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The Center for LTC Reform is a private institute dedicated to ensuring quality long-term care for all Americans by promoting public policy that targets scarce public resources to the neediest, while encouraging people who are young, healthy and affluent enough, to take responsibility for themselves.   We do this through...


Here’s what Steve had to say at ACSIA Partners’ “Wiggin’ Out for Alzheimers” event that raised $19,000 for the Alzheimer’s Association.

VIDEO -- Examining Abuses of Medicaid Eligibility Rules -- Includes testimony from Steve Moses (at 18min:45sec)
NEED A SPEAKER? Have Steve Moses speak at your next event.
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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, Friday, February 5, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC BULLET:  THREE CHEERS (BUT TWO FROM THE BRONX) FOR NEW BPC-LTC RECOMMENDATIONS

LTC Comment:  The Bipartisan Policy Center’s new report on long-term care leads with LTCI (hear, hear!), but makes Medicaid even more tempting (boo!) and adds a new, expensive, mandatory government program (boo!) based on faulty premises.  Our analysis and critique follow.

 

LTC BULLET:  THREE CHEERS (BUT TWO FROM THE BRONX) FOR NEW BPC-LTC RECOMMENDATIONS

LTC Comment:  The Bipartisan Policy Center released “Initial Recommendations to Improve the Financing of Long-Term Care” this week to considerable live, web-based fanfare.  The new report is the second deliverable in fulfillment of the BPC’s “Long-Term Care Initiative” launched in April 2014 with the publication of  “America's Long-Term Care Crisis: Challenges in Financing and Delivery.”  We summarized and criticized the BPC’s ambitious long-term care plans in “LTC Bullet:  Will Bipartisan LTC Policy Be Better?,” Friday, April 11, 2014.  Let’s apply a critical eye now to what they’ve come up with 22 months later.

What follows are quotes from and our comments on the BPC’s “Initial Recommendations to Improve the Financing of Long-Term Care.”

BPC Quote:  “BPC’s Long-Term Care Initiative plans to produce a set of recommendations that weave together the approaches of publicly funded programs, such as Medicaid, with private insurance products, while also improving the efficiency and quality of LTSS.”  (p. 4)

LTC Comment: A worthy goal, but the devil is in the details.

BPC Quote:  “[S]ales of private LTCI continue to fall, largely because premiums are unaffordable and the traditional product design has proved to be unsustainable for carriers.”  (p. 5)

LTC Comment:  Wrong!  Devilish detail #1:  The real cause of falling LTCI sales is government fiscal and monetary interference in the market.  Easy access to Medicaid after the insurable event occurs crowded out demand for private LTC insurance and the Federal Reserve’s zero-interest-rate policy (ZRP) made the product unprofitable, thus necessitating premium rate increases.  Artificially low interest rates also reduced seniors’ incomes making it harder for them to afford LTCI premiums, a double whammy.  Blaming the victim (LTCI carriers) instead of the culprit (bad government fiscal and monetary policy) for poor LTCI sales is incorrect and irresponsible.

BPC Quote:  “BPC’s work over the last two years led us to conclude that the challenges to achieving consensus on long-term care financing are numerous.  Among them:  …  Lack of awareness about the costs and risks of needing LTSS and the incorrect belief that Medicare or Medicaid will cover LTSS needs … Significant variation in the need for LTSS. For example, while more than half of Americans age 65 and over will need LTSS during their lifetimes, only 15 percent will have LTSS expenses exceeding $250,000 during their lifetimes.”  (p. 5)

LTC Comment: False assumptions!  Devilish detail #2:  Erroneous foundational premises bode poorly for BPC’s conclusions.  The “belief that Medicare or Medicaid will cover LTSS needs” is hardly incorrect.  Those two public programs pay for most high LTC costs, whether the public realizes the fact or not.  Variations in the need for LTC are hardly a “challenge”; they are precisely what makes private insurance a viable solution. 

BPC Quote:  “The Long-Term Care Initiative recommendations place a heightened focus on the role of the private market, outline improvements to public programs such as Medicaid, and consider the potential for catastrophic coverage.”  (p. 5)

LTC Comment:  OK, sounds reasonable, what exactly does BPC recommend?

BPC Quote:  Recommendation:  “Increasing the Availability and Affordability of Private Long-Term Care Insurance to Extend Existing Resources” including “establish a lower-cost, limited-benefit private LTCI product, called ‘retirement LTCI,’” for which “employees may use funds in retirement accounts to pay retirement LTCI premiums (early withdrawals would be penalty-free),” and “providing incentives for employers to offer retirement LTCI on an opt-out basis through workplace retirement plans and permitting the sale of retirement LTCI through state and federal insurance marketplaces.”  (pps. 5-6)

LTC Comment: Well, hallelujah, now you’re talking!  I think we have LTCI analyst/advocate Marc Cohen’s participation in the BPC project to thank for the ascendancy of private long-term care insurance in the report’s hierarchy of priorities.  These are proposals LTCI carriers’ government affairs specialists have been advocating for decades.  Unfortunately, designing a lower-cost LTCI product and getting expensive LTCI incentives passed will be very difficult, more likely impossible, unless and until the Devilish Details identified above are recognized and corrected.  Affordable LTCI won’t happen as long as Medicaid LTC is easy to get, artificially low interest rates prevent profitability, and so-called experts believe Medicaid and Medicare do not pay for LTC.

BPC Quote:  Recommendation:  “Expanding Options at Home and in the Community for Older Americans and Individuals with Disabilities under Medicaid Under Medicaid” including “Create incentives for states to expand the availability of HCBS by: (1) combining existing Medicaid waiver and state plan amendments (SPAs) authorities into a single streamlined SPA; and (2) extending existing enhanced federal matching to encourage states to take advantage of the new streamlined authority.”  (p. 6)

LTC Comment:  Sounds great.  Most seniors prefer home and community-based services (HCBS) to living in a nursing home and shouldn’t Medicaid give its “customers” what they want?  Sure, but the presumed financial viability of expanding Medicaid HCBS depends on another erroneous assumption—Devilish Detail #3—that home care saves money.  It does not.  Home care delays but too often does not replace institutional care.  Everywhere and everywhen Medicaid LTC expenditures for nursing home care and HCBS combined have increased rather than decreased year after year.  That’s why Congress only dipped its toe into providing non-institutional Medicaid LTC services originally.  It required formal waivers approved by the federal government which, ironically, limited HCBS to people who already need nursing home care and, as a cost-effectiveness guarantee, mandated that total costs could not exceed what expenditures would have been for purely institutional care.  BPC’s belief that Medicaid can throw the doors wide open to HCBS without breaking the bank is as dangerous as it is naïve.  The truth is that making Medicaid even more attractive and tempting will drive up costs and further crowd out private LTC financing alternatives.

BPC Quote:  Recommendation:  “Addressing the Needs of Americans with Significant LTSS Needs” including “For individuals with significant LTSS needs, pursue concepts and elements for a public insurance program to: (1) address uninsurable long-term care costs; (2) protect Americans from the catastrophic costs of LTSS; and (3) provide relief to states, which along with the federal government face significant Medicaid costs in the coming years as baby boomers begin to need LTSS.”  (p. 6)

LTC Comment:  Did you wonder why people with such an obvious bias for a government-program solution led with a nod to private LTC insurance?  Now you have the answer.  They think we really need a public LTC financing program to “address uninsurable long-term care costs.”  But what LTC costs are uninsurable?  Well most of them supposedly because BPC assumes private LTC insurance is severely limited by challenges they delineate, but which wouldn’t exist in the absence of government interference in the fiscal and monetary markets, as I explained above.  (See Devilish Details 1, 2 and 3.)  BPC wants to relegate LTC insurance to covering relatively small front-end LTC expenditures which would turn this genuine insurance product into a pseudo-insurance, pre-payment mechanism like Medigap.  The true purpose of insurance is to replace the small risk of a catastrophic loss with the certainly of an affordable premium.  By claiming the back-end, catastrophic costs of LTC for a new government program, these analysts relegate private LTC insurance to a permanent third class position and elevate the public program to a precarious fiscal pedestal from which, like its predecessors Social Security and Medicare, it will inevitably fall.

BPC Quote:  Recommendation:  “Program costs should be fully financed so as not to add to the federal deficit over the long-term.”

LTC Comment:  This is the “have our cake and eat it too” portion of the BPC proposals.  How exactly shall we pay for this big new back-end catastrophic LTC government program?  For that you have to leave the “Executive Summary” and dig through the weeds of the report.  Here’s what you’ll find:   

BPC Quote:  “A variety of financing approaches could be considered, including:  A dedicated payroll-tax financing approach, similar to Social Security or Medicare Part A” or “A general-funding approach, which could be offset through changes to the tax system, such as broadening income or consumption-tax bases or increasing tax rates, changes to spending programs, such as adjustments to Medicare and Social Security, or a combination of both.”  (pps. 22-23)

LTC Comment:  Bottom line, if you start with the false premises (1) that people are spending down to impoverishment for long-term care because Medicaid and Medicare don’t pay for it, (2) that variations in LTC risk are a detriment to LTCI instead of its basis, and (3) that home and community-based services save Medicaid money, you’ll end up concluding that the only solution to the LTC financing crisis is to increase payroll taxes, income taxes, sales taxes, or most likely, all of the above.

Closing LTC Comment:  We saw this upshot coming.  Here’s how we closed our analysis and critique of the Bipartisan Policy Center’s original “Long-Term Care Initiative” mission statement (America's Long-Term Care Crisis: Challenges in Financing and Delivery) in LTC Bullet:  Will Bipartisan LTC Policy Be Better?, Friday, April 11, 2014:

“The consensus coalescing around a long-term care financing solution is that some form of mandatory social insurance should supplement private LTC insurance.  The dangers in that remedy are myriad.  Do we really need another expensive entitlement program?  What happens when Social Security cuts back so that people have less income to spend on LTC?  What happens when Medicare reduces its generous provider reimbursements that currently enable LTC providers to survive despite Medicaid’s low payments?  Wouldn’t more public financing of LTC only increase the public’s growing entitlement mentality?  Don’t we need to start weaning people off dependency on government largesse?  How long will it be before economic gravity takes hold again and government has to pay normal interest rates on its trillions of debt?  What happens when the unfunded entitlement liabilities come due?  It is nothing short of bizarre that serious people claim to study, diagnose, and prescribe about long-term care without taking these factors into account.  It goes to show we’re not much closer to a real solution and that the new consensus coalescing is as much a danger as an opportunity.”

We see no reason to amend this judgment based on the Bipartisan Policy Center’s latest report.  If anything, we’re more concerned than ever.  We document our concerns in much greater detail in a new report soon to be published by Federalism in Action and the Center for Long-Term Care Reform titled “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire.”  This report will show why the current long-term care service delivery and financing system in the USA in general and New Hampshire specifically is highly unlikely to survive the age wave.  It will recommend viable solutions.  Stay tuned.

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Updated, Monday, February 1, 2016, 10:16 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-005:  LTC NEWS AND COMMENT

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

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

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

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

  • 9 senators request more funds for Alzheimer's

  • Why Candidates Aren't Talking About Long-Term Care

  • The old folks home goes upscale and ultra-competitive: The race is heating up in Massachusetts for a share of the golden-years gold mine

  • What Are The Best Coverage Options For Long-Term Care Insurance?

  • Free Webinar: The Evolving Medicare Payment Landscape: How PAC Providers Can Prepare

  • Short-Term Care Insurance Finding a Market

  • Medicaid and Long-Term Care Quiz

  • Officials urge state to support nursing homes if minimum wage reaches $15

  • Dual eligible pilots proving pricey, time consuming for states

  • What Are The Best Coverage Options For Long-Term Care Insurance?

  • What This Survey Said About Paying For Long-Term Care

  • Is Dementia Risk Falling?

  • As Population Ages, Where Are the Geriatricians?

  • Rocky Rollouts as States Try Managing Medicaid Long-Term Care

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

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Updated, Monday, January 29, 2016, 10:05 AM (Pacific)
 
Seattle—

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LTC BULLET:  CASSANDRA’S LTC RECOMMENDATIONS

LTC Comment:  Our recommendations for federal and state long-term care policy changes follow the ***news.***

*** TAKE THE KFF’S MEDICAID AND LTC QUIZ:  We sent the following LTC Clipping to our clippings subscribers last week.

 1/27/2016, “Medicaid and Long-Term Care Quiz,” Kaiser Family Foundation

Quote:  “Medicaid and Long-Term Care Quiz:  Medicaid, the nation’s major publicly-financed health insurance program, plays an important role in the delivery and financing of long-term care (LTC) services. These services include a broad range of paid and unpaid medical and personal care assistance. Long-term care is not medical in nature. Instead, it provides help with regular daily activities to support independent living. People may need LTC over a period of weeks, months, or years.  How much do you know about Medicaid and LTC?  Get Started

LTC Comment:  I aced the quiz and I bet most LTC Clippings readers will too. ***

*** WHY SUBSCRIBE TO LTC CLIPPINGS:  To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge.  Good LTC planning requires understanding the six “blind men” of long-term care and how they interact:  government, consumers, advocates, providers, insurers and financiers.  For the details on that observation, read “The Elephant, The Blind Men and LTC” here.

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

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

*** WIGGIN’ OUT FOR ALZHEIMERS VIDEO:  Steve Moses keynoted the ACSIA Partners 2016 Kick-Off Conference in Austin, Texas recently.  We published his remarks in LTC Bullet:  The Long-Term Care Crisis:  Why Now But Not Yet?, January 15, 2016.  Now see what Steve had to say at ACSIA Partners’ “Wiggin’ Out for Alzheimers” event that raised $19,000 for the Alzheimer’s Association.  Here’s the link:  http://centerltc.com/Steve_Moses.mp4 It may take a while to load. ***

 

LTC BULLET:  CASSANDRA’S LTC RECOMMENDATIONS

LTC Comment:  Last week’s LTC Bullet brought you the “Summary” and “Conclusion” from our forthcoming report “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire.”

We warned “From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.”

We concluded “that long-term care scholarship should angle away from narrow, marginal reforms of specific LTC service and financing problems toward comprehensive analysis and potentially radical restructuring with much heavier reliance on private planning and individual responsibility and much less dependency on public programs and funding.”

That said, what should federal and state policy makers do about the impending crisis in long-term care service delivery and financing?

 

 

Recommendations from “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” by Stephen A. Moses; to be published soon by Federalism in Action and the Center for Long-Term Care Reform

Recommendations

Federal

1.  Change federal monetary policy (low interest rates, credit expansion, easy money) which has enriched the affluent by increasing equity and real estate values but hurt the poor and middle class by impeding job creation and nearly eliminating safe income from savings.

2.  Change federal fiscal policy (deficit spending) which has grown the national debt from $10.8 trillion in January 2009 to $18.9 trillion today, undermined social safety net programs with trillions of dollars in unfunded liabilities, and diverted capital away from productive private uses thus damaging the economy and inhibiting job creation.

3.  Change the Federal Medical Assistance Percentage (FMAP) system of funding Medicaid so that it does not incentivize excessive program expenditures and disproportionately benefit wealthier states and people at the expense of poorer states and people.

4.  Block grant Medicaid or cap federal funding with fewer mandates and controls in order to encourage and enable states to experiment with new, potentially more cost-effective approaches to long-term care service delivery and financing. 

5.  Let states target Medicaid to the needy by allowing them more freedom to set their own Medicaid long-term care eligibility standards.  For example, eliminate or radically reduce the mandatory home equity exemption currently set at between $552,000 and $828,000 while retaining reasonable protections for community spouses.

6.  Review federal restrictions on Medicaid estate recovery, encourage and publicize the responsibility of recipients with exempt wealth to repay Medicaid for their care from their estates, and use some of the savings to educate consumers about long-term care planning, home equity conversion, and long-term care insurance as options to fund LTC.

7.  Reassess waiver and incentive programs that encourage rebalancing from institutional to home-based care.  Programs that make Medicaid more attractive should await successful re-targeting of LTC benefits to the truly needy so they do not discourage private financing and overwhelm the publicly funded system.

8.  Reduce future numbers of Medicaid’s most expensive users, the dual eligibles, by tightening financial eligibility rules, including much longer transfer of assets lookback restrictions, so people will know they need to plan for long-term care many years before they become eligible for Medicare and vulnerable to Medicaid dependency.

9.  Reassess incentives for expanding LTC managed care and delay implementation, especially for dually eligible recipients, until demonstrations show more conclusively that Managed Care Organizations can handle the special challenges such patients entail.

10.  Recognize the damage done by the growing entitlement mentality and start weaning Americans, especially the non-poor off the dole in all its forms.

State Recommendations

1.  Advocate for the federal changes described above.

2.  Eschew complacency.  Take aging demographics much more seriously.  Focus on preparing for 2050 and 2025 will take care of itself.

3.  Review New Hampshire’s 209-B status for ways to tighten eligibility for Medicaid long-term care benefits.

4.  Enhance private LTC revenue sources by tightening eligibility, disallowing Medicaid planning wherever possible, encouraging personal responsibility for long-term care, publicizing estate recovery responsibility, and endorsing reverse mortgages and private long-term care insurance as preferable to Medicaid dependency.

5.  Reduce Medicaid LTC participation, utilization and costs so that the program can afford to pay adequately for a continuum of care for a smaller number of genuinely needy recipients.  In the meantime, don’t discourage “free” care by making Medicaid home and community-based care more attractive and easier to get. 

6.  Recognize the roles of Social Security and Medicare in sustaining Medicaid long-term care at sub-cost reimbursement rates.  Account for those programs’ fiscal vulnerability so that the state is not surprised and devastated by potential, and increasingly likely, federal cutbacks.

7.  Reduce dependency on federal funds in general.  End provider taxes specifically.

8.  Drop out of the Affordable Care Act, ObamaCare program before it makes New Hampshire even more dependent on dubious future federal funding.

9.  Take managed care for the aged, blind and disabled slowly, especially for duals. Reduce future duals by stronger eligibility controls and early consumer education.

10.  Enhance state revenue prospects by aspiring to better scores on economic rating systems.  Stop New Hampshire’s economic freedom slide.  Encourage economic activity by lowering taxes.  End Medicaid LTC financing by county property taxes or give counties a much stronger role in eligibility and other policies.  Fund the state pension system.

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Updated, Monday, January 25, 2016, 10:09 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-004:  LTC NEWS AND COMMENT

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

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

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

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

  • New App from Agent Review, the “Yelp of Insurance,” Gives Insurance Agents Simple New Ways to Stand Out From the Crowd

  • Women and the Longevity Risk: Planning challenges can vary dramatically from that of men

  • XPrize Founder Seeking Sponsor For Alzheimer's Contest

  • We’re lucky if we get to be old, physician and professor believes

  • Tavenner slams CMS over Medicare Advantage underpayments

  • The Benefits and Drawbacks of Buying an Annuity Doubler to Pay for Long-Term Care

  • Hybrid Long-Term Care Insurance Policies

  • Computer-Based Test Aims to Predict Dementia Risk

  • Number of Americans living past 100 jumps 44%

  • Terri Judge joins LTCG as Senior Vice President, Operations

  • Can long term care illness be your biggest expense during your retirement?

  • Austin 'Wiggin' Out' Event Raises Awareness and Dollars to Help Fight Alzheimer's Disease

  • Potential Concerns and Risks for Traditional Long-Term Care Insurance

  • Medicare to tighten requirements for many home medical devices

  • Insurers push policies for coverage gaps

  • How reverse mortgages can help stave off Medicare surcharge

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

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Updated, Friday, January 22, 2016, 10:37 AM (Pacific)
 
Seattle—

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LTC BULLET:  HEED CASSANDRA ON LTC

LTC Comment:  The Trojans ignored Cassandra and Troy fell.  Disregard today’s LTC Cassandras at your peril.  Details after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** WIGGIN’ OUT EVENT—We sent the following LTC Clipping on Wednesday:  

1/20/2016, “Austin 'Wiggin' Out' Event Raises Awareness and Dollars to Help Fight Alzheimer's Disease,” Send2Press Newswire

Quote:  “Wearing smiles and purple wigs, a gathering of normally serious professionals mingled festively in ‘Wiggin' Out,’ a fundraising event held at Maggie Mae's in Austin, Texas, Saturday evening, January 16. ‘We achieved two objectives,’ says Denise Gott, CEO of ACSIA Partners, hosts of the event. ‘First, we raised some money [$19,000] to help fight Alzheimer's. And second, we raised awareness of the growing need for long-term care as the disease progresses.’”

LTC Comment: It was a hoot.  I was there to keynote ACSIA Partners’ 2016 Kick-Off Conference earlier in the day.  We published my remarks in last Friday’s LTC Bullet The Long-Term Care Crisis:  Why Now But Not Yet?, January 15, 2016. ***

 

LTC BULLET:  HEED CASSANDRA ON LTC

LTC Comment:  Last July, in “LTC Bullet:  Cassandra’s Quandary,” we explained how the ancient Greek myth applies to modern day long-term care financing:

In the ancient myth, Apollo granted Cassandra the ability to predict the future accurately, but when she declined his romantic advances, he doomed her to be disbelieved.  The evasion of reality and denial of risk surrounding long-term care public policy reminds me of Cassandra’s quandary.  No matter how much irrefutable evidence we adduce for the unsustainability of the current LTC financing system, the stubborn minions of complacency persist and prevail.

We capped that Bullet with this statement:  “So, when will Cassandra’s dire LTC predictions come true?  No later than 2030, but probably much sooner.  We’re compiling and organizing the evidence in one politically prominent state, New Hampshire.  Expect our report in September.”  Well, September 2015 is long past, but finally our report, titled “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” is nearing publication.

Don’t be underwhelmed by the report’s focus on a small state like New Hampshire.  Our analysis applies to the country as a whole and is easily comparable to any other state by applying our “Index of Long-Term Care Vulnerability.”  Besides, what could be more relevant right now than to home in on the LTC financing crisis as it manifests itself in the first-in-the-nation presidential primary state?

Here’s a sneak peak at our findings.  Soon we’ll share the report’s recommendations. 

 


Excerpt from “Cassandra’s Quandary:  The Future of Long-Term Care in New Hampshire” by Stephen A. Moses; to be published soon by Federalism in Action and the Center for Long-Term Care Reform

Summary

America’s LTC-prone, 85-plus population will more than triple by 2050 (+224 percent); New Hampshire’s will nearly quadruple (+267 percent).  Over one-third of the elderly already have a disability (37 percent); just under one-third in New Hampshire do (32 percent).  Nearly half of nursing home residents suffer from dementia nationally (46 percent); well over half do in New Hampshire (55 percent).  More people are living longer and the longer they live, the more likely they are to succumb to the chronic illnesses of old age and to require extended care.

Medicaid is the dominant payor for long-term care consuming nearly 17.8 percent of  state budgets (much more including federal matching funds); 40.4 percent in New Hampshire.  Long-term care, especially for dual eligibles and the aged, blind and disabled, consumes a disproportionate share of Medicaid expenditures.  State efforts to rebalance from institutional to home care have made Medicaid more attractive and increased expenditures.  Easy access to Medicaid after people need long-term care has crowded out private LTC financing alternatives such as home equity conversion and private long-term care insurance.  Low Medicaid reimbursement has diminished care access and quality for poor and affluent alike.  Medicaid consumes a larger and larger proportion of state budgets and tends to crowd out other spending priorities over time.  Expansion of Medicaid eligibility under the Affordable Care Act (AKA ObamaCare) will exacerbate all these problems.

To survive as the principal funder of long-term care, Medicaid is heavily dependent on federal (57%) and state (43%) funds.  The ratio is 50/50 for New Hampshire.  But the availability of sufficient federal funds in the future is dubious.  Federal debt is huge and growing, nearly $19 trillion as of January 20, 2016.[i]  Infinite horizon unfunded liabilities of Social Security and Medicare are $73.4 trillion.  Federal Medicaid lacks even the artifice of a borrowed “trust fund” to obscure its unlimited general fund liability.  Federal reserve policy has expanded the money supply tremendously and forced interest rates to near-zero creating a risk of higher, possibly hyper-inflation.  Aging boomers have not saved enough.  Low interest rates reduce their retirement incomes, making them more dependent on safety net programs that threaten to explode in cost.  

State funds needed to match the federal Medicaid funds are also vulnerable.  Each new economic bubble bursting—most recently the dot.com (2000) and housing (2008) busts—has brought worsening recessions that devastate state tax revenues and reserves.  Economists worry that the latest bubble, inflated by extremely loose monetary (credit expansion) and fiscal (spending) policy, will bring on a much worse downturn than the Great Recession.[ii]  Worst of all, “Policy makers worry fiscal and monetary tools to battle a recession are in short supply ….  The U.S. generally injects cash into the economy through interest-rate cuts, tax cuts or ramped-up federal spending.  Those tools could be hard to employ when the next dip comes:  Interest rates are near zero, and fiscal stimulus plans could be hampered by high levels of government debt and the prospect of growing budget deficits to cover entitlement spending on retired baby boomers.”[iii]

If the Age Wave and financing pressures are too great for Medicaid to sustain long-term care financing, where can the country and states like New Hampshire turn?  Unfortunately, potential private sources of LTC financing have been largely crowded out by the relatively easy access to Medicaid in the past.  Medicaid income and asset eligibility rules make it feasible for people with substantial wealth to qualify.  Mandatory estate recovery goes largely unenforced.  Medicaid’s outsized home equity exemption eliminates reverse mortgages as a major source of LTC funding.  A main reason so few people purchase private LTC insurance is that for the past 50 years Americans have been able to ignore the risk and cost of LTC, wait to see if they need extended care and, if they do, qualify easily for public financing while protecting most or all of their estates.  This perverse incentive has discouraged responsible LTC planning and impeded the market for private insurance products that could have relieved the financial pressure on Medicaid.

Underscoring all these practical problems is a broader socio-political malaise.  Over the past eight decades more and more Americans have become dependent on government programs.  Arguably, a growing entitlement mentality has substantially impaired the country’s traditional reliance on personal responsibility, self-sufficiency, independence, and freedom, the building blocks of our earlier economic success. 

Public assistance (Medicaid) pays for nearly half of all births in the U.S. (47.8 percent), though less than a third (29.9 percent) in New Hampshire.  Food stamps sustain one in seven (14.4 percent) of Americans; only one in 12 (8.4 percent) New Hampshirites.  Welfare pays more than work in 35 states, over $19 per hour in New Hampshire, the ninth most generous state.  The nearly bankrupt Social Security Disability Income (SSDI) program crowds out work.  SSDI supports 2.7 percent of Americans, 3.5 percent in New Hampshire.  State and local pensions, on which many depend, are unfunded $3 trillion nationally, $4.6 billion in New Hampshire.  Fully funding them would require tax increases of $1,385 per household per year for 30 years nationally; $1,010 in New Hampshire, which has pre-funded only 56.2% of its pension liability.  Medicaid is the primary payer for 63 percent of nursing home residents; 64 percent in New Hampshire and upwards of 80 percent of all Medicaid nursing home residents have prepaid burial insurance funded by assets exempted from the program’s resource spend down requirements.  This cradle-to-grave public safety net creates a moral hazard, “a situation in which a party is more likely to take risks because the costs that could result will not be borne by the party taking the risk.”[iv]

Conclusion

From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.  Absent extraordinary improvements in the national and state economies generating huge new revenues to support large and growing public programs and pensions, it is difficult to see how those programs’ and pensions’ promises will be met.  A sensible conclusion is that long-term care scholarship should angle away from narrow, marginal reforms of specific LTC service and financing problems toward comprehensive analysis and potentially radical restructuring with much heavier reliance on private planning and individual responsibility and much less dependency on public programs and funding.

The future prospects for private long-term care financing alternatives are better than they currently appear.  When economic conditions compel Medicaid and Medicare to back off from LTC financing, real asset spend down will rapidly increase; spend down of home equity to fund LTC will accelerate; and as retirement savings and home equity are consumed to pay for long-term care, more and more people will begin to plan early and insure privately for that risk and cost.  Private LTC insurance can become a mainstream financial planning tool, losing its reputation as the “poor relative” of insurance products, as demand and distribution increase. 

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[i] US Debt Clock.org, http://www.usdebtclock.org/, extracted January 20, 2016.

[ii] “We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit booms, asset price bubbles increase financial crisis risks; upon collapse they tend to be followed by deeper recessions and slower recoveries. Credit-financed housing price bubbles have emerged as a particularly dangerous phenomenon.”  Source:  Òscar Jordà, Moritz Schularick, and Alan M. Taylor, “Leveraged Bubbles,” National Bureau of Economic Research (NBER) Working Paper 21486, http://www.nber.org/papers/w21486.

[iii] Jon Hilsenrath and Nick Timiraos, “U.S. Lacks Ammo for Next Economic Crisis,” Wall Street Journal, August 17, 2015; http://www.wsj.com/articles/u-s-lacks-ammo-for-next-economic-crisis-1439865442.

[iv] Wikipedia definition of “moral hazard,” http://en.wikipedia.org/wiki/Moral_hazard. The definition cited in the text is no longer at this source, but remains an accurate description of moral hazard.

 

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Updated, Tuesday, January 19, 2016, 9:45 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-003:  LTC NEWS AND COMMENT

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

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

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

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

  • 5 Things That No Middle-Aged Person Has Said – Ever

  • Why Self-Coverage May Not Be An Adequate Substitute for Long-term Care Planning and Insurance

  • The Easy Way to Make Your Retirement Savings Last

  • Elder Orphans: Step One in the Aging-Alone Plan, learn the stages

  • What to Do With Your HSA Money When You Go on Medicare

  • Family Won't Help with Mom? 6 Strategies to Reduce the Drama

  • I Still Believe in Long-Term Care Insurance

  • MetLife to break itself up

  • Life Lessons: Thinking ahead to retirement? Get to know your future you

  • My Motherless Mother

  • Hawaii Long-Term Health-Care Bill Serves as National Model

  • Two Options for Funding Long-Term Care Expenses

  • Hospitals Step Up To Help Seniors Avoid Falls

  • A Tale of Two Retirements

  • RMDs aren't a tax-free way to pay for long-term care insurance

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

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Updated, Friday, January 15, 2016, 11:11 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE LONG-TERM CARE CRISIS:  WHY NOW BUT NOT YET?

LTC Comment:  If the LTC crisis is such a big deal and government is the cause, why hasn’t it happened already and when will it occur?  Our thoughts follow.

 

LTC BULLET:  THE LONG-TERM CARE CRISIS:  WHY NOW BUT NOT YET?

LTC Comment:  Tomorrow morning, I’m speaking to a group of long-term care insurance producers at the ACSIA Partners 2016 Kick-Off conference.  What follows is the message I plan to share with them.  My goal is to explain why the crazy, mixed up long-term care financing marketplace is the way it is, why it has worsened lately, and why it will change for the better sooner rather than later. 

Selling long-term care insurance is a tough business.  Agents need hope and understanding.  They need dedication and perseverance.  But just as important, consumers need what they’re selling in spite of all the obstacles to the sale, including rising premiums, tougher underwriting, and public policies that crowd out private financing options. 

Why are things the way they are and what’s going to happen next?  Read on.

 

 

“The Long-Term Care Crisis:  Why Now But Not Yet?”
by
Stephen A. Moses

What’s the deal with long-term care?

Do you know?

Just look at the facts.  They present an army of puzzles.

Aging population
High incidence of LTC
Very expensive for some
Unpredictable
Insurance is perfect solution
Yet few buy even if they can afford

We’ve known all that for 20 years

Latest facts and puzzles even worse 

Premiums higher
Underwriting tougher
Consumer denial/indifference continues, even greater
Yet need is bigger than ever

What gives?

Anybody here know?

If so, I’ll step aside.

No? 

Well, here’s the good news:  I know and I’m going to tell you.

I figured it out 34 years ago.

It hasn’t played out exactly as I predicted . . . yet!

But it will.

Here’s the story.

I was working for HCFA in 1982.

My job was to make sure the state of Oregon followed federal law and regulations implementing Medicaid.

I was doing a routine state assessment when I came across the estate recoveries program.

Little state of Oregon collected $5 million or 5% of LTC expenditures from estates of deceased recipients.

Wait, I thought.  How can that be?  Don’t you have to be poor to get Medicaid?

That set me to studying Medicaid eligibility.  What I found created a public policy uproar.

Income allowed practically unlimited—up to cost of a nursing home.

Assets truly unlimited—home and contiguous property, one business, one auto, term life, home furnishings, personal property, IRAs—all uncounted

Whoa!  This is huge, I thought. 

The aging baby boom will overwhelm Medicaid when they need LTC.

But people won’t buy the budding new LTC insurance product if they can ignore the risk, avoid the premiums, wait to see if they ever need extended care and then get Medicaid to pay.

The whole public welfare system will collapse if something isn’t done!

So I wrote reports explaining this for the Inspector General of the US Department of Health and Human Services.

I recommended tightening Medicaid LTC eligibility and requiring estate recoveries.

I met Secretary Louis Sullivan of HHS on a plane and told him about my findings.  Next thing I knew Cabinet secretaries were outbidding each other to deal with the issue. 

Almost everything I recommended passed into federal law in 1993.  Longer and stronger transfer of assets restrictions and mandatory estate recoveries.

We gave Americans a publicly-financed line of credit on their estates to pay for long-term care recoverable from their estates in order to encourage responsible LTC planning to avoid that eventuality.

Problem solved, right?

That’s what I figured, but . . . alas, no.

State Medicaid programs didn’t implement the new requirements aggressively; the feds didn’t require them to do so; the media didn’t publicize the new rules; so consumer behavior didn’t change.

I don’t have time to cover all the details.  Several Congresses and Presidents tackled the problem over the years, but our next big success didn’t come until 2005.

The Deficit Reduction Act of that year closed some more loopholes and put the first cap ever on home equity—at $500K to $750K, now $552K and $828K

That law as it applies to Medicaid was written by my co-founder of the Center, attorney David Rosenfeld when he became counsel to the House Medicaid committee.

I spent half a year lobbying for it commuting half time from the good Washington (Seattle) to Washington, DC.

That was a big victory, but didn’t solve the problem either.

Medicaid remains the primary payer for long-term care, not only for the poor, but also for the middle class, and even for many of the affluent.

LTCI remains a niche product as a result.

All this is well documented and we fully report the research in Center publications and on our website:  www.centerltc.com.

OK, so here we are over 30 years later.

The problem we found so long ago still persists and worsens

Boomers are retiring at 10,000 per day.

Social Security is overloaded with $25 trillion unfunded liabilities.

Medicare is underwater--$43 trillion unfunded.

Medicaid is even worse off—it has no phony trust fund like Social Security and Medicare to hide the problem.

So why hasn’t the whole public financing house of cards collapsed already as I predicted it would in 1985?

Why hasn’t private LTC insurance come to the rescue as I predicted it would?

The answer to both questions is the same.

The government!  There are two basic problems:

(1)  Fiscal or spending policy—profligate spending on Social Security, Medicare and Medicaid undercut personal responsibility, planning, and LTCI demand.

(2)  Monetary policy--Then, to disguise the damage done by borrowing and deficit spending . . .

The Federal Reserve printed a lot of money, sold a lot of bonds (Quantitative Easing) and forced interest rates to near zero undercutting seniors’ income, making them more dependent on public programs, and ruining LTCI’s profitability.

Government tries to have its cake (big spending) and eat it too (avoid consequences like recession and inflation).

The result is the puzzle we started by describing:  high risk and cost of LTC but consumer denial and indifference.

The economist Herb Stein said:  “Trends that can’t continue, won’t.”

So a day of reckoning is still coming.

But why hasn’t it come yet?  That’s the big question before us today.

Government interference in the economy postponed the reckoning.

Bottom line:  Federal reserve policy printing money and pushing interest rates to zero has created a series of economic booms and busts, one bubble after another growing until they burst.

The first was the internet bubble when low interest rates and easy monetary policy pushed money into high-tech stocks until that bubble popped in 2000.

Then the real estate bubble when low interest rates and easy money flowed into the housing sector until that bubble popped in 2008 leading to the “Great Recession.”

What’s happening now?

A bigger bubble is growing, the third and biggest bubble so far.

Stupendously bigger.

A decade of easy money and artificially low interest rates has enabled federal deficit spending to continue beyond all reason.

How can that be?

Federal debt now $18.9 Trillion; in 2000, $5.7 Trillion  more than triple

Interest on the federal debt was 6.63% in 2000; 2.33% in Dec. 2015 down by 2/3

The federal government is defying economic gravity.

If interest rates return to 2000 levels of 6.7% with 2016 debt $19 trillion, U.S government interest payments would jump from $400 billion to $1.3 trillion, 35% of the federal budget!

Heritage Foundation says “All Tax Revenue Will Go Toward Health Care, Social Security, and Net Interest by 2033

What else happens around 2033?  Social Security and Medicare trust funds will be depleted, automatically reducing those benefits.

In 2031, the first baby boomers turn 85, the age at which long-term care becomes a probability instead of a possibility.

Think of it like a family.

If you live beyond your means, sooner or later you can’t pay your bills and loans.  You go bankrupt.

But unlike a family, the government is able to print money, expand credit, and reduce interest rates.

That delays a reckoning, but it does not prevent one.

The excess money and credit chases investment opportunities that seem smart and profitable in good economic times, but create mal-investment.

That is, too much money goes into bad investments:  such as internet stocks with no revenue; real estate with values pumped up by sub-prime mortgages and “liar loans;” or, now, excess public spending on entitlement programs.

The first two bubbles popped after less than a decade.

The third and biggest bubble—excess debt and credit pumped into government social programs—could pop anytime.

That means an economic downturn even worse than the “Great Recession.”

Why now?

Markets are predictive.  “Buy the rumor; sell the news.”

What’s different now is that all the risk factors are approaching critical mass:

Aging of the baby boomers
Bankruptcy of the entitlement programs
Weakness of the LTC insurance business
Entitlement mentality of consumers

I’ve laid all this out in a new report:  “Cassandra’s Quandary”

Apollo blessed Cassandra with accurate prognostication but when she declined his romantic advances, he cursed her to be disbelieved.

We’ve been lulled to sleep by easy money, generous credit and deficit spending just as everything is about to hit the fan.

Like Cassandra, those of us—like you and me—who see it coming have great difficulty convincing people they should worry about and plan for long-term care.

So what does all this mean?

We’re in a critical period.

You must persevere.

Opportunities are coming.

You are the only line of defense between your clients and the poor house.

You are committed—you have commitment or you would not be in the business

Embrace the passion—let it show

Do what the top sellers do CWQLPK:

Care
Work
Question
Listen
Personalize
KISS

Thank you for listening but more importantly, thank you for all you do.

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Updated, Monday, January 11, 2016, 11:17 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-002:  LTC NEWS AND COMMENT

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

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

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

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

  • BY-BOOMERS: Tapping hard-earned resources

  • Agent Review, The ‘Yelp for Insurance,’ Closes Seed Round With Angel Investors to Drive Continued Growth

  • Are Health Plans That Pay A Lump Sum For Critical Illnesses Worth It?

  • Dear Distributor” letter from William L. Naylon, President, MedAmerica

  • Home Health Aides: Unsung Health Care Heroes

  • 'Critical illness' insurance plans surge in popularity

  • Genworth Investors: Beware of Bogus Reassurances

  • White House: ‘Age Wave’ Can Make Country Stronger

  • To keep seniors living independently, sensors track their home habits

  • By 2050, There Could Be as Many as 25 Million Poor Elderly Americans

  • Ep. 558 Medicare and Medicaid, 50 Years Later: The Awful Truth

  • Long-Term Care Insurance Can Be Costly but Effective

#############################

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

#############################

 

Updated, Friday, January 8, 2016, 9:54 AM (Pacific)
 
Seattle—

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LTC BULLET:  CENTER KICKS OFF NEW YEAR WITH MAJOR STUDY

LTC Comment:  Medicaid’s large home equity exemption vastly increases the program’s LTC expenditures, contributes to its growing unfunded liability, and discourages responsible LTC planning.  Details on our new study to address these problems follow the ***news.***

*** MEDICARE has published “2016 costs at a glance” here:  https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html.   We’ve posted the key numbers in The Zone here.  You’ll also find the comparable deductible and co-insurance numbers, etc. going back to 1993.  If you need your user name and password to access The Zone, or if you want to join the Center and get access to all our members-only resources, please contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** AGENT REVIEW LIFTS OFF—We posted the following LTC Clipping to our clippings subscribers yesterday.

1/5/2016, “Agent Review, The ‘Yelp for Insurance,’ Closes Seed Round With Angel Investors to Drive Continued Growth,” Yahoo Finance

Quote:  “Agent Review (www.agentreview.net), a free online platform to connect consumers with non-biased insurance education and credible agents, today announced it has closed its seed funding round and will begin fundraising for its Series A investment in January 2016. The angel investment was led by insurance leaders Joe Pulitano and Doug May, and by industry investors Towpath and Anabranch. The amount of money raised was not disclosed.”

LTC Comment: Congratulations to Agent Review and everyone associated with the ground-braking, pro-consumer initiative. ***

 

LTC BULLET:  CENTER KICKS OFF NEW YEAR WITH MAJOR STUDY

LTC Comment:  Until the Deficit Reduction Act of 2005 (DRA ’05), Medicaid allowed applicants and recipients to retain unlimited equity in a home and contiguous property.  DRA ’05 imposed the first-ever home equity limit of $500,000 or $750,000 at state legislatures’ discretion.  This cap has increased with inflation to $552,000 or $828,000 in 2016.  Inasmuch as the average senior’s home equity is only $130,000, Medicaid allows people with more than four to six times that level of wealth to qualify for LTC benefits. 

Theoretically, estate recovery—made mandatory in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93)—should recapture the exempted home equity after the Medicaid recipient and his or her last surviving exempt dependent relative pass away.  But state Medicaid programs have not pursued estate recoveries fully and the federal Medicaid program has not compelled them to do so as OBRA ’93 requires.  Consequently, Medicaid permits people to shelter hundreds of thousands of dollars in exempt home equity against the risk of long-term care expenditures. 

The Center for Long-Term Care Reform’s new study will (1) analyze the impact of Medicaid’s home equity exemption on the program’s LTC expenditures and unfunded liabilities, (2) examine the exemption’s impact on the LTC financing system in general and private financing alternatives in particular, and (3) propose solutions to reduce dependency on Medicaid, encourage responsible long-term care planning, and increase the use of home equity conversion and private LTC insurance to fund long-term care.

Following are excerpts from the formal description of this project, which we are conducting on behalf of the Foundation for Government Accountability.  We’ll report periodically on our progress.  Our final report will be due August 15, 2016.

 

“Medicaid Long-Term Care:
Ensuring Scarce Resources Reach the Neediest People”

Background

Medicaid has a massive unfunded liability that will cripple taxpayers if no changes to the program are made. The biggest problem is that Medicaid has become inheritance protection insurance for too many middle-class seniors in nursing homes. That is not what it was created for. That reality is robbing Medicaid and taxpayers of scarce resources needed to serve the truly needy. Reforming that part of Medicaid is the first and biggest step toward fixing the entire Medicaid program and its unfunded liability.

There are simple solutions, but we need to build the intellectual case for these reforms and market and mainstream them to state and federal policymakers.  . . .

The Problem

Medicaid is a means-tested public assistance program, i.e., welfare. Medicaid is also the principal funding source for long-term care (LTC) throughout the United States, not only for the poor, but for most middle-class Americans as well. Why is that? Because Medicaid’s basic LTC eligibility rules are different than traditional Medicaid, which only targets the poor. In many states, Medicaid’s basic LTC program allows elderly people who medically need nursing-home-level care to have income up to the annual cost of a nursing home—$80,300 per year on average as of 2015—to qualify. In addition to this high income limit, many large assets are exempt, such as equity in a home and contiguous property up to as much as $828,000 and, without a dollar limit, one business (including the capital and cash flow), one automobile, prepaid burial expenses, personal belongings, term life insurance, and IRAs.

Medicaid-compliant annuities and trusts, as well as other legal techniques, are used by prosperous applicants and their lawyers to protect even larger sums from Medicaid’s spend-down rules. Peer-reviewed research shows that easy access to Medicaid’s LTC benefits by people with substantial assets discourages early and responsible LTC planning and crowds out private LTC financing alternatives. Other research by the Federal Reserve Bank of Chicago indicates that affluent people benefit as much or more from Medicaid as the poor.

Taking advantage of Medicaid’s home equity limit is the biggest and easiest way for people with substantial wealth to access the program’s expensive long-term care benefit. In response to a Congressional inquiry on which the Center for Long-Term Care Reform consulted, North Dakota Medicaid reported that a couple with $700,000 in liquid assets qualified for Medicaid LTC by purchasing a more expensive house and car and buying an annuity, all the while receiving $8,000 of income per month from pensions, Social Security, annuity payments and oil lease money.

According to Tennessee Medicaid officials: “Taking substantial home equity and other assets currently exempt under the law into account in determining eligibility for Medicaid reimbursement of LTC would result in fewer people with substantial means qualifying for Medicaid-reimbursed LTC until such time that those assets have been exhausted, and target Medicaid reimbursement to those with the greatest financial need.”

Whether provided in someone’s home, in an assisted living facility, or in a nursing home, long-term care is Medicaid’s most expensive benefit. In 2014, taxpayers spent almost $106 billion on Medicaid-financed nursing home and home care services. Although LTC users are only seven percent of the Medicaid population, they account for more than half of the program's costs nationally. For Medicaid to survive as a last-resort LTC safety net, the program must direct its scarce resources to the neediest people and away from those able to plan wisely to pay for their own long-term care.

Yet there is strong political opposition to eliminating or radically reducing the limits. Why? Because Medicaid’s generous LTC eligibility limits have, in effect, become an inheritance protection program for the adult children of middle class elderly. To make matters worse, some states such as Texas and Florida actually provide special protections from creditors, including Medicaid, for home property.

One of the biggest changes Congress could make to reduce the taxpayer burden and dependency impact of Medicaid’s LTC program would be to narrow the front door and exclude the middle class by changing these generous and elastic financial eligibility rules, especially the home equity exemption. 

Goals and Outcomes

The primary objective of this proposed study is to forge a politically feasible strategy to:

(1) put home equity to use paying for long-term care in ways that improve access to and quality of care for everyone,

(2) save taxpayers money while

(3) re-targeting Medicaid LTC benefits to those most in need and

(4) encouraging most Americans to plan privately for long-term care so they do not become dependent on public assistance.

Strategy

We propose to select two target states . . . where officials have shown concern for federal Medicaid’s excessive financial exemptions and mandatory eligibility loopholes . . .. We will interview key Medicaid officials in those states, develop a methodology to measure the cost of the home equity exemption, propose recommendations, and draft state and federal legislation to correct the problem. We will publish a report on the project, write op-eds for local and national newspapers, and encourage the introduction of legislation at the state and federal level.

Toward those ends, we propose to:

  • Contact numerous officials who are knowledgeable about Medicaid long-term care’s financial eligibility at the state and federal level to identify two highly concerned states willing to work with us on this issue.
  • Apply the Center for Long-Term Care Reform’s “Index of Long-Term Care Vulnerability” to the two states selected as a means to demonstrate and document the magnitude of their potential risk and cost in financing LTC for a burgeoning elderly population.
  • In both states, interview the state Medicaid director, the LTC financial eligibility policy specialist, and LTC eligibility supervisors and workers for the purpose of documenting the incidence and cost of the Medicaid LTC home equity exemption.
  • Interview Medicaid estate recovery officials in both states to get their views on specifically how much home equity is lost to attrition before mandatory estate recovery from the recipients’ estates can be actualized.
  • Seek permission to identify and review a random sample of valid Medicaid long-term care eligibility case records in one state with the goal of estimating the total loss to Medicaid expenditures from the home equity exemption.
  • Review and document historical Congressional action on Medicaid, supporting its proper role as a safety net for people in need rather than the dominant long-term care payer it has become.
  • Work with members of Congress and their staff who have demonstrated concern for this problem and seek their guidance in proposing federal legislation.
  • Interview the principal researchers who have published on related topics and seek their advice and counsel.
  • Compile all findings, write a report, promulgate the report electronically, and draft model state and federal legislation.

This project for the Foundation for Government Accountability will be led by renowned Medicaid long-term care policy expert Stephen Moses.

Deliverables

Deliverables, within six months of the project start date, will include (1) a comprehensive report (approx. 25 pages) that explains the problem of Medicaid LTC financing and recommends modifications to the Medicaid home equity exemption which, if implemented, could achieve substantial savings of Medicaid long-term care expenditures in each state and nationally; (2) draft state and federal legislation to implement the proposed solution; (3) submit several newspaper op-eds, and (4) prepare an article suitable for publication in an appropriate journal.

Stephen Moses will conduct all of the research and interviews for this project. He has conducted many similar studies over the years. Examples of his project reports are at http://www.centerltc.com/reports.htm.

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Updated, Monday, January 4, 2016, 11:35 AM (Pacific)
 
Seattle—

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LTC E-ALERT #16-001:  LTC NEWS AND COMMENT

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

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

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

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

  • Washington Post Endorses Medicaid Gimmick That It Once Wanted Eliminated

  • Congress Boosts Alzheimer's Research But Offers Little To Help Those Who Already Have The Disease

  • 10 Worst Mistakes People Make After Retirement

  • Long-Term Care Insurance Can Be Costly but Effective

  • Long-Term Care Insurance Can Be Costly but Effective

  • America Cares, and It’s Draining

  • Inspired by Her Mother, WV Woman Revolutionized Long-Term Care For Elderly

  • Why Nearly All Consumers Should Open an HSA Account

  • The Twelve Days of Christmas in LTC

  • Caring for His Elderly Dad Made This Japanese Businessman Homeless

  • Create Custom Reports on Long-Term Care

  • Medicaid and Long-Term Services and Supports: A Primer

  • National Poll Finds Americans Thinking About Retirement But Not Long Term Care

  • Long-Term Care Insurance Can Baffle, With Complex Policies and Costs

  • Critical Illness Plans Become A Popular Voluntary Benefit

  • Rate Rise Signals a Merry Christmas (Finally) for Life Carriers

  • Baby Boomers Set Another Trend: More Golden Years In Poorer Health

  • Rising Obesity Rates Put Strain on Nursing Homes

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

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Updated, Friday, December 18, 2015, 9:50 AM (Pacific)
 
Seattle—

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LTC BULLET:  WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment:  Our annual report follows the ***news.***

*** ILTCI MOBILE APP READY.  The 16th Annual Inter-Company Long-Term Care Insurance Conference convenes at the Grand Hyatt hotel in San Antonio, Texas March 13-16, 2016.   Go here for more information and to register if you’re not on board already.  Denise Liston, 2016 ILTCI Conference Chair, reports that the ILTCI 2016 Mobile App, sponsored by Mutual of Omaha, is now available!  It's easy to connect with everything you need to make this year's ILTCI conference a great experience.  Download the app and use your cell phone/tablet to:  

  • Access the full event schedule, select sessions to attend, and create your own personal agenda
  • Access maps of The Grand Hyatt and session/event locations
  • Find out who's attending and share contact information
  • Preview the speakers, read their bios, and view presentations as they are finalized and posted
  • See who's exhibiting and easily locate their booths
  • Participate in live polling during the sessions
  • Complete session surveys
  • Surf through the Social Wall; read live displays of Tweets, Instagram photos, and LinkedIn posts. Post your own messages using the hashtags #ILTCI16 or @ILTCI.
  • Get important updates and exciting offers through the app
  • Play our Click Game to win prizes, share photos and join in the fun

To download the app visit the Apple Store or Google Play then:
o   Search for ILTCI
o   Download (It's that easy!) ***

*** ARTICLE HIGHLIGHTS CENTER.  Long-time friend and corporate member of the Center, Christine McCullugh, president of LTC Solutions, Inc., featured the Center for Long-Term Care Reform and an interview with Steve Moses in her monthly column for Health Insurance Underwriter’s December 2015 issue.  Titled “Close-up on Group Long-Term Care:  When Did Medicaid Become the Solution to Long-Term Care Financing?,” you can read the article here at page 36.  ***

*** 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:  The Center for Long-Term Care Reform’s major accomplishment for 2015 was to conduct, complete and prepare a report on a study of long-term care financing in the state of New Hampshire.  While the report focuses on the Granite State, much of its analysis, based on the Center’s “Index of Long-Term Care Vulnerability” is applicable nationwide.  We expect to publish that report with the project’s sponsor, State Budget Solutions (SBS), early in 2016.  SBS will also convene a meeting with several think tank representatives to review and discuss the study’s findings. 

For the start of 2016, we have exciting news.  The Center for LTC Reform has received a contract to study the problem of Medicaid’s excessive home equity exemption which diverts up to $828,000 per recipient homeowner from private long-term care liability to the welfare program’s overburdened budget.  A secondary focus of the study is to review the egregious abuse of “Medicaid-compliant annuities” by affluent couples to qualify for Medicaid LTC benefits.  We’ll work with the highly regarded Foundation for Government Accountability to complete that project by fall of next year.  Our first LTC Bullet in January will provide details.

On that happy note, let’s turn to the Center for Long-Term Care Reform’s other 2015 activities 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 1113 Bullets (so far), by date here and by topic here.  These 1100-plus articles are a valuable historical resource.  Please make use of them. 

Some highlights of our 2015 LTC Bullets include: 

January When Bad Models Happen to Good People
February Holding CMS’s Feet to the Fire
March LTC in the USA:  Who Provides to Whom and Who Pays?
April:  New Tool to Analyze LTC Spending Data
May Medically Underwritten Annuities for LTC
June CLTCR News:  Thousand Bullets Retrospective
July New Data on LTC Incidence, Duration, Cost and Financing Sources
August The Top 10 LTC Bullets of All Time
September:  LTCI Update from Broker World
October Another LTCI Hit Job?
November The Future of Long-Term Care Seen Through the Prism of History
December:  So What If the Government Pays for Most LTC?, 2014 Data Update

The Center for Long-Term Care Reform published a total of 46 LTC Bullets in 2015.

LTC E-Alerts

Our LTC E-Alerts are a weekly compendium for regular Center members of the previous week’s LTC Clippings, described below.

The Center for Long-Term Care Reform published a total of 48 LTC E-Alerts in 2013.

LTC Clipping Service

Our LTC Clippings 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. 

Center staff 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.  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; we give our “take” on what it means in our “LTC Comment;” and we send out approximately three “LTC Clippings” by email per work day.

Reading the LTC clippings 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 672 LTC Clippings so far in 2015 or roughly 1.9 per calendar day and 2.7 per work day.  2015 was our fourth year offering the clipping service in real time. 

Season’s Greetings

All in all, 2015 was a challenging year for long-term care financing and for your Center.  We look forward to a better 2016 as the political 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 Happy Holidays, a Merry Christmas and Prosperous 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 14, 2015, 9:54 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-048:  LTC NEWS AND COMMENT

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

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

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

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

  • Stress May Boost Risk for Alzheimer's-Linked Thinking Problems

  • Job forecast is sunny for healthcare industry

  • Dementia Care: Protecting a Father’s Legacy

  • For Early-Stage Alzheimer’s, a Little Alcohol May Be a Good Thing

  • Rethinking retirement income replacement rules

  • How to understand who’s eligible for long-term care benefits

  • US life expectancy flat for third straight year at almost 79

  • As Aging Population Grows, So Do Robotic Health Aides

  • Long-term care: why your home, not your pension, is key

  • There aren't enough nursing-home beds to meet demand

  • Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes

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

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Updated, Friday, December 11, 2015, 10:30 AM (Pacific)
 
Seattle—

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LTC BULLET:  SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2014 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. 

LTC BULLET:  SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2014 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 2014 statistics on its website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Tables.zip.

Health Affairs has published a “web first” summary and analysis of the new data titled “National Health Spending In 2014:  Faster Growth Driven By Coverage Expansion And Prescription Drug Spending."  Registered subscribers to Health Affairs can access the full text of that article here; the “Abstract” is available free.  

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

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

------------------

"So What If the Government Pays for Most LTC?, 2014 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 $155.6 billion on nursing facilities and continuing care retirement communities in 2014.  The percentage of these costs paid by Medicaid and Medicare has gone up over the past 44 years (from 26.8% in 1970 to 54.8% in 2014, up 28.0 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.5% in 2014, down 22.7% of the total).  Source:  Table 15:  Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2014.

So What?  Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 46.1% in the past four decades while the share paid by Medicaid and Medicare has more than doubled, up 104.5%.

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 $552,000 and in some states up to $828,000 of home equity (as of 1/1/16).  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 (31.9% of the dollars in 2014), it covers nearly two-thirds (63%) 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.  The 2014 national projected shortfall in Medicaid reimbursement is $21.20 per patient day and $6.7 billion in total.  Source:  2014 Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Don't be fooled by the 8.4% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2014.  That category does not include private long-term care insurance.  (See category definitions here.)  No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the nursing homes.  Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments.  This fact further inflates the out-of-pocket figure artificially.

How does all this affect assisted living facilities?  ALFs are 81% private pay (Source:  AHCA/NCAL Issue Brief) and they cost an average of $43,200 per year (Source:  Genworth 2015 Cost of Care 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 $552,000 or $828,000 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 $83.2 billion on home health care in 2014.  Medicare (41.7%) and Medicaid (35.6%) paid 77.3% of this total and private insurance paid 9.9%.  Only 8.9% of home health care costs were paid out of pocket.  The remainder came from several small public and private financing sources.  Data source:  Table 14:  Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2014.

So What?  Only one out of every 11.2 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?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf

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

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

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

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems.  A cap was placed 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, click here

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, Washington.  The Center's mission is to ensure quality long-term care for all Americans.  Steve Moses writes, speaks and consults throughout the United States on long-term care policy.  Learn more at www.centerltc.com or email smoses@centerltc.com.

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Updated, Monday, December 7, 2015, 11:14 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-047:  LTC NEWS AND COMMENT

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

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

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

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

  • Letter: Who pays for assisted living?

  • Women Will Face Especially High Long-Term Care Risks As They Age

  • Panel issues definition of 'person-centered care'

  • Taxpayers on hook for Medicare payments for unnecessary scooters

  • Analysis: Observation stays skyrocket, jeopardize SNF admissions

  • 4 Smart Uses for RMDs

  • Caregivers Of Spouses With Alzheimer’s Most Likely To Suffer From Depression

  • Obamacare deductibles leading to more critical illness policies

  • What working in a nursing home taught me about life, death, and America’s cultural values

  • Son Must Pay for Mother's Care Under Filial Responsibility Law Despite Abusive Childhood

  • CMS Confirms That Spousal Impoverishment Figures Will Remain the Same for 2016

  • How Hillary Clinton Is Making Aging Parents a 2016 Issue

  • Top-Rated Caregiving Apps To Consider Using

  • Health Insurance Pressure Increases Critical Illness Demand

  • Medicaid Drives Biggest State Spending Boost in Decades

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

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Updated, Friday, December 4, 2015, 10:10 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE ARROGANCE OF LTC ANALYSTS’ ELITISM

LTC Comment:  Arrogance, ideological bias and elitism spoil the recent research of abundantly endowed LTC analysts.  We explain after the ***news.***

*** ONE OF OUR OWN PASSES—Gary Corliss, retired LTCI actuary and long-time friend of so many in the business, died November 30.  You can read his obituary in the Hartford Currant, get information about the memorial service, and post condolences here.  Fellow LTCI actuary Claude Thau said:  “Gary was a true gentleman, in all senses of the word.  Gary led by example, without seeking fanfare.  His behavior and approach to life shall continue to serve as a model for those who had the privilege of knowing him.”  That sums up our impression too of a kind and thoughtful truly professional expert always ready to answer a question or make a helpful suggestion when asked.  Rest in peace. ***

*** ILTCI CONFERENCE KEYNOTER NAMED—Ken Schmidt, “Brand Visionary and Former Communications Strategist for Harley-Davidson Motor Company,” will address the 16th annual Intercompany Long-Term Care Insurance Conference to be held March 13-16, 2016 in San Antonio, Texas.  Schmidt has been associated with Harley-Davidson since 1985 and his success in helping rebuild the company's brand played a vital role in the motorcycle legend's turnaround from the brink of ruin to global dominance.  In his role as Harley's director of communication, Schmidt shaped the company’s positioning and served as its primary spokesperson to the media and financial communities.  Learn more and register for the meeting, themed as “Transforming the Options, Refining the Risk,” here.  See you there! ***

*** 2016 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS UNCHANGED FROM 2015—LTC Clippings subscribers received the following announcement on December 2.  We’ve also updated MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY in The Zone, the Center’s members-only website.  If you need your user name and password to access The Zone or if you’d like to join the Center to gain access, contact Damon at 206-283-7035 or damon@centerltc.com.

12/2/2015, CMS Confirms That Spousal Impoverishment Figures Will Remain the Same for 2016,” ElderLawAnswers

Quote “The Centers for Medicare and Medicaid Services (CMS) has announced that the spousal impoverishment and home equity limit figures will not change from 2015 levels next year.  This is because there was no increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). . . .  For CMS’s page on all the SSI and spousal impoverishment standards for 2016, click here.  For an informational bulletin that was attached to the figures, click here.

LTC Comment:  We’ll also update these numbers in The Zone where you can find the comparable annual amounts all the way back to 1991 for comparison. ***

 

LTC BULLET:  THE ARROGANCE OF LTC ANALYSTS’ ELITISM

LTC Comment:  Medieval philosophers built castles of elegant logic into the sky.  Starting with arbitrary rationalistic premises they constructed fanciful mental models of “true” reality.  But their simulations bore little resemblance or connection to the real world.  Consequently, human society and economics remained mired in misery and poverty for centuries.  Scientific method grounded in objective reality ended such philosophical and methodological error in the hard sciences unleashing the industrial revolution and the prosperity much of the world enjoys today.  Unfortunately, the same cannot be said for much of what passes as social science today.

Recent research in our very own field of long-term care financing is a case in point.  Based on false premises, arrogantly self-confident analysts backed by a richly financed think tank, advocacy organization and trade association have presumed to tell us how we should pay for long-term caregiving.  I refer of course to the recent article in Health Affairs titled “Financing Long-Term Services and Supports:  Options Reflect Trade-Offs for Older Americans and Federal Spending” which summarized research conducted by the Urban Institute and financed by the SCAN Foundation and Leading Age.  Let’s dissect that article, pinpoint its most fundamental errors, and explain why its advice that government should compel Americans under threat of force to pay for each other’s long-term care is mistaken and misguided.

Quote:  “Medicare does not provide coverage for extended LTSS.  Medicaid does, but only for people who meet state-specific eligibility standards that limit benefits to those who have disabilities and very limited income and wealth.  However, because people with LTSS needs may qualify for Medicaid after they deplete most of their resources, Urban Institute projections indicate that Medicaid will pay for about one-third of lifetime costs associated with severe LTSS needs for people turning sixty-five today.”  [p. 2, emphasis added]

LTC Comment:  Therein lies the fallacy that undermines these analysts’ whole evidentiary and logical structure that follows.  If Medicaid long-term care benefits required “very limited income and wealth” after recipients “deplete most of their resources,” our LTC financing system would not be in the mess that it’s in.  If that were true, responsible people would plan, save, invest and insure to avoid a catastrophic spend down scenario.  But it is not true and so most people don’t plan ahead for LTC costs and risks that are predominantly covered, and have been for 50 years, by Medicaid. 

Surely analysts who represent themselves as experts on Medicaid long-term care benefits must know that the program’s financial eligibility rules allow recipients to have incomes up to the cost of a nursing home plus virtually unlimited assets held in exempt form with any excess easily transferred or sheltered by a Medicaid planning attorney.  I wouldn’t accuse these analysts of ignorance or dishonesty so the only plausible explanation I’m left with is ideological bias that blinds them to the reality of how Medicaid actually works.

Quote:  “Because private insurance is not widespread and public financing is available only for people who have few financial resources or who have already spent nearly all of their resources, older adults with severe LTSS needs will pay about half of their expenses out of pocket.” (p. 2)

LTC Comment:  The article’s authors double down on the same error.  Because they assume incorrectly that people only get Medicaid LTC benefits after spending down into impoverishment, they accept without challenge that “older adults with severe LTSS needs will pay about half of their expenses out of pocket” which is also untrue.  Out-of-pocket nursing home costs have declined from 49.5% in 1970 to 29.4% in 2013, down 20.1% of the total while only 8.1% of home health care costs were paid out of pocket in 2013.  (For sources, see “LTC Bullet:  So What If the Government Pays for Most LTC?, 2013 Data Update.”  Furthermore, half of the “out-of-pocket” expenses reported by the Centers for Medicare and Medicaid Services (CMS) actually come from Social Security benefits that Medicaid recipients are required to contribute to offset Medicaid’s cost for their care.  In other words, these out-of-pocket costs are spend through of income from another fiscally vulnerable government program, not spend down of personal assets.

Quote:  “The average American turning sixty-five today will incur about $138,100 in future lifetime expenses for severe long-term care needs, according to Urban Institute projections.  These future expenses could be financed by investing $69,500 at age sixty-five, under the assumption that the investment earns average returns.” (pps. 1-2)

LTC Comment:  Gee, not so bad.  All we need to set aside to cover future LTC costs is $69,500.  Sounds doable.  The article tells us just a little further on:  “In 2014, people ages sixty-five and older had median financial assets of only $76,000 and median home equity of only $80,000.”  (p. 2)  Consider what this means. 

First, the financially median elderly person has enough wealth to cover the “future lifetime expenses for severe long-term care needs.”  Second, the financially median elderly person does not need to cover those expenses out of pocket, because he or she already qualifies for Medicaid LTC benefits!  Medicaid exempts a minimum of $552,000 of home equity up to a maximum of $828,000 in 14 states, so $80,000 in home equity is no obstacle anywhere in the country.  Cash resources of $76,000 are disqualifying for a single individual though usually not for a married person, but such an amount can be converted easily and virtually instantaneously into any of a long list of exempt assets, e.g. home improvements, a new car, furniture, personal possessions of almost any kind, etc.  No wonder most people with moderate and even substantial income and assets don’t worry about future LTC costs when they have so many bigger and more imminent financial worries to consider.

Finally, what about the analysts’ assertion that “These future expenses [$138,100] could be financed by investing $69,500 at age sixty-five, under the assumption that the investment earns average returns.”  I ran the numbers using the Bankrate Simple Savings Calculator here and found that one would need to get over 4.9% annual interest over the 14-year life expectancy of someone 65 years of age today (see the life expectancy table here).  Where can you get such a return reliably?  Answer:  nowhere, thanks to the Federal Reserve’s nearly-decade-long zero-interest rate policy (ZIRP).

Quote:  “Private insurance could help shield middle-income people from this financial risk. However, the market penetration of private long-term care insurance has been limited because of high premiums, the potential for Medicaid to crowd out demand for private coverage, and adverse selection—which limits the size of the market and drives up premiums.”  (p. 2)

LTC Comment:  Having asserted incorrectly that most people have to spend down into impoverishment before getting LTC help from the government, these analysts seek to show that private insurance is no solution, but the reasons they give are mostly wrong or misleading.  Do high premiums impede LTCI market penetration?  Of course, but why are premiums high?  First, because long-term care is expensive.  There’s nothing we can do about that.  If every tenth house burned down, fire insurance wouldn’t be cheap either.  But the other main reason for high LTCI premiums is government interference in the market.  By making LTC free after the insurable event occurs through Medicaid and by forcing interest rates down to nothing through the Fed, government forced product demand down and premium rates up.  Nor is adverse selection a cause of higher premiums.  Successful insurance carriers control adverse selection through good underwriting, which by the way, social insurance—these analysts’ preferred alternative—eschews.

Quote:  “Surveys show that while consumers demand a balance between price and benefits, their top priority is low cost.  None of the alternatives we modeled were able to resolve this major challenge.”  (p. 9)

LTC Comment:  Well, hello!  Everyone wants something for nothing.  The real problem is not that we can’t give them something for nothing, i.e. low cost LTCI.  The real problem is that we’ve been doing precisely that for half a century by making Medicaid LTC benefits easily available after the insurable event occurs.  Clearly, these authors are using the “Fallacy of Impoverishment” to lead us to a conclusion that the only solution for long-term care financing is to force people against their will to pay even greater job-killing payroll taxes than they already do in order to create another underfunded entitlement program that further weakens their sense of personal responsibility and efficacy. 

Quote:  “Each mandatory program would enroll more than 95 percent of the population. Access to this insurance would be especially beneficial to middle-income consumers, many of whom are unlikely to be able to afford voluntary insurance.” (p. 9)

LTC Comment:  People can't afford long-term care insurance voluntarily but society can afford it if it is forced on them?  Actually, costs will be much greater when everyone is insured because everyone will have an incentive to maximize benefits.  This is the fundamental fallacy of “social insurance.”  It spreads risk but, unlike real private insurance, it does not price risk.  Without underwriting and risk-based premiums, social insurance rewards irresponsibility and punishes responsible behavior.

Quote:  “If the primary purpose is to significantly increase insurance coverage, the mandatory programs we modeled would be far more successful than the voluntary ones. If the major aim is to reduce Medicaid costs, the comprehensive and backend mandatory programs would be most beneficial.” (p. 10)

LTC Comment:  Well, surprise, surprise.   Compulsion is more effective than persuasion if all you care about is forcing people to do something they don’t want to do.  Did we need the DYNASIM modeling software to tell us that?  If you really want to reduce Medicaid costs, you don’t need a new “comprehensive and backend mandatory program” to do so.  All you really need to do is reconfigure Medicaid so that it works the way this Health Affairs article inaccurately assumes it already works.  To wit:  eliminate the income and asset eligibility loopholes, stop the Medicaid-compliant annuity abuse, radically reduce or eliminate the home equity exemption, and strictly enforce mandatory estate recoveries. 

When people find they are actually responsible for their own long-term care expenses, they’ll quickly learn to save, invest and insure for those risks. For those who don’t or can’t prepare in that way, Medicaid will be a better program with more resources to cover many fewer people with less need for institutional bias to discourage participation.  Home equity conversion and reverse mortgages will generate huge amounts of private financing to help LTC providers give better care.   As the next generation watches their inheritances going to fund their parents’ private long-term care, they’ll decide traditional and asset-based private LTC insurance options are not so prohibitively expensive after all.  It’ll take a decade or so to sort out, but if instead we pursue a compulsory, tax-funded social insurance solution as these analysts propose, that program will join the rest of the unfunded government-based social insurance house of cards when it implodes as the aging demographic nemesis prevails.

Final LTC Comment:  Now you can see why I titled this LTC Bullet “The Arrogance of LTC Analysts’ Elitism.”  These analysts are arrogant because they seek to impose their policy preferences on others by means of government force.  They’re elitist because they think the American people are too stupid or self-indulgent to take personal responsibility for themselves.  The sad irony is that the “solution” they arrogantly propose is precisely what causes people to slide toward greater dependency on government.  I could draw on any number of sagacious quotes by America’s founders to nail this point down, but let’s close with this apt comment instead:

“There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” ― Robert A. Heinlein, The Moon is a Harsh Mistress

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Updated, Monday, November 30, 2015, 10:07 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-046:  LTC NEWS AND COMMENT

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

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

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

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

  • Financial Abuse of the Elderly: Sometimes Unnoticed, Always Predatory

  • The New Case for Reverse Mortgages

  • Losing your life savings to long-term care

  • Age Critical Illness Insurance

  • The Crisis in Our Midst: Ensuring Quality Home Care in an Aging America

  • National Health Spending 1960-2013

  • How to Care for 2 Parents at Once Without Going Broke

  • Detection of Alzheimer's

  • Clinton Unveils Elderly Care Plan

  • How to Work Better with Aging Clients

  • Long Term Care Insurance Association Suggests New Thanksgiving Tradition

  • UnitedHealth Warns Of Marketplace Exit – Start Of A Trend Or Push For White House Action?

  • LTC liability costs to rise by 5% for 3rd straight year

  • To understand climbing death rates among white Americans, look to women

  • LeadingAge, SCAN Foundation report sets framework for future of LTC financing

  • Building Better Long-Term Care Insurance

  • Report Finds Alzheimer’s May Possibly Bankrupt States, Medicaid If Precautions Aren’t Taken

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

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Updated, Monday, November 16, 2015, 10:45 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-045:  LTC NEWS AND COMMENT

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

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

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

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

  • Half of Americans Aged 45 to 65 Currently Care for Their Children or Aging Relatives

  • 3 types of insurance that can protect your family for years to come

  • Where Seniors Go When Their Nursing Homes Close

  • Older Americans Are Confident – Maybe Too Confident – They Can Detect Financial Abuse; Family/Friends Tell a Different Story, Are More Concerned

  • Critical Illness Insurance Market Sees Record High New Premium in 2014

  • Citizens group sues California over nursing home 'patient dumping'

  • Audit finds waste, inefficiencies in Virginia’s Medicaid program

  • The secret to LTC success? A focus on well-being

  • Your Kids Will Live Longer Than You Thought

  • New C.A.R.E. Study from Northwestern Mutual Reveals the Caregiving Conundrum

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

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Updated, Friday, November 13, 2015, 11:25 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE FUTURE OF LONG-TERM CARE SEEN THROUGH THE PRISM OF HISTORY

LTC Comment:  Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well.  We present the big picture after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** 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. ***

*** FRIDAY THE 13TH:  Don’t let superstitious fear of the unknown keep you from reading today’s LTC Bullet which presents a truly scary scenario about the future of LTC financing, but with a happy ending for those who persevere. ***

 

LTC BULLET:  THE FUTURE OF LONG-TERM CARE SEEN THROUGH THE PRISM OF HISTORY

LTC Comment:  In last week’s LTC Bullet:  A New Revolution in Long-Term Care Financing . . . by Government we provided a summary of the coming upheaval in public LTC financing and how it fits in with the history of government involvement in the long-term care market.  This week we present the bigger picture.

For starters, check out this presentation by Brian Ellsworth of Health Dimensions Group on “The Emerging World of Value-Based Payment.”  It will tell you everything you need to know about the trends I’ll critique below. 

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

Those are the questions I tried to answer in my presentation Tuesday at a conference in Dallas.  Following is a transcription of my remarks.  You’ll see why I think the whole publicly financed long-term care house of cards may soon come crashing down.

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The Future of Long-Term Care Seen Through the Prism of History
by
Stephen A. Moses

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

A monopsonistic, government-based nutrient payer could ensure quality food distribution by paying for value instead of quantity.

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

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

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

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

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

So, how did we get into this mess?

Once upon a time, long-term care was a Mom and Pop arrangement.  Mom and Pop took care of Grandpa and Grandma, usually as a family, sometimes as a business.

Then, in 1965, government stepped in to help.  At first, Medicare and Medicaid paid generously on a fee-for-service basis--initially to win passage of those programs and later to sustain support for them from business and political interests.

Medicare was to be “social insurance” for acute health care with premiums paid and benefits received by all.

Medicaid was to be a safety-net for long-term care, a means-tested public welfare program.

Remember that distinction between social insurance and welfare.  We’ll return to it.

In the beginning, Medicaid offered only nursing home care.  This was the origin of the welfare-program’s infamous “institutional bias.”

And in the beginning, Medicaid had no asset transfer restrictions nor any estate recovery requirement.  Access to publicly funded nursing home care was easy and practically universal.

Now, people aren’t stupid.  They saw that Medicaid would pay for Grandma in a nursing home, but they’d be burdened by personal caregiving or face cash out of pocket for any other kind of care.

Why pay for home care, adult day care, respite care or assisted living, when the government provides nursing home care? 

Unsurprisingly, a private market for home and community-based services did not develop in those early years.  There was no financial incentive for entrepreneurs to build a better long-term care mouse trap.

The same generous nursing home policies also stunted a budding private long-term care insurance market in the mid-1970s.  Why insure privately for a risk and cost the government already pays for?

The nursing home profession was pretty savvy also.  They saw a huge new funding source in Medicaid and Medicare.  Naturally, nursing homes adapted to take full advantage of the opportunity.  They formed powerful interest groups to influence public LTC policy.

So what do you think happened by the early 1970s?  P.J. O'Rourke, the political satirist, likes to say "If you think health care is expensive now, just wait until it's free."  Of course, the cost of Medicaid financed long-term care exploded.

Did the government respond by addressing the cause of this cost inflation—easily available free long-term care paid for by Medicaid?

No.  Government attacked the symptom of bulging budgets instead. 

Figuring nursing homes couldn’t charge for beds that don’t exist, the public pontiffs of health policy imposed “certificate of need” requirements severely limiting new construction.

But you don’t need a Ph.D. in economics to understand what happens in any market when you artificially cap supply.  Prices tend to increase and that’s exactly what happened. 

Nursing homes said:  “We can’t build more beds?  Fine, we’ll charge you more for the ones we already have.  Thanks, by the way, for protecting us from new entrants into our business.”

So, government finally got the message and curtailed the cause of the problem, free Medicaid-financed nursing home care, right?  Wrong.  The Medicaid monarchs capped nursing home reimbursement instead. 

This was the origin of the differential between low Medicaid reimbursements (often less than the cost of providing the care) and market-based rates half again higher but dwindling in total as private-payers followed public policy incentives and migrated to Medicaid.

Now, put your economists’ hats back on.  With supply and price capped, what do you think happened to demand?  Correct, it went through the roof!  Nursing home occupancy in the mid-1980s jumped to 95 percent at a time when hospitals were little more than half 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 provided.  Consequently, quality of care collapsed in principally Medicaid-financed nursing homes.  Or so the public powers-that-be concluded.

True to form, government attacked the symptom (poor quality) instead of the cause (public financing).  As if wishing could make it so, Congress simply mandated higher quality, more nurses’ aides, better training and so on in the Omnibus Budget Reconciliation Act of 1987.

Thankfully, this time federal command and control worked.  Expenditure growth abated and quality improved—NOT. 

Now caught between the rock of inadequate reimbursement and the hard place of mandatory quality, the nursing home profession had no place to turn but to the courts.

Suing under the 1981 “Boren Amendment” which required state Medicaid programs to reimburse nursing homes adequately so they could provide good care--lo and behold--state nursing home associations won most of those lawsuits.

Who says you can’t fight city hall?

But then, 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 legal floor under Medicaid reimbursement for nursing home care, yet costs continued to grow insupportably.

Now, while all this was going on another situation developed.  Private payers in nursing homes, paying half again as much as Medicaid for the same semi-private room, began to wise up. 

They rebelled against this “cost shifting” toward them by seeking ways to qualify for Medicaid themselves.  After all, state and federal laws require the same quality of care regardless of payment source.  So why not?

Some Medicaid eligibility workers were only too eager to help families who faced a long-term care crisis by stretching Medicaid’s already elastic financial eligibility rules in their favor. 

Other workers tried to solve the national debt by strictly enforcing the most draconian rules keeping even the poorest families off Medicaid. 

A special practice of elder law evolved to impoverish wealthier clients artificially in order to qualify them for LTC benefits.

In other words, Medicaid long-term care eligibility became a crap shoot with the lucrative benefit passing to people lucky enough to get a lenient eligibility worker or wealthy enough to consult a Medicaid planning attorney.

Not that it was ever very hard to qualify for Medicaid long-term care benefits.  Despite the common misconception that you must be “low income” to get Medicaid, the fact is that anyone with income below the cost of a nursing home, upwards of $80,000 per year on average, is eligible based on income. 

Consequently, two out of five people receiving Medicaid LTC benefits have incomes between $51,000 and $217,000 per year or more.  More than two-thirds getting Medicaid LTC have incomes between $30,000 and infinity.  Only for the low income?  Hardly.

What about assets?  The usual limit of $2,000 in cash or equivalents is unquestionably poor.  But to get to that level, you can spend down on anything, not just care.  Lawyers advise world cruises, big parties, better cars and larger houses to dispose or shelter excess assets.

Furthermore, virtually unlimited exempt resources don’t even count toward the asset limit.  These include . . .

At least $552,000 in home equity and--with no dollar limit at all--one business including the capital and cash flow, Individual Retirement Accounts, one automobile, term life insurance, prepaid burial plans, home furnishings, and personal belongings.

If you still have too much money, your friendly local Medicaid planner will wave a magic legal wand and reduce the surplus to a level below the welfare program’s income and asset limits. 

Cost in attorneys’ fees to become eligible for Medicaid after you already need care?  About the same as one month in a nursing home private pay, maybe $6,000 or $7,000.

In the early ‘80s, Congress began to attack the problem of Medicaid eligibility abuse with a long series of statutes:

TEFRA (the Tax Equity and Fiscal Responsibility Act of 1982) for the first time authorized state Medicaid programs to impose asset transfer penalties, liens on real property and estate recoveries.  But these measures were only voluntary.

MeCCA (the Medicare Catastrophic Coverage Act of 1988) required state Medicaid programs to penalize asset transfers made for the purpose of qualifying for public benefits within 30 months of application.

OBRA ’93 (the Omnibus Budget Reconciliation Act of that year) made estate recoveries mandatory, expanded the asset transfer look-back period to 36 months, and eliminated the previous 30-month cap on the asset transfer penalty.

When none of these measures worked as hoped, Congress and President Clinton stepped in with HIPAA (the Health Insurance Portability and Accountability Act of 1996) which made it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid.

Senior advocates and the elder law bar called this the “Throw Granny in Jail Law,” so Congress repealed that provision in the Balanced Budget Act of 1997 and replaced it with the “Throw Granny’s Lawyer in Jail Law” making it a crime to advise a client in exchange for a fee to transfer assets to get Medicaid.

When that law was deemed unconstitutional because it held lawyers culpable for recommending a practice made legal again when Congress repealed “Throw Granny in Jail,” public policy intended to save Medicaid for the needy was dead in the water again.

Nothing more happened until the Deficit Reduction Act of 2005 put the first cap ever on Medicaid’s home equity exemption.  It started at $500,000 or $750,000 at state legislatures’ discretion and has increased with inflation to range today from $552,000 to $828,000, from four to seven times the average senior’s home equity.

The DRA ’05 also extended the transfer of assets look-back to five years and closed several loopholes such as the “half-a-loaf” strategy, but it left other gimmicks used to qualify millionaires for Medicaid in effect such as the “Medicaid-compliant annuity.” 

Now, let’s pause for a moment and review.  Government intervened in the long-term care marketplace 50 years ago by providing nursing home care to infirm seniors with most of their assets exempt from spend down and most of their income (largely Social Security benefits) as co-insurance. 

This caused Medicaid LTC expenditures to skyrocket leading to federal and state initiatives to control costs by capping supply and price which drove up demand, undercut quality, reduced private-pay census, and crowded out private markets for long-term care insurance or home equity conversion (to fund LTC) and for home and community-based services (to provide care).

Meanwhile, from the early 1980s forward, another theme developed which was aimed at addressing the problem of escalating Medicaid LTC costs without confronting their real cause.

Academics and government officials became enamored of the idea that Medicaid's long-term care financing crisis could be relieved by paying less for expensive nursing home care and more for lower-priced home and community-based services.

The idea is that taking care of people in their own homes or in the community must be cheaper than maintaining them in a nursing home.  Data often cited at the individual level seem to show that home care is less expensive than nursing home care. 

But this reasoning commits the fallacy of composition, inferring that potential savings for specific individuals are additive to the society as a whole. 

In fact, available research does not show that home and community-based services save money compared to nursing home care overall. 

Community-based care usually only delays institutional services.  Between them, expanded home care plus eventual nursing home care end up costing more in the long run than nursing home care alone. 

That fact is borne out by historical data showing continued growth in total Medicaid long-term care expenditures.  While nursing home costs have leveled out considerably, the home care side of Medicaid continues to grow rapidly.

Here’s the point:  providing long-term care in the most appropriate and desirable setting is a worthy goal to pursue.  But it does not save money.

For every person in a nursing home or assisted living facility in America, there are two or three of equal or greater disability, half of whom are bedbound, incontinent or both, who remain at home.  They are able to stay home because their families, mostly daughters and daughters-in-law, struggle heroically to keep them out of an institution.

When government starts providing long-term care that they want (home care) instead of long-term care that they’d prefer to avoid (nursing home care), people come out of the woodwork to take advantage of it.  That too drives up overall Medicaid LTC expenditures.

Finally, Medicaid financed home and community-based care is deadly to the marketability of private long-term care financing alternatives, such as reverse mortgages or long-term care insurance. 

The big benefit of being able to pay privately for long-term care is the ability to command red-carpet access to top-quality long-term care at the most appropriate level and in the private marketplace. 

To the extent the government conveys to the American public that consumers can obtain the same benefits financed by Medicaid, Medicaid will continue to explode in costs and reverse mortgages to fund long-term care in the short-term and LTC insurance to fund it in the long run will remain stunted.

What a mess!  Here it is in a nutshell.

Easy access to Medicaid-financed nursing home care prevented the development of a private market for home and community-based services. 

Explosive cost growth led to ultimately unsuccessful government efforts to control the supply, price, quality, type and access to Medicaid funded care.

Notoriously low Medicaid reimbursement rates for two-thirds of nursing home residents were partially counterbalanced by relatively generous Medicare reimbursement levels for post-acute and home health care.

As good business people, the nursing home profession pursued the incentives in public policy by reaching out for higher paying Medicare post-acute patients and by seeking fewer lower-paying long-term Medicaid custodial care residents.

That caused the balance of Medicare financing to shift significantly from nearly all acute care toward much more post-acute and long-term care. 

Between 1990 and 2013, long-term care—defined as nursing home and home health care—remained roughly eight percent of total National Health Expenditures.

During the same period, however, the proportion of long-term care expenditures funded by Medicare more than tripled from 9 percent in 1990 to 29 percent in 2013.  Long-term care increased from 4.5 percent of total Medicare expenditures to 11.7 percent in those 23 years.  (CMS-NHE Data)

Consider what this means.  Our current long-term care financing system depends, and has depended for decades, on generous and growing Medicare reimbursements for home care and nursing home care balancing meager Medicaid reimbursements for the majority of people dependent on either or both programs.

As worries about Medicare’s solvency grew throughout the 2000s, federal policy makers looked for new ways to control public LTC expenditures.  CMS hit upon the idea of

driving reimbursement toward “quality” instead of “quantity” as a way to reduce long-term care cost growth in Medicare and Medicaid.

In other words, this latest push by government to manage the LTC service delivery and financing system is designed to fix or at least mitigate problems that were actually caused by earlier government market interventions.

As always before, these new interventions address symptoms—high costs, low quality  and public-policy-induced market dysfunction—instead of the real causes, perverse incentives created by earlier government intercessions.

The risk is that further interference in an already fragile LTC market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.

Remember what I said at the beginning of this talk about how Medicare began as “social insurance” and Medicaid as welfare? 

Ironically, political pressure is building now to means-test, that is to say welfarize, Medicare.  I’ve already shown how Medicaid has become a de facto entitlement, the dominant LTC funding source for all economic levels of Americans.

The net effect of this long historical process is that public financing of long-term care has expanded beyond government’s ability to pay while private LTC financing has dwindled almost to disappearance.

The public does not know who pays for long-term care, but they know someone must pay.  You don’t see Alzheimer’s patients dying in the gutter.

The result is a public asleep about the risk and cost of long-term care and dependent by default on a mostly publicly financed LTC service delivery system that may be on its last legs, unable to squeeze more and better care out of more and more intrusive regulations and mandates.

In a free market consumers rule.  They demand quality and volume.  If they don’t like what they get, they vote with their pocket books and move on to products and providers they prefer.

Competition to provide the best care at the lowest price in the most appropriate settings could and would solve the LTC service delivery and financing problems that have been created by government’s interventions, however well-intentioned those interventions may have been.

Do you have any doubt that long-term care services and financing in the United States would be better if government had left the market alone and allowed competition and the profit motive to make the best possible care available at affordable levels?

Would the poor suffer?  More than they do now?  Hardly.  There would be room for a real safety net paying market rates for the full continuum of care.  Such a safety net might even be possible without public funds, relying entirely on charity and philanthropy. 

But, that is not the course we’re on.  Let’s get back to reality.  I fear we’re headed toward a perfect economic storm when interest rates finally increase making service of our massive public debt unsustainable and leading to a severe retrenchment in Medicaid and Medicare long-term care financing. 

Such an outcome is very nearly inevitable.  The Federal Reserve and the U.S. Government cannot ignore economic gravity forever.  Sooner or later debt and unfunded promises come due.

But to end on a more positive note, if the worst does happen, we’ll be forced to get back to methods and strategies that are more in keeping with the traditional American values of independence, personal responsibility, self-sufficiency and hard work.

I predict that as government is compelled to withdraw from LTC financing dominance:

Medicaid will have to become a real welfare program.  Its home equity exemption will disappear or be radically reduced.  Consumers will use their home equity to pay privately for long-term care.  They’ll employ reverse mortgages for that purpose. 

That new source of private financial oxygen will reinvigorate all providers across the whole continuum of long-term care.

Over time, after watching their own inheritances consumed by their parents’ long-term care costs, the next generation will finally see the merit of private LTC insurance and begin to buy it.

Medicare will stop being “social insurance” paid for by and available to all.  It will be means-tested and become a program for the poor, and hence, as the saying goes, “a poor program,” like Medicaid. 

Acute health care will drift away from mostly public funding toward mostly private financing through health savings accounts and high-deductible insurance.

After 50 years of consuming our economic seed corn by moving ever more fully away from private and toward public financing of long-term care, demographic and economic reality will force us back to the kind of freer market that made the country great in the first place.

Now, before I conclude and turn to your questions, let me anticipate your first query.  You might ask:

“Well Steve, you’ve painted a pretty dismal picture.  Why are you so worried that this whole publicly financed long-term care house of cards may soon come crashing down?”

I’m glad you asked.

My organization, the Center for Long-Term Care Reform, has developed a tool to measure and analyze that risk.

We call it the “Index of Long-Term Care Vulnerability.”  We’ve applied the Index to the LTC service delivery and financing systems in four states so far:  Virginia, New Jersey, Georgia, and most recently, New Hampshire.

You can find our reports on each of those projects by opening the link on my handout which will take you to an online version of the handout where all the links in it are live.

Our Index of LTC Vulnerability analyzes the sustainability of current long-term care systems by examining published data in each of seven key issue areas.  These are:

  • Aging demographics:  how many 85 year olds are in the pipeline?  Answer:  Too many; more than triple what we’re dealing with now by 2050.

  • Morbidity:  how sick will they be?  Answer:  Too sick.  Recent optimistic compression of morbidity predictions are not bearing out due to the obesity epidemic.

  • Medicaid:  how viable is the welfare program as a source of future LTC financing?  Answer:  Not very based on expenditure trends, ObamaCare expansion, easy income and asset eligibility, inadequate reimbursement and cost shifting, dual eligibles, rebalancing and managed care challenges.

  • Federal revenue:  can revenue from taxation and borrowing sustain the federal share of Medicaid?  Answer:  Almost impossible when interest rates increase because of elevated debt and entitlement liabilities and high state matching rates exacerbated by provider taxes and recessions.

  • State revenue:  can state economies generate enough revenue to fund their share of Medicaid?  Answer:  Very doubtful based on rankings of states’ fiscal policies by Cato, Forbes, Mercatus, the Pew Charitable Trust, and the Urban Institute.

  • Private financing alternatives:  could genuine asset spend down, higher estate recoveries, reverse mortgages and private LTC insurance relieve the financial pressure on Medicaid and, if so, how much?  Answer:  Plenty if Medicaid financial eligibility rules were tightened and enforced.

    Finally,
     

  • Entitlement mentality:  to what extent has easy access to all forms of public assistance undercut the willingness and ability of the American people to fend for themselves?  Answer:  A lot based on metrics like dependency on Medicaid, food stamps, welfare, and disability, but we won’t know how much until we see what happens when people do have to fend for themselves.

The Index of Long-Term Care Vulnerability comes with an interactive score sheet which allows the user to apply weights and scores for each factor of analysis in order to estimate, albeit subjectively, the potential vulnerability of the national and each state’s long-term care service delivery and financing system. 

Check it out and let me know what you think.

Well, that’s my take on where we are, how we got here, and what’s likely to happen next.  Thanks for your attention.  I’ll be glad to answer questions.

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Updated, Monday, November 9, 2015, 10:07 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-044:  LTC NEWS AND COMMENT

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

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

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

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

  • Retirement: How to Live Well: Few people want to leave their home as they grow older. Smart planning about health care can make all the difference

  • New Research Exposes Big Problem With Long-Term Care Insurance

  • The Irresponsibility of States Guaranteeing Pension Returns

  • Critical illness coverage reaches tipping point

  • Alzheimer’s Link Leads to More Financial Planning

  • Actuaries choose new LTC future shapers

  • Genworth Unveils Long-Term Care Adviser Resource

  • Affluent Boomers Consider Long-Term Care Top Risk to Well-Being in Retirement Yet Only 3 in 10 Have Made Financial Plan to Address Issue

  • Access To Long Term Care Insurance Summit Videos Offered By AALTCI

  • Taking the really long view on long-term care insurance

  • CMS finalizes physician fee schedule for 2016

  • Economic Freedom of the World

  • ‘A lot of opportunity’ in critical illness insurance

  • The Death Rate Is Rising for Middle-Aged Whites

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

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Updated, Friday, November 6, 2015, 10:15 AM (Pacific)
 
Seattle—

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LTC BULLET:  A NEW REVOLUTION IN LONG-TERM CARE FINANCING . . . BY GOVERNMENT

LTC Comment:  Radical, disruptive changes in how government pays for long-term care are advancing rapidly.  Background after the ***news.***

*** MOSES SPEAKS:  If today’s LTC Bullet strikes a chord of interest, consider bringing Center president Stephen Moses in to speak at your next meeting or conference.  Check out his professional bio here and review our newly revised “handout” with links to dozens of his articles, speeches and reports here.  Get it as a one-pager .pdf for hard-copy distribution here.  Then call or email Steve or Damon to discuss arrangements:  206-283-7036 or info@centerltc.com.  Do not let these big changes in long-term care public policy catch you, your prospects or your clients by surprise. ***

*** AALTCI REPORTS:  “Video recordings of sessions at last week's 2015 National Long Term Care Insurance Sales Summit are being made available by the American Association for Long-Term Care Insurance.  ‘Holding the Summit in Washington D.C. allowed us to have top national legislative, legal and sales professionals speaking,’ explains Jesse Slome, executive director of the American Association for Long Term Care Insurance.  ‘We streamed the sessions live online and some 800 insurance professionals tuned in to watch.  Recordings of the sessions are being made available for On Demand viewing.  ‘We followed what I call the TED Talks format, which means sessions were between 12 and 18 minutes,’ Slome adds.  ‘People watching the recordings will see the speakers as well as their presentations and can view the recording on any device with Internet access.’  To learn more about accessing recordings from the 2015 LTC Sales Summit go to http://goo.gl/sR1vqp.” ***

 

LTC BULLET:  A NEW REVOLUTION IN LONG-TERM CARE FINANCING . . .  BY GOVERNMENT

LTC Comment:  Huge changes in how the government pays for post-acute and long-term care are under way, building steam, and about to revolutionize LTC service delivery.  “Bundling” and “prospective payment” are on every health care bureaucrat’s lips.  The system’s transformation to “managed care,” whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country.  We’ve touched on that development and its likely ramifications in earlier Center publications.  There will be more to come. 

The government’s latest move toward centralized control of the LTC market is even more significant.  The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated “quality” metrics).  The new system will put care managers and providers at far greater financial risk.  Only time will tell if this shake-up improves or damages the care patients actually receive.

I am learning more about the value-based payment revolution.  I’ll be attending and speaking at a conference focused on the subject next week.  I’ll report further thereafter.  But I am already very concerned.  My speech at the conference will place the transition to value-based payment by public programs into historical context.  I will show how the new policy relates to and builds on previous government interventions in the long-term care financing market.  I will speculate on the likely consequences of the new policy.

Today’s LTC Bullet is a summary and preview of what I intend to say at the conference next week. 

-------------------

“The Future of Long-Term Care Seen Through the Prism of History”
by
Stephen A. Moses

How did it come to pass that government is the dominant payor for long-term care?  Why does the government now perceive a need to demand value from LTC providers rather than simply paying for services or not?  What trend does this latest government intervention in LTC service delivery and financing continue?  Where is this trend likely to lead?  These are the questions my presentation will attempt to answer.

I will recount the history of long-term care financing beginning with the passage of Medicare and Medicaid in 1965.  I will show how generous public financing in the early days caused institutional specialization, public dependency on Medicaid-financed nursing home care, and exploding expenditures.  I will explain how government tried to deal with rapid cost increases by (1) capping supply with “certificates of need,” (2) suppressing price with reimbursement caps, and (3) attacking the resultant excess demand by statutorily compelling higher quality (OBRA ’87) without extra funding.

I will show how each of these measures addressed the symptom of out-of-control costs instead of the cause—easy access to public financing of long-term care after care is already needed.  I’ll explain the net effect:  a public desensitized to the real risk and cost of long-term care; the lack of private markets for home care services or long-term care insurance; the gradual disappearance of private LTC payers; and the increasing dependency of long-term care providers on generous and growing Medicare LTC funding to counterbalance inadequate Medicaid reimbursements.

I’ll cover several related themes that evolved as this basic history unfolded.  I’ll trace the government’s efforts to discourage Medicaid LTC eligibility abuse as private payers awakened to the ease of getting Medicaid.  I’ll address the seeming panacea of replacing expensive Medicaid nursing home care with ostensibly cheaper home and community-based services.  I will show how Medicare (social insurance) is giving way to means-testing (welfarization) while Medicaid has become a defacto entitlement program lacking fair or effective spend down requirements.

Finally, I will tie all these strands together to show how the latest government demands on long-term care providers are a consistent continuation of its previous interventions in the LTC service delivery and financing market.  I will speculate on the likely future of that market in the context of the age wave (demographic challenges), profligate fiscal policy (debt and unfunded entitlement liabilities), and irresponsible monetary policy (artificially low interest rates that hide public programs’ insolvency).

I’ll close on a hopeful note with a prediction that better times are ahead after we endure and weather the perfect economic storm I fear is coming.

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Updated, Monday, November 2, 2015, 10:11 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-043:  LTC NEWS AND COMMENT

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

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

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

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

  • LeadingAge: Start saying 'life plan community' instead of CCRC

  • Abuse Plagues System of Legal Guardians for Adults

  • Genworth Falls Most in S&P 500 as CEO Says Much More Work to Do

  • Seven money milestones to hit while you’re in your 50s

  • This is your brain on retirement — not nearly as sharp, studies are finding

  • Eligibility for federal employee long-term care insurance to expand

  • The Greatest Fear of Old Age: Who Will Take Care of Me?

  • How Race Influences Why People Die in America

  • The one thing CI producers ‘are all clamoring for’

  • Baby Boomers Hugely Underestimate What They Need for Retirement

  • Are voluntary benefits like pet insurance worth it?

  • Dementia costs rocket past heart disease, cancer

  • Learning the Unfamiliar Language of Home Care

  • Health Care Co-op Closings Narrow Consumers’ Choices

#############################

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

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Updated, Friday, October 30, 2015, 10:23 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC SUMMIT SMASHING SUCCESS

LTC Comment:  Brilliant conception, flawless execution and best-of-all free admission marked the live and online 2015 National Long-Term Care Insurance Sales Summit in and from Washington, D.C.  Detailed notes on each presentation follow the ***news.***

*** MAGA’s Brian Gordon was recently interviewed on Kevin Price's Houston-based radio show, "The Price of Business.”  The topic was LTC, proactive planning and emergency strategies.  The interview is on YouTube.   Here's the link:  https://youtu.be/9lewCmrNON4 .  Check it out. ***

LTC BULLET:  LTC SUMMIT SMASHING SUCCESS

LTC Comment:  If you missed this year’s free “Long-Term Care Insurance Sales Summit,” you missed one for the history books.  The live event took place Tuesday, October 27, 2015 in Washington, DC, but most participants followed it live as we did via online streaming.

Fortunately, if you were otherwise occupied on Tuesday, it’s not too late for you to glean this program for LTCI knowledge, insights, sales tips, and motivation.  According to the program’s sponsors, you can order 24-7 on-demand access to video recordings of the whole days’ sessions for 90 days here.  Alas, the recording, available for $19 on the day of the event, now costs $49.  Still a steal!

To whet your appetite for more, Damon and I took notes on the entire program.  They follow in the single longest LTC Bullet ever published.  If the notes seem to become clearer and more detailed around mid-day of the program, that’s because Damon took over the note taking to give me a two-hour break.  Well done!

Notes on the LTC Summit held Tuesday, October 27, 2015

Scope out the agenda here:  http://www.aaltci.org/2015summit/program123.html

The program began a little after 8:00am EDT with AALTCI president Jesse Slome’s introduction and welcome to the 2015 National Long-Term Care Insurance Sales Summit followed by four “bonus sessions” delivered by Jesse himself on Short Term Care Insurance.

8:15 AM - 8:50 AM
Successful Strategies For Short Term Care Insurance

Primer on industry and the product.  New organization with mission to put SLTCI on the map:  www.shorttermcareinsurance.org.

Recovery care product; LTCI light.  Lots of different products.  Coverage for SNF, ALF, and some home health care for less than one year; some as few as 30 days.

Regulations governing LTCI do not cover SLTCLI.  Market penetration still small.  Product in very formative stages. 

Seeing interest from major insurance companies.  Sales are growing.  First half 2015 sales up 71% over same period 2014.  26,000 policies closed.

Who is buying SLTCI?  A senior product.  Different than short-term health care to cover gap.  Age 61 and older:  60s and 70s.  4% are over 80.  Can write SLTCI policies on older people.

10 or 11 companies selling the product.  Medico, Aetna, etc.  Surveyed 9 insurers.

Benefit periods:  most people buying a year of coverage, getting maximum benefit.  Half of policies are 90 days or less. 

People using as plan B if can’t afford LTCI or to fill the gap.

Sales opportunity:  for LTCI producers, this is currently “Plan B” option.  Ideal affordable option for client declined for LTCI.  Go back to clients who were declined and offer SLTCI.

If you sell Medicare, Jesse presents on dovetailing SLTCI with Medicare.  Observation status problem is a gap SLTCI can bridge.

71% growth is just the beginning.  Jesse proud of relationship with media.  Every week in major media.  Counter negative publicity about LTCI.  So far no negative publicity about SLTCI.

Visit website which will have consumer and producer sides.  Sales tools, etc.

Recordings available for $49.

Types of people for SLTCI:  can’t, won’t, or waiting for LTCI.

Can’t:  SLTCI is ideal for people you cannot get LTCI.  Height/weight criteria may prevent coverage.  Diabetes with high blood pressure, with arthritis, pain medication, osteoarthritis, even stroke can be accepted.  Even a home care policy with memory issues.  No cookie cutter standard.  Some protection better than none.  49% of LTCI claims are over at one-year mark.

Won’t pay the cost:  Jesse advocates good, better, best strategy.  Compare single male or female:  360 day policy.  Comparing LTCI vs. SLTCI.  People expect SLTCI policies to be cheap but they are not.  360-day with zero elimination period.  Don’t have 90-day certification requirement that keeps LTCI cheaper.  SLTCI also has zero day elimination.  Very attractive for single women. 

Waited:  Age ratcheting down for LTCI.  In SLTCI policies not an issue.  Market starts at 60 to 65 mostly; high ages also.  Learn more at the website:  www.shorttermcareinsurance.org

Why SLTCI works for Medicare.  STOP!  For years, everybody has looked and said need to get Medicare producers talking about LTCI.  Perceptions of LTCI are not positive.  Let’s accept reality.  They don’t want to hear about something that sounds like LTCI.  SLTCI sounds like LTCI.  You have to change the terminology.  Call the product what the insurers call it:  “Recovery Care.”

Major gap in what Medicare covers and does not cover.  Observation claims; NBC Nightly News report, 3-minute video; if hospital categorizes as observation, get same care, 1.8 million; once categorized as observation not considered hospitalized.  So go to SNF, but Medicare does not pay.  You were not hospitalized.  Reason for Medicare producers to talk to their prospects and clients about “Recovery Care.”

Medicare is vulnerable entitlement.  That’s why observation care is hard for Congress to change.  If fixed, you drop the coverage.  For now it is real and this is an affordable solution.

Prospects for recovery care are Medicare prospects.  They are also your LTCI prospects who assume Medicare will cover them.

Learn more by watching the NBC report.  It will open your eyes.  Great YouTube video to show prospects.

How to be successful in SLTCI or Recovery Care

1. Review your declines.  Tell them benefits of product they may be able to get.

2. Anticipate your declines.  Offer Plan B ahead of decline.

3.  Too old:  Many products go well into the 80s.

4.  Good, better, best approach.  Position SLTCI as “good.”

5.  SLTCI uses unisex rates.  This is the only way we can get you both covered.

6.  Layering traditional LTCI; going back to clients to cover the first 90 days.

7.  Property casualty (PC) agents.  Ads for compare.com.  Gives ability to buy car insurance from all companies; Google owns; eating PC producers’ lunch.  State Farm is broadening from car insurance.  SLTCI is a way to partner with PC agents.

End of beginning sessions on Short Term Care Insurance

9:10 AM
Broadcast Begins: Welcoming Overview Comments

Welcome by Tom Riekse, Jr. of LTCI Partners:  Introduced Jesse. 

Jesse:  Thanks to LTCI Partners:  lined up sponsors; made it happen.  LTCI carriers underwrote cost of putting on event.

20 plus sessions.  All being recorded.  Streaming live throughout the day.  A few people in Hawaii, very early there.

Underwriters panel at end of day with questions from viewers at home.

Thanks to insurance media services and National Underwriter that ran ads about the Summit.

You can order on demand recordings of full day of sessions:  insuranceexpos.com, click on the “on demand” button.

9:15 AM - 9:33 AM
Who's Driving The Future of Long-Term Care Exploration Of Initiatives by Major Centers of Influence
John Cutler, Architect of the Federal Long-Term Care Insurance Program, Co-Chair, National LTC Discussion Group

5 Ws of journalism.

Who:  CLASS Act, Connie Garner, Ted Kennedy.  People work through organizations.  Modeling:  Bruce Chernoff, SCAN, Nov. 17 briefing with Health Affairs; Leading Age, Larry Minnix; AARP; HHS Center for Innovation; ASPE.  Designers:  Bipartisan Policy Center looking at proposals; LTC out this December; cutting costs and making services more affordable; LTC Collaborative, Howard Gleckman.  Minnesota:  looking at adding LTCI to Medi-Gap.  NAHU issue paper.  Paul Forte of FLTCI Program:  create FLTCI for all.

Where:  Minnesota, California around duals, Hawaii universal LTCI but Governor lost; New York doing education campaign.

When:  Driven by federal elections; only client who has said anything about LTCI is Hillary Clinton; might lead to proposals if she becomes president.  He thinks change will be incremental.

Jimmo case:  don’t have to be able to improve to get Medicare.  Medicare up from 3% to 18% for LTC.  Medicaid changing to HCBS.

With the Affordable Care Act, adding to Medicaid.  States integrating health care systems with Medicaid.  Why not do same for LTC?  Aligning post-acute and LTC for dual eligibles.

Sleeper issue:  adding LTC to IRAs and 401Ks.

Medicare for all:  not so likely.  CLASS defeated so nothing like it being proposed.

Jesse questions:  What’s likely to happen?

Answer:  don’t duplicate failure.  Section 125 plans; not a lot of lift for that.  Changing restrictions on IRAs and 401Ks possible.  Developing connection around annuities.

What is greatest vulnerability for traditional LTCI?  Claims denial is what gets the press concerned.

9:34 AM - 9:51 AM
Legislative Update & Outlook: The Latest Federal, State and NAIC Initiatives
Rod Perkins, Vice President, Insurance Regulation, American Council of Life Insurers

Snapshot of what’s going on from regulatory standpoint.  Rates and rating practices. 

First NAIC.  Passed changes to LTC model regs and model bulletin.  Attempt to do something regarding closed blocks and new business.  NAIC working groups for more clarification and work to implement. 

Health actuarial task force:  LTC pricing subgroup.  Companies now have to do annual recertification of adequacy of rates.  Carriers concerned about amount of information and security.  Looked at combo products.  How do they work with the LTCI rules? 

Senior issues task force:  look at updating consumer disclosure.  Changes being made re disclosure.  Significant changes to Appendix B, the LTC personal worksheet.  Collect info on income and assets.  Building in more disclosures about possibility of rate increases.  Variation across states.  Public hearing in Minnesota. 

Number of states have implemented LTC studies.  Some states capping rate increases, even retroactively.  Unique age-based limits. 

Reg changes.  Model regulation and Model Bulletin.  Too detailed to summarize; see available video recording of the slide presentation.  Other state activity:  lapses and notices; independent claims review; state health benefit exchanges—should LTCI be assessed to fund those exchanges?

Partnership programs still out there.  Just about every state has one; renewed activity in MI, IL and NM.  Companies have to report to HHS about Partnership activity; funding went away; NAIC leadership will send letter to HHS to try to get resources reassigned to Partnership effort.

Interstate compact:  get approved in many states.  Five year review.

Fiduciary rule of Department of Labor:  concerned about expanding definition of fiduciary.  If company provided LTC, need to be a fiduciary?  Need for exclusion? 

What’s next?  Something significant has to change.  Product with 30- or 40-year tail but little flexibility to change rates.  Need that for viable market.

Jesse question:  Enough already!  What makes states positive and excited.

Answer:  Innovative products like combos.  Organizations like Bipartisan Policy Center; big solutions.  Role for public backstop?

9:52 AM - 10:09 AM
Are Current LTCi Policies At Risk Of Future Rate Increases?
Roger Loomis, Principal & Director, ARC, Author of the Society of Actuaries’ 2015 Study of Rate Increase Risk

Roger Loomis, Actuarial Resources Corporation:  Are future LTCI policies vulnerable to rate increases?  For new issues, how likely rate increases?   Old books have a problem.  But what about new issues?

Three ways to approach.  Qualitative or predictive modeling.

Qualitative:  premiums higher now than in the past.  Have learned from experience.  Products less risky.  Still companies scared.  Most have pulled out.  Afraid of this project.  Buffet quote:  “When others are greedy be fearful and vice versa.”

Lapse rates most important.  Six large insurance carriers in business a long time, provided data.  How have assumptions changed over time?  How confident can we be?

Morbidity assumptions now higher:  108% of what companies have seen in the past.

Mortality improving.  Lapse assumptions very conservative now.  Assuming people will hold on to policy for life.  No downside risk.  Risk margins are higher; into 10, 12, 14 percent levels.  Premiums are already much higher and companies’ premiums are much closer to each other.

More detailed model from actuarial perspective.  Apply modern standards to earlier years.  Look at claims, lapses and mortality.  Look at those rates and figure confidence.  Compare to 2000 and 2007.  Have 16 times more data now.  70 times as much data for main policies.  Confidence levels much higher now. 

In 2000 would have predicted high premium increase rate 40%.  In 2007, a little better.  2014, best estimate right plus or minus 20%.  Really substantial probability of no rate increases.  Can pay many more claims now without a rate increase.

Finally, overall probability of a rate increase.  Looked at all the elements.  2000:  40%.  2007:  30%.  2014:  10%.  40% in past turned out to be low, but 10% now could be really, really high.  Little room for downside. 

Duke University study compared morbidity and mortality changes.  Eric Stallard.  People going to get old, live long, and be sick.  That’s scenario of morbidity getting worse.  Found morbidity improving.  60 is the new 50.  Putting those assumptions together means people living healthier longer.  More premiums collected to pay claims.  Either way good.  Bright future.  Comfortable buying a policy now.  Companies should reconsider the market.

Jesse question:  look at specific kinds of policies to lower risk?

Answer:  Some policy designs more risky than others.  Premium level tied to CPI reduces risk for insurance company.

10:10 AM - 10:28 AM
Long-Term Care Litigation: Recent LTC Insurance-Related Cases, Class Actions & Trends
Stephen A. Serfass, Drinker Biddle & Reath LLP

Litigation in an ever-changing landscape.  3 principal points: 

1. Volume of litigation growing.  So is magnitude, dollars at issue, complexity.  Sophistication.

2. What you as sales professionals do influences litigation.

3.  Easy things you can do to reduce the risk

Stats.  22 lawsuits in 2011, no class actions; 2015:  48 cases, 5 class actions and it’s only October.  April 6, 2012 everything changed.  Relatively small number but tripled since four years ago.  Significant increase. 

This story drives home the reason:  elderly insured on claim due to cognitive impairment; physician said moderate cognitive impairment; insurer sees this and claims rep calls facility to see if require continuous supervision; claims rep checked no; 24 hour round the clock; carrier denied claim; period of months not receiving benefits; lawsuit filed; then put back on claim but doesn’t pay gap period; case goes to trial; $34.25 million dollar award against carrier.  Shock heard round the plaintiff’s bar world.  Got bar thinking about LTCI.  Now all of a sudden more sophisticated plaintiff’s lawyers getting interested. 

Claim-based case.  How is continuous supervision defined?  Don’t get into that situation of misapplying definition.  Most profound reason litigation volume growing.  Expect continued growth at 10% through 2040; more claims mean more denials which  means more litigation.  Class actions also on the rise.  Plaintiffs’ bar looking for ways to recover funds.

Why should you care and what can you do about it?  LTCI litigation driven by three things.  Communication and documentation.  You are gifted communicators.  Document your communication.  Most litigation happens because of confusion.  Why did you tell Mom that the rates will never go up?  You know you would never say that.  I just pulled out my file; I sent email that said rates can go up.  Here’s what we talked about.  Now you have contemporaneous documentation that will defeat a lawsuit or prevent it from being filed.  Also increase communication with the family.  Defuses hostility.  Think about those things.

10:29 AM - 10:39 AM
Sponsored Message: Genworth
5 insurance companies made this program possible.  Each gets to present.  First, Genworth.  Video about LTC awareness and aging and LTC financing.

10:40 AM - 10:58 AM
The Right LTC Messaging To Get Their Attention And (More Important) Get Their Buy-In!
Nancy Dykeman, CLTC, CSA, LTC Consultant, Plan Advisor, LTCI Partners

Nancy Dykeman, LTCI Partners:  One of top producers in the country.  Subject:  “Right Messaging to Get Their Attention”

You’ve built your life around a goal for yourself and others.  88 keys on a piano.  Think about melodies.  52 white keys; 36 black keys.  All reflect ups and downs of our 88 years.  Sometimes warm and soft; sometimes harsh and loud. 

When you talk about planning, you must ask them about their little ones.  These are highest notes on the piano.  Must bring meaning to their lives.  Are you asking emotional questions about their family?  Our responsibility to ask all the right questions.  You are their trusted advisor.  Ask about dreams to show importance of planning.

Middle notes:  8 keys to left and right of C.  Middle range.  Solid notes, plans.  Middle aged market is smart.  Have experience.  Have seen what happened with parents and grandparents.  These clients put their thrust in you.  Strong melodies; full of action.  What do they want to be remembered for?  So many in this age group we have not talked to?  Concerned about parents but have not started to think about themselves.

36 black keys sharps and flats:  can throw off plans.  What about extended care?  What is your plan?  Especially if have not had experience of dealing with LTC.  Poor health, accidents can and probably will happen.  Living in denial not smart.

Nancy has been a music performer all her life.  Must ask questions about what people want.  Where receive care?  Who beside you?  What will pay for it?  The three critical questions.  We know great products and we have access to them.  Getting up to that is creating a plan.  Have to know the answers to these questions so you will be the one to provide the solution.

Book she read by Genova who wrote “Still Alice.”  50% chance of Huntington’s Correia.  Legacy for young ones.  Lower tones of the music.  Life gets rough.  Now in lower notes of later years; time to rest and remember.  Quite possible six sets of grandparents.  Sound of music.  Elders in low notes.  Everyone at risk of needing care.  May need extended care.  Carve your name on hearts, not tombstones.  You can change lives, by creating music, asking the right questions.

Maya Angelou:  people will never forget how you make them feel.

10:59 AM - 11:17 AM
Selling Traditional LTC Insurance To Single Women: Do You Know How To Really Sell It Today?
Beth Ludden, Senior Vice President, Genworth Financial

Jesse is awesome; celebrate his creativity; free program; no greater advocate over the years.

Women are important focus, but now always the main focus as they should be.  Lot of statistics.  Benefits in products.

Long time ago a smart producer told her what sales process ought to be.  Seven step sales process.  He advocated the three:  create need, solve need, close the sale.  Do the first two and the third is just the paperwork.

Creating the need:  women need it, women use it, and get the most out of it.  Women need a lot of data.  Need financial purpose validated.  Financial planning takes a back seat for women.  Genworth has done a lot of studies; found women don’t plan financially as much as men.  38% vs 57%.  Women have lower savings.  Women earn a quarter less than men; less in top tier jobs. 

Women just don’t like to plan.  That’s where you come in.  You can give women confidence because you have the data.  Millennial women don’t plan.  Women like to be validated with advice.  References Dallas Morning News story.  Given bad advice by journalist.  Single women advised not to buy.  This is an opportunity to refute that kind of dumb advice.

Women are caregivers.  We’re doing study called “Beyond Dollars” for three years.  Trending numbers.  What’s interesting this year:  shows women are 50% of caregivers but 50% are men for the first time.  But male caregivers are different than women caregivers.  Included Millennials in survey.  Late 20s and 30s.  69% already said expect to be caregivers.  Why?  Because seeing parents giving care. 

Everyone skipping over GenXers.  Only 50 million.  GenY is 80 million: aka Millennials.  Even more cynical about Medicare, Social Security and other public safety net programs.  Very interested about planning for future.  May be a way to get them an insurance product to help them plan today.

36% of claims come from single women.  Married women:  29% of claims.  Women make up 65% of Genworth claims.  Married women go on claim younger than single women.  When women claim on Medicare, Medicaid or out of pocket, exceed men on all marks. 

Driver is men tend to perform less caregiving tasks than women even if the caregiver.  Women feel need to do it themselves; men have no such notion.  Men will pay for care.  If relying on a man for  your care, you are probably making a mistake.

Benefit design used to be more important.  What’s important now:  home care, ALF, inflation.  Many ways to reduce cost.

My family will take care of me.  75% said that.  According to Genworth study, 19% of adult children did not, 12% of siblings did not despite expectation.  Care did not materialize.  People having smaller families and they are more dispersed.  Key issue with baby boomer women; 20% or so don’t have children.  Caregivers aren’t always more likely to buy plans; 37% still think family will provide care.  More of men have plans.

Need to start planning and need to focus on women.

Rate increases?  Need to disclose there will be rate increases and need to help them plan.  In the future this premium could change and likely will.  People handle it better if they know what to expect.

Women need and use and benefit from LTCI more than men.  Your job is to show need and plans.  Go to Millennials not just middle aged.  Don’t believe safety nets will be there.  Less underwriting problems.  Can have quite a large policy at the end of the day.  Important to plan.

Important to focus more on women even though they don’t like to plan.  Women graduating from college in greater numbers than men.  Also in professional degrees, doctors, lawyers, dentists.  More professional women coming and more wearing the financial pants in the family.

Jesse comment:  add one sales line:  When one needs care, woman will ask “What can I do?”, men ask “Who can I call?”

11:18 AM - 11:36 AM
Using Annuities To Fund Your Personal Healthcare Pension (including LTC Insurance)  
Michael Lehrhaupt, President & CEO, Strategies for Retirement


“Creating your Personalized Health Care Pension Plan”  Great reason to get back to your LTCI clients.  Strategy to present at reviews. 

Basics of retirement planning.  Break down into two categories:  essential (housing, food, health care); crucial to cover those expenses.  Non-essential:  travel, entertainment, etc.  Won’t greatly affect life style.  Pay money vs. play money. 

Insurance and health care.  LTC insurance.  Make sure people can afford essential expenses.  USA Today:  top retirement worry over 50 is health care costs.  Dilemma.  Planning has to be done long before retirement.  Better to buy younger than older. 

Personalized health care pension.  Two decisions in LTC.  Decision to insure the risk.  How pay for it is next decision.  Can afford while working, but what about after I retire? Where will the premium come from? 

Decision number two; how to pay for it.  That’s what he’ll help with.  Talking about traditional LTCI.  Three possibilities:  Immediate annuity.  Irreversible decision.  Give insurer an amount of money and they give you lifetime cash flow.  Income for life.  Old school.  Lots of options.  Fixed index and variable annuities.  Market risk in variable annuities.  His choice is fixed index annuity.  Perfect because principal can grow if market goes up, but if market goes down no loss.  Preserves principal better; fees lower; only a life insurance license needed.  Assets used to fund the account:  retirement or non-retirement assets.  He likes to use retirement assets.  Can take out at 59.5 but have to take out at 70.5.  He advises use to fund health care personal pension.  Works for any policy with an annual premium.

Two case studies:  need to take RMDs.  Create annual guaranteed annual income.  $120,000 could have been left in, but what if a market crash?  Have turned it into income to cover the LTCI premium.  Income is still $6,000 per year.

Other case study:  single female buying LTCI.  Can afford premium while working, but concerned about paying later and future premium increases.  Set aside $30K and defer income until age 66, able to create great plan.  Guaranteed lifetime income of $2,000 or more.  Could increase, but can’t go down. 

11:37 AM - 11:47 AM
Sponsored Message: John Hancock
Conference free because of underwriting from five corporate sponsors.  Joe Howard and Gene Arsenault presented live how John Hancock has adapted to the challenges LTC insurance has encountered.  For example, flex account.  LTC Captivate 2.0 just implemented yesterday.  Shaves a week off the submission process.  No money required with the application.

11:48 AM - 12:06 PM
Why Affluent Clients Still Need Long-Term Care Insurance
Steve Cain, Principal, National Sales Leader, LTCI Partners, LLC

Assume everyone knows need, product, expensive, tough on families.  Risk resonates with affluent clients.  We’re in the risk management business.  Reduce risk; avoid it; comes down to retain or transfer the risk. 

What’s on minds of affluent clients.  Risk management strategy.  Overview of options.  Come up with a road map.  Not so much about money; they have money.  Clients say health care is number one, then inflation and longevity.  Not specifically LTC, actually all health care.  Medicare, expenses, extended care.  Need more holistic discussion. 

What’s affluent depends on who is defining.  Under $250K investable assets or over $5 million.  Even for folks with lots of money, concerned about health care.  Be sensitive to that.  Not immune to issue because you have money.  Need to manage LTC and money. 

Awareness of LTC higher than it has ever been.  Talking about strategies to manage risk.
Strategies:  Speak in language of the affluent.  Speak about risk.  How to deal with the risk.  All different kinds of products.  Mitigate risk plans.  Maybe self-insurance.  Could be a yellow pad.

Solutions out there:  stand alone, linked, life with riders, etc., etc.  Encouraged despite lumps product has taken recently.  Tremendous transference of wealth and more planning solutions than ever before.  LTC planning needs are being met by other products and that’s OK.

Affluent clients often say we are going to self-insure.  I said you can, but managing a LTC event takes more than money.  Put a plan in place.  Timing, liquidity and health care.  During bull market or bad market.  Who will be quarterback to deal with the health care event?  Could turn it over to LTCI carrier.  Dig deeper than “self-insure.”  Plan of care.  Who will hire?  Ways to overcome the objection.

Simplify the conversation.  Emphasize risk management.  Financial trigger?  Emotional trigger?  Gain client agreement.  Get them nodding yes.  Provide objective planning solution.  Duty to make a recommendation and then follow up.

12:07 PM - 12:25 PM
Good, Better, Best; The Simple, Timely Sales Strategy That Works!
Jesse Slome, American Association for Long-Term Care Insurance

Jesse Slome:  How to Reboot Strategy for Increased LTCi Sales

Experienced in marketing for decades.  LTCI costs almost tripled.  If you think people with lower incomes prepared to spend more for optional insurance protection, naïve.

He proposes different way to present.  Good, Better, Best presentation strategy. 

We all do that.  Coach, business, or first class air.  Most people choose coach.  Few fly first.  Same is true for LTC or any discretionary insurance products.  Same with gasoline, tires, get a haircut.  We are consumers and so are the people you’re talking to.

Prospect age 60.  When most likely to need LTCI at age 83.  Don’t sell what everybody buys, best protection money can buy.  Much can change between now and later.  Wouldn’t buy now for 2039.  But every day people who sell LTCI say buy this and you won’t have to think about it again.  Curtails your ability to sell.

I’ve changed my good, better, best over time.  Good plan may be one year protection.  But call it two years.  Freaks out some producers.  Why comfortable with this being good.  Like a coach seat.  Affordable.  Some protection always better than no protection.  2 years very likely to be sufficient.  Half of claims satisfied in one year.  Coach is better than deciding not to fly.  If have good protection, can augment it later.

Better protection:  costs and gives a little more.  Option to increase coverage.  Single best way to help consumers with the here and now.  Low interest rate environment dictates what premiums will be.  Choose a policy to lock in health today and buy more coverage in the future.  One and done does not make sense.  Confusing to look at the products and know how they handle inflation.  One percent inflation is quite suitable.

The Best:  three year plan, $150 per day, 3% compound inflation.  That’s what most are selling.  Doing that is like American Airlines only sold first class.  Wait, before you leave, we also have these other seats. 

Almost every study shows consumers are ready to spend $100 per month for LTCI protection.  Good comes in under; better comes in at; best comes up a little more.  Consumer responds he didn’t think would be this cheap.  Consumer will be in disbelief and you reassure them.  They will make a decision that need coach and will then consider what more to enhance.  Most will take the better coverage.

End with couple statistics.  Most producers accept 3% inflation because can’t sell 5%.  Facts:  see Sourcebook for these statistics.  Claims mostly begin and end in the home:  1% annualized.  ALF 2.3%.  Nursing home:  1.9%.  Why do you need 3% compound growth?

He has been, is and continues to be advocate of good, better, best.  Industry needs a reboot. You can overcome objections, shock yourself when consumer agrees.

12:26 PM - 12:36 PM
What Is Your Present or Future LTCi Book of Business Worth?
Richard Pitbladdo, CEO, Commission Acceleration Corporation

What is the worth of your commissions?  What you could sell your commissions for is the definition of value.

Market for LTC renewals.  Sellers want to raise cash.  Buyers are specialty finance firms.

In-force Rate Increases

  • Bad if agent agreement excludes commissions on rate increase premium

  • Actually good if agreement does not exclude rate increase premium

  • Valuation impact depends on detailed carrier-specific and state-specific analysis

Description of buying process:  Review agency agreements, look over commission statements, enter data into actuarial pricing algorithm to generate price code. Two week process (approx.).

Next:  Distill three factors into primary, generic categories:  (1) Commissions schedule, (2) age of commission block and (3) detailed provisions in carrier agreement regarding how rate increases are handled. 

Absolute value of commissions reduces over time.  Policy lapses reduce the annualized cash flow over time.  Declining cash flow stream.

Value as multiple of annualized commissions is not flat. Valuation multiple tends to peak at five years and declines after.  Refer to recording for GRAPH.

Continual rate increases on in force business have an adverse impact on the value of a commission block if the agent agreement excludes commissions on rate increase premium.

Valuation impact depends on a very detailed carrier- and state-specific analysis. Buyers will pay more for blocks where the contract grants them commissions on rate increase premium.

12:48 PM - 1: 18 PM
National Economic Forecast: What's On Consumers' Minds As We Head Towards 2016

Knight Kiplinger, Editor in Chief, Kiplinger Washington Editors, Kiplinger Personal Finance

DC – Dysfunctional Capitol

Kiplinger offers staff LTC coverage through payroll deduction.  Kiplinger is very public about their support for LTC planning and know LTCi products very well.

Personal story of LTC coverage – having coverage greatly eased the financial burden on Mr. Kiplinger’s relatives recently.  Coverage paid for home healthcare.

LTCi is not an easy product to explain.  The Kiplinger publication carefully details how LTC coverage fits in a secure long-term financial plan.

“I want to talk today about America’s future: economic and political over the next two or three years.  Without wishful thinking.  Without partisanship.  No prescriptions and recommendations, just cool, dispassionate forecasts, which is what we have been doing at the Kiplinger Letter for over 90 years.”

First a snapshot of the present.

  • Economy growing

  • Long expansion

  • Job creation growing – almost back to 2007 employment level

  • Long surge of corporate profits

  • Amazing five years in stock market until recent correction

  • Inflation is tame.  No COLA for Social Security recipients.

  • Budget deficit

  • How long can expansion continue? Run out of steam? Collapse?

  • Slowing growth in China

  • Struggling Japan

  • “The EU is groaning under the burden of bailing out their profligate southern members and absorbing a huge wave of refugees from the Middle East.”

  • Sagging US exports

  • Plunge in global prices for raw materials

  • Fed printing money

“With all of this ominous stuff going on, should we assume that the expansion is just about over? Will next year, 2016, be the first year of sustained contraction? A mini recession since the Great Recession? I think not and I want to share with you some of the reasons:”

  • Some business sectors are struggling but others are doing well (auto, tech, airlines, healthcare, financial services, real estate).

  • Expansion of the last five years has been driven alternately by different actors: 1.) government via stimulus, budget deficits, Fed printing money; 2.) foreign buyers = export boom; 3.) business / capital spending and hiring; and 4.) consumers (consumer debt is down and people now have funds to afford purchases previously deferred).  Psychological: Wealth Effect

Looking at all the positives and negatives, it looks like we will see continued growth in the economy next year.

FED: When will they begin to change short term interest rates? Economy is too fragile to begin raising rates this year.  Odds favor the beginning of the Fed raising short term interest rates in December.   “easy-money regime”

End economic talk.  Start talking politics.

Democrats to nominate Hillary.  Who is her opposition? Not any of the moderate, conservative, republicans. 

GOP nominee likely to come from the far right of the party.  Perhaps Ted Cruz or Marco Rubio.  Very conservative candidate is unlikely to pull enough swing votes therefore Hillary is most likely to give Democrats another four years of control in the White House. 

Republican party doesn’t care: “They are going for ideological purity over electability.” They want to keep control of Congress and will likely do that in order to block the executive branch. 

It will be years before we see a viable budget out of Congress.  Budget by continuing resolution.  “Kick the can down the road.”

Too much democracy on Capitol Hill.  Gridlock.

“Gridlock created by extreme polarization in our society.” America secretly likes gridlock because it prevents either party from doing anything too extreme.

“Gridlock keeps each party as a counterweight to the excessive tendencies of the other.”

“The downside of gridlock, of course, is paralysis.” Paralysis prevents us from addressing necessary reforms: entitlement, Medicare and Social Security, and tax simplification.

“Political will is in very short supply.”

Acrimony in Washington.  Don’t hold your breath for meaningful change for the better, but know… “this too shall pass.”

1:19 PM - 1:37 PM
Financial Advisors: Your Planning Approach Is Incomplete! Now Finish The Job!
Laurence Moore, MBA, National Training Director, LTCi, John Hancock Insurance

“Engage in the LTC planning process … don’t be the gatekeeper to your client’s LTC planning.”

The audience Mr. Moore is trying to engage is the general financial professional, not people who specialize in LTC.

Objective: engage the “trusted advisor” with LTC planning

What is the sense of urgency?  Stats:  Risk and cost of LTC.  Clients very exposed to this risk and cost and coverage has not been addressed in the long-term financial planning process.

Through basic analysis of LTC risk and cost, LTC is a client’s greatest risk.

Why are people avoiding speaking to their clients about LTC protection?

  • Not comfortable talking about it.

  • Products are too complicated.

  • Underwriting is too difficult and too intrusive.

  • LTC planning is not part of their practice or perceived market.

  • Don’t have time.

BUT AREN’T YOUR CLIENTS WORTH THE EFFORT?

Impacts of LTC risk and cost:  The physical, psychological and financial reality of a long-term care event has a multi-generational impact on siblings, children and grandchildren.  “Ultimately, the nature of this risk is like a pandemic in terms of its impacts within a family structure.”

Barriers to the LTC conversation:

  • We over complicate the LTC planning issue.

  • Too closely associated with aging and the elderly.

  • LTCi products have perceived complexity and limitations.

  • Premium stability issues with the LTCi industry

BUT…

LTCi enjoys unique tax treatment and delivers superior financial leverage.

Restructure the conversation as a strategic sale.  The need for LTC is more closely associated with a disability that’s chronic in nature: physical or cognitive disability.

Potential buyer does not want to think about decades down the road, but does realize they could get hurt anytime.

Talk about LTC should be kept simple. Talk in terms of a disability that is either cognitive or physical in nature.

Age should not be specified in the definition of LTC.

Need for LTC impacts people of all ages.  Mr. Moore presents a list of famous people with corresponding LTC event age.

Keep the LTCi product discussion simple as well.  Think about LTCi as a strategic planning tool.  Four key areas:

  1. Generate cash flow.  Protection against a cash flow crisis.

  2. Duration of benefit

  3. Inflation protection

  4. Elimination period

Tax treatments of LTCi are advantageous.  Leverage of LTCi is amazing for what you pay. 

In comparing LTCi to self-insuring we find that LTCi is a better value in terms of financial investment.

12:37 PM - 12:47 PM
Sponsored Message:  Transamerica

1:38 PM - 1:56 PM
Five Winning Ways To Sell Linked Benefit Solutions; Different Approaches For Different Scenarios
Shawn Britt, Director, Long-term Care Initiatives, Nationwide Financial

What single women buy, but married women don’t.  82% of LTCI policies sold to married clients.  67% to women; 33% to men.  Men don’t think they need this; they’re married to their long-term care.  

We show women LTC; we show men return.  Women will look at benefits and features as she may have cared for a parent.  40% of spouses pre-decease the spouse needing care.  Show him a good return whether he needs care or not.  Guarantee a 9% rate of return tax adjusted.

Help for uninsurable spouse.  People get interested once they need to file a claim.  Indemnity policy for the healthy spouse.  Life insurance with indemnity rider.  Two potential solutions.

Do you have any CDs?  All should ask clients this question.  Bankers are pushing people into CDs with money that could be a LTC solution.  If they have CDs, maybe they can afford an LTC solution.  Better way to use “rainy day” funds.

Learn linked benefits pricing.  Confusing.  Does not follow traditional pricing of LTC.  Show different year durations. 

High Earners Not Rich Yet:  “Henrys.”  Use monthly premiums at a price they can afford.  Have your tool box ready.  Have the women talk first.  Get her concerns. 

1:57 PM - 2:15 PM
A Financial Advisor's Guide To "LifeSpan” Long-Term Care Planning
Kim Natovitz, CLU, The Natovitz Group

Planners say hard to bring this up.  Vegetable strategy.  Want kids to eat vegetables, start slow.  Work your way up to guacamole and finally to plain vegetables.  Meet them where they are.  Discuss LTC planning, but meet advisors where they care. 

Need to change the conversation.  We begin the conversation too late when they are close to retirement.  If important, why wait until age 50?  Somebody else will have talked to them if you don’t.  Needs to be part of every conversation you have with clients. 

Our health insurance plans exclude custodial care.  Potential significant costs uncovered.  Paying for children’s and grandchildren’s educations important to many.  Some retirement funds don’t transfer easily.  Medical underwriting does not improve with age.  More people with dementia under the age of 65. 

3 types of people:  who take your advice, don’t take your advice, or never heard your advice.  55% of clients say other expenses take priority.  Add a rider to those contracts they already have.  Prepare client for fact that may not be best fit for all time, but a start.  Too expensive?  How about the cost of care!?

Need to think about catastrophic riders when clients are buying disability insurance.  Traditional LTCI is not the best solution for everyone.  Look at all possibilities.  Maybe use an annuity to pay a LTCI premium.  Several case studies provided as examples.

2:16 PM - 2:26 PM
Sponsored Message: Nationwide

Sponsored message:  Nationwide, Shawn Britt, Director of LTC Initiatives at Nationwide.  Number one in availability (pay internationally for example), simplicity (all but one policy are cash indemnities), and ingenuity (only cash indemnity linked benefit now).

2:27 PM - 2:45 PM

The 5 Key Components of the New LTC Consumer Presentation
Pattianne Baran, Master Long Term Care Specialist, LTC Experts

Who I am and why I’m doing it.  Saw mother go through mini-strokes, broke her hip, laid all night on floor, major stroke, but didn’t kill her.  Had promised would not put her in a nursing home.  Cost of care in 1998 was over $250 per day.  Watched everything go out.  Lived on; ran out of money.  Father broke.  Sister’s husband diagnosed with Alzheimers.  Then her husband dies.  That was her LTC introduction.  Two by four to the head.  This info pulls people in.  Have to build trust right from the beginning.  Have to establish need.  Solve clients’ issues. 

Many of us are selling virtually.  Can’t see body language.  Still a sifting process.  Have to see what makes them tick; what’s going to work best.

After I tell them about my experience, I ask questions.  The more I know about you the more I can help you find a solution.  My job is to be your advisor.

What is your biggest worry?  Man:  asset protection.  Woman:  don’t want to be a burden on kids.  Turn it around and ask men about being a burden, etc.

2:46 PM - 3:04 PM
Selling The "50-50" Ultimate LTC Plan: Using Both Traditional & Linked To Get Best of Both
Jeff Merwin, CLTC, CLU, RHU, Capitol Metro Financial Services., Inc.

Story:  Goldilocks and the three bears; samples porridge; too hot, too cold, one just right.  Just right is what clients want to find.  Simplification is critical.  Choice is important.  Men are hunters; women are shoppers. 

Leverage is premium low enough and protection high enough it’s a good deal.  Traditional LTCI is the best leverage.  But objections are use it or lose it; premium increases; financial media criticism. 

Some people pivot to the hybrid product.  With life insurance connection, now the man costs more than the woman.  Don’t have compounded growth with the hybrid product.  Narrow market has $100K for both of a couple.  So, cut traditional LTCI by half.  Cut hybrid in half too to $50K each.  Add up the two pools of money.  Total premium is recouped by the life insurance benefit.  Don’t feel like I wasted money.  Do same thing but solve for premium, not benefits.

He tries with his advisors.  Simplify.  One page.  Traditional and hybrid.  What each does.  We have more tools and resources now than we have ever had in the industry.  Color code.  Summary:  Enhance value; increase leverage; cost recovery; one pager summary.

3:05 PM - 3:23 PM
Repositioning Qualified Monies To Fund Both Retirement & Long-Term Care
Michelle Prather, Marketing Director, OneAmerica Care Solutions

Talk about use of qualified money.  Asset Care III using qualified dollars.  How to use that for LTC expenses.  Why use qualified dollars?  For some it’s the only money they have.  People starting to turn 70.5 and facing RMD.  Many don’t need qualified dollars for income.

First cover the concept.  Aggressive, moderate and conservative assets.  What kind of money would they use first?  Usually use conservative assets.  Government gave tax incentives to get people to save.  Example.  Carve out $125K from your conservative funds.  Take money from right pocket and put it in left pocket.  Turn it into double.  Life insurance as death benefit.  Started these contracts 26 years ago.  Can use the whole $250K for LTC tax free. 

Guaranteed return of premium from day one.  Joint life contract.  If don’t quit and don’t live too long, death benefit goes to heirs.  Using this for LTC, $125K gives $250K.  Options up to age 85.  $5,000 per person per month.  One or both could use up whole month so have options to add more up to lifetime benefits.  Continuation of Benefits Rider, separate policy, no cash value, just going to pay like traditional LTCI with a $250K deductible.  Higher my deductible, the lower my premium.  Noncancellable.  Can never have a rate increase.  Life time coverage for $3,000.  Like a HSA. 

That’s how all their options work.  Has same tax advantages as traditional LTC insurance.  Use health savings account to pay the premiums.  Premiums locked in and lifetime coverage.

Look at qualified money aspect.  IRS will not allow us to take qualified money and put in life insurance without paying taxes on it.  Move money from one IRA to OneAmerica.  Taxable distribution goes toward RMD. 

Cover two people with one’s money; cover RMD; keep you from becoming poor.

3:24 PM - 3:34 PM
Sponsored Message:  OneAmerica:  Michelle Prather, Marketing Director, OneAmerica Care Solutions.  Four trends:  Boomers coming; medical technology, preparing for longevity; family dynamics, outsourcing care; government programs change, may not be available.

3:35 PM - 3:53 PM
Your #1-Ranked Internet Storefront: E-Z Ways To Create The Ultimate Linkedin Profile
Jesse Slome, National Award-Winning Marketing Professional

Even you can create and make a highly effective LinkedIn page.  Whatever kind of agent you are:  truism consumers today use the internet.  People will look you up on Google.  Give people the opportunity to check you out.  Number one result is his LinkedIn profile.  Paramount.  This is like your storefront.  If don’t have one, must get one over next two days.  Join world’s largest professional network.  Goal is to build into a colossus. 

Tips:  most important field is the name field.  Don’t be gimmicky.  With photo field 11times more looks.  Simple clean head shot.  Look business professional against a clean background:  400 by 400 pixels.  Search Google for resizing pictures.  

Branding headline:  120 characters to tell people most important things about you.  Look at other people’s profiles, competitor or someone you respect.  Make it stand out.  Key word rich.  Google looks for key words. 

Contact information:  click the pencil.  Be sure it’s complete.  People overlook Twitter, Facebook, websites.  Add links to your key words. 

Summary section:  one of the most important.  Write in first person and make it a conversation between you and your audience.  End with a call to action. 

Skills and expertise:  long section.  Use many skills and topics.  All ways you want to be found.  Complete your full profile.  Do not give up.  You can do it relatively quickly. 

Tip #8:  section on every linked in page allowing people to recommend you.  Often overlooked.  Jesse has over 100 recommendations.  Ask people to recommend you.  You can write their recommendations of you for them.  Join Groups.  LinkedIn just changed everything regarding Groups. 

Tip 10:  Promote your profile.  Google will promote it.  “See my LinkedIn profile.”  If you do this, you can track your results.  Most important thing you’ll do is create or improve your LinkedIn profile.

3:55 PM - 4:13 PM
Making A Virtual Sale Less Virtual; Success Strategies For Selling Remotely
Matt McCann, Principal/Owner, Long-Term Care Planning Specialist, McCann Insurance Services

Announced for president of USA.  Top producer years ago.  Face to face.  Sales management.  Marketing.  Last summer back into the field.  Went virtual.  Once you go virtual you will never go back.  Commute upstairs to downstairs.  Idea to be successful in virtual sales. 

Obstacles in virtual sales.  Fear danger of internet.  Screen sharing is safe but consumers may not know that.  May want to see actual human.  Conveying need without presence is difficult.  Education is not motivation.  Can't hold their hand.  Key to successful virtual selling, be as human as possible.  Not about technology.  If you embrace these things the extra work will give you more freedom, time, and money.

Start with strong logo.  His cost $45. Embrace social media.  Have personal email.  Good photo of yourself on all.  Makes you human.  Makes you real.  Make the process real.  Confirm appointments.  Include website in emails.  Interview not presentation.  Have fun; be real; human conversation; ask questions; follow up.  Explain why you’re unique, better than their local person.  Ask detailed health questions financial questions.  Not just for underwriting.  Find their motivation; then solve for them.  Every slide is a point of conversation.  Don’t read your slides.  Don’t be an educator. 

Attempt to close on first appointment.  Don’t lose the need, urgency, motivation.  He closes two/thirds in first appointment.  If can’t close, set the next appointment.  Take an application?  Send a welcome letter through the mail.  Avoid email which can be avoided.  Send priority mail.  Keep in touch during underwriting. 

Schedule delivery.  Congratulate them.  Have carrier send you the policy; you repackage with your folder; you send to the client.  Finally, thank them and ask them for referrals.  Stay in touch by email and snail mail.  Once you go virtual, you will never go back.

4:14 PM - 4:32 PM
Build Your Own Lead-Generating Website for $100 (In Under 5 Hours)
Jesse Slome, National Award-Winning Marketing Professional

100% of you want more leads; 99% will watch this and do nothing.  Hoping 1% may grow to 5%.  Nothing is more important than having a website.  He did it for one dollar in four hours.  You can do it too.  Why need a website?  The world has gone online. 

Step one:  name game.  You want your own domain name.  Most important property you’ll own.  Ease of recall for your users.  Google searches.  You have to create something new because you can’t afford to buy a great name.  GoDaddy he recommends.  Good customer service.  Allows you to research names.  “LongTermCareKansas” was available.  Did buy ShortTermCareInsurance.org.

Step two:  Design your website.  Trial and error, but pretty simple.  Select a theme from their templates.  Business instead of personal.  Start building your pages.  Just start playing around with it.  Drag and click.  Home page and secondary pages.  Name the pages with search engines in mind.  Use hyphens between words.  Keep it basic for starters.

Step Three:  Manage your pages.  Title should be unique.  Type in descriptions for each page.  Click publish when you like it.  That will save it if you mess up.  Navigation bar:  the one confusing area.  Has all the website pages linked.  Home page, primary page, pages underneath it.  Right click open settings button opening navigation panel click and drag.  Practice. 

Four hours later, he had simple website.  Top of page two on Google within a day. 

A website in and of itself not going to get you leads.  People need to know about it.  Promote your website on your business card, LinkedIn, etc. 

Add a new page every month on something.

4:35 PM - 5:15 PM
Ask The Underwriters Panel: Responding to online viewers' queries.
Moderator: David Hillelsohn, Brokerage Manager, Haslett Management Group
Actuaries from Transamerica, OneAmerica, Nationwide, Genworth, John Hancock

Underwriting critical part of the process.  Over last five years, more comprehensive.  More medical records requested. Screening for cognitive impairment, used to be 85, down to 65 now.  Much more intensive now.  Placement rates better for higher levels.  Placed more in standard class. 

Soliciting questions from audience.

Four things affect placement.  (Too fast to list; check recording.)

Advice on how to work with underwriters.  Make sure people know there will be cognitive testing for older people. 

Is end of year a better time to get a client through underwriting?  Expediency is more for the field than for underwriting.  We have three days to look at the application at Transamerica.

Pre-underwriting:  what percentage of declined cases are reversed on appeal?  Small percentage.  Prepare clients for interviews.  Get right the first time.

What percent of apps come in with cover letters?  Fewer on care solutions product.

How is information related to family history being used?  Genworth:  Coronary artery disease and dementia.  Viewed differently in LTCI than other insurance.

Underwriting for combo products net same result as for traditional LTCI? 

Too technical and detailed to follow and transcribe:  see video recording of this program for more.

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Updated, Monday, October 26, 2015, 10:23 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-042:  LTC NEWS AND COMMENT

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

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

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

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

  • Why Medicare Advantage members are so satisfied

  • Success Redefined: The Personal Impact Of The $8 Trillion Longevity Bonus:  Part 2 of a Two-Part Series

  • Unleashing The $8 Trillion Longevity Bonus:  Part 1 of a Two-Part Series

  • IRS Issues Long-Term Care Premium Deductibility Limits for 2016

  • 50-Somethings Advised to Calculate Their ‘Long-Term Care Savings Gap’

  • Long-term care insurance requires long-term planning

  • Insurance premiums: Is $100 the next Obamacare hurdle?

  • When Does A Reverse Mortgage Make the Most Sense?:  Quite seriously… when you don’t need it; Part III in a three-part series

  • Long-term care insurance helps protect family farm

  • Medicare Advantage and Traditional Medicare: Is the Balance Tipping?

  • Long-Term Care Takes Back Seat on Client Priority List

  • Almost half of elderly patients miscalculate life expectancy

  • Why some advocates are trying to push caregiving onto the 2016 presidential agenda

  • Advisers shy away from LTC insurance dialogue: Study

  • Why you shouldn’t worry about saving for long-term care  

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

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Updated, Friday, October 23, 2015, 09:51 AM (Pacific)
 
Seattle—

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LTC BULLET:  LONG-TERM CAREGIVING:  LATEST DATA

LTC Comment:  We source a cornucopia of new data and analysis on long-term elder caregiving after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** LTC CLIPPINGS subscribers received notification, including citations, links, key quotes and our commentary, for each of the reports highlighted in today’s LTC Bullet on or near their dates of publication.  Tune into LTC Clippings by contacting Damon at 206-283-7036 or damon@centerltc.comLTC Clippings subscribers know more news and analysis faster than their prospects, clients, colleagues or competitors. ***

*** REVERSE MORTGAGES:  We recently sent the LTC Clipping below about a series of articles on how to use reverse mortgages for retirement and longevity planning.  Center Regional Representative Romeo Raabe from Green Bay, Wisconsin replied with this creative extra idea: 

“And if you use the proceeds of the reverse mortgage to fund a life income annuity from State Life--the one that underwrites your health so that the shorter your life expectancy, the better the payout--you may end up with lifetime benefits far greater than any other possibility to fund your care.  I have a homeowner in Green Bay who is still in her home with five days per week home care funded by this method from a reverse mortgage.”

10/21/2015, “When Does A Reverse Mortgage Make the Most Sense?Quite seriously… when you don’t need it; Part III in a three-part series,” by Stephen R. Greenberg, Life & Health Advisor

Quote:  “Let’s take a quick look at the last two articles in this series and review what we’ve discussed so far. In the first, ‘A Practical Solution for Funding Longevity,’ I discussed that a reverse mortgage line of credit, when used in addition to, or in place of, long-term care insurance (LTCI), can be an effective way to support a client’s long-term care protection plan, particularly if the client is self-insured, or can’t afford or does not qualify for LTCI.

“In article two, ‘Reverse Mortgage Adds Alternative Retirement Funding Strategy,’ we talked about the common strategies of the ‘Three-legged Stool,’ delaying Social Security, working longer and saving more, and how a reverse mortgage fits within those strategies. . . .

“The use of a reverse mortgage as part of a client’s comprehensive overall retirement plan is a strategy that’s increasingly being embraced by leading financial experts. How can you incorporate home equity into a retirement plan for the best possible outcome for your client? The first step is education, and I hope these articles have helped.”

LTC Comment:  This series of articles is well worth reading. ***

*** LTC SALES SUMMIT ONLINE.  Jesse Slome of AALTCI reminds us that Tuesday, Oct. 27th is the date for the free LTC Sales Summit broadcast from Washington D.C.  If you’ve registered already, just click here on that day at that time and watch!  Otherwise, go to www.insuranceexpos.com and sign-up for access.  The broadcast starts at 8:15 AM eastern and continues all day (until about 5:00 PM).  Most sessions are 15-to-18 minutes presented by top LTC industry experts.  SUGGESTION:  Click here and print out the schedule.  That way you can pick the sessions you won't want to miss!  Your Center for Long-Term Care Reform will be tuned in.  Be there too. ***

*** 2016 LTCI TAX DEDUCTIBILITY LIMITS PUBLISHED: 

10/22/2015, “IRS Issues Long-Term Care Premium Deductibility Limits for 2016,” ElderLawAnswers

Quote:  “The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2016 taxes as a result of buying long-term care insurance.”

Attained age before the close of the taxable year

Maximum deduction for year

40 or less

$390

More than 40 but not more than 50

$730

More than 50 but not more than 60

$1,460

More than 60 but not more than 70

$3,900

More than 70

$4,870

LTC Comment:  We’ve updated these numbers in The Zone here:  Deductibility Limits for Long-Term Care Insurance.  There you’ll find the LTCI tax deductibility limits for every year all the way back to the first in 1997, after passage of the Health Insurance Portability and Accountability Act of 1996 that authorized LTCi tax deductibility.  Need a reminder of your user name and password for access to The Zone?  Contact Damon at 206-283-7036 or damon@centerltc.com. ***

LTC BULLET:  LONG-TERM CAREGIVING:  LATEST DATA

LTC Comment:  In the past month, three major reports on elder caregiving in the United States have appeared.  Today’s LTC Bullet gives you links to and highlights of those reports with our comments.

Report #1:  “Unpaid Eldercare in the United States —2013-14:  Data from the American Time Use Survey,” Bureau of Labor Statistics, 9/23/2015

Highlights:  “Sixteen percent (40.4 million) of the civilian noninstitutional population age 15 and over provide unpaid eldercare, the U.S. Bureau of Labor Statistics reported today. Of the 40.4 million eldercare providers, a majority are employed (61 percent) and nearly one-half are employed full time (47 percent). These estimates are averages for the 2-year period of 2013-14; combining the 2 years of data facilitates a more in depth analysis of eldercare.”

LTC Comment:  This BLS report contains extensive data on unpaid caregiving in the USA, but no estimate of its dollar value.  For that ($470 billion per year) see:  Susan C. Reinhard, et al., “Valuing the Invaluable: 2015 Update, Undeniable Progress, but Big Gaps Remain,” AARP Public Policy Institute, July 2015, p. 1.

Report #2:  “Beyond Dollars: Caregivers Face Career Crisis Resulting from Lack of Long Term Care Planning, According to Genworth Study,” Genworth, Market Watch, 10/1/2015

Highlights:  “Providing care for loved ones has taken a toll on the careers of half of caregivers surveyed in Genworth's latest Beyond Dollars study, with 11 percent actually losing their jobs and another 10 percent having to change careers. That's in addition to the other financial, physical and emotional impacts of caregiving examined in the study. ”

LTC Comment:  It’s not just the money—a powerful message for prospects in denial of LTC risk.  Read this report for details on how caregivers and the care they provide are changing; how caregiving negatively impacts caregivers’ health, careers, and retirement savings; and how planning mitigates stress and negative impacts.

Report #3:  “The Disproportionate Impact Of Dementia On Family And Unpaid Caregiving To Older Adults,” by Judith D. Kasper, Vicki Freedman, Brenda C. Spillman, and Jennifer L. Wolff, Health Affairs, 10/9/2015.

Highlights:  “The number of US adults ages sixty-five and older who are living with dementia is substantial and expected to grow, raising concerns about the demands that will be placed on family members and other unpaid caregivers.  . . .  We found that among family and unpaid caregivers to older noninstitutionalized adults, one-third of caregivers, and 41 percent of the hours of help they provide, help people with dementia, who account for about 10 percent of older noninstitutionalized adults.  Among older adults who receive help, the vast majority in both community and residential care settings other than nursing homes rely on family or unpaid caregivers (more than 90 percent and more than 80 percent, respectively), regardless of their dementia status. Caregiving is most intense, however, to older adults with dementia in community settings and from caregivers who are spouses or daughters or who live with the care recipient.” (From the Abstract, p. 1642) 

LTC Comment:  You can read the Abstract of this article for free here.  You can subscribe to Health Affairs or purchase only this article here.

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Updated, Monday, October 19, 2015, 11:17 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-041:  LTC NEWS AND COMMENT

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

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

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

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

  • Winning Hearts And Minds By Shocking Them…

  • To Age Well, Change How You Feel About Aging

  • 5 kinds of insurance you might need but not know it

  • Got $730K saved for nursing care? Dementia could cost that much

  • The Disproportionate Impact Of Dementia On Family And Unpaid Caregiving To Older Adults

  • Caregiver Thought Leader Interview: Dr. Samuel Henderson

  • What’s In and What’s Out? Medicare Advantage Market Entries and Exits for 2016

  • Knight Kiplinger to Keynote at Long Term Care Insurance Association Summit

  • CDC: 3 in 4 nursing home prescriptions are wrong

  • You need to Understand Medicaid if you need Nursing Home Care

  • Goldman's Fels Says Long-Term Care Insurance Is `Ripe for M&A'

  • Mortality rates, hospital admissions higher in for-profit LTC facilities

  • Top VCs target $7 trillion senior-care market: Marc Andressen and Mitch Kapor are betting on the booming longevity economy

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

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Updated, Friday, October 16, 2015, 10:27 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC UN-AWARENESS MONTH

LTC Comment:  After years of “LTC Awareness Months,” why does LTC denial still prevail?  We explain after the ***news.***

*** LTC AWARENESS MONTH began in 2001 as “LTC Awareness Week” promoted by Jesse Slome and the American Association for Long-Term Care Insurance.  In 2004 or 2005, the week dedicated to awakening the public about LTC risk and cost grew to a month.  This campaign of education and marketing aimed at cracking through the seemingly impenetrable wall of LTC ignorance and denial continues unabated.  Kudos to Jesse and AALTCI for their hard work and unflagging commitment to this mission. ***

*** LTC CLIPPING SAMPLE:  Every day we send LTC Clippings subscribers real time news they need to know about LTC services and financing with our comments.  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe by upgrading your membership to “Premier” ($250 per year).  That’s just an extra $100 for most Center members and only a little more than $20 per month for new subscribers.

10/14/2015, “Caregiver Thought Leader Interview: Dr. Samuel Henderson,” by Gary Barg, Today’s Caregiver

Quote:  “It has been 12 years since any new compounds have been advanced for Alzheimer’s disease. I think that reflects our fundamental misunderstanding of the disease. As you know, the primary hypothesis for Alzheimer’s disease is what is called an amyloid cascade hypothesis. Unfortunately, all of the large phase, (what are called Phase Three efficacy trials), have failed. I think the field is really struggling now with what really does cause Alzheimer’s disease and how we can tackle that best.”

LTC Comment:  This interview is one of the most interesting things I’ve read recently on Alzheimer’s Disease. ***
 

LTC BULLET:  LTC UN-AWARENESS MONTH

LTC Comment:  We’d like to thank Center Bronze corporate sponsor United Security Assurance for commissioning the following article.  Despite the heroic efforts of so many for so long, LTC awareness still trails our hopes and expectations.  Redoubling our efforts may help, but recognizing the cause of the problem and solving it is the permanent solution.  Toward that end, we offer . . . 

“LTC Un-Awareness Month”
by
Stephen A. Moses

You know what they say about doing the same thing over and over again but expecting a different result.  Yeah.  It’s nuts.

Yet, come November 1 every year, that’s what we continue to do.  We lament the public’s denial of long-term care risk and cost.  We repeat all the reasons to plan early and responsibly.  We urge government to educate, advocate and incentivize LTCI.  We implore consumers to buy the product.

What has it gotten us? 

Private long-term care insurance sales are down precipitously and neither the federal nor the state governments have lifted a finger lately to help.

What challenges do the “AMGs” (altruistic, masochistic geniuses) who still sell private LTC insurance face?  To name a few . . .

  • A public that thinks Medicare pays for LTC
  • Prominent carriers leaving the market
  • Rising premiums
  • Increasing underwriting declines
  • A shortage of good leads
  • A demographic sweet spot (40 to 50 year olds) that isn’t

But those are only the symptoms of LTCI’s malaise.  As it is for the medical profession, so it is for insurance:  if you treat the symptoms of disease instead of its underlying cause, you run the risk of making the ailment worse instead of better.

What is the cause of LTCI’s disorder?  Easy to explain; much harder to fix.

Government (Medicaid and Medicare) has paid for most expensive long-term care since 1965, not only for the poor, but also for the middle class and even the affluent when they take advantage of “Medicaid planning.”

Easy access to government financing after the insurable event occurred desensitized consumers to the risk and cost of long-term care thus enabling widespread denial that on the face of it seems irrational, but isn’t because of the Medicaid safety net.

Overspending on social engineering including LTC financing landed the state and federal governments in a financial morass of overspending, overpromising, burgeoning debt and unfunded liabilities leaving few resources to promote private LTC planning.

Futile monetary efforts to boost the economy by pushing interest rates down to nothing undercut profitable distribution of any insurance product based on building reserves, including private LTC insurance.

Do you see the connection between the symptoms and the causes? 

  • The public still mistakenly thinks Medicare pays for LTC because the fact that Medicaid actually does pay has anesthetized generations to the risk and cost of LTC.
  • Prominent carriers left the market because government fiscal and monetary policy crowded out demand for LTC insurance and shrank the product’s profitability.
  • Raising premiums was the responsible private-sector reaction to government-induced, artificially low interest rates that obviated lower premiums.
  • Increasing underwriting declines were another way to shore up LTCI’s financial viability in the face of negative public policy.
  • The shortage of good leads and the lack of interest among 40 to 50 year olds are just another way of saying the public has been duped into a false sense of security.

So what should we do about this problem?  Will attacking the symptoms with more studies, education and importuning the government for tax subsidies succeed?  Decades of trying those measures have fallen flat.

So how can we tackle the real cause?  I recommend two approaches.

  1. LTCI producers need to address the causes, not just the symptoms of consumers’ denial.  Learn to understand why the public is in denial about LTC risk and cost.  Show them why ignorance isn’t bliss.  Explain why going bare and hoping for the best is a plan to fail, not just a failure to plan.  To make those arguments, you’ll need to know why, how and to what extent the social safety net for long-term care is vulnerable and untrustworthy.  Find the answers at www.centerltc.com and in our LTC Bullets, LTC E-Alerts and LTC Clippings.
  1. LTCI carriers need to shift some of their resources toward effective public policy advocacy.  Beseeching the federal and state governments for tax incentives, education programs, and all forms of rent-seeking is fruitless.  Show instead how targeting scarce public LTC resources to the truly needy will save taxpayers money and simultaneously redirect the middle class and affluent to save, invest and insure privately for long-term care.

Easier said than done you say?  Well, yeah!  We’ve been pursuing those approaches at the Center for Long-Term Care Reform since 1998.  No one knows better than we do how difficult the mission is.  But we’ve had major successes before, as when the Deficit Reduction Act of 2005 tightened Medicaid financial eligibility and unfettered the LTC Partnership Program.  We can have more and bigger successes in the future as the government’s ability to fund programs that discourage private LTC planning becomes less and less viable.

In the meantime, your Center for Long-Term Care Reform is fighting the good fight for responsible LTC planning and rational LTC public policy.  We bring you critical information, trenchant analysis, and best practices every week in LTC Bullets, LTC E-Alerts and LTC Clippings.  If you’re not a member, join.  If you are a member, keep the faith.

We can and will prevail.  Failure is not an option.  Too much is at stake.  When we confront the causes of the LTC financing crisis, not just the symptoms, we will get the desired result.

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Updated, Monday, October 12, 2015, 11:20 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-040:  LTC NEWS AND COMMENT

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

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

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

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

  • Kiplinger's Personal Finance - Trade-offs that make long-term care coverage more affordable

  • Untangling the Medicare Premium Mess -- And What It Means For You

  • Medicare Advantage star ratings reveal mix of high, low performers

  • States 'shocked' they're on the hook for rising Medicare premiums

  • Retiree Health-Care Costs Rise to a Cool Quarter Million

  • Seniors Dump Long-Term Care Insurance Just When They Need It Most

  • The looming Medicaid time bomb

  • Retiring Into Uncertainty: One-in-Three Americans afraid of losing their independence in retirement

  • Why critical illness sales may be falling flat

  • I put my father in a nursing home at age 98. Then I brought him home

  • When care turns costly, patients leave private Medicare

  • GAO: Safety net programs account for billions in improper payments

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

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Updated, Friday, October 9, 2015, 10:38 AM (Pacific)
 
Seattle—

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LTC BULLET:  ANOTHER LTCI HIT JOB?

LTC Comment:  What shall we make of this new attack on private long-term care insurance?  Answers after the ***news.***

*** REGISTRATION IS OPEN for the 2016 Inter-Company Long-Term Care Insurance Conference to be held March 13-16, 2016 at The Grand Hyatt in San Antonio, Texas.  Organizers expect over 1000 attendees at this premier educational and net-working event of the private LTCI industry.  Insurance producers should apply for the “Producer Scholarships” ($600 price discount).  Broker General Agents can receive a $400 discount by entering “BGA” in the Coupon Code Box.  LTC Bullets and your Center for Long-Term Care Reform will be on hand to cover the conference, reconnect with old friends, and meet some new ones.  Register and make your hotel reservations early here. ***

*** HOLD ON:  Long-time friend of the Center George Braddock of Miami, Florida shared this note, which we’ve abbreviated considerably, that he sent to a representative of the state’s insurance commission:  “Dear Mr. Atwater:  While holding on the phone for the insurance department, I heard your many announcements.  It occurs to me that an important one is missing:  a message encouraging Floridians to explore the Florida Partnership for Long-Term Care insurance.  Don’t you agree?  Of course, adding an on-hold message is a small start, but it’s a start.  I’m sure if the right state leaders committed to a proper public campaign of outreach and education, many other ways to get out the word would be added.  What say you, Mr. Atwater?  Respectfully, George”  It’s a good idea all states should consider.  Even better:  don’t leave callers on hold interminably. ***

*** 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. ***

LTC BULLET:  ANOTHER LTCI HIT JOB?

LTC Comment:  Boston College’s Center for Retirement Research (BC/CRR) really has it in for private long-term care insurance.

Last November, BC/CRR published “Long-Term Care:  How Big a Risk?”  This report concluded that “previous research understates the risk of going into care but overstates the average duration of stay of those ever institutionalized” and that “most single individuals should not buy insurance given the availability of Medicaid.”  (p. 1)  The national media popularized these dubious findings by saying long-term care is not as big a risk as previously thought and that people should plan for Medicaid instead of getting private LTC insurance.

We refuted BC/CRR’s findings and recommendations in “LTC Bullet:  How Careless Economists Boosted LTC Risk” on December 12, 2014.  We also lambasted the national media in the same LTC Bullet for uncritically accepting and promulgating the think tank’s erroneous findings and bad advice.

Now, the Boston College economists are at it again.  In “Why Do People Lapse Their Long-Term Care Insurance?” (October 2015), authors Wenliang Hou, Wei Sun, and Anthony Webb (all three of whom also bylined the earlier report) conclude:

First, low-wealth and low-income individuals are more likely to lapse their insurance policies. Second, the study finds no evidence that individuals are lapsing strategically, i.e., because they believe they have a low probability of needing care. Third, and importantly, the study finds that lapses are common among the cognitively impaired, perhaps reflecting poor financial decision-making.  (p. 4)

Time magazine saw BC/CRR’s latest report and ran with “Seniors Dump Long-Term Care Insurance Just When They Need It Most,” by Dan Kadlec last Tuesday (October 6, 2015): 

Buying long-term care insurance has always been a dicey proposition.  It’s expensive.  You may never need it.  Insurers may later jack up the premiums.  And new research shows that a third of those who buy the coverage let it lapse—forfeiting benefits they had paid for, often just as they are about to be eligible to collect.

If the national media’s response to BC/CRR’s earlier report is any indication, we’ll see much more of such unfair, unwarranted and inaccurate coverage in the weeks and months ahead. 

Critique of “Why Do People Lapse Their Long-Term Care Insurance?”

What exactly is wrong with this latest salvo from BC/CRR? 

(1)  Data and Interpretation:  The data on which these analysts base their conclusion that LTCI “lapse rates”—the term as they use it is a misnomer—are high comes from a now-outdated 2011 Society of Actuaries report.  They conclude that

At current lapse rates, men and women age 65 have, respectively, a 32- and 38-percent chance of lapsing prior to death, assuming that lapse rates remain at the same levels observed for recent cohorts.  (p. 1)

We queried highly regarded LTC insurance actuary Roger Loomis regarding this data.  He explained:

Three thoughts on lapse rates.  First, whether the lapse rates in the industry are “very high” as they claim is subjective.  Perhaps without exception, LTC lapse rates are the very lowest lapse rates in any type of private insurance.  LTC lapse rates are much lower than what we thought they’d be 20 years ago . . .

 

Second, the lifetime lapse rates they mention in the article are based upon an old industry study.  Lapse rates have continued to go down since then.  According to the most current data, if somebody purchases a policy at age 65, less than 27% will eventually lapse—the rest of the policies will end either because of benefit exhaustion or death.  If somebody purchases a policy at age 50 and still has it at age 65, there is less than a 15% chance they will ever lapse.

 

Third, whether lapse rates being “high” is a good thing or a bad thing is somewhat complicated.  If lapse rates are high, that causes lower premiums, no rate increases, and higher profits—all good things (and a predominant focus in the insurance industry).  However, if lapse rates are “high,” that also means fewer people who once purchased insurance will still have that insurance in force when they need it—that’s something you, me, and the folks at Boston College can all agree is a bad thing.

 

“Wait,” I replied, “I thought LTCI lapse rates turned out to be much lower than previously expected, down around 1% instead of the 5% to 8% originally anticipated.”  Loomis explained:  

Yes, ultimate lapse rates are now less than 1% per year.  That is an annual rate.  With new issues, lapse rates might be in the 5% range for the first few policy years, and then quickly drop to less than 1% per year thereafter. 

 

The Boston folks are aggregating the numbers differently.  When they say a policy has a 32% “lapse rate”, what they mean is that if a company sells 100 policies, 32 of the policies will eventually end due to voluntary lapsation, with the other 68 policies eventually ending due to policyholder death (the other option is policies ending due to benefit exhaustion, but I can’t tell whether they included that in their calculations).  I think this is an important number to look at—especially when your concern is private LTC as a solution for financing actual LTC care.  But it is confusing to call this a lapse rate—lapse rates being expressed annually is a well-established standard and is based on actual data.  The number of people who will eventually lapse is based upon projections that use assumed future mortality and lapse rates.

 

It’s important to understand that most lapses happen in the first few policy years before the policyholder is really committed to the policy and before they have invested very much into it.  Somebody changing their mind about a policy in the first few policy years is very different than somebody lapsing after 20 years because they become too poor and sick to pay the premiums.  The authors didn’t discuss this distinction. 

(2)  Post hoc, ergo propter hoc fallacy:  Fine, let’s give the Boston College authors this much:  it’s unfortunate that so many people who originally purchase private long-term care insurance end up dropping their policies before they can collect on them.  Let’s even accept for the purpose of argument that people tend to be more likely to lapse their LTCI policies when they are less prosperous economically (“Financial Lapsers”) or cognitively impaired (“Forgetful Lapsers”) rather than “strategically” because they conclude they are unlikely to need care after all (“Strategic Lapsers”).

What these authors miss is that an entirely different reason may explain why Financial and Forgetful Lapsers drop their LTCI policies.  The authors commit the post hoc, ergo propter hoc fallacy by assuming that poor economic status or cognitive impairment cause lapses because these conditions precede the action to drop the policy.  But what if these conditions are merely symptoms and not the actual cause?

What might such an actual cause be?  The closer people come to needing long-term care, the more they learn about the available LTC funding sources.  The media drums into everyone’s heads that Medicaid pays for long-term care but only after people become totally impoverished first.  Some people buy LTC insurance to avoid just such a financial disaster.  They may pay LTCI premiums for many years under this assumption.

But the closer they come to actually needing care, the more they and their relatives (potential heirs) begin to worry and to research all available funding sources for LTC.  They read magazines, listen to radio ads, consult elder law attorneys, or see reports by the Boston College Center for Retirement Research, all of which sources tell them they’re suckers to pay for their own LTC or LTCI premiums when the government will pick up the tab.  They quickly learn that Medicaid financial eligibility rules allow people with high incomes and practically unlimited exempt assets to qualify and that even wealthier people can easily self-impoverish artificially to become eligible.  We’ve explained how this works and documented how commonplace it is in many articles, speeches and reports here.

Easy access to Medicaid after the insurable event occurs is a double whammy for private LTC insurance.  It deflates original demand for the product and it clearly inflates later lapses.  The BC/CRR authors do not choose to understand how Medicaid actually works, so they miss and consequently underestimate the welfare program’s disproportionate impact on LTC financing, consumer behavior and the long-term care insurance market.

(3)  Ideological Bias:  Why would accomplished professional economists fail so egregiously to see an obvious alternative explanation for their findings?  Why would they ignore Medicaid, the elephant in the room of long-term care financing?  What makes them attack private LTC insurance for high lapses and overlook the real culprit?  I think the answer is ideological bias.  Too many academics wear intellectual blinders that prevent them from seeing the shortcomings of public LTC financing and the benefits of private LTC financing.

Consider Social Security and Medicare for example.  These mandatory public “social insurance” programs do not allow non-participation or lapses.  Like private long-term care insurance, Social Security and Medicare failed to set aside enough reserves to meet future benefit promises.  But unlike private LTCI, which has responsibly adjusted premiums to provide adequately for paying future claims, Social Security and Medicare have done nothing to offset their tens of trillions of dollars of unfunded liabilities.

Generations X, Y, and the Millennials look at Social Security and Medicare and realistically conclude that they can expect to receive from those programs, if anything, only a paltry return.  The smart thing for them to do would be to lapse these worthless social insurance policies and save, invest or insure privately.  But that is not an option because these programs are compulsory, enforced by the threat of government force.

Do you begin to see why analysts who prefer to compel people to participate in self-destructive financial boondoggles are prone to miss the perverse incentives in public programs like Medicaid?  Is their onus toward private long-term care insurance more understandable now?

Conclusion

Thanks to the national media, which share the same ideological bias, and because of this report from BC/CRR, millions of people around the country will learn one more reason not to plan responsibly for long-term care risk and cost.  We conclude as we did after these authors’ earlier foray into LTCI bashing:

Facts have consequences.  By focusing only on technical economic analysis and ignoring the substantive reality of how Medicaid actually works, these authors, this work, and the misbegotten reporting it engendered increased consumers’ LTC risk, swelled Medicaid’s liability for future LTC costs, and further damaged the struggling LTC insurance industry’s prospects.

Unfortunately, only a handful of you faithful readers will see our rebuttal of this report.  But we hope we’ve armed you with some ammunition to counteract its damage with the prospects and clients whose lives you touch.

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Updated, Monday, October 5, 2015, 11:19 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-039:  LTC NEWS AND COMMENT

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

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

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

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

  • Use reverse mortgage for long-term care or insurance?

  • Why Obamacare's Cost Control Efforts Aren't Working

  • Critical illness insurance sales show improvement

  • New York Life Selected as Exclusive Long-Term Care Options Provider to 37 Million AARP Members

  • How to sell critical illness (and why you should)

  • Independent advisors dominate in life but not in CI insurance

  • Beyond Dollars: Caregivers Face Career Crisis Resulting from Lack of Long Term Care Planning, According to Genworth Study

  • 1996 report warned CalPERS about long-term care insurance pricing

  • Understanding Medicaid reimbursement

  • Social Security puzzles future beneficiaries: survey

  • Supreme Court urged to halt new pay rules for home aides

  • 300 million seniors excluded from long-term care

  • Billionaire Preaching Doom for Social Security and Medicare: Is He Right?

  • Financial State of the States

  • Family Spillovers of Long-Term Care Insurance

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

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Updated, Friday, October 2, 2015, 10:30 AM (Pacific)
 
Seattle—
 

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LTC BULLET:  THE LTCI SOURCEBOOK

LTC Comment:  Do you have AALTCI’s 2015-16 Sourcebook for LTCI information?  If not, you should.  Why, after the ***news.***

*** LTC SALES SUMMIT:   Jesse Slome of AALTCI reports “This is your final reminder to sign-up for the FREE online broadcast from the 2015 National LTC Solutions Sales Summit.  The conference takes place on Tuesday, October 27 and the video broadcast begins at 9:00 AM (Eastern Time).  You can watch as little or as much as you like during the day.  PRE-REGISTRATION IS REQUIRED to receive the web access information.   To see the program line-up and register click here now or go to http://www.insuranceexpos.com/LTC-Solutions-Sales-Summit-2015-signup/  ***

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LTC BULLET:  THE LTCI SOURCEBOOK

LTC Comment:  Having come up for air after a lengthy stint of research and writing on our latest project, I began a long overdue browse of “The 2015-2016 Sourcebook for Long-Term Care Insurance Information.”  The Sourcebook is Jesse Slome’s invaluable freebie for members of the American Association for Long-Term Care Insurance (www.aaltci.org.)  I’m going to give you a preview of the volume’s informative content below, but first, here’s Jesse’s “two cents” about the organization’s flagship publication.

The Sourcebook is more than just a compendium of the latest facts and data relevant to selling long-term care insurance … it answers the questions your clients and prospects will be asking you.  Plus it contains some beautifully designed, generic marketing tools that you can use to convey impactful information to prospects.  To see the Table of Contents for the 2015-2016 LTC Sourcebook and some examples of pages, click here

 

Copies are sent to all individuals who join the American Association for Long-Term Care Insurance.  The cost to join is $98 for one year and the cost of the Sourcebook alone would sell for $99.  But it’s yours at no charge when you join.  In addition, members are listed on the Association’s Find A LTC Insurance Agent online directory.  This is the #1 national resource for consumers seeking information on long-term care insurance.

OK, what’s in the LTCI Sourcebook?  Lots of data.  You’ll find average premiums for good, better, best LTCI policies for male and female singles and couples; sales data for tax qualified LTC riders; covered lives and market share for 2013 and 2011 plus 2013 earned premium for every LTCI carrier; 2012 and 2014 inforce lives by state; and a section on key findings from recent studies.

What really captivated me, however, were the graphs and charts in the Sourcebook that bring the data to life.  One explains how “We’re Terrible at Predicting How Long We’ll Live.”  For example, people who said they’d have a 30% chance of living to age 75 actually had a 70% chance.  Don’t you think facts like that could be a wake-up call for people in denial about the need for LTCI?

Getting old isn’t easy.  At age 85+, 41.5% of people have three or more disabilities.  Hard reality is less easy to dodge when you’re staring the proof in the face.  Almost 2/3 of Alzheimer’s patients are women.  Good husbands can’t evade that niggling tidbit by failing to insure their wives at least.

We all know Medicare and Medicaid are bankrupt, but most Americans don’t.  The Sourcebook has a whole page of eye-opening documentation of those programs’ shortcomings and long-term vulnerabilities.  You’ll see one chart that tells you how old you’ll be in 2030 followed by another chart that shows Social Security, Medicare and Medicaid will consume one-seventh of our Gross Domestic Product in that year, the same year Medicare’s trust fund is depleted!

Scare tactics?  Bull-pucky.  Tell it like it is!  Just be very sure you have the data and sources to back it up.  The Sourcebook has them.

Inclined to wait?  LTCI applicants ages 70-79 are declined 44% of the time.  For ages 60 to 69, the decline rate is 25%.  Reasons to act followed by reasons to act NOW.

But is it worth the cost?  Another full page answers that question.  Check out your lifetime chance of using your benefits and a comparison chart of insuring vs. saving.

Wonder where claims begin?  In homes far more than nursing homes.

Another whole page documents why premiums are unlikely to rise much in the future, putting to rest one of the biggest objections against LTCI.

OK, you get the idea.  But I’ve barely scratched the surface.  Oh, and by the way, free electronic versions of the Sourcebook’s impactful infographics are available to AALTCI members.

Bottom line.  Whether you sell LTC insurance or only advise clients about financial planning in general, you should own, study, and share the information packed into the Sourcebook.   And it’s free to AALTCI members.  Such a deal.

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Updated, Monday, September 28, 2015, 9:14 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-038:  LTC NEWS AND COMMENT

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

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

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

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

  • 50 Must-Know Statistics About Long-Term Care: The skinny on usage, cost, insurance, caregivers, and more

  • Unpaid Eldercare in the United States —2013-14: Data from the American Time Use Survey

  • Short-Term-Care Insurance Policies on the Rise

  • Communities Struggle to Care for Elderly, Alone at Home

  • The Effect on States of Increasing the Medicare Eligibility Age

  • A Practical Solution for Funding Longevity: How reverse mortgages can help manage the long-term-care risk

  • Poverty and the Social Welfare State in the United States and Other Nations

  • Some Legal Issues at the Intersection of Elder Law and Estate Planning

  • Court: Federal Nursing Home Act doesn't create private rights

  • An Aging Population, Without the Doctors to Match

  • MedAmerica introduces new long-term care insurance product

  • Millennials and the long-term care challenge

  • When $500,000 In Social Security And Medicare Benefits Isn't Enough

  • Medicare premiums for most won't increase in 2016, but higher-income seniors could see a big hike

  • New cancer cases to reach nearly 2.4 million in 2035 – AACR

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

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Updated, Friday, September 25, 2015, 10:56 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTCI UPDATE FROM BROKER WORLD

LTC Comment:  Broker World magazine has published its annual long-term care insurance surveys for 2015.  Highlights after the ***news.***

*** WHY SUBSCRIBE TO LTC CLIPPINGS:  To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge.  Good LTC planning requires understanding the six “blind men” of long-term care and how they interact:  government, consumers, advocates, providers, insurers and financiers.  For the details on that observation, read “The Elephant, The Blind Men and LTC” here.

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

Just this week, our LTC Clippings  documented (1) how higher cancer incidence combines with declining cancer death rates to increase the future need for long-term care; (2) how the million dollars a typical couple can expect to receive from Social Security and Medicare is inadequate and must be supplemented by private LTCI; (3) how millennials are a target-rich demographic for LTCI sales; (4) how a dearth of geriatricians threatens care for the aged who are unable to command access by paying privately; (5)  how and why debt is spreading like a malignant tumor among the elderly making LTCI protection more important than ever; (6) how a stand-by line of credit on home equity could make LTCI premiums affordable for millions more prospects; (7) how boosting the Medicare eligibility age would devastate state Medicaid programs making the welfare LTC safety net even worse than it already is; and much more.

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

LTC BULLET:  LTCI UPDATE FROM BROKER WORLD

LTC Comment:  Every year Broker World magazine publishes surveys of traditional and worksite long-term care insurance.  The surveys’ authors are well known LTCI experts, Claude Thau, Dawn Helwig, and Allen Schmitz.  We’ve culled a few highlights from this year’s surveys below.  Check out all the details in the July and August issues of the magazine.  Be sure to subscribe to Broker World if you haven’t already.

It’s clear from the following data that the private long-term care insurance industry continues to face daunting challenges.  On the other hand, it is equally true that private LTCI is playing a bigger and bigger role in financing extended care as its policies mature and claims increase.  What the future holds is anyone’s guess, but a likely scenario is that publicly financed long-term care will face harder times, and the obstacles holding back LTCI will retrench.

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Excerpts from “2015 Long Term Care Insurance Survey,” Broker World, July, 2015

  • “The 15 carriers that reported individual sales to this survey sold 133,660 policies ($316,522,515 of new annualized premium) in 2014. We estimate that these carriers sold more than 99 percent of the stand-alone LTCI industry’s 2014 sales.”
  • “Five insurers increased sales, three of them by 50 percent or more. However, continuing past trends, stand-alone LTCI sales dropped 23.8 percent from 2013 in terms of lives insured and 21.8 percent in terms of annualized premium.”
  • “Because of the strong persistency of LTCI business and in-force policy price increases, in-force premium increased 2.6 percent from year-end 2013 to year-end 2014 , and the number of insureds increased 0.8 percent, despite low sales.”
  • “LTCI sales have surged temporarily on the eve of price increases (including shifts to gender-distinct pricing) and benefit discontinuations. Absent those surges, sales would have been lower.”
  • “Nonetheless, there are hopeful signs for stand-alone LTCI. A major insurer that has been relatively inactive in LTCI the past couple of years is aggressively marketing an innovative new product. Another insurer will enter the market later this year with lifetime benefit period, a single premium alternative and term life insurance riders.”
  • “The placement rate dropped to an all-time low (60.9 percent, including work-site cases which sometimes permit easier qualification), despite a significant drop in cases above age 70. Thirty-three percent (32.9 percent) of such applications were declined, withdrawn or suspended. Many observers feel that higher prices result in a less healthy pool of applicants and that insurers have tightened underwriting.”
  • “The LTCI industry has had a much bigger impact than indicated above, because a lot of claims are paid by insurers that no longer sell LTCI. According to the NAIC’s report for 2013 (the most recent report available when this was written), the industry incurred $8.2 billion in claims in 2013, boosting the industry to $89.4 billion of claims incurred since 1991.”

----------------

Excerpts from “2015 Analysis of Worksite LTC Insurance,” Broker World, August, 2015

  • “In 2014, participants reported sales of 13,460 worksite policies for $20.1 million of new annualized premium, a 3.9 percent drop in policies sold, and a 14.6 percent drop in new annualized premium compared to 2013. The worksite sales decrease (especially in policy count) does not look bad compared to the total sales decrease of 23.8 percent in terms of policies and 21.8 percent in terms of annualized premium. While the average premium for sales ‘on the street’ increased, the average worksite premium per policy dropped 11 percent, from $1,684 in 2013 to $1,496 in 2014.”
  • “Reported WS LTCI sales accounted for 10.2 percent of the policies sold in the industry (up from 8.0 percent in 2013) and 6.1 percent of the annualized premium (up from 5.8 percent).”
  • “The number of policies per case was particularly interesting. Two carriers reported an average of 34 to 35 policies per case. Two others reported an average of two policies per case. Selling executive carve-out LTCI to just one or two owner-employees and their spouses may become more difficult because of the shift to gender-distinct pricing.”
  • “Only 41.7 percent of WS policies met partnership qualifications (down from 51.6 percent in 2013 and 57 percent in 2012), compared to 50.2 percent in the NWS market.”


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Updated, Monday, September 21, 2015, 11:21 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-037:  LTC NEWS AND COMMENT

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

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

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

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

  • Founder of MAGA Ltd. Honored for Lifetime Achievement in Entrepreneurial Excellence Awards

  • Serving Low-Income Seniors Where They Live: Medicaid's Role in Providing Community-Based Long-Term Services and Supports

  • Health Policy Brief: Rebalancing Medicaid Long-Term Services and Supports

  • Long-term disability insurance vs. long-term care insurance

  • New cancer cases to reach nearly 2.4 million in 2035 – AACR

  • Shopping for Affordable Long-Term Care Insurance

  • Women the Bigger Losers in Terms of Alzheimer's Costs

  • The Standard Introduces New Voluntary Employee Benefits: Accident, Critical Illness and Hospital Indemnity Insurance Enhance Existing Employee Benefits Suite

  • Symetra Introduces New Group Critical Illness Insurance Product

  • Long Term Care Insurance Agents Join Blogging Teleconference

  • SubHealth Reviews Six Bills to Strengthen Medicaid

  • Medicare and Social Security: How to make everyone happy

  • Medicare Fails To Save Money So Far On Cooperative Care Experiment

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

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Updated, Friday, September 18, 2015, 11:05 AM (Pacific)
 
Seattle—

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LTC BULLET:  NAHU ON LTC FINANCING

LTC Comment:  The National Association of Health Underwriters (NAHU) has published its analysis and recommendations regarding long-term care financing.  Some background, the executive summary and a link to the full report follow the ***news.***

*** SOA CALL FOR PAPERS:  The Society of Actuaries seeks essays on “three major sub-topics -- Defined Contribution Plan Risk Management Strategies; Decumulation in Retirement; and Long-Term Care Financing.  [Emphasis added.]  Individuals may submit essays on any or all of the topics and topics can be combined or treated separately.”  Check out SOA’s call for papers here.  November 1 is the deadline for submission of essays.  Prize money of $10,000 will be distributed for the best essays. ***

*** OUR LTC CLIPPINGS service ensures you’ll see critical news, articles, reports and data before your clients or competitors do.  If you’re a member of the Center already, add the “Clippings” by becoming a “Premium Member” at only 27 cents a day more ($100 per year.)  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe to “LTC Clippings.”  Here’s a sample from this week.

9/17/2015, “Health Policy Brief:  Rebalancing Medicaid Long-Term Services and Supports," Health Affairs, September 17, 2015.

Quote:  “Twenty-five years after the passage of the Americans with Disabilities Act (ADA), the Medicaid program is also marking an important milestone in system transformation in 2015. The national profile of Medicaid long-term services and supports (LTSS) expenditures has shifted away from primary dependence on institutional care. In 2013 the majority of Medicaid LTSS spending was for the first time focused on home and community-based settings instead of institutional care, and the Centers for Medicare and Medicaid Services (CMS) projects that community-based spending will reach 63 percent of all Medicaid LTSS spending by 2020. However, the fundamental structure of the Medicaid statute continues to promote an ‘institutional bias’ that strongly limits the potential for true balance for beneficiaries.”

LTC Comment:  This history of Medicaid’s rebalancing from principally institutional to mostly home and community-based care is worth reading, but take it with a grain of salt.  There is no reliable evidence that rebalancing saves Medicaid money and one thing is for sure, the more Medicaid pays for home care that people want instead of nursing home care they’d rather avoid, the more people will seek Medicaid and the more its cost for LTC will increase.  Be sure to note that while HCBS now consumes over half of Medicaid LTC expenditures overall, that’s not the case for elderly recipients for whom 71 percent of LTC expenditures still pay for institutional services. ***

LTC BULLET:  NAHU ON LTC FINANCING

LTC Comment:  Last week, the NAHU LTCi Advisory Group released its “Long-Term Care White Paper” with a publication date of June 2015.  Read its “Executive Summary,” dated September 2015, below and here.  Find the full report here.  Center Premium Member Sally Leimbach served on the LTCi Advisory Group.  She explains the white paper’s background as follows:

This paper has been over five years in the creation with fits and starts.  The content has changed over that time and certainly the degree of support that NAHU is now giving LTCi.  Claude Thau stuck with the project through thick and thin over the entire time.  John Parker was invaluable during the last year of rewrites.  Joe Lesson, Linda Thalheimer, Honey Leveen and I rounded out the subcommittee that contributed and persevered through the rewrites.  All but Joe will continue on the First Revision Committee that will begin our work next week.  Dan Samson, NAHU, gave us the “shell” to work with last September and has had the daunting task of listening to us hash out changes and then record them accurately regarding a subject that he is now much more knowledgeable about than when he started.

Anyone who has tried to create a coherent policy paper as part of a group effort knows how difficult a task that is.  “A camel is a horse made by a committee” goes the proverb.  So the NAHU LTCi Advisory Group deserves congratulations and a vote of thanks for their hard work and perseverance.

The Center for Long-Term Care Reform was asked for our critical analysis of the NAHU white paper.  We provided comments privately.  We will look forward to seeing the final, revised version of the white paper and we’ll bring that to you as well when it’s available.

For now, here’s the first published draft’s Executive Summary:

----------------

Long-Term Care Executive Summary

The National Association of Health Underwriters (NAHU) is the leading professional trade association for health insurance agents, brokers and consultants, and represents more than 100,000 benefit specialists nationally. Our members work on a daily basis to help millions of individuals and employers purchase, administer and utilize health insurance coverage. Many members also provide long term care insurance (LTCi) solutions to their clients.

Executive Summary September 2015

The long term care system in the United States faces significant challenges as it prepares for an increasingly aging society. The number of people over the age of 60 is growing rapidly and as many as seven in 10 individuals will require long term services and supports (LTSS) to manage their condition. However, many incorrectly believe they are already covered under their private health insurance or Medicare, when neither is true. Without LTCi, individuals can quickly spend down a lifetime of savings and then have to rely on family caregivers, or turn to Medicaid, which provides limited coverage for the destitute. Given the lack of financial preparedness for the potential future need for LTSS, individuals, employers and policy-makers need to find solutions to an increasingly growing problem as the population ages.

NAHU recommends the following to respond to these challenges:

Protect Medicaid for the truly needy. This can be done by encouraging the use of LTC Partnership Programs, closing loopholes to access Medicaid, and encouraging the use of reverse mortgages. Implementing programs to help consumers to adequately prepare for their own needs will decrease the likelihood of needing to rely on Medicaid, thus preserving it for the truly needy and extending the program’s lifetime.

Allow tax-free withdrawals from 401(k), 403(b) and IRA accounts for the purposes or purchasing LTCi. Currently, early withdrawals come with a 10% excise tax, which discourages individuals from using these funds to purchase insurance. Implementing a change so withdrawals to buy LTCi are tax-exempt and eliminating the early withdrawal penalties will help to encourage Americans to plan for their future needs. This will reduce the likelihood of the individual from later turning to public support.

Add LTCi to the types of benefits that can be purchased through IRS Section 125 plans, which is currently prohibited under federal law. Doing this will send a signal to employees about the importance of the benefit while the pre-tax treatment makes the product more affordable. Employers should also be encouraged to contribute to worksite-based LTCi benefit plans, which will both make the plan more affordable and underscore its importance.

Educating Americans about the potential need for LTSS, their role in providing for care, what care is currently covered under existing programs, and the value of purchasing LTCi as part of an overall retirement strategy is very important. Then too, implementing incentives to participate as early as possible will help to stave off potential financial ruin. In this effort, NAHU members are qualified and prepared to offer the necessary guidance and assistance for consumers to prepare for and enroll in LTCi coverage.

Encouraging more Americans to participate in LTCi through the full implementation of these recommendations will help lead to a more vital, competitive, healthy, stable and diverse LTCi marketplace. Not only will this provide financial security for individuals finding themselves with a long term chronic conditions or extensive frailties, but it also means Medicaid will not have to jump in to cover the remainder of the expenses, thus prolonging the program for future generations.

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Updated, Monday, September 14, 2015, 11:05 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-036:  LTC NEWS AND COMMENT

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

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

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

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

  • 7 Assumptions About Retirement: True or False?

  • Long-term care providers selling health insurance? Don't laugh

  • Can you afford to live to 100?

  • Costly new Medicaid regs will cripple nursing homes

  • Health Savings Accounts Growing, Especially Among the Better Paid

  • Income and Assets of Medicare Beneficiaries, 2014 – 2030

  • Don’t Be Too Quick to Recommend LTC Insurance

  • Why Communes May Be The New Retirement Home: Increasingly, boomers are cohabiting with friends in retirement

  • You'll take care of me when I'm old...right?

  • Federal Court: Short-Term Annuities Do Not Count Toward Medicaid

·      #############################

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

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Updated, Friday, September 11, 2015, 11:19 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC ALMANAC UPDATE (2)

*** SEPTEMBER 11:  Never forget!  We dedicate today’s LTC Bullet to remembrance.  Everyone cognizant at the time recalls that fateful late-summer day in 2001 when America came under attack on our own soil.  We recollect where we were, the shock we felt, and how the event impacted our lives even if we lost no one we knew personally.  Likewise, older readers will remember November 22, 1963, the day President Kennedy was killed, my 18th birthday as it happens.  But today, I want to bring back a different memory.  Two weeks after 9/11/2001, I lost a good friend and long-term care lost an inimitable analyst and advocate.  George Sherman, the curmudgeonly editor of LTC News & Comment, fell from his mountain bike at age 65, punctured his remaining lung and expired.  Now, here’s the connection with remembrance of important historical events.  At age six, George Sherman was in Hawaii and witnessed the Pearl Harbor invasion on December 7, 1941.  He claimed he looked up from his front yard and saw the face of an attacking Japanese aviator.  No one would agree more than George Sherman with Santayana’s admonition “Those who cannot remember the past are condemned to repeat it.”  So, remember. ***

*** DEADLINE APPROACHING:  2016 ILTCI CONFERENCE:  The 16th Annual Intercompany LTCI Conference will convene at The Grand Hyatt in San Antonio, Texas March 13th to 16th, 2016.  Mark your calendars and be there if you can.  Professional meetings don’t get any better than this one.  In case you’re considering sponsoring or exhibiting, conference organizers report “Please review the Promotional Opportunity Guide, Application and Exhibit Hall rules.  The conference is offering substantial discounts for signing up by Monday, September 14th.”  You can find an “Exhibitor & Sponsor Application” and “Exhibitor & Sponsor Options” at these links.***

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LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, September 18, 2015.  To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password:  UN:  IntrotoZone / PW:  FreeTrial.  Like what you see?  Then join the Center for Long-Term Care Reform here.  Or contact Damon at 206-283-7036 or damon@centerltc.com.  ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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

Unfunded Liability Estimates

2015 Social Security Trustees Report 0715 URL:  http://www.ssa.gov/oact/tr/2015/tr2015.pdf

The Board of Trustees, Federal Old-Age And Survivors Insurance and Federal Disability Insurance Trust Funds transmitting “The 2015 Annual Report of The Board of Trustees of The Federal Old-Age And Survivors Insurance and Federal Disability Insurance Trust Funds”

“For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.62 percentage points1 (from its current level of 12.40 percent to 15.02 percent, a relative increase of 21.1 percent); (2) scheduled benefits during the period would have to be reduced by an amount equivalent to an immediate and permanent reduction of 16.4 percent applied to all current and future beneficiaries, or 19.6 percent if the reductions were applied only to those who become initially eligible for benefits in 2015 or later; or (3) some combination of these approaches would have to be adopted.”  (p. 6)   

Don’t Count on Social Security or Medicare

GAO on Retirement Savings 0615 URL:  http://www.gao.gov/products/GAO-15-419
“Retirement Security:  Most Households Approaching Retirement Have Low Savings”
GAO-15-419: Published: May 12, 2015. Publicly Released: Jun 2, 2015.

6/2/2015, “Most Households Approaching Retirement Have Low Savings,” Government Accountability Office

Quote:  “Many retirees and workers approaching retirement have limited financial resources. About half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA). According to GAO's analysis of the 2013 Survey of Consumer Finances, many older households without retirement savings have few other resources, such as a defined benefit (DB) plan or nonretirement savings, to draw on in retirement (see figure below). For example, among households age 55 and older, about 29 percent have neither retirement savings nor a DB plan, which typically provides a monthly payment for life. Households that have retirement savings generally have other resources to draw on, such as non-retirement savings and DB plans. Among those with some retirement savings, the median amount of those savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74, equivalent to an inflation-protected annuity of $310 and $649 per month, respectively. Social Security provides most of the income for about half of households age 65 and older.

LTC Comment:  A sad state of affairs evoking the irony that people are less likely to save and plan these days because they think they can rely on Social Security, Medicare and other financially vulnerable public programs.

State Fiscal Responsibility

Fiscal Report Card, Cato 2014 URL:  http://www.cato.org/publications/white-paper/fiscal-policy-report-card-americas-governors-2014

“Fiscal Policy Report Card on America's Governors:   2014”  by Nicole Kaeding and Chris Edwards

“Four governors were awarded an “A” on this report card: Pat McCrory of North Carolina, Sam Brownback of Kansas, Paul LePage of Maine, and Mike Pence of Indi­ana. Eight governors were awarded an “F”: Mark Dayton of Minnesota, John Kitzhaber of Oregon, Jack Markell of Delaware, Jay Inslee of Washington, Pat Quinn of Illinois, Deval Patrick of Massachusetts, John Hickenlooper of Colorado, and Jerry Brown of California.”  (p. 1)

 

Chapter 4:  Long-Term Care

Alzheimer's Disease

AA on Cost of Alzheimers URL:  https://www.alz.org/aaic/_downloads/mon-930am-baby-boomers.pdf

“New Analysis Shows More Than 28 Million Baby Boomers Will Develop Alzheimer’s Disease; Will Consume Nearly 25% Of Medicare Spending”

7/20/2015, “Alzheimer's and Medicare spending to boom over next 25 years,” by Holly Petrovich, McKnight's LTC News

Quote:  “Over the next 25 years, more than 28 million baby boomers will develop Alzheimer's disease, and the cost of care will consume nearly 25% of Medicare spending, according to an analysis from the Alzheimer's Association released Monday. The association said that as more boomers develop the disease, more severe forms will develop, which will lead to greater Medicare costs. By 2020, caring for these patients will cost nearly $12 billion, and about 2.1% of total Medicare spending. By 2040, however, the baby boomers will be ages 76 to 94, and the projected Medicare costs will have increased to $328 billion, consuming nearly 24.2% of total Medicare spending.”

LTC Comment:  The financial impact on Medicaid will likely be even greater.

 

Chapter 5:  Caregiving

Value of Free Care

AARP on Valuing Caregiving 0715 URL:  http://www.aarp.org/content/dam/aarp/ppi/2015/valuing-the-invaluable-2015-update-undeniable-progress.pdf

“Valuing the Invaluable 2015 Update: Undeniable Progress, but Big Gaps Remain,”
by Susan Reinhard, Lynn Friss Feinberg, Rita Choula, Ari Houser,
Public Policy Institute, July 16, 2015

7/16/2015, “Valuing the Invaluable 2015 Update: Undeniable Progress, but Big Gaps Remain,” by Susan Reinhard, et al., AARP

Quote:  “Family caregivers are an essential part of the social, health, and economic fabric of the U.S. But family caregiving often comes at substantial costs to the caregivers themselves, to their families, and to society.  Without family-provided help, the economic cost to the U.S. health and long-term services and supports (LTSS) systems would skyrocket.”

LTC Comment:  This latest update puts the value of unpaid caregiving at $470 billion as of 2013.

 

Chapter 6:  Long-Term Care Financing

LTC Costs and Risk

ASPE on LTC Risk and Cost URL:  http://aspe.hhs.gov/daltcp/reports/2015/ElderLTCrb.cfm

“Long-Term Services and Supports for Older Americans:  Risks And Financing”

7/16/2015, “What Are the Chances You'll Need Long-Term Care And How Much Will It Cost?,” by Howard Gleckman, Forbes

Quote:  “What are the odds you’ll need assistance to help with personal activities such as bathing or dressing before you die? For those about to turn 65, it’s about 50/50, according to an important new study. On average, you can expect to need this high level of care for about two years. But one-in-five Americans will need such assistance for less than one year while about one in seven will need extensive help with daily living for five years or more.

“On average, this high level of long-term supports and services will cost about $140,000 (in 2015 dollars) from age 65 until you die. To think of it another way, if a 65-year-old wanted to have enough money to pay for this care for the rest of her life, she’d have to invest about $70,000.  But among those who use paid care (excluding those who use none), the average lifetime cost is more than $265,000. To afford that, you’d need to put aside about $134,000 at 65.”

LTC Comment:  I agree this new data on the risk and cost of long-term care from a just-published “ASPE Issue Brief” is important, but some of the claims for it may be dubious.  We’ll take a closer look and possibly publish a critique in next Friday’s LTC Bullet.

Quotes that Medicaid Requires Spendown from People Who Should Know Better

Feder on LTC 0615 URL

“The Challenge of Financing Long-Term Care,” by Judith Feder, Saint Louis University Journal of Health Law & Policy, [Vol. 8:47]

“The federal-state Medicaid program does serve as a valuable last resort for people who need long-term care, but its protections (especially for care at home) vary considerably from state to state and become available only when people are, or have become, impoverished taking care of themselves.”  (p. 47)

LTC Comment:  Medicaid for LTC is hardly a “last resort.”  Anyone with income below the cost of a nursing home and virtually unlimited exempt assets qualifies easily.”

 

Chapter 10:  Medicaid

Medicaid Financing and Burwell Data

Burwell ltss-expenditures-2012 URL:  available at very long URL here.

“MEDICAID EXPENDITURES FOR LONG-TERM SERVICES AND SUPPORTS IN FFY 2012,” by Steve Eiken, Kate Sredl, Lisa Gold, Jessica Kasten, Brian Burwell, Paul Saucier, APRIL 28, 2014

“Managed care and new program authorities authorized by Congress in 2006 and 2010 had a greater role in LTSS expenditures in FFY 2012 than in previous years. Managed care accounted for 6.6 percent of LTSS expenditures in FFY 2012, compared to 3.8 percent in FFY 2008, the first year state-reported data for managed care programs were included. We expect the role of managed care to continue to increase as states implement Medicaid managed LTSS programs or include LTSS in financial alignment demonstration programs for people who are dually eligible for Medicaid and Medicare.” (p. 12)

Medicaid Deficiencies

Finkelstein on Medicaid 0615 URL
“The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment” by Amy Finkelstein, Nathaniel Hendren, Erzo F.P. Luttmer #21308 (AG HC PE)

Abstract:  “Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world.” 

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Updated, Tuesday, September 08, 2015, 11:19 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-035:  LTC NEWS AND COMMENT

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

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

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

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

  • IG report: 300,000 vets died while waiting for health care at VA

  • Managing the Costs of Long-Term Care Insurance

  • Long-Term Care in the United States: A Timeline

  • Group long-term care insurance underwriting: SI is the new GI

  • Markets’ wild moves might make U.S. public pension funds vulnerable

  • How our healthcare system can be deadly to the elderly

  • eHealth Publishes Free eBook To Educate Consumers on the Value of Accident and Critical Illness Insurance Products

  • High earners face rising Medicare premiums

  • 9 Factors to Consider Before Buying Long-Term Care Insurance

  • Genworth execs slapped with two lawsuits

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

#############################

 

Updated, Friday, September 4, 2015, 11:20 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Almanac Update

Friday, September 4, 2015

Seattle—

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

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** PHYLLIS SHELTON reports on her summer series of webinars here.  Her ninth and last program covered “So How Long DO Claims Last and What's the REAL Value of LTC Insurance?” with speakers Matt Morton of LTC Group and Jessica Miller of LifePlans.  Handouts and recordings for all nine sessions are available for purchase here. ***

*** OUR LTC CLIPPINGS service ensures you’ll see critical news, articles, reports and data before your clients do.  If you’re a member of the Center already, add the “Clippings” by becoming a “Premium Member” at only 27 cents a day more ($100 per year.)  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe to “LTC Clippings.”  Here’s sample from this week.

9/2/2015, “Long-Term Care in the United States: A Timeline,” Kaiser Family Foundation

Quote:  “Long-term care (LTC) in the United States has evolved over the course of the last century to better serve the needs of seniors and persons with disabilities. This timeline outlines the major milestones in LTC from the nursing home era, which created an institutional bias in LTC, to the era of home and community based services (HCBS) and integration, and into the era of health reform and beyond. These milestones include key legislation and court decisions that were instrumental in providing LTC funding; improving the quality of care and safety in nursing homes; and allowing people with LTC needs to stay in their communities. Despite these successes, proposals by commissions and legislators for broader and more comprehensive national LTC policies have not been fully realized; though efforts in this area continue. Download the PDF.”

LTC Comment:  To read this LTC timeline you’d think the only thing that matters about long-term care is government funding and intervention.  It contains hardly a word about private financing, especially long-term care insurance.  Unmentioned are efforts in federal statute after statute to target scarce, under-funded public benefits to the neediest and to divert the middle class and affluent to early LTC planning with better financing options.  We cover that story in detail in "The LTC Graduate Seminar Transcript" here (requires password, contact Damon@centerltc.com.)

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LTC BULLET:  LTC ALMANAC UPDATE

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

*** SPECIAL:  We are making access to The Zone, including the "Almanac of Long-Term Care," free for one week—today through Friday, September 11, 2015.  To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password:  UN:  IntrotoZone / PW:  FreeTrial.  Like what you see?  Then join the Center for Long-Term Care Reform here.  Or contact Damon at 206-283-7036 or damon@centerltc.com.  ***

The LTC Almanac is divided into 11 sections:

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

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

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

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

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

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

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Chapter 1:  Aging Demographics

United States

General Stats

Profile of Older Americans 2014 URL:  http://www.aoa.acl.gov/Aging_Statistics/Profile/index.aspx

5/12/2015, “Profile of older Americans shows some states aging faster than others,” Administration for Community Living

Quote:  “Over the past 10 years, the U.S. population age 65 and over increased by approximately 25 percent, from roughly 36 million in 2003 to 45 million in 2013. An important aspect of this growth is that it is not equally distributed across states.  For example, the population age 65 and over increased by 30 percent or more in 20 states.  Nevada and Alaska experienced more than a 50 percent increase. Not only are more people reaching their 65th birthday, many are living well beyond age 65. Between 1980 and 2013, the population aged 100+ grew faster than the population over age 65.  The population of older Americans is experiencing dynamic changes. Monitoring these changes over time is an important part of understanding current needs and preparing for future growth.  Every year the Administration for Community Living (ACL) uses U.S. Census data to compile a profile of the U.S. population over age 65.  This year’s report is entitled ‘A Profile of Older Americans: 2014’ and is available here.” [Emphasis added]

 

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

CBO on Unfunded Liabilities

The 2015 Long-Term Budget Outlook,” Congressional Budget Office (CBO), 6/16/2015, LINK

Quote:  “If current law remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits—caused mainly by the aging of the population and rising health care costs—would push debt back to, and then above, its current high level. The deficit would grow from less than 3 percent of GDP this year to more than 6 percent in 2040. At that point, 25 years from now, federal debt held by the public would exceed 100 percent of GDP.

Unfunded Liability Estimates

Social Security Bias (Spring, '15) URL:  http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.2.239

“Systematic Bias and Nontransparency in US Social Security Administration Forecasts,” Konstantin Kashin, Gary King, and Samir Soneji, Journal of Economic Perspectives—Volume 29, Number 2—Spring 2015—Pages 239–258

5/13/2015, “Social Security forecasts ‘systemically biased’ to upside: study,” by Glenn Ruffenach, MarketWatch

Quote:  “A new report asserts that forecasting errors within the Social Security Administration, tied primarily to life-expectancy data, have significantly overstated the financial health of the benefits program.  . . .  The authors concluded that - since 2000 - the agency's forecasts have been ‘systematically biased’ and, as a result, are ‘misleading users of the forecasts to conclude that the Social Security Trust Funds are in better financial shape than turns out to be the case.’

LTC Comment:  What does this have to do with long-term care?  Medicaid pays for most LTC; most LTC recipients on Medicaid receive Social Security benefits; Medicaid LTC recipients are required to contribute most of their income including Social Security to offset Medicaid’s cost for their care; Social Security income reduces Medicaid LTC expenses by 10% to 15%.  Therefore, rosy financial scenarios by the Social Security Administration have the effect of making Medicaid’s LTC financial prospects look rosier too.  That’s very dangerous given the oncoming age wave and the public’s Medicaid-induced complacency about LTC planning.

 

Chapter 4:  Long-Term Care

Long-Term Care Awareness

AP-NORC Poll:  “Long-Term Care In America:  Americans’ Outlook and Planning For Future Care”:  Find it here.

7/16/2015, “Do Americans Understand Long-Term Care?,” by Lee-Lee Prina, Health Affairs:  http://healthaffairs.org/blog/2015/07/16/do-americans-understand-long-term-care/

Quote “Five Things You Should Know From The AP-NORC Center’s Long-Term Care Poll Among Adults Age 40 and Older

  • Nearly 1 in 10 are both supporting a child and providing ongoing living assistance for a loved one.
  • Only a third say they are very or extremely confident in their ability to pay for ongoing living assistance they may need in the future.
  • 54 percent report doing little or no planning for these needs.
  • 1 in 5 do not know if private health insurance plans cover ongoing care in a nursing home, and over a quarter do not know if Medicare does.
  • Majorities support a variety of policy options that would help Americans finance long‑term care.”

LTC Comment:  Old wine in the newest survey bottle.

 

Chapter 6:  Long-Term Care Financing

Cost of Care Surveys

Genworth 2015 Cost of Care Survey URL

4/9/2015, “Genworth 2015 Cost of Care Survey,” Genworth:  https://www.genworth.com/cost-of-care/landing.html

Quote:  “2015 Cost of Care Overview.  Use the information below to find out and compare the cost of care in your region. Go mobile with the Cost of Care app from iTunes.

LTC Comment:  Click through to the link above to access a clickable map for state data.  Find the full report here.  National highlights (annual costs):

Homemaker Services:                        Up 2% to $44,616

Home Health Aide:                            Up 1% to $45,760

Adult Day Health Care:                     Up 3% to $17,904

Assisted Living Facility:                    Up 2% to $43,200

Nursing Home (Semi-Private):          Up 4% to $80,300

Nursing Home (Private):                   Up 4% to $91,250

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

Health Affairs on NHE 10 year projections 0715 URL:  http://content.healthaffairs.org/lookup/doi/10.1377/hlthaff.2015.0600

“National Health Expenditure Projections, 2014-24: Spending Growth Faster Than Recent Trends,” by Sean P. Keehan, Gigi A. Cuckler, Andrea M. Sisko, Andrew J. Madison, Sheila D. Smith, Devin A. Stone, John A. Poisal, Christian J. Wolfe, and Joseph M. Lizonitz

10.1377/hlthaff.2015.0600

HEALTH AFFAIRS 34,

NO. 8 (2015): 1407-1417

"ABSTRACT Health spending growth in the United States is projected to average 5.8 percent for 2014-24, reflecting the Affordable Care Act's coverage expansions, faster economic growth, and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest. The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024."  (p. 1407) 

Who Will Pay for LTC? (includes "Not the VA")

GAO on VA Benefits 0612:  http://www.gao.gov/assets/600/590847.pdf

“Improvements Needed to Ensure Only Qualified Veterans and Survivors Receive Benefits”

“The Department of Veterans Affairs’ (VA) pension program design and management do not adequately ensure that only veterans with financial need receive pension benefits. While the pension program is means tested, there is no prohibition on transferring assets prior to applying for benefits. Other means-tested programs, such as Medicaid, conduct a look-back review to determine if an individual has transferred assets at less than fair market value, and if so, may deny benefits for a period of time, known as the penalty period. This control helps ensure that only those in financial need receive benefits. In contrast, VA pension claimants can transfer assets for less than fair market value immediately prior to applying and be approved for benefits.”

 

Chapter 9:  Long-Term Care Providers

General

2/18/2015, “Long-Term Care Services in the United States: 2013 Overview,” National Center for Health Statistics (NCHS)

Quote:  “This report presents descriptive results from the first wave of the National Study of Long-Term Care Providers (NSLTCP), which was conducted by the Centers for Disease Control and Prevention’s National Center for Health Statistics (NCHS). . . . 

“Key Findings:  In 2012, about 58,500 paid, regulated long-term care services providers served about 8 million people in the United States.  . . .  Provider sectors differed in ownership, and average size and supply varied by region.  . . .  Provider sectors differed in their nursing staffing levels, use of social workers, and variety of services offered. Rates of use of long-term care services varied by sector and state.  . . .  Users of long-term care services varied by sector in their demographic and health characteristics and functional status. . . . 

“The NSLTCP findings in this report provide a current national picture of providers and users of five major sectors of paid, regulated long-term care services in the United States. These findings can inform policy and planning to meet the needs of an aging population. NCHS plans to conduct NSLTCP every 2 years to monitor trends. Future NSLTCP products will be available from the NSLTCP website: http://www.cdc.gov/nchs/nsltcp.htm.”

LTC Comment:  Finally, a closer statistical look at LTC providers in the USA.

Medicaid Reimbursement

2014 Eljay Medicaid Underfunding for Nursing Center Care FINAL URL

“The majority of nursing center providers deliver Medicaid-covered services to residents at rates that are inadequate to cover their costs.  . . .  Unreimbursed allowable Medicaid costs for 2014 are projected to exceed $6.7 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2014 is projected to be $21.20,1 which is 12.6 percent lower than the preceding year’s projected shortfall of $24.26. The projected shortfall has declined due to Medicaid rates increasing slightly more than projected cost increases during the time period from the cost report years used in the study (2012 or 2013) to 2014. However, although Medicaid rate increases outpaced projected allowable cost increases during this period, significant shortfalls still exist.”

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We will update the “Almanac of Long-Term Care” again soon to bring its content up to current.

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Updated, Monday, August 31, 2015, 11:34 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-034:  LTC NEWS AND COMMENT

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

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

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

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

  • Retirement Planning Is Not A Single Issue: Now is the time to educate your clients about Multi-life LTCI

  • Nursing homes and loopholes, a love story

  • Managing financial burdens in LTC

  • MAGA Insurance Professionals Recognized for Outstanding Long-Term Care Insurance Sales Records

  • The States Most Dependent on Sin Taxes

  • Gen X: Sleeping Through The Retirement Wake-Up Call

  • Statistics Show What Retirement Is Really Like -- and Why We're Not Ready

  • Global life expectancy rises, but people live sicker for longer

  • Irving Levin Associates is Connecticut’s Fastest Growing Media Company on the Just Released Inc. 5000 Ranking

  • Federal healthcare spending projections inch upward

  • Report: Nearly 47 million people now have dementia

  • Study Reveals Limited Competition in Medicare Advantage Market

  • Medicare reconsiders rule that leaves dying patients facing a stark choice

  • 5 things to know about long-term care policies

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

############################# 

Updated, Friday, August 28, 2015, 10:13 AM (Pacific)
 
Seattle—

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LTC BULLET:  LTC SNEAK PEEK

LTC Comment:  Our study of long-term care in the U.S. and New Hampshire nears completion.  Highlights after the ***news.***

*** LTC CLIPPINGS:  If you’re not subscribed to the Center for LTC Reform’s LTC Clippings service, here’s a sample of what you’re missing.  Contact Damon at 206-283-7036 or damon@centerltc.com to begin receiving these daily “heads-ups” for about $.28 per day if you’re already a member of the Center and $.33 if you’re not.

8/24/2015, “5 things to know about long-term care policies,” by Terry Savage, Chicago Tribune

Quote: “Long-term care is a subject nobody likes to think about. Yes, Medicare and supplements will pay for illness and hospitalization costs. But they don't pay for care at home, or in assisted living, when you can no longer do basic activities such as bathing, dressing, toileting and dining. Will your children come to help? Or, if you are an adult with aging parents, are you prepared for Mom or Dad to move into your home? That's where long-term care insurance comes in. Here are five things you should know:”

LTC Comment:  Here’s a piece favorable on LTCi from a solid source. ***

 

LTC BULLET:  LTC SNEAK PEEK

LTC Comment:  Last April, the Center for Long-Term Care Reform and the State Budget Solutions policy organization undertook a study of long-term care service delivery and financing in the U.S. generally and New Hampshire specifically.  I spent several weeks in the Granite State this summer researching the subject and conducting interviews.  Our report on that project is nearing completion.  Though it’s still in draft, we thought you might like to see some of our study’s major findings.  So we pulled the following “highlights” to give you a preview.  Plans are to convene a conference based on our study to discuss the future prospects for long-term care at the national and state levels.  We also plan to publish a series of op-eds based on our findings to draw candidates’ attention to the LTC issue in the first-in-the-nation presidential primary state.

Highlights:

“Considering only the expected growth in New Hampshire’s age 85-and-over population between now and 2050, LTC expenditures could nearly quadruple from $282 million to $1,047 million, more than one billion dollars every year.” 

“While [New Hampshire’s] Health and Social Services spending increased in absolute terms, it actually declined as a proportion of the state budget from 2005 ($1,785,525,000) to 2014 ($2,153,341,000) from 43.0 percent to 42.4 percent.” 

“Because the average Medicaid nursing home reimbursement rate in New Hampshire is $157 per day or $57,305 per year [within the U.S. middle income quintile], any medically qualified elderly person with net income at or below that level is eligible based on income.” 

“Since homes with less than $552,000 in equity are not countable assets, most homeowners may qualify for Medicaid.”  (New Hampshire Bar Association publication) 

It is important to note that the money which must be spent down can be used for any purpose that would benefit either spouse, such as home repairs, vehicles, life insurance, prepaid funerals, furniture, travel, etc.” (New Hampshire Bar Association publication) 

“Our attorneys have significant experience in asset protection strategies, such as Medicaid-Qualifying Irrevocable Trusts; Special Needs Trusts; conversion of assets into income through the use of Medicaid-Qualifying Annuities; Personal Care and Service Agreements; as well as other spend-down techniques that allow for transfers of assets to family members without violating Medicaid gifting rules.” (Medicaid planner’s online advertisement) 

“The bottom line, however, on Medicaid long-term care eligibility in New Hampshire, as elsewhere, is that people who seek state funding for long-term care and are willing to accept the conditions that apply, can, with or without the legal assistance of a Medicaid planner, qualify for assistance much more easily than is commonly understood.” 

“New Hampshire Medicaid’s 2012 nursing home reimbursement rate was $179.66 which only partially covered average costs of $237.05 leaving a shortfall of $57.38 per bed day, the highest shortfall in the United States for that year.” 

“With 64 percent of their caseload on Medicaid, New Hampshire nursing homes are losing money on nearly two thirds of their residents.” 

“What nursing home and home care providers projected as serious financial problems caused by low Medicaid reimbursement rates took on a tone of near desperation on behalf of small, 100-percent-Medicaid ‘assisted living’ providers.” 

“Disproportionality of Medicaid spending is slightly less pronounced in New Hampshire where 29 percent of Medicaid recipients are aged, blind and disabled but account for 67 percent of program costs, whereas poor women and children are 72 percent of New Hampshire’s recipients, but account for 33 percent of the cost.” 

“New Hampshire is one of only four states where long-term care spending on duals was 80 percent or more of total Medicaid spending on duals.” 

“The research evidence that changing [i.e., rebalancing] the delivery system will produce substantial Medicaid savings is not strong, but it is a premise strongly held by many state officials and consumer advocates.”  (Wiener and Anderson)

“Medicaid-financed home and community-based care runs the risk of replacing so-called ‘free’ care provided by friends, family, and loved ones.  AARP estimates the economic value of such care at $470 billion per year.” 

“(1) With a uniquely severe aging demographic challenge approaching, (2) with the U.S. economy already lagging most post-recession recoveries, (3) with loose monetary and fiscal policies presaging another economic bubble potentially bursting and (4) with historically high debt and unfunded entitlement liabilities, we are certainly justified to ask ‘What if?’  What if the federal government reneged on its full share of Medicaid funding either by reducing the federal match rate or by defaulting through inflation or some other means?” 

“New Hampshire imposes a 5.5 percent ‘bed tax’ on both Medicaid and private long-term care patient revenue.  In state fiscal year 2015, the bed tax raised $37.5 million, which, matched with federal funds, returned $75 million to the state.” 

“So while the trust funds won’t ‘run out’ for a good while, Social Security and Medicare will constitute a drain on general revenue, because the federal government will have to make up shortfalls in payroll tax receipts while simultaneously paying off the trust funds’ IOUs with interest.” 

“The affluent prosper under these policies as their investments in the stock market and real property go up, but the poor and middle class struggle as jobs and salaries recede.” 

“So Social Security income of people already on Medicaid represents a substantial contribution to long-term care funding.  It covers as much as 13 percent of total long-term care expenditures and represents roughly half of all ‘out of pocket’ spending for long-term care.” 

“But a serious economic setback impacting federal tax revenue and limiting the government’s ability to borrow might tip the balance against the traditional high compensatory Medicare reimbursement rates.  The impact on state Medicaid programs and their long-term care providers could be catastrophic and immediate.” 

“On Economic Performance, [New Hampshire] is 36th, two-thirds of the way down from #1, Texas, toward #50, Michigan.  On Economic Outlook, New Hampshire fares a little better at 29, a little below halfway between #1, Utah, and #50, New York.” 

“The Cato Institute issues states a Fiscal Policy Report Card,’ and New Hampshire’s is not one any kid would want to bring home to Mom.” 

Forbes magazine ranks the ‘Best States for Business and Careers’ and concludes New Hampshire is not one of them.” 

“New Hampshire was one of only eight states with unemployment rates below 4.0 percent (3.8 percent).” 

“New Hampshire ranks fourth on overall freedom, a highly promising position for its future economic prospects.  Still, it slipped from number one in 2007, a less encouraging sign.” 

 “We are unique.  We’re both payer and provider.  The counties pay most of the cost, but the state sets policy on Medicaid eligibility and reimbursement rates.  The county has nothing to do with that.  We just get a bill and pay it.  We think we should have some say in eligibility and case management because we have the financial incentive to lower the expenditures for Medicaid.”  (Quote from a county nursing home administrator)

“A more severe recession causing a steeper decline in property values could imperil New Hampshire’s unusual Medicaid long-term care financing system.” 

“The home equity exemption of $552,000 in New Hampshire (up to $828,000 in 13 other states) is a major factor, but the many other exempt assets, not to mention Medicaid planning techniques of artificial self-impoverishment, also contribute substantially.  By comparison the total amount of exempt assets, including home equity, that participants may retain while qualifying for the United Kingdom’s long-term care public assistance program is only £23,500 or $36,895 at today’s exchange rate.” 

“Had New Hampshire matched Idaho’s recovery rate, the state’s estate recoveries would have been $16.7 million in 2011, $11.8 million more than they actually were.” 

“If 80 percent of New Hampshire’s elderly population of 109,000 own homes of median value of which 65.3 percent are owned free and clear, then the total home equity that could be redirected to help fund their long-term care is .8 times 109,000 times .653 times $249,500 or $14.2 billion, many times New Hampshire Medicaid’s total expenditures for long-term care in 2014 of $281,745,000.” 

“Medicaid is the largest funding source for long-term care.  From birth to death, in one way or another, public funding offsets personal financial responsibility leaving more and more people at risk if the sources of public funding decline.” 

“From Medicaid’s paying for nearly half of all births to food stamps for one in seven Americans to welfare benefits topping median salaries in eight states including New Hampshire to surging SSDI rolls bankrupting the disability insurance system and sapping the incentive to work to unfunded pension liabilities in the trillions of dollars, this socialized house of cards is severely vulnerable to any bad economic wind that may, and likely will, come its way.” 

“Nearly two (1.9) million elderly Medicaid recipients receive long-term services and supports of whom 60 percent to 80 percent, based on interviews by the author with many eligibility workers in numerous states over the years, shelter an average of $8,000 to $12,000 each in prepaid burial plans.  Taking the low range estimate of 60 percent and $8,000, that amounts to $9.1 billion diverted from potential private LTC financing to a Medicaid-financed windfall for the funeral industry.” 

“State funds needed to match the federal funds are also vulnerable.  Each new economic bubble bursting—most recently the dot.com (2000) and housing (2008) busts—has brought worsening recessions that devastate state tax revenues and reserves.  Economists worry that the latest bubble, inflated by extremely loose monetary (credit expansion) and fiscal (spending) policy, will bring on a much worse downturn than the Great Recession.” 

“A main reason so few people purchase private LTC insurance is that for the past 50 years Americans have been able to ignore the risk and cost of LTC, wait to see if they need extended care and, if they do, qualify easily for public financing while protecting most or all of their estates.” 

“From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.” 

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Updated, Monday, August 24, 2015, 10:13 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-033:  LTC NEWS AND COMMENT

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

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

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

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

  • Family Spillovers of Long-Term Care Insurance

  • The Impact of Social Security Income on Cognitive Function at Older Ages

  • New Study Identifies 9 Risk Factors for Alzheimer’s Disease

  • More Than Half of the Current Workforce Doesn't Expect Social Security

  • Has The Time Come For Short-Term Care Insurance?

  • When It Comes To Long-Term Care Insurance, Americans Don't Get It

  • Seniors, Not Millennials, Are Creating New Households

  • First almost fully-formed human brain grown in lab, researchers claim

  • Americans Who Have Advisors Are More Likely To Diversify Holdings

  • LTCI Watch: Creativity

  • 2015 Critical Illness Insurance Forum

  • Let Older Americans Keep Working

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

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Updated, Monday, August 21, 2015, 9:36 AM (Pacific)
 
Seattle—

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LTC BULLET:  THE U.S. ECONOMY NEEDS LONG-TERM CARE

LTC Comment:  U.S. fiscal and monetary policy are ruining long-term care’s prospects.  How and why after the ***news.***

*** GLICKMAN FOR PRESIDENT:  President of the Society of Actuaries, that is.  Jim asks “Although you may not be eligible to vote in the SOA election (only actuaries can vote for the President) it would be very helpful for my campaign if you can contact the actuaries at your company (as well as actuaries at other companies that you may know) and let them know about my candidacy, and how involved and dedicated I am to my volunteer activities in the LTCi industry.”  We say “hear, hear” and gladly support the candidacy of this indefatigable advocate for responsible LTC planning.  Here are a few links he pointed us to in support of his candidacy:  Lt Governor Letter; Supporter List; Jim Glickman’s Candidate Page.  Go Glickman! ***

*** 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. ***

 

LTC BULLET:  THE U.S. ECONOMY NEEDS LONG-TERM CARE

LTC Comment:  Let’s begin with a few facts:

  • Medicaid pays for most formal long-term care whether in nursing homes or home care.
  • Medicaid is a counter-cyclical welfare program.  It ramps up caseloads and expenditures, usually with extra help from the federal government, during recessions.
  • The United States has experienced two major recessions in the 21st century, the Great Recession of 2007-2009 being the worst since the Depression.
  • To combat recessions, the federal government employs deficit spending (as when it borrows to boost Medicaid assistance).  This is called “fiscal policy.”
  • Deficit spending (fiscal policy) has created a huge national debt, currently nearing $18.4 trillion according to the US Debt Clock.
  • To combat recessions, the Federal Reserve cuts interest rates and increases the money supply.  This is called “monetary policy.”
  • Artificially low interest rates have discouraged savings, impaired the market for LTC insurance by reducing its profitability and increasing its cost, and diverted capital away from economically productive investments and into “bubbles” of real estate, stocks and bonds, benefiting mostly the affluent.
  • The same monetary policies have hurt the poor and middle class by stifling job creation, repressing wage growth, and practically eliminating income on savings.
  • Low interest rates and a bloated money supply (monetary policy) have failed to revive the U.S. economy fully after the Great Recession, making the Fed very reluctant to allow interest rates to increase.
  • We find ourselves on the cusp of an unprecedented “Age Wave.”  The huge baby-boomer population cohort does not reach the age of heaviest LTC need (85+) until 2031.
  • Social Security and Medicare run out of “trust funds” in the 2030s, but in the meantime the federal government has to make up these gargantuan entitlement programs’ annual revenue shortfalls and pay off their trust funds’ IOUs with interest out of general funds (taxes and borrowing).
  • America’s fiscal and monetary tools are worn out.  We have too much debt to borrow more safely if interest rates increase and too much money supply to print more.
  • Our artificially suppressed interest rates are too low to be lowered further in order to combat the next recession.
  • In a nutshell, the U.S. economy may not be able to generate the revenue needed to support our long-term care safety net in the short-run and definitely cannot over the long-term without major changes in fiscal and monetary policies.
  • Ironically, this state of affairs benefits the elite at the expense of the needy for whom the elite hypocritically profess noblesse oblige.

These were some of the facts running through my mind when I read this article on Monday: 

Jon Hilsenrath and Nick Timiraos, “U.S. Lacks Ammo for Next Economic Crisis:  Policy makers worry fiscal and monetary tools to battle a recession are in short supply,” Wall Street Journal, August 17, 2015; http://www.wsj.com/articles/u-s-lacks-ammo-for-next-economic-crisis-1439865442

With the factual context provided above in mind, consider these quotes from that article and draw the logical conclusions regarding long-term care financing:

Quote:  “As the U.S. economic expansion ages and clouds gather overseas, policy makers worry about recession.  Their concern isn’t that a downturn is imminent but whether they will have firepower to fight back when one does arrive.”

LTC Comment:  If Medicaid is the dominant funder of long-term care and the counter-cyclical antidote to help pay for LTC during recessions, what happens if we lack the fiscal and monetary “firepower to fight back” when the next economic downturn arrives?

Quote:  “The U.S. generally injects cash into the economy through interest-rate cuts, tax cuts or ramped-up federal spending.  Those tools could be hard to employ when the next dip comes:  Interest rates are near zero, and fiscal stimulus plans could be hampered by high levels of government debt and the prospect of growing budget deficits to cover entitlement spending on retired baby boomers.”

LTC Comment:  Uh-huh.  So?

Quote:  “With the U.S. expansion entering its seventh year, policy makers are planning how to respond to the next downturn, which history shows is inevitable.  The current expansion is now 16 months longer than the average since World War II, and none has lasted longer than a decade.  ‘The world economy is like an ocean liner without lifeboats,’ economists at HSBC Bank HSBC -2.80 % wrote in a recent research note.”

LTC Comment:  Eek!  Will the Obama Administration save us?

Quote:  “Worries stretch to the White House.  ‘Federal fiscal policy will be a more important tool in addressing future business cycles because monetary policy may be more frequently constrained,’ Jason Furman, the chairman of the White House Council of Economic Advisers, said in an interview.”

LTC Comment:  Oh good, we can just borrow more money from China at artificially low interest rates that make servicing the engorged federal debt manageable for the time being.  No worries.

Quote:  “In the most recent recession, short-term interest rates were pushed to near zero, then the central bank embarked on massive—and controversial—bond-buying programs to drive down long-term interest rates.  The Fed also promised to keep short-term interest rates low for an extended period.  . . .  The next downturn could further expand Fed bond holdings, but with the central bank’s balance sheet already exceeding $4 trillion, there are limits to how much more the Fed can buy.”

LTC Comment:  Oops.

Quote:  “No one knows how much U.S. debt can grow without triggering an increase in inflation and interest rates that would hobble investment and growth.  ‘We don’t have that much experience with countries carrying debt like the level the U.S. has right now,’ said [former CBO director] Mr. Elmendorf, the budget analyst.”

LTC Comment:  Our country’s  customary fiscal and monetary tools to jump start a lagging economy are blunt indeed.

Quote:  “The challenge is that these policies ‘sound simple, but politically, it is really hard,’ said Glenn Hubbard, the dean of the Columbia Business School who advised President George W. Bush through the 2001 recession.  ‘We have very little cushion for whoever the next president is and the next congressional leaders if they had to deal, gosh, with anything.’”

LTC Comment:  The current U.S. economy is like a medical patient who overuses antibiotics, develops a resistance to their beneficial effects, and dies from a newly drug-resistant, previously harmless germ.

Our leaders have over-used fiscal and monetary stimulants.  Now that we’re facing America’s biggest aging demographic challenge ever, we’re virtually helpless to combat future economic downturns.

The financial system has rewarded the affluent with booming equity and real estate values, but punished the poor by diverting capital from job-creating investments and by virtually eliminating returns on safe savings.

The impact on long-term care financing and hence on long-term care service delivery has been, is and will continue to be devastating.  Specifically, we rely too heavily on a means-tested welfare program, Medicaid, which itself relies too heavily on financial support from the federal government, which itself relies too heavily on faulty fiscal and monetary policies that no longer, actually never did, work.

I titled this LTC Bullet “The U.S. Economy Needs Long-Term Care.”  Now you know why.  Radical long-term changes in counter-productive government fiscal and monetary policy are needed to fix the economy and enable it to generate the prosperity required to preserve and improve LTC services and financing.

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Updated, Monday, August 17, 2015, 9:36 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-032:  LTC NEWS AND COMMENT

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

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

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

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

  • China Seeks U.S. Input on Long Term Care

  • How Medicare Rewards Copious Nursing-Home Therapy

  • New LTCI tables seek government work

  • 1 in 4 Senior Women in U.S. Has Osteoporosis: CDC

  • Study Questions Validity Of Three-Day Rule

  • 3 ways to fix Social Security's funding shortfall

  • Franklin & Associates’ Barbara Franklin marks 25 years as long-term care specialist

  • Nursing home antipsychotic use down 21.7%

  • New Senior Housing Raises Concerns Supply Will Outpace Demand From Baby Boomers

  • Green Retirement Communities Are Sprouting

  • Twenty Eight of America's 'Top 100' Long-Term Care Insurance Agents Are with a Single Agency, ACSIA Partners

  • LTCG’s Vince Bodnar Named One of the ‘Most Creative People in Insurance

  • FDA approves tool for diagnosing dementia in a doctor’s office

  • Obama signs NOTICE Act into law

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

#############################

 

Updated, Friday, August 14, 2015, 10:20 AM (Pacific)
 
Seattle—


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LTC Bullet:  The Top 10 LTC Bullets of All Time

LTC Comment:  Your Center for Long-Term Care Reform presents to you our top 10 LTC Bullets of all time, after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** PHYLLIS SHELTON REPORTS on her 6th webinar covering “How to Do Successful Internet Selling and Technology Tips” here.  Get the details on this session and consider subscribing to her series of webinars at the bottom of the link. ***

*** THIS JUST IN FROM ILTCI:  “The 2015 conference session recordings are now available! [Here] is a link where you can access all the sessions and download the recordings as needed.  Thanks so much for your attendance at this year's conference. We hope to see you next year in San Antonio, TX for the 16th Annual ILTCI Conference, March 13-16, 2016!”  See http://iltciconf.org/ for further details.  Your Center for Long-Term Care Reform staff hope to see you there.  We never miss these excellent industry events. ***

*** 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 Top 10 LTC Bullets of All Time

LTC Comment:  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 1,092 Bullets (so far), by date here and by topic here.  These nearly-1,100 articles are a valuable historical resource.  Please make use of them.  Search for key terms using Control-F on your keyboard.

Today, we present to you what we feel are our top 10 LTC Bullets of all time, in this retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998.  We’ll highlight at least one Bullet from each of seven major topics:  “The LTC Problem and Solutions”; “Reality Check:  The Facts on LTCI”; “Medicaid Planning”; “LTC Services”; “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.” 

Read the summary quotes and check out the original Bullets at the links provided.  Here are our top 10 LTC Bullets in chronological order.  We hope you find this resource useful.

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June 6, 1998:  LTC Bullet:  New York Times Misinformed on LTC Insurance.  “This morning's New York Times contained an article about long-term care financing. The article accurately conveyed the gravity of long-term care as a personal and public policy issue. Unfortunately, some information in the article regarding private long-term care insurance was inaccurate and misleading. Furthermore, the author of the article cited exclusively sources who promote public financing and denigrate private financing of long-term care. The following is a letter to the editor of the New York Times regarding the long-term care article from Stephen A. Moses, President of the Center for Long-Term Care Financing in Seattle, Washington.”

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January 25, 1999 Scary Numbers.  “Center President Stephen Moses wrote the following article at the end of 1998. A few days later, the Clinton Administration put aging and long-term care on the public policy agenda in a big way. The Administration deserves credit for raising and confronting these critical issues sooner rather than later. ‘Scary Numbers’ explains why long-term care financing is so important. An abbreviated version of this article, adapted to the style of an op-ed piece, was published in the January 11, 1999 issue of National Underwriter's Life & Health Edition.”

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February 3, 1999 Perils of Medicaid.  “A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows [in this LTC Bullet].”

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December 10, 2002 What About the Rate Stability of the U.S. Government?  “The strongest criticism levied today against private LTC insurance is that premiums on in-place business may have to increase someday if claims experience turns out to be worse than anticipated. This, critics say, could devastate long-time policy holders who cannot afford steep premium increases in their old age and who no longer qualify medically for new coverage. Well, that is a valid concern that insurers and regulators are taking very seriously. But what about the far more ambitious, and less achievable promises that the U.S. Government has made to seniors through Social Security and Medicare? David Wessel, in his November 21, 2002 Wall Street Journal column ‘Capital,’ titled ‘U.S. Promises Are in the Hole’ raised that question.  [Excerpts follow in this LTC Bullet.]”

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March 4, 2004 No Wonder They Don't Buy LTCi.  “Do Medicaid estate planners really advise adult children to grab their parents' money, yank them from private-pay assisted living facilities, stick them in a nursing home on welfare, and transfer the cost to taxpayers and providers? Read an actual Medicaid planning ‘engagement letter’ that does exactly that.”

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December 19, 2005 House Passes Historic LTC Reform; Center Helps Tip Balance; AARP Spurned  “At 6:00 AM Eastern, after pulling an historic all-nighter, the House passed long-term care reforms that exceeded our highest hopes.  Bottom line, we got everything the Senate proposed, plus everything the House proposed, and then some.  We're still on tenterhooks, however, waiting to see if the full Senate will go along.  Stay tuned to C-Span coverage of the budget bill for the suspenseful conclusion of this public policy cliffhanger.  

“Your Center for Long-Term Care Reform had a thing or two to do with this progress too.  We spent half time in Washington, DC this Summer briefing (primarily) Senate Finance Committee staff on the importance of these reforms.  Our ‘Rule of Law’ column titled ‘Welfare for the Well-To-Do’ ran over the weekend in the Wall Street Journal and was widely circulated on Capitol Hill Saturday and Sunday before the vote.  Read on for a copy of that op-ed.  As you know, we've repeatedly exposed AARP's irresponsible attacks on members of Congress who seek to save Medicaid for the poor by diverting the affluent to responsible long-term care planning.”  

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March 7, 2006:  What I Believe About Long-Term Care.  “[W]hat follows is my [Steve Moses] address to a session at the meeting called ‘Shaking the Money Tree’ which was organized by LTCi veteran and MedAmerica Business Development Vice President Gail Holubinka.  Gail's idea was to have four speakers representing different perspectives on the LTC financing issue describe their vision of the topic.  She asked us to explain our underlying beliefs and to build from that foundation logically toward a description of our proposed solutions to the LTC financing crisis.” 

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February 8, 2010 LTC Bullet: The Enemy of LTC Truth.  “Einstein disdained ‘unthinking respect for authority,’ but he wasn't alone. President John F. Kennedy said:

‘The great enemy of truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.’

“The field of long-term care financing is a perfect case in point. What exactly are the ‘persistent, persuasive and unrealistic’ myths of long-term care?”  Read this LTC Bullet to find out.

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January 6, 2009:  An LTC Tour Retrospective.  “I can't move on to bring you our huge new plans for 2009 without pausing just once more this week to look back on our LTC Tour of 2008.  Today, I invite you down memory lane with ‘An LTC Tour Retrospective.’ On Thursday, we'll give everyone a summary, and Center members a TRANSCRIPT, of the LTC Tour's educational centerpiece: our two-hour mini-version of the Center's full-day ‘Long-Term Care Graduate Seminar.’”  See also this article that appeared in Broker World.

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February 3, 2012 LTC Bullet: How to Fix Long-Term Care.  “The Center for Long-Term Care Reform’s late summer, early fall [2011] project in Washington, DC produced seven important deliverables. As described in our project report titled ‘Near-Term Prospects for Long-Term Care Financing Reform,’ these work products included:

1.Pay for the Doc Fix by Fixing Medicaid LTC
2.Save Medicaid LTC $30 Billion Per Year AND Improve the Program
3. & 4. Letters from members or committees of Congress to both the GAO and the DHHS Inspector General requesting studies relevant to our project's objectives.
5.Medicaid Long-Term Care Benefits: Friendly Fire in the Class War’: Steve Moses’s testimony published by Congress.
6.Challenges to Effective Long-Term Care: Cost and Affordability’: Steve Moses’s speech to the 13th annual Health Sector Assembly in Sundance, UT.
7. Six ‘Briefing Papers’ on ‘How to Fix Long-Term Care’ with an ‘Overview’ linking to each.

“Today’s LTC Bullet conveys our ‘Overview’ of ‘How to Fix Long-Term Care.’ Subsequent LTC Bullets will deliver each of our six Briefing Papers in serial form. We hope that by reading this material you will gain a better understanding of why America’s long-term care delivery and financing system is so dysfunctional and what it will take to fix the problem. Thanks for supporting the Center for Long-Term Care Reform.”

Read this Bullet and “How to Fix LTC.”

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Updated, Monday, August 10, 2015, 9:57 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-031:  LTC NEWS AND COMMENT

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

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

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

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

  • Alzheimer’s: UNM researchers may be closing in on a cure

  • Caring for a Parent With Alzheimer’s Disease

  • People are developing dementia earlier and dying of it more, a study shows

  • Genworth reduced 220 positions; won't sell its life and annuity businesses

  • Bad news on cost of living raises for Social Security

  • Providers may “Yelp” at review website's newest feature

  • Obama's bombshell: More industry rules

  • Medicare rule may needlessly extend some hospital stays

  • Don’t Blame Medicaid for Rise in Health Care Spending

  • Science Confirms It: Retirement Is Good for Your Health

  • Intercompany Long-term Care Insurance Experience Study Webcast

  • Dementia residents and caregivers say invest in direct care, not research: survey

  • Long-term care insurance rates go up for new federal enrollees — with no warning

  • 7 Long-Term Care Insurance Trends to Watch

  • Medicaid Applicant with Care Agreement Assessed Transfer Penalty Because Rate Was Too High

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

#############################

 

Updated, Friday, August 7, 2015, 09:00 AM (Pacific)
 
Seattle—

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LTC Bullet:  LTC Wake-Up Call

LTC Comment:  What can aging demographics tell us about likely future Medicaid LTC expenditures?  Answers after the ***news.***

*** 2016 ILTCI CONFERENCE:  The 16th Annual Intercompany LTCI Conference will convene at The Grand Hyatt in San Antonio, Texas March 13th to 16th, 2016.  Mark your calendars and be there if you can.  Professional meetings don’t get any better than this one.  In case you’re considering sponsoring or exhibiting, conference organizers report “Please review the Promotional Opportunity Guide, Application and Exhibit Hall rules.  The conference is offering substantial discounts for signing up by Monday, September 14th.”  You can find an “Exhibitor & Sponsor Application” and “Exhibitor & Sponsor Options” at these links.***

*** PHYLLIS SHELTON REPORTS on her 5th webinar covering “My Favorite Linked Benefit Products and How Not to Sell Them” here.  Get the details on this session and consider subscribing to her series of webinars at the bottom of the link. ***

*** 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. ***

 

LTC BULLET:  LTC WAKE-UP CALL

LTC Comment:  Recent LTC Bullets have focused on academics’ and policy-makers’ complacency about unusually small health and long-term care expenditure increases over the past few years.  See LTC Bullet:  Cassandra’s Quandary (7/17/15) and LTC Bullet:  Pandora Meets Rosy Scenario in CMS Projections (8/1/15).

Everyone seems to agree that the recent moderate medical inflation will not continue indefinitely.  But few people in a position to do something about it appear to be taking full cognizance of the potential risk and cost.  Just as consumers are enabled to be in denial about long-term care because government has indemnified them against most catastrophic LTC costs over the years, so public officials and too many of the experts who advise them have allowed mild health and LTC inflation recently to dull their level of concern about the future.

Let’s get specific.  I’m working on a study of Medicaid and long-term care financing in New Hampshire.  The Granite State is interesting on this topic for many reasons.  It has a lot of old people already and its over-65 and over-85 cohorts are growing faster than they are in most other states.  New Hampshire is also suffering from a “birth dearth” with declining rates of child-bearing and in-migration suggesting a future shortage of workers, including LTC caregivers.  As elsewhere, Medicaid strains the state budget already despite notoriously low reimbursement rates for providers.  And, of course, being the first-in-the-nation presidential primary state, New Hampshire offers a unique opportunity to push hard questions about Medicaid and LTC financing into the faces of an unusually large number of presidential candidates this year.

So, given New Hampshire’s vulnerability to LTC risk and cost, why aren’t thought-leaders and decision-makers in the “live free or die state” more concerned?  I think a decade of relatively tame Medicaid LTC expenditure increases has desensitized them.  For example, from 2005 to 2014 New Hampshire’s Medicaid long-term care expenditures for the elderly in . . .

  • Nursing Homes only increased from $174,491,000 to $192,854,000 or 10.5%.

  • Home Nursing Services (Choices for Independence Waiver) increased more rapidly from $26,086,000 to $43,512,000 or 66.8%, but these services help recipients stay out of a nursing home and in their own homes at less cost, so they’re presumed to explain the low inflation in nursing home expenditures.

  • Likewise Mid-Level Care (Choices for Independence Waiver, AKA residential care or assisted living) grew from $1,497,000 to $9,327,000 or 523.0%, but again this increase is considered to be in lieu of higher institutional costs.

  • Medical Services to support home care declined from $50,536,000 to $36,052,000, a 28.7% decrease, but they have leveled out around $36,000.

  • Total Medicaid LTC expenditures for the elderly increased from $252,610,000 in 2005 to $281,745,000 in 2014, an increase of only 11.5% over a ten-year period!

Together, these LTC expenditure data convey a message that rebalancing from institutional to home and community-based care is working to keep overall cost increases moderate.  For the sake of argument, let’s assume that this is true and that over time nursing home costs will continue to increase only slowly while increases in home care costs will moderate some, other factors remaining equal.  Should that give us peace of mind about the future?

No!  Because other factors will decidedly not remain the same.  For now, never mind the potential inflation in the market price of all levels of long-term care services.  Set aside any concerns about the financial viability of Medicaid or the risk of another national economic downturn.  Let’s look only at the predictable growth of the elderly population in New Hampshire.  This is not speculation.  Most of the baby boomers in the state who will need long-term care in the future are already there.  Of course, some will move out but demographers predict the future holds more, many more, not fewer aged people in New Hampshire.  What’s the potential impact?

We draw on AARP’s “Across the States—2012” publication for these estimates of aging in New Hampshire.[1]  The “Appendix” below lays out more details.  But here are the highlights . . .

Nursing Homes

  • Nursing homes cost New Hampshire Medicaid $145 per state resident; $979 per resident over age 65; and $6,888 per resident over age 85 for a total of $192,854,000 in 2014
  • Taking into account only growth in the aging population, nursing homes will cost New Hampshire Medicaid . . .
    • $364,171,000 in 2032, an 88.8% increase and $392,980,000 in 2050, a 103.8% increase based on age 65-plus growth from 197,000 in 2012 to 372,000 in 2032 and 401,000 in 2050
    • $344,382,000 in 2032, a 78.6% increase and $716,560,000 in 2050, a 271.6% increase based on age 85-plus growth from 28,000 in 2012 to 50,000 in 2032 and 104,000 in 2050

Home Nursing Services (Choices for Independence Waiver)

  • Home Nursing Services cost New Hampshire Medicaid $32.79 per state resident; $221 per resident over age 65; and $1,554 per resident over age 85 for a total of $43,512,000 in 2014

  • Taking into account only growth in the aging population, home nursing services  will cost New Hampshire Medicaid . . .

    • $82,163,640 in 2032 and $88,568,870 in 2050 based on age 65-plus growth

    • $77,700,000 in 2032 and $161,616,000 in 2050 based on age 85-plus growth

Mid-Level Care (Choices for Independence Waiver)

  • Mid-Level Care (assisted living) costs New Hampshire Medicaid $7.03 per state resident; $47.35 per resident over age 65; and $333.11 per resident over age 85 for a total of $9,327,000 in 2014.

  • Taking into account only growth in the aging population, mid-level care will cost New Hampshire Medicaid . . .

    • $17,612,406 in 2032 and $18,987,350 in 2050 based on age 65-plus growth

    • $16,655,357 in 2032 and $34,643,440 in 2050 based on age 85-plus growth 

Medical Services

  • Medical Services for home care recipients cost New Hampshire Medicaid $27.17 per state resident; $183.00 per resident over age 65; and $1,287.57 per resident over age 85 for a total of $36,052,000 in 2014.

  • Taking into account only growth in the aging population, medical services will cost New Hampshire Medicaid . . .

    • $68,076,000 in 2032 and $73,383,000 in 2050 based on age 65-plus growth

    • $64,378,571 in 2032 and $133,907,280 in 2050 based on age 85-plus growth

Total Medicaid Long-Term Care for the Elderly

  • Nursing homes plus home nursing plus mid-level plus medical services:  $281,745,000 as of 2014

  • Taking into account only growth in the aging population, total long-term care for the elderly will cost New Hampshire Medicaid . . .

    • $531,934,560 in 2032 and $574,196,310 in 2050 based on age 65-plus growth

    • $503,196,570 in 2032 and $1,046,964,420 based on age 85-plus growth

LTC Comment:  It is interesting to note how the estimate of growth in expenditures through 2032 is higher based on age 65+ population growth than it is based on age 85+ population growth.  Even more remarkable is that costs would increase only slightly between 2032 and 2050 based on growth in the 65+ population (from $532 million to $574 million) whereas they skyrocket (from $503 million in 2032 to over $1 billion) based on growth in the 85+ population.  That’s true because the age 85+ population growth is expected to accelerate considerably between 2032 and 2050 growing from 3.2 percent of the population to 5.9 percent.  But in the same period, the percentage of the population aged 65+ decreases from 8.0 percent to 7.4 percent.  For the same reason, and because 85 is the age at which the incidence of dementia begins to spike causing the highest long-term care expenses, the growth in the 85-plus population is probably the better factor to consider in estimating likely future costs.

Bottom line, the take away from this analysis is that other things being equal New Hampshire’s Medicaid long-term care expenditures may nearly quadruple over the next 35 years to more than one billion dollars based on nothing other than highly predictable increases in the “old-old” (85+) population.

Ceteris Non Paribus

Unfortunately, other things are never equal.  Much more than aging demographics goes into reasonably predicting future Medicaid LTC expenditures.  In our report titled “Apply the LTC Vulnerability Index to Your State:  The New Hampshire Example,” we identified six additional critical factors:

  • Morbidity or how sick future aged cohorts will be

  • Medicaid viability as a long-term care payer

  • Reliability of federal revenue to fund Medicaid LTC

  • Reliability of state revenue to fund Medicaid LTC

  • Potential of currently untapped private LTC payment sources

  • Deleterious impact of growing dependency on public programs (Entitlement Mentality)

Our forthcoming report on Medicaid and long-term care financing in New Hampshire will expand on all of these factors and integrate them into a reasonable prognostication of what the state can expect to happen going forward.  We’ll also have some recommendations for state and federal policy changes to correct the dangerous course New Hampshire and the country are pursuing currently.  So, stay tuned.

Appendix[2]

New Hampshire population:  1,326,813[3]

Nursing Homes

From 2005 to 2014:  Nursing homes $174,491,000 to $192,854,000 or 10.5% increase.  As of 2014:  $145.35 per state resident;

$978.95 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $364,171,000 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $392,980,000 or 103.8% increase;

$6,887.64 per 28,000 age 85+ in 2012; 50,000 85+ in 2032 without inflation = $344,382,000 or 78.6% increase; 104,000 85+ in 2050 without inflation = $716,560,000 or 271.6% increase

Home Nursing Services

From 2005 to 2014:  Home Nursing Services $26,086,000 to $43,512,000 or 66.8% increase.  As of 2014:  $32.79 per state resident;

$220.87 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $82,163,640 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $88,568,870 or 103.6% increase;

$1,554 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $77,700,000 or 78.6%; 104,000 age 85+ in 2050 without inflation = $161,616,000 or 271.4% increase

Mid-Level Care

From 2005 to 2014:  Mid-Level Care $1,497,000 to $ 9,327,000 or 523.0% increase.  As of 2014:  $7.03 per state resident;

$47.35 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $17,612,406 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $18,987,350 or 103.6% increase;

$333.11 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $16,655.357 or 78.6%; 104,000 age 85+ in 2050 without inflation = $34,643,440 or 271.4% increase

Medical Services

From 2005 to 2014:  Medical Services $50,536,000 to $36,052,000 or 28.7% decrease, but has leveled out around $36,000.  As of 2014:  $27.17 per state resident;

$183.00 per 197,000 age 65+ in 2012; 372,000 age 65+ in 2032 without inflation = $68,076,000 or 88.8% increase; 401,000 age 65+ in 2050 without inflation = $73,383,000 or 103.6% increase;

$1,287.57 per 28,000 age 85+ in 2012; 50,000 age 85+ in 2032 without inflation = $64,378,571 or 78.6%; 104,000 age 85+ in 2050 without inflation = $133,907,280 or 271.4% increase


 

[1] Ari Houser, Wendy Fox-Grage, Kathleen Ujvari, “Across the States:  Profiles of Long-Term Services and Supports, Ninth Edition 2012,” AARP, Washington, DC, 2012, p. 216; http://www.aarp.org/home-garden/livable-communities/info-09-2012/across-the-states-2012-profiles-of-long-term-services-supports-AARP-ppi-ltc.html.

[2] Source for Medicaid LTC expenditure data:  Office of Legislative Budget Assistant, State of New Hampshire

[3] From the U.S. Census Bureau QuickFacts:  http://quickfacts.census.gov/qfd/states/33000.html

 

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Updated, Monday, August 3, 2015, 10:55 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-030:  LTC NEWS AND COMMENT

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

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

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

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

  • How Spouses Can Share the Benefits of Long-Term-Care Insurance

  • Catherine Hawes: Assisted Living is a ‘Ticking Time Bomb’

  • ASPE Long-Term Care Financing Colloquium

  • Prepared for a financial emergency?

  • Advocates split with health plans, states over Medicaid long-term care rules

  • As Medicare and Medicaid Turn 50, Use of Private Health Plans Surges

  • Senior Living Provides Solutions for Residents with Alzheimer’s Disease

  • “Jaw-dropping”: Medicare deaths, hospitalizations AND costs reduced

  • What Paul Krugman Doesn't Understand About Medicare

  • Health Affairs Web First: Health Spending Growth To Remain Moderate Compared To Pre-Recession Highs

  • Alzheimer's misdiagnoses running up big Medicare bills

  • 2015’s States Most & Least Dependent on the Federal Government

  • Dementia Risk May Be Dropping With Generations

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

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Updated, Friday, July 31, 2015, 9:28 AM (Pacific)
 
Seattle—

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LTC BULLET:  PANDORA MEETS ROSY SCENARIO IN CMS PROJECTIONS

LTC Comment:  The aging demographic evils in Pandora’s “box” don’t find their way into CMS actuaries’ health expenditure estimates for the coming decade.  Quotes and comments after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** PHYLLIS SHELTON REPORTS on her 3rd webinar on “How to Sell LTC Insurance to Companies of All Sizes” here and on her 4th webinar on “Equity-Index Annuities With and Without Underwriting” here.  Get the details on these sessions and consider subscribing to her series of webinars at the bottom of either of these links. ***

*** HONEY OF A MESSAGE:  Self-styled “Queen of Long-Term Care” Honey Leveen holds forth on “Why Self-Insuring for LTC Might be Unwise...” and other related topics here. ***

*** LTC CLIPPINGS:  If you’re not subscribed to the Center for LTC Reform’s LTC Clippings service, here’s a sample of what you’re missing.  Contact Damon at 206-283-7036 or damon@centerltc.com to begin receiving these daily “heads-ups” for about $.28 per day if you’re already a member of the Center and $.33 if you’re not.

7/29/2015, “Advocates split with health plans, states over Medicaid long-term care rules,” by Virgil Dickson, Modern Healthcare

Quote:  “Patient advocates are praising a section of the CMS' proposed Medicaid managed-care rule related to long-term care. But health plans and states are sharply critical of provisions imposing new credentialing requirements on long-term care providers and allowing beneficiaries to opt out of managed care if their provider is not in a health plan's network.

LTC Comment:  As state Medicaid programs pawn off their responsibility for long-term care to giant private insurance companies, the Feds are laying down the law.  Patients are unlikely to be winners as Medicaid managed care tries to squeeze between the rock of inadequate reimbursement and the hard place of mandated quality. ***

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LTC BULLET:  PANDORA MEETS ROSY SCENARIO IN CMS PROJECTIONS

LTC Comment:  Once a year, actuaries from the Centers for Medicare and Medicaid Services prepare a report estimating national health expenditures for the coming decade.  Each year, their findings are published by the journal Health Affairs.  This year’s article by Sean P. Keehan, et al., is titled “National Health Expenditure Projections, 2014-24: Spending Growth Faster Than Recent Trends.”  You can find it here, but it’s gated so we’ll give you a peek at some representative quotes followed by our comments.

Quote:  "ABSTRACT Health spending growth in the United States is projected to average 5.8 percent for 2014-24, reflecting the Affordable Care Act's coverage expansions, faster economic growth, and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase. However, in part because of the impact of continued cost-sharing increases that are anticipated among health plans, the acceleration of these growth rates is expected to be modest. The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024."  (p. 1407) 

LTC Comment:  That’s it in a nutshell.  Health costs are rising but more people are covered and thanks to an improving economy and less attractive public and private health insurance coverage we needn’t worry much about the long-term impact of population aging.  Hence there’s very little in this report, and nothing in the text, about future long-term care costs which are likely to do their worst damage outside the report’s totally inadequate 10-year window.  Pandora of the box, meet Rosy Scenario of the economic happy face.

Quote:  “Moreover, as the baby-boomer generation continues to age into eligibility for Medicare and as the Medicaid population ages, it is projected that nearly four out of every ten health care dollars will be spent on people enrolled in one or both of these two largely government-funded programs, in which per enrollee costs tend to be higher than average.” (p. 1408)

LTC Comment:  The first of the baby boomers don’t have their 85th birthdays, the age at which the risk of needing expensive long-term care begins to spike, until 2031, seven years after the last year in the CMS projections (2024).  Mentioning the baby-boomer generation’s growing impact on Medicare and Medicaid within a relatively harmless window of time has the effect of diminishing its importance.  Now is when we should be emphasizing the likely long-term impact of aging demographics, not tamping down such concerns.

Quote:  “Recent health spending trends, while low by historical standards, are consistent with expectations inferred from economic trends in the preceding periods that recently peaked in 2002 and reached a trough in 2013. Thus, health spending growth is likely to accelerate in response to improvements in economic conditions that are projected over the coming decade.”5   Footnote 5:  “Nominal GDP averaged 2.5 percent for 2008–13 and is projected to grow at an average annual rate of 4.9 percent for 2017–24.” (p. 1408)

LTC Comment:  Welcome to economic fantasyland.  GDP growth of almost five percent starting in 2017?  Don’t bet on it.  The U.S. economy succumbed to recessions in 2001 and 2008 following artificial booms created by irresponsible fiscal (deficit spending) and monetary (money printing and interest rate manipulation) policies.  The Obama Administration and the Federal Reserve doubled down on those same misbegotten fiscal and monetary policies after the Great Recession of 2008.  As a result, we’re in the Granddaddy of all artificial bubble booms right now and a truly catastrophic economic bust may be just around the corner.  In any case, the next bust is highly likely to occur within the ten-year time frame covered by the CMS health expenditure projections. 

Quote:  “In addition, the aging of the population is also expected to lead to increased Medicaid spending (5.9 percent growth over the period on average), particularly for assistance in paying for nursing home care. Average Medicaid spending per beneficiary during this [latter] period is expected to grow more rapidly than in the earlier portions of the projection period, at 5.1 percent.” (p. 1413)

LTC Comment:  That quote is all there is about LTC in the text of the article.  The CMS actuaries provide special sections expanding on “hospital services,” “physician and clinical services,” and “prescription drugs,” but they focus nowhere on long-term care.  I searched the document for “LTC,” “long-term care,” “LTSS,” and “long-term services and supports” without a single hit!  This is further evidence of how short-sighted these projections are.

You have to dig into the article’s tables or “Exhibits,” to find any details relevant to the coming surge in long-term care costs.  For example, “Exhibit 1:  National Health Expenditures (NHE), Amounts And Annual Growth From Previous Year Shown, By Spending Category, Calendar Years 2007–24,” has rows for:

  • Nursing care facilities and continuing care retirement communities:  projected to increase from $126.4 billion in 2007 to $274.4 billion in 2024, representing growth of 117.1%, with annual growth rates declining from 6.8% in 2007 to 5.8% in 2024
  • Home health care:  projected to increase from $57.8 billion in 2007 to $156.0 billion in 2024, representing growth of 169.9%, with annual growth rates declining from 10.1% in 2007 to 7.0% in 2024
  • Other health, residential, and personal care:  projected to increase from $107.7 billion in 2007 to $251.1 billion in 2024, representing growth of 133.1%, with annual growth rates declining from 9.3% in 2007 to 5.2% in 2024

The mean U.S. Gross Domestic Product growth since 2007 has been less than two percent.  (Source:  Trading Economics, http://www.tradingeconomics.com/united-states/gdp-growth)  What possible hope can we have that the U.S. economy will keep up with the 5.8%, 7.0% and 5.2% growth estimates for nursing care, home care and other personal care, respectively, projected for 2024, much less the far greater increases in these long-term care expenditure categories likely in the years following 2024?  Economist Herb Stein said “Trends that can’t continue, won’t.”  This is a perfect example.  What happens when they don’t?

Quote:  “With these changes in health insurance coverage, the share of national health spending paid for out of pocket is expected to decline from 11.6 percent in 2013 to 10.0 percent by 2024.” (p. 1414)

“Given the coverage shifts described above, by 2024 the share of national health spending financed by federal, state, and local governments is projected to rise to 47 percent from 43 percent in 2013, with total government spending projected to reach $2.5 trillion (Exhibit 4).”  (p. 1414)

LTC Comment:  The less people pay out of pocket for health and long-term care, the more unconcerned they become about the cost of their care.  U.S. health care financing dominated by third parties, including both public and private insurance and especially low-deductible coverage, has increased costs and reduced consumers’ sense of urgency about planning for potentially catastrophic health outcomes.  This is the tragic consummation that government intervention in the health care and private insurance marketplaces has caused.  We won’t see the full consequences of these policies for another decade after the CMS projections’ window.

The Center for Long-Term Care Reform and State Budget Solutions are preparing a 30-year projection of likely long-term care expenditures including recommendations to minimize damage to the country’s long-term care service delivery and financing system.

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Updated, Monday, July 27, 2015, 9:43 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-029:  LTC NEWS AND COMMENT

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

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

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

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

  • Long-Term Care: Families Face Steep Costs Even When It's 'Free'

  • Surprise! Your Medicare Premium Could Soar Next Year

  • Dispelling Reverse Mortgage Myths

  • Half of Senior Care Costs to be Paid Out-of-Pocket

  • 5 things from annual check-up for Social Security, Medicare

  • Who Will Provide Care For Childless Boomers?

  • Feds Say 7.5M Paid An Average Penalty Of $200 For Not Having Health Insurance

  • Cognitive impairment progresses faster in women, study finds

  • Expanding Your Sales Portfolio? Give LTCI a Second Look

  • Alzheimer's and Medicare spending to boom over next 25 years

  • Medicare Expanding Access to Hospice Care

  • Check Out Long-Term Care Insurance Agents before Engaging with Them, ACSIA Partners Advises

  • Medicare's midlife crisis: Catastrophic finances pit doctors against patients

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

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Updated, Friday, July 24, 2015, 11:06 AM (Pacific)
 
Seattle—

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LTC BULLET:  NEW DATA ON LTC INCIDENCE, DURATION, COST AND FINANCING SOURCES

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

LTC BULLET:  NEW DATA ON LTC INCIDENCE, DURATION, COST AND FINANCING SOURCES

Highlights from the report:

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

Highlights from our analysis:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Quote:  “Out-of-pocket costs average $72,000. Among those who have out-of-pocket costs, these costs average $140,000. About three-fifths of individuals face no out-of-pocket costs.14 Looking at community and institutional expenses together, two predominant payers are Medicaid, comprising 34 percent and out-of-pocket payments, comprising 52 percent of the sum of total LTSS expenditures, respectively. Medicare is the next most important payer, followed by private insurance and other public programs. Payer predominance varies by setting. For example, Medicaid pays for 51 percent of the total for institutional settings. For community expenses, in contrast, out-of-pocket payments by families comprise the majority, about 68 percent.15”  (p. 6)

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

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

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

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

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

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

Quote:  “The DYNASIM projections suggest that although Medicaid does reach individuals at all points in the income distribution at age 65, it primarily serves those in the bottom two quintiles. For example, about 36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to just 5 percent in the top quintile at that age. Those in upper income quintiles who use Medicaid are typically individuals who have survived until their mid- to late 90s, consistent with other research (DeNardi et al., 2013).16”  (p. 7)

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

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

Lowest:      $28,894

Second:        50,520

Third:           78,000

Fourth:        121,059

Fifth:          $217,032 (This is actually the “lower limit of top 5 percent”)

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

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

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

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

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

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

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

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

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

Do it before it’s too late! 

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Updated, Monday, July 20, 2015, 11:16 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-028:  LTC NEWS AND COMMENT

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

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

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

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

  • Why Working Past 70 Pays Off

  • What Are the Chances You'll Need Long-Term Care And How Much Will It Cost?

  • Do Americans Understand Long-Term Care?

  • The [White House] Conference on Aging that Wasn't

  • Home Health Agencies Get Medicare’s Star Treatment

  • Valuing the Invaluable 2015 Update: Undeniable Progress, but Big Gaps Remain

  • How much $100 is really worth in each state

  • Data Note: Medicare Advantage Enrollment, by Firm, 2015

  • Former CMS chief to become top lobbyist for health plans

  • More Adults Caring for Family Members As Age of Caregivers Gets Younger

  • CMS to Require Health Information Exchange for Long-Term Care

  • CMS proposes massive regulation revision for LTC

  • Democrats call for major change in Social Security

  • White House Tackles Aging Amid Booming Market For Long-Term Care

  • Federal Audits Of Medicare Advantage Reveal Widespread Overcharges

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

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Updated, Friday, July 17, 2015, 10:24 AM (Pacific)
 
Seattle—

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LTC BULLET:  CASSANDRA’S QUANDARY

LTC Comment:  With the gift of prophecy but cursed with doubters, Cassandra would be right at home predicting the future of long-term care financing, after the ***news.***

*** SHELTON REPORT:  LTCI author and trainer Phyllis Shelton reports that her July 8th Webinar on “How to Sell LTC Insurance that is Affordable in Today's Market” was a hit.  Get the details on this session and consider subscribing to her series of webinars here. ***

*** SAMPLE CLIPPING:  Every day we send LTC Clippings subscribers real time news they need to know about LTC services and financing with commentary.  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe by upgrading your membership to “Premier” ($250 per year).  That’s just an extra $100 for most Center members and only a little more than $20 per month for new subscribers.

7/15/2015, “How much $100 is really worth in each state,” by Mandi Woodruf, Yahoo Finance

Quote:  “Nothing diminishes the value of a dollar quite like your ZIP code. In a fascinating look at the cost of living in all 50 states and hundreds of metropolitan areas, the Tax Foundation shows exactly how much — and how little — 100 bucks is worth depending where you live.

LTC Comment:  What’s your buck worth?  Click on your state to find out.  And consider this:  not only does LTC cost much more in some states than others, the dollar may not go as far in those states either. ***

LTC BULLET:  CASSANDRA’S QUANDARY

LTC Comment:  In the ancient myth, Apollo granted Cassandra the ability to predict the future accurately, but when she declined his romantic advances, he doomed her to be disbelieved. 

The evasion of reality and denial of risk surrounding long-term care public policy reminds me of Cassandra’s quandary.  No matter how much irrefutable evidence we adduce for the unsustainability of the current LTC financing system, the stubborn minions of complacency persist and prevail.

I’ve seen some examples recently in my research on Medicaid and long-term care financing in New Hampshire. 

A long-term care provider expressed optimism that science would cure Alzheimer’s Disease and radically reduce future LTC costs.  My response:  “Hope for the best, but plan for the worst.”

A highly placed public official opined that LTC expenditures, which were predicted to explode two decades ago, haven’t.  My response:  “Yet!”

He went on “Besides, we can always print more money.”  My response:  “Eventually you run out of other people’s money,” as Margaret Thatcher warned.

Greek myth is a suitable lens through which to view predictions about the future of long-term care services and financing.  Modern day Greece, and Puerto Rico closer to home, are canaries in the mineshaft warning us to heed today’s LTC Cassandras. 

Can we relax about LTC financing because institutional and home care costs have not exploded yet?  Well, no, the first baby boomers won’t reach 85, the age at which long-term care becomes much more likely and expensive, until 2031.

Can we rely on current fiscal (deficit spending) and monetary (credit expansion, money printing, and interest rate manipulation) indefinitely?  Hardly.  Sooner or later, economic gravity prevails, interest rates will rise making public debt unserviceable.

But when?

My guess, to employ some tired but evocative metaphors, is that it will happen when the “silver tsunami” becomes a “perfect storm” causing an “economic freeze.”

Think about it. 

  • The boomers start coming of LTC age 85 in 2031.
  • Social Security and Medicare run out of “trust funds” in the 2030s.
  • Medicare and Social Security already collect less in payroll taxes than they pay out.
  • U.S. tax-generated general funds have to make up the entitlements’ shortfalls as well as pay off the trust funds’ bonds (IOUs).
  • Federal debt is $18.1 trillion and rising rapidly.
  • Heavy taxation impedes the economic activity necessary to generate the needed tax revenue.
  • The Federal Reserve domestically and central banks internationally are pushing the limits of their ability to expand credit in order to hide economic malaise.
  • The fiscal walls are closing on the U.S. and world economies.
  • Promiscuous spending leads to impoverishment for individuals, families (sooner) and national economies (later because of their ability to manipulate currency).
  • These lessons are legion throughout history and around the world.

Think this time is different?  See This Time Is Different: Eight Centuries of Financial Folly by Reinhart and Rogoff.

Economic bubbles expand until they don’t.  The internet and housing bubbles, inflated by easy money and credit, each lasted several years.  The current bubble, created by the very same fiscal and monetary policies that caused its predecessors, has been expanding about as long as they did before they burst.  What is different this time is that the latest economic bubble is much bigger than the others and the tools to hide it, artificially low interest rates and quantitative easing, are worn out from overuse and likely no longer effective.

So, when will Cassandra’s dire LTC predictions come true?  No later than 2030, but probably much sooner.  We’re compiling and organizing the evidence in one politically prominent state, New Hampshire.  Expect our report in September.

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Updated, Monday, July 13, 2015, 3:57 PM (Pacific)
 
Seattle—

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LTC E-ALERT #15-027:  LTC NEWS AND COMMENT

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

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

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

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

  • Poll: Sandwich generation worried about own long-term care

  • Safeguarding Clients from Long-Term Care Costs

  • Angela Bassett Aims To Increase Dialogue Surrounding Aging And Long-Term Care

  • Jonathan Kozol’s memoir on aging can stand proudly beside Roz Chast’s

  • Retirement assets on the rise

  • 4 Tips for Parents Who Care for Kids and Elderly Parents

  • Guide to Buying Life Insurance at Every Stage of Life

  • Questions loom for insurers bulking up on government business

  • Providers fume over pay freeze

  • Alzheimer’s spurs the fearful to change their lives to delay it

  • Technology Innovations That Could Help the Elderly

  • What Many 65-Year Olds Don't Know About Medicare

  • Japan Mulls Politically Dangerous Squeeze on Senior Benefits

  • Expert says health enrollment data paints misleading picture

  • How Technology Will Revolutionize Long-Term Care

  • Medicare Advantage 2015 Spotlight: Enrollment Market Update

  • What Can We Expect From a Growing National Debt?

  • Women More Likely to Get Alzheimer's

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

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Updated, Friday, July 10, 2015,  11:49 AM (Pacific)
 
Contoocook, NH—

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LTC BULLET:  AMERICA'S DEMOGRAPHIC WINTER

LTC Bullet:  The age wave isn’t our only problem.  A receding population tide is just as serious.  Details after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** THE GRANITE STATE is where I remain conducting interviews for our study of Medicaid and long-term care financing in New Hampshire.  We described this project in LTC Bullet:  Should Presidential Hopefuls Address Long-Term Care?  As you read today’s LTC Bullet you’ll see why the demographic challenges America faces are especially acute here.  I’ll be writing our report in August for publication in September following which we’ll do a conference, publicity and outreach to the presidential candidates. ***

***  AALTCI’S SALES SUMMIT will be a FREE one-day event this year on October 27, 2015 at the Hyatt Hotel at Dulles Airport, near Washington, D.C.  Attend in person or catch the program online.  All free of charge.  Get all the details here. ***

 

LTC BULLET:  AMERICA'S DEMOGRAPHIC WINTER

LTC Comment:  Population aging is a problem we deal with frequently in this space.  It’s important to recognize, however, that the phenomenon sometimes referred to as the “birth dearth” is equally important and for many of the same reasons.

Fewer children being born now has consequences later on.  We won’t have the same “bench” of workers to provide the long-term care services that surging numbers of aging boomers will require.  Nor will there be as many employees to pay the skyrocketing income and payroll taxes that government will need to finance ongoing entitlement programs and their growing unfunded liabilities. 

So today, we point you to some fascinating information provided in the following article by our colleague Scott Moody of State Budget Solutions (SMS).  Scott and SMS are collaborating with me and the Center for Long-Term Care Reform on the study of Medicaid and LTC financing in New Hampshire mentioned above. 

 

"America's Demographic Winter" (from http://www.keypolicydata.com/demographics/
by
J. Scott Moody

Demographics is Destiny!

In the policy world, demographics is far beyond the time-horizons of politicians. Politics is played out in 2-year cycles, but demographic trends can take decades to play out. Today, America stands on the precipice of an unprecedented demographic event which has been termed “demographic winter.”

Demographic winter is mostly the result of plummeting birth rates and, to a lesser degree, the aging of the baby boom generation. The aging impact on America’s population has been offset by longer life-spans, but a baby never born has exponential ripple effects on the size of the future population. As a result of too few babies being born, many parts of America will experience a shrinking working-age population and eventually shrinking overall populations.

America is not alone. Countries like Japan, Russia, and many others in Europe are already facing shrinking populations. As we will discuss, this will create a drag on economic growth at a time when many social programs will experience tremendous increases in demand. Will future generations, fewer in number, acquiesce to the financial demands of older generations? Ready or not, we will find out.

Net Natural Population Growth

So, the place to start is to examine “net natural population” growth which is the number of births minus the number of deaths that take place in a given jurisdiction. In 2014, there were 1.4 million more births than deaths [in the U.S.] which sounds impressive. However, since 1991 the change in net natural population growth declined by -32 percent to 1.4 million from 2 million.

In stark contrast, America’s population over the same time-period increased by 26 percent to 319 million from 250 million. As such, net natural population growth is contributing less and less to the overall growth in America’s population. In fact, as a percent of population, net natural population growth has declined to 0.43 percent in 2014 from 0.79 percent in 1991—a decline of 46 percent!

Of course there is a large variation among the 50 states. There are currently two states, Maine and West Virginia, where there are more deaths than births which means net natural population growth is negative. States that have also seen large drops in the rate of natural population growth include New Hampshire (-85 percent), Vermont (-81 percent), and Rhode Island (-76 percent).  [Emphasis added.]

On the brighter side, North Dakota has seen an increase in its net natural population growth (16 percent) and Nebraska is exactly level (0 percent). Beyond these two states, net natural population growth has fallen though not nearly to the extremes cited above—South Dakota (-2 percent), Kansas (-15 percent), and Iowa (-18 percent).

To better understand what is going on, let’s now look at the components of net natural population growth—births and deaths.

Births 

There has been a decline in the absolute numbers of births between 1991 and 2014 of 175,688 to 3.96 million births from 4.13 million—this is a -4.3 percent decline. Yet, as a percent of population, the drop is a steeper -24 percent to 1.24 percent in 2014 from 1.63 percent in 1991 because the decline in births is set against the backdrop of an overall increase in America’s population.

Only a single state—North Dakota—has escaped this dramatic fall in the number of births with an increase of 1.9 percent to 1.46 percent of the state’s population from 1.43 percent in 1991. This is likely due to the boom in hydraulic fracturing which has brought a younger and more fertile population to the state. Of course, with a small population of only 638,817 it doesn’t take many births to move the needle.

On the other hand, there are states with more dramatic drops in the number of births as a percent of the population including: New Hampshire (-39 percent), California (-35 percent), Vermont (-34 percent), Connecticut (-32 percent), and Maine (-31 percent).  [Emphasis added.]

Deaths

In stark contrast, there has been an increase in the absolute number of deaths in America between 1991 and 2014 of 455,090—this is a 21 percent increase. However, the absolute increase in deaths has actually lagged behind the overall growth in population. As a percent of population, deaths have fallen by -3.8 percent to 0.81 percent in 2014 from 0.85 percent in 1991.

The states that have seen the greatest increase in deaths as a percent of the population include: Alaska (52 percent), Hawaii (34 percent), and New Mexico (17 percent). On the other hand, the states that have seen the great decrease in deaths as a percent of the population include: Nebraska (-15 percent), New York (-15 percent), and South Dakota (-12 percent).

Conclusion on Net Natural Population Growth

Despite the aging of the Baby Boom generation, deaths are not (yet) to blame for America’s downshifting net natural population growth. For now, the increase in life-spans has forestalled a more dramatic rise in deaths as a percent of the population.

The blame for America’s reduced net natural population growth falls on the reduction in the number of births in both absolute terms and as a percent of the population. There are many factors that have brought this about such as contraception, abortion, delayed marriage, the decline in religion, and the rise of two-income households.

More troubling, as Baby Boomers continue to age the number of deaths is only going to continue to rise. If the decline in births does not reverse itself, many states will soon face the prospect of declining overall population without an influx of domestic or international migrants.

Net International Migration

At the national level, there is only one form of migration and that is international migration. Between 1991 and 2014, there has been an influx of 23.7 million legal immigrants—an average of 985,671 per year. The states with the greatest number of immigrants in 2014 are: California (161,318), Florida (112,306), and New York (118,799). The states with the fewest number of immigrants in 2014 are: Montana (766), Vermont (719), and Wyoming (485).

While the absolute level of international migration looks large, it only averaged 0.34 percent of the population during this time-period. Of course, this varies by state. The states with the highest level of immigration as a percent of population in 2014 are: Hawaii (0.61 percent), New York (0.6 percent), and New Jersey (0.58 percent). The states with the lowest level of immigration as a percent of population in 2014 are: West Virginia (0.06 percent), Montana (0.07 percent), and Mississippi (0.08 percent).

Net Domestic Migration

Net domestic migration measures the movement of people from one state to another. At the national level, these movements cancel each other out. However, for specific states domestic migration can significantly add or subtract population.

Between 1991 and 2014, the big winners of domestic migration include: Florida (2,825,189), Texas (2,097,396), and Arizona (1,442,367). The big losers of domestic migration include: New York (-4,144,561), California (3,875,727), and Illinois (1,580,939).

Also, it should be noted that some unknown amount of domestic migration is disguised international immigration. States like New York and California are major gateway destinations for international immigrants, but they don’t always stay for long. If they soon migrate to another state, they are classified as domestic migrants and not as international immigrants.

However, as a percent of population, the picture of net domestic migration changes significantly. The states with the greatest domestic migration as percent of population (averaged over the time-period) were: Nevada (1.9 percent), Arizona (1.2 percent), and Idaho (0.9 percent). The states with the lowest domestic migration as a percent of population were: New York (0.9 percent), Illinois (0.5 percent), and Rhode Island (0.5 percent).

The Economic Costs of Demographic Winter

Economically, for the business community, Demographic Winter will be akin to a slow-moving economic depression by moving from population growth to population decline.  With a growing population, businesses can plan on new customers simply because there are more people.  However, with a shrinking population, businesses not only lose the prospects of new customers, they must also face losing existing customers.  If businesses are unable to find new markets, they will be faced with ongoing declines in revenue—or, put simply, an economic depression.

More specifically Arnott and Chaves find that:

[W]e show that the past 60 years—which we think of as “normal”— enjoyed a demographic tailwind which we can quantify. It was worth about 1% per year, meaning that, if we think of 3% growth as normal, it’s really 2% growth plus a demographic tailwind of 1%.

 

The coming decades—due to the rising support ratios from the aging boomers—will experience a demographic headwind of (very roughly—these will be wildly out-of-sample conditions) roughly the same 1%. So, if 3% growth was normal, 1% growth (again, very roughly) becomes normal. This is the reason behind my concerns regarding the legacy of monetary and fiscal experiments, and debt and deficits we leave our children.

So even without a fiscal calamity, Demographic Winter alone will have the economy at stall speed. A little economic hiccup will quickly send the economy into a recession or even depression. Uncle Sam has already run up an $18.1 trillion dollar tab, but adding insult to injury Demographic Winter will create another fiscal tsunami.

The Fiscal Costs of Demographic Winter

In addition to the overall negative economic impact, Demographic Winter will also have a negative fiscal impact on federal, state, and local governments.  First, people over the age of 65 impose significantly more costs to government than younger age cohorts.  Figure 2 (Figure 1 omitted) shows that a typical person over the age of 65 costs government nearly three times as much as a person under the age of 18—even with educational costs factored in. 

While these costs predominantly fall on the federal government (Social Security and Medicare), state governments should be prepared for a significant spike in Medicaid costs for those over the age of 65, especially driven by the cost of nursing homes.

Second, while expenses soar for those over the age of 65, the taxes paid by this age cohort drop by two-thirds as shown in Figure 3.  The primary culprits for this drop are the payroll and income tax, which naturally decline as people retire from the labor force.  As such, the primary fiscal concern for state policymakers moving forward is the eroding income tax base as the county continues to age. [N.B. our study state, New Hampshire, has no income tax.]

Conclusion

Clearly Demographic Winter will be the major economic and fiscal issue for the next few decades. Reversing it will be not an easy task. Of course, understanding why it is happening is the first step in fixing it. There is one variable that significantly correlates with the fertility rate—weekly religious attendance. Has America’s declining church attendance resulted in the declining fertility rate? If so, finding ways to increase church attendance does not sound like a simple solution. But find a solution we must.

Below is a recent interview I did on the subject of Demographic Winter and its impact on Maine (which is currently the oldest state in America as measured by median age).
- See more at:
http://keypolicydata.com/demographics/#sthash.CsGSLgGC.dpuf

For an excellent overview, check out this movie titled “Demographic Winter: The Decline of the Human Family.”

J. Scott Moody is CEO and Chief Economist for State Budget Solutions, a non-partisan, non-profit, national public policy organization with the mission to change the way state and local governments do business.  Reach him at jsmoody@statebudgetsolutions.org.

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Updated, Monday, June 29, 2015, 10:15 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-026:  LTC NEWS AND COMMENT

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

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

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

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

  • Will Baby Boomers Change the Meaning of Retirement?

  • 'SCOTUSCare': Justice Scalia Issues Withering Dissent On Obamacare Subsidies

  • Many More Women Than Men Living to 100

  • Boomers Spend Their Kids’ Inheritance — on Supporting Them

  • Steps on the Path to Public/Private Long-Term Care Financing

  • 7 Things You Really Need To Know About Medicare But Probably Don't

  • CMS skips congressional hearing criticizing how Medicaid demos are run

  • Alzheimer’s May Begin 20 Years Before Symptoms Appear

  • How Hybrid Annuities Might Fit Into LTC Reform

  • ACSIA Partners Offers Election Poll on Key Issue: Incentives to Help More Americans Afford Long-Term Care Insurance

  • Estate Planning And The Single Girl

  • In Some States, a New Focus on Family Caregivers

  • The Evolution of Critical Illness

  • At Home, Many Seniors Are Imprisoned by Their Independence

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

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Updated, Friday, June 26, 2015, 11:21 AM (Pacific)
 
Nashua, New Hampshire—


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LTC Bullet:  Guest Column, “Real Sleight of Hand”

LTC Comment:  Author and LTCI marketer Stephen D. Forman opines about prestidigitation in the insurance domain after the ***news.***

*** SUMMER WEBINAR SERIES:  We highlighted Phyllis Shelton’s new program in a recent LTC Bullet.  The first webinar in the series took place on June 24:  “How to convert term life insurance into guaranteed issue LTC insurance.”  The next one will occur on July 8:  “How to sell long-term care insurance that is affordable in today's market / Finding money with High Deductible Plan F with a reserve annuity / Should we sell short-term care plans?”  Check out the whole series here. ***

*** 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. ***

 

LTC BULLET:  GUEST COLUMN, “REAL SLEIGHT OF HAND”

LTC Comment:  The purpose of genuine insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium.  Hence we buy life insurance, auto insurance, or fire insurance so that if we die, crash or burn (unlikely but potentially catastrophic outcomes) we’re compensated far beyond our outlay in premium payments.  Our financial risk is at least mitigated. 

Insurance works because carriers spread our risk across many other people in a way that allows for adequate indemnification at reasonable rates while covering administrative costs and profits for the underwriter.  But private insurance also prices risk.  You pay more for health insurance if you smoke, for example.  So insurance has the socially beneficial effect of encouraging responsible behavior and discouraging the opposite.  Real insurance is a neat, lean solution to a fundamental problem of human life, the unpredictability of individual tragedy.

Unfortunately, genuine insurance is getting harder and harder to find.  Government social programs, even welfare programs, call themselves “insurance.”  They spread risk, but they don’t price it so they reward irresponsible, self-destructive behavior instead of discouraging it with higher premiums.  Nowadays people expect insurance to pay for minor routine expenses, such as doctor’s visits, not just for major medical expenses.  It’s as if auto insurance paid for tune-ups.  If insurance pays routine costs, it has to be very expensive.  Hence premium costs rise or deductibles and co-insurance inflate.  I developed these points in detail here:  "The Inherent Individualism of Insurance," Navigator, Vol. 5, Nos. 10-11, November/December 2002, published in January 2003,  http://www.atlassociety.org/individualism-insurance.

But today, I’ll pass the baton to guest columnist Stephen D. Forman of Long Term Care Associates to talk about another aspect of the corruption of insurance.  He homes in on a “Real Sleight of Hand” that few people see for what it is, pseudo-insurance.

 

“Real Sleight of Hand”
by
Stephen D. Forman

In the world I inhabit—long term care—there are classically four solutions. Any salt-of-the-Earth agent knows you can only pay for long term care with Medicare, Medicaid, self-insurance, or private insurance[i]. When we speak across the metaphorical kitchen table, we are careful to point out why none of these options are viable except for private LTC insurance. We paint a picture in which our clients who have the health and means would never choose to wind up “uninsured”. To do so would risk losing everything, and ending up on welfare (Medicaid).

In another universe, the nonprofit RAND Corporation has just released new figures which point to the glowing success of the Affordable Care Act. Nearly 17 million more people in the US “have gained health insurance since the [ACA’s] major coverage expansion began.” That’s the net total of 22.8M newly insured people (who never had coverage before) less 5.9M who lost their insurance[ii]. RAND elaborates: for those gaining Medicaid coverage, “6.5 million, or 52 percent, were previously uninsured.”

Sleight of Hand

There’s just one problem.

In their official stats, RAND—and everyone else for that matter—are counting the 21M American adults presently on Medicaid as part of our “insured” population. Isn’t it funny how words evolve?

What sleight of hand! Even ten years ago, we would not have said an individual on Medicaid had health insurance. And no agent today would say that a senior on Medicaid has LTC insurance. The very statement is an oxymoron.

Yet a study was just published (by one of the same celebrated economists behind the “Medicaid Crowd Out Effect”) which may turn what we know about Medicaid on its head. For one thing, it asserts that Medicaid works as health insurance. But to reach this conclusion, it presupposes a world in which health insurance acts differently from its siblings: we buy home and auto insurance to protect us from catastrophic costs. Nowadays, we buy health insurance so we can use more healthcare. If that’s our benchmark, then Medicaid does the job: beneficiaries do get more healthcare (including preventive services) and find that doctors do not turn them away.

Of course, even before the ACA was but a glimmer, it could be said that everyone in America was covered. In fact, someone did say it—John Goodman (father of the HSA) in 2008. He was only half-joking when he suggested we count, “...only people who are denied care [as] truly uninsured. Everyone who gets care is effectively insured by some mechanism.” While an interesting thought experiment, such an overbroad definition may require fine-tuning.

The Under-Insured

It turns out there’s a third way, a star-crossed category known as the “under-insured”. Remarkably, the number of us who can call ourselves members of this group has doubled in the last decade to 31M.

One-quarter of Americans who actually have health insurance are paying so much in deductibles and out-of-pocket expenses that we’re skimping on care and less likely to see a doctor when sick for fear of the bills. Fifty percent of this group is busy paying off medical debt exceeding $4,000 or more.[iii] The big driver of under-insurance is the rise of health plans with large deductibles—both their ever-increasing size and the number of people buying them. (This rise is driven, in turn, by the shift away from employer-sponsored health insurance, and the desire by individuals paying their own freight to keep premiums down.)

Since the Commonwealth Fund (compiler of these stats) defines under-insurance as the percent of household income directed toward medical bills (10%) or the size of one’s deductible (5% of income), it will be interesting to see how Medicaid enrollees are accounted for. (The expansion had barely begun by the time the last survey was completed.) For if we were to compare, a long-term care recipient on Medicaid must contribute nearly 100% of her income toward the cost of her nursing home or home care before the public program will step in as “second payer”. Does it not follow that every Medicaid LTC recipient would meet this definition of “under-insured”?

And yet, the public is clamoring for it.

Woodwork Effect

We’re told expansion states are “reeling” from enrollment numbers that are sometimes double what they anticipated. But that’s not even the problem. (After all, as one official put it, you don’t roll out a program like this then hope no one shows up.) The trouble comes from the “woodwork effect”, which is what happens when folks come out of the woodwork to utilize a benefit that’s been made more desirable.[iv] Many people who were already eligible for Medicaid before the ACA have finally decided to enroll only because of the publicity and broader outreach accompanying the expansion.

These “woodwork” enrollees are costly. Unlike the expansion signups who are covered at the high 90%+ federal matching rate promised by the ACA, these folks receive the regular reimbursement, just 57% on average with states picking up the balance.

Those who enroll in Medicaid receive services of questionable value. That’s not this author’s opinion: that’s another conclusion from the study cited above. When the economists tried to quantify the value of benefits provided by the program they ranged from 15-cents on the dollar at a low to 20 – 40 cents at a high. In other words, a beneficiary would trade $1.00 in services for 15-cents in lump-sum cash.

Maybe that’s why you can’t give the program away. It was estimated before the ACA that 1/3rd of our nation’s uninsurance problem could be solved if those eligible for Medicaid and other public programs simply signed up—no law needed. And yet here we are 5 years down the road—plus an individual mandate and $2B/month in subsidies later—yet 36M Americans are still officially counted as uninsured (12% of the population).

During the last five years—the first five years of the Affordable Care Act—a change in the narrative has occurred. The national vocabulary has shifted beneath our feet. It is now acceptable to count 21M Americans on Medicaid as “insured”. Take away those who found “insurance” through Medicaid and the ACA isn’t just a smaller program, it’s a prodigious failure.

Public vs. Private “Insurance”

Whether this sleight of hand is a proper description, an improper appropriation or a total misnomer is anybody’s guess. At some level it’s a counting question—of import only to public policy wonks, record-keepers and statisticians. At a far more intimate level it’s about families—who can and cannot receive the care they need, the services they desire, and what the financial consequences will be.

For those of us who educate the public about their long-term care options, it’s important to note how the walls are coming down between public and private options. When ordinary Americans call on us for retirement advice in the future, it may prove difficult to reverse the consequences of years of such ingrained thought.


 

[i] We can quibble with the fringes—whether to include the VA, or what new products are meant by the term “private insurance”, but you’ll see it’s not germane to this argument.

[ii] All numbers in the RAND survey are extrapolations based on a longitudinal survey of nearly 1,600 adults 18 – 64.

[iii] This is significant: more than 60% of Americans do not have the savings to cover an emergency medical bill of $1,000. Source: http://blogs.wsj.com/economics/2015/01/07/most-americans-dont-have-savings-to-pay-unexpected-bill/

[iv] Steve Moses of the Center for Long-Term Care Reform has written frequently on this subject, for instance here: http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf.

 

Mr. Forman is co-author of "The Advisor's Guide to Long-Term Care" (2nd Ed.) published by National Underwriter, and a regular contributor to LifeHealthPro and ProducersWEB. Reach him at steve@ltc-associates.com.
 

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Updated, Monday, June 22, 2015, 11:48 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-025:  LTC NEWS AND COMMENT

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

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

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

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

  • OneAmerica seeking more deals to grow

  • How Married Couples Can Pay for Long-Term-Care Insurance With HSA Funds

  • 5 major risks to a client's retirement income

  • Maybe we should start calling it short-term care?

  • What is Medicare’s Role in End-of-Life Care?

  • Big Changes Coming for Medicare, Social Security

  • Company Offering Long-Term Care Insurance Alternatives Elects New Board Chair

  • Health insurance subsidies not effectively managed: OIG

  • Don't Forget About Deducting Your Long-Term Care Insurance Premiums

  • The 2015 Long-Term Budget Outlook

  • Four Reasons Why Your Parents Could Be Your Biggest Retirement Risk

  • America’s Seniors Find Middle-Class ‘Sweet Spot’

  • Long-Term Care Goes Virtual

  • Why People Don’t Buy Long-Term-Care Insurance

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

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Updated, Friday, June 19, 2015, 10:33 AM (Pacific)
 
Nashua, New Hampshire—

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LTC BULLET:  LTC ANNUITIES:  TO GET OR AVOID MEDICAID?

LTC Comment:  Annuities have a powerful role to play in funding long-term care.  But for good or ill?  That’s the question we’ll tackle after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find clients and reduce the “Ping-Pong” in the LTCi sales process. Help clients make informed final decisions about buying LTCi in 15-20 minutes!  Gauge a client's true interest in a combo product immediately!  Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation!  Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, a past Chair of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at claudet@targetins.com to ask questions or get references. ***

*** THE GRANITE STATE is where I am, ensconced in the Silver Bullet of Long-Term Care (give it a couple minutes to load).  I’m here to conduct the study of Medicaid and LTC financing that we described in LTC Bullet:  How Great is Medicaid’s Unfunded LTC Liability?, April 24, 2015 and LTC Bullet:  Should Presidential Hopefuls Address Long-Term Care?, May 29, 2015.  We’ll bring you LTC embed reports from the long-term care policy front here in New England from time to time.  We’re convening a special meeting of LTC insurance and home equity experts on July 15 to explore those industries’ potential to take a bigger role in financing long-term care.  If you work in those fields in New Hampshire or if you know someone who does, please contact Steve Moses at smoses@centerltc.com or 425-891-3640. ***

*** MEDICAID ANNUITY HUSTLE:  Here’s an example of how Medicaid-compliant annuities, the subject of today’s LTC Bullet, are presented in the financial press:

“Normally, advisor Jeremy Shipp isn’t a big fan of single-premium immediate annuities. But in working with high-net-worth couples where a spouse is nursing home bound, the president at Harbor Estate Services in Richmond, Va., finds such SPIAs — known as ‘nursing home annuities’ — an attractive alternative.

“‘It’s a very misunderstood strategy by advisors,’ says Shipp, who works on an hourly and retainer basis. ‘They just don’t realize that SPIAs can be used effectively to preserve wealth and qualify a family member for Medicaid.’ . . .

“Anthony recently worked with a couple who thought they were more than $200,000 over the limits to qualify for Medicaid. Anthony discovered that most of those assets could be put into a SPIA paying out $6,400 a month over a three-year term. ‘By doing it this way,’ he says, ‘we were able to preserve more than $200,000 for the family and provide a monthly income for the husband, who is still living at home.’”

Source:  “Medicaid Annuities Offer FAs Long-Term-Care Tools,” by Murray Coleman, June 18, 2015,  Financial Advisor.

LTC Comment:  Medicaid annuity promoters justify the product by saying it protects income of the well spouse in the community, but the spousal impoverishment protections in OBRA ’93 already did that.  Medicaid annuities protect both income and assets far exceeding the intent of Congress and the law. ***

*** NATIONAL LONG TERM CARE INSURANCE SALES SUMMIT PROGRAM ANNOUNCED:  Jesse Slome says this year’s one-day Summit is free.  Come in person or tune in online.  Either way, the cost is right:  free.  Check out the date, location, the topics and speakers here.  Congratulations to Jesse and AALTCI for another innovative idea to make LTCI work under difficult market conditions. ***

 

LTC BULLET:  LTC ANNUITIES TO GET OR AVOID MEDICAID

LTC Comment:  The LTC insurance world is abuzz with news on “hybrid” products that combine long-term care protection with life insurance or annuities.  Great, bring it on; that’s a fine way to employ equity-based insurance products.  The market can use all the ways it can find to attract consumers and provide coverage for the LTC risk.  Except one!

LTC Bullets readers are no strangers to that one kind of annuity for LTC that does more harm than good.  We’ve published about Medicaid-compliant or Medicaid-friendly annuities several times.  For example:  LTC Bullet:  Annuity Blues, 11/15/13 and LTC Bullet:  How to End Medicaid Annuity Abuse, 2/28/14.  Most recently we wrote about North Dakota’s ambitious, but unsuccessful fight to curb Medicaid-annuity abuse in court:  LTC Bullet:  Medicaid Annuity Abuse:  A Case Study, June 5, 2015.

Medicaid Annuities vs. Medically-Underwritten Annuities

In a nutshell, Medicaid annuities are single-premium immediate annuities (SPIAs) so designed as to comply with federal and state rules.  They can easily be configured to protect hundreds of thousands, even a million, dollars or more from the welfare program’s “spend down” rules.  We’ve explained in the Bullets listed above how that’s done.  Today, our objective is to compare and contrast Medicaid-compliant annuities (MCAs) with medically underwritten annuities (MUAs) for long term care expenses

MUAs enable people with assets, shortened lifespans and a need to pay for long-term care to purchase annuities with higher payouts than regular annuities because of the annuitant’s reduced life expectancy.  OneAmerica’s* “ImmediateCare” product is an example the company describes thus:

ImmediateCare is a medically underwritten single premium immediate annuity designed to help fund the cost of an existing long-term care need with monthly payments guaranteed for life. No matter how long care lasts, ImmediateCare can help maintain the level of quality care desired, while at the same time protecting assets from the costs associated with an extended care stay.

ImmediateCare’s issue ages are 75-99 and its primary market is for ages 80-95.  For more on MUAs, including how they’re used in the UK, see actuary Vince Bodnar’s guest column LTC Bullet:  Medically Underwritten Annuities for LTC, May 15, 2015

Comparing MCAs and MUAs

MCAs and MUAs have some similarities.  They both utilize SPIAs.  They are both usually employed after expensive long-term care becomes necessary.  They can both involve large sums of money.  But these superficial similarities mask the two products’ huge differences in purpose and outcome.

MCAs are often purchased for huge sums of money, $400,000 in the example we highlighted in LTC Bullet:  Medicaid Annuity Abuse:  A Case Study, June 5, 2015.  MUAs usually involve smaller amounts, $100,000 or less.

MCAs are bought to protect assets from Medicaid spend down.  MUAs are purchased to empower families to pay privately for long-term care.

MCAs result in affluent individuals becoming dependent on Medicaid, a means-tested public assistance program, i.e. welfare.  MUAs enable annuitants to purchase red-carpet access to top-quality long-term care across the spectrum of care venues.

MCAs are a path to Medicaid-financed nursing homes.  MUAs help to pay for the most appropriate level of care in the home, assisted living, or a nursing home when necessary.

MCAs shift Medicaid expenditures from the genuinely needy to the legally savvy affluent.  MUAs benefit the poor and taxpayers by helping people with assets to avoid Medicaid dependency.

MCAs are often hawked by lawyers and insurance representatives who likely know better solutions exist, but instead select these dubious manipulations of the Medicaid system.  MUAs are quality products offered by honorable carriers and producers.

So there you have it.  Is the best use of LTC annuities to get or avoid Medicaid?  You be the judge.

*Full disclosure:  OneAmerica is a long-time corporate supporter of the Center for Long-Term Care Reform.

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Updated, Monday, June 15, 2015, 10:46 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-024:  LTC NEWS AND COMMENT

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

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

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

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

  • To Increase Value in Medicare, Expand Coverage To Long-Term Care

  • LTCi Carriers Face Tough Crowd

  • Do you think you're in the will? Well, guess again

  • Experts say reform needed to alleviate LTC strain on Medicaid

  • Genworth Still An LTC Player Despite Sale Talk

  • Big Strides in Cancer Treatment Will Increase Long-Term Care Needs

  • Nation's sickest seniors reshape health care: 10,000 seniors cost Medicare $1 billion; containing costs a challenge as nation ages

  • 2.5 million more LTC workers needed by 2030, researchers warn

  • More Bad News For ObamaCare: Enrollees See Little Benefit From Medicaid Expansion

  • LIMRA: Sales Of Individual Life Combo Products Sold Increased In 2014

  • Family business marks 40 years in long-term care planning

  • New labor data predicts booming growth in continuing care

  • What a Life Estate Is And How It Could Save Your Home

  • Justice Department Takes Down Barriers in Retirement Homes

  • State, counties grapple with long-term care as state ages

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

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Updated, Friday, June 12, 2015, 10:22 AM (Pacific)
 
Seattle—


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LTC Bullet:  CLTCR News:  Thousand Bullets Retrospective

Friday, June 12, 2015

Seattle—

LTC Comment:  Your Center for Long-Term Care Reform continues to celebrate its publication of over 1,000 LTC Bullets with this overview of 18 years of “CLTCR News” Bullets.  Please enjoy this retrospective after the ***news.***

*** BY POPULAR DEMAND: Phyllis Shelton brings her sales training back to the LTCi industry with her Summer Webinar Series. She says: “Due to the great response to my April 30th email to see if there would be interest in a webinar series on all the different ways to sell long-term care insurance plus some new ideas, IT'S HAPPENING!” Click here to learn more about this exciting sales training opportunity. ***

*** 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. ***

LTC Bullet:  CLTCR News:  Thousand Bullets Retrospective

LTC Comment:  Once a week, usually on Fridays, we publish our latest LTC Bullet.  The Bullets are often policy pieces, sort of like op-eds.  You can always find the latest Bullets here and archives of the rest of the 1,000+ Bullets (so far), by date here and by topic here.  These 1,000+ articles are a valuable historical resource.  Please make use of them.  Search for key terms using Control-F on your keyboard.

This series is a retrospective of the most interesting and dramatic LTC Bullets that we’ve published since the Center’s founding in 1998.  We’ll highlight one Bullet per year in each of seven major topics:  “The LTC Problem and Solutions”; “Reality Check:  The Facts on LTCI”; “Medicaid Planning”; “LTC Services”; “Politics and Legislation”; “Demographics and Other Data”; and “CLTCR News.” 

Today’s Bullet is our “Thousand Bullets Retrospective” Number 7 covering “CLTCR News.”  These “CLTCR News” Bullets cover what’s happened at the Center since 1998, including press coverage and releases.  Read our summary and check out the original at the link provided.  Enjoy this walk down memory lane.

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May 15, 1998:  Center for Long-Term Care Financing Established.  “Stephen Moses and David Rosenfeld have established the Center for Long-Term Care Financing. The Center's mission is to promote universal access to top-quality long-term care by encouraging private financing and discouraging welfare financing of long-term care for most Americans.”

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November 24, 1999:  You are the Wind in our Sails.  “Last September 17, we published an LTC Bullet entitled "How Are We Doing?" We asked you to comment on the Center for Long-Term Care Financing's publications, web page, and public policy initiatives. We needed your endorsements to prove to current and potential financial supporters that you--the front line troops in the battle to save long-term care--find value in our work products.

“Here's a taste of the feedback we received from reporters, publishers, advocates, agents, brokers, LTC providers, public officials and others:”

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October 13, 2000:  The LTC Triathlon.  “Once a year, The Center for Long-Term Care Financing conducts a major research project. We call this year's project ‘The LTC Triathlon.’ That metaphor refers to the fact that America is in a race for survival to develop a long-term care service delivery and financing system that actually works before the baby boomer generation needs one. Center staff interviewed 119 of the leading financiers (lenders and investors), providers (home care, assisted living, and nursing homes) and insurers (agents, brokers and carriers) of long-term care in the United States. Our objective was to learn (1) what these key players know about each other's businesses, (2) how they account for the current malaise in long-term care service delivery and financing, and (3) what they think ought to be done to improve the situation. We have collected some dynamite material including many ‘colorful’ quotes. The report is circulating in draft for review by the study's respondents. We plan to publish it in final early in December, at which time copies will be available for purchase. In the meantime, here's an article by Center President Stephen Moses published in the September 2000 issue of Contemporary Long-Term Care magazine, a leading provider trade journal. The article will give you a good idea of where the Center for Long-Term Care Financing is going with our LTC Triathlon project.”

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March 12, 2001:  Center President Tackles New Constellation of LTC Issues.  “Center for LTC Financing President Stephen Moses addressed the ticklish subject of ‘Long-Term Care Due Diligence for Professional Financial Advisers’ on national conference calls February 14 and February 28, 2001.  The audience was primarily attorneys, accountants and financial planners for high net-worth individuals. Steve's advice in a nutshell: you have a fiduciary responsibility to your clients (1) to apprise them of the long-term care risk, (2) to propose responsible financial planning solutions, and (3) to warn them about the dubious practice of ‘Medicaid estate planning.’”

October 12, 2001:  Tribute to George Sherman.  “On September 28, we sadly announced the passing of a good friend and colleague, George Sherman.  In the meantime, dozens of you responded to our invitation to share your thoughts and anecdotes about George.  We have compiled your stories and added some information about Sherm's life and the circumstances of his death.  You will find this information at http://www.centerltc.com/GeorgeSherman.htm.  Thank you for a wonderful outpouring of affection, admiration, appreciation and respect for this unique man who touched so many of our lives.”

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August 1, 2002:  What Have You Done for Me Lately?.  “Around this time every year, we give LTC Bullets readers a report on what the Center for Long-Term Care Financing has done for you during the past year. We solicit your comments, criticism and questions. We also invite your endorsements and testimonials if you think we've earned them. We do this is preparation for the Center's 2002-2003 fundraising campaign that begins this month.”

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May 15, 2003:  Open Letter to Governors on Medicaid and LTC.  “State budgets are hurting. Medicaid, America's LTC safety net, is suffering. Huge cuts in eligibility and services already underway or under consideration will hurt the poor first and most, but formerly prosperous recipients who qualified through Medicaid planning will feel the pain too. We think there is a better way. Instead of taking a meat-axe to their home and community based waivers and other Medicaid LTC services, states can target Medicaid more effectively to the genuinely needy, encourage reliance on private financing sources such as home equity conversion, and use part of the savings to encourage the purchase of private LTC insurance with state tax credits and deductions. We estimate states can save at least five percent of their Medicaid nursing home budgets in the short run and twenty percent or more over time by implementing thoughtful reforms. The Center for Long-Term Care Financing recently sent the following letter to all State Governors (and Lt. Governors, Medicaid directors, and AHCA, AAHSA, and ALFA State affiliates) offering to help assess the problem and propose solutions. LTC Bullets readers who would like to see our LTC Choice http://www.centerltc.com/pubs/CLTCFReport.pdf or Magic Bullet http://www.centerltc.com/pubs/MAGIC_Bullet.pdf recommendations implemented are encouraged to forward this issue of LTC Bullets to your Governors, state legislators, Medicaid administrators, and local media. Invite them to check out the Center for Long-Term Care Financing at http://www.centerltc.org/ and to contact” us at 206-283-7036 or info@centerltc.com.

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March 17, 2004:  Center Announces Special LTC Project.  “The Council for Affordable Health Insurance (CAHI), a highly respected think tank and public policy organization in Washington, DC, solicited and accepted the following project proposal from the Center for Long-Term Care Financing. The Center will rank and critique states on their LTCi market penetration, their ability to control Medicaid LTC eligibility, and their success in Medicaid estate recovery, as well as other related issues. The timing and potential for this project are great because of the Medicaid-LTC driven fiscal crisis in the states. We hope to awaken legislators and policy-makers to the enormous potential of controlling Medicaid expenditures and preserving Medicaid for the needy by diverting more people to LTCi and home equity conversion. CAHI and the American Legislative Exchange Council (ALEC) will produce our report, distribute it to key state legislators and the media, and promote the findings.”  Editor’s note:  Access the finished product here:  The Realist's Guide to Medicaid and Long-Term Care.

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May 3, 2005:  The Center is Dead . . . Long Live the Center.  “Yesterday, we made the following announcement to Center donors: ‘The Center for Long-Term Care Financing ceased to exist on Friday, April 30.’ We hastened to add, however, that the work and the mission of the Center will continue. Here's what's happening:”

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May 25, 2006:  Center and Friends in the Press.  “So far this year, I've done twelve media interviews and the Center for Long-Term Care Reform has been quoted and cited in ten articles that we know about.  Publications that have covered our message include the Wall Street Journal, the Washington Post, the New York Daily News, the Dallas Morning News, Kiplinger's Personal Finance Magazine, McKnight's Long-Term Care News, Assisted Living Executive, and several others.  When you have a small budget but a big message, nothing helps more than a national media megaphone.  Today, we highlight three recent articles that cite the Center for Long-Term Care Reform and help convey our message.  Citations and excerpts follow.” 

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January 18, 2007:  The Almanac of Long-Term Care.  “After being barraged for decades with urgent questions like these from friends, colleagues, readers, Center members, public officials, legislators, reporters and so on and on and on, I decided to prepare an ‘Almanac of Long-Term Care.’  Our new Almanac is a reference source that makes finding the LTC information you want quick and easy.  I needed it for myself and I'll use it as much as anyone will.  

“If you're a member of the Center for Long-Term Care Reform, you can access our new Almanac of Long-Term Care today at http://www.centerltc.com/members/LTC_ALMANAC/Main.htm.  You'll need your user name and password.  If you don't have them handy, contact Damon at 206-283-7036 or damon@centerltc.com.” 

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December 17, 2008:  What Have You Done for Me Lately?.  “Thanks to the support of our individual and corporate members, and LTC Tour Regional Representatives, 2008 has been a very productive and successful year for your Center for Long-Term Care Reform. Today's LTC Bullet will list some of the year's accomplishments.”

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January 6, 2009:  An LTC Tour Retrospective.  “I can't move on to bring you our huge new plans for 2009 without pausing just once more this week to look back on our LTC Tour of 2008.  Today, I invite you down memory lane with ‘An LTC Tour Retrospective.’ On Thursday, we'll give everyone a summary, and Center members a TRANSCRIPT, of the LTC Tour's educational centerpiece: our two-hour mini-version of the Center's full-day ‘Long-Term Care Graduate Seminar.’”  See also this article that appeared in Broker World.

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February 2, 2010: Columbo Interviews Don Quixote of LTC.  “I [Stephen Moses] give a lot of media interviews every year, but this was the most fun.”

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December 9, 2011: LTC at Sundance.  “The 13th annual Health Sector Assembly brought together 70 thought leaders to discuss LTC services and financing.  Our message was heard loud and clear.

“Following is a transcript of my remarks to the Health Sector Assembly.  At the end of those comments, I mentioned that I had prepared six ‘Briefing Papers’ which ask and answer key questions about long-term care ‘from a perspective clearly at odds with conventional long-term care analysis.’  Staff of the event distributed a summary sheet with links to all six essays to all of the attendees.  In the coming weeks and months, we will share the same material with you in forthcoming LTC Bullets.”

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January 20, 2012:  New LTC Clipping Service.  “Subscribe to our new ‘LTC Clipping Service’ and Steve Moses will send you an average of 1 to 3 critical LTC articles per day so you can do business instead of searching the web.  Cost?  Discounted thanks to a grant:  Only $100 per year for Center members; $120 per year for non-members; and free to Regional Representatives of the Center.  Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe.  Details follow”

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December 20, 2013:  What Have You Done for Me Lately?.  “Our annual report on the Center for Long-Term Care Reform’s year follows [in this LTC Bullet].”

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July 16, 2014:  Free the LTCI 5000.  “LTCI specialists should break their chains and soar.  We can help [in this LTC Bullet].”

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March 27, 2015:  The 15th Annual ILTCI Conference:  A Virtual Visit.  “The annual Inter-Company Long-Term Care Insurance Conferences are always something special.  But this year’s meeting exceeded all that came before.”  Find out why in this LTC Bullet and don’t miss the next one!  

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Updated, Monday, June 8, 2015, 11:32 AM (Pacific)
 
Seattle—

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LTC E-ALERT #15-023:  LTC NEWS AND COMMENT

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

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

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

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

  • What Young Americans Should Look For In a Heath Care Plan

  • 7 Ways To Save On Long Term Care Insurance

  • Will the Gifts I Give My Parents Count as Income When They Apply for Medicaid?

  • Analyzing the LTCi Sale

  • In-plan annuity options grow as MetLife introduces longevity product

  • Medicare Patients, Beware This Costly Surprise

  • Medicare’s Income-Related Premiums Will Rise for Some Higher-Income Beneficiaries Beginning in 2018

  • LTC Global Announces New Agency, Contracts with Genworth General Agents

  • Lifestyle and the aging brain

  • Most Households Approaching Retirement Have Low Savings

  • Work in Retirement? Don’t Be So Sure

  • House Bill Would Make Income from Community Spouse's Annuity Available to Medicaid Applicant

  • More older Americans are being buried by housing debt

  • Seven Retirement Gaps And What To Do About Them

  • Medicaid Consuming Federal Assistance to States

#############################

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

#############################

 

Updated, Friday, June 5, 2015, 11:45 AM (Pacific)
 
Seattle—


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