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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!

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Updated, Friday, June 24, 2022, 10:40 AM (Pacific)

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LTC BULLET: MEDICAID’S PLAN TO FAIL

LTC Comment: AARP says too few people plan for old age even though most believe they’ll need long-term care, but it offers no clue as to why or what to do about it. Insights and analysis after the ***news.***

*** LTC CLIPPINGS are news items we send to Center Premium Members daily with news, data, studies, and information they need to know to stay at the professional forefront. Steve Moses scans the popular and scholarly media, condenses vital information, and forwards to you a message with the title, author, a link, a representative quote and his “LTC Comment” analyzing the significance. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or damon@centerltc.com. Here are two examples of LTC clippings sent this week:

5/2022, “Post-acute and Long-term Care Providers and Services Users in the United States, 2017–2018, Analytical and Epidemiological Studies,” by Sengupta, Manisha, et. al., National Center for Health Statistics
Quote: Key Findings [excerpts]
In 2018, about 69,000 paid, regulated post-acute and long-term care services providers in seven major sectors served more than 9.5 million people in the United States.
• Post-acute and long-term care services were provided by 4,200 adult day services centers, 11,500 home health agencies, 4,700 hospices, 15,600 nursing homes, 31,400 assisted living and similar residential care communities, 1,200 inpatient rehabilitation facilities, and 400 long-term care hospitals (Appendix III, Table IX).
• In 2018, an estimated 251,100 current participants were enrolled in adult day services centers; 1,321,200 people were current residents in nursing homes; and 918,700 current residents were living in residential care communities. In 2017, about 4,940,300 patients were discharged from home health agencies; 1,562,500 patients received services from hospices; 380,400 patients received services from inpatient rehabilitation facilities; and 115,800 patients received services from long-term care hospitals (Appendix III, Table XII).
LTC Comment: Consult the report for much more data on the LTC continuum. Center friend Bill Comfort observed that “the CDC data notes that Home HEALTH Care is for Medicare-paid skilled care at home. From my first look at the report, it appears that this doesn’t address at all private-duty, private-pay, custodial home care. The 11,500 home HEALTH agencies do not include the likes of Home Instead, Right At Home, Comfort Keepers, and all the mom and pop home care agencies at all! We continue to get a distorted view of post-acute and just basic custodial care from this oversight.”

6/23/2022, “Many Retirees Wish They'd Planned, Saved Earlier: EBRI Survey,” by Dinah Wisenberg Brin, ThinkAdvisor
Quote: “Half of surveyed retirees said they would have changed their financial habits during their working years. But those who paid a professional to develop a financial plan were satisfied and felt the service was worth the expense. Unexpected medical expenses, preventive health spending, inadequate retirement savings and inflation led the list of retirees' pre-retirement financial concerns.”
LTC Comment: Yet few people plan for old age. To learn why and what to do about it, read tomorrow’s [now today’s] “LTC Bullet: Medicaid’s Failure to Plan.”

LTC BULLET: MEDICAID’S PLAN TO FAIL

LTC Comment: There are few people in the LTC profession I’ve known longer and respect more than John O’Connor. He is editorial director, vice president and associate publisher at McKnight’s Long-Term Care News and sister publication, McKnight’s Senior Living. I’ve been reading John’s thoughtful commentaries since 1989 when I left government LTC research to join the private sector.

O’Connor’s “Editor’s Column” yesterday made several points that form a fine foundation for a crucial conclusion. Read “Worse than a bad plan for senior living” and then rejoin me for some observations.

He begins: “Even though Ben Franklin uttered the words more than two centuries ago, they still ring true today: ‘If you fail to plan, you are planning to fail.’ I was reminded of his gentle warning while reading about the AARP’s latest ‘Long-Term Care Readiness’ survey.”

Who in the insurance side of the LTC business hasn’t heard that Franklin quote and probably used it in sales?

The AARP study John refers to, titled “Long-Term Care Readiness: An AARP Survey of Adults 50+,” is available here. Read its “Key Findings” below and then we’ll see what John does with them.

“Key findings
“Uncertainty about Medicare coverage of long-term care services is common among adults 50-plus. Roughly half (46%) incorrectly believe Medicare covers care in a nursing home or care in the home from a home health aide.
“Recognizing that they may need assistance as they get older does not mean that adults 50-plus have really thought about *how* they will live independently. Nearly seven in 10 (68%) believe that they will need assistance with their daily activities as they get older, yet fewer than three in 10 (28%) have given a lot of thought to how they will continue to live independently if they need such assistance.
“The COVID-19 pandemic has had little effect on one’s thinking about independent living, with more than six in 10 (62%) thinking about the topic about the same now as two years ago.
“Roughly six in 10 adults 50-plus are concerned about multiple issues regarding aging, with concerns about not being able to live independently and becoming a strain or burden on family topping the list. Slightly fewer say they are concerned about not having enough money saved, needing to live in a nursing home or assisted living facility, or not being able to remain in their own home.
“When it comes to planning for their futures, half have discussed their end-of-life plans with family and have written a will. More than four in 10 have also planned for their funeral expenses and have designated a legal Power of Attorney, but far fewer say they have researched or made plans for in-home, community-based, or nursing home care.”

Back to John O’Connor’s column: “Consider, less than a third of the respondents (28%) have given much thought to how they will live independently should a need for assistance arise. That’s right, 28%. It’s a safe bet the percent of people in this crowd planning their next vacation is considerably higher. And it’s not like those who are 50 or older are unaware bad things might happen later in life. In fact, more than two-in-three (68%) believe they will need help with their daily activities at some point. For those who have reached age 65, the number spikes to 75%.”

He concludes: “If I’m running a senior living organization, these findings scare the heck out of me. Because what they strongly suggest is that more and more senior living services will need be paid for by states and the federal government going forward. Many potential prospects in the suddenly popular middle market may not have the means to pay their own way.”

What does he advise senior living providers to do? If you don’t want to be a “publicly subsidized enterprise” subject to the “regulatory hoops” and less than “generous” payments skilled nursing facilities endure, then consider waging “a campaign to get people to actually prepare for the decline old age will surely bring.”

He continues: “But be warned, your work is cut out for you. … it’s probably safe to say the fail-to-plan crowd is pretty dug in. Which is very unfortunate. Their eat, drink and be merry mentality may be OK for a night of celebration. But it’s no way to prep for the challenges of old age. As many will discover, once the party ends.”

LTC Comment: What I don’t find in John O’Connor’s column, nor in the AARP study, is the question “Why don’t people plan?” much less an answer. So let me try to provide both.

What could possibly explain why so few people worry or plan for old age? Why will their failure to plan leave future senior living providers as dependent as nursing home operators on meager government reimbursements? What could possibly be done to reverse this unfortunate outcome?

To me the answers are as glaringly obvious as the questions themselves. People don’t plan for old age because they’ve been assured the don’t need to by (1) Social Security, (2) Medicare, and (3) Medicaid. Read Medicaid and Long-Term Care for a full explanation.

Senior living providers are doomed to follow nursing homes down the primrose path of Medicaid dependency, including excessive regulation and inadequate payments, because of the moral hazard (“lack of incentive to guard against risk where one is protected from its consequences”) the entitlement program caused.

What could/should be done to fix this mess? Stop doing what government has always done. Stop giving easy access to Medicaid-funded care after the insurable event has already occurred. In other words, end “The Entitlement Put.”

Instead, move the LTC responsibility forward to a time when it’s not too late for people to plan. Enforce it then, but not by channeling everyone into compulsory payroll-funded government programs that are no better than the ones that caused LTC’s problems in the first place. Let people choose how to meet their LTC obligation—through insurance, or a home equity carve out, or an investment set aside, or a formal, recorded lien on their estate, or some other legitimate, trackable means—as a way to avoid government interference altogether instead of as an escape from a public program that traps everyone like WA Cares.

Closing LTC Comment: Hey John, how would you answer those three questions? What do you think of my answers? I’ll keep an eye out for that “Editor’s Column.” Thanks for the important contribution you and sidekick Jim Berklan make toward our common objective of improving long-term care.

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Updated, Monday, June 20, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-020 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 Steve at 425-891-3640 or smoses@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 Steve at 425-891-3640 or smoses@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:

Healthy lifestyle shown to decrease dementia risk up to 36 percent: study
The Future Of WA Cares: A Response To Warshawsky
Update on number of people opting out of state's long-term-care program
Can I Use a Medicaid Beneficiary’s Inheritance to Pay Her Assisted Living Facility Three Months in Advance?
New form of dementia prevalent in 40% of older adults
‘Startling’ lack of physical activity found in assisted living pilot study
Older adults more likely to have multiple ailments compared with prior generations
A Permanent Pandemic Means a Huge Medicaid Expansion
Shingles is not associated with increased risk of dementia, finds study
Assisted living’s place in the long-term care continuum

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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, Monday, June 13, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-019 LTC NEWS AND COMMENT

Medicaid Weighs Attaching Strings to Nursing Home Payments to Improve Patient Care
Nursing Home Closures Hit Smaller Markets as Financial, Staffing Crisis Deepens Across Industry
OPM Expects to ‘Revise’ FLTCIP Premiums, Could Temporarily Bar New Enrollments
A Two-Year Reprieve For Medicare Insolvency Sounds Like Good News. But It Isn’t
Under the radar: cash-only caregivers
House members launch new caucus focused on long-term care
A Small World Is a Big Solution for Workforce Woes
US Nursing Homes Face Closure Risks From Staffing Shortages
With 41% leap in nursing home costs, ‘doing nothing’ not an option: AHCA
Long-term care’s mortal risk

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Updated, Friday, June 10, 2022, 10:40 AM (Pacific)

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LTC BULLET: THE ENTITLEMENT PUT

LTC Comment: Eliminating personal risk is morally hazardous especially when government does it. Considerations after the ***news.***

*** STEVE MOSES’S latest published articles:

“Long-Term Care Epiphany,” by Stephen A. Moses, Broker World, June 2022

“Long-term care’s mortal risk,” by Stephen A. Moses, McKnight’s LTC News, June 6, 2022 ***

*** WILL NY FOLLOW WA CARES down the primrose path of compulsory public LTC financing? Rumor has it New York State may copycat Washington State’s WA Cares Fund program. We asked longtime Center friend Bob Vandy, President of Advisors Insurance Brokers (an Integrity Marketing Group Company). Bob assures us based on advice from a knowledgeable Empire State lobbyist that there is a Senate Bill in NY, but no companion bill in the Assembly. “The legislation’s sponsor is interested in LTC and someone we will engage with in preparation for next session/budget. My NAIFA lobbying contact says ‘all indications are that the bill is unlikely to go any further in this legislative session.’” So rest easy for the time being. In the meantime, if you want to know what New York really should do about long-term care, read Long-Term Care Financing in New York: How to Save Money While Serving the Needy. ***

LTC BULLET: THE ENTITLEMENT PUT

LTC Comment: Human beings evolved to fear danger and to respond with “fight or flight.” Then around the turn of the twentieth century governments took it upon themselves to make private risk go away. They set out to provide collective security instead. We’re living now with the consequences of 100-plus years of that policy. We don’t worry about or plan ahead for the “thousand natural shocks that flesh is heir to” as much as we otherwise would.

Lose your job? Get unemployment insurance. Face a pandemic? Checks will roll in. Get sick? Apply for ObamaCare or Medicaid. Old and sick? Medicare. Broke? Welfare. Old and broke? Supplemental Security Income. Frail or demented? Medicaid LTC. Want college? Get a guaranteed student loan. Can’t pay it back? Ask forgiveness. Do we have a safety net or a hammock in which we’ve fallen asleep?

Are we really better off swapping personal risk, responsibility and freedom for collective security, carelessness and dependency? I don’t think so based on what I see all around me in the modern American polity and culture. The following article is one way of looking at what has happened and why.

“The Entitlement Put”
by
Stephen A. Moses

For the past two decades, investors profited by “buying the dip.” Whenever stocks were in free fall, the Federal Reserve lowered interest rates and/or bought securities (quantitative easing) to restore the bull market. This Fed policy acted like a put option protecting investors from downside risk. What began as the Greenspan put in the 1990s became the Bernanke, Yellen and Powell puts over time.

This financial safety net encouraged over-investment in stocks, bonds and real estate. It inflated asset bubbles that popped during the dot-com (2001), real estate (2008) and pandemic (2020) recessions. Right now, we’re watching the biggest asset bubble of all deflate with the usual economic repercussions. What’s new this time is simultaneous unusually high consumer price inflation worsening the downturn and hurting the poor and middle class most.

By reducing investors’ risk, the “Fed put” repeatedly distorted equity, bond and real estate markets causing irrational exuberance, malinvestment, and devastating economic consequences. That is no mere coincidence. It is an example of “moral hazard,” the “lack of incentive to guard against risk where one is protected from its consequences.” Moral hazard also operates at a deeper and potentially devastating level in American society.

For example, in 1935, Social Security sent the message that private retirement savings are no longer crucial. In 1965, Medicare assured older Americans they will no longer need to worry about health care. That same year Medicaid removed concerns about paying for long-term care by opening nursing homes to anyone who could not afford them otherwise. Most recently, to combat the pandemic, government borrowed, printed and monetized trillions of dollars to shower benefits and accommodations on people and companies alike.

In a nutshell, government attempted to improve social conditions by eliminating personal and commercial risk but created instead a new culture of dependency with far greater collective peril. This “entitlement put” convinced the public and businesses that the government’s fiscal and monetary high wire act had a safety net that would always protect them from need. But now Social Security and Medicare share $56 trillion of unfunded liabilities. The Fed’s balance sheet has ballooned to $9 trillion. The national debt is 131 percent of GDP. Asset inflation has enriched the wealthy, while impoverishing the middle class. Consumer inflation at 40-year highs may soon complete that process.

Consequently, consumers and companies now face the greatest danger they have confronted since those “progressive” protections began. Boomers start turning 85, the age at which health and long-term care costs spike, in 2031. That’s three years after Medicare becomes insolvent (expected in 2028) and four years before Social Security follows suit (expected in 2035). Of course, Medicaid has no imaginary trust fund to run out. Medicaid is a direct draw on general funds of which the federal government has none extra as it runs a $2 trillion annual deficit. When Social Security and Medicare can’t pay full benefits, welfare programs like Medicaid will have to make up the difference creating more financial strain on the already overwhelmed federal budget.

U.S. companies and their customers are living on borrowed time … and on hollow government fiat money that has run out. Like Wile E. Coyote they’ve overrun the fiscal cliff but have not yet looked down. What should be done?

It is easier to say what should not be done. Do not double down on what caused these problems in the first place, that is, central planning, public financing and punitive government regulations. Most of all avoid big new social insurance programs funded with compulsory payroll deductions that siphon private capital out of the productive economy. That would be greasing the slippery slope we’re already sliding down.

Instead, we need to reemphasize private responsibility and risk management for personal financial, retirement and estate planning. Gradually phase out the big compulsory government programs on which people have become too dependent. Eliminate the moral hazard that has drawn so many into public welfare dependency. In other words, end the entitlement put. If we don’t do this intentionally through responsible public policy changes, ongoing economic default will do it for us anyway.

Steve Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). Reach him at smoses@centerltc.com.

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Updated, Monday, June 6, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-018 LTC NEWS AND COMMENT

Long-Term Care Insurance: Higher Premiums for Shrinking Benefits
Long-Term Care Epiphany
BREAKING NEWS: CMS updates Medicaid eligibility standards
Social Security Trust Funds Doing Better Than Last Year: Trustees Report
25% of Americans are delaying retirement due to inflation, survey finds
Is Slowed Walking a Sign Dementia Is Near?
How To Self-Insure For Long-Term Care Health Expenses (2022)
Legacy Lessons Part 2: More Wisdom from Leaders in the Aging Field
Less than 25 percent of Americans expected to save enough to retire comfortably
Retiree Health Care Cost Estimate
Inflation jumps 8.5% in a year for nursing goods and services, tripling the number of residents at risk of displacement
The Double-Edged Sword of Long-Term Care for Women
Reckoning with the growing demand for long-term care
Why Every Company, Organization and Association Should Gather the Wisdom and Life Lessons of their Field's Elders
Nursing homes sue over minimum staffing ratios, mandatory spending levels
Middle class declines, but not necessarily middle-market senior living opportunities
Elder Law Guys: When long-term care is looming, there's a short window to get financial affairs in order

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Updated, Friday, May 27, 2022, 10:40 AM (Pacific)

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LTC BULLET: BEGGING THE LTC QUESTION

LTC Comment: LTC researchers employ logical fallacies copiously after the ***news.***

5/23/2022, “Middle class declines, but not necessarily middle-market senior living opportunities,” by Kathleen Steele Galvin, McKnight’s Senior Living
Quote: “A new Pew Research Center analysis of government data found that the share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021. At the same time, the analysis found, the share of adults in the upper-income tier increased from 14% in 1971 to 21% in 2021, and the share of adults in the lower-income tier went from 25% to 29%.”
LTC Comment: The rich get richer and the poor get poorer. Evidence of supply side tax cuts promoting corporate interests? Hardly. Blame demand side policies forcing interest rates to zero and showering unearned money on nonworking citizens to buy their votes for more of the same. That created inflation which pumped up asset bubbles benefiting the affluent. Now the bill for profligate fiscal and monetary policy has come due in the form of consumer goods inflation. That’s where the poor pay the price for the self-serving economic policies of the rich. We’re in for a rough ride as the well-to-do lose their wealth (easy come, easy go) but the poor bear the brunt of the suffering.

5/25/2022, “Nursing homes sue over minimum staffing ratios, mandatory spending levels,” by Danielle Brown, McKnight’s LTC News
Quote: “Nonprofit New York nursing homes are taking action against the state in a push to overturn ‘illegal and unconstitutional’ policies that establish a minimum staffing requirement and spending mandates for providers. … The group is seeking a statewide preliminary and permanent injunction prohibiting the penalties being levied against nursing homes, and wants the regulations declared unconstitutional and illegal.”
LTC Comment: Déjà vu; seen this before. The federal government mandated improved long-term care, more caregivers, better training and compensation in OBRA ’87 but offered no extra funding. Nursing homes sued under the Boren Amendment and won. But Congress repealed Boren leaving no floor under Medicaid reimbursement rates. Free markets achieve cost-effective excellence. Government compulsion fails every time.

5/25/2022, “Why Every Company, Organization and Association Should Gather the Wisdom and Life Lessons of their Field's Elders,” by Ken Dychtwald, Generations
Quote: “After providing funding and in partnership with ASA and 37 co-sponsoring organizations, during the late summer of 2021, I hosted and filmed (via Zoom) a series of 12 ‘Legacy Interviews’ with a diverse set of leading pathfinders. … Click here to watch all of the one-hour interviews. Read the Generations Now post featuring the second half of Dychtwald’s Legacy interviews next week.”
LTC Comment: Here’s your chance to learn from a dozen members of aging’s Hall of Fame. ***

*** NEW MOSES ARTICLES forthcoming. Keep an eye out for “LTC Epiphany” in Broker World’s June issue and “Long-Term Care’s Mortal Risk” in McKnight’s LTC News sometime during the week starting June 6. ***

LTC BULLET: BEGGING THE LTC QUESTION

LTC Comment: Long-term care analysts routinely ignore, diminish and/or misrepresent the impact of Medicaid planning (artificial self-impoverishment to qualify for benefits) on the long-term care market. Here’s an example taken from Richard W. Johnson and Melissa M. Favreault, “Economic Hardship and Medicaid Enrollment in Later Life: Assessing the Impact of Disability, Health, and Marital Status Shocks,” HHS/ASPE/BHDAP, January 31, 2021. For the full context, please review the source before reading the following critique.

“Begging the LTC Question”
by
Stephen A. Moses

Begging the question is the logical fallacy of assuming as a premise of your argument the conclusion you want to prove. You can find examples of such circular reasoning here and all over the popular media. But begging the question should not appear in serious scholarship.

Yet here’s a glaring example from two leading long-term care scholars: “Medicaid enrollment is a reliable indicator of economic hardship because people qualify only if they have very low income (after covering health care costs) and few assets.” (Johnson and Favreault, 2021, p. 10)

Hmmm. Medicaid indicates economic hardship because you must have an economic hardship to qualify. That statement evokes another flaw in reasoning, the opposite of a fallacy, something that is always true automatically. A tautology is “a phrase or expression in which the same thing is said twice in different words.” It tells you nothing new.

Besides errors of logic and reasoning what else is wrong with the argument that Medicaid indicates economic hardship because you must be poor to get it? For one, it is false. People can retain substantial assets in exempt form and still receive Medicaid. To be fair, Johnson and Favreault acknowledge this fact elsewhere in their paper: “Countable assets exclude the value of the home and such things as automobiles, household goods, the surrender value of life insurance, and burial funds.” (p. 7)

But if Medicaid recipients can retain all those things, is it correct to say they must have “few assets” to qualify? The vast majority of seniors’ assets are held in these exempt forms. Whatever else they own, such as stocks, bonds, or cash, is easily converted from countable to noncountable status. Medicaid planners provide long lists of exempt assets and encourage their affluent clients to reduce their countable wealth by purchasing them. That’s the commonest way savvy people qualify for Medicaid without spending down for care. It’s legal but violates what public policy intends and what analysts like Johnson and Favreault assume occurs.

These authors do pay lip service to the idea that some people find ways to qualify for Medicaid long-term care benefits without spending down their wealth for care. For example: “Despite concern that some older adults game the system by transferring wealth to their children to qualify for Medicaid, there is little evidence that this practice is widespread … . (p. 8) But here they employ another logical fallacy. “A straw man argument attacks a different subject rather than the topic being discussed … The purpose of this misdirection is to make one's position look stronger than it actually is.”

Asset transfers are a significant, but comparatively minor form of Medicaid planning. By focusing specifically on asset transfers instead of generally on Medicaid planning, Johnson and Favreault divert attention from the far more commonly used methods of artificial self-impoverishment. These include the purchase of exempt assets described above and the use of Medicaid Asset Protection Trusts, Medicaid Compliant Annuities, reverse half-a-loaf strategies, and myriad other techniques including the ones on this long list. Medicaid planning by one or more of these methods is the rule, not the exception among Medicaid long-term care applicants who are not poor when they apply.

By ignoring the evidence of widespread Medicaid planning and disregarding the vast legal literature devoted to explaining and promoting it, Johnson and Favreault employ yet another logical fallacy. “An appeal to ignorance (also known as an ‘argument from ignorance’) argues that a proposition must be true because it has not been proven false or there is no evidence against it.” In other words, people must be spending down into impoverishment on long-term care, because there is no evidence they don’t. But the onus of proof is on whoever asserts the positive. Neither Johnson and Favreault nor others in the LTC intelligentsia ever adduce evidence of actual, as opposed to artificial, spend down. The truth is that people with substantial assets who actually spend their wealth for health or long-term care do so either voluntarily or out of ignorance of Medicaid’s generous and elastic financial eligibility rules.

But what about income. The one thing everyone knows about Medicaid is that it requires “low income.” Here’s Johnson and Favreault: “Because people qualify for Medicaid only if they have virtually no assets, except for a home, and very little income, receipt of Medicaid benefits is a strong indicator of financial vulnerability. … A single SSI beneficiary without earnings who does not receive Social Security or other income, like a state supplement could receive no more than $771 [$841 as of 2022] in monthly income in 2019 (equivalent to $9,252 per year), well below the FPL [Federal Poverty Level].” (p. 7)

Unlike their less intellectually honest scholarly colleagues, Johnson and Favreault do clarify that having “very little income” to qualify for Medicaid actually means applicants can have unlimited income as long as their private health care expenses are high enough or a Miller income trust is in place.

Many states account for individuals’ health care spending when determining Medicaid eligibility by subtracting applicants’ out-of-pocket costs for medically necessary services and supplies from their countable income. This adjustment essentially allows people to “spenddown” their income until they qualify for Medicaid. Other states achieve similar outcomes by allowing applicants to assign that portion of their income that exceeds the Medicaid income threshold to a special trust used to help cover service costs. The state receives any funds remaining in these trusts after a Medicaid enrollee’s death, up to the amount the state paid in Medicaid benefits. (p. 7)

Johnson and Favreault close their paper with this non sequitur: “Serious LTSS needs create economic hardship for many middle-class older adults because paid LTSS is expensive and third-party reimbursement is rare for people with too many financial resources to qualify for Medicaid.” (p. 19) Actually, third-party reimbursement is commonplace for people with too many financial resources to qualify for Medicaid if they employ the methods of artificial self-impoverishment described in this column or consult an elder law attorney with Medicaid planning expertise.

Unless or until policy makers wake up to this reality and fix it, Medicaid will continue to be the dominant payor for low cost long-term care of dubious quality in the United States. Private financing of top rate care at market rates will remain the exception instead of the rule.

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Updated, Monday, May 23, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-017 LTC NEWS AND COMMENT

Here's How Long-Term Care Planning Is Changing
Experiment Over: Future of Nursing Home 3-Day Stay Waiver in Doubt Post-PHE
As Medicare Advantage grows, experts say, so do hard-to-fight denials
Strategies for Paying for Long-Term Care - Lunch and Learn
Reports: Feds will extend public health emergency
Sending hopeful messages about state's long-term-care law doesn’t make it a good deal; exemptions continue
54 percent increase in low-care nursing home residents presents opportunity for assisted living
With REIT ownership of SNFs at 12%, experts question compatibility of business and healthcare goals
$2.7 billion settlement in CalPERS long-term care insurance lawsuit is canceled

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Updated, Monday, May 16, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-016 LTC NEWS AND COMMENT

Long-Term Care in the United States — Problems and Solutions
In first nursing home visit, CMS admin gets straight talk on agencies, pay and performance
Dr. Bill Thomas, Independence Officer, Lifespark
OIG: Older Medicare recipients often harmed during hospital stays
What Is the Functional Assessment for Long-Term Care Benefits?
Longevity and the New Journey of Retirement
All Clients Need Bone Scans: LTCI Insider
Covid-Related Nursing Home Lawsuits to ‘Skyrocket’ With Protections on Shaky Ground
Large Share of Alzheimer's, Dementia Cases Tied to 8 Modifiable Risk Factors
MA enrollees with dementia report poor quality of care: study

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Updated, Friday, May 13, 2022, 10:40 AM (Pacific)

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LTC BULLET: LTC EPIPHANY

LTC Comment: To fix long-term care once and for all we must front load the responsibility to plan and eliminate Medicaid’s financial honey trap on the back end. Enlightenment after the ***news.***

*** BE CAREFUL OUT THERE: “Friday the 13th is considered an unlucky day in Western superstition. It occurs when the 13th day of the month in the Gregorian calendar falls on a Friday, which happens at least once every year but can occur up to three times in the same year. … Friday the 13th occurs in any month that begins on a Sunday.” ***

*** AGEWAVE INSPIRATION: Don’t miss Ken Dychtwald’s latest views on The Future of Medicine, Aging, Health and Longevity. You’ll gain knowledge, vision and motivation. Put them all to work in whatever you do to advance the field of long-term care. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses. We hope you’ll read these articles, join the Center for Long-Term Care Reform, and help us solve the long-term care financing problem. The Center’s “Membership Levels and Benefits” schedule is here. Join individually or urge your company or association to join as a corporate member so you can receive all the benefits of membership at no cost to you. Universal access to top quality care for all Americans (the Center’s mission) is achievable. Join us and make it happen!

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022. (Originally titled more simply “Trapped.”)

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: LTC EPIPHANY

LTC Comment: The following article will be published in Broker World magazine’s June 2022 issue. We thank editor and publisher Stephen Howard for permission to pre-publish the column here. We strongly recommend Broker World to anyone working in the financing or provider sides of the long-term care profession. Subscribe here; only $6 for a year.

“LTC Epiphany”
by
Stephen A. Moses

When I first studied the long-term care issue in 1982, I sized it up quickly. People were living longer and dying slower usually in welfare-financed nursing homes. The reason was easy to discern. Well-intentioned politicians made institutional long-term care available to anyone who couldn’t afford it otherwise. They called the program Medicaid and over time it caused virtually all of the problems long-term care faces today.

By making nursing home care virtually free, Medicaid locked institutional bias into the long-term care system, crowded out private home care financing, and trapped the World War II generation in sterile, under-funded nursing facilities.

By reimbursing nursing homes less than the cost of providing the care, Medicaid guaranteed that America’s long-term care service delivery system would have a shortage of qualified caregivers and suffer from serious access and quality problems.

By providing care of dubious quality, Medicaid incentivized plaintiffs’ lawyers to launch giant tort liability lawsuits, extract massive financial penalties, and further undercut providers’ ability to offer quality care.

By compelling impoverished citizens to spend down what little income and savings they possessed in order to qualify for long-term care benefits, Medicaid discouraged accumulation and growth of savings among the poor, reducing their incentives to improve their stations in life.

By allowing affluent people to access subsidized long-term care benefits late in life, Medicaid encouraged accumulation and growth of savings among the rich who could pass their estates to their heirs whether they were stricken by high long-term care expenditures or not.

Medicaid discriminated against the poor and favored the affluent by allowing people and families with extra “key” money to buy their way into the better nursing facilities, and by allowing planners to help affluent clients avoid the program’s reputedly poor care.

By making public financing of expensive long-term care available after the insurable event occurred, Medicaid discouraged early and responsible long-term care planning and crowded out the market for private long-term care insurance.

All these pieces in the long-term care puzzle were clear to me from the beginning. A solution immediately revealed itself. We had to get people to worry about and plan for long-term care earlier in life so they would not end up decades later in need of catastrophically expensive care with relying on Medicaid their path of least resistance.

One way to do that was to force everyone to pay extra taxes to fund a new program that would, somehow be better than Medicaid. But using government compulsion repulsed me and besides the other programs of that kind we already had, Social Security and Medicare, were slipping toward inevitable insolvency.

So I recommended a kind of long-term care social contract. We would continue allowing people with substantial income and assets to qualify for Medicaid long-term care benefits, but if they chose that route their largest resource, their homes, would be liened and recovery of the cost of their care mandatory from their estates.

We got most of the LTC social contract into federal law with the Omnibus Budget Reconciliation Act of 1993, but alas states didn’t implement it fully, the federal government didn’t enforce it, and the media didn’t publicize it. So the public remained blithely unaware and continued to ignore long-term care until they needed it, relying on Medicaid by default.

So here I am in 2022, 40 years later, with a flash of insight, my LTC Epiphany. To fix long-term care once and for all, we have to move its risk and cost forward to a time in life when people are still young, healthy and affluent enough to qualify and afford responsible long-term care planning.

But how can we get their attention to this critical issue when they have so many other things pressing on their minds and their pocketbooks. Who worries about long-term care when there are car, home and credit card payments to make, plus retirement and college savings? Answer, almost no one.

Recent research has helped in this regard, however, by showing that the long-term care financing problem is not as big as we feared it was. For example: “an American turning 65 today will incur $138,000 in future LTSS costs, which could be financed by setting aside $70,000 today.” That does not sound so daunting.
(Melissa Favreault and Judith Dey. 2016. “Long-Term Services and Supports for Older Americans: Risks and Financing.” ASPE Issue Brief. Revised February, p. 1).

If we’re not going to use government to force people into another one-size-fits-all government program like the WA Cares Fund or the WISH Act, what can we do? We can learn from the critical mistake WA Cares made. Instead of starting with a bad government program and allowing people to opt out of it, begin with the opt out as the way to avoid government compulsion.

Give people options to show they have met their individual responsibility to cover the LTC risk they bring into the risk pool. They can pony up $70,000 today earmarked for future LTC or show they have a plan in place to cover $138,000 of LTC costs later. How? Count the ways.

Long-term care insurance could cover that risk. Earmarking a portion of home equity for long-term care would also work. A new kind of individual retirement account dedicated to LTC would be a third way. Or maybe a “deferred reverse estate annuity mortgage,” that is, a legally binding and officially recorded lien on one’s estate set aside for long-term care.

There are probably many other ways people could formally and legally prove they have satisfied their individual share of long-term care risk and cost. All that would be needed is a private company or agency to certify that whatever the individual proposes actually does cover his or her share of the liability.

Ah, but what if someone says no, I won’t do my part? Then and only then the government could step in by garnisheeing wages, reducing grants or withholding tax refunds to create a dedicated LTC account on the recalcitrant citizen’s behalf.

Covering each individual’s contribution to the LTC risk pool will not fully offset the total LTC risk across society. Some people incur far more than the average risk and cost. But by transferring so much of the LTC risk to the private sector, the residual burden on public financing would be vastly reduced and manageable.

With most people already covered for their share of the LTC risk, very few will remain dependent on public programs later on. So Medicaid, or whatever replaces it, could be a high quality provider of LTC services across the full spectrum of care paying private market rates thus raising the access to and quality of long-term care for everyone.

Maybe long-term care is not the overwhelming challenge it has always been considered to be. Maybe all we have to do is reconceptualize the issue, remove the perverse incentives that discourage LTC planning, and enforce long-term care responsibility on the front end instead of rewarding irresponsibility on the back end as now.

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Updated, Monday, May 9, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-015 LTC NEWS AND COMMENT

Genworth Rethinks Long-Term Care Market Return
The Nation’s Fiscal Health: Federal Action Critical to Pivot toward Fiscal Sustainability
Join Us for a Webinar by Ken Dychtwald, PhD, on the Future of Medicine, Aging, and Longevity
Medicare Advantage Plans Hit Back at Report on Coverage Denials
California task force ponders long-term care insurance program
OIG: MA plans denying, delaying services to beneficiaries
WA Cares Act Update: Federal Court Dismisses Lawsuit, Holding Premiums Are State Taxes and Case Must Be Litigated in State Court—Court Notes State Constitutional Challenge Likely
Ameriprise Celebrates Fed Interest Rate Increases
Older adults’ home equity exceeds record $10.6 trillion: report
Considering Hybrid Long-Term Care Insurance? Policy Differences To Understand Before Buying
Campaign highlights benefits of senior living versus home

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Updated, Friday, April 29, 2022, 10:40 AM (Pacific)

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LTC BULLET: THE MYTH OF UNAFFORDABILITY, REDUX

LTC Comment: Nothing is affordable if you don’t think you need it. We revisit long-term care insurance affordability after the ***news.***

4/26/2022, “WA Cares Act Update: Federal Court Dismisses Lawsuit, Holding Premiums Are State Taxes and Case Must Be Litigated in State Court—Court Notes State Constitutional Challenge Likely,” by Davis Wright Tremaine, Lexology
Quote: “On April 25, 2022, Judge Thomas Zilly of the U.S. District Court for the Western District of Washington dismissed a class action lawsuit that had been filed in federal court by DWT on behalf of employers and employees challenging the Washington Cares Act (WA Cares) premium assessed at the rate of .58 percent of wages. The lawsuit contended that the Act violated ERISA and other federal laws. … Judge Zilly dismissed the plaintiffs' federal case holding that the premium charged against an employee's wages was a tax and not an insurance premium.”
LTC Comment: Voters twice rejected WA Cares at the ballot box. So they sued, but now federal court has slapped them down too. When will the powers-that-be take “no” for an answer? When the current batch is thrown out of office. Is the cavalry coming?

4/27/2022, “Older adults’ home equity exceeds record $10.6 trillion: report,” by Kathleen Steele Galvin, McKnight’s Senior Living
Quote: “Homeowners aged 62 and older increased their home equity by 3.98% in the fourth quarter of 2021 to a record $10.6 trillion from the previous quarter, according to the National Reverse Mortgage Lenders Association. That’s a difference of $405 billion. … Reverse mortgages aren’t just for homeowners short on cash anymore, the New York Times reported earlier this month.”
LTC Comment: Home equity could pay for a lot of long-term care if Medicaid didn’t exempt nearly all of it. How exactly does that policy help the poor who have no home equity? ***

LTC BULLET: THE MYTH OF UNAFFORDABILITY, REDUX

LTC Comment: In 1999, when the Center for Long-Term Care Reform was only one year old, we published a report titled The Myth of Unaffordability. Read it here. Even back then, in the good old days of long-term care insurance marketability, the product was not an easy sell. People didn’t believe the politicians who urged them to buy it (to relieve Medicaid), much less the AMGs (altruistic, masochistic, geniuses) trying to make a living selling it. Then, as now, the real problem with long-term care insurance sales was not affordability, but the misperception of need.

Why don’t people perceive the need for long-term care insurance? They’ve been regaled for decades with the threat that if they don’t buy it, they could lose their life’s savings to catastrophic long-term care costs. That seems like a pretty powerful motivation. It would be, if it were true. But it wasn’t true back then and it isn’t true now. Once you understand who pays for expensive long-term care and why people don’t worry about that risk and cost when they’re still young, healthy and affluent enough to plan for it, it’s pretty easy to see what needs to be done to fix the problem. Explaining that is what we did in The Myth of Unaffordability.

In the meantime, much has changed. Fruitless appeals are more common than ever for government to take over long-term care financing with a new federal or state-based compulsory payroll-funded program. Long-term care insurance is more expensive than before and fewer companies sell it. But what is more important for the LTCI market has not changed. Medicaid still pays for most expensive long-term care after the care is needed. So people don’t see the need in time to prepare for it. Instead of dealing with that cause, however, most analysts focus on the symptom of “unaffordability,” and write off private insurance because of it. Let’s reconsider.

Following are excerpts from The Myth of Unaffordability. Many of the numbers would need to be updated, but the fundamental analysis and recommendations remain sound. Take this walk down memory lane, but keep your focus on applying its principles to the future.

Executive Summary

The publisher of this report—the Center for Long-Term Care Financing [now Reform] in Seattle, Washington—is dedicated to ensuring high quality long-term care for all Americans.

The global aging crisis is a demographic vise closing rapidly and inexorably on America and the world.

In the United States, challenges to our pension (Social Security) and health care (Medicare) entitlement programs capture most of the public’s attention.

In the end, however, the paramount problem of aging demographics is long-term care and how to pay for it.

Unfortunately, long-term care service delivery and financing in America are already fragmented and dysfunctional. They continue to decline.

Medicaid and Medicare—the principal public financing sources for long-term care—pay too little for nursing home and home care to assure public access to quality care.

Private financing, including long-term care insurance, remains inadequate to support the home and community-based services and assisted living that most seniors prefer.

Nevertheless, America’s World-War-II generation is dying in nursing homes on public assistance while their baby-boomer children blithely ignore the risks of long-term care.

Why do most Americans evade the risk of long-term care and fail to plan, save and insure before the chronic illnesses of old age befall them?

The usual answer—“They’re in denial”—begs the question “How can they ignore a nine percent risk of spending five years or more in a nursing home after age 65 at $50,000 per year?”

The other commonplace answer—“Most people cannot afford to buy private long-term care insurance”—is demonstrably untrue as this report substantiates.

The real reason Americans fail to prepare for the risk of long-term care is twofold:

First: since 1965, they have been able to ignore this risk, avoid the premiums for private insurance, wait until they need long-term care, and get Medicaid and Medicare to pay.

Second: the insurance industry has tried to sell asset protection (which the government is giving away) instead of emphasizing its unique benefit—access to quality care at the optimal level.

The solution to the long-term care financing problem is also twofold:

First: the government should redesign Medicaid to be a loan instead of a grant (for anyone with assets) and simultaneously educate the public about the real risk of long-term care.

Second: the long-term care insurance industry should market much more heavily the crucial benefit of access to quality care at the appropriate level in the private marketplace.

This report demonstrates and documents the fact that most Americans should, could and would purchase private long-term care insurance if the right public policy incentives obtained.

When most Americans do purchase long-term care insurance, the public financing programs will be better able to provide for those who are unable to pay privately for their care.

Once consumers recognize the real need for long-term care insurance, i.e. not just asset protection, but access to quality care at the appropriate level, they will have many strategies and techniques from which to choose that can enhance their ability to afford the protection. For example:

Buy young when premiums are lower. The average policy referenced above costs $589 per year at age 40, but $5,592, at age 79. The immediate benefit of buying young is self-evident. What may be less obvious is that total premiums paid for a long-term care policy purchased at age 55 and held to age 85 will be less than one-third the total premiums paid for similar coverage purchased at age 75 and held for only ten years.[1] A good strategy is to buy what you can afford when you are young and “stack” on additional coverage if you still qualify later as your financial condition improves. “Learn about long-term care insurance in your forties and own it by 50” is very sound advice.
Look to home equity for cash flow. Approximately, 77 percent of seniors own their homes and 82 percent of these own them free and clear.[2] More than $1.5 trillion lies untapped in seniors’ home equity that could be freed up by means of home equity conversion tools such as reverse annuity mortgages[3] to enhance the incomes of older people.[4] This extra income would empower many more people to buy long-term care insurance or to purchase home and community-based services. According to one expert: “Estimates reveal that 57% of all homeowners could pay the premium of the prototype LTC policy with their RM [reverse mortgage] disbursement.”[5] New, “premium-less” long-term care insurance policies could be developed funded entirely by home equity.
Buy Chevrolet, not Cadillac coverage. Consumers can decrease the cost of long-term care insurance drastically by reducing the length, breadth, and depth of coverage. For example, why would someone purchase a two-year, inflation-less, facility-only policy with a 90-day elimination period? If that is all a 79-year-old can afford, such a policy at least assures the policyholder highly competitive access to a quality nursing home as a private payer and improves the chances of remaining there should conversion to Medicaid occur later. Instead of paying $5,592 per year for the “average” policy cited above, a 79-year old purchasing this shorter-term, facility-only plan (which includes assisted living coverage) could pay $1,704 per year.[6]
Self-insure for some of the risk to reduce premiums. Long-term care insurance need not cover the entire cost of care. Over 90 percent of seniors receive Social Security benefits; approximately one-third have pension income; many receive interest or appreciation on their savings or investments. When someone enters an assisted living facility or a nursing home, his or her income, previously spent on food and lodging in the community, becomes available to offset the cost of facility care. Home equity conversion could also generate additional income to supplement the long-term care insurance benefits whether or not a surviving spouse remains in the home. Furthermore, many policies waive premium payments at some point after benefits begin.
Invite heirs to contribute toward premiums.[7] After all, who should insure the heirs’ potential inheritance against the risk of depletion by long-term care expenses? Is it the responsibility of the generation that struggled through the Depression, fought World War II, and scrimped and saved to accumulate the estate? Or should their baby-boomer heirs—who are about to inherit a $10.4 trillion windfall from their parents and who are now in their peak earnings years—pay the price to protect the estate and their parents’ access to quality long-term care?[8] This is more than common sense; it is common decency. Nevertheless, a survey of “Who Buys Long-Term Care Insurance” found: “When asked if children help to pay for long-term care insurance premiums, 98 percent indicated that they paid for premiums without help from their children.”[9] Worse yet, adult children are the driving force behind the artificial impoverishment of the elderly by means of Medicaid estate planning.[10]
Reconfigure assets to find premium dollars. Older people often have large sums of money tied up in low-yielding financial instruments such as bank accounts and certificates of deposit. Conversion of these assets into higher-yielding limited-risk instruments such as annuities or bonds can help to bridge the gap between available income and premium costs. Furthermore, by linking the income from a fixed-income asset to payment of a long-term care insurance premium, the policyholder reduces the risk of accidentally lapsing the policy for failure to pay the premium on time.
Mine the Med-Sup Policy. A fundamental principle of insurance is that one should insure against catastrophic risk first. Nursing home costs account for over 80 percent of seniors’ out-of-pocket expenditures that exceed $2,000 per year.[11] Yet most of the elderly are unprotected against this risk while 70 percent or more have “Medi-Gap” policies that cover routine, first-dollar acute care. Many seniors still pay $1,500 to $2,500 annually for Medicare Supplemental or Medi-Gap insurance policies. While it could be unwise[12] to drop this traditional coverage in favor of the low-cost or “free” Medicare wraparound protection offered by many health maintenance organizations, it may make sense to reduce Medi-Gap premiums drastically. A true catastrophic-only Medi-Gap policy, available for $600 or $700 per year, could often free up $1,000 or more annually to apply toward long-term care insurance premiums.
Look to life insurance for help. It is very important to match insurance coverage to your stage of life and to your financial goals. Many older people have significant assets frozen in whole life policies that could be freed up to finance long-term care insurance. Middle-aged people may find that by age 55 they need long-term care insurance more than they need their old term-life policy for which the premiums have increased over time to equal what a long-term care policy would cost now.[13] Single-premium and other equity-based life insurance policies that will also pay for long-term care are a good option for people with sufficient assets available to fund them. Finally, viatication, or sale of the rights to the benefits of an insurance policy is a viable care financing option for people with shortened life expectancies.

The truth is that if you recognize the need for long-term care insurance and if you give this kind of coverage a high enough priority in your financial plan, the probability is very high that you will find the product affordable at one stage of life or another. If it is out of reach when you are young, low paid and building a family, perhaps you will be able to afford protection when you are older, even if the premiums are higher, if you look creatively for optional financing sources such as heirs, home equity, and efficient asset management.

[1] Assume, for example, that someone purchases a four-year, zero-day elimination, “pool of money” policy that pays up to $100 per day for nursing home, assisted living, or home care. At age 55, one could pay $860 per year for a policy with five percent simple benefit increase protection that is actually offered by one of the 12 carriers who represented 80 percent of all individual and group policies sold in 1996. Holding this policy for twenty years, one would pay $17,200 in premiums, and its benefit value would increase to $200 per day (i.e., $100 plus five percent simple inflation for 20 years). Now, assume that someone waited until age 75 to buy the same policy with a benefit of $200 per day. The premiums at age 75 would be $8,400 per year or $84,000 for the ten years from the 75^th to the 85^th birthday. In the meantime, by age 85, the 55-year-old purchaser has paid another ten years of premiums making a total of $25,800. Therefore, the 55-year-old has paid less than one-third the total premiums paid by the 75-year-old purchaser ($25,800 as compared to $84,000) and has been protected by coverage for twenty years longer. (Note that it is true that the 75-year-old purchaser will have more coverage at age 85 than the 55-year-old purchaser [$300 per day instead of $250 per day], because the simple five percent inflation increase on $200 worth of coverage is greater than the increase on $100 worth of coverage. To end up with $300 of coverage at age 85, the 55-year-old purchaser would have had to have purchased $120 worth of coverage originally, instead of $100. This would have required $30,960 in premiums over 30 years, still only 37 percent of the total premiums paid by the 75-year-old purchaser for twenty years less coverage.)
[2] Of 20,438 occupied housing units with an elderly householder, 15,767 or 77.1 percent are owner-occupied. Of these, 12,873 or 81.6 percent are owned free and clear. Bureau of the Census, American Housing Survey for the United States in 1993, Current Housing Reports #H150/93, issued February 1995, Table 7-13 (p. 340) and Table 7-15 (p. 348).
[3] “Reverse annuity mortgages allow homeowners to use their housing equity to secure a loan that is made available to the borrower either as a line of credit or an annuity. The value of the house is the lender’s guarantee against repayment of the accumulated debt, with repayment due only after the residents die or sell the house. The reverse mortgage is a non-recourse loan, so the lender may not attach other assets even if the outstanding loan eventually exceeds the dwelling’s value. The borrower has the right to reside in the house until he or she decides to sell or until death.” Barbara A. Morgan, Isaac F. Megbolugbe and David W. Rasmussen, “Reverse Mortgages and the Economic Status of Elderly Women,” Gerontologist, Vol. 36, No. 3, 1996, p. 401.
“Government-backed ‘reverse’ mortgages are now available in 47 states, and homeowners 62 and over can get more money from the equity in their homes in more states due to lower interest rates and a growing federal insurance program.... The loan is fully insured by the federal government, and no repayment is required until she dies, sells her home or permanently moves.…” National Center Home Equity Conversion (Ken Scholen, Director, 612-953-4474) cited in Aging News Alert, January 12, 1994.
[4] “The homeownership rate steadily declined from almost 80 percent for householders between ages 65 and 69 to 62 percent for those in their nineties or older.... It was quite common for elderly owners to have lived in their home for at least 30 years.... Just over one-half of them had lived at their current residence for 3 decades or more; over 90 percent of these homes were single-family detached houses.... Just because an elderly homeowner had a low income didn’t necessarily mean that their home had a low value. To illustrate, there were more than 600,000 elderly home owners who had incomes of $20,000 or less but owned a home free and clear that was valued at $100,000 or more. About half of these owners were aged 75 or older. Reverse annuity mortgages make their homes a potential source of income.” U.S. Bureau of the Census, “Statistical Brief: Housing of the Elderly,” SB/94-33, Washington, D.C., January 1995.
[5] Aldo A. Benejam, “Home Equity Conversions as Alternatives to Health Care Financing,” Medicine and Law, Vol. 6, No. 4, May 1987, p. 340.
Note also that public policy clearly expects home equity to be used to finance long-term care: “The Congress intends that all assets, including home equity, available to Medicaid nursing home residents be used to help pay for their care.” General Accounting Office, “Recoveries from Nursing Home Residents’ Estates Could Offset Program Costs,” GAO/HRD-89-56, March 1989, p. 3. 3.
According to legislative history, the intent of Congress in the Tax Equity and Fiscal Responsibility Act of 1982 was “to assure that all of the resources available to an institutionalized individual, including equity in a home, which are not needed for the support of a spouse or dependent children will be used to defray the cost of supporting the individual in the institution.” United States Code, Congressional and Administrative News, 97th Congress—Second Session—1982, Legislative History (Public Laws 97-146 to 97-248) Volume 2, St. Paul, Minnesota, West Publishing Company, p. 814.
[6] This premium is based on an actual long-term care insurance policy offered by one of the 12 carriers who represent 80 percent of all individual and group policies sold in 1996.
[7] See “LTC Bullet #40: Money Magazine Recommends Boomers Protect Parents” in the “Appendix” of this report.
[8] “Boomers will inherit some $10.4 trillion from 1990 to 2040—for a mean inheritance of some $90,000, according to Robert B. Avery and Michael S. Rendall, professors of consumer economics and housing at Cornell University.” Business Week, September 12, 1994, p. 64.
[9] LifePlans, Inc., Who Buys Long-Term Care Insurance?: 1994-95 Profiles and Innovations in a Dynamic Market, Health Insurance Association of America, 1995, p. 2.
[10] “...[I]t seems fair to say that middle-aged children have much less concern about propriety than their elderly parents. The funds are there, at least for the moment, the planning is legal, and the stakes are high...once people become frail and ‘old-old’ it is much easier to do paperwork on their behalf and without their realizing the full impact of being on Medicaid.” Joel C. Dobris, “Medicaid Asset Planning by the Elderly: A Policy View of Expectations, Entitlement and Inheritance,” Real Property, Probate and Trust Journal, Vol. 24, No. 1, Spring 1989, p. 22.
[11] Thomas Rice and Jon Gabel, “Protecting the Elderly Against High Health Care Costs,” Health Affairs, Vol. 5, No. 4, Winter 1986, p. 17.
[12] Possibly unwise because seniors are rebelling against perceived access and quality problems in such managed care programs.
[13] “The State Farm Insurance company charges a nonsmoking male in good health $350 a year for a $100,000 policy at age 50, $920 at age 60, and $2,504 at age 70.... Mr. Feld [a CPA] maintains that people in their 50’s who have not taken a second look at the cost and compared it with their needs should do so. ‘You can usually eliminate term insurance as soon as your kids are out of college,’ he said.” New York Times, October 9, 1993.

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Updated, Monday, April 25, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-014 LTC NEWS AND COMMENT

More than 400 nursing home closures projected for 2022: report
New Long-Term Care Insurance Rate Pact May Speed Rate Hikes
Many Americans Worry Inflation Will Derail Ability To Save Enough For Retirement
Feds might dictate minimums nursing homes must spend on direct care workers
Pacific Life to Change Long-Term Care Product Strategy
PLANNING AHEAD: Consider state benefits for long-term care before moving [Column]
MA plan beneficiaries saving up to $2K annually
States’ nursing home staffing shortages ranked best to worst
Admissions discrimination ‘really, really widespread’ at nursing homes: expert
FDA authorizes first Covid-19 breath test
AARP Livability Index a ‘powerful tool’ for senior living operators, residents
Study finds healthy lifestyle adds to longevity, but not for Alzheimer’s patients
Washington state retools a first-in-nation payroll tax plan for long-term care costs

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Updated, Monday, April 18, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-013 LTC NEWS AND COMMENT

Longevity Without Alzheimer's Tied to Lifestyle
What to Do if Your Medicaid Application Is Denied
Is Long-Term Care A Predictable Need, Or An Unexpected One?
Can Medicaid Recover Benefits from an IRA After the Recipient Dies?
HHS extends public health emergency, answering providers’ No. 1 priority
Who doesn't text in 2022? Most state Medicaid programs
Inflation: A Special Report
New Pilot Could Mean Blue Skies for Staffing
COVID-19 lawsuits growing ‘in spades’ against long-term care providers
2023 Social Security COLA Estimate Rises to 8.9% as Inflation Climbs
NYers buy Medicaid for illegal migrants in Gov. Hochul, Dems’ $220B budget
All-Cause U.S. Mortality Was Up 29% in Early 2022
CMS Proposes $320M Decrease in Medicare Funding for Nursing Homes
Having a sense of purpose in life can slash risk of developing dementia, study suggests
Seniors Are Not Aware Of The No-Cost Long-Term Care Insurance Planning Technique

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Updated, Friday, April 15, 2022, 10:40 AM (Pacific)

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LTC BULLET: LTC CHOICE, STILL THE BEST SOLUTION

LTC Comment: In long-term care, as in life, the fundamental things apply as time goes by. We discuss some long-term care fundamentals after the ***news.***

4/13/2022, “Inflation: A Special Report,” by Terry Savage, TerrySavage.com
Quote: “It’s the most important financial headline of this century: Inflation! A new generation of Americans is about to face the impact of inflation – on their daily lives, their financial decisions, their investment choices, and their retirement lifestyle. While many pundits proclaim that this period of inflation will come to a quick end, history shows that inflation has always ended not with a whimper, but with a bang. Once started, the fires of inflation are not easily tamped down. Whether in Germany in the 1930s or in Zimbabwe a decade ago (their trillion-dollar note became worthless!) or in the United States in the late 1970s, it has taken a ruthless hand to stamp out the persistent belief that prices would go higher. It’s important to understand what inflation is—and isn’t, what causes it, what “cures” it –- and the potential impact on your life.”
LTC Comment: Terry Savage is my favorite source for financial advice. As a bonus, she’s always been an advocate for private long-term care insurance. Today, she sends this wake-up call about the importance of inflation and what to do to prepare for it. Don’t miss this chance to learn the “Savage Truth.”

4/12/2022, “2023 Social Security COLA Estimate Rises to 8.9% as Inflation Climbs,” by Ginger Szala, ThinkAdvisor
Quote: “Overall, prices rose 8.5% in March from a year earlier, according to CPI data released Tuesday. Annual COLAs are based on inflation in the third quarter; Social Security recipients got a 5.9% raise for 2022. The average Social Security recipient has lost $162.60 in purchasing power so far in 2023, according to Mary Johnson of The Senior Citizens League.”
LTC Comment: You’re at a nice restaurant with a big group of people. A few diners order the most expensive things on the menu, and add more drinks and appetizers. Then when the check comes and gets divvied up, some poor sap is stuck covering the shortfall. That’s how politics works. Politicians buy your votes with lots of “free” benefits, including big cash checks recently. Later the bill arrives and they’re nowhere to be found. You get to pay for their “generosity.” That’s inflation. Oh, and if you think 8.9% will cover 2023 inflation, you’re going to have another think, and a big bill, coming.

4/10/2022, “Having a sense of purpose in life can slash risk of developing dementia, study suggests,” by Xantha Leatham, Daily Mail
Quote: “Feeling a sense of purpose or meaning in life can lower the risk of developing dementia, a study shows. Researchers reviewed evidence from eight previously published papers which included data from 62,250 older adults across three continents. They found higher purpose or meaning in life was ‘significantly associated’ with a reduced risk of dementia and cognitive impairment. Notably, having a sense of purpose was linked with a 19 per cent reduced rate of clinically significant cognitive impairment.”
LTC Comment: This is great news for LTC insurance producers. I’ve never met more purposeful people. Most are driven by a passionate desire to confront LTC risk and cost by helping people prepare. Their passion is nearly always deeply rooted in a personal experience with a loved one. Selling LTCI may have a steep learning curve and demand permanent commitment and perseverance, but now we know at least it comes with a lower personal risk of dementia. ***

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022. (Originally titled more simply “Trapped.”)

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: LTC CHOICE, STILL THE BEST SOLUTION

LTC Comment: The Center for Long-Term Care Reform celebrated our 24^th anniversary in business on April 1, 2022. Since the beginning, we’ve published 1,332 LTC Bullets and scores of articles, speeches, and reports. It’s to the first of those reports I’d like to direct your attention today. Read it and I think you’ll agree it conveys some fundamental things about long-term care that still apply. LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle opened with this …

Executive Summary

How can America solve the long-term care financing problem?

The publisher of this study, the Center for Long-Term Care Financing, is dedicated to ensuring high quality long-term care for all Americans.
The problem of how to finance long-term care for the baby boom generation rivals Medicare and Social Security as the most serious social policy challenge facing the United States.
Today, America’s long-term care service delivery and financing system is fragmented, dysfunctional, and plagued by problems of access, quality, reimbursement, discrimination and institutional bias.
Nevertheless, we know exactly what we would like our country’s long-term care system to provide: universal access to top-quality care for rich and poor alike in the least institutional settings possible.
Pundits, politicians and policy-makers recognize the problem; they know what the solution should look like; why can’t they get the job done? That is the long-term care financing puzzle.
In this report, we explain how America’s long-term care system came to its current sorry state by tracing the history of long-term care financing since the establishment of Medicaid and Medicare.
We disprove and discard the conventional wisdom that catastrophic long-term care spend-down is widespread and therefore requires expanded public financing.
We prove and adopt the position that virtually everyone can obtain public financing of long-term care through Medicaid or Medicare after being stricken by chronic illness. This fact explains why so few people plan ahead for the risk of long-term care.
We demonstrate that the solution to the long-term care financing puzzle is to persuade people to consider and to confront the risk of long-term care while they are still young, healthy, and affluent enough to save or insure privately.
We offer a simple, cost-free solution called LTC Choice.
LTC Choice requires the United States Government to provide information about long-term care risk and financing options to all citizens as soon as possible, but no later than their 65^th birthdays.
Under LTC Choice, every individual may choose to show proof of private insurance or adequate financial reserves to pay for long-term care and thus abstain from public financing entirely and avoid all other reporting requirements.
Alternatively, anyone who is unable or chooses not to show proof of private long-term care financial protection would have to acknowledge formally in writing that any future eligibility for publicly financed long-term care is contingent upon spending down nearly all his or her income and assets for care expenses first.
Requiring all citizens to confront the LTC Choice long before the insurable event occurs will radically increase the proportion of Americans who plan responsibly for long-term care and drastically reduce the incidence of artificial impoverishment to qualify for Medicaid.
With over $10 trillion about to pass by inheritance to the baby boomers from the WWII generation, Americans have no shortage of private money to save or insure for long-term care.
All we need to do is eliminate the perverse incentives in the current system that enable denial of longterm care risk and discourage responsible, early planning.

LTC Comment: That was then. This is now. Little has changed except it’s the baby boom generation that is about to pass $68 trillion to their Millennial heirs by inheritance. People over age 62 now hold $10.1 trillion in home equity alone. In other words, money is not the problem. It never was. The problem is that government pays for most catastrophic long-term care expenses long after it’s too late for people to plan responsibly for that risk and cost. The solution remains to get people’s attention to long-term care risk and cost while there is still time for them to plan, save, invest or insure so they’re able to pay their own way when the time comes and avoid public dependency.

How then can we get people to confront the LTC Choice earlier, say by age 50. That’s when they really start getting serious about estate planning. Merely threatening them as in the past doesn’t work: “Mr. Jones, if you don’t buy long-term care insurance now, you will lose your life’s savings if you every need expensive, extended care.” We tried that for decades and it failed miserably, because it was not true. You could always ignore the risk, avoid the premiums for private insurance, wait to see if you ever need catastrophic long-term care, and easily switch the liability to Medicaid and the taxpayers if necessary. Measures taken to prevent that option, such as ostensibly draconian financial eligibility rules, liens and estate recoveries, failed because states didn’t implement them, the federal government didn’t enforce them and the media didn’t publicize them. So the public continued to ignore long-term care until they need it and then to rely on the government to provide.

We need something new, different, and far more persuasive to get people to deal with long-term care long before they need it. Putting that $10.1 trillion of home equity at risk would go a long way toward waking the public up. Just eliminate or radically reduce Medicaid’s huge home equity exemption. That would compel people who didn’t plan ahead by saving or insuring, to use their home equity to pay for their long-term care. Reverse mortgages would enable them to continue living at home while they receive the care they need. Most older people own homes and most of them own their homes free and clear. Voila. Problem solved for most homeowners.

But what about the rest of the population who may not own homes or who have no home equity? We should have special individual retirement accounts earmarked for long-term care that everyone contributes to by the age of 50. Such accounts should be voluntary, not compulsory like traditional social insurance programs, i.e., Medicare and Social Security. Compulsion is anathema to America’s culture and economy of freedom. But, while voluntary, the accounts should be “opt-out,” that is, automatically enrolled upon employment and only avoidable by consciously choosing not to participate.

Home equity and LTC-IRAs will cover most people, but what about the less responsible or less able? Will they fall through the cracks? No. We should lengthen, strengthen, publicize and enforce rules to ensure that no one with significant income or assets relies on public welfare to fund long-term care. That means eliminating the many “loopholes” in Medicaid financial eligibility policy that now, and always before, enabled the public’s denial about long-term care risk and cost. Once people really do have to become impoverished to get public assistance, very few will end up in that condition. Those that do will join a much smaller Medicaid long-term care program that can afford to provide better care in the most preferred settings than has been the case heretofore.

Solving long-term care is not as complicated as the analysts, policy makers, and politicians make it out to be. Just stop rewarding people with free long-term care later and they’ll take personal responsibility sooner.

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Updated, Monday, April 11, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-012 LTC NEWS AND COMMENT

COVID Stimulus Checks Worsened Inflation
Long-term care operators devise creative solutions to staffing shortages: NIC
Investment Strategist Challenges Genworth Board
Call for holistic nursing home reform a ‘wake-up’ for lawmakers, stakeholders
Insurance Administrator Acquires Key Long-Term Care Program Manager
Medicare Advantage Plans Get A Big Pay Hike, Offer More Services And Supports For Older Adults
Early Death Cuts Smokers' Lifetime Medicare Claims: Researchers
BREAKING: U.S. nursing home system ‘ineffective,’ ‘unsustainable,’ National Academies report says
'Industry Experts' suggest Long Term Care Insurance is unworkable
AALTCI Finds Out What Life-LTC Hybrid Coverage Really Costs
9 U.S. Health Spending Projections We All Should Know
Dementia soars among U.S. adults at end of life, study finds

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Updated, Monday, April 4, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-011 LTC NEWS AND COMMENT

Covid's Effect On Long-Term-Care Insurance
Medicaid: CMS Should Assess Effect of Increased Telehealth Use on Beneficiaries' Quality of Care
Are You Receiving, Providing or Paying for Long-Term Care?
Risk of Alzheimer's linked to cholesterol, blood sugar levels at age 35
Parkinson offers ‘obvious solution’ to staffing problems, occupancy outlook and financing answers
Can a Reverse Mortgage Pay for Long-Term Care?
National Health Expenditure Projections, 2021–30: Growth To Moderate As COVID-19 Impacts Wane
Biden Adds New Tax on Wealthy to $5.8T Budget
Beware the growth of Medicare Advantage, Harvard professor says
We can turn the caregiver crisis around, but fast action is needed

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Updated, Friday, April 1, 2022, 10:40 AM (Pacific)

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LTC BULLET: GO FUND WHAT?

LTC Comment: Would you contribute to a GoFundMe account intended to buy someone better long-term care than what is readily available from Medicaid? Asked and answered after the ***news.***

*** THE BIDEN ADMINISTRATION, in a surprise announcement, today abandoned its no tax under $400,000 income pledge. Talking off script, the President said “We have no choice but to charge everyone, regardless of income level, this new 8% and rising tax (aka inflation) to pay for recent extremely generous federal benefits and subsidies.” (See details below.) ***

*** CENTER’S 24^TH ANNIVERSARY. Stephen Moses and David Rosenfeld co-founded the Center for Long-Term Care Reform (formerly Financing) on April 1, 1998. Happy birthday, Center. You might ask “what have you done for us lately?” Check out “LTC Bullet: LTC Center Standing Guard” for the history of our efforts to fight for better LTC financing policy and against bad reform proposals. Read 1,330 LTC Bullets here. Join the Center team with an individual or corporate membership here. Check out all the membership options here. Contact Damon at 206-283-7036 or damon@centerltc.com for details. ***

*** FEDPOINT (formerly LTC Partners) is celebrating its 20^th anniversary. The company’s Federal Long-Term Care Insurance Program has over 260,000 enrollees and has paid more than $2 billion in LTCI claims to date. FedPoint has grown, become more sophisticated, and has diversified its business portfolio by taking a significant role in the electronic enrollment and premium administration business for the federal government. Congratulations to CEO Paul Forte and the whole, amazing FedPoint team! ***

*** APRIL FOOLS re the Biden announcement above: ***

LTC BULLET: GO FUND WHAT?

LTC Comment: We’re indebted to syndicated financial columnist Terry Savage for tipping us to this story. She wrote: “Steve — read ALL the answers to the item about using a GoFundMe to finance nursing home care. You will see the reality of what you have been saying all along — no incentive for insurance!” Boy, was she right! Read on to see what we mean.

Q: Has anyone used GoFundMe to help pay assisted living costs?

Click that link and you’ll find this question followed by 39 replies:

“I am trying to find additional money to help pay for my brother's assisted living bills. He has vascular dementia and Alzheimer's Disease. He also has Major Depressive Disorder. He is medically eligible for Medicaid, but I would have to move him to the skilled nursing portion of his care facility to apply for Medicaid. He would have to move out of his comfortable room into the hospital ward-like beds of skilled care. His clinical depression is eased somewhat by the pleasant surroundings of his assisted living room. If he moves to the clinic-like skilled nursing section, I'm concerned that his depression would increase and his decline from his dementia would only get worse. I am his financial POA, and I need an additional $1,600 a month added to his social security and pension to keep him in his assisted living room. I have been dipping into his savings to pay the current bills, but his money will soon run out. I am 70 years old and retired with health problems of my own and have no assets I can use to pay my brother's bills. I am considering using GoFundMe to do fundraising for my brother. Has anyone gone this route? Any suggestions or opinions? Thanks very much.”

LTC Comment: I’ve culled some telling excerpts from the replies, organized them by topic, and offered a little LTC commentary.

Medicaid and Quality

“If he's eligible for Medicaid and you are his POA [Power of Attorney], start looking at different care facilities for him so he won't have to go to the ‘nursing home’ part of the facility he's in now. If he has Alzheimer's and vascular dementia he should be in a memory care facility. Most of them accept Medicaid.”

LTC Comment: Most memory care facilities accept Medicaid? Hardly. Compare these answers.

“I thought memory care is considered assisted living and not covered by Medicaid? Is your [brother] getting memory care within a skilled nursing facility?”

“I am wondering if you have contacted your county dept. on aging. In many states, there are some memory care facilities that accept Medicaid. However, there aren’t many.”

“You mean the plight of many families that are forced to care for an elderly position? The story is not unique or compelling, and funding options exist it is called Medicaid. They are essentially saying their [loved one] is too good for Medicaid and is entitled to ‘better’ quality facility.”

“As a number of people have suggested, your best alternative, unfortunately, is to enroll him in Medicaid for long term nursing care. Keep in mind, when you do, Medicaid only pays for multiple bed rooms. If the facility is older and has an exemption, that usually means 3 beds to a room. A newer facility has to meet a higher standard of 100 square feet per person plus 6sf for storage. … There are assisted living places that do accept Medicaid, but they are far and few between. Also, I doubt you could get people to contribute on an on-going basis even if it were legal. Medicaid pays about $200/day so you'll find the level of service very inadequate. Be prepared to fight every day to have his needs taken care of. I know - I've been an advocate for my brother in a nursing home paid by Medicaid in California for over 3 years. It's brutal. There are no good alternatives. Good luck.”

“Look into care homes, they will sometimes be covered by Medicaid.”

LTC Comment: This is Medicaid truth right from the mouths of consumers actually experiencing it. Forget about obtaining quality in special memory care units. Plan on getting whatever Medicaid pays for at rates literally less than the cost of providing the care. Can’t find an assisted living facility that will accept Medicaid or a decent skilled nursing facility, then look for a “board and care home.” That is a house with a few beds presided over by a caregiver getting a pittance from public welfare to help some nearly helpless, often bedbound patients. You get what Medicaid pays for and don’t expect much.

Medicaid and Income Eligibility

“Just FYI, you cannot do both, GoFundMe and Medicaid. I think you may know that.”

“Once he's on Medicaid, he could not receive any money from a go fund me source if it went toward his housing, food, or medical expenses; this is illegal. People can only pay expenses that are not in these categories.”

“The GoFundMe donations would eliminate your brother to be eligible for Medicaid. Those donations are considered income by Medicaid eligibility. In other words you cannot use GoFundMe and Medicaid together. Medicaid does limit the choices for your brother, but as long as he is well cared for, you have to accept the skilled nursing facility.”

“The money for the GoFundMe will be designated (by your own words when you post it) for your brother's care --- this would be income for your brother. It could raise issues for Medicaid (maybe, maybe not) and a question to ask an attorney before you step into that mess.”

LTC Comment: Think you can improve what Medicaid provides by paying extra? Forget about it. “Family supplementation” is not allowed because it would let the rich buy better care than the poor receive. That’s equity by the lowest common denominator, a characteristic of socialism.

Selfishness

“If he’s eligible for Medicaid WHY would you do a go fund me? Don’t you think it’s insulting to expect others to pay for his care so he can be more ‘comfortable’? Really??? His care will be paid for by Medicaid. I just don’t get it. There are people with NO help out there. Sounds selfish but just my opinion.”

“If he's on Medicaid which is publicly funded by taxes, why give to a Go Fund Me so he can have a nicer room? Seems selfish to me too.”

“In this day and age when times are quite tight for most individuals, it seems inconsiderate at best to ask strangers to pay for your brother's health care needs since you've already stated that Medicaid is a viable option.”

“A nice try, but why would you expect other people to pay for your brother's care when other people need their money for their own and their own family's care?”

“Unfortunately, not using Medicaid because you don't want to move your brother to skilled nursing isn't going to fly. Taxpayers will already pay for his care with Medicaid, yet you're asking for even more. It won't work.”

Medicaid Planning

“I have been paying for my mom’s incidentals for the last ten years. Toilet paper, shampoo, soap, socks, underwear, haircuts, etc... I did that hoping to preserve mom's savings for as long as possible so that she could afford the AL [assisted living]. She will run out of savings later this year. We will need to apply for Medicaid and create a Millers trust with an elder lawyer. She will need to move to a facility that accepts Medicaid. The Millers trust is a way to funnel the money mom does have coming in to the nursing home [so] Medicaid will hopefully pay the difference. I don't want to move mom from the private pay memory care, but we do not have a choice. I also dread managing the trust and the flaming hoops that I am sure Medicaid will make us jump through.”

LTC Comment: The Miller income diversion trust is a legal device to shelter income above Medicaid’s allegedly “low” income threshold so that people with substantially higher incomes can qualify for LTC benefits. Miller trusts are used in “income cap” states to achieve the same purpose of allowing higher income people to qualify as in “medically needy” states. Medically needy states simply deduct all private health and LTC expenses from income before assessing eligibility. The rule of thumb in all states is that anyone with income below the cost of a nursing home is eligible. Hardly low income.

“Any chance your brother was a veteran during a war?? If so, look into Aid and Attendance thru the VA. It would provide enough funds to keep him at his current facility.”

LTC Comment: If one welfare program won’t pay, try another. VA benefits now have an asset transfer penalty similar to Medicaid’s.

“My brother just passed in a skilled nursing center. He was covered by Medicaid which left a small allowance $30, from his social security check that went to [the] facility. With multiple childhood disabilities, polio, etc., it took months to be approved after I cashed his life policy, prepaid his funeral, and spent down the funds in bank. If your brother has more than $2,000 total in assets, bank, real estate, whole life insurance, etc., he will not qualify for Medicaid. They can look at records years back. From what you describe, he will not be going home. With Alzheimer’s, depression and dementia, its questionable he can appreciate (or cares about) the difference in surroundings. His assets should be liquidated and utilized for the level of care you think he should have. Then apply for Medicaid when his asset level meets the requirement. My brother had no mental impairment, and I did the best I could with what we had to make him as comfortable as possible, as his multi conditions made bringing him home impossible. My other siblings did not offer assistance. Starting a ‘Go Fund me’ for someone with available fund sources, is improper.”

LTC Comment: This is the “Medicaid trap” people get caught in who have low income and resources and lack the advice of a financial planner or lawyer. Middle class and affluent people routinely avoid the inconvenience of “spending down” to qualify for Medicaid LTC benefits.

“If he qualifies for Medicaid you need to move him into a nursing home. My elder attorney advised me to be sure I can self-pay several months at a nursing home. That way you can choose the NH. Otherwise if he has no money left but his Social Security ... good luck in even getting him into one. I took his advice and when my mom only had about $27,000 I placed her in a NH I was referred to by her Hospice nurse. That paid for 3 months. She then was able to stay there while she was Medicaid pending. I applied for Medicaid when she only had $5,000 left. It took Medicaid 5.5 months to approve. She was just approved this past week. They will go back to 11/11/21 and back pay the facility. I know this isn't the ideal decision for you. But sometimes you just have to do what is financially in yours and his best interest.”

“If he is running out of money your only choice is placing him in LTC. If he has enough for one or months in a nice LTC, get him placed. Then apply for Medicaid. If the facility helps you with the process, keep on top of it. In my State you only have 90 days to spend down and get info needed to the caseworker. With my Mom I started the application process in April. She paid 2 months privately for May and June. I confirmed in June with the caseworker, that Mom was spent down and he had all info needed. Medicaid started July 1st.”

“Contact a care placement specialist. They can get you on the right track. Personally, if he has dementia, he needs to be in memory care. My mom is in memory care, She has her own private room and Medicaid covers it 100% … Find a memory care facility first so Medicaid doesn't try placing him first. You've got a better chance of getting what you want.

“It is best to move him in the SNF while he still has funds. If a Medicaid bed is not available when he needs it at the last minute, there is a possibility that he will have to move to another facility not of your choice.”

“I would consult with a Medicaid Planner for his state. FYI in addition to having to financially qualify he also has to medically qualify for LTC, and in my experience ‘just’ having dementia doesn't require LTC but rather MC [managed care?]. You don't get to make that LTC decision unless the facility is willing to give that assessment just to keep him there. Every state has different rules about Medicaid and that's why you need to talk to a professional who knows your state's rules inside and out. Then depending on what you find out, it may be helpful to consult an elder law attorney.”

LTC Comment: What these commenters are saying is what Medicaid planners call “key money.” Save out some hard cash so clients can pay privately for a few months. That will get them into the very best facilities which cannot expel them just because their payment source changes from private pay to Medicaid at a fraction of the private rate. This is how middle class and affluent people co-opt Medicaid for their own benefit at the expense of the poor people Medicaid was intended to serve.

Medicaid as Last Resort

“Sorry it has come to this, but I think applying for Medicaid will keep him with a roof over his head.”

“If you do decide to use GoFundMe to find money for your brother, let us know how it goes. Where I live, there are a lot of panhandlers standing at the center dividers where people wait to make a left turn. If they get one person to give them $1 every traffic light cycle, they probably get $20/hr. So, potentially they can make $100 or more per day, or $3000/month. No wonder they don't want to work. I also have seen a few women pushing their little kids in strollers, walking up to people in parking lots and asking for money. And there are a few normal/not homeless people carrying big poster boards with pictures of a sick child and a message saying the kid has cancer and they need money, etc. These people will walk right into the street where cars are waiting at red lights and shove their signs in front of the drivers to ask for money. Whether they actually have a sick kid with cancer, who knows. But these people get a lot of money, $5 or $10 from each donor vs $1 that panhandlers get. At 70 [years old], … I don't recommend you try any of the above.”

LTC Comment: For too many, Medicaid has become just another form of mendicancy. Its easy availability after care is needed and long after it could have been planned, saved or insured for, makes it a trap too many people fall into. Do you still wonder why so many people fail to save, invest or insure with long-term care risk and cost in mind?

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Updated, Monday, March 28, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-010 LTC NEWS AND COMMENT

Kennedy, Inhofe introduce bill to protect Medicaid recipients
Don’t Look Up? Medicare Advantage’s Trajectory And The Future Of Medicare
Cognitive decline rates more than double over 10 years: study
Where Long-Term Care Insurance Is Heading
Opinion: The imperative of equality in long-term care
Time Is on Group Long-Term Care Insurance Sellers' Side
COVID-19 and Long-Term Care Insurance Operations
How to Grease the Long-Term Care Planning Gears
6 New Long-Term Care Insurance Bills in Play Now
To Families’ Dismay, Biden Nursing Home Reform Doesn’t View Them as Essential Caregivers
Bill would reform tax code to make long-term care insurance more affordable, accessible
Long-Term Care Players Gather — in Person
California to eliminate Medicaid waitlists through assisted living waiver
Parkinson calls on providers to fight Biden’s ‘offensive’ reform plans

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Updated, Monday, March 21, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-009 LTC NEWS AND COMMENT

Ukrainian refugees could find support, employment at U.S. long-term care facilities
New Program Can Cover Up to 50 Weeks of Home Care
Medicare Advantage plans ‘robust’ at the expense of traditional Medicare plans: report
MedPAC’s call for 5% SNF pay cut ‘outdated and obsolete’
Dementia to cost nation $321 billion this year, Alzheimer’s Association says
Lincoln Financial Group Enhances Long-term Care Benefits Experience Through Partnership with LTCG
Congress passes bill targeting financial exploitation of older adults
Former CMS leader rips Biden’s nursing home reform plans
S&P Global Upgrades Genworth
Despite Seniors’ Strong Desire to Age in Place, the Village Model Remains a Boutique Option
America's Seniors Eating Junkier Diets
Walmart partnership provides lifeline to family caregivers

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Updated, Friday, March 18, 2022, 10:40 AM (Pacific)

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LTC Comment: A few things are going right for the long-term care insurance business lately. We’ll cover one of them after the ***news.***

*** ILTCI CONFERENCE NEWS: The Intercompany Long Term Care Insurance Conference at the Raleigh, North Carolina Convention Center, March 20-23, 2022 is only days away. Organizers say: “Join us and reconnect with over 700 of your colleagues from across the industry whom you haven’t seen since 2019! Choose from 49 educational break-out sessions across seven tracks. Look into the crystal ball with our Keynote Speaker, futurist Anders Sorman-Nilsson. Our closing session with Plug and Play Tech Center will host the first ever “LTC Innovators Invitational Challenge,” featuring nine aging-in-place innovators! The full schedule of the conference, including the breakout sessions is now available. Please visit ILTCI Conference Schedule to view our exciting program.” To all those able to attend, we at the Center for Long-Term Care Reform say “have a great conference!” ***

*** JOIN US. Since 1998, the Center for Long-Term Care Reform has conducted and published dozens of national and state-level studies and published 1330 LTC Bullets. We’ve helped to win crucial federal Medicaid statutory changes in 1993 (mandatory estate recovery) and 2005 (capping the home equity exemption). We’ve analyzed and refuted virtually every study and article advocating a government takeover of long-term care. Now we’re proposing a simple, cost-saving solution to the long-term care mess government created. Won’t you join us and support these achievements, goals, and future potential? Become a regular or premium member. Or ask your company or organization to become a corporate member, with benefits accruing to you at no extra expense. Contact Damon at 206-283-7036 or damon@centerltc.com for details. Review our Membership Levels and Benefits schedule here. Let’s get this done! Thanks for your consideration and support. ***

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022.
“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022
“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021
“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)
“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.
“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.
“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.
“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021
“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)
“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021
“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)
“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021
“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.
“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.
“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: LTC GOOD NEWS

LTC Comment: The news about private long-term care insurance isn’t always so great. The number of companies in the business has declined over the past couple decades from ten dozen to one or less. So, when we see Genworth getting a financial upgrade or new companies dipping a toe into the field, it’s refreshing. Recently, we learned that LTCG, long a good friend and corporate supporter of the Center for Long-term Care Reform, has also had good news. Today’s LTC Bullet covers that news and adds a little background “color” from CEO Peter Goldstein.

On February 24, illumifin,* a leading insurance third-party administration and software provider, announced it is purchasing LTCG, the leading TPA for the private long-term care insurance business. Industry press covered the story and supplied details:

Illumifin, a Greenville-headquartered insurance third-party administration and software provider, has signed an agreement to acquire LTCG, a provider of administrative solutions and clinical services to the long-term care insurance industry. The transaction is expected to close within the next 60 days, according to a news release. (Ross Norton, “Illumifin to acquire LTCG to expand third-party administration capabilities, February 25, 2022)

LTCG Chief Executive Officer Peter Goldstein explained at the time of the announcement:

Given our 25-year history as the leading partner for long-term care insurers and our deep customer relationships, the integrated company will allow us to build more strategic partnerships with our clients and help them enhance the customer experience for both policyholders and distributors. (“Illumifin to Acquire LTCG to Expand Third-Party Administration Capabilities,” Business Wire, February 24, 2022)

LTC Bullets spoke with CEO Goldstein this week to get the backstory about this transaction. He told us LTCG has been “experiencing tremendous growth.” The company just announced an expanded partnership with Lincoln Financial, taking on the claims administration for MoneyGuard, the industry’s leading hybrid product. The CNA group business is on its way back to LTCG and Transamerica will go live with over 300,000 policies and 14,000 claims later this year. Market share is growing again after years of slower expansion. From the macroeconomic standpoint mergers and acquisitions are strong despite the pandemic.

LTCG is not the same company it was five years ago, Goldstein explained. The long-term care insurance business has evolved. Carriers are adapting to the market reality, especially rapidly increasing claims. With so many closed books of business and smaller operations, they look to TPAs like LTCG to manage this complex risk by outsourcing work they lack the scale or systems to manage in house. This translated into “significant momentum” and expansion of services for LTCG.

Bottom line, when Goldstein reviewed the marketplace last year, it seemed like a good time to consider a sale. He explained that LTCG was always investor owned with private equity backing the management team. Sale of the company was therefore not unexpected. It had been done three times before. It’s a common pattern. Private equity buys high potential companies, adds value through targeted investments, and then sells a bigger, more diversified company. The typical hold period is five to seven years, which was about where LTCG is now.

Furthermore, absent a major transformation in the long-term care insurance business overall, Goldstein believes LTCG needs to expand into other areas, such as life insurance, annuities, and Med Supp. From that perspective, illumifin is the perfect company with which to merge. illumifin is a new name for an old company with many years of experience under various corporate identities. It supports a lot of the same insurance companies as LTCG. Goldstein clarified “illumifin gives us a whole new set of services to bring to our valued clients, especially with the growth of hybrid life and annuity LTC products.”

I asked what the sale means for Peter personally. He said, “As part of this process, I thought I might finally retire as it’s been 25 years at LTCG.” But because of the new opportunity and upside potential, he agreed to stay on, becoming president of illumifin and joining its board of directors. He looks forward to partnering with CEO Phil Ratcliff whom he has known for several years. The LTCG leadership team will stay in place as the company “paints on a larger canvas.”

We congratulate LTCG and illumifin on this merger and wish all involved every ongoing success.

* illumifin’s official name begins with a lower case “i.” We observed that formality in this article, except when quoting other sources that used an initial capital “I.”

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Updated, Monday, March 14, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-008 LTC NEWS AND COMMENT

Will the ‘Long-Term Care Tax’ be Coming to Your State Soon?
California Is Ending Its Asset Test For Medicaid Long-Term Care. Is It A Mistake?
Midlife Chronic Diseases Associated With Dementia Risk Later in Life
Unprecedented Caregiver Fatigue In America
2023 Social Security COLA Estimated at 7.6% as CPI Keeps Rising
U.S. Household Net Worth Jumps to a Record on Equities, Housing
‘Adequate’ funding part of nursing home staffing minimum strategy, CMS chief says
The silver tsunami factor: Creating a disaster recovery plan for the impending healthcare devastation
No Viable Path for Many SNFs to Improve, Avoid Penalties in Value-Based Purchasing
CNAs cite staffing shortage as biggest on-the-job challenge: survey
Spending on Medicaid HCBS totals nearly $116B in FY 2020, report finds
Reform policies ‘double down’ on decades-long failures, LTC physicians warn

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Updated, Monday, March 7, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-007 LTC NEWS AND COMMENT

CMS Releases Updated Guidance on Medicaid Eligibility and Redeterminations
Biden Proposes Major Nursing Home Reforms, Most Extensive “In Decades
Ken, Maddy, and Elyse: Age Wave’s Unbeatable Leadership Trio
Medicare Advantage Plans Boost Supplemental Benefits Offerings
The Impact of the COVID-19 Recession on Medicaid Coverage and Spending
AHCA Releases Report Highlighting Unprecedented Economic Crisis in Nursing Homes; High Operating Costs and Stagnant Recovery Could Mean More Nursing Home Closures, Threatening Access to Care for Seniors
The White House vision for nursing homes by many other names
[UPDATED] White House Unveils Major Nursing Home Reform Package, Targets Private Equity Ownership
Illumifin to acquire LTCG to expand third-party administration capabilities
The debate on overpayment in Medicare Advantage: Pulling it together
Trappings of LTC system leave operators trapped
The pandemic pummeled long-term care – it may not recover quickly, experts warn
States should refuse the feds’ ‘free money’ that’s creating huge, costly Medicaid rolls
High-fiber diet linked with reduced risk of developing dementia
Multimorbidity associated with increased risk for dementia
15 Most Expensive States for Long-Term Care: 2021

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Updated, Friday, March 4, 2022, 10:40 AM (Pacific)

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LTC Bullet: LTC Bankruptcy

LTC Comment: Is this Wall Street Journal anecdote of LTC bankruptcy commonplace, occasional, rare … or contrived? Considerations after the ***news.***

*** ILTCI CONFERENCE NEWS: Organizers report “The 2022 Intercompany Long Term Care Insurance Conference starts in just three weeks! Join over 700 of your colleagues at this year's in-person conference. Click ‘Register Now’ to see the full schedule of over 45 educational sessions and networking events and register for the conference. Attendees have filled three of our four hotel blocks. Please be sure to make your reservation soon if you haven't yet. ***

*** JOIN US. Since 1998, the Center for Long-Term Care Reform has conducted and published dozens of national and state-level studies and published 1328 LTC Bullets. We’ve helped to win crucial federal Medicaid statutory changes in 1993 (mandatory estate recovery) and 2005 (capping the home equity exemption). We’ve analyzed and refuted virtually every study and article advocating a government takeover of long-term care. Now we’re proposing a simple, cost-saving solution to the long-term care mess government created. Won’t you join us and support these achievements, goals, and future potential? Become a regular or premium member. Or ask your company or organization to become a corporate member, with benefits accruing to you at no extra expense. Contact Damon at 206-283-7036 or damon@centerltc.com for details. Review our Membership Levels and Benefits schedule here. Let’s get this done! Thanks for your consideration. ***

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022.

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: LTC BANKRUPTCY

LTC Comment: Clare Ansberry describes a heartrending case of long-term care spending unto impoverishment in “Caring for Older Relatives Is So Expensive That Even AARP’s Expert Filed for Bankruptcy” (Wall Street Journal, 2/20/22). The anecdote perfectly fits a narrative repeated endlessly in the academic and popular media. To wit: all across America the high cost of long-term care is wiping out the savings of aging Americans and of their families who struggle to care for them. Therefore, they conclude in a classic non sequitur: we need to add long-term care to Medicare or create a new, compulsory, payroll-funded program to cover it.

Does catastrophic long-term care spend down happen? Of course. Consider the case this article describes. Amy Goyer worked for AARP as a “family and caregiving expert.” She provided long-term care for her parents. She gave care herself and spent her own money to supplement her parent’s incomes when paid care became necessary. She left her job and moved from DC to Arizona to be with her ailing parents when caregiving trips became too frequent. She maxed out $25,000 on credit cards, took out a home equity line of credit, borrowed from her boyfriend and ultimately declared bankruptcy. All this happened despite her parents having private long-term care insurance, a pension, Social Security, and VA benefits. It would be hard to imagine a more tragic case. In fact, it seems almost too bad to be true.

The Ansberry article summarizes a national crisis that the Goyer case characterizes …

Family caregivers are the backbone of the nation’s long-term care system and provide an estimated $470 billion worth of free care—often at great personal cost. On average, caregivers spend 26% of their personal income on caregiving expenses, according to a 2021 AARP study, with most personal spending going to housing, including home modifications. A third of caregivers dip into their personal savings, like bank accounts, to cover costs, and 12% take out a loan or borrow from family or friends.

Could all of this be true and yet the predicate, that we need the government to take over long-term care and force everyone to pay for it like health care (Medicare) and retirement income (Social Security), be false? If so, how?

As tragic as the Goyer case is, we need to remember that she chose the course of action she took. At any point in her parents’ story, she could have qualified them for Medicaid. Their home equity was exempt and their huge health and long-term care expenses would have been deducted from their incomes before Medicaid’s low income eligibility threshold was applied. Qualifying them for Medicaid would of course have limited their choice of care setting and quality. Medicaid often means going to a nursing home, encountering long waiting lists for home care, and becoming dependent on Medicaid’s low reimbursements and poor quality reputation.

My point is not that Ms. Goyer should have taken this course instead of spending down into poverty as she did. I only mean to suggest that most people are not so self-sacrificial. Based on the fact that Medicaid pays for most expensive long-term care, it would seem that many do opt for that route instead. Nursing homes remain the dominant venue for long-term custodial care, but their private pay revenue has diminished to only 7.4 percent. Over 66 percent of their patients are covered by Medicaid and the welfare program’s extremely low reimbursement rates, often less than the cost of the care, account for half of nursing homes’ revenue. Home care is no different. Medicare, Medicaid and private insurance pick up about 80 percent of home care costs; out-of-pocket expenditures, only 10 percent.

Government, mostly Medicaid and Medicare pay for 70 percent of all long-term care. Private out of pocket costs for nursing home care have plummeted from 49 percent to only 23 percent since 1970. Half of that 23 percent is actually spend-through of Social Security (another fiscally vulnerable federal program) income that people already on Medicaid have to contribute toward their cost of care. Government has paid for most expensive long-term care for almost 60 years. That has anesthetized the public to long-term care risk and cost leaving most unprepared when catastrophic need arises.

Whatever its intentions, government set a long-term care trap for people. By making the high cost of long-term care go away for most, Medicaid anesthetized the public to long-term care risk, created institutional bias, hampered the home care market, and crowded out most private insurance. A few responsible people like Amy Goyer’s parents planned relatively well despite the perverse incentives in public policy. They even bought some, though obviously not enough, private long-term care insurance. She and they faced the sad choice of bankruptcy or welfare dependency.

The lamentable reality about long-term care in America today is that most people follow government’s lead if they need high cost long-term care. This results in an overwhelmed Medicaid program that pays too little to ensure quality care. The few like the family in this story who insist on paying their own way get wiped out financially. Forcing everyone into a new government funded and controlled program would only double down on the failures caused by the current government funded and controlled programs. For a full analysis and a better solution, read Medicaid and Long-Term Care.

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Updated, Friday, February 25, 2022, 10:40 AM (Pacific)

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LTC BULLET: MOSES VS. GRABOWSKI ON LONG-TERM CARE

LTC Comment: Is government the problem or the solution for long-term care. Two conflicting views after the ***news.***

“Trappings of LTC system leave operators trapped,” by Stephen A. Moses, McKnight’s Long-Term Care News, February 23, 2022.

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: MOSES VS. GRABOWSKI ON LONG-TERM CARE

LTC Comment: David C. Grabowski, PhD, is Professor of Health Care Policy in the Department of Health Care Policy at Harvard Medical School. Professor Grabowski is omnipresent in the news about long-term care. Stephen A. Moses is president of the Center for Long-Term Care Reform. His media megaphone is more subdued. But both were featured yesterday in McKnight’s Long-Term Care News. Their differing views on what ails long-term care services and financing provide food for thought about this complicated topic.

Grabowski is featured in a McKnight’s article by editor Kimberly Marselas titled “These 10 steps needed to save skilled nursing, experts say.” In a special issue of the Annals of the American Academy of Political and Social Science, Grabowski and co-author Brian E. McGarry, Ph.D. propose

Paying higher wages for direct care workers, adopting meaningful regulatory reform, increasing the presence of advanced practice clinicians in skilled nursing facilities, and realigning Medicare and Medicaid rates … Increasing wages for direct care staff and ensuring minimum staffing requirements … an infusion of federal dollars that nursing home operators would have to spend on wages or other staff benefits … more physicians, physician assistants and nurse practitioners to work routinely in long-term care settings …revisit an approach like the Boren Amendment — which required states’ Medicaid nursing home rates be “reasonable and adequate” — but to give it more teeth … increasing financial and ownership transparency; bolstering alternate models of nursing care, including the small house model; increasing use of home- and community-based services while ensuring the future viability of skilled nursing care; and offering better long-term care financing as a nation.

What do all these ideas have in common? They rely more than ever on the failed government central planning and regulation that already dominate long-term care services and financing. They do more of what has already been tried unsuccessfully but at much higher cost. To his credit, Grabowski acknowledge “In terms of finding the dollars, the political will, I don’t think that we’re there yet as a country ….”

Moses has a different view of long-term care’s problems and their solution. In a Guest Column for the same issue of McKnight’s titled “Trappings of LTC system leave operators trapped,” simply “Trapped” was his title for the piece, Moses writes:

Long-term care operators are trapped in a public financing system that pays too little, expects too much, rewards cronyism, discourages creativity, punishes profit making and disserves aging Americans … New ideas and creative caregiving approaches hit a brick wall of inadequate funding, bureaucratic red tape, political indifference and ideological bias. No one thrives in the publicly financed long-term care system we have now, least of all the aging Americans so poorly served by it. … In a free market, prices are set by supply and demand, not by government decree or pressure. So prices would reflect the kind, amount and quality of care options for which people are willing and able to pay … Profit-seeking entrepreneurs would revolutionize the LTC system with heretofore unimagined options if we would just get the government out of their way and let it happen … Home equity, if not protected by Medicaid’s huge exemption (up to $955,000), represents $9.2 trillion of wealth held by older people, that should, could, and would flow quickly into the long-term care financing market.

Moses argues that government funding and regulation of long-term care since Medicaid and Medicare arrived in 1965 are exactly what caused the system’s problems of institutional bias, poor access and quality, inadequate funding, caregiver shortages and a public oblivious to long-term care risk and cost. So, doing more of the same, as Grabowski and McGarry propose, would only make these problems worse.

Today’s LTC Bullet gives you only a hint of what these authors are saying. We encourage you to read more by both. You’re likely to find Professor Grabowski in virtually everything you read in the LTC media. For Moses’s views, see Medicaid and Long-Term Care and join the Center for Long-Term Care Reform to find 1,328 of his LTC Bullets archived chronologically and by topic. Check out Stephen A. Moses on Google Scholar or find his many national and state-level studies here. The Center for Long-Term Care Reform’s “Membership Levels and Benefits” schedule is here.

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Updated, Monday, February 21, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-006 LTC NEWS AND COMMENT

American Seniors Feeling the Inflation Heat
Nearly all high-touch surfaces in LTC are contaminated, study finds
Millions of People Could Lose Medicaid Coverage When the Pandemic Is Declared Over
Assisted living rate increase grows 4.65 percent — more than skilled nursing but less than home care
Gap between patient costs, reimbursements hits $11 daily
Why millions on Medicaid are at risk of losing coverage in the months ahead
Covid-19 created America’s next health care crisis: The cancers we didn’t catch early
Lifetime of knowledge can clutter memories of older adults
5 First Looks from 2022 Medicare Advantage Enrollment
SLEEPY HEAD Alzheimer’s: The sleeping position that slashes your risk of developing dementia
Studying This Could Slash Your Alzheimer's Risk, Experts Say
Taxpayers 65 and Older Eligible for Earned Income Tax Credit
Is it time to reimagine assisted living? These industry experts say yes
Retirees From Market Downturns: New Study
Long-term care financing success requires federal program, coverage across continuum: report
$200,000 sign-on bonus program seeks to entice nurse aides to long-term care

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Updated, Friday, February 18, 2022, 10:40 AM (Pacific)

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LTC BULLET: LONG-TERM CARE’S FUNDAMENTAL FALLACY

LTC Comment: We explain the fundamental fallacy that leads LTC analysts and policy makers astray after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors relative to individual, worksite and affinity LTCi. Advisors like his unique, simple and effective LTCi presentation. His revolutionary “Range of Exposure” tool protects financial planners by projecting the LTC cost (joint for a couple) and mean age of LTC based on age, gender, marital status, and success goal (the desired chance of not outliving assets), etc. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude.thau@gmail.com to discuss how he might help you. ***

*** ILTCI CONFERENCE NEWS: Organizers report “The Intercompany Long Term Care Insurance Conference has locked in our educational sessions schedule for our in-person conference at the Raleigh Convention Center from March 20-23. We will feature 49 sessions from seven disciplinary tracks. In addition to our educational sessions, our conference will have three days of networking events to help you reconnect with colleagues and reach out to decision-makers. With just under two months until it starts, we already have nearly 700 attendees and 70 exhibitors and sponsors.” Furthermore: “Sixty companies will host exhibit booths in our spacious exhibit hall in addition to ten innovators in our special Innovation Alley. Not yet registered to attend the conference? What are you waiting for? Register here. Rooms are booking fast, so please remember to book your hotel after registering. Book your hotel here. ***

*** *** RECENTLY PUBLISHED ARTICLES by Steve Moses. We hope you’ll read these articles, join the Center for Long-Term Care Reform, and help us solve the long-term care financing problem. The Center’s “Membership Levels and Benefits” schedule is here. Join individually or urge your company or association to join as a corporate member so you can receive all the benefits of membership at no cost to you. Universal access to top quality care for all Americans (the Center’s mission) is achievable. Join us and make it happen! ***

Watch for Steve’s latest article, titled “Trapped,” to appear in the February 23, 2022 edition of McKnight’s Long-Term Care News. He explains how “Long-term care operators are trapped in a public financing system that pays too little, expects too much, rewards cronyism, discourages creativity, punishes profit making, and disserves aging Americans.” He follows up with solutions that do not involve using government threats and compulsion to impose a universal, one-size-fits-all, tax-financed program.

“The Great Long-Term Care Compromise,” by Stephen A. Moses, Broker World, January 1, 2022

“The irony of long-term care advocacy,” by Stephen A. Moses, McKnight’s Long-Term Care News, December 17, 2021

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

*** JOIN US. Since 1998, the Center for Long-Term Care Reform has conducted and published dozens of national and state-level studies and published 1327 LTC Bullets. We’ve helped to win crucial federal Medicaid statutory changes in 1993 (mandatory estate recovery) and 2005 (capping the home equity exemption). We’ve analyzed and refuted virtually every study and article advocating a government takeover of long-term care. Now we’re proposing a simple, cost-saving solution to the long-term care mess government created. Won’t you join us and support these achievements, goals, and future potential? Become a regular or premium member. Or ask your company or organization to become a corporate member, with benefits accruing to you at no extra expense. Contact Damon at 206-283-7036 or damon@centerltc.com for details. Review our Membership Levels and Benefits schedule here. Let’s get this done! Thanks for your consideration. ***

LTC BULLET: LONG-TERM CARE’S FUNDAMENTAL FALLACY

LTC Comment: Many recent articles and reports insist that America needs a new, compulsory, payroll-funded social insurance program for long-term care. These proposals follow decades of similar studies and recommendations. They persist despite the universal failure of such initiatives from the Pepper Commission in 1990 through the CLASS Act of 2010 and the WA Cares Fund’s collapse this year. What drives the advocates of socialized long-term care? What keeps them trying in spite of universal rejection by voters? What underlies their persistence?

I think the answer is the social insurance advocates’ unquestioning acceptance of a fundamental fallacy about long-term care. My 1990 Gerontologist article titled “The Fallacy of Impoverishment” explained that misconception and provided evidence of the damage it causes. But to this day the same fallacy prevails among long-term care scholars and the politicians they influence. Today’s LTC Bullet briefly summarizes the fallacy of impoverishment and provides an example of how it misguides well-intentioned analysts who sincerely want to fix what ails America’s long-term care system.

The fallacy of impoverishment is the idea that people must be poor to the point of destitution before they qualify for government-financed long-term care. That idea prevails because Medicaid law and regulations seem to say that only people with low incomes ($730 per month) and minimal assets ($2,000) qualify. With draconian limits like that, how else could people become eligible for Medicaid besides spending down their life’s savings if they need expensive long-term care? They must spend down into impoverishment. They simply must. It’s so certain there is no need or reason to seek or cite evidence that it actually happens.

That’s the trap analysts fall into if they do not consider how Medicaid financial eligibility actually works and how it is expanded vastly further for people with wealth protected by legal experts. Medicaid does not require low income because private health and long-term care expenses are usually deducted from income before the low income standard is applied. The rule of thumb is that anyone with income below the cost of a nursing home qualifies. As nursing homes cost around $8,000 per month on average, people with substantial incomes routinely qualify for benefits. Others, with even higher incomes, qualify with advice from Medicaid planning experts by converting income-generating countable assets into exempt resources.

Likewise high assets are not necessarily disqualifying. Assets are easily converted from countable to exempt form by simply purchasing the latter with the former. Medicaid planners keep long lists of exempt assets which they advise their clients to purchase in order to “spend down” without actually depleting their wealth. Furthermore, the exempt assets that Medicaid recipients may retain are virtually unlimited. Home equity is capped at between $636,000 and $955,000 depending on the state, vastly exceeding the $143,500 median home equity of older people, but many other assets are completely unlimited. These include one vehicle, household goods, personal belongings, prepaid burial funds, term life insurance, a business including the capital and cash flow and Individual Retirement Accounts. On top of these routinely allowable assets, Medicaid planners use special annuities, Medicaid trusts, reverse half-a-loaf strategies and other sophisticated legal techniques to divert even more wealth from Medicaid asset limit consideration.

While these facts are widely known and available to anyone with an internet connection, just Google “Medicaid planning,” they are routinely ignored by long-term care scholars. The experts rarely acknowledge, much less cite, the extensive formal legal literature on Medicaid estate planning. They state that Medicaid requires impoverishment, but never cite evidence that people actually spend down significant sums for long-term care before becoming eligible for Medicaid. They ignore the evidence that widespread catastrophic spend down is clearly not happening. Such evidence includes the fact that nursing home private-pay financing has nearly disappeared, amounting recently to only 7.4 percent of total revenue and that out-of-pocket expenditures for home care are only 10.2 percent of total home care spending. Ask them for proof of the asset spend down they insist is commonplace and they blank out.

Let me give you one example of how the fallacy of impoverishment misguides analysts resulting in very bad judgments and recommendations. The case in point is an article titled “The Long-Term Care Challenge” by Robert P. Saldin in the Winter 2022 issue of National Affairs, “a quarterly journal of essays about domestic policy, political economy, society, culture, and political thought.” The American Enterprise Institute, a conservative think tank, publishes National Affairs which goes to show the “fallacy of impoverishment” is not limited to the political left. Following are quotes from the Saldin article followed by our comments.

Saldin: “LTC is expensive — so expensive that it can deplete a middle-class family's lifetime of savings in a few short years. Notably, the term ‘middle class’ here includes a vast demographic range, from those just over the poverty line to those maintaining six-figure retirement accounts decades after they leave the workforce. To be sure, once individuals have burned through their assets to the point of impoverishment, Medicaid swoops in to pick up the tab. But this intervention only shifts the burden to state budgets, which crowds out other spending priorities.”

LTC Comment: Saldin says LTC expenses “can deplete” lifetime savings, implying that it does but offering no evidence. He can give no evidence because there is none. The many analysts and scholars who write on this topic never cite empirical data to substantiate the assumption that private long-term care expenses impoverish wide swaths of the American public.

Saldin: “Of course, the United States already has robust social-insurance programs targeted at various vulnerable populations. Social Security hedges against elder impoverishment and homelessness. Medicare covers most health costs for the same demographic, while Medicaid does so for the poor. Rather than undermining freedom and economic dynamism, as some critics initially worried, these forms of social insurance have provided the kind of predictability and social continuity that free, dynamic societies require. Such public backstops also have the potential to neutralize the forces of polarization and populism that fuel calls for Washington to intervene more directly in the economy.”

LTC Comment: Whoa. Social Security and Medicare are unfunded by many trillions of dollars. Young people doubt they’ll ever see the benefits those programs promise. Medicaid, that program for the “poor,” actually supports the vast majority of middle class people and many of the affluent who need expensive long-term care. Medicaid strains state and federal budgets already although the age wave has only begun to crest. Those “robust” social insurance programs, financed by decades of monetary and fiscal profligacy, have already saddled American consumers with sky-rocketing price inflation. Surely this author cannot be proposing more of the same.

Saldin: “Recognizing the LTC challenge, the Biden administration recently proposed $400 billion in new funding to support home-care workers (that proposal was included in the House-passed Build Back Better legislation, albeit with a reduced price tag of $150 billion). While the initiative's emphasis on expanding options for home- and community-based care — as opposed to less desirable and more costly institutional care — represents a step in the right direction, it fails to address the core problem at issue: Americans are woefully ignorant of the likelihood of requiring LTC. Consequently, not enough healthy people pay into the system to make a robust private market viable. The ultimate objective, therefore, should be a universal national program to mitigate the catastrophic costs that drain state budgets and impoverish middle-class Americans.”

LTC Comment: Well, yes, there it is, the ultimate objective is yet another “universal national program.” First, the Biden “Build Back Better” plan fell flat because it was unsound fiscally and monetarily. Second, the idea that home and community-based care saves money has been proven wrong repeatedly. Home care is more desirable but does not save money because it delays but does not prevent institutionalization. The big problem is that Americans are “woefully ignorant” about long-term care? Nonsense, they’ve been barraged about the risk and cost of long-term care for decades. They just don’t believe it and they’re right. Medicaid pays. Do you begin to see how the fallacy of impoverishment underlies errors of analysis and fosters mistaken conclusions?

Saldin: “The key takeaway is that American society is rapidly aging, which means that our population is going to need far more support in the coming years and decades. Since LTC is so expensive for most Americans, that increased level of need poses a serious challenge. Without reform, the situation could impose significant constraints on America's dynamism and vitality.”

LTC Comment: Well, true, but how does relying on the government to print and spend a lot more money we don’t have help? We're seeing now how the cost of government “generosity”—creating money out of thin air and giving it to people to spend and letting the ineligible remain on Medicaid during the pandemic—has to be repaid. We’re no longer dumping this obligation only on our “children and grandchildren.” We’re paying for it ourselves through consumer price inflation, and will be doing for decades.

Saldin: “For those who aren't wealthy, LTC expenses can quickly exhaust personal savings. To the surprise of many, Medicare does not cover LTC expenses. This means that individuals and families are often paying out of pocket for care unless they are poor enough to qualify for Medicaid or are among the few with private LTC insurance.”

LTC Comment: There’s the fallacy of impoverishment again. We’re offered a presumption that LTC wipes out savings. No evidence; no citation. Poor enough to qualify for Medicaid? How poor is that? Not very according to the fallacy of impoverishment. Few people have LTCI? Why is that? The government has paid for most expensive long-term care since Medicaid began in 1965. Authors and papers like this one never ask the right question. Why is American long-term care such a mess in the first place? So they never put the blame where it belongs, on public policy that convinced the public they can ignore long-term care risk and cost.

Saldin: “Although there is considerable variation, the average person reaching the age of 65 will require $138,000 in LTC spending. Roughly half of Americans reaching age 65 will face ‘significant need’ — defined as being unable to perform multiple activities of daily living without assistance. For about 15% of American adults, the average cost will exceed $250,000 over the course of a lifetime.”

LTC Comment: $138,000? That’s the huge financial catastrophe driving our need to socialize long-term care? The same source (Favreault and Dey, 2016, p. 1) that came up with that total average need also said someone would only have to invest about $70,000 now to cover it in the future. Older Americans possess $9.2 trillion in home equity, which could lap up that small risk easily. $250,000 for 15%? That’s where private insurance would make the problem go away if it weren’t for the government obscuring the risk by paying for most expensive long-term care already through Medicaid.

Saldin: “The current system of LTC provision puts intense pressure on the middle class. Unlike the poor — who have few assets to spend down prior to reaching Medicaid eligibility — and the wealthy, who can finance their own care with relative ease, those in the vast middle have a lot to lose. About half of households aged 55 or over have retirement savings, but the median amount is just $109,000 [https://www.gao.gov/assets/gao-15-419.pdf]. For many families, a sum like that represents a lifetime of responsible saving, giving off the appearance of a healthy nest egg. But even average LTC expenses can eat through that amount in short order. Another 23% of households aged 55 or over have defined-benefit plans but no funds earmarked for retirement. Though many of these households are well above the poverty line, their plans are unlikely to provide enough funds to cover LTC costs.”

LTC Comment: Do you get it yet or does he have to say it for a fourth time? LTC wipes out middle class Americans’ savings all over the country. That’s a matters of faith, an assumption you must accept even though there is no evidence and Medicaid operates so that such catastrophic spend down is unnecessary.

Saldin: “In sum, the financial burden of our LTC-provision system falls squarely on the shoulders of a remarkably broad middle-class cohort that stretches from just above the poverty line to those who are still sitting on six-figure savings after a couple of decades of retirement. Medicaid provides a safety net, but qualifying for the means-tested program requires being in financial ruin. And even then, the economic burden doesn't go away; it's merely shifted from the individual to society.”

LTC Comment: OK, evidently we’re too stupid to have understood the first three times we were told this so a fourth was necessary. We’ve already shifted the long-term care burden to society? Then why would shifting even more help? The truth is we have already shifted most of the catastrophic burden to government. That’s why we have the current system’s problems: deficient access and quality, institutional bias, inadequate reimbursements, caregiver shortages, disappearing private payments and inadequate private insurance. Society, Medicaid, took the burden of long-term care off the shoulders of consumers and look what it delivered instead.

Saldin: “In addition to the political constraints it places on reformers, widespread ignorance regarding LTC has led America's patchwork system of LTC provision to be plagued by a classic case of adverse selection. Because there is relatively little interest in planning for LTC needs, the population interested in coverage is far more likely to already need care. This situation makes a non-mandatory program untenable, since there would be too few healthy people paying into the system to cover its costs.”

LTC Comment: It is not the public that’s ignorant about long-term care, but authors like this one. Of course a non-mandatory program is tenable; only a non-mandatory program is tenable. What he is saying is that freedom to choose does not work. That people must be forced by government to participate whether they see the value or not. Private insurance works for life insurance. It would work for long-term care also if government had not eliminated the catastrophic event which is the incentive to insure privately.

Saldin: “To re-conceptualize that system, reforming LTC should be understood as part of a broader effort to bolster the American social safety net in a way that promotes economic freedom and helps bring some much-needed stability to our democracy. As the Niskanen Center's Samuel Hammond has emphasized, combining free markets with a more universal system of social insurance can facilitate free enterprise by providing the kind of social continuity and certainty that are essential for sustainable economic dynamism.”

LTC Comment: What kind of Orwellian double speak is this? Compulsory payroll-funded government insurance makes us free? No, getting government to stop forcing us to do things against our will, things that hurt no one else, that’s what makes us free.

Saldin: “In addition to framing LTC reform as part of a broader effort to bolster the American social safety net, policymakers need to address the system's status quo, which leaves a broad swath of Americans vulnerable to financial ruin. This weakness is especially apparent when considering how people become eligible to receive assistance from Medicaid for LTC expenses. To do so, people must ‘spend down’ their savings until they are impoverished. Since wealth transfers are prohibited and Medicaid's five-year ‘look-back’ period is designed to ensure that applicants haven't, say, gifted money to family members, ‘spending down’ typically means spending assets on LTC until the Medicaid threshold is met.”

LTC Comment: I guess if you make the same false statement often and strongly enough, some people will begin to believe it.

Saldin: “These eligibility requirements hit the middle class the hardest. Poor Americans have few assets to burn through before qualifying for Medicaid, while the wealthy are often able to self-finance their care without significantly diluting their wealth. But for middle-class Americans hoping to pass on modest inheritances to family members, LTC expenses can be crushing. Reform efforts should seek to mitigate that risk while also recognizing that it's reasonable to expect middle- and upper-class individuals to make some provision for the likelihood they will have LTC needs as they age.”

LTC Comment: Thanks, I must have missed that point the first six times you made it. Do you begin to see why the whole argument authors like this are making relies entirely on the fallacy of impoverishment? Their conceptual framework falls apart without it.

Saldin: “Ultimately, meeting that challenge will require a national program focused on catastrophic LTC costs. But passing such a program is a heavy lift in our current political climate.”

LTC Comment: We already have a national program focused on catastrophic LTC costs. All we need to do is let it work the way it was intended to work by enforcing meaningful financial eligibility limits and recovering from estates so that people who fail to plan for long-term care and end up relying on Medicaid have to reimburse the government for the cost of their care. That is the “long-term care social contract.”

Saldin: “In the United States, the objective need not be a comprehensive program that covers every last dollar of LTC spending. Rather, reform should be geared toward the most daunting concerns facing individuals, families, and American society: the risk of financially catastrophic LTC expenses and the excessive burden LTC spending imposes on state budgets. A government-sponsored public program, or even a regulated private-insurance program that provides standard coverage for catastrophic LTC expenses, would go a long way toward addressing these challenges without expecting the public to provide complete protection for the assets of wealthy and middle-class Americans.”

LTC Comment: We already have that; all we need to do is enforce its rules: reasonable and universally enforced financial eligibility limits, liens to hold exempt property during Medicaid eligibility and later estate recovery to reimburse Medicaid with some of the savings going to incentives for private long-term care insurance.

Saldin: “The resulting program should address the high cost of institutionalized care. As noted above, shifting as much LTC as possible from institutionalized settings to home- and community-based settings is certainly desirable, but nursing homes will always be necessary, too. It is here that costs are highest and the burden on the middle class and Medicaid is greatest.”

LTC Comment: Private-pay nursing home revenue is down to 7.4%. Medicaid pays for most expensive long-term care. Home and community-based care does not save money.

Saldin: “Alternatively, individuals could be required to carry private, government-approved catastrophic LTC coverage. Subsidies would be needed to assist those with few assets, but this formulation would make certain that healthy and middle-class Americans would be funding at least some of their own LTC needs. Income-based premiums — already a feature of Medicare parts B and D — could further ensure that the middle class and especially the wealthy are contributing to their own LTC needs rather than leaving taxpayers to pick up the tab. Coverage could be structured like the private LTC insurance plans that are already available, which provide daily benefits of about $128 for five years.”

LTC Comment: Again with the compulsion, even for private insurance. And note the irony that Medicare, supposedly social insurance, is being welfarized by charging “income-based” premiums.

Saldin: “Again, the mandated coverage should be geared toward helping older adults with the kind of catastrophic expenses that lead to family impoverishment. Because the average stay in a nursing home is just under three years, individuals could be required to carry a plan covering that length of time. As noted earlier, a shared room in a nursing home costs about $93,000 per year, which could be covered with a daily benefit of about $250. Those living beyond the covered three years could become eligible for Medicaid immediately. This scenario would retain Medicaid as a key player in LTC spending but would dramatically reduce its obligations, thereby easing budgetary pressure on state governments. If participation was mandatory, premiums would be far more reasonable than those now available from private insurers.”

LTC Comment: Oh, impoverishment is a problem? Who knew? Why didn’t you say so? Compulsion again.

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Updated, Monday, February 7, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-005 LTC NEWS AND COMMENT

U.S. stroke rate declining in adults 75 and older, yet rising in adults 49 and younger
The second failed attempt at public insurance for long-term services and supports
CMS eyes 8% revenue increase for Medicare Advantage
Score on fatigue scale predicts 3-year likelihood of death in seniors
How Medicaid and Medicare Fit Into Planning for Long-Term Care
Genworth Plans to Start Selling Long-Term Care Product in Some States
U.S. national debt exceeds $30 trillion for first time
State effort to cover SNF care, other services falls short
Government watchdog give HHS an F for its COVID-19 response

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Updated, Friday, February 4, 2022, 10:40 AM (Pacific)

Seattle—

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LTC Comment: Long-term care financing is complicated. Here’s a key to help decipher it, after the ***news.***

*** ILTCI CONFERENCE NEWS: “The Intercompany Long Term Care Insurance Conference is excited to announce that Plug and Play Tech Center will sponsor and produce our closing Shark Tank session and an Innovation Alley section of our exhibit hall! Both will feature ten aging-in-place innovators! Join us March 20-23 for our in-person conference at the Raleigh Convention Center. With just under two months until it starts, we already have nearly 600 attendees and 70 exhibitors and sponsors. We have three days of events to help you reconnect with colleagues, reach out to decision makers, and attend our many educational sessions within our 7 different tracks.” ***

LTC BULLET: THE HISTORY OF LONG-TERM CARE FINANCING IN A SINGLE CHART

LTC Comment: The following chart shows percentages of total expenditures for nursing home and home care by source at the start of each new decade. The figures come from the Centers for Medicare and Medicaid Services (CMS) here. Just unzip the “NHE Tables” and refer to Table 15: Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2020 and Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2020.

After you review the chart, consider the comments that follow it.

OOP stands for “Out of Pocket”; PHI is “Private Health Insurance”; “Other” is a grab bag of smaller third party payers that are listed in a footnote to the CMS tables. A second, very small “other” category is also defined in the CMS tables but omitted here.

Nursing Home and CCRC
Year	Medicaid	Medicare	OOP	PHI	Other
1970	23.3	3.5	49.2	.2	22.3

1980	46.2	2.0	40.5	1.2	7.7

1990	36.7	3.8	40.1	6.0	11.1

2000	37.5	12.8	31.6	8.5	7.4

2010	33.0	23.0	26.4	7.6	7.2

2020	27.0	20.1	23.0	8.5	18.0

Home Care
Year	Medicaid	Medicare	OOP	PHI	Other
1970	6.7	26.7	9.4	3.0	52.7

1980	11.7	26.8	15.2	14.7	31.1

1990	17.1	26.1	17.8	22.8	15.9

2000	20.9	26.8	19.1	23.9	9.0

2010	36.0	45.0	8.2	7.2	3.1

2020	32.5	33.6	10.2	12.7	10.5

President Lyndon Baines Johnson and Congress created Medicaid and Medicare in 1965. So began the Great Society’s impact on long-term care financing. Here’s what happened next.

Nursing Home and CCRC

Early Years

By 1970, even though Medicaid had been paying for nursing home care for five years, it accounted for less than a quarter of the cost. Out-of-pocket expenditures were still high at nearly half but falling.

From 1965 until 1980, Medicaid had no restriction on asset transfers to qualify. Anyone could give away everything and become eligible immediately. The Omnibus Budget Reconciliation Act of 1980 permitted states to impose penalties for asset transfers done for the purpose of qualifying for Medicaid within two years of applying. But OBRA ’80 excluded exempt assets so it didn’t apply to seniors’ biggest financial resource, their homes. The Tax Equity and Fiscal Responsibility Act of 1982 corrected that omission by including exempt assets in the transfer penalty. TEFRA ’82 also allowed states to place liens under certain limited circumstances and to recover benefits correctly paid from recipients’ estates.

From 1970 on, out-of-pocket expenditures for nursing home care steadily declined, dropping from almost half to less than one-quarter in 2020. But don’t interpret that statistic to mean Americans still have to spend down their assets into impoverishment to pay for private nursing home care. Half of what CMS reports as out-of-pocket nursing home expenditures is actually spend-through of Social Security and other income that Medicaid recipients are required to contribute toward their cost of care. Analysts often assume that people routinely spend down their life’s savings on long-term care before becoming eligible for Medicaid. There is no evidence for that conclusion and they never cite any. It is very important to understand that Medicaid’s predominant role as a long-term care funder is heavily dependent on financing from Social Security and Medicare (as explained below), two highly vulnerable entitlement programs with trillions of dollars of unfunded liabilities between them.

Confusing Numbers

Medicaid’s share of nursing home expenditures is misleading. It doubled from 1970 to 1980, leveled out for three decades and then plummeted six percent in 2020. Medicaid is a much bigger factor in nursing home financing than those numbers imply. It covers almost two-thirds of all nursing home residents and nearly all of the most expensive long stayers. It pays about 80 percent of private pay rates, often less than the cost of providing the care. Thus Medicaid’s relatively small contribution to nursing home costs has a disproportionately large damaging impact on the program’s ability to pay for quality care.

Furthermore, CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding 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 percent in 2008 to under one-third (32.8 percent) in 2009 (as reported originally in those years by CMS). That is because CCRCs include independent and assisted living. Combining CCRCs, which are mostly private pay, with nursing homes, which provide most of the Medicaid-financed long-term custodial care for the elderly, had the effect of making Medicaid appear less a factor and out-of-pocket costs a much bigger factor in nursing home financing.

Medicare

What about Medicare financing of nursing home care? Piddling until it jumped to 12.8 percent in 2000, 23.0, in 2010, and 20.1, in 2020. What happened? In 1983, Medicare prospective payment for hospital care incentivized quicker and sicker discharges to nursing homes. Prospective payment for nursing homes, implemented in 1998, didn’t stop the expenditure growth. Why does it matter to long-term care since Medicare pays only for short-term sub-acute and rehabilitative care? Nursing homes depend financially on Medicare’s more generous reimbursement levels to make up for their losses on Medicaid’s low reimbursements for 63 percent of their residents. Without the 10 to 15 percent profit margins from their Medicare business, nursing homes could not survive Medicaid’s often less-than-cost reimbursements.

Public vs. Private Long-Term Care Financing

In 1970, Medicaid and Medicare paid 26.8 percent of nursing home costs. Other sources (see the CMS tables for the definition of “Other”) paid 22.3 percent. Private health insurance amounted to almost nothing,.2 percent. Nursing home residents and their families paid 49.2 percent. In the mid-1970s a fledging private insurance product began to appear designed to cover the risk of incurring catastrophic nursing home costs. By 2020, however, the share of nursing home and CCRC expenditures covered by Medicaid (27.0 percent), Medicare (20.1 percent) and Other sources (18.0 percent) had increased to 65.1 percent. Private health insurance added another 8.5 percent bringing third party coverage to 73.6 percent. Out-of-pocket expenditures had declined by more than half to 23.0 percent. Half of that came from income, not asset spend down. Consequently, private long-term care insurance, which prospered early on with over 120 companies marketing the product, began to decline by the late 1990s as out-of-pocket expenditures declined and third party funding from Medicaid, Medicare, private health insurance and Other sources increased.

What is “Private Health Insurance?”

If private long-term care insurance coverage has declined significantly since 2000, what is that private health insurance (PHI) that CMS says increased steadily from 1970 until 2000 and then leveled out at over 8 percent? According to CMS, PHI

[i]ncludes premiums paid to traditional managed care, self-insured health plans and indemnity plans. This category also includes the net cost of private health insurance which is the difference between health premiums earned and benefits incurred. The net cost consists of insurers’ costs of paying bills, advertising, sales commissions, and other administrative costs; net additions to reserves; rate credits and dividends; premium taxes; and profits or losses.

That definition does not mention private long-term care insurance by name. Is it included? The American Association for Long-Term Care Insurance reported that the “nation’s long-term care insurers paid out $12.3 Billion in claims during 2021.” That would be 6.3 percent of the $196.8 billion America spent on nursing home care in 2020. But AALTCI also says more “than two-thirds of new long-term care insurance policy claimants receive benefit payments covering care in their own home ….” Paid claims of $12.8 billion would be only 4.0 percent of the country’s total expenditure for nursing homes and home care in 2020. So, does PHI include private long-term care insurance? Who knows?

Why Pump OOP and Minimize Medicaid?

Why does CMS mix apples (custodial nursing home and home care mostly paid by Medicaid) and oranges (CCRC independent and assisted living mostly private pay)? Why are nursing home out-of-pocket costs (23.0 percent) reported so high and Medicaid costs (27 percent) so low, when nursing homes’ revenue mix is 50.7 percent Medicaid and only 7.4 percent private pay and their patient day mix is 66.2 percent Medicaid but only 8.2 percent private pay (NIC, Skilled Nursing Monthly Report)?

I think the intention is to make out-of-pocket costs appear higher and Medicaid costs appear lower. Why do that? To promote the idea that out-of-pocket nursing home costs are more onerous than they actually are and that Medicaid does less than it actually does to finance and influence nursing home care. Why do that? Because CMS bureaucrats, politicians, and policy analysts are biased toward public financing and against private financing alternatives. They rig the data to support proposals to expand public long-term care financing options, especially social insurance.

Home Care

The home care story is similar except out-of-pocket expenditures were never as large a factor as for nursing homes. In 1970, Medicaid (6.7 percent), Medicare (26.7 percent) and Other (52.7 percent) covered 86.1 percent of home care expenditures. Out-of-pocket costs were only 9.4 percent, less than one dollar out of 10. By 2020, Medicaid (32.5 percent), Medicare (33.6 percent) and Other (10.5 percent) were 76.6 percent of home care expenditures but private health insurance coverage had increased from 3.0 percent in 1970 to 12.7 percent in 2020 leaving only 10.2 percent of home care costs to be paid out of pocket. Still about one dollar in ten, leaving very little incentive to purchase private long-term care insurance against the risk of extended home care expenses.

Conclusion

Hopefully these observations and interpretations shed some light on the confusing state of America’s centrally planned, mostly public, and largely welfare-financed long-term care system. If not for the economic distortions created by that system’s lack of free-market price data, entrepreneurs and business people could imagine, design and implement better ways and means to meet the caregiving needs of aging Americans. As it stands, the age wave is cresting and about to crash while long-term care remains hamstrung by giant bureaucracies, self-serving politicians, and crony-capitalist operators. There is a better way.

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Updated, Monday, January 31, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-004 LTC NEWS AND COMMENT

With his signature, Inslee pauses WA Cares program for 18 months
What to Watch in Medicaid Section 1115 Waivers One Year into the Biden Administration
Question Answered
A ‘Medicaid annuity’ may be a useful option when your spouse needs nursing home care
Terry Savage: Retiree medical costs are soaring
Feds must deliver immediate $5 wage increase, relief payments for LTC workers, top provider group warns
How the Feds Handcuff States to Medicaid
‘Great retirement’ in U.S. driven by older female baby boomers
BREAKING NEWS: OSHA to withdraw COVID-19 vaccine mandate
80 is the mean age for long-term care insurance claims, study finds
Hospital discharge pressures build as nursing homes clamor for help
Why Medicare Doesn’t Pay for Rapid At-Home Covid Tests

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Updated, Monday, January 24, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-003 LTC NEWS AND COMMENT

California Is Planning to Eliminate the Asset Test for Medicaid Applicants
The $84T Wealth Transfer Underway Now, by the Numbers: Cerulli
What's next for beleaguered WA long-term care program?
State lawmakers fast-track long-term care tax delay, could be passed by next week
The big Medicare Advantage players keep getting bigger
LTCG Announces New Contract with CNA to Administer its Long Term Care Insurance Business
Informal Caregivers Provide Considerable Front-Line Support In Residential Care Facilities And Nursing Homes
If You Notice This in Conversations, Get Checked for Dementia
Working in long-term care can be hazardous to your health

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Updated, Friday, January 21, 2022, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE IRONY

LTC Comment: If long-term care is such a huge risk and cost, why don’t more people plan for it and how could better public policy fix that overnight? After the ***news.***

*** ILTCI CONFERENCE early-bird discount deadline extended until January 31, 2022. The Intercompany Long-Term Care Insurance Conference convenes “in-person” March 20-23, 2022 at the Raleigh Convention Center in Raleigh, North Carolina. You have 10 more days to lock in a $100 discount on the conference registration fee. Check out all the pricing details here. Register here. Organizers say “Don't miss out on key networking opportunities at the long term care industry's biggest event of the year. We have three days of events to help you reconnect with colleagues, reach out to decision makers, and attend our many educational sessions within our 7 different tracks.” ***

*** JOIN US. Since 1998, the Center for Long-Term Care Reform has conducted and published dozens of national and state-level studies. We’ve helped to win crucial Medicaid statutory changes in 1993 (mandatory estate recovery) and 2005 (capping the home equity exemption). We’ve analyzed and refuted virtually every study and article advocating a government takeover of long-term care. Now we’re proposing a simple, cost-saving solution to the long-term care mess government created. Won’t you join us and support these achievements, goals, and future potential? Become a regular or premium member. Or ask your company or organization to become a corporate member, with benefits accruing to you at no extra expense. Contact Damon at 206-283-7036 or damon@centerltc.com for details. Review our Membership Levels and Benefits schedule here. Let’s get this done! Thanks for your consideration. ***

LTC BULLET: LONG-TERM CARE IRONY

LTC Comment: The following article was originally published in Broker World magazine’s December 2021 issue. We thank editor and publisher Stephen Howard for permission to republish that column here. We strongly recommend Broker World to anyone working in the financing or provider sides of the long-term care profession. Subscribe here; only $6 for a year.

Steve Moses’s next Broker World column, in the magazine’s current (January 2022) issue, is titled “The Great Long-Term Care Compromise.” It proposes a simple public policy solution to the “long-term care irony” described below. Read it here.

Long Term Care Irony
by
Stephen A. Moses
December 1, 2021

“If you don’t buy long term care insurance, you could lose your life’s savings.”

We’ve heard that threat from government, private companies and the media for decades, but private long term care insurance has languished nevertheless. It wasn’t until a state government forced people to buy public long term care coverage through the WA Cares Fund that private policy sales exploded. Demand for private long term care insurance, as the only means to escape Washington State’s otherwise mandatory payroll tax, overwhelmed supply leaving many citizens of the Evergreen State trapped in a public program they would rather avoid. How ironic and contra-intuitive.

Let’s first put this puzzle into historical context and then resolve the incongruity by examining the almost universally held, but faulty premises on which it’s based.

Anyone who knows anything about long term care financing in the United States recognizes this mantra: Own long term care insurance or you may be impoverished by catastrophic care costs. Almost three of four Americans will need some long term care; one in four will face huge bills. All across the country people spend down into impoverishment until they slip onto Medicaid. That safety net only becomes available when people have been wiped out financially with no more than $2,000 left in savings and no more than $723 per month of income. Both the academic and popular media drum those warnings loudly and constantly into our ears.

Wow! How awful. You’d expect people to seek out and buy private insurance against such a risk without having to be cajoled by commissioned sales agents. But they don’t. How odd.

Finding that long term care’s high cost and Medicaid’s draconian financial eligibility rules weren’t enough to win consumers over, the state and federal governments hammered home the message with carrots and sticks. The long term care partnership program promised partial estate recovery forgiveness in exchange for buying private long term care insurance. Didn’t work. The “Own Your Future” long term care awareness campaign urged people to wake up and take action. They didn’t. Tax deductions and credits at the state and federal levels made private coverage cheaper. But even that didn’t work.

As positive incentives failed, the government tried negative persuasion. Policy makers figured making Medicaid even harder to get should sensitize consumers to the need for private insurance. The look-back penalty for asset transfers to qualify for Medicaid was lengthened and strengthened by federal legislation in 1982, 1988, 1993, and 2006. Congress and President Clinton made it a crime to transfer assets in order to qualify for Medicaid in 1996 only to repeal that “Throw Granny in Jail” a year later and replace it with the unenforceable “Throw Granny’s Lawyer in Jail” law in 1997. Medicaid estate recovery became mandatory in 1993. The home equity exemption was capped in 2006. None of these measures persuaded consumers that they should take personal responsibility to plan, save, invest or insure for long term care.

In fact, nothing worked to get the public to buy private long term care insurance until the State of Washington imposed a compulsory public program financed with a .58 percent supplemental payroll tax and promising a $36,500 lifetime benefit for state citizens. Although the state represented this program as a major contribution to solving the long term care financing problem and promised it would ease the public’s worries about long term care, as soon as a choice to “opt out” by purchasing private long term care insurance became available, Washingtonians stampeded to the exits. Private LTCI carriers were overwhelmed by the demand. Within weeks, private coverage became almost entirely unavailable in the state.

No amount of importuning, positive incentives, or negative threats prevailed. But let the government step in to force people to pay for public long term care benefits and all of a sudden private insurance enjoyed a fire sale. Is this just a one-off in Washington State or could it become a pattern as other states and the federal government experiment with compulsory public long term care programs? Should people and companies hurry to get in front of those experimental public programs by insuring privately? Will they? Or will the long term care irony prevail with denial and evasion continuing to hold sway?

It all depends on whether or not future state and federal long term care programs offer people a choice, an opportunity to opt out by purchasing private coverage. If they do, consumers will behave as they have done in Washington. If not, not. Why is that true?

The answer lies in the commonplace but faulty premises about Medicaid and long term care financing listed in the preceding paragraphs. Medicaid long term care eligibility does not require impoverishment. People can have incomes up to the cost of a nursing home plus virtually unlimited exempt assets and still qualify. Estate recovery is easy to evade. There is no evidence of widespread long term care spend down which is why the academic literature cites none. For documentation of these facts about how long term care financing really works, see Medicaid and Long-Term Care.

So here’s the answer to the “Long Term Care Irony.” People don’t buy private long term care insurance when the government pays for most catastrophic long term care costs, as it has done through Medicaid since 1965. No amount of cajoling, positive or negative incentives will get them to buy. But create a real cost for long term care by forcing them into a payroll-funded government long term care program and they’ll rush to buy private coverage if that escape hatch is available.

The lesson for state and federal central planners is this: If you must force people into mandatory payroll-funded long term care programs of dubious solvency, at least give them a way out by purchasing private insurance so we have some consumers able to pay their own way if and when the bottom falls out of the country’s many fiscally challenged entitlement programs.

Stephen A. Moses

425-891-3640 smoses@centerltc.com

Stephen A. Moses is president of the Center for Long-Term Care (www.centerltc.com). The Center promotes universal access to top-quality long term care by encouraging private financing as an alternative to Medicaid dependency for most Americans. Previously, Mr. Moses was president of the Center for Long Term Care Financing (1998-2005), director of research for LTC, Inc., (1989-98), a senior analyst for the Inspector General of the U.S. Department of Health and Human Services (1987-89), a Medicaid state representative for the Health Care Financing Administration (1978-87), a HHS Departmental Management Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970). He is widely recognized as an expert and innovator in the field of long term care.

He completed the “2008 National Long Term Care Consciousness Tour” traveling for a year and 28,028 miles while living in an Airstream trailer dubbed the “Silver Bullet of Long Term Care.” The LTC Tour promoted responsible long term care planning and rational long term care public policy.

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday, January 17, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-002 LTC NEWS AND COMMENT

House panel votes to delay Washington’s long-term care tax to 2023
BREAKING NEWS: Supreme Court stays OSHA vaccinate-or-test mandate for large private business
National Medicare Insurance Industry Conference Acquired: Connectiv Holdings and Insurance Forums Acquire National Medicare Insurance Industry Conference
Webinar on HCBS Settings Regulation: Where Are We Now and Where Are We Going
COVID-19 Hospitalizations Are Soaring for Working-Age People, Too
COVID-19 deaths among nursing home staff near all-time high
Seniors have less angst about personal finances than younger people: survey
Long-haul impacts on senior living — what to expect in 2022
Study: ‘Cognitive frailty’ may be result of aging — not the brain changes found in dementia
Regulators Aim to Curb Medicare Plan Lead-Generation Firms
Humana halves 2022 Medicare Advantage enrollment outlook
Dementia cases may triple globally by 2050: Study
Democratic lawmakers file 2 bills hoping to fix problems with Washington's new long-term care benefit
Health habits’ connection to dementia in the spotlight as new year begins
The Great Long-Term Care Compromise
Long-term care insurers pay out $12.3 billion in claims
Almost Half of CCRCs Plan to Downsize Skilled Nursing Footprint
Even After Covid, Could Congress Ignore The Long-Term Care Needs Of Older Adults?

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Updated, Friday, January 7, 2022, 10:40 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care Financing Update

LTC Comment: The political environment for long-term care financing is realigning. Policies impossible yesterday will become likely tomorrow. Read on after the ***news.***

*** ILTCI EARLY BIRD DISCOUNTS expire soon. So grab yours by January 14 to get $100 off the cost of admission. Conference planners report: “We have a full schedule in place for our in-person conference March 20-23rd at the Raleigh Convention Center in North Carolina. Our agenda includes over 45 educational sessions with ample time for networking and reconnecting with colleagues. Our session schedule is in the works right now and will be announced in February. We also still have some room for exhibitors and sponsors! Please contact us at info@iltciconf.org if you are interested in either opportunity to showcase your products and services to our attendees. Sponsorship Opportunities are going quick. ***

*** “THE GREAT LONG-TERM CARE COMPROMISE” is the title of an article by Center president Steve Moses in the current issue of Broker World. In it he proposes a radical new way to structure long-term care financing public policy. Here’s an excerpt: “The Great Long-Term Care Compromise invites social insurance advocates to relinquish their demand for compulsory universal participation. It requires free market advocates to agree with mandatory participation for all who do not opt out. If both sides can make those concessions, we can quickly get everyone covered for long-term care now and for the future.” Read the article here and let us know what you think. ***

LTC BULLET: LONG-TERM CARE FINANCING UPDATE

LTC Comment: Center for Long-Term Care Reform president Stephen Moses delivered the following presentation by webcast to staff and agents of GoldenCare on Wednesday, January 5, 2022.

Steve is available to address audiences on the past, present and future of long-term care by webcast or in person. Contact the Center for Long-Term Care Reform at 206-283-7036 or info@centerltc.com for details.

Good morning,

One year ago tomorrow I spoke to you about long-term care financing. That evening a mob penetrated the U.S. Capitol building. What a tumultuous year it’s been politically ever since.

Long-term care financing public policy is no exception. The country seems to have tiptoed up to the edge of a precipice in social policy … and then paused.

The Biden Administration’s Build Back Better plan would be the biggest expansion of America’s welfare state since the New Deal of the 1930s, as big if not bigger than the Great Society programs of the 1960s.

It looks now like Build Back Better, including its proposed $400 billion expansion of Medicaid home and community-based care, will either fail or be vastly scaled back.

The country seems to be stepping back from the brink of socialism. So it is a very good time to review the roles of government, on the one hand, and markets on the other in our economy.

What works best to make the most of America’s great resources? How does public vs. private financing impact our ability to provide quality long-term care for all Americans?

I know you’re interested in the Washington Cares Fund, its future prospects and its likely impact on the LTC insurance market.

I will cover that, but I want to put it into a broader context. What led up to WA Cares? Why has it dominated the headlines lately? What else is happening? Where is all this heading?

I’m going to cover six topics briefly. You can refer to the electronic outline GoldenCare is providing for details, including links to many published articles where I develop these ideas much more fully.

These are my six topics for today:

   1.   What is the LTC problem? I won’t spend much time on this as you are already experts.
   2.   Then I’ll discuss three approaches to correct the long-term care problem.
   3.   Third, in general, what’s better? Government or market-based solutions and why?
   4.   Next, how have government or market-based solutions actually played out in long-term care?
   5.   Fifth, I’ll mention some new research that suggests LTC isn’t such a huge problem after all.
   6.   Finally, I’ll suggest the best course for public policy going forward

So, first, what is the long-term care problem. In a nutshell, too many people living longer and needing help with activities of daily living for extended periods of time.

70% will need some long-term care, but only one quarter will require help involving catastrophic costs. Most of those extremely high costs are currently covered by government programs like Medicaid, Medicare and the VA. Those public programs are underwater financially already and extremely vulnerable in the future.

But private sources of long-term care financing are drying up. Private pay nursing home revenue is down to 7.4% from closer to half 50 years ago. Long-term care insurance never really caught on despite your best efforts. Home equity is rarely used to fund long-term care.

Families are suffering to provide care for “free.” Even paid caregivers are in short supply due to the hard, dangerous work, low wages, and vaccine mandates. Most people prefer home care but government pays primarily for institutional care.

It looks like all these problems are getting worse and worse. The pandemic exacerbated all of them.

So, second, what should be done? There are three primary options.

1. Do nothing. That’s an option we’ve not employed since the 19^th century. But, try this thought experiment:

What if there were no Medicaid program to pay for catastrophic long term care costs? How would consumers behave? Odds are people would worry about the risk of having a severe, expensive need for long term care in the future. They would save, invest, or insure to spread the risk. Unprepared people who were stricken would rely on private charity or use their home equity to fund care as most elderly own homes. Spending their own money for long term care, patients and families would seek home- and community-based care instead of nursing homes. With private asset spenddown, including potentially $9 trillion of home equity, flowing through the long term care services industry, access and quality of care would improve for everyone. Potential profits would supercharge entrepreneurs to discover and offer new and better care options. The relatively small numbers of genuinely needy people who remain could be served by private charity and/or a vastly scaled down public assistance program funded by a fraction of the savings from ending the Medicaid LTC program.

Voila! Problem solved. Except free market solutions are out of favor, so what’s another way?

2. Second, consider the “social contract for long-term care.” This is actually the system in effect now, although it is mostly unenforced. It goes like this:

If you are stricken by a need for long-term care that you cannot afford, we help you even if you are not poor. Assuming you’re eligible medically, and hold all but $2,000 of your assets in exempt form such as home equity, you’ll qualify for Medicaid long-term care benefits as long as your income is (1) less than the cost of a semi-private nursing home bed, about $93,072 per year, and (2) insufficient to cover your private uncompensated medical and long-term care expenses. But this benefit comes with the quid pro quo of mandatory estate recovery. So if you want to stay off Medicaid with all its shortcomings and avoid having to pay for it in the long run anyway, plan ahead and buy LTC insurance.

I won’t take time today to explain how and why even upper middle class people qualify for Medicaid LTC benefits without spending down assets significantly. You can find that in the outline and in many of my publications.

Why didn’t this “social contract for long-term care” work? The states didn’t implement estate recoveries effectively, the federal government didn’t enforce the program aggressively, the media didn’t publicize it. So the public remained in ignorant bliss, uninsured for long-term care, and ultimately dependent on Medicaid.

Now, MACPAC (the Medicaid and CHIP Payment and Access Commission) wants to water down estate recovery, making it voluntary and further debilitating the social contract.

Still, the social contract for long-term care is salvageable and may well be the course the country takes in the end.

3. Social insurance is the third approach to solving long-term care and by far the most popular option among what I’ve called the InLTCgentsia, the researchers, analysts, advocates, politicians, policymakers, etc. that are constantly opining about long-term care.

Social insurance is compulsory, universal and paid for by employers and workers through payroll deductions. Think of Social Security and Medicare. Every few years some author, commission or consortium proposes creating a new federal social insurance program to cover long-term care. Or they just want to shoehorn it into Medicare. These federal plans have always failed.

So now states are picking up the mantle. The one furthest along is Washington, the Evergreen State. The WA Cares Fund passed in 2019. It imposes a .58% payroll tax effective January 1, 2022 and promises to pay $36,500 to people who vest after 10 years of paying into it.

But before it could be implemented, WA Cares was hit by a storm of problems and opposition. Its opt-out escape hatch launched a fire sale of private LTC insurance that overwhelmed and quickly shut down the LTC insurance market in the state.

Besides being underfunded by about $15 billion, WA Cares required workers who live out of state who would not be eligible for benefits to contribute to the fund. Likewise, it made no provision for people who are about to retire and would pay in but not qualify for benefits.

These and many other problems led Governor Inslee only days before the program’s scheduled start to call a halt. Well, sort of. He enjoined the legislature to revisit WA Cares to try and fix its problems. Confusingly, he told employers they could either collect the payroll taxes or not, but regardless, they would be liable to pay them to the state if the legislature doesn’t repeal or modify the program to relieve them.

In other words, WA Cares is a total mess reminiscent of previous attempts to impose government social insurance for long-term care, such as the CLASS Act. Hopefully, other states reported to be considering a similar program are taking note and will back off.

A few of those states are …

(a) California

(b) Minnesota

(d) Maine

(e) Michigan

Why do all programs of this kind fail? What’s wrong with social insurance? The fundamental problem is that social insurance spreads risk, but does not price it. Everyone is charged the same “premium” or tax regardless of the risk they bring into the risk pool. So in effect, social insurance punishes good behavior with higher rates and rewards bad behavior with lower rates. It is inequitable. It treats some people (poor risks) better than other people (good risks).

Private insurance, on the other hand, spreads, but also prices risk. You pay more for life insurance if you smoke, for example. So private insurance rewards good behavior with lower rates and punishes bad behavior with higher rates. Private long-term care insurance ensures that beneficiaries pay only for the risk they bring into the risk pool. Private insurance is equitable. It treats everyone the same based on the risk they bring to the pool.

Why is social insurance so popular now after decades of failure to prevail? The answer is Modern Monetary Theory. The idea that government deficits don’t matter has taken over politics. No one cares anymore about the nearly $30 trillion national debt or that government spends each year almost double what it takes in through taxes, borrowing or printing the remainder.

Probably that whole house of cards will collapse in time. The resulting consumer price inflation flaring right now suggests the denouement is not far off. But in the meantime Modern Monetary Theory has seduced politicians and the experts who advise them. Until it does collapse, we’ll see more and more efforts at the state and federal level to impose long-term care social insurance programs on the country.

Now, for our third topic of the day, what is the fundamental difference between government solutions and private sector solutions to social problems like long-term care?

Private-market forces prevail in independent living, somewhat less so but predominantly, in assisted living and further less but considerably in home care.

Government funding and regulation prevail in home care, skilled nursing and, less so but significantly, in assisted living.

By most measures, the more market-based independent and assisted living sectors fare better economically over time than the more government-dependent nursing home and home health sectors.

Why is this so? Certain fundamental economic principles apply. Government is public, collectivist and bends toward socialism. Markets are private, individualistic and they’re maximized by capitalism.

Government subjects can only vote yes or no (that is, they accept) this or that politician or ballot measure with no gradations for preference, amount or quality. But in the market, free-acting consumers vote with their dollars (that is, they choose) whatever they want in the quantity and quality they desire.

In government, politicians compete by satisfying interest groups with benefits paid for by others, and with quality and efficiency notoriously absent. In markets, entrepreneurs compete by creating or identifying and meeting consumers’ needs based on quality and efficiency.

In government, the Federal Reserve sets interest rates based on balancing political powers and influence resulting in asset bubbles, malinvestment and economic inequality. In markets, millions of transactions between willing buyers and sellers create spontaneous economic order, set interest rates (the price of money) through supply and demand, and generate price data that tell investors and businesses how much of which products and services to produce.

Because of long-term care’s heavy reliance on centrally planned government financing, America’s long-term care system does not produce the price data investors would need to allocate resources in the most productive and beneficial way.

For these reasons, the less government controls long-term care and the more markets prevail, the better off consumers will be.

Our fourth topic of the day examines this point more closely. How do these principles play out specifically in the field long-term care?

The history of long-term care is a tension between public and private financing. Medicaid made public financing of long-term care easy to get after care is needed. It paid not only for long-term care, but also for health care, room, board, and laundry.

Consequently, the public didn’t worry about long-term care, didn’t buy insurance for it, and ended up on Medicaid. Government costs exploded. Access and quality suffered. Nursing home care prevailed despite the public’s preference for home care. In other words, government made a mess of long-term care.

The private sector—markets—have mitigated some of this damage. Assisted living came along in the 1980s and offered nicer facilities at half the cost of nursing homes, but fully private pay. People were actually willing to pay out of their own pockets to avoid Medicaid nursing homes.

Unfortunately, the assisted living industry is following nursing home down the primrose path of accepting Medicaid. ALF operators figure it’s better to get Medicaid’s low reimbursement than to have an empty unit. 16.5% of ALF residents receive Medicaid now and it’s growing.

Home care is similar. Government has failed to “rebalance” from nursing homes to home care despite decades of trying. But home care companies like Amada, for example, routinely search for customers who have LTC insurance, help them get all the benefits they’re entitled too and counsel them on using home equity or life settlements to fund their care privately as well. In other words, the private sector plays a critical role in helping consumers find ways to pay privately for the home care they prefer, but government has failed to provide.

Government went a long way to ruin LTC insurance by giving away what producers are trying to sell and by forcing interest rates to zero which compelled carriers to raise premiums, which alienated LTCI prospects and clients.

The private sector did the right thing, raising premiums to ensure benefits would be paid when due, unlike Social Security and Medicare which have huge unfunded liabilities and will never keep the promises they’ve made.

The private LTCI market licked its wounds and responded creatively with new hybrid products.

In other words, what government fouled up, the private sector goes a long way to fix. The lessons of long-term care history are clear. Public programs have diverted the public from responsible planning and left too many people dependent on welfare-financed nursing home care. The private sector has interceded repeatedly with preferred options such as assisted living, private insurance and home care.

Our fifth topic is new research that concludes long-term care may not be such a titanic problem after all.

Recent research shows that half of people turning 65 will incur LTC expenses, those expenses will average only $138,000, and that the people needing long-term care could handle that cost by investing only $70,000 today. That doesn’t sound so intimidating.

Other research shows 74% could fund two years of paid home care by liquidating all of their assets, and 58% could fund two years of extensive paid home care.

Of course people will not liquidate their assets to pay for LTC as long as Medicaid financial eligibility works the way it does. So, fix Medicaid. Don’t impose a massive new compulsory payroll tax on everyone to fund a universal program that isn’t needed.

NIC, the National Investment Center, says reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year would expand the middle market for seniors housing by 3.6 million individuals enabling 71 percent of middle-income seniors to afford the product.

Where could consumers find that extra $15,000? The LTCI premium for an annual policy of $15,000 would be a tiny fraction of the premiums consumers find so financially daunting now. Unfortunately, insurance regulations forbid carriers from offering coverage with a benefit of less than $18,000 per year. So, fix LTCI regs.

We should explore further the possibility that private LTC insurance, home equity conversion, and private savings could meet this less daunting challenge of providing quality long-term care to most Americans if government would just get out of the way.

Finally, our sixth and last topic of the day. What is the best course of action going forward?

Stop doing what we’ve always done that created long-term care’s problems. Reduce government’s role in financing and regulating long-term care. Cut federal financial participation in state Medicaid programs. Enforce Medicaid financial eligibility rules and estate recovery. Eliminate or radically reduce Medicaid’s home equity exemption to encourage the use of home equity conversion to fund long-term care privately. Close Medicaid financial eligibility “loopholes” and discourage Medicaid estate planning as inequitable, favoring the well-to-do over the poor.

Encourage personal responsibility for long-term care. Use some of the savings from tightening Medicaid to incentivize responsible LTC planning. Consider recommendations from NAIC’s 2017 report “Long-Term Care Federal Policy Options to Present to Congress” such as … Permit distribution from 401(k), 403(b) or Individual Retirement Account (IRA) to purchase LTCI with no early withdrawal tax penalty. Consider the AHIP proposal to allow employers to offer long-term care insurance under a cafeteria plan.

Publicize Medicaid’s estate recovery obligation. Make sure the public understands LTC is a personal responsibility: you either pay now or pay later. Encourage all forms of private LTC financing: Savings and investment. Private LTC insurance, both traditional and hybrid. Reverse mortgages and other kinds of home equity conversion. Life settlements also.

Finally, consider “The Great LTC Compromise.” That’s the title of my article in the current, January 2022 issue of Broker World magazine. If we can’t stop the drive for federal or state level LTC social insurance, then let’s at least demand they maintain an opt out by purchasing private LTCI. That ensures at least some people will be protected when the social insurance “entitlement” programs become insolvent.

I’ll conclude there but before we go to questions, let me just say a few words about my organization, the Center for Long-Term Care Reform.

The Center is a private think tank dedicated to ensuring access to quality long-term care for all Americans.

We do research and public policy advocacy aimed at convincing consumers to take the risk of long-term care seriously and plan early to save, invest and insure against that risk.

We publish two online newsletters, LTC E-Alerts and LTC Bullets.

We conduct and publish national and state-level studies and reports.

We speak at conferences and testify before state legislatures and Congress.

The Center is a membership organization with individual memberships beginning at $150 per year.

For more information, go to www.centerltc.com or contact me at 425-891-3640 or smoses@centerltc.com.

Thanks for your attention. That’s a lot to digest in a short time. Do you have questions?

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Updated, Monday, January 3, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-001 LTC NEWS AND COMMENT

Update: Exemption statistics for state’s long-term-care fund, payroll tax
Federal Government Approves California's Medicaid Overhaul
Washington Long-Term Cares Fund Update: Employers Advised to Withhold Premiums Starting January 1
‘Medicaid for All’ is rapidly becoming a reality in New York
Study finds abrupt decline in the prevalence of cognitive impairment among older Americans
Inslee statement on payments collected for long-term care program
WA’s Long-Term Care Insurance on Hold
Nursing Homes Bleed Staff as Amazon Lures Low-Wage Workers With Prime Packages
Washington State Delays Long-Term Care Program Launch

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Updated, Monday, December 20, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2020 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. But first …

*** THE CENTER FOR LONG-TERM CARE REFORM announces a new in-person or Zoomed program by Stephen Moses covering LTC services and financing. What works, what doesn’t, why, and what to do about it. Including …

So What if the Government Pays for Most Long-Term Care?
What Happened to WA Cares and Why it Matters
How to Square the LTC Circle
The Great LTC Compromise
The Irony of Long-Term Care Advocacy
What works for long-term care and what doesn’t
What’s better for senior living and care — the market or government
Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable
Should Medicaid Protect $8 Trillion from Private Senior Living Costs?
“The InLTCgentsia”—How it ruined long-term care
And much more

Start the new year off with a motivational long-term care convention-busting program by the fountainhead of creative LTC policy thinking. Zoom Steve’s presentation for $1,500 or bring him to your live program in person for $2,500 plus travel expenses. Steve says “there’s never been a more promising time to reinvent long-term care financing than right now, but we must come together, agree on the plan, and shout it from the electronic rooftops.” Call (425-891-3640) or email smoses@centerltc.com to schedule this electrifying program for your agents, members, employees and staff. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2020 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 2020 statistics on its website at NHE Tables (ZIP). Click on that link to download the tables, unzip them, then click on the data tables of interest, Tables 14 and 15 for our purposes.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending In 2020: Growth Driven By Federal Spending In Response To The COVID-19 Pandemic." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free. Unfortunately, the Health Affairs summary has little to say about long-term care, so read on to get that story.

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 have published all year. It is the nineteenth 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, 2020 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 $196.8 billion on nursing facilities and continuing care retirement communities in 2020, a 14.0% increase over 2019. The percentage of these costs paid by Medicaid and Medicare has gone up over the past half century (from 26.8% in 1970 to 47.1% in 2020, up 20.3 % of the total) while out-of-pocket costs have declined in the same period (from 49.2% in 1970 to 23.0% in 2020, down 26.2% 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 1970-2020.

So What? Consumers' liability for nursing home and CCRC costs has declined by over half, down 53.3% in the past five decades while the share paid by Medicaid and Medicare has increased by three-quarters, up 75.7%.

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 $636,000 and in some states up to $955,000 of home equity (as of 1/1/22). 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 (and CCRC) care (27.0% of the dollars in 2020), it covers two-thirds (66.3%) of all nursing home patient days.

So What? Medicaid pays in full or subsidizes nearly two-thirds 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. “With states setting the Medicaid rates paid to nursing centers, there is a wide variation in the percentage of costs covered by the rates. In 2015, the coverage ranged from a low of 73.5 percent to a high of 100 percent. A similar range exists with the 2017 projected shortfall across the states.” (Latest available data) Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 8.5% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2020. 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 providers. 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? According to the Genworth Cost of Care Survey for 2020, ALFs cost an average of $51,600 per year, up 6.15% from 2019. Although assisted living facilities remain mostly private pay, “48% of ALFs are Medicaid certified” and only “a small minority of state Medicaid programs do not cover services in assisted living.” Over time assisted living facilities have followed nursing homes down the primrose path of accepting more and more revenue from Medicaid.

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 $636,000 or $955,000 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 $123.7 billion on home health care in 2020, up 9.5% since 2019. Medicare (33.6%) and Medicaid (32.5%) paid 66.1% of this total and private health insurance (not LTC insurance) paid 12.7%. Only 10.2% 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 1970-2020.

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:

Medicaid and Long-Term Care (2020) at http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf

“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-Cbassandra-Quandry.pdf.

“How to Fix Long-Term Care,” a series of briefing papers, 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 cresting 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 20, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-044 LTC NEWS AND COMMENT

Payroll tax meant for long-term care delayed
The irony of long-term care advocacy
Inslee, Leaders Opt to Pause Washington Payroll Tax
Here’s How Not to Reform Long Term Care
Health spending growth more than doubled in first year of pandemic
Obsessive-Compulsive Disorder and the Risk of Dementia
Terrible staffing competition will worsen: survey
Number of MA plans offering home care benefit to skyrocket in 2022
Average net worth per generation
Dual Eligible Beneficiaries Prefer Medicare Advantage Over FFS
How record Social Security cost-of-living adjustment will be impacted by high inflation, Medicare premiums
Post-acute care in nursing homes is increasingly out of reach for many, study finds
Recap of Dec. 10 commission meeting on long-term-care law
Opposition to state long-term care tax ramps up ahead of January implementation
Are Medicaid annuities sound crisis-planning tools?
Who will have unmet long-term care needs?

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Updated, Friday, December 17, 2021, 10:40 AM (Pacific)

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LTC BULLET: SQUARE THE LTC CIRCLE

LTC Comment: How can we get government and private industry working together on long-term care financing? The answer after the ***news.***

*** ILTCICONF.ORG reports “Registration is Now Open for the 2022 Intercompany Long Term Care Insurance Conference! Our in-person conference will be March 20-23rd at the Raleigh Convention Center. Our agenda includes over 45 educational sessions with ample time for networking and reconnecting with colleagues. Register now to save $100 on your registration during our early bird. We still have room for exhibitors and sponsors! Please contact us at info@iltciconf.org if you are interested in either opportunity to showcase your products and services to our attendees.” ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses. We hope you’ll read these articles, join the Center for Long-Term Care Reform, and help us “Square the LTC Circle.” The Center’s “Membership Levels and Benefits” schedule is here. Join individually or urge your company or association to join as a corporate member so you can receive all the benefits of membership at no cost to you. Universal access to top quality care for all Americans (the Center’s mission) is achievable. Join us and make it happen! ***

“Long Term Care Irony,” by Stephen A. Moses, Broker World, December 1, 2021 (PDF version.)

“What works for long-term care and what doesn’t,” by Stephen A. Moses, McKnight’s LTC News, November 17, 2021.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue. (PDF version.)

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, The Hill, June 10, 2021.

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“The social contract for long-term care,” by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. ***

LTC BULLET: SQUARE THE LTC CIRCLE

LTC Comment: What does it mean to “square a circle?” Answer: construct a square equal in area to a given circle (a problem incapable of a purely geometric solution). In other words, do something that is considered to be impossible.

What does it mean to “square the long-term care circle?” Answer: find a way to get the government and private industry working together, instead of at cross purposes, to solve the long-term care financing problem.

That is a very tall order. For decades, at least since the implementation of Medicaid in 1965, government and private insurance have tackled long-term care financing with different, often contradictory approaches.

Government sought to provide long-term care to people who need but cannot afford it. So Medicaid offered nursing home care to anyone with an income below the cost of care and allowed them to retain practically unlimited exempt assets while receiving the benefit.

Easy access to Medicaid long-term care benefits after the insurable event occurred desensitized the public to LTC risk and cost leaving most Americans unprotected by private savings or insurance and dependent eventually on public assistance.

Attempting to pull the economy out of the “Great Recession” of 2008, government (the Federal Reserve) forced interest rates to near zero and kept them there still in order to encourage more capital investment and spending.

But those low interest rates crippled LTC insurers’ ability to obtain actuarially anticipated returns on reserves and forced them to raise premiums which alienated beneficiaries and prospects causing the market to implode from 120 carriers to around a dozen.

Bottom line, government and private insurance have pursued common goals by irreconcilable means for decades. That problem may be about to worsen exponentially.

Frustrated by the growing population in need of long-term care, by the exploding cost of providing that care and by the tremendous financial and emotional stress on family caregivers, the state and federal governments are leaning toward imposing mandatory, payroll funded long-term care social insurance programs on their populations.

That of course would be the death knell for private long-term care insurance. Why pay premiums for private coverage when the government has already compelled you to pay for it through taxes?

But here’s the problem with that “solution.” According to a recent Gallup poll, “Americans' opinions of capitalism have generally been stable over the past decade, with around six in 10 having a positive view of capitalism and slightly fewer than four in 10 having a positive view of socialism.”

In other words, the public doesn’t want more socialism. When governments try to impose more compulsory social insurance programs like Social Security and Medicare, voters rebel against their huge unfunded liabilities and doubtful ability to provide the benefits they promise.

Rather, the public prefers capitalism, free markets, individual responsibility and choice, which private long-term care insurance provides.

So, are government and private insurance hopelessly at loggerheads? Maybe not. Recent developments with Washington State’s foray into long-term care social insurance suggest a way to resolve their differences and square the LTC circle.

Politicians in the Evergreen State pushed through WA Cares to compel state citizens to contribute .58% of payroll in order to fund their long-term care in the future. But they gave people an escape hatch. Buy private LTC insurance by November 1 and you can avoid the tax forever.

To escape the tax, Washingtonians stampeded to buy the private coverage. That caused so much demand that overwhelmed private LTC insurance carriers had to shut down the market leaving thousands unable to get the coverage they needed in order to avoid the State’s new tax.

Chaos ensued and today it looks like the WA Cares Fund will fail as have its predecessors including the CLASS Act.

In the meantime, states all across the country are reported to be following Washington State’s lead by developing long-term care social insurance programs of their own, compelling their citizens to pay up for long-term care whether they want to or not.

The big question is whether these developing programs will or will not include the escape hatch that Washington offered. If they don’t, they’ll wither and die eventually as all social insurance programs are doomed to do. If they offer the opt out, they can square the LTC circle. How?

If state and federal governments insist on forcing people to prepay for long-term care through payroll deductions, they should leave open the choice to opt out by purchasing private long-term care insurance. Such a system captures everyone either coming or going in the long-term care financing net.

But don’t make the mistakes Washington made. Offer the opt-out early so that as many people as want to can purchase private insurance to avoid the tax. Establish a certain minimum amount and quality of private coverage to qualify. Review the coverage annually to ensure it remains in place. If private coverage lapses, revoke the payroll exemption.

This policy squares the LTC circle by getting all the potential benefits of a mandatory public insurance system while eliminating the downside of forcing people into the public program by giving everyone who prefers private coverage a way to remain independent and personally responsible.

Voila! We have everyone protected for long-term care without relying on universal compulsion. Few will remain dependent on Medicaid so its costs will plummet relieving taxpayers. Access and quality will increase across the care continuum as more revenue flows through the service delivery system. More paid caregivers will receive living wages bringing relief to financially and emotionally stressed caregiving families.

LTC circle squared!

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Updated, Monday, December 13, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-043: LTC NEWS AND COMMENT

Advocates Sound Alarm About Pilot Program They Say Could Privatize All of Medicare
The Difference Between Elder Law and Estate Planning
Welcome to long-term care insurance. You want some sanity with that?
2022 SSI and Spousal Impoverishment Standards
Increasing Medicaid’s Stagnant Asset Test For People Eligible For Medicare And Medicaid Will Help Vulnerable Seniors
Medicaid Expansion Alone Not Associated With Improved Finances, Staffing, Or Quality At Critical Access Hospitals
Can Viagra Prevent Alzheimer's?
Long-term prognosis and educational determinants of brain network decline in older adult individuals
Long-term care providers get help from National Guard

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Updated, Monday, December 6, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-042: LTC NEWS AND COMMENT

Washington’s long-term care tax could be delayed after Inslee shows support for bill tweaks
Paragon Health Institute
Some States Taking Matters Into Their Own Hands to Curb Price Gouging Staffing Agencies
Greater use of unpaid caregivers post-hospital raises questions about shift to home care, study suggests
Freedom in the 50 States
Long Term Care Irony
Long-term care tops list of retirement concerns of American workers: study
When Should Family Caregivers Apply for Medicaid for a Loved One?
As opposition grows, Washington’s long-term care tax to see fixes in Legislature this session

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Updated, Friday, December 3, 2021, 10:40 AM (Pacific)

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LTC BULLET: HOW TO PREPARE FOR THE COMING WAVE OF GOVERNMENT LONG-TERM CARE PROGRAMS

LTC Comment: Ironically, a wave of state-level social insurance programs may unleash the private LTCI market at long last. We explain after the ***news.***

*** SHOPPER’S GUIDE MIS-DIRECTS: Lynn Voss of longtime Center friend and corporate member GoldenCare reports that the Shopper’s Guide to Long-Term Care Insurance, the 2022 Medicare and You publication, and the NAIC website have undergone modifications that left some of their hyperlinks to critical information about LTC insurance dysfunctional. We join her in calling on the powers-that-be to fix the problem. Simply redirecting the broken links to links that work would resolve the matter without having to recall and correct the publications. What’s worse than clicking on a link to information you desperately need and getting sent to a “404 Page Not Found” error? ***

*** LTCIrony: For more on the theme of today’s LTC Bullet check out Steve Moses’s column titled “Long-Term Care Irony” in the current issue of Broker World magazine. ***

LTC BULLET: HOW TO PREPARE FOR THE COMING WAVE OF GOVERNMENT LONG-TERM CARE PROGRAMS

LTC Comment: My first reaction to the WA Cares Fund, Washington State’s revolutionary experiment in state-level LTC social insurance, was very negative: LTC Bullet: The Keystone Kops of LTC Insurance. The program’s clumsy design, inept execution, and dangerous precedent were very worrisome. It seemed like the fondest hopes of the analysts, advocates and politicians who have abandoned free market principles of private insurance in favor of compulsory socialist plans that have failed everywhere they’re tried were being realized.

Then a strange thing happened. Citizens of the Evergreen State stampeded for the exits as soon as the WA Cares Fund offered a way to opt out of the program. Purchase private LTC insurance by November 1 and you can avoid forever the compulsory payroll tax and mediocre benefits of the public plan. A fire sale of private long-term care insurance ensued, like nothing that market had ever seen. Demand quickly overwhelmed the ability of private LTCI carriers to supply the product. Untold numbers of Washingtonians were left uninsured and trapped in a program the state’s citizens had twice voted against, rejecting it at the ballot box in 2019 and refusing to fund it with risky investments in 2020.

Other states, including California, Hawaii, Maine, Michigan, and Minnesota, are reported to be planning programs similar to Washington’s. Unable to lure federal lawmakers down the primrose path of yet another underfunded national program like Social Security and Medicare, many state politicians want to take that challenge on themselves. They’re swimming in excess revenue now thanks to the explosion of economic activity created by the Federal Reserve’s artificially low interest rates and easy money. Like Washington State’s pols who are ignoring their program’s $15 billion dollar actuarial shortfall, lawmakers in other states assume the artificial bubble economy producing the current tax windfall will go on forever.

It won’t! It isn’t, as the current inflation surge shows. But what can we do in the meantime to mitigate the damage of these misguided social insurance programs? That’s the subject of today’s LTC Bullet. ACSIA Partners inspired the following white paper titled “How to Prepare for the Coming Wave of Government Long-Term Care Programs.” Read and heed it while there is still time to anticipate and adapt to the next market-disorienting curveball to come from state and federal policymakers.

How to Prepare for the Coming Wave of Government Long-Term Care Programs

America faces a long-term care financing crisis. Much of the growing financial burden will fall on employers and employees as state and federal governments mobilize to provide home care, assisted living and nursing home care for a rapidly increasing elderly population through employee payroll taxation. It behooves businesses to get in front of the long-term care challenge by establishing private insurance plans before their options are limited or closed by new government initiatives as is happening now in Washington State. This white paper explains the problem and offers a solution.

What to Do? Decades of special long-term care commissions, research studies and proposals have failed to fix the existing system. The Pepper Commission, 1990; the Medicaid Commission, 2006; and the Commission on Long Term Care, 2013 all struggled with the long-term care problem but were unable to mobilize sufficient political support to implement major changes. Lately, however, a consensus among scholars and politicians has formed around pursuing a social insurance approach to long-term care reform. The plan is to address long-term care problems with a mandatory, payroll-funded program financed by employees and/or employers paying into a trust fund on the model of Social Security and Medicare.

Status of Reform. The federal government and several states, including California, Hawaii, Illinois, Maine, Michigan, Minnesota and Washington, are exploring various forms of social insurance to address the long-term care challenge. So far, only Washington State has implemented such a program. The WA Cares Fund provides a case study in the difficulty of conceiving, designing, implementing and enforcing a compulsory social insurance program at the state level. It is a wake-up call for citizens, employees and employers throughout the country to think, plan and prepare early for long-term care before new government programs restrict or close off existing options.

The WA Cares Fund. The State of Washington is implementing the country’s first social insurance program for long-term care. Mandatory employee payroll deductions of .58 percent of gross wages begin/began January 1, 2022. The proceeds of this tax will go into a trust fund from which the state promises to pay beneficiaries, who have paid into the fund for at least 10 years or otherwise qualify, up to $100 per day to cover long-term care expenses, but with a lifetime limit of $36,500. Individuals may opt out of paying the extra payroll tax by showing proof of qualifying private long-term care insurance no later than November 1, 2021.

Fraught with Problems. From its conception, the WA Cares Fund has faced opposition from voters, workers and employers.

Their concerns include:

The Long-Term Services and Supports (LTSS) Trust Commission’s failure to heed a voter ballot advisory opposing the program
The trust fund’s 75-year, $15 billion shortfall
The Commission’s plan, voted down last year but to be offered to voters again, to close the budget deficit by investing the trust fund in riskier securities than the state otherwise allows
The inadequacy of the $36,500 total lifetime benefit
The inability of program beneficiaries to take their earned benefits with them if they move out of Washington State
Confusion and late decisions about whether and how workers can opt out of the program by purchasing private long-term care insurance.

The Opt-Out Alternative. The original 2019 state law creating the program now called WA Cares Fund did not include an option not to participate. In April of 2021 the state legislature approved a one-time opportunity for workers to avoid the payroll tax by showing proof no later than November 1, 2021 that they own comparable private long-term care insurance. With little more than half a year for the opt out alternative to be clarified, publicized, and sought by workers, the burgeoning demand for private coverage quickly overwhelmed the long-term care insurance carriers’ ability to underwrite it. On August 30, 2021 National Public Radio reported “Long-term care insurance companies have temporarily halted sales in Washington. The move follows a frenzy of interest … prompted by a November 1 deadline to opt out of a new state-run long-term care program.”

For those Washingtonians who have obtained private long-term care insurance and qualified for the WA Cares Fund exemption, it is important to be aware of this new language recently added to the WA Trust website – “Make sure you save your insurance policy, because you may need to provide it in the future. But you won’t need it for this exemption application.” The implication is that the state may require proof the insurance remains in effect to validate the exemption in the future.

Other states have indicated that they may establish an opt out date prior to the implementation date to avoid anti-selection; in effect, residents of these states would have to have coverage in place prior to the announcement of their state plan to avoid the payroll tax.

The Insurers’ Dilemma. Long-term care insurers, including life insurers with hybrid product (life insurance with a long term care rider) offerings, are in business to provide coverage for suitable customers who want it, so extra demand for their product was welcome. But because the new demand surged in such a short time, they were unable to accept, review, underwrite and approve such a huge number of policies by the November 1, 2021 deadline. One carrier received more applications in one week than in the previous two years. Concern arose that people eager to avoid the payroll tax might try to purchase policies otherwise unsuitable to their needs. In response carriers began placing restrictions on policies sold in Washington such as: minimum daily benefits, mandatory inflation protection, ceasing the sale of facility-only policies, minimum issue age, even a charge back of agent commissions if premiums are unpaid in the second year of policy ownership. Precisely who and what will qualify for the opt out remains in limbo as the Washington State Employment Security Division (ESD) has not yet provided definitive guidance.

The Employers’ Dilemma. The short implementation schedule of the WA Cares Fund caught many Washington employers unaware. Forward-looking Employee Benefit insurance brokers were advising some of the US’ largest companies’ human resources departments to act quickly to advise their personnel about the new payroll tax and to offer opt-out solutions. Large, mid-sized and smaller companies were blind-sided as were out-of-state firms that have employees in Washington State. Since the WA Cares Fund is still sorting out who must pay the payroll tax, who can opt out and exactly how, any company with employees in Washington is stymied in how to accommodate the new mandate.

On a Positive Note. The growing interest in new government programs to fund long-term care is awakening consumers to the need for private LTC protection. The threat of added deductions from their take home pay incentivizes workers to seek quality private coverage in order to avoid potentially problematical public coverage. It should also inspire their employers to get ahead of the curve in order to avoid the kinds of problems created by delayed clarification and implementation of the WA Cares Fund.

Act Now. Insurance distributors are receiving more calls from employers and Employee Benefit Brokers, especially in states that are considering programs like the WA Cares Fund. Business executives and entrepreneurs see what is happening in Washington. They want to get ahead of the issue by setting up worksite long-term care insurance programs for employees now. By doing so, when the government comes to offer a compulsory public long-term care program, many of their employees will already be protected. Neither their company nor their employees will have the problems encountered in Washington.

The goal of sharing this white paper with you is to outline the very real financial and physical capacity problems the insurance industry had in accommodating the unprecedented demand for coverage as the result of the implementation of the WA Cares Fund. As other states are contemplating implementing similar programs, we will inevitably experience the same problems, and if deadlines are set prior to the launch of a given state's program, we will be in a situation where we cannot provide a solution to avoid a payroll tax or similar funding mechanism.

As we encourage you to get in front of this issue by having the conversation with your employer clients, the message is the same to them: let's get in front of this problem and discuss the implementation of a carefully planned long-term care program.

Contact ACSIA Partners to begin the process.

Author Stephen A. Moses is president of the Center for Long-Term Care Reform, www.centerltc.com. Reach him at smoses@centerltc.com.

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Updated, Monday, November 29, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-041: LTC NEWS AND COMMENT

Senior living, home most frequent destinations after hospital discharge of Medicare beneficiaries
When You Go Home for Thanksgiving
Long-term care tax exemption applicants told not to worry about latest email
State is painting lipstick on its one-of-a-kind, long-term-care law
A payment program that should be fixed, not nixed
As $2 trillion Build Back Better Act heads to Senate, senior living industry seeks more
Experts propose new Medicare payment model that emphasizes collaboration between nursing homes, hospitals
Half of Americans fear falling more than cancer and want to age in home without stairs
What’s in store for the Long Term Care Act?
BREAKING NEWS: OSHA suspends implementation of COVID-19 vaccine mandate for businesses
Lawsuit Seeks To Overturn Washington State’s Public Long-Term Care Insurance Program
Unfunded Nursing Home Mandates in 'Build Back Better Act' Will Worsen Historic Staffing Crisis
What works for long-term care and what doesn’t
A Clever Strategy to Get Your Long-Term Care Costs Covered by Medicaid
Payment, regulatory and staffing reforms could emerge from effort to ‘reimagine’ care for older adults
Nursing homes can now lift most COVID restrictions on visits

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Updated, Monday, November 15, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-040: LTC NEWS AND COMMENT

US announces big hike in Medicare premiums
A list of trouble for Washington state’s long-term-care law
Repeated listening to favorite music induces beneficial brain plasticity in Alzheimer’s patients
Opinion | ‘We Don’t Fix This Because We Just Don’t Care About Old People’
Medicare Advantage's cost to taxpayers has soared in recent years, research finds
No cognitive gains from ‘brain gaming’ found in studies of older adults with dementia
Class action lawsuit filed against new WA long-term care tax
Long Term Care Industry Facing Worst Job Loss Among All Health Care Providers
More than 2,000 nursing homes earn top U.S. News ratings
Pandemic Takes Its Toll On Caregivers
How to Restructure Your Assets to Qualify for Medicaid

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Updated, Friday, November 12, 2021, 10:40 AM (Pacific)

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LTC BULLET: AMADA KEYNOTE

LTC Comment: Amada is a model for home care delivery and financing from which Medicaid should learn. Details follow the ***news.***

*** WA CARES FUND problems dominate the news as these three recent LTC Clippings indicate:

11/1/2021, “Leaders are saying — and writing — the magic word in regard to a misguided long-term-care law: ‘repeal’,” by Elizabeth Hovde, Washington Policy Center
Quote: “Momentum is building to repeal the Legislature’s unpopular long-term-care law and accompanying payroll tax that starts in January. A Nov. 1 press release announces that Reps. Joe Schmick, R-Colfax, and Peter Abbarno, R-Centralia, have drafted legislation to repeal the law, a Washington Policy Center recommendation, calling the long-term-care program it creates ‘unfair,’ ‘inadequate’ and ‘insolvent,’ and rightly pointing out that the payroll tax is ‘regressive.’ The draft legislation has the support of House Republicans.”
LTC Comment: Given that Washington voters have twice rejected the WA Cares Fund, this legislation to repeal it has a good chance to succeed.

11/1/2021, “Initiative could change Washington's controversial long-term care fund,” by Drew Mikkelsen, King 5

Quote: “Backers of an initiative to change the state’s new long-term care fund, called the WA Cares Fund, said they are not having trouble getting signatures. ‘Just say we're trying to make the long-term care tax optional. That's all you have to say is that one sentence and they go, ‘Where do I sign?'‘ said Cary Condotta, co-founder of Reform Washington, the organization behind I-1436. … If enough signatures are turned in by the end of the year for the initiative to reach the Legislature, lawmakers would have three options: make the program optional, send the issue to the voters next November, or offer an alternative to the initiative to voters.”

LTC Comment: Freedom to choose? Naw, can’t have that, say Washington State legislators.

11/9/2021, “Class action lawsuit filed against new WA long-term care tax,” by Rachel La Corte, Associated Press
Quote: “Opponents of a mandatory payroll tax to fund Washington state’s new long-term care program filed a class action lawsuit Tuesday in federal court seeking to stop the January start of the payroll premium for most employees in the state. … Among the arguments made by the suit is that the WA Cares Fund violates a federal law that forbids the state from passing any law that requires employees to participate in a plan that provides sickness or medical benefits. It also says that the disparate treatment of people paying the tax but not receiving benefits if they are not a Washington resident violates the Equal Protection and the Privileges and Immunities clauses of the U.S. Constitution.”
LTC Comment: Latest on the WA boondoggle. ***

*** LTC CLIPPINGS are a benefit received my premium members ($250 per year) of the Center for Long-Term Care Reform. Center president Stephen Moses scans the academic and popular media for critical studies, articles and data LTC professionals need to know. He sends an average of two brief email messages per day (like the ones above) to subscribers. Regular Center members ($150 per year) receive a weekly LTC E-Alert compendium of the previous week’s LTC Clippings. Both options provide members a way to stay on top of critical news and information so they are not blindsided by clients who have important knowledge before they do. Join the Center here. ***

LTC BULLET: AMADA KEYNOTE

LTC Comment: Amada Senior Care provides home care through franchisees. CEO Tafa Jefferson reports that over half the company’s clients own private long-term care insurance. Amada seeks out LTCI owners to become clients and then assists them to obtain all the benefits they’re entitled to under their policies. When more funding is needed, Amada helps customers explore home equity conversion and/or life settlements. If only Medicaid thought more creatively about diverting consumers away from dependency on public assistance.

Center for Long-Term Care Reform president Stephen Moses delivered the keynote address to Amada’s annual franchisees’ conference in Dana Point, California on October 27. After celebrating the company’s creative approach to private home care financing, he delivered the following remarks.

Amada Keynote Address
by
Stephen A. Moses

Most high-cost long-term custodial care is funded by Medicaid and is still delivered primarily in nursing homes. Quality is problematical because Medicaid often pays less than the cost of providing the care. When you’re losing money on every patient, you can’t make up for it in volume. But it seems like that’s exactly what many politicians want to attempt.

Most people prefer to “age in place.” I expect one of your biggest challenges is to find people to provide home care. Paid caregivers are in short supply. The pandemic made the shortage critical. But, what’s the problem?

It’s a steady job; lots of overtime; you’re doing God’s work. On the other hand, caregivers work long hours, move heavy objects and clean up smelly messes--for fast-food wages. Who wants to stay home and watch Netflix when you could be changing bedpans and turning patients?

You’re in this whirlwind business of coordinating and providing long-term care in the home. So I expect you often feel more like contestants in the Squid Game.

My Background

I attend a lot of big long-term care conferences. The keynoters are usually mountain climbers, motorcycle CEOs, or they come from some other exotic background. I congratulate you on picking someone with many years of work experience in long-term care.

I’ve been working in this field for about forty years. Let me tell you a little bit about that journey to establish my bona fides and give you a little background on the history of long-term care insurance and how its prospects have been affected by government policies.

I first got involved in 1982 as a U.S. government employee working in the Seattle regional office of the Health Care Financing Administration, the now defunct predecessor of the Centers for Medicare and Medicaid Services.

I did research about Medicaid and long-term care in the states of Oregon and Idaho. I concluded Medicaid was doing more harm than good and that it was stifling the market for a then new and promising product called long-term care insurance.

My HCFA bosses didn’t like that conclusion. They thought regional office staff shouldn’t be doing policy studies, so they threatened me with negative personnel actions if I kept distributing my report.

But it was too late. The HHS Inspector General and the Government Accountability Office liked what I’d written and both agencies went on to conduct similar studies on a national level.

In fact, the Inspector General hired me out of HCFA to conduct its national study based on my findings in Region 10. Recommendations from the IG’s resulting 1988 report became federal law in the Omnibus Budget Reconciliation Act of 1993.

Those changes included longer and stronger transfer of assets restrictions for Medicaid eligibility and mandatory estate recovery. The idea was to aim Medicaid toward the truly needy so others would have a stronger incentive to plan ahead and insure for long-term care.

In the meantime, a small long-term care insurance brokerage in Seattle called LTC, Inc. had just received a big contract from American Express to take its local marketing strategy national. They hired me as their Director of Research in 1989.

I published a lot of articles, conducted several state and national studies many of which are linked on your electronic handout, and gave numerous speeches, but in 1995 General Electric bought American Express’s long-term care business. A couple years later GE also bought LTC, Inc.

Suddenly I was working for a giant international company which put the same kinds of restraints on me that I left government to escape. To do the kind of disruptive research and advocacy I’d become known for, I could not be under the thumb of corporate overlords worried I might say something to the media that could embarrass them.

So, I told GE: “You need me doing what I do, but I can’t do it working for you. So give me the money to start an independent think tank and I’ll pursue research and advocacy that will help you market your product. After all, you can’t sell long-term care insurance on one side of the street when the government is giving it away on the other.”

So I founded the Center for Long-Term Care Financing as a 501c3 charitable non-profit in 1998, but I quickly learned I couldn’t afford to be a non-profit. It was too expensive to keep all those records and too bothersome to maintain a Board of Directors that always wanted to tell me what to do. So the Center became a for-profit, more accurately a no-profit, in 2005.

In that same year, we had another opportunity to impact federal law. The American Health Care Association, the big nursing home lobby, hired me to work half time in DC promoting policies that would return Medicaid to the needy and incentivize others to save, invest and insure so they could pay privately for long-term care. Seattle to DC was a long commute, but that’s what I did for six months, two weeks on and two weeks off.

We succeeded. The Deficit Reduction Act of 2005, actually passed in 2006 when Vice President Cheney flew in from overseas to break a tie in the Senate. It put the first cap ever on Medicaid’s home equity exemption and unleashed the long-term care partnership program that California Congressman Henry Waxman had hamstrung years before.

These were important steps in the right direction, but they didn’t solve the problem. Most Americans still ignored the risk and cost of long-term care until they needed it and then slipped quickly and easily onto Medicaid. So we turned our efforts to waking the public up.

In December 2007, I teamed up with some industry sponsors, bought a silver FJ cruiser and a 16-foot Airstream trailer, plastered it with corporate decals and headed out on a 16-month “National Long-Term Care Consciousness Tour.” I did a lot of radio, TV and print interviews, trained insurance agents, gave speeches to community groups and, really, addressed anyone who would listen about the importance of long-term care planning.

When the Silver Bullet of Long-Term Care and I visited Met-Life’s Connecticut headquarters, they greeted me with this video. Would you play it please Rick? [Play video.]

I guess you could call me the Nomadlander of long-term care.

Then in March of 2009, my wife of 45 years, was stricken with a glioblastoma. That’s an aggressive form of primary brain cancer, the same disease that took Ted Kennedy and John McCain. Suddenly, I went from speaking about long-term care in the abstract to delivering it in the most concrete ways for the next 20 months.

That experience, along with guiding my own and my late wife’s parents through the shoals of aging and long-term care, sensitized me intimately to what we’re all dealing with in this issue.

In the past 16 years we’ve made little further progress toward getting people to take the risk and cost of long-term care seriously and early enough to prepare for it. The number of carriers offering the product has declined from over 100 to about a dozen.

In fact politicians and policy analysts have drifted toward a very different model. They want to fund long-term care with compulsory social insurance funded with payroll deductions that go into a “trust fund” like Social Security and Medicare. I’m afraid that would be like trying to extinguish a fire by dousing it with gasoline.

So here’s the big picture: long-term care is a huge risk and cost yet most people don’t worry about it until they need it. Then, because they have not prepared financially, they drift toward public programs that mostly provide institutional care and pay too little to ensure quality.

America and Americans are prosperous, especially now that the Federal Reserve has printed so much new money. Yet very little of that money finds its way into funding the kind of home-based long-term care people prefer.

Puzzling Questions

Does all this seem a little incongruous to you? It does to me. It raises several questions in my mind:

(1) All the studies show that the vast majority of Americans prefer to age in place, at home not in nursing homes or assisted living facilities. And yet, our long-term care system remains institutionally biased. Why?

(2) When they’re spending their own money, consumers gravitate toward home and community-based care. So …

Why do so many people rely today on underfunded public programs and so few pay privately?

Why has private-pay declined to 7.1% of nursing home revenue (5.9% in urban areas)?

Why are assisted living facilities accepting more Medicaid residents despite that program’s extremely low reimbursement rates?

Why are out-of-pocket expenditures only 11% of home health costs?

(3) If the risk and cost of catastrophic long-term care spend down is wiping out life savings all across the country, as the academic journals and popular media are constantly telling us, why is the public still asleep about that risk and cost? Why is private long-term care insurance so hard to market?

(4) We know Medicaid is a means-tested public welfare program with apparently stringent income and asset eligibility limits. So, how is it that once people need expensive long-term care, they quickly become eligible for Medicaid?

(5) America is awash in wealth. According to Federal Reserve data, the median net worth for Americans in their late 60s and early 70s is $266,400. Seniors hold over $9 trillion in home equity alone. Why are huge potential sources of private LTC financing, such as home equity and private insurance, only minor contributors to long-term care providers’ revenue? (Present company excepted with regard to the insurance.)

Those are the thorny questions I propose to answer for you this morning.

But, I have my work cut out for me: First I want to persuade you that a lot of what you know about long-term care policy is wrong. Then I need to convince you that what I’m going to explain is actually correct.

Mark Twain said it best: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

My Story

The best way I know to explain these things is to tell you the story of how I learned them.

In the early 1980s, I was the Medicaid state representative for Oregon in the Health Care Financing Administration.

My job was to ensure that Oregon’s Medicaid program complied with federal rules and regulations. I led an annual program assessment to ensure that was the case.

During one of those assessments, I came across a program that puzzled me. Oregon’s estate recovery unit was collecting enough from deceased recipients’ estates to offset 1.7 percent of total Medicaid vendor payments and five percent of the cost of the state’s Medicaid nursing home expenditures. $3.8 million was still a lot of money in 1981.

Remember, back then, Medicaid was all nursing home care. I actually helped Oregon’s Senior Services Division implement the first Medicaid home and community-services waiver program in the country. That’s where the decades-long campaign of rebalancing Medicaid long-term care from nursing homes to home care began.

Now, here’s the quandary that jumped out at me. If Medicaid is welfare and you have to be poor to get it, how did so many people spend so much time in Oregon’s nursing homes on Medicaid, but the state still collected all that money from their estates?

This contradicted everything I thought I knew about Medicaid. Back then, as now, the conventional wisdom about long-term care and Medicaid went something like this.

“The risk and cost of long-term care is huge. People are spending down into impoverishment all across the country if they need extended care. When they run out of money, they turn to the Medicaid safety net. But Medicaid pays mostly for nursing home care, which people don’t want. They want home care, but too few can afford it. Private long-term care insurance could have helped finance home care, but it failed because it’s too expensive and complicated. The public remains largely ignorant or in denial about who pays for long-term care. So government keeps picking up more and more of the tab. Therefore, most conclude, government should pick up the whole tab.”

Does that about sum it up?

This peculiar state of affairs sent me to the library to study Medicaid eligibility rules and the long-term care financing market. What I found blew me away.

Medicaid does appear to have stringent income and asset limits, but that’s an illusion. The apparent income limit of $730 per month is obviated by the fact that Medicaid subtracts applicants’ personal health and long-term care expenses from their income before comparing the result to that low income limit.

The rule of thumb nationally is that anyone (well, anyone 65 or older with a qualifying medical need) with an income of less than the monthly cost of a nursing home qualifies for Medicaid. That can easily be $7,000 per month or $84,000 per year. Definitely not “low income.”

The truth about Medicaid long-term care income eligibility is that people do not need to be low income to qualify. They only need to have a cash-flow problem due to high personal health and long-term care expenditures. That is a condition most older people find themselves in once they need expensive long-term care.

Medicaid’s eligibility rules governing assets are similarly misleading. The academic and popular literature focus on the seemingly draconian resource limit of $2,000 and conclude people must be spending down huge amounts of wealth to qualify. But that $2,000 limit only applies to “countable” assets like cash, bank deposits, stocks and bonds, in fact anything easily convertible to cash.

But older Americans hold most of their wealth in assets that Medicaid considers “non-countable,” including home equity. Medicaid exempts between $603,000 and $906,000 of home equity depending on the state. According to recent research, that exemption prevents virtually all elderly Americans from having to use their home equity to fund their long-term care.

Besides the home equity exemption, which at least has an upper limit, Medicaid also exempts the following with no dollar limit: one automobile, prepaid burial plans, personal belongings including heirlooms, term life insurance, one business including the capital and cash flow, and Individual Retirement Accounts if they’re in payout status as most are for older people because of the Required Minimum Distribution rules.

The quickest and easiest way to become eligible for Medicaid long-term care benefits without spending down for care is to convert countable assets into exempt resources by purchasing the latter with the former. The lawyers who help affluent clients qualify for Medicaid benefits maintain long lists of exempt assets which they encourage the clients to purchase.

Medicaid planning attorneys also have a well-stocked armory of special legal trusts, annuities and so-called “half-a-loaf” strategies they use to qualify even wealthier clients for Medicaid.

I expect you’ve heard about this kind of “Medicaid planning” and scratched your heads. Who in their right mind with the wealth to purchase quality long-term care in the best and most appropriate venue would choose instead to “game” Medicaid and end up in the kind of underfunded welfare-financed facility you read about in the newspapers. That’s an objection I hear often.

But there are reasons why this happens. By the time elderly people need long-term care, they are often too infirm physically or cognitively to make their own decisions. Their adult children, that is to say their heirs, who have a financial conflict of interest, are in control. What is not spent on Mom and Dad’s long-term care will go to the heirs.

Nevertheless, most adult children do have their parents’ best interests top of mind. But the lawyers who advise them say not to worry about Medicaid’s poor reputation. They’ll get Mom and Dad into the best facilities that only have a few Medicaid beds.

How do they do that? They hold back some “key money” to ensure the client can pay privately for a few months. Nursing homes receive about half again as much from private payers as from Medicaid recipients, so they roll out the red carpet for people who can pay cash. After a few months, the family’s lawyer flips the legal switch and, voila, Medicaid takes over paying.

The sad truth about Medicaid planning is that poor people, for whom Medicaid is supposed to be a safety net, get wiped out financially very quickly because they don’t know the tricks of qualifying for Medicaid and don’t have access to special legal advice. So they end up in the least desirable nursing homes that rely mostly on Medicaid’s penurious reimbursement rates.

Answer the Questions

Let’s answer the questions we posed earlier:

1. Why do most people prefer home care but end up in nursing homes? Medicaid started paying for nursing home care, including room, board, medical care and laundry facilities, in 1965. Ostensibly stringent financial eligibility rules are actually very generous and elastic. Stories of catastrophic long-term care spend down are just anecdotal. There is no empirical evidence to prove that problem is widespread. So analysts cite none. No wonder people don’t worry about long-term care until they need it.

2. Why has private pay nearly disappeared from nursing home revenue? Why are assisted living facilities tempted to accept Medicaid? Why is so little home health care funded privately? Because government co-opted long-term care financing with well-intentioned but perversely counterproductive policies.

3. Why is the public still asleep about long-term care risk and cost? Why is long-term care insurance so hard to sell? Because consumers have been able to ignore the risk, avoid the premiums, wait to see if they ever need extended care, and if they do, get the government to pay. As undesirable as the care government pays for may be, at the point of facing catastrophic costs, it’s not hard for the elderly, and their heirs to justify qualifying for Medicaid. Any port in a storm.

4. How do so many financially comfortable people become eligible for Medicaid so quickly and without spending down significantly? Medicaid’s financial eligibility rules devastate the poor who lose everything quickly but welcome the middle class and affluent who have legal and financial advisers to guide them.

5. Why does the richest country in the world not tap the two biggest potential sources of private long-term care financing? Medicaid exempts nearly all home equity. Without their biggest asset at risk for long-term care, few people buy insurance to protect it.

What Can We Do?

What can we do to fix this ailing long-term care market?

What are policy analysts and the politicians who listen to them doing about this? Not much. They never ask “how did we get into this mess?” so they never discover that government funding and regulation are the primary causes. They just recount all of the dysfunctions afflicting long-term care and insist we need a bigger, better, compulsory, payroll-funded social insurance program. If their models, to wit Social Security and Medicare, were not under water by trillions of dollars in unfunded liabilities already, maybe they’d have a case to make. As it is, programs like the Washington Cares Fund and the federal WISH Act proposal only make you want to say “Oh no, here we go again.” I’ve analyzed those programs in articles cited in your handout. Ironically, the WA Cares Fund ignited a long-term care insurance fire sale by offering an exemption from its otherwise mandatory payroll tax for people who can show proof they have private long-term care insurance by November 1. The resulting demand for the product overwhelmed the insurance industry’s ability to meet it. The market shut down before the hundreds of thousands of people who wanted the exemption could qualify for it by purchasing a private policy. I have a column coming out in Broker World next week titled “LTCIrony.” [Publication of this article was delayed until Broker World’s December issue.]

What are LTC insurance carriers doing about these policy issues? Not much. The carriers have been very creative modifying their policies to deal with common objections. The newer “hybrid” policies, for example, counter the “what if I don’t need it” complaint, by returning a payment whether beneficiaries need long-term care or not. But there’s not much they can do about the “too expensive” objection. Fire insurance wouldn’t be cheap either if every fourth house burned down. With regard to the issues we’ve identified today as inhibiting the long-term care insurance market, the carriers and their industry groups have been mostly silent. Either they don’t get it or they’re too scared to offend the powers that be. I’ve made the case to them that they should support me and the Center for Long-Term Care Reform. We can say what needs to be said and advocate for the policies that are needed. And we’re not required to disclose our contributors, nor do we do so.

What are the long-term care providers and their trade associations doing about this? Again, not much. Their principle revenue sources are Medicaid and Medicare. Virtually all of their lobbying effort goes into asking for more money from those sources. It’s hard to think about the big picture and the need for major public policy changes when you’re struggling to keep the doors open for another month. I think the most promising source of support for better long-term care policies is companies like yours that would benefit tremendously from more private payers and less public funding.

What am I doing about this? I figure it’s really very simple actually. We want people to take the risk of long-term care seriously and buy insurance in case they ever require a long, expensive bout of care. So, the government should stop giving away what the insurance industry is trying to sell. Require people to use their home equity, through reverse mortgages or other methods, to fund their long-term care before they turn to public safety net programs.

Give the safety net programs back to the poor whom they were originally intended to serve. Do this and huge new revenue will flow into the service delivery system, most people will get the kind, quality, and type of care they prefer by paying privately; Medicaid will serve fewer, cost much less, and people still dependent on public assistance will also get better care because of the increased private revenue going to providers.

What’s Standing in Our Way?

I mentioned earlier that we made great progress changing federal law in 1993 and 2005, but we’ve made little or no progress in the last 16 years since. Why? What’s changed?

In the 1990s and early 2000s, politicians still cared about fiscal responsibility. Remember the “Contract With America” in 1994 and the worries about excessive spending and skyrocketing debt that ensued when the dot-com bubble burst?

Back then, we were able to get the powers that be to listen about ways to reduce government long-term care expenditures while simultaneously improving care for rich and poor alike. That’s our mission after all.

But nowadays no one seems to care about excessive government spending. The Federal Reserve just prints more money to cover whatever the U.S. government wants to spend.

It’s as though our public officials are guided by Modern Monetary Theory. It says that a country borrowing in its own currency can accumulate unlimited debt without creating a problem unless or until inflation flares.

Well, in case you haven’t noticed, inflation is finally flaring. So the Fed’s monetary policy of meeting every financial crisis—including the dot-com collapse, the 2008 housing bust, and the Covid recession—with more money printing, spending and debt may be slowly ending.

Ironically, while the politicians want us to believe that their big spending plans will be paid for by the wealthy, the truth is that inflation, the most pernicious tax of all, which hits low income people hardest, will be the price we pay for decades of careless monetary and fiscal policy.

The only silver lining in that cloud is that once inflation forces policy makers to refocus on responsible public policies that keep spending under control and incentivize personal responsibility, saving and private insurance, perhaps then our proposals regarding Medicaid and long-term care will have a better chance to succeed.

Want to Learn More?

Now, I think I know what’s on the tips of your tongues right now. Tell me Steve, how can we learn more about all this? If that is the case ….

I would refer you to two of my recent publications. Both are monographs. The first is titled “How to Fix Long-Term Care Financing.” It presents the material I’ve covered today, but it also includes a long annotated bibliography of books, elder law treatises and law journal articles on Medicaid planning. I think you’ll be amazed how vast and sophisticated that literature is.

The other monograph is titled “Medicaid and Long-Term Care.” It presents my argument and evidence in a more formal, scholarly way with abundant citations to the peer-reviewed academic literature on long-term care to make and substantiate my points.

Finally, you can find over 1300 of my articles, we call them “LTC Bullets” archived chronologically and by topic at the Center’s website, www.centerltc.com.

The Center is a membership organization, so please consider joining and working with us to achieve these goals. Amada is a member in good standing.

I think I’ll stop there. Thank you for your attention. I will be around the rest of the day and this evening. If you have any questions, please find me and ask them.

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Updated, Monday, November 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-039: LTC NEWS AND COMMENT

Resourceless vaccine rule could have ‘disastrous’ impact on long-term care
Genworth Might Resume Long-Term Care Insurance Sales by July
Democrats reach a breakthrough deal on drug prices, as spending bill nears the finish line
Many Now Use Life-LTC Hybrids to Pay for Care: Genworth
Leaders are saying — and writing — the magic word in regard to a misguided long-term-care law: ‘repeal’
Initiative could change Washington's controversial long-term care fund
Family feels less guilt when loved one moves to assisted living versus nursing home: study
Caregiving becoming more complex, consuming for family members, surveys reveal
State lawmakers look at long-term care program as criticism builds
Middle Class U.S. Households Have Few Financial Assets
Pandemic reshaping Medicaid programs

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Updated, Monday, November 1, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-038: LTC NEWS AND COMMENT

Redesigning The Washington Cares Act
Answers to your questions on the new Washington Cares Fund and the long-term care payroll tax
Long-Term Care Insurers May Have to Keep Their Policies: Regulators
Caregiving Caused Me to Divorce My Siblings
Confronting Ageism in Health Care: A Conversation for Patients, Caregivers and Clinicians
Policymakers see retraining older Americans as key to combating labor shortage
What’s better for senior living and care — the market or government?
3 States Limit Nursing Home Profits in Bid to Improve Care
SNF staffing shortages may get ‘much worse’

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Updated, Friday, October 29, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THREE NEW ARTICLES

LTC Comment: With Halloween approaching, here are some scary stories about long-term care. Synopses after the ***news.***

*** AMADA SENIOR CARE Annual Franchise Conference 2021. Stephen Moses delivered the keynote address for this event at the beautiful Marriott Laguna Cliffs Resort in Dana Point, CA on October 27. He congratulated the home care company’s stunning success. Over half its customers have private long-term care insurance. Amada prides itself in helping its LTCI beneficiaries obtain all the benefits they have coming to them under their insurance policies, cutting through red tape that sometimes inhibits the process. Steve assessed the state of long-term care financing in the USA and suggested how the country could move successfully from its remaining institutional bias toward a mostly privately financed system dominated by home and community-based care. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses.

In addition to the columns listed below, Steve has another article accepted for publication soon.

“LTC Irony” scheduled for the November issue of Broker World.

“What’s better for senior living and care — the market or government?,” by Stephen A. Moses, McKnight’s Senior Living, October 25, 2021

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.) ***

LTC BULLET: THREE NEW ARTICLES

LTC Comment: Magazines want exclusives on everything they publish. So I can’t share my three latest columns with you in full. But I do have permission to convey the essence of the articles and some short quotes. Please read the articles in their entirety at the sources.

McKnight’s Long-Term Care News published “Long-term care’s problems are bad, getting worse, but fixable” on October 1, 2021. In it I explained what ails long-term care service delivery. I asked: “What do all of the analysts’, politicians’, and bureaucrats’ proposed solutions have in common?” I answered: “They propose more government funding and regulation, usually in the form of a new compulsory, social insurance program for long-term care.” I pointed to the WA Cares Fund and the WISH Act as examples of these dangerous approaches seeking to build on the shaky fiscal foundation of Social Security and Medicare. I explained how and why government funding and regulation caused long-term care’s problems by making Medicaid easy to get after care is needed. I concluded with these questions: “Who dares raise the call to close Medicaid LTC eligibility loopholes, make home equity a giant new source of private LTC financing, strengthen estate recovery rules to recapture wealth lost to Medicaid exemptions and persuade more people to plan early to save, invest or insure so they can pay privately for long-term care when they need it? Will you?”

Broker World has scheduled “LTC Irony” for publication in its November issue. In it I point out the irony that decades of warning us “If you don’t buy long-term care insurance you could lose your life’s savings” had little impact on expanding the market. But let Washington State government impose a compulsory payroll tax on personal income unless citizens have private LTC coverage by November 1, and voila. A sudden fire sale ensued that shut down the market with excess demand. I conclude: “The lesson for state and federal central planners is this: if you must force people into mandatory payroll-funded LTC programs of dubious solvency, at least give them a way out by purchasing private insurance so we have some consumers able to pay their own way if and when the bottom falls out of the country’s many fiscally challenged entitlement programs.” Finally we’ve found the secret to selling private long-term care insurance: make it the only way to escape more government taxes, rules, regulations, and interference.

McKnight’s Senior Living published “What’s better for senior living? The market or government?” on October 25, 2021. In it I compare and contrast the basic principles underlying markets on the one hand and government on the other. For example: “In markets, millions of transactions between willing buyers and sellers create spontaneous economic order, set interest rates (the price of money) through supply and demand, and generate price data which tell investors and businesses how much of which products and services to produce. In government, the Federal Reserve sets interest rates based on balancing political powers and influence resulting in asset bubbles, mal-investment, and economic inequality.” In the article, I ask and answer “How has government impacted senior living?” and “How could a more market-oriented approach improve senior living?” I conclude “Applying the general principles of markets and government identified above to the practical challenges of senior living and long-term care points to only one conclusion. We need to rely more on markets and less on government to improve both.”

Happy reading!

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Updated, Monday, October 25, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-037: LTC NEWS AND COMMENT

So far, more than 200,000 apply for exemption from the state’s long-term-care fund
Milliman Report Shows $32.5B Value in Medicare Advantage
New federal funds spur expansion of home care services for the elderly and disabled
Are You Ready to Move Your Aging Parent Into Your Home?
My Perfect World
For most seniors, there’s no place like home
The Troubling Trend of ‘Gray Sheeting’ Life Insurance Policies
Covid-19 breakthrough deaths most common among older Americans, data shows
‘Fairly large contingent’ of National Guard will alleviate ‘healthcare backups’ at long-term care facilities
How a long-term care operator used immigrant program to overcome chronic staff shortages

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Updated, Monday, October 18, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-036: LTC NEWS AND COMMENT

Long-term care planning, retirement savings suffered during pandemic: study
My incredible shrinking lifespan
Most post-acute Medicare recipients with dementia sent to SNFs despite payment changes: study
Nursing home residents may have better CPR outcomes than their community-dwelling peers: study
Alzheimer’s villages could be the answer to the rising cases—and cost—of dementia
Poorly controlled diabetes — not diabetes itself — triples dementia risk, study finds
Washington state receives 95,000 exemption applications to new long-term care benefit in first week
Parkinson: COVID-19 May Be An ‘Endemic Problem’ For Nursing Homes Moving Forward
Nursing Facilities Need to Weather the ‘Reimbursement Storm’ of Medicare Advantage
Medicaid's safety net for pregnant women
State Senator: Only Gov. Inslee ‘has the power’ to pause Washington’s long-term care tax

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Updated, Friday, October 15, 2021, 10:40 AM (Pacific)

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LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: What would a bare-bones outline of the long-term care problem and its solution look like? Read on after the ***news.***

*** LTC DISCUSSION GROUP has launched their new and improved website. Browse it, find presentation materials from prior sessions, get added to their mailing list, submit questions or topic ideas for future sessions, or heaven forfend, even unsubscribe from future “Save the Date” notifications. Check the Group’s new You Tube channel for presentation videos starting with the September 2021 meeting that we highlighted in LTC Bullet: LTC Prevention is Better than Cure. Save the date for the LTC Discussion Group’s October 19^th meeting on “Direct Care Workforce.” ***

*** AMADA SENIOR CARE has retained Stephen Moses to deliver the keynote address at their annual franchise conference in Dana Point, CA on October 27. Amada is a home care provider that specializes in helping people get everything they’re entitled to from their long-term care insurance policies. The company also joins the Center for Long-Term Care Reform as a Bronze Member for the coming year. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses:

In addition to the columns listed below, Steve has another article accepted for publication soon and a second out for query. Watch for them.

“LTC Irony” scheduled for the November issue of Broker World.

“What’s better for senior living? The market or government?”

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: Long-term care financing is complicated. Most analysts bewail long-term care’s problems—excessive dependency on family caregiving, institutional bias, caregiver shortages, inadequate funding, etc.—and then, without analyzing or explaining why these problems exist, they reflexively prescribe more government financing and regulation. Ironically, they recommend more of what arguably caused the problems in the first place.

The explanation of why long-term care is so dysfunctional requires complex research, analysis, evidence, and reasoning. Our monographs, Medicaid and Long-Term Care and How to Fix Long-Term Care Financing, provide that. But they contain too much data and analysis to absorb all at once. So below, for brevity and clarity, I present only the basic argument. It leads in a very different direction than the anti-democratic, compulsory, payroll-funded social insurance plans (like WA Cares Fund and the federal WISH Act) on which so many analysts and advocates have come to agree.

A Framework for Thinking about Medicaid and Long-Term Care
by
Stephen A. Moses

The big picture: About 70% of people will require assistance with activities of daily living due to age. But only 25% are likely to experience expenses that are potentially catastrophic.

The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. A one in four chance of a catastrophic loss is an insurable risk.

So private insurance against long-term care risk should be a promising market. That is why over 100 companies sold the product at one time. But only a dozen still do. Why?

People only buy insurance against real risk from which they can see the dire consequences of being unprotected. That condition does not exist with long-term care. Why?

Most catastrophic long-term care costs are paid for by Medicaid, Medicare, the VA, and other smaller public programs.

Add “spend-through” of Social Security and other income Medicaid recipients must contribute toward their care and we account for 90% of total LTC costs without touching any savings.

But don’t people have to spend down their wealth before they become eligible for Medicaid? That is the conventional wisdom in most academic and popular articles but it is untrue.

To qualify for Medicaid people do need to meet ostensibly low income ($723/month) and asset ($2,000) limits. But those limits are misleading because …

Medicaid subtracts private medical and long-term care costs from income before determining eligibility. Rule of thumb: income below the cost of a nursing home, say $7K/month, qualifies.

Most large assets are exempt including $603K to $906K of home equity plus without a $ limit one vehicle, burial expenses, personal belongings, a business, term life insurance, IRAs, etc.

Non-exempt assets are easily converted to exempt status. Medicaid eligibility workers routinely advise applicants how to use countable assets to purchase exempt resources in order to qualify.

Beyond these already generous financial criteria, Medicaid planning attorneys qualify much wealthier people for Medicaid LTC using special trusts, annuities, and half-a-loaf strategies.

If most people aren’t at risk for catastrophic long-term care expenses, it makes sense that they are not sufficiently concerned about them to plan ahead, much less buy expensive insurance.

Yet, even experts still believe that all we need to do is educate the public about long-term care and they’ll take it seriously. But telling people they’re at risk when they’re not doesn’t work.

Consumers have been barraged for decades with warnings from government and the media about potentially catastrophic long-term care spend down. They still ignore the risk. Why?

Most people don’t know and don’t care who pays for long-term care. Many think incorrectly that Medicare pays. It doesn’t, but as explained above Medicaid does.

Medicaid enables denial about long-term care risk by paying for most expensive long-term care after the care is needed and long after the risk has become privately uninsurable.

It works like this. The public does not see large numbers of people being wiped out financially by long-term care. Why?

There is no empirical evidence that this actually occurs. That’s why the academic literature on this topic never cites hard evidence. There is none.

How can that be? As previously explained, the vast majority of catastrophic long-term care expenses are paid by sources other than personal wealth, mostly government programs.

So here’s the anomaly and the explanation. People don’t know who pays for long-term care, but they ignore the strident warnings about catastrophic spend down anyway, because …

They are not confronted with evidence that it actually happens, so they casually ignore the risk until they need expensive long-term care and when they do they slide easily onto Medicaid.

But don’t middle class and affluent people want to avoid Medicaid, which has such a poor reputation for nursing home bias and deficient quality? Two points:

Once care is needed the senior is usually out of the picture due to physical or mental incapacity. So, adult children, who are heirs with a financial conflict of interest, are making the decisions.

Second, Medicaid planners advise affluent clients not to worry about Medicaid’s poor reputation. They promise access to the best facilities that have only a few Medicaid beds. How?

The trick is to hold back enough “key money” to get those facilities to roll out the red carpet. Nursing facilities receive half again as much from private payers as from Medicaid.

So anyone who can pay privately for a while is welcomed into the nicest places. The tragedy is that poor people dependent on Medicaid end up in the nastier nursing homes.

What should be done?

They key to fixing what ails long-term care in the USA is to wake up consumers to the real risk and cost while they are still young, healthy and affluent enough to plan, save, invest or insure.

To do that, Medicaid must stop exempting seniors’ biggest asset, the home, so that aging Americans and their heirs know long-term care is a real risk for which they need to prepare.

With home equity finally at risk for the first time, more people will worry about long-term care and insure against the risk.

But those who don’t insure will have to tap home equity by means of a reverse mortgage or some other form of commercial or intra-family home equity conversion.

As more people have to use home equity, more will want to avoid that result by insuring, thus creating a positive incentive to insure and replacing the current perverse incentive to go without.

Over a very few years huge new private revenues from home equity conversion and private long-term care insurance will flow into home care, assisted living and nursing home providers.

The new private revenue at much higher market rates than Medicaid or Medicare pay will improve access and quality across the whole continuum of care for rich and poor alike.

What prevents this solution from being implemented? The main obstacle is political sensitivity. People have a visceral attachment to their homes.

Politicians benefit by providing “free” goods and services in exchange for votes. Removing or vastly limiting Medicaid’s home equity exemption is not politically feasible … yet

What is important now is to be ready with the right analysis and proposals when the political calculation changes as the result of a major economic collapse coming in the 2030s. Why then?

Social Security’s “trust fund” runs dry in 2034; Medicare’s, in 2026; Medicaid has no phony savings. Boomers start to turn 85 in 2031, the critical age for rising health and LTC expenditures.

This perfect fiscal and demographic storm will make the solution to long-term care financing possible. But what must be our focus in the meantime? Defense.

We need to defend what remains of Medicaid’s integrity as a means-tested public assistance program. That means opposing MACPAC’s proposal to make estate recoveries voluntary.

It also means opposing the increasingly popular proposals by academics, advocates and politicians to impose new, compulsory, payroll-funded social insurance programs for LTC.

Job one now is “do no harm.” Oppose bad programs like the WA Cares Fund and the federal WISH Act while we defend and strengthen Medicaid eligibility limits and estate recovery.

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Updated, Monday, October 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-035: LTC NEWS AND COMMENT

Tallying the Cost of Growing Older
How Making Public Long-Term Care Insurance (Sort Of) Voluntary Created A Mess In Washington State
Better Than No Loaf: Medicaid Planning Using “Half a Loaf” Strategies
10 Fastest-Rising Costs for Older Americans Since 2000
From transportation to housekeeping, MA plans moving further into the home in 2022
Limiting Medicare benefits deepens rift among Hill Democrats
Social Security Debt up $6.8T
The Delta variant caused a spike in deaths among nursing home residents, study finds
Long-term care’s problems are bad and getting worse — but fixable
Website to opt out of Washington state’s long-term care tax crashes on first day

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Updated, Monday, October 4, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-034: LTC NEWS AND COMMENT

The Risk of Coverage Loss for Medicaid Beneficiaries as the COVID-19 Public Health Emergency Ends
Opt-out option for Washington's long-term care tax begins Oct. 1
Medicare Advantage premiums to decline slightly in 2022, Part D to rise by nearly 5%
AP-NORC poll: Virus fears linger for vaccinated older adults
Assured Allies Makes Key Hires and Expands Advisory Board With Increasing Market Acceptance for Its Innovative ‘Successful Aging’ Platform
Biden’s $400 billion push for LTC faces severe cuts
Long-Term Care Planning: What Advisors Should Know
Strengthening Long-Term Services and Supports: The Difference Federal Investment Can Make
The Build Back Better Plan Remains Popular
New podcast offers latest insights about dementia

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Updated, Friday, October 1, 2021, 10:40 AM (Pacific)

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LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The old saying “an ounce of prevention is worth a pound of cure” applies equally well in long-term care according to three experts in this promising field. Much more after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors as National Brokerage Director for USA-BGA in the individual, worksite and affinity LTCi markets. Advisors like his unique, simple and effective LTCi presentation and his revolutionary “Range of Exposure” tool which, among other things, projects a client’s (joint for a couple) mean age of LTC, likely annual cost and length of need based on age, gender, marital status, success goal (% chance of not outliving their assets), etc. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude.thau@gmail.com to discuss how he might help you. ***

*** ILTCI CONFERENCE live and in person returns March 21-23, 2022 in Raleigh, NC. The organizers are planning the program and want your help. They say “Our Programs & Education Committee would like to know what YOU want to learn about next year.” Submit your session ideas and topic requests here. Additional information on the 2022 ILTCI Conference will be available soon. Check the website for details. Registration will launch in November. Exhibitor & Sponsor applications will be accepted beginning Oct 1st. As the program develops, we’ll keep you posted here as well. ***

*** WHAT’S NEXT AFTER THE WA CARES FUND? We thank Center corporate member CLTC and its Executive Director Amber Pate for inviting us to attend Wednesday’s webinar of that title. CLTC® Certification for Long-Term Care educates and certifies professionals in the fields of insurance, financial services, law and accounting in the discipline of extended care planning. Steve Cain emceed this 30-minute webinar for CLTC graduates with Melissa Steiner and Courtney Crenshaw commenting. Highlights follow.

The WA Cares Fund in Washington State unleashed an unprecedented demand for private LTC insurance.
Both traditional and hybrid policies went “bananas” in Washington. “3 years of business in 3 months.” “3 to 10 times normal volume.”
Advisers should build on the rising awareness of LTC planning caused by the Covid crisis and supercharged by new state-level efforts to develop public funding programs.
Carriers had to adapt by leveraging technology and maneuvering underwriting procedures to process more applications faster.
Lesson learned: important to track state program development earlier and closer and work directly with developers to influence design and implementation. Avoid surprises.
49 more states could potentially follow Washington with similar programs. They may not offer an opt out in which case there would be no incentive to buy private coverage.
Encourage states to include renewal monitoring in their opt-outs so new insureds cannot quickly drop the policies they just purchased in order to avoid the public program.
The LTCI industry did a good job of mobilizing in Washington, so was able to affect some beneficial amendments. Kudos especially to LTCA’s Stephen D. Forman.
Washington is unlikely to delay their program despite its many flaws. A proposal to “pause” at a recent Trust Commission meeting was quickly shot down.
What else is going on? WISH Act at the federal level. Caregiver tax credit under consideration. Biden wants $400 billion for HCBS, but probably won’t get it. Senator Pat Toomey proposes allowing withdrawals from IRAs for LTCI.
CLTC training, certification, and webinars like this one ensure a knowledgeable and highly professional work force of long-term care planning advisers. ***

*** RECENT MOSES COLUMNS:

In addition to the published columns listed below, Steve has two more articles accepted for publication soon and a third out for query. Watch for them.

“LTC Irony” in the November issue of Broker World.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” expected October 1, 2021 in McKnight’s LTC News.

“What’s better for senior living? The market or government?”

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The Long Term Care Discussion Group is a “voluntary independent group that meets solely for the purpose of educating the policy community on all facets of long term care.” The group’s September 28, 2021 meeting discussed “How Wellness Programs Can Enhance Care for Long-Term Care (LTC) Insurance Policyholders.” The speakers were:

Vince Bodnar, Chief Actuary, Bain Capital Insurance
Peter Goldstein, CEO, LTCG
Afik Gal, Co-Founder and CPO, Assured Allies

What follows is a paraphrased summary of the program in case you missed it followed by the presenters’ professional bios.

Vince Bodnar opened the program asking “What is a wellness program?” It is foremost about getting people into optimal care settings and not only about saving claims dollars. To keep people well is good for everybody involved. There are two areas of focus: pre-claim and in-claim. Pre-claim is about interacting with policy holders before they need care, usually before age 75. Interventions increase as the covered population becomes more frail. The goal is to maximize “disability-free lifetime.” The claim is a critical event taking place over a week or so. Once on claim, the focus becomes initiating, prolonging and improving services at home in order to avoid nursing home intake by default.

The LTC insurance industry asks “does this stuff work?” about two common wellness models. CCRCs without walls (Continuing Care Retirement Communities) is one model. People contract with an organization, pay a monthly fee while still healthy, and receive care as needed. There are annual physicals; prior authorization required to enter a facility; annual visits by a care coordinator to monitor progress and ensure quality. The care coordinators often become almost like family members. Over 90% of people in these programs receive services at home as compared to 40% on average for the LTCI industry in general.

The other wellness model is Medicaid Long-Term Services and Supports programs. The MLTSS model involves commercial managed care companies receiving capitation fees from state Medicaid programs to manage care recipients’ long-term care. They require prescreening before institutionalization; mandate referrals; attempt to “repatriate” people from facility to home care. They may help people find a home who no longer have one. One-on-one caseworkers coordinate care as with the CCRC w/o walls model. The more advanced programs use data for sophisticated risk scoring. MLTSS programs keep 80% in home care compared to 40% for LTCI.

If home care claims are half of facility claims, a carrier can reduce claims costs by 12%. That’s a big number. Carriers save money while policy holders get better care and stay in their homes longer.

A long list of the kinds of interventions used to achieve these outcomes is included in the presentation materials. (The LTC Discussion Group usually archives program materials here. I don’t find them there yet, but it’s worth checking again when you read this.) For a tongue-in-cheek example of technology helping seniors, see the Saturday Night Live skit Alexa for Seniors.

How do companies collect and use data to guide caregiving? Big data collection; wearables; monitoring devices; data from assessments; risk scoring for people needing care. Learn what the early warning signs are that transfer to facility is imminent. Intervention scoring: what’s working?

Companies talked about wellness programs in the 1990s, but high cost and low results led the programs to be dropped. Carriers were afraid such programs would stimulate claims. We’re getting beyond that now. Instead of being limited only to rate increases or benefit reduction to confront the industry’s challenges, this is an honest attempt to save money while delivering better services. Interest in wellness programs is expanding geometrically, especially in the past year and a half. Some carriers have entire teams working on this. They’re beginning to see promising results.

But there are challenges. Vendor contracting processes with carriers can be frustrating. Is there rebating? Who should provide services? Can be viewed as discriminatory if not providing same services to all. Liability might attach to referring a policy holder to a certain provider. The regulatory community is quite interested in these programs. Mostly positive. Seen as beneficial if done right. NAIC working group concerns: data privacy, rebating, unfair trade practices model regulations, discrimination.

The LTC insurance business needs good news. The wellness approach is very positive. Deliver better care more efficiently. No more “grim reaper of LTC.”

Peter Goldstein

The wellness focus is not just a funding issue. There is always the idea that a LTC insurance policy can provide a helpful service, not just dollars. We’re thinking about wellness, pre-claim, at-claim and on-claim.

LTCG is the largest claims payer. $4 billion last year. The business is all about claims now. After 25 years of adding policy holders, they’re now going into claim status. Previously, there was not enough interest. Now claims are growing rapidly and so are costs. We ask: what can we do besides raise rates and reduce benefits? Pursuing wellness is win/win because it benefits all stakeholders, carriers, policy holders and care providers.

Getting grounded in the claims process is challenging. We needed to make decisions, prioritize. We know we can’t be all things for all people. Three phases: pre-claim, the claim event, post-claim. The process usually lasts 2 to 3 years. LTCG made the decision to focus on at-claim and post-claim. Once someone makes a claim, what else can we offer to be sure the claim managed effectively?

The presentation material diagrams and explains the claim process. An interview is conducted at the point of claim so the process begins with more than just a claim form. We get them on phone, find out what has been done so far, what care received, face-to-face interview. Every time a claim is opened it creates a $250,000 cost (on average) for the carrier. We ask what are the needs? How can we manage those needs and arrange payments efficiently. Then loop around, reassess as needs change. Active management.

Make the right decision; use training; keep rules the same for all; same outcomes; collaborate with policy holders; the customer experience is important. Aim for recovery. About 33% recover, which is surprising; with right support, they get off claim. A lot of depression in this population, people spiral down. So we need to lean into recovery.

Pay benefits according to the approval. You need systems to vet claims. Don’t pay claims not covered by the policy. Catch any questionable activity; incredible what we see in fraud from seniors and providers. People are smart, savvy, if money is involved, people find a way to get it whether or not they’re entitled. Expanded programs and capabilities to address risk management, customer experience and administrative efficiency. This is a high touch business, but it needs to be efficient.

Best practices are important. You need an electronic way to view what providers are doing, including downloadable information on location, time in, time out. LTCG is launching a clearing house to take paper out of the process. Fraud detection using analytics. Interact electronically through a portal. 40% of the calls we receive are “where’s my check?” That information is available online so should not require taking phone calls. Care concierge service.

Post claim things we’re doing. There is a huge correlation with fraud when an agent is involved. We need to know and monitor the claim start date. High volume of unverified visits. Data tells more than a paper file. Important to stratify fraud risk.

LTCG partnered with Afik Gal and Assured Allies to expand our capabilities.

Afik Gal

Pre-claim issues are important. Tighter integration of the value proposition. Go a step beyond. That is what Assured Allies does.

We have multi-disciplinary teams, with actuaries, medical staff and others. We bring together professionals not often brought together. Assured Allies was developed because of our long-term care experience with our own parents.

We’re looking at LTC insurance as one determinant for successful aging as a whole. Make sure people don’t decline prematurely. But recognize they will decline and need support. Families must fund it themselves or find a solution, such as LTCI. That’s what attracted us to this topic.

To summarize, we are about employing multi-disciplinary teams to achieve successful aging Make health care work from the lens of insurance and finances. For policy holders, live healthier in homes whenever possible. We’re bringing a win/win value proposition to this market. It is a rare opportunity to do the right thing for the policy holder, the provider, and the payer.

Pre-claim the focus is wellness, risk management. All financially positive if done right.

It is easy to help a lot of people by spending a lot of money. The bigger issue is efficiency. It is important to understand trade-offs. The system must be sustainable financially, not only socially good. Reduce costs of claims while improving care.

Real case study from policy holder standpoint. Reach out to engage people. See what their needs are. Do they want help? Do they want to change how they’re aging? That information translates into how much to spend on people. There is much on the Assured Allies website about how it works. Check out the videos there.

We use data to estimate how likely people are to claim and when. We must decide how much to invest to change or delay that. Depends on their desire to get help. Intervention, feedback loop, compare experience with others. Careful measurement mechanism. Is it working or not? 25,000 lives by end of this year. This market is notorious for poor data. We’re spending a lot of energy improving that to get well-validated data.

Interventions are various. Stratify policy holders by proximity to claim. Ask what is the right thing to do? Self-efficacy. How much effort? How much money? Careful monitoring. Predictive modeling. We don’t focus just on caregiving. Multiple of tools based on risk factors. For example: is the caregiver far away? Different discussion for the very sick. Are the caregivers fighting?, etc. We try to coach them into a solution. We only do things proven to be effective.

We’re not going to actually provide home care assistance. That would be a disservice to the carrier because not proven to deliver a positive ROI (return on investment). We find the right approach for the policy holder.

The goal is successful aging. At age 80 plus, the focus may be urinary continence and caregiver issues. Better to get an earlier start because we can do more at age 60. Build good relationship between all parties so that all parties have better outcomes.

Speakers’ Bios

Vince Bodnar is an actuary with Bain Capital Insurance. He has 37 years of experience with a broad array of insurance products. Mr. Bodnar has led projects related to product and distribution strategy, in-force management, capital optimization, reinsurance strategy, operational reviews and diligence, company rehabilitations and liquidations, and mergers and acquisitions. Prior to joining the firm, Mr. Bodnar had senior leadership roles at Genworth and GE Capital and led actuarial consulting practices at Milliman, Willis Towers Watson, Oliver Wyman and KPMG.

Peter Goldstein is CEO of LTCG, a leading provider of administrative and clinical services within the LTC insurance industry. His 25 years of leadership have helped LTCG adapt to a changing industry environment and have transformed the organization into a premier partner for LTC insurers. LTCG serves all of the top LTC carriers and is the largest third-party claims payer in this space. Peter’s strategic vision for the company has transformed LTCG from a TPA focused on processing capabilities into an organization dedicated to proactive, holistic risk management for its customers. Peter is a recognized thought leader on topics ranging from next-generation claims management to the public policy changes needed to ensure a sustainable future for this industry. He has been featured in a variety of wide-reaching business publications including the Wall Street Journal, Bloomberg, Mergermarket, Think Advisor, Business Week and many others.

Afik Gal is a physician and a co-founder of Assured Allies, an insur-tech company dedicated to making longevity sustainable. Afik has spent over 15 years bringing innovative technological care management solutions to life across healthcare and financial insurance industries. Prior to founding Assured Allies, Afik served as VP of Product Innovation at EviCore healthcare where he revolutionized prior authorization as a benefit to payers, providers, and patients. He also led the innovation lab at PwC’s healthcare advisory practice helping clients design and implement advanced analytics solutions with great impact on their business models. Afik has also served as a partner and advisor to numerous hospitals and startup companies developing technologies to improve patient care.

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Updated, Monday, September 27, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-033: LTC NEWS AND COMMENT

The nursing care insurance fund is apparently threatened with insolvency
Bipartisan group of state lawmakers ask Gov. Inslee to pause long-term care insurance tax
Why the Cost of Long-Term Care Is Out of Reach for the Middle Class
Opt-out direction, updates, and good and bad news concerning long-term-care law
Consumers Use Up Washington State's Private LTCI Capacity
Medicare and Medicaid recipients, minorities receive more low-value, aggressive cancer care at end of life, study finds
The Next Medicaid Blowout
Recognize, Assist, Include, Support, & Engage (RAISE) Family Caregivers Act Initial Report to Congress
State of the Long Term Care Industry: Survey of nursing home and assisted living providers show industry facing significant workforce crisis
Annexus to Offer Social Security Uncertainty Protection
COVID-19 Claims More Than 675,000 US Lives, Surpassing the 1918 Flu
Survey finds family caregiver burden is worsening
Bipartisan Solutions to Improve the Availability of Long-term Care
Steep BMI Increase for Kids, Teens During the Pandemic

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Updated, Monday, September 20, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-032: LTC NEWS AND COMMENT

Retirees’ Need for Caregivers Varies Widely
Letter to Gov. Inslee Objecting to the WA Cares Fund
U.S. poverty declined overall last year due to pandemic relief, Census says
Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report
Two Healthcare Insiders at Aegis Living Blow Whistle on Alleged Elder Abuse and Medical Fraud
Changes to WA Cares Fund likely next session
Will Medicaid take life insurance proceeds after I die?
Long-term care tax is the wrong answer to a good question
The $3.5T Spending Mistake
Study: Medicare reduces older adults' risk for catastrophic health expenses
‘We’ve Been Too Reactive’: Argentum Pivots to Invest More in Public Policy Efforts,”
Older adults with dementia half as likely to move to a nursing home if they live with adult children: study
UK lawmakers back tax hike to pay for health, long-term care
Workers at home health agencies receiving Medicare, Medicaid must get vaccinated: CMS
BREAKING: 16,000 COVID deaths missed in nursing homes
Social Security predicts pandemic birth blip, not birth dearth
Washington is taking the worry out of long term care
New poll: Seniors want to age at home with caregiver support
Nursing home leaders unraveling after months of pandemic dangers, workloads, McKnight’s survey shows

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Updated, Friday, September 17, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE LTC ANOINTED

LTC Comment: Thomas Sowell’s books, A Conflict of Visions, The Vision of the Anointed and Intellectuals and Society, offer insights into why the long-term care intelligentsia think and act the way they do. We explain after the ***news.***

*** LTC CLIPPINGS are daily emails the Center for LTC Reform sends to premium members ($250 per year or $21 per month) apprising them of critical information they need to know before they’re blindsided by clients or prospects. They average two per day and include the date, title, author, a representative quote, a link to the source and Steve Moses’s brief interpretation. The Clippings cover popular and scholarly articles, studies and reports, newly published data, etc. Our goal is to free others from time-consuming research that takes them away from their normal sales or administrative work. The LTC Clippings are compiled each Monday in an LTC E-Alert sent to all Center regular members ($150 per year or $12.50 per month). Check out all the membership levels and benefits here and join the Center here. These are two LTC Clippings from earlier this week:

9/16/2021, “Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report,” American Enterprise Institute
Quote: “For the fourth consecutive year, Medicare trustees report that the program will be unable to pay the full cost of health benefits by 2026. The COVID-19 pandemic harmed Medicare’s finances, but the mismatch between program spending and revenue has been a long-standing concern. If it continues unabated, the consequences for millions of beneficiaries will be dire. Please join AEI as Medicare’s chief actuary summarizes the results of the 2021 trustees’ report. A panel of experts will discuss the need for reform and policy options that could improve the program’s fiscal condition.”
LTC Comment: If you missed it live this morning, catch this video of the program now. What’s more disconcerting? That politicians continue to ignore the oncoming insolvency of Medicare and Social Security? Or that the academics and advocates they listen to keep pushing for more of the same financially irresponsible programs?

9/13/2021, “Will Medicaid take life insurance proceeds after I die?,” by Karin Price Mueller, NJ.com
Quote: “Q. If I have an insurance policy that has no cash value and my son is the beneficiary, when I die and he receives the money, will Medicaid file a lien on that money? Would my son have to pay it?
— Uncertain
A. Many families are surprised that Medicaid will go after funds if it pays for your care before you die. …
New Jersey Medicaid considers proceeds from term life insurance policies with no cash benefit to belong to the named beneficiaries and are not subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.”
LTC Comment: Medicaid exempts term life insurance in unlimited amounts. So to get rid of a million dollars and qualify immediately for Medicaid LTC benefits, all the applicant needs to do is buy a term policy in that amount. Wait, you say. Wouldn’t the premium for such a policy be almost as much as the benefit? Why do it? This article explains the key to this Medicaid planning gimmick. As long as the beneficiary is someone other than the Medicaid recipient’s estate, such as an adult child heir, the family dodges the estate recovery requirement and the millionaire achieves immediate Medicaid eligibility. ***

LTC BULLET: THE LTC ANOINTED

LTC Comment: In A Conflict of Visions, Thomas Sowell identifies and distinguishes two principal ways of viewing the world and human potential. He calls them the unconstrained and the constrained visions. The “unconstrained vision” is The Vision of The Anointed. People with that view of the world imagine that anything is possible, human nature is improvable, and the better sort, especially intellectuals, should guide and direct the rest of humanity. Those with Sowell’s “constrained” or “tragic” vision, in contrast, see human potential as delimited by unavoidable obstacles that must be systematically confronted and overcome. For them, human nature is already mostly established and must be worked around with ingenuity and effort. Intellectuals, according to the constrained vision, are self-satisfied prima donnas who arrogate authority to themselves while ignoring or demeaning the public’s cumulative knowledge and preferences, often called “common sense,” gained from centuries of experience and tradition. Which of these two visions of the world would you associate with the academics and advocates who tell us so confidently what’s wrong with and what to do about long-term care?

To my mind, Sowell’s unconstrained vision clearly prevails among “The InLTCgentsia.” These experts, the “LTC anointed,” believe they know best what ails America’s long-term care system and how to fix it. They ignore the long history of government interference in the long-term care market. They persist in promoting government “solutions” for problems created by government funding and regulation. They brush off arguments to the contrary while refusing to engage on specific objections to their collectivist dogmas. They insist on addressing only symptoms, never identifying or analyzing the causes of long-term care’s dysfunctions. They seduce politicians with ideas and proposals based on the fantasy that government, following their advice, can provide better long-term care than a free market in which people vote with their own money for the kind, amount and quality of care they prefer. The LTC anointed persist in offering the same analysis and proposals rejected by voters decade after decade while expecting a different result.

To expand and elucidate, here are some quotes from Thomas Sowell about the unconstrained vision of the anointed followed by our examples based on observation of the “LTC anointed.”

Sowell: “The question for the anointed is not knowledge but compassion, commitment, and other such subjective factors which supposedly differentiate themselves from other people. The refrain of the anointed is we already know the answers, there’s no need for more studies, and the kinds of questions raised by those with other views are just stalling and obstructing progress. ‘Solutions’ are out there waiting to be found, like eggs at an Easter egg hunt. Intractable problems with painful trade-offs are simply not part of the vision of the anointed. Problems exist only because other people are not as wise or as caring, or not as imaginative and bold, as the anointed.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed have dreamed up “solutions” for long-term care in studies, commissions and legislative proposals over many decades. Somehow they can never figure out how to force the public, who are more self-interested, and supposedly less wise and caring, to pay for their illusive dreams.

Sowell: “While those with the vision of the anointed emphasize the knowledge and resources available to promote the various policy programs they favor, those with the tragic vision of the human condition emphasize that these resources are taken from other uses (‘there is no free lunch’) and that the knowledge and wisdom required to run ambitious social programs far exceed what any human being has ever possessed, as the unintended negative consequences of such programs repeatedly demonstrate.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: All we need to do is raise the marginal tax rate, bump up the Social Security tax, or nail the rich. Never mind that every dollar removed from the supply of private capital to fund social welfare schemes is a dollar that will not go to invest in producing products and services people actually want, as proved by the fact they’re willing to pay for them and do not have to be compelled by the threat of government force to spend for them.

Sowell: “To suggest that ‘society’ can simply ‘arrange’ better outcomes somehow, without specifying the processes, the costs or the risks, is to ignore the tragic history of the twentieth century, written in the blood of millions, killed in peacetime by their own governments that were given extraordinary powers in the name of lofty goals.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: The LTC anointed insist, without specifying the “processes, the costs or the risks,” that if we would just turn over to government the power to compel everyone to pay more taxes to support their recommendations, we could somehow get a better long-term care result than the dysfunctional system we have now that is grounded in many decades of government funding and control.

Sowell: “The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from ‘society,’ rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by ‘society.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed assume it is society’s responsibility to fix long-term care as other followers of the anointed vision “fixed” retirement security and elderly health care with Social Security and Medicare. It feels good to proclaim solutions from on high. But greater and greater dependency on government has depleted individuals’ sense of personal responsibility leaving real life people unprotected if and when government lets them down.

Sowell: “Systemic processes tend to reward people for making decisions that turn out to be right—creating great resentment among the anointed, who feel themselves entitled to rewards for being articulate, politically active, and morally fervent.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: That shoe fits the LTC anointed like a glove. They bask in the warm, unchallenged shibboleths of the “unconstrained” vision while evading the market’s school of hard knocks. Entrepreneurs, on the other hand, risk their own capital in search of profits earned by giving consumers what they actually need and want. Which should we appreciate more?

Sowell: “The hallmark of the vision of the anointed is that what the anointed consider lacking for the kind of social progress they envision is will and power, not knowledge. But to those with the tragic vision, what is dangerous are will and power without knowledge—and for many expansive purposes, knowledge is inherently insufficient”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed seek to force people into one-size-fits-all compulsory social programs that eliminate the power of personal agency leaving people dependent on politicians and bureaucrats. What has our increasing dependency on politicians and bureaucrats given us so far?

Sowell: “One of the first things taught in introductory statistics textbooks is that correlation is not causation. It is also one of the first things forgotten.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed often confuse correlation and causation. Two examples: (1) They assume elderly asset decumulation late in life must have been caused by catastrophic long-term care spend down. They never consider the possibility that older people and their families may learn of Medicaid’s generous and elastic income and asset eligibility rules and hide, jettison or reconfigure their wealth to qualify, with or without the assistance of omnipresent lawyers eager to help them artificially self-impoverish in exchange for a generous fee. (2) Trying to make their case for catastrophic Medicaid spend down, the LTC anointed over-estimate its incidence by pretending that every transition to Medicaid LTC eligibility occurs because of spending on long-term care. People can and often do transition to Medicaid eligibility without spending down significantly. The correlation between spending and transition often hides the true causation, i.e., that Medicaid rules allow people with substantial income and assets to qualify for LTC benefits. Even greater wealth than the basic eligibility rules allow is protected by means of techniques explained in the formal legal literature on Medicaid planning which the LTC anointed almost entirely ignore.

Sowell: “What is seldom part of the vision of the anointed is a concept of ordinary people as autonomous decision makers free to reject any vision and to seek their own well-being through whatever social processes they choose. Thus, when those with the prevailing vision speak of the family—if only to defuse their adversaries’ emphasis on family values—they tend to conceive of the family as a recipient institution for government largess or guidance, rather than as a decision-making institution determining for itself how children shall be raised and with what values.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed treat ordinary people like chess pieces to be moved around on political and economic game boards. They seek to replace personal responsibility and planning with government compulsion through mandatory social insurance for long-term care. They know best; the rest of us are too ignorant or irresponsible to do the right thing. But do they ever ask why the public has become so ignorant and irresponsible when it comes to retirement, health care and long-term care planning? Do they question whether government promises from Social Security, Medicare and Medicaid may have undercut private concern for economic risks? Does the concept of moral hazard, so fundamental to private insurance theory, ever enter their minds? The answers are no, no and no.

Sowell: “Among the many other questions raised by the nebulous concept of ‘greed’ is why it is a term applied almost exclusively to those who want to earn more money or to keep what they have already earned—never to those wanting to take other people’s money in taxes or to those wishing to live on the largesse dispensed from such taxation. No amount of taxation is ever described as ‘greed’ on the part of government or the clientele of government.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“[W]hen people choose their occupations according to what the public wants and is willing to pay for, that is ‘greed,’ but when the public is forced to pay for what the anointed want done, that is ‘public service’.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed routinely ask hard-working people to pay just a little more in taxes to fund their elaborate schemes. Two examples are the WA Cares Fund and the WISH Act. These programs and their ilk add long-term care to the mountain of moral hazard already inflicted on the economy by Social Security and Medicare. Yet the LTC anointed will characterize the opponents of their programs as uncaring and stingy.

Sowell: “Another way of verbally masking elite preemption of other people’s decisions is to use the word ‘ask’—as in ‘We are just asking everyone to pay their fair share.’ But of course governments do not ask, they tell. The Internal Revenue Service does not ‘ask’ for contributions. It takes.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: Usually the LTC anointed don’t even bother to ask nicely. They presume they’re right and the rest of us should fall into step with their mandates.

Sowell: “…the very commonness of common sense makes it unlikely to have any appeal to the anointed. How can they be wiser and nobler than everyone else while agreeing with everyone else?”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed bristle at arguments grounded in common sense. They display contempt for people who just want to keep what they’ve earned, take responsibility for themselves and their families, and give charity as and when they can afford it and deem it justified.

Sowell: “In short, numbers are accepted as evidence when they agree with preconceptions, but not when they don’t.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“Today, despite free speech and the mass media, the prevailing social vision is dangerously close to sealing itself off from any discordant feedback from reality.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

“Reality does not go away when it is ignored.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: Confirmation bias is commonplace among the LTC anointed. They do not consider, much less attempt to refute, evidence that conflicts with their predispositions. Examples are rife. The LTC anointed cling to the myth that Medicaid requires impoverishment while they ignore the ubiquitous popular and scholarly published evidence to the contrary. They insist wide swaths of the American public are being wiped out financially by long-term care expenditures, when there is no evidence this is so and they cite none. They rely slavishly on Health and Retirement Study (HRS) longitudinal data on asset decumulation assuming it’s proof of LTC spenddown without acknowledging or addressing the data’s many flaws. Moreover, nothing in that data demonstrates that spend down occurs because of long-term care expenses.

Sowell: “Many intellectuals are so preoccupied with the notion that their own special knowledge exceeds the average special knowledge of millions of other people that they overlook the often far more consequential fact that their mundane knowledge is not even one-tenth of the total mundane knowledge of those millions. However, to many among the intelligentsia, transferring decisions from the masses to people like themselves is transferring decisions from where there is less knowledge to where there is more knowledge. That is the fatal fallacy behind much that is said and done by intellectuals, including the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less total knowledge but more presumptions, based on their greater average knowledge of a special kind.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: That quote pretty much sums it up.

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Updated, Tuesday, September 7, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-031: LTC NEWS AND COMMENT

Number of people with dementia set to jump 40% to 78 million by 2030 -WHO
COVID vaccine protection drops by 80 percent in 6 months among nursing home residents: study
Do some cognitive functions improve with age?
Long-Term Care Needs Reform, Not More Money
Medicare Advantage slowing COVID discharges to SNFs: report
Why some plan to opt out of new WA long-term care insurance
Senator’s Report Provides Alternative Long-Term Care Policy
Covid could trigger a spike in dementia cases, say Alzheimer’s experts
A New Report Says The COVID Recession Has Pushed Social Security Insolvency Up A Year
Want to opt-out of Washington’s new long-term care tax? Good luck getting a private policy in time
Social Security Fund on Track to Go Bust by 2033: Trustees Report
Could active adult housing be a solution to the middle-market affordability challenge?

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Updated, Friday, September 3, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE INLTCGENTSIA

LTC Comment: Should LTC intellectuals, politicians and bureaucrats who pay no price for being wrong direct long-term care financing reform? Considerations after the ***news.***

*** ANNUAL LTCI SURVEYS available now in Broker World. Check them out for the latest on the status of private long-term care insurance.

“2021 Milliman Long Term Care Insurance Survey,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, July 1, 2021

“2021 Analysis Of Worksite LTCI,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, August 1, 2021 ***

*** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members ($250 per year) receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day on average) with the date, title, author, source, and his brief analysis of every important new publication. Regular members ($150 per year) receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now here or contact smoses@centerltc.com with your questions or comments. Two examples follow:

8/2021, “Senator’s Report Provides Alternative Long-Term Care Policy,” by Ashley Herzog, Health Care News

Quote: “First, Congress would eliminate Medicaid loopholes that allow affluent seniors to qualify, ending the ‘perverse incentives’ that discourage consumers from planning early and responsibly for long-term care, Moses writes. ‘Step two is to put the Medicaid estate planning bar out of business,’ Moses writes. ‘Systematically identify, analyze and prohibit the methods and financial products elder law attorneys use to qualify their affluent clients for Medicaid LTC benefits. Stop their discriminatory practice of using ‘key money’ to buy well-heeled clients access to the best long-term care facilities at the exclusion of poor people who lack the funds to pay privately.’ The third step is to warn the public that long-term care is a ‘pay now or pay later’ proposition, Moses writes”

LTC Comment: We thank Ms. Herzog and Health Care News for citing the Center’s LTC policy proposals at length. “Health Care News is available on the internet. Point your browser to HeartlandDailyNews.com.” To be clear, the Moses proposals are not a part of Senator Tim Scott’s alternative LTC policy referenced in the article’s title … yet. We’ll work on that.

9/2/2021, “Long-Term Care Needs Reform, Not More Money,” by Chris Pope, National Review

Quote: “The reconciliation bill being prepared by congressional Democrats is so substantial that specific provisions as large as $400 billion in proposed extra funds for Medicaid’s long-term-care benefit have attracted little attention. … However, the shortcomings of Medicaid’s long-term-care benefit owe much to the program’s resources being improperly targeted. Instead of being a safety net of last resort, the program has loose and inconsistent eligibility requirements, disincentivizing the purchase of private long-term-care insurance — which ought to bear the bulk of long-term-care costs. Policymakers should use the provision of additional funds to facilitate reforms that fix these deeper structural problems.”

LTC Comment: Well said. Much of this article we might have written ourselves. Actually, we have and many times. Other parts of the article are less coherent and there is no explanation of what should be done except a reference to Senator Casey’s bill, a step in the wrong direction. For a full picture of the problem and the solution, read Medicaid and Long-Term Care. Special thanks to long-time Center friend and supporter Brad Winnekins (President of Legacy Services, bradw@legacyltci.com) for tipping us to this article. ***

*** RECENT MOSES COLUMNS:

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: THE INltcGENTSIA

LTC Comment: The following article was originally published in Broker World magazine’s August 2021 issue. We thank the editor and publisher Stephen Howard for permission to republish the column here. Subscribe to Broker World here: https://brokerworldmag.com/orders/. We strongly recommend this publication for anyone working in the financing or provider sides of the long-term care profession.

“The InLTCgentsia”
By
Stephen A. Moses

“What is called ‘social’ planning are in fact government orders over-riding the plans and mutual accommodations of millions of people subject to those orders.”
—Thomas Sowell, Intellectuals and Society

“Why the transfer of…decisions from the individuals and organizations directly involved–often depicted collectively and impersonally as ‘the market’–to third parties who pay no price for being wrong should be expected to produce better results for society at large is a question seldom asked, much less answered.”
—Thomas Sowell, Intellectuals and Society¹

The LTC intelligentsia agrees on long-term care’s problems and solutions. To wit, more and more people need long term care. Current public programs are inadequate. Private LTCI failed. Providing “free” care stresses families financially and emotionally. So, obviously, we need government to take a bigger role in long term care, preferably with a new, compulsory, payroll-funded, social insurance entitlement program. Or, to keep it simple, just shoehorn long term care into Medicare. That’s the InLTCgentsia’s diagnosis and prescription in a nutshell.

Their remedy relies on government central planners, guided by their own sophisticated expert advice, to design, introduce, pass, implement and defend legislation impacting every individual and family in the country. How do these planners and their advisors know what millions of individuals and families who comprise the market for long term care need and want? In the absence of price data reflecting actual preferences, “polls” must suffice. People say they want more home care, fewer nursing homes, higher quality, lower costs, more control and choices. Will a big new government program deliver those benefits? At what cost? With what unintended consequences?

To answer those questions, don’t we first need to ask and answer why America’s long term care system doesn’t deliver those desired benefits already? Is it for lack of government funding? No. Medicaid, Medicare, the VA and other smaller government programs pay for most long-term care in the United States.² Is it for lack of government regulation? No. Long term care is the second most regulated industry in the nation, after nuclear power.³ So what does explain the dysfunctionality of our long term care services and financing?

Could the answer possibly be—the same government funding and regulation that dominate long term care already? Medicaid is by far the biggest source of funding for long term care and a huge drain on state and federal budgets. Its coverage rules cause institutional bias. Its eligibility rules crowd out private financing sources.⁴ Its low reimbursements hamper quality. Its availability after people need care creates a moral hazard that discourages early planning and traps many on public assistance late in life. If the public funding program we already have is the principal cause of what ails long term care, why should we expect a bigger, more expensive and intrusive program to improve the situation?

Try this thought experiment instead. What if there were no Medicaid program to pay for catastrophic long term care costs? How would consumers behave? Odds are people would worry about the 25 percent probability of having a severe need for long term care in the future.⁵ They would save, invest, or search for private insurance to spread the risk. Unprepared people who were stricken would use their home equity to fund care as most elderly own homes.⁶ Spending their own money for long term care, patients and families would seek home- and community-based care instead of nursing homes. With private asset spenddown, including potentially $8 trillion of home equity,⁷ flowing through the long term care services industry, access and quality of care would improve for everyone. Potential profits would supercharge entrepreneurs to discover and offer new and better care options.

What I’ve just described would solve the middle market problem.⁸ We don’t need to worry about the wealthy; they can take care of themselves. But, what about the poor? Having removed the perverse incentives that discourage responsible long term care planning, many fewer people will end up needing long term care but unable to pay. There will be no more incentive to hire attorneys to manipulate government eligibility rules in order to self-impoverish artificially. The relatively small numbers of genuinely needy people who remain could be served by private charity and/or a vastly scaled down public assistance program funded by a fraction of the savings from ending the Medicaid LTC program.

So let’s pose Thomas Sowell’s “seldom asked, much less answered” question from the quotation above. Whom should we entrust? The InLTCgentsia “who pay no price for being wrong” or the millions of consumers, providers, and insurers who comprise the market for long term care? Why should we be subject to “government orders over-riding the plans and mutual accommodations of millions of people?” When those millions vote with their own money for the kind of long term care they prefer, we will all receive better services in preferred settings. That is the answer.

References:

Stephen A. Moses

425-891-3640 smoses@centerltc.com

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday August 30, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-030: LTC NEWS AND COMMENT

The staggering, exhausting, invisible costs of caring for America’s elderly
New Research Signals Mass Employee Exodus From Long Term Care Due to Vaccination Mandate
Related: 10 Life Insurance Tax Facts to Know
How Taxes, Medicare Premiums Erode Social Security Benefits Despite COLAs
A Massive Elder Corps Is Just Waiting to Be Helpful
PLANNING AHEAD: Are inheritances protected and other Medicaid myths [Column]
Medicare nursing home residents more likely to be diagnosed, hospitalized and die from COVID-19 than beneficiaries not in facilities
Study: Pandemic increased the number of homebound, isolated seniors
How COVID-19 Has Changed Americans' Views on Health Insurance
What Can YOU Do to Resolve the LTSS Workforce Crisis?
CalPERS long-term care insurance settlement: how to avoid missing out on $35,000 checks

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Updated, Monday August 23, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-029: LTC NEWS AND COMMENT

AHCA, NCAL Urge Administration to Consider Implications of Vaccination Policy
Medicare Advantage Healthcare Spending Exceeds Original Medicare: Policymakers may soon have to address inequities between Medicare Advantage healthcare spending and Medicare spending
5 Ways to Keep People With LTC Insurance Healthy
BREAKING: It’s official: Nursing homes must vaccinate employees or lose Medicaid, Medicare funding
Yogurt every day keeps Alzheimer’s away? Probiotics, strong gut health may be key to avoiding dementia
The gig economy finally catches up with long-term care
Washington’s New Long-term Care Benefit Program: Important Deadlines Loom!
It’s Getting Late to Opt Out of Washington’s Long-Term Care Program
The Rising Toll of Autoimmune Diseases in Older People
Boosters to be expanded to most vaccinated Americans: reports
State Regulators Eye Long-Term Care Insurers' Wellness Programs
Retirement Income Policy Needs a Facelift
Commentary: New long-term care tax will affect Washington workers

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Updated, Friday, August 20, 2021, 10:40 AM (Pacific)

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LTC BULLET: WISHful THINKING

LTC Comment: Hope springs eternal among the LTC anointed that one more government program forced on the public at the expense of the productive economy can reduce the damage done by its many failed predecessors. Analysis of the WISH Act follows.

LTC BULLET: WISHful THINKING

LTC Comment: Thomas Sowell’s A Conflict of Visions contrasts people with “constrained” vs. “unconstrained” visions of the world. Those with the constrained or “tragic” vision see human limitations and focus on systemic analysis and marginal improvements. There are no solutions, only tradeoffs, for those with the tragic vision. Those with the unconstrained vision, The Vision of the Anointed, believe everything is possible. All it takes is for the best and the brightest to apply their superior intelligence and understanding to a problem and, voila, solutions emerge. But so do unintended, often disastrous, consequences.

We’ll have more to say about the LTC anointed in a future LTC Bullet, but suffice it here to say there’s no question which vision of the world the authors of the article we’ll review today share. Instead of focusing on the historical failure of government to solve the long-term care financing problem after decades of trying, they think one more attempt with the same approach applied by smart people with the best of intentions will have a better result. They’re unconstrained by any analysis or understanding of how the long-term care service delivery and financing system in the United States became so dysfunctional. So, anything seems possible to them.

Marc A. Cohen and Stuart M. Butler published “The Middle Ground For Fixing Long-Term Care Costs: The WISH Act," in the Health Affairs Blog on August 9, 2021. Their article reviews and strongly recommends a new, compulsory social insurance program for long-term care recently introduced in Congress. Quotes from their article and our comments in reply follow.

Cohen/Butler: “Roughly one week before Americans celebrated the July 4 holiday, Representative Thomas Suozzi (D-NY) introduced a revolutionary bill (H.R. 4289) designed to repair our broken system for financing long-term services and supports (LTSS). The ‘WISH Act’—Well-Being Insurance for Seniors to be at Home—is based on an idea first put forward by a group of long-term care experts known as the Long-Term Care Financing Collaborative, which was convened in 2012 by the Convergence Center for Policy Resolution and included the authors of this blog post. The [LTC Collaborative] idea was developed further in a 2018 paper presented at the Bipartisan Policy Center. If enacted, the WISH Act could significantly transform our LTSS financing system by harnessing the best of what the public and private sectors can jointly do to solve a problem that neither sector seems able to solve on its own. And it does this in a fiscally responsible way.”

LTC Comment: If public policy proposals are only as good as the research on which they’re based, the WISH Act is handicapped from the start. We have critiqued and rejected both of the studies cited in the article as foundational for the WISH Act. “LTC at a Crossroads” (June 3, 2016) addressed the “LTC Cooperative’s” proposal and “Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding)” (May 4, 2018) analyzed the 2018 Bipartisan Policy Center paper. Both studies share these shortcomings: (1) They begin by describing long-term care’s problems without asking or answering why and how the problems came to exist in the first place. Thus they run the risk, and do in fact, recommend more of the same government policies that caused the problems. (2) Both mistakenly assume wide swaths of the public are spending down their life’s savings for long-term care based on the “Fallacy of Impoverishment.” (3) Both ignore the vast legal and popular literature on qualifying for Medicaid LTC without spending down, so they assume incorrectly that “big data” from the HRS/AHEAD/Rand studies on asset decumulation prove LTC spend down is widespread. (4) Both equivocate on Medicaid planning by suggesting it means only “asset transfers,” which are a relatively small part of the wide range of techniques to qualify without spending down assets. (5) They equivocate on “spend down” and “transitions” by assuming that any transition to Medicaid means someone had to spend down savings before becoming eligible. (6) They equivocate on “out of pocket” expenses, making them seem larger than they really are by including residential care and excluding Medicare post-acute care expenses from LTC costs. These points are fully explained in “LTC at a Crossroads” and developed further in Medicaid and Long-Term Care. For our review and critique of 100 similar studies and proposals, see “LTC Center Standing Guard,” May 14, 2021. How these points and principles undercut the WISH Act’s approach is explained below.

Cohen/Butler: “The legislation seeks to address the growing problem that needing LTSS for a long spell and, particularly, receiving them in a nursing home, can be financially devastating even for middle-class Americans with significant savings. A year in a two-bed nursing-home room can cost upwards of $93,000, causing many to exhaust their funds and become reliant on Medicaid.”

LTC Comment: The assertion that large numbers of people exhaust their wealth paying for nursing home care before qualifying for Medicaid is often made even in peer-reviewed journal articles. But you will never find a citation to evidence supporting the claim. That is because there is none. According to the National Investment Center’s “NIC Skilled Nursing Data Report” covering data through May 2021, private-pay nursing home revenue mix has plummeted to 7.0%, compared to 49.5%, 20.4%, and 10.8% for Medicaid, Medicare and Managed Medicare, respectively. Most of the small remaining private payments to nursing homes are for short-term sub-acute and rehabilitative care not for the kind of long-term custodial care that Cohen/Butler claim is wiping out the savings of so many. This is a prime example of scholars using the “fallacy of impoverishment” to justify big new government programs. Furthermore,

There is more good news. In June 2019, Johnson and Wang “simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older.” They “found that 74 percent could fund at least two years of a moderate amount of paid home care if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care” (Johnson and Wang, 2019, p. 994). Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years” (Ibid., p. 1000). So, the problem is much more manageable than we thought. All we have to do is persuade people to liquidate all their assets. (Medicaid and Long-Term Care, p. 65)

Obviously, most people aren’t liquidating their assets to fund long-term care or those expenditures would show up in the data for out-of-pocket spending. Nor are people going to start liquidating assets to purchase long-term care as long as Medicaid is so easy to get after extended care is needed. How to remove this obstacle to private financing and responsible long-term care planning is explained below.

Cohen/Butler: “In theory, private insurance is the appropriate tool for protection against such a risk. But the private long-term care insurance market has been declining over the past two decades, with fewer than 10 percent of Americans having policies. … There are multiple reasons for the condition of the insurance market. One is the widespread but erroneous belief that Medicare will pay for LTSS, combined with confusion about what private long-term care policies cover, and an aversion among consumers to the policy’s upfront cost.”

LTC Comment: People don’t buy LTC insurance because they think Medicare pays for long-term care? Maybe, but there is some justification for the public’s seeming misapprehension when Medicare and Managed Medicare contribute 31.2% of nursing home revenues as referenced immediately above. Still, let’s stipulate that Medicare doesn’t pay a large share of the long-term care expenses that Cohen/Butler claim are catastrophically impoverishing so many. No matter; Medicaid does. So if you reconfigure the statement to read “People don’t buy LTC insurance because they think Medicaid pays for long-term care” you’d be much closer to the truth. But there is still a nuance of difference. In truth, most people don’t know who pays for long-term care. It doesn’t matter to them. They can ignore LTC risk, wait to see if they ever need care, and if they do, Medicaid usually pays and its financial eligibility rules are so generous and elastic that most people qualify without spending down assets significantly. Fifty-six years of that being true has essentially anesthetized the public to LTC risk, virtually eliminated potential demand for private LTC insurance, and left most of the middle class unprotected and dependent on Medicaid when they need expensive extended care.

Cohen/Butler: “Agreement on a policy solution has long been stymied by a fundamental philosophical conflict between those who would limit public policy to the promotion of private insurance as the only appropriate policy for protecting private resources and those who regard public insurance as essential to the assurance of adequate, affordable protection for all.”

LTC Comment: That statement is personally galling. I know of no one among academic or popular writers who has ever advocated limiting “public policy to the promotion of private insurance as the only appropriate policy for protecting private resources.” Yet that position has been attributed falsely to me. To be very clear, my position is that America has a social contract for long-term care that includes both public and private contributions. It was established in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) which made Medicaid estate recovery mandatory. This was the plan Congress and President Clinton had in mind at that time: when people need long-term care they can’t afford, Medicaid will provide the care as long as the applicant’s income is below the cost of a nursing home and most retained assets, allowed to be virtually unlimited, are held in exempt form. The only quid pro quo was that after the Medicaid recipient dies, the estate must reimburse Medicaid for the cost of the care provided. That contract still exists although it is under attack by the Medicaid and CHIP Payment and Access Commission (MACPAC).

The social contract for long-term care created in 1993 failed to solve long-term care’s problems because states did not implement its estate recovery provisions aggressively; the federal government did not enforce the requirements; the media did not report the new estate recovery liability; and so the public remained unaware of the need to save, invest or insure for long-term care in order to avoid Medicaid dependency and estate recovery risk. The Medicaid estate planning bar flourishes by helping their affluent clients evade estate recovery at the same time and in the same manner as they qualify those clients for Medicaid by means of artificial impoverishment. We should enforce estate recovery, prohibit Medicaid planning, stop exempting home equity from LTC responsibility, and publicize the fact that long-term care planning is a personal responsibility. In other words, we should fully implement the long-term care social contract as should have been done, but wasn’t, in the 1990s. That would change the incentives for long-term care planning so that they encourage personal savings, investment and insurance instead of desensitizing the public to LTC risk resulting in their dependency on public assistance in the end.

Cohen/Butler: “The WISH Act, however, steers a careful middle course. It combines public and private roles in ways that would promote comprehensive insurance protection while strengthening the private insurance industry. It does so by creating a modest ‘catastrophic’ public program to limit exposure for LTSS costs that modest- and middle-income people can reasonably be expected to manage, either through reliance on family caregivers, personal resources, or on private insurance. In this way, the WISH Act gives private insurers the opportunity and greater actuarial certainty to design insurance as a gap-filler (much like private Medigap insurance does for health costs).”

LTC Comment: Here wishful thinking borders on full-fledged fantasy. Even a “modest catastrophic” benefit sends the worst possible message to consumers: “don’t worry about long-term care; the government has you covered.” Private insurers won’t want to fill the public program’s gaps for reasons I’ll explain below. Middle income people won’t buy more private policies for the same reasons they don’t buy them now; Medicaid picks up catastrophic costs already and the WISH Act does nothing to change that.

Cohen/Butler: “The likely result: Many more middle-income people would buy private policies that, combined with the new public insurance, would provide nearly comprehensive insurance protection against LTSS costs. This fundamental idea is key to the WISH Act: using limited public insurance in part to help stabilize private insurance.”

LTC Comment: It is not necessary to create a new economy-debilitating compulsory payroll-funded catastrophic LTC financing program to solve the problems long-term care faces. All that’s needed is to recognize that Medicaid is America’s catastrophic LTC financing system and restore it to its original purpose. Retarget Medicaid’s benefits to people most in need. Eliminate or radically reduce its home equity exemption. Close its many other egregious eligibility loopholes; and enforce estate recovery. When long-term care really is a potential financial catastrophe that threatens even home equity, people will save, invest and insure against that risk. Furthermore, it does not require a new government program to make adequate private LTC insurance affordable to middle-income people.

The National Investment Center (NIC) recently reported that reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for seniors housing by 3.6 million individuals enabling 71 percent of middle-income seniors to afford the product (NIC, 2019, April). Where could consumers find that extra $15,000 to bring the cost of seniors housing into reach? The premium for an annual long-term care insurance benefit of $15,000 would only cost a small fraction of the premium required for the full coverage that consumers find so financially daunting now. Unfortunately, insurance regulations forbid carriers from offering coverage with a benefit of less than $18,000 per year. Once again, well-intentioned regulation stands in the way of sensible long-term care policy and planning. (Medicaid and Long-Term Care, pps. 65-66)

That is how to make adequate private LTC insurance affordable to middle-income people when they’ve come to want the coverage after Medicaid no longer obviates the need for it. The best solution is to reduce dependency on government not expand it with a big new program.

Cohen/Butler: “Under the legislation, the public program would begin paying a benefit only after an individual has a LTSS need that lasts for at least one to five years—depending on income. … Thus, the amount of time a family would wait to receive the public insurance benefit would be directly related to their income history so that those with lower incomes have to wait less time to receive benefits. This scaled, income-based waiting period is designed to target benefits to middle-income households and protect them from financial ruin.”

LTC Comment: Actually “this scaled, income-based waiting period” is a means test. In other words, the WISH Act would create another welfare program. It is not social insurance as its authors intend it to appear. Ironically, the welfare programs we already have—Medicaid and Supplemental Security Income (SSI)—have gradually become entitlements accessible to people of substantial means as a result of eligibility bracket creep and lack of financial eligibility enforcement. On the other hand, the programs billed as social insurance—Social Security and Medicare—have been welfarized with the addition of extra costs for higher income people. America already has too many middle-class people dependent on government social insurance and welfare programs. We should go in the opposite direction, not add more of the same.

Cohen/Butler: “The WISH Act would also strengthen private insurance by using public insurance to address a part of the risk that is hard for the private insurance market to predict: the costs associated with long-duration LTSS need. Historically, the unpredictability of these costs has discouraged insurers from offering policies in this market. But having a well-defined public insurance program in place would stabilize the market and make it more appealing to new entrants.”

LTC Comment: That statement displays a fundamental misunderstanding of the role of private insurance. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. The private insurance industry is uniquely qualified to perform that role responsibly in actuarially sound ways that the government has shown it is incapable of doing. Filling gaps with private coverage as the WISH Act proposes and Medi-Gap policies do is not insurance. It is dollar cost averaging which lacks the leverage against risk that real insurance provides. By taking over the catastrophic health risk, Medicare ruined genuine private health insurance for the elderly and placed an insupportable burden on the U.S. economy which has no hope of covering that program’s unfunded liabilities, currently $33.2 trillion according to the US Debt Clock. To add more to government’s catastrophic promises at this stage is unwise and irresponsible.

Cohen/Butler: “The largest public payer of LTSS is the Medicaid program. While it pays for more than half of all LTSS, however, it covers support services only after people expend most, if not all, of their personal resources. … The WISH Act would have a dramatic impact on state Medicaid programs, helping to stem expenditure growth and in a manner that also advances health equity. Indeed, by covering long-duration LTSS needs, which are the primary driver of LTSS costs, the WISH program would reduce Medicaid expenditures by at least 23 percent, based on an analysis of a similar approach.”

LTC Comment: The WISH Act would not reduce Medicaid LTC expenditures at all, much less by 23 percent. That’s because the proposed legislation does nothing to change Medicaid’s hemorrhaging financial eligibility system. The idea that Medicaid LTC benefits are only available “after people expend most, if not all, of their personal resources” insults the intelligence of anyone who knows how Medicaid actually works. Income only obstructs eligibility if it exceeds the cost of a nursing home, $7,750 per month on average, hardly low income. Virtually all large assets are exempt including $603,000 or $906,000 of home equity depending on the state and, with no limit on the amount, one vehicle, prepaid burial expenses, term life insurance, one business including the capital and cash flow, IRAs in payout status as most are for older people due to required minimum distributions, household goods and personal belongings, including expensive “heirlooms.” Elder law attorneys expand these already generous rules to qualify their affluent clients by means of special trusts, annuities, and spend down gambits.

Absent estate recovery, which most states do not pursue aggressively, Medicaid operates to preserve substantial assets for heirs at the expense of taxpayers. Heirs who receive large bequests because their parents’ long-term care costs were paid by Medicaid are not likely to purchase long-term care insurance for themselves. If Medicaid operated as it should, as a safety net for the poor, there would be no credible need for a program like the WISH Act proposes. People would know LTC is a personal risk and cost. They would use personal savings and home equity conversion to purchase their preferred kind of high quality care in the private market. In time, more would buy private LTCI to protect their savings and home equity. Fewer people would need Medicaid leaving the program with more resources to provide better care to truly needy recipients. Everyone can benefit by reducing government interference and funding instead of expanding both.

Cohen/Butler: “One of the shortfalls of the CLASS Act was that its design made it fiscally unsustainable, leading to its repeal in 2013. In contrast, the WISH Act is financed much like a typical insurance program, with a payroll premium offsetting program costs. In this case, 0.6 percent of wages would be collected from all participants (half from employees and half from employers). Like Social Security, full benefits would be available after 40 quarters of work. Pro-rated benefits would be available after six quarters. This structure would fund projected benefits and administrative expenses without general revenue.

“What does this mean for a typical worker? In early 2020, median weekly earnings for full-time wage and salary employees were $936. Thus, for such full-time employees, a total of $5.62 per week ($292 per year) would be set aside into a trust fund to pay for future catastrophic LTSS needs.”

LTC Comment: This is so much verbal slight-of-hand. CLASS failed because it was voluntary. It didn’t force people to participate under penalty of law as the WISH Act would. Structuring another quasi-welfare program on the model of Social Security, whose current unfunded liabilities are $21.4 trillion, is folly. Putting a median-income worker’s payroll tax into another “trust fund” that government will spend immediately and replace with IOUs it can never satisfy will be no consolation. Furthermore, what the “InLTCgentsia” never seem to grasp is that pulling $5.62 per week out of workers’ income and the same amount from their employers, which might otherwise have increased workers’ income, is a drag on the productive economy. We see the “benefits” they allege, but the opportunity cost—all the things productive people might have done with the wealth expropriated by government—goes unseen.

Closing LTC Comment: The essence of the Cohen/Butler case for the WISH Act is that

(1) Catastrophic spend down for nursing home care is wiping out the savings of large numbers of Americans. That is false. All but 7% of nursing home revenue comes from government programs. Is it long-term home health care, instead of nursing homes, that is wiping out so much wealth? No, only 11% of home health care expenditures are out-of-pocket. Most (85.3%) come from Medicare, Medicaid, and private health insurance with the remainder deriving from several small public and private financing sources.

(2) Private LTC insurance failed because insurers are afraid of catastrophic risks. That is false. Insuring catastrophic risk is the appropriate role for private insurance, one which government has proven fiscally incompetent to manage.

(3) People don’t buy private LTC insurance because it is too expensive. That is false. The main reasons private LTC insurance has languished are that (a) government forced interest rates artificially low making returns on reserves inadequate to avoid premium increases that alienated potential customers, and (b) after the insurable event occurs, Medicaid gives away the protection insurers were trying to sell when the need for expensive long-term care was still an insurable risk. If Medicaid did not crowd out private LTC insurance, people could purchase smaller amounts of it at much lower cost to close the remaining $15,000 gap identified (above) by NIC.

(4) We can’t possibly meet the long-term care needs of middle-income Americans without forcing them into another mandatory payroll-funded government Ponzi scheme like the ones that are already impossibly over extended financially. That is false. Long-term cares problems were created by decades of government financing that incentivized the public to ignore LTC risk, remain financially unprepared, and rely on public welfare if and when the need arose. Remove those perverse incentives and most people will do the right and responsible thing.

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Updated, Monday August 16, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-028: LTC NEWS AND COMMENT

Is The WISH Act A Real Fix For Long-Term Care Costs?
Who Will Take Care of America’s Caregivers?
Guest Opinion: Stop, rethink Washington state’s long term care law
Kaiser study finds severe workforce shortages challenging HCBS providers
Advisors, Take Fear Out of Long-Term Care Planning
Which long-term-care insurance plans qualify for a payroll tax exemption?
Social Security COLA Estimate for 2022 Raised to 6.2%
The Middle Ground For Fixing Long-Term Care Costs: The WISH Act
Life-LTC Combo Product Sales Fell in 2020: LIMRA
Getting Old Is a Crisis More and More Americans Can’t Afford
Democrats Hope To Beef Up Medicare With Dental, Vision And Hearing Benefits
Should Medicaid protect $8 trillion from private senior living costs?

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Updated, Monday August 9, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-027: LTC NEWS AND COMMENT

Schweitzer urges Inslee to end long-term care insurance benefit
A Woman’s Guide to Long-Term Care
Money For Nothing: The Biden Administration Seeks To Overturn Section 1115 Demonstration Safeguards
Genworth Hopes to Return to Long-Term Care Market Next Year
2021 Poverty Projections: Assessing the Impact of Benefits and Stimulus Measures
SNF-at-Home Model Becoming ‘Critical Player’ For Success
How a Medicaid Trust Protects Your Assets
The Evolution Of Long Term Care: What we might learn from Germany and other countries about managing the care for our aged
Advising non Washington State Employers about the Collection & Remittance process for their Washington State Employees for Wash. Cares
Deaths From Alzheimer's Far More Common in Rural America
The InLTCgentsia
Low vaccination rates, rise in variants preventing end to COVID-19 crisis in long-term care
COVID-19 Cases and Deaths in Long-Term Care Facilities through June 2021
3 Reasons Dementia Cases Could Triple by 2050
Ageism remains last accepted prejudice in ‘egalitarian’ workplace, according to research

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Updated, Friday, August 6, 2021, 10:40 AM (Pacific)

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LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: The best-laid plans of mice and men often go awry and especially in long-term care financing policy, after the ***news.***

*** JOIN THE LTC RESISTANCE: Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies that would make the ones critiqued in today’s LTC Bullet look benign by comparison. Act now before it’s too late.

In addition to today’s featured column and the recent articles linked below, Steve has the following piece accepted for publication in August:

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: We thank McKnight’s Long-Term Care News for publishing the following article on July 26, 2021. Long-term care providers and insurers share a common interest in improving public policy that governs LTC services and financing. Equally important, however, is that these two components of the long-term care business collaborate to prevent bad public policy from taking effect. Please read this article and, if you have something to say about it or the topic, avail yourself of the opportunity to comment, which McKnight’s provides readers at the end of the piece. Or just drop me a note at smoses@centerltc.com. Thanks for your time and attention to this important subject.

“Great moments in unintended LTC consequences”
by
Stephen A. Moses

Reason.com publishes a video feature called “Great Moments in Unintended Consequences.” Each episode features three problems, three “solutions,” and comical coverage of the unanticipated results.

For example, “The Luxury Yacht Tax.” The year: 1990. The problem: the national debt is exploding. The solution: a 10% luxury tax on expensive boats.

Narrator: “Sounds like a great idea with the best of intentions. What could possibly go wrong?”

It turns out that while wealthy people buy yachts, it’s usually middle-income people who make them. This tax plan cut sales of luxury boats by 70%, destroyed hundreds of thousands of middle-class jobs, and resulted in a net loss of tax revenue to the government.

Many episodes of this feature are equally amusing and thought-provoking. They got me thinking about “Great Moments in Unintended Long-Term Care Consequences.”

The year: 1965.

The problem: People are living longer, dying slower and in desperate need of more long-term care.

The solution: Provide Medicaid-financed nursing home care covering room and board as well as custodial and skilled care for anyone who can’t afford it otherwise and with no limit, for the first 15 years, on transferring assets to qualify.

“Sounds like a great idea with the best of intentions. What could possibly go wrong?”

With free long-term care available after they need it, people didn’t bother to save, invest or insure for that big risk and cost when they were young and healthy enough to prepare.

Once they needed care, most discovered they could get Medicaid to pay as long as their incomes were below the cost of a nursing home and they held their assets in easily convertible exempt form, such as a home, car, business, IRAs, prepaid burial funds, term life insurance, household goods or personal belongings.

Demand surged. Medicaid nursing homes filled to 95% capacity in the 1980s. Private pay census at market rates plummeted while Medicaid residents, reimbursed at less than the cost of care, surged. Care quality suffered. You can’t expect Ritz Carlton care for Motel 6 rates.

Medicaid costs exploded, so the government tried to clamp down on eligibility by penalizing asset transfers to qualify, requiring estate recoveries and capping the home equity exemption. But Medicaid planning lawyers dodged these restrictions, and expenditures continued to skyrocket.

Easy access to free or subsidized nursing home care stunted a private-pay market for home care and assisted living for decades until welfare-financed institutional care got such a dubious reputation that people were willing to spend their own money to stay out of a nursing home.

Potential private sources of long-term care financing, such as home equity conversion and private LTC insurance, dried up. Why spend your own money when Uncle Sam is so eager to pay for long-term care, room and board if you ever need them?

So, today we approach the second third of the 21^st century, when boomers start turning 85 and blow the lid off medical and LTC costs just as the Social Security and Medicare trust funds run out, forcing those programs to cut their payments.

We find ourselves overly dependent on welfare-financed institutional long-term care with untrained, unpaid family and friends struggling to care for loved ones and little hope the system will do anything but deteriorate further.

It’s all because well-intentioned academics, policymakers and politicians wanted to help by providing more long-term care back in 1965, then kept on “fixing” it until it became the Rube Goldberg mess it is today, and never asked, much less answered the key question: “What could possibly go wrong?”

But at least they’ve learned their lesson and no longer want to turn long-term care over to more government financing and regulation. Right? Alas, no.

Most of the recommendations coming from analysts and think tanks these days call for even more government involvement, including billions of dollars for Medicaid home-and-community based care and new, compulsory, payroll-funded, government-regulated entitlement programs with “trust funds” bound to be diverted to current spending like the ones we have already.

That sounds like doubling down on the same policies that caused long-term care’s problems in the first place. What could possibly go wrong?

There is a better way. For a fuller explanation of what did go wrong with long-term care and how to fix it, read Medicaid and Long-Term Care.

Steve Moses is president of the Center for Long-Term Care Reform and author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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Updated, Monday August 2, 2021, 10:40 AM (Pacific)

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