on the question “Long-Term Care: Who Should Pay” as moderated by national political commentator Morton Kondracke.

Dr. Wiener has a short article in the current issue of Health Affairs titled “After CLASS: The Long-Term Care Commission's Search For A Solution.” In three pages, he summarizes the current state of long-term care financing, laments our on-going dependency on Medicaid, predicts the current system will be unable to sustain future costs, eulogizes what he considers the impending demise of private long-term care insurance, opines about how to revive CLASS, concludes (predictably) that mandatory social insurance is the only practical answer, but believes the new LTC Commission isn’t going to get us to that solution. [Health Affairs, 32, no. 5 (2013):831-834. Want to read the article? The journal will sell you 24-hour access to the article for $12.95 or 30-day access to the whole issue for $29.95 or you can subscribe as the Center does for $158 per year.]

This is a good article. I’ll praise some of it before I bury all of it. As usual, Josh musters accurate and interesting facts. For example:

Two intertwined factors will dominate the [LTC] commission’s considerations as it begins its work. First is the rapidly growing need for additional long-term care driven by an aging population. If current use rates are held constant, the number of people needing informal care, home care, and nursing home care will roughly double between 2000 and 2040.

The second factor is a likely substantial increase in public spending on long-term care. It is simply not possible to finance services for twice as many people using the same amount of money. The Organization for Economic Cooperation and Development projects that public long-term care expenditures in the United States, which were about 1 percent of gross domestic product (GDP) in 2005, will climb to 2–3 percent in 2050. (p. 832, footnotes omitted)

Long-term care financing dominated by an already over-stretched welfare program is unsustainable? Granted, agreed, stipulated. But now what? Consider some of the options we’ve tried.

An active market for private long-term care insurance has existed since about 1985, yet only approximately 12 percent of people age sixty-five or older and 5 percent of people age forty-five or older have private long-term care insurance. Despite numerous potential tools to promote private long-term care insurance—for example, making the cost of policies tax deductible—the market for long-term care insurance is in danger of imploding. (p. 833)

To his credit, the author correctly recognizes two of the main reasons for the difficulties confronting private long-term care insurance: lower lapse rates than actuaries predicted and near-zero interest rates imposed by the Fed. But he neglected the most important reason, which I’ll disclose at the end of this review.

Or how about having another go at CLASS: “Although its chances are slim in the current political environment, another path would be to revive the CLASS Act, making changes to ensure its financial viability as a voluntary program.” (p. 833) Sounds crazy, but maybe you could tighten the work requirement and reduce or eliminate premium subsidies. On the other hand, that would just transform—heaven forfend—“a rejuvenated CLASS Act into something more like private insurance, raising questions about the program’s fundamental public policy purpose.” Evidently private insurance serves no legitimate public purpose.

So none of the approaches we’ve taken so far can succeed. Medicaid? Out. Private LTC insurance? Out. CLASS? Just wishful thinking. What’s left besides gloom, doom and despair?

Another option would be to make participation in a public long-term care insurance program mandatory. The obvious benefit of mandatory social insurance is that everyone would be covered and everyone would pay, creating extensive coverage and a broad tax base. But opponents resist new taxes and believe that any public program would be overly rigid. (p. 833)

Yeah, what a shame people aren’t willing to pony up more tax money to finance another program like the social insurance entitlements we already have such as Medicare ($38.6 trillion unfunded liability) and Social Security ($20.5 trillion). Somehow, the collectivists’ dream “that everyone would be covered and everyone would pay, creating extensive coverage and a broad tax base” always turns into an economic nightmare for individuals, threatening everyone’s prosperity and happiness.

Wiener suggests a “Rorschach test for policy makers” (p. 832):

Are you a pessimist? “Pessimists argue strongly for efforts to shift costs to the private sector and imply that America cannot afford to grow old. At the very least, this group sees any expansion of public programs as a formula for disaster.” (p. 832)

Or are you an optimist? “For optimists, the increase of one to two percentage points in public spending is fairly modest, given the large increase in need. After all, they argue, even if long-term care rises to 3 percent of GDP, it will remain a relatively small portion of overall health expenditures, which accounted for 17.9 percent of GDP in 2011.” (p. 832)

A better test is “Are you a realist or are you a dreamer?” How can anyone seriously believe that doubling down on bankrupt social insurance schemes will solve anything?

Now what is the fatal error in this article and in the author’s reasoning? He assumes without evidence and in contradiction of reality that “routine catastrophic out-of-pocket costs . . . often leave people impoverished” (p. 831) and that “catastrophic out-of-pocket costs . . . impoverish many middle-class Americans.” (p. 833) That is conventional wisdom but there is no proof it is true. Medicaid eligibility rules allow virtually unlimited income if medical and LTC expenses are high enough. Assets are unlimited for all practical purposes due to generous exemptions for home equity (up to $802,000) and (all unlimited) for a business, auto, IRAs, term life insurance, prepaid burials, and personal belongings. People who still don’t qualify using the basic rules every eligibility worker tells every applicant, can consult a Medicaid planner and self-impoverish quickly and easily by means of sophisticated legal techniques.

Of course, this does not mean that no one spends down life’s savings to qualify for Medicaid. It only means that unfortunate outcome occurs either voluntarily or due to ignorance. That’s why the data show and Josh Wiener has recently published that most people who “spend down” to Medicaid, i.e. start LTC as private payers and convert to Medicaid, have few assets and little income. The poor are quickly wiped out financially by catastrophic long-term care costs. But the middle class and affluent, who have access to financial planners, accountants and attorneys, routinely learn how Medicaid works when they or loved ones begin to need expensive long-term care. They not only qualify easily, the really affluent ones who do consult elder lawyers nail down the best spots in the nicest facilities by using “key money.” They buy their way into upscale assisted living facilities or nursing homes starved for private payers because of Medicaid’s meager reimbursement rates. After a few months, their lawyer flips the switch and, voila, Medicaid starts picking up the tab.

The Medicaid long-term care system is dysfunctional and corrupt, but it is not unfixable. Stop paying for long-term care publicly after the privately insurable event occurs and stop protecting over three-quarters of a million dollars of home equity from LTC liability, and it won’t take long for critically needed private dollars to flow into the service delivery system improving access and quality for everyone. Those private dollars will come from real asset spend down once the rules require it, from home equity conversion through reverse mortgages which allow people to buy quality home care that enables them to remain in their homes and off Medicaid, and from the private long-term care insurance people will rush to the carriers to buy once they realize they really need it.

That’s not pessimism; it’s realism. Expecting social insurance to solve the long-term care dilemma isn’t optimism; it’s self-delusion.

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Updated, Monday, May 6, 2013, 12:02 PM (Central)

Alpine, TX—

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THE 401-K WORLD AND LTC NEWS AND COMMENT

LTC Comment: Our first item after the ***news*** today features an op-ed by Thomas Friedman of the New York Times. He argues that our new digital world places more responsibility on the individual who in the future can expect fewer benefits from government and employers. So right, as I agreed in our “LTC Comment” following the “Quote” from his piece.

But no sooner did I bask in the glow of this happy idea that individualism is on the rise and dependency waning, than I read “A Darkening Digital Future” by L. Gordon Crovitz in the Wall Street Journal, warning the opposite. He reviews Google founder Eric Schmidt’s and Jared Cohen’s new book "The New Digital Age: Reshaping the Future of People, Nations and Business," focusing on the “bad news” it conveys:

“Many authoritarian regimes dedicate significant resources to limiting what their people can do online. The authors predict a ‘Balkanization of the Internet’ as more countries and groups hive off their own corners, narrowing what has been a globally connected network. The authors warn of separate ideological and religious versions of the Internet. Countries like Saudi Arabia and Yemen could create a ‘Sunni Web,’ especially now that the Internet domain system allows characters from non-Roman alphabets, including Arabic. Iran says it plans to build its own ‘halal Internet,’ then disconnect from the rest of the world.”

On the other hand: “By 2025, they write, ‘the majority of the world's population will, in one generation, have gone from having virtually no access to unfiltered information to accessing all of the world's information through a device that fits in the palm of the hand.’” That’s a surge of individual intellectual power that will be very hard for authoritarian regimes to stifle in the end.

*** Have a look at Marilee Driscoll’s review of Margie Barrie’s new book here and buy it here: "Selling LTCI today: 46 Ways to Find Clients and Close More Sales." ***

*** 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 ***

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4/30/2013, “It's a 401(k) World,” by Thomas L. Friedman, New York Times

Quote: "We now live in a 401(k) world - a world of defined contributions, not defined benefits . . .. Government will do less for you. Companies will do less for you. Unions can do less for you. There will be fewer limits, but also fewer guarantees. Your specific contribution will define your specific benefits much more. Just showing up will not cut it."

LTC Comment: We don't include many op-eds in the LTC E-Alerts, but this one struck me as important. I could re-title it "Why I'm Optimistic." Collectivism, including social insurance entitlements, never succeeded anywhere but they'll fail even faster in our brave, new, "hyper-connected" world. This new world fits better than our current nanny state with the values and traits that made America great in the first place--freedom, individualism, personal responsibility, ambition, and hard work. Now all we have to do is get from where we are to where this article correctly states we're headed. (Special thanks to Center member B.J. Randolph for tipping us to this piece.)

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5/3/2013, “Hancock has gender-based LTCI pricing OKs in 42 states,” by Allison Bell, LifeHealthPRO

Quote: "Executives at Manulife Financial Corp. (TSX:MFC) said they have made progress with revamping the long-term care insurance (LTCI) product line at the company's John Hancock unit. . . . The John Hancock Long-Term Care business -- which reports its performance in U.S. dollars -- is reporting $105 million in net income for the quarter on $721 million in 'subtotal revenue,' compared with a net loss on $690 million in subtotal revenue for the first quarter of 2012. . . . The company has received approvals for one new product in 47 states, and has received approvals to sell a 'gender-distinct' product -- a product with gender-based pricing -- in 42 states."

LTC Comment: Lucky gals. Take care of the guys until they need LTC and then pay extra for the privilege.

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5/2/2013, “Unum continues to fight low rates, soft employment,” by Allison Bell, LifeHealthPRO

Quote: "Unum Group Corp. (NYSE:UNM) is still facing pressure from a weak labor market and low interest rates. The low rates continue to pound the company's long-term disability (LTD) insurance business and its closed block of long-term care insurance business, leading the company to pass rate increases onto consumers."

LTC Comment: It’s a tough time to do private insurance when the government competes with public insurance and handicaps private business with artificially low interest rates.

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5/2/2013, “Most people aren't meeting exercise guidelines,” by Nanci Hellmich, USA Today

Quote: "About 79% of adults don't meet the physical activity guidelines that advise getting at least 21/2 hours a week of moderate-intensity aerobic activity such as brisk walking, or one hour and 15 minutes a week of vigorous-intensity aerobic activity, such as jogging."

LTC Comment: Not good news given the oft-reported fact that exercise, physical and mental, is important to prevent or delay chronic illness and dementia.

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5/1/2013, “Medicaid has mixed record on improving health for poor, study says,” by Noam N. Levey, Los Angeles Times

Quote: "As state leaders debate whether to expand their Medicaid programs next year under President Obama’s healthcare law, new research suggests the government insurance plan for the poor has only a mixed record of improving health.

"Medicaid beneficiaries are less likely than the uninsured to have catastrophic medical expenses and significantly less likely to suffer from depression, researchers at the Harvard School of Public Health and the Massachusetts Institute of Technology found.

"But those on Medicaid did no better controlling their blood pressure or cholesterol levels, raising questions about the program’s ability by itself to help low-income Americans become healthier.

"The lack of health gains came even though Medicaid beneficiaries went to the doctor’s office and the hospital and filled prescriptions more frequently than those without coverage."

LTC Comment: One more reason to challenge the wisdom of expanding Medicaid through ObamaCare . . . in case you needed another reason.

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5/1/2013, “Genworth to Cease New Sales of AARP-Branded Products on June 1,” Stockhouse

Quote: "Genworth Financial, Inc. (NYSE: GNW) has announced the cessation of new sales of AARP-branded long term care insurance products through Genworth Life Insurance Company and Genworth Life Insurance Company of New York (Genworth). Genworth will discontinue sales of AARP-branded products on June 1, 2013."

LTC Comment: AARP’s policy branch disses LTCI, while it’s money raising side sells it. What do they really believe?

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5/1/2013, “Elder Housing Options for Clients,” by June Fletcher, Financial Planning

Quote: "The collective home equity of homeowners 62 and older fell to $3.2 trillion in the fourth quarter of 2012 from $4 trillion at the end of 2006. Yet older homeowners who have lived in their homes since the start of 2000 have seen their total equity rise by more than 50%, according to the National Reverse Mortgage Lenders Association. For some, a reverse mortgage may be a good way to fund the cost of long-term care."

LTC Comment: Likewise, proceeds of a reverse mortgage can help aging homeowners afford LTC insurance to protect their home equity and the rest of their assets as well.

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4/30/2013, “Financial Q1 Profit More Than Doubles,” RTT News

Quote: "Insurance company Genworth Financial Inc. ( GNW ) on Tuesday reported a profit for the first quarter that more than doubled from last year, reflecting strong results at its U.S. mortgage and life insurance divisions. The company's shares gained more than 5 percent in extended trading following the announcement of the results. Tom McInerney, President and CEO of Genworth Financial said, 'We achieved several milestones in the first quarter of 2013, including progress on our long term care premium rate increase plans . . .. Long term care insurance net operating income declined 43 percent to $20 million.'"

LTC Comment: Hmmm. Premiums up but income down.

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4/30/2013, “Nursing home robots could come soon, if Japanese government funding pays off,” by Tim Mullaney, McKnight’s LTC News

Quote: "Starting this year, the Japanese government will subsidize up to 60% of research and development costs related to these robots, according to the Daily Press. One type of robot would assist in transfers, another would help residents walk, a third type would monitor people with dementia who wander, and the fourth type would be self-cleaning robotic toilets."

LTC Comment: And maybe a fifth type will help with breaking and entering, a la “Robot and Frank.”

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4/30/2013, “Health-Care Owners Shun Nursing Homes,” by A.D. Pruitt, Wall Street Journal

Quote: "Some of the nation's largest health-care landlords are pulling back from nursing homes on concerns they will be less profitable in an era of steep Medicare and Medicaid cuts. Health Care REIT Inc., HCN +0.98% which leases to about 250 nursing homes nationwide, and Senior Housing Properties Trust, SNH +0.78% which is the landlord to nearly 50 nursing homes, have indicated they are greatly reducing their exposure or that they might exit the sector."

LTC Comment: Developments we predicted. Capital always migrates to its highest and best use. With most of the income to the LTC provider sector coming from financially pinched government programs investors are rightfully wary of putting their money to work there.

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4/30/2013, “House bill would tighten Medicaid eligibility for long-term care,” by Tim Mullaney, McKnight’s LTC News

Quote: "A new House bill would reduce the amount of home equity that is exempted when determining Medicaid eligibility for long-term care. The 'Medicaid Program Integrity Act of 2013' would give states the option of setting the home equity exemption as low as $50,000. . . . Private long-term care insurance should be expanded, and the federal government should increase efforts to inform the public that Medicare does not fund long-term nursing home stays, wrote Boustany, Blackburn and Gingrey on Monday."

LTC Comment: While unlikely to become law any time soon, this legislation would accomplish the single most important thing that must be done to give Medicaid back to the genuinely needy and unleash the potential of private LTC financing. Kudos to the sponsors.

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4/29/2013, “Penn Treaty parties spar over policyholder panel proposal,” by Allison Bell, LifeHealthPRO

Quote: "Penn Treaty Network America Insurance Company and a sister company are still operating in rehabilitation, and the chairman of the companies' boards is still skirmishing in court with the rehabilitator. The latest battle is over whether the rehabilitator -- Pennsylvania Insurance Commissioner Michael Consedine -- should get to create a policyholder committee."

LTC Comment: The sad story continues.

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4/29/2013, “Retirement expert: Medicare already means-tested,” by Phil Ciciora, EurekAlert

Quote: "The Obama administration's controversial proposal to 'means-test' Medicare recipients is ostensibly aimed at generating more cash for the government from those who can afford it - or squeezing more money out of upper-income seniors, depending upon one's point of view. But according to a University of Illinois expert on retirement benefits, the Medicare program is already means-tested. . . . Editor's notes: To contact Richard L. Kaplan, call 217-333-2499, or email rkaplan@illinois.edu. The article, ‘Top Ten Myths of Medicare,’ is available online.”

LTC Comment: Dick Kaplan is an elder law attorney, professor, author and friend. We disagree on much but not about the fact that Medicaid is already means-tested and likely to become more so.

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4/29/2013, “Obama Administration Mulls Rule To Give Home Health Aides Better Wage,” by Alvin Tran Khn, Kaiser Health News

Quote: "The average yearly salary for home health aides in 2012 was $21,830, according to the Labor Department. Only 21 states and the District of Columbia extend minimum wage guarantees to at least some in-home care workers. Among them, 12 states have a minimum wage that is higher than the federal standard – $7.25 an hour. The administration wants to change that, however. In December, 2011, President Barack Obama proposed a revision to the Fair Labor Standards Act that would extend both overtime and minimum wage protections to home-care workers employed by third parties, such as home care agencies. ‘They work hard and play by the rules and they should see that work and responsibility rewarded,’ Obama said."

LTC Comment: Good intentions beg the question: Where will the money come from in a long-term care financing system dominated by government programs that pay providers less than the cost of providing the care?

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4/27/2013, “Loans Borrowed Against Pensions Squeeze Retirees,” by Jessica Silver-Greenberg, New York Times

Quote: "To retirees, the offers can sound like the answer to every money worry: convert tomorrow's pension checks into today's hard cash. But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt."

LTC Comment: Run the economy into a hole, choke off the job market, drive interest rates down to zero, and then wonder why old people are getting desperate.

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4/26/2013, “Critical Illness Insurance Showcased in Kiplinger's 2013 Retirement Guide,” Insurance Broadcasting

Quote: "Kiplinger's Personal Finance recently featured information about the importance of critical illness insurance on page three of its annual retirement guide, which offers numerous articles on programs and services that should be considered in retirement planning."

LTC Comment: Much needed recognition for an on-coming insurance product.

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4/26/2013, “The Unluckiest Generation: What Will Become of Millennials?,” by Derek Thompson, The Atlantic

Quote: "This so-called millennial cohort, the largest generation in American history, landed in the cradle during an awful recession, learned to walk during the Reagan recovery, came of age in the booming 1990s, and entered the labor market after the Sept. 11 attacks and before the Great Recession, the two tragedies of the early 21st century."

LTC Comment: The biggest generation? Fact is we boomers aren’t it any more. What life challenges these youngsters face! And what a pitiful inheritance they'll receive as late comers to the Ponzi scheme of social insurance "entitlements."

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4/26/2013, “Why Your Grandpa Is Cooler Than You,” by Mireille Silcoff, New York Times

Quote: "There is baby-boomer old, an audacious, aspirational sort of old. Common depictions include couples sky-diving for their 40th anniversaries; Richard Branson doing all manner of macho rich-guy nonsense; and the woman of a certain age on a seashore holding a fluttering piece of voile toward the winds of freedom. Then there is old old, a realm often belonging to the parents of the baby boomers. This is nursing-home old. This is prunes-for-breakfast old. This is 'I've fallen, and I can't get up' old."

LTC Comment: This article argues that the young think old is cool, especially “Advanced Style.” Left me flat but maybe I’m still too young to recognize cool when I see it.

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Updated, Friday, May 3, 2013, 11:50 AM (Central)

Alpine, TX—

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LTC BULLET: THE MEDICAID PROGRAM INTEGRITY ACT

LTC Comment: New proposed legislation opposes the two biggest perverse incentives in public policy that discourage responsible LTC planning.

LTC BULLET: THE MEDICAID PROGRAM INTEGRITY ACT

LTC Comment: I often get questions like this one. “Mr. Moses, you’ve been writing about Medicaid and long-term care financing for a long time. You’ve made hundreds of recommendations over the years. If you had to pick just one or two things policy makers could do to improve LTC, what would they be?”

You couldn’t find a better answer to that question than H.R. 1703, “The Medicaid Program Integrity Act of 2013” recently introduced in the U.S. House of Representatives by Congressman Charles W. Boustany, M.D. (R, LA). The provisions in this bill, when they become law, as they must sooner or later, in this or some other form, will correct the two biggest problems facing long-term care.

What are those problems?

First, the “Maintenance of Effort” (MOE) requirement in ObamaCare prevents state Medicaid programs from tightening their income and asset eligibility rules. Consequently, for example, states that made access to Medicaid’s most expensive LTC benefits very easy during good economic times are unable to tighten that access now in order to save money, ensure scarce LTC resources go to their neediest citizens, and send the message to the general public that long-term care is a personal risk and responsibility for which families should plan early and responsibly. The Medicaid Program Integrity Act repeals the MOE requirement. It would therefore, allow the 13 states and DC which opted for a home equity exemption of $750,000 (currently inflated to $802,000) to reduce the amount of their exemption to the minimum allowed under federal law, currently $536,000. But that limit still leaves our home equity exemption almost 15 times larger than socialized England’s $36,600 exemption, which includes all property, not just home equity like ours.

So, second, that huge home equity exemption is the single biggest loophole in federally imposed Medicaid LTC eligibility rules. As long as it remains in effect, even at the reduced level of over half a million dollars, the vast majority of Americans can qualify easily for Medicaid LTC benefits without spending down simply by hiding their money in their homes. (Mandatory estate recovery, intended to ensure that all assets, including home equity, go to re-pay Medicaid after recipients die, was achieved in 1993, but unfortunately remains very easy to evade.) The Medicaid Program Integrity Act allows state Medicaid programs to reduce their home equity exemption to as low as $50,000. That’s still over a third more than England allows, but it would send a very strong message to middle class and affluent Americans that failure to plan for long-term care could cost them and their heirs dearly.

Eliminating the maintenance of effort requirement and enabling states to reduce their home equity exemptions to a more reasonable level are the two most important actions the federal government could take to reduce perverse incentives in current law that discourage responsible LTC planning. There are many more things that need to be done, such as (1) stopping the abuse of “Medicaid-friendly annuities” which allow couples to divert hundreds of thousands of dollars from Medicaid spend down without any pre-planning and (2) closing the “reverse half-a-loaf” loophole that survived the Deficit Reduction Act’s valiant effort to return Medicaid LTC to the needy. To find other examples, read any of the Center for Long-Term Care Reform’s many national and state-level studies here.

Bottom line, the Medicaid Program Integrity Act does not do everything that needs to be done to fix LTC financing policy, but it does do the two most important things and that’s a critical step in the right direction.

Are we tilting at windmills to ask Congress to pass and the President to sign such a bill? Probably, in the short term. But I’ve learned that perseverance in tilting often tips windmills over. We’ve made important progress over the years since the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA ’82) first allowed states on a voluntary basis to restrict asset transfers, place liens on real property, and recover from estates. Legislation in 1988 (MCCA ’88) made asset transfer restrictions mandatory. OBRA ’93 made transfer of asset limits longer and stronger and estate recoveries mandatory. HIPAA ’96 and BBA ’97 tried to stop asset transfers altogether. And the DRA ’05 further strengthened asset transfer restrictions and put the first cap ever on the home equity exemption. For the full history and complete citations, see our “LTC Graduate Seminar Transcription” here.

So progress is slow. But it is inevitable. The USA cannot continue indefinitely to finance LTC for the middle class and affluent through a welfare program that serves no one well. Kudos to the author of the Medicaid Program Integrity Act of 2013 and to its supporters. Tilt away proudly.

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Updated, Monday, April 30, 2013, 10:30 AM (Pacific)

Seattle—

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LTC NEWS AND COMMENT: REJECT CLASS 2.0

LTC Comment: Today’s first item is a critical new development in the fight to fix America’s dysfunctional long-term care financing system. The Medicaid Program Integrity Act, newly introduced in Congress, addresses the three most urgent challenges facing policy makers:

1. The need to stop a move toward “CLASS 2.0,” i.e. the favorite solution of dyed-in-the-wool-statists, which is to replace the failed CLASS program with a mandatory version modeled after other bankrupt social insurance entitlement programs from which no one can escape.

2. The need to reduce Medicaid’s exorbitant home equity exemption, up to $802,000 and increasing annually, to a figure closer to the property exemption in England, $36,000 including home equity and all other property.

3. The need to eliminate the ObamaCare “Maintenance of Effort” restriction as it applies to Medicaid LTC eligibility so that states can target their scarce LTC resources to genuinely needy citizens without risking their entire federal Medicaid match.

We’re proud to say we’ve repeatedly urged policy makers to address all three of these objectives in Center for Long-Term Care Reform publications, most recently in “How to Fix Long-Term Care,” seven briefing papers that fully document the problem and the solution.

The Medicaid Program Integrity Act will be available online soon at Congress’s “Thomas” website. In the meantime, Center members in good standing may request a copy of the bill by emailing Damon@centerltc.com. While you’re at it, why not upgrade to one of our premium membership levels which include a subscription to our “clippings service?”

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4/28/2013, “Reject CLASS 2.0 and Address Medicaid's Looming LTC Crisis,” by Rep. Charles Boustany with Rep. Marsha Blackburn and Rep. Phil Gingrey, Townhall.com

Quote: “Federal rules force states to disregard more than a half million dollars in home equity and the entire amount of other valuable assets during enrollment.

“Making matters worse, the 2010 law prohibits states from tightening loopholes that allow welfare abuse. Virginia provides an example of a Medicaid applicant who purchased a $900,000 annuity, naming his wife the beneficiary of $89,000 per month. Obamacare forces Virginia to ignore this income when deciding eligibility. . . .

“To protect Medicaid for poor Americans, we recently introduced the Medicaid Program Integrity Act. The bill would give states the option to reduce the Medicaid home equity exemption as low as $50,000. It would also eliminate Obamacare's Maintenance of Effort rules, preventing states from closing loopholes allowing Medicaid abuse.

“Congress should reject CLASS 2.0, encourage personal responsibility, and protect Medicaid for those it was intended to protect. Ultimately, this will give middle-class Americans greater choice, independence and control over LTC services they need in a setting of their choice.”

LTC Comment: Although its chances of getting past the House, the Senate and President Obama’s veto pen are remote, this bill dodges another CLASS fiasco and tackles the most important problems with Medicaid LTC that need fixing. To wit, the program’s outrageously high home equity exemption and the self-destructive prohibition on eligibility reform in ObamaCare.

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4/26/2013, “SEC halts trading in embattled LTCI seller,” InvestmentNews.com

Quote: "The Securities and Exchange Commission temporarily halted trading in the stocks of Penn Treaty American Corp., an embattled long-term-care insurer that's now under the guidance of state regulators. It's been about seven years since Penn Treaty filed a quarterly or annual financial statement with the SEC. The last one, a 10-K for 2006's results, was submitted in April 2008. The delay was due to accounting concerns related to the company's policyholder benefit reserve liability."

LTC Comment: Penn Treaty’s sad saga continues.

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4/26/2013, “Long-Term Care Insurance Leader Joins American Senior Services Incorporated (ASSI): Mark Goldberg Appointed Chief Operating Officer, Will Support ASSI's New National Alternative to Traditional Home Care Insurance, ‘True Freedom II’ [link],” by American Senior Services Incorporated

Quote: "American Senior Services Incorporated (ASSI) (http://www.truefreedomhomecare.com) today announced that Mark Goldberg, a leader in the long-term care planning field, has joined as Chief Operating Officer."

LTC Comment: Congratulations to an old friend of responsible long-term care planning.

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4/26/2013, “Your biggest assets are Social Security, Medicare,” by Rex Nutting, WSJ MarketWatch

Quote: "For most people, the value of the pensions and health care they'll get in retirement far exceeds the value of all the rest of their wealth, including the equity in their homes, the money they have in the bank, and any funds they've been able to sock away in retirement accounts."

LTC Comment: I found this article fascinating. It imputes an annuity value to Social Security and Medicare benefits emphasizing how much more important those resources are to most Americans than are real assets, such as home equity and investments, of which they have very little. But this observation begs two questions: (1) What happens when Social Security and Medicare collapse as they are bound to do? (2) If it hadn't been for the false sense of security created by those unfunded entitlement programs, would most Americans have saved, invested and insured more in the private market and therefore been much more secure in the long run? It'll take another decade or two, but we're going to find out just how serious this problem is.

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4/25/2013, “A.M. Best Affirms Ratings of The Northwestern Mutual Life Insurance Company and Its Subsidiary [link],” Boston Herald

Quote: "NLTC has exhibited solid revenue growth in recent years, reflecting strong long-term care insurance sales associated with improving economic conditions, as well as several recent market exits and significant premium increases by its shrinking list of competitors. The company experienced a surge in sales over the most recent period after announcing that it would be suspending certain policy features. A.M. Best notes that operating results within the long-term care insurance line of business have been impacted by costs associated with increasing sales and substantial increases in reserves due to the low interest rate environment and less favorable morbidity. While A.M. Best maintains a cautious view on long-term care insurance, NLTC (one of only a few carriers that offer participating policies) has not implemented premium rate increases on inforce policies since it entered the business in 1998. However, the company recently increased premiums on new sales and eliminated some of the more generous product features in an effort to decrease risk improve profitability in this line of business. A.M. Best notes the challenges faced by long-term care insurance writers due to the current low interest rate environment and will monitor Northwestern Mutual's growth in this product line."

LTC Comment: Nice to see a good news story for a change.

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4/24/2013, “Not their parents' long-term care insurance,” by Carol Einhorn, LifeHealthPRO

Quote: "Many of our clients and their moms and dads (if they were smart) bought long-term care insurance (LTCI) five, 10, 20 or even 30 years ago. Now, as we work with prospects and clients in their 40s, 50s, 60s and 70s who have not yet purchased long-term care protection, we are facing a whole new world of LTCI options."

LTC Comment: As the LTCI world turns.

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4/25/2013, “The MetLife Study of Generation X: The MTV Generation Moves into Mid-Life [link],” MetLife Mature Market Institute

Quote: “They may have been known as the MTV Generation or sometimes ‘the slackers,’ when they first started entering the workforce more than 25 years ago, but members of Generation X (Gen X, those born between 1965 and 1976) are now as affluent, stable and saddled with responsibility as their parents were at the same age. A new study from the MetLife Mature Market Institute . . . reports that 70% of Gen Xers live with a spouse or partner. They have an average of 2.5 children and 82% own their own homes, though 17% of those report that the value of those homes is less than the debt attached to them. Forty-three percent have remained in the same type of career throughout their working years and just more than 40% have been with the same employer for 10 years or more. 75% are working full or part-time. Most are part of a dual-earner household.”

LTC Comment: Welcome to the new LTCI target demographic. The oldest Gen Xers turn 50 in 2015 and the younger ones are coming right along.

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4/24/2013, “Do Seniors Hide Assets to Get Medicaid Long-Term Care Benefits?,” by Howard Gleckman, Forbes

Quote: "There is a widespread belief that seniors, in cahoots with shady lawyers and greedy children, hide their assets so they can receive Medicaid long-term care benefits. It turns out that this image—sort of the greedy geezer equivalent of Cadillac-driving welfare queens—is largely an urban myth."

LTC Comment: As usual, this author has the facts and import of his topic all wrong. He infers that Medicaid planning is uncommon because most people who "spend down" to Medicaid LTC eligibility are already poor. The truth is that middle class and affluent people don't have to "spend down" at all. They're already eligible for Medicaid when they enter expensive long-term care, precisely because they have manipulated their income and assets, often with the help of a Medicaid planning attorney, to make themselves eligible for aid before they even apply. Ironically, it's only the poor, who don't have the advice of high-priced lawyers, whose meager savings are wiped out quickly after they enter care, usually a Medicaid nursing home. Unfortunately, this new myth that Medicaid planning is uncommon is misleading analysts, media and policy makers. All you have to do is ask a Medicaid eligibility worker to find out how widespread Medicaid planning is, or read any of the Center for LTC Reforms reports here: http://www.centerltc.com/reports.htm. But this author, and his ilk, who seek to cover up the problem can't be bothered with learning the truth. If you agree, read the Forbes article and offer your response.

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4/24/2013, “Poll: Aging Americans in Denial About Need for Long-Term Care,” by Associated Press

Quote: "We're in denial: Americans underestimate their chances of needing long-term care as they get older -- and are taking few steps to get ready. A new poll examined how people 40 and over are preparing for this difficult and often pricey reality of aging, and found two-thirds say they've done little to no planning."

LTC Comment: Special thanks to Center member Bill Comfort for tipping us to this article with his note . . . "And not a peep about LTC insurance as a viable funding source ....." Subsequently this poll received a lot of secondary coverage across the media.

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4/23/2013, “Medicaid planning & SPIAs,” by Russell E. Towers, J.D., CLU, ChFC, LifeHealthPRO

Quote: "The use of short term 'period certain only' single premium immediate annuity (SPIA) remains a viable tool in assisting some of your clients to qualify for Medicaid benefits while protecting asset values for their heirs."

LTC Comment: The item immediately below quoted an article by Howard Gleckman who claims Medicaid planning isn't really much of a problem. Now check out this article on the use of annuities for Medicaid planning. It's a nationwide fiasco, permitted by the Centers for Medicare and Medicaid Services, and ignored by Congress, which allows people with hundreds of thousands of dollars to qualify for Medicaid without spending down a red cent. I cited actual examples in our recent study of Medicaid and LTC financing in Maine here and you'll find several other egregious examples in replies from state Governors to a Congressional inquiry that we compiled here. The blood boils!”

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4/23/2013, “LTC Advocates Make Case for Immigration Overhaul,” by Bill Myers, Provider Magazine

Quote: "Joining up with a wide swath of small- and medium-sized business interests, the American Health Care Association has urged Congress to expand expert visas and to rethink some of the restrictions that operators say prevent willing immigrants from joining the ranks of the nation's caretakers."

LTC Comment: What does it say about government dominated LTC financing in the USA that providers are totally dependent on low cost foreign labor to provide the care?

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4/23/2013, “Hollywood's hot new target demo? Baby Boomers,” by Susan Wloszczyna, USA Today

Quote: "[F]ilms that cater to grown-up tastes are becoming a valuable commodity for studios looking to tap into a growing demographic: ticket-buyers age 50 and up who still adhere to the ritual of seeing the latest releases on the big screen rather than streaming via Netflix or renting from services such as Redbox."

LTC Comment: Next year every baby boomer will be age 50 plus. Expect more movie themes dealing with boomer concerns, such as parental caregiving and LTC risk.

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4/22/2013, “Beleaguered caregivers getting help from apps,” by Jim Fitzgerald, LifeHealthPRO

Quote: "From GPS devices and computer programs that help relatives track a wandering Alzheimer's patient to iPad apps that help an autistic child communicate, a growing number of tools for the smartphone, the tablet and the laptop are catering to beleaguered caregivers. With the baby boom generation getting older, the market for such technology is expected to increase."

LTC Comment: More evidence that the online conduit to caregivers, prime candidates for LTC insurance for themselves, is growing exponentially.

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4/22/2013, “Day Centers Sprout Up, Luring Fit Elders and Costing Medicaid,” by Nina Bernstein, New York Times

Quote: "Not a wheelchair or walker was in sight at these so-called social adult day care centers. Yet the cost of attendance was indirectly being paid by Medicaid, under Gov. Andrew M. Cuomo’s sweeping redesign of $2 billion in spending on long-term care meant for the impaired elderly and those with disabilities. Such centers have mushroomed, from storefronts and basements to a new development in the Bronx that recently figured in a corruption scandal. With little regulation and less oversight, they grew in two years from eight tiny programs for people with dementia to at least 192 businesses across the city.”

LTC Comment: New York is famous for turning "Medicaid" into a verb. Want to spend money on a new program? "Medicaid it," in other words, find a way to charge Medicaid and collect half the cost in federal matching funds. The stern eye of the U.S. House Oversight and Government Reform Committee is focused on this practice now, so we can expect much more scrutiny of the empire state's egregious Medicaid practices, many of which we highlighted in the Center for LTC Reform's 2011 report here.

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4/22/2013, “Ditch Your Sky-High Long-Term Care Insurance?,” by Jack Hungelmann, Fox Business

Quote: "The only advice I can give you for sure is to not drop your policy altogether. I do recommend that you talk to a financial planner or your long-term care insurance agent for guidance. By knowing your specific financial circumstances, these professionals will be able to help you decide on the best course of action."

LTC Comment: I’m helping a friend with precisely the same 78 percent premium hike right now. Tough situation, but inflicted on us not by carriers responsibly seeking solvency for their books of business, but rather by government policies that drove interest rates to zero while providing easy access to Medicaid LTC after the insurable event occurs

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4/22/2013, “The Retirement Home, Alive With Intrigue,” by Paula Span, New York Times

Quote: "In her new novel 'Life After Life,' the author Jill McCorkle's signal accomplishment is that she has rendered one of these places as a small but convincing universe. She's written a funny and moving book, but Ms. McCorkle doesn't play Pine Haven for laughs or generate cheap drama by portraying it as a hellish dump. The community, apparently a continuing care retirement community, or C.C.R.C., emerges as a kind of small town with its own pleasures, conflicts and concerns."

LTC Comment: Don’t confuse this book with another of the same title by Kate Atkinson, which is a best seller that, based on reviews, sounds like a take off on “Ground Hog’s Day,” except repeating “life after life” instead of day after day.

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4/22/2013, “A Profile of Older Americans: 2012,” USDHHS, Administration on Aging

Quote: "Profile of Older Americans: Electronic version of the popular brochure with the latest key statistics on older Americans in key subject areas. It includes both narrative and statistical charts. The 2012 edition is only available online."

LTC Comment: Proof positive the Age Wave is finally starting to crest.

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4/18/2013, “IRS Health Insurance Penalty Will Not Motivate Consumers To Buy Insurance [link],” Insurance Broadcasting

Quote: "HealthPocket consumer survey found that most people don't feel a penalty for remaining uninsured will motivate them to buy insurance starting in October. When survey takers were asked, 'Will the $95 IRS penalty motivate you to shop this October for an Obamacare health plan?' nearly two-thirds of consumers surveyed answered 'No.' Only 8 percent of respondents answered 'Yes' and nearly 30 percent were unsure. Beginning in 2014, consumers will be required to buy health insurance under the Affordable Care Act. An IRS tax penalty will be levied on consumers who fail to purchase health insurance, with some exceptions for people with financial hardships or religious beliefs that preclude them from purchasing health insurance, among others. The tax penalty for not purchasing health insurance will start at $95 per individual or 1 percent of household income, whichever is greater. By 2016, the penalty will rise to 2.5 percent of annual household income or a minimum of $695 per person, whichever is greater."

LTC Comment: Well as the saying goes “A failure to plan is a plan to fail.” The hodge-podge of ObamaCare patched together and forced to pass by one party in Congress certainly qualifies as a failure to plan.

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4/18/2013, "LTC Connection Launches ‘Members Only’ Website, Offering Producers Expertise On Demand [link]," InsuranceNewsNet

Quote: "LTC Connection, the Long-Term Care insurance (LTCi) industry's leading provider of mandatory LTC certification training is pleased to announce the launch of their newest product, the ‘LTC Inner Circle(tm)’. Designed to help new, occasional, and seasoned LTCi specialists, this user-friendly membership site will transform the way producers sell and market LTC insurance, offering producers an immediate access to LTC insurance expertise, sales and marketing training, tools and resources.”

LTC Comment: Congratulations to Center supporter LTC Connection.

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Updated, Friday, April 26, 2013, 10:25 AM (Pacific)

Seattle—

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LTC BULLET: CENTER TACKLES MEDICAID ESTATE RECOVERIES

LTC Comment: Medicaid estate recoveries (MER) fulfill Congressional intent that assets sheltered to qualify for public assistance will later “be used to defray the cost of supporting the individual” in government-financed long-term care. Read our study plan for MER in Maine after the ***news.***

*** HERE’S WHAT YOU’RE MISSING if you aren’t a premium member of the Center and eligible to receive our daily “clippings” service. According to Nancy A. Dykeman, CLTC, CSA, who is a National Speaker, Educator, Trainer with Long-term Care Planning Consultants, LLC of South Carolina:

“Steve and Damon, these clippings are amazing as I prepare speeches, training and articles about aging. I’m writing 3 chapters for the new CSA textbook (wonderful new company owns SCSA and has stepped up everything to a top level) and I need ‘food’ for my chapters. All of this is so good. I just didn’t know the clippings would be so helpful. Thank you so much.”

If you’d like to receive our “clippings,” which average three per day by email, contact Damon at 206-283-7036 or damon@centerltc.com. What you’ll get are short quotes from critical articles you should know about and a hyperlink to the source in case you want to read the whole piece. Premium individual members of the Center ($250 per year), Premium Elite Members ($500 per year) and corporate members qualify for a subscription to the clippings at no extra cost. You’ll save time and money getting the professional information you need without having to search it out for yourself. Not sure? Ask Damon for a free trial. ***

*** MEDICAID PLANNING DENIERS: It's rare to find a writer who gets so much so wrong so often in so many ways, but Howard Gleckman fills the bill. His latest Forbes blog post says: "There is a widespread belief that seniors, in cahoots with shady lawyers and greedy children, hide their assets so they can receive Medicaid long-term care benefits. It turns out that this image-sort of the greedy geezer equivalent of Cadillac-driving welfare queens-is largely an urban myth." Ironically, LifeHealthPRO published an article the same day explaining how affluent people easily shelter hundreds of thousands of dollars and qualify immediately for Medicaid LTC benefits: “Medicaid planning & SPIAs,” by Russell E. Towers, J.D., CLU, ChFC. Lest readers be taken in by deniers’ sophistry, here’s my reply:

“As usual, this author has the facts and import of his topic all wrong. He infers that Medicaid planning is uncommon because most people who ‘spend down’ to Medicaid LTC eligibility are already poor. The truth is that middle class and affluent people don't have to ‘spend down’ at all. They're already eligible for Medicaid when they enter expensive long-term care, precisely because they have manipulated their income and assets, often with the help of a Medicaid planning attorney, to make themselves eligible for aid before they even apply. Ironically, it's only the poor, who don't have the advice of high-priced lawyers, whose meager savings are wiped out quickly after they enter care, usually a Medicaid nursing home. Unfortunately, this new myth that Medicaid planning is uncommon is misleading analysts, media and policy makers. All you have to do is ask a Medicaid eligibility worker to find out how widespread Medicaid planning is, or read any of the Center for LTC Reforms reports here: http://www.centerltc.com/reports.htm. But this author, and his ilk, who seek to cover up the problem can't be bothered with learning the truth. If you agree, read the Forbes post and offer your reply online.” ***

*** AFTERTHOUGHT: Would anyone like to see and hear a debate between Steve Moses and Howard Gleckman? If a sponsor wants to step up, I’ll gladly throw down the gauntlet. Jesse Slome? What a draw for the next “Producers Summit.” Or how about next year’s Intercompany Long-Term Care Insurance Conference. A Moses/Gleckman contest of wits might make that meeting’s 2012 “Clash of the Titans: Moses vs Gordon on Medicaid and Other Dark Matter” seem like patsy cake by comparison. Who’s game? ***

*** THANKFULLY, someone in Congress is trying to do something about the widespread abuse of Medicaid by affluent people and their lawyers. According to his April 24 press release, Congressman Charles W. Boustany, M.D. (R, LA) “introduced the Medicaid Program Integrity Act, legislation removing federal rules permitting welfare abuse under Medicaid.” This legislation, if passed would allow states to reduce the mandatory Medicaid home equity exemption from as high as $802,000 now to as low as $50,000 in the future. That would unleash a desperately needed flow of private home-equity-conversion dollars into the LTC service delivery system, relieve financial pressure on Medicaid, and help to give welfare-financed LTC back to the genuinely needy. The legislation would also do away with ObamaCare’s “Maintenance of Effort” rule as it applies to Medicaid LTC eligibility thus enabling states for the first time in years to tighten up their income and asset eligibility standards. ***

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LTC BULLET: CENTER TACKLES MEDICAID ESTATE RECOVERIES

LTC Comment: Following is a study proposal submitted by the Center for Long-Term Care Reform to the Maine Heritage Policy Center and to the Maine Health Care Association. Your Center has been working on this project since April 1, 2013. So far, we have:

Reviewed the documentary and legislative history of Medicaid estate recoveries.
Interviewed representatives of seven leading state MER programs by telephone.
Visited and conducted in depth interviews in person with representatives of the private contractor that operates the Medicaid estate recovery program in Iowa (Des Moines).
Visited and conducted in depth interviews in person with representatives of the Medicaid estate recovery program in Maine (Augusta).

We are currently analyzing our findings, developing cost-effectiveness measures to compare the various state programs, and developing our interim report due May 1, 2013. We’ll report on those initial results next week. For now, here’s a look at the research task we’ve undertaken along with an explanation of why the Medicaid estate recovery program is such an important part of the long-term care financing marketplace.

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Project Proposal:
Maximizing NonTax Revenue from MaineCare Estate Recoveries
Submitted to the Maine Heritage Policy Center
and
the Maine Health Care Association
on February 14, 2013
by
Stephen A. Moses, President
Center for Long-Term Care Reform

I. Objective: Produce a step-by-step plan to increase the State of Maine’s Medicaid estate recovery revenue from an average of $6.7 million per year currently to $13.8 million per year with a net increase in non-tax revenue to the state of $7.1 million per year. We will provide a guide for the MaineCare (Medicaid) program on how to maximize estate recoveries while maintaining the moral and political high ground for such a program.

II. Background: Federal law requires all states to recover the cost of care provided by Medicaid from the estates of deceased recipients.[1] The purpose of this requirement is to restore funds previously sheltered from spend down, especially resources sheltered by means of the home equity exemption, so they are available to help others in need rather than passing as a “windfall”[2] to heirs.[3]

MaineCare has a relatively successful estate recovery program. Average recoveries for state fiscal years (SFY) 2009-2012 were $6,725,000 per year. Staff estimate the cost of recovery, including four positions, benefits and other expenses, to be $272,673 per year for a return on investment (ROI) of approximately 25 to one. MaineCare estate recovery staff anticipate that with stronger laws supporting recovery and with additional staff, annual recoveries could realistically increase by $1.5 million to $2.0 million.

Potential additional revenue from estate recoveries may be even higher, however. Maine’s program exempts the first $7,000 of estate value from recovery; does not recover from the estates of spouses predeceased by MaineCare recipients;[4] and does not use TEFRA liens[5] to ensure that real property is retained by recipients until recovery from their estates.

A small, informal sample of new estate recovery cases showed that seven out of ten owned homes meaning potential recoveries should be substantial.[6] Yet, of MaineCare’s 4217 nursing facility recipients, only 297 or 7.1% own homes that are exempt due to “intent to return.”[7] These homes have an average equity value of $105,114 and a median equity value of $87,200, both far below MaineCare’s $750,000 home equity exemption. Because we know a much larger percentage of age-65-plus people own homes, a key question to answer is “what happened to that home equity before the homeowners ended up on MaineCare?”

By hiring more staff, seeking stronger legislative authorities, researching and applying best practices from other states, Maine could aspire to achieve estate recoveries comparable to those of the most successful state, Oregon, which brought in recoveries equal to 5.8% of its Medicaid nursing home expenditures.[8] A comparable rate of recovery for Maine would more than double the non-tax revenue Maine recovers from estates to $13.8 million per year.[9]

The preceding information was taken from the November 2012 report of an earlier study of MaineCare long-term care financing by Stephen A. Moses conducted for the Maine Health Care Association and titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link].”

III. Diagnosis: Rapidly increasing Medicaid long-term care expenditures in Maine have placed enormous pressure on the state budget. Difficult decisions must be made to reduce costs or increase revenues. One effective way to do both with minimal negative impact on the needy is to increase Medicaid estate recoveries. Estate recoveries not only produce extra nontax revenue but they help to awaken the public to the importance of paying privately for long-term care. The more likely and well known recovery from the estate becomes, the more likely people will be to purchase insurance or use their home equity to pay for long-term care. Anything that delays or prevents Medicaid dependency reduces the cost of the program.

IV. Treatment: By maximizing estate recoveries, articulating the moral high ground of personal responsibility for long-term care, publicizing the estate recovery program, and encouraging private long-term care financing alternatives like insurance and home equity conversion, the State of Maine can relieve the fiscal burden of long-term care on tax payers, improve Medicaid's ability to provide quality care to the genuinely needy, and avoid the worse consequences likely otherwise to occur in the wake of the baby boomer "Age Wave."

V. Work Plan: To achieve the objective and goals of this project, we propose the following activities:

1. Conceptual Framework (the starting point): The key to successful estate recoveries is KISS: "Keep it simple." The idea is to find estates to recover and to recover them as inexpensively and efficiently as possible. (Liens are merely a sub-category of recovery to which the same principles apply.) The first step is to find out quickly when a Medicaid nursing home recipient dies. Years of practical experience have shown that the best source of this information is the local eligibility worker and/or the personal representative of the recipient. The next step is to ascertain whether Medicaid has made sufficient payments on a case to warrant recovery efforts. If not, no further effort is necessary. If so, the final step is to contact the personal representative of the deceased recipient, determine whether or not a recoverable estate exists, and initiate the recovery process.

In other words, one begins with a manageable amount of information--Maine can expect about [500] elderly nursing home recipients to die per month--and proceeds by an orderly process of elimination and prioritization to target staff efforts onto the most recoverable cases. Once this process has been refined and perfected manually, certain elements of it can be automated cost-effectively. The secret, however, is to start small, experiment, adopt procedures that work, drop those that do not, work the best and easiest cases first, measure progress in actual dollars recovered, and add staff and budget proportionately to the program's actual success.

2. Preliminary Review (2 weeks)

a. The first step to ensure a successful lien and/or estate recovery program is to capture the latest experience and best practices of successful recovery programs around the country.

(1) We will conduct a literature review: identify and document significant studies of Medicaid liens and estate recoveries and identify best practices for Maine to consider.

(2) We will identify and conduct telephone interviews with managers of the leading Medicaid estate recovery programs in the country. For example, how much money do they recover? Do they use TEFRA liens? How many recovery staff do they employ? How do they identify estates from which to recover? Do they recover from surviving spouses' estates? Have they used or considered using a private contractor to recover from estates on contingency and with what results?

(3) We will identify what the leading estate recovery states do, how they do it, and why it is successful. We will analyze and compare their latest programs, state statutory authorities, forms, procedures, automation approaches and controls. We will document best practices and assess their applicability in Maine.

b. The second step is to review and analyze Maine's Medicaid eligibility determination and information collection and verification process; to examine the availability of vital statistics including death records and property ownership, value, and transfer records; and to study the process in Maine for filing liens, placing estate claims, and enforcing liabilities. We will also identify techniques used by recipients, Medicaid planners, and other financial advisers to avoid Medicaid estate recovery liability. We will identify corrective actions to make estate recovery less avoidable.

c. In light of the findings from these initial studies, we will conduct a comprehensive review and analysis of Maine's current Medicaid estate recovery program. We will propose state legislation necessary to maximize Maine's estate recovery potential.

d. We will present an interim report following the preliminary study phase summarizing our progress, problems, findings and recommendations.

3. Design (two weeks)

a. The next step is to design an adaptation of Maine's current estate recovery program that takes advantage of lessons learned by other states, provides for experimentation with alternative techniques, adapts quickly and effectively to unique circumstances or problems in Maine and maximizes early recoveries through prioritization and error-prone profiling. Our project design takes into account the following kinds of considerations.

b. Lien and estate recovery programs must perform three basic functions: (1) identify assets, (2) track and preserve assets, and (3) recover assets when available. Based on our review of MaineCare’s current estate recovery program and our analysis of estate recovery programs in other states, we will design and propose an enhanced program and implementation strategy for Maine.

4. Report (two weeks): We will provide a comprehensive final report at the end of the sixth week of the project which fully describes the preliminary study, design, and recommended implementation, recounts problems encountered and solutions recommended, and lays out an operational guide for a successful lien and estate recovery program.

VI. Site Visits: We anticipate the need to spend approximately 5 work days in Maine during this project for the purpose of consulting directly with state staff on the analysis and design phases of this project. We will return to Maine for a one-week series of meetings and briefings on MaineCare and long-term care financing to be planned by the Maine Heritage Policy Center sometime after completion of this project and publication of its report.

VII. Schedule: We recommend beginning this project by April 1, 2013 and completing it by May 15, 2013.

VIII. Deliverables: One interim status report in letter format and a final report in electronic form reflecting accomplishment of all of the commitments made within this proposal. One week of presentations by Stephen Moses at the direction of the Maine Heritage Policy Center and in consultation with the Maine Health Care Association (MHCA).

IX. Business Proposal: We propose to conduct the work described in this proposal for the following compensation to the Center for Long-Term Care Reform: [omitted]

X. Experience and Credentials: All substantive work related to this project will be performed by Stephen A. Moses, President of the Center for Long-Term Care Reform. The Center's other staff will assist Mr. Moses with planning, research, and logistics. A copy of Stephen Moses’s professional biography is attached. Additional information on his direct experience with Medicaid lien and estate recovery programs and practices follows.

Stephen A. Moses was a career employee of the United States government for 18 years with extensive public benefit recovery experience. He is intimately familiar with the Social Security Act programs having conducted quality control reviews, state management assessments, state plan and waiver reviews and approvals, and special studies on them for many years. In 1978, for example, he conducted a special study of the Idaho Child Support Enforcement Program which launched that state from almost last to almost first in national collection standings. He was the only federal employee ever invited to run a state child support collection agency, in order to field test his recommendations.

In 1981, Mr. Moses was the principal investigator and sole author of Third Party Liability in the Medicaid Program: A Seattle Case Study. This study and report, published by the Health Care Financing Administration, received national recognition. The study involved identification and actual collection of previously unidentified third party resources on a valid random sample of Medicaid cases. This was the first study ever to discover and verify that 75 percent of all third party resources not identified at the public assistance eligibility interview are related to the employment health coverage of an AFDC recipient or an absent parent. This study was the earliest empirical documentation of the efficacy of automated data matches between public assistance eligibility rolls and state employment security records.

Mr. Moses served for nine years with the Health Care Financing Administration, for most of that time as a "Medicaid State Representative." In that capacity, he conducted periodic reviews of Oregon's long-term care eligibility system, asset control methodologies, and estate recovery program; he directed a feasibility study of closing eligibility loopholes and implementing estate recoveries in Idaho; and he surveyed every Medicaid eligibility system, lien and estate recovery program in the country (The Medicaid Estate Recovery Study, Region 10, November 1985).

In 1987, Mr. Moses joined the Office of Inspector General of the U.S. Department of Health and Human Services where he was the national project director and author of another national study of Medicaid nursing home eligibility, Medicaid estate planning, and asset and resource divestiture problems titled Medicaid Estate Recoveries, June 1988. He also directed and authored Transfer of Assets in the Medicaid Program: A Case Study in Washington State, May 1989 for the Office of Inspector General. Both of these projects delved deeply into all of the topics proposed for review in Maine. Mr. Moses advised the General Accounting Office on all aspects of its study titled Medicaid: Recoveries from Nursing Home Residents' Estates Could Offset Program Costs [link], March 1989. He briefed then-incumbent Secretary Otis Bowen of the US-DHHS and Administrator William Roper of HCFA on the growing national problem of Medicaid asset/resource divestiture and the need for Medicaid estate recoveries and he wrote the Inspector General's contribution to the report to Congress on these subjects that was mandated by the Medicare Catastrophic Coverage Act of 1988 (Medicaid Estate Recoveries: A Management Advisory Report, December 1988.)

On the national scene, Mr. Moses has advised the United States Congress on liens and estate recoveries. He presented a 21-page report titled Medicaid Loopholes: A Statutory Analysis with Recommendations to the Senate Committee on Finance in 1991. He presented a critique and analysis of the bill which ultimately became OBRA '93 to the Senate Special Committee on Aging and the Senate Committee on Finance in July 1993. This report, titled Medicaid Estate Planning: An Analysis of GAO's Massachusetts Report and Senate/House Conference Language, was instrumental in fending off efforts by lobbyists to dilute the strong loophole-closing and estate recovery provisions in OBRA '93.

Since leaving federal service in 1989, Mr. Moses has published hundreds of articles on Medicaid estate planning, nursing home eligibility, transfer of assets, liens and estate recoveries, and long-term care service delivery, financing and policy; he has consulted on these subjects in most U.S. states and spoken at innumerable national conferences. He has testified before over half of America's state legislatures. As Director of Research for LTC, Inc., Mr. Moses directed and authored studies on Medicaid nursing home eligibility, asset and resource transferring techniques, methods to control divestiture, estate recoveries, and how to implement OBRA '93 in numerous states, e.g.: Medicaid Estate Recoveries in Massachusetts: How to Increase Non-Tax Revenue and Program Fairness, December 1990; The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin, June 1992; Medicaid Estate Planning in Kentucky: How to Identify, Measure and Eliminate Legal Excesses, March 29, 1993; Long-Term Care in Montana: A Blueprint for Cost-Effective Reform, September 23, 1993; The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term Care, April 21, 1994; The Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois, February 1, 1995; The Long-Term Care Financing Crisis: Danger or Opportunity? A Case Study in Maryland, September 15, 1995; The Heartland Manifesto: How to Finance Long-Term Care for Middle America, August 1, 1996; The Jersey Share: How to Pay for Long-Term Care with Less Federal Money, March 31, 1997. Most of these reports and publications are available for review upon request. For additional, more recent examples, see http://www.centerltc.com/reports.htm.

Since founding the Center for Long-Term Care Reform in 1998, Mr. Moses has continued to speak, write and publish on long-term care financing issues. The Center for Long-Term Care Reform's website at http://www.centerltc.org/ contains many of his speeches, published articles, and reports. The Center's four original public policy reports are available in .pdf format on the website. These include LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle (1998), The Myth of Unaffordability: How Most Americans Should, Could and Would Buy Private Long-Term Care Insurance (1999), The LTC Triathlon: Long-Term Care's Race for Survival (2000), and The Heartland Model for Long-Term Care Reform: A Case Study in Nebraska" (2003). A biographical sketch of Stephen Moses is attached.

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[1] The Omnibus Budget Reconciliation Act of 1993 made estate recovery mandatory.

[2] “It is their children, after all, who stand to inherit whatever property remains after the costs of long-term care are paid and who currently reap the windfall of Medicaid subsidies. We must emphasize that the issue is enrichment of nonneedy adult heirs, not denial of care to the elderly.” (Office of Inspector General, US Department of Health and Human Services, “Medicaid Estate Recoveries: National Program Inspection,” June 1988, pps. 47-48; https://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf.)

[3] Congress made it clear 30 years ago that “all of the resources available to an institutionalized individual, including equity in a home, which are not needed for the support of a spouse or dependent children will be

used to defray the cost of supporting the individual in the institution.” (Source: United States Code, Congressional and Administrative News, 97th Congress—Second Session— 1982, Legislative History (Public Laws 97-146 to 97- 248), vol. 2 [St. Paul, MN:, West Publishing], p. 814, cited in U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy, “Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care,” Policy Brief no. 2, April 2005, p. 10.)

[4] The General Accounting Office (now called the Government Accountability Office) found in a 1989 study that "In the eight states studied, as much as two-thirds of the amount spent for nursing home care for Medicaid recipients who owned a home could be recovered from their estates or the estates of their spouses.” (General Accounting Office, “Recoveries from Nursing Home Residents' Estates Could Offset Program Costs,” HRD-89-56, March 7, 1989, p. 3; http://www.gao.gov/assets/150/147459.pdf.

[5] The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA ’82) authorized states to place liens on homes owned by institutionalized Medicaid recipients to ensure their availability for later estate recovery so long as no surviving exempt dependent relative lives in the property.

[6] Source: Email, October 24, 2012, from Deen Dunn, Manager, State of Maine Estate Recovery: “We did look at a small ample and there were 7 out of 10 cases that had homes at the time we processed.”

[7] As of 2010, Maine had 6390 nursing home residents, 66% of whom or 4217 relied primarily on MaineCare. (Source: StateHealthFacts.org, http://www.statehealthfacts.org/profileind.jsp?cat=8&sub=97&rgn=21) but currently only 297 cases or 7.1% have homes with values over $1 exempted due to intent to return according to an October 27, 2012 email from Reinhold Bansmer, Special Projects Program Manager, DHHS, Augusta.

[8] U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy, "Medicaid Estate Recovery Collections," Policy Brief No. 6, September 2005, p. 8; http://aspe.hhs.gov/daltcp/Reports/estreccol.pdf.

[9] MaineCare spent $237 million on nursing facilities in 2010. (Source: StateHealthFacts.org, http://www.statehealthfacts.org/profileind.jsp?ind=180&cat=4&rgn=21.) At a 5.8% rate of recovery, matching Oregon’s, Maine would recover $13.8 million.

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Updated, Monday, April 22, 2013, 10:31 AM (Pacific)

Augusta, Maine—

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PROVIDER SHORTAGES AND LTC NEWS AND COMMENT

LTC Comment: This week’s news contains several articles about the shortage of direct-service LTC caregivers.

Public policy has consequences. If you channel most Americans into Medicaid-financed long-term care, then pay providers less than the cost of providing their care, you should expect to have too few highly qualified caregivers and a lot of bad health outcomes.

Simultaneously, such a policy makes consumers complacent about the cost of LTC and less likely to save, invest or insure for the risk. We’re only now getting to the point where the negative consequences of Medicaid LTC—serious problems of access, quality, reimbursement, discrimination and institutional bias—are coming to the awareness of consumers. But by the time they need care, it’s too late for responsible planning and the path of least resistance is to qualify for Medicaid, often by means of gaping eligibility loopholes and welfare “planners.”

Unfortunately, the poor’s meager savings are wiped out before they know what hits them. That’s why studies show that most victims of “spend down” have low incomes and assets to begin with. The middle class and affluent don’t have to spend down. They just work the system, converting their wealth into exempt form without having to spend it.

That’s why a strong estate recovery system is critical. Without it Medicaid LTC financing is little more than free inheritance insurance for the baby boomer generation. This Friday’s LTC Bullet will fill you in about our study to enhance Medicaid estate recoveries in the state of Maine.

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4/21/2013, “Tip-Swapping on Long-Term Care Insurance: Morningstar.com readers offer their input on whether to buy it, when to buy it, and what features to seek in this complicated insurance product [link],” by Christine Benz, Morningstar.com

Quote: "Rforno wrote, 'I saw first-hand the value of long-term care plans now that I'm taking care of my father, [who has severe dementia.] His [insurance] has covered the vast majority of everything in assisted living for the past three years as his condition worsened, he never understood why he had to write those checks, but I'm extremely thankful I kept making him do it. Ergo last year when I had the opportunity to pick up a long-term plan through a one-time open season when my university employer tweaked its group policy slightly, I pounced especially when the number of firms offering individual long-term care plans has shrinking in recent years.'"

LTC Comment: Nobody likes LTCI . . . until they need it.

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4/19/2013, “LTCI carrier may have pulled back from some states,” by Allison Bell, LifeHealthPRO

Quote: "State Farm Insurance may have quietly pulled out of some state long-term care insurance (LTCI) markets. The American Association for Long-Term Care Insurance (AALTCI) recently reported that it has heard that the policyholder-owned mutual insurer has stopped selling LTCI coverage in Arizona, California, Connecticut, Hawaii, Indiana, Nevada and New York."

LTC Comment: Another one exits gradually, quietly.

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4/19/2013, “CMS work group recommends approach for employing former criminals in long-term care settings [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "The work group consists of Centers for Medicare & Medicaid Services employees and volunteers from 11 state agencies. It was formed in response to a March 2011 report from the Department of Health and Human Services Office of Inspector General, which found 92% of nursing facilities employ at least one person with a criminal conviction."

LTC Comment: Juxtapose this item with the other articles about America’s LTC caregiver shortage that you’ll encounter below. What a disaster LTC public policy has created.

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4/18/2013, “Long-Term-Care Top Concern Among Investors: UBS,” by Lorie Konish, OnWallStreet.com

Quote: “[T]he number of investors who cited long-term care - including health care and other support - as a top concern climbed to 31% from 26% in January. For 16% of the investors surveyed, long-term care ranked as a greater concern than retirement. Investors also said they do not feel prepared to fund the long-term care they will need. While 64% of investors indicated they are 'highly prepared' when it comes to retirement planning, just 37% said they are highly prepared with regard to planning for their long-term care needs. And those results also hold an opportunity for financial advisors, with 39% of investors ages 25 to 49 indicating they are interested in more guidance for their long-term care planning.”

LTC Comment: LTC risk and cost are showing up on boomers’ radar screens.

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4/18/2013, “UnitedHealth warns of Medicare profit squeeze,” CBS News

Quote: "UnitedHealth Group, the largest provider of Medicare Advantage plans, warned Thursday that funding cuts for the privately run versions of the federal Medicare program will force it to reconsider its expectations for earnings growth next year. CEO Stephen Hemsley told analysts that the government-subsidized coverage for elderly and disabled people faces a reimbursement cut of about 4 percent next year. That's on top of other possible federal funding reductions and an expected 3 percent rise in medical costs."

LTC Comment: American industry is so gullible. Government repeatedly offers new programs with generous reimbursements to incentivize participation. Once businesses are locked in, Uncle Sam takes away the punch bowl and the party ends badly for companies, shareholders, and consumers. There are so many examples that one wonders why private industry isn’t more wary. Crony capitalism run amuck.

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4/18/2013, “Arkansas’ unusual Medicaid pledge: ‘The program is not an entitlement program [link],’” by Sarah Kliff, Washington Post

Quote: "The Arkansas state legislature has officially passed legislation to use Medicaid expansion dollars to buy private insurance for some 250,000 state residents.

"The bill used to do so contains one of the more unusual provisions I’ve ever seen in health-care legislation. It requires those enrolling in the Medicaid expansion to acknowledge that they’re not enrolling in an entitlement program. The relevant section: (i) An eligible individual enrolled in the program shall affirmatively acknowledge that:
(1) The program is not a perpetual federal or state right or a guaranteed entitlement;
(2) The program is subject to cancellation upon appropriate notice; and
(3) The program is not an entitlement program."

LTC Comment: Medicaid is in fact a means-tested public assistance program, not an entitlement. Medicaid benefits can be reduced or eliminated by government at any time. There is nothing wrong, and much good, in requiring Medicaid applicants and recipients—especially those who take advantage of the program’s huge asset exemptions—to acknowledge they are participating in a welfare program and not enrolling in an entitlement for which they’ve paid premiums to earn benefits.

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4/17/2013, “Transition Boomers Prefer Income Over Higher Returns,” by Cyril Tuohy, InsuranceNewsNet

Quote: "Despite the market's recent strength, 'transition boomers,' or people between the ages of 55 and 65, said they would protect their retirement savings with a guaranteed return rather than watching their assets lose value in the market, according to the 2013 Transition Boomers and Retirement Income survey from Allianz Life."

LTC Comment: Protecting principal, a key role for LTCI, is more and more important to boomers.

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4/17/2013, “Top Dem sees 'train wreck' for PPACA,” by Ricardo Alonso-Zaldivar, LifeHealthPRO

Quote: "A senior Democratic senator who helped write the Patient Protection and Affordable Care Act (PPACA) stunned administration officials Wednesday, saying openly he thinks it's headed for a ‘train wreck’ because of bumbling implementation."

LTC Comment: It’s looking more and more like PPACA as a whole will go down in the end like its CLASS component did last year.

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4/17/2013, “Scooter Store Bankrupt After Medicare Audit Uncovered Fraud,” by Alan Farnham, ABC News

Quote: "The Scooter Store, which claims it has given 700,000 senior citizens back their mobility, has itself run aground. The company this week filed for Chapter 11 bankruptcy, listing assets of $1 million to $10 million and liabilities of between $50 million and $100 million. Major creditors include the Centers for Medicare and Medicaid Services (CMS), which, according to the filing, is looking to collect $19.5 million--the amount the Scooter Store previously had agreed to repay the U.S. government after an independent audit found that the company had overbilled Medicare and Medicaid by $46.8 million to $87.7 million from 2009 to 2011."

LTC Comment: I hope this means no more TV ads promoting “free” scooters compliments of Medicare.

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4/17/2013, “Call to integrate long-term care products with pensions,” by Donia O'Loughlin, FT Adviser

Quote: "Swiss Re's UK chief executive has called for long-term care saving products to be integrated into pensions in order to boost the amount that people put aside and has said he would like to see care needs being subject to a ‘soft compulsion’ to save in the same way as auto-enrolment."

LTC Comment: Should we “compel” people to save or insure for long-term care? The question only gets asked when the alternative is that government programs pay when people don’t insure. Another approach that does not involve government compulsion is to stop paying for LTC after the insurable event occurs for people who possess expensive homes and other large exempt or sheltered assets. Give the public a real incentive to plan responsibly for long-term care.

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4/17/2013, “Nursing Homes May Face Readmission Penalties Similar to Hospitals [link],” ALFA

Quote: "The HHS cites analysis by the Medicare Payment Advisory Commission which indicates that nearly 14 percent of individuals on Medicare discharged from a hospital to a skilled nursing setting are readmitted to the hospital for conditions that could potentially have been avoided. The HHS 2014 budget proposal recommends reducing payments by up to three percent for skilled nursing facilities that are determined to have high rates of preventable hospital readmissions. The proposed penalties would take effect in 2017, with an estimated $2.2 billion in savings over 10 years."

LTC Comment: First pay less than the cost of care for the 66% of nursing home residents who are on Medicaid, then cut reimbursement from Medicare when low cost care for “dual eligibles” results in bad outcomes. Welcome to LTC financing policy in the USA.

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4/17/2013, “Proposed rules broaden opportunities for veterans needing post-acute care [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "Newly proposed rules could impact veterans' nursing home care. One rule would provide more flexibility to veterans in terms of their healthcare benefits under the Department of Veterans Affairs. A separate rule would prioritize government funding for state homes that provide care to veterans."

LTC Comment: Center members can review our section titled “Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care [link]” in The Zone. If you need your user name and password, just reply to this email and Damon will look it up and let you know.

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4/16/2013, “CNAs vs. Football,” by Steve Monroe, Seniors Housing Weekly Update

Quote: "So, what is more punishing to the human body, playing professional football or working in a skilled nursing facility? Apparently, there is not too much difference in terms of missing work from injuries or needing to find another line of work. The real difference, of course, is the rate of pay. Monday's Wall Street Journal laid it out in black and white. Why would you toil away in a job that pays slightly higher than the minimum wage, where your customers (the residents) sometimes throw food at you, yell at you, bite you, and where you may have to work extra shifts and on Holidays whether you want to or not. And let's not forget the pulled muscles. True, many people in the industry say it is a calling, but I am not sure how many people are ‘called’ to be CNAs. Sounds more like an excuse for the low wages currently paid. But can the wages really go up? Not with cuts in Medicare and stagnant Medicaid reimbursement. So we have high unemployment, but apparently 11,000 CNA jobs are unfilled nationwide, and an age wave that's growing by the year. How else do you spell disaster?"

LTC Comment: Just in case you wondered why we have a shortage of LTC caregivers even though unemployment is high.

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4/16/2013, “Long-Term Care Panel Seen as Likely to Flop,” by Kathleen Struck, MedPage Today

Quote: "Without financial support, the federal government's new unpaid and volunteer long-term care commission is likely to do little more than produce yet another report about the challenge of providing care for an aging nation, experts said."

LTC Comment: You get what you pay for and you don’t get what you don’t pay for. Pretty basic economics but the federal government doesn’t exactly excel in that discipline.

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4/15/2013, “For the Elderly, Diseases That Overlap,” by Matthew Bloch and Hannah Fairfield, New York Times

Quote: "Alzheimer’s disease, high blood pressure and heart disease are the three most common chronic conditions in assisted living facilities: 82 percent of residents have at least one of them, according to a new government study. But what is alarming is how these ailments overlap."

LTC Comment: The geriatric triple threat.

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4/15/2013, “How to handle a long-term care rate hike,” by Glenn Ruffenach, WSJ MarketWatch

Quote: "Yes, getting a notice of a premium increase is typically a nasty surprise. That said, policyholders should first educate themselves about why the increase has occurred - and should recognize that such increases don't simply 'help the insurer make up for lost profits,' Kitces writes. Rather, premium hikes 'keep the company solvent to pay policy owners going forward.'"

LTC Comment: Well, it’s about time someone in the national media made that point! Now, someone should tell the government to prepare to pay its entitlement claims someday. The Social Security and Medicare “trust funds” have nothing in them but IOUs and Medicaid comes straight out of current budgets.

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4/15/2013, “Diabetics develop dementia 2 years sooner than others, researchers find [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "Those with diabetes and dementia died an average of 2.6 years earlier than non-diabetics, and those with a long history of diabetes who were diagnosed with dementia before turning 65 died almost twice as fast, the researchers said. However, as people get older, the impacts of having both diabetes and dementia become less pronounced."

LTC Comment: More evidence that obesity, diabetes and dementia are a plague.

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4/14/2013, “As America Ages, Shortage of Help Hits Nursing Homes,” by James R. Hagerty, Wall Street Journal

Quote: "Nursing homes and operators of agencies providing home-care services already are straining to find enough so-called direct-care workers, who help the elderly or disabled with such things as eating and bathing. They also face looming retirements in the current workforce, in which one-fifth of workers are 55 years old or older. The reasons for the shortage: pay is low, typically less than $12 an hour, injury rates are high, and the work can be unpleasant and physically draining."

LTC Comment: America has Medicaid to thank for dragging down reimbursement rates to levels that preclude paying salaries adequate to attract enough high-quality direct service caregivers. Even private payers, who must pay on average half again as much as Medicaid pays for the two-thirds of all nursing home residents it covers, are affected by the shortage of adequately paid caregivers.

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3/26/2013, “Consumers Find That Health Insurance Is Not Enough: Critical Illness Insurance Spotlighted on TV Segments Nationwide; Experts Offer Free Guide [link],” Yahoo Finance

Quote: "According to the American Association of Critical Illness, 1.5 million Americans will declare bankruptcy this year – 60 percent of them due to medical bills (a 50% increase over the last six years). Surprisingly, 78 percent of them have health insurance, but are still unable to meet the high cost of deductibles, co-payments, and daily living expenses. A new educational platform, http://www.criticalillnesseducation.org, has been launched to help consumers better understand the benefits of supplemental solutions like Critical Illness Insurance to help fill the gaps."

LTC Comment: Congratulations to Center corporate member American Independent Marketing for this initiative.

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Updated, Monday, April 19, 2013, 11:58 AM (Pacific)

Augusta, Maine—

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LTC BULLET: SHELTON ON LTCI

LTC Comment: Phyllis Shelton’s new book on long-term care insurance is a tour de force. Reviewed after the ***news.***

*** MEDICAID ESTATE RECOVERIES: I’m working on a study of Medicaid estate recoveries in Maine. Last week I interviewed experts by phone in six states that do Medicaid recoveries especially well. This week I visited a model program in Des Moines, Iowa and now I’m drilling down with Medicaid staff in Maine searching for ways to enhance their program. Why estate recoveries? It’s how a program like Medicaid, intended as a safety net for the poor, can also help middle class people who’ve failed to plan. By collecting from estates, Medicaid can allow program recipients to retain some income and assets, such as a home, which they’d otherwise have to liquidate when stricken by long-term chronic illness. In the absence of estate recoveries, which federal law made mandatory in 1993, Medicaid operates as free inheritance insurance indemnifying heirs and desensitizing baby boomer consumers to the risk and cost of LTC. Maine does a good job with estate recoveries already, but we hope to help the state find ways to do even better. Watch for a full report in next week’s LTC Bullet. ***

*** CRITICAL ILLNESS. "According to the American Association for Critical Illness, 1.5 million Americans will declare bankruptcy this year – 60 percent of them due to medical bills (a 50% increase over the last six years). Surprisingly, 78 percent of them have health insurance, but are still unable to meet the high cost of deductibles, co-payments, and daily living expenses. A new educational platform, http://www.criticalillnesseducation.org, has been launched to help consumers better understand the benefits of supplemental solutions like Critical Illness Insurance to help fill the gaps." Read more here. ***

*** SPOTLIGHT ON: “LTC Almanac”

The Center for Long-Term Care Reform’s “LTC Almanac” is a compendium of information on all aspects of long-term care service delivery and financing organized chronologically by subject for quick and easy access. The “LTC Almanac” conveniently provides information that will 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 better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Members can access the “LTC Almanac” by clicking here. If you need your username and password, or are not yet a member, contact Damon at 206-283-7036 or damon@centerltc.com. ***

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LTC BULLET: SHELTON ON LTCI

LTC Comment: Phyllis Shelton’s latest volume on LTCI covers this topical moving target admirably. So much is changing in the field of long-term care planning, yet this book is comprehensive, up to date through the start of 2013 and (mostly) accurate. I could quibble with a few points about Medicaid, but they’re minor and, if you’re concerned about that morass of complexity, you’d probably better consult your local welfare agency anyhow.

Protecting Your Family with Long-Term Care Insurance: A Complete Guide to Long-Term Care Planning including traditional and hybrid policies and alternative funding options!, by Phyllis Shelton, LTCi Publishing, Henderson, Tennessee, 2013 is presented in eight chapters. They cover the usual obligatory material such as LTC risk, cost, planning, coverage, and options. I’ll focus on a couple of things I thought the book did especially well.

Phyllis Shelton has been a thoughtful analyst and passionate advocate of private long-term care insurance for over 25 years. She weaves her background and experience into nearly every page of the book. You’ll find personal stories from her own family and from her thousands of clients. These anecdotes ground the needfully complex details and theory in practical and emotional reality. Readers will take this journey of discovery with a guide who’s been around the block more than most experts.

One key area of LTC planning that usually gets short shrift is “what do you do if you can’t qualify for LTC insurance?” Shelton does a particularly good job with this subject.

“Chapter 7: People Who Do Not Qualify for LTC Insurance” covers Life Insurance or Annuities, Life Settlements, Reverse Mortgages, LTC Immediate Annuities (medically underwritten), Short-Term Care Products, and Medicaid. “Chapter 6: Alternatives to LTC Insurance” covers some of the same subjects from a different perspective.

The author’s own flyleaf caveat says what the prospective consumer needs to know about this book: “You’re not sure LTC insurance is the best solution for you? No problem. After you read this book, you will know enough to make an informed decision and I will have done my job. However, I caution you to not procrastinate on this decision. The long-term care insurance market is changing rapidly. And you, dear friend, could become uninsurable with your next heartbeat.”

My own dust jacket blurb for the book sums it up: “The name Phyllis Shelton is synonymous with long-term care education. Who better to guide you through the shoals of LTC planning in this time of rapid change and elevated risk?”

Find promotional details and where to order the book here: http://www.ltcconsultants.com/newsletter/2013/pyf/index.shtml.

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Updated, Monday, April 15, 2013, 11:20 AM (Pacific)

Seattle—

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Tax Day and LTC News and Comment

LTC Comment: Happy Tax Day. Well that’s a contradiction in terms, but at least we can set the filing hassle aside for another year. Well, except for the quarterlies.

Or, no, wait. There is another big tax day coming this week: “Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year.” That’s April 18 this year according to the “Tax Foundation.”

We’re not exactly emancipated from taxes after that day, of course, as state, local, sales and property taxes keep biting all year.

Are taxes the price we pay for civilization or an anchor dragging prosperity down? Both. The challenge is to get the balance right.

Don’t hold your breath.

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4/13/2013, “Medicare Increase Could Ding Some in Middle Class,” by Associated Press, BizSmart

Quote: "'Means testing' of Medicare benefits was introduced in 2007 under President George W. Bush in the form of higher outpatient premiums for the top-earning retirees. Obama's health care law expanded the policy and also added a surcharge for prescription coverage. The latest proposal ramps up the reach of means testing and sets up a political confrontation between AARP and liberal groups on one side and fiscal conservatives on the other."

LTC Comment: This is how government will pull the entitlement safety net away from the middle class and affluent--not all at once, but rather in dribs and drabs.

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4/11/2013, “The Chained CPI - How Big Of A Difference Does It Make?,” by Arthur Stein, Seeking Alpha

Quote: "While a Chained CPI may provide a more accurate indication of inflation, it seems clear the reason for the switch is to reduce the federal budget deficit. Lower COLAs reduce annual increases in Social Security payments and federal pensions. Tax revenue increases because tax brackets, deductions and exemptions do not rise as quickly."

LTC Comment: This proposal is likely to pass. It's one more example of how government will withdraw entitlement benefits in small bites which in the end mean major retrenchment. Consumers who see this coming will turn more and more to private savings and insurance.

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4/10/2013, “Retiree health benefits: Facing extinction? Inflation, reforms lead more firms to shed retiree plans [link],” by Elizabeth O'Brien, WSJ Market Watch

Quote: "Employer-provided health insurance for retirees has been dwindling for decades now, but the trend is accelerating, experts say. Mounting costs have caused more employers to scale back or eliminate medical benefits for their former workers."

LTC Comment: The silver lining in this dark crowd is the growth of high-deductible health plans and Health Savings Accounts, assuming the government allows them to survive and prosper.

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4/10/2013, “Presidential Budget Caps Retirement Savings,” by Terry Savage, Huff Post

Quote: “The government wants to limit how much money you can save in a tax-deferred retirement account, saying too many people are taking tax deductions for saving more money than they are likely to need.”

LTC Comment: Several articles came out last week about the plan in the President's new budget proposal (released Wednesday, 4/10) to cap retirement savings. Not a good idea for reasons Terry Savage enumerates in this piece, but it could be a sideways benefit for LTC insurance. With tax-deferred savings limited to $3 million, maybe people would be more likely to use some of their extra income to protect their savings from LTC risk. Just a thought.

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4/10/2013, “Nursing home costs approach $84,000 a year, Genworth survey shows [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "The cost of long-term care continues to rise, according to the 10^th annual Cost of Care Survey from insurance company Genworth. The median annual cost of a private nursing home room reached $83,950 this year, up 3.6% from 2012, the report showed. Over the last five years, the cost of a private nursing home room has outpaced inflation, going up 4.5% on an annualized basis. Assisted living costs increased even more dramatically over the last year. The median annual cost for assisted living increased 4.6% year-over-year, to reach $41,400 for a single-occupancy one-bedroom."

LTC Comment: Genworth’s press release and other articles on the report made much of the fact that the cost of non-institutional LTC services is increasing more slowly: “The cost of receiving care in a setting such as an assisted living facility or nursing home is dramatically increasing, while the cost to receive care at home through homemaker services or a home health aide is rising at a much more gradual pace.” (From the press release.) Center members will find the latest Genworth LTC survey data linked in “The Zone” for easy future reference.

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4/9/2013, “Gene linked to higher Alzheimer's risk in blacks,” by Janice Lloyd, USA Today

Quote: "A new gene mutation has been identified that nearly doubles African Americans' risk for getting Alzheimer's disease, according to a large, government-funded report out Tuesday."

LTC Comment: Awful news. A kind of medical piling on.

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4/9/2013, “Medicaid patients struggle most with preventable chronic illnesses,” by Kathryn Mayer, LifeHealthPRO

Quote: "U.S. adults whose primary health insurance source is Medicaid are in significantly worse health than those with employer-sponsored coverage - and it's mainly preventable."

LTC Comment: Well, maybe, but Medicaid recipients tend to be less educated and poorer so that preventability of their health problems is difficult and dubious for a public program.

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4/9/2013, “On the Critical List?: A MetLife Report on the Health Status of the 40+ Population [link],” MetLife Mature Market Institute

Quote: "Treating diseases as they emerge runs counter to what individuals should be doing - focusing on health and wellness. The paper offers solutions for individuals, service providers and employers to improve health status, including the use of technology, implementing wellness and education programs, and more."

LTC Comment: An ounce of prevention is worth a pound of cure, but huge public funding of acute care may actually diminish personal responsibility about prevention.

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4/9/2013, “Is now the time for long-term care insurance?,” by Donald Jay Korn, Employee Benefit Adviser

Quote: “‘If the long-term care market is 'broken,' why are some experts calling this year the year to buy the product? . . . 'Insurance carriers are having to withdraw some of the more desirable benefits to keep rates as stable as possible,' Shelton says. 'Now is the time to buy before gender rating kicks in and before the best inflation option [5%, compounded for life] becomes unaffordable or goes away. It takes time for new products to get approved - some states are really slow - so I believe we have until the end of this year before most of the changes are pushed through.'”

LTC Comment: Another LTCI fire sale? Watch for our review of Phyllis Shelton’s new book, coming soon.

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4/9/2013, “Four Out of Ten Seniors Lapse or Surrender Life Insurance,” Life & Health Advisor

Quote: "Approximately 40 percent of seniors have lapsed or surrendered their life insurance policies, according to a study cited in Conning Research & Consulting’s 2012 report on the life insurance settlement industry. Conning published the numbers from a survey performed in April 2010 among U.S. seniors by the Insurance Studies Institute. The number reflects a tragic, long-accepted truth in the life insurance industry. An overwhelming number of beneficiaries will never claim the death benefit from their caretaker’s life insurance policy. In fact, life insurance companies rely on the high probability that they will never pay out a customer’s policy; they reap most of their profit from lapsed, unclaimed policies."

LTC Comment: If instead of lapsing those policies people could use them to fund long-term care it would generate a lot of private financing for LTC providers. Representatives of the provider profession have recommended legislation to encourage or require such use of life insurance benefits.

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4/8/2013, “Prudential Long Term Care Insurance Group Enrollments Ending Soon [link],” ExpertClick

Quote: "Prudential long term care insurance announced that June 30 is the final date for submission of applications from eligible employees working at companies that offer group long-term care insurance coverage previously sold by the insurer."

LTC Comment: Slow slide continues.

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4/8/2013, “MedAmerica trims California LTCI product line,” by Allison Bell, LifeHealthPro

Quote: "MedAmerica has stopped selling one type of long-term care insurance (LTCI) policy in California but is continuing to sell another type of LTCI policy in the state. The company said it will stop selling the CareDirections Simplicity line in California but will continue to sell the FlexCare product there."

LTC Comment: And more.

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4/7/2013, “The numbers behind the decline in workplace benefits,” by Alana Semuels, Los Angeles Times

Quote: "Only 28% of U.S. companies offer long-term care insurance, down from 45% in 2008, according to a survey from the Society for Human Resource Management."

LTC Comment: Wrong direction, but this sounds a little extreme. We’ll keep an eye out for other evidence.

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4/5/2013, “More Sharing Services,” by David Dankwa, InsuranceNewsNet

Quote: "A Portland-based law firm, Williams Love O'Leary & Powers, has filed a class-action lawsuit in a federal court in Oregon against Bankers Life, alleging that the insurer has a habit of denying long-term care benefits to the elderly."

LTC Comment: Another black eye for the business? Or another example of expecting LTCI to pay claims not covered by a policy?

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4/2/2013, “6 Months Before New Obamacare Plans Arrive, Consumers Still Don't Know What They're Buying [link],” InsuranceBroadcasting

Quote: "A new HealthPocket consumer survey indicates most people don't understand the most fundamental change to health plan designs under Obamacare. When survey takers were asked, 'How Will The New Obamacare Bronze, Silver, Gold, and Platinum Health Plans Always Differ From One Another?' 86% percent responded that they did not know. Only 4 percent selected the correct answer ‘% of medical costs covered by insurance’ when listed among five answer options in the survey.

"The Affordable Care Act creates four basic health plan designs to replace existing health plans and address the needs of most plan shoppers who are not enrolled in a grandfathered health plan, Medicaid, or Medicare. These plans are designated the Bronze Plan, the Silver Plan, the Gold Plan, and the Platinum Plan. All plans will share a mandatory set of insurance coverage features known as the Essential Health Benefits. The new plans differ from one another based on the percentage of medical expenses paid by the insurance plan, ranging from 60 percent of expenses to 90 percent of expenses."

LTC Comment: Who knew? This was the law they had to pass to find out what was in it! And even that’s taking a long time.

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Updated, Friday, April 12, 2013, 11:35 AM (Pacific)

Seattle—

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LTC Bullet: Reality Check: The Facts on LTCI: Thousand Bullets Retrospective

LTC Comment: Overview 15 years of “Reality Check: The Facts on LTCI” after the ***news.***

*** Genworth has recently published its latest (2013) annual Cost of Care Survey. Here are the press release, cost of care map and key findings. The report’s key findings can be summarized from the press release:

In its 10th year, the Genworth (NYSE:GNW) 2013 Cost of Care Survey shows a continued upward trajectory when it comes to the cost of obtaining long term care services. The cost of receiving care in a setting such as an assisted living facility or nursing home is dramatically increasing, while the cost to receive care at home through homemaker services or a home health aide is rising at a much more gradual pace.

As usual, this report has been archived along with many other Long-Term Care Cost Surveys in our Members-Only Zone (password protected). If you need your user name and password, or are not yet a member and would like to join, click here or simply contact Damon (206-283-7036 / damon@centerltc.com). ***

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LTC BULLET: THE LTC PROBLEM AND SOLUTIONS: THOUSAND BULLETS RETROSPECTIVE

LTC 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 994 Bullets (so far), by date here and by topic here. These nearly-1000 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 the thousandth LTC Bullet and the Center’s 15^th 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 2 covering “Reality Check: The Facts on LTCI.” These “Reality Check” Bullets address inaccuracies and faulty data that abound in media coverage of long term care insurance and include anecdotes from the popular press that highlight the benefits of planning ahead and taking personal responsibility for long term care. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.

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June 6, 1998: LTC Bullet: New York Times Misinformed on LTC Insurance. “This morning's New York Times contained an article about long-term care financing. The article accurately conveyed the gravity of long-term care as a personal and public policy issue. Unfortunately, some information in the article regarding private long-term care insurance was inaccurate and misleading. Furthermore, the author of the article cited exclusively sources who promote public financing and denigrate private financing of long-term care. The following is a letter to the editor of the New York Times regarding the long-term care article from Stephen A. Moses, President of the Center for Long-Term Care Financing in Seattle, Washington.”

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November 22, 1999: LTC Bullet: SmartMoney Isn't So Smart. “The November issue of SmartMoney magazine contains a worrisome article titled ‘To Protect and To Save’ by Jackie Day Packel. The article is full of misleading statements, inaccuracies, and dangerous advice about long-term care insurance. This LTC Bullet is the second in our ‘LTC Reality Check’ series. The comprehensive analysis--which we encourage you to save as a valuable reference--comes courtesy of Eileen Tell, Vice President of The LTC Group, Inc. Eileen can be reached at ETELL@LTCG.COM with any questions or comments.”

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November 20, 2000: LTC Bullet: Reporter Nails It. “We are often frustrated by unfair and inaccurate media coverage of long-term care financing issues. Reporters usually criticize private long-term care insurance (LTCI) mercilessly while giving government programs like Medicaid and Medicare a free ride. Of course, LTCI has its challenges. Rate stability and agent training come to mind. But the government programs have far more serious deficiencies related to access, quality, reimbursement, discrimination, and institutional bias. Nevertheless, private long-term care insurance is routinely lambasted in the media while the public financing programs get off scot-free. Except . . . once in awhile a reporter gets it right with accurate and thoughtful advice. The following are excerpts from an article entitled ‘Nail Down Long-Term Care Now’ by Pam Kelley in the November 7, 2000 issue of ‘The Charlotte Observer.’”

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January 8, 2001: LTC Bullet: The Mote in LTC's Eye. "LTC Bullets readers often ask us for sample speeches from which they can draw ideas to use in their own public addresses. We've obliged occasionally by posting transcripts of lectures delivered by Center for LTC Financing President Steve Moses on our web site at www.centerltc.org. We've received so much positive feedback on these postings that we have decided to add more of Steve's talks to the site. The speech we are posting today is entitled ‘The Mote in LTC's Eye.’ You can find the transcript at http://www.centerltc.org/speakers/mote.htm. This talk argues that public criticism of the long-term care service delivery and insurance professions is often overblown, heavily biased, and grossly unfair. Conversely, the media and senior advocates who lambaste long-term care providers and insurers rarely apply the same strict standards of review and criticism toward public programs. Nevertheless, Medicaid and Medicare are arguably more responsible for long-term care's serious access and quality problems than is the private sector.”

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December 17, 2002: LTC Bullet--Book Report: "J.K. Lasser's Choosing the Right Long-Term Care Insurance" [link]. “Following is an article that purports to warn consumers about dangers of LTC insurance touted in a new book. Thereafter, read comments by author/trainer Phyllis Shelton and a critical book report by Center for Long-Term Care Financing President Stephen Moses.”

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July 2, 2003: LTC Bullet: The WSJ on LTCI--Reality Check. “We desperately need good media coverage of long-term insurance. Unfortunately, most newspaper stories on this topic are inaccurate and misleading. Today's LTC Bullet, written by Eileen Tell of the Long-Term Care Group, is the latest in our series of ‘LTC Reality Checks.’ Our reality-check Bullets address inaccuracies and faulty data that abound in media coverage of long term care insurance. They also cover anecdotes from the popular press that highlight the benefits of planning ahead and taking personal responsibility for long term care. You can read the whole series of 61 LTC Reality Check Bullets at http://www.centerltc.com/bullets/subject.htm - reality_ck We extend our sincere appreciation to Ms. Tell and to her employer, the LTC Group, for this informative critique of a recent Wall Street Journal article (Kelly Greene, ‘Buying a Security Blanket -- Revisited,’ WSJ Online, June 9, 2003). We encourage LTC Bullets readers to forward this Bullet to your local reporters who cover long-term care. To share this Bullet with the Wall Street Journal, send a copy to mailto:encore@wsj.com. Excerpts from the article follow Ms. Tell's review in this [LTC Bullet].”

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October 20, 2004: LTC Bullet: Reality Check: Flawed Article on LTCi. “Long-term care insurance. Can't live with it; can't live without it. That's the media's schizophrenic attitude toward this struggling financial services product. Jonathan Clements' ‘Getting Going’ column, titled ‘The Flawed, Expensive Insurance Policy That You Really Ought to Consider,’ in the October 13, 2004 Wall Street Journal is a case in point. If you have a subscription to the WSJ Online, you can access the Clements column here. Following [in this LTC Bullet] are some quotes from the piece followed by our comments.”

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December 7, 2005: LTC Bullet: LTC Demagogy. “What drives AARP? Advocacy of good public policy? Or cynical, narrow-minded, misguided self-interest? The Medicaid motives of this mammoth mouthpiece for maturity are now clear. ‘The nation's top senior citizen advocacy group has targeted members of Congress with advertisements in their hometown papers opposing House spending cuts, largely because of the bill's provision to change Medicaid. . . . The group ran ads Friday in the local newspapers of several Republicans, including some liberals, and of some key lawmakers who will help merge the House and Senate versions of the bill, such as Sen. Charles E. Grassley, Iowa Republican and Senate Finance Committee chairman.’ Source: Amy Fagan, ‘AARP Ads Fight Medicaid Changes,’ The Washington Times, December 5, 2005, http://www.washingtontimes.com/national/20051204-113549-6448r.htm. A few good people in Congress finally muster the courage to reform Medicaid so it can better serve the interests of the truly needy and how does AARP respond? Here's the notorious newspaper ad targeted against members in their local districts who defend Medicaid against abuse. (The House budget reconciliation package at issue is the Deficit Reduction Act of 2005. Review it at http://thomas.loc.gov/cgi-bin/query/z?c109:hr.4241:.)” Read more in this LTC Bullet.

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March 28, 2006: LTC Bullet: Microsimulate This! “Heaven knows that people--including policy analysts, legislators, policy makers, senior advisors and just plain folks--desperately need reliable information on the risks and costs of long-term care. Therefore, the article by Peter Kemper, Harriet L. Komisar, and Lisa Alecxih titled ‘Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?’ and published in the Winter 2005/2006 issue of the journal Inquiry (Vol. 42, pps. 335-350) is a welcome addition to the literature. (You can purchase a .pdf of this article for $10 at www.inquiryjournal.org.) We won't take issue with the article's estimates of LTC incidence which are well within the ranges of earlier research. We do believe, however, that mistaken assumptions lead the authors to some incorrect conclusions about LTC costs and probable sources of future funding. We wonder what the output would show if the authors input reality, instead of mistaken assumptions, into their microsimulation model. To explain, here are quotes [in this LTC Bullet] from the article followed by our comments and analysis.”

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October 10, 2007: LTC Bullet: 125,000 LTCi Policies and No Claims Payment Problem [link]. “A week after New York Times muckraker Charles Duhigg bashed LTCi last March, I explained what's really happening in an LTC E-Alert (one of our daily ‘mental vitamins’ for Center members.) The Society of Actuaries re-published my piece in its "Long-Term Care News" (August 2007, Issue No. 19, pps. 11-12.) And here it is again [in this LTC Bullet].”

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March 12, 2008: LTC Bullet: National Underwriter Highlights Center's WSJ Response [link]. “After the publication of ‘LTC Bullet: WSJ Attacks LTCI, We Respond’ on Tuesday, February 26, 2008, we received a flood of phone and email messages thanking the Center. Read that piece at http://www.centerltc.com/bullets/latest/747.htm. ‘In all my years defending Medicaid as an LTC safety net for the poor by encouraging responsible LTC planning by the middle class and affluent, I've never received such an outpouring of appreciation,’ said Center for LTC Reform president Steve Moses. Now, the insurance industry publication National Underwriter has echoed the sentiment and elaborated on the need for and kind of industry response that is required.” Read more in this LTC Bullet.

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March 12, 2009: LTC Bullet: LTCi Pollyannas. “Steve Moses's letter (in this LTC Bullet) to the editor of National Underwriter's LTC E-Wire speaks for itself. The letter does not, however, recommend a collapse of Medicaid, LTCi's biggest competitor. It only predicts what will happen. Therefore, a better title than the one assigned by the editor would be: ‘What will unleash the long-term care market?’ The text of the letter and a link to the online version follow [in this LTC Bullet].”

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February 8, 2010: LTC Bullet: The Enemy of LTC Truth. “Einstein disdained ‘unthinking respect for authority,’ but he wasn't alone. President John F. Kennedy said:

‘The great enemy of truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.’

The field of long-term care financing is a perfect case in point. What exactly are the ‘persistent, persuasive and unrealistic’ myths of long-term care?” Read this LTC Bullet to find out.

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November 4, 2011: LTC Bullet: Why 9 Out of 10 Get LTCI Wrong. “I [Steve Moses] was practically blown over when I read the following article by Steve Forman, a long time supporter of the Center for Long-Term Care Reform whose company, LTC Associates, is a corporate member of the Center. ‘I couldn't have said it better myself’ isn't praise I give often or lightly, but it's deserved in this case. I hope you enjoy these excerpts and that you check out the full article on the Producers eSource here.”

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July 20, 2012: LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News [link]. “The Employee Benefit Research Institute (EBRI) usually does excellent research and analysis. But they sure got this one wrong. According to ‘Effects of Nursing Home Stays on Household Portfolios,’ by Sudipto Banerjee, Ph.D., Employee Benefit Research Institute, Issue Brief #372, June 2012, the cost of nursing home care is wiping out life’s savings, impoverishing families, and leaving them dependent on Medicaid. Well, that should sound familiar. It’s how the problem of long-term care financing has always been described. Wrongly. What’s different this time is that the EBRI report claims to base the mistaken conclusion on facts.” How so? Read this Bullet for Steve’s analysis.

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Updated, Monday, April 08, 2013, 10:32 AM (Pacific)

Seattle--

LTC NEWS AND COMMENT

LTC Comment: So far, all the hullaballoo about the National Long-Term Care Commission has produced nothing. We’re told the 15-member panel, which was finally appointed over a month after the statutory deadline of February 1, has neither met nor selected a Chairperson. The wheels of government, especially LTC policy, do grind slowly, but hey, let’s get on with this. In the meantime, news continues as this week’s LTC E-Alert recounts.

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4/5/2013, “Why the time is right for critical illness insurance,” by Bob Patience, LifeHealthPRO

Quote: "CI as a group voluntary benefit offers multiple advantages to employers and employees, and momentum for CI coverage is building in light of the current environment. For benefits advisors and consultants who understand CI's role in promoting employees' financial wellness, it's an ideal time to present the product to employers."

LTC Comment: CI will advance as Medicare and Medicaid retreat.

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4/6/2013, “Get ready: Mandatory HMO-style plans coming for long-term care [link],” by Diane C. Lade, Sun Sentinel

Quote: "If you or an elder relative is receiving nursing home, assisted living or in-home care through Medicaid, start watching the mailbox. State health-care officials are mailing notices about changes to Florida's new Medicaid Long-term Care Managed Care Program — changes that will dramatically alter how people will get this assistance and what their choices may be. . . . One major difference: Medicaid participants — often seniors whose medical care has depleted their resources and are facing nursing home placement — could apply for Medicaid on their own in the past and shop for their own care centers or agencies. Now all Medicaid adults needing long-term care must go through the state's managed care system and use providers in their plan's network."

LTC Comment: One more reason NOT to plan for Medicaid.

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4/4/2013, “Thrivent's new product looks at the long term,” by Lee Schafer, Star Tribune

Quote: "Thrivent Financial for Lutherans started offering its own long-term care insurance last year, coming back into a market that other big insurers have exited. It's done well with its product, selling it based on a very simple idea. Before talking insurance policies, Thrivent advisers say to clients, shouldn't we talk through who you would like to take care of you, and where, should the day come when you can no longer manage on your own?"

LTC Comment: Welcome back, Thrivent! Other carriers will follow suit sooner or later as the manifest destiny of private insurance to replace public financing plays out over time.

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4/3/2013, “Cancer clinics are turning away thousands of Medicare patients. Blame the sequester [link],” by Sarah Kliff, Washington Post

Quote: "Cancer clinics across the country have begun turning away thousands of Medicare patients, blaming the sequester budget cuts."

LTC Comment: Oh, so the problem is the cure (cost control) not the cancer (exploding Medicare costs.)

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4/3/2013, “Misperceptions of Benefits Make Trimming Them Harder,” by Jackie Calmes, New York Times

Quote: "President Obama had Senate Republicans nodding in agreement during a recent ice-breaking dinner as he described a basic problem for the nation’s fiscal future: For each dollar that Americans pay for Medicare, they ultimately draw about $3 in benefits. What’s more, he added, most people do not understand that."

LTC Comment: Denial isn’t a river in Egypt.

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4/3/2013, “Dementia Care Cost Is Projected to Double by 2040,” by Pam Belluck, New York Times

Quote: "The most rigorous study to date of how much it costs to care for Americans with dementia found that the financial burden is at least as high as that of heart disease or cancer, and is probably higher. And both the costs and the number of people with dementia will more than double within 30 years, skyrocketing at a rate that rarely occurs with a chronic disease."

LTC Comment: Yet another wake up call for consumers and policy makers.

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4/3/2013, “Worried About Being a Bag Lady in Your Old Age?,” by Terry Savage, Huff Post

Quote: "Despite all the bad publicity about rising prices of Long Term Care insurance, you owe it to yourself to purchase at least a policy that will cover a portion of your costs -- perhaps one to three years of care, for about $200 per day, with some inflation protection. Or you can consider one of the new 'combined' policies that offer both long term care benefits and a death benefit (or cash value withdrawal) if you don't use the care benefit. You make a one-time cash deposit into the policy, leveraging your dollars to pay for care. The need for long term custodial care will become a huge issue in coming years, especially for women. If you're part of a couple, it is likely your spouse will need care first -- using up the family financial resources, and your energy as a caregiver. And women alone especially need the resources of finding caregivers that come with an LTC insurance policy."

LTC Comment: And that’s the “Savage truth.”

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4/3/2013, “New Long Term Care Insurance Guide For Women On Their Own [link],” ExpertClick

Quote: "A new consumer guide advises women on their own about the importance of long term care planning. . . . The new guide is available in electronic format allowing insurance professionals to attach copies to emails, post on their websites and offer via blogs and other media. Guides are personalized with the agent's contact information, photograph and other personalization."

LTC Comment: A timely addition to the armory of sales tools given the onset of higher premiums for women.

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4/3/2013, “PPACA small business insurance market delayed a year,” Employee Benefit News

Quote: "Small business employees will have to wait a year before they can choose their own medical plans after the Obama administration delayed a part of the Patient Protection and Affordable Care Act intended to provide them with coverage options. Starting in 2014, workers at companies with fewer than 100 employees were supposed to have been able to choose from a variety of health plans through new small-business insurance marketplaces. They’ll instead wait until at least 2015, according to regulations released by the Department of Health and Human Services."

LTC Comment: ObamaCare continues to evolve, escalate in cost, and unravel.

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4/2/2013, “Feds: Exchanges can set up life, disability alliances,” by Allison Bell, LifeHealthPRO

Quote: "Managers of the new Patient Protection and Affordable Care Act (PPACA) health insurance exchanges may be able to connect with partners that sell vision insurance, disability insurance, life insurance, long-term care insurance (LTCI) and other ancillary insurance products. Officials at the Center for Consumer Information & Insurance Oversight (CCIIO), the arm of the U.S. Department of Health and Human Services (HHS) that oversees the exchange programs, give guidelines for ancillary products sales in a set of answers to frequently asked questions (FAQs) [link]." (Bold emphasis added)

LTC Comment: So what’s that mean for LTCI marketers?

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4/2/2013, “Automatic 2% Medicare cuts begin,” by Tim Mullaney, McKnight’s LTC News

Quote: "The 2% reduction in Medicare payments known as sequestration began Monday. Providers will be reimbursed 98 cents on the dollar for Medicare fee-for-service claims with dates of service or dates of discharge on or after April 1, 2013, according to the Centers for Medicare & Medicaid Services. Providers should begin to see the impact by mid-April. . . . The payment reductions will cost skilled nursing facilities about $782.5 million in fiscal year 2014, according to Avalere Health research."

LTC Comment: LTC providers, especially nursing homes, depend on generous reimbursements from Medicare to offset losses on the majority of their residents who depend on Medicaid. As Medicare and Medicaid cut back, providers will have to seek alternative funding sources.

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4/1/2013, “'Jaw-Dropping' Report Exemplifies Investor Confidence in Nursing Home, Assisted Living Markets [link],” Miami Herald

Quote: "Today, Brian Lee, Executive Director of Families for Better Care, called Irving Levin and Associates' 2013 Senior Care Acquisition Report 'jaw-dropping.' The report showed unprecedented growth in the nursing home and assisted living sectors, as figures climbed higher than ever; astonishing even the most seasoned investors. The median bed price (an appraisal benchmark) for nursing homes catapulted to a record $57,400 per bed along with a near-record average price per bed, ringing in at $60,400. Four in ten nursing homes sold for more than $50,000 per bed, an 18% increase over the previous year. But as strong as the nursing home market was, assisted living facilities fared even better, setting records in average and median price per unit at $164,000 and $152,000 respectively."

LTC Comment: How long can the LTC provider business stay “jaw-droppingly” good as the government ratchets back Medicare and Medicaid rates?

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4/1/2013, “U.S. to boost rather than cut payments to health insurers,” by Sandhya Somashekhar, The Washington Post

Quote: "The Obama administration reversed itself Monday, scrapping plans to cut by 2.2 percent the rates paid to health insurers that take part in the Medicare Advantage program. . . . On Monday, the Centers for Medicare and Medicaid Services (CMS) announced that it was changing its method of calculating reimbursement rates. Instead of cutting payments for Medicare Advantage plans, it will increase them by 3.3 percent."

LTC Comment: It’s very hard, in the end, for politicians and bureaucrats to force through changes that consumers and the market don’t want.

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4/1/2013, “Nursing home residents with dementia can be taken off antipsychotics without behavioral consequences, researchers say [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "After reviewing the studies, the researchers determined that it's generally safe and advisable to stop giving antipsychotics to those with behavioral symptoms of dementia, including agitation, aggression, depression, wandering and delusions."

LTC Comment: Less medication of the ailing aging is usually a good thing.

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3/31/2013, “Scrubbing Medicaid: An audit discovers thousands of people who aren't eligible for their benefits. The victims? Other Medicaid recipients [link],” editorial, Chicago Tribune

Quote: "An audit discovers thousands of people who aren't eligible for their benefits. The victims? Other Medicaid recipients."

LTC Comment: Amazing follow through! Julie Hamos runs Medicaid in Illinois. She testified before Congress about Medicaid eligibility abuse the same day I did in September 2011. Here's the hearing video. She was stunned by how easily middle class and affluent people qualify for Medicaid LTC benefits. Unlike most in her position of responsibility, she went back to her job and did something about it, as this story explains.

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3/30/2013, “Pet Trusts: Caring For Your Pets When You Can't,” by Lexie Rigden, PhillyBurbs.com

Quote: "For New Jersey pet owners, a pet trust fund may put an end to worrying about a pet's long term care. The New Jersey Legislature (some of them presumably pet lovers themselves) has expressly recognized pet trust funds as valid."

LTC Comment: Now that we have Fido covered, how about Grandma?

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2/29/2013, “The Liberal Medicare Advantage Revolt: Democrats suddenly object to cuts in private insurance for seniors [link],” editorial, Wall Street Journal

Quote: "A big political story this year is likely to be Democrats turning on their White House minders as the harmful and unpopular parts of the Affordable Care Act ramp up. On the heels of the recent 79-20 Senate uprising against the 2.3% medical device tax, now comes the surge of Democrats pleading on behalf of Medicare Advantage."

LTC Comment: Politicians are relearning the 1988 lesson from "Medicare Catastrophic" which was repealed a year later when middle-class seniors rebelled.

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3/29/2013, “Cancer survivors pose challenges and opportunities for long-term care [link],” by John O'Connor, McKnight’s LTC News

Quote: "Thanks to earlier detection and better treatments, the nation's No. 2 killer (after heart disease) is becoming far less of a death sentence than it was a mere generation ago. To put things in perspective, these cancer survivors mean millions of fewer tombstones in the nation's cemeteries. What does this mean for long-term care operators? Simply put, more business."

LTC Comment: What does it mean for LTC financing? Quicker Medicaid insolvency and growing demand for private LTC financing alternatives.

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3/28/2013, “Rising Household Debt a Game Changer for Seniors,” by Josh Boak, The Fiscal Times

Quote: "More and more Americans are spending their golden years racking up debt-a trend that if left unchecked could derail entitlement reform and alter the traditional pattern of wealth being transferred from older to younger generations."

LTC Comment: More likely, it will supercharge entitlement reform and reverse the trend of young people supporting senior entitlements they’ll never enjoy themselves.

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Updated, Friday, April 05, 2013, 10:52 AM (Pacific)

Seattle--

LTC BULLET: SCAN THE LTC POSSIBILITIES

LTC Comment: SCAN is a fountainhead of ideas about long-term care financing, but are those ideas potable? Analysis after the ***news.***

*** ON THE ROAD AGAIN. Remember the Center for Long-Term Care Reform’s 2008 “National Long-Term Care Consciousness Tour?” Steve Moses criss-crossed the country carrying our message of rational LTC public policy and responsible LTC planning to hundreds of media outlets, organizations, companies and individuals. But that year, the bottom fell out of the U.S. (and world) economy blunting the impact of our campaign and plunging the LTC market into recession. Today, however, things are looking up. LTC financing policy is back on the media’s and policy makers’ radar screens. Politicians have to find ways to curb entitlement spending. LTC providers need protection from meat-axe program cuts. Purveyors of private LTC financing options have the solution on both fronts. All we need to do is lay out the facts, answer the objections, and persuade the powers-that-be to act. So, Steve says: “It’s time to hit the road again!” He’s taking the Silver Bullet of Long-Term Care out of cold storage and prepping it for another cross-country run. Stay tuned for more on our plans for raising LTC consciousness in 2013 and how you can participate and help. ***

*** NAIFA OR NOT? Many Center members and readers are also avid supporters of NAIFA, a national organization that advocates on behalf of private insurance. We’ve heard that NAIFA is mounting a national appeal for new members representing the LTC insurance field. That’s a very positive development as long-term care needs all the political influence it can garner in the states and nationally. Recently a NAIFA national official invited Center president Stephen Moses to speak at the organization’s next national conference--September in San Antonio. The Center declined the invitation because we have a policy not to accept engagements that involve travel expenses and lost work time without compensation to the Center. Still, it seems like a highly desirable audience to reach with the message Steve was invited to present: “Long-Term Care Financing: Past, Present and Future.” So just in case there may be a person, group or company out there in Centerland who’d like to sponsor Steve’s presentation to NAIFA this Fall, here’s a special deal. We’ll upgrade any individual willing to contribute $250 for this purpose to “Premium Member” status with “clipping service” privileges plus a Bullet or LTC E-Alert sponsorship (usually $500). For any corporate member willing to contribute $1,000 or more, we’ll extend a year of privileges at the “Bronze” level, usually $5,000 per year. All member levels and benefits are described here. If you’re interested, let Damon know ASAP at 206-283-7036 or damon@centerltc.com. This window of opportunity closes Friday, April 12. ***

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LTC BULLET: SCAN THE LTC POSSIBILITIES

LTC Comment: According to its website: “The SCAN Foundation is an independent, non-profit public charity devoted to transforming health care for seniors in ways that encourage independence and preserve dignity.” That’s a noble goal and based on the organization’s prolific publications and omnipresent CEO, Dr. Bruce Chernof (who was recently appointed to the National LTC Commission), SCAN’s endowment must be vast. So, what’s their latest offering?

On March 20, while I was exploring the Himalayan hill station of Shimla, India, SCAN sponsored a major LTC financing shindig at the National Press Club in Washington, DC. Here you can read the eight policy briefs SCAN released that day and watch videos of two panel discussions surveying “The Current Landscape of Long-Term Care Financing” and “Long-Term Care Policy Considerations.” But I’ve already done that homework for you so I thought I’d save you the time and effort by providing the following Cliff’s Notes summary of the key content.

I’ll focus on the two most significant of the new research papers, but note here that Eileen Tell, Senior VP of Univita Health, deserves honorable mention for her “Overview of Current Long-Term Care Financing Options.” Likewise, Jeremy Pincus, et al., for “Size of the Employer and Self-Employed Markets Without Access to Long-Term Care Coverage Options [link],” which describes an “enormous untapped market” and explains how to tap it. Following, are the two papers I’d like to address in more detail.

“Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy [link],” by Joshua M. Wiener, et al., sets out “to analyze the Medicaid spend-down experience” and “the potential impact of various models of insurance for LTSS [AKA LTC], focusing on . . . the recently repealed Community Living Assistance Services and Supports (CLASS) Act, and mandatory programs, such as those that operate in Germany and Japan.” The paper concludes: (1) “The high cost of long-term services and supports (LTSS) results in catastrophic out-of-pocket costs for many people needing services, some of whom spend down to Medicaid eligibility”; (2) “[T]he income and assets of people who spend down are considerably lower than commonly assumed, casting doubt about whether the spend down population could be expected to purchase private long-term care insurance”; and therefore (3) “A mandatory long-term care insurance program can shift the LTSS financing burden more effectively from Medicaid to insurance financing . . ..”

Backing these conclusions are data from the “Health and Retirement Study” and “Avalere Health’s Long-Term Care-Policy Simulation (LTC-PS) Model.” We’ve previously critiqued and debunked published inferences from the same data source here and simulation models are notoriously unreliable, e.g. climate change models. Before we take anything seriously in this latest scholarly attempt to convince us that Medicaid spend down is pervasive, but Medicaid doesn’t crowd out private LTC financing sources, we should consider these three facts.

(1) A raft of Medicaid spend-down studies in the late 1980s and early 1990s proved that the vast majority of institutionalized Medicaid recipients were already eligible for Medicaid at admission and did not “spend down.” In 1991, I surveyed and interpreted these studies in “The Myth of Medicaid Spend Down.”

(2) The fact is that income and assets rarely stand in the way of Medicaid long-term care eligibility. Most states deduct medical and LTC expenses from income before determining eligibility which makes it routine for people with high incomes to qualify. Miller income diversion trusts enable the same result in the other states. Because of practically unlimited asset exemptions—the home (up to $802,000) and with no limit, a business, prepaid burial plans, a car, personal belongings, IRA accounts, term life insurance, etc.—asset spend down to Medicaid eligibility is unnecessary, voluntary, and therefore rare among middle class and affluent people who choose to take advantage of the program’s generous eligibility rules. In other words, just because people become eligible for Medicaid LTC, it does not mean they “spent down.”

(3) Anyone who has ever interviewed a Medicaid eligibility specialist anywhere in the USA—and I’ve interviewed scores of them—or reviewed actual Medicaid LTC eligibility cases—and I’ve reviewed hundreds of them—knows that Medicaid spend down only crushes the poor and ignorant. Middle class and affluent applicants/recipients dodge spend down with impunity. They are the people who could, should and would plan for long-term care, buy LTC insurance, and relieve Medicaid of the burden of their care if Medicaid spend down really did require them to pay for their own care first.

Unless and until the authors of this paper address these realities, which they ignored in their paper, their data and conclusions remain dubious at best.

The second new paper I want to highlight is “Making Progress: Expanding Risk Protection for Long-Term Services and Supports through Private Long-Term Care Insurance [link],” by Richard G. Frank, Marc Cohen, and Neale Mahoney. They argue “that the current private market for LTCI is not functioning well . . . there is both an under-demand and undersupply of LTCI . . . today's political environment demands that . . . insurance program designs be structured as voluntary . . . that there is little taste for new mandated benefits and the criteria for making new financial outlays by government will be extremely demanding. This means that program designs must have some level of medical underwriting, have low budgetary impacts, and be structured in a way that makes them attractive to a broader population of consumers, as well as profitable or break-even for program sponsors.”

Right on! Those are certainly the lessons learned by the abortive pseudo-insurance fiasco called CLASS. But why exactly is the LTCI market not functioning well and how do we fix it? These authors say the problem is a combination of demand factors (consumer denial, misperception, myopia, confusion, mistrust) and supply factors (adverse selection, high cost, risk mis-management). Well, sure, but why is the public so seemingly irrational and ignorant about long-term care risk and cost? And why can’t the insurance industry deal effectively with product design, pricing, marketing, and risk mitigation for LTCI as it has for other products? Blank out. Instead of explaining why these conditions exist, the paper goes directly into speculation about product designs that might ameliorate the market’s supposed dysfunction. That’s dangerous.

If you don’t know why you have a problem in the first place, you run the risk of proposing solutions that exacerbate instead of improve the situation. At best you’re left with a shotgun approach, trying a lot of ideas that may or may not help. That’s where this paper ends up. On the demand side, it recommends simplifying and standardizing products, indexing premiums, launching more education campaigns, mandating availability, etc. On the supply side, the authors propose reinsurance pools, more employer coverage, and co-marketing with health insurance. Some of those suggestions may be helpful, but in the absence of an explanation for why the problems exist that they’re intended to address, we have no standard by which to judge. Furthermore, might not simplified products mean less choice and flexibility for consumers? Why would more education help when education efforts heretofore have failed? Co-marketing with health insurance? Do we really need ObamaCare for LTC?

There is a much better way to approach and solve the problem of LTCI market dysfunction. First, explain why the problem exists. Answer: For nearly 50 years, the government, through Medicaid and Medicare has paid for the vast majority of all catastrophically high long-term care costs. Consequently, consumers have been shielded from the risk and cost of LTC resulting in their denial and intransigence about long-term care planning. Second, address this real problem head on. Stop giving away free LTC to middle class and affluent people after the insurable event occurs, and before long such people will start to (1) spend their own money for LTC, (2) tap their home equity to purchase quality LTC in the most appropriate setting for their care, and (3) in time, in order to avoid the new objective reality of a previously nonexistent Medicaid spend down liability, they’ll buy LTCI products in droves . . . even without simplified products, reinsurance pools, and other tinkerings that address only symptoms rather than causes.

Identify correctly the cause of the ostensible market dysfunction and correct it in this way and you’ll not only unleash the LTC insurance market, but you’ll preserve Medicaid as an LTC safety net for the genuinely needy.

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Updated, Monday, April 1, 2013, 9:49 AM (Pacific)

Seattle--

LTC BULLET: NATIONAL LTC COMMISSION DISBANDED

LTC Comment: In a surprise announcement early this morning, Tungan Sheek, a spokesperson for the newly appointed National Commission on Long Term Care, told reporters that all 15 members of the Commission had resigned.

“The new Commission members were ‘outraged,’” explained Sheek, “because no one was appointed to represent private long-term care financing interests despite an explicit requirement to that effect in the authorizing legislation.”

With the long-term care financing crisis mounting, state and federal budgets under water, the demographic Age Wave cresting and the Great Recession continuing to repress economic activity and government revenues, several former Commission members lamented the shortsightedness of relying on public financing of LTC while discounting the enormous potential of home equity conversion and private LTC insurance.

“I hope a new round of appointments to the LTC Commission will remedy this problem,” said one disgruntled former member who preferred to remain anonymous, “but I worry that all the focus is on expanding Medicaid, which is why we have a long-term care financing problem in the first place.”

How or if Congress and the President will respond to this development remains unknown.

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April Fools!

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LTC Comment: Happy April Fools Day! The foregoing announcement is totally fictitious, but the following one isn’t. Today, the Center for Long-Term Care Reform celebrates our 15^th anniversary. Steve Moses and David Rosenfeld founded the Center on April 1, 1998. For a detailed history of the Center for LTC Reform, check out the dozens of LTC Bullets we’ve published over the years reporting on the Center’s progress at “CLTCR News.”

“It’s been a great run,” said Steve this morning. “We’ve impacted federal law for the better many times over the years—MCCA '88, OBRA '93, HIPAA '96, BBA '97 and DRA '05—to mention a few. But I’ve never been more optimistic about the prospects for beneficial LTC financing reform than I am right now. With your support, we’ll soon achieve our goal to improve safety-net financing of LTC by enhancing private LTC financing sources.”

Carpe diem -- even if it is April Fools Day.

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Updated, Friday, March 29, 2013, 10:49 AM (Pacific)

Seattle--

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.

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03/28/2013, Child's liability for parent's nursing home care upheld, by Jeffrey Marshall

Quote: "The Pennsylvania Supreme Court has declined to hear the appeal of a son seeking to avoid personal liability for his mother’s nursing home costs. Lower courts had held John Pittas responsible for his mother’s unpaid nursing home bill of nearly $93,000. The Supreme Court’s action leaves the lower Superior Court ruling in the case (HCRA v. Pittas) as the guiding precedent in Pennsylvania."

LTC Comment: We’ve been alerting our Clipping Service subscribers to developments in this case since May, 2012. See also the “News” section of this LTC Bullet.

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03/28/2013, State Farm Pulls Long Term Care Insurance From Seven States

Quote: "State Farm Insurance has announced it will cease offering long term care insurance in California, Arizona, Connecticut, Hawaii, Indiana, Nevada and New York."

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03/27/2013, Uncle Sam's LTCI hand, by Allison Bell, LifeHealthPro

Quote: "The United States is now stumbling toward what, apparently, if a thousand gears click smoothly into place, will be a system in which having some kind of acute health care coverage will be almost mandatory. Now health policy analysts have concluded in a new report that having any kind of mandatory long-term care insurance (LTCI) would probably be a lot more effective at shoring up the U.S. long-term care (LTC) system than any imaginable voluntary system."

LTC Comment: Stay tuned for analysis from your Center for Long-Term Care Reform.

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03/27/2013, CalPERS Long Term Care Insurance Rate Increases Addressed,

Quote: "Newspaper reports about an 85 percent hike in the cost of long term care insurance offered to California State employees tells only part of the story according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

"The Association executive explained that current CalPERS policyholders will very likely still be paying less money for their coverage than they would for new coverage. 'We field calls from consumers outraged but when they hear what comparable coverage costs today, they realize the value in what they have.' Slome notes that very few policyholders will drop their coverage. 'That's what the news reports would lead you to believe but it doesn't work that way and we challenge any reporter to follow-up after the 2015 rate increase to report what actually took place. I'm not holding my breath,' he concluded."

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03/27/2013, CMS to post more nursing home deficiency data online next month, by Tim Mullaney, McKnight's Long Term Care News

Quote: "Citing the desire for the public to know more about nursing homes, the Centers for Medicare & Medicaid Services will make more information about nursing home deficiencies available online next month, according to a recent memorandum."

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03/26/2013, GOP lawmakers look to repeal Medicaid expansion, by Pete Kasperowicz, The Hill's Floor Action

Quote: "Rep. Matt Salmon (R-Ariz.) and five other House Republicans have introduced legislation that would repeal the 2010 expansion of Medicaid benefits to lower-income Americans. The Medicaid Expansion Repeal and State Flexibility Act, H.R. 1404, would eliminate the expansion of Medicaid that happened under the 2010 healthcare law. Salmon said that law 'essentially bribed states' to expand Medicaid eligibility to people with incomes at 138 percent of the poverty level."

LTC Comment: What could possibly go wrong with something that is basically a political payday loan? [Lighthearted sarcasm intended]

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03/26/2013, Consumers Find That Health Insurance Is Not Enough: Critical Illness Insurance Spotlighted on TV Segments Nationwide; Experts Offer Free Guide [link], MarketWatch

Quote: "According to the American Association of Critical Illness, 1.5 million Americans will declare bankruptcy this year - 60 percent of them due to medical bills (a 50% increase over the last six years). Surprisingly, 78 percent of them have health insurance, but are still unable to meet the high cost of deductibles, co-payments, and daily living expenses. A new educational platform, http://www.criticalillnesseducation.org, has been launched to help consumers better understand the benefits of supplemental solutions like Critical Illness Insurance to help fill the gaps."

LTC Comment: This innovative product keeps gaining traction in the United States and abroad.

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03/26/2013, Amount of post-acute care accounts for regional differences in Medicare spending, report says [link], by Tim Mullaney, McKnight's Long Term Care News

Quote: "Geographic variations in Medicare payments can be largely explained by how much skilled nursing and post-acute care is being used, according to a recently released interim report from the Institute of Medicine."

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03/25/2013, Expense and Emotions Affect Decisions About Long-Term Care, by Ann Carrns, NYTimes.com

Quote: "His father has required a live-in health care aide for the last two years. He has been able to afford that and stay in his home because about 30 years ago, he bought a long-term care insurance policy.

“‘Anything relating to long-term care triggers a lot of emotions, because most of us want to believe we’ll never need it,’ said Nora Dowd Eisenhower, economic security director at the National Council on Aging. Many people who consider the policies have firsthand experience caring for an aging parent, she said, and most of them want coverage that will pay for care in their homes.”

LTC Comment: The prospect of living the rest of your life assured that you’ll age with dignity, in the setting of your choice, without being a burden to your family surely will conjure some emotions and hopefully result in responsible long-term care planning.

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03/22/2013, LTCI sales boosters: 5 tools, by Stephen Forman, LifeHealthPro

Quote: "If you're an optimist like me, then you already believe 2013 is going to be a banner year for the long-term care insurance (LTCi) industry. It looks like we're trending on the gains we made last year, in which the top 5 carriers posted a combined growth of 25% new business sales year-over-year. (Not everyone fared so well, but I've written before how our industry is undergoing a natural process of contraction and thinning just as 200 other markets have.) Still, how the market outside your doorstep fares is of marginal concern: you want to know how to improve your own bottom line. Allow me to share with you five reasons why 2013 is going to be your best year yet for helping Americans plan smartly for their retirement:"

LTC Comment: Helpful tips from this LTCi savant.

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03/21/2013, Broken long-term care financing system must be fixed within 5 years, SCAN says [link], by Tim Mullaney, McKnight's Long Term Care News

Quote: "The country's long-term care financing system for consumers must be revamped within five years to meet the needs of aging baby boomers, according to The SCAN Foundation. In eight reports released Wednesday, the organization laid out policy recommendations for taking pressure off government programs while increasing the availability and affordability of long-term care financing for consumers.

“'The current private long-term care insurance market is effectively broken, as it has never held more than 10% of the potential market and many insurers have stopped offering these policies altogether,' stated Gretchen E. Alkema, Ph.D., vice president of policy and communications at The SCAN Foundation. 'Reasons for lack of uptake are many: lack of public understanding and interest, high monthly premiums, and underwriting standards that make it difficult for individuals to qualify for coverage.'"

LTC Comment: Read this article to find out how “this ‘broken’ market has resulted in massive costs to government programs.” Then read just about anything published by your Center for Long-Term Care Reform for evidence that the opposite is true.

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03/21/2013, Money Talks to Have With Your Spouse, by Mary Schwager, Fox Business

Quote: "4. Long term care planning: A slower than expected economic recovery coupled with increased life expectancies and ever-increasing costs of medical care has made relying on government funded long term care resources unrealistic. Initiate the discussion by encouraging your spouse to sit down with a long term care insurance professional. What you are looking for here is a maximum daily benefit that coincides with the cost of care in your area. Don't be seduced by the 5 percent inflation protection, because the actual cost of care increases approximately 12 percent per year."

LTC Comment: Long-term care financing is a critical facet to anyone’s retirement plan.

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03/20/2013, Can the wonks save private LTCI?, by Allison Bell, LifeHealthPro

Quote: "The SCAN Foundation has brought about 200 long-term care (LTC) policy specialists to Washington this week to try to wake the United States up and get it off of the demographic train tracks."

LTC Comment: Stay tuned for analysis from your Center for Long-Term Care Reform.

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03/20/2013, How to Live in Assisted Living, by Judith Graham, NYTimes.com

Quote: "Sometimes Martin Bayne speaks in little more than a whisper, like many people with advanced Parkinson’s disease. But his voice has a way of carrying. Many consider him the nation’s foremost advocate for people in assisted living. 'Marty communicates the truth about living and aging and dying in America,' said Joy Loverde, a caregiving expert and author of 'The Complete Eldercare Planner.'"

LTC Comment: Read this article for thoughtful comments on how to live happily and purposefully in assisted living by Mr. LTC. This is recommended reading for caregivers and for anyone with a loved one in assisted living. See also: “Culture Change Means Nothing Without This.”

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03/19/2013, A Third of U.S. Seniors Die With Dementia, Study Finds, by Serena Gordon, US News and World Report

Quote: "There's more troubling news for America's aging population: A new report finds that one in every three seniors now dies while suffering from Alzheimer's or another form of dementia.

"Released Tuesday, the report also focuses on the toll that Alzheimer's takes on families, particularly those caregiving from a distance. In 2012, more than 15 million people were Alzheimer's caregivers. They provided more than 17 billion hours of unpaid care that the Alzheimer's group estimated was valued at $216 billion."

LTC Comment: LTCi remains a viable option for many to mitigate the myriad costs—financial, physical, emotional, professional, social, familial etc.—of this devastating disease.

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03/19/2013, Hawaii lawmaker introduces LTCI tax credit bill, by Allison Bell, LifeHealthPro

Quote: "A group of seven lawmakers in Hawaii are trying to get their state to offer a long-term care insurance (LTCI) purchase tax credit. The lawmakers have introduced state House Bill 304, a bill that would give state residents with incomes under a designated limit the ability to take a tax credit equal to up to 10 percent of the cost of LTCI premiums."

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03/19/2013, 2013 Long Term Care Insurance Sales Growth Reported American Association for Long Term Care Insurance [link]

Quote: "A number of leading long term care insurance companies recorded significant increases in submitted applications during the first two months of 2013 compared to the same time period last year."

LTC Comment: Great news and a good start.

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03/19/2013, How to Reduce Health-Care Costs in Retirement, by Donna Fuscaldo, Fox Business

Quote: "When it comes to retirement savings planning, studies show that health-care costs are often the most under-planned expenses in retirement. And while it’s impossible to predict your health-care future, there are ways to reduce these costs.

"Long-term care insurance can help combat the costs associated with a long-term illness that may involve the expenses of a nursing home or assisted-living."

LTC Comment: The quote above is true, but having long-term care insurance could also provide the option of staying at home if possible, instead of in a nursing home or assisted living.

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03/18/2013, Life spans rise, but so do 'sick years', By Matthew Heimer, MarketWatch

Quote: "Baby boomers and their financial advisers can tie themselves in knots trying to plan financially for medical costs in retirement – accumulating some extra nest-egg padding to handle out-of-pocket costs, for example, or buying long-term care insurance. But data published as part of a recent study of longevity and health shows why those seemingly morbid calculations are essential. According to the Global Burden of Disease Study 2010 (GBD 2010), a major data-gathering project led by the Institute for Health Metrics and Evaluation at the University of Washington, the average American can expect to spend a little over 10 years of his or her life in less-than-good health, with much of that time concentrated in the retirement years."

LTC Comment: The good news is we’re living longer; the bad news is we’re living those extra years sicker. Savvy consumers will plan for this long in advance.

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03/17/2013, Medicaid benefits politicians more than it benefits citizens, by Richard Grant, Forbes

Quote: "In how many states have the governors or legislators claimed that their state would be a net beneficiary of federal spending for Medicaid expansion? There are supporters of Medicaid expansion in all 50 states who do make such claims. But not everyone can be a net beneficiary of subsidization.

"Medicaid, by lowering the perceived price of medical care, increases the demand on care providers. But it does nothing to increase the supply of medical care. The result, now and increasingly in the future, is shortages of service for those who were supposed to be helped by Medicaid, and an increased cost burden for those who are insured and able to pay."

LTC Comment: Those who are able are wise to save, invest or insure for their long-term care needs far in advance. This equals better LTC services for all, including the truly needy for whom Medicaid was intended.

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03/15/2013, Are Americans ready to fix Social Security?, by Steve Vernon, CBS News

Quote: "In spite of numerous proposals and debates on the topic, our political leaders still haven't found the courage to address Social Security's funding challenges. This year, we've witnessed the coming and going of the fiscal cliff and sequestration, following such non-events in previous years as the debt 'supercommittee' and the Simpson-Bowles recommendations to reduce our debt. Any Social Security reform would involve some combination of benefit reductions and increases in Social Security (FICA) taxes. But are Americans willing to make these hard choices?"

LTC Comment: Suppose Social Security is made solvent, it still would not be enough to retire on for most people. Long-term financial planning, beyond Social Security, is essential in preparing for the high cost of aging.

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03/14/2013, AHCA calls for immigration reform to meet staffing shortage, by Elizabeth Leis Newman, McKnight's Long Term Care News

Quote: "Saying the current permanent visa programs for immigrants are 'insufficient and inadequate' to meet long-term care staffing needs, the American Health Care Association outlined its vision of immigration reform Wednesday. 'A critical part of any immigration reform package must take into account ways to supply the U.S. economy with the workers it needs to recover from the downturn and grow,' said Mark Parkinson, president and CEO of AHCA."

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03/13/2013, Why Women Need to Plan for Long Term Senior Care, by Sarah Stevenson, Senior Living News and Trends

Quote: "Women live longer, and that means women will have more years of retirement to pay for—in many cases, living on their own or in long-term care. So why are women less likely to have a financial plan, and what can we do about it?"

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03/13/2013, AALTCI finds sharp rise in LTCI costs, by Allison Bell, LifeHealthPro

Quote: "The cost of a typical U.S. individual long-term care insurance (LTCI) policy increased 20 percent between 2012 and 2013, to about $2,065 in premiums per year. The American Association for Long-Term Care Insurance has reported that finding in a preview of the data that will appear in its new national LTCI price index report."

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03/13/2013, White House Finally Fills Out Long-Term Care Commission, by Howard Gleckman, Forbes

Quote: "The White House finally appointed the last three members of the congressional long-term care commission, making it possible for the panel to get down to work. The nominations, which were supposed to have been made by Feb 1, are Henry Claypool, Executive Vice President of the American Association of People with Disabilities and a top aide at the Department of Health and Human Services from 2009-2012; Dr. Julian Harris, a physician and the Massachusetts Medicaid director; and Carol Raphael, the Vice Chair of the AARP board and former CEO of the Visiting Nurse Service of New York."

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03/11/2013, Clients underestimate retirement income needs, by John Sulllivan LifeHealthPro

Quote: "The rich got it wrong. Despite a general sense of confidence in their financial readiness for retirement, affluent Americans might be overlooking critical tenets of retirement planning, according to a new Schwab survey."

LTC Comment: Even for “affluent” Americans, financial and personal well-being can easily be marginalized by a serious medical event. Add to that the many increasing costs of enjoying a long life as well as the statistical probability of needing long-term care and retirement planning can be a real challenge. Yet, LTCi still languishes as a retirement planning tool, but for how long? Medicaid cannot continue to be the primary payor of long-term care services indefinitely. Once government stops giving away long-term care to people who otherwise would have purchased insurance, the LTCi market will take off.

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LTC Bullet: Virtual Visit to the 13th Annual Intercompany LTCI Conference in Dallas, Texas

Wednesday, March 20, 2013

Seattle—

The 13^th Annual Intercompany LTCI Conference, co-sponsored by the LTCi section of the Society of Actuaries, held March 3-6, at the Hilton Anatole hotel in Dallas, Texas was another excellent industry event. Aiming “to enhance the dialogue between producers, technology and the risks looming in the LTC industry,” the conference did just that by bringing together 700+ attendees, close to 60 exhibitors and 40+ sponsors and co-sponsors. A broad range of over 48 educational sessions offered ample occasions for learning and professional development, while receptions and meals provided many valuable opportunities for networking with a diverse range of industry professionals. With Steve unable to attend the conference and Damon busy volunteering at conference registration, we decided to recruit some Center for Long-Term Care Reform friends and members, all of whom attended the conference, to submit some of their impressions. For doing so, we wish to thank:

Sally Leimbach, Senior Consultant for Long Term Care Insurance, FranklinMorris (www.franklinmorris.com);
Honey Leveen, “The Queen, by self-proclamation, of LTCi” (www.honeyleveen.com);
Claude Thau, Target Insurance Services (www.targetins.com); and
Stephen Forman, Senior Vice President, Long Term Care Associates, Inc. (www.ltc-associates.com).

Overall, the mood of the conference was one of optimism and motivation. In reference to this, Sally Leimbach states: “Several Exhibitors seemed to me to be relatively small providers vying to become a part of the process of underwriting LTCi or providing services at time of claim. To me, that showed optimism about the growth of the market among providers.” Sally continues by mentioning she encountered “[m]ore optimism than expected. It rubbed off. I have come back reenergized for educating people to plan for LTC and selling to assist to meet the ever important need.” What an excellent reminder of why events like this are so important to the industry.

Many conference attendees in Dallas expressed high satisfaction with the value of networking opportunities with industry professionals as well as the quality of educational content. Honey Leveen states:

For marketing people like me, the SOA [ILTCI conference] is valuable. I gain insight into the LTCi product, its actuarial, underwriting, and other elements I would otherwise not learn about. I learn about the latest LTCi sales approaches, both from the sessions and from colleagues. I learn about upcoming LTCi products. Also, I get breaking news on LTCi national politics. I feel my attendance at SOA conferences definitely gives me a competitive edge.

A first-time ILTCI conference attendee, Stephen Forman, acknowledges challenges inherent to providing educational sessions that would appeal to such a diverse group of attendees: “How can you appeal to the interests of hundreds of individual attendees when scheduling so many diverse topics? You can’t. Overall, the workshops I attended were terrific, both in educational value and quality of presenters.”

Stephen Forman also commented on conference attendees:

There was a terrific sense of camaraderie among the attendees, and so many folks were friendly. This was a great chance to meet Home Office friends, “Hey, I’ve emailed you a thousand times, nice to put a face with a name!” and to meet your LinkedIn and Twitter friends, “Oh, it’s you!” Since I personally do a lot of writing, it was very validating to finally meet folks in person who’ve read my pieces, “Hey, you’re the guy who wrote that article!” What’s not to like about that?

One aspect of the conference that absolutely caused a buzz was the keynote speaker, Frank Abagnale. Recognized as “one of the world’s most respected authorities on forgery, embezzlement and secure documents,” Mr. Abagnale engendered polarized reactions to his selection as keynote speaker; nevertheless, attendees raved about his presentation. Here’s Claude Thau’s take: “Frank Abagnale’s key-note presentation was excellent. It was an unexpected, yet strong, call for ethical behavior and training. BRAVO! We should show the DVD to our families, friends, associates and politicians.”

Another popular benefit of this conference is the subsidized (by the ILTCI conference) tuition of Harley Gordon’s CLTC Master Class. Conference attendees were able to enroll in the class at a dramatically reduced price and earn their CLTC—the LTC industry’s esteemed and ubiquitous professional designation. Here’s Stephen Forman on the CLTC Master Class:

Terrific content, one-of-a-kind presentation. From speaking with my classmates, I think many shared my takeaway: Harley Gordon’s message is a game-changer (moving away from a risk-based conversation to one that is based on consequences. In this way, our market expands from merely those who have experienced an extended care event to anyone in America who loves his or her family). However, successful execution of this content will rely on our ability to translate it into our own voices.

Final thoughts: What I take home from each ILTCI conference, and this is true for the AALTCI Producers Summit as well, is a renewed sense of appreciation for the LTCi industry and all the talented people in it who devote themselves to protecting others from the risk and cost of long-term care. It’s a diverse group of attendees, but I’ve noticed that what draws many to the industry (and to these conferences) are personal long-term care experiences and the resulting desire to help others plan for their long-term care needs. Many thanks are due to Jim Glickman, everyone on the conference organizing committee, Meeting Masters, Hilton Anatole staff and, of course, all the sponsors, exhibitors, speakers and attendees for making this event exceptional. See you next time.

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Updated, Tuesday, March 12, 2013, 12:02 PM (Pacific)

Seattle--

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.

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03/11/2013, “The 10 Worst Places to Retire,” by Emily Brandon, US News and World Report

Quote: "Retirement is especially difficult if you live in a place with expensive real estate, high taxes, and steep healthcare costs. Retiring in a city with an inordinately high cost of living means you will have to save more money and invest more successfully just to make ends meet. Here are 10 U.S. cities where it's extremely difficult to retire well:"

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03/08/2013, “It's about the benefits,” by Jesse R. Slome, LifeHealthPro

Quote: "Private insurers paid $6.6 billion in benefits last year to individuals who were getting care at home, in assisted living communities and in skilled nursing facilities.

"Consumers associate long-term care with nursing home care. They may not realize that private insurance actually enables many people to remain at home when care is needed.

"Consumers also may have trouble imagining how high LTC costs can get. They may not realize that the value of the largest known LTCI claim open in 2012 exceeded $1.7 million."

LTC Comment: This article succinctly shows the value the LTCi industry brings to our nation.

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03/07/2013, “Obamacare's Costly Medicaid Expansion: How Does Your State Fare? [link],” The Heritage Foundation

Quote: "Obamacare’s Medicaid expansion is touted by the law’s proponents as a ‘no-brainer.’ While it is true that some states may see projected savings, it is erroneous to claim that this experience applies to every state."

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03/07/2013, “Newer Long Term Care Insurance Options Offer Significant Savings [link],” Reuters

Quote: "Newer options are enabling individuals in their 50s and 60s to obtain more affordable long term care insurance protection. A just-released report suggests ways current choices and comparison-shopping can save hundreds of dollars in yearly costs."

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03/06/2013, “Lethal bacteria affecting long-term care facilities could spell 'end of antibiotics,' CDC says [link],” by Tim Mullaney, McKnight's Long Term Care News

Quote: "A lethal type of antibiotic-resistant bacteria is on the rise in acute and long-term care facilities, and providers must act to prevent the spread of these germs that kill about half of all people who become infected, the Centers for Disease Control & Prevention announced Tuesday."

LTC Comment: All the more reason to purchase LTCi and stay out of nursing homes.

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03/06/2013, “Genworth Suspends California Long-Term Care Sales,” by Zachary Tracer, Businessweek

Quote: "Genworth Financial Inc. (GNW), the provider of life insurance and mortgage guaranties, said it is suspending sales of individual long-term care coverage in California as the company works to start replacement offerings with better returns.

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03/05/2013, “The Experts: How to Plan for Retirement Expenses,” WSJ.com

Quote: "In roughing out a retirement budget, what should an individual figure for expenses? Do people's expenses fall a little or a lot—or maybe even go up—when they leave the workforce? The Wall Street Journal put this question to The Experts, an exclusive group of industry and thought leaders who engage in in-depth online discussions of topics from the print Report. This question relates to a recent article on changing rules for retirement spending.”

LTC Comment: LTCi offsets the catastrophic financial risk and cost of long-term care and allows savvy consumers to focus their remaining resources elsewhere, without fear of losing their nest egg if an insurable event should occur.

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03/05/2013, “Employers and Employees Agree on the Value of Voluntary Benefits [link],” MarketWatch

Quote: "Indicating a possible future trend, 44% of brokers currently selling voluntary products are expecting increased demand for these benefits over the next five years, representing an increase of 10% over last year. Brokers foresee the biggest increase in the adoption of critical illness insurance, with 41% believing it will increase. Critical illness coverage pays a lump sum for covered illnesses or conditions such as cancer, heart attack and stroke surgery. Interestingly, signaling that better communication and more education may be needed regarding worksite benefits, 27% of employees surveyed said they weren't sure if critical illness is part of their current employee benefit package."

LTC Comment: Critical illness insurance is gaining traction here in the United States after relative success in countries with more socialized healthcare systems. Is this correlation or causation?

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03/04/2013, “Another panel OKs Hawaii LTC study bill,” by Allison Bell, LifeHealthPro

Quote: "Supporters of private long-term care insurance (LTCI) have won a partial victory in Hawaii. Members of the Hawaii House Finance Committee have voted 16-0 with one excused absence to approve a bill, H.B. 1, that calls for the director of the state executive office on aging to commission a study of the idea of setting up a mandatory, government-run, limited-benefit long-term care insurance (LTCI) program in the state."

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03/04/2013, “Children's Inheritance First to Go When Paying for Long-Term Care Costs [link],” MarketWatch

Quote: "Those expecting to leave loved ones an inheritance should not bank on it - especially if they are not planning for long-term care (LTC) costs in retirement. According to a Nationwide Financial survey, about half (48 percent) of those age 50 and over agree that paying for their LTC costs will take away from the money intended for their children as an inheritance, and 43 percent would rather use these funds to cover LTC costs than pass money to their heirs."

LTC Comment: Adult children have a vested interest in not only protecting their parents’ personal well-being after they no longer can live on their own, they have a financial interest in protecting their inheritance. What an excellent angle to use with prospects.

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03/03/2013, “Dementia Continues To Increase Among Elderly,” by Megan Hanks, Gazettes.com

Quote: "Apply for long-term care insurance. According to the Alzheimer’s Association, in 2011 more than 15 million family members and other unpaid caregivers provided an estimated 17.4 billion hours of care to people with Alzheimer’s disease and other dementias, estimated to value more than $210 billion. Medicare payments for services to beneficiaries with Alzheimer’s and other dementias 65 years of age and older were three times greater than payments for beneficiaries without some form of dementia, and Medicaid were 19 times greater."

LTC Comment: LTCi remains the best way for most to prepare for the challenges brought forth by Alzheimer’s disease.

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03/03/2013, “How advisers can help clients deal with Alzheimer's,” by Dr. Robert Pokorski, InvestmentNews

Quote: "Discuss insurance options for the financial consequences of Alzheimer's disease, including long-term-care insurance, annuities and life insurance with riders that provide a benefit if chronic care is needed.

"For advisers' own protection and to ensure that they can effectively meet the needs of clients, they should document discussions with clients. For example, a note can be put in the individual's file: 'We discussed the possibility of Alzheimer's and other serious conditions, the high cost of chronic care and insurance solutions. The client wasn't interested.'”

LTC Comment: Recommended reading: "Long-Term Care Due Diligence for Professional Financial Advisers".

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03/01/2013, “Planning for Alzheimer's,” by Kimberly Lankford, Kiplinger

Quote: "'You think you've saved enough, and it's overwhelming,' says Julie. 'My father felt financially comfortable. You can have a couple hundred thousand dollars in the bank, and it can all go in just a year or two.'

"Neither Elizabeth Dobson nor Rebecca Barnard has long-term-care insurance. That's the only way to get broad coverage for custodial care in a variety of locations: your home, an assisted-living facility or a nursing home."

LTC Comment: Nobody wants to plan for Alzheimer’s, but those who do, and use their LTCi policy, no doubt are glad they did.

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02/28/2013, “New Evidence Supports Palliative Care Benefits,” by Julia Little, Sunrise Senior Living

Quote: "Palliative care is designed to give an individual the highest level of well-being, and now a new study has proven that comfort really can cure. A study published recently in The Gerontologist shows that seniors who were receiving palliative care as part of their long-term care services had a significant reduction in emergency room visits and depression."

LTC Comment: The results from this study show the benefits of having a wide variety of care options available when needed.

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02/28/2013, “Top quality Medicare Advantage plans in strong position-official,” by David Morgan, Reuters

Quote: "Medicare Advantage insurance plans that meet the program's higher quality standards should be in a strong position to withstand federal payment reductions proposed for 2014, a senior U.S. health official said on Thursday."

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02/27/2013, “LTCI Watch: PCIP,” by Allison Bell, LifeHealthPro

Quote: "Claude Thau, a long-term care insurance (LTCI) actuary, has argued that keeping LTCI providers and LTCI supervisors separate provides much needed checks and balances. Maybe one side will co-opt the other, but at least they will be (or, could be) separate groups of people who look at LTCI situations from different perspectives."

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02/27/2013, “Long-term care: An asset-based approach,” by Bill Coffin, LifeHealthPro

Quote: "Long-term care insurance (LTCI) is the best product nobody ever buys. With people living longer lives and with the cost of health care increasing much faster than people's ability to save, the need for some kind of funding mechanism for long-term care (LTC) is obvious. And yet, long-term care insurance on its own remains a difficult sell. Bruce Moon, vice president of product management for OneAmerica speaks with National Underwriter Life & Health about what he thinks has gone wrong with long-term care insurance, and how it can still go right."

LTC Comment: An interesting conversation about LTCi innovation with Bruce Moon.

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02/27/2013, “Medicare Advantage Enrollment Tops 14.5 Million,” MarketWatch

Quote: "Aggregated enrollment in Medicare Advantage (MA) plans increased by 1.260 million members between February 2012 and February 2013, according to a new report by Mark Farrah Associates (MFA). Nearly 14.6 million people were enrolled in Medicare Advantage plans as of February 2013, 28.5% of the 51.1 million people eligible for Medicare, according to the Centers for Medicare and Medicaid Services (CMS)."

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02/26/2013, “Report: Chris Christie will support Obamacare's Medicaid expansion,” by Sarah Kliff, The Washington Post

Quote: "Republican opposition to the Medicaid expansion appears to be fading fast. New Jersey Gov. Chris Christie will announce his support for the expansion this afternoon, according to the New Jersey Star-Ledger, following a similar statement from Florida Gov. Rick Scott last week. He followed early February announcements from governors in Ohio and Michigan."

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02/24/2013, “Alzheimer's epidemic puts advisers 'and their practices' at risk,” InvestmentNews

Quote: "The number of Americans with Alzheimer's disease is expected to nearly triple by 2050. This impending epidemic will put even more pressure on advisers as they try to help clients prepare for the possibility of a costly health crisis."

LTC Comment: See also: “How advisers can help clients deal with Alzheimer's” and "Long-Term Care Due Diligence for Professional Financial Advisers".

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Updated, Wednesday, February 27, 2013, 11:56 AM (Pacific)

Seattle--

LTC NEWS AND COMMENT

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2/25/2013, Low Cost Long Term Care Insurance Options for Women, PR.com

Quote: "A single woman will pay between $900 and $1,300 yearly for long term care insurance protection currently being offered by leading insurers. However, they will soon be paying more warns one of the nation's leading industry experts.

"The difference will be significant, as much as 40 percent more, so the incentive to act sooner rather than later can really result in significant savings," Slome notes. The organization reports that a single woman, age 55 who qualifies for preferred health rates will pay between $902 and $1,325 yearly for $164,000 of current coverage." The pricing is based on policies offering a Future Purchase Option feature which allows the individual to add to their coverage in future years without having to meet health qualifications."

LTC Comment: As always, planning early for long-term care is imperative, especially for women.

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2/25/2013, What top producers want from the home office, by Brian Anderson, LifeHealthPro

Quote: "I attended a breakout session at last week's LIMRA Distribution Conference in Orlando featuring a pair of top independent producers talking about what they value most from home offices, above and beyond product payout. Both said producers who are at the top of their game don't make decisions based on product and payout but want to closely align themselves with organizations that have the following characteristics:"

LTC Comment: Talented producers that thrive selling LTCi no doubt have valuable opinions regarding home office support.

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2/23/2013, How to close the LTCI sale online, by Margie Barrie, LifeHealthPro

Quote: "Q: Many more agents are selling over the Internet. How do they structure their presentation? A: Internet selling is gaining in popularity. An expert in this area is Amy Pollock, a specialist with LTC Financial Partners. Here are her tips on how to present long-term care insurance in this non-traditional selling method."

LTC Comment: See also last month’s “How to sell LTCI online,” by Margie Barrie.

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2/22/2013, Millions more could join Medicaid as Republican governors cave in [link], by Tami Luhby, CNN Money

Quote: "Despite their initial, vehement protests, a growing number of Republican governors are giving their blessing to expanding Medicaid in their states. That opens the door for millions of poor Americans to enroll in government health care coverage, beginning in 2014."

LTC Comment: Stay tuned to see who is next.

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2/21/2013, CalPERS may reopen long-term care plan, by Jon Ortiz, The Sacramento Bee

Quote: "A key CalPERS committee Wednesday approved a plan to reopen its long-term care insurance to new policyholders, widen the eligibility pool and introduce a new, cheaper benefit program."

LTC Comment: They’re raising rates as well. See also: “CalPERS enrollees receive notice of long-term care rate hikes.”

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2/21/2013, Deficit-reduction plan to gain $600 billion from lower provider payments and higher beneficiary premiums [link], by Tim Mullaney, McKnight's Long Term Care News

Quote: "The co-chairs of President Barack Obama's deficit reduction commission are promoting a way to achieve $600 billion in healthcare 'savings' in a new version of their deficit reduction plan. Medicare and Medicaid cuts would be targeted over the next 10 years.

"Long-term care providers are among those facing a possible 2% reduction in Medicare payments if sequestration cuts take effect. They have protested this reduction, which would come on the heels of an 11.1% reduction in Medicare payments that took effect in late 2011."

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2/20/2013, Buying LTCI for parents, by Richard W. Samson, LifeHealthPro

Quote: "Millions of middle-aged Americans worry about parents in their 50s and 60s who lack long term care insurance (LTCi). Should they buy policies for their unprotected parents, and if so, how should they go about it?

"One important point: Financial professionals should encourage clients to think about the topic as early as possible. If clients wait until their parents have health problems, that's too late. If clients wait until their parents actually need long-term care (LTC) services, that's far too late. To actually get coverage, the parents need to apply when they're still able to qualify for coverage."

LTC Comment: Adult children should act fast to protect their parents from the risk and cost of long-term care.

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2/20/2013, OneAmerica survey finds generational retirement confidence donut [link], by Tristan Lejeune, Employee Benefit News

Quote: "The youngest and the oldest working-age Americans have the most confidence in their ability to retire comfortably, according to a new survey from OneAmerica. The first-time survey, which OneAmerica intends to repeat to track data, identified a “confidence donut” for those between the ages of 30 and 50."

LTC Comment: Interesting results.

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2/20/2013, “What You Need to Know About Long-Term Care Insurance,” by Philip Moeller, U.S.News & World Report

Quote: "Yet, private LTC insurance could be a valuable tool. It merits a close look when you're making your later-life financial plans. Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), has assembled useful data about LTC policies and the likelihood you would ever need to use them."

LTC Comment: Some useful data from AALTCI in this article.

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2/20/2013, “CalPERS enrollees receive notice of long-term care rate hikes,” by Jon Ortiz, The Sacramento Bee

Quote: "With an 85 percent premium hike looming, government workers and retirees covered by CalPERS' costliest long-term care insurance policies face a crucial decision: Swallow the increase or get out of a program they have been paying into for years.

"CalPERS says it is hiking rates to keep the insurance fund solvent long-term. Losses from higher-than-expected claims, lower-than-expected investment returns and loose underwriting standards early on forced the decision."

LTC Comment: Not immune to the same challenges as the private LTCi industry, even CalPERS is raising rates to keep its reserves solvent.

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2/19/2013, “Health Insurers Sell Off on Medicare Advantage Rate Proposal,” by Matt Egan, FOXBusiness

Quote: "Shares of major health insurers like Humana (HUM) and UnitedHealth (UNH) tumbled Tuesday morning in response to a new U.S. proposal to set 2014 Medicare Advantage rates at lower levels than the industry had been bracing for."

LTC Comment: This is so typical. The government entices the private sector into new programs with generous policies. Then after companies adapt to take full advantage, the government removes the financial punch bowl and the party ends badly.

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2/19/2013, “Insurers: Medicare Advantage cuts would be 'crushing blow,’” by Sam Baker, The Hill's Healthwatch

Quote: "The insurance industry said Tuesday that plans to cut payments to private Medicare Advantage plans will hurt seniors' access to care. The Health and Human Services Department said Friday that Medicare Advantage plans will face a 2.2 percent payment cut in 2014. America's Health Insurance Plans (AHIP) said the cuts go too far."

LTC Comment: Cuts to Medicare loom while Medicaid is set to expand under ACA.

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Updated, Friday, February 22, 2013, 11:01 AM (Pacific)

Seattle--

LTC Bullet: Bipartisan Congressional Blast at New York Medicaid

LTC Comment: Congressional Republicans and Democrats concurred in a scathing critique of New York State’s Medicaid program. Details after the ***news.***

*** ESTATE RECOVERY PROJECT: The Maine Heritage Policy Center and the Maine Health Care Association have retained the Center for Long-Term Care Reform to conduct a study of Medicaid estate recoveries in Maine. Our goal is to make recommendations that could double the state’s nontax revenues from this source while simultaneously encouraging Mainers to plan early for LTC and avoid dependency on Medicaid altogether. We’ll begin the research for this project on April 1 and submit our report by May 15. ***

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LTC BULLET: BIPARTISAN CONGRESSIONAL BLAST AT NEW YORK MEDICAID

LTC Comment: In its first bipartisan report in four years, the U.S. House Oversight and Government Reform Committee, led by Darrell Issa (R-CA), has lambasted New York state government for egregious abuses of Medicaid, including the welfare program’s most expensive long-term care component.

Following is the Committee’s press release announcing, describing and linking to the full report. Further below, we provide links to some of the caustic newspaper articles and editorials the report engendered. Finally, we offer some background on the Center for LTC Reform’s extensive work that identified and criticized many of the same abuses.

We especially applaud this report’s recommendations that New York Medicaid should enforce Medicaid eligibility rules, ban the “spousal refusal” gimmick used to dodge asset limits, and strengthen estate recoveries to discourage use of Medicaid as free inheritance insurance for heirs.

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Press Release: Oversight Committee Adopts Bipartisan Recommendations to Prevent New York Medicaid Misspending and Recover Past Overpayments

February 14, 2013

Contact: Ali Ahmad (202) 225-0037

WASHINGTON - Today, the House Oversight and Government Reform Committee adopted the bipartisan Committee report entitled “Billions of Federal Tax Dollars Misspent on New York’s Medicaid Program [link].” [This link takes you to a page with further links to a video and to the full published report. If you watch the video, note that the committee’s deliberation begins at 7 minutes, 21 seconds into the video.] The report details some of the historic problems with New York State's Medicaid program as revealed by independent investigators, news organizations, and the Committee's own research. The report shows that fraud, waste, abuse, and mismanagement has been a large problem in New York’s Medicaid program for decades. The report discusses the long-standing and aggressive State approach to maximize federal dollars flowing into the State through the federal Medicaid reimbursement.

The report makes several significant, bipartisan recommendations for reforming New York’s Medicaid program to save taxpayers billions of dollars a year.

Stop Overpayments and Recover an Appropriate Share of the Overpayments for Taxpayers

“CMS should finalize an agreement with New York on a corrected payment methodology that ends the developmental center overpayments as soon as possible. CMS should pursue recovery of an appropriate portion of previous overpayments in excess of reasonable costs for federal taxpayers.” – p. 28

Ensure Accurate Accounting in Correcting New York Medicaid Misspending

“New York State has submitted several waiver applications to CMS that relate to the financing of its Medicaid program. The Medicaid Redesign Team (MRT) Waiver Amendment asks CMS to allow New York to keep $10 billion of the anticipated federal savings from the waiver... Before considering the merits of these waivers, CMS and the State must come to an agreement to reduce the State’s developmental centers to a rate of about one-fifth of their current levels, as CMS indicated was its intention at the September 20, 2012 hearing before the Subcommittee on Health Care, District of Columbia, Census and National Archives.” - p. 27

Complete an Independent Audit of New York’s Medicaid Program

“CMS or a qualified government watchdog agency should conduct a complete and independent audit of New York’s Medicaid program, including the work of New York State’s Office of the Medicaid Inspector General (OMIG).” - p. 28

Additional recommendations:

Only individuals who meet the legal eligibility thresholds should be enroll in New York's Personal Care Services Program.
New York should aggressively pursue estate recovery against those who abuse Medicaid eligibility rules.
New York's legislature should codify Governor Cuomo’s executive order that limits compensation of executives at organizations that are funded almost entirely by Medicaid.

The report discusses several steps taken by Governor Cuomo’s Administration to address the problems. The report also discusses concerns that the Cuomo Administration has not been forthcoming with this Committee and the serious allegations that New York is not adequately policing fraud and abuse in the State’s Medicaid program.

The report was adopted by a voice vote. Only Rep. Carolyn Maloney (D-NY) voiced opposition to the Committee’s adoption of the report.

###

Caitlin A. Carroll
Deputy Press Secretary
House Committee on Oversight and Government Reform
Chairman Darrell Issa
Rayburn 2157
Office: 202-225-0459
Cell: 202-579-7257
caitlin.carroll@mail.house.gov

----------------

Media coverage of the Committee’s findings and report:

“States fall for Medicaid trap,” by Betsy McCaughey, former Lieutenant Governor of New York, Boston Herald, 2/16/13

“House panel: Medicaid is a $54B mess: New York's Medicaid system needs audit to study waste, abuse, draft report says [link],” by James M. Odato, Times Union, February 6, 2013.

“NY Medicaid exec pay is sickening,” by Carl Campanile and Chuck Bennett, New York Post, February 5, 2013

“House panel adopts stinging report on NY Medicaid system,” by James M. Odato, Times Union, February 14, 2013

----------------

Over the years, the Center for Long-Term Care Reform has conduced several studies of Medicaid and long-term care financing in New York. Examples of our reports that revealed and criticized many of the same conditions identified in the Oversight Committee’s report include.

NEW YORK: Our report: Long-Term Care Financing in New York: The Consequences of Denial [link], March 2011

NEW YORK: Long-Term Care Financing in New York: How to Save Money While Serving the Needy [link], shorter version of the above report published by the Empire Center (Link to abridged version of the report on the Empire Center website (pdf here))

NEW YORK: The New York Long-Term Care Compact Proposal: Update, Analysis and Recommendations [link], July 2007

LTC Bullet: Friendly Fire in the Class War (LTC Embed Report #6), Thursday, September 22, 2011: This Bullet described Steve Moses testimony before the Oversight Committee on some of the same subjects as the Committee’s current report addressed.

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Updated, Tuesday, February 19, 2013, 11:30 AM (Pacific)

Seattle--

LTC COMMISSION DAY NUMBER MINUS 19 AND LTC NEWS AND COMMENT

LTC Comment: Twelve members of the 15-person LTC Commission created by the law that repealed CLASS have been appointed. It remains to learn whom President Obama will choose for the panel. So far, despite the law’s stipulation that the LTC insurance industry should be represented on the Commission, that hasn’t happened. What do you think the odds are that the President will fill that gap with one of his three appointments?

*** ILTCI CONFERENCE: Registration is still open for the Thirteenth Annual Intercompany Long Term Care Insurance Conference to be held from March 3-6, 2013, at the Hilton Anatole in Dallas, Texas. A current schedule and event details can be found at http://www.iltciconf.org. Check out all the details on registration here. This is the first of the SOA/ILTCI conferences I’ll miss, says Steve Moses, due to a travel planning oversight. But Damon will be there. Look him up and say hello. ***

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2/17/2013, “Long-term focus for coverage, company,” by Todd Nelson, Star Tribune

Quote: "Deb Newman, CEO of Richfield-based Newman Long Term Care, has written more than 25,000 long-term care policies since she founded the firm in 1990."

LTC Comment: Congratulations to Center corporate member Deb Newman and Newman LTC on this complimentary column her and the LTCI industry.

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2/17/2013, “Repeal of Va.'s long-term care insurance tax credit fails in committee,” IFAWebnews.com [link]

Quote: "Virginia residents who own or purchase long-term care insurance get at least one more year of a premium tax credit after a transportation funding bill failed in the Virginia General Assembly."

LTC Comment: Bullet dodged in Virginia but state legislators trying to cut LTCI tax incentives is a bad precedent.

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2/15/2013, “Beyond Long-Term Care,” by Kelly Greene, Wall Street Journal

Quote: "But insurers have been battered by low interest rates and expensive claims, leading a few large firms to quit selling new policies in the past few years. Others have jacked up rates on existing policyholders. That has led some families and financial advisers to look for other ways to hedge against the potential for late-life custodial care that can decimate decades of retirement savings in just a few years. Some families are choosing CCRCs. They offer a range of care depending on medical need, from independent living that appeals to some healthy older adults seeking social activities, transportation or meals to 24-hour skilled-nursing care."

LTC Comment: CCRCs and LTCI are not mutually exclusive. Many CCRCs encourage residents to purchase long-term care insurance.

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2/14/2013, “Confronting the legacy of Baby Boomer long-term care,” by Victoria Yates, MedIll Reports

Quote: "Now these aging pioneers are leaving their children with an unwanted legacy. By 2020 a third of working Americans will be faced with ensuring some form of long-term care for their parents."

LTC Comment: Yet, our public policy still encourages adult children of aging Americans to ignore LTC until parents need it, take an early inheritance, and put Mom, Dad, or both in a nursing home on Medicaid.

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2/14/2013, “As Alzheimer's rate soars, concern rises over costs,” by Janice Lloyd, USA TODAY

Quote: "New reports that the number of Alzheimer's cases in the USA will likely triple to 13.8 million by 2050 are raising concerns about the nation's ability to afford care. Care for patients with Alzheimer's and other forms of dementia will increase 500% by 2050, reaching $1.1 trillion, according to the Alzheimer's Association. This is in 2012 dollars. About 70% of costs for Alzheimer's care are billed to Medicare and Medicaid. "

LTC Comment: Thank goodness Medicare and Medicaid are financially whole and ready to meet this huge challenge. Not!

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2/14/2013, “Culture Change Means Nothing Without This,” ChangingAging

Quote: "After a decade in assisted living, Martin Bayne knows more about long term care than just about any living person. Fewer than one out of 25,000 residents survive that long in institutional care. And Martin has an important message for those of us promoting culture change - nothing we're doing will make a shred of difference until residents take responsibility for finding purpose in their own life."

LTC Comment: Some of you may remember Martin Bayne as "Mr. Long-Term Care" a decade or two ago.

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2/14/2013, “A New Commission: Time to Cheer or Yawn?,” by Paula Span, New York Times

Quote: "Even Connie Garner, the longtime Kennedy staff member who directs the advocacy group called Advance Class, was skeptical. 'What can you really do in six months?' she said. Actuaries and policy types had been working on the Class plan for 19 months before the plug was pulled. 'And so what if you introduce a bill?' she went on. 'You can introduce stuff and nothing happens.'"

LTC Comment: The importance of this LTC Commission is not what it will accomplish--zilch--but the media attention it will draw to the LTC policy issue. That's where our long preparation of hard evidence, solid arguments, and irrefutable logic will bear fruit.

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2/13/2013, “Married baby boomers better prepared for retirement,” by Margarida Correia, Employee Benefit News

Quote: "Married baby boomers are much more likely to have retirement savings and a retirement savings goal. More than eight in 10 married baby boomers (81.9%) report having retirement savings and 55.7% have gone through the process of calculating a retirement savings goal, compared with only 66.6% and 40.8%, respectively, for singles."

LTC Comment: Maybe it just boils down to the old adage “two can live more cheaply than one.”

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2/12/2013, “Caregiving for parents: What it can cost,” by Elizabeth O'Brien, WSJ MarketWatch

Quote: "Ask your parents about their plans for retirement, and how they'd like to be cared for if they are not able to do it themselves. Try to understand your parents' financial situation, asking whether they've considered reverse mortgages, or whether they have long-term care insurance. Siblings can begin discussing how they might divide up caregiving responsibilities, and how they might pay for care to be provided if they don't assume the duties themselves."

LTC Comment: Sound advice.

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2/11/2013, “£75,000 cap on bills for long-term care disappoints campaigners,” The Guardian [link]

Quote: "Bills for long-term care in old age are to be capped at £75,000 [$116,307] in England, in a £1bn move to be funded by dragging more people into the inheritance tax net, it has been announced."

LTC Comment: We should watch what England and the U.K. do about LTC financing and how it turns out because the same measure is likely to be recommended here.

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2/7/2013, “Hawaiian panel OKs public LTC plan bill,” by Allison Bell, LifeHealthPRO

Quote: “If passed as written, H.B. 1 would require the director of the state's executive office of aging to hire actuaries to analyze the idea of setting up a ‘limited, mandatory, public’ LTCI program for Hawaii's workers, according to the state legislative tracking system.”

LTC Comment: Expect something similar to be the new federal LTC Commission's recommendation.

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2/6/2013, “The Long-Term Care Financing Crisis,” by Diane Calmus, Heritage Foundation

Quote: "Long-term care (LTC) in the United States is in crisis. The current system is not meeting the needs of the frail elderly and disabled populations. As the 77 million baby boomers enter retirement, the LTC crisis will likely grow, both because of the sheer number of the baby boomers and because of medical advances that have increased longevity. Regrettably, few have prepared to pay for their LTC, either through insurance or savings. Policymakers need to move swiftly to reform the current system to ensure that tomorrow's retirees have access to high quality care without bankrupting future generations."

LTC Comment: Overview of the issue by a Heritage Foundation intern.

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Updated, Friday, February 15, 2013, 10:57 AM (Pacific)

Seattle--

LTC BULLET: THE LTC DOZEN (SO FAR)

LTC Comment: Read profiles of the first twelve appointees to the Commission on Long-Term Care after the ***news.***

*** LTCI UNREPRESENTED: Of the 12 appointees to the LTC Commission named so far none represents “private long-term care insurance providers” as required by the statute creating the Commission. We’ll see if President Obama fills that gap when he names his three appointees. ***

*** NYT ON LTC COMMISSION: The New York Times’ “New Old Age Blog” took notice this week of the Commission on Long-Term Care. “A New Commission: Time to Cheer or Yawn?,” by Paula Span, reflected common doubts that the LTC Commission will accomplish much of consequence. For example: "Even Connie Garner, the longtime Kennedy staff member who directs the advocacy group called Advance Class, was skeptical. ‘What can you really do in six months?’ she said. Actuaries and policy types had been working on the Class plan for 19 months before the plug was pulled. ‘And so what if you introduce a bill?’ she went on. ‘You can introduce stuff and nothing happens.’" Our LTC Clipping about this article opined: “The importance of this LTC Commission is not what it will accomplish--zilch--but the media attention it will draw to the LTC policy issue. That's where the Center for LTC Reform’s long preparation of hard evidence, solid arguments, and irrefutable logic will bear fruit.” ***

*** 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 junk 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. ***

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LTC BULLET: THE LTC DOZEN

LTC Comment: The American Taxpayer Relief Act of 2012 (ATRA ’12) repealed the CLASS Act and established a “Commission on Long-Term Care.” The Commission’s mandate is to . . .

develop 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 of such services and supports, including elderly individuals, individuals with substantial cognitive or functional limitations, other individuals who require assistance to perform activities of daily living, and individuals desiring to plan for future long-term care needs.

The LTC Commission will consist of 15 members, three each appointed by the President, the Majority Leader of the Senate, the Minority Leader of the Senate, the Speaker of the House and the Minority Leader of the House. The statutory deadline for these appointments was February 1, 2013, by which date none of the appointments had been made. In the meantime, however, 12 members have been appointed. Only the President’s three appointments remain to be named.

According to ATRA ’12, the Commission members must represent a wide range of long-term care interests:

The membership of the Commission shall include individuals who-

(A) represent the interests of-

(i) consumers of long-term services and supports and related insurance products, as well as their representatives;

(ii) older adults;

(iii) individuals with cognitive or functional limitations;

(iv) family caregivers for individuals described in clause (i), (ii), or (iii);

(v) the health care workforce who directly provide long-term services and supports;

(vi) private long-term care insurance providers;

(vii) employers;

(viii) State insurance departments; and

(ix) State Medicaid agencies;

(B) have demonstrated experience in dealing with issues related to long-term services and supports, health care policy, and public and private insurance; and

Who are the 12 appointees named to the Commission so far?

Special thanks to Jonathan S. Westin, Health Policy Director, The Jewish Federations of North America (JFNA) for preparing and permitting us to publish the following profiles of the first 12 appointees to the Long-Term Care Commission.

Javaid Anwar [appointed by Harry Reid, Majority Leader of the Senate]

Dr. Javaid Anwar, MD serves as Chief Executive Officer of Quality Care Consultants LLC, providing consulting service in Health Care Policy/Strategy to Employers, Health Insurers & Hospitals. Mr. Anwar serves as Vice President of Health Care Services for MGM/Mirage, a fortune 100 company. He served as Chairman of Governor Guinn's Committee on Access to Health Care in Nevada. He serves as member of the Operational Board of Nevada Cancer Institute and President of Nevada.

Judith Y. Brachman [appointed by John Boehner, Speaker of the House]

Judith Y. Brachman has served with distinction in government positions throughout her career which has been focused on issues pertaining to health services and housing for those in need. From 1991 – 1999, Ms. Brachman served as Director of The Ohio Department of Aging, a cabinet-level agency that administers services and supports for older adults, their caregivers and their families. Ms. Brachman played an integral role as director of this agency for eight years under Former Governor George V. Voinovich where she focused on ensuring that care would be delivered in a pragmatic yet innovative way that would add value to the Buckeye State’s older population.

Ms. Brachman also served as an Assistant Secretary of Fair Housing & Equal Opportunity, U.S. Department of Housing and Urban Development during the Reagan Administration. A chief accomplishment of her tenure was her work on the 1988 reauthorization of the Fair Housing Act which ensured more inclusive language that enabled persons with disabilities in need of long-term services and supports access under the reauthorized law. Ms. Brachman has also served on the Ohio Board of Nursing, which has afforded her deep knowledge of the state’s workforce challenges.

Within the non-profit sector, Ms. Brachman serves as a member of the JFNA Board of Trustees and is currently the national co-chair of JFNA’s Aging and Family Caregiving Committee for the past five years. In these roles, Ms. Brachman has balanced her roles as a tireless advocate for those in need with the duty of delivering care with a finite amount of funds from both government sources as well as philanthropic ones.

Laphonza Butler [appointed by Harry Reid, Majority Leader of the Senate]

Laphonza Butler is the President of SEIU ULTCW – the United Long Term Care Workers’ Union, which represents 180,000 in-home caregivers and nursing home workers across California. Ms. Butler brings to her position years of experience working to improve the lives of members by successfully running strategic organizing campaigns, forming alliances with community and political allies, and partnering with other unions to build workers’ strength.

Ms. Butler has played an important role in shaping the labor movement’s strategy for organizing the newly emergent multi-national, multi-service corporations such as Sodexho, Compass, and Aramark. In response to the outsourcing of millions of food service jobs, SEIU and Unite Here joined forces to form Service Workers United to organize and represent food service workers. As the organizing director of SEIU 1199 Maryland, she organized and bargained collective bargaining agreements to represent hospital and nursing home workers in facilities like Johns Hopkins Hospital.

Bruce Chernof [appointed by House Minority Leader Nancy Pelosi]

Bruce Allen Chernof, MD, FACP, currently serves as the President & Chief Executive Officer of The SCAN Foundation whose mission is to advance the development of a sustainable continuum of care for seniors. The SCAN Foundation is one of the largest foundations in the United States focused entirely on improving the quality of health and life for seniors.

Prior to heading The SCAN Foundation, Dr. Chernof served as the Director and Chief Medical Officer for the Los Angeles County Department of Health Services, after serving as the Department’s Senior Medical Director for Clinical Affairs and Affiliations since December 2004. Earlier in his career, Dr. Chernof served as Regional Medical Director for California Health Programs at Health Net, California's largest network-model managed care plan where he managed the Healthy Families program statewide and the managed care Medicaid program in Los Angeles County. Previously, Dr. Chernof worked as an academic general internist in the VA system as well as at Olive View UCLA Medical Center, serving as a UCLA faculty member.

Currently, Dr. Chernof is an Adjunct Professor of Medicine at UCLA. Dr. Chernof served as the founding Director of UCLA’s five-year combined MD/MBA Program. In 2002, the Geffen School of Medicine at UCLA recognized Dr. Chernof with the Award for Excellence in Education for these innovative programs. He has had work published in a variety of journals including Medical Care, and the Journal of General Internal Medicine.

Judy Feder [appointed by Harry Reid, Majority Leader of the Senate]

Judy Feder is a professor of public policy and, from 1999 to 2008, served as dean of the Georgetown Public Policy Institute. A widely published scholar, Dr. Feder’s health policy research began at the Brookings Institution, continued at the Urban Institute, and, since 1984, flourished at Georgetown University. In the late 1980s, Dr. Feder moved from policy research to policy leadership, actively promoting effective health reform as staff director of the congressional Pepper Commission (chaired by Sen. John D. Rockefeller IV) in 1989-90; principal deputy assistant secretary for planning and evaluation at the Department of Health and Human Services in former President Bill Clinton’s first term; a senior fellow at the Center for American Progress (2008-2011) and, today, as an Institute Fellow at the Urban Institute.

Dr. Feder matches her own contributions to policy with her contributions to nurturing emerging policy leaders. As dean from 1999 to 2008, she built the Georgetown Public Policy Institute into one of the nation’s leading public policy schools, whose graduates participate in policymaking, policy research, and policy politics, not only throughout Washington but throughout the nation and the world.

Bruce Greenstein [appointed by Mitch McConnell, Minority Leader of the Senate]

Bruce D. Greenstein is the Secretary of the Louisiana Department of Health and Hospitals. He has extensive experience in the health care field, having worked in both the private and public sector. On the state level, Bruce worked for Governor Lawton Chiles in Florida leading the design and administration of health care programs. On the federal level, he served as Associate Regional Administrator and Director of Waivers and Demonstrations in U.S. Department of Health and Human Services (HHS), where he oversaw the state Medicaid programs and led the federal government's Medicaid state reform efforts. Most recently, he served as the managing director of worldwide health for Microsoft Corp. Bruce enjoys combining his technological knowledge and health care experience in his role as DHH Secretary.

Stephen L. Guillard [appointed by John Boehner, Speaker of the House]

Stephen L. Guillard most recently served as Executive Vice President, Chief Operating Officer and member of the Board of Directors of HCR ManorCare, a Toledo, Ohio-based healthcare company. Prior to joining HCR ManorCare, Mr. Guillard was Chairman and Chief Executive Officer of Harborside Healthcare, a Boston-based post-acute services firm from 1988 to 2005. Prior to his tenure at Harborside Healthcare, Mr. Guillard was Chairman and Chief Executive Officer of Diversified Health Services in Philadelphia, Pennsylvania.

Mr. Guillard has focused on promoting quality improvements at long-term care facilities. As part of his involvement, he served four years as chairman of The Alliance for Quality Nursing Home Care, a coalition of 18 national provider organizations that care for 650,000 elderly and disabled patients annually and employ approximately 425,000 caregivers nationwide.

Neil L. Pruitt, Jr. [appointed by Mitch McConnell, Minority Leader of the Senate]

Neil L. Pruitt, Jr. is Chairman and Chief Executive officer of UHS-Pruitt Corporation, an integrated health care company offering independent and assisted living, skilled nursing services, rehabilitation services, home health and hospice care as well as pharmacy services, community-based services, medical supplies and care management. Mr. Pruitt also serves as the Chair of the Board of Governors of the American Health Care Association. He is a recognized leader in the health care profession and is a member of The Alliance for Quality Nursing Home Care, a board member of the United Hospice Foundation and past Chairman of the Georgia Health Care Association.

Judith Stein [appointed by House Minority Leader Nancy Pelosi]

Judith Stein founded the Center for Medicare Advocacy, Inc. in 1986 where she is currently the Executive Director. Ms. Stein has focused on legal representation of the elderly since beginning her legal career in 1975. From 1977 until 1986, Ms. Stein was the Co-Director of Legal Assistance to Medicare Patients (LAMP) where she managed the first Medicare advocacy program in the country. She has extensive experience in developing and administering Medicare advocacy projects, representing Medicare beneficiaries, producing educational materials, teaching and consulting. She has been lead or co-counsel in numerous federal class action and individual cases challenging improper Medicare policies and denials.

Ms. Stein is the editor and co-author of books, articles, and other publications regarding Medicare and related issues including the Medicare Handbook (Aspen Publishers, Inc., 13th Edition, 2011; update annually) and a contributor to the on-line periodical, Neiman Watchdog. Ms. Stein is a Past President and a Fellow of the National Academy of Elder Law Attorneys (NAELA), a past Commissioner of the American Bar Association Commission on Law and Aging, an elected member of the National Academy of Social Insurance (NASI), and a recipient of the Health Care Financing Administration (HCFA, now CMS) Beneficiary Services Certificate of Merit. She represented Senator Christopher Dodd as a delegate to the 2005 White House Conference on Aging and received the Connecticut Commission on Aging “Age-wise Advocate Award” in 2007.

Grace-Marie Turner [appointed by John Boehner, Speaker of the House]

Grace-Marie Turner is president of the Galen Institute, a public policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform. Ms. Turner has been instrumental in developing and promoting ideas for reform to transfer power over health care decisions to doctors and patients. She speaks and writes extensively about incentives to promote a more competitive, patient-centered marketplace in the health sector.

Ms. Turner served for a three-year term as a member of the National Advisory Council of Healthcare Research and Quality and served as a member of the Medicaid Commission, charged with making recommendations to modernize and improve Medicaid.

She has been published in hundreds of major newspapers, including The Wall Street Journal and USA Today, and has appeared on ABC’s 20/20 and on hundreds of radio and television programs in the U.S. Grace-Marie is founder and facilitator of the Health Policy Consensus Group which serves as a forum for analysts from market-oriented think tanks around the country to analyze and develop policy recommendations.

George Vradenburg [appointed by House Minority Leader Nancy Pelosi]

George Vradenburg is a civic activist and philanthropist, driven by a passion for public service. President of the Vradenburg Foundation, he founded USAgainstAlzheimer's, a national disease advocacy network and chairs the Geoffrey Beene Foundation-Alzheimer's Initiative on early diagnosis.

Prior to December 2003, he was Strategic Advisor, AOL Time Warner, having served in senior executive positions at AOL, AOL Time Warner and Time Warner. Before joining America Online, Mr. Vradenburg served as Senior Vice President and General Counsel of CBS Inc. and Executive Vice President of Fox, Inc.

Previous board positions have included Vice Chair of the INOVA Health System Foundation, Human Rights First and the Survivors’ Fund (serving families of 9/11 victims at the Pentagon). With his wife Trish, Mr. Vradenburg founded and co-chairs the National Alzheimer’s Gala and the Alzheimer’s Action PAC and publishes Tikkun Magazine (a Jewish and Interfaith Critique of Politics, Culture & Society).

Mark J. Warshawsky [appointed by Mitch McConnell, Minority Leader of the Senate]

Mark J. Warshawsky is Director of Retirement Research at Towers Watson, a global human capital consulting firm. He conducts and oversees research on employer-sponsored retirement programs and policies, social security, financial planning and health care financing. He has written numerous articles published in leading peer-reviewed scholarly journals, practitioner publications, conference volumes and working papers, has organized several research conferences, and has testified before Congress on public policies relating to pensions, annuities and other economic issues. He is a co-author of the Fundamentals of Private Pensions, Ninth Edition, 2009, published by Oxford University Press, and of Retirement Income: Risks and Strategies, forthcoming, MIT Press.

A member of the Social Security Advisory Board for a term through 2012, he is also on the Advisory Board of the Pension Research Council of the Wharton School.

From 2004 to 2006, Dr. Warshawsky served as assistant secretary for economic policy at the U.S. Treasury Department. There he played a key role in the development of the Administration’s pension reform proposals, particularly pertaining to the funding of single-employer defined benefit plans, which formed the basis of the Pension Protection Act of 2006. Dr. Warshawsky’s research led directly to the 2001-2 regulatory reform of minimum distribution requirements for qualified retirement plans. He is the inventor of the life care annuity, a product innovation integrating the immediate life annuity and long-term care insurance. For that research, Dr. Warshawsky won a prize from the British Institute of Actuaries in 2001. He has also held senior-level economic research positions at the Internal Revenue Service, the Federal Reserve Board in Washington, D.C. and TIAA-CREF, where he established the Paul A. Samuelson Prize.

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Updated, Monday, February 11, 2013, 11:06 AM (Pacific)

Seattle--

DAY NUMBER MINUS 10 AND LTC NEWS AND COMMENT

LTC Comment: Another week has passed with most appointments to the Commission on Long-Term Care still unmade. We are awaiting three appointments each by the White House, the Senate Majority Leader and the Speaker of the House. They were due February 1. They’re ten days late. Why the delay?

It’s speculation, but one wonders. According to the American Taxpayer Relief Act of 2012, the Commission’s report isn’t due until half a year “after appointment of the members of the Commission.” Here’s the actual language from the statute:

Not later than 6 months after appointment of the members of the Commission . . . , the Commission shall vote on a comprehensive and detailed report based on the longterm care plan described in subsection (b)(1) that contains any recommendations or proposals for legislative or administrative action as the Commission deems appropriate, including proposed legislative language to carry out the recommendations or proposals (referred to in this section as the “Commission bill”).

Could it be that for some reason the President and Congressional Republicans are delaying their appointments in order to delay the deadline for completion of the Commission’s report? It’s hard to imagine why the President would be so motivated, because the Commission, heavily biased toward more government LTC spending, is likely to follow his preferences. But Senate and House Republicans, rumored to care little about the Commission, may well prefer to see it languish indefinitely.

For our part at the Center for Long-Term Care Reform, we’d like to see the Commission appointed and underway with its deliberations. Yes, it’s likely to recommend something we consider counterproductive. But, on the other hand, it will attract media attention to the long-term care issue. We have mustered the evidence and logic to address the problems and solutions surrounding LTC in ways that do not require expansion of government’s role; do in fact involve a smaller, less expensive role for government; will expand the markets for private financing alternatives; and will improve access to and quality of care for all. So, let the Commission and the media scrutiny begin. Bring it on!

Here’s the current status of appointments to the Commission on Long-Term Care followed by the rest of our report this week:

2/6/2013, “Reid and Pelosi Appoint Members of LTC Commission,” by Emily Wilson, Leading Age

Quote: “Sen. Reid's appointments are:

* Javaid Anwar, a Nevada physician.
* Laphonza Butler of California, president of the United Long-Term Care Workers Union.
* Judy Feder of Virginia, a professor of public policy at the Georgetown Public Policy Institute.

Rep. Pelosi's appointments are:

* Dr. Bruce Allen Chernof, president and CEO of The SCAN Foundation.
* Judith Stein, founder and executive director of the Center for Medicare Advocacy, Inc.
* George Vrandenburg, civic activist, philanthropist, and president of the Vrandenburg Foundation and founder of USAgainstAlzheimer's.”

LTC Comment: Not a propitious start. Judith Stein is a past president of the National Academy of Elder Law Attorneys (NAELA), the Medicaid estate planners’ trade association. Judy Feder is a long-time advocate of government financed long-term care who also served on the “Pepper Commission” 23 years ago. Bruce Chernof leans heavily toward public financing options. When will we see some balance on this commission?

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2/7/2013, “San Diego Hospice Files For Bankruptcy,” by Randy Dotinga, Kaiser Health News

Quote: "Hobbled by a federal investigation into its practice of treating patients who had more than six months left to live, one of the biggest hospices in the country has filed for bankruptcy as it tries to continue operating. . . . The financial woes facing San Diego Hospice, which has slashed its workforce and patient load, might not be isolated. Hospices nationwide are under intense scrutiny from Medicare, and facing lower growth in their reimbursement levels."

LTC Comment: Juxtapose this article with the one below at 2/5/13.

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2/6/2013, “Lack of nursing home input compromised obesity-lifespan studies, researchers say,” by Tim Mullaney, McKnight’s LTC News [link]

Quote: "Controversial studies have proposed recently that elevated body mass doesn't lead to bad health outcomes after a certain age. Some proponents of the 'obesity paradox' have said the extra padding cushions falls and provides energy that can fuel the body during illness, extending the lifespan of obese seniors. However, studies that were based on National Health Interview Survey data are flawed, according to researchers from Columbia University's Mailman School of Public Health and the University of Texas. The NIH surveys did not include seniors living in nursing homes or institutional settings, skewing the results in favor of healthier people, the researchers say."

LTC Comment: So much for the “obesity paradox” that puzzled readers. Sloppy research published uncritically wastes a lot of time and money.

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2/6/2013, “An Alzheimer's 'epidemic' could hit the USA by 2050,” by Janice Lloyd, USA TODAY

Quote: "A new government-funded report confirms what advocacy groups have been warning for years: The number of people in the USA with Alzheimer's disease will almost triple by 2050, straining the health care system and taxing the health of caregivers."

LTC Comment: The article urges more money for research but not a word on financing or insurance to pay for care.

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2/6/2013, “For Women, Reduced Access to Long-Term Care Insurance,” by Jane Gross, New York Times

Quote: "'This was a very, very good business for a short time, with people buying long-term care insurance like it was candy in a candy store,' said Michael Perry, a vice president at the Opus Advisory Group, a strategic financial planning firm in Purchase, N.Y."

LTC Comment: Oh really? When exactly was that candy sale? I've been around the LTCI market for 30 years and I missed it somehow. Of course, all along, Medicaid's been giving the candy away.

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2/6/2013, “Genworth Declines as Long-Term Care Insurance Falters,” by Zachary Tracer, Bloomberg

Quote: "Genworth Financial Inc. fell the most in a month as Chief Executive Officer Tom McInerney said he was disappointed by lower profit from long-term care coverage. Genworth dropped 3.2 percent to $8.88 at 9:53 a.m. in New York. The shares have advanced about 18 percent this year."

LTC Comment: Doesn’t the annual good news (18% increase) overshadow the monthly bad news (3.2% decline)?

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2/5/2013, “Many Relying on Home Equity for Retirement,” by Ann Carrns, New York Times

Quote: "Even though the housing market has not recovered, nearly half of older working Americans expect to use equity in their homes to help finance their retirement, a new survey finds."

LTC Comment: You reckon reverse mortgages have a future?

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2/5/2013, “Baby boomers sicker than parents' generation, study finds,” Bloomberg News Service

Quote: "Baby boomers have more chronic illness and disability than their parents, as their sedentary habits and expanding girth offset the modern medicine that enables them to live longer, a new study says."

LTC Comment: Now there's a headline that screams "Buy LTCI."

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2/5/2013, “Long-Term Care Protection May Be Toothless,” by Michelle Andrews, Kaiser Health News

Quote: "There aren’t many investments people make to protect themselves against something that may happen 20 or 30 years down the road. Yet that’s exactly what long-term care insurance purchasers do. But a provision in those policies that people rely on to help ensure their coverage will meet their needs decades hence may do nothing of the kind."

LTC Comment: If insurance carriers provide benefits which were not underwritten or included in the policy, they become like government, promising future benefits for which they’ll have no resources to pay. And yet, it is a reasonable argument that old nursing-home-only policies designed to pay for “intermediate care” should cover comparable assisted living benefits which are the modern equivalent of the defunct ICF level of care.

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2/5/2013, “When Does End Of Life Begin: Hospice Under Scrutiny,” by Joanne Faryon, KPBS Radio News

Quote: "For the vast majority of patients, hospice is paid for by Medicare. In 2010, of all the people who died and received Medicare benefits, 44 percent chose hospice, double the number in the past decade. But while the number of hospice patients doubled, the cost quadrupled [link]. That divergence has led the federal government to increase scrutiny of hospice providers -- most notably San Diego Hospice, the largest in the state -- by questioning the eligibility of those accepted into care."

LTC Comment: Query: To what extent has hospice become Medicare-financed LTC?

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2/4/2013, “Sen. Mark Kirk on how his stroke made him a better senator - and a better man,” Washington Post [link]

Quote: "I wanted to give up almost every day. I was indescribably fatigued. I wanted to sleep all the time, a common desire in stroke sufferers. But I was beginning to believe. I used the prospect of returning to work, of climbing up the steps of the Capitol and walking the 50 paces to the Senate floor, as motivation. With every swing of my leg on the treadmill, I became more convinced I would do it.”

LTC Comment: Imagine going through stroke recovery without a Senator's income and benefits, without LTC insurance, and dependent upon whatever limited care the government deigns (and can afford) to provide.

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2/2/2013, “National LTC Network and 3in4 Association Announce Strategic Partnership,” National LTC Network [link]

Quote: “The National LTC Network (NLTCN) and the 3 in 4 Association are pleased to announce a new strategic partnership. About the National LTC Network (NLTCN): The National LTC Network has been a national leader in long term care insurance distribution for 18 years. Member firms include some of the most well-respected and successful firms in the LTCi industry. Find Network members at http://www.nltcn.com About The 3in4 Association The 3in4 Association operates as a nonprofit 501(c) (6) corporation and the 3in4 Need More campaign is a public service of the 3in4 Association. The Association is dedicated to raising awareness about the importance of long term care planning, and also provides education on products; services and programs to consider during plan design. More at http://www.3in4needmore.com.”

LTC Comment: Congratulations to Center corporate member NLTCN and the 3 in 4 Association.

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2/2/2013, “In Hard Economy for All Ages, Older Isn't Better ... It's Brutal,” by Catherine Rampell, New York Times

Quote: "Young graduates are in debt, out of work and on their parents’ couches. People in their 30s and 40s can’t afford to buy homes or have children. Retirees are earning near-zero interest on their savings. In the current listless economy, every generation has a claim to having been most injured. But the Labor Department’s latest jobs snapshot and other recent data reports present a strong case for crowning baby boomers as the greatest victims of the recession and its grim aftermath."

LTC Comment: The Age Wave crests. When will it crash?

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2/2/2013, “America's Baby Bust: The nation's falling fertility rate is the root cause of many of our problems. And it's only getting worse,” by Jonathan V. Last, Wall Street Journal [link]

Quote: "Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate."

"The nation's falling fertility rate underlies many of our most difficult problems. Once a country's fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem-a population that is disproportionately old and shrinking overall-has enormous economic, political and cultural consequences."

"If you want to see what happens to a country once it hurls itself off the demographic cliff, look at Japan, with a fertility rate of 1.3. In the 1980s, everyone assumed the Japanese were on a path to owning the world. But the country's robust economic facade concealed a crumbling demographic structure."

"Because of its dismal fertility rate, Japan's population peaked in 2008; it has already shrunk by a million since then. Last year, for the first time, the Japanese bought more adult diapers than diapers for babies, and more than half the country was categorized as 'depopulated marginal land.' At the current fertility rate, by 2100 Japan's population will be less than half what it is now."

LTC Comment: It's the Birth Dearth as much as the Age Wave causing our demographic problems. Thanks to Center premium member Romeo Raabe for pointing us to this article.

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2/1/2013, “Gen X, Gen Y Not Focused on Retirement Saving,” by Margarida Correia, Financial Planning

Quote: "In a new report, titled 'Sowing the Seeds for Retirement: Gen X and Gen Y Markets,' LIMRA found that younger investors are not giving retirement the attention it deserves. Less than half of Gen X consumers (46%) selected retirement as their top reason for saving, with vacation and travel the top choice for 38% of Gen Xers. Younger Gen Y consumers were even more delinquent, selecting vacations over retirement as the single most important reason to save. More than four in 10 Gen Y investors (41%) cited traveling as the biggest motivating factor compared with 31% who were saving primarily for retirement."

LTC Comment: So much for relying on the smaller Gen X and Gen Y generations to support the bigger Boomer generation’s entitlement benefits.

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1/30/2013, “Genworth to suspend multi-life LTCI sales,” by Allison Bell, LifeHealthPRO

Quote: "The units, Genworth Life Insurance Company and Genworth Life Insurance Company of New York, have decided to stop accepting new applications for the multi-life and LTC Business Solutions programs April 15, the company said, according to the letter. The units will continue to sell individual LTCI coverage, and they will continue to sell coverage in the large employer group market, according to the letter."

LTC Comment: More LTCI industry retrenchment.

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1/27/2013, “Long-term care insurance about to set fees by gender,” by Terry Savage, Chicago Sun-Times

Quote: "'The issues of long-term care - custodial care, not medical care - are not going away anytime soon and people need to take the responsibility on their own to plan for this type of an event,' says Brian Gordon of MAGA LTC, an insurance brokerage that specializes in long-term care insurance says. 'Government cannot provide the kind of care you want for your parents or yourself.'"

"According to Stephen Moses of the Center for Long Term Care Reform, Americans spent $149.3 billion on nursing facilities and continuing care retirement communities in 2011. The percentage of these costs paid by Medicaid and Medicare has more than doubled in the past four decades to 56 percent of the total, as people have relied on the government to take care of them.

"But just think about the strains on state and federal budgets, which will grow as boomers need care. Will you want to be in a state Medicaid-funded nursing home? I thought not. So with even a partial policy that covers just half of the projected costs, plus your Social Security, you will be able to buy your way into much better care."

LTC Comment: The Savage Truth, right again. Article quotes Brian Gordon of Center corporate member MAGA LTC and Steve Moses.

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1/26/2013, “The insured and the unsure: Will Obamacare spur firms to drop workers' health cover?,” The Economist [link]

Quote: "Mr Obama does not want companies to dump their staff on his health exchanges, so his health law will impose a fine of $2,000 per worker on any employer that does not sponsor health insurance (employers with 50 workers or less are exempt). Some firms will simply opt to pay the fine, however. A 2011 survey from McKinsey, a consultancy, found that 30% of employers would ‘definitely or probably’ drop insurance in the years after 2014. Among those who actually understood health reform, a remarkable feat, more than half said they would."

LTC Comment: Ominous prediction from a prestigious source.

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Updated, Monday, February 8, 2013, 11:00 AM (Pacific)

Seattle--

LTC BULLET: THE LTC PROBLEM AND SOLUTIONS: THOUSAND BULLETS RETROSPECTIVE

LTC Comment: Overview 15 years of the “LTC Problem and Solutions” after the ***news.***

*** LTC COMMISSION UPDATE. Appointments to the “Commission on Long-Term Care” created by the “American Taxpayer Relief Act of 2012” are not exactly off to a propitious start. So far, six people have been named to the Commission and all six advocate government-dominated LTC financing. One appointee, Judith Stein, Director of the Center for Medicare Advocacy, is actually a former president of the National Academy of Elder Law Attorneys, the Medicaid estate planners’ trade association! The rest of the people appointed so far are listed here. Still to make their appointments to the Commission are the President (D), the Minority Leader of the Senate (R) and the Speaker of the House (R). Let’s hope someone ends up on the LTC Commission who understands and can explain how government-based LTC financing has hurt long-term care and how market-based solutions are the only way to improve it. ***

*** VOICE OF REASON. As the following LTC Bullet documents, your Center for LTC Reform has for nearly 15 years explained “how government-based LTC financing has hurt long-term care and how market-based solutions are the only way to improve it.” The LTC Commission needs to hear our message and we intend to deliver it proudly, frankly, and often. Help us by getting involved. Join the Center or upgrade your membership. All our membership levels and benefits are described here. Once the LTC Commission is appointed and staffed, we’ll be conveying our message to it in many different ways. We’ll write letters, op-eds, and articles. You can help by working with us to regale Commission members and the politicians and academics who influence them with hard evidence, solid reasoning, and irrefutable recommendations. To join the Center or upgrade your membership, contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET: THE LTC PROBLEM AND SOLUTIONS: THOUSAND BULLETS RETROSPECTIVE

LTC 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 988 Bullets (so far), by date here and by topic here. These nearly-1000 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 the thousandth LTC Bullet (likely to be issued some time in April) and the Center’s 15^th 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 1 covering “The LTC Problem and Solutions.” Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.

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September 8, 1998: LTC Bullet: An Open Letter to the Medicare Commission. Appointing commissions is the government’s way of dodging and postponing problems. The new LTC Commission is unlikely to be an exception. Certainly “The National Bipartisan Commission on the Future of Medicare,” created by Congress in the Balanced Budget Act of 1997, solved nothing. In this LTC Bullet, released by the then-only-five-months-old Center for Long-Term Care Financing, Steve Moses addressed the Medicare Commission in an open letter later published by LTC News & Comment: “Wouldn't it be a big load off the Commission's back if the long-term care problem really could be solved easily and inexpensively? Here's the answer in a nutshell: America's long-term care difficulties are largely self-inflicted. We have been trying to solve the wrong problem. Our costly attempts to improve long-term care over the years have ironically made the situation worse. Why?” He proceeded to explain the problem and the solution in this Bullet.

September 1, 1999: Study Shows Most Can Afford LTC Insurance. “‘Most Americans can afford private long-term care insurance and would buy it if well-intentioned government programs didn't anesthetize the public to this huge financial risk.’ With that statement, Stephen A. Moses, President of The Center for Long-Term Care Financing in Seattle, WA released a white paper today entitled ‘The Myth of Unaffordability: How Most Americans Should, Could and Would Buy Private Long-Term Care Insurance.’ According to Moses, ‘this report explains why only 7% of seniors and virtually none of the critical baby-boomer generation have purchased private long-term care insurance. It shows that 70% to 80% of Americans could afford this coverage if they felt the need to buy it. The report explains how easy access to government-financed long-term care services has impeded the market for private insurance, assisted living and home care. Finally, 'The Myth of Unaffordability' offers a workable, cost-free, public policy solution--called LTC Choice--that would improve access to quality long-term care for rich and poor alike.’” Read this Bullet and “The Myth of Unaffordability.”

December 7, 2000: LTC Bullet: LTC: What's Wrong, Who's to Blame, How to Fix. "America's long-term care service delivery and financing system is a tragic mess. The symptoms include widespread bankruptcies, collapsed stocks, scant capital, scarce staffing, high costs, low government reimbursement, little private insurance, declining quality, expanding litigation, skyrocketing liability premiums, persistent institutional bias, and a growing generation of overwhelmed family caregivers. Unfortunately, aging demographics signal that the worst is yet to come. What's wrong? Who's responsible? What should be done? Those are the questions this study set out to address." With that statement, Stephen A. Moses, President of The Center for Long-Term Care Financing in Bellevue, Washington released a report today entitled The LTC Triathlon: Long-Term Care's Race for Survival. Based on telephone interviews with 119 of the leading private financiers, providers and insurers of long-term care, The LTC Triathlon study is a penetrating analysis and critique of long-term care public policy. Read this Bullet and “The LTC Triathlon.”

May 11, 2001: LTC Bullet: How to Avoid the Long-Term Care Trap. "LTC Bullets readers often ask us for sample speeches from which they can draw ideas to use in their own public addresses. We've obliged occasionally by posting transcripts of lectures delivered by Center for LTC Financing President Steve Moses on our website at www.centerltc.org. We've received so much positive feedback on these postings that we have decided to add more of Steve's talks to the site. The speech we are posting today is entitled 'How to Avoid the Long-Term Care Trap.' You can find the transcript at www.centerltc.org/speakers/ltc_trap.htm. Steve delivered this talk on March 10, 2001 to a consumer audience at 'Money Watch Live 2001' in New Orleans. This annual financial planning mega-conference attracts 6,000 to 7,000 people and is well known as the premier event of its kind in the U.S.” Read this Bullet and “How to Avoid the Long-Term Care Trap.”

October 24, 2002: LTC Bullet--How To Save Medicaid LTC. “The following article by Claude Thau, President of Thau, Inc. and Chairman of the Board of Directors of the Center for Long-Term Care Financing, describes a key aspect of the Center's LTC Choice proposal: Through Medicaid, we do two wonderful things for people who need long-term care (LTC). First, we all pay taxes so that indigent people can get commercial LTC that they otherwise would not be able to afford. We should all feel proud to contribute to that cause. Secondly, we provide support to people who are NOT indigent. If people were to sell their homes in order to pay for LTC, and then were to recover, they would no longer have a home to return to. To avoid such an undesirable result, we give loans to these people, advancing their LTC costs, with the intention of recovering when their estate is settled [through Medicaid estate recovery]. Not only do we pool our money to provide a loan to such people, we provide that loan on an interest-free basis! It is a long-term loan as it does not require repayment until the care recipient dies. And, if the recipient's spouse is living in the house, the loan does not have to be repaid until (s)he dies. If disabled or minor children live in the house or if adult children who were care-givers for a couple of years live in the house, the loan continues until they die or sell the house. It is wonderful that we provide such loans, but such loans should be provided OUTSIDE the Medicaid program.” Read this Bullet and the rest of Claude’s classic article.

March 12, 2003: LTC Bullet: The Elephant, The Blind Men and Long-Term Care. This article by Stephen A. Moses would be good advice to the newly appointed members of the latest “LTC Commission.” “Three blind men approached an elephant. One touched the elephant's trunk and exclaimed, ‘a hose.’ The second grabbed the elephant's leg and said, ‘a telephone pole.’ The third reached for the elephant's tail and concluded, ‘a rope.’ The allegory of the blind men and the elephant teaches us the folly of making conclusions about any complex thing without comprehending its entirety. What can we learn about long-term care from this ancient parable? Long-term care is a complex subject comprised of many inter-related parts. When people, even experts, analyze one facet of long-term care without taking into consideration all of its aspects and inter-relationships, they often reach wrong, incomplete or misleading conclusions. Who are the ‘blind men’ of long-term care? What mistaken suppositions do they tend to make? And what can we learn if we remove our blindfolds and observe long-term care in its fullness and complexity?” Read this Bullet or a version published in National Underwriter of “The Elephant, The Blind Men, and Long-Term Care.”

September 7, 2004: LTC Bullet: The Realist's Guide to Medicaid and Long-Term Care. “The Center for Long-Term Care Financing, a [then] nonprofit think tank and public policy organization, released a new report today titled ‘The Realist's Guide to Medicaid and Long-Term Care.’ The report explains (1) how America's long-term care service delivery and financing system became plagued by quality problems and bankruptcies, (2) why Medicaid, a welfare program, dominates long-term care funding and causes institutional bias, and (3) what must be changed in public policy to control explosive Medicaid costs and improve access to quality long-term care for everyone. ‘The Realist's Guide to Medicaid and Long-Term Care’ also highlights ten states, five of the worst and five of the best for long-term care policy.” Read this Bullet and “The Realist’s Guide to Medicaid and Long-Term Care.” Book review:

"Steve Moses and the Center for Long-Term Care Financing have established the knowledge base and foundation from which the future of LTC and eldercare is emerging. As I have examined and learned from their work over the years, I have found that their views have always been insightful, bold, astute, and 'early!' I encourage everyone in the field of aging to review the Center's new report 'The Realist's Guide to Medicaid and Long-Term Care.'"

Ken Dychtwald, Ph.D.
President of Age Wave,
Author of Age Wave, Age Power and Healthy Aging

September 1, 2005: LTC Bullet: Aging America's Achilles' Heel. “Following is the Cato Institute's press release announcing publication of a new ‘policy analysis’ titled Aging America's Achilles' Heel: Medicaid Long-Term Care. ‘Medicaid Long-Term Care Abuse Is Rampant. Study urges Congress to eliminate loopholes for long-term care recipients. WASHINGTON -- Medicaid is a fiscal crisis waiting to happen, warns a study released today by the Cato Institute. In Aging America's Achilles' Heel: Medicaid Long-Term Care, Stephen Moses, president of the Center for Long-Term-Care Reform, exposes how Medicaid is exploited to finance nursing home care for many seniors who could have financed such care themselves. Moses explains that while Medicaid's financial eligibility rules are relatively tight for poor women and children, ‘for people over the age of 65 who have medical need for nursing-home-level care, Medicaid's eligibility rules -- contrary to conventional wisdom -- are very loose.’” Read this Bullet and Aging America's Achilles' Heel: Medicaid Long-Term Care.

November 16, 2006: LTC Bullet: The Brave New World of Long-Term Care. "The Brave New World of Long-Term Care" presented by Stephen A. Moses to the Notre Dame Law School Symposium on Aging, Notre Dame, IN: Thank you for inviting me to Notre Dame Law School. It is an honor to address you and to share the podium with such distinguished co-presenters. . . . I chose ‘The Brave New World of Long-Term Care’ as my topic today. But let me start by describing the ‘Pusillanimous Old World of Long-Term Care,’ that is, the status quo.” Read this Bullet and “The Brave New World of Long-Term Care.”

March 16, 2007: LTC Bullet: Don't Mess With Texans' LTC--Fix It!. "Don't Tread on Texans' Long-Term Care-Fix It! By Stephen A. Moses. If the nation isn’t prepared for the aging baby boomers, it isn’t because the boomers sneaked up on us. For some time, we have seen the warnings and been conscious of the coming ‘age wave.’ The problem is that few have taken heed and been moved to act thus far. While national leaders warn about the coming collapse of Medicare and Social Security, state lawmakers grow increasingly concerned about meeting the increasing demand and cost of Medicaid long-term care as the boomers age. To stave off the coming disaster, state lawmakers need to respond quickly to embrace every ounce of the limited federal flexibility available. Read this Bullet and “Don’t Mess With Texans’ LTC—Fix it!.”

February 7, 2008: LTC Bullet: Hillary on LTC. “Hillary Clinton on LTC by Stephen Moses: Presidential candidate Senator Hillary Clinton has promised a cornucopia of LTC benefits if elected. Would our service delivery and financing system be better or worse if she delivered? Hillary Clinton announced her plans for long-term care public policy a few weeks ago. Let's give due credit: none of the other presidential candidates have committed themselves to anything like such a detailed plan. At least she's on the record, with lots of ideas, some of which are very appealing. First a synopsis, then our comments . . ..” Read this Bullet and “Hillary Clinton on LTC.”

April 15, 2009: LTC Bullet: Do We Need an LTC Tea Party?. “Across the country today, at 300 locations in all 50 states, citizens are staging ‘tea parties’ to protest high taxes and explosive public spending. That got me thinking: Do We Need an LTC Tea Party? Think about it. We have a new President, a new administration, a new focus on fixing government, on helping those in need, and on holding those in power accountable. So why not tackle the utter inequities in our long-term care financing system? For example, Medicaid is the dominant funder of long-term care. It's supposedly a safety net for the poor. But in truth it pays for most expensive LTC for nearly everyone, thus crowding out privately financed home care and LTC insurance to pay for it. What's fair about that?” Read this Bullet.

January 15, 2010: LTC Bullet: "Doing LTC RIght" or The Medicaid Mouse that Roared. “The State of Rhode Island took a daring leap into radical Medicaid reform last year. The state requested and the Centers for Medicare and Medicaid Services (CMS) granted a ‘global Medicaid waiver.’ Under this unique plan, Rhode Island agreed to a cap on Medicaid matching funds for five years in exchange for more flexibility to administer the program than federal law and regulations otherwise allow. Among other objectives, the state is using the global waiver to increase Medicaid-financed home and community-based services while reducing nursing home utilization. Rhode Island's gutsy move and noble goals are praiseworthy. But will they save money or break the bank? Will offering more services people want (home care) and fewer they'd rather avoid (nursing homes) swell Medicaid ranks? How will home care providers fare with higher acuity patients? How will nursing homes survive with fewer low-acuity (profitable) residents? Why are low-acuity patients in expensive skilled nursing facilities in the first place? Can private financing alternatives like insurance and reverse mortgages grow if Medicaid LTC becomes more attractive than ever? Is Rhode Island jumping from the fiscal frying pan into a financial firestorm? What might the state do with its global Medicaid waiver authority to reinvent and save the LTC safety net? Can Rhode Island get it right and become a model for the rest of the country? Our new report, titled ‘Doing LTC RIght,’ released today in collaboration with the Providence-based Ocean State Policy Research Institute, answers all these questions.” Read this Bullet or “Doing LTC RIght.”

January 5, 2011: LTC Bullet: "Medi-Cal LTC: Safety Net or Hammock?" Report Released “Today, the Pacific Research Institute released our report on Medicaid and long-term care financing in California titled ‘Medi-Cal Long-Term Care: Safety Net or Hammock?’ PRI's press release follows below. Find links to the full study and a longer version of the press release here: http://www.pacificresearch.org/publications/medi-cal-long-term-care. The report is also posted on the Center's website here. Now, check out the ‘movie’ PRI prepared spoofing Medi-Cal's egregious LTC eligibility loopholes as documented in the report. We at the Center for Long-Term Care Reform wish to thank the Pacific Research Institute and its staff for their thoughtful and creative work to bring this report to publication and to promote it with ingenuity and humor.” Read this Bullet and “Medi-Cal Long-Term Care: Safety Net or Hammock.”

February 3, 2012: LTC Bullet: How to Fix Long-Term Care. The Center for Long-Term Care Reform’s late summer, early fall [2011] project in Washington, DC produced seven important deliverables. As described in our project report titled “Near-Term Prospects for Long-Term Care Financing Reform,” these work products included:

1. "Pay for the Doc Fix by Fixing Medicaid LTC"
2. “Save Medicaid LTC $30 Billion Per Year AND Improve the Program"
3. & 4. Letters from members or committees of Congress to both the GAO and the DHHS Inspector General requesting studies relevant to our project's objectives.
5. "Medicaid Long-Term Care Benefits: Friendly Fire in the Class War": Steve Moses’s testimony published by Congress.
6. "Challenges to Effective Long-Term Care: Cost and Affordability": Steve Moses’s speech to the 13^th annual Health Sector Assembly in Sundance, UT.
7. Six “Briefing Papers” on “How to Fix Long-Term Care” with an “Overview” linking to each.

Today’s LTC Bullet conveys our “Overview” of “How to Fix Long-Term Care.” Subsequent LTC Bullets will deliver each of our six Briefing Papers in serial form. We hope that by reading this material you will gain a better understanding of why America’s long-term care delivery and financing system is so dysfunctional and what it will take to fix the problem. Thanks for supporting the Center for Long-Term Care Reform.

Read this Bullet and “How to Fix LTC.”

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Updated, Monday, February 4, 2013, 10:39 AM (Pacific)

Seattle--

DAY NUMBER MINUS THREE AND LTC NEWS AND COMMENT

LTC Comment: By law, the 15 members of the Commission on Long-Term Care created by the American Taxpayer Relief Act of 2012 were supposed to be appointed by February 1, 2013. So, if you’re counting, we are now at Day Number Minus Three with no appointees named.

Wonder why the foot dragging? That’s not hard to understand. The Commission must vote on a “comprehensive and detailed report based on the long-term care plan” it’s mandated to produce not later than six months after appointment of the Commission members. So, the clock doesn’t start ticking on production of the grand LTC plan until the Commissioners are appointed. No wonder the appointments have not been made, there’s no news as to when they’ll be made, and no one seems to know who is under consideration. Long-term care remains the poor relative of social issues.

On another subject but in a similar vein, consider the following exchange between a state bureaucrat and the Center for LTC Reform’s Regional Representative in Wisconsin. The state official’s letter grated on me but Romeo Raabe’s tongue-in-cheek reply was right on target. See what you think:

From: Deignan, Monica A - DHS
Sent: Tuesday, January 29, 2013 11:40 AM
To: 'rrabe@thelongtermcareguy.com'

Subject: Your letter to Gov. Walker about the Long Term Care Insurance Partnership Program

Dear Mr. Raabe:

I have been asked to respond to your letter to Governor Walker suggesting that state government should be doing more to promote the Long Term Care Insurance Partnership Program (LTIP). The goal of the Department of Health Services and the Office of the Commissioner of Insurance, which share state-level responsibility for this program, is to provide fair and balanced information to the public about this initiative. See http://www.dhs.wisconsin.gov/em/ltcip/ltcip.htma and http://www.oci.wi.gov/srissues/ltpartnership.htm.

As public agencies, our job is not to promote insurance products but to give the public good information including what we believe are salient considerations in making a major financial decision to purchase and maintain qualifying long term care insurance policies over a long number of years.

In Wisconsin we rely heavily on our system of Aging and Disability Resource Centers to provide information to all people about long term care, and about conserving their own resources to pay for their own care as long as possible. The Board on Aging and Long Term Care is another resource that provides objective information to people who need to learn about options for funding long term care.

Thank you for your interest in our publicly-funded long term care system.

Monica Deignan, Deputy Director
Office of Family Care Expansion
Division of Long Term Care
Wisconsin Department of Health Services
Phone: 608-261-7807
Fax: 608-266-5629
email: monica.deignan@wi.gov

Romeo Raabe’s reply:

I agree completely. The state should not promote insurance of any kind. This would include auto insurance (which is mandated) and life insurance (which the state sells).

My practice is doing just fine with the referrals from financial planners who recognize the need and suggest their wealthier clients meet with me to investigate LTC insurance. [The LTC] Partnership [Program] is meant to encourage those of modest means to take some personal responsibility, and rewards them for doing so in order to save Medicaid from paying for most if not all LTC.

Since the Medicaid program in Wisconsin does not take up a significant portion of the state budget, there is no need to consider ways to encourage personal responsibility. Thus keeping this program hidden deep in the OCI website (your first link does not work) is simply not a concern here unlike other states who are concerned about the 10,000 baby boomers a day (nationwide) who are turning 65 and lining up to apply for Medicaid to pay for their LTC.

Fortunately, the state does not encourage gambling either (also not the state's business), which is why all the television spots about each new lottery game the state pays for are only "informational" and definitely not advertisements.

Some of the ADRC's [Aging and Disability Resource Centers] now print the DHS [Department of Health Services] brochure on the partnership program as they often now function as the first intake point for people seeking Medicaid. They realize there is not enough money to pay for everyone's long term care. However, first mentioning a program to prevent or limit Medicaid expenditures long after the ship has sailed is not effective at all.

The only way I participate in Medicaid is to pay for it through my taxes, and finding ways for people to actually pay their bill (a novel concept today) without using it. Attorneys find ways to hide money in order to collect Medicaid sooner. They make big money doing so and the public flocks to them, making our budget problems worse. We've got this program, other states promote it to save money, perhaps we could consider saving money as well?

Romeo Raabe LUTCF, LTCP
(920) 884-3030 (800) 219-9203
www.TheLongTermCareGuy.com

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2/2/2013, “Consumer Interest in Long Term Care Insurance Surges: Interest in long term care insurance grew 18.3 percent in January 2013 according to a report by the American Association for Long-Term Care Insurance,” PR.com

Quote: "Consumer interest in long term care insurance protection grew significantly compared with a year ago according to a report issued today by the director of the American Association for Long-Term Care Insurance."

LTC Comment: It’s about time!

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1/31/2013, “Analysis: Rate pressures on pensions wipe out billions in profits,” by Ben Berkowitz, Reuters

Quote: "Pension charges wiped out more than $20 billion in fourth-quarter earnings at major American companies, as persistently low interest rates leave some of those with the largest retiree burdens no choice but to assume they need more money now to cover liabilities later."

LTC Comment: American companies get it. They're putting more money into their pension funds to ensure they'll meet future commitments. LTCI carriers get it. They've raised premiums for the same reason. When will government get it? Social Security and Medicare trust funds have already been spent and Medicaid doesn't even have the pretense of a phony trust fund.

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1/31/2013, “Long Term Care Insurance Agents Warned To Avoid Scam,” ExpertClick

Quote: "'We have been getting an increasing number of calls from frustrated insurance agents who have paid money for long term care insurance leads and believe they have been ripped off,' explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national trade group. 'Because the company requires an electronic transfer of funds, they have absolutely no recourse to recoup their money.'"

LTC Comment: Caveat emptor.

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1/31/2013, “As America ages, senior care options flourish,” by Matthew Perrone, Associated Press

Quote: "Millions of families are beginning to grapple with the one major health expense for which most Americans are not insured: long-term care. . . . 'The people who can really afford long-term care insurance often have enough fixed income that they don't really need it,' says Bradley Frigon, vice president of the National Academy of Elder Law Attorneys."

LTC Comment: Such is the advice coming from the Medicaid planners' trade association these days.

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1/30/2013, “Sandwich generation takes a hit supporting adult children and aging parents,” by Carol Morello, Washington Post [link]

Quote: "The findings reflect an evolution in the image of who makes up the sandwich generation. In the past, the burden typically was shouldered by a middle-aged woman who stayed at home caring for young children and aging parents. During the recession and the slow recovery, more adult children have returned home while they look for jobs. Even the percentage of married couples living in a parent’s home has returned to levels not seen since the turn of the 20th century."

LTC Comment: It’s a club sandwich generation now.

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1/29/2013, “Nursing-Home Operators Turn to the U.S.: Federal Housing Agency Backs More Loans as Banks Hesitate to Lend Amid Uncertain Health-Care Environment,” by A.D. Pruitt, Wall Street Journal [link]

Quote: "The Federal Housing Administration has come to the rescue of nursing-home operators that are having a tough time obtaining traditional financing for mortgage loans. Big banks are becoming more hesitant to make loans to nursing homes because of the uncertain health-care environment. Lenders are worried that nursing-home companies may face trouble repaying the loans in the future if they are hit with cutbacks by state governments or the federal Medicare program."

LTC Comment: That isn't the half of it. Medicaid already pays nursing homes $7 billion per year less than their cost to provide the care, $22 per bed day below allowable costs. This shortfall in public financing of all levels of care will get worse as 16 million new recipients join the program. Scary to think the FHA will bail out victims of yet another government-caused financial disaster. (Thanks to clipping-service-subscriber and Premium Elite Center member Romeo Raabe for tipping me to this article.)

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1/29/2013, “When Consumer Protection Isn't There,” by Kathleen O'Connor, The O’Connor Report

Quote: "Since June 2012 I have been trying to help this lovely woman with what I thought would be an inadvertent oversight/error with a long-term care insurance company. Instead she is out $40,000, and has few if any alternatives or any recourse. There is not a regulation or law on the books-federally or in our state-that can help her."

LTC Comment: Do LTCI carriers bear responsibility when policy holders let their policies lapse after failing to respond to several premium notices the post office did not forward? The publisher of "The O'Connor Report" thinks so and engenders more ill will toward the LTCI industry.

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1/28/2013, “Complimentary Webinar: The Real Choice Employers and Employees Are Making About Long-Term Care Insurance,” [link]

Quote: "Phyllis Shelton will explain why worksite opportunities with long-term care insurance are greater than ever before despite rate increases, carriers exiting the market and the tighter underwriting and repricing strategies employed by most carriers. She will also relate the latest happenings in long-term care insurance to the overall picture of health care reform."

LTC Comment: Worksite is catching fire.

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1/28/2013, “Most Americans Aren't Familiar with Long-Term Care Insurance and Overstate its Cost, According to InsuranceQuotes.com,” WSJ MarketWatch [link]

Quote: "Fifty-six percent of Americans overestimated the cost, InsuranceQuotes.com found. Twenty percent underestimated it and only 16% correctly pegged it as somewhere between $2,000 and $3,000 per year."

LTC Comment: That’s a lot of people who are just waiting for good news about the real cost of LTCI.

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1/28/2013, “Advocates: Insurance should cover Alzheimer's brain scan,” Employee Benefit News

Quote: "Advanced imaging that detects plaque in the brain should be covered by Medicare and private insurers for select people with dementia to help diagnose or rule out Alzheimer's disease, advocates and doctors say."

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1/26/2013, “Murder-suicide disturbing trend among the elderly,” by Diana Reese, Washington Post

Quote: "Murder-suicides among people 55 and older have increased from 21 percent in 2002 to 25 percent in 2011 of the total murder-suicides in the United States, according to the Violence Policy Center."

LTC Comment: Another side effect of the Fed’s driving interest rates to zero? Lacking adequate retirement income, maybe some folks decide to check out early.

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1/25/2013, “Judge grants final approval of Jimmo settlement,” by Tim Mullaney, McKnight’s LTC News

Quote: "Marking another step toward guaranteeing Medicare coverage for nursing home residents needing skilled services, a federal judge on Thursday approved the October 2012 settlement agreement in Jimmo v. Sebelius. The high-profile case involved a woman denied Medicare coverage for treatment of her chronic, diabetes-related conditions. As a result of the settlement with the Department of Health and Human Services, individuals who need maintenance care for conditions that are not improving can no longer be denied Medicare coverage under an Improvement Standard."

LTC Comment: The final shoe has dropped with the judge's approval of this settlement. Medicare now will have no choice but to pay for skilled nursing and home care in many situations where coverage was previously denied. The net effect, beyond increasing Medicare expenditures, will likely be further LTC denial on the part of consumers who have one more reason to believe the government pays for long-term care.

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Updated, Friday, February 1, 2013, 10:37 AM (Pacific)

Seattle--

LTC BULLET: BOOK REVIEW: “TAKE THAT NURSING HOME AND SHOVE IT”

LTC Comment: This new anti-nursing-home book disturbs and delivers on several levels. Read our review after the ***news.***

*** LTC COMMISSION: Today’s the deadline for appointments to the new Commission on Long-Term Care created by the American Taxpayer Relief Act of 2012. According to the law: “The Commission shall be composed of 15 members, to be appointed not later than 30 days after the date of enactment of this Act . . . .” That would be today, Friday, February 1, 2013, but so far no news regarding appointments. Well, I suppose if the U.S. Senate can ignore federal law by failing to pass a budget for four years, we shouldn’t be too surprised if the President, Senate and House leaders miss this deadline. In the meantime, we’re waiting impatiently for news. While government commissions usually just delay tough decisions, this one at least gives long-term care a level of public exposure and consideration it hasn’t received in decades. Let’s make the most of it. Stay tuned for our plans as, if and when this LTC Commission takes form. ***

LTC BULLET: BOOK REVIEW: “TAKE THAT NURSING HOME AND SHOVE IT”

LTC Comment: Gerontologist and elder law attorney Susan B. Geffen’s new book--Take That Nursing Home and Shove It: How to Secure an Independent Future for Yourself and Your Loved Ones—delivers better on its sub-title than its crass lead.

Shove It begins as a diatribe against nursing home care. It’s a sad indictment to read. Examples of deficient care, too few caregivers, bad smells, greedy owners, lawsuits, etc. abound. Author Geffen sees the problems with nursing home care up close and personal because she deals professionally with people and families in crisis who have few choices about where and how to get the care they need. So I don’t doubt her passion or honesty on the topic.

And certainly, this book would help long-term care insurance salespeople sell their “stay-out-of-a-nursing-home” product, which Ms. Geffen’s book heartily endorses. Because waking people up to the need to plan for LTC risk and cost is so important and really is the primary contribution of the book, I won’t hesitate to recommend it with the following qualifications.

Take the book’s bitter criticism of nursing homes with a grain of salt and consider the following larger context. Nursing homes are a critical part of the long-term care continuum. They provide excellent sub-acute and rehabilitative care, for which they are well suited and amply compensated by Medicare and private insurance. Most of the problems that Ms. Geffen describes derive from the use of nursing homes to provide long-term custodial care funded at parsimonious levels by a welfare program, Medicaid.

The nursing home industry has made and continues to make heroic efforts to improve care quality. But the reality in this life is that you get what you pay for. According to a recent study, Medicaid reimburses nursing homes $7 billion per year less than the cost of providing the care, more than $22 per bed day below “allowable costs.” As one author put it as far back as a 1988 article in the Journal of Health Politics, Policy and Law:

One way to interpret the current market outcomes in the nursing home sector is to say that, despite protest to the contrary, state Medicaid programs are acting effectively to buy the services they wish to purchase for Medicaid patients--a limited amount of relatively low-cost care of uncertain quality.

For a few years, I served as an expert witness in nursing home liability lawsuits. I saw disgusting conditions described at great length with stomach-turning detail in depositions against certain nursing homes. But I also saw the exact same conditions described in identical boiler-plate language in case after case by the same law firms. I became aware of highway billboards inviting people to contact law firms about problems with nursing homes, but only in states where liability laws made nursing homes easy to sue. I came to wonder how much of the alleged poor care and abuse was real and how much contrived for monetary gain by tort lawyers and their clients.

I also concluded that care problems in nursing homes are not solely a problem of inadequate Medicaid reimbursement. There is also the fact that too many--in fact most--people who receive expensive institutional long-term care rely on Medicaid. Why is that? Because contrary to conventional wisdom, Medicaid nursing home care is easy to get. Income rarely stands in the way. And virtually unlimited assets are exempt.

Making the problem of over-reliance on Medicaid even worse is that Medicaid planning attorneys use a magic legal wand to qualify affluent seniors for Medicaid nursing home care. Medicaid compliant annuities, special trusts, early transfers, promissory notes, reverse half-a-loaf strategies: these and many other legal gimmicks divert Medicaid’s scarce resources to people who should pay their own way instead of to the neediest poor, the program’s proper clientele.

Unfortunately, I found little in “Shove It” to explain why our country’s inadequate LTC service delivery and financing system is the way it is. Bitter criticism leaving the impression that evil people prey for profit on the helpless adds only ill will and mistrust to a very complicated story. Far better is to focus on how to correct the deficiencies by eliminating their cause.

So take the many valuable parts of this book to heart. Plan early and responsibly for long-term care risk and cost. Buy long-term care insurance or use home equity as the author recommends. But realize that access to quality care at the most appropriate level depends more than anything else on the ability to pay privately for care. Private payers get red carpet treatment because they pay half again as much for their care as Medicaid does.

Bottom line, don’t blame nursing homes or the good people in them who struggle to provide the best care possible despite huge obstacles. Rather, put the blame where it belongs: on poor government policy that trapped a generation of Americans in underfunded, welfare-financed institutions.

Praise and empower the good people who take personal responsibility and prepare to pay for their own care if and when needed. They and the people who struggle to wake them up to the risk and cost of long-term care, including the author of this bi-polar book, are the real heroes of LTC.

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Updated, Monday, January 28, 2013, 10:36 AM (Pacific)

Seattle--

HCBS SAVINGS DUBIOUS AND LTC NEWS AND COMMENT

LTC Comment: Today’s first story calls into question the cost-effectiveness of home and community-based long-term care. The idea that home care could save Medicaid money has been taken for granted for decades. We’ve always been dubious. For our analysis of the subject, see “Briefing Paper #4: Rebalancing Long-Term Care.” Now comes research sponsored by the U.S. Department of Health and Human Services’ Agency for Healthcare Research and Quality that concludes the HCBS model neither provides better care nor saves money. Well, maybe that’s why Medicaid LTC expenditures keep going up year after year despite the fact that “rebalancing” from nursing home to home care has continued steadily throughout the country.

A better model for Medicaid that would solve the problem is easily attainable. Stop paying for most expensive LTC through Medicaid. Turn Medicaid into the safety net program it is supposed to be by radically reducing the home equity exemption, eliminating or reducing other gaping eligibility loopholes, and strengthening lien and estate recovery programs that ensure people with wealth pay their own way. With fewer recipients, Medicaid could provide a full continuum of long-term care and pay providers adequately to ensure quality at every level of care. Taxpayers get relief; private payers get better access to higher quality care; and to avoid high LTC costs, more people will buy private insurance. Everyone wins.

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1/27/2013, “Is Community Care Better Than Nursing Homes? Survey Says: It's Hard to Tell,” by Alyssa Gerace, Senior Housing News [link]

Quote: "Home- and community-based services (HCBS), initially touted as a cost-saving method of delivering long-term care compared to institutional settings, may not actually be a significantly superior setting in which to receive care, suggests a report from the Agency for Healthcare Research and Quality (AHRQ). AHRQ reviewed several studies comparing different long-term care models and concluded there's not enough evidence to truly assess their relative effectiveness in relation to each other. It may be more accurate to simply consider HCBS as a preferred model among consumers, rather than one that provides better care at a lower cost, the report's authors say."

LTC Comment: Academics, policy makers, politicians and senior advocates have pushed the idea for decades that home and community-based care saves Medicaid money. We’ve always argued otherwise. Now finally comes research that shows no evidence that HCBS saves money or improves outcomes. Nevertheless, Medicaid financing of HCBS continues to skyrocket, crowding out private financing alternatives.

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1/27/2013, “Medicaid Funds 70% Of Births In N.M.,” by Olivier Uyttebrouck, Albuquerque Journal

Quote: "Of the 27,795 babies born in New Mexico in 2010, 19,863 births - or 71 percent - were paid for by the state and federally funded health insurance program for the poor, according to a recent analysis by the state Legislative Finance Committee."

LTC Comment: Babies now; LTC later.

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1/24/2013, “Six Ways to Save on Long-Term Care Insurance,” by Donna Fuscaldo, Fox Business

Quote: "Despite the challenges, experts say you can buy long-term care insurance that will protect you and won't completely break the bank. Here are six strategies to save."

LTC Comment: The move toward “short and fat” policies bothers me because “long and lean” better protects against the catastrophic risk, which is the primary role for insurance.

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1/24/2013, “Northwestern Mutual Announces 2012 Financial Results,” WSJ MarketWatch

Quote: "Northwestern Mutual U.S. market share rankings based on most current sales data provided by Life Insurance Market Research Association (LIMRA). For the 12 months ended Sept. 30, 2012: first in individual life insurance; second in individual disability income insurance; second in individual long-term care insurance."

LTC Comment: Congratulations.

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1/24/2013, “What to expect in 2013 in voluntary long-term care insurance,” by Tom Riekse Jr., Employee Benefit Adviser

Quote: ". . . 2013 should be a year of growth in LTC sales through the worksite. Why? Instead of employers offering group policies to employees, they are offering individual policies sold on a multi-life basis."

LTC Comment: The year 2013 may start a turnaround for LTCI in several ways.

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1/23/2013, “How to sell LTCI online,” by Margie Barrie, LifeHealthPRO

Quote: "Amy Pollock, an LTC Specialist with LTC Financial Partners, has been selling online since 2005. She finds that selling via a live meeting with screen sharing is efficient and very well received. She uses a private online website where prospects view her screen on their computers. If they have a speaker phone, they can watch and listen hands-free. Connectivity is simple."

LTC Comment: They said it couldn’t be done: LTCI sales by phone or online. But I’ve been hearing some pretty amazing stories from a few producers in recent years.

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1/23/2013, “Avoid Coming Long-Term Care Insurance Rate Increases for Women,” WSJ MarketWatch [link]

Quote: "Women will soon pay between 20 and 40 percent more than men for long term care insurance as leading insurers move to sex-distinct pricing. 'Women have an opportunity to lock in lower rates but the window for significant savings is closing,' declares Jesse Slome, director of the American Association for Long-Term Care Insurance, and author of A Woman's Guide To Long-Term Care Insurance Protection."

LTC Comment: Another fire sale.

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1/23/2013, “Creating Realistic Long-Term Care Solutions as Part of the Entitlement Reform Debate,” by Bruce Chernof, Health Affairs [link]

Quote: "Why should we now address long-term care, you ask, since this issue has been endlessly dissected by technocrats while generally ignored by most policymakers? The answer is twofold. First, because in practical terms, there is no meaningful way to fundamentally bend this country's health care cost curve (currently at 18 percent of gross domestic product) respective to Medicare and Medicaid expenditures without dealing directly with long-term care needs that nearly all Americans will face one way or another. Second - and in human terms more relevant - solving this problem is really about aging with dignity, independence, and choice, which all Americans want regardless of party affiliation. Policymakers who embrace the long-term care challenge and the charge of the new Commission as an opportunity will be rewarded for seeking to rationalize and humanize our current long-term care pseudo-system, which right now is excessively unresponsive and expensive."

LTC Comment: There is very little about which I agree with SCAN president Bruce Chernof, who naively states: "Once individuals find themselves in need of care and have spent out their personal resources to maintain a dignified way of life, Medicaid becomes the payer of last resort, leaving people to rely on it for the rest of their lives." If that were true, everyone would be buying LTC insurance. Nevertheless, Chernof's statement quoted above is right on point. It's exciting that LTC is back on the public policy radar screen. I'm encouraged by the reception my research, analysis and recommendations are receiving. I'm very hopeful this could be the year for a breakthrough.

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1/23/2013, “Medicare, Medicaid fight could take center stage after debt ceiling extension,” by Tim Mullaney, McKnight’s LTC News [link]

Quote: "Long-term care operators have a stake in any changes to Medicare and Medicaid, which together pay for more than 70% of annual long-term care costs, according to the SCAN Foundation."

LTC Comment: The SCAN report referenced here is an eye-opener. But reality is even worse. When you realize that half the 21.9% of LTC costs called "out of pocket" are really just Social Security income of people already on Medicaid, you see that over 80% of LTC expenditures in the US come from sources other than asset spend down. No wonder people are not as worried about LTC risk and cost as they should be; the government pays for the vast majority of expensive LTC. When that stops, as it must, the poor will suffer most; the affluent will pay their own way; spend down of home equity to fund LTC will skyrocket; and demand for LTC insurance will explode. Likely, interest rates will soar around the same time further pinching government budgets and hopelessly undermining Social Security, Medicare, and Medicaid, but unleashing LTCI profitability. Bank on it!

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1/23/2013, “LTC Connection Launches New Product, Offering A ‘Super Simple’ Solution For Selling LTC Policies,” InsuranceNewsNet [link]

Quote: "LTC Connection, the Long-Term Care insurance (LTCi) industry's leading provider of mandatory LTC Certification training has just announced the launch of their newest product, the ‘LTC Super Simple Interview’. Developed by two of the top producers in the LTCi industry, Dr. Stana Martin and Wendy Rinehart, LTC Connection has designed a proven, turn-key way to help producers sell LTC policies."

LTC Comment: Congratulations and good luck with it.

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1/23/2013, “For LTC protection, look to annuities,” by Brad Tisdale, LifeHealthPRO

Quote: "By presenting asset-based long-term care annuities as an option for long-term care protection, you can explain to your clients that the assets they've already accumulated can be leveraged to secure protection for future long-term care expenses. A major point of emphasis and value on these products is that, should long-term care never be needed, the cash value of the annuity is not lost and can be passed along to a beneficiary."

LTC Comment: Hail the hybrids. The more choices for consumers the better.

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1/22/2013, “Women and Social Security Income Planning: The Emerging Opportunity For Niche Financial Advisory Stewardship”, by Martha Shedden, Life & Health Advisor [link]

Quote: "Making a smart Social Security income election decision may be one of the most important financial decisions a woman makes in her lifetime. Since women have longer life expectancies, often marry men older than themselves, and, therefore, are usually the survivor of the two, the Social Security decision has a much greater impact on them."

LTC Comment: It behooves LTCI producers to understand and advise clients about Social Security planning because it parallels LTC planning so closely. Especially for women.

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1/22/2013, “Testing brain pacemakers to zap Alzheimer's damage,” by Lauran Neergaard, Associated Press

Quote: “A dramatic shift is beginning in the disappointing struggle to find something to slow the damage of this epidemic: The first U.S. experiments with 'brain pacemakers' for Alzheimer's are getting under way. Scientists are looking beyond drugs to implants in the hunt for much-needed new treatments.”

LTC Comment: What next?

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1/21/2013, “Listen up: Dementia linked to hearing loss,” by Janice Lloyd, USA Today

Quote: "Cognitive problems developed 30% to 40% faster when hearing declined to 25 decibels - mild hearing loss, according to the research online in the JAMA Internal Medicine."

LTC Comment: Say what?

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1/14/2013, “401(k) breaches undermining retirement security for millions,” by Michael A. Fletcher, Washington Post

Quote: "A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age. More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans. With federal policymakers eyeing cuts to Social Security benefits and Medicare to rein in soaring federal deficits, and traditional pensions in a long decline, retirement savings experts say the drain from the accounts has dire implications for future retirees."

LTC Comment: Translation: expect more truly poor elderly in the future just when government has fewer resources to support them meaning less public funding of LTC, more personal responsibility, and a bigger LTCI market.

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Updated, Friday, January 25, 2013, 11:27 AM (Pacific)

Seattle--

LTC BULLET: LTC GOOD NEWS/BAD NEWS

LTC Comment: 2013 is a year of danger and opportunity for long-term care financing policy. Find out why after the ***news.***

*** ILTCI CONFERENCE: The 13^th Annual Inter-Company Long-Term Care Insurance Conference is coming up March 3 to March 6 in Dallas, Texas. Get all the details and register here: http://www.iltciconf.org/. ***

*** HELP US fight the good fight for rational LTC policy and responsible LTC planning in this critical year of 2013. Join the Center if you’re not a member. Upgrade to Premium Membership, Premium Elite Membership, or Regional Representative status. Encourage your company to become a corporate sponsor of the Center so you get all the benefits of membership at no personal expense and your company gets all the benefits of corporate membership. Find out all you need to know from our “Membership Levels and Benefits” schedule here: http://www.centerltc.com/MembershipLevelsandBenefits.htm. Contact Damon at 206-283-7036 or damon@centerltc.com to join or upgrade quickly and easily. ***

*** 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 junk 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: LTC GOOD NEWS/BAD NEWS

LTC Comment: The American Taxpayer Relief Act of 2012, aka the “fiscal cliff” deal, repealed the CLASS Act and created a 15-member “Long-Term Care Commission” to design a LTC service delivery and financing system for the United States.

The good news is that long-term care is again on the country’s public policy radar screen to a degree we’ve not seen since the Pepper Commission in 1990. The bad news is the same as the good news.

What if the new LTC Commission—three members each to be appointed any day now by the President, the Senate Majority and Minority Leaders, and the House Speaker and Minority Leader—flubs this opportunity, recommends even worse policies than already plague long-term care, and gets them passed?

That’s why the Center for Long-Term Care Reform will keep a close eye on the LTC Commission’s deliberations. We’ll do all we can to bring hard data, thoughtful analysis, and irrefutable logic to its attention. For now, however, here’s another perspective on the good news and bad news about long-term care.

Following is an edited transcript of a speech delivered by Center president Stephen Moses to an audience of leading LTC insurance producers, distributors and carriers at a conference on January 12, 2013 sponsored by Long-Term Care Financial Partners.

Don’t miss the irony in Steve’s speech. The good news for LTC insurance is actually very bad news for the U.S. economy. The only way to reconcile this seeming conflict is to resolve the LTC financing crisis in the right way. That’s exactly what the Center for Long-Term Care Reform will recommend to the LTC Commission.

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“The Good News and Bad News About Long-Term Care”
by
Stephen A. Moses

I have good news and bad news.

I’ll spend one minute on the bad news and the rest of my time on the good news.

The bad news is that all the reasons consumers have been in denial about the risk and cost of long-term care still apply and they are getting worse.

Government programs still pay for most expensive long-term care in the USA.
Government LTC benefits are much easier to get than most people realize.
And the Federal Reserve still forces interest rates to near zero which compels carriers to raise premiums to compensate, making LTCI harder to sell.

OK. So much for the bad news.

Here’s why LTC insurance carriers, distributors and producers are in the catbird seat primed to do well doing good for your clients and for your country.

First of all, everything that makes LTC insurance necessary remains true and is becoming more so. For example:

8,000 Americans turn 65 every day and that will continue for the next 18 years.
70 % of people 65+ will need some LTC and 20% will need 5 years or more
LTC is very expensive: As of 2012, over $80,000 per year for a nursing home; over $42,000 for assisted living; and over $60,000 for a home health aide on a daily 8-hour shift

But we’ve known all that since the inception of LTC insurance in the 1970s. Nothing new there.

So what is new? Why will the LTC insurance market explode within your career horizons and probably during the current four-year presidential term?

In a nutshell, all the obstacles to a strong LTC insurance market are about to come crashing down.

Let me walk you through them one by one.

The demographic bombshell of aging boomers is only now beginning to explode with the first of the 77-million-strong generation becoming fully eligible for Social Security last year and for Medicare the year before.
Government programs funding LTC are like Wylie Coyote in the Road Runner cartoon. They’ve gone over the fiscal cliff still wearing a silly grin, but they’re about to fall like an anvil. Why?
Basic federal government debt is $16.5 trillion, over $52,000 for every man, woman and child in the country. Our debt to Gross Domestic Product ratio is 100 percent. We borrow 42 cents of every dollar the federal government spends. Can you believe that? We go $1 trillion deeper in debt every year. That can’t continue for long.
Medicaid, which crowds out 2/3 to 90% of the LTC insurance market according to Brown and Finkelstein, has a terrible reputation for poor care and is bankrupting the states. Easy access to Medicaid and its big loopholes will end.
Social Security pays for about 13% of LTC through Medicaid spend-through, but Social Security has a $21 trillion unfunded liability. It can’t continue funding LTC.
Medicare pays generously for nursing home and home care which enables LTC providers to survive with most of their patients funded at less than cost by Medicaid. But Medicare has a $39 trillion unfunded liability, so it can’t continue either.
All three – Medicaid, Social Security and Medicare – will be means-tested. That means they’ll be welfare programs, not social insurance, and most middle class and affluent Americans will get less, if anything, from them.
Home equity will become a major source of funding for income security, health care and long-term care in retirement. That’s good for the reverse mortgage business in the short run and for LTC insurance in the long run as more people realize they need coverage to protect their home equity.
65 million Americans are unpaid caregivers, 7 of 10 of whom care for someone over 50 years of age. Those numbers will skyrocket as boomers age.

So what does this mean for you?

We’re about to enter a brave new world of long-term care. Keep doing what you’re doing and before long prospects will be knocking on your door instead of vice versa.

The public’s been asleep about LTC risk and cost because a government safety net has softened the financial consequences of going without LTC insurance since 1965.

As I’ve explained, that’s ending.

Already you see key changes indicating the public is finally getting the message. The age of purchase for LTC insurance has fallen by a decade from late ‘60s to late ‘50s.

You see and hear many more media stories about the risk and cost of long-term care.

Businesses worry more and more about absenteeism and “presenteeism” due to employees caring for elderly parents or worrying about them instead of working. That means you’ll sell many more group and multi-life policies.

Attorneys, financial planners and accountants are getting more questions from their clients about LTC. Just last week an estate planner called me to find out who could help him protect his clients. I referred him to a major distributor.

People are getting scared. They hear the news about the federal debt and deficit and unfunded entitlements. They’re caring for elderly loved ones in huge and rapidly growing numbers. The public programs they’ve relied on no longer instill confidence.

These trends develop slowly over time. They grow and grow like blowing up a balloon. Then they pop and all of a sudden everything is different. That’s what’s going to happen.

You are in the enviable position of being in the right place at the right time. Some of you have been pioneers in long-term care insurance. We know you by the arrows in your backs.

But your time has come now.

Watch for this scenario to play out.

Assuming current government policies stay the same, the American economy will continue to lag.
Domestic and international financial pressures will force interest rates up in spite of the Federal Reserve.
Federal debt service will skyrocket putting more financial pressure than ever on government programs that fund LTC such as Medicaid, Social Security and Medicare.
Policy makers will have no choice but to cut back on benefits, eligibility, and provider reimbursements.
The quality of publicly financed LTC will continue to decline.
It is true already and will be more true in the future that access to quality long-term care at the most appropriate level is assured only to those who can pay privately.

You are the heroes who will show the next generation how to avoid the pitfalls of publicly financed long-term care.

One of the things I love most about speaking with my many friends who have been selling long-term care insurance for two decades or more, is to hear their stories about clients who have gone on claim.

Those clients are so appreciative that they elevate the producers who sold them their policies to the status of demigods. How enormously proud that must make them . . . you . . . feel.

And that’s what the future holds for you if you stay on course. You are the last line of defense between the people you meet and the dismal future that awaits them if you allow their denial about LTC risk to prevail.

So my advice to you is “Go forth with confidence and pride. Know that long-term care insurance is good and people need it. Everyone you protect is one less person to drag down the social safety net for the truly needy.”

Look forward in your own old age to the warm appreciation of all the people you’ve helped. And enjoy your own retirement someday with the windfall of renewals that are coming your way.

Thank you.

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

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Updated, Tuesday, January 22, 2013, 11:32 AM (Pacific)

Seattle--

LTC COMMISSION AND LTC NEWS AND COMMENT

LTC Comment: As always I have my ear to the ground but so far I’ve heard little about appointments to the new “Long-Term Care Commission” created by the American Taxpayer Relief Act of 2012 (ATRA ‘12). Its 15 members are supposed to be appointed by the end of January. The American Academy of Actuaries called for an actuary, specifically Eric Stallard, to be assigned to the Commission and a few rumors about recommendations from Congressional offices have floated. But not much else. Anyone out there know what’s happening? Let us know.

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January 2013, “Medicaid's Role in Meeting the Long-Term Care Needs of America's Seniors [link],” Kaiser Family Foundation

Quote: "Given the high cost of long-term care services, few elderly people can afford these services. For seniors with long-term care needs, Medicaid, as a complement to Medicare, serves as an essential safety net for institutional and community-based services not fully covered by Medicare or private insurance."

LTC Comment: A key principle in economic analysis is the difference between the seen and the unseen. It's easy to see the benefits Medicaid LTC provides to people who take advantage of it. What reports like the one cited here do not identify or explain are the unseen negatives of Medicaid. Medicaid distorts the LTC marketplace in critical ways. Easy access to Medicaid-financed nursing home care crowded out markets for privately financed home care, for home equity conversion to pay for LTC, and for private LTC insurance. The result is our LTC system's institutional bias and over-reliance on a bankrupt welfare program that pays LTC providers less than their cost to deliver the care. Also unmentioned in the article and unseen to most people is that Medicaid is easy to obtain for people with substantial incomes and assets even without legal gaming. Abuse of annuities and promissory notes that we've highlighted recently in Center publications expand Medicaid access even to the rich, but they too go unacknowledged. Ironically, these unseen aspects of Medicaid LTC are ruining Medicaid as a safety net for the poor AND simultaneously inhibiting private insurance as a resource for the middle class and affluent. Double jeopardy. But the Kaiser Family Foundation hides this reality by focusing only on the benefits easily seen and ignoring the critical unseen deficiencies of Medicaid.

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1/19/2013, “Scams targeting veterans on the rise,” by Elliot Raphaelson, Chicago Tribune

Quote: "One scam involves the VA's Aid and Attendance benefit. For certain senior veterans who served during wartime and their spouses, this covers unreimbursed medical expenses and in-home care. In order to qualify, a veteran's assets are considered. While there is no hard and fast limit, generally those with assets of more than $80,000 are excluded. Unscrupulous advisers often make presentations 'educating' seniors who are too well off to qualify about how to reposition their assets using an annuity in an irrevocable trust in order to meet the program's threshold. They tell senior vets that their assets will be safe and will pass to their heirs when they die."

LTC Comment: VA Aid and Attendance (A&A) has no transfer of assets proscription like Medicaid, so advisors meet with families at assisted living facilities to promote the idea of buying an irrevocable annuity to get rid of excess assets. While that works to get A&A, it may disqualify the person for Medicaid. Under consideration now in Congress is a proposal to close the A&A asset transfer loophole.

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1/18/2013, “Saying no to long-term care,” by Jennie Phipps, Fox Business

Quote: "Buying long-term care insurance could do you more retirement planning harm than good, says actuary Anna Rappaport, chair of the Committee on Post-Retirement Needs and Risk for the Society of Actuaries and key author of a new study on retirement security."

LTC Comment: Terrible advice from an actuary who has been touted as an expert at LTC insurance conferences. Her argument against LTCI is exactly why people should buy the product. To wit: "[T]he likelihood you'll need it for a significant period of time is relatively low." When catastrophic risk is not low, it isn't insurable! The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. That's what LTC insurance does and that's why people need it.

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1/17/2013, “Significant Financial Management and Fiscal Challenges Reflected in U.S. Government's 2012 Financial Report [link],” Government Accountability Office

Quote: "The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2012 consolidated financial statements of the federal government because of widespread material internal control weaknesses, significant uncertainties, and other limitations."

LTC Comment: Good grief! The federal government borrows 42 cents of every dollar it spends and the accountants with the green eye shades at GAO can't even figure out where it's going.

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1/16/2013, “Slowly Dying Patients, an Audit and a Hospice's Undoing,” by Randy Dotinga, Kaiser Health News

Quote: "While hospices normally treat patients with fewer than six months to live, San Diego Hospice often served people who had much more time left. . . . Across the country, hospices with generous admissions policies may find themselves on life support too. Medicare, which heavily funds hospice programs, is cracking down on the industry's growing habit of embracing those whose deaths aren't imminent."

LTC Comment: More evidence that government is, and will have to continue, cutting back on benefits that have—for decades—softened the financial blow of critical illness and long-term care. As this reality penetrates the public consciousness, demand for LTCI and CI coverage will increase proportionately.

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1/16/2013, “Alzheimer's breakthrough: Vaccine may be on its way, researchers say [link],” by Tim Mullaney, McKnight’s LTC News

Quote: "Researchers say they've made a major breakthrough in the effort to develop an Alzheimer's disease vaccine. . . . News of the potential vaccine breakthrough comes shortly after a government panel delivered recommendations to the Advisory Council on Alzheimer's Research, and outlined ways to improve long-term care for individuals with dementia. The panel said the Centers for Medicare & Medicaid Services should work with Congress to update Medicare coverage to enable more comprehensive care for those with Alzheimer's or other types of dementia."

LTC Comment: Even as the government ratchets back hospice care (see preceding item), a "government panel" urges more Medicare coverage for dementia care. One foot on the brake; the other on the gas pedal. Typical of government’s choppy LTC policy.

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1/15/2013, “Creating Realistic Long-Term Care Solutions as Part of the Entitlement Reform Debate [link],” Health Policy Forum

Quote: "Today, Americans who want to plan for their needs as they age have few viable options. The current private long-term care insurance market is effectively broken, as it has never held more than 10 percent of the potential market and many insurers have stopped offering these policies altogether. Reasons for lack of uptake are many: lack of public understanding and interest, high monthly premiums, and underwriting standards that make it difficult to qualify for coverage."

LTC Comment: This ridiculous statement by SCAN president Bruce Chernof displays a gross misunderstanding of private long-term care insurance. Government policies cause the low take-up of LTCI, including easy access to public financing after LTC is needed and Federal Reserve measures that force interest rates to levels that obviate the possibility of profit. Hopefully, we can wake the new LTC Commission up to the real problems with LTC financing before they undertake another misguided initiative like CLASS.

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1/15/2013, “Advanced Resources Marketing, a leader in Long-Term Care Insurance announces New Office in Florida [link],” by Aria Munro, eNewsChannels

Quote: "Advanced Resources Marketing (ARM), one of the country's largest distributors of Long Term Care Insurance (LTCi) announced today the opening of a satellite distribution office in Tampa, Fla. This location joins the main office in Boston, and satellite offices in Merion Station, Pa., and McLean, Va., as a growing part of ARM's distribution network."

LTC Comment: Hearty congratulations to Joe Pulitano, Henrik Larsen and their team at ARM, a Bronze-level corporate member of the Center for LTC Reform.

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1/14/2013, “Medicaid eligibility changes affect thousands,” by Anna Oakes, Watauga Democrat

Quote: "Thousands of residents in adult-care facilities across the state, including the elderly, persons with mental illness and adults with developmental disabilities, could soon be forced to move as a result of new Medicaid eligibility rules. Effective Jan. 1, the state requires persons who are reimbursed by Medicaid for personal care services to need limited hands-on assistance with at least three of five qualifying daily living activities: eating, dressing, bathing, toileting and mobility. Persons can also qualify if they need assistance with two of those activities in which one requires extensive assistance. The change raised the bar on eligibility requirements - prior to Jan. 1, adult-care home residents qualified for the Medicaid reimbursement if they needed assistance with one daily living activity."

LTC Comment: Another state Medicaid program (North Carolina following Minnesota’s lead) goes to a three-ADL trigger for Medicaid LTC assistance. Because states cannot restrict Medicaid eligibility based on financial resources due to the Maintenance of Effort rule in ObamaCare, they turn to higher restrictions based on medical need or disability. This has the effect of denying assistance to the poor who desperately need help while still allowing people with higher income and assets to get the care they could have paid for themselves assuming they also meet the 3-ADL standard.

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1/14/2013, “In the Index of Economic Freedom, Liberalization Slips,” by Terry Miller, Wall Street Journal

Quote: "The foundations of economic freedom are weakening around the world, according to the 2013 Index of Economic Freedom, published today by the Heritage Foundation and The Wall Street Journal. Particularly concerning are the rise of populist 'democratic' movements that use the coercive power of government to redistribute income and control economic activity. . . . Surprisingly, ailing Europe made the most progress last year, while the average economic-freedom score world-wide increased only a 10th of a point. The threat of imminent collapse in the euro zone has prompted some serious efforts to rein in government spending and taxation. Leading the way in Europe are those countries that know firsthand the ravages of socialism. Georgia, a former Soviet republic, showed the most improvement in the 2013 index, with Estonia and Poland not far behind. Even Sweden, the former poster child for democratic socialism, has adopted more market-oriented policies promoting economic freedom. . . . The United States, ranked only 10th most free in the world this year, joins Ireland as the only advanced economies to have lost economic freedom five years in a row."

LTC Comment: Ominous trend.

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1/14/2013, “MedPAC calls for permanent reauthorization of Medicare Advantage plan covering nursing home residents [link],” by Tim Mullaney, McKnight’s LTC News

Quote: “The Medicare Advantage special needs plan that enrolls nursing home residents, set to expire at the end of 2014, will be permanently reauthorized if Congress acts on recommendations proposed by the Medicare Payment Advisory Commission (MedPAC). . . . Dual-eligible issues are of interest to long-term care operators, as LTC services account for a majority of the $150 billion in Medicaid spent on duals, a recent report showed.”

LTC Comment: Dual eligibles (people on Medicare and Medicaid) are hugely expensive. Great effort is being made to manage their care more efficiently and cost-effectively. As important, but unaddressed, are ways to prevent people from becoming Medicaid eligible (hence a dual because most are already on Medicare) in the first place. That’s the focus of our report titled “Briefing Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the ‘Doc Fix’”: www.centerltc.com/BriefingPapers/5.htm -- (PDF for print).

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1/13/2013, “Documenting a Generation's Fall,” by Michael Winerip, New York Times

Quote: "One of the lasting effects of the Great Recession has been the economic spiral downward of the American middle class, and no group has been harder hit than the boomer generation, men and women in the prime of their working lives."

LTC Comment: The more this message permeates the media, the more people will realize they're on their own, cannot count on the entitlement safety net, and need to insure privately against growing risks.

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1/13/2013, “Genworth Stock Downgraded on Long-Term Care Insurance Risks [link],” by Jason Oliva, Senior Housing News

Quote: "Genworth Financial (NYSE: GNW) saw its stock rating downgraded from ‘Neutral’ to ‘Underperform’ this week in a report from global financial services company Credit Suisse, related to continued uncertainty in the long-term care insurance industry. The downgrade comes following the recent rally in shares reached in late July to early August of more than 100% and over 50% since mid-November and reflects risks Genworth faces in its long-term care insurance business."

LTC Comment: Another blow to LTCI’s investment reputation which will soar again when economic gravity finally takes hold, interest rates shoot up, and public confidence in government LTC programs plummets.

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Updated, Friday, January 18, 2013, 10:47 AM (Pacific)

Seattle--

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2011 DATA UPDATE

LTC Comment: Heads up! We're about to explain why long-term care insurance sales have disappointed, why people don't "use their homes to stay at home" and why LTC providers who depend on public financing are at risk.

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2011 DATA UPDATE

LTC Comment: Once a year around this time the Centers for Medicare and Medicaid Services (CMS) report health care expenditure data for the latest year of record. Recently, CMS posted 2011 statistics on its website at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.

The current issue of Health Affairs (Vol. 32, No. 1, pps. 87-99) contains a summary and analysis of the new data titled “National Health Spending in 2011: Overall Growth Remains Low, but Some Payers and Services Show Signs of Acceleration." Registered subscribers to Health Affairs can access the full text of that article online at http://content.healthaffairs.org/content/32/1/87.full.

Note that CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding for example Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities. This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40% in 2008 to under one-third (32.8%) in 2009. CMS also created a new category called "Other Third Party Payers" (7.1%) which includes "worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health." For definitions of all NHEA categories, see http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.

Following is our annual analysis of the new nursing home and home health care data.

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"So What If the Government Pays for Most LTC?, 2011 Data Update"
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care? Read on.

America spent $149.3 billion on nursing facilities and Continuing Care Retirement Communities in 2011. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 41 years (from 26.8% in 1970 to 56.1% in 2011, up 29.3 % of the total) while out-of-pocket costs have declined (from 49.5% in 1970 to 26.7% in 2011, down 22.8% of the total). Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 15.

SO WHAT? Consumers' liability for nursing home and CCRC costs has declined by 46% in the past four decades, while the share paid by Medicaid and Medicare has more than doubled, up 109%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts up to $802,000 of home equity. No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home care (30.9% of the dollars in 2011), it covers two-thirds of all nursing home residents. Because people in nursing homes on Medicaid tend to be long-stayers, Medicaid pays something toward nearly 80 percent of all patient days.

SO WHAT? Medicaid pays in full or subsidizes almost four-fifths of all nursing home patient days. If it pays even one dollar per month (with the rest contributed from the recipient's income), the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes are facing insolvency all around the United States when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care.

Don't be fooled by the 8.3% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2011. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because most LTCI policies pay beneficiaries, not nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments because private payers are paid by their LTC insurance policies and then they write the checks to the nursing homes. This fact further inflates the out-of-pocket figure artificially.

How does all this affect assisted living facilities? ALFs are 80% private pay and they cost an average of $42,600 per year (Source: 2012 MetLife survey here). Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $536,000 or $802,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

SO WHAT? For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid's income contribution requirement is usually much less expensive than paying the full cost of assisted living.

No wonder ALFs are struggling to attract enough private payers to be profitable. No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care. This problem has been radically exacerbated in recent years because more and more state Medicaid programs are paying for assisted living as well as nursing home care, which makes Medicaid eligibility more desirable than ever.

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $74.3 billion on home health care in 2011. Medicare (44.2%) and Medicaid (37.1%) paid 81.3% of this total and private insurance paid 6.9%. Only 7.6% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 14.

SO WHAT? Only one out of every 13 dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care.

Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in denial about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.

The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care. For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;

"The LTC Graduate Seminar Transcript" at http://www.centerltc.com/members/LTCGraduateSeminarTranscription112712.pdf (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel: Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some small steps toward addressing these problems. A cap was placed on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. He is the author of the study "Aging America's Achilles' Heel: Medicaid Long-Term Care," published by the Cato Institute (www.cato.org). Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, January 14, 2013, 11:58 AM (Pacific)

Seattle--

LTC NEWS AND COMMENT

LTC Comment: Finally, long-term care policy is back in the national spotlight. Well, maybe “spotlight” is too grandiose, but the new LTC Commission created by the American Taxpayer Relief Act of 2012 at least shines a flashlight on our issue. The Commission’s members will be appointed by the end of this month and it’s mandated to report within six months. Already think tanks and lobby groups are lining up their intellectual and financial firepower to influence the Commission. Your Center for LTC Reform will present the case for responsible LTC planning and rational, market-based policy. Let the games begin!

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1/8/2013,: “House GOP Members Probe Medicaid Eligibility Problems in the States, by Jane Norman, CQ HealthBeat (gated)

Quote: “As Congress sharpens its focus on deficit reduction and health care spending, some GOP members of Congress are taking a fresh look at how people shelter their assets in order to qualify for Medicaid long-term care. The move revives a long-running debate over whether Medicaid should be regarded as a middle-class entitlement or an assistance program for the truly needy. It also raises the question of whether 2005 changes in the law were effective in ensuring that people with enough money to afford nursing home care couldn't game the system.”

LTC Comment: Following is my email to the author of this article. Last Friday's LTC Bullet compiled and analyzed in greater detail the Governors' responses to this Congressional inquiry about Medicaid estate planning abuses.

“Dear Ms. Norman: Thanks for an excellent article on the Medicaid planning issue (and for citing my 2011 Congressional testimony). A key point often missed is that, as egregious as the strategies cited in your article are, the far bigger problem is that, contrary to conventional wisdom that ‘individuals over 65 generally qualify for Medicaid long-term care if they have assets of less than $2,000 and an annual income of less than 74 percent of the federal poverty level,’ the reality is very different. Income rarely obstructs Medicaid LTC eligibility. It happened only twice in the history of the Rhode Island Medicaid program as I reported in a study recently: “Doing LTC RIght.” Medicaid exempts not only home equity (up to $802,000 in some states) but also, in unlimited amounts, one business, one car, prepaid burial expenses, term life insurance, personal belongings and IRAs. This is why so few people plan for LTC costs and so many end up dependent on Medicaid, leaving that program a poor safety net for the truly needy. I'll attach my professional bio. Let me know if I can help when you write on this topic in the future. Regards, Steve Moses.”

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1/11/2013, “Rob Cohen Joins LTC Global, Inc. as Agency Sales Executive,”

Quote: "LTC Global, Inc., a leading national distributor of senior market insurance products, today announced that Rob Cohen has joined LTC Global's main insurance agency subsidiaries, ACSIA Long Term Care, Inc. (ACSIA) and United Insurance Group Agency, Inc. (UIG), as Executive Vice President - Sales. In his new role, Cohen will manage the agent sales forces of ACSIA and UIG."

LTC Comment: Congratulations to Rob Cohen and LTC Global.

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1/9/2013, “Beta blockers could reduce risk of Alzheimer's, study indicates,” McKnight’s LTC News [link]

Quote: "Men taking beta blockers to treat high blood pressure may also be benefiting from an unintended side effect: a reduced chance of brain changes associated with Alzheimer's disease."

LTC Comment: Cardio-vascular serendipity.

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1/9/2013, “Even Fewer Geriatricians in Training,” by Paula Span, New York Times

Quote: "The number of doctors enrolling in the nation's fellowship programs to become geriatricians has dropped again, to 251 this year from 279 last year. . . . People who think about medical education have essentially given up on trying to train enough geriatricians to care for the expanding over-70 population - 36,000, by one estimate. We're simply too far in the hole, with fewer than 7,000 and falling.”

LTC Comment: We’ve warned about the forthcoming shortage of geriatricians for many years. Unfortunately, it’s too late now to fix the problem before it becomes a crisis.

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1/9/2013, “Alliance Seeks to Ease Shift to Senior Living and Long-Term Care,” PRNewswire [link]

Quote: "Today LTC Financial Partners, LLC (LTCFP) announces an alliance with Alternatives for Seniors, the leading senior housing and services online directory."

LTC Comment: Congratulations, LTCFP.

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1/8/2013, “Long-term care: 'The real cap will be £200,000, not £75,000',” by Chris Horlick, The Telegraph

Quote: "We are delighted that Andrew Dilnot's proposals have stimulated a debate about how care should be funded. This is particularly important for the 41pc of elderly people in the care system who are 'self-funders' because they have over £23,250 in assets including property (the limit in outside England; the rules are different elsewhere). Many are not very wealthy yet they are, in my opinion, among the most overlooked and underserved in the care system."

LTC Comment: England considers capping private LTC costs at around $120,000 with government picking up costs over that amount in hopes that a private insurance market will grow to pick up the capped upfront amount. That approach has been proposed here in the USA before and will likely be one of the ideas recommended again by the new LTC Commission created by the American Taxpayer Relief Act of 2012 (the fiscal cliff deal). One more reason to keep a close eye on that new LTC Commission.

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1/7/2013, “Long Term Care Insurance Association Website Achieves Milestone,” by Jesse Slome, ExpertClicks [link]

Quote: "More than half a million individuals visited the website of the American Association for Long-Term Care Insurance in 2012, a significant increase over the prior year according to the industry trade group. 'I think people are finally getting the message that planning for the eventual risk of needing long term care is essential,' declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national industry trade group headquartered in Los Angeles. ' As a result, more individuals than ever are seeking information on how insurance works, how much to buy and ways to reduce the cost of this important protection.'"

LTC Comment: Proof that interest in private LTC insurance is growing even as the public’s confidence in government safety net programs declines.

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1/7/2013, “Growth of Health Spending Stays Low,” by Robert Pear, New York Times

Quote: "National health spending climbed to $2.7 trillion in 2011, or an average of $8,700 for every person in the country, but as a share of the economy, it remained stable for the third consecutive year, the Obama administration said Monday. . . . Kathleen Sebelius, the secretary of health and human services, said that 'the statistics show how the Affordable Care Act is already making a difference,' saving money for consumers. But a report issued by the Centers for Medicare and Medicaid Services, in her department, said that the law had so far had 'no discernible impact' on overall health spending."

LTC Comment: To explain the latest available data, we'll publish our annual LTC Bullet titled "So What If the Government Pays for Most Long-Term Care?" on Friday.

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1/7/2013, “Leading Long Term Care Insurance Distributors Announce Merger,” by National LTC Network, HeraldOnline [link]

Quote: "The National LTC Network is pleased to announce the merger of two of its member firms' Long Term Care insurance brokerage operations. Effective January 1, 2013, Individual Commercial Brokerage, Inc. (ICB) and Gelbwaks Executive Marketing Corp. (GEM) are combining their two award-winning and nationally-recognized operations."

LTC Comment: Congratulations to both industry stalwarts and Center supporters.

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1/7/2013, “Long-Term Care Plan Gets Thrown Off the Fiscal Cliff,” by Mike Anthony, MedicaidPlanning.org

Quote: "Without the benefit of a guaranteed-issue government insurance, seniors face their own Fiscal Cliff. The only way for the uninsured to protect themselves is to seek refuge under Medicaid, but many don't know how to minimize the sting of the Medicaid spend down. . . . With the absence of the CLASS Act, Medicaid Planning becomes all the more essential." [Emphasis in the original]

LTC Comment: This is how LTCI's competition in the Medicaid planning bar is playing the fiscal cliff deal and the demise of CLASS. Boils the blood!

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1/6/2013, “Deadbeat Illinois: Long-term care facilities feel state budget pinch,” by Kevin Haas, State Journal-Register [link]

Quote: "Organizations that provide long-term care for the elderly in Illinois operate in a kind of business limbo, unsure of when they'll receive from the state the Medicaid reimbursements they rely on to keep their doors open. Right now, the payment backlog is about six months, forcing organizations to find creative ways to manage without half of the annual revenue that finances care for two-thirds of patients in nursing homes and about 60 percent of those in assisted-living centers."

LTC Comment: Expect more reports like this one in more states. We saw this coming when we published the “Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois” way back in 1995.

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1/6/2013, “Use Health Savings Account to Pay Long Term Care Insurance Costs,” by Jesse Slome, ExpertClicks [link]

Quote: "The 14 million American individuals who have health savings accounts were encouraged to use this benefit to pay for long-term care insurance protection."

LTC Comment: HSAs solve the acute health care financing challenge and they could go a long way toward solving the LTC financing challenge.

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1/5/2013, “Social Security: It's Worse Than You Think,” by Gary King and Samir S. Soneji, New York Times

Quote: "[T]he Social Security Administration underestimates how long Americans will live and how much the trust funds will need to pay out - to the tune of $800 billion by 2031, more than the current annual defense budget - and that the trust funds will run out, if nothing is done, two years earlier than the government has predicted."

LTC Comment: Worse news, of course, is that there is nothing in the Social Security “trust fund” in the first place. All that money has already been borrowed and spent by the federal government. All that’s in the trust fund is IOUs from Uncle Sam who is already borrowing 42 cents of every dollar he spends. Sam’s not a rich uncle; he’s a poor relative.

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12/28/2012, “China requiring people to visit their aged parents,” Associated Press

Quote: "Visit your parents. That's an order. So says China, whose national legislature on Friday, Dec. 28, 2012 amended its law on the elderly to require that adult children visit their aged parents ‘often’ - or risk being sued by them.”

LTC Comment: Talk about "filial responsibility"!

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12/2/2012, “New Limits on Veterans Pension Benefits,” Marshall Elder and Estate Planning Blog

Quote: "There is even more bad news on the way for future pension claimants. Veterans can expect the next Congress to pass new legislation that will penalize veterans who have made gifts that reduced their net worth. See my earlier blog post GAO recommends changes to VA Pension Eligibility Rules for more about these proposed transfer penalties. These changes will make it both more complicated and more difficult for veterans to claim pension benefits. The Government is looking to reduce the growing cost of benefit programs, and many older veterans will feel the effects."

LTC Comment: This blog post by an elder law attorney explains how the VA is clamping down on veterans benefits including the likely requirement of a transfer of assets penalty for "aid and attendance" similar to the one that applies to Medicaid LTC eligibility. Just one more reason veterans should not rely on the VA for future LTC expenses. See dozens more such reasons in The Zone here: “Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care [link].”

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Updated, Friday, January 11, 2013, 11:00 AM (Pacific)

Seattle--

LTC BULLET: STATES DECRY MEDICAID LTC LOOPHOLES

LTC Comment: State Governors complained about egregious Medicaid LTC loopholes in replies to a Congressional inquiry. Details after the ***news.***

*** LTC COMMISSION: The “American Taxpayer Relief Act of 2012,” aka the “fiscal cliff deal,” was signed by President Obama on January 2. It creates a “Commission for Long-Term Care” comprised of 15 members to be appointed by the end of January who are mandated, within six months, “to develop 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 [LTC] for individuals in need of such services and supports, including elderly individuals, individuals with substantial cognitive or functional limitations, other individuals who require assistance to perform activities of daily living, and individuals desiring to plan for future long-term care needs.” The “Mission Impossible” theme plays relentlessly in my head, but, hey, at least LTC is getting some high level attention and, as we’ve said before, 2013, as the first year of a new Congress and a new presidential term, bodes well for potential LTC policy reform. At a minimum, the LTC Commission should address the outrageous misuse of Medicaid highlighted in today’s LTC Bullet. The Center for LTC Reform will redouble our efforts on behalf of responsible long-term care planning and rational LTC public policy. We’ll make sure our analysis and recommendations reach the LTC Commission early and often.”

*** CONGRESSIONAL QUARTERLY ON MEDICAID PLANNING ABUSE: “House GOP Members Probe Medicaid Eligibility Problems in the States,” by Jane Norman, CQ HealthBeat Associate Editor in the Jan. 8, 2013 edition of CQ HealthBeat News describes Governors’ replies to a Congressional inquiry regarding Medicaid planning. The online version is only for subscribers, but today’s Bullet contains much of the same information. Quotes from the article: “As Congress sharpens its focus on deficit reduction and health care spending, some GOP members of Congress are taking a fresh look at how people shelter their assets in order to qualify for Medicaid long-term care. The move revives a long-running debate over whether Medicaid should be regarded as a middle-class entitlement or an assistance program for the truly needy. It also raises the question of whether 2005 changes in the law were effective in ensuring that people with enough money to afford nursing home care couldn’t game the system.” “Stephen A. Moses of the Center for Long-Term Care Reform . . . said that there are too many exemptions and ‘income almost never disqualifies anyone for Medicaid long-term eligibility.’” ***

LTC BULLET: STATES DECRY MEDICAID LTC LOOPHOLES

Highlights:

North Dakota: A couple with $700,000 in liquid assets qualified for Medicaid LTC by purchasing a more expensive house and car and buying an annuity while receiving $8,000 per month of income from pensions, Social Security, annuity payments and oil lease money. Another couple had more than $528,000, but qualified when the community spouse bought a new home, a new car, and two annuities worth $240,000 and then applied for Medicaid to pay the institutionalized spouse’s nursing home costs.

Wisconsin: An ill spouse transferred $600,000 to the community spouse who refused to sign the Medicaid application making the ill spouse eligible for Medicaid LTC because “interspousal transfers are not considered divestment.”

New York: Using promissory notes, immediate annuities, and spousal refusal, affluent Medicaid LTC applicants qualify while retaining unlimited assets. Even when the state has legal recourse: “Medicaid does not have sufficient resources to pursue all these cases in court.”

Rhode Island: A couple with $400,000 in a bond account became eligible in a month by purchasing “a large single premium immediate annuity.” A single man transferred $100,000 to his son but dodges half the transfer of assets penalty using a promissory note to carry out a reverse half-a-loaf strategy.

Virginia: A man bought a $900,000 annuity in his wife’s name which paid her $89,000 per month, but “the Virginia Medicaid program could not count this income for purposes of determining the husband’s Medicaid LTC eligibility.”

Read the answers to question #4 below for more examples of how the wealthy qualify for Medicaid LTC benefits without spending down personal wealth.

LTC Comment: In LTC Bullet: The Medicaid Long-Term Care Reform Act of 2012 (October 5, 2012), we described legislation introduced by Congressman Charles W. Boustany, Jr., MD (R, LA) and others that called for the study and reform of Medicaid LTC eligibility and estate recovery rules.

In the same Bullet, we reported that the bill’s sponsors had sent a letter to state Governors asking their opinion of the proposed legislation and requesting their replies to four key questions about the appropriate role of Medicaid long-term care financing.

Despite prodding from the members of Congress, only 15 states replied to their letter. But in those 15 replies, there is strong evidence that Medicaid eligibility and estate recovery rules are subject to frequent and egregious abuses.

Following are typical replies to each of the four questions:

1. Should the federal government give states greater flexibility to consider assets, including substantial home equity, when determining eligibility for long-term care coverage through the Medicaid program? Why or why not?

New Mexico Governor Susana Martinez: “I agree that alternate policy options should be pursued to prevent state Medicaid programs from becoming the default financier of long-term care services for middle income individuals, and to protect the program as a safety net for those who need it most.”

Wisconsin Department of Health Services Secretary Dennis G. Smith [Smith was Director of Medicaid at the federal Centers for Medicare and Medicaid Services (CMS) for eight years during the George W. Bush administration]: “Greater flexibility should be provided to states regarding Medicaid eligibility policies, including which assets should be considered for purposes of determining medicaid eligibility. Increased flexibility will allow states to adopt changes to their Medicaid programs in order to help ensure the long-term sustainability of such programs for their residents most in need of government assistance.”

Pennsylvania Department of Public Welfare Secretary Gary D. Alexander: “States should be given more flexibility to determine asset limitations for Medicaid long-term care program eligibility. The economic climate of states varies, as does their ability to raise revenues. What makes sense in one state may not make sense in another. A $525,000 home exemption, while better than the prior limitless exemption, does not address the needs of state that are struggling to provide services to those who do not have sufficient asset reserves. States should have the flexibility to adjust asset limitations based upon their individual needs.”

Maine Governor Paul R. LePage: “Yes, we believe that States should be given greater flexibility to consider assets.

Medicaid requires that we deny eligibility for Long Term Care (LTC) if the individuals equity interest in their primary residence exceeds $525,000. This appears to be an extremely high threshold.
Medicaid regulations should not allow the exemption of a primary residence when it is determined that the individual is institutionalized and will not be able to return to the home. . . .
Federal regulations make it too difficult to administer transfer of resource penalties for individuals that do not meet the institutional level of care. . . . Regulations should be simplified so that States can deny Medicaid to all people who have transferred resources to become eligible for Medicaid, not just for institutional level of care.”

New York Deputy Secretary for Health James E. Introne: “For states that are tied to the resource rules of the Supplemental Security Income (SSI) program, federal Medicaid policy should be developed separately for the treatment of annuities, promissory notes and individual retirement accounts. These assets are most commonly encountered in Medicaid and yet the rules regarding their treatment as an asset is dependent on the rules of the SSI cash program.”

Tennessee Deputy Director of Policy and Research Beth Tipps in the office of Governor: “Taking substantial home equity and other assets currently exempt under the law into account in determining eligibility for Medicaid reimbursement of LTC would result in fewer people with substantial means qualifying for Medicaid-reimbursed LTC until such time that those assets have been exhausted, and target Medicaid reimbursement to those with the greatest financial need. The effectiveness of any such policy would also likely require adjustments to the look-back period for asset transfer.

“Persons who want to protect assets would still be able to purchase a LTC Partnership policy and protect assets up to the value of private insurance benefits provided. This would encourage those who can afford LTC insurance to purchase it in order to protect assets, and decrease dependency solely on Medicaid for payment of LTC.”

Virginia Secretary of Health and Human Resources William A. Hazel, Jr., MD: “Giving states flexibility to change eligibility rules and expanding LTC insurance coverage options for middle income individuals will help to protect Medicaid LTC as a safety net for the low income Americans who need it most.”

“Under current federal requirements, states must exclude, at a minimum, approximately $500,000 in home equity when determining the eligibility of an individual for Medicaid LTC. If a qualifying individual (e.g. a spouse or dependent child) is living in the house, the home equity exclusion can be even higher. Virginia believes, in general, that states should have greater flexibility to determine the level of assets can have and still be eligible for Medicaid LTC.”

“Currently, the repeal of the federal MOE provision would likely be the single most effective way of providing Virginia with the flexibility needed to reform LTC eligibility requirements and eliminate several loopholes that allow individuals to shelter assets from the Medicaid program. These loopholes allow individuals to shelter even more assets than those allowed under the home equity exemption and still qualify for Medicaid LTC.

Georgia Governor Nathan Deal: “Federal restrictions fail to recognize significant variation across states. Home values, household incomes, cost of living, demographics, and cost of health care are factors that determine eligibility but are widely different from place to place. States are better suited to establish criteria which ensure their safety net programs better serve those for which it is intended.”

2. Please provide examples of barriers to effective Medicaid estate recovery programs and tools that might help states in this area.

North Dakota Human Services Department Interim Executive Director: “State Medicaid programs have, by default, become the major form of insurance for long-term care. Medicaid estate planning has increasingly become a way for middle income Americans to impoverish themselves to the point that they can become eligible for Medicaid. The current system is consuming both state and federal budgets and is unsustainable. It is imperative that states have the flexibility to pursue creative and innovative options for state-appropriate solutions.”

Wisconsin Department of Health Services Secretary Dennis G. Smith: “There has been an increase in the number of beneficiaries age 65 and older seeking disability determinations solely to place excess assets into . . . pooled trusts. The trusts are preventing the state from recovering medicaid costs in certain cases, and the extra requests for disability determinations from persons over age 65 are straining the state’s resources.”

“The prohibition against filing a TEFRA lien prior to the outcome of a fair hearing has been increasingly problematic because beneficiaries or their responsible parties postpone hearing dates while attempting to sell the home. When the home eventually sells prior to the hearing, no lien can be placed because the beneficiary is no longer the owner. Many beneficiaries then seek a determination of disability and, if granted, the sale proceeds are placed into a . . . pooled trust and not available to pay for the cost of care which then continues to be borne by Medicaid.”

Pennsylvania Department of Public Welfare Secretary Gary D. Alexander: “The underlying policy debate on estate recovery involves the very character and purpose of Medicaid. Should the Medicaid long-term care program be a strictly needs-based program for individuals who have no ability to pay for their own care? Or should middle class individuals and couples be permitted to qualify for benefits without losing the ability to transfer wealth to their children? When the economy falters, allowing the latter to occur places an increasing amount of stress on limited human services budgets and requires policymakers to consider service reductions.”

Hawaii Governor Neil Abercrombie: “When a Medicaid recipient dies while having only a life estate interest in the property, the lien that was on the property must be released which results in the loss of revenue. The federal statute should be amended to allow recovery of up to the value of the life estate at the time of the recipient’s admission to the facility.

“Reverse mortgages are an emerging area of concern. Families are beginning to draw out the equity in property before they have to pay back the lien. By leaving little, if any, equity in the property prior to having to repay the lien, families are effectively diverting this asset from its intended use as a means to repay the government. We believe that this should be considered a fraudulent diversion of assets, and states may have to file a civil fraud complaint to recoup this money.”

“Currently, there are loopholes because there is no definition of the term ‘medical institution.’ There are certain types of facilities that are not considered ‘medical institutions’ for the purposes of placing a lien. The term ‘medical institution’ needs to be better defined in the federal statute. An example of this is a Residential Alternative Community Care facility.”

“There are no standards or guidelines regarding whether or not a lien remains on a property held in joint tenancy. When the Medicaid recipient passes away, is the lien extinguished or does it continue even though the property transferred to the surviving joint tenant? Perhaps the federal statute should be amended to allow liens to continue on real property held in joint tenancy after the Medicaid recipient passes away.

“Some families don’t report the death of the medicaid recipient in a timely manner. Perhaps there needs to be a requirement for the families to report the death of the Medicaid recipient within a certain time frame. The delay in the reporting is potentially costing the state millions of dollars.”

“By amending the federal statute to include property held ‘just prior’ or ‘immediately prior’ to death, real property held as a life estate or held in joint tenancy would be included in a Medicaid recipient’s estate.”

New York Deputy Secretary for Health James E. Introne: “Although states are required by federal statute to pursue estate recovery from all real and personal property and other assets within an individual’s estate as provided by State law, states have the option of expanding the probate definition of estate to include any other real and personal property and other assets in which the individual had any legal title or interest at the time of death. If the option to expand the probate definition of estate for Medicaid estate recoveries were a mandate, rather than an option, all states would be participating equally in the effort to decrease Medicaid spending.”

Rhode Island Governor Lincoln D. Chaffee: “Medicaid estate recovery programs are problematic because of legal options allowable under current State and Federal laws. People are currently able to find refuge for assets in the form of life estates or promissory notes.”

“The federal government should not allow for the use of ‘Lady Byrd’ deeds; life estate with special powers; or enforced life estate deeds. Currently, CMS does not consider the use of such deeds to be a transfer of a resource because the transferor retained the right to ‘sell, mortgage, hypothecate, etc.’ Medicaid, however, cannot recover from an estate when such a deed has been executed. Therefore, homes or former homes may not be considered assets under probate when the life estate holder dies and subsequently the State cannot recover monies spend for medical costs.”

Tennessee Deputy Director of Policy and Research Beth Tipps in the office of Governor: “Estates must include real and personal property and other assets in an estate as defined in state probate law. At the option of the state, however, recoverable assets also may include any other real and personal property, annuities, and other assets in which the person has legal title or interest at the time of death, including assets conveyed to a survivor, heir, or through assignment through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangements. Thus, assets (i.e., living trusts, life insurance policies, and certain annuities), which may pass to heirs outside of probate, would only be subject to Medicaid recovery if a state expanded its definition of ‘estate.’ These are the vehicles often used by Medicaid Estate Planners to help people with more substantial wealth protect assets while still qualifying for Medicaid reimbursement of LTC.”

Virginia Secretary of Health and Human Resources William A. Hazel, Jr., MD: “In addition to Virginia’s current broad estate recovery authority, we are considering several other measures to increase recovery efforts, but these are currently stalled due to the Affordable Care Act (ACA) maintenance of eligibility (MOE) provision which precludes more restrictive eligibility policy for adults enrolled in Medicaid until at least 2014.”

3. Should state and federal governments encourage middle-income Americans to anticipate and plan for their future long-term care needs, instead of relying on Medicaid, a safety net for the poor? Why or why not?

New Mexico Governor Susana Martinez: “Current policies have transformed the Medicaid long-term care program from a safety-net for the financially and medically needy to an entitlement for middle-income individuals, essentially changing its original scope and intent. Estate planning for Medicaid discourages individuals from engaging in meaningful financial planning that would enable them to take greater personal responsibility for their future long-term care needs.”

North Dakota Human Services Department Interim Executive Director: “The current lack of limitations on estate planning virtually eliminates incentives for individuals to plan for their own future needs. While the long-term care partnership act was enacted to encourage couples to plan for their long-term care needs, the interpretation of the Medicaid act to allow people to shelter an increasing number of assets makes the allowances found in the long-term care partnership act a less desirable option to assist a couple in retaining their assets.”

Wisconsin Department of Health Services Secretary Dennis G. Smith: “Wisconsin supports collaboration between states and the federal government in order to encourage all Americans to anticipate and plan for their future long-term care needs. Placing greater emphasis on future planning, coupled with changes to eligibility requirements in order to ensure that only those individuals who are in fact financially eligible for Medicaid receive such coverage, will contribute greatly to ensuring the long-term sustainability of Medicaid programs.”

Maine Governor Paul R. LePage: “People would be more inclined to purchase LTC plans if there were tighter rules around transfers and greater incentives to purchase such policies.”

Rhode Island Governor Lincoln D. Chaffee: “Yes; using Medicaid as the primary source of funding for long-term care is not sustainable.”

Virginia Secretary of Health and Human Resources William A. Hazel, Jr., MD: “State and federal governments should encourage middle income Americans to anticipate and plan for their future LTC needs. Current reliance of Americans on Medicaid financing for their LTC is simply not sustainable. The Medicaid program is intended to be a payer of last resort; a safety net for the truly needy. Allowing individuals who can afford to buy LTC insurance to accumulate assets and shield those assets, enabling them to qualify for a program intended to serve individuals with very low income, is wrong.”

Georgia Governor Nathan Deal: “Encouraging all Americans to plan for their future needs is critical to ensuring our Medicaid program is able to serve the most vulnerable citizens for which it is designed. Personal responsibility is fundamental. . . . The Medicaid program is a ‘welfare’ or ‘poverty’ program which was established as a safety net program for the poor.”

4. Do you consider Medicaid estate planning to be a significant problem that takes resources from the truly needy in your state? Please explain and provide examples.

Texas Governor Rick Perry: “State Medicaid programs have, by default, become the major form of insurance for long-term care. Medicaid estate planning has increasingly become a way for middle income Americans to impoverish themselves to the point that they can become eligible for Medicaid. The current system is consuming both state and federal budgets and is unsustainable. It is imperative that states have the flexibility to pursue creative and innovative options for state-appropriate solutions.”

North Dakota Human Services Department Interim Executive Director: “Shortly before going into the nursing home, the couple had liquid assets worth about $700,000, not including the home or car. They were over the Medicaid limit by more than half a million dollars. The community spouse, on advice of an attorney, sold the home the couple had lived in for years and bought one worth twice as much and sold the car they had and bought a brand new one worth three times as much. The car is completely exempt under Medicaid rules. The house also is completely exempt under Medicaid rules, as long as the community spouse lives in the house. After successfully sheltering those assets, the community spouse took $400,000 cash, money that was available to be spent on the institutionalized spouse’s care and instead, bough an annuity from their attorney (an ‘investment’ which essentially returns the premium with a very small return) in an effort to tie up the money to make the couple appear to have fewer resources. The annuity is irrevocable, non-assignable, and non-transferable. . . . The North Dakota Department of Human Services was sued in federal court under a civil rights action for denying Medicaid to this wealthy institutionalized spouse. . . . The community spouse has successfully retained nearly all of the wealth the couple had before the institutionalized spouse went into the nursing home and the nursing home has not received one penny. The bill is nearly $100,000 and the couple wants medicaid to cover it. The couple receives nearly $8,000 a month from pensions, social security, the annuity payments, and oil lease money. This couple is not needy and they are simply not who the Medicaid program was or is intended to cover.” [Emphasis in the original.]

“In another case, a couple had nearly $600,000 available that could have been used for nursing home costs. The 83-year old community spouse had beginning sighs of dementia, and ‘invested’ $340,000 . . . into an irrevocable, nontransferable, non-assignable annuity on the advice of his attorney in an attempt to qualify the institutionalized spouse for Medicaid.”

“In another case, the day the institutionalized spouse entered the nursing home, the couple had more than $528,000. At that time, the couple represented to the nursing home that they intended of be ‘self-paying,’ and in fact, paid for two months of care. After learning of ways to exploit Medicaid laws, the community spouse purchased not one, but two annuities from their attorney after realizing the first one did not maximize the assets that could be sheltered. The community spouse bought a new home, a new car, and an annuity for $220,000 and the next day, a subsequent one for $20,000, and then applied for Medicaid to pay the institutionalized spouse’s nursing home costs.”

“In yet another case, a couple had nearly $400,000 the day one spouse entered the nursing home. An annuity for $125,000 was purchased to try to become eligible for Medicaid.

“These scenarios are being duplicated around the state, with an increase in the sales of these types of annuities, and around the country in other states. Medicaid is not intended for people who artificially impoverish themselves by sheltering their wealth instead of using it to pay for nursing home care, but these are the people who are fighting for it and winning – at the expense of the taxpayers and those who legitimately need the assistance of the Medicaid program.

“The North Dakota Department of Human Services argues that annuities like these should be treated as an asset available to pay the long-term care costs incurred by either spouse.”

“Changing the federal law to clarify that these annuities are assets or to allow states to determine how to treat these annuities as assets would be a significant first step in helping states determine appropriate limits of eligibility for the medicaid program. This would help ensure that Medicaid funds would be used by states for those who are the intended recipients rather than being diverted to subsidize those who can and should pay for their own care.”

Arizona Governor Janice K. Brewer: “Spouses use resources to purchase an annuity with high monthly payments being made to the community spouse. The annuity is not considered a countable resource and it is not considered a transfer so the applicant is eligible for medicaid.”

Wisconsin Department of Health Services Secretary Dennis G. Smith: “The Medicaid program is designed to provide health care and long-term care services to individuals and families who are financially eligible. Unfortunately, some estate planners have created a ‘cottage industry’ aimed at sheltering or using assets or income in ways for individuals to gain Medicaid eligibility despite having personal resources to pay for their own long-term care needs. These loopholes continue to leave the state at risk for people intentionally divesting their personal assets so their health care and long-term care is paid for through taxpayer dollars, rather than their own resources. Individuals should use their own resources before asking their neighbors to pay their long term care needs.”

“One example is related to spousal impoverishment laws. More and more, institutionalized spouses are transferring assets to community spouses who refuse to sign the Medicaid application. . . . Interspousal transfers are not considered divestment so Fred was able to maintain eligibility while Bonnie was able to keep $600,000. This is over five times the maximum Community Spousal Resource Allowance of $113,640. If the Department could deny eligibility if a spouse refuses to sign the application, Fred would have been able to cover at least six years of private pay nursing home care using his own resources.”

Pennsylvania Department of Public Welfare Secretary Gary D. Alexander: “Medicaid estate planning is a common tool, but significant issues and problems can arise because individuals and couples can transfer substantial wealth to their children yet still qualify for federal and state long-term care benefits. Annuities, promissory notes and the large home equity exemption used in combination with a life estate/remainder are all legal devices that applicants can use in the process of determination of benefit eligibility. Further, short duration ‘Medicaid’ annuities have been used to facilitate gifting of assets for Medicaid eligibility purposes.

“Special needs trusts are also used for disabled individuals. Yet some of these trusts raise serious policy questions. For example, multi-million dollar personal injury awards that include damages for future medical expense can be placed into such trusts. This results in qualification (or continuing eligibility) for Medicaid, and that program would pay future medical expenses during the recipient’s lifetime. Although there is a ‘payback’ requirement for such trusts, the payback occurs only if assets remain in the trust and only after the death of the individual, which can be decades later. This delayed payback can result in a substantial monetary benefit to the individual’s heirs.”

Maine Governor Paul R. LePage: “Yes, much of which is allowed under the current federal regulations. An example of such abuse is in the purchasing of ‘Medicaid’ qualifying annuities. It is clear that elder law attorneys use this loophole to shelter assets of their clients. Federal law allows such annuities as long as they meet certain provisions. It has become clear that the intent of Congress to allow individuals to save for retirement through the purchases of annuities has been abused and needs to be addressed. It was not intended for individuals to purchase annuities so that they can become eligible for Medicaid at the time they need LTC. . .

“Another form of abuse is commonly referred to as the ‘half-a-loaf’ method. This allows individuals to transfer resources and then get back half of what they transferred to reduce their penalty, while still being able to transfer half of what they gave away. Regulations can be fixed so that, unless the individual gets back all of what they transferred, the entire penalty remains.”

New York Deputy Secretary for Health James E. Introne: “Yes. Medicaid funds spent on the high cost of long-term care for individuals who are financially able to pay for the cost of their own long-term care needs, but choose to avail themselves of Medicaid through estate planning techniques, increases the amount of state and federal funds that must be apportioned to support the program. As a result, state and federal funds may be restricted from funding programs for the truly needy, e.g. programs for children, education and programs that assist the elderly. Planning techniques such as promissory notes, immediate annuities and spousal refusal continue to provide a mechanism for individuals to access medicaid benefits rather than provide for their own long-term care needs.

“Promissory notes, even when made after an individual has been admitted to a nursing home, preserve the ‘half-loaf’ strategy. This strategy allows an individual to divest him/herself of assets (say $50,000 is transferred outright) and pay for nursing home care during a penalty period with monies returned through a promissory note (a second $50,000 loaned with repayments made at the private pay nursing home rate -- which covers the transfer penalty). The same strategy is employed using an immediate annuity. Money is transferred and an immediate annuity is purchased to pay for nursing home care for the number of months the person is subject to a transfer penalty. With spousal refusal, all assets are put into the name of the community spouse who then refuses to make the resources available for the nursing home spouse. Medicaid must be provided if the institutionalized spouse executes an assignment of support from the community spouse in favor of the Medicaid office or the denial of medicaid would create an undue hardship. Medicaid does not have sufficient resources to pursue all these cases in court.”

Rhode Island Governor Lincoln D. Chaffee: “Trusts allow the wealthy to shelter assets. The more affluent have access to better estate planning and thus, are more likely to have properly crafted legal documents (i.e., trusts, promissory notes, life estates with enhanced powers, caregiver contracts, etc.) In addition to the use of annuities for married couples, and promissory notes for those single individuals or married couples, the amount of monies paid for legal advice is sizeable.

“Some examples:

“Mr. and Mrs. Smith have $400,000 in a bond account. Mr. Smith needs to go into a nursing home. After the spousal share has been determined, Mrs. Smith has excess resources transferred to her ‘spouse to spouse’ and purchases a large single premium immediate annuity paying her thousands per month. Mr. Smith has less than $4000 and is found eligible for LTC in the next month.

“Mr. Jones is a single individual with $100,000 in the bank. He goes into a nursing home. He transfers the whole $100,000 to his son. Applies for LTC/MA, meets a level of care due to his poor health and is ‘otherwise’ eligible for LTC except for the prohibited transfer of $100,000. His son creates a promissory note for $50,000 and pays him back monthly. This allows for the father to pay privately for ½ of the time he would have paid privately, except for this ‘Medicaid estate planning’ tool. (Assume the promissory note is created with the correct DRA language.)”

Tennessee Deputy Director of Policy and Research Beth Tipps in the office of Governor: “Medicaid estate planning (‘elder law’) is a big business and allows people with considerable income and assets to maximize their ability to protect both while preparing to access Medicaid to pay for LTC services.

“Restrictions on the use of annuities, promissory notes and life estates would reduce the types of financial vehicles available for protecting assets. In addition to consideration of a longer look-back period, tighter penalties for transferring assets for less than fair market value would likely deter some people from making transfers.”

Virginia Secretary of Health and Human Resources William A. Hazel, Jr., MD: “Medicaid estate planning is a significant problem that negatively impacts Virginia’s ability to provide LTC to the truly needy. Estate planning allows individuals to take advantage of loopholes in Medicaid eligibility rules which allow them to shelter their assets and avoid paying for their LTC services. These services are among the most expensive services provided by the Medicaid program. States are unable to afford the ever increasing cost of the Medicaid program and are obligated to impose limits on services, reduce provider compensation and, in some cases, stop covering certain services. This has an adverse impact on LTC services, as well as other Medicaid services, and directly impacts individuals who most need Medicaid services.”

“The following are examples of loopholes that the Virginia Medicaid program has wanted to close, but has been unable to due to the federal MOE requirement in ACA:

The ability to count the value of life estates as a resource.
The ability to shelter assets for one year by purchasing savings bonds.
The ability to exclude as a resource the unpaid balance of an annuity.”

“Prior to applying for Medicaid LTC services, an individual placed approximately $900,000 into an annuity and named his wife as the beneficiary of the annuity. The annuity paid his wife $89,000 per month, but the Virginia Medicaid program could not count this income for purposes of determining the husband’s Medicaid LTC eligibility.”

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Updated, Monday, January 7, 2013, 12:36 PM (Pacific)

Seattle--

CLASS GONE AT LAST AND LTC NEWS AND COMMENT

LTC Comment: Having taken some time off for the holidays, this is our first LTC E-Alert in awhile. With a few notable exceptions, long-term care news took some time off too. We’ll focus this week on highlights you may have missed while your attention was turned to family get-togethers and holiday celebrations.

*** 3IN4 NEED MORE MEDIA SUCCESS: The 3in4 Need More program used $25,000 of its annual sponsorship dollars in 2012 to create radio advertising about LTC planning that would have cost over three million dollars to purchase. As a non-profit, 3in4 receives special concessions on public service announcements. Some key stats:

* Investment Dollars to Record and Distribute: $25,000.00
* Number of Hours Played: 633.18
* Impressions: 444,769,760
* Times played: 50,844
* Result: $3,047,800.00 in FREE radio play

Congratulations to 3in4 and its director Jonas Roeser ***

*** AMERICAN TAXPAYER RELIEF ACT OF 2012: President Obama signed the “fiscal cliff” legislation on Wednesday, January 2, 2013. Following is a link to the statute that repeals CLASS and sets up a “Commission on Long-Term Care”: http://www.gpo.gov/fdsys/pkg/BILLS-112hr8enr/pdf/BILLS-112hr8enr.pdf. We’ll keep a close watch on that LTC Commission as its most likely recommendation will be a new CLASS-like entitlement program but with compulsory participation. Before even considering expensive new government LTC programs, the Commission should propose ending Medicaid loopholes that trap the middle class on LTC public assistance. Examples of such loopholes include Medicaid’s $802,000 home equity exemption; Medicaid-compliant annuities which allow applicants to hide hundreds of thousands of dollars immediately before Medicaid qualification; and the welfare program’s unlimited exemptions for personal belongings, a business, prepaid funeral expenses, an automobile, and term life insurance. ***

*** ILTCI CONFERENCE: Early Bird Registration ends Thursday, January 10th, for the Thirteenth Annual Intercompany Long Term Care Insurance Conference to be held from March 3-6, 2013 at the Hilton Anatole, in Dallas, Texas. Once again, the ILTCI conference will host and subsidize the cost for a special 2-day pre-conference CLTC Master Class (only $95 extra). Harley Gordon will personally conduct this class. If you are an agent selling LTC (or other) insurance directly to consumers, you can apply here for a Scholarship that will qualify you for a $295 Scholarship rate (plus an additional $95 if attending the CLTC class). If you are a government employee, register here for the conference using the Government Employee rate of $95. For those who have never attended ANY of the previous twelve annual conferences, get a special rate of only $395 (instead of the $895 early bird rate) and register here before January 10th. The price of registration goes up $100 after that date. Make your Hotel reservations early for attractive rates of only $129 (for the Hilton Anatole Hotel). The final few booths available for exhibitors are going fast. Get all details at http://www.iltciconf.org/. If you have any questions, contact Jim Glickman at 818-867-2223. ***

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1/4/2013, “The 10 Best Countries to Retire to in 2013,” by Jacquelyn Smith, Forbes

Quote: "Planning to retire overseas? Ecuador is the top spot for North American retirees, according to InternationalLiving.com's newly-released Annual Global Retirement Index 2013."

LTC Comment: Distraught by the fiscal cliff deal and new oncoming crises? There's always expat status. Medicaid planners, who seriously recommended considering it, said LTC in Costa Rica was particularly good and only $5,000 per year. Well, that was a decade ago, but I'll bet it's still pretty reasonably priced. Nevertheless, isn’t that a long way to go to visit Grandma? Planning ahead to pay privately for quality LTC at or near home remains by far the best option.

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1/4/2013, “10 Retirement Resolutions for 2013,” by Emily Brandon, U.S. News & World Report

Quote: "Get your Social Security statement. Most workers will no longer receive a paper Social Security statement in the mail. But now people age 18 and older can access their Social Security statements online. Take a few minutes to check that your earnings history has been property recorded and familiarize yourself with your expected Social Security payout. 'Delaying Social Security makes sense for most people if you can afford to do it, because the payout escalates enormously for every year you wait between ages 62 and 70,' says Chatzky. 'That's a return that is really hard to beat by putting your own money to work.'"

LTC Comment: Remember those Social Security statements we used to get in the mail each year? They told us how much we'd get from the program if we retired at 62, 66 (or full retirement age) or 70. They warned ‘Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 75 cents for each dollar of scheduled benefits.’ These hard-copy statements stopped coming a few years ago. But they are available online now at http://www.ssa.gov/mystatement/. This might be good information to share with a prospect for LTC insurance who seeks confidence about his or her ability to pay the premium in the future.

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12/28/2012, “Five Big Retirement Mistakes,” by Ellen E. Schultz, Wall Street Journal

Quote: "Low-balling elder-care costs. When planning for retirement, few people think about how much they might end up spending to support elderly parents. Inflation and longevity could erase the purchasing power of the children's pension and savings, leaving them with too little to live on, let alone cover medical expenses. . . . And even if elderly parents have adequate financial resources, their retired offspring can incur significant expenses when traveling to help them out."

LTC Comment: The irony is that government entitlement programs like Social Security, Medicare and Medicaid have desensitized the public to health and LTC risks and costs so that just as the Age Wave crests those programs are going to crash financially.

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12/17/2012, “Medicare denials are rarely challenged by seniors, but appeals can succeed,” The Washington Post

Quote: "Murphy said less than 10 percent of the several hundred denials that her organization handles each year for Connecticut residents are overturned in the first and second levels of appeals. 'It's almost an automatic denial,' she said. But at the third level of appeal, the center has won roughly 60 percent of its appeals in the past three years. 'If people knew that they are likely to lose at the first couple of levels, they would stick it out until they got to a judge,' Murphy said."

LTC Comment: I learned long ago from elder law attorneys that they win roughly two-thirds of all the Medicare denials they appeal on behalf of clients. Like Medicaid planning, this is another way people who can afford elder law advice get more out of the social safety net than the citizens who need help the most.

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12/17/2012, “Tax strategy may affect Medicare premiums,” by Larry Swedroe, CBS MoneyWatch

Quote: "Under the Medicare law, if you have a high-enough income, you have to pay extra for Part B and prescription drug coverage. The amount depends on your modified adjusted gross income (MAGI), which is your adjusted gross income plus tax-exempt income. These increases are based on your MAGI from two years prior, meaning your 2012 MAGI may affect your 2014 premiums."

LTC Comment: Two key points about this article. Medicare is no longer "social insurance" where all pay the same premiums and all get the same benefits. Rather, high income people pay more for the same benefits meaning Medicare is now "means-tested," i.e., welfare. Secondly, this article indicates that affluent people don't just pay higher taxes automatically as government accountants are required by law to presume. Rather, affluent people analyze tax policy consequences and reconfigure their income and assets to minimize taxes and maximize after-tax investment returns. That's why actual tax returns to government often fall below estimates.

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12/16/2012, “Medicare to Cover More Home Care,” by Anne Tergesen, Wall Street Journal

Quote: "For years, Medicare recipients with chronic conditions have had difficulty qualifying for home health services administered by nurses and therapists. Now, a legal settlement between consumer advocates and the federal government has paved the way for patients with chronic conditions to receive such services both at home and in skilled-nursing and outpatient facilities. . . . Medicare recipients with chronic conditions don't have to wait for a federal judge to approve the settlement before filing claims, says Ms. Stein [of the Center for Medicare Advocacy], who expects Vermont Chief Judge Christina Reiss to sign off on the settlement some time after a hearing to be held on Jan. 24, 2013. (The lead plaintiff in the case lives in Vermont.)"

LTC Comment: More Medicare for LTC bodes ill for the program’s solvency in the long run and for the LTCI market in the short run.

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12/15/2012, “Healthcare crisis: not enough specialists for the poor,” by Anna Gorman, Los Angeles Times

Quote: "With months-long waits for Medi-Cal patients to see specialists, some turn to emergency rooms - exactly what healthcare reform is banking on avoiding."

LTC Comment: I've predicted that Medicaid's poor reputation for access and quality would worsen dramatically. It's happening now, based on more and more stories from all over the country, and just as "health reform" is about to extend Medicaid to millions more people.

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12/14/2012, “States face double fiscal whammy: Federal aid cuts and spiraling health-care costs,” by Michael A. Fletcher, The Washington Post

Quote: "Just as state governments are healing from the deep fiscal wound inflicted by the Great Recession, they are confronted by the dual threat of reduced federal help and ever increasing health-care costs, according to a new report. Governors are bracing for substantial cuts in federal aid in the immediate future, even if Washington policymakers agree on an alternative to a series of budget cuts and tax increases set to go into effect in January. Meanwhile, the spiraling costs of Medicaid, employee health insurance premiums and retiree health care would make it nearly impossible for states to fill the gap caused by expected federal cuts. That means service cuts initiated during the recession would have to go deeper, the report warned."

LTC Comment: This is exactly why I think 2013 is the year to push for Medicaid reform that saves states money, improves access and quality for the poor, and incentivizes everyone else to buy LTCI. See this LTC Bullet for more on our plans to take the Silver Bullet back on the road for five special state-level studies.

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12/13/2012, “Getting the runaround on long-term care insurance: An insurance company relies on corporate gibberish to build a smoke screen around a denial of benefits [link],” by David Lazarus, Los Angeles Times

Quote: "Washington National appears to be acting in bad faith in dealing with a longtime customer for no better purpose than to save itself some money. If the company is so sure it's in the right, it shouldn't hesitate to explain itself plainly, to Corwin if not to me. The fact that it chooses to hide behind corporate gibberish suggests it knows perfectly well that its actions are indefensible. Steven M. Stecher, who pulled down $2.1 million in total compensation last year as president of Washington National, is more than welcome to prove me wrong."

LTC Comment: The last time there was a big media hullabaloo about LTCI carriers not paying claims it turned out under close scrutiny that failure to pay a legitimate claim was a rare exception.

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12/11/2012, “Caregiver lives rerouted yet enriched by aging parents,” by Sarah LeTrent, CNN

Quote: "According to data from the National Alliance for Caregiving, an estimated 65 million people in the U.S. are unpaid family caregivers. Seven in 10 of those caregivers take care of someone 50 years of age or older, according to research done in conjunction with the AARP. Caregiving for loved ones the 'new normal' for boomers "

LTC Comment: Get used to it. Boomers are locked into caregiving responsibilities. Take it from one whose mother just turned 100 years old. Stories like this should help aging boomers and their progeny realize the growing need for LTCI.

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12/11/2012, “Health rankings: USA is living longer, but sicker,” by Michelle Healy, USA TODAY

Quote: "Americans are living longer, with fewer deaths from heart disease and cancer, but more chronic illnesses, an annual snapshot of the USA's health shows."

LTC Comment: Solid evidence that private LTC insurance has a future, especially when combined with news of the government LTC safety net’s dire fiscal condition.

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12/11/2012, “MedPAC recommendations 'have no bearing on the realities' nursing homes face, group says [link],” McKnight’s LTC News

Quote: "The Medicare Payment Advisory Commission has recommended a 4% reduction in skilled nursing facility reimbursement for 2014, drawing the ire of the Alliance for Nursing Home Reform in response."

LTC Comment: As the fiscal vise closes on Medicare, MedPac-recommended cuts--which the nursing home industry has fended off for years--are finally coming. And when MedPac is replaced soon by the far-more-powerful Independent Payment Advisory Board (IPAB), look out! The balance billing from traditionally generous Medicare to offset parsimonious Medicaid reimbursements will end. Nursing homes and Medicaid recipients will suffer, further alienating consumers from publicly financed LTC.

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12/10/2012, “States Expand their Medicaid Community-Based Services but Their Benefits Vary Widely [link],” by Howard Gleckman, Forbes

Quote: "Medicaid is the largest single payer of long-term supports and services [LTC], funding almost half of all paid long-term care. It dwarfs the benefits provided by private long-term care insurance or what people pay out of pocket. But the Medicaid program, run by the states but jointly funded by states and the federal government, is required to provide care only in nursing facilities. . . . Most people who need supports and services [LTC] want to get that care at home. And states say they want to deliver such care in the community. But, as the Kaiser study shows, many states are still reluctant to provide that assistance through Medicaid. Their home and community-based programs exist on paper, but often are often insufficient for the needs of the frail elderly and those younger people with disabilities who are trying to stay at home."

LTC Comment: And so it shall ever be. Medicaid funding of home care has hit its high mark and will decline. True now and more so in the future: only private payers are assured of access to quality LTC at the most appropriate level.

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12/10/2012, “Aiming for Medicaid, Clients Tell Advisers 'Make Me Poor' [link],” Reuters

Quote: "Called 'Medicaid planning,' the goal is for the client to give away their money to their kids in order to qualify for government assistance. It is not a new strategy, but with the cost of healthcare rising, retirement benefits shrinking and people living longer, it is increasingly on the table."

LTC Comment: I've seen several articles picking up on the survey by Nationwide that we reported last week which showed half of financial advisers recommend Medicaid planning. Of course, there is much more to Medicaid planning than giving away money, including Medicaid-compliant annuities, life care contracts, special trusts, the reverse half-a-loaf strategy, etc. The mission to end these practices and encourage early, responsible LTC planning continues here at the Center for LTC Reform.

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December 2012, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care [link],” by ELJAY, LLC, for the American Health Care Association

Quote: "Unreimbursed allowable Medicaid costs for 2012 are projected to exceed $7 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2012 is projected to be $22.34, which is 14.3 percent higher than the preceding year's projected shortfall of $19.55."

LTC Comment: I track this report every year. It shows that Medicaid reimburses nursing homes less than the cost of providing the care! The situation is getting worse and worse as is Medicaid's reputation for access and quality. You get what you pay for and only what you pay for.

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11/22/2012, “Cash-strapped Pennsylvania nursing homes are increasingly on edge [link],” by Bill Vidonic, TribLive

Quote: "Across the state, counties that still own nursing homes are saying that declining medical assistance payments have cut into revenue, while costs, including pay and benefits for employees, continue to rise, requiring them to make tough choices on whether to cut back service or find new sources of money."

LTC Comment: The crisis of LTC financing we warned was coming in The Keystone of Long-Term Care: More Access to Better Care at Lower Public Cost for Pennsylvanians has arrived and is on its way to most other states soon.

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Updated, Friday, January 4, 2013, 1:56 PM (Pacific)

Seattle--

LTC BULLET: LTC ALMANAC UPDATE

LTC Comment: We’ve updated the “Almanac of Long-Term Care” in The Zone. More on the LTC Almanac and today’s update after the ***news.***

*** AMERICAN TAXPAYER RELIEF ACT OF 2012: President Obama signed the “fiscal cliff” legislation on Wednesday, January 2, 2013. Following is a link to the statute that repeals CLASS and sets up a “Commission on Long-Term Care”. We’ll keep a close watch on that LTC Commission as its most likely recommendation will be a new CLASS-like entitlement program but with compulsory participation. Before even considering expensive new government LTC programs, the Commission should propose ending Medicaid loopholes that trap the middle class on LTC public assistance. Examples of such loopholes include Medicaid’s $802,000 home equity exemption; Medicaid-compliant annuities which allow hiding hundreds of thousands of dollars immediately before Medicaid qualification; and the welfare program’s unlimited exemptions for personal belongings, a business, prepaid funeral expenses, an automobile, and term life insurance. ***

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LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL. To celebrate the New Year of 2013, we are making access to The Zone, including the "Almanac of Long-Term Care" free for seven days—today through Friday, January 11, 2013. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

Aging Demographics
International
Unfunded Liabilities--Social Security, Medicare, and Budgets
Long-Term Care
Caregiving
Long-Term Care Financing
Long-Term Care Insurance
Reverse Mortgages
Long-Term Care Providers
Medicaid
Medicaid Planning

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

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

The Zone and the LTC Almanac are for Center for Long-Term Care Reform members only, except during the current free trial offer. Join the Center here: http://www.centerltc.com/support/index.htm. Call or email Damon at 206-283-7036 or damon@centerltc.com. He can give you a user name and password to open up The Zone even before your annual dues payment arrives. Individual annual memberships are $150. Premium memberships with access to our “Clipping Service” start at $250. Premium Elite and “Regional Representative” membership (if you qualify professionally) are $500. Corporate memberships with many extra benefits start at $1,000. See our "Membership Levels and Benefits" schedule here.

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

Suggestion: Read through the following update to stay current on new resource materials. Then browse the full LTC Almanac at your leisure. When you need a quick fact or the latest research on a particular topic, you'll know right where to go. Enjoy.

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

Unfunded Liability Estimates

“How Much Does the Federal Government Owe,” NCPA 0612 URL: http://www.ncpa.org/pdfs/st338.pdf

“This fiscal imbalance is equal to the current debt held by the public plus the unfunded obligations of all federal government programs, or the amount by which future expenditures exceed projected revenues.

“In 2011, a conservative estimate of these amounts totaled $84 trillion. More than one-third of this amount — $30.3 trillion — is due to public debt holders, federal employees or current retirees through their Social Security and Medicare benefits. The remaining two-thirds can be affected by policy changes, and much of this remainder is for Social Security and Medicare benefits.”

State Fiscal Responsibility

Fiscal Report Card, Cato 1012 URL: http://www.cato.org/pubs/wtpapers/GRC2012.pdf

“Fiscal Policy Report Card on America's Governors 2012, by Chris Edwards, Cato Institute, Washington, D.C.

“Four governors were awarded an ‘A’ in this report card—Sam Brownback of Kansas, Rick Scott of Florida, Paul LePage of Maine, and Tom Corbett of Pennsylvania. Five governors were awarded an ‘F’—Pat Quinn of Illinois, Dan Malloy of Connecticut, Mark Dayton of Minnesota, Neil Abercrombie of Hawaii, and Chris Gregoire of Washington.” (p. 1)

Chapter 5: Caregiving

General

MetLife Grandparents Study 0912 LINK

"The majority (62%) of grandparents have provided financial support or monetary gifts for grandchildren within the past five years. Of those grandparents who provide financial assistance: • The average amount given for all grandchildren over the past five years was $8,289 total. More than half gave up to $5,000. • Cash was the most common type of financial support, and helping with basic needs rose to the top with 43% of grandparents giving for clothing, 33% for general support, and 29% for education, such as pre-school through high school private schools, tutoring, college tuition, and graduate school. • The top average dollar amount spent per grandparent was $23,068 for investments, $8,276 for education, and $6,742 for a down payment on a grandchild's home. • Forty-three percent report they are providing more financial support due to the economic downturn, and one-third (34%) are giving financial support to grandchildren even though they believe it is having a negative effect on their own financial security."

Chapter 6: Long-Term Care Financing

Cost of Care Surveys

MetLife Cost of Care Survey 2012 LINK

“According to the newly released 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services and Home Care Costs (link), conducted for the tenth year by the MetLife Mature Market Institute, national average rates for long-term care in the U.S. continue to rise. The average cost of a semi-private room in a nursing home rose 3.7% in 2012, from $214 daily or $78,110 annually in 2011, to $222 or $81,030 annually. Assisted living base rates increased by 2.1%, from $3,477 monthly or $41,724 annually to $3,550 or $42,600 annually. The average rate for a homemaker increased by 5.3%, from $19 to $20 per hour. Only rates for home health aides and adult day services were unchanged year-to-year, remaining at $21 per hour and $70 per day respectively.”

Who Will Pay for LTC? (includes "Not the VA")

EBRI on LTCI 0612 LINK
“Effects of Nursing Home Stays on Household Portfolios By Sudipto Banerjee, Ph.D.

LTC Comment: This article purports to prove that a large percentage of Americans spend down catastrophically into impoverishment for nursing home care. It and the study on which it is based are bunk. They assume that because people in nursing homes have less money and property than they did before they were institutionalized, they must therefore have spent down their savings and home equity for their care. Nonsense. Medicaid pays for the vast majority of all long-term (> 3 months) nursing home stays. Private pay nursing home patients have declined radically. Cash and real estate disappear for many reasons other than LTC spend down, including for the purpose of self-impoverishing to qualify for public benefits. There is no empirical evidence whatsoever to indicate large amounts of asset spend down for nursing home care. As I've explained year after year, from 80% to 90% of the entire cost of nursing home care in the United States is accounted for by direct government payment (Medicaid and Medicare), indirect government payment (Social Security income of people already on Medicaid), and by other sources of income, not assets. See "LTC Bullet: So What If the Government Pays for Most LTC?," 2010 Data Update, Friday, January 13, 2012.

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

National Health Expenditures Projections 0712 URL: http://content.healthaffairs.org/content/31/7/1600.full.pdf+html

“National Health Expenditure Projections: Modest Annual Growth Until Coverage Expands And Economic Growth Accelerates,” by Sean P. Keehan, Gigi A. Cuckler, Andrea M. Sisko, Andrew J. Madison, Sheila D. Smith, Joseph M. Lizonitz, John A. Poisal, and Christian J. Wolfe, Health Affairs 31, NO. 7 (2012): 1600–1612

“For 2011–13, US health spending is projected to grow at 4.0 percent, on average—slightly above the historically low growth rate of 3.8 percent in 2009. Preliminary data suggest that growth in consumers’ use of health services remained slow in 2011, and this pattern is expected to continue this year and next. In 2014, health spending growth is expected to accelerate to 7.4 percent as the major coverage expansions from the Affordable Care Act begin. For 2011 through 2021, national health spending is projected to grow at an average rate of 5.7 percent annually, which would be 0.9 percentage point faster than the expected annual increase in the gross domestic product during this period. By 2021, federal, state, and local government health care spending is projected to be nearly 50 percent of national health expenditures, up from 46 percent in 2011, with federal spending accounting for about two-thirds of the total government share. Rising government spending on health care is expected to be driven by faster growth in Medicare enrollment, expanded Medicaid coverage, and the introduction of premium and cost-sharing subsidies for health insurance exchange plans.”

Chapter 7: Long-Term Care Insurance

General and Data

LIMRA on LTCI, “LTCI: An Industry Subdued,” technical report 0712: http://marketing.cpsinsurance.com/linkdocs/LTC%20LIMRA.pdf

“Eighty-three individuals from 48 organizations participated in LIMRA's 2012 LTCI Industry Outlook and Insights Study, a survey fielded every three years to examine the state of the industry. Survey participants are asked to identify the most pressing issues facing the industry today, what they're most encouraged by, and what's keeping them awake at night.”

See also LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News (link) Friday, July 20, 2012

Why Don’t More People Buy LTCI?

Health Affairs (Brown-Goda) on LTCI 0612 URL: http://content.healthaffairs.org/content/31/6/1294.full.pdf+html
“Long-Term Care Insurance Demand Limited By Beliefs About Needs, Concerns About Insurers, And Care Available From Family,” Health Affairs

“Abstract: In spite of the high costs and major financial risks involved in long-term care, the majority of older Americans do not own long-term care insurance. We conducted a survey designed to learn more about the role of the following four broad factors in affecting the demand for longterm care insurance: preferences and beliefs, such as notions about the likelihood that one will become disabled; substitutes for insurance, such as savings that could be spent on long-term care; substitutes for formal care, such as care provided by family members; and features of the private market, such as concerns about the high costs of coverage. We found evidence that each of these factors was important in explaining low demand for long-term care insurance. For example, people who believed they might need long-term care were more likely to purchase long-term care coverage. People who had alternative ways to pay for care, such as through savings, or those who could use unpaid care from family members, were less likely to purchase insurance. Features of the private market, such as people’s lack of trust in insurers and the high cost of coverage, made people less likely to buy long-term care insurance. We conclude that policy interventions designed to address only one factor limiting the purchase of long-term care insurance are unlikely to dramatically increase demand for long-term care insurance. [Emphasis added] “As long as people know that there is some means-tested payer of last resort, then the existence of these programs may still reduce people’s demand for insurance.” (p. 1298) “In the open-ended responses, the cost of long-term care insurance was the most frequently cited reason for not purchasing it, given by 57 percent of respondents.” (p. 1299, emphasis added)

For a critique of this paper, see: LTC Bullet: Why Don’t More People Buy LTC Insurance? Friday, July 13, 2012

Chapter 9: Long-Term Care Providers

Medicaid Reimbursement

A Report on Shortfalls in Medicaid Funding for Nursing Center Care, 2012 LINK, December 19, 2012

“Medicaid underpayments are expected to exceed $7 billion nationally in 2012, an average shortfall of $22.34 per resident day. That's up from $18.54 in 2010, notes the ‘Report on Shortfalls in Medicaid Funding for Nursing Center Care.’ The report was commissioned by the American Health Care Association and conducted by Eljay, LLC. It was released Tuesday.”

Chapter 10: Medicaid

Medicaid Financing

Kaiser Family Foundation on Federal Medicaid Assistance Percentage 0912 URL: http://www.kff.org/medicaid/upload/8352.pdf
Medicaid Financing: A Primer on the Federal Medicaid Matching Rate (FMAP)

“A new paper from the Kaiser Family Foundation's Commission on Medicaid and the Uninsured provides an overview of the Federal Medicaid Assistance Percentage (FMAP), the formula which is used to determine the federal government's share of the cost of covered services in state Medicaid programs. It also reviews the various temporary changes to the FMAP formula that have taken place over the history of the Medicaid program. Beginning in 2014, the Affordable Care Act (ACA) establishes highly enhanced FMAPs for the cost of services to low-income adults with incomes up to 138% of the Federal Poverty Level (FPL) who are not currently covered. The federal government will pick up 100 percent of such costs in 2014 through 2016, phasing down to 90 percent in 2020 and beyond.”

State Budget Crisis 0712 LINK, “Report of the State Budget Crisis Task Force”

“Medicaid programs are growing rapidly because of increasing enrollments, escalating health care costs and difficulty in implementing cost reduction proposals. At recent rates of growth, state Medicaid costs will outstrip revenue growth by a wide margin, and the gap will continue to expand.”

Medicaid Eligibility

GAO on Medicaid LTC Eligibility Documentation 0712 URL: http://www.gao.gov/assets/600/593053.pdf

“MEDICAID LONG-TERM CARE Information Obtained by States about Applicants' Assets Varies and May Be Insufficient”

From: LTC Bullet: The Maine Thing About Long-Term Care, Friday, September 7, 2012: *** GAO REPORT: The Government Accountability Office published “Medicaid Long-Term Care Information Obtained by States about Applicants' Assets Varies and May Be Insufficient” (GAO-12-749) on July 26, 2012. It’s worth a quick read but we consider it another of many lost opportunities for GAO to tackle the vastly misunderstood subject of Medicaid LTC eligibility. This report addresses the process of determining who’s eligible for Medicaid’s most expensive benefit and concludes states don’t always collect enough income and asset information to make a correct decision. What’s needed is a study to determine whether and to what extent accurate eligibility decisions are actually being made. That’s a much tougher task. It requires pulling a valid random sample of Medicaid LTC cases and researching their financial eligibility thoroughly. Such a study would show that many people receiving Medicaid LTC benefits are and have been ineligible all along. Further analysis would show that many who are eligible could have, would have and should have avoided Medicaid dependency if the proper incentives had been in place to encourage them, while still young, healthy and affluent enough, to have planned responsibly to pay for their own care. ***

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Updated, Friday, December 14, 2012, 3:33 PM (Pacific)

Seattle--

LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: Our annual report on the Center for Long-Term Care Reform’s year follows the ***news.***

*** 100^th BIRTHDAY TODAY of Steve’s mother, Damon’s grandmother, Margaret Moses. Party this afternoon with family, friends, and a feast of Chinese food, her favorite. Happy Birthday, Mom! Relevance to the Center’s mission, you might ask? Margaret lives in an assisted living facility and her LTC insurance policy offsets the cost of her care significantly. We don’t just talk the talk; we walk the walk. Steve bought that AMEX Life policy in 1987 and paid the premiums every year until the waiver of premium took effect this year. ***

*** MEDICARE EXPANSION INTO LTC: Remember the court settlement that will expand Medicare coverage of skilled nursing, home care and therapy services? We provided details in LTC Bullet: Medicare Expansion Could Be Last Straw for Private LTC Financing. One of the Center’s Regional Representatives forwarded our Bullet to an admissions official at a skilled nursing facility to ask for an opinion. Here’s the reply he received from that official who asked to remain anonymous:

“I think that the number of people in our long-term care facility that could qualify for this proposed type of Medicare coverage for ‘maintenance’ would equal about, oh, 100% to 101%?! Yes, the reimbursement for Medicare is currently about 30%-50% higher than what we bill privately paying residents.

“Given the nature of the current economy, I would be very surprised if our Federal government actually allowed this coverage to start. Surely, it would increase expenses to the government by Billions and Billions of dollars.

“Given that I'm married to someone with Parkinson's disease, who will qualify for Medicare in exactly 110 days, the effect of this law on my personal life and financial future would be the equivalent of hitting the lottery. I guess it's safe to say that I would like to learn more. I hadn't heard anything about it, so thank you for the heads up.” ***

*** MEDICAID PLANNING EXPOSED: We highlighted the following item in last week’s LTC E-Alert. Since then many newspapers and other news distributors have picked up the story. Inasmuch as we do our best to publicize and eliminate the problem of Medicaid planning, we’re pleased to see others picking up the story.

12/6/2012, “Nationwide Financial Warns Against the Financial Pitfalls of ‘Medicaid Planning’,” WSJ MarketWatch [link]

Quote: "A new Nationwide Financial advisor survey released today found that half of advisors say they have clients asking about giving all their money to their children in order to qualify for government assistance in paying for long term care."

LTC Comment: Sadly, some things seem never to change. I cited a similar finding back in 1989: A survey found that "...a majority of [financial planners] felt that an individual with a catastrophic illness should consider transferring assets to family members in order to qualify for Medicaid."

(Source: Peter W. Bacon, et al., "Long-Term Catastrophic Care: A Financial Planning Perspective," The Journal of Risk and Insurance, Vol. LVI, No. 1, March 1989, p. 153)

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: The year 2012 was consumed by hype surrounding the national election. Based on our years of experience, we’ve concluded that presidential election years are rarely good ones for public policy advocacy. Public officials and the parties they represent are reluctant to engage regarding anything controversial or politically sensitive. Long-term care policy, especially as it relates to Medicaid and LTC insurance, certainly falls into those categories. Not exactly “third rail” level, but dangerous for politicians. So we kept our powder dry this year, getting ready for a major initiative in 2013, on which, more below.

We conducted a major study in Maine during 2012, the report of which is titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net.” This study focused on the “maintenance of effort” (MOE) rule in the Affordable Care Act, aka health reform or ObamaCare. The MOE prohibits states from tightening Medicaid eligibility rules, resulting in their being unable to target scarce public LTC resources to citizens most in need. In Maine, for example, the MOE restriction meant the state could not reduce its $750,000 home equity exemption—set when the economy was booming—to the lower $536,000 federal minimum (as of 2013) in order to save money and divert wealthier people away from public assistance.

The MOE rule has devastating consequences during bad economic times, preventing state Medicaid programs from making the most of their limited resources. Policymakers despair when they must divert desperately needed K-12 education funds to finance easy access to Medicaid LTC for affluent seniors and their heirs. That’s why the Center for Long-Term Care Reform is planning a multi-state series of five studies for Spring through Fall of 2013. We’ll help five states to identify and achieve savings equal to at least 10% of their Medicaid nursing home expenditures. The key is to escape the shackles of the maintenance of effort rule, which may be possible for states that do not expand their Medicaid programs under the ACA.

For our special series of studies in 2013, Center president Steve Moses may recommission the Silver Bullet of Long-Term Care in which he criss-crossed the country for nearly 40,000 miles on our National LTC Consciousness Tour in 2008 and early 2009. Check out this one-minute slide show about that adventure. “By living and working in the Silver Bullet on site,” Steve says, “I’ll be able to spend a lot more time with key public officials and program administrators as we conduct our interviews and prepare our reports.” Stay tuned in the new year for how you can get involved at the local level when these projects begin.

LTC Bullets

The Center for Long-Term Care Reform endeavors every year to keep our members educated and updated about important news and developments bearing on long-term care financing policy.

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 982 Bullets (so far), by date here and by topic here. These nearly-1000 articles are a valuable historical resource. Make use of them. In 2013, in celebration of the thousandth LTC Bullet and the Center’s 15^th anniversary, we plan to do a retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998. We’ll review them by topic, covering “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.”

Highlights of 2012 LTC Bullets include:

January: So What If the Government Pays for Most LTC?, 2010 Data Update [link]
February: The History of Long-Term Care Financing or How We Got into This Mess [link]
March: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the "Doc Fix" [link]
April: Boomer Coma [link]
May: The LTC Graduate Seminar [link]
June: What the HECM is Happening with Reverse Mortgages? [link]
July: Why Don’t More People Buy LTC Insurance? [link]
August: LTC Truth to Power [link]
September: The Medicaid Long-Term Care Reform Act of 2012 [link]
October: Medicare Expansion Could Be Last Straw for Private LTC Financing [link]
November: Cut Medicaid to Help the Poor [link]
December: The Myth of Unaffordability . . . Still! [link]

And don’t miss Damon’s “Memory Lane” series highlighting the best of the best LTC Bullets over the years:

Memory Lane (1998-2001), May 2012
Memory Lane Part Two (2002-2005), May 2012
Memory Lane Part Three (2006-2009), June 2012
Memory Lane Part Four (2010-Present), November 9, 2012

The Center for Long-Term Care Reform published a total of 42 LTC Bullets in 2012.

LTC E-Alerts

Our LTC E-Alerts serve a different purpose. We scan the print and electronic literature on long-term care services and financing every day. We identify the articles, speeches and reports that we consider most important for Center members to read, hear or see. Then we cite them by date, title and author; we provide a representative quote from the source; and we give our “take” on what it means in our “LTC Comment.”

The main idea behind the LTC E-Alerts is to lift the burden of time-consuming research off the shoulders of LTC professionals whose time is better spent providing financial planning advice to clients, selling long-term care insurance, counseling borrowers on home equity conversion, or supplying any of the many other critical services our members provide. It’s called “division of labor.” We have to stay abreast of everything that’s happening in the popular and professional media. We pore over tons of material so you don’t have to spend nearly as much time doing so.

The Center for Long-Term Care Reform published a total of 37 LTC E-Alerts in 2012.

LTC Clipping Service

New in 2012, we began offering a clipping service in real time. Instead of, or rather in addition to, getting a summary of the news and key professional developments once a week, we send you an average of three items per work day. Reading them on the go keeps your professional knowledge at a peak minute-by-minute. It makes a nice break from other duties. And you’re probably more likely to read a few items per day than to go through the whole list of publications in the weekly LTC E-Alerts at a sitting.

We announced the LTC Clipping Service in LTC Bullet: New LTC Clipping Service in January 2012. Check it out for all the details and pricing. Want to subscribe? Contact Damon at 206-283-7036 or damon@centerltc.com.

The Center for Long-Term Care Reform has published a total of 812 LTC Clippings so far in 2012 or roughly 2.3 per calendar day or 3.1 per work day.

Publicity

Here are a few examples of the media coverage the Center for Long-Term Care Reform attracted in 2012:

Thomas G. Donlan, “A Medicaid Mess,” Barron’s, January 14, 2012: Quotes Steve Moses, references the Center for Long-Term Care Reform, and covers the problem of Medicaid planning.

Rob Nikelewski, “New Mexico’s impending old age crisis: We’ve got the fourth-highest rate of growth 85+,” [link] Capital Report New Mexico; Read the full interview and watch a two-minute video interview here.

Allison Bell, “LTCI Watch: Maine,” LifeHealthPRO, September 13, 2012, http://www.lifehealthpro.com/2012/09/13/ltci-watch-maine; article about the Center’s project in Maine based on our LTC Bullet titled “The Maine Thing About Long-Term Care.”

Publications (Moses Byline)

Here’s a sampling of Steve Moses’s published articles this year:

"Near-Term Prospects for Long-Term Care Financing Reform: Final Report to the Milbank Foundation for Rehabilitation,” Center for Long-Term Care Reform, Seattle, Washington, January 27, 2012 [link].

“How to Fix Long-Term Care: Six Briefing Papers,” Center for Long-Term Care Reform, Seattle, Washington, February 3, 2012; http://www.centerltc.com/BriefingPapers/Overview.htm.

“Foreword” to “The Completely Understandable LTCI Buyer’s Guide,” by Craig McCormick, LTCI Educational Services, Inc., 2012; http://ltcieducationalservices.com/.

“The Medicaid Long-Term Care Reform Act of 2012,” Insurance Forums, October 9, 2012 [link].

Speeches and Briefings

The Center for Long-Term Care Reform had a good year getting in front of audiences all over the country with our important message. Here’s a sampling:

On March 19, Steve Moses debated Harley Gordon at the 12^th Annual Intercompany Long-Term Care Insurance Conference in Las Vegas in a program titled the “Clash of Titans.” Read all about it here.

Steve addressed a Rotary Club in Bellevue, Washington; Estate Planning Councils in Erie, Pennsylvania and Baltimore, Maryland; and the Maryland Health Underwriters Association as well as presenting webinars that reached hundreds of LTC professionals electronically.

Season’s Greetings

All in all, 2012 was a good year. We look forward to an even better 2013 as the ground is more fertile for public policy research and advocacy with the President and Congress beginning new terms.

We wish our many friends and members a Happy Hanukkah, Merry Christmas and Happy New Year.

The Center’s Clipping Service will continue without interruption, but for everything else, see you next year.

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Updated, Monday, December 10, 2012, 11:44 AM (Pacific)

Seattle--

LTCI SUMMIT PRESENTATIONS AVAILABLE AND LTC NEWS AND COMMENT

LTC Comment: Jesse Slome of AALTCI reports that "Recordings of some 30 workshop and keynote presentations from the 2012 National Long Term Care Insurance Sales Summit are now accessible for insurance and financial professionals." Details here.

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12/6/2012, “The Baby Boom Bump,” by Kenneth S. Baer and Jeffrey B. Liebman, New York Times

Quote: "For decades we have known that the retirement of the baby boomers would be a monumental event for the economy. But now that it's happening, many fiscal policy makers are acting as if the boomers are eternal teenagers and are turning a blind eye to how the boomers' aging changes how we should approach economic policy. And this affects two of the central issues of the negotiations: how much the government should spend and how we can cut unemployment."

LTC Comment: Well, yeah, but there is no blinder eye to America’s fiscal crisis than the publisher of this op-ed, The New York Times.

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12/6/2012, “Nationwide Financial Warns Against the Financial Pitfalls of ‘Medicaid Planning’,” WSJ MarketWatch

(Source: Peter W. Bacon, et al., "Long-Term Catastrophic Care: A Financial Planning Perspective," The Journal of Risk and Insurance, Vol. LVI, No. 1, March 1989, p. 153)

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12/6/2012, “Holmes for the Holiday,” by Gary Barg, Caregiver.com

Quote: "For those long distance caregivers who are going home to visit your caregiving loved ones, may I be so bold as to offer a few suggestions. Although it would be a bit inappropriate to walk into your loved one's home with an old trench coat, large magnifying glass in hand and sporting a Sherlock Holmes Deerstalker hat, nevertheless, my dear Watson, you are on a case-the case I call 'The Holiday Visit of the Caregiver Detective.' (Cue organ crescendo.)"

LTC Comment: This author, website and magazine are excellent sources of advice, information, and encouragement for caregivers everywhere and care receivers.

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12/5/2012, “Barry J. Fisher Insurance Marketing, Inc. Announces Merger with Borden Hamman Agency,” Enhanced Online News

Quote: "Barry J. Fisher Insurance Marketing, Inc. (BJFIM), a nationally recognized leader in long-term care insurance brokerage, has announced plans to merge with the Borden Hamman Agency (BHA), a trailblazing life insurance and annuity marketing organization, based in Dallas, Texas."

LTC Comment: Congratulations and best of luck in this new venture to Center for Long-Term Care Reform supporter Barry Fisher and his team.

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12/5/2012, “Older Americans Changing Course on Investments,” by Margarida Correia, Financial Planning

Quote: "Americans 55 and older have taken the 2008 financial crisis as 'wake-up call' and are looking for less risky investment strategies. In a study released by AIG Life and Retirement this week, the 55 and older set said they are far more likely to favor 'financial peace of mind' over the pursuit of potentially higher but riskier returns."

LTC Comment: Financial peace of mind and preserving principal are goals that LTCI meets perfectly.

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12/4/2012, “Long-term care coverage: Worth the price?: With premiums up, here's what buyers need to know,” by Elizabeth O’Brien, WSJ MarketWatch

Quote: "Many people hear 'long-term care insurance' and think 'nursing home.' The thought often ends there. Few want to end their life in a care facility, so why would they buy a product that enables them to do just that-a complicated, often expensive product to boot? In reality, long-term care insurance is a more flexible tool, and one whose value people approaching retirement need to weigh carefully."

LTC Comment: Article quotes Center for Long-Term Care Reform supporter Debra C. Newman, president of Newman Long Term Care in Richfield, Minn.

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12/3/2012, “Comments Forced to Choose: Exploring Other Options,” by Paula Span, New York Times

Quote: "Medicare will pay for hospice, the acknowledged gold standard for those at the end of life and their families, and it will also pay for skilled nursing (known in this universe as the ‘sniff’ benefit, for Skilled Nursing Facility or S.N.F.). But only rarely will it cover both at the same time, which creates a financial bind.

"Rather than pay hundreds of dollars a day out of pocket for room and board in a nursing home, most families opt for S.N.F. coverage. But they pay a price in other ways: they lose the visits by nurses and aides and social workers, the comfort care, the pain relief and the spiritual support that can make hospice such a godsend, whether patients are at home or in nursing homes."

LTC Comment: Read this article keeping the context in mind of the recent court settlement that, once approved by the judge, will prevent Medicare from denying SNF, home or therapy care based on a beneficiary's inability to improve and return home.

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12/3/2012, “Mad-Cow Disease May Hold Clues To Other Neurological Disorders,” by Amy Dockser Marcus, Wall Street Journal

Quote: "Scientists believe new ways to treat Alzheimer's, Parkinson's and Lou Gehrig's disease could emerge from research into another neurodegenerative disorder: mad-cow disease."

LTC Comment: Kind of “good news, bad news.”

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12/3/2012, “The Federal Government's Long-Term Fiscal Outlook: Fall 2012 Update,” GAO-13-148SP, Government Accountability Office

Quote: "GAO's simulations continue to illustrate that the federal government is on an unsustainable long-term fiscal path. . . . In both GAO simulations spending for the major health and retirement programs will increase in coming decades, putting greater pressure on the rest of the federal budget. For the first few decades this spending is driven largely by the aging of the population. The oldest members of the baby-boom generation are already eligible for Social Security retirement benefits and for Medicare, and the number of baby boomers turning 65 is projected to grow in coming years from an average of about 7,600 per day in 2011 to more than 11,000 per day in 2029."

LTC Comment: GAO has been warning periodically that the federal government “is on an unsustainable” fiscal path. It’s a race now to see whether seemingly oblivious public officials will deal with the problem before a financial catastrophe occurs. Don’t hold your breath.

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12/3/2012, “Medicare Advantage 2013 Spotlight: Plan Availability and Premiums,” Kaiser Family Foundation

Quote: "The Kaiser Family Foundation today issued a new report examining trends in the Medicare Advantage marketplace, including the choices available to Medicare beneficiaries in 2013, premium levels and other plan features. The analysis finds almost all plans offered this year will be available again in 2013, despite concerns that reductions in payments to plans under the Affordable Care Act would result in widespread pullouts from Medicare Advantage plans. If all beneficiaries choose to remain in their current plans, monthly premiums would increase about 10 percent, or $4, on average. The analysis also examines the types of plans available (HMOs, PPOs, etc.), changes in out-of-pocket limits, and the availability of special needs plans. Medicare Advantage 2013 Spotlight: Plan Availability and Premiums is authored by researchers at Mathematica Policy Research and the Kaiser Family Foundation."

LTC Comment: The latest on Medicare Advantage plans.

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12/2/2012, “Behind a Call That Kept Nursing Home Patients in Storm's Path,” by Jennifer Preston, Sheri Fink and Michael Powell

Quote: "Mayor Michael R. Bloomberg, acting on the advice of his aides and those of Gov. Andrew M. Cuomo, recommended that nursing homes and adult homes stay put. The 305 residents would ride out the storm. . . . The recommendation that thousands of elderly, disabled and mentally ill residents remain in more than 40 nursing homes and adult homes in flood-prone areas of New York City had calamitous consequences."

LTC Comment: Seems like a bad call, but on the other hand, “transfer trauma” has to be a consideration in such circumstances too.

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11/30/2012, “Researcher: Remember the LTCI demographics,” by Allison Bell, LifeHealthPRO

Quote: "Melnyk -- who emphasized that he spoke for himself, not the ACLI -- said he believes the aging of the U.S. population and younger consumers' growing familiarity with long-term care (LTC) risk are much stronger forces than whatever short-term problems are causing problems at LTCI divisions today."

LTC Comment: True, but the biggest problem and opportunity, is that Medicaid remains a major funder of LTC for people who should have purchased LTCI. That’s an opportunity because it can’t go on indefinitely and when it stops, LTC insurance will fill the gap . . . and save the day.

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Updated, Friday, December 7, 2012, 11:28 AM (Pacific)

Seattle--

LTC BULLET: THE MYTH OF UNAFFORDABILITY . . . STILL!

LTC Comment: Too little has changed since we debunked “The Myth of Unaffordability” in 1999, as LTCA’s Steve Forman elucidates after the ***news.***

*** REMEMBER PEARL HARBOR DAY and those who served. ***

*** MEDICARE LTC SETTLEMENT UPDATE: Find here an update on the proposed court settlement that expands Medicare coverage of longer-term "maintenance care." The update comes from an organization that favors the proposed settlement for which the judge has granted preliminary approval subject to a "Fairness Hearing." The downside, of course, is that as Medicare pays for more and longer skilled, home and therapy care, the program’s $38.6 trillion unfunded liability will continue to increase and the public will perceive less incentive to plan privately for LTC risk and cost. ***

*** LTCI SUMMIT PRESENTATIONS AVAILABLE ONLINE: Recordings of 32 workshop and keynote presentations from the 2012 National Long Term Care Insurance Sales Summit are now accessible for insurance and financial professionals. Some 560 agents, brokers and marketing professionals attended the event held November 10-12, 2012 in Las Vegas. "Summit sessions ranged from the very basic for those just getting started to some highly advanced topics featuring many of the nation's leading industry experts," explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. They varied in length from 45 minutes to two hours. Get free access to the first five minutes of each presentation here: www.aaltci.org/audios. Download complete sessions for $20 or $390 for all. To download sessions or order CDs, take advantage of a special 33 percent professional discount arranged by the Association. Simply enter the code SAVE33 during the online checkout process. The discount is valid through January 2013. ***

*** “FISCAL CLIFF” news coverage reminds us of this advice from an old Ann Landers column:

"Ten Cannots"
by the Reverend William J.H. Boetcker

You cannot bring about prosperity by discouraging thrift.
You cannot help small men by tearing down big men.
You cannot strengthen the weak by weakening the strong.
You cannot lift the wage earner by pulling down the wage payer.
You cannot help the poor man by destroying the rich.
You cannot keep out of trouble by spending more than your income.
You cannot further the brotherhood of man by inciting class hatred.
You cannot establish security on borrowed money.
You cannot build character and courage by taking away men's initiative and independence.
You cannot help men permanently by doing for them what they could and should do for themselves.

From: Ann Landers Advice Column, Seattle Post-Intelligencer, July 29, 1995, page C2.

LTC BULLET: THE MYTH OF UNAFFORDABILITY . . . STILL!

LTC Comment: In the Center for Long-Term Care Reform’s 1999 monograph titled “The Myth of Unaffordability: How Most Americans Should, Could, and Would Buy Private Long-Term Care Insurance [link]” I reached the following conclusion:

Confronted with the stark reality of long-term care financing risk, most Americans (realistically as many as 70 or 80 percent) can afford to purchase the protection of private long-term care insurance at one stage of their life or another. For the young and middle-aged, the challenge is to get their attention. For older people, the challenge is to help them find creative ways to generate the cash flow for premiums.

Please don’t batter me with emails insisting “that’s nuts” unless and until you’ve read our 84-page, extensively documented, 13-year-old study. You may find a happy discovery waiting for you there. For a quick summary of the report, see our LTC Bullet: The Myth of Unaffordability, published August 27, 1999.

But whether or not you find my analysis and conclusions in the “Myth of Unaffordability” persuasive, that was then and this is now. How can anyone seriously suggest today, after rising premiums and plunging incomes, that private LTC insurance remains affordable? Here’s how:

Special thanks to Stephen D. Forman, Senior Vice President of Bellevue, Washington based Long-Term Care Associates, for permission to re-publish his article titled "LTC Premiums Have Decreased! Say What?," which follows.

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"LTC Premiums Have Decreased! Say What?"
by
Stephen D. Forman

Stop me if you’ve heard this one: “Long-term care insurance is too expensive,” or “LTCi costs too much,” or “The product is unaffordable.” Sound familiar? What makes it even worse is that such clap-trap comes not only from the mouths of agenda-driven journalists and chicken-little consumers, but is also repeated by our own peers, carriers and spokespeople.

CATAPULTING THE PROPAGANDA

Minds more shrewd than my own established that repetition turns opinion into fact. The danger of this potent marketing concept is when it’s used without forethought. When we repeat the statement that LTCi is unaffordable we damage our sales and our industry multi-fold:

1. We reinforce the narrative. That rates are rising is already the dominant storyline in the media, and a hole we must climb out of every morning just to begin our workdays. It helps the industry not one bit to provide news outlets with soundbites claiming our own product is expensive.

2. We make sales harder than necessary. Most consumers believe LTCi is—are you sitting down?—too expensive. As a result, we devise all sorts of contortions to accommodate this objection, including a movement afoot to persuade consumers to under-insure themselves just to make a sale.

3. We change the way the product is sold. There was a time when planning began with a suitability review and needs-analysis, followed by personalized plan design. However, in a world where price is paramount, such ideals are quickly jettisoned. Out goes “needs-based analysis”, and in comes “spreadsheeting”, which I’ve argued has led to the ruination of our business [link].

4. We discourage the use of important riders. Although the industry has adapted to the varied needs of our clientele by devising a brilliant array of unique riders, the fact is that each of these planning tools nudges up the price of a plan incrementally. Sadly, there are perhaps 2 which are sold to any great degree, while the others primarily “sit on the shelf”.

5. We encourage budget-based solutions. More than one carrier has introduced illustration software which permits an agent to enter a budget, and work backward to produce a matrix of available benefits. The result of years of groupthink has been visited upon us in the form of agents losing control—and rendering their services redundant—to Priceline-like consumers who now “name their price”.

But what about the premise? This knock against runaway LTCi pricing—how the product is increasingly more expensive and must be shaved, contained, or sliced—what if it’s all wrong? Fortunately for us, it is.

The cost of living is measured in the hours and minutes we must work to live.

SORTING FACT FROM FICTION

Let’s start with a crash course in economics. According to the Federal Reserve of Dallas, “Making money takes time, so when we shop, we’re really spending time. The real cost of living isn’t measured in dollars and cents but in the hours and minutes we must work to live.”¹

An example may help here, “A pair of stockings cost 25-cents a century ago. Of course, the average wage at the time was 14.8-cents an hour, so the real cost of stockings in 1900 was one hour and forty-one minutes of work for the average American. If you walk into a department store today, stockings (pantyhose) are seemingly more expensive than they were in 1900—but they’re not. The price has gone up, but our wages have gone up even faster. Stockings now cost around $4, while America’s average wage is over $13 an hour. As a result, a pair of stockings costs the average worker only eighteen minutes of time, a stunning improvement from an hour and forty-one minutes.”²

It’s actually one of the great marvels of Western technology and efficiency that over successive generations we can work less and less to pay for equal goods and services. In economics it’s called “productivity”, and such material progress is not to be taken for granted. It’s at most a few centuries old—remember the stagnation called the Dark Ages? With “productivity” as our backdrop, let’s examine the cost of long-term care insurance in a new light.

PUTTING IT IN PERSPECTIVE

For this study, we gathered 15-years of statistics, from 1995 – 2010. We examined average premiums at four different ages (60, 65, 70 and 75) for a nearly-identical benefit across 10 representative carriers. For example, although the average premium for a 60-yr old tended to rise over time for the same coverage, this was neither unexpected, nor particularly telling. This is why most LTCi price indices we’ve read tend to be of limited utility.

We need to add context.

Therefore, for the same time period we obtained both Income and Wealth statistics from the US Census. Although the Census does provide very good Median and Mean Income statistics by year, it groups them by age-band (55 – 64, and 65+), which forced us to make some accommodation in our calculations. We were consistent with our choices when borrowing the Net Worth statistics as well (55 – 64, and 65 – 74 age bands).³

The results?

A 60-yr old in 1995 spent 4.1% of her income on LTCi, while a 60-yr old in 2010 spent 4.2%. Meanwhile, a 65-yr old spent 9.1% of her income on LTCi in 1995, while a similar 65-yr old in 2010 spent only 8.8%. One could charge that LTCi is expensive for some individuals because it costs more than 7% of one’s income— the arbitrary and discredited method found on the NAIC Suitability Form—but that would miss the point entirely. Rather, we should all marvel how—in 2010—LTCi costs roughly the same, or less, than it did in 1995.

Besides, we all know you don’t pay for LTCi out of income—you pay for it out of assets! So let’s look at Net Worth. A 60-yr old in 1995 spent 0.25% of her Net Worth on LTCi premiums, whereas a 60-yr old in 2010 spent 0.21%. The 65-yr old in 1995 spent 0.39% of her Net Worth on LTCi, while the 65-yr old in 2010 spent 0.26%.

Once again, the bottom line is clear: LTCi premiums may have increased, but our incomes and net worth have both risen faster.

The 65-74 and 75+ age brackets are the only ones to experience rising real median incomes between 2007 and 2010.

NO APOLOGY NECESSARY

We could still point an accusatory finger at our own industry and product, except that we have nothing to apologize for. During roughly the same time frame as LTCi prices stood still—relative to Income and Net Worth—the cost of items such as Auto Insurance (45%) and Health Insurance (131%) skyrocketed.

Yet the industry has chased a myth—a belief that our own sales have suffered due to price. (Fact is, even if LTCi were half the price, it would still cost more than our #1 competitor. [Ie., Medicaid) This is why product designs and sales schemes which rely on cost-cutting fail: know anyone who’s making a killing selling Short Term Care lately? GPO and Co-Insurance designs have been around for a decade, and even though they’ve sunk entire carriers, companies keep re-introducing them as if they were an industry savior. You will notice a theme: even when our ads and marketing pieces begin with the premise, “It’s a myth that LTCi is expensive,” the solutions put forth inevitably cave by suggesting ways to lower the price.†

And yet, according to the latest National Partnership Survey, nearly 50% of partnership policyholders of All Ages are today paying less than $2,000/yr, and nearly 63% pay less than $2,500/yr. Compared to just about anything else we might pay $2,500 for, is this a lot of money? It’s dang cheap! To close, let’s channel the words of my father, “Mr. Client, do you think you and your wife would have a hard time coming up with $5,000 a year?”

“Oh my, Mr. Forman, we could manage it out of our savings, but it might be a little tough some years.”

“Well then you’re damn sure not gonna be able to come up with $5,000 a month should either one of you ever need nursing home or assisted living care, wouldn’t you agree?”

Let’s get back to basics. Let’s not cede control of the narrative to the media and consumers. Our product is not expensive—it’s a terrific value and its price has held steady for at least 15 years. As always,

Good Selling!

Stephen D. Forman, SVP

LTCA

@ltcassociates

¹ Michael Cox and Richard Alm, Time Well Spent: The Declining Real Cost of Living in America, Federal Reserve Bank of Dallas, 1997 Annual Report.

² Charles Wheelan, Naked Economics: Undressing the Dismal Science, p. 152, 2002.

³ The statistics for Net Worth were offset a year or so from the points-in-time when we calculated Avg Premiums, but the effect should be marginal: for instance, comparing 1997 to 1995, or 2000 to 2001.

† The ultimate endgame? Linked-benefit products. These demand no premium from the consumer at all, simply a re-positioning of assets “from one pocket to the other”.

Image Courtesy of Lewis W. Hine.

Image Courtesy of "The Saeculum Decoded", a blog by Neil Howe, Once Again Economy Hammers Gen-Xers and Favors the Silent, June 12, 2012.

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Updated, Tuesday, December 4, 2012, 2:10 PM (Eastern)

Baltimore, Maryland--

MARYLAND EVENTS, NEW NUMBERS AND LTC NEWS AND COMMENT

LTC Comment: Steve Moses has enjoyed a week of valuable business opportunities in Maryland. Special thanks to Center for LTC Reform Regional Representative Sally Leimbach for her advocacy resulting in Steve’s presentation last Tuesday to 180 members of the Baltimore Estate Planning Council, last Monday to 66 members of the Maryland Health Underwriters Association and last Friday to the LTCI Producers Roundtable. What a great week capped with fun times and great food in between and after. Many thanks!

We announced publication of the 2013 Medicare and Medicaid numbers in Friday’s LTC Bullet. Here’s the story as presented by McKnight’s LTC News followed by a link to the official CMS chart.

11/20/2012, “CMS Releases 2013 Skilled Nursing Co-Insurance Amounts,” McKnight’s LTC News

Quote: “The Centers for Medicare & Medicaid Services has released the 2013 daily co-insurance amounts for skilled nursing care services, along with the inpatient hospital deductible amount. The inpatient hospital deductible will be $1,184, up $28 from 2012. The daily co-insurance amount will be $296 for the 61st through 90th day of hospitalization in a benefit period, CMS said Friday. It will be $148 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period. The standard monthly Part B premium rate for all enrollees for 2013 is $104.90, up $5 from 2012. The Part B deductible will be $147 for all Part B beneficiaries.”

LTC Comment: For all the new Medicare and Medicaid numbers from the latest 2012 updates back to the early 1990s, see our section on MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY in The Zone. For a password reminder or to join the Center and get access to The Zone, contact Damon at 206-283-7036 or damon@centerltc.com.

CMS Chart: CLICK HERE

LTC Comment: The government has published the following new numbers affecting Medicaid LTC financial eligibility for 2013 (see chart below). Spousal impoverishment protections increase from $2,841 to $2,898 per month of income (originally $1,500 after being established in 1988) and from $113,640 to $115,920 in assets (originally $60,000). The home equity exemption increases from a minimum of $525,000 to $536,000 in most states (originally $500,000 when established in 2006) to a maximum of $802,000 in 13 states and DC, up from $786,000 (originally $750,000).

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12/2/2012, “Researcher: Remember the LTCI demographics,” by Allison Bell, LifeHealthPRO

LTC Comment: Yes, true, and once government stops forcing interest rates down and giving away LTC to people who should have purchased LTCI, the product will take off like a skyrocket.

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11/29/2012, "Long Term Care Insurance Online Lead Generation Studied,” by Jesse Slome, ExpertClick

Quote: "'The Internet is being widely used by consumers seeking information as well as actual insurance quotes,' explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. 'Key search phrases such as long term care insurance quotes are now costing more than ever for insurance companies and agents who pay for Google Adwords. A single click now costs between $20 and $30.'”

LTC Comment: And you thought mail leads were expensive!

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11/30/2012, “Boomers will redefine senior living communities,” by Daniel Katz, Rochester Business Journal

Quote: "The nearly 10,000 individuals turning 65 each day have a range of expectations that are considerably broader than their parents', requiring traditional religious and community-based models to develop new plans and programs to meet their needs."

LTC Comment: Here come the boomers!

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11/30/2012, “Aetna Launches New Managed Long-Term Care Program in Five New York Counties, Target: Manhattan, Brooklyn, Queens; Nassau & Suffolk counties,” Life & Health Advisor [link]

Quote: "Aetna Better Health of New York today announced its participation in New York State's managed long-term care (MLTC) program. Aetna Better Health of New York, an Aetna Medicaid company (NYSE: AET), will serve people eligible for the state program in three New York City boroughs-Manhattan, Brooklyn and Queens-as well as Nassau and Suffolk counties on Long Island."

LTC Comment: If you can't beat 'em, join 'em? Aetna, having dropped out of LTC insurance years ago, is teaming up with Medicaid to do “managed” long-term care. I predict this liaison will follow the usual pattern: government offers a good deal; private industry adapts to take advantage of it; then government removes the punch bowl and the party ends . . . not well for the companies that participate.

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11/29/2012, “Hybrid LTCI prospects: How to find (and sell!) to them,” by Charles K. Hirsch, LifeHealthPRO

Quote: "In Part I of this roundtable, three producers share how they look for LTCI hybrid prospects and what they're saying to those prospects when they find them."

LTC Comment: Here come the hybrids!

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11/29/2012, “Common objections to LTCI hybrids - and how to overcome them,” by Charles K. Hirsch, LifeHealthPRO

Quote: "Like any product, hybrid LTCI policies aren't perfect, and they're not for everybody. But when a hybrid fits a client's needs, how do you convince him or her to buy? Three successful producers share how they're countering objections when it comes to hybrid LTCI products and talk about what features they'd like to see in future versions of the policies."

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11/29/2012, “Women Daunted by Long-Term-Care Costs,” by Kelly Greene, Wall Street Journal

Quote: "A report released today finds that the closer people get to retirement, the lower their confidence that they can cover long-term-care costs. Women have lower confidence levels than men, which is troubling since they tend to have greater long-term-care needs, as they live longer on average and are less likely to have a partner around to help take care of them if they need it."

LTC Comment: Long-term care IS a women’s issue.

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11/28/2012, “The Financial Balancing Act,” by Christopher A. Hynes, Fox Business

Quote: "In particular, long-term care costs-at $130,000 to $150,000 (in today's dollars) for custodial care in Massachusetts, for example-would necessitate a large chunk of liquid assets to be accessible as part of a retirement income plan. If these assets were not ultimately consumed, however, they could be ultimately subject to both state and federal estate taxes at the death of the second spouse. . . . Fortunately, one solution could be a life insurance policy with a Critical Illness Rider (CIR). A CIR enables a client who can obtain life insurance to benefit from a contractual provision allowing the owner to accelerate the death benefit during life. There is neither specific underwriting for long-term care risk (morbidity) nor an additional cost for the CIR."

LTC Comment: Critical Illness insurance is coming on, but has a long way to catch up with the markets in Europe, Asia and Canada.

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11/28/2012, “4 Medicaid myths, debunked: You don't have to be destitute to get help with elder care,” by Elizabeth O’Brien, WSJ MarketWatch [link]

Quote: "In the meantime, here are four Medicaid myths that you're likely to hear as you approach retirement-and the reality that can help you navigate the program."

LTC Comment: This article is not complete nor completely accurate, but it gives you a pretty good idea what the elder law bar is telling people about government financed LTC.

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11/27/2012, “Manulife names new Canadian chief as part of executive shuffle,” Financial Post

Quote: "Manulife Financial Corp. has appointed Marianne Harrison to head the company's Canadian division, effective Jan. 1. Harrison has been president of Manulife's John Hancock Long Term Care Insurance in the United States since 2008. Her appointment to lead the biggest business unit in the Manulife group follows the appointment of Paul Rooney as chief operating officer of the whole company."

LTC Comment: Congratulations to Ms. Harrison. LifeHealthPRO reports that Michael Doughty, who already heads John Hancock’s Life Insurance operations, will replace Harrison by adding LTCI to his portfolio.

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11/26/2012, “Why $16 Trillion Only Hints at the True U.S. Debt Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't,” by Chris Cox and Bill Archer, Wall Street Journal [link]

Quote: "We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government's true liabilities. The actual liabilities of the federal government-including Social Security, Medicare, and federal employees' future retirement benefits-already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure."

LTC Comment: Fiscal smoke and mirrors to hide America’s real financial condition isn’t just bad accounting, it is fraud perpetrated on a public largely ignorant of basic economics. We’ll all pay the price for that ignorance, evasion and denial sooner or later.

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11/26/2012, “57% of Family Caregivers Provide Financial Support to Loved Ones Despite Limited Resources: New survey underscores the growing demands placed on those caring for loved ones with complex health care needs,” Life & Health Advisor [link]

Quote: "Seventy-five percent of people caring for Medicare beneficiaries with complex health care needs have an annual income of less than $25,000, yet a majority provide financial support to their loved one, according to a new survey by Care Improvement Plus and the National Family Caregivers Association."

LTC Comment: More evidence of the financial and emotional strain on older caregivers.

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11/25/2012, “Pioneering the granny pod: Fairfax County family adapts to high-tech dwelling that could change elder care,” by Fredrick Kunkle, Washington Post [link]

Quote: "Her daughter's family had just invested about $125,000 in a new kind of home for her, a high-tech cottage that might revolutionize the way Americans care for their aging relatives. But Viola wouldn't even step inside. A new elder care option called the MedCottage is an apartment equipped like a hospital room that can be set up in your backyard. She told her family she would rather continue living in the family's dining room than move into the shed-size dwelling that had been lowered by crane into the back yard of their Fairfax County home."

LTC Comment: You can lead a horse to water . . . or a Grandmother to a Med-pod . . . but you can’t . . ..

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11/23/2012, “Women Face Higher Costs,” by Kelly Greene, Wall Street Journal

Quote: "Until now, insurers have charged the same premiums regardless of gender for the policies, which help pay for future nursing-home, assisted-living and home care. But beginning early next year, Genworth Financial, GNW -0.18% the country's largest long-term-care insurer, plans to start charging women applying for coverage as much as 40% more than men."

LTC Comment: One of the biggest differences between private insurance and social insurance is that the former prices risk and the latter doesn’t. Private insurance charges premiums based on the amount of risk the insured brings into the risk pool. Hence the need for underwriting. Social insurance, in its pure form, charges everyone the same and pays everyone the same. So, if you think non-smokers should subsidize smokers or that healthy people should subsidize sick people or that men should subsidize women, social insurance is for you. Private insurance, which prices risk fairly, is the far more equitable approach overall.

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11/21/2012, “Researcher: Medicaid Stifles LTC Ins. Purchases,” by Stephen A. Moses, originally published in the August 5, 1996 issue of National Underwriter Life & Health magazine and republished November 21, 2012 by LifeHealthPRO

Quote: "'Mr. and Mrs. Jones, if you don't buy this long-term care insurance policy from me, you could lose your whole life savings to the catastrophic costs of a long-term nursing home stay.' Long-term care insurance agents repeat that sentence with only minor variations thousands of times every day throughout the United States. But this traditional sales pitch has two major flaws: it is untrue and it usually fails."

LTC Comment: I wrote those words and backed them up with data, analysis and recommendations for a solution in a 1996 National Underwriter article. Special thanks to Lori Fjelstad of GoldenCare USA for bringing the fact to my attention that LifeHealthPRO is circulating the piece anew. Little has changed in the 16 years since it was published. We've closed a few Medicaid loopholes but enough remain open that most middle class people qualify easily for publicly financed LTC benefits and the wealthy can still wangle the best Medicaid beds with help from their elder lawyers. If you harbor any doubts, read our most recent report: "The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net." [link]

A few things of note have changed. Assisted living--still mostly private pay, but going to Medicaid fast all across the country--is a much bigger part of LTC now than in 1996. Nursing homes provide less long-term custodial care and have much higher acuity patients. LTCI market penetration is closer to 10% than 6%, but still too low. In the dozen states that put any limit on income for Medicaid eligibility, it's now $2,094 per month instead of $1,410. Spousal impoverishment protections have increased from $1,919 to $2,841 per month in income and from $76,740 to $113,640 in assets. Bottom line, Medicaid has crowded out private LTC insurance protection now for nearly 50 years instead of the 30 years I referenced in the article.

One thing hasn't changed at all: the solution. Target Medicaid to its originally intended clientele, the poor, and use some of the vast savings to incentivize everyone who is healthy, young and prosperous enough to plan early and save, invest and insure for LTC. Therein lies a solution to Medicaid's financial problems and a way to supercharge LTCI sales. And therein lies the Center for LTC Reform's ongoing mission.

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11/20/2012, “Does Insurance Cover Alzheimer's Care? Private and government insurance programs may cover some of the costs,” by Kimberly Lankford, Kiplinger's Personal Finance [link]

Quote: "One in eight individuals 65 and older suffers from Alzheimer's disease -- quite a sobering statistic for the growing number of baby boomers crossing that age threshold. And the costs can be an ‘overwhelming financial burden,’ says Carol Steinberg, executive vice-president of the Alzheimer's Foundation of America. Private and government insurance programs may cover some costs. Here's a primer on your options."

LTC Comment: The information on Medicaid LTC eligibility in this article expresses conventional wisdom but is inaccurate. Our latest report, on LTC financing in Maine, explains how Medicaid really works and why millionaires end up on Medicaid so easily (without spending down). Check it out here: http://www.centerltc.com/pubs/Maine.pdf.

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11/19/2012, “American Association for Long Term Care Insurance's Things to Look for When Visiting Aging Parents This Holiday Season: Holiday Visits Are Ideal Time to Take Aging Parental Reality Check,” by Jesse Slome, AALTCI [link]

Quote: "Beginning with Thanksgiving and continuing through New Year's millions of adult children visit their aging parents. They've been talking by phone all year being told everything is fine. But, once they arrive, it is obvious that all is not well. . . . According to an Association study some eight million Americans have long term care insurance coverage and the number of people calling insurers with questions about their policy benefits increases by roughly 15 percent immediately following the holidays."

LTC Comment: The holidays can be a very stressful time and topping the list of stressors if finally having to confront the reality that aging loved ones require long-term care.

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11/19/2012, “Medicaid, The Frail Elderly, And Federal Budget Cuts,” by Howard Gleckman, Forbes

Quote: "So who are the Medicaid takers? Among the elderly, they are among the nation’s most vulnerable. They are frail, often suffer from multiple chronic diseases (such as heart failure, dementia, or diabetes), and are impoverished. Many were once middle class but, due to illness, are without financial resources in old age."

LTC Comment: This is another misleading and disingenuous column by Howard Gleckman, a specialist in the genre. The real "Medicaid takers" are the lawyers and their clients who manipulate the program's financial eligibility rules to position their affluent clients ahead of the truly needy. Why do we have so many poor dual eligibles dependent on Medicaid? Because the welfare program has paid for most expensive LTC since 1965 and thus desensitized consumers to the risk and cost of LTC. Any doubts? See our reports The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link] and Save Medicaid LTC $30 Billion Per Year AND Improve the Program . This isn't rocket science, but it does require some nominal concern for reality, evidence and objectivity.

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Updated, Friday, November 30, 2012, Time (Pacific)

Seattle--

LTC BULLET: LTC GRADUATE SEMINAR UPDATED

LTC Comment: Steve Moses delivered the Center’s LTC Graduate Seminar to the Baltimore Estate Planning Council and the Maryland Health Underwriters Association this week. Read the program’s transcript update after the ***news.***

*** KEY NUMBERS UPDATED: The Centers for Medicare and Medicaid Services (CMS) has updated the critical Medicare and Medicaid numbers for 2013. For example, the home equity exemption for Medicaid increases from a minimum of $536,000 ($525,000 in 2012) to a maximum of $802,000 ($786,000 in 2012). For all the new numbers, see our updated chart here. It shows the year-by-year increases as adjusted annually for inflation going back two decades. You’ll need your Center Member’s-Only User Name and Password. Need a reminder? Or want to join the Center, receive our weekly publications and get access to The Zone? Contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** LTC CONFERENCE: Registration is now open for the Thirteenth Annual Intercompany Long Term Care Insurance Conference to be held March 3-6, 2013 at the Hilton Anatole in Dallas, Texas. Once again, the ILTCI conference will host and subsidize the cost for a special 2-day pre-conference CLTC Master Class (only $95 extra). Harley Gordon will personally conduct this class. If you are an agent selling LTC (or other) insurance directly to consumers, you can apply here for a Scholarship that will qualify you for a $295 Scholarship rate (plus an additional $95 if attending the CLTC class). If you are a government employee, register here for the conference using the Government Employee rate of $95. For those who have never attended ANY of the previous twelve annual conferences, get a special rate of only $395 (instead of the $895 early bird rate) and register here before January 10th. The price of registration goes up $100 after that date. Make your Hotel reservations early for attractive rates of only $129 (for the Hilton Anatole Hotel). Get all details at http://www.iltciconf.org/. If you have any questions, contact Jim Glickman at 818-867-2223. ***

*** MEDICAIDPLANNING.ORG: Every other week or so someone asks me if I’ve seen the egregious Medicaid planning promotions of one Roccy DeFrancesco at www.medicaidplanning.org. Yes. I have. And indeed, he is outrageous. Check it out here and watch his 22-minute video. Then let the purveyor of this advice know why self-impoverishment to qualify for public welfare financing of long-term care isn’t such a great idea. If you contact him, be professional and respectful, but firm. And by all means, forward a link to his website to your local health care media (print, broadcast and cable) explaining to the reporters how much damage Medicaid planning does to consumers and taxpayers. ***

LTC BULLET: LTC GRADUATE SEMINAR TRANSCRIPT UPDATED

LTC Comment: During the Center for Long-Term Care Reform’s 2008 Long-Term Care Consciousness Tour, Steve Moses delivered our LTC Graduate Seminar dozens of times to audiences all across the United States. The program received such positive reviews that we made a transcript of it available on the Center’s website here.

There’s been a lot of change and development in long-term care financing policy in the meantime, so we’ve updated the transcript. The new material follows below, more or less as presented in Baltimore, Maryland during the past few days. You can still find the whole transcript including the update here: http://www.centerltc.com/members/LTCGraduateSeminarTranscription112712.pdf.

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The LTC Graduate Seminar transcript update added on November 30, 2012 follows.

Long-Term Care Partnership Program

Finally, the DRA ’05 reinvigorated the LTC Partnership Program. LTC Partnerships had been around since 1992. The idea behind them was to incentivize people to purchase LTC insurance by forgiving some of the prospects’ Medicaid spend down liabilities. The offer: buy LTCI, use it, and the Partnership policy holder could go onto Medicaid while retaining assets up to the amount of insurance purchased and used instead of having to spend down to $2,000. Under a Robert Wood Johnson Foundation grant, four states—California, New York, Connecticut and Indiana—piloted the program. A variation, in New York alone, allowed holders of special Partnership policies to retain all their assets and still receive lifetime Medicaid LTC benefits.

As these pilot projects were gearing up in the early 1990s, they were derailed by Henry Waxman, a liberal Congressman from California. Waxman considered Medicaid to be welfare and inappropriate for people with substantial resources to receive. So, when the Omnibus Budget Reconciliation Act of 1993 made recovery from the estates of deceased Medicaid recipients mandatory, Congressman Waxman insisted that assets sheltered by Partnership policies for purposes of initial Medicaid eligibility, should nevertheless, not be exempted from estate recovery. That rule took the steam out of the Partnership movement. A Partnership policy holder could preserve substantial wealth and qualify for Medicaid, but at death that wealth became recoverable by the state to recoup Medicaid funds expended on the policyholder’s behalf.

For over a decade, the Partnership program languished. Then, in the DRA ’05, the OBRA ’93 estate recovery mandate was eliminated as against Partnership policies. They resurged and became available in half or more of the states. LTC insurance sales in the original four pilot states increased on the margin. Similar results are expected in the new Partnership states, especially in those that endorse and promote the policies officially. Nevertheless, two factors impede Partnership sales. First, Medicaid LTC eligibility remains easily available to middle-class and affluent people without significant spend down so that the Partnerships’ spend down forgiveness is less of an incentive than it would otherwise be. Second, Medicaid LTC has such a dismal reputation for problems of access, quality and impending insolvency that consumers who know the program are not likely to want to rely on it. Certainly, Medicaid is unlikely ever to pay for the kind and quality of home care and assisted living that are routinely available through private LTC insurance policies.

[See Stephen A. Moses, "The Long-Term Care Partnership Program: Why It Failed and How to Fix It," in Nelda McCall, editor, Who Will Pay for Long Term Care?: Insights from the Partnership Programs, Health Administration Press, Chicago, Illinois, 2001, pps. 207-222; http://www.centerltc.com/pubs/LTCPartnership.pdf.]

Recent LTC History

America’s post-Internet-boom, early-2000s recession led to passage of the DRA ’05 with its new constraints on Medicaid LTC financial eligibility. As so often happened in the past, however, soon after the new legislation passed, the economy improved, welfare rolls went down, tax receipts improved and public officials at the state and federal levels lost their enthusiasm for enforcing the new restrictions. In California, for example, Medi-Cal (California’s name for Medicaid) didn’t implement mandatory changes required by the DRA ’05 such as the longer lookback period for asset transfers and the cap on home equity. Nor did the federal government enforce the law, allowing California to flout it with impunity and other states to get by with only half-hearted enforcement.

[Source: Stephen A. Moses, Medi-Cal Long-Term Care: Safety Net or Hammock?, Center for Long-Term Care Reform and Pacific Research Institute, January 2011]

Medicaid planners found new ways to circumvent the DRA’s stronger spend-down rules, replacing for example the newly proscribed “half-a-loaf” strategy with a clever “reverse half-a-loaf” gimmick whereby their affluent clients could use promissory notes or annuities to “cure” an asset transfer penalty and achieve the same objective to preserve half the assets. Medicaid-compliant annuities re-emerged in popularity allowing “millionaires” to qualify easily for LTC benefits according to MaineCare (Maine’s name for Medicaid) eligibility workers.

[Source 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 and the Maine Health Care Association, November 2012 [link]]

Thus, by 2007, easy access to Medicaid LTC benefits was returning to its historical norm. Then the economic cycle clobbered America again. In 2008, the “Great Recession” began. Once more, state and federal tax revenues plummeted, welfare rolls skyrocketed, and huge state and federal budget shortfalls developed. In other words, the stage was set for another round of legislative and administrative initiatives to reduce Medicaid expenditures, tighten eligibility rules, curb Medicaid planning abuses, and protect the LTC safety net for people most in need. But this time, it didn’t happen. Why?

Maintenance of Effort

The American Recovery and Reinvestment Act of 2009 (ARRA ’09) was signed into law by President Obama on February 17, 2009. This “stimulus” law ultimately pumped $831 billion into the economy according to the Congressional Budget Office. State Medicaid programs were among the biggest beneficiaries of the ARRA ‘09’s largesse receiving approximately $100 billion in extra funds from an increase in federal Medicaid matching funds. But this windfall had a string attached. To qualify for the additional revenue, states had to agree not to tighten their Medicaid eligibility rules. This “maintenance of effort” (MOE) requirement prevented states from reducing Medicaid expenditures during the economic downturn by means of targeting scarce resources to the neediest applicants.

The ARRA ‘09’s MOE restriction expired at the end of June 2011, at which time state revenues plunged as federal matching fund rates reverted to pre-stimulus levels. A state that had been getting three dollars in federal matching funds for every dollar it put up now was getting only two federal dollars for every state dollar. Simultaneously, due to the reduced economic activity incidental to the ongoing economic downturn, other state revenues from sales and income taxes declined as well. But Medicaid costs continued to increase rapidly as they always do when the economy falters. This would have been the perfect time to control the Medicaid eligibility hemorrhage by targeting the program’s scarce benefits to citizens who needed them most.

By this time, however, a new MOE rule applied which prohibited any reduction in Medicaid financial eligibility. The Patient Protection and Affordable Care Act of 2010 (PPACA ‘10, AKA health reform or “ObamaCare”) required maintenance of effort upon penalty of the loss of all federal Medicaid funds. Under PPACA ‘10, however, the states received no bonus in federal matching funds for complying with MOE. Thus, with flat or falling state government revenues, state Medicaid programs all across the country were locked into retaining the generous Medicaid LTC financial eligibility they had implemented during better economic times. If they acted to reduce Medicaid LTC eligibility even within limits allowed by federal law before imposition of the MOE requirement, they could lose all federal Medicaid funds.

Then in June 2012 the United States Supreme Court ruled that, although ObamaCare is constitutional, states can nevertheless opt out of its Medicaid expansion provision without losing federal matching funds for the rest of their Medicaid programs. Arguably, states that choose not to expand Medicaid under PPACA should therefore not be constrained by the law’s MOE provision for the same reason. Some legal and policy experts, as well as the state of Maine, have made that case, but so far unsuccessfully based on interpretations from the Centers for Medicare and Medicaid Services (CMS, the federal agency that oversees Medicaid) and the Congressional Research Service.

Thus, faced with widespread budget shortfalls and doubtful new revenues sufficient to close the gaps, states have only two ways to constrain costs: cut benefits or cut providers. With eligibility cuts out of bounds due to MOE, the states’ only options, besides shifting funds from education or some other budget category, are to eliminate desperately needed services or to reduce provider reimbursements. Cutting services hurts the most needy. Provider reimbursements are already minimal and further cuts could lead to facility closures and other LTC provider shortages. At present, the maintenance of effort requirement is the biggest obstacle to Medicaid LTC reform, which is stymied so long as MOE remains in effect.

ObamaCare

The Patient Protection and Affordable Care Act of 2010 (PPACA ’10) or “health reform” was signed into law by President Obama on March 23, 2010. By far its most important impact on long-term care financing was its provision regarding maintenance of effort as already explained. But ObamaCare attempted to address LTC financing in two other potentially important ways. One was the “CLASS Act,” an acronym standing for Community Living Assistance Services and Supports. While not formally repealed, CLASS died for all practical purposes when it became clear the pseudo-LTC-insurance program was financially infeasible to implement. I explained the problems and deficiencies of CLASS in a 2011 speech to the Society of Actuaries "Living to 100" Symposium. The aborted program does not warrant further consideration.

The other way ObamaCare addressed long-term care was with several special programs and pilots designed to encourage more public financing of home and community-based services (HCBS). These are described in an October 2011 report by the Kaiser Family Foundation titled “State Options That Expand Access to Medicaid Home and Community-Based Services [link].” They need not concern us here, because, as the following section explains, publicly financed HCBS on a wide scale are not financially sustainable, impede a private market for home-based care, and discourage responsible long-term care planning.

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The LTC Graduate Seminar transcript update ends here. To read the whole transcript, including the section that follows the update, go to “The Long-Term Care Graduate Seminar.”

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Updated, Monday, November 19, 2012, 11:12 AM (Pacific)

Seattle--

HAPPY THANKSGIVING AND LTC NEWS AND COMMENT

LTC Comment: Happy Thanksgiving to all. We’ll take a breather by skipping our weekly LTC Bullet on Friday and next Monday’s E-Alert as well. That week I’m in Baltimore to address the Baltimore Estate Planning Council and the Maryland Association of Heath Underwriters, but we’ll be right back at you with the Center’s usual publications. LTC public policy is at a critical crossroads. There is a lot to be said and done in the coming year. Stay tuned.

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11/17/2012, “Does LTC insurance still make sense?, Mary Beth Franklin, InvestmentNews

Quote: "Policyholders like me should check their benefit level and compare it with the cost of care, according to Tom Riekse Jr., managing partner of LTCI Partners LLC. 'Most people who bought 5% compound inflation protection 10 years ago have more than covered the cost of care,' he said. They may be able to scale back on their inflation protection or daily benefit amount, or to reduce their coverage period to hold down premiums, Mr. Riekse said."

LTC Comment: Author Mary Beth Franklin falls into the trap of blaming private LTCI for problems caused by government policy, such as higher premiums resulting from Fed-mandated low interest rates and anemic demand caused by decades of easy access to Medicaid.

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11/16/2012, “Medicare premiums going up $5 a month for 2013,” by Ricardo Alonso-Zaldivar, Associated Press

Quote: "Medicare premiums are going up $5 a month in 2013, the government said Friday. It's less than expected, but still enough to eat up about one-fourth of a typical retiree's cost-of-living raise next year. Medicare chief Marilyn Tavenner said the new ‘Part B’ premium for outpatient care will be $104.90 a month. In most cases, it's deducted directly from a beneficiary's monthly Social Security check. Currently the premium is $99.90 a month."

LTC Comment: Good news, bad news from Medicare/Social Security, which have a combined unfunded liability of many trillions of dollars. Think maybe more bad news than good news is on its way?

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11/16/2012, “Study: Boomers most interested in health at 2 'change points,'” McKnight’s LTC News

Quote: "Baby boomers are most interested in their health and health issues at two key points of their lives, new study results show. The findings give senior care providers new insight as to when key healthcare decisions might be more likely to be made by prospective residents or their adult children. The increases in healthcare focus came after their 50th birthday and as study subjects neared age 65, researchers said. The report showed people in their late 40s were the least invested in health issues; interest hit a plateau after the first high point: before the 51st birthday through the respondents' early 60s."

LTC Comment: Study findings verify what LTCI producers know: 50 and 65 are important birthdays for LTCI prospects.

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11/15/2012, “Are You Responsible for Mom's Nursing Home Bill?,” by Chris Kissell, FOXBusiness

Quote: "As your parents age, they may spend a few months or more in a long-term care facility. Thanks to parental support laws, also known as ‘filial support,’ you could be on the hook for unpaid bills they leave behind."

LTC Comment: I hesitate to pass on articles like this one because filial support laws are rarely enforced. But this piece is interesting because the incoming president of NAELA (the Medicaid planners' trade association) tries to turn it into an advertisement for Medicaid planning.

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11/15/2012, “For Alzheimer's, Detection Advances Outpace Treatment Options,” by Gina Kolata, New York Times

Quote: "The ability to detect the disease has leapt far ahead of treatments. There are none that can stop or even significantly slow the inexorable progression to dementia and death. The new brain scan technology, which went on the market in June, is spreading fast. . . . There are already more than 300 hospitals and imaging centers, located in most major metropolitan areas, that are ready to perform the scans, according to Eli Lilly, which sells the tracer used to mark plaque for the scan. . . . Many insurers, including Medicare, will not yet pay for the new scans, which cost several thousand dollars. And getting one comes with serious risks. While federal law prevents insurers and employers from discriminating based on genetic tests, it does not apply to scans. People with brain plaques can be denied long-term care insurance." [Emphasis added.]

LTC Comment: Gee, fire insurance has the same problem. You can’t buy it after your house is in flames. Maybe government should step in and guarantee your right to purchase fire insurance whenever you need it. We could have high risk pools for people whose homes are fire traps. Will this madness never end?

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11/15/2012, “Health-care bill in retirement: $240,000, How to budget for what Medicare doesn't cover [link],” by Elizabeth O'Brien, WSJ MarketWatch

Quote: "Here's a breakdown of where their $240,000 goes: 32% goes to premiums for Medicare Parts B & D, which cover doctor visits and drugs, respectively; 23% goes to prescription drugs expenses not covered by Medicare Part D; and 45% goes toward Medicare cost-sharing provisions, including copayments, deductibles, other services not covered by Medicare, and any optional Medigap policies purchased. For all their detail, Fidelity and EBRI's retirement health-care estimates have a whopping exclusion: the cost of long-term care, which could be provided at home or in an assisted living or nursing facility." [Emphasis added]

LTC Comment: Whopping is right!

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11/14/2012, “12 questions for 1 successful LTCI agent: Phil Grossman, A sales leader,” by Marilee Driscoll, LifeHealthPRO

Quote: "Phil Grossman is president and chief executive officer of LTC Options Inc. of Scottsdale, Ariz. He has a $1.5 million book of in-force long-term care insurance (LTCI) business, and he was recognized by the American Association for Long-Term Care Insurance (AALTCI) in May for ranking 15th in the nation in terms of LTCI sales."

LTC Comment: How better to learn the art and science of selling LTCI than to pick the brain of a successful producer? Phil Grossman definitely qualifies. And his interviewer, author/trainer Marilee Driscoll, who, decked out in a Hollywood producer’s costume directed professional video shoots of industry standouts at the recent Producers Summit in Las Vegas, knows whom and what to ask.

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11/14/2012, “The 3in4 campaign: Use it, Opinion,” by Margie Barrie, LifeHealthPRO

Quote: "Building awareness of need is the first step toward any buying decision. The 3in4 Need More Campaign can start conversations that drive home the need for LTC planning, gain attention, stimulate referrals and open doors to worksite/association educational meetings."

LTC Comment: LTCI industry maven Margie Barrie describes, endorses and encourages all to use the 3in4 Need More campaign.

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11/13/2012, “LTC: Why don't they plan? With video,” by Allison Bell, LifeHealthPRO

Quote: "The overall state of long-term care (LTC) planning in the United States may have more to do with lack of nerve than with lack of money."

LTC Comment: Are people really afraid to think about LTC planning or have they been anesthetized to the risk and cost of LTC by decades of easy access to publicly financed LTC? People don’t plan for Medicaid decades in advance but they fail to plan for LTCI because they sense someone always pays for LTC, never mind who or what.

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11/13/2012, “Do I Really Need Long-Term Care Insurance?,” by Dave Ramsey, FOXBusiness

Quote: "If you have $20 million liquid sitting around, then you could easily set aside $2 to $3 million for long-term care and still be in great shape. But I advise virtually everyone to have good, long-term care coverage in place by age 60. For many folks, it can make the difference between living with dignity and having to depend on the government. And that's not something I ever want to do for anything-especially not my healthcare!"

LTC Comment: Wise words from the nationally syndicated financial adviser.

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11/13/2012, “Future of long-term care insurance in flux,” by Christine Dugas, USA TODAY

Quote: "As Americans are living longer, they are facing the staggering cost of nursing homes and assisted-living care, often without a financial safety net. Long-term care insurance is one way to prepare for the growing expenses, but the industry is undergoing changes and the products are confusing and costly."

LTC Comment: When will we see an article like this one that begins with the first sentence above and follows with: “Relying on government programs like Medicaid and Medicare is one way to plan for growing LTC expenses, but public entitlement programs are complicated, confusing, bankrupt already and unable to provide the same safety net in the future that they’ve provided in the past..” Why is private insurance always criticized for shoring up reserves whereas government receives no criticism for failing to set aside any reserves?

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11/12/2012, “Election Means New Leaders on Aging Policy,” National Council on the Aging

Quote: "Election defeats, retirements, and committee leadership term limits mean there will be some changes at the top of Congressional committees that oversee programs and benefits for older adults next year."

LTC Comment: You can't tell the players without a program so here it is.

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11/12/2012, “Nursing Homes Said to Overbill U.S.,” by Thomas M. Burton, Wall Street Journal

Quote: "Hundreds of nursing homes overcharge Medicare every year for so-called skilled services, adding $1.5 billion in annual costs to the program, according to a federal report. . . . About one-fourth of Medicare bills from facilities examined in the report were incorrect. The majority of these claims involved so-called upcoding, where a nursing home or other provider inflates the cost of its bill to Medicare by claiming more intensive services were done than actually performed. In other cases, nursing homes provided treatments that were inappropriate."

LTC Comment: Nursing homes squeeze all the reimbursement they can out of Medicare, because Medicaid reimbursement is so deficient and their private-payers have nearly disappeared. Using generous Medicare payments to balance sparse Medicaid reimbursements is getting much harder to do and will become ever more so as health reform is implemented and the fiscal cliff is addressed.

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11/12/2012, “What should you think about LTC planning now? 8 trends,” by Tom Riekse, Jr., LifeHealthPRO

Quote: "Long-term care (LTC) planning hasn't been a big topic during the recent elections. But for the aging baby boomers living in states struggling with bursting Medicaid budgets and families dealing with the Alzheimer's epidemic, it is a never ending focus of conversation and concern. Of course, part of that discussion is how to pay for LTC and the role long-term care insurance (LTCI) plays. Here are some recent trends that advisors should keep in mind when discussing long-term care plans."

LTC Comment: Thoughtful--and hopeful--observations and analysis from Tom Riekse, Jr. of LTCI Partners, a Center for Long-Term Care Reform corporate member.

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11/12/2012, “Standard Life and Accident Finds New Niche in Critical Illness Plans for Small Groups [link],” Standard Life and Accident Insurance Company

Quote: "Standard Life and Accident Insurance Company (Standard Life), a leading provider of medicare supplement and voluntary benefits insurance, introduces critical illness plans for groups ranging from a minimum of 2 lives to 1000+ ."

LTC Comment: CI on the move.

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11/12/2012, “Baby Boomers Blunt Fed Easing While Saving for Retirement,” by Elizabeth Dexheimer and Jeff Kearns, Bloomberg

Quote: "Older people are more likely to forgo purchases of houses, cars and other big-ticket items that the Fed is trying to encourage with near-zero interest rates. And their numbers are growing, making the Fed's task ever harder."

LTC Comment: Maybe the Fed is finally starting to consider the broader impact of its low-interest-rate policies such as ruining retirements, impoverishing seniors and undercutting all forms of private insurance.

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Updated, Friday, November 16, 2012, 11:09 AM (Pacific)

Seattle--

LTC BULLET: CUT MEDICAID TO HELP THE POOR

LTC Comment: Counterintuitive, but true. Dramatic targeted cuts to Medicaid could dodge the fiscal cliff and improve Medicaid LTC for the needy. Details follow.

LTC BULLET: CUT MEDICAID TO HELP THE POOR

LTC Comment: The Center for Long-Term Care Reform’s new report on Medicaid and long-term care financing in Maine explains how the Pine Tree State can save money, improve long-term care for the poor, and divert the middle class away from welfare dependency.

Titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” the report recounts how counterproductive federal laws and regulations rob LTC benefits from the poor and shower them on the well-to-do.

Read the full report here. Following is an op-ed piece that briefly explains the study’s major findings and their significance. For more information on the same problem and solutions, please see our reports on Medicaid and LTC financing in New York, California, Pennsylvania and many other states here as well as our study titled Save Medicaid LTC $30 Billion Per Year AND Improve the Program.

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“Cut Medicaid to Help the Poor”
by
Stephen A. Moses

Cut Medicaid to help the poor? Sounds crazy. Everyone knows Medicaid benefits low-income people impoverished by catastrophic medical expenses. How could cutting Medicaid possibly help the poor?

It’s a fascinating story we uncovered in a study of Medicaid and long-term care financing in the State of Maine. You see, Maine’s Medicaid program, called MaineCare, helps the poor, but it also showers generous benefits on the middle-class, the affluent and even the wealthy!

Frustrated MaineCare eligibility workers complained that rich Mainers--“even millionaires”--qualify instantaneously for the program’s most expensive long-term care (LTC) benefit using “Medicaid-compliant annuities.” Nearly $6 million dodged MaineCare spend down requirements that way last year.

MaineCare recipients can retain $750,000 of home equity and--without any dollar limit--one income-producing business, household goods, one auto, prepaid burials, term life insurance, and individual retirement accounts. Literally hundreds of thousands of dollars.

But if you still have too much wealth to qualify for free LTC, not to worry. “MaineCare planners” will gladly help you self-impoverish artificially for legal fees of $10,000 to $15,000, little more than you’d pay privately for one month in a nursing home.

Our study concluded that “just about anyone qualifies for MaineCare’s expensive LTC benefits without much problem, except, ironically, the poor, who often lose everything quickly for lack of professional financial and legal advice.”

No wonder MaineCare is busting the state budget.

But who’s to blame? Certainly not the dedicated public officials and staff who administer MaineCare. Their hands are tied by extravagantly generous and elastic federal Medicaid eligibility rules and regulations that all states are compelled to administer.

What little flexibility states had in the past to target their Medicaid programs to people in need they lost when, first the stimulus and then health reform, imposed a “maintenance of effort” requirement that froze their most generous eligibility rules in place.

The consequences are grave. Two of three nursing home patients and four of five assisted living residents in Maine have their bills paid by MaineCare. Reimbursements to LTC providers are so low that care access and quality are threatened. The poor suffer most because they depend exclusively on MaineCare, whereas the affluent have choices.

Few Mainers buy private insurance for LTC or spend their own assets, including home equity, for care. Decades of easy access to publicly financed benefits after the insurable event occurs have desensitized them to the real risk and cost of long-term care.

MaineCare’s growing LTC costs already threaten to pull resources away from education and other state priorities. A bulging wave of aging baby boomers in Maine will swamp this foundering system in time. Our report concluded that Maine should

redouble its efforts to escape the federal “maintenance of effort” rule,
tighten MaineCare LTC eligibility rules to stop the affluent from commandeering public benefits intended for the needy, and
encourage everyone to plan responsibly so they do not become dependent on public welfare for their own care someday.

In a nutshell: “Cut Medicaid to Help the Poor.”

Stephen A. Moses is president of the Center for Long-Term Care Reform, a public policy research institute in Seattle, www.centerltc.com. Contact him at 206-283-7036 or smoses@centerltc.com.

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Updated, Tuesday, November 13, 2012, 1:12 PM (Pacific)

Seattle--

LTCI Producers Summit and LTC News and Comment

LTC Comment: Let’s start with a view from the Summit. The 10^th Long-Term Care Insurance Producers Summit occurred in Las Vegas over the preceding three days. Appropriately held on Veterans Day weekend and immediately after a hard-fought presidential election, this year’s Summit saw some of the 550 attendees licking their political wounds but all girding for ongoing and anticipated challenges to the LTCI industry.

The 2012 Producers Summit was one of evaluation and consolidation. Many of the breakout sessions asked and answered the question: “How do we respond to the new normal of fewer carriers, higher premiums and stricter underwriting?” Answers included a new kind of critical illness product designed to supplement LTCI for consumers and producers; linked benefits, hybrids with annuities and life insurance, that are coming on strong; and life settlements that can generate tremendous resources to fund quality LTC and help people afford LTCI premiums.

Knight Kiplinger delivered the meeting’s keynote address. He’s Editor in Chief of The Kiplinger Letter and Kiplinger’s Personal Finance. His topic was “the first hundred days and the next four years” after last Tuesday’s election. Expect, he says, quick short-term attention to the “fiscal cliff” followed by a slower, but more profound response to the country’s severe debt, deficit and entitlement liability problems. Most moving, however, was his endorsement of private long-term care insurance, which both he and his wife own. Kudos to Jesse Slome of AALTCI for forging such a strong relationship with the Kiplingers and for the advertizing featured in Kiplinger publications distributed at the conference.

Harley Gordon and his colleagues presented a special three-hour program for holders of the CLTC designation, of which there are now over 20,000, an extraordinary achievement. I attended this session which hammered home the CLTC message that LTCI is not about a product, but about having a plan; not about risk, cost or the insured, but about consequences for family and friends. Some of you saw Harley and me engage in a spirited debate on public policy issues at the last big industry conference. We still find things to disagree about in that arena, but we’re in perfect sync about the importance of LTC planning as this photo of the two of us symbolizes.

Want to know more about the LTCI Producers Summit? Check out the agenda here and, by all means, when it becomes available, buy the conference recording which we’re told will be synchronized to the PowerPoint presentations. Congratulations again to Jesse and Mindy for putting on such a successful and inspiring program at a time of great industry and economic challenges.

Now to our compendium of the past week’s news and analysis.

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11/10/2012, “Childless boomers wonder who will handle their long-term care,” by Anita Creamer, Sacramento Bee

Quote: "But the question that concerns . . . many of America's 15 million childless baby boomers is more emotional and poignant: Without offspring to help them, who will take care of them when they grow old? . . . But already, 16 percent of frail adults ages 85 and older have no surviving children to help provide their caregiving, according to AARP Public Policy Institute figures."

LTC Comment: This demographic trend will be a boon and boom for LTCI.

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11/9/2012, “Will I have to pay 3.8% Medicare tax on the sale of my home?,” Claudia Buck, Sacramento Bee

Quote: "In order for the gain from the sale of your principal residence to be subject to the new 3.8% Medicare tax it will have to exceed the $500,000/$250,000 section 121 exclusion, and your modified adjusted gross income, including the taxable portion of the gain, will have to exceed the applicable threshold amount mentioned above."

LTC Comment: Medicare means-testing by the back door.

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11/9/2012, “An Outcast Among Peers Gains Traction on Alzheimer's Cure,” by