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

READ STEVE'S BIO

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Updated Monday, October 14, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-038: LTC NEWS AND COMMENT

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

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

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

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

Long-Term Care Out of Reach for 6.5 Million 'Near Dual' American Seniors
A Bad Policy Proposal from Kamala Harris: Home Health Care Benefits in Medicare
Harris Home Care Plan: Right Problem, Wrong Solution
Distrust of assisted living helps drive older adults’ desire to age in place
Who Will Pay For Ms. Harris’s Long-Term At-Home Care Proposal?
This Surprising Hobby May Help Keep Your Brain Sharp Later in Life
LTCR Joins LTC Global
Prevention Is the Best Long-term Care Planning Strategy
Harris Wants Medicare to Cover Home Care for More Seniors

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

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Updated Friday, October 11, 2024, 10:03 AM (Pacific)

Seattle—

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LTC Comment: Today’s special Guest Column brings us Stephen D. Forman, Senior Vice-President of LTC Associates, who weighs in on Washington State’s currently-compulsory public long-term care insurance program, after this ***message.***

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

All LTC Bullets and E-Alerts
Access to our Members-Only Zone website and Almanac of Long-Term Care
Subscription to our Clipping Service
Email/phone access to Steve Moses for 24-hour turnaround queries

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

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

LTC Bullet: Guest Column, "Yes on I-2124"

LTC Comment: The fate of Washington State’s WA Cares Fund hangs in the balance as voters will soon decide whether to make participation in the State’s long-term care insurance plan voluntary, putting at risk its long-term financial viability. Could WA Cares Fund go the way of the CLASS Act? For thoughtful analysis of such issues, we often turn to Washington State resident, author and long-term care insurance expert, Stephen D. Forman. For previous installments on the WA Cares Fund’s saga by Mr. Forman, see also: “LTC Bullet: The WA Cares Fund Gets a Bad Wrap” and “LTC Bullet: Kill or Cure WA Cares?.” In the meantime, here’s his latest.

"Yes on I-2124"
by
Stephen D. Forman

Spend any time listening to opponents of ballot Initiative 2124 [1]—that is, those who are fighting to maintain mandatory employee participation in WA Cares—and a powerful message comes through. They believe passionately in long-term care insurance.

“Our loved ones can’t afford to lose our long-term care benefits,” says this ad.

“By ending our long-term care insurance program, I-2124 will take away help from family caregivers who help their older parents, spouses, and other loved ones remain in their homes for as long as possible, where they consistently tell us they would rather be,” says AARP of WA.

These WA Cares supporters not only love LTC insurance, but evangelize as if they always have, and already fear losing a benefit that’s not available until July, 2026. But if this is true, why haven’t these true believers been taking our calls?

Many would love insurance all right—just not from us. These consumers have no desire to buy from, or work in partnership with, Big Insurance, a market they’ve been told to distrust. One can take the temperature of the room from this paper-cliché villainizing “for profit insurance companies.”

But wanting is not the same as valuing.

Our profession has learned from decades of AHIP Buyer vs Non-Buyer surveys that non-buyers undervalue LTC insurance, just one-quarter of whom would be willing to spend what a policy actually costs. Most have some appreciation, but when shown the actual price, non-buyers backpedal: “Oh, in that case, I don’t value it that much.”

For most proponents—but not an insignificant minority we’ll get to in a moment—this has been their WA Cares dynamic.

Because an employee’s premium rises with income, most who’ve so far chosen not to contribute to WA Cares earn roughly 3.9x the median wage: $194,000/yr on average.[2] If more employees were given the opportunity to opt-out, and remaining insureds were asked to pay an unsubsidized rate—that is, would they still value WA Cares—I-2124 opponents seem convinced the answer would be, “Not at that price!”

Heck, here are I-2124 opponents in their own words: “It’s very difficult for any of us to imagine NEEDING [sic] services or support at home after an illness or injury so we will be tempted to not pay the premium.”

If I-2124 were to pass and WA Cares to become voluntary, you’ve been led to believe the sky will fall. You’ve been warned of an “insurance rate spiral.” But I find a measure of reassurance in Milliman’s modeling of a fully voluntary program. WA Cares could lose nearly 75 percent of its participants, and the resulting premium assessment might only need to double, to 1.14%[3].

The STC [short-term care] insurance market has been very rate stable, and their appropriately-rated blocks have tended to produce profits, not rate spirals.

Are there 775,000 motivated employees in Washington—25 percent of the original 3.1m—who value WA Cares sufficiently that they’d be willing to shell out—not 0.58%—but a 1.14% payroll tax—an average premium of $582 per year? Could WA Cares still command these glowing testimonials?

According to Ben Veghte, we may never know: “There’s no appetite in the Legislature to increase the premiums right now. And I don’t know if there will ever be.”

Perhaps I-2124 opponents are right to fear a voluntary program and its inability to lure even 775,000 people. After all, WA Cares already has a 100% voluntary program—the self-employed market. The state assumed that 40,000 self-employed would voluntarily opt-in during the first year, then another 25,000 every year thereafter. The last cumulative total I saw in April, 2024 had reached 620 volunteers.

Call me an optimist, but I actually think in a post-I-2124 world WA Cares could command a lot of voluntary interest—even 775,000 participants. The reason owes to that “not insignificant minority” I mentioned earlier. These are non-buyers with a quite understandable reason for “waiting” for WA Cares:

They’re commercially uninsurable.

The coalition against I-2124 has added groups such as the National Multiple Sclerosis Society and ALS Association to its roster, while making the point that it’s not about money: “Medical underwriting limits access to insurance regardless of the affordability of the policies.”[4]

On the other hand, “WA Cares covers all pre-existing conditions. That means that the 57% of non-elderly adults with pre-existing conditions can now get long-term care benefits if we need it, when we’d otherwise be stuck without an option.”

There’s no denying WA Cares’ guaranteed insurability is its winningest proposition. The upshot is that—speaking in broad strokes—the individuals who are most vocally defending WA Cares are those who expect to file a claim on the first day they can, and to use the entire benefit. This is hardly breaking news: in the actuarial graphs it looks like a double black-diamond ski slope of claims.

Intuitively, it makes sense that if you removed most of the healthy insureds and left behind mostly claimants—and paid out $36,500[5] on each of them without even much time to earn interest—you’d soon have a problem on your hands. For context, the state anticipates paying out $1.87b in claims in FY 2027.

That’s why things couldn’t remain as they are if I-2124 passes: you’d have to take countermeasures. We’ll learn what contingencies the state has planned just six days before the election, on October 30^th. I expect the LTSS Trust Commission will revisit the vesting provisions. The “3 of the last 6 years” rule has always felt like it was courting disaster, and lengthening the vesting period is one of the steps explicitly advised to counteract a rate spiral.

I exaggerate by saying everyone would file a claim immediately, of course, and as time goes on every new participant’s “immediately” can occur no sooner than three years after making their first premium assessment. Obviously, the longer the vesting period, the more defense against adverse selection. The part-time work requirement is another underwriting trick, borrowed from group/multi-life LTC.

As it is, not everyone agrees that rate spirals are inevitable, since not everyone agrees that we are good judges of our own future risk and need for care. Besides, the pool of money is not very substantial. To put the WA Cares benefit in perspective, it’s just 1/3^rd the size of the maximum pool of money Penn Treaty was selling in WA eighteen years ago under its impaired risk policy series.[6] Some readers are allergic to the mention of Penn Treaty, but that policy series has had only a 20 percent rate increase, and its $263,525 benefit (2024, for those who bought inflation protection) is fully backed by the Washington Life & Disability Guaranty Association.[7] WA Cares is vulnerable to change every time the legislature meets, and nothing is guaranteed from year to year, not even so-called “vested” benefits, which the state could unwind prior to July, 2026.

I can’t tell you what will happen at the ballot box this November, when we celebrate the 24^th LTC Awareness Month. No matter what happens, I say to our new friends, “Better late than never!” I hope neither the state, its agencies, nor WA Cares surrogates lose their passionate belief in long-term care insurance.

(Many thanks to CLTCR friend Stephen D. Forman and corporate member Long Term Care Associates for this latest contribution to LTC Bullets.)

[1] The Fiscal Note for I-2124 can be found here.

[2] “Using the new ESD data, trended to 2022 levels, we project the average wages for the individuals opting out to be approximately $194,000 (as seen in Figure 3).”

[3] This represents the “full adverse selection” scenario: “To provide a specific example, take a 25% participation rate scenario. Under a 25% participation rate, for the high end of our results range, we assumed the individuals with both the 25% lowest wages, as well as the 25% poorest health status would be the only individuals to participate.”

[4] Some who think they are uninsurable may be mistaken: “If you have a pre-existing condition, such as cancer or diabetes, private insurers will not provide coverage.”

[5] “So $36,500 paid out on day one and we saw the tax, the the premium assessment, would need to be increased by 2 basis points… So changing the reimbursement on a daily level, we're just not seeing that moved the needle a significant amount since in general we're assuming that many beneficiaries will use the $36,500 benefit in total.” Annie Gunnlaugsson, March 21^st, 2024.

[6] “We have also added a 3 Year Lifetime Maximum Benefit Period. You can still write up to a $100 a day in benefits and the same great Underwriting applies!” (August 1, 2006)WA-SR400(Rev)(7-06)

[7] SERFF Tracking LTCG-131225787, SERFF Tracking LTCG-131707810, SERFF Tracking LTCG-132437501

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Updated Monday, October 7, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-037: LTC NEWS AND COMMENT

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

After recent increases, senior living resident fees projected to decline: Ziegler
Want to Retire on a Budget? Consider these U.S. Destinations with Affordable Health Care
Bipartisan bill would ease long-term care workforce shortage, advocates say, but ‘there’s more to be done’
Long-term care costs continue to rise, regardless of politics
Regulators Eye Rules for 600% Long-Term Care Insurance Rate Increases
Initiative 2124 would make WA Cares insurance program tax optional
Long-term care insurance: From crisis to opportunity
Nebraska woman spends $240K/year on care for husband with Alzheimer's - twice the cost of a private room in a nursing home facility. How aging at home is crushing Americans' finances

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Updated Monday, September 30, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-036: LTC NEWS AND COMMENT

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

Employees Desire Supplemental Health Benefits Amidst Rising Healthcare Costs, New York Life Survey Finds
1-in-2 working Americans underestimates their life expectancy by 5-plus years, resulting in skewed retirement income goals — how to make your money last in later life
The Keys to Aging at Home? Frank Conversations and Financial Planning
3 insurance types experts say seniors should buy now
America's Best Nursing Homes 2025
Expert says Medicaid, Medicare reform is critical and can save $2.1 trillion
6 Key Retirement Changes Under SECURE 2.0 Act
What are the options for covering long-term care?
Nearly two-thirds of Americans fear Medicare will not be there when they need it

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Updated Friday, September 27, 2024, 10:03 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care News and Analysis

LTC Comment: Center for Long-Term Care Reform Premium members have the option to receive our LTC Clipping Service and weekly LTC E-Alerts newsletters. Today, we’d like to share a sample of these members-only services with a wider audience. Our topic is the news this week, so we’ll skip our usual ***news*** section and dive straight in.

LTC Bullet: Long-Term Care News and Analysis

Many Center for Long-Term Care Reform Premium members are familiar with our LTC Clipping Service, and from what we hear, get great value from this benefit of Premium membership.

For those who don’t already know, our LTC Clipping Service is an excellent way to stay on top of current and critical long-term care news without having to spend hours a day researching on the internet. We send our Clipping Service subscribers an average of 2-3 emails per workday with a must-read-article link, a pull quote and some brief analysis. We’re sensitive to the fact that we all receive too many emails, so we’re very careful to send along only the most important LTC news items.

If you’re reading this, chances are you play a valuable role in protecting people from the risk and cost of long-term care and to that end we think the Clipping Service allows our subscribers to be more effective doing so. Based on their feedback, we think our subscribers feel the same. For example:

In my entire 24- year career in the long term care insurance industry I have never seen such a spate of articles in popular media – including print, digital, radio, TV - highlighting long term care as one of the top worries of aging Americans facing retirement. As a supporter of the Center for Long Term Care Reform and a subscriber to “LTC Clippings” I have been kept completely “in the loop” and fully up to date on the vastly increasing information flow about the need for LTC planning. I can not only see what my prospects and clients are reading and hearing about the industry but also have good quality information to share with the “centers of influence” that depend on me for information. The “clipping service” is just one of many benefits provided by the Center and I am grateful to Stephen and Damon Moses for providing a tool that has been so important over the years to the success of Franklin & Associates and Franklin Funding Reverse Mortgages. -- Barbara Franklin, CEO

Your clipping service is the best. I seldom give out insurance company brochures to prospects, much preferring the third party endorsement of published articles that are far more believable than an insurance company brochure. The news does a great job of creating urgency to act as well. You bundle them and send to my inbox for me to use, wonderful! I’m speaking to a group at lunch today and will be handing out an article that was published two days ago that you alerted me to. Keep up the good work, saves me time, and makes me money. -- Romeo Raabe, www.TheLongTermCareGuy.com

Please find below a sample collection of clippings we’ve sent to our Clipping Service subscribers over the past few months. Read through them and if you think that receiving news items like these in real time would be valuable to you, please consider subscribing at the Premium membership level. By doing so, you can stay on the forefront of professional knowledge and help us fight for rational long-term care policy reform.

Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month.

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9/23/2024, “Nearly two-thirds of Americans fear Medicare will not be there when they need it,” by Nationwide, PRNewswire

Quote: “Americans are increasingly concerned about the future of Medicare, with nearly two-thirds (63%) fearing the program will not be there when they need it, according to the annual Nationwide Retirement Institute^® Health Care Costs in Retirement survey. When asked about their biggest retirement planning stressor, one in five (20%) selected Medicare running out of money.”

LTC Comment: Many people rely on the solvency of Medicare, but one particularly vulnerable group--nursing homes (and their residents)--depend on it to make up for low Medicaid reimbursements. Furthermore, the questionable financial viability of America’s entitlement programs is all the more reason to save, invest or insure for future healthcare and long-term care needs.

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9/22/2024, “You say you want a resolution?,” McKnights Long-Term Care News, by John O’Connor

Quote: “It’s clear the long-term care field is in a tough spot. At a time when worker shortages have never been more severe, regulators are pushing for minimum staffing benchmarks.

“One proposed response was a resolution to overturn the directive. But Republicans have now announced they won’t pursue that option, as it would face a certain veto from the Biden administration.

“The nursing home industry needs more than just regulatory demands — it needs real, targeted action. That means new policies where you invest in building a stronger long-term care workforce and ensure providers aren’t shortchanged by inadequate reimbursement.

“The stakes are too high to rely on mandates that don’t address the core issues. What’s needed is a comprehensive, strategic plan to strengthen the long-term care industry — before things get really ugly.” (Emphasis added)

LTC Comment: One core issue that should be addressed is limiting access to Medicaid resources to those who truly have no other options and requiring those who can save, invest or insure for their long-term care needs to do so. This would divert many people away from overburdened and under-funded nursing homes and into care setting they prefer, thereby targeting scarce Medicaid resources to those who truly need it and improving conditions for all.

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9/19/2024, “Longer lives, divorces, smaller families mean more older adults are living alone,” Kathleen Steele Gaivin, McKnights Senior Living

Quote: “More older Americans are living alone, either by choice or by circumstances, than 50 years ago, according to the US Census Bureau.

“As of 2023, about 28% of people aged 65 and older lived by themselves, the agency said. That’s up from about 10% of older adults living alone in 1950.”

LTC Comment: The fraying of the familial safety net, combined with the demographic challenges brought by the cresting age wave, leaves LTCi poised as an even more valuable resource.

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9/16/2024, “What if Medicaid paid market rates?,” by Stephen A. Moses, McKnights LTC News

Quote: “Most of long-term care’s problems boil down to heavy dependency on low Medicaid reimbursement rates. The program paid 61% of total U.S. LTC spending in 2022 at about 70% of private-pay rates. Economists explain that government price fixing causes market disruptions. Set prices too low, and shortages occur.

“Providers are forced to compensate by compromising on services. Most complaints about questionable LTC quality, high cost, inadequate staffing, caregiver shortages, too much nursing home and too little home care, all the big challenges would improve or disappear entirely if Medicaid paid market rates.

“But something else will happen. Cost shifting to private payers in order to compensate for low Medicaid rates will no longer be necessary. The market rate for LTC will settle substantially below the private pay rate but well above the current Medicaid rate. Everyone, including private payers and Medicaid, will pay that market rate infusing the LTC service delivery system with desperately needed revenue and resolving most of the problems challenging LTC today.”

LTC Comment: Read this concise explanation of America’s LTC problem, and what to do about it, in Steve’s latest “Guest Column” for McKnights LTC News.

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9/12/2024, “The States Are Dangerously Dependent on Medicaid-Expansion Dollars,” by Gary D. Alexander, National Review

Quote: “A recent study by the Paragon Health Institute points out that a fundamental flaw with Medicaid expansion is its inequitable distribution of federal funds. As currently implemented, the program has the federal government covering 90 percent of the medical costs of able-bodied adults but only 50 to 75 percent of the costs of elderly, disabled, and child recipients — populations that tend to require the most expensive and intensive care. This creates a perverse incentive for states to prioritize the coverage of healthy adults, who are cheaper to care for, while the truly vulnerable are left underfunded. This imbalance isn’t just fiscally irresponsible — it’s morally wrong. The system effectively rewards many individuals who could seek insurance through other means, while it forces states to bear a heavier financial burden for those who genuinely depend on Medicaid for survival.”

LTC Comment: Upside down ethics and perverse incentives infect Medicaid in so many ways as we point out often here. Kudos to my Paragon Health Institute colleague Gary D. Alexander for shining the light of scrutiny on this example.

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9/2024, “Beyond the Numbers: Assisting Clients with LTC Concerns,” by Danielle Andrus, Journal of Financial Planning

Quote: “There are a lot of statistics that planners can employ to illustrate the risk that their clients will face regarding future care needs. A common one is that 70 percent of people who live to age 65 will need paid long-term care at some point. Bill Comfort, owner of Comfort Long-Term Care and director of training for the Certification in Long-Term Care (CLTC) designation and continuing education program, believes this overstates the true risk of needing care. ... Margie Barrie, a long-term care insurance specialist with ACSIA Partners, believes that whether you buy an insurance policy or not, everyone needs to have a plan for long-term care.”

LTC Comment: This article by the editor of the Journal of Financial Planning cites LTCI industry experts Bill Comfort and Margie Barrie at length. Click through to see what they have to say.

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8/28/2024, “I don't have a spare $150,000, so long-term care insurance is absolutely worth the cost,” by Angie Chapman, Business Insider

Quote: “With lifespans longer and families more spread out, it's essential that I think about long-term care. Long-term care insurance comes in many forms at many costs, including as part of a life insurance policy. I hope to have a long, comfortable life, but I'm preparing for whatever is ahead.”

LTC Comment: Short, sweet and to the point. And in a business magazine!

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8/25/2024, “Long-term care is in trouble,” by John O’Connor, McKnights LTC News

Quote: “The American Health Care Association/National Center for Assisted Living released some updated supply and demand numbers last week. To say they are concerning would be an extreme understatement. In a nutshell: Since the onset of COVID-19, nearly 800 nursing homes have closed, displacing almost 30,000 residents. ‘It’s not hyperbole to say access to care is a national crisis,’ said Mark Parkinson, the organization’s president and CEO. He’s right. Nursing homes are closing faster than new ones can open, and the challenges aren’t just logistical. They’re existential.”

LTC Comment: John O’Connor has edited McKnights’ LTC newsletters for decades. When he’s this worried about America’s nursing homes, we all should be. To make sense of what ails LTC, read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers.

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8/2/2024, “Listen to Ken Dychtwald on the Georgetown CRI Podcast,” Age Wave

Quote: “Age Wave is delighted to have partnered with the Georgetown Center for Retirement Initiatives for two events this year. In June, Ken Dychtwald delivered a keynote presentation at their 2024 Policy Innovation Forum in Washington DC. He also just appeared on their podcast "The State of Retirement: Shaping the Future," where he was interviewed about ‘What is the New Retirement in an Age of Longevity?’”

LTC Comment: Click through for more insights from the inimitable Ken Dychtwald. ICYMI, check out the Paragon Health Institute’s “virtual LTC event” hosted by Ken Dychtwald and featuring yours truly.

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7/24/2024, “How States Can Support Individuals In The Long-Term Services and Supports Gap,” by Laura Benzing, Hannah Godlove and Megan R. Burke, Health Affairs

Quote: “But what about the large population of middle-income Medicare beneficiaries nationwide who do not qualify for Medicaid and cannot afford to hire a home health aide? These individuals fall into an ‘LTSS gap’ where care is difficult, if not impossible, to access. … Near Medicaid-eligible individuals who fall into the LTSS gap experience higher rates of disability and less access to potential family caregiver support compared to Medicare beneficiaries with higher incomes. … State policy makers can consider opportunities to address the LTSS gap under existing authorities including expanding Medicaid eligibility and State Plan Amendments, Section 1115 Demonstrations, Older Americans Act funding, and other state-driven initiatives.”

LTC Comment: Health Affairs published my comment on this article. It begins: “Respectfully, there is no ‘LTSS Gap’.” It continues to explain how high-income and high-asset people routinely qualify for Medicaid LTC benefits, crowding out needier people from better care. Click through to read the article and my comment. Next Friday’s LTC Bullet will include a more detailed critique of the article and why its recommendation—ever more government spending on LTC—is exactly the wrong prescription for what ails LTC.

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7/12/2024, “States Set Minimum Staffing Levels for Nursing Homes. Residents Suffer When Rules Are Ignored or Waived.,” by Jordan Rau, KFF Health News

Quote: “An acute shortage of nurses and aides in the nation’s nearly 15,000 nursing homes is at the root of many of the most disturbing shortfalls in care for the 1.2 million Americans who live in them, including many of the nation’s frailest old people. They get festering bedsores because they aren’t turned. They lie in feces because no one comes to attend to them. They have devastating falls because no one helps them get around. They are subjected to chemical and physical restraints to sedate and pacify them. … Now the Biden administration is trying to guarantee adequate staffing the same way states have, unsuccessfully, for years: with tougher standards. Federal rules issued in April are expected to require 4 out of 5 homes to boost staffing. The administration’s plan also has some of the same weaknesses that have hampered states. It relies on underfunded health inspectors for enforcement, lacks explicit penalties for violations, and offers broad exemptions for nursing homes in areas with labor shortages. And the administration isn’t providing more money for homes that can’t afford additional employees.”

LTC Comment: Nursing homes are caught between the rock of inadequate reimbursement and the hard place of mandatory quality. Compulsory staffing levels won’t help any more than wage and price controls fix market imbalances. The fundamental problem is excessive government interference, i.e. funding and regulation, in the long-term care market. The only way progress will ever be made is to identify what causes the problem and address it with real market-based solutions. That’s what the Paragon Health Institute did in two reports: “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

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7/2/2024, “Older adults’ home equity tops $13 trillion in first quarter,” by Kathleen Steele Gaivin, McKnights Senior Living

Quote: “Homeowners aged 62 or more years saw their housing equity grow by $328.5 billion in the first quarter, according to data released Friday by the National Reverse Mortgage Lenders Association. The increase brings older adults’ housing equity to a record $13.19 trillion, according to NRMLA. Housingwire reported that the increase marks ‘a recovery after decreases observed over the past year.’”

LTC Comment: Good news indeed because home equity is America’s true LTC safety net when Medicaid, Medicare and Social Security fail.

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6/27/2024, “Battle Flares Over Long-Term Care Insurance Rate Hike Rules,” by Allison Bell, ThinkAdvisor

Quote: “Some regulators want special rules for the oldest insureds and phase-ins of big increases. Trade groups said regulators should stick with rules meant to keep insurers in business. Genworth said some moves to soften rate increase blows may create confusion or lead to bigger total increases. … ‘Deviating from actuarial principles may lead to inadequate premiums, jeopardizing insurer stability and consumer protection,’ according to a letter to the LTC Actuarial Working Group signed by Jan Graeber of the American Council of Life Insurers and Ray Nelson of America’s Health Insurance Plans.’”

LTC Comment: “Deviating from actuarial principles may lead to inadequate premiums?” Well, yeah. That’s exactly what’s happened to America’s big entitlement programs which are underfunded to the tune of many trillions of dollars. When the time comes to pay benefits, private LTCI carriers will be able to pay if regulators don’t hamstring them with un-actuarially-based requirements. Hard to imagine the government entitlements will be able to pay benefits, except in vastly deflated dollars.

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6/21/2024, “Protecting and Preserving Property When Paying for Long-Term Care,” by Christine A. Barone, The National Law Review

Quote: “‘I have to sell my house to pay for my nursing home care.’ This is a common misconception among persons requiring skilled nursing home care and/or their family members. Oftentimes a person requiring long-term care in a nursing home will require Medicaid benefits to pay for that care as nursing homes costs can average anywhere from $10,000 to $15,000 monthly. Selling one’s home and using the proceeds to pay the nursing home is not the only option in these cases. A proper long-term care and asset protection plan, even if your only asset is your home, can protect the value of your property for your loved ones and/or for your supplemental needs and care. … As such, it is important to meet with a qualified elder law attorney to discuss your options in regards to property and qualification for Medicaid benefits for long-term care.”

LTC Comment: Between this shyster and the hard-working LTC insurance agent, who do you think will make the sale? Still wonder why so few people pay premiums to get the coverage lawyers and Medicaid give away? Shame on The National Law Review.

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6/11/2024, “Revenue pressures driving home care consolidation, private equity’s growing influence, provider group says,” by Adam Healy, McKnights Home Care

Quote: “Pressures such as insufficient government reimbursement and rising Medicare Advantage penetration are contributing to consolidation in home care and hospice, LeadingAge told regulators last week in response to a February request for information surrounding healthcare market competition.”

LTC Comment: Crowding out small providers and commoditizing home health care does not bode well. The growing cozy alliance between big government and big business subverts the potential benefits from a freer LTC marketplace.

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6/8/2024, “Soaring premiums, denied benefits, delayed payments show crisis in long-term care insurance,” by Jeremy Olson, Star Tribune

Quote: “The Minnesota Department of Commerce has to approve any rise in premiums, but it's proving impossible for the agency to balance its goals of protecting consumers from massive monthly bills and keeping private insurers in business. … A key miscalculation by insurers: They didn't anticipate the five-year rise in U.S. life expectancy since 1980, so they underestimated the number of people surviving long enough to need long-term care. Many plans also came with inflation adjustments that exponentially increased the value of their benefits, especially as policyholders outlived projections. Insurers also overestimated the proportion of policyholders who would cancel their plans. … Policyholders can cut premium increases by agreeing to reduced benefits — waiving future inflation growth or capping the dollar amount of benefits or the number of years they can be used. … Denials of benefits are increasingly common as policyholders beset with disabilities or dementia — or adult children taking on new care-giving roles — struggle with insurance paperwork.”

LTC Comment: Hit pieces on LTC insurance are nothing new. I remember one especially virulent article that the New York Times brought to press on opening day of the 7^th annual Intercompany LTC Insurance Conference in Dallas (LTC Bullet: Sucker Punched in Dallas, April 10, 2007). Just once, it would be nice to find some balance in media coverage. Maybe compare how miserably Medicaid and Medicare have done in managing LTC financing. Or mention the Federal Reserve artificially dropping interest rates to zero and crushing returns on carriers’ reserves. Or how about recognizing how well and creatively the LTC insurance industry has managed its challenges, creating new hybrid products and dealing with premium increases responsibly, unlike the government programs that cannot pay future claims but have done nothing to adjust. It would be nice to see some recognition that the vast majority of complaints about failure to pay claims turn out to be specious, based on expecting carriers to pay when contractual policy conditions are unmet. Don’t hold your breath. But do soldier on fellow fighters for LTC reform!

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6/6/2024, “Ageless Aging: A Woman’s Guide to Better Healthspan, Brainspan, and Lifespan,” by Maddy Dychtwald, Age Wave

Quote: “Ageless Aging presents a pioneering new way for women to feel energetic, purposeful. and vital while gaining the upsides of aging, including more happiness, wisdom, and resilience. It provides a holistic action plan based on cutting-edge research that helps women take advantage of the scientific, medical, psychological, and spiritual tools, tips, and advice available to help women live better longer. It’s available wherever books, ebooks, and audiobooks are sold. You might enjoy some of Maddy’s recent interviews where she addresses many of the themes in her book: LA Times ‘Want to live to 100? That May Depend on Your Sex,’ MarketWatch ‘Women Live Longer than Men, but there’s a ‘Dark Side,’ and Barron’s ‘Women’s Guide to Retirement and Aging.’”

LTC Comment: Another fine offering from the Dychtwalds, this time from Ken’s wife, Maddy.

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5/31/2024, “The Costs of the Rising Cost of Long-Term Care,” by Lee Pruitt, ElderLawAnswers

Quote: “Do you have a family member who is receiving some form of long-term care? If you don’t, the chances are good that someday you will – and that day may not be too far away. … Long-term care insurance offers a way to safeguard against the high costs of long-term care, providing financial protection, choice, and peace of mind. However, it’s essential to carefully consider the cost, benefits, and your unique circumstances before purchasing a policy. Consulting with an elder law attorney, financial advisor, or insurance specialist can help in making an informed decision tailored to individual needs and financial situations. Contact an experienced elder law attorney near you today to talk further about your options for affording long-term care. They can walk you through the options that may be available to you and help you understand the benefits and costs.”

LTC Comment: More Medicaid planner double talk. They used to pooh-pooh LTC insurance because it competes with their cash cow, Medicaid planning. But when putting affluent people on welfare got too much negative publicity, they changed their tune. Now they say, LTC insurance is wonderful, so come to us so we can tell you how expensive it is and that you should rejigger your income and assets to qualify for Medicaid. Legal fees are much less than insurance premiums.

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Updated Monday, September 23, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-035: LTC NEWS AND COMMENT

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

You say you want a resolution?
House Committee Advances Important Bills For Nursing Home Workforce, Telehealth Flexibilities
Best Long-Term Care Insurance Companies of 2024
Longer lives, divorces, smaller families mean more older adults are living alone
Biden-Harris Administration Announces Nearly $100 Million to Grow the Health Workforce
Survey reveals knowledge gap in long-term care planning among income groups
Warning From Older Adults: Care for Aging in America Needs Urgent Rethinking
What if Medicaid paid market rates?

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Updated Monday, September 16, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-034: LTC NEWS AND COMMENT

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

· Millennial sparks important discussion by admitting he can't take care of his mom in her old age

· What is Medicaid Estate Recovery?

· 13 things to know about long-term care planning

· Welfare Is What’s Eating the Budget

· The States Are Dangerously Dependent on Medicaid-Expansion Dollars

· You Aren’t as Sick as Government Claims

· Half of home care workers have seen, experienced workplace violence, report finds

· Massachusetts Long-Term Care Bill Passes After Efforts by Elder Advocacy Groups

· Why home equity should be in the long-term care conversation

· Report: More than one-third of nursing homes don’t have required medical director

· Beyond the Numbers: Assisting Clients with LTC Concerns

· The cost of senior care: Why aging farmers fear the nursing home

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Updated, Friday, September 13, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: MORE KFF DATA MISINFORMATION

LTC Comment: Does KFF misunderstand, misinterpret, or misrepresent LTC insurance data? All three? See what you think after the ***news.***

*** ILTCI ’25 in Philly next March wants to hear from you. “Call for Speakers/Producers & Session Ideas or Topic Requests. The ILTCI Board and the Program and Education Committee are already working on bringing our attendees the best conference ever for 2025! Session development is just beginning now. If you have any topic requests, session ideas, or if you'd like to help by producing or speaking at a session this year, then now is your time! Please use this link for submissions. Registration for ILTCI 2025 will open sometime in October. We're now accepting applications for exhibitors and sponsors! See you in Philly in March!” ***

*** JOIN the Center and receive all our LTC Bullets and LTC E-Alerts. Become a premium member and get our daily LTC Clippings as well. Your Center for Long-Term Care Reform exists to promote policies that deliver quality LTC to all Americans. We conduct research and pursue advocacy toward increasing private financing and relieving public LTC spending with the goal to improve funding and quality for all levels and venues of long-term care. Join our campaign here. Check out all the individual and corporate membership options here. Read our 1384 LTC Bullets, organized by topic and chronologically, here. Following are sample LTC Clippings. Help continue the good fight. Support the Center for Long-Term Care Reform.

*** LTC CLIPPING SAMPLES:

9/4/2024, “You Aren’t as Sick as Government Claims,” by Charles Silver and David Hyman, Wall Street Journal
Quote: “Criminals and legitimate providers—hospitals, physician groups, drug manufacturers, pharmacy benefit managers and insurers—raid the Treasury in other ways too. Within the past few weeks, it was reported that crooked brokers and insurers are helping five million ObamaCare enrollees enjoy $20 billion a year in premium subsidies by misrepresenting their incomes, and that half or more of Medicaid’s annual $217 billion budget for long-term care goes to people wealthy enough to cover their bills.”
LTC Comment: My July 1 “Paragon Prognosis” titled Medicaid’s $100+ Billion Leak was the source for this Medicaid reference.

9/2024, “Beyond the Numbers: Assisting Clients with LTC Concerns,” by Danielle Andrus, Journal of Financial Planning
Quote: “There are a lot of statistics that planners can employ to illustrate the risk that their clients will face regarding future care needs. A common one is that 70 percent of people who live to age 65 will need paid long-term care at some point. Bill Comfort, owner of Comfort Long-Term Care and director of training for the Certification in Long-Term Care (CLTC) designation and continuing education program, believes this overstates the true risk of needing care. ... Margie Barrie, a long-term care insurance specialist with ACSIA Partners, believes that whether you buy an insurance policy or not, everyone needs to have a plan for long-term care.”
LTC Comment: This article by the editor of the Journal of Financial Planning cites LTCI industry experts Bill Comfort and Margie Barrie at length. Click through to see what they have to say.

9/3/2024, “The cost of senior care: Why aging farmers fear the nursing home,” by Juliana Kim and Tim Evans, NPR
Quote: “Long-term care insurance exists, but it's deeply unpopular with older Americans. So, many seniors dip into their retirement or savings to get the care they need, while others apply for Medicaid, which has its own challenges. … Long-term care insurance is rife with its own problems, from complex underwriting to rising premiums. … Short-term care policies are a newer alternative to long-term care insurance, said Lance Boyer, a sales director at Farmers Union Insurance in North Dakota. But their benefits usually last no more than a year. … Another option is Medicaid, which is the largest single payer for long-term care in the U.S. In North Dakota, while the program completely covers nursing home costs, enrollees can only have a few thousand dollars to their name. They can keep some additional cash and their home and car if it's in their spouse's name, but generally no other property. That’s especially troubling for farmers, whose livelihood and families are often intertwined with their land.”
LTC Comment: This article is a confusing muddle. Here’s the truth. Medicaid exempts the home and the farm business, including its capital and cash flow. That’s how farmers paid for LTC since 1965. That’s also why so few of them purchased LTC insurance. While estate recovery is a concern for some, it is easily avoided by a Medicaid planning attorney. The big LTC problem for farmers nowadays is getting access to any care as Medicaid-dependent nursing homes go out of business and care of any kind becomes difficult to find anywhere nearby. So more and more care falls on unpaid families and friends. The whole sad, worsening mess derives from government trying to help and ruining the LTC market.

LTC BULLET: MORE KFF DATA MISINFORMATION

LTC Comment: Our most recent LTC Bullet, titled “LTC Data Manipulation,” analyzed KFF’s publication “10 Things About Long-Term Services and Supports (LTSS).” We concluded KFF distorted National Health Expenditure data in service to an ideologically biased LTC Narrative. To wit: Medicaid and out-of-pocket LTC expenditures appear bigger when you exclude Medicare and private insurance from the data, which supports the mistaken conclusion that catastrophic LTC spend down is widespread and, therefore, America needs a big new, compulsory, payroll-funded LTC entitlement program.

Our essay triggered another analyst to opine further about faults in the same KFF publication. So we invited Stephen D. Forman, CLTC, Senior Vice President of Long Term Care Associates, Inc., to share his thoughts in today’s “Guest Bullet.” Following are quotes from the “10 Things About Long-Term Services and Supports (LTSS)” article followed by Stephen’s “LTC Comments.”

KFF: “In 2021, just 80,000 people filed claims for private long-term care insurance benefits.”

LTC Comment: KFF seems perplexed by what they perceive as a low number of claimants. It’s not clear what the right number should be, but KFF does not believe the industry is paying much of a share.

KFF: “In 2021, about 7.1 million people nationwide paid premiums for private long-term care insurance (LTCI), including standalone LTCI and also an array of products that pair life insurance or an annuity with some long-term care coverage (Figure 6). The age and other demographics of those people are unknown.”

LTC Comment: I don’t always have the latest data, but I usually know someone who does (or knows someone who does). So if I can locate “the age and demographics of those people,” then KFF, which bills itself as “the independent source for health policy research, polling, and news,” can. Between BrokerWorld Magazine’s 2024 Survey, AHIP’s 2017 “Who Buys Long-Term Care Insurance?,” or AALTCI’s Fast Facts (2022) I think they can work it out.

KFF: “While those premiums may sound low relative to private health insurance premiums or to the costs of LTSS, LTCI is purchased before a person develops a need for LTSS and most people pay premiums for many years without using any benefits.”

LTC Comment: The idea that insurance is to be purchased before someone needs to file a claim is so obvious as to beggar belief what it’s doing here. What about the idea that “most people pay premiums for many years without using any benefits?” First, I’ve personally never liked this framing since I don’t subscribe to the belief that you have to file a claim to receive a benefit. The benefit is transferring risk and not being liable during the period covered, liberating money which would have otherwise been tied up. But I know most people don’t view insurance that way. I can’t tell if KFF conceptualizes LTC insurance as analogous to health insurance, and expects the product to behave the same. I do know that most people also pay taxes for many years without using particular benefits, for example Medicaid. Why KFF makes a big deal about the former, but not the latter is anyone’s guess.

KFF: “…most people pay premiums for many years without using any benefits. That is one of the reasons that only around 80,000 people filed a claim for LTCI benefits in 2021.” (Emphasis added.)

LTC Comment: That is not a reason, it is just making the same point twice.

KFF: “It is not uncommon for people to die without using benefits or to let their coverage lapse in response to rising premiums.”

LTC Comment: Not so fast—it’s not low lapse rates that have challenged assumptions, but high lapse rates. Here’s the NAIC: “A consequence of the limited data was that insurance companies overestimated lapse rates, or the number of policyholders who would voluntarily drop their policies.” (pages 18 – 19) In any event, I’m not sure how many insureds are forfeiting a benefit by lapsing in 2024. In the NAIC’s latest consumer research regarding how consumers would respond to a rate increase, “lapse” wasn’t even an option since people could receive either contingent nonforfeiture or a cash buyout.

KFF: “There are a number of limitations of LTCI. Many policies don’t have inflation protection, limit eligibility for services, do not cover all expenses, and have lifetime limits.”

LTC Comment: Here we go again. Medicaid has limitations, so does WA Cares. If “many” policies don’t have inflation protection, it’s because individuals chose not to add that mandatorily-offered option. If “many” policies have lifetime limits, others do not, and consumers can choose what they want. What does this even mean?

KFF: “Insurers could also go out of business before coverage is needed…”

LTC Comment: And programs like CalPERS and WA Cares can jeopardize the credit rating of their respective states, which is why we plan ahead. In the case of the private LTC insurance market—which has seen precious few insurers “go out of business,” consumers are protected by state insurance guaranty funds. It’s not a perfect system, but it’s one that insurers and producers are legally discouraged from promoting, although KFF is not. They could’ve done a service by explaining how this FDIC-like backstop functions.

Closing LTC Comment by your editor, S. Moses: We thank Mr. Forman for his thoughtful observations. KFF’s dismissive attitude about private LTC insurance displays ignorance and ideological bias unworthy of an objective source. We can’t help but wonder how careless KFF is about other topics in the health care policy sphere. When market-based analysis and solutions are ruled out thoughtlessly, we’re left with more of what we already have—a government-dominated LTC system that fails everyone.

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Updated Tuesday, September 03, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-033: LTC NEWS AND COMMENT

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

· Caregivers score worse than non-caregivers on most health measures, CDC finds

· The impact of Medicaid Estate Recovery

· I don't have a spare $150,000, so long-term care insurance is absolutely worth the cost

· Assisted living edges out home care, nursing home as paid long-term care choice for middle class

· ‘A devastating effect’: Aging care stakeholders warn of drastic repercussions of proposed home health rule

· Year-over-year health spending growth highest ‘by far’ for home healthcare

· Play on, Picklers! The health benefits of pickleball

· Workforce participation expected to continue to decline, report finds

· Long-term care is in trouble

· Hi, Kids! We're Moving In

· Study Reveals Long-Term Care Insurance Reduces Hospital Costs and Improves Care

· Medicare Advantage Plans Get High Marks from Customers

· More Annuity Owners Are Buying Their Contracts From Issuers

· Here's Why Consumers Accept Hikes in Long-Term Care Insurance Rates

· Study finds differences in home health usage between MA, traditional Medicare beneficiaries

· No quick fix, but quality concerns demand nursing home reform: experts

· Long-Term Care Costs Emerge as a Top Issue for Older Americans

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Updated, Friday, August 30, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: LTC DATA MANIPULATION

LTC Comment: “Statistics don’t lie, but liars use statistics.” We explain after the ***news.***

*** 2024 LTC SURVEY. The current July/August issue of Broker World contains the 2024 Milliman Long Term Care Insurance Survey. This annual compilation of findings authored by Claude Thau, Nicole Gaspar and Chris Giese is the 26^th consecutive review of stand-alone long-term care insurance published by the magazine. Check it out here. If you don’t already subscribe, definitely do so here. ***

*** ILTCI ’25, the Inter-Company Long-Term Care Insurance Conference, to be held March 9-12, 2025 in Philadelphia, has announced that Exhibitor & Sponsor Applications for ILTCI 2025 are Now Available! (With Early Bird Pricing) Get the Exhibitor & Sponsor Prospectus and the Exhibitor & Sponsor Form now. We’ll keep you posted as more information about the big industry conference becomes available. ***

*** SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2022 DATA UPDATE: Read this latest of our 20-year annual series as context for today’s LTC Bullet. ***

LTC BULLET: LTC DATA MANIPULATION

LTC Comment: National Health Expenditure data on long-term care (LTC) spending seem straight forward. Three NHE tables cover expenditures for Nursing Facilities and Continuing Care Retirement Communities (CCRCs) (Table 15), Home Health Care Services (Table 14) and Other Health, Residential and Personal Care Services (Table 13). Endnotes 1, 2, and 3 below describe those categories, respectively. The following table includes all these spending sources. They cover the LTC waterfront, but they need some adjustments according to KFF (Kaiser Family Foundation).

For example, in “10 Things About Long-Term Services and Supports (LTSS),” published July 8, 2024, KFF explains that it “excludes spending from certain payers.” These excluded sources include “$94 billion in Medicare spending, most of which is post-acute care, but some of which is home health spending that might be considered LTSS.” Also “excluded is spending from private insurance [$52.7 billion] because much of those expenditures are for rehabilitation and not LTSS.” Private long-term care insurance is excluded “in most cases” because it “reimburses people for the expenses they pay out-of-pocket and would be classified as out-of-pocket spending in the NHE data.”

Backing out those sources has the effect of reducing total LTC spending in 2022 from the $571 billion NHE total in the table to KFF’s $415 billion. Let’s ask two questions. First, is there a rationale for leaving those sources in the total instead of excluding them? Yes. Take Medicare’s $94 billion for example. Of course Medicare doesn’t pay for LTC, but it is critical to America’s LTC financing system. LTC providers are heavily dependent on Medicaid which pays them 70 percent of private-pay rates and often less than the cost of providing the care. They survive financially only because Medicare pays more generously for a much smaller number of sub-acute and rehab patients. Remove Medicare’s $94 billion and the whole financing system collapses. To see the complete LTC financing picture accurately, Medicare must be included.

What about private insurance, including LTC insurance? True, some health insurance benefits, such as major medical coverage, go for rehabilitation, not LTC. But as in the case of Medicare, those payments help sustain a rickety LTC service delivery system, so they should not be excluded. For private LTC insurance specifically, isn’t it interesting that it gets lumped in the “out-of-pocket” bucket. Why might that be? That brings us to our second question.

Why do analysts and policymakers define LTC spending in some ways and not in others? What effect do the exclusions just described have on the big picture of LTC spending? Backing out Medicare and private insurance raises Medicaid’s contribution to total LTC costs from 44.6 percent in the table to the 61 percent KFF reports. It increases out-of-pocket spending from 12.5 percent in the table to KFF’s 17 percent. In other words, these exclusions make Medicaid and out-of-pocket expenditures appear much higher. Giving that impression supports a specific policy agenda, what I’ve called the LTC Narrative. Specifically, that narrative is that LTC costs are impoverishing people all across America and driving up Medicaid expenditures excessively which is why we need a new, compulsory, payroll-funded LTC entitlement program.

KFF isn’t the only group pushing that agenda by tinkering with the data. In 2011, the Centers for Medicare and Medicaid Services (CMS) changed the definition of NHE categories to combine CCRCs with nursing homes. That created an apples/oranges problem. Nursing homes rely mostly on Medicaid and have few private payers. CCRC’s include mostly private payers for independent and assisted living. They have fewer nursing home residents and very little Medicaid. So this definitional change had the effect of dropping Medicaid’s share of spending for the category from over 40 percent in 2008 to under one-third (32.8 percent) in 2009. Back then, cutting costs was a priority. Likewise, this change drove out-of-pocket expenditures up to over one-quarter, below what they would be for CCRCs but far above what they would be for nursing homes. Making out-of-pocket expenditures look high supports the narrative of widespread catastrophic spend down and the demand for more government funding and regulation.

The table below gives a more accurate rendering of the LTC financing landscape. It shows that when we leave in the funding sources KFF excludes, out-of-pocket costs clock in at only 12.5 percent. But that figure still overstates the impact of out-of-pocket LTC funding. Half of it is spend down of income, mostly from Medicaid recipients’ Social Security benefits. Only half, or about six percent, could come from savings. The vast majority of all LTC financing comes from third-party payors, mostly government. Out-of-pocket costs are nominal despite the widespread belief that Medicaid requires impoverishment and families across the country are being devastated by LTC costs. That lie is the real reason most people don’t think about or plan for LTC and end up on public assistance. It is no reason to compound the error of relying too heavily on government funding and regulation by adding more of the same with a big new entitlement program.

There is much more to this story. To understand what is really wrong with LTC and what needs to be done to fix it, read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution,” watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers and check out “Medicaid's $100+ Billion Leak.”

Source: National Health Expenditures*

2022 (Billions)

Total

Medicaid

Medicare

Private Insurers

OOP

Other Payers

NH + CCRC[1]

191.3

100%

58.5

30.6%

42.2

22.1%

18.2

9.5%

48.3

25.2%

24.1

12.6%

HH[2]

132.9

100%

46.9

35.3%

47.5

35.8%

18.6

14.0%

15.4

11.6%

4.5

3.5%

Other[3]

246.5

100%

149.3

60.8%

4.2

1.7%

15.9

6.4%

7.8

3.2%

69.3

28.1%

Total

570.7

100%

254.7

44.6%

93.9

16.5%

52.7

9.2%

71.5

12.5%

97.9

17.2%

* 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.

[1] Nursing Care Facilities and Continuing Care Retirement Communities:
Covers nursing and rehabilitative services provided in freestanding nursing home facilities. These services are generally provided for an extended period of time by registered or licensed practical nurses and other staff. Care received in state & local government facilities and nursing facilities operated by the U.S. Department of Veterans Affairs are also included. These establishments are classified in NAICS 6231-Nursing Care Facilities and NAICS 623311-Continuing Care Retirement Communities with on-site nursing care facilities.

[2] Home Health Care:
Covers medical care provided in the home by freestanding home health agencies (HHAs). Medical equipment sales or rentals not billed through HHAs and non-medical types of home care (e.g., Meals on Wheels, chore-worker services, friendly visits, or other custodial services) are excluded. These freestanding HHAs are establishments that fall into NAICS 6216-Home Health Care Services.

[3] Other Health, Residential, and Personal Care:
This category includes spending for Medicaid home and community based waivers, care provided in residential care facilities, ambulance services, school health and worksite health care. Generally these programs provide payments for services in non-traditional settings such as community centers, senior citizens centers, schools, and military field stations. The residential establishments are classified as facilities for the intellectually disabled (NAICS 62321), and mental health and substance abuse facilities (NAICS 62322). The ambulance establishments are classified as Ambulance services (NAICS 62191).

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Updated, Monday, August 19, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-032: LTC NEWS AND COMMENT

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

Long-Term Care Costs Emerge as a Top Issue for Older Americans
The Overextended Retirement State
CMS: Nursing Home Medicare Spending and Discharge Rates Vary Widely by Dual Enrollment Status, Race
Senior care leads in healthcare bankruptcies
Study shows LTC costs are seniors’ No. 1 health concern, but expert says no help in sight
MA penetration expected to top 64% by 2034, analysis finds
Homebound MA beneficiaries have higher readmission, mortality risk, study finds
Medicare Advantage Hits 32.8M Enrollees, 54% of Spending
How Medicaid cripples SNFs

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Updated, Monday, August 12, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-031: LTC NEWS AND COMMENT

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

House Bill Could Create an Unlimited LTCI Premium Deduction
Letter: Long-term care — my modest proposal
CDC releases new profile of assisted living residents
Medicare Advantage in 2024: Enrollment Update and Key Trends
As $90 Trillion "Great Wealth Transfer
How 'Home-Based Planning' Can Address Long-Term Care Costs
Researchers doubt Alzheimer’s drugs will make a dent in dementia reduction
Coffee-Dementia Link Continues to Unfurl
A fourth of Americans over age 50 are caregivers for family, friends
Government support of dementia caregiving across the continuum important: poll
Families headed by someone at or near retirement have more debt than in decades past

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Updated, Friday, August 9, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: THERE IS NO “LTSS GAP”

LTC Comment: This Health Affairs article offers a solution without a problem. We explain below.

LTC BULLET: THERE IS NO “LTSS GAP”

LTC Comment: A new Health Affairs “Forefront” article proposes solutions for a problem that does not exist. We offer the following rebuttal as part of our “Standing Guard” series. Those 101 LTC Bullets (to date) correct errors in “peer-reviewed” journal articles that occur because scholars ignore how Medicaid LTC actually works in practice. They cling instead to myths sustained by a short-sighted literal reading of the law and regulations. They ignore real-world evidence from outside their academic echo chamber. Here’s the latest example.

Laura Benzing, Hannah Godlove, and Megan R. Burke. "How States Can Support Individuals In The Long-Term Services and Supports Gap." Health Affairs Forefront, July 24, 2024. DOI: 10.1377/forefront.20240723.226615. You can find my comment on this article below it on the Health Affairs and at the end of today’s LTC Bullet.

Following are quotes from the LTSS Gap article followed by our LTC Comments.

LTSS Gap: “If your income is low enough, you might qualify for support in your home and community or a nursing facility through Medicaid, the primary payer of LTSS [long-term services and supports]. … But what about the large population of middle-income Medicare beneficiaries nationwide who do not qualify for Medicaid and cannot afford to hire a home health aide? These individuals fall into an ‘LTSS gap’ where care is difficult, if not impossible, to access. Today, nearly 40 million unpaid family caregivers provide 36 billion hours of care, but this is an unsustainable model as family members live further apart and balance multiple demands.”

LTC Comment: This article begins by describing how hard it is for Americans to get assistance with activities of daily living. Medicare won’t pay for LTSS. Private care is excessively expensive. Low-income individuals turn to Medicaid. But middle-income people are presumed to be ineligible. Nor can they afford a private home health aide. Alas, they fall into an “LTSS gap.” Either they go without needed care or they become a burden on millions of unpaid family caregivers. Everything in this opening assessment is either completely wrong or misunderstood and misinterpreted as explained below.

LTSS Gap: “State Medicaid income eligibility for the aged, blind, and disabled population varies across states from 75 percent to 138 percent of the federal poverty level. Because 138 percent of poverty is the top of the threshold, we define ‘near Medicaid eligibility’ as individuals who have incomes between 139 percent and 221 percent of poverty. We use 221 percent as the upper bound because, among states offering a ‘special income pathway’ to home- and community-based services (HCBS) for individuals with an institutional level of care need, the 300 percent federal benefit rate (which translates to approximately 221 percent of poverty) is a common income eligibility limit.”

LTC Comment: What’s wrong with this description of Medicaid’s ostensibly draconian income eligibility standard? It seems to come right out of federal and state laws and regulations. But it ignores how the system actually works in practice. Most state Medicaid programs allow applicant/recipients (ARs) to subtract their personal medical or LTC expenses from their income before applying a low-income standard. Other states cap income at 300 percent of the SSI monthly limit but allow ARs to shift excess income into diversion trusts, making them eligible despite having large incomes. The bottom line is the same everywhere. There is no firm upper limit on income. As a rule of thumb, income up to the monthly cost of a nursing home, often $8,000 to $10,000, rather high income, is not disqualifying. The article’s assertion that Medicaid LTC eligibility is limited to people with 75%, 138%, 221% of the poverty level … or any other set amount is wrong and worse, misleading.

LTSS Gap: “Some individuals may meet Medicaid income eligibility criteria but do not qualify for Medicaid because of the asset limit, which, in many states, means an individual can retain a minimal amount of personal assets (usually about $2,000).”

LTC Comment: Medicaid ARs are limited to $2,000 of countable assets. But most large assets held by the middle class are exempt, such as a minimum of $713,000 and a maximum of $1,071,000 of home equity depending on the state. Furthermore, an unlimited amount of countable assets can be converted easily to exempt status by purchasing any of a long list of exempt assets available from financial advisors or online. These non-countable assets include one vehicle, a business, prepaid burial plans, IRAs in payout status, home furnishings and all personal belongings. In 2014, the Government Accountability Office (GAO) found that 74 percent of its sample “owned at least some resources that were not countable as part of their financial eligibility determination … .” Reasonably $100 billion or more could be diverted from private LTC spending to a Medicaid liability nationwide in this way. For practical purposes, there is no limit to how much wealth Medicaid ARs may retain in or convert to exempt status.

LTSS Gap: “Individuals near Medicaid eligibility are unlikely to qualify for Medicaid or be able to afford LTSS out of pocket. … The literature refers to this broad population who cannot always afford LTSS as ‘the forgotten middle’ or ‘middle income.’ Understanding the characteristics and needs of individuals near Medicaid eligibility is the first step to addressing the LTSS gap.”

LTC Comment: Neither high income nor high assets prevent upper-middle-income people from qualifying for Medicaid LTC benefits. The “forgotten middle” is a fallacy. At most, there remain only some “forgotten wealthy,” people with so much income and resources, they would not qualify in spite of Medicaid’s very generous financial eligibility rules. The problem is not too few people on Medicaid, but too many. By making government LTC benefits so easy to obtain late in life while preserving exempt wealth, Medicaid desensitized the public to LTC risk and cost leaving most Americans dependent on public assistance when they confront catastrophic LTC costs. By covering too many people, Medicaid’s resources became inadequate to ensure access to quality care, especially in the home and community-based settings citizens prefer. But the situation is even more tragic and ironic than that. Medicaid hurts most the very same people who need it most.

LTSS Gap: “Older adults of color are disproportionately represented in the near Medicaid-eligible population, potentially furthering disparities in care.”

LTC Comment: If there is a near-Medicaid-eligible population with low income and assets, it primarily includes socioeconomically marginalized groups, including racial minorities. Medicaid financial eligibility rules devastate such individuals and families. They lose everything quickly to sky-high private LTC costs. They tend to live in neighborhoods with nursing homes and home care providers that rely heavily on Medicaid’s low reimbursement rates and lack supplemental philanthropic funding. They receive the low-cost care of uncertain quality that Medicaid is reputed to provide.

Compare affluent people, who qualify for Medicaid as easily and with less financial disruption because they can reconfigure their income and assets. As they “spend down” by purchasing exempt assets, they retain “key money” so they can pay privately initially for care. Key money enables them to gain admission to the best nursing homes and other LTC providers that are desperate for private payers at rates 1.5 times what Medicaid pays. They co-opt the best care Medicaid offers to the exclusion of poor people who lack the private funds to buy their way into the better care. This reality is the root and cause of the “structural LTSS racism” widely reputed in the peer-reviewed academic literature to be endemic in America’s long-term care service delivery and financing system.

LTSS Gap: “As the first state to eliminate the asset test starting in 2024, California’s Department of Health Care Services used a mix of Section 1115 Demonstration authority and the State Plan authority granted to states by the Social Security Act (note 2).”

LTC Comment: By eliminating its asset test for Medi-Cal LTC eligibility, California threw the public welfare gates wide open for wealthy people to access and appropriate scarce resources formerly, and more appropriately, preserved for people in need. This policy reduces the incentive for people with substantial wealth to plan ahead and pay privately for long-term care. It exacerbates the problem of structural LTC racism by further crowding out socioeconomically marginalized groups from Medicaid’s better care options.

LTSS Gap: “State policy makers can consider opportunities to address the LTSS gap under existing authorities including expanding Medicaid eligibility and State Plan Amendments, Section 1115 Demonstrations, Older Americans Act funding, and other state-driven initiatives.”

LTC Comment: Solving an “LTSS gap” that does not exist in the first place makes no sense. In fact state Medicaid programs have pushed such “solutions” to the limit of their ability to pay for them already. Medicaid nursing home and home care expenditures continue to rise annually. Home care options that were supposed to save money have not. Medicaid home care waiting lists approach 700,000 and people who receive home care often need institutional care eventually anyway.

LTSS Gap: “One strategy for meeting the LTSS needs of individuals near Medicaid eligibility is to adjust Medicaid requirements so more people can access Medicaid. States could make Medicaid accessible to more individuals by increasing income limits, increasing or eliminating asset limits, or implementing medically needy programs through State Plan and 1915 Waiver authority.”

LTC Comment: Loading up Medicaid with more high-cost LTC enrollees is the worst possible idea. It would vastly worsen the already serious problem of structural LTC racism. Far better to retarget Medicaid LTC benefits to those who need them most and redirect the middle class and affluent to early LTC planning to become private payers eventually. For a complete analysis of why that solution is best and how to achieve it, see the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

Following is my reply to the Health Affairs article "How States Can Support Individuals In The Long-Term Services and Supports Gap” Although posted 10 days ago, none of the article’s authors have replied to my criticism.

Stephen Moses

Respectfully, there is no “LTSS Gap.” The income and resource limits cited in this paper do not prevent affluent people from qualifying for Medicaid LTSS benefits. Most state Medicaid programs deduct private medical and LTSS expenses from income before applying a low-income standard. The others allow income diversion trusts to enable higher income people to qualify. A good rule of thumb: income below the cost of a nursing home, easily $8,000 to $10,000 per month, rather high income, is not disqualifying.

Likewise, the $2,000 resource limit cited in the article applies only to countable assets. But most wealth held by middle class and affluent people is exempt, including most home equity, a vehicle, a business, prepaid burial plans, IRAs in payout status, home furnishings and all personal belongings. Medicaid LTSS eligibility rules place no limit on exempt assets. All countable resources are easily converted to exempt status by using the former to purchase the latter. That method of spending down may account for $100 billion or more of excess Medicaid LTSS spending.

The real LTSS problem is not that too few people qualify for Medicaid, but rather too many do. By making LTSS benefits so easily available late in life for middle-class people, Medicaid created a moral hazard. It enabled the public to ignore LTSS risk and cost, avoid the necessity to save, invest or insure to prepare for extended care in old age, and still receive care when needed while preserving substantial exempt wealth. Consequently, few people prepare ahead for LTSS and most turn to Medicaid when they require care.

The tragic irony is that this system overloads Medicaid with too many enrollees causing scarce resources to be spread too thinly. Medicaid’s reputedly low-cost care of uncertain quality harms the program’s neediest enrollees most. Socioeconomically marginalized people, including racial minorities, tend to live in neighborhoods with nursing homes and other LTSS providers that are heavily dependent on Medicaid’s low reimbursements and unlikely to have supplemental philanthropic funding. Poor people receive the dregs of Medicaid LTSS care.

More affluent Medicaid enrollees live in nicer neighborhoods with better LTSS providers that are less dependent on Medicaid’s low reimbursements and more likely to have philanthropic support. As they “spend down” to Medicaid’s resource limit by purchasing exempt assets, these more financially comfortable applicants hold back “key money” so they can pay privately at admission. Because LTSS providers are desperate to attract private payers at 1.5 times what Medicaid pays, this key money ensures these better off enrollees have access to the best LTSS care Medicaid has to offer.

A large and growing peer-reviewed literature on “structural LTSS racism” reflects this system’s inequitable effects, hurting the economically disadvantaged while significantly benefiting more prosperous people. California’s unusually lenient financial eligibility system, including its recent elimination of any asset test for Medi-Cal (Medicaid), is the most egregious example of this problem. Nothing will change until scholars take into account how Medicaid LTSS financial eligibility really works in practice. They should stop assuming incorrectly that ostensibly strict rules in the statute and regulations actually prevail.

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Updated, Monday, August 5, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-030: LTC NEWS AND COMMENT

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

Listen to Ken Dychtwald on the Georgetown CRI Podcast
Reports reveal best, worst states for retirement, falls among older adults
Nearly half of dementia cases could be avoided or delayed by tackling 14 risk factors
How States Can Support Individuals In The Long-Term Services and Supports Gap
Just The Facts: Federal Staffing Mandate For Nursing Homes Threatens Access To Care For Americas Seniors
Nearly half of beneficiaries don't know the difference between Medicare and MA: survey
Study: Professional medication review is a must when older adults want to scale back meds
Nursing home employees among most likely to carry medical debt, related burdens: study

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Updated, Monday, July 29, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-029: LTC NEWS AND COMMENT

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

The Hidden Crisis in Long-Term Care
Gen X’s retirement woes may give rise to a generation of ‘silver squatters’
Medicaid Financing Reform: Stopping Discrimination Against the Most Vulnerable and Reducing Bias Favoring Wealthy States
Lawsuit slams staffing rule
Find long-term funding solution for Social Security now, 87 percent of respondents to survey say
New York City’s Biggest Job Engine Has Become a ‘Racket,’ Hochul Says
New poll sees if WA cares about payroll tax to fund WA Cares program
Stop Talking About Nursing Homes
Dementia rate decline accelerates during COVID-19 pandemic
Paragon Prognosis: Housing Isn’t Health Care
Who is eligible for both Medicare and Medicaid?

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Updated, Friday, July 26, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: WHAT IF THE LTC MARKET WERE FREE?

LTC Comment: Government dominates long-term care services and financing in the U.S. What if it were otherwise? Reflections after the ***news.***

*** JOIN THE CENTER. If you receive today’s LTC Bullet from a friend or colleague, please consider joining the Center for LTC Reform in your own right. You’ll receive our bi-weekly LTC Bullets and our weekly summaries, LTC E-Alerts, of our daily LTC Clippings. There is no better way to stay abreast of everything happening in the LTC policy space. On top of that, you will support and be part of our mission to reform LTC public policy. Our goal is to encourage responsible LTC planning instead of rewarding consumers’ denial that leads to excessive reliance on Medicaid. Find all the membership options here. Join and contribute here. ***

*** PREMIUM Center members also receive our daily LTC Clippings. Steve Moses scans the academic and popular media. He identifies the reports, data, and articles you need to see to stay at the forefront of professional expertise. He sends an email with the title, author, a link and a key quote followed by his brief analysis of its meaning. Here are some examples:

7/24/2024, “Medicaid Financing Reform: Stopping Discrimination Against the Most Vulnerable and Reducing Bias Favoring Wealthy States,” by Brian Blase, PhD and Drew Gonshorowski, Paragon Health Institute
Quote: “The Affordable Care Act (ACA) created a new eligibility category for Medicaid—able-bodied, working-age adults—with a much higher federal reimbursement percentage for these enrollees. This has led to a host of problems, including 1) a diversion of resources away from traditional Medicaid enrollees, particularly low-income children, and people with disabilities, that has reduced their access to health care services; 2) a near quadrupling of Medicaid’s improper payments; and 3) a surge of spending that has significantly contributed to large and growing federal deficits.”
LTC Comment: The ACA tipped the Medicaid scales against traditional aged, blind and disabled enrollees in favor of new, younger, able-bodied recipients, simultaneously causing expenditures and error-rates to rise perilously. Don’t miss this informative study by my colleagues at the Paragon Health Institute.

7/23/2024, “Lawsuit slams staffing rule,” by Josh Henreckson, McKnights LTC News
Quote: “A federal lawsuit filed by providers seeks to throw out the national nursing home staffing mandate, charging that it exceeds the authority of the Centers for Medicare & Medicaid Services and ‘creates impossible-to-meet standards that will harm thousands of nursing homes and the vulnerable Americans they serve.’ Some industry and legal experts have boldly predicted a straightforward provider victory.”
LTC Comment: It’s been decades since the nursing home business put up a real fight against bureaucratic government over-reach. Thanks to the recent Supreme Court Chevron decision, they have a shot. But, alas, the bureaucracy is fighting back: “Bill Introduced In Senate To Override Supreme Court’s Ruling On Chevron Doctrine.” We’ll watch and report to you as this plays out.

7/23/2024, “New poll sees if WA cares about payroll tax to fund WA Cares program,” by Claire Withycombe, The Seattle Times
Quote: “For about a year, many Washington workers have paid a 0.58% tax on their wages to fund a first-in-the-nation long-term care insurance program, an attempted antidote to the looming cost of caring for an aging population. But a new statewide poll suggests a narrow majority of likely voters, 52%, would support a ballot initiative making the tax optional, while 27% said they were certain to vote no and 22% of voters said they were undecided.”
LTC Comment: Voters who rejected WA Cares twice before when asked are likely to do it again. Will the politicians finally get the message? Compulsory, payroll-funded, financially vulnerable entitlement programs are so 20^th century.

***

LTC BULLET: WHAT IF THE LTC MARKET WERE FREE?

Free markets with unencumbered exchange between willing buyers and sellers generate price data that reflect preferences such as how much of which kind of a good or service people want and what the price should be to deliver the optimal supply for any given demand. When government tips the scale to encourage certain preferred outcomes, unforeseeable consequences, often undesirable, invariably occur.

LTC in a Free Market

What would the LTC market be like with no government regulation or funding? Certainly people would take the risk and cost of expensive extended care late in life more seriously than they do now. Without Medicaid to pick up the tab for catastrophically expensive nursing home or long-term home care while protecting practically unlimited exempt assets, planning for LTC would become a personal finance priority on a par with life, health, auto and fire insurance.

Without government limiting LTC providers and consumers to nursing homes or home care with 7000-person-long waiting lists, entrepreneurs would offer amazing new venues and practices for LTC service delivery. Home and community-based care would dominate because that’s what people want and people can demand what they want when they’re spending their own money or their insurer’s with no government bureaucrats intervening.

Of course, in a free market, you must pay for what you get. No more gaming Medicaid to access free or subsidized care while holding back “key money” to buy your way into the best nursing homes and home care to the exclusion of the needier people Medicaid was supposed to help. It won’t be cheap, but it will be a lot less expensive than private-pay LTC is now when Medicaid pays too little and private payers have to make up the difference by paying much more.

In a free market the cost of LTC will be as high as needed to clear markets. That is, prices will rise until they suffice to support enough providers at sufficient wages to meet the LTC needs of individuals and families. Caregiver shortages will therefore disappear. On the other hand, prices will decline to reach a balance reflecting market competition. Capitalism’s creative destruction removes inefficient, high-cost providers leaving only the most efficient, lower-cost operators.

So much for the rosy scenario. What about “market failure?” Capitalism and free markets harm the poor, don’t they? What happens to people who cannot afford the great new LTC choices the free market provides? What about the bad actors who overcharge for poor care. They’ll emerge without government regulation, right?

Those problems arise because, not in spite of, government funding and regulation as explained below. With a free LTC market in place, most people will prepare to pay for their own LTC. Few will remain in need of outside help from government or private charity. Without government to co-opt natural generosity, private philanthropy will revive and thrive. Private individuals and organizations will fill in to provide a better safety net than government welfare ever did.

LTC with Government Involvement

America has never had a long-term care system remotely approaching a free market. But there was a time long ago when left to its own devices a system more like the one described above might have developed. Instead, little by little, government intervened with more and more funding and regulation. You see the depressing results all around you today.

As people lived longer and longer in the 20^th century, they died slower and slower, often with debilitating chronic illness, physical frailty or cognitive impairment. Families, who formerly provided most care for their own elders, could no longer manage. Mom and Pop residential care supplemented, but did not become a huge corporatized nursing home industry until public financing flooded the market with capital.

Many people could not afford care. Available care was often dubious as a nascent private LTC market floundered. Instead of letting the market find its way over time, government stepped in to “fix” it. Early well-intended financial infusions and regulatory interventions snow-balled into the current overweening state and federal government behemoth.

It started with money. State and federal funds poured in, enabling people to pay for residential care, which quickly supercharged the nursing home industry. In 1965, that trend vastly increased as Medicaid made LTC available to anyone unable to afford it. Medicaid did not require poverty or catastrophic spend down as often claimed. It made free or subsidized LTC available to anyone with too little income and too few resources to pay private market rates.

Medicaid chose winners and losers. It paid exclusively for nursing home care, which unleashed that sector. It paid nothing for home and community-based care, which suppressed the care venue the public prefers. Later efforts through “waivers” to rebalance from institutional to home-based care exacerbated Medicaid’s exploding cost. It turned out that home care did not save money, despite expectations that it would, because too many people who received care at home ended up needing a nursing home eventually anyway.

Having pumped virtually unlimited state and federal funding into the nursing home industry and having made that high-cost care available to anyone who could not afford it otherwise, Medicaid became fiscally unsound. It could not afford to pay adequately to ensure quality nursing home care, much less home and community-based care. Quality deteriorated becoming a crisis by 1987 when the Nursing Home Reform Act mandated better care and more caregivers but without increasing reimbursements.

Easy Medicaid LTC eligibility enabled the public to ignore LTC risk and cost, leaving them dependent on public financing when stricken. Decades of relying on Medicaid if and when catastrophic care costs occurred deflated demand for private insurance to cover such costs. Publicly financed nursing home care delayed development of care options such as assisted living and impaired the private market for home care.

Government tried to ameliorate the damage easy access to Medicaid did by closing financial eligibility loopholes, imposing transfer of assets restrictions and mandating estate recoveries. But nothing worked. A cottage industry of private Medicaid planning attorneys always found creative ways around such efforts. High-income and high-resource people not only qualified for Medicaid, they could access the best care the program offers by holding back “key money” to buy their way into the best facilities and providers. That inequity crowded out the poor from Medicaid’s best care condemning them to the worst care often highlighted in media exposes and giving rise to widespread accusations of “structural LTC racism.”

Today, the LTC system government created is a total mess. Few people worry or plan for LTC. When they need it they qualify easily for Medicaid. But the available system pays too little to ensure quality care, leaving them with very limited options. They can pay privately for good care in preferred venues, which few can afford; or rely on Medicaid’s deficient choices; or burden their friends and families with unpaid, unprofessional care. Unable to tax or spend more to better fund the system it created, government continues to mandate better care and more caregivers without providing adequate funding.

Bottom line, America’s government-dominated LTC system is tragically dysfunctional. A free or freer LTC market would likely produce much better results. We will probably find out by default when the public system collapses and we have nowhere to turn but to a freer market. It would be so much better to experiment with alternatives on purpose.

If you find anything in this short essay dubious or if you want more evidence and detail, please read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers.

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Updated, Monday, July 22, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-028: LTC NEWS AND COMMENT

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

Home health sees spending, utilization decline as hospice equivalents grow, MedPAC reports
CDC report: Cognitive disability tops list of disabilities in US adults
My Dad Was Diagnosed With Dementia. Medicare's 7-Word Response Baffled Me
Home care spending outpaces nursing home spending ‘by far’
Biden Administration Backs Off From Medicare Agent Pay Fight
How Likely Are You to Need Long-Term Care?
A New Way to Pay for Long-Term Care Insurance

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Updated, Monday, July 15, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-027: LTC NEWS AND COMMENT

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

Trump shooter worked at nursing home
Genworth launches first LTC insurance plan in 5 years as Washington state residents consider ‘crazy’ plan that could end mandatory program
GOP calls for agency regulation review in wake of Supreme Court overturning of Chevron doctrine
States Set Minimum Staffing Levels for Nursing Homes. Residents Suffer When Rules Are Ignored or Waived.
Biden’s condition? It’s called aging, folks
LTSS increasingly expensive, with fewer guardrails and more demand to come: new KFF analysis
Genworth Unit Moves to File New Long-Term Care Policy
What nursing homes need, versus what they get

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Updated, Friday, July 12, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: UNDERSTANDING MEDICAID SPEND DOWN

LTC Comment: To fix long-term care you must understand Medicaid spend down. We explain after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau (BackNine Insurance). BackNine gives you a free personalized website at no cost. Your clients (& family & friends) can, with as little or as much of your involvement as you or they want, buy life insurance and LTCi, and can speed issue by scheduling a paramed and uploading medical records immediately. We quote stand-alone LTCi, linked-benefit and life with a LTC rider side-by-side. 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@back9ins.com to learn about more great BackNine features and services. ***

*** TWO BIRDS, ONE STONE. McKnights is a national news brand specializing in institutional long-term care, senior living and home care. This week McKnights published the same column I wrote about senior living with different titles in two of its venues. You can read “What assisted living needs versus what it gets” in McKnights Senior Living or “What nursing homes need, versus what they get” in McKnights LTC News depending on your interest. Same piece. Thanks to McKnights for this unique dual coverage. The Paragon Health Institute republished the article making it a trifecta. ***

*** AI TOLD YOU SO. Today’s LTC Bullet claims people can qualify for Medicaid LTC benefits without spending down assets for medical or long-term care expenses. If you don’t believe me, then consider this reply from Perplexity.ia to my query.

Question: “How do people spend down to qualify for Medicaid LTSS benefits without spending wealth on medical or LTSS expenses?”

Answer from Perplexity.ia: “People can spend down to qualify for Medicaid long-term services and supports (LTSS) benefits through several methods that do not involve directly spending wealth on medical or LTSS expenses:

Purchasing exempt assets: Individuals can convert countable assets into exempt assets that are not counted towards Medicaid eligibility. Common examples include:

Paying off the mortgage on a primary residence
Making home improvements or modifications
Purchasing a new vehicle
Buying household goods and personal effects
Prepaying funeral and burial expenses

Gifting assets: Some people choose to gift assets to family members or others. However, this strategy must be done carefully, as Medicaid has a ‘look-back’ period (typically 5 years) during which gifts can result in transfer penalties.
Establishing trusts: Certain types of irrevocable trusts can be used to protect assets while still qualifying for Medicaid. These may include special needs trusts or pooled income trusts.
Spending on non-medical necessities: Using funds for travel, entertainment, or other personal expenses that improve quality of life but are not directly related to medical care or LTSS.
Paying off debts: Reducing or eliminating outstanding loans, credit card balances, or other debts.
Purchasing long-term care insurance: Some states have partnership programs that allow individuals to protect more assets if they purchase qualifying long-term care insurance policies.
Spousal transfers: In cases where one spouse needs LTSS and the other does not, transferring assets to the community spouse can help protect those assets while allowing the institutionalized spouse to qualify for Medicaid.

It's important to note that Medicaid eligibility rules are complex and vary by state. Additionally, some spend-down strategies may have tax implications or affect future eligibility for other benefits. Individuals considering spending down to qualify for Medicaid LTSS should consult with elder law attorneys or financial advisors familiar with Medicaid planning in their state to ensure compliance with all regulations and to develop an appropriate strategy for their specific situation.” ***

*** ARTIFICIAL SPEND DOWN. For more on the damage done by widespread practice of qualifying for Medicaid by purchasing exempt assets, read this “Paragon Prognosis” I wrote for the Paragon Health Institute: “Medicaid’s $100+ Billion Leak.”

LTC BULLET: UNDERSTANDING MEDICAID SPEND DOWN

LTC Comment: The Social Security Act says Medicaid’s role in long-term care (LTC) is “to furnish (1) medical assistance on behalf … of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services, and (2) rehabilitation and other services to help such … individuals attain or retain capability for independence or self-care … .”

In plainer language, Medicaid’s LTC job is to provide medical assistance, rehabilitation and related services to individuals “ … whose income and resources are insufficient to meet the costs of necessary medical services … .” Note there is no requirement, as so often claimed, that people become “destitute” or “impoverished” to qualify. Anyone is eligible for Medicaid’s help who faces private medical or LTC expenses, but has too little income and resources to pay for them.

How does Medicaid decide whether an applicant for LTC benefits has insufficient income and resources to pay privately?

On the income side, most state Medicaid programs (34) require applicant/recipients (ARs) to prove that they spent down nearly all of their income for private medical or LTC expenses. Other states cap total income but permit higher-income applicants to divert their excess income into special trusts. Under either system there is no upper limit on how high starting income can be as long as documented private medical and LTC expenditures suffice or an income diversion trust is used. A good rule of thumb is that income below the cost of a nursing home, $8,000 or $9,000 per month, fairly high income, is not disqualifying.

Medicaid’s procedure to determine whether ARs have insufficient resources to pay privately for care is entirely different. Unlike for income, Medicaid requires no evidence that people spend down their resources for private medical or LTC expenses. They can expend their wealth on anything they wish, including products or services that Medicaid considers exempt from its very low resource limit, usually only $2,000. Because most large assets seniors own are exempt, such as home equity, a business, a vehicle, IRAs in payout, etc., and remaining countable assets are easily convertible to noncountable by purchasing exempt resources, such as home improvements, a new car, personal belongings or home furnishings, there is no upper limit on how much wealth Medicaid ARs can retain. For an estimate of how much value is diverted from private LTC spending into a Medicaid expenditure by means of purchasing exempt assets, see “Medicaid’s $100+ Billion Leak.”

Thus, despite its reputation as a program for the poor that requires spend down into impoverishment, Medicaid actually places no upper limit on how much income and resources ARs may retain. Bottom line, financial eligibility for Medicaid LTC benefits is not difficult to achieve. Beyond their income, which is Medicaid’s co-insurance, consumers have little “skin in the game.” This reality has terrible consequences for America’s foundering LTC services and financing system.

Financial Consequences

Nearly six decades of easy access to Medicaid LTC with the added benefit of preserving wealth created a moral hazard. It enabled the public’s denial of LTC risk and cost. Fewer people, in fact hardly any, plan early to save, invest or insure for LTC. Why bother when Medicaid has bailed out generations of elders when they face catastrophic LTC costs? As a result, we see spiraling dependency on Medicaid, with generations of adult children ignoring LTC planning as their inheritances are protected by Medicaid’s paying for their parents’ LTC.

Excessive reliance on government funding and regulation delivered a dysfunctional LTC system based on too much central planning. Heavy regulation by the Centers for Medicare and Medicaid Services (CMS) hamstrings LTC providers. It demands Ritz Carlton care but pays only Motel 6 rates. Government micromanagement, such as a recent staffing mandate without commensurate compensation, deflates morale as it exacerbates providers’ dilemma, pinched between the rock of inadequate reimbursement and the hard place of mandatory quality. Lacking market incentives to experiment with new care strategies, LTC providers offer only those care options for which the government will pay.

Access and Quality Consequences

Because Medicaid LTC benefits are so easy to qualify for financially, too many people rely on the program for its most expensive service. State and federal Medicaid LTC budgets are spread so thin and program resources are so limited that reimbursement levels for LTC providers must be kept notoriously low, often less than the cost of delivering the care. Low wages cause caregiver shortages. Care access and quality suffer, especially for the neediest recipients. The financial strain on institutional and home care providers reduces profitability and discourages private investment in LTC.

Medicaid’s long-standing institutional, i.e. nursing home, bias lingers despite decades of efforts to rebalance toward home care for two reasons. The public’s aversion to nursing home care helps restrain growing Medicaid expenditures. The hope that home care would save money did not prove out because too many people who receive home care end up needing a nursing home eventually anyway. Long waiting lists, upwards of 700,000, for Medicaid’s waivered home and community-based services (HCBS) further exacerbate access problems. Desire to avoid Medicaid’s low cost care of uncertain quality leads to excessive reliance on unpaid caregivers, severely stressing families and friends financially and emotionally.

Ethical Consequences

Perhaps most tragic of all is the structural LTC racism Medicaid causes. The program’s deficient access and quality is well known. Everyone who depends on the program suffers. But some suffer more than others. Marginalized, socioeconomic groups, including racial minorities, are quickly impoverished by Medicaid’s financial eligibility rules. They are already Medicaid dependents when they seek nursing home care or HCBS. More affluent people, who also qualify easily as explained above, are able to pay privately for a while before applying for Medicaid. That is important because revenue-starved LTC providers are desperate to attract market-rate private payers who contribute half again as much revenue per person as Medicaid provides.

What this means is that more affluent people who qualify for Medicaid have first access to the best care Medicaid provides. They tend to live in nicer neighborhoods where the best nursing homes and home care providers are found. LTC providers that are less dependent on Medicaid’s low reimbursement rates and that have greater philanthropic funding and higher Medicare and private pay census are known to provide the best care. Lacking the “key money” to buy their way into such care providers and tending to live in neighborhoods with fewer of the best providers, the poor, including racial minorities, have access only to the least desirable Medicaid-financed care. For these reasons, a large and growing academic literature condemns Medicaid as a primary cause of structural LTC racism.

Bottom Line

By funding most LTC, not only for the poor but for the middle class and affluent as well, Medicaid is the direct cause of most of America’s LTC problems. By covering everyone who is unable to pay privately for LTC, the program crowded out personal planning and responsibility, became the dominant payor for LTC, is unable to pay adequately to ensure good access and high quality, and favored the affluent over the needy whom it should have benefited most.

To improve LTC, Medicaid’s scarce resources should be re-directed to the needy and away from others who can and should pay for their own care. That policy change will quickly incentivize those who are able to plan early and take personal responsibility for LTC risk and cost. For more detailed analysis and a full explanation of how to achieve these goals see, the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

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Updated, Monday, July 8, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-026: LTC NEWS AND COMMENT

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

What assisted living needs versus what it gets
Federal Court Blocks Medicare Agent Pay Cap Regulations
Medicaid Efforts to Address Racial Health Disparities
Medicaid’s $100+ Billion Leak
Supreme Court Decision Limiting the Authority of Federal Agencies Could Have Far-Reaching Impacts for Health Policy
Older adults’ home equity tops $13 trillion in first quarter

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Updated, Monday, July 1, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-025: LTC NEWS AND COMMENT

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

Medicaid's 80/20 Rule: New Restrictions on Funding for Home and Community Based Services
BREAKING: Supreme Court’s Chevron ruling could defang CMS
Battle Flares Over Long-Term Care Insurance Rate Hike Rules
Medicaid Long-Term Care: Future And Current Retirees Need To Prepare
Keep an eye on Washington state initiative, long-term care insurance expert cautions
‘Deteriorating’ outlook for CCRCs to continue for rest of year: Fitch
How much long-term-care insurance do I need?
Is this the end of the line for nursing homes?

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Updated, Friday, June 28, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: KFF HOISTED AGAIN

LTC Comment: A series of KFF “issue briefs” intended to show how poor Medicare beneficiaries are prove the opposite. We explain after the ***news.***

*** JOIN the Center and receive all our LTC Bullets and LTC E-Alerts. Become a premium member and get our daily LTC Clippings as well. Your Center for Long-Term Care Reform exists to promote policies that deliver quality LTC to all Americans. We conduct research and pursue advocacy toward increasing private financing and relieving public LTC spending with the goal to improve funding and quality for all levels and venues of long-term care. Join our campaign here. Check out all the individual and corporate membership options here. Read our 1384 LTC Bullets, organized by topic and chronologically here. Following are sample LTC Clippings. Help continue the good fight. Support the Center for Long-Term Care Reform.

*** LTC CLIPPING SAMPLES:

6/27/2024, “Keep an eye on Washington state initiative, long-term care insurance expert cautions,” by Kathleen Steele Gaivin, McKnights Senior Living
Quote: “As the one-year anniversary of the effective date of the country’s first publicly operated, tax-based long-term care insurance program approaches July 1, voters in Washington state ‘are being given the choice to make the program optional, and early polling shows that’s very likely to happen,’ Jesse Slome, director of the American Association for Long-Term Care Insurance, said Wednesday.”
LTC Comment: It looks like WA Cares will follow the Pepper Commission, CLASS, and a series of Medicaid and LTC Commissions into the sinkhole of failed compulsory government takeover plans.

6/25/2024, “How much long-term-care insurance do I need?,” Dow Jones
Quote: “The way to get a more accurate figure is to look closely at the sick person's family history and current medical circumstances, and also their financial situation. This is not something you can do in a back-of-the-envelope way or even with a spreadsheet. Waterlily said it is able to help by crunching through decades of case studies to more accurately pinpoint the length of care needed, and also the range above and below that number to create a cushion. The service mostly is available through advisers, insurance companies and care facilities to help clients, rather than directly to consumers. With the help of an adviser, a family can then take the data and map out the costs of various care options against that time frame. Chen converts the future dollar amount to the value that has to be saved today, using the standard formulas of financial planners; then he can tell them how much they need to earmark and invest.”
LTC Comment: Intriguing idea. If you want to learn more, check out the forthcoming LTC Discussion Group meeting focused on this topic. “Using Data Science to Predict Individual LTC Needs and Identify Solutions,” Thursday, June 27, 2024, 1:00 PM 2:00 PM. The Group requires pre-registration. Learn more at www.ltcdiscussiongroup.org. ***

LTC BULLET: KFF HOISTED AGAIN

LTC Comment: To set the stage, read “LTC Bullet: Hoist with Its Own Petard,” April 28, 2017. In it we critiqued KFF’s April 2017 “Issue Brief” titled “Income and Assets of Medicare Beneficiaries, 2016-2035.” KFF argued that “Medicare beneficiaries are so poor that it behooves policymakers not to consider ‘decreasing federal Medicare spending’ when they are ‘addressing the federal debt and deficit.’” We explained that “what they inadvertently prove instead is that most Medicare beneficiaries are actually quite well off” and “what they miss entirely is that affluent [Medicare] beneficiaries capture a disproportionate share of Medicaid’s long-term care benefits.” Neither income, assets nor home equity stand in their way.

We concluded: “This KFF issue brief tries to sidetrack policymakers from addressing Medicare’s fatal fiscal flaws by focusing on beneficiaries below the financial median. But, contra the KFF argument and conclusions, most Medicare beneficiaries are doing quite well financially. Furthermore and ironically, with tragic consequences for the genuinely needy half of beneficiaries, the better off group is co-opting desperately needed long-term care resources that should go to the needier group. The fact that affluent whites live longer than poor minorities, consume a disproportionate share of Medicaid’s scarce resources, and plan for that eventuality as a result of incentives created by existing policies raises serious ethical questions—not because Medicaid forces people into impoverishment as usually assumed, but for precisely the opposite reason.”

That’s where we left the matter seven years ago. But KFF is back again with another issue brief promoting the same mistaken views: “Income and Assets of Medicare Beneficiaries in 2023,” by Alex Cottrill, Juliette Cubanski, Tricia Neuman, and Karen Smith, published February 5, 2024. Here’s a quote from the press release for that publication: “A new KFF analysis shows that most Medicare beneficiaries live on relatively low incomes and have modest financial resources for retirement – posing a risk to their economic well-being, particularly if they were to have a major, unanticipated expense, such as a need for long-term nursing home care. The financial picture is especially bleak among Black and Hispanic Medicare beneficiaries, who tend to have lower incomes, savings, and home equity than White beneficiaries, the analysis shows. Women have lower incomes and less savings than men, and beneficiaries’ income and savings tend to decline with age. … Some Medicare beneficiaries may be eligible for additional support from Medicaid, including those with very low incomes and limited savings, and others who spend down their assets to pay for their medical or long-term care costs. Medicaid offers coverage for nursing home care and other long-term care services and supports that are not generally covered by Medicare. However, for lower and middle income beneficiaries who do not qualify for Medicaid, the high cost of unanticipated medical and long-term services and supports may simply be unaffordable.”

This is cock-eyed analysis. The truth is that most Medicare beneficiaries are eligible for Medicaid LTC benefits. They do not have to have “very low incomes and limited savings” and they do not have to “spend down their assets to pay for their medical or long-term care costs.” Medicaid does not require applicants/recipients to spend down assets for care. They can reduce wealth to the countable level allowed, usually $2,000, by purchasing anything. As long as what they purchase is something Medicaid considers exempt, their eligibility is unobstructed and their net worth undiminished. What does Medicaid exempt? Almost every large asset the affluent elderly possess, including most home equity, home repairs and updates, a business, a car, prepaid funeral expenses for the whole family, and many more listed on websites and provided by Medicaid planning attorneys.

To make sense of what’s really wrong with LTC in the USA, read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers.

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Updated, Monday, June 24, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-024: LTC NEWS AND COMMENT

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

Protecting and Preserving Property When Paying for Long-Term Care
New Resident Health Data Show Value of Senior Living to CMS, Medicare Advantage Payers
What Long Term Care Professionals See as the Greatest Operational Risks
Financing Long-Term Care
Poll indicates voter support for three initiatives on Washington’s fall ballot
Medicaid Eligibility and Enrollment Policies for Seniors and People with Disabilities (Non-MAGI) During the Unwinding
Director’s Statement on the Updated Budget and Economic Outlook for 2024 to 2034
Ensuring Sustainability in Long-Term Care: Challenges and Strategies for the European Union
Nation’s older adult population changing, federal report shows

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Updated, Monday, June 17, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-023: LTC NEWS AND COMMENT

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

Medicare will recalculate quality ratings of Medicare Advantage Plans, WSJ reports
4 percent of those aged 65+ have dementia diagnoses: report
CMS: Home healthcare spending estimated to grow by 7.1 percent from 2025 to 2026, surpassing other sectors
US healthcare spending for NFs and CCRCs to reach $337.4 billion by 2032, CMS says
MACPAC wants Congress to force states to disclose Medicaid financing streams
Congress takes aim at White House nursing home staffing quotas
Revenue pressures driving home care consolidation, private equity’s growing influence, provider group says

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Updated, Friday, June 14, 2024, 10:03 AM (Pacific)

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LTC BULLET: REIMAGINING LTC FINANCING

LTC Comment: See long-term care financing more clearly through a new theoretical lens, after the ***news.***

*** JOIN the Center and receive all our LTC Bullets and LTC E-Alerts. Become a premium member and get our daily LTC Clippings as well. Your Center for Long-Term Care Reform exists to promote policies that deliver quality LTC to all Americans. We conduct research and pursue advocacy toward increasing private financing and relieving public LTC spending with the goal to improve funding and quality for all levels and venues of long-term care. Join our campaign here. Check out all the individual and corporate membership options here. Read our 1383 LTC Bullets, organized by topic and chronologically here. Following is a sample LTC Clipping in which we take poor, biased reporting on LTC insurance to task. Help continue to good fight. Support the Center for Long-Term Care Reform.

*** LTC CLIPPING SAMPLE:

6/8/2024, “Soaring premiums, denied benefits, delayed payments show crisis in long-term care insurance,” by Jeremy Olson, Star Tribune

LTC Comment: Hit pieces on LTC insurance are nothing new. I remember one especially virulent article that the New York Times brought to press on opening day of the 7^th annual Intercompany LTC Insurance Conference in Dallas (see LTC Bullet: Sucker Punched in Dallas, April 10, 2007). Just once, it would be nice to find some balance in media coverage. Maybe compare how miserably Medicaid and Medicare have done in managing LTC financing. Or mention the Federal Reserve artificially dropping interest rates to zero and crushing returns on carriers’ reserves. Or how about recognizing how well and creatively the LTC insurance industry has managed its challenges, creating new hybrid products and dealing with premium increases responsibly, unlike the government programs that cannot pay future claims but have done nothing to adjust. It would be nice to see some recognition that the vast majority of complaints about failure to pay claims turn out to be specious, based on expecting carriers to pay when contractual policy conditions are unmet. Don’t hold your breath. But do soldier on fellow fighters for LTC reform! ***

LTC BULLET: REIMAGINING LTC FINANCING

LTC Comment: People are living longer often in need of extended help with basic activities of daily living due to frailty, chronic illness or cognitive impairment. Such care is expensive. Most people cannot afford it. Currently, Medicaid, a means-tested public assistance program, is the dominant LTC payer.

If Medicaid’s means test really required people to pay their own way before relying on the public program, it would operate in keeping with wholesome principles of independence and personal responsibility. But that is not how Medicaid LTC benefits work.

Income rarely prevents Medicaid LTC eligibility because private medical and LTC expenses are deducted from income before a low income standard is applied. Nor do large resources obstruct eligibility because most big assets, such as home equity and IRAs, are exempt from spend down requirements.

Easy access to Medicaid LTC benefits while preserving personal wealth for heirs created a moral hazard that discouraged early and responsible planning for LTC risk and cost. Medicaid’s availability for most Americans’ LTC needs over decades enabled their denial of personal responsibility.

The resulting excessive dependency on Medicaid caused LTC’s deficiencies, including nursing home bias, insufficient home care, and poor provider reimbursements that led to caregiver shortages, access and quality problems. Understanding what caused these dysfunctions is the key to fixing them.

That key is to remove Medicaid as the dominant LTC payer and replace it with private financing at market rates. That will enable and incentivize nursing homes and home care agencies to supply the kind and quality of care consumers prefer and will demand when they pay their own way. How can we achieve that objective?

Theoretically, this is the easy part. Eliminate all Medicaid rules that enable people with high incomes and assets to qualify for benefits. But politically, that’s the hardest part. Although it will save Medicaid for the poor, enabling the program to pay market rates for more and better care, it would leave the middle class and affluent with huge LTC liabilities that Medicaid no longer alleviates.

The political challenge therefore is to show prosperous people how they are better off without the option to ignore LTC and rely on a poverty program. On the plus side, if they pay privately at market rates, they will have better access to higher quality care in the venue—home care, assisted living or nursing home—that best satisfies their need and preference.

But that is small consolation if they must pay out of pocket for services that Medicaid financed before. Most cannot afford that now and they lack the incentive to safe, invest or insure against the future risk and cost. But with Medicaid removed as an option, that incentive will develop far stronger than ever before.

So the essential ingredient is to give people a reason and a way to save, invest or insure for LTC early in life at a time when LTC planning competes with other priorities. How can families keep up with car and house payments, save for children’s education and their own retirement, and still prepare for LTC?

Some creative public policy changes could replace the current slippery slope onto Medicaid dependency with positive incentives to prepare for LTC. Step one is to set the planning goal at an achievable level. Instead of expecting people to prepare against the small risk of a catastrophically expensive LTC cost, set the expectation on each to meet their average risk. For the average American, setting aside $70,000 by age 65 would suffice according to recent research.

How could people meet that new, lower level of preparation? In “Long-Term Care: The Solution” we identified seven “LTC Choices” that public policy might offer to ease the way. These include … lower premium LTC insurance policies covering reduced average risk; new, tax-advantaged savings accounts; and especially, creative methods to carve out funds for LTC from other savings, such as home equity, retirement savings, life insurance, and estates, if and only if LTC becomes necessary.

With Medicaid removed as a late-life LTC financing source, people will plan early to prepare for LTC risk and cost. With new LTC Choices, they will be able to meet their expected LTC risk and cost without having to come out of pocket at a time when other financial responsibilities are pressing. When the time comes that they do need LTC, they will have the resources to purchase the kind of services they prefer in the private market.

If and when their LTC needs do exceed their funds available, the genuine Medicaid safety net, relieved of covering too many people, will be available to provide services of equal quality. With all their revenue coming at market rates, both for private and Medicaid patients, LTC providers will be relieved of the caregiver shortages caused by low reimbursements.

LTC Comment: For a fuller development of these ideas, see the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

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Updated, Monday, June 10, 2024, 10:03 AM (Pacific)

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LTC E-ALERT #24-022: LTC NEWS AND COMMENT

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

Soaring premiums, denied benefits, delayed payments show crisis in long-term care insurance
Medicare among top voting issues for Gen Xers, millennials, report finds
Ageless Aging: A Woman’s Guide to Better Healthspan, Brainspan, and Lifespan
HHS Delivers Strategic Framework for National Plan on Aging
More older Americans worried about Medicare future: Survey
Is Mom late on bills? Could be sign of dementia, report finds
Emerging Opportunities for Hospitals in the Long Term Care Sector: Structuring Models and Key Considerations
‘A Troubling Trend’: Sudden Closures, Bankruptcies, Displaced Residents in State Put Extra Pressures on Nursing Homes

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Updated, Monday, June 3, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-021: LTC NEWS AND COMMENT

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

After A Settlement, Steady Sales For LTC
Insights from a Certification For Long-Term Care (CLTC) webinar
The Costs of the Rising Cost of Long-Term Care
KFF Introduces Health Policy 101—A Primer on U.S. Health Policy
Medicaid HCBS utilization linked to reduced SNF use, study finds
The Perils of Self-Funding Long-Term Care
ACL Releases 2023 Profile of Older Americans
‘Daunting’ concerns about nursing home cost escalation dominate 2025 pay rule comments

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Updated, Tuesday, May 28, 2024, 10:03 AM (Pacific)

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LTC E-ALERT #24-020: LTC NEWS AND COMMENT

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

BREAKING: AHCA files lawsuit to dismiss nursing home staffing rule
Black Americans are underrepresented in residential care communities, AP/CNHI News analysis finds
California takes top spot as worst state for retirees
Improvements in socioeconomic status associated with dementia-free years over lifespan, study finds
Ultra-processed foods linked to cognitive decline, stroke
Insurance on Insurers: How State Insurance Guaranty Funds Protect Policyholders
In 45 States, Fewer Than Half of Nursing Facilities Have Enough Staff to Meet New Federal Requirements
Senior living referral site accused of using manipulated reviews, listing communities providing substandard care
More boomers favor renting, with little interest in buying homes: report

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Updated, Friday, May 24, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: HOW MEDICAID HELPS THE AFFLUENT AT THE EXPENSE OF THE POOR

LTC Comment: How does a “poverty program” divert billions of parents’ long-term care costs to their affluent heirs at taxpayers’ expense? Answers after the ***news.***

*** BELATED HAPPY BIRTHDAY. On April 1^st the Center for Long-Term Care Reform celebrated 26 years in operation. No fooling! To date, the Center and Steve Moses have published 1,382 LTC Bullets, provided a continuous supply of LTC E-Alerts, conducted many state and national studies and educated through countless speeches, media interviews, and articles. Most recently, Steve published “Long-Term Care: The Problem” and “Long-Term Care: The Solution” with the Paragon Health Institute, which also produced this “virtual LTC event” covering those papers’ issues in depth. All of this while remaining only a phone call or email away to answer questions about why long-term care faces mounting challenges in the U.S. and what to do about it. This work has been in service of our mission: to ensure quality long-term care for all Americans by promoting public policy that targets scarce public resources to the neediest, while encouraging people who are young, healthy and affluent enough, to take responsibility for themselves. To our many supporters, both financial and “moral,” individual and corporate, thank you for ensuring our longevity to this point. We would not be here without you. For anyone looking to become a new member or to renew a membership, please consider doing so and help us continue our work. You’ll find our membership schedule here. Join the Center and show your support here. Please contact Damon at 206-283-7036 or damon@centerltc.com with any questions. Thank you so much. ***

LTC BULLET: HOW MEDICAID HELPS THE AFFLUENT AT THE EXPENSE OF THE POOR

LTC Comment: We covered this same topic a decade ago in “LTC Bullet: GAO Punts on Medicaid Planning,” July 3, 2014. That Bullet linked to four others which describe GAO
“studies that downplay the impact of Medicaid’s loose and easily manipulated long-term care eligibility rules.” Specifically:

LTC Bullet: GAO on LTCI Partnerships, June 20, 2007: GAO drops the ball again on the issues of Medicaid, long-term care financing and private insurance.
LTC Bullet: GAO AWOL on LTC TOA, May 2, 2007: The Government Accountability Office has again displayed stunning miscomprehension of the Medicaid eligibility, Medicaid planning and transfer of assets issues.
LTC Bullet: Georgetown, GAO and Kaiser: The Bermuda Triangle of Good LTC Policy, January 25, 2006: LTC doubletalk is not the exclusive province of Medicaid planners and AARP lobbyists. Otherwise often reliable analysts get long-term care policy wrong too.
LTC Bullet: GAO on TOA Underwhelms, October 5, 2005: The Government Accountability Office's new report on Medicaid asset transfers asks the wrong questions, uses the wrong data, and so provides few helpful answers.

Why would an agency charged with ensuring “accountability of the federal government for the benefit of the American people” dodge key issues and downplay its own findings? Could it be that affluent people vote more than poor people do? So benefiting the affluent is more expedient politically. Whatever the reason, the evidence is overwhelming. Government stacks the LTC deck against the needy and GAO is complicit.

Here’s one more example:

“How Medicaid Helps the Affluent at the Expense of the Poor”
by
Stephen A. Moses

Medicaid spends huge sums on long-term care (LTC), $217 billion for 5.6 million recipients in 2020. Reputed to be a program for the poor, Medicaid still allows affluent people to shelter billions while consuming its LTC benefits. Arguably half or more of what Medicaid spends on LTC protects uncounted wealth retained by recipients, exempt from asset spend down.

Medicaid LTC applicants and recipients can usually have no more than $2,000 in countable assets. Countable assets are cash or anything else easily convertible to cash. But most large assets seniors own are not countable. Such exempt assets include most home equity, one vehicle, a business, prepaid burial expenses, personal care contracts, annuities, and others.

Countable assets are easily made non-countable by purchasing exempt assets. Medicaid planners, who help their clients qualify for Medicaid without spending down for medical or long-term care, provide them extensive lists of exempt assets to purchase. Books and the internet offer similar advice.

We know little about how much wealth that could have been used to purchase LTC privately has been converted to become a Medicaid cost and a taxpayer liability. No systematic study has ever been done. In 2014, however, four members of Congress asked the Government Accountability Office (GAO) to examine methods people use to reduce countable assets in order to qualify.

GAO responded with a report full of intriguing facts and potentialities. For example: GAO found that14 percent of approved Medicaid applicants … had over $100,000 in total resources; 75 percent owned noncountable resources with a median amount of $12,530; 31 percent owned homes with a median value of $68,350; 3 percent owned real property other than their primary residence with a median value of $47,300.

GAO explained that these findings were based on a small sample of cases in only three states and were not generalizable. GAO did not stress the findings’ significance, seeming rather to downplay their importance. But what if we imagine these results actually were generalizable nationwide? Would they justify further study to find out for sure?

Medicaid covered 5.6 million LTC recipients in 2020. If 14 percent of them had over $100,000 in resources, then $78.4 billion went unused for private LTC financing at Medicaid’s expense. That’s a lot of wealth for a poverty program to protect, fully 36.1 percent of the total $217 billion Medicaid spent on LTC.

If 75 percent of LTC recipients owned a median average of $12,530 each, then $52.6 billion found its way into sheltered wealth, largely as prepaid burial expenses. That is a giant subsidy for the funeral industry at the expense of LTC financing for the poor, fully 24.2 percent of total LTC expenditures.

If 31 percent of 5.6 million Medicaid recipients owned homes with a median value of $68,350, then $118.7 billion of real estate value was diverted from private LTC financing. Given that Medicaid exempts a minimum of $713,000 up to a maximum of $1,071,000 in home equity, it is evident that Medicaid replaces practically all potential LTC liability from personal home equity. The loss to Medicaid equals 54.7 percent of what it spends on LTC.

If 3 percent of recipients own real property other than their primary residence, such as vacation homes, with a median value of $47,300, then $7.9 billion is diverted from private LTC financing into a Medicaid liability while preserving a personal luxury. That’s where 3.6 percent of Medicaid LTC expenditures go.

We have no way to know how realistic GAO’s state-level estimates are. But we can say they are probably very conservative. GAO acknowledged that its results were based solely on information in case records none of which they verified independently. GAO made no attempt to interview recipients’ families or to analyze outside bank or tax records. Nor were assessors’ offices checked for ownership records or recorders’ offices for property transfers. A thorough analysis of their sample employing these tried and true investigative methods would surely have identified substantially more sheltered wealth.

Even though GAO’s findings are not generalizable, aren’t they significant enough to suggest we ought to investigate further? It is long past time to conduct a study based on a valid random sample of Medicaid LTC cases large enough to generalize to the whole United States. Whatever such a study would show, it is already incontrovertible that Medicaid diverts billions of dollars from private LTC financing into heirs’ inheritances.

There is no better reason than that to support mandatory Medicaid estate recoveries. They recoup at least some of this lost wealth to support the program’s truly needy recipients. Proposals to repeal or restrict Medicaid estate recoveries only redound to the benefit of more prosperous others. They reward failure to take responsibility privately for LTC.

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Updated, Monday, May 20, 2024, 10:03 AM (Pacific)

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LTC E-ALERT #24-019: LTC NEWS AND COMMENT

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

House Republicans introduce measure to overturn nursing home staffing rule
All important questions and answers: Why a bankruptcy of nursing care insurance affects us all
Premiums for long-term care insurance rise 3.5% for elderly
Task force recommends state reduce reliance on nursing homes
The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Create Bad Policy
Ageless Aging: A Woman’s Guide to Increasing Healthspan, Brainspan, and Lifespan
A solution to the crisis in long-term care? The Big Story

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Updated, Monday, May 13, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-018: LTC NEWS AND COMMENT

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

Paragon Prognosis: Nursing Bad Policy
Nursing homes wield pandemic immunity laws to duck wrongful death suits
Program standard for income and resources
Long-term care: Options and considerations
Staffing mandate costs estimated at $6.5B annually, with 1 in 4 residents at risk of displacement, AHCA warns
IRS Releases 2025 Contribution Limits for HSAs
Why supporters of Washington’s long-term care program are worried
Growing Cost of Obamacare, Dire Medicare Trustees Report, and More
A gene long thought to just raise the risk for Alzheimer’s may cause some cases
Letting Heirs Bilk Medicaid Is Bad Policy
Social Security, Medicare solvency improves slightly, but ‘significant financing issues’ remain: reports

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Updated, Friday, May 10, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: CUI BONO LTC?

LTC Comment: Who benefits from Medicaid LTC? Ironically, not the poor, but instead, the affluent. We explain after the ***news.***

*** JOIN the Center. If you receive today’s LTC Bullet from a friend or colleague, please consider joining the Center for LTC Reform in your own right. You’ll receive our bi-weekly LTC Bullets and our weekly summaries, LTC E-Alerts, of our daily LTC Clippings. There is no better way to stay abreast of everything happening in the LTC policy space. On top of that, you will support and be part of our mission to reform LTC public policy. Our goal is to encourage responsible LTC planning instead of rewarding consumers’ denial that leads to excessive reliance on Medicaid. Find all the membership options here. Join and contribute here. ***

5/7/2024, “Letting Heirs Bilk Medicaid Is Bad Policy,” by Stephen Moses and Brian Blase, National Review
Quote: “More than a dozen members of the House of Representatives have introduced legislation that would increase federal Medicaid spending by ending “estate recoveries.” The proposal, which was discussed at an Energy and Commerce Committee legislative hearing on April 30, would let individuals secure their inheritances by putting their parents on Medicaid and forcing taxpayers to fund their long-term care (LTC).”
LTC Comment: Repealing Medicaid estate recoveries would be terrible public policy as we explained recently in “LTC Bullet: The Fiscal Imperative and The Moral High Ground of Medicaid Estate Recoveries,” April 26, 2024. Hopefully, this piece in National Review will help to quell that idea once and for all. ***

LTC BULLET: CUI BONO LTC?

LTC Comment: Cui bono, “who benefits?,” is a Latin term with two related meanings: 1: a principle that probable responsibility for an act or event lies with one having something to gain; and 2: usefulness or utility as a principle in estimating the value of an act or policy. When it comes to long-term care (LTC), cui bono?

Medicaid dominates America’s LTC service delivery and financing system. Ostensibly, Medicaid benefits the poor and under-privileged most. It has a means test with limits on applicants’ and recipients’ incomes and assets. People with wealth exceeding these limits are supposed to pay for their own LTC until they “spend down” to Medicaid’s low income ($943 per month) and asset ($2,000) standards.

The often stated intent of this system is to ensure that the scarce resources of this Great Society poverty program go primarily to its intended, neediest beneficiaries. But it has another objective as well: to incentivize more affluent people to plan ahead for LTC risk and cost. Surely most people would rather save, invest or insure for LTC than to be forced to expend their incomes and savings until they become impoverished and eligible for Medicaid.

But is this how the system really works? Cui bono? Whom does this system benefit and whom does it hurt the most?

Ironically, Medicaid hurts the poor, its intended beneficiaries, most. They have low incomes and assets at the start. High LTC costs consume what little they have very quickly. Poor people usually lack the advice of lawyers and financial experts. So they do not learn about ways to protect and preserve what they have by circumventing the spend down rules. Once on Medicaid, they tend to receive nursing home care in the least desirable facilities, have reduced access to home and community-based services, and suffer many other deficiencies compared to private-pay patients.

Why is this true? Is Medicaid underfunded? Does it lack the resources to provide care access and quality comparable to what is available to people who pay privately for LTC? I don’t think so. Medicaid LTC is enormously expensive and its expenditures continue to grow steeply every year. What else could explain why such a richly funded program does such a poor job for the people who need it most?

The answer lies in understanding who really benefits most from Medicaid LTC. Medicaid’s supposedly draconian income and asset limits are a myth. Income rarely obstructs eligibility because states either subtract private medical and LTC expenses before they apply a low income standard or they allow income diversion trusts to achieve the same outcome. Nor do assets stand in the way of eligibility for the affluent. Most large assets, such as home equity, a business, and IRAs, are exempt. So people with big incomes and assets actually qualify for Medicaid LTC more easily and with less financial disruption than the poor.

But why would they? Why would people with substantial wealth choose to take advantage of Medicaid’s financial eligibility loopholes to qualify for a welfare program widely considered to be deficient in so many ways? Financial and legal advisers show them how to preserve their wealth, evade “mandatory” Medicaid estate recovery, and gain access to the very best LTC providers, the ones to which poor people have little or no access.

How can they do that? Restructuring high income and assets to qualify a prosperous client for Medicaid LTC and to avoid estate recovery is easy and routine. Getting the same client access to the best LTC Medicaid has to offer requires a second step. Instead of going directly onto Medicaid, the affluent applicant is advised to hold back enough money to pay privately for at least a few months. This “key money” gains access to the best nursing homes and home health providers, who have relatively few Medicaid “beds.” They are less dependent on Medicaid’s extremely low reimbursements, so they are able to provide better care. But they are desperate for private payers at much higher rates than Medicaid pays to make up the difference. So the best facilities welcome all private payers to the exclusion of poor people already on Medicaid. Once in a good facility, federal and state laws prevent residents’ expulsion based solely on a change of payment source from private to Medicaid.

So, bottom line, cui bono from Medicaid LTC? Not the poor. They lose everything quickly. They are shunted into the worst facilities and services Medicaid provides. The affluent get the best of what Medicaid offers. That has been true since Medicaid came on the scene in 1965. It is why so few prosperous people plan early for LTC.

Medicaid tries to do too much for too many and ends up doing worst for the poor and best for the affluent who take advantage. The system is upside down and backwards, but easily fixed by understanding what’s wrong (see “Long-Term Care: The Problem”) and changing policies in ways that follow logically (see “Long-Term Care: The Solution.”)

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Updated, Monday, May 6, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-017: LTC NEWS AND COMMENT

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

‘No time to mislead the public’ on nursing homes, Biden told; experts offer solutions
Government shouldn’t micromanage nursing homes
Genworth's CEO Aims for 2025 Long-Term Care Insurance Launch
Brain function of older adults catching up with younger generations, finds study
Restraining Medicaid’s Budget-Busting Waivers
State panel approves nursing home worker minimum wages, including $24 hourly for CNAs
The Coming Elder Care Crisis
US long-term care costs are sky-high, but Washington state’s new way to help pay for them could be nixed

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Updated, Monday, April 29, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-016: LTC NEWS AND COMMENT

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

Promoting WA Cares is unnecessary, questionable
The Path Bill Gates Sees to Overcoming Alzheimer’s Biggest Remaining Challenges
Dementia care comes with ‘catastrophic’ costs for older adults, families, study finds
Nursing Homes, HHS on Collision Path Over Staffing Mandate
Analysis finds 4 in 5 nursing facilities don’t meet staffing requirements
Medi-Cal Now Considers Income, Not Assets, of Enrollees
States lack resources to support new Medicaid waiver programs, association asserts
BREAKING: CMS increases hours to 3.48 in final staffing rule

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Updated, Friday, April 26, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: THE FISCAL IMPERATIVE AND THE MORAL HIGH GROUND OF MEDICAID ESTATE RECOVERIES

LTC Comment: The affluent qualify easily for Medicaid LTC benefits. So recovering the cost of their care from their estates is necessary to discourage excessive use of the program by the non-poor, protect scarce resources for the needy, incentivize responsible LTC planning, and prevent taxpayer financed windfalls for heirs who put their parents on welfare. More after the ***news.***

*** March 2024, “Data-Driven Pre-Claim Wellness Programs Bend the LTCI Claims Cost Curve: The Numbers Are In.,” by Assured Allies and Faegre Drinker

Quote: “With the average age of nearly 7 million long-term care insurance policyholders above 80 and the rising cost of care, insurance carriers and regulators must work together to offer solutions that bend the claims cost curve. This report presents the groundbreaking success of one such solution—designed and executed by Assured Allies—based on the findings from an analysis of its program deployed with five long-term care carriers and 135K lives for over three years.

“The results of our analysis show that the program delivered not only consistent claim reduction patterns across all five carrier program deployments but also an impressive ~10% overall reduction in claims payments in our longest-running program.

“In addition to the financial impact of the program, the policyholder benefit has been overwhelmingly positive, both measured by customer satisfaction (average Net Promoter Score of 50+) and strong clinical outcomes measured by Patient Reported Outcome Measures (PROMs).”

LTC Comment: Click through for all the details in this ground-breaking report. It documents Center-corporate-member Assured Allies’ data-backed success enhancing policyholder satisfaction while reducing claims ten percent. Remarkable! ***

*** BARRY FISHER RADIO: On April 23, 2024, Steve Moses appeared on “Protecting What Matters with Barry Fisher” on KPRL, Paso Robles, CA, 12:25 – 1:00pm

Listen to a recording of the show here.

Stephen Moses, President, Center for Long-Term Care Reform: Topics

Why and how current methods of paying for long-term care cannot continue.
Saving Medicaid/Medi-Cal for the truly needy.
Commonsense solutions for America’s aging population.

“Protecting What Matters, is the broadcast that helps you become better shoppers & buyers of services and products to protect various aspects of your life, health and property. We also explore current events, our history, community, institutions and local treasures that are notable and worth preserving.”

Barry invited Steve to do quarterly updates as a “regular” on the show. Stay tuned! ***

LTC BULLET: THE FISCAL IMPERATIVE AND THE MORAL HIGH GROUND OF MEDICAID ESTATE RECOVERIES

LTC Comment: I got my start in long-term care analysis with a study for the Health Care Financing Administration in 1985. HCFA suppressed that work, but the USDHHS Inspector General and the General Accounting Office did national studies based on it. I conducted the IG’s study, wrote its report and consulted on GAO’s review. In the Omnibus Budget Reconciliation Act of 1993, most of our recommendations in those reports became federal law. OBRA ’93 made Medicaid estate recoveries mandatory. But it also made qualifying for Medicaid LTC benefits a little harder to achieve and it discouraged divesture of assets to quality. The plan behind these studies and the legislation they inspired was to keep Medicaid eligibility generous but to encourage the public to plan early for LTC and avoid Medicaid dependency. This “kinder and gentler” approach to encourage private LTC planning and preserve Medicaid resources for the needy is under attack again. So we need to revisit the issue and explain why estate recoveries are even more necessary today than they were 30 years ago.

The Center for Long-Term Care Reform has published 14 LTC Bullets about and defending estate recoveries since 1998.

Here’s our latest appeal for rational public policy on LTC based on keeping the affluent off Medicaid and recovering from their estates when they do take advantage of the program.

“The Fiscal Imperative and The Moral High Ground of Medicaid Estate Recoveries”
by
Stephen A. Moses

State officials are "picking the bones of the elderly."

That's how one critic described "estate recoveries," the mandatory recoupment of benefits legally paid by Medicaid from the estates of deceased recipients.

This vital revenue source is periodically under attack, and now again. Calls for repeal have failed before and are being proposed again.

But, like most things in life, this issue is complicated. Here's a primer and fair warning about a government program that is almost certain to touch you or a loved one sooner or later . . . unless you take the proper financial planning steps to avoid it.

Medicaid is a means-tested, public assistance program. In a word, welfare. It is very expensive. Nationally, Medicaid cost over $805 billion in 2022, almost as much as Medicare ($944 billion).

At the state level, Medicaid is the second largest spending category after primary and secondary education. States must balance their budgets, so they need more, not less, estate recoveries. Undue hardship waivers protect the truly needy while these recoveries help fund benefits for all.

Medicaid is a critical health care safety net for poor women and children. But the program is also the primary payor for long-term care (LTC), the mostly custodial assistance critically needed by frail or infirm elderly and disabled people.

LTC consumes a disproportionate share of Medicaid expenditures. While 79% of Medicaid recipients are low-income children or adults, they consume only 44% of the program's costs. Just 21% of Medicaid recipients are aged, blind or disabled, but they consume 55% of Medicaid expenditures, mostly for long-term care.

Why should you care? Many reasons, the first and foremost of which is: you are paying for Medicaid long-term care with your state and federal taxes. You can feel good about that. After all, Medicaid is America's safety net ensuring access to long-term care for the vulnerable poor.

But, Medicaid has become much more than that. It is the principal payor of long-term care for nearly everyone, including many of the well-to-do. How can that be true if Medicaid is welfare?

Over the years, Medicaid eligibility "bracket creep" has expanded the program to cover even upper-middle-class people whom it was never intended by Congress to serve.

For example, income is rarely an obstacle to Medicaid long-term care eligibility because all medical expenses, including expensive nursing home costs, are deducted from people's income before Medicaid’s “low income” standard is applied.

Assets are limited to $2,000 except that home equity, one business, an automobile, prepaid burial costs, term life insurance and IRAs are exempt in unlimited amounts. Many additional assets are exempt within limits.

On top of all that, thousands of attorneys and financial planners specialize in sophisticated techniques to impoverish their affluent clients artificially to qualify them for Medicaid LTC benefits.

Bottom line, there is no limit on how much income or assets people can have while receiving Medicaid LTC benefits as long as their medical expenses are high enough, their assets are held in exempt form, or they hire a "Medicaid planner."

Maybe you're thinking: "You mean I can ignore the huge potential risk and cost of long-term care, avoid the premiums for private insurance, keep most of my wealth, and the government will pay if I ever need care? Sounds pretty good to me."

Not so fast. Leaving aside the critical fact that Medicaid has a dismal reputation for problems of access, quality, reimbursement, discrimination and institutional bias, there are other critical downsides for you to consider.

Ever since 1993, the federal government has required state Medicaid programs to recover the cost of their care from the estates of deceased recipients. Most states have not pursued these "estate recoveries" aggressively before, but that will surely change as Medicaid's enormous fiscal pressure on the state and federal coffers continues to mount.

Expect government at all levels to constrain Medicaid eligibility and to pursue estate recoveries far more aggressively in the future. Their goal is to make sure Medicaid survives as a safety net for the poor without bankrupting taxpayers and the economy. Over time, everyone with any significant wealth will be expected to plan early for long-term care; save, invest or insure against that risk; and pay their own way when the time comes.

When the massive baby boom generation finally needs long-term care, Medicaid will not be an option for any but the most needy, if it survives at all. In the future, the only way to obtain quality long-term care, especially in the preferred settings of one's own home or an assisted living facility, will be to pay privately. The only way to pay privately will be to spend your own wealth including your home equity or to own private long-term care insurance.

So, here's the bottom line about Medicaid estate recoveries.

First: estate recoveries are a fiscal necessity to preserve Medicaid as America's long-term care safety net for the poor as long as possible.

Second: if you want to preserve your own wealth against the cost of long-term care, don't expect a free ride on the public welfare system. Plan to use your savings, home equity or buy private long-term care insurance.

The question to ask yourself about estate recoveries is this: should Medicaid help the needy with LTC costs or give heirs a windfall for placing their ailing parents on public assistance?

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Updated, Monday, April 22, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-015: LTC NEWS AND COMMENT

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

CMS finalizes controversial 80/20 rule
Here's Why Extended Care Planning Remains Critical for Women
Medicare’s push to improve chronic care attracts businesses, but not many doctors
Routine jobs raise the risk of cognitive decline by 66% and dementia by 37%, study says
Data-Driven Pre-Claim Wellness Programs Bend the LTCI Claims Cost Curve: The Numbers Are In
Democrats push new LTC workforce bill as offset to nursing home mandate
Setting the Record Straight on Long-Term Care Policy
Bill would end federal mandate for states to recoup Medicaid costs for HCBS, care
Rethinking Insurance for an Aging Population

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Updated, Tuesday, April 16, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-014: LTC NEWS AND COMMENT

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

The Medicaid LTC snafu
Home care sees largest price jump in history, BLS report finds
Setting the Record Straight on Long-Term Care Policy
Health advocates decry changes to long-term home care program
Home healthcare for elderly sees largest price increase ever
Working conditions, not personal reasons, causing nurses to leave long-term care: study
Immigration reform needed to solve caregiver shortage: Brookings
Calif. consumer group asks NAIC to lead on U.S. long-term care financing issue
California’s senior living and care sector at ‘critical juncture’

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Updated, Friday, April 12, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE DISPARITIES: ARE THEY RACISM OR ONLY ECONOMIC INEQUITY?

LTC Comment: Are LTC disparities due to racism, economic inequity, or both? We address this sensitive, but compelling question after the ***news.***

*** JOIN the Center; SUBSCRIBE to LTC Clippings. Join the Center for Long-Term Care Reform and receive our bi-weekly LTC Bullets and weekly LTC E-Alert summaries of our daily LTC Clippings. For a little extra, get the Clippings by email in real time. Check out our “Membership Levels and Benefits” schedule for all the details or contact Damon at 206-283-7036 or damon@centerltc.com. If you’re not a member yet, here are the subjects of the Clippings you missed last week. Each Clipping included the following information plus a representative quote from the source and Steve Moses’s brief analysis of why it matters.

4/5/2024, “Report: Medicaid Payment Variability Hinders Access To Home- and Community-Based Services,” by Patrick Filbin, Home Care News

4/5/2024, “Researchers call to reform long-term care as Israelis live longer,” Jewish News Syndicate

4/3/2024, “Medicare, Medicaid authorized $100B in improper payments last year, GAO reveals,” by Adam Healy, McKnights Home Care

4/2/2024, “Changing Perspective Part 1: My Day as a Post Acute Care Resident,” by Doug Farmer, Provider

4/1/2024, “Can a Nursing Home Take Our Savings? We Have $350,000 in IRAs,” by Mark Henricks, Yahoo!Finance

4/1/2024, “Aging In Place: The New American Dream,” by Larry Nisenson, Advisor Magazine

4/1/2024, “Senior Housing Rebounds as Boomers Move In,” by Peter Grant, Wall Street Journal (pay wall)

Your Center for Long-Term Care Reform membership will get and keep you up to speed on everything happening in LTC services and financing. Join now! ***

LTC BULLET: LONG-TERM CARE DISPARITIES: ARE THEY RACISM OR ONLY ECONOMIC INEQUITY?

LTC Comment: Last summer I came across a webinar titled “A Matter of Justice: Racism as a Fundamental Cause of LTC Inequities.” Dubious, but intrigued, I watched this well-organized and documented presentation by Professor Shekinah Fashaw-Walters of the University of Minnesota’s School of Public Health. Afterwards, I followed the links she provided to scholarly articles on the topic. Those sources led me to many more. I’m working on a paper, provisionally titled “Structural Long-Term Care Racism: The Cause and the Solution.” In the meantime, facing criticism that “it’s not racism, but only economic inequity,” I decided to think through that distinction. This essay is the outcome of that reflection.

“Long-Term Care Disparities: Are They Racism or Only Economic Inequity?”
by
Stephen A. Moses

Imagine if Jim Crow were a state Medicaid director today. We would not be surprised to see this quote about racial disparities in his domain.

[B]lacks are much more likely than whites to be located in nursing homes that have serious deficiencies, lower staffing ratios, and greater financial vulnerability.[1]

We might also expect that deficiencies experienced disproportionately in Crow’s state by “Black, Indigenous, and persons of color (BIPOC)” users would include segregation;[2] less access to HCBS,[3] assisted living,[4] mental health services,[5] pain medication,[6] influenza vaccinations,[7] hospital and hospice care[8] and ADRD care;[9] more physical restraints;[10] higher COVID-19 incidence, hospitalization and death counts;[11] and more pressure ulcers.[12]

We would reasonably attribute these disparities in long-term care access and quality to blatant racism by the authority in charge. That is, to Medicaid Director Crow and his racially prejudiced minions.

Thankfully, no current state Medicaid program to my knowledge is run by a blatant racist. But every one of those race-based disparities listed above persists in America today according to the peer-reviewed academic journals cited.

Is it racism? If not, what else is at work? The obvious answer is that socially and economically marginalized groups, regardless of their racial make-up, suffer poor care disproportionately. But that is a distinction without a difference. Racial minorities are often among socially and economically disadvantaged groups.

So the question becomes: why are economically disadvantaged people, including racial minorities, treated less well in terms of medical and long-term care? Is it deliberate animus? Hatred of the poor? Racism?

An explanation has evolved in the literature that blames entrenched laws, regulations and policies without holding contemporary individuals culpable for deliberate bias. It goes by different names—institutional, systemic or structural racism—each term having nuanced differences, but the basic idea is this.

Structural racism operates through laws and policies that allocate resources in ways that disempower and devalue members of racial and ethnic minority groups, resulting in inequitable access to high-quality care.[13]

Could it actually be that disparities in long-term care are unintended consequences of well-intentioned, even noble objectives of fundamentally good, certainly non-racist individuals? Consider one example among many possible involving Medicaid long-term care eligibility.

Medicaid is designed presumably to benefit the poor and underprivileged, including racial minorities, most. Income must be very low ($943/month) and assets $2,000 or less. Clearly the intent of these rules is to ensure that scarce public resources go to those most in need.

But there are other benevolently intended rules that have the opposite effect. People with much higher incomes and assets also qualify for Medicaid LTC benefits. That’s because Medicaid deducts personal medical and LTC expenses before applying its low income cap and most larger assets, such as home equity, are exempt.

The net effect of Medicaid LTC law, regulations and policies is that the poor, middle class, and even the affluent qualify for benefits. In fact, Medicaid planning experts specialize in artificially impoverishing even the wealthy so they too can take advantage of the public assistance program ostensibly targeted to the poor.

The obvious consequence of these laws and policies is that more people rely on Medicaid than would be the case if the program were only available to the neediest. That means fewer resources are available to help those most in need. The result: low provider reimbursements, caregiver shortages, nursing home bias, access and quality problems.

While these deficiencies affect everyone dependent on Medicaid, they impact the underprivileged and racial minorities most. That is because more affluent people, including the racial majority, are able to get the best care Medicaid has to offer, essentially crowding out recipients with less money and influence.

For example, affluent families can subsidize a relative’s Medicaid-funded care by paying extra directly to a nursing home to purchase special meals or a private room. Prosperous people tend to reside in upscale neighborhoods where the better LTC providers are. So, when they qualify for Medicaid, they have immediate access to the best facilities that are least dependent on low Medicaid reimbursements. People with “key money” are often advised to pay privately for a while before converting to Medicaid. That assures them access to the best institutional and home care providers who are desperate to supplement meager Medicaid funding with private payers at market rates.

Bottom line, Medicaid policies try to do too much for too many and end up doing too little for the people who need the help most. That’s where the egregious discrepancies in care access and quality that hurt underprivileged people including racial minorities most, come from.

Is it racism? Not in the Jim Crow or Bull Connor sense. But the consequences may be indistinguishable from the structural long-term care equivalent.

End Notes

[1] David Barton Smith, Zhanlian Feng, Mary L. Fennel, Jacqueline S. Zinn, and Vincent Mor, “Separate and Unequal: Racial Segregation and Disparities in Quality Across U.S. Nursing Homes,” Health Affairs, 26, no. 5, (September/October 2007), p. 1448, https://www.healthaffairs.org/doi/10.1377/hlthaff.26.5.1448.

[2] Momotazur Rahman and Andrew D. Foster, “Racial Segregation and Quality of Care Disparity in US Nursing Homes,” Journal of Health Economics, 39, (January 2015), p. 3, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4293270/.

[3] Chanee D. Fabius, Jessica Ogarek, and Theresa I. Shireman, “Racial Disparities in Medicaid Home and Community-Based Service Utilization among White, Black, and Hispanic Adults with Multiple Sclerosis: Implications of State Policy,” Journal of Racial and Ethnic Health Disparities, 6, (December 2019), https://pubmed.ncbi.nlm.nih.gov/31359384/.

Zhanlian Feng, Mary L. Fennell, Denise A. Tyler, Melissa Clark, and Vincent Mor, “Growth of Racial and Ethnic Minorities in US Nursing Homes Driven by Demographics and Possible Disparities in Options,” Health Affairs, 30, no. 7, (July 2011), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0126.

Rebecca J. Gorges, Prachi Sanghavi, and R. Tamara Konetzka, “A National Examination of Long-Term Care Setting, Outcomes, and Disparities Among Elderly Dual Eligibles,” Health Affairs, 38, no. 7, (July 2019), https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.05409.

[4] Meghan Jenkins Morales and Stephanie A. Robert, “Black–White Disparities in Moves to Assisted Living and Nursing Homes Among Older Medicare Beneficiaries,” Journals of Gerontology: Social Sciences, 75, no. 9, 2020, https://academic.oup.com/psychsocgerontology/article/75/9/1972/5610255.

[5] Maricruz Rivera-Hernandez, Amit Kumar, Gary Epstein-Lubow, and Kali S. Thomas, “Disparities in Nursing Home Use and Quality Among African American, Hispanic, and White Medicare Residents With Alzheimer’s Disease and Related Dementias,” Journal of Aging and Health, 31, no. 7, (August 2019), https://journals.sagepub.com/doi/abs/10.1177/0898264318767778.

[6] Deborah S. Mack, Jacob N. Hunnicutt, Bill M. Jesdale, and Kate L Lapane, “Non-Hispanic Black-White disparities in pain and pain management among newly admitted nursing home residents with cancer,” Dove Press Journal of Pain Research, 11, (2018), https://pubmed.ncbi.nlm.nih.gov/29695927/.

[7] Jasmine L. Travers, Krista L. Schroeder, Thomas E. Blaylock, and Patricia W. Stone, “Racial/Ethnic Disparities in Influenza and Pneumococcal Vaccinations Among Nursing Home Residents: A Systematic Review,” The Gerontologist, 58, no. 4, (2018), https://pubmed.ncbi.nlm.nih.gov/28329831/.

[8] Nan Tracy Zheng, Dana B. Mukamel, Thomas Caprio, Shubing Cai, and Helena Temkin-Greener, “Racial Disparities in In-Hospital Death and Hospice Use Among Nursing Home Residents at the End-of-life,” Medical Care, 49, no. 11, (November 2011), https://pubmed.ncbi.nlm.nih.gov/22002648/.

[9] Rivera-Hernandez, et al., “Disparities in Nursing Home Use and Quality Among African American, Hispanic, and White Medicare Residents With Alzheimer’s Disease and Related Dementias.”

[10] Kimberly M. Cassie and William Cassie, “Racial disparities in the use of physical restraints in U.S. nursing homes,” Health & Social Work, 38, no. 4, (November 2013), https://pubmed.ncbi.nlm.nih.gov/24432487/.

[11] Rebecca J. Gorges and R. Tamara Konetzka, “Factors Associated With Racial Differences in Deaths Among Nursing Home Residents With COVID-19 Infection in the US,” JAMA Network Open, 4, no. 2, (February 2021), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7876590/.

Rohan Khazanchi, Charlesnika T. Evans, and Jasmine R. Marcelin, “Racism, Not Race, Drives Inequity Across the COVID-19 Continuum,” JAMA Network Open, 3, no. 9, (September 2020), https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2770954.

[12] Shubing Cai, Dana B. Mukamel, and Helena Temkin-Greener, “Pressure ulcer prevalence among Black and White nursing home residents in New York State: Evidence of racial disparity?,” Medical Care, 48, no. 3, (March 2010), https://pubmed.ncbi.nlm.nih.gov/20182267/.

[13] Ruqaiijah Yearby, Brietta Clark, and José F. Figueroa, “Structural Racism in Historical and Modern US Health Care Policy,” Health Affairs, 41, No. 2, (February 2022), p. 187, https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01466.

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Updated, Monday, April 8, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-013: LTC NEWS AND COMMENT

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

Report: Medicaid Payment Variability Hinders Access To Home- and Community-Based Services
Medicare Advantage Program to Restructure Agent, Broker Pay
Researchers call to reform long-term care as Israelis live longer
Medicare, Medicaid authorized $100B in improper payments last year, GAO reveals
Changing Perspective Part 1: My Day as a Post Acute Care Resident
Can a Nursing Home Take Our Savings? We Have $350,000 in IRAs
Aging In Place: The New American Dream
Senior Housing Rebounds as Boomers Move In

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Updated, Monday, April 1, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-012: LTC NEWS AND COMMENT

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

The seven most important questions about Medicaid
The Long-Term Care Planners' Club Meeting
Americans Reducing Retirement Savings And Taking On Debt Due To Inflation
Providers applaud long-awaited update to Older Americans Act programs
Rates for nursing homes, in-home care down: report
State is gathering stories about long-term care
Why the New Old Age Could Be Different
‘Money Out of Our Pockets’: $274.9M in Nursing Home Revenue Lost For Every Percentage MA Plans Grow
It's Late, You're Tired, and All You See Are No Vacancy Signs
2 senior living companies file for Chapter 11 bankruptcy protection
SNF, home care spending outpaced by overall personal healthcare spending

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Updated, Friday, March 29, 2024, 10:03 AM (Pacific)

Seattle—

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LTC Comment: ILTCI ’24 was another successful industry convocation. Your “virtual visit” to the conference follows the ***news.***

*** OUR OBJECTIVE in offering these “virtual visits” to the conference is to give those who did not attend some of the flavor of the experience. We’ve published dozens of these reports over the years. You can find many of them by going here and searching for “virtual visit.” Check out our History of LTC Insurance Conferences (2021) for an overview of LTCI industry conferences going back to ILTCI #1 in January 2001 at the Hyatt Regency in Miami, Florida. If you know some of the leading lights in the industry, you’ll recognize their younger selves in several pictures. Happy reading! ***

LTC BULLET: ILTCI ‘24 VIRTUAL VISIT

LTC Comment: The 2024 Intercompany Long-Term Care Insurance Conference convened March 17-20 at the Town & Country resort in San Diego, California. This year’s theme was “We’re Up to Something Good” and the program delivered in full measure.

For me, the meeting kicked off on Sunday, the 17^th with a visit to the Society of Actuaries Long-Term Care Section meeting.

Discussion of the section’s 2024 initiatives covered their planned webcasts on international LTC programs, standalone or combo products, and/or an update on state LTC programs. Other topics included podcasts, past and future, and a proposal for a Medical LTC Symposium, presented by Sally Leimbach.

The opening reception Sunday night from 5pm to 7pm featured ample food and drink provided by conference sponsors that fueled amiable networking, allowing participants to renew old friendships and make new professional contacts.

The conference opened in earnest on Monday morning, March 18. Karen Smyth, 2024 Conference Chair, welcomed the 950 attendees. She recognized and thanked the many staff, volunteers and sponsors who planned and executed the program.

ILTCI Recognition Award

A highlight of the 2024 conference was the renewed offering of the ILTCI Recognition Award to “showcase the best of our industry and acknowledge their contributions.” The honor was bestowed on Marc Cohen in 2018 and Stephen Moses in 2019, but had not been awarded since, due to pandemic disruptions. To make up for those lost years, two individuals and one company received the award, including a $1,000 honorarium and a trophy. Receiving the ILTCI Recognition Award this year were:

Ronald R. Hagelman, “a teacher, cattle rancher, agent, brokerage general agent, corporate consultant, and home office executive” as well as the author of a long-running monthly column in Broker World.

Peter Goldstein of illumifin received and acknowledged the award, presented a $10,000 donation check to the Alzheimer’s Association, and introduced the meeting’s keynote speaker.

LTCI Partners received the company award. Managing Director Tom Riekse acknowledged the award on behalf of the company.

These exceptional individuals and companies are a tribute to ILTCI and represent the achievement of its “vision.” The Intercompany Long Term Care Insurance Conference Association’s (ILTCI) vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society.

Keynote Speech

Peter Goldstein introduced keynote speaker: Dr. Maria Carrillo, chief science officer of the Alzheimer’s Association. She delivered a highly relevant and meaningful update on the state of scientific research on Alzheimer’s disease, a welcome change from more general motivational speakers in the past. Her key message was that research considered only “hopeful” and “futuristic” as recently as a few years ago is now a reality. Alzheimer’s is a disease, not normal aging, we can do something about it. There are modifiable and non-modifiable risk factors. Focus on risk reduction. Forty percent of cases could be prevented or delayed by targeting modifiable risk factors. Onset is earlier and slower than previously believed. Exercise, nutrition brain exercise, aggressive cardio vascular activity are critical. There is no ROI (return on investment) so big pharma won’t take this part on. Can diagnose Alzheimer’s before death now. So much happening in this space. Blood tests. New approvals for new drugs. Outcomes: slowing disease progression; being able to do what I want longer. Only a beginning. But Alzheimer’s research is on the move. Finally, there is reason to hope for real progress.

March 18 Breakout Sessions

The first I attended was 10am: “Data Science and AI in Action: Driving Modernization and Enhanced Outcomes.”
Presenters: Joe Long; Doug Elfers; Dan Marsh; and Paddy Horan
Discussion: The use of data science and AI, including machine learning [ML] and innovative data sources, to improve outcomes in the long-term care insurance industry.
Insights: What AI means to them. Everyone psyched up. Broad terms, lot of different methods. Neural networks. Background of AI umbrella. What’s out there? New products and different ideas. Machine learning models. Around for a long time. More data, cheaper costs. Building a model. AI about using a model. Trying to find associations; optimizing outcomes. Supervised vs. unsupervised learning. Generative AI generates new content that is similar to but not identical to data it has been trained on. How can data science leverage AI/ML to improve outcomes of wellness programs in the LTC industry? Get wellness programs to the right people. How ML can optimize LTC insurance claim processes such as eligibility or recertification. How can LTC actuaries use predictive models to expand their analytic capabilities and improve their methods. Policy holder experience side. Cost savings vs. customer experience. Don’t let chatbot interfere with customer experience.

11:15am “Recent Research Findings”
Presenters: Matt Majewski; John O’Leary; Celeste Cobb; Trish Shuhilo; Vince Bodnar moderated.
Discussion: Panel of experts shared findings from four recent studies that cover emerging consumer sentiments about long-term care, long-term care insurance, and the burdens of family caregiving.
Insights: Best research of the past year. 10 minutes each. Matt from Lincoln. Trying to understand consumers; help them overcome obstacles. Motivate advisors. Cost is main obstacle. Consumers underestimate the risk of LTC to retirement savings. Medical and care costs on the rise. More referrals from women 1.5X. Pandemic brought LTC more attention. Consumers want to plan but need help. Family members in conversation is win-win-win. Top barrier to purchase is affordability. Take aways: hard to pinpoint when to bring to client. No life stage. When to have need. Impact on portfolio. Think about emotional sale.
Celeste Cobb from Insurance Marketing Solutions. 2022 industry studies. Survey focusing on caregivers. How caregiving influences decisions. Does caregiving induce future planning? Yes, 93%. What future planning are they most likely to do. These are caregivers. Deferment insight. 62% said take care of it themselves. 32% said talk to financial planner or look into LTCI. Traits of caregivers who say they’ll do future planning. Sandwich generation; owning a home; having planner; financial products; higher education; familiarity with LTCI; assets to protect. Caregivers more likely to consider buying LTCI: Men. Married. Higher income. Homeowner. Higher education. Why hasn’t caregiving motivated caregivers to plan? In a word. Denial. Message. People don’t get it. Most people think health insurance will pay. Comes back to education. Traits of people not interested in LTCI: Female, divorced, no children, retired, no life insurance. Next study, middle America vs. affluent America. Education is end all and be all.
Patricia Shuhilo from One America. Paying for LTC. 1. Cost of LTCI; 2. Medical support for LTC; 3. Not believe they’ll need it. Only 23% said LTCI for payment source. More: self-fund; medicare. Biggest gap, only 18% worked with a financial professional. Only 54% of financial professionals talking about LTC. 25% said used to talk about it but don’t anymore.
John O’Leary’s from O’Leary Management Associates. Unfortunately, I had to leave this session before John presented.

12:30pm “Center for Long-Term Care Reform”
Presenter: Stephen Moses
Discussion: Stephen Moses (Center for LTC Reform president) presented findings from two papers: “Long-Term Care: The Problem” and “Long-Term Care: The Solution” (both published by the Paragon Health Institute. He explained why LTC financing reform has languished since the Great Recession, but will flourish anew soon. He previewed his forthcoming paper “Ending Structural Long-Term Care Racism.”
Insights: This presentation provided a retrospective on what went wrong with LTC services and financing in the U.S. and a forecast of what is likely coming next.

2pm “Projecting the 5^th Decade of LTC Insurance from its First 40 Years”
Presenters: Al Schmitt, Jim Glickman, Claude Thau, Bruce Stahl
Discussion: A lively discussion from industry experts sharing thoughts of where the industry has been, where we are currently, and what the future holds form an actuarial lens.
Insights: Advice to a new CEO? Bruce: always disagree. Claude: avoid gotcha claims provisions. Don’t use provisions that sound better than they are. Challenge staff to explain how product remains good if interest rates go up. Assumption settings, missteps of past. How to train actuaries. Claude has concern about genetic testing. Underwriting: What learned over years: Jim: Doing rate increases. How to get into the middle market. 25% miss rate both ways. Distribution: Past v. future. Claude: Coming back to specialists. Too complicated for financial planners. Liability. Paperwork. Variety of products compounds problem.

3:30pm “LTCI 101 Family Feud”
Presenters: Steve Serfass, Karen Smyth, Sandra Jones and others.
Discussion: Modeled after America’s hottest game show, this session featured Steve Serfass reprising the role of Richard Dawson as two families showed off their LTC knowledge. Karen Smyth led the ILTCI Board Member family facing off against a family populated by audience participants led by Sandra Jones.
Insights: Questions and answers were derived from responses to surveys completed by ILTCI attendees. A good time was had by all.

March 19, 2024 Breakout Sessions

8:45am “LTC Legislative Update”
Presenters: Diane Boyle (NAIFA), Leah Walters (ACLI), Carroll Golden (NAIFA Limited and Extended Care)
Discussion: This polling-format session looked at Federal and State LTC legislation and other initiatives, including wellness programs and the use of external consumer data and information sources.
Insights: Leah: important to understand the states. Governor, legislature, run by one party. Only 10 states with divided government. 80% of country lives in one-party state. 25 insurance commissioners have 3 years of experience or less. Can’t get their attention. 11 elected; 31 appointed. 80% of all legislators up for election in November. Lot of turnover. Have to go in and educate. Background.
Diane: Little done in LTC space. Congress, Medicare for all has greatest interest. 113 members and 14 senators signed on. Introduced. All democrats. Divided government; hard to get anywhere. Other proposals not getting any traction. The last time we had comprehensive legislation: Tom Suozzi. CLASS act before that. Actuaries found would not work. Suozzi is back. Maybe LTC will get traction. But he got Homeland for committee. No groundswell. Bad news on federal side that anything will get done.
Leah: WA Cares. Collections started July 1. Initiative to make optional. Hot issue for Rs and Ds in WA. Keeping lists of who supports and opposes. Don’t want to be on that list. Initiative to make optional expected to pass. Many other states looking at what WA is doing. CA well along. Doing actuarial study. 5 or 6 other states, CT, MD, PA. Not moving. Seeing more studies.
Diane: 64 bills in 29 states. Garnering interest.
Leah: should be actuarially sound, not depend on interest groups.
Diane: Some general health care bills that would include LTC. Wellness programs:
Leah: Consumers want more direct, electronic access to life insurance.

10am “State Tax Mandates: Selling LTC in Face of Legislation”
Presenters: Stephen Forman, Gary Forman, Tom Riekse, Carolyn Olson
Discussion: What does it mean to you and your clients that states are exploring publicly financed LTC solutions? Topics included: talking points for client conversations; can the industry work with states to develop supplemental products; what about a public/private partnership?
Insights: Gary Forman introduced the topic. Tom Riekse: how do you want to position? Get in touch with associations. We didn’t know what reaction would be for opt out. Details fuzzy. Didn’t know how to prepare. Had relationships with brokers. Carolyn, first learned in 2019. Had to get ready. Changed business model to get more people interested. Adjusted as things happened. Had infrastructure to handle it. “Went to town.” Positioned website. Gary: spread like wildfire. Much preparation. Tom: just laid out the facts. Kept our team informed. Steve: Approached carriers. Told them this coming. In couple years, things are going to get crazy. This will be tax avoidance driven. People looking for smallest possible policy. You need systems in place to handle volume. You can do this in other states coming up. Get in front of state legislators. What opt out provision? Look around. If don’t have a seat at the table, you’re on the outside looking in. We spent a lot of time trying to educate. Try to be good educators. Get ahead of the process. Tried to be in front of WA Cares. They were putting out notoriously wrong information. We were getting more traffic to our information than the state. That’s something you can do in other stages. Tom, tried to show people better options. Look at more comprehensive plan. People looking a smaller plans. How much of million dollars place still in force. Carolyn: 1200 cases. 9% have cancelled. $76K premium gone away. Gone back to people and upgraded 8%. Tom, above average drop off. Gary: we work in regulated world. Politicians back into decisions. Legislative process. Steve: WA removed the cap on income. Very small group of high earners responsible for supporting the program. High tech industry, all opted out. CA says we can’t do that.
From audience, Joe Pulitano asked: what will happen with initiative. Switch to voluntary program. Fear is would undermine solvency. Milliman: death spiral. What we’ve heard. Scrap program flat. Sense on the ground; overestimated popularity; tremendous opposition; genuine expectation leaning toward passing. WA Cares goes down in flame. Lot can happen between now and November. Could change. Gary: ship has sailed, nothing happens in the other states. How did you talk about uncertainty? Carolyn: acknowledged didn’t know. Tried to be logical about it.
Steve: look at what these states are doing. Let me tell you what’s happening and why you should be aware. All the urgency things apply. It could be too late. Started 2019 in WA but constant changes. Steve: great publicity. Everyone knows benefit not enough. So shows public need to think about LTC. State of WA puts out information. That is awareness we can’t afford to buy. People call us. Basic strategies. Sell with intention of exempting yourself. Cooperate with us, need something in addition. Maybe if own something at least get a break on the tax. Steve: CA much more vigorously researched. WA eschewed the help of experts. Original sin of WA was not accepting help from experts. Now they’re paying for it. CA learned from that. Lots of creative ideas. Legislators can do anything. Things take so long because elections happening all the time. Whole new crop of legislators.

11:15am “Can WE Chat (GPT) Using AI and Predictive Modeling to Engage with Customers”
Presenters: Robert Eaton, Doug Elfers, Karan Chawla
Discussion: How can we tap into the intersection of artificial intelligence, predictive modeling and personalized experiences to ethically and wisely improve engagement and ROI?
Insights: Robert: Large language model predicting next word in a sentence. Generative AI does more. Using data, multimodal models. Fill in the gaps, pictures, etc. Using models to predict the next thing. Computer based. Chatbots engaging in conversation. Predictive Analytics. Likelihood of future outcomes.
Karan: Customer experience. AI makes like talking to a social worker.
Robert: We use AI to develop machine learning models. Perplexity.ai is one of the best. Gets articles about a subject and summarizes them. How were we 10 years ago vs. now.
Karan: Evolution of what we’re thinking. More simplistic before. At one time, not having to do long form division was amazing. But now can do so much more. Big data sources. Automation. Seeing now where it is going.
Robert: 2014 starting to see new actuarial models. Segmented many ways. Morbidity. Models now much more complicated. More insight into the data. Needed more computer power.
Why be optimistic?
Karan: Only going to make the world more efficient. Make better outcomes for customers.
Robert: A lot of skepticism. He asked for a poem about superhero actuary. Not copying, creating. Marketing LTCI, telling better stories. Easier to get. Power of words. All going to have more access. Using these tools opens new problems and solutions. Very optimistic.
Concerns? Legitimate. Misuse.
10 years ahead? Hard to think in years when changes are weekly.
Robert: All robots.

12:45pm, “Building LTC State Reform Proposals for Collaborative Success”
Presenters: Stephanie Moench (Oliver Wyman) and Steve Schoonveld (FTI Consulting)
Discussion: A brief “think tank” for LTC enthusiasts to speak their minds and generate creative public/private LTC financing solutions.
Insights: Steve: Put CA and MN together. Want to be part of the solution. Data. No names. What is needed; who are eligible? What are current coverage options? Where gaps? Medicaid, Alternative care, out-of-pocket costs, private insurance. By income. All based on supposition of cost of care. High level ball park estimates. Looking at projections of Medicaid use and payments. 10 year time horizon. Costed services and projected increases. Nursing facilities going higher and faster. HCBS and ALF are potential cost savings. Simulate changes in population and other factors. What is new normal after Covid?
Second panel: CA and MN combined. Emily Smith; Stephanie Moench; Peterson; John O’Leary
State approaches to innovation. Steve question: federal vs. state role. Middle income reliant on Medicaid. More affordable financing options for the middle class. John: systematic reforms. Stephanie, culturally competent. Value proposition for all income levels. How to evaluate options. Collaboration of groups in LTC space. John, stakeholder input. Everyone citizen of MN. Expert witnesses too. Interaction between, input process. Integrate data into discussion. WA threw something at the wall and some stuck. Took more time with it in CA. How to evaluate impact of proposals? Funding less of a problem than care navigation. Some states are unprepared. Resistance to change. MN high LTCI penetration. What is the value proposition? What are people expecting? Provide quality LTSS. People don’t want to have to spend down. Go through their assets. How to make it more equitable or all. Educating. Consumer expectations are very low. Don’t think about until personal experience in family.

3:30pm “Live Focus Group Session: Engaging with LTC Policyholders”
Presenters: Winona Berdine, Rachel Kudler
Discussion: Watch a live focus group session of persons aged 75 to 85. Learn what it takes to engage with them on wellness, care coordination and caregiver support programs. What services are they interested in? What messaging resonates with them? How do they prefer to be reached? How do they prefer to interact with us? This is the only session we have a recording of from the conference this year. [Strongly recommended session; link to the recording here.]
Insights: Several LTCI policy holders answered questions about their experiences with caregiving, why they purchased LTCI, what their experience has been as policyholders, what they would like the industry to do to improve the product. Typical responses: bought because of own parents’ asset spend down; premiums way up; would like more communication from carrier, but not clear about what; all trying to stay active and healthy; their own challenging experiences with caregiving; frustration with nursing homes, assisted living and caregivers; one respondent had great experience with LTC in France; regarding wellness programs: very little interest, even if free, carriers should stick to their knitting, focus on good coverage, getting care when needed, many other sources for “wellness,” marketed as free, but premiums already high and this will increase them; no phone calls, no texts, rather prefer email or hard copy; information needed about what to do, where to go to find and manage care; no contact from agents after sale.

LTC Comment: I strongly recommend watching the video of this session. It provides clear insights into what this group of policyholders think and feel about their experience with the coverage. What struck me most is their lack of interest in the kinds of wellness programs the industry is promoting. Most of the respondents felt that the carriers should stick to improving the product and reducing premiums rather than promoting ancillary services that are available elsewhere and would only add to costs if provided by the carriers. Industry leader, actuary Vincent Bodnar shared this thought: “A good analogy that I've shared with other attendees: The industry is like an estranged father now wanting to have a relationship with his child after being gone for decades. Based on the recording and other interactions I listened to, the policyholders do want a relationship with the insurers, but it will take time to gain trust. So far, all they've received from insurers is rate increase notices. New efforts need to start with little things and win over that trust over time. After the industry regains trust, policyholders will be open to these programs.”

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Updated, Monday, March 25, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-011: LTC NEWS AND COMMENT

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

There’s a huge Medicaid problem in California: Most doctors just won’t see those patients
Long-Term Care Insurance Association Releases 2024 Short-Term Care Price Index
First-time grants will help connect new Americans with long-term care careers
State Medicaid offices target dead people’s homes to recoup their health care costs
Ensuring Families Have the Resources To Care for Older Adults
CMS delivers providers payment lifelines in the wake of Change Healthcare outage
Personal care workers received most Medicaid fraud convictions in 2023: OIG
Poor neighborhoods tied to higher dementia risk, faster brain aging
Private equity sets sights on home care, hospice, new report finds
Older adults’ net worth surges following pandemic
Long-term care rates up 1 to 10 percent: survey
Proposal would add Kentucky to mix of states trying to address long-term care financing
Genworth Releases Cost of Care Survey Results for 2023: Twenty Years of Tracking Long-Term Care Costs

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Updated, Friday, March 15, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: YOUR LTC QUESTIONS ANSWERED

LTC Comment: Center for Long-Term Care Reform president Stephen Moses will speak at next week’s ILTCI conference in San Diego. Find some of the questions he’ll answer, after the ***news.***

*** 2024 ILTCI CONFERENCE convenes March 17-20 in San Diego. Check out the general schedule here and print the full session matrix here. CLTC offers its Masterclass at a reduced rate ($700) on Sat. and Sun. before the conference kicks off (register online). The Center for Long-Term Care Reform will cover the meeting for LTC Bullets. So if you cannot attend yourself, watch for our LTC Bullet “Virtual Visit” to the conference the following week. Steve Moses will speak on Monday, March 18 from 12:30 to 1:30pm in Room D. To all 2024 ILTCI attendees, he says: “Come listen and say hello.” (View the event invitation.) ***

*** GENWORTH publishes 20^th annual cost-of-care summary and the results, especially for home-based care, are stunning:

3/13/2024, “Long-term care rates up 1 to 10 percent: survey,” by Kathleen Steele Gaivin, McKnights Senior Living
Quote: “Year-over-year rate increases in long-term care ranged from 1% to 10% across setting types, according to the results of Genworth’s Cost of Care Survey 2023, published Tuesday. …The average national rate for a private nursing home room inched up 4.9% to $116,800 a year, which equates to $9,733 per month or $320 per day, in 2023. The rate for a semi-private room rose 4.4% to $104,025 annually, which equals $8,669 per month or $285 per day. The average hourly rate for home health aide services has risen by 15.38% year over year to approximately $33, according to the data. Homemaker services average $30 per hour. … State-by-state information and other details of the report can be found using the Genworth online tool.”
LTC Comment: More on Genworth’s 20^th annual cost-of-care survey that we reported yesterday. Center members can always find the latest Genworth survey here. If you need your user name and password, contact us at damon@centerltc.com. ***

LTC BULLET: YOUR LTC QUESTIONS ANSWERED

LTC Comment: Long-term care services and financing policy in the United States has a long and mostly failed history. Nursing home bias still dominates despite consumers’ preference for home care. Access and quality problems persist despite the ready availability of outstanding services for people who can pay. Medicaid (i.e., welfare) financing dominates LTC despite trillions of dollars lying fallow in the economy that could fund high quality private home-based LTC. Perverse incentives in public policy still discourage responsible planning for LTC risk and leave most Americans unprotected and dependent on Medicaid if they need expensive LTC. Neither policies to target Medicaid to the needy nor campaigns for a big new LTC social insurance entitlement program have succeeded.

To understand why these conditions persist and show no signs of improving in the third decade of the 21^st century, certain questions must be asked and answered. That’s what Steve Moses will do at a special session on Monday, March 18, 2024 from 12:30 to 1:30pm PDT in Room D at the Intercompany Long-Term Care Insurance Conference in San Diego. For answers, come to the presentation. If that’s not possible, consult last week’s “LTC Bullet: What Happened to Long-Term Care?,” read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers. Here are some of the questions Steve will tackle. How fitting to discuss long-term care’s life or death struggle on the Ides of March.

What was long-term care like in 1982?

Why did nursing homes dominate although consumers preferred home care?

How did a welfare program with a terrible reputation for access and quality come to dominate LTC services and financing?

Why was private LTC insurance so slow to develop? What holds it back still?

When did Medicaid stop allowing people to give away assets to qualify for LTC?

When did Medicaid start requiring estate recoveries?

Why did efforts to target Medicaid LTC to the needy fail?

How do affluent people qualify for Medicaid LTC benefits while preserving wealth?

How did economic recessions affect LTC financing policy reform?

When did assisted living and private home care finally become available and why did it take so long? What holds them back still?

What is “Medicaid planning” and why is it so widespread despite Medicaid’s flaws?

What is “structural LTC racism?” Is it real? What can be done about it?

What has to happen for LTC services and financing to improve?

Will a big new government social insurance program or many, smaller, state-level, tax-based programs succeed?

What is the fatal flaw that dooms all social insurance plans to eventual failure?

What happened since the dot.com bust and the Great Recession to hold back progress toward better LTC policy?

LTC Comment: Tough questions? To be sure. But until they’re asked and answered by the powers-that-be, little or no progress will be made to improve LTC services and financing. Fortunately, these and more questions are asked and answered in the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” papers as well as in this “virtual LTC event.”

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Updated, Monday, March 11, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-010: LTC NEWS AND COMMENT

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

More than half of nursing home workers caught in ‘vicious cycle’ of workplace violence, burnout
Older Adults With Moderate Income Cannot Afford The Dual Burden Of Housing And Care
Group Asks White House to Stop Picking on Medicare Agents
12-facility strike raises stakes as workforce board gets to work on wages
HCBS needs better Medicaid funding to bolster workforce, reduce waitlists, ANCOR report finds
Wisconsin seniors face housing upheaval as assisted living homes reject Medicaid
Study proving longevity benefits of senior living is something for operators to ‘jump up and down’ about
Scary ‘state’: Two-thirds of nursing home operators fear closure without staffing relief
Genworth’s CareScout Hopes Home Care Networks Will Help Consumers Cut Through ‘Noisy, Fragmented’ System
Containing Medicaid Costs at the State Level

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Updated, Monday, March 4, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-009: LTC NEWS AND COMMENT

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

Fact Check: Will making WA Cares optional force seniors into poverty?
Workforce improvement No. 1 target in final OIG report on nursing home pandemic effects
‘Real Heartache’: Medicaid Redetermination Post-PHE Causing Nursing Homes Serious Cash Flow Problems, Anxiety
Report: Dementia comes with a high price tag that’s only rising
FedPoint announces retirement of longtime CEO Paul Forte
Assisted living? No thank you, investors and developers say
Transamerica Wins Long-Term Care Benefits Appeal
Nursing Home Reimbursement Pressure ‘Flat Out Profound,’ Necessitating Innovative Models

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Updated, Friday, March 1, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: WHAT HAPPENED TO LONG-TERM CARE?

LTC Comment: I’ve watched our country struggle to improve long-term care since 1982. Observations after the ***news.***

*** ILTCI NEWS: The 2024 Inter-Company Long-Term Care Insurance Conference convenes in San Diego, CA – March 17-20, 2024 – at the newly renovated Town & Country Resort. This year’s keynote speaker is Dr. Maria C. Carrillo, Chief Science Officer of the Alzheimer’s Association. The program includes 58 educational sessions, the most ever; scores of exhibitors and dozens of sponsors. Late breaking: Lifeline Screening will offer hypertension and osteoporosis risk screenings to all attendees from 8:00am, to 6:00pm on Monday, March 18, and Tuesday, March 19, 2024 at their exhibit booth in the Golden State Ballroom. On Monday, March 18 at 12:30pm, Center for Long-Term Care Reform president Steve Moses will present two papers and preview a third, recounting LTC’s past and forecasting its future. Last year’s conference chair, Steve Schoonveld invites attendees to a discussion on “Building LTC State Reform Proposals for Collaborative Success” on Tuesday, March 19 at 12:30pm. Finally, suspense is building! Who will receive the 2024 ILTCI Recognition Award? The winner will be announced at the San Diego meeting. Organizers say “If it’s happening in LTC… It’s happening at the ILTCI Conference!” Hope to see you there. ***

LTC BULLET: WHAT HAPPENED TO LONG-TERM CARE?

I’ve followed long-term care since 1982. Back then nearly all formal, paid LTC services were provided in nursing homes. Medicaid was the dominant payor, but paid too little to ensure quality care. Nicer private-pay options like assisted living were becoming available, but most people could not afford them. A budding new product, LTC insurance was gaining traction slowly but was constrained by the dominance of subsidized Medicaid nursing home care. Much of the care burden fell on unpaid family members by default.

Before 1980 the Medicaid program allowed unlimited asset transfers to qualify. People ignored LTC risk and cost until care became necessary and then moved seamlessly onto public assistance. Medically needy eligibility rules allowed high income people to qualify by deducting their private medical and LTC expenses, enabling them to become “low income.” Despite its dismal reputation for poor access and quality, Medicaid nursing home care was the path of least resistance for people needing expensive long-term care. Its availability impeded the development of home-based care options and private-pay alternatives like insurance.

At the time, I was working for the Health Care Financing Administration (HCFA), the predecessor of the current Centers for Medicare and Medicaid Services (CMS). As I analyzed the LTC marketplace in the early 1980s, I concluded that easy access to Medicaid nursing home benefits trapped elders in underfunded nursing homes, discouraged service delivery and financing alternatives, and would bankrupt the economy as the age wave crested and crashed over time. Something had to be done to break this cycle of perverse incentives leading to bad outcomes. Why prepare for LTC when you could ignore the risk, avoid insurance premiums, and get the government to pay if and when you needed care?

I conducted a study and wrote a paper for HCFA in 1985 suggesting that Medicaid LTC income and asset eligibility criteria should be stricter, liens and estate recoveries should be mandatory, and consumers should be urged to buy private LTC insurance. The insurance would give them access to quality care of their choice and enable them to avoid Medicaid dependency with its newly required payback from estates. No longer would Medicaid provide a windfall for heirs by protecting their inheritances. Families would instead work together to avoid Medicaid and protect their legacies.

HCFA management suppressed that paper. They didn’t think a mid-level Seattle regional office staffer should be writing national policy papers. But the Inspector General of the Department of Health and Human Services (IG) and the Government Accountability Office (GAO) both picked up on my paper and conducted national studies from the same analytical perspective. The IG hired me out of HCFA to conduct their study and write its 1988 report. I also consulted on GAOs 1989 report. Both national studies recommended tightening Medicaid financial eligibility rules and requiring estate recoveries as a means to reduce expenditures and encourage private LTC financing alternatives.

At first, it looked like this strategy would succeed. Federal legislation passed year after year to target Medicaid LTC to the needy while encouraging the affluent to plan early and avoid public assistance. COBRA ’85 prohibited “Medicaid qualifying trusts”; MCCA ’88 required states for the first time to penalize asset transfers for the purpose of qualifying for Medicaid; OBRA ’93 made estate recoveries mandatory. So by the mid-1990s the key elements were in place to revolutionize LTC policy, eliminate the perverse incentive trapping elders in nursing homes on Medicaid, and breathe new life into the private home care and LTC insurance markets.

Alas, history did not play out as we hoped. The states didn’t implement the new rules fully or aggressively; the federal government didn’t enforce the tighter eligibility and mandatory estate recovery measures; the media didn’t cover the new system’s incentives to plan for LTC and avoid Medicaid; and elder law Medicaid planners found evermore creative ways to circumvent the rules. So consumer behavior didn’t change. People continued to ignore LTC risk and cost, waiting to see if they would ever need expensive LTC, and then turning to Medicaid when high cost care became necessary. That common result relieved the LTC financial burden on heirs further entrenching their tendency to ignore LTC until needed and then rely on Medicaid.

A Republican Congress and President Clinton became so frustrated by skyrocketing Medicaid LTC costs benefiting the affluent as much as the poor that they made it a crime to transfer assets to qualify for Medicaid in HIPAA ‘96. Outrage at this “Throw Granny in Jail” law led to its repeal by BBA ’97 and replacement with the “Throw Granny’s Lawyer in Jail” law. The latter did not survive judicial scrutiny as it was deemed unenforceable to hold attorneys legally culpable for recommending a practice (asset transfers) that were no longer illegal. Nothing more happened to target Medicaid to the needy and incentivize LTC planning by the affluent until a last gasp effort in DRA ’05, which capped Medicaid’s home equity exemption for the first time ever.

Every one of these beneficial federal statutes achieved during the preceding years occurred after and in response to an economic recession. When federal and state budgets were tight during recessions, politicians and policy makers were forced to look for ways to constrain Medicaid expenditures while preventing care access and quality from deteriorating. That’s when the measures recounted above to lengthen and strengthen asset transfer penalties, enforce estate recoveries, and encourage private LTC insurance gained traction. “LTC Partnerships” and LTC insurance tax deductions were also passed in those years and for those reasons. But once the recessions ended, and budget constraints relaxed, the pressure for wiser policies receded, and higher spending to mollify advocacy groups returned.

Then came the Great Recession of 2007-2009 and all progress stopped. This big recession did not lead to beneficial legislation as in the past. Why? Starting a few years before, but accelerating after the Great Recession, the Federal Reserve began pushing interest rates down toward zero. The resulting artificially low interest rates distorted incentives throughout the economy including in the LTC market. Deficits and debt didn’t matter so much when the cost of servicing the debt was nominal because interest rates were negligible. Pressure to control Medicaid LTC expenditures abated and costs grew with few constraints. Medicaid expanded to provide more desirable home and community based services making it more attractive to consumers. The LTC insurance market suffered as carriers could not obtain anticipated returns on their reserves and were forced to raise premiums, thus angering current insureds and alienating prospects.

These conditions continued and worsened until a government spending blow out during the Covid pandemic caused deficits and debt to skyrocket and inflation to spike. A return to artificially low interest rates and continued unbounded spending is unlikely. The national debt currently exceeds $34.3 trillion, a six-fold increase since 2000 and up $200 billion in just the past month. The interest rate to service the national debt doubled between January 2022 (1.56%) and January 2024 (3.15%). Debt service cost is already 18% of total federal spending and 2.4% of GDP. It will increase in tandem with the rising debt. The U.S. government will soon spend more on interest payments than defense. Social Security, Medicare, Medicaid, Obamacare, and other federal health care programs consumed 46% of all federal spending in 2022. These costs will continue to rise at least until statutory entitlement cutbacks begin in the late 2020s and the 2030s. The staggering unfunded liabilities of Social Security ($26.6T) and Medicare ($40.9T) alone guarantee these programs will encumber the productive economy for decades ahead. On top of everything, boomers start turning 85, their age of greatest medical and LTC need, in 2031.

To paraphrase the late economist Herbert Stein, “Trends that can’t continue, won’t.” The price of irresponsible fiscal and monetary policy that characterized the first two decades of the 21^st century is coming due. State and federal budgets will have to be set again and met. Challenging economic conditions, especially during and after recessions, will compel serious attention to Medicaid LTC spending as they did before the Great Recession. The time is coming again when politicians and policymakers will have to listen to proposals that constrain spending while enhancing LTC access and quality.

Coming up with those policy proposals is the task before us. But we can’t continue doing more of the same. Keeping Medicaid LTC financial eligibility generous, allowing big income and asset exemptions, and threatening estate recovery to persuade the public to plan and insure for LTC did not work. Government gave the carrots but withheld the sticks, so consumers ignored LTC until they needed it and then turned to Medicaid. Consequently LTC services and financing in the U.S. are as bad or worse today as they were in 1982. Long-term care in America remains broken, marked by nursing home bias, too little home care, dubious access and quality, inadequate funding, caregiver shortages, stressed out unpaid family caregivers, and growing complaints of structural racism. A radical new approach to LTC financing policy is needed.

My October 2022 paper for the Paragon Health Institute (PHI) titled “Long-Term Care: The Problem” offered this diagnosis. Easy access to Medicaid LTC benefits after the insurable risk occurs while retaining wealth created a moral hazard that discouraged early and responsible LTC planning and left most Americans dependent on public assistance by default. My October 2023 paper for PHI titled “Long-Term Care: The Solution” proposed a radical change. Eliminate the moral hazard by ending all Medicaid rules that enable people to receive Medicaid LTC benefits while retaining wealth. In other words, turn Medicaid into the program for the poor most believe it was originally intended to be and many believe it still is. What does that mean specifically?

Medically needy income eligibility, which allows high income people to qualify for Medicaid if their medical and LTC expenses are high enough, must end. Likewise Miller income diversion trusts, that achieve the same purpose in states that do not use the medically needy income system, should not be allowed. Such policies divert Medicaid funds that should support the underprivileged to people who could pay a portion, often a large portion, sometimes their entire LTC bill privately. Medically needy policies also mean that nursing home and home health providers receive their revenue at notoriously low Medicaid rates instead of at market rates that are half again as high on average. This heavier dependency on Medicaid impedes care access and quality for the affluent as well as the poor.

Another income policy that needs to end is the requirement people on Medicaid contribute nearly all their income, including their Social Security benefits, to offset Medicaid’s cost for their care. This policy makes Medicaid vulnerable to Social Security’s precarious financial condition. When statutorily required 23% benefit cuts occur in the 2030s, state Medicaid programs and the already financially strained LTC providers they support will be devastated. A better policy is to have all people pay LTC providers at the market rate up to their ability to do so and for Medicaid to make up the difference when recipients fall short. That will ensure higher revenue for LTC providers allowing them to improve care and alleviating caregiver shortages as they are able to pay higher wages.

Asset eligibility rules also need to change. Current rules allow applicants to reduce their countable wealth by purchasing exempt assets. Because exempt assets, including home equity, IRAs, a business, a vehicle, home furnishings, personal belongings, etc. are virtually unlimited, countable assets in any amount are easily eliminated in this way. Medicaid should require that asset spend down be for medical or LTC expenses in order to count as it does for income spend down now. The huge Medicaid home equity exemption, $731,000 in every state where it isn’t $1,071,000, should end. Home equity is easily converted to liquid cash flow to purchase top quality LTC in the private market. Obviously, abusive Medicaid Asset Protection Trusts and Medicaid friendly annuities, that allow even the wealthiest families to co-opt Medicaid to fund their LTC, should end.

Once all income and asset exemptions are eliminated, Medicaid LTC benefits will be available only to the truly needy. More affluent people will pay their own way. The extra private revenue flowing through the system will improve care for everyone and eliminate the caregiver shortage by paying higher wages. Faced with a real spend down requirement, that has never existed in the U.S. before, consumers will take the risk and cost of LTC seriously for the first time. Many will plan early and save, invest or insure for LTC. Others, if they continue to ignore LTC will face serious consequences if they need LTC later in life. These consequences will signal to others that planning for LTC is imperative because the costs of failing to do so are too great.

But isn’t this plan too draconian? Can a humane society really refuse to provide long-term care unless and until people have used up all their own income and assets paying privately? Yes, but only if we reconceptualize LTC and reprioritize it among life’s necessities. As I explained in “Long-Term Care: The Solution,” LTC risk and cost are not as great as we once thought. For example, nearly half of Americans turning 65 will never need paid care. See the paper for more on this point. Likewise, it turns out that aging Americans have much more wealth they could use for LTC if they had a reason to do so, including $12 trillion in home equity, $35 trillion in retirement savings, and $21 trillion in life insurance. See the paper on this point too. LTC is the single biggest financial risk aging Americans face, but it has been treated as an afterthought, easy to ignore, because Medicaid was always there to cover the cost if and when expensive care became necessary. With Medicaid gone as an asset-protecting, long-term care fail safe, people will put a much higher priority on planning for the risk.

So, having created the necessity for people to plan ahead for LTC, what is needed is a way for them to do so without being devastated financially at a time of their lives when other financial responsibilities, such as raising children and making car and mortgage payments, have always taken precedence. In the LTC Solution paper I proposed seven LTC Choices designed to enable people to prepare for future LTC expenses without impinging excessively on their current cash flow. The basic ideas are (1) to focus on preparing people to pay for their average expected LTC liability, instead of their having to plan for the unlikely, but devastating catastrophic cost if the worse happens and (2) to allow savers to earmark a portion of the wealth they are already accumulating to be used for LTC if and only if such care becomes necessary.

So here are the seven LTC Choices in their barest form. See the paper for details. (1) Buy less LTC insurance at lower premiums to cover average LTC risk instead of the full catastrophic risk as now. (2) Establish a new tax-favored account for long-term care. Carve out enough retirement savings (3), home equity (4), life insurance (5), or estate wealth (6) to cover average LTC risk. (7) Incentivize younger people to start LTC planning earlier with easier goals reflecting their longer time to prepare. Each of these LTC Choices is intended to make it easier for people to cover their expected lifetime LTC risk and cost. Private organizations or companies, similar to Underwriters Laboratories (UL), should evolve to help consumers define their average LTC risk and to set goals to achieve it.

With the moral hazard of easy access to Medicaid gone; with consumers expected only to cover their average LTC risk; and with the ability to tap existing sources of funds established, most people will prepare privately for LTC. Private revenue at market rates flowing to LTC providers will improve LTC access, quality and choice. With most people prepared to pay for care, families will be relieved of providing the heaviest and most intimate kinds of LTC. They will be able to focus on giving love and support. Caregiver shortages will disappear as wages for the profession rise from bare minimums now to private market rates. Medicaid LTC expenditures will decline radically as the program refocuses on helping only the remnant who have no other means to pay for private care. With Medicaid program resources relieved, it should pay market rates for care thus improving access, quality and choice for the smaller number of remaining recipients.

An additional benefit of refocusing Medicaid LTC on the needy in this way is that it will end the problem of structural LTC racism. In its current form, Medicaid benefits the affluent to the detriment of the underprivileged. Prosperous people gain access to Medicaid’s best LTC providers by holding back “key money” when they spend down assets to qualify. This key money enables them to pay privately for a time. Nursing homes and home care providers are desperate for private payers, so they roll out the red carpet for anyone who can pay privately even for a while. Poor people don’t have key money. Their scarce savings are quickly consumed. They only have access to the mostly Medicaid facilities and services that have the worst reputations for care. By diverting affluent people to private pay, Medicaid will be able to provide better care to people in need thus eliminating the structural racism that pervades the system now.

The many deficiencies of today’s LTC service delivery and financing system have been self-inflicted by perverse incentives in public policy. Whether well-intentioned or simply unintended, policies that invited prosperous people to ignore LTC until they need it and then qualify for public assistance distorted the LTC marketplace. Efforts to change policy to encourage responsible planning failed. They will always fail as long as consumers can ignore LTC, get government to pay, and retain wealth for inheritances. “Long-Term Care: The Problem” and “Long-Term Care: The Solution” explain what’s wrong and how to fix it in greater detail.

What will it take to achieve this radical transformation of LTC policy and Medicaid eligibility? Most likely it will take a commensurately radical downturn in the economy. Only desperate measures to make budget ends meet will compel change of the magnitude needed. But such measures may soon become unavoidable as servicing the national debt at ever increasing interest rates becomes impossible; more deficit spending, money printing and borrowing further increase the debt relentlessly; and the resulting inflation finally shows the public how it is forced to pay for decades of irresponsible fiscal and monetary policy. As these pressures grow, the oncoming crisis of unfunded entitlement liabilities will hit just as the boomer generation’s greatest medical and LTC need arises in the 2030s, making that decade as bad or worse than the 1930s.

As bleak as the current situation is, it will improve. As economic conditions deteriorate, policymakers will either respond with thoughtful changes along the lines described above. Or economic reality will compel such changes by making the current system fiscally unsustainable and such changes therefore unavoidable. The only remaining question is whether America can fix Medicaid LTC by returning the program to its roots as LTC protection for the needy or whether the current system has to collapse before that happens anyway by default. When and how will this process play out? In the same way Hemmingway described going bankrupt: gradually at first, then suddenly.

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Updated, Monday, February 26, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-008: LTC NEWS AND COMMENT

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

Older adults receiving home care are missing out on palliative care: study
LTC Bullet: Guest Column, ‘Real Sleight of Hand’
What long-term care looks like around the world
Examining the Impact of Long-Term Care Insurance on the Care Burden and Labor Market Participation of Informal Carers: A Quasi-Experimental Study in China Get access Arrow
Redesigning Retirement
Nursing homes sue state Medicaid program, claiming massive underfunding
WA Cares is not the solution for the state’s graying population
Voters To Decide On Washington’s Public Long-Term Care Insurance Program
Spending on nursing home, home healthcare growing fast

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Updated, Tuesday, February 20, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-007: LTC NEWS AND COMMENT

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

Proposed HCBS rule could diminish service access, hamper provider retention efforts, 11 senators tell CMS
‘Elephant in the Room’: Medicare Advantage a Huge Factor in CCRC Decision Making Around Nursing Home Services
New Eligibility Rules Are a Financial Salve for Nearly 2 Million on Medi-Cal
Inside the Rash of Abrupt Nursing Home Closures: The Key Factors at Play
Reduced federal share may force state Medicaid programs to cut services, HCBS expert says
People on Both Medicare and Medicaid Should Get Better Care, But They Don’t
CareScout, a Genworth Company, Aims to Redefine Quality and Build Trust in Long-Term Care
Dementia care costs lowest for patients living in home care settings, study finds
Medicare home care eligibility standards unfairly burden family caregivers, think tank argues
About 30 percent of older adults who need care are caring for another
Some State Legislators Race to Add Funding as ‘Nursing Home Deserts’ Expand

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Updated, Friday, February 16, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: HOW MEDICAID SUBSIDIZES THE FUNERAL INDUSTRY

LTC Comment: Medicaid channels billions of dollars to the funeral business that could pay for better long-term care for the needy. Evidence and consequences after the ***news.***

*** ILTCI 2023: Last year’s Intercompany Long-Term Care Insurance Conference was a huge success! Over 950 attendees from across the US attended. Organizers say: “We look forward to bringing you another amazing conference in 2024. Here’s how our attendees self-identified the area of the industry they work in:

Sales, Marketing, Distribution 26%
Actuarial & Finance 25%
Management & Operations 17%
Claims & Underwriting 12%
Aging in Place/Eldercare Solutions 11%
Legal, Compliance & Regulatory 9%

Check out the schedule here. Review session titles here. Register here. See you there. “Stephen Moses (Center for LTC Reform president) will present two new papers ‘Long-Term Care: The Problem’ and ‘Long-Term Care: The Solution.’ He will explain why LTC financing reform has languished since the Great Recession, but will flourish anew soon. Steve will also preview his forthcoming paper ‘Ending Structural Long-Term Care Racism.’ Don’t miss this review of the past and forecast of the future by the 2019 ILTCI Recognition Award recipient.” ***

*** MUD SLIDE: We thank Center corporate member Long Term Care Associates for bringing this story to our attention. Here it is verbatim as they explained the situation. Some of the links are broken but you can see pictures at the GoFundMe site. The Center for LTC Reform made a contribution to the GoFundMe to help and we encourage others to do the same. Here’s the story as LTCA told it:

“Many readers and colleagues know Rich Wierman, an LTCA producer for over 20 years. The Baldwin Hills, CA home [buried in mud] belongs to his daughter Kristy and son-in-law Matt, who find themselves overwhelmed after ‘nearly every room of their home is filled with about 4 feet of mud.’ [LTCA’s Steve Forman] asked Rich if [he] could share their story in his words:

Shock: "This tragedy is huge and hard to believe. This home in LA was Matt and Kristy’s first home, an extensive fixer-upper they poured their lives into. They finished the last remodel last year and it was beautiful. Matt was there all last week and I picked him up from the [Seattle] airport Friday night and he mentioned he was concerned about the torrential rains coming that weekend. Sunday night at 10:30pm, their cameras and alarms went off on their phones. Then they went dark, and a neighbor confirmed their fears. Kristy called me at 11:00pm and told me the house was destroyed. Matt flew there in the morning and has spent all week assessing the damage, clearing the house, and trying to determine what to do next. It was confirmed that insurance does not cover natural disasters like this. What a huge shock and disappointment!"

Rebuild: “I hope you'll visit Kristy and Matt's GoFundMe page and help in their time of need. Thank you for your generosity! ***

LTC BULLET: HOW MEDICAID SUBSIDIZES THE FUNERAL INDUSTRY

LTC Comment: Medicaid is the biggest long-term care (LTC) payer in the United States. It contributed 43% of the $530 billion Americans spent on LTC in 2021. Eligibility for Medicaid is means-tested. Recipients are allowed to retain no more than $2,000 in countable assets on average. Wealth in excess of that amount is supposed to be spent down.

But Medicaid does not require that excess assets be spent down for medical or long-term care. Program applicants may instead reduce their wealth to the usual $2,000 qualifying level by converting countable into exempt assets. Exempt assets are virtually unlimited. They include most home equity, tax-favored retirement accounts, a vehicle, a business and many more.

But Medicaid recipients hold one exempt asset more than all the others combined. According to ElderLawAnswers: “By purchasing a prepaid funeral contract, you can turn available assets into exempt assets that won't affect your eligibility.” Which final expenses can applicants prepay with a funeral trust to achieve Medicaid financial eligibility more quickly and easily?

According to the American Council on Aging, funds in a funeral trust can cover “funeral home usage, service charge of funeral director and staff, clergy fee, musicians for service, death certificate, printed death notices, embalming, casket/burial vault, burial plot, headstones/ monuments, cemetery fees, hearse/limousines, dressing and casketing, clothing, makeup and hairstyling, cremation, urn” and in some but not all states, flowers and “travel expenses for relatives to come to the funeral.”

How much do funerals cost and how much of that expense can Medicaid applicants use to facilitate and expedite their spend down? USA Today reports: “The median cost of a funeral is $7,848, according to a recent study conducted by the National Funeral Directors Association. The median cost of a funeral with cremation comes in at $6,970.” How does the average value of a funeral trust purchased to achieve Medicaid eligibility compare with the average cost of a funeral? Roughly double.

Irrevocable Funeral Trusts [IFTs] can be established for each spouse. Typically, an elderly couple applying for Medicaid, would establish two trusts, each for around $10,000 – $15,000. These trusts would lower the couple’s countable assets for Medicaid purposes by $20,000 – $30,000. Furthermore, some states allow IFTs to be established for one’s adult children. Some of these states include Arizona, Colorado, Illinois, Missouri, and Oregon. (American Council on Aging)

That is a lot of money diverted from private long-term care spend down to funeral expenses. But how prevalent is this practice? Very little evidence exists about the level of non-countable assets retained by Medicaid LTC recipients. More studies are needed. One Government Accountability Office (GAO, 2014) analysis did address the question head on ten years ago.

“GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage” including “spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements.” (GAO, 2014, “Highlights” page). GAO concluded “Nearly 75 percent of applicants owned some non-countable resources, such as burial contracts; the median amount of non-countable resources was $12,530” (Ibid.).

These findings were based on a small sample in only three states. They are not generalizable to the entire population of Medicaid recipients. But they do dramatically suggest the need to conduct more studies that are applicable to the broader base. Just assume for a moment that three-fourths of all Medicaid recipients divert $12,530 from private spending to prepay funeral costs. How much money are we talking about?

“KFF estimates that nearly 6 million people receive Medicaid long-term services and supports …” (KFF, 2023). If 4.5 million Medicaid recipients (75%) protect $12,530 each from Medicaid spend down requirements by purchasing prepaid funeral contracts, the total comes to $56.4 billion. That is 10.6% of the $530 billion Americans spent on LTC in 2021 and 24.9% of Medicaid’s total $226.7 billion LTC expenditures in that year.

KFF states that 12.5 million are jointly enrolled in Medicare and Medicaid. “In 2019, combined Medicare and Medicaid spending on dually eligible beneficiaries totaled $440.2 billion of which Medicaid accounted for $164.3 billion (37 percent).” (MACPAC) These “dual eligibles” are the two programs’ most expensive enrollees. If 9,375,000 dual eligibles (75%) protect $12,530 each using prepaid funeral contacts, the total comes to $117.5 billion or 26.7% of the entire cost of dual eligibles for both programs and 71.5% of Medicaid’s share.

Medicaid’s policy of allowing applicants to avoid spending down assets for long-term care by purchasing prepaid funeral contracts is ethically dubious. It reduces market-rate compensation to LTC providers, replacing it with Medicaid reimbursements that are notoriously low, often less than the cost of the care provided. Inadequate revenue translates into access and quality problems, caregiver shortages due to poor compensation, and excessive residual caregiving for unpaid family members. The policy harms Medicaid, Medicaid recipients, and taxpayers while it benefits the funeral industry, which has a less than stellar reputation. According to the Wall Street Journal: “Unethical funeral homes have exploited grieving customers for decades.”

Subsidizing the funeral industry at the expense of LTC for the needy is only one of many ways current Medicaid eligibility policy impairs care access and quality. To make sense of what is wrong with LTC and why, read the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution” and watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers.

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Updated, Monday, February 12, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-006: LTC NEWS AND COMMENT

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

Student loan debt is negatively affecting worker retirement saving, experts say
KFF Reports on Financial Situation of Medicare Beneficiaries in 2023
Great Recession Saved Lives: Research
Halfway Through ‘Unwinding,’ Medicaid Enrollment Is Down About 10 Million
Proposed initiative effectively would kill long-term care payroll tax program
Income and Assets of Medicare Beneficiaries in 2023
Impossible expectations are undermining nursing home care
Decoding Medicaid for your long-term care needs

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Updated, Monday, February 5, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-005: LTC NEWS AND COMMENT

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

Initiative 2124 asks voters to make WA Cares an opt-in, rather than mandatory, program
Spending in home care outpaces other healthcare sectors
ILTCI Recognition Award
Timely dementia diagnosis, specialized long-term care limited for members of minority groups: study
10 Reasons Why Medicare Advantage Enrollment is Growing and Why It Matters
More Americans support government assistance for care of older adults
When a Long-Term Care Insurance Insider Is the Caregiver
Moody's: Why Medicare Advantage's profitability may be on the decline
Navigating insurance for those with dementia a major challenge for family caregivers
Silver lining: The U.S. workforce has more employees over 65 than ever before and it could mean great things for the bottom

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Updated, Friday, February 2, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: PROGRESSIVE BIAS PRODUCES REGRESSIVE POLICY

LTC Comment: Public officials and their advisers prefer government solutions to social problems, so their policies often produce deficient outcomes. We explain after the ***news.***

*** ILTCI RECOGNITION AWARD nominations due by February 9: “The Intercompany Long Term Care Insurance Conference Association’s (ILTCI) vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society. It is the desire of the ILTCI to recognize people and organizations that have made significant, long-term contributions in attaining the ILTCI vision. Do you know someone deserving of recognition? Read on for more…

To be eligible for this award, candidates must

Be engaged in the long-term care field, such as a long-term care service provider or financier, as a regulator or legislator involved in governance of long-term care or these entities, or as a research or policy expert in long-term care issues and
Exhibit an extraordinary commitment to the industry through ingenuity, length of service and dedication.

Winner(s) chosen for this award will be recognized at the Intercompany Long Term Care Insurance Conference in San Diego at the Town & Country Resort, March 17 – 20, 2024.

Entries must be submitted by February 9, 2024 for Board of Directors consideration.

Prior Award Winners:
2019 Award Recipient: Stephen Moses, President of the Center for Long Term Care Reform (http://www.centerltc.com/)
2018 Award Recipient: Dr. Marc Cohen, Clinical Professor, Department of Gerontology and Director, Center for Long-Term Care Services and Supports at the University of Massachusetts (https://www.linkedin.com/in/marc-cohen-2487343/)”

Only one more week left to submit your nomination for the 2024 ILTCI Recognition Award. Don’t miss the February 9 deadline for nominations. Nominate Now. ***

*** TO MAKE SENSE of what ails LTC, read “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Then watch this “virtual LTC event” featuring age wave visionary Ken Dychtwald and leading LTC researchers. Or reverse the order. But do it! ***

LTC BULLET: PROGRESSIVE BIAS PRODUCES REGRESSIVE POLICY

LTC Comment: Progressive bias is rife in long-term care (LTC) data, policy and analysis. Examples abound:

Only 6% of LTC expenditures come from patients’ assets, but advocates claim LTC impoverishes aging Americans, so they demand a vast new LTC entitlement.
CMS combines data on Continuing Care Retirement Community (CCRCs are mostly private pay) and nursing homes (mostly Medicaid) to make Medicaid spending seem lower and out-of-pocket costs (OOPs) look higher.
Researchers are complicit in making OOPs look artificially bigger when they count non-LTC assisted living and residential room and board costs as though they were LTC.
CMS makes Medicaid costs appear smaller and condemns LTC providers to meager rates by requiring recipients to contribute income (mostly Social Security) to offset costs.
Medicare props up Medicaid LTC by paying generous reimbursements for a minority of patients which enables Medicaid to pay less than cost for the majority.
Government defines poverty to exclude in-kind contributions like Medicaid LTC supporting the mistaken impression that LTC OOPs cause widespread impoverishment.

Another example of progressive bias in government data and researchers’ analysis is their proclivity to search strenuously for proof of LTC spend down, but completely ignore evidence of Medicaid planning, artificial self-impoverishment, to qualify. When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. These sources say nothing about how assets are spent, but analysts routinely assume this data proves spend down for medical or long-term care. It does not. It merely documents transitions to Medicaid without explaining how assets were decumulated to achieve eligibility. What might be happening other than spend down for care?

There are many possibilities, such as egregious Medicaid trusts, annuities, and artificial spend down strategies. But I think the big one that goes almost entirely unnoticed is the purchase of exempt assets. In a 2020 paper titled “Medicaid and Long-Term Care,” I explained how the Government Accountability Office (GAO) both documented the importance of this Medicaid planning technique and downplayed its findings in the same report (Government Accountability Office. 2014. “MEDICAID: Financial Characteristics of Approved Applicants and Methods Used to Reduce Assets to Qualify for Nursing Home Coverage. GAO-14-473. May). Here is that explanation as a final example of progressive bias and the damage it does in government LTC data and analysis.

Excerpt from Stephen A. Moses, “Medicaid and Long-Term Care,” Center for Long-Term Care Reform, 2020, pages 53-59.

Unfortunately, hard empirical evidence of Medicaid long-term care asset spend down avoidance is sparse. Most researchers have preferred to scan big data bases looking for evidence to the contrary instead of examining actual Medicaid long-term care cases. In May 2014, however, the Government Accountability Office published results of the only study to date of a sample of such cases for this purpose. They found dramatic results, but for some reason downplayed their own findings.

GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage: 1. spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements; 2. converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note; 3. giving away countable assets as a gift to another individual—such gifts could lead to a penalty period that delays Medicaid nursing home coverage [N.B.: but only if discovered]; and 4. for married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity (GAO, 2014, unnumbered “GAO Highlights” page).

Those methods of qualifying for Medicaid without spending down resources for care are exactly in line with the techniques and procedures recommended by the popular and professional literature on the topic discussed above [Medicaid planning].

GAO analyzed a random, but non-generalizable, sample of 294 Medicaid nursing home applications in two counties in each of three states: Florida, New York, and South Carolina. They found “Nearly 75 percent of applicants owned some non-countable resources, such as burial contracts; the median amount of non-countable resources was $12,530” (Ibid.). That seems significant, but GAO does not draw out the implications in its report. A back-of-the-envelope estimate finds that if those results could be projected to the total of all Medicaid nursing home residents nationally—which they cannot, suggesting a study that could provide generalizable results is needed—665,700 Medicaid nursing home residents sheltered over $8.3 billion in non-countable resources or 42.4 percent of the $19.7 billion Medicaid paid for their nursing home care in 2009, the most recent data available at the time of the GAO study’s publication (Houser, Fox-Grage and Ujvari, 2012[1]). That is a lot of money to divert from private long-term care financing liability.

GAO found “Eligibility workers in 10 of the 12 counties interviewed stated that purchasing burial contracts and prepaid funeral arrangements, which are generally noncountable resources, was a common way applicants reduced their countable assets; and eligibility workers from one state said they recommend making such purchases to applicants” (GAO, 2014, 25). In fact, 39 percent of GAO’s sample owned “Burial contracts and prepaid funeral arrangements” with a median value of $9,311. If that proportion holds for the country as a whole, $3.2 billion or 6.3 percent of total Medicaid nursing home expenditures are diverted from funding long-term care to relieving families of the final expenses for their loved ones. This matters because funeral and burial pre-planning to expedite Medicaid eligibility is big business in the United States. Heavy use by Medicaid families of prepaid burial plans to shelter otherwise countable assets has the effect of shifting scarce program resources from purchasing long-term care services for the poor to subsidizing the funeral industry and indemnifying often affluent adult children from the cost of burying their parents.

GAO found “. . . 44 percent of approved applicants—129 applicants—had between $2,501 and $100,000 in total resources, and 14 percent of approved applicants—42 applicants—had over $100,000 in total resources” (Ibid., p. 14). Pretending again that GAO’s findings are representative of all Medicaid nursing facility recipients, how much wealth would that mean Medicaid is sheltering from private long-term care financial liability nationwide? 887,598 nursing home residents receive Medicaid. If 14 percent of them, or 124,264 recipients, possessed $100,000 or more in non-countable resources, that is at least $12.4 billion or 3.4 times the $3.7 billion Medicaid spent for their nursing facility care. Yet, again, GAO does not draw out the implications.

GAO found: “For the 51 applicants for whom we were able to determine the equity interest in the home, the median home equity was $50,000, and ranged from $0 to $700,000” (Ibid., p. 20). Most home equity (equity, not value) is non-countable, up to as much as $893,000 in some states as of 2020. GAO found median home equity to be $50,000 among the 51 applicants (out of 91 total homeowners or 31 percent of the sample) for whom they were able to determine it. Thus 100 percent of their sample’s home equity was non-countable. Keep in mind that $50,000 is a median home equity value, meaning as many exempt homes were higher in home equity value as were lower, and meaning that the average or mean home equity value could be significantly higher. If 31 percent of 887,598 Medicaid nursing home recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, then at least $13.8 billion worth of their home equity is non-countable, a figure that is 1.7 times the annual $8.1 billion cost of their care. Did it not behoove GAO to dig a little deeper? How much money could Medicaid save by making nursing facility care available only after home equity is spent down by means of private or commercial home equity conversion methods?

GAO found: “Among the Medicaid application files that we reviewed in selected states, 16 of the 294 approved applicants (5 percent) had a personal service contract—all of which were determined to be for FMV [fair market value]. The median value of the personal service contracts was $37,000; the value of the contracts ranged from $4,460 to $250,004” (Ibid., p. 26). What if GAO’s findings were valid nationwide? If 5 percent of Medicaid nursing home recipients (44,380 recipients) sheltered a median value of $37,000 each in personal service contracts, the total diverted away from private long-term care financial liability would be $1.6 billion or 3.4 percent of total Medicaid nursing home expenditures nationally in the same year. That’s a very large subsidy to family members for taking care of their loved ones. Personal service contracts are a technique that is available mostly to savvier, more affluent families who seek legal advice on how to shelter assets. Commonly, the poor lose what little wealth they have to long-term care expenses without learning the often technical and complicated legal methods of artificial self-impoverishment.

GAO found: “Of the 70 married approved applicants whose files we reviewed, 13 had applications that contained a claim of spousal refusal. . . . These 13 applicants resided in two states and the community spouse retained a median value of $291,888 in non-housing resources; two of the community spouses were able to retain over $1 million in non-housing resources” (Ibid., p. 31). Spousal refusal is based on a bizarre interpretation of federal law commonplace in only two states (New York and Florida, both of which were included in GAO’s three-state sample for this study) by which spouses of institutionalized Medicaid recipients are allowed to refuse to contribute financially toward the cost of their spouse’s Medicaid-financed care—with impunity and in direct contradiction of the federal statute. The GAO report does not challenge this practice, nor has CMS taken action to curtail or end it. The spousal refusal cases GAO identified had a median value of nearly $292,000 in non-housing resources, but as they also found, some spousal refusal cases involve a million dollars or more. Why exactly is this allowed? Why doesn’t GAO question the practice? Where is CMS? The report makes no comment.

GAO found: “State Medicaid officials, county eligibility workers, and attorneys who provided information on the value of annuities for the community spouse reported average values ranging from $50,000 to $300,000. Officials from one state reported seeing annuities for the community spouse worth more than $1 million. Medicaid officials from one state indicated that they have seen annuities that disbursed all of the payments to the community spouse shortly after the annuity was purchased, while officials from another state said that annuities can have large monthly payments for the community spouse, such as $10,000 per month” (Ibid., p. 32). Spousal annuities are a huge loophole that allows many millions of dollars to be diverted from private long-term care financing into the pockets of affluent Medicaid nursing home recipients’ spouses. Yet GAO does not call for closing the annuity loophole nor has CMS done anything about it.

GAO found: “Among the 294 approved applicants whose files we reviewed, we identified 5 applicants (2 percent) who appeared to have used one of the ‘reverse half-a-loaf’ mechanisms; 4 of the applicants appeared to use the mechanism that involved creating an income stream through a promissory note to pay for nursing home care during the penalty period. These 4 applicants gifted between $20,150 and $227,250 worth of resources, and had penalty periods of between 2 months and 22 months” (Ibid., p. 29). Again, GAO gives only glancing attention to the reverse half-a-loaf technique often employed by Medicaid planners to reduce their affluent clients’ Medicaid spend down liability by half. The incidence of this technique’s use as identified by GAO—only 2 percent—seems small, but keep in mind that it is only used for people with substantial assets. Otherwise, it would hardly be worth the cost in attorneys’ fees to set up the complicated procedure. Public officials should ask about this and all the other techniques downplayed in the GAO report “how much public spending is being wasted?” and “why are such abuses allowed to continue?”

One final point about this study: GAO says “Our analysis was limited to information included in the application files, which states used to make their eligibility determinations. We did not independently verify the accuracy of this information (Ibid., pp. 4-5).” That single admission obviates any value or credibility this report might otherwise have. Federal quality control audits have found that state welfare eligibility determinations are wrong in a third to a half of all cases even after state quality control reviews have confirmed the original determinations by state or county workers. We will never know the true extent of Medicaid asset shelters, transfers and other artificial self-impoverishment techniques until someone reviews a valid random sample of long-term care cases that is generalizable statewide and nationwide and goes beyond the extremely limited information available in case records for purposes of verification.

The Government Accountability Office or the DHHS Inspector General or any serious researcher or organization should review a generalizable sample of Medicaid long-term care cases to establish once and for all how much money is being lost to Medicaid financial eligibility rules that divert the programs scarce resources from the needy to the affluent.

Closing LTC Comment: It is safe to conclude that government officials and LTC researchers routinely ignore evidence of Medicaid planning, while they search persistently for non-existent evidence of catastrophic LTC spend down. This progressive bias impairs LTC service delivery and financing.

[1] Calculations in this section are based on figures for Medicaid nursing home expenditures, number of Medicaid nursing home residents, etc., as reported in AARP’s Across the States, 2012 publication. Detailed computations by the author are available upon request.

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Updated, Monday, January 29, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-004: LTC NEWS AND COMMENT

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

‘Crying wolf’ or dying breed? Incentives often ignore plight of rural skilled nursing operators
Senate Probes the Cost of Assisted Living and Its Burden on American Families
Long-Term Care: The Problem and The Solution
End-of-life patterns emerge in one-year analysis
Living longer is great! But we need reforms to reduce dependency – Long Term Care solutions
2024 Long-Term Care Insurance Facts - Prices - Data - Statistics - 2024 Reports
Record-Breaking $14.1 Billion Paid in Long-Term Care Insurance Benefits by Top Insurance Companies in 2023
Medicaid and State Financing: What to Watch in Upcoming State Budget Debates

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Updated, Monday, January 22, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-003: LTC NEWS AND COMMENT

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

Woman Sues Genworth Over LTCI Survivorship Benefit
Data shows nursing home closure often linked to care issues
Your Healthspan Is as Important as Your Lifespan—and It’s Declining
Preserving long-term Medicaid for the poor
US Senate launches investigation of assisted living after lay media reports about safety, staffing, pricing
Medicaid should not be for the middle class | Opinion
Easy Medicaid Access Discourages Long-term Care Planning
Hospital study on AI identifies patients with undiagnosed dementia coming from LTC
Dr. Marilyn D. Singleton Interviews Stephen Moses on Long-Term Care Solutions

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Updated, Friday, January 19, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: PARAGON’S VIRTUAL LONG-TERM CARE EVENT

LTC Comment: For a scintillating 75-minute virtual LTC event, go here and read on for a transcript of the program’s opening commentary, after the ***news.***

*** MEDIA COVERAGE of the Paragon Health Institute’s January 9, 2024 “virtual LTC event” and related issues is notable. Following are links to and LTC Clippings about this coverage.

1/9/2024, “Qualifying for Medicaid LTC Benefits Could Get Tougher,” by Allison Bell, ThinkAdvisor - LINK to LTC Clipping

1/12/2024, “Public policy must address flaws in long-term care financing, experts say,” Kathleen Steele Gaivin, McKnights Senior Living and McKnights Business Daily - LINK to LTC Clipping

January 2024, “Easy Medicaid Access Discourages Long-term Care Planning,” by Kevin Stone, Health Care News - LINK to LTC Clipping

1/15/2024, “Preserving long-term Medicaid for the poor,” by Gary D. Alexander, Washington Times - LINK to LTC Clipping

1/16/2024, “Medicaid should not be for the middle class | Opinion,” by Sally Pipes, PENNLIVE.com - LINK to LTC Clipping

1/16/2024, “Medicaid should not be for middle class,” by Sally C. Pipes, TribLive
No LTC Clipping

*** ILTCI ’24 seeks exhibitors and sponsors for this year’s conference in San Diego. See the current sponsor list here. Inquire about and/or request exhibit space here. Register here. Register now to capture the $100 Early Bird Discount which ends today, January 19. This year’s meeting convenes March 17 to 20 at San Diego’s newly renovated Town & Country Resort. This is the big one with the best LTCI content and networking you’ll find anywhere. I’ll host a special session: “Stephen Moses (Center for LTC Reform president) will present two new papers “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” He will explain why LTC financing reform has languished since the Great Recession, but will flourish anew soon. Steve will also preview his forthcoming paper ‘Ending Structural Long-Term Care Racism.’ Don’t miss this review of the past and forecast of the future by the 2019 ILTCI Recognition Award recipient.” ***

*** ILTCI RECOGNITION AWARD: The ILTCI Conference is reviving this tradition. Marc Cohen was the ILTCI Recognition Award’s first recipient in 2018. Steve Moses received the honor in 2019. After the 2020 conference was cancelled due to Covid, the ILTCI Recognition Award was not announced or bestowed for the 2021 to 2023 conferences. But kudos to 2024 ILTCI Conference Chair Karen Smyth and the organization’s Board of Directors for restoring the tradition in 2024 with this announcement: “Now is your chance to nominate a person(s) or organization that has made a significant, long-term contribution towards the attainment of the ILTCI vision. Help us showcase the best of our industry and acknowledge their contributions. Nominees must have worked within the long term care insurance industry in some capacity for minimum of five years to qualify. Submissions will be accepted through February 1, 2024.” Find the nomination form here. Act soon as the deadline is only 12 days away! ***

*** STOP. Go back one item. Don’t skip over this chance to nominate an organization or person who has made a “significant, long-term contribution towards the attainment of the ILTCI vision.” The ILTCI vision is “to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long term care for all levels of American society.” Nominate someone for the ILTCI Recognition Award here now. ***

LTC BULLET: PARAGON’S VIRTUAL LONG-TERM CARE EVENT

LTC Comment: On January 9, 2024, the Paragon Health Institute sponsored and hosted a 75-minute virtual LTC event. Check out a video recording of the proceedings here.

Paragon president Brian Blase opened and closed the program with summary remarks. Age wave visionary Ken Dychtwald moderated the discussion and explained how LTC fits into the broader cultural, demographic, and gerontological context. He asked the participants many provocative questions. Steve Moses briefly summarized findings from two Paragon reports—“Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Two discussants reacted: Richard Johnson from the Urban Institute and Mark Warshawsky from the American Enterprise Institute. Over 100 people attended via Zoom. They asked an unusually large number of questions (34) for such a brief program, some of which were answered live and others are addressed in the Paragon reports.

Steve set the stage with a 12-minute presentation, the text of which follows below. Rich and Mark had six minutes each to respond. Their feedback and their answers to questions reflected substantial agreement, but also many insightful diverging views. Do click through to watch the whole program and see for yourselves. In the meantime, here’s how Steve set the stage:

Welcome and thank you for participating in today’s discussion.

Long-term care in America is broken, marked by nursing home bias, too little home care, dubious access and quality, inadequate funding, caregiver shortages, stressed out unpaid family caregivers, and growing complaints of structural racism.

Everyone bewails these problems, but few ask or explain their cause. Most jump to “solutions” that involve more government money and regulation. But, arguably, government money and regulation caused these problems. Certainly, Medicaid is at their root.

Medicaid reimburses providers 70% of market rates, too little to ensure access and quality. Resulting low salaries cause caregiver shortages and worsen the burden on families. Federal law underwrites Medicaid’s nursing home bias and impedes home care alternatives.

Medicaid’s impact is much greater than its 42% contribution to LTC spending implies. By requiring recipients to contribute their incomes, Medicaid shifts costs to the private sector. It relies heavily on recipients’ Social Security income, and on Medicare, which pays higher reimbursements, enabling Medicaid to pay often less than care costs.

This arrangement is unsustainable. The boomer generation starts turning 85 in 2031, when their LTC need is greatest, just as Medicare and Social Security face statutory cuts. With higher caseloads, less revenue from Social Security, and reduced Medicare payments, rising Medicaid expenditures will constrict budgets, further impairing providers’ ability to deliver good care.

What caused Medicaid’s dominance that created these problems? Policy makers sought to provide a safety net for the needy, but they created a financial fail safe for the elderly instead. A program reputed to help only low income people who have spent down their savings for care is actually available to higher income people who preserve most of their wealth.

As a rule of thumb, monthly income below the cost of a nursing home is not disqualifying; most large assets, such as home equity, are exempt; any remaining countable wealth is removable by purchasing exempt assets; and if eligibility is still out of reach, legal advisers extend it to affluent clients by means of trusts, annuities, and other financial strategies.

What has this system wrought? By giving publicly financed LTC to the middle class and affluent late in life and allowing them to preserve wealth, it encouraged consumers to ignore this risk early in life. It indemnified them against the worst consequences of failing to prepare. In other words, Medicaid created a “moral hazard” that discouraged early and responsible LTC planning.

Despite constant warnings that aging Americans are “Dying Broke,” few people plan for LTC. Private insurance languishes. The high “out-of-pocket” costs that CMS reports are deceptive. Most are payments from income, not assets, toward the cost of care for people already on Medicaid. If you back out all other LTC payment sources, what remains that could come from personal savings is only 6%.

Taking all this into account, we concluded that to end LTC’s problems would require ending Medicaid as a late-life, wealth-preserving funding source for all but the truly indigent. The solution is to convert Medicaid into the program most think it was originally intended to be and many claim it still is, a safety net for people actually impoverished by private LTC costs.

To achieve that objective, we propose to end all Medicaid rules that enable people with substantial incomes and assets to qualify. On the income side, that means eliminating the “medically needy” method of determining income eligibility and stopping the use of income diversion trusts in “income cap” states. All private income would remain in the private-pay system instead of coming to providers at harmfully low Medicaid rates as now.

On the asset side, we propose to eliminate the ways people qualify for Medicaid benefits while preserving wealth. Purchase of exempt assets to reduce countable resources is the biggest of these and the least understood. The home equity exemption, over $1 million in some states, should disappear entirely. The look-back period for asset transfer penalties should be 20 years instead of five. Legal schemes to remove wealth from LTC spend down should end.

Phase these changes in gradually. Exempt everyone too old or infirm to adapt and prepare. People 55 or older and younger people with chronic disability or early onset dementia would be unaffected. Tell others that Medicaid eligibility rules have changed; there is no way to fund LTC and preserve estates going forward without taking personal responsibility; so they should prepare now in case they need care later. Private firms can estimate individuals’ risk levels actuarially giving each a planning goal to achieve by a date (or age) certain. People who prepare for LTC risk at younger ages could have a lower goal set.

Is this plan draconian? No more so than the way Medicaid is described today as requiring “catastrophic” spend down into total “impoverishment.” Consider the plan’s benefits. Consumers would prepare for LTC instead of ignoring that risk until they need care. Fewer would rely on Medicaid, substantially reducing numbers of high cost “dual eligibles.” Reduced Medicaid budgets could pay providers market rates, which would improve quality and relieve caregiver shortages. Families would mobilize to help elders plan and protect inheritances by avoiding Medicaid instead of taking advantage of it. With most LTC funded privately, families could turn over the heaviest and most intimate personal care to paid caregivers. Nursing homes would provide sub-acute and rehab care but long-term custodial care would devolve naturally toward home care as market-based consumer preferences prevail.

The challenge to achieve these benefits may not be as great as we once thought. Research, by one of today’s interlocutors, Dr. Johnson, found that while 56% of people turning 65 will need LTC, 44% will not. The average $121,000 cost for those who do need care, 43% of which Medicaid pays today, could be financed by setting aside the “present discounted value” (PDV) of $70,000 at age 65. Starting earlier, less would be needed.

We also identified substantial wealth held by aging Americans that is untapped for LTC. It is locked up in home equity ($12 trillion), retirement savings ($35 trillion) and life insurance ($21 trillion). By mobilizing this wealth to fund LTC, reliance on Medicaid could be drastically reduced and access to quality care vastly increased. But that objective faces two obstacles.

First: that wealth already supports other worthy goals such as estate planning, retirement savings, and life insurance. Second: young families saving for retirement while making car and mortgage payments cannot assume the added burden of LTC planning. We resolve those two challenges by reprioritizing LTC among life’s risks and offering ways for people to meet their planning objective more easily.

LTC is the biggest financial risk aging people face, but Medicaid obscured that fact. Granting LTC top priority, public policy should allow people to meet their planning responsibility by earmarking wealth they are already accumulating for other purposes to be used first for LTC if needed. We propose seven “LTC Choices” to help them do that.

LTC Choice #1 recognizes private insurance would be more affordable covering only average risk. Choice #2 proposes a new tax-favored account for LTC. Numbers 3, 4 and 5 would enable people to earmark part of their home equity, retirement savings, and life insurance for LTC if and only if needed. LTC Choice #6 does the same for estates and #7 favors people who start younger with more easily attainable goals.

With average LTC risk and cost handled in the private market, the burden on Medicaid will decline substantially, but not disappear. Medicaid for catastrophic coverage will remain but only for the truly indigent whose savings have actually been consumed by private LTC expenditures.

Exploding Medicaid costs and the service delivery and financing dysfunctions they caused are undesirable and insupportable. What could be more reasonable than to solve them by converting Medicaid into the program most people think it already is?

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Updated, Tuesday, January 16, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-002: LTC NEWS AND COMMENT

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

Cost of linked-benefit LTC insurance drops by up to 27 percent from last year
Public policy must address flaws in long-term care financing, experts say
New Paragon research on Medicare clinician payments, Medicaid expansion, long-term care, and the CDC
Long-Term Care: The Problem and The Solution
Qualifying for Medicaid LTC Benefits Could Get Tougher
States Begin Tapping Medicaid Dollars to Combat Gun Violence
Researchers dissect LTC’s immigrant workforce, push for even more
Home health is fastest-growing component of national health spending
California is robbing America’s poor to fund Medicaid for its rich
HCBS staffing shortages lead to severe cuts to programs, services, new report finds
Financial hardship drives unhappiness in people living with dementia, study finds
Fines suspended for nursing homes that violate minimum staffing law
What is the Centers for Medicare and Medicaid Services’ New AHEAD Model?

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Updated, Friday, January 5, 2024, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2022 DATA UPDATE

LTC Comment: Heads up! We're about to explain why long-term care insurance sales have disappointed, why people don't "use their homes to stay at home" and why LTC providers who depend on public financing are at risk. Details after the ***news.***

*** VIRTUAL LTC EVENT on January 9, 2024: Register now for this timely, provocative discussion sponsored by the Paragon Health Institute. Steve Moses will present findings from two Paragon papers: “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Responding will be Richard W. Johnson, Senior Fellow and Director of the Program on Retirement Policy at the Urban Institute and Mark J. Warshawsky, Senior Fellow at the American Enterprise Institute and Former Deputy Commissioner for Retirement and Disability Policy at the Social Security Administration. Ken Dychtwald, Ph.D., Founder and CEO of Age Wave will moderate the discussion and Q&A. Brian C. Blase, Ph.D., President of Paragon Health Institute hosts and oversees the event. Please forward today’s LTC Bullet and this invitation to everyone you think might be interested. Thanks. See you on the Zoom screen January 9. ***

*** ILTCI KEYNOTER announced: Maria C. Carrillo, Ph.D., Chief Science Officer of the Alzheimer's Association, will deliver the keynote address at the 2024 Inter-Company Long-Term Care Insurance Conference in San Diego. Register now for the March 17-20, 2024 meeting at the Town and Country Resort. Early bird registration discounts end January 18, so act soon to save $100. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2022 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 2022 statistics on its website here. Click on this link NHE Tables (ZIP) to download the tables, unzip them, and then click on the data tables of interest, Tables 13, 14 and 15 for our purposes here.

Health Affairs has published a summary and analysis of this new data titled “National Health Care Spending In 2022: Growth Similar To Prepandemic Rates." The article is “open access” so available free here. Unfortunately, the Health Affairs article has little to say about long-term care, so read on to get that story.

Following is our annual analysis of the latest long-term care expenditure data. Note that we added Table 13, “Other Health, Residential, and Personal Care Expenditures,” to our analysis this year. We focused only on nursing home* and home health expenditures before.

Heads Up: This may be the most important LTC Bullet we publish all year. It is the twenty-second 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.” 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, 2022 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 $191.3 billion on nursing facilities and continuing care retirement communities in 2022, a 5.6% increase compared to 2021. The percentage of these costs paid by Medicaid and Medicare has gone up over the past half century (from 26.8% in 1970 to 52.7% in 2022, up 25.9 % of the total) while out-of-pocket costs have declined in the same period (from 49.2% in 1970 to 25.2% in 2022, down 24.0% 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 1970-2022.

So What? Consumers' liability for nursing home and CCRC costs has declined by over half, down 51.2% in the past five decades while the share paid by Medicaid and Medicare has nearly doubled, up 96.6%.

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 $713,000 and in some states up to $1,071,000 of home equity (as of 1/1/24). No wonder nursing homes struggle 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 (30.6% of the dollars in 2022), it covers nearly two-thirds (65.1%) 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. “Medicaid, the primary payer for nursing homes, covers more than 60 percent of all nursing home residents and approximately 50 percent of costs for long term care services. Medicaid reimbursements, on the other hand, only cover 70 to 80 percent of the actual cost of care.” (Source: AHCA/NCAL, “Financial Challenges Continue To Affect Nursing Homes, Emphasizing Need For Higher Medicaid Reimbursement Rates,” October 14, 2020)

Private Health Insurance

Don't be fooled by the 9.5% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2022. 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 2021, ALFs cost an average of $54,000 per year, up 4.7% from 2020. Although assisted living facilities remain mostly private pay, “61% of ALFs are Medicaid certified” and only “a small minority of state Medicaid programs do not cover services in assisted living.” (Find these quotes under the source’s “Finance” tab.) 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 $713,000 or $1,071,000 depending on the state), plus—in unlimited dollar 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 $132.9 billion on home health care in 2022, 6.0% more than in 2021 ($125.4). Medicare (35.8%) and Medicaid (35.3%) paid 71.1% of this total and private health insurance (not LTC insurance) paid 14.0%. Only 11.6% 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 1970-2022.

So What? Only one out of every nine 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 personally at risk for the cost of their care.

Other Health, Residential, and Personal Care

This category includes a lot of long-term care spending that is not encompassed by the nursing home and home health NHE categories, such as Medicaid home and community based waivers and care provided in residential care facilities. The trends are very similar. Americans spent $246.5 billion on these services in 2022, up 9.7% from $224.7 in 2021. Medicare (1.7%) and Medicaid (60.6%) paid 62.3% of that total; private health insurance and other third parties contributed 34.5%; out-of-pocket expenditures amounted to only 3.2%. Data Source: Table 13: Other Health, Residential, and Personal Care Services Expenditures: Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2022

So what? Only one dollar out of $29 spent on these important LTC services comes from a private payer.

No wonder the public feels so little sense of worry about planning, saving, investing or insuring for long-term care.

Summary:

Service	Total	OOP	OOP %

Nursing home	191.3	48.3	25.2%
Home health	132.9	15.4	11.6%
Other health, residential and personal care	246.5	7.8	3.2%

TOTAL	570.7	71.5	12.5%

Across all three kinds of LTC services out-of-pocket expenditures account for only $1 in $8 spent. Half of this spending comes from income of people already on Medicaid. Thus only 6.25%, or $1 in $16, could have come from spend down of savings.

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:

“Long-Term Care: The Solution” (2023) with the Paragon Health Institute at https://paragoninstitute.org/research-paper-page-moses-ltc-solution-20231002/

“Long-Term Care: The Problem” (2022) with the Paragon Health Institute at https://paragoninstitute.org/long-term-care-the-problem/

“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

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.

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, Tuesday, January 02, 2024, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #24-001: LTC NEWS AND COMMENT

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

Investors predict senior living rent increases of 3 to 7 percent
Bold Changes Are in Store for Medi-Cal in 2024, but Will Patients Benefit?
Let’s Go Washington turns in over 2.6 million signatures for all six landmark initiatives
Negative Wealth Shock and Cognitive Decline and Dementia in Middle-Aged and Older US Adults
‘Tougher Every Day’: Nursing Home Operators, CCRCs Weigh in on Future of Skilled Nursing
Americans Over 70 Hold More Than 30% of the Country’s Wealth
Aging Into Uncertainty: How will we navigate the looming long-term care crisis?
Senior-held home equity rises for second consecutive quarter

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Updated, Monday, December 18, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-037: LTC NEWS AND COMMENT

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

Demographics drive retirement saving disparities
Closing the Medicaid Gap Is Just the First Step, as Nursing Homes Fight for Predictable Reimbursement
Who Uses Medicaid Long-Term Services and Supports?
Nursing home, CCRC-related spending tops $191 billion, CMS says
New Poll Finds Older Americans Believe Medicare Should Cover Weight-Loss Drugs
Naked
Global Atlantic, John Hancock Strike Biggest LTCI Reinsurance Deal Ever
Home care largely unaffordable, especially for middle-class seniors, Harvard research shows
Views Washington state long term care tax offers lessons for everyone
Forced to work in a vacuum, MedPAC recommends another Medicare cut
Researchers find a way to predict which of our organs will fail first

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Updated, Friday, December 15, 2023 10:40 AM (Pacific)

Seattle—

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LTC BULLET: “DYING BROKE” WAS DEAD WRONG

LTC Comment: Who knows more about long-term care (LTC) than KFF and the New York Times? Answer: anyone who deals in facts and logic instead of anecdotes and ideology. We explain after the ***news.***

*** REGISTER NOW for the 2024 Intercompany Long Term Care Insurance Conference! Plan now for the March 17 - 20, 2024 convocation at the Town & Country Resort in San Diego, CA. Organizers say the “agenda includes numerous educational sessions over two days across seven tracks with ample time for networking and reconnecting with colleagues. Contact them at info@iltciconf.org if you’d like to exhibit or sponsor. Go here to register and here to book your hotel. The host hotel room block is almost full, so get this done soon. I’ll attend the meeting, cover it for media, and regale anyone interested with the findings and recommendations from two new studies: “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” ***

*** THE NAKED TRUTH about long-term care:

12/2023, “Naked,” by Ron Hagelman, Broker World
Quote: “Stephen has laid out a blueprint that attacks the problem at its core. …
Step One: Eliminate the Moral Hazard. Shut down all planning tools used to avoid personal responsibility—to include purchase of exempt assets, eliminate home equity exemptions, prohibit asset protection trusts and Medicaid compliant annuities. And perhaps most importantly extend the look back period to 20 years and then ‘monitor and enforce compliance.’
Step Two: Publicize the now exposed true risk.
Step Three: Reconceptualize the actual size of the risk.
Step Four: Proselytize affordable planning at younger ages.”
LTC Comment: I thank my friend, Broker World columnist and all-around LTC advocate, Ron Hagelman, for this thoughtful summary and exposition of key facts and recommendations (“the naked truth”) in the Paragon Health Institute’s “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Read Ron first and then the papers to see for yourself.

*** JOIN AND SUBSCRIBE. Center members receive our LTC Bullets and LTC E-Alerts. Center president Steve Moses reads everything relevant to LTC in the popular and academic media. He distills the essence of all important articles and reports in LTC Clippings. He gives you the date, title, author, a representative quote and his interpretation of the publications’ meaning and significance. You get one or two extra emails daily, but you save time you’d otherwise spend researching issues and client questions on your own. All members receive a compilation of the week’s LTC Clippings every Monday in our LTC E-Alert. Premium members receive the Clippings in real time. Check out our Membership Levels and Benefits here. Learn about our “Members-Only Zone” here. You’ll be amazed how economical joining the Center and gaining access to all our online content is. We’re fighting the good fight for rational LTC financing policy. Join our team here. Still undecided? Contact damon@centerltc.com or smoses@centerltc.com. ***

LTC BULLET: “DYING BROKE” WAS DEAD WRONG

LTC Comment: The New York Times and KFF (formerly the Kaiser Family Foundation) partnered to examine “the ways in which the financial and emotional toll of providing and paying for long-term care are wreaking havoc on the lives of millions of Americans.” Their investigative series, titled “Dying Broke,” began with an alarming article: “Facing Financial Ruin as Costs Soar for Elder Care.” Like so much of what passes as investigative journalism in the LTC services and financing field, this report bewails the dismal conditions currently, warns of an aging onslaught that will make everything worse, and laments inadequate LTC funding from public and private sources, but says nothing about what caused these problems nor what to do about them, other than asking government to spend more.

The Paragon Health Institute has published two reports that address both the cause of these problems (“Long-Term Care: The Problem”) and how to solve them (“Long-Term Care: The Solution”) without spending more government money. The following applies insights from those Paragon papers to explain what’s wrong with the KFF/NYT’s findings and analysis. Our perspective follows these quotes from “Dying Broke.”

KFF/NYT: “Millions of families are facing such daunting life choices — and potential financial ruin — as the escalating costs of in-home care, assisted living facilities, and nursing homes devour the savings and incomes of older Americans and their relatives.”

“‘People are exposed to the possibility of depleting almost all their wealth,’ said Richard Johnson, director of the program on retirement policy at the Urban Institute.”

LTC Comment: Are LTC costs truly devouring the savings and incomes of aging Americans and their families? Dying Broke offers anecdotes and asserts that people are vulnerable to catastrophic LTC spend down, but it provides zero evidence that such devastating expenditures actually happen. Our study, “Long-Term Care: The Problem,” explains that government, mostly Medicaid and Medicare, funds the vast majority of all formal paid LTC. Private LTC financing has dwindled from around half in 1970 to a quarter today, most of which is income, not assets, that people already on Medicaid have to contribute. If so many peoples’ savings are devastated by catastrophic LTC costs, shouldn’t that fact show up in the data?

KFF/NYT: “The prospect of dying broke looms as an imminent threat for the boomer generation, which vastly expanded the middle class and looked hopefully toward a comfortable retirement on the backbone of 401(k)s and pensions. Roughly 10,000 of them will turn 65 every day until 2030, expecting to live into their 80s and 90s as the price tag for long-term care explodes, outpacing inflation and reaching a half-trillion dollars a year, according to federal researchers.”

LTC Comment: The oft-reported datum that 10,000 boomers turn 65 daily is rarely balanced by the fact that about 5,700 of them die each day and a third are already dead and free of future LTC risk or cost. Of that half-trillion dollars per year spent on LTC, Medicaid pays 44%; Medicare, 20%; other public sources, 7%; private insurance, 8%; and other private sources (mostly philanthropic), 7%; making a total of 86% that people do not pay out of their own pockets. Of the remaining 14% that the government reports as “out-of-pocket” LTC spending, half or more comes from Social Security and other income that people already on Medicaid are required to contribute to offset the cost of their government-funded care. In other words, only 7% of LTC expenditures nationwide could possibly come from people’s savings. Hardly devastating and certainly not a mandate for more government deficit spending.

KFF/NYT: “The United States has no coherent system of long-term care, mostly a patchwork. The private market, where a minuscule portion of families buy long-term care insurance, has shriveled, reduced over years of giant rate hikes by insurers that had underestimated how much care people would actually use. Labor shortages have left families searching for workers willing to care for their elders in the home. And the cost of a spot in an assisted living facility has soared to an unaffordable level for most middle-class Americans. They have to run out of money to qualify for nursing home care paid for by the government.”

LTC Comment: This paragraph combines a lot of truth, misunderstanding and falsehood. It’s true America’s LTC services and financing system is an incoherent mess, that too few families own private LTC insurance, that we face a dire shortage of caregivers and that care costs are going through the roof. What matters, however, is why these conditions persist. On that, KFF and NYT blank out. The answer lies in correcting the falsehood that people “have to run out of money to qualify” for government LTC financing. If that were true, more people would worry and plan for LTC, more would buy private insurance, and more would pay privately at market rates for home and community-based care resolving the worker shortages as competitive market forces contain costs.

KFF/NYT: “Medicaid, the federal-state program, covers long-term care, usually in a nursing home, but only for the poor. Middle-class people must exhaust their assets to qualify, forcing them to sell much of their property and to empty their bank accounts.”

Paragon: Archimedes said “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” The “fallacy of impoverishment,” the idea that Medicaid requires catastrophic impoverishment to qualify for LTC benefits, is the lever long enough and the fulcrum strong enough to explain all of the problems with LTC and to plot a course to a solution. If people really had to “exhaust their assets to qualify,” if generations of Americans had been wiped out financially by LTC costs, we wouldn’t be in the mess we’re in. People would have quickly taken the risk and cost of LTC seriously and prepared. But the truth is that Medicaid allows practically unlimited income and assets to remain with people who receive its publicly financed LTC benefits. How and why that is true and the dire ramifications for the LTC services and financing system, we explain in “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

KFF/NYT: “The only true safety net for many Americans is Medicaid, which represents, by far, the largest single source of funding for long-term care.

“More than 4 in 5 middle-class people 65 or older who need long-term care for five years or more will eventually enroll, according to an analysis for the federal government by the Urban Institute. Almost half of upper-middle-class couples with lifetime earnings of more than $4.75 million will also end up on Medicaid.

“Qualifying for a slot in a nursing home paid by Medicaid can be formidable, with many families spending thousands of dollars on lawyers and consultants to navigate state rules. Homes may be sold or couples may contemplate divorce to become eligible.”

LTC Comment: There you have it. Just about everyone who has high LTC expenses eventually ends up on Medicaid. But have they really impoverished themselves to qualify? That’s what KFF/NYT assume. They cite the “Health and Retirement Study” (HRS), but the HRS says nothing about how much people spend on health and LTC expenses before they become eligible for Medicaid. HRS only records “transitions” to Medicaid. As we explain in “Long-Term Care: The Problem” and “Long-Term Care: The Solution,” most people can easily qualify financially for Medicaid LTC benefits because private health and LTC expenses are deducted from income before the “low-income” criterion is applied (or in some states income diversion trusts achieve the same purpose) and most assets seniors own are exempt from eligibility limits or can be easily converted to exempt form. On top of that, Medicaid planners, including specialized lawyers and other financial professionals, qualify even high net worth clients using special trusts and annuities, while holding back “key money” to ensure their affluent clients have access to the best facilities and care available through Medicaid. Poor people Medicaid is supposed to serve don’t have key money so they end up in the least desirable care Medicaid offers.

In summary:

“‘Dying Broke’ Was Dead Wrong”
by
Stephen A. Moses
<656 words>

Who knows more about long-term care (LTC) than KFF and the New York Times? Answer: anyone who deals in facts and logic instead of anecdotes and ideology.

KFF and NYT joined forces to frighten the public about LTC risk and cost. Their article series Dying Broke, begins with “Facing Financial Ruin as Costs Soar for Elder Care.” If those titles sound familiar it is because the media barraged the country with the same warnings for decades.

If LTC is such a huge risk and cost, if people are being impoverished in large numbers by its cost, if families are buckling under the strain of providing care the government funds inadequately, then why hasn’t something been done? Why the hand-wringing without action or change?

The answer lies in elites’ misunderstanding of the LTC problems’ cause. They believe poor care access and quality, nursing home bias, caregiver shortages, and excessive reliance on over-stressed family caregivers come from too little government spending for LTC. Ironically, the exact opposite is true.

Government spent too much for LTC and in the wrong ways. Medicaid made nursing homes the dominant venue of care by paying for them exclusively. Medicaid crowded out private savings and LTC insurance by enabling people to preserve wealth and receive publicly funded care late in life. Medicaid reimbursed providers too little to fund quality care or attract paid caregivers.

What makes KFF/NYT cling to the simplistic explanation that government spends too little and ignore the obvious, but more complicated cause? A progressive “LTC Narrative” dominates their thinking and obscures reality. Here are some examples from Dying Broke.

According to “Facing Financial Ruin as Costs Soar for Elder Care,” “Millions of families are facing … daunting life choices — and potential financial ruin — as the escalating costs of in-home care, assisted living facilities, and nursing homes devour the savings and incomes of older Americans and their relatives.” Shouldn’t we expect evidence to support such a dire statement? None is offered.

The article continues “Medicaid, the federal-state program, covers long-term care, usually in a nursing home, but only for the poor. Middle-class people must exhaust their assets to qualify, forcing them to sell much of their property and to empty their bank accounts.” That is certainly the conventional wisdom about Medicaid, but is it true? Blank out.

And still: “The only true safety net for many Americans is Medicaid, which represents, by far, the largest single source of funding for long-term care. More than 4 in 5 middle-class people 65 or older who need long-term care for five years or more will eventually enroll, according to an analysis for the federal government by the Urban Institute. Almost half of upper-middle-class couples with lifetime earnings of more than $4.75 million will also end up on Medicaid.”

So, this is the narrative: LTC wipes out the savings of millions because the main funder, Medicaid, requires impoverishment causing even upper-middle-class couples with millions in savings to qualify for public welfare. But what happens to that narrative if none of this is true?

What if Medicaid does not require low income or exhausting assets to qualify for LTC benefits? What if there is no evidence of widespread catastrophic spend down caused by LTC costs? What if millionaires qualify for Medicaid without spending down and while retaining their wealth for heirs? If all that’s true, it throws the LTC narrative into a cocked hat and invites an entirely different analysis leading to radically different recommendations.

The Paragon Health Institute’s October 2022 paper “Long-Term Care: The Problem” substantiates those unconventional points and explains how Medicaid caused LTC’s problems. Its October 2023 paper “Long-Term Care: The Solution” proposes new public policy to save Medicaid for the neediest and uplift LTC services with an infusion of private financing.

Discard the LTC narrative; focus on facts; think clearly about public policy incentives; and real change becomes possible, even likely.

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Updated, Monday, December 11, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-036: LTC NEWS AND COMMENT

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

Retirement planning, true life expectancy not on most adults’ radar, increasing the risk of outliving resources
The needs of middle-class Americans over 55 often go unmet: SCEPA
Medicaid consultant used nursing home meetings to fleece residents: AG
Event Recording Available
Fitch offers bleak outlook for life plan communities for 2024
Models can predict when older adults with dementia may need nursing home care
Medi-Cal Senior Care Change Will Pressure California’s State Budget
US Is Unprepared to Provide Housing and Care for Millions of Older Adults
Government must encourage personal responsibility, prohibit easy access to Medicaid

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Updated, Monday, December 4, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-035: LTC NEWS AND COMMENT

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

2024 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards
Americans are tapping retirement nest eggs to pay for every day, emergency expenses
New insurance rider aims to be solution for LTSS funding
A Look at Waiting Lists for Medicaid Home- and Community-Based Services from 2016 to 2023
How Medicaid Waivers Have Affected Nursing Home Utilization – And Why the Staffing Proposal May Further This Trend
U.S. Long-Term Care Insurance Users Average $1.4M in Household Wealth: Study
The Own Your Future LTSS Funding and Services Initiative: Options to Increase Access to Long-Term Care Financing, Services, and Supports in Minnesota
State Medicaid expenses to grow as federal dollars wane in FY 2024

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Updated, Friday, December 1, 2023, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, PART 4)

LTC Comment: Today we offer easy access to a must-read new study by Center president Steve Moses, after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau with BackNine Insurance. Back9 gives you a free personalized website at no cost. Your clients (& family & friends) can, with as little or as much of your involvement as you or they want, buy life insurance and LTCi, and schedule parameds and upload their medical records to speed the process. We quote stand-alone LTCi, linked-benefit and life with a LTC rider side-by-side and provide a sales track with video support. 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@back9ins.com discuss how he might help you. ***

*** 11/30/2023, “Government must encourage personal responsibility, prohibit easy access to Medicaid,” by Steve Moses and Brian Blase, Washington Times

Quote: “Well-intentioned government policy tried to help people but ended up trapping generations in nursing homes on welfare. The government must now solve the problem it created by encouraging personal responsibility and prohibiting easy access to Medicaid while preserving wealth. This will naturally lead our nation’s consumers and providers to solve the LTC system challenges.”

LTC Comment: America’s LTC financing crisis is self-imposed by counterproductive public policies. To understand the problems and the solution, read “Long-Term Care: The Problem” and “Long-Term Care: The Solution.”

*** 11/27/2023, “A Long-Term Solution To America's Long-Term Care Crisis,” by Sally Pipes, Forbes

Quote: “Indeed, Medicaid has become such a major source of long-term care coverage that middle-income and even some wealthy Americans rely on the program to support them in their twilight years. … It is precisely this perverse incentive that Stephen A. Moses outlined in his 2022 Paragon Health Institute paper ‘Long-Term Care: The Problem.’ Moses, one of the nation's leading experts in long-term care, determined that access to Medicaid and other publicly-funded safety nets ‘discourages responsible [long-term care] planning when people are still young, healthy, and affluent enough to save, invest, or insure for the risk.’ Rather than continue down the same path, Moses urged policymakers to consider free-market solutions to the ‘problems caused by well-intentioned but ultimately damaging government’ policies. In a paper released last month—‘Long-Term Care: The Solution’—Moses offers some suggestions on how to do just that.”

LTC Comment: We thank Sally Pipes, president and chief executive officer of the Pacific Research Institute, for this clear and compelling review of “Long-Term Care: The Problem” and “Long-Term Care: The Solution.” Click through for the rest of her thought-provoking article. ***

*** 10/19/2023, “Medicaid should only be ‘safety net’ for LTC needs, expert says,” by Kathleen Steele Gaivin, McKnight’s Senior Living.

Quote: “‘Medicaid [long-term care] should be restored as a safety net for indigent elderly people,’ but ‘lawmakers should eliminate the ability to access publicly funded LTC while preserving wealth,’ Stephen Moses, president of the Center for Long-Term Care Reform, writes in a new paper, ‘Long-Term Care: The Solution.’ … The new paper is a follow-up to Moses’ “Long-Term Care: The Problem,” which was published a year ago by the Paragon Institute.”

LTC Comment: This article is a reasonable interpretation of what my paper says, but I urge readers to see for themselves, because the topic is complicated and full of nuances. I’m always eager to receive comments or criticism at smoses@centerltc.com. ***

*** APPEAL: The Center for Long-Term Care Reform, in partnership with the Paragon Health Institute, is embarking on a campaign to improve LTC services and financing. In “Long-Term Care: The Problem,” we explained what’s wrong and why. In “Long-Term Care: The Solution,” we discard the failed policies of the past and propose a radical new approach based on engaging vast sources of private wealth currently diverted from LTC funding. We will reach out to the media, brief federal and state policy and law makers, speak at conferences, and write for publication, all toward the end of achieving the policy goals in “Long-Term Care: The Solution.” Will you help us in this effort? Join the Center or contribute online here. Check out the Center’s “Membership Levels and Benefits” schedule here. Most corporate memberships include a briefing by Center president and “LTC Solution” author Stephen Moses. Call or write for more information: 206-283-7036; damon@centerltc.com; smoses@centerltc.com. LTC policy has floundered for too long. Let’s get this done! ***

LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, PART 4)

LTC Comment: The Paragon Health Institute published “Long-Term Care: The Solution” on October 3. This new report is long and complicated, but important. So LTC Bullets is delivering it to you in bite-sized pieces over several weeks. Published so far: Long-Term Care: The Solution (The Serial), October 20, 2023, Long-Term Care: The Solution (The Serial, Part 2), November 3, 2023 and Long-Term Care: The Solution (The Serial, Part 3). Today, read “Poverty Reconceptualized,” “Managing the Back End,” “Why Not Social Insurance Instead?,” “Summary and Conclusion” and the “Appendix: Exactly How Much Wealth Do People Have and Why Aren’t They Using More of It for LTC?”

Excerpts from “Long-Term Care: The Solution”
by
Stephen A. Moses
President, Center for Long-Term Care Reform

[Box Insert] Poverty Reconceptualized:

Clearly there is enough wealth in the American economy to fund quality LTC for all Americans if it is mobilized with better incentives than prevail now. In fact, poverty, properly measured, is already uncommon in the United States.[67] A 2018 Cato Institute study reports, “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades.”[68] How can that be? “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households.”[69] What is the bottom line? “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more.”[70] The rich are poorer and the poor, richer than we thought. “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone.… Public policy debate should begin with the realization that only about 2 percent of the population—not 13.5 percent—live in poverty.”[71]

The official poverty level calculated by the government does not involve the level of total destitution some may associate with it. Consider a poor household’s consumption a decade ago according to a Heritage Foundation analysis:

The typical poor household, as defined by the government, has a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR. By its own report, the typical poor family was not hungry, was able to obtain medical care when needed. The typical average poor American has more living space in his home than the average (non-poor) European has.[72]

Worries about income inequality are also misplaced. “By not counting two-thirds of all transfer payments as income to the recipients of the transfers and not counting taxes paid as income lost to taxpayers, government statistics dramatically overstate income inequality.… The facts reveal a very different and better America than the one currently described in debates across much of the political spectrum.”[73] Phil Gramm and John Early concluded: “By eroding self-reliance, worker pride and labor-force participation, government-generated income equality undermines the very foundations of American prosperity.”[74]

Applying this corrected understanding of poverty and “inequality” to the challenge of financing LTC suggests, as do other facts referenced above, that America has more sources of wealth to work with than previously contemplated by most experts. Mustered and employed more sensibly, these resources would suffice to ensure access to quality LTC for all Americans.

[End box insert]

Managing the Back End

This proposed approach of withdrawing Medicaid asset protection in the future and encouraging private LTC planning in the present will not cover everyone who may need LTC later. Some will be unable to fund any of the options that will become available. Others will decide not to plan. But most people, faced with an immediate requirement to confront LTC risk and cost, will likely take steps to prepare. Still, 14.7 percent of people turning 65 will incur LTC expenses of $250,000 or more, nearly half of which Medicaid already pays.[75] Much relieved of the need to cover most of the cost of LTC, Medicaid could continue as the payer of last resort for these people.

With the techniques used to qualify for Medicaid while preserving wealth eliminated in the future for people currently under age 55, over time Medicaid LTC benefits will no longer be available to people while also allowing them to retain income and resources. Far fewer people will be dependent on Medicaid. At that point the program should pay full private market rates so remaining recipients can receive high-quality home care, assisted living, or nursing home care as needed. The existing two-tier LTC service delivery system—in which Medicaid recipients receive lower cost, less desirable care compared to market-rate private payers—should largely end. Resources accumulated in private hands through insurance, targeted savings or from reverse mortgages or liens, will suffice to fund the vast majority of all LTC for most people. In fact, even before those measures are employed, most older adults could already finance substantial LTC if required to use resources they already own for that purpose.[76]

With most LTC provided within the private market at market payment rates, LTC providers would prosper instead of being underpaid by Medicaid as they now are. Private market competition would ensure adequate compensation for LTC nursing and support staff, which would eliminate their shortage. In addition, fewer people would need to provide direct care themselves for friends and family. They could instead provide love and support without having to provide bathing assistance or change adult diapers. Entrepreneurs would compete to find newer and better service delivery methods. The financial burden on government and taxpayers would lessen substantially. Impoverishment due to LTC, to whatever heretofore unsubstantiated level it has existed,[77] would mostly disappear.

Why Not Social Insurance Instead?

Why not simply require by government fiat that everyone must pay a tax so that all can receive a LTC benefit when it is needed? That is the sirens’ song of social insurance.

Why is social insurance so appealing to intellectuals and politicians despite their inability to get such plans approved by voters? By compelling citizens to participate in the scheme, social insurance avoids the biggest problem of voluntary private insurance. People are not forced to purchase private LTC insurance, so many do not, leaving too many unprotected. By forcing everyone to pay for social insurance, government ensures that the substantial financial risk of LTC is spread across the whole population. Social insurance avoids adverse selection, the problem of only those most likely to use the insured benefit purchasing private insurance for it, resulting in a solvency death spiral. Despite these apparent benefits, proposals for compulsory LTC social insurance have never achieved the approval of voters and taxpayers. Why?

The compulsion and universality of social insurance also have vital downsides, including loss of freedom and some perverse incentives. Because social insurance spreads (but does not price) risk, it rewards irresponsibility and punishes responsible behavior. Private insurance, on the other hand, spreads but also prices risk. People pay more for private life insurance if they smoke, so it discourages smoking and rewards healthier behavior. Social insurance does the opposite. It charges everyone the same regardless of how much risk they bring into the risk pool, thus rewarding high-risk people and behaviors while punishing low-risk people and behaviors. Private insurance rewards personal responsibility and self-reliance, whereas social insurance rewards and thus encourages government dependency.

The moral precept of social insurance is “from each according to his ability, to each according to his need,” the fundamental principle of socialism. Across a society the incentives and disincentives of social insurance undermine personal responsibility, discourage individual effort, and lead to excessive reliance on others for support, including government authorities exercising their monopoly of the legitimate use of force. Social insurance always and everywhere tends toward collective mediocrity and individual failure. In light of the short-term solvency denouement of Social Security and Medicare, we should view new social insurance plans with increasing skepticism.

Summary and Conclusion

Albert Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.”[78] The kind of thinking that created LTC’s problems is that markets cannot provide the services people need without massive government regulation and financing. No other way of thinking about the problem has been seriously considered. But recent research suggests how to reconceptualize the quandary policymakers face so that LTC is not such a titanic crisis and may be fixable with a market-based solution.

Eliminating the means by which people have ignored LTC planning early in life while preserving wealth and qualifying for Medicaid later can encourage consumers to prepare early and responsibly for future LTC risk. Showing them ways to set aside wealth that they already possess or will accumulate over time can enable them to manage the LTC risk while fulfilling other responsibilities such as raising a family, car and house payments, retirement, and education savings.

LTC need not be the overwhelming challenge that pushes analysts toward “easy” solutions involving economically harmful payroll taxes, government compulsion, and public entitlement programs. Properly conceived and with the right financial tools and incentives available, LTC can be fully financed and vastly improved without undue pressure on families, consumers, or taxpayers.

Appendix: Exactly How Much Wealth Do People Have and Why Aren’t They Using More of It for LTC?

The following table is condensed from a more detailed version published by the National Council on Aging and the LTSS Center in a February 2023 report. It displays the wealth of older adult households by quintile through 80 percent and then by decile to 100 percent. The report states that “the bottom 20%, approximately 11 million households, have no assets. This group has a 2018 median income of $16,989 and would be unable to rely on personal finances to pay for LTSS, especially with rising costs of care.”[79] Clearly, this is an economic group for which Medicaid LTC benefits are intended to provide a safety net.

Older Adult Households Divided into Quintiles or Deciles of Total Net Wealth (2018)

Quintiles	0-20%	21-40%	41-60%	61-80%	81-90%	91-100%
Total household income (median)	$16,989	$27,240	$40,000	$52,229	$71,135	$109,092
Net value [home equity] of primary residence (median)	0	$45,000	$115,000	$220,000	$300,000	$400,000
Household value of financial assets (non-housing, median)	0	$2,000	$16,300	$130,000	$480,000	$1,331,254

The report continues: “The next three quintiles (21–40%, 41–60%, and 61–80%) of older adults saw modest increases in their financial assets between 2016 and 2018, but these individuals would still be unable to afford more than two years of nursing home care in a semi-private room or four years in an assisted living community if their median income and household value of financial assets were added together. Despite adults’ preference to age in place, 60% of adults would be unable to afford two years of in-home long-term services and supports.”[80]

That conclusion is striking. If 60 percent of middle-class aging Americans cannot afford two years of in-home LTSS, then it follows that 40 percent can. If so, that would cover the average LTC risk and cost for most of them: “[O]ver half of adults 65 and older will need LTSS for less than two years … .”[81]

But are people actually spending down their wealth for LTC? How much of their income, “household value,” and other financial assets do people actually use to fund their own LTC? Conventional wisdom holds that high LTC costs force wide swaths of American elders into impoverishment, leaving them dependent eventually on Medicaid. Is that what happens? Do middle-income people have any other choice? If faced with high LTC costs, would people in the fourth wealth quintile (61-80 percent) need to spend down their wealth before qualifying for Medicaid-financed LTC?

Their median total household income is $52,229. The rule of thumb for income is that anything below the cost of a nursing home is not disqualifying. That is because private health and LTC expenditures are usually deducted from income before comparing the balance to Medicaid’s very low allowable limit.[82] A well spouse would keep any income in his/her sole name plus a “monthly maintenance needs allowance” of up to $2,465 or $29,580 per year (as of 2023) from the recipient’s income. Any remaining income in the Medicaid recipient’s name would go to offset the program’s cost for his/her care, but if there is an estate recovery later, the recipient would be liable only for what Medicaid spent for his/her care, which is much less than what the private pay cost would have been.

Thus, while some private income goes for care, this out-of-pocket cost—mostly Social Security income (explained below)—merely reduces Medicaid’s share of the extremely low reimbursement, often less than the cost of care, that the LTC provider receives. Although the recipient is paying out of pocket, he/she is not commanding the better access and higher quality care associated with paying privately. He/she is trapped in the lower Medicaid level of America’s two-tier LTC system.

What about assets? Must they be spent down before getting Medicaid? The “net value of primary residence” (i.e. home equity) of people in the fourth wealth quintile is $220,000. Does that amount interfere with Medicaid LTC eligibility compelling asset spend down? No. Medicaid exempts a minimum of $688,000 of home equity and up to $1,033,000 in some states. Even the richest people would qualify for Medicaid based on their home equity of $400,000.

But, as is widely known, Medicaid allows applicants/recipients to hold no more than $2,000 in “countable” assets while qualifying for or receiving Medicaid LTC benefits. The fourth quintile’s “household value of financial assets (non-housing, median)” is $130,000. But that is just a starting point. If there is a spouse, Medicaid computes the couple’s jointly owned assets and sets aside half—not to exceed $148,620 but never less than $29,724 (as of 2023)—for the “community spouse.” Then Medicaid takes out the non-countable assets people own, such as “pre-paid burial and funeral expenses, an automobile, term life insurance, life insurance policies with a combined cash value limited to $1,500, household furnishings/appliances, and personal items, such as clothing and engagement/wedding rings.”[83] Very few people in the fourth quintile of wealth will have much savings left after these deductions, but whatever remains can easily be converted to non-countable status by investing more money in the home or purchasing, in unlimited amounts, any of the other exempt items just listed.

When they confront high LTC costs, do middle-class people ignore these generous Medicaid financial eligibility limits and pay out of pocket? Do they voluntarily plunge themselves into real impoverishment from a sense of personal responsibility or shame at depending on public assistance? Some do. More used to. But nowadays information on how to qualify for Medicaid without spending down for care is universally available in magazine articles and self-help books, in legal treatises and on the internet. Google “Medicaid planning in [any state]” to find long lists of attorneys who specialize in qualifying clients for Medicaid while preserving their wealth. Even state Medicaid eligibility workers routinely explain to middle-class applicants how to speed up or entirely eliminate their “spend down” process by purchasing exempt assets. Workers report that people think of Medicaid (public assistance) as though it were an entitlement like Medicare.[84] They ask, as Jane Bryant Quinn did in a 1989 Newsweek column, “Do Only the Suckers Pay?”[85] So, no, ignoring easy access to Medicaid LTC benefits and paying out of pocket is the exception, not the rule.

But what about the conventional wisdom that people all across America must be, and actually are, spending down to impoverishment before obtaining Medicaid? If that is true, it should show up in the data. But it does not. The percentage of nursing home costs paid by Medicaid and Medicare has nearly doubled over the past half-century from 26.8 percent in 1970 to 52.3 percent in 2021, while out-of-pocket costs have shrunk by half in the same period from 49.2 percent in 1970 to 24.5 percent in 2021.[86] Nursing home private-pay revenue has plummeted to 7 percent.[87]

The situation with home health care is very similar. America spent $125.2 billion on home health care in 2021, of which Medicare (37.2 percent) and Medicaid (34.2 percent) paid 71.4 percent. Private health insurance (not LTC insurance) paid 12.7 percent. Only 10.3 percent of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources.[88] Maybe people are spending down for assisted living. Some surely do, but “Almost 1 in 5 [assisted living] residents relies on Medicaid to pay for daily services (18%),” “61% of [assisted living facilities] are Medicaid certified,” and only “a small minority of state Medicaid programs do not cover services in assisted living.”[89] Assisted living began exclusively as a private-pay option, but that is changing rapidly. Still, to count spend down for assisted living as an out-of-pocket LTC expenditure is dubious, because a large portion of the fee for assisted living covers room and board, not LTC.

So how can it still be that “Family out-of-pocket costs are also substantial, averaging $44,800 and accounting for 37% of the total” LTSS expenses, averaging $120,900 per person?[90] The answer is another anomaly of Medicaid LTC financing policy: People receiving Medicaid LTC benefits are required to contribute all but a small portion of their income to offset Medicaid’s cost for their care. While this income “spend-through” is rarely considered, research from three decades ago documented that it is substantial, roughly half of what is reported as out-of-pocket costs.[91] This matters because the spend-through income—mostly Social Security benefits, although correctly considered to be a private out-of-pocket expenditure for Medicaid LTC—is not asset spend down and does not come from people’s savings or home equity. Relatively little of what is reported as personal out-of-pocket LTC expenditures comes from savings or home equity expended for nursing home or home health care. Much of it is Social Security income that is vulnerable to that entitlement program’s potential insolvency and has been contributed by people already on Medicaid, some of whom are receiving Medicaid while residing in assisted living facilities or continuing care retirement communities (CCRCs).[92] Removing private payments for assisted living and CCRCs, much of which cover room and board costs and not LTC, leaves much less reported out-of-pocket LTC costs remaining that could actually constitute consumption of life savings or real property assets.

Finally, analysts often refer to the University of Michigan Health and Retirement Study and its auxiliary, the Asset and Health Dynamics among the Oldest Old study for evidence to support their presumption that people are spending down assets to qualify for Medicaid LTC benefits. Research does show that people tend to decumulate assets rapidly at older ages, and many do qualify for Medicaid thereafter. But there is nothing in the data to link decumulation of wealth with spend down on health or LTC costs. Those sources show only that transitions to Medicaid eligibility occur. Such transitions may as likely be the result of Medicaid planning (i.e., artificial self-impoverishment) conducted many years before in anticipation of the future need for LTC.

The widespread belief that high LTC costs impoverish large numbers of aging Americans is unsupported by the evidence. Medicaid financial LTC eligibility rules do not exclude people up to and through the fourth quintile of wealth. Ample evidence suggests that the public is aware of methods to qualify easily for Medicaid LTC benefits or quickly learn how when expensive care costs arise. Private-pay revenue for LTC providers, including home health agencies and skilled nursing facilities, is low and falling. Private pay for assisted living and CCRCs—much of which does not go for LTC but rather for room and board—should not be bunched in with spending for home health and skilled nursing. In the absence of evidence of high out-of-pocket spend down for LTC, analysts should reassess what is actually happening and how to address reform.

In summary, middle-class Americans have enough wealth to fund their average expected LTC costs, and this wealth is largely exempt from Medicaid spend down rules. Information on how to access Medicaid LTC benefits without spending down is widely available, and there is no evidence of widespread LTC spend down resulting in impoverishment. So, one can conclude that changing Medicaid eligibility policy to remove the option to ignore LTC, shelter personal wealth, and rely on public benefits when LTC becomes necessary should free up enormous resources of private wealth to support LTC financing.

[67] Phil Gramm, Robert Ekelund, and John Early, The Myth of American Inequality: How Government Biases Policy Debate (Lanham, MD: Rowman and Littlefield, 2022).

[68] John F. Early, “Reassessing the Facts about Inequality, Poverty, and Redistribution,” Cato Institute, April 24, 2018, p. 1, https://www.cato.org/policy-analysis/reassessing-facts-about-inequality-poverty-redistribution.

[69] Early, “Reassessing the Facts,” p. 2.

[70] Early, “Reassessing the Facts,” p. 4.

[71] Early, “Reassessing the Facts,” 21.

[72] Rachel Sheffield and Robert Rector, “Air Conditioning, Cable TV, and an Xbox: What Is Poverty in the United States Today?,” Heritage Foundation, July 19, 2011, https://www.heritage.org/poverty-and-inequality/report/air-conditioning-cable-tv-and-xbox-what-poverty-the-united-states.

[73] John F. Early, “The Myth of American Income Inequality,” Cato Institute, September 20, 2022, https://www.cato.org/study/myth-american-income-inequality.

[74] Phil Gramm and John Early, “Income Equality, Not Inequality, Is the Problem,” Wall Street Journal, August 29, 2022, https://www.wsj.com/articles/income-equality-not-inequality-is-the-problem-labor-force-participation-income-taxes-transfer-payments-middle-bottom-rich-household-size-census-11661781351.

[75] “About 15% of older adults can expect their total LTSS expenses from age 65 onward to amount to more than $250,000, whereas about 8% will have positive but low costs (less than $10,000). A smaller percentage (about 6%) will spend $250,000 or more out of pocket on LTSS. Fourteen percent will spend at least $100,000 out of pocket on LTSS after turning 65.” Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 8.

[76] “Most older adults could finance a substantial amount of paid home care out of pocket. About three-quarters of non-Medicaid, community-dwelling adults ages sixty-five and older could cover at least two years of moderate amounts of paid home care—the median duration among recipients—with their available resources, and about two-thirds could fund that amount of care using only their income and financial assets.” Johnson and Wang, “The Financial Burden of Paid Home Care on Older Adults,” p. 999.

[77] LTC researchers often claim that spend down for high LTC costs plunge wide swaths of older Americans into impoverishment, leaving them dependent on Medicaid. That presumption has become conventional wisdom as well. But proof for this “fallacy of impoverishment” is never offered. Researchers claim data from the HRS and AHEAD surveys substantiate spend down. But those sources only document “transitions” to Medicaid. Such transitions could occur due to spend down. But they are as likely or more so to happen as a result of Medicaid planning, artificial self-impoverishment, conducted much earlier in anticipation of future LTC need. Certainly, spend down of assets on health or LTC expenses is not required to achieve Medicaid LTC financial eligibility as explained in Long-Term Care: The Problem and above.

[78] See https://www.brainyquote.com/quotes/albert_einstein_385842.

[79] Rocki Basel et al., “The Continued Toll of Financial Insecurity in Retirement,” National Council on Aging and LTSS Center, February 2023, https://ncoa.org/article/addressing-the-nations-retirement-crisis-the-80-percent-financially-struggling. Cited 9/4/23.

[80] Basel et al., “The Continued Toll of Financial Insecurity in Retirement.” Emphasis in original.

[81] Basel et al., “The Continued Toll of Financial Insecurity in Retirement.”

[82] Most states (34) use the “medically needy” income eligibility method. They deduct private medical and LTC expenses from income before determining eligibility, enabling people to qualify despite having incomes well above categorical eligibility limits. Other states use an “income cap” method, allowing income up to 300 percent of the Supplemental Security Income monthly limit. People with much higher incomes can still qualify for Medicaid in income cap states by diverting any excess income to an income diversion trust, also known as a “Miller” or “Qualified Income Trust.” For an explanation of the medically needy and income cap pathways to Medicaid income eligibility, see American Council on Aging, “Income Spend Down,” updated December 14, 2022, https://www.medicaidplanningassistance.org/medicaid-spend-down/.

[83] American Council on Aging, “Spending Down Assets to Become Medicaid Eligible for Nursing Home/Long Term Care,” updated December 14, 2022, https://www.medicaidplanningassistance.org/medicaid-spend-down/.

[84] Many are quoted in Center for Long-Term Care Reform state-level reports accessible here: http://www.centerltc.com/reports.htm.

[85] Jane Bryant Quinn, “Do Only the Suckers Pay?,” Newsweek, December 18, 1989.

[86] Centers for Medicare and Medicaid Services (CMS), National Health Expenditure Data, Table 15, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical. To access Table 15, open and unzip NHE Tables (ZIP).

[87] National Investment Center, “Monthly Skilled Nursing Data Report,” February 2023, https://info.nicmapvision.com/nic-map-skilled-nursing-data-monthly-report.html.

[88] CMS, National Health Expenditure Data, Table 14. To access Table 14, open and unzip NHE Tables (ZIP).

[89] American Health Care Association and National Center for Assisted Living, “Facts and Figures,” https://www.ahcancal.org/Assisted-Living/Facts-and-Figures/Pages/default.aspx. Find these quotes under the source’s “Finance” tab.

[90] Basel et al., “The Continued Toll of Financial Insecurity in Retirement.”

[91] “An estimated 41 percent...of out-of- pocket spending for nursing home care was received as income by patients or their representatives from monthly social security benefits.” Helen C. Lazenby and Suzanne W. Letsch, “National Health Expenditures, 1989,” Health Care Financing Review 12, no. 2 (1990), p. 8, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4193104/. Later research confirmed that Social Security spend-through is almost half of nursing home out-of-pocket costs. Nelda McCall, ed., Who Will Pay for Long Term Care? Insights from the Partnership Programs (Chicago: Health Administration Press, 2001), p. 19.

[92] The Centers for Medicare and Medicaid Services changed the definition of National Health Expenditure Accounts categories in 2011, adding CCRCs to Nursing Care Facilities. This change had the effect of reducing Medicaid’s reported contribution to the cost of nursing home care and increasing the amount reported as “out of pocket” expenditures, because CCRCs, like assisted living facilities, are mostly private pay.

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Updated, Monday, November 27, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-034: LTC NEWS AND COMMENT

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

A Long-Term Solution To America's Long-Term Care Crisis
10 Things You Should Know About Long-Term Care Insurance
Brian Blase Discusses Affordable Care Act Enrollment
The way we pay for long-term care needs a fundamental rethink
Does It Make Sense to Self-Fund Long-Term Care Expense?
Why long-term care in America is a long-term problem
When You Go Home for Thanksgiving
Why Long-Term Care Insurance Falls Short for So Many
Americans would have difficulty paying for a year of long-term care: survey
Federal, lender support needed for assisted living operators to lower rates, leader says
Nursing home care continues to outpace most categories of national health spending: Altarum

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Updated, Monday, November 20, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-033: LTC NEWS AND COMMENT

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

Can a Nursing Home Take Our Assets? We Have a $1 Million IRA and a Trust to Protect Us
Why High Interest Rates Are Good News for Long-Term Care Insurance
Facing Financial Ruin as Costs Soar for Elder Care
The Affordability of Long-Term Care and Support Services: Findings from a KFF Survey
The Biden Administration Is Slow to Act as Millions Are Booted off Medicaid, Advocates Say
Can I Be Compensated for the Care I Give to My Elderly Parents?
Don't be afraid of too many LTC Insurance Choices!
Genworth Moves Ahead With Long-Term Care Reboot
Removing Medicaid Loopholes to Improve Long-Term Health Care
12 Ways Long-Term Care Risk Eats Your AUM
Worried About Long-Term Care Expenses? Let’s Do Something About It

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Updated, Monday, November 17, 2023, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, Part 3)

LTC Comment: Today we offer easy access to a must-read new study by Center president Steve Moses, after the ***news.***

*** PODCAST: “Removing Medicaid Loopholes to Improve Long-Term Health Care,” by AnneMarie Schieber, The Heartland Institute, 11/7/2023
Quote: “Stephen Moses, one of the leading experts on long term care in the U.S. says the nation can dramatically improve the quality of long-term care if we could get rid of the many loopholes that allow just about anyone to qualify for Medicaid coverage. Few people save for long term care because it is widely accepted that the government will pick up the tab. But government paid care has really impacted the quality of care. Many of the elderly live their last days in nursing homes. Moses, and the Paragon [Health] Institute released their latest report on the problems with long term care in the U.S., called Long-Term Care: The Solution. In October 2022, Moses and Paragon outlined the problems in Long-Term Care: The Problem. … This podcast begins with a discussion on Medicaid loopholes, the response from Congress, whether a solution is workable immediately, and how special interests might respond to closing off loopholes. The conversation then turns to why the public needs to be better educated on long-term care. The idea that it must be debilitatingly expensive isn’t true.”
LTC Comment: Get the essence of the LTC problem and its solution in this 36-minute podcast. Many thanks to Health Care News managing editor AnneMarie Schieber and the Heartland Institute for publishing this important message. ***

*** COLUMN: “The federal Medicaid bait and switch,” by Stephen A. Moses, McKnight’s LTC News, 11/6/2023
Quote: “How to unleash trillions of dollars in home equity, retirement savings and life insurance lying fallow now and mobilize them to supercharge LTC service delivery is the new paper’s topic. How to do that without unsettling young people and families who have more immediate goals and responsibilities they currently put ahead of LTC planning is the paper’s proposal. I invite McKnight’s readers [and everyone else] to review ‘Long-Term Care: The Problem’ and ‘Long-Term Care: The Solution,’ consider their analysis and recommendations, and share your comments and criticism with the author.”
LTC Comment: Have a look at these two papers and let me know what you think. I believe the opportunity to change LTC financing for the better is coming again. The system described in the first paper is unsustainable and the proposal in the second paper is practical, new, and achievable. Just do it. ***

LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, Part 3)

LTC Comment: The Paragon Health Institute published “Long-Term Care: The Solution” on October 3. This new report is long and complicated, but important. So LTC Bullets will deliver it to you in bite-sized pieces over several weeks. Published so far: Long-Term Care: The Solution (The Serial), October 20, 2023 and Long-Term Care: The Solution (The Serial, Part 2), November 3, 2023. Today, read “Changing Course: From Failed Threats to Stronger Incentives,” “How to Engage the Public in Long-Term Care Planning While They Still Have Time to Prepare,” “How These Policy Changes Would Impact the LTC Market,” “People Already Have More Funds Available for LTC Than They Are Using Now,” and “Methods to Satisfy Individual LTC Responsibility.” Next time: “Poverty Reconceptualized,” “Managing the Back End,” and “Why Not Social Insurance Instead?” Finally, in Part 4, expect “Summary and Conclusion” and the “Appendix: Exactly How Much Wealth Do People Have and Why Aren’t They Using More of It for LTC?”

Excerpts from “Long-Term Care: The Solution”
by
Stephen A. Moses
President, Center for Long-Term Care Reform

Changing Course: From Failed Threats to Stronger Incentives

Policies intended to scare consumers into planning privately for the risk and cost of LTC did not work. People could always ignore LTC and, if they needed expensive care over an extended period later, easily transfer the liability to Medicaid. The program’s financial eligibility rules allowed (1) ownership of practically unlimited exempt assets; (2) asset transfers five years in advance; (3) very large home equity protection; (4) major trust, annuity, and life estate exemptions; (5) large incomes so long as private health and LTC expenses were also high; and (6) substantial wealth transfer to heirs due to scant enforcement of the estate recovery mandate. Easy access to Medicaid meant the measures taken to encourage LTC planning and policies to encourage the purchase of private insurance for LTC largely failed. This condition will remain unless and until the public is engaged in LTC planning earlier in life.

How to Engage the Public in Long-Term Care Planning While They Still Have Time to Prepare

Step One: Eliminate Moral Hazard

Lawmakers should eliminate the moral hazard that has discouraged early LTC planning. That is, end the ability and practice to (1) ignore the LTC risk; (2) avoid the need to save, invest, or insure to prepare; (3) wait to see if expensive care is ever needed and, if it is; (4) transfer the liability to taxpayers by qualifying for Medicaid while preserving wealth. The methods people use to preserve wealth while qualifying for Medicaid LTC benefits late in life must cease. Those practices include but are not limited to:

a. Purchase of exempt assets. This is the biggest, most costly, and hardest to measure method of artificial self-impoverishment to qualify for Medicaid. Medicaid requires that personal assets be spent down to a very low level (usually $2,000) before eligibility is granted. But the program does not require that such assets be expended for health or long-term care needs.[29] This loophole allows Medicaid applicants to protect unlimited wealth by purchasing goods or services that are not included among countable resources. Such exempt items include an expensive home and—without any dollar limit—the following: one automobile, prepaid burial plans, one business including the capital and cash flow, term life insurance, household goods, personal belongings, and even individual retirement accounts (IRAs) in many cases.[30] Medicaid planners routinely advise clients to maximize this path to eligibility. They provide long lists of exempt items for clients to purchase in order to reduce their countable wealth for Medicaid eligibility.[31] No study has ever been conducted to measure this very easy Medicaid planning method’s incidence or cost.
Recommendation: Eliminate the exempt asset loophole by requiring that spend down of assets must be for health or LTC expenditures and documented in the case record as is already required and done for income spend down.[32]

b. Home equity exemption. Current Medicaid law exempts between $688,000 and $1,033,000 of home equity, depending on the state. As home equity is most seniors’ biggest asset, protecting this wealth from LTC liability discourages responsible and early LTC planning. Financial tools and methods such as reverse mortgages and home equity loans enable individuals and families to access otherwise illiquid home equity for the purpose of funding private home-based LTC. As the legitimate purpose of Medicaid is to ensure access to quality LTC for the underprivileged, the program should not shelter home equity from eligibility consideration on behalf of middle-class and affluent applicants. Otherwise, Medicaid operates as free inheritance insurance for heirs instead of a safety net for those in need.
Recommendation: Eliminate the Medicaid home equity exemption according to a phase-in schedule with enough advance warning to incentivize early LTC planning without unduly affecting people already too old to prepare.

c. Medicaid Asset Protection Trusts (MAPT). “A Medicaid Asset Protection Trust is exactly as it sounds—a trust designed to protect assets from being counted for Medicaid eligibility.”[33] Putting wealth, including real property, into an MAPT five years ahead of application for Medicaid LTC benefits removes unlimited amounts from eligibility consideration or spend down requirements.
Recommendation: Prohibit MAPTs immediately for all applicants and recipients. Once the law is changed, Medicaid legal advisers will self-enforce by no longer using or recommending the practice.

d. Medicaid Compliant Annuities. “A Medicaid Compliant Annuity is a single premium immediate annuity (SPIA) that contains zero cash value and provides income to the owner. Properly structured, this annuity functions as a spend-down tool that eliminates excess countable assets, allowing the nursing home resident to become eligible for Medicaid benefits.”[34] There is no limit on how much wealth can be sheltered with a Medicaid compliant annuity. A congressional study cited a Rhode Island resident sheltering $400,000 and a Virginia resident sheltering $900,000 this way.[35]
Recommendation: Eliminate Medicaid-compliant annuities as a means to qualify for Medicaid while preserving wealth at any age.

e. Five-year asset transfer look-back. Assets transferred for the purpose of qualifying for Medicaid within five years of application are used to determine eligibility according to a formula that delays eligibility based on the amount of the transfer.[36] Assets transferred more than five years before application are not considered no matter how great the amount divested. Because the median period of time from diagnosis to death in dementia cases is five years,[37] families that transfer assets at early signs of mental weakening can entirely avoid Medicaid spend down requirements. Because real property ownership and transfers are publicly recorded, easy to check, and represent the largest portion of seniors’ wealth, the look-back period to discourage their transfer for purposes of Medicaid qualification should be much longer. It is unlikely that so many people would become Medicaid eligible and join the most expensive dually eligible recipients of Medicaid and Medicare if they were under notice of asset transfer limits 20 years in advance instead of five.
Recommendation: Expand the Medicaid asset transfer look-back period from five to 20 years. As all real property transfers are recorded and often automated now, checking for a look-back of 20 years is no more difficult than the current five-year look-back requirement. People would be much less likely to initiate asset transfers to qualify 20 years ahead of a potential LTC need as they routinely do five years ahead. In other words, this rule would be self-enforcing and not generally require enforcement 20 years later at the point of Medicaid application.

A systematic review of Medicaid income and asset eligibility loopholes (described and promoted in the vast formal legal literature on Medicaid estate planning[38]) would reveal many more oversights in Medicaid law and regulations that discourage responsible LTC planning and smooth the way onto Medicaid for people who do not plan for LTC. Some of the more egregious examples include spousal refusal, life estates, and half-a-loaf strategies.[39] These should be eliminated as well. At a minimum, the GAO should immediately undertake a systematic study of Medicaid LTC eligibility rules and enforcement to ascertain the incidence and costs of these major loopholes. GAO should examine a valid random sample of Medicaid LTC cases generalizable to the national universe of such cases. Such a study should employ more intense review and verification techniques than are used by state Medicaid agencies. Severe staff and financial shortages cause the state agencies to miss applicants’ unreported income and resources, resulting in eligibility errors that closer scrutiny would reveal. Establishing national LTC financial eligibility error rates would finally reveal how much Medicaid loses as a safety net for the needy and how large its moral hazard impact is on the non-needy due to eligibility loopholes and errors.

How These Policy Changes Would Impact the LTC Market

Without any government program ensuring both the financing of LTC benefits and asset protection in the future, consumers would be far more concerned about LTC risk and therefore much more likely than they are now to save, invest, or insure against the risk. Fewer middle-class and affluent people would end up dependent on public assistance, so the public safety net could do a better job for the truly needy. Adult children would encourage and assist their parents to plan ahead instead of turning to Medicaid for relief when needed. Principles of personal responsibility guided by risk management techniques would prevail. More private financing would flow through the service delivery system relieving LTC providers from the burden of notoriously low Medicaid reimbursement rates. The market would set prices and allocate resources to meet consumer preferences instead of providers offering only what the government is able and willing to finance. Home- and community-based services would dominate—because that is what people prefer—and investors, entrepreneurs, and companies would be rewarded for providing these services. Nursing homes would still have an important role, but they would primarily provide skilled sub-acute and rehabilitative care rather than long-term custodial assistance.

These policy changes should be phased in so that they affect older people less or not at all and give younger people enough time to adapt. For example, people 55 or older and younger people with chronic disability or early onset dementia could be exempted from the change altogether. Current rules would remain in effect for them as they age into their 80s, the time of life when LTC becomes most likely. People 45-54, newly on notice that they can no longer count on easy access to Medicaid LTC while preserving wealth, should be expected to have a minimal level of LTC savings, investment, or insurance in place by age 65 sufficient to offset their average LTC liability. Likewise, people younger than 44 should be on notice that they need to have sufficient resources set aside by age 65 to offset their average catastrophic LTC risk. How each of these age groups can reasonably be expected to achieve these levels of protection is addressed below under Steps Three and Four.

We will need to monitor and enforce compliance with these new expectations regarding LTC planning. Without either, we can expect widespread non-compliance, leaving many unprotected for LTC risk as now but no longer protected against asset spend down in the future as before. Private fiduciary organizations could be tasked with identifying individuals’ LTC risks and to follow up with each person until the risk is covered. There could be a role for some level of government to follow up with people who remain derelict in this responsibility. Artificial intelligence could help monitor and administer a program to incentivize early LTC planning.[40]

Step Two: Publicize LTC Risk and Cost

Once Medicaid is preserved for the truly needy by preventing people from using it late in life and protecting their wealth, that change should be publicized widely. Without the ability to access government programs to finance LTC later in life while preserving wealth, people will have far greater incentives to engage in proper planning. From Washington State’s experiment in payroll-funded social insurance for LTC, we know that individuals will prepare once they are confronted with the urgent need to deal with LTC risk.

Washington Governor Jay Inslee signed a law in 2019 establishing the WA Cares Fund. The program was designed to charge workers a 0.58 percent payroll tax beginning January 1, 2022, to fund a lifetime LTC benefit of up to $36,500 after a 10-year vesting period. It faced strong public opposition, failing twice to receive citizens’ support at the ballot box.[41] To make WA Cares more attractive to voters, an opt-out choice was added that allowed people to avoid the payroll tax by owning private LTC insurance purchased no later than November 1, 2021. As of August 15, 2022, 475,072 Washingtonians had taken that option,[42] overwhelming the private LTC insurance carriers’ ability and desire to supply the product.[43] Carriers, backlogged by the heavy new demand, worried the new policies taken out in minimal amounts to avoid the payroll tax would quickly lapse, creating an administrative headache and expense.

The key insight of the WA Cares Fund experience is that it took forcing people to pay immediately for LTC to get them to purchase private insurance for the risk. Prior to the Washington experience, no amount of scaring people about LTC cost or encouraging them with tax incentives persuaded many to buy the product. After WA Cares offered a way to opt out of its payroll tax, LTC insurance sales exploded. Nationally, more than three times as many people purchased the product in 2021 compared to 2020. Most of these new buyers were Washingtonians seeking to escape the WA Cares program’s payroll tax.[44] Adding the opt out harmed the program by diverting individuals with higher incomes and more favorable LTC risks to private coverage, but it also pointed the way to better LTC policy.

Clearly, an important answer to the LTC challenge lies in making LTC risk and cost real for consumers earlier in their lives. Eliminating Medicaid eligibility loopholes would create this condition, and it does so without threatening all workers with a new, economically harmful payroll tax as in the WA Cares example. Publicizing the change in future Medicaid LTC eligibility across the country, at least as widely and frequently as WA Cares was promoted to Washingtonians, should result in a similar increase in consumer demand for any and all private means to save, invest, or insure against LTC risk and cost.

Step Three: Reconceptualize the LTC Challenge

LTC risk and cost are both frightening and seemingly so distant in the future that most people choose to ignore them, especially in the face of more immediately pressing responsibilities. One key to refocus consumers on LTC is to reconceptualize the problem, with new information that reveals it is less intimidating than usually conceived. In the past several years, new research has suggested that LTC may not be such an overwhelming financial risk for most people as previously assumed.

In 2022, HHS’s Assistant Secretary for Planning and Evaluation estimated “that over half (56%) of Americans turning 65 today will develop a disability serious enough to require LTSS.”[45] But that means nearly half, 44 percent, can expect to have zero LTC need. In fact, “While individuals on average will need 0.8 years of paid LTSS, 55% of older adults will not use any paid LTSS.”[46] Furthermore, on average “an American turning 65 today will incur $120,900 in future LTSS costs, measured in today’s dollars.”[47] This amount could be financed by setting aside[48] the present discounted value of $69,800[49] at age 65.[50] Earmarking $70,000 at age 65 for future LTC expenses does not sound nearly as daunting as insuring against the full catastrophic LTC risk potential of $250,000.[51] If people begin LTC planning earlier than age 65, even less would be needed to set aside.[52] In essence, the burden is much more manageable than previously conceived.

Once the principle is established that every person has a responsibility to cover an objectively determined amount of LTC liability by a certain age, each person’s target amount could be adjusted in a way that treats people fairly based on their sex, income, health status, and other relevant demographic characteristics.

People Already Have More Funds Available for LTC Than They Are Using Now

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.”[53] 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.”[54] Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.”[55] So the potential LTC financial burden is much more manageable than we thought. The evidence that people accumulate substantial savings that could be used for LTC if they had more incentive to do so is very encouraging. Assuming the removal of Medicaid’s generous financial eligibility rules that obviate the need to plan for LTC, the path forward will be much less fraught.

Exactly How Much Wealth Do People Have and Why Aren’t They Using More of It for LTC?

This paper’s Appendix answers those questions based on new research and draws the appropriate conclusions for LTC financing policy reform.

Step Four: Show Younger People a Better Way

Even if the LTC financing challenge is not as daunting as previously believed and families possess more wealth than we thought, we still need ways to make it easier for younger people and families to identify and put to use the means at their disposal to prepare for LTC risk and cost. Government should advise all Americans by age 25 that LTC planning is a personal responsibility planning for which should start no later than age 40 and be achieved by age 65. The termination of all methods to qualify for Medicaid LTC benefits late in life while preserving wealth should be disclosed, publicized, and frequently reiterated in state and federal government publications. By age 65, most Americans should be prepared to pay for their expected LTC expenses, which would require them on average to have $70,000 saved, set aside, or insured for that purpose. LTC Choices 1-7 below suggest some methods by which people could fulfill their LTC planning responsibility. Entrepreneurs can be expected to produce many more.

A private fiduciary organization similar to Underwriters Laboratories could counsel Americans on LTC risk and cost, propose methods to prepare, evaluate their proposals to meet their responsibility, and help them achieve the needed protection. Private insurers could estimate individual need and recommend the necessary level of coverage with quality control review by independent actuaries or auditors. Following are several possibilities that could satisfy the need to plan for LTC with minimal financial disruption for individuals and families carrying other financial responsibilities at the same time. The basic strategy is twofold: (1) to aim LTC planning toward a more realistic goal of meeting each individual’s probable risk and (2) to minimize the immediate cost of preparing for LTC risk by earmarking funds already accumulated in retirement savings to be used for LTC if and only if LTC becomes necessary.

Methods to Satisfy Individual LTC Responsibility

LTC Choice #1: Private Insurance. Purchase private LTC insurance that meets minimal coverage standards based on age, sex, health status, etc. Instead of huge premiums to cover potential lifetime coverage of expensive nursing home custodial care,[56] adequate insurance coverage for each individual’s personal risk will prove much more affordable. Most analysts believe private LTC insurance is unlikely ever to penetrate enough middle-income households to become a significant payment source. But they have always assumed that people would need much more coverage at too great a cost to attract enough buyers to make a big difference. That assumption may be wrong.

Smaller, less expensive LTC insurance policies could have a disproportionately large impact on the aging public’s ability to afford senior housing, including home care and assisted living. The National Investment Center reported that reducing the annual cost of senior housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for senior housing[57] by 3.6 million individuals, enabling 71 percent of middle-income seniors to afford the product.^{^[58]} Where could consumers find that extra $15,000 to bring the cost of senior housing into reach? The premium for an annual LTC insurance benefit of $15,000 would only cost a small fraction of the premium required for the comprehensive coverage that consumers find so financially daunting now. Unfortunately, insurance regulations sometimes 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 LTC policy and planning.

LTC Choice #2: Investment Accounts. Establish a new tax-deferred investment account similar to the 401(k) or IRAs already available to cover future predictable LTC expenses. Consider a fully tax-exempt investment account as an even greater savings facilitator. To soften the impact of contributing to an extra retirement account, savers could be allowed to use a portion of their existing retirement accounts or health savings accounts to satisfy the LTC responsibility.[59] The strategy is to use a portion of funds already saved for other purposes by allocating them for LTC if and only if LTC becomes necessary.

LTC Choice #3: Retirement Savings. Allow a portion of retirement savings to meet the LTC planning responsibility. At the end of March 2023, total U.S. retirement assets were $35.4 trillion, including $12.5 trillion in IRAs, $9.8 trillion in defined contribution accounts, and $10.9 trillion in combined government and private defined benefit plans. Annuity reserves outside of retirement accounts add another $2.2 trillion.[60]

LTC Choice #4: Home Equity. Over 78 percent of age 65 and over households own homes.[61] Many could lien their home equity to support LTC or withdraw sufficient funds through reverse mortgages to purchase private LTC insurance as in LTC Choice #1. The $12.4 trillion in home equity held by people 62 years of age and older[62] would both cover the LTC expenses for a large portion of them and send huge waves of desperately needed private revenue into the LTC service delivery system. This new private revenue—at rates 50 percent more than what Medicaid pays—would improve care quality and access for all LTC patients, including those dependent on public financing. Estimating potential savings to Medicaid from this source is difficult. Little is known about current home ownership by Medicaid LTC recipients, because Medicaid exempts most home equity. A dated (but unique) 1989 GAO study found, “About 14 percent of the Medicaid nursing home residents in the eight states GAO reviewed owned a home,” and “By using home equity to defray Medicaid costs as Oregon does, the six states that now lack recovery programs could recover about $85 million [$218 million in today’s dollars] from recipients admitted to nursing homes.”[63] Diverting home equity earlier in life to finance LTC risk later, instead of relying on Medicaid and then attempting to recover from estates after death, would unleash the huge potential of home equity to finance quality LTC for more people.

LTC Choice #5: Life Insurance. Many life insurance policy holders can carve out enough of their cash values or death benefits to meet their personal LTC responsibility. Total life insurance coverage in the United States was $21.2 trillion by the end of 2021.[64] There are several ways to access the cash value of life insurance without dying. They include dropping the policy to collect its surrender value, selling the policy by means of a “life settlement,” and withdrawing funds or borrowing from the policy.[65] Even a term life policy, with no cash value, can sometimes be sold.[66] The current perverse incentive created by government policy when people need LTC is to liquidate cash value life insurance, spend the money on exempt assets, and then apply for Medicaid when the funds are gone. Eliminating that loophole would free up trillions of private life insurance value to offset public LTC expenditures.

LTC Choice #6: The Deferred Reverse Estate Annuity Mortgage (DREAM). This option—a legally binding and officially recorded lien on one’s estate set aside for LTC—does not currently exist, but it is similar to the existing Medicaid estate recovery obligation except that it moves the responsibility forward in time and ensures eventual LTC funding availability. The DREAM mortgage satisfies the LTC planning responsibility only if it is formally executed, is legally recorded, and applies to all property that will pass inside or outside of a probated estate. Unlike asset transfer limitations and estate recovery, this option secures the property so that it is available to pay for care in the private market. This is a way for people to prepare for LTC risk and cost, lock in the ability to pay privately for care, and have no immediate need to expend income. They merely obligate a portion of their estates for their LTC if needed. Any remainder would pass to heirs, although it would be unprotected by Medicaid, as it is currently. This is the easiest and least intrusive of all the methods to satisfy the LTC planning responsibility.

LTC Choice #7: Capture the other end of the age spectrum from estates. People who begin saving, insuring, or setting aside resources for LTC before age 40 could receive a reduced LTC responsibility level. So, in addition to the lower discounted present value of their LTC responsibility, they would have an added incentive to begin LTC planning earlier. Employers could introduce LTC responsibility to job seekers in their early 20s. Increasingly, younger people are having to care for their parents and grandparents. If they become sensitized to the need for LTC planning earlier than others and they take action, their LTC responsibility could be satisfied earlier and at less personal cost than for others who begin preparation later in life.

All seven of these options are manageable by private companies—such as employers, insurers, banks, or brokers—eliminating much of the huge federal and state bureaucracy currently managing Medicaid LTC eligibility determination and estate recovery. Other tools and methods of satisfying the LTC planning objective will evolve naturally in a market not distorted by Medicaid rules that reward failure to plan.

[29] For purposes of income spend down, as opposed to asset spend down, Medicaid does require that monthly income be expended for health or LTC expenses to qualify as a cost under medically needy income eligibility rules. Analysts often confuse this distinction and assume incorrectly that assets must be, and usually are, spent for health-related costs as well. There is no evidence that people decumulate assets due to health or LTC expenses, despite analysts’ typical assumption that they do. They ignore the possibility that assets could be divested by other means, such as Medicaid planning techniques.

[30] States apply exempt asset rules inconsistently, and the federal government enforces them inconsistently.

[31] For example: “The real goal, though, is to work with your parents on an asset-shifting plan that will allow them to have Medicaid pick up the tab for their long-term care if need be.… One way to do this is by turning assets that aren’t exempt from Medicaid into those that are. Money in the bank or a certificate of deposit could be spent on a prepaid funeral or a more extravagant engagement ring, for example; both are exempt assets” (Smart Money, October 1997, pp. 134-36).

“Another sheltering strategy is to convert available, countable assets into non-countable exempt assets. For example, money in checking or savings accounts may be used, without creating a period of ineligibility, to purchase or improve a home, pay off a mortgage, buy a cemetery lot, pre-pay funeral services, pre-pay residence-related taxes and insurance, or even pay outstanding bills, including legal fees” (Hal Fliegelman and Debora C. Fliegelman, “Giving Guardians the Power to Do Medicaid Planning,” Wake Forest Law Review 32, no. 2 [Summer 1997], pp. 341-42, 359, 362-64, 373).

“Viatical settlements may provide an opportunity for families that include a senior in need of long-term care, to meet financial obligations without disqualifying the senior for Medicaid benefits…. Viatication affords a policyholder the means by which to convert a ‘non-exempt’ asset (i.e., a life insurance policy) to an ‘exempt’ asset for purposes of Medicaid regulation…. Possible uses of viatical settlement proceeds to create an ‘exempt’ asset include: (a) paying off a home mortgage; (b) making major home repairs or improvements; (c) paying off outstanding medical bills; (d) prepaying tax obligations, including real estate taxes; (e) purchasing or replacing a car; (f) creating a burial fund or making prepayments for funeral costs; and (g) purchasing a long-term care policy for a spouse. These alternative uses permit viators to put viatical proceeds to good use and still retain their Medicaid eligibility or the Medicaid eligibility of their spouses” (NAELA, 1996 conference proceedings, Session 11, pp. 18-19, 21-23).

[32] Enforcement of this requirement should be as routine as enforcement of the existing rule that income spend down for medically needy eligibility must be for health-related costs.

[33] Law Offices of Stephen J. Silverberg, “What Is a Medicaid Asset Protection Trust (MAPT)?,” https://www.sjslawpc.com/practice-areas/what-is-a-medicaid-asset-protection-trust-mapt/.

[34] Krause Financial Services, “Medicaid Compliant Annuity,” https://www.medicaidannuity.com/products/medicaid-compliant-annuity/.

[35] On September 14, 2012, four congressional sponsors of the Medicaid Long-Term Care Reform Act (H.R. 6033) queried state governors “on policies to strengthen program integrity and make Medicaid more sustainable for state and federal budgets.” The questions they asked and the responses they received, including the Medicaid compliant annuity examples cited above, are summarized in Stephen A. Moses, “LTC Bullet: States Decry Medicaid LTC Loopholes,” Center for Long-Term Care Reform, January 11, 2013, http://www.centerltc.com/bullets/archives2013/984.htm; and Stephen A. Moses, “LTC Bullet: The Medicaid Long-Term Care Reform Act of 2012,” Center for Long-Term Care Reform, October 5, 2012, http://www.centerltc.com/bullets/archives2012/973.htm.

[36] The ineligibility penalty is the number of months of delayed eligibility equal to the amount of assets transferred for less than fair market value for the purpose of qualifying for Medicaid divided by the average cost of a nursing home in the state.

[37] “Median time from recorded diagnosis until institutionalization and until death for people with dementia was 3.9 and 5.0 years, respectively” (Karlijn J. Joling et al., “Time from Diagnosis to Institutionalization and Death in People with Dementia,” Alzheimer’s and Dementia 16, no. 4 [April 2020], https://pubmed.ncbi.nlm.nih.gov/32072728/).

[38] A partial annotated bibliography of Medicaid planning publications is available in Stephen A. Moses, “How to Fix Long-Term Care Financing,” Center for Long-Term Care Reform, July 26, 2017, pp. 34-65, http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf.

[39] “Spousal Refusal, which has been dubbed, ‘just say no,’ is when a non-applicant spouse of a long-term care Medicaid applicant refuses to help pay the cost of long-term care for their spouse. While spouses are legally obligated to financially support one another, Medicaid cannot legally deny care if a non-applicant spouse refuses to contribute towards the cost of care of their spouse” (American Council on Aging, “How Spousal Refusal Works as a Strategy to Medicaid Eligibility,” updated May 31, 2023, https://www.medicaidplanningassistance.org/spousal-refusal/).

Note that spousal refusal is clearly illegal under federal law, but it is routinely permitted in New York and Florida and sporadically in some other states.

Life estate: “A common dilemma that our Fortune 500 clients run into is how to preserve their homes while also gaining Medicare [sic] eligibility. A transfer subject to a life estate may be used to preserve your home and facilitate your eligibility for Medicaid. With this planning tool, you transfer the ‘remainder interest’ in your house to your children (or other beneficiaries), and keep a ‘life estate’ for yourself. As a practical matter, you deed the house to the remainder beneficiaries and incorporate language in the deed to retain your life estate. The life estate gives you the legal right to live in the house for life” (Kevin Won, “Residence Transfer Subject to Life Estate: Medicaid Planning for Fortune 500 Employees and Retirees,” The Retirement Group, October 29, 2020, link).

“Half a Loaf, Reverse Half a Loaf, and Modern Half a Loaf are Medicaid gifting strategies (also called transfer strategies) that have been or are currently used for the purpose of reducing countable assets to qualify for Medicaid. These strategies can also preserve some of the Medicaid applicant’s assets for their family members” (American Council on Aging, “How the Modern Half a Loaf Strategy Helps Families Become Medicaid Eligible and Preserves Assets,” updated January 25, 2023, https://www.medicaidplanningassistance.org/modern-half-a-loaf/).

[40] “A data analytics application could review household data or claims information to spot anomalous patterns that suggest ineligibility.” William J. Oliver with Josh Archambault, “MassHealth Protecting Medicaid Resources for the Most Vulnerable: How Massachusetts Saved Hundreds of Millions through Enhanced Eligibility Verification,” Pioneer Institute, October 2018, p. 7, link

[41] “Washington Advisory Vote 20, a non-binding question concerning whether to maintain or repeal House Bill 1087, was on the ballot in Washington as an advisory question on November 5, 2019. A majority of voters voted in favor of repealing the bill.” Ballotpedia, “Washington Advisory Vote 20, Nonbinding Question on Tax to Fund Long-Term Healthcare Services (2019),” link.

“Washington Senate Joint Resolution 8212, the Authorize Fund Investment of Long-Term Services and Supports Trust Account Amendment, was on the ballot in Washington as a legislatively referred constitutional amendment on November 3, 2020. It was defeated.” Ballotpedia, “Washington Senate Joint Resolution 8212, Authorize Fund Investment of Long-Term Services and Supports Trust Account Amendment (2020),” link.

[42] “As of Monday, Aug. 15, [2022] the [State of Washington] Employment Security Department reports the following WA Cares exemption numbers:

Total opt-out requests submitted: 478,781
Total opt-out requests processed: 478,681
Total opt-out requests approved: 475,072
Applications processed as a percentage of total: 99.98%.”

Elizabeth Hovde, “Updated Numbers on People Exempted from State’s Long-Term-Care Program and Payroll Tax,” Washington Policy Center, August 16, 2022, https://www.washingtonpolicy.org/publications/detail/updated-numbers-on-people-exempted-from-states-long-term-care-program-and-payroll-tax.

[43] “Washington State’s ‘Washington Cares Fund’ (WCF) stimulated a tremendous demand for private LTCI from individuals and businesses within WA…. Partly because the tax applies to all earned income, LTCI sales in Washington soared to unprecedented levels. Insurers quickly became backlogged with applications and were concerned about early lapses as the law provided a permanent WCF exemption based on only a one-time attestation. Insurers reduced design flexibility, and then discontinued sales in WA before the November 1 deadline.” Claude Thau, Allen Schmitz, and Chris Giese, “2022 Milliman Long Term Care Insurance Survey,” Broker World, July 1, 2022, https://brokerworldmag.com/2022-milliman-long-term-care-insurance-survey/.

[44] “We estimate total stand-alone LTCI annualized new premium sales of nearly $200 million in 2021 … almost 1/3 more than our 2020 estimate of $150 million. However, premium outside the state of Washington decreased 6.0 percent, based on the insurers that reported sales.

“We estimate that 140,000 to 150,000 people purchased stand-alone LTCI coverage in 2021, more than triple the 2020 numbers. Outside of WA, the number of new insureds dropped 9.4 percent based on the insurers that reported sales.” Thau, Schmitz, and Giese, “2022 Milliman Long Term Care Insurance Survey.”

[45] Richard W. Johnson and Judith Dey, “Long-Term Services and Supports for Older Americans: Risks and Financing, 2022,” HHS, Assistant Secretary for Planning and Evaluation, revised August 2022, p. 1, https://aspe.hhs.gov/sites/default/files/documents/08b8b7825f7bc12d2c79261fd7641c88/ltss-risks-financing-2022.pdf. LTSS stands for “long-term services and supports,” another term for LTC.

[46] Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 6.

[47] Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 1. On page 5, Johnson and Dey clarify: “We project that total paid LTSS expenses will average $120,900 per person (Table 3). Medicaid is the largest payer of LTSS, averaging $51,800 after age 65 and accounting for 43% of the total. Family out-of-pocket costs are also substantial, averaging $44,800 and accounting for 37% of the total.”

[48] “These estimates differ from a present discounted value (PDV) of expenditures at age 65, the amount that an individual would need to set aside at age 65 to cover future LTSS expenses. The PDV is lower than the sum-of-expenditures measure because it accounts for the investment returns that could be earned on funds set aside at age 65 until LTSS expenses begin, often after age 80. We show PDV projections in the appendix.” Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 6.

[49] Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 17. Table A1.

[50] “PDV estimates, which are reported in Tables A1-A9, use the Social Security trustees’ ultimate real interest rate of 2.5%. Because the trustees assume long-range price growth averages 2.6%, this real discount rate is equivalent to a nominal long-run discount rate of about 5.1%.” Johnson and Dey, “Long-Term Services and Supports for Older Americans,” p. 13.

[51] See footnote 75.

[52] Resources set aside for future LTC expenses would be expended in the private LTC market, where services cost more—often 150 percent of what Medicaid pays for the same service. This differential needs to be accounted for in estimating the average and catastrophic LTC responsibility of individuals. On the plus side, paying privately for LTC tends to command better access to higher quality care across a wider choice of care venues than Medicaid does.

[53] Richard W. Johnson and Claire Xiaozhi Wang, “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income,” Health Affairs 38, no. 6 (June 2019), p. 994, https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.00025.

[54] Johnson and Wang, “The Financial Burden of Paid Home Care on Older Adults.”

[55] Johnson and Wang, “The Financial Burden of Paid Home Care on Older Adults,” p. 1000.

[56] “Over the past two decades, annual LTCI premiums in the stand-alone market have increased significantly for both current and new policyholders. Higher average premiums reflect increased demand for more comprehensive benefit packages (including inflation protection) and higher daily benefit amounts” (Kirsten J. Colello, “Long-Term Care Insurance: Overview,” Congressional Research Service, updated July 21, 2023, https://crsreports.congress.gov/product/pdf/IF/IF11614).

[57] “We conservatively defined the middle market as those individuals in the 41st to 80th percentile of individual income and annuitized assets in 2014. For seniors age 75-84, that band corresponds to $25,001 to $74,298 in annual income and assets. The band is wider for older seniors age 85 and above, where it ranges from $24,450 to $95,051” (Beth Burnham Mace et al., “Middle Market Seniors Housing Study: Executive Summary,” National Investment Center, https://www.nic.org/wp-content/uploads/pdf/Executive-Summary.pdf).

[58] “By reducing annual seniors housing costs by $15,000 per year—from $60,000 to $45,000— the potential market expands by 3.6 million individuals 75+. At the $45,000 annual cost level, 10.2 (71 percent) million middle-income seniors have resources including housing equity above the annual cost” (Mace et al., “Middle Market Seniors Housing Study”).

[59] Already, limited LTC insurance premiums and certain LTC expenses can be withdrawn from HSAs tax free.

[60] Investment Company Institute, “Release: Quarterly Retirement Market Data,” June 14, 2023, https://www.ici.org/statistical-report/ret_23_q1.

[61] “According to the Housing Vacancy Survey, 78.5 percent of households age 65 and over owned their primary residences in 2018.” Joint Center for Housing Studies of Harvard University, “Housing America's Older Adults 2019: A Supplement to the State of the Nation’s Housing Report,” 2019, p. 6, link.

[62] National Reverse Mortgage Lenders Association, “Senior Home Equity Levels Fall Slightly to $12.39T in Q4,” press release, April 21, 2023, link.

[63] GAO, Medicaid: Recoveries from Nursing Home Residents’ Estates Could Offset Program Costs, p. 4.

[64] “Americans purchased $3.3 trillion of new life insurance coverage in 2021, a 1.3 percent decrease from 2020. By the end of 2021, total life insurance coverage in the United States was $21.2 trillion, an increase of 3.7 percent from 2020 (Table 7.1).” American Council of Life Insurers, “Life Insurers Fact Book,” November 28, 2022, https://www.acli.com/about-the-industry/life-insurers-fact-book.

[65] “Life insurance can provide much-needed cash for loved ones you leave behind when you die.… But life insurance also can provide cash for you while you’re living—that is, if you have a cash value life insurance policy.… You can access the cash in a variety of ways. That’s right: It’s yours for the taking.” Cameron Huddleston, “Cash Out Life Insurance Guide,” Forbes, updated May 19, 2022, https://www.forbes.com/advisor/life-insurance/tap-cash-value/.

[66] “You can sell either a term life policy or a permanent life policy. However, if you have a term life policy, investors prefer that the policy have an option to be converted to a permanent policy because they don’t want to risk having the insured outlive the length of the policy…. Or the insured’s life expectancy must be shorter than the term of the policy to sell it.” Cameron Huddleston and Amy Denise, “Life Settlements Provide Escape Hatch When You Need Cash,” Forbes, updated March 28, 2021, https://www.forbes.com/advisor/life-insurance/life-settlements/.

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Updated, Monday, November 13, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-032: LTC NEWS AND COMMENT

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

· The $600 Billion Dilemma: How to Help Family Caregivers

· These lawmakers should be more careful about what they ask for

· What is the Average Age and Disability Level of Older People Moving Into Long-Term Care?

· Japan’s aging population to increase burden on nursing care costs

· Long-Term Care Insurance Coverage: State-to-State 2023

· As People Live Longer, Family Caregivers Face Financial Challenges

· Study: People entering nursing homes have more severe disabilities than those going into independent living

· The federal Medicaid bait and switch

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Updated, Monday, November 6, 2023, 10:03 AM (Pacific)

Seattle—

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LTC E-ALERT #23-031: LTC NEWS AND COMMENT

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

Nursing Home Construction Dwindles As Operators Downsize – But a Lack of Medicaid Beds is Most Concerning
Millennials Join Ranks of ‘Sandwiched’ Caregivers
It’s time to dig in and let CMS do the digging out
Can a Nursing Home Take Our Assets? We Have a $500k IRA and a Trust to Protect Us
Long-term care has its congressional moment
Report reveals minorities’ LTSS access barriers, reliance on family caregivers
Surge in Dementia Cases by 2040 Expected
Executive order from Biden on regulating AI in healthcare expected this week, as the world starts to come to grips with the new technology

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Updated, Friday, November 3, 2023, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, Part 2)

LTC Comment: Today we offer easy access to a must-read new study by Center president Steve Moses, after the ***news.***

*** ILTCI REGISTRATION OPEN: “Registration is Now Open for the 2024 Intercompany Long Term Care Insurance Conference!” reports the meeting’s organizing committee. “Our in-person conference will be March 17 - 20, 2024 at the newly remodeled Town & Country Resort in San Diego, CA. Our agenda includes numerous educational sessions over two days across seven tracks with ample time for networking and reconnecting with colleagues. 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.” Click here to register and here to reserve your hotel. I’ll be there covering the conference as I have been for most of its predecessors as recounted in History of LTC Insurance Conferences (2021). Read our coverage of this year’s conference in LTC Bullet: Virtual Visit to ILTCI 2023. ***

LTC BULLET: LONG-TERM CARE: THE SOLUTION (THE SERIAL, Part 2)

LTC Comment: The Paragon Health Institute published “Long-Term Care: The Solution” on October 3. This new report is long and complicated, but important. So LTC Bullets will deliver it to you in bite-sized pieces over the next few weeks. Today, read “The LTC Solution” (introduction), “What Did Not Work,” and “What Happened and Why Action Is Imperative Now.” Next time: a whole new approach to LTC financing that will unleash the potential of private financing, including insurance.

Excerpts from “Long-Term Care: The Solution”
by
Stephen A. Moses
President, Center for Long-Term Care Reform

The LTC Solution

In “Long-Term Care: The Problem,”[4] I described the lessons of LTC history. Public programs have paid for most expensive LTC since 1965. Government policies diverted the public from early private LTC planning and left too many people dependent on welfare-financed nursing home care. Private sector entrepreneurs interceded repeatedly with preferred options such as assisted living, private home care, and insurance. But the dominance of Medicaid and Medicare financing for nursing homes prevented alternative modes of LTC service delivery and financing from fully developing based on consumer preferences. Given the damage government financing and interference have caused, what are the best LTC policy options going forward?

America’s many LTC service delivery and financing problems are understandable, manageable, and correctable. The fundamental issue is that people do not plan, prepare, save, invest, or insure early enough to be able to pay for LTC when they need it, usually much later in life. The current challenge facing policymakers is twofold: (1) how to get people to think about and plan for LTC in their younger, working years, when LTC risk and cost seem distant and low compared to more immediate needs, and (2) how to provide and pay for LTC in the future for burgeoning numbers of aging people who are unprepared to meet its cost. The growing emphasis on healthy aging, with its resulting expansion of lifespans, will make these imperatives more important than ever to achieve.[5]

The reason most people do not plan early enough for LTC is that, since its establishment in 1965, Medicaid has paid for most expensive formal LTC not only for the poor but also for the middle class and many affluent people. The fallacy of impoverishment—the mistaken belief that eligibility for Medicaid’s LTC benefits requires spend down of income and assets into destitution—has prevented analysts from seeing this connection between Medicaid’s availability and the public’s seemingly irrational denial of LTC risk. The problem is not that people intentionally plan to use Medicaid if they ever need LTC. Few know who pays for LTC, and most wrongly believe Medicare does.[6] Rather, Medicaid’s actual availability when care is needed (usually many years later) enables consumers’ denial of the risk and cost and leaves them unprepared and unprotected when confronted with chronic long-term illness.

Thus, the fundamental solution to the LTC policy problem is to direct the public’s attention to this large risk and cost earlier—before it is too late for them to prepare personally. That has been a major goal of LTC public policy ever since Medicaid’s LTC expenditures spiked far above original expectations in the 1970s. Through the 1980s and 1990s and into the mid-