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

READ STEVE'S BIO

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Updated, Monday, March 10, 2014, 12:01 PM (Central)

Midland, Texas—

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LTC E-ALERT #14-008: MANAGED LTC AND LTC NEWS AND COMMENT

LTC Comment: Keep an eye on “managed long-term care.” It’s coming on big, throwing the service delivery system into confusion, and changing LTC financing in radical ways. Today’s first article gives some perspective on how long-term care providers see managed LTC. The March 6 New York Times article which it discusses is highlighted and linked below. Check it out too. Managed LTC is a major trend comparable to the impact of HMOs on acute health care delivery a couple decades ago.

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3/10/2014, “Privately managed Medicaid threatens long-term care quality and options, New York Times article states [link],” by Tim Mullaney, McKnight's LTC News

Quote: “People with complex needs could find themselves squeezed out of the most appropriate long-term care settings as Medicaid beneficiaries become enrolled in programs from private sector companies, The New York Times reported in a lengthy Page 1 examination of the subject Friday.”

LTC Comment: This article gives a long-term care provider perspective on the New York Times report about managed LTC that we highlighted in Friday’s LTC Bullet and in today’s LTC E-Alert.

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3/7/2014, “LIMRA: LTCI-covered life count holds steady,” by Allison Bell, LifeHealthPRO

Quote: "The number of people covered by new LTCI policies fell 26 percent between 2012 and 2013, to 172,178, according to the LIMRA data. Premium revenue from new sales fell 30 percent, to $406 million. The average level of premiums generated by each of the new covered LTCI lives fell 5.4 percent, to about $2,360. But, in spite of all of the news reports about massive increases in LTCI premiums, the number of people with LTCI coverage held steady at about 4.8 million."

LTC Comment: Amazing persistency.

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3/7/2014, “Should Middle-Class Seniors and People with Disabilities be Paying More for Medicare? [link],” Medicare Rights Center

Quote: "If the President's plan were implemented today, people with incomes as low as $46,500 would be forced to pay higher premiums. Middle class seniors and people with disabilities are in no position to pay more for Medicare."

LTC Comment: Proponents claimed for decades that Social Security and Medicare were better than private insurance. They were "social insurance" for which everyone paid the same premiums (payroll taxes) and everyone received the same benefits, whether rich or poor. Critics claimed from the beginning that these programs failed to price risk and so rewarded irresponsibility. They were Ponzi schemes and economic reality would catch up with them sooner or later. Well, sooner has arrived and later looks worse than ever. We predicted long ago that government would deal with burgeoning social insurance costs by means-testing the programs; in other words, by welfarizing Social Security and Medicare. That process began years ago when Social Security benefits were taxed and Medicare Part B and Part D premiums were raised for higher income beneficiaries. Means testing is accelerating now as this message from the Medicare Rights Center complains. It just goes to show, you can evade economic reality for a long while, but not indefinitely.

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3/6/2014, “'Aging-in-place' features for the home gain higher profile as baby boomers get older [link],” by Wendy A. Jordan, Washington Post

Quote: "Aging-in-place design choices are gaining a higher profile as baby boomers become a larger and larger segment of the population. . . . This demographic change translates into demand for residential designs that anticipate changes in health, vision or mobility, and ensures that homes stay safe, comfortable and aesthetically pleasing."

LTC Comment: Boomers are waking up to aging-in-place design choices. Now, how do we wake them up to planning for how to pay for aging in place?

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3/6/2014, “Financial 'vicious cycle' traps poor women caregivers,” by Shereen Jegtvig, Reuters

Quote: "Caring for aging parents can be a burden for anyone, but poor women are more likely to need to take it on and to enter a financial downward spiral as a result, a recent study suggests. . . . Overall, the researchers found, women who cared for their parents in 2006 and 2008 had lower incomes in 2008 and 2010. As household income increased, women were 23 percent less likely to care for parents in 2008 and 12 percent less likely to care for parents in 2010."

LTC Comment: Elder care is expensive in lost income and other ways. More evidence supporting the value of LTCI.

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3/6/2014, “Pitfalls Seen in a Turn to Privately Run Long-Term Care,” by Nina Bernstein, New York Times

Quote: “Even as public attention is focused on the Affordable Care Act, another health care overhaul is underway in many states: an ambitious effort to restrain the ballooning Medicaid cost of long-term care as people live longer and survive more disabling conditions.”

LTC Comment: This is a long article, but I strongly recommend that you take the time to read it. Managed long-term care, even for the most severely disabled Medicaid recipients, is sweeping the country. State Medicaid programs are trying to save money by turning over their most severely impaired LTC recipients to giant managed care companies whose job it is to move them from mostly nursing home to mostly home care. This article explains why the strategy is not working as well as hoped. Savings from managed deinstitutionalization are not materializing and care quality is suffering. The underlying problem, however, with which this article does not deal and which most analysts evade, is that Medicaid covers the long-term care for too many people who should, could and would have paid for their own care. Managed home care for severely disabled patients won’t solve the problem of too many people dependent on welfare-financed long-term care. That problem will only be solved by (1) returning Medicaid to its original purpose of being a long-term care safety net for the neediest and by (2) incentivizing all who are financially able to plan, save, invest and insure to pay privately for their own long-term care.

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3/6/2014, “2013 a record-setting year for Mutual of Omaha,” by Steve Jordon, Omaha.com

Quote: "Mutual of Omaha reported Wednesday a record $359.2 million in net income in 2013, up 26.6 percent from 2012, crediting increases especially in individual Medicare supplement, employee benefit and mortgage loan products."

LTC Comment: Good for MoO.

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3/5/2014, “Senior Services Take a Hit in Obama Budget,” by Howard Gleckman

Quote: "Until Congress and the president break their impasse over raising taxes and fundamentally restructuring costly entitlement programs such as Medicare and Social Security, there is no chance that spending for federal senior services will increase. The money just won't be there."

LTC Comment: The money isn't there and hasn't been there for a long time, but that hasn't stopped Congress and the President from borrowing to spend more and more. A little less of that is a good thing. A lot less would be a better thing.

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3/5/2014, “New study ranks Alzheimer's as third-leading cause of death, after heart disease and cancer [link],” by Tara Bahrampour, Washington Post

Quote: “The Centers for Disease Control and Prevention lists Alzheimer’s as the sixth-leading cause of death, far below heart disease and cancer. But the new report, published Wednesday in the medical journal of the American Academy of Neurology, suggests that the current system of relying on death certificates for causes misses the complexity of dying for many older people and underestimates the impact of Alzheimer’s.”

LTC Comment: Families often object to having “Alzheimer’s” listed as the cause of death.

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3/5/2014, “A Third Of Nursing Home Patients Harmed By Their Treatment,” by Ina Jaffe, National Public Radio

Quote: "In a large sampling of Medicare patients discharged from hospitals to skilled nursing facilities in one year, roughly a third of the patients were harmed by their treatment in the nursing homes, the study found. And most of that harm could have been prevented."

LTC Comment: We reported this study earlier, but the fact that NPR publicized it is news in itself. Two-thirds of nursing home residents are funded by Medicaid at less than the cost of care. You get what you pay for . . . or what you don't pay for. Jawboning quality without adequate reimbursement won't work now any more than it did when Congress tried to demand quality in OBRA '87.

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3/5/2014, “Required Minimum Distributions for Roth IRAs?,” by Jeffrey Levine, Financial Planning

Quote: "In other words, you would have to begin taking RMDs from your Roth IRA when you turn 70 1/2, the same way you do with your traditional IRA and other retirement accounts. If this were to come to pass, it would be a major game-changer when it comes to retirement planning. The fact that Roth IRAs have no RMDs is one of the key reasons many people decide to contribute or convert to Roth IRAs in the first place. If this proposal were to become law, conversions would make sense for far fewer people. Not only that, this proposal gives all those who haven't made Roth conversions over the years because they 'don't trust the government to keep their word" more ammunition.'"

LTC Comment: Heads up!

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3/5/2014, “White House proposes 'accelerated' skilled nursing facility payment cuts [link],” by Tim Mullaney, McKnight's LTC News

Quote: "The White House's proposed 2015 budget includes sharp cuts to skilled nursing facility reimbursements, which has drawn strong criticism from the nation's largest long-term care provider group."

LTC Comment: The more government reduces already inadequate Medicaid nursing home reimbursements, the more important it becomes for people to be able to pay privately for their own care-both to avoid nursing homes if possible and to ensure quality care if necessary.

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3/4/2014, “GAO: 'Traditional Medicare' is private, too,” by Allison Bell, LifeHealthPRO

Quote: "The traditional Medicare program affects the commercial health insurance and employee benefits markets by shaping provider pay rates; changing reimbursement rates for its enrollees in ways that change costs for enrollees in commercial insurance programs; and affecting private insurers' appetite for commercial business, by causing big, sudden shifts in profitability at some private carriers' Medicare administration units."

LTC Comment: What an interesting admission from GAO!

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3/4/2014, “Don't Get Conned on Long-Term Care,” by Carole Moore, The Fiscal Times

Quote: "Brian Gordon, president of MAGA, a long-term care planning and insurance company, says consumers should exercise extreme care when purchasing policies from telemarketers or agents who claim to be 'jacks of all trades.' Like Teicher, Gordon cautions consumers to ascertain that the agent knows his or her way around the industry, has a good track record and is knowledgeable on the art of filing a claim. He also advises choosing an insurance company that's not new to the game."

LTC Comment: Good advice from Center-supporter Brian Gordon of Center-corporate member MAGA.

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3/4/2014, “Government report: 1 in 5 Medicare patients suffers an adverse event while receiving post-acute SNF care [link],” by Tim Mullaney, McKnight's LTC News

Quote: “About 22% of Medicare beneficiaries experienced an adverse event during a post-hospitalization skilled nursing facility stay in fiscal year 2011, and the majority of these events were preventable, according to a newly released government report. Post-acute provider groups said many initiatives to lower this percentage already are underway.”

LTC Comment: Medicare pays adequately for SNF care but Medicaid doesn’t. Because most nursing home residents are on Medicaid and most SNF revenue comes from Medicaid, the bar of quality is lowered for everyone, including private payers, who also have to overpay because of low Medicaid reimbursements.

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3/3/2014, “Long-term care insurance costs go up, benefits go down; Experts say it's best to buy policy while still in good health [link],” by Tom Wilemon, The Tennessean

Quote: “People on the wrong side of the baby boomer population curve are getting doubly squeezed. As costs for private long-term care insurance skyrocket, state Medicaid programs are imposing greater hurdles to qualify for nursing home coverage.”

LTC Comment: When a reporter needs an “expert” to tell him people should buy insurance before the insurable event occurs, you know you have a problem. People and reporters have been brainwashed by social insurance and ObamaCare which purport to be available whenever you need them, but never quite live up to the billing.

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3/3/2014, “Strict blood pressure control won't stem mental decline, study says [link],” by Melissa Healy, Los Angeles Times

Quote: "New research has found that using medication to aggressively drive down blood pressure or improve lipid levels does not do more than standard therapy to stem the decline in cognition that's common among such patients. In fact, aggressively lowering systolic blood pressure may accelerate brain shrinkage, which is a hallmark of dementia, the new study found."

LTC Comment: Can’t win for losing.

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3/3/2014, “Warning over 'risky' schemes to cut care bills,” by Nicole Blackmore, The Telegraph

Quote: "Experts have warned local authorities are increasingly challenging cases of what they call 'deliberate deprivation of assets' - where people give away their wealth to avoid paying for care. Local authorities have the power to challenge such transfers and seize the assets."

LTC Comment: This article is about the UK but it goes to show we're not alone in this problem of "Medicaid planning" abuse.

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3/3/2014, “Buyers beware of long-term care insurance,” by Cynthia Flash, The Spokesman-Review

Quote: "The [1994 Bankers United] policy the couple bought covers skilled nursing-home care. But Dan's physician wrote to the insurance company stating his ailments are best served at a special dementia-care facility like the one where he is, rather than a more expensive skilled nursing home. Gunnarson called the insurance company and later had the director of the facility work on her behalf, but failed to get anywhere."

LTC Comment: Faced with a similar situation Genworth paid for my mother's assisted living although she had a nursing-home-only plan originally purchased in 1987.

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Updated, Friday, March 7, 2014, 11:40 AM (Central)

Alpine, Texas—

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LTC BULLET: ILTCI CONFERENCE PREVIEW

LTC Comment: Whether you can attend or not, you should know what’s being discussed at this important LTC insurance industry conference. We offer a preview after the ***news.***

*** NEW YORK TIMES reports today: “Pitfalls Seen in a Turn to Privately Run Long-Term Care.” We alerted the Center’s “Clippings Service” subscribers first thing this morning to this important article.

Quote: “Even as public attention is focused on the Affordable Care Act, another health care overhaul is underway in many states: an ambitious effort to restrain the ballooning Medicaid cost of long-term care as people live longer and survive more disabling conditions.”

LTC Comment: This is a long article, but I strongly recommend that you take the time to read it. Managed long-term care, even for the most severely disabled Medicaid recipients, is sweeping the country. State Medicaid programs are trying to save money by turning over their most severely impaired LTC recipients to giant managed care companies whose job it is to move them from mostly nursing home to mostly home care. This article explains why the strategy is not working as well as hoped. It claims that savings from managed deinstitutionalization are not materializing and care quality is suffering. ***

*** CLIPPING SERVICE. Would you like to receive three emails a day alerting you to the most important new articles, reports, and data sources related to long-term care services and financing? The Center for LTC Reform’s clipping service is available at no extra cost to Premier Members ($250), Premier Elite Members ($500), and Corporate Members ($1,000+). Even non-members of the Center can receive our clippings for only $120 per year. Steve Moses (and Damon if Steve’s away) scans the LTC literature, culls the most important items, and sends them to you every day with a representative quote, a link to the source, and often a brief comment or analysis. It’s like getting your weekly LTC E-Alert in smaller doses and in real time. Don’t be left wondering what your prospect is talking about when he or she has read something important that you haven’t seen yet. To subscribe, contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** SPEAKING OF LTCI CONFERENCES, don’t forget AALTCI’s 2014 LTC Sales Solutions Summit at the Westin Kansas City at Crown Center May 18-20, 2014. For the agenda: http://www.aaltci.org/i/2014summit.pdf. For all the details: http://www.aaltci.org/2014summit/index.html. To register (only $99!): http://www.aaltci.org/2014summit/register.html. And if you can’t attend, you can even view some of the conference programs online for free: http://www.insuranceexpos.com/. Watch a short video about the free online access: http://www.insuranceexpos.com/ ***

LTC BULLET: ILTCI CONFERENCE PREVIEW

LTC Comment: The 14^th Annual Inter-Company Long-Term Care Insurance Conference convenes in Orlando, Florida at the Rosen Centre Hotel from March 16-19, 2014.

This is a premier industry meeting for a business facing many challenges and changes. Its theme this year is “Sharing News, Exchanging Views, and Forging Solutions,”

Most of the following “preview” comes from the conference’s website here: http://www.iltciconf.org/. We’ll only hit a few of the highlights. So take the opportunity to dig deeper there.

Damon and I will be onsite, so if you can attend, be sure to say hello. We’ll report from the conference. If you aren’t able to be there, we will try to give you a virtual visit with our “LTC Embed” dispatches.

Hopefully this preview will inspire some of you to join us at the conference after all or to send a representative from your company or organization.

Find a full conference brochure with brief descriptions of each session and information on all the conference sponsors here.

For a top line version of the agenda, go to: http://www.iltciconf.org/agenda.htm

Harley Gordon will offer his CLTC Master Class on Saturday (3/15) and Sunday (3/16): http://www.iltciconf.org/cltc%20master%20class.htm plus a special program, Advanced Sales & Marketing Program for CLTC Designated Professionals on Wednesday, March 19: http://www.iltciconf.org/cltc%20master%20class.htm.

Keynote speaker will be Chris Gardner, well known for The Pursuit of Happyness: http://www.iltciconf.org/keynotespeaker.htm

A Future of the Industry - General Session on Tuesday, March 18 will feature Marc Cohen (LifePlans), Maria Ferrante-Schepis (Maddock Douglas), and Thomas McInerney (Genworth) discussing: “Carrier exits, in-force premium increases, missed assumptions, the persistent low interest rate environment, few new carriers, shrinking distribution” and what to do about all the industry’s problems.

You can view the “PowerPoint” presentations for many of the breakout sessions here: http://www.iltciconf.org/presentations.htm.

Following are descriptions of several sessions that caught my eye. All the sessions are described here.

1. Current Alternatives – Short Term Care/Combination Products
The major alternative products that exist in the market today include Short Term Care and combination products. Both products have their own niche markets. The speakers will give a brief introduction about each product, pros and cons from a consumer and insurance company's perspective, discuss the regulatory requirement, the existing market, the opportunity and obstacles in the future.

Alternative Products – Panel Discussion
Session Producer: Linda Chow, Milliman, Inc.
Panel: Dawn Helwig, Milliman, Inc.
Anthony Laudato, Hannover Re

5. Litipedia: How Recent Trends in LTC Litigation are Changing the Face of Risk
Show me an insurer and I’ll show you a litigant. Sooner or later, we all get sued. And litigation is on the rise. Not just the simple one-off claim disputes, mind you, but the larger and more sophisticated brand of actions that resonate across our industry. This interactive session gives a primer on key current legal actions and the take-aways that will help you reduce risk to the company.

Legal, Compliance, & Regulatory – Case Studies
Session Producer: Mike Rafalko, Drinker, Biddle & Reath LLP
Panel: Mike Rafalko, Drinker, Biddle & Reath LLP
Lisa Simmons, Edwards Wildman Palmer LLP

6. Feder and Warshawsky: Long-Term Care Financing Perspectives and Solutions
An in-depth conversation with two of the nation's most knowledgeable and thoughtful long-term care experts. Judy Feder and Mark Warshawsky come at the long-term care problem with years of experience and two different points of view. In this session, the panelists will discuss their different perspectives on private and social insurance, but importantly, the session will also explore where there are areas with the potential for agreement.

Marketing – Panel Discussion
Session Producer: John O’Leary, O'Leary Marketing Associates
Panel: Judy Feder, Georgetown University Public Policy Institute
John O’Leary, O'Leary Marketing Associates
Mark Warshawsky, American Enterprise Institute

13. There’s Room in the Tent: Clarifying Traditional LTCi/Hybrid Product Roles
According to LIMRA, individual LTC sales declined 27% through 3Q13. Fewer people are buying and they’re spending less when they do. But it’s not all bad news. Buyers continue to get younger –57 is the current average age – and in 2012, 57% were Boomers between 55 and 64 years old. This session will look at today’s buyer in the context of shifting priorities and changing market conditions. The session is designed to help carriers rethink your product choice, position for maximum effect, and find the best fit for your consumers.

Marketing – Panel Discussion
Session Producer: Suzanne Schmidt, Lincoln Financial Group
Panel: Suzanne Schmidt, Lincoln Financial Group
Steve Schoonveld, Lincoln Financial Group

15. Middle Market Success Stories
To the extent that people don’t buy LTCI, how are they solving this problem when they need assistance? This session will examine the concerns and motivations of middle-income families, and potential solutions for this market.

Alternative Products – Panel Discussion
Session Producer: Dr. Barbara Stucki, NestCare FPC
Panel: Rona Bartelstone, Our Aging
Linda Chow, Milliman, Inc.
Dr. John Migliaccio, Strategy and Research Consulting

20. Incremental Visualization - LTC Product Innovation in Minnesota
How is the State of Minnesota approaching the Long-term care dilemma facing its citizens? Minnesota has long been a leader in healthcare and aging innovation. They have identified the future impact long-term care will have on their state and they are doing something about it. Hear Minnesota Lt. Governor Yvonne Prettner Salon, Loren Colman, Assistant Commissioner of Continuing Care and LaRahe Knatterud, Director of Aging Transformation, discuss Minnesota's approach to LTC.

Marketing – Panel Discussion
Session Producer: John O’Leary, O'Leary Marketing Associates
Panel: Loren Coleman, State of Minnesota
LaRhae Knatterud, Minnesota Department of Human Services (DHS)
John O’Leary, O'Leary Marketing Associates
Yvonne Prettner Solon, Lt. Governor State of Minnesota

21. The Growing LTC Spectrum
This session will cover the LTC Product Spectrum. The speakers will discuss the scope of products, the future role of traditional products, new product definitions, costs, and benefits, training agents on how to make appropriate recommendations, and how new product designs can re-ignite worksite LTC sales.

Sales – Panel Discussion
Session Producer: Carroll Golden, Transamerica Long Term Care
Panel: Doug Burkle, Genworth Financial
William Comfort, Comfort Assurance Group, LLC
Bradley Ridnour, Transamerica Long Term Care
Session Survey

22. Short-term Planning for LTC
If you did not plan ahead, what are the options? Who is innovative? Who is providing advice? Creative ways to make the money last, America’s best kept funding secret, and protecting assets for self and family.

Alternative Products – Panel Discussion
Session Producer: Romeo Raabe, Consultant
Panel: Bridgette Duber, Elderlife Financial Services, LLC
Romeo Raabe, Consultant
John Zwolanek, Main Street Law Office

26. Watch Out! Protect Your Company from LTC Insurance Fraud
LTC Insurance remains a prime target for insurance fraud, especially with the shift to home-based and new care delivery models. Come hear from the experts about what your company needs to be doing today to avoid being a victim of fraud. This session will include: • Insights from the Claims Bureau USA with firsthand accounts of current fraud techniques • Legal experts will offer the latest information on fraud litigation • Company Special Investigations Unit (SIU) leaders share their advice and answer your questions.

Legal, Compliance, & Regulatory – Panel Discussion
Session Producer: Rod Perkins, Genworth Financial
Panel: Chuck Angiollio, Claims Bureau USA
Mike Gugig, Saul Ewing LLP
Harry Markland, Genworth Financial

28. Aging and Community Redefined with an Eye Toward the Future
The SCAN Foundation will present their new strategic framework that includes viable options for long-term care needs in 2014 and beyond. Hear about family, vulnerable adults, support models, decision making and various options to help families finance LTC expenses.

Policy & Providers – Teaching Session
Session Producer: Beth Ludden, Genworth Financial
Panel: Dr. Gretchen Alkema, The SCAN Foundation
Beth Ludden, Genworth Financial

29. International Market
What is working in other places? Demographics, care delivery system, family and consumer attitudes in 3 countries. Government programs used to fund LTC. Market for private LTC insurance and products provided.

Alternative Products – Panel Discussion
Session Producer: Vince Bodnar, Towers Watson
Panel: Dr. Yair Babad, University of Illinois at Chicago
Etienne Dupourqué, Consultant
Mark Dearsley, Partnership

34. Home Equity Release Products
With only a few years of coverage, policyholders may need to use other resources, particularly home equity, to serve as a wrap-around to comprehensive LTCI. This session will examine new ways of funding this gap for aging in place.

Alternative Products – Panel Discussion
Session Producer: Dr. Barbara Stucki, NestCare FPC
Panel: Steve Cinelli, PRIMARQ
John Nelson, Wall Street Without Walls

36. Squaring the Circle: The American Long Term Care Insurance Program
Paul Forte will present an overview of his proposal for a national public-private partnership to finance LTSS. His new framework would facilitate mass enrollment, create administrative efficiencies, and offer greater accountability and stability to consumers. In this session his proposal will be reviewed and discussed by nationally recognized policy experts Stuart Butler and Larry Atkins in light of the key policy issues facing LTSS financing today. The session will be moderated by Gretchen Alkema.

Marketing – Panel Discussion
Session Producer: Joan Melanson, Long Term Care Partners, LLC
Panel: Dr. Gretchen Alkema, The SCAN Foundation
Larry Atkins, Long-Term Quality Alliance
Dr. Stuart Butler, The Heritage Foundation
Paul Forte, Long Term Care Partners, LLC

37. Managed Medicaid - Understanding the Basics from an Industry Leader
Florida Managed Care programs have been leading the country in innovation and cost-effective solutions. This session will provide training in the basics of Managed Medicaid programs that focus on the chronically ill in both home and facility based settings. Learn the terminology that is buzzing around in this space, the priority of case management metrics and the role of state/federal government.

Policy & Providers – Teaching Session
Session Producer: Sharon Reed, Penn Treaty Network America
Panel: Sharon Reed, Penn Treaty Network America
Paula Tietjen, UnitedHealthcare Community Plan of Florida

41. Price Sensitivity in LTC Insurance
Consumers typically cite "it costs too much" as a primary reason for not buying LTCI. But if the premium were reduced, would they really buy? Or would the trade-off in coverage required to satisfy a lower premium turn off interest? At what premium price point does product interest increase? This session explores consumer price sensitivity in LTCI based on a recent study across age segments and at varying price points. Coverage trade-offs with enhanced "middle market" appeal are explored.

Marketing –Panel Discussion
Session Producer: Eileen Tell, Univita Health
Panel: Clark Heitkamp, United Health Actuarial Services, Inc.
Dr. Jeremy Pincus, Forbes Consulting Group
Eileen Tell, Univita Health

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Updated, Monday, March 3, 2014, 11:33 AM (Central)

Alpine, Texas—

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ILTCI ROOMS AND LTC NEWS AND COMMENT

LTC Comment: Are you headed to the 14^th Annual Inter-Company Long-Term Care Insurance Conference in Orlando March 16-19? Great, see you there.

But if you’ve had a change of plans and need to cancel your Rosen Centre hotel reservation, Jim Glickman asks you to contact him rather than the hotel. Here’s Jim’s message:

To all: The Rosen Centre is sold out for the nights of Monday March 17th, Tuesday March 18th, and Wednesday March 19th. We have a waiting list for rooms (which is growing as more people register), but can only help those people if those of you who need to cancel part (such as Wednesday night only) or all of your reservation choose to contact me first to reassign your reservation. If you cancel directly with the hotel, your cancelled reservation will unfortunately not be available to anyone on our waiting list. Also, there are still rooms available at the $125 Conference rate for the Friday, Saturday, and Sunday nights before the conference. Please let me know if you have any questions. Thank you. Jim Glickman 818-867-2223

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3/1/2014, “State rules for nursing care aid are strict,” by Katie Evans Moss, The Tennessean

Quote: “Choices, a part of TennCare Medicaid, is the major payer for nursing home care in Tennessee, but changes in nursing home admission requirements are affecting many patients. Navigating eligibility requirements for Choices can be difficult. An acuity scale determines if you meet the at-risk level of care based on how serious your medical problems are and how much help you need with daily activities. Take, for example, a person who must be physically helped to get from a bed to a chair. That person gets a maximum of four points if he can never do this on his own. If the same person is incontinent and can never use a toilet on his own, he gets three more points. That is still not enough to get the nine points required to qualify for Choices Groups 1 or 2.”

LTC Comment: The good news is you’re eligible for Medicaid. The bad news is that you don’t qualify medically for services.

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2/28/2014, “6 Ways Federal Reserve Policy Hurts Retirees,” by Chris Kissell, Fox Business

Quote: "Fed policy effect No. 4: Costly long-term care premiums. Long-term care insurance covers the cost of a wide range of expensive services you may need in your final years, including nursing home care, assisted living facilities and adult day care. This insurance potentially can save you and your family hundreds of thousands of dollars. But thanks to falling interest rates, long-term care insurance premiums have skyrocketed, says Jesse Slome, executive director of the American Association for Long-Term Care Insurance."

LTC Comment: Double whammy. Low interest rates mean seniors have less cash flow for LTCI premiums which low interest rates have forced to be increased.

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2/27/2014, “New Report: Seniors to Lose Benefits and Choices as a Result of CMS' Proposed Cuts to Medicare Advantage [link],” by Robert Zirkelbach, AHIP

Quote: "Seniors and people with disabilities enrolled in Medicare Advantage plans would face premium increases and benefit reductions of $35-$75 per month, or $420-$900 next year, if new Medicare Advantage payment cuts recently proposed by the Centers for Medicare and Medicaid Services (CMS) take effect next year, according to a new analysis by Oliver Wyman prepared for America's Health Insurance Plans."

LTC Comment: Cut what works and subsidize what doesn’t.

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2/27/2014, “Better Coordinating Long-Term Care and Medical Treatment,” by Howard Gleckman, Forbes

Quote: “The most important trend in care for the frail elderly and younger people with disabilities may be what’s called managed long-term supports and services, or MLTSS. This effort to combine medical care with long-term care would replace today’s disorganized, ineffective, and even dangerous system with one that can bring together complex care that’s being delivered by many different providers.

“Done well, this model has the potential to improve the quality of life for those receiving care and save money. Done poorly, it puts an extremely vulnerable population at even greater risk than it is today–and may not save money.”

LTC Comment: Funding most long-term care through dysfunctional public programs that have mutually contradictory perverse incentives is what caused this problem. Turning it over to giant private sector managed care organizations (MCOs) financed inadequately by those same public programs may mitigate the problem if “done well.” But that is a very big “if.” Far better would be to introduce more private financing and competition into the LTC marketplace by implementing recommendations of the Center for LTC Reform in many reports including this one: Briefing Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the "Doc Fix" www.centerltc.com/BriefingPapers/5.htm -- (PDF for print)

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2/27/2014, “5 Financial Risks to Consider in Retirement,” Life & Health Advisor

Quote: "Health/long-term care: Sadly, the escalating costs associated with long-term care during retirement can make the possibility of outliving one's retirement income a reality for many. Statistics reveal that as we age, there's an increased probability of our eventually needing assistance with basic daily activities. The truth is that most of us will need long-term care in our later years."

LTC Comment: It is encouraging to see this basic truth sinking in and articulated more often in the media.

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2/27/2014, “Many families will spend modestly for dementia care, a minority face financial ruin, expert tells senators [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Low uptake of current long-term care insurance policies shows that these products are not working, Hurd told the senators. RAND is preparing a report on long-term care costs for dementia to help guide policymakers as they work to improve the status quo, Hurd noted."

LTC Comment: Yet another study by "experts" will conclude LTC protection has to be nationalized because private insurance is "not working." Nonsense. Stop paying through Medicaid for most expensive LTC after the insurable event occurs and private insurance will grow. Medicaid's "spend down" and "estate recovery" mandates are too weak and easy to avoid. Consequently, the public has no sense of urgency about LTC until they need it.

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2/26/2014, “A Shortage of Caregivers,” by Judith Graham, New York Times

Quote: “If you want fresh evidence of the caregiving crisis that lies in the not-too-distant future, look no further than the employment projections released by the Bureau of Labor Statistics late last year. Topping the list of occupations expected to grow between 2012 and 2022 are personal care aides, in the No. 1 slot (580,800 new positions); home health aides, No. 4 (424,200 jobs); and nursing assistants, No. 6 (312,200 jobs). . . . About 75 percent of services provided by home care agencies are paid by Medicaid and Medicare. Financial pressures on both programs are enormous, making it unlikely that significant wage increases are in store. . . . ‘The direction of Medicaid policy is to provide more services to frail seniors in the home and fewer in institutions,’ he said. Yet this won’t be possible unless steps are taken to create a more stable, better trained work force.’”

LTC Comment: All the more evidence we desperately need more private LTC financing sources including genuine Medicaid spend down requirements, stronger estate recoveries, home equity conversion and long-term care insurance.

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2/26/2014, “LTC Global Marketing Names Diana Hayn Director of Talent Acquisitions [link],” Press Release

Quote: "In this new position, Diana Hayn will be responsible for handling the extra flow of candidates from the more efficient recruiting drive LTCGM has been using in its efforts to bring agents in to selling Long Term Care insurance. LTCGM has developed new techniques to recruit potential candidates at a much higher efficiency."

LTC Comment: Congratulations.

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2/25/2014, “Study Questions Benefits of 'Medical Home' Programs for Chronically Ill [link],” by Melinda Beck, Wall Street Journal

Quote: "Health-policy experts often talk up the notion of a 'patient-center medical home'-in which a medical practice actively manages patients' chronic conditions to improve their health and avoid hospitalizations-as the ideal model for transforming the U.S. health-care system. But a study of one of the earliest and largest medical-home pilots found that after three years, patients' health improved in only 1 of 11 measures. There was no change in hospital or emergency-room use, and no significant cost savings."

LTC Comment: The best-laid plans of mice and academics go awry unless and until they are tested in a market.

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2/24/2014, “Obama Administration Proposes 1.9% Cut In Medicare Advantage Payments [link],” by Mary Agnes Carey, Kaiser Health News

Quote: “Late Friday, the Centers for Medicare & Medicaid Services announced proposed rates that officials said could mean payment reductions of 1.9 percent for the private plans in the program. But insurers, who have led a fierce lobbying campaign against payment reductions, say the Medicare Advantage plans would sustain a far deeper cut.”

LTC Comment: The squeeze is on . . . already!

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2/24/2014, “Link Between BP Meds and Falls Affirmed for Some,” by Todd Neale, MedPageToday

Quote: “Older adults with multiple chronic health conditions -- including hypertension -- appear to be at greater risk for sustaining serious fall injuries when treated for high blood pressure, an observational study showed.”

LTC Comment: Damned if you do and damned if you don’t.

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2/24/2014, “Implementing Health Reform: Medicaid Asset Rules and the Affordable Care Act [link],” by Timothy Jost, Health Affairs

Quote: "In sum, most of the rules that apply to traditional Medicaid recipients with respect to LTSS (except for lien requirements) are likely to apply to MAGI-eligible individuals who receive LTSS. CMS intends, however, to take steps to avoid applying estate-recovery rules to MAGI-eligible individuals who do not receive LTSS to keep this from becoming a barrier to Medicaid expansion eligibility."

LTC Comment: There has been much ado in the media lately about the possibility that Medicaid estate recovery will impact new enrollees who end up on Medicaid due to ObamaCare. This commentary is more "inside baseball" than most of you are likely to want, but it does do a good job of explaining the situation and allaying those concerns.

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2/24/2014, “NYL Launches Next Generation Asset Preserver,” Press Release

Quote: "This product is designed to help individuals guard against today's surging costs of long-term care, including nursing home care, assisted living and extended at-home care, while enjoying the traditional benefits of permanent life insurance."

LTC Comment: Another hybrid.

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2/24/2014, “Incorporating the LTCi Solution: The once stand-alone product has become integral to retirement income strategy [link],” by Maria Sarci, Life & Health Advisor

Quote: "Today the LTC planning market is vastly different and in a good way. There are more solutions available to agents and consumers than ever before. Linked-benefit solutions continue to enjoy double-digit growth each year, and insurance companies continue to innovate their standalone long-term care solutions."

LTC Comment: Silver lining on a difficult market created by bad public policy.

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2/23/2014, “Options for Covering Long-Term-Care Costs; Facing scaled-back benefits and premium hikes, baby boomers can use several strategies to help cover future costs [link],” by Kimberly Lankford, Kiplinger's Retirement Report

Quote: "As boomers help their aging parents, many are experiencing firsthand the overwhelming costs of long-term care. And they want to protect their own children from these crushing responsibilities if they end up needing care themselves."

LTC Comment: And just imagine how much more daunting it will be when boomers are the care receivers instead of the care givers.

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2/21/2014, “The Baby Boomer Housing Bust,” by Mary Meehan, Forbes

Quote: "Boomers had an unreal real estate run for decades. But it's about to come to a hard stop. Social shifts and demographic forces (more than the ups or downs of any local housing markets) are poised to change Baby Boomers' futures."

LTC Comment: With the baby-boomers downsizing, who will buy all those McMansions?

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2/21/2014, “Blockbuster merger will bring Brookdale, Emeritus together, create largest senior living company [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Brookdale Senior Living and Emeritus Senior Living will merge through a $2.8 billion deal, in a move that Brookdale CEO T. Andrew Smith said will be 'transformative for the industry.' . . . 'In an industry with very attractive long-term growth dynamics, this strategic merger creates the first national, predominantly private-pay based, senior living solutions company,' said Smith."

LTC Comment: Bigger isn’t always better, but economic activity in a dominantly private-pay sector of long-term care is promising.

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2/20/2014, “Many on Medicare get painkillers from multiple doctors,” by Deborah Kotz, The Boston Globe

Quote: "In the study published Wednesday in the British Medical Journal, researchers reviewed more than 1.2 million medical records of Medicare patients who received a prescription for an opioid— such as hydrocodone, fentanyl, morphine, and oxycodone—and found that nearly 35 percent had received a prescription from more than one doctor. One-third of this group got their prescriptions from four or more doctors.”

LTC Comment: With no profit motive or competition, Medicare lacks a financial incentive to avoid such disastrous mis-handling of dangerous drugs.

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2/20/2014, “Medicaid-only long-term care residents driving up state expenditures, report finds [link],” by Tim Mullaney, McKnight's LTC News

Quote: "The high-expenditure group represented 4.3% of total Medicaid beneficiaries nationally, but accounted for 31.6% of state Medicaid spending in 2009, according to the report. Dual eligibles were a costlier group, accounting for 35.2% of spending. The remaining third of Medicaid dollars went toward the beneficiaries who were not in the high-expenditure or dual-eligible groups - and this cohort accounts for the majority (81%) of those enrolled in Medicaid, the report notes."

LTC Comment: Because a disproportionate share of Medicaid expenditures go to a small percentage of recipients who need long-term care, public policy to discourage Medicaid dependency by encouraging early LTC planning and private LTC financing alternatives would result in disproportionately high savings to the program and tax payers.

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2/19/2014, “California bill would ban gender-based LTCI pricing,” by Allison Bell, LifeHealthPRO

Quote: “Assembly Member Mariko Yamada, D-Davis, Calif., has introduced Assembly Bill 1553, a bill that would prohibit gender-based LTCI pricing.”

LTC Comment: Unlikely to pass but worth knowing about.

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2/18/2014, “Unique Retirement Planning Challenges Facing Hispanic Americans,” by Jamie Hopkins, Forbes

Quote: "The bright side for both financial planners and for the Hispanic American community is that the study found that they are 'equally likely to work with a financial advisor, if contacted.' This provides an amazing opportunity for financial advisors and retirement planning specialists to reach out and assist Hispanic Americans in planning for the unique retirement challenges they face."

LTC Comment: Another rapidly growing demographic to target . . . and help.

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2/17/2014, “Should You Self Insure Against Long-Term Care Risk Or Buy Insurance? [link],” by Howard Gleckman, Forbes

Quote: “So what most people face is an impossible choice. Realistically, most won’t save for their long-term care needs despite Ms. Thakor’s advice (many won’t even save enough for healthy retirement). Yet, they won’t buy LTC insurance either, and for the most part can’t buy catastrophic coverage even if they want to. That means yet another generation unprepared and likely with nowhere to turn but Medicaid.”

LTC Comment: At long last, an article by this writer with which I can largely agree, although we strongly disagree on the cause of the problem and the solution. People will buy LTC insurance, even at newly increased premiums, when Medicaid stops mitigating the consequences for the middle class and affluent of failing to insure. Likewise, even more consumers would buy LTCI if the government got smart and gave large, above-the-line tax deductions for catastrophic policies that would save Medicaid billions and make critical back-end coverage more affordable. Alas, don’t hold your breath.

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2/17/2014, “Long-term care insurance rising,” by John Reid Blackwell, Richmond Times-Dispatch

Quote: "While long-term care insurance has been on the market for about four decades, it is still a relatively new type of insurance compared with others such as homeowner and health insurance. McInerney said insurers approached the pricing of long-term care insurance the wrong way from the start. It should have been structured less like life insurance and more like health insurance."

LTC Comment: Article has long section on Genworth's McInerney's views on LTCI.

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Updated, Friday, February 28, 2014, 11:47 AM (Pacific)

Alpine, Texas—

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LTC BULLET: HOW TO END MEDICAID ANNUITY ABUSE

LTC Comment: Medicaid-compliant annuities enable wealthy people to divest unlimited assets making them immediately eligible for Medicaid LTC benefits. What should be done?

LTC BULLET: HOW TO END MEDICAID ANNUITY ABUSE

LTC Comment: The problem of waste, fraud and abuse of scarce Medicaid resources is long-standing, wide-spread, and repugnant. No worse misuse of the welfare program exists than so-called Medicaid-friendly or Medicaid-compliant annuities. These special annuities enable the affluent to qualify easily for Medicaid’s expensive long-term care benefits without spending down their own resources as Congress intended. They reduce public awareness of and demand for private LTC planning and financing alternatives, thus resulting in more people unprepared to pay for their own long-term care and dependent on public assistance.

State Medicaid programs have litigated against the use of Medicaid annuities to dodge the program’s spend down rules. But those lawsuits failed. Courts have held that federal law precludes preventing the use of annuities in this way so long as the annuities comply with all other laws and regulations. Appeals by some states to the Centers for Medicare and Medicaid Services (CMS) have not resulted in corrective action by administrative means. It seems evident now that resolution will have to come in the form of an Act of Congress. But, without strong public support, Congress is unlikely to tackle this politically sensitive issue. Such action would eliminate a lucrative loophole used mainly by the same affluent constituents most likely to finance congressional campaigns.

Persuading Congress to act will require a systematic effort to identify, document and publicize the frequency and cost of Medicaid annuities. The Center for Long-Term Care Reform has prepared the following proposal for a project to achieve those objectives. We invite our readers to forward this proposal to any company, organization, or foundation that might consider supporting this work.

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How to Eliminate Fraud, Waste and Abuse
Caused by Medicaid-Compliant Annuities
a proposal by the
Center for Long-Term Care Reform
submitted to the [sponsor to be decided]

I. The Problem

Medicaid is a means-tested public assistance program, i.e., welfare. Yet Medicaid is the principal funding source for long-term care (LTC) throughout the United States, not only for the poor, but for most Americans. Medicaid’s basic LTC eligibility rules allow people with income below the cost of a nursing home—$82,855 on average as of 2013—to qualify. Many large assets are exempt, such as the equity in a home and contiguous property up to as much as $814,000 and, without a dollar limit--one business including the capital and cash flow, one automobile, prepaid burial expenses, term life insurance, and IRAs. Research shows that easy access to Medicaid’s LTC benefits by people with substantial assets after they already need care discourages early and responsible LTC planning and crowds out private LTC financing alternatives.

Further exacerbating this basic problem are Medicaid-compliant annuities which allow wealthy individuals to (1) shelter and divest virtually unlimited assets, (2) avoid Medicaid spend down requirements entirely, and (3) qualify for LTC benefits immediately. Three recent U.S. Court of Appeals cases bearing on Medicaid-compliant annuities—Geston v. Anderson in North Dakota ($400,000 annuity), Hughes v. McCarthy in Ohio ($175,000), and Lopes v. Department of Social Services in Connecticut ($167,000)—have dramatically complicated this issue by reversing state Medicaid programs’ efforts to prohibit the abuse of Medicaid annuities. Two national studies have estimated the cost of Medicaid-compliant annuities to the program at $1 billion (2003) and $200 million (2005) per year. Whatever their actual cost, the use of Medicaid annuities to artificially impoverish affluent people in order to qualify them for public assistance violates the congressionally intended purpose of Medicaid which is to be a long-term care safety net for people in need.

II. Substantive Proposal

Closing the Medicaid-compliant annuity loophole would save the state and federal governments substantial amounts of money. It would end a practice that discourages private long-term care planning and causes unnecessary Medicaid dependency. Entreaties to the Centers for Medicare and Medicaid Services (CMS), which oversees Medicaid at the federal level, and court challenges at the federal district and appeals court levels have not curtailed the use of Medicaid annuities. To resolve the problem will likely require action by the Congress of the United States. The best way to encourage Congress to act is to make the public aware of the widespread abuse of Medicaid-compliant annuities and to encourage citizens and the media to call for statutory corrective action. Toward that end, we propose to . . .

· Research and document federal and state Medicaid LTC eligibility laws and regulations that encourage public assistance dependency for LTC.

· Review the issue of Medicaid-compliant annuities and compile examples of annuities having been used in North Dakota, Ohio, Connecticut and other states to shelter or divest large amounts of assets.

· Study all relevant court cases, including appeals, and identify necessary legislative changes to prevent the abuse of Medicaid annuities.

· Interview attorneys who represented the state Medicaid programs in cases challenging Medicaid-compliant annuities and seek their advice regarding needed changes in the law.

· Interview state staff who make, interpret, and implement LTC eligibility policy to determine and document the frequency of Medicaid annuity use and the amounts involved.

· Seek advice from Medicaid directors and eligibility policy specialists, supervisors and workers with experience handling annuity cases regarding needed changes.

· Interview Medicaid estate recovery staff on methods used in various states to discourage the use of annuities: what has worked where?

· Travel to five or more key states to accomplish these reviews and interviews.

· Review published research conducted by the American Public Health Services Association in 2003 that resulted in a potential savings estimate of $1 billion per year from closing the Medicaid-compliant annuity “loophole.”

· Summarize, analyze and critique findings by Robert A. Levy, et al., for CMS in 2005 that estimated potential savings at only $200 million per year.

o This research arguably underestimated potential savings by inadequate sampling, failing to consider moral hazard or the crowd out effect on private LTC financing and because the Deficit Reduction Act of 2005 (DRA ’05) later closed other Medicaid planning loopholes making annuities more attractive, frequent and larger.

o This research appears to have a pro-annuity bias as the reviewers did not interview long-term care providers or insurers who are most impacted negatively by Medicaid annuities, but rather only consulted one annuity marketer and an elder law attorney representing the “industry” that benefits from Medicaid annuities.

o This research did not review or cite sources in the voluminous Medicaid estate planning literature which widely advocates the use of Medicaid annuities to circumvent Medicaid spend down rules.

· Document and publicize egregious examples of Medicaid-compliant annuities

· Interview key state legislators and/or their staff to gauge their interest and willingness to fix the problem and seek advice on best strategy to do so.

· Interview members of Congress and/or their staff to gauge interest in fixing the problem and to get advice on the best strategy.

· Work with staff in Congress to develop proposed legislation to close the Medicaid annuity loophole.

· Estimate the cost of Medicaid annuities to the Medicaid program.

· Propose specific changes to federal and state law to fix the Medicaid annuity problem.

· Publish articles through national and state think tanks identifying abuse of Medicaid-compliant annuities and advocating legislative action at the state and federal levels to close the loophole.

· Publish op-eds in national and state-level media identifying abuse of Medicaid-compliant annuities and advocating legislative action at the state and federal levels to close the loophole.

To accomplish these objectives, we will contact Medicaid officials in the states most seriously affected by the Medicaid annuity problem. Through them we will reach and interview the key front line staff who know the most about the issue. We will also seek their advice and assistance in identifying and contacting their peers in additional states until we have reached and interviewed all state and federal officials with knowledge of and a concern for the impact of Medicaid annuities. We will also contact and work cooperatively with staff of the State Policy Network affiliates in each state. We anticipate that the research, report writing, and article and op-ed preparation and publication will consume approximately six months full time effort.

III. Business proposal

Deliverables, within 26 weeks of the project start date, will include (1) a comprehensive report (at least 35 pages) that explains the problem of Medicaid annuities, documents the degree of the problem, and recommends solutions to achieve savings per annum of at least 1,000 times the cost of the contract; (2) distribution of electronic reports to all interviewees and respondents, (3) several newspaper op-eds in affected states, and (4) an article suitable for publication in a relevant professional journal.

Stephen Moses (professional bio attached or viewable here: http://www.centerltc.com/steves_bio.pdf) will conduct all of the research and interviews for this project. He has conducted many similar studies over the years. Examples of his published articles and project reports are at http://www.centerltc.com/reports.htm and on the websites of many state and national think tanks, including the Cato Institute, the Pacific Research Institute in California, and the Manhattan Institute’s Empire Center for New York State Policy.

Total cost: $75,000 plus reasonable travel expenses not to exceed $10,000. Payable: $10,000 upon signing; $10,000 upon submission of five monthly progress reports; and $15,000 upon submission of acceptable deliverables.

Respectfully submitted February 28, 2014

Stephen A. Moses

President

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Updated, Friday, February 21, 2014, 7:00 AM (Pacific)

Alpine, Texas—

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LTC BULLET: CAN LONG-TERM CARE SURVIVE?

LTC Comment: How vulnerable is our current and likely future long-term care system to the ravages of aging demographics, unfunded entitlement liabilities, bad economic policies, and a growing entitlement mentality?

LTC BULLET: CAN LONG-TERM CARE SURVIVE?

LTC Comment: We welcome your comments on the following draft article, on the findings it summarizes, and on the reports it references. My thanks to Bob Helms of the American Enterprise Institute for his helpful suggestions.

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“Can Long-Term Care Survive?”
by
Stephen A. Moses

The question policy makers and analysts usually ask is “How shall we pay for long-term care?” It stumps them every time. Last year’s Long-Term Commission punted on the question. The only hint of consensus is that public and private funding must combine somehow. But how?

Maybe it’s time we ask a more basic question: Can Long-Term Care Survive? If we don’t find a way to pay for it, what is the likelihood our current non-system of service delivery and financing can endure the coming age wave? If we can muddle through, all right. But what if prospects are dim? Then how to finance LTC takes on far greater urgency.

America’s dominantly Medicaid-financed, nursing-home-based long-term care system is in turmoil. State Medicaid programs struggle to constrain LTC expenditures by expanding managed care and rebalancing from institutional to home care. But total Medicaid LTC costs continue to rise and private LTC financing continues to decline. Few people save, invest or insure to pay for their own long-term care.

What if those trends persist? Can long-term care survive in its current or likely future form? The answer depends on how the USA and each state copes with the daunting problems of aging demographics, Medicaid funding, economic growth and social policy. It bodes poorly that we already have too many sick elderly people dependent on inadequately funded public programs without the means to pay for their own care.

The Index of Long-Term Care Vulnerability

How can we measure the prospects for future success or failure? The Center for Long-Term Care Reform developed an “Index of Long-Term Care Vulnerability” as a tool to help answer that question. The Index incorporates seven key metrics to which the analyst ascribes weights. The Index, an Excel worksheet, automatically calculates maximum points for each metric out of a total possible of 1000. The analyst then scores each sub-factor under the metrics using links to data sources provided in the Index instructions.

Here’s how we ranked the key metrics followed by the results we obtained for the United States and three states.

1. How many older people are coming in the next few decades? (5%, 50 points)
2. How sick will they be? (5%, 50 points)
3. How viable is Medicaid as a long-term care payer? (15%, 150 points)
4. How reliable is federal revenue on which Medicaid mostly depends? (20%, 200 points)
5. How reliable is state revenue on which Medicaid secondarily depends? (20%, 200 points)
6. How much private-pay revenue is available to relieve LTC financing pressure on
Medicaid? (15%, 150 points)
7. How strong is dependency on public programs (i.e., the entitlement mentality)? (20%, 200 points)

You may assign different weights for each metric and different scores for each sub-factor. Our objective with the Index was not to provide an indisputable conclusion but rather to ask “Can LTC Survive?,” to lay out some key issues that go into answering that question, and to provide links to sources of data that shed light on the crucial factors and sub-factors .

Results

So far, we have applied the Index of Long-Term Care Vulnerability to the United States and to the states of Virginia, Georgia and New Jersey. In the following reports, you can find our analysis, a completed Index for each of those states with footnotes to the data sources used, and a blank Index that you can experiment with by filling it out yourself.

“The Index of Long-Term Care Vulnerability: A Case Study in Virginia” was published in November 2013 by the Thomas Jefferson Institute for Public Policy and the Center for Long-Term Care Reform. It is posted on their websites here and here, respectively.

“The Index of Long-Term Care Vulnerability: A Case Study in Georgia” was published in December 2013 by the Georgia Public Policy Foundation and the Center for Long-Term Care Reform. It is posted on their websites here and here, respectively.

“The Index of Long-Term Care Vulnerability: A Case Study in New Jersey” was published in January 2014 by the Common Sense Institute of New Jersey and the Center for Long-Term Care Reform. It is posted on their websites here and here, respectively.

The results are not encouraging. We concluded that the United States—scoring only 529 out of a possible 1000 points—has little more than a 50/50 chance to sustain its long-term care system through the aging of the baby boom generation. Virginia’s prospects (501 points) and Georgia’s (455 points) are only slightly worse, but New Jersey’s situation (338 points) is nearly hopeless with a two-thirds probability the state’s LTC system will fail.

How did we reach these conclusions? You will need to consult the individual state reports and their vulnerability indices for a full explanation. But in a nutshell, here’s how we scored each of the key metrics:

Factor #1—How many older people are coming in the next few decades?

The key metric for aging demographics is how many people over age 85—the population cohort most likely to need long-term care—there will be in the future. We applied a weight of 5% for a possible 50 points out of 1000 total. For the USA, 2% of the population was over 85 in 2012 with an increase of 69% expected by 2032 and 224% by 2050. Providing long-term care to this rapidly increasing group is a formidable challenge so we assigned only one-third of the possible points, 17 to the USA. Virginia begins with a smaller proportion over 85 (1.7%) but its old-old (85 plus) cohort grows even faster through 2032 (101%) and 2050 (307%). We gave Virginia 14 points. Georgia is comparable to Virginia. It starts at only 1.4% in 2012, but increases 121% and 375% through 2032 and 2050, respectively. Georgia got 14 points also. New Jersey begins with a higher percentage of old-old than the USA (2.2%), but its expected increase is somewhat less, 58% through 2032 and 206% through 2050. So 14 points for New Jersey too. All three states face similar vulnerability for aging demographics, just slightly more vulnerable than the USA as a whole. Hence slightly fewer points.

Factor #2—How sick will they be?

We applied a weight of 5% (50 points) and ranked the USA and all three states based on their percentage of people age 65-plus with disabilities including self-care difficulty, cognitive difficulty, any disability, and nursing facility residents with dementia. Consult the state reports for scoring details. The totals were USA, 22; VA, 27; GA, 14; and NJ, 26. In other words, Virginia and New Jersey’s aged populations are somewhat healthier than the USA average, but Georgia’s elderly are markedly sicker.

Factor #3: How viable is Medicaid as a long-term care payer?

Medicaid is now and will remain for the foreseeable future the principal payer for long-term care throughout the United States. The program’s sustainability is critical to long-term care financing. We applied a weight of 15% to this factor with 150 potential points. To measure Medicaid’s sustainability in future decades, we considered (1) the percent of budget devoted to Medicaid, (2) the percent of LTC spending for aged and disabled recipients, (3) the increase in nursing home spending over time, (4) the increase in Home and Community-Based Services (HCBS) spending over time, (5) HCBS spending as a percentage of LTC spending, (6) Federal Medical Assistance Percentage (FMAP), (7) Affordable Care Act (ACA) Medicaid expansion or not, (8) LTC eligibility strictness, (9) Skilled Nursing Facility (SNF) reimbursement shortfall, (10) Medicaid SNF reimbursement rate compared to private-pay rate, (11) dual eligibles vulnerability, (12) rebalancing vulnerability, and (13) managed care vulnerability. Refer to the respective worksheets for detailed scoring. Totals are USA, 97; VA, 81; GA, 114; NJ, 68.

Factor #4: How reliable is federal revenue on which Medicaid mostly depends?

Without federal matching funds averaging 57% of their total Medicaid expenditures, state Medicaid programs would collapse. We assigned a weight of 20% to this factor, 200 possible points. Sub-factors considered were (1) total Medicaid spending, (2) five year increase in spending, (3) federal and state shares of Medicaid costs, (4) dependency on “provider taxes,” (5) Social Security unfunded liability, (6) Medicare unfunded liability, and (7) federal debt. Refer to the respective worksheets for detailed scoring. Totals are USA, 89; VA, 70; GA, 71; NJ, 64.

Factor #5: How reliable is state revenue on which Medicaid secondarily depends?

States can only draw down federal Medicaid matching funds by putting up revenue of their own. Therefore a healthy economy is critical to the sustainability of long-term care programs. We assigned a weight of 20% to this factor, 200 total possible points. Sub-factors considered were (1) ALEC-Laffer State Economic Competitive Index, (2) Forbes Best States for Business and Careers, (3) Cato’s “Fiscal Policy Report Card,” (4) Mercatus Center’s “Freedom in the 50 States,” (5) Tax Foundation’s “State and Local Tax Burdens,” and (6) State Health Facts State Budget Shortfalls. Refer to the respective worksheets for detailed scoring. Totals are USA, 160; VA, 156; GA, 139; NJ, 55.

Factor #6: How much private-pay revenue is available to relieve LTC financing pressure on Medicaid?

If public financing falters, long-term care viability will depend on private resources such as savings and home equity. We assigned a weight of 15 to this factor, 150 possible points. Sub-factors are (1) asset spend down potential, (2) Medicaid estate recoveries, (3) home equity conversion potential, and (4) private long-term care insurance. Refer to the respective worksheets for detailed scoring. Totals are USA, 77; VA, 69; GA, 47; NJ, 49.

Factor #7: How strong is dependency on public programs (i.e., the entitlement mentality)?

To the extent citizens have come to expect government to provide their long-term care, service delivery and financing are more vulnerable than when people expect to take personal responsibility for funding their own care. We assigned a weight of 20% or 200 points to this factor. Sub-factors include (1) percentage of births financed by Medicaid, (2) Food Stamp participation rate, (3) the degree by which welfare proceeds exceed the minimum wage, (4) the degree to which Social Security Disability Insurance replaces work, (5) unfunded pension liabilities, (6) nursing facility residents dependent on Medicaid, and (7) Medicaid recipients with prepaid burial plans that avoid spend down requirements. Refer to the respective worksheets for detailed scoring. Totals are USA, 67; VA, 84; GA, 56; NJ, 62.

What is the bottom line?

Be scared. Be very scared about the future of long-term care financing and services wherever you live in the USA. By our reckoning, the USA and two of the states we reviewed in detail (Virginia and Georgia) have only one chance in two of surviving the age wave with their LTC programs intact. New Jersey’s prospects are even worse, about one in three.

What might a long-term care system failure look like? Exploding public expenditures for long-term services and supports. Long-term care expenses crowding out other critical government priorities such as education, highways, and law enforcement. More municipalities and then states declaring bankruptcy. Nursing homes and home health agencies closing due to cuts in federal and state funding. Caregiver shortages caused by inadequate wages. Plummeting quality of paid care. Excessive strain on family and friends forced to provide even more free care than they do now. Loss of personal savings and home equity as Medicaid and Medicare spend less on home care and skilled nursing home care. Concomitant reduction in retirement income and acute health care security as more personal wealth goes into funding long-term care. Development of a two-tier long-term care system; best for the affluent and worst for the poor.

If you see many of these outcomes starting to happen already, you might want to ask this next question and see if the Index of Long-Term Care Vulnerability can help you answer it.

Can long-term care survive in my state?

How would your state score on the Index of Long-Term Care Vulnerability? The Center for Long-Term Care Reform can review the key factors, calculate the metrics, and give you an answer. To discuss that possibility contact Center president Stephen Moses at 425-891-3640 or smoses@centerltc.com.

But feel free to use the Index of Long-Term Care Vulnerability to compute your own estimate of your state’s LTC prospects. A lot depends of course on how you analyze the current condition of long-term care in your state, what weights you place on each of the major metrics in the Index, and how you score each of the sub-factors. Those choices will determine the result and your conclusion may be very different from the one we would reach.

So try the Index of Long-Term Care Vulnerability yourself. See what you conclude. And please let us know your results. We’ll use your findings to improve the current beta version of the Index.

Steve Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). Reach him at smoses@centerltc.com or 425-891-3640.

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Updated, Tuesday, February 18, 2014, ???? AM (Pacific)

Alpine, Texas—

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WSJ ON LTCI AND LTC NEWS AND COMMENT

LTC Comment: The Wall Street Journal has been running a series of articles about long-term care insurance by “The Experts,” a collection of writers the newspaper convened and calls “An exclusive group of industry and thought leaders . . . who engage in in-depth online discussions of important topics.” Well, take that with a grain of salt. We critiqued one egregiously wrong and misleading example in last Friday’s LTC Bullet and below. Some of the other articles in this series weren’t so bad and we highlight a couple of those below. But the basic problem with the series is that it gives voice to financial planners who, as a group, understand little about long-term care financing and insurance. So too often they end up criticizing LTCI unfairly and endorsing Medicaid planning irresponsibly.

Heads up! The last three exhibit booths (10x10, $3,250) for the 14^th Annual Inter-Company Long-Term Care Insurance Conference (Orlando, March 16-19) are available with a special enticement. According to Jim Glickman: “In order to finish selling the rest of the Exhibit Hall slots quickly, the Executive Committee has approved allowing your attendees to register for the conference for only $100 each (instead of the regular discounted price of $295) as long as they are registered by February 21^st. In addition, any new Exhibitor (who has never exhibited at our conference before) is eligible for an additional $250 discount.” If you have questions, please contact Jim Glickman or go to www.ILTCIconf.org for additional information.

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2/18/2014, “Response to ‘Surprise! Your Long-Term Care Insurance Won't Cover It’,” [link] by Phyllis Shelton, LTC Consultants

Quote: “This very unfair and uneducated article was written by a financial planner. My take on it is his agenda is to sell individual long-term care insurance by bashing group LTCi plans. You can read it and see what you think. Here is my response. Just as in any other response I write, please feel free to use any part of it in any response of your own with your clients and prospects.”

LTC Comment: Phyllis Shelton takes issue with an article published in the Wall Street Journal’s “MarketWatch.”

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2/16/2014, “Medicaid's death bill leaves homes, assets at risk,” by Shannon Mullen, USA Today

Quote: “After their 92-year-old mother died, Richard Pfieffer and his siblings were set to sell her New Jersey home when a bill for $25,347 brought them up short. The amount was the total cost of the home-based medical care their mother received through Medicaid in the last years of her life. If the bill wasn't paid in full, the family was informed, the state would place a lien on the property.”

LTC Comment: We fought hard to make estate recovery mandatory in 1993 on the grounds that people who get free long-term care from Medicaid should pay it back from their estates. We argued successfully that without estate recovery baby-boomer heirs would reap a windfall from the welfare program and be less likely themselves to insure for long-term care. Now, estate recovery is under attack and this article in a national newspaper openly proposes Medicaid planning as a means to evade estate recovery. The Center for Long-Term Care reform remains one of the few voices defending estate recovery and Medicaid as a safety net. Matt Salo, executive director of the National Association of Medicaid Directors Association, is another such voice. Bottom line: the tide is turning against responsible long-term care public policy and your support for our work is needed more than ever now.

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2/15/2014, “Custodial care fraud against Medicare persists as funds to fight it ebb,” [link] by Jim Landers, Dallas Morning News

Quote: "Medicare has struggled with home health care fraud for decades, because the industry has kept trying to use the federal insurance program to get paid for long-term custodial care."

LTC Comment: The common caveat that "Medicare does not pay for long-term care" is untrue. Just as Medicaid funds LTC for the middle class and affluent despite rules that seem to prohibit the practice, Medicare pays for a great deal of LTC at home and in nursing facilities despite rules to the contrary.

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2/13/2014, “Retiring on the House: Reverse Mortgages for Baby Boomers,” by Lisa Prevost, The New York Times

Quote: "As baby boomers age, reverse mortgages are expected to gain popularity as a means of covering living expenses. Hence, in the future, more homes passed on to children will come with a bill attached - the balance due on these equity loans."

LTC Comment: Medicaid's mandatory estate recovery is a form of government-provided reverse mortgage which protects Medicaid from affluent abusers and encourages heirs to protect their inheritances by insuring their parents and themselves against LTC risk.

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2/13/2014, “Why Long-Term-Care Coverage Is Right for Me,” by Olivia Mitchell, Wall Street Journal

Quote: "We became empty nesters! Our children finished school, moved out, and (even more awesome), got jobs. To celebrate, I canceled my term life and bought long-term care insurance (LTCI) instead."

LTC Comment: Better advice from WSJ.

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2/13/2014, “LTCI sales rise at John Hancock,” by Allison Bell, LifeHealthPRO

Quote: "John Hancock Long-Term Care operations did well in the fourth quarter, despite the effects of a paper investment loss that reduced revenue."

LTC Comment: Better news.

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2/13/2014, “Start Shopping for Long-Term-Care Insurance at 45,” Michelle Perry Higgins, Wall Street Journal

Quote: "If you're around 45 years of age, start doing your homework on the different plans available (including through your employer) and costs you may be looking at for a long-term health-care policy. By 50 years of age, you may want to consider purchasing a policy that would complement your financial plan."

LTC Comment: Better advice from WSJ than what we cite below.

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2/13/2014, “CO man gets decade-long prison sentence for human trafficking of nursing home workers,” [link] by Tim Mullaney, McKnight's LTC News

Quote: “Kizzy Kalu, 49, was convicted on dozens of criminal counts in July. He and a co-conspirator, 78-year-old Philip Langerman, were found guilty of promising nonexistent jobs to foreign nurses, then forcing them to take jobs in nursing homes once they were in the United States. The nurses paid Kalu about 40% of their earnings, and he threatened to have them deported if they did not comply.”

LTC Comment: Low Medicaid reimbursement rates have many bad side-effects.

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2/12/2014, “CNO Rallies After Deal to Cut Long-Term Care Risk,” by Alexandria Baca, Bloomberg

Quote: “Beechwood Re Ltd. agreed to take on obligations tied to the policies with CNO ceding $590 million, mostly in reserves, the reinsurer said in a statement today. CNO is among insurers burned by higher-than-expected costs on the coverage, which helps pay for home-health aides or residence in nursing homes. Low interest rates also pressured returns.”

LTC Comment: Who “reinsures” Social Security and Medicare? We do.

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2/12/2014, “States Meld Medicare and Medicaid,” by Christine Vestal, Stateline

Quote: "In the nearly 50 years since Medicaid and Medicare were enacted, the two health care programs - one for the poor and the other for the elderly and disabled - have remained separate, with different rules, duplicative benefits and conflicting financial incentives. The result has been wasted money and disjointed care for more than 10 million 'dual eligibles,' the Americans who qualify for both programs."

LTC Comment: The best solution for the “dual eligibles” problem is to have fewer of them. Our white paper explains how: “Briefing Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the ‘Doc Fix’” www.centerltc.com/BriefingPapers/5.htm -- (PDF for print)

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2/12/2014, “The Real Reason Health Spending Has Slowed,” by John C. Goodman and Peter Ferrara, National Center for Policy Analysis

Quote: "Three developments track the slowdown in health care spending very closely: the growth of Health Savings Accounts (HSAs), the growth of Health Reimbursement Arrangements (HRAs) and the general trend toward higher deductibles. All three changes mean that patients are paying more medical bills out of their own pockets. And that has produced profound changes - on both the demand and supply sides of the market."

LTC Comment: And if HSAs and HRAs had been the norm in acute health care insurance for the past three decades, enough money would repose in them now to pay LTCI premiums for aging boomers.

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2/11/2014, “Carrier applies for LTCI rate hikes,” by Allison Bell, LifeHealthPRO

Quote: "For that block, incidence is just 58 percent of what the company had expected, but, because the claim termination rate is just 89 percent of the expected rate, and mortality is just 34 percent of the affected rate, the company expects the lifetime loss ratio to be 93 percent even if it gets the full rate increase requested, the company said."

LTC Comment: Hard to make such numbers work.

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2/11/2014, “Medicaid and Your Parents: The Basics,” by Virginia Morris, Forbes

Quote: “Some health care providers and nursing homes won’t take patients on Medicaid or will accept only a limited number because the reimbursement rates are low. In some areas, it may be difficult (or impossible) to find aides or other home care workers who will take Medicaid. As a result, Medicaid patients may have to settle for fewer choices and lower quality care. Furthermore, Medicaid has largely switched over to managed-care plans, which means that your parent has to receive care from a particular list of providers. Her doctor and many specialists might not be in that group.”

LTC Comment: This article advocates Medicaid planning and incorrectly states that the home exemption disappears when a recipient is permanently institutionalized, but at least the author mentions some of the downsides of ending up on Medicaid.

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2/11/2014, “When Boomers Inherit, Complications May Follow,” by Fran Hawthorne, New York Times

Quote: "[T]here have never been as many heirs with as much money as now, thanks to the intersection of two demographics: the 79 million baby boomers and the general thriftiness of their Depression-raised parents. The Center for Retirement Research at Boston College estimates that boomers will ultimately receive a total of $8.4 trillion, most of it by 2030."

LTC Comment: That’s a lot of money that needs protection from LTC risk.

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2/11/2014, “States Accelerate Shift Of Nursing Home Residents Into Medicaid Managed Care,” [link] by Phil Galewitz, Kaiser Health News

Quote: “States had traditionally been reluctant to place frail and elderly people into managed care. But that caution is fading as officials become comfortable with managed care and more anxious to curb Medicaid spending. The elderly and disabled account for about 6 percent of Medicaid enrollees, but nearly half of the program’s spending.”

LTC Comment: Can giant managed care companies learn to care adequately for Medicaid’s frailest, most infirm recipients? Does home and community-based care so managed really save money without sacrificing quality? Time will tell as managed LTC is a trend sweeping through Medicaid programs across the country.

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2/11/2014, “Remembering Philip Seymour Hoffman, long-term care firebrand,” [link] by Tim Mullaney, McKnight's LTC News

Quote: "Hoffman himself wasn't a critic of the nation's long-term care system, but in the role of Jon Savage, he delivered a blistering and relevant diatribe against a certain type of provider."

LTC Comment: This is an interesting column dealing with the tension between assisted living and nursing homes with a relevant movie review included.

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2/10/2014, “Reasons to be Wary of State-Run Retirement Plans,” by Jeffrey Brown, Forbes

Quote: “Lawmakers in states from Connecticut to Washington are considering letting the state manage the retirement funds of private sector workers. Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.”

LTC Comment: There’s no substitute for personal responsibility when it comes to retirement savings. Some private company pension programs and most run by governments at any level are unsound financially.

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2/10/2014, “The Case for Skipping Long-Term-Care Insurance; Adviser Says the Coverage Is Too Expensive and Often Doesn't Get Used,” [link] by Susan Kaplan, Wall Street Journal

Quote: “Those who are wealthy enough or can save enough should just pay for long-term care out of pocket. For those who can't, one solution is to put clients' assets into an annuity, which will provide them with an income stream of X amount for the rest of their lives. Because they are no longer holding the majority of their assets, clients can qualify for Medicaid before entering a nursing home.”

LTC Comment: This patently irresponsible article had no business appearing in the Wall Street Journal. Nevertheless, the annuity gambit it recommends works . . . for now. The Center is going after that gaping loophole with a vengeance this year. We devoted last Friday’s LTC Bullet: WSJ Misfires on LTC Insurance to refuting claims in this article.

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2/8/2014, “Seniors overspend on mortgage, credit cards,” by Robert Powell, USA Today

Quote: “The percentage of 65- to 74-year-olds who report having a mortgage or home equity loan payment increased from 21% in 1989 to nearly 37% in 2010, according to Pamela Villarreal, author of How Are Seniors Spending Their Money. And for those age 75 and older, the percentage of mortgage or home equity loan holders increased from just 6% to 21% during the same time.”

LTC Comment: An ominous development if the Center’s prediction proves true that aging Boomers will need their home equity to fund long-term care when Medicaid cuts its home equity exemption.

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2/7/2014, “'Aid in Dying' Movement Takes Hold in Some States,” by Erik Eckholm, New York Times

Quote: "Helping the terminally ill end their lives, condemned for decades as immoral, is gaining traction. Banned everywhere but Oregon until 2008, it is now legal in five states. Its advocates, who have learned to shun the term 'assisted suicide,' believe that as baby boomers watch frail parents suffer, support for what they call the 'aid in dying' movement will grow further."

LTC Comment: Worthy perhaps in its own right as a voluntary choice, let's hope "aid in dying" doesn't become a mandatory solution to the long-term care financing crisis.

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Updated, Friday, February 14, 2014, 9:26 AM (Pacific)

Terlingua, Texas—

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LTC BULLET: WSJ MISFIRES ON LTC INSURANCE

LTC Comment: We dissect and correct a misbegotten column in the Wall Street Journal after the ***news.***

*** HAPPY VALENTINE’S DAY ***

*** CENTER “CLIPPINGS” SUBSCRIBERS knew about this WSJ article the day it was published and fired off rebuttals. Others learned of the piece when their prospects cited it as a reason not to buy LTCI. Knowledge is power and information is key. If you belong to the Center for Long-Term Care Reform, you already receive a weekly digest of the most important LTC articles and reports, our Monday LTC E-Alerts. But reading material that is critical to your profession a week later is like waiting for the gun to go off before you duck. Clippings subscribers receive the information and data they need by email daily in real time. Join the Center as a “premium member” or upgrade to that status and you’ll begin immediately to receive our clippings service. Contact Damon at 206-283-7036 or damon@centerltc.com for details. ***

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LTC BULLET: WSJ MISFIRES ON LTC INSURANCE

LTC Comment: Over the years, private long-term care insurance has been the target of many unfounded attacks. But this latest one is especially galling as it comes from someone pushing a truly irresponsible alternative: Medicaid planning. Here’s the reply we emailed to the offending author and posted on the Wall Street Journal’s website.

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Susan Kaplan’s “The Case for Skipping Long-Term-Care Insurance” (Wall Street Journal, 2/10/14) is full of inaccurate statements and bad advice.

For example:

Quote: “[T]he odds that clients will continue paying for coverage until they actually need it are slim.”

LTC Comment: Not true. Most LTC insurance policy holders retain their coverage. In fact, lapsed policies are only a small fraction of what actuaries originally expected. Besides, consumers who worry about making future premiums for traditional coverage can purchase LTC protection linked with single-premium life insurance or an annuity.

Quote: “Premiums are going up 10% to 45% a year.”

LTC Comment: Premiums on in-place business remained flat for the first three decades of the LTC insurance product’s existence. Recent premium increases have largely achieved their purpose so future increases should be moderate. If the Federal Reserve stops forcing interest rates to zero so insurance carriers can receive better returns on their reserves it is possible competition could actually push LTC insurance premiums down in the future. Besides, consumers who still worry about premium increases have guaranteed premium options through linked products.

Quote: “The average premium these days can cost anywhere from $4,000 to $6,000 annually per person, a lot even for high net-worth clients.”

LTC Comment: Actually, a couple can buy “best” coverage for less than that. According to the American Association for Long-Term Care Insurance: “Today’s average cost for ‘Best’ coverage for a 60-year-old couple each purchasing $164,000 of immediate coverage that grows to a combined benefit pool of $730,000 ($365,000 each) at age 85, is $3,840-per-year. ‘That’s a three percent increase from the 2013 average ($3,725) and 4.8 percent higher than 2012 ($3,663),’ [AALTCI executive director] Slome shares.” Furthermore: “A 55-year-old single male purchasing new long-term care insurance protection can expect to pay $925-per-year for $164,000 of benefits according to an industry report. He’ll pay $1,765 for coverage that increases the benefit pool to $365,000 at age 85, a 14.5 percent decline from last year’s average.”

(Emphasis added. Source: “2014 Long Term Care Insurance Price Index Published,” http://www.aaltci.org/news/long-term-care-insurance-association-news/2014-long-term-care-insurance-price-index-published)

Quote: “After paying the premium, clients may not have money left over to do things like take a vacation.”

LTC Comment: What’s more important? Preparing for a secure future or immediate gratification?

Quote: “Those who are wealthy enough or can save enough should just pay for long-term care out of pocket.”

LTC Comment: So, it’s better to spend dollar-dollars later than nickel-dollars today? Most people with significant assets to protect didn’t accumulate their wealth by ignoring the power of private health, life and auto insurance to protect it. Why should they ignore the leverage from private long-term care insurance?

Quote: “For those who can't [save enough to pay for their own long-term care], one solution is to put clients' assets into an annuity, which will provide them with an income stream of X amount for the rest of their lives. Because they are no longer holding the majority of their assets, clients can qualify for Medicaid before entering a nursing home. This doesn't have to be done in advance of needing long-term care and is perfectly acceptable to the nursing home.”

LTC Comment: Here’s what this article is really about, i.e., selling “Medicaid-friendly annuities.” But, Medicaid is a means-tested public assistance program. In a word, welfare. The program has a dismal reputation for problems of access, quality, reimbursement, discrimination and institutional bias. It is not true that Medicaid is “perfectly acceptable to the nursing home.” Medicaid pays nursing homes only 2/3 of the private pay rate so the nicest facilities roll out the red carpet for private payers. It is true now and will be more true in the future that to obtain the highest quality long-term care at the most appropriate level people need to be able to pay privately.

Quote: “The reality is that when a client gets sick, many don't even make it to the nursing home, and once there, most people die within 18 months. This paints a bleak picture of the future, but ultimately can save a client thousands of dollars over the years, especially as long-term-care policies get less and less appealing.”

LTC Comment: Long-term care insurance is “stay out of a nursing home insurance” because it ensures that policy holders can stay at home or in a comfortable assisted living facility as long as possible and that they can access the very finest skilled nursing facilities if necessary.

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Updated, Friday, February 10, 2014, 10:55 AM (Pacific)

Seattle—

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3 IN 4 NEED MORE, AN INSPIRING STORY AND LTC NEWS AND COMMENT

LTC Comment: The 3in4 Association has announced its new lead generation marketing fulfillment licensee - TargetLeads. Says 3 in 4: “This new partnership means more efficiency, more variety, more effectiveness and more success in sharing the 3in4 message with Americans.” Check out the details here.

Center Regional Representative Romeo Raabe of Green Bay, Wisconsin reports:

“I had quite an emotional end to a meeting this morning. I was in a client’s office, delivering his wife’s LTCi policy and going over options for him who was declined. We settled on an annuity/LTC product that should accept him although costing much more and providing less coverage. After filling out all the paperwork and him signing it, he got up and paced a bit in his office as I packed up.

“He had tears in his eyes as he looked at me and said ‘You don’t know this, but I’ll bet you have saved 20-30 lives over your career. People who did not know what to do, people who might have considered suicide if you had not come along with some solutions to at least help them somewhat.’

“I did not know what to say, except that it is so satisfying to be able to help people with what would otherwise be overwhelming financial distress. I had tears in my eyes as we shook hands and I left.

“Just thought you might be heartened by this story, I sure as heck am!”

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2/9/2014, “LTCi & Gender-Distinct Pricing As products mature, so do opportunities [link],” by Henrik Larsen, Life & Health Advisor

Quote: "In conclusion, I strongly believe that the move to gender-distinct pricing is an overall benefit to not only the carriers from a risk spreading perspective, but also to distribution from the marketing perspective. Results from our early initiatives support this opinion. The change in pricing philosophy has not disrupted demand; it has created opportunities. The fact that women are the ones planning for long-term care as they face the largest risk has been validated. We will capture more sales to men. And lastly, women in the workplace will be even greater allies than before."

LTC Comment: Congratulations to author Henrik Larsen of Center Bronze corporate member Advanced Resources Marketing for this thoughtful article.

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2/6/2014, “Unum says LTCI reserve release possible,” by Allison Bell, LifeHealthPRO

Quote: "Someday, the closed block of long-term care insurance (LTCI) at Unum Group Corp. could free up a lot of cash for general corporate purposes. . . . John McGarry, the head of individual disability and LTCI closed-block operations, said the company would be cautious about releasing reserves but might be in a position to do so in three to five years. McGarry said one challenge is that the average age of the insureds in Unum's large block of group LTCI business is still under 50. 'This is going to be around for a long time,' McGarry said."

LTC Comment: That’s a good example of a difference between government and private insurance. Medicare and Social Security didn’t wait to release their reserves. Everything in their “trust funds” has been spent and replaced with IOUs.

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2/6/2014, “CalPERS reopens long-term care insurance to new applicants,” by Dale Kasler, Sacramento Bee

Quote: "CalPERS' troubled long-term care insurance program has reopened to new applicants, ending a five-year hiatus marked by heavy financial losses and the announcement of a significant rate increase. . . .   Following years of hefty losses, the California Public Employees' Retirement System closed the program to new applicants in 2008. In 2012, the fund imposed an 85 percent rate increase for most of its existing policyholders, taking effect in 2015."

LTC Comment: More proof that putting government in charge of insurance is a very bad idea.

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2/6/2014, “Study: Small biz health costs have doubled under Obama,” by Tim Devaney, The Hill

Quote: "Healthcare costs for small businesses have doubled under President Obama, according to a new study. The report from the National Small Business Association (NSBA) surveyed 780 small business owners and found that healthcare cost increases are preventing many companies from growing."

LTC Comment: No wonder we’re experiencing a jobless non-recovery.

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2/6/2014, “MetLife Study Finds Lost Income from Major Accidents and Critical Illness Averaged $26,900 and $50,600 Respectively [link],” press release, Wall Street Journal

Quote: "MetLife, a leading provider of employee benefits, today announced the release of new research exploring the growing need and popularity of supplemental health solutions. Findings are highlighted in MetLife's white paper, Accident and Critical Illness Insurance Are Surprisingly Good for Business!, which examines the financial risks associated with accidents and critical illnesses and how employers can effectively leverage voluntary insurance solutions to not only provide added financial protection to employees, but to address their own business challenges. The paper can be downloaded at metlife.com/cwb."

LTC Comment: Good news for CI.

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2/5/2014, “Subsidy Eligibility, Demographics Fuel Hot Debates,” by Bruce Shutan, Health Insurance Exchange

Quote: "HHS noted that nearly 80% of the roughly 2.2 million Americans who signed up for a public exchange plan by the end of 2013 were eligible for federal subsidies. However, reports published in December by The Atlantic Monthly and Kaiser Health News projected that just 40% of people were thought to be eligible for HIX subsidies, which the former publication later revised upward to 60% in an article postscript. The HHS report was more in keeping with Congressional Budget Office projections of around 90%."

LTC Comment: Just what we need—more people dependent on government subsidies.

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2/5/2014, “Emerging Trends: A Working Retirement,” Life & Health Advisor

Quote: "Working beyond the traditional retirement age is having a positive effect in the British workplace as older people stay on in work because of high living costs and uncertainty about the future, a survey commissioned by Nationwide Building Society shows."

LTC Comment: The same trends are present in the USA and bode well for private financial planning and insurance products. Working longer in retirement is a sign of greater personal responsibility and lesser confidence in financially vulnerable public programs.

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2/5/2014, “Some Illinois Medicaid patients' assets at risk,” Chicago Tribune

Quote: "More than 200,000 low-income Illinoisans have applied for new coverage under Medicaid, the state-federal health insurance that was expanded in Illinois and several other states as part of the Affordable Care Act. But for certain members of that group, the new coverage could come with strings attached. A little-known wrinkle in the federal health insurance expansion could put at risk the house and other assets of those ages 55 to 64 should they require substantial and expensive health care treatments. The issue arises because of a provision in the long-standing laws governing Medicaid that compel states to recoup certain medical costs after a person dies, either via liens placed on an individual's home or claims on their assets."

LTC Comment: Medicaid estate recovery is a mandatory and critical feature of the LTC safety net ensuring (when enforced) that affluent people pay back the welfare program for the cost of their care.

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2/5/2014, “The true state of the elderly,” by Robert J. Samuelson, Washington Post

Quote: "How well-off are the elderly? The answer is crucial to public debate about Social Security, Medicare and other programs to help older Americans. If most live on the edge, then cuts are hard to justify. On the other hand, if many elderly are financially comfortable, then their government benefits and taxes should be open to change - just like other Americans'.

"It's routinely said that the elderly's median household income - the income of the household exactly in the middle - is lower than that of the non-elderly population. That's true. In 2012, it was $33,848 compared with $57,353 for the under-65 population. We're then supposed to imagine that the median income accurately reflects the lot of most elderly. That's not true."

LTC Comment: You’re well-advised to click through to this article and find out why and how the elderly are better off than commonly reported.

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2/5/2014, “CBO: Affordable Care Act will reduce full-time workforce by more than 2 million in the next decade [link],” by Tim Mullaney, McKnight's LTC News

Quote: “More than 7.5% of the nursing home workforce is vulnerable to having hours reduced as a result of the health law's ‘employer mandate,’ Stanford University's Lanhee J. Chen, Ph.D., told the House Ways & Means Committee on Jan 28. The mandate calls for employers with at least 50 full-time workers to provide health insurance that meets certain requirements, or face a penalty. The ACA defines full-time work as 30 hours or more a week, and some employers threatened to cut workers' hours below that threshold to avoid the mandate."

LTC Comment: Nursing home care deficiencies are directly related to inadequate staffing and the ACA will make the problem even worse.

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2/4/2014, “Less than half of doctors in nation's largest cities are accepting Medicaid now: study [link],” by Sarah Hurtubise, The Daily Caller

Quote: “Health-care consulting firm Merritt Hawkins conducted a survey of Medicaid acceptance rates which found that just 45.7 percent of physicians are now accepting Medicaid patients in the U.S.’s largest 15 cities. The federal welfare program cuts costs by reimbursing physicians at extremely low rates, preventing many doctors from seeing patients with Medicaid coverage.”

LTC Comment: Will Medicaid LTC facilities be next?

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2/4/2014, “Genworth's Profit Rises 24%, Insurer Cuts Expenses, Posts Higher Net Investment Gains [link],” by John Kell, Wall Street Journal

Quote: "Genworth Financial Inc.'s fourth-quarter profit rose 24% as the life and mortgage insurer cut expenses and reported higher net investment gains.

"Genworth's long-term-care insurance's operating profit grew to $42 million from $7 million last year. Long-term-care insurers rely heavily on investment income to help pay claims decades into the future."

LTC Comment: With premiums up and able to go higher, imagine how profitable LTCI can be once interest rates rise.

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2/4/2014, “Tips on caring for your aging parents,” by Julie Landry Laviolette, Miami Herald

Quote: "Financial advisors say the best way to manage a potential blow to your budget if you take on the financial care of a parent is to anticipate and plan for it. A little preparation can go a long way, said Frank Armstrong, a certified financial planner and founder of Investor Solutions in Coconut Grove. 'There are all kinds of resources available, but they come at a cost, and if your parents didn't save enough, it's going to come out of your pocket,’ he said. ‘The average family has only 'x' number of dollars, and if you don't plan in advance, it may mean your kid can't go to the college you want them to or you may impact your own ability to retire.'"

"You may be dealing with your own retirement, kids who want to go to college and your parents' problems, and there are only so many dollars to go around. It's a crap shoot, Armstrong said. 'Some of these things can be insured against - like long-term care - it's expensive, but the odds that one of your parents is going to need long-term care are quite high,' Armstrong said. 'So you can share the risk through insurance policies or you can bear the risk, and take the chance that you're going to get wiped out.'"

LTC Comment: Unfortunately, there’s another option that is available even after the LTC crisis occurs. Medicaid planners offer protection of the inheritance and free care (such as it is) for the parents. All it costs in attorney’s fees is the equivalent of one month in a nursing home at the private-pay rate.

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2/4/2014, “Long Term Care Insurance Industry Paid $7.5 Billion in Claim Benefits [link],” by Jesse Slome, AALTCI

Quote: "Long term care insurance companies paid nearly $7.5 billion in claim benefits to 273,000 individuals in 2013 according to a just-released report.

"'Total benefit payments increased by 13 percent and the number of long term care insurance policyholders on claim grew 3.4 percent,' explains Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI), the national trade group. Insurers paid $6.6 billion to some 264,000 policyholders in 2012."

LTC Comment: Progress but, alas, still a drop in the bucket of total LTC expenditures of $229 billion.

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2/3/2014, “Nation's nursing homes undergoing culture change,” by Stacey Burling, Philadelphia Inquirer

Quote: "Long places where many older people dreaded to go, nursing homes originally followed a medical model. They resembled hospital units with long, sterile-looking corridors. Regimented schedules were designed more for staff efficiency than patient happiness. A newer approach emphasizes that skilled nursing centers are often a last home before death. They should feel more like homes. That means more choices for residents, better food, individualized care, smaller units called neighborhoods or households, stronger relationships with staff, flexible schedules, even pets. WillowBrooke now lets residents help choose new staff and pick paint colors. This model of reform, known broadly as 'culture change,' has been building for more than 25 years. It remains rare, in part because of tight funding, old buildings, a lack of incentives, and resistant staff, but it is gaining."

LTC Comment: You can thank nursing home reform pioneer Dr. Bill Thomas for these promising changes.

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2/3/2014, “Who Will Pay For Mom's Or Dad's Nursing Home Bill? Filial Support Laws and Long-Term Care [link],” Northwestern Mutual

Quote: "If your parents live in one of 29 states or Puerto Rico that has filial responsibility laws on the books, you could potentially be held legally responsible for their care under certain circumstances, such as when your parents are ailing and without sufficient financial resources to take care of themselves. Until recently, these statutes have been largely ignored. However, several recent court decisions indicate that there might be renewed interest in enforcing them.

"Now, with long-term care costs on the rise and funding sources under pressure, nursing homes and other health care providers may have increasing incentive to seek to use the courts to compel children to either help a parent financially or be at risk for covering the cost of his or her care.

"No one knows whether these recent court cases will encourage other states to enforce their filial support laws with greater vigor, but this is a development worth watching. However, as more of the Baby Boomer generation reaches their golden years, and as many nursing homes and local governments are faced with providing care to a growing number of indigent elderly patients, there's a possibility that other states will look more closely at their filial support statutes in an attempt to find another way to fund mom's or dad's nursing home bill."

LTC Comment: Idaho tried in 1984 (and I helped as their HCFA Medicaid state rep) to enforce relative responsibility but the effort succumbed to political opposition. It’s more likely states will strengthen estate recovery than they will enforce filial support laws.

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2/3/2014, “Pew report: US expectations for elder care are at odds with those in similar nations [link],” by Tim Mullaney, McKnight's LTC News

Quote: "People in the United States are much more likely to say that seniors should be responsible for their own care, compared with people living in similar economies around the world, according to a recently released study from the Pew Research Center.

"Only 24% of Americans said the government should bear primary responsibility for the elderly, which tied Indonesia as the second-lowest percentage. Pakistan ranked lowest, with 16% saying the government should bear primary responsibility, and 77% saying families should do so."

LTC Comment: Maybe there’s still hope.

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1/31/2014, “Retiring on Your Own Terms,” by Jason Zweig, Wall Street Journal

Quote: "To be assured of having enough money to fund a comfortable retirement, you should save a total of 22 times the annual income you want to earn when you retire. That is higher than many previous estimates, but it offers near-certainty of hitting your target."

LTC Comment: Best to include in that savings goal enough income to cover your LTCI premiums so the total principal is protected.

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1/31/2014, “The Policy Lapsed, but No One Knew,” by Paula Span, New York Times

Quote: "In the meantime, cases like this demonstrate anew how vigilant families need to be. If your older relative has a long-term care policy, photocopy the page listing the company, policy number and claims contact information. Keep the insurance company updated on new addresses, yours (if you are the third-party designee) and your relative's. It wouldn't hurt, if the policyholder is becoming forgetful, to check bank statements or call the company to be sure premiums are paid."

LTC Comment: Reasonable precautions.

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1/31/2014, “More elderly get care from families than paid workers,” by Sharon Jayson, USA Today

Quote: "More than 8 million people (mostly women over 65) used services of a long-term care provider in 2012, according to the first-ever compilation of federal data on the subject, by the National Center for Health Statistics.
"Services include adult day centers, home health agencies, hospices, nursing homes and assisted-living-type residential care communities.
"But 'by far, the lion's share of people getting care are getting it from family caregivers rather than from paid care workers,' says John Schall, CEO of the Caregiver Action Network in Washington, D.C. 'There's no question that family caregiving is really the backbone of the long-term care support services in this country.'"

LTC Comment: Publicly financed LTC would crowd out more family caregiving than it does already if it weren’t for its serious problems of access, quality, low reimbursement, discrimination and institutional bias.

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1/30/2014, “Maryland considers LTCI tax credit bill,” by Allison Bell, LifeHealthPRO

Quote: "Today, Maryland lets a taxpayer have a credit for up $500 in LTCI premiums for the first year the coverage is in effect. If S.B. 478 takes effect as written, it will cut the value of the state's LTCI tax credit to $250 in the first year, then increase the value to $500 in later years."

LTC Comment: Penny wise, pound foolish.

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1/30/2014, “Americans shrug off worries over aging population,” by Mary Bowerman, USA Today

Quote: "Concern was highest in regions such as East Asia and parts of Europe, where the percentage of older people will be greater than other countries by 2050. Almost 90% of Japanese surveyed worried about the aging population, and half of those in Germany and Spain are worried, the survey found. On the opposite end, only 26% think the aging population is a major problem for the USA."

LTC Comment: What, me worry? Dangerous complacency about aging demographics.

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1/8/2014,” State Budget Solutions' Fourth Annual State Debt Report,” by Cory Eucalitto, State Budget Solutions

Quote: "State Budget Solutions' (SBS) fourth annual State Debt Study reveals that state governments face a combined $5.1 trillion in debt. This total equals roughly $16,178 per capita, or 33 percent of annual gross state product. Another telling way to view the problem - state debt is equal to 469% of all fiscal year state general and other fund expenditures."

LTC Comment: What happened to the idea that states can't run deficits because their constitutions don't allow it? How do you accumulate huge debt without running deficits?

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Updated, Friday, February 7, 2014, 11:11 AM (Pacific)

Alpine, Texas—

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LTC BULLET: MEDICAID PLANNING—THE REST OF THE STORY

LTC Comment: We made progress combatting Medicaid estate planning over the years, but artificial self-impoverishment to obtain free long-term care is back with a vengeance. Details follow.

LTC BULLET: MEDICAID PLANNING—THE REST OF THE STORY

LTC Comment: You may recall those catchy radio commentaries by the late Paul Harvey in which he told an anecdote, paused for a commercial, and then returned with the “rest of the story,” a surprising, amusing or tragic twist on the lead. Here’s the rest of the story about Medicaid planning.

Medicaid planning is the practice of divesting or sheltering assets to create a condition of supposed poverty sufficient to fall within the welfare program’s ostensibly stringent income and asset eligibility limits.

Medicaid estate planning includes many techniques to achieve that goal. One can give away any amount of assets, or transfer them to an irrevocable trust, five years before applying for Medicaid. Or use countable assets to buy exempt things such as an expensive house, business or car. Or claim compensation for providing care to a parent, care that most people give for free out of love and personal responsibility. Or convert wealth Congress meant to be spent down privately for care into uncountable income by means of an annuity.

Over the years, we’ve tried to discourage this abuse of the welfare safety net by affluent shirkers. I wrote about the problem in a 1988 report for the DHHS Inspector General you can still read on the IG’s website here. I proposed a simple solution: let people keep most of their wealth and receive LTC from Medicaid if they want it, but make certain they pay it back out of their estates so their heirs do not “reap the windfall of Medicaid subsidies.” (pps. 47-48)

Most of my recommendations in that long-ago report became law in the Omnibus Budget Reconciliation Act of 1993. OBRA ’93 made Medicaid’s asset transfer restrictions longer and stronger and required states to recover from recipients’ estates. The idea was to send good news and bad news to people with wealth who wanted to reply on public assistance. They could access the safety net, but they’d have to pay it back.

Congressional intent in OBRA ’93 was to encourage people to plan responsibly for long-term care so they would not end up dependent on Medicaid with their legacies encumbered to reimburse the government. It didn’t turn out that way. Most states did not implement the new rules aggressively; the federal government did not enforce the stronger eligibility standards and mandatory estate recovery strongly; the media didn’t report the new liability consumers were supposed to face; and so the public went on ignoring LTC risk until they needed care leaving them dependent on Medicaid and with easy access to it.

Later attempts to discourage Medicaid planning also failed. HIPAA ’96 made transferring assets to qualify for LTC assistance illegal. But the “throw Granny in jail law” was repealed a year later by the BBA ’97 “throw Granny’s lawyer in jail” which proved unenforceable. Finally the Deficit Reduction Act of 2005 (DRA ‘05) made some more progress by extending the asset transfer look-back period to five years, capping the home equity exemption for the first time, and attempting to discourage the use of Medicaid friendly annuities.

Have the decades-long efforts by Congress to preserve Medicaid as a safety net for the poor finally worked? Read the following and judge for yourselves.

In “LTC Bullet: States Decry Medicaid LTC Loopholes,” we highlighted responses from states’ replies to a Congressional inquiry about the problem of Medicaid planning. One state’s reply was especially informative and we provide it here in full along with the question to which it responded.

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4. Do you consider Medicaid estate planning to be a significant problem that takes resources from the truly needy in your state? Please explain and provide examples.

ND: Assuming that by "Medicaid estate planning" you mean the sheltering of assets to allow people with greater resources to become eligible to receive Medicaid, then yes. We have seen some extreme examples in North Dakota.

The Medicaid Act is very difficult to understand, making it easy to misconstrue its intent. The courts have recognized that the Act's "Byzantine construction makes it almost unintelligible to the uninitiated," "an aggravated assault on the English language," and "resistant to attempts to understand it." This has led to courts approving techniques employed to circumvent the intent of the Medicaid Act and expand eligibility far beyond those it was intended to serve.

Under current statutes and case law, married people are able to shelter nearly unlimited wealth. Recent court decisions are allowing for a more widespread use of asset sheltering strategies within the Medicaid system, with agents marketing products like annuities on the internet and attorneys advising clients on how to circumvent Medicaid rules and exploit them to their benefit. (Interestingly, single people are not able to shelter their assets in the same way.)

A striking example of aggressive asset sheltering strategies is seen in Geston v. Olson No. 1:11-cv-044,2012 WL 1409344 (D.N.D.2012) where one spouse had dementia and, it was apparent, would eventually need nursing home care. Shortly before going into the nursing home, the couple had liquid assets worth about $700,000, not including the home or car. They were over the Medicaid limit by more than half a million dollars. The community spouse, on advice of an attorney, sold the home the couple had lived in for years and bought one worth twice as much and sold the car they had and bought a brand new one worth three times as much. The car is completely exempt under Medicaid rules. The house also is completely exempt under Medicaid rules, as long as the community spouse lives in the house.

After successfully sheltering those assets, the community spouse took $400,000 cash, money that was available to be spent on the institutionalized spouse's care and instead, bought an annuity from their attorney, (an "investment" which essentially returns the premium with a very small return) in an effort to tie up the money to make the couple appear to have fewer resources. The annuity is irrevocable, non-assignable, and non-transferable.

Under a very well-crafted state statute that places limits on the amounts that can be put into these types of annuities, and a long line of state case decisions that allows the Department to count the annuity as an asset, eligibility was denied. The North Dakota Department of Human Services was sued in federal court under a civil rights action for denying Medicaid to this wealthy institutionalized spouse. Based on its interpretation of federal law and following existing federal case law, the Court ruled the annuity could not be counted as an asset. Thus, none of the actions could be considered a disqualifying transfer, none of the 'new' resources could be considered available, and none of the annuity income could be considered available to meet the long-term care needs.

The community spouse has successfully retained nearly all of the wealth the couple had before the institutionalized spouse went into the nursing home and the nursing home has not received one penny. The bill is nearly $100,000 and the couple wants Medicaid to cover it. The couple receives nearly $8,000 a month from pensions, social security, the annuity payments, and oil lease money. This couple is not needy and they are simply not who the Medicaid program was or is intended to cover. While North Dakota believes that reading the statutes as a whole and applying generally accepted rules of statutory construction would not allow these provisions to be used to shelter assets, courts are consistently reading certain sections of the Act to the exclusion of relevant others to allow applicants with extensive assets to become eligible for Medicaid by transferring assets from the institutionalized spouse to the community spouse.

In another case, a couple had nearly $600,000 available that could have been used for nursing home costs. The 83-year old community spouse had beginning signs of dementia, and "invested" $340,000 (over 64 percent of the couple's net worth) into an irrevocable, nontransferable, non-assignable annuity on the advice of his attorney in an attempt to qualify the institutionalized spouse for Medicaid.

In another case, the day the institutionalized spouse entered the nursing home, the couple had more than $528,000. At that time, the couple represented to the nursing home that they intended to be "self-paying," and in fact, paid for two months of care. After learning of ways to exploit Medicaid laws, the community spouse purchased not one, but two annuities from their attorney after realizing the first one did not maximize the assets that could be sheltered. The community spouse bought a new home, a new car, an annuity for $220,000 and the next day, a subsequent one for $20,000, and then applied for Medicaid to pay the institutionalized spouse's nursing home costs.

In yet another case, a couple had nearly $400,000 the day one spouse entered the nursing home. An annuity for $125,000 was purchased to try to become eligible for Medicaid.

These scenarios are being duplicated around the state, with an increase in the sales of these types of annuities, and around the country in other states. Medicaid is not intended for people who artificially impoverish themselves by sheltering their wealth instead of using it to pay for nursing home care, but these are the people who are fighting for it and winning - at the expense of the taxpayers and those who legitimately need the assistance of the Medicaid program.

The North Dakota Department of Human Services argues that annuities like these should be treated as an asset available to pay the long-term care costs incurred by either spouse. It is simply a contractual right to receive income, an asset under state law. The annuity is not income, but a different form of asset; the cash is converted to another asset, the contractual right to receive income. The annuity pays the annuitants' own money back to them over time, similar to a certificate of deposit. Further, under state law, the contractual rights to receive money payments are presumed saleable. Despite the "irrevocable, non-transferable, non assignable" language of the annuity contract, a factors market exists where these annuities can be sold. If the annuitant makes a good faith effort to sell and finds no buyer willing to pay at least 75 percent of the fair market value of the payment stream of the annuity, an annuitant is able to defeat the presumption that the annuity is saleable. In that case, the annuity is not saleable and is not counted as an asset. This is how annuities were treated under North Dakota state law, until the Geston decision.

As the law currently stands, federal courts have misinterpreted federal law as prohibiting states from counting annuities as assets. The problem is the courts are treating the annuity as community spouse income (which cannot be deemed available under Medicaid law) instead of treating the annuities as assets-which are available and countable under Medicaid law.

Something should be done quickly before these practices become commonplace. Changing the federal law to clarify that these annuities are assets or to allow states to determine how to treat these annuities as assets would be a significant first step in helping states determine the appropriate limits of eligibility for the Medicaid program. This would help ensure that Medicaid funds would be used by states for those who are the intended recipients rather than being diverted to subsidize those who can and should pay for their own care.

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LTC Comment: North Dakota appealed the court decision that allowed the use of annuities to shelter hundreds of thousands of dollars immediately before accessing Medicaid LTC benefits. Eight more states supported North Dakota’s appeal with amicus briefs. But the Eighth Circuit Court of Appeals rejected the eloquently argued and documented appeal on September 10, 2013. Its decision leaves North Dakota and other states helpless to prevent such egregious abuses of the Medicaid safety net.

That’s the rest of the story . . . but not the end of the story.

It’s clear the Centers for Medicare and Medicaid Services (CMS) will not act to close the annuity loophole. The problem has been brought to CMS’s attention many times. Nor will the courts act, believing they are constrained by the impermeable federal Medicaid statute. The solution will have to come from Congress, but despite efforts in the House of Representatives, the problem remains and grows as more and more states report the abuse of Medicaid annuities.

What’s needed is to make the public aware of this profligate misuse of their hard-earned tax dollars. We propose to (1) gather examples of egregious Medicaid annuities from state Medicaid programs around the country, (2) write articles and op-eds exposing these abuses, and (3) engage the support of interest groups representing the needy and others who would benefit from discouraging the abuse of Medicaid. By shining the light of public scrutiny on this problem, Congress can be persuaded to fix it. That’s what happened with OBRA ’93 and DRA ’05. It can happen again.

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Updated, Friday, January 31, 2014, 11:23 AM (Pacific)

On Amtrak near Los Angeles—

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CONFERENCE NEWS AND LTC NEWS AND COMMENT

LTC Comment: ‘Tis the season for conferences. I just returned from presenting at the AICPA Personal Financial Planning Conference in Las Vegas. CPAs are a rich potential source of leads. Center Regional Representative Romeo Raabe informs us he’s been a guest speaker for an investment company helping their financial advisors fulfill continuing education requirements. The Wisconsin CPA Association has asked him to present a three hour class on LTC financing. You go, Romeo!

The Intercompany Long-Term Care Insurance Conference coming up soon (March 16-19) in Orlando, Florida reports that all but ten booth locations in their exhibit hall are sold out. “The cost for a 10x10 Exhibit Booth is only $1,250 for Non-Profit Associations and allows you to send up to four attendees at a discounted price of only $295 each ($700 off of the individual registration price of $995).” If you have questions, contact Jim Glickman at 818-867-2223 or go to www.ILTCIconf.org.

Last but not least, Jesse Slome urges everyone to spread the word about the AALTCI’s forthcoming “Summit” and the fact that portions of it will be streamed for free. To be held May 18 to 20, 2014 in Kansas City, this premier event for LTCI producers is a “must see” especially now that you can watch it online from the comfort of your office or home. Check out all the details here: 2014 National Long-Term Care Solutions SALES SUMMIT.

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1/29/2014, “Health Care and Retirement: Embracing the new essentials of retirement planning [link],” by Beth Allan and Chris Leone, Life & Health Advisor

Quote: "While planning for the final two years of life may seem excessive to some, there is growing concern that a lifetime of saving and hard work may go to LTC facilities, rather than children or other family members. For many, this will result in the liquidation of assets to pay for a decent facility, a minimal inheritance for surviving family members, and living with the very real possibility that earnings garnered over a lifetime of labor might be pillaged in the final two years of life."

LTC Comment: Access to Medicaid-financed LTC without significant loss of assets has been the rule since 1965, but that reality is likely to change. A fiscal vise is closing on Medicaid and Medicare making the conclusion above truer now and in the future than it has ever been.

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1/28/2014, “Falls Top Car Crashes as Leading Cause of U.S. Spinal Injuries
Rates rising fastest among seniors, study finds [link],” HealthDay

Quote: "Spinal cord injury rates in the United States are rising, and the leading cause now appears to be falls suffered by seniors rather than traffic crashes, according to a new study. The findings suggest that programs to prevent falls in elderly people could significantly reduce the number of spinal injuries in the nation, the researchers said."

LTC Comment: Get used to more news like this as age-related injuries and illness spike with the aging of the baby boomers.

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1/28/2014, “New Website for LTC Agents Launched - LTCUnderwriter.COM; Recently launched website LTCUnderwriter.com offers free underwriting tools and features to assist LTC insurance professionals in various underwriting processes [link],” Debra Tancredi, LTC Global

Quote: "By combining multiple functionalities that reflect common, yet tedious, tasks associated with underwriting, LTCUnderwriter can help agents become more efficient in manual checks, and allow them to focus better on giving top quality service to their clients."

LTC Comment: Simplifying tedious tasks sounds like a good thing.

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1/28/2014, “2014 Long Term Care Insurance Price Index Published,” AALTCI

Quote: "Long term care insurance prices drop 14 percent for single men, rise three percent for couples reports the American Association for Long Term Care Insurance."

LTC Comment: A different spin on the usual reports that LTCI premiums have skyrocketed.

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1/28/2014, “Political Cartoon: 'Think Or Swim?,” by Lisa Benson, Kaiser Health News

Quote: Click through to see the cartoon: http://www.kaiserhealthnews.org/Cartoons/2014/January/Think-Or-Swim.aspx.

LTC Comment: Community rating always means low risk people subsidize high risk people whether the low risk people want to or not and whether the high risk people are deserving of special treatment or not.

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1/28/2014, “Surprise: Millennials as Financially Conservative as Grandma & Grandpa [link],” Life & Health Advisor

Quote: "The majority of Millennials said saving was the best financial advice they had received, while other generations said investing was the best. This Depression Era mentality combined with advice they get from family is turning Millennials into a generation of savers who are skeptical about long-term investing and market chasing. Only 12% of Millennials said they would invest found money in the market, and only 28% see long-term investing as a pathway to success and are focused on meeting their goals instead of a specific market return."

LTC Comment: Conservative savers are likely to protect their principal with insurance.

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1/27/2014, “Part-time work is the fastest-growing source of retirement income [link],” by Emily Brandon, US News and World Report

Quote: "While 47 percent of retirees receive interest generated by their personal savings, half reported $255 or less in annual interest payments."

LTC Comment: You can thank the Federal Reserve’s having pushed interest rates to near zero for that meager return on savings.

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1/27/2014, “The Older Mind May Just Be a Fuller Mind,” by Benedict Carey, New York Times

Quote: "It goes without saying that many people remain disarmingly razor-witted well into their 90s; yet doubts about the average extent of the decline are rooted not in individual differences but in study methodology. Many studies comparing older and younger people, for instance, did not take into account the effects of pre-symptomatic Alzheimer's disease, said Laura Carstensen, a psychologist at Stanford University."

LTC Comment: Hopeful findings for the aging brain.

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1/27/2014, “As America ages, senior care options flourish,” by Matthew Perrone, FiftyPlusAdvocate

Quote: "'The people who can really afford long-term care insurance often have enough fixed income that they don't really need it,' said Bradley Frigon, vice president of the National Academy of Elder Law Attorneys."

LTC Comment: Unsound advice from the people who bring you artificial impoverishment via Medicaid planning.

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1/25/2014, “Sixteen States Still Offer Unisex Long Term Care Insurance Rates [link],” by Jesse Slome, Kansas City Infozine

Quote: "California, New York and Florida are three of the nation's larger states where men and women still can pay equal amounts for long term care insurance according to an analysis by the American Association for Long Term Care Insurance."

LTC Comment: Isn’t failure to price risk a form of sex discrimination?

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1/23/2014, “Baby Boomers to Push U.S. Politics in the Years Ahead; Baby boomers' politics vary significantly by age [link],” by Frank Newport, Jeffrey M. Jones, and Lydia Saad, Gallup Politics

Quote: "Predicting the politics of the highly important baby boom generation over the next decade as the group moves into its senior years is highly speculative. But one thing is certain. Baby boomers, holding the distinction of the largest generation in the U.S. population, will continue to exert disproportionate influence over the U.S. political process for at least the next 25 years."

LTC Comment: It’s not so difficult to predict that boomers will become more conservative as they grow older just as previous age cohorts have done.

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1/23/2014, “For Seniors With Dementia, the Choice to Live Alone Can Be a Risky One; Study identifies safety issues, lack of social activities and health care [link],” by Lisa Esposito, HealthDay

Quote: "For the millions of Americans with dementia, staying at home for as long as possible is a common goal. But independent living can pose certain risks for these adults -- and prove challenging for family caregivers. A new study of more than 250 Baltimore residents with dementia found unmet needs, especially concerning safety, health and meaningful activities, in almost all cases."

LTC Comment: We're seeing more and more reports like this one suggesting that home care is not the panacea often suggested. Institutional care of various kinds may rebound especially for the most frail and infirm seniors. Such a trend runs directly contrary, however, to broad national Medicaid policy pushing high-risk "dual eligibles" into home care managed by giant MCOs (managed care organizations).

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1/23/2014, “5,000 Expected For Long Term Care Insurance Virtual Conference [link],” American Association for Long-Term Care Insurance

Quote: "Some 5,000 insurance agents and financial advisors who market traditional long term care insurance as well as hybrid long term care products are expected to participate in the national conference organized by the American Association for Long Term Care Insurance."

LTC Comment: Congratulations to AALTCI for convening a virtual crowd.

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1/22/2014, “Intercompany Long Term Care Insurance Conference Welcomes 800+ LTCI Professionals to Orlando for 14th Annual Conference, March 16-19; Chris Gardner, Portrayed by Will Smith in the movie ‘The Pursuit of Happyness,’ To Provide Keynote Address [link],” by The Intercompany Long Term Care Insurance Conference Association, Inc., PR Newswire

Quote: “The Intercompany Long Term Care Insurance Conference Association, Inc. (ILTCI) today announced its 14th annual conference (http://www.iltciconf.org), March 16-19 at the Rosen Centre in Orlando. 800+ long-term care insurance (LTCi) specialists are expected to attend, to learn more about how to better support retirement planning for baby boomers and seniors. Co-sponsored by the LTCi Section of the Society of Actuaries, the conference will include a keynote by Chris Gardner, whose amazing life story was published as the #1 bestselling autobiography, The Pursuit of Happyness. Will Smith starred in the movie version, earning Academy Award, Golden Globe, and Screen Actors Guild nominations for his performance.”

LTC Comment: Be there if you can and do say hello to Damon and Steve.

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1/22/2014, “Managing long-term care insurance for a parent? Try these tips to make sure claims are covered [link],” by Kimberly Lankford, Kiplinger Personal Finance

Quote: “A long-term-care insurance policy can help cover the costs of care in a nursing home, an assisted-living facility, or at home. If you're helping out a parent, follow these steps, and you're more likely to get through the claims process smoothly . . ..”

LTC Comment: Helping a parent through the LTC or LTCI process is often the first encounter of the younger generation with the challenges of long-term care.

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1/22/2014, “Most Boomers Mistakenly Think Affordable Care Act Covers Long-Term Care Costs [link],” Life & Health Advisor

Quote: “According to the poll conducted by Harris Interactive of 801 Americans over 50 with at least $150,000 in household income, only 28 percent know that the Affordable Care Act does not cover LTC costs. Nearly half say they are worried about becoming a burden to their families, but 54 percent say they would rather die than live in a nursing home.”

LTC Comment: What you don’t know can hurt you.

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1/22/2014, “Issue Brief: How Are Seniors Spending Their Money?,” by Pamela Villarreal, National Center for Policy Analysis

Quote: “Today's seniors have a mixed bag of spending habits. Although discretionary and recreational purchases have increased, today's seniors are taking on debt in the form of mortgages and credit cards. Moreover, with abysmally low interest rates on savings and a tax policy that subsidizes consumption over saving, seniors do not have much incentive to save. Those who are early into retirement should rethink conventional wisdom about saving by considering a variety of investments besides just bonds. Also, they should avoid incurring debt through a home equity loan or any type or mortgage.”

LTC Comment: LTC insurance is a great option to preserve capital in such an environment.

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1/21/2014, “New York Life Introduces a New Way to Address the Financial Demands of Chronic Illness [link],” Business Wire

Quote: “The Chronic Care Rider is a flexible, low-cost addition to a whole life insurance policy with a premium that is guaranteed to stay level. If a policyholder does not need to use their benefits for chronic care, those funds remain intact as life insurance benefits for heirs or as cash value that can help supplement retirement income as their life insurance needs decrease. The Chronic Care Rider is also very easy to use once the insured is certified as permanently chronically ill. Policyholders are not required to submit receipts or a care plan for claim reimbursement, and policyholders can decide how their monthly claim payments are spent. The benefits may be used - for at-home care, a nursing home stay, or even to help supplement the needs of family members who are spending time providing care - no receipts or plan of care needed.”

LTC Comment: Options for LTC protection proliferate.

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1/20/2014, “High-tech upgrades may let aging boomers live independently in their own homes longer [link],” by Hayley Tsukayama, Washington Post

Quote: “Their medicine bottles will alert their doctor when they miss a dose. Pressure-sensing floor mats can sense when they have fallen or let caregivers know when a patient hasn't showered for a while. Honeywell is developing a sensor that customers can wear on their body that would detect whether they are moving in a manner that would indicate they have fallen. The aim of these upgrades is to allow an aging population to stay in their homes - and independent - longer.”

LTC Comment: Ain’t technology great . . . when it works?

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1/18/2014, “The Register's Editorial: Court delivers a lesson on Medicaid,” DesMoines Register

Quote: “Most Iowans are likely comfortable paying taxes used to provide health care to poor people - as long as we know they are actually poor.

“So there is something wrong when Medicaid pays hundreds of thousands of dollars for an Iowa couple's care and then after they die, the children sell the couple's assets and collect more than $900,000. But that is what happened with Arnold and Vesta Melby. . . .

“'The decision of the Iowa Supreme Court was unanimous supporting the state's position that these funds should be repaid to the taxpayers of Iowa,' said DHS spokeswoman Amy Lorentzen McCoy. . . .

“A strong estate recovery program is essential as more Iowans will be eligible for Medicaid under the health reform law. These government health care dollars should not be used to pay for the care of those who can afford to pay it themselves. And when that does happen, taxpayers should get their money back, even if the state has to fight the case all the way to the Iowa Supreme Court.”

LTC Comment: Once in a while, a court and a newspaper get it right.

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1/13/2014, “Iowa Supreme Court Reaffirms Extensive Reach of Medicaid Recovery in Granting Department's Claim against Irrevocable Trusts [link],” by Kristine A. Tidgren, Iowa State University Center for Agricultural Law and Taxation

Quote: "The Iowa Supreme Court has reaffirmed the extensive reach of the Iowa Medicaid recovery program, stressing the Medicaid program's 'broad purpose' of 'providing for care for those in need' and 'allowing for recovery by the state' to free 'more funds for the provision of future services.' The Court again noted that the Iowa legislature has intentionally defined 'estate' for purposes of the Medicaid recovery statute more broadly than required by federal law. . . . Clients should be counseled that a long-term care insurance policy, purchased during middle age from a reputable insurer, is usually going to be the best Medicaid planning tool available."

LTC Comment: Finally a state supreme court sends the message we've been sending for decades now.

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Updated, Monday, January 27, 2014, 1:30 PM (Pacific)

Seattle—

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LTC BULLET: A BRIEF HISTORY OF LONG-TERM CARE FINANCING

LTC Comment: How did America’s LTC service delivery and financing system become so dysfunctional? A brief history follows the ***news.***

*** CENTER PREZ Steve Moses is back from the AICPA (American Institute of Certified Public Accountants) Advanced Personal Financial Planning Conference at the Aria Resort and Casino in Las Vegas. There he presented a “Long-Term Care Intensive” which included two key sections of our “Long-Term Care Graduate Seminar”: “The Elephant, the Blind Men and Long-Term Care” and “The History of Long-Term Care” to a highly attentive and appreciative audience. ***

*** BULK MAIL MISHAP. Our bulk mail sending program was down for a few days. Hence we’re sending this Bullet today instead of last Friday. Your next LTC E-Alert will arrive on schedule next Monday. Thanks for your patience. ***

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LTC BULLET: A BRIEF HISTORY OF LONG-TERM CARE FINANCING

LTC Comment: Once a year we update the Center for Long-Term Care Reform’s “LTC Graduate Seminar.” Center members have access to this 44-page transcription in The Zone here. Reading it is a great way to review the big picture about long-term care financing. For access, you’ll need your user name and password. For a reminder or to join the Center and get access to everything we do including The Zone, contact Damon at 206-283-7036 or damon@centerltc.com.

Today for everyone, including non-members, we offer a special peek at one section of the LTC Graduate Seminar. What follows is a 15 page history of long-term care services and financing in the United States since the establishment of Medicaid and Medicare in 1965. We hope you find it interesting and helpful in understanding this complicated topic. There is much more in the LTC Graduate Seminar than this, however. If we pique your interest with the history section below, check out the rest of the document including these informative sections:

The Elephant, the Blind Men, and Long-Term Care
The Welfare Paradigm
The Entitlement Paradigm
Medicaid Eligibility for Long-Term Care
Medicaid Estate Planning
Key Money
What's Going to Happen Next?
How Social Security Props Up Medicaid LTC
How Medicare Props Up Medicaid LTC
The Welfarization of Medicaid, Medicare and Social Security
The Bottom Line

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History of LTC and Why it Matters for Financial Advisors and LTCI Producers

I want to change gears now and take another approach to the LTC issue. We have established so far that the elephant of long-term care is a very complicated animal. It's comprised of many competing interest groups, each and all of which have something to gain from continuation of the status quo.

We've established that the United States has a welfare-financed, nursing home based long-term care system in the wealthiest country in the world where nobody wants to go to a nursing home. And yet most people are asleep about the risk and cost of long-term care. Until we understand how this status quo came to be and why, we can hardly expect to identify the right corrective actions.

So I want to turn now to the history of long-term care service delivery and financing. How did we get into the mess we're in?

Something really important happened in 1965. Two new government programs were established. Do you know what they were?

Right, Medicare and Medicaid.

Medicare, of course, was designed to provide acute health care to the elderly. But Congress decided that something really needed to be done for low income people as well. So they added Medicaid as kind of an afterthought to Medicare. Then, as an afterthought to that afterthought, Congress decided that something should also be done for aging Americans who need long-term care. So they added nursing home care to Medicaid for people over the age of 65.

In the beginning, there were no transfer of assets restrictions interfering with eligibility for Medicaid long-term care. There was no estate recovery mandate requiring people with sheltered wealth to pay back the cost of their care. If you were over the age of 65, it was easy to get the government to pay for nursing home care.

The public isn't stupid. They figured: "You mean, if we want to take care of Grandma at home, we'll have to pay for it 100 percent out of our own pockets? But if we put her in a nursing home, the government will not only pay for her care but send in surveyors to make sure she receives quality care? That's a no-brainer."

The nursing home industry isn't stupid, either. They said. "You mean the government is going to put a giant pot of money out in the middle of the country, somewhere around Kansas or Nebraska, and all we have to do is build nursing homes, offer the beds to people who want long-term care, and the government will pay? Terrific. Bring it on."

Medicaid Nursing Home Costs Explode

P.J. O'Rourke, the political satirist, likes to say "If you think health care is expensive now, just wait until it's free."

For all intents and purposes, the government made nursing home care free in 1965.

That had the effect of crowding out a market for privately financed home and community-based care. Why pay out of pocket for home care services, adult day care, respite care or assisted living, when the government provides nursing home care?

For the same reason, a market for long-term care insurance to pay for home care and nursing home care was slow to develop and remains stunted to this day.

By the mid-1970s, I was working for the Health Resources Administration in Rockville, Maryland. That's part of the U.S. Public Health Service. I saw what happened next, up close and personal.

Predictably, the cost of Medicaid financed nursing home care exploded. The public filled new nursing home beds as fast as the nursing home industry could build them. "Roemer's Law" said: "A built bed is a filled bed."

[See http://en.wikipedia.org/wiki/Roemer's_law]

The government looked at the exploding cost of nursing home care and concluded that something had to be done. But instead of addressing the cause--that is, the fact that government had made nursing home care free or radically subsidized resulting in higher construction, utilization and expenditures--they attacked the symptom, the increasing costs.

The government figured "they can't charge us for a bed that doesn't exist." So, state governments began to require nursing homes to get permission before they build new facilities. Nursing home companies had to obtain a "certificate of need" or CON before building new skilled nursing facilities.

Now, this arrangement was fine with the nursing home industry. For anyone already in that business, the Certificate of Need only meant that they now had a government-enforced monopoly. They might not be able to build more nursing homes, but neither could their potential competition. Since the nursing homes' growth was restricted by this limit on supply, however, the industry simply started charging more for the beds they already had.

That was predictable. In any economic system, when supply goes down or is artificially restrained from going up, price tends to increase. You don't need a PhD in economics to figure that out, but the government didn't see the consequences coming.

The cost of Medicaid financed nursing home care continued to explode. Once again, the government knew it had to take action. And once again, it failed to address the cause--i.e., free government financed nursing home care--and went instead after the symptom--skyrocketing costs caused by increasing charges to Medicaid by the nursing home industry.

So the government told the nursing home industry they could no longer charge whatever they wanted to charge for nursing home care. Medicaid capped its reimbursement rates. This was the origin of the differential between the very low Medicaid reimbursement rates for long-term care and the relatively high private pay rates. Today, Medicaid pays only about two-thirds of the private-pay rate for nursing home care. Private payers have to pay half again as much as Medicaid reimburses for people in the same nursing home, sometimes in the same room as the private payers.

Quality Collapses

With supply AND price capped, what do you think happened to demand? Of course, demand went through the roof. In the mid-1980s, nursing homes were 95 percent occupied. At the same time, hospitals were only 55 percent to 60 percent full. If a nursing home was willing to accept Medicaid's low reimbursement rates, it could fill all of its beds . . . no matter what kind of care it offered. Consequently, quality of care collapsed in principally Medicaid-financed nursing homes.

Once again, Congress took note. Even though quality plummeted, costs continued to explode. True to form, however, government attacked the symptom (poor quality) instead of the cause (public financing). So Congress went to the nursing home industry and said, in paraphrase:

"This is America. We cannot tolerate poor quality of care in our nursing homes. You must improve the care. You must hire more nurse's aides; you must train them better; you must pay them more. Make sure you dot every I and cross every T according to stricter regulations. And if you don't, we will hit you with fines and other penalties."

That was OBRA '87, the Omnibus Budget Reconciliation Act of 1987. Thankfully, it worked, and quality of care in America's nursing homes is top notch today. [Audience snickers.] Well, not exactly. If anything, the problems are worse than ever now, 27 years later.

But when OBRA '87 passed, the nursing home industry wasn't displeased. They said, in essence, "We're not in this business just to make a lot of money. We want to provide loving and compassionate care. We love the idea that you want us to hire more people, train them better and provide higher-quality care. Only one question though, how much more are you going to reimburse us under Medicaid to make this possible?"

And the government responded "Money? We don't have any of that. We just demand that you do all these new things."

Nursing Homes Sue Medicaid

Well, now the nursing home industry was caught between the rock of inadequate reimbursement and the hard place of mandatory quality. If they tried to attract more private payers at the higher private-pay rate, they were accused of discriminating against Medicaid recipients. If they tried to cut costs, they were accused of providing poor care. It was a hopeless situation. So the nursing home industry turned to the courts.

Under the "Boren amendment," which was part of OBRA '81, the nursing home trade associations in many states began suing their state Medicaid programs for higher reimbursement under Medicaid. The Boren amendment said in essence: "State Medicaid nursing home programs must provide sufficient reimbursement for an effective facility to provide decent care." That's a paraphrase, but pretty close.

[For the precise language, see Joshua M. Wiener and David G. Stevenson, "Repeal of the 'Boren Amendment': Implications for Quality of Care in Nursing Homes," at http://www.urban.org/publications/308020.html.]

Who do you think won most of those lawsuits? There's an old saying that "you can't fight City Hall," so you might think the State Medicaid programs prevailed. But the truth is, the state nursing home associations won most of those Boren suits. They forced Medicaid to increase reimbursements for nursing home care.

So, what do you think the government did next? You guessed it. Congress repealed the Boren Amendment in the Balanced Budget Act of 1997. Since then, there has been no floor under Medicaid reimbursement for nursing home care. Nevertheless, long-term care costs continue to increase and quality remains questionable.

Medicaid LTC Eligibility Bracket Creep

While all this was going on, another situation developed. Most people who needed long-term care were receiving it in nursing homes because an alternative market for home and community-based care had been crowded out by free nursing home care. So people were finding themselves in nursing homes, often in semiprivate rooms, paying privately, but sharing a room with a person on Medicaid.

The people paying privately, or their representatives, noticed that the person on Medicaid may have had more money throughout most of their lives than the person paying privately. Because of Medicaid's reduction in the reimbursement rate it was willing to pay nursing homes, private payers came to be paying half again as much on average as Medicaid was paying for Medicaid recipients. That's called "cost shifting." Naturally, this created a temptation on the part of the private payers to find a way to qualify for Medicaid. If they could get onto the program, it would pay not only for their nursing home care, but for other, ancillary services that Medicaid often pays for but Medicare doesn't, such as foot care, eye care, dental care and residual pharmaceuticals after Part D.

By the early 1980s, there developed a sub-practice of law, called "Medicaid estate planning" designed to help middle-class and affluent people self-impoverish in order to become eligible for Medicaid. I call this process of extending Medicaid eligibility to more and more prosperous people "eligibility bracket creep." As Medicaid LTC eligibility expanded, it created even more financial pressure on Medicaid and reduced the number and percentage of people in nursing homes who were paying at the higher private pay rate. Thus, eligibility bracket creep exacerbated all the problems we've discussed so far regarding access to and quality of care.

Congress Acts to Discourage Medicaid Abuse

Beginning in 1982, Congress tried to get control of Medicaid LTC eligibility. The first major measure in this direction was the Tax Equity and Fiscal Responsibility Act of 1982, or TEFRA '82. TEFRA authorized state Medicaid programs for the first time to (1) penalize asset transfers done for the purpose of qualifying for Medicaid, (2) place liens on real property in order to hold that property in a recipient's possession during their period of Medicaid eligibility, and (3) to recover the cost of their care from the estates of deceased recipients.

The critical thing to understand about TEFRA '82 is that it was entirely voluntary. States could implement these new programs or not at their own discretion. In 1983, I was the Medicaid State Representative for the state of Oregon in the Seattle Regional Office of the Health Care Financing Administration (the predecessor organization of the current Centers for Medicare and Medicaid Services or CMS). It was my job to make sure that the federal laws and regulations governing Medicaid long-term care were properly implemented by the state government. The federal government partially funds and oversees Medicaid. State governments partially fund and administer the program. So the Medicaid State Rep's job was to be the linchpin between the federal and state Medicaid programs.

In Oregon, I came across this interesting program called "Medicaid estate recoveries." It purported to recover five percent of the cost of Oregon's nursing home program, or about $5 million a year. That was back then. It's more like $20 million a year now.

Imagine my confusion when I discovered this program. By that time I had already worked a total of ten years in federal welfare programs. I thought I knew how they worked. When you're poor . . . when you're destitute . . . when you have nothing left . . . you can apply for public assistance, and the government helps you with cash or, in Medicaid's case, with medical or long-term care services. That's how it was with the old Aid to Families with Dependent Children Program. I thought it was the same with Medicaid.

So how could it be that people who are poor and destitute enough to qualify for Medicaid would spend years in a nursing home at enormous expense to the state and federal governments, and then, after they die, a little state like Oregon recovers nowadays $20 million out of their estates? Where did all that money come from?

That question really fascinated me. So, in 1983 I conducted a study, the objective of which was to ask and answer the question "What if every state in the country recovered from estates at the same rate as Oregon?"

I quickly realized that to do this study, I would have to understand how Medicaid eligibility works. In other words, how could people with substantial income and assets qualify for Medicaid in the first place?

What I learned is that income is rarely an obstacle to qualifying for Medicaid. I also found that assets, ostensibly limited to only $2000, were rarely an obstacle to qualifying for Medicaid. That's because unlimited assets could be held in exempt form. We'll discuss Medicaid income and asset eligibility in detail later in this program.

Until 2006, for example, there was no limit on the amount of home equity that could be exempted. One home and all contiguous property, regardless of value, was disregarded. It was no wonder, therefore, that people could qualify for Medicaid, receive free or subsidized nursing home care and other medical services indefinitely, and still have substantial assets in their estates.

The report I prepared for the Health Care Financing Administration in 1985, titled "The Medicaid Estate Recoveries Study," is available at http://www.centerltc.com/mer_study.pdf. What I found was that most states had not aggressively implemented TEFRA '82. Most states had put in place some form of the transfer-of-assets restriction, but back then it was limited to a two-year look-back and no more than a two-year penalty. Only two states had implemented TEFRA liens. And while 15 or 16 states had implemented estate recoveries, most had not done so in such a way as to maximize estate recoveries. My state of Oregon was an exception in that regard.

After I drafted this report, I forwarded it to a number of people interested in long-term care financing, including several scholars and federal agencies like the General Accounting Office (GAO is now known as the Government Accountability Office) and the Office of Inspector General (OIG) of the Department of Health and Human Services (DHHS). Although HCFA discouraged my work and refused to publish it, the DHHS Inspector General loved it and hired me out of the Health Care Financing Administration to conduct a more comprehensive national study and write a report titled "Medicaid Estate Recoveries." That report is still available to read on the OIG's website at http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf. (Cut and paste this link into your browser if it does not come up otherwise.) GAO also followed up with a national study on which I consulted. Read that report at http://archive.gao.gov/d15t6/138099.pdf.

My report for the OIG explained how people with substantial income and assets could qualify routinely for Medicaid. It estimated that nearly $600 million could be recovered from estates, if every state in the country performed at the same level as Oregon. The report warned that as long as people with substantial income and assets could qualify easily for Medicaid, there would be very little market for private LTC financing alternatives; Medicaid long-term care expenditures would continue to explode; little privately financed home and community-based services infrastructure would develop; quality of care would continue to decline due to Medicaid's notoriously low reimbursement rates; and, if something weren't done about these problems, within 30 years the cresting of the Age Wave would crush the existing long-term care financing system.

Here we are 26 years later and everything I predicted in that early OIG study has come true or is about to!

COBRA '85, MCCA '88, OBRA '93, HIPAA '96, BBA '97 and DRA '05

In 1985, in the Consolidated Omnibus Budget Reconciliation Act of that year, Congress took the next step to rein in abuse of Medicaid LTC. COBRA '85 put a stop to "Medicaid qualifying trusts." MQTs had become the technique of choice for elderlaw attorneys to impoverish their affluent senior clients and qualify them for Medicaid nursing home care. COBRA '85 changed the rules, but did not grandfather in people who already had Medicaid qualifying trusts. Many individuals and families were hurt. A lot of elderlaw attorneys were embarrassed professionally. But that didn't stop them from finding new ways to focus on qualifying affluent clients for Medicaid financed long-term care.

The Medicare Catastrophic Coverage Act of 1988 (MCCA '88) was the next step in this process. MCCA '88 was mostly about Medicare, but it did have some provisions that affected Medicaid long-term care eligibility. The most important change was, for the first time, to require state Medicaid programs to penalize asset transfers for less than fair market value done for the purpose of qualifying for Medicaid long-term care benefits. MCCA '88 required state Medicaid programs to look back 30 months for inappropriate asset transfers. It established an ineligibility penalty 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. For example, give away $80,000 to qualify for Medicaid in a state where nursing home care averaged $8,000 per month and you'd be ineligible for 10 months from the date of the transfer. The italicized point will be very important later. MCCA '88 also established a limit of 30 months as the maximum penalty for asset transfers. In other words, if you gave away $1 million within 30 months of applying for Medicaid, your transfer of assets penalty would still be only 30 months.

In 1993, the Omnibus Budget Reconciliation Act of that year implemented most of the recommendations from my 1988 "Medicaid Estate Recovery" report for the Office of Inspector General [http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf, you may have to cut and paste this link into your browser]. OBRA '93 extended the look-back period for asset transfers to a full three years (36 months) for most improper transfers and to five years for transfers into or out of a trust. The law also eliminated the limit on the eligibility penalty. Now, if you gave away $1 million within three years of applying for Medicaid, you would be permanently ineligible for all intents and purposes. OBRA ’93 made estate recoveries mandatory for the first time.

OBRA '93 also eliminated the Medicaid planning gimmick of "pyramid divestment." Before OBRA '93, the elderlaw bar had figured out that because transfer of assets eligibility penalties were allowed to run concurrently, they could jettison lots of money very quickly for their affluent clients while minimizing any transfer of assets penalty. On their websites, they published schedules that showed exactly how much to give away each month to take full advantage of this loophole. They could actually spend you down from $1 million to nothing in a period of about a year. This was possible because, for example, instead of giving away all the money in one month and incurring the maximum penalty, you could give away smaller amounts each month and, because the penalties ran concurrently from the date of the first transfer, you'd be out of money and eligible for Medicaid in only a fraction of the time originally intended by Congress. This so-called pyramid divestment was no longer allowed after 1993. But the elderlaw bar was very creative and opened many new "loopholes" to replace this one.

A Political Earthquake

Something big happened in American politics in 1994. Anybody recall what it was? Remember the "Contract with America," Newt Gingrich? The Republicans took over both houses of Congress.

Who was president at the time? Right, Bill Clinton.

Clinton was well known for something in particular. [Audience snickers.]

"Not that!"

I'm referring to President Clinton's frequent statement that he would "change welfare as we know it." And he did. He added a work requirement to the welfare (Aid to Families with Dependent Children or AFDC) rules and reduced the welfare rolls by two-thirds, a tremendous success.

The new Republican Congress and President Clinton were alarmed by the exploding Medicaid long-term care costs. They were frustrated that none of the government's efforts since 1982, which were intended to control the abuse of Medicaid long-term care resources, had worked. So they decided to stop the overuse of Medicaid once and for all. In 1996, in the Health Insurance Portability and Accountability Act (HIPAA '96 or the Kennedy/Kassebaum Act), they made it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid. To do so, according to HIPAA '96 would be punishable by a fine of up to $10,000 and a jail term of as much as a year.

Now, remember the senior advocates? They were one of the blind men of long-term care we talked about. The senior advocates and their organizations looked at this new rule with alarm and decided to fight it. They called HIPAA '96 the "throw granny in jail law." Okay, this was one measure to control Medicaid abuse that even I didn't favor. It seemed to me like a stupid, ham-handed way to deal with the problem, which is actually fairly simple to fix.

But when Congress repealed the throw granny in jail law in the Balanced Budget Act of 1997 (BBA '97) and replaced it with the "throw granny's lawyer in jail law," that made a lot more sense to me. Why penalize the victim, when you should be going after the culprit? For a while, the Medicaid planners' big conventions, held at luxury resorts twice a year, were more like funeral dirges than professional meetings. (I used to attend those sessions to keep an eye on the Medicaid planners and report their egregious methods to the media until they blackballed me by closing their conventions to non-attorneys.)

Unfortunately, the "throw-granny's-lawyer-in-jail law," which threatened a year in jail and/or a $10,000 fine for recommending (in exchange for a fee) that a client transfer assets to qualify for Medicaid, was unconstitutional. Janet Reno, who was Bill Clinton's Attorney General at the time, looked at the law and concluded it would be unenforceable. How could you hold an attorney legally culpable for recommending a practice that was legal again after the "throw-granny-in-jail law" was repealed?

So, there we were in the late 1990s, 15 years after Congress had taken the first steps in TEFRA '82 to control the abuse of Medicaid, right back where we'd started. Costs continued to explode. More and more people were qualifying for Medicaid-financed long-term care. Private payers were disappearing. Quality of care continued to decline. The public remained asleep about long-term care risk and cost. Neither private insurance nor home equity conversion contributed significantly to LTC costs. And the Age Wave was a decade and a half closer to wiping out the LTC safety net.

From Boom to Bust

Now, what was the economy like in the late 1990s? Good or bad?

Right, those were boom years. The Internet bubble. The new economy. Everyone's 401(k) was on its way to becoming an 802(k). In my experience, when the economy is good, when tax receipts are up, and when welfare rolls are down, it is extremely hard to get the attention of politicians and public officials to the issues of controlling Medicaid costs and encouraging personal responsibility and long-term care planning.

But, exactly the opposite is true when the economy goes into the tank. When welfare rolls are up and tax receipts are down, state legislatures, governors and other public officials become much more amenable to reason and evidence about the need to control Medicaid long-term care expenditures. After September 11, 2001, as the economy went rapidly into recession, state officials became far more sensitive to the need to spend Medicaid's scarce resources effectively and efficiently.

When governors could not make their budget ends meet and because, unlike the federal government, they are constitutionally required to work within their budgets, we were able to get their attention. In 2005, I was funded by the American Health Care Association, the big proprietary nursing home and assisted living trade association, to spend half time for six months in Washington, DC. My objective was to explain to all of the "blind men of long-term care," the key stakeholders in the LTC issue, the need to control Medicaid long-term care expenses and encourage private financing alternatives for long-term care.

I testified before Congress on April 27, 2005; I gave briefings on Capitol Hill; I met with all the key interest groups, including long-term care providers, LTC insurers, the National Governors Association, the National Reverse Mortgage Lenders Association and dozens of others. In fact, I sought out and met with anyone and everyone who had any role in or concern about long-term care financing . . . and would listen.

My co-founder of the Center for Long-Term Care Reform, an attorney by the name of David Rosenfeld, after leaving the Center in 2001, ultimately became the Chief Health Counsel to the House Energy and Commerce Committee, the germane committee for Medicaid in the United States House of Representatives. David wrote much of the Deficit Reduction Act of 2005 and guided it through the shoals of political opposition.

On February 8, 2006, President Bush signed the DRA '05. It had passed by a single vote. Vice president Cheney had to be transported back from the Middle East to cast the deciding vote in the Senate. As soon as the law was signed, senior advocacy organizations and Medicaid planning attorneys filed lawsuits against it. All of this litigation was thrown out of court.

The DRA '05 took some giant steps in the direction of controlling Medicaid eligibility. For the first time ever, it put a limit on the amount of assets that could be exempted in a home and contiguous property. The limit was placed at $500,000 ($543,000 as of 2014 in 37 states) or up to $750,000 ($814,000 as of 2014 in 13 states and DC) at the option of a state legislature. That is a step in the right direction. By the time the Deficit Reduction Act passed, however, the recession that made it possible had ended. When state governments were under severe budgetary constraint, the National Governors Association had actually advocated in writing for a limit on the Medicaid home equity exemption of $50,000. We got half a million and that's significant, but it isn't enough to solve the problem.

An LTC Tour Anecdote

Let me tell you an anecdote from our 2008 National Long-Term Care Consciousness Tour that helps make the point about Medicaid's home equity exemption.

When I was in Washington, DC with the Silver Bullet of Long-Term Care, I received an e-mail from the Prime Minister's office of the United Kingdom. They wanted to know if it would be all right to send over a delegation to speak with me, and others, about long-term care financing. It seems Great Britain is unable to pay for its socialized acute care health system, much less for long-term care. They would love to have a private long-term care insurance market to help defray the public cost of funding long-term care.

But when they looked at the United States, where it is commonly understood that no one qualifies for help with their long-term care costs until they have spent down into total impoverishment, they wondered: "If Americans can't sell long-term care insurance in their dog-eat-dog, capitalist system, how could we ever hope to develop a long-term care insurance market in a socialized health care system like England's?" (My paraphrase.)

I invited the U.K. delegation of two experts on aging to join me in the Silver Bullet at a very nice RV park on the outskirts of DC. I picked them up in the truck at the end of the D.C. Metro Green line, and drove them to the Airstream trailer. It was a hot and humid day, so we had the air conditioning on. The three of us sat in that little 16-foot trailer for three hours talking about long-term care financing.

I learned something very interesting. In the United Kingdom, all you can shelter in home equity while getting the government to help with your long-term care costs is $40,000. We are 10 to 20 times more generous with our scarce public resources for long-term care in the United States as they are in their socialized health care system.

More on the DRA

The Deficit Reduction Act of 2005 also extended the look-back period for asset transfers from three years to five years for all transfers. That sounds impressive until you realize that the look-back period on asset transfers in Germany, another European socialized health care system, is ten years! Transfer assets for less than fair market value within ten years of applying for public assistance to help with your long-term care costs in Germany, and you run the risk of their pursuing recovery from the people, probably your relatives, to whom you gave the money.

One of the most important changes the DRA '05 made was to eliminate the single most prevalent Medicaid estate planning gimmick at the time. That was the so-called "half-a-loaf" strategy. Instead of giving away $100,000 and incurring a 20 month transfer of assets penalty, people would give away $50,000, incur half the penalty, i.e., 10 months, hide the rest of the money and become eligible after the penalty ran its course, without ever spending any of their own money for long-term care. The Deficit Reduction Act ended this practice by starting the eligibility penalty at the date someone would have otherwise become eligible for Medicaid if the rule hadn't changed. Previously, the penalty began at the date of the transfer, a practice which enabled the half-a-loaf strategy. Now, the penalty begins (usually) at the date of Medicaid application.

Ironically, this was a DRA provision the nursing home lobby opposed. They worried that people who had transferred assets would end up on their doorstep destitute, unable to pay their own way for long-term care, but also ineligible for Medicaid. In other words, nursing homes figured they'd end up with a lot more "charity" cases. I explained to them at the time that this would not happen, at least not in significant numbers, because the new rule eliminated the practicality of giving away half of one's assets to become eligible for Medicaid more quickly. In the future, no attorney in his or her right mind would recommend that people transfer assets in the same old way to qualify for Medicaid, because that strategy would no longer work and would leave the lawyers vulnerable to malpractice suits. To date, I have heard no evidence that the worry of the nursing home industry has materialized. By eliminating the half-a-loaf strategy, people who would have used that trick are now having to spend their money for long-term care or they divest or shelter it in some other way.

Long-Term Care Partnership Program

Finally, the DRA ’05 reinvigorated the LTC Partnership Program. LTC Partnerships had been around since 1992. The idea behind them was to incentivize people to purchase LTC insurance by forgiving some of the prospects’ Medicaid spend down liabilities. The offer: buy LTCI, use it, and the Partnership policy holder could go onto Medicaid while retaining assets up to the amount of insurance purchased and used instead of having to spend down to $2,000. Under a Robert Wood Johnson Foundation grant, four states—California, New York, Connecticut and Indiana—piloted the program. A variation, in New York alone, allowed holders of special Partnership policies to retain all their assets and still receive lifetime Medicaid LTC benefits.

As these pilot projects were gearing up in the early 1990s, they were derailed by Henry Waxman, a liberal Congressman from California. Waxman considered Medicaid to be welfare and inappropriate for people with substantial resources to receive. So, when the Omnibus Budget Reconciliation Act of 1993 made recovery from the estates of deceased Medicaid recipients mandatory, Congressman Waxman insisted that assets sheltered by Partnership policies for purposes of initial Medicaid eligibility, should nevertheless, not be exempted from estate recovery. That rule took the steam out of the Partnership movement. A Partnership policy holder could preserve substantial wealth and qualify for Medicaid, but at death that wealth became recoverable by the state to recoup Medicaid funds expended on the policyholder’s behalf.

For over a decade, the Partnership program languished. Then, in the DRA ’05, the OBRA ’93 estate recovery mandate was eliminated as against Partnership policies. They resurged and became available in half or more of the states. LTC insurance sales in the original four pilot states increased on the margin. Similar results are expected in the new Partnership states, especially in those that endorse and promote the policies officially. Nevertheless, two factors impede Partnership sales. First, Medicaid LTC eligibility remains easily available to middle-class and affluent people without significant spend down so that the Partnerships’ spend down forgiveness is less of an incentive than it would otherwise be. Second, Medicaid LTC has such a dismal reputation for problems of access, quality and impending insolvency that consumers who know the program are not likely to want to rely on it. Certainly, Medicaid is unlikely ever to pay for the kind and quality of home care and assisted living that are routinely available through private LTC insurance policies.

[See Stephen A. Moses, "The Long-Term Care Partnership Program: Why It Failed and How to Fix It," in Nelda McCall, editor, Who Will Pay for Long Term Care?: Insights from the Partnership Programs, Health Administration Press, Chicago, Illinois, 2001, pps. 207-222; http://www.centerltc.com/pubs/LTCPartnership.pdf.]

Recent LTC History

America’s post-Internet-boom, early-2000s recession led to passage of the DRA ’05 with its new constraints on Medicaid LTC financial eligibility. As so often happened in the past, however, soon after the new legislation passed, the economy improved, welfare rolls went down, tax receipts improved and public officials at the state and federal levels lost their enthusiasm for enforcing the new restrictions. In California, for example, Medi-Cal (California’s name for Medicaid) didn’t implement mandatory changes required by the DRA ’05 such as the longer lookback period for asset transfers and the cap on home equity. Nor did the federal government enforce the law, allowing California to flout it with impunity and other states to get by with only half-hearted enforcement.

[Source: Stephen A. Moses, Medi-Cal Long-Term Care: Safety Net or Hammock?, Center for Long-Term Care Reform and Pacific Research Institute, January 2011]

Medicaid planners found new ways to circumvent the DRA’s stronger spend-down rules, replacing for example the newly proscribed “half-a-loaf” strategy with a clever “reverse half-a-loaf” gimmick whereby their affluent clients could use promissory notes or annuities to “cure” an asset transfer penalty and achieve the same objective to preserve half the assets. Medicaid-compliant annuities re-emerged in popularity allowing “millionaires” to qualify easily for LTC benefits according to MaineCare (Maine’s name for Medicaid) eligibility workers.

[Source Stephen A. Moses, “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link],” Center for Long-Term Care Reform and the Maine Health Care Association, November 2012]

Thus, by 2007, easy access to Medicaid LTC benefits was returning to its historical norm. Then the economic cycle clobbered America again. In 2008, the “Great Recession” began. Once more, state and federal tax revenues plummeted, welfare rolls skyrocketed, and huge state and federal budget shortfalls developed. In other words, the stage was set for another round of legislative and administrative initiatives to reduce Medicaid expenditures, tighten eligibility rules, curb Medicaid planning abuses, and protect the LTC safety net for people most in need. But this time, it didn’t happen. Why?

Maintenance of Effort

The American Recovery and Reinvestment Act of 2009 (ARRA ’09) was signed into law by President Obama on February 17, 2009. This “stimulus” law ultimately pumped $831 billion into the economy according to the Congressional Budget Office. State Medicaid programs were among the biggest beneficiaries of the ARRA ‘09’s largesse receiving approximately $100 billion in extra funds from an increase in federal Medicaid matching funds. But this windfall had a string attached. To qualify for the additional revenue, states had to agree not to tighten their Medicaid eligibility rules. This “maintenance of effort” (MOE) requirement prevented states from reducing Medicaid expenditures during the economic downturn by means of targeting scarce resources to the neediest applicants.

The ARRA ‘09’s MOE restriction expired at the end of June 2011, at which time state revenues plunged as federal matching fund rates reverted to pre-stimulus levels. A state that had been getting three dollars in federal matching funds for every dollar it put up now was getting only two federal dollars for every state dollar. Simultaneously, due to the reduced economic activity incidental to the ongoing economic downturn, other state revenues from sales and income taxes declined as well. But Medicaid costs continued to increase rapidly as they always do when the economy falters. This would have been the perfect time to control the Medicaid eligibility hemorrhage by targeting the program’s scarce benefits to citizens who needed them most.

By this time, however, a new MOE rule applied which prohibited any reduction in Medicaid financial eligibility. The Patient Protection and Affordable Care Act of 2010 (PPACA ‘10, AKA health reform or “ObamaCare”) required maintenance of effort upon penalty of the loss of all federal Medicaid funds. Under PPACA ‘10, however, the states received no bonus in federal matching funds for complying with MOE. Thus, with flat or falling state government revenues, state Medicaid programs all across the country were locked into retaining the generous Medicaid LTC financial eligibility they had implemented during better economic times. If they acted to reduce Medicaid LTC eligibility even within limits allowed by federal law before imposition of the MOE requirement, they could lose all federal Medicaid funds.

Then in June 2012 the United States Supreme Court ruled that, although ObamaCare is constitutional, states can nevertheless opt out of its Medicaid expansion provision without losing federal matching funds for the rest of their Medicaid programs. Arguably, states that choose not to expand Medicaid under PPACA should therefore not be constrained by the law’s MOE provision for the same reason. Some legal and policy experts, as well as the state of Maine, have made that case, but so far unsuccessfully based on interpretations from the Centers for Medicare and Medicaid Services (CMS, the federal agency that oversees Medicaid) and the Congressional Research Service.

Thus, faced with widespread budget shortfalls and doubtful new revenues sufficient to close the gaps, states have only two ways to constrain costs: cut benefits or cut providers. With eligibility cuts out of bounds due to MOE, the states’ only options, besides shifting funds from education or some other budget category, are to eliminate desperately needed services or to reduce provider reimbursements. Cutting services hurts the most needy. Provider reimbursements are already minimal and further cuts could lead to facility closures and other LTC provider shortages. At present, the maintenance of effort requirement is the biggest obstacle to Medicaid LTC reform, which is stymied so long as MOE remains in effect.

ObamaCare

The Patient Protection and Affordable Care Act of 2010 (PPACA ’10) or “health reform” was signed into law by President Obama on March 23, 2010. By far its most important impact on long-term care financing was its provision regarding maintenance of effort as already explained. But ObamaCare attempted to address LTC financing in two other potentially important ways. One was the “CLASS Act,” an acronym standing for Community Living Assistance Services and Supports. While not formally repealed, CLASS died for all practical purposes when it became clear the pseudo-LTC-insurance program was financially infeasible to implement. I explained the problems and deficiencies of CLASS in a 2011 speech to the Society of Actuaries "Living to 100" Symposium. The aborted program does not warrant further consideration.

The other way ObamaCare addressed long-term care was with several special programs and pilots designed to encourage more public financing of home and community-based services (HCBS). These are described in an October 2011 report by the Kaiser Family Foundation titled “State Options That Expand Access to Medicaid Home and Community-Based Services [link].” They need not concern us here, because, as the following section explains, publicly financed HCBS on a wide scale are not financially sustainable, impede a private market for home-based care, and discourage responsible long-term care planning.

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Updated, Tuesday, January 21, 2014, 1:01 PM (Pacific)

Seattle—

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LTC NEWS AND COMMENT

1/18/2014, “The Key Health Risk Obamacare Doesn't Cover,” by Dan Caplinger, Motley Fool

Quote: "But Obamacare doesn't address one key health risk that everyone faces, forcing you to make alternative arrangements to protect yourself from potentially catastrophic expenses. In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about how Obamacare doesn't cover long-term care expenses."

LTC Comment: Important advice from a widely read national column.

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1/17/2014, “Advisors Put To Test by LTC Insurance Market Upheaval,” by Karen Demasters, Financial Advisor

Quote: "'Financial advisors need to start the conversation about long-term care with their clients and then go to experts for the details,' says Deb Newman, founder of Newman Long Term Care and former chair of the board of directors of the LIFE Foundation. . . . 'One of the challenges is to get advisors to discuss the subject. Their clients do not want to talk about dying, becoming disabled or living too long. But long-term care coverage is not just a financial issue,' Newman says. 'Having coverage provides peace of mind.'”

LTC Comment: Excellent quotes from long-time friend, Center supporter and corporate member Deb Newman of Newman Long Term Care.

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1/17/2014, “Medicare appeals at the administrative law judge level will be suspended for two years due to backlog, agency announces [link],” by Tim Mullaney, McKnight's LTC News

Quote: "A tremendous increase in appeals has swamped the 65 ALJs who hear disputes over Medicare claim determinations, OMHA Chief Administrative Law Judge Nancy J. Griswold wrote in a memorandum obtained recently by the Bureau of National Affairs. To give the judges time to work through this backlog, OMHA stopped assigning new hearing requests from providers as of July 15, 2013, Griswold disclosed. Beneficiaries' appeals will continue to be processed, to safeguard patients, she wrote." (Emphasis added.)

LTC Comment: Interesting policy. Pay nursing homes less than cost for most of their residents who depend on Medicaid. Threaten often to cut Medicare reimbursements which currently help to make up for the revenue shortfall from Medicaid. Then process Medicare beneficiaries' appeals but gag providers. Observed over time it is easy to see why publicly financed long-term care is deteriorating.

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1/16/2014, “Medicare cuts weigh on UnitedHealth,” by Alex Nussbaum, LifeHealthPRO

Quote: "Medicare Advantage, insurers' private version of the U.S. government program for the elderly, has been a key source of growth for the industry and provided about a fifth of UnitedHealth's profit last year. The companies' reimbursements are being scaled back to help pay for the insurance expansion under the Patient Protection and Affordable Care Act (PPACA)."

LTC Comment: Another version is playing out of the common government "bait and switch" gimmick. Offer lucrative incentives to private industry. Get them committed to some new publicly financed program. Then, when costs explode as they always do, stop the party by pulling away the financial punch bowl. It's happened over and over again, but the private sector never seems to learn.

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1/16/2014, “Study: Rehospitalizations Nearly Twice As High When Elders Are Transferred To HCBS From Skilled Nursing [link],” by Bill Myers, Provider

Quote: "Those seniors who went into HCBS from nursing homes were nearly 40 percent more likely to be sent back into the hospital with preventable conditions, the Brown University report says in this month’s edition of the Journal of the American Geriatrics Society. Indeed, moving to HCBS increased the overall risk of hospitalization by 58 percent compared with those who stayed behind, lead researcher Andrea Wysocki writes for her colleagues."

LTC Comment: More evidence that, desirable as home care may be, it does not save Medicaid money overall.

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1/16/2014, “Insured for Old Age? An Economist Explains the Dangers of Long-Term Care Insurance [link],” by Lew Mandell, PBS NewsHour

Quote: "If neither community spouse nor another dependent lives in the house, homes with equity values from $536,000 to $802,000 (depending on the state) may be retained when the owner accepts Medicaid for long-term care, provided that the owner signs a form stating his or her intent to return to the house. Medicaid is then entitled to be reimbursed from the equity of the home when it is sold, generally after the recipient's death, so it is seldom worthwhile to pay real estate taxes, insurance, utilities and maintenance for a home owned by a long-term care Medicaid recipient."

LTC Comment: This article is a mixed bag of good and bad, accurate and inaccurate information and advice about LTC insurance and Medicaid LTC eligibility.

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1/16/2014, “Managed care plans will account for 75% of Medicaid beneficiaries by 2015, analysts estimate [link],” by Tim Mullaney, McKnight's LTC News

Quote: "By providing capitated payments to these plans, states can have more budget certainty than if they were paying out Medicaid claims on a fee-for-service basis. The MCOs themselves can coordinate care and sometimes offer services that would not be available through a program administered by the state."

LTC Comment: Managed care saves Medicaid money by transferring management responsibility and cost control to giant private companies (Managed Care Organizations or MCOs). The worry is that Medicaid will clamp down on payments forcing the MCOs to reduce provider reimbursements and minimize the number of providers resulting in care and access even more deficient than now. A special worry is how this new system will impact the most frail and vulnerable Medicaid population, the "dual eligibles."

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1/15/2014, “Long-term care insurers' 'gender rating' practices challenged,” Business Record

Quote: "The complaints were filed today by the National Women's Law Center with the U.S. Department of Health and Human Services' Office for Civil Rights. The organization asserts that recently adopted gender rating practices by Genworth Financial Inc., John Hancock Financial, Transamerica Life Insurance Co. and Mutual of Omaha violate an anti-discrimination rule enacted as part of the federal health care overhaul."

LTC Comment: What about the discrimination against men when they have to pay premiums in excess of the level of risk they bring into the risk pool?

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1/15/2014, “Only one-third of employees consider retirement savings a priority,” by Amanda McGrory-Dixon, Employee Benefit Adviser

Quote: "Regionally, North America and Asia-Pacific respondents report being the most involved in saving for retirement, with interest at 39%. However, only 32% of respondents in Latin America, 30% of respondents in the Middle East and Africa, and 26% of respondents in Europe say they are actively saving for retirement. In fact, 40% of respondents in Europe say they have no expectations for saving for retirement at all, above the global average of 22%."

LTC Comment: That statistic for Europe is alarming and clearly a result of the continent's decades-long growth of entitlements and public dependency. When Europe's social insurance programs finally hit the fiscal wall, it will be devastating for citizens who lack private resources. As Europe is further along in this decay than the USA, perhaps we can learn the lesson before it's too late.

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1/15/2014, “Gap between long-term care costs and Medicaid payments was widest ever last year, report finds [link],” by Tim Mullaney, McKnight's LTC News

Quote: "LTC providers incurred more than $7.7 billion in allowable costs that were not reimbursed by the Medicaid program in 2013, the investigators estimated. Analysts from Eljay LLC compiled the report by looking at data such as Medicaid cost reports and the long-term care inflation index known as the market basket. This 'historic' shortfall translates to an estimated average Medicaid shortfall of $24.26 per Medicaid patient day. This exceeds last year's projected shortfall by 8.6%, the report notes."

LTC Comment: Access and quality problems in Medicaid-financed LTC? Why expect otherwise when the program pays less than cost for a majority of long-term care patients?

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1/14/2014, “Virginia considers LTCI premium options,” by Allison Bell, LifeHealthPRO

Quote: "Virginia has not let insurers use the drop in interest rates as a reason to increase rates. But, if rates turn out to be 4 percent, and the company assumed it could earn 6 percent on its investments, it would have had to charge 45-year-old purchasers about 33 percent more at the time of purchase to make up for the difference, and it would have had to charge 55-year-old purchasers about 24 percent more, the actuaries say."

LTC Comment: Too many regulators try to defy economic gravity.

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1/14/2014, “Fresh Thinking on Long-Term Care Financing: The American Long-Term Care Insurance Program [link],” by Paul Forte, Contingencies

Quote: "Many U.S. policymakers believe that there's no way a voluntary long-term care (LTC) insurance program can attract a critical mass of enrollees. Given the 2011 severing of the optional federal Community Living Assistance Services and Supports Act from the Affordable Care Act (ACA) and a continuing exodus of private insurers from the LTC market, this isn't surprising. But arguing that any LTC program must be mandatory ignores both the federal budget deficit and ongoing political resistance to mandatory provisions in the ACA."

LTC Comment: This thoughtful, well-documented article by Federal Long-Term Care Insurance Program CEO Paul Forte is well worth a careful reading. His proposal seems to leave little room for LTCI producers and it does not solve the problem of easy Medicaid LTC access after the insurable event occurs, but it is nonetheless a notable contribution to the literature on this difficult topic.

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1/13/2014, “America's Dwindling Economic Freedom,” by Terry Miller, Wall Street Journal

Quote: "World economic freedom has reached record levels, according to the 2014 Index of Economic Freedom, released Tuesday by the Heritage Foundation and The Wall Street Journal. But after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries."

LTC Comment: If you would like to read this article but do not have easy access to the Wall Street Journal, let me know. I'll forward a copy to you under the Center's online subscription.

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1/13/2014, “Government Programs Have Become One Big Scammer Fraud Fest,” by Merrill Matthews, Forbes

Quote: "We are being inundated by news stories of fraud perpetrated against numerous government programs. The feds themselves put Medicare and Medicaid fraud at approaching 10 percent of the programs’ budgets, or about $100 billion a year for the two programs."

LTC Comment: This article highlights the problem of Medicaid planning abuse of LTC benefits.

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1/13/2014, “New Medicaid rule requires patient-centered care for home- and community-based services, defines HCBS settings [link],” by Tim Mullaney, McKnight's LTC News

Quote: "A person receiving HCBS should be able to direct the care planning process, including defining goals and preferences for how to achieve them, the rule states. The planning process also may involve a representative chosen by the beneficiary, and other people who the beneficiary wishes to contribute. . . . The final version of the rule revised problematic language in the proposed version, which threatened to uproot residents of assisted living and residential care communities, according to the American Health Care Association/National Center for Assisted Living."

LTC Comment: Providing patient-centered home care is a nice goal for Medicaid-financed LTC, but demanding it without accounting for cost--as when OBRA '97 demanded higher nursing home quality without supplying new revenue--will have no more effect than to hamper state Medicaid programs' ability to manage their financially challenged systems cost-effectively.

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1/12/2014, “The High Cost of Health Care in Retirement,” Wall Street Journal

Quote: "A couple retiring in 2013 with median drug expenses would need $151,000 for a 50% chance of having enough money to cover health costs in later life (assuming they have Medicare Part B and Part D coverage as well as Medigap insurance). But the same couple at the 90th percentile of drug spending would need $220,000-an additional $69,000. (Some good news: Those figures are down from 2012, given that projections of spending growth for Medicare beneficiaries are slowing.)"

LTC Comment: Don’t forget long-term care on top of that.

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1/9/2014, “Why boomers get more from Social Security than anyone,” by Jeffrey Miller, WSJ MarketWatch

Quote: "The age at which workers born between 1943 and 1954 can receive full Social Security retirement benefits is 66. If workers delay claiming benefits until age 70, they are rewarded with a whopping 8% increase in benefits for each year delayed. Workers who are retiring now can get the 8% increase each year for four years. In an environment where interest rates are historically low, the 8% Delayed Retirement Benefit bonus is one of the very best bargains around."

LTC Comment: For younger generations, who must wait until age 67 to receive full Social Security benefits, the 8% yearly increase for delaying benefits will only be available for three years.

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Updated, Friday, January 17, 2014, 11:33 AM (Pacific)

Seattle—

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LTC BULLET: THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN NEW JERSEY

LTC Comment: The Center for Long-Term Care Reform and the Common Sense Institute of New Jersey have published “The Index of Long-Term Care Vulnerability: A Case Study in New Jersey [link].” Details after the ***news.***

*** "FRESH THINKING ON LONG-TERM CARE FINANCING: THE AMERICAN LONG-TERM CARE INSURANCE PROGRAM [link]" by Federal Long-Term Care Insurance Program CEO Paul Forte is a thoughtful, well-documented Contingencies article well worth a careful reading. Unfortunately, his proposal leaves little room for LTCI producers and it does not solve the problem of easy Medicaid LTC access after the insurable event occurs. Quote: "Many U.S. policymakers believe that there's no way a voluntary long-term care (LTC) insurance program can attract a critical mass of enrollees. Given the 2011 severing of the optional federal Community Living Assistance Services and Supports Act from the Affordable Care Act (ACA) and a continuing exodus of private insurers from the LTC market, this isn't surprising. But arguing that any LTC program must be mandatory ignores both the federal budget deficit and ongoing political resistance to mandatory provisions in the ACA." ***

*** THE FOURTEENTH ANNUAL INTERCOMPANY LONG TERM CARE INSURANCE CONFERENCE [link] will be held March 16-19, 2013 at the Rosen Centre, in Orlando, FL. Find details and registration at the conference website here: http://www.iltciconf.org/. If you have questions, please contact Jim Glickman at 818-867-2223. Check out the closing conference session on “The Future of the Industry Session” here. Genworth's CEO Thomas J. McInerney will complete the panel previously announced. Conference highlights also include keynoter Chris Gardner, whose life story The Pursuit of Happyness became a best-selling book and movie. ***

*** THE INSTITUTE FOR THE AGES has announced that National Public Radio (NPR) correspondent Ina Jaffe will headline the dinner keynote presentation at the Seventh Annual International Conference on Positive Aging on February 11, 2014 at the Hyatt Regency in Sarasota, Florida. For more information about the Conference program, travel and hotel arrangements, and other details, visit www.positiveagingconference.org. Tickets may be purchased online at www.positiveagingconference7.eventbrite.com. Sponsorship opportunities are still available. Please email inquiries to info@institutefortheages.org or contact Michelle Bauer at 727-510-2524. ***

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LTC BULLET: THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN NEW JERSEY

LTC Comment: Last summer, the Center for Long-Term Care Reform conducted research on Medicaid and long-term care financing in three states: Virginia, Georgia and New Jersey. Last month, we published our reports on the first two states in “The Index of Long-Term Care Vulnerability: A Case Study in Virginia” and “The Index of Long-Term Care Vulnerability: A Case Study in Georgia.” On Wednesday, January 15, 2014, we released the third and last report in the current series titled “The Index of Long-Term Care Vulnerability: A Case Study in New Jersey.”

Today we bring you the Executive Summary of the New Jersey report and encourage you to read any or all of the three studies. Each report features a new tool, called the “Index of Long-Term Care Vulnerability.” The purpose of the Index is to help legislators, policy makers and analysts assess the future sustainability of their states’ long-term care financing systems.

Try your hand at filling out the “Index” for your state. You’ll find two links to the Index tool at the end of each report. One link goes to a sample version I filled out as an example. The other link goes to a blank version you can use to evaluate the state of your choice. See the body of each report for links to the sources you’ll need to find the data for your state.

Soon, we will publish a comparative analysis of Medicaid and long-term care financing in the three states comparing them to each other and to the USA as a whole. This year, we plan to apply The Index of Long-Term Care Vulnerability to more states and to bring the findings to the attention of key state and federal decision makers.

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Executive Summary from “The Index of Long-Term Care Vulnerability: A Case Study in New Jersey,” by Stephen A. Moses, published simultaneously by the Common Sense Institute of New Jersey here and by the Center for Long-Term Care Reform here, on January 15, 2014.

Long-term care (LTC) for the elderly is already a large risk and expense for private citizens and public programs. The need for and cost of LTC will increase radically with the aging of the baby-boom generation. Most expensive long-term care, including care provided in nursing homes or by professional aides in family homes for more than nominal durations, is paid for by Medicaid, a means-tested public assistance program.

Medicaid already strains federal and state budgets, including New Jersey’s. Yet major initiatives at the federal level and in New Jersey are underway to expand Medicaid coverage in general and to make the program’s LTC benefits more attractive, accessible and efficient. New Jersey’s “Comprehensive Medicaid Waiver” aspires to achieve those goals by rebalancing care from mostly institutional services to mostly home and community-based services and by turning over management of long-term care for more recipients with higher acuity care needs to managed care organizations.

New Jersey faces multi-faceted long-term care problems including (1) a rapidly increasing elderly population with (2) much higher numbers of disabled or demented people coming soon and (3) Medicaid already strained as the principal LTC payer dependent on (4) funding from the heavily indebted federal government as supplemented by (5) state revenues constrained by recessionary pressures and poor future economic prospects with (6) very little private financing of LTC to relieve the budgetary pressure on public programs in the context of (7) heavy public dependency on social programs already and a growing “entitlement mentality” among the citizenry.

By focusing on improving the state’s current long-term care service delivery and financing program instead of taking into account this full range of problems and addressing it, New Jersey runs the risk of modifying a broken LTC system that cannot survive the larger on-coming demographic, economic and social challenges. This report offers a way to take account of these broader challenges by applying an Index of Long-Term Care Vulnerability. It recommends that New Jersey reassess its current LTC initiatives and move in the direction of reducing dependency on public programs while attracting much more private revenue into the LTC financing mix.

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Updated, Monday, January 13, 2014, 11:23 AM (Pacific)

Seattle—

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2014 ILTCI CONFERENCE AND LTC NEWS AND COMMENT

LTC Comment: Early-bird registration ends this Thursday, January 16th, for the Fourteenth Annual Intercompany Long Term Care Insurance Conference, to be held from March 16-19, 2013 at the Rosen Centre, in Orlando, FL. On that date the $895 and all early bird registration prices go up $100. Agents selling long term care (or other insurance) directly to consumers may apply for a scholarship here. Government employees may register at a special $95 rate here. New attendees may apply by January 10th (tomorrow) for a special $395 rate here. If you have any questions, please contact Jim Glickman at 818-867-2223.
Conference highlights include keynoter Chris Gardner, whose life story The Pursuit of Happyness became a best-selling book and movie. A closing session on “The Future of the Industry,” featuring Marc Cohen, Maria Ferrante-Schepis and another panelist to be named, will focus on the present state of the LTCI industry, provide parallels to other industries that have weathered turbulent times and offer opinions and perspectives about what all can do to re-invigorate this industry. Here’s an outline of the closing general session:
TITLE: The Future of the Industry

1. Current vs. Future State: Can our industry bounce back?
2. What can we learn from other industries?
3. Hear from experts why they are bullish on our future

DESCRIPTION: The long term care insurance industry is in a state of flux. Numerous companies have exited the market. Sales of long-term care insurance are on a downward trend. Distribution is shrinking. In-force premium increases dominate the headlines. This general session will focus on the present state of the industry, offer parallels to other industries that have weathered turbulent times and offer opinions and perspectives about what we all can do to reinvigorate this industry.

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1/11/2014, “What happens when your spouse's care drains your savings?,” by Garry Marr, Financial Post

Quote: "It's the end of the line for you, so who cares if there's nothing left and you actually owe money? How about the lifelong partner funding the expensive care you require in your last days - their own retirement plans now in jeopardy? . . . While it depends on the province, the government will provide you with long-term care in your old age, but the type of place you'll end up living in could be limited and part of your income is likely to be clawed back."

LTC Comment: Note the ominous parallels between Canadian and U.S. long-term care policy.

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1/11/2014, “Top 5 reasons why long-term care insurance hasn't taken off,” by Mark Halpern, Financial Post

Quote: "LTC insurance coverage has a number of benefits, and you have to weigh the possibility of requiring long-term care in the future as part of your comprehensive estate planning or explore other ways to self-fund the care, perhaps with less expensive joint last-to-die insurance or an annuity down the road."

LTC Comment: This is an interesting article about LTCI in Canada.

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1/10/2014, “Long Term Care Insurance Prices Drop for Men, Rise Slightly for Couples [link],” by Jesse Slome, Market-Wired

Quote: "The typical healthy 55-year-old male can expect to pay almost 15 percent less for long term care insurance coverage purchased in 2014 compared to last January. A 60-year-old married couple faces a seven percent increase according to a new analysis of prices.

"‘Compared to last year, costs for long term care insurance have risen slightly for couples, increased more significantly for single women but they have decreased for single men,’ reports Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). The national trade group released the findings of their 2014 Long-Term Care Insurance Price Index."

LTC Comment: How long until the government forbids pricing insurance based on risk and requires “gender equality” for LTCI?

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1/9/2014, “Study: Supplemental Plans Raise Medicare Costs 22 Percent,” by Jay Hancock, Kaiser Health News

Quote: "Supplemental "Medigap" plans shield millions from Medicare's deductibles and other out-of-pocket costs. Pay a flat Medigap premium to a private insurer such as UnitedHealthcare or Humana and you might have little or no out-of-pocket expense for doctor visits, hospitalization or other Medicare services.

"Naturally many worry that the all-you-can-eat model inflates Medicare's costs by encouraging consumers to seek -- or doctors to order -- potentially unnecessary procedures. Now economists at the University of Texas and the University of Chicago have taken what some call the closest look yet at the relationship between Medigap coverage and Medicare spending. Their conclusion, that Medigap substantially increases what Medicare spends on treatment and tests, gives new ammunition to those who want to restrict these plans."

LTC Comment: This is only one of many perverse economic incentives in government health financing programs that have unintended, but entirely predictable, negative consequences.

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1/9/2014, “Transition from facility to home- and community-based care greatly increases dual eligibles' risk of hospitalization, study shows [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Controlling for demographic and medical factors, the researchers determined that people who transitioned had an elevated risk of being hospitalized and also had their first hospitalization sooner than those living in nursing homes. Including both preventable and non-preventable hospitalizations, 419 people in the transition group were admitted while 297 of the nursing home residents were admitted."

LTC Comment: Nevertheless, rebalancing from nursing home to home care and switching dual eligibles into giant managed care organizations with little experience caring for the most frail and vulnerable are two trends sweeping through Medicaid programs nationwide. Our new “Index of Long-Term Car Vulnerability” exposes the risk of these cost-cutting policies.

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1/8/2014, “Why has LTD done better than LTCI?,” by Allison Bell, LifeHealthPRO

Quote: "Premium flexibility has helped the U.S. long-term disability (LTD) insurance market weather low interest rates better than the private long-term care insurance (LTCI) market."

LTC Comment: Ultimately, the only solution is to let markets set interest rates and get the Federal Reserve out of the business of manipulating them to crony capitalists’ benefit and everyone else’s detriment.

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1/8/2014, “Long-Term Care Platform Eyes CU Market,” by Michelle A. Samaad, Credit Union Times

Quote: "Advanced Resources Marketing, a distributor of long-term care insurance, announced the creation a new sales and marketing platform for credit unions. The Health Care Solutions Distribution platform will consist of agents working closely with ARM nationwide, delivering long-term care insurance and related product solutions to credit unions, according to the Boston-based ARM."

LTC Comment: Congratulations to Center Bronze corporate member ARM president Joe Pulitano, CEO Henrik Larson and Brent Stubbe who will head up the new distribution channel.

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1/7/2014, “U.S. Cancer Deaths Decline Again: Report Better prevention, screening and treatment are keys to continued progress, experts say [link],” by Steven Reinberg, HealthDay

Quote: "The rate of cancer deaths among Americans continues to decline, according to a new report. Over the last 20 years, the overall risk of dying from cancer has dropped 20 percent, researchers found."

LTC Comment: A bit of good empirical news in a torrent of poor public policy.

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1/7/2014, “Illegals still get Medicare benefits, but feds vow crackdown, $70M savings,” by Tom Howell Jr., The Washington Times

Quote: "Federal health officials vowed this week to crack down on illegal immigrants who get Medicare — signaling that one part of the Obama administration believes it has authority to deny taxpayer-funded benefits going to those in the country without authorization. The Centers for Medicare and Medicaid Services said it could save nearly $70 million from 2015 to 2019 by preventing illegal immigrants from taking advantage of Medicare’s prescription drug program or enrolling in Medicare Advantage plans."

LTC Comment: Yeah, that’s about as likely to happen as government stopping Medicare fraud and Medicaid eligibility abuse.

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1/7/2014, “CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels [link],” by Tim Mullaney, McKnight's LTC News

Quote: "While hospital, physician and clinical services spending increased in 2012, health spending as a share of gross domestic decreased slightly, from 17.3% in 2011 to 17.2%. This was due to slow growth in nursing home, prescription drug, private health insurance and Medicare expenditures, according to the annual report from the CMS Office of the Actuary." (Emphasis added.)

LTC Comment: We've predicted major cuts to Medicare nursing homes. They've arrived. This is a very significant development because high Medicare reimbursements for a small minority of nursing home residents have historically made up for extremely low Medicaid reimbursements for the majority of nursing home residents. Further strains on nursing home access and quality are inevitable.

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1/6/2014, “More Cuts In Store For Medicare Plans -- Here Are The Options That Will Shrink Most For Seniors [link],” by Scott Gottlieb, Forbes

Quote: "The privately run Medicare plans known as 'Medicare Advantage' have been in the political crosshairs of the Obama White House. Even after facing steep cuts under Obamacare, the Advantage plans are now slated to take a brand new round of reductions in 2015. . . . This means that in 2015, the rates that the feds pay these plans is slated to go from an earlier 1.7 percent increase to a new, -2.0 percent decrease. This is on top of other cuts that have already been announced or implemented. Combined with these other cuts mandated by Obamacare, the Medicare Advantage plans are looking at significant reductions when they had been expecting small increases."

LTC Comment: Current health policy: first, find the best Medicare program and cut it. Then, find the worst health care program, Medicaid, and expand it. What are they thinking?

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1/6/2014, “Millionaires on Medicaid,” by Mark Warshawsky, Wall Street Journal

Quote: "Expanding Medicaid coverage to an estimated nine million more Americans-as mandated by the Affordable Care Act-reinforces the idea that Medicaid only serves the poor. That perception is not accurate. And it distracts from a looming budgetary threat to the program: long-term care. . . .

"We might accept these rising costs if benefits flowed only to the elderly poor, as originally intended. But that is not the case. Significant long-term care benefits flow to individuals in the top 20% of retirement earnings, enabled by Medicaid's generous asset-exclusion limits. . . .

"The rules wouldn't matter if wealthy individuals shunned Medicaid long-term care benefits. But with Medicaid crowding out private alternatives, many don't. In fact, 15% of elderly individuals in the middle-income quintile, 8% in the upper-middle quintile, and 5% in the top quintile receive Medicaid benefits.

"Even these numbers don't capture the burden wealthy individuals place on Medicaid because they live much longer than the poor. Beneficiaries in the top income quintile receive, on average, double the lifetime payouts of those that are less well-off. And because Medicaid lowers reimbursement rates to providers and restricts benefits to contain costs, the poor are tied to lower-quality care and enjoy far less provider flexibility. . . .

"Tightening eligibility rules is the first step toward a solution. Before receiving Medicaid payouts, for example, wealthier households should first be asked to draw down the value of their home through a reverse mortgage to help pay for long-term care. Wealthier households could also be asked to meet long-term care expenses through life annuity payouts from their retirement accounts. Such changes would help ensure that Medicaid benefits flow to the financially needy."

LTC Comment: The author of this Wall Street Journal op-ed co-chaired last year's LTC Commission. I spent several hours answering his questions about the problem of easy Medicaid LTC eligibility for the middle class and affluent and its effect of crowding out home equity conversion and long-term care insurance as private financing alternatives. I'm very glad to have Mark Warshawsky as an ally in the Center for LTC Reform's mission to ensure access to quality long-term care for all Americans.

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1/6/2014, “Genworth shows $8.3 billion in captive reserves,” by Zachary Tracer, LifeHealthPRO

Quote: "The Richmond, Va.-based company said it would probably face increased costs and the need to curb sales of some products if it were required to stop using reinsurance subsidiaries, known as captives, to build reserves. . . . Genworth said most of the $7.3 billion in reserves at its Bermuda-based units stem from the LTCI business. Today's filings include queries from the SEC about the reserves and Genworth's responses."

LTC Comment: Reinsurance is as important to insurers as insurance is to consumers.

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1/6/2014, “New Medicare Data Show Hospitals With High Rates Of Readmissions,” by Jordan Rau, Washington Post

Quote: "Medicare’s new comprehensive measure of hospital readmissions shows that at least 20 percent of the hospitals in Illinois, Maryland, Massachusetts, New Jersey, New York and Rhode Island have higher rates of patients returning than the national average. Colorado, Hawaii, Idaho, North Carolina, Oregon, South Carolina, Utah and Washington led the states with the highest proportion of hospitals with low readmission rates. In those states, between 13 and 16 percent of hospitals came in below the national average, the data show."

LTC Comment: Are states with higher readmission rates simply providing more aggressive, better care? Or are they wasting money? Who decides? Medicare regulators decide in the absence of real market data based on consumers selecting hospitals based on price, reputation, and other objective metrics.

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1/4/2014, “Readers weigh in about their long-term care insurance,” by Scott Burns, Dallas Morning News

Quote: "Some people swear by their long-term care insurance policies. Others swear at them. There is no middle ground. . . . I think it is fair to say that while long-term care insurance is a wonderful idea, the actual product has been oversold and underserviced."

LTC Comment: An unfortunate conclusion reached by a reporter who has covered LTC for a long time.

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Updated, Friday, January 10, 2014, 11:15 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2012 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. After the ***news.***

*** “MILLIONAIRES ON MEDICAID” by Mark Warshawsky, Wall Street Journal, 1/6/14: We forwarded this article to Center “clippings service” subscribers on the day of its publication. We’ll feature it in Monday’s LTC E-Alert. The author, Mark Warshawsky co-chaired last year’s LTC Commission and queried Center president Steve Moses often about why and how the affluent qualify for Medicaid LTC benefits. ***

*** INSTITUTE FOR THE AGES’ Seventh Annual International Conference on Positive Aging (February 9-12, 2014 at Sarasota, Florida's Hyatt Regency) will feature a keynote address by Marc Freedman, founder and CEO of Encore.org, a non-profit supporting "encore" careers for older Americans. Susan Stamberg, special correspondent for National Public Radio and former co-host of NPR's award-winning news magazine, All Things Considered, will deliver the closing keynote. The 2014 conference theme is "Positive Aging Transcends: The Voices of Innovation and Community." Registration for the conference is open. Find tickets here. More information here. For sponsorship opportunities, email inquiries to sponsor@institutefortheages.org, or call Michelle Bauer at 727-510-2524. ***

*** KEN DYCHTWALD, Ph.D., one of the world's foremost visionaries and original thinkers in the field of aging has been nominated Chair-Elect of the American Society on Aging (ASA), www.asaging.org. The association's 5,000+ members range from practitioners, educators, administrators, policymakers, business leaders, entrepreneurs, investors, researchers, media and students all working towards improving the lives of older adults. In this important and significant role, Ken will contribute the leadership skills he has honed for nearly 40 years, as well as innovative ideas, with an eye towards further building the largest association of professionals in the field of aging/gerontology. More here. ***

*** ATTEND AALTCI’s 2014 LTC Solutions Sales Summit for $99 or watch its top sessions online FOR FREE. Get all the conference details here and register for the online access here. Jesse Slome expects 5,000 people will watch the live sessions, with special interest in the LTC CEO panel featuring the chiefs of five insurers. He notes that two insurers, Transamerica and Mutual of Omaha have signed up to be Platinum Sponsors in support of the virtual event. Kudos to Slome, AALTCI, and the meeting sponsors for this creative, cost-sensitive effort to encourage LTC insurance success during a challenging time for the profession. ***

*** EARLY BIRD REGISTRATION ends next Thursday, January 16th, for the Fourteenth Annual Intercompany Long Term Care Insurance Conference, to be held from March 16-19, 2013 at the Rosen Centre, in Orlando, FL. On that date the $895 and all early bird registration prices go up $100. Agents selling long term care (or other insurance) directly to consumers may apply for a scholarship here. Government employees may register at a special $95 rate here. New attendees may apply by January 10th (tomorrow) for a special $395 rate here. If you have any questions, please contact Jim Glickman at 818-867-2223.

Conference highlights include keynoter Chris Gardner, whose life story The Pursuit of Happyness became a best-selling book and movie. A closing session on “The Future of the Industry,” featuring Marc Cohen, Maria Ferrante-Schepis and other panelists to be named, will focus on the present state of the LTCI industry, provide parallels to other industries that have weathered turbulent times and offer opinions and perspectives about what all can do to re-invigorate this industry. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2012 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 2012 statistics on its website at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.

The current issue of Health Affairs (Vol. 33, No. 1, pps. 67-77) contains a summary and analysis of the new data titled “National Health Spending in 2012: Rate of Health Spending Growth Remained Low For The Fourth Consecutive Year." Registered subscribers to Health Affairs can access the full text of that article online at http://content.healthaffairs.org/content/33/1/67.full.pdf.

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

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"So What If the Government Pays for Most LTC?, 2012 Data Update"
by
Stephen A. Moses

Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care? Read on.

America spent $151.5 billion on nursing facilities and Continuing Care Retirement Communities in 2012. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 42 years (from 26.8% in 1970 to 53.3% in 2012, up 26.5 % of the total) while out-of-pocket costs have declined (from 49.5% in 1970 to 28.6% in 2012, down 20.9% of the total). Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 15.

SO WHAT? Consumers' liability for nursing home and CCRC costs has declined by 42.3% in the past four decades, while the share paid by Medicaid and Medicare has nearly doubled, up 98.9%.

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 $543,000 and in some states up to $814,000 of home equity (as of 1/1/14). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home care (30.6% of the dollars in 2012), it covers two-thirds of all nursing home residents. Because people in nursing homes on Medicaid tend to be long-stayers, Medicaid pays something toward nearly 80 percent of all patient days.

SO WHAT? Medicaid pays in full or subsidizes almost four-fifths of all nursing home patient days. If it pays even one dollar per month (with the rest contributed from the recipient's income), the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care.

Don't be fooled by the 7.9% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2012. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because most LTCI policies pay beneficiaries who then pay the nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

How does all this affect assisted living facilities? ALFs are 87% private pay (Source: AHCA/NCAL Issue Brief) and they cost an average of $42,600 per year (Source: 2012 MetLife survey). 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 $543,000 or $814,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

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

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

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $77.8 billion on home health care in 2012. Medicare (43.4%) and Medicaid (37.2%) paid 80.6% of this total and private insurance paid 7.2%. Only 7.8% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf, Table 14.

SO WHAT? Only one out of every 13 dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

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

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

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

Note especially:

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

"Medi-Cal Long-Term Care: Safety Net or Hammock?" here;

"The LTC Graduate Seminar Transcript" here (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel: Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some small steps toward addressing these problems. A cap was placed on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

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

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington. The Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United States on long-term care policy. He is the author of the study "Aging America's Achilles' Heel: Medicaid Long-Term Care," published by the Cato Institute (www.cato.org). Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, January 6, 2014, 11:46 AM (Pacific)

Seattle—

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HAPPY NEW YEAR AND LTC NEWS AND COMMENT

LTC Comment: Failure of the Affordable Care Act brings danger and opportunity. Danger because demands for a government-controlled single-payer system will increase. Opportunity because true insurance against catastrophic risk, with vouchers as a safety net, is a better direction to take. Whether the danger or the opportunity prevails will depend on whether or not the pendulum of government dependency swings back toward freedom, independence, and market-based solutions. 2014 could be the year.

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1/3/2013, “Analysts expect slower Medicare Advantage growth,” by The Associated Press, Business Week

Quote: "Enrollment in Medicare Advantage plans will grow more slowly in 2014 than it did the past couple years, predicted a Citi analyst who follows health insurers. . . . The government has been cutting funding in part to help pay for the health care overhaul, the federal law that aims to cover millions of uninsured people. Insurers have responded by trimming the benefits their Medicare Advantage plans offer, dropping doctors from their coverage networks or, in some cases, pulling out of markets where they feel they can no longer make a profit."

LTC Comment: ObamaCare siphons funds from a relatively good program to support a relatively bad program.

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1/3/2013, “Medicaid Expansion Drives Up Visits to ER; Study Finding Increased Use Contradicts View of Health-Overhaul Backers [link],” by Melinda Beck, Wall Street Journal

Quote: "Some supporters of President Barack Obama's health-care overhaul say that putting uninsured Americans on Medicaid will reduce costly emergency-room visits by giving them more access to care in other settings. But a new study found the reverse: A group of 10,000 low-income Oregon residents who recently obtained Medicaid coverage visited ERs 40% more often than those without insurance."

LTC Comment: One possible explanation for this phenomenon is that people on Medicaid have difficulty finding primary care physicians and specialists to treat them because of Medicaid's low reimbursements.

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1/2/2013, “State finds Medicaid expansion surprise,” by Allison Bell, BenefitsPRO

Quote: "To reduce the risk that families with assets will think of Medicaid as a free long-term care insurance plan, federal regulations require states to put liens on the homes, cars and other assets of Medicaid users ages 55 and older, to help state [sic] recover any money spent on long-term care from the Medicaid users' estates."

LTC Comment: Unfortunately, this statement is incorrect. Medicaid law and regulations do not require liens. Liens are optional and can only be applied to homes, not cars or other assets, and only under very strictly limited circumstances, i.e., when it can be shown that a Medicaid recipient will be unable to return to the home within six months. The author confuses liens with estate recoveries, which are mandatory for the recovery of costs for long-term care services, though optional for recovery of costs for non-LTC services provided after age 55. See the CMS guidelines here.

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1/2/2014, “Long-Term Care Insurer Gets Sued for Excluding Assisted Living Claims [link],” by Alyssa Gerace, Senior Housing News

Quote: "'Defendants have engaged in an illegal course of conduct designed to reduce its exposure to costly long-term care claims by denying claims of elderly insureds through a scheme of fraud, deception, and manipulation of policy terms, while seeking massive premium increases at the expense of these same insureds,' Gardner says in a federal class action suit she's bringing against CNA, Courthouse News reports."

LTC Comment: The principle of “innocent until proven guilty” should apply as accusations of failure to pay claims in the past have often proved specious.

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1/1/2014, “Why the rise in fatal falls?,” by Barbara Peters Smith, Herald-Tribune

Quote: "Especially when it comes on top of other chronic health problems, a hard fall often signals the beginning of the end for an elder - causing broken bones or injuries that can immobilize the body, depress the spirit and force overall well-being to plummet."

LTC Comment: More people living longer means more falls and more need for education and preventive measures to prevent them.

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12/31/2013, “High Vitamin-E Dose Slows Decline in Alzheimer's Patients, Study Finds,” by Jennifer Corbett Dooren, Wall Street Journal

Quote: "However, the research to be published in this week's Journal of the American Medical Association, found no impact on memory and doctors said there was no evidence that vitamin E prevents the debilitating disease."

LTC Comment: If it doesn’t help memory this news is less than epochal.

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12/31/2013, “With new year, Medicaid takes on a broader health-care role,” by Sandhya Somashekhar and Karen Tumulty, Washington Post

Quote: "'I think it is very bad social welfare policy,' said Edmund F. Haislmaier, a senior research fellow at the Heritage Foundation. 'You are taking people who are by and large young, healthy and perfectly capable productive members of society and encouraging them to become dependent on public assistance. This is the very last population you want to do that for.'"

LTC Comment: The ACA should be renamed the “Entitlement Expansion Act.”

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12/31/2013, “Liability claims and costs on the rise for long-term care providers; Aggressive plaintiffs' lawyers may contribute to increases [link],” by Stephanie Bouchard, Healthcare Finance News

Quote: "Aon found that since 2010, claim frequency has been rising after a decade of remaining essentially flat. The consultant estimates a 2 percent increase in claims frequency in 2014. Coupled with a 3 percent increase in claims severity, Aon estimates that long-term care providers are facing an annual loss rate increase of 5 percent. Why these increases are being seen is hard to pinpoint and varies from state to state, said Christian Coleianne, author of the report and associate director and actuary at Aon. Among the possible reasons are increases in the usage of long-term care and plaintiffs' attorneys who are more aggressive."

LTC Comment: Medicaid planning attorneys manipulate the program’s rules to make affluent people eligible for Medicaid which, because of the resulting excessive utilization, is unable to pay nursing facilities adequately which results in poor care which ends in the attorneys bringing liability suits against the facilities. The lawyers make money on both ends. The poor and taxpayers lose.

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12/30/2013, “Medicaid On The Eve Of Expansion: A Survey Of State Medicaid Officials About The ACA [link],” by Benjamin Sommers, Sarah Gordon, Stephen Somers, Carolyn Ingram, and Arnold Epstein, Health Affairs Blog

Quote: "Twenty-five states and Washington D.C. are currently planning to expand Medicaid in 2014 under the Affordable Care Act. We recently surveyed Medicaid directors in these expanding states (for simplicity, we refer to D.C. as a state throughout this article) to assess expectations and implementation strategies regarding enrollment, costs, and access. This blog post describes some of the most relevant findings from our analysis."

LTC Comment: Even states that wisely opt not to expand Medicaid under the Affordable Care Act will suffer huge cost increases due to the “woodwork effect,” the influx of new Medicaid recipients who were eligible before but had not applied until the publicity about ObamaCare.

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12/30/2013, “3 things to know when hiring home health aide,” by Robert Powell, USA Today

Quote: "In 2012, some 58,500 paid, regulated long-term care companies served about 8 million people in the U.S., some 4.7 million of whom received that care in their home. And more often than not, experts say those receiving that care - be it one, two or all of the basic activities of daily living - didn't know the first thing about hiring a home health care provider."

LTC Comment: All the more reason to have a LTC insurance policies with a case management to help find a good home health provider AND pay for it.

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12/30/2013, “Cholesterol and Alzheimer's disease link strengthens in study,” by Melissa Healy, Los Angeles Times

Quote: "Well before signs of dementia trigger a diagnosis of Alzheimer's disease, a person's cholesterol levels may be a bellwether of amyloid plaque build-up in the brain, a new study finds. Long considered a reliable predictor of heart attacks and strokes, worrisome cholesterol levels may now raise concerns about dementia risk as well, prompting more aggressive use of drugs, including statins, that alter cholesterol levels."

LTC Comment: Eat well to think well.

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12/30/2013, “Some with Alzheimer's find care in far-off nations,” by Denis D. Gray

Quote: "Faraway countries are offering cheaper, and to some minds better, care for those suffering from the irreversible loss of memory."

LTC Comment: This article reminded me of an elder law training session I wrote about in an LTC Bullet in April 2001, "International Long Term Care Options: The Good, The Bad, and the Ugly." Here’s how I summarized it: “Recognizing that they can no longer find decent nursing home care for clients they've put on Medicaid, these elder law attorneys want to ship the infirm seniors off to Thailand, Costa Rica or Uruguay where their Social Security checks will still buy quality professional care, their heirs' inheritances will remain untouched, and plenty will be left over for generous attorney's fees. They call this the ‘globalization of long-term care.’ How can we get demented elders across the border? Drug them with ‘happy pills.’ How can we make sure they get decent care? Three hundred dollars a month will buy a geriatric care manager to look after Mom or Dad for a month in a third world country. Visiting gramps at the home won't just be a Sunday outing anymore. This presentation was so bizarre, you would have to hear it to believe it.”

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12/28/2013, “Barbara Franklin helps seniors grow old with dignity,” by Wevonneda Minis, The Charleston South Carolina Post and Courier

Quote: "It was 1990, and a relatively unfamiliar specialty in the insurance industry was becoming more well-known. While insurance wasn't a professional road Barbara Franklin had considered traveling, the new long-term care insurance being marketed by American Express piqued her interest and she joined its sales team."

LTC Comment: This article profiles Center Premium Member and long-time supporter, colleague and friend Barbara Franklin of Charleston, South Carolina. As you'll see from the article, Barbara is a prime example of the many top-notch people dedicated to long-term care planning.

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12/26/2013, “Elder Care Options: Help Clients Get Help,” by Jessica Ness, Financial Planning

Quote: "Most commonly, clients cover the cost with long-term care policies, because geriatric care managers can qualify as private care help. If the bill needs to be paid out-of-pocket, however, our recommendation for doing so depends on the financial resources and status of the patient. Patients who have the financial means should pay the bill and perhaps look to reduce the burden by writing off the medical expense. If the patient is getting financial help from a relative or other loved one, that person could pay the provider directly to avoid making a gift. And if the patient is considered a dependent, the custodian could use their pre-tax HSA dollars."

LTC Comment: LTC policies are the best option, of course, but most people are unprepared and end up with the other options, which may include ending up in a Medicaid nursing home.

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12/25/2013, “Guest: Depending on observation status, Medicare may not cover a hospital stay Medicare patients can be subject to exorbitant hospital bills if they don't carefully check their patient status [link],” by Tony Provine, Seattle Times

Quote: "Medicare currently requires that patients have at least three consecutive days of 'inpatient status' in the hospital to qualify for recovery time in a skilled-nursing facility. Yet some patients are unknowingly kept in the hospital under a different category called 'observation status.' When this happens their admission is not covered by Medicare. Also, while hospitalized they can be subject to multiple co-payments for various medications, procedures and tests."

LTC Comment: When the Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) repealed Medicare’s three-day hospitalization requirement (for SNF coverage), private LTC insurance policies dropped the same requirement. But Congress repealed MCCA ’88 one year later thus reinstating the Medicare rule. Private insurance policies never did return to the earlier more restrictive system.

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12/23/2013, “Connecticut rejects LTCI rate hike request,” by Allison Bell, LifeHealthPRO

Quote: "The Connecticut Insurance Department is refusing to let an insurer increase premiums for the holders of 28 individual long-term care insurance (LTCI) policies."

LTC Comment: What’s the alternative? Follow the government’s plan for Medicare and Social Security, i.e., let the unfunded liabilities build up until the programs collapse?

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12/23/2013, “How Seniors Manage to Adapt,” by Judith Graham, New York Times

Quote: “Many older adults want to live independently, without relying on assistance from others, for as long as they can. But how often does that actually happen? A study published recently in the American Journal of Public Health attempts to answer the question by examining how seniors adapt to disability, an issue that hasn’t received much scholarly attention. . . .

“And the results: an estimated 12 million older adults are fully able to manage on their own without any type of help (31 percent of all seniors on Medicare); 9 million have successfully adapted to disability (25 percent); 2.1 million have reduced their activities without acknowledging limitations (6 percent); 7 million find it hard to function independently (18 percent); and 7.7 million received assistance with at least one task over the last month (about 20 percent, including 1.1 million seniors living in nursing homes).”

LTC Comment: What more do you need to know before starting to plan responsibly for long-term care?

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Updated, Friday, January 3, 2014, 1:35 PM (Pacific)

Seattle—

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LTC BULLET: MINNESOTA MEDICAID ABORTS MOVE TO FOUR ADLS

LTC Comment: If home care saves Medicaid money, why would Minnesota change from requiring one ADL to four ADLs for recipients to qualify for its home care waiver? The answer after the ***news.***

*** ILTCI CONFERENCE. The 14^th annual Intercompany Long-Term Care Insurance Conference will convene March 16-19, 2014 at the Rosen Centre in Orlando, Florida. Get all the details and register here. Chris Gardner will keynote the event on opening day. His life was the basis for the book and movie “The Pursuit of Happyness.” The conference will close with a general session on “The Future of the Industry,” by Marc Cohen, a nationally known and highly regarded industry analyst. In between the opening and closing general sessions, you can expect the usual high caliber presentations, peerless networking, and excellent food and drink. This is a convocation not to be missed if you can manage it. Damon and I will be there to cover the program and report on it. Say hello if you attend and, if you don’t (rue the thought), then watch for our “LTC Embed” accounts of the action. ***

*** THE INSTITUTE FOR THE AGES will host its Seventh Annual International Conference on Positive Aging on Florida's Gulf Coast, February 9-12, 2014, at Sarasota's Hyatt Regency. Registration for the conference is open, with Early Bird rates offered through December 30. Tickets may be found online at www.positiveagingconference7.eventbrite.com. For more information about the Conference program, travel , hotel arrangements and other details, visit www.positiveagingconference.org. ***

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LTC BULLET: MINNESOTA MEDICAID ABORTS MOVE TO FOUR ADLS

LTC Comment: Minnesota planned effective January 1, 2014 to jump from requiring one ADL for Medicaid recipients to qualify for home-based LTC benefits to four ADLs. Read all about it in the Minneapolis Star Tribune here. This was the plan in a nutshell:

“Starting in January, thousands of low-income elderly Minnesotans could lose government benefits intended to help them stay in their homes and out of nursing care.

“In an effort to constrain runaway Medicaid spending, Minnesota is implementing stricter rules that will make it harder for senior citizens to qualify for home-based services, potentially leaving them with reduced care or no care at all. . . .

“Until now, it has been relatively easy for poor Minnesotans to qualify for the program. It was enough to show that they needed assistance in one basic activity of daily living, such as help with bathing or dressing.

“Under the new criteria, seniors must show that they need assistance in at least four activities of daily living; or, alternatively, they need help in a single critical activity such as toileting or transferring, for example, moving from a bed to a wheelchair.”

This new tougher rule was not implemented. Minnesota Governor Mark Dayton postponed the change for a year due to “an outcry from advocates for senior citizens and the poor.” Find details on the delay here.

What’s going on? First, why would Minnesota Medicaid cut home care services to save money if home care itself is supposed to save money? Second, why would the Governor delay the change if it makes sense? The answers are an object lesson in why and how Medicaid distorts the long-term care market.

The answer to the first question is that Minnesota Medicaid would not seek to cut home care services if they really did save money. They do not. No empirical evidence shows that home care saves money. It tends to delay, but not prevent institutionalization, thus causing higher costs overall. State Medicaid expenditures for all long-term care—home and community-based care and nursing home care combined—continue to rise rapidly everywhere. Furthermore, the availability of home care makes Medicaid much more attractive than when nursing home care was its only option. Thus, when home care is offered, the public is less likely to plan privately for long-term care and more likely to rely on Medicaid. Consequently, LTC expenditures, especially for home-based services, continue to skyrocket.

The answer to the second question is that the senior lobby and groups claiming to represent the poor brought political pressure to bear on the Governor leading to his decision to delay the change from one to four ADLs. The irony is that seniors and the poor do not benefit from programs to make Medicaid more attractive. The reason is that loose financial eligibility criteria make it too easy for middle class and affluent people to qualify for Medicaid LTC benefits. By admitting too many people to Medicaid, the Medicaid program has distorted the market for long-term care resulting in the public’s denial of LTC risk, their failure to save, invest or insure for long-term care, and Medicaid’s burgeoning and insupportable LTC expenditures. Those consequences do not help, rather they hurt the poor.

To put the issue in broader historical perspective, this is how Medicaid distorted the LTC market. It made nursing home care free in 1965 which resulted in (1) widespread and unnecessary use of nursing homes for custodial care (Medicaid’s institutional bias), (2) public indifference to LTC risk and cost which prevented successful development of private LTC financing alternatives (LTC insurance and home equity conversion), and (3) impeded growth of a private home care infrastructure and delivery system. We’re living with the consequences of these market distortions to this day.

What is changing is that state governments can no longer evade the budgetary consequences of providing most long-term care through Medicaid, a defacto entitlement masquerading as a means-tested public assistance program. The only thing propping up Medicaid’s LTC financing is the federal government’s ability to borrow and spend beyond its means. At some point, the federal deficit and debt will sow doubt among lenders (domestic and foreign bond holders) who will no longer provide needed funds except at higher interest rates. Higher interest rates will make servicing the federal debt impossible. States, which constitutionally cannot run budget deficits indefinitely, will be left holding the bag.

When economic gravity again prevails, the current system will come crashing down. The lesson in all this is that state Medicaid programs should seek to return the program to what it was intended originally to be—a safety net for the poor. When middle class people and the affluent really do have to spend down their own resources, including home equity, for long-term care, they will begin to understand why planning for LTC is necessary. That process has already begun as we’ve successfully curtailed Medicaid abuse over the years by requiring transfer of assets penalties, extending the look back period, mandating estate recoveries, and capping the home equity exemption. Much remains to be done, but Minnesota’s aborted effort to save money by cutting home care services is evidence the pressure for such changes remains heavy.

The lesson for individuals and families is that people who want access to quality home care when they need LTC someday had better plan to pay privately. The Medicaid safety net will no longer catch them, at least not for home care and, in the future, probably not even for nursing home care.

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Updated, Monday, December 23, 2013, 2:52 PM (Pacific)

Seattle—

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MERRY CHRISTMAS AND LTC NEWS AND COMMENT

LTC Comment: With Christmas Eve tomorrow, everyone’s probably too busy to read today’s LTC E-Alert. But just in case your eye scans this title in your email in-box, we wanted to wish you Happy Holidays. Thanks for your support of the Center for Long-Term Care Reform and for the critical work you do all year long to advance our common mission—better long-term care for all Americans.

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12/21/2013, “State to Cut Medicaid Benefits for the Elderly,” by Chris Serres, Minneapolis Star Tribune

Quote: “Starting in January, thousands of low-income elderly Minnesotans could lose government benefits intended to help them stay in their homes and out of nursing care.

“In an effort to constrain runaway Medicaid spending, Minnesota is implementing stricter rules that will make it harder for senior citizens to qualify for home-based services, potentially leaving them with reduced care or no care at all. . . .

“Until now, it has been relatively easy for poor Minnesotans to qualify for the program. It was enough to show that they needed assistance in one basic activity of daily living, such as help with bathing or dressing.

“Under the new criteria, seniors must show that they need assistance in at least four activities of daily living; or, alternatively, they need help in a single critical activity such as toileting or transferring, for example, moving from a bed to a wheelchair.”

LTC Comment: Rebalancing from skilled nursing to home care is supposed to save Medicaid money. So why is Minnesota cutting home care to save money? Simple. Rebalancing doesn’t save money. It makes Medicaid more attractive. Home care and nursing home expenditures continue to rise in tandem. The only way Medicaid can fund a true continuum of care is to target benefits to the needy, reduce caseloads, and divert many more people to private financing alternatives.

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12/19/2013, “Senate panel still thinking about public LTC options,” by Allison Bell, LifeHealthPRO

Quote: "Scott, who joined the Senate in January, pointed out that he is the grandson of a grandmother who died of Alzheimer's in 2001 -- and an insurance agent who sold private LTCI policies.

"Scott said he thinks the right kind of support could help private LTCI benefit as many as 40 percent of Americans.

"He said one major problem with any kind of voluntary LTCI program is that letting workers know LTCI benefits are available is much different from actually getting workers to sign up for coverage, especially given how many people think Medicare or ordinary health insurance will pay for nursing home care.

"‘The misinformation really takes away the motivation,’ Scott said.

"But the emphasis has to be on making as much use of private programs as possible, because the country is having a hard time paying for the public benefits programs it already has, Scott said."

LTC Comment: A former LTC insurance salesman who is a “tireless advocate for smaller government, lower taxes, and restoring fiscal responsibility in Washington” is now in the United States Senate. Don’t expect a sea change in LTC policy overnight, but that has to be a good thing.

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12/19/2013, “Oregon State Fines Bankers Life $115,000 for Mishandling Long-Term Care Claims, Denying Benefits Without Full Investigation [link],” Albany Tribune

Quote: "The Oregon Insurance Division has fined Bankers Life and Casualty Company, one of the state's largest long-term care insurers, $115,000 for improper claims handling."

LTC Comment: Another black eye for the embattled carrier.

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12/19/2013, “Senators weigh need for individual mandate in long-term care financing reform [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Senators and panelists alike agreed that the current system is broken and that it is all but impossible for individuals to prepare for LTC needs in the absence of a stable insurance option, either public or private."

LTC Comment: Yet another Congressional hearing that ignores the underlying problem and proposes "solutions" that would make the LTC financing system even worse. Forcing people to buy LTC insurance might be seductive to the LTCI industry, but consider how the "individual mandate" worked out for the acute health care industry. Ironically, LTC financing isn't hard to fix. All that's needed is to recognize the real problem: easy access to government financed LTC after the insurable even occurs. Change that, give Medicaid back to the needy, and hold others accountable for their own LTC expenses and most will begin to take responsibility to plan and insure for their own LTC.

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12/18/2013, “Association Announces Long Term Care Insurance CEO Forum Participants [link],” by Jesse Slome, PR.com

Quote: "The five panel participants announced today are:

Michael Doughty, President and General Manager, John Hancock Insurance
Michael Hamilton, Vice President, Lincoln Financial Group
Tim Kneeland, President, Transamerica Long Term Care
Scott McKay, Senior Vice President, Genworth Financial
Steve Sperka, President & CEO, Northwestern Long Term Care Insurance Company"

LTC Comment: The 2014 Long-Term Care Insurance Solutions Summit will convene May 18-20, 2014 in Kansas City. Registration is only $99. Check out all the details here: http://www.aaltci.org/2014summit/.

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12/18/2013, “Social Security to run 12% deficit for next decade,” by Stephen Dinan, Washington Times

Quote: "Social Security has been running in the red for several years and will see a 12 percent gap between the taxes it’s collecting and the benefits it’s projected to pay out over the next 10 years, according to a report Tuesday from the Congressional Budget Office."

LTC Comment: That shortfall is part of the 20 percent of the entire federal budget that we’re borrowing.

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12/17/2013, “Carrier updates LTCI commission structure,” by Allison Bell, LifeHealthPRO

Quote: "An insurer says it will return to an older, higher sales commission structure for some long-term care insurance (LTCI) products sold in some states."

LTC Comment: A nice little package under the tree from Genworth.

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12/17/2013, “2014 Long Term Care Insurance Predictions Released By AALTCI,” by Jesse Slome, ExpertClick

Quote: "'We expect sales of individual long term care insurance policies will increase between eight and 10 percent next year, though I wouldn't be surprised if growth was more than that,' declares Jesse Slome, director of the American Association for Long Term Care Insurance, the national trade organization. . . . Slome notes that election year politics at both the Federal and State level will refocus attention on the potential collapse of Medicaid. 'There will be a lot of finger pointing and dire predictions all of which will make Americans aware that government programs are not the desired solution,' Slome notes. 'Those with the ability to plan for their own future will recognize the importance of planning and long term care insurance provides a most viable alternative.'"

LTC Comment: I agree that the implosion of ObamaCare and the increasing volume of reportage about budget shortfalls, excessive borrowing, and unfunded entitlement liabilities will create a growing sense of unease among consumers. Whether that will translate into significantly higher LTCI sales . . . we’ll just have to wait and see.

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12/17/2013, “Retirement myths you need to ignore,” by Anthony Volastro, NBC News

Quote: "Myth # 3: You're too young to start paying for long-term care. Long-term care could be the next major retirement crisis in America. The Department of Health and Human Services expects that some 70 percent of Americans over the age of 65 will need it at some point. Currently, only about 8 million Americans have long-term care coverage."

LTC Comment: Well, thank you NBC. More of the same kind of advice would be welcome.

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12/17/2013, “Employed Family Caregivers Providing Complex Chronic Care: A report of the AARP Public Policy Institute and the United Hospital Fund [link],” by Susan C. Reinhard, Carol Levine, and Sarah Samis

Quote: "This report shows that employed family caregivers, despite their workplace obligations, perform many of the tasks that health care professionals do-a range of medical/nursing tasks including medication management, wound care, using meters and monitors, and more. While an earlier report from the authors documented that nearly half of family caregivers nationally performed these types of tasks-in addition to familiar personal care and household supports-the new report is the first to document that those who have the responsibilities of full- or part-time employment take on this high level of support in similar proportions."

LTC Comment: This report may help persuade younger generations to insure against LTC risk and cost--for their parents and themselves.

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12/16/2013, “5 predictions for the LTC insurance industry in 2014,” by Stephen D. Forman, LifeHealthPRO

Quote: "As we look ahead to the New Year and ponder what changes lie in store for our beloved long-term care insurance industry, this author finds it easiest to place into five categories the major influences which impact whether 2014 will be sweet or sour.
. . . There's no greater impediment to LTCI sales than government's 'free inheritance insurance for prosperous heirs,' as Steve Moses describes Medicaid. 2014 will see 9 years since the Deficit Reduction Act was passed — the last real attempt to curb Medicaid abuse — and time for renewed attention."

LTC Comment: Another thought-provoking piece by Center supporter and corporate member Stephen Forman of Long Term Care Associates.

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12/16/2013, “Long-term care is free,” by Romeo Raabe, LifeHealthPRO

Quote: “The partnership concept was designed to give an incentive to Americans of modest means to purchase at least some long-term care (LTC) insurance. . . . This should have triggered a considerable number of people purchasing some LTCI, but nothing happened. Nobody knew the program existed.”

LTC Comment: Center for Long-Term Care Reform Regional Representative Romeo Raabe is a passionate advocate for LTCI and the LTC Partnership program, but Wisconsin is a hard nut to crack.

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12/16/2013, “In denial that you've reached middle age? A survey identifies some telltale signs,” by Margaret Shapiro, Washington Post

Quote: "The 2,000 people surveyed by Benenden, a health-care and insurance firm, also made clear that middle age was no longer something for 30- or 40-year-olds to worry about. The life change, they said, began at 53. In fact, nearly half of the older-than-50s who were surveyed said they personally had not experienced ‘middle age’ yet."

LTC Comment: So, 53 is the new 40.

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12/16/2013, “Columnist Ellen Goodman wants families to have end-of-life talks before a crisis hits [link],” by Richard Harris, Washington Post

Quote: "In a survey it commissioned, The Conversation Project found that more than nine in 10 Americans think it's important to talk about their own and their loved one's wishes for end-of-life care, but fewer than three in 10 actually engage in these conversations."

LTC Comment: So a little over half, six in ten, think they should have the end-of-life conversation, but don’t. Kind of a sad commentary.

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12/16/2013, “Groups call for tough LTCI rate rules,” by Allison Bell, LifeHealthPRO

Quote: "The groups want regulators to create new conversion rights for any LTCI policyholder who has held a policy 10 years or more. If an LTCI policy rate increase occurs after a consumer has owned a policy for 10 or more years, the consumer should be able to convert to a paid-up policy with benefits equal to the amount of premiums paid, the groups say."

LTC Comment: I wonder what a “paid-up” policy would look like after only 10 years.

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12/16/2013, “Expanded Medicaid's fine print holds surprise: 'payback' from estate after death [link],” by Carol M. Ostrom, Seattle Times

Quote: "As thousands of state residents enroll in Washington's expanded Medicaid program, many will be surprised at fine print: After you're dead, your estate can be billed for ordinary health-care expenses. State officials are scrambling to change the rule."

LTC Comment: With easy financial eligibility rules getting even easier under ObamaCare, the only remaining disincentive (other than poor access and quality) to shift health and LTC costs to the government is the requirement we got into federal law in 1993 that people repay the welfare benefits they receive from their estates. Otherwise, Medicaid operates as free inheritance insurance for affluent heirs instead of as a safety net for the poor. Such perverse incentives are ruining Medicaid and bankrupting government.

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Updated, Friday, December 20, 2013, 10:37 AM (Pacific)

Seattle—

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: Our annual report on the Center for Long-Term Care Reform’s year follows the ***news.***

*** MEMBERSHIP BENEFITS. Let’s take a moment to review the benefits of individual and corporate membership in the Center. For more details, see our “Membership Levels and Benefits Schedule.”

In a nutshell, as a regular member of the Center ($150 per year or $12.50 per month), you’ll get our weekly LTC Bullets and LTC E-Alerts and a user name and password for access to our “Members-Only Zone.”

In “The Zone,” you’ll find the “Almanac of Long-Term Care,” our compendium of LTC news, reports and statistics stretching back more than a decade with links to critical research materials covering eleven topics from “Aging Demographics” to “Unfunded Liabilities.”

Other features in The Zone include key Medicaid and Medicare numbers updated yearly and archived, a transcription of our highly regarded “Long-Term Care Graduate Seminar,” links to the major current and past “Long-Term Care Cost Surveys,” a couple dozen reasons why veterans should not rely on VA benefits for long-term care and much more.

If you’re really serious about a career in long-term care financing, then join the Center as a “Premium Member” ($250 per year). At that level, you’ll have all the benefits of regular membership plus email and phone access to Steve Moses with a 24-hour turnaround and a subscription to our “Clipping Service,” placing you on the pioneering forefront of up-to-the moment news, data and analysis in your field.

Premium Elite members ($500 per year) get all of the above plus a complimentary LTC Bullet or LTC E-Alert sponsorship with a banner ad, complimentary Center membership for one assistant, and quickest-turnaround email and phone access to Steve Moses.

Regional Representative members ($500 per year) get all of the above and, after they meet all the qualifications—including five years qualified experience and completion of our LTC Graduate Seminar—the status of Regional Representative of the Center for Long-Term Care Reform.

Every member of the Center gets the “Big Benefit”: the knowledge and personal satisfaction that you're supporting the indefatigable research and public policy advocacy of the Center for Long-Term Care Reform.

Corporate membership at the Bronze, Silver, Gold and higher levels is also available. Each level includes the same benefits individual members receive for increasing numbers of employees or producers plus additional benefits exclusively for corporate members. ***

LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: 2013 was a frustrating year for long-term care policy. We waited month after month for the LTC Commission to be appointed only to wait longer for them to begin deliberations and finally to produce an anti-climactic report which fell on deaf ears. It was another fruitless effort and lost opportunity, despite the valiant efforts and hard work of a few clear-thinking members.

Then implementation of the Affordable Care Act, alias ObamaCare, stole the national spotlight. So far, no one has formally identified the third graders who designed Healthcare.gov, but rumor has it they are being held back for a year. In fact, the whole Rube Goldberg scheme to hijack health care is failing fast. Now we worry, was that their goal in the first place—to pave the way for a single-payer system? Will they snuff out the last embers of a free market in health care or will a better system rise like a Phoenix from the ashes, sloughing off both ObamaCare and the crony capitalist mixed system that preceded it?

In the meantime, the only viable alternative to welfare-financed long-term care is less than healthy. More long-term care insurance carriers left the business or raised premiums and regulators threaten to make life even more difficult for the brave companies and souls who remain. The Federal Reserve plans to keep interest rates near zero for at least another year propping up government’s deficit spending and Medicaid expansion while devastating the private insurance industry’s financial reserves and destroying its customers’ ability to afford its products.

Nor is home equity conversion yet a viable financing source for long-term care. Starting January 1, 2014, Medicaid’s home equity exemption increases from a minimum of $543,000 in most states to a maximum of $814,000 in 13 states. That travesty is only exceeded by the widespread abuse of Medicaid-compliant annuities, which were granted a longer lease on life by three major court cases this year. The wealthy can easily divest unlimited amounts of money, qualify for Medicaid LTC overnight, and crowd out poor people from the best long-term care by paying privately for awhile.

How bad is this situation? That’s exactly the question we set out to answer with the “Index of Long-Term Care Vulnerability” which figures prominently in the Center’s 2013 publications discussed below. It’s probably too late now to avoid a catastrophic financial meltdown, so what’s important next year is to understand the risk and do whatever we can do to mitigate the damage. That will remain the Center for Long-Term Care Reform’s focus in 2014.

Nevertheless, we expect 2014 to begin a turnaround. Disenchantment with Medicaid expansion on the acute and long-term care sides will grow. Political support for ever-more-deficit spending with borrowed funds will decline. Disillusionment with entitlement programs and increasing evidence of their unfunded liabilities will compel thoughtful citizens to reassess their retirement risks and take more personal responsibility. The more of them who do so the less disastrous the inevitable collision with financial reality will be when it occurs.

On that happy note, let’s turn to the Center for Long-Term Care Reform’s year in brief.

LTC Bullets

The Center for Long-Term Care Reform endeavors every year to keep our members educated and updated about important news and developments bearing on long-term care financing policy.

Once a week, usually on Fridays, we publish our LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the five latest Bullets here and archives of all 1025 Bullets (so far), by date here and by topic here. These 1000 plus articles are a valuable historical resource. Make use of them.

In 2013, to celebrate the Center’s 15^th anniversary (April 1, 2013) and our thousandth LTC Bullet (published May 25, 2013), we began a retrospective series highlighting the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998. We’ve completed four of our seven main topical areas. Check them out as compiled, edited and published by Damon:

“LTC Bullet: The LTC Problem and Solutions: Thousand Bullets Retrospective”

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

“LTC Bullet #1,000: Medicaid Planning: Thousand Bullets Retrospective”

“LTC Bullet: LTC Services: Thousand Bullets Retrospective”

In 2014, we’ll bring you the remainder of our retrospective series covering these topical areas: “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.” Stay tuned.

Highlights of our 2013 LTC Bullets include:

January: So What If the Government Pays for Most LTC?, 2011 Data Update

February: Bipartisan Congressional Blast at New York Medicaid

March: National LTC Commission Disbanded: Did this April Fool’s report by spokesman “Tungan Sheek” catch you off guard?)

April: SCAN the LTC Possibilities

May: Let’s Play LTC Jeopardy

June: The Role of Estate Recoveries in LTC Financing

July: Medicaid Spend Down that Isn’t and Why it Matters

August: Do the Rich Benefit from Medicaid?

September: The Tarnished Name of Assisted Living

October: Why Don’t Children Buy LTCI for Parents?

November: Annuity Blues

December: A twofer: Government LTC is Getting Old announced publication of our Georgia report and The Index of Long-Term Care Vulnerability: A Case Study in Virginia.

The Center for Long-Term Care Reform published a total of 43 LTC Bullets in 2013.

LTC E-Alerts

Our LTC E-Alerts serve a different purpose than the Bullets. We scan the print and electronic literature on long-term care services and financing every day. We identify the articles, speeches and reports that we consider most important for Center members to read, hear or see. Then we cite them by date, title and author; we provide a representative quote from the source; and we give our “take” on what it means in our “LTC Comment.”

The main idea behind the LTC E-Alerts is to lift the burden of time-consuming research off the shoulders of LTC professionals whose time is better spent providing financial planning advice to clients, selling long-term care insurance, counseling borrowers on home equity conversion, or supplying any of the many other critical services our members provide. It’s called “division of labor.” We have to stay abreast of everything that’s happening in the popular and professional media. We pore over tons of material so you don’t have to spend nearly as much time doing so.

The Center for Long-Term Care Reform published a total of 38 LTC E-Alerts in 2013.

LTC Clipping Service

2013 was our second year offering a clipping service in real time. In addition to getting a summary of the news and key professional developments once a week, we send our clipping service subscribers an average of three items per work day. Reading them on the go keeps your professional knowledge at a peak minute-by-minute. They make a nice break from other duties. And you’re probably more likely to read a few items per day than to go through the whole list of publications in the weekly LTC E-Alerts at a sitting.

We explained all the details and pricing for the LTC Clipping Service in LTC Bullet: New LTC Clipping Service. Check it out. If you’d like to subscribe, contact Damon at 206-283-7036 or damon@centerltc.com.

The Center for Long-Term Care Reform published a total of 742 LTC Clippings so far in 2013 or roughly 2.1 per calendar day and 3.0 per work day.

Publications

The Center for Long-Term Care Reform published three major reports in 2013. One more is pending and we hope to report its publication before the end of this year. Check them out at these links:

Maximizing NonTax Revenue from MaineCare Estate Recoveries, Center for Long-Term Care Reform, Seattle, Washington, May 15, 2013.

The Index of Long-Term Care Vulnerability: A Case Study in Virginia, published simultaneously on November 26, 2013 by the Thomas Jefferson Institute and the Center for Long-Term Care Reform (archived here.)

The Index of Long-Term Care Vulnerability: A Case Study in Georgia, published simultaneously December 3, 2013 by the Georgia Public Policy Foundation and the Center for Long-Term Care Reform (archived here.)

Pending publication: The Index of Long-Term Care Vulnerability: A Case Study in New Jersey.

Our three most recent study reports all carry the title “The Index of Long-Term Care Vulnerability.” The Index is a seven-part analytical tool with numerous subparts designed to help legislators and policy-makers measure the sustainability of their states’ Medicaid and long-term care financing systems. Its objective and empirical metrics facilitate analysis of Aging Demographics, Morbidity, Medicaid viability, Federal financing, State financing, Private financing, and Entitlement mentality as these factors will impact long-term care in the future. In each of our “Index” reports, you will find a version of the Index filled out by Steve Moses and another blank version which you are invited to fill out based on your own opinion of how each of the key factors should be weighted and scored.

Other publications by the Center this year included:

“States Decry Medicaid LTC Loopholes,” Long Term Care News, Issue Number 34, June 2013, pps. 20-23.

“Government Role in Long-Term Care: It's Getting Old,” op-ed posted on December 6, 2013 by the Georgia Public Policy Foundation (link0

“Government's role in long-term care is getting old,” The Columbia County News-Times, December 11, 2013 (link)

Speeches

Steve Moses addressed 125 LTCFP partners at their annual all-partners meeting in San Diego on January 12, 2013; 15 dinner guests of the Maine Heritage Policy Center in Bangor, Maine on May 22, 2013 regarding MaineCare’s long-term care program, our studies, and the importance of estate recovery; 60 luncheon guests of the Maine Heritage Policy Center in Portland, Maine on May 23, 2013 on the same topic; 40 attendees and a live C-SPAN 2 audience at the American Enterprise Institute on May 31, 2013 for a program titled “Long-term care: Markets or mandates?” Video here: http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/; 70 agents on an AIM webinar on July 30, 2013 titled "Long Term Care Update -- Congressional Committee Status"; 40 MBA and other students at the Wharton Business School by Skype video on September 18, 2013; 40 state attorneys at the 46^th Annual Conference of the American Association of Public Welfare Attorneys in Newport, Rhode Island on November 12, 2013 and 28 attendees at the Virginia Health Care Round Table on December 12, 2013 sponsored by the Thomas Jefferson Institute for Public Policy.

Plans for 2014

We’re still formulating our strategy for the coming year. A likely target of our efforts is the egregious abuse of Medicaid-compliant annuities which we documented this year in two of our reports. We have in mind a research project to review the loophole in federal law that enables the practice and to document more cases like the $450,000 and $900,000 examples we discovered this year. If we can get the support for such a study and conduct it, we’ll produce the evidence and argument to convince Congress to end this Medicaid planning gimmick.

Further plans involve refining the Index of Long-Term Care Vulnerability, applying it in more states, and bringing the results to the attention of the powers-that-be who can adjust course and improve likely future outcomes.

Season’s Greetings

All in all, 2013 was a challenging year for long-term care financing and for your Center. We look forward to a better 2014 as the ground becomes more fertile for public policy research and advocacy. The pendulum has begun to swing back, away from expansion of government dependency and toward more fiscal responsibility.

We wish our many friends and members a Merry Christmas and Happy New Year.

The Center’s Clipping Service will continue without interruption, but for everything else, we’ll see you next year.

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Updated, Monday, December 16, 2013, 3:42 PM (Pacific)

Seattle—

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O’CARE EXPLAINED IN ONE PARAGRAPH AND LTC NEWS AND COMMENT

LTC Comment: I usually dislike “fram”— email spam from friends. But this item, purporting to represent Donald Trump’s one-paragraph assessment of ObamaCare, caught my eye:

“Let me get this straight.... We're going to be ‘gifted’ with a health care plan we are forced to purchase and fined if we don't, which purportedly covers at least ten million more people, without adding a single new doctor, but provides for 16,000 new IRS agents, who have recently demonstrated their objective and professional integrity; written by a committee whose chairman says he doesn't understand it, passed by a Congress that didn't read it but exempted themselves from it, and signed by a President who smokes, with funding administered by a treasury chief who didn't pay his taxes, for which we'll be taxed for four years before any benefits take effect, by a government which has already bankrupted Social Security and Medicare, Fannie Mae and Freddy Mac, and the Post Office all to be overseen by a surgeon general who is obese, and financed by a country that's broke!!!!! 'What . . . could possibly go wrong'??”

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12/13/2013, “First-ever CDC report: Nursing homes provide most long-term care nationwide, alternative settings gain ground in the West [link],” by Tim Mullaney,

Quote: "Research has shown home- and community-based care is increasing at a faster rate than nursing home care, the report states. However, nursing homes are still by far the most prevalent long-term care settings in most regions, the NCHS research found.”

LTC Comment: But combined HCBS and nursing facility costs continue to increase rapidly giving the lie to the notion that rebalancing from institutional to home care saves money. So what? We should make the change even if it doesn’t save money. The key is to rely less on Medicaid and more on private financing for LTC. Otherwise, publicly funded care in all venues will continue to grow out of control.

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12/12/2013, “Cancer deaths rise to 8.2 million, breast cancer sharply up,” by Kate Kelland, Reuters

Quote: “The global death toll from cancer rose to 8.2 million in 2012 with sharp rises in breast cancer as the disease tightened its grip in developing nations struggling to treat an illness driven by Western lifestyles. Cancer deaths were up 8 percent from 7.6 million in a previous survey in 2008 and breast cancer killed 522,000 women last year, up 14 percent in the same period, according to the World Health Organisation's International Agency for Research on Cancer (IARC)."

LTC Comment: Take note, CI.

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12/12/2013, “5 Steps To A More Affordable Retirement,” by Barbara Davis, Forbes

Quote: "Long-term care insurance policies can help hedge your risk. If you’re able to afford the monthly premiums, buying a policy in your 50s or early 60s might be a smart investment to tamp down potential retirement costs."

LTC Comment: Good advice.

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12/11/2013, “Genworth CEO Would Support Public/Private Long-Term Care Insurance [link],” by Howard Gleckman, Forbes

Quote: "After Thomas J. McInerney took the helm of insurance giant Genworth Financial GNW +0.67% Inc. last January, he ordered an intensive review of the firm’s long-term care insurance business. Genworth was one of the biggest players in the market, but the industry was struggling and investors unhappy. . . . McInerney . . . says is looking at ways to create a joint public/private insurance product where government would assume risk for catastrophic care. McInerney’s interest in such a solution is a major change for Genworth, which in the past had been skeptical of a public/private partnership."

LTC Comment: It's good to know the person at the helm of Genworth is thinking creatively, but none of the ideas for reforming LTC insurance and LTC financing discussed in this article address the basic problem: Medicaid LTC eligibility is easy to get after the insurable event occurs. Fix that and everything else falls into place. Leave it alone and most people won't buy LTCI regardless of its form, tax deductions, education campaigns or any other public efforts to encourage its purchase. What's so hard to grasp? Doesn't half a century of experience teach us anything?

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12/12/2013, “On Avoiding Long-Term Care Insurance,” Susan Kaplan, Wall Street Journal

Quote: "Although it seems like blasphemy, I don't recommend that clients purchase long-term care coverage. It's a burden on clients who have to move heaven and earth to pay extremely high premiums. Further, the odds that your client will continue paying for coverage until they actually need it are slim."

LTC Comment: I'm undecided whether ignorance or stupidity prevails in this article, but both are present in nearly every sentence.

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12/12/2013, “More than 8 million use long-term care services in USA,” by Sharon Jayson, USA Today

Quote: "More than 8 million people (mostly women and mostly older than 65) used services of a long-term care provider last year, according to the first-ever compilation of federal data profiling the types of providers in the USA and the people who use them. The report, released Thursday, is based on the National Study of Long-Term Care Providers, a new effort by the National Center for Health Statistics to get a better handle on the options for care and determine trends. . . . The five areas of paid, regulated providers are adult day service centers, home health agencies, hospices, nursing homes, and assisted living and similar residential care communities. The report for 2012 includes some 2011 data; officials say numbers will be updated every two years."

LTC Comment: America’s LTC service delivery system has changed radically over the past five decades. Starting in 1965, free nursing home care provided by Medicaid created the system’s institutional bias compounded by inadequate reimbursement, poor access and low quality. Disenchanted by Medicaid financed nursing home care, people able to pay privately started purchasing assisted living, home care and adult day care. Now government is trying to rebalance Medicaid and integrate funding streams from Medicare and Medicaid in order to pay for more home and community-based care. Unfortunately, state and federal governments have too few resources to make such a new service delivery and financing system work well. So high costs and low quality remain for most people who rely on Medicaid. Private payers suffer too but at least they can demand higher quality or change providers.

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12/11/2013, “USA's health improving; Hawaii ranks first, Miss. Last,” by Michelle Healy, USA Today

Quote: "An annual measure of the nation's health status finds evidence that Americans made 'a notable shift' toward better health in 2013. Important gains were seen in more than two-thirds of the measures analyzed for the 2013 America's Health Rankings report, released today . . .."

LTC Comment: Good news on the acute care side, but ironically, healthy people live longer and are therefore more likely to succumb to the debilitating chronic illness that require long-term care.

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12/11/2013, “Medi-Cal Clinics Recruit Long-Term Care Patients To Boost Billings [link],” California Healthline

Quote: "Some rehabilitation clinics that receive funding from the Drug Medi-Cal Treatment Program have been using money and other incentives to recruit board-and-care residents in order to bill the program for more services, the Center for Investigative Reporting reports. Medi-Cal is California's Medicaid program . . .."

LTC Comment: Just another kind of "Medicaid planning."

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12/11/2013, “Government's role in long-term care is getting old,” by Stephen Moses, The Columbia County News-Times

Quote: “The single biggest expense senior citizens face is long-term care. The risks and cost are huge: a 20 percent chance they'll need five years or more, with costs of $181 per day for a nursing home in Georgia. Yet few Georgians plan for long-term care. Only 3.5 percent of Georgians over age 40 own private insurance; the national average is 4.5 percent. Why don't they?”

LTC Comment: I wrote this “op-ed” to introduce our new report titled “The Index of Long-Term Care Vulnerability: A Case Study in Georgia.”

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12/10/2013, “Feds to study LTCI attitudes,” by Allison Bell, LifeHealthPRO

Quote: "The U.S. Department of Health and Human Services (HHS) is getting ready to conduct a long-term care insurance (LTCI) awareness survey."

LTC Comment: Another government boondoggle study. They gave the contract to the Research Triangle Institute, probably under the guidance of Josh Wiener, a staunch advocate of government-financed long-term care and a stauncher critic of private LTC insurance. It's like a fox study the henhouse. Moreover, asking people what they think about LTC insurance or LTC financing policy doesn't work. They tell researchers the same thing every time, i.e., they don't know who pays and if they think they know they're wrong, and besides they aren't very interested anyway. The important question for researchers to ask is "why is the public asleep about LTC risk and cost if the danger is so great?" That's the implicit and mistaken premise they never question. Get Medicaid out of paying for most LTC after the insurable event occurs and people will quickly get serious about saving, investing, and/or insuring for LTC risk when it's real.

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12/10/2013, “Boomers Terrified of Future Health Care Costs: Nationwide Financial Survey shows 30 percent jump in fear level [link],” Life & Health Advisors

Quote: "More than three in five (61 percent) pre-retirees now say they are ‘terrified’ of what health care costs may do to their retirement plans. The annual survey by Nationwide Financial released today reveals the number of affluent pre-retirees jumped 30 percent from the fewer than half that used the word ‘terrified’ last year to describe their concerns about paying for health care costs in retirement."

LTC Comment: In a rational world, people “terrified” by a financial risk buy insurance to protect against it. What’s different in our world? Government’s futile attempt to cover everyone by spreading risk without pricing it.

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12/9/2013, “Federal exchange sends unqualified people to Medicaid,” by Jayne O'Donnell, USA Today

Quote: "The federal health care exchange is incorrectly determining that some people are eligible for Medicaid when they clearly are not, leaving them with little chance to get the subsidized insurance they are entitled to as the Dec. 23 deadline for enrollment approaches. . . . Jessica Waltman, top lobbyist for the National Association of Health Underwriters, says she's heard a number of reports from around the country of people making as much as $80,000 a year being told they qualify for Medicaid on HealthCare.gov."

LTC Comment: Just what Medicaid needs: more ineligible recipients.

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12/8/2013, “Should you buy long-term care insurance?,” By Robert Digitale, The Press Democrat

Quote: "Insurance actuaries have estimated that 35 percent of clients will get paid on a claim for a long-term care policy that requires the buyer to pay for the first 90 days of care before eligibility for coverage."

LTC Comment: Used in the article as a reason not to buy LTCI, this fact is irrelevant. Insurance protects against catastrophic risk, which a 90 day LTC stay is not. Only 69 percent of people over age 65 need any care, which excludes most insureds from having claims. That’s what makes long-term care an insurable risk, i.e., a risk private insurers can spread and price. What matters is that most insureds with long-term stays (over 90 days) do have their claims paid, but that stat is missing from the article.

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12/7/2013, “ObamaCare created a Medicaid time bomb,” by Michael D. Tanner, New York Post

Quote: "The good news, if you want to call it that, is that roughly 1.6 million Americans have enrolled in ObamaCare so far. The not-so-good news is that 1.46 million of them actually signed up for Medicaid. If that trend continues, it could bankrupt both federal and state governments."

LTC Comment: Like a gambler who doubles his bet every time he loses in the hope he’ll win before his stake runs out, the government’s expansion of Medicaid is a race against fiscal insolvency.

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Updated, Friday, December 13, 2013, 10:43 AM (Pacific)

Seattle—

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LTC BULLET: GOVERNMENT LTC IS GETTING OLD

LTC Comment: Georgia Medicaid is free inheritance insurance, after the ***news.***

*** Happy Friday the 13^th. Be careful out there! ***

*** ILTCI CONFERENCE. The 14^th annual Intercompany Long-Term Care Insurance Conference will convene March 16-19, 2014 at the Rosen Centre in Orlando, Florida. Get all the details and register here. Chris Gardner will keynote the event on opening day. His life was the basis for the book and movie “The Pursuit of Happyness.” The conference will close with a general session on “The Future of the Industry.” Stay tuned here to learn who will deliver that challenging presentation. In between the opening and closing general sessions, you can expect the usual high caliber presentations, peerless networking, and excellent food and drink. This is a convocation not to be missed if you can manage it. Damon and I will be there to cover the program and report on it. Say hello if you attend and, if you don’t (rue the thought), then watch for our “LTC Embed” accounts of the action. ***

*** VIRGINIA HEALTH CARE ROUND TABLE. The Thomas Jefferson Institute for Public Policy convened a conference in Richmond yesterday to discuss health and long-term care policy. Some of the leading national critics of the Affordable Care Act (aka ObamaCare) spoke including Grace-Marie Turner of the Galen Institute and Michael Tanner of Cato. Addressing the challenges to Medicaid and long-term care financing, respectively, were Bob Helms of the American Enterprise Institute and the Center for Long-Term Care Reform’s Steve Moses. The audience of public officials, business and professional people came away educated but hardly edified. National health and LTC public policy are on a rapidly accelerating deadly course. ***

LTC BULLET: GOVERNMENT LTC IS GETTING OLD

LTC Comment: For the second week in a row, we’re announcing publication of a major study by the Center for Long-Term Care Reform. The Georgia Public Policy Foundation (GPPF) underwrote the project. Steve Moses conducted the onsite research last summer and produced the draft report on deadline September 30, 2013. You can read “The Index of Long-Term Care Vulnerability: A Case Study in Georgia,” on the GPPF’s website here or on the Center for Long-Term Care Reform’s website here.

Now, if you’re thinking to yourself “Gee, that title sure sounds familiar,” give yourself a gold star. Last week’s published report was “The Index of Long-Term Care Vulnerability: A Case Study in Virginia.” And, get ready for this, we have one more coming soon titled “The Index of Long-Term Care Vulnerability: A Case Study in New Jersey.” What’s with all this “Index” business you might ask.

The “Index of Long-Term Care Vulnerability” is an analytical tool we’ve developed to help legislators and policy makers (and anyone else who’s interested) assess the future sustainability of their state’s long-term care service delivery and financing system. Check it out here as applied to Virginia and here (pages 27-28) as applied to Georgia in our latest report. In both reports, you’ll find the Index filled out by me for the USA and for the state in question. In each of the reports, you’ll also find a blank version of the Index inviting you to weight the key factors determining the sustainability of LTC and to score your own state’s vulnerability. Check it out here and let me know what you conclude.

Op-Ed Published

I wrote an op-ed to introduce our Georgia report to the media. I titled it “Georgia Medicaid is Free Inheritance Insurance.” Editors change titles sometimes with or without telling authors. That can be annoying, but this time I had no objection to the new title. “Government's role in long-term care is getting old” was the title assigned by The Columbia County News-Times. Read the piece here or below.

It’s true literally and figuratively that government LTC is getting old. It started long before Medicaid and Medicare came along in 1965, but it has ballooned ever since. Government interference in the LTC market is not only temporally old, it is deadly tiresome as well. When will the powers-that-be learn that providing underfinanced LTC after the insurable event has occurred to consumers who should, could and would have planned responsibly and paid privately otherwise--is a recipe for insolvency?

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Here’s the op-ed for your consideration:

“Government’s Role in Long-Term Care is Getting Old”
by
Stephen A. Moses

The single biggest expense senior citizens face is long-term care. The risks and cost are huge: a 20 percent chance they’ll need five years or more, with costs of $181 per day for a nursing home in Georgia. Yet few Georgians plan for long-term care. Only 3.5 percent of Georgians over age 40 own private insurance; the national average is 4.5 percent. Why don’t they?

The answer is surprising. Most frail or infirm elderly Georgians don’t pay for their own long-term care. In fact, expensive long-term care in Georgia is financed mostly by the state and federal government through Medicaid, a means-tested public assistance program. Georgia Medicaid spent a billion dollars on long-term care in 2011, most of it for nursing home care (76 percent) but a substantial portion (13 percent) for the more popular, waivered home care services. Medicaid recipients occupy 72 percent of the beds in Georgia’s nursing homes.

The way Medicaid eligibility works results in most people qualifying for Medicaid-financed long-term care almost regardless of their income or assets. That’s the conclusion we reached in a study sponsored by the Georgia Public Policy Foundation and published recently in a report titled The Index of Long-Term Care Vulnerability: A Case Study in Georgia. Read it here: http://www.georgiapolicy.org/ftp_files/IndexofLong-TermCareVulnerability.pdf.

This is what we found:

Georgians can circumvent Medicaid’s $2,130 per month income limit by setting up Qualified Income Trusts (QITs). County eligibility workers provide “templates” to help families set up QITs, which enable people with substantially higher incomes to qualify for Medicaid-financed long-term care.

Nor are assets a significant obstacle to qualifying for Medicaid. The $2,000 limit applies only to cash or assets easily convertible to cash. Medicaid recipients in Georgia may also retain up to $536,000 worth of home equity, plus one automobile, prepaid burial plans, personal belongings and home furnishings of unlimited value.

Income and asset eligibility rules are even more generous for married couples and Georgia Medicaid is more lenient in this area than federal rules require. The spouse in the community can draw on the institutionalized spouse’s income to bring monthly income up to $2,898. The non-institutionalized spouse may retain $115,920 of the couple’s joint assets. Federal rules limit the income to $2,184 (without a household to maintain) and set the minimum asset limit to only half the joint assets, not to exceed $115,920.

Even wealthier Georgians qualify by retaining Medicaid planning attorneys to impoverish themselves (or more often, their parents) artificially. Common Medicaid planning techniques used in Georgia include asset transfers, promissory notes, annuities and purchase of exempt assets. For example, according to county eligibility workers, annuities worth hundreds of thousands of dollars are established in ways that prevent the state from capturing any of the money to offset Medicaid costs.

Isn’t this retained wealth recaptured from the estates of deceased Medicaid recipients? Georgia Medicaid finally implemented an estate recovery program a decade after the federal Omnibus Budget Reconciliation Act of 1993 made one mandatory. Georgia’s program is set up in such a way, however – exempting, for example, the first $25,000 of an estate – that it is unlikely to recover much revenue.

Georgia Medicaid makes free or subsidized long-term care available to most residents of the state. The consequences of this generous policy are that few Georgians plan for long-term care or purchase insurance for it, and most expensive long-term care is paid for by Medicaid, a large and rapidly growing program that consumes more and more state and federal resources.

Georgia should seek ways to return Medicaid to its original intent: a long-term care safety net for people in need. Without that, Medicaid will remain free inheritance insurance for relatively prosperous heirs, deflating their sense of urgency about long-term care risk and cost, and resulting in too many ending their lives on Medicaid for that program to survive.

(Stephen Moses is president of the Center for Long-Term Care Reform and author of The Index of Long-Term Care Vulnerability: A Case Study in Georgia.)

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Updated, Monday, December 9, 2013, 1:20 PM (Pacific)

Seattle—

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ANNUITY ABUSE AND LTC NEWS AND COMMENT

LTC Comment: Today’s lead article is about an appeals court case argued by Bill Browning, a former President of the National Academy of Elder Law Attorneys whom I debated eleven years ago at one of Jesse Slome’s national conferences:

“Listen to "The Great Debate": Steve Moses v. NAELA (National Academy of Elder Law Attorneys) President-Elect Bill Browning, held at the National LTCi Producers Summit, November 18-19, 2002 - St. Louis, Missouri.”

The net result of Mr. Browning’s “win” in this case is that his client diverted $175,000 from Medicaid spend down rules thus transferring the cost to taxpayers at the expense of a program intended to help the poor.

In the greater scheme of annuity abuses, this one is small potatoes. I’ve documented examples of $450,000 and $900,000 annuities in recent reports available here and here. In fact, there is no limit on how much money can be divested through Medicaid compliant annuities.

This is a quote from a Virginia Medicaid eligibility worker frustrated by the problem of annuity abuse:

“Medicaid is a program that pays for pretty much anyone who needs care and knows how to get it, not just for the poor.”

(Source: Stephen A. Moses, “The Index of Long-Term Care Vulnerability: A Case Study in Virginia,” The Thomas Jefferson Institute for Public Policy, November 2013, p. 7; http://www.thomasjeffersoninst.org/files/3/LongTermCare.pdf.)

December 2013, “Community Spouse's Purchase of Annuity Before Medicaid Determination Is Not Improper Transfer [link],” ElderLaw Answers

Quote: “In a case argued by Ohio ElderLawAnswers member attorney William Browning, the U.S. Court of Appeals for the Sixth Circuit rules that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer and that the annuity does not need to name the state as a remainder beneficiary. Hughes v. McCarthy (6^th Cir., No. 12-3765, Oct. 25, 2013).”

LTC Comment: Waste, fraud and abuse are rampant in Medicaid’s long-term care financing program, but the worst of these is abuse that is legal. Waste can be fixed and fraud can be prosecuted, but legal abuse goes on and on unless and until Congress acts. Yet, year after year, nothing happens to close this gaping loophole and the Centers for Medicare and Medicaid Services (CMS) remains silent about Medicaid annuity abuse.

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12/7/2013, “Long Term Care Insurance Association Praises Virginia LTC Vulnerability Report [link],” by Jesse Slome, American Association for Long-Term Care Insurance

Quote: "The Association director praised a new report researched and written by Stephen Moses, president of the Center For Long-Term Care Reform and presented by the Thomas Jefferson Institute. 'This is a very well prepared look at the current environment that draws some very dire conclusions if we continue to hide our heads in the sand,' Slome explains. 'Kudos to Moses and the Center for another excellent look at the problem in an extremely fair and balanced way.'"

LTC Comment: Thanks to our friends at AALTCI for this endorsement.

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12/6/2013, “Government Role in Long-Term Care: It's Getting Old,” by Stephen A. Moses,” Georgia Public Policy Foundation

Quote: "Georgia should seek ways to return Medicaid to its original intent: a long-term care safety net for people in need. Without that, Medicaid will remain free inheritance insurance for relatively prosperous heirs, deflating their sense of urgency about long-term care risk and cost, and resulting in too many ending their lives on Medicaid for that program to survive."

LTC Comment: This is the op-ed I wrote for the Georgia Public Policy Foundation announcing publication of our report titled “The Index of Long-Term Care Vulnerability: A Case Study in Georgia [link].”

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12/6/2013, “2014 Long Term Care Insurance Tax Guide Published by AALTCI,” by Jesse Slome, American Association for Long-Term Care Insurance

Quote: "Long term care insurance premiums remain one of the tax deductible expenses few individuals are aware of according to the American Association for Long Term Care Insurance. A new guide produced by the organization explains the current rules and the new IRS tax deduction limits for 2014."

LTC Comment: Heed and lead.

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12/5/2013, “Nursing home $10,000 suicide fine upheld,” by Dave Surico, McKnight's LTC News

Quote: "A federal appeals court has upheld a $10,000 fine against a skilled nursing facility for leaving a suicidal patient unattended, who then walked out of the facility and killed himself. The U.S. Court of Appeals for the Ninth Circuit said the Department of Health and Human Services' ruled that the decision (Del Rosa Villa v. Sebelius, 2013 BL 330965, 9th Cir., No. 12-71685, 11/26/13) to fine petitioner Del Rosa Villa was supported by substantial evidence. The court denied a petition to overrule decisions that led to the fine."

LTC Comment: Care to make a guess whether this facility was mostly Medicaid or mostly private pay?

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12/5/2013, “Russian diplomats charged in $1.5M Medicaid scheme,” by Associated Press, Politico

Quote: "More than three dozen Russian diplomats and their spouses enjoyed luxury vacations and spent tens of thousands of dollars at the finest stores as they lied about their incomes to get the government to pay their health care bills, federal prosecutors in New York said Thursday."

LTC Comment: Medicaid planning: it’s not just for elder law attorneys anymore.

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12/4/2013, “How is Medicare Advantage really doing?,” by Allison Bell, LifeHealthPRO

Quote: "Two witnesses painted completely different pictures of the state of the Medicare Advantage program today at a House Energy & Commerce health subcommittee hearing."

LTC Comment: Who are you going to believe? An employee of a research firm that depends on government grants or the former chief of the Congressional Budget Office?

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12/4/2013, “Nursing homes lagging in palliative care, researchers say,” by Dave Surico, McKnight's LTC News

Quote: "Nursing homes have lagged in the area of palliative care, and need to take a seat at the table, according to researchers in a Health Affairs blog. The lack of intertwinement between nursing homes and palliative care is due to a number of factors: regulations that favor rehabilitation, inadequate staff education around palliative care, financial disincentives, lack of reimbursement and misconceptions, write authors Mary Ersek, Ph.D., RN, David Stevenson, SM, Ph.D., and Justine Sefcik."

LTC Comment: All sorts of perverse incentives are built into government financed long-term care which makes providers, instead of patients, the customers.

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12/4/2013, “Genworth Says Higher Premiums Blunt Long-Term Care Errors,” by Dan Reichl, Bloomberg

Quote: "Genworth Financial Inc., the largest seller of long-term care coverage, is counting on periodic rate increases of 2 percent to 4 percent to maintain profit targets, after larger insurers retreated from the business to limit risk. 'I don't think it's prudent to be in this business unless you can, over time, re-rate policies to reflect the difference between how actual reality played out versus your original assumptions,' Chief Executive Officer Tom McInerney said today in an interview. 'You have to ultimately have a return in the mid-teens range. If it's less than that, on a risk-adjusted basis, investors shouldn't invest in the business.'"

LTC Comment: “If at first you can’t succeed, try, try again.” The irony is that government has set aside nothing to ensure it will be able pay its entitlement promises. Yet the private sector is criticized for doing the responsible thing, i.e., making sure reserves will suffice to pay future claims.

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12/3/2013, “Carriers slam Medicare Advantage moves: AHIP says carriers should be able to cut MA networks [link],” by Kathryn Mayer, BenefitsPRO

Quote: "Because of the Patient Protection and Affordable Care Act, seniors enrolled in Medicare Advantage plans are paying higher premiums and experiencing a reduction in benefits and disrupted coverage. And that's just the beginning. That's the dire message from America's Health Insurance Plans, which predicts will hit seniors even harder over the next two years."

LTC Comment: Unfortunately, the insurance industry cozied up to the Administration to help pass the Affordable Care Act (aka ObamaCare) and now we’re all living with the disastrous consequences: higher premiums for worse coverage. The private sector (Charlie Brown) never seems to learn that government (Lucy) always offers a sweet deal (the football) and then reneges after companies adapt to take advantage.

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12/3/2013, “Post-hospital care spending jumps,” by Dave Surico, McKnight's LTC News

Quote: "Bundled payment experiments are growing while Medicare spending on nursing homes continues to come under scrutiny, according to a Kaiser Health News/Washington Post report. Widely varied care, additional services and costs from state-to-state have drawn the attention of regulators."

LTC Comment: The risk is that cutting Medicare payments to nursing homes will undermine access to and quality of care funded (at less than the facilities’ cost of care) by Medicaid.

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12/3/2013, “North Dakota drafts short-term care insurance regs,” by Allison Bell, LifeHealthPRO

Quote: "The North Dakota Department of Insurance may add a section on short-term care insurance (STCI) to the state administrative code."

LTC Comment: Better some insurance than none.

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12/2/2013, “NIH deposits first batch of genomic data for Alzheimer's disease [link],” NIH News and Events

Quote: "Researchers can now freely access the first batch of genome sequence data from the Alzheimer's Disease Sequencing Project (ADSP), the National Institutes of Health (NIH) announced today. The ADSP is one of the first projects undertaken under an intensified national program of research to prevent or effectively treat Alzheimer's disease."

LTC Comment: One more step in a Sisyphean effort to conquer Alzheimer’s.

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12/2/2013, “Doctors Face A 24% Pay Cut In Both Medicare And Medicaid Reimbursements [link],” by Merrill Matthews, Forbes

Quote: "In 1997 Congress passed legislation, known as the 'sustainable growth rate' (SGR), to try and reduce Medicare spending. If Medicare spending grew faster than a predetermined amount, doctors' Medicare reimbursements would be cut the next year by enough to offset the overspending. Not surprisingly, Medicare spending didn't hit the target rate, and, again not surprisingly, Congress didn't want doctors to take the financial hit. So Congress has passed legislation, known as the 'Doc Fix,' multiple times to postpone the cuts and keep the reimbursement levels roughly the same. But those postponed deficits keep piling up, and come January doctors will see, on average, a 24 percent cut in Medicare reimbursement levels. And here comes the double whammy: Medicaid reimbursements will face the same 24 percent cut."

LTC Comment: The Center for Long-Term Care Reform proposed a solution to the “Doc Fix” problem that would save $30 billion per year and solve the LTC financing problem too. Read it here.

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12/1/2013, “Oversight of nursing home trust funds limited,” by Peter Eisler, USA TODAY

Quote: "Many states do not require criminal background checks on nursing home staff who manage residents' trust funds, and few demand audits of those accounts - a regulatory gap that contributes to scores of cases in which the money is stolen or mismanaged. Nearly every state requires background checks for nursing home staff in caregiving roles, but 20 states don't apply that requirement to office workers who do not routinely have direct patient contact, a USA TODAY review of state laws finds. Those office employees typically manage the trust accounts that nursing homes must maintain for residents who request that the facility safeguard their money."

LTC Comment: And why must nursing homes maintain “trust accounts” for residents? Because 2/3 of their residents are on Medicaid and the nursing homes have to help ensure that Medicaid residents’ assets never exceed $2,000 and throw them off the program that pays for their care. Private-pay patients don’t need nursing home trust accounts and don’t have to worry about crooked nursing home employees ripping them off.

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11/29/2013, “Why your clients need a care coordinator,” by Margie Barrie, LifeHealthPRO

Quote: "Q. The policies I’m selling contain a care coordinator benefit. How can I explain the value of that benefit to clients? A. Having hired a care coordinator for my mother, I am a big advocate of that benefit. When I tell my mother’s story to clients, they really understand how valuable a benefit caregiving is."

LTC Comment: Someone should do a study that compares the care coordinator benefit in a private long-term care insurance policy with whatever benefit, if any, is available under Medicaid.

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11/28/2013, “Large discrepancies found in Medicare spending on post-hospital care [link],” by Jordan Rau, Washington Post

Quote: "After years of trying to clamp down on hospital spending, the federal government wants to get control over what Medicare spends on nursing homes, home health services and other medical care typically provided to patients after they leave a hospital.”

LTC Comment: Great idea except that the only thing enabling nursing homes to provide custodial long-term care to two-thirds of their residents--who rely on Medicaid at less than the cost of providing the care--is that Medicare has paid very generously in the past. Take that away and the whole government LTC financing scheme collapses.

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11/27/2013, “Long-term care: The silent Medicaid killer,” by Kathryn Watson, Watchdog.org

Quote: "ALEXANDRIA, Va. — A silent threat to the commonwealth looms as the baby boomer generation gets older — long-term care costs like nursing home expenses, paid for by taxpayer-funded Medicaid.

“'Income, I found, is almost never an obstacle to qualifying for Medicaid,' said Stephen Moses, a former Medicaid state representative who is now president of the Center for Long-Term Care Reform and recently wrote a report on the state of long-term care in Virginia. [Emphasis in the original]

"Moses said Virginians need to take personal responsibility to save and find ways to finance nursing home care in the future, and lawmakers need to put more restrictions on eligibility so long-term care doesn’t cripple the system."

LTC Comment: This article reviews and recommends the first of our three state-level studies introducing a new analytical tool: “The Index of Long-Term Care Vulnerability.” Watch for subsequent reports applying the index to Georgia and New Jersey.

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11/26/2013, “Group wants Virginia to tighten Medicaid rules,” by Chelyen Davis, The Fredericksburg Star

Quote: "A conservative think tank is advising Virginia to tighten its rules for Medicaid coverage of long-term care to discourage reliance on the public program. The Thomas Jefferson Institute for Public Policy, which advocates for public policy 'based on a philosophy of limited government, free enterprise and individual responsibility,' said in a report Tuesday that Virginia is going to see big growth in the over-85 population in the next 40 years."

LTC Comment: The Thomas Jefferson Institute, which published our report reviewed by this article, is more accurately described as a libertarian, not as a conservative, think tank.

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11/26/2013, “Inspector General Scrutinizes LTC Industry on Rehospitalizations,” by Jason Oliva, Senior Housing News

Quote: "Government inspectors say there's not enough attention being paid to the readmissions problem in long-term care settings, specifically nursing homes. A recent study by the Office of the Inspector General (OIG) found that of the 825,765 Medicare residents who stayed in nursing homes for at least one day in fiscal year 2011, 24.8% experienced hospitalizations."

LTC Comment: Frail, infirm and elderly people need a lot of care, both acute and long-term. It’s very hard to say how much is too much.

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11/26/2013, “How a toddler's brain may indicate if they'll get Alzheimer's in old age: Children with a genetic risk have brains that develop differently [link],” by Anna Hodgekiss, MailOnline

Quote: "Toddlers who have a genetic risk from Alzheimer's have brains that develop differently, new research suggests. Infants who carry a gene associated with increased risk of the condition tend to have differences in brain development compared to children without the gene. The gene variant is called APOE-E4 - a known risk factor for late-onset Alzheimer's - and researchers say this study shows some of the earliest differences in people who have it."

LTC Comment: A whole new age demographic for the LTCI market to target.

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Updated, Friday, December 6, 2013, 1:10 PM (Pacific)

Seattle—

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LTC BULLET: “THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN VIRGINIA” PUBLISHED

LTC Comment: Can the Commonwealth of Virginia’s Medicaid-based long-term care system survive? Hard questions asked, analyzed and answered after the ***news***

*** SEND STEVE TO HEALTH CARE ROUNDTABLE in Richmond, VA. The Thomas Jefferson Institute for Public Policy (TJI) published our major report titled “The Index of Long-Term Care Vulnerability: A Case Study in Virginia.” This study introduces the public policy world to our new “Index of Long-Term Care Vulnerability” which enables analysts to answer objectively the question: can LTC financing survive in its current and tending form? TJI is sponsoring an important “Health Care Roundtable” on December 12. Steve Moses will present our report’s findings and join the discussion with some of the top health care policy analysts in the country, including Grace-Marie Turner of the Galen Institute, Michael Tanner of the Cato Institute and Bob Helms of the American Enterprise Institute.

The Center for Long-Term Care Reform seeks to raise funds to support Steve’s trip to give this presentation and contribute to this important health policy conversation.

Special deal:

Pledge any amount $25 or above to support this important project and we’ll comp you for a year of the Center’s clipping service (usually $120 minimum; valid for new clipping service subscribers only) at no extra charge.

Pledge $50 or more and we’ll upgrade your Center membership to the next higher individual level, e.g. Regular membership ($150 per year) goes to Premium Membership (usually $250 per year); Premium goes to Premium Elite or Regional Representative ($500 per year, for those who qualify). Check out our “Membership Levels and Benefits” for details on all membership levels.

If you can help, let Damon know at damon@centerltc.com or 206-283-7036. He’ll subscribe you to the Clippings or upgrade your membership immediately, even while your check is in the mail.

We’ll gladly make similarly attractive special offers to corporate donors willing to pony up somewhat larger amounts. Just email Steve at smoses@centerltc.com or call him at 425-891-3640 to discuss and negotiate a bonus benefit most attractive to you and your company.

How to contribute: Make your check out to Center for Long-Term Care Reform and send to: 2212 Queen Anne Avenue North, #110 / Seattle, WA 98109 -- Or contribute online here.

Our goal is to raise $1,500 to support this trip and opportunity. Thanks in advance for your consideration and support. ***

*** IF YOU’RE NEAR RICHMOND, VA ON 12/12/13, YOU CAN ATTEND THE SAME EVENT and join Steve’s cheering section (free registration required, see below): Leadership Roundtable On Health Care Reform — Register today for the next Leadership Roundtable hosted by the Thomas Jefferson Institute for Public Policy! This Roundtable, on Health Care Reform, is sponsored by Verizon-Virginia and will take place on Thursday morning, December 12 in the Shenandoah Room of the SunTrust Building, (919 East Main Street in Richmond), from 8:30 am until noon. The first half of the session will cover an update on Obamacare and possible reforms; the second half will discuss reforming or expanding Medicaid in Virginia. Among the expert speakers confirmed –

Grace Marie Turner, President of the Galen Institute
Michael Tanner, Healthcare expert for the Cato Institute
Kevin Kuhlman, Manager of Legislative Affairs for the NFIB National Office
Robert B. Helms, Resident Scholar, American Enterprise Institute, and
Stephen Moses, Center for Long Term Care Reform (and author of a new Jefferson Institute study here)

Registration for this Leadership Roundtable is Free, but there is limited space available. To register at no charge, please click here. ***

*** PUBLICATION ANNOUNCEMENT: “The Index of Long-Term Care Vulnerability: A Case Study in Virginia — Virginia is faced with a serious problem as are all states: The aging population requires us to determine how to handle the additional costs this will bring to government and personal budgets. Long Term Care is one of the more important problems facing all parents, as parents, siblings, aunts and uncles live longer and longer. What are the costs today? What are the projections for these costs in the future? And how should we consider restructuring this need for Long Term Care? These are the questions and concerns examined by this new study on Long-term care funded by Medicaid. Read It Here!” ***

*** KEY NUMBERS UPDATED: The Centers for Medicare and Medicaid Services (CMS) has updated the critical Medicare and Medicaid numbers for 2014. For example, the home equity exemption for Medicaid increases from a minimum of $543,000 ($500,000 in 2010) to a maximum of $814,000 ($750,000 in 2010). For all the new numbers, including the Community Spouse Resource Allowance (CSRA) and the Minimum Monthly Maintenance Needs Allowance (MMMNA) see our updated chart here. It shows the year-by-year increases in all the key numbers as adjusted annually for inflation going back two decades. You’ll need your Center Member’s-Only User Name and Password. Need a reminder? Or want to join the Center, receive our weekly publications and get access to The Zone? Contact Damon at 206-283-7036 or damon@centerltc.com. ***

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LTC BULLET: “THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN VIRGINIA” PUBLISHED

LTC Comment: As ObamaCare doubles down on Medicaid for national acute-health-care policy, the beleaguered welfare program continues to undermine long-term care throughout the country.

After three decades of analyzing America’s long-term care financing system and proposing policy solutions in dozens of national and state-level studies here, we realized it may be too late to avoid a catastrophic meltdown of the system.

So we decided to ask a different question in three studies this year. Instead of “What’s wrong and how can we fix it?,” we asked “What is the probability today’s LTC system can survive the challenges it faces?”

Step one was to ask: What are the main challenges our long-term care financing system(s) face? We broke them into seven key questions:

1. How many older people are coming in the next few decades? (The “Age Wave”)
2. How sick will they be? (Morbidity)
3. How viable is Medicaid as a long-term care payer?
4. How reliable is federal revenue on which Medicaid mostly depends?
5. How reliable is state revenue on which Medicaid secondarily depends?
6. How much private-pay revenue is available to relieve LTC financing pressure on
Medicaid?
7. How strong is dependency on public programs (i.e., the entitlement mentality)?

To measure those challenges, we developed an “Index of Long-Term Care Vulnerability.” The Index enables a user to assign percentage weights of importance to each of the challenges and then to score and rank the national and state levels of achievement on each of several sub-issues within each challenge using objective metrics.

Not quite sure what we mean by that? Then take this opportunity to read our first of three forthcoming reports that apply the Index of Long-Term Care Vulnerability to specific state Medicaid and long-term care financing systems. You’ll find a full explanation of our methodology, a sample “Index” filled out by the author for Virginia, and an Index worksheet you can use to assign your own weights, ranks and scores to your own state.

The Thomas Jefferson Institute for Public Policy and the Center for Long-Term Care Reform published “The Index of Long-Term Care Vulnerability: A Case Study in Virginia” last week. You can read it at TJI’s website or the Center’s.

To whet your appetite for the full report, what follows is the “Foreword,” written by Michael Thompson, president of the Thomas Jefferson. You can also read two media articles about our study here and here.

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“Foreword”
by
Michael W. Thompson

Virginia is faced with a serious problem as are all states: the aging population requires us all to figure out how to handle the “costs” that this is going to bring to government and personal budgets.

Long Term Care is one of the more important problems facing all families as parents, brothers and sisters and aunts and uncles live longer and longer. What are the costs today, what the projections for these costs in the future, and how should we consider restructuring this need for Long Term Care in order for those who need it receive it, and that the burden on government – on the taxpayers – is kept within reasonable bounds?

It is these questions and concerns that prompted the Thomas Jefferson Institute to ask Stephen Moses of the Center for Long Term Care Reform to look into our program and, with his expertise from doing similar work in other states, to suggest what we ought to do here to prepare for this growing need within our society. Four concerns popped out to me in this study that need to be opening and frankly discussed. They are:

1) Long-term care is expensive, funded mostly by Medicaid (considered part of our nation’s welfare program), heavily dependent on already strained state and federal revenue, and facing an on-coming wave of aging boomers who will test the adequacy of scarce public resources.

2) Virginia is one of only seven states in which the age 85 plus population, the cohort most likely to need LTC, is projected to more than quadruple between 2012 and 2050, up 307%! So financing long-term care in Virginia will become a huge problem.

3) The Commonwealth has doubled down on its Medicaid-financed LTC system by implementing major new programs to (a) “rebalance” services from nursing home care to home care (making Medicaid more desirable) and (b) to “manage” care by turning it over to large managed care organizations (making Medicaid recipients more vulnerable to cost cutting and quality problems).

4) While ramping up Medicaid for long-term care, Virginia has not done enough to encourage private sources of LTC financing that could relieve financial pressure on the tax-financed program. Asset spend down, estate recovery, home equity conversion and private long-term care insurance could and should contribute far more to financing quality LTC services.

This study, “The Index of Long-Term Care Vulnerability: A Case Study in Virginia,” focuses on this problem and offers some policy alternatives. At the end (in the Appendix) there is worksheet/an index process that policy makers, policy influencers and others can use to determine long term care needs depending on the variables outlined in this report. This is a serious problem that needs to be confronted sooner than later.

Michael W. Thompson, President, Thomas Jefferson Institute for Public Policy November 2013

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Updated, Wednesday, November 27, 2013, 11:13 AM (Pacific)

Seattle—

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ILTCI CONFERENCE NEWS, A NEW CENTER REPORT AND LTC NEWS AND COMMENT

LTC Comment: Registration is now open for the Fourteenth Annual Intercompany Long Term Care Insurance Conference to be held from March 16-19, 2014 at the Rosen Centre, in Orlando, Florida. Details and conference website here.

Once again, the ILTCI conference will be hosting and subsidizing the cost for a special 2-day pre-conference CLTC Master Class (only $195 extra). Harley Gordon will personally conduct this class on Saturday March 15 (8AM to 6PM) and Sunday March 16 (8AM to 4PM).

If you are an agent selling long term care (or other insurance) directly to consumers, you can apply for a Scholarship. The Scholarship application is available at www.ILTCIConf.org/Scholarship.htm. All Scholarship applications that are approved, will qualify the attendee for the $295 Scholarship rate (plus an additional $195 if you are attending the CLTC class).

If you are a government employee, please go to https://LTCIDB.com/Registration-Government/ and register for the conference using the Government Employee rate of $95.

For those who have never attended ANY of the previous thirteen annual conferences, there is a special new attendee rate of only $395 (instead of the $895 early bird rate). Please go to https://LTCIDB.com/Registration-Introductory/ and register before January 16th.

Next, ILTCIC strongly recommends that you make your Hotel reservations by clicking on the "HOTEL AND TRAVEL" button. The Hotel has very attractive rates of only $125 (for the Rosen Centre Hotel). If the Hotel is already fully booked for a room for any date that you want to stay at the hotel, please contact Jim Glickman at 818-867-2223, so that you can be placed on a waiting list (which usually clears) for those days.

If you have any questions, please contact Jim Glickman at 818-867-2223.

*** CENTER REPORT RELEASED. The Center for Long-Term Care Reform and the Thomas Jefferson Institute (TJI) of Virginia released today a report titled “The Index of Long-Term Care Vulnerability: A Case Study in Virginia.” Center president Stephen Moses and TJI president Michael Thompson participated this morning in a “tele-press conference” attended by 13 reporters to answer questions about the report’s findings and recommendations. Read the new report here. Experiment with the generic Index/Worksheet which enables you to predict the likely survivability of LTC financing in your own state. We’ll have much more to say about this report and two others we conducted in Georgia and New Jersey in an LTC Bullet next week. ***

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11/26/2013, “NAIC to consider LTCI market conduct forms,” by Allison Bell, LifeHealthPRO

Quote: "Top bodies at the National Association of Insurance Commissioners (NAIC) have put three items related to private long-term care insurance (LTCI) on their agenda for the NAIC's upcoming fall meeting. The NAIC's executive committee and its plenary -- a body that includes all voting NAIC members -- plan to consider adopting the widely discussed Long-Term Care Premium Rate Increase Model Bulletin at a joint session Dec. 18."

LTC Comment: Oh good, more help from the government.

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11/25/2013, “Pressure ulcer treatments should be re-evaluated, expert says,” by Elizabeth Leis Newman, McKnight's LTC News

Quote: "Nursing home staff should adopt evidence-based approaches to pressure ulcer prevention and treatment, and significantly more research is needed, a geriatric medicine professor said Saturday.

'We don't know as much as we think we know,' said David Thomas, M.D., FACP, AGSF, GSAF, CMD, a professor at the Saint Louis University School of Medicine, where the International Nursing Home Research Conference was held last weekend. 'What we have been facing in the care of pressure ulcers in nursing home is dogma. We desperately need people in nursing homes to do clinical research.'"

LTC Comment: Research is fine but the real solution to most problems with care in nursing homes is adequate reimbursement, which means more private financing and less dependency on Medicaid.

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11/25/2013, “The $234 billion job that goes unpaid,” by Elizabeth Shell, PBS News Hour

Quote: "Nearly 9 in 10 Americans who need some form of long-term care (LTC) get that assistance from family members or friends who volunteer their time. More than a third of these 'informal' caregivers are taking care of an aging parent, and assist with tasks like getting in and out of bed, going to the bathroom, eating, housework and transportation."

LTC Comment: The solution to this problem is not bigger government programs to pay families for providing the care they give for free now. The solution is to target scarce government resources to the truly needy and incentivize middle-class and affluent people to insure privately. That’s the only way we’ll ever relieve the huge and growing burden of elder caregiving on families across the land.

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11/25/2013, “OIG promises more in-depth anti-fraud efforts, further auditing of providers [link],” by James M. Berklan, McKnight's LTC News

Quote: "The Office of Inspector General may have delayed the announcement of its detailed 2014 annual Work Plan from October until January, but providers now know where the overall focus of investigative efforts will lie for the next four years. The OIG has announced it is committing to maximizing fraud recoveries and the protection of patient data for 2014-2018."

LTC Comment: Maybe the OIG should also pay attention to poor estate recoveries by most state Medicaid programs. My report in 1988 for the OIG laid out findings and recommendations, most of which were adopted by Congress and President Clinton in the Omnibus Budget Reconciliation Act of 1993. Medicaid Estate Recoveries: National Program Inspection is still a useful manual for states seeking to increase non-tax revenue from their estate recovery programs. You can still read the 25-year-old report on the OIG’s website here.

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11/24/2013, “Exploding Medicaid bills will threaten budgets and health: So get ready for more Obamacare trouble [link],” by Paul Howard and Stephen Parente, New York Daily News

Quote: “While the persistent problems with Obamacare's health exchanges have captured media headlines, a more troubling underlying story is the law's historic and unsustainable expansion of Medicaid. For every one person that has enrolled in private coverage under Obamacare to date, four have enrolled in Medicaid. That portends an astronomical rise in Medicaid spending in state and federal budgets - and worse health outcomes for millions of Americans."

LTC Comment: Never mind the incident with the iceberg, let’s add more deck chairs to the Titanic.

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11/22/2013, “Liability costs climb for long-term care, analysis finds,” by Elizabeth Leis Newman, McKnight's LTC News

Quote: “A nursing home operator with 100 beds can expect $194,000 in liability expenses in 2014, according to a new analysis from the American Health Care Association and Aon Global Risk Consulting. Liability costs for long-term care providers are expected to increase by 5% next year, while claims frequency also is expected to climb, says the ‘2013 Long Term Care General Liability and Professional Liability Actuarial Analysis.’ The projected national 2014 loss ratio is $1,940 per bed.”

LTC Comment: Low Medicaid reimbursement for most of their residents and lawyers lined up to sue at any opportunity bode poorly for nursing homes’ liability risk.

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11/21/2013, “When Mom And Dad Move In: The 'Granny-Flat Tax Exemption' For The Sandwich Generation [link],” by Kelly Phillips Erb, Forbes

Quote: "My brother and I understand that we will eventually become part of the 'sandwich generation' – adults who are charged with taking care of their parents while also taking care of their own children. That doesn’t make us special: in fact, far from it. Accordingly to a recent study published by the Pew Foundation, nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). And while those numbers are creeping up just slightly, the financial and other burdens associated with caring for parents and children are increasing quickly.

"It’s an economic reality that takes some adjustment – and politicians are just now beginning to feel the pressure from their constituencies to make changes in the law to ease that burden. That’s exactly what just happened this week in Jefferson County, Florida. Jefferson County is located in the state’s panhandle, bordered by Georgia and the Gulf of Mexico. In terms of age, it tracks pretty closely with the nation as a whole with a median age of 39 while 14.50% of all residents are age 65 years or older. With those demographics in mind, the Jefferson County Commission recently passed a 'granny flat tax' – the name for the law that makes it tax-exempt to build onto or remodel a home if taking care of an elderly family member."

LTC Comment: Now, how about a tax incentive for LTCI?

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11/21/2013, “CMS too burdened and focused on cost to be the epicenter of long-term care reform, experts say [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Most long-term care reforms rely on the Centers for Medicare & Medicaid Services for implementation, but the overburdened agency cannot manage all the needed changes in this area, according to a panel of experts."

LTC Comment: Why would we expect CMS to do a better job on LTC reform than it’s done on ObamaCare implementation?

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11/21/2013, “Aging Baby Boomers And Higher Health Care Costs To Impact Long-Term Care [link],” by Partnership for Long-Term Care

Quote: "University of California, Berkeley researchers state in a new study that an unprecedented increase in seniors over the next decade could nearly double Medi-Cal long-term care costs, from $6.6 billion to $12.4 billion annually by 2023."

LTC Comment: To understand just how disastrous this news is read our California report titled Medi-Cal LTC: Safety Net or Hammock?

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11/20/2013, “Hospital admission rates show need for new nursing home quality measure , OIG and CMS say [link],” by Tim Mullaney, McKnight's LTC News

Quote: "One in four nursing home residents on Medicare was hospitalized in 2011, costing the program $14.3 billion, according to a new report from the Department of Health and Human Services Office of Inspector General. In light of its findings, the OIG has recommended a new quality measure to track hospital admissions."

LTC Comment: “Dual eligibles” are old, frail, infirm and extremely vulnerable to hospitalization, especially because Medicaid pays less than the cost of their care to LTC providers. This problem is endemic to government-financed LTC.

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11/20/2013, “LTCI deduction limits creep higher,” by Allison Bell, LifeHealthPRO

Quote: “Taxpayers who can use the federal long-term care insurance (LTCI) premium deduction in 2014 may still get substantial benefits from the deduction. Analysts at LTC Tree, an LTCI agency network, looked at how the latest LTCI premium deduction limits might affect policyholders who own a policy that provides a total of up to $219,000 in lifetime benefits with a 3 percent automatic inflation increase."

LTC Comment: Federal below-the-line LTCI deductions benefit few people unfortunately.

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11/20/2013, “Planning for saving in the face of terminal illness,” by Paul Sullivan, MarketPlace, New York Times

Quote: "Patrick Skeldon, a commercial airline pilot, started having trouble walking in the autumn of 2003. His doctor thought he had a vitamin deficiency and prescribed supplements. When those didn't work, the doctor referred him to a neurologist. The next year, he was told he had amyotrophic lateral sclerosis, more commonly known as Lou Gehrig's disease. He was 59.

"Through some shrewd financial planning, Mrs. Skeldon was able to continue working for the United States Marshals Service and adding to her own retirement while still getting care for her husband. Several years before Mr. Skeldon was found to have A.L.S., the couple had purchased long-term care insurance. They did so out of a fear that they might run out of money, as her father had.

"To date, she said, the policy has paid $213,000 to cover a home health care aide and still has $349,000 or five years left in benefits."

However:

"Depending on the state, there may be help short of running out of money. New York, for one, has a generous program for home care.

LTC Comment: There are mixed messages in this article. It begins with an LTCi success story, but ends with a message encouraging long-term care planning indolence. "Abandon all logic, ye who enter here." Indeed.

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11/19/2013, “Gaming Medicaid has potential consequences for the aging,” by Kerry Peabody, Portland Daily Sun

Quote: "People trying to avoid the responsibility of providing for their own long-term care by transferring assets as they age is a mine field of risk not to mention a moral dilemma.

"Unfortunately, some people continue to game the system - attempting to protect assets to benefit their family members while transferring the cost of care to the taxpayers. Put another way, it is the practice of engineering one's own poverty.

"With the federal debt now exceeding $17 trillion and the interest on that debt absorbing evermore of our tax dollars, our government simply will not have the ability to fund the crushing demand for these services. Based on public policy discussions, means testing for all social services is likely to become more aggressive and the threshold for eligibility will be higher. Ultimately, the burden is ours to provide for our future. One mechanism is long-term care insurance."

LTC Comment: Hear, hear!

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11/19/2013, “'Self-reliance' a key to long-term care financing reform, experts say,” by Tim Mullaney, McKnight's LTC News

Quote: "The United States is likely to favor an approach to long-term care financing reform that values self-reliance but includes some form of social safety net, according to a new report from a panel of experts."

LTC Comment: Great, but the current system falls far short of that. It undermines self-reliance by making the Medicaid LTC safety net available to people who could, should and would insure privately otherwise.

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11/19/2013, “5 Financial Lessons from Retirees,” by Donna Fuscaldo, FoxBusiness

Quote: "Whether it's not saving enough, or being too conservative with their investments, people already in retirement make many mistakes that adversely impact their lifestyle that can tarnish their so-called golden years. But that doesn't have to happen to you. Before you let history repeat itself, check out these five lessons financial planners and their retired clients:"

LTC Comment: Lesson #5 includes a strong recommendation to purchase LTC insurance.

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11/18/2013, “Watchful Eye in Nursing Homes,” by Jan Hoffman

Quote: "A pretty nightie, a new lipstick, a fresh toothbrush: Doris Racher noticed that small things she had bought for her 96-year-old mother, Eryetha Mayberry, a dementia patient at a nursing home in Oklahoma City, had been disappearing. Ms. Racher assumed the culprit was another resident who sometimes wandered into her mother's room and fell asleep in her bed. So in 2012, Ms. Racher placed a motion-activated camera in her mother's room. It looked like an alarm clock, and Ms. Racher nearly forgot about it. About two months later, the family decided to pore through the recordings."

LTC Comment: A new source of horror movies.

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11/18/2013, “Most People Misunderstand Long-Term Care Insurance Coverage, Costs [link],” by Mark Chalon Smith, FoxBusiness

Quote: "Most people are woefully unprepared to cope with long-term care needs and expenses, according to a study released this week by a major insurer. Northwestern Mutual's report, based on a Harris Interactive survey of more than 2,000 people nationwide, found that 41% of those questioned admitted they're confused about how to approach future long-term care challenges. They are also failing to actively build a strategy for long-term care needs, despite the possible personal and financial consequences."

LTC Comment: An open invitation to LTCI producers to fill the information gap and provide the needed coverage.

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11/18/2013, “It's time frivolous lawsuit filers were held more accountable,” by John O'Connor, McKnight's LTC News

Quote: "We live in a world where the luckiest among us get old and sick before we die. Fortunately, senior living options exist to make the endgame more comfortable and less painful than it otherwise would be. And while it's one thing to hold operators responsible for bad care, it's another to blame them for life's inescapable realities. Yet all too often, that's the driving factor behind many cases that never should have been filed."

LTC Comment: Such as the cases that come into vulture lawyers from their highway billboards urging people to sue nursing homes. Sometimes the same people who sue are ones who used the same lawyers to impoverish their parents to qualify them for Medicaid. Low Medicaid reimbursements for their parents’ care may have caused the problems they’re now suing to correct. What a system!

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11/17/2013, “Survey: Americans do not like to discuss finances,” by Annika McGinnis, USA Today

Quote: "American families may not be saving enough for retirement but even worse, they're not talking about it with each other, show the findings of a new study out Monday. 'Family & Retirement: The Elephant in the Room,' a representative survey of 5,400 adult Americans conducted by Merrill Lynch and consulting firm Age Wave in August shows 70% over the age of 25 have not had a discussion with their parents about retirement.

"Not discussing these emotionally delicate topics is preventing many Americans from facing the facts together as a family. More than 90% say they would not be prepared financially if an aging parent or close relative needed long-term care. And just 37% of people age 50 or older believe they'll need long-term care before they die. The reality: 70% eventually will need the costly services, the new study says."

LTC Comment: Moral of the story? Have “the talk” with aging parents.

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11/7/2013, “Doctors In Venezuela Say Their Universal Health Care System In Collapse [link],” by Dr. Susan Berry, Breitbart.com

Quote: "Almost everything needed to mend and heal is in critically short supply: needles, syringes and paraffin used in biopsies to diagnose cancer; drugs to treat it; operating room equipment; X-ray film and imaging paper; blood and the reagents needed so it can be used for transfusions."

LTC Comment: So why am I sending you news about health care in Venezuela? My late wife and I were Peace Corps Volunteers there from 1968 to 1970. It always seemed ironic to me that the country's constitution guaranteed "free" health care to all citizens . . . but free health care was virtually unavailable to anyone. So much for "social health insurance."

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Updated, Monday, November 18, 2013, 12:25 PM (Mountain)

Santa Fe, New Mexico—

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MEDICARE RUN AMUCK AND LTC NEWS AND COMMENT

LTC Comment: Medicare has a $43 trillion unfunded liability. Yet, the program eagerly encourages seniors to take maximum advantage of its wide ranging benefits. Last week I received the following personal email message from the Centers for Medicare and Medicaid Services (CMS):

“Happy Birthday from Medicare! We wish you well in the upcoming year and want to remind you of the preventive services Medicare offers to help you stay healthy. Our records show that you have not taken advantage of some of the preventive services which are available to you now or in the future and listed in the table below. Please talk with your doctor to decide which ones are right for you.”

Here are some of the preventive services Medicare’s boilerplate email urges me to use:

OBESITY COUNSELING

CARDIOVASCULAR DISEASE (BEHAVIORAL THERAPY)

HIGH INTENSITY BEHAVIORAL COUNSELING

ALCOHOL MISUSE SCREENING

DEPRESSION SCREENING

ABDOMINAL AORTIC ANEURYSM

I’m not obese. I work out regularly. I don’t misuse alcohol. I’m not depressed. And last time I saw a doctor, he told me biannual check ups would suffice. The nurse marveled that, at 67 years of age, I didn’t use a single drug prescription. But Medicare is looking after me and insists I should avail myself of all eligible services whether I need them or not.

The message ended: “Remember, Medicare is your partner in health. Sincerely, Centers for Medicare & Medicaid Services.”

As ObamaCare implodes, the commonest “solution” proposed is “Medicare for all.” Out of the frying pan, into the fire.

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11/15/2013, “CBO analyzes Medicaid caps to curb federal healthcare spending,” by Tim Mullaney, McKnight's LTC News

Quote: "The federal government could reduce its Medicaid contributions to states as a deficit reduction measure, but the move likely would achieve savings only by putting seniors at risk, according to the Congressional Budget Office."

LTC Comment: A better approach to Medicaid savings is to change the program's LTC eligibility rules to prevent the non-poor from taking advantage of the program and encourage them to plan early and responsibly for long-term care.

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11/14/2013, “Better Medicaid managed care oversight needed to protect providers serving high-risk populations: OIG [link],” by Tim Mullaney, McKnight's LTC News

Quote: "States are not doing a good job of monitoring how Medicaid managed care enterprises handle providers serving high-risk populations, according to a new government report."

LTC Comment: Across the USA states are converting their fee-for-service long-term care systems into managed care. They transfer the responsibility for providing complicated care for vulnerable populations such as the aged, blind and disabled, and in some states even the highest-risk "dual eligibles," to giant managed care companies that have little or no experience delivering such care to such groups. Senior advocates worry it's a disaster ready to happen. The USDHHS Inspector General (my former employer) finds in this report that states are not adequately monitoring managed LTC. Risks due to Medicaid managed LTC conversions are a component of the Center for LTC Reform's "Index of Long-Term Care Vulnerability," about which, more, in future messages.

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11/14/2013, “Caring For Elderly Parents Is A Daily Choice,” by Edgar B. Herwick III, WGBH News

Quote: "Ward, who lives in Rhode Island, said before his father died he did something simple and extraordinary. 'My father began to realize at a certain point that his health was declining, and he made a decision at that point that he wanted to prepare for the fact that my mother was going to outlive him,' he said. 'So he pulled us together and he gave us a task: to be responsible and to take care of her.'"

LTC Comment: More aging Americans should do what Ward's Dad did and more adult children should partially fulfill such commitments by helping their parents obtain LTC insurance.

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11/13/2013, “LTC community fights for attention: The silver tsunami,” by Allison Bell, LifeHealthPRO

Quote: "Insurance groups, insurance companies and insurance producers are trying to tap Americans on the shoulder this month and remind them that long-term care (LTC) planning is much more of a mess than acute health care planning."

LTC Comment: Long-Term Care Awareness Month is afoot!

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11/13/2013, “Price increases, not a larger senior population, are responsible for exploding healthcare costs: analysts [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Escalating healthcare costs in the United States cannot be pinned on an aging population demanding more services for chronic conditions. Instead, higher costs are primarily the result of price increases, according to a new analysis in the Journal of the American Medical Association."

LTC Comment: The Age Wave has only begun to crest. It won't crash until boomers reach the age when acute and long-term care risk peak. Then age-related health expenditures will exceed and exacerbate "higher costs."

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11/13/2013, “Major insurers say they will hike premiums on long-term care policies,”   by Tim Mullaney [link], McKnight's LTC News

Quote: "A number of issues have necessitated the rate modifications, including miscalculations about how many people would maintain their policies and the true costs of claims, as people are receiving benefits longer than the insurers anticipated when designing these products."

LTC Comment: The other major reason, totally outside the control or reasonable anticipation of the private insurance industry, is the Federal Reserve’s policy of forcing interest rates down to near zero artificially.

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11/12/2013, “An Alzheimer's reality check,” by Tim Mullaney, McKnight's LTC News

Quote: "Alzheimer's researchers - or the public relations machines trumpeting their work - should chill out. Frequent breathless reports about major breakthroughs are giving false hope to anyone who believes the hype about an imminent cure. . . . It's perhaps too easy to be cynical about Alzheimer's research, thanks to how the results often are presented. In addition to creating false hope, the hype around promising findings also threatens to make people complacent, thinking that the Alzheimer's research machine is well-oiled and firing on all cylinders. This new report does a service by pointing out the huge challenges that remain. Signing your name to the declaration might be a merely symbolic gesture, but hopefully the report will remind everyone that Alzheimer's research still needs - and merits - our attention and activism.”

LTC Comment: Well said.

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11/11/2013, “None Dare Call It...,” by John Goodman, National Center for Policy Analysis

Quote: "But what threatens the foundations of a free society most of all is when it is the government (and its allies in the private sector) who are doing the attacking, and when the reason there is no response is that the victims of the attacks have been threatened and bullied into silence. I believe that is where we are today--not just with respect to health insurance, but with respect to health care generally. I'm afraid other industries are not far behind."

LTC Comment: This is an excellent column on the current status of health policy intimidation by the government and its ramifications.

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11/11/2013, “Nursing homes are the most dangerous workplaces in America, government data shows [link],” McKnight's LTC News

Quote: "Last year's illness and injury incidence rate for private sector nursing and residential care facilities was 7.3%, the BLS reported Thursday. This was the highest overall, and it far eclipsed the illness and injury rates for workplaces that might seem more dangerous. The rate for miners (except oil and gas) was 2.7%, and the rate for construction was 3.6%. State-run nursing homes are even riskier places to work, with a 13% incidence rate. Of all the illness and injury rates published by the BLS last week, this was the only one to reach double digits."

LTC Comment: Medicaid pays nursing homes less than the cost of providing the care and nursing home caregivers are paid some of the lowest wages of any workers in the country. Having the highest injury rates adds injury to insult.

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11/9/2013, “Blame game as insurers dump doctors,” by Carl Campanile, New York Post

Quote: "The nation's largest health insurer, UnitedHealthcare, claims the Affordable Care Act is responsible for forcing it to boot doctors from its Medicare Advantage program that serves thousands of elderly patients in the New York metro region."

LTC Comment: The ACA is from the government and it’s here to help you.

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11/8/2013, “Routine assessment predicts when Alzheimer's patients will need nursing home care, researchers report [link],” by Tim Mullaney, McKnight's LTC News

Quote: "The variables include the patient's ability to take part in daily activities, estimated time of symptom onset and level of rigidity. A healthcare professional can gather this information in a single patient visit, the researchers noted. They also said the assessment has proven highly accurate even when not all 16 variables can be collected."

LTC Comment: Possibly a valuable new assessment worth adding to the underwriting tool chest.

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11/7/2013, “How Social Security redistributes money from minorities to whites [link],” by Brad Plumer, Washington Post

Quote: "Specifically, for every $100 that white beneficiaries pay in taxes, they receive $113 in benefits, blacks receive $89 and Hispanics receive $58. The gap is particularly pronounced for retirement benefits, although the Disability Insurance program narrows the gap somewhat. The disparity will continue to widen in the next ten years. Whites will receive $120 in benefits for every $100 they paid in taxes, while blacks will receive $91 and Hispanics $62."

LTC Comment: Unintended consequences? One wonders, given how skewed Medicaid LTC benefits are toward the middle class and affluent.

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11/7/2013, “Speaking more than one language may delay dementia,” by Kim Painter, USA Today

Quote: "The latest evidence that speaking more than one language is a very good thing for our brains comes from a study finding dementia develops years later in bilingual people than in people who speak just one language."

LTC Comment: Bueno, pues!

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11/6/2013, “New Study Examines Who's Really Living in Assisted Living Communities [link],” by Alyssa Gerace, Senior Housing News

Quote: "Small assisted living communities were nearly three times more likely to house 'non-senior' residents under the age of 65, the study found, with more than 21% of residents falling into that age group compared to about 7% in larger communities.

"However, the smallest communities were also more likely to house residents with Alzheimer's disease or other memory care needs, at 53%, compared to 41% of large communities, even though those conditions are typically associated with the 'oldest old,' or seniors aged 85-plus.

"Still, larger assisted living communities were more likely to house older, 'traditional' residents: nearly 85% were over the age of 75, while more than half (56%) were older than 85."

LTC Comment: Disturbing evidence that the most frail, infirm and vulnerable patients are ending up in smaller care homes which may be less equipped to provide quality care and much harder for quality control inspectors to reach.

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11/6/2013, “Young people becoming more realistic about future long-term care needs, survey finds [link],” by Tim Mullaney

Quote: "Out of more than 2,000 people surveyed, about 30% said they were saving for future long-term care needs. The number was highest (36%) for those between 18 and 34 years old. Only 21% of people between the ages of 45 and 54 said they were saving."

LTC Comment: Evidently caring for Grandma takes its toll on youthful complacency more than on middle-aged anxiety.

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11/5/2013, “Why it's time to embrace asset-based long-term care products,” by Chris Coudret, LifeHealthPRO

Quote: "With all the recent negative news, it would be easy and natural for the financial services industry and the financial media to be sour on the prospects of finding a worthy approach to funding long-term care. However, the sustained growth of asset-based long-term care products indicates there is a sea change occurring in the industry and a story that needs to continue to be told."

LTC Comment: A major benefit of private insurance vs. “social insurance” is that the private market allows and encourages many different kinds of coverage. Consumers can pick and choose what’s best for them. Social insurance imposes a one-size-fits all program that usually fits no one especially well.

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11/5/2013, “Retirement: Make long-term care coverage more affordable,” by Kimberly Lankford, Chicago Tribune

Quote: "Until recently, people bought long-term-care policies to cover 100 percent of the cost of care. But rates for new policies have shot up and it has become a lot more difficult to qualify for coverage if you have health issues. Fortunately, insurers are offering new options that shift more risk to you but make policies less costly."

LTC Comment: This Chicago Tribune article quotes Center-corporate-supporter Claude Thau.

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11/4/2013, “The Biggest Risk to Your Retirement,” by Shelly K. Schwartz, CNBC

Quote: "You can create an additional financial safety net with long-term care insurance. Such policies are designed to cover long-term services and support, including assisted living, home care, adult day care and hospice-things traditional health insurance doesn't cover. . . . Not everyone requires assisted living in their later years, however, and long-term care coverage does not come cheap. As such, it's important to consider how much money you already have set aside for health-care costs and purchase only the amount of coverage you actually need, according to the Department of Health and Human Services."

LTC Comment: Sound advice to insure only for LTC risk that exceeds your ability to pay otherwise. Properly used, insurance replaces catastrophic risk with affordable premiums rendering peace of mind to the insured and well-earned profit for the insurer.

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11/4/2013, “Long Term Care Insurance Applications Cost Insurers Reports AALTCI [link],” by Jesse Slome, Expert

Quote: "An individual applying for long term care insurance costs the insurer between $400 and $600 even if they are not accepted according to a study from the American Association for Long Term Care Insurance. The approximate cost to the industry was $200 million in 2012, AALTCI reports."

LTC Comment: Due diligence in establishing eligibility for coverage and estimating the level of risk each insured brings to the risk pool is a major benefit of private insurance over “social insurance.” The latter lets everyone in, charges everyone the same and thus rewards poor behavior, punishes good behavior, and becomes insolvent over time.

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11/3/2013, “We need to stop coddling the elderly,” by Robert J. Samuelson, Washington Post

Quote: "No one wants to be against Grandma, who — as portrayed in the media — is kindly, often suffering from some condition, usually financially precarious and somehow needy. But projecting this sympathetic portrait onto the entire 65-plus population is an exercise in make-believe and, frequently, political propaganda. The St. Louis Fed study refutes the stereotype. Examining different age groups, it found that since the financial crisis, incomes have risen for the elderly while they’ve dropped for the young and middle-aged."

LTC Comment: We're getting closer and closer to a time when views like Samuelson's will prevail. Social Security, Medicare and the defacto entitlement Medicaid LTC will be means-tested. The imbalance of government benefits flowing from the young to the old will equalize. And private insurance will rise again to fulfill its rightful role in retirement planning.

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Updated, Friday, November 15, 2013, 12:48 PM (Mountain)

Santa Fe, New Mexico—

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LTC BULLET: ANNUITY BLUES

LTC Comment: Medicaid planners use annuities to disappear megabucks and they (the planners and the annuities) drive the good Medicaid lawyers crazy. After the ***news.***

*** NOVEMBER IS LONG-TERM CARE MONTH SEVEN TIMES OVER according to a press release today highlighting these seven programs: Long Term Care Awareness Month, National Home Care Month, National Family Caregivers Month, National Hospice and Palliative Care Month, National Alzheimer's Disease Awareness Month, Warrior Care Month and the 3 in 4 Need More campaign. LTC Awareness month (November) gets all too little attention in the national media. Thanks to LTCFP for pushing these important programs into the limelight. ***

*** SEND STEVE TO HEALTH CARE ROUNDTABLE in Richmond, VA. The Thomas Jefferson Institute for Public Policy (TJI) is about to publish our major report titled “Medicaid and Long-Term Care Financing: A Case Study in Virginia.” This will introduce the public policy world to our new “Index of Long-Term Care Vulnerability” which will enable analysts to answer the question objectively: can LTC financing survive in its current and tending form? TJI is sponsoring an important “Health Care Roundtable” on December 12. They’d like Steve Moses to present our report’s findings and join the discussion with some of the top health care policy analysts in the country, including Grace-Marie Turner of the Galen Institute, Michael Tanner of the Cato Institute and Bob Helms of the American Enterprise Institute.

The Center for Long-Term Care Reform seeks to raise funds to enable Steve to make this trip, give this presentation, and contribute to the important health policy conversation.

Special deal:

Pledge any amount $25 or above to support this important project and we’ll comp you for a year of the Center’s clipping service (usually $120 minimum; valid for new clipping service subscribers only) at no extra charge.

Pledge $50 or more and we’ll upgrade your Center membership to the next higher individual level, e.g. Regular membership ($150 per year) goes to Premium Membership (usually $250 per year); Premium goes to Premium Elite or Regional Representative ($500 per year, for those who qualify). Check out our “Membership Levels and Benefits” for details on all membership levels.

If you can help, let Damon know at damon@centerltc.com or 206-283-7036. He’ll subscribe you to the Clippings or upgrade your membership immediately, even while your check is in the mail.

We’ll gladly make similarly attractive special offers to corporate donors willing to pony up somewhat larger amounts. Just email Steve at smoses@centerltc.com or call him at 425-891-3640 to discuss and negotiate a bonus benefit most attractive to you and your company.

Our goal is to raise $1,500 to support this trip and opportunity. Thanks in advance for your consideration and support. ***

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LTC BULLET: ANNUITY BLUES

LTC Comment: I’m just back from the 46^th Annual Training and Continuing Education Conference of the American Association of Public Welfare Attorneys. Dan Hart, Assistant Attorney General from Iowa, and I presented a program titled “Medicaid Eligibility for Long-Term Care: If You Build It, They Will Come.” We explored the collateral damage done to the long-term care safety net by aggressive Medicaid planning. Evidently we succeeded. Two members of the audience came up to me afterwards to say they'll keep their LTC insurance coverage after all, despite harboring recent doubts.

In the course of the conference, I learned about extraordinary efforts some states have made to curtail the abuse of one especially egregious Medicaid planning technique.

Special Medicaid-friendly annuities make hundreds of thousands of dollars disappear from spend down scrutiny. While conducting state-level studies of Medicaid and long-term care financing, I’ve frequently encountered examples of this loophole. Search for “annuities” in any of our many state reports here and you’ll see what I mean. Here’s one example from our November 2012 study titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link].”

The use of annuities to qualify affluent Mainers, even “millionaires” according to eligibility workers interviewed for this study, is pervasive. This technique is used in two ways. For married applicants, the couple’s otherwise disqualifying wealth is transferred into an annuity for the community spouse strictly in keeping with allowable federal guidelines, which require actuarial soundness and making the state the beneficiary of residual funds. Virtually any amount of money can be transferred into such an annuity rendering the institutionalized applicant immediately eligible. The annuity pays out to the community spouse within the life expectancy of the institutionalized spouse, often in less than one year. Workers cited one example of a $450,000 annuity which paid out at a rate of $17,000 per month until all the sheltered funds were back with the community spouse and hence uncounted, the eligibility determination having already been made.

The second way annuities are used to qualify otherwise ineligible applicants for MaineCare involves single people with excess assets. The “reverse half-a-loaf” strategy works as follows. The applicant gives away half his or her disqualifying assets thus creating an eligibility penalty equal to the amount of assets transferred for less than fair market value divided by the average cost of a nursing home in Maine. With the other half of the assets, the applicant creates an annuity in his or her own name and uses the proceeds of the annuity to pay for care during the duration of the penalty period. When the penalty period expires, the annuity runs out, and the applicant is eligible for MaineCare LTC benefits having protected half the original assets from MaineCare’s spend down requirement. (pps. 10-11, footnotes omitted)

There is virtually no limit to the amount of assets that can be divested in this way. But wait, you demur. Didn’t the Deficit Reduction Act of 2005 (DRA ’05) fix the Medicaid annuity problem? Well, yes, partially. It put some new restrictions on the use of annuities to qualify for Medicaid long-term care benefits. Here’s how I summarized the new provisions in a contemporaneous “LTC Bullet: The Brave New World of LTC Financing.”

ANNUITIES AND OTHER LARGE TRANSACTIONS
* Medicaid recipients and community spouses must disclose annuities at eligibility and recertification
* State must be named as remainder beneficiary
* State must notify annuity issuer of its status as remainder beneficiary
* States may require annuity issuer to report income or principal withdrawals
* States may deny Medicaid eligibility based on such withdrawals
* Purchase of an annuity is a penalizable TOA unless state is listed as remainder beneficiary in first position for at least total of Medicaid payments or in second position to community spouse or minor or disabled child
* Effective at enactment

So, how is it that Medicaid planners can still use annuities to make huge amounts of assets go poof? The method discussed at the conference depends on the difference between Medicaid’s treatment of income and resources for married couples. Spousal impoverishment rules protect a certain amount of a couple’s joint assets for the healthy community spouse. But, as long as it is done before the Community Spouse Resource Allowance (CSRA) is determined at the time of Medicaid application, the rules also allow the transfer of an unlimited amount of assets from an ill, institutionalized spouse to the community spouse for the “sole benefit” of the community spouse.

So, to get around the spousal impoverishment CSRA limits, Medicaid planners have their clients do a sole benefit transfer before applying for Medicaid. Then they have the community spouse purchase an annuity that meets all the federal requirements delineated above. They argue this is not a penalizable transfer of assets because fair market value, in the form of an income stream from the annuity, has been received. Now, however, instead of having resources which would be limited by the spousal impoverishment rules, the community spouse has an income stream, which federal Medicaid rules consider unavailable to the institutionalized spouse. At this point, the ill spouse can apply for Medicaid with impunity having transferred literally unlimited amounts of money into the sole ownership of the healthy, community spouse.

Three states have challenged such annuities in three different court cases. They argued variously that such annuity machinations are really inappropriate asset transfers or that they violate the letter and intent of the Medicaid law in other ways. It seems to most stewards of the Medicaid LTC safety net that for the wealthy to be able to shift a million dollars or more out of the way of spend down requirements is a distortion and perversion of Medicaid’s avowed purpose, to be a safety net for people genuinely in need. But the courts did not agree. The law is the law, they said. Efforts to persuade the Centers for Medicare and Medicaid Services to fix the problem and appeals to Congress to fix it in statute have gone nowhere. So the practice continues, rendering big fees to Medicaid planners and diverting desperately needed public funds from the poor to the affluent.

We at the Center for Long-Term Care Reform see the annuity problem and many other abuses of Medicaid’s loose eligibility rules day in and day out. Fighting for laws and public policy that preserve scarce public resources for the needy and encourage everyone else to plan responsibly for long-term care is our stock in trade. It’s sad to see the highly qualified and superbly competent attorneys who represent America’s public welfare programs struggle in frustration to make those programs work to the benefit of their rightful beneficiaries. I applaud their efforts and we’ll continue to do what we can at the Center to support them with thoughtful and persuasive public policy research and analysis.

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Updated, Friday, November 8, 2013, 11:02 AM (Pacific)

Seattle—

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LTC BULLET: PBS’S 6 LTC TIPS MISS THE MARK

LTC Comment: What’s wrong with the conventional wisdom about how to resolve America’s long-term care crisis? After the ***news.***

Here is the latest from the president of LTC Consultants, Phyllis Shelton:
*** "I've been saying since my 2010 Worksite and Combo Tour that Medicaid is the real threat to our economy. May I say ‘I told you so’ now with this Oct. 25th 2 1/2 minute CBS video?" ***
*** In "Why Caregivers are an Endangered Species", US News & World Report 9/4/13 says: "The nation's bill for Medicaid is already projected to rise substantially due to the expansion of health insurance under Obamacare. Imagine what a caregiving crisis would do." Critical related reading: "Why Medicaid Could Be the Real Threat to Our Economy". ***
*** Cover Story: Life Insurance Selling ***

*** 2014 LTC SUMMIT. AALTCI has seemingly worked a miracle. Next year’s LTC Summit costs only $69 to attend in person if you register by November 30. If you still can’t afford to participate in person, you can watch the program streamed live online. How can they do it? Check out the details here. ***

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LTC BULLET: PBS’S 6 TIPS FOR LTC MISS THE MARK

LTC Comment: Millions watch the Public Broadcasting System’s NewsHour every night. So when that show addresses long-term care it’s worth paying attention.

You can read about and view videos from a forum, titled "Global and Regional Models for Long-Term Care: Can They Work Nationally?," that MacNeil/Lehrer Productions (the NewsHour’s parent company) and the SCAN Foundation sponsored on Monday.

But if you have better things to do, such as advising consumers on how to protect themselves from LTC risks and costs without depending on tottering government programs, let me save you some time.

Following are quick summaries of PBS’s “6 tips for averting America's looming long-term care crisis” followed by our critique of each.

PBS Tip #1: “Keep it Local” The Urban Institute’s Howard Gleckman says don’t seek a “single answer.” Rather work from the bottom up with friends, neighbors and families taking the lead. “To the degree that we can, government can at least try to stay out of the way of those solutions . . ..”

LTC Comment: Hear, hear! Finally something from this writer with which I can agree. But true to form, he reverts to form a few sentences later, advocating more and bigger government programs.

PBS Tip #2: “Change the Financing” Former CMS Administrator Dr. Mark McClellan, currently with the Brookings Institution, says “let people control how [Medicaid] money is spent on their behalf. That's what's behind our ‘Money Follows the Person’ [MFP] initiatives in states around the country . . ..”

LTC Comment: Terrific. MFP programs are a vast improvement over the current LTC financing system which makes providers--not patients--the program’s customers. But “Money Follows the Person” still depends on payments coming from an unsustainable welfare program. Making Medicaid more attractive to more people is not a solution.

PBS Tip #3: “Focus More on the Poor” Dr. E. Percil Stanford, president of Folding Voice and the KIND Corporation, says “Unfortunately, considerable [LTC policy] attention from the most well-intentioned institutions and organizations has focused primarily on the middle and upper classes.” Instead, he says, they should focus laser-like on the poor elderly.

LTC Comment: Right on, but how? No answer from this source. Research shows Medicaid’s LTC program benefits the middle-class and affluent as much or more than the poor. The solution is to target scarce public benefits to the needy and use some of the savings to incentivize early and responsible LTC planning by more prosperous people.

PBS Tip #4: “Build a Comprehensive National Strategy” AARP’s Debra Whitman wants us to spend more government money to help family caregivers, grow Medicaid, expand “affordable” housing and transportation, “integrate” health care services, and eliminate LTC impoverishment.

LTC Comment: Typical AARP eyewash. Not a word about where the money will come from to pay for such wishful public program expansions. The federal government already borrows a third or more of everything it spends. It forces interest rates to near zero to make such borrowing feasible temporarily. Watch out when this bubble bursts.

PBS Tip #5: “Begin the Conversation” Jennie Chin Hansen, CEO of the American Geriatrics Society [AGS], thinks we should "chat and chew" LTC issues with our friends and colleagues creating a "study group" opportunity to “discuss the universal journey.” She says “Let's proactively help each other build greater confidence, clarity and capacity.”

LTC Comment: Doesn’t that advice sound vacuous coming from the head of the AGS? We’ve been jaw-boning long-term care for decades without addressing the real problem, i.e. government pays for most high-cost LTC which anesthetizes consumers to the risk and crowds out responsible LTC planning and private financing.

PBS Tip #6: “Make It a Human Right” Dr. Laura Gitlin of the Center for Innovative Care in Aging says “We need to grow a long-term care system based on . . . [the] principle . . . that long-term care is a basic right."

LTC Comment: Of all the empty rhetoric in this program, the prize for thoughtless irresponsibility goes to this proposal. If people have a basic human right to long-term care whether or not they are able or willing to pay for it, their “right” means someone else must provide LTC whether or not they are compensated for their effort. That is the definition of slavery, which is what this ostensibly caring academic actually advocates.

Closing LTC Comment: When I see the subterranean quality of LTC policy analysis displayed in program’s like this one, I’m nearly ready to despair. The one thing that keeps me going is that a few of you AMGs (altruistic, masochistic geniuses) are still out there having truly valuable conversations with real consumers about how actually to protect themselves from escalating LTC risks and costs.

The whole wobbly Rube Goldberg apparatus of government-financed LTC puts enormous obstacles in your way. It gives away what you’re trying to sell. It makes your product unprofitable by manipulating interest rates so that its programs are artificially viable. It falsely assures citizens they’ll be taken care of by bankrupt social programs already under-funded by trillions of dollars. Yet you soldier on. Somehow.

Hail to the AMGs!

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Updated, Monday, November 4, 2013, 11:08 AM (Pacific)

Seattle—

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OBAMACARE STUMBLES AND LTC NEWS AND COMMENT

LTC Comment: What a week for “ObamaCare.” Everything its critics predicted is beginning to happen. It will get worse. We begin today’s LTC E-Alert with this link to the best critique of the government health care take over I’ve seen so far. It isn’t just the software, folks.

10/23/2013, “Top Ten Obamacare Disasters to Come,” by Grace-Marie Turner, National Review Online

Quote: “[E]ventually, software can be fixed. Obamacare’s epic policy flaws can’t. The problems increasingly are going to be up close and personal, as people see for themselves the impact it has on their lives and pocketbooks. The top ten debacles to come:

1. Deductible shock . . . 2. Will people pay? . . . 3. Attracting the sickest . . . 4. Less expensive plans vanish . . . 5. Families lose out . . . 6. Repaying subsidies . . . 7. Public health-care costs are going to explode . . . 8. More jobs lost . . . 9. Identity theft and fraud will explode . . . 10. Federal-exchange subsidies eliminated? . . . If you thought Healthcare.gov was bad, just wait. This article is available online at: National Review Online.”

LTC Comment: Read it and weep.

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December 2013, “How to Make Long-Term Care More Affordable: We help you navigate the maze of choices to get the best deal [link],” by Kimberly Lankford, Kiplinger

Quote: "The average cost of a private room in a nursing home is now about $248 per day (or about $90,000 per year), and 12 hours a day of home care costs even more, according to the MetLife Mature Market Institute. But for many baby-boomers, it takes more than the threat of financial catastrophe to be prodded into buying a long-term-care insurance policy."

LTC Comment: Gee, wonder why, when the government pays for most expensive long-term care after the insurable event occurs and without requiring spend down of most assets. See How to Fix Long-Term Care for more.

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11/1/2013, “IRS Announced Increased Tax Deductible Limits for Long Term Care Insurance [link],” by Jesse Slome, ExpertClick

Quote: "November 1, 2013. The American Association for Long Term Care Insurance announced today release of increased deductibility levels for long-term care insurance policies purchased in 2014.

"'For taxable years beginning in 2014, the limitations have been increased again,' explains Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI), the industry's trade association. 'Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners.'"

LTC Comment: See our Members-Only Zone archives for LTCi tax deductibility limits for each year dating back to 1997 here.

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11/1/2013, “Analyst expects insurer loss on overhaul exchanges,” by Tom Murphy, Bloomberg Business Week

Quote: “Health insurers will lose money for the first couple years on business they get from the health care overhaul's public exchanges, according to a Goldman Sachs analyst. He says the hits won't be big enough to change earnings forecasts, however.

"Borsch said a bigger concern for health insurers will be rate cuts for Medicare Advantage plans, the privately run versions of the federal government's Medicare program. Insurers will receive less reimbursement next year for these plans due to overhaul-mandated reductions."

LTC Comment: And thus the Medicare Advantage plans favored by consumers will be forced to subsidize ObamaCare’s expansion of high-cost coverage to subsidized public dependents.

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10/31/2013, “Why Art Therapy is Good for the Brain,” by Jennifer Wegerer, A Place for Mom

Quote: "Art therapy has proven a powerful tool for treating Alzheimer’s. More than giving patients something pretty to look at it or an exercise to keep them busy, it stimulates the brain. It stirs memories and can bring language back into the life of someone who struggles to speak.

"Studies show that art therapy gives back to Alzheimer’s patients, in some part, what the disease has taken away. It stimulates the senses, can trigger dormant memories and encourages conversation. Whether they’re viewing or creating art themselves, Alzheimer’s patients can use it as a form of expression, particularly individuals who can’t communicate verbally."

LTC Comment: How much “art therapy” do you think Medicaid patients in nursing homes or waivered home care programs receive? The best and most creative care will always be available first and foremost to people who can afford to pay privately.

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10/31/2013, “Advance Planning for Eldercare Saves Money, A New Study Shows [link],” by Sally Abrahms, AARP Blog

Quote: "When it comes to planning for long-term care, the early bird does get the worm, according to a new study : The report shows that families who anticipate their needs can save close to $11,000 a year in out of pocket expenses by planning in advance instead of waiting until a crisis."

LTC Comment: Just be sure you aren’t trading poor care for savings by planning for Medicaid eligibility by deliberately impoverishing yourself.

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10/31/2013, “Nursing home arbitration agreements force consumers to 'sign away legal rights,' trial lawyers argue [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Arbitration agreements in long-term care contracts are harming consumers and eroding the U.S. civil justice system, according to a prominent association of trial lawyers."

LTC Comment: Maybe trial lawyers would have more credibility if they hadn’t abused nursing home liability cases for so long. Have you seen the billboards in Florida urging drivers to sue their parents’ nursing homes? First the Medicaid planning attorneys take their cut by impoverishing the parent and enriching themselves and their adult-children clients. Then the litigators extract a fortune from the LTC financing system by suing nursing homes that can’t afford to provide good care because they have too many Medicaid recipients paying rates less than the cost of providing their care. Yeah, these lawyers really have our best interests at heart.

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10/30/2013, “Social Security benefits up just 1.5% in 2014,” by Chris Isidore, CNNMoney

Quote: “Social Security benefits will rise only 1.5% next year, one of the smallest increases ever in the program's annual cost-of-living adjustment. The increase is down from the 1.7% increase for 2013. There was no cost-of-living increase at all in 2010 and 2011 because prices fell in the wake of the recession. A 3.6% adjustment in 2012 has been the only significant rise in benefits in recent years."

LTC Comment: And that little increase will likely be wiped out by increases in Medicare costs.

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10/30/2013, “Healthcare Continues To Rank as Top Financial Fear in Retirement in National Investor Survey [link],” Press Release, Wall Street Journal

Quote: "A new survey of investors who are currently working shows concerns about rising health care costs, changes to Social Security and/or Medicare and running out of money are among the greatest financial worries in retirement, and the percentage citing them has increased since prior surveys.

"'Though being able to afford healthcare isn't a new issue, the fact that more affluent workers are very worried about it than not, points to the value advisors can provide to help clients develop strategies to manage it,' said Matt Rigatti, vice president, Signator Investors, Inc. 'We've already seen movement in the direction of tools that address healthcare, specializations -- or including a healthcare finance-oriented specialist on a client's team and I suspect we'll continue seeing growth in that area.'"

LTC Comment: Well, yes, and including a long-term care specialist.

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10/29/2013, “How to transfer IRAs to LTC insurance Opinion,” by Brent Welch, LifeHealthPRO

Quote: "Nearly 10,000 baby boomers are turning 65 every day, and they will for the next 16 years. Where will they get the money to purchase long-term care insurance (LTCI)? Most LTCI owners are deeply concerned about the shocking price increases in policies this past year. Forbes reported that the increases in LTCI premiums may be between 45 percent and 85 percent in 2013 alone! The question I am asking you this month is: How can one use IRA assets to pay for long-term care insurance? Is it really possible to transfer IRA money into tax-free LTCI?"

LTC Comment: Does this work and is it a good idea?

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10/29/2013, “Medicaid enrollment surges ahead of ACA sign-ups,” by Jennifer Haberkorn, Politico

Quote: "HealthCare.gov may be limping along to full viability, but Medicaid is flying off the shelves. New Medicaid enrollment is far outpacing new insurance customers under Obamacare so far, a subtle sign that the program could play a greater role in the law's coverage expansion than first anticipated. Some people are signing up for the Medicaid expansion created by the president's health law. Others were already eligible for their state's current Medicaid program, but until this outreach campaign about health coverage, they had never signed up."

LTC Comment: There’s an old saying in the business world: “When you’re losing money on every customer, you can’t make up for it with greater volume.” Welcome to Medicaid, a bankrupt public welfare program that is crowding out health care and LTC providers with dismally low reimbursements.

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10/28/2013, “Another perspective on the Virtual Dementia Tour: Guest Column,” by Lassie Pappas, McKnight's LTC News

Quote: "Several years ago, I attended a seminar on how to decorate an Alzheimer's unit in a skilled nursing facility. While fascinated by what patterns, textures, and nuances should and should not be used in that situation, I never really knew how the residents FELT about their surroundings. I simply took the information as factual based on research, and moved forward with an internal renovation. A recent experience at the American Healthcare Association Convention really changed my perspective on how our elderly population may view their environment, and how we as care givers or visitors may unknowingly make them feel."

LTC Comment: Read this for a vicarious sense of what being a dementia patient might be like.

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10/28/2013, “What the Voyager space program can teach you about preparing for long-term care,” PBS News Hour

Quote: "At first glance, comparing a 36-year-old, one-ton spacecraft hurtling through interstellar space at about 37,075 miles per hour to the realities of planning for our long-term care needs seems ... odd. But the more we thought about it, it made sense. We brought together the wisdom of NASA scientists and health experts to highlight 10 lessons the Voyager spacecraft can teach us about planning for long-term care.

"Like the Voyager engineers, make sure your plans have fallback options in case your intended future doesn't materialize. Consider a long-term care insurance policy in case investments and Social Security are not enough to cover your medical needs after you retire. Understand the availability and kinds of care options your state and local government provides, and make plans should you need additional support."

LTC Comment: Hmmm. Maybe those who preferred to call the Center’s “Silver Bullet” a “space capsule” were right all along.

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10/28/2013, “Breakthrough study identifies 11 new genes linked to Alzheimer's disease [link],” FoxNews

Quote: "Researchers have identified 11 new genes linked to an increased risk of developing Alzheimer’s disease, Medical News Today reported. In a study published in Nature Genetics, researchers from 145 academic centers around the world collected genetic data from 74,076 people in 15 countries in an attempt to identify more genes linked to the neurodegenerative disease."

LTC Comment: The more we know about the “Big A” the better, but who needed 11 more genes associated with Alzheimer’s Disease?

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10/28/2013, “The real cost of (not having) LTCI: Sales strategy,” by Ed McCarthy, CFP, LifeHealthPRO

Quote: "Many clients who reject long-term care insurance (LTCI) or consider dropping their coverage do so on the argument that it's too expensive. But that attitude overlooks several important aspects of the costs of not buying the coverage, including the financial and personal burdens imposed on long-term care (LTC) recipients' families. We asked several LTCI experts for their thoughts on the cost issue and how they approach it with prospects and clients."

LTC Comment: This article cites Premier Elite Center members Honey Leveen and Phyllis Shelton. Well done!

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10/25/2013, “The future of LTCI: Options, opportunities and urgency,” by Tom Riekse, Jr., LifeHealthPRO

Quote: "Luckily, in the United States, we have many private LTC insurance solutions. Despite media perceptions, Americans have more opportunities than ever to plan for LTC through insurance. Will baby boomers heed the message and actually engage in planning? Financial professionals are the most likely group to influence them.

"There are four key types of coverage: traditional health-based LTC insurance, linked life/LTC plans, life insurance with LTC or chronic care riders, and finally annuity LTC plans. Let's look at the future of these product categories."

LTC Comment: Congratulations on this fine article to long-time Center supporter Tom Riekse, Jr., managing principal of Center-corporate-member LTCI Partners.

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10/25/2013, "Strokes affect more young people, could double by 2030: study,” The Associated Press, New York Daily News

Quote: "The incidence of stroke in people aged 20-64 jumped by a quarter, according to a new analysis of more than 100 studies published between 1990 and 2010. Stroke is the second-leading cause of death worldwide, though the death rate from stroke is actually falling due to better treatment options.”

LTC Comment: As stroke is one of the leading causes of LTCI claims, this finding should be a wake up call to younger prospects who now face a higher LTC risk.

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10/25/2013, “Greater family involvement in care improves resident outcomes but increases guilt, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Programs to boost family involvement in caregiving can improve quality of life for long-term care residents and decrease the burden on staff, but might also increase family members' feelings of guilt, researchers have found."

LTC Comment: Caregiving is fraught with mixed emotions: pride and satisfaction for doing what you can, but worry and guilt that you could and should have done more. Very natural feelings.

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10/24/2013, “Medicaid could be the next headache for Obamacare,” by Kyle Cheney, Politico

Quote: "A new phase of the Obamacare launch is coming, this one involving Medicaid. And it could be déjà vu all over again. On Nov. 1, the health law's malfunctioning enrollment system is supposed to send reams of data to states so they can begin placing thousands of people into Medicaid. But state officials say that transfer system has barely been tested and could be vulnerable to technical failures like those that have crippled the broader Obamacare sign-up process.

"Under Obamacare, millions of low-income uninsured people are expected to enroll in Medicaid, which will be expanded significantly in about half the states on Jan. 1. Plus, the health law's enrollment push is expected to bring out of the woodwork people who are currently eligible but haven't already signed up for Medicaid. Early data from states running their own enrollment systems are reporting tens of thousands of new Medicaid enrollees so far this month, a potential indicator of strong interest."

LTC Comment: Solving America’s health care problems by placing millions more people on Medicaid is like adding deck chairs to the Titanic after the incident with the iceberg.

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10/24/2013, “Health-care help from an unlikely source: As clients' health costs rise, financial advisers scramble to become Medicare experts [link],” by Elizabeth O'Brien, WSJ MarketWatch

Quote: "Most financial advisers spend years developing expertise in the likes of asset allocation and investment fund selection. Until recently, they barely addressed the second-largest budget item of their older clients: health-related costs. This is beginning to change, though, as demand for help with health-care planning drives more advisers to add another line to their resume: Medicare consultant."

LTC Comment: When will financial advisors get around to becoming “LTC consultants?” More of them should advise their clients to consult genuine LTC insurance experts.

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10/23/2013, “3 ways to pitch worksite LTCI,” by Jeff Sadler, LifeHealthPRO

Quote: "Say what you will about the Patient Protection and Affordable Care Act (PPACA), but it is having a positive effect on the voluntary worksite marketplace. The majority of Americans seem to feel that health insurance coverage will never be the same and that future coverage will be less comprehensive and more costly. This would continue a decade-long pricing trend where employers passed more of the premium responsibility for health coverage on to the employee even as deductibles and out-of-pocket costs were increasing. Concerned that the underlying health care coverage may not be enough or even affordable in the years to come, employees have embraced the supplemental products employers are making available to them through both Section 125 cafeteria plans and payroll deduction. Whatever health insurance ends up looking like post-2014, there will be ample opportunity for additional supplemental sales to make up for whatever an employee feels the core benefit package is lacking. Enter long-term care insurance."

LTC Comment: A dim silver lining at best, but any port in a storm.

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10/22/2013, “Survey: Third of Americans expect to work until they drop,” by Eric Rosenbaum, CNBC

Quote: "You've heard the story about America's retirement crisis. Young people don't save enough. Older people have to work longer. Public pension benefits are always on the verge of being slashed, and Social Security's future is anyone's guess. And now it has come to this: In its annual retirement study of middle-income Americans (income of $25,000 to $100,000), Wells Fargo asked participants if they expect to work until they die. 'This is the first time we asked if people thought they would work until they die or become too sick,' said Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust. Thirty-seven percent of middle-income Americans surveyed by Wells Fargo said they have that expectation. ‘If 80 is the new 60, it's looking like six feet under is the new 65 for a significant percentage of Americans.’”

LTC Comment: The reality is that most people will not work until they die. They may work until they need long-term care, but then they’ll “retire.” The bad news is that traditional retirement is disappearing. The somewhat better news is that more people will have higher incomes longer so they can afford the LTC insurance they’ll need to gain access to better private LTC services when that time comes.

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10/22/2013, “7 health insurance blogs you should know about,” by Lauren Jaeckel, LifeHealthPRO

Quote: "From health care reform to sales and marketing, the insurance landscape is constantly evolving. Throughout every change, industry thought leaders provide essential tips and insights into new policies and trends to keep us on top of our game. Without further ado, here are seven of the industry’s most influential insurance blogs that you should be following."

LTC Comment: All good, but we scan everything and deliver the best of it to you in the Center for Long-Term Care Reform’s “Clippings” and LTC E-Alerts. Congratulations to Center supporters Honey Leveen (Premier Elite) and Stephen Forman (Bronze Corporate) for publishing free public blogs that made the list of the health care industry’s best!

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10/21/2013, “GAO analysts eye Medigap effects,” by Allison Bell, LifeHealthPRO

Quote: "Holders of Medicare supplement insurance who said they had health problems spent an average of about $30,000 on care in 2010. The ailing Medigap holders spent about 2.5 times as much on care that year as consumers who said they had health problems but only had traditional Medicare fee-for-service (FFS) coverage, without help from a Medigap policy, a Medicare Advantage plan, or employer-sponsored retiree health benefits."

LTC Comment: Government ruined Medi-Gap insurance by forcing it into limited, structured plans and eliminating most of the choices consumers used to have for supplementing their Medicare coverage.

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10/21/2013, “The cost of not planning for long-term care: Study pinpoints financial cost of caregiving [link],” by Maria Wood, LifeHealthPRO

Quote: "Numerous studies have underscored the physical and psychological strain of taking care of an aging, ailing loved one. However, a recent study by Genworth quantifies the monetary loss that caregiving could entail without the benefit of long-term care insurance (LTCI) or some form of pre-planning. The new report, ‘Beyond Dollars: A Way Forward,’ calculated that, on average, families would be able to save nearly $11,000 yearly in out-of-pocket expenses if long-term care arrangements were made prior to a loved one actually needing long-term care. Moreover, 53 percent of family members that acted as the primary caregiver have lost income due to their caregiving duties."

LTC Comment: There’s more to LTC expenses than the cost of the patient’s care itself, especially for caregivers.

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10/21/2013, “Report: Providers should prepare for managed care partnerships for dual-eligibles services [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Managed care organizations are set to play a bigger role in how long-term care is provided for people currently eligible for both Medicare and Medicaid, and providers should focus on having the right capabilities in place for them, according to a new report. Released by merchant bank TripleTree, it also identifies technology vendors enabling these capabilities in the long-term and post-acute care settings."

LTC Comment: Moving the aged, blind and disabled—even including the most frail, infirm and expensive dual eligibles—into care managed by giant corporations that are more accustomed to dealing with preventive and acute care of mostly healthy people is a huge trend nationally. Advocates worry it will not work even as well as the poor system already operated by Medicaid and Medicare.

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Updated, Friday, November 1, 2013, 1:06 PM (Pacific)

Seattle—

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LTC BULLET: THE INSURANCE DILEMMA

LTC Comment: Why are we losing the benefits of insurance and suffering the inevitable consequences of compulsory government benefit programs? After the ***news.***

*** FREE LTCI CONFERENCE: Jesse Slome and the American Association for Long-Term Care Insurance have announced that key portions of their May 2014 long-term care insurance solutions conference in Kansas City will be streamed live for free to 5,000 virtual attendees. Read all about it here. You can watch two hours of sessions each day, including a special one-hour workshop by Corporation for Long-Term Care Certification president Harley Gordon. Tweet questions to presenters. Says Slome: “Nothing can replace face-to-face networking but technology will allow us to reach thousands of professionals who can’t dedicate the time or expense involved with attending a conference.” Congratulations to Jesse and AALTCI for another creative effort to promote responsible LTC planning and to support the producers who make it possible. ***

LTC BULLET: THE INSURANCE DILEMMA

LTC Comment: What a mess! The roll out of “health care reform,” AKA the Affordable Care Act, AKA ObamaCare is almost universally panned in the media. But most coverage misses the real story. Real insurance is disappearing.

Insurance is a financial tool that allows purchasers to replace the small risk of a catastrophic loss with the certainty of an affordable premium. Because it spreads risk, insurers can sell the product to many vulnerable customers, taking a loss on some and a profit on most. But insurance does more than spread risk. It also prices risk. By actuarially estimating the amount of risk each insured brings to the risk pool and pricing each individual’s coverage accordingly, insurance ensures that reserves collected from premiums will suffice to pay reasonably anticipated claims.

But pricing risk does something else of enormous importance. When smokers pay more for life insurance than non-smokers, smoking is discouraged. When poor drivers pay more for car insurance, bad driving is discouraged. When older people pay for more long-term care insurance, failure to plan early is discouraged. In other words, when insurance prices risk it performs a valuable role for individuals and for society by encouraging responsible behavior and discouraging irresponsibility.

Now consider the misnomer “social insurance.” Social insurance programs such as Medicare and Social Security spread risk very effectively. Everyone pays in and everyone receives benefits, equally in its pure form. Thus social insurance does not price risk. It has no way to determine what premiums are adequate to meet total claims in the future and it entirely lacks the valuable benefit of rewarding responsible behavior and discouraging irresponsible behavior.

In fact, how has social insurance played out in the United States and elsewhere? Everywhere accumulated reserves are vastly inadequate compared to reasonably anticipated future costs. Social Security has a $23 trillion unfunded liability and Medicare a staggeringly irresponsible $43 trillion shortfall. As bad or worse, the false hope that social insurance will somehow provide future benefits has replaced the public’s sense of personal responsibility with a widespread entitlement mentality.

It’s really pretty clear what is happening to the personal values of hard work, self-reliance and individual responsibility that made this country great in the first place. We’ve chipped away at them for decades and we’re now about to pay a tragic price for the inevitable results of social insurance. So, why not confront that reality, explain it clearly, and advocate a return to true insurance?

Therein lies the insurance dilemma. Imagine what would happen to the politician who advocates that insurance should price risk. You mean people with pre-existing conditions should pay more? How cruel. Women should pay higher premiums for health insurance and men, for life insurance? How unfair. People who don’t want or can’t afford insurance should remain uninsured? How socially irresponsible. Never mind that everyone was better off when real private insurance prevailed. Forget that everyone is and will be worse off as social insurance and the entitlement mentality lead to their inevitably destructive outcomes.

Bottom line, social insurance requires responsible (insurable) people to pay more to offset the cost of irresponsible (uninsurable) people. Responsible people will not voluntarily pay more to support the irresponsible, so government has to compel citizens to participate. That’s why the Affordable Care Act forces citizens to buy insurance and penalizes them if they do not. It substitutes personal responsibility with a false hope of social security. Easy to see all around us.

Ah, but make that case and you’ll be reminded that social insurance not only subsidizes the irresponsible, it helps the poor and unfortunate, who may be in that condition through no fault of their own. Don’t you care about them? How long will a politician survive without taking the needy into account? Ironically, the poor fare much better in a society that rewards personal responsibility and encourages freedom. Without the economic drag of social insurance and compulsory wealth redistribution, the economy would thrive and all, including the poor, would fare better. Voluntary charity could and would provide for the needy better than government dependency.

But that argument is complicated and difficult to make. Which is why few politicians who understand and believe it actually try to convey it publicly. Thus the opposing argument that government has to force citizens to act against their own best interests prevails. Only strong principles, grounded in human nature, could turn the tide. But it is those principles of independence, self-reliance, personal responsibility and hard work that have been corrupted over time.

Sadly, we may have to suffer the increasingly inevitable collapse of the current system before better values can prevail again. Whether the USA follows the dismal history of previous economic powerhouses or rises again depends on whether or not and to what extent those fundamental values have survived. In the meantime, the relentless political efforts to destroy them, grounded in the threat of government force, continue apace.

For a more detailed account of the difference between social insurance and real insurance, see Stephen A. Moses, “The Inherent Individualism of Insurance,” Navigator, Vol. 5, Nos. 10-11, November-December 2002, pps. 10-12, 14-16, published in January 2003.

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Updated, Friday, October 25, 2013, 11:15 AM (Pacific)

Corning, California—

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LTC BULLET: THE LTC BLIND

LTC Comment: “There are none so blind as those who will not see.” That proverb applies perfectly to a recent column about long-term care, after the ***news.***

*** AALTCI: The American Association for Long-Term Care Insurance has announced their 11th National Long-Term Care Solutions Sales Summit will be held May 18-20, 2014 at the Westin Hotel in Kansas City, MO. Over the past decade we’ve attended many of these conferences and have always found them to be of high value in terms of professional development through educational content and networking opportunities. Early registration is only $69. See http://www.aaltci.org/2014summit/index.html for further details and to register. ***

*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / damon@centerltc.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***

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LTC BULLET: THE LTC BLIND

“There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true.”
― Søren Kierkegaard

LTC Comment: Case in point? A Forbes column last week by a perennially insightless writer. Excerpts and our analysis follow.

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Excerpts from “Americans Worry About Long-term Care Costs, See Insurance and Government Solutions [link]” by Howard Gleckman

“Americans have little idea how long-term supports and services are paid for, according to a new poll by Harris Interactive HPOL -0.51% and the medical publishers HealthDay. Yet, they are worried about the cost, believe most people should buy long-term care insurance, and also favor a new government program to pay some or all of the costs of LTC.

“It is hard to make much sense of these results, although the public's confusion in this poll seems consistent with past surveys.

“For instance, although Medicaid pays for as much as 60 percent of long-term care costs, only about one in five of those surveyed believe the program is the major payer of these services. One-third think Medicare is the biggest funder, though the program pays for almost no LTC costs. Half think individuals pay the most. In reality, families pay only about one-fifth of the cost of paid services, though of course they do provide the vast bulk of uncompensated care.

“When asked who should pay these costs, 29 percent said individuals and their families while 27 percent said the federal government. Interestingly only 9 percent thought state and local governments should pay even though states are already a major payer through their share of Medicaid. Fully one-third said they don't know who should pay. . . .

“The survey also asked if people were worried about the cost of long-term supports and services. Overall, 68 percent said they were very or somewhat worried. Women more much more likely to be concerned than men by 74 percent to 61 percent. By age, those least likely to be concerned were 18-24 (not surprising) and those 65 and older (very surprising). Those most likely to worry were aged 40-49. . . .

“What's the take-away of all this? Americans recognize that long-term supports and services are a major financial risk, yet they are deeply uncertain about how long-term care is paid for today and what to do about it. And they seem open to some sort of new government program to help, perhaps one that is insurance-based in some way.”

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LTC Comment: If the findings of this poll leave you stumped like the Forbes columnist, you haven’t been reading your LTC Bullets. Let’s review.

Survey after survey and poll after poll produce the same results: Americans don’t know who pays for long-term care. Nevertheless, they do know LTC is high risk and high cost. But they don’t do much about it, such as buying LTC insurance.

Academics, pundits, policymakers and even some LTCI marketers scratch their heads, throw up their hands and whine: “What’s wrong with the American people? How can they be so dense? It must be denial, self-delusion, or early onset Alzheimer’s.”

Guess what? The public has a better grasp of reality than the “experts” who “refuse to believe what is true.” Here’s what’s true and why it explains the poll findings that befuddle so many analysts.

(1) Americans don’t know who pays for long-term care because they haven’t needed to know. Since 1965 Medicaid has paid for most expensive long-term care. It still does. It pays after the insurable event occurs and without significant income or asset limits as we’ve explained so many times before. Ending up on Medicaid is a terrible outcome because of the program’s access and quality problems, but consumers don’t confront that reality until after it is too late to prepare responsibly. By then their heirs are so relieved their inheritances are safe that they blank out about their own need to plan for LTC risk.

(2) Americans know LTC is high risk and high cost? Of course. It’s been drummed into them by newspapers, magazines, TV specials, “Own Your Future” campaigns, and every altruistic, masochistic genius who’s ever survived for more than a few weeks selling long-term care insurance. A truly strange poll finding would be that Americans hadn’t gotten the message of LTC’s high risk/cost and somehow thought long-term care was an emotional and financial cakewalk.

Now, all you have to do is add paragraph one to paragraph two to get paragraph three.

(3) When asked who pays for LTC, Americans either don’t know or say “Medicare.” Well good guess, but the real payer is Medicaid. The only thing that matters is that somebody pays, and Medicaid does. So, even though people do know that LTC may hit them with huge costs, it’s all just theory to them because in fact somebody really does pay if LTC becomes high-cost. Why don’t they plan to save, invest or insure for LTC? Simple. Consumers have many demands on their attention and finances. They only focus on real risks and costs and they prioritize which risks and costs on which to focus.

End result? You get the survey and poll findings that baffle deniers. They refuse to acknowledge how Medicaid works in reality and cling to the myths that (1) it requires impoverishment and (2) LTC wipes out life savings nationwide. To resolve their conundrum is as easy as opening their eyes and accepting reality. But they have clamped their eyes shut.

Want some good eye-openers? Read just about anything at www.centerltc.com, especially our “Articles, Speeches, and Reports.” We’ve provided the evidence to back up the argument in this Bullet often and irrefutably. We’ll gladly debate anyone publicly who disagrees.

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Updated, Monday, October 21, 2013, 11:27 AM (Pacific)

Seattle—

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LTC E-ALERT #13-033: LTC NEWS AND COMMENT

LTC Comment: It was a slow news week for LTC, with reportorial and editorial content aimed mostly at the debt ceiling and government shutdown stories.

Coverage of the challenges facing ObamaCare will ramp back up now. That won’t be pretty. Everything critics of the Affordable Care Act have warned would happen is beginning. It will be entertaining political theater.

We’ll stick to our knitting here with a focus on LTC news and policy, but we won’t entirely neglect the bigger, acute care policy drama that is unfolding. It does have a long-term care component, in that ObamaCare pushes state Medicaid programs toward more home care (which increases costs) and more managed care (which risks access and quality problems). More on those issues will follow as we publish our three new state reports over the next month and a half.

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10/18/2013, “Family caregivers live longer than their peers,” by C. E. Huggins, Reuters

Quote: "In a nationwide study, adults who provided care for a chronically ill or disabled family member had a lower death rate than a similar group of non-caregivers. The finding is something of a surprise. In the past, researchers have found just the opposite - an increased risk of death as well as poorer mental and physical health among caregivers."

LTC Comment: Seems counter-intuitive, but anyone who has cared for a chronically ill loved one knows how personally rewarding the experience can be . . . if it isn’t too hard and doesn’t go on too long.

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10/17/2013, “PPACA premiums, state-by-state Infographic,” by Nichole Morford, LifeHealthPRO

Quote: "It's mid-October and the exchanges have launched — clunkily, in most cases, and with many unknowns still to be answered. One question that has been answered is an important one: How much will health care cost under the Patient Protection and Affordable Care Act (PPACA)?"

LTC Comment: And the answer is . . . it depends.

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10/18/2013, “Common blood pressure drugs cut the risk of Alzheimer's dementia by 50%, researchers find [link],” by Tim Mullaney, McKnight's LTC News

Quote: "People older than 75 who had normal cognition and took diuretics, angiotensin-1 receptor blockers (ARBs) and angiotensin-converting enzyme (ACE) inhibitors demonstrated a 50% reduced risk of Alzheimer's dementia, the researchers found. Among those with mild cognitive impairment, diuretic use was associated with a 50% reduced risk."

LTC Comment: Almost makes you want high blood pressure.

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10/17/2013, “Don't Let Health Care Squeeze Your Retirement,” Military.com

Quote: "In 2012, 82% of all long-term care insurance policy buyers were under age 65, according to the financial research organization LIMRA. And, most likely because of longer life expectancy, women make up 57% of long-term care insurance purchasers, according to a 2012 LIMRA study."

LTC Comment: USAA promotes LTC insurance for the "military community."

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10/16/2013, “Thefts from nursing home trust funds target the elderly,” by Peter Eisler, USA Today

Quote: "Thousands of residents in U.S. nursing homes and other long-term care institutions for the aged and disabled have had their personal savings raided or mismanaged after relying on the facilities to safeguard the money in special trust fund accounts, a USA TODAY investigation shows."

LTC Comment: Most people in nursing homes are funded by Medicaid. Medicaid limits their cash assets to $2,000. Nursing homes manage those assets in trust accounts to ensure they do not exceed $2,000 and cause the resident to become ineligible for Medicaid. So, as new revenue comes into the accounts, they spend money to keep the accounts below the limit. Hopefully, the money is spent on the resident, but evidently that's not always the case according to this article. Another big question, unaddressed in this article, is what happens to the money in these accounts when a resident dies. It should go to the state's Medicaid estate recovery program to reimburse Medicaid for the cost of caring for the resident. But that's not what happens often. Someone shows up, claims to represent the deceased, and takes the money, leaving Medicaid (and taxpayers) with the full cost of the departed's care.

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10/15/2013, “Seniors Cautioned To Pay Close Attention To Details As Enrollment Begins In Medicare Plans [link],” by Susan Jaffe, Kaiser Health News

Quote: "The seven-week enrollment period for next year's Medicare prescription drug and managed-care plans begins Tuesday, but seniors shouldn't simply renew their policies and assume the current coverage will stay the same. There's a likely payoff for those who pay close attention to the details."

LTC Comment: Government makes everything so simple.

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10/15/2013, “'Landmark' discovery brings a pill for Alzheimer's closer to reality, researchers say [link],” by Tim Mullaney, McKnight's LTC News

Quote: "In Alzheimer's and similar diseases, the brain responds to the buildup of 'misfolded' proteins by shutting off production of new proteins altogether, which leads to cell death. An orally administered compound has been found to intervene in this process and restore protein production in mice with neurodegenerative disease, according to researchers at the Medical Research Council Toxicology Unit at the University of Leicester."

LTC Comment: Another false hope or "this time is different?"

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10/14/2013, “Beneficiaries of Medicare Left Confused by Exchanges,” by Robert Pear, New York Times

Quote: "Medicare beneficiaries can sign up for private health plans starting Tuesday, but federal officials fear that many of them, out of confusion, might go to the new federal insurance exchange."

LTC Comment: How tangled the web of confusion becomes with government in charge.

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10/14/2013, “Most Americans expect to work for pay in retirement, poll says,” Associated Press

Quote: "Stung by a recession that sapped investments and home values, but expressing widespread job satisfaction, older Americans appear to have accepted the reality of a retirement that comes later in life and no longer represents a complete exit from the workforce. Some 82 percent of working Americans over 50 say it is at least somewhat likely they will work for pay in retirement, according to a poll released today by the Associated Press-NORC Center for Public Affairs Research."

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10/13/2013, “Baby boomers fueling wave of entrepreneurship ,” Associated Press

Quote: "Every passing month an unanswered resume dimmed Jim Glay's optimism more. So with no job in sight, he joined a growing number of older people and created his own. In a mix of boomer individualism and economic necessity, older Americans have fueled a wave of entrepreneurship."

LTC Comment: If there is a silver lining to the dark economic clouds, it's that boomers working longer and becoming entrepreneurs will be sensitized to the importance of preserving principal as they generate income longer, which they can put to good use with LTCI.

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Updated, Friday, October 18, 2013, 11:32 AM (Pacific)

Seattle—

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LTC BULLET: WHY DON’T CHILDREN BUY LTCI FOR PARENTS?

LTC Comment: The Wall Street Journal says professional kids should buy LTC insurance for their parents. It’s a perfect solution. So why doesn’t it happen more often? The answer after the ***news.***

*** LTC COVER UP: By hiking the debt ceiling and reopening government yesterday without corrective action, Congress covered up the underlying cause of America’s financial malaise: too much spending; too much debt; too little private economic incentive. They applied a band-aid to a suppurating malignant tumor. Long-term care is part of the cover up because most expensive LTC in the USA is financed in large measure by federal borrowing, money printing and deficits. As the time approaches when this funny money finally runs out, we face huge demographic challenges that legislators, policy makers, and bureaucrats have ignored for decades. There is not much individuals and families can do to protect themselves beyond maximizing personal savings, investments and insurance. ***

*** TESTIMONIALS AND OFFER:

“I just can’t imagine how difficult, and time consuming it would be to keep up on LTC news without your LTC Alerts and Bullets. You guys do a spectacular job.” -- Randy Gallas, CLTC, LTCP, President, Long-Term Care Insurance Agency, LLC, Kettering, OH

“I strongly recommend that every LTCi ‘Professional’ subscribe to and support the Center for Long-Term Care Reform, and receive their own ‘LTC-E-Alerts’... the minimum $150.00 annual membership is one of the best ‘Business Expenses’ a serious LTCi professional should gladly incur.” -- Robert A. Callanan, LTCP, CLTC, Senior Vice President, Borden Hamman Agency, Dallas, TX

Find many more testimonials like these here: http://www.centerltc.com/Testimonials.htm.

If you agree our LTC E-Alerts and LTC Bullets are worth a modest investment of $12.50 per month, then consider this. For an extra $100 per year, you can hear from us most days with an average of three emails alerting you to key media stories, academic articles, and major reports. Our “Clippings Service” delivers that information in real time to your email in-box. To subscribe to the clippings, contact Damon today and upgrade your membership to Premier or Premier Elite: damon@centerltc.com or 206-283-7036. Find all our Membership Levels and Benefits here: http://www.centerltc.com/MembershipLevelsandBenefits.htm. As an extra added bonus for Premier and Premier Elite members, we’ll forward articles to you that are “gated” and otherwise unavailable to non-subscribers – like the one discussed below – whenever you ask and we legally can. ***

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LTC BULLET: WHY DON’T CHILDREN BUY LTCI FOR PARENTS?

LTC Comment: Yesterday’s Wall Street Journal had an article titled “Protecting a Family from Long-Term Care Costs.” It’s available here to online WSJ subscribers. If you’d like a copy forwarded to you, see the ***news*** above. Articles like this one, appearing in national publications, are a godsend for the struggling LTC insurance industry. Following are excerpts to give you a sense of the piece followed by our commentary.

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Excerpts from Austin Kilham, “Protecting a Family from Long-Term Care Costs,” Wall Street Journal, October 17, 2013 [link].

“The husband and wife were successful physicians in their late 30s, but they were worried about the husband's parents, who had saved only about $100,000 for retirement.

“The couple was especially concerned about the cost of medical expenses falling to them should the parents' health deteriorate. . . .

“The adviser [Ms. Horvath] realized that even though her client's parents had relatively little saved for retirement, they wouldn't be eligible for long-term care coverage through Medicaid, which requires recipients to have less than $2,000 in assets. That meant that even if they purchased LTC insurance, they would be responsible for additional expenses once the policy ran out.

“But Ms. Horvath devised a solution that protected the parents and their children from the high cost of long-term care, while improving the parents' chances of qualifying for assistance from Medicaid.

“First, the adviser suggested that the parents purchase LTC insurance from Georgia's Long-Term Care Partnership program-one of 31 state partnership programs to encourage individuals to buy LTC insurance. . . .

“Ms. Horvath found a policy with a $6,300 annual premium and would pay up to $4,500 a month for long-term care for three years. . . .

“But Ms. Horvath had a second part to her plan: The son and daughter-in-law could pay the premiums on behalf of the parents. Not only could the successful couple afford the payments, she showed them how it might be less expensive than paying for long-term care down the road.

“Above all, Ms. Horvath adds, both the children and the parents are relieved to have a plan in place that addresses potential long-term care needs without putting either couple's finances in jeopardy.”

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LTC Comment: Great plan. Slam dunk. That’s why everyone’s buying LTCI for Mom and Dad, right? Hardly.

Adult children purchasing LTC insurance policies for their parents is not unheard of, but it is rare. Why?

Most people don’t think about LTC protection until they need it and then it’s too late.

Well, sure, but why don’t they think about it? After all, the risk of needing LTC someday is high and the potential cost is astronomical.

If the risk and cost is so high, why are most people unconcerned? “They’re in denial,” you say. OK, true, but that explains exactly nothing.

The key question is “What enables their denial?”

Do you really think most Americans would remain in denial, oblivious of long-term care’s risk and cost, if one of every ten families in the country were being wiped out financially by long-term care?

No, there is a simple reason for this seemingly peculiar circumstance that most people ignore long-term care until they need it.

Since 1965, Medicaid and Medicare have paid most of the cost of expensive long-term care. Sure, families provide huge amounts of free care at considerable emotional and financial distress. But once care costing thousands of dollars per month becomes necessary, public funding kicks in.

Now, if the public funding didn’t start until personal finances were wiped out, as most media coverage and academic writing incorrectly assumes, then people would worry about LTC and plan ahead.

But that’s not how it works in the real world. Income doesn’t interfere with Medicaid LTC eligibility because people who have too little income to pay privately for all their LTC and medical expenses qualify based on income. Assets don’t interfere despite the $2,000 limit, because people’s biggest assets are exempt, such as a home, business, IRAs, term life insurance, an automobile, etc. Those who still have too much wealth to qualify consult Medicaid planners. They make the excess go away artificially and get their affluent clients into the nicest facilities by holding back some “key money” to buy their way into the best care.

Do you see why the LTC Partnership Program, promoted in the article, has not attracted as many clients as it was expected to do? People don’t buy insurance to avoid a catastrophic spend down liability that does not actually exist. They don’t intentionally plan to go on Medicaid. They just don’t plan or think about LTC at all. Their denial is the logical outcome of nearly five decades of Medicaid’s operating as a de facto LTC entitlement.

The Wall Street Journal article cited above describes a situation in Georgia. The Center for LTC Reform recently completed a study of Medicaid and LTC financing in “The Peach State.” Our report, titled “The Index of Long-Term Care Vulnerability: A Case Study in Georgia” will be published soon by the Georgia Public Policy Foundation and the Center. It will provide a much more detailed explanation than we have space for in this LTC Bullet. Stay tuned.

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Updated, Monday, October 14, 2013, 12:11 PM (Pacific)

Seattle—

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KING KONG, THE DEBT AND LTC NEWS AND COMMENT

LTC Comment: Last Friday’s LTC Bullet, titled “Shutdown Irony,” pulled some compliments. Thanks.

But I’m not the only analyst to see the key issues in the current political morass as the debt (not the ceiling) and excessive government spending (not the shutdown).

Today, editorial cartoonist Glenn McCoy portrays a growling King Kong (labeled “debt”) atop the Empire State Building. Kong grasps Uncle Sam in a choke-hold with bi-planes circling. A frustrated elephant pilots one and the President the other saying “Gorilla? What Gorilla?” Check it out here.

Denial is not a river in Egypt.

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10/11/2013, “What's the Deal with the Exchanges?,” by Greg Scandlen, John Goodman’s Health Policy Blog

Quote: At e.Healthinsurance.com: “All you have to do is enter your zip code to find out what is available in your area and the world of choices opens up. You can see what the benefits and costs will be. Only after you have made your selection do you have to start filling out the paperwork. That is not how the ObamaCare exchanges operate. You can't see any actual insurance plans until you first fill out a whole lot of paperwork. Even Kentucky, the state with the best performance so far, requires you to complete a form including your name, address, phone number, and social security number, which must then be verified by ‘public records and consumer credit information.’”

LTC Comment: Big Brother wants your personal information before revealing subsidized health insurance options. Is this about expanding health insurance or capturing email addresses and increasing dependency?

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10/10/2013, “Some Good News About Saving For Retirement Health Costs,” by Ankita Rao, Kaiser Health News

Quote: "A new report from the Employee Benefit Research Institute found that Medicare beneficiaries, who are 65 years or older, would need to save six to 11 percent less in 2013 than they did in 2012. Men hoping for a 50-percent chance of having enough money saved for retirement health costs would need an average of $65,000. For women, who have longer life expectancies and related costs, the savings goal would be about $86,000. . . . Even so, saving for retirement won’t necessarily be easier in coming years. The report notes that its analysis doesn’t account for long-term care expenses like nursing home care, or for costs incurred by those who retire before they’re eligible for Medicare." (Emphasis added)

LTC Comment: Such a minor oversight, not accounting for LTC expenses.

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10/11/2013, “Strokes drastically reduce quality of life, showing need for better care systems, researchers say [link],” by Tim Mullaney, McKnight's LTC News

Quote: "They found that in the five-year period after having a stroke, participants lost 1.71 years due to earlier death and an additional 1.08 years due to reduced quality of life, on average, totaling a loss of 2.79 ‘quality-adjusted life years.’ Those who had severe strokes lost just over 4 quality years. . . . Last month, the American Heart Association/American Stroke Association issued a policy statement calling for universal access to post-stroke skilled nursing and rehabilitation services, regardless of how an individual is paying for healthcare." (Emphasis added.)

LTC Comment: It always comes down to funding in the end. Can you or your insurance pay for the care you need or do you have to depend on government or charity?

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10/9/2013, “A New Way to Pay for Long-Term Care,” by Paula Span, New York Times

Quote: "I was visiting an assisted living facility recently with my sister, whose disability made that a prudent choice, when the marketing manager handed us a brochure. It asked, 'Did you know a life insurance policy can pay for long-term care expenses?'”

LTC Comment: Life settlements come to the attention of the New York Times.

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10/9/2013, “Top 20 Most Expensive Inpatient Conditions,” by Bob Herman, Becker's Hospital Review

Quote: “Here are the top 20 most expensive inpatient conditions from 2011 across all payers, according to the AHRQ brief.

1. Septicemia (except in labor) - $20.3 billion
2. Osteoarthritis - $14.8 billion
3. Complication of device, implant or graft - $12.9 billion
4. Liveborn (general childbirth) - $12.4 billion
5. Heart attack - $11.5 billion
6. Spondylosis, intervertebral disc disorders, other back problems - $11.2 billion
7. Pneumonia (except caused by tuberculosis and STDs) - $10.6 billion
8. Congestive heart failure - $10.5 billion
9. Coronary atherosclerosis - $10.4 billion
10. Adult respiratory failure - $8.7 billion
11. Acute cerebrovascular disease - $8.4 billion
12. Cardiac dysrhythmias - $7.6 billion
13. Complications of surgical procedures or medical care - $6.9 billion
14. Chronic obstructive pulmonary disease and bronchiectasis - $5.7 billion
15. Rehab care, fitting of prostheses and adjustment of devices - $5.5 billion
16. Diabetes mellitus with complications - $5.4 billion
17. Biliary tract disease - $5.1 billion
18. Hip fractures - $4.9 billion
19. Mood disorders - $4.8 billion
20. Acute and unspecified renal failure - $4.7 billion”

LTC Comment: And then comes long-term care.

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10/9/2013, “ACSIA Long Term Care Leader Rob Cohen Joins the 3in4 Association Advisory Board [link],” DigitalJournal

Quote: "Today Rob Cohen, CPA, a long-term care insurance leader with ACSIA Long Term Care, announced his commitment to LTC education by accepting a position on the Advisory Board of the 3in4 Association. Rob has over 21 years of progressive experience in the LTC industry, including running the largest division of a major national long term care insurance carrier, founding a national LTC brokerage, and testifying in his state Congress on consumer advocacy and advancing the impact of the state LTC Partnerships."

LTC Comment: Congratulations, Rob.

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10/8/2013, “Why spouses should 'split up' for Medicare,” by Anne Tergesen, WSJ MarketWatch

Quote: "Just a week before Medicare's annual enrollment period is set to begin, here's something for married couples to consider: Just because you were on the same health insurance plan during your working years doesn't mean you should opt for the same coverage in Medicare."

LTC Comment: This advice to “split up” to choose the best Medicare plan for each spouse is a far cry from the advice Medicaid planners give elderly couples to separate or divorce to facilitate eligibility for welfare-financed LTC benefits.

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10/8/2013, “Obamacaid: Democrats ask: Why not expand the worst insurance in America? [link],” Wall Street Journal editorial

Quote: "In reality, Medicaid is now mostly a middle-class entitlement for nursing homes. Almost two-thirds of Medicaid spending flows to the elderly, and 60% of people in long-term care institutions are on the program.

"Some 20% of the people under 65 who are eligible for the program today also haven't signed up. One reason might be the scandalously poor quality of care as states squeeze down provider reimbursements. Only this May an important randomized, controlled trial in Oregon concluded that the program generates no discernible improvement in health compared to being uninsured.

"If the sojourners for Medicaid were serious about helping the least fortunate, they'd try to repair its current dysfunctions. Start by prioritizing spending, and then give Governors waivers to manage case loads and make operations more efficient.

"But the truth is that liberals view Medicaid as a national model, not a national disgrace. Coverage on ObamaCare's nominally private exchanges largely clones Medicaid's narrow networks of doctors and hospitals, low reimbursements, limited patient choice and heavy federal regulation. It might be more accurate to call it Obamacaid.

"Meanwhile, the Administration is closing off state Medicaid experimentation with 'maintenance of effort' rules that guarantee state costs are higher than they need to be. Most Governors, even Republicans, are pragmatic about living with Medicaid, but the White House's control-freak instincts are making it impossible for them to participate."

LTC Comment: This excerpt from a Wall Street Journal editorial is unusually accurate and perceptive about the real nature of Medicaid. The rest of the piece is even more highly political. You may not be able to click through to it without an online subscription to the WSJ. If you really want to read the whole editorial, just respond to this email and I'll forward it to you, which the WSJ allows for one week or so.

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10/7/2013, “Costliest 1 Percent Of Patients Account For 21 Percent Of U.S. Health Spending [link],” by Sandra G. Boodman, Kaiser Health News

Quote: "Five percent of patients accounted for 50 percent of all health-care expenditures. By contrast, the bottom 50 percent of patients accounted for just 2.8 percent of spending that year, according to a recent report by the federal Agency for Healthcare Research and Quality."

LTC Comment: Dramatic findings and they suggest that real, private insurance works, i.e., exchanging catastrophic risk for affordable premiums. But that kind of insurance is disappearing, replaced by "social insurance" that forces everyone to pay leveled premiums so that anyone can collect benefits regardless of the risk they bring to the pool. Hence articles like this one focus only on managing care for the tiny minority of heavy health care users. Health care financing will not step back from the fiscal cliff until public policy focuses on preventing people from entering the high-risk, high-cost, predominantly publicly financed category. The way to do that is to return to the traditional principle of private insurance with a strictly means-tested, welfare-based public safety net.

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10/7/2013, “When it comes to paying for long-term care, public and private options can both fail [link],” by John O'Connor, Editorial Director, McKnight's LTC News

Quote: "Our lawmakers' incompetence leaves many concerned about future Medicare and Medicaid funding, which just happens to pay for most of our nation's long-term care services. But before the privatize-everything crowd completely takes over, let's remember this salient fact: The private sector doesn't always get payments right either."

LTC Comment: Not a happy read and it contains some errors about LTCI, but this editorial in a widely read LTC provider magazine gives insight into how that industry views public and private LTC financing.

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10/4/2013, “The Employer Mandate of the Patient Protection Affordable Care Act: An Alliance for Health Reform Toolkit [link],” by Bara Vaida, Alliance for Health Reform

Quote: "Fast Facts

“Employers with more than 50 full-time employees (those who work 30 or more hours a week) must offer insurance to workers beginning in 2015 or pay a $2,000 per employee penalty, if any worker gets a coverage subsidy through a state health insurance exchange.

“Employer-provided insurance coverage must be affordable and cost no more than 9.5 percent of the employee's income. If it is more, the employee may seek coverage on the exchange and the employer will pay a $3,000 penalty for each of those workers.

“The mandate was originally scheduled for implementation in 2014, but the Obama administration in July 2013 delayed it for one year to give employers more time to comply with the law.

“Small employers (those with fewer than 50 workers) are exempt from the penalties.

“The percentage of individuals with employment-based coverage was 55.1 percent in 2011, down from 55.3 percent in 2010, 56.1 percent in 2009, and 65.1 percent in 2000.”

LTC Comment: Anybody out there want to hire your 50^th “full time” employee? So much for a focus on job creation!

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Updated, Friday, October 11, 2013, 11:11 AM (Pacific)

Seattle—

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LTC BULLET: SHUTDOWN IRONY

LTC Comment: Default gestalt hides reckless debt bet.

LTC BULLET: SHUTDOWN IRONY

LTC Comment: How ironic that most government shutdown news and analysis despairs about the consequences of default now, but ignores the debt itself, its causes and the hugely greater risk of a nearly inevitable, much bigger default later. Most media coverage focuses on the symptoms, not the disease.

Writing this yesterday with the stock market soaring over hopes of a temporary debt ceiling compromise, I knew it might be old news by publication time today. But this morning, as I apply the finishing touches, little has changed although “talks” with the White House have begun.

While I mused about writing a Bullet on this subject, I read an op-ed in yesterday’s Wall Street Journal that did the job admirably for me: “David Malpass: The Bigger Battle Behind the Shutdown” (gated). Following are a few summary excerpts from what Malpass had to say followed by my thoughts on the situation’s relevance to long-term care policy.

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From “David Malpass: The Bigger Battle Behind the Shutdown,” Wall Street Journal, October 10, 2013

"At its core, the shutdown is part of a much bigger battle to restrain the federal government. It is spending $3.6 trillion per year without a budget, and its expenditures are expected to increase rapidly in the years ahead.

"Meanwhile, the government has piled up $17 trillion in debt and $60 trillion more in unfunded spending promises. The Federal Reserve will borrow $1.1 trillion in 2013 alone to buy bonds-and it reserves the right to borrow unlimited amounts for future bond purchases without congressional or presidential permission." . . .

"Much federal spending can't be justified. The government shutdown is giving more insight into the problem-a staggering $250 billion per month, 80% of spending, runs on autopilot without any congressional involvement or control. So much for the Constitution's bedrock principle that 'No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.'" . . .

"Rather than discuss restraint, the administration has increasingly turned to the Federal Reserve as a crutch. The Fed is borrowing and spending $85 billion per month on bonds, and it claims the legal authority to increase its debt at will. Wall Street is intensely focused on supporting this profligacy and profiting from it." . . .

"The Fed is choosing to buy long-term bonds with short-term debt. The result is a rapid shortening in the effective maturity of the national debt that benefits current politicians but puts taxpayers at risk. Like an adjustable-rate mortgage, the borrower, in this case the government, gets a lower interest rate now but will have to refinance at higher rates later." . . .

"The upside is clear: Growth, jobs, the dollar and financial markets would surge if the shutdown leads to restraint."

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LTC Comment: That’s the big picture. Now here’s our focus on long-term care.

What Malpass calls “a staggering $250 billion per month, 80% of spending, [that] runs on autopilot” includes government spending on long-term care. Since 1965, Medicaid and Medicare have paid for most expensive LTC with three major consequences. First, by paying mostly for nursing home care, government created “institutional bias” and crowded out a private market for home and community-based care. Second, by making most expensive long-term care virtually free, government discouraged responsible private LTC planning and impeded markets for private insurance and home equity conversion products to fund LTC. Third, by forcing interest rates to near zero, government (i.e., the Fed) administered the coup de grace to market-based LTC financing and delayed indefinitely the reckoning for government’s profligacy.

Now we all find ourselves on the edge of a fiscal cliff. By hiding from financial reality for so long, public policy has brought us to the cusp of a Hobson’s choice about long-term care. Back off voluntarily from paying for most long-term care with non-existent (i.e., borrowed or printed) government funds now or be forced to do the same by deteriorating economic and monetary conditions a little later. Take it or leave it. The end game is the same and it’s getting nearer day by day.

To illustrate just how grave this situation is, the Center for Long-Term Care Reform developed an “Index of Long-Term Care Vulnerability.” We provided an outline of the Index in an LTC Bullet last August. In the meantime, we’ve refined the index and applied it to the United States and to three states: Virginia, New Jersey and Georgia. The results are not encouraging. The country as a whole and all states face staggering challenges to the sustainability of their long-term care financing systems. We’ve summarized the demographic, economic and social challenges in these seven questions:

How many older people are coming in the next few decades?
How sick will they be?
How viable is Medicaid as a long-term care payer?
How reliable is federal revenue on which Medicaid mostly depends?
How reliable is state revenue on which Medicaid secondarily depends?
How much private-pay revenue is available to relieve LTC financing pressure on Medicaid?
How strong is dependency on public programs (i.e., the entitlement mentality)?

Stay tuned to LTC Bullets for answers. It may already be too late for solutions short of public funding default and market-based reconstruction.

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Updated, Tuesday, October 8, 2013, 4:01 PM (Pacific)

Seattle—

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GOVERNMENT SHUT DOWN AND LTC NEWS AND COMMENT

LTC Comment: The government shut down and the shaky implementation of ObamaCare seem to have sucked all of the journalistic oxygen out of the room. LTC-related clippings were relatively sparse this past week. The shut down and ObamaCare coverage, however, are a welcome reminder of the massive problems that arise when parties do through politics what can only be done well and efficiently through markets. The jury is out on whether government failures, inevitably becoming much worse, will lead to a total collapse or, by default, to market-based solutions. If to avoid defaulting on debt payments, the feds were forced to cut popular programs, the public would soon be forced to see hard choices for what they are. Sooner or later, there’ll be no more monetary wool over their eyes. Expect Congress- and fed-watching to become as entertaining and violent as a demolition derby.

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10/7/2013, “Your guide to Medicare: What Medicare Advantage plan is best for you? [link],” by Phyllis Furman, New York Daily News

Quote: "Medicare Advantage plans are on a tear: Enrollment in Medicare Advantage plans has been growing at a 10% annual clip for the last few years as seniors have warmed to their convenience and potentially lower costs, while growing more comfortable with the idea of managed care."

LTC Comment: Medicare Advantage sales help support LTCI distributors who confront a more challenging market.

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10/7/2013, “Shutdown update: DC cuts off Medicaid payments, CMS confirms limited surveys [link],” by Tim Mullaney, McKnight's LTC News

Quote: "'Due to the failure of the United States Congress to pass a budget for fiscal year 2014 and the District's resulting budget difficulties, at this time, the Department of Health Care Finance is not in a position to pay the managed care organizations or fee-for-service providers for the healthcare services delivered to the District's Medicaid and Alliance beneficiaries,' the department stated Friday."

LTC Comment: The nursing home industry is accustomed to long delays in Medicaid reimbursement. How much of that will giant managed care organizations put up with? We’re likely to find out as managed care continues to spread into long-term care for aged, blind and disabled Medicaid recipients, especially the highly vulnerable and extremely expensive “dual eligibles.”

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10/4/2013, “99% of Obamacare applications hit a wall,” by Dan Mangan, CNBC

Quote: "As few as 1 in 100 applications on the federal exchange contains enough information to enroll the applicant in a plan, several insurance industry sources told CNBC on Friday. Some of the problems involve how the exchange's software collects and verifies an applicant's data."

LTC Comment: Anybody surprised?

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10/4/2013, “Don't wait to plan long-term care: Most of us will need help as we age. Here's what to do-and how to pay for it [link],” Orly Avitzur, M.D., ConsumerReports.org

Quote: "So unless you have ample savings to cover prolonged care, it's worth considering at least partial coverage through a long-term-care policy."

LTC Comment: A positive article on LTC insurance in long-time basher Consumer Reports? Did Hades freeze over?

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10/4/2013, “Texas Medicaid Law Could Transform Life Insurance Industry,” by Wm. Scott Page, Huffington Post

Quote: "Texas dramatically changed its Medicaid eligibility law recently, in a move that is already having a profound effect on the life insurance industry -- yes, the life insurance industry. Traditionally, to enroll in Medicaid, the state-run health insurer of last resort, individuals needed to be nearly destitute. So to qualify, many people spent down or surrendered their assets (including life insurance) in order to become eligible for this needed medical coverage. The new law in Texas, however, enables individuals with a life insurance policy to enter the Medicaid program provided they obtain a life insurance settlement and use the proceeds specifically for long-term care."

LTC Comment: Good for Medicaid, elders and care providers. Not so good for life insurers who lose lapsers.

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10/4/2013, “Health Reform FAQs,” Kaiser Family Foundation

Quote: 189 "frequently asked questions" about ObamaCare answered!

LTC Comment: And they say LTC insurance is complicated.

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10/4/2013, “CMS: Medicare will not cover PET scans for Alzheimer's,” by Tim Mullaney, McKnight's LTC News

Quote: "Seniors will not be able to receive Medicare coverage for imaging scans to help diagnose Alzheimer's disease, the Centers for Medicare & Medicaid Services recently announced. ... The CMS decision has sparked criticism from some quarters. Opponents say it contradicts an Alzheimer's action plan released earlier this year by the Department of Health and Human Services itself, noted the Assisted Living Federation of America."

LTC Comment: Government jerkily at work. One foot on the brake and the other on the accelerator.

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10/3/2013, “How PPACA affects long-term care insurance,” by Tom Nawrocki, LifeHealthPro

Quote: "PPACA eliminates an insurance company's ability to impose a lifetime maximum on how much it can pay out. That means that end-of-life medical issues will be more likely to be covered, which eliminates part of the cost of long-term care. When your clients are shopping for long-term care insurance, that's something important to keep in mind."

LTC Comment: An interesting observation, but I wonder to what extent it will prove true.

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10/2/2013, “Long-Term Cognitive Impairment Too Common After Critical Illness [link],” Science Daily

Quote: "Patients treated in intensive care units across the globe are entering their medical care with no evidence of cognitive impairment but oftentimes leaving with deficits similar to those seen in patients with traumatic brain injury (TBI) or mild Alzheimer's disease (AD) that persists for at least a year, according to a Vanderbilt study published in the New England Journal of Medicine."

LTC Comment: No wonder hospitals always leave me feeling a little crazy.

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10/2/2013, “Long-term statin use reduces dementia risk by 30%, researchers discover [link],” by Tim Mullaney, McKnight's LTC News

Quote: "Last year, the U.S. Food and Drug Administration ordered that statin labels include a warning about memory problems associated with short-term use. A research team from Johns Hopkins Medicine found no evidence of this, based on their analysis of prior studies. In addition, they found that statin use for longer than one year reduced the risk of dementia by 29%."

LTC Comment: Hmmm. The FDA protects us from problems that don’t exist and from solutions that do.

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10/1/2013, “Long Term Care Insurance Leader, Mark Goldberg Joins LTC Financial Partners As National Sales Manager [link],” Sacramento Bee

Quote: "LTC Financial Partners, LLC (LTCFP) https://www.ltcfp.com today announced the addition of Mark Goldberg, a leader in the long-term care planning field, as new National Sales Manager. For the past 8 months, Goldberg has held the role of Chief Operating Officer for American Senior Services Incorporated (ASSI) http://www.truefreedomhomecare.com, and will continue supporting ASSI's efforts in a modified position as Senior Distribution Director."

LTC Comment: Congratulations, Mark.

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10/1/2013, “Covering Health Issues: A Sourcebook for Journalists: Fall 2013,” Alliance for Health Reform

Quote: Table of Contents:

* CHAPTER 1 - PATIENT PROTECTION AND AFFORDABLE CARE ACT (Updated: 10.03.2013)

* CHAPTER 2 - HEALTH CARE COSTS (Updated: 10.02.2013)

* CHAPTER 3 - HEALTH INFORMATION TECHNOLOGY (Updated: 10.02.2013)

* CHAPTER 4 - QUALITY OF CARE (Updated: 10.02.2013

* CHAPTER 5 - INNOVATION AND DELIVERY SYSTEM REFORMS (Updated: 10.02.2013)

* CHAPTER 6 - EMPLOYMENT-BASED HEALTH COVERAGE (Updated: 10.03.2013)

* CHAPTER 7 - HEALTH INSURANCE EXCHANGES (Updated: 10.03.2013)

* CHAPTER 8 - MEDICARE (Updated: 10.02.2013)

* CHAPTER 9 - MEDICAID AND CHIP (Updated: 10.02.2013)

* CHAPTER 10 - DUAL ELIGIBLES (Updated: 10.02.2013)

* CHAPTER 11 - LONG-TERM SERVICES AND SUPPORTS (Updated: 10.03.2013)

* CHAPTER 12 - DISPARITIES IN HEALTH AND HEALTH CARE (Updated: 10.02.2013)

* CHAPTER 13 - MENTAL HEALTH AND SUBSTANCE ABUSE (Updated: 10.03.2013)

* CHAPTER 14 - PUBLIC HEALTH AND PREVENTION (Updated: 10.03.2013)

* GLOSSARY - GLOSSARY (Updated: 10.01.2013)

LTC Comment: This is a convenient source for data on all aspects of health care financing including long-term care, or as they prefer to call it "long-term services and supports," a real mouthful. Take it with a grain of salt, though. The sources are heavily biased against private financing alternatives, including insurance. The list of experts for the LTSS section reads like a "who's who" of government takeover advocates, with only a few more-objective, “go-along-to-get-along” exceptions.

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10/1/2013, “Government shutdown will not cripple long-term care, leaders say,” by Tim Mullaney, McKnight’s LTC News

Quote: "A shutdown could lead to dramatic consequences, such as furloughs of up to half the staff at the Department of Health and Human Services. However, it should not immediately impact long-term care providers too severely. LeadingAge and the American Health Care Association reassured members that Medicare and Medicaid reimbursements should continue to flow, at least in the short term. . . . The shutdown likely will lead to fewer initial and recertification surveys for Medicare and Medicaid providers and interrupt the work of healthcare fraud and abuse strike forces, wrote Barbara Gay, director of governmental affairs at LeadingAge."

LTC Comment: Actually, the shutdown did stop Medicaid payments in DC. The bigger problem long term, however, is the hopelessly unfunded entitlement programs and the massive and rapidly growing federal debt, compounded of course by huge, unfunded pension liabilities. If shutting down the government leads to greater scrutiny of those issues, it will be well worth the minor inconveniences that ensue.

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9/29/2013, “When to Recommend Medicaid,” by Elliot M. Kass, Financial Planning

Quote: "The difficult part, says Steve Mathieu, a Manchester, New Hampshire-based financial and estate planner specializing in clients age 55 and up, comes down to loss of control, 'Because once you go on Medicaid, the government dictates many aspects of your life, including the level and type of care that you'll receive and where you'll live.' 'Some people no longer care. They don't have any assets to protect and they're okay with the government making all their decisions,' Mathieu says. They may transfer ownership of what few assets they have to a loved one in order to qualify for the program."

LTC Comment: He's right about losing control when you go on Medicaid, but wrong about transferring those last few assets to loved ones. That would create a transfer of assets penalty . . . if done for the purpose of qualifying for Medicaid and if the eligibility workers catch it.

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LINKS

Here are some links you can check out to find valuable information on long-term care providers, financiers and insurers. This is just for starters. We'll add many more as time goes on plus advice on what to look for on their sites.

www.ahca.org American Health Care Association

www.leadingage.org American Association of Homes and Services for the Aging

www.alfa.org Assisted Living Federation of America

www.nic.org National Investment Center

www.ahip.net America's Health Insurance Plans

ltcconsultants.com Phyllis Shelton's website

www.aaltci.org American Association for Long-Term Care Insurance

ltcconnection.com LTCi producers' information