|
READ STEVE'S BIO.JPG)
#############################
Updated, Friday, January 27, 2012,
11:59 AM (Pacific)
Seattle--
#############################
LTC BULLET: NEAR-TERM
PROSPECTS FOR LONG-TERM CARE FINANCING REFORM
LTC Comment: Our
latest study, in collaboration with the
Cato Institute, explains why LTC financing reform is stymied for now,
but hopeful next year. Read all about it after the ***news.***
*** TODAY'S LTC
BULLET is sponsored by Claude Thau, a General Agent whose proprietary
sales tools enable your clients to make informed final decisions about
whether to buy LTCi in 15-20 minutes. He’ll help you build your business
in any market (individual, executive carve-out, work-site, affinity,
financial institution, referrals from other professionals, etc.). 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. ***
*** SPOTLIGHT ON: The
Center for Long-Term Care Reform’s “Almanac of Long-Term Care” 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. Members can access the “LTC Almanac” by clicking
here. If you need your user name and password, or are not yet a
member, contact Damon at 206-283-7036 or
damon@centerltc.com for quick access to The Zone and the LTC Almanac.
***
*** SPEAKER: Need a
speaker for your next conference or event? Steve Moses says: “This is
the year to wake up the media, policy makers and the public to the
critical need for LTC planning and policy reform. I’m hitting the road
again with that message. Let me bring it to your group and through you to
your local media and public.” Check out the details
here. Contact Steve directly at
smoses@centerltc.com or 206-283-7036. ***
*** CLIPPING SERVICE:
The Center for Long-Term Care Reform has a new clipping service aimed at
anyone who needs to stay current on LTC news and data. Get all the
details
here. In a nutshell: Subscribe to our new "LTC Clipping Service" and
Steve Moses will send you an average of 1 to 3 critical LTC articles per
day so you can spend your time doing business instead of searching the
web. Cost? Discounted thanks to a grant: Only $100 per year for Center
members (including people covered by corporate memberships); $120 per year
for non-members; and free to Regional Representatives of the Center.
Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. ***
*** PREMIUM
MEMBERSHIPS AND REGIONAL REPSHIPS. Check out our newly revised
“Membership Levels and Benefits” schedule
here. Premium Members ($250 per year) get the new clipping service at
no extra charge. Premium Elite Members ($500) get all the benefits of
premium membership, including the clipping service, for one assistant as
well, and may qualify as a
Regional Representative of the Center for Long-Term Care Reform. Get
involved. This is our year, working together, to lay the groundwork for a
major LTC policy push in 2013. ***
LTC BULLET: NEAR-TERM
PROSPECTS FOR LONG-TERM CARE FINANCING REFORM
LTC Comment: We
posted the following report to the Center for Long-Term Care Reform’s
website today. Check it out
here. Damon’s cover design,
showing an elder riding a free-from-Medicare scooter hell-bent toward a
brick wall of fiscal reality, is worth a look in its own right.
Although frustrated by
our inability this year to move the powers-that-be in Washington, DC
toward major LTC financing reform, we aren’t giving up. We expect that
2013 will offer a chance to fix long-term care policy once and for all.
It better. The window
of opportunity to improve long-term care without catastrophic damage to
aging Americans is closing rapidly. The problem isn’t complicated and the
solution is easy as we explain in this report. Just do it!
---------------
Final Report to the Milbank Foundation for
Rehabilitation
on the Project
"Near-Term Prospects for Long-Term Care Financing Reform"
Narrative Report
Project
Background
During the Summer and Fall of 2011, the
Cato Institute sub-contracted with the Center for Long-Term Care Reform of
Seattle, Washington for the purpose of engaging researcher Stephen A.
Moses to conduct a study of long-term care (LTC) financing. He has
been a Medicaid state representative for the Health Care Financing
Administration and senior analyst for the inspector general of the U.S.
Department of Health and Human Services. Michael Cannon, Cato's
Director of Health Policy, provided oversight for the project.
Medicaid
is a means-tested public assistance program, i.e. welfare. Yet Medicaid
is the principal funding source for long-term care (LTC) throughout the
United States, not only for the poor, but for most Americans. Although
LTC users are only seven percent of the Medicaid population, they account
for more than half of the program's costs nationally. The only way
Medicaid can survive as a long-term care safety net for the poor is if
more prosperous people plan responsibly and pay privately for their own
long-term care. But Medicaid crowds out most private LTC financing
alternatives such as home equity conversion and insurance. The trend
toward greater and greater dependency on welfare-financed nursing home
care is reversible. It will be reversed by responsible public policy or
by default as costs skyrocket and public resources dwindle with the aging
of the baby boom.
Conceived
as a project to identify, present, and win support for a cost-saving
Medicaid reform initiative, the project and its proposal encountered
political and bureaucratic apathy despite dramatic and escalating state
and national fiscal crises. Adapting to this reality, the project
produced and published several papers intended to educate legislators,
policy makers, interest groups and the media about the Medicaid and
long-term care financing issues. Researcher Stephen Moses testified
before Congress on September 21, 2011 at a hearing titled "Examining
Abuses of Medicaid Eligibility Rules." The
Milbank Foundation for Rehabilitation provided a grant a $40,000 in
support of this work.
Under the
terms of the agreement, Moses committed "to spend a minimum of six weeks
in the Washington, DC in late summer or early fall of 2011 "to conduct
interviews with key long-term care policy experts and to "produce a report
that reflects the views of the interviewees and threads the needle of
conflicting interests to produce realistically achievable recommendations
for Congress to consider." Stephen Moses lived full time and conducted
interviews in Washington, DC from July 25, 2011 to August 8, 2011 and from
September 2, 2011 until October 28, 2011, a total of ten weeks.
Strategy
The
premise behind this project was that the U.S. government faces severe debt
and deficit problems exacerbated by massive unfunded entitlement
liabilities and that, therefore, public officials should be receptive to
common sense proposals that save money and improve programs. Frequent
warnings from the Congressional Budget Office and the Government
Accountability Office, the December 2010 report of the National Commission
on Fiscal Responsibility and Reform (Simpson/Bowles report), and an
impending debt ceiling crisis substantiated this sense of urgency as the
Summer of 2011 began.
Thus, the
proposed strategy was to (1) propose an approach to Medicaid long-term
care savings, (2) brief and interview key Congressional members and staff
on the proposal and get their agreement on what would be realistic to
achieve politically, then (3) go to LTC interest groups such as providers,
insurers, and senior advocates to seek their support, and finally (4)
propose practical recommendations to Congress suitable for adaptation into
legislative language.
As a
practical matter, in response to political polarization and legislative
inertia, the project's strategy evolved through three phases into a more
modest one of raising consciousness about the Medicaid long-term care
issue among policy makers in Washington, DC and the broader public. The
following sections explain challenges the project encountered, how its
focus changed, and what it achieved in the end.
Phase 1 (July - August, 2011)
Moses’s
first step in the project was to interview David Rosenfeld, Senior
Health Counsel to the House Republican Caucus. Rosenfeld was a co-founder
of the Center for Long-Term Care Reform in 1998. Moses believes he
understands the Medicaid and long-term care financing issues better than
any other Congressional staffer. He was instrumental--as Health Counsel
to the House Energy and Commerce Committee--in the writing and passage of
the last major national reform language affecting Medicaid and long-term
care financing, the Deficit Reduction Act of 2005. Mr. Rosenfeld provided
the names and contact information for key House and Senate members and
staff who have knowledge and influence related to budgets, appropriations,
and specifically Medicaid and long-term care funding.
Rosenfeld
advised that congressional members and staff were extremely concerned at
that time (mid-Summer 2011) about the Sustainable Growth Rate (SGR or "Doc
Fix") issue. He explained that Congress needed to find $30 billion per
year or $300 billion over ten years to avoid the automatic implementation
of a 30-percent cut in Medicare physicians' fees created by an earlier
law. He recommended that a good way to get the attention and buy-in of
Congress for a Medicaid long-term care reform recommendation would be to
show how such a reform could save some or all the revenue needed to fund
the Doc Fix. Rosenfeld particularly recommended that he reach out to
members of Congress who are also physicians.
Reasoning
that the Doc Fix issue would indeed be an excellent hook to get the
attention of key policy makers, Moses then prepared a report titled "Pay
for the Doc Fix by Fixing Medicaid LTC."[1]
This report, the project's first deliverable, was published and
posted to the Center for Long-Term Care Reform's website on August 5, 2011
(see end note 1). It explained in detail how a relatively simple, common
sense change to Medicaid's long-term care eligibility rules could achieve
sufficient savings to fund the Doc Fix.
Phase 2 (September
2011)
Even as
this flagship proposal to garner interest was being prepared, however, the
attention of Congress refocused onto a different and broader fiscal
issue. A late-July 2011 debt ceiling crisis captured everyone's
attention. After it culminated with the President's signing the Budget
Control Act of 2011 on August 2, the main thing on the minds of people on
the Hill was the "Super Committee" and how it would raise the newly
mandated $1.2 trillion dollars in budget savings by a December 23, 2011
deadline.
So, to
keep the project in tune with the short attention span and current
preoccupation of Congress, Moses modified the original flagship report
changing it from a proposal to fund the Doc Fix to a means of supplying
one-fourth of the Super Committee's savings mandate, or $300 billion over
ten years. The Center for Long-Term Care Reform published the project's
second deliverable titled "Save Medicaid LTC $30 Billion Per Year
AND Improve the Program" and posted it to our website.[2]
Moses and the Center continued to bring both position papers to the
attention of people briefed and interviewed for the project depending on
each individual's principal area of interest.
As these
adjustments in strategy and approach were taking place, Moses continued
conducting interviews with Congressional staff and influential interest
groups. His argument was simple and well supported in both of the reports
mentioned above. To wit: Medicaid long-term care eligibility rules
exempt at least half a million dollars of home equity. Most seniors own
homes and most senior homeowners own their homes free and clear. By
reducing Medicaid's home equity exemption--which increased to $525,000 or
$786,000 at state legislative discretion effective January 1, 2012--to an
amount closer to England's asset exemption (23,500 British pounds or
approximately $36,400), many of Medicaid's most expensive recipients
(potential dual eligibles) would need to pay for their own long-term care
which would delay or prevent their dependence on welfare, thus producing
the estimated savings of $30 billion per year.
During the
interview phase of the project, the following people were briefed and
interviewed: James Holland representing Senator Jim DeMint
(R, SC); Rodney Whitlock, Senator Charles Grassley (R, IA);
Winthrop Cashdollar, America's Health Insurance Plans; Dan
Elling, Staff Director, Committee on Ways and Means, Subcommittee on
Health; Janice Zalen, Steven Gregory, Teresa Cagnolatti and Karl
Polzer of the American Health Care Association; James "JP"
Paluskiewicz representing
Congressman Michael Burgess, M.D. (R, TX); Kris Skrzycki,
Chief of Staff, Republican Policy Committee and Laura Holland
representing Chairman Tom Price, M.D. (R, GA);
Stephanie J. Carlton, Health Policy Advisor, U.S. Senate Committee on Finance Minority
Staff; Greg D'Angelo, U.S. Senate Committee on the Budget; Josh
Trent representing Senator Tom A. Coburn, M.D. (R, OK); Anna
K. Abram, Senator Richard Burr (R, NC); John Greene,
National Association of Health Underwriters; Robert Horne,
Congressman Phil Gingrey, M.D. (R, GA); Christie Herrera,
American Legislative Exchange Council; Steven M. Lieberman,
National Governors Association; Brian Blase, House Committee on
Oversight and Government Reform; Robert Moffit and Nina
Owcharenko, the Heritage Foundation; Joe Antos and Robert
Helms, American Enterprise Institute.
Phase 2 Results
While
individual responses varied somewhat, as a general thrust, those
interviewees expressed shock and concern about Medicaid's wasteful home
equity exemption policy. They showed interest in the potentially enormous
savings from the reform we proposed, but their concern for the political
sensitivity of reducing any senior benefit, however worthwhile such a
change might be, trumped their anxiety about budget issues. Democrats
refused to touch Medicaid no matter how much sense a proposed change would
make, no matter how much it would save, and no matter how much it would
improve the program. Republicans said, in essence, "We can't do anything
on Medicaid because the Democrats say it is off the table."
Nevertheless, the project did not reach a total dead end. Several
promising possibilities opened up:
- A Senate Budget
Committee staffer asked for "specs" he could use to request a "score"
from the Congressional Budget Office for our proposal to reduce or
eliminate the Medicaid home equity exemption. Moses supplied those
specifications backed up by recent reports supporting the $30 billion
per year savings and by state-level studies published by the Center for
Long-Term Care Reform and local think tanks in Pennsylvania, California,
and New York earlier in 2011.
- Two Senate staffers
requested "the right questions to ask the Government Accountability
Office" to study in order to document the need for and potential savings
from reducing or eliminating the Medicaid home equity exemption for
long-term care. He supplied those proposed questions plus back up
documentation.
- One House staff
member asked for help preparing a letter to the Department of Health and
Human Services Inspector General requesting a study of Medicaid planning
abuses and updating Medicaid estate recovery results by state.
While the
request to CBO for a score has not gone forward, letters to both the GAO
and the DHHS Inspector General requesting studies relevant to our
project's objectives either have been sent or will be sent soon from
members of Congress. The content of those letters remains confidential,
but both Moses and the Cato Institute consider them major achievements,
the third and fourth deliverables of the project respectively.
Congressional Hearing
Moses
contends that his biggest impact during the second phase of the project
was to assist with the selection of witnesses for and to testify at a
hearing, titled "Examining Abuses of Medicaid
Eligibility Rules," conducted by the
House Oversight and Government Reform's Sub-Committee on Healthcare.
Video and witnesses' testimonies are available. (See end note 3) Congress
published Moses' testimony, titled
"Medicaid Long-Term Care Benefits:
Friendly Fire in the Class War".[3]
It is the project's fifth deliverable.
The Center for Long-Term Care Reform also
published his testimony and analysis of the hearing.
By the end
of September 2011, it was clear that the project's original strategy would
not work. The powers-that-be in Washington, DC simply were not as
motivated to deal with excess spending, debt and deficit problems as the
objective gravity of these problems previously suggested that they would
(and should) be. Despite all the rhetoric about the fiscal crisis, policy
makers were not yet scared enough to tackle the Medicaid entitlement
program. Virtually everyone with whom Moses
spoke agreed with the facts and analysis, but neither the left nor the
right were willing to move forward with serious review of the proposal.
Subsequent events, such as the failure of the Super Committee to
achieve its relatively modest goal of $1.2 trillion in savings over ten
years, substantiated this conclusion.
Phase 3 (October
2011)
Under the
circumstances, it was necessary to modify the project's strategy yet
again. If action on Medicaid reform is premature due to government
control’s being politically divided--with the Presidency and Senate held
by one party and the House by the other--Moses concluded that his best
strategy would be to use the remainder of the project to prepare for a
time when the political landscape would be better suited for reform. That
meant focusing on documentation of and education about the problem as
leveraged by outreach to influential organizations and people who can help
to publicize the proposed solution.
Thus, he
began work on a series of briefing papers designed to provide legislators,
policy makers, pundits and the public with a primer on the Medicaid and
long-term care financing issue. Fortuitously, Moses was invited to attend
and to present formally in early November at a prestigious national
conference. The 13th annual Health Sector Assembly's (HSA)
2011 topical focus was "Long-Term Care: The Unacknowledged Elephant in
the Room," a title reflecting the reality that long-term care service
delivery and financing are bigger problems than commonly recognized.
At the HSA meeting in Sundance,
Utah on November 4, 2011, Moses delivered remarks on "Challenges to
Effective Long-Term Care: Cost and Affordability." The purpose of this
invited speech was to raise questions for discussion by the leading
national health care experts convened. The Center for Long-Term Care
Reform published the presentation on December 9, 2011. It is the
project's sixth deliverable.[4]
The meeting referenced and the Health Sector Assembly distributed to all
attendees a one-page handout titled "Overview: How to Fix Long-Term
Care." That handout is available[5]
and includes internet links to each of the following six briefing papers:
Briefing Paper #1: The History of Long-Term Care Financing or How We Got
Into This Mess
www.centerltc.com/BriefingPapers/1.pdf
How did the USA come to have a welfare-financed, institutionally biased
LTC system in the wealthiest country in the world where no one wants to go
to a nursing home? We answer this question first or we risk treating
symptoms instead of causes and making problems worse instead of better.
Briefing Paper #2: Medicaid Long-Term Care Eligibility
www.centerltc.com/BriefingPapers/2.pdf
Despite the conventional wisdom that
people must spend down into impoverishment before qualifying for Medicaid
LTC benefits, the truth is that income and asset eligibility rules are so
generous that most people qualify easily without spending down significant
wealth. This brief explains how and why.
Briefing Paper #3: Medicaid Planning for Long-Term Care
www.centerltc.com/BriefingPapers/3.pdf
Even people who are too affluent to
qualify for Medicaid LTC benefits under the generous basic eligibility
rules can qualify easily with the help of simple or sophisticated legal
techniques marketed by "Medicaid planners." This brief explains how.
Briefing Paper #4: Rebalancing Long-Term Care
www.centerltc.com/BriefingPapers/4.pdf
Despite the high hopes of many analysts
and policymakers, rebalancing Medicaid LTC services from nursing home care
to home care without simultaneously tightening eligibility will not save
money and will increase costs interminably. This brief explains why.
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.pdf
Medicaid recipients also eligible for
Medicare are the program's most expensive. Better public policy could
delay or prevent Medicaid dependency for millions who would otherwise
become dual eligibles. This brief explains precisely what needs to be
done to achieve that goal.
Briefing Paper #6: Private Long-Term Care Financing Alternatives
www.centerltc.com/BriefingPapers/6.pdf
Medicaid does not have to bear the brunt
of most LTC financing if policy makers unleash the potential of the four
major private financing alternatives that currently go mostly untapped.
This brief explains what those sources are and what needs to be done to
maximize their potential.
Project Completion
The Center
for Long-Term Care Reform will publish all six of the preceding "briefing
papers" one a week beginning in February and encourage its readership to
distribute them widely along with the "Overview" paper which links to each
of them. Together, those publications represent the project's seventh
deliverable. Moses intends to reach out to the media and to "bull
horn" organizations such as the Concord Coalition, Citizens Against
Government Waste, the National Taxpayers Union and others, to seek their
help in publicizing the problem and the solution. On October 28, 2011,
for example, he met with and briefed David M. Walker, the former
Comptroller General and current founder and president of the Comeback
America Initiative. At a future date, the Cato Institute will publish for
wider dissemination a Policy Analysis based on the briefing papers, and
will distribute the papers to attendees of its upcoming State Health
Policy Summit (funded in part by the JM Foundation).
Subsequent to the completion of this
project, Barron’s published an editorial based on an interview with
Stephen Moses. It explained the problem he tackled in the project and
described the difficulty he encountered mobilizing support for a
solution. The editorial is available online: Thomas G. Donlan, “A
Medicaid Mess,” Barron’s, January 14, 2012, (link).
Both Moses and Cato think that,
although this project veered from its originally intended course due to
practical necessity, it did produce several important work products,
including the seven deliverables referenced above. Our bottom line
conclusion is that the legislative and executive branches of the U.S.
government are not yet ready to tackle the problem of long-term care
financing by reforming Medicaid. We hope that this project has helped to
document and promulgate the gravity of that problem and to propose a
viable solution for when policy makers are finally ready to act. We are
very grateful to the trustees of the Milbank Foundation for Rehabilitation
for their support and recognition.
Bios
Stephen A. Moses is president of the Center for Long-Term Care Reform
in Seattle, Washington (www.centerltc.com). The Center promotes universal
access to top-quality long-term care by encouraging private financing as
an alternative to Medicaid dependency for most Americans. Previously, Mr.
Moses was president of the Center for Long-Term Care Financing
(1998-2005), Director of Research for LTC, Inc., (1989-98), a senior
analyst for the Inspector General of the U.S. Department of Health and
Human Services (1987-89), a Medicaid state representative for the Health
Care Financing Administration (1978-87), a HHS Departmental Management
Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970).
He is widely recognized as an expert and innovator in the field of
long-term care. Mr. Moses’ articles have appeared often in
distinguished publications like The Gerontologist, The Journal
of Accountancy, The Journal of Financial Planning,
Contemporary Long-Term Care, Best’s Review, National
Underwriter, Assisted Living Today and Nursing Homes
magazine. He has testified before Congress and most of America’s state
legislatures. He frequently addresses professional conferences in the
fields of law, aging and insurance. His recommendations are quoted often
in the national media including the “CBS Evening News,” PBS’s “Frontline”
and “The Financial Advisors,” CNN, National Public Radio, The New York
Times, The Wall Street Journal, Newsweek, USA Today,
Forbes, The New Republic, Smart Money, National
Journal, and Jane Bryant Quinn’s syndicated column. He appeared in a
public television documentary titled “The Aging of America: The Dilemma
of Long-Term Care.” Bachelor of Arts in Political Science, Highest
Honors, Phi Beta Kappa, University of California, Davis (1967); Master of
Arts in Political Science, High Honors, University of Maryland, College
Park (1971).
Michael F. Cannon is the Cato
Institute's director of health policy studies. Previously, he served as a
domestic policy analyst for the U.S. Senate Republican Policy Committee
under Chairman Larry E. Craig, where he advised the Senate leadership on
health, education, labor, welfare, and the Second Amendment. A columnist
for Kaiser Health News, Cannon has appeared on ABC, CBS, CNN, CNBC,
C-SPAN, Fox News Channel, and NPR. Cited by the Washington Post as
"an influential health-care wonk at the libertarian Cato Institute," his
articles have been featured in USA Today, the Los Angeles Times,
the New York Post, the Chicago Tribune, the Chicago
Sun-Times, the San Francisco Chronicle, Forum for Health
Economics & Policy, and the Yale Journal of Health Policy, Law, and
Ethics. Cannon is coauthor of Healthy Competition: What's Holding
Back Health Care and How to Free It. He holds a bachelor's degree in
American government (B.A.) from the University of Virginia, and master's
degrees in economics (M.A.) and law & economics (J.M.) from George Mason
University.
[2]
Stephen A. Moses, "Save Medicaid LTC $30 Billion Per Year AND Improve
the Program," Center for Long-Term Care Reform, Seattle, Washington,
September 9, 2011; (link)
[3]
Stephen A. Moses, "Medicaid Long-Term Care Benefits: Friendly Fire in
the Class War," Hearing Documents, United States House of
Representatives Committee on Oversight and Government Reform September
21, 2011 Hearing "Examining Abuses of Medicaid Eligibility Rules;" (link).
#############################
Updated, Monday, January 23, 2012,
12:42 PM (Pacific)
Seattle--
#############################
LTC NEWS AND
COMMENT
LTC Comment: The
Center for Long-Term Care Reform has a new, discounted “LTC Clipping
Service.” Get the latest LTC articles, reports, and statistics emailed to
you in real time. Check it out
here.
*** REGISTRATION IS
OPEN for the 12th Annual Intercompany Long-Term Care Insurance
Conference to be held March 18-21, 2012 at the Paris and Bally’s Hotels in
Las Vegas. Click
here or on the banner above for all the details and to register. Some
highlights:
* Apply for a (non-home-office) agent
scholarship at a special $395 rate
here.
* First time attendees may qualify for a new, special $495
registration ($995 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra!
(12-15 CE hours, the exam and one re-take included)
* And don’t miss this conference highlight: Steve Moses and Harley
Gordon will debate! ***
*** JANUARY 31ST is
the last day to register for the 2012 National LTCi Summit at the lowest
rate of $199. The Summit, organized this year by the American Association
for Long-Term Care Insurance and the CLTC designation program takes place
November 10-12, 2012 in Las Vegas. Regular registration for the
two-and-a-half-day Summit is $349. Find complete information on the
Association's website
here. ***
*** STATE LTCI TAX
DEDUCTIONS: "The American
Association for Long-Term Care Insurance has published a state-by-state
listing of available tax deductions on its website at www.aaltci.org/tax."
Long-Term Care Insurance Tax-Deductibility Rules - LTC Tax Rules. ***
#############################
1/21/2012,
“More
Elderly Find They Can't Afford Not to Work,” by Kelly Greene and Anne
Tergesen, Wall Street Journal.
Quote:
"As of December, 1.31 million people ages 75 and older were working, a 25%
jump from 1.05 million in 2005, according to the Bureau of Labor
Statistics. Now, 7.3% of the oldest Americans have jobs, up from 5.3% a
decade ago and the highest level since 1966, according to the Center for
Retirement Research at Boston College. The numbers offer a glimpse into
the future for the 77 million baby boomers, Americans born between 1946
and 1964. This generation began turning 65 last year. By 2018, the
government estimates, about 10% of people 75 or older-about two million
Americans-will be working or seeking work."
LTC Comment:
Working longer to build savings for ultimate retirement means older
workers will have more principal to protect and more earnings to afford
LTCI premiums to protect it.
#############################
1/20/2012,
“New
York Life Appoints John Kim and Chris Blunt to New Business Roles,”
MarketWatch
Quote:
"In addition to Mr. Blunt's responsibility for U.S. life insurance, he
will also be responsible for the company's long-term care insurance
business and the marketing, finance, technology, and service functions
that support those product lines."
#############################
1/20/2012,
“Lack
of retirement planning options,” by Mark Miller, Reuters
Quote:
"Failing to sign up for Medicare at the right time can cost you - big
time. The monthly Part B premium jumps 10 percent for each full 12-month
period that a senior could have had coverage but didn't sign up. A mistake
can be costly; someone who fails to enroll for five years would face a 50
percent Part B penalty - 10 percent for each year of delay. That penalty
is permanent, and can translate into thousands of dollars in unnecessary
lifetime penalty expenses; a headache no one needs on top of already
soaring healthcare costs."
LTC Comment:
Big penalties await those who delay Medicare.
#############################
1/19/2012,
“Medicare
savings ideas have missed the mark,” Associated Press
Quote:
"Nonpartisan analysts looked at experiments that promoted better care
coordination for the chronically ill, trying to keep them out of the
hospital. They also studied experiments that changed the way doctors and
hospitals get paid, rewarding quality instead of volume. A report issued
Thursday concluded neither approach reduced spending."
LTC Comment:
So much for the idea that managed care will save the day fiscally for
Medicaid and Medicare.
#############################
1/19/2012,
“When
the Nursing Home Resident in the Next Room Is a Convicted Criminal,”
by Katharine Mieszkowski, New York Times
Quote:
"As an incentive for private nursing homes to accept the parolees, the
state can offer to pay as much as 30 percent more than the Medicare fee
schedule for their care. The state is also eligible for reimbursement from
the federal government for some of the patients' medical care, from
programs like Medi-Cal, Medicare, veterans' benefits and Social Security."
LTC Comment:
One more reason to prepare to pay privately for 100% non-Medicaid care.
#############################
1/19/2012,
“National Underwriter Launches New Resource to Guide Clients through
Long-Term Care Options” (link)
Quote:
"At a time when hands-on, real-world guidance on long-term care issues is
needed more than ever, The National Underwriter Company today announced
the release of The Advisor's Guide to Long-Term Care, the latest addition
to its authoritative new Advisor's Guide series."
LTC Comment:
If someone from National Underwriter would like to send us a copy, we’ll
have a look and publish a review.
#############################
1/18/2012,
“Should
You Buy Long-Term Care Insurance? Maybe Not,” by Howard Gleckman,
Forbes
Quote:
"Private long-term care insurance
can be an important tool to protect against the risk of needing costly
personal assistance in old age. But two respected financial economists
conclude it is very expensive relative to the benefits it provides and may
not be appropriate for many buyers. At the same time, a new consumer brief
from the Society of Actuaries suggests how much wealth you should have for
coverage to make sense."
LTC Comment:
This column and the journal article
it references miss a critical point: choosing Medicaid or LTC insurance is
not "six of one, half a dozen of the other." Medicaid is a bankrupt
welfare program that pays too little to insure quality care even in a
nursing home. The insured and other private payers command red-carpet
access to top quality care at home or in assisted living or a nursing
home. Access to quality care in the private market is the most important
reason to purchase LTC insurance. And thanks a lot SOA for suggesting
that people with less than $250K or more than $2M don't need LTCI. With
friends like that, enemies hardly matter.
#############################
1/18/2012,
“Panel
Moves to Repeal Suspended Long-Term Care Program,” by Melissa Attias,
CQ Online
Quote:
"A House panel endorsed legislation Wednesday to repeal a suspended
long-term care program included in the 2010 health care law, paving the
way for likely House floor consideration next month."
LTC Comment:
How many stakes in the heart is it going to take to kill CLASS?
#############################
1/18/2012,
“Who
Should Do a Reverse Mortgage?,” by Donna Fuscaldo, Forbes
Quote:
"Smith says a reverse mortgage makes
sense for someone who has enough cash flow to live, but may not have
enough to pay for supplemental long term care insurance. In that instance,
they can use the reverse mortgage to cover those monthly payments, he
says. 'A reverse loan program really should be part of every senior's
plan. It doesn't mean it has to be the program used.'"
LTC Comment:
Expect advice like this will become mainstream as the Medicaid LTC safety
net continues to disintegrate and personal responsibility for long-term
care financing replaces it.
#############################
1/17/2012,
“Cost
of Long Term Care Study,” Northwestern Mutual
Quote:
"Northwestern Mutual just released its annual "Cost of Long-Term-Care
study." As you might imagine, the costs of long-term-care can vary,
depending on which region of the country you live in and whether you hire
an aide to help you at home or enter an assisted living facility or
nursing home."
LTC Comment:
A link to Northwestern Mutual’s 2012 “Cost of Long Term Care Study” has
been added to our
“Long-Term Care Cost Surveys” feature in The Zone so that Center
members can access this information and past surveys easily anytime. If
you don’t have access to The Zone, contact Damon at 206-283-7036 or
damon@centerltc.com to join the Center.
#############################
1/17/2012,
“Amid
Squeeze on Home Equity, A Revival for Reverse Mortgages,” by Annamaria
Andriotis, Smart Money
Quote:
"Converting home equity into cash has been a challenge for homeowners
since the real-estate downturn, but a growing number of lenders are
quietly reviving a loan for seniors that does just that: the reverse
mortgage.”
LTC Comment:
Tapping home equity is the key to solving the long-term care financing
crisis. We’ve predicted a resurgence of reverse mortgages and it is
happening.
#############################
1/17/2012,
“The
Biggest Threat to Your Life Savings,” by Erik Carter, Forbes
Quote:
"One solution is to buy 5 years' worth of coverage. This way they can give
away their assets when they need care and let Medicaid kick in after their
insurance expires. However, there are three problems with this. First,
most people would prefer not to give up their assets before they pass
away. Second, the 5-yr Medicaid rule could be extended in the future.
After all, it used to be 3 years and Medicaid's financial prospects aren't
very rosy. Finally, this could expose the children to capital gains
taxes."
LTC Comment:
This article, as most in the major media, misses the main reason not to go
on Medicaid: the program pays providers less than the cost of delivering
the care and consequently has a reputation for poor care access and
quality which is only likely to get much worse in the future.
#############################
1/17/2012,
“Nearly
Half of U.S Lives in Household Receiving Government Benefits,” by Sara
Murray, Wall Street Journal
Quote:
"Some 48.6% of the population lived in a household receiving some type of
government benefit in the second quarter of 2010, up a notch from 48.5% in
the first quarter, according to Census data."
LTC Comment:
How long can half the population carry the other half without dropping its
load?
#############################
1/13/2012,
“MedPAC
votes to lower the boom on skilled nursing providers,” McKnight’s
LTC News
Quote:
"The Medicare Payment Advisory Commission voted Wednesday to recommend
that the way skilled nursing providers are paid by the government be
drastically overhauled within two years. MedPAC commissioners also voted
to recommend that they receive no Medicare inflationary pay increase
during the next fiscal year."
LTC Comment:
Nursing homes make up for inadequate Medicaid revenues with generous
Medicare reimbursements, but not for much longer if Med-Pac has its way.
#############################
1/11/2012,
“Medicaid:
a year of excruciating decisions,” by Christine Vestal, Stateline
Quote:
"Two years ago, Medicaid eclipsed K-12 education as the most expensive
item in state budgets. Since then, it has only kept growing. Medicaid now
comprises 24 percent of state budgets, when federal funds are counted.
That's up from 22 percent last year, according to the National Association
of State Budget Officers. The upward spiral seems to be continuing. Even
as states get ready to write their budgets for fiscal year 2013, which
starts in July in most states, half of them expect to be wrestling with
Medicaid shortfalls in their 2012 budgets, according to a survey by the
Kaiser Family Foundation."
LTC Comment:
As Medicaid gobbles more and more of state and federal budgets, expect a
continued decline in the program’s already poor LTC access and quality.
#############################
12/26/2011,
“Judge:
State gets $178K found in safe,” by Jill Harmacinski, Eagle-Tribune
Quote:
"City firefighters first spotted the abandoned safe in a vacant lot in
November 2008. Then, when $178,496 cash was found inside, several people,
including a tow truck driver and relatives of former shoe store owner
Sally Daher filed claims for the cash. Now, more than three years later,
the state has been awarded the $178,496 to cover medical costs for Daher,
who spent five years in a skilled nursing facility prior to her 2001
death."
LTC Comment:
Medicaid estate recovery bonanza! But did anyone bother to ask why
someone with $178K qualified for Medicaid in the first place?
#############################
12/22/2011,
“Retirement
Assets Tumble 7.5% to $17 Trillion in 3Q,” by Lee Barney, Financial
Planning
Quote:
"Total retirement assets fell to $17 trillion by the end of the third
quarter, down 7.5% from the record high of $18.4 trillion that investors
socked away in the prior quarter. The decline corresponded with a 13.9%
drop in the S&P 500 during the third quarter."
LTC Comment:
Not a good way to start the new year.
#############################
Updated, Friday, January 20, 2012,
10:51 AM (Pacific)
Seattle--
#############################
LTC BULLET: NEW LTC
CLIPPING SERVICE
LTC Comment: Have
Steve Moses search the web for must-read articles and email them to you
daily so you can spend your valuable professional time in front of clients
and doing business.
*** TODAY’S BULLET IN
A NUTSHELL: Subscribe to our new “LTC Clipping Service” and Steve Moses
will send you an average of 1 to 3 critical LTC articles per day so you
can do business instead of searching the web. Cost? Discounted thanks to
a grant: Only $100 per year for Center members; $120 per year for
non-members; and free to Regional Representatives of the Center. Contact
Damon at 206-283-7036 or
damon@centerltc.com to subscribe. Details follow. ***
#############################
LTC BULLET: NEW LTC
CLIPPING SERVICE
LTC Comment: Do you
spend hours searching the internet for information about long-term care
issues?
Do you feel behind the
curve because you’re not always up to speed on questions your clients ask?
Have you ever lost a
sale or missed an opportunity because someone else knew something that you
discovered too late?
What if you could
receive LTC articles and reports that precisely meet your information
needs daily and in real time? That’s what we propose to give you.
Don’t worry. We’re
not talking about a data deluge. Rather, you’ll receive on average one to
three key articles daily with a representative quote, a link to the full
source, and occasionally a sentence or two of explanation.
Who’s going to find
this material and send it to you?
Steve Moses
McKnight’s
Long-Term Care NEWS called him “one of the 100 most influential
people in long-term care.” Long-Term Living named Steve one of
five "people making a difference in LTC." Senior Market Advisor
magazine put him on the cover and in its top-ten LTC insurance "Power
List." Nursing Homes magazine reported “there is probably no more
articulate spokesperson for privately financed long-term care than Stephen
Moses.”
Says Steve:
“It’s my job to scan
all sources of information about long-term care services and financing. I
have to know what’s going on and who’s saying what. Why should you
duplicate my efforts? Let’s divide the labor. I’ll do the research and
send you the information. You make the sales, close the deals, earn
the money and enjoy the extra leisure time and reduced eye strain you’ll
have when you delegate most of this tedious web searching to me.”
What will you find and
send to me?
Steve will search the
web for everything relevant to the following topics: Long-Term Care,
Long-Term Care Insurance, Medicaid, Medicare, Medicare Advantage, Medicare
Supplemental, Critical Illness, Critical Illness Insurance. He’ll also
find lots of valuable information from dozens of e-letters to which he
subscribes and from the many professional journals he follows. You’ll
never lack for the latest analysis, commentary, statistics, data,
government reports and academic studies.
What’s this going to
cost me, you ask?
The cost is nominal, especially if you are a premium member of the Center. Our new
premium membership is $250 per year or $21 per month. Premium members
receive all the usual benefits of Center for Long-Term Care Reform
membership plus the clipping service. That’s only $100 per year more than
our regular $150 annual membership fee, which by the way, hasn’t changed
since it began in 2002. Think of it as less than $2 per week to
save you many hours of frustrating internet research.
If you’re not a member
of the Center, why not? You’re already missing out on tons of invaluable
information, including The Zone and our weekly LTC Bullets and
LTC E-Alerts. But at least you can still get our new clipping service
for only $10 per month or $120 per year. That’s less than 33
cents per day!
Finally, for you
serious LTC people, if you can meet the stringent requirements to become a
“Regional
Representative of the Center for Long-Term Care Reform,” you’ll
get the clipping service for no extra charge included in your $500 per
year investment in the Center.
How can we offer this
service at such rock bottom rates? It’s thanks to a grant from two
outstanding corporate members and long-time supporters of the Center for
Long-Term Care Reform. Each clipping we send you will be headed by the
following banner:
|
 |
The Center
for Long-Term Care Reform's discounted clipping service is made
possible by a grant from:
GoldenCareUSA
and
American
Independent Marketing |
 |
Maybe you’re
wondering: why subscribe to this clipping service when, as a member of
the Center, I already receive Steve’s weekly digest of key LTC articles in
the LTC E-Alerts?
Our LTC E-Alerts
contain a lot of the same information as the clipping service, but you
have to wait a week to get them and finding time to read a lot of
information all at once is difficult. With the clipping service,
you’ll get the articles immediately and one-at-a-time, making the
information more timely and easier to digest.
To subscribe to the
Center for Long-Term Care Reform’s new clipping service, just call or
email Damon at 206-283-7036 or
damon@centerltc.com. Tell him:
- I’m a Center
member. Make me a premium member for $250 per year and send me Steve’s
clippings. Pay only a prorated fee now and $250 at your annual renewal.
- I’m not a Center
member, but I want the clippings. Bill me $120 or $10 per month.
Monthly payments are by PayPal automatic withdrawal.
- I’d like to become
a Regional Representative of the Center for Long-Term Care Reform.
Please have Steve contact me about this.
Thanks for your
interest. We look forward to hearing from you.
#############################
Updated, Tuesday, January 17, 2012,
12:35 PM (Pacific)
Seattle--
#############################
BARRON’S
EDITORIAL AND LTC NEWS AND COMMENT
LTC Comment: At
the tail end of my sojourn in Washington, DC last Fall, I had lunch with
the editorial page editor of Barron’s. We talked about unfunded
entitlement liabilities, especially the challenges facing Medicaid, the
dominant payer for long-term care in the U.S. Tom Donlan’s resulting
column titled “A Medicaid Mess” reached a nationwide audience on Saturday,
January 14. Read it
here. It’s gated so you may need to register for a free preview
subscription. Here’s an excerpt:
"Stephen A. Moses
has spent 30 years trying to bring this Medicaid long-term care issue to
broad public attention. He heads the Center for Long-term Care Reform,
based in Seattle, and he says this of the California program:
"'The effect of
easy eligibility and increasingly attractive services-including even
payments for friends or relatives to provide home care-has been to
anesthetize the public to long-term-care risk and cost. Consequently,
private-pay insurance for long-term care has declined precipitously, and
only 5.4% of Californians age 50-plus have purchased private LTC
insurance.'
"He reckons that
federal and state governments could save $30 billion a year if Congress
only required people to spend down the equity in their homes before
receiving Medicaid for long-term care, using home-equity loans or
reverse-annuity mortgages. More could be saved, he says, if states showed
more determination to force people to pay for their own care until they
are really broke-or if states effectively went after patients' estates for
reimbursement of Medicaid payments."
I'm mis-quoted
slightly in this Barron's editorial. I didn't say private insurance
declined precipitously, but rather that private pay for LTC from all
sources dropped by nearly half in the past 40 years during which time the
proportion of LTC paid by Medicaid and Medicare doubled. (For details,
see LTC
Bullet: So What if the Government Pays for Most Long-Term Care, 2010
Data Update.”) Enforcing strong income and asset eligibility limits,
collecting from recipients’ estates, and using some of the savings to
incentivize responsible LTC planning could save the public LTC safety net
and unleash the market for private LTC insurance.
*** REGISTRATION IS
NOW OPEN for the 12th Annual Intercompany Long-Term Care
Insurance Conference to be held March 18-21, 2012 at the Paris and Bally’s
Hotels in Las Vegas. Click
here or on the banner above for all the details and to register. Act
fast! The early registration deadline is Thursday, January 19, after
which fees increase by $100. Some highlights:
* Apply for a (non-home-office) agent
scholarship at a special $295 rate
here.
* First time attendees may qualify for a new, special $395
registration ($895 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra!
(12-15 CE hours, the exam and one re-take included)
* And don’t miss this conference highlight: Steve Moses and Harley
Gordon will debate! ***
***
AALTCI and
CLTC will co-sponsor the 2012 National Long-Term Care Insurance
Producers Summit scheduled to convene November 10-12 at the Tropicana
Hotel in Las Vegas. "It is a milestone for the industry . . . that two
leading national organizations are cooperating to put on the three-day
conference," declares Jesse Slome, AALTCI executive director. "We look
forward to presenting three days of ideas that will show producers the
most effective ways to create new markets," explains Harley Gordon,
President of the Corporation for Long-Term Care Certification, Inc. "CLTC's
top trainers will be organizing a special daylong advanced program for the
over 10,000 insurance professionals who have earned the CLTC
designation." For more information, call AALTCI (818) 597-3227. ***
#############################
1/13/2012,
“Private
Carriers Cover More Nursing and LTC Costs,” by Allison Bell,
LifeHealthPRO
Quote:
"Commercial carriers' share of the longer-term care (LTC) and skilled
nursing tab was up from 8.9% in 2009 and up from 8.8% in 2000. Commercial
carriers' share of the tab has increased every year since 2004."
LTC Comment:
This article explains that the private health insurance reported by CMS as
covering nursing home costs does not include most private LTC insurance.
See also last Friday’s
LTC Bullet: Who Cares if the Government Pays for Most Long-Term Care,
2010 Data Update where I explain why the CMS data are so
confusing and misleading.
#############################
1/12/2012,
“A
Step Backward for Economic Freedom in 2012,” Wall Street Journal
Editorial
Quote:
"How about the U.S., historically the country more responsible than any
other for leading the march of freedom? . . . Its economic freedom score
has dropped to 76.3 in 2012 from 81.2 in 2007 (on a scale of 0-100).
Government expenditures have grown to a level equivalent to over 40% of
GDP, and total public debt exceeds the size of the economy."
LTC Comment:
Ominous tidings from this annual report card on freedom in the world.
#############################
1/12/2012,
“How
Boomers Can Get Their Retirement Back on Track in 2012,” by Casey
Dowd, FOXBusiness
Quote:
"Boomers and financial advisors are not planning enough for the cost of
long-term care. People generally underestimate its cost, and are stunned
at the amount of health expenses that aren't covered, and have to be paid
out of pocket down the road. People who can afford to buy long-term care
insurance should, it will keep their retirement savings in a much more
secure place. Medicare and most health insurances do not cover long-term
care."
LTC Comment:
Good advice in a major media outlet.
#############################
1/12/2012,
“New
LIFE Chair Has Deep LTCI Roots,” by Allison Bell, LifeHealthPRO
Quote:
"Debra Newman - a holder of the Long Term Care Professional designation
who has been selling long-term care insurance (LTCI) since 1990 - is the
new chair of the Life and Health Insurance Foundation for Education
(LIFE)."
LTC Comment:
Congratulations to Center corporate member and long-time supporter Deb
Newman for this honor.
#############################
1/12/2012,
“Survey:
Docs Face Stress, Burnout Medicare, Medicaid Policies Among Major Causes,”
by Meg LaPorte, Provider (link)
Quote:
"Doctors are stressed out, according to a recent national survey of U.S.
physicians. Conducted by Cejka Search, the survey found that the majority
of U.S. physicians are moderately to severely stressed or burned out on an
average day, with nearly 63 percent of respondents saying their stress has
risen moderately to dramatically in the past three years. ... Medicare and
Medicaid policies were among the top four causes of doctors' stress and
burnout, according to the survey."
LTC Comment:
Even if you are a private payer not dependent on government-financed care,
you will suffer the consequence of burned out physicians overworked and
underpaid by Medicare and Medicaid.
#############################
1/11/2012,
“How
to Get Prospects to Return Your Calls,” by Josh Mellberg,
LifeHealthPRO
Quote:
"Here are six simple questions you can ask yourself to increase the
chances of getting a returned call."
LTC Comment:
A few sales pointers for good measure.
#############################
1/10/2012,
“Americans
Ignore Need for LTC Planning Despite Knowing More About the Risks
--Economy and Reliance on Medicaid Seen as Factors --Discrepancies Cause
for Concern,” MarketWatch (link)
Quote:
"According to a recent national survey of 1,000 Americans, more know the
basics of long-term care (LTC) and LTC insurance than five years ago and a
majority believe they will someday need some LTC (60%). However, fewer
have planned for the possibility in their own lives, and many said they'd
rely on Medicaid despite admitting they did not understand how the program
worked. ... Although most respondents said they thought LTC insurance
would be the best way to cover long-term care needs (61%), only 11 percent
reported having purchased it. More than half of those who hadn't bought
LTC insurance (53%) said they plan to cover their LTC costs by qualifying
for Medicaid."
LTC Comment:
Finally, a survey that explains why Americans know more about LTC risk and
cost yet still don’t buy LTC insurance. Well done, John Hancock. Whether
they realize it consciously or not, the easy availability of Medicaid LTC
benefits after the insurable event occurs has prevented most Americans
from purchasing private LTC insurance. Either they plan to use Medicaid,
or more likely, they don’t plan at all because they’ve been desensitized
to the risk as a result of Medicaid’s having paid for most expensive LTC
since 1965.
#############################
1/10/2012,
“Multi-Generational
Views on Family Financial Obligations: A MetLife Survey of Baby Boomers
and Members of Generations X and Y,” MetLife Mature Market Institute (link)
Quote:
“A sense of strong responsibility and obligation is widely felt by
respondents across the generations for the following scenarios: * Saving
enough for retirement to avoid having to ask family members for
assistance * Having a parent live with them if they need help due to a
major health or financial issue * Making sure a spouse or child would
have enough money if a financial provider dies unexpectedly * Helping to
pay for a child's college education * Providing strong and consistent
emotional and non-financial support and contact.”
LTC Comment:
This study is evidence of the public’s good intentions about family
financial obligations which are undercut by perverse public policy that
rewards failure to plan for LTC.
#############################
1/10/2012,
“Government
releases Alzheimer's taskforce plan,” McKnight’s LTC News
Quote:
"The vast majority of people do not think about or plan for the long-term
services and supports they will need until they experience a disability or
Alzheimer's disease. Many Americans incorrectly believe that Medicare will
cover most of the costs of these supportive services. Unfortunately, by
the time care is needed, it is difficult to get coverage in the private
long-term care insurance market, and options are limited."
LTC Comment:
What is alarming about the new government approach to Alzheimer's is how
little attention it pays to financing care. The quote above is from the
document itself. How alarming that no insurance company is willing to
sell LTC insurance to people after they already need expensive care!
Sounds like a job for the government, which doesn't have to worry about
collecting premiums, investing reserves, or in the long run, paying
claims. I fear these people learned nothing from the CLASS experience.
#############################
1/9/2012,
“65-and-Older
Population Soars,” by Emily Brandon, U.S. News & World Report
Quote:
"There are now more Americans age 65 and older than at any other time in
U.S. history. According to a new Census Bureau report, there were 40.3
million people age 65 and older on April 1, 2010, up 5.3 percent from 35
million in 2010 (and just 3.1 million in 1900)."
LTC Comment:
The Age Wave is surging.
#############################
1/9/2012,
“Top
10 Trends in Senior Housing for 2012,” by George Yedinak, Senior
Housing News
Quote:
"Long-term care insurance is becoming more prevalent and will continue to
grow in senior housing communities during 2012. As younger seniors enter
communities with LTC insurance, the increases in the administrative work
and burden on supporting handling LTC insurance claims added with any kind
of additional support adds to the overhead costs for owners and operators.
At some point, these additional costs will be passed along through rate
increases in one fashion or another. The good news is that some
communities are finding that their newer entrants have a well-balanced
retirement plan that includes LTC insurance but the bad news is that those
seniors may become 'high maintenance' residents given the complexity of
their LTC insurance."
LTC Comment:
More good news about the expanding LTCI market.
#############################
1/9/2012,
“National
Health Spending Grew Slowly In 2010,” by Marilyn Werber Serafini,
Kaiser Health News
Quote:
"At the same time, there has been a shift in health care spending from the
private sector and the states to the federal government. The federal
government's share of total national health care spending increased from
23 to 29 percent between 2007 and 2010. Over the same time, business'
share of health care spending decreased from 23 percent to 21 percent, and
spending by state and local governments declined from 18 percent to 16
percent."
LTC Comment:
The late economist Herb Stein used to say "trends that can't continue,
won't." We're seeing the beginning of the end of the trend of government
financed LTC and the start of a new era when private financing, including
LTC insurance, will prevail.
#############################
1/9/2012,
“Cetera
Brings on 2,000 More Advisors, Reps in Genworth Unit Acquisition,” by
Ann Marsh, Financial Planning (link)
Quote:
“Cetera Financial Group has agreed to buy Genworth Financial Investment
Services, an independent broker-dealer with almost 2,000 independent
advisors specializing in integrating wealth management services with tax
and accounting services."
LTC Comment:
Anyone care to comment on what impact this development may have on
Genworth’s LTCI business?
#############################
1/9/2012,
“Scrutiny
rises on Bankers Life,” by J.K. Wall, IBJ News
Quote:
"But then last week, CBS News focused on how hundreds of Bankers Life's
long-term-care insurance policyholders have accused the company of having
'beat them down with bureaucracy.’ . . . Bankers Life noted that it paid
out $1.3 billion in claims to policyholders last year. In a statement
provided to CBS, officials said the company is ‘committed to the highest
standards for ethics, fairness and accountability.’”
#############################
1/8/2012,
“Protecting
Your Future: Trying to protect assets is just plain common sense,” by
Bonnie Kraham, Times Herald-Record (link)
Quote:
"Occasionally, I meet with someone who expresses the opinion that it's
immoral or wrong to protect assets from nursing home costs. Asset
protection for long-term care costs includes strategies such as the
Medicaid Asset Protection Trust (MAPT), spousal refusal for married
couples, and the gift-and-loan strategy for single people, all of which I
have described in past columns."
LTC Comment:
Medicaid planners continue to justify artificially impoverishing their
clients even in the face of the financial collapse of Medicaid.
#############################
1/7/2012,
“When
Insurance Fails: Cheaper Policies Bought in the Workplace Can Have
Drawbacks,” by Leslie Scism, Wall Street Journal (link)
Quote:
"Many people assume insurance offered by their employer is a better deal
than they can get on their own. But while the premiums can be lower, such
policies have drawbacks."
LTC Comment:
How does LTCI fare in this regard?
#############################
1/4/2012, “Happier
Staffers at Nonprofit Nursing Homes,” by Paula Span, New York Times
Quote:
"Ownership isn't a fail-safe way to choose, sadly. Good commercial homes
do exist, and so do lousy nonprofits. In any case, there aren't enough
nonprofits for all the older people who will need long-term care."
LTC Comment:
The key difference between non-profit and for-profit nursing homes is the
source of payment. For-profits rely much more heavily on Medicaid which
according to the latest annual study reimburses nursing homes $20 per bed
day less than the cost of providing the care. Therefore, the key to access
and quality of institutional care is the ability to pay privately.
#############################
1/4/2012, “Hot
(or Not): The Year in LTCI Agents Struggle to Reach the Rest of the Market,”
by David Port, LifeHealthPRO (link)
Quote:
"Despite all of the turmoil at the companies issuing long-term care
insurance (LTCI) policies, it looks as if 2011 LTCI sales were pretty
solid."
LTC Comment:
Well, hallelujah, just as we predicted all last year. LTC insurance is
growing as confidence in the social safety net declines.
#############################
1/4/2012,
“Survey:
57% of Residential Care Facilities Shun Medicaid for Private-Pay,”
Alyssa Gerace, Senior Housing News (link)
Quote:
“With most states facing Medicaid budget shortfalls, many publicly traded
long-term care providers are making efforts to shift away from depending
on government benefits programs or to avoid dependence on these programs
from the start, and a recent survey shows that more than half of
facilities don't have any Medicaid patients."
LTC Comment:
This story and the one that follows make the same point. Long-term care
choice depends on avoiding Medicaid dependency.
#############################
1/3/2012, “Medicaid
underfunding care by $6.3 billion, report finds,” James M. Berklan,
McKnight’s LTC News
Quote:
"It's no wonder long-term care providers prefer residents whose care is
reimbursed by something other than Medicaid: The federal-state program
was expected to underfund care by an average of nearly $20 per beneficiary
day in 2011, according to a new analysis."
LTC Comment:
We’ve hammered home the same point repeatedly. It is true already and
will be truer in the future that access to quality long-term care at home
or in an institution depends on the ability to pay privately.
#############################
1/3/2012, “LTC
Global, Inc. Names Deborah Skiff Chief Marketing Officer,”
MarketWatch
Quote:
"LTC Global, Inc., a leading national distributor of senior market
insurance products, today announced the appointment of Deborah Skiff to
the newly created position of Chief Marketing Officer, effective
immediately."
LTC Comment:
Congratulations, Deborah.
#############################
Updated, Friday, January 13, 2012,
12:00 AM (Pacific)
Seattle--
#############################
LTC BULLET: SO
WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2010 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. Details after the ***news.***
*** REGISTRATION IS NOW OPEN for the 12th
Annual Intercompany Long-Term Care Insurance Conference to be held March
18-21, 2012 at the Paris and Bally’s Hotels in Las Vegas. Click
here or on the banner above for all the details and to register. Act
fast! The early registration deadline is Thursday, January 19, after
which fees increase by $100. Some highlights:
*
Apply for a (non-home-office) agent p at a special $295 rate
here.
* First time attendees may qualify for a new, special $395
registration ($895 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra!
(12-15 CE hours, the exam and one re-take included)
* And don’t miss this conference highlight: Steve Moses and Harley
Gordon will debate! ***
*** NEW FEATURE: The Center for Long-Term Care
Reform’s public and members-only websites are full of useful information.
Yet members often tell us they were unaware of this or that resource. So
we’ve decided to point you periodically to information we think you can
use. Watch for our new “Spotlight On” feature in LTC Bullets and LTC
E-Alerts. Center VP Damon Moses will author them and you can contact him
if you have any questions or comments:
damon@centerltc.com or 206-283-7036. Here’s number 1 in our
“Spotlight On” series:
SPOTLIGHT ON: “LTC Bullets” Archives. LTC
Bullets is our informative newsletter covering the latest developments
in long-term care services and financing. You already know these critical
emails--authored by CLTCR President, Stephen Moses--arrive in your inbox
weekly, but did you know every “LTC Bullet” ever published is archived
by date and by subject on our website? Over 940 informative “LTC
Bullets” dating back to 1998 are easily searchable and
available for all to view. Check them out
here. In the archive, you’ll find the “LTC Bullets” organized into
seven subjects: (1) The LTC Problem and Solutions, (2) Reality Check: The
Facts on LTCI, (3) Medicaid Planning, (4) LTC Services, (5) Politics and
Legislation, (6) Demographics and Other Data, and (7) CLTCR News. We
provide this free service to educate the public, legislators, policy
makers and long-term care professionals in order to encourage rational
long-term care policy reform and responsible LTC planning. Browse to our
“LTC Bullets”
archives and start reading and researching today! ***
#############################
LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST
LTC?, 2010 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 2010
statistics on its website at
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.
The current issue of Health Affairs (Vol. 31,
No. 1, pps. 208-219) contains a summary and analysis of the new data
titled "Growth in US Health Spending Remained Slow in 2010; Health Share
of Gross Domestic Product Was Unchanged From 2009." Registered
subscribers to Health Affairs can access the full text of the
article online at
http://content.healthaffairs.org/content/31/1/208.full.pdf+html.
Note that CMS changed the definition of National
Health Expenditure Accounts (NHEA) categories last year, adding for
example Continuing Care Retirement Communities (CCRCs) to Nursing Care
Facilities. This change had the effect of reducing Medicaid's reported
contribution to the cost of nursing home care from over 40% in 2008 to
under one-third (32.8%) in 2009. CMS also created a new category called
"Other Third Party Payers" (7.1%) which includes "worksite health care,
other private revenues, Indian Health Service, workers' compensation,
general assistance, maternal and child health, vocational rehabilitation,
other federal programs, Substance Abuse and Mental Health Services
Administration, other state and local programs, and school health." For
definitions of all NHEA categories, see
http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.
Following is our annual analysis of the new nursing
home and home health care data.
#############################
"So What If the Government Pays for Most LTC?, 2010
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 $143.1 billion on nursing facilities
and Continuing Care Retirement Communities in 2010. The percentage of
these costs paid by Medicaid and Medicare has gone up over the past 40
years (from 26.8% in 1970 to 53.8% in 2010, up 27.0 % of the total) while
out-of-pocket costs have declined (from 49.5% in 1970 to 28.3% in 2010,
down 21.2% of the total). Source:
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf,
Table 12.
SO WHAT? Consumers' liability for nursing home and
CCRC costs has declined by 43% in the past four decades, while the share
paid by Medicaid and Medicare has more than doubled.
No wonder people are not as eager to buy LTC
insurance as insurers would like them to be! No wonder they don't use
home equity for LTC when Medicaid exempts most home equity. No wonder
nursing homes are struggling financially--their dependency on parsimonious
government reimbursements is increasing while their more profitable
private payers are disappearing.
Unfortunately, these problems are even worse than the
preceding data suggest. Over half of the so-called "out-of-pocket" costs
reported by CMS are really just contributions toward their cost of care by
people already covered by Medicaid! These are not out-of-pocket costs in
terms of ASSET spend down, but rather only INCOME, most of which comes
from Social Security benefits, another government program. Thus, although
Medicaid pays less than one-third the cost of nursing home care (31.5% of
the dollars in 2010), it covers two-thirds of all nursing home residents.
Because people in nursing homes on Medicaid tend to be long-stayers,
Medicaid pays something toward nearly 80 percent of all patient days.
SO WHAT? Medicaid pays in full or subsidizes almost
four-fifths of all nursing home patient days. If it pays even one dollar
per month (with the rest contributed from the recipient's income), the
nursing home receives Medicaid's dismally low reimbursement rate.
No wonder the public is not as worried about
nursing home costs as LTC insurers think they should be. No wonder
nursing homes are facing insolvency all around the United States when so
much of their revenue comes from Medicaid, often at reimbursement rates
less than the cost of providing the care.
Don't be fooled by the 8.9% of nursing home costs
that CMS reports as having been paid by "private health insurance" in
2010. That category does not include private long-term care insurance.
(See category definitions
here.) No one knows how much LTC insurance pays toward nursing home
care, because most LTCI policies pay beneficiaries, not nursing homes.
Thus, a large proportion of insurance payments for nursing home care gets
reported as if it were "out-of-pocket" payments because private payers
write the checks to the nursing home but are reimbursed by their LTC
insurance policies. This fact further inflates the out-of-pocket figure
artificially.
How does all this affect assisted living
facilities? ALFs are 90% private pay and they cost an average of
$41,724 per year (Source: 2011 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 $525,000 or $786,000 depending on the state),
plus one business, and one automobile of unlimited value, plus many other
non-countable assets, not to mention sophisticated asset sheltering and
divestment techniques marketed by Medicaid planning attorneys. Income
rarely interferes with Medicaid nursing home eligibility unless such
income exceeds the cost of private nursing home care.
SO WHAT? For most people, Medicaid nursing home
benefits are easy to obtain without spending down assets significantly and
Medicaid's income contribution requirement is usually much less expensive
than paying the full cost of assisted living.
No wonder ALFs are struggling to attract enough
private payers to be profitable. No wonder people are not as eager to
buy LTC insurance as insurers would like them to be.
The situation with home health care financing is very
similar to nursing home financing. According to CMS, America spent $70.2
billion on home health care in 2010. Medicare (44.9%) and Medicaid
(37.3%) paid 82.2% of this total and private insurance paid 6.4%. Only
7.1% 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 4.
SO WHAT? Only one out of every 14 dollars spent on
home health care comes out of the pockets of patients and a large portion
of that comes from the income (not assets) of people already on Medicaid.
No wonder the public does not feel the sense of
urgency about this risk that long-term care insurers think they should.
Bottom line, people only buy insurance against real
financial risk. As long as they can ignore the risk, avoid the premiums,
and get government to pay for their long-term care when and if such care
is needed, they will remain in "denial" about the need for LTC insurance.
As long as Medicaid and Medicare are paying for a huge proportion of all
nursing home and home health care costs while out-of-pocket expenditures
remain only nominal, nursing homes and home health agencies will remain
starved for financial oxygen.
The solution is simple. Target Medicaid
financing of long-term care to the needy and use the savings to fund
education and tax incentives to encourage the public to plan early to be
able to pay privately for long-term care. For ideas and recommendations
on how to implement this solution, see
www.centerltc.com.
Note especially:
"Medi-Cal Long-Term Care: Safety Net or Hammock?" at
http://www.pacificresearch.org/docLib/20110104_LongTermCare_final(2).pdf;
"Doing LTC RIght" at
http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf;
"The LTC Graduate Seminar Transcript" at
http://www.centerltc.com/members/LTCGradSemTranscription.pdf (requires
password, contact
smoses@centerltc.com);
"Aging America's Achilles' Heel: Medicaid Long-Term
Care" at
http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and
"The Realist's Guide to Medicaid and Long-Term Care"
at
http://www.centerltc.org/realistsguide.pdf.
In the Deficit Reduction Act of 2005, Congress took
some small steps toward addressing these problems. A cap was placed on
Medicaid's home equity exemption and several of the more egregious
Medicaid planning abuses were ended. But much more remains to be done.
With the Age Wave starting to crest and threatening to crash over the next
two decades, we can only hope it isn't too late already.
Stephen A. Moses is
president of the Center for Long-Term Care Reform in Seattle, Washington.
The Center's mission is to ensure quality long-term care for all
Americans. Steve Moses writes, speaks and consults throughout the United
States on long-term care policy. He is the author of the study "Aging
America's Achilles' Heel: Medicaid Long-Term Care," published by the Cato
Institute (www.cato.org).
Learn more at
www.centerltc.com or email
smoses@centerltc.com.
#############################
Updated, Tuesday, January 3, 2012,
12:40 PM (Pacific)
Seattle--
#############################
LTC NEWS AND
COMMENT
Happy New Year!
LTC Comment:
Both of the big LTC insurance conferences are on the calendar for this
year.
The
Intercompany LTCI Conference is up first, running from March 18-21,
2012 at the Paris Hotel in Las Vegas. Get all the details and register
here. I'll be there to debate
CLTC's Harley Gordon about the role of Medicaid. A few exhibit booths
were still available as of 12/18/11. If you have any questions about
exhibiting, please contact Jim Glickman at 818-867-2223 or e-mail your
inquiries to
Jim.Glickman@LifeCareAssurance.com.
The 10th
LTCI Producers Summit will convene November 10-12, 2012 at the Tropicana
hotel, also in Las Vegas, immediately after the presidential election.
We're rolling the dice this year in more ways than one! Get Sponsor and
Exhibitor information
here. Get information on the 2012 Long Term Care Insurance Sales
Achievement Awards
here and apply
here.
#############################
1/1/2012,
"One
and Only: A rise in single Americans will likely result in more clients
who will need someone to care for them," by Donald Jay Korn,
Financial Planning (link)
Quote:
"Planners have been hearing about and preparing for the baby boom ever
since the first 1946er became a client. Yet their single-minded focus on
boomers may mean they've missed another demographic trend: the singles
surge. . . . Erin Botsford, CEO of the Botsford Group in Frisco, Texas,
and author of The Big Retirement Risk: Running out of Money Before You
Run out of Time, agrees. 'Buying long-term-care insurance would be my
No. 1 recommendation for a single person. Most people do not want to
become a burden on their families. Regardless of their financial status,
single people should obtain long-term-care insurance while they are still
able to qualify medically.'"
LTC Comment:
LTCI for singles.
#############################
12/31/2011,
"Aging
and Broke, More Lean on Family," by E.S. Browning, Wall Street
Journal
Quote:
"Thirty-nine percent of adults with parents 65 and older reported giving
parents financial aid in the past year, according to a September Pew
Research Center survey. Some parents may have trouble acknowledging it:
10% of parents 65 and older reported receiving aid. ... In 1900, 57% of
adults 65 and older lived with relatives, according to Pew Research.
Because of Social Security, Medicare and improving health and wealth, that
rate declined to 17% by 1990, Pew says. Now it is up to 20%."
LTC Comment:
Marketing opportunity to middle-aged adult children of aging parents? If
Mom and Dad have LTCI, maybe they won't have to move in.
#############################
12/26/2011,
"Increased
Broken Bones Among Boomers Is Precursor Of Future Long-Term Care Needs,"
OpenPR (link)
Quote:
"A new study suggests that the number of baby boomers visiting hospital
emergency rooms for broken arms could rise by nearly a third by 2030. That
is when the youngest baby boomers will have just turned 65. . . .
'Prevention is vital, but so is planning for living a long life,' Slome
explains. 'If you live into your 80s or beyond, the likelihood you will
need long term care is vastly increased but you need to start preparing
for this in your 50s and early 60s when the most planning options are
still available to you.'"
LTC Comment:
For a good second act, don't "break a leg."
#############################
12/24/2011,
"When
Divorce Unravels Your Retirement Plans," by Ruthie Ackerman, Wall
Street Journal
Quote:
"Long-term-care insurance, which covers services such as assisted-living
or nursing-home care, home care and medical equipment, can be even more
important for divorced people, since they are likely to have a smaller
nest egg that could easily be wiped out by serious illness or disability."
LTC Comment:
This LTCI for singles theme is one I'm seeing more and more lately.
#############################
12/23/2011,
"LTCI
Watch: Panic Shopping," by Allison Bell, LifeHealthPRO
Quote:
"Maybe one of the best places to set up a LTCI outreach table would be
near a display full of Christmas wrapping paper that's on sale after the
holidays. Remind conscientious prospects that they're conscientious. If
they plan ahead for a $25 Christmas gift, why wouldn't they plan ahead for
the possibility of needing $250,000 in LTC?"
LTC Comment:
Conscientious people who think ahead and prepare for risks and costs
certainly describes the LTCI market.
#############################
12/23/2011,
"Fiscal
Year 2011 Financial Report of the United States Government,"
Government Accountability Office (GAO)
Quotes:
"The U.S. Government Accountability Office (GAO) cannot render an opinion
on the 2011 consolidated financial statements of the federal government,
because of widespread material internal control weaknesses, significant
uncertainties, and other limitations."
"In addition, GAO was
unable to render an opinion on the 2011 Statement of Social Insurance and
the 2011 Statement of Changes in Social Insurance Amounts because of
significant uncertainties, primarily related to the achievement of
projected reductions in Medicare cost growth."
"'The comprehensive
fiscal projections presented in the 2011 Financial Report show that -
absent policy changes - the federal government continues to face an
unsustainable long-term fiscal path,' [Comptroller General] Dodaro said."
LTC Comment:
Happy New Year! Isn't it nice to know our government is in the hands of
such financially responsible people?
#############################
12/21/2011,
"The
Slow Starvation of Senior Services," by Howard Gleckman, Forbes
Quote:
"Congress is slowly starving senior services programs. In the 2012 budget
it passed as it was leaving town last weekend, Congress froze or cut
spending for a broad range of government programs aimed at seniors and
their caregivers-everything from Meals on Wheels to long-term care
ombudsman training to information and referral services."
LTC Comment:
I submitted the following comment after reading this article:
"What a tragedy that
needful senior programs are cut while (effective 1/1/12) Medicaid bumps
the home equity exemption for long-term care eligibility to $525,000 or
$786,000 at state option.
"Penny wise, pound
foolish. In fact, the entire asset exemption in England, including home
equity, is only 23,500 British pounds (roughly $38,400). Who'd have
thought our reputedly draconian Medicaid program was so much more generous
than England's socialized health care system?
"Reducing
Medicaid's home equity exemption to something closer to England's would
generate enough savings to restore all the cuts mentioned in this article
and prevent other, even deeper cuts that are inevitably coming."
#############################
12/21/2011,
"Things
Medicare Won't Tell You," by Catey Hill, SmartMoney
Quote:
"The government's massive entitlement program is full of costly glitches."
LTC Comment:
This article lists and describes ten such glitches.
#############################
12/19/2011,
"Spending
Surge for Seniors: Medicare and Social Security Total 50 Percent of Budget
by 2030," by Veronique de Rugy, Mercatus Center (link)
Quote:
"Half of the entire budget will be consumed by payments for senior
citizens by 2030."
LTC Comment:
Ominous data!
#############################
12/19/2011,
"Feds
Unveil First National Survey of ALF Facilities, Residents," Patrick
Connole, Provider
Quote:
"A first-of-its-kind survey by the federal government of assisted
living/residential care facilities and residents provides a large new
source of data on the profession, including important trends like the
growing role of the Medicaid program in the field, experts said recently.
. . . The study found that 19 percent of residents received Medicaid
funding, and 43 percent of facilities had at least one resident receiving
Medicaid assistance."
LTC Comment:
I warned about the danger of Medicaid's funding assisted living facilities
in "The
Sirens' Call, The Primrose Path, and Assisted Living," Assisted
Living, April 2004. Read it to learn how Medicaid ruined nursing
homes even for private payers and could destroy assisted living for the
same reasons.
#############################
12/2011,
"It
Begins!," Ronald R. Hagelman Jr., Broker World
Quote:
"After previewing the preliminary third quarter LIMRA annualized LTC
insurance figures, I must say that by any measure the industry is
experiencing the best new premium production in almost a decade. This is
grand, spectacular news! The new numbers are amazing and historic. They
will cause an incredible volume of speculation. The growth was dramatic
across all lines of business."
LTC Comment:
Ron Hagelman's column in the December issue of Broker World gives 9
reasons why LTCI sales are surging and will continue to do so. Evidence
we were right when we told you so 2011 was LTCI's turnaround year.
#############################
12/19/2011,
"Financing
Your Future: A Push to Turn 'For Sale' Into 'Sold'," by Rachel Louise
Ensign, Wall Street Journal
Quote:
"For those seeking to sell a home in order to move into a continuing-care
community or similar retirement residence, help is increasingly available.
Owners and operators of such developments are stepping forward with home
staging and repair programs, no-interest bridge loans, buyouts and reduced
entrance fees. The goal: to get you out of your space and into theirs."
LTC Comment:
Yet another way home equity conversion is critical to financing long-term
care.
#############################
12/12/2011,
"Magic
or mayhem: What's ahead? Part 2," by Richard L. Peck, Long-Term
Living
Quote:
"It's simple: Once we get past the housing crisis and the Medicare
crackdown, long-term care looks to be an investment bonanza. Independent
living, assisted living, skilled nursing-all levels of senior housing and
care are poised to accommodate surging baby boomers and their Silent
Generation predecessors. Even with retirement being put increasingly on
hold and average age for facility occupancy hovering around the early 80s,
savvy providers are gearing up for some potential boom years."
LTC Comment:
Second half of the "LTC predictions" article from Long-Term Living
magazine, which follows.
#############################
11/18/2011,
"Magic
or mayhem: What's ahead?, Part 1," by Richard L. Peck, Long-Term
Living
Quote:
"[A]s the vast baby boom generation and its parents start learning their
LTC lessons the hard way, public perception will grow exponentially. The
LTC financing model will almost certainly change no matter what happens to
Medicare, Medicaid or CLASS. The predictions that follow do in fact
indicate what that model will eventually look like, and which providers
will likely succeed and prosper."
LTC Comment:
Every so often, it's good to look at the bigger picture of long-term care
from the providers' perspective.
#############################
Updated, Monday, December 19, 2011,
11:07 AM (Pacific)
Seattle--
#############################
LTC NEWS AND
COMMENT
LTC Comment:
Honey Leveen, self-proclaimed "LTCI Queen" and faithful supporter of the
Center for Long-Term Care Reform, reports the following endorsement from a
client:
"I've been collecting
from my LTC insurance policy since January 2011. It's paying beautifully
and even covers the mileage charges when my caregiver transports me. I
love my caregivers. This policy is making a huge difference in the
quality of my life, as well as my sense of security. I am very grateful
to you for selling it to me in 1998 and for still being present to answer
my questions and guide me through the claims process." ~ Marienne J,
Houston, TX
Kind of a nice
reminder of what it's all about at a time of the year when it's good to
reflect on such things.
Happy Holidays, we'll
see you in January.
Your Center for
Long-Term Care Reform
#############################
12/15/2011,
"Boomers
Push Back Retirement Six Years," by Lee Barney, Financial Planning
Quote:
"The 11th quarterly Allstate-National Journal Heartland Monitor Poll found
that near-retiree Baby Boomers have pushed back initial plans to retire
from an average of age 60 to 66. Additionally, 68% of Baby Boomers expect
to work in some form after retirement, the survey of 1,200 Americans
found. Only 11% of current retirees currently work."
LTC Comment:
More boomers working means more income to pay LTCI premiums and a greater
need for the product to protect their retirement savings.
#############################
12/15/2011,
"The Top Ten Reasons Long-Term Care Insurance May Be the Best Holiday Gift
Ever," PR Newswire (link)
Quote:
"Whether you celebrate Christmas, Hanukkah, or another end-of-year
holiday, long-term care insurance just might be the best present you could
possibly give."
LTC Comment:
Maybe it is "better to give than receive," but LTCI is one gift that
benefits the giver as well as the receiver by protecting the inheritance
of the giver and the long-term care of the receiver.
#############################
12/15/2011,
"Medicaid
outlook bleak for providers in 2012, report finds," McKnight's LTC
News
Quote:
"The unreimbursed funds from Medicaid to nursing homes is [sic] projected
to exceed $6.3 billion in 2011, which means an average per-patient
shortfall of $19.55 per day, according to an annual study conducted by
Eljay LLC, on behalf of the American Health Care Association. That's a
jump from a $16.54 per day loss in 2009 . . . . And while many providers
have relied on Medicare to subsidize Medicaid patients, they will lose
that patch in 2012. 'The combined shortfall of both Medicare and Medicaid
is projected to exceed $2 billion, marking an end to the current reliance
on Medicare cross-subsidization of Medicaid shortfalls and the beginning
of greater uncertainty,' the report states."
LTC Comment:
Nursing homes will be more desperate than ever as they compete for a
dwindling supply of private payers while facing the double jeopardy of
declining Medicaid and Medicare reimbursement.
#############################
12/15/2011,
"Long
Term Care Insurance 2012 Tax Guides Published," PR*Urgent
Quote:
"Long term care insurance may be fully tax deductible and the 2012 limits
and rules are spelled out in two new guides published by the American
Association for Long Term Care Insurance."
LTC Comment:
Happy New Year!
#############################
12/15/2011,
"Retirement fears jump the wealth gap to strike affluent Americans," by
Lisa Gillespie, Employee Benefit News (link)
Quote:
"About a quarter of affluent Americans (23%) say they are not confident
they will have saved enough for retirement, and this is especially true
for Americans with assets between $100,000 and $250,000 (33%) and people
without a written retirement plan (32%) and women (31%)."
LTC Comment:
What better way to protect principal than LTCI?
#############################
12/14/2011,
"Elderly
care reforms may have to wait until 2025," Tim Ross, The Telegraph
Quote:
"An estimated 20,000 people a year are
forced to sell their homes to pay fees for nursing and residential care,
which can reach hundreds of thousands of pounds."
LTC Comment:
Did our draconian Medicaid program force these people into impoverishment
and make them sell their homes? No, this news comes from a British paper
where people supposedly enjoy "free," socialized care. In the USA,
Medicaid exempts $525,000 of home equity in 40 states and $786,000 of home
equity in 10 states and DC. If Medicaid were no more restrictive than
England, which allows a home equity exemption of approximately $38,000,
Medicaid could save $30 billion per year and the market for private LTC
insurance would explode. See our report with the evidence
here.
#############################
12/14/2011,
"Consumer
Alert: High Health Deductibles Coming," by Merrill Goozner, The
Fiscal Times
Quote:
"More than one in five Americans who are privately insured are now part of
high-deductible plans, a figure that's at an all-time high and growing
rapidly according to a new survey by the
Employee Benefit Research Institute (EBRI)."
LTC Comment:
High deductible health plans when linked with Health Savings Accounts
allow healthy people to accumulate tax favored savings that can be used
later to pay LTCI premiums.
#############################
12/13/2011,
"Pre-retirees
and retirees are happy and optimistic," by Lisa Gillespie, Employee
Benefit Adviser
Quote:
"Among retirees, the more affluent are
twice as likely as others to cite giving up a fulfilling career as a
negative to retirement. When it comes to planning, both pre-retirees and
retirees said a milestone birthday (19% of pre-retirees, 14% of
retirees) or the realization that they are within 10 years of retiring
(15% of pre-retirees, 11% of retirees) were the two most common triggers
for serious financial planning. It also seems that early planning plays
off: More affluent retirees - those with $250,000 or more of investable
assets - are twice as likely to say they began serious financial planning
when they got their first job." (Emphasis added)
LTC Comment:
Maybe identifying people reaching "milestone birthdays," i.e., 50, 60, 65,
would be a good source of LTCI leads.
#############################
12/13/2011,
"Some
Long-Term-Care Insurance Is Better Than None," by Glenn Ruffenach,
SmartMoney
Quote:
"The best is the enemy of the good. Or so
said Voltaire, the French philosopher. I could be wrong, but...I think he
was talking about long-term-care insurance -- and how to fix what is
probably the biggest hole in your plans for retirement."
LTC Comment:
Author Glenn Ruffenach attended the last Intercompany LTC Insurance
conference. Evidently, the industry made a good impression.
#############################
12/13/2011,
"Bigger
Share of State Cash for Medicaid," by Michael Cooper, New York
Times
Quote:
"The Medicaid program accounted for 21.9 percent of all state expenditures
in 2009, 22.3 percent in 2010, and is estimated to account for 23.6
percent in 2011, the report found. At the same time the share spent on
elementary and secondary education has declined, dropping to 20.1 percent
in 2011 from 21.5 percent of all state expenditures in 2009."
LTC Comment:
Evidence continues to mount that Medicaid's continued role as the dominant
payer for LTC in the USA is doubtful.
#############################
12/12/2011,
"Connecticut
Schedules LTCI Rate Hearing," by Allison Bell, LifeHealthPRO
Quote:
"The Connecticut Insurance Department has
scheduled a hearing on a 41% rate increase proposed for a closed block of
long-term care insurance (LTCI) policies (link)
for 9 a.m. Jan. 11. Metropolitan Life Insurance Company, a unit of
MetLife Inc., New York (NYSE:MET),
is asking for the increase for 3 separate but related blocks of LTCI
business . . .."
LTC Comment:
What's often missed when private LTCI carriers raise rates responsibly to
cover actual claims experience and protect policy holders is that "public
carriers," such as Medicaid and Medicare, have failed to set aside any
reserves, much less adequate reserves, to meet political promises of
future benefits. When will they schedule a "hearing" to review that?
#############################
12/12/2011,
"How
to plan for retirement," The Nation
Quote:
"Obtain medical and long-term care insurance: In the absence of an omnibus
insurance policy that include [sic] healthcare, obtaining a separate
medical and long-term care insurance policy provides you cover against
health challenges that may come with old age."
LTC Comment:
What's particularly interesting about this quote is its source, an article
in
The Nation, self-described as "the flagship of the left,"
according to
Wikipedia.
#############################
12/12/2011,
"Biggest
Handouts to 1 Percent Are Social Security and Medicare," Nick
Gillespie, Reason
Quote:
"Using
IRS data, IBD [Investor's Business Daily] found that the
top 1% of income earners claimed approximately $7 billion in Social
Security benefits in 2009. That year, the program paid super-rich seniors
- those with adjusted gross incomes exceeding $10 million - an average of
$33,000 each."
LTC Comment:
We often report how affluent people easily access Medicaid LTC benefits,
but the same holds true for Social Security and Medicare, only more so.
Policy makers and pundits have those two formerly "social insurance"
programs in their sights for conversion to means-tested welfare programs.
Ironically, the powers-that-be continue to leave Medicaid as a de-facto
entitlement with toothless income and asset limits.
#############################
12/12/2011,
"Troubled
nursing homes aren't closed," by Robin Erb and Kristi Tanner,
Detroit Free Press
Quote:
"All these years later, Qazi said, recruiting staff in some of Detroit's
poorest neighborhoods is 'an ongoing struggle.' He said money is tight
because residents are overwhelmingly poor and rely on Medicaid. Qazi said
higher-income Medicare patients, whose short-term daily reimbursements are
much higher, 'keep us in business.'"
LTC Comment:
With both Medicaid and Medicare funding in doubt, access to and quality of
institutional care is likely to deteriorate further for people unable to
pay privately for home or nursing facility care.
#############################
Updated, Friday, December 16, 2011,
11:50 AM (Pacific)
Seattle--
#############################
LTC BULLET: NEW
MEDICAID AND MEDICARE NUMBERS ANNOUNCED FOR 2012
LTC Comment: You
need to know these new numbers for 2012. We've also updated tables in The
Zone that provide the numbers for every year since the early 1990s.
Details follow the ***news.***
*** Happy Hanukkah,
Merry Christmas, Happy New Year and overall Season's Greetings. ***
*** 2012 LTCI
PRODUCERS SUMMIT will take place at the Tropicana Hotel in Las Vegas
November 10-12, 2012. The conference begins just four days after the next
presidential election, so you can celebrate or drown your sorrows
depending on the outcome. ***
*** WHAT HAVE YOU
DONE FOR ME LATELY? It's been a very productive year for your Center for
Long-Term Care Reform. We published
41 LTC Bullets counting this one and
43 LTC E-Alerts counting Monday's. Our studies of LTC
financing in
Pennsylvania, New York and California were released jointly with major
state think tanks in the first two months of the year. Steve Moses gave
17 speeches and published 11 bylined articles or reports. He spent 10
weeks living in the
Silver Bullet of LTC in Washington, DC collaborating with the
Cato Institute, interviewing and briefing key policy makers,
testifying before Congress on September 21, 2011 (video
and testimony), and sending you 13 "LTC
Embed Reports." We wrapped up this successful year with Steve
(presenting) and Damon attending the prestigious, invitation-only
Health Sector Assembly meeting in Sundance, Utah. At that event, we
previewed our six new briefing papers on "How to Fix Long-Term Care" which
we'll publish one at a time early in the new year. Thanks again for your
support, both financial and "moral," for our work. ***
*** THE ZONE has been
updated to include all the new Medicaid and Medicare numbers for 2012.
Check them out
here. You'll not only find the latest 2012 numbers, you can see how
each threshold number has increased year by year since 1991 for Medicaid
and since 1993 for Medicare. Access to The Zone is gated for Center for
Long-Term Care Reform members only. If you need a reminder of your user
name and password or if you'd like to join the Center to get immediate
access to this and our many other resources in The Zone, contact Damon at
206-283-7036 or
damon@centerltc.com. ***
#############################
LTC BULLET: NEW
MEDICAID AND MEDICARE NUMBERS ANNOUNCED FOR 2012
LTC Comment: First,
why do these new numbers matter? Once upon a time, long, long ago (like
until 1988), Medicaid routinely impoverished healthy, community spouses of
institutionalized recipients. It worked like this:
Medicaid nursing home
recipients had to contribute most of their income to offset their cost of
care to Medicaid. That's still true, but until the Medicare Catastrophic
Coverage Act of 1988 (MCCA '88), Medicaid rules made no allowance for the
financial well-being of healthy spouses who remained in the community.
Usually the husband would enter the nursing home and go onto Medicaid
first. Most of the family income was in his name. So the wife was left
at home with few liquid assets (only $2,000 in most states) and no more
than her own income or at most a few hundred dollars worth of the Medicaid
husband's income.
MMMNA and CSRA
Congress and
President Reagan eliminated the problem of "spousal impoverishment" in
MCCA '88 by requiring that community spouses of institutionalized Medicaid
recipients be allowed to retain up to $1,500 per month of income (the
Minimum Monthly Maintenance Needs Allowance or MMMNA) plus half the joint
assets not to exceed $60,000 (the Community Spouse Resource Allowance or
CSRA). The law also provided for annual increases in these thresholds
based on inflation. With inflation flat for the previous two years, these
amounts had not increased since 2009, remaining at $2,739 and $109,500,
respectively for 2010 and 2011. But inflation jumped 3.7 percent in 2011,
so the new thresholds effective January 1, 2012 will be $2,841 for the
MMMNA upper limit and $113,640 for the CSRA, an 89.4 percent increase
over the original 1988 protected amounts.
Home Equity Exemption
Several other
Medicaid numbers are of interest and increasing. Under federal law, one
home including all contiguous property, is exempt from asset eligibility
limits so long as the Medicaid applicant/recipient expresses a subjective
intent to return to the home. Up until the Deficit Reduction Act of 2005
(DRA '05), there was no limit whatsoever on the value of the retained
home, land and property. The DRA '05 set a cap of $500,000 on protected
home equity or $750,000 at state legislative option. Those limits
increased to $506,000 and $758,000 respectively in 2011. The Medicaid
long-term care home equity exemption levels leap to $525,000 and $786,000,
effective January 1, 2012.
An interesting fact
about Medicaid's home equity exemption is that, at its maximum of
$786,000, it is nearly 22 times as high as the total asset exemption,
including home equity, allowed in England. (According to the
Kaiser Family Foundation, 11 states allow the maximum home equity
exemption, including some with huge budget deficits: California,
Connecticut, DC, Hawaii, Idaho, Maine, Massachusetts, New Jersey, New
Mexico, New York, and Wisconsin.)
A recent article in the British newspaper The Telegraph
stated: "An estimated 20,000 [English] people a year are forced to sell
their homes to pay fees for nursing and residential care, which can reach
hundreds of thousands of pounds." Using reverse mortgages to fund
long-term care could harness the value of home equity for many people
without their needing to sell their homes. But isn't it fascinating that
the USA's reputedly draconian Medicaid program is so much more generous
than England's socialized health care system?
Other Medicaid Numbers
What we referred to
above as the "MMMNA upper limit" is actually the upper end of the income
transfer allowance available to community spouses who have additional
expenses, such as for housing. The lower end, the actual minimum
community spouses are allowed to receive from their institutionalized
spouse's income, is calculated by multiplying the poverty level for a
couple by 1.5, i.e., 150 percent. Currently the MMMNA lower
limit is $1,839. It will remain at that level until July 2012 when it
will be reset as the new poverty level for a couple is reported. We
announce that change each year in July when it happens and we update the
information in The Zone.
Most states have
"medically needy" income eligibility systems, which means they deduct
medical and long-term care expenses from applicant/recipient's income
before determining eligibility. Some states, however, use an "income cap"
system. Those states allow only 300 percent of the Supplemental Security
Income (SSI) allowance for a single individual. The SSI allowance will
increase to $698 per month from $674 effective January 1, 2012 causing the
300 percent income cap to increase from $2,022 to $2,094. For all
practical purposes, however, it makes little difference whether Medicaid
recipients live in medically needy or income cap states. Income level
rarely interferes with eligibility in either system due to the medical/LTC
deduction in medically needy states and the availability of Miller income
diversion trusts in income cap states.
Medicare Numbers
Several key Medicare
numbers change effective January 1, 2012. The Part A skilled nursing
facility co-insurance amount for the 21st through 100th
day in a nursing home increases from $141.50 to $144.50. This is up
from $84.50 in 1993, a 67 percent increase.
The Part A inpatient
hospital deductible for the 1st 60 days will rise from $1,132
to $1,156, up from $676 in 1993, a 71 percent increase.
On the other hand,
one key Medicare number is actually going down. The Part B annual
deductible declines $22 from $162 to $140 effective New Year's Day.
The Part B monthly
premium remains a moving target, bouncing around depending on several
factors including personal income. For details on such complications,
refer to "The
2012 Medicare Part B Premium and Deductible Lower Than Expected," a
10/27/11 article posted on the AARP website.
For most Medicare beneficiaries, the Part
B premium will increase from $96.40 to $99.90 per month.
See also "Medicare
premiums and coinsurance rates for 2012," "Fact Sheet:
Medicare Premiums and Deductibles For 2012," and "2012
Part B Premium Amounts for Persons with Higher Income Levels" on the
Medicare.gov website.
#############################
Updated, Monday, December 12, 2011,
10:20 AM (Pacific)
Seattle--
#############################
LTC NEWS AND
COMMENT
LTC Comment: CMS
has announced the new Medicaid and Medicare numbers that will become
effective January 1, 2012. They include some pretty dramatic changes.
For example, the upper end Medicaid home equity exemption will rise to
$786,000. It was originally $750,000 but increases with inflation. The
Medicare Part B annual deductible drops by a nearly unprecedented $22 from
$162 to $140. In this Friday's LTC Bullet, we'll bring you full
coverage of these changes and an updated table in The Zone showing key
Medicaid and Medicare numbers year by year since the early 1990s and
through 2012.
For now, here's
our LTC media retrospective since 10/31/11.
#############################
12/9/2011,
"Rhythms
Flow as Aging Pianist Finds New Audience," by Dan Barry, New York
Times
Quote:
"Boyd Lee Dunlop found his musical talent during the Great Depression. But
after years of playing in bars and nightclubs, it took a damaged piano in
a Buffalo nursing home for him to be discovered."
LTC Comment:
Charming story of a life and talent renewed.
#############################
12/8/2011,
"Home
Health Care Franchises on the Rise as Boomers Age, Costs Rise," by
Liza Porteus Viana, Fox Business
Quote:
"[Nautilus Senior Home Care founder] Bruce explained that the availability
of long-term care insurance, combined with the fact that more patients are
being forced to pay out of pocket for care is why he and his wife have a
rosy outlook on their company's growth."
LTC Comment:
As we emphasize here often, the ability to pay privately for care will
drive access and quality of care in the future. Private financing,
including LTCI, will also help to grow and expand home and community-based
care which is financially starved today by its heavy dependence on
unreliable public funding.
#############################
12/6/2011,
"More
Exercise Can Help You Sleep Better," OpenPR
Quote:
"Inadequate sleep has been linked to depression, cardiovascular disease
and other health problems notes Slome. Increased risk of cardiovascular
disease puts aging Americans at greater risk of needing benefits from
their long-term care insurance Slome explains."
LTC Comment:
AALTCI director Jesse Slome continues to link new medical research to
the need for LTC insurance protection in a series of creative, low-cost
press releases.
#############################
12/5/2011,
"Many
Workers in Public Sector Retiring Sooner," by Monica Davey, New
York Times
Quote:
"As states and cities struggle to resolve paralyzing budget shortfalls by
sending workers on unpaid furloughs, freezing salaries and extracting
larger contributions for health benefits and pensions, a growing number of
public-sector workers are finding fewer reasons to stay."
LTC Comment:
The surge of public employee retirements could be a rich source of LTCI
leads.
#############################
12/5/2011,
"Long-Term Care Awareness Campaign '3 in 4 Need More' Gains Additional
Support and New Board Members," Insurance Broadcasting (link)
Quote:
"In November the 3in4 Association added seven new members to its advisory
board, and received increased support from two insurance carriers: John
Hancock, an existing member of the organization, and Genworth, which
provided sponsorship of a meaningful consumer study. 'We're gaining
momentum,' says Mark Goldberg, Treasurer of the association that runs the
'3 in 4 Need More' campaign."
LTC Comment:
Congratulations to the 3in4 Association and the 3in4 Need More campaign.
#############################
12/2011,
"US
life insurance industry outlook," Ernst & Young
Quote:
"Life insurers in the United States face a conundrum as they head into
2012-managing both capital and risk in an economically and politically
uncertain year, while continuing to lay the groundwork for future growth.
The uncertain economic climate, compounded by ongoing concerns over US
debt, continues to put pressure on life insurer ratings and capital
levels.
"Factors intensifying
this pressure include:
* Low interest rates
raising concerns over spread compression
* Volatile equity
markets increasing hedging costs and reserve requirements
* Impacts of the
unfolding euro zone financial crisis - particularly for multinationals
* Insistent investors
wanting higher returns
* The changing
regulatory environment"
LTC Comment:
Interesting content and analysis because the challenges facing LTC
insurance are so similar to those confronting life insurance.
#############################
12/3/2011,
"Debate rises over whether Medicare pay cuts will hurt doctors' practices,
patients," by N.C. Aizenman, The Washington Post (link)
Quote:
"The impact of mandatory Medicare pay cuts triggered by the congressional
debt panel's recent failure to reach a deal is the subject of sharp
disagreement. Doctors and hospital officials are warning that the cuts
could have serious repercussions for American health care, prompting many
doctors to drop Medicare patients and forcing hospitals to lay off staff
and consolidate facilities."
LTC Comment:
The Center for LTC Reform offered a solution to this problem based on
Medicaid LTC savings and increased LTC insurance: see "Pay
for the Doc Fix by Fixing Medicaid LTC."
#############################
12/3/2011,
"Health
Official Takes Parting Shot at 'Waste,'" by Robert Pear, New York
Times
Quote:
"The official in charge of Medicare and Medicaid for the last 17 months
says that 20 percent to 30 percent of health spending is 'waste' that
yields no benefit to patients, and that some of the needless spending is a
result of onerous, archaic regulations enforced by his agency."
LTC Comment:
Medicaid not only crowds out most of the LTC insurance market according to
researchers cited below, but a quarter to a third of its spending is
wasted on top of that damage, according to the outgoing CMS Administrator.
#############################
12/1/2011,
"A CLASS denied: Shelving of the CLASS act could mean big business for
brokers," by Brian M. Kalish, Employee Benefit Adviser (link)
Quote:
"The CLASS Act's greatest gift may have actually been in its shelving,
says Slome. 'In the years ahead, the greatest gift of the CLASS Act has
been to really increase the level of consumer awareness and the death of
[the Act] has really made it clear to intelligent individuals and business
owners that the government is not coming to the rescue,' he concludes.
'It's evermore clear that people have to act and that's what you are
seeing and will continue to see.'"
LTC Comment:
That is indeed the net effect of thousands of hours and millions of
dollars expended by legislators, staff, pundits, analysts, and producers
promoting or debunking and ultimately killing a program that was
hopelessly flawed from the start.
#############################
11/27/2011,
"Hearing
testimony suggests Medicaid abuse attracts all income levels," by Lou
Ann Anderson, Estate of Denial
Quote:
"In October of this year, ElderLawAnswers.com featured a post,
House Panel Hunts the Elusive 'Millionaire on Medicaid', that examined
a September 21 congressional hearing on alleged abuses of Medicaid
long-term care eligibility rules."
LTC Comment:
The articles cited and referenced discuss the Congressional hearing on
Medicaid planning in which Stephen Moses testified. We covered the
hearing in detail
here.
#############################
11/17/2011,
"Researchers Call for Peers to Study LTC," by Allison Bell,
LifeHealthPRO
Quote:
"But even middle-income people can qualify for nursing home benefits from
Medicaid, the health insurance program for the poor, by spending or giving
away assets, to make themselves artificially poor, and Medicaid may appear
on the surface be a better deal than private LTCI for about two-thirds of
U.S. residents, the researchers estimate."
LTC Comment:
New article by the researchers who concluded Medicaid crowds out 2/3 to
90% of the LTC insurance market. Full citation: Brown, Jeffrey R., and
Amy Finkelstein. 2011. "Insuring Long-Term Care in the United States."
Journal of Economic Perspectives, 25(4): 119–42.
#############################
11/2011,
"The
Fiscal Survey of the States: Fall 2011," National Governors
Association and the National Association of State Budget Officials
Quote:
"While overall state spending is expected to grow slowly over the next few
years, spending on Medicaid is expected to consume an increasing share of
state budgets and grow more rapidly than state revenue growth. Factors
causing rapid growth in Medicaid costs for states include: increased
enrollments (because of both the weak economy and expanded eligibility
under health care reform); the elimination of federal funds associated
with the enhanced matching rate of state costs from the Recovery Act; and
per capita health care costs in general increasing faster than the
economy. With Medicaid costs growing significantly and state revenue
collections growing at a much slower pace, states are likely to face tight
fiscal conditions for the foreseeable future."
LTC Comment:
This semi-annual report from the
National Governors Association and the
National Association of State Budget Officers is the best gauge we
have of state governments' ability to fund Medicaid long-term care
benefits. The picture is bleaker for states all the time, but brighter
for private LTC financing alternatives as more and more people realize LTC
will be more than ever a personal responsibility in the future.
#############################
10/31/2011,
"CLASS
Aside, Long-Term Care is a Key to Entitlement Reform," by Avik Roy,
Forbes
Quote:
"Lest you think that the $122-billion-plus in Medicaid long-term care
spending is going entirely to the needy, it's not. Medicaid's inadequate
eligibility rules allow
wealthy individuals to game the system in order to gain Medicaid
long-term coverage. In one such game, called 'spousal refusal,' one person
can transfer his assets to his spouse, in order to claim that he is poor."
LTC Comment:
This is one of the better articles to come out of the CLASS post-mortems.
#############################
10/31/2011,
"Editorial:
States are pushing it on Medicaid cuts," USA Today
Quote:
"To get a sense for how desperate states are to cut Medicaid costs, think
about this: Several of them are seeking federal permission to impose
short, inflexible annual limits on hospital stays, no matter how sick or
severely injured the patient is."
LTC Comment:
In this USA Today editorial point/counterpoint, the newspaper
thinks such Medicaid cuts are unconscionable; the state Medicaid directors
reply they have no choice. In the meantime, Medicaid exempts at least
$525,000 of home equity (effective 1/1/12) while paying for the program's
most expensive benefit, LTC. Go figure.
#############################
Updated, Friday, December 9, 2011,
10:22 AM (Pacific)
Seattle--
#############################
LTC Comment: The 13th annual Health
Sector Assembly brought together 70 thought leaders to discuss LTC
services and financing. Our message was heard loud and clear. Details
follow the ***news.***
*** TOP TEN REASONS WHY MEDICAID NEEDS REFORM: Check
out
this press release from Senators Orrin Hatch (R, UT) and Dr. Tom
Coburn (R, OK) listing "ten examples of the fundamental flaws and problems
confronting the Medicaid program that illustrate why this program needs to
reformed." They include:
1. You can own a Rolls-Royce and still qualify for
Medicaid today.
(Source: The Code of Federal Regulations: 20 CFR 416.1218.)
8. You can own a half a million dollar luxury home
and still qualify for Medicaid.
(Source: The Social Security Act: Section 1917(f).)
And especially this one citing the Center for
Long-Term Care Reform:
9. An entire consulting industry now teaches how to
do financial planning around Medicaid’s long-term care offerings, and not
surprisingly, taxpayers now finance 40 percent of long-term care services
in America through Medicaid.
(Sources: The Center for Long-Term Care Reform: Medicaid Planning Quotes
and Kaiser Commission on Medicaid and the Uninsured: Medicaid and
Long-Term Care Services and Supports. March 2011) ***
LTC BULLET: LTC AT SUNDANCE
LTC Comment: It's been a little over a month since
our last LTC Bullet. Capping three months of hard work on the Hill
and in the policy trenches of Washington, DC, I'm just back from three
weeks of much-needed rest, respite and vacation in Southeast Asia,
specifically Borneo, Singapore and a wide-ranging air and road tour of the
Philippines. But now it's time to dive back into the LTC policy fray.
In between DC and the wilds of Borneo, I spent three
days (with Damon) at the 2011 "Health Sector Assembly" which convened at
the Sundance resort near Salt Lake City, Utah. This invitation-only,
all-expense-paid, annual meeting focused this year on "Long-Term Care:
The Unacknowledged Elephant in the Room." Organizers described the event
thus:
The Health Sector Assembly of America is a
gathering of health leaders from virtually every segment of the health
universe. Bringing together a wide range of philosophical opinions,
experiential dimensions, and varying approaches to the future of health
care in the United States, it has become an annual occasion when these
individuals bond around the discussion table. Without outside pressures,
they are able to exchange openly and frankly often in a spirited manner.
Discussion at the Assembly
was definitely open, frank and spirited, reflecting the widely divergent
views of attendees representing leading national think tanks, trade and
professional associations, consumer groups and including public officials
and scholars. Eight of the attendees were invited to offer formal,
seven-minute "challenge remarks" from the podium to get the broader
discussion started. I was asked to speak on "Challenges to Effective
Long-Term Care: Cost and Affordability."
Following is a transcript
of my remarks to the Health Sector Assembly. At the end of those
comments, I mentioned that I had prepared six "Briefing Papers" which ask
and answer key questions about long-term care "from a perspective clearly
at odds with conventional long-term care analysis." Staff of the event
distributed a summary sheet with links to all six essays to all of the
attendees. In the coming weeks and months, we will share the same
material with you in forthcoming LTC Bullets.
----------
Health Sector Assembly Presentation
Sundance, Utah
November 4, 2011
Session: "Challenges to Effective Long-Term Care"
"Challenge Remarks: Cost and Affordability of
Long-Term Care"
by
Stephen A. Moses
First some
facts. Long-term care is very expensive. A private nursing home room for
custodial care in 2011 averages $239 per day or $87,000 per year; a
semi-private room runs $205 per day or $78,000 per year. Both are up 4.4
percent from last year. Base rates for assisted living climbed 5.6
percent to $3,500 per month or $42,000 per year. Private-pay hourly rates
for home health aides and homemaker/companion services remained unchanged
from 2010 at $21 and $19 respectively.[1]
At these levels, few Americans could pay privately for very long which
leads analysts to conclude that long-term care is unaffordable.
According
to the Centers for Medicare and Medicaid Services (CMS), the United States
spent $137 billion in 2009 for care provided in skilled nursing facilities
or continuing care retirement communities.[2]
The country expended another $68 billion for home health care in the same
year.[3]
The total of $205 billion for institutional and home care is up 47 percent
from $139 billion in 2003. As the Health Sector Assembly "Topic
Statement" suggested, public and private long-term care expenditures are
an unacknowledged fiscal elephant in the room. Clearly unaffordable.
What's most
interesting about these huge and expanding long-term care expenditures,
however, is "who pays for what and why?"
For
example, the percentage of nursing home costs paid by Medicaid and
Medicare nearly doubled from 27 percent in 1970 to 53 percent in 2009. In
the same period, out-of-pocket expenditures declined two-fifths from 50
percent to 29 percent.[4]
Furthermore, half of the out-of-pocket costs reported by CMS are actually
spend-through of Social Security income by Medicaid recipients who are
required to contribute most of their income to offset Medicaid's costs for
their care. Clearly, direct and indirect government financing of
expensive institutional care has increased dramatically over the past 39
years while personal financial liability for such care has declined
substantially.
Government
financing also predominates in home health care expenditures. According
to CMS, Medicare paid 44 percent and Medicaid, 36 percent for a total of
80 percent of home health care expenses in 2009. Private insurance paid 7
percent. Only 9 percent of home health care costs were paid out of
pocket.[5]
Assisted living is another matter altogether. Private payers account for
roughly 90 percent of assisted living costs. Government financing of the
sector is very limited. CMS doesn't even report assisted living costs
among National Health Expenditures.
Now for my
challenge remarks. What questions should the hard facts of long-term
care's high cost and unaffordability lead us to ask? I suggest five.
1. How did the USA
come to have a welfare financed, institutionally biased long-term care
system in the wealthiest country in the world where no one wants to go to
a nursing home? If heavy public financing created that problem, maybe
less government and more private funding is the solution.
2. Does qualifying
for Medicaid long-term care benefits really require people to spend down
into impoverishment as the popular and academic media suggest? If not,
maybe Medicaid rules cause the program's overuse and crowd out private
long-term care services and financing.
3.
Will "rebalancing" Medicaid from mostly nursing home care to mostly home
and community-based care save the program money? If not, rebalancing
might make Medicaid more desirable, expand its utilization, and further
discourage private long-term care planning and financing alternatives.
4. Is it inevitable
that millions of Americans will become Medicaid's most expensive
recipients or could different public policy incentives prevent or delay
people from becoming dual eligibles? So called "duals," people who
receive both Medicaid and Medicare benefits, are heavy users of long-term
care and, although they are only 15 percent of recipients, they account
for 39 percent of Medicaid's expenditures.
5.
If long-term care is such a huge risk and cost, why don't more Americans
save, invest or insure against it? Perhaps Medicaid's large home equity
exemption and relatively easy income and asset eligibility rules inhibit
private long-term care financing alternatives such as reverse mortgages or
insurance.
I have prepared six
short "Briefing Papers" that ask and answer these questions from a
perspective clearly at odds with conventional long-term care analysis.
With these remarks, in those briefs, and during the coming discussion, I
challenge you to reconsider government's proper role in financing
long-term care.
Thank you.
End Notes
#############################
Updated, Friday, November 4, 2011,
10:38 AM (Pacific)
Sundance, UT--
#############################
LTC BULLET: WHY 9 OUT OF 10 GET LTCI
WRONG
LTC Comment: Today's
guest column explains why the "Medicaid myth" is fallacious, but most LTCI
agents still fall into the trap dragging too many potential buyers into it
with them.
*** HEALTH SECTOR
ASSEMBLY. Damon and I are attending an invitation-only convocation of
health policy experts in Sundance, Utah through the weekend. This year's
13th annual HSA is focused exclusively on long-term care policy
for the first time. In honor of the event, I prepared six briefing papers
on key aspects of the LTC service delivery and financing issues. Check
them out
here. I will also deliver one of the "Challenge Remarks" speeches
intended to trigger discussion among the attendees. My assigned topic is
"Cost and Affordability of Long-Term Care." ***
*** NEW HOME EQUITY
NUMBERS. The Deficit Reduction Act of 2005 placed the first limits ever
on Medicaid's home equity exemption. To wit, a minimum of $500,000 or a
maximum of $750,000 at state legislative option. Those caps go up with
inflation. As of November 1, 2011, they increased to $506,000 and
$758,000 respectively. We've added this information to the "Key Medicaid
and Medicare Numbers" in The Zone
here. ***
*** OUTAHERE. Steve
Moses is taking a much-needed vacation starting November 8. Believe it or
not, I'm headed to Borneo. I wanted to get as far away from work as
possible and that destination pretty much filled the bill. I'll have
occasional access to email and Damon will be on the job in Seattle, so
your Center for Long-Term Care Reform is available if and when you need
us. See you after Thanksgiving Day, of which I wish you a great one. ***
LTC BULLET: WHY 9
OUT OF 10 GET LTCI WRONG
LTC Comment: I 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.
--------------
Excerpts from "LTC
Insurance: Why 9 Out of 10 People Make the Wrong Choice," by Stephen D.
Forman
"Keep in mind the
lion's share of applicants qualify for Medicaid straightaway without
needing or seeking professional assistance. However, for the affluent a
cottage industry of Medicaid Planners and Elderlaw Attorneys exists to
finagle and exploit every loophole. Rather than save, invest or insure,
our wealthy neighbors use exotic financial planning techniques to hitch a
ride on the public safety net. Recently the GAO was asked to assess one
such abusive 'self-impoverishment' technique- asset transfers- and
concluded that mechanism alone (among the least popular) cost Medicaid
around $1 Billion/year. To put that in perspective: this amount of abuse
from just one technique used by the middle-class and wealthy in order to
'game' Medicaid exceeds the annual LTC claims-paid by most of our industry
carriers.
"Since both public
and private insurance confer asset protection, I don't think it's a
particularly strong selling point. On consumer surveys you will often
find respondents voicing 'asset protection' as an important feature to
them- I don't deny that. However, working against us is an undercurrent
called the 'crowd-out effect': that sentiment taxpayers feel about paying
for something that replaces a government benefit they already get for
free. It is estimated that Medicaid 'crowds-out' 2/3rds to 90% of our
private LTCI market (the groundbreaking work for this paper was published
in the most prestigious of economic journals, NBER). This is why LTCi is
bottled up and has yet to take off.
"Having said this,
I'm not dismal about our market, and neither should you. There are good
ways to sell our products, and a future which endorses them. You've heard
how Medicaid has become the dominant payor of long-term care in this
country, and why it can be difficult to sell what is essentially 'ice' to
Eskimos. Now it's time to tell 'the rest of the story...'
"First, if you've
kept an eye on our economy lately, then you're aware that what began as a
New Year's Eve party is turning into a New Year's Day hangover of epic
proportions. One of the largest contributors to this has been- and
continues to be- our Big Three entitlements (Social Security, Medicare,
and Medicaid). According to a GAO Report from earlier this year, by 2020
our country could spend as much as 89-cents of every dollar on the
Entitlements and Interest, leaving only 11-cents for every other program,
need, interest group, and worthy cause we'd like to fund.
"Because this path is
unsustainable, choices will be made which reduce or eliminate the easy
access to Medicaid of the past. In 5, 10, or 20 years we will not
recognize Medicaid (or Medicare, for that matter) as the programs we know
today. Medicare is becoming increasingly means-tested as a result of the
Affordable Care Act, raising both the payroll tax and premiums for higher
wage-earners (Parts A, B and D), all for the sake of gaining 8 more years
of solvency.
"Medicaid fares
worse. Jointly run by the Federal Government and the States, it's
partially dependent on how much water the states can take on before
sinking. Unlike the Federal Government, States must balance their
budgets, and going into 2012, they collectively face a $121B deficit- not
counting the 17M new Enrollees they are mandated to add to their rolls in
2014 as a result of ACA. (Washington has pledged to cover the cost of
these new Enrollees for a few years, but these matching funds will
eventually sunset.)
"States are feeling
squeezed. Already, nearly half (24) are preparing to cut $4.7B from their
Medicaid budgets, reducing both provider reimbursement rates and services
which beneficiaries receive. Adding insult to injury, the President's
recently unveiled Deficit Reduction Plan recommends an additional $320B in
entitlement cuts over the next ten years.
"I hope by now the
clever reader will acknowledge why I haven't suggested working 'with'
Medicaid by selling a long-term care Partnership product. What's the use
of promoting a 'guarantee' from a Government Program which may be
unrecognizable, capricious, or worse- bankrupt?
"To fully explore
that point, let's talk about how we 'sell against' the 'Medicaid Insurance
Company'. We're going to win by making a qualitative sale, not a
quantitative one. . . .
"In the end, you can
have coverage on the cheap, but there are serious trade-offs, including
loss of quality, access, choice, and independence. A cursory review of
some of Medicaid's 'greatest hits' in the last two years includes
canceling transplant coverage for 98 people dying on a waiting list;
unilaterally raising the number of qualifying ADL's to 4 in Minnesota;
providing unreliable coverage of Assisted-Living; and adding,
constricting, expanding, then cost-cutting of HCBS like a sail caught in
the political winds (and how is that 're-balancing' working out? Fine,
unless you count the 365,000 people wait-listed for Home Care). Add to
this the news that some major nursing home chains have made the switch to
'private-pay only', and it's all the proof you need that a 2-tier
HealthCare system is developing in our country.
"That positions you
right where you need to be: selling the experience. Private long-term
care insurance allows your clients to choose the highest-quality care in
the most-appropriate setting of their choice. Although Medicaid is a
powerful undertow, you cannot let them get swept out to sea, subject to a
budgetary system that is $100,000,000,000,000 in the red, and feverishly,
furiously looking for ways to cut corners, including eligibility
restrictions, provider payment reductions, and service cuts."
About Stephen D.
Forman: A pioneer and leader in LTC insurance since 1974, LTCA has
distinguished itself as one of the country's leading voices on this
specialized topic. As Senior Vice-President, Stephen D. Forman has
dedicated nearly two decades to this field, and is frequently sought for
his expertise, appearing in such publications as "Kiplinger's Personal
Finance", "Agents Sales Journal", and in the Congressional Research
Service's confidential report to Congress on the CLASS Act. He can be
reached at 800.742.9444 or
steve@ltc-associates.com.
#############################
Updated, Monday, October 31, 2011,
11:19 AM (Pacific)
Seattle--
#############################
LTC NEWS AND
COMMENT
(LTC Embed Report
#13)
LATE BREAKING
NEWS: Repealing CLASS has no budgetary effect.
In a letter today
(10/31/11) to Senator John Thune (R, SD), Douglas W. Elmendorf, Director
of the Congressional Budget Office, writes:
"In its March
2011 baseline projections, CBO anticipated that the CLASS program would
begin collecting premiums in fiscal year 2012 and that net receipts of the
program over the 2012-2021 period would amount to $81 billion. In the
absence of the program, the government would not receive that income-and,
in addition, Medicaid costs would be about $2 billion higher, CBO
estimates. Therefore, prior to the October 14 announcement by the
Secretary of HHS, CBO would have estimated that the Repeal the CLASS
Entitlement Act (S. 720, as introduced on April 4, 2011) would increase
federal budget deficits by $83 billion over the 2012- 2021 period,
relative to the March 2011 baseline.
"CBO considers
the October 14 announcement to be definitive new information, and in its
next baseline projections (which will be issued in January), CBO will
assume that CLASS will not be implemented unless there are changes in law
or other actions by the Administration that would supersede the
Secretary's announcement. Further, beginning immediately, legislation to
repeal the provisions of law establishing the CLASS program, such as S.
720, would be estimated as having no budgetary effect."
LTC Comment: On
Wednesday, October 27, I met with Tom Donlan, Editorial Page Editor of
Barron's on Capitol Hill. He had read our Cato report "Aging
America's Achilles' Heel: Medicaid Long-Term Care" and wanted to know
more about how middle class and affluent people qualify for Medicaid LTC
benefits. I explained everything and handed him copies of two recent
Center reports: "Save
Medicaid $30 Billion Per Year AND Improve the Program" and "Medi-Cal
Long-Term Care: Safety Net or Hammock." He said he'll definitely
write about the problem, including our analysis and recommendations, in
Barron's.
On Friday, my
last day in the nation's capital, I met with former Comptroller General
(GAO Chief) David Walker. His "Fiscal Wake-Up Tour" helped inspire the
Center's 2008 "LTC Consciousness Tour." Walker left GAO in 2008 to become
President and CEO of the Peter G. Peterson Foundation. Today, he leads
his own "Come
Back America" initiative. I explained to Mr. Walker how easy access
to Medicaid LTC benefits explodes program costs and crowds out private LTC
financing alternatives. He said he will weave our analysis and
recommendations into his future presentations.
I'm back home in
Seattle after a two-month-plus stay in Washington, DC. We fought the good
fight, but this was not the year to win. Gridlock prevails on the Hill
and between the Hill and the White House. We have our eyes on 2013 as the
next great opportunity to fix LTC financing. Here's a story in
Provider magazine about our best efforts this time around: Patrick
Connole, "Proposed Plan May Save Medicaid $30 Billion Per Year, But
Congress Is Not Buying It," Provider, October 27, 2011, (link).
#############################
10/29/2011,
"The debt fallout: How Social Security went 'cash negative' earlier than
expected," by Lori Montgomery, Washington Post (link)
Quote:
"For most of its 75-year history, the program had paid its own way through
a dedicated stream of payroll taxes, even generating huge surpluses for
the past two decades. But in 2010, under the strain of a recession that
caused tax revenue to plummet, the cost of benefits outstripped tax
collections for the first time since the early 1980s. Now, Social
Security is sucking money out of the Treasury. This year, it will add a
projected $46 billion to the nation's budget problems, according to
projections by system trustees. Replacing cash lost to a one-year payroll
tax holiday will require an additional $105 billion. If the payroll tax
break is expanded next year, as President Obama has proposed, Social
Security will need an extra $267 billion to pay promised benefits."
LTC Comment:
Social Security is sinking even faster than previously expected. Not
often considered a source of LTC financing, Social Security is actually a
major LTC funder. People in nursing homes on Medicaid must contribute
most of their income, including their Social Security checks, to offset
Medicaid's expenditures on their behalf. People receiving home and
community-based care under Medicaid use Social Security and/or SSI
benefits to make ends meet. If and when Social Security has to cut back
benefits, public financing of LTC will be devastated. Medicaid and
Medicare, state budgets, nursing homes, home care providers and especially
patients who lack private funds or insurance will suffer.
#############################
10/28/2011,
"Survey Finds Family Caregivers Most Concerned about Respite Care,
Personal Health and Finances," PRWeb (link)
Quote:
"Taking care of their personal health, lack of respite care and meeting
monthly financial needs are the top concerns cited by 1,579 family
caregivers, according to a survey by The National Family Caregivers
Association (NFCA) and Allsup. Allsup is a nationwide provider of Social
Security Disability Insurance (SSDI) representation and Medicare plan
selection services. . . . Additionally, most are interested in obtaining
help with Medicare plan selection (60 percent) and long-term care
insurance (57 percent)." (Emphasis added)
LTC Comment:
Family caregivers are practically begging for help finding LTCI.
#############################
10/28/2011,
"Cutting Medicaid by 5% would spur loss of nursing home jobs, economists
say," McKnight's LTC News (link)
Quote:
"Cutting the state-federal Medicaid program by 5% could result in the loss
of thousands of jobs in nursing homes and other healthcare-related
industries, a new report finds. Cuts to Medicaid by Congress, which pays
for 43% of U.S. long-term care services, are looking increasingly likely,
according to The Hill. A 5%-Medicaid cut would likely cost states -
which will soon be tasked with widening their roles under the Affordable
Care Act - $14 billion total, Reuters reported."
LTC Comment:
So, let's see, what does this mean? We should go on warehousing infirm
elders in welfare-financed nursing homes while sheltering up to $750,000
of home equity for their heirs because clamping down on such waste would
cut nursing home jobs. Twisted logic. How many jobs would we create in
the HCBS sector and the financial services industry by reforming Medicaid
so it does not crowd out LTC insurance and home equity conversion?
#############################
10/28/2011,
"States'
Medicaid Cost-Cutting May Not Control Program Spending," Bloomberg
Quote:
"States will have to spend more on the health program for the poor to
offset the loss of $100 billion in U.S. funds authorized by the 2009
economic stimulus law and to accommodate higher enrollment due to the
flagging economy, according to an annual survey of Medicaid officials
released today by the Kaiser Family Foundation."
LTC Comment:
A perfect fiscal storm is hitting state Medicaid programs and state
budgets this year due to the end of enhanced federal matching fund rates
as of June 2011. Watch for Medicaid crowd out of the LTCI market to
decline over time.
#############################
10/26/2011,
"Long-term
care: Your clock is ticking!," Mike Causey, Mike Causey's Federal
Report
Quote:
"The uncertainty of life may be one reason that 270,000 federal workers
have signed up for the federal LTC program at work. During the most recent
open season, there were 45,000 new enrollees in the federal plan.
Presumably, hopefully, many feds who didn't buy into the federal group
program purchased a policy for themselves from one of the few remaining
companies that offer LTC coverage."
LTC Comment:
Paul Forte, CEO of the Federal Long-Term Care Insurance Program, is
interviewed on this show. Listen to the interview
here. Congratulations to Mr. Forte and the FLTCIP on an
extraordinarily successful 2011 Open Season.
#############################
10/26/2011,
"Just
for the Record," Gary Barg, The Fearless Caregiver
Quote:
"One of every eight Americans aged 40 to 60 is in what is known as the
'Sandwich Generation,' both raising a child and caring for a parent. Many
are also well within what has come to be known as the 'Club-Sandwich
Generation,' raising kids while caring for parents and grandparents. Of
the over 65 million family caregivers in the US, over half spend on
average 21 hours per week caring for mostly elderly loved ones."
LTC Comment:
Think maybe the "Club-Sandwich Generation" could use some LTCI?
#############################
10/25/2011,
"Loving
LTCI Claim Time," by Honey Leveen, LifeHealthPRO
Quote:
"For me, claim time represents the ultimate affirmation of my career.
Back when I began selling LTCI at an aggressive clip in the early '90s, I
sold tons of policies with 0-Day Elimination Periods. Such policies were
plentiful and reasonably priced, as were Lifetime Benefit Periods.
Consequently, I am now having a minor deluge of clients going out on
claim. Once in awhile, I learn abut claims that went in without my even
being aware of them. I don't have a way of knowing exactly how many LTCI
claims my clients have had, but my best guess is that at least 300 of my
clients have collected on their policies. Yow!"
LTC Comment:
Congratulations to the "LTC Queen" Honey Leveen, a long-time member and
supporter of the Center for Long-Term Care Reform and one of our Regional
Representatives.
#############################
10/25/2011,
"Genworth Mortgage Insurance Unit Must Rebound or Wind Down, Haines Says,"
by Noah Buhayar, Bloomberg (link)
Quote:
"Genworth Chief Executive Officer Michael Fraizer has faced investor
pressure to prevent mortgage insurance losses from draining capital at the
Richmond, Virginia-based company, which also sells life and long-term care
insurance."
LTC Comment:
Housing crisis backwash.
#############################
10/25/2011,
"Long-Term Care Costs in the U.S. Rise Again, Continuing a Trend,
According to MetLife Mature Market Institute Survey: Nursing Home,
Assisted Living and Adult Day Services All Increased 4.4% or More,"
MetLife Mature Market Institute
Quote:
"Costs continue to rise for those requiring long-term care in the U.S.
According to the newly released 2011 MetLife Market Survey of Nursing
Home, Assisted Living, Adult Day Services, and Home Care Costs, conducted
by the MetLife Mature Market Institute, national average rates for a
private nursing home room increased 4.4% to $239 daily or $87,235
annually, in 2011. Assisted living base rates rose by 5.6% to $3,477
monthly or $41,724 annually. Adult day services went up by 4.5% to $70 per
day. Home health aides and homemaker/companion service rates were
unchanged at $21 and $19 per hour, respectively." (link
to survey)
LTC Comment:
Center for Long-Term Care Reform members can always find the latest LTC
cost surveys in The Zone
here. Contact Damon at 206-283-7036 or
damon@centerltc.com to get your user name and password if you've
forgotten them or need to join.
#############################
10/24/2011,
"Is
Granny Headed to the Ice Floe?," By John Goodman, John Goodman's
Health Policy Blog
Quote:
"The need for long-term care may arise for
all of us. Yet there is very little private insurance for this - only 7
million people are so insured. And the baby boomers have done a poor job
of saving to pay for their own long-term care needs. . . . Is there a
responsible way of dealing with this problem - one that doesn't adopt
chain-letter finance [like CLASS] and one that encourages each generation
to pay its own way, each family to pay its own way and each individual to
pay his own way?"
LTC Comment:
The author's research assistant contacted me for ideas and fact checking
for this article. The result is some pretty good thinking on Medicaid's
home equity exemption, the need for stronger estate recovery enforcement,
and ways to encourage LTC insurance.
#############################
10/22/2011,
"Retirement
Health-Care Costs: How to Deal," by Andrea Coombes, MarketWatch
Quote:
"Those whose parents needed long-term care 'are much more likely to buy
long-term-care insurance,' Miller said, 'because they don't want to put
their kids through what they went through.'"
LTC Comment:
Finding adult children of current policy holders, or better yet, progeny
of nursing home occupants or home care recipients, might be a good
prospecting approach.
#############################
10/20/2011,
"Half
of Millenials declare Social Security dead," by Kelley M. Butler,
Employee Benefit Views
Quote:
"According to a poll of 642 18- to 29-year-olds conducted by the Strategic
Research Institute at St. Norbert College in De Pere, Wis., 50% don't
believe Social Security will exist by the time they become age-eligible
for the program at 67. Another 28% think the program will be around, but
will provide a much smaller benefit. Just 5% expect benefits to be the
same as they are to current beneficiaries."
LTC Comment:
The Millennials get it and will be big buyers of LTC insurance, but not
for a couple of decades. Their parents are still the biggest, most
imminent challenge.
#############################
10/19/2011,
"The
Prophet of the Coming Age Boom," by Susan Adams, Forbes
Quote:
"For three decades Ken Dychtwald has been proclaiming that a demographic
tidal wave is approaching America. He calls it the Age Wave, which is also
the name of his Emeryville, Calif. consultancy and a book he co-wrote back
in 1989. Learn to ride it, he tells businesses, or you will be crushed and
drowned. Now that the wave is beginning to hit full force, more and more
businesses are listening."
LTC Comment:
"Ken Dychtwald's 1989 book Age Wave tuned me in to many of the key
aging issues. He's been a friend and supporter of the Center ever since.
This profile in Forbes highlight's his career, insights and
achievements.
#############################
Updated, Friday, October 28, 2011,
12:59 PM (Eastern)
Washington, DC--
#############################
LTC BULLET: REMEDIAL CLASS
LTC Comment:
Wednesday's Congressional hearing on the brain dead CLASS program
illustrates the inefficacy of seeking political solutions to the easily
solvable LTC financing problem. Details after the ***news.***
*** GO TO THE ZONE.
In it you will find the latest update on LTC insurance tax deductibility
limits
here. You'll also find the annual limits going all the way back to
the first year they were allowed, 1997. Need your user name and
password? Contact Damon at 206-283-7036 or
damon@centerltc.com. Don't have access to The Zone? Join the Center
and Damon will have you in The Zone today. For a webinar guiding you
through all the information resources available in the Center for
Long-Term Care Reform's public and private websites, click
here. ***
LTC BULLET: REMEDIAL
CLASS
LTC Comment: The
House Energy and Commerce Subcommittee on Oversight and Investigations and
the Subcommittee on Health conducted a joint hearing on Wednesday, October
26, 2011 titled "CLASS Cancelled: An Unsustainable Program and Its
Consequences for the Nation's Deficit."
Find the opening
statements of the Chairman, the Ranking Member and the majority and
minority members plus the witnesses' testimonies
here. But don't bother. I sat through almost the whole thing and I
can tell you in a few short paragraphs everything you need to know.
The Republicans on
the subcommittees condemned the Obama Administration and the Department of
Health and Human Services for hiding fatal problems with CLASS until long
after the program passed. It was all a scam, they said, to find $70
billion worth of phony savings to grease the skids for passage of the
giant health care bill. True enough.
The Democrats
responded by defending the process of passage and review as well as the
CLASS program itself. They insisted all was done in a good faith effort
to solve a terrible social problem, i.e., the need for affordable
long-term care. OK, let's assume, however dubious, that much is also
true.
Here's the nitty
gritty. The Ds kept asking the one question that every blogger and
editorial writer in DC has been posing interminably since Secretary
Sebelius shelved CLASS on October 14. To wit: "If not CLASS, what?" The
R's only reply was stony silence. Result of the hearing? Stand off,
stasis, status quo. Another opportunity to deal with the real problem of
long-term care financing was missed.
Here's what should
have been said:
Medicaid has morphed
into the dominant payer of expensive long-term care for most Americans.
Give Medicaid back to the poor. Save it as a safety net. Let middle
class and affluent people pay for their own LTC (1) with savings that are
now protected in unlimited amounts by wide open Medicaid eligibility
loopholes, (2) with home equity protected now up to a minimum of $500,000,
(3) or with the LTC insurance people would buy if their savings and home
equity were actually at risk.
Instead, what we got
in the hearing was Rs insisting on repeal of CLASS once and for all with
nothing better to replace it and Ds suggesting life support for CLASS by
activating the program's "Advisory Council" to study the LTC financing
problem perpetually. Einstein said doing more of the same and expecting a
different result defines insanity. Welcome to Washington, DC.
I leave today for the
saner Washington state, but I shall return. The problem is too big and
the solution so simple that giving up is not an option. Keep your eyes on
2013 for our next big opportunity to save Medicaid for the needy, relieve
taxpayers, unleash private financing alternatives and improve LTC access
and care. The end game has already begun. We only need better field
position.
#############################
Updated, Monday, October 24, 2011,
1:24 PM (Eastern)
Washington, DC--
#############################
LTC NEWS AND
COMMENT
LTC Comment:
We're playing "catch up" this week on tracking the news. Hence this
longer-than-usual LTC E-Alert.
The coming week
is my last in DC for now. I'm headed back to Seattle, then on to
Sundance, Utah for the "Health Sector Assembly" which is an annual
gathering of health policy experts focused this year on long-term care.
I'll speak on "Cost and Affordability." I'm also preparing a series of
"Briefing Papers" that explain the key issues and problems in long-term
care service delivery and financing. To wit:
·
"The History of Long-Term Care or How We Got into This Mess"
·
"Medicaid Long-Term Care Eligibility"
·
"Medicaid Planning"
·
"Rebalancing Long-Term Care"
·
"Dual Eligibles and Long-Term Care"
·
"Private Long-Term Care Financing Alternatives"
·
"Overview: How to Fix Long-Term Care"
Soon I'll have a
report ready on our Washington, DC project. Then I'm heading off to the
outback of Borneo for a vacation in November.
*** COPING WITH
INCONTINENCE: Check out an excellent webinar sponsored by editor Gary
Barg and
Today's Caregiver magazine
here. ***
#############################
10/20/11,
"Medicare
costs to reduce Social Security increase," by Stephen Ohlemacher,
Associated Press
Quote:
"That didn't last long. About 55 million Social Security recipients will
get their first increase in benefits next year since 2009 - a 3.6 percent
raise. But higher Medicare premiums could erase a big chunk of it."
LTC Comment:
What government giveth, it taketh away in very short order.
#############################
10/19/11,
"CLASS
Act Failure Leaves Problem to Be Solved," by Norman J. Ornstein,
Roll Call
Quote:
"The world has changed since I had my brief brush, about 20 years ago,
with this system. My father was at a point where we needed to explore
long-term care options; we went to the facility in the Twin Cities that
made the most sense, sat down with the nursing home administrator and were
asked first about my dad's assets. We were told that Medicaid would pay
for his care in the facility if he had very limited assets and were
then told about ways to divest him of the not-quite-so-limited assets he
did have." (Emphasis added)
LTC Comment:
Here's a major DC thought leader acknowledging that he did Medicaid
planning for his own father. But somehow he misses the point that doing
so helped cause Medicaid costs to explode and LTC insurance sales to lag.
So he concludes we need something like CLASS to replace CLASS, which
definitely does not follow. Note too that Minnesota has rate equalization
between Medicaid and private pay. By government fiat, nursing homes
cannot charge private payers any more than Medicaid pays. That's why the
nursing home was so eager in this case to help qualify Mr. Ornstein's
father for public welfare. It's also interesting to note that nowadays,
Minnesota's Medicaid program is so financially devastated, it has
increased the threshold for receiving any LTC benefits to four activities
of daily living (ADLs). Private LTC insurance's standard is usually two
ADLs.
#############################
10/19/11,
"Americans'
Retirement Confidence Falls to Four-Year Low: Survey," by Larry
Barrett, Financial Planning
Quote:
"American workers are becoming more and more pessimistic about their
retirement prospects, according to a new survey by Sun Life Financial, but
those who have invested in annuities or hold long-term care insurance
are decidedly more confident." (Emphasis added)
LTC Comment:
Silver lining.
#############################
10/18/11,
"White
House waffling on long-term care plan?," by Ricardo Alonso-Zaldivar,
Associated Press
Quote:
"The White House appeared to waffle Monday on the fate of a financially
troubled long-term care program in President Barack Obama's health
overhaul law, as supporters and foes heaped criticism on the
administration."
LTC Comment:
CLASS joins the undead, federal programs that never quite die. Can public
policy get any crazier?
#############################
10/16/11,
"American Association for Long Term Care Insurance Industry Leader Warns
More Medicaid Changes to Come," PR.com (link)
Quote:
"'Lawmakers realize that taxpayers simply will no longer allow lawyers to
shelter the wealth of families while taxpayers pay the growing tab for
long-term care,' declares Jesse Slome, executive director of the American
Association for Long-Term Care Insurance (AALTCI). 'With State Medicaid
budgets in shambles, more states are going to have to take a serious look
at the ways lawyers transfer this costly burden to working
taxpayers.'"
LTC Comment:
I hope Jesse is right, but my experience these two months in DC is that
federal legislators aren't ready to tackle this issue. It will probably
take a single party in control of the Presidency, the House and the Senate
to get the job done as was true for the Deficit Reduction Act of 2005.
Now is the time to educate and publicize how to give Medicaid back to the
needy so we're ready when the opportunity occurs. Read our reports
here to see what the Center for Long-Term Care Reform is doing to set
the stage.
#############################
10/15/11,
"CLASS
is Killed: But How Will We Pay for Long-Term Care Services?," by
Howard Gleckman, Forbes
Quote:
"To further encourage participation, Congress could require people who
don't buy insurance to include the value of their home when figuring
Medicaid eligibility, an asset that is excluded today."
LTC Comment:
It tickles me that this author, an opponent of LTC insurance and an
advocate of CLASS and government financing of LTC, has come around to one
of my principal recommendations: reduce the Medicaid home equity
exemption so people with housing wealth will pay their own LTC expenses,
or buy LTCI to protect their wealth, and leave Medicaid for the people
it's supposed to serve, the needy.
#############################
10/15/11,
"How
Medicare Fails the Elderly," by Jane Gross, New York Times
Quote:
"Yet Medicare, which pays for all of the above [high-cost, low-effect,
late-life medical interventions], does not, except in rare instances, pay
for long-term care in a supervised, safe place for frail or demented old
people, or for home aides to help with shopping, transportation, bathing
and using the toilet."
LTC Comment:
This interesting article contains two key fallacies. First, Medicaid does
not require impoverishment and does pay for most expensive LTC. Second,
Medicare does pay for arguably ineffectual late-life medical
interventions, but it will be unable to do so much longer and it will
never expand to cover LTC. Failure to grasp these facts of reality
prevents policy makers from seeing the solution: target Medicaid to the
poor so middle class and affluent people will use their home equity or buy
more LTC insurance. It'll happen by default if politicians don't wake up
and do it through intentional policy.
#############################
10/14/11,
"CLASS Dismissed: Obama Administration Pulls Plug On Long-Term Care
Program," by Julie Appleby and Mary Agnes Carey, Kaiser Health News
(link)
Quote:
"Under one scenario shown in a report sent to Congress Friday,
administration analysts said a basic CLASS insurance plan with a $50 a day
benefit might have cost $235 to $391 month. That might have been more
than consumers would have been willing to pay based on the benefit."
LTC Comment:
Ya think?
#############################
10/14/11,
"Health
Law to Be Revised by Ending a Program," by Robert Pear, New York
Times
Quote:
"The Obama administration announced Friday that it was scrapping a
long-term care insurance program created by the new health care law
because it was too costly and would not work. . . . Ms. Sebelius said
Americans still had an 'enormous need' for long-term care insurance."
LTC Comment:
CLASS finally succumbed to the obvious. Politicians can't defy economic
gravity any more than physicist's can defy physical gravity.
#############################
10/14/11,
"National Consumer Ad Campaign Focuses On New Perspectives In Long-Term
Care Planning," Life & Health Advisor (link)
Quote:
"The American Association for Long-Term Care Insurance (AALTCI), the
nation's leading professional organization dedicated solely to promoting
the importance of planning for long-term care needs, announced today it
will publish in the December issue of Kiplinger's Personal Finance
magazine, its third consumer-focused advertorial section, entitled
Fresh Perspectives on Long-Term Care Planning."
LTC Comment:
Go, Jesse, go!
#############################
10/13/11,
"The
Medicaid Planning Guidebook," Roccy DeFrancesco, The Wealth
Preservation Institute
Quote:
"Thank you for your interest in Medicaid planning and for signing up to
download the 74-page summary of the individual state laws on Medicaid. To
download the 74-page summary, please click on the following link:
http://www.thewpi.org/pdf_files/state.laws.mediciad.planning.pdf."
LTC Comment:
All I can say is "Take your blood pressure medicine before reading this."
#############################
10/12/11,
"Fitch:
LTC Results Remain a Drag on U.S. Life Insurers," MarketWatch
Quote:
"The U.S. long-term care (LTC) insurance market continues to be plagued by
adverse claims experience and poor overall results, which has led to rate
instability, insurer solvency concerns, and market exits by several major
insurers, according to Fitch Ratings in a new report."
LTC Comment:
It's always darkest just before the dawn. CLASS failed because it didn't
heed the hard lessons private LTCI has learned. As other government
programs, i.e., Medicaid and Medicare, stop paying for so much LTC
and crowding out LTCI, the private insurance product will take off.
When? It's already starting to happen. Fasten your seat belts.
#############################
10/12/11,
"Long Term Care Insurance Expert Warns Mild Strokes Have Serious
Consequences," OpenPR (link)
Quote:
"'When it comes to long term care planning there is no such thing as a
mild stroke,' explains Jesse Slome, executive director of the American
Association for Long-Term Care Insurance, the national trade group.
Strokes are the second leading cause of long-term care insurance benefit
payments according to AALTCI, after Alzheimer's disease. 'As more
Americans live longer lives, there is greater need to understand the risk
factors and the impact of stroke on individuals, their finances and
families,' Slome adds."
LTC Comment:
Truer words were never spoken.
#############################
10/12/11,
"Prescription dementia drugs delay nursing home admission by one year, new
study shows," McKnight's LTC News (Link)
Quote:
"The Liverpool University scientists followed 127 dementia patients who
were prescribed medications known as cholinesterase inhibitors, and 212
dementia patients who did not take these drugs, over four years. At the
30-month point, researchers noted a delay in nursing home placement by a
median of 12 months in patients who took the antidementia drugs."
LTC Comment:
If they delay nursing home institutionalization for a year, maybe LTCI
should cover these drugs.
#############################
10/11/11,
"Health
Insurers Bid to Take Elderly Poor Out of U.S. Plans," by Alex Wayne,
Bloomberg
Quote:
"The U.S. may save as much as $125 billion over a decade if health
insurers manage care for about 9 million people now covered by Medicare
because of their age and Medicaid because they're poor, the companies have
told Congress."
LTC Comment:
A far better way to save money on "dual eligibles" is to prevent them from
becoming dependent on Medicaid in the first place. How? Read our
report: "Save
Medicaid LTC $30 Billion Per Year AND Improve the Program."
#############################
10/11/11,
"4
Signs Economy is Heading Up for Seniors," by Philip Moeller, US
News and World Report
Quote:
"The country is still weathering a perfect economic storm--weak growth
here and throughout the world, depressed job markets, big deficits
depressing government employment, and a Congress incapable of agreeing on
paths toward recovery and fiscal responsibility. But despite all this bad
news, the outlook for older Americans actually may be turning more
positive."
LTC Comment:
Kind of a stretch, but worth a read if you feel the need right now for a
silver lining.
#############################
10/11/11,
"The
impact of prolonged low interest rates on the insurance industry,"
Ernst and Young,
Quote:
"The insurance industry faces a challenging interest-rate environment that
poses a major threat to performance and profitability. Economic
uncertainty, the Federal Reserve's intention to keep rates low through
mid-2013, and Operation Twist point to an increasing likelihood that
currently depressed rates may be sustained for an extended period of time.
Insurers will need to look to both sides of the balance sheet to develop
creative solutions to counter the impact of this scenario on portfolio
yields."
LTC Comment:
Big pressure on LTCI reserves and premiums until interest rates turn up,
then a boon.
#############################
10/10/11,
"Study: Growing population of cancer survivors means more preparation
needed by providers," McKnight's LTC News (link)
Quote:
"The number of cancer survivors over the age of 65 is expected to increase
by about 42% over the next 10 years, which could present new challenges to
the healthcare community, study results show."
LTC Comment:
Interesting that this LTC provider trade journal picked up on the same
study that Jesse Slome of AALTCI used in a press release to show the
growing need for LTC insurance.
#############################
9/29/11,
"Best
U.S. Cities For Seniors Not What You'd Expect, Says New Study,"
Bankers Life and Casualty
Quote:
"Minneapolis is the best city in the United States for senior living, with
Boston, Pittsburgh, Cleveland and Denver rounding out the top five,
according to a new survey conducted for the Bankers Life and Casualty
Company Center For a Secure RetirementSM."
LTC Comment:
Newark, NJ (#10) beats out Seattle (#20)? I'm dubious.
#############################
Updated, Friday, October 21, 2011,
2:07 AM (Eastern)
Washington, DC--
#############################
LTC BULLET: CLASS IS UNDEAD
(LTC Embed Report #12)
LTC Comment: The
Obama Administration shelved CLASS, but refuses to repeal it. Government
programs do seem to live forever, but this one's officially a zombie.
LTC BULLET: CLASS IS
UNDEAD
LTC Comment: If
you're involved in long-term care financing and you can still fog a glass,
you've probably had it up to here (pointing at top of head) with CLASS
news. We haven't bothered to cover it, because everyone and his cousin
blogged their two cents worth last week. Which is about what CLASS was
worth all along.
In a nutshell, last
Friday, the Administration announced that it couldn't find a way to make
CLASS work actuarially or financially. What a surprise! Every serious
analyst who looked at the program from day one said the same thing. But
now it's official. As passed, CLASS won't work. It isn't fixable without
new legislation which is about as likely to happen as pigs flying (see
cartoon illustration
here).
So why won't the Ds
agree to repeal CLASS as the Rs demand? To drop CLASS explicitly would
invite recalculation of alleged savings attributed by it to the Affordable
Care Act, aka health reform, aka "ObamaCare." So called "savings" of $72
billion (the difference between the $86 billion in premiums CLASS was
supposed to collect and the $14 billion in claims it was expected to pay
in the first ten years) would go poof.
So now, for the time
being, probably until the next national election, we have a program on the
books that everyone knows is unsalvageable, but which lives on to
camouflage its real cost.
The only other news
about CLASS worth mentioning is that op-ed after op-ed lamented the
program's passing, reminded us the problem CLASS was supposed to solve is
still with us, and asked . . . often snarkily . . . "If not CLASS, what?"
For an answer to that
question, you need go no further than to any of the articles, speeches and
reports on the Center for Long-Term Care Reform's website here:
http://www.centerltc.com/articlesspeechesandreports.htm.
For our specific
views on "The CLASS Act and the Future of Long-Term Care Financing," check
out Steve Moses's paper of that title prepared for the Society of
Actuaries January 2011 "Living to 100 Symposium" and recently published in
SOA's "2011 Living to 100 Monograph." Read the abstract
here and the full paper
here.
Although Steve was
unable to attend the January 2011 conference because of a death in the
family, he did deliver his remarks at the event by means of digitally
recorded video. You can view and listen to that speech
here.
In the speech, Steve
predicted the CLASS story would play out as follows and so far events are
unfolding as expected:
------------
Speech Excerpt:
My best guess of what
to expect for long-term care services and financing is that . . .
CLASS will flounder .
. .
State Medicaid
programs will cut back radically to survive as federal-match bonuses from
the "stimulus" disappear July 1, 2011, as 16 million new recipients are
added by "health reform" in 2014, and as support from Social Security and
Medicare declines as I explained in my paper.
Boomers, only
one-third of whom have saved enough for their retirement income security,
have set aside almost nothing to meet future acute and long-term care
costs. They will quickly spend through their savings and home equity if
they need long-term care after they can no longer rely on Medicaid.
Reverse mortgages
will become the dominant funding source for middle class and affluent home
owners who require long-term care once Medicaid's home equity exemption
has been eliminated or radically reduced as it will have to be.
As soon as Medicaid
no longer operates as free inheritance insurance for heirs, more and more
people will purchase private long-term care insurance to avoid the new,
and this time very real risk of asset spend down.
Now that I've
depressed you all sufficiently, let me close on an upbeat note. We will
get through this.
When it is no longer
available to middle class and affluent people after the insurable event
occurs, Medicaid will be able to do a better job for fewer dependents at
less taxpayer expense.
In time, most people
will see the real risk and cost of long-term care. They will prepare to
be able to pay privately for long-term care if and when the need arises.
Private revenue will
supply much needed financial oxygen to the service delivery industry.
People spending their own money or their private insurance benefits will
not go to nursing homes until they need them medically. So institutional
bias will disappear.
When most patients
pay market-based rates, long-term care providers will prosper, pay better
salaries, and grow. So problems of access, quality and caregiver supply
will disappear. Desperately needed private debt and equity capital will
pour into the long-term care services industry when it is profitable
again.
When people know they
must pay for their own long-term care, the reverse mortgage and long-term
care insurance industries will prosper and grow. So there will be more
jobs created and increased tax revenue.
Bottom line, if we
stop doing what we've always done in long-term care services and
financing, we'll get a different result. Because CLASS does nothing to
replace Medicaid as the dominant LTC payer, it will lead to more of the
same.
According to Albert
Einstein, doing the same thing over and over again and expecting a
different result is . . . well, let's be tactful and just say . . . not
very useful.
------------
Now it's time to bury
CLASS and turn to more realistic market-based solutions.
#############################
Updated, Thursday, October 13, 2011,
1:41 PM (Eastern)
Washington, DC--
#############################
MOSES REPLIES TO CONGRESSMAN'S
QUESTIONS
(LTC Embed Report #11)
LTC Comment: House
Oversight and Government Reform Healthcare Subcommittee ranking member
Danny Davis (D, IL) asked me some questions in writing after the 9/21
hearing on "Examining Abuses of Medicaid Eligibility Rules." His
questions and my answers follow.
*** WATCH THE 9TH &
FINAL "Week in Review" video segment from the "3in4
Need More" National Bus Tour and Caregiver Make Over Contest
here. Congratulations to Dr. Marion, the 3in4 Need More, crew and to
everyone who helped make this campaign a success. What a great lead-in to
Long-Term Care Awareness Month in November! ***
*** STEVE MOSES will
address the "Long Term Care Discussion Group" in Washington, DC on
Wednesday, October 19, 2011 at 3pm Eastern Time on the topic "How to Save
Medicaid LTC $30 Billion per Year and Improve the Program."
According to its website at
www.LTCDiscussionGroup.org:
"The Long Term Care
Discussion Group is a voluntary, independent group that meets for the
purpose of educating the policy community on all facets of long term care.
We convene monthly presentations exploring long term care policy,
research, and advocacy issues. Membership is free and open to all.
Participants span the entire spectrum of the long term care policy
community, including federal agency and congressional staff, researchers,
and representatives of a wide variety of stakeholder organizations. For
more information or to be included on the distribution list, please
contact Jenifer Allen at
jallen@univitahealth.com."
LTC Discussion Group
members often call in from around the country to listen to the monthly
presentations and participate in the discussion. If you would like to do
so, contact Jenifer Allen at
jallen@univitahealth.com to request the call-in and verification
numbers. We're told that dial-in participation is limited to 100 lines,
so evidently first come, first served. Please do not contact the Center
about accessing the program as we have no additional information. ***
--------------
LTC BULLET: MOSES
REPLIES TO CONGRESSMAN'S QUESTIONS
(LTC EMBED REPORT #11)
LTC Comment: First,
let me thank all you faithful Center members and supporters for your many
complimentary messages about the September 21 hearing "Examining Abuses of
Medicaid Eligibility Rules."
If you haven't
watched the 90-minute hearing online yet, check it out here:
http://www.youtube.com/watch?v=JtJp0g38sxo. You'll get an earful and
an eyeful of how Medicaid long-term care eligibility really works. Much
of it isn't pretty.
You can read each of
the witnesses opening remarks, including mine,
here. I was originally told that a full transcript of the hearing
would be posted after two weeks. Latest information is that a transcript
will not be available to the public until six months after the hearing.
In the meantime, I
received five questions from the subcommittee's ranking member. You may
find his questions and my answers of interest.
--------------
Reply to Ranking
Member Davis's questions sent on Center for Long-Term Care Reform
electronic letterhead stationery:
Question #1:
"Mr. Moses, you make allegations of widespread asset transfers among older
people in order to fraudulently receive Medicaid assistance for nursing
home services. Research by the Urban Institute shows that even the most
aggressive approach to recovering transferred assets would yield a savings
of only about 1 percent of total Medicaid expenditures for long-term
services and supports. Similarly, a Government Accountability (GAO) report
on this issue found that the median amount of money transferred was $3000,
with older persons with low incomes and disabilities transferring less
than those who were less likely to go on Medicaid. Another GAO report
found a median amount of $15,152 in transferred for less than fair market
value. Do you have any hard evidence apart from anecdotes to refute these
findings? Can you document with hard numbers the actual amounts being
transferred fraudulently?"
Reply #1:
I did not in my testimony, nor have I ever in any of my published writings
or otherwise, made "allegations of widespread asset transfers by older
people in order to fraudulently receive Medicaid assistance for nursing
home services." The premise of your question is false.
If you read my
testimony, or anything else I've published, you will see that the problem
is not fraud, but rather the ease with which middle class and affluent
people qualify legally for Medicaid LTC benefits under the basic
eligibility rules. Nothing in the sources you cite contradicts my
evidence or argument in any way.
Question #2:
Mr. Moses, your testimony is premised at least in part on the argument
that Medicaid costs have risen to a large extent by increased numbers of
older people going on Medicaid to pay for nursing home costs. Are you
aware of CMS data showing that the number of older people receiving
Medicaid assistance to pay for nursing home costs actually decreased by 23
percent between 1995 and 2008 - even while the older population was
increasing by 16 percent? Are you aware that the percentage of older
people using Medicaid to pay for nursing home care decreased from 4.6
percent in 1975 to 2.8 percent in 2008? Are these numbers consistent with
the allegation that increasing numbers of older people are cheating or
trying to game the system to get on Medicaid?
Reply #2:
My testimony was not premised in any way on "the argument that Medicaid
costs have risen to a large extent by increased numbers of older people
going on Medicaid to pay for nursing home costs." The premise of your
question is false.
Excessive dependency
on nursing homes, or "institutional bias," was caused by Medicaid's paying
mostly for nursing home care since 1965. That's why a healthy, private
market for home and community-based services (HCBS) never developed. As
Medicaid "rebalances" from institutional care to HCBS, the danger is that
government services will become even more attractive and expensive at a
time when government funding is less and less available. By controlling
eligibility in ways I've recommended, Medicaid can cover a full range of
home and community-based services for a smaller number of genuinely needy
recipients and, at the same time, encourage middle class and affluent
people to plan early, save, invest or insure for long-term care, and pay
privately for their care, thus relieving Medicaid and tax payers of a huge
financial burden and encouraging private sector jobs and new tax revenue.
Question #3:
Mr. Moses, you have suggested requiring older people to take out a reverse
mortgage, a loan from a private lender, and exhausting the person's home
equity before becoming eligible for Medicaid long-term services and
supports (LTSS). As you may know, the upfront costs on such loans can be
in excess of $10,000 before the person gets a dime in loans. Do you think
it is proper for Congress to require people to take out such expensive
private loans as a condition of eligibility for public benefits?
Reply #3:
It is not necessary to require people to take out a reverse mortgage.
There are many ways for consumers to extract the equity from their homes
to pay for long-term care. The key point I'm making is that Medicaid
should not exempt up to three quarters of a million dollars worth of home
equity while paying for the home owner's long-term care services. Doing
so has turned Medicaid into free inheritance insurance for boomer heirs
and impeded the program's true purpose, to be a quality long-term care
safety net for people in need. In my paper titled "Save Medicaid LTC $30
Billion Per Year AND Improve the Program," I've explained my position on
this issue in detail
here.
Question #4:
Mr. Moses, you cite a study by the National Council on Aging as a basis
for arguing that $30 billion a year in Medicaid savings could be realized
by requiring those dually eligible for Medicare and Medicaid to take out
reverse mortgages before gaining eligibility. But that report indicates
that only about 17 percent of older Medicaid beneficiaries could be
candidates for using a reverse mortgage to pay for LTSS, even using a very
broad definition of being a candidate. Only about 60 percent of duals are
age 65+, so only roughly 10 percent of duals would even be eligible for a
reverse mortgage - and many of them have homes with low values. How could
tapping these meager resources generate $30 billion a year?
Reply #4:
I do not cite the NCOA study as a basis for "requiring those dually
eligible for Medicare and Medicaid to take out reverse mortgages before
gaining eligibility." The premise of your question is false.
The point, as I
clearly articulate in the paper you cite, is that if Medicaid did not
exempt up to $750,000 of home equity, affluent people with homes of great
value, would take the risk and cost of long-term care more seriously and
plan more responsibly to pay for their own care and protect their real
estate wealth. The goal is to prevent people from ending up as dual
eligibles because they failed to save, invest or insure for long-term care
and, as a consequence, turn to Medicaid by default after they require
care.
Question #5:
If an individual was single and was receiving Medicaid nursing home care,
wouldn't that individual be more likely to sell his or her home, rather
than take out a reverse mortgage, since the individual would not be living
in his or her home?
Reply #5:
Under existing Medicaid eligibility rules, the home remains exempt as long
as the Medicaid recipient or his or her representative expresses a
subjective intent to return to the home. It makes no difference whether
the recipient is able medically ever to return to the home, is single or
married, or whether anyone is residing in the home or not. In the absence
of estate recovery, which has been mandatory since OBRA 1993, but which
most states have not implemented strongly and the federal government has
not enforced, the value of the home redounds to the heirs and the cost of
the care remains with Medicaid and tax payers.
If Medicaid
eligibility rules were changed to exempt a smaller amount of home equity,
individuals would need to extract the value of the home to pay for
long-term care by various means. Reverse mortgages, either formal ones
with a financial institution or informal ones with family members, are one
means to put home equity to use to fund LTC. Sale of the home if no
exempt relative remains in it is another option. The key point here is
that home equity becomes a source of private financing for quality home
and community-based services, or assisted living or nursing home care
relieving Medicaid of the need to pay for such services and recover from
estates.
Sincerely,
Stephen A. Moses
Stephen A. Moses
President
--------------
LTC Comment: If any
of these questions or my replies pique your interest, you'll find much
more in the same vein by watching the hearing
here or reading any of the Center's published reports
here.
#############################
Updated, Monday, October 10, 2011,
12:27 PM (Eastern)
Washington, DC--
#############################
LTC NEWS AND
COMMENT
(LTC Embed Report
#10)
*** SPECIAL:
Members of the Center for Long-Term Care Reform receive two email
publications from us each week. On Mondays, we send LTC News and
Comment, which is a compilation of the previous week's news with a
citation and hyperlink to each article followed by a key quote and our
comment or analysis. Scroll down past today's special news and you'll
find it. On Fridays, we send the LTC Bullet which is usually a
long-term care policy essay by Steve Moses. When someone sponsors an
LTC E-Alert or an LTC Bullet, we send them to a much wider
audience than paid-up members of the Center. Today's LTC E-Alert
is especially important, so we're sending it free of charge to our largest
email list as a sample of what members receive every week. We invite
current members to renew when the time comes and we urge non-members to
join and support the Center's campaign for rational LTC public policy and
responsible LTC planning. To join or renew, please contact Damon at
206-283-7036 or
damon@centerltc.com. ***
LTC Comment: By
now, many of you have heard about the September 21 Congressional hearing
on "Examining Abuses of Medicaid Eligibility Rules." We published my
(Steve Moses's) testimony at that hearing in
LTC Bullet: Friendly Fire in the Class War (LTC Embed Report #6). In
LTC E-Alert #11-037: LTC News and Comment
(LTC Embed Report #7), we provided a link to a video recording
of the hearing. Unfortunately, that version of the video showed 20
minutes of dead time as the committee waited for one of the other
witnesses to arrive and it cut off the tail end of the hearing, severing
my reply to some personal attacks from antagonistic members of the
committee.
I heard from
several faithful Center supporters, who asked "Why did the video cut off
just as you were about to reply to the attacks? We want to hear what you
said."
Well folks, now
you can see and hear the whole hearing. Check it out here:
http://www.youtube.com/watch?v=JtJp0g38sxo. Chairman Gowdy and
members of the committee begin the proceedings with opening remarks. My
testimony, explaining how middle class and affluent people qualify easily
for Medicaid LTC benefits, comes at 18 minutes, 45 seconds in. New York
elder law attorney and Medicaid planner David Dorfman, who excuses
Medicaid planning, testifies at 25:00; Medicaid eligibility expert Janice
Eulau, who says Medicaid applicants routinely qualify despite having
hundreds of thousands of dollars of assets, begins at 29:50; and Illinois
Medicaid Director Hamos, who describes her unsuccessful struggles to end
Medicaid planning abuses, starts at 34:45. Questions and answers from the
Committee, including my responses to the personal attacks from members who
defend the status quo, start at 39:35 and complete the one and one-half
hour program.
I strongly
encourage everyone to watch this hearing. I promise you a valuable
education in the Medicaid and long-term care financing issue. You'll also
get an amazing insight into the workings of Congress, or more accurately,
into why Congress isn't working very well these days. Ironically,
everyone on the Committee agreed Medicaid should be a safety net for the
poor. Every witness on the panel acknowledged Medicaid planning
(intentional self-impoverishment) occurs frequently. The eligibility
expert from New York said 60 percent of all Medicaid LTC recipients in her
office do some form of Medicaid planning and that the average client has
$300,000 in assets, often much more. The Medicaid director said Illinois
hasn't implemented provisions of the DRA '05 yet, that Medicaid planning
is commonplace, and that she has faced great political opposition to
ending wasteful practices that allow the affluent to qualify.
Nevertheless, some members of the Committee refused even to consider
changes to Medicaid to eliminate such abuses.
What disappointed
me most was that, although no one on the committee took substantive issue
with my evidence, logic or conclusions, several members launched personal
attacks based on questioning the source of the Center for Long-Term Care
Reform's financial support. I replied that such an argument is a logical
fallacy, an ad hominem. I explained that information about the
Center's finances is none of the Committee's business; that it says
nothing relevant, positive or negative, about the merit of my information
or conclusions. So, I refused to disclose the Center's donors. Finally,
I told the members who challenged my credibility that my professional
mission ever since I was a career U.S. Government employee working for the
Medicaid program in the 1980s has been to protect Medicaid as a long-term
care safety net for people in need. Unfortunately, the poor do not have
money to donate to organizations like mine. So I have to rely on support
from individuals and businesses who stand to gain from public policy that
improves Medicaid for people in need while encouraging middle class and
affluent people to plan early and save, invest or insure for long-term
care.
I believe any
objective observer who watches this hearing from beginning to end will
come away proud of our contribution and disturbed by the personal attacks
made by defenders of the corrupt status quo. So I strongly encourage you
to watch the hearing, form your own judgments, and if you agree, please do
what you can to support our work. I'm in the middle of a two-month
project in Washington, DC which is described in "LTC
Bullet: The LTC Opportunity." I have three more weeks to make a
difference in our nation's capital. After that, our special project with
the Cato Institute will be completed.
Now here's some
media coverage of the hearing:
10/6/11, "LTCI
Watch: Mr. Moses Went to Washington: The Visit Was Not Fun," by
Allison Bell, LifeHealthPRO
Quote:
"Moses, who worked for the inspector general of the U.S. Department of
Health and Human Services in the 1980s and is now president of the Center
for Long-Term Care Reform, Seattle, spoke at a hearing on Medicaid
planning organized by the House Oversight and Government Reform
Committee's health care subcommittee." (LINK)
LTC Comment:
The DHHS Inspector General back then was Dick Kusserow, a powerful and
influential curmudgeon. Whenever Dick walked into a room and saw me, he'd
say "Moses is here. The subject must be Medicaid estate recovery." The
IG published my report titled "Medicaid
Estate Recoveries" in 1988 and a few years later, the Omnibus Budget
Reconciliation Act of 1993 implemented most of our recommendations in that
study including making Medicaid estate recovery mandatory.
Following is the kind
of information we provide in every Monday's LTC E-Alert.
#############################
10/8/11,
"Editorial:
Ready to do your part for the deficit?," Star Tribune
Quote:
"Former U.S. Rep. Tim Penny told CAE [Center
of the American Experiment] that he's purchased long-term care
insurance, an individual decision that would reduce nursing home spending
if more people did the same."
LTC Comment:
I wonder how many past and present members of Congress have made this one,
simple contribution toward solving the Medicaid LTC financing crisis.
#############################
10/8/11,
"INSIDE WASHINGTON: A budget zombie? Gov't puts program on hold, but
claims savings," Washington Post (LINK)
Quote:
"The Community Living Assistance Services and Supports program, CLASS for
short, may just keep lurching along indefinitely. It would join other
peculiar creatures of the federal budget such as 'trust funds' that are
actually more like IOUs and Medicare cuts that can be counted twice. . .
. Don't expect CLASS to go away easily. If the congressional
supercommittee tackling the debt decides to recommend repeal, the panel
would have to come up with about $80 billion in other cuts - possibly real
and painful - to offset the hypothetical savings from CLASS."
LTC Comment:
Finally, some straight up reporting about what is really going on with
CLASS.
#############################
11/7/11,
"Many
Medicare patients get surgeries in last year of life," by Amanda
Gardner, USA Today
Quote:
"By analyzing Medicare claims data the study authors found that, in a
group of almost 2 million elderly beneficiaries, all of whom died in 2008,
almost one-third had inpatient surgery in the year before they died,
almost one in five in the last month of their lives and almost one in 10
in the week before they took their last breath."
LTC Comment:
Is this a problem or a point of pride? What are the options? Financial
triage based on the cost-effectiveness of surgery late in life? Who
decides? Families? Payers? Politicians? Bureaucrats?
#############################
10/7/11,
"More
Seniors Surviving Cancer Adds To Long-Term Care Crisis," AALTCI
Press Release
Quote:
"According to an analysis of US cancer data, the greying of the baby
boomer generation is at the root of the issue. 'Americans are already
living longer lives and that will create a long-term care tsunami in the
years to come,' explains Jesse Slome, executive director of the Los
Angeles-based American Association for Long-Term Care Insurance. 'Because
long-term care insurance can only be purchased when you can medically
qualify, the tsunami will wreak havoc on family savings and state Medicaid
welfare budgets.'"
LTC Comment:
Point well put.
AALTCI's recent outreach via press releases tying medical research
reports to the importance of LTC planning continue to attract positive
attention to both.
#############################
10/6/11, "American
Association for Long-Term Care Insurance Supports Wall Street Journal Call
for Repeal of CLASS Act,” AALTCI Press Release (LINK)
Quote: "The
American Association for Long-Term Care Insurance, the national trade
organization supported The Wall Street Journal editorial calling
for the outright repeal of the CLASS Act."
LTC Comment: A link
to the editorial in question follows below. Taking a position on a
political issue like this one is risky for a trade association, but it
probably does reflect the dominant view of
AALTCI's members.
#############################
10/6/11,
"CLASS
Implementation Oversight Listed In HHS Work Plan," Kaiser Health
News
Quote:
"The HHS Office of Inspector General has listed several ACA [Affordable
Care Act, aka PPACA, 'health reform' and ObamaCare] investigations as part
of its planned oversight for fiscal 2012, including the implementation of
the CLASS Act . . .."
LTC Comment:
My former employer (1987-89), the HHS Inspector General, is going to
investigate CLASS implementation. When I worked for the IG, I carried a
badge like an FBI agent's in am elegant leather holder, very
intimidating. Hopefully, the IG will take a close, objective look at
CLASS and the political/financial shenanigans that preceded and followed
its passage.
#############################
10/6/11,
"Medicaid explained: How would lower provider taxes affect state
budgets?," by Christine Vestal, Stateline (LINK)
Quote:
"The Obama administration's current deficit reduction proposal, now before
the so-called congressional 'Super Committee,' includes a variety of
measures designed to roll back federal Medicaid spending. But one - a
lower cap on the taxes that states charge hospitals, nursing homes and
other health care organizations - would have the biggest potential impact
on state budgets."
LTC Comment:
It's not just Medicaid planners who game Medicaid. States do it too.
They tax LTC providers, return the funds to the providers in extra
reimbursements, charge the feds, and collect up to three times as much
from Uncle Sugar depending on their Medicaid match rate. The President
wants to end the practice. States and providers object strenuously. Why
does it matter to LTC insurers? It's more proof LTCI's biggest
competitor, government financed LTC, won't crowd out the private insurance
product as much in the future as it has in the past.
#############################
10/5/11,
"Nearly
Half of U.S. Lives in Household Receiving Government Benefit," by Sara
Murray, Wall Street Journal
Quote:
"Means-tested programs, designed to help the needy, accounted for the
largest share of recipients last year. Some 34.2% of Americans lived in a
household that received benefits such as food stamps, subsidized housing,
cash welfare or Medicaid (the federal-state health care program for the
poor)."
LTC Comment:
Maybe the situation wouldn't be so bad if programs like Medicaid were only
for the poor, but Medicaid funds it's most expensive benefit (LTC) for
middle class and affluent people as well ballooning the program's cost and
crowding out private financing alternatives like LTC insurance and home
equity conversion.
#############################
10/4/11,
"Health Costs Remain Top Retirement Issue; Long-Term Care Needs More
Attention," by Danielle Reed, Financial Planning (LINK)
Quote:
"When it comes to retirement income, clients are concerned about rising
health costs, and they probably also should be concerned about long-term
care, said a top executive of Merrill Lynch's Retirement Income Program,
in a keynote address here Tuesday at the Retirement Income Industry
Association's fall conference."
LTC Comment:
It's about time financial planners got with the LTC planning program.
This is another piece of evidence that it is starting to happen.
#############################
10/4/11,
"Anatomy
of the CLASS Act 'Ponzi Scheme'," United States Senate Republican
Study Committee
LTC Comment:
This is a timeline tracing the development, consideration, criticism,
passage, and reconsideration of the CLASS Act.
#############################
10/4/11,
"The
Definition of Insanity," editorial, Wall Street Journal
Quote:
"The Obama health-care plan passed 18 months ago, and its cynicism still
manages to astonish. Witness the spectacle surrounding one of its flagship
new entitlements [CLASS], which is eliciting some remarkable concessions
from its drafters."
LTC Comment: This
Wall Street Journal editorial covers the latest twist in the CLASS
story, the government's pretension not to drop the dead program in order
to avoid losing its phony budget "savings."
#############################
10/3/11,
"Home-Health
Firms Blasted," by John Carreyrou, Wall Street Journal
Quote:
"An inquiry by the Senate Finance Committee has found that the nation's
three largest home-health companies tailored the care they provided to
Medicare patients to maximize their reimbursements from the federal
program."
LTC Comment:
Gee, ya think? Of course companies adapt to take advantage of government
programs that lack the sensible controls which are routine in the private
sector. Can you imagine a better argument for less government financing
of long-term care and more private financing through LTC insurance?
#############################
10/2/11,
"Fighting for market share in the LTC business: Mutual insurers are
winning LTC business over some big publicly held carriers," by Darla
Mercado, Investment News (LINK)
Quote:
"A handful of publicly held life insurers dominate the market for
traditional long-term-care insurance, but mutual life insurers are
beginning to make inroads with agents and financial advisers."
LTC Comment:
The LTC insurance market continues to evolve.
#############################
Updated, Friday, October 7, 2011, 1:30
PM (Eastern)
Washington, DC--
#############################
LTC Bullet: Why
Don't Consumers Insure Against LTC Expenses?
LTC Embed Report # 9
LTC Comment: Can you
think of a more timely or important question than the one in today's
title? It's critical to our DC project and to everyone who ever will
need, provide or pay for long-term care.
%20--%20to%20use%20-%20small.JPG)
LTC BULLET: WHY DON'T CONSUMERS INSURE AGAINST LTC EXPENSES?
LTC EMBED REPORT # 9
LTC Comment: Why
Don't Consumers Insure Against LTC Expenses? That's the question I was
asked to address on a webinar yesterday sponsored by the Society of
Actuaries' LTC insurance "Think Tank."
My job was to respond
to research findings presented by Dr. Gopi Shah Goda, Ph.D., an economist
with the
Stanford Institute for Economic Policy Research. Samples of Dr.
Goda's published work can be found
here and
here.
In a nutshell, Dr.
Goda's research has led her to conclude that people fail to purchase
long-term care insurance for many reasons, but the expectation that
government will pay for such care is not among the most important of those
reasons.
She also concludes
from her research that tax deductibility for LTC insurance does not save
Medicaid more than the cost of the subsidy because people incentivized to
purchase LTC insurance by tax deductions tend to be more affluent and less
likely to "spend down" to Medicaid anyhow.
I don't have access
to Dr. Goda's presentation, and some of the findings on which she reported
and I replied yesterday, have not yet been published. So, to be fair,
please withhold any conclusions about her work until you can review it in
full and in context.
For now, all I can
offer is my explanation of why I believe mistaken assumptions about
Medicaid LTC eligibility rules account for the common belief that Medicaid
does not significantly discourage the purchase of LTC insurance.
I also observe that
if Medicaid really did require catastrophic asset spend down, then people
would buy LTC insurance in much greater numbers and tax deductibility
would save Medicaid considerable sums.
#############################
Following are my
20-minute opening remarks for yesterday's webinar:
Let me begin by
thanking the Society of Actuaries' "Think Tank" for inviting me to
participate in this important conversation.
Over the years, I've
read the research on who buys long-term care insurance, who doesn't, and
why with great interest.
I've followed the
debates and industry appeals concerning tax deductibility for the private
LTC insurance product closely as well.
I confess I've been
puzzled by the research findings. People tend not to mention Medicaid as
a reason for failing to purchase LTC insurance? Tax deductibility appears
to have a relatively small impact on the likelihood people will insure for
long-term care? Peculiar.
How can it be that a
government program which pays for most expensive long-term care in the
United States does not discourage people from buying private
insurance? Why wouldn't offering a tax credit or deduction create a major
incentive to insure?
I've puzzled over
these questions for a long time, so I appreciate this opportunity to learn
from experts in the field as well as to think through, firm up and
articulate my own views.
I do not have the
social science credentials of Dr. Goda. I am duly impressed with her
expertise and both the quality and clarity of her work. Far be it from me
to challenge the technical aspects of her research or the accuracy of her
findings.
So let me stipulate
at the outset that given the assumptions on which her work is based, I
accept her findings and analysis without question. It is with her
assumptions about Medicaid LTC eligibility and spend down, however, that I
will take some issue. That's where my expertise lies.
It seems to me that
if different assumptions were used with the same analytical model, the
findings would be very different, would clarify more definitively how
Medicaid crowds out the LTC insurance market, and would indicate how tax
deductibility could save Medicaid considerably more money than otherwise
expected.
I'll begin by citing
a couple examples of assumptions I'd question in the articles published by
Dr. Goda which I reviewed to prepare for this discussion. Later I'll
explain why I think those assumptions are incorrect.
Example #1 regarding
Medicaid savings from tax deductibility of LTCI:
On page 744 of her
article in the Journal of Public Economics, Dr. Goda writes: "The
results indicate that the average tax subsidy raises coverage rates by 2.7
percentage points, or 28%. However, the response is concentrated among
high income and asset-rich individuals, populations with low
probabilities of relying on Medicaid. Simulations suggest each
dollar of state tax expenditure produces approximately $0.84 in Medicaid
savings, over half of which funnels to the federal government." (Emphasis
added.)
She continues on page
755: "To have a larger effect on the allocation of long-term care
financing, tax incentives would need to increase private insurance
coverage for those who are at higher risk of spending down to Medicaid
eligibility."
Observation #1: What
if "high income and asset-rich individuals" are not "populations with low
probabilities of relying on Medicaid"? What if income rarely interferes
with Medicaid LTC eligibility? What if asset-rich individuals can qualify
easily for Medicaid LTC even without consulting Medicaid planning
attorneys? Wouldn't that change everything?
Example #2 regards
whether Medicaid crowds out demand for private LTC insurance:
In an article titled
"Why Don't Retirees Insure Against Long-Term Care Expenses? Evidence from
Survey Responses," Dr. Goda writes (with co-authors Jeffrey R. Brown and
Kathleen McGarry):
"[B]eliefs about
Medicare and Medicaid do not appear to be systematically related to rates
of long-term care insurance ownership. . . . These results suggest that
beliefs about Medicare and Medicaid are not a large factor in ownership
decisions . . .." p. 18
Observation #2: I
think the mistaken assumption here is that asking people about Medicare
and Medicaid will elicit useful answers to the question of why they don't
buy LTC insurance. Most people do not know who pays for long-term care.
When asked, they guess Medicare. The more important question for us to
ask is: If long-term care is such a big risk and high cost, why don't
people know more about who pays for it? That's the issue I'll try to
elucidate.
All right, we have
two questions before us. Why doesn't tax deductibility for LTC insurance
generate larger savings for Medicaid? and Why don't more people buy LTC
insurance? Dr. Goda's answers to both questions are premised on the
assumption that people with wealth have to spend down their assets before
qualifying for Medicaid. She concludes that tax deductibility for LTC
insurance saves Medicaid relatively little because people most likely to
buy LTC insurance are the least likely, because of their higher income and
assets to qualify for Medicaid. People don't buy LTC insurance for a lot
of reasons Dr. Goda eloquently analyzes but evidently, according to her
findings, not because they are planning to get Medicaid to pay.
Medicaid LTC
Eligibility
But let's consider
some alternative explanations for the observed phenomena. I've spent
nearly 30 years studying how Medicaid long-term care eligibility actually
works, as opposed to the conventional wisdom displayed in both the popular
and academic media, that qualifying for Medicaid LTC benefits requires low
income and catastrophic asset spend down. I want to suggest that Medicaid
eligibility is actually quite easy to obtain without significant asset
spend down for most Americans and that, therefore, most people don't worry
about long-term care until they need it. After that, they qualify easily
for Medicaid.
Consequently, under
the current system tax deductibility has relatively little influence on
the public's likelihood to purchase LTC insurance. Neither does planning
to rely on Medicaid significantly influence their decision to purchase or
not. If Medicaid did operate as most commentators and academic writers
assume it does . . . if Medicaid did require catastrophic asset spend down
and if long-term care frequently resulted in devastating financial
consequences for families, then people would buy LTC insurance out of
concern for those consequences and tax deductibility would translate into
major savings for Medicaid. All I want to suggest today, is that Dr. Goda
and her colleagues try applying their analytical model with a set of
assumptions that more closely reflect actual Medicaid eligibility rules
and practices.
What are those rules
and practices? Assuming an individual is over the age of 65 and has a
long-term care level of medical need, he or she must qualify based on
income and asset means tests. So let's look at those tests and to what
extent they restrict access to Medicaid LTC benefits.
Medicaid Eligibility
Means Tests
Income
Despite the
frequently stated claim that Medicaid LTC eligibility requires "low
income," income is almost never an obstacle to qualification. In a
2010 study of Medicaid and LTC financing that I conducted in Rhode Island,
that state's LTC policy specialist told me that in his more than
three-decade tenure with the program, Medicaid had only disqualified two
people for LTC benefits based on excess income. How can that be?
Income eligibility
for Medicaid is determined in two different ways. Most states (around 35)
have "Medically Needy" income eligibility systems. They deduct medical
expenses, including the cost of nursing home care, from applicants'
incomes before determining whether or not their remaining income is low
enough, based on some percentage of the poverty level, to qualify. Thus,
people with large incomes who have comparably large medical and LTC
expenses, qualify easily in such states. One does not need "low income"
to qualify for Medicaid LTC benefits, only a "cash flow" problem after
paying for medical and LTC costs not covered by Medicare.
Other states have
"income cap" eligibility systems. In those states, people with over 300
percent of the Supplemental Security Income level (currently $2,022), do
not qualify for LTC benefits. But ever since the Omnibus Budget
Reconciliation Act of 1993, such individuals can divert their excess
income into a Miller Income Diversion Trust in order to qualify. For all
intents and purposes, anyone with income below the cost of a nursing home,
which averages around $75,000 per year, qualifies for Medicaid LTC
benefits in either a "Medically Needy" or "Income Cap" eligibility system.
Dr. Goda writes in a
May 2010 "Policy Brief": "I find evidence that although tax subsidies
raised insurance coverage by 30 percent, they did so mostly among wealthy
and high-income populations who were unlikely to rely on Medicaid in the
first place. Therefore, tax subsidies are unlikely to reduce Medicaid
expenditures for long term care by more than the cost of providing the
subsidy." (SIEPR Policy Brief, pps. 1-2)
Query: If
high-income populations are not actually excluded from Medicaid LTC
eligibility based on income, how would this fact affect the conclusion
that tax subsidies are unlikely to reduce Medicaid expenditures more than
the cost of the subsidy?
The Asset Test
Does Medicaid really
require catastrophic asset spend down as a condition of eligibility for
long-term care benefits? Hardly.
First of all, there
is no requirement under Medicaid that people spend down assets for
long-term care. As long as one does not give away assets for less than
fair market value for the purpose of qualifying for Medicaid, it is
perfectly acceptable to purchase anything for value. Applicants are often
advised by attorneys, but also by state Medicaid eligibility workers, to
reduce their countable resources by purchasing exempt assets such as home
improvements, furniture, a more expensive automobile, or prepaid burial
plans. Sometimes such recommendations extend to purchasing world cruises
or throwing big parties. All that matters is that the buyer get value and
the goods purchased are either exempt or have been consumed already by the
time of the Medicaid application.
In addition to the
$2,000 in cash or resources easily convertible to cash that Medicaid
recipients may retain ($13,800 in New York), virtually unlimited
additional resources are exempt from the asset limit test. I've provided
hyperlinks to federal regulations governing these exemptions in several of
my state level reports. See especially "Medi-Cal
Long-Term Care: Safety Net or Hammock?" at
www.centerltc.com or on the Pacific Research Institute's website.
A home and all
contiguous property is exempt up to at least $500,000 in equity value
($750,000 in New York, California, and a few other states.)
The following
resources are exempt without any limit:
One business
including the capital and cash flow; household goods and personal
belongings; one automobile; prepaid burial plans for the Medicaid
recipient and immediate family members; term life insurance; and
individual retirement accounts as long as the Medicaid recipient is
receiving periodic interest and principal payments.
Over and above these
generous asset limits, married couples can preserve additional income and
assets for the healthy spouse in the community. The Medicare Catastrophic
Coverage Act of 1988 set these "spousal impoverishment" protections at up
to $1,500 per month of income and $60,000 in assets. They've increased
with inflation to $2,739 per month of income and $109,560 of assets.
The vast majority of
elderly Americans who need long-term care qualify easily based on these
basic eligibility criteria. Some people who are even more wealthy may
consult Medicaid planning attorneys to self-impoverish artificially in
order to qualify. When GAO studied only one Medicaid planning
technique--asset transfers--it concluded the cost to Medicaid was about $1
billion per year. Hardly insignificant. But asset transfers are only one
method of Medicaid planning and not the most important one at that. What
might the cost be of commoner techniques such as special trusts, Medicaid
friendly annuities, life-care contracts, reverse half-a-loaf strategies,
life estates and purchasing exempt assets? I'm not aware of any studies
that estimate the actual impact on Medicaid of the full range of Medicaid
planning methods.
Nevertheless, I
believe this practice of intentional self-impoverishment, although very
costly to Medicaid and destructive of Medicaid's mandate to protect the
indigent, is only the tip of the iceberg. The larger problem is that most
people qualify without having to employ any sophisticated legal
techniques.
Conclusion
To conclude, I'll
point out that according to data on sources of LTC financing cited in Dr.
Goda's "SIEPR Policy Brief" article, Medicaid covers 48.5 percent;
Medicare, 22 percent; and 8 percent comes from private insurance. Out of
pocket costs are only 21.5 percent of LTC financing. It is important to
understand that roughly half of those "out-of-pocket" costs for long-term
care are actually contributions to their cost of care from their Social
Security benefits of people already on Medicaid. In other words, they
represent "spend down" of income from another highly vulnerable government
program. They are not spend down of personal savings. When you add up
all the direct and indirect government payments for long-term care, you've
accounted for over 80 percent of the total cost. Add in private insurance
payments and you're nearly up to 90 percent. Thus, at most, only 10 or 12
percent of long-term care costs could come from asset spend down.
Bottom line, I want
to suggest that the vast majority of all long-term care expenses are paid
by government directly or indirectly. Most of the remainder of such
expenses are paid by third parties or they come from income, not assets.
Despite the conventional wisdom that life savings are at risk for
catastrophic long-term care expenses, the reality is very different. If
people really did have to spend down savings, including most of their
currently exempt resources, before qualifying for Medicaid . . .
- They would be much
more likely to purchase LTC insurance
- Incentives to
purchase LTC insurance such as tax deductions or credits would be much
more effective
- The availability
of Medicaid after total asset spend down, whether consumers knew about
it or not, would have much less impact on their decision to buy or not
buy LTC insurance. Who wants Medicaid if it doesn't save your estate?
- Medicaid
expenditures would plummet and the program would have more resources to
expend for the care of truly indigent people.
Would I then advocate
forcing people into total impoverishment before Medicaid helps? Of course
not. All we need to do is implement some moderate and sensible reforms.
The most important
such reform is to reduce Medicaid's home equity exemption from
$500,000--13 times the level of asset protection allowed in England's
socialized health care system--to something closer to what England allows
or $38,000.
If most home equity
were at risk to fund long-term care, people would tap the equity in their
homes to fund home and community-based care. If they could no longer live
at home, they could sell to family members or others to fund their
institutional care. The point is their need to rely on Medicaid would be
delayed or completely eliminated.
Once home equity, the
largest repository of seniors' wealth in the United States, is at risk for
long-term care, families will pull together to find ways to protect their
parents and their inheritances from LTC risk instead of fighting over the
savings from putting a parent on Medicaid.
Unless and until
Medicaid returns to its original purpose of providing a long-term care
safety net for people in need, no amount of education, tax incentives, or
LTC insurance salesmanship will convince many more people to buy
protection they can get at a radical discount just by ignoring the
problem.
Thank you.
#############################
Updated, Monday, October 3, 2011, 1:37
PM (Eastern)
Washington, DC--
#############################
LTC E-ALERT
#11-038: LTC NEWS AND COMMENT
LTC Comment: I'm
in Dallas to attend and present at the National LTC Network's 2011
Producer Conference. My topic is ""What's Happening in Washington, DC and
Why It Matters to Producers, Distributors and Carriers."
On Thursday, I'll
debate Stanford economist Gopi Shah Goda, Ph.D. on a Society of Actuaries
"Think Tank" webinar regarding whether or not Medicaid crowds out the LTC
insurance market.
Then, the challenges
discussed in
Friday's LTC Bullet await. Busy times, but the good fight
continues. Thanks to and for your support of the Center for Long-Term
Care Reform.
#############################
*** 3 IN 4 NEED
MORE: Check out the 8th “Week in Review” video segment from the 3in4 Need
More National Bus Tour and Caregiver Make Over Contest. Watch it here:
http://www.youtube.com/watch?v=U6-FRIu0RXk&feature=channel_video_title.
***
*** PETER GELWAKS,
Chairman of Gelbwaks Executive Marketing Corp of Plantation, Florida, will
receive a Lifetime Achievement Award from the Florida Assisted Living
Coalition at a gala celebration October 18, 2011. Congratulations, Peter.
***
*** ROSS SCHRIFTMAN,
LTCI producer, author and Center for LTC Reform member, has published his
first book, My Million Dollar Mom. Ross hopes to bring awareness
of the need for long term care planning and how families can manage
through the difficult and long process of caring for a loved one with
conditions like Alzheimer's. Get more information
here or link directly to the book
here. ***
#############################
9/30/11,
"Federal
retirement plans almost as costly as Social Security," by Dennis
Cauchon, USA Today
Quote:
"Retirement programs for former federal workers - civilian and military -
are growing so fast they now face a multi-trillion-dollar shortfall nearly
as big as Social Security's, a USA TODAY analysis shows."
LTC Comment:
I've been waiting for this shoe to drop. Just wait until the public finds
out how much federal retirees receive and at what cost to taxpayers. With
interests rates at historic lows, retired feds are getting the equivalent
of proceeds from a multi-million-dollar annuity.
#############################
9/29/11,
"Employer-Based
LTC Shrank," LifeHealthPRO
Quote:
"The percentage of all participating firms offering LTC benefits fell to
11% this year, from 19%, the researchers say. The LTC offered rate fell
to 20%, from 25%, at firms with 200 or more workers, and it sank to 11%,
from 19%, at firms with 3 to 200 workers."
LTC Comment:
Bad news if correct, but I'm dubious. Opinions? Anyone challenge this
report?
#############################
9/29/11,
"Advocates
for disabled optimistic that CLASS Act program won't be scrapped," by
Julian Pecquet, The Hill
Quote:
"'We recently received a report from the actuary retained by CLASS which
provides the actuarial analysis of a number of potential CLASS benefit
plans. This report will be included in its entirety in a comprehensive
review of our work on CLASS over the last 18 months,' Assistant Secretary
of Aging Kathy Greenlee, who oversees the program, wrote in a blog post.
'We are now reviewing the findings of the actuarial report in combination
with the legal and policy analyses that we have undertaken as part of our
careful exploration of the many aspects of operationalizing the CLASS
program. Once this work is complete, HHS will issue a report along with
recommendations about how to proceed. We are on target to release our
comprehensive report by mid-October,' she added."
LTC Comment:
The plot thickens.
#############################
9/28/11,
"Ways
to Assess Long-Term Care Insurance Companies," by Leann Reynolds,
Huffington Post
Quote:
"Long before anyone expects to be thinking about in-home caregivers or
nursing homes is precisely when they should be considering long-term care
insurance."
LTC Comment:
Hear, hear! But what really makes this quote interesting is that it comes
from the very liberal Huffington Post. More evidence that even
people who usually trust government and distrust the private sector are
beginning to get it: you can't rely on government for LTC benefits in the
future which have been easy to come by in the past.
#############################
9/28/11,
"Obama
Cracks Down on Nursing Home Quality," by Howard Gleckman, Forbes
Quote:
"Skilled nursing facilities whose patients are too frequently admitted to
the hospital would face stiff new penalties according to the deficit
reduction plan proposed by President Obama on Sept. 20."
LTC Comment:
How absurd! First government pays nursing homes less than the cost of the
care under Medicaid, then threatens to reduce Medicare reimbursement when
nursing homes don't provide the perfect care government isn't willing to
pay enough to purchase in the first place. Another example of more
government regulation and interference being imposed to correct a problem
created by excessive government involvement in the market, a vicious
downward cycle that is approaching a dangerous nadir.
#############################
9/28/11,
"Low
Vitamin B12 Linked To Cognitive Decline In Elderly," by Jesse Slome,
OpenPR
Quote:
"Older individuals who have low levels of vitamin B12 in their blood have
a greater risk of brain shrinkage, losing cognitive skills and greater
risk of needing long term health care."
LTC Comment:
AALTCI director Jesse Slome has hit upon a very clever way to promote
LTC insurance. He finds relevant scientific reports like this one,
publishes the information by means of a press release, and pivots toward
the end of the article to a pitch for LTCI and the Association. Clever
and effective.
#############################
9/28/11,
"Ominous
Signs for the Class Act," by Paula Span, New York Times
Quote:
"In the absence of real information, theories are circulating. Maybe these
changes are part of a reorganization? Maybe the actuaries are finding that
they can’t make the numbers work within the strictures of the statute, so
Class has to go back to Congress? Maybe the administration just wants this
program to go away until after the election?"
LTC Comment:
Most of us have had it up to here (pointing at top of head) regarding the
CLASS Act's dubious status, but I'm passing this article on to you because
of the significance of its being published in the New York Times.
Clearly the people who like CLASS are still deep into wishful thinking.
#############################
9/28/11,
"Debt
panel eyes dual Medicare/Medicaid patients," by Donna Smith,
Reuters
Quote:
"Government health benefits for some 9 million of the sickest and poorest
U.S. citizens will come under scrutiny from the congressional 'super
committee' seeking to cut the nation's debt."
LTC Comment:
I bring this article to your attention because of a paper I wrote since
starting our DC project with Cato which explains how to save $30 billion
per year on Medicaid LTC expenses by diverting potential "dual eligibles"
early to LTC insurance so they avoid Medicaid dependency. My paper is
here. I also forwarded this article and my paper to 15 Hill staffers
and other experts (with whom I've met in person during our project) with
the suggestion they bring both to the attention of the SuperCommittee.
#############################
9/28/11,
"Boomers
'Delusion' About Health In Retirement," by Julie Rovner, National
Public Radio
Quote:
"The good news is that when it comes to long-term care, the boomers are
considerably more aware of the possibility of the crushing cost than
previous generations have been. More than two-thirds said they were very
or somewhat likely to have trouble paying for long-term care if they or a
spouse needed it. That's slightly more than the three-fifths who feared
they might have trouble paying overall medical bills."
LTC Comment:
Center supporter and LTCI agent/expert Sally Leimbach of
FranklinMorris in Baltimore was interviewed for this NPR story. We
have Sally to thank for the following highlight of the importance of LTCI:
Quote:
"That's true of Jason Mitchell, 53, of Rockville, Md., who's in the
process of purchasing private long-term care insurance for himself and his
wife, Nina. 'A few years ago, my dad passed away at 89, and for the two
years before passing away, we incurred some pretty high costs for private
care,' Mitchell says. 'Luckily he had the means to pay for it, but I
recognize it's probably a bigger risk as all of us are living
longer.'"
Quote:
"One thing people don't recognize very well, however, is who pays for
long-term care. In the poll, a majority of those both retired and
not-yet-retired thought Medicare, private savings and private insurance
would be the primary payers if they needed a nursing home stays longer
than 100 days. In fact, the primary payer for nursing home care across the
nation is the joint federal-state Medicaid program. Yet that was
identified as the most likely payer for their own long-term nursing care
by only 7 percent of retirees and 10 percent of not-yet-retired boomers."
LTC Comment:
What this proves is that people have a vague sense that somebody or
something pays for long-term care. They are more likely to think the
payer is Medicare than Medicaid because they associate Medicare with
funding health care for old people. But all that matters for the
marketability of LTCI is that the government does in fact pay for most
expensive LTC. That's why the public is blasé about LTC risk/cost and
fails to buy private insurance against it.
#############################
9/28/11,
"Committee
Addresses Abuses of Medicaid Eligibility," ALFANewsBot
Quote:
"Chairman Trey Gowdy (SC-4) began the hearing by explaining that Medicaid
is currently an unsustainable system due in part to beneficiaries gaming
the system. The costs of Medicaid nationally have exploded from less than
75 billion dollars per year two decades ago to over 400 billion dollars
per year, causing both state governments and the Federal Government to
struggle financially. 'Although Medicaid technically has income and asset
tests, these tests are easy to circumvent and abuse,' explained Chairman
Gowdy, 'In fact, an entire cottage industry has arisen seeking to educate
the wealthy on how to transfer assets so tax payers can pay for their long
term care.'?"
LTC Comment:
Kudos to Brian Blase, formerly of Heritage and currently with Chairman
Gowdy on the Hill, for staffing this hearing and bringing in a panel of
witnesses, including yours truly, who exploded the myth that only the poor
qualify for Medicaid LTC.
#############################
9/27/11,
"Companies
That Could Profit From Baby Boomers," by Tom Sightings, U.S. News
and World Report
Quote:
"More than three million Baby Boomers are turning 65 in 2011. . . . Along
the way they will be managing their finances through asset managers and
mutual funds. And before it's over, they will have bought long-term
care insurance, done time in a senior citizen facility, and dropped an
average of $8,000 per funeral." (Emphasis added)
LTC Comment:
Now this is more like it! A financial expert who assumes the huge baby
boomer generation will buy LTCI. The times they are a-changin'.
#############################
9/27/11,
"Poll
shows retirees don't see Medicaid as important to their future LTC needs,"
McKnight's LTC News
Quote:
"Only 10% of pre-retirees and 7% of retirees think Medicaid will pay the
majority of their costs for three months in a nursing home, according to
the poll, conducted by NPR, the Robert Wood Johnson Foundation, and the
Harvard School of Public Health. Additionally, only 32% of retirees want
major changes in the Medicare program, compared to 47% of pre-retirees."
LTC Comment:
This poll confirms what we've said all along: Most people don't plan to
use Medicaid for LTC, but their failure to plan responsibly for LTC is
enabled by the fact that Medicaid has always been the dominant payer for
most expensive LTC. Medicaid is easy to get after the insurable event has
occurred, unlike LTC insurance.
#############################
9/26/11,
"Republicans
to HHS: What Did You Do with the CLASS Office?," by Arthur D. Postal,
LifeHealthPRO
Quote:
"Congressional Republicans are demanding that the Obama administration
clarify what it is doing about implementation - or non-implementation - of
the Community Living Assistance Services and Supports (CLASS) Act long
term care (LTC) insurance program. Republicans in the House and the
Senate have written to the U.S. Health and Human Services Secretary
Kathleen Sebelius to get the details behind reports that the CLASS Act
implementation office has been shut down. The lawmakers have asked a
total of 24 questions, and they are demanding that Kathleen Sebelius
answer by Oct. 6."
LTC Comments:
Read this amazing letter to Secretary Sebelius
here. Death knell for CLASS. Should be but advocates insist the
misbegotten program can rise phoenix-like from the ashes. It's enough to
burn an actuary up!
#############################
9/20/11,
"The MetLife Study of Women, Retirement, and the Extra-Long Life:
Implications for Planning," MetLife Mature Market Institute (link)
Quote:
This study "shows women face a number of unique risks - including
longevity, aging single, lower retirement incomes, greater healthcare
costs and added caregiving responsibilities - and have not planned
adequately to address these concerns, leading to a significant shortfall."
LTC Comment:
Producers should see this report as a road map for interesting women in
LTC planning.
#############################
Updated, Friday, September 30, 2011,
1;12 PM (Eastern)
Washington, DC--
#############################
LTC BULLET: LTC
EMBED REPORT (#8) FROM THE POLICY FRONT IN WASHINGTON, DC
Happy New Year's
Eve! (The 2012 Federal Fiscal
New Year begins tomorrow)
LTC Comment:
Polarized political stalemate in Washington leads to a mid-course
correction in the Center's DC project. Details after the ***news.***
*** NPR STORY
HIGHLIGHTS LTC INSURANCE AND SALLY LEIMBACH. "When aging Americans need
long-term care, especially in a nursing home, the costs can be enormous.
In this part of the program, we're going to talk about those costs and
some options for seniors and their families . . .." That's how
yesterday's story begins. Listen to it
here. Read the transcript
here. Center supporter and LTCI agent/expert Sally Leimbach of
FranklinMorris in Baltimore was interviewed for this NPR story. She
and her client are quoted. We have Sally to thank for adding this focus
on the solution (LTCI) to a story mostly about the problem (how to finance
LTC). ***
#############################
LTC BULLET: LTC
EMBED REPORT (#8) FROM THE POLICY FRONT IN WASHINGTON, DC
LTC Comment: Center
for Long-Term Care Reform president Stephen Moses is in Washington, DC,
living in the
Silver Bullet of Long-Term Care, and working on a two-month project in
coordination with the Cato Institute.
You can find a
description of our project
here. In a nutshell, we set out to assess the potential for major
reform of Medicaid and long-term care financing policy as a means to
reduce government expenditures while improving LTC access and quality. We
pitched our approach first as a way to pay for the "doc fix"
here and then as a way to achieve one-quarter of the $1.2 trillion
savings over ten years that the SuperCommittee needs to find,
here and
here.
The Center's reports
on how to "Save
Medicaid LTC $30 Billion Per Year AND Improve the Program" plus our
state-level studies on LTC financing in
California,
New York and
Pennsylvania--all published this year--explained why Medicaid spends
too much without fixing long-term care and what should be done to correct
the problem.
With government
spending out of control and all eyes on how to tame the debt and deficit
by reducing expenditures, we figured the time was right to focus on policy
changes aimed at targeting scarce public resources to the neediest while
generating substantial government savings and encouraging private sector
jobs and tax revenue.
Evidently, we were
wrong. Unlike in 2005, when our efforts contributed to the successful
passage of the Deficit Reduction Act (DRA '05), today's politics are so
polarized it seems unlikely any worthwhile legislative change can be
achieved before next year's Presidential election.
What's different?
One political party controlled the Presidency and both houses of Congress
in 2005. This year, divided government prevents action even when both
parties fundamentally agree. For example, in the House Oversight and
Government Reform Health Subcommittee's hearing last week on Medicaid
eligibility abuse--read about it
here, watch it
here--members from both parties agreed that Medicaid benefits should
go to the indigent and that "loopholes" which allow the affluent to hijack
limited Medicaid funds should be closed.
But one party has
stated it will not cut Medicaid for any reason, no matter how sensible,
and the other party says cutting Medicaid eligibility for the well-to-do
is not possible this year because the first party refuses to consider any
Medicaid cuts. The Center for Long-Term Care Reform is non-political so
we'll just let you guess which party is which in this scenario.
One incident in the
hearing really drove home the frustrating hopelessness of meaningful
reform any time soon. No one took issue with the facts and logic Steve
Moses laid out in his testimony and elaborated upon in answers to
questions. But when advocates for maintaining Medicaid's dysfunctional
status quo questioned him, they asked exclusively about the Center for
Long-Term Care Reform's funding sources. One member of the Committee
railed about the Center being a mouthpiece for the insurance industry and
then stormed out of the room without allowing Steve to reply.
Steve adamantly
refused to disclose any of the Center's funding sources. He countered by
observing that the only thing that matters about the Center's funding is
that none of it comes from the federal government. All of the Center's
financial support is clean money earned legitimately in the private
sector. To oppose the Center's analysis and recommendations based on the
source of our funding is a logical fallacy called ad hominem. Such
a tactic is baseless and base. Center supporter and LTCI expert Bob Vandy
of
New York and National Long-Term Care Brokers asked "does this mean we
can't believe what [the Congressman] says because he is simply a
mouthpiece for his campaign contributors?" Well put.
Unfortunately, the
video of the hearing cut off the end of the Q&A period in which Steve
responded forcefully to these attacks. Several of our readers who watched
the hearing video complained that the coverage ended just as he was about
to respond. We've asked the committee to post the entire recording.
People who attended the hearing in person agreed that Steve successfully
turned the criticism against his critics.
The bottom line is
that continuing to pursue consensus and action on Medicaid LTC reform in
the current political environment would be spinning our wheels. Not
because consensus is unreachable. We have consensus. We simply have no
agreement that action, no matter how worthwhile, is possible.
So, when Plan A
doesn't work, you shift to Plan B. What is Plan B? Instead of preparing
legislative recommendations and persuading interest groups to support
them, we'll focus on getting the word out more widely through "bullhorn
organizations." These are groups that don't necessarily conduct research
or do analysis, but rather publish information and promote ideas to their
membership and clientele. Some examples include the
Peterson Foundation, the
Concord Coalition,
Citizens Against Government Waste and former Comptroller General David
Walker's new
Comeback America Initiative. If you have any contacts in such
organizations, please make an email introduction to open the door for the
Center.
To help get the word
out, Steve Moses will prepare a series of "Briefing Papers" on key issues
related to Medicaid and LTC financing. Topics will include "The Sorry
History of LTC Financing," "Easy Medicaid Eligibility," "Medicaid Planning
or Welfare for the Well-to-Do," "The Mirage of Rebalancing," "Preventing
Dual Eligibles," and "Private LTC Financing Alternatives." We'll add an
"overview" paper that shows how all these topics inter-relate and proposes
a solution to the problems discussed.
Finally, let's close
today's Bullet with this vote of confidence and support from Center for
LTC Reform corporate member Stephen D. Forman of
Long Term Care Associates. He writes about the 9/22/11
ProducersWeb article titled "Medicaid
planning critic goes to Capitol Hill," a good read in its own right.
"As Steve Moses has
said, 'You can't sell apples on one side of the street while the
government is giving them away on the other.' As long-term care insurance
producers, the biggest obstacle to growth in our industry is the perverse
incentive afforded by Medicaid LTC--an entrenched 45-yr old system of
nursing-home biased, low-quality, but free health care.
"Bravo to the Center
for LTC Reform for traveling to Washington, DC to testify during the
'Examining Abuses of Medicaid Eligibility Rules' Hearing (find the video
and transcript here:
http://1.usa.gov/Moses-Testifies-DC). . . .
"Where is the
support, the hurrahs, the interest? Do the LTCI producers-at-large make
the connection between the products you sell and Medicaid, and why the
latter crowds-out 2/3rds to 90% of our market? Or do you disagree? The
work the Center is doing is singular in its purpose--no other organization
can perform the mission it can. I'm curious why a story like this
seemingly flies under the radar . . .
"One of the future
articles I'm writing in my series concerns unity in our industry: showing
a united front; trading competition in favor of collaboration; taking
responsibility for the attacks we incur and standing up to defend
ourselves in the media-- not letting a handful of agents carry the water
for us. . . ."
Regards,
Stephen D. Forman,
SVP, LTCA INC
Read the article
Steve Forman refers to in the last paragraph above
here.
#############################
Updated, Monday, September 26, 2011,
1:08 PM (Eastern)
Washington, DC--
#############################
LTC NEWS AND
COMMENT
(LTC Embed Report
#7)
LTC Comment:
Last Thursday's "LTC
Bullet: Friendly Fire in the Class War" described the Congressional
hearing titled "Examining Abuses of Medicaid Eligibility Rules" conducted
by the House Oversight and Government Reform Subcommittee on Healthcare,
Wednesday, September 21, 2011. In that Bullet, we referred you to
a link for a video of the hearing which was not yet live. It is live now
and you can find the full video recording of the hearing
here.
Highlights:
- Chairman Gowdy's
opening statement begins at 9 minutes into the video.
- Ranking Member
Davis's opening statement begins at 15 minutes in.
- Steve Moses's
testimony begins at 27 minutes in.
- Elder law attorney
and Medicaid planner David Dorfman's testimony begins at 34 minutes in.
- Janice Eulau, the
Medicaid eligibility worker from New York who explained how people with
hundreds of thousands of dollars routinely qualify for Medicaid, begins
at approximately 38 minutes
- Director Hamos
from Illinois' Medicaid program begins at 44 minutes.
- Questioning of the
witnesses by members of the Committee, which becomes somewhat animated
and confrontational, begins at 48 minutes in.
*** NATIONAL MEDICARE SUPPLEMENT INSURANCE CONFERENCE SCHEDULED for May
16-18, 2012 in Miami, Florida. Organized by the American Association for
Medicare Supplement Insurance, the conference will be held at the Hilton
Hotel in Downtown Miami. Obtain additional information by calling the
Association offices at (818) 597-3205 or by visiting their website at
http://www.medicaresupp.org/. ***
***
CONGRATULATIONS to CEO Paul Forte and the whole team at LTC Partners:
"More than 45,000 federal employees, spouses and same-sex domestic
partners signed up for the Federal Long Term Care Insurance Program during
the open season period earlier this year." Source: "45,000
Feds Sign Up For Long-Term Care Benefit," by Stephen Losey, Federal
Times, September 22, 2011. ***
#############################
9/23/11,
"Use
Reverse Mortgages, Save $30 Billion on Medicaid?," by Elizabeth Ecker,
Reverse Mortgage Daily
Quote:
"Reverse mortgages could play an important role in saving $30 billion per
year in Medicaid spending, says long-term care reform advocate Stephen
Moses. If people had to consume their home equity before qualifying for
public benefits, spending on those public benefits would see a substantial
decrease, Moses said in a congressional hearing Wednesday on Medicaid and
long-term care financing."
LTC Comment:
I also explained to the committee that once home equity is at risk for
long-term care, many more people will purchase private LTC insurance to
pay for the care and protect the home equity.
#############################
9/23/11,
"Improved coordination of dual eligibles could save the federal government
$125 billion over 10 years, report says," McKnight's LTC News (link)
Quote:
"Requiring dual eligibles - individuals receiving both Medicare and
Medicaid benefits - to enroll in team-based coordination of care programs
could save the federal government $125 billion over 10 years, a new report
finds."
LTC Comment:
Huge efforts are being made to find better ways to manage dual eligibles,
but to my knowledge no one except your Center for Long-Term Care Reform is
promoting public policies to prevent people from becoming dual eligibles
in the first place by eliminating Medicaid eligibility loopholes and using
the savings to incentivize the purchase of LTC insurance.
#############################
9/22/11,
"Long
Term Care Insurance Planning - Why 64 Is The Magic Cut Off Age,"
WebWire
Quote:
"Long term care insurance is best purchased between the ages of 52 and 64
according to a new report from the American Association for Long-Term Care
Insurance the national trade organization. . . . 'The reason according
to [Jesse] Slome is the fact that when individuals reach age 65, they
qualify for Medicare health coverage benefits. 'Ask anyone within a year
or two of Medicare eligibility and they can't wait,' Slome declares.
'They delay seeing their doctor knowing that once Medicare kicks in, they
are basically free to have every little ailment examined and treated.'
What consumers do not recognize however is the fact that long term care
insurance companies will request medical information from individual
applicants. 'You finally visit the doctor thanks to Medicare and his or
her diagnosis makes you uninsurable or heath-rated so that you have to pay
more for insurance coverage,' Slome notes."
LTC Comment:
How ironic! Seniors put off check ups waiting for Medicare to start and
then lose insurability for LTC.
#############################
9/22/11,
"Should
rich people pay more for Medicare?," Reuters
Quote:
"Should affluent seniors pay more for Medicare than everyone else? How
about Social Security? Should we cut benefits for wealthy Americans?
Ideas for 'means testing' these critical retirement programs are front and
center as deficit reduction talks move back into high gear in Washington."
LTC Comment:
Just as I've predicted since 2008. Means testing means conversion of
Social Security and Medicare into welfare programs instead of "social
insurance."
#############################
9/21/11,
"Medicaid
Planning Critic Goes to Capitol Hill," by Allison Bell, National
Underwriter
Quote:
"Stephen Moses, a man who has spent years fighting the rules that let
relatively affluent people qualify for Medicaid nursing home benefits, got
a chance today to explain his position to members of Congress. . . . When
people with substantial assets use Medicaid nursing home benefits, that
hurts Medicaid program finances, the taxpayers who are paying for
Medicaid, and genuinely poor people, who might be able to get better
benefits if they did not have to share the Medicaid program with
relatively affluent people, Medicaid planning critics said."
LTC Comment:
For details on the hearing, see last Thursday's "LTC
Bullet: Friendly Fire in the Class War" and above for a link to the
hearing video.
#############################
9/21/11,
"Study
Links Diabetes With Dementia And Long Term Care Insurance Risk,"
OpenPR
Quote:
"Adults with diabetes face a significantly higher risk of developing all
types of dementia, including Alzheimer's disease, the leading cause of
long term care insurance claims."
LTC Comment:
The epidemic of obesity and diabetes in the USA bodes ill for Americans
insurability.
#############################
9/21/11, "Boomers'
spending binge presents additional retirement planning challenge," by
Ann Marsh, Employee Benefit Adviser
Quote:
"Around the time they turn 50, many people unconsciously begin to ratchet
up their spending. Instead, prominent retirement planning scholar Alice P.
Munnell thinks financial planners and employers need to wage a campaign to
get their clients and employees to hit the pause button at this crucial
midpoint in their lives."
LTC Comment:
This advice fits perfectly with advice to invest in LTC insurance around
the same time of life.
#############################
9/20/11,
"Survey:
More than half of seniors confused by Medicare, healthcare reform,"
McKnight's LTC News
Quote:
"Only 46% of seniors and baby boomers have a solid understanding of how
Medicare works, and half of people over the age of 60 say they have a poor
understanding of healthcare reform, a new report finds. What's more, 39%
of all seniors say their ability to navigate the numerous Medicare options
is fair to poor, according to a survey of 1,500 seniors released by
UnitedHealthcare and the National Council on Aging."
LTC Comment:
People say LTCI policies are complicated, but they've got nothing on
Medicare in that regard.
#############################
9/19/11,
"Patient
Protection Reform Could Mean Higher Healthcare Costs," Employee
Benefit Adviser
Quote:
"Of the endlessly debated provisions in the Patient Protection and
Affordable Care Act (PPACA), the requirements for Medical Loss Ratios (MLRs)
stand out for insurance companies because the requirements are designed to
dictate how those companies pay their bills."
LTC Comment:
The Medical Loss Ratio issue could be the death knell for health reform or
for agent sales.
#############################
Updated, Thursday, September 22, 2011,
1:48 PM (Eastern)
Washington, DC--
#############################
LTC Bullet: Friendly
Fire in the Class War
(LTC Embed Report #6)
LTC Comment: Steve
Moses's Congressional testimony on Wednesday was well-received except for
an ad hominem attack, "friendly fire" in the class war. An
explanation, witness testimonies, and a video of the hearing follow after
the ***news.***
*** LATE BREAKING
NEWS . . . "9/22/11 12:51 PM EDT HHS has issued this statement: While
the staff of the CLASS office has been reduced, reports that the CLASS
office is closing are not accurate. We are continuing our analysis of this
program. As we have said in the past, it is an open question whether the
program will be implemented. A CLASS program will only be implemented if
it is fiscally solvent, self-sustaining, and consistent with the statute."
***
*** CLASS DIES?
LTC Bullets obtained the following email communication from an
anonymous source:
September 22, 2011
Dear colleagues,
I'm leaving my
position as the CLASS Office actuary as HHS has decided to close down the
CLASS Office effective tomorrow. I believe I have made a contribution to
CLASS to the best of my ability and hope I haven't embarrassed the
actuarial profession too much.
I had the good
fortune to work with, and receive advice from, almost all of you during
this assignment. Thank you so much for your help and guidance. You have
no idea how comforting it is to know that you have my back. Special
thanks to the government actuaries whose predicament I have learned to
appreciate - overworked and underpaid.
I'll be taking some
time off in late October. But, as my beloved governor Arnold has
promised, I'll be back.
If you have any
questions or thoughts, please share them with me.
Take care.
Bob Yee ***
*** FURTHER DETAILS
re CLASS come from AHIP: "We are writing to let you know that the CLASS
Office established under the Administration on Aging, to implement the
CLASS Program, has been put on hold. To date, the CLASS Office has been
unable to develop an actuarially sound CLASS program. Until a financially
workable program has been developed, staffing for the CLASS Office will be
significantly reduced and implementation of the program will be put on
hold. We also have been told that the CLASS Office is working on an
official announcement that will likely be posted on its website (http://www.aoa.gov/AoARoot/CLASS/index.aspx)
in the next few days." ***
*** NATIONAL
UNDERWRITER covered yesterday's Congressional hearing "Examining
Abuses of Medicaid Eligibility Rules"
here. Quote: "Stephen Moses, a man who has spent years fighting the
rules that let relatively affluent people qualify for Medicaid nursing
home benefits, got a chance today to explain his position to members of
Congress. . . . When people with substantial assets use Medicaid nursing
home benefits, that hurts Medicaid program finances, the taxpayers who are
paying for Medicaid, and genuinely poor people, who might be able to get
better benefits if they did not have to share the Medicaid program with
relatively affluent people, Medicaid planning critics said." ***
------------
LTC BULLET: FRIENDLY
FIRE IN THE CLASS WAR
LTC Bullet: On
Wednesday, September 21, 2011 the House Oversight and Government Reform
Committee's Subcommittee on Healthcare, District of Columbia, Census and
the National Archives conducted a hearing titled "Examining Abuses of
Medicaid Eligibility Rules." Read witnesses' testimonies and watch the
entire hearing
here. A transcript of the hearing will be available in approximately
two weeks and we'll bring it to you then.
Hearing witnesses
included Stephen Moses of the Center for Long-Term Care Reform; New York
elder law attorney David Dorfman; Suffolk County (Long Island) New York
Medicaid eligibility specialist Janice Eulau; and Julie Hamos, Director of
the Illinois Department of Healthcare and Family Services, Illinois'
Medicaid agency. After opening statements by the Subcommittee Chairman
Trey Gowdy (R, SC) and by ranking member Danny Davis (D, IL), witnesses
had five minutes each to present their testimonies.
Steve Moses explained
how most elderly people who need long-term care qualify easily for
Medicaid benefits without spending down their savings. (Steve's testimony
follows below.) Attorney David Dorfman defended Medicaid planning for
people who would not qualify otherwise based on their income and assets.
Eligibility expert Janice Eulau explained that her county's average
Medicaid applicant has $300,000 in assets, that those with $500,000 are
common, and that people with over $1,000,000, though less frequent, do
qualify easily. Illinois Medicaid agency director Hamos derided Medicaid
planning abuses and explained how her program is trying to end them.
In the question and
answer period after witnesses testified, subcommittee members probed for
details. Chairman Gowdy's first question went to attorney Dorfman. He
asked whether the Medicaid planner considered Medicaid a program for the
indigent or "universal health care" for all. Mr. Dorfman replied that
Medicaid is a program for people who qualify, implicitly acknowledging
that he believes Medicaid is for all people who can arrange their income
and assets to qualify legally. He stated that his average client has a
home worth $500,000, $100,000 in retirement savings, and around $30,000 in
liquid assets.
Eligibility expert
Eulau said most of the Medicaid applicants she sees have much more wealth
than Mr. Dorfman's average client. Nevertheless, they qualify for
Medicaid LTC benefits easily using techniques such as transfers,
annuities, and promissory notes. She explained in detail the most common
Medicaid planning practice in her county, which involves using promissory
notes to reduce spend down liability.
The most
confrontational episode in the hearing occurred when some members attacked
Steve Moses for receiving financial support from the insurance industry.
Moses responded by pointing out that such an ad hominem argument is
a logical fallacy and that he would respond only to questions about his
analysis, evidence and logic. He refused to list his organization's
corporate donors on the grounds that he receives no federal funds and it
is none of the questioners' business. "How ironic," Steve remarked after
the hearing, "to attack me as a tool of corporate interests when I live in
a trailer 3,000 miles from home fighting to save Medicaid as a long-term
care safety net for the poor."
Steve's testimony
follows. He titled it "Medicaid Long-Term Care: Friendly Fire in the
Class War" for this reason: Easy access to Medicaid LTC benefits since
1965 has led to middle class and affluent seniors crowding out the poor
from access to quality care. When your own troops shoot at you in war,
it's called "friendly fire." Politicians who oppose targeting Medicaid to
people most in need are really helping the well-to-do and hurting the
poor, the opposite of their stated objectives. Hence, friendly fire in
the class war.
#############################
Testimony before the House Oversight and Government Reform Subcommittee on
Healthcare by Stephen A. Moses, President, Center for Long-Term Care
Reform (www.centerltc.com) on September 21, 2011
"Medicaid Long-Term Care Benefits: Friendly Fire in the Class War"
Mr. Chairman and members of
the Committee: thank you for inviting me to speak to you about Medicaid
and long-term care financing.
I've worked in this field
since 1981, first as a career federal employee with the Health Care
Financing Administration, then for the Inspector General of the U.S.
Department of Health and Human Services, and since 1989 in the private
sector. I am currently president of the Center for Long-Term Care Reform.
In each of these roles, I conducted national and state studies of Medicaid
and long-term care financing policy. My remarks today are fully developed
and documented in published reports available on our website at
www.centerltc.com.
Medicaid is supposed to be a
long-term care safety net for people in dire financial need. Instead it
has become the dominant payer for most Americans who require extended care
at home or in a nursing home, including the middle class and even the
affluent. How can this be true if Medicaid is a means-tested, public
assistance program? That is the key question before you today. Here's the
answer.
Although everyone says
Medicaid eligibility requires low income, that is untrue for people over
the age of 65 who need long-term care. Federal rules require most states
to deduct medical expenses, including the cost of nursing home care, from
applicants' incomes before determining eligibility. Some states apply
"income caps" but those are easily evaded by means of special "income
diversion trusts." Bottom line, income almost never disqualifies anyone
for Medicaid long-term care eligibility.
But what about assets? It is
true that cash or negotiable securities over $2,000 are disqualifying in
most states, but it doesn't matter how people spend down to that level as
long as they don't give their money away. Financial advisors frequently
tell clients to purchase exempt assets, take a world cruise, or throw a
big party, all non-disqualifying spend down methods.
Just how many exempt assets
can applicants retain and still qualify for Medicaid LTC benefits? There
really is no meaningful limit. Exempt home equity is capped at $500,000 or
$750,000--13 to 20 times the amount protected in England's socialized
health care system--but the following resources are exempt without any
limit:
• One business including
the capital and cash flow
• Individual retirement accounts (IRAs)
• One automobile
• Prepaid burial plans for the Medicaid recipient and immediate family
members
• Term life insurance, which allows recipients to evade Medicaid's estate
recovery mandate
• Household goods and personal belongings
The federal regulations and
policies that require these exemptions are documented in our report titled
"Medi-Cal
Long-Term Care: Safety Net or Hammock?," a copy of which has been made
available to the Committee.
Married applicants for
Medicaid LTC benefits can retain substantially more income and assets than
single people: up to $2,739 per month of income and half the couple's join
assets not to exceed $109,500. If the healthy spouse's personal income and
assets are below these levels, the Medicaid spouse's income and assets are
transferred to bring her or him up to the limit. These "spousal
impoverishment" protections increase annually with inflation.
Because of these very generous
basic eligibility rules, the vast majority of America's elderly qualify
easily for Medicaid when they need long-term care. The conventional wisdom
that people must spend down into impoverishment before Medicaid will help
is demonstrably untrue. Only the most affluent need to consult Medicaid
planners and use special legal techniques--such as trusts, transfers,
annuities, life estates, life care contracts and promissory notes--to
qualify. The other panelists will discuss Medicaid planning. The key point
to remember is that egregious Medicaid planning is only the tip of the
iceberg. The bigger problem is that Medicaid's basic eligibility rules
allow most people to qualify after they need long-term care and without
spending down their wealth first.
Easy access to Medicaid has
the effect of desensitizing the public to LTC risk and cost. Medicaid's
home equity exemption prevents people from using reverse mortgages to
finance home care. With most of their assets protected by Medicaid, few
people plan early to save, invest or insure for long-term care. Well
intentioned public policy has turned into a perverse incentive
discouraging responsible LTC planning. Furthermore, consuming scarce
public welfare resources to indemnify affluent baby-boomer heirs of
well-to-do seniors hurts the poor instead of helping. It's like friendly
fire in the class war.
Medicaid could save up to $30
billion per year if people had to consume their home equity before
qualifying for public benefits as is true in England. The program's most
expensive "dual eligible" recipients could be reduced by 20 percent.
Reverse mortgages to fund long-term care would thrive and generate new
jobs and tax revenue. The private long-term care insurance market would
expand creating even more jobs and revenue. But most importantly,
relieving the financial pressure on Medicaid in this way would enable the
program to survive as a quality safety net for the truly needy.
My analysis explaining how Medicaid can save $30 billion per year by
encouraging financing of long-term care through reverse mortgages and
private insurance has been provided to the Committee.
Thank you for your attention.
#############################
Updated, Tuesday, September 20, 2011,
1:20 PM (Eastern)
Washington, DC--
#############################
LTC NEWS AND
COMMENT
LTC Comment: The
House "Oversight and Government Reform Subcommittee on Healthcare,
District of Columbia, Census, and National Archives" will hold a hearing
on Wednesday, September 21, 2011 at 10:00a.m. in Room 2247 of the Rayburn
House Office Building. The hearing is titled "Examining Abuses of
Medicaid Eligibility Rules." It's open to the public so do come if
you can.
According to the
Sub-Committee's chairman, Congressman Trey Gowdy (R, SC): "The hearing
will focus on eligibility rules for Medicaid long-term care services, the
techniques used by individuals to qualify for Medicaid, and the overall
impact of the eligibility rules."
Steve Moses will
testify regarding Medicaid
long-term care eligibility rules and how they are stretched beyond
Congressional intent to enable non-poor people to qualify for the
program's most expensive benefits. Other witnesses include a state
Medicaid LTC eligibility worker and a New York elder law attorney.
We'll report on the
hearing in Friday's LTC Bullet. In the meantime, we hope to see
you there. Let's gather a cheering section for rational long-term care
policy and responsible long-term care planning.
#############################
Dr. Marion and the
3in4 Need More Tour visited
Detroit's OneReverse Mortgage and the Heidelberg Project last week. Check
out episode 7 of the tour's "Week in Review" video coverage
here.
#############################
9/19/11,
"GOP
Vets an ObamaCare Program," by Joseph Rago, Wall Street Journal
Quote:
"The Solyndra solar subsidy flare-up is getting all the media attention,
but arguably as great a White House scandal concerns one of ObamaCare's
multiple new entitlements. A trove of internal emails uncovered by
congressional investigators shows that administration officials knew that
a new program for long-term care really was the fiscal disaster that
critics claimed at the time."
LTC Comment:
We covered this CLASS scandal before, but when the Wall Street Journal
picks it up, it's news all over again.
#############################
9/18/11,
"Protecting
Your Future: Using Medicaid Asset Protection Trust," by Bonnie Kraham,
Times Herald-Record
Quote:
"If you want to protect your assets and pass them on to your children, and
you don't have long-term-care insurance, then the best plan is the
irrevocable Medicaid Asset Protection Trust (MAPT). Some people balk at
the idea, because they fear losing control of their assets. In reality, an
MAPT gives you more control of your assets, not less."
LTC Comment:
Medicaid planning persists.
#############################
9/17/11,
"Don't
Join the Ostrich Generation," by Kelly Greene, Wall Street Journal
Quote:
"Most boomers realize that care is pricey, but typically don't grasp the
scale of rising costs.
"A private room in a
nursing home, which now costs $82,125 a year on average, according to the
American Association for Long-Term Care Insurance, could escalate to
$190,000 a year by 2030, according to estimates by insurer Sun Life
Financial. Yet in a survey of 1,015 people who are 50 or older that Sun
Life released earlier this month, the median guess was that costs would go
up half that much.
"Some 70% of
Americans older than age 65 will need long-term care, meaning help with
daily activities such as eating and bathing, according to the U.S.
Department of Health and Human Services. Yet the same survey found that
almost no one had discussed long-term care with a financial adviser or
lawyer.
"Financial planners
who confront their older clients with such statistics say the clients
usually spring for long-term-care insurance, which costs about $2,350 a
year for a 55-year-old couple (including discounts for good health and
being married), or $4,660 a year for a 65-year-old couple, according to
the American Association for Long-Term Care Insurance.
"The main moving
parts are the length of the benefit, which generally should last at least
three years; the daily benefit amount, which should match up to costs
where you live; and the "elimination period," meaning the period of time
you choose to pay your expenses yourself before coverage starts.
Particularly for people under age 70, many planners also recommend paying
up for a rider that provides a 5% bump in the benefit each year to protect
against inflation.
"Another option is a
'hybrid'-an annuity or life-insurance policy with a long-term-care
benefit. Ms. Bajalia in St. Augustine recently set up an indexed annuity
for Barbara Deckman, a 62-year-old retired teacher, which has a lifetime
income benefit and a "double confinement" rider, meaning the policy pays
twice as much each year if Ms. Deckman qualifies for long-term-care
payments."
LTC Comment:
Great to find this in Kelly Greene's Wall Street Journal column!
#############################
9/15/11,
"CLASS Act flawed: American Association for Long Term Care Insurance
Comments On Congressional Report," Life & Health Advisor (link)
Quote:
"'The President and the Democrats are in an impossible situation,'
explains Jesse Slome, executive director of the American Association for
Long-Term Care Insurance, the national trade group. 'If Democrats throw
CLASS under the bus, it opens the door for attacks on other aspects of
healthcare law. If they defend what they know is an unsustainable
program, they are open to political attack as the party who never met an
unsustainable entitlement program they didn't like.'"
LTC Comment:
Damned if they do and damned if they don't, but not if they hadn't! "Oh
what a tangled web we weave, When first we practice to deceive"-- Sir
Walter Scott
#############################
9/14/11,
"Seniors
Housing Weekly Market Update: 60 Seconds with Steve Monroe," Senior
Care M&A Deals and News
Quote:
"The home health care industry provides a wonderful and much-needed
service to the elderly market, but misleading marketing ploys can be
damaging to its cause, as we saw in a recent example . . ."
LTC Comment:
I recommend this one minute video on comparing home care costs with
assisted living or nursing home care.
#############################
9/14/11,
"When
Health Insurance is Free," by John Goodman, NCPA Health Alert
Quote:
"Did you know that an estimated one of every three uninsured people in
this country is eligible for a government program (mainly Medicaid or a
state children's health insurance plan), but has not signed up?"
LTC Comment:
What would happen to the state and federal budgets if all these eligible
people showed up, applied and sought care suddenly?
#############################
9/13/11,
"New
Reverse Mortgage Product Has Lower Upfront Costs," ElderLawAnsers
Quote:
"A new mortgage product is making 'reverse' mortgages more affordable.
Reverse mortgages typically have high fees, but the new Home Equity
Conversion Mortgage (HECM) Saver allows borrowers to get a reverse
mortgage with lower upfront costs as long as they are willing to borrow a
smaller amount."
LTC Comment:
The rap against reverse mortgages for high fees and complaints that LTC
insurance costs too much are grounded in both a lack of understanding of
the products, including how they differ from other financial products and
in the lack of need for them to fund long-term care engendered by the easy
availability of Medicaid.
#############################
9/13/11,
"Caregivers
urge action as Obama administration drafts national Alzheimer's plan,"
Associated Press, Washington Post
Quote:
"Dementia is poised to become a defining disease of the rapidly aging
population - and a budget-busting one for Medicare, Medicaid and families.
Now the Obama administration is developing the first National Alzheimer's
Plan, to combine research aimed at fighting the mind-destroying disease
with help that caregivers need to stay afloat."
LTC Comment:
Great, and the money is coming from where? Another example of how good
intentions lead to unfunded liabilities. Don't hold your breath waiting
for the government to provide "help that caregivers need to stay afloat."
Smarter to insure for LTC and pay your own way.
#############################
9/13/11,
"Surprising Facts about America's Poor," Mike Brownfield, Heritage
Morning Bell
Quote:
"The following are facts about persons defined as 'poor' by the Census
Bureau:
- 80 percent of poor
households have air conditioning
- Nearly
three-fourths have a car or truck, and 31 percent have two or more cars
or trucks
- Nearly two-thirds
have cable or satellite television
- Two-thirds have at
least one DVD player and 70 percent have a VCR
- Half have a
personal computer, and one in seven have two or more computers
- More than half of
poor families with children have a video game system, such as an Xbox or
PlayStation
- 43 percent have
Internet access
- One-third have a
wide-screen plasma or LCD television
- One-fourth have a
digital video recorder system, such as a TiVo"
LTC Comment:
Well, that's not exactly what I recall "poverty" being like when I lived
in the Venezuelan outback from 1968 to 1970 as a Peace Corps Volunteer.
#############################
9/12/11,
"Why
People Don't Buy Long-Term Care Insurance," by Howard Gleckman,
Forbes
Quote:
"It isn't news that Americans are reluctant to buy private long-term care
insurance. Only 7 million have policies and few people are buying new
ones. But why don't we plan for the risk of needing assistance at some
point in our lives? After all, 7 of every 10 of us will need care sometime
after we reach age 65 and others will need it at younger ages due to
injury or illness."
LTC Comment:
On Sept. 29, as part of the Society of Actuaries "Think Tank" programs, I
will debate (by Web link) the author of the paper discussed in this column
who argues that Medicaid does not crowd out LTC insurance and that tax
deductibility for LTCI does not save Medicaid money. Despite her fine
scholarship, she's wrong for reasons she does not know, understand or
consider. I'll explain.
#############################
9/12/11,
"VA
Experience Shows Patient 'Rebound' Hard To Counter," by Jordan Rau,
Kaiser Health News
Quote:
"The Veterans Health Administration, the largest integrated health care
system in the country, has long employed many of the approaches Medicare
is pushing on all hospitals to cut unnecessary readmissions. But new data
show VA hospital patients are just as likely to end up back in a hospital
bed as are patients at private hospitals."
LTC Comment:
The best laid plans of mice and men (and ObamaCare) go awry.
#############################
9/12/11,
"A
Squirt of Insulin May Delay Alzheimer's," by Gina Kolata, New York
Times
Quote:
"A small pilot study has found preliminary evidence that squirting insulin
deep into the nose where it travels to the brain might hold early
Alzheimer's disease at bay, researchers said on Monday."
LTC Comment:
Flashes of hope regarding Alzheimer's seem rarely to pan out.
#############################
Updated, Friday, September 16, 2011,
Time 12:41 PM (Eastern)
Washington, DC--
#############################
LTC BULLET: LTC
ACTION
(LTC EMBED REPORT #5)
LTC Comment: Exciting things are happening as
your Center for LTC Reform completes week two of our September-October LTC
policy project in the nation's capital. Read below about a CLASS attack,
a Congressional hearing on our issues, plus CBO and GAO developments.
LTC BULLET: LTC
ACTION (LTC EMBED REPORT #5)
CLASS Act Attacked
The big news
y
| 
