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

READ STEVE'S BIO

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Updated, Monday, May 13, 2019, 10:14 AM (Pacific)

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LTC E-ALERT #19-018: LTC NEWS AND COMMENT

LTC Comment: Do you spend hours searching the internet for useful articles, key data, and relevant reports to keep you on the forefront of professional knowledge? Do you lose business because you’re blindsided by clients or competitors who learn critical information before you do? Here’s an antidote:

LTC Clippings: The Center for Long-Term Care Reform notifies subscribers to our LTC Clippings service daily of information you need to know. Each message contains only the critical facts about new publications: a title, representative quote, a link to the original, and our analysis in a sentence or two. To inquire or subscribe, contact Damon at 206-283-7036 or damon@centerltc.com. Read testimonials by satisfied subscribers here. To subscribe online, please click here.

LTC E-Alerts: Once a week, we compile our daily LTC Clippings into a summary, email it to Center for Long-Term Care Reform members, and archive it in The Zone, our password-protected members-only website. Center members also receive our weekly LTC Bullet op-ed. To join the Center and receive all these benefits and more, contact Damon at 206-283-7036 or damon@centerltc.com.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

· How To Help Middle-Income Seniors Pay For Their Long-Term Care Needs

· Many Americans Will Need Long-Term Care. Most Won’t be Able to Afford It

· Almost Half of Americans Take Prescription Drugs: CDC

· Older Americans are relying too much on Social Security as a main source of income

· States approving bigger rate increases for long-term care policies

· Two Ways Medicare Could Save Billions

· Federal government paying insurers billions more than necessary: Kaiser

· Putting an aging parent on a senior living waitlist avoids crisis decision-making

· ‘My dad died at their hands’: WWII vet fatally injured in VA nursing home

· Minimum wage increase would cripple state’s nursing homes, advocates say

· Five Ways to Help Protect Retirement Income

· 5 unexpected trends in today’s long-term care

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"LTC E-Alerts" are a feature offered by the Center for Long-Term Care Reform, Inc. to members at the $150 per year level or higher. We'll track and report to you news and analysis regarding long-term care financing, service delivery, and research. We hope The LTC E-Alerts will help you attain and maintain a high level of knowledge and competency in this complex field. The Center for Long-Term Care Reform, Inc. is a private institute dedicated to ensuring quality LTC for all Americans (www.centerltc.com).

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Updated, Friday, May 10, 2019, 10:45 AM (Pacific)

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LTC BULLET: REMEMBER THE MIDDLE

LTC Comment: A recent Health Affairs article accurately assessed the plight of middle-income seniors whose resources will be inadequate to fund their senior living and long-term care. But the article proposed interventions that would exacerbate the problem. We explain after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, whose revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on LTC, based on their personal characteristics, and estimates how much of their cost in each range would be covered by various traditional or linked insurance designs. He also offers other ways to educate and help clients make informed final decisions in 15-20 minutes! Change work-site LTCi from a series of proposal deliveries to an interactive consultation! Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. You can reach him at 913-403-5824 or claude.thau@gmail.com. ***

*** MOVIE UPDATE: Ross Schriftman announces his “Million Dollar Mom” film is now available for purchase on I-Tunes, Google Play, Amazon and Vimeo. Here is the link: https://www.mymilliondollarmom.com/buynow.cfm. A great gift for Mother's Day, he adds. ***

LTC BULLET: REMEMBER THE MIDDLE

LTC Comment: The May print issue of Health Affairs contains an article published earlier online titled “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care.” In it, authors Caroline F. Pearson, Charlene C. Quinn, Sai Loganathan, A. Rupa Datta, Beth Burnham Mace, and David C. Grabowski

project that by 2029 there will be 14.4 million middle-income seniors, 60 percent of whom will have mobility limitations and 20 percent of whom will have high health care and functional needs. While many of these seniors will likely need the level of care provided in seniors housing, we project that 54 percent of seniors will not have sufficient financial resources to pay for it. This gap suggests a role for public policy and the private sector in meeting future long-term care and housing needs for middle-income seniors. (Abstract, p. 1)

The new private sector role these authors propose is to cut senior living providers’ profits and subsidize “lower-income residents with higher-paying residents.” The new role they propose for public policy is to add long-term care coverage to Medicare and loosen eligibility for Medicaid benefits so that long-term care recipients don’t have to “impoverish” themselves. The irony in these proposals is that government financing and other political interference in the long-term care market is what caused the problems these authors seek to solve … with more of the same.

What are those problems? What caused them in the first place? And what public and private sector measures would truly correct them?

The Health Affairs article correctly identifies critical problems with senior living and long-term care financing. To wit: middle-income seniors face a high risk they will need assistance with activities of daily living as they age. The most desirable, least institutional venues in which to live and receive care, such as their homes, independent or assisted living, are beyond the financial means of many. This situation will get worse over time as fewer unpaid caregivers are available and more middle-income seniors with greater needs overwhelm the current safety net. Medicaid and Medicare are severely challenged financially already. Neither personal savings nor private long-term-care insurance are adequate now or promising.

The litany of senior living and long-term care challenges middle-income seniors face screams out for answers to these questions: How did long-term care service delivery and financing in the United States become so dysfunctional? Why are we still unprepared at the crest of an age wave we’ve known was coming for decades? Where did the nursing home bias in our system come from despite consumers’ preference for aging in place? Why do we only now finally have attractive senior housing options? What caused non-institutional alternatives like assisted living and home and community based care to be out of reach for so many middle-income seniors? Why are public long-term care financing sources like Medicaid, Medicare and the VA stretched to the breaking point, but private financing options like saving, investment and insurance languish? It is folly to bewail the long-term care system’s problems and to propose solutions without first answering those questions. But that is exactly what the Health Affairs article does.

Let us instead answer those questions, explain why the problems exist, challenge some of the mistaken assumptions in the article, and see if we’re led to different corrective actions.

As life spans extended through the first half of the 20^th century, the chronic illnesses of old age struck rapidly growing numbers of aging Americans. It was obvious shortly after mid-century that a post-war baby-boom would one day require expensive long-term care. Government tried to get in front of that need by creating Medicaid for long-term care in 1965. But originally and for decades thereafter Medicaid paid only for nursing home care. Until 1985, no limits restricted transferring assets to qualify for Medicaid benefits. Easy access to government-financed long-term care after care was needed had profound effects on the long-term care market.

The nursing home industry prospered and grew. Government-subsidized institutional care crowded out a market for home and community-based care. With most expensive long-term care funded by Medicaid, consumers had little incentive to worry about the future financial consequences of long-term care risk and cost. In time, however, Medicaid’s low reimbursements made nursing home care so undesirable that by the 1980s the private sector began making more attractive assisted living facilities available. But home care and assisted living were slow to catch on because they required consumers to pay privately.

In a nutshell, easy access to free or subsidized nursing home care desensitized the public to long-term care risk leaving many unprotected by savings or insurance when faced with this terrible choice: put aging loved ones in a nursing home on public assistance and preserve their wealth for inheritance or spend it on access to private-pay home care or assisted living? The first option was too tempting for too many families who could, should and would have funded a private market for home and community based care, including assisted living, decades earlier if it were not for competition with the government-funded nursing home leviathan.

So, this is the real reason we have middle-income seniors facing a growing need for non-institutional senior living and long-term care which they cannot afford. To fix the problem, we need to eliminate competition from Medicaid nursing home care so that more desirable senior living options can prosper in the private market and so that people will understand the need to save, invest or insure privately for long-term care. The worst possible interventions would be to limit senior living industry profitability and expand government financing. To stifle the source of high quality non-institutional care while supplementing the source of institutional bias makes no sense. Yet these are the options the Health Affairs article proposes.

What prevents scholars like the authors of this paper from understanding the real problem and proposing viable solutions? Mistaken assumptions they do not question.

For example, they say in the article “The current [Medicaid] program requires people to impoverish themselves (‘spend down’) to qualify for coverage.” (p. 8) This statement is objectively false. Income below the cost of a nursing home rarely prevents Medicaid LTC eligibility. Virtually unlimited assets listed below are exempt from Medicaid spend down. Even wealthier individuals qualify with the help of special “Medicaid planning” attorneys. Mandatory estate recovery is easily evaded. The truth is most seniors qualify quickly and easily for Medicaid long-term care benefits with little or no spend down. There is no wonder so many of their families choose preserving inheritances using Medicaid over spending privately for home care or assisted living.

This is another mistaken assumption: “Our definition of middle income was motivated in part by the seniors housing options that exist in the market today. We conservatively selected a definition that identified seniors who would be unlikely to qualify for Medicaid long-term care.” (p. 6) How do they define middle income? “In 2029, for people ages 75–84, that middle-income definition corresponds to annuitized financial resources of $25,001–$74,298 in 2014 dollars. For those ages 85 and older, middle income is $24,450– $95,051.” (p. 3) Would people with those asset levels be “unlikely to qualify for Medicaid long-term care?”

Hardly. By doing little more than speaking with a state Medicaid eligibility worker, applicants or their families can learn of Medicaid’s virtually unlimited asset exemptions, including $585,000 to $878,000 in home equity and, without dollar limits, one income-producing business, including the capital and cash flow, IRAs generating periodic income, prepaid burial funds for the immediate family, one automobile, home furnishings, personal belongings including heirlooms, and more. Medicaid eligibility workers often suggest to applicants or their representatives that they purchase exempt assets, especially prepaid burial plans, to avoid spending their remaining resources on private long-term care. People with asset levels in the range identified in the article as “middle-income” have no need to consult a Medicaid planner. They can qualify doing nothing more than converting from countable to exempt assets.

Ironically, the real problems America’s long-term care financing system faces are that it already funds most expensive long-term care for most people, that its primary funding source Medicaid is already hopelessly over-extended, and that unless eligibility is somehow restricted so that more middle-income seniors prepare privately for the cost, the coming onslaught of aging boomers will sink the whole convoluted scheme.

For evidence and details beyond what can be delivered in this brief article, see my monograph How to Fix Long-Term Care Financing, published jointly by the Center for Long-Term Care Reform and the Foundation for Government Accountability in 2017.

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Updated, Monday, May 6, 2019, 10:29 AM (Pacific)

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LTC E-ALERT #19-017: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

7 Public Reactions to Virginia LTCI Rate Increases
Short-Staffed Nursing Homes See Drop In Medicare Ratings
Genworth Reports Higher Earnings
How The Trump Administration Is Reforming Medicare
Insurance Agents Bullish On Long-Term-Care Policies
Genworth Says It Needs $6 Billion in Additional LTCI Rate Hikes
Seniors owe billions in student loan debt: “This will follow me to the grave”
Nursing home, home health payments need addressed
Dementia: How to Find the Right Fit for Long-Term Care
Poor sense of smell linked to higher risk of early death in older adults
Assisted Death and Dementia
Serving The Forgotten Middle: The Need For Financing And Innovation
Better Care For People Dually Eligible For Medicare And Medicaid

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Updated, Monday, April 29, 10:39 AM (Pacific)

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LTC E-ALERT #19-016: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

The U.S. in 2050 Will Be Very Different Than it Is Today
Rise of Managed Medicaid Could Deepen Skilled Nursing Financial Woes
Washington Becomes First State to Approve Publicly Funded Long-Term Care
Is most home care paid by government programs?
In 10 Years, Half Of Middle-Income Elders Won’t Be Able To Afford Housing, Medical Care
36% of Skilled Nursing Facilities See Star-Rating Declines After CMS Changes Take Effect
Untrained Caregivers Bear Burden of Care for Families: Report
Full Medicare Part A Funding Will Run Out in 2026, Two-Thirds of SNFs in the Red by 2040
Medicaid Could Save $2.6 Billion a Year With Dip in Smoking
America’s elderly are twice as likely to work now than in 1985
Medicare Will Be Insolvent by 2026, Government Report Warns
Is 75 the new 65? Wealthy countries need to rethink what it means to be old

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Updated, Wednesday, April 24, 2019, 10:05 AM (Pacific)

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LTC BULLET: THE BLIND MEN OF LONG-TERM CARE

LTC Comment: “There are none so blind as those who will not see” applies to long-term care in many ways. See how after the ***news.***

*** MOVIE UPDATE: Ross Schriftman’s “My Million Dollar Mom” movie continues to attract media attention. Check out this clip of TV news coverage. More information about his presentation-in-a-box community events program can be found here. Ross and his movie are helping people put a human face on long-term care risk, an otherwise easy-to-evade future possibility. ***

*** WHY SUBSCRIBE TO LTC CLIPPINGS?: To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge. Good LTC planning requires understanding the “blind men” of long-term care and how they interact: government, consumers, advocates, elder lawyers, providers, financiers and insurers. For details on that observation, read my original 2003 article published in National Underwriter's LTC Online Edition titled “The Elephant, The Blind Men and LTC” here and check out the updated version below.

How can you keep abreast of those complicated topics and their interactions? You can spend dozens of hours every week canvassing the internet for relevant articles, speeches and reports. Then scan volumes of useless information to find and absorb the few valuable gems of knowledge they contain. Or you can subscribe to LTC Clippings and let us do that job for you.

We’ll send you an average of two tips per day to crucial articles, reports and data you need to know before your prospects and clients confront you with them. We’ll give you the title, the author, the source, the date of publication, a representative quote, and our “LTC comment” on the item’s significance in a sentence or two.

If you subscribe to LTC Clippings and invest a few minutes of your time each week to read and consider the items we send you, we promise you a plentiful and profitable source of actionable information and insights. Contact Damon at 206-283-7036 or damon@centerltc.com for details and to subscribe. ***

LTC BULLET: THE ELEPHANT, THE BLIND MEN AND LONG-TERM CARE

LTC Bullet: The Elephant, the Blind Men and Long-Term Care (updated)*
by
Stephen A. Moses

Who are the blind men of long-term care and why can't they see how to solve the long-term care financing crisis?

Some blind men approached an elephant. One touched the elephant's trunk and exclaimed, "a hose." The second grasped the elephant's leg and said, "a telephone pole." The third reached for the elephant's tail and concluded, "a rope." The allegory of the blind men and the elephant teaches us the folly of reaching conclusions about any complex thing without first comprehending its entirety and the interrelationships between its parts. What can we learn about long-term care from this ancient parable?

Long-term care is a complex subject comprised of many interrelated subtopics. When people, even experts, analyze one facet of long-term care without taking into consideration all of its aspects and their relationships, they often reach wrong, incomplete or misleading conclusions. Who are the "blind men" of long-term care? What mistaken suppositions do they tend to make? And what can we learn if we remove our blindfolds and observe long-term care in its fullness and complexity?

Government

To the government, long-term care is a major fiscal problem. Medicaid and Medicare pay for most formal nursing home and home care services in the United States. The proportion of long-term care costs paid by government has increased, while the share paid by consumers has declined, for decades. Medicaid rivals education as a burden on state budgets and long-term care is often a third to half the program's cost. Although government officials recognize the public's preference for home and community-based care, laws and policies still push many long-term patients into nursing homes. The public's aversion toward institutionalization discourages utilization and limits cost. Financing long-term care for an aging baby-boom generation is a daunting prospect for state and federal governments that are already facing crisis-level budget shortfalls.

Consumers

To the public, long-term care is usually a non-issue. At any given time, only a small percentage of Americans give or receive long-term care. These caregivers and their patients suffer emotionally and financially. But their numbers are small and when their situation becomes dire, Medicare home care and Medicaid nursing home benefits mitigate consequences that might otherwise become catastrophic. Medicare has no means test and Medicaid is readily available to anyone unable to afford private nursing home care with little or no asset spend down. Thus, most Americans, who are not currently in the throes of a crisis, are barely conscious of long-term care as a health and financial risk. They are in denial, but their denial is understandable. If they ignore the risk, avoid the premiums for private insurance, but someday need long-term care, the government will pay. Most people do not choose this course of action consciously, but that is the point. They have been desensitized to the risk of long-term care so they fail to plan or insure by default.

Senior Advocates

To senior advocates, long-term care is a benefit-seeking enterprise. Groups like AARP, Families USA and the Alzheimer's Association examine the deficient status quo and conclude we need more government financing for long-term care. Among other things, they want tax credits for caregivers and more money for home and community-based services. They miss or ignore the irony that the more money government spends on long-term care, especially for desirable benefits like tax credits and home care, the less motivated the public becomes to save, invest or insure personally against the risk. Consequently, these groups advocate policies and programs that compound the underlying problem which is excessive dependency on perpetually inadequate government financing. Thus do well-intentioned senior advocates compound the long-term care problem by promoting counterproductive public policies that serve their intensely felt, but narrow, short-term interests.

The Elder Law Bar

Even worse is the impact of Medicaid estate planning attorneys who artificially impoverish their affluent clients to qualify them for welfare-financed nursing home benefits while dodging Medicaid’s toothless spend-down rules. This practice sends a disastrous message to the next generation that long-term care is a second-tier risk that can be safely ignored thanks to an elastic social safety net which protects not only the needy, but also the well-to-do,.

Long-Term Care Providers

To service providers, long-term care is a race for survival. Nursing homes and home health agencies, once flush with cash flow when Medicaid and Medicare were more generous, are now public utilities starved for revenue by parsimonious and inadequate government reimbursements. Assisted living facilities, attractive private-pay alternatives to nursing home institutionalization, fill too slowly because most people cannot afford them, few have insurance, and Medicaid nursing home care is a cheaper alternative for most families. Thus, America's long-term care service delivery system is steadily declining with increasing bankruptcies, diminishing revenues, scarce capital, dire staff shortages, deteriorating quality, and high liability insurance premiums. Yet, addicted to public financing, the nursing home industry begs hopelessly for ever higher government reimbursements instead of demanding public policy to encourage private financing of long-term care. Even the assisted living industry looks greedily at Medicaid, tempted by the same false promise of easy money that led nursing homes down a fifty-year primrose path of constricting reimbursements and tightening regulations.

LTC Financiers

Financiers are the people and companies who provide the debt and equity capital to build and operate long-term care facilities. They seek profitable investments. To them, long-term care means "show me the money." Financiers shun businesses that do not produce adequate financial returns. In the 1990s, they over-invested in long-term care anticipating that aging demographics would make home care, assisted living and nursing homes into hugely profitable growth industries. They financed and built myriad long-term care facilities. Wall Street followed suit, pumping up long-term care stocks in anticipation of big future gains. When Medicare cut back on reimbursements for home health, skilled nursing facility, and auxiliary services in the Balanced Budget Act of 1997, the bottom fell out. Long-term care stocks collapsed, major nursing home and home health chains went bankrupt, and investors lost interest in the long-term care industry. Capital will always migrate to its highest and best use. When investors cannot safely anticipate a healthy profit, they take their money elsewhere. At a time when America should be building up its long-term care infrastructure, our heavy dependency on inadequate government financing is driving profit-minded investors away from the business.

LTC Insurers

Finally, to insurers, long-term care was a golden opportunity tempered by disappointing results. Many carriers entered the long-term care market lured by promising demographics only to depart a few years later discouraged by disappointing sales. Likewise, most insurance agents and brokers join the long-term care insurance market with stars in their eyes only to find the product too difficult to sell profitably. The insurance industry completely missed the point that America already has a national social insurance program for long-term care that finances the vast majority of all professional home care and nursing home services. Focused traditionally on selling asset protection to prospects who do not feel, and are not in fact, at risk of asset spend down, long-term care insurance companies failed to penetrate the senior or baby-boomer markets significantly. The primary benefit of long-term care insurance is not asset protection, which can be purchased from a Medicaid planning attorney after the insurable event occurs for a fraction of the cost of private insurance premiums. Rather, the major value added by private long-term care insurance is to empower consumers to purchase quality care in the private market at the most appropriate level, i.e. home care, assisted living, and when necessary, red-carpet access to top-quality nursing home care.

Understanding The Blind Men of Long-Term Care

Those are the blind men of long-term care. We've now taken the elephant of long-term care apart. Here's what we found.

• The government funds most long-term care but can't afford to do so in the future.

• The public is asleep about the risk of long-term care because the government has paid for most of it since 1965. So the public is about to get a rude awakening as government is forced to withdraw slowly from widespread LTC funding.

• Senior advocacy organizations, instead of working to wake the public up to the need for long-term care planning, have put all their lobbying energy and resources into promoting more government financing of long-term care. But that's a dead end.

• And ironically, at least for the time being, the easiest money of all to be made in long-term care is made by Medicaid planning attorneys who wave a magic legal wand and make the financial liability for long-term care disappear for their affluent clients--after the insurable event has occurred.

• Long-term care providers are hooked on "LTC crack." They invest all of their energy, resources and money into squeezing more revenue out of the government. But again, that's beating a dead horse, drilling a dry hole.

• Nursing homes remain a powerful lobby because they get and have gotten so much government financing for so long. Home and community-based services providers have little clout, because the government co-opted a private market for their services by paying mostly for nursing home care for over five decades.

• Long-term care financiers are few and far between, because they can make more money for their investors in other sectors of the economy. Hence, we have a shortage of debt and equity capital to build, operate and maintain long-term care facilities in the United States at the very time the demand for long-term care is about to explode.

• And finally, long-term care insurance remains a stunted market, because the government has paid for most long-term care since 1965, the public is therefore asleep about the risk, and the long-term care providers are hooked on public funding.

Get the picture? What a mess! When you look at the whole elephant of long-term care and take it apart, what you see is a very complicated interrelationship between many interconnected parts resulting in a totally dysfunctional whole.

Putting the Elephant of Long-Term Care Back Together

A brief article like this one cannot present or develop all of the viewpoints and perspectives necessary to comprehend long-term care in its full intricacy. Nevertheless, "in the land of the blind, the one-eyed man is king." If we only keep a few critical facts in mind about the elephantine complexity of long-term care, we will be far better prepared to plot rational public policy to solve these problems.

The public has been anesthetized to the risk of long-term care by decades of easy access to government-financed nursing home care. To awaken Americans to the risk of long-term care before it's too late, we must target publicly financed long-term care more effectively to the genuinely needy and create strong incentives for everyone else to save, invest or insure for this risk. By reducing government financing and increasing private financing of long-term care, America can (1) reduce the fiscal burden on Medicaid and taxpayers, (2) improve access to and quality of care for poor and rich alike, (3) breathe financial oxygen into the service delivery system, (4) build a strong home and community-based services infrastructure and (5) begin to attract new capital into the field of long-term care. All we need is the vision to see long-term care in its full complexity and the will to change public policy accordingly.

For a more comprehensive analysis of and prescription for the long-term care financing problem, see the Center for Long-Term Care Reform’s many national and state-level reports at http://www.centerltc.com/reports.htm.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, WA and recipient of the 2019 ILTCI Recognition Award. Reach him at smoses@centerltc.com or 206-283-7036. Check out the Center’s website at www.centerltc.com.

* The original version of this article was published in National Underwriter's LTC Online Edition in February 2003.

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Updated, Monday, April 22, 2019, 11:10 AM (Pacific)

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LTC E-ALERT #19-015: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Feds investigating Medicaid managed care
The Villages is fastest-growing U.S. metro area
Washington State's Public Long-Term Care Program Is On The Verge Of Becoming Law
Midwest is best, when it comes to the 30 best cities for older Americans in retirement
Bill Gates says there could be a way to predict Alzheimer’s using a voice app that listens for 'warning signs'
Alzheimer's Dementia Predicted by Low 'Scam Awareness'
Baby boomers may have no one to care for them in old age
'Generation Alpha' Babies Arrive With Caregiving Obligations
Agenda For Seniors
House budget adds $30M to help nursing homes stay open
More than 50% of dual-eligibles end up in low-rated SNFs, study finds

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Updated, Monday, April 15, 2019, 10:58 AM (Pacific)

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LTC E-ALERT #19-014: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

CMS may start cracking down on dual-eligible 'look-alike' plans
NAIC Forms Top-Level Long-Term Care Insurance Task Force
‘Headwinds’ cause assisted living per-unit price to fall 16% to $186,400: Report
Few family caregivers get formal training
More Than Half of Americans Want To Live To 100...
Lethal Plans: When Seniors Turn To Suicide In Long-Term Care
The Diagnosis Is Alzheimer’s. But That’s Probably Not the Only Problem
Study: Older Adults Often Don't Report Adverse Drug Effects
Older Americans Are Awash in Antibiotics
Analysis: State’s nursing home Medicaid funding gap reaches $631M
Grandparents Are a Major Economic Force: AARP
5 Design Don’ts for Senior Living Communities

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Updated, Monday, April 8, 2019, 10:47 AM (Pacific)

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LTC E-ALERT #19-013: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

What the VA is doing to our veterans is an absolute disgrace
4 Ways Researchers Are Still Fighting Alzheimer's
Republican governor seeks for Alaska to be first state to get Medicaid as a block grant
Alzheimer's Diagnoses Change With Amyloid PET Scans
Caring for Aging Parents is Not a Family Affair
Medicare Advantage is nudging aside ‘old Medicare’ with a free ride, a warm meal, and a handyman
Fear and health care: Gallup survey finds Americans skipped treatment, borrowed $88B to pay for costs
One hour a week of physical activity can hold off disability, study says
Medicare Advantage Managers Give 2020 LTC Sample Details
Another Shock To The Long-Term Care Insurance Industry
Reverse Mortgage: Types and Examples

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Updated, Thursday, April 4, 2019, 11:00 AM (Pacific)

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LTC BULLET: VIRTUAL VISIT TO THE 19^TH ANNUAL ILTCI CONFERENCE

LTC Comment: Whether you were able to attend or not, we hope you’ll enjoy this coverage of LTCI’s premier professional conference, after the ***news.***

*** CLARIFICATION: LTCI expert Bill Comfort replied to our recent “LTC Bullet: Treasure Trove of LTC Provider and User Data” with a good point. He observed: “It’s also important to note that the ‘Home Health Care’ data is almost exclusively Medicare or Medicaid-funded, short-term, post-acute, home health care delivered in one-hour visits a few days a week. It does NOT include ‘private duty,’ non-medical, ‘home care’ for multi-hour shifts which is effectively private-pay and only loosely regulated when it is by states. The exclusion of private-duty, non-medical, custodial home care also artificially shortens the average lengths reported as well as the number of people needing care. Of course it also excludes all of the private caregiving provided by families/others. Overall this is a very good, rich treasure-trove of data … but it’s not the full picture, and it’s certainly not the full picture of the types of care and services that need to be planned for with LTC insurance.” Points well taken. ***

*** HAPPY BIRTHDAY to your Center for Long-Term Care Reform. The Center turned 21 years old on April 1, 2019. Now it can tip a glass with you to celebrate. Thanks for a great and on-going run! ***

LTC BULLET: VIRTUAL VISIT TO THE 19^TH ANNUAL ILTCI CONFERENCE

LTC Comment: The 19^th Annual Intercompany Long-Term Care Insurance Conference convened at the Sheraton Grand Hotel in Chicago, Illinois from March 24 to 27, 2019. Today’s LTC Bullet offers you a virtual visit to that event, the biggest of its nearly two-decade history.

The meeting’s overall theme was “Imagine the Possibilities.” With nearly 1100 attendees, 52 exhibitors, 36 sponsors (15 Diamond, 4 Platinum, 6 Gold, and 11 Silver), some very interesting food choices, ample adult beverages, and scores of excellent general and breakout sessions, ILTCI was a big success again this year.

Best of all, especially if you couldn’t attend, you can explore the whole program here. Check out the list of sessions. Choose those that interest you. Then click through to the list of presenters and finally to their presentation materials. It’s not the same as being there, but it is the next best thing.

Recognizing high quality professional conferences like this one do not happen without the generosity of numerous sponsors, we encourage you to check them out here.

Opening General Session: Monday, March 25, 2019

Conference Director Peggy Hauser kicked off the proceedings by welcoming the attendees. She thanked and recognized the organizing committee, the speakers and the producers of 165 sessions. She announced the conference charity, the USO, and encouraged everyone to attend a special program by the Alzheimer’s Association. She tickled everyone’s curiosity about the entertainment to be provided by a team of improvisational actors. Finally, Peggy introduced Robert Eaton who will chair next year’s program to be held in Denver, Colorado, March 29 to April 1, 2020. Get it on your calendar!

First order of business was presentation of the “ILTCI Recognition Award” to “a person(s) or organization that has made a significant, long-term contribution towards the attainment of the ILTCI vision” which is “to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long term care for all levels of American society.” Steve Moses, president of the Center for Long-Term Care Reform, acknowledged the honor saying

I like to think my stuff is kind of edgy, so I was afraid the ‘boos’ might overwhelm the cheers after this announcement, but they didn’t, so thank you. I want to thank the nominators, the board for selecting me, all our wonderful friends and financial supporters. There are too many to list, so I’ll only mention one by name, my son, Damon, whom many of you know. I’ve heard this honor called a “lifetime achievement” award. That sounds like you’re putting me out to pasture. So, to my friends, let me assure you I’m not going anywhere. To those who disagree with me, don’t think this will stop me. Thanks again to all.”

Next, Carroll Golden announced the creation of a new organization she’ll lead intended to keep LTC issues at the forefront and to bring together LTCI producers and general financial advisors more effectively. The new NAIFA Limited & Extended Care Planning Center will offer professional designation programs and other resources for insurance agents and financial advisors, NAIFA said in a center launch announcement. Read more about it here.

Dennis Martin, president of OneAmerica, introduced the conference keynote speaker whom his company sponsored. Jamie Clarke, hockey star and mountain climber extraordinaire, delivered a humorous, self-effacing, and inspirational address urging all to “be of service.”

From the 2018 Stanley Cup Champion Washington Capitals to the heights of the Seven Summits to the peaks of business success, Jamie Clarke draws from his unique position as a winning performance coach and an accomplished adventurer turned acclaimed entrepreneur to help you develop your team, establish your purpose and succeed in any endeavor. One of a handful of people in the world who have climbed the Seven Summits—including two summits of Mt. Everest—Jamie is the creator of the successful outdoor retail company, LiveOutThere.com, which has been named one of Canada’s fastest growing businesses.

Read more about Jamie Clarke here.

Breakout Sessions

We’ll give you brief summaries of the sessions I attended, but my focus was on the “Public Policy & Alternative Solutions” track. So if your main interests lie elsewhere, be sure to look up these other tracks:

Actuarial & Finance
Claims & Underwriting
Legal, Compliance & Regulatory
Management & Operations
Marketing & Distribution
Producers & Sales

To check those sessions out, go to https://event.crowdcompass.com/iltci19/activities. Once there, click on one of the conference days, March 25 or 26. Scroll through the sessions, which are listed by their track name. Pick a session that interests you. Click on its title. You’ll find a session description and a list of presenters. Scroll down to the bottom of the page and you will find a link to a .pdf with the session’s presentation materials. For example, the first session I attended was this one:

Mon, March 25th, 10:45 AM - 12:00 PM
Medicare Advantage Expansion into Personal & LTSS
Public Policy & Alternative Financing Solutions Track

Description: Under new federal guidelines, Medical Advantage (MA) plans have more flexibility to expand the benefits and services they offer to include supplemental benefits for members with chronic conditions. This means that the more than 20 million Medicare beneficiaries (representing one-third of the market) potentially have access to an expanded set of LTC services through their MA plan. As of 2019, just under 600 of the more than 2,000 MA plans are offering some type of LTC benefit including personal care services, supportive care, dementia care support, caregiver support programs, and others. This session explores the specifics of what MA plans are providing in LTC, the types of care needs they are serving and what this means for the LTC insurance industry and the consumers we serve.

Session Producer: Eileen Tell, MPH, Independent Consultant, ET Consulting, LLC

Speakers:
Dr. Larry Atkins, Ph.D., Executive Director, National MLTSS Health Plan Association
Howard Gleckman, Resident Fellow, The Urban Institute
Jay Greenberg, ScD, CEO , NCO Services
Anne Tumlinson, Founder, Anne Tumlinson Innovations, LLC

Find this session’s presentation materials here.

LTC Comment: Bottom line, there isn’t enough money in the system to make this a significant benefit, but it could convey the idea to the public that they have a meaningful new benefit, which they do not. The importance of the change is that it removes the traditional requirement that Medicare benefits must be medical in nature and universal (available to everyone). Offering non-medical benefits that can be targeted to certain individuals and groups but not others is a major, and some might say worrisome, departure from long-standing Medicare policy. Camel’s nose under the tent?

Mon, March 25th, 12:15 PM - 12:45 PM
Demo - My Million Dollar Mom
During the lunch break, Ross Schriftman showed and discussed the movie he wrote and produced about caring for his mother through her Alzheimer’s Disease. Check it out here. Ross is using the movie to make people aware of the personal and financial risks of dementia and the importance of planning ahead.

Mon, March 25th, 2:00 PM - 3:15 PM
Become an LTCI Super Hero: Integrating Asset-Based into Traditional LTCI Presentation
Producers & Sales Track

Description: Learn from a panel of top producers how they have successfully merged the two product types to provide a comprehensive and effective client presentation and experience. This team of presenters – LTC Wonder Women and Supermen – will share proven approaches and techniques you can adapt to boost your sales.

Session Producer: Andrew Herman, FSA, MAAA, President, AH Insurance Services, Inc.

Speakers:
Alecia Barnette, SVP - LTC, Fig Marketing
Margie Barrie, LTCP, CLTC, Senior LTC Consultant, ACSIA Partners
Steven Cain, CLTC, CSA, Director, LTCI Partners, LLC
Mary Ann DeKing, Long Term Care Specialist, Plan and Care
Zach Derryberry, Director of Hybrid LTC Planning, ACSIA Partners
Find this session’s presentation materials here.

LTC Comment: This session addressed ways to integrate the sale of traditional and hybrid products. Key take-aways: don’t badmouth one kind of LTC insurance to sell the other. Treat them as complementary. Assess clients’ needs and propose the best options. Help the client navigate through the inherent complexity of the product. Be the expert.

Mon, March 25th, 3:45 PM - 5:00 PM
State Initiatives for LTC Financing Reform
Public Policy & Alternative Financing Solutions Track

Description: The National Academy of Social Insurance (NASI), as part of a larger project will soon release a comprehensive study on models for guiding states interested in social insurance initiatives for LTC finance reform. The report identifies the considerations states must evaluate including how various approaches would best enhance a private market role. Actuarial projections for various sample programs are included. This session will explore the analytic framework presented in the NASI report. It will also provide a brief update on the state-based initiatives underway in Washington, Maine, Michigan, California, Minnesota and others.

Session Producer: Eileen Tell, MPH, Independent Consultant, ET Consulting, LLC

Speakers:
Eddie Armentraut, Consulting Actuary, Actuarial Research Corporation
Dr. Marc Cohen, PhD, Clinical Professor of Gerontology, University of Massachusetts
Allen Schmitz, FSA, MAAA, Principal and Consulting Actuary, Milliman, Inc.
Ben Veghte, Research Director, Caring Across Generations

Find this session’s presentation materials here.

LTC Comment: The wonderful thing about federalism is that individual states can try experimental programs (like these) and fail without causing a huge national waste of time and money like CLASS. This project’s goal of changing long-term care financing from a welfare-based system to social insurance, however, is highly problematical. First, the major social insurance programs we already have—Social Security and Medicare—are bankrupt. They face the inevitable economic outcome of all such Ponzi schemes. But even more fundamentally, social insurance undermines key personal values like independence and personal responsibility by spreading, but not pricing risk, thus rewarding poor behavior and punishing good behavior. After many decades of social insurance, we now see its inevitable consequences: too few people prepared to face retirement financially and the social insurance programs on which they’ve been taught to rely approaching insolvency. Ironically, the welfare approach to long-term care financing that this project aspires to replace has never been tried. The elephant in the room remains easy access to Medicaid by middle class and affluent people which is the real cause of the system’s dysfunction and LTCI’s low take-up. Pushing social insurance instead means trading the frying pan for the fire.

Tue, March 26th, 9:00 AM - 10:15 AM
What’s up Doc? Geriatric Neurology and the Implications for LTC Insurance
Public Policy & Alternative Financing Solutions Track

Description: A conversation with two of the nation’s leaders in geriatric neurology.

Key discussion topics will include:

Limitations in access to healthcare and current health provider attitudes that impact cognitive claims incidence
Issues with the cognitive diagnostic process
The dementia knowledge gap among healthcare professionals
The impact of dementia on fiduciary risks
The role of the family caregiver in cognitive situations
Current and new methods to assess cognition
The opportunity for recoverable cognitive claims including the use of technology to flag recoverable claims and help insureds age in place
De-risking dementia: opportunities for new products and services

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:
Neelum Aggarwal, MD, Associate Professor, Rush Medical Center
Dr. Anitha Rao, MD, MA, Chief Executive Officer and Founder, Neurocern
Lindsay Resnick, Wunderman

LTC Comment: This session was a fascinating discussion of dementia, what it is, what causes it, why drug development has been stymied, and the broadening research perspective on its relationship with nutrition, exercise and behavior. The link between heart and brain health; why women are more prone to Alzheimer’s Disease; inadequate geriatric training for physicians; the difference between dementia and delirium; a new approach to research that drops unpromising trials sooner; why patients are seeking help from insurers because they’re not getting it from harried health care providers.

Tue, March 26th, 10:45 AM - 12:00 PM
Evidence-Based Nutrition for Healthier Futures
Public Policy & Alternative Financing Solutions

Description: This session will feature three medical experts discussing how nutrition and healthy eating can help consumers, including long-term care insureds, lead healthier lives, and potentially mitigate conditions that lead to the need for long-term care. Lauren Biscotti, Director of External Development, Harvard Medical School, Dr. Monique Tello, primary care physician, author and healthy lifestyle advocate from Massachusetts General Hospital, and Dr. Neelum Aggarwal, a neurologist at Rush University Medical Center in Chicago and one of the nation’s pre-eminent experts on diagnosing and treating Alzheimer’s patients, will discuss their perspectives on evidenced-based nutrition practices their impact on future health.

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:

Neelum Aggarwal, MD, Associate Professor, Rush Medical Center will discuss the status of several current nutritional studies that are underway including the MIND diet and their preliminary findings on changes that may positively impact cognition.

Lauren Biscotti, Director of Strategic Development, Harvard Medical School will discuss the new Harvard Medical School e-learning program- “6 weeks to Healthy Eating” and how it can help change consumer’s eating behaviors.

Dr. Monique Tello, MD, MPH, FACP, Instructor, Harvard Medical School, will provide a set of practical, easy to follow steps for both what to include and exclude from a healthy diet to prevent chronic diseases and also provide recipes that are both healthy and easy to make.

Find this session’s presentation materials here, here and here.

LTC Comment: Dementia and Alzheimer’s research are moving away from narrowly focusing on a single cause toward considering the effects of lifestyle, including diet, exercise, sleep, etc., on associated cognitive problems. Overall theme of the presentation: what is good for the heart is good for the brain. The goal is to turn risk factors into protective factors. It is ironic that healthy behavior leads to longer life which makes having a long-term chronic illness including dementia more likely over time. But if healthy living diminishes the risk of dementia, as this session argued, that irony is somewhat mitigated. This shotgun approach seems to me far more promising than the failed efforts to find and fix a single cause.

Tue, March 26th, 2:00 PM - 3:15 PM
Political Pundits Pontificate: The Political/Policy Environment in 2019
Public Policy & Alternative Financing Solutions Track

Description: After two plus years of a Trump White House and a Republican Congress, the situation changed dramatically last November. This session brings together some of the nation’s leading health, aging, and long-term care political and policy pundits to provide an update on the current political/policy situation in Washington. They will shed light on what the new landscape means for legislative and regulatory initiatives in financing and program delivery, for both public and private programs in long-term care and aging.

This session takes an interactive and entertaining approach to these challenging political topics by engaging the audience and putting our pundits on the spot to address a wide range of critical issues without sugar-coating or wishful thinking. This is a “tell-it-like-it-is” session designed to give us some strategic insights into the political realities within which we will be living for this year and next. There may even be some predictions for the 2020 elections.

Key topics will include what changed in terms of players and committee assignments and what that might mean for initiatives like the Chronic Care Act, Medicare for all, Medicaid re-structuring, caregiver support and the future of other aging, disability and long-term care programs.

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:
Bob Blancato, President, Matz, Blancato & Associates, Inc.
Richard Browdie, President/CEO, Benjamin Rose Institute on Aging
Joel White, Founder and President, Horizon Government Affairs
Tamera Luzzatto, Senior Vice President, The Pew Charitable Trusts

Find this session’s presentation materials here.

LTC Comment: Dominant conclusion of the panel: “Medicare for All” will go nowhere. No one in Washington wants to consider “pay fors.” State governors don’t have the luxury to ignore costs. They’re under pressure from constituents to fix things and that takes money. So they have to negotiate and compromise. Little of that happens in DC where the usual restraints on spending no longer seem to apply and the policy conversation is caustic. All panelists agreed the Mueller report made Trump stronger as a 2020 candidate, at least temporarily. Long-term care is America’s “denial issue.” Such focus as there is addresses “little pieces” of the problem. There’s no momentum and won’t be until the public demands attention to long-term care.

Tue, March 26th, 3:30 PM - 5:00 PM

Alzheimer's Association Closing Session
General Conference Session

Description: Attendees will hear from Tom Doyle a member of the National Early-Stage Advisory Group (ESAG) helping to bring the voice of individuals living with dementia to the national forefront. Keith Fargo the Director of Scientific Programs & Outreach for the Alzheimer's Association will discuss the breadth of Association-led research initiatives that span the mission. He will also address how science and programs intersect around research including POINTER and LEADS. Sam Fazio, Senior Director of Quality Care and Psychological Research for the Alzheimer's Association will report on the financial literacy research that is currently being done as a result of a grant program. This Session Sponsored by OneAmerica.

Speakers:
Tom Doyle, National Early Stage Advisor, Alzheimer's Association
Keith Fargo, Ph. D., Director of Scientific Programs & Outreach, Alzheimer's Association
Sam Fazio, PhD, Senior Director of Quality Care and Psychosocial Research, Alzheimer's Association

LTC Comment: The highlight of this session was the opening speaker, Tom Doyle. Tom has both Alzheimer’s Disease and Parkinson’s. He recounted how his life was turned upside down by these ailments as he could no longer carry on his work as a college professor and he felt like he was losing all reason for living. But now, with the help of his husband, Levi, and having been given new purpose as a spokesman for the Alzheimer’s Association, Tom is thriving with a new sense of purpose and personal satisfaction. Presentations like Tom’s help an audience imagine what having dementia would be like and hopefully awaken people to the need to prepare for this eventuality for themselves and for their loved ones. The remainder of the session addressed the status of Alzheimer’s and dementia research with all the material presented mentioned, accessible at the Alzheimer’s Association’s website.

Tue, March 26th, 7:30 PM - 9:00 PM
Whirled News Tonight Improv Show
General Conference Session

Description: Cocktails begin at 7:30 - Show begins at 7:45pm.
Our Tuesday evening entertainment will feature performers from Chicago’s Best Improv Comedy Theater – Improv Olympic! Improv Olympic will be bringing a seven person cast of performers to entertain the attendees of the ILTCI. The performance will be approximately 60 – 80 minutes in length. “ iO” is recognized as the birthplace of “long-form” improv and is home to some of the best improv comedy shows in the country. They have helped to train and develop an entire generation of America’s best and brightest comedic entertainers for over 30 years. Alumni include past and present cast members of Saturday Night Live and stars of some of your favorite small screen prime-time comedy and late-night shows – along with others who have gone on to write, direct and produce blockbuster Hollywood movies. This interactive show will include performance pieces including musical games, scenes that solve the audience’s problems and their signature piece, THE DREAM, based on the day in the life of one of the audience members. To learn more about iO, visit https://www.ioimprov.com/ It will be a improve show of Olympic proportions…we hope to see you there!

LTC Comment: And a good time was had by all at this closing session of the conference. Stay tuned to LTC Bullets for information about the 20the ILTCI Conference in Denver, Colorado March 29 to April 1, 2020 as it becomes available.

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Updated, Tuesday, April 2, 2019, 9:43 AM (Pacific)

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LTC E-ALERT #19-012: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

5 Medicare Advantage Sample Size LTC Benefits Reactions
Veterans harmed at VA nursing homes in 25 states, inspections find
Not All Medicare Cuts Are Bad
Transamerica Announces Agreement With LTCG for Administration of Long Term Care Insurance
Members of ‘sandwich generation’ stealing from their futures to pay for care for aging parents
ILTCI Conference Attendees Soldier On
NAIFA Launches Long-Term Care Planning Center
Majority of Americans think government should pay for long-term care
Where Alzheimer’s Research Is Pushing Ahead
LTC Hybrid Experience Looks Great: Milliman Actuaries
Survey Identifies Long-Term Care Planning Resisters
Private LTC insurers say fewer beneficiaries using plans for nursing homes than believed
Biogen halts studies of closely watched Alzheimer’s drug, a blow to hopes for new treatment
Mind-blowing research that all skilled nursing providers can use
Finding and keeping qualified talent a top concern for administrators
Video game may help slow dementia progression, address workforce issues
Medicaid Squeeze Hurts Nursing Home Quality: Witnesses
Avoiding Million-Dollar Medicaid Eligibility Mistakes in Nursing Facilities
NAIC Developing Executive-Level Committee to Harmonize LTCI Rates
Many baby boomers willing to receive long-term care outside the home, LeadingAge poll finds
Heart Attacks Fall One-Third Among Older Americans

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Updated, Wednesday, March 20, 2019, 10:16 AM (Pacific)

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LTC BULLET: TREASURE TROVE OF LTC PROVIDER AND USER DATA

LTC Comment: Who’s getting what long-term care where? Answers after the ***news.***

*** THE 19^TH ANNUAL INTER-COMPANY LONG-TERM CARE INSURANCE CONFERENCE convenes next week (March 24-27) in Chicago. Check out the program here. Damon and I will be there. Our next LTC Bullet will be a virtual visit to the conference giving those of you who do not attend a sense of what it was like, a summary of the sessions we attend, and some analysis. ***

*** More ILTCI news: This just in from Claude Thau: “I hope you can attend our Range of Exposure (ROE) session (Sunday, 2 to 3:30 pm) at ILTCi. Our ROE tool helps advisors more easily engage clients in productive long-term care planning.” Click for more information. ***

*** MY MILLION DOLLAR MOM: A showing of Ross Schriftman’s film is on the ILTCI’s agenda for March 25^th. Well worth a viewing. Contact Ross Schriftman, Author, Screenwriter, Producer, LTCi "Producer" and Dementia Advocate at 215-682-7075 or mymilliondollarmom@gmail.com. ***

LTC BULLET: TREASURE TROVE OF LTC PROVIDER AND USER DATA

LTC Comment: Ever wonder exactly how many people are receiving what kind of long-term care in which venues? We refer you today to Long-term Care Providers and Services Users in the United States, 2015–2016 by Lauren Harris-Kojetin, Ph.D., Manisha Sengupta, Ph.D., Jessica Penn Lendon, Ph.D., Vincent Rome, M.P.H., Roberto Valverde, M.P.H., and Christine Caffrey, Ph.D.

According to its Abstract: “This report presents the most current national results from the National Study of Long-Term Care Providers (NSLTCP) conducted by the National Center for Health Statistics (NCHS) to describe providers and services users in five major sectors of paid, regulated long-term care services in the United States.”

We’ll share some highlights followed by our comments below, but if you would like to see how two of its authors summarized the report’s findings, with charts and tables, check out this slide deck from a presentation by Harris-Kojetin and Lendon to the LTC Discussion Group on February 21, 2019.

NCHS Report: “In 2016, about 65,600 paid, regulated long-term care services providers in five major sectors served over 8.3 million people in the United States.” (p. 1)

LTC Comment: Wow, that’s 2.5% of the U.S. population of all ages receiving LTC services already. Where?

NCHS Report: “Long-term care services were provided by 4,600 adult day services centers, 12,200 home health agencies, 4,300 hospices, 15,600 nursing homes, and 28,900 assisted living and similar residential care communities (Appendix III, Table V).” (p. 1)

LTC Comment: So, there are nearly twice as many ALFs and RCFs as SNFs. Assisted living came out of nowhere starting in the 1980s to offer a more desirable care venue than Medicaid-financed nursing homes, but only for people able to pay privately. Who goes where?

NCHS Report: “In 2016, there were an estimated 286,300 current participants enrolled in adult day services centers, 1,347,600 current residents in nursing homes, and 811,500 current residents living in residential care communities. In 2015, about 4,455,700 patients were discharged from home health agencies, and 1,426,000 patients received services from hospices (Appendix III, Table VIII).” (p. 1)

LTC Comment: Interesting, while there are around twice as many ALFs as SNFS, the assisted living facilities (and other residential care facilities) have only about 60 percent as many residents as nursing homes do.

NCHS Report: “The majority of home health agencies, hospices, nursing homes, and residential care communities were for profit, while a minority of adult day services centers were for profit (Figure 4). The majority of nursing homes and residential care communities and a minority of adult day services centers were chain-affiliated (Figure 5).” (p. 2)

LTC Comment: Evidently, it’s hard to make a profit offering adult day services. Otherwise, we’d see more companies and chains doing so. Conclusion: adult day services are available because government pays for them and not because consumer demand insists on them.

We often see claims that chain-affiliated, for-profit care facilities provide deficient care compared to non-profit facilities. But that’s not because they are for-profit or non-profit. It’s because for-profit facilities serve more Medicaid recipients for whom they receive reimbursement at less than the cost of providing the care. You can’t expect Ritz Carlton care at Motel 6 rates.

NCHS Report: “At least one-quarter of services users in each of the five sectors had Alzheimer disease or other dementias, arthritis, heart disease, or hypertension (Figure 24). However, the prevalence of these and six other reported diagnosed chronic conditions varied widely between sectors.” (p. 2)

LTC Comment: Check out the detail in Figure 24 and you’ll find Alzheimer’s Disease and depression are most common in nursing homes whereas arthritis, heart disease, and especially hypertension prevail in home health agencies. Residential care communities have relatively high occupancy by people with each of those ailments.

NCHS Report: “Fewer adult day services center participants needed assistance with four of six activities of daily living (ADLs; bathing, dressing, toileting, and walking or locomotion) than services users in other sectors (Figure 25).” (p. 2)

LTC Comment: Well, yeah! How many adult day care centers would be equipped to handle visitors needing help with four or more ADLs?

NCHS Report: “More residential care residents had falls compared with adult day participants and nursing home residents.” (p. 2)

LTC Comment: Makes sense. You’re less likely to fall out of a wheel chair or bed than from walking, which residential care residents are more apt to be able to do than nursing home residents.

NCHS Report: “Short-stay (less than 100 days) [nursing home] residents differed from long-stay (100 days or more) residents by age and sex, and in the prevalence of numerous diagnosed conditions, overnight hospital stays, and falls (Appendix III, Table IX).”

LTC Comment: There are more long-stay nursing home users (794,000) than short-stay (606,800) users. Short-stay users are more likely to be under age 65 compared to long-stay users (18.6% vs. 14.9%); less likely to be women (60.3% vs. 67.9%); less likely to have Alzheimer’s Disease (36.7% vs. 58.9%); more likely to have an overnight hospital stay (23.8% vs. 8.7%); but less likely to fall (13.5% vs. 19.1%). Unfortunately, Appendix III, Table IX doesn’t tell us the short vs. long stay break out for “Medicaid as payer source,” the cell for which is blank.

NCHS Report: “Average length of stay among all residents is 485 days; 43% of residents are short-stay and 57% are long-stay.” (Footnote 1 of Appendix III, Table IX, p. 78)

LTC Comment: Now this is fascinating. The average length of stay is 1.3 years (485 days) but with 43 percent of residents staying less than 100 days dragging the average way down, we must conclude that the 57 percent of residents staying 100 days or longer must be staying much, much longer than 485 days in order to bring the average up to that level.

Why does this matter? First, long-stayers in nursing homes tend to be older women with Alzheimer’s who are prone to fall and who mostly rely on Medicaid. They are among the most expensive recipients of Medicare and Medicaid, the so-called “dual eligibles.” CMS reports that 61.8 percent of nursing home residents rely on Medicaid as their “primary” funding source. But that includes both short and long stayers. So when you consider that there are more long-stayers than short-stayers and that long-stayers stay much longer than short-stayers, you must conclude that long-stayers account for a far greater proportion of total patient days than the percentage of all residents with Medicaid as primary payer.

So what? Well, it’s bad enough that over 3/5 (61.8 percent) of nursing home residents generate Medicaid reimbursements at less than the cost of care, but when you realize that nursing homes receive less than the cost of care for an even higher percentage of total patient days, you can fully recognize just how damaging Medicaid dependency is to the ability of nursing homes to provide quality care.

What proportion of total patient days does Medicaid touch with its low reimbursements? The National Investment Center’s latest “Skilled Nursing Data Report” for Q4 2018, covering data from January 2012 through December 2018, says the figure is 66.6 percent. That’s higher than 61.8 percent of residents with Medicaid as primary funding source, but not nearly as high as one would expect it to be based on the analysis immediately above. That’s a paradox that needs to be researched.

Why? Because the same NIC report indicates that Medicaid reimbursement as a proportion of total nursing home revenue has increased from around 47 percent in 2012 to 50 percent in 2016 whereas private-pay revenue has declined from 12 percent to 8.2 percent. Inasmuch as private payers pay half again as much as Medicaid on average, this trend toward Medicaid and away from private pay, which has been going on since private-pay was around 50 percent in 1970, is potentially devastating for the financial viability of nursing homes.

Closing LTC Comment: Kudos to the National Center for Health Statistics (NCHS) for producing the National Study of Long-Term Care Providers (NSLTCP) and publishing this report. As disclosed to the aforementioned meeting of the LTC Discussion Group, NCHS plans to expand and refine this survey and the report in the future. We’ll stay tuned.

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Updated, Monday, March 18, 2019, 10:09 AM (Pacific)

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LTC E-ALERT #19-011: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Genworth move could signal big shift in distribution of long-term-care insurance
Alzheimer's Risk Linked to Extended Family
Could Alzheimer's Be a Reaction to Infection
Tips to share with prospective residents about paying for senior living
A Legacy on the Land: For Donna Lien, protecting a cherished family property meant rethinking later-life finances
Should genetic test results be used to determine insurance coverage? Debate is on
More Consumers Are Counting on Help From LTCI: Bankers Life Arm
Wi-Fi Joins Location, Price as Top Housing Concern for Seniors
White House proposes deep cuts to HHS and Medicaid in new budget
Making the Most of a Health Savings Account Once You Turn Age 65
Sanders’ ‘Medicare for All’ expands long-term care benefits

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Updated, Monday, March 11, 2019, 10:20 AM (Pacific)

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LTC E-ALERT #19-010: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Genworth to Suspend LTCI and Annuity Sales Through BGAs
GE’s Fix-It Plan for Insurance: Raise Rates, Boost Returns
Top Workplaces 2019: Penn Treaty Network America workers help set the company's focus, direction
Why the number of Americans with Alzheimer’s could more than double by 2050
Americans Cite Healthcare Expenses as No. 1 Barrier to Early Retirement
CDC updates report on assisted living community characteristics
Will $14.5 billion plug GE's long-term care insurance hole? Some experts say 'No'
Report finds few seniors are getting routine memory checkup
Medicare Advantage Eats Into Margin Gains for Skilled Nursing Facilities
Cost of nursing home care makes planning ahead crucial for financial security
Nursing Homes Are Closing Across Rural America, Scattering Residents

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Updated, Monday, March 4, 11:29 AM (Pacific)

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LTC E-ALERT #19-009: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Is Washington State About To Okay Public Long-Term Care Insurance?
Ages When Long-Term Care Insurance Claims Begin
A CLASSy Proposal?
High-Need Medicare Advantage Members Disenroll at Higher Rates: Study
5 Trends That Could Reshape Retirement
Operators should emphasize lifestyle in marketing efforts: study
Universal long-term care coverage included in House Democrats’ new Medicare-for-all plan
AHCA study: Facilities with higher Medicaid populations have poorer quality outcomes
Hip fractures may serve as first sign of undiagnosed Alzheimer’s disease
Managed Medicaid Poised to Threaten Skilled Nursing Facility Payments, Census
Dwindling reimbursement, occupancy numbers chipping away at skilled nursing margins, new analysis finds
How To Plan The Legal And Financial Needs Of A Loved One With Dementia
House passes measure to create long-term care program

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Updated, Friday, March 1, 2019, 10:44 AM (Pacific)

Seattle—

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LTC BULLET: THE PRE-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: How did we end up paying for the WWII generation’s long-term care in poorly financed welfare nursing homes and why is long-term care service delivery and financing still such an awful mess? The answer after the ***news.***

*** ILTCI RECOGNITION AWARD: Organizers of the 2019 Intercompany Long-Term Care Insurance Conference, which is due to convene on March 24 at the Sheraton Grand in Chicago, inform us that “The ILTCI Recognition Award is back for its second year and we need your help. Now is your chance to nominate a person(s) or organization that has made a significant, long-term contribution towards the attainment of the ILTCI vision.” We confirmed that nominations are open to anyone, not just conference attendees, so click through to the details about the award and submit your nomination. ***

*** MORE LTCI CONFERENCE NEWS: The ILTCI executive planning committee informs us of its partnership with Creighton University Health Sciences Continuing Education to offer continuing education for several break-out sessions at this year’s conference. Nurses, Doctors, and Social Workers can pay a flat $50 reporting fee and earn CEUs for accredited session participation. A complete CEU accredited session list is available online. To sign up for CEU reporting you will need to log into your registration online to add it to your activities and pay the $50 fee. Your password to login is: 35043.

“We still have slots available in our Future Leaders program if you have anyone from your company that would benefit from attending their Sunday noon workshop and attending the conference at a discounted rate!” ***

LTC BULLET: THE PRE-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: I’ve written a lot about the history of long-term care services and financing. But I’ve always begun such accounts with the sea change that occurred when Medicaid became the principal LTC payer in 1965. That revolutionary development increased nursing home bias, stifled the private market for home care, impaired care quality with notoriously low reimbursement rates, relieved Americans from the necessity to plan ahead for long-term care, and hence ruined the potential for non-governmental sources of funding such as home equity conversion and private LTC insurance.

That is still the big news, but Medicaid didn’t just appear out of nowhere. It had roots in decades of earlier government intervention in long-term care services and financing. In fact, long-term care has been a challenging problem from America’s earliest days, long before government assumed a major role. For insights on the pre-Medicaid history of long-term care, I refer you to an interesting website which traces that story from 1776 to 1969. I’ve culled highlights from that source below followed by our “LTC Comments” on each entry, but for all the details, check out https://www.seniorliving.org/history/. You will find that the damage done by Medicaid starting in 1965 has deep historical roots.

1776-1799: America was a young, rural society. Life expectancy was short. "Old age security" meant having children or private wealth. Adult children were expected to care for their parents or pay for their care by surrogate families. The earliest welfare and pension programs developed. Paupers received cash, so-called “outdoor relief,” paid by city or county taxpayers until costs quickly grew too high. Poorhouses, “indoor relief,” became homes for the indigent elderly, which they shared with impoverished miscreants. Government pensions went only to veterans.

LTC Comment: Key principles, inherited from the British “poor laws,” prevailed from the beginning of U.S. history. People were individually responsible both for themselves and their parents. Government’s safety net role was local and made intentionally unattractive. “A common concern of the public at that time was that the opportunity to get free room and board would be so attractive that people would deliberately pretend to be poor so they could live an ‘indolent life’ in the almshouse at the expense of the taxpayers. Consequently, poorhouse life was made as unappealing as possible.” The idea was unheard of that people have a “right” to a living wage, much less to “free” health care or housing.

1800-1899: Families dispersed with the young moving to cities or the west. Single elderly, especially women, lived with adult children. The poorhouse system, with conditions between “barely tolerable to horrific,” came under scrutiny. “Boards of Charities,” precursors to today’s Departments of Welfare, developed in the mid-1800s to oversee local poorhouse operations.

There was a lot of debate about society’s role in caring for the poor, but by the mid-1800’s, many felt that the ‘deserving’ poor, like children, the insane, and the elderly, should get better treatment than the “undeserving” poor, like alcoholics and those who were healthy but shiftless or lazy.

Benevolent societies and fraternal organizations built old age homes to alleviate problems with the poorhouses.

[T]he benevolent societies created one of the earliest organized old-age assistance programs. Members paid monthly dues to the Society while they were young and healthy, then received help when they were elderly, infirm, or in need.

Private and non-profit developers created some approaches that became modern such as planned communities, retirement campuses, and “lifecare” whereby residents “turn over their pensions and any other income or assets they had to the facility, in exchange for a guarantee that they would have a home as long as they needed it.” Private nursing homes began:

A small number of the non-indigent frail elderly people lived in early “proprietary,” privately-owned facilities called “rest houses,” “convalescent homes,” or “medical boardinghouses,” generally just rented rooms in a family home.” Home health care services began to evolve “directed to the poor” and “supported by philanthropy.”

Veterans’ benefits expanded after the Civil War beyond cash assistance. “[T]he federal government started building hospitals and homes to provide long-term care to disabled soldiers and sailors, where many lived into their old age.” By the end of the 19^th century some private companies started providing pensions and some states began providing cash assistance to the poor elderly.

LTC Comment: The 1900s saw the United States emerge as a world economic powerhouse with government interfering very little in the free market or to improve conditions for the poor elderly. Voluntary organizations took the lead to provide alternatives to poor houses and insane asylums for the deserving poor. State and federal government roles in support of the elderly and long-term care remained minimal.

1900-1929: Many non-profit old-age homes were built. People were living longer. “The average life expectancy at birth increased by 10 years from 1900 to 1930, and increased by another 15 years from 1930 to 1990.” Urbanization increased care needs. Home health care exploded with the Metropolitan Life Insurance Company providing visiting nurses for a “modest fee per policy.” More cash benefits were available from states and employers. A tuberculosis epidemic spurred “the development of public institutions designed to provide chronic care ….” More states began offering very limited, means-tested cash assistance to the poor. Many elderly were shunted into facilities for the mentally ill.

LTC Comment: In the dawn of the progressive era, little had changed yet, but the stage was being set for huge developments. The mostly voluntary, non-profit, non-governmental approach to old age support and care was about to be uprooted by heavy federal and state government involvement. The coming Depression tipped the balance toward government financing and control.

1930-1939: The Great Depression worsened poverty and destroyed family supports. State assistance was restricted.

All but Arizona and Hawaii refused to make payments to older people who had children or relatives who could support them. … Many required that the beneficiary must transfer to the pension authority any property they possessed before any payment would be made. … Most required that benefits would be denied to anyone who gave away property in order to qualify for public assistance. Most required that a lien be placed on the estate of the beneficiary to be collected upon their death.

In the worst of the Depression, voluntary organizations, local and state governments could not keep up with the need and demand for old age assistance. The 1935 Social Security Act created federal/state old-age assistance.

Title I … created a program, called Old Age Assistance (OAA), which would give cash payments to poor elderly people, regardless of their work record. OAA provided for a federal match of state old-age assistance expenditures. Among other things, OAA is important in the history of long-term care because it later spawned the Medicaid program, which has become the primary funding source for long-term care today.

These new benefits discouraged poorhouses and stimulated for-profit homes for the aging. “OAA recipients were able to pay cash at a time when there was little real money in circulation, making them very attractive customers for proprietary operators, and old age homes were a perfect ‘cottage’ industry.”

State and federal governments began to share welfare costs. “The OAA program established the precedent of splitting welfare expenditures between the federal and state governments while allowing the states to retain a significant amount of authority and autonomy to set standards, eligibility, and payment levels as they desired.” This division invited intergovernmental tension and “gamesmanship.”

LTC Comment: As the federal and state governments began to take a larger role in old age assistance, they required very strong controls. Strict eligibility criteria, transfer of assets restrictions, and mandatory liens were commonplace. These practices largely went by the wayside when Medicaid took over long-term care financing in 1965. Such restrictions only found their way back into the Medicaid program gradually over four decades as Medicaid LTC expenses exploded immediately and kept on a steady upward trend. The practice of splitting state and federal funding presaged the practice and its problems later in Medicaid. For more on this post-Medicaid history, see How to Fix Long-Term Care Financing (2017), especially pages 19-24 and 34-63.

1940-1949: “The size of the elderly and disabled population was growing, and many of them were now eligible for government payments of one kind or another, including veterans benefits, old-age assistance, Social Security, and unemployment assistance. Those payments could be used to pay for nursing home care, further encouraging the development of care facilities.” Both the cap on Old Age Assistance and the proportion paid by the federal government increased. Costs skyrocketed despite efforts to control abuse and overuse. Welfare planning, i.e., self-impoverishment to qualify, was feasible but still unpopular.

The benefit levels had risen so much that by 1948 the average OAA benefit ($38.18 per month) greatly exceeded the average Social Security benefit ($25.13 per month), providing a perverse disincentive for people to provide for their own old age by working and saving.

Government support for hospital construction gradually expanded to include nursing homes. “Hill-Burton financing lead to an explosion in public and non-profit hospital construction, and provided a model for federal and state standards for the design, regulation, and financing of healthcare institutions that was later used for nursing homes.” Many old hospitals replaced by the Hill-Burton program became nursing homes.

LTC Comment: Around the time of WWII we begin to see the perverse incentives created by state and federal government involvement in financial and long-term care support for the elderly. Why work when welfare pays more than Social Security? Why not start a nursing home? Success is guaranteed by direct subsidies and indirect government funding paid to welfare beneficiaries. Why save, invest or insure for the risks and costs of old age? The VA, OAA, SSA and UI will take care of you. The old principles of personal responsibility, self-reliance, and voluntary philanthropy are dying out but the inevitable consequences are not yet felt. So as the country enters a period of post-war prosperity, we’ll see more of the same.

1950-1959: The government is now heavily involved in nursing home care. The first official inventory showed 270,000 people living in 9,000 homes classified as “nursing care home” or “personal care home with nursing.” Of such homes, 86% were for-profit, 10% were voluntary, and only 4% were public.

Social Security and Old Age Assistance made the poorhouses irrelevant so many closed. Consensus grew to consider nursing homes as providing medical care, not just welfare. Social Security expanded in the 1950s “creating millions of additional people who would have a reliable source of income in their old age.” By the end of the decade, “the government was totally enmeshed in the business of providing nursing home care.” Half of private nursing home residents were welfare recipients and government was paying half the cost of nursing home care in the country.

Federal reimbursement, formerly split 50/50 with states, changed to give more to low-income states. With new nursing homes being built, smaller, older ones closed, especially “Mom and Pops.”

Not surprisingly, with government financial spigots open wide and few restrictions on what nursing homes should look like or how they should operate, quality issues started to come to the forefront. … A 1955 study by the Council of State Governments reported that the majority of nursing homes had low standards of service and relatively untrained personnel.

States often failed to enforce quality for fear of worsening the remaining shortage of nursing home beds.

LTC Comment: Government, at the federal, state and local levels, gets increasingly involved in building, funding, encouraging and regulating nursing homes. Federal funds pour into the public’s hands through Social Security and Old Age Assistance, which empowers people to purchase nursing home care, incentivizes investment in large for-profit facilities and contributes to crowding out smaller, family-run homes. Despite the rapid building of nursing homes and the new money pouring into the business, quality becomes a serious problem. Already, with government as the dominant payer and nursing homes as the customers, patients and residents are caught in between with little independence, control or protection.

1960-1969: In 1960, Congress passed the Medical Assistance for the Aged (“MAA”) program which made health care available to people sixty-five and older with low or moderate income and required state matching funds. The same Kerr Mills statute radically changed eligibility for nursing home care by adding people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses.” This critical change found its way into Medicaid.

These programs benefited thousands of older people who were not technically ‘poor’ but whose incomes were inadequate to pay for expensive medical costs like nursing home care. The program also helped nursing home operators, since they now had a source of payment for a whole new group of people who otherwise would not have been able to pay for their care.

Program costs exploded due to these new classes of beneficiaries and elimination of the only effective spending control, the cap on OAA payments.

From this point forward, states could set payments to nursing home providers as high as they wished, and the federal government, which had no control over rates, was mandated to pay its part of the cost.

Nursing home demand remained “unquenchable” because people, who managed somehow before, were coming out of the “woodwork” to take advantage of the new government money and programs. The expansion of Social Security added more people with more money who were able to pay at least a part of the cost for their care.

Medicare passed in 1965 and intentionally excluded most nursing home care as not in keeping with its mission. It was custodial, not curative care. Then Medicaid passed almost as an afterthought, with little consideration for its mission and turning its administration over to the states.

The new Medicaid program contained features that guaranteed high costs: it paid for nursing home care for higher income medically indigent people but not for cheaper home care; it paid for “housing, food, housekeeping, and laundry, services” which would not have been covered for in-home services; federal matching funds incentivized states to move people from state-funded in-home programs to Medicaid nursing homes expanding services at little or no state cost; states could reimburse nursing homes at any rate and never pay more than half the cost; federal fiscal control was virtually impossible because states controlled all of the data.

First year costs for Medicaid, estimated at $250 million, turned out to be that much for New York State alone with 41 percent of its population eligible for Medicaid. “In spite of the looming problems with Medicare reimbursement, publicly-traded nursing home chains became one of the hottest things on Wall Street. Everyone viewed Medicare and Medicaid as a risk-free source of revenue that made this a business where no one could lose money.”

LTC Comment: Adding the medically indigent to nursing home eligibility drove up, and continues to drive up, government expenditures for long-term care. People came, and continue to come, out of the woodwork to take advantage of virtually free care. Demand skyrocketed as Medicaid covered, and continues to cover, housing, food, housekeeping, and laundry, not just “care.” Easy money from federal matching funds invited states, and still invites them, to change programs and pass costs to the federal government which they had shouldered themselves before.

Closing LTC Comment: The history of long-term care since Medicaid is the story of how state governments have tried to make the most of the program and the federal government has struggled to fix the problems inherent in its design. Unfortunately, most of the initiatives taken to improve Medicaid have only made it worse. Instead of recognizing the cause of Medicaid’s problems, perverse incentives that reward over-utilization and abuse, legislators, analysts and advocates have insisted on addressing symptoms only. But that is a story for another LTC Bullet and we’ll tell it soon. Stay tuned.

Selected bibliography: other sources of information on the pre-Medicaid history of long-term care:

No Place Like Home, by Karen Buhler-Wilkerson

Chronic Disease in the Twentieth Century: A History, by George Weisz

Unloving Care by Bruce Vladeck: history of nursing homes and public policy starts on p. 30.

Too Old, Too Sick, Too Bad, by Frank E. Moss, and Val J Halamandaris

“Legislating Medicaid: Considering Medicaid and Its Origins,” by Judith D. Moore and David G. Smith, Ph.D.

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Updated, Monday, February 25, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-008: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Paul Ryan: Medicare Advantage is the Future of Medicare, and Medicaid Reform Will Return
Midlife Activities Linked to Alzheimer’s, Dementia
Waste not, why not?
National Health Expenditure Projections, 2018–27: Economic And Demographic Trends Drive Spending And Enrollment Growth
Untangling the Mysteries of the Brain
Resident who kissed woman in iconic WWII photo dies at 95
Medicaid Pressures, Worker Shortages Lead to SNF Closure Wave in Wisconsin
Consumers at High Risk for Dementia Put More Wealth in CDs: Researchers
The Link Between Menopause and Alzheimer’s
Experts: Home equity is key to solving the country's looming retirement crisis
California Commission Lays Out Plan to Drastically Boost Health Care Workforce
‘If I Ran AARP for One Day: Here’s What I’d Do to Redefine Aging, Fix Health Care, Balance Generational Equity, Eliminate Ageism in the Popular Culture, and Create a New Social Role and Purpose for Elders.’

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Updated, Tuesday, February 19, 2019, 9:16 AM (Pacific)

Seattle—

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LTC E-ALERT #19-007: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

What Are Medicare Advantage Plans' New Mini LTC Benefits Really Like?
Seniors' Health Costs May Be Moderating But The Need For Long-Term Care May Be Growing
One state’s single-payer push now includes LTC insurance
THE NATIONAL DEBT IS NOW MORE THAN $22 TRILLION. WHAT DOES THAT MEAN?
Announcing the Minority Aging Statistical Profiles
Brighthouse Prepares to Launch Life-LTC Hybrid
Secrets From the Medicare Advantage Producer Comp Spreadsheets
A change is happening in Maine with wide-ranging effects: State is seeing more deaths than births
The Largest Individual LTCI Claim of 2018
Don’t expand Social Security. Our elderly are mostly fine.

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Updated, Wednesday, February 13, 2019, 10:10 AM (Pacific)

Seattle—

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LTC BULLET: AMPLIFY LTC SANITY

LTC Comment: In today’s echo chamber of irresponsible fiscal and monetary advocacy, a voice for responsible LTC planning and policy is more critical than ever. Join us!

LTC BULLET: AMPLIFY LTC SANITY

LTC Comment: The U.S. national debt is about to tip over $22 trillion. That’s $67,547 for every man, woman and child in the country. Even that figure is dwarfed by our total unfunded liability for Social Security, Medicare, federal employee, and veterans’ benefits: $123 trillion or $376,113 per citizen. Entitlement programs for the elderly plus interest on the debt to pay for them threaten to crowd out other government spending. According to the Congressional Budget Office (p. 12), half of noninterest federal spending will go to the elderly by 2029. Yet we hear loud calls to expand Social Security and Medicare even further.

Alas, even entitlement spending is small potatoes as Congress considers the “Green New Deal.” That resolution proposes to eliminate greenhouse gases, feed all Americans, upgrade every building in the U.S., replace air travel with high-speed rail, and guarantee “a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.” All in 10 years! Even a perennial advocate of expanded government long-term care spending acknowledges “the resolution’s ambitious promises will add trillions of dollars to the nation’s debt. And that itself could slow the economy.”

What’s happening?

Frankly, we’re spoiled. Like a child who wants an expensive toy, we don’t care how much it costs as long as someone will get it for us somehow. Too manyAmericans have come to think that buying something and paying for it are two entirely unrelated matters. Want a new house? Get a “liar’s loan.” Need a car? Buy it on credit with interest deferred. Save for retirement? Why bother when Social Security, Medicare and Medicaid await? Aging Americans’ widespread ill-preparedness for retirement is easy to understand in such a frame of mind.

But how do we explain the same lack of concern about the government spending beyond its means by politicians and public officials who ought to know better? Don’t they understand what will happen when they borrow, spend, and promise with no thought to repayment? The answer is that people and their political representatives are slowly sliding into this sinkhole of irresponsibility because it works. Rather, it has seemed to work for several decades. We’ve ignored debt and deficits so long without dire consequences that we’ve become jaded. We wonder “Why can’t this go on forever?”

Socialism works until it doesn’t

Adam Smith said “there is a great deal of ruin in a nation.” By promising citizens retirement income and medical security through unfunded entitlements, we’ve chipped away at America’s “ruin” since the Depression. Just as debilitating, we’ve undermined fiscal and monetary responsibility since the Great Recession by spending more carelessly than ever before and deferring the consequences through artificially low interest rates. Nations’ ruin may come slowly, but following such practices it comes inevitably. Cuba, Venezuela, the Soviet Union and every previous attempt to have something for nothing in every historical epoch provide the proof. You can delay but you cannot avoid the consequences.

Like each of those examples, America’s fate is inevitable without a change of course. Pursuing such policies will lead ultimately to an economic paroxysm. Just as bankruptcy comes sooner or later to irresponsible individuals and to failed companies, countries can only consume their economic “seed corn” for so long before further financial prestidigitation fails. Currency devaluation, inflation, economic stagnation, shortages, hunger, civil unrest, poverty, crime, depression … follow inexorably.

What does this have to do with Long-Term Care?

It’s not hard to see this same story playing out in the economy’s long-term care microcosm. America has funded LTC since 1965 through Medicaid, a public welfare program. Supposed to require spend down, Medicaid has actually provided a long-term care safety net for the middle class and affluent as well as the poor. By paying for nursing home care after care is needed without effective spend down requirements and enforcement, Medicaid created institutional bias, impaired development of a private market for home care, and crowded out savings, investment and insurance as preferable funding sources. Without even the pretense of a trust fund, Medicaid is today a dead fiscal weight on the country’s future adding substantially to the problems discussed above.

So what should we do about it? Most long-term care policy analysts and advocates call for even more government involvement and funding. They either ignore paying for government’s increased role altogether, adding to the debt, or they propose higher taxes or “premiums,” further reducing private capital and debilitating the economy. In a phrase, they propose doing more of the same and hoping for a different result, AKA insanity.

There is another way

Are you aware of a different voice in the LTC financing conversation? If you’re reading this, you probably know the Center for Long-Term Care Reform has stood resolutely for two decades in opposition to excessive government dependency and in favor of personal responsibility.

We’ve conducted and published dozens of national and state-level studies explaining why government-financed long-term care has failed and advocating “simple, cost-free solutions.” Steve Moses’s articles and speeches have urged less welfare dependency and more personal responsibility in both public policy and individual planning. The Center’s 2008 “Long-Term Care Consciousness Tour” crisscrossed the country delivering that message through TV, radio, and professional appearances. Since then we developed the “Index of Long-Term Care Vulnerability” to measure and publicize states’ risks from burgeoning LTC expenditures. So far, we’ve applied the Index and published its results for New Hampshire, New Jersey, Georgia and Virginia. With your help, we could do the same for the other 46 states and help them get in front of the age wave instead of being swamped by it.

What else do we do for you?

We publish daily “LTC Clippings” to keep you apprised of the latest articles, reports, and data related to health and long-term care issues. We do the research so you can focus on doing your job while staying at the forefront of professional knowledge and expertise. Read testimonials about our “LTC Clippings” here including this one from our late friend and colleague, the highly regarded and beloved sales trainer Mark Randall:

Your clipping service has saved me hundreds of hours of research each year since we started receiving your clippings. Using it makes me feel confident knowing that I’m on top of anything happening in the industry – from legislation to state movements to industry and insurer announcements. And being on top of things is critical in our industry. Any serious LTCi agent who doesn’t take advantage of this . . . doesn’t realize the value the service can bring to their production! For anyone above the level of agent, this service has to be considered a must. Thank you for your diligence in uncovering all the daily news a person in our industry needs!

Once a week, on Monday, we compile the previous week’s “LTC Clippings” in an “LTC E-Alert,” so you’ll never miss a critical piece of news even if you skip a Clipping on the day it’s published. These E-Alerts are also archived in our members-only website, “The Zone,” along with an organized compilation of all the news of the past decade or so that we call “The Almanac of Long-Term Care.” Also in The Zone:

LONG-TERM CARE CLIPPINGS ARCHIVE
CLASS Act Update -- Quick reference to publications on CLASS.
One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.
LTC GRADUATE SEMINAR TRANSCRIPTION
LTC ALMANAC
Deductibility Limits for Long-Term Care Insurance
LTCI TAX TREATMENTS
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
Unfunded Entitlement Liabilities -- Various articles and reports including data on unfunded entitlement liabilities.
LTC Embed Reports -- Brief on-site reports from the policy front in Washington, D.C. and elsewhere, wherever the LTC policy battle takes us.
Long-Term Care Cost Surveys
Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care
VIRTUAL VISITS to LTCI conferences.

Frequently, we publish “LTC Bullets” like the one you’re reading now to report and analyze developments that we believe anyone active in the long-term care market needs to understand and consider. Today’s is LTC Bullet number 1,247. You can review them all archived both chronologically and by subject here. Age Wave founder Ken Dychtwald once said this about the Bullets and the Center’s reports:

In my attempt to stay abreast of this subject, I continually scan dozens of reports and newsletters. However, I have found no resource more insightful and useful than the LTC Bullets I regularly receive as well as the potent reports the Center for Long-Term Care Financing [Reform, since 2005] periodically prepares. Keep up the great work - your analyses and conclusions are like a lighthouse beacon.

Over the years, we’ve done countless interviews, seminars and presentations advocating private long-term care financing solutions. Find testimonials about those here including this one:

From the moment of the legislative breakfast to [a TV] interview at 7:30 Tuesday morning, we have been overwhelmed by the positive response to our sponsorship [of the Center for Long-Term Care Reform’s LTC Tour] from the media and the community. This means bundles for us, our company, and furthering the cause of long-term care planning.

Gail Lindsey of Lindsey and Associates – Chattanooga, TN

Frankly, friends, it’s a little lonely out here making the case for personal responsibility and freedom from government interference. We need all the help we can get. If today’s message strikes a chord, please …

Join the Center if you’re not already a member
Upgrade your membership to Premium or Premium Elite levelEncourage your broker or general agent to join as a corporate member
Ask the LTC insurance carriers you represent to support the Center for LTC Reform
If you work on the provider side of long-term care, ask your nursing home, assisted living facility, or home health agency and their trade associations to support the Center’s advocacy for private LTC financing
Forward our publications to your state and federal political representatives and media
Encourage reporters to view the Center’s website and interview Steve Moses

You can find our “Membership Levels and Benefits Schedule” here. It describes all the advantages of membership at each of the individual and corporate levels. When you’re ready to join us in this noble fight, contact Steve Moses at 425-891-3640, smoses@centerltc.com or Damon at 206-283-7036, damon@centerltc.com.

We can do this, but not alone. When you support the Center for Long-Term Care Reform and encourage others to do so, you “Amplify” our common voice for “LTC Sanity.” Make the Center your megaphone! Thanks for your consideration

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Updated, Monday, February 11, 2019, 10:06 AM (Pacific)

Seattle—

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LTC E-ALERT #19-006: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

How to keep nursing home costs from devouring your life savings
The Medicare Plan Market Is Alive!
Aging Population Could Cut U.S. 2096 Output 39%: Economists
PCPs, Psychiatrists Much Less Likely to Accept Medicaid
Genworth diverts $327 million to shore up long-term-care insurance
Continued push to keep seniors out of nursing homes irks industry leaders
Explaining The Slowdown In Medical Spending Growth Among The Elderly, 1999–2012
THE NATION'S RETIREMENT SYSTEM: A Comprehensive Re-evaluation Needed to Better Promote Future Retirement Security
72% of retirees are concerned about long-term care expenses: survey
Longevity, Life Expectancy & The Long Run
The Impact of Cognitive Decline on Families' Finances: RBC Survey
Spending dips on health care for the Medicare elderly
Alzheimer's May Have Different Trajectory for Women
Good News for Indemnity Based LTC Coverage
As Democrats Talk Single Payer, Private Medicare Advantage Soars

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Updated, Monday, February 4, 9:18 AM (Pacific)

Seattle—

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LTC E-ALERT #19-005: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Report: Lack of services and supports driving seniors into nursing homes earlier than necessary
The Federal Government Will Spend Half Its Budget On Older Adults In Ten Years
How to Afford Long-Term Care
Big rise: More than 43,000 jobs open in long-term care as leaders plot
The Budget and Economic Outlook: 2019 to 2029
CMS chief: Providers should expect new set of quality measures, more sophisticated enforcement strategies
Aging Americans fall prey to 'brain-boosting' supplements offering hope, hype and dodgy data
Funding for skilled nursing needs to be a priority
Skilled Nursing Facilities Face ‘Colossal Collapse’ in Mass. Amid Low Medicaid Rates
Report: 85% of Baby Boomers plan to work into their 70s (and even 80s)
Older adults’ top priorities for the government may surprise you

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Updated, Wednesday, January 30, 2019, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: VALUE IS IN THE EYE OF THE BEHOLDER

LTC Comment: Like beauty, health care value is in the eye of the beholder, and it may turn out to be very unattractive indeed. We explain after the ***news.***

*** ILTCI UPDATE: The 19^th Annual Intercompany Long-Term Care Insurance Conference convenes at the Sheraton Grande Hotel in Chicago March 23-27, 2019. Details on speakers, sessions, sponsors, scholarships and more are now available here. Download the mobile app here. Attendees will meet and learn from industry thought leaders, get in-depth insights and information at more than 40 breakout sessions, network and have substantive discussions with more than 60 exhibitors and sponsors that specialize in providing products and services to this growing industry. You know the movers and shakers of the LTC insurance profession will be there. But did you know that if this is your first time attending the ILTCI, you may be eligible for an additional $50 scholarship?! Just reply to info@centerltc.com to receive your discount code, which you can use when registering at http://www.iltciconf.org/. Damon and I hope to see you there. ***

LTC BULLET: VALUE IS IN THE EYE OF THE BEHOLDER

LTC Comment: The 1960 Twilight Zone episode “Eye of the Beholder” begins with a young woman lying in a hospital bed. Her head is wrapped in bandages. She awaits the outcome of a surgical procedure performed by the State in a last-ditch attempt to make her look "normal." When finally the bandages are removed, we see her beautiful face but we hear the horrified expressions of others in the room. Then the camera pans to those others. They have dreadfully disfigured faces. In their eyes, our idea of beauty is ugliness itself.

The latest trend in health care financing reminds me of that story.

The government wants to pay for high-quality health care outcomes (value) instead of reimbursing for specific health care services (volume) in the traditional manner. “Value-based” reimbursement for acute and long-term care under both Medicare and Medicaid is all the rage. The idea is to pay for better care instead of more procedures. Policy makers hope that medical outcomes will improve and expenditures will decline under such a system.

But some analysts worry the end result will be a two-tiered system. Poor providers, punished for delivering inferior care, may become even worse and more dependent than ever on low Medicaid reimbursements. Better providers, rewarded for higher quality care, may attract more private payers. That could reduce the subsidy private payers’ higher reimbursement rates deliver now to providers already too dependent on Medicaid. The result may be far different from the expectation, just as so many well-intentioned government interventions have caused unintended and highly disagreeable consequences.

What will we find when the bandages come off and we finally see what value-based health care reimbursement has wrought?

LTC Bullets have followed the value-based revolution in long-term care financing for several years. We first raised the issue in LTC Bullet: A New Revolution in Long-Term Care Financing . . . by Government on November 6, 2015:

Huge changes in how the government pays for post-acute and long-term care are under way, building steam, and about to revolutionize LTC service delivery. “Bundling” and “prospective payment” are on every health care bureaucrat’s lips. The system’s transformation to “managed care,” whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country. … The government’s latest move toward centralized control of the LTC market is even more significant. The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated “quality” metrics). The new system will put care managers and providers at far greater financial risk. Only time will tell if this shake-up improves or damages the care patients actually receive.

The following week, in LTC Bullet: The Future of Long-Term Care Seen Through the Prism of History, November 13, 2015, we answered some key questions bearing on the prospects for value-based financing:

In a nutshell, the Centers for Medicare and Medicaid Services (CMS) seeks to change both programs’ LTC payment systems to reward quality instead of quantity. Sounds good, right? But why does government pay for most LTC in the first place? Why does it have to revolutionize its reimbursement methods to ensure quality? Why can’t people simply choose the LTC services and providers they prefer without the long arm of the law needing to intervene?

We introduced the topic with satire:

If value-based payment is good enough for Medicare, it should be good enough for McDonald’s too.

A monopsonistic [i.e., single buyer], government-based nutrient payer could ensure quality food distribution by paying for value instead of quantity.

We could reimburse prospectively for dietary-related groups of alimentary consumption episodes rewarding lower food poisoning levels with five-star ratings.

“What if I want a Big Mac,” you ask? Tough luck. Too many calories for too little nutrition. The re-hospitalization risk is off the chart.

Why do we have prospective payment systems, bundling, managed care, and value-based payment in health care but not in food distribution?

Why is government micro-management of long-term care service delivery and financing the wave of the future?

Well, it’s been a slippery slope for 50 years. Santayana said: Remember history or you’ll repeat it. We’re not just repeating the mistakes of the past, we’re doubling down.

This Bullet traced the history of long-term care financing, explained how earlier government interventions caused the problems this latest government intervention seeks to resolve, and concluded “The risk is that further interference in an already fragile LTC market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.”

Next, in LTC Bullet: What’s Wrong with Bundled and Value-Based LTC Payments?, January 20, 2017, we expressed concern that the new president replacing Barrack Obama would carry on with the same plans.

Recently, listening to long-term care policy experts speculate about the likely future prospects under the approaching Trump presidency, I heard something both wrong and disturbing. A supposedly “conservative” commenter observed that a major new approach to LTC financing promoted by the Obama Administration—bundled and value-based long-term care payments—should be embraced and carried forward by the new Administration. I could not disagree more. Because such views are being expressed and because so many of the officials of both parties in DC and the states who are implementing the new policies will remain in positions of influence, I want to re-visit our critique of these bad ideas.

The fundamental problem with value-based reimbursement is that central government planners determine who gets what and they alone define what patients are supposed to consider good care. “In a free market,” we explained instead, “consumers rule. They demand quality and volume. If they don’t like what they get, they vote with their pocket books and move on to products and providers they prefer. Competition to provide the best care at the lowest price in the most appropriate settings could and would solve the LTC service delivery and financing problems that have been created by government’s interventions, however well-intentioned those interventions may have been.”

Then, in LTC Bullet: Government LTC Financing “Revolution” Averted, August 25, 2017, we announced with relief: “According to Healthcare Finance: “The Centers for Medicare and Medicaid Services on Tuesday officially announced it is pulling back from mandatory bundled payment models set up under the Obama administration.”

How wrong we were!

It appears now that the Trump Administration’s Center for Medicare and Medicaid Services (CMS) is proceeding full-speed ahead with the value-based approach. Find a summary of several such initiatives here. Impacting long-term care the most and soonest is the Patient-Driven Payment Model (PDPM), whereby “therapy minutes are removed as the basis for payment in favor of resident classifications and anticipated resource needs during the course of a patient's stay,” whatever that means. Only time will tell whether this expansion of centralized control over the health care Americans receive will achieve its objective of better care at less cost or pull us even further away from patient choice at even higher public expenditures. Count me among the dubious.

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Updated, Monday, January 28, 2019, 10:22 AM (Pacific)

Seattle—

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LTC E-ALERT #19-004: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

The Health 202: Policymakers are realizing health is about a lot more than just care
Long-term care led all of healthcare in deal volume in 2018
Too Many Americans Will Never Be Able to Retire: Without more babies and immigrants, the country won’t be able to support its aging population
Simplicity Acquires LTC Distributor
‘I feel deeply ripped off.’ Steep hikes in long-term care premiums jolting many consumers
DEMENTIA AND GUM DISEASE: ALZHEIMER'S LINKED TO GINGIVITIS
Medicare LTSS changes may not help two-thirds of beneficiaries
Scamming Grandma: Financial Abuse of Seniors Hits Record
MedPAC Unanimously Calls for $2 Billion in Skilled Nursing Payment Cuts in 2020
New Study Says Americans Flocking To Urgent Care Instead Of Their Primary Doctor Due To Convenience
Blood Test May Predict Alzheimer’s Progression

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Updated, Tuesday, January 22, 2019, 10:10 AM (Pacific)

Seattle—

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LTC E-ALERT #19-003: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

CMS announces new ‘innovations’ to Medicare Advantage plans
5 Things Actuaries Are Saying About Death Now
Dementia and Firearms Make a Dangerous Combination
Former HHS chief: Nursing homes playing a part in Medicare ‘drifting toward disaster’
Medicare Advantage industry sees slower growth for 2019
New York Approves China Oceanwide-Genworth Deal
Long-Term Care Insurance Claims Rise 12%: AALTCI
When Older American Households Fall Short
Trump wants to bypass Congress on Medicaid plan
Tech companies edge into crowded caregiving space
Costs of New Long-Term Care Insurance Policies Vary Considerably

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Updated, Thursday, January 17, 2019, 10:30 AM (Pacific)

Seattle—

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LTC BULLET: THE LONG-TERM CARE TRIFECTA

LTC Comment: How is long-term care financing like a trifecta bet? The answer, after the ***news.***

*** SPECIAL DEAL: You know the movers and shakers of the LTC insurance profession are meeting for the 19^th annual Intercompany Long-Term Care Insurance Conference in Chicago this March. But did you know that if this is your first time attending the ILTCI, you may be eligible for an additional $50 scholarship?! Please reply to info@centerltc.com to receive your discount code, which you can use when registering at http://www.iltciconf.org/. Find details about the conference and registration here. If today’s LTC Bullet is correct, this conference could be your opportunity to get in on the ground floor of LTCI’s resurgence! ***

*** MOVIE UPDATE: Ross Schriftman’s “My Million Dollar Mom” movie continues to make news. I found this 30-minute interview with Ross and female lead Susan Moses [no relation] interesting and inspirational. Ross reports “We are planning lots of community events around the country to show our film this year. Our program page will highlight these:
https://www.mymilliondollarmom.com/program.cfm
https://www.mymilliondollarmom.com/events.cfm
Stay tuned.”***

LTC BULLET: THE LONG-TERM CARE TRIFECTA

LTC Comment: Invited to survey the “state of the long-term care insurance industry” at the start of 2019, I took the high-altitude policy perspective that follows. I hope this speech, delivered to two groups of LTC insurance producers in early January, educates, motivates, and inspires everyone on the front lines of LTCI sales to carry on despite the challenges this business faces. Here’s the speech as delivered, once as a webinar and later in person. You can find the “handout” that went with it here. If you’d like to have this speech or another developed to meet your unique needs delivered to your group, contact me at smoses@centerltc.com or 425-891-3640.

The Long-Term Care Trifecta
by
Stephen A. Moses

You don’t need me to tell you that the long-term care insurance business has faced some pretty strong headwinds lately … so I won’t dwell on that.

Let’s forget about bad publicity over premium increases, carriers leaving the market, consumer indifference to planning, damaging public policy, and so on.

Set all that aside and think positively with me today. Let’s try to understand what happened, why it happened, and what’s most likely to happen in the future.

Believe me, the view through the windshield is much more encouraging than the one through the rear-view mirror.

My goal today is to tell you some things that, when you think about them and apply them to selling LTC insurance, you will be more successful, help more people, and feel great about yourselves. In fact, it will be much easier than you ever thought possible. Sound good?

OK, when you face a challenge in life, and selling long-term care insurance certainly qualifies, the best way to begin is to review and understand what you’re up against.

Let me tell you a little story.

In 1968 … yeah half a century ago, hardly seems possible … my late wife and I joined the Peace Corps. We were assigned to a tiny town in the Venezuelan grasslands called Carmen de Cura, three hours south of Caracas by bus.

Our site sat behind a river with no bridge that flooded in the rainy season. We had electricity four hours at night if the generator was working. The house they gave us flooded from rain run off but also from the septic tank because of the high water table. How charming was that? Still, we loved the people and enjoyed the work.

Part of our job was to meet with visiting doctors and nurses and back them up by supporting good health care practices when they left town and we remained. Unfortunately, they rarely showed up, never when scheduled, and did very little to promote good health habits.

The Venezuelan constitution promises health care to all citizens, but the government didn’t deliver. That was a bitter early lesson that political entitlements guarantee nothing.

Nowadays, everyone knows what a tragedy Venezuela has become by pursuing public policies that promise everything but deliver nothing.

What concerns me is that we seem to be following a similar path here at home. We promise American citizens retirement income security, senior health care and even long-term care. But Social Security, Medicare and Medicaid come with no guarantees. A future Congress and President can, and may have to, cut those programs radically or even eliminate them entirely and they can do it with the stroke of a pen.

Where did we get the idea that government programs can take care of us? What has confidence in that idea done to our sense of personal responsibility? I think answering those questions will explain why long-term care insurance faces the challenges it does today.

In the 19^th century as the United States was evolving from an economic backwater to an industrial super power, people had to fend for themselves. There was no public safety net of any kind, only private charity.

Free-market capitalism prevailed. Waves of creative destruction disrupted markets. Competition compelled improvement. Sink or swim was the order of the day. That environment got the most out of everyone. People had a positive incentive to achieve and prosper, backed up by a negative incentive to avoid the poor house.

Rough and tumble? Of course. Most people prospered but some didn’t either by dint of bad luck or through their own irresponsibility. Life punished the irresponsible and provided strong lessons on how to turn their lives around.

But good, hard-working people were also vulnerable to ill fortune. Private insurance evolved as a way to protect responsible individuals and families from the bad luck of unforeseeable events. Insurance allowed them to replace the small risk of catastrophic financial loss with the certainty of an affordable premium.

In the absence of government programs to lean on, responsible individuals worked hard to succeed and they bought insurance to mitigate unpredictable risks. Such a system works well if you believe most people are good, capable, self-interested and hence motivated.

That’s what our country’s founders believed and that’s what they counted on when they gave us a government based on protecting life, liberty and property, AKA the pursuit of happiness.

So Americans did great for many decades after our founding, but no system is perfect. The more prosperity we achieved, the harder it became to accept misfortune or poverty of any kind in any amount for anyone.

The Great Depression shook our country to its foundations. Arguably government interference in previously freer markets caused that economic catastrophe, but whatever the cause, people were having a very hard time. The government wanted to help. Franklyn Delano Roosevelt and his Administration pushed hard for the idea of “social insurance” as the solution.

They said “social insurance” would improve on “private insurance” because it would have the widest possible risk pool, inasmuch as everyone would be required to participate. Social insurance would also be better than private insurance, they argued, because it would treat everyone the same, giving equal benefits to everyone.

Therein lie the two fatal flaws of social insurance. It is compulsory and therefore violates the fundamental principle of freedom on which our nation’s earlier success depended. And it spreads, but does not price risk, thus rewarding irresponsible behavior at the expense of more responsible people. Let me explain what I mean.

Ted Marmor is a Yale professor emeritus of some influence. He recently explained the difference between social and private insurance this way: “In commercial insurance,” he said, “price must reflect risk. Social insurance, by contrast, operates on the premise that contributions are calculated according to one’s income and benefits are related to one’s needs.”

Does that idea ring a bell? Ever heard the motto “From each according to his ability to each according to his need.” Yes, that’s the Marxist creed, the fundamental principle of communism. That’s exactly where Venezuela … not to mention Cuba and the Soviet Union … went astray.

This is a fundamental difference between social insurance and private insurance. Both spread risk but only private insurance prices risk. Social insurance pays benefits to everyone the same regardless of the level of risk they bring into the risk pool. Consequently, social insurance rewards risky behavior. You can be lazy, smoke, drink, take drugs, no matter, social insurance pays everyone the same.

Private insurance spreads risk, but it also prices risk. Your premium is based on underwriting which measures the amount of risk you bring into the risk pool and charges you accordingly. That’s why smokers pay more for life insurance. And it’s why people already demented or dependent on walkers can’t purchase long-term care insurance at any price.

Pricing risk is fair to everyone. It is justice. It rewards good health care behavior and early planning, punishes poor behavior or failure to plan, and hence promotes social good. This is a critical point. Keep it in mind.

Its other main difference from social insurance is that private insurance is voluntary. You’re free to participate or pass, but social insurance is mandatory. It violates deeply held American values of freedom and personal responsibility.

Now, what does this have to do with long-term care insurance?

Since 1935, the government has told Americans work hard, contribute to Social Security, and it will take care of you financially in your old age.

Since 1965, the government has told Americans, pay your Medicare premiums and you won’t need to worry about health care in your senior years.

Since 1965, the government has told Americans, whether or not you work or pay taxes, Medicaid will cover your long-term care if you ever need it and can’t afford it.

Americans believed those promises. Look what it got them.

All three of the major programs Americans were invited to rely on are now on a slippery slope to insolvency.

Social Security and Medicare are already consuming the IOUs in their so-called “trust funds,” funds that the rest of government borrowed, spent and is having to pay back with interest, crippling our economy. Even those borrowed funds run out in the 2030s, only a little more than a decade away.

Medicaid doesn’t even have a phony trust fund to pretend to spend. It’s a direct drain on general funds and hence on private investment capital, further debilitating the economy.

Do you get angry complaints because private long-term care insurance premiums have increased? Don’t take it lying down. Stand tall. LTC insurance carriers raised premiums to ensure that contractual benefit promises would be met. The government has done nothing similar to ensure it will be able to pay for promised benefits that it cannot possibly provide.

Never forget that you occupy the moral high ground on the issue of premium increases. Claim it!

So social insurance has done tremendous damage by making promises it can’t keep. But that’s not the worst of its impact, not by a long shot.

The greatest negative impact of Social Security, Medicare and Medicaid is the effect those programs have had on Americans’ work ethic, saving behavior, and attitude toward private insurance protection.

Nowadays, fewer people work; more rely on Disability or welfare; life spans are shortening; waistlines are widening; we have an epidemic of obesity. Private companies no longer offer retiree health benefits. Why duplicate Medicare, they figure? Who needs long-term care insurance when the government pays for most expensive extended care costs anyway?

Do you see the fix we’re in? We’ve inhaled the social insurance drug for so long that we’ve lost the drive and incentive to take care of ourselves. This is happening when reality is about to force us to go cold turkey, by curtailing, if not eliminating entirely the safety net on which we’ve come to rely.

Let me give you a few examples.

Americans think the government should take care of everyone and they don’t care how much it costs. Here are a couple quotes from the Wall Street Journal:

“A Pew study … found majorities endorsing the view that government does too little to help young people, the elderly, the middle class and the poor.”

Too little to help? Most of the federal government’s budget goes to help those exact groups.

Nor do we care how much it costs.

“[S]urveys also register a steep decline in public concern about the federal budget deficit. In 2013 … 72% of Americans regarded deficit reduction as a top priority. By the beginning of this year the figure had fallen to 48%.”

We are so concerned about the poor that we think deficits and debt no longer matter.

But, here’s the irony with that view. Most of the poor, aren’t!

According to a study published by the Cato Institute: “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades.”

How can that be?

Government poverty statistics make the poor look poorer and the rich look richer by ignoring most forms of public benefits paid to the poor and by ignoring taxes paid by the rich.

Here’s the net impact:

It’s a wash for the middle class: “On average, [middle class] households with $63,136 in earned market income get to keep it all. They pay taxes averaging approximately $17,000 per year, but on average they also get an equal amount of government transfers.”

But the affluent have to make up the difference: “The top 47.5 percent of households were taxed to do the following:

Transfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income
Pay for the many activities of government that require 40 percent of all government spending
Pay the interest on the national debt, which constitutes 12 percent of government expenditures”

Cato concluded “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone.”

I conclude: Government should declare success in the War on Poverty and start eliminating policies that discourage personal responsibility and work.

Besides, what is poverty in America anyway?

According to the Heritage Foundation: “The typical poor household, as defined by the government, has a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR. By its own report, the typical poor family was not hungry, was able to obtain medical care when needed. The typical average poor American has more living space in his home than the average (non-poor) European has.” From Heritage Foundation, 2011: “Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?”

Ladies and gentlemen, I have seen poverty up close in Venezuela, South America and Asia. And that is not it!

The anomalies and contradictions in government entitlements are unending. Conventional wisdom states that only poor people get Medicaid but research shows that “at the top of the income distribution. Medicaid covers 21 percent of lifetime costs at age 70, with the fraction rising to nearly 30 percent at age 100. … While most high-income households do not receive Medicaid, those that do [mostly the ones who end up needing long-term care] … tend to have high medical expenses and tend to receive large Medicaid benefits (De Nardi et al., 2016a).” (p. 24)

What impact on demand for long-term care insurance do you think Medicaid’s offsetting about a quarter of rich people’s high medical expenses has had?

Of course, tremendous. Government tells the poor explicitly “don’t worry about long-term care, we’ll pay” but government tells the rich exactly the same thing implicitly by actually paying for most expensive long-term care if and when the wealthy need it.

Nor does the government honestly report Medicaid’s impact on the LTC financing market.

The Centers for Medicare and Medicaid Services (CMS) reports that Medicaid is the “primary payer” for 62 percent of nursing facilities’ residents. Don’t you think that would mean Medicaid pays most of the cost of the care for such residents?

You’d be wrong. If a nursing facility resident is on Medicaid, Medicaid is counted as the “primary payer” even if it pays nothing toward that resident’s cost of care.

How can that be? People on Medicaid have to contribute most of their income, principally their Social Security income but also private pensions and other sources, to offset Medicaid’s cost. In some cases, the private income suffices to pay the entire cost of their care … at the low Medicaid rate.

This is the critical point: even if Medicaid pays nothing and the entire cost of the care comes from the Medicaid recipient’s private income contribution, the nursing home receives the low rate of Medicaid reimbursement, often less than the cost of providing the care. That’s why Medicaid has such a poor reputation for quality of care.

Now, why on earth would Medicaid operate this way? Claiming that Medicaid is the “primary payer” for nearly two-thirds of nursing home residents gives the appearance that Medicaid does more for more people than it really does. It makes public officials, senior advocates, and politicians look good. It wins votes.

There’s still more to this deception, however. CMS reports out-of-pocket costs for nursing facility residents to be over 25 percent, but the reality is that half of all out-of-pocket costs are really just spend-through of private income by people already on Medicaid. That makes it look like Medicaid costs less than it really does.

Bottom line: Medicaid takes credit it doesn’t deserve and then misrepresents its cost to the downside.

In the meantime, the damage to consumers is incalculable. Over 80 years of believing in government promises that social insurance entitlements will take care of us have desensitized consumers to all kinds of insurable risks.

But that’s all about to change. I call what lies immediately ahead “The Long-Term Care Trifecta.”

A trifecta is a bet in which the person betting forecasts the first three finishers in a race in the correct order. Here they are.

The first finisher is Medicare. Its trust fund runs out, not that there’s anything in it anyway, by 2026, only seven years away, three years sooner than previously projected.

The second finisher is the baby boomer generation. It starts turning 85, the age at which health and long-term care costs spike upwards in 2031, only 12 years from now.

The third finisher is Social Security. Its, literally empty, trust fund “runs out” in 2034.

Unfortunately, we may not make it to the first finisher in 2026. As I prepared these remarks, the bottom was falling out of the stock market and a recession in 2019 was looking more and more likely.

Since the Great Recession of 2007-2009, we’ve been living in an economic fantasy land with artificially low interest rates and profligate government spending enabling us to live far beyond our means on funds we’ve borrowed from ourselves and from foreign countries.

When the asset bubble created by those policies bursts, all bets are off. Markets are predictive so collapsing equity and real estate values combined with higher interest rates on private and public debt could plunge our public finances and the entitlement programs they mostly support into crisis much earlier.

We may face the Long-Term Care Trifecta at any time.

So what does this mean for you and for long-term care insurance?

LTC risk and cost are greater than ever. Oncoming demographic challenges, the so-called age-wave, is cresting and will crash soon. The need for private LTC insurance protection is greater than ever. Consumers need to plan for this risk.

Yet, although consumers are smarter about LTC risk and cost than they used to be, thanks to our decades of work waking them up, most still don’t operationalize their knowledge enough to take concrete action by insuring for the risk.

That’s where you come in. You’re the last line of defense against the idea that people can ignore the risk, avoid the premiums, and wait for the government to take care of them.

That headwind holding back private LTC insurance is disappearing as the LTC Trifecta nears and arrives.

You should redouble your efforts in the knowledge that you can save people from the awful fate of relying on public programs as those programs are collapsing.

Do you read Ron Hagelman’s columns in Broker World? If not, I think you should. He argues that in the past we pushed too hard to get full LTCI coverage for every client resulting in too few people being able to afford the protection.

Going forward, he suggests, the challenge is to help people mobilize all of their financial resources, supplemented by whatever LTCI they can afford, with the primary goal to stay off Medicaid.

That’s good advice, makes protection affordable for more people, and ensures that fewer will be stuck in welfare nursing homes as their major funding source, Medicaid, dries up.

One of the biggest problems for LTC insurance lately has been the necessity of companies to raise premiums on in-place business. But actuaries’ concerns about future premium increases are abating.

New policies’ premiums are based on longer and better experience and the huge damage done by government’s forcing interest rates artificially to near zero is reduced as interest rates normalize. You should muster and deploy the verifiable evidence of this development in your meetings with prospects and clients.

Did premium increases and the widely publicized Penn Treaty insolvency hurt traditional insurance? Of course, but asset based products evolved to provide guaranteed premiums and benefits. Both kinds of products have critical roles to play in the market, but one or the other may prevail temporarily as the headwinds, largely caused by poor government policy, shift in direction and intensity.

If I’m right about the plummeting direction public programs are likely to take, all forms of private insurance, including traditional LTCI, hybrids, products modeled on a health insurance chassis, term life that converts to LTC protection as proposed by the Society of Actuaries and designs yet uncontemplated will thrive in the new, challenging economic world.

I’m tremendously encouraged by the amazing creativity and resilience of the LTC insurance industry, including the carriers who are sticking it out, the exceptional distributors of the product, and you, the producers, the AMGs (altruistic, masochistic, geniuses) who manage to carry on in spite of the challenges.

So many of you are driven by a passion for this work because of a personal experience of LTC with a loved one, a parent, grandparent or spouse. You’ve proved over and over again that nothing can stop you.

Many carriers were less persistent. They abandoned the LTCI market when utilization increased beyond actuarial expectations, the Federal Reserve destroyed returns on their reserves, and the media attacked the industry for doing the right thing, that is, increasing premiums to ensure benefits would be paid.

Here’s what I predict. Those same companies and new ones will come rushing back into the business as those problems disappear.

We now have better and longer experience data on which to base premiums and they’ve already increased for new products. So as interest rates and hence returns on reserves return to normal levels, the business will become highly profitable, leveraged by the fact that premiums have already increased.

As the pressure I’ve predicted on public programs hits over the next decade, the public will lose confidence in Medicaid, which is propped up by Social Security and Medicare, in which they’ll also lose confidence.

When that happens, Katie bar the door. The rush to find insurance protection against LTC risk and cost will explode. Consumers will prospect for you!

In the meantime, we’re all in this together. I want to thank you for your dedication, hard work, collegiality and friendship in our common mission to improve long-term care for all Americans.

Before I conclude, I’d like to tell you a little bit about how we pursue that mission at the Center for Long-Term Care Reform.

We conduct state-level and national studies of long-term care financing with a focus on the problems created by government interference in that market.

You can find and read dozens of our reports at our website, www.centerltc.com, and on the handout you’ve been given for today’s presentation.

We publish periodic essays called the LTC Bullets. The Bullets discuss and analyze current topics related to long-term care service delivery and financing. We’ve done over 1240 of them in the Center’s 21 years and you can find them archived chronologically and by topic on our website.

We publish a weekly compendium of long-term care news called the LTC E-Alerts designed to keep members abreast of everything they need to know to remain on the forefront of professional knowledge and expertise.

Our daily LTC Clippings give premium members access in real time to the latest stories, articles, reports and data as these are released along with our “take” on what they mean in a sentence or two.

Our Members-Only website, AKA “The Zone,” is full of invaluable resource material including our voluminous “Almanac of Long-Term Care,” where we archive all important news about long-term care organized within 11 sub-topics.

Finally, I want to thank our sponsors for this opportunity to share some ideas with you today and for their long and invaluable support for our work at the Center for Long-Term Care Reform.

I’ll be glad to take questions now.

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Updated, Monday, January 14, 2019, 9:57 AM (Pacific)

Seattle—

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LTC E-ALERT #19-002: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

People Still Need a Way to Pay for Long-Term Care: Idea File
Some LTCI Issuers Count More on Future Rate Hikes Than Others: S&P
With the search for Alzheimer’s drugs foundering, tech firms try to offer solutions
New Data Examine CCRC Occupancy Levels Compared to Assisted Living, SNFs
Poor sleep, daytime napping could be signs of Alzheimer’s
The 5 Governors Who Got A's on Their Fiscal Report Cards in 2018
House May Pass Medicaid Planning Measure This Week
LTC insurance industry is ‘imploding’ as new numbers show chasm in costs for private plans
Premiums spike; long-term care insurance carriers drop out as market
Inadequate Medicaid pay is a ‘rampant’ issue: Parkinson
Bundled Payments Save Money ‘Nearly Exclusively’ By Cutting Skilled Nursing
The New Retirement Strategy
Long-Term Care Insurance Issuers Face a Form Tsunami: Idea File

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Updated, Monday, January 7, 2019, 11:13 AM (Pacific)

Seattle—

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LTC E-ALERT #19-001: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Countdown to Retirement: 10 Years Away
Dementia care program reduces nursing home admits 40%, trims Medicare costs
Older Americans worried about insurance coverage, health costs as they approach retirement
Maybe not such a safe bet after all
Big claims strain senior living market for U.S. insurers
Is Genworth Financial a Buy?
Is the Rising Storm of Alzheimer's Disease Stoppable?
How and Why Entrepreneurs Should Focus on Seniors in 2019
Genworth Gets Major Regulatory Approvals for China Oceanwide Deal
The Changing Demographics of Family Caregivers
A Guide to Finding Long-Term Care for Your Loved One
Are you heavier or shorter than the average American?
Even a Booming Job Market Can’t Fill Retirement Shortfall for Older Workers
How Your Retired Prospects' Coverage Has Changed
Retiree Survey: Nearly All Say They Are Happy Though Many Are Financially Insecure
The 4 top safety concerns in senior care — and how to address them
Long-Term Care Providers Drive Growth in Special Medicare Advantage Plans
Seniors Appear To Have Highest Rates Of Gun Ownership, Suicide

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Updated, January 4, 2019, 11:13 AM (Pacific)

Seattle—

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LTC BULLET: LTC ALMANAC UPDATE

LTC Comment: We’ve updated the “Almanac of Long-Term Care” in The Zone. More on the LTC Alma nac and today’s update after the ***news.***

*** IMAGINE THE POSSIBILITIES, but do it quick. Early Bird Registration Discounts for ILTCI 2019 end this coming Thursday, January 10. The 19th Annual ILTCI Conference - March 24-27, 2019 convenes at the Sheraton Grand Chicago. If you’ve been to this annual convocation before, you know it is a top quality industry meeting. If you’re new, get ready for the best presentations and networking in the LTC insurance business. This year’s theme, “Imagine the Possibilities,” expresses perfectly the LTCI industry’s amazing persistence, resilience and creativity in the face of extraordinary challenges. See you there! ***

*** MOVIE NEWS: Ross Schriftman’s film, “My Million Dollar Mom,” won Best Drama at the Tampa Bay Underground Film Festival. Find the press release including seven nominations, a picture and a video with the award here: https://www.mymilliondollarmom.com/news-121418.cfm. The film focuses on the challenges families face when a loved one has dementia and is inspired by Ross’s true story. The value of long term care insurance is also highlighted. Congratulations! ***

LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, January 18, 2019. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

Aging Demographics
International
Unfunded Liabilities--Social Security, Medicare, and Budgets
Long-Term Care
Caregiving
Long-Term Care Financing
Long-Term Care Insurance
Reverse Mortgages
Long-Term Care Providers
Medicaid
Medicaid Planning

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

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

The Zone and the LTC Almanac are for Center for Long-Term Care Reform members only, except during the current free trial offer. Join the Center here: http://www.centerltc.com/support/index.htm. Call or email Damon at 206-283-7036 or damon@centerltc.com. He can give you a user name and password to open up The Zone even before your dues payment arrives. Individual annual memberships are $150. Premium memberships with access to our “Clipping Service” start at $250. Premium Elite and “Regional Representative” membership (if you qualify professionally) are $500. Corporate memberships with many extra benefits start at $1,000. See our "Membership Levels and Benefits" schedule here.

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

Suggestion: Read through the following update to stay current on new resource materials. Then browse the full LTC Almanac at your leisure. When you need a quick fact or the latest research on a particular topic, you'll know right where to go. Enjoy.

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Chapter 1: Aging Demographics

AARP's Across the States--Long-Term Care Profiles

Excellent source for state-by-state data on "many facets of long-term care and independent living in each state and the District of Columbia." Updated usually every two years: 2002, 2004, 2006, 2009, 2012, now 2018.

Across-the-states 2018 0918 URL: https://www.aarp.org/content/dam/aarp/ppi/2018/08/across-the-states-profiles-of-long-term-services-and-supports-full-report.pdf

9/4/2018, “Nursing home resident numbers decreasing, while quality varies, new AARP analysis notes,” by Marty Stempniak, McKnight's LTC News

Quote: “Nearly every state in the country (46) saw a decrease in the number of nursing home residents between 2011 and 2016, according to a new analysis published by AARP. All told, about 1.3 million Americans lived in nursing facilities on an average day, occupying about 81% of the 1.7 million beds available, the retired persons interest group noted last week in its 24th annual ‘Across the States’ report, providing a snapshot into long-term care across the country. … You can read the entire free report here, and find specific state-level reports here.” (Emphasis added.)

LTC Comment: This is our second clipping of the day reporting on AARP’s latest “Across the States” report. Check it out and watch for our analysis in the weeks ahead.

9/4/2018, “Assisted living supply, charges vary widely among states, new AARP report shows,” by James M. Berklan, McKnight's Senior Living

Quote: “The District of Columbia ($80,400) and Missouri ($32,400) represent the ends of the spectrum for average annual charges for private-pay assisted living in a new report released by the AARP. Meanwhile, the supply of assisted living and residential care units among various states showed even more divergent statistics: Oregon led with 121 units per 1,000 people, whereas Louisiana was last at 20 per 1,000. The figures are included in the newly released AARP Public Policy Institute's 2018 edition of ‘Across the States/Profiles of Long Term Services and Supports.’”

LTC Comment: AARP stopped publishing this very useful report for several years. It’s good to see it back and we’ll offer detailed analysis in a future LTC Bullet.

We made good on that promise with LTC Bullet: Long-Term Care Across the States, Thursday, September 27, 2018

Expenditures of the Aged

NBER on The Lifetime Medical Spending of Retirees 0518 URL: http://www.nber.org/papers/w24599

The Lifetime Medical Spending of Retirees
John Bailey Jones, Mariacristina De Nardi, Eric French, Rory McGee, Justin Kirschner
NBER Working Paper No. 24599
Issued in May 2018, Revised in July 2018
NBER Program(s):Health Care, Health Economics, Public Economics
Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired U.S. households face over the remainder of their lives. We find that households who turned 70 in 1992 will on average incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000, and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the dispersion of this spending diminish only slowly with age. Although permanent income, initial health, and initial marital status have large effects on this spending, much of the dispersion in lifetime spending is due to events realized later in life. Medicaid covers the majority of the lifetime costs of the poorest households and significantly reduces their risk.
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

LTC Comment: We analyzed and critiqued this paper in LTC Bullet: How and How Much Medicaid Reduces Lifetime Medical Spending for Affluent Retirees, October 10, 2018.

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

National Health Expenditures

Health Affairs on National Health Expenditures for 2017 URL:
NHE for 2017 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05085

See also: LTC Bullet: So What If the Government Pays for Most LTC?, 2017 Data Update, Thursday, December 13, 2018

Unfunded Liability Estimates

AEI on The-2018-Medicare-Trustees-Report 0718 URL: https://www.aei.org/wp-content/uploads/2018/07/The-2018-Medicare-Trustees-Report.pdf

7/9/2018, “The 2018 Medicare Trustees Report: Fiscal and Policy Challenges,” by Joseph Antos and Robert E. Moffit, AEI Economic Perspectives

Quote: “Medicare’s financial outlook has deteriorated in the past year, according to the latest annual report by the program’s trustees. The Medicare Hospital Insurance trust fund is projected to be depleted in 2026, three years earlier than estimated in last year’s report. That understates the policy challenge. Every year, the program relies more on general revenues to cover its costs. In total, Medicare will receive $324 billion in general revenues this year. That will more than double by 2026. Prompt action is needed to put Medicare on a sound financial footing.”

LTC Comment: Trenchant analysis by two of the best health policy analysts I know.

Don’t Count on Social Security or Medicare

Social Insurance and American Health Care -- Principles and Paradoxes, by Theodore R. Marmor 11-29-2018 (3) URL: https://read.dukeupress.edu/jhppl/article/doi/10.1215/03616878-7104419/135383/Beneath-the-Surface-Social-Insurance-and-American

Journal of Health Politics, Policy and Law, Vol. 43, No. 6, December 2018
DOI 10.1215/03616878-7104419 _ 2018 by Duke University Press

We analyzed and critiqued this article in LTC Bullet: Venezuela, Yale and Long-Term Care, December 7, 2018

Chapter 6: Long-Term Care Financing

General

NBER on LTCHs 0818 URL: http://www.nber.org/papers/w24946.pdf

8/2018, “Long-Term Care Hospitals: A Case Study in Waste,” by Liran Einav, Amy Finkelstein, Neale Mahoney, National Bureau of Economic Research

Quote: “There is substantial waste in U.S. healthcare, but little consensus on how to identify or combat it. We identify one specific source of waste: long-term care hospitals (LTCHs). These post-acute care facilities began as a regulatory carve-out for a few dozen specialty hospitals, but have expanded into an industry with over 400 hospitals and $5.4 billion in annual Medicare spending in 2014. We use the entry of LTCHs into local hospital markets and an event study design to estimate LTCHs’ impact. We find that most LTCH patients would have counterfactually received care at Skilled Nursing Facilities (SNFs) – post-acute care facilities that provide medically similar care to LTCHs but are paid significantly less – and that substitution to LTCHs leaves patients unaffected or worse off on all measurable dimensions. Our results imply that Medicare could save about $4.6 billion per year – with no harm to patients – by not allowing for discharge to LTCHs.”

LTC Comment: This is the abstract for the full paper which is available through NBER here: http://www.nber.org/papers/w24946.pdf. Could treating high-acuity LTCH patients in SNFs save money without tipping the delicate balance of high Medicaid dependency and low reimbursement against quality? I’m very dubious.

8/27/2018, “How to Tame Health Care Spending? Here’s a One-Percent Solution,” by Margot Sanger-Katz, New York Times

Quote: “The researchers concluded that the health care system could probably save a lot of money — around $5 billion a year — by paying the long-term care hospitals the same prices that are paid to skilled nursing facilities, the places that most long-term patients end up in when there is no long-term care hospital nearby. If they’re right, the savings would probably be in the 1 percent range. … The scholars involved in the project know that they are not the first group to think small. The sort of deep and narrow investigations they are undertaking have long been the focus of groups like the Medicare Payment Advisory Commission, a group that recommends changes to Congress and that had even flagged long-term care hospitals for overhaul years ago. Washington policymakers and think tanks have long assembled briefing books of options to help them nip and tuck dollars out of government health programs.”

LTC Comment: More on the NBER research we highlighted earlier today, this time in the New York Times. If saving a measly $5 billion is no longer beneath the dignity of the economics profession, maybe they should reconsider our analysis and proposal: Save Medicaid LTC $30 Billion Per Year AND Improve the Program (2011).

Chapter 10: Medicaid

Medicaid Financing and Burwell Data

8/23/2018, “Don't Blame Older Adults For Big Increases In Medicaid Spending,” by Howard Gleckman, Forbes

Quote: “Is the growing need for long-term supports and services (LTSS) by older adults driving big increases in Medicaid spending? Not according to a new study by Don Redfoot and my Urban Institute colleague Melissa Favreault. Indeed, they found that while Medicaid enrollment and expenditures for older adults grew in recent decades, it had far less effect on the program than increases in other Medicaid populations, especially younger people with disabilities. Older adults accounted for only about 13% of Medicaid spending increases from 1975 to 2011. … What did account for the relatively modest boost in Medicaid spending on older adults? … First, the asset test that helps determine financial eligibility for Medicaid is not indexed for inflation, and its income test is tied to a relatively slow-growing inflation factor. For instance, unmarried older adults generally are barred from enrolling in Medicaid if they have non-housing assets that exceed $2,000—a limit that has not changed since 1989. Thus, as the wealth of many older adults is increasing, the asset test is not and the percentage of seniors eligible to enroll in Medicaid is shrinking.”

LTC Comment: More double talk and statistical prestidigitation from the usual suspects. The fact that ObamaCare policies spiked Medicaid costs mostly for new, young, able-bodied recipients doesn’t reduce, rather it increases, the future medical and LTC financial liability from the age wave which is just now starting to hit in earnest. The flat Medicaid asset test of $2,000 means nothing, because exempt assets are virtually unlimited, countable assets are easily convertible to exempt assets, and Medicaid planners still wave magic legal wands to make any additional wealth disappear. This research assuages concern about entitlement spending on the elderly in order to encourage more of the same. That’s a very risky prospect a decade or so before the bottom falls out of Medicare, Social Security, and Medicaid and boomers start turning 85, the age at which medical and long-term care costs explode.

KFF on Medicaid Enrollment and Spending 1018 URL: http://files.kff.org/attachment/Issue-Brief-Medicaid-Enrollment-and-Spending-Growth-FY-2018-2019

10/25/2018, “2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending,” by Alex Spanko, Skilled Nursing News

Quote: “Increases in long-term care costs contributed to an overall boost in Medicaid spending during fiscal 2018, and a leading health policy non-profit warns that 2019 could be a pivotal year for the program. ‘FY 2019 will be a year to watch how Medicaid’s role evolves on the ground in the 50 states and D.C.,’ the Kaiser Family Foundation (KFF) wrote in its annual report on Medicaid enrollment and spending, released Thursday.”

LTC Comment: Medicaid LTC spending growth, overshadowed for years by the rapid expansion of able-bodied ObamaCare recipients, is once again assuming the role of key revenue driver. And you ain’t seen nothin’ yet!

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Updated, Sunday, December 16, 2018, 4:43 PM (Pacific)

Seattle—

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LTC E-ALERT #18-047: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Minnesota Considers Two New Ways To Pay For Long-Term Care
Could Medical Procedures Transmit Alzheimer’s?
Older Americans Drive Growth of Wearables
Dementia Patients Fuel Assisted Living’s Growth. Safety May Be Lagging
7 Myths About Caregiving Costs
Provider groups rail against Trump administration pitch to penalize immigrants for using Medicaid
Senior Homeowners Give Reverse Jumbo Mortgages New Life
The Human Freedom Index
2019 SSI and Spousal Impoverishment Standards
‘Means Tested’ Welfare Means Nothing in Practice
The Loneliest Generation: Americans, More Than Ever, Are Aging Alone
Reverse Mortgages Seen By Advisors As Option Of Last Resort
Senior Living vs. Home Care: Consumer Preferences May Be Changing

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Updated, Thursday, December 13, 2018, 9:24 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2017 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.

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find and educate clients, reducing the “Ping-Pong” in the LTCi sales process. Help clients project their exposure to LTC risk, compare Combo vs. Stand-Alone LTCi easily, and make informed final decisions about buying LTCi in 15-20 minutes! Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation! Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, & a past Chair of the Center for Long-Term Care Financing. Contact Claude at 800-999-3026, x2241 or claudet@targetins.com to ask questions or get references. ***

*** NEW MEDICAID/MEDICARE NUMBERS: We’ve just updated the Medicaid and Medicare Key Numbers in The Zone for 2019. One highlight: Medicaid’s home equity exemption has increased to $585,000 or $878,000 depending on your state. For all the raw numbers as reported by the Centers for Medicare and Medicaid Services (CMS), go to 2019 SSI and Spousal Impoverishment Standards and Social Security, Medicare announce key 2019 numbers. For access to The Zone, you’ll need your user name and password. For a reminder or to become a member of the Center for Long-Term Care Reform and get your UN and PW, contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** REST IN PEACE. We are sad to report the passing of Mark Randall. Mark was a much-beloved national trainer of long-term care insurance agents. His humor and passion for his subject inspired trainees across the country to market this crucial product successfully. I worked most closely with Mark during the 2008 National Long-Term Care Consciousness Tour, which he played a major role to organize and direct. I know there are thousands of past and present LTCI agents throughout the nation who will remember Mark Randall fondly and with deep appreciation for the education and entertainment he gave them. See his picture and read his obituary here. We say goodbye to a great friend of the business and a key contributor to the mission we share. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2017 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 2017 statistics on its website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Tables.zip. Click “save” when asked what to do with Tables.zip. You’ll need to click on the data tables of interest, Tables 14 and 15 for our purposes to “unzip” them.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending in 2017: Growth Slows to Post–Great Recession Rates;
Share of GDP Stabilizes." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free.

Following is our annual analysis of the latest nursing home and home health care data.*

Heads Up: This may be the most important LTC Bullet we publish all year. It is the sixteenth in a row we’ve done annually to analyze the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing. If you'd like to see the earlier versions, go here and search for “So What if the Government Pays for Most LTC.” You’ll find our yearly analyses of the data going all the way back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC?, 2017 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.

Nursing Homes

America spent $166.3 billion on nursing facilities and continuing care retirement communities in 2017. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 47 years (from 26.8% in 1970 to 52.9% in 2017, up 26.1 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.7% in 2017, down 22.5% of the total). Source: Table 15: Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2017.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 45.7% in the past four decades while the share paid by Medicaid and Medicare has nearly doubled, up 97.4%.

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts at least $572,000 and in some states up to $858,000 of home equity (as of 1/1/18). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home care (30.2% of the dollars in 2017), it covers nearly two-thirds (62%) 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. Even if Medicaid pays nothing with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. The 2015 national projected shortfall in Medicaid reimbursement was $22.46 per patient day and over $7 billion in total. Source: 2015 Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.0% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2017. 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 many LTCI policies pay beneficiaries who then pay the nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? ALFs are 85% private pay (Source: AHCA/NCAL Data) and they cost an average of $48,000 per year (Source: Genworth's 15th Annual [2018] Cost of Care Survey Shows Continuing Rise in Long Term Care Costs). 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 $572,000 or $858,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

So What? For most people, Medicaid nursing home benefits are easy to obtain without spending down assets significantly and Medicaid's income contribution requirement is usually much less expensive than paying the full cost of assisted living.

No wonder ALFs are struggling to attract enough private payers to be profitable. No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care. This problem has been radically exacerbated in recent years because more and more state Medicaid programs are paying for assisted living as well as nursing home care, which makes Medicaid eligibility more desirable than ever.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $97.0 billion on home health care in 2017. Medicare (40.0%) and Medicaid (36.1%) paid 76.1% of this total and private insurance paid 11.1%. Only 9.3% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2017.

So What? Only one out of every ten dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care.

Bottom line, people only buy insurance against real financial risk. As long as they can ignore the risk, avoid the premiums, and get government to pay for their long-term care when and if such care is needed, they will remain in denial about the need for LTC insurance. As long as Medicaid and Medicare are paying for a huge proportion of all nursing home and home health care costs while out-of-pocket expenditures remain only nominal, nursing homes and home health agencies will remain starved for financial oxygen.

The solution is simple. Target Medicaid financing of long-term care to the needy and use the savings to fund education and tax incentives to encourage the public to plan early to be able to pay privately for long-term care. For ideas and recommendations on how to implement this solution, see www.centerltc.com.

Note especially:

“How to Fix Long-Term Care Financing” (2017), at http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf

“CASSANDRA’S QUANDARY: The Future of Long-Term Care” (2016), at http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm;

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;

"The LTC Graduate Seminar Transcript" here (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 significant steps toward addressing these problems. A cap was placed for the first time 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.

* Note that CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding for example Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities. This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40% in 2008 to under one-third (32.8%) in 2009. CMS also created a new category called "Other Third Party Payers" (7.1%) which includes "worksite health care, other private revenues, Indian Health Service, workers' compensation, general assistance, maternal and child health, vocational rehabilitation, other federal programs, Substance Abuse and Mental Health Services Administration, other state and local programs, and school health." For definitions of all NHEA categories, see http://www.cms.gov/NationalHealthExpendData/downloads/quickref.pdf.

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. Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, December 10, 2018, 10:18 AM (Pacific)

Seattle—

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LTC E-ALERT #18-046: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Take advantage of protections in NY from nursing-home costs
Growth in Medicare Advantage Spending Far Outpaces Traditional Medicare
U.S. healthcare spending growth slows for second year in a row
Lawsuit accuses Brookdale of ‘dumping’ residents of 10 CCRCs
In times of low unemployment, nursing home quality suffers
Boomers Create a Surge in Luxury Care Communities
Trump Cabinet Calls on States to Eliminate Certificate of Need Laws
Federal watchdog: Nearly half of Medicare patients in long-term-care hospitals experienced harm
Demand Grows, Challenges Increase for Senior Housing in Low-Density Markets
Medicare Players Team Up for 2020 Chronic Care PushOpinion: This isn’t your grandpa’s Social Security system
Social Security Runs Short of Money, and Ideas Fly on How to Repair It

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Updated, Friday, December 7, 2018, 10:39 AM (Pacific)

Seattle—

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LTC BULLET: VENEZUELA, YALE AND LONG-TERM CARE

LTC Comment: What could those three diverse terms possibly have in common? Read on, after the ***news.***

*** REMEMBER PEARL HARBOR: This is a good day to recall what others have given so we can live free of foreign or domestic compulsion. ***

*** “IMAGINE THE POSSIBILITIES” is the theme of the 19th Annual ILTCI Conference, which will convene March 24-27, 2019 at the Sheraton Grand in Chicago, IL. Organizers report “You can rest assured that you’ll receive expert insight into only the most current tactics and information pertaining to long-term care. There will be opportunities to attend special workshops, network with both peers and industry leaders, and also engage with exhibitors and sponsors at their booths. This conference truly is centered around dramatically enhancing your understanding of the long-term care industry, so that you can easily and efficiently implement success strategies for your organization.” Register here. Apply to exhibit here. Sponsor here. ***

*** MOVIE UPDATES: “Big Sonia” is the poignant story of 91-year-old Sonia Warshawski– great-grandmother, businesswoman, and Holocaust survivor. We’ve pointed you to this wonderful film before. The latest news is that Big Sonia is now available for rent on Google Play and Amazon and can be purchased at those sites or www.BigSonia.com. Similarly Big Sonia is available to rent or buy on iTunes. Here is a link to Q & A after the showing at the Dole Institute: https://www.youtube.com/watch?v=G1I6P37MYGc&feature=youtu.be. Finally, a core-standard curriculum guide for Big Sonia is now available for download here.

The other movie we’re following is LTC expert and Center-friend Ross Schriftman’s “My Million Dollar Mom,” based on a true story about caring for his mother diagnosed with Alzheimer's. Ross’s film has received seven nominations at the Tampa Bay Underground Film Festival to be held December 6th through December 9th. He says “Our film highlights the value of long term care insurance as the main character faces the challenges of his mom's failing health from Alzheimer's.” Check out the website for ways to view and/or buy the film. ***

LTC BULLET: VENEZUELA, YALE AND LONG-TERM CARE

LTC Comment: In 1968, my late wife and I settled into Carmen de Cura, our tiny Peace Corps site in the Venezuelan llanos. Part of our job was to confer with visiting medical professionals and back them up in the community when they left and we remained. But even though Venezuela’s constitution guarantees medical care to every citizen, the government doctors and nurses rarely showed up in our town and never when scheduled. That was a bitter early lesson that despite what I’d been taught in college, entitlements do not ensure benefits.

Fifty years later everyone knows what happened to Venezuela. Yet our universities and eminent professors continue to teach that government entitlement programs financed by compulsory contributions enforced by the IRS are crucial to individual and social well-being. Let me give you an example published recently by a Yale professor emeritus who is also regarded as an opinion leader.

You can read Theodore R. Marmor’s “Social Insurance and American Health Care -- Principles and Paradoxes” for yourself in the Journal of Health Politics, Policy and Law, Vol. 43, No. 6, December 2018, here. I encourage you to do so, but first, let me give you the general idea and then comment on some illustrative quotes from his article.

Professor Marmor worries that we no longer understand and apply the true principles of social insurance. The original idea behind Social Security, and later Medicare, was that everyone would contribute to a fund that could later pay for their retirement income security and old age health care. This social insurance approach was not based on need, but rather on earned right. You paid in so you had a right to the program’s defined benefits. But somehow, according to Marmor, critics corrupted this grand idea by mixing social insurance programs up with means-tested welfare programs like Medicaid. They bunched these fundamentally different programs together, called them all safety net “entitlements,” and claimed they’ll bankrupt the country as they plunge into insolvency. But funds for senior entitlement programs can’t run out any more than funds for national defense can run out. Voters, especially the burgeoning elderly bloc, won’t allow that to happen. So, we should not worry about the survival of social insurance as long as we return to its purer principles.

That’s his argument in a nutshell. But don’t take it from me. What follows are direct quotes from the article followed by our comments.

Marmor: “Social insurance, like commercial insurance, is about protection against financial risk. In the United States, Medicare and the Social Security Administration’s programs for retirement, disability, worker’s compensation, and worker’s life insurance have become dominant features of American public policy, amounting to more than 41 percent of the federal budget.” (Abstract, p. 1013)

LTC Comment: 41 percent? Maybe, if you leave out Medicaid and the escalating cost of interest on the national debt. Add those and other social entitlement costs back in and you’re looking at two-thirds (67 percent) of the federal budget already and growing rapidly. That’s one very good reason to consider the whole entitlement picture and not just focus on social insurance alone.

Marmor: “This essay seeks to clarify the crucial differences between social and commercial insurance and elaborates on the conceptual justifications and distinctive operational features of America’s social insurance programs.” (Abstract, p. 1013)

LTC Comment: Wait. The proper counterpart for “social” insurance is not “commercial,” but rather “private” insurance. Private, voluntary, nonprofit “insurance” funds created by philanthropic organizations were commonplace in the United States before compulsory government programs crowded them out. Using the term “commercial” is just this author’s way of sneering at the profit motive as if it were a good thing to operate at a loss as social insurance programs routinely do.

Marmor: “There are two issues that involve serious misunderstandings: the difference between social insurance and commercial insurance, and the difference between programs for which benefits are earned through contributions and programs with means-tested, often called ‘welfare,’ benefits.” (p. 1016)

LTC Comment: True, but unfortunately Marmor does not grasp the importance of the distinctions as our comments on later quotes will clarify.

Marmor: “It is ‘insurance’ in the sense that people contribute to a fund to protect themselves against unpredictable financial risks.” (p. 1016)

LTC Comment: That’s a poor definition of insurance because it leaves out half of the term’s legitimate meaning. Both social and private insurance spread risk and charge a fee, but only private insurance prices risk to determine a variable premium amount. By charging everyone the same and giving everyone identical benefits regardless of the risk level each person brings into the insurance pool, social insurance creates a fatal moral hazard. It punishes responsible, healthy behavior and rewards the opposite. The implicit message is “Go ahead and smoke, binge drink, use drugs, take welfare instead of working, no problem. The rest of us will pay for your irresponsibility.” The dignity of private insurance comes from underwriting, which treats everyone justly, charging each a premium commensurate with the risk they’re asking others to share on their behalf. I developed these points more fully in an article titled “The Inherent Individualism of Insurance.”

Marmor: “In commercial insurance, price must reflect risk. Social insurance, by contrast, operates on the premise that contributions are calculated according to one’s income and benefits are related to one’s needs.” (p. 1016)

LTC Comment: There, he’s made it explicit. Social insurance operates on the premise: “From each according to his ability, to each according to his needs.” That is the credo of Marxism, the essence of communism, the fatal flaw that dooms every socialist enterprise. That’s the crumbling foundation on which our social insurance programs are based and the main reason they face eventual collapse. You don’t grant a pickpocket the right to your wallet based on need. Why would you give the same power to the government?

Marmor: “The social insurance contract, once created, cannot be voluntary and survive long.” (p. 1016)

LTC Comment: So, social insurance is wonderful, but it cannot survive without the threat of government force to compel citizens to participate. Loss of freedom and independence are inevitable outcomes of involuntarily taxing ability to fund need. You always get less of what you tax (ability) and more of what you subsidize (need). Over time such policies sap individual initiative, handicap economic productivity, and make increasing dependency on government inevitable. Eighty years of expanding social insurance and welfare programs have set us on that course, the inevitable tragic outcome of which is already in sight.

Marmor: “In recent years, much linguistic muddle has been created through the use of entitlements as the term of choice for discussing both social insurance and means-tested programs.” (p. 1017)

LTC Comment: Social Security and Medicare were originally set up as social insurance programs. You paid in; you took out; no means test. They had the dignity of private insurance in that respect. Medicaid and Supplemental Security Income (SSI), on the other hand, required no contribution and were based on need. They were welfare, not insurance, and shared that stigma. But all that has changed radically. Social Security and Medicare have been substantially welfarized by tying their benefit levels to beneficiaries’ wealth. Medicaid and SSI have gone the opposite direction becoming readily available to able bodied adults and affluent elders in need of long-term care. Social insurance and welfare programs are gradually merging into indistinguishable, fiscally unlimited entitlements that require contributions based on ability to pay, but distribute benefits based on financial need.

Marmor: “We see the power of [calling both social insurance and welfare “entitlements”] by default: few if any critics of Social Security or Medicare explicitly criticize their appropriateness. Instead, they concentrate on claims that the programs are unaffordable.” (p. 1018)

LTC Comment: Do critics walk gingerly around “third-rail” entitlement programs? Well sure. No one wants to be called uncaring, much less have to fend off attacks by Antifa thugs demanding more “free” benefits. But plenty of thoughtful economists have demonstrated that by sopping up private savings and diverting capital away from productive investment, the huge and growing entitlement programs have set the American economy on a dangerous downward course. Borrowing to support spending beyond our means has been going on for decades as indicated by the huge federal deficits and debt. The consequences of such irresponsibility can be disguised and delayed for a long time. “There’s a great deal of ruin in a nation,” Adam Smith acknowledged. But sooner or later the piper must be paid. Sooner is looking more likely than later now as the entitlement trifecta approaches. The first boomers turn 85 in 2031, the same decade in which the empty Social Security and Medicare trust funds use up their economy-debilitating claims on general federal revenue. This crescendo of collapse will give the final lie to the false promise of social insurance.

Marmor: “The idea of a trust fund, then, was to emphasize the special status of a program whose benefits would be paid decades after a contributor’s payments. It was language meant to highlight reliability, to suggest a governmental appreciation of an especially protected program. The sad and second paradox is that this language has been turned upside down, bringing needless fear that the funds will ‘run out.’” (pps. 1018-19)

LTC Comment: Oh well, then, never mind. No worries. The trust funds were never meant to have any real assets in them, just to convey a sense of responsibility by the government in order to sustain the public’s confidence in the social insurance schemes. What a relief!

Marmor: “Anyone who asked whether the Defense Department will ‘be there’ in 2040 would be considered at the very least odd. … As a speaker I face questions about dire predictions of ‘insolvency’ regularly. I urge such questioners to dwell for a moment on how a growing proportion of senior citizens can be politically compatible with large reductions in future Social Security benefits.” (p. 1019)

LTC Comment: Right, we don’t have to worry about entitlements’ insolvency, much less funding national defense, because a lot of old people can vote themselves anything they want. But revenue to fund social benefits and national defense does not come from votes. It comes from taxes. The more important demographic number is not how many old people can vote, but how many young people, a declining bloc, can or will pay taxes to support benefits and services they don’t believe they will ever receive themselves.

Marmor: “The regulatory innovations of Obamacare represent earnest efforts to regulate commercial health insurance to become more like social insurance. Requiring insurers to guarantee issue at a fixed price regardless of preexisting conditions would reduce risk selection that social insurance eliminates directly.” (p. 1021)

LTC Comment: The more government tries to convert private insurance into social insurance, the more likely both forms will collapse. As described above, the distinguishing feature of private insurance is that it prices risk through underwriting. It neither punishes ability nor rewards need. To ignore pre-existing conditions and eliminate underwriting leads inevitably to insolvency, whether in the social or private insurance models. The proper solution for pre-existing conditions is charity, preferably private charity, but means-tested public assistance as a last, not first, resort.

Closing LTC Comment: OK, that covers Venezuela and Yale, but where does long-term care come in? The most popular reform proposals for long-term care financing advance the same ideas and arguments as Marmor’s article. They insist we need mandatory, government-enforced participation in a social insurance scheme to pay for long-term care. They seek to eliminate the necessity for people to take personal responsibility for this risk and cost. They propose to add just a little bit more to the camel’s back of public financing. In other words, they guide us toward the same dark path of ruin that Professor Marmor illumines.

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Updated, Monday, December 3, 2018, 10:26 AM (Pacific)

Seattle—

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LTC E-ALERT #18-045: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

The high price of being an unpaid caregiver
Death rate for those 85+ increases ‘significantly,’ CDC says
In GE Probe, Ex-Staffers Say Insurance Risks Were Ignored
The $15 billion money pit dragging General Electric down
There’s a looming long-term care crisis. Are you prepared?
Generational Wealth Transfer to Hit $68 Trillion Over 25 Years: Cerulli
Here’s what it’s like dealing with the high cost of long-term care
Paying for Long-Term Care: How It’s Changing
What You Need to Know About Hybrid Long-Term-Care Insurance
Daytime sleepiness may indicate a higher risk for Alzheimer’s disease
Senators express ‘profound concern’ over VA nursing home care
New Tax Deductible Limits for Long-Term Care Insurance Announced by AALTCI Director
High-fat diet 'lowers risk of dementia'
Long-Term Care: A Comparison of Assisted Living and Nursing Homes

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Updated, Wednesday, November 21, 2018, 10:14 AM (Pacific)

Seattle—

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LTC BULLET: GET LTC RISK RIGHT

LTC Comment: If you’re still saying 70 percent will need LTC and 20 percent will need it for five years or more, wake up. Research has passed you by. Details after the ***news.***

*** HAPPY THANKSGIVING ***

*** ILTCI REGISTRATION OPEN: The 19th Annual Intercompany Long-Term Care Insurance Conference, themed this year as “Imagine the Possibilities,” takes place March 24-27, 2019 at the Sheraton Grand Hotel in Chicago, Illinois. Register here. Organizers assure you’ll get “discussions led by industry experts across a variety of different disciplines, from legal to marketing, technology,” “expert insight into only the most current tactics and information pertaining to long-term care,” and the opportunity to “attend special workshops, network with both peers and industry leaders, and also engage with exhibitors and sponsors at their booths.” There’s no better way to capture the state of the LTCI business. We hope to see you there.***

LTC BULLET: GET LTC RISK RIGHT

LTC Comment: I keep seeing the ancient (2005) data cited that 70 percent of elderly Americans will need long-term care and one in five of them will need it for five years or more. Well, those estimates went out the window three years ago. We explained and critiqued the newer, better data in LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources on Friday, July 24, 2015. Did you miss it? Well, no worries, here’s that report and analysis again. Don’t take the new findings and conclusions at face value without considering our critique as well.

Following is a slightly modified reprint of: LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources

LTC Comment: New numbers, better than the old numbers, but they require further clarification and explanation.

Highlights from a new report by the DHHS Assistant Secretary for Planning and Evaluation:

Roughly half—not 70 percent—of elderly Americans will need long-term care.
One in seven—not one in five—will need five years or more.
Average LTC expenditures are $138,000 but, not to worry, you can cover that with only $70,000 today.
Average LTC expenditures if you need any paid LTC are $266,000 but you can cover that with only $134,000 today.
Out-of-pocket costs average $72,000, but among those who have out-of-pocket costs, they average $140,000.
Women’s LTC costs average $180,000 compared to $90,000 for men.
For those with any LTC costs, the averages jump to $320,000 for women and $194,000 for men.
36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to only 5 percent in the top quintile.

Highlights from our analysis:

This new data is a vast improvement over what we had before.
But this report’s analysis of the new data is fraught with political and ideological bias in ways we’ll explain and document.
Saying as this report does that $70,000 and $134,000 set aside today can cover future costs of $138,000 and $266,000 is inaccurate, misleading and irresponsible.
The report misleads by implying without evidence and incorrectly that Americans must spend down most of their wealth before receiving Medicaid LTC benefits.
Two out of five people receiving Medicaid LTC benefits have incomes between $50,521 and $217,032 or more.
More than two-thirds (67.4 percent) getting Medicaid LTC have incomes between $28,895 and infinity. Only for the low income? Hardly.
If the lowest-income-quintile people are so broke, how is it that 5.2 percent of them can expect out-of-pocket LTC expenses to exceed $250,000?
Analysis of long-term care risk and cost should raise consumers’ awareness and concern, not tamp it down unrealistically as this report does.

LTC Comment: The Department of Health and Human Services’ (DHHS) Assistant Secretary for Planning and Evaluation (ASPE) has just published (July 2015) an “Issue Brief” titled “Long-term Services and Supports for Older Americans: Risks and Financing.” Read it here. (Never mind the report’s use of the awkward neologism “LTSS.” What they mean is formal, HIPAA-level “LTC” wherever it is provided. We’ll use the clearer, traditional term “LTC.”)

This new report is an important contribution to our understanding of the incidence, duration, cost and financing sources for long-term care. But it’s a big change from what we used to think, i.e., that 70 percent of the elderly will require some LTC and 20 percent will need five years or more of care. (For our critique of the study that generated those old estimates, see LTC Bullet: Microsimulate This!, March 28, 2006.) We’re asked now to believe that only 52.3 percent will need any formal LTC and that only 13.9 percent will require five years or more.

Big change. What shall we make of the new utilization numbers, lower risk estimates, and funding source information? That’s what today’s LTC Bullet is about. But, bottom line, these new data give a better picture of the reality of long-term care, because they take into account the cost of housing (not just care) in residential settings and because they focus on higher-acuity, more clearly defined HIPAA-level care for two or more ADLs or incidental to cognitive impairment.

So, this is progress, but that said, let’s go through the report, quote by quote, analyze and comment.

Quote: The issue brief’s “abstract”: “Most Americans underestimate the risk of developing a disability and needing long-term services and supports (LTSS). Using microsimulation modeling, we estimate that about half (52%) of Americans turning 65 today will develop a disability serious enough to require LTSS, although most will need assistance for less than two years. About one in seven adults, however, will have a disability for more than five years. On average, an American turning 65 today will incur $138,000 in future LTSS costs, which could be financed by setting aside $70,000 today. Families will pay about half of the costs themselves out-of-pocket, with the rest covered by public programs and private insurance. While most people with LTSS needs will spend relatively little on their care, about one in six (17%) will spend at least $100,000 out-of-pocket for future LTSS.” (p. 1)

LTC Comment: Those are powerful, but confusing numbers. At age 65, you have roughly a 50/50 chance of needing long-term care that will cost $138,000. But you’d only have to set aside $70,000 to cover that cost. On the other hand, you have a 17% probability of spending $100,000 on LTC out of pocket even though half the cost of long-term care will be paid by public programs or private insurance. You’ll need to read the whole report to unravel this confusion, but we’ll try to clarify the meaning in the following quotes and comments, with a special focus on any ideological bias that has crept into ASPE’s exposition.

Quote: “Most Americans who receive formal LTSS pay out-of-pocket. For those with longer spells, they may pay out-of-pocket until they qualify for Medicaid. Reliance on Medicaid for those that cannot afford the full costs of LTSS may result in increased federal and state spending for LTSS.” (p. 2)

LTC Comment: It’s true that most people pay privately for formal LTC at least for a while. It is also true that they continue paying privately while they receive Medicaid benefits. This report does not explain how such private payment works nor how it impacts the LTC financing and service delivery system. The report simply assumes that people spend down their wealth before qualifying for Medicaid. The truth is much more complicated and critical to understand.

First, Medicaid LTC benefits are easily available to high-income people, because anyone with income below the cost of a nursing home (at least several thousands of dollars per month) qualifies based on income. Second, Medicaid’s LTC asset exemptions are nearly unlimited. Uncounted assets include most home equity and a car, term life insurance, prepaid burial plans, IRAs, and one business with no dollar limits. So for purposes of eligibility, even ignoring legal techniques used to hide or divest assets, neither income nor assets prevent most elderly Americans from qualifying for Medicaid LTC benefits.

Thus, the reality is not that most people spend down their wealth and finally become dependent on Medicaid. The reality is that most people are eligible with little or no spend down. Once on Medicaid, of course, they have to contribute their income to offset Medicaid’s cost for their care. That means that the LTC provider receives Medicaid’s dismally low reimbursement rate, but Medicaid only has to pay its de minimus rate minus whatever private income, largely Social Security and SSI, that the recipient contributes. The result is downward pressure on quality and misleadingly low Medicaid expenditures. Recipients’ exempt assets are also subject to estate recovery, but loopholes in the federal law and most states’ failure to enforce estate recovery aggressively allow most exempt assets to pass to heirs instead of reimbursing Medicaid. You cannot understand the distribution of payment sources arrayed in this new data without taking these facts into account.

Quote: “A microsimulation model is used to describe the future care needs for Americans. This model can predict what percentage of individuals will develop a disability, have LTSS needs, use paid LTSS, and among those that use paid LTSS, how much they use and for how long. It estimates care costs, and how they would be financed under current policies. Microsimulation modeling provides not only the average likelihood of these outcomes, but also describes the distribution of these needs and costs.” (p. 2)

LTC Comment: All econometric models should be taken with a grain of salt. A key question: if you input data from 30 years ago, does this model accurately predict current conditions in the LTC service delivery and financing system? Unfortunately, we don’t have the necessary data from 30 years ago to answer this question. So the lesson is to challenge all assumptions and watch carefully and critically how the model’s predictions play out over time.

Quote: “As expected, given the aging population, the number with HIPAA-level disability is expected to grow from 6.3 million to almost 15.7 million.” (p. 3)

LTC Comment: Whatever else we can say about LTC services and financing, we’ll have 2.5 times as many people to care for over the next 50 years. Those aging boomers are marching relentlessly toward senescence and need. Absent a plague targeting old people they’re going to need a lot of long-term care. So it behooves us to get these projections right.

Quote: “The typical person who is alive at age 65 can [be] expected to live another 20.9 years. Fifty-two percent can anticipate having at least some needs for LTSS; 19 percent are expected to have needs that last less than a year, and about 14 percent are expected to have needs that extend beyond five years.” (p. 3)

LTC Comment: Instead of being able to say 70 percent of aged Americans will need some long-term care, we can now say that over half will need assistance with two or more activities of daily living and that one in seven will need such help for five years or more. That makes the risk more tangible and realistic, but still insurable. It remains a small risk of a catastrophic loss, which is the necessary and sufficient condition to make private insurance workable.

Quote: “While on average, individuals will need one year of paid LTSS, 48 percent of individuals will not use paid, formal LTSS at all (measured in service days, where one year is 365 days of paid LTSS). Among those who need paid LTSS services, about half will need less than a year, and a little more than 10 percent will need five years or more.” (p. 4)

LTC Comment: Likewise for paid LTC services, a one in ten risk of needing five years or more of paid care is eminently insurable.

Quote: “On average, individuals can expect to spend about $138,000 for LTSS (see Table 3A, or $70,000 in PDV as shown in Table A1). However, among those who ever use paid LTSS, the average cost will be about $266,000 (Table 3B or $134,000 in PDV as shown in Table A2).” (pps. 5-6)

LTC Comment: Big numbers but it’s more important to examine sub-categories and sub-populations as we’ll do below.

For now, consider that the phrase “individuals can expect to spend about $138,000 for LTSS” is a little misleading. The reality is that “various payers, including the individuals themselves, can expect to pay parts of the $138,000 expended on average per individual.”

What bothers me most here, however, is the idea as first stated in the “abstract” above that “$138,000 in future LTSS costs . . . could be financed by setting aside $70,000 today” or that $134,000 set aside today could cover $266,000 in future LTC costs.

What’s being employed to make this assertion is “present discounted value (PDV).” PDV is a legitimate actuarial concept intended to show how much money you would need to have now to be able to meet a future obligation based on certain assumptions regarding investment returns and inflation. For purposes of this paper, the authors computed PDV “using the Social Security Trustees' ultimate real interest rate of 2.9 percent. (Because the Trustees assume long-range price growth to average 2.7 percent, this amounts to a nominal discount rate of about 5.6 percent in the long-run.)” (Footnote 12, p. 12)

Now, here’s the problem with using present discounted value in this context.

How many aging Americans have earmarked $70,000, much less, $134,000 to cover their future possible long-term care needs? Very few.
Who is getting a safe 2.9 percent return on their savings today? No one.
Why should we expect inflation in the cost of LTC services to be only 2.7 percent? It won’t be.

Suggesting that people can set aside such small sums to meet the risk of catastrophic LTC costs adds another soporific to the already overwhelming factor anesthetizing the public to LTC risks and costs. To wit, the fact that government pays for most expensive long-term care after the care is needed, which enables the public’s denial by ameliorating the consequences of failing to plan or insure.

Quote: “Out-of-pocket costs average $72,000. Among those who have out-of-pocket costs, these costs average $140,000. About three-fifths of individuals face no out-of-pocket costs. Looking at community and institutional expenses together, two predominant payers are Medicaid, comprising 34 percent and out-of-pocket payments, comprising 52 percent of the sum of total LTSS expenditures, respectively. Medicare is the next most important payer, followed by private insurance and other public programs. Payer predominance varies by setting. For example, Medicaid pays for 51 percent of the total for institutional settings. For community expenses, in contrast, out-of-pocket payments by families comprise the majority, about 68 percent.” (p. 6)

LTC Comment: To read this, you’d get the impression that out-of-pocket LTC expenses are very high compared to Medicaid especially for “community services,” which implies that people are spending down savings to pay for long-term care as was stated without evidence or explanation earlier in this report. The reality is more complicated.

Half of the out-of-pocket expenditures for nursing home care is really just spend-through of Social Security income of people already on Medicaid. This is important because it shows that a very significant portion of out-of-pocket expenditures does not come from asset spend down, but from another fiscally vulnerable federal entitlement program. Sure, it’s money people could otherwise put in their pockets, but think ahead a few years. What happens in 2035 when Social Security can only pay ¾ of what it has promised future beneficiaries? Someone will have to make up the difference. Medicaid? It’s already under water and the age wave bodes ill for tax-funded welfare programs. Medicare? It runs out of money sooner than Social Security (2030). Private payers? That would mean even more cost shifting, further punishing private payers for having behaved more responsibly than others by saving, investing or insuring to pay for their own long-term care.

Do families and individuals pay even more for community care out of pocket (68 percent)? Well, yeah, but that’s just money they would have to spend for room and board anyway. What’s important here is that public financing pays for 28.6 percent of community-based care (Table 3B), which means Medicare and Medicaid are paying for most of the care-cost component whereas individuals and families are paying mostly for room and board expenses they would have had to fund in any case.

Quote: “Expected LTSS costs are higher for women than for men. Women’s costs average $180,000 (Table 4B) compared to $90,000 for men (Table 4A). These could be financed by setting aside about $90,000 for women (Table A5) and about $47,000 for men (Table A3). However, when we focus on those with any LTSS expenditures, this average jumps to $320,000 for women and $194,000 for men (translating to $160,000 and 101,000, respectively, in present value terms as shown in Table A6 and Table A4).” (p. 6)

LTC Comment: OK, if you needed any more proof that long-term care is a “women’s issue,” there you have it. Women have a higher probability than men of needing long-term care; they need it longer on average; and if they need any at all, it’ll cost them nearly one-third of a million dollars.

But here we go again with the present-discount-value painkiller. $320,000 looks like a lot of money at first, but the real cost today is only half that ($160,000). So, not to worry. Analysis of long-term care risk and cost should raise consumers’ awareness and concern, not tamp it down unrealistically.

Quote: “The DYNASIM projections suggest that although Medicaid does reach individuals at all points in the income distribution at age 65, it primarily serves those in the bottom two quintiles. For example, about 36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to just 5 percent in the top quintile at that age. Those in upper income quintiles who use Medicaid are typically individuals who have survived until their mid- to late 90s, consistent with other research (DeNardi et al., 2013).” (p. 7)

LTC Comment: Well, hello! Why is it news that Medicaid, a means-tested public welfare program, covers more poor people than rich people? This report displays ideological bias by bending over backwards to minimize the fact that Medicaid LTC benefits accrue to middle class and affluent people as much or more than to the needy.

Let’s cut the numbers from Table 6A a little differently. Two out of five people (40.8 percent) in the top three income quintiles rely on Medicaid. What are the upper limits for all five income quintiles? According to the Census Bureau, as of 2013:

Lowest:	$28,894
Second:	$50,520
Third:	$78,000
Fourth:	$121,059
Fifth:	$217,032 (This is actually the “lower limit of top 5 percent”)

Hmmm. This looks quite different. Nearly 41 percent of people receiving Medicaid LTC benefits have incomes between $50,521 and $217,032 or more. More than two-thirds (67.4 percent) have incomes between $28,895 and infinity. Not exactly destitute. How does this jibe with the slanted analysis offered in this report? It doesn’t. From now on, every time you read in a newspaper, magazine, or alas, a peer-reviewed academic journal that only “low-income” people qualify for Medicaid LTC benefits and only after they spend down their savings to impoverishment: Think bunk!

Not to put too fine a point on this paper’s bias, but keep an eye out for how its authors round up or down decimal numbers. For example, when they say “about 36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to just 5 percent in the top quintile at that age,” they’ve bumped up the low-income-quintile number from 35.8 percent and bumped down the top-quintile number from 5.5 percent. That introduces a .7 percent misimpression. Why not just use the actual numbers with the decimals intact? Why indeed? If you like to play “Where’s Waldo,” you’ll love reading this report sleuthing for rounding bias, or searching for typos. Good hunting.

Quote: “Family out-of-pocket expenditures, in contrast, are more concentrated in the higher quintiles. The average out-of-pocket LTSS expense in the top quintile is approximately $97,000 compared to closer to $45,000 in the bottom quintile. But again the mean obscures important distributional information. About 12 percent of people in the top income quintile at age 65 can expect out-of-pocket expenses in excess of a quarter million dollars.” (p. 8)

LTC Comment: The richest people pay only twice as much ($97,000) for LTC as the poorest people ($45,000)? Gee, I wonder if that could have something to do with what we explained immediately above.

It’s not surprising that 11.7 percent of top-income-quintile people have out-of-pocket expenses in excess of $250,000. But Table 6B also says that 5.2 percent of people in the lowest income quintile can expect out-of-pocket expenses to exceed $250,000. Maybe those lowest-income people aren’t quite as broke as we thought they were.

Quote: “Medicaid is an important payer for LTSS, but because it serves only those who meet income and asset criteria, many families pay for LTSS out-of-pocket. Private LTSS insurance has only a modest reach, and it predominantly covers costs for those high in the income distribution. Similarly, other public expenditures (for example, including Veterans Administration care) only help to cover small shares of the population with long-term care needs. The results presented here highlight the need for better planning for LTSS to accommodate both average and catastrophic financial risks associated with chronic disability.” (p. 8)

LTC Comment: Well, true, that’s what these results show. What they do not show without the explanation and clarification offered here is that Medicaid is a major payer for expensive long-term care for all income and asset levels and that as such it has for 50 years crowded out private-payers, impeded the private insurance and reverse mortgage markets as potential long-term care funders, and distorted the service delivery system in favor of the kind of welfare-financed nursing home care that most Americans prefer to avoid.

Bottom line, however, properly interpreted this data on long-term care incidence, duration, cost and financing sources is better than we have ever had before. Use it, but don’t abuse it to suit any political or ideological bias. If you let the facts speak for themselves they’ll shout:

“Give Medicaid back to the poor and everyone else will save, invest or insure for long-term care.”

Do it before it’s too late!

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Updated, Monday, November 19, 2018, 10:25 AM (Pacific)

Seattle—

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LTC E-ALERT #18-044: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

LTCi Liquidation Decision Could Undermine The Insurance Industry, ACLI Says
Obesity and diabetes rates are up in every state
Veterans ‘demand action’ to improve care at VA nursing homes
A Dozen Facts About Medicare Advantage
Failure to Plan for Long-Term Care Often Leaves Caregiving to Female Family Members
Health, Family Take Precedence In Aging Americans' Minds
Life-LTC Hybrids Confuse Regulators, Too
Boomer Retirement Will Fuel Wave of Business Ownership Transitions
Liability insurance rates to increase 5% to 30%, according to new report
Wildfire destroys three skilled nursing facilities

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Updated, Monday, November 12, 2018, 9:53 AM (Pacific)

Seattle—

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LTC E-ALERT #18-043: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

New Medicare Advantage Benefits Are Supposed To Help Seniors Stay Out Of The Hospital
Top Strategies to Pay for a Longer, Healthier Retirement
It’s time to sign up for long care coverage
One of the fastest-aging US states has rejected free care for seniors
Study: Dark roast coffee may reduce risk of Alzheimer’s, Parkinson’s
Active Ingredient In Marijuana Reduced Alzheimer's-Like Effects In Mice
Medicaid Is A Big Winner On Election Day
New prize offers $2 million for finding key to Alzheimer’s in past research
Senior Citizens Are Replacing Teenagers as Fast-Food Workers
CalPERS insurance rates moves forward with trial date
In Less Than 10 Years, America Will Have 17 ‘Superaged’ States

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Updated, Thursday, November 8, 2018, 9:36 AM (Pacific)

Seattle—

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LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In Part 1, we showed how Medicaid misleads by taking credit for helping recipients whether it pays anything for their care or not. Part 2 shows how Medicaid misleads by downplaying its cost and exaggerating out-of-pocket expenditures, after the ***news.***

*** LTC CLIPPINGS bring you one or two daily updates on critical information you need to know to stay at the forefront of professional knowledge. Steve Moses scans the news and LTC literature. He chooses reports, articles, stories and data that LTCI agents, financial advisors, and anyone involved in aging issues need to know. He provides the title, author, source, a hyperlink to the original, and a sentence or two of commentary. As a bonus to LTC Clippings subscribers, Steve will answer questions by phone or email usually within 24 hours. Hook yourself into this reliable source and you can safely spend less time scanning for information and more time doing what you do best professionally. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe or learn more. Sample clipping:

11/7/2018, “Medicaid Is A Big Winner On Election Day,” by Jeffrey Young, HuffPost

Quote: “Voters in Idaho, Nebraska and Utah on Tuesday defied their GOP state leaders and approved ballot initiatives to expand Medicaid, which would provide access to health coverage for about 300,000 working adults. … In other potentially positive news for supporters of Medicaid expansion, Kansas elected Democrat Laura Kelly to be its next governor. … Kelly voted for expansion while serving in the legislature. In Maine, Democrat Janet Mills will succeed Gov. Paul LePage (R) after winning Tuesday, which should bring swift implementation of the Medicaid expansion there, which LePage has obstructed since voters approved it via ballot initiative last year.”

LTC Comment: When is adding more people to public assistance a victory? 73.2 million out of 325.7 million or 22.5% already receive Medicaid. What happens when half of us are supporting the other half? We should be working to reduce dependency not to increase it. ***

LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In “LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?,” we explained how Medicaid claims “primary payer” status for a nursing facility resident whether it pays any part of the bill or not.

We observed that this makes Medicaid, senior advocates, politicians and public officials appear to be supporting more people than is actually the case.

We pointed out losers in this system include nursing facilities who receive Medicaid’s extremely low reimbursement rate and tax payers who fund a system that discourages LTC planning and often results in their ending up in publicly-underfinanced nursing homes.

We explained that the system perversely …

incentivizes consumers to ignore the need for LTC planning by making publicly funded care available after the insurable event, i.e. the need for care, has already occurred.
incentivizes politicians and bureaucrats to drive up public expenditures, deficits and debt offering generous LTC benefits in exchange for votes, professional advancement and ego gratification.
incentivizes state governments to maximize federal funding by “Medicaiding,” i.e. charging Medicaid for any good or service they can get away with, and/or using “provider taxes” to jack up federal financial participation.
incentivizes nursing facilities to do whatever they can to survive debilitatingly low Medicaid reimbursement rates, including economizing on care, creative billing, driving up private pay rates, and over-charging Medicare.
incentivizes tax payers not to plan or insure for long-term care resulting in their dependency on public assistance for care widely recognized as institutionally biased and at risk of lower quality.

Thus, Medicaid misleads to the upside about its benefits and disguises its negative consequences.

But Medicaid also misleads to the downside on its cost and that is our focus in today’s LTC Bullet.

For example, for 2016 CMS reported in Table 15 that Medicaid paid $50 billion (30.7 percent of the total) for “Nursing Care Facilities and Continuing Care Retirement Communities Expenditures” whereas it reports out-of-pocket expenditures for the same service were $43.8 billion (26.9 percent of the total.)

What a bargain! Medicaid is the “principal payer” for 62 percent of all nursing facility residents (see LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?), but it only charges us 31 percent of the total cost of nursing facility care. Who picks up the other half?

Must be out-of-pocket costs. At 27 percent, they’re very high, nearly as high as Medicaid itself (31 percent) and even higher than Medicare’s, $37.5 billion or 23 percent of the total. Reporting out-of-pocket expenditures so high appears to support the conventional wisdom that Americans are spending down their life’s savings before qualifying for Medicaid.

But it’s an illusion.

Nearly half of what CMS reports as out-of-pocket expenditures for nursing home care is actually the “spend through” of Social Security income, by people already on Medicaid who are required to contribute their income to offset Medicaid’s cost for their care. Here’s the proof:

According to HCFA: “An estimated 41 percent...of out-of-pocket spending for nursing home care was received as income by patients or their representatives from monthly social security benefits.” (Helen C. Lazenby and Suzanne W. Letsch, “National Health Expenditures, 1989,” Health Care Financing Review, Vol. 12, No. 2, Winter 1990, p. 8.) Later research confirmed that Social Security spend-through is almost half of nursing home out-of-pocket costs. (Nelda McCall, "Long Term Care: Definition, Demand, Cost, and Financing," in Nelda McCall, editor, Who Will Pay for Long-Term Care, Health Administration Press, Chicago, Illinois, 2001, p. 19.) As all income, not only Social Security, is subject to the Medicaid recipient contribution requirement, private pension and other income also count as income “spend-through” and not asset spend down.

In other words, Medicaid recipients are largely spending income, not catastrophically depleting their life savings as is almost universally assumed and reported. The 27 percent reported by CMS as out-of-pocket costs, half of which are really Social Security income, explains much of the difference between the 62 percent of nursing facility residents for whom Medicaid is allegedly the “primary payer” and the fact that Medicaid only pays 31 percent of the cost for their care.

Wait, people own their Social Security, pension and other income, don’t they? When they contribute those sources of income to offset Medicaid’s cost, they are actually paying out of pocket. True, but you can see the confusion and misrepresentation created. It gives the impression that people are spending down the savings of a lifetime when they’re actually only applying income from another fiscally challenged government program, i.e. Social Security, as likely as Medicaid to suffer catastrophic reductions when the age wave hits in earnest.

We’ve already explained the motive Medicaid advocates have for making the program appear to support more people than it really does. Why do they make out-of-pocket expenditures appear to be higher and more onerous than they really are?

Let me explain with an example…

Some analysts say the out-of-pocket share of long-term care expenditures has skyrocketed to more than 50 percent.^{^[i]} But they arrive at that figure by including room and board expenses in residential care settings — costs that people would incur whether they need long-term care or not — and by excluding Medicare post-acute care expenditures from the total even though Medicare’s relatively generous nursing home and home care reimbursements are the only thing enabling Medicaid to pay long-term care providers less than the cost of providing the care to a majority of long-term care patients.^{^[ii]}

In reality, the proportion of long-term care expenses paid by taxpayers has been rising and the proportion paid by families has been declining for half a century. When Medicaid first started paying for long-term care in the late 1960s, out-of-pocket expenditures were very high – upwards of half of all nursing home expenditures. Since then, Medicaid and Medicare spending have increased rapidly and dramatically. Out-of-pocket expenditures, as reported by CMS, declined to around one-fourth of total long-term care expenditures. But even that low figure is misleadingly high because roughly half of it is not savings being spent down as often implied but Social Security and other income being “spent-through” by people already on Medicaid to offset Medicaid’s cost of care as federal law requires.^{^[iii]} To this day, upwards of 85 to 90 percent of nursing home expenditures are accounted for without dipping into personal savings and only 8.9 percent of formal home health care costs were paid out of pocket.^{^[iv]}

Nevertheless, analysts and advocates continue to argue that out-of-pocket long-term care expenditures are higher than they really are. Why? When you back out Social Security income that beneficiaries contribute to Medicaid, which is income they would otherwise have spent on room and board in the absence of Medicaid nursing home benefits, you’re left with a much smaller out-of-pocket total for long-term care. Medicaid promoters push up out-of-pocket expenditures creatively in order to justify new, government-funded long-term care financing programs. But spending more on the same programs that caused the problems in the first place is as foolish as it is self-serving.

Closing LTC Comment: Medicaid misleads to the upside by claiming to help more people than it does. Medicaid misleads to the downside by claiming out-of-pocket LTC expenditures, strongly implied to be asset spend down, are higher than they really are. Medicaid advocates do both to promote the program and their own interests. The net effect is that too few people plan for long-term care; they end up unable to pay its full cost; and they become dependent on the Medicaid program, which may disappear just when people need it most as the age wave crests and crashes.

A more honest way to measure Medicaid’s benefits and costs would be to report the number and proportion of patient days the program covers. Medicaid recipients tend to be the long-stayers in nursing homes, often remaining a year or more whereas Medicare residents are in an out usually in 20 days. Private payers last only as long as it takes the family to find a Medicaid planning attorney. If 62 percent of nursing facility residents qualify for Medicaid, but they account for 80 or 90 percent of patient days, because of their long stays, then Medicaid with its notoriously low reimbursement rates is doing far more damage than the commonly reported and highly misleading 62 percent “primary payer” number suggests. So what proportion of total nursing facility resident days does Medicaid touch? That’s the key metric researchers should discover and analyze. Does anyone know?

[i] Melissa Favreault and Judith Dey, “Long-Term Services and Supports for Older Americans: Risks and Financing,” USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief, July 1, 2015, revised February 2016, p.5; https://aspe.hhs. gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief. Critiqued in S. Moses, LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015; http://www.centerltc.com/bullets/archives2015/1094.htm.
[ii] “Nursing centers rely heavily on two public programs, Medicare and Medicaid, to pay for the services they provide to most of their patients. The rates paid by states for Medicaid do not adequately reimburse the actual costs incurred by providers, resulting in a major disconnect between payment levels and the needs of the patients. Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year’s projected shortfall of $21.20.” ELJAY, LLC & Hansen Hunter & Company, PC, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care,” American Health Care Association, Washington, D.C., April 2016, p. 1; www.ahcancal.org.
[iii] People in nursing homes on Medicaid are required to contribute all of their income, except for a small personal needs allowance, to offset Medicaid’s cost for their care.
[iv] See S. Moses, “LTC Bullet: So What If the Government Pays for Most LTC?, 2015 Data Update,” December 6, 2016; http://www.centerltc.com/bullets/latest/1159.htm.

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Updated, Monday, November 5, 2018, 9:36 AM (Pacific)

Seattle—

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LTC E-ALERT #18-042: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Legal-Ease: Asset protection from nursing home costs
Maine might fund senior home care. How do most Americans pay?
Pete the Planner: Elderly couple learns lesson about long-term care insurance
Deep in the weeds: A tale of two poverty measures
US Retirement Confidence Reaches 10-Year High
Medicare Advantage insurers could be on the hook for billions from audit changes
US News Rolls Out New Nursing Facility Rankings with Short-Term Focus
Evidence mounts that an eye scan may detect early Alzheimer's disease
How Much Will Boomers, Millennials Get in Retirement?
Reimbursement limitations on home healthcare are being loosened

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Updated, Monday, October 29, 2018, 9:50 AM (Pacific)

Seattle—

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LTC E-ALERT #18-041: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Venture-Funded Medicare Advantage Plans Launch into 2019 Market
Retirees' Health Care Costs May Blow Your Mind
2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending
Make November The Time to Start LTC Conversations
Ameriprise Will Be a Careful LTCI Reinsurance Shopper
Medicaid Overpays Nursing Homes by $1B Per Year, Study Suggests
Limit on immigrant visas would hurt nursing homes, LeadingAge says
The Hidden Costs Of Alzheimer's Disease
There's No Magic Number for Self-Funding Long-Term Care
Common Herpes Virus Could Cause 50 Percent of Alzheimer's Disease Cases, Expert Says
Critical Illness Market Keeps Growing: Gen Re
This retirement expense has hit $100,000 annually — and it's continuing to rise

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Updated, Thursday, October 25, 2018, 9:16 AM (Pacific)

Seattle—

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LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS?

LTC Comment: Public financing impacts long-term care more than most analysts recognize, benefiting affluent recipients and Medicaid planners but hurting providers and taxpayers. Insights and analysis follow the ***news.***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:

· All LTC Bullets and E-Alerts

· Access to our Members-Only Zone website and Almanac of Long-Term Care

· Subscription to our Clipping Service

· Email/phone access to Steve Moses for 24-hour turnaround queries

Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources.

Stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform by contacting Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS?

LTC Comment: Everyone knows Medicaid is the major payer for nursing home care. But as soon as you get below that high-level platitude, the subject complicates quickly. The consequences of how Medicaid really works as opposed to how it is represented are serious. Let me give you some examples.

AARP’s 2018 version of its “Across the States” report tells us that nationwide Medicaid is the “primary payer” for 62 percent of nursing facility residents. The report also provides the comparable figure for each state, which varies from 82 percent in Alaska to only 46 percent in Iowa.

Now here’s something curious. When I read that Medicaid is the “primary payer” for a resident, I’m thinking Medicaid must pay most of the bill. So I’m wondering who else pays the remainder? Who’s the secondary payer? But that isn’t what “primary payer” means at all. A nursing facility resident has Medicaid as “primary payer” if Medicaid pays any part of the bill, whether or not any other source contributes to the total, as is usually the case.

That seemed strange to me, so I did some research. I asked Charlene Harrington, co-author et al. of “Nursing Facilities, Staffing, Residents and Facility Deficiencies, 2009 Through 2016,” which is the source of the Medicaid-as-primary-payer data that AARP reported. She confirmed “when it says that a payer is the primary, it means that those residents have that payer source. Even if they have a share of payment, if Medicaid is paying any part, it is credited to Medicaid.” So, if Medicaid pays only $1, as can happen when a recipient has substantial income to contribute, Medicaid gets the credit in full.

That got me wondering where the primary payer data come from originally, so I consulted long-term care data maven extraordinaire Mick Cowles of the Cowles Research Group. He told me the summary data are compiled from field #76 of the CMS-672 “Resident Census and Conditions of Residents” form that is filled out by staff of the nursing facilities that receive the Medicaid payments. So I checked the instructions for that form and found this guidance on when to check that box: “Block F76: Residents whose primary payer is Medicaid.”

We seem to be going around in circles here. We ask: “What does it mean that Medicaid is the primary payer for a nursing home resident?” We get the answer: “Someone at a nursing home checked a box saying Medicaid is the primary payer.” But what makes Medicaid a primary payer even when it pays almost nothing? What is the definition of “primary payer”? No answer. Not very enlightening and quite frustrating.

But why does this matter anyway? Who cares?

You need to know how Medicaid eligibility and reimbursement work. It’s a complicated system with several undesirable, maybe or maybe not unintended, consequences. Unlike most of what you read in the newspaper, and in academic journals for that matter, people do not have to be low-income to qualify for Medicaid’s long-term care benefit. In most states, they qualify if their income is insufficient to pay all their medical and LTC expenses. In other states, those that cap income, Miller trusts achieve the same purpose. Rule of thumb: people with incomes below the cost of a nursing home, which is at least several thousands of dollars per month and often $10,000 or more--hardly “low income”--qualify routinely for Medicaid based on income. (Never mind assets. That’s a topic for another day, but the short answer is that substantial assets often don’t obstruct eligibility either because of Medicaid’s huge resource exemptions and/or legal machinations by Medicaid planners.)

This situation has consequences for everyone involved, beneficial for some, very negative for two. To wit:

Recipients get nursing home care at the Medicaid rate, which on average is about two-thirds of the private pay rate.
Medicaid, as well as the politicians and government officials who run it, get credit for helping a citizen who couldn’t afford long-term care otherwise.
State governments that partially fund Medicaid rake in billions from the federal government which pays the larger share of Medicaid.
Nursing homes are big losers. They get the Medicaid rate instead of the private pay rate which on average is half again as much.
Tax payers are the biggest losers. They seem to get something for nothing, easy access to publicly financed long-term care, but at the expense of ultimately ending up uninsured and dying in a welfare home.

Perverse incentives influence each party in this system. To wit:

The recipients, who can retain substantial assets because of Medicaid’s large resource exemptions, get care they would have had to pay half again as much more for privately, while only contributing their income as a kind of deductible. That’s much better than being wiped out financially as most media reports claim happens frequently, but actually doesn’t. Thus, Medicaid offers the uninsured a good deal after they need care when it’s too late to plan ahead for the risk thus perversely rewarding and incentivizing consumers’ failure to plan.
Politicians and government officials who get the credit for the services Medicaid provides are perversely incentivized to do more of the same, trading government deficits and debt for votes and personal advancement.
State governments are perversely incentivized to maximize the federal financial participation they receive from the U.S. government by charging Medicaid for anything they can get away with and by means of “provider taxes,” i.e., taxing LTC providers to bump up the federal contribution and then kicking back some of the extra funds to the over-taxed, underfunded providers and putting the rest of the windfall into the state’s general budget.
Nursing homes, which can’t survive without Medicaid, their single biggest payer, are perversely incentivized in several ways. They cut corners on care, file questionable claims, over-utilize higher-paying Medicare and over-charge private payers trying to compensate for the dismally low Medicaid reimbursements on which they principally depend.
Tax payers are perversely incentivized not to plan or insure for long-term care resulting in their dependency on public assistance for care widely recognized as inferior and subject to institutional bias.

It’s a crazy, mixed up system, but what does this have to do with calling Medicaid the “primary payer” whether it pays any part of the bill or not?

Because of the way Medicaid eligibility works, as described above, it is entirely possible for someone with substantial Social Security and pension income to qualify for Medicaid because their income is insufficient to cover all their medical and LTC costs but meets or exceeds the low Medicaid rate for their care. I’ve even seen cases where the patient contribution pays the entire cost of care at the low Medicaid rate. So, Medicaid gets the credit even when the recipient pays the whole bill out of pocket.

In a rational system, when the patient pays most or all of the bill out of pocket, out of pocket would be the “primary payer.” But reporting the reality instead of the myth required by the Centers for Medicare and Medicaid Services instructions for its CMS-672 form would diminish the reported proportion of residents Medicaid supports.

LTC Comment: In general, it benefits the government, and its hangers on, politicians and bureaucrats, to give the impression that Medicaid does more good than it does, does less damage than it does, and costs less than it seems. Reporting Medicaid as the “primary payer” even when it pays nothing for a recipient’s care is a handy way to buff the welfare program’s image. The big losers in this system are the nursing facilities expected to provide “Ritz Carlton care at Motel 6 rates,” as a provider explained to me once. Biggest losers of all are the tax payers who fund the system and end up uninsured for long-term care and spending their final days in welfare-financed nursing homes.

Entitlements of all kinds are popular. Most people like to get something for nothing at someone else’s expense. Medicaid fits that bill. But there is one big criticism of Medicaid that still rankles after its reputation as “primary payer” has been artificially enhanced. Medicaid costs too much. Does government reporting also mislead regarding Medicaid’s cost to make it appear less than it really is? If so, how? Qui bono? Who benefits? Who loses?

For the answer to those questions, stay tuned for our next LTC Bullet.

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Updated, Monday, October 22, 2018, 10:10 AM, (Pacific)

Seattle—

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LTC E-ALERT #18-040: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

4 Top Medicare Advantage Mini LTC Benefits
Study: For-profit nursing home residents more likely to be diagnosed with neglect issues; AHCA calls conclusions ‘faulty’
Long-term care institute compiling ‘No Brainers’
Trump proposes 5 percent budget cut for each Cabinet agency
Controversial former aide to Maine’s LePage to run Medicaid
Genworth's 15th Annual Cost of Care Survey Shows Continuing Rise in Long Term Care Costs
Aging Parents With Dementia? Beware Of Thieving Financial Advisors
AP-NORC Poll: Many caregivers neglecting their own health
40% of the American middle class face poverty in retirement, study concludes
Medicare Advantage Plans Found to Improperly Deny Many Claims

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Updated, Monday, October 15, 2018, 11:32 AM (Pacific)

Seattle—

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LTC E-ALERT #18-039: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Starbucks Opens New Front in Staffing Wars: Senior Care Benefits
Retirees, Adult Children Disagree on Retirement Community Essentials
7 reasons seniors housing is attracting investor interest
Top 25 cities for best and worst nursing homes listed
As Open Enrollment Begins, Record Medicare Advantage Growth Expected
Unlocked And Loaded: Families Confront Dementia And Guns
Seniors Prefer Assisted Living To Moving In With Family
Failing health top reason for move to assisted living: survey
Average State Medicare Advantage Plan Costs for 2019
Managed Care Payers Struggle to Staff Long Term Support Services
The Comforting Fictions of Dementia Care

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Updated, Wednesday, October 10, 2018, 10:13 AM (Pacific)

Seattle—

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LTC BULLET: HOW AND HOW MUCH MEDICAID REDUCES LIFETIME MEDICAL SPENDING FOR AFFLUENT RETIREES

LTC Comment: Medicaid is welfare, so of course it reduces lifetime medical spending of the poor. But here’s evidence Medicaid radically reduces medical spending by the affluent, especially for those savvy enough to maximize “Medicaid planning.” Evidence and analysis after the ***news.***

*** IMAGINE THE POSSIBILITIES: The 19th Annual ILTCI Conference convenes March 24-27, 2019 in Chicago. Great deals on exhibit space remain available through Friday, October 12. Organizers say “We're looking to increase participation with new companies and increase our 1,000+ attendee group. To do that we've created cost effective exhibiting options with savings compared to regular attendee pricing.” Get an exhibitor application here and a sponsorship application here. We hope to see you there. ***

*** THE LTC DISCUSSION GROUP will address the “Potential for Medicaid Savings from New Long Term Care Financing Products: LifeStage and Retirement Plus” as presented by Brian Ulery, LTCG and Vincent Bodnar, Genworth on Thursday, October 25 from 11am to noon EDT. For more information, go to http://www.ltcdiscussiongroup.org/aboutus.html. If you have not participated in the LTC Discussion Group’s informative sessions in person or by phone, this would be an ideal time to begin. ***

LTC BULLET: HOW AND HOW MUCH MEDICAID REDUCES LIFETIME MEDICAL SPENDING FOR AFFLUENT RETIREES

LTC Comment: Today, we direct your attention to new research that bears on the critical question of why people don’t worry enough about long-term care risk and cost to prepare in advance. Answering that question is not the stated goal of the paper we’ll discuss, so we’ll tease out this meaning from its findings.

“The Lifetime Medical Spending of Retirees” by John Bailey Jones, Mariacristina De Nardi, Eric French, Rory McGee, Justin Kirschner is NBER (National Bureau of Economic Research) Working Paper No. 24599, issued in May 2018 and revised in July 2018. To give you its general direction, we’ll start with the paper’s “Abstract” and then pull representative quotes followed by our “LTC Comments.” Our “Closing LTC Comment” will answer the key questions we raise, but which this paper leaves frustratingly unaddressed. You may purchase the paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

NBER Paper: “ABSTRACT: Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired U.S. households face over the remainder of their lives. We find that households who turned 70 in 1992 will on average incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000, and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the dispersion of this spending diminish only slowly with age. Although permanent income, initial health, and initial marital status have large effects on this spending, much of the dispersion in lifetime spending is due to events realized later in life. Medicaid covers the majority of the lifetime costs of the poorest households and significantly reduces their risk.” (p. 1)

LTC Comment: OK, important information to know, but we see no direct reference to long-term care spending. It’s easy to infer such a connection, however. We know a large portion of late-life medical spending is for long-term care, one of the biggest “events realized later in life.” So, these findings on the wide dispersion of lifetime medical spending, are highly relevant to the insurability of long-term care. Insurance should replace the small risk of a catastrophic loss with the certainty of an affordable premium. Lifetime medical spending ranging from an average of $122,000 to a 5 percent probability of more than $300,000 to a 1 percent chance of more than $600,000 certainly invites mitigation by insurance. But wait, these aggregate numbers include both out-of-pocket spending and Medicaid expenditures. Won’t we have to separate those to understand the impact of medical spending on consumers as opposed to its impact on taxpayers?

NBER Paper: “Our focus is out-of-pocket spending, the payments made by households themselves. High out-of-pocket expenses, however, can leave households financially indigent and reliant on Medicaid, the means-tested public insurance program. Medicaid eligibility depends on financial as well health-related factors (De Nardi et al., 2012), and Medicaid-provided care is widely viewed as inferior (e.g., Ameriks et al. 2011). Our benchmark spending estimates therefore include payments made by Medicaid, to capture all of the medical spending risk that households potentially face. Mechanically, our benchmark estimates measure the medical spending not covered by Medicare or supplemental private insurance. In economic terms, they measure the medical spending risk that wealthier households would face, and the medical spending risk that less wealthy households would face were Medicaid not available (absent any other changes in their insurance).” (p. 3)

LTC Comment: Hmmm. Their focus is out-of-pocket spending, but high costs may impoverish people and leave them dependent on “inferior” care from Medicaid, so they also look at total medical spending including out-of-pocket and Medicaid expenditures. That strategy allows them to identify the medical spending risk that both wealthy and poor households would face in the absence of Medicaid. Very useful and interesting, but I already discern a potential problem. If affluent people can rely on Medicaid without becoming financially indigent (and they can; see the evidence here), how does that affect the calculation and impact of medical spending risk? Will the paper address the myriad ways in which affluent people qualify for Medicaid, thus reducing their vulnerability to out-of-pocket medical spending? That would be very unusual.

NBER Paper: “We find that Medicaid lowers average lifetime expenditures by 20 percent. It covers the majority of the medical costs of the poorest households and significantly reduces their risk. Medicaid also reduces the level and volatility of medical spending for high-income households, but to a much smaller extent.” (p. 5)

LTC Comment: Now that is disappointing. Medicaid lowers expenditures by 20 percent wiping out the majority of medical costs for poor people, but only helps high-income households much less. How much less? Why does Medicaid, a welfare program, reduce spending for “high-income” people at all? Will we learn more as the paper progresses? Only a little more.

NBER Paper: “Our baseline measure of medical spending is the sum of payments made out-of-pocket and Medicaid. A number of recent papers have argued that Medicaid significantly reduces the out-of-pocket spending risk faced by older households. Brown and Finkelstein (2008) conclude that Medicaid crowds out private long-term care insurance for about two-thirds of the wealth distribution. De Nardi et al. (2016a) find that most single retirees, including those at the top of the income distribution, value Medicaid at more than its actuarial cost.” (p. 21)

LTC Comment: This is promising. If Medicaid crowds out private LTC insurance and high-income retirees value Medicaid more than its actuarial cost, this welfare program must be significantly impacting saving, spending, and insuring behavior by affluent people somehow. How? With what effect on the proclivity of the well-to-do to worry about and plan for long-term care? Blank out.

NBER Paper: “The top row of Figure 7, which compares the two spending measures for households at the bottom of the PI [permanent income] distribution, shows that Medicaid picks up a large share of these households' medical expenditures. At age 70, mean out-of-pocket expenditures are about 45 percent lower than mean combined expenditures, meaning that Medicaid constitutes about 45 percent of the total. The share of costs covered by Medicaid rises rapidly with age, however, to around 85 percent. The bottom row of Figure 7 repeats the comparison for the top of the PI distribution. Not surprisingly, Medicaid covers a much smaller fraction of these households' expenditures.” (p. 24)

LTC Comment: Again, proof Medicaid helps poor people a lot (from 45 to 85 percent depending on age), and people with high lifetime incomes, less, but now how much less? No answer. It’s as though the authors want to obscure the puzzling impact of how a welfare program benefits affluent people so they don’t have to explain it.

NBER Paper: “Figure 8 compares lifetime spending totals. The top row of this figure shows that at the bottom of the income distribution, Medicaid covers 57 percent of lifetime costs as of age 70. At older ages and higher percentiles it covers even more. The bottom row shows results for households at the top of the income distribution. Medicaid covers 21 percent of lifetime costs at age 70, with the fraction rising to nearly 30 percent at age 100. While most high-income households do not receive Medicaid, those that do qualify under the Medically Needy provision, which assists households whose financial resources have been exhausted by medical expenses. Such households tend to have high medical expenses and tend to receive large Medicaid benefits (De Nardi et al., 2016a).” (p. 24)

LTC Comment: All right, finally, numbers describing the impact of Medicaid on medical spending of high-income households. From 21 percent of lifetime costs at age 70 up to 30 percent at age 100. That’s huge. How can it happen? What effect has decades of avoiding roughly a quarter of the medical spending liability they’d otherwise have incurred had on the tendency of affluent people to plan responsibly for the health risks and costs of old age? The paper provides no answers but we do get a clue to why it has no answers. We learn that high-income households who get Medicaid qualify under the “Medically Needy provision” when their “financial resources have been exhausted by medical expenses.” Really? What is “Medically Needy”? What evidence proves people must exhaust their financial resources to qualify for Medicaid? If late-life medical spending frequently wipes out life savings, why aren’t consumers more apt to use insurance to abate that risk. Blank out. Our “closing LTC comment” answers those critical questions which this paper ignores.

Closing LTC Comment: This paper accepts the common myth of most academic research on the subject of long-term care financing. To wit, Medicaid eligibility requires impoverishment. But if Medicaid requires impoverishment, how do so many affluent people benefit so much from the welfare program? Scholars who accept the myth of impoverishment unquestioningly, as these do, have no answer. So they dodge the hard question (how Medicaid benefits the affluent) and focus on the obvious (that Medicaid helps the poor) as in this paper.

Let’s demythify this matter. Medicaid does not require impoverishment. Anyone with income below the cost of a nursing home, which averages $7,148 per month, can qualify for LTC benefits anywhere in the country. It’s easier to do in a “Medically Needy” state where health expenditures are deducted from income before determining eligibility, but in “income cap” states, higher income people can divert their excess income into “Miller income trusts” to qualify. So, the fact that high-income people qualify for Medicaid LTC benefits is no surprise, happens routinely and ought to invite explanation and analysis of its impact on consumer behavior.

But don’t the wealthy have to spend down their life’s savings into penury, no more than $2,000 in assets? How quaint and naïve to think so. Experts should know, and every affluent family quickly learns, that Medicaid exempts most wealth from spend down liability. Examples include a home and all contiguous property worth $572,000 everywhere but up to $858,000 in some states; a business including the capital and cash flow of unlimited value, including a second home if rented for income; and with no limit on their value, household goods and personal belongings, including heirlooms; one automobile; prepaid burial plans for the Medicaid recipient and everyone in his or her immediate family; term life insurance; individual retirement accounts if they’re “paying out” as all must at age 70 ½. I listed and sourced the federal laws and regulations supporting these exemptions in Medi-Cal LTC: Safety Net or Hammock? (2011), pages 19-21.

Still dubious? Explore the vast legal literature on how to expand those broad exemptions much further to protect an estate of virtually any size by means of sophisticated “Medicaid planning” techniques. I summarized that literature in a “Supplemental Bibliography of Books, Elder Law Treatises and Law Journal Articles on Medicaid Planning Listed Chronologically,” pages 34-63, in How to Fix Long-Term Care Financing (2017).

Here are the questions and answers long-term care financing scholars should be addressing.

Does Medicaid require impoverishment? No, of course not, open your eyes.

Are the affluent vulnerable to high late-life medical expenditures? Yes, of course. But really wealthy people absorb those easily. It’s the middle class and moderately well-to-do who qualify for Medicaid to offset their biggest liability, long-term care costs. Hence, the 21 percent to 30 percent of lifetime costs avoided through Medicaid by the top of the income distribution as identified by this paper.

Does the fact that Medicaid eliminates much, possibly most, of the long-term care vulnerability of the middle class and moderately well-to-do, affect their savings, investment and insurance behavior? Well, yeah. That explains why “Brown and Finkelstein (2008) conclude that Medicaid crowds out private long-term care insurance for about two-thirds of the wealth distribution” and why “De Nardi et al. (2016a) find that most single retirees, including those at the top of the income distribution, value Medicaid at more than its actuarial cost.” (p. 21)

In what directions should these facts take the study of long-term care financing? Pretty obvious. We need research that acknowledges Medicaid’s true impact on the LTC planning behavior of aging middle-class and affluent Americans. Such research should also address questions like these:

How does the availability of Medicaid after care is needed affect the planning, saving, and insuring behavior of people still in the prime of life?

Does it matter that most people do not know that Medicaid pays for most expensive long-term care if the reality is that it does?

If Medicaid did not exempt relatively high incomes and virtually unlimited assets, would people be more likely to save, invest or insure for long-term care?

If Medicaid protected the inheritances of fewer adult children of infirm elders, would those “kids” be more likely to prepare for their own future long-term care needs?

If Medicaid with its bias toward institutional care were less available to middle class and affluent people, would they be more likely to opt for private-pay home and community-based care?

If the LTC service delivery system had more private-payers at market rates and fewer Medicaid dependents generating reimbursements less than the cost of care, would access and quality of long-term care improve for everyone, rich and poor alike?

The answers to these questions are as obvious as the research needed to address them is barren. Unless and until scholars acknowledge and correct the myth of Medicaid spend-down and explore its ramifications for consumer behavior, progress to improve long-term care services and financing will remain stunted.

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Updated, Monday, October 8, 2018, 10:13 AM (Pacific)

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LTC E-ALERT #18-038: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

What A Medicare Advantage Personal Care Benefit Looks Like
Without Safety Net Of Kids Or Spouse, ‘Elder Orphans’ Need Fearless Fallback Plan
Study claims nursing homes increasingly pushing residents into ‘unnecessary’ rehab at end of life
Feds Unleash Short-Term Health Insurance From Obama-Era Limit
Nursing homes can treat higher acuity patients without raising their risk of death: Study
Half of women 'will develop dementia or Parkinson's or have a stroke'
Studies in healthy older people aim to prevent Alzheimer’s
Parents Spend Twice as Much on Their Adult Children as They Save for Retirement Merrill Lynch/Age Wave Study Finds
Governor vetoes expansion of assisted living program for Medicaid beneficiaries
Medicare Advantage Premiums to Decrease by 6% in 2019
In the Nursing Home, Empty Beds and Quiet Halls

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Updated, Monday, October 1, 2018, 10:00 AM (Pacific)

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LTC E-ALERT #18-037: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

You may be hovering too much over your aging parents
CMS chief stresses need to improve care for dual-eligible population: Inefficiencies are ‘unacceptable’
Nationwide Finds LTC Discussion Gap
5 Things to Know About New York Life's New LTCI Policy
The U.S. Returns to Top 10 in World Economic Freedom Index
What's the Dollar Cost of Caring for a Loved One With Alzheimer's?
71% of affluent older adults would rather rely on family — and pay them — for LTC, survey finds
28% of affluent 50+ adults expect to live in assisted living, survey finds
Investing in Long-Term Care Now Can Help America Age Well
The Rising Value of Senior’s Homes
Survey: 85% of adults want active adult and assisted living communities nearby
The Authentic Role an Insurer Can Play as ‘Personal-Risk Manager’
It’s Now Harder for Veterans to Qualify for Long-Term Care Benefits

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Updated, Thursday, September 27, 2018, 9:33 AM (Pacific)

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LTC BULLET: LONG-TERM CARE ACROSS THE STATES

LTC Comment: This is the single best source and compendium you’ll find anywhere of state and national-level demographic and long-term care data, after the ***news.***

*** “LTCG, a recognized leader in business process outsourcing for long term care insurance (LTCi), has announced the launch of its new Unified Provider Database (UPD). This new product contains detailed information for more than 100,000 senior care providers including non-skilled home care, skilled home health, assisted living communities, skilled nursing facilities, memory care, hospice agencies, adult day care facilities and continuing care retirement communities.” For the full story, click here. We extend congratulations to LTCG, a longtime friend and corporate member of Center for Long-Term Care Reform. ***

*** ADVISORS INSURANCE BROKERS announcement: “This is just a friendly reminder to our valued business partners. Note: while our Marketing name has changed, our Corporate ID, including our ID for carrier licensing and contracting, commissions, etc., is NOT changing. That will remain under the New York Long Term Care Brokers, Ltd. Corporate name. We continue to ‘fine tune’ our transition from New York-National LTC Brokers to our new Marketing name, Advisors Insurance Brokers. I am also pleased to announce that our new AIB website, www.AdvisorsIB.com is now LIVE. Please feel free to check out the new website at your convenience, and we welcome your feedback.” Congratulations to Kevin Johnson and Bob Vandy of AIB/NYNLTCB, longtime friends and supporters of the Center for Long-Term Care Reform. ***

LTC BULLET: LONG-TERM CARE ACROSS THE STATES

LTC Comment: Three cheers for AARP! Those are words you won’t hear often in these LTC Bullets. But in this case, they’re deserved.

The AARP Public Policy Institute has published a new version of its longest running (24 years) and best publication, titled “Across the States 2018.” This is the first update of the classic since 2012.

We’ll tell you more about the report and pull a selection of highlights below, some with our comments, but first this slide deck by two of its authors, Ari Houser and Wendy Fox-Grage, from their recent presentation to the LTC Discussion Group, makes a good summary.

I’m especially fond of “Across the States” because it was a principal source for the “Index of Long-Term Care Vulnerability” we developed in 2013 and used to analyze the condition of long-term care services and financing in these four states:

· New Hampshire: Apply the LTC Vulnerability Index to Your State: The New Hampshire Example (2014)

· New Jersey: The Index of Long-Term Care Vulnerability--A Case Study in New Jersey (2014)

· Georgia: The Index of Long-Term Care Vulnerability: A Case Study in Georgia (2013)

· Virginia: The Index of Long-Term Care Vulnerability: A Case Study in Virginia (2013)

Our plan eventually to apply the Index of Long-Term Care Vulnerability to every state in the country was stymied when AARP stopped publishing Across the States after its 2012 version. The data was just getting too old. So despite the fact that our other principal sources continued to be published annually, we had to give up on the larger project.

But, hallelujah, publication of Across the States 2018, means we can get back to analyzing long-term care vulnerability state by state. So please review the reports linked above for NH, NJ, GA, and VA. If you would like to underwrite similar studies applying the Index of Long-Term Care Vulnerability to any state, please contact Steve Moses at smoses@centerltc.com or 425-891-3640. I think you’ll be surprised how economically this work can be done.

Now, back to Across the States 2018. Here’s how the authors describe it:

“This reference book is a powerful compilation of state data and analysis on LTSS in each state. This resource combines data from a large number of studies and data sources—including some original analysis not found elsewhere—into a single volume, so these state data can be at your fingertips. … Each state profile is a four-page, user-friendly, print-ready document that provides your state’s data and rankings and can be found at http://www.aarp.org/acrbossthestates.” (p. 1)

Report Highlights:

“The ages 85+ population—the cohort with the highest need for LTSS—is projected to triple (a 208 percent increase) between 2015 and 2050.” (p. 2)

“The caregiver support ratio … will drop [from 7 to 1] to 3 to 1.” (p. 2)

“In particular, the Hispanic population ages 65+ is projected to quadruple between 2015 and 2050.” (p. 2)

“The percentage of LTSS [long-term care] spending for older people and adults with disabilities going to HCBS [home and community-based services] ranged from 13 percent to 73 percent in 2016. While 40 states became more balanced [more HCBS], 11 states became less balanced [less HCBS] for older adults and people with physical disabilities in 2016 compared with 2011.” (p. 2)

“Nearly one-third of this [age 85+] population has dementia. Members of this age group not only have higher rates of disability than younger people, but they are also more likely to live alone, without a spouse or other family member to provide them with assistance.” (p. 3)

“Although disability is often associated with old age, the number of people ages 18–64 with cognitive difficulty or any disability is actually higher than the number of adults ages 65+ with these conditions.” (p. 6)

“The cost of LTSS is not within reach of most families across all the states. The annual median cost for nursing facilities is more than double the median income of older households, $42,113. This high cost of care can all too often cause people to exhaust their savings and rely on Medicaid, the largest public payer for LTSS.” (p. 7)

LTC Comment: Oops. Not every conclusion in this report is justified by the facts. Yes, LTC is expensive and most people cannot afford it. But, no, people do not have to “exhaust their savings” to qualify for Medicaid. There are dozens of ways to convert savings into exempt resources preserving most wealth while shifting LTC costs to taxpayers.

Report: “Despite the need for long-term care insurance to cover these costs, the vast majority (95 percent) of adults ages 40+ do not have this type of insurance. … Because of the low take-up rates, the overwhelming majority of private pay LTSS is paid out of pocket rather than by insurance.” (p. 8)

LTC Comment: Ah, true, but misleading. Fully half of the “out of pocket” funding for long-term care comes from the personal income people on Medicaid are required to contribute toward their cost of care. Even if they pay most of the bill out of pocket, providers get the notoriously low Medicaid reimbursement, often less than the cost of providing the care. Medicaid is a far bigger factor undercutting access to and quality of care in the US than appears evident from these unanalyzed data.

Report: “Family caregivers provided $470 billion worth of unpaid care in 2013, more than six times the Medicaid spending on home-and community-based services.” (p. 11)

“In 2015, there were 7 people ages 45–64 (the peak caregiver age group) for each person age 80 and older (the peak care need age group). While not all people ages 80+ have access to 7 potential caregivers ages 45–64, this is a useful metric for the overall availability of caregivers to provide family care to older people. In 2030, it is estimated that the ‘family caregiver support ratio’ will drop to 4 to 1. It is estimated to then fall to about 3 to 1 in 2050, when all baby boomers will be ages 85 or older.” (p. 11)

LTC Comment: So, we’ll just rely on paid caregivers then, right?

Report: “In 2015, nearly 2 million home health and personal care aides provided care, at just slightly more than $11 per hour on average. These workers made roughly $22,000 each in 2015 if they worked full time, which is just above the poverty line for a family of three (about $20,000), making them eligible for Medicaid.”

LTC Comment: Not exactly an attractive career we should expect future professional caregivers to seek.

Report: “Assisted living and residential care communities are needed options for when living at home is no longer viable. …These options are available mostly to people who can pay privately for them. Medicaid cannot cover room and board charges, only services. However, many state Medicaid programs do not cover these optional services in assisted living and residential care settings.”

LTC Comment: So Medicaid should pay more for ALFs and RCFs, right? Sounds logical until you analyze why we have a nursing home bias and quality of care problem in the first place. That is, because Medicaid made institutional care virtually free. We run the risk of ruining assisted living and residential care in the same way if we follow that course, as I explained in "The Sirens' Call, The Primrose Path, and Assisted Living," Assisted Living, April 2004.

Report: “Roughly 6 out of 10 (62 percent) nursing facility residents rely on Medicaid because many of them have spent their life savings paying for care.”

LTC Comment: There is no empirical evidence that many “have spent their life savings paying for care.” Medicaid does not require spend down for care. People can spend down by purchasing exempt resources, thus preserving wealth, while qualifying for Medicaid. To learn how and why, Google “Medicaid planning.” To learn why it’s terrible public policy, condemning millions to mediocre care or worse, read any report by the Center for Long-Term Care Reform here.

Closing LTC Comment: We’ll have more to say based on the excellent AARP Across the States report soon. We will revisit the potential of applying the “Index of Long-Term Care Vulnerability” to more states and we’ll explore what AARP means by “primary payer,” a critical concept, misused I think, to make Medicaid appear less damaging to LTC access and quality than it truly is. Stay tuned.

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Updated, Monday, September 24, 11:32 AM (Pacific)

Seattle—

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LTC E-ALERT #18-036: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Universal Life Insurance, a 1980s Sensation, Has Backfired
When Family Members Care for Aging Parents
Number of people with Alzheimer’s to double by 2060, CDC predicts
Another Big Insurer Posts Another Big Long-Term Care Insurance Charge
Low Medicaid Rates Cause Skilled Nursing Crisis in Washington State
Medicare-Medicaid dual eligible care models provide highly coordinated healthcare services to help beneficiaries navigate their healthcare options
Managed care organizations picking nursing homes based on cost, not quality, study finds
New Report Finds Nation’s Retirement Crisis Persists Despite Economic Recovery
Social Security COLA Estimate Revised Below 3% for 2019
Buyers Of New Long-Term Care Insurance Policies Face Little Risk Of Future Rate Increase
To Manage Dementia Well, Start With The Caregivers

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Updated, Monday, September 17, 2018, 10:12 AM (Pacific)

Seattle—

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LTC E-ALERT #18-035: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

State tests voucher program to help adults with dementia afford assisted living
Sex Doesn't Stop with Dementia
Not just nursing homes’ problem
States try to beat back rate increases on long-term-care policies
Anne Tumlinson: Transforming Long-Term Care for Older Adults
How a son’s viral videos give hope to families dealing with dementia
Benefits and Challenges of Payment Adjustments Based on Beneficiaries' Ability to Perform Daily Tasks
Traditional gender roles don't keep men from becoming caregivers
What to do if Your Long-Term Care Insurance Premiums Have Skyrocketed
CCRC occupancy strong as construction pipeline continues to expand, analysis finds
Smoking May Increase Dementia Risk
Infectious Theory Of Alzheimer's Disease Draws Fresh Interest

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Updated, Thursday, September 13, 2018, 10:25 AM (Pacific)

Seattle—

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LTC BULLET: STATE OF THE LTCI INDUSTRY—2018

LTC Comment: Don’t believe ~~everything~~ anything you read in the media. Count on this annual report for the truth about long-term care insurance, after the ***news.***

*** ACT FAST, DEADLINE TOMORROW: The premier long-term care insurance industry annual conference, to be convened in Chicago March 24-27, 2019, is making this offer: “We're looking to increase participation with new companies and increase our 1,000+ attendee group. To do that we've created cost effective exhibiting options with savings compared to regular attendee pricing. Regular attendees will pay $1,095 each to attend but now through Friday [September 14] you can get a 6x10 booth with two attendee passes for only $2,000. If you've never exhibited with us before you get an additional $250 discount. 10x10 Booths come with 4 attendee passes and are only $3,500, or $3,250 if you've never participated before. Aside from our exhibit hall we also have 45+ educational sessions, a keynote speaker, and more to offer attendees.” Find the exhibitor application here for the 19th Annual Intercompany Long-Term Care Insurance Conference. We hope to see you there. ***

LTC BULLET: STATE OF THE LTCI INDUSTRY--2018

LTC Comment: “The 2018 Milliman Long Term Care Insurance Survey is the 20th consecutive annual review of long-term care insurance (LTCI) published by Broker World magazine. It analyzes the marketplace, reports sales distributions, and details available products.”

Subscribers can find this article, authored by actuaries Claude Thau, Allen Schmitz, and Chris Giese, in Broker World’s July 2018 issue here. Purchase a .pdf of the full survey here. To whet your appetite for more, here are a few items that stood out to us:

“State Farm discontinued stand-alone LTCI sales in May 2018, hence is no longer included in the Product Exhibit.”

“The 17 carriers reported sales of 70,080 policies … with on-going premiums ($181,956,656 of new annualized premium … ) in 2017, compared to our 2016 reported sales … of 94,353 policies ($225,838,660 of new annualized premium), a 26 percent drop in the number of policies and a 19 percent drop in the amount of new annualized premium.”

“Six insurers (three in the Product Exhibit and three others) sold more premium than in 2016 and five sold more policies.”

“Mutual of Omaha and Northwestern reversed position as the top two carriers, combining for more than half of the new sales in terms of premium.”

“For the third straight year (and 3rd time ever), our participants’ number of inforce policies dropped, this time by 5.1 percent after 0.3 percent (2016) and 0.2 percent (2015) drops previously.”

“Nonetheless, year-end inforce premium increased 6.0 percent in 2017 (2.9 percent in 2016). Inforce premium increases from sales, price increases, and benefit increases (including FPOs), and reduces from lapses, reductions in coverage, deaths, and shifts to paid-up status for various reasons.”

“Participants’ individual claims rose 6.1 percent and group claims rose 10.3 percent. Overall, the stand-alone LTCI industry incurred $11.1 billion in claims in 2016 based on companies’ statutory annual filings, raising total incurred claims from 1991 through 2016 to $118.9 billion. … This compares with $9.5 billion of incurred claims in 2015, a 14 percent increase. Combo LTC claims are in their infancy and amounted to $5.9 million. The claim figures are even more startling considering that only 4 percent of 7 million covered individuals were on claim at the end of 2016.”

“Only 59.0 percent of applications resulted in active policies. This low success ratio contributes to financial advisors’ reluctance to recommend that clients apply for LTCI.”

“Recently priced policies are based on assumptions that rely on far more credible data, hence premiums should generally be more stable.”

“Despite the anticipated more stable pricing, many financial advisors presume that currently-issued policies will face steep price increases. It is important to educate them that assumptions underlying current market pricing should produce a lower chance of needing a rate increase.”

“‘Combo’ policies (LTCI combined with life insurance or annuity coverage) increased to 256,000 sales totaling more than $4 billion of new premium in 2016 (88 percent life; 12 percent annuity) much of which was from single premium sales, compared to $3.6 billion in 2015.”

“During the course of 2017, the brokerage worksite market reduced to a sole insurer. However, three new unisex offerings appear likely by the end of 2018.”

“For the nine insurers which reported individual claims for both 2017 and 2016, claim dollars rose 6.1 percent, despite a 6.3 percent decrease in inforce policies.”

“The LTCI industry has had a much bigger impact than indicated above, because a lot of claims are paid by insurers that no longer sell LTCI.”

“Individual claims shifted significantly away from nursing homes (from 37.4 percent to 32.1 percent) to ALFs (31.2 percent to 35.3 percent).”

“Some people may have expected that ALF claims would be less expensive than nursing home claims because ALFs cost less per month. But that has not been the case.”

“Past average claim data understates the value of buying LTCI because the many small claims drive down the average claim. LTCI can provide significant financial return for people who need care one year or longer. The purpose of insurance is to protect against a non-average result, so the amount of protection, as well as average claim, is important.”

“Worksite business produced 22.0 percent of new insureds (see Table 7), but only 13.9 percent of premium because of its younger issue age distribution and less robust coverage.”

“[T]he average premium per new insured ranged between $2,322 and $2,497 between 2011 and 2016, then surged to $2,596 in 2017.”

“The average issue age rose to 56.7, the highest since 2013.”

“Five percent compounded for life, which represented 56 percent of sales in 2003 and more than 47.5 percent of sales each year from 2006 to 2008, now accounts for only 1.5 percent of sales. Simple five percent increases were 19 percent of 2003 sales, but are now 0.2 percent of sales.”

“Partnership Programs When someone applies to Medicaid for long term care services, states with Partnership programs disregard assets up to the amount of benefits received from a Partnership-qualified policy. Partnership sales were reported in 44 jurisdictions in 2017, all but Alaska, District of Columbia, Hawaii, Massachusetts, Mississippi, Utah, and Vermont, where Partnership programs do not exist. Massachusetts has a somewhat similar program (MassHealth).”

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Updated, Monday, September 10, 10:25 AM (Pacific)

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LTC E-ALERT #18-034: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicaid-exempt assets from nursing home costs
3 Peeks Behind the LTCI Blinds
New York Life Launches Stand-Alone Long-Term Care Insurance Policy
As debt grows among older Americans, so does bankruptcy
Some older adults using Facebook less
‘It’s become a gold rush’: Inside the race to create smart shoes, custom razors and high-tech devices for the over-65 crowd
New report paints bleak picture for nursing assistants
Elderly Women to Bear Brunt of Japan's Spending Cuts
5 Long-Term Care Stats That Will Blow You Away

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Updated, Thursday, September 6, 10:22 AM (Pacific)

Seattle—

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LTC Bullet: Why Keep Fighting … and How

LTC Comment: Responsible long-term care planning is on the ropes. Government dependency prevails. Worse, we’ll get more of the latter and less of the former in the short run. Give up or fight on, after the ***news.***

*** 2019 ILTCI CONFERENCE will convene in Chicago March 24-27, 2019. Organizers report “Now through September 14th exhibitor and sponsor pricing is at the Early Bird Rate and the lowest it will be all year! This year's individual attendee rate is $1,095 per person, making exhibitor and sponsor discounts even more valuable and cost effective. Preliminary conference info and hotel details can be found at www.iltciconf.org.” We’ll follow up with more news and information about the meetings as they become available. ***

LTC BULLET: WHY KEEP FIGHTING … AND HOW

LTC Comment: Here’s the problem:

Most of the public is finally aware of long-term care risk and cost, but the vast majority still fail to plan, save, invest or insure privately.
LTC insurance is out of favor and many carriers, distributors and producers have migrated partially or wholly to other products.
Medicaid continues to fund most high-cost LTC, while paying providers less than cost, exacerbating quality problems.
Plans to expand public LTC financing abound without serious strategies to pay for them.
Media coverage is frequently inaccurate and biased, but mostly uncontested.
Asset bubbles and deep debt due to irresponsible government monetary and fiscal policies threaten the economy.
We’re little more than a decade away from the 2030s when boomers start turning 85, their medical and LTC expenses explode, and their entitlement safety nets (Social Security, Medicare and Medicaid) implode.
Time is running out.

What a mess! What’s the use? Why not give up and move on?

Well, read through that litany of travails again and ask yourself what’s different? Most of it reflects errors of public policy that have prevailed for decades, but remain untenable indefinitely. The late economist Herb Stein said "If something cannot go on forever, it will stop," often paraphrased “Trends that can’t continue, won’t.” The LTC financing status quo cannot go on forever. Therefore, it will end. So the right question is not what’s the use? But rather, how can we make the most of this stupendous opportunity to understand, anticipate and get in front of a major, forthcoming social and economic sea change? Disrupt or be disrupted!

Comparable Considerations

Consider this analogy. Stocks just achieved the longest bull market in history. Do you sell out entirely now? If you’d done that when this bull run was the second or third longest in history, you’d have missed, as many did, a big portion of the profits from holding on. If the bull market finally ends and stocks plummet, will you sell then and risk getting out at the bottom, the opposite of good “buy low, sell high” advice, or will you buy more trying to “catch a falling knife” against most professional investment counsel? No, wise investors dollar-cost average into the market, diversify domestically and internationally, take profits occasionally, look for unique opportunities, remain ever vigilant to changes in the economy, and purchase insurance against financial cataclysms by holding some hard assets such as gold that are resistant to recessions and fiat currency risk. Awareness, analysis, research, persistence and insurance are the watchwords for successful investing.

Same Principles Applied to Long-Term Care Policy Reform

Likewise, what would be comparable principles and responses to address the current bear market in long-term care financing policy?

Awareness: Understand the problem; know what we’re facing; stay abreast of the latest news, studies, journal articles, legislation and public policy affecting long-term care services and financing. Here’s how the Center for Long-Term Care Reform helps:

Our daily LTC Clippings briefly highlight critical new information and developments
Our LTC E-Alerts summarize the previous week’s LTC Clippings in one quick read
Our LTC Bullets analyze larger policy trends, major reports, and academic articles. Search the Bullets here and you’ll find 1,235 of them archived both chronologically and by topic. To wit:

The LTC Problem and Solutions: 293

Reality Check: The Facts on LTCI: 130

Medicaid Planning: 151

LTC Services: 184

Politics and Legislation: 174

Demographics and Other Data: 119

CLTCR News: 215
Total: 1266 (A few Bullets straddle topics and therefore are listed under more than one heading.)

Our members-only website provides many more features to facilitate professional expertise and excellence. Non-members may access these free for one week at user name: IntrotoZone and password: FreeTrial (case sensitive)

New: Long-Term Care Clippings Archive: Access all our LTC Clippings here organized chronologically by topic.

LTC Almanac: Our huge and unique compilation containing links to decades of news, articles, studies, and reports organized by topic.

LTC Graduate Seminar Transcription: Full day advanced training program presented throughout the USA including a history of how we got into this mess and what to do about it.

Long-Term Care Cost Surveys: Find most of the surveys ever published covering LTC costs by year for nursing homes, assisted living and home care.

Medicaid and Medicare Key Numbers Updated Annually: Look back at yearly Medicaid Spousal Impoverishment Standards since 1991 and Medicare Deductibles and Co-Insurance amounts since 1993.

Deductibility Limits for Long-Term Care Insurance: See how these have changed every year since they began in HIPAA ’96.

LTCI Tax Treatments: How individual states treat LTC insurance for taxes.

Unfunded Entitlement Liabilities: Many articles and reports with data on unfunded entitlement liabilities.

Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care: Years of stark warnings not to count on the VA for long-term care.

LTC Embed Reports: Brief on-site reports from the policy front in Washington, D.C. and elsewhere, wherever the LTC policy battle takes us.

Virtual Visits to years of long-term care insurance conferences.

CLASS Act Update: Quick reference to dozens of publications on CLASS.

One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.

Analysis: Having provided all the tools necessary to keep you abreast of everything going on in the long-term care financing field, we focus frequently on broader analysis, making sense of new developments, praising if they’re positive, and criticizing otherwise. Browse these for example:

The Still Broken Rhythm of Long-Term Care Reform, July 20, 2018: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer?
The New Fallacy of Impoverishment, June 29, 2018: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work.
Feder Fantasy Fatally Flawed, May 4, 2018: A new Feder/Cohen proposal would take long-term care out of the frying pan into the fire.
The End of Alzheimer’s, April 20, 2018: Is there hope for delaying, mitigating, even ending Alzheimer’s? We report, you decide.
Have Your Cake Until It Eats You, March 23, 2018: Americans want to have their cake (entitlements) and eat it too, but scary evidence and trends show this cake will eat our economy first.
LTC Calculation, February 16, 2018: We explore why socialism always fails, especially when applied to long-term care.
LTC Cause and Effect, February 9, 2018: New Bipartisan Policy Center LTC report puts the services cart before the financing horse as usual.
Don’t Buy LTCI?!, January 12, 2018: Bad advice by the unknowing spread by the unwitting refuted by understanding.
The Morality of Hazards, November 10, 2017: If conventional morality is a trap, what would work better?
The Hazards of Morality, November 3, 2017: Is conventional morality a trap? Could we have it all backwards?
Is it Spend Down or Medicaid Planning?, July 14, 2017: A lot of what passes for Medicaid “spend down” in the scholarly literature is really Medicaid planning. We explain and give examples.
Home Equity and LTCI Demand, June 30, 2017: We affirm and confirm Professor Thomas Davidoff’s observations on the connection between home equity and LTC insurance demand.

Keep browsing 20 years of LTC Bullets archives and you will find our trenchant analysis of every major LTC financing development and proposal during that period.

Research: It’s not enough to stay current with the LTC literature and to analyze developments carefully. We must push the boundaries of knowledge especially in areas, such as the benefits of freer markets and the downsides of over-reliance on government, where many conventional scholars refuse to go. Steve Moses and the Center for Long-Term Care Reform have conducted and published such original research on long-term care financing for over 30 years. Examples include:

How to Fix Long-Term Care Financing (2017)
New Hampshire: Cassandra's Quandary: The Future of Long-Term Care in New Hampshire (2016)
Georgia: The Index of Long-Term Care Vulnerability: A Case Study in Georgia (2013)
Near-Term Prospects for Long-Term Care Financing Reform (2012)
New York: Long-Term Care Financing in New York: The Consequences of Denial (2011)
California: Medi-Cal LTC: Safety Net or Hammock? (2011)
Save Medicaid LTC $30 Billion Per Year AND Improve the Program (2011)
Rhode Island: The Age Wave, the Ocean State, and Long-Term Care (2009)
North Carolina: Long-Term Care Financing in North Carolina: Good Intentions, Ambitious Efforts, Unintended Consequences (2008)
Aging America's Achilles' Heel: Medicaid Long-Term Care (2005)
The Realist's Guide to Medicaid and Long-Term Care (2004)
Nebraska: The Heartland Model for Long-Term Care Reform (2003)
The Long-Term Care Partnership Program: Why It Failed and How to Fix It (2001)
LTC Triathlon (2000)
Myth of Unaffordability (1999)
LTC Choice (1998)
Maryland: THE Long-Term Care Financing Crisis: Danger or Opportunity? A Case Study in Maryland (1995)
Illinois: The Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois (1994)
Florida: The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term Care (1994)
Wisconsin: The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin (1992)
The Myth of Medicaid Spend-Down -- LTC, Incorporated (1991)
The Fallacy of Impoverishment --The Gerontologist (1990) (Requires membership or "pay-per-view" through GSA, Gerontological Society of America)
Transfer of Assets in the Medicaid Program: A Case Study in Washington State -- Office of Inspector General (1989) -- Archived permanently here
Medicaid Estate Recoveries: National Program Inspection -- Office of Inspector General (1988) -- Archived permanently here
The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the Medicaid Program -- Health Care Financing Administration (1985)

Persistence: Your Center for Long-Term Care Reform has pursued these principles in these ways for over 20 years, since April 1, 1998. We’ve faced the same challenges so many of you struggle to overcome. But like thoughtful investors, we don’t panic and sell. We carefully evaluate the challenge, adjust to meet it in evermore creative ways, keep our powder dry, and await the next big opportunity to effectuate change for the better. We remain proactive, supporting good ideas, opposing bad ideas, and proposing new approaches.

We remember and are buoyed by our major successes changing long-term care financing law and regulations for the better, including

(1) forging the framework for the Omnibus Budget Reconciliation Act of 1993, which closed many Medicaid eligibility loopholes, made estate recoveries mandatory, and implemented most of the recommendation from the 1988 "Medicaid Estate Recovery" report Steve Moses wrote for the Office of Inspector General [http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf] and

(2) influencing (with co-founder, attorney David Rosenfeld) the content and passage of the Deficit Reduction Act of 2005, which capped Medicaid’s home equity exemption for the first time, extended the asset transfer look back period to a full five years, and unleashed the long-hamstrung LTC Partnership program from debilitating statutory restraints.

We did it before. We can do it again.

Insurance: Like buying gold to insure an investment portfolio against inflation, recession, and stagflation, supporting your Center for Long-Term Care Reform ensures that we’ll be there fighting for sound long-term care financing policy, keeping you apprised of all you need to know, taking every opportunity to correct errors by ideologically biased analysts or media, and seeking every opening to effectuate changes that benefit private LTC financing products and producers.

LTC Comment: I started to title today’s LTC Bullet “Why You Need the Center for Long-Term Care Reform.” But then I figured you might not read what I had to say. So I took the tack of assessing the problems we face and pointing out how the Center for Long-Term Care Reform addresses them with careful analysis, realistic recommendations, and forward-looking optimism. I hope you share our vision and will support our on-going efforts. Join, renew, or upgrade by contacting Damon at 206-283-7036 or damon@centerltc.com.

We are planning to make a few changes in the Center’s approach to these problems we all face. Instead of publishing LTC Bullets every Friday, we’ll publish periodically as needed to oppose bad research and support promising developments. We’ll use time saved to focus more on writing for outside publication and correcting mistaken or biased media coverage of long-term care financing. Instead of conducting more state and federal studies to re-substantiate what we’ve proved over and over again, we’ll focus on forcing the opposition to consider facts and analysis they’ve evaded.

Thanks for your support.

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Updated, Tuesday, September 4, 10:30 AM (Pacific)

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LTC E-ALERT #18-033: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Nursing home resident numbers decreasing, while quality varies, new AARP analysis notes
Assisted living supply, charges vary widely among states, new AARP report shows
Wall Street Journal: Aging Boomers Divided on Being Called ‘Perennials’
Sizing up the state of labor in senior living
New York Life Tests New Pitch for an Unpopular Insurance Policy
Short-Term Care Has Role in Skilled Nursing, But Future Remains Cloudy
Genworth and Oceanwide Extend Merger Agreement
Medigap Offers Agents Years Of Strong Commissions
10% of Surveyed Seniors Say They’ll Fund Long-Term Care with Reverse Mortgages
In-force LTC Rate Increases Continue, Some Lower Than Actuarially Justified
How to Tame Health Care Spending? Here’s a One-Percent Solution
Reinsurers Have Traded $60 Billion in Longevity Risk: Rating Agency
Foreign workers to the rescue?

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Updated, Monday, August 27, 9:33 AM (Pacific)

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LTC E-ALERT #18-032: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Long-Term Care Hospitals: A Case Study in Waste
Some Doubt LTC Insurance Industry's Future As Premiums Spiral Upward
The big difference between long-term care and long-term disability insurance
Autobiographical memory tested for early Alzheimer's detection
Don't Blame Older Adults For Big Increases In Medicaid Spending
Plan ahead to protect your family and your fortune from this retirement risk
A Late-Life Surprise: Taking Care Of Frail, Aging Parents
Michael Cohen's guilty pleas include assisted living connection
75 Must-Know Statistics About Long-Term Care: 2018 Edition
Good providers need more Medicaid help
Scott Harrison Is Tired of Long-Term Care Policy Think Tanks
China Beckons to US Skilled Nursing, Long-Term Care Operators
42% of older adults have a disability: CDC

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Updated, Monday, August 20, 10:13 AM (Pacific)

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LTC E-ALERT #18-032: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Elder Care: Frequently asked questions regarding Medicaid Asset Protection Trusts
Could Your Long-Term Care Premiums Be Hiding in Plain Sight?
Mutual of Omaha Adds Medicare Drug Plans and an LTC Rider
Genworth and China Oceanwide Push Back Deal Deadline
Life expectancy decreasing, CDC says
Slideshow: 15 employee benefits on the rise
Slideshow: 15 employee benefits on the decline
Humana completes sale of long-term care insurance policy business KMG, at a loss of $790 million
Planning challenge: Aging clients, no kids, assisted living required
How to protect your retirement when your senior parent needs financial help
LTCG to Provide Administration to Wilton Re in Support of Its Transformative Reinsurance Transaction with CNO Financial
Are You Ready for Longevity? 4 Steps to Take Now
As the Wilmington-area region ages, nursing home populations decline
HC2 Completes One LTCI Deal, Seeks More: Have an unwanted LTCI block, and some cash? Philip Falcone's company might be interested

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Updated, Friday, August 17, 2018, 10:26 AM (Pacific)

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LTC BULLET: IS IT TIME TO PROSPECT MILLENNIALS?

LTC Comment: Maybe at 22 to 37 years old they’re too young to buy LTCI, but boy are they going to disrupt the insurance market. Details after the ***news.***

This week’s LTC Bullet is sponsored by LTC Consumer, an online resource that’s helping individuals understand and plan for long term care. LTC Consumer is managed by Nathan Sanow, Executive Director. Sanow leads an experienced team of Long Term Care Insurance Specialists educating consumers on the need for long term care insurance planning and to identify the best solution that meets their long term care needs. Resources on LTC Consumer can be found at www.LTCConsumer.com

*** SCHRIFTMAN to receive Dementia Society of America’s Diplomat Award for raising awareness about dementia through his book and film “My Million Dollar Mom” at September 14 gala. We congratulate longtime Center friend, member and supporter Ross Schriftman for his work and this well-deserved honor. ***

LTC BULLET: IS IT TIME TO PROSPECT MILLENNIALS?

LTC Comment: Have you noticed all the news stories about millennials recently? We’ve highlighted several for LTC Clippings subscribers:

7/10/2018, “With little saved, employers and aging employees share same fear: Can retirement happen?,” by Yasemin Sim Esmen, Employee Benefit Adviser

6/7/2018, “Millennials and retirement: How bad is it?,” by Alicia H. Munnell, Politico

1/5/2018, “Millennials flock to nursing at twice the rate of baby boomers, staving off shortage,” by Shari Rudavsky, Indianapolis Star

Note especially these stories about millennials and long-term care financing/insurance:

2/14/2018, “How To Sell LTCi To Millennials For Their Parents,” by Susan Rupbe, InsuranceNewsNet

6/20/2018, “Despite not using long-term care, millennials have strong opinions on how it should be paid for,” by Marty Stempniak, McKnight's LTC News

6/27/2018, “Millennials May Care Deeply About Long-Term Care Benefits,” by Allison Bell, ThinkAdvisor

Finally, stories about millennials caring for parents and grandparents abound:

8/15/18, “From Sunday Brunch To Caregiver Crunch: Millennials Confront Caring For Aging Baby Boomers,” by Joseph Coughlin, Forbes

5/21/18, “This is What the Challenging Life of a Millennial Caregiver Looks Like,” Abigail Abrams, Time

8/9/18, “It looks like it's not just crushing student loans holding millennials back anymore — it's also their aging parents,” by Hillary Hofflower, Business Insider

So, what’s going on?

Here’s a LTC Clipping we sent this week that points to the answer:

8/14/2018, “Dimensions, Demographics And The March Of Generations,” Advisor Magazine

Quote: “By 2019, Millennials will number 73 million, and will have taken over Baby Boomers as America’s largest living generation. Meanwhile, in 2016 Millennials became the largest generation in the U.S. Labor Force and will soon surpass Baby Boomers as comprising the majority of the U.S. electorate (Fry, 2018). In short, Millennials are about to take over the world. Yet, even as Millennials surpass Boomers in their sheer numbers (not to mention contributions to the economy), they continue to be treated by many industries and institutions as a niche market, whose values, beliefs and behaviors are at best inscrutable and at worst despicable. And like any other generation, they have been vulnerable to stereotyping and even derision. … Read the entire report: Insurance And Millennials- A Coming Of Age here.”

LTC Comment: Get to know the new boomers who’ll have to fund the entitlements for the old boomers . . . and themselves.

Read that article from Advisor Magazine and consider especially these observations from it about the likely impact of millennials on the insurance industry:

“Like its infrastructure, both technological and human, the composition of insurance products remains rigid and structured along hard lines that are ceasing to exist for Millennials: business vs. personal, digital vs. physical, online vs. offline etc. The way that products are sold and marketed often does not align with how Millennials shop and research and is instead driven by assumptions, like the idea that Millennials want to do everything online or that Millennials are lazy and won't do their research.

“Attitudes in insurance toward Millennials and toward change in general are slowly shifting, but still pervasive within the industry is the perception that it's not the industry that needs to change, but Millennials themselves. A study conducted by the website insurancequotes.com in 2015 revealed that Millennials are severely misinformed about insurance, finding that while the majority of Millennials rent, most do not have renters insurance, and are the group most likely to lack knowledge about renters insurance, with 29 percent believing renters insurance costs more than $1,000 a year (Johnson, 2015). The common industry response to such findings (and indeed the general tone of this particular study) has been to blame Millennials for their ignorance, relying on the old adages-that Millennials are naive, selfish, and irresponsible-rather than the industry's own failures.

As an industry that will increasingly rely on Millennials to buy its products, it is on the industry to understand, empathize and find innovative ways connect with Millennials, not the other way around. If what the research shows is true, Millennials are not lazy, and they definitely aren't stupid. It's the insurance industry that has become opaque, complicated and disconnected from the people it exists to serve. The purpose of our research is neither to confirm nor negate common stereotypes of Millennials, but to provide a layer of complexity, nuance and humanity to how Millennials are perceived within the insurance industry. As a customer experience agency, all of our work is driven by real human insights-by what people tell us about how they feel, what they want and what they are worried about-and by what we can observe in their behavior. Millennials are people, too. And like any people, they can only be understood through a complex and interwoven set of values, priorities, and general characteristics that exist within particular economic, historical, and cultural circumstances.”

LTC Comment: Millennials have had a rough go compared to their Baby Boomer parents/grandparents. They’re handicapped by debt yet must carry the economic weight of funding entitlements for their elders and themselves. The long-term care insurance industry hasn’t exactly had an easy ride either. LTCI carriers, distributors and producers have had to adapt to hard realities such as underwriting errors, artificially low interest rates, and consumers asleep about LTC risk and cost.

Millennials and the LTCI industry have this in common: they’ve gotten a bum rap because of poor public policy. Maybe they can find ways to work together toward mutual benefit.

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Updated, Monday, August 13, 2018, 10:44 AM (Pacific)

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LTC E-ALERT #18-030: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicaid Officials Target Home Health Aides' Union Dues
Higher acuity, assisted living behind nursing home Medicare spending growth, experts say
Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society
LTCI Issuers May Be Counting on Health Improvement That Isn't Coming: Prudential
Study confirms what many suspect: Assisted living's growth taking a toll on skilled care private pay
Rate Hikes Help Push Genworth LTCI Premium Revenue Higher
HHS Inspector General's Report Finds Flaws And Fraud In U.S. Hospice Care
Dr. Bill Thomas' tiny house prototype now available for rent
Unum Could Add Up to $750 Million to LTCI Reserves
Fitch Wants Insurers to Post More LTCI Performance Data
Abusive Unlicensed Care Homes Are 'Hidden In Plain Sight' In America, Researcher Says
The hidden male caregiver

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Updated, Friday, August 3, 2018, 9:39 AM (Pacific)

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LTC BULLET: UPDATE ON THE CALIFORNIA LTC PARTNERSHIP

LTC Comment: Thanks to the indefatigable efforts of Louis H. Brownstone, the California Partnership for Long-Term Care has a new lease on life. Details after the ***news.***

*** MEA CULPA. Last week’s, “LTC Bullet: SOA Delivers on LTCI Again,” mistakenly reported that the two concepts tested came from the “Land this Plane” effort. They actually arose during an October 2015 Think Tank meeting.

Further clarification from analysts representing the report: There is no current facility that enables a conversion from term life to LTC later in life, in the same policy. By combining them in this way, with the original issue age, our analysis shows that consumers will save about 1/3 on premiums versus buying the products separately. Given how affordability is such a big issues for LTC, we think that’s important. Benefit levels and the premiums are designed to stay the same when the conversion occurs, which helps account for the ease of understanding seen in the research. The “Retirement Plus” proposal assumes that the “retirement account” would NOT be excluded from assets considered for Medicaid eligibility. Because the term life ends when the LTC begins (65 or older), the product that consumers would have when they apply to Medicaid would be LTC which we believe will count as an asset in most states. ***

LTC BULLET: UPDATE ON THE CALIFORNIA LTC PARTNERSHIP

LTC Comment: Center-corporate-member Louis H. Brownstone has spearheaded a years-long effort to salvage the nearly defunct California Partnership for Long-Term Care. In today’s guest Bullet, he describes the challenge he and his co-reformers faced and the success they are having. We congratulate Mr. Brownstone for his proactivity, persistence, dedication and impending victory.

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Progress for the California Partnership for Long-Term Care
by
Louis H. Brownstone

There has been significant progress in reviving the California Partnership for Long-Term Care. The Partnership is still in intensive care; its sales are non-existent; and it’s barely on life support. But changes are likely to occur which could bring the plan out of its critical condition and into rehabilitation.

As you may recall, California Senate Bill 1384 was passed in September, 2016. It allowed for inflation options in Partnership policies besides the formerly mandated 5% compound. It also required the formation of a Task Force of interested stakeholders to advise and assist in implementing reforms to the Partnership.

That Task Force is composed of some fifteen members of various state departments and a dozen outside consultants. This group has now met seven times. Its purpose is to mitigate the coming tsunami of Medi-Cal long-term care expenses when the baby boomers reach their eighties and need long-term care. Its main objective is to create new and innovative Partnership policies that would be affordable to the middle class.

That goal required coming up with a policy structure that would achieve it. A subgroup was formed to recommend a structure to be presented to the Task Force, which was done on February 6^th.

There are two major impediments to creating an affordable Partnership policy:

1. The heretofore compulsory 5% compound inflation rider; and

2. The requirement that the minimum facility benefit be 70% of the average nursing home cost in California, now $310/day, 70% of which is $217/day.

A subgroup of the Task Force recommended two measures to address these impediments. First, it proposed a 3% compound inflation rider, in compliance with SB 1384, which all by itself cuts the premium by about half. Second, it recommended that the 70% requirement for the average nursing home cost factor be removed entirely.

The subgroup recognized that future nursing home claims will probably be less than 10% of all long-term care claims. Therefore, it believed that basing future requirements on nursing home costs would be an outdated guideline, and that it was far more pertinent to base future protection on far less expensive residential care facility and home care costs where the vast majority of care would be received. It also noted that new robot and sensor technology would change the caregiving dynamic, especially in the home.

Next, the question became what structure would be both meaningful protection and affordable to the middle class. There was serious debate on the answer to this question, but in the end, the subgroup agreed and recommended the following:

1. That the minimum benefit would be $100/day, or $3,000/month, in all settings;

2. That the minimum lifetime benefit would be $73,000.

3. That required elimination periods would be up to 30 calendar days for one and two-year benefit limits and up to 90 calendar days for benefit limits of three years or more.

The subgroup decided that these would be its only requirements in a policy, giving the insurance carriers maximum flexibility in their policy design. Carriers would be encouraged to file structures currently in their non-Partnership policies in order to ease their filing process and obtain speedy approval. For example, they could file either a lifetime benefit of $73,000 over two plus years with a daily benefit of $100 or a lifetime benefit of $73,000 with a daily benefit of $100. Or they could file a lifetime benefit of $73,000 over one year with a daily benefit of $200, or a two-year plan with a lifetime benefit of $109,500 and a daily benefit of $150.

Industry studies have concluded that the market for long term care insurance would be substantially larger if premiums would be at or under $100/month. This was the premium goal of the Task Force. The subgroup anticipated that a two-year plan at $100/day with a lifetime benefit of $73,000 with 3% compound inflation would create premiums at or under $100/month for males and for each individual of a married couple in their mid-fifties. Premiums would be somewhat higher for unmarried females, but still under $150/month.

Of course, a $100/day benefit with a $73,000 lifetime benefit would only constitute partial coverage in many scenarios. But these benefits could be a big help to claimants, and could be coupled with Social Security income and other income to fully cover costs in many cases. The assumption here was that the market for Partnership policies was not appropriate for the lower 50% to 60% of the population, which would have to rely solely on their own resources and on Medi-Cal. But the top 40% to 50% of the population would have other income and assets they could utilize to cover the balance of the costs of care. Long term care insurance is currently primarily being sold to the top 10% of the population in income and assets, and it would be a major step forward to increase the marketability of the product to the top 40% or 50% of the population.

For citizens with moderate income and assets, such plans could in effect offer lifetime protection. For example, if a person had $73,000 in assets, he or she could purchase a partnership plan with a benefit limit of $73,000. Once that person became sick, he or she could use up the benefits in the policy, apply for Medi-Cal, protect the $73,000 in assets, and be covered for the rest or his or her life. With Medi-Cal waivers, he or she may be able to stay at home for at least most of the period of care. That’s what we all want in a long-term care insurance policy…lifetime protection, preservation of assets, and possible home care. Perfect!

The Task Force then considered whether to wait for revised regulations from the California Department of Health Care Services or attempt to pass an urgency statute through the legislature. The revised regulations approval process of DHCS was deemed too slow, and the legislative approach was endorsed.

This structure was introduced to the legislature as SB 1248. That bill has been endorsed by both political parties. It was passed by the Senate easily, and we expect the Assembly to pass it in August based on the Assembly Appropriations Committee’s recommendation. Governor Brown will most likely sign the bill by the end of September.

In addition, the bill requires the various departments to “adopt emergency regulations … necessary for the immediate preservation of the public peace, health, or safety.” The intent is for all departments, including the Department of Insurance, to approve new Partnership filings within 90 to 120 days, assuming such filings would be submitted very shortly after the bill becomes law.

Whew! Sacramento works in strange ways. I have a political science degree from Stanford, but I was never taught the intricate machinations that occur inside our state government. I don’t pretend to understand completely what goes on. The good news is that I probably don’t need to, and that some folks in the Task Force are passionate and want to push this process on to a conclusion.

The Task Force has made significant progress, but this would only begin the process. As its immediate goals, the Task Force also needs to:

1. Convince the insurance carriers that such Partnership policies could be filed expeditiously and with minimum expense;

2. Convince the insurance carriers that such policies could be saleable in volume and be flexible enough to ensure future profitability;

3. Educate the public with a major campaign on the need for long-term care protection.

4. Convince agents that they can create a new long-term care market and sell what is essentially lifetime coverage, based on premiums a client can afford.

5. Educate agents and get them excited enough to sell Partnership policies again.

Long-term care expenses are going to skyrocket in about ten years when the baby-boomers begin to reach their eighties. Billions of dollars of Medi-Cal expense can be saved if this new Partnership program works. It can also be duplicated in other states. Anyone want to join in this effort?

Louis H. Brownstone is Chairman, California Long-Term Care Insurance Services, Inc., past-Chairman of the National LTC Network and Government Relations Chair of NAIFA SF-Peninsula. Reach him at louis@cltcinsurance.com

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Updated, Monday, July 30, 2018, 10:06 AM (Pacific)

Seattle—

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LTC E-ALERT #18-029: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Why does one of the most needed jobs pay so poorly?
The Heated Battle Over Whether Medicare Advantage Plans Should Offer Personal Services
Long-term nursing care turnover linked to low Medicaid payments
Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks
What the World's Biggest Asset Manager Recommends to Boost Retirement Savings
What Are Senior Citizens’ Biggest Financial Regrets From Their Twenties?
How Medicare Advantage Fuels Innovation in Care of Seriously Ill
Senior living will grow at skilled care's expense through 2021, report predicts
Critical Illness Insurance Sales Rise: LIMRA
What's the Ideal Retirement Age? Here's What Americans Think
Researchers find Alzheimer's threat never diminishes; average survival confirmed 6 years
Got Medicare Advantage? Prepare for New Perks — and New Questions

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Updated, Friday, July 27, 2018, 11:02 AM (Pacific)

Seattle—

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LTC BULLET: SOA DELIVERS ON LTCI AGAIN

LTC Comment: New product ideas originated by the “LTC Think Tank” are formalized in a report sponsored by the Society of Actuaries. Details after the ***news.***

LTC BULLET: SOA DELIVERS ON LTCI AGAIN

LTC Comment: Remember the LTC Think Tank’s extraordinary effort to address the long-term care insurance puzzle? We summarized it and its report, titled “Land This Plane,” in LTC Bullet: Inspect This Plane, April 18, 2014. Now, two of the product ideas proposed in that study have received detailed description and analysis in a new report written by Maddock Douglas’s Cindy Malone and sponsored by the Society of Actuaries. Read “Long-Term Care and the Middle Market: Sizing the Opportunity for New Ways to Finance Long-Term Care” and/or its highlights here. Following is the report’s summary from page 6:

“Section 2: Summary of Findings

“The combination long-term care (LTC) insurance product concepts developed in this project, LifeStage Protection and Retirement Plus, both show promise for success in the consumer marketplace. The forecasts projecting these results are based on above-average self-reported purchase intent scores and other real-world assumptions. In addition, modeled tax revenue and Medicaid spending projections suggest that both concepts create the opportunity for significant government savings.

“In addition, both concepts have been well received, with key diagnostics providing clues to what is driving the strong self-reported purchase interest. Most significantly, many consumers can envision a personal need for each (although more commonly in the future than today, regardless of current age). While some seek additional information, the majority find both concepts to be easy to understand and believable. Many also feel these products are unique compared to other offerings designed to help them plan for their future financial needs.

“Price is a likely barrier for many as “interest in investigating further” drops sharply after exposure to price. Of note, however, is that purchase intent is higher among those who selected a larger benefit level, suggesting that those who recognize the benefits of the products may be willing to pay more to get the coverage they desire.

“Consumers would prefer to purchase both concepts through their employer or online, directly from the insurance company. However, offering either product only through employers may lower overall interest. About one in five would prefer to purchase through an agent.

Here are the findings specific to each concept:

LifeStage Protection. An insurance policy that starts as term life insurance during prime income-earning years and then switches to long-term care insurance during later years gathers positive initial impressions. The concept fills a need for consumers in the future. Being a combination product that transitions as you get older is a top-liked element. However, there is some concern about not choosing the “right” transition age. Survey data indicates that the option to pay more to receive a death benefit after the transition age or to be able to use long-term care benefits prior to the transition age is likely to increase interest and could help alleviate some of the concerns.
Retirement Plus. A flexible retirement plan like a 401(k) or IRA, but with long-term care insurance built in also generates positive initial reactions and the perception that it fills a personal need. The flexibility to use saved funds for whatever the buyer needs is appealing. Highlighting the benefits of this product compared to other separate savings and insurance options will be important to converting hesitant or skeptical consumers. Survey results show adding an option to pay more to have access to the insurance benefit early is likely to increase interest.”

LTC Comment: We congratulate all associated with the project that generated these ideas and the report that published them. They’re too many to mention by name here, but key contributors acknowledged in the report included LTCI veterans Vince Bodnar, John O’Leary and Eileen Tell as well as “the members of the Long-Term Care Think Tank, whose collaborative thinking generated ideas for what evolved into the LifeStage Protection and Retirement Plus concepts.” (p. 5).

Not to rain too heavily on their parade, but I’d be remiss in my role if I didn’t point out a couple problems with these ideas:

“LifeStage Protection” is based on combining term life insurance and LTCI. Point 1: People don’t need a special product to combine those two kinds of coverage. It always made sense to buy term life when young and convert to LTC insurance later. But few did it. Why? Point 2: Because Medicaid always paid for most high LTC costs after the insurable event had already occurred desensitizing people to LTC risk until it was too late for private insurance. Besides, term life insurance, in any amount, does not deter Medicaid eligibility.

“Retirement Plus” relies on tax-deferred retirement accounts, but those aren’t at risk for Medicaid spend down either, at least under federal law and regulations. Some states do count them in spite of federal rules to the contrary.

For more details and links to the federal laws and regulations that apply, see especially Medi-Cal LTC: Safety Net or Hammock? (2011), pages 19-21.

Unfortunately, the report’s estimates of Medicaid savings are vastly over-optimistic. Ignoring Medicaid’s ease of access after care is needed and its true effect of crowding out consumers’ concern for LTC risk and cost is like an engineer disregarding gravity when constructing a bridge. Anything seems possible.

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Updated, Monday, July 23, 11:02 AM (Pacific)

Seattle—

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LTC E-ALERT #18-028: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

America Is Running Out of Family Caregivers, Just When It Needs Them Most
U.S. Medigap plans fall short on protections for pre-existing conditions
Nursing home signs 'groundbreaking contract,' doles out bonuses to staffers for cutting back bed sores
CCRCs Move Away From Skilled Nursing As Demand Drops
Majority of older adults with probable dementia are likely unaware they have it, study suggests
A Growing Number of People Are Navigating Retirement Alone. This Woman Is Spearheading a Movement to Change That
CDC: 14% of those 75+ have early symptom of Alzheimer's
Baby boomers bode well for CCRCs
Are adult foster homes a good long-term care option?
3 ways to help employees understand the value of their HSAs

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Updated, Friday, July 20, 2018, 9:57 AM (Pacific)

Seattle—

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LTC BULLET: THE STILL BROKEN RHYTHM OF LONG-TERM CARE REFORM

LTC Comment: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer? The answer follows after the ***news.***

*** LTC CLIPPINGS are our way of keeping premium Center members abreast of all the news, data, reports and articles they need to read to be at the forefront of professional knowledge. If you’re not receiving our daily (2 on average) LTC Clippings contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. Here are a couple examples from last week to help you keep your finger on the pulse of change in long-term care:

7/15/2018, “Baby boomers bode well for CCRCs,” by Lois A. Bowers, McKnight's Senior Living

Quote: “Continuing care retirement communities are expected to hold much appeal to baby boomers, and the good news is, the first wave of boomers will be entering the target age range for such communities within the next five years, notes a new “Market Insight” report from CBRE. … The oldest baby boomers are turning 72 this year, and CCRC residents typically are in their late 70s to mid-80s at move-in, according to CBRE.”

LTC Comment: And so it begins . . . finally. But what happens 13 years from now when the oldest boomers start turning 85 and moving into the highest acuity CCRC settings?

7/16/2018, “CCRCs Move Away From Skilled Nursing As Demand Drops,” by Maggie Flynn, Skilled Nursing News

Quote: “By the industry’s own definition, continuing care retirement communities (CCRCs) include skilled nursing care — but there is a growing trend of developing similar communities that lack such care, according to a report from the commercial real estate services firm CBRE.”

LTC Comment: We reported yesterday that boomers are moving into their peak years for joining CCRCs, age 72. We observed it’ll be a much bigger problem when they start turning 85 in 2031 and need more skilled nursing care. Now we learn CCRCs are cutting back the SNF option. First a shortage of kindergartens in 1950; now a shortage of nursing homes coming to a CCRC near you soon.

LTC BULLET: THE BROKEN RHYTHM OF LONG-TERM CARE REFORM

LTC Comment: Why have we seen no progress for eight years (now nine) to protect Medicaid as a long-term care safety net for the poor? Why are Medicaid LTC benefits more readily available than ever to middle class and affluent people who failed to plan for long-term care? Why has the previously steady rhythm of long-term care reform been broken? I wrote this article to address those questions.

“The Broken Rhythm of Long-Term Care Reform”
by
Stephen A. Moses

(This article was originally published as an LTC Bullet in May of 2017. But the situation persists, so we’ll revisit the matter once a year until it changes.)

Historically, progress toward making Medicaid a better long-term care safety net for the poor tended to occur shortly after major economic downturns when state and federal governments faced serious budgetary constraints. After most recessions since 1965, Congresses and Presidents of widely divergent ideological persuasions backed legislation that closed Medicaid long-term care eligibility loopholes and encouraged early and responsible long-term care planning. But as each recession was followed by a rapid economic recovery and fiscal pressure abated, Medicaid long-term care benefits always reverted to virtually universal availability for all economic classes. That pattern prevailed for the first 35 years of the program, but it ended at the turn of the millennium. It has been eight years since the end of the “Great Recession” in June 2009; the country is mired in a slow, [now long-in-the-tooth] recovery; but we’ve still seen no movement, much less legislation, to target Medicaid’s scarce resources to the needy. Why?

The Rhythm of Long-Term Care Reform

On July 30, 1965, President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . . aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” The new program’s costs immediately exploded far beyond expectations. The U.S. suffered a recession from December 1969 to November 1970, which sensitized the country to the spiraling guns-and-butter expenditures of the Viet Nam War and Great Society programs. By 1970, a Wisconsin Law Journal article concluded

To evaluate Medicaid at the halfway mark to 1975, i.e., in terms of its ability to provide comprehensive medical care to substantially all needy and medically needy, would show not merely a failure but, perhaps, a disaster.^{^[i]}

The country fell into economic recessions again from November 1973 to March 1975 and from January to July 1980. Finally, Congress acted to curtail spiraling Medicaid LTC expenditures. On December 5, 1980, President Jimmy Carter signed the Omnibus Reconciliation Act, imposing the first ever restriction on asset transfers done in order to qualify for Medicaid. Until then, Medicaid “applicants were expressly permitted to transfer resources that otherwise would have disqualified them from receiving any benefits.”^{^[ii]}

July 1981 to November 1982 brought another recession during which, on September 3, 1982, President Reagan signed the Tax Equity and Financial Responsibility Act authorizing, but not requiring, state Medicaid programs to penalize asset transfers, place liens on real property, and recover benefits from the estates of deceased recipients. Reagan doubled down on April 7, 1986, signing the Consolidated Omnibus Budget Reconciliation Act that restricted the use of Medicaid Qualifying Trusts. He followed through again on July 1, 1988 by signing the Medicare Catastrophic Coverage Act, which made asset transfer penalties mandatory and expanded the transfer of assets look-back period to 30 months.

Unfortunately, these Reagan-era measures were not strongly enforced or publicized. With the economy booming, it was easier for the state and federal governments to pay the still-burgeoning Medicaid bills and avoid the political sensitivity of enforcing restrictions on Medicaid long-term care eligibility. But that changed when the country experienced another recession from July 1990 to March 1991. All of a sudden, state and federal officials were again having trouble making budget ends meet. Congress responded and President Bill Clinton signed the Omnibus Budget Reconciliation Act on August 10, 1993, making estate recovery mandatory, expanding the look back period to three full years, eliminating the cap on asset transfer penalties, and prohibiting “pyramid divestment.” When costs continued to skyrocket, Clinton also doubled down. On August 21, 1996, he signed the Health Insurance Portability and Accountability Act (the “Throw Granny in Jail Law”) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

But the latter Clinton years brought renewed prosperity as the technology boom intensified. With revenues up and welfare rolls down, why worry about enforcing rules to target Medicaid to the needy? On August 5, 1997, President Clinton signed the Balanced Budget Act repealing the criminalization of asset transfers to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee. Shortly thereafter, this “Throw Granny’s Lawyer in Jail Law” was deemed unconstitutional and thus unenforceable. Back to square one.

The Rhythm of Reform Breaks

This historical pattern of rapid statutory action to control Medicaid planning abuse following each economic recession ended with the start of the new millennium. After the March to November 2001 recession resulting from the internet bubble’s implosion, economic recovery came more slowly than before. Likewise, it took much longer for legislation discouraging the excessive use of Medicaid long-term care benefits to be passed. The Deficit Reduction Act of 2005, placing the first cap ever on Medicaid’s home equity exemption, extending the asset transfer look back period to a full five years, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program, was not signed into law by President George W. Bush until February of 2006, nearly five years after the start of the previous recession. Ultimately, economic recovery did come and true to form, enforcement of the DRA ’05 declined.

The next economic boom ended when the housing bubble burst causing the Great Recession of December 2007 to June 2009. Again, economic recovery has come very slowly and meagerly.^{^[iii]} To date, eight years after the end of the last recession, we have seen neither a full economic recovery nor action to spend Medicaid’s scarce resources more wisely by aiming them toward people most in need. In fact, public policy analysts and advocates are moving in the opposite direction, toward proposing yet another government program funded by taxpayers to expand public financing of long-term care for all.

What Broke this Rhythm of Reform?

What might explain both phenomena, i.e., slower economic recoveries in recent years and less attention to the cost of Medicaid long-term care benefits?

The Federal Reserve forced interest rates to artificially low levels after the internet bubble burst and to almost zero during and since the Great Recession. The consequences of this policy have ramified through the economy in many ways. One way is that government has been able to finance deficit spending and the rapidly increasing national debt at considerably lower carrying costs than before, when interest rates were much higher. By enabling politicians to spend more without facing the previously inevitable fiscal consequences, this new economic policy has attracted greater financial resources, including borrowed funds, into public financing of all kinds and simultaneously diverted private wealth into low-interest-rate-induced malinvestment. Consequently, political concern about mushrooming budgets and debt has abated and no significant effort to preserve Medicaid funds by targeting them to the poor has occurred.

The danger is that just as excessive public spending and private malinvestment in the early 2000s led to the housing bubble and its consequent mid-decade recession, so the current much larger credit bubble driven by excessive government borrowing and spending could lead to an even greater economic collapse. With the current national debt nearing $20 trillion [now $21.3 trillion] and total unfunded entitlement liabilities around $106 trillion, a return to economically realistic market-based interest rates would render the federal government immediately insolvent.^{^[iv]}

Rendezvous with the Age Wave Looms

Further exacerbating the problem of long-term care financing is the fact that the long anticipated age wave is finally cresting and will soon crash on the U.S. economy.

Baby boomers began retiring and taking Social Security benefits at age 62 in 2008. At age 65 in 2011, they turned the Social Security and Medicare programs cash-flow negative. Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital. They will reach the critical age (85 years plus) of rising long-term care needs in 2031, around the time Social Security and Medicare are expected to deplete their trust funds forcing them to reduce benefits.

Of course, Medicaid is the main funder of long-term care, but according to the Center for Medicare and Medicaid Services Chief Actuary, in a statement of consummate denial, “. . . Medicaid outlays and revenues are automatically in financial balance, there is no need to maintain a contingency reserve, and, unlike Medicare, the ‘financial status’ of the program is not in question from an actuarial perspective.”^{^[v]} In summary, conditions are coalescing for a potential economic cataclysm in or before the second third of this century and public officials are almost totally ignoring the risk.

Conclusion

Old-fashioned monetary and fiscal discipline kept Medicaid long-term care spending somewhat in check during the program’s early decades. Spending skyrocketed all along, but when the country fell into recessions, state and federal legislators responded with measures to reduce the overuse of Medicaid. Those measures helped to discourage prosperous people from ignoring long-term care risk and hence ending up on Medicaid by default.

But any semblance of monetary and fiscal discipline ended after the year 2000. Artificially low interest rates invited deficit spending and enabled politicians to keep Medicaid eligibility very generous without breaking their budgets. Easy access to Medicaid long-term care benefits after care was needed anesthetized the public to LTC risk and cost, impaired the private home care market, and crowded out sources of private funding such as home equity conversion and long-term care insurance.

Consequently, the country is on the cusp of aging demographic and economic crises of historic proportions without the resources to continue funding the current system nor the incentives in public policy to inspire more responsible long-term care planning by the public. The solution, and the only hope for a benign outcome, is to end Federal Reserve manipulation of interest rates and stop federal deficit spending, so we can once again target Medicaid’s scarce resources to people genuinely in need.

While we are unlikely to see such policy changes soon, we definitely should redouble our efforts toward those objectives.

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[i] Sydney E. Bernard and Eugene Feingold, “The Impact of Medicaid,” Wisconsin Law Review, Wis. L. Rev. 726 1970.

[ii] Timothy N. Carlucci, “The Asset Transfer Dilemma: Disposal of Resources and Qualification for Medicaid Assistance,” Drake Law Review, 36 Drake L. Rev. 369 1986-1987

[iii] According to the Wall Street Journal, we are experiencing “the weakest pace of any expansion since at least 1949.” Eric Morath and Jeffrey Sparshott, “U.S. GDP Grew a Disappointing 1.2% in Second Quarter,” Wall Street Journal, July 29, 2016; http://www.wsj.com/articles/u-s-economy-grew-at-a-disappointing-1-2-in-2nd-quarter-1469795649.

“Even seven years after the recession ended, the current stretch of economic gains has yielded less growth than much shorter business cycles.” Eric Morath, “Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era,” Wall Street Journal, July 29, 2016; http://blogs.wsj.com/economics/2016/07/29/seven-years-later-recovery-remains-the-weakest-of-the-post-world-war-ii-era/

[iv] The “National Debt Clock” (http://www.usdebtclock.org/) places U.S. national debt at $19.9 trillion and unfunded liabilities at $106.0 trillion (cited May 2, 2017).

[v] Christopher J. Truffer, Christian J. Wolfe, and Kathryn E. Rennie, “Report to Congress: 2016 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Sylvia Mathews Burwell, Secretary of Health and Human Services, 2016, p. 3; https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/medicaidReport2013.pdf. This identical quote was in the 2013 version of the “Actuarial Report” and was critiqued in S. Moses, “LTC Bullet: Does Medicaid Solvency Matter?,” Friday, October 31, 2014; http://www.centerltc.com/bullets/archives2014/1062.htm

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Updated, Monday, July 16, 9:57 AM (Pacific)

Seattle—

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LTC E-ALERT #18-027: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

New Study Links MA Plans to Lower Levels of Hospital Visits
The 'Big Bang' of Alzheimer's: Scientists ID genesis of disease
With little saved, employers and aging employees share same fear: Can retirement happen?
The 2018 Medicare Trustees Report: Fiscal and Policy Challenges
Skilled Nursing Facilities Rank Low on Operators’ Investment Wish Lists
Advocacy group calls for 'immediate' Congressional hearings into nursing home staffing
Gen X's Deep Dive Into Financial Stress
Medicaid Backlog to Shutter Central Illinois Nursing Home
It’s Almost Like a Ghost Town.’ Most Nursing Homes Overstated Staffing for Years
The truth behind long-term care insurance
New ways to estimate and fund long-term care costs
Aging Population to Be Major Driver of Healthcare M&A
Life-LTC Hybrid Sales Soar: LIMRA
U.S. Interest Payments to Equal Social Security Spending by 2048: CBO
An aspirin a day may keep dementia away, study finds
Study rebuts idea that Medicare is wasted on the dying
Where Do Older Americans Die?

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Updated, Friday, July 13, 2018, 11:17 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care News and Analysis

LTC Comment: Center for Long-Term Care Reform Premium members have the option to receive our LTC Clipping Service and weekly LTC E-Alerts newsletters. Today, we’d like to share a sample of these members-only services with a wider audience. Our topic is the news this week, so we’ll skip our usual ***news*** section and dive straight in.

LTC Bullet: Long-Term Care News and Analysis

Many Center for Long-Term Care Reform Premium members are familiar with our LTC Clipping Service, and from what we hear, get great value from this benefit of Premium membership.

For those who don’t already know, our LTC Clipping Service is an excellent way to stay on top of current and critical long-term care news without having to spend hours a day researching on the internet. We send our Clipping Service subscribers an average of 2-3 emails per workday with a must-read-article link, a pull quote and some brief analysis. We’re sensitive to the fact that we all receive too many emails, so we’re very careful to send along only the most important LTC news items.

As an added benefit and for convenient reference, we keep a running archive of the clippings we send in our new LTC Clippings Archive, dating back to January 2016. This archive is organized by LTC-related subject and sub-category. While CLTCR Premium members will continue to receive their LTC Clippings in real time, they and Individual members, have access to the Clippings Archive through our Members-Only Zone website. Here’s a breakdown of the Archive’s subject categories:

INSURANCE (Long-Term Care Insurance, Critical Illness Insurance, Hybrid and Miscellaneous (including alternative financing solutions))

LONG-TERM CARE (General, Cost, Assisted Living, Nursing Homes, Home Care, Caregiving, Veterans Affairs and Government Solutions)

MEDICAID (General, Medicaid Planning and Crowd-Out Effect)

MEDICARE (including Medi-Gap and Medicare Advantage)

SOCIAL SECURITY

ALZHEIMER'S DISEASE

POLITICS, LEGISLATION AND PUBLIC POLICY

ECONOMICS, DEMOGRAPHICS AND DATA

RETIREMENT PLANNING

HEALTH AND HEALTHCARE

OTHER

If you’re reading this, chances are you play a valuable role in protecting people from the risk and cost of long-term care and to that end we think the Clipping Service allows our subscribers to be more effective doing so. Based on their feedback, we think our subscribers feel the same. For example:

Your clipping service is the best. I seldom give out insurance company brochures to prospects, much preferring the third party endorsement of published articles that are far more believable than an insurance company brochure. The news does a great job of creating urgency to act as well. You bundle them and send to my inbox for me to use, wonderful! I’m speaking to a group at lunch today and will be handing out an article that was published two days ago that you alerted me to. Keep up the good work, saves me time, and makes me money. -- Romeo Raabe, www.TheLongTermCareGuy.com

In my entire 24- year career in the long term care insurance industry I have never seen such a spate of articles in popular media – including print, digital, radio, TV - highlighting long term care as one of the top worries of aging Americans facing retirement. As a supporter of the Center for Long Term Care Reform and a subscriber to “LTC Clippings” I have been kept completely “in the loop” and fully up to date on the vastly increasing information flow about the need for LTC planning. I can not only see what my prospects and clients are reading and hearing about the industry but also have good quality information to share with the “centers of influence” that depend on me for information. The “clipping service” is just one of many benefits provided by the Center and I am grateful to Stephen and Damon Moses for providing a tool that has been so important over the years to the success of Franklin & Associates and Franklin Funding Reverse Mortgages. -- Barbara Franklin, CEO

Please find below a sample collection of clippings we’ve sent to our Clipping Service subscribers over the past few months. Read through them and if you think that receiving news items like these in real time would be valuable to you, please consider subscribing at the Premium membership level. By doing so, you can stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform.

Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month.

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7/9/2018, “Gen X's Deep Dive Into Financial Stress,” by Christy DeFrain, Advisor Magazine

Quote: “Gen X (born between 1965 and 1979) is now the second largest generation in the workforce today, and this group of ‘latchkey children’ and ‘slacker’ young adults can be viewed as America’s neglected middle child. Bookended by two much written-about generations — the Baby Boomers ahead and the Millennials behind — this driving force behind today’s companies is easily overlooked despite the fact that they are the most committed and engaged at work. Truly, Gen Xers are the source of power that keeps a business together”

LTC Comment: A new generation of LTCI prospects comes online.

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6/28/2018, “The Infamous Medicaid Look Back Rule… Why Does it Matter and What Does it Mean?,” by Casey Sauerwine, Marshall, Parker & Weber LLC

Quote: “Engaging in trust planning or gifting more than five years before applying for Medicaid can be an effective strategy to protect assets from nursing home costs. Gifting ahead of time can reduce the amount of available assets an individual will have at the time a Medicaid application is completed. It is important to talk about trust planning and gifting with your elder law attorney if you are considering going down one of these paths.”

LTC Comment: Academics who favor turning LTC over to the government pretend Medicaid planning is so minor as to justify they’re ignoring it. This is a sample of the kind of information elder law firms all across the country routinely purvey to their affluent clients.

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6/21/2018, “Senior living might want to take a new look at an old friend,” by John O’Connor, McKnight's Senior Living

Quote: “Odd as it now seems, there was a time when private insurance was allowed to sit with the grownups. … Turns out the sellers grossly underestimated how expensive and likely senior living services would turn out to be. Most of the dozens of firms that once sold private long-term care coverage culled it from their portfolio as quickly and quietly as possible. … But a rebound of sorts appears to be underway. A growing number of firms are starting to sell hybrid products that combine LTC insurance with a potential life insurance benefit. More than a quarter million of these combo policies were sold last year, primarily as estate-planning tools. By comparison, the number of traditional LTC policies sold was only 66,000.”

LTC Comment: If LTC provider pooh-bahs and their political allies paid attention to the real problem—dependency on Medicaid and crowd out of private financing—all forms of LTC insurance would resurge.

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6/20/2018, “New screening tool could help diagnose early cognitive decline in dementia from home,” Science Daily

Quote: “An international team of scientists have developed a new way to screen for age-related cognitive decline at home using a test which asks people to detect sounds and flashes on their laptop or phone.”

LTC Comment: Early diagnosis is more critical than ever as behavioral modifications to reduce or reverse cognitive decline become more seriously considered.

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6/13/2018, “Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients,” by Jordan Rao, Kaiser Health News

Quote: “With hospitals pushing patients out the door earlier, nursing homes are deluged with increasingly frail patients. But many homes, with their sometimes-skeletal medical staffing, often fail to handle post-hospital complications — or create new problems by not heeding or receiving accurate hospital and physician instructions. Patients, caught in the middle, may suffer. One in 5 Medicare patients sent from the hospital to a nursing home boomerang back within 30 days, often for potentially preventable conditions such as dehydration, infections and medication errors, federal records show. Such rehospitalizations occur 27 percent more frequently than for the Medicare population at large. Nursing homes have been unintentionally rewarded by decades of colliding government payment policies, which gave both hospitals and nursing homes financial incentives for the transfers. That has left the most vulnerable patients often ping-ponging between institutions, wreaking havoc with patients’ care.”

LTC Comment: Rewarded? Really? Medicaid pays nursing homes less than the cost of providing their care for 60% of their residents which is why medical staffing is skeletal. Nursing homes have to maximize relatively generous Medicare reimbursements for a small minority of their residents to make up part of the difference. Poor public policy is the problem and can’t be solved by punishing LTC providers with more regulation and penalties.

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6/2/2018, “'Invisible workforce' of caregivers is wearing out as boomers age,” by Jackie Crosby, Star Tribune

Quote: “Growing numbers of Americans face the immense and often overwhelming challenge of caring for an aging parent or other loved one, a burden that will skyrocket as 76 million baby boomers move into their 80s and need help coping with dementia, cancer, heart disease or just plain frailty and old age. … Soon, Minnesota and the nation will reach a demographic crossroad. In 2030, the first wave of the baby boom generation will turn 85, an age when people are twice as likely as those even a decade younger to need help getting through the day.”

LTC Comment: Good article on the topic especially because it recognizes the sea change coming in 2030. Add to the wave of boomers turning 85 the exhaustion of Social Security and Medicare “trust funds” and you have a clear view of the coming mayhem.

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5/17/2018, “The Hidden Costs Of Caregiving,” Securian Financial

Quote: “Securian Financial recently conducted a survey of more than 800 people currently providing, or who have provided, unpaid care to a parent, in-law or spouse who is aging, or has a disability or chronic disease. The survey found the majority of caregivers (60 percent) spend more than 10 hours per week caring for a family member, and about one in four (29 percent) spend more than 20 hours per week. Women (32 percent) are more likely than men (26 percent) to spend more than 20 hours each week on caregiver duties.”

LTC Comment: Information to share with prospects and clients to trigger and sustain their concern about planning ahead for long-term care.

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5/9/2018, “Why Families Need a Plan for Caregiving,” by Kimberly Lankford, Kiplinger’s Personal Finance

Quote: “Kamilah Williams-Kemp, 43, is the head of Northwestern Mutual's long-term-care insurance business. She was the primary caregiver for her mother last year.”

LTC Comment: The personal story of one of our own in the LTCI business.

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5/2/2018, “The Myth of Outliving Your Retirement Savings,” by Gail MarksJarvis, Reuters

Quote: “Most retirement research points to an impending retirement crisis for about half of Americans who save too little. But a new study suggests that behavior like Anderson’s makes the outlook far less dire. Because people worry about outlasting their savings, most adjust by living humbly – often overly so. Consequently, they make even modest savings last for years longer than expected by researchers.

“What can devastate financially are divorce, caring for a mentally or physically ill adult child who cannot work, and long-term care expenses, according to the Society's research. Still, debilitating healthcare costs are far more rare than people fear, according to the EBRI research. Half of retirees face no nursing home expenses since Medicare covers short recoveries after hospital stays and Medicaid can help when resources run out.”

LTC Comment: Unfortunately, the author here fails to mention that the supposed rareness of debilitating healthcare costs doesn’t make those costs less impactful to those who experience them.

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5/2/2018, “Medicare Advantage Plans Can Pay for Many LTC Services in 2019: Feds,” by Allison Bell, ThinkAdvisor

Quote: “The Centers for Medicare and Medicaid Services is getting ready to let Medicare Advantage plan issuers add major new long-term care benefits to their supplemental benefits menus.”

LTC Comment: Medicaid made nursing home care free in 1965 without enforcing spend-down rules thus desensitizing the public to LTC risk, locking in institutional bias, and impeding private financing of LTC through savings, home equity conversion and private insurance. This new government venture into “free LTC” will also end badly.

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4/27/2018, “Largest LTCi Claim Exceeds $2 Million,” by Jesse Slome, Advisor Magazine

Quote: “A single long-term care insurance policyholder claim has exceeded two million dollars (actually $2.6M for a female). The largest claim still being paid to a male policyholder reached nearly $1.6 million. Why is this important? First, it’s the first time we’ve seen a single claim in excess of $2 million. Second, because consumers mistakenly perceive this protection in ‘investment’ terms … will I get my money back? Advisors need info like this to tell the story properly! When it comes to LTC insurance (or most insurance for that matter) some will get NO benefit … some will get SOME benefit … and a few will get HUGE benefit.”

LTC Comment: Fascinating findings. I wonder how many million-dollar claims Medicaid has paid.

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4/20/2018, “No Spend Down,” by Stephen D. Forman, LTCA Weekly Reader

Quote: “The Employee Benefit Research Institute (EBRI) always publishes high-quality research. In their latest study they find that retirees do a poor job of asset decumulation. Those with few assets (who enter retirement with median assets of $31,740) still have $24,000 eighteen years later, a parsimony which is ‘not irrational,’ according to the authors. But even when assets are plentiful upon retirement (a median of $857,450), eighteen years later this group still maintains a healthy bank account worth $763,900. In short, EBRI finds that retirees spend their income (what comes in, goes out), but rarely touch assets. That's what the chart above illustrates. (This is not what ‘life cycle theory’ or traditional financial planning has presumed.)”

LTC Comment: So much for the idea that wide swaths of the American public are spending down into impoverishment for long-term care. As we’ve explained frequently and most recently here, Medicaid pays for most expensive LTC in the USA and for most Americans it’s easy to get after care is needed without spending down significantly.

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4/20/2018, “Couples in retirement face average health care costs of $280,000, Fidelity estimates,” by Adam Shell, USA Today

Quote: “Fidelity estimates it will cost a couple $280,000 to cover their health care costs in retirement, up 2% from last year and 75% since its 2002 estimate of $160,000. The math assumes a couple retires at 65 and is eligible for Medicare. The cost for care for males in retirement is an estimated $133,000, while the tab for women, who tend to live longer than men, is $147,000.”

LTC Comment: Annual update excludes long-term care costs.

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4/19/2018, “'60 Minutes' To Air Unprecedented Video Study On The Progression Of Alzheimer's,” by Robin Seaton Jefferson, Forbes

Quote: “The chief medical correspondent to CBS News and professor of medicine at NYU Langone Medical Center has spent the last 10 years recording the effects of Alzheimer’s disease on a patient and her husband, who over the course of his study have become not only his subjects but his friends. … LaPook will share his journey and their stories-said to be the longest video study of its kind-Sunday on "60 Minutes," chronicling the long-term devastation of Alzheimer’s disease on both patient and caregiver.”

LTC Comment: Watch this 60 Minutes episode if you have access. If not, click the article for the story. See also: “LTC Bullet: The End of Alzheimer’s.”

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4/15/2018, “65% of Baby Boomers Are Making a Huge Financial Mistake That Could Leave Them Broke,” by Christy Bieber, Motley Fool

Quote: “Many pre-retirees think they don't need to worry about healthcare because they anticipate care costs will be covered by Medicare. But the reality is that Medicare makes seniors responsible for picking up a significant percentage of their cost of care. Seniors may face high deductibles, coinsurance costs, premiums, and coverage limitations. … There are also many services Medicare doesn't cover, including hearing aids, long-term care, and dental care. … Qualifying for Medicaid could also help you afford care costs by subsidizing Medicare premiums and paying for some services not covered by Medicare, such as routine nursing home care. While there are strict asset limits to obtain Medicaid, an attorney can help you to develop a plan that protects your wealth and still allows you to obtain coverage.”

LTC Comment: There’s the essence of the problem in a nutshell. People are in denial about the long-term care risk, but not irrationally so because “an attorney can help you” protect your wealth and get the government to pay if you ever need LTC. The truly irresponsible parties in this public policy fiasco are the academics, politicians and policy-makers who refuse to take this simple, obvious reality into account. For details see How to Fix Long-Term Care Financing.

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4/4/2018, “Caring for elderly parents can put a dent in your budget,” by Sarah O’Brien, CNBC

Quote: “The biggest monthly expenses for caregivers are medicine and medical supplies ($273), food ($159) and personal-care items ($151).

About half of current and past caregivers did not know in advance that they would be stepping into that role.

In advance of finding yourself in that situation, whether expected or not, it's worth having a conversation with your parents about how they envision their care if they reach a point where they no longer can care for themselves.”

LTC Comment: Sound advice.

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3/26/2018, “As Trump Targets Immigrants, Elderly Brace To Lose Caregivers,” by Melissa Bailey, Kaiser Health News

Quote: “Nationwide, 1 million immigrants work in direct care — as CNAs, personal care attendants or home health aides — according to the Paraprofessional Healthcare Institute, a New York-based organization that studies the workforce. Immigrants make up 1 in 4 workers, said Robert Espinoza, PHI’s vice president of policy. Turnover is high, he said, because the work is difficult and wages are low. The median wage for personal care attendants and home health aides is $10.66 per hour, and $12.78 per hour for CNAs. Workers often receive little training and leave when they find higher-paying jobs at retail counters or fast-food restaurants, he said.

“The country faces a severe shortage in home health aides. With 10,000 baby boomers turning 65 each day, an even more serious shortfall lies ahead, according to Paul Osterman, a professor at Massachusetts Institute of Technology’s Sloan School of Management. He predicts a national shortfall of 151,000 direct care workers by 2030, a gap that will grow to 355,000 by 2040. That shortage will escalate if immigrant workers lose work permits, or if other industries raise wages and lure away direct care workers, he said.

“‘What people don’t seem to understand is that people from other countries really are the backbone of long-term care,’ said Sister Jacquelyn McCarthy, CEO of Bethany Health Care Center in Framingham, Mass., which runs a nursing home with 170 patients. She has eight Haitian and Salvadoran workers with TPS, mostly certified nursing assistants. They show up reliably for 4:30 a.m. shifts and never call out sick, she said. Many of them have worked there for over five years. She said she already has six CNA vacancies and can’t afford to lose more.

“Osterman, the MIT professor, said the sum of all of these immigration policy changes may have a serious impact. If demand for workers exceeds supply, he said, insurers may have to restrict the number of hours of care that people receive, and wages may rise, driving up costs. ‘People aren’t going to be able to have quality care,’ he said. ‘They’re not going to be able to stay at home.’”

LTC Comment: Politics + demographics = LTC - TLC.

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Updated, Monday, July 2, 2018, 10:41 AM (Pacific)

Seattle—

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LTC E-ALERT #18-026: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Millennials May Care Deeply About Long-Term Care Benefits
Voices Pushing through client fears about LTC needs
Some Advisors Call for Early Long-Term Care Planning
Hannover Re Backs OneAmerica Life-Based LTC Product
Medicaid: Actions Needed to Mitigate Billions in Improper Payments and Program Integrity Risks
Help clients face up to long-term care
More time in SNF does not 'yield better health,' new study asserts
Pain, bed sores more common at most VA nursing homes than private facilities, data show
Survey: Older adults prefer assisted living over home health or nursing home care
Medicare Allows More Benefits for Chronically Ill, Aiming to Improve Care for Millions
Spending on Medicare Advantage Plans Nearly Doubled Over Last Decade
AHCA/NCAL President Parkinson Shares Lessons Learned from China Visit
Despite slower Medicare growth, higher taxes may be needed to cover aging population, researchers say

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Updated, Friday, June 22, 2018, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: THE NEW FALLACY OF IMPOVERISHMENT

LTC Comment: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work, after the ***news.***

*** GC AND AIM JOIN INTEGRITY MARKETING: American Independent Marketing and GoldenCare are now part of Integrity Marketing. The announcements came on February 6 in AIM’s case and on May 8 for GC. Lenny Anderson (GC) and John Wane (AIM) and their companies have been pioneers and leaders in long-term care insurance for over four decades. Both men cited succession planning, the ability to stay involved, and the ongoing success of the companies they founded as reasons for the move. Check out this video press release for a more personal insight on the decision. We congratulate these two great men of the private LTC insurance business and wish them, their companies and Integrity Marketing every success going forward. By the way, GC and AIM were the organizing sponsors of the Center for LTC Reform’s 2008 “Long-Term Care Consciousness Tour” and they continue to support our LTC financing policy research and advocacy generously. ***

LTC BULLET: THE NEW FALLACY OF IMPOVERISHMENT

LTC Comment: In 1990, the Gerontologist published my article “The Fallacy of Impoverishment” explaining how middle class and affluent people take advantage of Medicaid long-term care benefits intended for the needy. In 2005, I updated that research in a “Policy Analysis” for the Cato Institute titled “Aging America’s Achilles’ Heel: Medicaid Long-Term Care.” My work shows how people do not have to be poor to get public welfare. Now Cato has published a new “Policy Analysis” that proves most of the poor … well … aren’t.

Whoa, say what? We’ve whipped poverty? How can that be? For answers, check out “Reassessing the Facts about Inequality, Poverty, and Redistribution” by John F. Early, published in April by the Cato Institute. Or read this summary by Phil Gramm and Robert B. Ekelund, Jr. in the June 24 Wall Street Journal: “How Income Equality Helped Trump: Working Americans sense that taxes and transfers now leave them little better off than those who work less.” What follows are snippets from the Cato piece to give you the gist followed by our comments. Footnotes are omitted.

Cato: “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades.” (p. 1)

LTC Comment: How can that be?

Cato: “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households.” (p. 2)

LTC Comment: Interesting, how about some examples?

Cato: “The inequality debate is most frequently framed in terms of the differences in money income as measured by the Current Population Survey (CPS) from the U.S. Census Bureau.” (p. 2) [but] “Census money income estimates explicitly exclude the following:

The Earned Income Tax Credit (EITC)
The monetary value of benefits from the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps
Free or subsidized medical care such as Medicaid and the Children's Health Insurance Program (CHIP)
Free, subsidized, or controlled rent or other ‘affordable housing’ schemes
Heating subsidies
Free or reduced-fee social services such as daycare, tax preparation, or meal services” (p. 4)

LTC Comment: So, when analysts report the percentage of people living in poverty and levels of inequality they’re leaving out cash and in-kind benefits provided by all those government programs? Wouldn’t that make people look a lot poorer than they really are?

Cato: “The net result is that although the lowest income group has only 2.2 percent of earned income, it receives 8.3 percent of spendable income available for consumption and savings. … Beneficiaries in the lowest income quintile during their working years receive 10 times more benefits per dollar contributed than those in the top two quintiles.” (pps. 5-6)

LTC Comment: Wait a minute. Wouldn’t this effect be counterbalanced by the taxes poor people have to pay, especially sales and payroll taxes?

Cato: “Official income statistics make no adjustments for taxes paid.” (p. 4)

LTC Comment: If that’s true, doesn’t it make higher income people look richer than they are? Leaving out government benefit transfers and taxes would make the poor look poorer and the affluent look wealthier. Right?

Cato: “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more.” (p. 4)

LTC Comment: It sounds like all the anguishing we hear about poverty and inequality in the USA is vastly overstated.

Cato: “If the government were to raise taxes on the wealthy tomorrow and transfer all the additional money to the lowest income groups through a larger EITC [earned income tax credit], the official metrics of inequality would not budge by a single cipher because neither the new taxes taken from the top nor the additional income transfers given to the bottom would be used in the calculations.” (p. 4)

LTC Comment: What’s the bottom line?

Cato: “The net result was that the average spendable income for the highest income group was only three times higher than that for the lowest group.

Government redistribution eliminated 88.5 percent of the ratio between the highest and lowest market income quintiles.
The 3.0:1 ratio in spendable income between the highest and lowest quintiles is more than five times smaller than the 16.2:1 ratio highlighted by the annual Census Bureau money income estimate.” (p. 10)

LTC Comment: What does this really mean for the middle class?

Cato: “On average, households with $63,136 in earned market income get to keep it all. They pay taxes averaging approximately $17,000 per year, but on average they also get an equal amount of government transfers.” (p. 10)

LTC Comment: So, you’re saying we’ve practically eliminated poverty, as only 2% remain genuinely impoverished, and the middle class is getting back in benefits as good as it gives in taxes. Who’s picking up the tab?

Cato: “The top 47.5 percent of households were taxed to do the following:

Transfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income
Pay for the many activities of government that require 40 percent of all government spending
Pay the interest on the national debt, which constitutes 12 percent of government expenditures” (p. 10)

LTC Comment: But surely widespread hunger and homelessness belie your rosy statistics.

Cato: “Other independent data confirm that only small numbers of Americans live in conditions that would normally be considered poverty. These data show that families classified as poor have lifestyles that would usually be considered middle class. For example:

Only about 2.5 percent of the U.S. population has even a single day of hunger or malnutrition in a year.
Only about 1 percent of the population lives in housing that is severely inadequate or crowded-one-fourth as many as in 1975. Less than one-half of 1 percent of the population is homeless for even a short time during a year.
Most families that are defined as ‘poor’ have many goods and services that would be classified as luxury items. Air conditioning is seven times more prevalent among poor families today than among the general population when the War on Poverty began. Most poor families have microwave ovens, at least one vehicle, video games, flat-screen TVs, and personal computers.

“These metrics are consistent with the improved measures that show about 2 percent poverty prevalence. (p. 20)

LTC Comment: I spent 1968-70 in the Peace Corps in Venezuela and I correspond with friends suffering there now. I know what poverty is. That isn’t it.

Cato: “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone. … Public policy debate should begin with the realization that only about 2 percent of the population—not 13.5 percent—live in poverty.” (p. 21)

Closing LTC Comment: Well, there you have it. Poverty is gone for all intents and purposes. We spend one trillion dollars a year to erase it. But that’s not the only cost.

We “[t]ransfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income.” (p. 10)

Re-read that last sentence and then ask yourself:

Does taxing half the people enough to pull the other half up to the median income make sense?
What effect does getting so much unearned income have on the motivation and effort expended by the recipients?
What effect does paying their own bills and those of the other half of the population have on the motivation and effort expended by the payers?
Have we eliminated poverty at the cost of inhibiting economic incentives and rewards?

One last quote from the Cato report:

During the 15 years before President Johnson's announcement of the War on Poverty, the measured poverty rate had fallen from 34.8 percent to 19.0 percent. Two years after Johnson's speech and before most of the new programs were fully implemented, the rate had dropped to 14.7 percent, well within the range that would prevail for the next 48 years. (p. 15)

One last question: By eliminating the economic consequences of laziness, irresponsibility and poor behavior, did we punish producers, reward indolence, create dissension, polarize our politics, handicap the economy and make everyone’s life less rewarding?

The Cato “Policy Analysis” does not draw those conclusions, but it definitely provides ample evidence to support them.

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Updated, Monday, June 25, 10:02 AM (Pacific)

Seattle—

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LTC E-ALERT #18-025: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

White House releases sweeping proposal to reorganize government
Senior living might want to take a new look at an old friend
New Stand-Alone LTCI Player Continues to Move Forward
The Nation's Fiscal Health: Action Is Needed to Address the Federal Government's Fiscal Future
How to Talk About Long-Term Care Planning Now
New screening tool could help diagnose early cognitive decline in dementia from home
Dr. Atul Gawande, new healthcare company CEO, no stranger to senior living
Help clients come to grips with long-term care
The Low-Down on the Medicaid Spend-Down
House GOP 2019 Budget Takes a Swing at Social Security, Medicare
Health Care Choices Proposal: A Plan to Lower Costs, Provide Better Choices in Health Care and Return Power to Consumers
LTSS financing proposal 'a promising start,' providers say
Walgreens and Humana are partnering to create senior health hubs
Despite not using long-term care, millennials have strong opinions on how it should be paid for
Second hospice employee pleads guilty in alleged $60 million kickback scheme involving assisted living communities
MedPAC calls for lower SNF pay rates; provider advocates fire back
Secret VA nursing-home ratings hid poor quality care from public
Research shows that the prevalence of dementia has fallen in the United States

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Updated, Friday, June 22, 2018, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: TRIBUTE TO PHYLLIS SHELTON

LTC Comment: LTCI trainer, consultant and author Phyllis Shelton says goodbye and hello after the ***news.***

*** LTC CLIPPINGS, our special service for premium Center members, keeps you abreast of the latest LTC news, data, reports and articles. We drop brief messages into your email inbox a couple times per day with a title, author, source, representative quote, and our comment. Contact Damon at 206-283-7036 or damon@centerltc.com for details and to subscribe. Examples from this week include:

6/20/2018, “New screening tool could help diagnose early cognitive decline in dementia from home,” Science Daily

LTC Comment: Early diagnosis is more critical than ever as behavioral modifications to reduce or reverse cognitive decline become more seriously considered.

6/20/2018, “Despite not using long-term care, millennials have strong opinions on how it should be paid for,” by Marty Stempniak, McKnight's LTC News

Quote: “That's one of the key takeaways from a AP/NORC survey of young individuals about LTC, highlighted by Forbes this week. As noted by AARP, about 1 in every 4 caregivers is between the ages of 18 and 34. They spend about 20 hours per week delivering care, which is only going to balloon as the population ages. … Some 62% are in favor of instituting tax breaks for purchasing long-term care insurance. And 60% said they would like to see a government-administered LTC insurance program in the same vein as Medicare. Another 81% said they would favor employers offering long-term care insurance plans as a benefit, the report notes.”

LTC Comment: I’m not sure how you square 62% favoring LTCI tax breaks and 81% wanting employer LTCI plans with 60% preferring a Medicare LTC takeover. But, hey, at least the generation that will have to pay for our Social Security and Medicare is starting to think about long-term care. ***

LTC BULLET: TRIBUTE TO PHYLLIS SHELTON

LTC Comment: Anyone involved in the long-term care insurance business knows the name Phyllis Shelton. Her training company, LTC Consultants, prepared thousands of eager new producers to ascend the steep learning curve of LTCI sales. Her book, Long-Term Care: Your Financial Planning Guide, introduced consumers to the perils of long-term care and the protection private insurance provides. Phyllis’s omnipresence at key industry events; her penetrating questions; her informative comments are well known to her fellow professional travelers. That’s why it was with some surprise and disappointment this week that we received Phyllis Shelton’s “goodbye letter.” She’s closing LTC Consultants and moving on to other pursuits, including Christian speaking opportunities and helping families personally with retirement planning.

We asked Ms. Shelton if we could re-publish excerpts from her goodbye letter in this week’s LTC Bullet including a link to the whole story. She replied “When Steve and Damon asked if they could publish my goodbye letter for LTC Consultants, my agent training company, I said of course! The Center for LTC Reform has been an integral part of my success by making sure I was always up on the latest news and research in the LTCi industry.” Thanks, Phyllis, the feeling is mutual.

Now, here’s enough of Phyllis Shelton’s goodbye letter for LTC Consultants to give you the flavor and the gist. We’ve focused on the professional stories including the names of people and companies that helped her along the way. Read the full unedited version with photos and all of its personal content here: http://ltcconsultants.com/good-bye/good-bye.html.

June 16, 2018

Dear Long-Term Care Insurance World,

It has been my honor and pleasure to serve you from a training standpoint since August 7, 1991, the birth of this wonderful company known as LTC Consultants … .

The mission of LTC Consultants was to provide a way for me to teach as many who wanted to learn my simple sales presentation and how I was selling 40-year-olds back in 1988-1991. … I hate cold calls and after three failed phone calls with the last one telling me he already had someone to mow his lawn, I resolved to NEVER make another one! I resolved to work as hard as it took doing seminars, networking with other professionals and PR, like writing articles and giving radio/television interviews to never, ever face another cold call. …

When the $500 marketing system [she designed] didn’t fly off the shelves after paying $1200 for a booth at the 1991 NALU (now NAIFA) annual convention … and after calling all the major insurance companies with no result, God gave me a vision to do a national training tour which would be a grassroots marketing effort … [with financial help] from Long-Term Preferred Care, spearheaded by Gerald Witcher and Robert Forman. Robert is now president of LTC-Associates. …

Two big bonuses: I met Suze Orman at my San Francisco meeting in November, 1994, and secured my first big training contract (40 cities) with Banker’s Life at that same meeting. I told them I could train their 3000 agents for the cost of two 6 packs of Diet Coke per agent! Plus, they bought the rights to print my marketing materials, so each agent would have a flip chart and sales script, and each office would have a seminar system. I still have the letter – their LTCI production went up 34.6% in 1995. Home Run.

Nine additional companies followed in the ensuing years, including a large bank and a large LTC provider, and two online training programs. … The second one was for the mandated training with Phil Sullivan of Selling LTC.

Prior to the mandated training, we had to bring on additional trainers so we could do five cities on the same day for big accounts like State Farm, Allstate and Prudential. [Husband] Bill orchestrated that entire effort with John Ferroni, Dave Miller, Catherine Dove and Randy Smith. … The best thing that came out of the grueling training they went through was “The Medicaid Blues,” compliments of John and Dave playing hooky one night and escaping to the Bourbon Street Blues and Boogie Bar in downtown Nashville. We incorporated it into the Medicaid section of every training class we ever did after that! If you’ve never heard it, it’s a crack-up. You can listen to it here.

Then we implemented the first live training in 2001 for Harley Gordon with the CLTC designation and brought in Bill Comfort, Betty Doll and Shelly Kapfhammer, along with Catherine Dove. That was a true Hall of Fame effort as we taught the course in 33 cities using a 2 ¾ day format. Each city had a guest elder law attorney, and we used two videos that Harley did on the estate planning and Medicaid planning segments. I found the elder law attorney for each city to make sure he or she believed in long-term care insurance. I remember telling a well-known elder law attorney in Long Island that he didn’t qualify, and he was flabbergasted that I “fired” him for not being what we were looking for, as he was an avid Medicaid planner. If you want to see how a great elder law attorney behaves, click here.

Then in 2002 came the Federal LTC Insurance Program (FLTCIP). I was referring MetLife to a firm in Nashville that specialized in employee meetings, but they came back and asked if I would consider doing 1,000 meetings for them. I’m sure that request came from my wonderful friend Joyce Ruddock, who was head of MetLife’s LTCi effort at that time. …

2003 saw LTC Consultants helping with the launch of the State of Tennessee group LTCi program with MedAmerica. …

In 2005-2006, we helped MetLife build a field sales force for the AARP program. …

2007-2010 was crazy with the mandatory LTCi training, which Phil [Sullivan] and I put together based on the chapters in my big book with added audio/video effects. I’m a huge believer in the LTC Partnership, so somehow I got involved with helping several states implement it…Washington, Louisiana, Tennessee and Alabama…as well as forming relationships with insurance departments and Medicaid managers throughout the country to gather credible information for the course, LTCi Training.com.

I continued to do live training tours every year and a big meeting in Nashville with a BAND (my favorite part!), and now all of my materials were in digital form and editable…One-on-One, Seminar Selling, Worksite Selling with new books for a turnkey training and presentation system. Unfortunately, the compliance police killed that business, even though everything I put out was the most well-researched material in the industry.

2011 saw the publication of Suze Orman’s The Money Class. I had been serving as a resource for Suze for a number of years prior, but she decided to bring me out of the closet by putting my name in her book as a resource for those who don’t have a knowledgeable LTCi professional. …

So today I’m back where I started in 1988, on the front lines, serving families. Yet now I can do it in all 50 states from the comfort of my beautiful office in Tennessee. …

So what do I tell people today who ask what I do for a living?

I say “I help people retire with dignity.” How, they ask?

Simple – I help people avoid the two biggest mistakes people make in retirement. They fail to plan for a long chronic condition and they fail to keep a paycheck. I can solve both of those with some form of LTC insurance, whether it be traditional or hybrid, and I can provide a lifetime paycheck that they can’t outlive with a fixed index annuity for only 1% a year. I can also provide a way for their money to grow with zero market risk for no fee. …

All this leads me to why I’m closing LTC Consultants. …The percentage of agents who became my students over the years and wanted the annual updates became fewer and fewer as the compliance police made my materials black market.

My last tour was in 2010 on worksite and combo LTCi and I used that to go to Washington, D.C., and try to convince regulators that I had a plan to fix Medicaid. How? By educating financial professionals and state governments on how to sell worksite LTCi with limited underwriting and take the burden off Medicaid. I even provided a budget on how to do it with funding from the additional premium tax that would go to the state as a result of more LTCi being sold. Part of the materials at the live meetings and on my website gave agents a press kit so they could do the same thing in their states. That failed miserably as you can imagine, but I know I gave it my best shot, so no regrets.

So I’m signing off on the training and coaching business, and directing my effort into helping families first-hand. Believe me, there’s NO SHORTAGE of people who want my help in this arena…and your help too. We need knowledgeable professionals in LTC planning more now than ever!! …

[Special thanks] to Martin Bayne and Kevin Johnson of New York LTC Brokers (now Advisors Insurance Brokers), who hired me for my first training gig on September 29, 1994 in Albany NY.

How do you say good-bye after 28 years?

Good-bye.

Phyllis Shelton

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Updated, Monday, June 18, 2018, 9:16 AM (Pacific)

Seattle—

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LTC E-ALERT #18-024: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Gout Linked to Higher Risk of Dementia
Five myths about Alzheimer’s disease
‘Dying at your desk is not a retirement plan’
A New Congressional Proposal For A Medicare Long-Term Care Insurance Benefit
America’s Entitlement Crisis Just Keeps Growing
Announcement: Moody's: Legacy long-term care blocks concerns heightened as focus on actuarial assumptions could lead to margin declines
AMA adopts policy to make long-term care more affordable
Association between systolic blood pressure and dementia in the Whitehall II cohort study: role of age, duration, and threshold used to define hypertension
Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients
APNewsBreak: Nursing homes sue to halt Montana Medicaid cuts
Big state budget changes alter nursing homes' outlook
Visual Association Test, MMSE Highly Predictive of Dementia in Older Adults
Genworth Clears Major Obstacle to Completing China Oceanwide Deal
China Oceanwide’s $2.7 Billion Takeover of Genworth Financial Passes U.S. Security Review

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Updated, Friday, June 15, 2018, 11:04 AM (Pacific)

Seattle—

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LTC BULLET: STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 20^th year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private financing or promoted government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to six dozen LTC Bullets we’ve published taking these groups and individuals to task:

Media: Consumer Reports, National Public Radio (NPR), Public Broadcasting System (PBS), New York Times, Wall Street Journal, Washington Post, Dow Jones MarketWatch

Organizations: National Academy of Elder Law Attorneys (NAELA, Medicaid planners’ trade association), AARP, Alzheimer’s Association, Leading Age (formerly American Association of Homes and Services for the Aging, LTC provider trade association)

Thinktanks or companies: Kaiser Family Foundation (KFF), Georgetown Long-Term Care Financing Project, Urban Institute, Avalere, SCAN, Employee Benefit Research Institute (EBRI), Bipartisan Policy Center (BPC), Center for Retirement Research at Boston College, LTC Collaborative

Government Agencies and Commissions: Government Accountability Office (GAO), the Medicaid Commission, the Long-Term Care Commission, Congressional Research Service (CRS), Congressional Budget Office (CBO), Medicare Trustees, Centers for Medicare and Medicaid Services (CMS)

Scholars: Ellen O'Brien, Peter Kemper, Harriet L. Komisar, Lisa Alecxih, Timothy Waidmann, Korbin Liu, Judith Feder, Richard W. Johnson, Joshua Wiener, Mark Merlis, Lee Shirey Thompson, Anne Tumlinson, Christine Aguiar, Molly O'Malley Watts, Diane Rowland, David G. Stevenson, Marc A. Cohen, Janemarie Mulvey, Sudipto Banerjee, Richard G. Frank, Neale Mahoney, Howard Gleckman, Leora Friedberg, Wenliang Hou, Wei Sun, Anthony Webb, Gretchen Jacobson, Shannon Griffin, Tricia Neuman, Karen Smith, Norma B. Coe, and Melissa M. Favreault

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Damon at 206-283-7036 or damon@centerltc.com to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

LTC Bullet: More Bad Advice from Consumer Reports, November 15, 1999
LTC Comment: Individuals and organizations most critical of private long-term care insurance are usually the ones lining their pockets with Medicaid estate planning profits.

LTC Bullet: They're Baaaack . . . Medicaid Planners Rise Again, April 25, 2001
LTC Comment: Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. No longer.

LTC Bullet: "Nursing Home Care Virtually Free For Life," Tuesday, May 7, 2002
LTC Comment: What follows is a transcription of excerpts from a professionally produced and mass-distributed videotape from a man and his company who promise lifelong free long-term care.

LTC Bullet: Medicaid Planners Confess, October 2, 2003
LTC Comment: A survey intended to exonerate Medicaid planners is actually the strongest indictment of artificial impoverishment yet.

LTC Bullet: Where There's Smoke, There's Fire, May 18, 2005
LTC Comment: Our critique follows of "Medicaid's coverage of nursing home costs: Asset shelter for the wealthy or essential safety net?" by Ellen O'Brien of the Georgetown Long-Term Care Financing Project.

LTC Bullet: LTC Bombshell, June 29, 2005
LTC Comment: Results from a poll of state Medicaid programs by a Congressional office with subpoena power may blow the lid off a carefully orchestrated cover-up of Medicaid planning abuses. Lists, summarizes and analyzes studies that pooh-pooh Medicaid planning.

LTC Bullet: Alzheimer's Association Shortsighted on LTC Financing, July 6, 2005
LTC Comment: The Alzheimer's Association's public position on Medicaid reform and long-term care financing is a classic example of how good intentions invite unintended consequences.

LTC Bullet: GAO on TOA Underwhelms, October 5, 2005
LTC Comment: The Government Accountability Office's new report on Medicaid asset transfers asks the wrong questions, uses the wrong data, and so provides few helpful answers.

LTC Bullet: NPR Defends Medicaid Planning, Attacks Messenger, January 4, 2006
LTC Comment: National Public Radio's "All Things Considered" show took a slanted swipe at responsible Medicaid reform yesterday while defending Medicaid planning abuse. Hear the broadcast version, followed by our side of the story.

LTC Bullet: Georgetown, GAO and Kaiser: The Bermuda Triangle of Good LTC Policy, January 25, 2006
LTC Comment: LTC doubletalk is not the exclusive province of Medicaid planners and AARP lobbyists. Otherwise often reliable analysts get long-term care policy wrong too.

LTC Bullet: LTC Victory, February 2, 2006
LTC Comment: The Deficit Reduction Act of 2005 passed yesterday curbing Medicaid abuse and unleashing LTC Partnerships. Celebrate? Sure. But don't take a victory lap until you consider what can go wrong.

LTC Bullet: Microsimulate This!, March 28, 2006
LTC Comment: The fundamental things apply as time goes by--like "garbage in, garbage out." Take for example a recent Inquiry article that estimates future public and private LTC costs. Our critique follows.

LTC Bullet: Kaiser Cover-Up Continues," April 27, 2006
LTC Comment: Urban Institute "scholars," aided and abetted by the Kaiser Family Foundation, employed an underhanded straw man argument in the foundation's latest unsuccessful attempt to debunk the impact of Medicaid planning abuse.

LTC Bullet: Medicaid Commission Errs by Omission, August 9, 2006
LTC Comment: The national Medicaid Commission, appointed last year to fix Medicaid (including its dysfunctional LTC component) before the welfare program implodes financially, is way off track.

LTC Bullet: The DRA Bullets, January 9, 2007
LTC Comment: Two Medicaid planners lament the DRA we praised and defended in 21 LTC Bullets last year. Their whining, our replies plus links to all the DRA Bullets follow.

LTC Bullet: Take Georgetown's Facts With a Big Grain of Salt, February 15, 2007
LTC Comment: Three new "fact sheets" from the Georgetown LTC Financing Project are spoiled by ideological bias. This Bullet critiques Medicaid's Spousal Impoverishment Protections (February 2007) , Medicare and Long-Term Care (February 2007) and National Spending for Long-Term Care (February 2007)

LTC Bullet: GAO AWOL on LTC TOA, May 2, 2007
LTC Comment: The Government Accountability Office has again displayed stunning miscomprehension of the Medicaid eligibility, Medicaid planning and transfer of assets issues.

LTC Bullet: GAO on LTCI Partnerships, June 20, 2007
LTC Comment: GAO drops the ball again on the issues of Medicaid, long-term care financing and private insurance.

LTC Bullet: Medicaid Estate Recover. . .up, July 5, 2007
LTC Comment: Medicaid estate recovery could be a major source of non-tax revenue for the ailing LTC safety net for the poor, but AARP would tie the program in bureaucratic knots.

LTC Bullet: The NY Compact: Analysis, Conclusions, and Recommendations, July 31, 2007
LTC Comment: Is the New York Compact the future of long-term care financing or the last gasp of an old, failed system?

LTC Bullet: Hillary Clinton on LTC, January 3, 2008
LTC Comment: Presidential candidate Senator Hillary Clinton has promised a cornucopia of LTC benefits if elected. Would our service delivery and financing system be better or worse if she delivered? We comment.

LTC Bullet: WSJ Attacks LTCI, We Respond, February 26, 2008
LTC Comment: Today's front-page Wall Street Journal article criticizing long-term care insurance was as one-sided and misguided as a similar piece published by the New York Times also during a major industry conference. We reply, same day, as follows.

LTC Bullet: NYT Asks Medicaid Planner to Advise on LTCI, July 18, 2008
LTC Comment: The New York Times added insult to injury by inviting a notorious Medicaid planner to advise readers on private long-term care insurance. We respond.

LTC Bullet: We Critique WSJ on Medicaid Planning, January 16, 2009
LTC Comment: Within 24 hours, we replied to a Wall Street Journal column that promoted Medicaid planning for long-term care.

LTC Bullet: New LTC Financing Study Uninterpreted or Misinterpreted, March 24, 2009
LTC Comment: A new report on LTC financing by Avalere Health was reported uncritically by many and mistakenly by one source.

LTC Bullet: LTC Clueless, May 26, 2009
LTC Comment: Consumers' denial of LTC risk and cost is nothing compared to the naiveté of professionals who should know better.

LTC Bullet: KFF Misfires on LTCI, June 9, 2009
LTC Comment: A new study of private long-term care insurance published by the Kaiser Family Foundation fails in the usual, predictable ways. Details follow.

LTC Bullet: How Much More Wrong Can They Get It?!, July 21, 2009
LTC Comment: Another "report" from the usual suspects gets long-term care advice dead wrong.

LTC Bullet: We Reply to Washington Post Blast at Federal LTCI, August 14, 2009
LTC Comment: Read our reply to the Washington Post's "Federal Diary" criticism of Federal LTCI's premium increase.

LTC Bullet: CLASS Consciousness, October 21, 2009
LTC Comment: To hear Kaiser Family Foundation speakers, the CLASS Act is a no-brainer for passage and implementation. We offer a wake-up call.

LTC Bullet: The Enemy of LTC Truth, February 8, 2010
LTC Comment: Albert Einstein said "Unthinking respect for authority is the greatest enemy of truth." See how this principle applies to long-term care.

LTC Bullet: New LTCI Report: Research or Propaganda?, June 8, 2010
LTC Comment: Is a newly updated report on LTC insurance by the Congressional Research Service really research, or CLASS Act propaganda? You decide.

LTC Bullet: CLASSless Journalism, September 21, 2010
LTC Comment: Reporting only the CLASS program's dubious benefits and none of its inevitable detriments is negligent journalism. An example follows.

LTC Bullet: Friendly Fire in the Class War (LTC Embed Report #6), September 22, 2011
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.

LTC Bullet: Moses Replies to Congressman's Questions (LTC Embed Report #11), October 13, 2011
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.

LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News, July 20, 2012
LTC Comment: A recent EBRI study that claims nursing home stays are wiping out Americans’ savings is based on a fallacy and mistaken. What’s really happening?

LTC Bullet: SCAN the LTC Possibilities, April 5, 2013
LTC Comment: SCAN is a fountainhead of ideas about long-term care financing, but are those ideas potable? We analyze.

LTC Bullet: What Should the LTC Commission Do?, June 21, 2013
LTC Comment: How should the LTC Commission prioritize its work and recommendations? Some thoughts follow.

LTC Bullet: Medicaid Spend Down that Isn't and Why it Matters," July 19, 2013
LTC Comment: Claiming “transitions” to Medicaid are evidence of catastrophic LTC asset “spend down” misrepresents the truth and should be publicly recanted. We answer who, what, when, where and why.

LTC Bullet: The LTC Blind, October 25, 2013
LTC Comment: “There are none so blind as those who will not see.” That proverb applies perfectly to a recent column about long-term care by the Urban Institute’s Howard Gleckman.

LTC Bullet: PBS’s 6 LTC Tips Miss the Mark, November 8, 2013
LTC Comment: What’s wrong with the conventional wisdom about how to resolve America’s long-term care crisis?

LTC Bullet: WSJ Misfires on LTC Insurance, February 14, 2014
LTC Comment: We dissect and correct a misbegotten column in the Wall Street Journal.

LTC Bullet: Who Gets Medicaid LTC?, March 28, 2014
LTC Comment: Is Medicaid a long-term care safety net for the poor, the middle class, even the affluent, all of the above? Questions remain, but answers abound.

LTC Bullet: Will Bipartisan LTC Policy Be Better?, April 11, 2014
LTC Comment: Heads up! Consensus is coalescing around a bipartisan long-term care financing solution. Let’s be hopeful, but wary.

LTC Bullet: GAO Punts on Medicaid Planning, July 3, 2014
LTC Comment: Another GAO report underplays dramatic findings about the role, methods and extent of Medicaid planning and loose LTC eligibility rules.

LTC Bullet: Entitlement Double Talk, August 1, 2014
LTC Comment: To read the major media coverage of the 2014 Medicare Trustees report, you’d think things are looking up for the 49-year-old mega-program. Think again.

LTC Bullet: CMS Health Expenditure Data Mask LTC Cost Growth, September 5, 2014
LTC Comment: CMS actuaries’ estimates of health expenditures for 2013-2023 downplay the big story, snowballing LTC costs. We explain.

LTC Bullet: Does Medicaid Solvency Matter?," October 31, 2014
LTC Comment: CMS says Medicaid solvency “is not an issue.” We beg to differ.

LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures, November 21, 2014 LTC Comment--The USDHHS Inspector General reports that many states failed to implement mandatory provisions in OBRA ’93 and/or DRA ’05 designed to discourage abuse of Medicaid LTC benefits. Details follow.

LTC Bullet: IG Report Reveals Medicaid Estate Recovery Weakness, December 5, 2014
LTC Comment—A newly released USDHHS Inspector General report shows few states do Medicaid estate recoveries well resulting in a potential annual loss, we infer, of $2.5 billion. Details, numbers, and why it matters follow.

LTC Bullet: How Careless Economists Boosted LTC Risk, December 12, 2014
LTC Comment: We explain how Boston College economists generated poor long-term care planning advice that national media unfortunately amplified.

LTC Bullet: When Bad Models Happen to Good People, January 16, 2015, guest Bullet by Stephen D. Forman
LTC Comment: We offer the last word on that Boston College fiasco of poor scholarship and bad economics.

LTC Bullet: Holding CMS’s Feet to the Fire, February 6, 2015
LTC Comment: When a federal agency fails to enforce the law hurting the poor it’s supposed to help and costing tax payers billions of dollars, bureaucratic heads should roll. Background and details follow.

LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015 LTC Comment: New numbers, better than the old numbers, but they require further clarification and explanation.

LTC Bullet: Pandora Meets Rosy Scenario in CMS Projections, July 31, 2015
LTC Comment: The aging demographic evils in Pandora’s “box” don’t find their way into CMS actuaries’ health expenditure estimates for the coming decade. Quotes and our comments follow.

LTC Bullet: Another LTCI Hit Job?, October 9, 2015
LTC Comment: What shall we make of this new attack on private long-term care insurance? Answers follow.

LTC Bullet: A New Revolution in Long-Term Care Financing . . . by Government, November 6, 2015
LTC Comment: Radical, disruptive changes in how government pays for long-term care are advancing rapidly. We provide background.

LTC Bullet: The Future of Long-Term Care Seen Through the Prism of History, November 13, 2015
LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We cover the big picture.

LTC Bullet: The Arrogance of LTC Analysts' Elitism," December 4, 2015
LTC Comment: Arrogance, ideological bias and elitism spoil the recent research of abundantly endowed LTC analysts. We explain .

LTC Bullet: Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations, February 5, 2016
LTC Comment: The Bipartisan Policy Center’s new report on long-term care leads with LTCI (hear, hear!), but makes Medicaid even more tempting (boo!) and adds a new, expensive, mandatory government program (boo!) based on faulty premises. Our analysis and critique follow.

LTC Bullet: Losing Principles, April 29, 2016
LTC Comment: What’s happening to the basic principles of personal responsibility and self-reliance that validate private insurance? We reflect.

LTC Bullet: LTC at a Crossroads, June 3, 2016
LTC Comment: Long-term care financing policy is at a critical crossroads and may take a wrong turn. We explain.

LTC Bullet: How the Government Ruined LTC (and We’ll Fix It), June 10, 2016
LTC Comment: Government interference in the LTC marketplace since 1965 caused harmful unintended consequences that only clear analysis and bold action can fix.

LTC Bullet: Half a Century of Bad Medicaid LTC Policy, August 5, 2016
LTC Comment: Medicaid long-term care policy is a classic story of good intentions leading to unfortunate consequences.

LTC Bullet: Behind AHEAD, September 2, 2016
LTC Comment: The people and organizations advocating a new, compulsory, payroll-financed government program to fund catastrophic LTC expenses base their arguments on dubious sources and reasoning. Details follow.

LTC Bullet: How Fiscal and Monetary Malfeasance Will Ruin Long-Term Care, October 7, 2016
LTC Comment: Fiscal malfeasance ($20 trillion federal debt) enabled by monetary malfeasance (artificially low interest rates) bode ill for the economy and for Medicaid LTC financing. Here’s why and how.

LTC Bullet: Medicaid LTC Data Insights, October 14, 2016
LTC Comment: What’s happening with Medicaid LTC financing and why it matters.

LTC Bullet: What’s Wrong with Bundled and Value-Based LTC Payments? January 20, 2017 LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We present the big picture.

LTC Bullet: Hoist with its Own Petard , April 28, 2017
LTC Comment: This Kaiser Family Foundation “Issue Brief” blows up its own argument. We explain.

LTC Bullet: The Broken Rhythm of Long-Term Care Reform, May 19, 2017
LTC Comment: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer? The answer follows.

LTC Bullet: Is it Really Hopeless to Reduce Medicaid LTC Costs?, June 23, 2017
LTC Comment: Kaiser Family Foundation researchers despair of reducing Medicaid LTC expenditures, but their “literature review” is incomplete, misleading and risky.

LTC Bullet: Is it Spend Down or Medicaid Planning?, July 14, 2017
LTC Comment: A lot of what passes for Medicaid “spend down” in the scholarly literature is really Medicaid planning. We explain and give examples.

LTC Bullet: Have Your Cake Until It Eats You, March 23, 2018
LTC Comment: Americans want to have their cake (entitlements) and eat it too, but t